RCI Reports 2Q25 Results, Hosts X Spaces Call at 4:30 PM ET Today

Business Wire

12-05-2025

HOUSTON--(BUSINESS WIRE)--RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2025 second quarter ended March 31, 2025. The Company also filed its Form 10-Q today.
Summary Financials (in millions, except EPS)
2Q25
2Q24
6M25
6M24
Total revenues
$65.9
$72.3
$137.4
$146.2
EPS
$0.36
$0.08
$1.38
$0.85
Non-GAAP EPS 1
$0.65
$0.90
$1.46
$1.76
Impairments and other charges (gains), net
$2.1
$8.2
$(0.1)
$8.2
Net cash provided by operating activities
$8.5
$10.8
$21.9
$24.5
Free cash flow 1
$6.9
$8.8
$19.0
$21.5
Net income attributable to RCIHH common stockholders
$3.2
$0.8
$12.3
$8.0
Adjusted EBITDA 1
$14.2
$17.2
$29.9
$34.7
Weighted average shares used in computing EPS – basic and diluted
8.86
9.35
8.89
9.36
Expand
1 See 'Non-GAAP Financial Measures' below.
2Q25 Summary (Comparisons are to the year-ago period unless indicated otherwise)
Eric Langan, President and CEO, said: "As previously announced, revenues primarily reflect the sale/divestiture of five underperforming Bombshells segment locations and the effect of severe weather on company same-store sales in January and February, partially offset by improving trends in March. Profitability primarily reflects lower SSS, lower costs from the sale/divestiture of the Bombshells related units, and lower impairments. During and subsequent to 2Q25, we continued to make progress with our Back to Basics 5-Year Capital Allocation Plan, acquiring clubs, completing projects, and buying back shares."
Back to Basics 5-Year Capital Allocation Plan (FY25-29)
2Q25: Acquired Flight Club, the premier gentlemen's club in the Detroit market ($8.0 million for the club and $3.0 million for the real estate).
2Q25: Opened Bombshells in Denver, CO, and the rebranded/reformatted Chicas Locas in El Paso, TX.
2Q25: Repurchased 56,875 common shares for $2.9 million ($50.92 average per share), with 8,832,125 shares outstanding at March 31, 2025.
3Q25: Acquired Platinum West of West Columbia, SC, the only upscale adult nightclub in the central part of the state ($6.25 million for the club and $1.75 million for the real estate).
X Spaces Conference Call at 4:30 PM ET Today
Hosted by RCI President and CEO Eric Langan, CFO Bradley Chhay, and Mark Moran of Equity Animal.
Call link: https://x.com/i/spaces/1djGXVvkXgkxZ (X log in required).
Presentation link: https://www.rcihospitality.com/investor-relations/.
To ask questions: Participants must join the X Space using a mobile device.
To listen only: Participants can access the X Space from a computer.
There will be no other types of telephone or webcast access.
2Q25 Results (Comparisons are to the year-ago period unless indicated otherwise)
Nightclubs segment: Revenues of $57.5 million declined by 3.1%. Sales, which were affected by weather in January and February, reflected a 3.5% decline in same-store sales and the absence of Baby Dolls Fort Worth due to fire in July 2024, partially offset by five new and/or reformatted clubs not in SSS. 2
By type of revenue, alcoholic beverages declined 5.3%, service declined 2.9%, and food, merchandise and other increased 2.4%. Impairments and other charges totaled $2.0 million compared to $8.2 million.
Operating income was $14.6 million (25.4% of segment revenues) compared to $11.0 million (18.6%). Results primarily reflected the impairment decline, partially offset by the sales decline. Non-GAAP operating income was $17.1 million (29.8% of segment revenues) compared to $19.8 million (33.4%). Non-GAAP results primarily reflected the sales decline.
Bombshells segment: Revenues of $8.2 million declined 35.6%. Sales, which were similarly affected by bad weather in January and February, reflected the sale/divestiture of five underperforming locations and a 13.4% decline in SSS, partially offset by two locations not in SSS (Stafford, TX, and Denver, CO). 2
Operating loss was $227,000 (-2.8% of segment revenues) compared to income of $699,000 (5.5%). Non-GAAP operating loss was $67,000 (-0.8% of segment revenues) compared to income of $750,000 (5.9%). Results primarily reflected the sales decline from open locations and Bombshells Denver pre-opening costs, most of which were offset by the sale/divestiture of non-performing locations.
Corporate segment: Expenses totaled $5.5 million (8.4% of total revenues) compared to $6.8 million (9.4%). Non-GAAP expenses totaled $5.4 million (8.2% of total revenues) compared to $6.3 million (8.8%). The decline primarily reflected lower overhead from fewer locations.
Impairments and other charges (gains), net within consolidated operations totaled $2.1 million compared to $8.2 million.
Income tax expense was $1.1 million compared to $5,000. The effective tax rate was 25.1% compared to 0.7%.
Weighted average shares outstanding of 8.86 million declined 5.2% due to share buybacks.
Debt was $241.5 million at March 31, 2025 compared to $235.5 million at December 31, 2024. The increase primarily reflected Flight Club new acquisition related debt and Bombshells Rowlett and Lubbock construction financing, partially offset by scheduled pay downs.
2 See our April 8, 2025 news release on 2Q25 sales for more details.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the Company and helps management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.
Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income or loss attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) gains or losses on lease termination, and (h) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at 18.1% and 18.4% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2025, and 2024, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.
Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income or loss attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) impairment of assets, (c) income tax expense, (d) net interest expense, (e) settlement of lawsuits, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, and (i) gains or losses on lease termination. We believe that adjusting for such items helps management and investors better understand our operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
We also use certain non-GAAP cash flow measures such as free cash flow. Free cash flow is derived from net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)
With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult nightclubs and sports bars-restaurants. See all our brands at www.rcihospitality.com.
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the Company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the Company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, and (vi) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2024, as well as its other filings with the U.S. Securities and Exchange Commission. The Company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months Ended
For the Six Months Ended
March 31, 2025
March 31, 2024
March 31, 2025
March 31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
3,194
$
749
$
12,259
$
7,993
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,776
3,884
7,345
7,737
Impairment of assets
1,780
8,033
1,780
8,033
Deferred income tax benefit
(853
)
(1,911
)
(1,242
)
(1,911
)
Loss (gain) on sale of businesses and assets
215
40
(1,248
)
37
Amortization and writeoff of debt discount and issuance costs
227
149
290
312
Doubtful accounts expense on notes receivable
—
—
—
22
Gain on insurance
—
—
(1,150
)
—
Noncash lease expense
668
773
1,326
1,535
Stock-based compensation
118
471
588
941
Changes in operating assets and liabilities, net of business acquisitions:
Receivables
(659
)
(162
)
1,714
1,067
Inventories
68
76
64
(142
)
Prepaid expenses, other current, and other assets
68
2,609
(530
)
(6,420
)
Accounts payable, accrued, and other liabilities
(55
)
(3,875
)
695
5,265
Net cash provided by operating activities
8,547
10,836
21,891
24,469
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets
956
—
1,085
—
Proceeds from insurance
—
—
1,150
—
Proceeds from notes receivable
76
61
147
116
Payments for property and equipment and intangible assets
(2,854
)
(7,667
)
(8,608
)
(12,802
)
Acquisition of businesses, net of cash acquired
(6,000
)
—
(6,000
)
—
Net cash used in investing activities
(7,822
)
(7,606
)
(12,226
)
(12,686
)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations
5,433
1,956
8,396
2,657
Payments on debt obligations
(4,627
)
(4,278
)
(10,321
)
(10,630
)
Purchase of treasury stock
(2,896
)
(1,530
)
(6,114
)
(3,602
)
Payment of dividends
(619
)
(560
)
(1,242
)
(1,122
)
Payment of loan origination costs
(71
)
—
(71
)
(136
)
Net cash used in financing activities
(2,780
)
(4,412
)
(9,352
)
(12,833
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(2,055
)
(1,182
)
313
(1,050
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
34,718
21,155
32,350
21,023
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
32,663
$
19,973
$
32,663
$
19,973
Expand
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, 2025
March 31, 2024
ASSETS
Current assets
Cash and cash equivalents
$
32,663
$
32,350
$
19,973
Receivables, net
4,174
5,832
9,044
Inventories
4,645
4,676
4,554
Prepaid expenses and other current assets
4,071
4,427
8,387
Assets held for sale
—
—
74
Total current assets
45,553
47,285
42,032
Property and equipment, net
283,442
280,075
288,224
Operating lease right-of-use assets, net
24,905
26,231
33,396
Notes receivable, net of current portion
4,031
4,174
4,289
Goodwill
62,524
61,911
67,862
Intangibles, net
167,383
163,461
172,728
Other assets
1,918
1,227
1,362
Total assets
$
589,756
$
584,364
$
609,893
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
$
5,652
$
5,637
$
5,632
Accrued liabilities
18,161
20,280
22,597
Current portion of debt obligations, net
19,737
18,871
25,072
Current portion of operating lease liabilities
3,073
3,290
3,098
Total current liabilities
46,623
48,078
56,399
Deferred tax liability, net
21,451
22,693
27,232
Debt, net of current portion and debt discount and issuance costs
221,725
219,326
206,853
Operating lease liabilities, net of current portion
26,677
30,759
33,593
Other long-term liabilities
4,741
398
317
Total liabilities
321,217
321,254
324,394
Commitments and contingencies
Equity
Preferred stock
—
—
—
Common stock
88
90
93
Additional paid-in capital
55,925
61,511
77,742
Retained earnings
212,772
201,759
207,928
Total RCIHH stockholders' equity
268,785
263,360
285,763
Noncontrolling interests
(246
)
(250
)
(264
)
Total equity
268,539
263,110
285,499
Total liabilities and equity
$
589,756
$
584,364
$
609,893
Expand
RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share, number of shares, and percentage data)
For the Three Months Ended
For the Six Months Ended
March 31, 2025
March 31, 2024
March 31, 2025
March 31, 2024
Reconciliation of GAAP net income to Adjusted EBITDA
Net income attributable to RCIHH common stockholders
$
3,231
$
774
$
12,255
$
8,000
Income tax expense
1,068
5
2,915
1,804
Interest expense, net
3,909
3,903
7,882
8,025
Depreciation and amortization
3,776
3,884
7,345
7,737
Impairment of assets
1,780
8,033
1,780
8,033
Settlement of lawsuits
127
167
306
167
Loss (gain) on sale of businesses and assets
220
(5
)
(1,186
)
(8
)
Gain on insurance
—
—
(1,017
)
—
Stock-based compensation
118
471
588
941
Gain on lease termination
—
—
(979
)
—
Adjusted EBITDA
$
14,229
$
17,232
$
29,889
$
34,699
Reconciliation of GAAP net income to non-GAAP net income
Net income attributable to RCIHH common stockholders
$
3,231
$
774
$
12,255
$
8,000
Amortization of intangibles
577
640
1,157
1,299
Impairment of assets
1,780
8,033
1,780
8,033
Settlement of lawsuits
127
167
306
167
Stock-based compensation
118
471
588
941
Loss (gain) on sale of businesses and assets
220
(5
)
(1,186
)
(8
)
Gain on insurance
—
—
(1,017
)
—
Gain on lease termination
—
—
(979
)
—
Net income tax effect
(263
)
(1,701
)
47
(1,921
)
Non-GAAP net income
$
5,790
$
8,379
$
12,951
$
16,511
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share
Diluted shares
8,861,854
9,350,292
8,891,638
9,358,768
GAAP diluted earnings per share
$
0.36
$
0.08
$
1.38
$
0.85
Amortization of intangibles
0.07
0.07
0.13
0.14
Impairment of assets
0.20
0.86
0.20
0.86
Settlement of lawsuits
0.01
0.02
0.03
0.02
Stock-based compensation
0.01
0.05
0.07
0.10
Loss (gain) on sale of businesses and assets
0.02
0.00
(0.13
)
0.00
Gain on insurance
0.00
0.00
(0.11
)
0.00
Gain on lease termination
0.00
0.00
(0.11
)
0.00
Net income tax effect
(0.03
)
(0.18
)
0.01
(0.21
)
Non-GAAP diluted earnings per share
$
0.65
$
0.90
$
1.46
$
1.76
Expand
Reconciliation of GAAP operating income to non-GAAP operating income
Income from operations
$
8,171
$
4,657
$
22,077
$
17,822
Amortization of intangibles
577
640
1,157
1,299
Impairment of assets
1,780
8,033
1,780
8,033
Settlement of lawsuits
127
167
306
167
Stock-based compensation
118
471
588
941
Loss (gain) on sale of businesses and assets
220
(5
)
(1,186
)
(8
)
Gain on insurance
—
—
(1,017
)
—
Non-GAAP operating income
$
10,993
$
13,963
$
23,705
$
28,254
Reconciliation of GAAP operating margin to non-GAAP operating margin
GAAP operating margin
12.4
%
6.4
%
16.1
%
12.2
%
Amortization of intangibles
0.9
%
0.9
%
0.8
%
0.9
%
Impairment of assets
2.7
%
11.1
%
1.3
%
5.5
%
Settlement of lawsuits
0.2
%
0.2
%
0.2
%
0.1
%
Stock-based compensation
0.2
%
0.7
%
0.4
%
0.6
%
Loss (gain) on sale of businesses and assets
0.3
%
0.0
%
(0.9
)%
0.0
%
Gain on insurance
0.0
%
0.0
%
(0.7
)%
0.0
%
Non-GAAP operating margin
16.7
%
19.3
%
17.3
%
19.3
%
Reconciliation of net cash provided by operating activities to free cash flow
Net cash provided by operating activities
$
8,547
$
10,836
$
21,891
$
24,469
Less: Maintenance capital expenditures
1,611
2,011
2,887
2,994
Free cash flow
$
6,936
$
8,825
$
19,004
$
21,475
Expand
RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP SEGMENT INFORMATION
($ in thousands)
For the Three Months Ended March 31, 2025
For the Three Months Ended March 31, 2024
Nightclubs
Bombshells
Other
Corporate
Total
Nightclubs
Bombshells
Other
Corporate
Total
Income (loss) from operations
$
14,603
$
(227
)
$
(680
)
$
(5,525
)
$
8,171
$
11,021
$
699
$
(277
)
$
(6,786
)
$
4,657
Amortization of intangibles
572
1
—
4
577
589
47
—
4
640
Impairment of assets
1,780
—
—
—
1,780
8,033
—
—
—
8,033
Settlement of lawsuits
97
30
—
—
127
167
—
—
—
167
Stock-based compensation
—
—
—
118
118
—
—
—
471
471
Loss (gain) on sale of businesses and assets
93
129
—
(2
)
220
7
4
—
(16
)
(5
)
Non-GAAP operating income (loss)
$
17,145
$
(67
)
$
(680
)
$
(5,405
)
$
10,993
$
19,817
$
750
$
(277
)
$
(6,327
)
$
13,963
GAAP operating margin
25.4
%
(2.8
)%
(641.5
)%
(8.4
)%
12.4
%
18.6
%
5.5
%
(197.9
)%
(9.4
)%
6.4
%
Non-GAAP operating margin
29.8
%
(0.8
)%
(641.5
)%
(8.2
)%
16.7
%
33.4
%
5.9
%
(197.9
)%
(8.8
)%
19.3
%
For the Six Months Ended March 31, 2025
For the Six Months Ended March 31, 2024
Nightclubs
Bombshells
Other
Corporate
Total
Nightclubs
Bombshells
Other
Corporate
Total
Income (loss) from operations
$
35,485
$
1,744
$
(851
)
$
(14,301
)
$
22,077
$
31,390
$
785
$
(473
)
$
(13,880
)
$
17,822
Amortization of intangibles
1,146
2
—
9
1,157
1,180
110
—
9
1,299
Impairment of assets
1,780
—
—
—
1,780
8,033
—
—
—
8,033
Settlement of lawsuits
276
30
—
—
306
167
—
—
—
167
Stock-based compensation
—
—
—
588
588
—
—
—
941
941
Loss (gain) on sale of businesses and assets
109
(1,201
)
—
(94
)
(1,186
)
6
4
—
(18
)
(8
)
Gain on insurance
(1,017
)
—
—
—
(1,017
)
—
—
—
—
—
Non-GAAP operating income (loss)
$
37,779
$
575
$
(851
)
$
(13,798
)
$
23,705
$
40,776
$
899
$
(473
)
$
(12,948
)
$
28,254
GAAP operating margin
29.8
%
9.8
%
(306.1
)%
(10.4
)%
16.1
%
26.1
%
3.1
%
(167.1
)%
(9.5
)%
12.2
%
Non-GAAP operating margin
31.7
%
3.2
%
(306.1
)%
(10.0
)%
17.3
%
33.9
%
3.5
%
(167.1
)%
(8.9
)%
19.3
%
Expand