Rick's Cabaret International, Inc. Reports $22.8 Million In Revenue For Second Quarter; Adjusted Ebitda Rises To $6.6 Million

 
FOR IMMEDIATE RELEASE
 
RICK’S CABARET INTERNATIONAL, INC. REPORTS $22.8 MILLION IN REVENUE FOR SECOND QUARTER; ADJUSTED EBITDA RISES TO $6.6 MILLION
 
HOUSTON – (May 10, 2011) – Rick’s Cabaret International, Inc. (NASDAQ:RICK), the nation’s leading group of upscale gentlemen’s clubs, today reported total revenues for its second quarter ended March 31, 2011 of $22.8 million, compared with $22.4 million for the same period last year. Rick’s Cabaret had total net income for the quarter of $2.9 million, the same as in the previous year, with fully diluted earnings per share of 29 cents, compared with 31 cents last year.  Adjusted EBITDA (earnings before income tax, depreciation and amortization) for the quarter rose to $6.6 million from $6.4 million in 2010.
 
The company will hold an investor conference call at 4:30 p.m. EDT today at which President and CEO Eric Langan will discuss the results.  The toll-free domestic call in number is 877-407-8033 and a webcast of the call is available at www.ricksinvestor.com or http://www.investorcalendar.com/IC/CEPage.asp?ID=164373.  Following the call the company will hold a “Due Diligence Ball” at its New York City Club (50 West 33rd Street) for investors and other interested persons.
 
“We had a solid quarter and I’m looking forward to discussing it in detail with our investors today,” said Mr. Langan. “Despite a big ice storm in Texas that weakened revenues anticipated from this year’s Super Bowl compared with 2010, we still did very well for the quarter and we are happy with our overall club results. We are also pleased with the Adjusted EBITDA number, which is a key metric we use to measure our performance.
 
“We have begun to eliminate losses at our Las Vegas location through the sharp reduction in operations we announced last month as we seek a buyer for the club.  We believe that we did everything possible to make the club work, but the Las Vegas market remains troubled and we believe it is now in our shareholders’ best interests to exit,” Mr. Langan said.  “Once our exit from this market it is complete we will have a better idea how we will do for the remainder of the year.”
 
For the six-month period ending March 31st Rick’s Cabaret had consolidated total revenues of $43.7 million compared to $42.4 million for the six months ended March 31, 2010.  Six month net income attributable to Rick’s Cabaret International Inc. was $5.0 million, compared with $3.7 million during the first six months of last year. Adjusted EBITDA for the six months ended March 31st was $11.9 million, compared with $9.5 million last year.  
 
Note: Adjusted EBITDA is a financial statement measure that was not derived in accordance with GAAP. The company uses Adjusted EBITDA (earnings before interest expense, income taxes, depreciation, amortization and impairment charges) as a non-GAAP performance measure. In calculating adjusted EBITDA, the company excludes the largest recurring non-cash charge, depreciation, amortization and impairment charges. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes, which have considerable variation between domestic jurisdictions.  Also, the company excludes interest cost in the calculation of Adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. The company uses Adjusted EBITDA as one guideline to assess unleveraged performance return on investments. Adjusted EBITDA is also the target benchmark for acquisitions of nightclubs.
 
 
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS

(in thousands, except per share data)
 
 
March 31,
2011
 
September 30, 2010
 
Assets
 
 
(UNAUDITED)
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
$                 17,344
 
 
 
$     18,817
 
Accounts receivable:
 
 
 
 
 
 
 
 
Trade, net
 
 
859
 
 
 
662
 
Other, net
 
 
284
 
 
 
206
 
Marketable securities
 
 
485
 
 
 
-
 
Inventories
 
 
1,136
 
 
 
1,100
 
Deferred tax asset
 
 
2,037
 
 
 
1,503
 
Prepaid expenses and other current assets
 
 
1,620
 
 
 
871
 
Assets of nightclub held for sale
 
 
3,035
 
 
 
3,160
 
Total current assets
 
 
26,800
 
 
 
26,319
 
 
 
 
 
 
 
 
 
 
Property and equipment, net
 
 
59,632
 
 
 
57,915
 
 
 
 
 
 
 
 
 
 
Other assets:
 
 
 
 
 
 
 
 
Goodwill and indefinite lived intangibles, net
 
 
63,226
 
 
 
62,076
 
Definite lived intangibles, net
 
 
916
 
 
 
1,139
 
Other
 
 
1,064
 
 
 
922
 
Total other assets
 
 
65,206
 
 
 
64,137
 
 
 
 
 
 
 
 
 
 
Total assets
 
 
$                151,638
 
 
 
$   148,371
 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands, except per share data)
 
 
 
 
March 31,
2011
 
 
      September 30,
             2010 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
(UNAUDITED)
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
 
 
 $
$                      740
 
$
$                 700
 
 
Accrued liabilities
 
 
 
 
4,369
 
 
4,414
 
 
Texas patron tax liability
 
 
 
 
5,446
 
 
3,955
 
 
Current portion of derivative liabilities
 
 
 
 
1,015
 
 
1,276
 
 
Current portion of long-term debt
 
 
 
 
6,223
 
 
5,461
 
 
Liabilities of nightclub held for sale
 
 
 
 
2,723
 
 
2,582
 
 
Total current liabilities
 
 
 
 
20,516
 
 
18,388
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liability
 
 
 
 
16,818
 
 
15,566
 
 
Other long-term liabilities
 
 
 
 
752
 
 
719
 
 
Long-term debt
 
 
 
 
32,078
 
 
34,803
 
 
Derivative liabilities at fair value, less current portion
 
 
 
 
417
 
 
1,243
 
 
Total liabilities
 
 
 
 
70,581
 
 
70,719
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Temporary equity - Common stock, subject to put rights 102 and 198 shares, respectively
 
 
 
 
3,676
 
 
4,366
 
 
 
 
 
 
 
 
 
 
 
 
 
PERMANENT STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
 
 
 
 
Preferred stock, $.10 par, 1,000 shares authorized; none issued and outstanding
 
 
 
 
-
 
 
-
 
 
Common stock, $.01 par, 20,000 shares authorized; 9,677 and 9,766 shares issued and outstanding, respectively
 
 
 
 
97
 
 
 98
 
 
Additional paid-in capital
 
 
 
 
61,447
 
 
62,326
 
 
Accumulated other comprehensive loss
 
 
 
 
(20)
 
 
-
 
 
Retained earnings
 
 
 
 
12,512
 
 
7,515
 
 
Total Rick’s permanent stockholders’ equity
 
 
 
 
74,036
 
 
69,939
 
 
Noncontrolling interests
 
 
 
 
3,345
 
 
3,347
 
 
Total permanent stockholders’ equity
 
 
 
 
77,381
 
 
73,286
 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and stockholders’ equity
 
 
 
 
$                 151,638 
 
$
$          148,371
 
 

 
 
RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 

(in thousands, except per share data)
 
FOR THE THREE MONTHS
ENDED MARCH 31,
 
FOR THE SIX MONTHS
ENDED MARCH 31,
 
2011
 
2010
 
2011
 
2010
 
(UNAUDITED)
 
(UNAUDITED)
Revenues:
 
 
 
 
 
 
 
Sales of alcoholic beverages
$           9,205     
 
$          9,029
 
$         17,564
 
$          17,078
Sales of food and merchandise
1,982
 
1,782
 
3,766
 
3,372
Service revenues
10,396
 
10,225
 
19,807
 
19,518
Internet revenues
120
 
144
 
246
 
289
Media revenues
192
 
311
 
409
 
567
Other
944
 
948
 
1,905
 
1,620
Total revenues
22,839
 
22,439
 
43,697
 
42,444
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Cost of goods sold
2,807
 
2,639
 
5,325
 
5,096
Salaries and wages
4,762
 
4,411
 
9,438
 
8,722
Stock compensation
-
 
44
 
-
 
88
Other general and administrative:
 
 
 
 
 
 
 
Taxes and permits
3,483
 
3,339
 
6,553
 
6,179
Charge card fees
374
 
370
 
738
 
717
Rent
1,076
 
1,028
 
2,155
 
2,051
Legal and professional
523
 
759
 
1,009
 
1,409
Advertising and marketing
1,176
 
1,507
 
2,359
 
4,445
Insurance
310
 
260
 
617
 
524
Utilities
425
 
415
 
831
 
828
Depreciation and amortization
1,125
 
903
 
2,207
 
1,745
Other
1,663
 
1,632
 
3,240
 
3,177
Total operating expenses
17,724
 
17,307
 
34,472
 
34,981
Operating income
5,115
 
5,132
 
9,225
 
7,463
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest income
44
 
6
 
56
 
9
Interest expense
(1,110)
 
(1,079)
 
(2,234)
 
(2,108)
Other
-
 
(3)
 
-
 
(3)
Gain on change in fair value of derivative instruments
 
333
 
 
385
 
 
                 481
 
 
429
 
Income before income taxes
 
4,382
 
 
4,441
 
 
7,528
 
 
5,790
Income taxes
1,406
 
1,423
 
2,423
 
1,917
Net income
2,976
 
3,018
 
5,105
 
3,873
Less: net income attributable to noncontrolling interests
 
(53)
 
 
(73)
 
 
(107)
 
 
(146)
Net income attributable to Rick’s Cabaret International, Inc.
 
$            2,923
 
 
$         2,945        
 
 
$           4,998
 
 
$       3,727
Basic earnings per share attributable to Rick’s shareholders:
 
 
 
 
 
 
 
Net income
$               0.29
 
$              0.31
 
$              0.50
 
$             0.40
Diluted earnings per share attributable to Rick’s shareholders:
 
 
 
 
 
 
 
Net income
$               0.29
 
$              0.31
 
$              0.50
 
$             0.40
 
Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
9,937
 
9,361
 
9,990
 
9,366
Diluted
10,771
 
10,238
 
10,004
 
9,394

 
 
About Rick’s Cabaret: Rick’s Cabaret International, Inc. (NASDAQ: RICK) is home to 23 upscale adult nightclubs serving primarily businessmen and professionals that offer live entertainment, dining and bar operations. Nightclubs in New York City, Miami, Philadelphia, Charlotte, Dallas, Houston, Minneapolis and other cities operate under the names "Rick's Cabaret," "XTC," “Club Onyx” and “Tootsie’s Cabaret”. Sexual contact is not permitted at these locations. Rick’s Cabaret also operates a media division, ED Publications, and owns the adult Internet membership Website couplestouch.com as well as a network of online adult auction sites under the flagship URL naughtybids.com. Rick’s Cabaret common stock is traded on NASDAQ under the symbol RICK. For further information contact ir@ricks.com or visit www.ricksinvestor.com.
 
Forward-looking Statements: This document contains 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 in this document, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company’s businesses, risks and uncertainties related to the operational and financial results of our Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel.Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements are described in forms filed with the SEC from time to time and available at www.ricksinvestor.com or on the SEC's internet website at www.sec.gov.   Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances. For further information visit www.ricksinvestor.com.
 
Contact: Allan Priaulx, 212-338-0050, allan@ricks.com