Greetings. Welcome to The RCI Hospitality Holdings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. 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. For those of you listening on the phone, you can find our presentation on the RCI website, click Company and Investor Information just under the RCI logo. That will take you to the Company and investor Information page, scroll down and you will find all the necessary links. Please turn to Page 2 of our presentation. I want to remind everybody of our Safe Harbor Statement. It is posted at the beginning of our conference call presentation. It reminds you that you may hear or receive Forward-Looking Statements that involve risks and uncertainties. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments that occur afterwards. Please turn to Page 3. I also direct you to the explanation of non-GAAP measurements that we use. Lastly I would like to invite everyone listening to the New York City area to join us tonight at 7 o'clock to meet management at Rick's Cabaret New York New, Manhattan's number one gentleman's club. You can also tour it’s sister club Hoops Cabaret and sports bar next door. Rick’s is located at 50 West 33rd street between 5th Avenue and Broadway around the corner from the Empire State Building. If you have an RSPV [indiscernible] Eric Langan or me at the door. Now I am pleased to introduce Eric Langan, President and CEO of RCI Hospitality.

Thank you, Gary. Everyone please turn to Page 4, thank you for joining us today, I’m here with our CFO, Bradley Chhay. After the market closed, we reported our third quarter numbers. We had an outstanding performance. We reported record total revenues based on nightclub and Bombshell segment revenues. We also reported record free cash flow, strong earnings per share and a high cash balance. As always, we thank our loyal customers, dedicated team members and steadfast investors for their support. We are working to continue these trends in the future. Currently 36 of our clubs and all kind of our Bombshells are open. We are also continuing to work on all fronts on our growth initiatives. Last week, we announced a major agreement to acquire 11 clubs in six states and the six related real estate properties. We are now in the process of closing and preparing to integrate these new units. Bradley and I will talk more about growth later. Now here's Bradley to review the financials.

Thanks, Eric. And good afternoon to all those who tuned into the call. We reported total revenues of $57.9 million for the third quarter. Bang! That is up tremendously from the year ago quarter, but also 31% from the second quarter of the current fiscal year and 23% from the pre-pandemic third quarter two years ago in 2019. Consolidated operating margin was 32%. EPS was $1.37 compared to a year ago loss of $0.60 and we had $29.1 million in cash and equivalents at June 30. Net cash from operating activities was $50 million and free cash flow was a record [$13] million the highest quarter in the company's history even after we paid roughly $4 million in income taxes. Please turn to page 5. Nightclub segment revenues, operating margin and operating income were all up significantly year-over-year. The increases reflect the fact that we had 36 clubs open the whole quarter compared to the June 2020 quarter when we were closed in April and with a limited number of locations that began to reopen in May and June with restrictions. As a result, third quarter revenues this year rose to $41 million. Operating margin expanded to 44.7% and operating income increased to $18.4 million. Looking at the results from the second to the third quarters of this current year, revenue rose 33%, operating margin expanded and additional 10.7 percentage points and operating income increased 75%. We believe this reflected 36 clubs were opened the whole quarter versus 29 in the second quarter. The elimination of restrictions on our northern clubs by the beginning of June, a 46.5 increase in the higher margin service revenue primarily from our northern clubs, the ongoing return of our loyal customer base and overall general consumer confidence. Please turn to page 6; Bombshell segment. Similar to nightclubs, Bombshell segment revenues, operating margin, and operating income were all up significantly year-over-year. The increase reflects the fact that we have 10 locations open the whole quarter compared to the June 2020 quarter when all Bombshells were closed in April and began to reopen in May with restrictions. As a result, third quarter revenues this year rose to $16.1 million. Operating margin expanded to 27.4% and operating income increased to $4.4 million. Looking at the results from the second to the third quarters of this current year, revenues rose 22.4%, operating margin expanded and additional 3.5 percentage points and operating income increased 40.2%. We believe this reflected three things; greater brand recognition in our markets, more sporting events that attract the guests and overall consumer confidence. Please turn to page 7 to review these items in our third quarter consolidated statement of operations. Note that we elected to showcase the change from 2019 as opposed to 2020 except 2020 was in a typical year due to COVID. Cost of sales increased slightly due to change in sales mix, particularly a higher sales mix coming from the Bombshell segment and a lower proportion of service revenues within the nightclub segment. Major line items such as salaries and wages, SG&A and depreciation and amortization, all improved as a percentage of sales compared to the third quarter in 2019. This primarily reflected much higher sales and reduced accounting and legal expenses. Interest expense decreased slightly primarily due to lower debt balances. And lastly, income taxes as a percentage of sales were higher due to the significant increase in pre-tax income or income before taxes. The effective tax rate was similar in both periods. Please turn to page 8. We included this slide to highlight our record setting quarter. In total during the third quarter, we achieved a record level in 18 of our 30 key performance indicators. These are marked by the green cells. They are revenues on a consolidated basis and for our revenues for our Nightclub segment and revenues for our Bombshell segment, income from operations on a consolidated basis and for a Nightclub segment. And third, non-GAAP EPS net cash provided by operating activities and free cash flow. Please note that we've included a much bigger metrics and of these metrics for the third quarter of 2020 and 2019 on slide 17 towards the end of the presentation. Please turn to page 9. We ended the quarter with $29.1 million of cash on hand almost twice as much as we did in December 2019 quarter before the pandemic began. During the third quarter free cash flow continued to grow sequentially to $13 million. As a percentage of sales free cash flow also improved sequentially. Our free cash flow to sales ratio was 12% in the fourth quarter of last fiscal year, 14.8% in the first quarter of this fiscal year, 20.4% in the second quarter, and 22.4% in the third quarter. We use free cash flow as a percentage of sales to measure how well we're doing at converting sales dollars to cash. Debt declined $4.8 million for March 31 this year. This reflected scheduled pay downs and the $2 million pay down related to our sold property. We are now at our lowest debt level in almost two years. As for current liabilities at $32.1 million. current liability continues to be in the general range for the last two years. Please turn to page 10 for our debt pie chart. Our secured debt now consists of 65.1% of debt secured by the real estate, 17.2% listed as seller financing. This is secured by the respective club to which it applies, 6.4% secured by other assets and lastly, less than 1% is represented by the Texas comptroller settlement. This is secured by the businesses and assets related to the settlement. The total dollar amount is $1.1 million roughly. Our unsecured debt consists of 10.3% that is listed as unsecured and 0.1% represented by our one remaining SBA loan of $124,000. Please turn to page 11 to review debt manageability. Occupancy costs continue to trend in the right direction. As a percentage of revenue, they were 5.7% in the third quarter compared to 23.6% in the year ago quarter and 7.5% in the third quarter of 2019. This is primarily due to higher sales in the current quarter. We have continued to reduce our weighted average interest rate. Over the last five years, it has come down from 7.53% in the third quarter of fiscal 2016 to 6.68% in the third quarter of this current fiscal year. Our weighted average interest rate is two basis points higher than in the second quarter of this year, primarily due to the fact that of the debt paid down in the third quarter that was lower rate interest, lower rate real estate debt. As we've discussed, one of our strategic initiatives is refinancing our debt. We continue to work with our bank to refinance higher interest rate debt and increase the length of our amortization. Now, let me turn the call back over to Eric. Thank you.

Thank you, Bradley. If everyone will turn to page 12 we continue to talk to new investors. So I'd like to review our capital allocation strategies. Our goal is to drive shareholder value by increasing free cash flow per share 10% to 15% on a compounded 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've 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 line clubs at three to five times adjusted EBITDA using seller financing, and acquire the real estate at market value. Another strategy is to use cash to grow organically specifically expanding our successful Bombshells concept to develop critical mass, market awareness and sell franchises. Our goal in M&A and organic growth is to generate annual cash on cash returns of at least 25% to 33%. Third action is buying back our shares when the yield on free cash flow per share is more than 10%. During the first quarter ended in December, we had purchased to retired approximately 75,000 shares at a cost of $1.8 million. Please turn to slide 13. To further our M&A strategy last week, we announced definitive agreements to acquire 11 clubs in six states. The collective acquisition will be our largest and is anticipated to be a creative in year one. Locations expand our geographic footprint. They provide us with a major position in Denver with five clubs. they expand our position in the St. Louis market with two additional clubs and they provide entry into four new markets, Indianapolis, Louisville, Raleigh and Portland, Maine. All the clubs are open and are well established proven cash generators. Pre-pandemic and 2019 they did a combined $40 million in revenue and $14 million in adjusted EBITDA. We're paying $57 million for the clubs, $13 million for the intellectual property that results in a valuation of five times the club's 2019 adjusted EBITDA. We're also paying $18 million for the six related real estate properties. Payment will be in the form of $30 million in restricted stock valued at $60 per share $26 million in cash, a good portion of which is likely to be borrowed. $21.2 million and 6% seller financing and $10.8 million and 5.25% real estate commercial bank loan that we are working on. Multiple closing dates are anticipated. Based on our past successes, we believe our season management team will be able to integrate the clubs using our time tested industry best practices. And as I said in our news release this is exactly the type of sizable transaction we were looking for. We believe the quality of the clubs licenses and locations enhance the value of the collective acquisition to us. Please turn to slide 14. There are two developments we want to tell you about. The first is Admire Me, a new social media platform we plan to launch that enables creators to post content and receive payment from their admirers. It's comparable to only fans. And we are looking to formally launch in the next fiscal year. The second is we have a number of properties for sale and under development. We have three properties under contract for sale in the Dallas Fort Worth and Austin area. The total sales price is approximately $7 million. We're also working on other real estate land property developments. Please turn to page 15. We are continuing to execute on our growth initiatives. We continue to make progress on our efforts to refinance our real estate debt. We are just waiting on three surveys and a few final title commitments and zoning letters on the 46 properties that will be collateral on this loan. We are hopeful we will be able to close this loan relatively soon. Construction is underway at the first plan next 10 Bombshells in Arlington, Texas in our first franchise location in San Antonio. We're continuing to find other potential Bombshells locations. We are currently in negotiations on several other properties in Dallas and Austin markets. Our goal is to build 10 new locations over the next 13 months. We also want to sign additional franchises and are in negotiation with several groups. Lastly, we continue to talk to other club owners interested in exploring opportunities with us. And we look forward to telling you about some of the single club acquisitions soon. Our management and accounting, especially our employees that all the clubs and restaurants from our kitchen staff or our bartenders wait staff, especially our entertainers, reform, all of you are what make our company one of the best hospitality companies in the business. And our great investors were sticking with us as we continue to grow into a much larger and professionally ran publicly trading company, especially those that have been with us through all the growing pains and continue to believe in our incredible team. I truly believe the best is yet to come. And with that, let's open the lines for questions. Operator?

Absolutely. Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Okay, it looks like your first question is coming from Adam Wyden from ADW Capital.

Hey, guys, congratulations on the great quarter. And congratulations on getting [indiscernible]. I think I may have mentioned to you I remember when Troy took his company, private many years ago coming out of the recession. And I remember it was actually my first kind of foray into the adult entertainment industry. I always fascinated by the unit economics. So I'm glad you guys were able to finally find a way to do business together. He's obviously built a wonderful business, and you built a wonderful business. And it's, it's great when two professionally managed organizations can get together and drive economic value. So that's super exciting. And obviously we saw that he issued shares at $60. And obviously the transaction is very accretive. We have it at like 4 to 4.5 times EBITDA performance. So obviously that can make sense, but I guess my bigger issue is, I think there's a little bit of a prevailing sentiment that these numbers are not sustainable and that there aren't more clubs to buy and that you aren't going to open up more Bombshells. And somehow this call it $110 million of EBITDA that you're doing now is going to like get cut in half or something. Now, obviously we're an unchartered territory. We don't know, whether some of this stuff comes down a little bit, but I mean, can you speak to kind of what you think, how you think about valuation and how you think about getting your cost to capital right, because obviously, as you continue to kind of do these multi club acquisitions, you're going to want to have that equity in your arsenal. So, can you talk a little bit about how you see businesses business going today? And why you are confident this company? I mean, you made a comment on the conference call, you said, look e we want to be a real public company. We've gone through the growing pains, I mean, what gives you the confidence that this company is going to trade with the normal cost of capital clearly you put all the systems in place and it looks and smells like a public company, and it just doesn't have that public company cost of capital. And I think your ability to grow will largely be augmented by the fact if you haven't. So I mean just curious kind of how you think about that from here.

Well, I mean, I think we did a very large acquisition. We paid top dollar for but we're getting some top locations remember, VCG used to have 20 locations these are the ones they have left the 11, they have left, because they've sold off the locations that were underperforming to service debt or get rid of debt and do the things they needed to do, to focus on their top locations. So we come in, we're buying some of their top locations, top cash generating, which was important to us. So instead of paying typically, we've been paying three or four times on our recent deals, this is a five times transaction, but it had the size force, and we were able to use some equity. I think that if you look at our evaluation, we're getting a little premium. We're paying them five, I think we're creating probably closer to six on our trailing basis. So we will also get upside from when we take over some of their clubs with our synergies and some of the things I think we'll be able to do to improve pre-results at those locations. And I think at the end of the day, this is going to look much closer to a four times a year from now we'll look back and go, Oh, we only paid four times for the EBITDA that we picked up. So that's my thoughts on it. As far as how are we becoming a real public company, I think we're out of the crazy days of trading. I think we've gotten through the shorts, I think we've gotten through the growing pains and audit issues. Now with Friedman with us for this year, and then moving forward from 2018 and 2019 our corporate office staff is in the best shape it's been in. We're ready to grow. Our ERP system is now we'll start with that was enough, we won't even we won't even realize that there won't be any stress on the system at all. We barely even notice that there's more clubs the way that we set things up in the office. And as far as our management team goes, I mean, we've attracted some of the best in the business. Everybody's calling us right now.

Let me ask you a question now. Sorry to interrupt you. But I mean, if you think about how your lenders are financing you, you're able to buy real estate effectively financing in it, depending on the property anywhere from 3% to 5%. Now, realistically, these real estate assets have operating businesses on adult entertainment. So to the extent that you're able to collect rent from yourself, you're basically the lender is effectively saying we're lending you money to buy real estate that's lending to an adult entertainment. So like by that stretch of the imagination of the debt investors is smart enough to say, okay, this is the quality of the cash flows. Why do you think the equity investors are not able to underwrite to a similar cost of capital? When they're all they're doing effectively is buying these operating businesses with the real estate, right? I mean, if the debt is going to be, if the debt is going to trade at five, why should we trade at five?

I think we are having a hard time understanding, like you said, people think this is a fluke, or they think it's but I'm telling you, our July was better than our June. We're continuing to see improvements. Our northern clubs in July had great deals. New York still off a little bit. Chicago hit almost an all time high. The Minneapolis market is strengthening. So I think we're off in the south up 2-3 points which is typical summer decline, nothing. Like there's no slowdown from COVID. There's no slowdown from people spending. And I think the reason why is, I just don't think that other operators have the employees, they have the staff. I mean, we retain almost 86% of our management staff. We've retained almost 60% of our total staff from 2019. In an industry, that's normal. If we didn't have COVID we have about those same percentage of retention, because that's just --

So let me ask question. So let's say you get Lowry done, you get your synergies and he gets the rest, you basically did 20.4 in the quarter, and he didn't have everything open. And if I do the incremental economics, I feel like I'm a broken record. I feel like I've been saying this since even before COVID. But if I kind of run the numbers out, you're probably running at 90 plus before Lowery, so then you kind of run Lowry through the machine. And you're basically another 20 of EBITDA obviously you get the refinance, you'll save money on free cash flow, but I mean, if you think about it starting calendar 2022, you're looking at a business that's pro rating about 110 of EBITDA I mean, do you see a path to getting to 500 I mean, I guess at 110 it's kind of like, okay, it's public, but at 500 it's kind of like a corporation, I mean, is your plans to build a corporation because, I mean, to me, if you put all the building blocks, you put all the systems in place you're not really getting the public company costs a capital. I mean, is it your I mean, is it your goal or intense I mean, to really build this thing into a multi 100 million dollar cash flow business?

Yes, I mean, I think this acquisition shows that we can do that. Our goal is to grow at a 10% to 15% clip compounded.

That's organic without deal.

No that's not, we want free cash flow per share growth. To do 15%, free cash flow growth when you're doing $1 you need $1.15 the next year, but when you're doing 100 million need 115 million next year.

Okay, but you guys, I mean, look, you guys have been growing 15% to 20%, without --

Over 20%.

Look Lowry effectively is the first big deal you've done in a long time. I mean, I know you bought some things, you guys have basically been catering without the acquisition. So presumably with Bombshells and acquisitions, this 15% to 20% is going to prove conservative, right? I mean, that's your baseline. But I mean, you could –

Double check, that's our minimum, that's our minimum goal. What they say, under promise over deliver, that's we tried to do, but if I tell you 20%, do 19 oh, everybody wants to cut my head off. But I'll stick with my 10% to 15% growth, and I keep pushing it and I keep 22 and everybody's happy. I just I don't see any snags in the plan, at least not in the foreseeable future. People are getting vaccinated and things are getting back to normal. Yes, there's new scares here and there. But I mean, we're not really seeing any results or people that are vaccinated are not scared. They're not I shouldn't I don't know if they should be or shouldn't be, but they're not worried about coming out to the clubs or dine or even worried about getting COVID for the most part from the people that I see every day and talk to everyday. We're ready to live our lives. That's what we're seeing in our clubs. That's what we're seeing in our restaurants. I think we'll continue to see that for the foreseeable future unless something major changes. That's unforeseen. But based on all the foreseeable data that I have, we're going to continue to build and continue to grow.

Great.

Well, look, obviously we own 10% of the company plus or minus we we're obviously on board, I mean, I, I would not have taken a position in this company, if I didn't think that the combination of the acquisition strategy with the nightclubs, the organic growth strategy in franchising at Bombshells and now obviously, this is what we were playing for is obviously, if there's something that comes out this Admire Me, which you guys haven't talked much about. But I mean, obviously, we've seen the conflagration that is only fans. And by definition, you have all of your adult entertainers if they can have another venue to go and you can work it and not to mention it also serves as lead generation marketing for your in person there's an enormous amount of synergies between Admire Me and you're in your kind of traditional nightclub business. So obviously unlocking that value and intangible value you have in your enterprise, I think, is super exciting. So look I am still on the belief that this is a 500 EBITDA for us but that this can be $8 billion, $9 billion, $10 billion in market cap. So look its Rome was not built in a day, but obviously, you guys are taking the right steps to build the corporation. So hopefully, we don't have other people on the conference call asking stupid questions about liquidity when our cash flow doubled through COVID. And we bought stuff.

I think we're going to get there. We just got to just stay the course and just keep pushing away on it. All right.

I'm going to going to hop off the call if someone else jumps in and ask something stupid. I'll be back. Thank you.

Okay, your next question is coming from Jason Scherer from Orchard Health. Your line is live.

Hey, guys, are you doing?

Good. How are you?

Just want to say I'm blown away by the numbers that you guys just posted on the board. Didn't expect anything that high. Congratulations. Absolutely took my breath away. A couple quick things. First of all debt restructuring. What do you think the timeframe is going to be on this?

We have been working on it. Unfortunately we added a bunch of out of state seals, the title companies have all been overwhelmed. And they're very slow. I mean we turn this over title company on June. The third, we've got our first product comes back two weeks ago. We're down to three survey requests, which if they told us in June, we needed to we've already had them done. But like I said, we just started finding out about the stuff about two weeks ago. There was actually five surveys, we've got two of them completed. We've got three to go. It should be wrapped up here soon. I'm hoping to close by the end of August. Worst case the second week of September. First week will be hard because of waiver day, so I guess we get into the second week of September, but definitely before the end of this quarter, I'd like to get this $104 million billing.

Okay. The other question is with the new club that you guys are making the acquisition of the employee mix that you have an independent contractors, can you give us an idea of what that is, to 1099?

I have no idea. I mean, that we can run it, but I mean we have a lot of entertainers. Some are employees in certain markets. Some are not depends on the market, some states and whatnot. So, I mean, I'd probably if I had to guess I'd say we probably have in a given period, pre-COVID 10,000 plus contract entertainers today. I don't know what the number is.

He is asking about the 11 club of any employee model.

I don't know. I have not gone deep into the 11 club. I think that based on the markets that are in no, I'd say they're all independent contractors.

Okay, next question being this is going to be 11 clubs, that you guys are going to start to chew through here. How long do you think this process would probably take to get them on to the board?

Which I don't understand that?

Well, the 11 club.

All the transactions or --

Yes. I mean like how long you think it will be?

We could start closing first deals. First deal could close as early as I'd say mid September, maybe a little earlier. There is seven clubs of licensing, it'll be very, very quick on. There's one state that could take up to 90 days. So it could be, we could be looking at this August, so November to close on the final transaction. So I'm going to guess it's going to be a series of transactions starting sometime in September and running through November to close all 11, to close on all 11 properties.

I got it. So January, February, March, will they'll all be on the books, probably.

I think they'll all be on the books in the next quarter in our first quarter of 22, maybe not for the whole quarter, but in that quarter for sure.

Okay, and then with this, such a purchase like this in the integration, do you guys think you can handle another big purchase or other club purchases, if somebody came along?

Sure. We're picking up some great management with this, I mean, they're doing $40 million in revenue. I don't think we don't buy businesses because we want to go in and change all the management out. We go in and buy and because they already have strong managers. They are already making strong cash flow. We want to come in and take our systems, teach their management tool to put in our best practices, put in our POS systems, bring out cost control systems in lower their cost of operating and increase the EBITDA from 14 million to say 17 million. That's our goal not to and you can't do that if we're rebuilding management teams at every location, that's not going to happen. So we need current management teams. That's why we buy strong management teams.

Can you tell me a little bit about the Admire Me? How long have you guys like had this concept out or how long it's been in the works?

Well, we have for several months we had people contacting us wanting to invest in their invest with them, do stuff with them. We kind of looked at the process and one of the groups that we talked to was pretty near and had a very similar concept to what we wanted which is basically see a girl on the internet and come meet her and in real life at the clubs or meet her in the clubs but be able to learn more about her or talk in her more and on the internet basically. And so we think it was just a nice interrogation and the other thing is I look at some of these other websites and other than like the big stars that are I call them the circuit stars that are coming around and hitting all the clubs and have big followings those people are real I just think there's a lot of canned material and so I wanted something that's it's much it's much realer for the customer. And like I said it takes the fantasy world and the real world and gives you a safe place to demand to meet and the girls continue to build their business at the club level and the club girls can build an internet business as well. It's kind of a cross between the internet and the brick and mortar businesses that I think will do very well with. It's a very inexpensive, relatively inexpensive venture for us, we're going to own about 65% of it. A lot of the setup and program was done. We're going to be hopefully launching beta here in the next quarter. And hopefully launch full live sometime in early 2022. And we'll see how it goes. One of the things that we can add a value with is to these big circuit stars that we can, we're going to own 50, some clubs around the country where we can go we'll give you 20 weeks of featuring to our top influencers on our website which is something other people can't do for the big for the girls and the big stars to draw more of them in. So I think this makes a lot just have a lot of synergies that made sense, as we started talking about it and looking at it and saying this can make a lot of sense. And I think our total investment from now to go live is probably under a million dollars. Currently, I think we've invested about $25,000 in programming, making some changes, but these are changes we wanted to the website to integrate our ideas. And like I said, we'll start the beta testing, we're in the process of getting the credit card processing to go live here soon. And once we reach those milestones, the rest of us just put it out there and see what happens.

Thank you very much. Got everything's fantastic.

Okay. Thank you.

Okay, the next question is coming from Darren McCammon from Cash Flow Kingdom. Darren your line is live.

Hi, guys. It's Darren.

Hi Darren.

I was going to say --

How are you doing buddy?

Good. Hey, any cash on hand? What are you comfortable with given COVID Delta going forward for cash on hand?

I mean we are keeping 15 million - 20 million cash on hand. More than likely, I mean, we're sitting 29. At the end of the period, I think we're a little over 30 something now 32, maybe, or so 33. I have to go back and look. And when it gets that high, though, I'll have to look at it every day like I used to. I'm too busy trying to invest it. We've got access to debt financing still. Our debts at a two year low. Even with this new acquisition, because of the equity component on it EBITDA we're going to add is our debt to EBITDA ratio, actually, I think drop even with this transaction. So I'm not over overly concerned. Like I said 20 million - 25 million is probably too much. So 15 million, 20 million right now. We're generating over a million a week in cash.

I'm going to reiterate the same question as the previous guy. I'm sorry, my system is going in and out. Are you still there?

Yes. I'm here. I'm sorry. I didn't hear what you were saying. Something about the question from the last guy.

Yes. I'm just going to reiterate kind of the same question. Given that this is a pretty big purchase for you I'm kind of wondering how long do you need for integration before you can really consider buying another big purchase.

Considering another big purchase today. You got to remember, we started this acquisition, we started working on this acquisition in November. So it's taken eight months to get where we are today to get definitive documents. So if I start today on another acquisition and even if it goes faster, it only takes four or five months to get the definitive documents with a larger acquisition, it's going to take time. There is a lot of due diligence process you have to go through and whatnot. So by the time I'm down to the definitive documents, we'll have this one integrated. This is going to this acquisition is going to integrate in the first quarter. Maybe a little bit extra work in a second quarter of six months, six months, this thing's fully integrated. We won't even it'll be like it was we like it was ours the whole time. Our systems are back basically transferable now. Everything is just plug and play, plug and play plug. It's just a matter of training the current management teams to use our systems. In a pilot terms, it's differences training. We are going to upgrade their software and their systems and we're going to teach them how to use it. It's basically still all the same stuff. It's just I think our systems are better for our cash control handling, better for inventory controls, better for costs and tracking costs. And then our national buying power lowers costs. So everything goes, that's the value we add. And so when we buy these things, and we integrate them I think it's a three to six month period tops.

Okay, thanks for the additional color. That's all the questions I really have. I just like to say great quarter, and I really like the purchase too fantastic purchase.

Yes I mean, I'm very excited about the new locations. The Denver market is a fantastic market unbelievable growth in Denver right now. I think we'll be able to go out there and do some great things in that market. And the other markets some of those, they're the only the only club in the state of Maine, Raleigh, North Carolina capital city just a great location as well. I think we'll do well there. Louisville is going to be a good market for us. We're excited about the management team there. And Indianapolis as well. So I mean, when you put it all together, it's this, it's going to be a good acquisition for us for sure. And I think it lays out the path for other big owners ago, I can do this. This seller wanted equity. They wouldn't we've had a hard time doing deals in the past because we just couldn't get them enough equity because he wants to avoid the taxes whether we know with the stock doing stock transfers and stuff. So it's about creating a tax benefit for the seller as well as an upside for RCI and our shareholders.

It makes sense to me. I think it also opens up other big purchases. So I think the great deal, congratulations.

Thank you.

Okay, the next question is coming from Greg Pendy from Sidoti. Greg your line is live.

Hey, guys, thanks for taking my question. Just wanting to shift over to Bombshells per se. before you've learned more and more about this concept over time, and I get that, but I think in the past and this was well over a year ago, you put out this 19% to 22% segment level margins, and just kind of given what you've learned, can you kind of any comfort on saying even as things normalize, the higher end of that is more sustainable. And then also when you're talking to franchisees I mean, I'm assuming they're looking at probably using the concept, they're probably going to go the lease route versus owning the real estate. That's just my assumption but, I mean, how are they thinking about it and kind of how, are you framing it given the fact that the numbers are kind of all over the place right now?

We were looking at both. As far as what are the Bombshells numbers I just knew that that because of all the pre-operating costs and reopening costs, and we were in government, we were basing everything on $5 million units. Our new units are closer to $7 million units, or higher. So we have to rethink the margins on those higher units. So as we expand, I guess it just depends on do we know if we're opening more $5 million units, we have a couple of $3.5 million units, or $4 million unit so we're at the end of the day it's going to depend on the mix of units and whether we're highly successful in picking $7 million units right. I mean, that's, the real key right now. We've got to find the right locations. I've looked at a lot of properties that I'm very comfortable we would do $4.5 million to $5 million. It cost me the same amount of money to build a 4.5 million to 5 million across those $7 million unit. So we're very focused on the demographics and the traffic needs of building these stores that will do 140,000 a week in sales. That's our focus right now. So that's what's changed. That's why the margins have gone from 22% to 27%. Is it sustainable I don't see why not. I mean, maybe it's 25% or 24% sustainable number over the long haul if the sales mix changes for some reason or you remember Bombshells is now going on, they opened in May of 20 during the pandemic with restrictions unbelievable numbers, and we all kept saying there can we do this. How long can you do this for I want to do this work? Why? I don't know, we're going on 18 months now. I mean, we're still doing the numbers. So I don't see a reason for a big drop off in the numbers at this point, I think that the brand is especially in the Houston market is an unbelievable brand in that market. There's name recognition. I mean, anywhere I go, people know Bombshells in that town now. And that was kind of the idea. When we built we said, Look, we're going to focus on one market, going to own that market. And then we're going to take the concept other places. I think we've done that. And when people talk about, well it's Bombshell anybody could build it sure. Anybody with $6 million, can go out and build a store. The problem is how many people going out and building restaurants to be on a competitive nature at that price range? And if they don't spend the money they don't have they don't have what Bombshells has, because that's what it costs to build our concept and to do the things the way we do them. So I think we have while we don't have the motive of this of the adult clubs. I still think we have a cash, motor cost people money, sort of amount of money, and they're going to have to throw an event, their concept, we're going to spend that kind of money on vendor concept. And so I think we've been very successful in our niche of what we do with bombshells. As we expanded into the Dallas Fort Worth market, we're looking to expand an Austin as well. And we're still working in Florida. It's just everybody in New York moved to Florida, and the prices went crazy. And I'm sorry, I just can't pay $8 a foot to lease a building. Even if I think it's going to $200,000 a week in sales. At the end of the day the rent starts becoming 9%, 10%, 11% of revenues. And it's like, No, I can't I can't do that. We'll just go stick with the model that we know. And we know it works, and will if those prices come back down to reality at some point at $60 I think we can make it work. Maybe we were looking in the high 40s in that market, when we were when we first got down there. And we were getting NOIs out. And we were getting close on negotiations. And I'm not kidding you. It literally seems like within a two week period, the prices went up 50%. They went from 40 to 60. And then from 60 to 80, probably within a month from that time. And it's like, okay, let's just go back to Texas right now. We're looking in Arizona real hard right now. And we're really we're talking with franchisees, and know their markets and know their demographics. And we're able to teach them what kind of demographics they need. And we're running all the traps and I think we'll sign up more franchisees here, in the near future as well. And that's really we love that model, too.

Right. Well, that's very helpful. Thanks a lot.

The next question is coming from Peter, he is a private investor, Peter, your line is live?

Well, I'm very disappointed that you've made me pull out 12 year old spreadsheets.

I didn't make you do it. But yes, it's been a long time to, since they were public. I know, you were, I know, you guys were pretty big in instrumental and in building their public company. So unfortunately, it's not the same company that it was when we tried to buy it in 2012. But the reality is, I think we're getting to cherry pick it now.

I just wanted to make a comment, because I know all these clubs very well. With what I agree with you completely when you said it's going to be four, not five when I'm looking over my model and seeing what leverage is there and you have a whole bunch of really strong clubs Denver market and some of these other markets. They have good clubs, it should be very good. The question I wanted is when I look at similar kinds of industries, and a good example would be the automobile dealer industry. And let me tell you why I'm saying it's a similar thing. You'll have a lot of independence, a few small, you'll have five or six in the automobile industry, public companies in your industry you have one. You now have discussions of potentially new taxes coming that will make it less attractive if they pass for people to pass these kinds of assets on to their heirs. So one of the things I'm seeing in the automobile dealer industry is lots of deals. And I am thinking that there has to be a lot of people in your industry, who are calling you on a daily basis saying, I want to make the same kind of deal you made with Troy, am I wrong?

We're getting calls Yes. I don't know if I'm taking them every day, but they're probably making them every day. We're getting lots of emails, texts, we're talking with brokers, we're, obviously we want to get this one in, we're lining them up, so to speak down the road, give me a call. In two weeks, I'm calling in three weeks type deal. We're talking with people we're looking at some of the, I'm I am calling it cherry pick some of the someone offs stuff, it's easy for us to operate close to our existing clubs. So like, that's very appealing to us or if we can find a deal where you can buy a home market, like we did with Denver, and St. Louis, basically, of the big clubs we now own three of the four that's appealing to us to get that type of market presence makes things a lot easier for us. As far as we don't have to deal with what I call rogue operators, doing crazy things that get the input to the industry in a bad light or cause problem with local officials and stuff. We're not perfect in every market, but in most of them, we try to be so.

But going back to where Adam started, and I hope I'm not asking a stupid question I was going to get Adam, on my case. It looks to me that you could have the opportunity now using a combination of equity and debt in I'm leaving at Bombshells, but in the gentleman's club segment, to grow significantly faster than people are thinking, is that a reasonable point?

We get the stock multiple, and we can start getting the arbitrage. You remember in 2008? I did 11 acquisitions in 2008. And that's because we had $25 stock in that stock the equipment a $25 stock in 2008 would be like $175 today. Right. So Apple stock was that, yes, we'll we will absolutely move much quicker. The abilities out there if the cost of capital becomes cheap enough. At that point, I think our cost of capital was like 3%, or 2%, or something like that, but using our equity. So there's times when equity makes a lot of sense for us. This deal, it was it was borderline for me. Here's the way I looked at the equity. I said, well look at the stock, we do this big deal, the stock runs up, okay, everybody comes out ahead, everybody stock stays at $60. We look at as a five year interest free loan, and we buy that 500,000 shares back at 100,000 shares a year for the next five years and the stock comes back, we're back down to 9 million shares and whatever. So there was no downside and issuing equity here. I don't know that there's a lot of upside, we'll find out. All right. I mean, the markets going to tell us over the next three months, I think what, what it thinks of this deals we integrated in as the numbers start coming out. I think we'll know by February for sure. And then we can decide but either it's it was a home run for us, or the market isn't rewarding us for it. And okay, well, then we'll just we'll buy the shares back and if interest rate debt.

Well, my guess is going to be a home run and congratulations. Thanks. Thank you.

Yes, I mean, we certainly hope so. I mean, we would love the ability to have the capital and build the user equity. And have that equity arbitrage. Going forward, we'll still have some seller financing and deals, we'll still have some cash components and deals. But if we could use a little bit of equity to sweeten it up for the sellers, I think it's sweet and for the sellers. I mean, Steve, I know Troy is very excited. He only thinks that like the combined companies are going to be worth a whole lot more than the two of us were separate and that is $60 stock or we'll trade for trade much higher. What I think, he's actually when I talk to him, he's really wants to be a long term shareholder with us and grow with us. He got enough cash in the deal to take care of the things he wants to do. And the desk going to give him monthly cash flow and the equity component is his long term create wealth plan. So, hopefully he becomes basically the poster boy for everybody going forward saying, look, guys, this is how you do it.

I think it will. Thank you.

Okay, the next question is coming from Doug Weiss from ESW Investment, Douglas, your line is live.

Hey, nice quarter. Let's see a couple questions. So I'm on kind of thinking about these larger deals. How many of these large club groups are there theoretically, that you could over the next five years would theoretically be fit your --

Well, when you put on a timeframe, it's hard to say how quickly guys will, come around and want to sell. But I mean there's multiple levels, one second, I had a sneeze. But there's multiple, deals out there to be had. There is definitely lots of operators, we'd love to buy, or merge or whatever, someone we'd love to have join our team, and grow the company with us. I think it's going to be an evolution, I think a lot of us, we're going to know over the next three years, we're going to see a lot of it, we're going to know now that we're in the we're back in the driver's seat of what we're able to do. And if the equity continues to respond favorably, and we start getting the value for what we're doing, and for the cash flow that we're generating. I think you're going to see more people join us. That's my honest opinion.

Yes. And you've been really careful, I think about which markets geographically and legally you've entered. I mean how many states are there that sort of work for you from a legal and?

Well, we think all of them could work for us. If the operators in those states, who know the state and know that know how to operate there are willing to stay on with us, at least until we figure it out with them. I mean, California is a scary state for me. We went out there once and it was a little more intense out there. I would say that then and regulatory takes time takes months to do anything. We're not used to that. We are much more business friendly environments, and majority the markets that we operate in. But at the same time, I mean, we're doing business in Illinois. We're doing business in New York, where it takes longer to get things done, but we just keep pushing forward and get it done. So I'm not afraid of any market, especially as we continue to grow and we get the size. But I don't want to buy losses either. It's not fun. It's not fun for me, I hate lawsuits. I hate being in court. I'd rather just run my businesses. And so we're looking for very business friendly environments, where we can do what we do, grandfathered locked in locations. And, of course, we all love living in competition. We don't have, the problem is we have limited competition that our exact industry, but our industry still competes with multiple other facets of entertainment, rock concerts, sporting events, while some are complimentary, some are also competitive. They people only have so much money to spend, and they choose where they're going to spend their money. So we have those competitive issues as well.

Can you just remind me what the two clubs that are closed are currently and whether those are going to reopen?

Sure. One is in San Antonio, Texas, we have I believe with San Antonio, we're waiting for the actual settlement papers. We have a lawsuit with them. We believe they closed our club illegally during COVID that we had the right to be open. They said we didn't was a big mess. We've been in court battles where we've won, we've lost we've gone back and forth. At the end of the day, we're closed and I want to be open. So we've structured a deal that I think is win for us and the city. I'm hoping that gets done that club could be open as early as October under a new format and a new name. And the other one is, the one that got hit by the hurricane in Lake Charles is actually in South Louisiana, but it's Lake Charles area right by the casinos. And I mean hurricane basically took the building out. We've been in the process of rebuilding that building. We're probably four to six weeks from reopen that location as well. So.

Are those kind of million dollar?

Let's see, Antonio is probably about 600,000 in profit a year. So far, I don’t know at the top of my head but probably in that same 500,000 - 600,000, range. So, the two of them together $ 1,200,000, quarter million two, for easy numbers purposes.

Okay. And the operating margin on club that Fuqua were the highest you've ever had in the mid-40s. Is that?

Second highest, I think there was a quarter in 18, were higher margins I believe, or Bradley can. It's on Bradley's chart, on Page 07.

Yes, I got it, December 18.

Yes.

Is that sustainable or?

I mean, we're not, things do down in July. I'm like you guys, I don’t know. I don’t see it dropping off overnight. I think if it drops, it'll be one of those gradual 3% 5%. But typically our industry we run solid up for six quarters or eight quarters and then we have three four quarter decline, then we go back and beat the numbers again, right. If we go back all the way to 1995, you can trace that pattern, wherever. And a lot of it has to do with our size back then and a lot had to do with sporting events. Was there suitable one year in one of our cities and not the next? The think with now is with $57 million, a soup bowl that brings in an extra $1 million a week at a single club, effects that club but it doesn’t change the whole company like it used to. We're just getting large enough now but the seasonality of it, the big sporting events don’t effect the overall numbers like they used to. So, I think we're just going to have to just keep moving forward while we've to monitor it. As of right now we're not seeing much slip in it. In the South, we're seeing a typical summer slowdown 2% to 3% at some of the clubs but overall the northern clubs are up 20% 40% 60%. So, is it it's where we're -- it's coming as zero some gain, we're losing here we're gaining there. Unless the overall economy changes or something that changes, basically peoples have it, I don’t see a slowing down right now. I think we've gained market share coming out of COVID because we were prepared. Our management teams are up, management staff Ed and Dean, they did an unbelievable job. Our regional managers with their general managers, keep them and the general manager with their local teams, just did a great job of getting everybody back to work. We work as hard as we could. I never want to focus when we start reopening. Wasn’t making money, we're getting our staff back to work. Because people want to pay in their bills. Let's get our staff back to work with everybody taking care of and then we'll figure out how to make money, right?

Yes.

We just kind of double locked out, we got all of our staff back to work and everybody's tired making money when these 25% occupancies and 50% occupancies, it's just we want to what we call we all say do the right thing. We talk, I do the right thing, we want to do the right thing by our guys. Get our clubs open, get our guys back to work. How much business we can have. Who knows, we'll make do in what business we have. We'll figure how to make money with the business that we get.

Yes.

And all of a sudden we had more, we've lined up the door everywhere like oh where are all these people come from. Right. But we've been excited about it, we -- and we hate them people waiting on line. We want to get people on the building because we're not making money from our standing on lines. We want to get them in, we want them to get have a good time. It's not fun standing in line. We've all had to go places and stand in line. So, we're I think our staff has just done a fantastic job of meeting those needs and turning that into revenues. You've seen them, I mean this quarter it's if you ask me people say well how can you do, how do you do it. I'll say all I did was put my people back to work. My people, all our staff are coming inside went out there and did what needed to be done to basically put the dollars in the cash register and keep the customers happy, keep the customers coming back. I think as long as we're continuing to meet our customers' needs and keep our customers happy and well they continue to fill and we create value, entertainment value for them. They're going to continue to come spend money at our businesses.

Yes.

So, I don’t know why we will slow down right now. And also our staff quits doing their job. And I don’t I mean I talk to them every day, everybody's happy everybody's pretty ecstatic about things we're doing. We're having a convention in New Orleans next week, we're bringing about 200 where our staff members from around the country to do seminars. We have two days of seminars and training that we're going to be doing. And I look so forward to it, I know every club I've been travelling around the country and talking to guys and then everybody's excited about coming to New Orleans and basically seeing everybody again and it's been a long time. We have a convention every August normally in Vegas with the EXPO was in May this year in Miami and we were doing we were too busy opening new stuff by opening clubs back up. We couldn’t really take our staffs, so we started to wait to August and just do our own two-day seminar, so.

Uh-huh. Well great, well congrats again and back to you soon.

Yes, thank you. Alright.

[Operator Instructions] The next question is coming from Steven Martin from Slater. Steven, your line's live.

Hi.

Hi, Steve.

I got on a little late. So, if I'm asking questions you've already answered, just tell me. Your corporate overhead, you're going to add 11 clubs and another Bombshells in the near future. What is how is that going to affect your corporate overhead and your ability to leverage?

Part rates are adding costs a little bit but as far as internally we've already we've kind of known since we signed the LOI. We've already -- we've had the corporate office staff already in house already training already working for us. But yes, I don’t think we really have the need for more staff based on this acquisition. In our ERP system, we basically once our ERP system became fully integrated, we actually over staffed but people work for us we don’t want to let them go. We can need to build and we know we're going to buy more stuff, build more stuff and so we kept everybody on and now they’re going to have my word, now.

So, you're saying that you can grow for a while and not add a whole lot of staff?

Yes, I mean, we may need a new a key person at some point. We may have to add another revenue account. We are basically you're talking about 60,000 all your employees, you'd add one here one there as we continue to add more locations. But I think as far as upper staff, upper management, well we may have regional management but most of those clubs have already anyway as we buy them. So, it's not really new added expense. We're going to make incremental margin increase from these acquisition, that's what we bring to the table as the efficiency, so on the cost savings.

Okay. Will the added volume of the new clubs change anything with respect to alcohol costs or food costs or insurance, et cetera?

Anyway doesn’t lower it. I mean, we're going to we will use our cost savings on a national buying accounts from coca cola from somewhere large liquor and beer distributors where we can. Some markets you have to buy local you have no choice but some markets those savings get passed on. So, that's all part of what you do in this process is working to all that. I know Ed is our director of alcohol services has been working in marketing, he's been working with some of our providers to discuss what they can do and can't do in certain markets for us. And we'll continue to work on that.

Alright. Well, congratulations on a super quarter.

Thank you.

Okay. The next question is coming from Adam Wyden from ADW. Your --.

I knew I'd have to step in one last and I know for the last few conference well I usually have to get a second in. so, I don’t know who that guy Steve was that you were having a dialogue with. I mean, look I actually agree with him on one part night, I vehemently disagree with another part which is I definitely agree that the prognosis for cap gains in the state tax is that such the people are trying to sell other states. So, I definitely think there's going to be a universe of guys who want to sell their business to you. But the flip side that is cost of preps is most people a) don’t have the b) assured services infrastructure to operate one in two clubs. And so, they're not in a private equity is a) maybe there's a lot of the ESG component to it or b) cant on the platform. I mean, they aren’t really it's almost like these guys want to sell it and they should be less place conscious because the reality is if their capital gains they should be less place conscious because the reality is if their capital gains are going to go from 24 to 50, to ordinary income, then the multiple of today's earnings can be substantially lower. So, I actually think it puts you in a better spot for negotiation because like the place where I do disagree with Steve or whatever hell his name was is across the capital. I mean, obviously I think your analogy on Troy was a good one, right. I mean, you paid $88 million of which $30 million was equity, right. So, if you think about it, $55 million or $50 million debt and like you said if for whatever reason you don’t get your cost of capital and the stocks still sitting it, whatever six times EBITDA you could buy back 500,000 shares will up to easily a 100,000. It's basically as your interest one. I love that analogy. I think maybe what Steve was getting at and what I'm concerned about is I think that there we I don’t know we may have talked in the past about that guy in Michigan who's got a huge business. I think there are some larger business than Troy and in order to acquire those, you're not going to be able to convince them with all that debt in stock and it's just the numbers are going to be larger, I mean larger business require higher multiples and by definition you're going to need more capital to begin with. So, what I agree with Steve I think the opportunity for buying these smaller clubs is right but I actually think you have an enormous one negotiating leverage relative to the alternative. Because no one, because really no one else can buy these things except for you, I mean I just I don’t care what anyone says. You guys are the only team like can really buy it and pay the price and integrate them and what not. But I am a little concerned that we still after all this time and not gotten across the capital, I mean you made a comment about 2008. We went back and looked, I mean, I think you guys are trading at 30 or 40 times EBITDA. So, in the event that you were trading as the multiple you are trading in 2008, I think the stock we did the math and about 315 not 175 but maybe a 175 you're 20 times EBITDA. So maybe, you can start thinking about more equity at those price. I would be somewhat concerned about using substantial equity at these levels unless either a) you're buying assets at two times EBITDA which I find farfetched or we don’t get huge move up. But I mean I understand Troy was kind of it was a kind of a deal killer not to have it. And obviously as a percentage of the transaction, I mean, it was only a third equity plus or minus but I do think that the next 12 months 24 months are going to be very incremental and credit to the company getting trying to cost capital. I mean, someone actually someone who owns the stock said to me once told me stories said "well, the stock markets like are really raised." Right, and so people like me bought shares out of the offices of this company, is knocked and go out of business and its worth a lot more. And we took risk relative to the perception. I think now clearly you guys have performed during COVID and built a growth enterprise, promoted broadly did many things that we thought were kind of in tune with being a proper company. And I think it's important that investors that might demand lower returns but have more sense of risk profile, can get comfortable that this company's cost of capital is substantially lower higher low however you want to define it, than what it is now. And so, I -- you obviously I'll leave you with this. I think it's very critical over the next 12 to 24 months that a) you're hyper tuned to your capital position. Obviously you've got some cash stock based around here, obviously what to do. You're paying back a zero --.

That's easy part, right.

What?

I said that's the easy part. Buying back our stocks are easy part. That is part of my job.

Yes. But we got we do got to find a way, I mean these conference calls are just Adam, Eric, Steve, it's the same cast of characters, right. I mean, we got to get guys like Fidelity and T Rowe Price and these large firms can know that RICK is one of these companies that consistently deliver results. I mean, if you think about it, your algorithm, your growth algorithm base and it fits the profile of most of these large kind of clubby institutional asset managers yet it's the same people talking on the conference call. So, my advice to you is I mean 90% of the time continue to do what you're doing but I think part of your strategy going forward I just to kind of continue to go liaison hunting. And so, I'd love to see you guys get it to a point where you've got that cost of capital in your arsenal. And maybe in next conference call we have someone real on it. But obviously while the impressive results, Bombshells was a kind a knockout success, that was your brainchild, I have no reason to believe that admire me, can follow suit. So, at some point people are going to have to value these assets. Me, hopefully before I'm 90-years-old. So, thank you again for the time and I'll be done.

Alright, thanks Adam.

[Operator Instructions] We have no remaining questions in queue. I'd now like to turn the call back to Gary Fishman for closing remarks.

Thank you, operator. And thank you Eric and Bradley. For those who've joined us late, you can meet management tonight at Rick's Cabaret in New York from 7:00 to 9 o' clock at 50 West 33rd Street, between Fifth Avenue and Broadway. If you have an RSVP, you'd ask for Eric or me at the door. The next event on our calendars are is our participation Thursday August 19th, at a Sidoti & Company Virtual Investor Conference we'll be doing virtual 101s. Our presentation is at 12:15 PM Eastern Time. Registration is free for professional and retail investors. We'll issue a news release with the details. On behalf of Eric, Bradley, the company and our subsidiaries: Thank you. Good night. Stay safe, stay healthy. And as always, please visit one of our clubs or restaurants.

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.