Author Topic: RICK - RCI Hospitality  (Read 15105 times)

Amitsham

  • Newbie
  • *
  • Posts: 1
Re: RICK - RCI Hospitality
« Reply #30 on: August 31, 2016, 07:08:04 AM »
RICK reports very strong quarter. The Company reduced debt, reduced the number of shares and gave a better forecast of FCF.

FY16 FCF target revised upward to $19-$21M (RCI's fiscal year end in September)
Shares outstanding 9.833M (07/31)
FCF per share $1.93 - $2.14

Stock price = $11
5.5x multiple of FCF per share

I believe the Company is worth at least $16 per share.

If they do these things, the Company will be worth at least $20 per share:
1) Buyback more shares at this price
2) Close or sell Robust
3) Refinancing and pay off debt

Bouns:
1) Bombshells' franchising
2) Real estate sales




johnny

  • Sr. Member
  • ****
  • Posts: 317
Re: RICK - RCI Hospitality
« Reply #31 on: August 31, 2016, 12:09:19 PM »
I don't think sale-leasebacks really work for Rick's.

A tremendous amount of the earnings power of the club can be attributed to the specific zoning of the property, and the liquor license attached to the property. -If- they have some clubs doing very good ROAs (corp ROA is mediocre, no?), the moat is entirely contained in the property.

With this business, if you sell the property, you're giving somebody else a tremendous amount of leverage...way more than the average REIT bulk-buying Olive Gardens or whatever.

Either the sale is done at a very high price and very high contracted rent, in which case the property buyer is caught pants-down if the business has trouble, or the rent is underpriced, in which case the property buyer can always think about contriving to the club shut down so that he can set up his own operation.

Ultimately I think this was probably what they realized when they looked into the REIT stuff a year or two ago. They were getting cap-rate offers that were substantially higher than straight RE loans. And whoever is letting them finance individual properties at 5% is really clueless about how dangerously they're living.

I should mention I just dumped the last of my RICK stock, so I'm officially now talking my book instead of being a self-loathing degenerate.
« Last Edit: August 31, 2016, 01:00:24 PM by johnny »


Foreign Tuffett

  • Hero Member
  • *****
  • Posts: 503
Re: RICK - RCI Hospitality
« Reply #33 on: September 15, 2016, 01:10:07 AM »
the business is in secular decline.

An attorney I work with is quite a "party" guy.  A week ago or so he went into a crazy, ranting, diatribe on the state of strip clubs in/around Detroit.  Evidently, they have hit rock bottom.  There is a severe problem getting good looking dancers.

As he put it...."I go to a strip club to escape reality, to look at hot women that I don't see in real life"...."I don't want to see everyday, broken down, busted, tatted up, overweight women.  I am just not going to pay money for it.  I go to a strip club for a smiley face, not a frowny face!" 

Of course, I am paraphrasing a bit for public consumption.

This goof admits that he can spend $200, $300 or maybe even more...but lately he says he spends $50 or much less.

I asked what he thinks the problem is.  He replied that heroin is a ravage.  He also was bemoaning that society is getting "too fat".  Also that quality women can get on "web cams" and make similar $ and not have to meet degenerates in person.

So I don't know if this is a problem limited to just Detroit, or is it nationwide?

If this is nationwide, then yes, I could very much see MOST clubs being in decline, shutting down.  Who wants to pay big $$$$ to see ugly, overweight, tatted up women?

Maybe it is like malls?  All but the highest end are collapsing, partly from competition on the interwebs?

I think part of the problem is that some of the women who would be working at strip clubs are now working as nude internet cam girls. Unlike regular pornography -- but similar to strip clubs -- male customers can perceive that they have a "relationship" with a cam girl.

I don't see pornography per se as a replacement for strip clubs as, at least in its current form, there's no real interaction between the porn stars and the customer. Video pornography has been around for decades and strip clubs have thrived during that time.
 

TedKord

  • Newbie
  • *
  • Posts: 32
Re: RICK - RCI Hospitality
« Reply #34 on: September 15, 2016, 02:29:41 PM »
I am absolutely unconcerned about technology/cams as a risk factor. There have been dirty movies as long as I've been alive. I also don't think RICK will ever trade at a premium valuation. There are always going to be investors who wouldn't want to own this sort of business at any price.  I think the risk factors are the amount of debt that RICK's carries and their capital allocation. RICK is too levered. The overwhelming amount of their debt is secured by properties, but one doesn't tend to situate strip clubs in the best parts of town, though I must admit a big location two blocks from Madison Square Garden must have some alternative use value. As to the capital allocation, I have my fingers crossed. They talk the talk in their presentations and conference calls, but they just announced the opening of a sports bar gentlemen's club in Manhattan. "Key attractions will include a bevy of beautiful ladies dressed in sexy sports themed jerseys and cheerleading outfits." I'd rather have seen them buy back shares.

JayGatsby

  • Hero Member
  • *****
  • Posts: 603
Re: RICK - RCI Hospitality
« Reply #35 on: September 15, 2016, 08:20:47 PM »
to the capital allocation, I have my fingers crossed. They talk the talk in their presentations and conference calls, but they just announced the opening of a sports bar gentlemen's club in Manhattan. "Key attractions will include a bevy of beautiful ladies dressed in sexy sports themed jerseys and cheerleading outfits." I'd rather have seen them buy back shares.
They gave the projected numbers for this earlier in the year to explain why it fit within their strategy. Projected returns were something like 100% IRR assuming it all goes at least as well as planned.

TedKord

  • Newbie
  • *
  • Posts: 32
Re: RICK - RCI Hospitality
« Reply #36 on: September 16, 2016, 02:45:17 AM »
Oh no, I get it. And I've heard the calls. I will feel more comfortable when I see it.

DTEJD1997

  • Hero Member
  • *****
  • Posts: 1444
Re: RICK - RCI Hospitality
« Reply #37 on: September 16, 2016, 05:56:30 AM »
I am absolutely unconcerned about technology/cams as a risk factor. There have been dirty movies as long as I've been alive. I also don't think RICK will ever trade at a premium valuation. There are always going to be investors who wouldn't want to own this sort of business at any price.  I think the risk factors are the amount of debt that RICK's carries and their capital allocation. RICK is too levered. The overwhelming amount of their debt is secured by properties, but one doesn't tend to situate strip clubs in the best parts of town, though I must admit a big location two blocks from Madison Square Garden must have some alternative use value. As to the capital allocation, I have my fingers crossed. They talk the talk in their presentations and conference calls, but they just announced the opening of a sports bar gentlemen's club in Manhattan. "Key attractions will include a bevy of beautiful ladies dressed in sexy sports themed jerseys and cheerleading outfits." I'd rather have seen them buy back shares.

The more I think about it, the more I think cams/interweb COULD be a real problem for RICK.

Apparently, all the good looking women in the Detroit have vanished?  Have they vanished, or are they just on the interweb?  I might have to do some investing on this...

If I were a hot woman, why would I go to a smoky, sleazy strip club?  I could get $ on the interweb without meeting sleazy dudes in person.  Plus, when you are working in a club, you've got to leave the house, take a shower, do your hair & makeup...not required with a web cam.

BTShine

  • Hero Member
  • *****
  • Posts: 656
Re: RICK - RCI Hospitality
« Reply #38 on: September 16, 2016, 07:19:34 AM »

Will webcams and FaceTime make it less appealing for regular people to go out to dinner or nightclubs/bars?

If it's cheaper to eat at home and chat online with friends will that hurt the restaurant/bar industry?

There might be similarities between SOBs and Bars/Nightclubs
« Last Edit: September 16, 2016, 11:36:08 AM by BTShine »

Foreign Tuffett

  • Hero Member
  • *****
  • Posts: 503
Re: RICK - RCI Hospitality
« Reply #39 on: September 30, 2016, 08:42:06 AM »