管理層發言
Greetings and welcome to RCI Hospitality Holdings Fourth Quarter 2024 Earnings Conference Call. You can find the company's presentation on RCI's website, go to the Investor Relations section; all the links are at the top of the page. Please turn with me to Slide 2 of our presentation. I'm Mark Moran, CEO of Equity Animal. I'll be the host of our call today. I'm coming to you from New York City. Eric Langan, President and CEO of RCI Hospitality; and CFO, Bradley Chhay are in Houston today. Please turn with me to Slide 3. RCI is making this call exclusively on X Spaces. To ask a question, you'll need to join the Space with a mobile device. To listen only, you can join the Space on a personal computer. At this time, all participants are in a listen-only mode. A question-and-answer session will follow, and this conference is being recorded. Please turn with me to Slide 4. I want to remind everybody of our safe harbor statement.
You may hear or see 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 may occur afterward. Please turn with me to Slide 5. I also direct you to the explanation of RICK's non-GAAP financial measures. Now, I'm pleased to introduce Eric Langan, President and CEO of RCI Hospitality. Eric, take it away.
Thank you, Mark, and thank you all for joining us today. All comparisons are year-over-year unless otherwise noted. Please turn to Slide 6. In the fourth quarter, same-store nightclub sales increased for the second consecutive quarter, which is the first time since the first half of fiscal 2023. However, total company sales declined due to a hurricane and a fire, which resulted in lower EPS. On a positive note, non-GAAP EPS, net cash from operating activities, and free cash flow all saw an increase. We ended fiscal year 2024 with 8.955 million shares outstanding, marking a reduction of 4.7% year-over-year. Moving to capital allocation, we have officially launched our Back-to-the-Basics five-year plan, and we've made significant progress in implementing it. This includes continuing to buy back shares in the first quarter of 2025, divesting four underperforming Bombshell locations, closing the Denver food hall, reducing Bombshells-related debt, and discontinuing franchising.
Please turn to Slide 7. Since we initiated our capital allocation strategy at the end of fiscal year 2015, RCI has significantly grown. Revenue has more than doubled from $135 million to $296 million, with a CAGR rate of 9%. More importantly, free cash flow has more than tripled from $15 million to $48 million, a CAGR of 14%, while our share count decreased by 13%. We take pride in this achievement, thanks to all our employees, entertainers, and partners. Looking forward, we aim to build on this momentum through our Back-to-the-Basics strategy. Please turn to Slide 8. Operationally, this will involve focusing on our core nightclub businesses and pursuing new acquisitions. For Bombshells, our focus will be on enhancing the performance of existing locations and completing the final three units currently under construction. In terms of capital allocation, we expect to generate over $250 million in free cash flow in the next five years.
Under our plan, we will allocate 50% of this to club acquisitions, which includes debt repayment since most of our debt relates to acquisitions, and the other 50% to share buybacks and dividends. Our fiscal 2029 targets include reaching $400 million in revenue, $75 million in free cash flow, and reducing our share count to 7.5 million or fewer. This would lead to a doubling of free cash flow per share from current levels. Please turn to Slide 9 for more details. Nightclubs remain our core business, and we value this sector because it generates operating margins of over 35%. There are substantial barriers to entry, and nightclubs provide stable and significant cash flow. We are currently assessing each club in our portfolio and will either rebrand, reformat, or divest underperforming locations. For Bombshells, we aim for 15% operating margins while returning to same-store sales growth. In our club acquisition strategy, our goal is to secure $6 million of adjusted EBITDA annually, concentrating on the best clubs and valuing consistent performance over high-risk bets.
Our target metrics remain consistent: three to five times adjusted EBITDA for each club, aligned with foreign market values for real estate. We will continue to finance our acquisitions using cash reserves, bank financing, and seller notes, and may consider using stock when our valuation improves. We will also strive for 100% cash-on-cash returns within three to five years. As part of our plan, we intend to establish a regular buyback program rather than sporadic purchases, with the flexibility to increase stock buybacks if the price is favorable. We are prepared to buy back a significant amount of stock if conditions permit, viewing it as an excellent use of capital, especially considering our perspective on the business's potential over time. We are also looking at small annual dividend increases. Please turn to Slide 10. Based on our track record, we remain confident in our five-year plan.
Since fiscal 2017, we have accomplished $267 million in club and related real estate acquisitions while maintaining price discipline. We have enhanced operations and financial performance in line with our goals and have increased our capability to deploy larger amounts of capital as we have grown. We believe there is ample opportunity for more club acquisitions, as illustrated by the accompanying pie chart. While we cannot precisely predict the timing or size, we find our goal of acquiring $6 million of EBITDA per year realistically achievable over the next five years. Please turn to Slide 11. Here, you can observe that the expected growth rates for some key financial targets are relatively conservative when compared to past performance. We also do not intend to increase leverage to meet our objectives. Please turn to Slide 12. We have already made considerable progress on our strategic plan.
In our nightclub sector, we've experienced two quarters of positive same-store sales growth and are exploring three potential acquisitions. In our Bombshells division, we've divested underperforming units, closed the Denver food hall in early December, and are marketing that real estate for sale. We've also discontinued franchising. Additionally, during the fourth quarter, we expanded our share buyback program and raised our cash dividend by 16.7%, all while continuing to decrease our share count. Please turn to Slide 13 for an initial view of our updated capital allocation strategy, which will guide us to reach $400 million in revenue, $75 million in free cash flow, and further reduce our share count. Now, I will pass the presentation to Bradley to discuss our fourth-quarter performance.
Thank you, Eric. Please turn to Slide 15. All comparisons are year-over-year unless otherwise noted. Fourth quarter sales declined by $2 million. This was largely due to hurricane-related closures and the sale of Bombshell San Antonio in early September. Net income attributed to RCIHH common shareholders declined a similar amount, with EPS at $0.03. Looking at some of our other key metrics, non-GAAP EPS increased by $1.63. Net cash provided from operating activities increased by $3.5 million, and free cash flow increased by $2 million, while adjusted EBITDA declined by $2.3 million. Please turn to Slide 16. Nightclub revenues declined by $307,000. This primarily reflected a 2.2% same-store sales growth, 10 closure days at Houston area clubs due to Hurricane Beryl in July, and some other changes that we're going through to improve our club lineup. Alcoholic beverage sales increased by 0.3%; food, merchandise, and other increased by 0.9%, and service declined by 1.7%.
The differing growth rates primarily reflected higher alcohol and food and lower service revenues. Impairment and other charges were lowered by $2 million. As a result, operating income was $1 million higher, while non-GAAP was $1.1 million lower. Please turn to Slide 17. Bombshell's revenues declined by $1.643 million. This primarily reflected a 16.2% same-store sales decline, which was negatively affected by 26 closure days at Houston area locations due to Hurricane Beryl in July. Impairment and other charges were $3 million higher. This primarily reflected impairments partially offset by a gain from reducing San Antonio-related debt. As a result, there was an operating loss of $2.5 million compared to an income of $1.2 million. On a non-GAAP basis, however, operating income was $701,000 compared to $1.4 million. These Bombshells impairments included locations that were divested and the Denver food hall, even though these events occurred in the first quarter of 2025.
These divestitures and closings are anticipated to improve the segment's performance. Collectively, these five locations accounted for $14.6 million in sales in fiscal 2024. Excluding $10.3 million in impairment and $2.9 million in gain on the sale, they lost a collective $1.1 million. Please turn to Slide 18. Corporate expenses increased modestly by $284,000 and a little less on a non-GAAP basis. Please turn to Slide 19. We have a couple of slides coming up that will discuss free cash flow and adjusted EBITDA, which are non-GAAP. In advance of that, we wanted to present the closest GAAP equivalents on this side, which are operating income and net cash provided by operations and net income. Please turn to Slide 20. We ended the fourth quarter with cash and cash equivalents of $32.4 million. During the quarter, we used $7.8 million to buy back shares. As a percentage of revenues, free cash flow was 18% and adjusted despite being 24%.
Please turn to Slide 21. Debt at September 30th declined by $7.2 million from June 30th. This reflected eliminations of Bombshell San Antonio debt, early paydown of $1.5 million of the Playmate note, and other scheduled amortized paydowns. The weighted average interest rate was 6.67%, only 3 basis points higher than a year ago. Total occupancy cost was 8% and declined from 8.1% year-over-year. Debt to trailing 12-month adjusted EBITDA was 3.28 times, similar to the third quarter. This should now further decline in fiscal year 2025 as sales grow from locations that have come online and more recently and from those anticipated to open throughout the year. Debt maturity has continued to remain reasonable and manageable. Now, here's Eric.
Thank you, Bradley. Please turn to Slide 22. We have seven remaining developments. Bombshells Denver is awaiting final inspections. We are targeting a late January opening in time for the professional football championship. Chicas Locas, El Paso is finished, and reopening is planned for March 1st. We are waiting for new electrical plans sign-off at the Rick’s Cabaret in Central City. Then we have about six more weeks of construction. We are targeting an April opening to avoid the risk of bad weather. Interior construction at Bombshells, Lubbock is well underway, and we are targeting an April opening. The framing and stucco work is underway at Bombshells in Rowlett, and we are targeting a May opening there. I'd like to note that both Lubbock and Rowlett construction are being financed through current bank loans and construction loans rather than through free cash flow. We are still awaiting construction permits for the Baby Dolls, West Fort Worth, and we are awaiting engineering review of our plans for the Baby Dolls, Fort Worth to rebuild our club that burnt down. I'd like to say thank you to all of our loyal and dedicated teams for all their hard work and effort and to all of our shareholders who believe and make our success possible. Now, I’ll open to Mark for questions and look forward to hearing what you are concerned with.
Thank you very much, Eric. Before I continue, I'd like to call Scott Buck. If you could please request to speak if you're on here. If you would like to ask a question, please raise your hand in the X Space. When you finish, mute your microphone to eliminate any background noise. We have a limited number of speaker spaces, so after your question, we may move you to the back of the audience to free up space. To start things off, we'd like to take questions from Scott Buck, if he is available, as well as RICK's largest shareholders. So if you're out there, please request to speak and we will add you to the docket. It's not looking like we have Scott in the audience, so I would like to open this up to anyone with questions. Please raise your hand and we will bring you up to the front to be a speaker. This limited time offer, there we go. We have D&D Realty. D&D Realty, please take it away. You have to unmute yourself to speak.
分析師問答
Hi, can you hear me?
Yeah, now I got you.
Sorry. So you guys have about six to seven properties that are currently under construction or in development. After you work through that pipeline, how do you think about developing or opening new clubs organically versus purchasing them non-organically? Thanks.
We are focusing on growth through acquisitions rather than developing new properties in the near future. Our current projects will be completed, but I don't anticipate any new developments in 2025. If we don't begin looking for acquisitions in 2025, it's likely we won't initiate any new builds in 2026 either. It will be a few years before we consider any new developments, so from this point on, our growth strategy will center exclusively on acquisitions.
Thank you very much, D&D Realty. Next up, we have Antonio, my man. How you doing? Please take it away.
Doing great, man. How are you?
We are great. Good to see you.
My question is, considering all the challenges you've overcome in 2024 and your success, what excites you about the future of the business model with the new five-year plan?
I think that just getting back to our basic core business, really being focused on the clubs again, been digging through financials, looking at some of the performances of some of our operations, trying to figure out should we rebrand, should we eliminate some of the locations, really going through real estate offerings and saying, what's the real estate worth as another use, and are we generating enough cash flow out of that unit to justify continuing to operate it as a club, or should we sell the real estate and take the money and do something else with it. That was really a big part of our 2017 plan as we really got into the capital allocation strategy originally. And it's just nice getting back to visiting those thoughts again. And just kind of seeing where we've come and looking at how much our real estate value has actually increased. It's kind of crazy looking at some of the properties where we bought properties 15 years ago and we've used them in loans back in ‘21. But here we are even, just a mere four years later and seeing the value increase, I guess a lot due to inflation, and a lot just due to some of our high freeway Class A locations, some of our properties are on.
All right. One last question. I know that some of your locations are accepting Bitcoin, and with Bitcoin reaching $106,000 today, how is that looking? Is that an interesting aspect of the business model? Because you’ve been accepting it for a while now.
I'll have to actually go and look at the Miami and New York clubs and see how much is processing. I don't actually see the Bitcoin because we convert to US dollars at the point of transaction. So I don't really see. So I have to actually, like, go look at a special program basically to see how much we're taking in in Bitcoin. But I will do that and let everyone know. I'll see what I can find out, and post on Twitter how that's going for us. I know that Bitcoin has been very integral, especially in Miami. And I think we started in New York and Chicago as well. So, I suspect that with these high prices, we're probably getting more of it.
Thank you.
Yeah, thanks. And if anyone's not following Antonio, he's got a great show on stocks and investing. Might want to throw him a follow and see his show on Monday.
And I second that. Yes.
Scott Buck is actually on. Will you pull him up as a speaker? He’s not showing up to you for some reason.
Yeah. He's not showing up on my request, but I'm going to bring up Jacob first and I will try adding Scott while Jacob is speaking. So, Jacob, please take it away.
Hello. You guys hear me?
Got you loud and clear.
Great. Well, perhaps you mentioned this, but I mean, could you give some more color on the M&A environment? Is, like, things heating up, like, geographically? Like, where is like the interesting objects? And I remember from a couple of quarters ago that you guys mentioned that you had put out some LOIs, but no deals has yet been occurred. So just kind of wondering what happened there and about the climate.
We are currently working on three acquisition opportunities that are at various stages of the licensing approval process. Once we receive those approvals, we will finalize and announce the deals. Furthermore, we are in discussions with other operators. Moving forward, our primary focus for growth will be on acquisitions. We will actively explore more opportunities while adhering to our established criteria and will not compromise to finalize deals. I expect that we will begin to see additional acquisitions as we progress. We have been targeting larger deals in recent years, such as the $88 million acquisition in 2021 and the $66.5 million acquisition in 2023. Now, we are shifting our focus to smaller acquisitions, specifically those with purchase prices between $5 million and $15 million. We aim to accumulate enough of these smaller deals to reach our target of adding $6 million in revenue annually. We also intend to achieve a 20% increase and grow our same-store sales by a few percentage points each year, ultimately targeting $400 million in revenue and $75 million in free cash flow by 2029. We will closely monitor our progress each year.
Yes. So and those clubs that you're currently evaluating, are those still in the same areas that you currently operate in?
Some are in different areas, some are in the same. I mean, same states.
Yes, exactly.
Obviously, the same states make it easier for us. We're licensed in those states. Everything's a little bit quicker in those states. We are looking at a couple of new states, which is probably the reason it’s taking a little more time on a couple of the ones we're working on right now. But hopefully, we'll get through those hurdles relatively quickly after the first of the year and get a deal closed.
Okay, nice. Thank you.
Thank you.
Thank you for your question. We are still in the process of bringing Scott Buck on board. In the meantime, DJ HLS, please share your question. You'll need to unmute yourself to talk. While we wait for that to happen, go ahead.
Yes. Jan Lessner, shareholder from Germany. So many of your locations are located in a region where hurricanes really hit your operations. Isn't there any insurance that compensates you for those locations hit by a hurricane or fire?
If there is significant destruction or if we're closed for an extended period, then yes, I think we would file a claim for some of the locations. However, we have to meet our deductibles first. Currently, our accountants and insurance adjusters are handling most of that. Therefore, there might be a payout from the hurricane, but I'm not sure yet. Aside from the days we lost business, our properties didn't sustain much damage except for the lack of electricity, which prevented us from opening.
Thanks a lot.
Yeah. And we do carry insurance on our properties in all those markets.
Fantastic and great question. I'd like to take this moment to encourage anyone with any questions to please raise your hand and request to speak, and we will bring you up to be a speaker. Scott, we are currently trying to coordinate. There we go. You just sent some questions. So since we cannot bring Scott Buck of H.C. Wainwright, he has messaged me his questions. And the first one is, Eric, under the Back-to-Basics plan, would the company consider increasing the dividend?
The dividend is not really a tax-efficient use of capital. However, I do like a dividend, and many of our shareholders do like getting the dividends, especially a lot are starting to do the DRIP programs, I think with them to buy the stock when they get their dividends. We will continue to slowly and gradually raise that on an annual basis so that we continue to have dividend growth and continue to pay our dividend. I think we're nine years of constant dividend payments and constant dividend growth on an annualized basis. So I see us continuing that at least for the next five years, along with the majority of our capital return being done through buybacks.
Fantastic. And so, Scott has an additional question, which is, what was the purchased real estate value of the closed Bombshells in Denver food hall for him to understand potential sale values?
The Denver food hall cost $5.2 million. All the Bombshells we divested were leased locations, most of which were already on their third rent increases, making them economically unviable for us to continue operating. As Bradley mentioned, these units collectively lost $1.1 million in fiscal ‘24. Therefore, we decided to move ahead, eliminate those locations and concentrate on the core properties that we own. Currently, we have one location that we own, and we are seeing an increase in its numbers since we closed the nearby unit. If that location meets our threshold requirements, we will keep it open; if not, we may sell it in the future. I will need to look into it further. That was part of an 11.5-acre development, and we do not have any financial stake in it now since we sold the additional real estate around it, except for the 2.3 acres of property we still hold, for significantly more than what we spent to purchase the land and construct the building there. We are already profiting from that property, so we will evaluate its turnaround potential in the next three to six months before making any decisions.
Thanks for that. Before I bring up the next point, Eric, we have a question from one of our larger shareholders about the impairments and what those specifically are, if you could address that.
Bradley, you want to handle that? It's kind of your expertise.
The impairments are basically accelerated write-offs of various sets of assets, either intangible assets such as SOB license, goodwill, or FF&E. They stem from basically doing an analysis of the future discounted cash flows against the book value of the assets. So, in this current quarter, we had $12.5 million, and for fiscal year we had $38.5 million.
Fantastic.
Yeah, Mark, I'd like to come. From my understanding, and Bradley, correct me, a lot of this is because of interest rates increasing, and so the discounted free cash flow rates are increasing, thus driving down the value of that free cash flow and resulting in these impairments. So they're all non-cash. The reality of it is they don't really affect the operations at all or the free cash flow at all.
Yeah, they don't affect the free cash flow at all. That's correct, Eric.
Fantastic, everyone. I really appreciate that. Before I bring up the next speaker, I encourage anyone with a question to please request to speak. Now, let's continue.
Thanks a lot. Really like your work. Any plans of opening restaurants in the Yuma area, Yuma County, and Yuma? There's a lot of traffic. It's a $3.5 billion agriculture industry, and there's a lot of traffic going on. There's a lot of activity going on. Any plans of expanding beyond Phoenix? Thank you.
I mean, we'll buy existing nightclub operations if we can find them in any market right now in the US. But as far as opening any new restaurants, no, we have no desire at this point, other than the three that we are already well into construction on. I don't have any plans of building additional restaurants at this time.
Thanks so much, Eric. I would like to encourage anyone with any questions to please request to be a speaker, and I'll give it a few more seconds before we close out this earnings call. Unless, Eric or Bradley, there's anything else that you'd like to opine on or promulgate about. We have one request now. Adam Wyden, please take it away.
Hey, this is Adam Wyden. Did you guys open it up? You guys hear me?
I got you.
Good. Perfect. I'm sorry I missed the first part of this call. I was on another call. I have a few questions. Have you discussed the non-income producing real estate that you're planning on selling and what you estimate its value will be in terms of cash on the balance sheet? Also, how much is the EBITDA being affected by property taxes and operating expenses? Did you cover that at all, along with the assets you plan to sell and monetize? What is the framework for understanding the value that isn’t reflected on the balance sheet, and how much EBITDA could be saved by monetizing those real estate assets?
I didn't delve into it during this call, but we currently have around 14 to 19 acres in Pearland, along with an additional build site next to Bombshells in Pearland, especially now that we've put the Grange and the food hall in Denver up for sale. We also have one of the Central City casino properties that we are looking to sell, which could be valued at approximately $20 million to $25 million. We acquired most of this real estate at very favorable prices, so our investment in it is significantly lower. As for carrying costs, I'm not sure of the exact figure, but it's in the hundreds of thousands of dollars primarily related to property taxes, insurance, and similar expenses. We are actively working to sell a substantial amount of that real estate in 2025.
Got it. Did you talk about, I don't know if I missed this, but did you guys talk about sort of where you expect Bombshells margins to get in, in 2025, now that you've closed down the three bad ones and you're opening up the good ones, sort of has your expectations around margin generation for Bombshells changed in 2025 and beyond? I know you're not building anymore, but do you sort of have a sense of where you think Bombshells margins are going to settle out now that you've gotten rid of the three bad ones and got the three new ones open?
Without having the new locations open and assessing their progress, I can't provide an exact figure, but we are aiming for 15% margins at Bombshells. If we find that we can't achieve that, we'll explore alternative options for those units. Our primary focus now is on growing same-store sales. I believe we will be very close to achieving that this quarter, or potentially positive by December, instead of the 15% to 16% growth we’ve previously experienced. We have made adjustments at our units and closed stores that were significant burdens due to high rent among other factors, concentrating on what needs to be done at our remaining locations. With the support of our management teams, we've been able to strengthen our store teams, retaining valuable managers while letting go of those who weren't performing well. I'm optimistic that we are headed in the right direction, although the industry is facing challenges at the moment.
There are reports of restaurants going bankrupt daily, and many are voicing concerns about sales and margins, except for a few that are performing exceptionally well. We aim to rediscover the successful formula we had during the first decade of operation. We're concentrating on enhancing our late-night offerings, creating a fun atmosphere, and boosting alcohol sales as a proportion of total sales at each location. I believe we are on track, and in the next six months, we will have a clearer understanding of whether our efforts are effective. The 15% margin targets are our current goal.
Yeah. So I'm looking at the presentation you put together, which is quite clear. You have a plan with 40% for buybacks, 50% for acquisitions, and dividends under 10%. It seems straightforward. Do you have any thoughts on the comparisons? They've been inconsistent, with some periods being high and others low. You appear to be bouncing back well in the strip clubs. Bombshells, though smaller than before, had 14 locations, and after closing three and adding the Grange, you have 10. With three new openings, you'll return to 13, but the mix will change.
13 or 12, I'm not sure. I think it's 12. I don't confuse myself.
But you have sort of a, at that point, as a percentage of sales, you're not going to have, your Bombshell is still not going to be a huge percentage of the business and with the nightclub, comping positively, this is, as you do more M&A, nightclubs will be a larger percentage of the business. Do you think you can get back to doing 3% to 5% comps in the business? I mean, you're sort of there now and I can sort of back into it. You're sort of there on nightclubs. Bombshells is going to be flat hopefully or close to it this year. You'll have the new ones open. Hopefully that those can comp, whatever, a few percent. I mean, if the tax is on tips and sort of what Trump is doing for small, medium-sized business, maybe we get a resurgence. As you said, there are a lot of restaurants that are suffering. Maybe you get a resurgence there. We get a little bit of a lift at Bombshells just from the macro. I mean, do you think it's unrealistic to think you guys can get, like, on a total company basis back to a 3% to 5% comps for the long term? Is that impossible?
I believe it's not impossible. Right now, I'm aiming for at least a 2% overall growth rate over this five-year plan, but I'd prefer to see higher growth. If the economy performs well, we will likely benefit as well. There's considerable work needed on the government's part, and depending on the location of spending cuts—whether they are US-based or foreign—it will have varying impacts on our performance in the US. We'll need to see how this unfolds. I'm currently focused on our immediate situation, closely monitoring trends and ready to make rapid adjustments as needed, whether that involves pricing, labor, or security costs. I'm especially concentrating on our core business and the Bombshells margins. We've been rigorously reviewing our finances monthly to identify areas for cuts or improvements. We've discovered some opportunities where we can enhance revenues. Presently, I'm evaluating all our assets critically, determining the best use of capital, and considering the return on investment for each asset.
We're closely looking at about four or five clubs and one Bombshell location, potentially assessing them for sale. We're also exploring opportunities to sell smaller locations and debating if it's worth our resources to invest in a club generating $1 million in sales with a $300,000 profit. We're constantly evaluating these decisions, discussing them weekly, and trying to address everything effectively.
Did you discuss the capital expenditures and how much you've been spending on the Bombshells, the casinos, and the renovations? You would expect that in 2025, your maintenance capital expenditures will return to normal levels, right? You're getting close to it.
We reached about $7.5 million to $7.8 million last year. We invested in the roof of Tootsies, which was a significant expense, and we also completed several new AC packages along with four remodels. Maintenance capital expenditures were much higher last year. I believe we are projecting around $6 million for 2025, and I think we will come in close to that, possibly even a bit under.
Right. And if most of the money's been spent on Bombshells, like, if I'm just backing into it, the only deviation from $6 million of maintenance capital would probably be M&A, right? If I think about CapEx, right?
Yeah, that's total CapEx, not maintenance CapEx.
Well, that's my point. If you look at the last few years, you've spent money on casino real estate, various projects, and building Bombshells. From what I can see, most of the investment in Bombshells has already been made. Denver is set to open, you've spent most in Rowlett, and what about Lubbock? Do you anticipate any significant additional capital outflow for Bombshells, or has most of it already been spent?
No. As I said on the call earlier, both Bombshells, Denver's done. We're getting final inspections. I believe we had inspections all this week. We have two more inspections on Thursday. And then I believe the final is scheduled for Friday of this week. Then we have the liquor inspection the following week, hopefully, and that that store will be done. So there's not much more money to spend other than startup costs, right? I mean, we always have startups, but the startup costs will be offset by immediate sales in January as we open up. So most of the startup costs will start January 6th, and with any luck, we'll be able to open that store somewhere around the 21st or 22nd of January. So most of those costs will be offset in that quarter, which will be the second quarter of fiscal ‘25. The construction for the other two locations is all bank financed now. So there's no actual cash from the company going out on those locations.
Right, but my point is that like, this will be a pretty big step down for CapEx. So you're going to have cash flow next year. If no M&A shows up, I don't know if you talked about M&A, but if no M&A shows up, you're going to have a lot of cash to buy back stock at these levels. And you bought back in ‘24, but you also had to do the projects. If you have $25 million real estate going out the door and the CapEx going down, you guys are going to have a pretty big war chest to buy back stock if there's no M&A, right? I mean, if the stock stays here, you're going to be pretty active on the buyback, I would think.
We are actively engaged every day and currently do not have a specific limit on our stock buyback program. We have accumulated a significant amount of extra cash and have also paid down about $2 million in additional debt, which includes a large portion of 12% interest debt. Our focus has been on both regularly buying back our stock and reducing our debt. Our goal is to maintain our debt to EBITDA ratio under three times. This has always been our target, even though we know we could potentially reach four times without too much strain, particularly since much of our debt is real estate related. However, we prefer to keep our total debt at a three times ratio.
You should be under three times on next year. I mean, I again, I don't have…
Yeah, I think so too. We look at a trailing, which was 3.28 times at the end of September 30th. So we are definitely working on that.
Yeah. I mean, I don't have the September balance sheet in front of me, but as of June, you had $244 million of debt, not including leases and $34 million cash.
$238 million. We paid back $7.2 million debt in the quarter.
And you have $34 million. How much cash do you have, like, $35 million?
$32 million and change at the end of the quarter but yeah we're probably pretty close to $35 million right now.
You have $206 million, correct? If I'm calculating this correctly, considering all these assets coming online, the Bloomberg consensus estimate for EBITDA is $83 million, but I believe you'll exceed that. If I take $206 divided by $83, which is the Bloomberg estimate, that's 2.5 times for 2025. If you can get those other assets operational and continue your cost-cutting measures, and if the nightclubs see a 4% to 5% same-store sales increase on $250 million in sales, that would significantly boost your EBITDA. It’s quite possible that your EBITDA could reach around $100 million next year. In that case, you would be at two times, but even sticking with the $83 million consensus, you'd still be at 2.5 times. Looking at the debt in relation to your $25 million or $30 million in real estate and non-income producing assets seems unfair. Selling real estate that doesn’t generate EBITDA would decrease your leverage, and not selling it might suggest increasing EBITDA. Everything is quite dynamic. For instance, if your Central City property generates $3 million in EBITDA, the debt from the casino would be on the balance sheet, but you wouldn’t have any EBITDA from it. Now it's a nightclub, but you understand my point.
As we open these locations, the construction is nearly complete. Most of the carrying costs for these sites that are preparing to open are covered. There may be about $3 million remaining on the bank loans for the two Bombshells, which could slightly increase. However, all the real estate is owned, property taxes are being paid annually, and insurance and related expenses are accounted for. This revenue will contribute positively, helping to reduce the EBITDA multiple from 3.28 to below 3 times. I’m not worried about the debt; what I mean is that I want to stay within our targets. If a significant acquisition opportunity arises, I want to have the flexibility to pursue it without being too close to 4 times debt. If I manage to increase our leverage to 3.2, 3.3, or 3.5 through a major acquisition like the one we made in March of '23, I'm comfortable with that.
Thank you, Eric, and thank you for your questions, Adam. We'll follow up if you have more. The next question comes from another major shareholder inquiring about Favoritely. It has been launched, and you can visit the site at favoritely.com. We are continuing to add new performers. Currently, we are still in beta. About ten days ago, I mentioned that we had five clubs represented on the site along with entertainers and other staff. I hope to see further growth as we add more locations and prepare for a full launch of the site. Wonderful. Now, the last question that I have from another shareholder who submitted this was just to give any color on the current business trends that you're seeing?
November was excellent, with five strong weekends, particularly around the holidays, which was unexpected. We had two major events: the Tyson and Jake Paul fight on Friday and a significant UFC event on Saturday, making that third weekend of November particularly successful. December began somewhat slowly due to December 1st falling on a Sunday, but the first weekend was robust. We performed reasonably well through the second week, although the most recent weekend showed a slight decline of a few percentage points compared to our target, rather than the overall trends we've seen up until now. However, sales have been fairly solid from October through December, and I hope that continues as we close out the month. The last two weeks of January tend to be weak for us, but then we move into February and March, with March Madness being a major highlight. I'm optimistic about having a vibrant March Madness, especially since we'll have five weekends, including five Saturdays and five Sundays. It will be interesting to see how things develop as we move forward.
Fantastic. Thank you so much for that, Eric. We appreciate everyone joining this call. On behalf of Eric, Bradley, the company, and our subsidiaries, thank you and have a good night. Please visit one of our clubs or restaurants to celebrate Christmas, Hanukkah, Kwanzaa, New Year's, or just to have fun. Take care and have a great time.