Unidentified Analyst: When it comes to buybacks right now, obviously, you guys have your chart for when you should be aggressive or not. But obviously, with the influx of the cash that you’re going to have on the balance sheet and stuff. It’s — I mean, because it sounds like you’re not in any negotiations or anything close by where you’re going to be doing any big deals at least at the present moment. Are you prepared to be aggressive and get back to those 130,000 shares that you put out at $80 close to two years ago?
Eric Langan: I’m being thinking a little more aggressive terms on that. I would like to get us back under 9 million shares total outstanding. So I’d like to buy back a little over 300,000 shares at some price here depending on what the market opportunity is for us. I don’t know when I that aggressively — we closed the loan on made can remind what best — today is Thursday, we closed on Tuesday, Bradley — or 8K went out, whenever the 8K went out — we closed last week, I can tell you that. I thought about getting pretty aggressive. I decided that after talking with our attorneys that I should wait until after this call, make sure all the relevant data is out there. Now with the casinos kind of in limbo, we’ll probably stick to a — for at least the next two weeks, we’ll probably stick to a more moderate buyback if we start buying back stock.
We may not — I don’t know. We may buy maximum under safe harbor. I can tell you we probably will never buy over a safe harbor amount in a single day. We will stick to the SEC safe harbor provision for our buybacks.
Unidentified Analyst: And what’s that number approximately?
Eric Langan: 25% of the average daily volume management so long as I had to worry about it because we actually we used to use a little local stock broker. Now we actually use an investment bank to do our buybacks. 25% of the average daily volume over a 25-day period. 30-day period or some 10 days, I don’t know.
Unidentified Analyst: It’s like 8,000 to 10,000 shares is what you could take to.
Eric Langan: I think it’s a little higher than that, but I’d have to get to — I mean I can ask I mean, it comes up to 14,000 shares, I think, last time I looked.
Unidentified Analyst: But you have more than enough cash to take back $130,000.
Eric Langan: I mean we’re setting out $45 million in cash now will be closed the loan. I mean used the whole $20 million to buy back stock. I well, I can use 13 of it — so the Board would have approved for me to go over that amount. But yes, I mean we could do that. We’ll see what the stock does. I just — obviously, when it’s super cheap, I get very aggressive. We’ve seen that before. And when it’s — at these prices, $100,000 a day or $200,000 a day I don’t consider that too aggressive. I consider that just a nice casual buyback or cost average in and out, and we bought some stock at 48. We buy some stock at 56. It all was out in the wash for us. And over the long run, over a five year period, it won’t matter — when we bought it [Technical Difficulty] price and it will be five years from now.
Unidentified Analyst: Well, I mean, you got two deals. You got shares at 80, you got shares at 60. So anything right now is net return on cash.
Eric Langan: Next 300,000 shares — under 60, we’re benefiting, right? I mean we bought real assets. The bought real estate, we bought cash flow. Both of those acquisitions are performing much better than they were on the price that we bought them on. So I mean you see the Duncan Burch changes of 23% increased revenues, margins up to 32%. I mean, that’s a big change from where we bought it at 1.5 years ago, a year ago, right.
Unidentified Analyst: And then with like, obviously, over the last number of years here, you guys obviously have a huge amount of real estate portfolio right now. I’m assuming like on a lot of these things, when you did with the Bombshells, you had ancillary property and stuff. Do you still have parcels and stuff that you can sell off? And like what possibly could you sell off in terms of just land or places next to the clubs that could — that doesn’t do you any good, it’d be worth selling…
Eric Langan: On a cost base — on a cost basis, about $4 million on a cost basis. On a market basis, we have one property that we just turned down $9 million for I believe it’s worth.
Unidentified Analyst: And what did you pay for that?
Eric Langan: $2.15 million about four years ago maybe. We’ve got — basically, we have three parcels of land left. The Aurora property that we recently bought for Bombshells that we’re not going to develop is Bombshells that property is up for sale. I expect to have a contract on that hopefully in the next 2 weeks, according to the broker that output on that. I said, I turned on $9 million for our property in the Houston, Texas area. It’s about 19 acres. I believe the property is worth about $30 a foot if we got prime price for it. But in this market today, probably closer to $14 a foot, which would be around $12 million, $14 million. I know I think the price we got offered for it was closer to $10 a foot. If somebody came in at $12 a foot today, I’d probably just take it and walk Friday was a fast closing.
I talked about broker pretty regulators a lot of — it’s the largest contingent piece of land within about a 5-mile radius at an intersection of two major highways. There’s a big giant Bass Pro shop on the opposite corner. It is a prime piece of real estate today. It wasn’t when we bought it because it was zoned for in a special use zone. I petitioned the city about 1 year, 1.5 years ago to rezone that property into basically C1 commercial, which is basically any viable commercial use. So that probably — and that’s where the value was created is when we changed the zone, and that probably became very valuable. And if all the other large pieces around us got bought up because we had originally planned to develop that property into basically a mini industrial park, light industrial park, and then, of course, I got a look, RCI really in the development business, let’s just sell this property, and so started shopping it out there to sell it.
So we’ll get it sold, I think, at some point in the next — the next six months really. I’d like to get everything — I’d like to really — or we’re actually four months now because I’d like to get everything lined up by October 1, 2024 or 2024 to our fiscal 2025 and get everything back in line with our K strategy like we did in 2016 and ’17.
Unidentified Analyst: And I’m assuming anything that you’re buying at these current levels is meeting your capital allocation strategy?
Eric Langan: I think everything we bought period is met our capital allocation strategy. I don’t think we have anything invested. I think some mistake, if we made any mistake was estimation of time to open. And so therefore, the carrying costs are increasing. And I think we’ll still be I think we’ll be within our capital case strategy with additional carrying costs on everything except for maybe these casino ropes because this time line is getting crazy. So we’ve got to weigh that math still. But on everything else, the Bombshells properties, unit, we hope six month, maybe the return on investment is 25% instead of 45%, but I still think the return on investment will be very fine. Cash on cash wise, we’ll still fall within the ranges of our capital allocation strategy.
Unidentified Analyst: We can’t buy clubs by stock.
Mark Moran: Thank you very much, Eric and Bradley as well as all those who ask questions. For those who joined us late, you can meet management tonight at 7:00 at Rick’s Cabaret New York, one of RCI’s top revenue-generating clubs. Rick’s is at 50 West 33rd Street between Fifth ab and Broadway a little in from Herald Square. If you have an RSVPed, ask for Eric or me at the door. On behalf of Eric, Bradley, the company and our subsidiaries, thank you, and have a good night. As always, please visit one of our clubs or restaurants and have a great time.
