Financial Performance - Total revenues for the three months ended December 31, 2024, were $71,483,000, a decrease of 3.2% from $73,907,000 in the same period of 2023[14] - Net income for the three months ended December 31, 2024, was $9,065,000, representing an increase of 25.3% compared to $7,244,000 in the prior year[14] - Earnings per share for the three months ended December 31, 2024, were $1.01, up from $0.77 in the same period of 2023, reflecting a 31.2% increase[14] - Nightclubs segment revenues increased to $61.724 million in Q4 2024 from $61.033 million in Q4 2023, while Bombshells segment revenues decreased to $9.587 million from $12.731 million[35] - Income from operations for the Nightclubs segment was $20.882 million in Q4 2024, compared to $20.369 million in Q4 2023, indicating a growth of 2.5%[35] - Consolidated revenues for the first quarter decreased by $2.4 million, or 3.3%, primarily due to the $4.4 million impact of closed locations[85] - Nightclubs revenue increased by 1.1% to $61.7 million, driven by a $2.1 million increase in same-store sales, partially offset by a $1.8 million impact from closed clubs[88] - Bombshells revenue decreased by 24.7% to $9.6 million, with a 7.5% decline in same-store sales and $2.6 million from recently closed locations[89] - Basic and diluted earnings per share (EPS) for the quarter were $1.01, compared to $0.77 in the prior-year quarter[87] - For the three months ended December 31, 2024, the consolidated operating margin improved to 19.5% from 17.8% in the same period of 2023[97] Cash and Assets - Cash and cash equivalents increased to $34,718,000 as of December 31, 2024, from $32,350,000 at the end of September 2024, marking a 7.3% increase[12] - Total assets as of December 31, 2024, were $586,218,000, up from $584,364,000 as of September 30, 2024, indicating a growth of 0.3%[12] - The company reported a net receivables balance of $3.519 million as of December 31, 2024, down from $5.832 million as of September 30, 2024[40] - The company’s retained earnings increased to $210,160,000 as of December 31, 2024, from $201,759,000 at the end of September 2024, reflecting a growth of 4.9%[12] - Free cash flow for Q4 2024 was $12.068 million, a decrease of 4.6% from $12.650 million in Q4 2023[117] Expenses and Liabilities - Operating expenses for the three months ended December 31, 2024, totaled $57,577,000, down from $60,742,000 in the same period of 2023, a decrease of 5.3%[14] - Total liabilities decreased to $317,447,000 as of December 31, 2024, from $321,254,000 as of September 30, 2024, a reduction of 1.2%[12] - Selling, general and administrative expenses rose from $25,201,000 for the three months ended December 31, 2023, to $26,207,000 for the same period in 2024, an increase of approximately 4.0%[44] - Total accrued liabilities increased from $20,280,000 as of September 30, 2024, to $20,514,000 as of December 31, 2024, an increase of approximately 1.2%[42] - Depreciation and amortization expenses for the three months ended December 31, 2024, were $3.569 million, compared to $3.853 million in the same period of 2023[35] Tax and Legal Matters - The effective income tax rate decreased from 19.9% in 2023 to 16.9% in 2024, reflecting a reduction in tax burden[45] - The company recorded a lawsuit settlement of $179,000 for the three months ended December 31, 2024, compared to $0 in the same period of 2023[61] - The company recorded an assessment of $2.8 million from the New York State Department of Labor for state unemployment tax matters for the years 2009-2022[57] Strategic Initiatives - The company completed the acquisition of a club in Detroit for a total purchase price of $11.0 million, including $3.0 million in cash and a seller-financed note[72] - The growth strategy includes opening new units and acquiring existing units in high growth potential markets, with a new Bombshells location opened in Denver, Colorado, in January 2025[125] - The company is evaluating opportunities to acquire new nightclubs and anticipates acquiring locations that fit its business model, potentially requiring additional debt or stock issuance[126] - The company aims for a minimum cash on cash return of 25%-33% for new club or restaurant acquisitions, absent strategic rationale[126] - The company is considering disposing of underperforming units to free up capital for more productive uses[126] Internal Controls and Compliance - The company identified material weaknesses in internal control over financial reporting as of September 30, 2024, related to IT general controls and management review controls[130] - Remediation efforts are underway to address the identified material weaknesses, with expected completion prior to the end of fiscal 2025[134] - The company will engage third-party consultants to assist in the valuation and accounting for intangible assets acquired in business combinations[131] - The company maintains disclosure controls and procedures designed to ensure timely and accurate reporting to the SEC[128]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for RCI Hospitality, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - RCI Hospitality is expected to report quarterly earnings of $0.52 per share, reflecting a year-over-year decrease of 32.5% [3]. - Revenue projections stand at $71.12 million, down 3.8% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst assessments [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [10]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates potential deviations from consensus estimates, with positive readings being more predictive of earnings beats [6][7]. - A positive Earnings ESP combined with a strong Zacks Rank increases the likelihood of a positive surprise, with a success rate of nearly 70% [8]. Historical Performance - RCI Hospitality has not surpassed consensus EPS estimates in the last four quarters, with a significant miss of 91.89% in the last reported quarter [12][13]. Overall Assessment - The combination of a Zacks Rank of 5 and an Earnings ESP of 0% suggests that RCI Hospitality is not a strong candidate for an earnings beat [11][16]. - Investors are advised to consider other factors beyond earnings results when evaluating the stock [14][15].

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Acquisition Details - RCI Hospitality Holdings Inc acquired Flight Club, a premier gentlemen's club in Detroit, for a total purchase price of $11 0 million, including $3 0 million cash and $5 0 million seller financing at 8 0% for the club, and $3 0 million cash for associated real estate [2] - The acquisition is expected to contribute an estimated $2 0 million in annualized adjusted EBITDA [2] - Flight Club is a two-story, 10,000-square foot establishment located at 29709 Michigan Avenue, Inkster, MI, established in 1997 and recently renovated [2] Strategic Fit and Management Commentary - The acquisition aligns with RCI Hospitality's portfolio of high-end clubs with restaurants in major cities and is the first club purchase since the launch of the company's 5-Year 'Back to Basics' Capital Allocation Plan [2] - Eric Langan, President and CEO of RCI Hospitality Holdings Inc, stated that Flight Club is a well-established business that should benefit from the company's marketing, purchasing, and systems expertise [2] Company Overview - RCI Hospitality Holdings Inc, through its subsidiaries, operates more than 60 locations and is the leading company in adult nightclubs and sports bars-restaurants in the country [3] - The company's brands can be viewed at www rcihospitality com [3]

During the initial beta phase, Favoritely.com was rolled out to entertainers and fans at five clubs in the Houston-San Antonio area in Texas—Chicas Locas Houston, Club Onyx Houston, Heartbreaker's Club in Dickinson, Scarlett's Cabaret San Antonio, and Temptations Cabaret Beaumont. "Everybody loved it," said RCI President and CEO Eric Langan. "The service worked well. We received positive feedback. Favoritely.com fills a void in the adult club industry. Fans can follow their favorite entertainers between vis ...

Core Insights - RCI Hospitality Holdings, Inc. reported an increase in same-store sales for Nightclubs for the third consecutive quarter, while Bombshells experienced a decline in total sales due to divestitures and closures of underperforming locations [1][2]. Group 1: Financial Performance - Nightclubs total sales reached $61.3 million, reflecting a year-over-year increase of 1.2%, with same-store sales up by 3.7% compared to 1Q24 [1]. - Bombshells total sales were $9.6 million, showing a significant decline of 24.7%, with same-store sales down by 7.5% compared to 1Q24 [1]. - Combined sales for both segments totaled $70.9 million, representing a decrease of 3.3%, while same-store sales increased by 2.3% [1]. Group 2: Operational Changes - The increase in Nightclubs sales was attributed to the rise in same-store sales, the opening of three new and reformatted clubs in Texas, and the absence of a club due to a fire incident in July 2024 [1]. - Bombshells' sales decline was primarily due to the divestiture and closure of five locations during 4Q24 and 1Q25, alongside a full quarter of operations from the Stafford, TX location that opened in mid-November 2023 [2]. Group 3: Company Overview - RCI Hospitality Holdings, Inc. operates more than 60 locations and is recognized as a leading company in the adult nightclubs and sports bars-restaurants sector in the United States [4].

Financial Data and Key Metrics - Fourth quarter nightclub same-store sales increased for the second consecutive quarter, marking the first time since the first half of fiscal 2023 [7] - Total company sales declined due to hurricane and fire-related closures, resulting in lower EPS [7] - Non-GAAP EPS, net cash provided by operating activities, and free cash flow all increased [7] - The company ended fiscal year 2024 with 8.955 million shares outstanding, a reduction of 4.7% year-over-year [7] - Fourth quarter sales declined by $2 million, largely due to hurricane-related closures and the sale of Bombshell San Antonio [18] - Non-GAAP EPS increased by $1.63, net cash provided from operating activities increased by $3.5 million, and free cash flow increased by $2 million, while adjusted EBITDA declined by $2.3 million [18] Business Line Performance - Nightclub revenues declined by $307,000, primarily due to a 2.2% same-store sales growth, 10 closure days at Houston area clubs due to Hurricane Beryl, and other changes to improve the club lineup [19] - Bombshells revenues declined by $1.643 million, primarily due to a 16.2% same-store sales decline, negatively affected by 26 closure days at Houston area locations due to Hurricane Beryl [21] - Corporate expenses increased modestly by $284,000 [22] Market Performance - The company ended the fourth quarter with cash and cash equivalents of $32.4 million [23] - Debt at September 30th declined by $7.2 million from June 30th, reflecting eliminations of Bombshell San Antonio debt, early paydown of $1.5 million of the Playmate note, and other scheduled amortized paydowns [24] - The weighted average interest rate was 6.67%, only 3 basis points higher than a year ago [24] Strategy and Industry Competition - The company has officially launched its Back-to-the-Basics five-year plan, focusing on core nightclub businesses and making new acquisitions [8] - The plan includes divesting underperforming Bombshells locations, closing the Denver food hall, reducing Bombshells-related debt, and discontinuing franchising [8] - The company expects to generate more than $250 million of free cash flow over the next five years, allocating 50% to club acquisition and 50% to share buybacks and dividends [10] - The fiscal 2029 targets include hitting $400 million in revenue, $75 million in free cash flow, and reducing the share count to 7.5 million or less [11] Management Commentary on Operating Environment and Future Outlook - The company is focusing on improving the performance of existing Bombshells locations and finishing the last three units under construction [12] - The company is evaluating every club in its portfolio and will rebrand, reformat, or divest underperforming locations [12] - The company is targeting 15% operating margins for Bombshells with a return to same-store sales growth [12] - The company is planning small dividend increases annually and expects to buy a significant amount of stock if the price is right [13] Other Important Information - The company has seven remaining developments, including Bombshells Denver, Chicas Locas El Paso, Rick's Cabaret in Central City, Bombshells Lubbock, and Bombshells Rowlett [26] - The company is awaiting construction permits for Baby Dolls West Fort Worth and engineering review of plans for Baby Dolls Fort Worth to rebuild the club that burnt down [27] Q&A Session Summary Question: How does the company plan to grow after completing current developments? - The company plans to focus strictly on acquisitions for growth and does not anticipate building anything else in the near future [34] Question: What excites the company about the future of the business model with the new five-year plan? - The company is excited about getting back to its core business, focusing on clubs, and evaluating real estate offerings to determine the best use of capital [37] Question: How is Bitcoin integration looking at the company's locations? - The company is processing Bitcoin at some locations, converting it to US dollars at the point of transaction, and expects to see more Bitcoin transactions with the current high prices [40] Question: What is the M&A environment like for the company? - The company is working on three potential acquisitions and is focusing on smaller acquisitions between $5 million and $15 million purchase price [49] Question: Does the company have insurance for hurricane and fire-related damages? - The company carries insurance for its properties, but payouts depend on the extent of damage and deductibles [56] Question: Will the company consider increasing the dividend under the Back-to-the-Basics plan? - The company plans to continue slowly and gradually raising the dividend annually, with the majority of capital return being done through buybacks [60] Question: What is the purchased real estate value of the closed Bombshells in Denver food hall? - The Denver food hall was purchased for $5.2 million, and the company is marketing the real estate for sale [61] Question: What are the impairments and how do they affect the company? - Impairments are accelerated write-offs of various assets, primarily due to increasing interest rates, and do not affect the company's operations or free cash flow [64][66] Question: Are there plans to open restaurants in Yuma? - The company has no plans to open new restaurants beyond the current developments and will focus on acquiring existing nightclub operations [70] Question: What is the expected CapEx for 2025? - The company expects maintenance CapEx to return to normal levels, forecasting around $6 million for 2025 [86] Question: How does the company view its leverage and debt? - The company aims to keep its debt to EBITDA under three times and is actively working to reduce its debt load [92] Question: What are the current business trends? - November was strong with five weekends, and December started slow but picked up, with the company expecting a strong March Madness [102]

Financial Performance & Targets - RCI Hospitality Holdings aims to generate over $250 million in cumulative Free Cash Flow (FCF) over the next 5 years[24] - The company targets $400 million in revenue and $75 million in FCF by FY29[24] - RCI Hospitality Holdings plans to double FCF per share by FY29[24] - In 4Q24, the company's Non-GAAP EPS was $1.63, and for FY24, it was $4.72[45] - The company's FY24 free cash flow was $48.4 million[45] Capital Allocation & Strategy - RCI Hospitality Holdings has allocated approximately 50% of its FCF for share buybacks and dividends, and approximately 50% for club acquisitions (including debt repayment)[42] - Since FY16, RCI Hospitality Holdings has completed $267 million in club acquisitions (including real estate)[29] - The company increased its share buyback program by $25 million in 4Q24[38] - In FY24, RCI Hospitality Holdings repurchased 442,639 shares for $20.6 million[38] Segment Performance - Nightclubs segment revenues in 4Q24 were $56.6 million[49] - Bombshells segment revenues decreased by $1.7 million in 4Q24 compared to 4Q23[59]

Financial Performance - RCI Hospitality Holdings, Inc. announced sales at nightclubs and restaurants for the fourth fiscal quarter ended September 30, 2024[3] - The press release detailing the financial results was issued on October 8, 2024[3] Company Classification - The company is classified as an emerging growth company under the Securities Act of 1933[2]

Financial Performance - Consolidated revenues for fiscal 2024 were $295.6 million, a slight increase of 0.6% from $293.8 million in fiscal 2023[18]. - Diluted earnings per share for fiscal 2024 decreased to $0.33 from $3.13 in fiscal 2023, reflecting a significant decline[18]. - Nightclubs segment revenue increased by approximately 3.0%, while income from operations decreased by 20.6% compared to the prior year[23]. - Bombshells segment revenue decreased by 9.2%, with income from operations decreasing by 263.7% from the prior year[25]. - Same-store sales for Nightclubs in 2024 were down by 2.1%, while Bombshells experienced a decline of 18.4%[23][25]. - Over the five-year period from fiscal 2019 to fiscal 2024, diluted earnings per share declined at a CAGR of 30.9%[31]. - Net cash provided by operating activities improved at a CAGR of 8.5%, while free cash flow improved at 7.8% CAGR during the same period[31]. Operational Challenges - The company plans to close underperforming locations and has terminated its franchising program[32]. - The company has experienced challenges in hiring and retaining qualified restaurant and club employees, which could adversely affect growth plans and profitability[111]. - The company incurs significant costs due to operating as a public company, which increases legal and financial compliance costs[92]. - The ongoing COVID-19 pandemic and geopolitical tensions may continue to disrupt the company's business operations and financial condition[61]. - The company faces risks related to labor disputes and shortages, which could disrupt operations and increase costs[116]. - The company recorded impairment charges of $38.5 million in 2024, including $8.9 million of goodwill impairment on four clubs and $11.8 million of SOB license impairment on seven clubs[130]. - The company experienced significant disruptions due to the COVID-19 pandemic, impacting operations and leading to increased costs and staffing shortages[123]. Financial Risks and Liabilities - The company may need additional financing if cash generated from operations is insufficient to satisfy working capital and capital expenditure requirements, which could lead to dilution of existing shareholders[74]. - The company may face uninsured liabilities or liabilities exceeding its insurance coverage, which could have a material adverse effect on its financial condition[96]. - The company has discontinued general liability and liquor insurance coverage in several establishments as of October 1, 2024, due to prohibitive costs, and is establishing self-insurance for claims[96]. - The company is currently under investigation by the New York State Attorney General and the Department of Taxation and Finance regarding tax filings and entertainment benefits, which may lead to fines or penalties[102]. Market and Competitive Environment - There is substantial competition in the nightclub entertainment industry, which may affect the company's ability to operate profitably or acquire additional clubs[75]. - The adult entertainment industry is extremely volatile and sensitive to general economic conditions, which could materially affect the company's business[76]. - The company derives a significant portion of its revenues from the sale of alcoholic beverages, and any limitations on permits could materially affect revenues[135]. - Seasonal factors historically lead to reduced revenues from April through September, with stronger results from October through March[144]. - The company is subject to regulatory uncertainties that may affect its ability to operate existing nightclubs or acquire new ones[131]. Corporate Governance and Compliance - As of September 30, 2024, the company concluded that it did not maintain effective internal control over financial reporting, identifying material weaknesses in IT controls, business combination accounting, and impairment assessments[95]. - The company has taken steps to enhance internal controls but faces significant costs and management efforts to remediate identified weaknesses[95]. - The company must continue to meet NASDAQ listing requirements to avoid delisting, which would adversely affect its business[140]. - The board of directors has the authority to issue up to 1,000,000 shares of preferred stock, which could adversely affect the rights of common stockholders[146]. Stock Performance and Shareholder Value - The company’s stock performance has shown a decline from $332.43 on September 30, 2021, to $215.37 on September 30, 2024[192]. - The market price of common stock may decline due to substantial sales or the perception of future sales of common stock[147]. - The trading price of securities has been volatile, influenced by performance, market conditions, and investor perception[148]. - During the three months ended September 30, 2024, the company repurchased a total of 174,790 shares at an average price of $44.85 per share, with a maximum number of shares that may be purchased under the plans totaling 21,035,109[186][187]. Strategic Initiatives - The company aims to leverage its brands and financial strength to enhance competitiveness and accelerate growth[199]. - The company operates upscale adult nightclubs and restaurants/sports bars across multiple states, generating revenues from liquor, food sales, and service revenues[196]. - The company’s same-store sales calculation excludes units closed temporarily for more than 15 days and those undergoing renovations, ensuring accurate year-over-year revenue comparisons[198]. Impairment and Asset Management - The company recorded impairment charges of $12.6 million in 2023 and $1.9 million in 2022, indicating ongoing challenges in asset valuation[130]. - The company impaired six properties for $4.8 million in property and equipment and $5.7 million in operating lease right-of-use assets during the third quarter of 2024[203]. - The company reported a total of $58,000 in impairment for one property and $1.0 million for its operating lease right-of-use asset during the third quarter of 2023[204]. - The company identified four reporting units that were impaired in both 2024 and 2023[209]. Risk Management - The company relies heavily on information technology, and any material failure or breach could adversely impact operations and financial condition[80]. - The company faces risks related to cybersecurity, which could result in loss of revenues, increased costs, and litigation if confidential information is compromised[82]. - The company has developed a risk-based information security program to manage cybersecurity threats[159]. - The Audit Committee oversees the enterprise risk management program, including information security and technology risks[165]. - The company has no recent cybersecurity attacks that materially affected its business strategy or financial condition[164].