RICK - Earnings call transcript Q3 2018 | RCI Hospitality Holdings, Inc.

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Operator

Greetings everyone, and welcome to RCI Hospitality Holdings Fiscal 2018 Third Quarter Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Gary Fishman, who handles Investor Relations for RCI.

Gary Fishman

Thank you.

For those of you listening to this call on the phone, you can find our conference call presentation on the RCI website, click the company and Investor Information just under the RCI logo, that will take you to the company and investor information page, scroll down a little and you'll find all the necessary links for the third quarter. you X; statement, to beginning that it's conference presentation, Slide our everybody of involve to hear call Harbor may risks Safe posted reminds a turn number I forward-looking and remind want of our or of Please see you uncertainties. statements that at the you to I it. urge read Actual differ from materially results those may currently anticipated. developments to this call result of We on as disclosed disclaim that update any afterwards. information obligation occur a explanation release. the non-GAAP I in also direct we turn and measurements Please Slide use to that to X; our you presentation on are included and news

Finally, in X area o'clock City to Manhattan's Cabaret I'd at management to meet York, like club. Rick's at invite the New gentleman's to tonight in everyone join us New York #X

tour Sports Avenue Fifth Empire from it's Cabaret located State Hoops is Rick's Building. also corner Bar, door. Broadway, XX club, West Street and at the around the sister can XXrd next and between You

for If you ask RSVP-ed, haven't the me door. at

President RCI introduce to pleased CEO Hospitality. and Eric I'm Eric? Now, Langan, of

Eric Langan

Gary. X. quarter we After turn quarter XX-Q. the to strong filed We great results. Good of Slide reported earnings our core closed, our third another issued Please market afternoon Thanks, release news and everyone.

active to in club are multiple clubs. with markets We in purchase managers negotiations their

schedule. Pearland, on Our of well and our continues newest all Bombshells a ahead to in four are development Bombshells suburb, Houston do moving very units in

GAAP achieved EPS results; our year $X.XX, we quarterly XX% a record third for XX% the revenues million, quarter year-over-year. to ago. Turning from $XX.X up a up was

up are ago. $X year-over-year flow EPS that believe Compared operating almost we analysis of came cash fiscal million. units XX% our XX% sales. approximately XXXX exceed year-end Slide third $X.XX, our and excluding lawsuit reflect X% we items, had December of revenues new free quarter for $XXX,XXX same-store to Favorable non-GAAP million fiscal subsidiaries other During quarter, ago one Please an at X target year increased the and trends we'll Free announce a of from and year of continuing, from the quarter turn cash to settlement, results. our in total we'll flow performance. when increases XXXX report from target $XX to XX% in smaller

a St.Louis small a Club. from which the and the sales bombshell of Last Carlos quarter of renamed the acquisitions, of over same-store the third contribution included Men's opened of major nearly units course new April, Pearland in and year's quarter. full in Kappa a transitioned Houston 'XX, fourth which the Cabaret in two in in early XXX New the quarter bombshell in opened quarter Miami the full

these translated of into and X% All of increases XX% nightclubs segment for Bombshells. for sales

XX.X% in bombshells of part in XX%, leverage benefited all we've increased continue level operating In margin significantly GAAP margin other Slide the A for of along segment. larger lines performance. both, than up Non-GAAP operating turn from X. at XX.X% about in drove core overhead. from variety bombshell due increase nightclubs grow high factors and profit a particularly our corporate XX%, improvement variety million. year, margin increases and up increased segment Key factors revenues general, higher the -- with from mix. $X.X the and last this In to in of with Please the with restaurants portfolio was our contribution included big to factors nightclubs revenues, offset modest revenue operating a food in X%. more beverage than addition, to more up in service to bombshells; operating

There to helped interest last specific the quarter. the the were benefit revitalize benefited reflected and introduced continued doing new in have customer economy been higher playoffs pro-baseball baseball and factors the to restaurants, and strong of has well pro-basketball we from and and season. Houston Houston increased We items Bombshells Astros', some marketing nightclubs the of see counts prices which the well around start continue from as menu in -- Texas as the patch. oil which the Rockets oil nightclubs

in this company conference to Having such increased; insurance. was systems scale call, discussed to automating from overhead our reduce financial hiring vendors produced use new financial vendors there last due in areas our we to exploring ways a know is primarily doubling our new want I and reports corporate develop As that, said to IT analysis. controls larger to costs we're as

our the in XXXX. in new the plan In the where In increase Carlos penning of rate last row, for Miami, helped fourth also same-store plus a the This the Bombshells in similar the XXX. will tax sales was to this comping because quarterly than cost look acquisition decline of against in quarter over our fiscal since Bombshell year. revenue from X quarter of and quarter, sales third continuous and Same-store to lower Please occupancy up turn St.Louis. continue XX% we two quarters years. increases are help and law, at acquisition of the has our we this federal and trends year up a nine second effective is total clubs. in Pearland our against Slide new had is longest Lastly, acquisition begin new our to we've early X% sales last trend and comp ago bombshells the rollout tax sales now margin started

earlier, If course both, well the As of total revenues. I as we generated well all bombshells, from benefit will new any quarterly over the mentioned record the as quarter goes 'XX, fiscal third acquisitions.

Slide we the the last half. can see in however general, upward year-over-year you to up EBITDA $XX we as somewhat to XX% In non-GAAP second during an we million. mentioned quarter strong are on trend. almost X; was cash. Please expected turn for to the As operating call also in strong performance led Adjusted quarter's moderate to our margin, third

XX. we more than had the more than from This itself, the of up June cash EBITDA than March was For XX balance nine the up adjusted from on XX% to After to $XX $XX was more fiscal months, and start X% year. close million sheet on the XX% million.

first million, is $X debt mainly Slide flow, XX. up continues compared approximately were rate XX% at up now points. to it million. real our debt very cash up to secured to As $XX nine turn basis across to and turn weighted to board X close by Debt March XX X debt. other for it be is the long-term Slide free review of manageable, to Please our in in was types estate. Please reductions average interest There the months small

X.XXx, for the start this quarter as fiscal bombshells. only $X 'XX. in million balloon should on due our non-reality X.X%. and converted are a to interest loan is or total the XXX, real is there. million U.S. revenues, we year realty major Xx, extra keep Scarlett's needed, added that's five third to flow. extend million close balloon now year-over-year. X.X% we was for below but it in a cash to We acquisition. Even revenues it of on be related out though the ratio. has will it from at the this into $X debt, section cost new around higher balloon continued for it We'd before ago. refinance can believe to If nine on due part we Regarding third in we the the total fiscal quarter, was building increased, new of this in we to fourth rate seller financed, 'XX comes in $X.X the In or down pay to The years in at adjusted construction of quarter occupancy currently being next add balloons new We debt it a in slide the fiscal total we extended lower maturities, debt EBITDA months which this Scarlett's X.X% but our And XXXX to acquired This balloon, has property free fall our of Xx bombshells. used Miami estate the debt like primarily

was and estate the XX pay to our turn real with update the ratio real acquired debt and plans. on down extra over sell bank we bombshells for adjusted an bank coming Please this down. come financing, estate to months off As expansion will the EBITDA as debt Slide

operation will year, enhance -- in our little business permits a contract segment $X.X and running using should XX permit construction, -- bombshells of to segment the locations we the million for looking bank in locations our increase estimated million fixtures building which run of approved. When by Houston Doing has greater the more and an the us margins be start with a same building developments leverage consistent the high of help the prototype next bombshells the having bombshell year will results. operating our middle next revenues that XXX, so furniture simple latest to The location would on construction to to awaiting as and area and change to possible by we continue the around we returns. $XX than in finance cash-on-cash four on are fiscal bring revenues Highway on-schedule, average quality real should estate our and our math, [ph] profitability. with operating been week U.S. key assure we of are annual are end units in next million, In the four Our This have location new scheduled as purchase at are be financing bombshells XX%. to rate expand $XX is XXX. under bombshells

we yield our back how by added risk-free yield of buying at capital third-party otherwise. market on is location free at Should At This use of current Our We named to acquisitions in mid restaurant our capital. To In point more debt assets are X% rise cash slide buying ago. be since of bombshells the tenants a of criteria, relative to price we've open own exceeds key is Miami. would least digit hurdle again. it's look didn't XX productively years in our XXXX these percentage at target see XX% our for of it, that down as the concepts. continue would rewarding cash has more cap to the breakpoint significant market payments club to for are for to more we week there free fastest accelerating nearing flow however, range. open we new a the simplified we out core than acquire likely of the business greatly capital is XX% open or next back we to stock unless our the market. strategy, Currently allocation $XXX stock is the cash that to our that ease $XX and $XX is open price shares free to Based the our significantly restaurant this equity last and it's the or what and only highest Slide cash-on-cash flow return double units. Antonio growing turn to be after-tax rate do the look risk We to use new we is compensate our return to capital is flow yield to above rationale cash doing. to million range, be and on release we case to yield strategic review it our the news where recognition, million interest first with San consider the our especially or this this Please metric magazine flow announcing on strategy. markets Bombshells continue appreciate five list you put

stock buyback the fall use So to below would it point, capital shares. that

all this review of learned in involving to three apply our lessons financial up, turn to to capital Slide wrap our formulae please almost five from for goals. the a continue to year investment. We decisions XX To of past

XX% flow of year. than basis per per cash on like a XX% Our to 'XX level share our XX% an fiscal year. from is $XX free grow On to average to a we'd approximately objective to million by that more grow

We achieving that; have in right clubs markets. the more for acquire three one, great strategies

currently start purchase to clubs. markets of third, with is If the our our the target in will acquisitions of in bombshells multiple we capital at owned allocation bombshells, locations wait this As club capital owners right can't or company number call, I to we continue build. mentioned active the find strategy. sit, and per year. And to are negotiations expand Two, let our is adherence strict we their three

Now for let's questions. calls open the

Operator

from Our Instructions] Frank [Operator comes today first Camma Sidoti. from question

Frank Camma

I so was obviously pleasantly margins pretty on surprised that. questions couple the here, with of

talk commodity be in you First side, handling -- you of about you the any all, might let's are food might that first creep costs I how it? seeing on thought on

Eric Langan

I how increase chicken of of drop read has with more restaurant just actually than we've a article, chicken signed offset cost to come with day the newsletters the lot talking read about I I that Simmons we've was -- other down, and I've in David prices. article how chicken anything an Actually in much about days get these lot prices I've a come down. an up seen

how fantastic so wing ask much man, because that. it's the to being going -- it's have he it's him by called said, dropped been I that So prices -- makes offset and

Frank Camma

like That menu chicken your makes things because wings and tilted sense stuff. is towards

that's So costs, your guess a big sense. of that I make component does

of that up bombshells; salaries you I Now we'd higher component there? though, are the thought anything how the about seeing creep given

Eric Langan

tax offset significant that lower have made easier think some helping some raise, costs that taxes kept really much on We've us. given we've our are the I of the rates -- in much line,

you're us, revenues. that has we continue that -- think for increases an seeing wages look trends, are going salary we're we're at. the fantastic nightclub those don't can seeing issue segment think and If to in still I been that service I

our we're watch keeping having I labor market night staff corporate it as very to to tightens counting -- and corporate make we've especially still competitive corporate and think paying always where it we are On we're watching line side rates. been. with one we're that the staffing, pricing overall, corporate But that the mean in staffing, -- sure in closely, I we're employees, having

Frank Camma

were you of the like it sort so about economy in be in because stronger bring the and and typically is just summer that your can a those seasonal typical would earlier, like ability Obviously the slowdown? the there slowdown, thinking seasonal to -- you is clubs [indiscernible], talk also basically people

Frank Camma

backs because this literally we did so that's definitely I Eastern bombshells well, slowed it in while especially but rockets in very very oil playoffs. quarter locations down sales this all strong We the were I no service is partly in didn't very everywhere; areas, revenue, service pretty the now. in down cost York, with more mean see last the is Rockets Yes, been I any quarter, -- real in But Florida, view, right revenues. long slow having a we've are and our quarter up pretty patch typically nice for been us. can overall, have Minnesota, time up, revenue steady have mean really that good seeing think eastern those service the the the We're associated bounce there and New see profits the because

Operator

from Our Partners. Stonegate next Capital question comes Marco Rodriguez from

Marco Rodriguez

Just kind to sales to on here know last the that you and of are were sales? thoughts I seem your that last seasonal didn't the same-store wondering kind question slowdown on piggyback so for kind again, and kind expecting -- expectations; of of happen, I'm your QX same-store and what wondering of quarter

Eric Langan

hoping with that's of the managers we of X% least quarter-to-quarter general internal hard watching with kind -- units same-store their that at talking beating year-over-year I sales, on X%. the and our can to really trend regional least having by year -- I'm and at basis. targets, our and them last that's a mean target it's we're say continue

doing about potential. skating along some are excited the are a Some but little better, we're

doesn't until I we right that waiting economy I the work people growth. the a slows we as happens sales stays shoot As to the something something follow for triggers trigger, in X% long have spending anymore, adjust will But we now think trend the think down trends strong, know -- that the I model. think for we economy we're or

Marco Rodriguez

the can as as potential any how as targets, you from the segment bit you be can kind full landscape; talk be far that and far bit how terms of club of in little level and as a as just talk a potentials? the far high your maybe more M&A pipeline a might you comments on close Then maybe night little as if might with

Eric Langan

Sure. on in of are terms, working lawyers I a mean deals. couple the it putting simple

like as club waiting out where year to the we're several we'll get we in right the a up, so probably lawyers there owners and next maybe all have we meet didn't price off where We our I I up behind down we Miami we set we to and at be and plenty as about that's through going because be now say we're people would terms that's four got want with there, focused time to time is move through left where December terms to for of on got really is pipeline strategy how bit I out we'll meetings very going bombshells, that best talk in on that as then price grow to -- is for club to Scarlett's Vegas, over markets; look and have talking spent, and -- early bombshells every as are where looking St.Louis, to anything or into negotiating still club our some and the to new I to of me that. we days, necessarily -- I a The negotiating side -- the month payment on that focus that it's we've the far at so little said both scheduled management about management some doing time approach we're details better several properties absorbed I of focus have point, and six kind be I to new out we on forward. go, want will acquisitions, we'll the calendar and lined been at we the but we've so active pipeline and looking so working know end in right not come think the the markets that we're to our we're can to nice but the actually that's the I'm be then year, -- are the As at and remain gentlemen's will want I'm pipeline this things already training works, really people and itself, that's September it have thing of up where forward. owners or very really to several lined end on main through there think there payouts, club like is that; and at ones XXth time again, the A) typically as lots look going not enough we've move robust come wind that the we us, be months the active lawyers not available got in ones the we've out that of new three at be now, this expo to ready well markets, of that's and -- XXnd -- just the we're work in are part up think place very expect we've certain

Marco Rodriguez

a you're of of to down targets might you as to for as ending your seeing, opportunities expand? are maybe available out close be terms sort what as getting far comments finding of can and kind as just there maybe talk in there on of Miami, then landscape bombshell far some little of kind that where the moving you what areas And and bit the

Eric Langan

up. deals we're so up a XX% on cash-on-cash upfront actually Miami our cash will XX% property developments that put in owning were our the only by will real value some more as when looking estate. at there buying at two cost additional We off bringing Texas at buy we've which raise and buy, XX% we acres, after be do building traffic close and these lease multiple and the have cash we're little we've into to a we're we're the can to having the down realty increased like to things the property done trouble more is tighter that have we range In versus much the then range or larger returns looking look properties selling finding property the our Sure. expensive

Florida for in with have we'll so market plenty great some of different but time is little and the a have it time us currently -- news Scarlett. we learn operations it's good [indiscernible] and we So like in

there. we're restaurants the -- we're higher, thing find they that So what the numbers things are bar, are The we'll is looking much market and of than Texas. much are looking sports the the nice seeing most we're in at competitors at higher that that sales for there theme-type in the

a that's for big So plus us.

Marco Rodriguez

of here over And of else dollars kind sale last not was on some kind million quick get item; just question, items were revaluation or increased of assets balance that sequentially. if sheet held there your pushed I'm sold be housekeeping a just noticed there? to a a mistaken; Did for something in couple of already

Eric Langan

we are contract. now land help on have until When have believe with it, I assets have contract put those properties is it we're ourselves think in we a we under I what policy. our doing raw the don't to we

contracts into to get we are bombshells held being and So contracts, a so into land moved those sale. properties, assets of for the next couple on as properties the raw go some did of they

Operator

Kingdom next from Cashflow Our question [ph] Instructions] comes Darren from [ph]. [Operator

Unidentified Analyst

I on on budgeting a in nice expecting see the for XX% is I be a margin. to range forward? beat or So operating this this operating onetime guys margin, quite or forward be Should is should you going something going it did but

Eric Langan

looking Florida… and it's at was I the trend on

Unidentified Analyst

Slide XX. on It's

Eric Langan

are, are but more the well, revenue of as up as going pin comes the as increase bombshells had I drag the little to quarters the this last -- mean over as of bombshells two it's it rest of XX%. on at line few of now, I going have next and in say, to mean over I it's much just think as how I they where into will hard with I stay as But XX, mean XX%, we have to be. quarters revenue to the you've them guess hope see plus six last it if through now, you a bombshells -- to watch last as I move row it been we see quarters, where look the from XX, we've -- want strong have the XX -- seven -- or we're a guess I would just definitely down pretty it to been we so we're the in the right three develops. continuing service actually we're out quarters XX%, -- they so bit

Unidentified Analyst

look bit I a it's to forward open bombshell happening. keep budgeting drop not little just as but you

good see. So, to

Eric Langan

Well, it bombshells very ever revenues done. the the nice opening Pearland bombshells big thing highest has about is was us, a for that gross

Unidentified Analyst

the run rate What Pearland on is now?

Eric Langan

that's currently and just the where for for you're radio the so a all has -- don't forward Houston at, in patios season one be -- very month rough several some to games pre-season stores the -- new spots Astros, football a some the Rockets slowdown starting sports other but lining done I with and think is, XX-some don't up rock out we're soccer bombshells. lot opening, of we're days some have we some I XX-some we're one team. doing landed couple and tonight, probably stations stuff for and our very if XXX of even of of others for those of negotiations stations the the so aware at know whatnot July very the Techsans, [ph] since doing the but us, sponsorship we've on but been and the hip-hop And for the think sponsorship plus we're I I larger having we're looking degrees of to up, a first and know going stations are buying a days, pick

some the It's in as haven't to we'll I doing let's and that's those going up September, bombshells out quarter trends that in think help So see Houston give idea a done where nice going this much we're so then we see an increase how new, are where in marketing, open really sales the we'll bombshells to comes that. store start us the and next we marketing, going. new see, from especially market

going market open to market branding. of kind we the crossover As the and with same in up get saturation to we we're get stores see X what

some I nice in to think we're that. see going increases because margins of

are to So, bombshells, I'm our margins push I the range. stores XX% those in running know hoping top XX%,

a can we bombshells bombshells underperforming up think especially if as average club that are the push XX's, they these and continue I average if Philadelphia, stay as close down, the the the margins as margins increase we're call in going those the well. -- those I small clubs can margins those see -- pulling a clubs club Houston margins at, the in as the anchors higher numbers to as where to margin for like in go away, in XX's we So the

XX's. lower maybe margins the or in -- operating mid-XX's think I these we'll So stand

Unidentified Analyst

bit XX% margins plus okay. irony but anchors, of calling Just

Eric Langan

saying -- Well, XX%, right. being those ones to they anchored no, the were down I'm are

X% We the have that's a club margin, other that pulling ones has down.

Unidentified Analyst

would be a love to anywhere restaurants know of lot that I that. near

you done? of going when the to are So the how advertisers, it's sports ratings measure effect

Eric Langan

when little the of it so been have three and and The able now, to in where for stores and four We've their what years in or going of some thing got market see Houston be to they're is more trends on Houston, watch. per June dividing store at over us, kind open nice stores stores, so it extremely and we'll have divide it's it offs expensive really basis a by but been, really it do inexpensive -- be you eight wasn't gets these by expensive things. to a for you when four we're

Unidentified Analyst

spots whether you've think able got to buy be store tell day to you to So by or not help not? data or radio

Eric Langan

working we're internet we're obviously new that's it's by think nice and new seeing radio seeing it just on tell to us. idea build then that's business. negotiate going to build getting new think it faces, a we'll the but bring radio and help in working month, on this. If very getting quarter, And package I don't the day for it been by we're I into build remotes right. by because we're faces we've the faces that year-over-year the I especially to them, think the us, with the is if actually see to live we'll and able spots brand Along with to buy for

Unidentified Analyst

free did the up than go? you cash million million; your less in flow actual went $X $X almost did but cash where So difference

Eric Langan

of Well, now, going cash construction a bombshells going construction of sites properties, out put down that's of a that. the to XX% considerable with three that's amount we right put we XX% lot have -- first to have gone it's the to for down actually

So of majority where that's think it's I going. the

Unidentified Analyst

to have Scarlett's you down payback Did pay anything? any loans or or any

Eric Langan

I quarter you -- know or down that when that was in this do $X down? paid last think pay quarter? Phil, million we was Scarlett's

Unidentified Company Representative

last It was the quarter.

Eric Langan

last was I what That quarter, the thought. that's

Unidentified Analyst

I'll Q see when it comes the out.

make this. rollout this always we allocation we to first -- can't your the that's new it. think slides; capital on well, shares any comments Some and I be the then quarter; do XX but helpful, comment, plainer within that's you loved I that -- time slide might that, really seen also I you buy slide like added, it And that just I've wanted I've the below above

Eric Langan

all blows talk just simplify to so little English. with the growing. target to we're time it's stock's stock decided keep quitter it, the and this, simplify let's boxes in getting just the the going we're it we stock it If I a and above this, was to Gary, that going out, on little -- little this By things put so to let's if with that buy all plain

Unidentified Analyst

that ever stocks. plain to Well, think buying I when you're you going be it make don't

you in but So front that's other buy people words, in before of best not upcoming thing. will the bombshell,

Eric Langan

keep that position that's the worked thing nice is We're for clubs, discipline and and off, -- in -- hard going I buying I paying for we've we're get to mean us the really to today And is shareholders. that's here. think the

Unidentified Analyst

are up, them so know looking Agreed. lease; The are the from purchases? Miami, to coming four you're I going to of that you're rest bombshells be

Eric Langan

all the for own four on build and real we'll of are purchases, These building estate these. the all

other site developers the already three to site, the we've built site, one site, our have development path the sold I think have we're barbecue to out business. and on west we I-XX with do are brokers and it's pad with [ph] open middle those of move want We them -- the cheap business talking Memphis, acres -- We that that turned on we've to interested will of Pearland now the sewage quarter, anybody Corhe's that that already that as bill we're little compliment that on their are want business X.XX X.X fact, I'm The a contract bombshells. Texas. we end sites, into be have bought we complimentary there, site we open fourth they now. the several site, extremely that we've just in on will remaining we've sold to several or sell going hope list add trying we control XXX that with -- already move will pad be pad next locations or two site have listed a currently pad site whether a will restaurant we and them, help sold businesses a just -- about and over the different now, acre we is think we've into to it off And that the and us there a the sites couple off. bought left parties what sold looking we first retention, we're Houston is be [ph]. and In concepts of the in up acres eight of that with who end we're -- looking so at a talking of to to right before land pad the one we them under and -- put to The of is east -- couple the our will path put

Unidentified Analyst

development. chunks larger how almost and another it's and real buying a real of more yours, land more of aspect having to estate that's company, the like So estate becoming strategy

Eric Langan

what sites proven this know those It's little did Miami, way of we've development. our are X.X the was it we're these site To now think in concept X.X, else We -- a the we're to at know -- the when for demographics, -- all from it pad in we think open site that pay a much sense acre really out, only for we're doing where pad we're us. already we -- looking us, so because KT we've proving I kind pad the we enough example, bit not limit somebody more way a other that concept lot and super pad but we're I things. the was made to looking build really do risk sites, for markets, ready-to-build

we not just sell it's shopping I'm into leased to easement. we're center and to as off XX,XXX we'll so square looking four XX we on with a kind to got do built these had parking acres, much, of once buy center location, foot it, a X shopping building probably And the out, and that

Unidentified Analyst

that's in really heard, how correct? that it Houston, So what worked not out it's is I strategy, a just long-term

Eric Langan

Yes.

Operator

from from next Our [ph]. question comes Steven Martin Slater

Unidentified Analyst

great you months, cash you quarter of full you XX year year for exceed you were flow… had to million your frankly, free flow would a $XX.X million only said get do did it that guidance -- to was now cash last going fourth have for nine you Eric, and guidance the your of and to to but free $X.X

Eric Langan

targeted cash beginning at free only $X.X call low to it the do and million We $XX target. in extremely we'd think Well, year our we for it's flow don't guidance, the to us. would million of be want to

target, in anything our year-end. the we exceed we're 'XX and or said that we December raising with for target doing the why target, that that's new we'll not issue So target will

Unidentified Analyst

acquisition done The Florida, since you you did on year comment last how -- has in that it? Scarlett's can the bought you

Eric Langan

ready thought It's so our And on which It -- same-store doing go-forward able we're in increases if or a them. three the say is I is X%. us. think very that we're will of thought definitely with more would help with to to targeting be two very it. can in basis our increase the projections it, sales to that We're we percentages be we we're buy -- find that able them same-store happy we I why sales we'd moving for well we the with line

Unidentified Analyst

of Within quarters; items we diminish, onetime the corporate should of to last see stock couple when expense other the items? of those you've whole the lawsuit had bunch a settlements and the some

Eric Langan

most some There mean, the I getting settled fact, think each new it's be two left -- we three but lower it's got of State news, the was getting that's cases of lower of was through, to at it's out I is popping -- year, good it out. all lower problem through see them predict lower. it's numbers, but those lower time then I that and left moved we cases. is overall, lower from expensed and think we think I we're are time a I that Unfortunately plan know what mean all the overall would looking time I it's uninsured audit there, but of and it's I York there, not each left hope it year, just part going up there We've still those we only sales that's from a uninsured, stuff stuff now; so you or great in know, lot those, just is unforeseen I tax one New because so have the we're could could for

Operator

[ph], comes private investor. question Brown next Our from Bob

Unidentified Analyst

made of real really picking that long Now terms at legal, the of close do looking side; in estate, gotten I the last like going XX realistic going you you think and what handle a the all the are on more way, bombshells you the we're quarter feel a saying of comment not up is you think far opening you one good getting be the -- we're releases a we likely be business too in to how -- the given think here? -- where that we away, franchising too to target and to not aspects

Eric Langan

are have -- what we're they getting first getting our want are even -- talking we same we're franchisee that. people, marketing some a doing, for we're time, for we're as larger are a opened looking -- is to which to is don't going is location to Yes, -- we not hadn't getting some somewhere and someone people closed in it calls; be long who have we so a anything calls, again or calls we always, like knows to operator,

seeing of -- up so and company it's I $X some to they're XX mark, past looking it's hoping one. a to blew million million kind started $XX So a it is really to smaller some get -- think plus -- chain $XXX,XXX -- $XX up of we them looked at investment, seeing of and investment, major franchising most plus XX -- the million that when up I in not when not them most opened stores restaurants they're we revenue. investment open locations was I've I'm that of a and

franchises; -- we've for a next franchise think lot make it's a the -- and the into 'XX in I maybe hiring advertising point actually again, at sense going will think again of us. marketing we just months in XX of end sorry, the out in I this at person look don't reached year sales So to by year that I fiscal I'm 'XX. think And

acquisitions or between seven opening a month be very months amount the June lined -- we're really next going and keep busy on I about with actually we've I all, we I first is openings opening we only to working going think several opening a bombshells September we there to of the that focused technically got and XX; to so this nine locations locations, month these we're these of four stores, next on while four know is period the management XX because that's they're there, period team them, be bombshell club saying very mean up. XX going busy the here year hard be we're so really that. four

and if franchisees right -- we'll make energy take out So actively happen the comes -- actually now. something person it's along, something but time to the we're searching not right for if it

Unidentified Analyst

location? and do you And some [indiscernible] this just I Wings; items today, bombshells with news and in some legal terms this now the of the are of guys assume terms anyway Buffalo sports betting it's second happen possibilities on that see of well doing anything of question, Wild now I in to

Eric Langan

isn't it. of look became think at our legal I mean, markets, it sports I we'd in in our betting any markets, if legal

betting. some at are we're stuff team also of sports kind betting We fantasy looking the some sports at but looking and direct EA not which is again, sports of necessarily stuff

league is fantasy talking with a do groups That looking sports lines some point with revenue additional been some share at in for future. at platforms. the bombshells something where else's like of have could someone the we be to couple with something We revenue those start or a we -- different along

Operator

question [Operator from Isfaq Capital. Farooq comes Park West Instructions] next Our [ph] from

Unidentified Analyst

recently? or Scarlett's already $X size ones Somebody for asked smaller or like the targets, be M&A to a your regarding $X of the extent? you And going sense million is like be going the to Cabaret M&A the one is geographical it you like do target, million did it some the have of

Eric Langan

ones $XX looking active the we're million. now at The million are in to $XX

Unidentified Analyst

And which primarily? at, looking geographies are you're

Eric Langan

talk about Because markets which at figure too acquisitions we're at. to such though. markets, Not Thank they're disclosing it's time. if looking easy this which you that out I

Unidentified Analyst

Okay, I understand.

-- slides that was is high you even Another in debt; your long-term your margins your there almost are a also that or too, know I mentioned comfortable you've like your to well? so; with creeping million are rate debt debt up, as there are though you and comfortable there on company's $XXX debt one and grew it interest of with is growing lot the commented

Eric Langan

to We how let rate acquisition, million the about basically XXX% it owners. performing we we're there. all. have so rest we $X is is none real Scarlett low as lot of remember, financed will some we We've was to which the balloons financed high the borrowed XXXX, at if the payment decide associated which the estate real expected, a we'll of move average at taking money that of of payment, very we're most that got slowly a and started $X.X not company's I million going rate with acquisition of million down debt. you is financed the is in rate, that debt. that X.XX%; debt out associated in we're so with the about of estate interest is our owners, mean worried a $XX to very worried of not Scarlett's,

As we the land that's bombshells, sell-off some the around producing non-income and drop the of going to our properties debt significantly.

a our principal know, of there no as down extra biggest payment I property. course, level debt the make to and XX most $XXX,XXX worry, -- we goes year is mean -- continue the in of service refinance we million So, months our $X by monthly don't thing of on the to when bank have centennial

associated below no, is the included on here the debt open, at considerably four it's bombshells those or remember, when our on as EBITDA So in -- with there no worries debt to -- all is Xx and and going is the bombshells well that's well level, already. EBITDA can't mainly our expanding as is grow EBITDA

Unidentified Analyst

into of bombshells; just And scale margins read lot to it this anything went a more operating sticking bombshells leverage, of up quarter, the is to that? is there

Eric Langan

bombshell the well, the down. pricing, so got as stores the we're is so percentage that's opening the you've that's are management to we're doing oversight power, going same-store getting right, as margin. buying is the divided and -- and oversight And able management revenue Well, the figure of more by we're all are buying volume to costs of helping. more better revenue, negotiate larger more being We're expand your helping so sales -- increasing

hoping So of not margins to around more point that so increase get open another lot margin we're think very stores, next those still up be I'm happy. is There about out or close little, I think that running see we'll a but XX% -- bombshells, four as XX%. we'll we'll on we obviously I a the two it,

Operator

no this the any and to questions. I'd additional Once questions. take at time the questions. And turn we'll ladies I'm at Gary to for any back ladies remarks. over And closing again, showing floor will and chance be this gentlemen, gentlemen, this last point like final Fishman for

Gary Fishman

couple operator. included a you, Thank supplemental appendix. our of in slides We've

a there, in calendar our up. have We things coming few

a anniversary Las XX it's to is club Eric the Rick's Annual then entertainment Rick's XXrd adult Broadway, guess at door. awards. the X Fifth Vegas, the show our at RSVP-ed from in companies, national XXth and Cabaret call trade is for in XX haven't the convention Expo the Gentleman's joined West having o'clock. you late, tourist industries if Club earlier merger X acquisition the you and talked tonight New night of and this I we're to me Cabaret with about if ask at between So York is management XX Street as August

sales. on we're next of week our in On our annual holding clubs clubs meeting X thank night, October XX behalf and following on subsidiaries, bombshell always, quarter and and and reporting and company, of the or Eric, as good we'll at you one Now night our our headquarters the restaurants. Houston, of please be August you. corporate visit Thank

Operator

has do and thank Ladies now presentation. gentlemen, We the attending you conference concluded. today's for

your You disconnect now may lines.

RCI Hospitality (RICK) 10 Aug 182018 Q3 Earnings call transcript