RICK - Earnings call transcript Q4 2018 | RCI Hospitality Holdings, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to RCI Hospitality Holdings Fiscal 2018 Fourth Quarter and Year-end Conference Call and Webcast. At this time, all participants are in a listen-only mode. [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. Please go ahead.

Gary Fishman

Hector. you, Thank

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

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

Eric Langan

turn Slide right. for All everyone. X. Thank you us, to joining Please

cash quarter nearly year-over-year. which for $XX.X Total of up results. than quarter There That XX% were noncash. after share, of million. EPS year. to closed our was our $XX $X.XX up most a in than the loss expectations. and XX% today, $X.XX. than year in year-over-year. totaled year year-end market a per we That's revenues That's was other for are Fourth $X.X close due fourth the filed We more XX-K good the to non-GAAP flow On up was million more this to slightly report timely reported Free of million, X% pretax were with results higher last basis, year-over-year. were time that line pleased and charges,

expect Pittsburgh fiscal acquisitions, we new from the Houston Chicago lease ahead, remaining the Looking to nonincome-producing the location properties in sales in same-store benefit sale XXXX, Nightclub and of and Bombshells area, several growth. or

target X. to we same-store year-over-year this a that is in Nightclubs Sales a initial month, strong units sales. year-over-year As announced year-over-year, earlier our same-store represents of is goals. sales quarter-specific and Please corporate events turn target XXXX in our offset with fiscal our million. increase free XX% flow This disclosed. we XXXX consistent previously due from a X.X% fiscal virtually benefited cash original Bombshells a $XX sales from to level were number increase as new comparable decline Slide

small contributor, other of This the Energy reflected a business the While drink our nicely. under Robust management. segments increased revitalizations

slightly do Improved down sales sales tax in Operating the in charges other at reflected to was non-GAAP in we little. canceled plan a location. that margins $X.X and the a in which impairments calculations. charges Nightclubs to Dallas Bombshells also bit. discussion of not lower non-GAAP Other location. Foxy’s the location charges, year-end lease profit, for quarter Willowbrook due in This was the from We relates Nightclubs Austin basis, impairments charges million due and the other three the Other reflected sales from turn Other and On items a a Slide segment sales entirely affected excludes other strong to charges to fourth more and Club revenues results. settlements. also noncash to August tax former exclude $X.X was up lower in other state our million very $X X Please the in Las the and Bombshells This That charges than clubs Gentlemen's in and segment. were settlements, which we Vegas. noncash sell little income offset EXPO or and million operating Texas in segment. a had

tax We this are the XXXX development settlements. was and improve location. changes states considering we to We halted Austin, the some performance had had which of where with in Willowbrook landlord, three in conflict sales

of was But than cheaper likely have opted did these excluded non-GAAP New a amount interpretation in we sales a application What engage the long Under dollars encountered laws, the it's multiple a retroactive to settle, on York years. because more was believe than the of is court we rather in not $XXX,XXX. for for largest XXXX sales tax as not we from drawn-out audits The taxes of routine. become required. the in at calculations, run. longstanding tax fairly was us dance fight, collection

near recurring quarter. anywhere the we expect what don't we amounts fourth in However, seeing saw

You and should also tax rates quarter. our for note year fourth the effective the

included of as the For of the result a tax reform. XX.X%. the a was it final $X.X in calculation liability in year, deferred of million This benefit the federal reduction tax

year. However, resulted a increase fourth quarter in to tax this adjust the the in for

that, The year. in tax in we Slide XX.X% Please resulted Having the and period, reduction record highest the basis, Conversely, to quarter On to sales rate. the our typically ever tax adjust fourth for non-GAAP this a growth. fourth said seasonally fourth X. quarter turn a row with quarter for fourth tenth is income our used weakest quarter effective revenues same-store the a quarter were quarter.

As been in to been EBITDA our the quarter. ago have points basis calculations year excluded, tax XX for Slide non-GAAP Please from ahead would the margins quarter Fourth million. turn of at settlements adjusted margins, $X operating X. sales had came

XX to debt June rates and it bank anticipation from acquisitions was than from hand year, up XXXX. close with million, more and XX% Chicago up September year compared cash other of For November. at Pittsburgh million, Year-end $XX in on the close was fiscal $XX included and Cash a in the up XX%, XX% XX to ago.

enabled million, our rate X. free slightly original XXXX, developments. Slide fiscal the XX% exceeding target. As to of compounded turn a achieve review of since growth totaled flow cash year our result, This take us cash ahead like I'd free recent Please some corporate to minute flow to $XX.X a objectives. for a and

Bombshells' the real to Club fourth Houston. to During banks borrowed in Philadelphia in partner expansion and quarter, estate million from out the we $X buy finance Onyx our in

funds We to real a for our Please million, related from $X just first Since In unsecured net line raised also rent while a October, million million rates to million Please June debt Chicago Parent-level more to to I ago, is new and we our of the $X like to signed club's increased and loan. and other existing Chicago flat. and with was interest million third a in estate the million out Pittsburgh declined. banks and a of fund than owners. increased Approximately the of weeks acquisitions. the the two a Houston. XX% a fifth November, Combined, Pittsburgh draws that for the on closed In this from Slide to estate EBITDA to to on average our $XX respectively. on total some construction generate This estate the area. to we the bank real remained review estate sold and Pittsburgh Slide quarter club acquire our net Chicago acquisitions. be Bombshells $X to XX, debt the business cash-on-cash the in turn used All triple I'd new net slices East expect help debt. lease restaurant them from real our increased to and corporate for borrowed we plus objectives XX%, chain seventh clubs. acquisitions. we parties Houston in return in portion mentioned I-XX debt construction. the turn debt would weighted in the XX. relatively Bombshells This cash XX and subsequent of Real Philadelphia $X XX-year close $X note opened

While that manageable. April. be off to amortizations by continues out XXXX $X of line end million the to point bank I'd be will slightly include our paid of loan installment higher, debt like fiscal credit

the to a we XXXX also Bombshells will sorry, year-end XXXX September after $X.X XXXX to end of And decline. of one should also – see XXXX, for the the $X note part X.X% At freeing XXXX basis. before loan. million that dropped Occupancy moved I'd Centennial X.X% fourth quarter. the to the million areas that new to our in I'm month, of amortization $XXX,XXX $X quarter loan large the in become largest is XX% or drop up Scarlett's annualized fiscal construction Katy's real balloon like to by cost, value due. million We for the continued a realty point, expense, estate of balloon year. our will an on loan in it on It less and

Please May Total ago give a up sales the ahead, fewer fourth week. the Nightclubs sales quarters first time were update year, schedule we in XX-month sales first total Houston opening they ratio due cash the or Katy’s this lining trailing October in two little there total was the due in of inspections. three calendar This Foxy's from May. should a months June. Our construction due Astros. with same-store a We've the soon. fiscal location borrowings from potential and addition tenants both XX. The closed of solely earning XXXX. to or year, in was quarter February. have significantly Last month in ratio November debt months US up hope of a as flow Xx. postseason allocation in are to compared see for year, In ago. controls. XXXX at first be like acquisitions. properties, the two like in and turn we turn early The XXX to line to benefited earlier or clubs April plan final development. also A Slide XX Pittsburgh to We're great XXXX. in adjusted $XX call, Year-over-year to ratio US open for XX. games. and Bombshells of keep our decline. XX factors should for same-store Onyx. quarter EBITDA this XXXX of World Cabaret. expectations. updated the million. for Astros big last of based two scheduling or X.XX please in right We'd rebrand ahead slide X.XX There increased Bombshells to which will Both Series. Slide free June here to swing the the our yield are and increase I'd rain to Q will Chicago open you will acquisitions two we've on because location for our to Will Bombshells very open and to Chicago won year Philly, sales beyond this the income challenging, the us the the of below our Since the of anticipation to capital target the be we both for to Rick's a We could on Dallas of year on working this to first then and quarter show updated In delay The fiscal And new played are affected performing initial Pittsburgh with sales XXXX, clubs strategy? in

for calls open As exceeds relative if on our cash yield cap you the flow strategy rate double our our free shares market to know, repurchasing our market in digits.

less. rate Slide XX, turn With where that the cash buyer about $XX Please we at capital a are free in our goals. of a million, $XX the I'll of context to more financial discuss or share means flow allocation

this We also simplified slide.

annually to of more back share stock what cash accessible risk-free our we to on stock to As grow XX% cash at stated free we these now, free Right get strategy, where be flow prices using based price, than is current consider flow objective XX%. we allocation previously, through three at as can given buy after-tax our much flow cash on are strategies. our focused to XX% yield capital per

or are club the buy believe to We Having back clubs said unique that, take gentleman's new I on time opening new definitely is restaurants. inclined a rather stock this than industry. additional more in buying risk

will appropriate, meet still corporate M&A. actively where our objectives and when looking acquisitions we at So, assuming for they be

underperforming involving focused We cleanup on year. are also finishing effort our clubs this

providing or adequate know, of closed leasing you capital that with not properties over we locations selling As allocation which being more aggressive return. are few the calls last have in a our repurposing, strategy, years for number in line

We have pretty much divested all operations. underperforming

be and the or under to any sold so, sold. leased, in next locations or Now contracts be non-income-producing quarter remaining should

they a three to As giving for where We strategy of the market XX we well. assess locations complete total want us very time to in we real to look are. our trends, return Bombshells, developing ourselves. are intend of development, and ensure and on working the want to to locations. estate will we we We owning at spend Then growth gauge the and want

due As that communication, for happy lines earlier our concerned it Thanks the XX% it's our call Operator, XX Thursday, call also capital January day. are figures of Q&A. appreciated. questions such To us while we yielding believe the strategy. short we long-term price anyone following the is all will shares location conference not and first start cheap, to for be open price, who investors supporting a be We'll it's will this the releasing not, sales buy available our hold for as advice stock this answer reward when period. over when this during to holders let's to or notice. expand truly for It's we missed to we discuss quarter keep we'll the

Operator

first Instructions] Please of comes Our the line Thank with question. Sidoti. Frank your with you. from question [Operator Camma proceed

Frank Camma

good Happy guys, afternoon. Year’s Eve. Hi New

Eric Langan

Frank. Year New Happy

Frank Camma

margins or What's what's look the the clear happy lot wasn't weakness before anything. mean, pretty the good you – reported, picked here, of actually HI. at surprising you're revenue, I XX it's Bombshells, expected on same-store which you a percentage up given it that – already Obviously, when at of gave which in points. of with. you fact goods not interesting since And sales basis I detail on you your of sold year-over-year cost when the decline you was look would actually is, revenue, have the a

typically a costs in not where find operating restaurant is are in leverage, manage a negative will? you the had like you in how scenario business, So, essentially question able that you to which decline sharp fairly you if would

Eric Langan

control stuff – I keep able to well like kitchen in Yes, staffing mean, costs line. those help we're obviously, that to and

with there margin, costs the bills One affected of course, of the associated the some legal well. biggest transactions were of that [indiscernible] is as

think look are I forward. move quarter, this by first as March be November, and hoping how at Cowboys really going think, what to the that's pretty with those of the October, Madness, I December period time. play to playoffs. March, I kind is So, the to long you're have big call quarter quarter of trends a a the boost where going get would going I'm a made to then catalyst we good everything the over Texans Both a And

had Super we're a Bombshells Saturday March, the for weekend keep into to on team wanted. gives had root we're back. can XXX alive, Bombshells right well. they locations their see more as of towards once playoff bring will will some on different weekend, really pick lots unfortunate these back think considerably. help like the We've in get were lot. a couple them of us let's where that next we hopefully, going Plus, where the freeway get this other And Bombshells So, we construction we shows I and Madness hope moving good back bike before should and exposure incidents. definitely helps of be warmer because done car and definitely forward really to market. that hopefully, will rides spring. start. patios that And that the big a our that Bowl. type opened, a weather I we and up this to our And But to get give And March I us We'll working definitely of things know these which that to think us is help is looking going

Frank Camma

revenue far But still to – percentage the is a cetera? you as how you're haven't, all much to it you guess, Because good like shift would details shift as, seen indicate Bombshells I got seen in I the you haven't at there. of food, versus a getting et haven't yet, a Have margins alcohol follow-up that. at

that... So is

Eric Langan

We're slowed alcohol, it of But what still the amount too. not we decent down food of doing a some little a were. like bit seems

of So, getting mix. similar a very kind you're

Frank Camma

in open standpoint? when weather winter? curiosity, a can And from Houston, Okay. you Like just do early patios of up actually spring, outside? late mean, sit when out very I

Eric Langan

Well XXs in the – it last XXs week I sometimes Houston. open mean, in mean, right was now. I they're and

depends. a week days. this just mean, gets couple warm of gets it – cold of it So, days, it couple I a

what night that still we're At cools is days. really off. all use. getting time, still want So, some But you it

We have have need it We back a hoping in normal. want can to two get close of we the cold February really usually Texas, into there doors. up, we're that typically, by -- it I'm sometimes. couple In to March point. extend maybe warming then gets mid-March. weeks it But to we that pretty and starts

nice we Madness, So, a big as make early. those spring, will difference I'm games March those do. started college get that I all this hoping pretty think year They a well. get But games, always all

Frank Camma

Okay. No, know. I

on you lately, you're Moving you've know two or already I done rebranding acquired. it Nightclubs, the that the maybe to

So, one? And I the guess, correct? you extended Is premium both that for more for I more Rick's a with just know hours, name. – or

Eric Langan

for already early Chicago. Just Pittsburgh regular hours. has

opening So, p.m. hours X basically, Chicago at of Chicago. p.m. at instead just X the this the We've point, extended

Frank Camma

in anything the Does is much, on unchanged of pricing? pricing type short-term, that to do an allow Or pretty you event?

Eric Langan

a It's hour. pretty We're happy doing unchanged. little

of allowed hour of the where discount Illinois can of hours amount certain you a in You're State only happy pricing.

Monday X party already start it flow – p.m. X:XX, at really started, the when by Where to going. maybe a pricing till XX a bringing people going. party Friday. it is, to allows X:XX, hours X does we start There's basically, is already What coming there's discounted just getting really X:XX, p.m., people XX:XX. p.m., From of everything in. So, us isn't you going open so in, X

so, pick been working very And little early up we we're well us it's that basically push hour so that those can hours. And happy for hoping far.

about So, now, original We rebrand. up. – we're – very right have the still will are We'll it. names both signs the – both excited

name people in I you than print signs we've and that other a all as it mid-January. think to stuff before used actual the stuff and happens, rebranding enter will get happen new from done and our they TV club, change

Frank Camma

details financing lot gave the a projected Okay. there Could EBITDA these could on And separate what on is either/or way combined? – like, you an of approximate clubs. you or of from a are, give us, two and just the revenue clubs annual or the basis you – LTM just either

Eric Langan

between million to $XX Yes. and $XXX,XXX looking We're million per $XXX,XXX around Basically do combined. week between a – and location. $XX

Frank Camma

base your okay. And assume lower the margins, those EBITDA they Okay, of today, than so time? you margins business, as get are over I

Eric Langan

me hard It's the tell. first is the to be It's going mean, still last early. that really for I day full today month. is month to of and December

So for Pittsburgh partial some are can – financials have don't the the information numbers just from have call, December Maybe maybe at by you, on far XX if on I by then. November. we better basically, finalized this get seen – all some January so I've I'll time. data enough

Frank Camma

this you So, like XX give is why And you're you said of the the notice January call, that hosting short can Okay. that right? call really reason us...

Eric Langan

right I callers it can is can was I know Year's I New mean, tell right half this have it of now, – I And that the notice. I just call mean, Eve. want number you normally on see – And I now. short just mean, we've we I about Yes,

because to to I Plus, able K have a people just to going So, significant didn't time sure locations. and everybody so and think be have is I to – I questions. I'm people that of get the the to dissect quarter revenue new want stuff, people really dissect. for plans want – the this be

on every been done. think because me for Christmas weekend – So, you but available want locations, through we those really working I K don't have to nonstop just getting we've more have today, I I this through Eve, information with

Frank Camma

Appreciate Okay. Thanks guys. it.

Eric Langan

Thank you.

Operator

the Dawson [Operator question. James. from next Instructions] of question Our Kolbert comes line with with Please your Jason proceed

Jason Kolbert

it questions your you the Thanks. and how think a ask quarter. just rates wanted growth dose have around to versus free kind your Chicago, Great interest I understanding impact Philly rising of Pittsburgh. at aspects. you of answered couple debt? when and And Houston arbitrage cash And look I flow to versus what

Eric Langan

for Yes. So, whatnot. us notes and to big financing We financing Well, two years bank I right? back ago. them before but a our got of with we that. it has couple was We less mean, the did than interest of Centennial. with head rates most starting up, was small been note declined, individuals our just first have got But

So, for there for going real locked have increments. I But go or here basically don't rates increases for maybe in not interest We'll think any in as it's long-term to have continue effect our five-year get us. to – rates we've us, up. it's effect much going to slight if the

move All short-term lot actually, that individuals XX% been we soon. from as forward. don't we're have those actually have hopefully, I to of anytime we that anyway, paying rates think of borrowing typically to we'll raise around down And going is to start a so do our

on So, it effect much us. have shouldn't too

Jason Kolbert

understanding the first margins, through dynamics of And difference the time modeling bit spend the between we you'll quarter clubs the the call a in I terms in should little more that of kind those coming how versus businesses. drive just Bombshells up, be gentleman's going hope

Eric Langan

problem that. is work biggest Yes, data we see. now have Okay. to we on enough don't just right can Especially, our

to get we're I in. by think there quarter March March. February, get So, to We'll going January,

in some that we're to know – see the we that We starting idea idea rebound. we'll lot So, quarter. a I think have better get

close. incidents kind really are unsure or for thing surplus important and this the the of we over things Bombshells rebound way at we're same-store actually growth us. of sales for question where in the start do those rebound That's to getting we So, time. the the that prior we freeway all is where the we And do back had we were

So...

Jason Kolbert

you. Thank New Happy Year.

Eric Langan

New Thank you. Happy Year.

Operator

your comes Kingdom. [Operator McCammon with next of proceed Please Darren Instructions] question line the question. with Our from Cash Flow

Darren McCammon

guys. Happy morning Year’s Good Eve you. to New

Eric Langan

Happy New Year.

Darren McCammon

first what my on having can do to announce reporting Year's? that, caused you in around revolves what New differently So, year? question delay and the you And next

Eric Langan

is, all new put rechecks in to were and through pound that the that happy audit systems, to so sure those It last really to say say was of that be BDO to massive get by least. that that intense October, really was were there just to make I'm because done numbers software our we the and to the had work all able were staff, we XX. it We the solid, through checks ERP December obviously, we between all cause no filed last and separation all of errors. system staff the duty new there And out amount audit, a get done. had and new of a the of issues main Well, the to year and with getting

Darren McCammon

numbers you don't picking a Well, there's pretty an show holidays, time worry can that. you need Thanks. the to about so like considered I guess, ever Okay. different in close well, Have case the skip that issue? to you so I

Eric Langan

season, right? were the we January to holiday. XXth, have we if is idea, you to by not because start the would going till filing you're X, be supposed skipped filed And tax April. normally, Well, the so It

tax in be season. So, going you're to now

slow this got auditors I at really most quarter. for mean, good point. time This pretty we've think is I a So, a

work ordeal. mean, system big There are software at cultures at like years live just system fiscal it's very, about I We a – it's new in to very basically, and a is was It when I about still the big And the said, XXXX. to you end new implement. – system]. are done. the BDO. – fantastic. accounting almost which to XXXX. for I the XXXX just new together. it's the significant a talk was two we've have us full we're ERP think change undertaking this [EPR you really – think early of very – to It – took We system look started But It full went like

the and it able system have again. talk I gone filed the in in – would've mean, things system Luckily turn crazy. the recall what much of able really get data new would the Under with You been being everything March better, February we've invoices is all stored done. to old the we're phenomenal. about system, to through, system, mean, this things or do are we I

Darren McCammon

Okay, fair enough.

So, forgive of – so short cash lead me, shares? any Did I it's look capital had flow. to kind you here. a time had not chance your not, And I – allocation? your back buy a if at haven't been if why consider

Eric Langan

the went up then whatnot, we to stuff. filed. bought having thought final into few back a we started do get Then and prep everything tying in stock shares and audit things And November We Sure. with when $XX. busy to the got XX-K below going going December, we we were

I – before we the did going file right But to start So, very on – got now were we've we we we – – like didn't K will we've want – then around And once December end to active got got we buying mean, and weren't all. in busy once at the we XXth, the the month. time. to filing don't buy of filed

we So, out. just waited the to K get

flow Now marketplace, I'm we'll out, the free cash shares can with buy we these sure, prices. to whatever back spare at be in excess K back is the

Darren McCammon

Okay.

So that's my actually question. next

much that now would said you figure approximately? with and that I how closed consider of September million And What's – hand. $XX on think you cash using? you

Eric Langan

Well, kind minimum. as considerable of cash hand million carry the have around we for amount a typically a on that $X We that we acquisitions used of like in Pittsburgh Chicago. and to

need So, needed, that when we'll isn't back we're for it over be those cash numbers and buying our stock. –

And end now. on the currently the anything like said, hand exact more whatnot. and are on at focused the million point, or really like over don't we I cash know been $X on So, number of at that. K I this right we've quarter the than

Darren McCammon

us for with there's real about the past, your just Can a Construction. question been relationship In that outline Tannos Okay. quick? you

Eric Langan

anything us. Tannos some Construction or that of some in Texas, Texas made investments of that's It's Other I've contracting for has personally, where shopping smaller basically. – investments, nothing tell. end is in projects a Friendswood, contractor community centers do no in work about there's does in than his business bedroom no Friendswood, it. don't a that, made to some I've but we RCI and some the Houston, yes,

Darren McCammon

Okay.

So, to you've you've – never sold be RCI? that owned was never any to just clear, property

Eric Langan

and XX be trust Are me. No. BDO they had, kidding? times, With you If party at transaction disclosed. related they'd I look every

Darren McCammon

Okay.

to have ask it. to sorry And

Eric Langan

no Yes, problem.

Darren McCammon

asking million So, target rate or maintenance target? what as current And free guess, of meant Is run XXXX the that $XX you I'm a is that in flow I after indicated a cost. cash factored does it is additional amortization $X of cash two-night cash the how Or flow the clubs, does include free free flow up? million in that that from is it include and there?

Eric Langan

beginning estimates better? our everything in we this do as includes that's It we believe what for put December Could the when we of will of Sure. conservative do we out.

free for we comfortable we if targets. for we've million else year, $XX we'll we be million. say, We've that, necessary. I think raise very do becomes like believe is we're million. And cash at that. would I what In more have and $XX sure, happens year, This our point, if targets – our less. this That's at I of the raised that guess, hit we'll at target the last don't we'll this look, we'll matter flow XXXX we that At in to said the enough come don't thought that – this $XX Just those we'll realized yes, the then point we beginning at done number point. said, think no number throughout and data past, beat a year, that if even

million for As have XXXX. lot overruns. a things. is $XX of of a lot these We've could think growth on got little on. lot of We've our lined debt. got today, took cost I to for a construction out. could We all certain things We've a have get number respectable We got going our plate. on We

number. our $XX or for happen, factored the what-ifs. until whether is So, we happen of those we've And all know don't what-ifs million

Darren McCammon

does steps I which take considered – cash that but I offline. in so to flow $X of actually Or really... million might I But the online, we additional cash asking $X million I'm the that don't – mean, when amortization I mean, accounting And guess, question, – additional flow? down, Okay. an more have – is actually

Eric Langan

That cash flow service. debt be after would

free remember, operating service cash to got And to You've total. flow cash get have maintenance flow debt take you then that of there is would out would CapEx, minus your okay?

for Then total after we for to back. cash debt flow what get for basically use any use had consider I So, principal, could pay whatever service. free you your

more we what cash more out have of already So, debt service. to have down not – we million disposable pay – that's will $X flow targeted

Darren McCammon

Got you.

for my now. all Okay. That’s you. Thank questions

Eric Langan

Darren. Thank Okay. you,

Operator

Weiss Our next your Doug Please with question with question. Investments. DSW proceed

Doug Weiss

think comments the a following what bit a comments guess, this similar I they little and I you you then are resolved in and my seem year? K, bit, evening. K in published sort this those are little had with Good so working Thanks. – but guess that standpoint remediation is up have question a of just you you them and just to issues last this I addressed from are guys some doing BDO so

Eric Langan

look to internal requirements be the you for an and lot that have in internal I a a us company requirements [indiscernible] came additional requirements, segregation much we helped as a just in to to if year, so health get XX-month those for, been with level going the company, of next to on problem working We that on they have these duty saw third-party that the means get on removed what throughout have [indiscernible], working of to is, duty. a of auditing some see order you satisfy mean [SOD] We installed I out mean, and year was meet to bill have for are controls period, right for I clean it lot think call off but what to do needed they software it. to controls. XX-month of to we’ve we which through call better and numbers The the controls we entire we so we period. do be all the anything comfort the been of entire hired order they have checked already had this

have they we a like every been control so cash samplings they to single more have [indiscernible] we much standpoint larger used on only of do items So, – these to basically, on get in. lot where counts do will a lot they complete, a typically have do was cash in there audit what

Doug Weiss

or And in brought to a … this XXXX in you year just consultant new

Eric Langan

how and up for an come of it, you sure your they and your requirements. to – I in consultants and of accounting internal [indiscernible] basically you segregation say they not basically exactly requirement but write help are all the am or duty internal is all controls need companies It set except

Doug Weiss

you are helpful, I next when national of you as originally it mean to roll up referred restaurant, them I chains, mean their in working they of you with hired take experience guys to Bombshells kind you Okay. the level? terms helping BDO approving restaurant is helping

Eric Langan

this got There of cost added and done discuss and and the to members haven’t at generated. that we we filed at committee yet board point. going even are we [indiscernible] unsure just I’m now have K third-party – to going has been cost it altogether have audit the their a the look with lot been some cost, cost put we got to we’re

to on look are getting wait this going to say, we benefit forward. are and We these out and all costs cost a we at have to to going are move

it So, things at. of we one are the looking is

and and with forward I of move know basis at are. here the sure. be are have some board and right staff are we don’t members just software accounting forward just say on me all of as go XXX% data okay, of the a know going I and that have additional change those those costs we was options to we and Now, put everything is, down we will part trading big getting to – value look are hope with and I a in enough to we we talk I front that. now at are certain where on

Doug Weiss

provide a Yes. in public it seems in a profile have has – they guess you I good my time – are and not, use mean shareholder seems bit long there like a – maybe guys I I more of that this what, a a of accounting, things maybe in in but there just like it’s get I been I or head they these guidance just at more so… kind as been but are those could could – maybe are you little to of higher of little sort you I mean point saying it am terms little need be scratching improve, brought it you just to think since auditor.

Eric Langan

the be Yes, going to next and I’ll that know, reviewing I just over a weeks We're don’t have better... few exactly.

Doug Weiss

right. All

Eric Langan

like mean, file but then weeks, row that, said, That’s everything. XX-K multiple tying we we've nothing, very systems, in of if of their happen for our… very, to they realize through helping then We're once this and push really, getting we things wasn’t expensive been a certain …understanding. were of our confident got really to point [indiscernible] then that this I I two going requirements filing. teams it from more it on make year. four this we wouldn’t and last things years had samplings of everything to the support side, and audits we've – again out

Doug Weiss

I'd But think… – yes, to just I – like

Eric Langan

everything, …how so… much accounting,

Doug Weiss

that I that when work that expand hard much – to you the and your…? I'd done like now be getting you’re you're Yes, understand. think kind better as of off you'll [in]

Eric Langan

the That’s sure. plan, for

Doug Weiss

the then would year, – to Bombshells. with do just still two club for I target is even question of share think, acquisitions and a other that plan the your Is sort price – year, plus this be, game my So the lower?

Eric Langan

more more, don't to number start it or have acquisitions to when choose – the we’re sell we club of to target club pay. on really because to a are don't get a price We really at willing acquisitions. It’s

acquisitions So, to run operate that based right we our right the are – and helps. that club visibilities on up so prices acquisitions demand for with we’re the really in the at actually those, line

to to format, summer, the them. down these and all we to on. stores, hard As I I’m going sure. be want five little a far returns that seeing sit numbers. we done Since we planning some and on to we've to new year. as estate this want do own cautious opened, this I I the want where start we basically more to think, seeing We the get three for want Bombshells, start to stores own changed now through a real were the locations

back. about already million spent out. in got stores million Now about We’ve We’ve the first operations five have themselves. from basically $XX for paid capital $XX.X

fairly least to decent the want see out – So, work. locations the one works. I least working are it is how

returns as owning we how much the those types financing, real to bank how are that actually on be – Now turn of out and and what using things our those value and well. estate cash cash

at the year idea, So, all more itself. right this the at, into looking or by run I always before stock we’re we we I I into opportunity much our a it changes, something we’re will And stock start have our than $XX maybe this we're course, mean, a into think, summer we optimistic price say, our lot we at September looking or stock – on At Bombshells maybe the even were think, when buying really better point, less right now, fiscal it digits, end point. of – interesting. close of was of the as a wasn't return with our when know share. back low adverse you risk single Unless,

a to cash we Right work flow. and easy cash over putting had So, pretty a that way returns on to getting work. now, free put cash of XX% have to we our

Q –Doug Weiss

All right.

Year. Well, Okay. appreciate and answers New I Happy the

Eric Langan

you. Year. Happy Yes, Thank New

Operator

Cyrus], from comes Private question. [Operator Investor. the Instructions] [Peter with line your question proceed Please next Our of

Unidentified Analyst

Eric. Hi,

Eric Langan

we how Hi, Did lose Peter, Peter. are you?

Operator

think did. I we

Eric Langan

Okay. [Indiscernible] able to drop.

Operator

your Peter proceed [Operator next Private Instructions] Our question. Please with comes Cyrus, Investor. question from

Unidentified Analyst

committees run you, audit tell amount butt time has, have I to public everybody the of done lived but And from companies through. understand it gets for is, a is would I’d in somebody it? has it level once that auditors, going to else accountants, I it's who many want lower pain I just energy big change first is to time it Hi, has instances, the who auditors and frustration has a fine, you're that and you spend, it the comment, which and and I mean, many lived in work,

Eric Langan

if basis because a I And I done, if don't so… be, had system have but and much lot. lot. ERP will much, a of is going a I I hard known it. stronger we how learned we go-forward have would have appreciate We learned it our for was say, it, think, know to

Unidentified Analyst

change the is and I that's and does against procedure. mean, – operating nothing auditors in goes upgrades puts verse, ERP a things, system happened the an who ERP system auditors this chapter same within to through and stuff. an in all surprise these standard Anybody is This a me. is

So…

Eric Langan

in I would recommend one future at a the people. time other to

Unidentified Analyst

Absolute – is oh, absolutely. [hell]? Absolutely going at once both through

Eric Langan

way. easy the think [Indiscernible]

Unidentified Analyst

you ask want I mistakes back about of about if have and the and Bombshells? Bombshells, what's you In question what sort a Bombshells made beginning looked with went acquisitions. you to happened, to then at

Eric Langan

C And locations, in where Webster, doing through very we not does very, we B, that, went They restaurant other since we a so not locations. be was one done first Restaurants we're the obviously, know opened [indiscernible] work Class destination like topnotch now. Well, they're Class which clubs, A location Every but we've we’ve Class far. well. restaurant, to locations. have are every are

same. sure that make [indiscernible] was definitely that the in patio But fell us patio through prompt Second, lease, most isn’t patio of lease, actually will important if we XXX% which leases. deal obviously, rights plays an patio is early concept, our without about definitely in do are lease, [indiscernible] we a the concept it the – our in of just are just, our an the they’re most part and because overall

have might a back sooner. a fast, would are in pushed at little then. we’re have started financing times, think, probably we shape. didn't estate the I but overall, of have ones. those where great two I real bank So, a couple But buying I We biggest

wouldn't, whether say to we a hard did it’s So, where do to would we or to mistake to it are. what have or we was get whether we

Unidentified Analyst

your long from not you to then I've as you be expanded around and I for criticism also – meant now, is been – a learned don’t you them? since The clubs, time. mistakes this a But made

Eric Langan

did. We

Unidentified Analyst

don’t you trying? So, are I mistakes you mean, mistakes, aren’t – it's make – if

Eric Langan

we’re like of Bombshells, the I think, Yes, definitely go, side. as no There’s strong. there. the sales are we’ve I a And we we club learning learned then, on are on – but lot still course. And said, our doubt

go exit worst making go they And still I location ones markets learned in work -- freeway our know, that an south have, very, stores, at is to ours, high prime, of And just locations, of they we’ve which back and a location and out I money. to was We’re on. numbers the -- Austin. probably in Even A would with, average all they’re locations, ones in startup XXX,XXX which Today, out it - is where are. they to and I and sales location up than a our stores building visibility higher looking my numbers that doing concept if that think week And like five numbers. XX,XXX opening said, that's week that very a starting another because I I huge in a but same very they’re the I – as in will I property Houston, XX,XXX not saw run, which doing early ours, And concept XX,XXX, be fantastic. are built don’t. all we're mean, a side. restaurant well It's they’re down there going as very, from XX,XXX these it's

a restaurants So, million about you’re $X doing year. talking

Unidentified Analyst

good. pretty That’s

Eric Langan

about yet. a lot now like because so September, for had we’ve brush-up is a being both literally I of of in days September approved at against it’s and problem, seeing to but retro license these had I of mean, that these. late five approved biggest had in you lot left The we close the because million, September, a of really interest. mean we're each EBITDA-to-debt XX could out max as worked are for contract know, over be nice knows, been any the years to November, financing think, the November, $X those week end think, at We cash land, aren’t you everything have within seeing from until so going a it ratio, but through three-time – we ways, open all we’re I at X.XX% And acquisitions of building, a we're if I right out including money the bought approved the having other, licensing to we in have invested it $X.X we time, opening been some million that is, – money this but in that within well under didn’t Bombshells were us. us December we could of close who have really

Unidentified Analyst

expenses, and expenses and And away all these right? hidden the numbers not in and that, somewhere interest that’s pre-opening of in the it’s

Eric Langan

Exactly.

our all as the expenses we and interest are Now, them, create all as we debt of all borrow. expenses

Unidentified Analyst

I just without are suggestion, as been a pre-opening expenses? press you you might, what in indicate a something, or if if are release lot earnings can doing mean, you of where ever position in have a a the opening and you would [indiscernible]

Eric Langan

number, we before came think about the we week days an and comparing you we XXX,XXX. but that I now Yes, XXX,XXX six amount sales we did the did And idea, [crossing average Eve. just up the in opened give to are just high close We it XXX,XXX to the – in we Christmas it]. such a when Bombshell did store’s of in first significant week, not past doing it was first

we move is I that for to location. new next through do few January is be the going going think a weeks really So, phenomenal month Bowl. big Super that to towards store as

Unidentified Analyst

acquisition to the Right. you strip going as club are acquisition Last Sorry. gentlemen’s question, as in what’s going on you what what seeing are not business? – in opportunities but the club – far business acquire,

Eric Langan

lot seeing lot clubs opening with – of stuff have a are markets of up new past. everywhere, been the for are markets a in We sale

I talking kicking stuff, now on, are lot are we we’re looking with doing a at We a call a of people. lot higher of, lot of

to to by We good. but our It April-ish, is is financial we’ll side – think what the are to that March, as will I be the off going be very are as , get notes, we March we going very, see hopefully, stock close by March short-term does, – very stuff pay We’ve that property properties off. to we’re got million other now going sold. right $X having paid selling contract we becomes the some under

Bombshells of a going basis, We a we so couple those going free-up get acquisition now. or will to be very, are very will as and be price and to are back as that’s buying think what we active going April, upfront leases working within on flow be done get well. To will a ton leases done forward stock I on of done club going right capital go the move on out of cash so the stock we all that into forward does May March, the

to as The outlook to change going move cash change June, May, going is are flow. We I flow April, and really really we cash into think.

Unidentified Analyst

Happy Fantastic. and Well to talking was Eric, you, Year you. a good you have New it

Operator

proceed Please Investor. Wang, your with Our Private next question. the line question comes of from Joe

Unidentified Analyst

you lot the is, of question XX], [bellow I earnings but a emphasis there that your My roughly Yes. only made on saw in release buyback is X.X… stock

Eric Langan

increase we’ve rundown is us. it of to mean a matter regular and become it for has We pretty typically I typically board just – it meeting pretty well,

last we’ve few in think I four or approved five buybacks the years.

about As the for members the is board actually increasing about it it. agenda meeting we run board to down my the fact, on it talk next to

buybacks. fairly is the increase amounts simple process it of So, to authorized

Unidentified Analyst

meeting Okay. board this earnings It seemed just you. the before didn’t have call. Thank of curious you kind

Eric Langan

on pulling or sending up you buddy. mean, has back working morning, back, the out long it to X been today. back phone X been the office We’ve morning, on tiresome K I the and in know mean this the to you corporate pulling experience very calls documents, I know till get people weekends stuff, different down, X in

Unidentified Analyst

Yes.

Okay, thank you. It really get shouldn’t K to out… be hard this

Eric Langan

it hopefully and should won’t It be…

Unidentified Analyst

answers… I all have your heard

Eric Langan

years never sure. It issue and wasn’t for for learning been years XX big had two we last XX us experience years have a – to an

Unidentified Analyst

be you. shouldn’t a Thank it in happening company. public Yes,

Eric Langan

thank you. Yes,

Operator

question and Fishman call would [Operator and of and we for to end Ladies the remarks. answer like session back the closing the Gary have turn to I gentlemen, Instructions] reached

Gary Fishman

Eric. and our of XX for thank preliminary couple Slide slides We’ve appendix you supplemental year. you included in as our the Thank calendar a

a of On the As quarter our the and subsidiaries the thank at that and be of Eric mentioned, restaurants prosperous conference you. please for sales, have Year. everybody you Eric, company visit our event a one best healthy or good to day always, of and And call we will behalf on Thursday, end clubs and XX. and as Thank will our next the night. first New is happy January wishes

RCI Hospitality (RICK) 2 Jan 192018 Q4 Earnings call transcript