RICK - RCI Hospitality Holdings Inc. (RICK) Q2 2023 Earnings Call Transcript

2023-05-10 22:02:06 ET

RCI Hospitality Holdings, Inc. (RICK)

Q2 2023 Earnings Conference Call

May 10, 2023 04:30 PM ET

Company Participants

Mark Moran - Chief Executive Officer, Equity Animal

Eric Langan - President & Chief Executive Officer

Bradley Chhay - Chief Financial Officer

Conference Call Participants

Scott Buck - H.C. Wainwright

Anthony Lebiedzinski - Sidoti

Lynne Collier - Water Tower Research

Rob McGuire - Granite Research

Joe Gomes - Noble Capital Markets

Adam Wyden - Individual Shareholder

Presentation

Operator

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 2 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 Langan, President and CEO of RCI Hospitality; and Bradley, the human calculator [indiscernible], the Chief Financial Officer.

Please turn with me to Slide 3. If you aren't doing so already, it is easy to participate in the call on Twitter Spaces. On Twitter, go to @RicksCEO and select the space titled RCI Hospitality Holdings, Inc. 2Q23 Earnings Call. Apologies for the technical difficulties here. 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 4. 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 5. I'd also direct you to the explanation of Rick's 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 Rick's Cabaret New York, one of RCI's top revenue-generating clubs. Rick's is located at 50 West 33rd between 5th Avenue and Broadway, a little in from Herald Square. If you haven't RSVP, ask form me or Eric at the door.

And now I'm pleased to introduce Eric Langan, President and CEO of RCI Hospitality. Eric, take it away.

Eric Langan

Thanks, Mark. Thanks everyone for joining us today. Please turn to Page 6 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%. [Technical Difficulty] 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. And here's Bradley to review the financials.

Bradley Chhay

Thanks, Eric, and good afternoon, everybody. Looking at some of the other major numbers in the quarter, EPS was $0.83, this reflects some nonrecurring items. On a non-GAAP basis, EPS was a $1.30, up 9.2% year-over-year. On a -- non-cash from operating activities 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-Chicas 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 Nightclubs 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 include primarily a legal settlement expense and an impairment. Compared to the first quarter from fiscal 2023, revenues increased by 1.3%, driven primarily by acquisitions, while non-GAAP operating margin declined 1.1 percentage points. That reflects the fact that we had two weeks of the Baby Dolls-Chichas Locas acquisition, which did not allow enough time for full optimization.

Please turn to Page 9 to review the Bombshells segment. I only have three things to say here. Number one, results improved sequentially, revenues increased 6.6% driven mainly by the acquisition of Bombshells San Antonio and the Grange Food Hall with this 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 their results. And lastly, number three, [indiscernible] 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 a 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 reflects the 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 Hall 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 1 percentage basis point from the first quarter. Interest expense was higher year-over-year [Technical Difficulty] but quarter-over-quarter. Second quarter 2023 include initial cost of new debt at [Technical Difficulty].

Please turn to Page 11. [Technical Difficulty] 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 or in line with our 20% and 30% targets respectively, as a percentage of revenue.

To wrap up 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 [Technical Difficulty] to review our debt metrics. Net of loan costs [Technical Difficulty] ($45.8) (ph) 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-Chicas Locas 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 debt -- our cash flow -- higher level of cash flow.

Please turn to Page 15 to review some of our other debt related metrics. [Technical Difficulty] as of March 31st below are comfort level of around three. Please note that this reflects our new debt related to Baby Dolls-Chicas Locas acquisition, but only two weeks of contribution. Occupancy cost was 7.6% of revenues. This continues to be well within the 6% to 9% range we've averaged when sales were 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-Chicas Locas acquisition that was also secured.

Now, let me turn the call over back to Eric.

Eric Langan

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 the underlying thinking to where we're 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 disclaim any obligation to update 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 [Technical Difficulty] point between whether we should buy shares or invest in buying or opening new locations. Using a possible range of $68 million to $78 million for fiscal 2024 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 investment.

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 Baby Dolls-Chicas 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 million to $16 million in adjusted EBITDA. We assume conservatively we go from $11 million in year one to midpoint $13 million in year two and $15 million in year three, that total $39 million would represent [Technical Difficulty] 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. Excluding the casino, a similar-sized RCI club generates between $8 million and $10 million of revenue. Slot 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 will generate $7.4 million operating profit. 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 revenues.

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, so total 56 clubs, which represent only a small portion of the market we want to consolidate. As our company expanded 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 [indiscernible]. 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 both -- that can help us 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 Page -- Slide 23, I'm sorry. We believe we have the cash to do this. Let's take a -- let's look at what happened in the second quarter, at December 31st, we had $34.1 million, we made an acquisition of $7.1 million in net new cash and we made an additional $7.1 million in net new cash and we used $18.4 million in cash, primarily for the Baby Dolls-Chicas Locas acquisitions, ending the quarter with [Technical Difficulty] in cash. Now, let's look at what could happen in the next fiscal year. Using the range of $68 million to $78 million in free cash flow, that's $21.7 million in debt maturities gives us with a range of $46 million 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 of shares at an average price of $65.71 to provide $46 million of capital for acquisitions. From our viewpoint, we use shares that we bought at an average of $19.55 and sold them for $65.71 or at 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 [indiscernible] we'll be holding our 30th Anniversary Gentlemen's Club Expo Convention, August 20th to 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. We can't do it without now here's Mark to start the Q&A

Question-and-Answer Session

A - Mark Moran

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 [Operator Instructions]

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 JPMorgan, 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.

Scott Buck

Good afternoon and 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?

Eric Langan

Typically, there times it's 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 perhaps, but for all new licensees, but I think there -- I believe there are 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 its cash on 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 development -- department and so hopefully the new people are coming in are going to hopefully speed this process up little bit. We would like to -- definitely like to see in our license issued by the end of the year, we'd like to do a grand opening as the 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.

Scott Buck

Understood and thank you for that. And I'm just curious if you could give us an update on what you're seeing in the clubs, just given the current environment, I know in the past couple of quarters, there had been some weakness, a few of the blue collar clubs, but 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.

Eric Langan

Yes, I mean I think right now it's just inconsistencies, 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 location gets down a little bit, we make some adjustments and then we have another location that's down a little bit, we make some adjustments, and it goes well. So it's just a constant right now, it's like a shell game, where we're just kind of moving parts around the moving pieces around and just overall shooting for a set number each week. And if we're hitting that number, we're looking -- like I said, we look for the weak spots and the strong spots and we focus on those and everybody else is just kind of water right now.

Overall though, revenues have been strong, as you've seen in this quarter. I don't believe that -- we've acquired enough new stuff, I don't think you will see any decline in revenues. The question now is can we continue to keep the growth rate at 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 -- we've been prime the pump here, so to speak 2024 and I think you'll see a lot of activity, as we move into 2024.

Scott Buck

Great. I appreciate that. And then just 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 kind of holding that?

Eric Langan

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 were able to pull into a transaction, they definitely don't have the track record and public track records, 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 -- forecast based on those trend numbers and can make an offer according to that numbers are trending up and we will make an offer according to that. So we just kind of watch where everyone's at and what we're seeing in our markets and their market and it's been pretty basic math these days for us and nothing is going to really change much.

Scott Buck

Well, appreciate the additional time guys. Thank you.

Mark Moran

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 and Company.

Anthony Lebiedzinski

Yes. Good afternoon and thank you for taking the questions. So just a follow up, Eric, you mentioned that you are making some adjustments to some of the clubs that have to use your phrase instrument and softness that you've had, so just -- can you just talk about some of the adjustments that you've been making and just wondering, are these generally the same clubs [indiscernible]

Mark Moran

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

Anthony Lebiedzinski

That was not my -- that was not me in the background now, so I'll repeat the question. So yes, Eric, I 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 kind of -- what's the common theme, I guess, as far as the clubs that you have seen some softness last few quarters?

Eric Langan

Yes, I mean basically what we'll do is increased social media, make sure that [Technical Difficulty] into the clubs. We may run some bottle service specials on slower nights, we may basically just do whatever we need to do to create a better value for the customers and guests that are visiting the location and doing things to put more people through the door, whether that's social media, whether that's onsite promotion, we had huge -- we had huge crews out of the [indiscernible] game last night. I'm sorry the game I think was the day before, but you get the idea, it's just -- it's more promotional. We become more promotional. We've become more proactive. And then like I said, we watch -- if our main floor is not full, we try to fill it up and VIP is empty, we'll try to run some specials VIP, we may do more shots specials, we may do like I said, more social media promotions and specials. So just things that put people through the door. That's how we -- that's how we fix it.

Anthony Lebiedzinski

Got it. Understood. Yeah. Thanks for that color. And then 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.

Eric Langan

Yes, certainly. I mean, obviously, when we first take stuff over there little heavy, we put some extra labor in there as well. So we've become a little heavy on labor. We sort through moving people around, we -- if there's dead-weight, we have to get rid of the dead-weight to get the numbers, where they need to be. Typically, 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.

Anthony Lebiedzinski

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

Eric Langan

Absolutely. We didn't raise -- we didn't -- we were viewing prices through most of March and 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 prices increase -- this effect of price increases in April, May and June. And 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 people out to Bombshells in Houston to watch games and it hasn't disappointed, it's been like -- this has been a great series and I think next phase is going to be even better, which I think will bring more people out and then we get to the playoffs. And I guess we're just relying on baseball for a while and then football season will start back up—

Mark Moran

We have the WNBA too, Eric.

Anthony Lebiedzinski

Got it. All right. Well thank you, and best of luck.

Mark Moran

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

.

Lynne Collier

Thank you and congratulations on a great quarter. Congratulations again. I had a couple of 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 Black Hawk? In other words, is there some sort of zoning issue that prevents it from being as big as Black Hawk 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?

Eric Langan

Sorry, I couldn't get my mic didn't come on. I know you were just out there. I wish I had been able to meet with you while you were up there, I just couldn't make the timing work from my schedule. There's no reason Central City can build like Black Hawk, other than in Historic District, it won't happen. But there are another gaming areas down the Gulf and whatnot, where they can build some larger hotels like the Z Casino there in Central City. I think it's 400 and some room hotel, it's about close to 700 gaming devices. And that whole area, I think to be developed at some point in the future.

I think the biggest change Black Hawk 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 2021, which is now allowing Black Hawk, I mean now in Central City to grow. If you look, there is 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 and Colorado. Central City has so much charm. They have so much more to offer in forms of entertainment, art, opera than Black Hawk.

So I think over time, you're going to see -- and I really don't look at that as two competing cities, because the reality of it is they're 0.9 miles away from each other. And does the strip and Downtown Las Vegas really compete with each other or is it just -- they each have their customer base, their vacated to the clientele, I think that Central City and Black Hawk to be same in that regard is that they'll share some customers, of course. Sometimes, they'll go to Black Hawk and sometimes they'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 there are just so close. And as they grow, yeah as -- they develop and Black Hawk develops up towards Central City and they develop into each other, they're just going to see like one giant gaming area and that's what I see over the next maybe three, five, 10 years in that market up there.

Lynne Collier

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

Eric Langan

I'm sorry, you broke up Yeah. They're 0.9 miles. They're 0.9 miles, they're not even a mile apart. City Center to City Center is 0.9 miles.

Lynne Collier

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?

Mark Moran

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

Lynne Collier

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?

Eric Langan

Well, the pricing was at the end of the quarter, so none of the results from pricing. A lot of it is just -- we always call it or I always call it getting back to the basics. 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 TikTok, getting the girls on Instagram, getting out there and taking the girls to promotion events, whether it's a basketball game or going to hit all the automotive car lots and buying all the car dealers and salesmen and stuff like. Just getting out there and getting seen and getting our name out there, 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 why you build the margins, of course upselling drinks and upselling appetizers and desserts all help with margins.

And so it's just basically getting everybody doing the things they're are supposed to be doing anyway that I just feel that when you're number -- when your margins slip typically because of those types of things that just kind of slip by a little bit or people let go a little bit, maybe 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 just making people understand that we're never too busy. We must continue to promote, we must continue to bring people into the business.

Lynne Collier

Thank you so much. And after doing 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 from me. But I appreciate the time.

Mark Moran

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

Rob McGuire

Congratulations on the quarter. I just have a couple of questions here. First off on Bombshells, can you give us the Bombshells margins back to 18% if the Arlington on ramp, off ramp has not yet reopened.

Eric Langan

I mean, I believe we can.

Rob McGuire

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?

Eric Langan

It's too early, I don't have the numbers from that period yet.

Rob McGuire

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

Eric Langan

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

Rob McGuire

Very good. And then, if you could 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 correct back towards the mean with the price increases you've been putting in? I mean I think we will continue to be in that 25% range, I think that's what we try to normally shoot for give or take a couple of points. I don't really worry about one quarter, simply because you can have a bunch of overtime, you could have a lot of little things that affect one quarter, if we start seeing a trend up on a longer-term basis then we'll have to be much more concerned about it, but right now is very, very small amount of money anyway.

Rob McGuire

Okay, I appreciate that. And then lastly, just can you talk a little bit about the softness in nightclubs, has the trend of the softness is really being limited to blue-collar evolved or is it continued to be kind of contained in that segment, as you kind of look at the business for the last six to nine months?

Eric Langan

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 we're -- 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 will 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's our focus at the high locations continues and they continue to build and do the big numbers.

Rob McGuire

Great. Thank you so much for your time.

Mark Moran

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 Tootsie's. Next up, we have Joe Gomes of Noble Capital Markets. Joe, please take it away.

Joe Gomes

Congrats on the quarter and thanks for taking my questions.

Eric Langan

Hey Joe, how's it going?

Joe Gomes

Good. So again, service revenues continue to perform nicely, just wondering in your mind, Eric, is that something that you think can just continue or do you think that at some point in time, they start to level out?

Eric Langan

I mean, they're going to find -- 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 they're just an ongoing trend. We'll just keep watching and as certain markets do better with the higher service revenues like New York, we can see service revenues increased, but I mean the reality is they're going to fluctuate, I mean, for example, Miami, this weekend was insane. Formula 1 racing, UFC -- it was big UFC boxing fight 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 want to be not bumped into or get away, they want the private areas, which drastically increases our service revenue.

So it really I think just depends as we move forward, how many events and those types of things that we have a bunch of events in a quarter, you will see higher service revenues, also if there is not a bunch of events in the quarter, we could see a little bit lower service revenues. But like I said, overall, I'm much more concerned with monitoring our total revenues, and our total revenue numbers were 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 the club goals -- we set goals at the clubs and fact that they're beating those numbers, I'm excited about. We are going to get some major comps, like I said in April last year 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 want 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 first week of May with a very, very strong week, like said, with F-1 and the NBA games are -- have been fantastic for us. Just a lot of positive, I mean you've got Phoenix, you got Miami, you've got New York, you've got Denver, all teams that definitely help our revenues right now are in play-offs. So 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 and because I think that will be more revenue for us. So we're watching much 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 6ers continue to advance that will help our business as well. So we've got three of the four series are great for us.

Joe Gomes

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 how they were performing this -- the past couple of months?

Eric Langan

Sure. Both have continued to see improvements. Heartbreakers just had a couple of record week, 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 were some electrical issues and heating air conditioning issues, so 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 process, but we just -- there's no sense in opening in June or July or August having huge problems, because we can't run the building.

So that's all -- that's all being worked on right now. We've also got our Lubbock Jaguars location is under construction, they got steel up, they're closing the building, the parking lots Board, so that location to come online soon as well as the [indiscernible] location that we bought in Fort Worth, Texas. That will start construction, probably in the next 90 days on properties and we have three more clubs coming up.

Joe Gomes

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

Eric Langan

I mean, we're certainly going to try. We've got to find the right deals. We've got a lot of construction going on. We're getting -- we're in the process of four bank loans right now for different various construction and property. So hopefully those will all come through. We're getting rates between I think 6.8% to 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 -- or I mean in Lubbock is all cash, our Stafford location we've basically paid all cash for the construction there.

So we've got multiple properties that we could turn around and cash out of it at some point here in the next six months if rates settle back down, as Fed stops and 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 million to $25 million, which gives us a 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 stays in our way 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 get the cash-on-cash returns that I see versus buying back our stock.

Mark Moran

Thank you so much, Joe, for those questions. Before we bring up our next questionnaire, I'd like to encourage everyone to re-tweet and share this Space. If you have a question to ask, please raise your hand and we were bringing up as a speaker. Next up, we have the [indiscernible] Orchid Wealth. The mike is all yours. Hey Orchid Wealth, you're going to have to unmute yourself to ask the question.

Unidentified Participant

Got it. Good quarter. My big thing that I wanted to get some clarity on it. As 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, like, I mean -- if I mean where Tootsie's used to be, how much in those respective counties is commercial property going up year after year, which you don't record on your balance sheet, as those properties move up?

Eric Langan

Well, we're not allowed to take step-up basis. We have these cost basis accounting under GAAP, but I would guess in certain markets, I mean we've turned down some pretty, there's always be trying to buy your properties, right, I don't know if you guys -- anybody that owns property knows your phone rings off, look, I want to buy your house, I want to buy this, I want to -- we get those calls on a regular basis, we've gotten some offers, I mean we bought Tootsie's property can't remember what year it was 2015 maybe for $15 million.

I've got unwritten offer, 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 the tenants. So look, I mean I don't know -- I think somewhere -- I think we have about $250 million plus in real estate, last time I did everything we have $100 million written on the sheet, I think about $120 million some in real estate debt on Slide 14, so--

Unidentified Participant

The thing is, I just keep looking at -- I keep looking at the fact that your borrowing cost 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.

Eric Langan

Probably, easily. We were only -- our weighted interest rate now on our real estate is only 5.41%. I mean our overall 6.52%, but our real estate finance much cheaper about ready -- a little over 1 point cheaper. So that's highly possible. And you 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.

Unidentified Participant

And then about what percentage of the entire business do you own real estate and what percentage is leased?

Eric Langan

Bradley and I just did this the other day, 85% and 15% or 83% and 17%, 15% to 17% leased and that's because of the reason we have so much lease now is because the restaurants and the Lowrie acquisition, so I think it's pretty close to 85% and 15% I believe. Now we've gotten all the new locations that were getting ready to open that we're building like [indiscernible] Lubbock, Austin, Texas, Florida, Colorado, Downtown, Denver, Colorado, all those locations are owned.

So as more locations open, the percentage of own properties are going to go up versus lease properties, we haven't added any lease properties recently. Not that we won't, I mean we find the right location and then just got the right term lease and the lease's price is right, I mean if we can lease them cheap than we can buy it, then we may tend to lease, but it just really depends on how much capital we have to put into the location as well.

Unidentified Participant

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?

Eric Langan

Hey, I got the new casino location, but I didn't get the rest, I'm sorry.

Unidentified Participant

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?

Eric Langan

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

Unidentified Participant

Okay.

Bradley Chhay

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

Eric Langan

I'm about the only game in town for you to eat after 11:00 PM at night up there, other than 24x7 at Monarch, I mean, it's a discounted, 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 summer, there are some things to do, but in the winter their numbers die down. You've got the Opera, you've got lot of art galleries and stuff in Central City but for Black Hawk, 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 access, I saw some ads for this summer, they're bringing in some lounge access, I was like, wow, finally a lounge, and a live band of some kind, something, because literally, there is no entertainment in that marketplace right now.

And that's what was so exciting to me, I was like 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, feel like I got to get out of here, you've got two choices, you drive back to Denver or you go to bed in your hotel room, no, 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 as we continue to look at properties out there and do other things, we may build a nightclub out there of some kind. Other things to create an entertainment zone for the thousands of people especially Thursday, Friday, and Saturday that are out there and gaming and this if you win it, 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 given those other options. But I think, and if you want to games still, you still can, which I think will be a big part of our deals, 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 I'm still going to be paid very, very well while I'm working through my learning curve and that's why you see in our analysis, we said, look, the first, let's say we only do half the money, we only do three point some odd million, and it takes us that for the full year to learn and get to the point where the second year, we are in the $7.5 million.

We're still a 50% cash-on-cash return on this investment. So to me, it's just 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, 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, I tore it down. There's nothing left, the three brick walls, and then we spent $3.8 million rebuilding it, which was unbelievable amount of money for us at that time, but that's what created the RCI we see today. I think this property for a very small investment of $10 million has the chance of taking this company to a whole different level than where it is today.

Unidentified Participant

When -- 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 Rick's premium that you guys are able to squeeze out on average from what they were doing numbers wise to what you think like 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?

Eric Langan

Typically, about 20%. I think we're at 17.4% on the trailing 12 months through December 31st. I don't know if Bradley ran in March, if he did, 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 EBITDA by about 20%.

Unidentified Participant

So when you're purchasing the clubs for three times 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.

Eric Langan

Yeah. Typically, I mean typically, that's what we're seeing. Sometimes we see in the first year, sometimes we see it right away. I mean look at Tootsie, when we bought Tootsie in 2007, we bought $18.8 million in revenue on and they were doing $8.8 million in EBITDA. We paid $25 million for it. In 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 we didn't lose so much in the management staff, because of -- they just not really recovered from reopening from COVID, they've only been opened four weeks in Denver when we bought it, some of the other clubs have been open a little bit longer, but mean they were all they were markets at all opened 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 game there.

Unidentified Participant

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, I mean like individual owners. But I mean like when you go to the industry, I've gone through a couple of these events, 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.

Eric Langan

Yeah. I think [indiscernible] EXFO is definitely a lot of multi-club owners and I think it's anywhere from two to 25 that these guys out, of course you've got a couple of the big boys that own lots of clubs like us, but there's not very many of those, I think one actually, I think only one other club who owns the same number, more -- probably more clubs than we do. Most of them are smaller between four and 10 clubs, I would say is an average and you've got a few like I said they are 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 just a lot of one-offs that we can do throughout time. The key is running them, so we just made a major acquisition and I'll wrap I say people are worried about Bombshells and with one single location in the last acquisition does more annual EBITDA than all the Bombshells combined. So that'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 free cash flow and put money to work, while we're waiting for the next acquisition because we have to put management teams and we have to run.

So, our Director Operations for RCI Management Services is in Dallas right now. He is working on getting the new clubs. He's teams putting the teams together, putting our POS systems and getting our culture in the acquisition, in the clubs that we acquire and that takes time. I mean it's a three-month 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. Let's -- our pace of how we've done increased overtime, 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.

Unidentified Participant

Great. Thanks.

Mark Moran

Thank you so much for those questions. Before we bring up our next person to ask question, I'd like to give a shout out to DK and Y, my man, if you come by the shareholder reception tonight, I will teach you how to purchase sunglasses that are from the women's section. We also have a dunk tank waiting for you as well as Bradley Chhay, 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.

Adam Wyden

Can you hear me, everyone. Hello.

Mark Moran

Hello, how you doing?

Adam Wyden

Okay, perfect. So sorry, I'm a little late, I had another earnings call and I know these go on for a while, but so you'll have to catch me up. But I'm just reading to the deck a second time on the Steakhouse and casino, you guys talked about conservatively taking two years to get from $3.7 million to $7.4 million. Have you guys sort of quantified I know your slot revenue anticipation is very -- is less than half in Black Hawk, which is really conservative, so I mean if you can match Black Hawk, that's a lot -- a lot more EBITDA probably another $4 million, but can you sort of talk a little bit about like what the table games. I know there's also supposed to be a Steakhouse there, 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 sort of given a bare bones estimate of what the revenue and EBITDA contribution, but 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 sort of other buckets and how big they could be.

Eric Langan

Well, you've outlined the buckets, I'm not making any guess 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 revenues. 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 website, you can download every casinos numbers, you can download combined casinos numbers, you can download by city. So you guys can go look at all those things yourself 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 games, so I say sell, we're 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 over 10 years on a contract on a revenue share basis with a minimum, minimum payments. So we are 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 within 30 days after our license is issued, we will have a full time -- probably the day that license is issued, you will have the partner and there'll be license 30 days after that and so that'll be 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. And if I make zero off of all those other things that make 50% a year for two years and that's anticipating that I am going to be so behind the learning curve, but I'm only going to 50% of the revenue in the first year that we anticipate, well I was, noting that we anticipate is that the other operations do so--

Adam Wyden

Yeah. I know--

Eric Langan

I think it's a conservative -- 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 map. 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 in the backup with table games and with online sports betting and actual Sportsbook on the premises as well, I mean we didn't include any sports betting that then I can make my 50% returns that easily, so.

Adam Wyden

That was sort of my point that you beat the crap out of the numbers and still a 50% cash on cash. So those are the best types of investments where everything goes to hell and a handbasket and you make 50%. I was just trying to 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 of room outside, but that's helpful. What else--

Eric Langan

I mean -- I'll give you a little color on slots for example Central City is $129 a day. I think the Black Hawk average is about [Multiple Speakers] and something day, it's always take your top casinos over there, they are running over 400 something a day, so if we can come in somewhere between $129 and $300 in the middle of that zone, you're talking about, more dollars. So I think there's a lot of uniqueness to our project and I believe that with our properties in Denver, we will market -- our properties around the country will be able to market a lot of packages to not only our employees and entertainment and our guest of our existing clubs around the country, but they'll bring friends, and this will become a very unique market I think for us.

Adam Wyden

Got it. I don't know if anyone has asked about sort of M&A, I know you -- you've got you're digesting, and you did Lowrie, can you talk -- have you commented at all about sort of these a little clubs that you're sort of renovating and repurposing and so the ramp up of those or any of the other sort of smaller M&A opportunity and what that looks like?

Eric Langan

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

Q - Adam Wyden

Right. Yeah. And I noticed that you updated your buyback slide for different, different fiscal year '24 ranges with free cash flow, obviously these are on the consensus numbers, I suspect not where you think you are, but sort of it gives people sort of a band of outcomes in terms of where the buyback is and so 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.

Eric Langan

All right. Thanks, Adam. Now, I'll let Mark take over again.

Mark Moran

Thanks so much for the questions, Adam. Next, [indiscernible] Please take it away.

Unidentified Participant

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?

Eric Langan

I think you'll have to turn up your mute there to ask questions.

Unidentified Participant

Is it better now? Can you guys hear me?

Eric Langan

I can hear him.

Unidentified Participant

I wanted to ask the follow-on question which is what systems do you guys have in place to ensure club quality, stayed consistent expansion continues to grow.

Eric Langan

We just put our system in. We put our culture in. If you follow at Dean Reardon -- Reardon Dean, whatever Dean's handle is on Twitter, that's our Vice President of Operations, he posts all the parties, he takes the teams to lunches and dinners and post the DJ meeting the other day, where we had big MMA star as a surprise Speaker on the call, I mean those are the things we do. We build our culture and our current sort of keeps everything else in line, because people want to be a part of it.

Unidentified Participant

Thank you.

Mark Moran

[Technical Difficulty] It seems like Twitter's having some difficulties, guys. We're sorry, we're working on it here, but hopefully you can hear me.

And apologies for all the technical difficulties we are 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 and there'll be related to me or you can DM me.

This question is to Eric. What's the go-to-market strategy for you guys to expand into sports betting in an already crowded Sportsbook app market, what is the main product differentiation?

Eric Langan

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 crowded in certain markets. In 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 possibility and I told you -- 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 have actually are using what they call a skin, they call it skinning, so skin it with their bans, so like when you bet on say balance sports Penn Gaming deal, you're actually betting through the Ameristar casino and in Black Hawk Colorado, you're on their license, everything is done through their license through the skin of balance sport. So that kind of gives you an idea, there's still plenty of -- can you talk about all those gaming companies, while all those gaming companies aren't licensed in the state of Colorado and any one that aren't licensed to 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 am going to go to a gaming convention tomorrow afternoon and market those skins as well.

Mark Moran

Thanks. 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 DK and Y, our favorite troll will be participating in arm wrestling battle with Bradley Chhay and will become a shareholder tonight. Rick 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.

Eric Langan

I think it's every time, Mark.

Mark Moran

Okay. It was $30, it was $30, all right Eric. Rick. Rick, if you haven't RSVP already, you can ask for Eric Langan or me at the door. After 9:00 PM, 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.

Eric Langan

Yeah. I just want to thank, shout out to Antonio Brown, we brought the camel's and the goats to Houston at the 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 so much fun, and I look forward to next year's meet and greet, the camel's and Denver, where I plan to host you guys again and hopefully, we set up some other companies for you guys to visit why out there, so you're not just learning about us. Thanks again for inviting me and sharing your time.

Mark Moran

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

Eric Langan

We met them in Miami. They were with us at [Multiple Speakers] Great. We had a great time. We partied till about four 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 the Dallas, I'll try to make it 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.

For further details see:

RCI Hospitality Holdings, Inc. (RICK) Q2 2023 Earnings Call Transcript