Financial Performance - RCI Hospitality Holdings, Inc. announced sales at nightclubs and restaurants for the first fiscal quarter ended December 31, 2024[4]. - The press release detailing the financial results was issued on January 8, 2025[4]. - The financial statements and exhibits related to the earnings report are included in the filing[6]. Company Information - The company is listed on The Nasdaq Global Market under the trading symbol RICK[2]. - RCI Hospitality Holdings, Inc. is classified as an emerging growth company[3].

Financial Performance - Total revenues for the three months ended December 31, 2024, were $71,483,000, a decrease of 3.2% from $73,907,000 in the same period of 2023[14] - Net income for the three months ended December 31, 2024, was $9,065,000, representing an increase of 25.3% compared to $7,244,000 in the prior year[14] - Earnings per share for the three months ended December 31, 2024, were $1.01, up from $0.77 in the same period of 2023, reflecting a 31.2% increase[14] - Nightclubs segment revenues increased to $61.724 million in Q4 2024 from $61.033 million in Q4 2023, while Bombshells segment revenues decreased to $9.587 million from $12.731 million[35] - Income from operations for the Nightclubs segment was $20.882 million in Q4 2024, compared to $20.369 million in Q4 2023, indicating a growth of 2.5%[35] - Consolidated revenues for the first quarter decreased by $2.4 million, or 3.3%, primarily due to the $4.4 million impact of closed locations[85] - Nightclubs revenue increased by 1.1% to $61.7 million, driven by a $2.1 million increase in same-store sales, partially offset by a $1.8 million impact from closed clubs[88] - Bombshells revenue decreased by 24.7% to $9.6 million, with a 7.5% decline in same-store sales and $2.6 million from recently closed locations[89] - Basic and diluted earnings per share (EPS) for the quarter were $1.01, compared to $0.77 in the prior-year quarter[87] - For the three months ended December 31, 2024, the consolidated operating margin improved to 19.5% from 17.8% in the same period of 2023[97] Cash and Assets - Cash and cash equivalents increased to $34,718,000 as of December 31, 2024, from $32,350,000 at the end of September 2024, marking a 7.3% increase[12] - Total assets as of December 31, 2024, were $586,218,000, up from $584,364,000 as of September 30, 2024, indicating a growth of 0.3%[12] - The company reported a net receivables balance of $3.519 million as of December 31, 2024, down from $5.832 million as of September 30, 2024[40] - The company’s retained earnings increased to $210,160,000 as of December 31, 2024, from $201,759,000 at the end of September 2024, reflecting a growth of 4.9%[12] - Free cash flow for Q4 2024 was $12.068 million, a decrease of 4.6% from $12.650 million in Q4 2023[117] Expenses and Liabilities - Operating expenses for the three months ended December 31, 2024, totaled $57,577,000, down from $60,742,000 in the same period of 2023, a decrease of 5.3%[14] - Total liabilities decreased to $317,447,000 as of December 31, 2024, from $321,254,000 as of September 30, 2024, a reduction of 1.2%[12] - Selling, general and administrative expenses rose from $25,201,000 for the three months ended December 31, 2023, to $26,207,000 for the same period in 2024, an increase of approximately 4.0%[44] - Total accrued liabilities increased from $20,280,000 as of September 30, 2024, to $20,514,000 as of December 31, 2024, an increase of approximately 1.2%[42] - Depreciation and amortization expenses for the three months ended December 31, 2024, were $3.569 million, compared to $3.853 million in the same period of 2023[35] Tax and Legal Matters - The effective income tax rate decreased from 19.9% in 2023 to 16.9% in 2024, reflecting a reduction in tax burden[45] - The company recorded a lawsuit settlement of $179,000 for the three months ended December 31, 2024, compared to $0 in the same period of 2023[61] - The company recorded an assessment of $2.8 million from the New York State Department of Labor for state unemployment tax matters for the years 2009-2022[57] Strategic Initiatives - The company completed the acquisition of a club in Detroit for a total purchase price of $11.0 million, including $3.0 million in cash and a seller-financed note[72] - The growth strategy includes opening new units and acquiring existing units in high growth potential markets, with a new Bombshells location opened in Denver, Colorado, in January 2025[125] - The company is evaluating opportunities to acquire new nightclubs and anticipates acquiring locations that fit its business model, potentially requiring additional debt or stock issuance[126] - The company aims for a minimum cash on cash return of 25%-33% for new club or restaurant acquisitions, absent strategic rationale[126] - The company is considering disposing of underperforming units to free up capital for more productive uses[126] Internal Controls and Compliance - The company identified material weaknesses in internal control over financial reporting as of September 30, 2024, related to IT general controls and management review controls[130] - Remediation efforts are underway to address the identified material weaknesses, with expected completion prior to the end of fiscal 2025[134] - The company will engage third-party consultants to assist in the valuation and accounting for intangible assets acquired in business combinations[131] - The company maintains disclosure controls and procedures designed to ensure timely and accurate reporting to the SEC[128]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for RCI Hospitality, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - RCI Hospitality is expected to report quarterly earnings of $0.52 per share, reflecting a year-over-year decrease of 32.5% [3]. - Revenue projections stand at $71.12 million, down 3.8% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst assessments [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [10]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates potential deviations from consensus estimates, with positive readings being more predictive of earnings beats [6][7]. - A positive Earnings ESP combined with a strong Zacks Rank increases the likelihood of a positive surprise, with a success rate of nearly 70% [8]. Historical Performance - RCI Hospitality has not surpassed consensus EPS estimates in the last four quarters, with a significant miss of 91.89% in the last reported quarter [12][13]. Overall Assessment - The combination of a Zacks Rank of 5 and an Earnings ESP of 0% suggests that RCI Hospitality is not a strong candidate for an earnings beat [11][16]. - Investors are advised to consider other factors beyond earnings results when evaluating the stock [14][15].

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Acquisition Details - RCI Hospitality Holdings Inc acquired Flight Club, a premier gentlemen's club in Detroit, for a total purchase price of $11 0 million, including $3 0 million cash and $5 0 million seller financing at 8 0% for the club, and $3 0 million cash for associated real estate [2] - The acquisition is expected to contribute an estimated $2 0 million in annualized adjusted EBITDA [2] - Flight Club is a two-story, 10,000-square foot establishment located at 29709 Michigan Avenue, Inkster, MI, established in 1997 and recently renovated [2] Strategic Fit and Management Commentary - The acquisition aligns with RCI Hospitality's portfolio of high-end clubs with restaurants in major cities and is the first club purchase since the launch of the company's 5-Year 'Back to Basics' Capital Allocation Plan [2] - Eric Langan, President and CEO of RCI Hospitality Holdings Inc, stated that Flight Club is a well-established business that should benefit from the company's marketing, purchasing, and systems expertise [2] Company Overview - RCI Hospitality Holdings Inc, through its subsidiaries, operates more than 60 locations and is the leading company in adult nightclubs and sports bars-restaurants in the country [3] - The company's brands can be viewed at www rcihospitality com [3]

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Core Insights - RCI Hospitality Holdings, Inc. reported an increase in same-store sales for Nightclubs for the third consecutive quarter, while Bombshells experienced a decline in total sales due to divestitures and closures of underperforming locations [1][2]. Group 1: Financial Performance - Nightclubs total sales reached $61.3 million, reflecting a year-over-year increase of 1.2%, with same-store sales up by 3.7% compared to 1Q24 [1]. - Bombshells total sales were $9.6 million, showing a significant decline of 24.7%, with same-store sales down by 7.5% compared to 1Q24 [1]. - Combined sales for both segments totaled $70.9 million, representing a decrease of 3.3%, while same-store sales increased by 2.3% [1]. Group 2: Operational Changes - The increase in Nightclubs sales was attributed to the rise in same-store sales, the opening of three new and reformatted clubs in Texas, and the absence of a club due to a fire incident in July 2024 [1]. - Bombshells' sales decline was primarily due to the divestiture and closure of five locations during 4Q24 and 1Q25, alongside a full quarter of operations from the Stafford, TX location that opened in mid-November 2023 [2]. Group 3: Company Overview - RCI Hospitality Holdings, Inc. operates more than 60 locations and is recognized as a leading company in the adult nightclubs and sports bars-restaurants sector in the United States [4].

Financial Data and Key Metrics - Fourth quarter nightclub same-store sales increased for the second consecutive quarter, marking the first time since the first half of fiscal 2023 [7] - Total company sales declined due to hurricane and fire-related closures, resulting in lower EPS [7] - Non-GAAP EPS, net cash provided by operating activities, and free cash flow all increased [7] - The company ended fiscal year 2024 with 8.955 million shares outstanding, a reduction of 4.7% year-over-year [7] - Fourth quarter sales declined by $2 million, largely due to hurricane-related closures and the sale of Bombshell San Antonio [18] - Non-GAAP EPS increased by $1.63, net cash provided from operating activities increased by $3.5 million, and free cash flow increased by $2 million, while adjusted EBITDA declined by $2.3 million [18] Business Line Performance - Nightclub revenues declined by $307,000, primarily due to a 2.2% same-store sales growth, 10 closure days at Houston area clubs due to Hurricane Beryl, and other changes to improve the club lineup [19] - Bombshells revenues declined by $1.643 million, primarily due to a 16.2% same-store sales decline, negatively affected by 26 closure days at Houston area locations due to Hurricane Beryl [21] - Corporate expenses increased modestly by $284,000 [22] Market Performance - The company ended the fourth quarter with cash and cash equivalents of $32.4 million [23] - Debt at September 30th declined by $7.2 million from June 30th, reflecting eliminations of Bombshell San Antonio debt, early paydown of $1.5 million of the Playmate note, and other scheduled amortized paydowns [24] - The weighted average interest rate was 6.67%, only 3 basis points higher than a year ago [24] Strategy and Industry Competition - The company has officially launched its Back-to-the-Basics five-year plan, focusing on core nightclub businesses and making new acquisitions [8] - The plan includes divesting underperforming Bombshells locations, closing the Denver food hall, reducing Bombshells-related debt, and discontinuing franchising [8] - The company expects to generate more than $250 million of free cash flow over the next five years, allocating 50% to club acquisition and 50% to share buybacks and dividends [10] - The fiscal 2029 targets include hitting $400 million in revenue, $75 million in free cash flow, and reducing the share count to 7.5 million or less [11] Management Commentary on Operating Environment and Future Outlook - The company is focusing on improving the performance of existing Bombshells locations and finishing the last three units under construction [12] - The company is evaluating every club in its portfolio and will rebrand, reformat, or divest underperforming locations [12] - The company is targeting 15% operating margins for Bombshells with a return to same-store sales growth [12] - The company is planning small dividend increases annually and expects to buy a significant amount of stock if the price is right [13] Other Important Information - The company has seven remaining developments, including Bombshells Denver, Chicas Locas El Paso, Rick's Cabaret in Central City, Bombshells Lubbock, and Bombshells Rowlett [26] - The company is awaiting construction permits for Baby Dolls West Fort Worth and engineering review of plans for Baby Dolls Fort Worth to rebuild the club that burnt down [27] Q&A Session Summary Question: How does the company plan to grow after completing current developments? - The company plans to focus strictly on acquisitions for growth and does not anticipate building anything else in the near future [34] Question: What excites the company about the future of the business model with the new five-year plan? - The company is excited about getting back to its core business, focusing on clubs, and evaluating real estate offerings to determine the best use of capital [37] Question: How is Bitcoin integration looking at the company's locations? - The company is processing Bitcoin at some locations, converting it to US dollars at the point of transaction, and expects to see more Bitcoin transactions with the current high prices [40] Question: What is the M&A environment like for the company? - The company is working on three potential acquisitions and is focusing on smaller acquisitions between $5 million and $15 million purchase price [49] Question: Does the company have insurance for hurricane and fire-related damages? - The company carries insurance for its properties, but payouts depend on the extent of damage and deductibles [56] Question: Will the company consider increasing the dividend under the Back-to-the-Basics plan? - The company plans to continue slowly and gradually raising the dividend annually, with the majority of capital return being done through buybacks [60] Question: What is the purchased real estate value of the closed Bombshells in Denver food hall? - The Denver food hall was purchased for $5.2 million, and the company is marketing the real estate for sale [61] Question: What are the impairments and how do they affect the company? - Impairments are accelerated write-offs of various assets, primarily due to increasing interest rates, and do not affect the company's operations or free cash flow [64][66] Question: Are there plans to open restaurants in Yuma? - The company has no plans to open new restaurants beyond the current developments and will focus on acquiring existing nightclub operations [70] Question: What is the expected CapEx for 2025? - The company expects maintenance CapEx to return to normal levels, forecasting around $6 million for 2025 [86] Question: How does the company view its leverage and debt? - The company aims to keep its debt to EBITDA under three times and is actively working to reduce its debt load [92] Question: What are the current business trends? - November was strong with five weekends, and December started slow but picked up, with the company expecting a strong March Madness [102]

Building a portfolio of well-managed, high cash-flowing nightclubs and sports-bar restaurants NASDAQ: RICK | 4Q24 Conference Call | December 16, 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) • Select this X Space: https://x.com/i/spaces/1DXGydpRR ...

United States Securities and Exchange Commission Washington, D.C. 20549 Texas 001-13992 76-0458229 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.01 par value RICK The Nasdaq Global Market FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 8, 2024 RCI HO ...