Financial Highlights - RCI Hospitality Holdings achieved record total revenues of $195.3 million for FY21, compared to $132.3 million in FY20 [15] - The company reported EPS of $3.37 and Non-GAAP EPS of $4.08 for FY21 [15] - Net cash from operating activities reached $42.0 million, with free cash flow at $36.1 million for FY21 [15] - As of September 30, 2021, the company had $35.7 million in cash and equivalents [15] - Adjusted EBITDA for FY21 was $60.2 million [40] Segment Performance - Nightclubs segment revenues for 4Q21 were $40.3 million [18] - Bombshells segment revenues for 4Q21 reached $14.4 million, a 69% increase compared to 4Q19, with 25% more units [24] - Bombshells operating margin for 4Q21 was 20.8% [24] Debt and Capital Allocation - As of September 30, 2021, total debt was $126.8 million with a weighted average interest rate of 5.64% [42] - As of November 30, 2021, total debt increased to $164.6 million with a weighted average interest rate of 6.24% [52] - The company refinanced its bank real estate loan for $99.1 million [15] Growth Initiatives - The company closed on the acquisition of 11 nightclubs in 6 states on October 18, 2021 [58]

For the fiscal year ended September 30, 2021 ☐ Transition report under 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) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Texas 76-0458229 (I.R.S. Emplo ...

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q3 2021 Earnings Conference Call August 5, 2021 5:00 PM ET Company Participants Gary Fishman - Investor Relations Eric Langan - President and Chief Executive Officer Bradley Chhay - Chief Financial Officer Conference Call Participants Greg Pendy - Sidoti and Company Darren McCammon - Cash Flow Kingdom Doug Weiss - DSW Investment Adam Wyden - ADW Capital Management Jason Scherer - Private Investor Steven Martin - Slater Operator Greetings. Welcome to The RCI Hospi ...

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section provides RCI Hospitality Holdings, Inc.'s unaudited condensed consolidated financial statements and comprehensive explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | ASSETS/LIABILITIES AND EQUITY | June 30, 2021 (in thousands) | September 30, 2020 (in thousands) | | :------------------------------ | :--------------------------------------- | :-------------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $29,068 | $15,605 | | Total current assets | $43,171 | $31,433 | | Total assets | $367,939 | $360,933 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $32,062 | $37,304 | | Total liabilities | $190,644 | $208,626 | | Total equity | $177,295 | $152,307 | - Total assets increased by **$7.01 million** from September 30, 2020, to June 30, 2021, primarily driven by an increase in cash and cash equivalents[12](index=12&type=chunk) - Total liabilities decreased by **$17.98 million**, while total equity increased by **$24.99 million**, indicating an improved financial position[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenues | $57,860 | $14,721 | $140,317 | $103,541 | | Income (loss) from operations | $18,507 | $(4,657) | $34,931 | $2,554 | | Net income (loss) attributable to RCIHH common stockholders | $12,302 | $(5,474) | $28,036 | $(3,292) | | Basic and diluted EPS | $1.37 | $(0.60) | $3.11 | $(0.36) | | Dividends per share | $0.04 | $0.03 | $0.12 | $0.10 | - Total revenues for the three months ended June 30, 2021, increased by **293.0%** year-over-year, and for the nine months, increased by **35.5%**, primarily due to recovery from COVID-19 closures[14](index=14&type=chunk) - The company reported a significant turnaround from a net loss in the prior year to net income for both the three and nine months ended June 30, 2021, with EPS of **$1.37** and **$3.11**, respectively[14](index=14&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Condensed Consolidated Statements of Changes in Equity (in thousands) | Equity Component (in thousands) | Balance at September 30, 2020 | Balance at June 30, 2021 | | :------------------------------ | :---------------------------- | :----------------------- | | Common Stock | $91 | $90 | | Additional Paid-In Capital | $51,833 | $50,040 | | Retained Earnings | $100,797 | $127,753 | | Total RCIHH Stockholders' Equity | $152,721 | $177,883 | | Noncontrolling Interests | $(414) | $(588) | | Total Equity | $152,307 | $177,295 | - Total RCIHH stockholders' equity increased by **$25.16 million** from September 30, 2020, to June 30, 2021, primarily driven by retained earnings[16](index=16&type=chunk) - The company purchased and retired **74,659 common shares** for approximately **$1.8 million** during the nine months ended June 30, 2021[16](index=16&type=chunk)[57](index=57&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $32,217 | $12,147 | | Net cash used in investing activities | $(7,186) | $(1,024) | | Net cash used in financing activities | $(11,568) | $(10,425) | | Net increase in cash and cash equivalents | $13,463 | $698 | | Cash and cash equivalents at end of period | $29,068 | $14,795 | - Net cash provided by operating activities significantly increased by **165.2%** to **$32.22 million** for the nine months ended June 30, 2021, compared to the prior year[19](index=19&type=chunk)[171](index=171&type=chunk) - Investing activities used more cash, primarily due to increased payments for property and equipment and intangible assets (**$10.79 million** in 2021 vs. **$5.57 million** in 2020)[19](index=19&type=chunk)[173](index=173&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=8&type=section&id=1.%20Basis%20of%20Presentation) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, and should be read with the Annual Report on Form 10-K[21](index=21&type=chunk) [2. Recent Accounting Standards and Pronouncements](index=8&type=section&id=2.%20Recent%20Accounting%20Standards%20and%20Pronouncements) - The Company adopted ASU 2016-13 (Credit Losses), ASU 2018-13 (Fair Value Measurement), and ASU 2019-01 (Leases) as of October 1, 2020, with no significant impact on consolidated financial statements[23](index=23&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The Company is still evaluating the impact of ASU 2019-12 (Income Taxes), effective for fiscal years beginning after December 15, 2020[28](index=28&type=chunk) [3. Liquidity and Impact of COVID-19 Pandemic](index=10&type=section&id=3.%20Liquidity%20and%20Impact%20of%20COVID-19%20Pandemic) - The COVID-19 pandemic caused major disruptions, leading to significant steps to augment cash flow, including debt deferment and cost reductions[31](index=31&type=chunk) - The Company received PPP funding under the CARES Act for its restaurants, shared services, and lounge, and recognized approximately **$1.7 million** in asset impairment due to the pandemic[33](index=33&type=chunk)[36](index=36&type=chunk) [4. Revenues](index=10&type=section&id=4.%20Revenues) - Revenue is recognized at the point-of-sale for alcoholic beverages, food, merchandise, and services, net of discounts[37](index=37&type=chunk) Revenue by Type (in thousands) | Revenue Type (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Sales of alcoholic beverages | $25,092 | $7,623 | $62,725 | $45,285 | | Sales of food and merchandise | $12,058 | $3,452 | $30,205 | $17,378 | | Service revenues | $16,880 | $2,907 | $38,442 | $34,448 | | Other | $3,830 | $739 | $8,945 | $6,430 | | Total revenues | $57,860 | $14,721 | $140,317 | $103,541 | - The Company signed a franchise development agreement in December 2020 to open three Bombshells locations in San Antonio, Texas[42](index=42&type=chunk) [5. Selected Account Information](index=12&type=section&id=5.%20Selected%20Account%20Information) Selected Account Information (in thousands) | Account (in thousands) | June 30, 2021 | September 30, 2020 | | :--------------------- | :------------ | :----------------- | | Accounts receivable, net | $2,458 | $6,767 | | Prepaid expenses and other current assets | $4,062 | $6,488 | | Accrued liabilities | $11,738 | $14,573 | | Total selling, general and administrative expenses (3 months) | $14,697 | $8,908 | | Total selling, general and administrative expenses (9 months) | $39,467 | $39,889 | - Accounts receivable, net, decreased significantly from **$6.77 million** to **$2.46 million**, primarily due to a decrease in income tax refundable[44](index=44&type=chunk) - Accrued liabilities decreased from **$14.57 million** to **$11.74 million**, mainly due to lower insurance and interest accruals[45](index=45&type=chunk) [6. Assets Held for Sale](index=14&type=section&id=6.%20Assets%20Held%20for%20Sale) - As of June 30, 2021, assets held for sale were **$4.9 million**, up from **$0** at September 30, 2020[48](index=48&type=chunk) - During Q1 2021, three real estate properties were classified as held-for-sale with an aggregate estimated fair value of **$7.4 million**, after a **$1.4 million** impairment charge[49](index=49&type=chunk) - One property was sold for **$3.1 million** on May 7, 2021, with proceeds used to pay down **$2.0 million** in related debt[50](index=50&type=chunk) [7. Debt](index=14&type=section&id=7.%20Debt) - The Company negotiated extensions on **$1.69 million** of notes due November 1, 2020, to November 1, 2021[52](index=52&type=chunk) - A new **$2.175 million** promissory note was borrowed on January 25, 2021, with a **3.99%** initial interest rate and a 20-year term, guaranteed by the CEO[53](index=53&type=chunk) - PPP loans amounting to **$5.3 million** in principal and interest were forgiven during the nine months ended June 30, 2021, included as non-operating gains[56](index=56&type=chunk) [8. Equity](index=14&type=section&id=8.%20Equity) - During the nine months ended June 30, 2021, the Company purchased and retired **74,659 common shares** for approximately **$1.79 million**[57](index=57&type=chunk) - Cash dividends of **$0.12 per share** were paid during the nine months ended June 30, 2021, totaling approximately **$1.08 million**, an increase from **$0.10 per share** (**$920 thousand**) in the prior year[57](index=57&type=chunk)[58](index=58&type=chunk) [9. Income Taxes](index=15&type=section&id=9.%20Income%20Taxes) Income Tax Metrics | Income Tax Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax expense (benefit) | $3,986 | $(1,437) | $5,540 | $(1,262) | | Effective income tax rate | 24.4% | 20.5% (benefit) | 16.6% | 26.9% (benefit) | - The effective tax rate for the nine months ended June 30, 2021, was **16.6% expense**, influenced by state taxes, permanent differences, tax credits, and the impact of PPP loan forgiveness[60](index=60&type=chunk)[63](index=63&type=chunk) - The Company received forgiveness for **11 out of 12 PPP loans**, totaling **$5.3 million** in principal and interest, which impacted non-operating gains[63](index=63&type=chunk) [10. Commitments and Contingencies](index=15&type=section&id=10.%20Commitments%20and%20Contingencies) [Legal Matters](index=15&type=section&id=Legal%20Matters) - The aggregate balance of the Texas Patron Tax settlement liability was **$1.2 million** as of June 30, 2021, down from **$2.2 million** at September 30, 2020[66](index=66&type=chunk) - A U.S. District Court ruled the Texas Patron Tax unconstitutional as applied, which the State of Texas has appealed[67](index=67&type=chunk) - The Company is vigorously defending against a consolidated securities class action lawsuit filed in 2019, with a trial date set for January 9, 2023[72](index=72&type=chunk) - A shareholder derivative action filed in 2019 was dismissed without prejudice on June 21, 2021, following the plaintiff's motion to voluntarily dismiss[75](index=75&type=chunk) - The Company is involved in an image infringement lawsuit and a landlord dispute, both of which are being vigorously defended and are subject to appeal processes[76](index=76&type=chunk)[77](index=77&type=chunk) - The Company is a plaintiff in lawsuits challenging COVID-19 restrictions on its businesses[82](index=82&type=chunk) [11. Segment Information](index=20&type=section&id=11.%20Segment%20Information) - The Company operates two principal reportable segments: Nightclubs and Bombshells, with an 'Other' category for media and energy drink divisions[86](index=86&type=chunk) Segment Revenues and Operating Income (Three Months Ended June 30, in thousands) | Segment (in thousands) | Revenues (3M Q2 2021) | Revenues (3M Q2 2020) | Op. Income (3M Q2 2021) | Op. Income (3M Q2 2020) | | :--------------------- | :-------------------- | :-------------------- | :---------------------- | :---------------------- | | Nightclubs | $41,031 | $6,013 | $18,350 | $(3,038) | | Bombshells | $16,077 | $8,531 | $4,404 | $1,850 | | Other | $752 | $177 | $321 | $(92) | | General corporate | N/A | N/A | $(4,568) | $(3,377) | | **Total** | **$57,860** | **$14,721** | **$18,507** | **$(4,657)** | Segment Revenues and Operating Income (Nine Months Ended June 30, in thousands) | Segment (in thousands) | Revenues (9M Q2 2021) | Revenues (9M Q2 2020) | Op. Income (9M Q2 2021) | Op. Income (9M Q2 2020) | | :--------------------- | :-------------------- | :-------------------- | :---------------------- | :---------------------- | | Nightclubs | $97,015 | $75,239 | $37,313 | $13,002 | | Bombshells | $42,218 | $27,684 | $10,263 | $4,109 | | Other | $1,084 | $618 | $107 | $(423) | | General corporate | N/A | N/A | $(12,752) | $(14,134) | | **Total** | **$140,317** | **$103,541** | **$34,931** | **$2,554** | [12. Related Party Transactions](index=21&type=section&id=12.%20Related%20Party%20Transactions) - CEO Eric Langan personally guarantees all commercial bank indebtedness of the Company, totaling **$81.6 million** as of June 30, 2021[92](index=92&type=chunk) - Related parties, including an employee (brother of a director) and a brother of the CFO, hold notes totaling **$600 thousand** as part of a larger private lender group[93](index=93&type=chunk) - The Company utilized Nottingham Creations (owned by Eric Langan's brother) for furniture fabrication and TW Mechanical LLC (partially owned by Eric Langan's son-in-law) for plumbing and HVAC services, with billings of **$118.09 thousand** and **$388.18 thousand** respectively for the nine months ended June 30, 2021[94](index=94&type=chunk)[95](index=95&type=chunk) [13. Leases](index=22&type=section&id=13.%20Leases) Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Nine Months Ended June 30, 2021 | Nine Months Ended June 30, 2020 | | :--------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating lease expense – fixed payments | $828 | $839 | $2,485 | $2,519 | | Variable lease expense | $47 | $158 | $155 | $288 | | Short-term equipment and other lease expense | $296 | $97 | $843 | $856 | | Sublease income | $(2) | $(2) | $(5) | $(8) | | Total lease expense, net | $1,169 | $1,092 | $3,478 | $3,655 | - The weighted average remaining lease term is **12 years**, with a weighted average discount rate of **6.0%** as of June 30, 2021[98](index=98&type=chunk) [14. Subsequent Events](index=22&type=section&id=14.%20Subsequent%20Events) - On July 23, 2021, the Company entered into definitive agreements to acquire eleven gentlemen's clubs, six related real estate properties, and associated intellectual property for a total of **$88.0 million**[99](index=99&type=chunk) - The acquisition is subject to permit transfers, bank financing, and other customary closing conditions[99](index=99&type=chunk) - The Company is negotiating with its bank lender to refinance existing real estate debt and partially finance the real estate purchases related to the acquisition[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, COVID-19 recovery, liquidity, and strategic growth [Overview](index=24&type=section&id=Overview) - RCI Hospitality Holdings, Inc. operates **48 establishments** (adult entertainment and restaurants/bars) and a business communications company for the adult nightclubs industry[105](index=105&type=chunk) - The Company has two principal reportable segments: Nightclubs and Bombshells, with other operating segments combined into 'Other'[105](index=105&type=chunk) [Impact of COVID-19 Pandemic](index=24&type=section&id=Impact%20of%20COVID-19%20Pandemic) - COVID-19 heavily impacted businesses through temporary closures and restrictions, leading to a **293.0%** increase in total revenues for the three months ended June 30, 2021, compared to the prior year's pandemic-affected period[106](index=106&type=chunk) - The Company implemented debt deferments, payroll cost reductions, and expense modifications to mitigate anticipated declines in operating cash flows[107](index=107&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management's estimates and assumptions are crucial for financial statements, based on historical experience and reasonable forecasts, with actual results potentially differing[110](index=110&type=chunk) - No significant changes in accounting policies or estimates occurred during the three and nine months ended June 30, 2021, other than newly adopted accounting standards disclosed in Note 2[112](index=112&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) [Highlights of the Company's operating results](index=25&type=section&id=Highlights%20of%20the%20Company%27s%20operating%20results) Operating Results Highlights | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 9 Months Ended June 30, 2021 | 9 Months Ended June 30, 2020 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $57.9 million (↑293.0%) | $14.7 million | $140.3 million (↑35.5%) | $103.5 million | | Nightclubs Revenue | $41.0 million (↑582.4%) | $6.0 million | $97.0 million (↑28.9%) | $75.2 million | | Bombshells Revenue | $16.1 million (↑88.5%) | $8.5 million | $42.2 million (↑52.5%) | $27.7 million | | Basic & Diluted EPS | $1.37 | $(0.60) | $3.11 | $(0.36) | | Net Cash from Operations | $15.0 million (↑8,918.7%) | $166,000 | $32.2 million (↑165.2%) | $12.1 million | - Compared to pre-pandemic fiscal 2019, total revenues increased by **23.0%** for the quarter and **3.3%** year-to-date, driven by strong Bombshells growth[114](index=114&type=chunk)[116](index=116&type=chunk) [Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020](index=26&type=section&id=Three%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202020) Three Months Ended June 30, 2021 vs 2020 (in thousands) | Metric (in thousands) | Q3 2021 Amount | Q3 2021 % of Revenues | Q3 2020 Amount | Q3 2020 % of Revenues | Change Amount | Change % | | :-------------------- | :------------- | :-------------------- | :------------- | :-------------------- | :------------ | :------- | | Total Revenues | $57,860 | 100.0% | $14,721 | 100.0% | $43,139 | 293.0% | | Total Operating Expenses | $39,353 | 68.0% | $19,378 | 131.6% | $(19,975) | (103.1)% |\ | Income (Loss) from Operations | $18,507 | 32.0% | $(4,657) | (31.6)% | $23,164 | 497.4% | | Net Income (Loss) | $12,321 | 21.3% | $(5,568) | (37.8)% | $17,889 | 321.3% | - Nightclubs revenues increased by **582.4%** due to prior year closures, and **8.3%** compared to pre-pandemic Q3 2019, driven by alcoholic beverages and food/merchandise sales[118](index=118&type=chunk) - Bombshells revenues increased by **88.5%** year-over-year and **83.6%** compared to Q3 2019, primarily due to two new locations[119](index=119&type=chunk) - Operating expenses as a percentage of revenues decreased significantly from **131.6%** to **68.0%**, mainly due to higher sales and a shift to higher-margin service revenues[120](index=120&type=chunk)[121](index=121&type=chunk) [Nine Months Ended June 30, 2021 Compared to Nine Months Ended June 30, 2020](index=30&type=section&id=Nine%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20Nine%20Months%20Ended%20June%2030%2C%202020) Nine Months Ended June 30, 2021 vs 2020 (in thousands) | Metric (in thousands) | 9M 2021 Amount | 9M 2021 % of Revenues | 9M 2020 Amount | 9M 2020 % of Revenues | Change Amount | Change % | | :-------------------- | :------------- | :-------------------- | :------------- | :-------------------- | :------------ | :------- | | Total Revenues | $140,317 | 100.0% | $103,541 | 100.0% | $36,776 | 35.5% | | Total Operating Expenses | $105,386 | 75.1% | $100,987 | 97.5% | $(4,399) | (4.4)% |\ | Income from Operations | $34,931 | 24.9% | $2,554 | 2.5% | $32,377 | 1,267.7% |\ | Net Income (Loss) | $27,862 | 19.9% | $(3,427) | (3.3)% | $31,289 | 913.0% | - Nightclubs revenues increased by **28.9%** year-over-year but decreased by **13.9%** compared to pre-pandemic 9M 2019, due to early fiscal 2021 restrictions[136](index=136&type=chunk) - Bombshells revenues increased by **52.5%** year-over-year and **89.4%** compared to 9M 2019, driven by new locations[137](index=137&type=chunk) - Operating expenses as a percentage of revenues decreased from **97.5%** to **75.1%**, primarily due to higher sales and lower impairment charges in the current period[139](index=139&type=chunk)[144](index=144&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) - Management uses non-GAAP measures like Non-GAAP Operating Income, Non-GAAP Net Income, Non-GAAP Net Income per Diluted Share, and Adjusted EBITDA to provide a clearer understanding of ongoing business operations[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) Non-GAAP Financial Metrics (in thousands, except per share) | Non-GAAP Metric (in thousands, except per share) | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 9 Months Ended June 30, 2021 | 9 Months Ended June 30, 2020 | | :----------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Adjusted EBITDA | $20,402 | $(1,904) | $42,675 | $17,973 | | Non-GAAP Net Income (Loss) | $12,240 | $(6,772) | $22,560 | $3,362 | | Non-GAAP Diluted EPS | $1.36 | $(0.74) | $2.50 | $0.36 | | Non-GAAP Operating Income (Loss) | $18,415 | $(4,084) | $36,428 | $11,604 | - Adjusted EBITDA increased significantly to **$42.68 million** for the nine months ended June 30, 2021, from **$17.97 million** in the prior year, reflecting improved operating performance[158](index=158&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Flows from Operating Activities](index=37&type=section&id=Cash%20Flows%20from%20Operating%20Activities) Operating Cash Flow (in thousands) | Operating Cash Flow (in thousands) | 9 Months Ended June 30, 2021 | 9 Months Ended June 30, 2020 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | $27,862 | $(3,427) | | Depreciation and amortization | $6,197 | $6,696 | | Gain on debt extinguishment | $(5,298) | $- | | Impairment of assets | $1,672 | $9,192 | | Net cash provided by operating activities | $32,217 | $12,147 | - Net cash provided by operating activities increased by **165.2%** to **$32.22 million**, driven by higher income from operations and lower income taxes paid[171](index=171&type=chunk) [Cash Flows from Investing Activities](index=39&type=section&id=Cash%20Flows%20from%20Investing%20Activities) Investing Cash Flow (in thousands) | Investing Cash Flow (in thousands) | 9 Months Ended June 30, 2021 | 9 Months Ended June 30, 2020 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Payments for property and equipment and intangible assets | $(10,788) | $(5,565) | | Proceeds from sale of businesses and assets | $3,213 | $2,041 | | Net cash used in investing activities | $(7,186) | $(1,024) | - Capital expenditures for new facilities increased to **$6.18 million** (from **$3.45 million**), primarily for a new Bombshells location, a renovated club, and a liquor license[173](index=173&type=chunk) - Maintenance capital expenditures also increased to **$4.61 million** (from **$2.11 million**)[173](index=173&type=chunk) [Cash Flows from Financing Activities](index=39&type=section&id=Cash%20Flows%20from%20Financing%20Activities) Financing Cash Flow (in thousands) | Financing Cash Flow (in thousands) | 9 Months Ended June 30, 2021 | 9 Months Ended June 30, 2020 | | :--------------------------------- | :--------------------------- | :--------------------------- | | Proceeds from debt obligations | $2,176 | $6,503 | | Payments on debt obligations | $(10,845) | $(7,489) | | Purchase of treasury stock | $(1,794) | $(8,488) | | Payment of dividends | $(1,080) | $(920) | | Net cash used in financing activities | $(11,568) | $(10,425) | - The Company purchased fewer treasury shares (**$1.79 million** vs. **$8.49 million**) and paid higher dividends (**$1.08 million** vs. **$920 thousand**) compared to the prior year[177](index=177&type=chunk)[178](index=178&type=chunk) - Free cash flow, calculated as net cash from operating activities less maintenance capital expenditures, increased by **175.1%** to **$27.6 million**[179](index=179&type=chunk)[180](index=180&type=chunk) [Share Repurchase](index=41&type=section&id=Share%20Repurchase) - The Company repurchased **74,659 shares** of common stock at an average price of **$24.03** during the nine months ended June 30, 2021[184](index=184&type=chunk) - Approximately **$9.0 million** remains authorized for additional share repurchases as of June 30, 2021[184](index=184&type=chunk) [Impact of Inflation](index=41&type=section&id=Impact%20of%20Inflation) - The Company has not experienced a material overall impact from inflation in recent years and has managed to recover increased costs through price increases[185](index=185&type=chunk) [Seasonality](index=42&type=section&id=Seasonality) - Nightclub operations are seasonal, with reduced revenues from April through September (fiscal Q3 and Q4) and strongest results from October through March (fiscal Q1 and Q2)[186](index=186&type=chunk) - Bombshells revenues are also affected by sporting events, causing unusual sales changes[186](index=186&type=chunk) [Capital Allocation Strategy](index=42&type=section&id=Capital%20Allocation%20Strategy) [Growth Strategy](index=42&type=section&id=Growth%20Strategy) - The growth strategy includes acquiring existing units, opening new units, franchising the Bombshells brand, forming joint ventures, developing new club concepts, and controlling real estate[188](index=188&type=chunk) - The Company aims for a minimum cash-on-cash return of **25%-33%** on new club or restaurant developments/acquisitions[192](index=192&type=chunk) [Nightclubs](index=42&type=section&id=Nightclubs) - Nightclub operations are expected to grow organically and through acquisitions in high-growth potential markets[189](index=189&type=chunk)[190](index=190&type=chunk) [Bombshells](index=42&type=section&id=Bombshells) - Bombshells aims for organic growth and expansion into new markets, with all ten existing locations in Texas as of June 30, 2021[191](index=191&type=chunk) - The Company is increasing efforts in Bombshells franchising, having signed its first franchisee in San Antonio, Texas, in December 2020[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported compared to the prior fiscal year's Annual Report on Form 10-K - No material changes to market risk disclosures were reported as of June 30, 2021, compared to the prior fiscal year's 10-K[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses disclosure controls, internal control over financial reporting, income tax material weakness, and remediation [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that disclosure controls and procedures were not effective as of June 30, 2021, due to a previously identified material weakness in internal control over financial reporting[195](index=195&type=chunk) [Previously Reported Material Weakness in Internal Control Over Financial Reporting](index=43&type=section&id=Previously%20Reported%20Material%20Weakness%20in%20Internal%20Control%20Over%20Financial%20Reporting) - A material weakness was identified in internal control over financial reporting as of September 30, 2020, specifically concerning the design and implementation of controls over the income tax provision[196](index=196&type=chunk) [Remediation Efforts to Address Material Weakness](index=43&type=section&id=Remediation%20Efforts%20to%20Address%20Material%20Weakness) - Remediation efforts include enhancing the risk assessment process for income tax provision controls, implementing enhanced review controls by senior accounting management, and retaining a new third-party income tax consultant[197](index=197&type=chunk)[198](index=198&type=chunk) [Changes in Internal Control Over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No other material changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, beyond the described remediation efforts[199](index=199&type=chunk) PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, exhibits, and report signatures [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference detailed legal matters from Note 10 of the financial statements - Legal proceedings information is incorporated by reference from Note 10 of the financial statements[201](index=201&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, except for additional legal disclosures and franchising risks - No material changes to risk factors were disclosed, except for those arising from additional legal matters (Note 10) and risks associated with franchising operations[202](index=202&type=chunk) - Risks associated with franchising include potential negative impacts on brand values if franchisees do not operate consistently with company standards[203](index=203&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock during the quarter, with remaining authorization for future repurchases - No common stock shares were repurchased during the three months ended June 30, 2021[204](index=204&type=chunk) - As of August 4, 2021, approximately **$9.0 million** remains authorized for additional share repurchases[204](index=204&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL documents - Exhibits include CEO and CFO certifications (Rule 13a-14(1) or 15d-14(a), Section 906 of Sarbanes-Oxley Act) and various XBRL taxonomy documents[206](index=206&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section contains the signatures of the CEO and CFO, certifying the filing of the report - The report is signed by Eric S. Langan, CEO and President, and Bradley Chhay, CFO and Principal Accounting Officer, on August 5, 2021[209](index=209&type=chunk)

Financial Data and Key Metrics Changes - Total revenues for Q2 2021 were $44.1 million, up 9% year-over-year, marking the first year-over-year quarterly increase since the pandemic began [10] - GAAP EPS was $0.68, compared to a loss of $0.37 in the same quarter last year, while non-GAAP EPS was $0.75, up from $0.47 [11] - Free cash flow reached $9 million, the third highest in the company's history [11] - Cash on hand at the end of the quarter was $20.2 million, a two-year high [23] Business Line Data and Key Metrics Changes - Nightclubs segment revenues were $30.8 million, up 22.2% from the previous quarter and down only 1.8% year-over-year [12] - Same-store sales for nightclubs increased by 3.6% [13] - Bombshells segment generated $13.1 million in revenue, a 49.2% increase year-over-year, with same-store sales rising 48.7% [17] Market Data and Key Metrics Changes - Nightclubs and Bombshells sales exceeded $18 million in April [8] - The company noted that restrictive curfews in northern clubs are beginning to end, which is expected to positively impact sales [8] Company Strategy and Development Direction - The company aims to drive shareholder value by increasing free cash flow per share by 10% to 15% annually [30] - Strategies include mergers and acquisitions, organic growth of Bombshells, and share buybacks when free cash flow yield exceeds 10% [33][35] - The company is focused on refinancing real estate debt to lower interest expenses and extend terms [28][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued recovery as COVID-19 restrictions ease, with expectations of increased revenues from lifted curfews [42] - The company anticipates a strong year ahead, with potential revenues reaching $250 million or more if current trends continue [54][55] - Management noted that consumer demand remains high, with a significant increase in spending observed [43] Other Important Information - The company has been proactive in managing costs, with salaries and wages improving to 25.4% of revenues from 30.2% [21] - Debt has decreased significantly, reflecting both extinguishment and scheduled paydowns, reaching the lowest level in almost two years [25] Q&A Session Summary Question: What factors contributed to the improvement in salaries and wages? - Management attributed the success to loyal employees and increased revenues, but acknowledged that salaries may need to rise to remain competitive in the market [40] Question: How significant will the lifting of curfews be for business? - Management indicated that lifting curfews could lead to a substantial increase in revenues, estimating potential gains of $60,000 to $800,000 per week across key markets [42] Question: What is the outlook for Bombshells' performance? - Management believes that Bombshells' current performance is sustainable, projecting revenues around $13 million for the foreseeable future [53] Question: How does the company plan to deploy potential free cash flow? - The company plans to pursue multi-club acquisitions and is open to paying higher multiples for the right opportunities [57][58] Question: What is the status of the M&A pipeline? - Management expects a busy year for acquisitions, with many club owners interested in selling before potential capital gains tax increases [70]

CI HOSPITALITY OLDINGS INC Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants NASDAQ: RICK 2Q21 Conference Call May 10, 2021 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ 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) Texas 76-0458229 (I. ...

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) Q1 2021 Results Conference Call February 9, 2021 4:30 PM ET Company Participants Gary Fishman - Investor Relations Eric Langan - President and Chief Executive Officer Bradley Chhay - Chief Financial Officer Conference Call Participants Gregory Pendy - Sidoti and Company Adam David Wyden - ADW Capital Management Steven Martin - Slater Capital Management Operator Greetings, and welcome to RCI Hospitality Holdings conference call and webcast. At this time all partic ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 ☐ 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) Texas 76-0458229 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 ☐ Transition report under 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) Texas 76-0458229 (I.R.S. Emplo ...