RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q3 2022 Earnings Conference Call August 9, 2022 4:30 PM ET Company Participants Mark Moran - Chief Executive Officer, Equity Animal Eric Langan - President and Chief Executive Officer Bradley Chhay - Chief Financial Officer Conference Call Participants Rob McGuire - Granite Research Anthony Lebiedzinski - Sidoti & Company Joshua Zoepfel - Noble Capital Markets Adam Wyden - ADW Capital Howard Penney - Hedgeye Operator Mark Moran Greetings, and welcome to RCI Hospi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-13992 RCI HOSPITALITY HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Tex ...

Financial Data and Key Metrics Changes - The company reported record revenues of $63.7 million for Q2 2022, an increase of 44.6% year-over-year [12] - Earnings per share (EPS) increased by 69.1% to $1.15, while non-GAAP EPS rose 58% to $1.19 [13] - Net income attributed to RCI Hospitality Holdings was $11 million, up 79.8% [13] - Adjusted EBITDA totaled $19.9 million, reflecting a 46.8% increase [13] - Free cash flow for the first half of the year was $26.3 million, up 79.8% year-over-year [22] Business Line Data and Key Metrics Changes - Nightclubs segment revenues reached $48.2 million, growing 56.5% year-over-year, with an operating margin of 39.7% [14] - Bombshells segment revenues totaled $15.3 million, up 16.7% year-over-year, with an operating margin of 22.6% [16] Market Data and Key Metrics Changes - High-margin service revenues in the Nightclubs segment increased by 87.8% year-over-year, contributing to overall revenue growth [15] - Cost of goods sold as a percentage of revenue improved to 13.8%, down from 15.4% a year ago [18] Company Strategy and Development Direction - The company aims to drive shareholder value by increasing free cash flow per share by 10% to 15% annually [27] - The strategy includes mergers and acquisitions, organic growth through Bombshells, and share buybacks when free cash flow yields exceed 10% [30] - The company is actively pursuing club acquisitions and expanding Bombshells locations [31][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong performance, citing favorable trends and successful events like the F1 race in Miami [48][56] - There is optimism about the potential for acquisitions during economic downturns, as some club owners may seek to sell [58] - Management noted that the business is currently experiencing strong demand and does not see signs of a recession affecting operations [84] Other Important Information - The company has begun accepting Bitcoin as a payment method and is launching an NFT program to enhance customer engagement [35][36] - The company has a solid cash position, ending the quarter with $38 million in cash [59] Q&A Session Summary Question: Can you provide details about the club acquisitions? - The South Florida acquisition is valued at $16 million, expected to add about $3 million in EBITDA [43] - The Fort Worth location is being purchased primarily for real estate value, with plans for a full remodel [45] Question: How did the F1 race impact club performance? - Tootsie's achieved its first $1 million week, contributing to overall company sales exceeding $6 million [48] Question: Will the NFT program generate new revenue? - The NFT program aims to create a community and loyalty among users rather than being a direct revenue generator [49] Question: What is driving the momentum in sales? - Strong operational performance, increased social media engagement, and recovering VIP spend are key drivers [54] Question: How does the company view potential recession impacts? - Management believes the business is recession-resistant, with no current signs of slowdown [83] Question: What is the sentiment regarding future growth and acquisitions? - There is increased interest from club owners looking to sell, and management is optimistic about future acquisitions [92]

Financial Performance - Total revenues increased by 44.6% to $63.7 million[16] - EPS increased by 69.1% to $1.15, and Non-GAAP EPS increased by 58.0% to $1.19[16] - Net income attributable to RCIHH common stockholders increased by 79.8% to $11.0 million[16] - Adjusted EBITDA increased by 46.8% to $19.9 million[16] - Free cash flow increased by 23.3% to $11.1 million[16] Segment Performance - Nightclub revenues increased by 56.5%[21] - Bombshells revenues increased by 16.7%[25] - High margin service revenues increased by 86.9%, accounting for 33.8% of revenues compared to 26.1% in the previous year[16, 31] Debt and Capital Allocation - As of March 31, 2022, total debt net of loan costs was $178 million[38, 46] - Weighted average interest rate on debt was 6.14%[46] - The company repurchased 83,343 shares at an average cost of $62.37 per share in 2Q22 and 3Q22 through May 6[52] Expansion and Growth Initiatives - Acquired real estate for the 12th Bombshells location in March 2022 and has two more under contract to purchase[16, 55] - Purchased one nightclub in May 2022 and has one under contract to purchase[16] - Targeting addition of $20 million adjusted EBITDA in FY23 through more acquisitions[55]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Exact name of registrant as specified in its charter) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-13992 RCI HOSPITALITY HOLDINGS, INC. (State or other jurisdiction of incorporation or organization) Te ...

CI HOSPITALITY OLDINGS INC Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants NASDAQ: RICK 1Q22 Conference Call February 9, 2022 www.rcihospitality.com Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other ...

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q1 2022 Earnings Conference Call February 9, 2022 4:30 PM ET Company Participants Gary Fishman - Investor Relations Eric Langan - Chairman, President and Chief Executive Officer Bradley Chhay - Chief Financial Officer Conference Call Participants Joe Gomes - NOBLE Capital Markets Anthony Lebiedzinski - Sidoti & Company Adam Wyden - ADW Capital Management Operator Greetings, and welcome to RCI Hospitality Holdings Conference Call and Webcast. At this time, all par ...

PART I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q1 FY2022 show significant growth in assets, revenues, and net income, primarily driven by strategic acquisitions and pandemic recovery [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $465.7 million, driven by acquisitions, while liabilities and equity also grew significantly Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2021 | Sep 30, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$465,678** | **$364,619** | | Cash and cash equivalents | $17,954 | $35,686 | | Goodwill | $54,484 | $39,379 | | Intangibles, net | $125,314 | $67,824 | | **Total Liabilities** | **$245,909** | **$185,396** | | Debt, net of current portion | $152,847 | $118,734 | | **Total Equity** | **$219,769** | **$179,223** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Total revenues increased 61.0% to $61.8 million, leading to a 141.7% rise in operating income and $10.6 million net income Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q1 FY2022 (ended Dec 31, 2021) | Q1 FY2021 (ended Dec 31, 2020) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $61,836 | $38,398 | 61.0% | | Income from Operations | $15,911 | $6,583 | 141.7% | | Net Income Attributable to RCIHH | $10,575 | $9,643 | 9.7% | | Diluted EPS | $1.12 | $1.07 | 4.7% | | Dividends per share | $0.04 | $0.04 | 0.0% | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased to $16.3 million, but cash decreased by $17.7 million due to substantial investing activities for acquisitions Summary of Cash Flows (in thousands) | Activity | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,264 | $6,274 | | Net cash used in investing activities | ($48,130) | ($1,013) | | Net cash provided by (used in) financing activities | $14,134 | ($3,899) | | **Net (Decrease) Increase in Cash** | **($17,732)** | **$1,362** | - A significant non-cash transaction was the issuance of **500,000 shares of common stock** valued at **$30.4 million** as partial payment for the acquisition of businesses[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the **$88.4 million** acquisition of eleven clubs, new debt financing, and a pending shareholder lawsuit settlement - On October 18, 2021, the company acquired eleven gentlemen's clubs and six real estate properties for a total preliminary fair value of **$88.4 million**, paid with **$36.8 million in cash**, **$21.2 million in seller-financed notes**, and **500,000 shares of common stock** valued at **$30.4 million**[38](index=38&type=chunk)[63](index=63&type=chunk) - The company closed a **$17.0 million debt financing transaction** with 28 investors for unsecured promissory notes bearing **12% interest**[57](index=57&type=chunk) - In January 2022, the parties in a shareholder class action lawsuit reached an agreement-in-principle to resolve the matter, which is now pending court approval[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 revenue growth of 61.0% to $61.8 million, improved operating margin, and the strategic $88.4 million acquisition [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q1 2022 revenues increased 61.0% to $61.8 million, driven by strong Nightclubs and Bombshells segment growth and improved operating margin Segment Revenue Performance (in thousands) | Segment | Q1 FY2022 Revenue | Q1 FY2021 Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Nightclubs | $46,781 | $25,197 | 85.7% | | Bombshells | $14,771 | $13,006 | 13.6% | | **Total** | **$61,836** | **$38,398** | **61.0%** | - Consolidated same-store sales increased by **21.8%**, with Nightclubs up **30.6%** and Bombshells up **7.6%**[114](index=114&type=chunk) Non-GAAP Performance Measures (in thousands, except per share data) | Metric | Q1 FY2022 | Q1 FY2021 | | :--- | :--- | :--- | | Adjusted EBITDA | $17,965 | $8,690 | | Non-GAAP Net Income | $10,352 | $3,537 | | Non-GAAP Diluted EPS | $1.10 | $0.39 | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Cash decreased to $18.0 million due to acquisitions, despite strong free cash flow of $15.3 million, with new debt secured post-quarter - The company paid for an **$88.4 million acquisition** with **$36.8 million in cash**, **$21.2 million in seller-financed notes**, and **500,000 shares of common stock**[148](index=148&type=chunk) Free Cash Flow (in thousands) | Metric | Three Months Ended Dec 31, 2021 | Three Months Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,264 | $6,274 | | Less: Maintenance capital expenditures | $998 | $605 | | **Free cash flow** | **$15,266** | **$5,669** | - In January 2022, the company borrowed **$18.7 million** from a bank lender for working capital purposes, secured by eleven real estate properties[149](index=149&type=chunk) [Capital Allocation Strategy](index=39&type=section&id=Capital%20Allocation%20Strategy) The capital allocation strategy prioritizes acquisitions with 25%-33% cash-on-cash returns, debt reduction, and potential share buybacks - The company targets acquisitions or developments that are expected to provide a minimum cash-on-cash return of **25%-33%**[171](index=171&type=chunk) - The company considers buying back its own stock if the after-tax yield on free cash flow is above **10%**[171](index=171&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported as of December 31, 2021, compared to the prior annual report - There were no material changes to the information regarding market risk from the company's most recent Annual Report on Form 10-K[172](index=172&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to a material weakness in impairment testing, with remediation efforts underway - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2021[174](index=174&type=chunk) - The ineffectiveness is due to a material weakness related to the design and implementation of controls over estimates for the impairment of goodwill, indefinite-lived intangibles, and long-lived assets[175](index=175&type=chunk) - Remediation efforts are underway, including adding controls to increase the precision of the review of assumptions used in the impairment valuation model[176](index=176&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings include an ongoing Patron Tax dispute and a pending settlement for a shareholder class action lawsuit - This section incorporates by reference the 'Legal Matters' section from Note 10 of the financial statements[180](index=180&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, except for potential risks from legal matters disclosed in Note 10 - There were no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2021[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased during the quarter, with approximately $9.0 million remaining for future share purchases - The company did not repurchase any shares of its common stock during the quarter[182](index=182&type=chunk) - As of February 7, 2022, approximately **$9.0 million** remained authorized for future share purchases[182](index=182&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - Lists required certifications from the CEO and CFO, as well as XBRL data files, filed as exhibits to the report[183](index=183&type=chunk)

ITHOSPITALITY OLDINGS INC Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants NASDAQ: RICK ICR Conference January 10-12, 2022 www.rcihospitality.com Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other stat ...

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q4 2021 Earnings Conference Call December 14, 2021 4:30 PM ET Company Participants Gary Fishman - Investor Relations Eric Langan - President & Chief Executive Officer Bradley Chhay - Chief Financial Officer Conference Call Participants Anthony Lebiedzinski - Sidoti & Company Adam Wyden - ADW Capital Management Joshua Zoepfel - Noble Capital Markets Jason Scheurer - Orchard Wealth Andrew Hollingworth - Holland Advisors Operator Greetings and welcome to the RCI Hos ...