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13-05-2025
- Business
- Yahoo
Q2 2025 RCI Hospitality Holdings Inc Earnings Call
Mark Moran; Moderator; Equity Animal Eric Langan; Chairman of the Board, President, Chief Executive Officer; RCI Hospitality Holdings Inc Bradley Chhay; Chief Financial Officer; RCI Hospitality Holdings Inc Adam Wyon Mark Moran Good afternoon, everyone, we are going to wait a few more minutes as people gather around before we get this earnings call on the and welcome to RCI Hospitality Holdings 2nd quarter 2025 earnings conference call. You can find the company's presentation on RCI's website. Go to the investor relations section, and all the links are at the top of the turn with me to slide 2 of our presentation. I'm Mark Moran of Equity Animal and I'll be hosting our call today. I'm coming to you from Washington DC Eric Langan, President and CEO of RCI Hospitality, and CFO Bradley Shea are in Houston turn with me to slide 3. RCI is making this call exclusively on Xpas. To ask a question, you will 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. This conference call is being 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 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 occur 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. Eric Langan Thank you, Mark. Please turn to slide for joining us today. Let me run through some key takeaways. All comparisons are year over year unless otherwise we previously announced, revenues reflect the sale divesture of 5 underperforming bombshell segment locations and the effect of severe weather on company same store sales in January and was offset by improving trends in March and contributions from new and rebranded reflects the lower -- the lower same store sales. Offset by lower costs, sales of bombshells-related units addition, during the subsequent and subsequent to the 2nd quarter, we continue to make progress with our back to basics 5-year cap allocation plan. We acquired two upscale adult nightclubs, Flight Club in Detroit and Platinum West in South multiples were in line with our capital allocation strategy. We are also working on another opened the bombshells in Denver and rebranded and reformatted the Chicas Locus in El Paso. This reduced our list of development projects. And we repurchased 56,875 common shares for $2.9 million ending the quarter with approximately 8.8 million shares outstanding. Now, here's Bradley to review our performance in more detail. Bradley Chhay Thank you, Eric. Please turn to slide 7. All comparisons are year over year for the quarter unless otherwise revenues were $65.9 million compared to $72.3 million a difference of $6.4 million primarily due to closures or divestitures of non-performing bombshells and the effect of bad weather, as Eric mentioned 18 club and bombshell locations had to close 1 or 2 days even if clubs and bombshells were able to open, they experienced slower business, particularly on weekends when temperatures were below zero or had heavy snow and ice, for example, in Dallas and Houston. But with warmer temperatures in March, sales began to and other charges were $2.1 million compared to $8.2 million a difference of $6.1 million. That was due to lower impairments in a result, net income attributable to RCIHH common shareholders was $3.2 million compared to $0.8 million a difference of $2.5 million. GAAP EPS was $0.36 per share compared to $0.08 per cash provided for operating activities was $8.5 million compared to $10.8 million a difference of $2.3 million. That was primarily due to a reduced operating margins due to lower a result, free cash flow was $6.9 million compared to $8.8 million. Adjusted EBITDA was $14.2 million compared to $17.2 million and non-GAAP EPS was $0.65 compared to $ please turn to slide 8. Nightclub revenues total $57.5 million a difference of $1.8 million or negative 3.1% year over factors included a 3.5% decline in same store sales and the absence of baby dolls Fort Worth due to a fire. This was partially offset by $1 million from Flight Club acquisition and four rebranded clubs not in same store beverage sales declined 5.3%, service declined 2.9%, however, food, merchandise, and other increased 2.4%. Impairment and other charges totaled $2.0 million with impairments spread across four clubs. This compares to impairments and other charges of $8.2 million in a year ago income was $14.6 million compared to $11 million. Margin was 25.4% of revenues versus 18.6%. Results primarily reflected the impairment decline offset by sales operating income was $17.1 million compared to $19.8 million. Margin was 29.8% of segment revenues versus 33.4%. Non-GAAP results primarily reflected the sales please turn the slide light. Bombshell's revenue totaled $8.2 million a difference of $4.5 million or 35.6% year over key factors here included sale and a vesture of five underperforming locations in the fourth quarter of 24 and the first quarter of 2025, which impacted revenues by $3.7 million a 13.4% decline in same source sales and bad was offset by 2 locations, not in same source cells, consisting of a full quarter of Stafford, Texas location, and a partial quarter of the new Denver results were a loss of $227,000 versus an income of $699,000. Margin was 2.8% of segment revenues versus a positive 5.5% in the year ago a non-GAAP basis, the segment was virtually break even with the loss of $67,000 versus income of $750,000 or negative 0.8% of segment revenues versus positive 5.9%. These results primarily reflect that the cells decline from open locations and bombshell's Denver pre-opening costs, most of which were offset by the cell and divestiture of non-performing turn this light 10. GAAP expenses totaled $5.5 million a decline of $1.3 million. Non-GAAP expenses total $5.4 million a decline of about $0.9 margin was 8.4% of revenues versus 9.4% GAAP and 8.2% versus 8.8% non-GAAP. This decline primarily reflects lower overhead from fewer turn the slide have slides in the upcoming deck that discuss free cash flow and adjusted IBEDA, which are non-GAAP. In advance of that, we wanted to present the closest GAAP equivalents, which are operating income, non-net cash provided by operations, and turn this slide ended the first quarter with cash and cash equivalents of $32.7 million. During the quarter, we used $6 million as part of the Flight Club acquisition and $2.9 million to buy back a percentage of revenues, free cash flow was 11% and adjusted Ibida was 22%. Both primarily reflected lower turn its light debt at March 31st increased $5.9 million from December 31st. The increase primarily reflects financing related to the Flight Club acquisition and the construction of Bombshells, Roulette and Lubbock, offset by scheduled weighted average interest rate was 6.7% compared to 6.6% in a year ago occupancy cost was 8.5% of revenue compared to 8% a year ago, reflecting lower second quarter revenues, not higher to trailing 12 month adjusted IBEDA was 3.56 times compared to 3.32 times in the preceding quarter, reflecting the higher debt at March 31st and lower second quarter to trailing 12 month adjusted IBEDA should decline as cells rebound with warmer weather and growth from locations that have come online more recently and from those anticipated to maturities continue to remain reasonable and manageable. Now here's Eric. Eric Langan Thank you, Bradley. Please turn to slide 14 to review our capital allocation plan calls for allocating our free cash flow in the following man, 40% to capital allocation or to club acquisitions, and 60% to share buybacks, debt reduction, and dividends with the goal of growing free cash flow per share at 10 to 15% turn to slide 15. Operationally, we are focused on our core nightclub business. Reviewing every club to increase same store sales on a regular basis, we'll rebrand, reformat, or or divest our nightclubs plan also involves acquisitions. Our goal is to acquire an average of $6 million of adjusted e-biter per year, focused on the best clubs buying base hits with an occasional home target matrix remain the same, 3 to 5 times adjusted EBITDA for the club and fair market value for the real estate, targeting 100% cash on cash returns in 3 to 5 would be made with cash on hand, bank financing, or seller notes. We would also consider using stock if our valuation bombshells, we're working to improve existing locations, targeting 15% operating margins and return to same store sales also plan to complete 2 new locations in development. The final part of our plan is regularly buying back our stock, flexing up if we consider the price to be particularly undervalued. We also anticipate modest annual dividend the five years, we aim to generate more than $250 million in free cash flow and repurchase a significant amount of shares. By fiscal 29, our targets are $400 million in revenue, $75 million in free cash flow, 7.5 million shares outstanding, and the end result would be doubling free cash flow per share to approximately $10 from last year' turn to slide give you an idea of the progress we've made on the share buyback. 10 years ago, we had about 10.3 million shares outstanding. As of last Friday, we had about 8.8 million shares, which is about a 15% turn to slide Bombshells Denver and Chicas Locus now open, we have 5 remaining developments. 3 are very close to completion. We are targeting Bombshells Lubbock for the opening later this month or early June, and Rick's Cabaret Central City for early next month as bombshells that sometime this are still awaiting construction permits for baby dolls West Fort Worth, and we are awaiting engineering review and zoning plans for the bombshells or for the baby dolls of Fort Worth that was burned in the have also sold our Aurora, Colorado property, which we were going to use for bombshells and listed the other properties for sale in Austin and we continue to make progress with our social media fan site for adult nightclub entertainers and staff. We are out of beta now and we have added a few more clubs and entertainers since our news release last month.I'd like to thank all of our loyal and dedicated team members for all their hard work and efforts and all of our shareholders who believe and make our success possible. Now, here's Mark. Mark Moran (Event Instructions)Now, first we have orchid wealth, please take it [Orchid Wealth], you're still on mute. Hey guys, just a couple of quick questions about financing. Obviously with the market being where it is today, you'll probably encounter a lot of possible sellers. If you guys could use seller financing, what do you feel like is the average rate of return that you're going to have to pay these sellers? And if you have to resort to using bank financing, what's that rate? Eric Langan No, they're both pretty close to the same, about 6 to 7% right now in the current market. Okay, so you guys are essentially paying what people pay on a 30-year fixed mortgage. That's kind of crazy. Eric Langan That's that's right. Yeah, no, that's fantastic. The other part is, any, obviously from a year or two years ago when you guys weren't making acquisitions, have you noticed any difference in the people that you're speaking to about, making deals or you're negotiating with or talking with about how they're approaching it differently from a few years ago or a year ago? Eric Langan Well, a few years ago, everybody was trying to use 2022 numbers which were just astronomically high. And, 24 has been a really bad year for the industry. People are, have been, I mean, we're down, but I mean, I've talked to other people, we've seen other numbers are down, higher percentages than us. Even, so there's, you've got now they're trying to do some type of, average or combination cause they don't want to use the low numbers from 24, but, we're coming up with solutions, to some of these, deals as you've seen with our South Carolina acquisition we've got finished and we've got the Detroit acquisition completed. And we've got several more we're working on right now. It's just a matter of, coming to terms that, makes sense for us. We're not, we're not in a hurry to get anything done unless the terms are right. Then we'll move very rapidly. As a side note, what do you think the average range is of the owners that are out there? I mean, are we dealing with people in their 50s, 60s, 70s, people that are, I'm trying to get an idea of like, when you're looking at the clubs that are out if they're talking to you about selling their children or their relatives don't want to take over the business. So is there an age group you're typically dealing with? Eric Langan I mean, the majority of the guys from their in their late 60s to 80s to low 80s, that we've been talking with so far. There's some guys in their 40s we're talking to right now as well. They're trying to decide if they want to stay in this business or they want to go do something we've had a few buyouts of guys like that in the past. They get married, they have kids, they decide that the adult entertainment businesses, is not something they want to stay in. So we see that sometimes, but I would say the majority are, between the ages of probably 65 and 80. Okay. All right, thank you, guys. Eric Langan Yeah, thank you. Mark Moran Thanks so much. Next up we have Aaron. Aaron, please take it like you're still on up we'll bring Adam, widen up. Adam, once you're connected, please take it away. And you're still on mute, Adam? Hey Adam, you're still on on mute?And I will text you right now. While we're waiting for Adam to unmute, I will pull up Jason, once you're connected, then you are good to go. Adam, you're unmuted if you want to proceed. Eric Langan I still show muted on my end. Both him and Jason are still muted. Mark Moran Jason or Adam, whoever unmutes first can have the next question. I muted. Thank you, Mark. Thank you, Mark. I just want to ask Eric about the new acquisition in Detroit with the new Flight Club and what, rebranding and new improvements you have made to the Flight Club and how the Detroit market is treating you guys. Eric Langan It's been great for us. We really, we really like the market up there, you know. We got our typical welcome where everybody told every entertainer and customer, all the crazy things that we were going to do, which we have never done before. So we had a little rough start in the beginning because a lot of the entertainers were, afraid to come to work because they thought they, I mean, some of the stories they come up with this time were really good. But that lasts about two weeks and we get the word gets out and, we get our customers in, especially as we start seeing some of our VIP guests from other states come to town and know that, it's an RCI club and come in. So we got over that pretty course, we have some great ice storms and some weather that, was very unwelcoming in Detroit as well during the first takeover, but it's going very well now. We've done some minor upgrades. The club was in really good shape, so we upgraded the POS systems, we changed some of their systems and how they treated and find entertainers, how they, did some did some stuff that, it, it's, we just don't, we don't operate that way. So we had to fix those things, and get that, into play. Since then, it's been very good for right on course with the numbers we predicted. Good to hear. What do you think was the biggest operational change that you guys had to do from the previous owners down there? Eric Langan Just treating the way they treat guests. I mean, they wanted everyone to be a VIP, if you weren't spending 200 or 300 bucks when you walked in the door, you weren't treated very well, I don't think, that, that's kind of our of it. And so, we wanted to make it a place where the average guy can come in and have a good time. And if you want a VI VIPO, there's plenty of space in the club for VIPs as well. And so we kind of created that, all around encompassing club like we do at the, in the majority of our markets. I think that was the biggest change we made. Okay, nice. And then one last question with, the adult entertainment business, being very popular on the infamous, 8 mile road. Are you guys looking at any other adult entertainment clubs on 8 Mile, or are you guys just going to stay more in the suburbs of metro Detroit? Eric Langan I mean, we've looked in Detroit. We've looked at about 4 or 5 clubs up there. We were actually on a hunt, I posted on my ex, I posted some pictures of some of the clubs and some of the flight, taking the flight up there and some of those things. We've talked with other owners. We haven't been able to come to terms, with any of them that we agreed to, at this point, but we're always open. I mean, we're always looking for sure. Okay, thank you for your time, Eric and you guys. Mark Moran Thanks very much for your question, up we have [Adam Wyon]. Adam, feel free. Adam Wyon Can you guys hear me? Mark Moran We can. Adam Wyon Perfect. Okay, 3 questions. First question is on the insurance accrual. You guys created your captive, and I know you had like a $5 million charge in the quarter, the previous quarter. Can you sort of give us some clarity on how much, sort of the insurance accrual you had in the quarter on your EBITA that quote unquote wouldn't have been cash, that's sort of burdening your EBITA? Bradley Chhay The accrual for this quarter is 1.3 million Adam, but we look at it on an annualized basis. Our first quarter annualized run rate was about $9.1 million and given the actualization of run rates and whatnot, it's reduced to about $8.8 million. So we won't know until any of these claims come in, any invoices and things like that. But it is a non-cash, you're correct, it is a non-cash just a purely accrual charge, so about $1.3 million. Adam Wyon Right, but you took a big charge in the first quarter, so we wouldn't expect basically huge accruals going forward. Is that right? Correct. Bradley Chhay I just told you I think the annualized is 8.8%. So from that you guys can speculate what the next two quarters, could be based upon our current trends. Now if we have massive claims coming through or invoices or new lawsuits coming in, that can change it, but it just depends on what falls off and what gets added by the actuary. Adam Wyon And how much did and we had a big charge in the first quarter, right? We had like a $5 million-odd charge in the first quarter. That's it. Okay, that makes sense. Can you, I know a lot of restaurants have been complaining about weather and you said, well, weather was bad and you couldn't get in because of snow. I mean, is there any way to sort of quantify like how much IITA we lost in the first quarter because of weather and like if you, I mean, I know it's hard, but I'm saying like, do you have a sense of sort of like sort of what the burden was a little bit like based on if you like, let's say you'd close the location instead of having the people open, like, do you sort of have a sense of like what you think weather hurt you on comps or or Ibita a little bit? Yeah. Eric Langan I think it's about, I mean, I don't, there's no way to know for sure, but I can tell you that I believe that it was over about an eight-week period, and it was about 700,000 a week. And sales declines. And I'll tell you where I get that from is that we were doing $4.9 million to $5.1 million during those first eight weeks, January and February when we're having weather and close downs, and by March we were doing $5.7 million to $5.9 million per week. So if you figure true average should have been 5.7 to 5.9, and it was 4.9 to 5.1, about $700 a week over about an eight-week period. So, if you did that, it's about $5.6 million in sales, and you take that to a margin of about $3 million probably in more because we because we still have the cost, right? We still have the cost. We didn't have any of the revenue. We still have the cost. So, it was considerable, and I think you'll, we'll have a real good idea of it, as we come out of this quarter, because I don't suspect too much weather in April, May or June, to affect us much, at this point, only thing this year is we have, Easter was in April this year instead of March, and and this Mother's Day weekend was a little off for us, but not too bad, but quite a little off. But I think we'll, I think we're going to come in pretty close to about 5.7 million a week average this year or this quarter. It's what I'm, that's what I'm hoping unless we get to pick up at the end of May and in June. So we'll see how that goes. Adam Wyon Okay, on the, and then I got two more questions. On the M&A pipeline, you talked about another club. You're, can you talk a little bit about what you think has contributed to IITA so far between Detroit and then this other one in South Carolina and the other one that you're going that you're working on now and sort of what the pipeline is because it looks like you're Looking like you're averaging a good amount more than 6 million of people right now. Well, I mean, you, well, South. Eric Langan Carolina didn't contribute anything. We didn't close until April, but it will contribute this Detroit didn't contribute much last quarter because we closed in January, but January and February had really bad weather. We were still taking over, so there was some operating costs that we we increased as we first went up there before we got the revenues back up. But it is doing very well for us and it will contribute to. Probably on par with the $2 million run rate that we estimated when we purchased it, so it's going to be in good that's why I think this quarter, April, May, June will be a much better quarter for us to gauge everything on. We also had just recently closed the bombshells. We fired. David Simmons, the director of operations for the restaurant division, we promoted someone else from it then. They've really started working on changing those things and changing costs. We've lowered costs making some other cost changes. We've got the Denver location open. We've got Lubbock opening, hopefully on May 29th, if not by June 5th, I think we'll be open for sure. So Bombshells is going to go through some significant changes in this quarter, and I think we'll get a much better idea of bombshells as well. Plus bombshells was drastically affected by had the Houston Rockets in the playoffs this year, so that helped a little bit. So, hopefully NBA basketball continues to do well for us, through the NBA playoffs. And we've got, Astros baseball backup. So I think we'll be in, a much better idea to see, where bombshells are going by June 30th. That's kind of been, and I think I kind of told you that once before, in a conversation we had where I said, it's going to take till the end of June for bombshells to really for me to figure out, the change we've made, if they're effective, if they're, if we're doing any good with them, and to get these other two locations open, so that any and all drags or bombshells is gone. Adam Wyon Right, but we're not building outside of, like you said you sold the, you sold Aurora and you sold Huntsville. Eric Langan We have listed. We have not sold Huntsville. We sold Aurora. We have the Huntsville property listed. We have the Austin property listed, where we were going to build bombshells locations. Both those, both of those properties are, being listed for sale or lease right we're we'll start working on all that. The Grange is closed. It's been for sale. We've got people looking at it, but, this is, it's a tough restaurant environment right now, so I think it will take, a little bit, maybe by the end of the summer, I suspect that we'll see some movement on those. Adam Wyon Right, but you, it sounds like, you've gotten rid of all the bad bombshells by and large. You've got the final two that you're open, which you're opening because you've, sort of very far along, and then I guess it sounds like your focus is trying to get it to com positively and, figuring out whether it makes sense to divest it or what to do with it. Eric Langan Right? Exactly. I mean, if we can get a good offer for it, we would divest it. I mean, we're not, we, the offers when we put it up for sale the first time, we got ridiculously crazy. Like people wanted us to give them $80 million with assets for no money down and pay us $20 million for 50% of them and, basically have no liability on their side, keep all the liability on us, and but give them a 100% operational control. And we know we can't do that. I mean, that's That's not a fiduciary. I mean, at least if I did that, I couldn't even walk away, right? I'd be stuck with whatever they decided. At least this way, we can close and sell our properties. There's a lot, we have a lot of options still. This is the first quarter we've ever really lost money at Bombshell since its 14 years ago, and the majority of that loss was basically the startup cost for opening Denver. So, I'm very optimistic on a go forward basis that we can get the bombshells to a point where, they level out, the whole in the industry that side, I think even Twin Peaks reported negative same sort of sales for the first time, this last quarter. So it is, it is, it's a tougher market out there in the restaurant side of the actually, it's actually we're seeing a little bit on the club side as well, where some of the drinking is, the number of people are the number of people in the clubs have been pretty steady. Our headcounts have been good, just, the amount of spend is, has been down a little on the regional managers and and that and that that I've been talking with. So, I'm optimistic that as we get into the summer, as these tariff wars settle down and things start turn to normal, they get the new, the Republicans pass a new tax bill and they get some certainty for the next 3 or 4 years, 3. 5 years I guess. I think the economy could do very well. If that happens, that'll be great for us. Adam Wyon I mean, gas, I would think gas prices and all the inflation things that they're looking at like like gas prices and milk prices and all this stuff. I mean, I would think that all of those things should be a tailwind for you guys, not to mention, don't the comps get a lot easier for you guys over the next couple of quarters? I mean, you didn't start comping positively in nightclubs, I think, until The calendar 4th quarter last year. Eric Langan 4th quarter and 1st quarter, and then we were down again so we're flat for we're up 3 and we're down 3. So we're flat for 6 months basically, for I think that was mainly weather related, on the club side. Some of us VIP spend as well, but we were making it up. We were doing very well with putting, like I said, we're putting more people through the doors, and that's working very well for us now. As you see, our food and merchandise sales are up, but people are just aren't drinking as much. They're just not spending as much. And what they're not drinking is the high dollar bottles, the high dollar bottle sales, the liquor they're drinking by the glass and instead of, or by the drink, buying by the drink instead of by the bottle. So bottle service down, VIP spend is down, as you see in our service revenues down, almost 3%. So I think that's really what we've got to watch and focus on. We do have the Knicks in the playoffs and New York is doing very well. Cubs been doing great up are really coming out. They, they're, I think they sold out the Madison Square Garden for the watch parties even when they were playing in Boston. So that was great for the clubs that we're a block away from the garden there. So that's been really good for us. Miami's off a little bit, so hopefully, as we get into the summer months, we can get a little stronger in Miami. We, like I said, the head counts are good, we just gotta get the spin up.I think a lot of that is uncertainty, right? You got to remember, a very large portion of our customer base, especially the high dollar spend, are small business entrepreneurs who make, considerable amounts of money. But if their money is uncertain, then they won't spend as much as they normally would. They'll get, a little more reserved in their spending. And so, as the uncertainty goes away, I believe that we'll see our numbers come back up. Adam Wyon Okay. Thank. Mark Moran You. Yeah. Thanks so much for the questions, up, we have [Man Hands 9]. Please take it away. Thank you for taking my, question, and I really appreciate this venue to, talk with you. With the new administration, making a lot of noise and headlines, as part of their, project 2025, pornography was listed as being They they had wanted it to say that it should be outlawed, and I wondered if you have heard anything about this, if there's anything that you'd want to add about that. Eric Langan No, I, you haven't heard anything. We haven't had any issues. I don't think we're technically in the pornography business. We're not. Really making videos and whatnot, our biggest, protractors are always human trafficking, and we are very avid anti-human trafficking founding member of COS Club Owners Against Sex Trafficking, and we have done everything we can do, and continue to do everything we can do in our powers to fight sex trafficking and human trafficking in all forms. As well as a congressional, our training program has had received a congressional honor and we're going to continue to work with that program.I think, if, and look at any real studies that, less than 0.1% of all human trafficking is through adult nightclubs. Or even has any ties to any adult nightclubs, while our, there are people out there that are against our industry that would TRY to, skew those facts. I think those facts are pretty much given, when you get into real studies, real scientific studies that have, real data. So, I'm not too worried about anything like that. Thanks for taking my question. Mark Moran Fantastic. Thank you very much for the question and thank you, Eric and Bradley, on behalf of the company and our you and good night. Please visit one of our clubs or restaurants to have a great time. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
12-05-2025
- Business
- Business Wire
RCI Reports 2Q25 Results, Hosts X Spaces Call at 4:30 PM ET Today
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: (X log in required). Presentation link: 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 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
Yahoo
08-04-2025
- Business
- Yahoo
RCI Announces Acquisition of Platinum West Gentlemen's Club in West Columbia, SC
HOUSTON, April 08, 2025--(BUSINESS WIRE)--RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today announced closing on the acquisition of Platinum West Gentlemen's Club in West Columbia, South Carolina, the only upscale adult nightclub in the central part of the state. The purchase price totaled $8.0 million, consisting of $3.75 million cash and $2.5 million seller financing at 7% for the club, and $1.75 million cash for associated real estate. The purchase price is in line with RCI's acquisition valuation target of 3-5x annualized adjusted EBITDA for a club and fair market value for its real estate. Eric Langan, President and CEO of RCI Hospitality Holdings, Inc., commented: "This is another exciting acquisition. It fits in well with our other high-end clubs and is the second club purchase since the recent launch of our 5-Year 'Back to Basics' Capital Allocation Plan." "Platinum West is a well-established business with a seasoned management team. It adds to our six other clubs in Southeast states and should benefit from our marketing, purchasing, and systems know-how." The 10,000 square-foot establishment located at 1995 Old Dunbar Road, West Columbia, SC, is 5 minutes by car from Columbia Metropolitan Airport, 10 minutes from downtown Columbia, and 25 minutes from Fort Jackson, the U.S. Army's main facility for basic combat training. Platinum West is open Monday through Thursday from 11:00 a.m. to 4:00 a.m., Friday and Saturday from 11:00 a.m. to 6:00 a.m., and Sunday from 4:00 p.m. to 4:00 a.m. Visit 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 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. View source version on Contacts Media & Investor Contacts Gary Fishman and Michael Wichman at 212-532-3232 or gfishman@ and mwichman@
Yahoo
10-02-2025
- Business
- Yahoo
RCI to Host 1Q25 Conference Call on X Spaces on Monday, February 10
HOUSTON, February 07, 2025--(BUSINESS WIRE)--RCI Hospitality Holdings, Inc. (Nasdaq: RICK) plans to file its 10-Q and report financial results for the fiscal 2025 first quarter ended December 31, 2024 after the market closes on Monday, February 10. The company will hold a related conference call on X Spaces at 4:30 PM ET. X Spaces Call & Presentation Hosted by RCI President and CEO Eric Langan, CFO Bradley Chhay, and Mark Moran of Equity Animal Call link: (X log in required) Presentation link: To ask questions during Q&A: 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. 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 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. View source version on Contacts Media & Investor ContactsGary Fishman and Steven Anreder at 212-532-3232 or and Sign in to access your portfolio
Yahoo
10-02-2025
- Business
- Yahoo
RCI Reports 1Q25 Results, Hosts X Spaces Call at 4:30 PM ET Today
HOUSTON, February 10, 2025--(BUSINESS WIRE)--RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2025 first quarter ended December 31, 2024. The Company also filed its Form 10-Q today. Summary Financials (in millions, except EPS) 1Q25 1Q24 Total revenues $71.5 $73.9 EPS $1.01 $0.77 Non-GAAP EPS1 $0.80 $0.87 Other gains, net $(2.2) $0.0 Net cash provided by operating activities $13.3 $13.6 Free cash flow1 $12.1 $12.7 Net income attributable to RCIHH common stockholders $9.0 $7.2 Adjusted EBITDA1 $15.7 $17.5 Weighted average shares used in computing EPS – basic and diluted 8.92 9.37 1 See "Non-GAAP Financial Measures" below. 1Q25 Summary (Comparisons are to the year-ago period unless indicated otherwise) Eric Langan, President and CEO, said: "Nightclubs total and same-store sales increased, while GAAP and non-GAAP segment operating profit were approximately level with last year, despite the absence of a club due to fire in July. Bombshells total sales declined as expected with the sale/closure of underperforming locations, but GAAP and non-GAAP segment operating profit and margin improved. Consolidated net cash provided by operating activities and free cash flow nearly matched year-ago levels, and we continued to make progress with our Back to Basics 5-Year Capital Allocation Plan." Back to Basics 5-Year Capital Allocation Plan (FY25-29) 1Q25: Sale/closure of four underperforming Bombshells segment locations, for a total of five since September 2024. 1Q25: Repurchased 66,000 common shares for $3.2 million ($48.76 average per share), with 8,889,000 shares outstanding at December 31, 2024. 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). The location is expected to generate an estimated $2.0 million in annualized EBITDA. 2Q25: Opened an 8,500 square-foot Bombshells in downtown Denver. 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: (X log in required). Presentation link: 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. 1Q25 Results (Comparisons are to the year-ago period unless indicated otherwise) Nightclubs segment: Revenues of $61.7 million increased by 1.1%. Sales primarily reflected a 3.7% increase in same-store sales, three new and reformatted clubs in Texas, and the absence of Baby Dolls Fort Worth due to fire in July.2 By type of revenue, food, merchandise and other increased by 8.6%; alcoholic beverages increased by 3.0%; and service declined by 3.7%. The quarter included a gain of $1.0 million from additional cash insurance proceeds related to the July fire. Operating income was $20.9 million (33.8% of segment revenues) compared to $20.4 million (33.4%). Non-GAAP operating income, which does not include the gain, was $20.6 million (33.4% of segment revenues) compared to $21.0 million (34.3%). Bombshells segment: Revenues of $9.6 million declined 24.7%. Sales primarily reflected the sale/closure of underperforming locations, a 7.5% decline in SSS, and a full quarter of the Stafford, TX location, which opened in mid-November 2023.2 The quarter included a gain of $1.3 million for a Bombshells that was sold. Operating income was $2.0 million (20.6% of segment revenues) compared to $86,000 (0.7%). Non-GAAP operating income, which does not include the gain, was $642,000 (6.7% of segment revenues) compared to $149,000 (1.2%). Corporate segment: Expenses totaled $8.8 million (12.3% of total revenues) compared to $7.1 million (9.6%). Non-GAAP expenses totaled $8.4 million (11.7% of total revenues) compared to $6.6 million (9.0%). The increase reflected an expense of approximately $1.7 million to establish a self-insurance reserve. Other gains, net of $2.2 million within consolidated operations included the fire insurance proceeds and the gain on sale as discussed in the Nightclubs and Bombshells paragraphs above, respectively. Income tax expense was $1.85 million compared to $1.80 million. The effective tax rate was 16.9% compared to 19.9%. Weighted average shares outstanding of 8.92 million decreased 4.8% due to share buybacks. Debt was $235.5 million at December 31, 2024, compared to $238.2 million at September 30, 2024. The difference primarily reflected scheduled pay downs. 2 See our January 8, 2025, news release on 1Q25 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) settlement of lawsuits, (c) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, and (e) 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) settlement of lawsuits, (c) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, (e) stock-based compensation, (f) gains or losses on lease termination, and (g) 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 17.7% and 19.9% effective tax rate of the pre-tax non-GAAP income before taxes for the three months ended December 31, 2024, and 2023, 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) income tax expense, (c) net interest expense, (d) settlement of lawsuits, (e) gains or losses on sale of businesses and assets, (f) gains or losses on insurance, (g) stock-based compensation, and (h) 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 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 INCOME (in thousands, except per share, number of shares, and percentage data) For the Three Months Ended December 31, 2024 December 31, 2023 Amount % ofRevenue Amount % ofRevenue Revenues Sales of alcoholic beverages $ 32,188 45.0 % $ 33,316 45.1 % Sales of food and merchandise 10,106 14.1 % 10,802 14.6 % Service revenues 24,181 33.8 % 25,119 34.0 % Other 5,008 7.0 % 4,670 6.3 % Total revenues 71,483 100.0 % 73,907 100.0 % Operating expenses Cost of goods sold Alcoholic beverages sold 5,846 18.2 % 6,281 18.9 % Food and merchandise sold 3,563 35.3 % 4,038 37.4 % Service and other 72 0.2 % 40 0.1 % Total cost of goods sold (exclusive of items shown below) 9,481 13.3 % 10,359 14.0 % Salaries and wages 20,564 28.8 % 21,332 28.9 % Selling, general and administrative 26,207 36.7 % 25,201 34.1 % Depreciation and amortization 3,569 5.0 % 3,853 5.2 % Other gains, net (2,244 ) (3.1 )% (3 ) — % Total operating expenses 57,577 80.5 % 60,742 82.2 % Income from operations 13,906 19.5 % 13,165 17.8 % Other income (expenses) Interest expense (4,152 ) (5.8 )% (4,216 ) (5.7 )% Interest income 179 0.3 % 94 0.1 % Gain on lease termination 979 1.4 % — — % Income before income taxes 10,912 15.3 % 9,043 12.2 % Income tax expense 1,847 2.6 % 1,799 2.4 % Net income 9,065 12.7 % 7,244 9.8 % Net income attributable to noncontrolling interests (41 ) (0.1 )% (18 ) — % Net income attributable to RCIHH common shareholders $ 9,024 12.6 % $ 7,226 9.8 % Earnings per share Basic and diluted $ 1.01 $ 0.77 Weighted average shares used in computing earnings per share Basic and diluted 8,920,774 9,367,151 RCI HOSPITALITY HOLDINGS, INC. SEGMENT INFORMATION (in thousands) For the Three Months Ended December 31,2024 December 31,2023 Revenues Nightclubs $ 61,724 $ 61,033 Bombshells 9,587 12,731 Other 172 143 $ 71,483 $ 73,907 Income (loss) from operations Nightclubs $ 20,882 $ 20,369 Bombshells 1,971 86 Other (171 ) (196 ) Corporate (8,776 ) (7,094 ) $ 13,906 $ 13,165 RCI HOSPITALITY HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Three Months Ended December 31,2024 December 31,2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 9,065 $ 7,244 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,569 3,853 Deferred income tax benefit (389 ) — Gain on sale of businesses and assets (1,463 ) (3 ) Amortization and writeoff of debt discount and issuance costs 63 163 Doubtful accounts expense on notes receivable — 22 Gain on insurance (1,150 ) — Noncash lease expense 658 762 Stock-based compensation 470 470 Changes in operating assets and liabilities, net of business acquisitions: Receivables 2,373 1,229 Inventories (4 ) (218 ) Prepaid expenses, other current, and other assets (598 ) (9,029 ) Accounts payable, accrued, and other liabilities 750 9,140 Net cash provided by operating activities 13,344 13,633 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of businesses and assets 129 — Proceeds from insurance 1,150 — Proceeds from notes receivable 71 55 Payments for property and equipment and intangible assets (5,754 ) (5,135 ) Net cash used in investing activities (4,404 ) (5,080 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from debt obligations 2,963 701 Payments on debt obligations (5,694 ) (6,352 ) Purchase of treasury stock (3,218 ) (2,072 ) Payment of dividends (623 ) (562 ) Payment of loan origination costs — (136 ) Net cash used in financing activities (6,572 ) (8,421 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 2,368 132 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32,350 21,023 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 34,718 $ 21,155 RCI HOSPITALITY HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands) December 31,2024 September 30,2024 ASSETS Current assets Cash and cash equivalents $ 34,718 $ 32,350 Receivables, net 3,519 5,832 Inventories 4,640 4,676 Prepaid expenses and other current assets 4,226 4,427 Total current assets 47,103 47,285 Property and equipment, net 282,621 280,075 Operating lease right-of-use assets, net 25,573 26,231 Notes receivable, net of current portion 4,103 4,174 Goodwill 61,911 61,911 Intangibles, net 162,881 163,461 Other assets 2,026 1,227 Total assets $ 586,218 $ 584,364 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 5,010 $ 5,637 Accrued liabilities 20,514 20,280 Current portion of debt obligations, net 17,788 18,871 Current portion of operating lease liabilities 3,008 3,290 Total current liabilities 46,320 48,078 Deferred tax liability, net 22,304 22,693 Debt, net of current portion and debt discount and issuance costs 217,741 219,326 Operating lease liabilities, net of current portion 27,471 30,759 Other long-term liabilities 3,611 398 Total liabilities 317,447 321,254 Commitments and contingencies Equity Preferred stock — — Common stock 89 90 Additional paid-in capital 58,731 61,511 Retained earnings 210,160 201,759 Total RCIHH stockholders' equity 268,980 263,360 Noncontrolling interests (209 ) (250 ) Total equity 268,771 263,110 Total liabilities and equity $ 586,218 $ 584,364 RCI HOSPITALITY HOLDINGS, INC. NON-GAAP FINANCIAL MEASURES (in thousands, except per share and percentage data) For the Three Months Ended December 31,2024 December 31,2023 Reconciliation of GAAP net income to Adjusted EBITDA Net income attributable to RCIHH common stockholders $ 9,024 $ 7,226 Income tax expense (benefit) 1,847 1,799 Interest expense, net 3,973 4,122 Depreciation and amortization 3,569 3,853 Settlement of lawsuits 179 — Gain on sale of businesses and assets (1,406 ) (3 ) Gain on insurance (1,017 ) — Stock-based compensation 470 470 Gain on lease termination (979 ) — Adjusted EBITDA $ 15,660 $ 17,467 Reconciliation of GAAP net income to non-GAAP net income Net income attributable to RCIHH common stockholders $ 9,024 $ 7,226 Amortization of intangibles 580 659 Settlement of lawsuits 179 — Stock-based compensation 470 470 Gain on sale of businesses and assets (1,406 ) (3 ) Gain on insurance (1,017 ) — Gain on lease termination (979 ) — Net income tax effect 310 (220 ) Non-GAAP net income $ 7,161 $ 8,132 Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted shares 8,920,774 9,367,151 GAAP diluted earnings per share $ 1.01 $ 0.77 Amortization of intangibles 0.07 0.07 Settlement of lawsuits 0.02 0.00 Stock-based compensation 0.05 0.05 Gain on sale of businesses and assets (0.16 ) 0.00 Gain on insurance (0.11 ) 0.00 Gain on lease termination (0.11 ) 0.00 Net income tax effect 0.03 (0.02 ) Non-GAAP diluted earnings per share $ 0.80 $ 0.87 Reconciliation of GAAP operating income to non-GAAP operating income Income from operations $ 13,906 $ 13,165 Amortization of intangibles 580 659 Settlement of lawsuits 179 — Stock-based compensation 470 470 Gain on sale of businesses and assets (1,406 ) (3 ) Gain on insurance (1,017 ) — Non-GAAP operating income $ 12,712 $ 14,291 Reconciliation of GAAP operating margin to non-GAAP operating margin GAAP operating margin 19.5 % 17.8 % Amortization of intangibles 0.8 % 0.9 % Settlement of lawsuits 0.3 % 0.0 % Stock-based compensation 0.7 % 0.6 % Gain on sale of businesses and assets (2.0 )% 0.0 % Gain on insurance (1.4 )% 0.0 % Non-GAAP operating margin 17.8 % 19.3 % Reconciliation of net cash provided by operating activities to free cash flow Net cash provided by operating activities $ 13,344 $ 13,633 Less: Maintenance capital expenditures 1,276 983 Free cash flow $ 12,068 $ 12,650 RCI HOSPITALITY HOLDINGS, INC. NON-GAAP SEGMENT INFORMATION ($ in thousands) For the Three Months Ended December 31, 2024 Nightclubs Bombshells Other Corporate Total Income (loss) from operations $ 20,882 $ 1,971 $ (171 ) $ (8,776 ) $ 13,906 Amortization of intangibles 574 1 — 5 580 Settlement of lawsuits 179 — — — 179 Stock-based compensation — — — 470 470 Loss (gain) on sale of businesses and assets 16 (1,330 ) — (92 ) (1,406 ) Gain on insurance (1,017 ) — — — (1,017 ) Non-GAAP operating income (loss) $ 20,634 $ 642 $ (171 ) $ (8,393 ) $ 12,712 GAAP operating margin 33.8 % 20.6 % (99.4 )% (12.3 )% 19.5 % Non-GAAP operating margin 33.4 % 6.7 % (99.4 )% (11.7 )% 17.8 % For the Three Months Ended December 31, 2023 Nightclubs Bombshells Other Corporate Total Income (loss) from operations $ 20,369 $ 86 $ (196 ) $ (7,094 ) $ 13,165 Amortization of intangibles 591 63 — 5 659 Stock-based compensation — — — 470 470 Gain on sale of businesses and assets (1 ) — — (2 ) (3 ) Non-GAAP operating income (loss) $ 20,959 $ 149 $ (196 ) $ (6,621 ) $ 14,291 GAAP operating margin 33.4 % 0.7 % (137.1 )% (9.6 )% 17.8 % Non-GAAP operating margin 34.3 % 1.2 % (137.1 )% (9.0 )% 19.3 % View source version on Contacts Media & Investor Contacts Gary Fishman and Steven Anreder at 212-532-3232 or and
