Rci Hospitality Holdings, Inc. · NASDAQ:RICK
Rci Hospitality — Investor Presentation (December 2018)
19 slides from Rci Hospitality's investor presentation, Dec 4, 2018
Slide 1: RCI Hospitality Holdings Investor Presentation December 2018
RCI HOSPITALITY HOLDINGS INC The Innovator in Bar-Restaurant-Entertainment Themed Hospitality Nasdaq: RICK Investor Presentation December 2018 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: Non-GAAP Financial Measures
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
Slide 4: 1. What We Do
1. What We Do + Leader in gentlemen's clubs and sports bars/restaurants + Founded 1983, IPO and Nasdaq listing in 1995 Overview + 39 clubs — some of the industry’s best — many in Top 20 US markets + Major brands: Rick’s, Tootsie’s, Scarlett’s, XTC, Jaguars, Club Onyx Bombshells + Fast-growing, sport
Slide 5: 2. Great Business
2. Great Business Strong Cash Generation (FY17) Total Revenues (FY17) + High gross profit margin (86%) + Fast inventory turnover (10x) Entertainment Alcoholic Services Beverages + Low maintenance capex ($1.8M) 40% 42% Clubs: Barriers to Entry + Most municipal licenses tied to physical location + Few
Slide 6: 3. Financial Goals (3-5 Years)
3. Financial Goals (3-5 Years) Objective + FCF: Grow +50% to +$30M from $19.3M in FY17 + Acquire more great clubs in the right markets 2. Bombshells + Expand number of company-owned units 3 per year 3. Capital + Build capital or buy back stock if we can’t find right club acquisitions Allocation or B
Slide 7: 4. Capital Allocation Strategy
4. Capital Allocation Strategy Key Metric FCF Yield on Stock Price @ FCF of $26M* + Free cash flow (FCF) after-tax yield relative to Buy Shares Buy / Open New Units our market cap i f * Buy/Open New Units If... + We can achieve target cash on cash return of at least 25-33% or + There is a strategic
Slide 8: 5. Nightclubs: Plenty of Room to Grow
5. Nightclubs: Plenty of Room to Grow Market + 2,200 clubs / ~500 meet our qualifications + While we are one of the largest, market share is < 2% + Long-term owners interested in selling + Acquirer of choice: Only public company in the space plus access to bank financing Financial Dynamics + Buy ear
Slide 9: 6. Nightclubs: Deals Structured for Great Returns
6. Nightclubs: Deals Structured for Great Returns Scarlett’s Cabaret Miami $25.9M (4x Club Adjusted EBITDA) May 2017 + Nearby competitors shut down shortly before acquisition + Adjusted EBITDA: +$6.0M + Cash Up Front for Club: $5.4M + Seller Financing — $5.0M @ 5%, 1 year balloon — $15.5M @ 8% X 12
Slide 10: 7. Why Bombshells?
7. Why Bombshells? Part of New Generation of More Upscale Sports Bars + Better quality food, service and experience + Wide appeal: men, women, families, friends, singles, couples + Strong community involvement + Large venues: 8K sq. ft. inside + 2K sq. ft. patio outside + Big HDTVs, scratch kitchen,
Slide 11: 8. Bombshells: Great Returns
8. Bombshells: Great Returns First 5 Locations — Already Paid Back (as of 6/30/18) + Average unit revenue: $4.5M TTM. + Average EBITDA margin: 19% TTM + Total cash invested in all five: $13.0M + Total operating cash flow generated: $12.9M + No debt; all locations leased except one on already owned p
Slide 12: 9. Debt Is Manageable
9. Debt Is Manageable (s in mitions) Long-Term Debt: 87% secured Debt Maturities 6.71% Average Weighted Rate 6/30/18 — % Total ™ Amortization Schedule Secured by Real Estate $90.7 68% ™ Realty Balloon ™ Non-Realty Balloon Scariett’s Seller Financing $177 13% Parent (Includes $5.4 to buy Scarlett’s)
Slide 13: 10. Free Cash Flow Scorecard
10. Free Cash Flow Scorecard* Starting FY16: Cash is King + FCF: Net cash provided by operating activities less maintenance capex Free Cash Flow ($M) + FY15-17: FCF up 29%, to $19.3M + FY18: Targeting +19% growth, to more than $23.0M Reduced FD Shares by 6% (4Q15-3Q17) + Share Buybacks - 1Q16-1Q17:
Slide 14: RCI Hospitality Holdings
RCI HOSPITALITY Q) HOLDINGS INC NASDAQ: RICK Investor Presentation
Slide 15: FY18 to Date
FY18 to Date [snnmonsesentresive sara] vovenne] ais] vr cn Total Revenues $42.6 13.9% $125.1 18.3% Nightclubs Segment $35.3 8.2% $105.9 15.3% Bombshells Segment $7.1 54.4% $18.6 39.7% Non-GAAP Operating Income” $10.0 13.0% $29.9 30.1% Non-GAAP Net Income* $5.7 26.6% $17.1 50.5% Non-GAAP EPS* $0.58 2
Slide 16: Other Financial Metrics
Other Financial Metrics (s in minions) Adjusted EBITDA* Total RCI Stockholders’ Equity + Significantly improved growth FY16-FY17 + Significantly improved growth FY16-FY17 + 9M18 vs. 9M17: Up 28% to $35.4M + 6/30/18 vs. 6/30/17: Up 15% to $156.3M FYI4 FYI5 FYI6 FYI7 9/30/14 9/30/15 9/30/16 9/30/17 QD
Slide 17: Bombshells Existing & New Houston Units
Bombshells Existing & New Houston Units Locations in Completely Different Residential-Commercial Parts of the City EVI CHOLINE CE DEXE JOC : M Key | Location | Open | Mies 2 1 Spring Sep-14. 34 38 2 WMOEast Dect8 25 17 3 Fuqua Nov-14-25 20 4 Pearland Apr18 2318 5 USS9 -Mari9. 1510 6 Katy Junig 1010
Slide 18: Nightclub Locations
Nightclub Locations Cs Coe Blush Gentlemen's Club Pittsburgh 2018 Rick's Cabaret 2009 Cabaret East Fort Worth 1x 2010 Rick's Cabaret oe L 2018 Downtown Cabaret Minneapolis MN 2011 Rick's Cabaret Dallas ™K 2011 Foxy's Cabaret Austin 1x 2015 Rick's Cabaret Fort Worth x 2007 Hoops Cabaret New York City
Slide 19: 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 ILDINGS IN 19
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