• Revenue: $296 million for fiscal year 2024, up from $135 million in 2015.
• Free Cash Flow: Increased to $48 million, up from $15 million in 2015.
• Shares Outstanding: 8.955 million, a reduction of 4.7% year-over-year.
• Non-GAAP EPS: Increased by $1.63.
• Net Cash Provided by Operating Activities: Increased by $3.5 million.
• Adjusted EBITDA: Declined by $2.3 million.
• Nightclub Same-Store Sales Growth: 2.2% increase.
• Bombshells Same-Store Sales Decline: 16.2% decrease.
• Cash and Cash Equivalents: $32.4 million at the end of the fourth quarter.
• Debt Reduction: $7.2 million decline from June 30.
• Average Interest Rate: 6.67%.
• Total Occupancy Cost: 8%, down from 8.1% year-over-year.

• Warning! GuruFocus has detected 8 Warning Signs with MAMA.

Release Date: December 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RCI Hospitality Holdings Inc (NASDAQ:RICK) reported an increase in nightclub sales for the second consecutive quarter, marking a positive trend in their core business.
• The company successfully reduced its share count by 4.7% year-over-year, enhancing shareholder value.
• RCI Hospitality Holdings Inc (NASDAQ:RICK) launched a 'back to the basics' five-year plan, focusing on core nightclub businesses and acquisitions, aiming for $400 million in revenue and $75 million in free cash flow by fiscal 2029.
• The company plans to allocate 50% of its projected $250 million free cash flow over the next five years to club acquisitions and debt repayment, and the other 50% to share buybacks and dividends.
• RCI Hospitality Holdings Inc (NASDAQ:RICK) has shown significant growth since 2015, with revenue more than doubling and free cash flow more than tripling, demonstrating effective capital allocation and operational strategies.

Negative Points

• Total company sales declined due to a hurricane and a fire, impacting earnings per share negatively.
• Bombshells segment experienced a 16.2% decline in same-store sales, affected by multiple closure days due to a hurricane.
• The company faced impairments and other charges totaling $12.5 million in the current quarter, impacting financial results.
• RCI Hospitality Holdings Inc (NASDAQ:RICK) divested underperforming Bombshells locations and closed the Denver Food Hall, indicating challenges in these segments.
• Corporate expenses increased modestly, adding pressure to the company's overall cost structure.

Q & A Highlights

Q: After completing the current pipeline of properties under construction, how does RCI Hospitality plan to approach development versus acquisitions? A: Eric Langan, CEO, stated that after completing the current projects, the company plans to focus strictly on growth through acquisitions rather than building new properties. They do not anticipate starting new builds in 2025 or 2026.

Q: What excites you about the future of RCI Hospitality's business model with the new five-year plan? A: Eric Langan, CEO, expressed enthusiasm about refocusing on the core nightclub business, evaluating current operations for potential rebranding or divestment, and leveraging real estate value increases. The plan involves a disciplined capital allocation strategy to enhance shareholder value.

Q: Can you provide more details on the M&A environment and any potential deals? A: Eric Langan, CEO, mentioned that RCI is actively working on three potential acquisitions, pending licensing approvals. The focus is on acquisitions for growth, with a target of adding $6 million in EBITDA annually through smaller deals ranging from $5 million to $15 million.

Q: How does RCI handle insurance for locations affected by hurricanes or fires? A: Eric Langan, CEO, explained that while they have insurance, claims depend on the extent of damage and duration of closures. They have filed claims for recent hurricane impacts, but payouts depend on reaching deductibles and ongoing assessments.

Q: Under the back-to-basics plan, will RCI consider increasing dividends? A: Eric Langan, CEO, noted that while dividends are not the most tax-efficient use of capital, they plan to continue gradual annual increases to maintain a record of dividend growth, alongside a focus on share buybacks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.