RCI Hospitality Holdings, Inc.

Greetings and welcome to RCI Hospitality Holdings second quarter fiscal 2023 earnings call. You can find RCI's presentation on the company's website. Click company and investor information under the RCI logo. That will take you to the company and investor info page. Scroll down and you'll find all the necessary links. Please turn with me to slide two of our presentation. I'm Mark Moran, CEO of Equity Animal. I'll be the host of our call today. I'm here in New York City with Eric Langen, President and CEO of RCI Hospitality, and Bradley the Human Calculator Shea, the Chief Financial Officer. Please turn with me to slide three. If you aren't doing so already, it is easy to participate in the call on Twitter Spaces. On Twitter, go to at RickCEO and select the space titled dollar sign R-I-C-K, RCI Hospitality Holdings, Inc.

to queue 23 earnings call. Apologies for the technical difficulties here. We good?

Looks like we're back at it. To ask a question, you will need to join the Twitter space with a mobile device. To listen only, you can join the Twitter space on a personal computer. RCI is also making this call available for listen only through traditional landline and webcast. At this time, all participants are in a listen only mode. A question and answer session will follow. This conference is being recorded. Please turn with me to slide four. I want to remind everybody of our safe harbor statement. You may hear or see forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards. Now please turn with me to slide five. I'd also direct you to the explanation of RICS non-GAAP measurements. Finally, I'd like to invite everyone listening in the New York City area to join Eric, Bradley, and me tonight at 7 o'clock to meet management at RICS Cabaret New York, one of RCI's top revenue generating clubs. RICS is located at 50 West 33rd between Fifth Avenue and Broadway, a little in from Herald Square. If you have an RSVP, ask for me or Eric at the door. Now I'm pleased to introduce Eric Langan, President and CEO of RCI Hospitality.

Eric, take it away. Thanks, Mark.

Thanks everyone for joining us today. Please turn to page six for today's news. We moved ahead on a number of fronts in the second quarter. Revenue grew to $71.5 million. That's an increase of 12.3% year-over-year, reflecting both same-store sales and acquisitions. Free cash flow was $14.8 million, up 33%. Adjusted EBITDA was $21.7 million, up 8.8%. We look forward to optimizing their contributions. On a sequential quarter basis, our bombshells turnaround program has started to produce results. We also advanced many of our projects involving club acquisitions, new club developments, the Rick's Cabaret Steakhouse and Casino in Colorado, and new bombshells locations. I'll be back to tell you more and answer questions later. Here's Bradley to review the financials.

Thanks, Eric, and good afternoon, everybody. Looking at some of the other major numbers in the quarter, EPS was 83 cents. This reflected some non-recurring items. On a non-GAAP basis, EPS was $1.30, up 9.2% year-over-year. On a non-casual operating activity, it was $16.8 million, up 44.8%. We had 9.3 million weighted average shares outstanding. That's down 2.4% year-over-year due to prior period repurchases. The 200,000 shares issued as part of the Baby Dolls Chica acquisition had minor impact. That's because they were issued late in the quarter. Now moving on to the income statement. Please turn to page 8 to review the nightclub segment. Revenues totaled $57 million, up 18.4% year-over-year. That was driven by $6.9 million from acquisitions and newly remodeled clubs and 3.7% same-store sales growth. Operating margin was 31.6% and 39.3% non-GAAP. GAAP operating margin included primarily a legal settlement expense and an impairment. Compared to the first quarter from fiscal 2023, revenues increased 0.3%, driven primarily by acquisitions, while non-GAAP operating margin declined 1.1 percentage points. That reflected the fact that we had two weeks of the Baby Dolls and Chico Locust acquisition which did not allow enough time for full optimization. Please turn to page 9 to review the bombshell segment. I only have three things to say here. Number one, results improved sequentially. Revenues increased 6.6%, driven mainly by the acquisition of Bombshell San Antonio and the Grange Food Hall with its new Bombshells Kitchen. Non-GAAP operating margin expanded 1.6 percentage points. All this reflects initial progress from our turnaround program. Number two, while operating margin target remains 18 to 21%, the segment's performance at 15.4% non-GAAP was right in the middle of many well-known publicly traded restaurant chains that have recently reported the results. And lastly, number three, the segment was profitable, generating $1.8 million GAAP and $2.2 million non-GAAP. Please turn to page 10 with me to review our consolidated statement of operations. Note that all comps are at the percentage of revenues. Cost of goods sold declined year over year, reflecting increased service revenues. Salaries and wages were higher year over year and quarter over quarter. This was due to minimum wage increases in many states where we have clubs on January 1st. It also reflected higher labor costs at newly acquired clubs. SG&A was higher year over year, but declined quarter over quarter. Year over year reflected newer acquisitions that are not fully optimized, and quarter-over-quarter reflected the absence of year-end audit expenses. Depreciation and amortization were higher year-over-year and quarter-over-quarter. The second quarter of 2023 included a one-time accelerated amortization of Grange food stall leases. Other charges and gains reflected $3.1 million in legal settlement expense and $662,000 of non-cash impairment. Operating margin was lower year-over-year and quarter-over-quarter, but on a non-GAAP basis, was approximately level with the year-ago quarter and expanded one percentage base point from the first quarter. Interest expense was higher year-over-year, but quarter-over-quarter.

Second quarter of 2023 included initial cost of new debt at mid-March. Please turn to page 11. The quarter was counted in April.

Keep in mind that this was after paying $18.4 million for the cash portion of acquisitions. Free cash flow was 20.6% of revenues and adjusted EBITDA was 30.3%. Both increased sequentially are in line with our 20% and 30% targets respectively as a percentage of revenue. To wrap up our discussion of the income statement, please turn to page 12 for an update of our geographic focus. In the second quarter of 2023, our regional revenue breakdown was Texas at 41%, Florida at 25%, New York, Colorado, and Illinois are 8%, 7%, and 6% respectively, and the other eight states combined for 13%. This demonstrates our geographic diversification, our exposure to growth states like Texas, Florida, Colorado, and how we develop our business clusters in key areas.

Turning to to review our debt metrics.

Net of loan costs, that's $45.8 million as of March 31st. That's an increase of $35 million from December 31st. The increase primarily reflected financing for the five club Baby Dolls Chico Locos acquisition primarily offset by scheduled pay downs of other debts. Our weighted average interest rate was 6.52%. This compares to 6.14% a year ago and 6.6% five years ago. Excluding balloons, our amortization schedule is now in the $12 million to $15.7 million annual range, which is very manageable with our higher level of cash flow.

Please turn to page 15 to review some of our other debt-related metrics. Just point one, as of March 31st, below our comfort level of around three.

Please note that this reflects our new debt related to Baby Doll's Chicas Locas acquisition, but only two weeks of contribution. Occupancy cost was 7.6% of revenues. This will continue to be well within the six to 9% range we've averaged when sales weren't dramatically impacted by COVID. Now please turn to page 16 to look at our March 31st debt pie chart. Our debt now consists of 54.9% secured by real estate, 30.4% seller financing secured by respective clubs and or the real estate which it applies to, 6.6% of unsecured debt, 4.1% of debt secured by other assets, And lastly, 4% that relates to new bank line of credit that was used in the Baby Dolls Chica Locals acquisition that was also secured. Now, let me turn the call over back to Eric.

Thank you, Bradley.

For this quarter, we added a third section to our presentation. We call it our take and are using it to explain underlying thinking to where we are going. I want to remind everybody of our safe harbor statement. You may hear or see forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those currently anticipated. We just claim any obligation to information disclosed in this call as a result of developments that occur afterwards. Please turn to slide 18. Everything we do is about our capital allocation strategy, which is similar to those outlined in the book, The Outsiders by William Thorndike. First and foremost, the goal of our strategy is to drive shareholder value by increasing free cash flow per share by at least 10 to 15% on a compound annual basis. We have been implementing this strategy since the end of fiscal 2015 with three different actions, subject to whether there is strategic rationale to do otherwise. One is mergers and acquisitions, specifically buying the right clubs in the right markets. We like to buy solid cash flowing clubs at three to five times adjusted EBITDA using seller financing and acquire the real estate at market value. Another strategy is growing organically, specifically expanding bombshells to develop critical mass market awareness and sell franchises. Our goal in both M&A and organic growth is to generate annual cash on cash returns of at least 25 to 33%. The third action is buying back shares when yield on flow per share is more than 10%. As a result of these efforts, we have exceeded our primary goal. Through the end of fiscal 2022, we have increased free cash flow by 22% on a compound annual basis while reducing shares by 1.5% on a compound annual basis. Please turn to slide 19. So what is the current point between whether we should buy shares or invest in buying or opening new locations? Using a possible range of 68 to $78 million for fiscal 24 against 9.43 million shares, the 10% yield point for buying back shares comes in at $72 to $83 per share, subject to whether we can make better investments.

Please turn to slide 20.

Let's take a look at our most recent club acquisition. We used $15 million in cash, $16 million in stock, and $35.5 million in debt to acquire five Babydoll and Chica Locas clubs and their real estate. We estimate the acquisition will generate $11 million in adjusted EBITDA in the first full year after closing. After that, with remodeling and some expansions, we estimate it will generate $14 to $16 million in adjusted EBITDA. We assume conservatively we go from $11 million in year one to midpoint $13 in year two and $15 million in year three. That total $39 million would represent an of more than 50% on the $15 million that we put down on this acquisition. If you turn to page 21, let's take a look at our planned Rick's Cabaret Steakhouse and Casino in Central City, Colorado. We bought the building and real estate for only $2.4 million. We anticipate it will take us about $8 million to complete, which would include 200 slot machines. Including the casino, a similar size RCI club generates between $8 and $10 million in revenue. Spot machines at existing Central City casinos average $129 per day. That's another $9.4 million in annual revenue. So the combined estimated revenue of $18.4 million at a 40% average club margin would generate $7.4 million operating profits. Let's assume conservatively that we only do $3.7 million in year one, and in year two, we build to $7.4 million. That's a total of $11.1 million. That would represent an average annual cash on cash return of more than 50% on the $10.4 million invested. Keep in mind, this does not include any table games or sports betting revenue. Please turn to slide 22.

I'm sorry, slide 23.

We also believe we have the opportunity to add even more locations. For example, it took 28 years for the company to go from one location to 21 locations. In the following seven years, we added 19 more. And in the next five and a half years, we added another six to total 56 clubs, which represent only a small portion of the market we want to consolidate. As our company expands in size, we believe we can continue to potentially accelerate our rate of growth. This is due to a variety of factors, including increased economies of scale, enhanced market penetration, and greater access to resources. With a larger company footprint, we may be better positioned to capitalize on opportunities, take advantage of the synergies, and achieve operational efficiencies that can help drive growth. Therefore, we believe, as we continue to grow as a company, we can potentially experience faster rates of growth and achieve greater levels of success.

Turning to slide number 23.

We believe we have the cash to do this. Let's look at what happened in the second quarter. At December 31st, we had $34.1 million. we made an acquisition $7.1 million in net new cash, or we made an additional $7.1 million in net new cash, and we used $18.4 million in cash, primarily for the Baby Dolls Chica Locust acquisition, ending the quarter in cash. Now let's look at what could happen in the next fiscal year. Using the range of $68 to $78 million in pre-cash flow, plus $21.7 million in debt maturities, leaves us with a range of $46 to $56 million in projected cash available to use for future investments. Turning to slide 24, we also have shares we can use to finance acquisitions, provided we continue to do it carefully, judiciously, and in an accretive manner. To that end, we believe we have demonstrated a strong track record. Since the implementation of our capital allocation strategy, we have acquired more than 2 million shares at an average price of $19.55 per share. We have issued 700,000 shares at an average price of $65.71 to provide $46 million of capital for acquisition. From our viewpoint, we use shares that we bought at an average of $19.55 and sold them for $65.71, or a 236% cash-on-cash return. To sum up, we have a long list of investment opportunities with the potential to generate significantly compelling returns when combined with our strong, disciplined, and proven track record to make it happen. Please turn to slide 25. Before we go into the Q&A, we'll be holding our 30th anniversary Gentleman's Club Expo convention August 20th to the 23rd at the Paris Hotel in Las Vegas. For more information, go to the website listed on the slide. Thank you to our loyal and dedicated teams for all their hard work and effort. You can't do it without. Now here's Mark to start the Q&A.

Thank you, Eric and Bradley.

Before we move on, I'd like to. Thank you, Eric and Bradley.

Before we move on, I'd like to congratulate you both on the one year anniversary of our first Twitter spaces, the first ever earnings call on Twitter spaces. If anyone would like to ask a question, please raise your hand in the Twitter space. When you finish your question, please mute your microphone to eliminate any background noise. We have a limited number of speaker spaces. And after your question, we may move you back to the audience to free up space. Before we start things off, I'd like to give a special shout out to Kellen Curry, a listener in the audience and former equity research analyst at J.P. Morgan, who will be challenging George Santos next year for New York's third congressional district. Thank you for joining us. Let's go ahead and start this show. We'd like to take questions from Rick's equity research analysts and some of its largest shareholders first. To begin, we'll have Scott Buck of HC Wainwright. Scott, please take it away.

Hi, good afternoon. Thank you, Mark. Eric, I'm curious, can you give us an update on where you are in terms of licensing for gaming for the Central City Colorado location?

Typically, their time is going to take 12 months.

We filed at the end of November. 2022, so we're hoping to hear something soon. Typically, you'll get some type of preliminary deal, which allows us to then set up the casino. I'm hoping that we see that in August, September. It could be as late as October. Gaming in Colorado, it's been a very slow process, not just for us, but for all new licensees. I believe there's seven or eight licenses that are now applied for in the state of Colorado. Some are much older due to various reasons on funding of the casino, things like that. I think as a publicly traded company, our funding will be super easy to explain. It's cash from the bank accounts. So I don't think we're going to have any issues when we reach that point. It's just getting to that point. I know that there's been some shuffling at higher levels. in the Colorado Gaming Department. And so hopefully the new people that are coming in are going to hopefully speed this process up a little bit. We would definitely like to see our license issued by the end of the year. We'd like to do our grand opening as a New Year's Eve party. But I think worst case, we could be looking at as late as March. So it's a very – until they –

contact you there's not really much we can do just sit and wait no i understood and thank you for that uh now i'm just curious if you could give us kind of an update on what you're seeing uh in the clubs just given the current environment i know the past couple quarters there had been some weakness and a few of the blue collar clubs but uh you know you were kind of more than making up for that and some of the higher end stuff so any kind of update there on business would be great

Yeah, I mean, I think right now it's just inconsistencies. You know, I don't see real trends forming up or down. I don't see – I think we're just seeing kind of more of the same. We have a location that gets down a little bit. We make some adjustments. It goes up. And then we have another location that's down a little bit. We make some adjustments, and it goes up. You know, so it's just a constant right now. It's like a shell game where we're just kind of moving parts around and moving pieces around and just overall shooting for – you know, a set number each week. And if we're hitting that number, you know, we're looking, like I said, we're looking for the weak spots and the strong spots, and we focus on those. And everybody else is just kind of in water right now. Overall, though, you know, revenues have been strong, as you've seen in this quarter. I don't believe that, you know, we've acquired enough new stuff that I don't think we'll see any decline in revenues. The question now is, can we continue to keep the growth rates at, you know, double-digit growth rates? We are looking at other club acquisitions right now that will help that, hopefully, by the time we get into the fourth quarter or definitely through 2024. And everything is really, you know, we've been priming the pump here, so to speak, for 2024. And I think you'll see a lot of activities as we move into 2024.

Great. Appreciate that. And then just the last one on the acquisition front. First, congrats on the deal closed earlier this year. What are you seeing in terms of pricing when you talk to folks? Any changes there or people, you know, kind of holding that?

I mean, it's always been three to five times. I mean, we basically set the market. Other operators that are trying to expand don't have the capital or the cash typically that we are able to pull into a transaction. They definitely don't have the track record and a public track record. So I think we just stick to the plan right now. It's all about the adjusted EBITDA. If we see trends, if their numbers are trending down, then we'll run a forecast based on those trend numbers and make an offer according to that. If numbers are trending up, then we'll make an offer according to that. So we just kind of watch. you know, where everyone's at and what we're seeing in our markets and their market. And it's been pretty, you know, pretty basic math these days for us. And nothing's going to really change much.

Super. Well, appreciate the additional time, guys. Thank you.

Thank you very much, Scott. And to further highlight your question on spend, I'd like to add that my spend at Rick's Establishments has stayed consistent. Next up, we're going to bring Anthony of Sidoti & Company.

Yes, good afternoon. Thank you for taking the questions. So just to follow up, Eric, you mentioned that you were making some adjustments to some of the clubs that have, if you can use your phrase, intermittent softness that you've had. So can you just talk about some of the adjustments that you've been making? And just wondering, are these generally the same clubs in the first quarter of the season?

Sorry, I did not hear that. Did you say it again?

Hey, Anthony, I'm not sure if that's you in the background, but could you repeat the question?

That was not my, that was not me in the background, so I'll repeat the question. Yes, so Eric, just wanted to follow up about the adjustments that you said you're making in some of the clubs that you've seen some softness. Can you just expand on that as to what you're doing? And then just in terms of the, what's the common theme, I guess, as far as the clubs that you have seen some softness last few quarters? Yes.

Yeah, sure. I mean, basically what we'll do is, is increase social media, uh, make sure that, uh, that our, our is doing to put people into the, into the clubs. Uh, we may run some bottle service specials, uh, on slower nights. We may, you know, basically just do whatever we need to do to create a better value for the customers and guests that are visiting the location, uh, and doing things to put, you know, more people through the door, whether that's social media, whether that's on-site promotion. We had huge crews out at the Nuggets game last night. I'm sorry. I think it was the day before. You get the idea. It's more promotional. We become more promotional. We become more proactive on things. Like I said, we watch if our main floor is not full, we try to fill it up. If you know, VIP is empty. We'll try to, uh, you know, run some specials, uh, VIP. We may do more shot specials. We may do, uh, you know, like I said, more, more social media, uh, promotions and specials. So there's things to put people through the door. That's how we, that's how we fix it.

Got understood. Yeah. Thanks. Thanks for that color. And then, um, Just in terms of the second quarter here, you also cited higher labor costs at the newly acquired clubs. Do you expect to bring those costs down as a percentage of revenue now that you've had a few weeks already under the belt?

Yeah, certainly.

I mean, obviously, when we first take stuff over, they're a little heavy. We put some extra labor in there as well. So we've become a little heavy on labor. We sort through it and move people around. If there's, you know, dead weight, we have to get rid of the dead weight to get the numbers where they need to be. Typically, you know, it's a three-month to six-month process. Like Denver, Denver took a lot longer. I think this location, because it's in Texas, will be much faster for us.

Gotcha. Okay. And then, you know, it was good to see bombshells margins up sequentially. Do you still expect a longer term you can get to your target range of 18 to 22% segment margins for that piece of the business?

Absolutely. We were viewing prices through most of March. We raised most of the prices we needed to raise at the end of the March period, so you didn't see any of those Price increases in that quarter. You'll see the price increases in April, May, and June. The fights have been good. We had a couple of really big fights in April and the first week of May. We've got NBA playoffs have been fantastic. Some unbelievably close games that are bringing people out. James Harden playing in Philadelphia. There's still a lot of James Harden fans in Houston. So that's bringing, you know, people out to bombshells in Houston to watch the games. And, you know, if you haven't disappointed, it's been, like I said, it's been a great series. And I think the next series is going to be even better, which I think will bring more people out. And then we get through the playoffs. And I guess we're just relying on baseball for a while. And then football season will start back up. You know, same drill.

We have the WNBA too, Eric. All right, well, thank you, and best of luck.

Thank you so much, Anthony. Next up, we have Lynn Collier of Water Tower Research. Lynn, please take it away.

Thank you, and congratulations. It's a great quarter. Congratulations again. I had a couple questions around your incredible growth opportunity in Central City. The first question is, is there some reasons that Central City cannot be as built out as Blackhawk? In other words, is there some sort of zoning issue that prevents it from being as big as Blackhawk from a gaming perspective, number one? And then number two, what do you envision for Central City looking out over the next two or three, four years?

Sorry, I couldn't get my mic to come on.

You know, I know you were just up there. I wish I'd have been able to meet with you while you're up there. I just couldn't make the timing work for my schedule. You know, there's no reason Central City can't build like Blackhawk. Other than in the historic district, it won't happen. But there is other gaming areas down the gulch and whatnot where they can build some larger hotels like the Z Casino there in Central City. I think it's a 400 and some room hotel with about close to 700 gaming devices. And that whole area, I think, could be developed at some point in the future. I think the biggest changes is, you know, Blackhawk had a much more business-friendly leadership in the city and basically grew their town faster. I think what's changed as well is the gaming laws changed in September of 21, which is now allowing Blackhawk, I mean, now in Central City to grow. If you look, there's, I think, seven or eight licenses applied for in the state of Colorado. All but one is in Central City. So Central City is the next growth area for gaming in Colorado. Central City has so much charm. They have so much more to offer in forms of entertainment, art, opera than Blackhawk. So I think over time, you're going to see, and I really don't look at it as two competing cities because the reality of it is they're 0.9 miles away from each other. And, you know, does the Strip and downtown Las Vegas really compete with each other or is it just, you know, they each have their customer base, their form, you know, they cater to the clientele. I think that Central City Blackhawks in that regard is that they'll share some customers, of course, and Sometimes you'll go to Blackhawk and sometimes you'll go to Central City. But I think the reality is most people on most visits will end up in both towns at one point or another because they're just so close. And as they grow together, as that gulch is developed, Blackhawk develops up towards Central City and they develop into each other, it's just going to seem like one giant gaming area. And that's what I see over the next maybe three, five, ten years in that market up there.

That sounds great. Thank you. And I think they're only like a mile or two miles apart, right? Blackhawk and Central City.

I'm sorry, you broke up. Yeah, they're only a mile or two miles apart.

Oh.

Yeah, they're 0.9 miles. They're 0.9 miles. They're not even a mile apart. City Center, City Center is 0.9 miles.

Okay. Okay, great. I just have one follow-up question. You talked about bombshells and the new initiatives that you have that are resonating with the consumer. You talked about pricing, but what other things are you doing from an initiative perspective regarding bombshells?

Hey, Lynn, we were having some technical difficulties on our end. Would you be able to repeat that question again for Eric?

yes i wanted to ask you about the initiatives that you have implemented at bombshells they seem to be really resonating and i know part of it is pricing but what other initiatives have you put into place at bombshells in the last two to three months well the pricing was at the end of the quarter so none of the results is from pricing uh a lot of it is just you know we always call it i always or i always call it getting back to the basics uh you know teams

get lazy or teams get complacent. And so we have to remind them to get back on the basics. That's getting back on social media, getting the girls on Tik TOK, getting the girls on Instagram, getting out there and, and, you know, taking the girls to promotion events, whether it's a basketball game or, uh, you know, go going hitting, you know, all the automotive car lots and inviting all the car dealers in and, you know, salesmen in and stuff like that. Just getting out there, getting seen and getting, uh, you know, our name out there so that, uh, so that people come into the business. And then, of course, once they're in the store, providing the best customer service we can provide, making sure that managers are touching tables, and that they're making sure the guest experience is the best that it can be, so that not only do we have happy guests, but we get returning guests. Because that's how you build, and that's how you build the margins. Of course, upselling drinks and upselling appetizers and desserts all help uh with margins and uh so it's just uh you know basically getting getting everybody you know doing the things they're supposed to be doing anyway that i just feel that you know when your number when your margins slip it's typically uh because of of those types of things that uh just kind of slip by a little bit or people let go a little bit maybe they they didn't go to this game or they didn't go to that game because they were too busy or they thought they were too busy. And, you know, just making people understand that we're never, you know, we're never too busy. We must continue to promote. We must continue to, you know, bring people into the business.

Thank you so much. And after going out to Colorado, I am just amazed at what you've accomplished and you really have a true home run and congratulations. That's all for me, but I appreciate the time.

Thank you so much, Lynn, for those great questions. Next up, we're going to bring Rob McGuire of Granite Research. Rob, please take it away.

Congratulations on the quarter. I just have a couple of questions here.

First off, on bombshells, can you get the bombshells margins back to 18% if the Arlington on-ramp, off-ramp has not yet reopened?

I mean, I believe we can. Okay, great.

And since the price increases went into effect this quarter, can you just give us an idea of how those have been going?

I don't. It's too early.

I don't have the numbers from that period yet.

All right. Can you just talk about where cash is today? I might have missed that earlier. and what you intend to do, just where your cash is today in general.

I think $22.8 million is what we ended the quarter with, and we haven't disclosed anything after that publicly, but it's increasing.

Very good. And then if you can just look at the wages, they're a little higher in terms of wages as a percentage of overall revenues. Is that something we can expect going forward? Do you think that corrects back towards the mean with the price increases you've been putting in?

I mean, I think we will continue to be in that 20, 25% range. I think it's what we try to normally shoot for, you know, give or take a couple of points. You know, I don't, I don't really worry about one quarter simply because you could have a bunch of overtime. You could have a lot of little things that affect, one quarter. If we start seeing it trend up on a longer term basis, then we'll have to be much more concerned about it. But right now, it's a very small amount of money anyway.

Okay, I appreciate that. And then lastly, you talked a little bit about the softness in the nightclubs. Has the trend of the softness really been limited? Has the blue collar evolved, or does it continue to be contained in that segment as you look at the business of the last six to nine months?

I mean, in the past, yes, it's been pretty, pretty based on the blue collar. It's hard to say with April because this April we had Easter this year, but last year, Easter was in March. And so the only weakness was the week of Easter weekend and Good Friday. And of course, the Monday after Easter, this was a little weak. And so I don't know if the softness was just because of that one week period or If there's softness, there's no trends. Like I said earlier, I'm just not seeing any trend in weakness or any trend in strength either way. And so we'll continue to watch. As long as we're doing our total weekly numbers, we'll monitor the best locations, we'll monitor the weakest locations, and we'll try to fix the weakest locations and try to make sure that our focus at the high locations continues and they continue to build and do the big numbers.

Great.

Thank you so much for your time.

Thank you so much, Rob. I appreciate it. And that softness around Easter was, as a former altar boy, I attended church that weekend rather than go to Tootsies. Next up, we have Joe Gomes of Noble Capital Markets. Joe, please take it away.

Congrats on the quarter, and thanks for taking my questions. Sure, Joe. How's it going? Good. Good. So, you know, again, service revenues continue to perform nicely. Just wondering, you know, in your mind, Eric, you know, is that something that you think can just continue, or do you think at some point in time they start to level out?

I mean, they're going to find a top at some point, but I think they're going to continue to be in these ranges. I think the highest peak of the business, we were doing 42% or 43% service revenue margins. So we're still below those peaks, but we do have more bombshells nowadays than we had back then. So I think there's just a, you know, an ongoing trend we'll just keep watching. And, you know, as certain markets do better with the higher service revenues, like New York, we could see the service revenues increase. But, I mean, the reality is they're going to fluctuate. I mean, for example, Miami this weekend was insane. Formula One racing. UFC, which was big UFC boxing fights. And then you had the big boxing event. So it was, there was a lot of things driving traffic. When there's that much traffic on the floor, of course, that drives VIP because customers, you know, want, want, want to be, you know, not bumped into or get away and they went to private areas. So which drastically increases our service revenue. So it really, I think just depends on, As we move forward, how many events and those types of things, if we have a bunch of events in a quarter, you'll see higher service revenues. If all of a sudden there's not a bunch of events in a quarter, we could see a little bit lower service revenues. But like I said, overall, I'm much more concerned with monitoring our total revenue and our total revenue numbers. We're beating our internal goals for April and through May so far. So I'm very, very happy to see those numbers being beaten. They were, I thought they were pretty optimistic numbers to begin with. And the fact that, you know, the club goals, we set goals at the clubs and the fact that they're, that they're beating those numbers. I'm excited about, we are going to get some major pops. Like I said, April last year had no, had no Easter. So we did have a very strong April last year. I think April was our strongest month of the year last year, actually. And I, I, I wanted to try to figure out why. I know it can't just be Easter. There must have been some major sporting events and some other things in that month as well. But we started out the first week of May with a very, very strong week. Like I said, with F1 and the NBA games have been fantastic for us. Just a lot of positives. I mean, you've got Phoenix, you've got Miami, you've got New York, you've got Denver. all teams that definitely help our revenues right now in the playoffs. So, you know, we can't lose in the Miami-New York game because either one of those are great. I think we're leaning towards Denver. We have more clubs in Denver than we do in Phoenix. So I'd love to see Denver advance because I think that'll be more revenue for us. So we're watching those games close. And like I said, with James Harden, a lot of Houston fans for James Harden still. And so I think that if the Sixers continue to advance, that'll help our business as well. So we've got, you know, three of the four series are great, Chris.

Excellent. Now, I think at the end of the first quarter, you had talked about, I think, reopening the Galveston Heartbreakers and the Jaguars in San Antonio. Just wondering, you know, how they were performing, you know, the past couple of months.

Sure. Both are continuing to see improvements. Heartbreakers has had a couple of record weeks, so we're very excited that that location is continuing to get better and better for us. The real thing now is to get the Baby Dolls in Fort Worth reopened, which should open by mid-June, I think, at the latest. We probably could have opened earlier, but we decided we wanted to do things right, and so there was some electrical issues and heating air conditioning issues there just wasn't enough power to the building so we had to add additional power to the building which added about four to six weeks to the uh to the process but uh you know we just there's no sense in opening in june or july or august having huge uh you know problems because we can't call the building so that's all that's all being worked on right now we've also got uh you know our lubbock uh jaguars location uh is under Construction, they've got steel up there, closing the building, the parking lot's bored. So that location will come online soon, as well as the pinups location that we bought in Fort Worth, Texas, that will start construction probably in the next 90 days on that property. Three more clubs coming up.

Great. And then one more for me, if I may. I know you had that $200 million goal of investment. for each year of the next couple of years. I think at the end of the first quarter, we were around 110. You still confident you'll be able to get that other, let's call it 90 million invested or the remainder of this fiscal year?

I mean, we're certainly going to try, but we've got to find the right deals. We've got a lot of construction going on. We're in the process of four bank loans right now for different various constructions and properties. So hopefully those will all come through. We're getting rates between, I think, 6.8 and 7.25%. So rates are not horrible yet. So we're going to try to lock in what we can lock in and get these other construction projects going. Some of the construction projects we're doing in cash, like the Jaguars in Longview, I mean, in Lubbock is all cash. Our Stafford location, we basically paid all cash for construction there. So we've got multiple properties that we could turn around and cash out of at some point here in the next six months if rates settle back down, the Fed stops, and then the rates come back down and we start seeing a 6% rate again. I would look for us to do a refi or cash out, I should say, of probably around $20 to $25 million, which would give us, you know, Nice chunk of cash going forward, which will make it easier to hit that $200 million mark. Right now, I'm not seeing anything that's standing in our way from us making those investments other than we must find the right deals. I'm not doing deals to do deals. I'm only doing deals if they meet our requirements and we can get the cash on cash returns that I see versus buying back our stock.

Thank you so much, Joe, for those questions. Before we bring up our next questionnaire, I'd like to encourage everyone to retweet and share this space. If you have a question to ask, please raise your hand and we will bring you up as a speaker. Next up, we have the deep value provocateur, Orchid Well.

The mic is all yours. Hey, Orchid Wealth, you're going to have to unmute yourself to ask the question.

Got it. All right. Good quarter. My big thing that I wanted to get some clarity on is you guys obviously keep acquiring the real estate in these prime areas, Texas, Florida, and so for Colorado. Do you have any idea what the underlying property values that you've been buying have accumulated by?

in those for respective counties is commercial property going up year after year which you don't record on your balance sheet as those properties move up well we're not allowed to you know take step up basis we have to use cost basis accounting under gap uh but i would guess uh you know in certain markets i mean we've turned down some pretty You know, there's always people out trying to buy your properties, right? I don't know if you guys, anybody that owns property knows. Your phone rings off the hook. I want to buy your house. I want to buy this. We get those calls on a regular basis. We've gotten some offers. I mean, we bought Tootsie's property. I can't remember what year it was. 2015, maybe, for $15 million. I've got an unwritten offer, you know, verbal over the phone. Would I take $24 million for it? Of course, I laughed. I was like, if you add a zero, we can sit down and talk. We own the club. Oh, we thought you could just move that tenant. No, we are that tenant. But, I mean, I don't know. I think there's somewhere – I think we have about $250 million plus in real estate. Last time I did everything, we have 100 – on the sheet, I think, what, $120-some million in real estate debt. Was that slide 14? Yeah.

All right, so the thing is, I just keep looking at the fact that you're borrowing cloth on this real estate that you've had over the years. It seems to be growing at least equal to what you're paying out in interest on these properties.

Oh, probably easily. You've got to remember, our weighted interest rate now on our real estate is only 5.41%. I mean, our overall is 6.52%, but our real estate debt is much cheaper. About a point cheaper, right? A little over a point cheaper. So that's highly possible. And you've got to remember, a lot of this real estate that we bought, we've done some pretty major improvements to the properties as well.

So that never hurts with the value. And then about what percentage of the entire business do you own real estate and what percentage is wasted?

uh bradley and i just did this the other day 85 and 15 or 83 and 17 percent uh about 15 to 17 percent least and that's because of the uh the only reason we have so much lease now is because the restaurants and the uh the lowry acquisition uh so i think it's it's pretty close to 85 and 15 i believe now we've gotten all the new locations that we're that we're getting ready to open that we're building like roulette and lubbock austin texas uh Aurora, Colorado, downtown Denver, Colorado, all those locations are owned. So as more locations open, the percentage of owned properties are going to go up versus leased properties because we haven't added any leased properties recently. Not that we won't. I mean, we find the right location and they've got the right, you know, right term lease and the lease's price is right. I mean, you know, if we can lease it cheap and then we can buy it, then we may tend to lease at a It just really depends on how much capital we have to put into the location as well.

At the new casino location, when that goes in, you're going to have a steakhouse and you will have a club in there. Are there any other clubs in that area? Okay, I got at the new casino location, but I didn't get the rest. I'm sorry. At the new casino location, you're going to put in a steakhouse and you're also going to have a club of some sort. Are there any other clubs within that area?

The five clubs we own, which are about average of about 45 minutes away. Okay.

So the idea being is if somebody's on a vacation and I've got a bunch of guys and we all head up there and we're looking for something, you are the only game in town when it comes to that. Or hopefully.

I'm about the only game in town for you to eat after 11 p.m. at night up there, other than 24-7 at Monarch. I mean, this town is, it's amazing to me because it's literally the, it's a gaming town. All you can do is gamble. There's not, I mean, you can fish. In the summer, there's some things to do. But in the winter, their numbers die down. You've got the opera. You've got a lot of art galleries and stuff in Central City. But for Blackhawks, other than the new distillery area that they're opening, I just don't know a lot. And the casinos, I mean, they barely have lounge acts. I saw some ads for this summer. They're bringing in some lounge acts. I was like, wow, finally a lounge, you know, a live band of some kind, you know, something there's just, it's literally, there's no entertainment in that, in that, in that marketplace right now. That's what was so exciting to me. I was like, you know, we can take, central city and turn it into the Fremont street of Vegas with all the entertainment. And the strip is 0.9 miles away and has zero entertainment. So come 11 o'clock at night, midnight, you're on a table and you're not doing very good. You're not feeling it. You're like, well, I got to get out of here. You got two choices. You drive back to Denver or you go to bed in your hotel room. Nothing else to do out there. I'm going to give you a third option. Well, hey, let's go see the girls at Rick's or... you know, as we continue to look at properties out there and do other things, you know, we may build a nightclub out there of some kind. You know, just other things to create an entertainment zone for the thousands of people, especially Thursday, Friday, and Saturday that are out there that are gaming and, you know, just if you're winning, you want to stop and go do something else. If you're losing, you want to stop and do something else, right? So, I just want to give them those other options. And if you want a game still, you still can, which I think will be a big part of our deal. You may come to the casino to gamble and end up seeing an entertainer and ending up in VIP. You may come to see the entertainers, end up in VIP, and then decide, hey, let's go play blackjack for a while. So I think there's just going to be a lot of synergies between the two businesses. I know it hasn't been tried before, and I know I'm going to have a learning curve. But the beauty of it is both businesses are so profitable that, you know, I'm still going to be paid very, very well while I'm working through my learning curve. And that's what I see in our analysis. We said, look, the first year, let's say we only do, you know, half the money. We only do three point some odd million. And it takes us that full year to learn and get to the point where the second year we earned the $7.5 million. We're still a 50% cash on cash return on this investment. So to me, it's just a super easy. I haven't seen anything that's excited me like this since 2004 when I bought Rick's Cabaret on 33rd Street. And that was a better company deal at that time. And we've We did $6.7 million of revenue the year before, and we paid $7.6 million for a single club. And within four days of owning it, I tore it down. There was nothing left but three brick walls. And then we spent $3.8 million rebuilding it, which was an unbelievable amount of money for us at that time. But that's what created the RCI that we see today. I think this property... For a very small investment of $10 million, I have a chance of taking this company to a whole different level than where it is today.

On a different pivot, when you take over clubs over the history of, let's say, the last five years or so, when you take over the business, what's like the risk premium that you guys are able to squeeze out on average from what they were doing numbers-wise? to what you think like in, you know, a year, year and a half of you being there, you can get it up to. Is it like 15% improvement? It's 20% improvement?

Typically about 20%. I think we're 17.4 on the trailing 12 months through December 31st. I don't know if Bradley ran it in March. If he did, I didn't, I didn't see the report, but I know through December 31st, I think we were up or maybe that was through March 31st. We were up 17 or 18%. So, Yeah, I think 20% is a pretty good number for us. We tend to increase revenues and the EBITDA by about 20%.

So when you're purchasing the clubs for three to five times, it's three to five times their numbers, but then you come in and you're finding another 20% on top of that, which obviously lowers your acquisition costs. But you don't realize that until a few years later.

Yeah, typically. I mean, typically that's what we're seeing. Sometimes we see it in the first year. Sometimes we see it right away. I mean, look at Tootsies. When we bought Tootsies in 2007, we bought $18.8 million in revenue and they were doing $8.8 million in EBITDA. We paid $25 million for it. And the first year we did $23.8 million in revenue and $11.4 million in EBITDA. So sometimes it's immediate. Sometimes it takes like Denver probably would have been pretty immediate had we not been coming out of COVID and there was employees to hire and You know, we didn't lose so much to the management staff because, you know, they had just not really recovered from reopening from COVID. It had only been open four weeks in Denver when we bought it. Some of the other clubs had been open a little bit longer. But, I mean, they were in markets that all opened late for COVID. So there was a lot of issues we had to work through. So it took us almost six months to realize and see the gain there.

One last question. When you showed us the universe of the 2,200 total clubs that are out there, give or take, what percentage of them are owners that have, let's say, four or more clubs? You know, I mean, like, it's not all the individual owners, but I mean, like, you know, when you go to the industry, I've gone to a couple of these events. You know, I seem to run into people that these people own, like, six, four, five. Sometimes, you know, there's a bunch of ones and twos. But it seems a lot of the participants at these club events are usually the guys that own multiple clubs.

Yeah, at the Expo, it's definitely a lot of multi-club owners. And I think it's anywhere from two to, you know, 25 that these guys own. Of course, you've got a couple of the big boys, you know, that own lots of clubs like us. But, you know, there's not very many of those. I think only one other club owner really owns the same number, probably more clubs than we do. most of them are smaller, you know, between four and 10 clubs a day, I would say as an average. And you've got a few, like I said, they're probably up to about 25 range. So there's plenty of people out there for us to purchase clubs from as we go through. And then there's a lot of one-offs that we can do throughout time. You know, the key is running them. So we just made a major acquisition and I laugh, I say, you know, people are, are worried about bombshells. And one single location in the last acquisition does more annual EBITDA than all the bombshells combined. So it's like, why don't we focus on the important stuff, which to me, which is the clubs. And everything else is just bonus for us, bonus ways for us to come up with the money, build additional pre-cash flow. you know, put money to work while we're waiting for the next club acquisition because we have to put management teams in. We have to run them. So, you know, our director of operations for RCI Management Services is in Dallas right now. He's working on getting the new club open. He's putting the teams together, putting our POS systems in, getting our culture ingrained in the acquisition and the clubs that we acquired. And that takes time. I mean, it's a three- to six-month process. So... People say, well, can you go buy something else? I could probably go buy something else right now, but why stretch our management team? Our pace of how we've done it has increased over time because our ability to manage them has increased over time. And as our ability to manage and absorb more acquisitions increases, we'll buy more. We'll make more acquisitions. But in the meantime, it's nice to have a couple of other things to put our cash flow into and keep the – Keep the machine running. Great. Thanks.

And thank you so much for those questions. Before we bring up our next person to ask a question, I'd like to give a shout out to DKNY. My man, if you come by the shareholder reception tonight, I will teach you how to purchase sunglasses that aren't from the women's section. We also have a dunk tank waiting for you, as well as Bradley Shea, America's favorite CFO. to do an arm wrestle challenge, and if you lose, you will become a shareholder of RCI Hospitality Holdings. Next up, we're going to bring Adam Wyden, the largest individual shareholder of RCI Hospitality Holdings Inc. up. Adam, please take it away.

Can you hear me, everyone? Hello? Hello.

How we doing? Okay, perfect. So, sorry I'm a little late. I had another earnings call, and I know these go on for a while, so you'll have to catch me up. But I'm just reading through the deck a second time. On the stick housing casino, you guys talked about conservatively taking two years to get from 3.7 to 7.4. Have you guys sort of quantified? I know your slot revenue participation is less than half of Blackhawks. which is really conservative. So, I mean, if you could match Blackhawk, that's a lot more EBITDA. That's probably another four. But have you sort of talked a little bit about what the table games... I know there's also supposed to be a steakhouse there, and you're talking about digital sports betting, but also potentially in-house sports betting. I mean, it'd be nice to sort of, you know, you sort of given a bare bones estimate of what the revenue contribution, but I mean, it might be helpful to sort of give the other layers and obviously it's a new business for you. So you're not going to guide to it, but it might be helpful to sort of outline the, the sort of other buckets and how big they could be.

Well, you've outlined the buckets. I'm not making any guests on any of those other revenue sources. at this time because I just don't know. I think the steakhouse is actually part of the club revenue. So the only thing you really have that we didn't include is table games, which we have no clue on at this point. We've got some preliminary numbers. You can go to the Colorado Department of Gaming's website. You can download every casino's numbers. You can download combined casino's numbers. You can download it by city. So you guys can go look at all those things yourselves and put together models. I am not sharing my models at this time. I think it's way too premature for that for us. And as far as the sports betting goes, I mean, we know that the online sports can sell, I say sell, but basically partner with an online sports betting group or partner with a casino and those range anywhere from about 7.5 million to 10 million dollars over 10 years on a contract on a revenue share basis with a minimum minimum payments. So we're not including any of that at this time. We don't have a signed contract at this time with any other group. We have been talking with groups, negotiating with groups and I think that within 30 days after our license is issued we will have a full-time partner. Probably the data license issue will have the partner and they'll be licensed within 30 days after that. And so that'll be an immediate income as well. But I don't want to speculate on where we're going to be or what that revenue is going to be at this time. I don't need to. I mean, I just showed you that if I make zero off of all those other things, I make 50% a year for two years. And that's anticipating that I am going to be so behind the learning curve that I'm only going to do 50% of the revenue in the first year. that we anticipate – well, it's not even that we anticipate. It's that the other operations do. So I think it's a conservative number. I don't need to go out on a limb. I don't need to say we're going to make $20 million or $15 million or anything else to justify the investment. I wouldn't even be trying to justify the investment, but I have a lot of calls and a lot of people saying, why are you doing this? And I wanted to put out there why we're doing it. This is our take. This is our math. This is the way we see it happening. And if we can make 50% cash on cash returns, I mean, there's not too many investments I'm not going to invest in. When I have the certainty of an investment like this and the backup with table games and with online sports betting and actual sports book on the premises as well. I mean, we didn't include any sports betting. that I can make my 50% returns that easily.

That was sort of my point that, you know, you beat the crap out of the numbers and it's still a 50% cash on cash. So, you know, those are the best types of investments where everything goes to hell in a handbasket and you make 50%. I was just trying to, you know, lay out the other buckets for folks so they understand that if you execute on this like you've done on other things, there's a lot more outside. But that's helpful. What else?

I'll give you a little color on spots. For example, Central City is $129 a day. I think the Blackhawk average is about $200 and something a day. If you take your top casinos over there, they're running over $400 and something a day. If we can come in somewhere between $129 and $300 even, in the middle of that zone, you're talking about millions more dollars. I think there's a lot of uniqueness to our project, and I believe that with our properties in Denver, we will be able to market our properties around the country. We'll be able to market a lot of packages to not only our employees and entertainers and our guests of our existing clubs around the country, but they'll bring friends. This will become a very unique experience. very unique market, I think, for us.

Got it.

I don't know if anyone has asked about sort of M&A. I know you, you know, you've got your Digesting Birch and you did Lowry. Have you talked, you know, have you commented at all about sort of these little clubs that sort of are renovating and repurposing and sort of the ramp up of those or any of the other sort of smaller M&A opportunity and what that looks like?

Yeah, we've talked about the three properties that we have in various stages of construction right now that will probably all be open in 2024. And, you know, we talked about, I forgot what slide number it is now, but we've talked about the free cash flow generation on slide 23 that, you know, how much cash we'll have. You know, we're still looking to invest, you know, $200 million a year. We're showing where this cash is going to come from. We talked about the bank loans that we'll still be able to get on our real estate, how we have about $20 to $25 million And cash out that we can do, if interest rates drop back under 6%, we'll probably immediately cash that real estate out on new real estate loans. So, I mean, all the places are in place. We just have to continue to do what we do.

Right. Yeah. And I noticed that you updated your buyback slide for different fiscal year 24 ranges of free cash flow. Obviously, these are on the consensus numbers, I suspect, not where you think you are, but sort of gives people a sort of a band of outcomes in terms of, you know, where the buyback is. And so, you know, looking forward to hopefully seeing some of that as well. But I'll hop back into the queue.

And if I have more questions, I'll raise my hand. All right. Thanks, Adam. And I'll let Mark take over again.

Thanks so much for those questions, Adam. Next up, we're going to take it away.

Thank you, Mark. And congratulations to Eric Bradley and the RCI team for a great quarter. As a frequent customer, I wanted to ask you guys the following question. I think you have to turn off your mute there. Last question.

Is it better now? Can you guys hear me? You can hear me? I can hear him.

I wanted to ask the following question, which is what systems do you guys have in place to ensure club quality stays consistent as expansion continues to grow?

We just put our systems in. We put our culture in.

If you follow at Dean Reardon or Reardon Dean, whatever Dean's handle is on Twitter, that's our vice president of operations. He posts all the parties, how he takes the teams to lunches and dinners and I post the DJ meeting the other day where we had a big MMA star as a surprise speaker on the call. I mean, those are the things we do. We build our culture, and our culture keeps everything else in line because people want to be a part of it.

Thank you. There's a lot of people in question. Seems like Twitter's having some difficulties, guys. We're sorry. We're working on it here, but hopefully you can hear me. Like everyone who I'm hearing. So let's get that working.

And apologies for all of the technical difficulties we're having. We're going to blame Elon on this one. Now, I have a question that was submitted anonymously. And so I'd like to encourage anyone who has questions, who is listening, who would like to ask them that you can go to the form at the top of this space and type them in. They'll be relayed to me or you can DM me. This question is, Eric, what is the go-to market strategy for you guys to expand into sports betting in an already crowded sports book app market. What is the main product differentiation?

Well, the beauty for us is it's not our product. We're being paid a minimum fee to use our license in the state of Colorado. You got to remember sports betting may be credited in certain markets and other markets. It's not as crowded because you have to have a license in that state in order to take bets in that state. And currently in the state of Colorado, there are only 31 possibilities. And I don't even, I believe maybe 21 or 24. I can't remember the number, but I'm sure you can find it on the Colorado Gaming Department's website on how many of those licenses are actually, you know, are using what they call a skin. They call it skinning it. So they skin it with their thing. So like when you bet on, you know, say, you know, bet on sports, Penn Gaming's deal. You're actually betting through the Ameristar Casino in Blackhawk, Colorado. You're on their license. Everything's done through their license through the skin of BetOnSports. That gives you an idea. There's still plenty of... You talk about all those gaming companies. All those gaming companies aren't licensed in the state of Colorado. Anyone that aren't licensed should reach out to us because we have two skins at this point that should be available sometime around the first year. So, in fact, I'm going to go to a gaming convention tomorrow afternoon and market those skins as well.

And with that, we are going to be concluding our Q&A session. So, thank you so much, Eric and Bradley, on this one-year anniversary of the first-ever earnings call on Twitter Spaces. For those who joined us late, you can meet management tonight at 7 o'clock at Rick's Cabaret New York, one of RCI's top revenue-generating clubs, and also where DKNY, our favorite troll, will be participating in an arm wrestling battle with Bradley Shea and will become a shareholder tonight. Rick's is located at 50 West 33rd Street between 5th Avenue and Broadway, a little in from Herald Square. Also, the exact crime scene of where I spent $20 in ATM fees last night.

I seen you there three times, Mark.

Okay. It was 30. It was 30. All right, Eric. Rick, if you haven't RSVP'd already, you can ask for Eric Langen or me at the door. After 9 p.m., however, I will be busy implementing my own capital allocation strategy. And I'm going to pass off to Eric to say one more thing, but on behalf of all of us at the company and our subsidiaries, thank you so much. Now, Eric, with the last word.

Yeah, I just want to thank, shout out to Antonio Brown, who brought the camels and the goats to Houston to visit with me for a couple of days. And thank you, thank them personally for inviting me to their barbecue at their meet and greet. It was a great event. I had a So much fun. And I look forward to next year's meet and greet the camels in Denver, where I plan to host you guys again. And hopefully we set up some other companies for you guys to visit while you're out there. So, you know, you're not just learning about us. Thanks again for inviting me and sharing your time.

And, hey, Eric, one last thing is you said you hadn't been this excited since 2004 about the Central City opportunity, but I was just as excited when I saw Marissa Gladen and Nancy Landon's video earlier today. So I very much look forward to meeting you ladies in Dallas or Miami.

We met them in Miami. They were with us at Carlos after F1. No, you didn't.

I did.

Yeah. Great. We had a great time. We partied at Carlos until I think about 4 in the morning. So, yeah, definitely enjoyed the visit with them and look forward to hosting them again next time I'm in Miami or if they make it to Dallas, I'll try to make it up there as well. And with that, I thank everyone for your time today. Look forward to another great quarter as we move forward and hope to talk to everyone again soon. Thanks.