Rci Hospitality Holdings, Inc. · NASDAQ:RICK
Rci Hospitality — Investor Presentation (December 2016)
24 slides from Rci Hospitality's investor presentation, Dec 7, 2016
Slide 1: RCI Hospitality Holdings Investor Presentation
RCI HOSPITALITY HOLDINGS INC The Innovator in Bar-Restaurant-Entertainment Themed Hospitality NASDAQ: RICK Investor Presentation December 2016 www.rcihospitality.com
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements contained in this presentation regarding RCI Hospitality future operating results or performance or business plans or prospects and any other statements not constituting historical fact are “forward-looking statements’ subject to the safe harbor created
Slide 3: Introduction
RCI HOSPITALITY & J HOLDINGS INC Introduction
Slide 4: History
History Timeline 1983: Founded by Robert Watters as Rick's Cabaret International 1995: NASDAQ Initial Public Offering 1998: Merged with Eric Langan’s publicly traded company of smaller clubs 1999: Langan named President and CEO 2014: Name change reflected transformation to hospitality company 2016:
Slide 5: The Bar-Restaurant-Entertainment Spectrum
The Bar-Restaurant-Entertainment Spectrum Key Traffic Driver* Entertainment Ricks’ » * CABARET BUSTER’S STAURANT & 8 RCI Hospitality RCI Hospitality Brinker International 36 clubs featuring beautiful 7 sports bars/restaurants 87 sports bars/restaurants 1,660 casual dining Chili's dancers/entertainer
Slide 6: Leader in Gentlemen's Clubs
Leader in Gentlemen’s Clubs Subsidiaries own/operate 36 venues throughout the US + Powerful brands attract different market segments * Quality environments, beautiful entertainers, excellent restaurants + Larger units in big cities, smaller ones in Texas Licensing Limits Favor Acquisitions + We acqu
Slide 7: Fast-Growing Bombshells Chain
Fast-Growing Bombshells Chain First Military-Themed Franchise in Sports Bar Segment + Leverages expertise in bars, restaurants and entertainment + Drives traffic through design strategy and attractive Bombshells Girls in uniforms + Large venues (8,000 sq. ft.+2,400 sq. ft. patio), full bar, scratch
Slide 8: RCI Business Advantages
RCI Business Advantages Nationwide Scale, Resources and Efficiencies + Sophisticated systems, purchasing, best practices, training, and innovation + Ability to maximize management, marketing and profitability + Implementing easy “plug and play” platform for expansion More Banks Offering Traditional
Slide 9: Strong Free Cash Flow
Strong Free Cash Flow (6 inmitiions) Significant Feature of Clubs + High gross margin business (86% in FY15) + Low capex + Inventory turns quickly RCI’s FCF Performance + Averaged 16% of revenues 2011-2015 + Defined as operating cash flow less maintenance capex FY16 Target* + $19-$21M (currently exp
Slide 10: Active Fiscal 2016
RCI HOSPITALITY & J HOLDINGS INC Active Fiscal 2016
Slide 11: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy 1. Use FCF to buy back shares — Compelling after tax yield of 15% with shares in $12 range 2. Buy/ open new units onl — Risk adjusted retum rivals buying our assets in the market — There is a significant strategic rationale 3. Take action if units not performi
Slide 12: Increased Share Buybacks, New Dividend, Eliminated Potential Shares
inated Potential Shares Increased Share Buybacks, New Dividend, El Capital Returned via Buy Backs ($M) Shares Retired via Buy Backs Shares Outstanding (M) 73 747,081 468 S| Pvis Pvi6 Pvis Fvie ensoris nae FY16 Highlights Quarter Shares Bought Average Price Total ($M) + Largest annual buy back in RCI
Slide 13: Restored Sales Growth
Restored Sales Growth Same Store Sales Change (YoY) 18% Total Sales Change (YoY) , 0.7% 01% oan 07% “1.9% 63% “2.3% 1016 2016 3016 4016 1016 2016 3016 4016 Highlights Last 24 quarters (6 years): + Sales softened going into FY16 + SSS average: 1.0% year over year + Moved from radio to more effective
Slide 14: Improved Bombshells Potential
Improved Bombshells Potential Sales Change (YoY) Segment Operating Margin 13.1% 181% 10.5% 13.9% 4.1% 11.1% 9.1% 34% 1016 2016 3016 4ar6 aos 1016 2016 2016 Company-Owned Stores Moved Franchising Forward + Favorable trends through FY16 + Refined concept, updated menu, designed prototype + Closed smal
Slide 15: Reduced Costs & Expanded Margins
Reduced Costs & Expanded Margins Occupancy Costs (as % of total revenues) YoY Percentage Point Change 5% —rentsnterest Non-GAAP Operating Margin* 1.7% chid 8.1% “1.2% -3.0% sata 3015 3016 1016 2016 306 Occupancy Costs Declining + One of our largest fixed costs + Benefit from two large club real esta
Slide 16: Most LT Debt Secured by Real Estate
Most LT Debt Secured by Real Estate (¢ in millions, as of 6/30/16) Total of $101.4* = " 0 $19.3 Secured by Subsidiary Stock (19%) Average Weighted Rate: 7.53% ‘Average weighted raise10.6% + Secured by three of the company's more profitable groups of subsidiaries $6.4 Texas Comptroller Settlement (6%
Slide 17: More Aggressive Portfolio Management
More Aggressive “Portfolio Management” Develop Brands that Attract Millennials + 3Q16: Foxy's Cabaret + 4Q16: Hoops Cabaret and Sports Bar Open New Units with Higher Potential Return + Late 4Q16: Hoops (Manhattan) + 2H17: Three new Bombshells (Houston) CABARET, FOXY’S CABARET Sell or Close Under-Per
Slide 18: Outlook
RCI HOSPITALITY & J HOLDINGS INC Outlook
Slide 19: Strong FY17 Outlook
Strong FY17 Outlook Key Metrics + Revenue, margin and EPS growth + FCF initial target of $18M* + Continued implementation of Capital Allocation Strategy New Units + Hoops: 1Q17 first full quarter + Foxy’s Dallas: 2Q17 first full quarter + 3New Bombshells: 2H17 Strong Sports Line Up + NFL: Vikings re
Slide 20: Conclusion
Conclusion Investment Opportunity * Growing trend in bar-restaurant-entertainment + Clubs generate strong free cash flow + Implementing plan to further enhance FCF * Can finance growth without raising capital Disciplined Capital Allocation + Buying back significant number of shares + Initiated meani
Slide 21: Appendix
RCI HOSPITALITY & J HOLDINGS INC Appendix
Slide 22: Strong Management Team
Strong Management Team Executive Background Z + President and CEO since 1999 Eric Langan + Involved in nightclub/restaurant business since 1989 Chairman, CEO, President * Acquired his first club at age 21 with proceeds from the sale of his baseball cards + Merged his XTC Cabaret chain with RCI in 19
Slide 23: Detail: More Aggressive Portfolio Management
Detai : More Aggressive “Portfolio Management” Action Unit Location Timing _ Financial Benefit Re-concepted club Foxy's Cabaret Austin 4016 Increase revenues & operating profit New brand Closed restaurant Bombshells Webster, TX 4016 Eliminate operating loss Sold club for gain Rick's Cabaret Indianap
Slide 24: Contact Information
Contact Information Corporate Office 10737 Cutten Road Houston, TX 77066 Phone: (281) 397-6730 Investor Relations Gary Fishman Steven Anreder Phone: (212) 532-3232 IR Website www. rcihospitality.com Nasdaq: RICK RCI HOSPITALITY HOLDINGS INC. 24
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