Greetings. Welcome to 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. [Operator Instructions] 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 Info page, scroll down and you will find all the necessary links. Please turn to Page 2. 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 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. Now I am pleased to introduce Eric Langan, President and CEO of RCI Hospitality. Eric?

Thank you, Gary. If you 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 second quarter numbers. Results reflected a continued rebound in financial performance due to the COVID pandemic. We posted strong increases in earnings per share and free cash flow. Nightclubs had their best overall performance since the pandemic began and Bombshells served up another strong quarter. To enable us – this enabled us to keep our teams employed and generated higher levels of free cash flow and profitability. Once again, we thank our loyal customers, dedicated team members and steadfast investors. We hope these trends continue as the COVID-19 situation continues to improve. As of today, 36 clubs and 10 Bombshells are open. Nightclubs and Bombshells sales exceeded $18 million in April. Restrictive curfews, which have affected many of our northern clubs are beginning to end. Minneapolis, where we have three clubs, we have 11 PM curfew on Friday. New York, where we have three clubs plans to eliminate the midnight curfew starting May 31 and we hope the curfew in Chicago where we have one club will be lifted soon. Looking forward, we are working on all fronts to grow free cash flow. I’ll talk more about that when I return to the wrap and then we’ll have our Question-And-Answer Session and now here is Bradley, to review the financial data.

Thanks, Eric, and good afternoon to those who tuned in on the call. We reported total revenues of $44.1 million for the second quarter, that’s up 9% year-over-year. This is our first year-over-year quarterly increase since the pandemic began in the year ago quarter. GAAP EPS was $0.68, compared to a year ago loss of $0.37. Non-GAAP EPS was $0.75 compared to $0.47 in the March 2020 quarter. Looking at cash, we had $20.2 million as of March 31st. Second quarter net cash from operating activities was $11 million and free cash flow was $9 million, that’s the third highest in the quarters – third highest quarter in the company’s history. Please turn to Page 5. The Nightclubs segment continues to rebound. Revenues of 30.8 million were up 22.2% from the December quarter and down only 1.8% from the year ago quarter. The sequential increase reflected more locations open on a more consistent basis and strong demand. Same-store sales increased 3.6%, based on clubs that were open enough days to qualify in the March 2021 quarter and the year ago quarter. During the March 2021 quarter, 29 of the 38 clubs were open for the full period. 37 were open by quarter end. 21 were closed for several days in mid-February due to the Texas freeze. This compares to the December 2020 quarter, when 24 clubs were open through most of the period and 26 were open by the quarter end. As you may recall, after our strong performance in January and February last year, all 38 clubs closed in mid-March when local and state pandemic restrictions went into effect. While March 2021 quarter sales were a little bit below a year ago, operating income and margins bounced back to pre-pandemic levels. Cost of goods sold was 12.3% of segment…

Thanks, Bradley. Please turn to Slide 11. We continue to talk to a lot of new investors, so, I’d like to review our capital allocation strategy. 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, the author William Thorndike who I spoke to recently studied companies that focus on generating cash per share and allocating that cash to generate more cash. We have been applying these strategies since fiscal 2016 with three different actions, subject, of course, to whether there is a strategic rationale to do otherwise. The first is mergers and acquisitions, specifically buying the right clubs in the right markets. We like to buy good, solid cash flowing clubs at three to four times adjusted EBITDA, using seller financing, and acquire the real estate at market value. Our goal is to generate annual cash-on-cash returns of at least 25% to 33%. Since we can’t always buy clubs when we want, our second strategy is using cash to grow organically, specifically expanding Bombshells to develop critical mass and market awareness to sell franchises. Similar to acquiring clubs, we like to see at least 25% to 33% cash-on-cash returns. The third is buying back shares, when the yield on our free cash flow per share is more than 10%. During the first quarter ended in December we purchased and retired approximately 75,000 shares of common stock at a cost of approximately $1.8 million. Please turn to Page 12. We continued to execute on our capital allocation strategy in order to grow free cash flow. We continue to make progress on our efforts to refinance our real estate debt and our goal is to lower our rate, increase our term and convert some higher interest unsecured debt into real estate debt. Construction is underway at the first of our planned "next ten" Bombshells in Arlington, Texas and at our franchisees location in San Antonio. We are continuing to do due diligences on other potential company-owned locations and franchisees. Our goal is build ten new subsidiary-owned locations over the next 33 months and sign additional franchisees. We are also looking forward to meeting club owners interested in exploring opportunities at EXPO, the industry convention May 23 through May 2 6 in Miami. With that, let’s open the Question-And-Answer Session. Operator?

[Operator Instructions] Our first question comes from Greg Pendy with Sidoti. Please go ahead.

Hey. Thanks for taking my questions. My first question is I just want to dig into the salaries and wages. I think you mentioned, they came in obviously at 25.4%. Obviously, it’s a big topic of – there might be difficulty finding people to come back to work. So, can you explain why you did so well on that metric in this quarter? And what the pathway you said normalization expected to kind of get back to 28%. But can you kind of walk us through? I mean, is that over the next couple of quarters? Is it going to creep back up to 28% or is that immediately? And what is the environment right now in salaries and wages? And is that' likely going to be a headwind going forward?

I think it will be a little headwind going forward. There are a couple of reasons. First let’s start with your first question why we did so well this quarter? I think we did so well this quarter, because we have very loyal employees. Our revenues increased very rapidly and our employees worked through it. We have a lot of staff. We kind of froze revenue – or froze wages when COVID hit. We are reviewing a lot of people, a lot of our employees right now, a lot of our management teams, corporate staff and what not. We are probably a little below market. So we are going to have to step that up. So, I would say you are going to see it return, increase a little bit over quarter-by-quarter for the next couple of quarters, maybe three, depending on how quickly we react and what we need to do. We are also short a little bit of in some places right now. So we are trying to hire. It is very difficult, it’s a very difficult employment market right now. But I think that because of the loyalty of our current employees, and they are willing to put in the extra work, willing to do what needs to be done to make sure the company is successful, that’s helping. And so, they are out recruiting for us as well, because they realize we need staff. So, I don’t see any long-term problems. I think it’s very short-term deal. But I think we definitely have to look at – unlocking our salary cap that we’ve had and we are going to have to look at being competitive in the marketplace and taking care of the employees that have taken care of us for the last 18 months. So that is a process we are going to be going through this quarter and next quarter. And that’s why when we’ve seen this, and I think we need to make sure people understand the 25.4% is not going to be the new norm. Our typical average for the last five years is about 28%. I think we’ll get back to it. I think we have to stay at that level in order to be competitive in the marketplace.

Okay. That’s helpful. And then, just on the New York lifting the caps as in Minnesota, just trying to understand, I mean, is that going to be a big positive? Or are people kind of going to the clubs? Are you getting more business because people know about the midnight curfew? I mean, how should we be thinking about it? How much incremental business is that’s going to drive?

The curfews are killing us. To give you an idea, when the curfews were lifted in other states, we typically did 40% of our business in the last four hours of the night. So in New York, we are open until 4 AM. And you are talking about the full 40% is gone. In markets where we are open up to 2 AM we are still getting in little bit of that business, but not the prime business. And the biggest problem we have is, the main cities maybe closed down, but they can just go someplace else. For example, in New York City, we close at midnight, but you can go across the bridge until 4 o'clock in the morning. So what happens is the customer that would normally go out at 11:30 at night, they just don’t come to our place. They go someplace else. So, I think it’s going to be very big for us. Putting in numbers, I think right now, Pittsburgh opened about a month ago to regular hours. Their numbers are returning back to normal and actually increasing year-over-year. I think we are going to see that in New York at the end of May. Minneapolis started Friday night, we had a huge increase, best night we’ve had in ages by just being open normal hours. I think you are talking between the Minneapolis, New York and Chicago clubs, somewhere between $60,000 and $800,000 a week in revenues. And if you take our $18 million in April, it’s about $4.4 million per week in sales. You can kind of see where we are more than likely headed as we roll through the end of May and end of June, July, August, September. So, I really think that – and even if we haven’t seen a slowdown. I call it consumer exuberance. We are seeing that right now. They are going to run out of gap at some point, but when? Who knows? So far, all we have seen is a continued increase. It’s like there is going out and partying and having a good time and just getting out of the house and being around people, which is more addictive and more contagious than COVID was. People want to be out now. And they want to stay out and they spend the money to be out. Like I said, week after week we are seeing it increase not decrease right now. So, when that consumer exuberance kind of caps out, I just don’t really know.

Okay. And then just one more if you can just kind of – just real quickly, just trying to understand the margins at Bombshells, any kind of conceptual color on average checks? Is that something that just kind of ballooned? I am just trying to get a better sense of the margins there and maybe what was driving that?

I don’t think average checks really ballooned. I just think that fewer numbers of people and the number of hours that we are busy - the world is busy and we have increased. And I think that’s a lot of what we are seeing.

Okay. So, you think it’s traffic-driven and…

It’s traffic. It’s definitely traffic-driven. I’ve been there a few times. It’s traffic-driven. I mean there may be some big spenders as well but, the Bombshells is like the clubs where we get a VIP customer coming in, go upstairs and spend time, have champagne, this is a place you go and you hang out and we have few drinks, if it’s average ticket, it’s up one drink or two drinks. So, it’s up $6 to $8, $10 a ticket or something, it might have something to do with it. But it’s really just a number of tickets. It’s pure volume that’s driving Bombshells right now.

That’s helpful. Thanks a lot.

You bet.

Next question Yaron Naymark with 1 Main Capital. Please go ahead.

Hey guys. Awesome quarter. Just I want to follow-up a little bit on the Bombshells commentary. I mean, I am trying to internalize like how much of it you think is sustainable all the streaking strength, but once all the local restaurants, bars and what not, reopen which I think a lot of them have already been open in Texas, I mean where do you think that this eventually levels out? I know, it’s a hard question but I don’t know if you would do on that.

They are open in Texas. I think we peaked in the fourth quarter of last year. And the last two quarters have been very consistent with $13 million. I think that’s where we are at. I am talking with the management team. Then looking at the numbers, I said I’ve been in some of the Bombshells to see kind of what’s going on. I think this is where we are at now. I think this is the normal for that brand right now. Will it slowdown a little bit? I guess, if maybe people stopping in out as much or something. But right now, for the next, I think 12,18, 24 months, I think this is probably pretty much the range we are going to be at. I don’t see any reason for it to slow down from here. I don’t know that it will do the big quarters that we did in that fourth quarter of last year. But we did 15 something. I think 13 is pretty sustainable right now.

Got it. So, if you take the April number and you add kind of the $600,000 or so you were talking about for the restrictions lifting in Minnesota, New York and Chicago, I mean you are looking at a business that’s probably a run rate like $250 million plus of revenue. I mean, if you just annualize it I know there is some seasonality. But that…

Well, we say $5 million a week, I mean, we could be close to $5 million a week, there is something. I think, $220 million to $230 million is very safe. I think $240 million, $250 million is possible. And if you said $260 million I wouldn’t say it’s out of the question on a runrate. I want everything is open and running. And so what we are seeing right now today, you've got to remember, Minneapolis and New York are big VIP spend clubs. That’s the service revenue. So, all the service revenue you see missing right now, that’s where it comes from. So, if we see this service revenue spike up in New York, and spike up in Minneapolis and Chicago gets back open that’s when I think we are seeing some of the margin expansion, as well. We are seeing it in Florida, I was just looking through these numbers, I mean, it’s crazy – $879,000 last week. So, it’s big numbers. If people are out and they are spending money. I guess it could close down at some point, but if everything is open and we are at $5 million a week and it closes down 20%, we are still $4 million a week, right. I mean, we are still doing some pretty heavy numbers at that point. And I just don’t see a slowing down 20% anytime in the next 12 to 18 months. I mean, maybe that’s two years from now. But this next year is going to be a huge year for us, very confident.

On that basis, I mean, you guys are doing some massive, massive free cash flow numbers. I mean, you could be doing $50 million $60 million plus of free cash flow, maybe even more than that if you are at the higher end of those revenue numbers. And if you are generating much free cash flow, I mean the club acquisition you typically acquire – use a decent amount of debt to acquire them, seller financing, I mean, if you are generating $50 million or $60 million of free cash flow or even the pre-pandemic numbers which are closer to 40, but I mean, you could be deploying $75 million to $80 million, 90 million, $100 million potentially in growth CapEx assuming you are doing acquisitions and/or Bombshells. I mean, how are you going to deploy that much capital? I mean, so you are trading at a…

Multi club acquisition. That’s how we are going to do it. We’ve got to – we are going to buy one of the big boys, two of the big boys. Who knows? We are at a point right now where and we may have to pay five times, instead three to five, we go to five times. We go to couple of the big boys and say we are going to give you five times right now, are you guys interested? We’ve never done that. So, I can’t say they are not interested. I think they are going to be interested. I think that number is going to be very, very good call for someone to resist. We are starting to talk to guys right now. We plan to, we have some meetings set up at the end of this month at EXPO and a couple of guys that can’t come to EXPO I am going to go meet in the second week of June. We got a couple of meetings on market on right now. And we are going to see about it. I mean, this maybe the year that we start wrapping these things up. We’ve talked about it. We pushed, we’ve gotten really close a couple of times. In 2008, we really got close and we got that multiple we can pay a little bit higher prices. Without it affecting the model to o much. I think that’s probably what we are going to see as we move forward. We are going to put the right acquisition only. Our typical acquisition is going to stay in that 3, 4 times range. But for the right acquisition, I think we would be prepared to make a 5 times offer obviously, with some terms. But we are going to see that. You are going to see a much larger and it’s going to be more cash, we are going to start using $20 million, $25 million, $35 million cash downpayments, because we are going to have the cash to do that.

Yes. And how is the single club M&A pipeline looking? I mean, is Boston back on track. Are there any other big cities with single clubs you are looking at?

Boston is off now again. It’s on off, on off, it’s a love hate relationship with the two partners out there I think. I can’t figure that up truly. What they are thinking is at this point the clubs do not even open. But there are several other single club stuff we are looking at but my real focus right now and probably through the next three months is going to be a large acquisition. We’ve got to land a pretty large acquisition. Because like you said, that’s what we need to make some needle moves, right? We are generating a ton of cash. We’ve got a ton of cash. I have no problem with it sitting on the book and just building up in the bank. Not a problem for me. I can deal with that until I find the right acquisition at the right price. But at the same time, we’ve never had that cash before. I’ve talked to guys before in the past and they said, oh, for me to even think about it you have to have $30 million cash down and we go like, we are not going to do that deal. But we have the cash. So, we are going to go out and start looking, start kicking tires and hopefully, maybe somebody will listen to our call. And I’ll get a call tomorrow from one of the big guys that’s interested. But we are definitely interested and definitely going to be very aggressive at finding the right large acquisition.

Yes. On the refi timing, I know it’s a high priority for you guys. I mean, how long do you think you think typically it takes?

Well, once we can get the returns on the commitment letter we are two terms away, negotiating two different terms in the commitment letter, which I hope I think they are going to committee on Wednesday, hopefully that will – they’ll get those - we’ll get our agreement on these last two things that we need which is freedom for a large acquisition without somebody overlooking our shoulder. And the debt coverage ratios that allow us to pay dividends, because we are a dividend company somewhat, we don’t want our dividend to be at any risk at any time. So, once those two items are fixed, I think we probably sign the commitment letter the day if approved, the day we get kind of the terms that we can agree to and I think we can close three weeks later. So, if everything gets cleaned upon on Wednesday, we probably close the first of June, we might guess.

Correct. Okay, awesome. And then, last one for me. On the patron tax in Texas can you give us the latest on what’s going on there? And I forgot it. You guys paying that tax today, so until it’s finalized or it’s going to breach or do you guys stopped paying it for now?

We are paying under protest. We don’t want to build up a big liability on the balance sheet again like we did in the past. So we are paying under protest between the right climate back if the case is on – right now, the case is sitting at the court and waiting on a ruling. So, we’ll just have to sit and wait basically.

And how much is that per quarter per year then?

Oh, gosh, I have to go back and look. I really don’t – it fluctuates so much with COVID because things have been opened and closed in time. I just don’t know off the top of my head, but I had to guess it’s maybe $1.5 million $2 million a quarter, I mean, a year.

A year?

A year, yes. And about 300,000 a quarter right now is where it is.

Alright. That’s all for me. Great job guys. Thank you. Keep it coming.

Thank you.

Next question Jonathan Abenaim with ADW Capital. Please go ahead.

Yes, good job on the quarter. I mean, if I just annualize what you guys are doing in free cash flow, that’s more than sellside consensus in 2023. And obviously doing 60 of free cash would be double what sellside has looking at two years. And can you just help us think about sort of the M&A pipeline? I know you spoke about this with your own, but are mom and pops coming to market now with cash gains lot changing. And how are you thinking about this year in terms of M&A? Do you think this is going to be a blockbuster year?

I think the next 12 months are going to be very big. I don’t think they’ll get a capital gains tax passed prior to the mid-term election. So, I think we have a little bit of time. But, yes, guys are very interested in figuring out if you are planning on selling the next three to five years, and you need to sell this year. So, you can lock your capital gains tax rate in now at these lower rates if they are going to be raised. I think there is a pretty much consensus on both parties that there will be a raise in the capital gains tax over a certain dollar amount, maybe with all the deals we are looking at, they are going to have more capital gains and whenever that dollar amount is going to be, we are getting interest. We are talking to people. And I think we’ll have a big year this year with club acquisitions for sure. I’ll know a lot more in the next three to four weeks as we are putting out there now. We are spreading it with the brokers we are spreading with everybody that we were looking for a very multi-club acquisition. And $40 million, $30 million down payment doesn’t scare us if you need of a bunch of cash. We are building the cash and sitting on the cash. We can get enough access to the cash, so, come talk to us. So, I have talked to a few and like I said, I think we’ll get more calls over the next four weeks.

Got it. And then just on M&A, have any of them expressed interest in joining in the RCI family and taking stock in the company? And then, last one from me would be, how franchisee – franchise conversations with interested parties are going for Bombshells?

We have two people that we are working on Bombshells right now. I have talked to some club owners about equity. Because now everybody wants stock. Nobody wants when it’s 15, everybody wants when it’s 70, which is a fine buy, because we wouldn’t issue at 15 and I don’t know that we issued at 70 or 60 or whatever. We have to be very comfortable with the deal that is equity, because we still think equity is cheap. We are going to kind of lay out as we move in through May and June I think we are going to get a much better idea with everything open. So that by the July, September quarter, we will have a good idea of a – hopefully at least a 12-month run rate. I am getting more and more confident. I kind of thought Bombshells could slow down a little bit. It did after a big quarter, now slowed down a little bit, but then we had two quarters in a row, where we are sitting here with $13 million run rate. So, I thought maybe Texas would slow down or Florida would slow down, they are not slowing down and they are just getting busier. And so, I am getting very confident on the numbers that the numbers will continue to stay high for this 12 to 18-month period. And maybe forever, I just don’t know, I don’t – it’s hard to see past that point right now, because it’s so early. It’s kind of early in its recovery and what not. But we are also seeing inflation kick in. We are going to have some wage inflation, I think, chicken has gone up tremendously. I think we are going to see, you are seeing certain shortages catch up –…

Very exciting. Thank you very much.

Thank you.

[Operator Instructions] Our next question comes from Darren McCammon with Cash Flow Kingdom. Please go ahead.

Hi guys. Congrats on another strong quarter and really excellent capital management and capital allocation for the last few years. You’ve done a great job.

We just keep following the program. That’s the name of the game right now.

Well, I mean, you got it dialed and I think, if you ever get a chance, thank the Austin and then book for me too.

You got it.

Okay. So, we’ve talked about free cash flow a lot here. And we are hearing a number of program by analysts sort of $60 million et cetera. Are you prepared at this point to give us some free cash flow guidance?

I mean, like I said, I can tell you what I think for April, May and June right now, I am very confident in the next three months. I think it will carry through July, August, September and then we had our prime season. So, I mean, you see the percentage this month went to 20.4%, if we continue to get – if we continue to increase and a lot of that is service revenues, it’s going to increase that 20.4% to higher number. On top line revenues, it’s a 52% to 54%. If everything goes right, it could be a little bit higher. So, you can do the math. I don’t really want to give the guidance. But I think those are kind of the ranges that we are looking at right now. And if that carries into the next quarter, then our prime season, we had October, like I said, we had October through, May is our prime season for us. And we continue to see increases. This consumer exuberance continues, I can’t tell you where we – how high we get, I just don’t know. But we will peak at some point. I think Bombshells peak, restaurants kind of peak in basically the third calendar quarter or fourth quarter in our fiscal fourth quarter of last year. But now, if this is the new average we’ll take it. You are talking about basically $52 million a year, $5.2 million per unit on average. Some of our top units are much higher. Some of the early units aren’t doing the big numbers. When as we open the Arlington location we are going to get another idea, that location open - this year, we made a plan to open up for the weekend of the first Dalls Cowboys –…

Okay. Well, from my point of view, I mean, I guess, I am looking at a minimum of $1 per share in cash flow going forward and seeing that as really the low end of things. It’s funny. It used to be the expectation. But now it’s looking like the low end.

You are talking about per quarter, correct?

Yes, per quarter.

Yes. Okay. I just want to make sure, okay, yes.

That’s a 30 plus million over a year which pre-COVID used to be our forecast and now looking at the low end…

It is, I would definitely say that would be the low end after this quarter and the way things are running through early April, because February was not a good month, January was okay. March was the first solid month and then April back right up to it. Right back about $18 million and now we are bringing New York back online. We bring Minneapolis back online. We are going to bring Chicago online at some point in this quarter I believe. I don’t think they can keep Scarborough closed through June 30. I don’t know they are keeping it closed in May 31. But I am not a politician. So I don’t know what their thinking is out there. But judging by the rest of the country, they are way behind the times. So it will be back open as well. And those are big revenue generating clubs and very profitable clubs, especially, our New York clubs. So, that will continue to add to the numbers. I don’t see the current numbers slipping off for at least the next three to six months. So, if $4.4 million is the new normal range for the next three to six months for the existing stuff, we bring those other clubs online. I think they add $600,000 to $800,000. And maybe there is $200,000, $300,000 in our mop – by $0.5 million. We are still at $4.5 million $4.6 million per week and those are going to generate some pretty decent cash numbers.

Okay. Just this is more comment than anything else, but Texas Roadhouse also just came off of one of its biggest quarters ever. So you are not the only guy that are selling hard in restaurant food and stuff.

We are actually looking at properties next to two different Texas Roadhouse right now for that exact reason. I’ve been following them very closely. We’ve got a friend that’s very high up in Texas Roadhouse. And they are doing very great location picks right now as as well building for their new stores. So I am very excited to kind of – for one of the locations that we are putting under contract, hopefully, I am – closed to have it back by the end of the day today. I haven’t checked my email because we’ve been busy working on the call. But it should have another property that’s very close to them right next door to one of their locations under contract hopefully by the end of the day. So, definitely working on it.

Good. Glad to hear that. So, along those lines, a nice problem to have to be floating in cash and I know you talk a lot about what to do with it, but you and I both know there is a very large potential persons out there hanging where they use up all the cash and more frankly. I guess, any progress or anything to say there. And would you consider using shares or selling shares to find a bigger cash chunk in them or…

If we need to, and at the right price, yes. We are not – look, we are looking for – when we do any acquisitions or anything we do, we are going to look for the cheapest possible cost of capital that we can find. Obviously, nothing is cheap in the cash we already have on hand. We already have it. It doesn’t cost us anything. We put it work, we get return. Debt would be next and equity would be our last at this point. Now depending on what the equity does, as the equity moves up in value, and we calculate our cash flow multiple, we’ll put that against debt and against the cost of debt and what not? I don’t - I am not excited about issuing $60 or $70 equity. But if this thing runs to some of the charts, I am talking to different chartered guys, okay, go to $90, if you go to $130, what are you going to do then? Well, I am going to do my calculations and if that’s worth that, then yes, we might heavily consider using the equity at those points. But we are going to still be – we are only going to issue what we have to issue. I don’t think it’s something I was going to run out and build much equity all of a sudden, because the stock price ran up. We want to – we are going to be very smart about how we do things going forward, especially with our equity.

Understand. Well, I just put one qualification on this for you from my point of view. You don’t get to issue equity when you need it. You get to issue equity when you don’t need it. Right. The market loves you is when you issue equity, not when you are out there meeting them, so.

If they love us and that will give them some. How is that?

Okay, okay. That’s what I wanted to get. So, but along those lines, if you had a very major purchase in – we know what we are talking about. We are talking about déjà vu.

Equity in our leak or block out agreement and we would consider, yes, definitely.

Okay.

We have considered that.

Okay. Are there any talks going on there or have there been?

There are a lots of talks right now. We are talking about lot of people right now. There is a lot of solid groups out there. I want to get large groups. That’s the thing. Right now, we are talking with some smaller operators. I really think now is the time with the tax law changing, with equity where it's at, with the cash where it's at, and our ability, if we – when the refinance is done our ability to borrow additional funds without having to use additional cash - monthly cash, we are going to save almost $5 million a year with this new note in equity and interest payment cost. So we have that money. So we can borrow against that, use that same $5 million to have more money to buy, more cash flow with, it’s going to make a lot of sense to do a large acquisition. And we are working towards that means for sure. I mean, we do something at 30 days. I mean, it’s possible. It could be the next 90 days. I think we’ll definitely do something in the next six months before our – I would say, before our fiscal year end or definitely in the first quarter of next year, I think we’ll have a very sizable acquisition locked in definitive agreements by that point.

Okay.

My goal. Whether I can make it happen, I don’t know, but that is my goal for sure.

Okay. So, as far as other means of soaking up cash, I agree with you the best choice. I would say that paying other than a token dividend increase makes no sense to me. Now with the other opportunities you have. And although you should do a token because it just gets you on the growing dividend, but….

We just did one issue. We would – the first time we need to look at a dividend increase, I think would be December or March. I think we were kind of reviewing that earlier. But we’ve got consecutive dividend growth for – it’s going on five years now. So, yes, another penny here, penny there seems irrelevant in the overall cash flow stream, but it keeps some screens. We understand the screening. So, it’s something we aren’t rolling it out, we are not looking to do it either, right, at this point as we’ve got 6,7 months where you even need to think about it. We don’t need a dividend increase until fiscal 2022. We’ve got the $0.16 we did in 2021 with December raise. So, we’ve got a year to think about that.

Okay. And then, on some of your debt, you got seller financing. And I know, you kind of made a deal there and some of those guys don’t want you to pay them off certainly. But are there any that might want you to or welcome it?

There is only one that we are not paying off early. When we consolidate this debt, everyone will be paid off except for one seller note. The note against other assets. The debt against other assets and the Texas Comptroller. Everything else will be consolidated into a single loan at that point. It was about $105 million. We’ve been paying it down.

So, we’ve been working on it for a while.

That’s going to go through.

Well, they are going to committee with our last few comments to the letter on this Wednesday. So, if we can get agreement on the terms with the bank’s board, I think we’ll move very quickly. Three weeks, four weeks from Wednesday. Their prices are done, everything is done. All we are working on is final terms.

Okay.

And then, basically that’s to put it all together. If we can come to agreement on those final terms, we don’t and we are just going to wait. We’ve got the – we can’t do alone that on a going forward basis. It’s just not something we are interested or willing to do. It’s we’ve got to have similar terms to what we did on the 17 loans. If we can get that, which is what we are negotiating right now and then we will move forward very quickly.

Okay. And then, can you talk a little bit more about inflation, not just wage inflation, but also drinks and supplies? What kind of inflation are you look at there?

The beauty right now is we have no menus. Everything is QR codes. So, if our prices are raised, we can raise our menu prices in 15 minutes. But to give you an idea, chicken was $65 for a 45 pound box of chicken wings. It is now $148 and we are told it’s going to $158 next week. So, those are the kind of things we are seeing. We got a word that ketchup was going to be up. We ordered a ton of ketchup so our ketchup inflation will be zero, because we planned ahead of time. But beef and seafood are getting ready to go up a little bit. But overall, it’s – you can see it’s there is not really an effect as our cost of goods stay pretty steady. So, we’ve been able to manage everything properly and it’s just about knowing and reacting fast enough. We were getting ready to print menus. Again and go back to correct menus and after a meeting with staff, we just decided that we don’t really need them. Everybody has their phone with them. And everybody is so used to just phone the menu on their phones now. That may actually be the new norm. We may never have menus again. It is just easier and then the cost of things and you can advertise whatever stuff that you want. It’s a really interesting way of doing it. So, we may stay with that. Not 100% sure, yet, but that made it very simple for us.

You could also do a chart for those people that don’t have phones Or a video display on one of the TVs or something like that.

Yes. Those are – that doesn’t matter, we are good there, so.

Okay. So, what about alcohol inflation?

We haven’t really seen much of that, alcohol stay, right now. You can’t get things, like, there is no Hennessy but other than that, it’s not a big deal. But they’ll get their – they’ll ramp back up. Everything will be back. I am not worried about that. The beauty of demand is it creates supply.

Okay. Thanks a lot. That’s my last question.

Alright. Thanks, Darren.

Next question, Adam Wilk with Greystone Capital Management. Please go ahead.

Hey guys. Thanks for taking my questions. I guess, the downside of going toward the end here is that most of my questions are asked which is great. A lot of really good discussion on the M&A environment and kind of what you guys are looking to do, which is really where the bulk of my questions are coming. But I guess, I can ask, you mentioned something interesting a few minutes ago about putting down like or potentially looking down like a $30 million to $40 million down payment on a potential acquisition. Did I hear that correctly? And if so, I mean, are you talking about acquiring like a – is this like a huge deal or huge deals you are looking at potentially? Is that something sort of in the pipeline?

Yes, I think that will be, typically, put down 30% to 40%. So, think of it in the appetite. So, I want to do an acquisition that is enough clubs and enough EBITDA that we would be comfortable to pay in the $80 million to $120 million range. Because I think that’s what we need. A, number one, our systems we put in place, like our IT system is ready for it. Our staff is ready for kind of easily absorbing an acquisition of that size. Somewhere between 8 and 15 clubs in a single acquisition. It would give us significant size of growth. And it’s going to put us in markets we are not in already. And that’s the real key I think for the future we need to – we’ve got to expand our footprint. And it will give us – what it might do is on that large it gives us economies of scale. We’ll be able to tweak it, pick up another, one, two, three points, four points, six points on the deal which will make it – it may look like, we paid x amount of dollars, but then a year later, it will go, oh wow! Look what they’ve done. Look at the money they’ve saved. Look at the cost savings we’ve put in with our national pricing with taking them and – taking our staff and put it over more revenue in more locations, we’ll get a much better return on it than originally it looked like at the beginning. And that we’ve seen in Chicago, we recently in the numbers, on our last few locations. And Pittsburgh was the only location where after a full year of operations we actually ran on a EBITDA multiple, a little less than we had. So, for example, we paid 3.45 times and we actually afterwards worked about to be in only 2.79 times or – in Pittsburgh, I can’t remember the exact, but it was like a point two more. Right. So, Pittsburgh was the only one that wasn’t in our favor. And we just had some issues out there in the first year. I think as we move forward it will start looking better as well. It was a new market for us. We get a new market sometimes, we got a little learning curve with the single location. That’s where I want to go in and do these multi-club locations to where you just buy a whole market and it’s going to be much easier and more profitable for us.

Right. I understand. Thanks. So, you mentioned like where the cost savings are coming from or what potentially be coming from, so that was helpful. Thanks. And so, like when you are looking at different markets, is this just all over the country or you have clusters of places that you like to look, because I can’t – aside like from multi-unit acquisitions, I can’t imagine there is many single or even one or two clubs doing the numbers you just said. That will…

These are multi-club for sure. Yes, these will be multi-club for sure. We can just go out and do five or ten single club operators and put the same amount of money just $3 million or $4 million at a time, right. I mean, well it’s a lot of work. It’s easier to buy one multi-operator and then it’s going to be the go out and try to buy ten individual clubs. But we will do it and we have – and we are looking at both ways. I mean, we are just out there. We are pound the pavement right now. That’s what I call it. Knock on doors, knock on doors and pound the pavement. Back in my old days, when I was 13 years old, going door-to-door sales.

Right. Yes. And I appreciate the way you are thinking about sort of spending the money to do these things. I don’t know why I am very confused why the previous person would ask about or talk about the need to raise equity. There is absolutely no need – again, like you’ve mentioned, it’s the lowest cost of capital that was kind of continues into me, but.

I appreciate how you are thinking about that. No problem, I think everybody, they want much more flow, so they want more flow, they can buy more stock, I guess, but without paying more for us, that’s not going to happen. Not – we keep them. We have no – I learned all those days back in – I made those mistakes in 2008, 2009 all the way into 2012 and it’s like, you know what? I am done with that. Our equity is gold. We have other ways to pay for things. We are going to pay for them. And that the equity will just stay valuable, right. I mean, that’s how we look at it.

Yes. I love to hear it. Thanks. That’s it for me. I appreciate it and great job. Thanks again.

Thank you.

Next question Doug Weiss with DSW Investment. Please go ahead.

Hey, thanks. I just wanted to ask about Bombshells a little bit more. Specifically, on the expansion. And I wondered if – I mean, obviously you have a lot in your play in terms of M&A on the club side, but I was curious if you sort of siloed things enough that, the expansion of Bombshells can run independent of that. And if that’s the case, I wondered if there was the possibility of accelerating that rollout if things continue to go well.

We are definitely trying to accelerate the Bombshells expansion if we can find the right locations. We were trying to going to Miami very heavily. We have found that with all the New Yorkers that have moved to Florida that market is on fire right now. Something goes on the market, we start calling it. They are getting 50 calls on vacant property down there right now. It’s absolutely crazy. We had two locations. One got bought out from underneath of us, by Chick-fil-A. Another property, a condo developer is now looking at buying the entire retail center down in building 30, a eight story condominium project on it. So, they want give us a three year lease and so, we are like, we can't do that. So we are having difficulties getting in the Miami market. We do have one property that we are fairly certain that we are not going to have issues whether we are going to get that one done. We have come back to Texas, because, A, we know it, we love it. We’ve got the Arlington location going in. I am working on a location in a West Dallas suburb right now. I don’t want to mention it yet, because I don’t have the signed contract in my email. And but we are getting there. So, and we are looking at another Houston location right now, as well. So, we are looking at two franchisees outside of Texas that we are talking with as well.

What’s the thought as far as beginning to look at other markets? And I think you mentioned Las Vegas a couple of years ago?

For Bombshells?

Yes.

At Phoenix, we've considered the Phoenix market very heavily. That’s probably one of the markets we will head to at some point in the future for company-owned stores if we don’t end up with a franchisee there first. We in fact, we’ve been talking about going down there in the next few weeks and just kind of refamiliarizing ourselves and seeing what’s available in that marketplace, if we don’t get something solid in Miami on couple of the properties we are working on there right now.

Okay. And I just – couple of housekeeping questions. The land for sale, I think this is the first quarter that came from the balance sheet. What’s that related to?

Yes. Those are signed contracts. So, we don’t move it into the land assets held for sale, we’ll lease it. The way that GAAP works, if you will lease the property, you can’t put an asset held for sale. Even though it’s for sale or lease. So we have everything basically for sale or lease until the day it’s put under contract. We had three properties under contract. One closed Friday. So, at least, two, we have two properties left, one is $3.25 million. We will sell or finance that property we are taking a $500,000 downpayment. There I was going to do about a $2 million remodel on the property on construction project on the property and they are getting their five-year balloon there for the $2.75 million. Another property we have under contract a $2.15 million all cash where they have – I think about 30 days left on feasibility and then they have 30 or 40 days to close the transaction to extend the feasibility if they put worthy for a monthly fee.

Okay. And then, just a follow-up. If you were able to recover some of the retroactively some of your past payments, how many years back are you trying to claim?

I have no idea at this point. Right now, we just want to stop paying it going forward. That’s really what we are pushing for. The lawyers will work all the rest of that. Our big motivation is it’s not paying it going forward.

Got it. Okay, alright. Thanks. Thank you.

Thank you.

Next question Adam Wyden with ADW Capital. Please go ahead.

Hey, Eric. Sorry I am a little late here. But I won’t disappoint. So, I mean, look I am just doing my this thing back of the envelope math that everybody else is doing or perhaps no one is doing, but like, I look at these numbers and I say, okay, I can back into New York and these later curfews in Minnesota, and I keep coming back to that number, I keep throwing out there, which is 100 plus of EBITDA and when I look at your refinance, that’s coming, I don’t know, I was on the early part of the call, you guys have been talking about it. But I know it’s coming and I look at the maintenance capital I look at kind of the tax loss carry forwards and some of this other stuff and the deprecation in the real estate. I am getting to free cash flow numbers that are effectively double kind of what our run rate is. And I guess, my question is, there seems to be a very, very large dichotomy, but in the cash flow, the multiple people are willing to ascribe to something like Bombshells versus the Nightclubs. And I guess, I am just trying to understand what are you guys doing in terms of getting the market do it some of the parts in that evaluation or getting different sellside coverage or raising money to subsidiary level because look at the performance is remarkable, but I mean, we are not anywhere close to being able to use our equity and I think part of the big reason why we invested in this company is because, private equity can actually buy these things and so, you’ve got this capital gain thing coming up and people don’t necessarily want to pay 100% tax or maybe they want to pay a little bit of tax on part of their state. But I mean, you are the acquirer of choice in the nightclub business. So, look, I guess, I – look, everyone says, oh, it’s up so much. But I mean, look, I look at it much longer and I look at where we were pre-07 and all the total return hasn’t been that great. And you are starting to get institutional sponsorship. I mean, how do you think about the next level in terms of research coverage, institutional investors, cost of capital, so we can accelerate kind of the inorganic growth trajectory.

I think the reality is we have to do the first big acquisition. That’s going to get a lot more attention. We are going to continue to put out the cash flow numbers. I think this quarter is kind of a wakeup call, like, oh, hey, the cash flow is really coming back. $9 million is a big number. But most of that money was made in March. And I think as we move forward and you see April, May, June, we get that quarter out. We get this acquisitions kind of rolling we get some definitive documents. We kind of see the terms. We see how we are setting this stuff up. I think that when we are going to wake up some of the – some of these other banks. The problem with investment banking today is, they need a deal in order to make it worth their time. And since we're not really at a point where we are going to sell equity, but I think hopefully there are some investment bankers out there listen to this call and understand it we are relationship guys and you need to build a relationship with us now so that it's time for us to raise equity we are interested in using your bank. Because, the banks only want, I mean, even though when I don’t need them or when I need them to raise money and that’s up to us. Because I am not going to spin out cheap equity. This is never going to happen. You ask why you invest, because you talked to me back in the day, and you are asking about the equity and I am not issuing any equity. I am not interested in throwing out cheap equity. And yes, people think, oh, it’s at $70, it’s high. But like and you said, when you did the math, it’s not. So, let’s say that our margin increases from 20.4% this quarter. Only 22% and we end up doing 54 million. All right, so we are now $11-plus almost $12 million in free cash flow, between $11 million, $12 million in the next quarter and as we roll forward, we get New York opened fully. We get the deal and we are getting that point where we are at $60 million in a quarter. And the New York is and Chicago and Minnesota is our service revenues which as we all know is much more profitable and that margin moves up some more now we can maybe we are $15 million plus in free cash flow a quarter. I am not selling my stock at $70 when it was $60 million in free cash flow. I mean…

I think the number is higher, so.

And I know you do. I know you think the number is high and you’ve surprised me because you’ve been right, of lately. I just – I get it.

I guess, the question is, is like I feel like every business has had an inflection point, right?

Right.

You’ve got to drill, you are calling Bombshells that people can accept. You got a government that wants to take all your money, right? You have individuals that are sunsetting and they don’t have necessarily children to run their businesses, right? And why not sell to you to participate in the upside, because as far I can tell like I don’t know we’ve talked in the past about the TAM and the market position. But like, I don’t think it’s unreasonable to think putting the restaurants aside, but I mean, look, you know how many strip clubs there are and night clubs there are in the United States, I mean, if you are at a $100 million of EBITDA, is there anything stopping you from building a business in Nightclubs or $500 million of EBITDA. I mean, look, I don’t - I think it’s very, very fragmented.

Definitely that much out there to buy. Like I said, we went…

The bigger you get, the more likely they are going to sell to you, because that means that they are selling to somebody who A, will be a good steward of their business, B, they can take actually a flexible capital solution from you because you are safe, right? And so, as you are stable you’ll become the more likely they are going to stop, right? Not to mention though, like what is the probable – or what’s

We are pitching this now to a couple of different people. And I think, as I said, or you missed on the call, but I think we are probably, it could be 30 days, it could be 90 days, but I think definitely within the next six months. We are going to land, one, maybe more of these larger of a larger type acquisition. And that’s our goal and that’s what we are pushing towards. And all the things that you just mentioned are the reasons these guys are talking to us now and we are able to go and talk to them. I didn’t go talk to a guy who needed $30 million or $40 million cash down a year ago or two years ago, even three years ago, I couldn’t talk to these guys. I mean, I could talk to them, but I want realistic, but I was going to go out and raise $30 million or $40 million. I couldn’t afford the debt yet. I didn’t have the bank financing in place for the existing real estate. We weren’t going to issue equity. So, I mean, we just, we weren’t in a position to come up with $30 million or $40 million in cash. Now we could have $30 million in cash on our own books by the end of June at the rate we are going. So, we just – we are in a position now. This is the first time we’ve been in a position. Now we are out there, knock at the doors.

Well, look, I didn’t invest for this to be a $100 million EBITDA biz. I invest with Rockstar’s CEO who want to build generational wealth companies. I firmly believe this to be a generational wealth creation opportunity for both yourself and myself. And so, the sooner we can get our cost of capital online, and the sooner this story becomes pervasive in the marketplace such that we can accelerate the organic opportunity the sooner that becomes a reality for all of us. So, look, these are great numbers. I hope that we place great emphasis going forward both on the execution and on the business that we are building, because I think you and I and everyone else on this call know what this could be. I think we need other people around the world to know what you are doing. So, we can make that a viable thing. So, congratulations on a great quarter. I think it’s a testament to your operational excellence and execution. I am obviously continuously frustrated at the markets need to discount what we are building, but haters are going to hate all the way up and the sooner, you can continue to execute on this stuff. I mean, look, obviously, we have the cost of capital combined, clubs with real estate of 3 or 4, 5 x EBITDA. But the real motherlode is buying businesses with 30, and 40 and 50 of EBITDA at the current times. And so, in order to do that, you’ve got to have the capital, but obviously, we are going to keep punching. And I look forward to the jabs, but as much as I love the jabs, I like haymakers. So, I look forward to us getting to a point where we can start lending haymakers.

I want to land one in the next six months. That’s the goal. So, we are going to find a big one in the next six months. That’s what we got to get done.

Well, we need haymakers for $500 million of EBITDA and to land a haymaker we need a real stock. So, look, I am not going anywhere. I am your biggest shareholder. I am always truly impressed at your ability to execute and I look forward to trying to find some more people to kind of accelerate the market realization plan. But I’ll leave you with that and we’ll talk more. Alright?

Alright. Appreciated. Thanks, Adam,

Next question Jason Scherer, private investor. Please go ahead.

Hey guys. I guess, than in clean up like everyone else says a lot of these questions have been already answered. The only thing I really have is, just pointing out the fact that like, as we are going to have inflationary pressures that’s not up for discussion. The question being is, how much is this going to affect your business lines across the board as it is versus the other industries that are out there, and no different than the Texas Roadhouse that somebody brought up in the past, because you might about be talking about a box of chicken. But that’s now really where the money coming from. Is it - I mean, what percentage are we really looking at in terms of like how much is this really alcohol and how much of this is really just service?

Yes. I mean, we have food. We have to be concerned with those costs, because they creep up and our margins get shrink 1%, 2%, 3%. The point is we look at all those things. And I think that’s what people missed about our company is they think, oh, you know, this is a strip club company or this is that and it’s not real cash flow company and we watch and monitor anything and everything that we can that affects our cash flow down to a box of chicken wings, but the reality is, yes. That’s why I say, I am very excited that New York is coming back online . Minneapolis is back online. I can’t wait for Chicago to be back online as well and everything up and running back how it was, because you can see our service revenues are 20% or 30% they used to be 40%, 45% of our revenue. And I am excited for the days when that happens again, business that’s the margins. When Adam is talking about the margins, you are going to be at better margin. You are going to benefit from that. That’s because he is calculating this service revenue coming in which has no cost of goods associated, whether we pay some sales tax on it and it’s just I always call it the free money, because a VIP cost me, I can remodel the entire VIP room for $15,000, $20,000, new furniture and some carpet. And I’ve got a brand new room that’s going to certainly generate me hundreds of dollars per hour in rentals.

Well, that’s great. I guess, I’ll leave it at that. I mean, that the main thing for me is just you guys had another quarter and it seems like if you can get this big club acquisition and debt redone and we are well on our way about the $100 bucks a share. Thanks a lot for your time.

All right. Thank you.

Next question Alex Hardman, private investor. Please go ahead.

Hey. I just had a quick question on – with the states taking away occupancy restrictions and things like that are getting back to 100%, and like last quarter, you had mentioned some dialogue in Miami, maybe 70%, 100% occupancy. I was just wondering are you seeing the 100% occupancy rate come back? Are you seeing the sales growth that you had against 2019 with the lower occupancy rate maintaining itself? Or are you getting some diminishing return on that?

In the south we are at a100% occupancy. Texas back to 100%, I think Florida is back to 100%. And yes, we are seeing big numbers, you see – as you’ve seen in the last quarter, and as we’ve said, April, over $18 million in revenue in April. As the occupancies are going up, the numbers are going up. So, I was thinking that maybe when the occupancy went up the numbers will go down, but that has not happened at all. I’ve been in the last call as much more cautious as far I was saying how we’re going to do over the next three or four months, I am not as cautious now I am very confident in the numbers over the next three to six months. And I really believe that we are talking 12 to 18 months. But I like the fee trends. I like the fee patterns I can see a two months trend, three months trend it gives me and it starts my thinking. But when I get to a six months trend then that’s when I start really gaining confidence and that a trend is real. And that’s where I think the Bombshells we’ve now seen – we have nine months of numbers. We have the big, big quarter and then we’ve seen two quarters here in a row now, which is a six month period of Bombshells is in this nice steady $13 million revenue from the ten stores. I think that’s going to be something that we can do very consistently for the time being. Until something changes, I think we are going to be very consistent and Bombshells is in that range. I don’t have a consistency on the Nightclubs range, because I just don’t have enough data. I am very confident, like I said over the next – I know we ran through five, six weeks of this quarter. I see – I think those numbers only go up from where we are at in April as we open up more stuff in May and June or extended hours, and less curfews, higher occupancies. And it runs all the way through September with no problem. Then we get our prime season. I think the numbers could go even higher or maybe this consumer exuberance slows down a little bit and we start seeing a normalized okay, now we are going to normalize around here. The growth is going to start but we are going to level off and stay at x number per week. And we’ll have that idea as we going like this. We go from quarter-to-quarter and we get more data.

Okay. Yes, I mean, on Bombshells, I mean, you said you are comfortable with like the $13 million figure, but, by the way – they just went from 75% to 100% in March. So it seems like your – the growth behind in March probably covered your losses in February. I mean, would you be doing like, at least a little bit more than $13 million going forward then?

We might. I know that we did a record – I know we did a record Saturday with the five, I got a email from our operations guys and they didn’t break the total sales number figure that they were shooting for. But they still be – they still have the record for a Saturday night, which is the Saturday before Mother’s Day, which is a weekend, it has been a very off weekend for us. But the Canelo fight make sure that didn’t happen, because it was a very big fight and very, very profitable for us around the country at the locations where we showed the fight. So I mean, everything is going – I get scared sometimes when everything goes too perfect. Well that’s really where we are at right now. Everything is just flowing purposely right now.

Okay. Appreciate it. I guess, as New York, those are laggard cities back up and running and service revenues are following.

And we should continue to see the cash flow increase. That is what we’ve got to stick with right now and push for.

Okay. I appreciate it. Thanks.

Thank you.

[Operator Instructions] Next question comes from Greg Pendy with Sidoti. Please go ahead.

Hey guys. Just one quick final one. Can you just give us a little bit of guidance on the CapEx? How to think about it? Just got lean obviously, for obvious reasons as you right sized on the downturn. Just, is there any kind of pent-up spend that will be coming?

It’s not really the pent-up spend. It’s that we are going to be expanding a couple of locations. I would say that, typically, I think we’ve been saying $4 million to $5 million. I would probably raise that a little bit in the next six months. So let’s say, we were going to say $2 million to $2.5 million, I probably say we are probably going to spend another – or maybe another $1 million over the next six months. I know we are expanding striptease right now. We are going to add some square footage to the upstairs VIP room. We are going to convert some upstairs offices into a more private VIP space there. We are redoing a club in San Antonio and converting one of our BOYB clubs into a high-end liquor club in San Antonio. So there will be some spend there. We had a lot of flood damage, or I’d say, flood damage is actually ice damage. The ice froze the pipes. So you are going to see some expense there. Now, some of that will be reimbursed through insurance. But I think we do maintenance CapEx and insurance comes in on a separate line. I don’t think so. So, you are going to have a gain on insurance that offsets some of that CapEx, but we – by the way, we are doing our free cash flow, I don’t know how that washes or not, that’s a Bradley question. But there will be some of that. So that’s going to add some expense to maintenance CapEx, as well. I think we had nine locations that were affected at the club side and two or three of the Bombshells that were affected. But I think the Bombshells were already fixed and probably expensed in this quarter, where the clubs are more insurance claims and will be – there were larger damaged, some larger damaged clubs that will be affected.

Okay. Helpful. Thanks.

Thank you. I would like to turn the floor over to Gary Fishman for closing remarks.

Thank you Eric and Bradley. On behalf of Eric, Bradley, the company and all our subsidiaries, thank you, and good night. Stay safe. Stay healthy. And as always, please visit one of our clubs or restaurants. Thank you.

This concludes today’s teleconference. You may disconnect your lines at this time, and thank you for your participation.