Rci Hospitality Holdings, Inc. · NASDAQ:RICK
Rci Hospitality — Q2 2024 Earnings Presentation
28 slides from Rci Hospitality's earnings presentation, May 9, 2024
Slide 1: Building a portfolio of well-managed, high cash-flowing nightclubs and sports-bar restaurants
Building a portfolio of well-managed, high cash-flowing nightclubs and sports-bar restaurants NASDAQ: RICK | 2Q24 Conference Call | May 9, 2024 | www.rcihospitality.com | @RCIHHinc
Slide 2: Today’s Speakers
Today’s Speakers Eric Langan Bradley Chhay Mark Moran President & CEO Chief Financial Officer CEO RCI Hospitality Holdings, Inc. RCI Hospitality Holdings, Inc. Equity Animal @RicksCEO @BradleyChhay @itsmarkmoran 2
Slide 3: X Spaces Instructions
X Spaces Instructions • Log in to: X (formerly Twitter) • Go To: @RicksCEO on X: https://x.com/RicksCEO • Select this X Space: https://x.com/ricksceo/status/1787271843239338182 Or • To ask a question during Q&A: You will need to join the Space with a mobile phone • To listen only: You can join the S
Slide 4: 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 5: 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 6: Summary Results
Summary Results In Millions Except EPS 2Q24 2Q23 6M24 6M23 Total revenues $72.3 $71.5 $146.2 $141.5 EPS $0.08 $0.83 $0.85 $1.94 Non-GAAP EPS* $0.90 $1.30 $1.76 $2.50 Other charges, net $8.2 $3.8 $8.2 $3.1 Net cash from operating activities $10.8 $16.8 $24.5 $31.7 Free cash flow* $8.8 $14.8 $21.5 $27
Slide 7: Key Takeaways
Key Takeaways • Core business enabled RCI to generate revenues of $72.3M vs. $71.5M (2Q24 vs. 2Q23) 2Q24 • GAAP EPS of $0.08 primarily due to non-cash impairments; non-GAAP EPS $0.90 Results • Nightclubs revenues $59.4M vs. $57.0M (2Q24 vs. 2Q23) • Effort begun mid-February resulted in steady sales
Slide 8: Nightclubs Segment
Nightclubs Segment Total Revenues ($M) Operating Margin As % of Segment Revenues $62.4 60% $60.9 $61.0 $59.4 $56.6 $56.3 $57.0 $54.7 45% $48.2 30% 15% GAAP Non-GAAP 0% 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q24 vs. 2Q23 ($M) Locations Contributing
Slide 9: Duncan Burch Acquisition
Duncan Burch Acquisition Revenues Have Grown ($M) Operating Margin Has Expanded As % of Revenues $8.7 $8.7 $7.9 32.5% 32.5% $7.0 31.2% 28.6% 3Q23 4Q23 1Q24 2Q24 3Q23 4Q23 1Q24 2Q24 • Acquired mid-March 2023 (2Q23) with 4 of 5 locations open • 5th location opened mid June 2023 (3Q23) • 2Q24 revenues
Slide 10: Bombshells Segment
Bombshells Segment Total Revenues ($M) Operating Margin As % of Segment Revenues 40% $15.8 $15.3 $14.3 $14.4 $14.0 $13.4 $13.6 30% $12.7 $12.8 GAAP Non-GAAP 20% 10% 0% 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q24 vs. 2Q23 ($M) Locations Contributing
Slide 11: Corporate Segment
Corporate Segment Expense ($M) Expense Margin As % of Total Revenues GAAP Non-GAAP 15% $7.5 $7.1 $6.9 $6.8 $6.8 $6.6 $6.6 12% $6.2 $6.3 $6.3 $6.3 $5.8 $5.5 $5.3 $5.5 $4.9 $4.9 9% $4.6 6% 3% GAAP Non-GAAP 0% 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q2
Slide 12: Consolidated Operating Income
Consolidated Operating Income $M* 2Q24 2Q23 Change Comment Revenues • $7.4 increase from acquisitions not in SSS Nightclubs $59.4 $57.0 $2.4 • $2.9 decrease in SSS • $2.1 decrease from clubs in transition • $1.2 increase from acquisitions and new location not in SSS Bombshells 12.8 14.3 (1.5) • $2.7
Slide 13: GAAP Disclosure ($M)
GAAP Disclosure ($M) Operating Income Net Income $20.5 $18.0 $17.1 $16.9 $15.5 $13.4 $13.2 $13.9 $11.0 $10.6 $10.2 $9.1 $7.7 $7.2 $5.6 $4.7 $2.2 $0.8 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 8-
Slide 14: Cash, FCF & Adjusted EBITDA ($M)
Cash, FCF & Adjusted EBITDA ($M) Cash As% of Total Revenues $38.1 $37.5 $36.0 35% $34.1 34% 29% 30% 29% 31% 27% $23.6 24% 24% $22.8 $21.0 $21.2 $20.0 25%* 17% 20% 21% 19% 19% 17% 15% 12% FCF Adj. EBITDA 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 3/31/24 2Q22 3Q22 4Q22 1Q23 2Q2
Slide 15: Debt Metrics
Debt Metrics Debt, Net of Loan Costs ($M) Debt Maturities at 3/31/24 ($M) Amortization Schedule $246 $244 $240 $234 $232 Realty Balloon $211 Non-Realty Balloon $203 $188 $178 $7.9 $11.5 $9.1 $5.7 $5.3 $12.7 $13.5 $14.4 $14.8 $7.2 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 3/31
Slide 16: Debt Analysis (at 3/31/24, $M)
Debt Analysis (at 3/31/24, $M) Total of $234.7* Weighted Average Interest Rate (WAIR): 6.61% $70.0 Seller Financing (29.8% of total) • Secured by the respective clubs and real estate to which it applies • 5 Baby Dolls-Chicas Locas: $19.0 @ 7.0% WAIR • 11 Clubs: $17.4 @ 6.0% WAIR • Scarlett’s: $11.6
Slide 17: Capital Allocation Strategy Guides Our Growth
Capital Allocation Strategy Guides Our Growth* • Repurchase shares when FCF yield is more than 10% Share Buybacks Mergers & Organic Acquisitions Growth • Buy good, solid, cash Drive Value • Structure investments flowing clubs at 3-5x in new units to adjusted EBITDA with 10-15% generate annual cash •
Slide 18: Development Update
Development Update Items highlighted in Project Location Status bold indicate update PT’s Centerfold Lubbock, TX • Opened late March 2024 from April 9, 2024 Baby Dolls Abilene Tye, TX • Opened early April 2024 conference call Scarlett’s Cabaret Denver Glendale, CO • 4 AM liquor license approved late
Slide 19: Long-Term Performance
Long-Term Performance Fiscal Year ($M) 2015 2016 2017 2018 2019 2020 2021 2022 2023 8-Year CAGR Total Revenues $135.4 $134.9 $144.9 $165.7 $181.1 $132.3 $195.3 $267.6 $293.8 10.2% Adjusted EBITDA $34.1 $34.5 $37.3 $44.4 $46.2 $22.4 $60.2 $86.7 $85.0 12.1% % of Revenues 25.2% 25.6% 25.8% 26.8% 25.5%
Slide 20: Appendix
RCI HOSPITALITY HOLDINGS INC Appendix
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s 2Q24 2Q23 6M24 6M23 Reconciliation of GAAP net income to Adjusted EBITDA Net income attributable to RCIHH common stockholders $774 $7,732 $8,000 $17,970 Income tax expense 5 2,147 1,804 5,178 Interest expense, net 3,903 3,587 8,025 7,183 Depreciation and a
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s 2Q24 2Q23 6M24 6M23 Reconciliation of GAAP net income to non-GAAP net income* Net income attributable to RCIHH common stockholders $774 $7,732 $8,000 $17,970 Amortization of intangibles 640 1,109 1,299 1,804 Impairment of assets 8,033 662 8,033 662 Settlem
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2Q24 2Q23 6M24 6M23 Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share* Diluted shares 9,350,292 9,265,781 9,358,768 9,247,824 GAAP diluted earnings per share $0.08 $0.83 $0.85 $1.94 Amortization of intangibles 0.07 0.12 0.14
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s 2Q24 2Q23 6M24 6M23 Reconciliation of GAAP operating income to non-GAAP operating income Income from operations $4,657 $13,427 $17,822 $30,325 Amortization of intangibles 640 1,109 1,299 1,804 Impairment of assets 8,033 662 8,033 662 Settlement of lawsuits
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Percentage of Total Revenues 2Q24 2Q23 6M24 6M23 Reconciliation of GAAP operating margin to non-GAAP operating margin* Income from operations 6.4% 18.8% 12.2% 21.4% Amortization of intangibles 0.9% 1.6% 0.9% 1.3% Impairment of assets 11.1% 0.9% 5.5% 0.5% Settlemen
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s 2Q24 2Q23 6M24 6M23 Reconciliation of net cash provided by operating activities to free cash flow Net cash provided by operating activities $10,836 $16,789 $24,469 $31,684 Less: Maintenance capital expenditures 2,011 2,021 2,994 3,885 Free cash flow $8,825
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures $ in 000s Nightclubs Bombshells Other Corporate Total 2Q24 Non-GAAP Segment Information Income (loss) from operations $11,021 $699 $(277) $(6,786) $4,657 Amortization of intangibles 589 47 -- 4 640 Impairment of assets 8,033 -- -- -- 8,033 Settlement of lawsuits 1
Slide 28: 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 28
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