Adam Wyden's questions to RCI HOSPITALITY HOLDINGS (RICK) leadership • Q3 2025
Question
Adam Wyden of ADW Capital Management asked a series of detailed questions regarding the self-insurance reserve's impact on EBITDA, the quantification of pre-opening costs, the potential sale of the Bombshells segment, and the current M&A pipeline for nightclubs.
Answer
CFO Bradley Chhay and CEO Eric Langan addressed the questions. Chhay clarified the insurance charge impacts EBITDA but not free cash flow, estimating a $10-12 million annual run-rate under the current method. Langan added that a planned captive insurance company would normalize these costs. Langan estimated pre-opening costs burdened the quarter by $400,000 to $500,000. Regarding Bombshells, he stated a willingness to sell the entire segment for the right price, citing a target of around $85 million. Finally, he discussed the active M&A strategy, which includes divesting some underperforming clubs to fund acquisitions in more profitable markets.