RCI Hospitality Holdings, Inc. (RICK) Q3 2013 Earnings Report, Transcript and Summary

Thank you for taking your time today. I think there have been technical difficulties with my last phone. Let’s hope this one is working better. I'll begin the conference call with an overview. We’re going to talk about Q3 '13 financial results, the debt update and the cash flow, talk about our new project status, where we are with those projects and what we’re doing, review our shareholder value strategies, industry roll up and diversification update, kind of let you know where the industry was as a whole, how we think we stand in the roll up of the industry and talk about our diversification and why we’re working on that, talk about the pain over last four years, for the company and our shareholders and how that’s behind us and how we’re looking forward to the remainder of 2013 and 2014, and then we’ll end the call with a question-and-answer session. Starting with 2013, $28.3 million in the third quarter, total consolidated revenue up 18.3% from the previous year, strengthened our Jaguars’ acquisition and the Bombshells of Dallas we’re very happy with. Both of those are doing very well and our New York and Minneapolis markets both performed very well in this quarter. Income from operations, GAAP number $5.7 million, non-GAAP $7 million with adjusted EBITDA of $6.9 million. Our GAAP net income of $0.23 per share was impacted by $540,000 in one-time unusual expenses and settlements of lawsuits. Those one-time unusual expenses are mainly the startup costs from any location that's not still open. Once we open the location we're going to take them out of there and actually that'll just be end of the startup cost of opening that location, and then the settlement of two lawsuits that were pending, that we're very happy to get rid of, basically (inaudible) and settlements. Non-GAAP net income $0.35 per share. GAAP operating margins 20% versus 16%, so we're starting to see the operating margins increase. Cash flow from operations, $14.2 million for the nine months, and we have invested $9.1 million cash in property equipment and businesses in these nine months. Our debt update, $76.5 million in total long term debt, of which $39.5 million is real estate related debt, $28.7 million is subsidiary level debt from club acquisitions. The collateral on these loans are basically the businesses that we acquired. The parent company level debt at $8.3 million, our current portion of long term debt $7.8 million, which means we're paying off approximately or pretty close to $2 million to quarter on our long term debt, and our free interest expense $1.9 million or 6% of revenue as well within our level of what we want to keep that at. Accelerated pay down of high interest debt, $1 million in the first nine months on the Tootsie's debt which now stands at $6.06 million, and we're going to continue to work on accelerating and paying down that debt as quickly possible. It is our highest interest rate debt. Update on new projects; we now have 37 locations open with six more in the works, several more under consideration. The Ricky Bobby Sports Saloon in Fort Worth opened successfully two weeks ago, exceeding over 80,000 sales the first week and over 90,000 in sales last week. We expect that location to continue to grow. The Bombshells in Dallas continue to exceed our expectations averaging over 65,000 weekend sales now and still growing. This is the off season for the sports bar market, and so we really expect as we move forward, as football starts up next week with full preseason games and then we move in later into the season with basketball and hockey as well, especially in Dallas market where the Stars and Mavericks play right down the street from our location, we expect to see that location continue to do even better. We currently have a building under contract in Beaumont, Texas to do Bombshells in. We're also moving forward in the Rick's Cabaret Houston which we closed due to the fact that we weren't really making any money at that location and operating losses there were continuing to increase, and so we decided to close that location and we're looking at the possibility of putting new Jaguars on that site. Our Vivid Cabaret in LA, we’re waiting for the final license approval. We had a little soft opening deal for a day and now we're waiting for our final license approval, our business license. We did a little showcase there and that location should formally open sometime in Q4 and we're on schedule with the construction at the New York location, the Vivid location, which should open in the first quarter of 2014 as well. The Temptations, the Beaumont location is another location we have going which is scheduled to open August 15 should open on time. Our permit is in place there for us to open that location. We're currently waiting for the liquor license approval but we're going to open without the liquor license at first as a BYOB and then when the liquor license is issued we'll convert the concept to full liquor. The Rick's Cabaret Odessa is scheduled to open in the first quarter 2014. We have about approximately four weeks left on the construction there according to contractors and we look forward to getting that location open as soon as possible. That will be a full (inaudible) with kitchen and we suspect that it will be very, very well in the location it is in the Odessa market which is really booming right now with the oil industry. Under consideration right now, we have a Bombshells location in Houston that we’re currently doing some research on and a Bombshell in Austin that we are currently working on as well. And we are also looking at several other acquisition targets in the adult club market that we hope to put together and build or announce in the near future to continue to keep our growth at 20% to 30% range that we're focused on. Focusing on shareholder value; we're focused on the higher profit customers. Our same store sales maybe declined a little because we're not just trying to sell seats like we were doing through recession, and now we're looking for customers that we can actually make money off of. So while our same store sales may decrease a little at certain clubs, we're going to see better margins going forward as we do less discounting. We have completed our original 5 million stock buyback, purchasing 756,087 shares at average prices of $6.61 and we are now into our new $3 million buyback, which has $2.45 million remaining in net. We're continuing to explore ways to increase the value, use the left up (ph) value of our real estate, including exploration of our REIT. I have been talking with several banks that specialize in REIT formations and REIT. We realized that we're probably little too small scale to do a REIT on our own. So we're talking with several other club owners and we'll be out at the expo on the 20th through the 22nd with the Gentlemen's Club Owners Expo talking with other club owners to start exploring the possibility of may be having several club operators, putting our real estate together and forming a REIT as a way to pull cash out for the company to do expansion, as well as looking at leveraging those real estate assets.\ One of the most exciting developments recently is a new bank loan that we were able to achieve at prime plus one and half with 6.25% from real estates that we just refinanced in Austin, Texas and we are talking with that bank and a few others about possibly rolling some of our other real estate on existing real estate as well as setting up possible line of credit to expand our restaurant operations, and we are very excited that the banking seems to be coming back. This is the first real bank loan we have been able to do since 2008. They know the acquisition so we are very happy with that. We are also looking at getting a possible sale lease packs with the options of repurchasing that property at a later time which provided we can get a decent interest rate on, would give us the benefit of unlocking some of that cash for expansion. One of the other things we are going to be working on very hard is presenting the company at investor conferences. We have already booked several conferences between September and December. We are looking to get into a couple of more and hopefully get out there and at least once a month or go twice a month and tell our story and promote our company. Going forward with the presentation, the Rick's Then and Now slide, I really want to tell you how we got where we are, what we have learned from our mistakes that, the Vegas acquisition, at the time it seemed like a great acquisition. It was a very large acquisition, single club which put a lot of risk on a single property, similar to what we did in Miami and of course Miami, we were very successful with it and in Vegas we were not successful with it and the risk of failure on those large acquisitions, I think outweighs the gains and we kind of stayed away from those and gone to more multi club acquisitions like the Jaguars, or if we have a single property that has a problem, we still have that acquisition spread out over many other cities and clubs. The acquisition issues with closing the acquisitions on time, when we think we are going to have a certain acquisition, similar to the BCG acquisition and so we really look at smoothing that growth out, so that we can have a nice steady growth. So we don’t have 40% growth in one quarter and 10% growth in the next quarter and 3% growth in the next quarter and 35% growth in the next quarter, kind of say a nice steady growth of pattern. And that’s why we like the sports bar restaurant live music venues and that’s why we think they make sense is because we can go, okay these venues are going to do $3 million to $5 million and we saw profit margins 15% to 25% depending on the volumes and okay we can go and open three in this market and two in that market and guarantee percentages of growth and revenue growth and earnings growth. So we are really looking at those as well as to compliment, not to replace the acquisition of other existing adult clubs throughout the country. Why owing real estate is so important? In the adult market the licenses go with the properties. They're zoning, they can't be moved, they can't be switched. The nice thing about the sports bar restaurant live music venues are we can actually lease buildings because if our landlord comes in and jacks up our land or those things we can always move down the street or another part of town, which we can’t do with the adult. We are especially excited about our 50 West 33rd Street location and that location generates a lot of revenue for us and a lot of net income for us. We have been going through a lot of changes on the deal. It’s kind of evolved as we come along and we have looked at purchasing the entire property including the air rights for $23 million. We've kind of evolved. We had a group that made an offer to purchase 10 SARs from us which is basically two-thirds of air rights which are the residential air rights that move to an adjacent property for $8 million, which means we would get our building and still have a 5 SAR, still got 20,000 square foot of commercial space there for $15 million and we've gone to the landlord and we had some financing set up. The landlord decided that he would beat that financing and own our finance for us. So we talked to him, then we decided after talking with the tax attorneys, there were other issues that he would do a lease modification with a right to purchase the property at any time during the lease when we can cash him out for saving him some tax and so we actually cashed the property out. But now it looks like we are going to buy and sell the air rights in one transaction and buy our property in another transaction by entering into a lease modification till such time as we buy our property for the remaining $10 million after funding $30 million cash at the closing on the air rights. So it’s a very complicated transaction, there is a lot of taxes in New York that we have to be aware of and look for that we don’t see in other states, when you sale and transfer real estate. So we have got the experts who are working on that for us and keeping us out of any trouble on that and making sure that we maximize our price that we are paying and the landlord is working of course to maximize his profits on selling us that property. Looking at our forward growth strategy, we’ve achieved 18% growth so far this year. I think that as we continue to grow with Ricky Bobby’s opening and some of the other clubs we have opening that we are on target to achieve our 20% to 30% growth target that we’re looking for, continue to expand these non-adult concepts with the Bombshells looking for additional locations and now as we move forward with Ricky Bobby’s that the Ricky Bobby’s Sportsman continues to grow and we continue to deal. We develop that format as well. They’re similar but they’re really non competing deals because they basically cater to different types of customer base, very similar to our Rick's Cabaret and our cabaret concepts that we’ve gotten very good at doing. Also, continuing to acquire existing clubs on favorable terms, we’re not just looking to go out and acquiring things just to acquire stuff. We want to make sure that our return on cash is good. We want to make sure that we’re not getting ourselves into a lease where we’re going to have our rent jacked up often in the future. We want to try to buy our properties when we can. We believe there 500 clubs in that acquisition universe and basically we own and rent 50 of them of them right now. So we believe there is a huge growth potential to continue to grow in that market as well and I think that as we continue to grow with the real estate hopefully we’re going to be able to use more bank financing for the real estate which will lower our cash out of pocket cost on the real estate, which hurts our overall return on investment, because the return on the real estate is much lower than the return on the actual operating company. Looking our outlook for 2013 and 2014, entering the fine season on a roll with our 2013 growth target in sight. Our earnings are increasing, our revenues are increasing and as we enter our October, November, December, which is the beginning of our prime season going forward and then hitting January, February, March, last year the Super Bowl the last quarter we had a little downtime mainly because of hockey was not going on. The Super Bowl wasn’t in one of our cities. Well next year the hockey season should be gone on course and find the (inaudible) New York as much in the following year and we’re going to have the Super Bowl in New York City which we think will be great for us. We have the new Vivid open. We do believe that the Vivid and Rick's complementary concepts, not competing concepts, very similar to our Rick's Cabaret and our Cabaret North in the Fort Worth and Dallas market, the downtown cabaret and the Rick’s Cabaret in Minneapolis with both completing each other and both doing very, very well with their demographics. We think we can duplicate that in New York City as well. We’re also going to continue to reduce the high risk debt again working with the banks. So I think that’s going to help the bank financing, should hopefully help as we move forward and, we’re getting to a point where we’re starting to generate tons of tons cash. As we open these locations we’re starting to get farther and farther long in the construction. So the cash outlays that we’ve been having go out in LA, in New York at the Ricky Bobby’s and in the Bombshells, those cash outlays are going to slow down and as they actually start generating revenue, we’re going to see kind of a double turnaround on that of our actual cash. And we’re also continuing to score I've said the best use of our real estate holdings. I do think that as we move into 2014, we’re going to find a way to unlock that hidden value of all the equity we have in the real estate, either through some type of REIT, through some type of sale leaseback program or through bank financing where we’re able to go in and borrow money against our wholly owned and free and clear property pulling cash in for expansion. In 2014 I think something we’ll continue to grow. I’m very excited about the prospects of our growth going forward. We’re talking with several operators on a couple of multi-club acquisitions which would add several clubs at one time. As our (inaudible) perform we may have another weight of rate capital through equity. So there is lots of forms and ways for us to fund this growth and obviously we’re going to use whatever works best and as the least dilutive to our shareholder base. Speaking to a very important thing that I think needs to be said is that I own a very large portion company, but not in terms of 50% or anything but 12.4%, but that is still over 90% of my personal net worth and my personal net worth is basically tied to the success of Rick’s and what Rick’s does. I’ve continued to buy stock. I’ve never been a net seller of Rick’s stock and I’ll continue to buy additional properties. So I believe that’s the best investment I can make, especially at the current price levels. With that said I’d like to take a question-and-answer session at this time.

(Operator Instructions). Our first question comes from the line of Eric Beder from Brean Capital. Please continue with your question.

In terms of the restaurant you are now expanding Bombshells. What should we think about is the end game for the restaurants group, and can they do the returns that you get from a regular night club?

I think the main thing one has to realize that these are not typical restaurants. We run in 50-50 liquor, actually Ricky Bobby is running even a little higher than 50-50 liquor. So what I like with them is we’re a theme sports bar, with a restaurant that converts in a live music venue when the sport ends. And so we’re basically a destination location and an entertainment place where people come to entertain and hang out and not just come and grab dinner and go home. I think the end game, we got lots of options, A, we can keep growing it, growing it ourselves as we grow internally. At some point we prove the concept, we lay it out and we franchise, we can (inaudible) start on partners. At some point we may build it to a certain point and maybe somebody buys it from us giving us a influx of cash to grow our adult business. I mean I think we just have lots and lots of positives with it. As far as the margins go, based on the layout on approximately $300,000; $3 million a year rotation to a $3.5 million year rotation. We think that we can get the margins around 20%. Excuse me, that’s a little lower than say some of the strip clubs especially the high volume strip ups. But it’s right in line with the basic club. So I think we can grow it pretty successful.

In terms of the clubs, is there a geographic area you’re looking for in acquisitions or it’s really just kind of that deal fits in with your criteria?

Well if we do multiclub obviously we're like some clustering in the acquisition which is probably put us in a dent, which is typically how operators operate. They open up in general areas. So that may get us into some new areas. The Jaguar’s acquisition, while in Texas it was within the same state, it was still in some fairly different geographic areas that we didn’t operate in, so we are very happy with that and plus we got a location in Phoenix, so that helped. so we’re really looking at that as well as single acquisitions that are complementary to our existing operations which makes it very easy for us to operate and of course save money by cross marketing and purchasing powers.

Okay, and finally you’ve hired some new people, trying to make sense of that kind of what should we expect those people would do, that they haven’t done before in terms of the beverage people and restaurant people.

Yes, well with the beverage people, the beverage guy we hired in, and he has been setting up national accounts for us, national marketing stuff which is lowering our cost of goods sold by getting us the same price in every market and getting us discounted prices for product placement in multiple markets and volume discounts because when you track multiple locations and all the buying that we are doing we become a much larger purchaser and we are able to shrink those prices down as well. And then of course with energy drink companies we have been able to work out some deals with some energy drink company that’s lowered our cost on energy products. Same thing we are doing now with food as we expand the restaurant, some of the products we sell it out at Rick’s locations where we are able to get discounts on specific items or products as we grow and I think we will continue this to see more and more of that as we get larger and larger. And that’s really what his job is about. On the restaurant side we brought a new guy that worked for Planet Hollywood for several years. He has done multiple restaurant startups and he started helping launch these restaurants help us find the new locations and do kind of the things that have been his expertise. We understand the adult club business and we understand that the liquor side and the bar side of it. He is really helping us to learn and understand and develop our systems for our food service. And it’s made a drastic difference when he came on board, the Bombshell location was doing about 35,000 a week and now it’s consistently doing 65, I think during the playoffs we had a couple of $80,000 weeks and it’s very exciting. The quality has gotten better. The reviews and the amount of positive customer response has gone up drastically since he’s been on Board.

(Operator Instructions) Our next question comes from the line of Igor Novgorodtsev with Lares Capital. Please proceed with your question.

Couple of questions, can you just tell me I know additional couple of losses and you have several outstanding. Can you just tell me which (inaudible) you have settled and what is your outstanding?

We settled a claim that was in excess of our insurance coverage from 2009. We had several claims around the country under that policy under our assault and battery policy which has a $1 million limit. So we severed the claim there that cost us about $160,000 in addition to what the insurance company policy had left on it. And we figured that was the easiest way to discard that claim and move forward kind of finish out our 2009 claims that we had possible and ensured claims on. So that was nice to move forward from that year. And then we also settled the lawsuit with the landlord in Las Vegas on a Las Vegas property. When we closed Las Vegas property we made claim that we owed them several million dollars in rents and what not. And that case was preparing to go to trial in Nevada where we’re going to have some pretty hefty trial expenses and discovery and what not, and so we were work out a settlement that got rid of that claim as well.

So the (inaudible) break issue which was followed in New York is still outstanding, right?

Well actually whether they are employees or independent contractors is really what's at stake there. We’re working on that now and we had oral arguments there is more for summary judgment and basically we're waiting on the course. So we’re kind of in a hurry up and wait mode to kind of see what all the different issues are going to. There are going to be facts of law that we have do and what not. And then we’ll go from there. I still think that it will probably be another year plus before we really know what’s going on. We’ll probably get some summary judgment rulings here in the next few months that will kind of give us idea of what the judge is leaning towards, what he is thinking and what not. And then of course we’ll see if we believe it’s still a class or not, whether we should move for a certification on the case based on what the judge does, and those types of things. So there is still a lot of open issues, so really nothing’s really changed at this point. We’re still kind of in a wait mode.

Okay, I guess from a positive side of lawsuit I know that you were lawsuit to the state (inaudible) income tax and that you actually were thinking that you can actually win the case. Was there any movement on that?

There has been no movement at all. We thought we were going to get something, an agreement worked out with the other side and pass some legislation and the (inaudible) session of course takes place later is now recessed and won’t meet again for two years. So we’ll probably get some type of court ruling that will either be appealed or move forward in that time period. So right now I guess kind of basically at the mercy of the courts waiting for the court to make some decisions in that case as well. So it’s kind of hurry up and wait. in the meantime we continue to expense the placement tax but we’re continuing not to pay that patent tax.

Okay, I’m just curious as soon as the worst case scenario moves the case, would there be additional charges, interest charges or penalties applied (inaudible) to what you approved?

No one really know how that falls in work at this point. We’ve basically got an agreement to stay this data collection. we filed the force, we’ll filed the forms. And I guess what’s really going to happen more than likely is there with the judge maker ruling I would assume that at some point during the appeal process that everyone will reach some type of settlement is my guess on this deal. Whether, I mean, obviously if they win the tax they don’t want to close all the businesses down because they all go bankrupt because they can’t pay what they owed in the past. They want to start collecting the money. I would assume they will work out some type of payment plan or some type of settlement on a go forward basis. We don’t consider that a super high risk at this point because we just believe that under Texas law even the judge tries to make some changes and there is a lot of (inaudible) case law that really says that the legislator has to make those changes not the judiciary section of the government. And so I guess we’re just basically going to have to sit and wait. And I wish we had more information on it but we really don’t know. I don’t think anybody or any of the lawyers aren’t really a 100% sure; it’s kind of new stuff. So as it moves through the courts, reality of it is we'll probably know in about three to five years.

Okay, and my last question (inaudible) state of things your openings already soft launched Vivid cabaret in Los Angeles, you are opening one in New York, positively it will take a few months to see how all the competitors are working out, but I am just curious I mean Vivid obviously being a more recognized brand, if this cabaret concept works out, do you plan to have any other Greenfield development of Vivid cabaret or any in the existing motto in the existing cabaret in Vivid cabaret. I mean what makes it…

I mean we've had discussions. right now we want to see, we want to open, we want to see what happens, we want to see the response, we want to see how their marketing plan works, they have got lots of internet access on cable television, they have cable television stations there, have Jewish radio stations. So we just kind of want to kind of see how it all works, how to promote, how many people they bring through the doors of the clubs and how the Vivid girls, the Vivid girls performances at the clubs, how they draw our customers in and as we move forward the relationships working, yeah absolutely we would love to continue to expand that concept and grow it. I guess it's not exactly competing with Rick's Cabaret concept; it's a little different concept. It's more of party; it's more of night club concept, with entertainers, where Rick's is more of a raw gentleman's club concept. I think that as we move forward, I think we're going to be very happy with the relationship and I think they will too. We've gotten along with them for many, many years and this relation goes back, we have talked about other things together and done some other things here and there together. And I think this is going to be very successful concept for both of us.

And you don't disclose how much you paid for using their name?

Actually we have a non disclosure to not disclose that at this time. Obviously once we are operating and the revenues are going, it's going to be kind of pretty easy to figure out.

Our next question comes from the line of David with (inaudible) Acquisition. Please proceed with your question.

I just had a quick question for you, you obviously have gotten past for last four years of some restructuring. Have you thought about forward guidance at this point and how that might help the investing public, look at you guys in terms of the organic growth versus what you are doing in the acquisitions.

Yes certainly we were working on guidance to put some guidance in this deal; we decided that it was just a little pre-mature, we want to kind of move a little bit later in this quarter. But before the quarter end or yearend, before our fiscal yearend we expect to get back into the guidance, back to our guidance model for 2014. And I suspect sometime before September 30, we will get that guidance out to public. We want to kind of let everybody know what our plans are going forward. We think it's going to be much easier and more predictable like I said with the ability to open up restaurant concepts if an acquisition falls through. We're having a nice steady growth and we'll know if we get our surprise acquisition, it will be surprisingly up instead of in the past where we have had, we thought this acquisition was going to close but it didn't, and supplies in the wrong direction. I think we'll definitely be back to some type of guidance model before the end of the quarter.

And second follow up question, you have Ricky Bobby just opening, Bombshell is the new concept. At what point do you expect those businesses to be let's say a significant portion of your business on a per club basis as well as overall revenue basis?

I mean it looks like these concepts are going to be in line with what we expect, somewhere between 3 and 5 million in annualized revenues. So I mean as you look obviously we said we are looking at three new Bombshell locations right now. One we actually have the billing under contract on a owner financed deal which was an old restaurant and night club. So as we move forward we're finding some restaurants that where the owners weren't successful because they opened the wrong type of food service or something in the area but they had a great location. We're starting to find those types of locations and looking at those right now. Much cheaper (inaudible) the kitchens are already built, the bathrooms are pretty much already built, everything we're going to do is basically cosmetic. Instead of having it spend $1 million to $3 much like we did with the Bombshells refurb, which had never been a restaurant before or the Ricky Bobby which we built from the ground up, we believe we can do these and the $500,000 to $600,000 range and total start up costs. We're currently looking across (inaudible) like that right now, one in Austin and one in Houston. We're going to continue to look of course in the Dallas Fort Worth expand the brand in that market as well. But we have got some pretty serious leads on specific pieces of property in the Austin and the Houston market that we're working. To answer your question I think probably we open two to three more by March of ’14 we continue to look and find as we move into October three or four more lined up and it could $15 million to $20 million worth of revenue pretty quickly by the end of fiscal 2014.

Thank you. (Operator Instructions) Our next question comes from the line of David (inaudible) Capital. Please proceed with your question.

So, I am looking at your numbers, it’s pretty great actually. And obviously you guys seem to be doing a fine job managing your business. I mean looking at it over the last five years your revenue gone from almost 30 million annually to over 100 million, earnings at the same time 3 million over 10 million annually. But I think is at the point where it’s pretty clearly your shareholders are going to want a piece of the action. And more or less if you look at, even though, over the last two years, you’ve generated close to 60 million in total EBITDA in just two years at the same time your market cap remains under 100 million. And I think you studied yourself. You’re buying the stock today personally because you feel that’s the best investment around. So I’m just curious as to why not boost the share buybacks or pay down debt is set off more or less acquisitions?

Well, I think that’s one of the nicest things that we’re getting to as we’re getting to the point where we’re going to be able to do both. In fact we have. If you look we’ve returned $1.5 million last year. In the first nine months of this year, we returned almost $1.5 million in our stock buyback program in addition to paying additional 600,000 in debt reduction just on the Miami deck we’re just the (fact) we’ve also paid off a couple of other loans early, paid back the $8 million convertible debenture that we had done in 2009 that fully paid off and gone. So I think you’re starting to see some of that and we’re taking somewhere (inaudible) even, okay. We’re growing here and we’ve got enough money to do all this growth while we’ve got access to capital where we can (bout) capital cheaper in the return on the growth. So, let’s figure how to best use this other cash and increase our earnings per share. At the end of the day the stock is going to come back to a (mean), it’s going to trade at some type of multiple based on the earnings per share, the cash flow and our rate of growth.

More or less referring to that if you look at the acquisition so far they’ve been great and obviously you can see by the numbers. If you were to put a run rate numbers on your current earnings tower, you’re looking at something that should be north of a $200 million company and more or less, so what I am more referring to because I know is that okay the acquisition tag’s been great so we’re looking the use of capital. The focus is what I hear you saying is still the focus really should be on shareholder value rather than acquisitions at this point just because at the run rate you’re going you’re going to be generating enough cash where the cash should be going back into the business and not in too far of the business.

But we’ve just, I mean, if you look we just recently gotten to this point.

And gradually you’ve been saying for now it seemed that the you’ve got it’s all run rate and at this point shareholder buyback or anything else that you’re heavily investing in company as well the best return would be buyback your stock or do whatever you could just to bring the value out of the business because I think if that’s done we’ll all be about wealthy in given time because I think as I said this is a $200 million company. And it’s not trading as it is.

And if you look at us and try to compare to other restaurants, sports bar, whatever entertainment company you can kind of take a whole ménage of different types of business that are similar but not the same because there is really nothing that’s exactly the same with us. But if you take and cover up the names, cover up the names up, don’t even look at what the name is, cover up our name, cover up all their names and just put the financials down, side by side. Look at the rent expenses that they’re carrying; look at their debt expenses that they carry. Most of them don’t carry lot of debt because but look at their rent expense, their rent expense runs 9%, 10%, 11% of revenues where you could got it written and together with 8% something. Take just the numbers and compare them side by side and look at the market gaps and look at their EBITDA numbers and you’ll see where the cheapest thing on the table, I don’t think you can, I think you’re going to find anything that trades at the multiples on a go forward basis was paid on. And that’s one of the things was we working, moving, to giving guidance that we really want to lay out to investors and we think we’re going to get out and tell our story for the next four months very hard, very strong and then continue to build and work those relationships with the institutional investors. It was hard because we had a lot of relationships with institutional investors but in the institutional investor market just got flattered after 2009 and 2010 and all those relationships we’ve developed and worked it’s not that we had any problem with those relationships if those businesses themselves had huge problems and cash calls and we were a pretty good winner form so a lot of our stock was sold.

I understand that and I really want to congratulate you on the business and making more or less thing I just hope that translates into a higher stock price. And I just would like to see that will be the focus because all in all we can make $10 million, $15 million in a year but as you know investors don’t see any of their money after few years it becomes firm. So, again…

As the largest shareholder of the company, I promise I want to see the stock rise up. It’s not that I want to buy more, I’d love to diversify some of my holdings and own other and make other investments but it’s hard to do that when I, like I said lay out finances about the company and go gee, I can buy this, buy my own company, much better.

Understood, with this understood that when you look at other acquisition take a look at your company you’ll see that’s probably is buy around.

Thank you. There are no further questions at this time. I’d like to turn the floor back over to the management for closing comments.

Well, thank you everybody for participating in our conference call again any of you who are recently near city area tonight please stop by Rick’s Cabaret and get a quick tour of the club and really in depth look at how we operate. We do appreciate your calling as always, if you any further questions please address them IR at ricks.com. Thank you very much.

Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for participation.