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].

Core Insights - The company reported a decline in total revenues for 4Q24, with revenues of $73.2 million compared to $75.3 million in 4Q23, despite an increase in same-store sales for nightclubs [1][2] - Non-GAAP EPS increased to $1.63 in 4Q24 from $1.11 in 4Q23, indicating improved operational performance despite challenges [1][2] - The company plans to implement a "Back-to-Basics" capital allocation strategy focusing on nightclub acquisitions and returning capital to shareholders through buybacks [1][2] Financial Performance - Total revenues for FY24 were $295.6 million, slightly up from $293.8 million in FY23 [1] - Net income attributable to common stockholders decreased to $0.2 million in 4Q24 from $2.2 million in 4Q23, reflecting operational challenges [1][2] - Free cash flow increased to $13.2 million in 4Q24 from $11.1 million in 4Q23, demonstrating improved cash generation [1][2] Segment Analysis - Nightclubs segment revenues were $60.6 million, a slight decrease of 0.5%, with a same-store sales growth of 2.2% impacted by closures due to a hurricane [2] - Bombshells segment revenues declined by 12.1% to $11.9 million, with a significant same-store sales decline of 16.2% due to weather-related closures [2] - The corporate segment expenses increased to $7.1 million, reflecting higher operational costs [2] Capital Allocation Strategy - The company aims to allocate 50% of free cash flow towards nightclub acquisitions and the other 50% towards share buybacks and dividends [1][2] - The financial targets for FY29 include total revenues of $400 million and free cash flow of $75 million, with a goal to reduce shares outstanding to 7.5 million [1][2] Share Repurchase and Debt Management - In 4Q24, the company repurchased 174,790 shares for $7.8 million, reducing the total shares outstanding to 8.955 million [2] - Total debt decreased to $238.2 million as of September 30, 2024, down from $245.4 million at June 30, 2024, primarily due to debt elimination from the sale of Bombshells San Antonio [2]

Core Viewpoint - The article emphasizes the importance of value investing and highlights RCI Hospitality (RICK) as a strong stock opportunity based on its valuation metrics and earnings outlook [1][2][6] Group 1: Value Investing - Value investing is a preferred strategy for identifying strong stocks, utilizing fundamental analysis and traditional valuation metrics to find undervalued stocks [2] - Zacks has developed a Style Scores system to identify stocks with specific traits, particularly focusing on those with high grades in the "Value" category [3] Group 2: RCI Hospitality (RICK) Overview - RCI Hospitality currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - The stock has a Forward P/E ratio of 12.36, significantly lower than the industry average of 22.22, suggesting it may be undervalued [4] - RICK's Forward P/E has fluctuated between 8.63 and 61.17 over the past 12 months, with a median of 10.65 [4] - The P/B ratio for RICK is 1.72, which is attractive compared to the industry's average P/B of 4.83, indicating a favorable market value versus book value [5] - Over the past 52 weeks, RICK's P/B has ranged from 1.29 to 2.27, with a median of 1.64 [5] - These valuation metrics suggest that RICK is likely being undervalued, supported by a strong earnings outlook [6]

Core Points - RCI Hospitality Holdings, Inc. announced that Bombshells Restaurant & Bar will offer a free entree for veterans on Veterans Day, November 11, 2024, along with a 20% discount on other items for veterans and their families [1][2] - The offer is valid at Bombshells locations in Houston, Dallas, Austin, and San Antonio, with operating hours from 11 AM to 2 AM [1] - To qualify for the free entree and discount, veterans and active service members must present valid military identification [2] Discounts and Offers - Families accompanying veterans and active service members will also receive a 20% discount on entrees and other items on Veterans Day [2] - The free entree and discount do not apply to alcoholic beverages and are not eligible for rain checks, gift cards, or take-out [2] - On any other day of the year, veterans and active service members can receive a 20% discount on all items, excluding alcoholic beverages [3] Company Overview - Bombshells Restaurant & Bar is a military-themed casual dining chain that emphasizes a sports and fun atmosphere, featuring large interiors, outdoor patios, and a vibrant environment [4] - The restaurant offers a scratch kitchen and a diverse menu for lunch, dinner, and late-night dining [4]

Core Insights - RCI Hospitality Holdings, Inc. (RICK) reported a total sales of $72.1 million for Q4 fiscal 2024, reflecting a 2.6% decrease year over year due to external challenges like Hurricane Beryl [2][4] - The company experienced a decline in same-store sales by 1.1% year over year, primarily impacted by temporary closures at key locations [2][3] Q4 Preliminary Revenue Results - Nightclub sales totaled $60.2 million, down 0.5% year over year, affected by Hurricane Beryl causing 10 closure days at three clubs in Houston [3] - Bombshells restaurant sales were reported at $11.9 million, down 12.2% from the previous year, with same-store sales falling 16.2% year over year due to prolonged closures in Houston [4] Other Updates - RICK repurchased 0.17 million shares of common stock for approximately $7.8 million during Q4, with $21 million remaining in stock repurchase authorization [5] - The company plans to expand with six new clubs and restaurants in fiscal 2025, including the reopening of Baby Dolls Fort Worth [6] Valuation and Investment Opportunity - RICK's stock is trading at a 12-month forward P/E ratio of 10.10, significantly lower than the industry average of 17.84, indicating potential undervaluation [7] - The company's focus on enhancing its portfolio and strategic share repurchases suggests a commitment to maximizing shareholder value, making it an attractive investment opportunity [8] Stock Performance - RICK shares have gained 7.7% over the past three months, compared to a 12.4% rise in the industry [9]

RCI Hospitality Holdings, Inc. (RICK) is benefiting from efficiently progressing with its Back to Basics business approach and following an effective capital allocation strategy. These strategic initiatives are positively impacting the company's business, resulting in notable operational improvements and shareholder value. In the past six months, the company's shares have lost 24.4% against the Zacks Leisure and Recreation Services industry's 12% growth. However, this Zacks Rank #2 (Buy) company has shown s ...

Building a portfolio of well-managed, high cash-flowing nightclubs and sports-bar restaurants NASDAQ: RICK | 3Q24 Conference Call | August 8, 2024 | www.rcihospitality.com | @RCIHHinc Today's Speakers Eric Langan President & CEO RCI Hospitality Holdings, Inc. @RicksCEO Bradley Chhay Chief Financial Officer RCI Hospitality Holdings, Inc. @BradleyChhay Mark Moran CEO Equity Animal @itsmarkmoran 2 X Spaces Instructions • Log in to: X (formerly Twitter) • Go To: @RicksCEO on X: https://x.com/RicksCEO • Select t ...

Financial Data and Key Metrics - Revenue for Q3 2024 was $76.2 million, with GAAP EPS at a loss of $0.56 per share due to a non-cash impairment of $17.9 million [8] - Non-GAAP EPS was $1.35, and free cash flow reached a year-high of $13.8 million, with EBITDA at $20.1 million [8] - Nightclubs revenue increased by $374,000 year-over-year to $62.8 million, with same-store sales growth of 1.7% [8] - Bombshells revenue declined by 8.7% to $13.1 million, but non-GAAP operating income increased by 89.3% sequentially [10] - Corporate expenses were 9.4% of total revenues year-over-year, consistent with the previous quarter [11] Business Line Performance - Nightclubs achieved record revenues, with alcoholic beverage sales up 4.9%, food and merchandise up 5.1%, and service revenue down 5.3% [9] - Bombshells saw a sequential revenue increase of 2.9%, with margins improving from 5.9% to 10.8% [4][10] - Seven locations were opened, converted, or enhanced during the fiscal year, with seven more in progress [4] Market Performance - Severe weather in Texas and South Florida temporarily impacted club operations, with 10 day closures for Bombshells and 1 for clubs in Q3 [11] - Hurricane Beryl caused 10 day closures for clubs and 26 for Bombshells in Q4 [11] Strategic Direction and Industry Competition - The company is focusing on a "Back to Basics" approach to increase revenues, reduce costs, and expand margins [3] - A five-year strategic plan is being developed, with two pillars: operational efficiency and capital allocation [7] - The company withdrew its Colorado casino license application to focus on projects with more immediate results [4] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about achieving 15% margins for Bombshells, with potential to reach 20% as new stores open [18] - The company is actively pursuing M&A opportunities, with a focus on clubs in the Detroit market [19] - Management is reviewing underperforming locations and may sell or close some to improve overall profitability [18] Other Important Information - The company reduced its share count to less than 9 million through a share buyback program, purchasing 700,000 shares at a 22% discount [5] - A $20 million bank real estate loan was secured, and the share repurchase program was increased by $25 million [4] - The company is rebuilding the Baby Dolls Fort Worth location after a fire and is reviewing all operating units to ensure financial objectives are met [15] Q&A Session Question: Progress on Bombshells margins and restructuring timeline - Management aims for 15% margins, with potential to reach 20% as new stores open in 2025 [18] Question: M&A environment and criteria for club properties - The company is exploring opportunities in the Detroit market and expects acquisitions at closer to 5x multiples [19] Question: Colorado properties and liquidation timeline - The company is in discussions to lease or sell Colorado properties, with an LOI expected soon for one property [20] Question: Impact of potential interest rate declines on refinancing opportunities - No immediate refinancing plans, but the company is monitoring interest rates for future opportunities [21] Question: Cumulative cash invested in Bombshells and casinos - Approximately $6 million in non-income producing properties and $8 million in the Rick's Cabaret Steakhouse [27] Question: Fire at Baby Dolls Fort Worth location - The fire was likely an electrical issue, and the company is already redesigning the property for reopening [29]