8-K
Rci Hospitality Holdings, Inc. (RICK)
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2024
RCI HOSPITALITY HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Texas | 001-13992 | 76-0458229 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
10737 Cutten Road
Houston, Texas 77066
(Address of Principal Executive Offices, Including Zip Code)
(281) 397-6730
(Issuer’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.01 par value | RICK | The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On August 8, 2024, we issued a press release announcing results for the fiscal quarter ended June 30, 2024, and the filing of our quarterly report on Form 10-Q for that quarter. Also on August 8, 2024, we will hold a conference call to discuss these results and related matters. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.
This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release of RCI Hospitality Holdings, Inc. dated August 8, 2024 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RCI HOSPITALITY HOLDINGS, INC. | ||
|---|---|---|
| Date: August 8, 2024 | By: | /s/ Eric Langan |
| Eric Langan | ||
| President and Chief Executive Officer |
3
Document
RCI Reports 3Q24 Results; X Spaces Call at 4:30 PM ET Today
HOUSTON—August 8, 2024—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2024 third quarter ended June 30, 2024. The company also filed its Form 10-Q today.
| Summary Financials (in millions except EPS) | 3Q24 | 3Q23 | 9M24 | 9M23 |
|---|---|---|---|---|
| Total revenues | $76.2 | $77.1 | $222.4 | $218.5 |
| EPS | $(0.56) | $0.96 | $0.30 | $2.91 |
| Non-GAAP EPS1 | $1.35 | $1.30 | $3.11 | $3.80 |
| Other charges, net | $18.3 | $2.6 | $26.5 | $5.7 |
| Net cash provided by operating activities | $15.8 | $15.3 | $40.2 | $47.0 |
| Free cash flow1 | $13.8 | $14.3 | $35.3 | $42.1 |
| Net income (loss) attributable to RCIHH common stockholders | $(5.2) | $9.1 | $2.8 | $27.1 |
| Adjusted EBITDA1 | $20.1 | $22.7 | $54.8 | $64.8 |
| Weighted average shares used in computing EPS – basic and diluted | 9.28 | 9.43 | 9.33 | 9.31 |
1 See “Non-GAAP Financial Measures” below
Share Repurchases
In 3Q24, RCI repurchased 202,630 common shares for $9.2 million (average $45.27 per share). As of August 5, 2024, RCI repurchased an additional 133,244 common shares for $6.0 million (average $44.86 per share), resulting in 8,996,546 shares of common stock outstanding and $22.9 million in remaining purchase authorization.
Eric Langan, President and CEO, said:
"The third quarter reflected the first full quarter of our Back to Basics approach to business and our Capital Allocation Strategy. We are taking aggressive action to increase revenues, reduce costs, and expand margins, concentrating on our club business and buying back stock, all with the goal of increasing free cash flow per share.
"Nightclubs achieved record revenues, increasing year over year, on a same-store basis, and from last quarter. While operating margin was negatively impacted by non-cash impairments, it increased sequentially on a non-GAAP basis.
"Bombshells revenues are now up two quarters in a row. While operating margin was similarly affected by non-cash impairments, it expanded sequentially on a non-GAAP basis. These improvements reflected the new marketing and cost cutting moves implemented mid-February.
"Finally, I’m pleased to report that as of last week we have reached our short-term buyback objective of reducing shares outstanding to less than 9 million. As part of that effort, we bought back a total of 700,000 shares in the open market since February 2022, reducing our share count by the same number used in our big October 2021 and March 2023 acquisitions, and we did it at a 22% discount to the average share price used in those transactions.2
"Looking ahead, we are laser focused on opening our reformatted and new clubs and Bombshells currently under development; rebuilding Baby Dolls Fort Worth as quickly and efficiently as possible; reviewing all operating units to ensure they meet our financial objectives; selling non-income producing real estate to free up more cash and/or reduce debt; and using our cash flow to facilitate the buyback of more shares and acquisition of clubs."
X-Spaces Conference Call at 4:30 PM ET Today
Hosted by RCI President & CEO Eric Langan, CFO Bradley Chhay, and Mark Moran of Equity Animal
Call link: https://x.com/RicksCEO/status/1821258346877612301 (X log in required)
Presentation link: https://www.rcihospitality.com/investor-relations/
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
3Q24 Results (Comparisons are to the year-ago period unless indicated otherwise)
Nightclubs segment: Revenues of $62.8 million increased by 0.6%, primarily reflecting 1.7% same-store sales growth and two new and reformatted clubs, partially offset by the temporary closing of clubs being reformatted to liquor from BYOB and severe weather in Texas and South Florida.3 By type of revenue, alcoholic beverages increased by 4.9%; food, merchandise and other increased by 5.1%; and service decreased by 5.3%. The differing growth rates primarily reflected a higher alcohol and lower service sales mix from clubs acquired over the past year and a half.
Non-cash impairment totaled $7.6 million compared to $2.6 million, resulting in operating income and margin of $13.6 million and 21.7% of revenues compared to $20.4 million and 32.7%, respectively. Non-GAAP operating income and margin was $21.9 million and 34.9% of revenues compared to $23.6 million and 37.7%, respectively.
Compared to last quarter, revenues increased by 5.8%, and operating margin was 21.7% compared to 18.6%. On a non-GAAP basis, operating margin was 34.9% compared to 33.4%. The non-GAAP margin increase reflected higher sales, including service, and reduced costs.
Bombshells segment: Revenues of $13.1 million declined 8.7%, primarily reflecting a 16.2% decline in SSS and temporary closings due to severe weather in Texas, partially offset by three locations not in SSS (Bombshells in San Antonio and Stafford in Texas and Cherry Creek Food Hall & Brewery in Greenwood Village, CO, with its Bombshells Kitchen).3
Non-cash impairment totaled $10.3 million, resulting in an operating loss and margin of $8.9 million and (67.8)% of revenues compared to income of $1.7 million and 11.8%, respectively. Non-GAAP operating income and margin was $1.4 million and 10.8% of revenues compared to $1.8 million and 12.8%, respectively. The decline in profitability primarily reflected lower SSS.
Compared to last quarter, revenues increased 2.9%, and operating margin was (67.8)% of revenues compared to 5.5%. On a non-GAAP basis, operating margin was 10.8% compared to 5.9%. The revenue and non-GAAP margin increases reflect the first full quarter of changes initiated mid-February 2024.
Corporate segment: Expenses totaled $7.2 million or 9.4% of total revenues compared to $6.3 million and 8.1%, respectively. Non-GAAP expenses totaled $6.4 million or 8.4% of total revenues compared to $5.8 million or 7.5%, respectively. The expense increase primarily reflected additional corporate level management, accounting and professional services due to recently acquired clubs, and new projects. Compared to 2Q24, expenses increased 5.4% and expense margin was flat at 9.4%, and on a non-GAAP basis, 8.4% compared to 8.8%.
Other charges included $7.6 million in goodwill, SOB and leasehold improvements impairment related to six clubs and $10.3 million in operating lease right-of-use asset and leasehold improvements impairment related to five Bombshells.
Income taxes were a benefit of $1.4 million compared to an expense of $2.3 million. The effective income tax rate was 21.5% compared to 20.1%.
Weighted average shares outstanding of 9.28 million decreased 1.6% due to share buybacks partially offset by shares issued in the 2Q23 Baby Dolls-Chicas Locas acquisition.
Debt was $245.4 million at June 30, 2024 compared to $231.9 million at March 31, 2024. The increase reflected a previously announced $20 million bank loan, partially offset by scheduled pay downs.
2 A total of 700,000 shares valued at $46.0 million were used in our big October 2021 (500,000 shares @ $60) and March 2023 acquisitions (200,000 shares @ $80). The first 700,000 shares bought back in the open market since February 2022 after the 2021 acquisition were acquired for $35.9 million (average $51.31 per share). This represents a discount of $10.1 million or 22% of the value of shares used in the two acquisitions.
3 See our July 11, 2024, news release on 3Q24 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, 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 11.7% and 21.6% effective tax rate of the pre-tax non-GAAP income before taxes for the nine months ended June 30, 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) impairment of assets, (c) income tax expense (benefit), (d) net interest expense, (e) settlement of lawsuits, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, and (h) stock-based compensation. 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, (vi) the impact of the COVID-19 pandemic, and (vii) 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, 2023, 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.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or gary.fishman@anreder.com and steven.anreder@anreder.com
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||
| (in thousands, except per share, number of shares, and percentage data) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Sales of alcoholic beverages | $ | 34,442 | 45.2 | % | $ | 34,151 | 44.3 | % | $ | 100,665 | 45.3 | % | $ | 93,937 | 43.0 | % | |||||||||||||
| Sales of food and merchandise | 11,736 | 15.4 | % | 11,405 | 14.8 | % | 33,606 | 15.1 | % | 32,757 | 15.0 | % | |||||||||||||||||
| Service revenues | 25,268 | 33.2 | % | 26,663 | 34.6 | % | 73,951 | 33.3 | % | 77,916 | 35.7 | % | |||||||||||||||||
| Other | 4,734 | 6.2 | % | 4,836 | 6.3 | % | 14,148 | 6.4 | % | 13,930 | 6.4 | % | |||||||||||||||||
| Total revenues | 76,180 | 100.0 | % | 77,055 | 100.0 | % | 222,370 | 100.0 | % | 218,540 | 100.0 | % | |||||||||||||||||
| Operating expenses | |||||||||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||||||||
| Alcoholic beverages sold | 6,273 | 18.2 | % | 6,397 | 18.7 | % | 18,445 | 18.3 | % | 17,136 | 18.2 | % | |||||||||||||||||
| Food and merchandise sold | 4,197 | 35.8 | % | 4,106 | 36.0 | % | 12,228 | 36.4 | % | 11,429 | 34.9 | % | |||||||||||||||||
| Service and other | 36 | 0.1 | % | 26 | 0.1 | % | 111 | 0.1 | % | 91 | 0.1 | % | |||||||||||||||||
| Total cost of goods sold (exclusive of items shown below) | 10,506 | 13.8 | % | 10,529 | 13.7 | % | 30,784 | 13.8 | % | 28,656 | 13.1 | % | |||||||||||||||||
| Salaries and wages | 20,992 | 27.6 | % | 20,578 | 26.7 | % | 63,299 | 28.5 | % | 58,682 | 26.9 | % | |||||||||||||||||
| Selling, general and administrative | 25,057 | 32.9 | % | 23,803 | 30.9 | % | 74,911 | 33.7 | % | 68,561 | 31.4 | % | |||||||||||||||||
| Depreciation and amortization | 3,901 | 5.1 | % | 4,041 | 5.2 | % | 11,638 | 5.2 | % | 11,108 | 5.1 | % | |||||||||||||||||
| Other charges, net | 18,260 | 24.0 | % | 2,589 | 3.4 | % | 26,452 | 11.9 | % | 5,693 | 2.6 | % | |||||||||||||||||
| Total operating expenses | 78,716 | 103.3 | % | 61,540 | 79.9 | % | 207,084 | 93.1 | % | 172,700 | 79.0 | % | |||||||||||||||||
| Income (loss) from operations | (2,536) | (3.3) | % | 15,515 | 20.1 | % | 15,286 | 6.9 | % | 45,840 | 21.0 | % | |||||||||||||||||
| Other income (expenses) | |||||||||||||||||||||||||||||
| Interest expense | (4,240) | (5.6) | % | (4,316) | (5.6) | % | (12,455) | (5.6) | % | (11,680) | (5.3) | % | |||||||||||||||||
| Interest income | 130 | 0.2 | % | 87 | 0.1 | % | 320 | 0.1 | % | 268 | 0.1 | % | |||||||||||||||||
| Income (loss) before income taxes | (6,646) | (8.7) | % | 11,286 | 14.6 | % | 3,151 | 1.4 | % | 34,428 | 15.8 | % | |||||||||||||||||
| Income tax expense (benefit) | (1,426) | (1.9) | % | 2,269 | 2.9 | % | 378 | 0.2 | % | 7,447 | 3.4 | % | |||||||||||||||||
| Net income (loss) | (5,220) | (6.9) | % | 9,017 | 11.7 | % | 2,773 | 1.2 | % | 26,981 | 12.3 | % | |||||||||||||||||
| Net loss (income) attributable to noncontrolling interests | (13) | — | % | 68 | 0.1 | % | (6) | — | % | 74 | — | % | |||||||||||||||||
| Net income (loss) attributable to RCIHH common shareholders | $ | (5,233) | (6.9) | % | $ | 9,085 | 11.8 | % | $ | 2,767 | 1.2 | % | $ | 27,055 | 12.4 | % | |||||||||||||
| Earnings (loss) per share | |||||||||||||||||||||||||||||
| Basic and diluted | |||||||||||||||||||||||||||||
| $ | (0.56) | $ | 0.96 | $ | 0.30 | $ | 2.91 | ||||||||||||||||||||||
| Weighted average shares used in computing earnings (loss) per share | |||||||||||||||||||||||||||||
| Basic and diluted | 9,278,921 | 9,430,225 | 9,332,249 | 9,308,624 | |||||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| SEGMENT INFORMATION | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Nightclubs | $ | 62,823 | $ | 62,449 | $ | 183,228 | $ | 175,805 | |||||||||||||||||||||
| Bombshells | 13,139 | 14,397 | 38,641 | 42,143 | |||||||||||||||||||||||||
| Other | 218 | 209 | 501 | 592 | |||||||||||||||||||||||||
| $ | 76,180 | $ | 77,055 | $ | 222,370 | $ | 218,540 | ||||||||||||||||||||||
| Income (loss) from operations | |||||||||||||||||||||||||||||
| Nightclubs | $ | 13,640 | $ | 20,392 | $ | 45,030 | $ | 61,127 | |||||||||||||||||||||
| Bombshells | (8,914) | 1,701 | (8,129) | 5,323 | |||||||||||||||||||||||||
| Other | (108) | (300) | (581) | (653) | |||||||||||||||||||||||||
| Corporate | (7,154) | (6,278) | (21,034) | (19,957) | |||||||||||||||||||||||||
| $ | (2,536) | $ | 15,515 | $ | 15,286 | $ | 45,840 | ||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||||||||
| Net income (loss) | $ | (5,220) | $ | 9,017 | $ | 2,773 | $ | 26,981 | |||||||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 3,901 | 4,041 | 11,638 | 11,108 | |||||||||||||||||||||||||
| Impairment of assets | 17,931 | 2,631 | 25,964 | 3,293 | |||||||||||||||||||||||||
| Deferred income tax benefit | (4,508) | (790) | (6,419) | (790) | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 79 | (183) | 116 | (872) | |||||||||||||||||||||||||
| Amortization and writeoff of debt discount and issuance costs | 150 | 162 | 462 | 453 | |||||||||||||||||||||||||
| Doubtful accounts expense on notes receivable | — | — | 22 | — | |||||||||||||||||||||||||
| Gain on insurance | — | — | — | (91) | |||||||||||||||||||||||||
| Noncash lease expense | 783 | 763 | 2,318 | 2,226 | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 470 | 1,412 | 2,117 | |||||||||||||||||||||||||
| Changes in operating assets and liabilities, net of business acquisitions: | |||||||||||||||||||||||||||||
| Accounts receivable | 1,985 | 772 | 3,052 | 1,480 | |||||||||||||||||||||||||
| Inventories | (70) | — | (212) | 79 | |||||||||||||||||||||||||
| Prepaid expenses, other current, and other assets | 2,936 | 2,103 | (3,484) | (3,602) | |||||||||||||||||||||||||
| Accounts payable, accrued, and other liabilities | (2,674) | (3,666) | 2,591 | 4,622 | |||||||||||||||||||||||||
| Net cash provided by operating activities | 15,764 | 15,320 | 40,233 | 47,004 | |||||||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||||||||
| Proceeds from sale of businesses and assets | 1,950 | 1 | 1,950 | 2,811 | |||||||||||||||||||||||||
| Proceeds from insurance | — | — | — | 91 | |||||||||||||||||||||||||
| Proceeds from notes receivable | 63 | 57 | 179 | 170 | |||||||||||||||||||||||||
| Payments for property and equipment and intangible assets | (6,417) | (9,029) | (19,219) | (31,119) | |||||||||||||||||||||||||
| Acquisition of businesses, net of cash acquired | — | — | — | (29,000) | |||||||||||||||||||||||||
| Net cash used in investing activities | (4,404) | (8,971) | (17,090) | (57,047) | |||||||||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||||||||
| Proceeds from debt obligations | 20,000 | — | 22,657 | 11,595 | |||||||||||||||||||||||||
| Payments on debt obligations | (6,507) | (4,950) | (17,137) | (11,431) | |||||||||||||||||||||||||
| Purchase of treasury stock | (9,173) | — | (12,775) | (98) | |||||||||||||||||||||||||
| Payment of dividends | (552) | (565) | (1,674) | (1,580) | |||||||||||||||||||||||||
| Payment of loan origination costs | (154) | (34) | (290) | (239) | |||||||||||||||||||||||||
| Share in return of investment by noncontrolling partner | — | — | — | (600) | |||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | 3,614 | (5,549) | (9,219) | (2,353) | |||||||||||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 14,974 | 800 | 13,924 | (12,396) | |||||||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 19,973 | 22,784 | 21,023 | 35,980 | |||||||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 34,947 | $ | 23,584 | $ | 34,947 | $ | 23,584 | |||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||
| June 30, 2024 | September 30, 2023 | June 30, 2023 | |||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 34,947 | $ | 21,023 | $ | 23,584 | |||||||||||||||||||||||
| Accounts receivable, net | 6,794 | 9,846 | 7,433 | ||||||||||||||||||||||||||
| Current portion of notes receivable | 263 | 249 | 244 | ||||||||||||||||||||||||||
| Inventories | 4,624 | 4,412 | 4,571 | ||||||||||||||||||||||||||
| Prepaid expenses and other current assets | 5,457 | 1,943 | 5,028 | ||||||||||||||||||||||||||
| Total current assets | 52,085 | 37,473 | 40,860 | ||||||||||||||||||||||||||
| Property and equipment, net | 283,834 | 282,705 | 277,530 | ||||||||||||||||||||||||||
| Operating lease right-of-use assets, net | 26,880 | 34,931 | 35,683 | ||||||||||||||||||||||||||
| Notes receivable, net of current portion | 4,228 | 4,443 | 4,507 | ||||||||||||||||||||||||||
| Goodwill | 61,911 | 70,772 | 78,684 | ||||||||||||||||||||||||||
| Intangibles, net | 170,709 | 179,145 | 181,262 | ||||||||||||||||||||||||||
| Other assets | 1,342 | 1,415 | 1,581 | ||||||||||||||||||||||||||
| Total assets | $ | 600,989 | $ | 610,884 | $ | 620,107 | |||||||||||||||||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||||||||||||
| Current liabilities | |||||||||||||||||||||||||||||
| Accounts payable | $ | 5,519 | $ | 6,111 | $ | 7,762 | |||||||||||||||||||||||
| Accrued liabilities | 20,155 | 16,051 | 17,732 | ||||||||||||||||||||||||||
| Current portion of debt obligations, net | 28,889 | 22,843 | 23,824 | ||||||||||||||||||||||||||
| Current portion of operating lease liabilities | 3,161 | 2,977 | 2,923 | ||||||||||||||||||||||||||
| Total current liabilities | 57,724 | 47,982 | 52,241 | ||||||||||||||||||||||||||
| Deferred tax liability, net | 22,724 | 29,143 | 30,146 | ||||||||||||||||||||||||||
| Debt, net of current portion and debt discount and issuance costs | 216,511 | 216,908 | 219,999 | ||||||||||||||||||||||||||
| Operating lease liabilities, net of current portion | 32,779 | 35,175 | 35,941 | ||||||||||||||||||||||||||
| Other long-term liabilities | 318 | 352 | 355 | ||||||||||||||||||||||||||
| Total liabilities | 330,056 | 329,560 | 338,682 | ||||||||||||||||||||||||||
| Commitments and contingencies | |||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||
| Preferred stock | — | — | — | ||||||||||||||||||||||||||
| Common stock | 91 | 94 | 94 | ||||||||||||||||||||||||||
| Additional paid-in capital | 68,950 | 80,437 | 82,091 | ||||||||||||||||||||||||||
| Retained earnings | 202,143 | 201,050 | 199,425 | ||||||||||||||||||||||||||
| Total RCIHH stockholders' equity | 271,184 | 281,581 | 281,610 | ||||||||||||||||||||||||||
| Noncontrolling interests | (251) | (257) | (185) | ||||||||||||||||||||||||||
| Total equity | 270,933 | 281,324 | 281,425 | ||||||||||||||||||||||||||
| Total liabilities and equity | $ | 600,989 | $ | 610,884 | $ | 620,107 | |||||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||||||||
| (in thousands, except per share and percentage data) | |||||||||||||||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| Reconciliation of GAAP net income (loss) to Adjusted EBITDA | |||||||||||||||||||||||||||||
| Net income (loss) attributable to RCIHH common stockholders | $ | (5,233) | $ | 9,085 | $ | 2,767 | $ | 27,055 | |||||||||||||||||||||
| Income tax expense (benefit) | (1,426) | 2,269 | 378 | 7,447 | |||||||||||||||||||||||||
| Interest expense, net | 4,110 | 4,229 | 12,135 | 11,412 | |||||||||||||||||||||||||
| Depreciation and amortization | 3,901 | 4,041 | 11,638 | 11,108 | |||||||||||||||||||||||||
| Impairment of assets | 17,931 | 2,631 | 25,964 | 3,293 | |||||||||||||||||||||||||
| Settlement of lawsuits | 141 | 63 | 308 | 3,183 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 188 | (105) | 180 | (692) | |||||||||||||||||||||||||
| Gain on insurance | — | — | — | (91) | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 470 | 1,412 | 2,117 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 20,083 | $ | 22,683 | $ | 54,782 | $ | 64,832 | |||||||||||||||||||||
| Reconciliation of GAAP net income (loss) to non-GAAP net income | |||||||||||||||||||||||||||||
| Net income (loss) attributable to RCIHH common stockholders | $ | (5,233) | $ | 9,085 | $ | 2,767 | $ | 27,055 | |||||||||||||||||||||
| Amortization of intangibles | 598 | 918 | 1,897 | 2,722 | |||||||||||||||||||||||||
| Impairment of assets | 17,931 | 2,631 | 25,964 | 3,293 | |||||||||||||||||||||||||
| Settlement of lawsuits | 141 | 63 | 308 | 3,183 | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 470 | 1,412 | 2,117 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 188 | (105) | 180 | (692) | |||||||||||||||||||||||||
| Gain on insurance | — | — | — | (91) | |||||||||||||||||||||||||
| Net income tax effect | (1,554) | (812) | (3,475) | (2,258) | |||||||||||||||||||||||||
| Non-GAAP net income | $ | 12,542 | $ | 12,250 | $ | 29,053 | $ | 35,329 | |||||||||||||||||||||
| Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share | |||||||||||||||||||||||||||||
| Diluted shares | 9,278,921 | 9,430,225 | 9,332,249 | 9,308,624 | |||||||||||||||||||||||||
| GAAP diluted earnings (loss) per share | $ | (0.56) | $ | 0.96 | $ | 0.30 | $ | 2.91 | |||||||||||||||||||||
| Amortization of intangibles | 0.06 | 0.10 | 0.20 | 0.29 | |||||||||||||||||||||||||
| Impairment of assets | 1.93 | 0.28 | 2.78 | 0.35 | |||||||||||||||||||||||||
| Settlement of lawsuits | 0.02 | 0.01 | 0.03 | 0.34 | |||||||||||||||||||||||||
| Stock-based compensation | 0.05 | 0.05 | 0.15 | 0.23 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 0.02 | (0.01) | 0.02 | (0.07) | |||||||||||||||||||||||||
| Gain on insurance | 0.00 | 0.00 | 0.00 | (0.01) | |||||||||||||||||||||||||
| Net income tax effect | (0.17) | (0.09) | (0.37) | (0.24) | |||||||||||||||||||||||||
| Non-GAAP diluted earnings per share | $ | 1.35 | $ | 1.30 | $ | 3.11 | $ | 3.80 | |||||||||||||||||||||
| Reconciliation of GAAP operating income (loss) to non-GAAP operating income | |||||||||||||||||||||||||||||
| Income (loss) from operations | $ | (2,536) | $ | 15,515 | $ | 15,286 | $ | 45,840 | |||||||||||||||||||||
| Amortization of intangibles | 598 | 918 | 1,897 | 2,722 | |||||||||||||||||||||||||
| Impairment of assets | 17,931 | 2,631 | 25,964 | 3,293 | |||||||||||||||||||||||||
| Settlement of lawsuits | 141 | 63 | 308 | 3,183 | |||||||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 188 | (105) | 180 | (692) | |||||||||||||||||||||||||
| Gain on insurance | — | — | — | (91) | |||||||||||||||||||||||||
| Stock-based compensation | 471 | 470 | 1,412 | 2,117 | |||||||||||||||||||||||||
| Non-GAAP operating income | $ | 16,793 | $ | 19,492 | $ | 45,047 | $ | 56,372 | |||||||||||||||||||||
| Reconciliation of GAAP operating margin to non-GAAP operating margin | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| Income (loss) from operations | (3.3) | % | 20.1 | % | 6.9 | % | 21.0 | % | |||||||||||||||||||||
| Amortization of intangibles | 0.8 | % | 1.2 | % | 0.9 | % | 1.2 | % | |||||||||||||||||||||
| Impairment of assets | 23.5 | % | 3.4 | % | 11.7 | % | 1.5 | % | |||||||||||||||||||||
| Settlement of lawsuits | 0.2 | % | 0.1 | % | 0.1 | % | 1.5 | % | |||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 0.2 | % | (0.1) | % | 0.1 | % | (0.3) | % | |||||||||||||||||||||
| Gain on insurance | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | |||||||||||||||||||||
| Stock-based compensation | 0.6 | % | 0.6 | % | 0.6 | % | 1.0 | % | |||||||||||||||||||||
| Non-GAAP operating margin | 22.0 | % | 25.3 | % | 20.3 | % | 25.8 | % | |||||||||||||||||||||
| Reconciliation of net cash provided by operating activities to free cash flow | |||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 15,764 | $ | 15,320 | $ | 40,233 | $ | 47,004 | |||||||||||||||||||||
| Less: Maintenance capital expenditures | 1,986 | 1,064 | 4,980 | 4,949 | |||||||||||||||||||||||||
| Free cash flow | $ | 13,778 | $ | 14,256 | $ | 35,253 | $ | 42,055 | |||||||||||||||||||||
| RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| NON-GAAP SEGMENT INFORMATION | |||||||||||||||||||||||||||||
| ( in thousands) | |||||||||||||||||||||||||||||
| For the Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||
| Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||||||||||||
| Income (loss) from operations | 13,640 | $ | (8,914) | $ | (108) | $ | (7,154) | $ | (2,536) | $ | 20,392 | $ | 1,701 | $ | (300) | $ | (6,278) | $ | 15,515 | ||||||||||
| Amortization of intangibles | 16 | — | 4 | 598 | 624 | 81 | 208 | 5 | 918 | ||||||||||||||||||||
| Impairment of assets | 10,312 | — | — | 17,931 | 2,631 | — | — | — | 2,631 | ||||||||||||||||||||
| Settlement of lawsuits | — | — | — | 141 | 57 | 6 | — | — | 63 | ||||||||||||||||||||
| Stock-based compensation | — | — | 471 | 471 | — | — | — | 470 | 470 | ||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 6 | — | 258 | 188 | (153) | 50 | — | (2) | (105) | ||||||||||||||||||||
| Gain on insurance | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
| Non-GAAP operating income (loss) | 21,902 | $ | 1,420 | $ | (108) | $ | (6,421) | $ | 16,793 | $ | 23,551 | $ | 1,838 | $ | (92) | $ | (5,805) | $ | 19,492 | ||||||||||
| GAAP operating margin | % | (67.8) | % | (49.5) | % | (9.4) | % | (3.3) | % | 32.7 | % | 11.8 | % | (143.5) | % | (8.1) | % | 20.1 | % | ||||||||||
| Non-GAAP operating margin | % | 10.8 | % | (49.5) | % | (8.4) | % | 22.0 | % | 37.7 | % | 12.8 | % | (44.0) | % | (7.5) | % | 25.3 | % | ||||||||||
| For the Nine Months Ended June 30, 2023 | |||||||||||||||||||||||||||||
| Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||||||||||||
| Income (loss) from operations | 45,030 | $ | (8,129) | $ | (581) | $ | (21,034) | $ | 15,286 | $ | 61,127 | $ | 5,323 | $ | (653) | $ | (19,957) | $ | 45,840 | ||||||||||
| Amortization of intangibles | 126 | — | 13 | 1,897 | 1,880 | 500 | 329 | 13 | 2,722 | ||||||||||||||||||||
| Impairment of assets | 10,312 | — | — | 25,964 | 3,293 | — | — | — | 3,293 | ||||||||||||||||||||
| Settlement of lawsuits | — | — | — | 308 | 3,174 | 9 | — | — | 3,183 | ||||||||||||||||||||
| Stock-based compensation | — | — | 1,412 | 1,412 | — | — | — | 2,117 | 2,117 | ||||||||||||||||||||
| Loss (gain) on sale of businesses and assets | 10 | — | 240 | 180 | (734) | 66 | — | (24) | (692) | ||||||||||||||||||||
| Gain on insurance | — | — | — | — | (48) | — | — | (43) | (91) | ||||||||||||||||||||
| Non-GAAP operating income (loss) | 62,678 | $ | 2,319 | $ | (581) | $ | (19,369) | $ | 45,047 | $ | 68,692 | $ | 5,898 | $ | (324) | $ | (17,894) | $ | 56,372 | ||||||||||
| GAAP operating margin | % | (21.0) | % | (116.0) | % | (9.5) | % | 6.9 | % | 34.8 | % | 12.6 | % | (110.3) | % | (9.1) | % | 21.0 | % | ||||||||||
| Non-GAAP operating margin | % | 6.0 | % | (116.0) | % | (8.7) | % | 20.3 | % | 39.1 | % | 14.0 | % | (54.7) | % | (8.2) | % | 25.8 | % |
All values are in US Dollars.
11