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spk08: Hello and welcome to those out in the crowd. We're going to let some people gather here over the next few minutes, and then we will begin this call shortly.
spk07: Great to see some familiar faces in the crowd out there from previous calls.
spk08: We're just going to give this a few more seconds as we wait for some more listeners to join, and then we will be getting this started. Looks like we can go ahead and get this started. Greetings and welcome to RCI Hospitality Holdings second quarter 2Q24 sales call. You can find the company's presentation on RCI's website. Go to the investor relations section and all of the links are at the top part of that page. Please turn with me to slide two of our presentation. I'm Mark Moran, CEO of Equity Animal. I'm the host of our call. I'm coming to you from New York City today. Eric Langen, President and CEO of RCI Hospitality Holdings, and CFO Bradley Shea are coming to you from Houston today. Please turn with me to slide three. To ask a question, you'll need to join the X space with a mobile device. To listen only, you can join the X space on a personal computer. 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. 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 I'm pleased to introduce to you Eric Langen, President and CEO of RCI Hospitality. Eric, take it away.
spk05: Thank you for joining us today. Can you please turn to slide five? There's a lot going on in the company right now. We wanted to give you a broad brush update for items that we can talk about now rather than wait until May when we report financial results. First, total sales for nightclubs and bombshells were $71.7 million for the second quarter, an increase of 1.3% or $3.9 million year-over-year increase in sales from prior years' acquisitions and new locations more than offset declines in same-store sales and clubs in transition. Nightclub sales totaled $59 million, an increase of 4.2% or $2.4 million year-over-year. This reflected increase of $7.4 million from acquisitions that are not in same-store sales. This has partially offset by declines of 5.7% or $2.9 million in same-store sales and of $2.1 million from clubs that reopened or reformatted or closed during a prior period in the second quarter. Bombshell sales totaled $12.8 million, a decline of 10.4%, $1.5 million year over year. This reflected increase of $1.2 million from three locations not in same-store sales, the Cherry Creek Food Hall in Colorado with its Bombshells Kitchen, Bombshell San Antonio, which we acquired last year, and Bombshell Stafford, which opened in November. The second quarter also reflected declines of 20.5% or $2.7 million in same-store sales. I'd like to note that Bombshells did not start making any of the previously announced management changes and marketing changes, along with our cost cutting, until around mid-February of 2024. We should see better results in the next quarter. Fiscal 24 club and restaurant sales by month. Please turn to slide six. Please note that the highest month to date for both clubs and bombshells are in March. And we continue to push forward and use our discounting, marketing, and other tools to hope to see these numbers increase as we continue to move forward. Please turn to slide seven. During and subsequent to the second quarter, we had a number of positive developments in our nightclub business. Two of our clubs recently opened, the P.T. Centerfold Gentlemen's Club in Lubbock, Texas, a new BYOB opened on the third week of March, and Baby Dolls Abilene, a reformatted liquor club, opened the first week of April. Two of our other BYOB locations, one in El Paso and one in Harlingen, are being converted into Chica's Locas, and they will both open with their liquor license when their liquor licenses are issued. Baby Dolls Quest Fort Worth should have its construction permits very soon. We're in final stages there. Scarlet Cabaret Denver, which is in Glendale, Colorado, received its liquor license to sell and serve alcohol until 4 a.m., while most of other Denver area locations have to close at 2 a.m. We are working on bringing Scarlet's hybrid nightclub adult entertainment concept to Dallas. We'll have more on that in May. And we've recently signed a letter of intent to purchase one more new club. Please turn to slide eight. We had an important development in our plan to create two casinos in Central City, Colorado. Our Ricks Cavalry Steakhouse and Casino and Bombshell Sports Casino both received their 24-hour liquor licenses from the city. We're thinking of possibly opening the Cavalry Steakhouse once construction is complete in late summer 2024 while we await approval of gaming instead of waiting for the gaming license. Bombshell's development. Please turn to slide nine. The big update here is that our next three locations, Sapphire Bay and Rowlett, Lubbock and Denver, are all at a stage in their development where they are expected to open by late summer. Rowlett being our flagship location located in Sapphire Bay and Rowlett, Texas. We put a little slide there. You can also go to the website and kind of see that development. I think that's going to be a very big location for us. Please turn to slide 10. We anticipate the closing in April of a $20 million bank loan. This is expected to be secured by nine real estate properties appraised at $31.6 million. The loan would provide us with additional funds for working capital at favorable bank rates and terms. I'm also pleased to report that during the second quarter, we repurchased 27,265 common shares for an investment of $1.53 million at an average of $56.12 per share. Year-to-date, RCI has purchased 65,219 shares for $3.6 million on average. I'm sorry, $3.6 million on average of $55.23 per share. We currently have $13 million remaining in our repurchase authorization. This concludes formal remarks, and I want to thank our loyal and dedicated teams for their hard work and effort, and all of our shareholders believe and are making this success possible. Now here's Mark.
spk08: Thank you very much, Eric. If you would like to ask a question, please raise your hand in the X space. When you finish, please mute your microphone to eliminate any background noise. We have a limited number of speaker spaces. After your question, we may move you to the back of the audience to free up space. To start things off, we'd like to take questions from Rick's analysts and then to some of its larger shareholders. First off, we'll have Scott Buck of HC Wainwright. Scott, take it away.
spk09: Hi guys, thanks for taking my questions. First one is on bombshells. Eric, I know the optics are tough looking at same store sales down 20% year over year. The changes that you made in February, when should management and investors start to see some of that recognized in the results and be able to determine whether or not these were successful or not?
spk05: Well, I think you see kind of a little bit in March, as you see, you know, our two high October and December 4.4 million in revenues. And then of course, January and February down at 4.1 and 3.9, and then March at 4.7. I'm hoping this quarter we'll continue to see improvement in that number. My personal goal right now is to get us back to $15 million per quarter or 60 million total without the three new stores. And I'd like to do that prior to those new stores opening so that Bombshells is, is operating in a much healthier place for us.
spk09: I appreciate that. That's helpful. And then on the central city properties, it sounds like construction is going on kind of, you know, the schedule that you anticipated, but you're still waiting on the casino license or gaming license. Any update that you can provide us on what to expect there in terms of timing?
spk05: No earthly idea at all. All we are being told is that at this point is that, you know, the investigation is continuing. We'll see. I know that I've seen the shortest about 15 months, which we're past that now. And there's a couple of licenses out there I think have been applied for for between two and three years. So I don't know what's going on in Colorado gaming right now. but uh definitely uh not not quick as uh as we would like of course so but uh nobody nobody has leapfrogged you right in terms of putting in an application after you and getting a license before you not that i know of at this time no they've only issued one license and it's just it was a it was actually a mini casino with 74 machines or less okay perfect
spk09: That's helpful. And then last question for me, just on the 20 million that you're kind of freeing up from the real estate, on the acquisition front, do you have deals that you are actively negotiating or is this just dry powder for, you know, if the right opportunity comes along?
spk05: Well, we have an LOI right now that we're working on putting into definitive documents. Hopefully, before May 9th, we'll have more information on that for you. And maybe even an anticipated closing date on that transaction by then. We are talking with other operators right now. We've just haven't come to terms that are agreeable for both parties at this time. So we continue to look. Having the extra cash there is good for stock buyback as well as new acquisitions. Should they come up? And of course, to build the club in Fort Worth, Texas, that'll be approximately about a three million or so outlay for the club in Fort Worth that we hope to open sometime in October or November, depending on building permits, of course.
spk09: Great. That's it for me. Appreciate all the transparency, guys. Thank you.
spk08: Yeah, no problem. Thanks a lot, Scott. Next up, we'll have Anthony of Sudoti. Anthony, please take it away.
spk02: Can you hear me?
spk05: Now I can.
spk02: Okay, thank you. Thanks for taking the question.
spk05: Can you hear me now? You're cutting in and out. I can hear you when you ask me if I can hear you, but I can't hear you any other time.
spk02: Okay. So thanks for taking the question. So first, I guess, in terms of the improvements that you have made with the marketing changes and the cost cutting that you've done at Bombshells, can you give us maybe a sense as to like the monthly progression of the same store sales? Have you seen notable improvements since you've done that? How should we think about that?
spk05: We put that on slide six for you so you can kind of see both how the clubs and bombshells did over the last six months of this quarter in revenue. I think that April will probably be a little less than March or around March if we can be successful at continuing the increase in business. And then May should be very strong for us, and we'll see how June goes. June last year is when comps just – basically disintegrated. If you'll remember, everybody, European vacations were hot. I had predicted it would happen the year before, and I was a year off. Since it didn't happen the year before, I didn't think it was really going to happen This past year in 23, but it did actually happen in 23. So we're going to get some much easier comps come June. Keep in mind that the major acquisition of the Birch Clubs, the Baby Dolls from Dallas, the Chica Locas, the brand will go into same store sales as well. and they're a huge part of our increase right now of total revenues. So that will also help nightclub same-store sales. So I think we're going to be in pretty good shape as far as same-store sales on a go-forward basis, definitely by June. And hopefully we can do well in April and May and get things back in swing there and try to close this new acquisition as quickly as possible and maybe even pick up some additional ones.
spk02: Got it. In the past few calls, you guys have talked about seeing weakness in some of the blue-collar locations. Is that still the case? Are you still seeing that divergence between the white-collar clubs versus the blue-collar locations?
spk05: I think what we're seeing, and I think we've mistaken some of it for blue-collar, is I think we're seeing the middle class that are being squeezed the most. uh and what i'm you know as i've been watching and kind of watching spin uh we're seeing that uh the high-end spend is is is getting more reserved uh I think people start to feel like they're showing off again, similar to, uh, to 2009 when everybody started cutting back. I think we're seeing some of that right now, but I think that middle-class customer is very, very squeezed. And the example of that is, you know, everybody's making minimum wage. So you're very low in blue collar workers, uh, your seven to $10 an hour employees that were, you know, basically hitting our, our blue collar clubs once or twice a week. Uh, Their pay's doubled, right? They've gone to $15 to $20 an hour now. Of course, some of their costs have increased as well, but they're not as hurt as that middle-class guy who was already making $20 to $25 an hour. And instead of getting bumped up to $40 to $50 an hour, he's been bumped to $27 or $29 or whatever. you know, and so on and so forth. As you move up, the percentage has become less, but yet their food costs have increased, their energy costs have increased. So, and of course, interest costs have increased. So I think we're dealing with some of that right now as well. Overall, I think we just have to continue to push specials on slower days. I've said in calls a while back that once we really saw it hitting us the hardest, we would see good weekends and slow Mondays and Wednesdays. we have come upon that our mondays and wednesdays are being affected we're now doing discounting on those days uh you can see some of the bombshell specials uh if you're on x uh you know we i tend to post them out quite a bit our monday madness our thursday lingerie nights the specials we put in place there uh and we're starting to you know see traffic count increases uh from those specials so i think overall it's just a matter of time till uh You know, things kind of stabilize. And as we push through our specials, we're seeing a lot of restaurants closing in Texas, especially right now, Houston and Dallas areas. So as that happens, I think, you know, the spread of customer base will be in less stores, which should help our stores as well.
spk02: Gotcha. Okay. So in terms of the specials that are driving the traffic, so are you actually seeing increases in traffic on a year-over-year basis as a result of that, or is it just you're seeing less of a decline?
spk05: I think we're seeing less of a decline. I don't think we're seeing the increase yet. I don't think that happens until June. June is when the customer counts really fell off due to summer vacation that year, and I I don't believe everybody's going to Europe this year, uh, based on, you know, personal, uh, friends and acquaintances that I talked to on a regular basis. Uh, you know, I think 70% went to Europe or, uh, you know, Caribbean, South America last year. And I think this year is less than 15% of people I talked to saying they're going anywhere. Oh, we're staying home this summer. We're staying home this summer is what I'm hearing from a lot of them.
spk02: Understood. Okay. Well, thanks and best of luck.
spk08: Thank you very much, Anthony. Hey, Eric, while I'm bringing up Scott, can you please re-add me and the Equity Animal Accounts as co-hosts?
spk07: Oh, yeah.
spk08: Perfect. And Rob. No worries. Rob, you're up. Take it away.
spk00: Thanks, Mark. Eric, just in terms of, you're talking more about a cost reduction program. You discussed a little on the last call as well. Can you kind of give us some additional color on that initiative?
spk05: I'm much more familiar with it on the bombshell side than I am on the club side, though I know the club's making changes as well. But I can tell you on the bombshell side, we've gone from having two sheriff's deputies on slower nights to either one or going to private security at a much reduced rate. Nights, we've had four managers. We're cutting back down to three managers. We're basically just running leaner. as well as trying to eliminate any unnecessary marketing or unnecessary expenses. you know, stuff like that. And it's, it's, it's, we'll, we'll see some in March, I think, but obviously we, you know, we had seven weeks before we really started making a lot of those changes. And then it took us, you know, time to implement those changes and get them all in place. So I think the real cost cutting will be seen in April, April to June quarter. But we'll see, we'll see a little bit of it in this, in this second quarter as well.
spk00: Thank you for that. And then, With regards to other club owners realizing that they're not really able to sell at peak 2022 EBITDA, can you expand on what that environment is today? Clearly you've made some progress with that LOI, acquiring the one club.
spk05: Yeah, I mean, we've been talking with this group off and on for about three years. We've just basically said, look, this is what we're paying now. I don't think anybody else out there is paying more. uh, or, or, or, or lesser. I mean, there's probably some paying the same. I think we just have the better track record, uh, especially with some of the owner finance parts of our transactions. And, uh, I, I think that, you know, at some point we're going to see, uh, people quit holding out for those high numbers and, and, and thinking they're going to sell based on their 2022 numbers. Uh, and that was, that's been the real problem is everybody thought, you know, well, I did so well in 22, 23 is just a off year and it's going to come back. And, I think people are realizing that it's not just coming back as easy as they kind of thought it would, or definitely not as quickly. It may come back, but it's not going to come back as quickly in this current interest rate environment. And of course, no free government money like there was in 21, 22.
spk00: Sure. And then shifting gears to AdmireMe, can you kind of discuss – your progress with your new partner and kind of what, what we might see next.
spk05: Yeah. Admire me is kind of done. Uh, we're not spending any money on it at this point. Uh, the new partner is going to launch the new site. We hope, uh, uh, in this, in the, in this quarter, uh, April, May, June quarter, uh, we are in the process of setting up the banking relationships for that, uh, website right now. Uh, there are some, there's, there's some basic stuff up right now that we've been, uh, able to beta test ourselves internally. We'll probably, I'm hoping start, as soon as the banking is up, we'll start opening up some public beta testing as well as putting a few of the entertainers on the site. I can tell you that from the little bit of looks and what I've done with the site, I've looked at the site so far, the new site's already better than our existing site. So it was definitely a good choice to basically cut that off by trying to create the wheel. and go with a company that's got a similar product out there right now that they're reskinning and putting together. We'll own 75% of it at this point. We may bring in another couple of club operators and give them a percentage of ownership as well just to grow the site because obviously the bigger the site is and the more creators and stuff we can put onto the site and more marketing we can do for the site, I'd rather have a smaller piece of a bigger pie than have a whole pie that's too small. So that's kind of where we're at right now. Hopefully May 9th, I'll have some more information for you. Hopefully I can get banked and set up in the next 30 days and then maybe we can set up some beta testing
spk00: Terrific. And then just last question. Can you talk to us about the Scarlett's hybrid nightclub model and how that differs from your other clubs and just in general?
spk05: Well, I mean, Scarlett's caters to typically a younger customer. It's a later hours club. We operate later hours than normal. Typically, I'd say the average age is probably closer to 27 to 30 versus our typical gentleman's club where the average age is probably closer to 40. It's a dance club, so it's a lot like a dance club. There's a sound and lighting, video, audio equipment is hugely upgraded compared to a typical strip club. There's places to stand because a lot of people don't, they want to stand or or, you know, stand, dance around more than sitting in a chair for a couple hours like a typical gentleman's club. And like I say, I think it's just a younger crowd, more of a party. uh, atmosphere. Uh, and, and we're doing very well with it. Uh, the Denver location is doing very well. We just got the 4am liquor out there, uh, which is going to make a huge difference in that market. Uh, you know, I would say, you know, guys, my age, uh, I don't stay out till four o'clock in the morning very often. Uh, whereas my, you know, my son might stay out till three, four, five o'clock in the morning. Uh, you know, three nights a week. So just a different party vibe than a typical club would be.
spk00: But that's it for me. Thank you so much.
spk08: Thanks very much, Rob. Eric, I don't know. I think you stay out three, four, pretty late from what I've seen. Next up, we have Orchid Wealth. Orchid Wealth, please take it away. Hey, Orchid Wealth. I think you muted.
spk07: Yeah. Well, then let's bring up.
spk04: There we go.
spk07: Perfect.
spk04: How many clubs did you guys have open for the past quarter? How many will come on in the next three months? And then how many in the three months after that? What's the number looking like?
spk08: Hey, Eric, you're on mute.
spk05: Oh, shoot. How'd that happen? I was unmuted, then it muted me. This thing's going crazy today. I think about 59 locations open right now. I think that's what I remember reading a minute ago. The only location that is not open right now, other than the new Fort Worth Club, which has not even started construction, is the El Paso Club. We're waiting on the liquor license on that. It will reopen. Lubbock and Abilene both reopened in this quarter. And, of course, the Central City location, if we decide to open that as just a club and steakhouse for right now while we await gaming. So there's basically three more locations that could open. And then, of course, one location that will be converted from a BYOB club in Harlingen, Texas, into a Chica's Locust location. So that's what's coming right now. And, of course, the new acquisition. Get that closed. That'll be added as well.
spk04: Great. Okay. And with any of the new acquisitions that are out there, obviously the point is these people are finally realizing that they can't ask for their five times earnings or whatever the number was from these inflated numbers from a year or so ago.
spk05: Yeah, I mean, we have to either use some type of average or a run rate. So it's been a little more difficult because nobody knew what their run rate was going to be. Now that 23 is over, so we have a 22 and a 23 comparison. We're four months into calendar 24, you know, three months into it anyway, into the fourth month. So, yeah, I think people are starting to get more realistic. And we've looked at about five locations in the last – I don't know, five, six weeks. We have a couple of other ones we've considered LOIs on, but can't get that final... Just can't get everything to work properly for us, whether it's interest rates or the final purchase price, the value for the real estate. There's different things in each one. But I don't think that anybody else is buying any of these clubs right now either. So... Uh, we're just kind of, you know, in a whole pattern, uh, we're, we're kind of holding, this is what we'll pay for it. This is what it's worth to us. Uh, and if it's worth more than that to somebody else, then, then by all means sell to them. And, uh, if you think it's worth more to you than, than what we can pay, then, uh, then, then hold on to it. Uh, that's what you think is best. It's kind of our, it's kind of our outlook on it. Uh, like I said, we're not in a hurry. Uh, We're patient investors. We'll patiently take the acquisition as it comes.
spk04: All right, great. Thanks.
spk08: Fantastic. Thank you for the questions. Next up, we have Johnny. Johnny, please take it away.
spk07: Hey, Johnny, I think you're on mute.
spk08: While Johnny is attempting to connect, I'm going to bring Adam Wyden up. Adam, please take it away once you're ready. Looks like Adam is still connecting. So we'll give that a second.
spk06: Can you guys hear me? Yes, we can. All right, great. So a couple questions here. I know that you consummated the Birch Club, I think, towards the end of March. So is it fair to assume that – I know that Birch is – Eric mentioned that Birch is comping really well, and obviously you've got some of those Birch Clubs getting renovated and coming back online. I mean, is it fair to assume that – basically in the second, in the, in the, in the next quarter sequential. So the quarter ended June, you're going to have what you would call the Birch clubs that are copping positively enter into the cop base that would, uh, help sort of your strip club cop numbers in the, the following quarter. Is that, is that a fair assumption? Am I getting the timing right there?
spk05: I believe that's the case. Uh, I know the big effect will be in June. Uh, But I think April, I mean, we're only seven days in, so it's very difficult. to really say, or eight days in, I guess, counting yesterday.
spk06: But Birch wasn't in the same store sales for the quarter end on March 31st, and those clubs are doing what?
spk05: And those clubs are doing well, correct? They're doing very well. I mean, one of the examples, we're doing about $275. We're doing close to $350 at that location now. A couple of the other locations are up anywhere from $20,000 to $40,000 a week as well. So, yeah, they're going to be very good for us as far as comps go. And I think that, you know, we're getting to the bottom of Miami, I hope. Most of our decline is very regional right now. We have two clubs in New York, which, you know, I consider our younger clubs where the, you know, the 25 to 35 year olds go, which is that big middle class that I was talking about, I think is getting squeezed the most because those two clubs are affected. But Rick's location is, It is doing very well in New York. Of course, Minnesota is huge on decline, even down from 2019 due to, you know, COVID, the George Floyd thing. And just has crime has just gotten out of control in Minneapolis at the moment. So in the downtown area. And it's, you know, the people in the suburbs are scared to come downtown, which is hurting our business. I think their convention schedule has been lacking as well because of that. So that's part of the decline. And then, of course, you know, Miami and Florida, where in 2022, you know, Tootsie's did almost 40 million in revenue versus the highest year ever in 19 was like 26.8%. We did 33 or almost 34 million, I think, in 23. So we'll see where we're at. We're declining a little bit off that. I think we steady out. I think that's going to steady out at about 10% down at around 30 million a year run rate. It could be a little higher depending on if crypto stays hot. That can bring some of that back. But I think we're going to be in that range, that 30, 33 million range in 2023. in Miami now is going to be, I think, a real run rate for Tootsies, and the other clubs are off about the same amount. Scarlet's maybe not so much, but Cheetahs, which is, again, you know, upper blue collar, lower end white collar type location is being affected. But overall, I think this should be the bottom. I think definitely by June, if we do worse this June than last June, then And we're going to have to really make some changes, fundamental changes, not just price-raising and cost-cutting. But I don't see that happening at all. Like I said, I don't think everybody's going on European vacations this year. I don't think that the bottom is going to fall out in June. I think it's just going to kind of be a return to norm for a typical summer for us. I'm excited about getting to that point.
spk06: Well, and on the nightclubs, it sounds like, you know, if you go back and you look, you know, we've had this conversation, I think offline, but I think what you would say is that, you know, look, if you look at how the business performed in 08, 09, the clubs, I think, you know, peak to trough were down, you know, somewhere between three and 5%. And, and, your argument is, is that, well, you know, you were, you were copying off of a higher base. And so I guess what, what you would say is, you know, if you basically had really big numbers in 22, 23, you were down, you know, off of that high base, but you know, you, Is it sort of fair to assume that you're not that – this isn't a business that should see additional comp declines? If anything, I think you would say that you're putting Birch into the comp base in June, which should be positive, and some of the renovations and remodels and some of the stuff that you've done with these clubs, part of your construction phase – I mean, I think that those would enter into the comp base sort of reinvigorated. I mean, if anything, I would think that you would think that there's probably tailwinds from the, from a cop perspective with Birch coming in and sort of the new clubs that are being renovated effectively coming into the comp base. Is that, is that a fair assumption?
spk05: You know, I'm, I think April is going to be our toughest comp may get a little easier and June becomes extremely easy. That's, that's what I think. And yeah, Depending on the next three weeks of April, we'll tell us a lot. Baseball started back up. The Rangers are doing great, which is helping our Arlington club and Fort Worth area clubs, as well as the bombshells in Arlington. So there's just a lot of positive things going on. The Mavericks are going to make the playoffs. That'll definitely help the two clubs and the Dallas bombshells in that market. You know, we've got, you know, sports helping us in New York with the Knicks doing well this year. I think we've got a lot of right things going for us. And we just got to adjust to the new to the new environment.
spk06: So this is my last question. Can you – for sort of simplicity standpoint, can you try and summarize sort of what you would sort of classify as the inorganic opportunity going forward? And I'm not – obviously you've got this M&A and it would be nice to sort of talk about that. But like we've talked a lot about sort of going through this sort of the rebuilding or construction phase. Can you talk a little bit about timing? I think you've said sort of –
spk05: I do not want to be dealing with going into 2025. I don't want to build anything if I can keep from it. I don't want to remodel anything.
spk06: So basically you have your capital plans through November, you know, and then sort of forward looking cash is going to M&A and buyback. But can you sort of help enumerate for folks like sort of, you know, how much revenue? I mean, obviously people can have their own sort of speculation around what margins are and whatnot. But I mean, sort of give people a sense of the quantum of revenue that will come from assets that are not online right now. I mean, maybe you can go through, you know, I know you did in the presentation, but it's sort of hard to follow. I mean, maybe just sort of give people a quantum of sort of how much revenue is sort of in the ground, but not sort of turned on yet.
spk05: Yeah, I mean, it's hard to say with the three bombshells we have. If we just do an average opening, you know, they'll add $18 million in 2025, I think. for the three new stores at six million a unit. But I really think that the Rowlett unit could be a 10 million plus unit. And I think six million is low for Lubbock. And I think six million is going to be low for for downtown Denver. But if you just use those numbers, it's 18. You know, the baby dolls in Fort Worth should somewhere between, you know, six, eight million dollars a year could be as high as 10. It's a great location over there. We know what what other businesses in that area have done. in the past. And we had a business in that area in the past as well. Uh, and we know it did be, you know, until the freeway construction forced us to sell it, uh, during 2017, when I was just selling off any asset that wasn't, uh, if I could get more money from and get a higher return from under our capital location strategy, then, uh, What else do we got? The new chicas, you know, those clubs or BYOB clubs doing about a million a year in sales as chicas. They should do between three and four million. So let's say they do average three and a half, seven million for the two new chicas. 18 to 25, you're up to 30 something. Yeah, that's Harlem to El Paso. You know, the central city location, I have no real idea. idea of what it's going to do. But, uh, I think overall, you're probably looking at additional, uh, 35 to $40 million in revenues added to, uh, you know, our current run rate, which should be right around 300 million.
spk06: So, uh, And that doesn't include the casino and that doesn't, it doesn't include the casinos and it doesn't include this, this, this M and a target that you basically have under LOI plus, plus any future or anything else. Correct. Yes.
spk05: so you know basically somewhere between three around 335 million uh run rate for for 2025 uh all things staying equal basically uh if we get any little bounce back in same store sales all of a sudden we bounce same store sales four percent uh you know four percent of 300 million is another 12 million dollars we could pick up real easily uh so There is, you know, obviously a lot of potential out there right now. And I'm just hoping, like I said, that, you know, this is, we found the bottom in this last quarter. March came back pretty strong. I know there were extra weekend in that month, as some people will point out, but the extra weekend was not the, it was Easter weekend. So it wasn't like a full-fledged weekend. Uh, it was like really more like having an extra, uh, Tuesday, Wednesday, Thursday in the month. Uh, but it's still, or maybe, maybe Wednesday, Thursday, Friday. Uh, but it was still, it was a strong month. Overall sales early in the month, uh, uh, were, were decent, uh, and, and only increased once the, uh, NCAA basketball tournament started. Uh, and then baseball kicked in, uh, The end of the NBA season, regular season, those last games became important, especially to several teams in our markets. We look forward to Denver being in the finals, Dallas. I don't know if the Knicks made the finals or not. I need to look. I haven't even been following that closely. But those teams will, anytime a sports team is strong in one of our markets, it helps our sales. Got it.
spk06: And if construction is done by November, is it fair to assume that you would be active on the buyback and the M&A and all that stuff from there? I mean, where you are right now based on all the stuff that's coming online and a reasonable margin. I mean, our sales numbers are a little bit higher than yours based on what's out of commission. But I mean, even if you were just to take the $350 million in sales and take a reasonable margin, I mean –
spk05: basically having everything online i mean 25 should be a much better year for us you remember we've got a lot of drag right now too we're carrying nine properties uh we have ongoing construction on on all but two of those properties right now and the two of those properties construction is going to start better start the next two weeks because i i i want to be done with construction uh you know i've never dealt in a time frame and i don't know if anybody else out there is is in construction business right now but It's never taken me seven months or eight months to get a remodeling permit. I used to be able to get a remodeling permit in six weeks, not six months. It's very frustrating. And I think it's part of the core problem with the economy that's going to be coming. And why I'm a little concerned is that small business operators, construction, housing starts, all this stuff are going to be very difficult if you can't get permits to do them. Uh, and that's, you know, it's, it's, it's definitely slowing down our progress because, you know, some of these locations were supposed to be opening. There's going to open in, in June, July, and August. We're supposed to open in March, April, and May. Uh, and you know, they've all been pushed three to four months and all of those pushes have been because we've been waiting on, you know, some form of government to approve us doing, doing the work. I made a joke the other day. I said, I sure miss the 90s when you just built it. And they came in and said, you weren't supposed to build this. And you asked for forgiveness instead of permission. It was so much easier. But in this day and age, you can't do that, especially a company our size. So we're pushing through. We're getting our permissions. We have permissions on all but, I think, two locations now. uh or maybe it's maybe three i don't think the bombshells casino properties uh building permits not approved so we have three left that we need building permits on everything else is in various you know phases of that construction we'll start seeing some of those completed starting in june and we'll be open june july august september and i think hopefully the final uh the baby dolls location can get open in october uh november at the absolute latest and then And then we should be done with construction for, I think I'll be done for at least a little while, six months for sure before I even start thinking about it. And then once you start thinking about it, it takes a year to start. So 18 months before we start really looking at building anything new again, I think.
spk06: So a lot of cash for buyback and M&A.
spk05: That's the plan. M&A is what we're looking at. I think it's going to heat up. I mean, we're seeing it heat up right now. Like I said, in the last six weeks, we probably looked at five or six different locations. Some, you know, one too small for us, a couple too pricey right now, but we've made offers. We're waiting for the owners to you know, to go out and shop it. They'll shop our offer. What we do, the process is they call us first. We make an offer. They call everybody else and say, Hey, we want to sell it for this amount, which is usually more than our offer. Uh, they can't get any bites. Uh, and then they come back to us and, and, and negotiate, uh, you know, a fair, fair sale price. So, uh, I'm, I'm hopeful that, uh, that at least two, two more of our offers will, uh,
spk06: we'll we'll get some traction here over the next uh between now and may we've got you know 30 days till earnings come out so hopefully we'll have some some better news or some more news at least by uh by the 9th of may right well you you bought i guess between laurie cheetah playmate and birch you did a good amount of m&a and then it basically turned off for a year and a half so you know it it obviously goes in fits and starts but you know after a a fit usually gets a start. So you guys have shown.
spk05: We should be setting on between 22 and 25 million in cash. Uh, after we closed this loan, uh, we, we wanted to close by Friday, but we had two surveys issues that had to be fixed with the title company. Uh, one of the two is fixed. We're waiting on the final on the other and we're waiting for a, uh, a confirmation, a zoning confirmation, and I believe a final sign-off of all the documents by the bank itself, and then we'll get that closed pretty quick. So we should definitely have that loan closed by May 9th. Unless something unforeseen pops up, we should have that closed by May 9th. So we'll have that cash sitting there. We should have, hopefully, definitive documents before the earnings call on this current LOI. And maybe we have another LOI or two by then as well. I know that's where the majority of my time right now, I hired somebody full time to work on these building permits and to basically monitor all of the construction because I've just been fed up with it. So I think I hired somebody who can do that for a living, basically. It was basically a full-time job for me, and I had to free my time up to get focused on stuff that was going to be more beneficial for the company, especially with taking on trying to fix the bombshells and possibly still bring in a partner or sell bombshells as well. That is not off the table. We are still talking with groups. We actually got a written offer that was ridiculous and we said no. So, which I expected, you know, usually the bottom feeders come in first. And that's, that's what we've, that's what we've seen. We've dealt with them. And now we've got a couple of, I think, real, real buyers or real partners, possible partners in bombshells for us going forward. Yeah. Uh, one would be an operating partner, which would be very happy to, uh, to maybe do something with, uh, if we can agree on value, you know, the, probably the problem with everything right now is, is green on value. Uh, nobody wants to sell at their lowest, you know, bombshells get the lowest numbers ever in 2023. We're not going to sell based on, on that low value. We'll go fix it first. Uh, let it, you know, let it get back to a normalized, uh, run rate, uh, get, get some of the expenses that we. added in 21 and 22 when we were doing huge numbers as long as security and management and, you know, some of the buildup that we did, uh, and put, return ourselves back to a more normal operating deal, get us, uh, you know, maybe that number's eight or 9 million annualized instead of, instead of 12 or 14, but, uh, it's definitely better than, than four or five. Uh, and so we've got to figure out what that number is. Then we can value that value properly and work with the group to, uh, you know, to, to monetize it for shareholders.
spk06: Yeah. Well, the nice thing about having permits being hard and cost being up is it's harder for your competition to build more stuff. I mean, like if you look at Rowlett in Denver, like, you know, it's not easy for people to, I mean, Denver, there's no other real estate and it's going to take a, you know, it might take two or three years for someone to build a Twin Peaks in downtown Denver or build one in Rowlett. So at least the locations that you have going up are, do not have any competition nearby. And given what the costs are for debt for construction and permitting, at least the stuff that you have opening, you know, won't have competition for some period of time. So, you know, the, one of the benefits is that, you know, it's hard for competition to come in if they can't get the financing and they can't get the land and it's expensive to build it.
spk05: So, you know, maybe there's pluses and minus to all of this, you know, it's just, it's painful for a little while. And then, you know, you get to reap the rewards from it, which I think we're, we're very close to, uh, you know, the end of June is not too far away. Uh, so next, you know, 10, 11 weeks, we, we start opening locations and this pop, these locations open one after another for, about a five month period and be ready to, uh, to enjoy some, uh, time. I think of just operating normally. Good.
spk06: All right. Well, I hope you can get some stock.
spk05: Get back to what I love. You know, I love, I love operations. Uh, you know, I love, I love acquisitions. Uh, I've always hated construction, but, uh, it seemed to be one of those things where we just, you know, those were the best opportunities. Uh, at the time we started doing these deals, uh, interest rates were so cheap and, uh, most of our interest rates are locked for, you know, pretty, pretty fair, you know, amount of time. And so we've got plenty of time to, uh, figure it all out and, uh, move forward. And like I said, just keep, uh, keep doing what we do, buy back stock, buy more clubs and, uh, you know, figure out what we're doing with bombshells and, and launch the, uh, Lost the new website. So got plenty coming up in the next six months.
spk06: That's it for me.
spk08: Thank you. Fantastic. Thanks so much, Adam. We appreciate it. Next up and for our last questionnaire, we'll have Value Hunter. Value Hunter, can you please come up?
spk03: Yes. Hi, guys. Thank you so much. Thank you so much for taking my question. So I'll just follow up again on the buyback using the numbers that Adam was saying. So let's call it 340 to 350 in top line. That used to get us a 60 to 75 million dollar yearly free cash flow. And I just think buybacks really haven't been that strong, given where the share price is. And I understand all the costs related with construction and everything. But any way to think about it or anything that we could do to increase it? That's it. Thank you.
spk05: I mean, basically, when it comes to our own stock, we've been bottom feeders. I'll be honest about it. Yes, we probably buy it higher than we've been buying. We probably bought between... I think we had a high of 57.25 as a buy price for our buyback. We bought slowly. The stock's held up actually pretty well. I was trying to close this loan earlier in case the stock dips below 50. I would like to buy the remaining shares, get us under 9 million shares outstanding again. If the stock dips that low, we will be pretty heavy buyers, I think, if it goes under 50 to buy back at least a couple hundred thousand shares that we still need to buy. We'll be setting, I guess, I think once those loans close, we're somewhere between 42 and 45 million in cash. We're loving switching to a bank loan. Rowlett is already on the bank loan. We've got some money to put out in Denver still and in Central City. But we don't really have the huge amounts of cash that we're going out. I think we were going probably around two and a half to three million dollars a month in cash going out for construction with everything we had going on. I think that number is going to come down considerably, especially come June. It'll definitely come down considerably because these bombshells will We'll hopefully all be operating. So that will make a big difference. The only thing we'd have left is the casino, which should be done at the construction. It's supposed to be done on June 30th on the Ricks property out there in Central City. So we've got that cash going out. We just had huge outlays for the air conditioning and other construction projects. stuff out there, electricians, all that. But most of those outlays are out. I think there's a couple million out there, a million in Denver downtown, 3 million on the other deal. So maybe another 6 million or so. So that's going to really free up our cash flow, whether we want to buy back stock or make acquisitions. And with the cash we have on hand, we have plenty of cash on hand. Basically, we'll have all the money we need to do to do the acquisition that we've currently got planned and all the rest of the construction without touching any future cash flows. So basically, we could pile all future cash flows in the stock buyback if that became necessary. And that's really what I've been trying to line ourselves up with. I really appreciate our shareholders' patience with us on bombshells. I know everybody's not extremely happy about the way it's gone. I'm not extremely happy with it myself. But we are making the changes. We are seeing the results of those changes. And hopefully the next quarter we'll tell a different tale than the last two have for us.
spk03: Eric, just a quick follow-up. Can you comment a little bit more on the changes? Like, what are they? Like, are you focusing more on liquor now versus food? Are you making it more of a roundier place? I think what happened... Timing or music? What is it?
spk05: It's a little bit of everything. I think what really happened is the team, the current team that we had there or the team we had there in February, A, got complacent. You know, it had been so easy for them for two years. And we really, you know, I was busy with... uh, Colorado with, you know, with the construction stuff, uh, Ed's been busy with the new acquisition, uh, and, and getting those clubs up and running, uh, that we just kind of left them on autopilot and, uh, You know, they weren't ready to be self-driving yet. And so we've taken back control around mid-February. We made some pretty significant changes in the first two weeks, or I should say the first two weeks we were there, last two weeks of February. We've kind of been watching those changes and pushing through that through April. We're having another meeting next week. Next Thursday in Houston, Ed's coming to town. I'm going to be here. We're bringing in all of the regionals and GMs. We're going to have basically come to Jesus Talk and probably make a few more changes from things that just aren't getting the way we want them right now. And we'll push through that and hopefully have a very good report for you on May 9th and definitely at the revenue numbers in early July. So that's the plan. We're going to stick to it. We're going to keep pushing. We've got to get this construction done. We've got to get these locations open and, you know, get back to acquisitions, which, you know, we've been looking at a lot of acquisitions right now over the last six weeks. So hopefully we'll see a few more.
spk08: Thank you so much, Value Hunter. And for our last person, we're going to bring up Johnny Shen. We tried to connect earlier. Let's see if it works this time.
spk01: Yeah, sorry about that, man. Perfect. Yep. Excellent. Happy Ayat Al-Fatih to all who celebrate. If you're breaking fast at one of the clubs today, I might find you. I've got just a quick question. Actually, I was going to ask about bombshells, but that last bit was really good. I think that we've kind of troughed and things should be looking good. If I remember on the Q1 presentation, you had the free cash flow. Hey, Johnny. He's cutting out on my side. Did y'all hear him?
spk08: Yeah. Hey, Johnny, we can't really hear anything that you're saying. It's cutting in and out. Yeah, it sounds like a computer underwater. Yeah. Hey, Johnny, I think given the technical difficulties, we're going to end it now. So I wanted to thank Eric, Bradley, everyone who came up and asked questions. On behalf of ourselves, the company, and our subsidiaries, thank you and have a good night. As always, please visit one of our clubs or restaurants and have a great time.
spk05: Johnny, if you want to email myself or Gary, we can answer some of your questions. as well as anybody else. All right. Thank you everybody for with us tonight. Appreciate it.
spk08: Thanks so much, Eric.
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