Yaron Naymark From 1 Main Capital Discusses RCI Hospitality

Summary

• RICK is poised to be a massive beneficiary from reopening.
• Continued free cash flow growth driven by accretive acquisitions and Bombshells rollout.
• Significant upside as the market awards the company a reasonable multiple.

Yaron Naymark, founder and Portfolio Manager at 1 Main Capital, discusses his investment in RCI Hospitality (NASDAQ:RICK). RICK is a cash flow machine, and Yaron thinks the company is set to compound free cash flow per share at an accelerated rate for years as they continue to roll up the gentlemen's club industry at very low multiples, execute on their Bombshell's growth plans, and repurchase shares when they trade at attractive prices.

Chapters

0:00 Intro

1:55 RICK overview

10:05 Getting comfortable with the management team

18:30 Discussing the roll up opportunity

28:15 Valuation arbitrage on acquired clubs

32:25 Bombshell's growth prospects

38:50 Breaking down the ROIC for new Bombshell's

44:15 RICK valuation and SOTP

49:25 Does ESG and regulation help or hurt RICK?

51:55 Normalized FCF for RICK

57:10 Closing thoughts and adjusting for James Harden leaving Houston

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.