FALSE000093541900009354192024-02-082024-02-08

United States
Securities and Exchange Commission
Washington, D.C. 20549
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): February 8, 2024
RCI HOSPITALITY HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas001-1399276-0458229
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
10737 Cutten Road
Houston, Texas 77066
(Address of Principal Executive Offices, Including Zip Code)
(281) 397-6730
(Issuer’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueRICKThe Nasdaq Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On February 8, 2024, we issued a press release announcing results for the fiscal quarter ended December 31, 2023, and the filing of our quarterly report on Form 10-Q for that quarter. Also on February 8, 2024, we will hold a conference call to discuss these results and related matters. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.
This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
 
(d) Exhibits
 
Exhibit Number Description
   
99.1 
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
2


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RCI HOSPITALITY HOLDINGS, INC.
Date: February 8, 2024By:/s/ Eric Langan
Eric Langan
President and Chief Executive Officer
3

image_0.jpg
RCI Reports 1Q24 Results; X Spaces Call at 4:30 PM ET Today
HOUSTON—February 8, 2024—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2024 first quarter ended December 31, 2023. The company also filed its Form 10-Q today.
Summary Financials (in millions except EPS)1Q241Q23
Total revenues$73.9$70.0
EPS$0.77$1.11
Non-GAAP EPS1
$0.87$1.19
Net cash from operating activities$13.6$14.9
Free cash flow1
$12.7$13.0
Net income attributable to RCIHH common stockholders$7.2$10.2
Adjusted EBITDA1
$17.5$20.5
Weighted average shares used in computing EPS – basic and diluted9.379.23
1 See “Non-GAAP Financial Measures” below
CEO Comment
Eric Langan, President and CEO, said: “Net cash from operating activities and free cash flow held up well, declining only 8% and 3%, respectively, despite previously reported macro uncertainty that negatively affected same-store sales.”
“Nightclubs performed generally in line with expectations. Bombshells did not perform as well. We are in the process of making major structural management changes to the Bombshells team and are considering any and all options to improve performance, including potentially seeking an operational partner or selling the business."
“Separately, we continued to make progress with our growth plans based on opening new casinos, clubs and restaurants; acquiring more clubs; and buying back shares when appropriate. To add to our war chest, we are in the process of completing an approximately $20 million cash-out bank loan, using an estimated $30 million of unencumbered real estate.”
Conference Call at 4:30 PM ET Today
X Spaces: https://x.com/i/spaces/1ypKdknPlaqxW (to ask questions during Q&A, you need to use a mobile phone)
Live, listen-only participant phone: Toll Free 888-506-0062, International 973-528-0011, Passcode: 156390
Live, listen-only webcast, slides, and replay: https://www.webcaster4.com/Webcast/Page/2209/49818
1Q24 Results (Comparisons are to the year-ago period unless indicated otherwise)
Nightclubs segment: Revenues were $61.0 million compared to $56.3 million. The $4.7 million increase primarily reflected the benefit of newly acquired and remodeled clubs, which more than offset the decline in same-store sales.2 By revenue type, alcoholic beverages increased 18.7% and food, merchandise and other increased 11.3%, while service declined 1.6%. The differing growth rates primarily reflected a higher alcohol and lower service sales mix from the newly acquired Baby Dolls-Chicas Locas clubs. Operating income was $20.4 million (33.4% of revenues) compared to $22.7 million (40.4% of revenues). On a Non-GAAP basis, operating income was $21.0 million (34.3% of revenues) compared to $22.8 million (40.4% of revenues). The margin decline primarily reflected lower service revenues, wage inflation, and an increase in the Texas patron tax to $10 from $5.
Bombshells segment: Revenues were $12.7 million compared to $13.4 million. The $700 thousand decline primarily reflected lower same-store sales, partially offset by increases from FY23 acquisitions not in same-store sales and the opening of a new location.2 Operating income was $86 thousand (0.7% of revenues) compared to $1.8 million (13.8% of revenues). On a Non-GAAP basis, operating income was $149 thousand (1.2% of revenues) compared to $1.8 million (13.8% of revenues). The decline in profitability primarily reflected lower same-store sales.
1


Corporate segment: Expenses totaled $7.1 million (9.6% of total revenues) compared to $7.5 million (10.7% of total revenues). On a non-GAAP basis, expenses totaled $6.6 million (9.0% of total revenues) compared to $6.6 million (9.4% of total revenues).
Interest expense was 5.7% of revenues compared to 5.3%. The increase reflected higher average debt mostly from seller-financed promissory notes related to FY23 acquisitions.
Effective tax rate was 19.9% and 22.8%. The rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit.
Weighted average shares outstanding increased 1.5% year over year due to shares used in the 2Q23 Baby Dolls-Chicas Locas acquisition, partially offset by subsequent share buybacks.
Share repurchases totaled 37,954 common shares for $2.1 million or an average of $54.59 per share, with $14.6 million in remaining stock repurchase authorization at 12/31/23.
Debt was $234.1 million at 12/31/23 compared to $239.8 million at 9/30/23. The reduction reflected scheduled paydowns.
2 See our January 9, 2024 news release on 1Q24 sales for more details
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. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) gains or losses on sale of businesses and assets, (c) gains or losses on insurance, and (d) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.
Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) gains or losses on sale of businesses and assets, (c) gains or losses on insurance, (d) stock-based compensation, and (e) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at 19.9% and 22.7% effective tax rate of the pre-tax non-GAAP income before taxes for the three months ended December 31, 2023 and 2022, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.
Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) income tax expense (benefit), (c) net interest expense, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that adjusting for such items helps management and investors better understand our operating activities. 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. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
We also use certain non-GAAP cash flow measures such as free cash flow. Free cash flow is derived from net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @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.


2


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, 2023, 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.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or gary.fishman@anreder.com and steven.anreder@anreder.com
3


RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share, number of shares and percentage data)
For the Three Months Ended
December 31, 2023December 31, 2022
Amount% of RevenueAmount% of Revenue
Revenues
Sales of alcoholic beverages$33,316 45.1 %$29,650 42.4 %
Sales of food and merchandise10,802 14.6 %10,347 14.8 %
Service revenues25,119 34.0 %25,563 36.5 %
Other4,670 6.3 %4,408 6.3 %
Total revenues73,907 100.0 %69,968 100.0 %
Operating expenses
Cost of goods sold
Alcoholic beverages sold6,281 18.9 %5,374 18.1 %
Food and merchandise sold4,038 37.4 %3,586 34.7 %
Service and other40 0.1 %49 0.2 %
Total cost of goods sold (exclusive of items shown below)10,359 14.0 %9,009 12.9 %
Salaries and wages21,332 28.9 %18,676 26.7 %
Selling, general and administrative25,201 34.1 %22,732 32.5 %
Depreciation and amortization3,853 5.2 %3,307 4.7 %
Other charges, net(3)— %(654)(0.9)%
Total operating expenses60,742 82.2 %53,070 75.8 %
Income from operations13,165 17.8 %16,898 24.2 %
Other income (expenses)
Interest expense(4,216)(5.7)%(3,687)(5.3)%
Interest income94 0.1 %91 0.1 %
Income before income taxes9,043 12.2 %13,302 19.0 %
Income tax expense1,799 2.4 %3,031 4.3 %
Net income7,244 9.8 %10,271 14.7 %
Net income attributable to noncontrolling interests(18)— %(33)— %
Net income attributable to RCIHH common shareholders$7,226 9.8 %$10,238 14.6 %
Earnings per share
Basic and diluted$0.77 $1.11 
Weighted average shares used in computing earnings per share
Basic and diluted9,367,151 9,230,258 

4


RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share and percentage data)
For the Three Months Ended
December 31, 2023December 31, 2022
Reconciliation of GAAP net income to Adjusted EBITDA
Net income attributable to RCIHH common stockholders$7,226 $10,238 
Income tax expense1,799 3,031 
Interest expense, net4,122 3,596 
Gain on sale of businesses and assets(3)(590)
Depreciation and amortization3,853 3,307 
Gain on insurance— (64)
Stock-based compensation470 941 
Adjusted EBITDA$17,467 $20,459 
Reconciliation of GAAP net income to non-GAAP net income
Net income attributable to RCIHH common stockholders$7,226 $10,238 
Amortization of intangibles659 695 
Gain on sale of businesses and assets(3)(590)
Gain on insurance— (64)
Stock-based compensation470 941 
Net income tax effect(220)(200)
Non-GAAP net income$8,132 $11,020 
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share
Diluted shares9,367,151 9,230,258 
GAAP diluted earnings per share$0.77 $1.11 
Amortization of intangibles0.07 0.08 
Gain on sale of businesses and assets0.00 (0.06)
Gain on insurance0.00 (0.01)
Stock-based compensation0.05 0.10 
Net income tax effect(0.02)(0.02)
Non-GAAP diluted earnings per share$0.87 $1.19 
Reconciliation of GAAP operating income to non-GAAP operating income
Income from operations$13,165 $16,898 
Amortization of intangibles659 695 
Gain on sale of businesses and assets(3)(590)
Gain on insurance— (64)
Stock-based compensation470 941 
Non-GAAP operating income$14,291 $17,880 
Reconciliation of GAAP operating margin to non-GAAP operating margin
Income from operations17.8 %24.2 %
Amortization of intangibles0.9 %1.0 %
Gain on sale of businesses and assets0.0 %(0.8)%
Gain on insurance0.0 %(0.1)%
Stock-based compensation0.6 %1.3 %
Non-GAAP operating margin19.3 %25.6 %
Reconciliation of net cash provided by operating activities to free cash flow
Net cash provided by operating activities$13,633 $14,895 
Less: Maintenance capital expenditures983 1,864 
Free cash flow$12,650 $13,031 
5


RCI HOSPITALITY HOLDINGS, INC.
SEGMENT INFORMATION
(in thousands)
For the Three Months Ended
December 31, 2023December 31, 2022
Revenues
Nightclubs$61,033 $56,325 
Bombshells12,731 13,431 
Other143 212 
$73,907 $69,968 
Income (loss) from operations
Nightclubs$20,369 $22,740 
Bombshells86 1,847 
Other(196)(185)
Corporate(7,094)(7,504)
$13,165 $16,898 

6


RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP SEGMENT INFORMATION
($ in thousands)
For the Three Months Ended December 31, 2023
NightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$20,369 $86 $(196)$(7,094)$13,165 
Amortization of intangibles591 63 — 659 
Gain on sale of businesses and assets(1)— — (2)(3)
Stock-based compensation— — — 470 470 
Non-GAAP operating income (loss)$20,959 $149 $(196)$(6,621)$14,291 
GAAP operating margin33.4 %0.7 %(137.1)%(9.6)%17.8 %
Non-GAAP operating margin34.3 %1.2 %(137.1)%(9.0)%19.3 %
For the Three Months Ended December 31, 2022
NightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$22,740 $1,847 $(185)$(7,504)$16,898 
Amortization of intangibles628 61 695 
Gain on sale of businesses and assets(569)— — (21)(590)
Gain on insurance(48)— — (16)(64)
Stock-based compensation— — — 941 941 
Non-GAAP operating income (loss)$22,751 $1,849 $(124)$(6,596)$17,880 
GAAP operating margin40.4 %13.8 %(87.3)%(10.7)%24.2 %
Non-GAAP operating margin40.4 %13.8 %(58.5)%(9.4)%25.6 %
7


RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months Ended
December 31, 2023December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$7,244 $10,271 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization3,853 3,307 
Gain on sale of businesses and assets(3)(686)
Amortization and writeoff of debt discount and issuance costs163 144 
Doubtful accounts expense on notes receivable22 — 
Gain on insurance— (64)
Noncash lease expense762 719 
Stock-based compensation expense470 941 
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable1,229 1,447 
Inventories(218)(94)
Prepaid expenses, other current, and other assets(9,029)(7,208)
Accounts payable, accrued, and other liabilities9,140 6,118 
Net cash provided by operating activities13,633 14,895 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets— 2,784 
Proceeds from insurance— 64 
Proceeds from notes receivable55 55 
Payments for property and equipment and intangible assets(5,135)(12,553)
Acquisition of businesses, net of cash acquired— (4,000)
Net cash used in investing activities(5,080)(13,650)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations701 1,500 
Payments on debt obligations(6,352)(3,361)
Purchase of treasury stock(2,072)(98)
Payment of dividends(562)(462)
Payment of loan origination costs(136)(96)
Share in return of investment by noncontrolling partner— (600)
Net cash used in financing activities(8,421)(3,117)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS132 (1,872)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD21,023 35,980 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$21,155 $34,108 
8


RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2023September 30, 2023December 31, 2022
ASSETS
Current assets
Cash and cash equivalents$21,155 $21,023 $34,108 
Accounts receivable, net8,617 9,846 6,016 
Current portion of notes receivable253 249 235 
Inventories4,630 4,412 4,051 
Prepaid expenses and other current assets10,985 1,943 8,611 
Total current assets45,640 37,473 53,021 
Property and equipment, net284,398 282,705 246,536 
Operating lease right-of-use assets, net34,169 34,931 36,329 
Notes receivable, net of current portion4,362 4,443 4,631 
Goodwill70,772 70,772 70,189 
Intangibles, net178,486 179,145 143,949 
Other assets1,388 1,415 1,503 
Total assets$619,215 $610,884 $556,158 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$5,254 $6,111 $5,182 
Accrued liabilities26,564 16,051 18,864 
Current portion of debt obligations, net19,789 22,843 13,291 
Current portion of operating lease liabilities3,037 2,977 2,850 
Total current liabilities54,644 47,982 40,187 
Deferred tax liability, net29,143 29,143 30,562 
Debt, net of current portion and debt discount and issuance costs214,324 216,908 197,943 
Operating lease liabilities, net of current portion34,392 35,175 35,270 
Other long-term liabilities328 352 386 
Total liabilities332,831 329,560 304,348 
Commitments and contingencies
Equity
Preferred stock— — — 
Common stock94 94 92 
Additional paid-in capital78,815 80,437 68,070 
Retained earnings207,714 201,050 183,726 
Total RCIHH stockholders' equity286,623 281,581 251,888 
Noncontrolling interests(239)(257)(78)
Total equity286,384 281,324 251,810 
Total liabilities and equity$619,215 $610,884 $556,158 
9