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RCI Hospitality Expands Portfolio With Flight Club Acquisition
RCIRogers Communications(RCI) ZACKS·2025-01-23 15:21

Core Viewpoint - RCI Hospitality Holdings, Inc. has successfully acquired Flight Club for a total of 11million,whichincludescashandsellerfinancing,markingastrategicmovetoenhanceitsportfolioofhigh−endclubs[1][2].AcquisitionDetails−Theacquisitionpriceconsistsof11 million, which includes cash and seller financing, marking a strategic move to enhance its portfolio of high-end clubs [1][2]. Acquisition Details - The acquisition price consists of 3 million in cash, 5millioninsellerfinancingatan85 million in seller financing at an 8% interest rate, and 3 million for the associated real estate [1]. - Flight Club is expected to contribute approximately 2millioninannualizedadjustedEBITDAtoRCIHospitality′sfinancials[2].PropertyandBusinessOverview−Theacquiredpropertyspans10,000squarefeet,islocatedinInkster,MI,andhasbeenrecentlyrenovatedtoprovideupscaleentertainment[3].−Thebusinessiswell−establishedandisanticipatedtobenefitfromRCIHospitality′smarketing,purchasing,andoperationalexpertise[3].StrategicFocus−RCIHospitality′s"Back−to−Basics"approachaimstoenhancebusinessconditionsandprofitabilityinresponsetoeconomicchallenges,focusingonsame−storesalesandimprovingmargins[4].−Thecompanyhasmadesignificantprogresswiththisplan,includingsharebuybacksanddivestingunderperforminglocations[5].FuturePlans−ThecompanyintendstoconcentrateonitscorenightclubbusinessesandpursueadditionalacquisitionswhileimprovingtheperformanceofexistingBombshellslocations[6].−RCIHospitalityexpectstogenerateover2 million in annualized adjusted EBITDA to RCI Hospitality's financials [2]. Property and Business Overview - The acquired property spans 10,000 square feet, is located in Inkster, MI, and has been recently renovated to provide upscale entertainment [3]. - The business is well-established and is anticipated to benefit from RCI Hospitality's marketing, purchasing, and operational expertise [3]. Strategic Focus - RCI Hospitality's "Back-to-Basics" approach aims to enhance business conditions and profitability in response to economic challenges, focusing on same-store sales and improving margins [4]. - The company has made significant progress with this plan, including share buybacks and divesting underperforming locations [5]. Future Plans - The company intends to concentrate on its core nightclub businesses and pursue additional acquisitions while improving the performance of existing Bombshells locations [6]. - RCI Hospitality expects to generate over 250 million in free cash flow over the next five years, with plans to allocate half for club acquisitions and debt repayment, and the other half for share buybacks and dividends [7]. Stock Performance - RCI Hospitality's shares have increased by 25.1% over the past three months, outperforming the Zacks Leisure and Recreation Services industry's growth of 7.4% [10]. - The company's consistent progress with its strategic initiatives is driving operational improvements and enhancing shareholder value [10].