Rci Hospitality Holdings, Inc. · NASDAQ:RICK
Rci Hospitality — Investor Presentation (December 2019)
26 slides from Rci Hospitality's investor presentation, Dec 10, 2019
Slide 1: RCI Hospitality Holdings Investor Presentation
RCI HOSPITALITY HOLDINGS INC Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants NASDAQ: RICK Investor Presentation December 2019 www.rcihospitality.com
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and under
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: What We Do
What We Do Overview Bombshells Restaurants . Entertainment Drives Sales . Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants Founded 1983, IPO and Nasdaq listing in 1995 37 clubs — Many of the industry's best in top US markets Major brands: Rick’s, Tootsie’s, Scarlett
Slide 5: Why It's a Great Business
Why It’s a Great Business Strong Cash Generation (FY18) + High gross profit margin (86%) + Fast inventory turnover Entertainment , Services + Low maintenance capex ($2.5M) 39% Clubs: Barriers to Entry + Most municipal licenses tied to physical location + Few municipalities issue new licenses + We ha
Slide 6: Our Current Core Focus
Our Current Core Focus Grow FCF/Share 10-15% Annually Buy More of the Right Clubs Buy Back More Shares RCI HOSPITALITY HOLDINGS INC
Slide 7: Capital Allocation Strategy
Capital Allocation Strategy Key Metric FCF Yield on Stock Price @ FCF of $26M + Free Cash Flow (FCF) relative to our market Buy Shares Buy / Open New Units cap Buy Back Shares If FCF Yield... + Enters double-digit range + Exceeds yield of accelerated payment on our highest interest debt (9.2% curren
Slide 8: Nightclubs: Significant Acquisition Opportunities
Nightclubs: Significant Acquisition Opportunities Market + 2,200 clubs / ~500 meet our acquisition criteria + Weare one of the largest, but our market share is < 2% + Long-term owners interested in selling + We are the acquirer of choice as the only public company in the space with access to bank fi
Slide 9: Nightclubs: LBO Style Acquisitions
Nightclubs: LBO Style Acquisitions 7 Acquisition Real . AICre Fiscal Club % Seller % Private % Bank Requisition Year’ Price Fst EBITDA icon Kemah lab fms Club Multiplet Price 9 9 9 Seaton Caperet 2017 $26M 43x - 60% 40% 0% Miami Blush (renamed Rick's 9 9 9 Cabaret Pittsburgh)? 2019 $10M 3.3x $5M 50%
Slide 10: Strong Cash Generation
Strong Cash Generation (rr as of 6/30/19) $230 $232 $193 FCF Growth Free Cash Flow ($M)* e) (pSeenenieeess ane Focus Started FY16 * 18% CAGR FY15-TTM. * 16% FCF conversion rate TTM Accretive Share Repurchases Sn * 7% decline in FD share count FY15-9M19 bite + Currently repurchasing shares when we ca
Slide 11: Tracking Our Progress
Tracking Our Progress Key Financial Metrics’ FY15 FY16 FYAr FY18 TTM2 Operating Consolidated Adjusted EBITDA Margin 25.2% 25.6% 25.8% 26.8% 25.8% Nightclubs Adjusted EBITDA Margin 35.0% 36.4% 37.2% 38.9% 40.3% Bombshells Adjusted EBITDA Margin 18.4% 21.2% 21.8% 20.3% 10.8% Cash Related Free Cash Flo
Slide 12: Strong FY20 Outlook
Strong FY20 Outlook Q Bombshells Corporate RCI HOSPITALITY HOLDINGS INC Pro football championship in North Miami near our two biggest clubs Big Game generated an extra $1M revenues last two times when in one of our core markets FY19 acquisitions in Pittsburgh and Chicago continue to grow Scarlett's
Slide 13: RCI Hospitality Holdings
RCI HOSPITALITY Q) HOLDINGS INC NASDAQ: RICK Investor Presentation
Slide 14: Nightclubs: Improving Portfolio
Nightclubs: Improving Portfolio Total Revenues ($M) S377 $379 4016 1017 2017 3017 4017 1018 2018 3018 4018 1019 2019 3019 + Profit growth driven by higher revenue per location and expanded operating margin + Reflects implementation of capital allocation strategy — Replaced poor performers with premi
Slide 15: Bombshells: New Generation Sports Bar
Bombshells: New Generation Sports Bar More Upscale Than Traditional Sports Bars + Better quality food, service and experience + Wide appeal: men, women, families, friends, singles, couples + Strong community involvement + Large venues: 8K sq. ft. inside + 2K sq. ft. patio outside + Big HDTVs, scratc
Slide 16: Bombshells: Turnaround Taking Shape
Bombshells: Turnaround Taking Shape Total Revenues ($M) pias Same-Store Sales (YoY Change)! 19.4% 105% gee 346 M4 gag S44 4016 1017 2017 3017 4017 1018 2018 3018 4018 1019 2019 3019 4016 1017 2017 sa17 4017 1018 2018 3018 4018 1a19 2019 sa19 sate + Five new Houston locations doing well Non-GAAP Oper
Slide 17: Bombshells: Houston Locations
Bombshells: Houston Locations Locations in Completely Different Residential-Commercial Parts of the City way driving clockwise to next location | key | Locaton | Open Mies | 1 Spring Sep-14 3438 2 MOEast Dec-18 20017 3 Fuqua Nov-14 2520 4 Pearland Apr-i8 23 18 5 US59 1020 ee |) “6 Katy Oct-19 10 10
Slide 18: Bombshells: Myth vs. Reality
Bombshells: Myth vs. Reality Myth Bombshells is another entry in the failing “breastaurant” category; most customers are men, menu is limited Reality Bombshells is a next-generation sports bar Appeals to a wide multi-generational, multi-cultural audience, from millennials to baby boomers on up Guest
Slide 19: 87% of Debt is Secured
87% of Debt is Secured (as of 6/30/19, $ in millions) Total of $148.1! Weighted Average Interest Rate (WAIR): 6.79% $28.2 Seller Financing (19.1% of total) Secured by the respective clubs + Scarlett’s: $16.8 @ 7.38% WAIR + VIP's & Blush: $11.4 @ 7.39% WAIR $15.1 Parent Level Debt (10.2%) + 11.45% WA
Slide 20: Financial Goals
Financial Goals Metric Direction Comment": CORE TARGET: Free Cash Flow 10-15% average annual increases in FCF/share via business growth and/or share buybacks incrementally increase FCF conversion (FCF/Revenues) — 16.4% TTM. Incrementally increase annual dividend to establish track record — currently
Slide 21: Quarterly Roll
Quarterly Roll 1019 2019 3019 4a19 1020 2020 (12/31/18) (3/31/19) (6/30/19) (9/30/19) (12/31/19) (3/31/20) + Bombshells 6 + Club acquisitions in + Club acquisitions in + Club acquisttons in + Bombshells 7(I10) + Bombshell 9 (Katy) Full Quarter (Peatand) Chicago, Pittsburgh Chicago and Chicago and +
Slide 22: Slides & GAAP Versions of Graphs
Slides 14 & 16 GAAP Versions of Graphs Nightclubs GAAP Operating Margin Bombshells GAAP Operating Margin As % of Total Revenues As % of Total Revenues 408% 407% 135% TEES. 7.2% 17.2% 147% 4016 1017 2017 3017 4ai7 1018 2018 3018 4a1s 1019 2019 3a19 4016 1017 2017 3017 4a17 1018 2018 3018 418 1019 201
Slide 23: Slides & Calculations & Non-GAAP Reconciliations
Slides 4 & 20 Calculations & Non-GAAP Reconciliations ($ in 000s except per share) 4Qis 9mi9 1™ Total Revenues $ 40676 $ 135,876 $ 176552 Net Cash from Operating Activities 3,358 28,414 31,772 Less: Maintenance Capex 680 2072 2,752 Free Cash Flow 2,678 26,342 29,020 FCF Conversion Rate (FCF/Total Re
Slide 24: Slides & Calculations & Non-GAAP Reconciliations
Slides 10 & 11 Calculations & Non-GAAP Reconciliations {$ in millions) P15 FvI6 rvi7 Fis ™ Total Revenues $135.45 $ 134.86 $ 14490 $ 165.75 $ 176.55 Consolidated Operating Income $20.73 $ 2069 $ 23:14 $ 27.56 $ 32.97 ‘Add: Consolidated D&A $705 $ 733 $ 692 $ 7.72 $ 8.63 Consolidated EBITDA $27.77 $
Slide 25: Slides & Calculations & Non-GAAP Reconciliations
Slides 10 & 11 Calculations & Non-GAAP Reconciliations )) RCI HOSPITALITY HOLDINGS INC {Sin millions) Fs FYI6 FvI7 Net Cash Provided by Operating Activities $16.36 $ 2303 $21.09 Less: Maintenance Capital Expenditures $148 252 $ 181 Free Cash Flow $1489 $2051 $ 19.28 ‘Average Shareholders Equity* $12
Slide 26: 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 26
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