RCI Hospitality (US:RICK)2022-05-10 14:30Financial 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]