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HOUSTON, Feb. 9, 2023 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results and filed its Form 10-Q for the fiscal 2023 first quarter ended December 31, 2022.
Summary Financials | 1Q23 | Change YoY |
Total Revenues | $70.0M | +13.2 % |
EPS | $1.11 | -0.9 % |
Non-GAAP EPS* | $1.19 | +8.2 % |
Net Cash from Operating Activities | $14.9M | -8.4 % |
Free Cash Flow* | $13.0M | -14.6 % |
Net Income Attributable to RCIHH Common Stockholders | $10.2M | -3.2 % |
Adjusted EBITDA* | $20.5M | +13.9 % |
Weighted Average Number of Basic & Diluted Shares Outstanding | 9.2M | -1.9 % |
* See "Non-GAAP Financial Measures" below.
Eric Langan, President and CEO of RCI Hospitality Holdings, Inc., said: "1Q23 results were generally in line with our expectations as we launched our big, three-year growth plan for fiscal 23-25. Thanks to our loyal and dedicated teams for all their hard work and effort."
"During 1Q23, a 21.4% year-over-year increase in Nightclubs operating income more than offset challenging comparisons in Bombshells. GAAP EPS and net cash from operating activities, and non-GAAP EPS and free cash flow, were affected by higher than anticipated repairs and maintenance capital expenditures that happened to occur during the quarter. Nonetheless, adjusted EBITDA increased 13.9% year-over-year, and we ended 1Q23 with $34.1 million in cash."
"To continue with our mission of growing free cash flow and adjusted EBITDA in the years ahead, we now have numerous acquisitions and projects in development. These include our pending acquisition of the five Baby Dolls and Chicas Locas adult nightclubs in Dallas, Fort Worth and Houston; our exciting new Rick's Cabaret Steakhouse & Casino in Central City, CO; and new Bombshells in Alabama, Colorado, and Texas."
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1Q23 Segments
1Q23 Consolidated (Comparisons are to 1Q22 and % are of total revenues unless indicated otherwise)
Note
The novel coronavirus (COVID-19) pandemic disrupted and may continue to disrupt our business, which has and could continue to materially affect our operations, financial condition, and results of operations for an extended period of time. All references to the "company," "we," "our," and similar terms include RCI Hospitality Holdings, Inc., and its subsidiaries, unless the context indicates otherwise.
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:
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (Twitter: @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, 2022, 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
1 See our January 10, 2023 news release on 1Q23 sales for more details.
RCI HOSPITALITY HOLDINGS, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(in thousands, except per share, number of shares and percentage data) | |||||||
For the Three Months Ended December 31, | |||||||
2022 | 2021 | ||||||
Amount | % of | Amount | % of | ||||
Revenues | |||||||
Sales of alcoholic beverages | $ 29,650 | 42.4 % | $ 26,431 | 42.7 % | |||
Sales of food and merchandise | 10,347 | 14.8 % | 10,894 | 17.6 % | |||
Service revenues | 25,563 | 36.5 % | 20,876 | 33.8 % | |||
Other | 4,408 | 6.3 % | 3,635 | 5.9 % | |||
Total revenues | 69,968 | 100.0 % | 61,836 | 100.0 % | |||
Operating expenses | |||||||
Cost of goods sold | |||||||
Alcoholic beverages sold | 5,374 | 18.1 % | 4,834 | 18.3 % | |||
Food and merchandise sold | 3,586 | 34.7 % | 3,957 | 36.3 % | |||
Service and other | 49 | 0.2 % | 100 | 0.4 % | |||
Total cost of goods sold (exclusive of items shown below) | 9,009 | 12.9 % | 8,891 | 14.4 % | |||
Salaries and wages | 18,676 | 26.7 % | 16,505 | 26.7 % | |||
Selling, general and administrative | 22,732 | 32.5 % | 18,486 | 29.9 % | |||
Depreciation and amortization | 3,307 | 4.7 % | 2,194 | 3.5 % | |||
Other gains, net | (654) | -0.9 % | (151) | -0.2 % | |||
Total operating expenses | 53,070 | 75.8 % | 45,925 | 74.3 % | |||
Income from operations | 16,898 | 24.2 % | 15,911 | 25.7 % | |||
Other income (expenses) | |||||||
Interest expense | (3,687) | -5.3 % | (2,604) | -4.2 % | |||
Interest income | 91 | 0.1 % | 106 | 0.2 % | |||
Non-operating gains, net | - | 0.0 % | 84 | 0.1 % | |||
Income before income taxes | 13,302 | 19.0 % | 13,497 | 21.8 % | |||
Income tax expense | 3,031 | 4.3 % | 2,933 | 4.7 % | |||
Net income | 10,271 | 14.7 % | 10,564 | 17.1 % | |||
Net loss (income) attributable to noncontrolling interests | (33) | 0.0 % | 11 | 0.0 % | |||
Net income attributable to RCIHH common shareholders | $ 10,238 | 14.6 % | $ 10,575 | 17.1 % | |||
Earnings per share | |||||||
Basic and diluted | $ 1.11 | $ 1.12 | |||||
Weighted average shares outstanding | |||||||
Basic and diluted | 9,230,258 | 9,407,519 | |||||
Dividends per share | $ 0.05 | $ 0.04 |
RCI HOSPITALITY HOLDINGS, INC. | |||
NON-GAAP FINANCIAL MEASURES | |||
(in thousands, except per share, number of shares and percentage data) | |||
For the Three Months | |||
Ended December 31, | |||
2022 | 2021 | ||
Reconciliation of GAAP net income to Adjusted EBITDA | |||
Net income attributable to RCIHH common stockholders | $ 10,238 | $ 10,575 | |
Income tax expense | 3,031 | 2,933 | |
Interest expense, net | 3,596 | 2,498 | |
Settlement of lawsuits | - | 192 | |
Gain on sale of businesses and assets | (590) | (342) | |
Gain on debt extinguishment | - | (85) | |
Unrealized loss on equity securities | - | 1 | |
Gain on insurance | (64) | (1) | |
Stock-based compensation | 941 | - | |
Depreciation and amortization | 3,307 | 2,194 | |
Adjusted EBITDA | $ 20,459 | $ 17,965 | |
Reconciliation of GAAP net income to non-GAAP net income | |||
Net income attributable to RCIHH common stockholders | $ 10,238 | $ 10,575 | |
Amortization of intangibles | 695 | 50 | |
Settlement of lawsuits | - | 192 | |
Gain on sale of businesses and assets | (590) | (342) | |
Gain on debt extinguishment | - | (85) | |
Unrealized loss on equity securities | - | 1 | |
Gain on insurance | (64) | (1) | |
Stock-based compensation | 941 | - | |
Net income tax effect | (200) | (38) | |
Non-GAAP net income | $ 11,020 | $ 10,352 | |
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share | |||
Diluted shares | 9,230,258 | 9,407,519 | |
GAAP diluted earnings per share | $ 1.11 | $ 1.12 | |
Amortization of intangibles | 0.08 | 0.01 | |
Settlement of lawsuits | - | 0.02 | |
Gain on sale of businesses and assets | (0.06) | (0.04) | |
Gain on debt extinguishment | - | (0.01) | |
Unrealized loss on equity securities | - | 0.00 | |
Gain on insurance | (0.01) | (0.00) | |
Stock-based compensation | 0.10 | - | |
Net income tax effect | (0.02) | (0.00) | |
Non-GAAP diluted earnings per share | $ 1.19 | $ 1.10 | |
Reconciliation of GAAP operating income to non-GAAP operating income | |||
Income from operations | $ 16,898 | $ 15,911 | |
Amortization of intangibles | 695 | 50 | |
Settlement of lawsuits | - | 192 | |
Gain on sale of businesses and assets | (590) | (342) | |
Gain on insurance | (64) | (1) | |
Stock-based compensation | 941 | - | |
Non-GAAP operating income | $ 17,880 | $ 15,810 | |
Reconciliation of GAAP operating margin to non-GAAP operating margin | |||
GAAP operating margin | 24.2 % | 25.7 % | |
Amortization of intangibles | 1.0 % | 0.1 % | |
Settlement of lawsuits | 0.0 % | 0.3 % | |
Gain on sale of businesses and assets | -0.8 % | -0.6 % | |
Gain on insurance | -0.1 % | 0.0 % | |
Stock-based compensation | 1.3 % | 0.0 % | |
Non-GAAP operating margin | 25.6 % | 25.6 % | |
Reconciliation of net cash provided by operating activities to free cash flow | |||
Net cash provided by operating activities | $ 14,895 | $ 16,264 | |
Less: Maintenance capital expenditures | 1,864 | 998 | |
Free cash flow | $ 13,031 | $ 15,266 |
RCI HOSPITALITY HOLDINGS, INC. | |||
SEGMENT INFORMATION | |||
(in thousands) | |||
For the Three Months | |||
Ended December 31, | |||
2022 | 2021 | ||
Revenues | |||
Nightclubs | $ 56,325 | $ 46,781 | |
Bombshells | 13,431 | 14,771 | |
Other | 212 | 284 | |
$ 69,968 | $ 61,836 | ||
Income (loss) from operations | |||
Nightclubs | $ 22,740 | $ 18,736 | |
Bombshells | 1,847 | 2,802 | |
Other | (185) | (43) | |
Corporate | (7,504) | (5,584) | |
$ 16,898 | $ 15,911 |
RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||
NON-GAAP SEGMENT INFORMATION | |||||||||||||||||||
($ in thousands) | |||||||||||||||||||
For the Three Months Ended December 31, 2022 | For the Three Months Ended December 31, 2021 | ||||||||||||||||||
Nightclubs | Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | ||||||||||
Income (loss) from operations | $ 22,740 | $ 1,847 | $ (185) | $ (7,504) | $ 16,898 | $ 18,736 | $ 2,802 | $ (43) | $ (5,584) | $ 15,911 | |||||||||
Amortization of intangibles | 628 | 2 | 61 | 4 | 695 | 47 | 3 | - | - | 50 | |||||||||
Settlement of lawsuits | - | - | - | - | - | 177 | 10 | - | 5 | 192 | |||||||||
Loss (gain) on sale of businesses and assets | (569) | - | - | (21) | (590) | 45 | 13 | - | (400) | (342) | |||||||||
Gain on insurance | (48) | - | - | (16) | (64) | (1) | - | - | - | (1) | |||||||||
Stock-based compensation | - | - | - | 941 | 941 | - | - | - | - | ||||||||||
Non-GAAP operating income (loss) | $ 22,751 | $ 1,849 | $ (124) | $ (6,596) | $ 17,880 | $ 19,004 | $ 2,828 | $ (43) | $ (5,979) | $ 15,810 | |||||||||
GAAP operating margin | 40.4 % | 13.8 % | -87.3 % | -10.7 % | 24.2 % | 40.1 % | 19.0 % | -15.1 % | -9.0 % | 25.7 % | |||||||||
Non-GAAP operating margin | 40.4 % | 13.8 % | -58.5 % | -9.4 % | 25.6 % | 40.6 % | 19.1 % | -15.1 % | -9.7 % | 25.6 % |
RCI HOSPITALITY HOLDINGS, INC. | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(in thousands) | |||
For the Three Months | |||
Ended December 31, | |||
2022 | 2021 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 10,271 | $ 10,564 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 3,307 | 2,194 | |
Gain on sale of businesses and assets | (686) | (523) | |
Gain on debt extinguishment | - | (83) | |
Unrealized loss on equity securities | - | 1 | |
Amortization of debt discount and issuance costs | 144 | 51 | |
Doubtful accounts expense on notes receivable | - | 17 | |
Noncash lease expense | 719 | 629 | |
Stock-based compensation | 941 | - | |
Gain on insurance | (64) | - | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 1,447 | 1,344 | |
Inventories | (94) | (445) | |
Prepaid expenses, other current assets and other assets | (7,208) | (6,519) | |
Accounts payable, accrued and other liabilities | 6,118 | 9,034 | |
Net cash provided by operating activities | 14,895 | 16,264 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Proceeds from sale of businesses and assets | 2,784 | 803 | |
Proceeds from insurance | 64 | 185 | |
Proceeds from notes receivable | 55 | 34 | |
Payments for property and equipment and intangible assets | (12,553) | (9,850) | |
Acquisition of businesses, net of cash acquired | (4,000) | (39,302) | |
Net cash used in investing activities | (13,650) | (48,130) | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from debt obligations | 1,500 | 17,002 | |
Payments on debt obligations | (3,361) | (2,488) | |
Purchase of treasury stock | (98) | - | |
Payment of dividends | (462) | (380) | |
Payment of loan origination costs | (96) | - | |
Share in return of investment by noncontrolling partner | (600) | - | |
Net cash provided by (used in) financing activities | (3,117) | 14,134 | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (1,872) | (17,732) | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 35,980 | 35,686 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 34,108 | $ 17,954 |
RCI HOSPITALITY HOLDINGS, INC. | |||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||
(in thousands) | |||||
December 31, | September 30, | December 31, | |||
2022 | 2022 | 2021 | |||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ 34,108 | $ 35,980 | $ 17,954 | ||
Accounts receivable, net | 6,016 | 8,510 | 6,012 | ||
Current portion of notes receivable | 235 | 230 | 225 | ||
Inventories | 4,051 | 3,893 | 3,530 | ||
Prepaid expenses and other current assets | 8,611 | 1,499 | 8,245 | ||
Assets held for sale | - | 1,049 | 3,113 | ||
Total current assets | 53,021 | 51,161 | 39,079 | ||
Property and equipment, net | 246,536 | 224,615 | 203,878 | ||
Operating lease right-of-use assets | 36,329 | 37,048 | 35,845 | ||
Notes receivable, net of current portion | 4,631 | 4,691 | 5,512 | ||
Goodwill | 70,189 | 67,767 | 54,484 | ||
Intangibles, net | 143,949 | 144,049 | 125,314 | ||
Other assets | 1,503 | 1,407 | 1,566 | ||
Total assets | $ 556,158 | $ 530,738 | $ 465,678 | ||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Accounts payable | $ 5,182 | $ 5,482 | $ 5,807 | ||
Accrued liabilities | 18,864 | 11,328 | 18,413 | ||
Current portion of debt obligations, net | 13,291 | 11,896 | 9,003 | ||
Current portion of operating lease liabilities | 2,850 | 2,795 | 2,288 | ||
Total current liabilities | 40,187 | 31,501 | 35,511 | ||
Deferred tax liability, net | 30,562 | 30,562 | 22,040 | ||
Debt, net of current portion and debt discount and issuance costs | 197,943 | 190,567 | 152,847 | ||
Operating lease liabilities, net of current portion | 35,270 | 36,001 | 35,154 | ||
Other long-term liabilities | 386 | 349 | 357 | ||
Total liabilities | 304,348 | 288,980 | 245,909 | ||
Commitments and contingencies | |||||
Equity | |||||
Preferred stock | - | - | - | ||
Common stock | 92 | 92 | 95 | ||
Additional paid-in capital | 68,070 | 67,227 | 80,397 | ||
Retained earnings | 183,726 | 173,950 | 139,888 | ||
Total RCIHH stockholders' equity | 251,888 | 241,269 | 220,380 | ||
Noncontrolling interests | (78) | 489 | (611) | ||
Total equity | 251,810 | 241,758 | 219,769 | ||
Total liabilities and equity | $ 556,158 | $ 530,738 | $ 465,678 |
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SOURCE RCI Hospitality Holdings, Inc.