Greetings, and welcome to the RCI Hospitality Holdings conference call and webcast. At this time, all participants are in a listen-only mode. A Q&A session will follow the formal presentation. To ask a question or a comment, you would simply hit star one on your touch-tone phone. As a reminder, this conference is being recorded. It is now my pleasure to introduce Gary Fishman, who handles investor relations for RCI. Thank you, John. For those of you listening on the phone, you can find our presentation on the RCI website. Click Company and Investor Information under the RCI logo. That will take you to the Company and Investor Information page. Scroll down, and you'll find all the necessary links. Please turn to page two of our presentation. I wanna remind everybody of our safe harbor statement. It's posted at the beginning of our conference call presentation. It reminds you that you may hear or see forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those currently anticipated, and we disclaim any obligation to update information disclosed in this call as a result of developments that occur afterward. Please turn to page three. I also direct you to the explanation of non-GAAP measurements that we use. I'd like to invite everyone listening in the New York City area to join us tonight at 6:00 P.M. to meet management at Rick's Cabaret New York, Manhattan's number one gentlemen's club. You can also tour its sister club, Hoops Cabaret and Sports Bar next door. It's located at 50 West 33rd Street between 5th Avenue and Broadway, around the corner from the Empire State Building. If you haven't RSVP'd, ask for Eric Langan or me at the door. Now I'm pleased to introduce Eric Langan, President and CEO of RCI Hospitality. Eric? Thanks, Gary. Thanks for joining us today. I'm here with our CFO, Bradley Chhay. After the market closed, we reported our fourth quarter and year-end numbers. We had another strong performance, with record fourth quarter revenues, fiscal year revenues, and cash generation. As always, we thank our loyal customers, dedicated team members, and steadfast investors for their support. We are continuing to work on all aspects of executing our growth plan for fiscal 2022. At the end of the quarter, we closed on our $99 million bank real estate refinancing at better rates and terms. In October and November, we closed on our big acquisition of 11 clubs in six states and The Mansion in Newburgh, New York. Last week, we opened our 11th Bombshells in Arlington, Texas, in the Dallas market, and our first franchise is close to opening its first location in San Antonio. Bradley and I will talk more about the growth plans later. Now, here's Bradley to review the financials. Thanks, Eric, and good afternoon to all those who are listening. During the fourth quarter, we reported total revenues of $54.9 million. That is up 91% from a year-ago quarter but also up 22% from the pre-pandemic fourth quarter in fiscal 2019. GAAP EPS was $0.26, and non-GAAP EPS was $1.58. GAAP EPS was impacted by a non-cash impairment charge of $11.9 million. Most clubs rebounded significantly through the year on a favorable trajectory. However, for the full year contribution from the clubs in certain locations which had a more stringent COVID-19 restrictions did not recover as fast as previously projected. Net cash from operating activities was $9.8 million, and free cash flow was $8.5 million for the fourth quarter. Net income was $2.3 million, and adjusted EBITDA was $17.6 million. For the full year fiscal 2021, we reported total revenues of $195.3 million. That is up 48% from a year-ago quarter but also up 8% from fiscal 2019. GAAP EPS was $3.37, and non-GAAP EPS was $4.08. GAAP EPS was impacted by a non-cash impairment charge of $13.6 million for the full year. The net cash from operating activities was $42 million, and the free cash flow was $36.1 million. We ended the year with $35.7 million in cash and cash equivalents. Now, if you'll turn to page five. Nightclub segment revenues, operating margin, and income from operations were all up significantly year- over- year. As a result, revenue rose to $40.3 million, which is great for our seasonally slower fourth quarter. GAAP operating margin was 16.1%, and non-GAAP operating margin was a whopping 43.2%. GAAP income from operations increased to $6.5 million, and non-GAAP was $17.4 million. Our Florida clubs did particularly well, and our high-margin service revenues, mainly from our northern states clubs, grew sequentially year- over- year. Looking at results compared to pre-COVID fourth quarter of 2019, revenues were up 12%. Income from operations increased 4% on a GAAP basis and 58% on a non-GAAP basis, which excludes impairments. Now if you'll please turn to page six. Bombshells had a great quarter, with revenues of $14.4 million, GAAP operating margin of 20.8%, and income from operations of $3 million. Revenues were below the third quarter and the unusually strong year-ago fourth quarter. They were 11% above the first and second quarters of this fiscal year 2021, and 68% higher on 25% more units compared to pre-COVID fourth quarter of 2019. Operating margin was lower sequentially. There was less in the way of operating leverage. During the fourth quarter, we experienced and were heavily impacted by food and labor inflation costs. We also had pre-opening expenses related to Bombshells in Arlington, which opened earlier this month. Please turn to page seven. Still, fiscal year 2021 was a record year for Bombshells. I'd like to spend a moment reviewing our progress. Now, over the last five years, we've grown from five to 10 locations. We've seen a 200% increase in revenues and an increase of 7 percentage points in GAAP operating margin. Our fiscal 2021 average unit volume compares very nicely to some of the biggest and best brands in the business. We believe there are several factors that are driving the success. Number one, our Bombshells team, led by restaurant pro David Simmons. Number two, we believe that Bombshells is a great concept, and we've done a really fine job at refining it. Lastly, our site selection has resulted in better locations and higher average sales per location. Now, please turn to page eight to review our fourth quarter consolidated statement of operations. Sales were higher, expenses were lower. There's a CFO analysis right there. Improvements in the margins of cost of goods sold, salaries and wages, and SG&A were all attributable to higher nightclub revenues during the quarter. In part, that's due to high margin service revenues growing from 23% of the total in a year ago quarter to 31% this year. Certain costs overall in general, such as insurance and legal, were significantly lower. As a result, GAAP operating margin was 6.6%, and non-GAAP operating margin was 28.4%. Our interest expense has also declined as a percentage of revenue. I'll talk about more of this later when I get to the debt analysis slides. Now, if you'll please turn to page nine. As I also mentioned earlier, we ended the quarter with $35.7 million of cash on hand, while our total debt fell $2.4 million to a two-year low of $125.2 million. The debt decline reflected scheduled pay downs and a $1.2 million pay down related to a sold property. Free cash flow was $8.5 million for the quarter and a record $36.1 million for the year. As you know, we pay a lot of bills in the fourth quarter. This affects our net cash from operating activities and our free cash flow for the period. While many of our locations bounced back over the course of fiscal 2021, they were not open to their full capacity as they are now. Adjusted EBITDA for the quarter was $17.6 million and $60.2 million for the year. Now, back to the debt. The next three slides show our debt as a result of the September refinance and then the new debt that we took on related to our October and November acquisitions. Let's start with our 9/30/2021 debt pie chart on page 10. Real estate debt increased $18.6 million from June 30th to $102.3 million, September 30th. Using the cash that we pulled out from our real estate, we paid down $7 million in higher rate seller financing and $12.4 million in higher rate unsecured interest debt. Please turn to page 11 to review the 9/30 debt manageability. Our occupancy costs continue to trend in the right direction and are well below our target range of 8%-12%. As a percentage of revenue, they were 6% in the fourth quarter compared to 11.8% in the year-ago quarter and 7.6% in the fourth quarter of 2019. This was primarily due to higher sales in the current quarter and the decline in interest expense. We continue to reduce our weighted average interest rate. Over the last five years, it has come down from 7.23% in the fourth quarter of fiscal 2016 to 5.64% in the fourth quarter of this fiscal year. Our 9.30% weighted average interest rate was 104 basis points lower than the 6.30%, primarily due to refinancing and paying down the higher rate interest debt. As we've discussed, our periodic refinancings, like the one we just did in September, enables us to convert higher rate seller financing and other unsecured financing used in club acquisitions into lower rate commercial real estate bank debt. Our periodic refinancing also enables us to smooth out our debt maturity schedule. In this case, the September refi enabled us to eliminate $4 million in balloon payments due in fiscal year 2022. Refi also enabled us to reduce principal amortization by more than $2 million annually. Now, if you'll please turn to page 12 to look at our 11/30 debt pie chart. Now, going into October and November, we were able to take on $39.2 million of new debt. This was in the form of seller financing and unsecured debt that was used to make our recent acquisition of our clubs and real estate. I'd also like to note on this slide that we have reached the end of our SBA loan through forgiveness and have a small amount of repayment left. We are also nearing the end of the Texas Comptroller settlement. Now, let me turn over the call back over to Eric, and thank you. Thanks, Bradley. If you'll turn to slide 13. We've continued to talk with new investors, so I'd like to review our cap allocation strategy. Our goal is to drive shareholder value by increasing free cash flow per share 10%-15% on a compound annual basis. Our strategy is similar to those outlined in the book The Outsiders by William Thorndike. He studied companies that focused on generating cash per share and allocating that cash effectively to generate more cash. We have been applying these strategies since fiscal 2016, with three different actions subject, of course, to whether there's other strategic rationale to do otherwise. One is mergers and acquisitions, specifically buying the right clubs in the right markets. We like to buy good, solid cash flowing clubs at 3x-5x adjusted EBITDA, use some seller financing and acquire the real estate at market value. Another strategy is using cash to grow organically, specifically expanding Bombshells to develop critical mass, market awareness and sell franchises. Our goal in both M&A and organic growth is to generate annual cash-on-cash returns of at least 25%-33%. The third action is buying back shares when the yield on our free cash flow per share is more than 10%. Currently, we believe the yield is within our buy range. However, we are seeing some great opportunities to expand Bombshells as well as additional club purchases with opportunities to earn cash-on-cash returns of 25%-50%. We have been letting our cash build. Once cash gets to a point beyond where what we feel we can deploy quickly at these great returns, our plan is to use excess cash to buy stock in the open market if the stock price continues to stay in the current range of $60-$65 per share, and we would be more aggressive the better the yield becomes under $60 per share. For our growth initiatives, please turn to page 14. Here is an update on our current growth initiatives. We have a lot going on. We are making important progress with the 11 clubs that we acquired in October. This is a COVID rebuilding effort similar to what we did with our own clubs in fiscal 2020 and the first half of fiscal 2021. The new clubs are back up to about 80% of their pre-COVID run rate. We are continuing to staff them with the right people. As this happens, we expect to make continued progress over the next two quarters. Our other acquisition, The Mansion, is doing well, and our new Bombshells in Arlington is off to a terrific start with a record single week sales for a new Bombshells. Our first franchise location in San Antonio should open in the March quarter, which is our second fiscal quarter. Also during that quarter, we expect to reopen our remodeled club in Louisiana and the club we are reformatting and rebranding in San Antonio. We are in the process of obtaining our credit card processor for admireme.com. The site is also scheduled for beta testing in the second quarter. We have two excess properties under contract for sale, and as we announced last week, we are under contract for purchasing land for two new Bombshells in Dallas. This would give us four locations in that market. We are also under contract for purchasing land in Stafford, Texas, which would give us nine Bombshells in the Houston market. As always, we continue to talk to owners about acquiring their clubs, and we continue to look for new Bombshells locations and franchisees. Sales for our first quarter are doing well. With our acquisitions, we should have another great quarter. As always, a big thanks goes out to our teams, nightclubs, Bombshells and corporate for all your hard work and dedication. Thank you all and Merry Christmas. With that, let's open the lines for questions, Operator. Thank you. Ladies and gentlemen, the floor is open for questions. If you have any questions or comments, please press star one on your touchtone phone. Pressing star two will remove you from the queue should your question be answered. Lastly, while posing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Once again, that's star one if you have a question or a comment. The first question is coming from Anthony Lebiedzinski from Sidoti & Company. Your line is live. Yes, good afternoon, and thank you for taking the questions. You know, certainly terrific quarter and a terrific year as well. Just looking at the segment margins, obviously, you know, very strong performance for both, you know, the quarter and the year. As we think about the rise in food costs and labor costs, you know, how should we think about segment operating margins going forward? I mean, I think we've been able to pass most of those costs on. Obviously, if the costs continue to rise and we're unable to pass those on, those margins could get squeezed a little bit. We had some considerable pre-opening costs, obviously for the Bombshells, as we will again this quarter. The Arlington store will also, you know, have about just under four weeks of revenue as well, so that'll help offset some of that. I think the Bombshells margins will, you know, probably stay within our range of 18%-22%, which has been our target. As far as the nightclubs go, for the quarter, I think we're seeing an increase, we're continuing to see an increase in our service revenues in our northern markets, as people coming back out. We will have to see, you know, obviously how this new variant affects that, if it does or not. The new mask mandates in New York could become a factor as well. We're gonna be watching that. They just started Monday, so there's no real, you know, no way to judge anything at this point on that. Other than that, everything else, I think we're very strong in our other markets. I think that the club margins will hold or expand from where they're currently at. Got it. Okay. Yeah, thanks for that. As far as just to follow up on that, as far as the pre-opening costs, do you have those numbers, what that was for the quarter, and what should we expect for the first fiscal quarter for pre-opening? No, we don't really have it broken down because basically we train at our existing locations. What I can tell you is, you know, our labor costs are up in the quarter, but a lot of that labor cost is training. It's not necessarily cost inflation. Some of it is cost inflation, but the cost inflation, like I said, we've been able to pass most of that on in pricing increases. And so I'm not too worried about margins being hit by that at this point. You'll see some of our existing stores, you know, I think their margins will return to more normal labor margins as we move forward, as all the employees are now, you know, employed in the new store in Arlington. All the training for that we've been doing for the last six months is, you know, it's been basically spread around different stores, and the company will go away. Understood. You mentioned that the Q1 to date, the trends are pretty good. Is that just mostly traffic driven or are you seeing also increases in average ticket as well? We're seeing higher VIP spend. That's why I said I think we'll continue to see the service revenues as a percentage continue to grow a little bit. But I mean, right now it's very solid. What I don't really have is, you know, we have 12 new locations, and I don't really have the full breakdown on those locations at this time. I've been watching the numbers on a much more macro level. But as we get to the end of this quarter, and in the next Q, we'll have a better idea of more of the micro on those locations. But those locations are, like I said, more of a COVID rebuild set right now. Some of the locations just barely opened in October to be fully opened. They've all had restricted hours. The previous owners didn't necessarily open for all their normal business hours, so they had limited hours. We're in the process of basically expanding those business hours, getting everything back open full- time, staffing the locations better. I believe that, I think we'll be back to 100% 2019 run rate, probably by March, in a worst-case scenario, May. And then we'll start seeing what kind of growth we can get out of those locations. Got it. Okay. Well, thank you, and best of luck going forward. All right. Thank you. Okay. The next question is coming from Adam Wyden from ADW Capital. Your line is live. Eric, can you hear me all right? Yep. Perfect. I just wanted to do a little bridging math. You know, Anthony, I think alluded to this, but you know, the fourth fiscal quarter is a seasonally slower quarter, and it was burdened by some pre-opening costs and whatnot. I mean, if I just take that quarter and I annualize it, I get to about $70 million of EBITDA, and you know, perhaps the run rate is maybe $75 million or $80 million when adjusted for seasonality. You know, when I add Lowrie, which was doing $14 million or $15 million you know kind of before you got them up and running, you know, I'm seeing a business that's doing nearly $100 million of EBITDA, and that's you know kind of before the new Bombshells locations. I mean, you know, look, I don't want to sound like a broken record, although I often do. With a market cap of $564 million, you know, or maybe it's a little bit more with another, $564 million and $100 million of EBITDA, I mean, you're trading cheaper than pretty much any restaurant or hospitality company out in the marketplace. I mean, you know, what are you guys doing to kind of, you know, narrow the gap on the cost of capital, you know, in terms of, you know, getting the market to see, you know, the value? I mean, maybe it's, you know, maybe buying back shares at these prices makes more sense, you know, than M&A. I mean, obviously, at 3x EBITDA, maybe not. I mean, at 5.5x, whatever you wanna call it, that's a pretty high bar. Yeah, I agree. That's why I said I think, you know, we're well within, you know, our buying range right now. We're looking at all the opportunities we have. You asked some of the things we're doing. We are going to the Noble Conference in April. We're doing IRC in January. We're doing a Sidoti conference also in January. I'm looking at a possible conference maybe in March. We're gonna get out. We're gonna keep telling the story. The main thing we're gonna do is continue to focus on building the free cash flow, getting that $100 million in EBITDA, and then growing from there. I believe that we're a little off that run rate right now, but I think that by March, like I said, between March and May, that's gonna be our go forward run rate with the Lowrie clubs coming on up to speed and starting to see the, you know, the effects of what we do when we take over these locations and grow them, you know, typically 15%-20%. I think we'll see that growth come into play. The new Bombshells in Arlington had a record week. It's a fantastic location. We're working on the Rowlett property. I just talked, we had a development meeting this afternoon before this call. Looks like everything's going good to hopefully close on that property at the end of January, early February. We'll be getting that one started. We've got all the stuff in on the Grapevine location. It's about a 42-day deal. I think it started the 42-day started December 6th for that process. Hopefully that process is going. We'll get started on construction on that one shortly thereafter. We're, you know, on the early stages of the new location in Houston as well. I've also got multiple other properties that we've got LOIs out, or that we're working or we're negotiating on right now to continue to build the Bombshells. I wanna get the eight locations that we've discussed in the past and get those eight locations under contract and get them all under construction and get them going. We're meeting with a couple of other franchisees, and we're talking with a couple that we've been talking with and moving those forward down the line a little bit. Of course, our current franchisee is very excited to be hopefully opening in January, early February as well. They're trying to be open before Super Bowl, so I think that's achievable for them. You know, they originally wanted to be open in December, but we've kind of told them, "Look, we've watched these things be built a million times." We figured they'd make about mid-January, and t hat looks like where they're headed right now. If they get it up done by then, they should be able to open by February, which will give us our first franchisee. I think once that franchisee starts putting their results out, I think people are gonna see the value of franchising Bombshells, and we're gonna end up with even more franchisees and it's a great concept. The franchise economics on Bombshells are great. Obviously, royalty revenue is 100% return on invested capital. I mean, if you look at, I think in one of your decks before, you were showing the cash-on-cash returns on Bombshells. I mean, on a levered basis, they're like 50% or 60%. I mean, it's kind of insane that we're still trading at 5.5x EBITDA, you know, when you've got this segment with those return profile, you know, and then you've got, you know, Chipotle and all these things trading at 40x EBITDA and Wingstop at 100x EBITDA. I mean, granted, you know, Wingstop's franchise, but Chipotle is all company-owned with leases, right? You've got an owned real estate base with, you know, arguably better cash-on-cash returns. Look, obviously, you guys reported a great quarter and, you know, look, it's you know, with pre-COVID, you know, you were doing 50x EBITDA or whatever it was. You know, now you're exiting 2021, you know, with a double. You know, it's super impressive. I mean, look, I think you know, any initiatives and efforts you can put on expanding your audience base and, you know, trying to you know, get the appropriate cost of capital, I think will be beneficial because, you know, obviously, you know, the company is executing and, you know, we're not getting you know, we're not getting, I guess the appreciation in the public markets. I mean- I think we'll get there. I mean, you know, this is. We gotta keep putting the information out there. The market's overall a little weaker right now. I think people are a little afraid of this new variant at first, but I think that fear is kind of going by as, you know, people aren't really getting that sick from it seems, from the reports that I'm reading. It hasn't slowed down business at all. You know, we've had a great week last week. You know, I think, as we continue, this week's gonna be a great week for us as well. We run our weeks from the 1st-7th, 8th-14th, and 15th-21st. I think that, you know, as we see these weeks coming in through December, we're having a very strong December, which is gonna lead us to a very strong quarter. You know, going to January, February, March, I think it just keeps getting better. That's what we've been seeing. I think we'll continue to do that. Maybe my $100 million of EBITDA is getting a little bit light, but- No, that's what I'm working for. Make you be under me for a change. Oh my goodness. Wouldn't that be nice? All right, guys. I have to jump off for a Zoom but keep up the good work. Thank you. All right. Have a good one. Okay. The next question is coming from Joe Gomes from Noble Capital Markets. Your line is live. Hi, guys. This is Joshua Zoepfel filling in for Joe Gomes. My first question is just based on the acquisition pipeline you guys are going on. I know you guys are just finalizing those 11 clubs. But just how is it looking? I noticed that there's like four new exposure markets that you guys are dealing with. Is it kind of like a trend you're seeing with a new strategy for those acquisitions? Well, I think, you know, we've gotten more aggressive. You know, in the past, we were paying 3x or less for most of our acquisitions. The current acquisition that we just did was a 5x EBITDA acquisition for some great locations. Like you said, four new markets, and we dominate in those markets with those locations. And they're basically some of them, they're the only locations in those markets. So we're very excited about that. It's woken up some other owners that have some quality clubs that said, "I didn't know you pay me 5x. I thought you were only paying 3x." I said, "Well, we'll look at your stuff." You know, if you There are certain clubs that, you know, in certain markets where I'm gonna pay 3x-4x, and then there's, you know, some what I call supermarkets that I would pay, you know, a higher multiple for, and certain clubs. I'm getting calls from some of those owners now. We're starting to discuss, you know, where they fit in that 3x-5x ratio and see if we can make them happy and get a deal done. There's a lot of clubs right now where people are considering just because of simply the large amount of cash that we have. You know, if you look back 2019, you know, coming up with $8 million or $10 million cash was a lot of cash down payment for us. On this deal, we put up $36 million in cash down. So we're able to, you know, to do much, much larger deals, and bigger cash, which, you know, is actually more attractive to these owners obviously than being paid back slowly over time. I am talking to a few that are looking for 20-year annuities. Look, I need the cash every month. You know, I'm 68 years old, but I'll probably live another 20 years. You know, I just want you to pay me a payment every month for the next 20 years. I want guaranteed money, you know. We've got some deals like that we're talking to some owners on right now. There's a lot of exciting stuff out there for us. Yeah, thank you for the color on that. I just kinda wanted to switch over to the Bombshells portion. I just wanna see how the franchising is going. I know you alluded to Arizona as a state you're looking at outside of Texas. Is there like maybe a possibility of other states that you're looking at? I mean, for Arizona, we're looking at, you know, the Phoenix market for company-owned stores. For franchising, we've got about three other states that we're talking with groups right now. One's kind of in a. They had a site picked out, we thought we were gonna get it done, and then they ended up having a problem with the Department of Transportation getting a curb cut into the property. Without the curb cut, they have to put extra road in, so the property, there wasn't enough land there to make it work. They would've lost, you know, about 45 parking spots, which makes the site not usable. They're now looking for another spot. Hopefully they'll find one soon, and we can get them going. Like I said, our current franchisee starts talking about their second location already. They're excited to get open and get started on their second location. We've got several others that we're, you know, kind of vetting right now and talking with and discussing the markets they're interested in. The company's obviously always still looking in Florida. We'd love to be in the Miami area, but I think we're now open to looking. We're gonna look in Jacksonville, we're gonna look in Orlando a little bit. Maybe even on the west coast of Florida from, you know, say, Tampa down to Naples and look in those areas as well for possible expansion of company-owned stores in those markets as well. Oh, great. Thank you for that. One more question if I may. I saw that it's in one of the slides that your Florida clubs are doing particularly well. Is there like any kind of reason for that, like increased traffic, just better cost initiatives going into those? Well, I think all of our New York customers moved to Florida. No. I mean, I just think you know, the growth in especially the Miami-Fort Lauderdale area alone is phenomenal. The state of Florida has been very business friendly. I think that's helped you know, with the recovery in that market tremendously. You know, I'm not big on politics, but I do believe that it's definitely helping you know, the clubs down there. I mean, Tootsie's is doing record numbers you know, week after week after week after week. That's a site that was already doing you know, $26 million was our best year ever. This last year we did almost $33 million, and our current run rate's probably $36+ million at that location. You're talking about a 50% increase post-COVID at Tootsie's. Scarlett's is up 40%. You know, as always, I say the numbers don't lie. I mean, the math is there, the numbers are great, and as our northern clubs are coming online, now we're starting to see an even bigger influx. I think we're gonna see, as the new acquisitions as we get past their COVID restraints. I kind of call them restraints, right? We have these restraints put on us, and when you first take off the restraints, you haven't used your muscles in a while, so they're a little weak. Now we're building up. You know, we're going to the gym every day and we're building up. Those locations, I believe, will be very strong, you know, as we move into March and definitely through May. Great. Yeah, thank you for the color on that. That'd be all for me, but congrats on the quarter and the year. Thank you. Thanks. Looking forward to more. We are too. Okay. The next question is coming from Jason Scheurer from Orchard Wealth. Your line is live. Hey guys. Congratulations. Th ought the fourth quarter was excellent considering it was your slowest. It makes some of your other quarters look pitiful. It's unbelievable how much business you guys are doing. Question for you about sales from the new locations. What do you think they're gonna add in sales to the balance sheet, let's say for the next 12 months? Well, if you'd asked me, you know, three months ago, I would've thought we'd already be on a run rate of about $14 million-$15 million. We're running about 80% of that. Perhaps our $40 million revenue. Not $40 million revenue, $14 million in EBITDA. But $40 million revenue, we're at about 80% of that. So we're about $32 million on a run rate. But that's only based, I mean, we've only had them for, what? nine weeks now? Eight weeks now? So it's still a little early to tell. You know, it's hard because we're just now getting open the hours, but we're in markets where in some of their markets, the employment stuff has been very difficult. So we're having to bring people in or move people in and hire new people and train new people. So that's taken a little bit longer than it would if they'd already been open full hours and had full staffing, or whatnot. So that's why it's adding about three months to it. I do believe that, like I said, we'll be on about a 15%-20% growth trajectory going into March or April over 2019. They were doing $40 million in 2019. You know, at 15% we'd be at $46 million, 20% would be at $48 million. I'm gonna guess, you know, by the end of March we're on a go forward rate of about $46 million-$48 million in revenue. I would say at least 60% of that extra $8 million, so an extra $4.5 million goes to the bottom line. We go from $14 million to $18 million, maybe we round down a little bit, that's $14 million to $17 million. On an even level, you know, we're $48 million and $17 million on a run rate by the end of March. Yeah. That's right. That's how I'm projecting it right now. I don't see any issue with that. I think we've gotten stronger. I've been talking with management. A couple of the clubs have turned the corner. They're, you know, running at close to their 100% of their 2019 or at their 100%. They've got the full hours open again. When they close certain days, they close certain hours. We're just now ramping up to get those days reopened, to get those hours, you know, restaffed and reopened. It'll take a little bit of time. Just day by day. Earlier you said, you know, your Bombshells' operating margins 18%-22%, you know, is like the range you're looking at. What do you see your range for operating margins for the clubs? Basically they've been between 40% and 55%. Really just depends on... I mean, sporting events affect us a lot. Certain locations affect us, you know, a lot. Depending on what sporting events are in those towns, what the local teams do. I mean, if you take New York, I think if, you know, if the Knicks were contenders and going to the NBA Finals, I think our New York club's revenue during that two-month period for the finals and the playoffs would probably run 25% higher than normal just because the Garden's right here beside us. And it would be the big executives going to the games, not the, you know, they're not giving the tickets out in the mail room. It just depends on who goes to the games, who comes to games. You know, the Rangers got on a real hot streak, and all of a sudden, you know, boom, we're full of hockey customers after every game. It just varies, you know, from market to market and time to time. If all of our markets hit at one time, I mean, it's, you know, that's a big difference. It's hard to judge, you know, with everything. I think, you know, 40% on the low side, 50%-55% on the high side. Okay. The question I have is with the OnlyFans rollout that you guys are gonna be doing, is this gonna be something that, like, every one of the dancers is gonna be encouraged to do this, and you're gonna give them, like, a free site or something along those lines? You know, what's the plan with that? We're definitely gonna be encouraging promoting in our clubs, help them promote their, you know, their business at our clubs, and bring customers to, you know, into the clubs to see them, and then of course communicate and, you know, build their online business with their customers. A lot of our, especially, I think it'll be very popular with our business clubs, where the business travelers come to our clubs. I think it'll be very popular there because typically guys that come into town on business come several times a year, and the girl can create that relationship so that each time he comes to town, he'll come to the club and visit as well. When, you know, he's not coming into town, he can stay in touch online and, you know, build what I call the fantasy relationship, right? Yeah, sure. Well, good. I'm very happy with the numbers. You know, usually for your slow quarter, I was expecting, you know, lower numbers, but you guys exceeded those. Yeah. I mean, we were- Congratulations. It was. We were like, "Is this real? Is this real?" Sometimes ourselves. We understand. Yeah. Awesome. Thanks again, guys. Yes. Thank you. Once again, if there are any remaining questions or comments, please indicate so by pressing star one on your touchtone phone. The next question is coming from Andrew Hollingworth from Holland Advisors. Your line is live. Hi. Thanks so much. I'm just making sure you can hear me because I'm phoning from the U.K. Yes. Yeah, I can hear you. Great. Thanks for taking the question. Again, like everyone else, you know, fantastic reporting period. Just a couple of questions from me. I was gonna ask about the segmental margin in the clubs as well, but obviously the gentleman before me has done that. Just to be clear on that, because obviously what I was gonna ask is really, you know, the structural lift we've seen in margin, how much of that is coming from sort of revenue in terms of, you know, the good trading you're getting and how much of that is coming from the sort of structural change that you've done in terms of the cost base over this sort of last two-year period. You sort of answered that in the sense that what you're telling us is that the current level of run rate of the margin of the clubs you think is the sort of low end of the range. I'm just making sure that the 40%-55% you just talked about is comparable to basically Slide five. That's first question. Yeah, I mean, you know, I think some of the margin comes from, you know, we've upgraded our accounting systems over the last five years. We've streamlined stuff. Then with COVID, we made huge, you know. We went from, you know, tons of revenue to zero in basically one day or about three days. We made some pretty big cuts in what I call the fat in the company. You know, as you grow over 20, 30 years, you have some fat. Now, we started cutting a lot of that fat in 2016 when we adopted capital allocation strategy, and we thought we'd gotten rid of a lot by 2018. As we move into the 2018 and 2019. When you put your revenue at zero and you realize you still got some fat in there. I think we were able to cut some more of that, and we've been very conscious about not adding it back, keeping our costs, you know, tight, keeping our controls tight, and just running a tight ship and staying very focused on the margins. Some of it's from that, some of it's from customers. Our VIP spend is not that high right now as in certain markets. We're seeing it come back. As those big customers come back, that, then the margins could be. That's why, you know, when you say, I say 40%-55%, that's a huge, 15% is a huge, you know, margin difference. But it all depends on that VIP spend. If that big VIP spend, you know, comes back in full force, you know, that's where we'll be. Okay. I think in previous calls you talked about- I'm sorry. You're cutting out a little bit now. I'm sorry. Okay. Can I just say in previous periods of time, you talked about sort of six to eight quarters of having sort of good trading and then some slowdown for a while. In terms of that margin range, if you know, if you had a wonderful period of trading six to eight quarters, then it's beyond that range and sort of a slower period. Do you think now a slower period is probably 40%? You know, not saying this quarter or next quarter or years from now, that's what you're telling us, is that the bottom end of the range could be 40%, whereas the bottom of the range used to be obviously much lower than that. Yeah, I mean, I still think that, you know, we've gotten rid of. When you look back long-term, you know, especially if you go back pre-2016, we had a lot of what I call anchors. Those were, you know, legacy clubs that we'd owned for years and years, or property that we own, that we carry. We had a carrying cost on it and, you know, we had clubs that weren't really making any money, but, you know, we were so concerned with top line revenue that we didn't worry. You know, we didn't pay as much attention to return on investment as we started doing in 2016. We eliminated those clubs in 2016, 2017. That's why you see those lower margins, is when times were low and we went to a 40% margin, we had a 6% drag from the clubs that were losing money. The margin dropped 34%. Well, that 6% drag is gone, and it's not coming back. If we have locations that are underperforming now, w e will sell those locations, we will move those locations, do what we have to do, and then reallocate that capital into, you know, into a much higher margin location or asset. Okay. That's really clear. That's really helpful. Can I just ask one more? I think in terms of the presentations you've given on past calls, and obviously with a bit of help from Adam as well, you know, the outlook for the business is obviously, you know, impressive and appealing, and it's really well laid out in terms of your capital allocation. I congratulate you for that. You know, I'm a shareholder of the business in the fund that I run, and the only question that really comes to mind for me when I look at this company is what goes wrong. You know, and so I just. It would be lovely to hear you just talk about that a little bit, and particularly in what's happened in the sort of Visa, Mastercard situation in the last sort of six months or so. You know, and the world sort of likes some businesses and doesn't like others, and you have a Facebook situation where the government sort of seems to be against certain companies. Just talk to us about, you know, if society or politicians decide to come after you in the sector. What can you do to appease that? Yeah. Well, the beauty of the government changes every two, four, or six years, right? That's a constant moving target. There's not really much we can do except for maneuver through it, and then we use the courts. When we can't, w e tie it up until we get another administration that deals with us, or, you know, a new city council that deals with us, and we work it out. We have these settlements, and we move forward. A lot of the litigation is pretty settled, I think. I think there's a few cities and towns here and there that don't understand that there are protections, and they still try to squeeze us every now and then, and we have to go to battle with them like we had to do in San Antonio. We've come to a nice compromise in San Antonio. You know, store's gonna be reopened soon. We passed the inspections today. The inspections were earlier this morning, they passed the inspections. That's moving forward. I mean, it's just white noise, right? It's always white noise. There's always some white noise out there. We always have some legal going on here, some battle going on there. You have to deal with slip and falls. You know, it's like Walmart. At some point, you just get so big, you have a legal department. That's where we've gotten to. You know, every now and then we lose one and most of the times we win because you know, if we're wrong, we try to do what's right. You know, we've made some legal settlement payments. You've seen the payments. We disclose them. Sometimes we make some payments. You know, a lot of times we win. Of course, you don't hear about the times we win because you know, we're not gonna go out and put that in our 10-Qs and 10-Ks and brag about winning. It's just not our way. We fight the battles that we have to fight, and we pick our battles where we think we can win. If we can get out cheaper, we try to get out. We don't throw our money away on frivolous lawsuits. We will spend money on our attorneys rather than pay frivolous lawsuits, so our legal stays a little higher. We have great insurance. We have a great reputation with our insurance company right now. We hope to continue that relationship and keep that going, keeping our costs in line for insurance. I think the only real negatives out there are, you know, the occasional deals. Now, obviously, you have, you know, the downturn in 2008, 2009. We survived that. We survived the pandemic. We survived being closed down. You know, I think we've, as a company, proven throughout the years that, you know, they throw something at us every now and then and we figure our way through it and come back even stronger each time. No, I see that. I see that. Something else they're gonna throw at us again, w e'll, you know, c ontinue that trend. I suppose all I'm really trying to do is sort of you know, I think if you're you know, half as successful as you look like you're gonna be in terms of rolling up the industry in Miami and all the rest of it, you know, you're gonna become a much bigger company, hopefully. You know, and you'll certainly be there to be shot at from the sort of, you know. I'm just wondering kind of reputationally- I mean, when you figure 250% compound rate of growth, it's gonna grow pretty quick, right? Because we've gotten to that critical mass. That's what we needed to do. No, my question is just more a question of, you know, what happened with Visa and Mastercard wasn't about lawsuits, it was just about somebody made a stink and then ultimately they were forced to react. I'm just sort of trying to put myself in the position of years to come, and is the business more sort of, you know, more of in the public perception, and therefore is there issues about workers' rights? Or just, I just wanna know how you think about that as an organization in terms of what could go wrong with it. Yeah, I mean, we, you know, obviously, we care about our reputation and we work through it. You can't keep all the people happy all the time. We've learned that. I think as we expand more, especially in the Bombshells and more mainstream. You know, the days, the strip clubs just aren't popular to really pick on anymore. You know, there's very few of them. You know, it's not like in the 1980s and 1990s when, you know, clubs had 300 clubs in the city of Dallas or Fort Worth, you know, and they were all biker bars and they were all low end. I mean, these are multimillion dollar businesses nowadays. A lot of the smaller clubs have disappeared from the marketplace. You have a resurgence in certain markets with what I call rogue operators. They're operating without SOBs. They're operating as bikini bars and kind of skirting the rules and that. They last for a little while, but they don't tend to, you know, do things the right way. Either the tax people get them or somebody, you know. Eventually they go away, and then, you know, we continue to do our thing. You know, the key I think is just operating, being a good neighbor, and just operating the best we can do. You know, we try to avoid negative headlines. Obviously, you know, it's impossible for any business to you know, avoid all negative headlines because there's always haters out there. We do our best to do you know the best we can and present our side of how we do things and why we do things. I think as long as we continue to do that, we'll continue to be successful. No, I appreciate the very vague question. I appreciate your answer. Thank you. Thanks Thanks for your time. Okay. Yep. Once again, if there are any remaining questions or comments, please indicate so by pressing star one. The next question is coming from Craig Smith, Private Investor. Your line is live. Hi. I just had one question on the 11.9% impairment. Was that in any particular market area or what's triggered that now with COVID-19 sort of, you know, sort of 18 months on, Sure. I'll give you the easy, the quick and easy. It's multiple markets. It's mainly some of our college towns where the colleges haven't really opened back up fully in Texas. And of course, our northern clubs, New York and some of our other markets that just got opened so late in the year that when you do the impairment on a 12-month basis, you know, you just can't meet the numbers. There's no COVID exception in GAAP. You know, we argued, and that's, you know, if you see, we have the material weaknesses because management used basically a non-COVID period. We took out a COVID period of about six months or nine months out of our growth projections and said, "These months don't count because this was COVID rebuild. This is where we're really at, this is what we're really doing," blah, blah. Of course, the auditors came in and said, "No, under GAAP, you have to do it this way. It's very cut and dried. There's no COVID exception." We said, "Okay, no problem." We redid it and you know, we included the COVID numbers, and when you do that, we ended up with some impairments in some of these markets. That you know we believe you know long term we'll recover in every one of those markets. Like I said, there's just no COVID exception for GAAP, so we follow the rules. Okay. Do you see sort of part of that maybe reversing in the future if demand? Well, you can't reverse it. Once you write it off, it's gone. You get no write-up in value. If we did, Tootsie's would be worth,Tootsie's would have to be written up $50 million right now, probably, based on the numbers they're doing. But yeah, you don't, you never get it back. It's just a write-off of book value. I mean, we don't really use book value as a gauge of what our company's worth anyway. You know, we use our free cash flow and our cash generation, EBITDA numbers and, you know, our non-GAAP numbers to kind of value the company and see where we're going, how much cash we can generate on a go-forward basis. I mean, the book value's not overly important to us, so. Sorry. One other question, not related to this, but so on your new debt financing, is that a fixed rate loan or is that floating? It's fixed rate for five years with one adjustment at the end of five years with a floor. I can't remember if there was a ceiling in it or not. Basically it's a, you know, one-time adjustment for which carries for another five years, and then it becomes ballooned at the end of 10 years. It's on a 20-year amortization. Okay. If tomorrow rates increase, that's not really impacting you guys. It won't impact us for five years. Yeah. Okay. Thank you. It, you know, could have a small impact in five years from now. Okay. The next question is coming from Jason Scheurer from Orchard Wealth. Your line is live. Hey, sorry, guys. I just wanted to get a little more clarification on stock buybacks. I'm under the impression again because you gave away part of the deal was the 5.5 million shares at $60 a share. Anything under $60, you guys are gonna be crazy buying back because that's just printing money, right? That's the way we look at it. I think we're much more aggressive. You know, I think we would. Right now we've got a lot of stuff on our plate. I'm trying to see what I'm getting through the holidays, letting the cash build up. You know, we made a huge acquisition. We paid out $36 million in cash, but we did borrow some of that. I don't know right off the top of my head, but I'm guessing we're $24 million or so cash on hand right now today. I don't know how we'll finish the end of the quarter. We are working on a debt financing for all of the real estate in the new acquisition, plus the Arlington location and a couple other pieces of property that we own free and clear that weren't in the first loan. There's a small package being put together on that to give us some more cash. If we get that closed by the end of the quarter, we could end the quarter at $45 million or so. I think we're growing free cash, you know, after debt service and whatnot, probably at $750,000-$800,000+ a week right now, maybe even $1 million a week. I just don't know. Like I said, we've just been going through this cycle and, you know, getting the K done, getting everything done, getting this acquisition done. I've got a lot of homework, so to speak, as we get to the end of this quarter and move into January and February that for the first of the year, I'll be doing a lot of homework, trying to get a really good feel for, you know, our run rate on free cash flow. You know, we know it's good, and we've been really busy, so we haven't, you know, really nailed it all down. I think, I'm hoping that we can do, you know, maybe put our old chart back in. Have a much better understanding by the, you know, by the February, probably the May quarter, when we actually can get that chart back in and kind of show you, look, this is our run rate, this is our free cash flow, this is where we buy. I think if you go back to some of our old slides, from pre-COVID, you'll see those slides where we basically tell you exactly when we're gonna be buying stock and exactly what prices. I wanna get that back out there. I'd like that. It's just really hard to do because it's just been so crazy, right? I mean, I don't know if, you know, a city's gonna close me down at midnight, you know, next week or they're gonna do, you know. I think in our south markets we're very, you know, well off and I think even the north. I don't think anybody's gonna deal with close down again. I don't think the voting public is going to allow it. In Minnesota, you know, with the defund police and the just the strict restrictions and everything, there was a huge, you know, like, four city council members got voted out of office this last election. I think there's a big turn on like, no, we want our businesses open. We want our... We wanna be able to go out. We wanna go eat. We wanna go... We don't wanna sit at home anymore. I think that's, you know, weighing positive in our favor. Like I said, I think by the May quarter, by the end of March, we'll be able to have a much better idea of where we're at and hopefully get that back out in the May slides hopefully. Well, you also have the good numbers coming from the 11 clubs being folded. Yeah, I mean, because they're so new, you know. That's the other problem is, you know, I mean, like I said, we've got eight or nine weeks right now. They're, you know, we're seeing growth trajectories in them, but they're still not, you know, we're not back to 2019 at all the clubs yet, but I think we will be, we'll be soon. As we get to that, then the trick is figuring out the growth. I have a better idea, you know, solidly where we're at. That's where I really wanna know where are we at today, so I can snapshot that and say, "This is where we at based on seasonality, based on this is what our projections are." Once we can get back to that free cash flow projection, we can use that projection to say, this is when we're gonna buy stock. That's super easy to calculate the yield based on the stock price. Yeah. Just, you know, anything around $60 is a complete steal. Anyway. Yeah. Thank you. We're buying it. We're definitely buying it. If it's under $60 we'd be buying. It's getting close, so we'll see what happens tomorrow. All right. Thanks again. Yep, thank you. Bye. Once again, if there are any remaining questions or comments, please indicate so now by pressing star one on your touch tone phone. Are there any final questions? This is the last chance for questions. Okay, we have a question coming from Michael Toredio from. He's an individual investor. Your line is live, Michael. Hello everyone. Thank you for taking the last-minute question here. I just had a question about the dividend. I remember you had mentioned on a call a few quarters back, you were at least maybe considering raising it slightly or something to that effect. So I just wanted to see if there was any guidance you could provide on that, because I mean I love cash being distributed to me, I guess you could say. By the same token, you guys are able to deploy cash into businesses with great economic characteristics and you know things that I couldn't buy myself in the stock market. I don't have one view or another as far as having it necessarily be. No. Yeah, go ahead. I don't think we'll see a big increase, but I mean, we talk about it at board meetings. This would be the year, probably. I'd have to look at the quarters when we would be due to raise to continue our annual growth rate. We've got to, you know, basically when you want to come up in those dividend screens, you have to have a growth rate of x. We'll be reviewing that. It's on the agenda for before the March dividend is paid to review that and make sure that we're keeping our growth trajectory. I mean, you know, I could see us, you know, I think right now we're at $0.16 a year. I could see us going to $0.18 a year, possibly paying two quarters of $0.05 and two quarters of $0.04. Or I could see us, you know, maybe, depending on things going to $0.20 and just paying $0.05 a quarter or something like that. It's actually the worst, you know, tax efficiency use of our capital as we have. It doesn't really go with our capital allocation strategy. Like you said, it gives a lot of investors warm, fuzzy feeling, and it also puts us in a lot more screens and allows, you know, a broader group of investors to buy and hold longer. We do like, you know, I personally like that aspect of the dividend. Of course, being a very large shareholder, I don't mind those quarterly checks either. Question to follow up on that. Thank you. The acquisition pipeline, is that a factor? How much of a factor is it, or is it not really entering into your thought process on that at all? On the dividend? Look, we've got, you know, if we raise it $0.04, you're talking $400,000 a year, not even $400,000 a year. We generated $36 million in cash. So I mean, $400,000 is, i t doesn't even dent. What we have on growth and what we, you know, we're setting up has really no effect, thought process at all. I mean, our dividend yields, what, even 0.5%. I don't even know if it's 0.5% right now. It's so low that it's really very, very small portion of our cash. Like I said, it's about the feel good, right? You know, you got cash coming every quarter, those kind of things. Let's, like I said, let a certain shareholder base increase and feel good about owning the stock. Those are things we weigh when we discuss it at board meetings. You know, those we'll continue to weigh on it. Like I said, continuing the growth factor, I think it's important that we keep that growth trajectory on a growth trajectory so that we keep coming up in all the searches when people go and do stock screenings. I think that's important. Thank you. Okay, I'd now like to turn the floor back to Gary Fishman for closing remarks. Thank you, John. Thank you, Eric and Bradley. Just to reiterate what Eric had mentioned, we've been invited to a number of investment conferences the first half of calendar 2022. We'll be at the ICR conference in Orlando, January 10th to the 12th. We'll be participating in the Sidoti Virtual Small Cap Conference January 19th and 20th. We'll be at the Noble Capital Markets Small Cap Conference in Hollywood, Florida, April 19th through the 21st. On behalf of Eric, Bradley, the company, and our subsidiaries, thank you and good night. Stay safe, stay healthy, and as always, please visit one of our clubs or restaurants. Thank you. Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.