RCI Reports 4Q24 & FY24 Results, Launches 5-Year Capital Allocation Plan, Hosts 4:30 PM ET X Spaces Call Today
HOUSTON – December 16, 2024 – RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2024 fourth quarter and year ended September 30, 2024. The company also filed its Form 10-K today and announced details of its "Back to Basics" Five-Year Capital Allocation Plan.
Summary Financials
| ($ in millions, except per share and shares) |
4Q24 |
4Q23 |
FY24 |
FY23 |
| Total revenues |
$73.2 |
$75.3 |
$295.6 |
$293.8 |
| EPS |
$0.03 |
$0.23 |
$0.33 |
$3.13 |
| Non-GAAP EPS1 |
$1.63 |
$1.11 |
$4.72 |
$4.90 |
| Impairments and other charges, net |
$10.1 |
$9.9 |
$36.6 |
$15.6 |
| Net cash provided by operating activities |
$15.7 |
$12.1 |
$55.9 |
$59.1 |
| Free cash flow1 |
$13.2 |
$11.1 |
$48.4 |
$53.2 |
| Net income attributable to RCIHH common stockholders |
$0.2 |
$2.2 |
$3.0 |
$29.2 |
| Adjusted EBITDA1 |
$17.9 |
$20.2 |
$72.6 |
$85.0 |
| Weighted average shares used in computing EPS – basic and diluted |
9.01 |
9.42 |
9.25 |
9.34 |
4Q24 Summary
Eric Langan, President and CEO, stated: "Nightclubs same-store sales increased for the second quarter in a row, the first time since the first half of FY23, but total company sales declined due to a hurricane and fire, resulting in a lower EPS. However, non-GAAP EPS, net cash provided by operating activities, and free cash flow all increased. We ended FY24 with 8.955 million shares outstanding, down 4.7% year over year, and have continued to buy back shares in the market."
"Back to Basics" FY25-29 Capital Allocation Plan
Mr. Langan continued: "RCI has grown significantly since we initiated our Capital Allocation Strategy at year-end FY15. Revenue has more than doubled, from $135 million to $296 million, a CAGR of 9%. More importantly, free cash flow has more than tripled, from $15 million to $48 million, a CAGR of 14%, while our share count fell by 13%. We are proud of this achievement and thank all employees, entertainers, and partners who made this possible."
"Looking ahead, we plan to build on this track record through a 'Back-to-Basics' strategy. Operationally, this means focusing on our Nightclub business and improving Bombshells. For capital allocation, this means focusing on club acquisitions and returning more capital to shareholders, mainly through buybacks."
Operational priorities:
- Focus on Existing Nightclubs
- Improve Bombshells
- Acquire New Nightclubs
Capital allocation priorities (% of free cash flow):
- Nightclub Acquisitions: 50% (includes debt repayment)
- Share Buybacks & Dividends: 50%
FY29 targets:
- Total Revenues: $400M
- Free Cash Flow: $75M
- Shares Outstanding: 7.5M
X-Spaces Conference Call at 4:30 PM ET Today
- Hosted by RCI President & CEO Eric Langan, CFO Bradley Chhay, and Mark Moran of Equity Animal
- Call link: https://x.com/i/spaces/1DXGydpRRRLKM (X log in required)
- Presentation link: https://www.rcihospitality.com/investor-relations/
- To ask questions: Participants must join the X Space using a mobile device
- To listen only: Participants can access the X Space from a computer
- There will be no other types of telephone or webcast access
4Q24 Results
Nightclubs segment
Revenues of $60.6 million decreased by 0.5%. Sales reflected 2.2% same-store sales growth, which was negatively impacted by 10 closure days at three Houston area clubs due to the July hurricane. Sales also reflected three new and reformatted clubs, the temporary closing of two clubs, and the transition of two clubs to new formats and/or hours.2
By type of revenue, alcoholic beverages increased by 0.3%; food, merchandise and other increased by 0.9%; and service decreased by 1.7%. The differing growth rates primarily reflected higher alcohol and food, and lower service sales from clubs acquired last year.
The quarter included total impairments and other charges of $6.9 million compared to $8.9 million, resulting in operating income of $13.1 million (21.5% of segment revenues) compared to $12.1 million (19.8%). Non-GAAP operating income was $20.5 million (33.8% of segment revenues) compared to $21.6 million (35.4%). The difference in non-GAAP operating margin reflected minimum wage increases that took effect in July and September 2024 in various locations.
Bombshells segment
Revenues of $11.9 million declined 12.1%. Sales reflected a 16.2% SSS decline, which was negatively impacted by 26 closure days at five Houston area locations due to the July hurricane. New sales from the Stafford location, which opened in November 2023, partially offset the early September 2024 divestiture of the San Antonio location.2
The quarter included total impairments and other charges of $3.2 million compared to $0.2 million, resulting in an operating loss of $2.5 million (-21.1% of segment revenues) compared to income of $1.2 million (8.7%). Non-GAAP operating income was $0.7 million (5.9% of segment revenues) compared to $1.4 million (10.4%). The difference in non-GAAP operating margin reflects lower SSS and weather related closures.
Corporate segment
Expenses totaled $7.1 million (9.7% of total revenues) compared to $6.8 million (9.0%). Non-GAAP expenses totaled $6.6 million (9.0% of total revenues) compared to $6.3 million (8.4%).
Impairments and other charges, net
Impairments and other charges, net of $10.1 million within consolidated operations mainly included impairment of $7.0 million related to nine clubs and $5.5 million related to six Bombshells and the food hall, and a $2.3 million net gain from the elimination of debt from the sale of Bombshells San Antonio.
Income tax
Income tax was a benefit of $0.8 million compared to $0.6 million. The effective tax rate was a benefit of 15.7% in FY24 compared to an expense of 19.0% in FY23.
Weighted average shares outstanding
Weighted average shares outstanding of 9.01 million decreased 4.4% due to share buybacks partially offset by shares issued in the 2Q23 Baby Dolls-Chicas Locas acquisition.
Share Repurchases
In 4Q24, RCI repurchased 174,790 common shares for $7.8 million ($44.81 average per share), resulting in 8,955,000 shares of common stock outstanding and $21.0 million in remaining purchase authorization. For all of FY24, RCI repurchased 442,639 shares for $20.6 million ($46.55 average per share).
Debt
Debt was $238.2 million at September 30, 2024 compared to $245.4 million at June 30, 2024 and $239.8 million at September 30, 2023. The June-September 2024 decline primarily reflected elimination of Bombshells San Antonio debt and scheduled pay downs.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the Company and helps management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP.
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) the impact of the COVID-19 pandemic, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2024, as well as its other filings with the U.S. Securities and Exchange Commission. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
1 See "Non-GAAP Financial Measures" below.
2 See our October 8, 2024, news release on 4Q24 sales for more details.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (Twitter: @RCIHHinc)
With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult nightclubs and sports bars/restaurants. See all our brands at www.rcihospitality.com.
Media & Investor Contacts
Gary Fishman and Michael Wichman at 212-883-0655 or gary.fishman@anreder.com and michael.wichman@anreder.com