RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q4 2022 Earnings Call Transcript

Adam Wyden: Okay, great. Wow, it’s been a harrowing three years. I remember in March of 2020, driving my and seen the lines out the door and my bonehead analysts telling me that the company was going to go bankrupt and I should sell the stock. Well, I’m happy he doesn’t work with me anymore, and I’m still a shareholder. So, look, it’s been an amazing run and you guys have continued to sort of raise the bar. I thought Lowrie was sort of special and now you’ve got Baby Doll and you did Cheetah and Playmates. And look, anyone who knows me knows that I’m also trying to raise the bar. So, I sort of point the question back, which is you sort of had this sort of side with Lowrie. You wanted the business a long time ago. He took a private, you sort of got that.

You’d integrated. Lowrie’s making money. Now, you got this other guy. I mean what’s the next thing? I mean, I know you got the casino, but like are there groups that are doing 30, 40, 50 of EBITDA. We know about with a very, very big business. What’s the sort of the next thing? I mean, you obviously have invested so much time and energy to build this platform and get the scale. Now, you’re sort of getting affirmation by the marketplace, the sellers are taking paper. You’ve now got this cash flow to make down payments on businesses. You used to save three years and have M&A this unsecured money. And now with $120 million of EBITDA and $9, $10 a share, $9, $10, whatever a share of free cash flow. I mean, you can fund the cash component of these M&As from internally generated free cash flow.

I mean –where are we in terms of sort of getting to that next level of club group size and sort of building that sort of corporation?

Eric Langan: I mean there’s a lot of acquisitions out there. We’re talking with a lot of owners. Some are small, some are large. It’s really about the seller being ready to sell. I’ve been doing this for a long time. I meet with a lot of owners. Some say they want to sell, but after meeting with or a while, I can tell that they’re just not ready to let go. Some of these guys have been running these clubs for 30 years and their babies. So, it’s difficult for them to make that final decision to go ahead and sell, but they’re coming around. And part of it is the it’s more convincing that you’re joining the RCI family versus selling your club and retiring. Those some of them are, but of course, they’re concerned with the people that have worked with them and been with them for 20 and 30 years. They want to make sure they have opportunities. And I think it’s convincing as they see the deal we do with