RCI Hospitality Holdings, Inc. · NASDAQ:RICK
RCI Hospitality — LD Micro Investor Conference 2015
28 slides from RCI Hospitality's conference presentation, Dec 3, 2015
Slide 1: 2015 – 20th Anniversary of RCI's IPO
2015 – 20th Anniversary of RCI’s IPO Two decades of innovation in the adult club segment of the hospitality industry NASDAQ: RICK LD Micro Investor Conference December 3, 2015 www.rcihospitality.com
Slide 2: Forward Looking Statements
December 2015 Investor Presentation 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"
Slide 3: Leader in Gentlemen's Clubs and Sports Bars/Restaurants
December 2015 Investor Presentation Leader in Gentlemen’s Clubs and Sports Bars/Restaurants • Pioneered elegant gentlemen's clubs Founded 1983 • Powerful brands, quality environments, beautiful entertainers, excellent restaurants IPO (NASDAQ) 1995 • Since IPO, transformed RCI into a leading hospital
Slide 4: RICK Investment Catalysts
December 2015 Investor Presentation RICK Investment Catalysts 1. EPS to benefit in FY16 and beyond from expanding 120% RICK Stock vs. Revenues & Non-GAAP EPS margins 100% 2. Cash flow expected to grow due to increased earnings and access to lower cost bank financing 80% 3. Lengthy litigation ending,
Slide 5: Disciplined Capital Allocation Strategy
December 2015 Investor Presentation Disciplined Capital Allocation Strategy • Higher after tax yield buying back After Tax Free Cash Flow Yield of Buying Back Shares* stock vs. paying down debt until Annual Free Cash Flow (mm) $15.0 $15.0 $15.0 $15.0 $15.0 stock price is higher Stock Price $10.00 $1
Slide 6: Adjusted EBITDA Growth
December 2015 Investor Presentation Adjusted EBITDA* Growth ($ in millions) $40 $12 $10.2 $30 $32.5 $9 $9.7 $9.4 $28.5 $8.0 $8.2 $7.3 $7.6 $23.5 $24.0 $20 $6 $18.0 $10 $3 $0 $0 2010 2011 2012 2013 2014 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 • Reflects RCI’s cash generating power to buy back stock and fi
Slide 7: Undervaluation Spurs Share Buybacks
December 2015 Investor Presentation Undervaluation Spurs Share Buybacks ($ in millions) 500,000 $4 Shares Retired via Buybacks Capital Returned via Buybacks 415,384 $3.3 375,000 $3 $2.3 250,000 $2 262,054 $2.1 225,280 192,455 $1.6 125,000 $1 $1.2 101,330 0 $0 FY11 FY12 FY13 FY14 9M15 FY11 FY12 FY13
Slide 8: Major Legal Issues Behind Us
December 2015 Investor Presentation Major Legal Issues Behind Us Item Resolution ($ in millions) • Possible $20M or more judgement NYS FLSA Lawsuit • Settled for a maximum of $15M in FY15; established $10.3M accrual • All contracts since 2011 contain no class action participation/arbitration clauses
Slide 9: Margins & Cash Flow Expected to Grow in FY16 & Beyond
December 2015 Investor Presentation Margins & Cash Flow Expected to Grow in FY16 & Beyond Item Details ($ in millions, % of revenues) • 2.6% of revenues in FY14 and 2.7% in 9M15 Legal Costs • Settlements plus new insurance reduces need for outside counsel • Cost expected to decline starting in FY16
Slide 10: Recent & Pending Bank Financings
December 2015 Investor Presentation Recent & Pending Bank Financings ($ in millions) Item Details • Tootsie’s Cabaret is the largest tenant Miami Gardens • Paid $15.3M ($4.0M cash, $11.3M bank loan at 5.45%) Square Mall Acquisition • 100% occupied, income producing, good management, 2nd largest tena
Slide 11: Rent+Interest Falling (as % of total revenues)
December 2015 Investor Presentation Rent+Interest Falling (as % of total revenues) 12 11.6 11.0 11 10.1 10 9.4 9 8.5 8.0 7.9 8 7.5 6.8 7 6.2 5.9 6 6.4 5.2 5.2 4.8 5 4.6 4.4 4 4.2 3.9 3 3.5 3.3 3.2 3.3 3.1 2 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Rent Interest Rent+Interest RCI views Rent+Interest a
Slide 12: Nightclubs: Best in the Business
December 2015 Investor Presentation Nightclubs: Best in the Business • Our subsidiaries own 38 of the best, most well run gentlemen’s clubs in the country • 27 (71%) in Texas, with different formats and customer bases • 11 (29%) mostly larger clubs outside of Texas, many of them with national reputa
Slide 13: Nightclubs Segment Results
December 2015 Investor Presentation Nightclubs Segment Results $ in millions 9M15 9M14 Change Revenues $93.6 $91.0 2.8% Units (at 6/30/15 and 6/30/14) 39 39 -- Adjusted Operating Income* $29.8 $29.5 1.0% Adjusted Operating Margin* 31.8% 32.3% (55 bps) * See Appendix for reconciliation to GAAP 13
Slide 14: Nightclubs Future
December 2015 Investor Presentation Nightclubs Future • Universe of ~500 clubs we would consider owning out of total ~3,500 US clubs • Many owners plan to retire in the years ahead • With increasing access to bank financing, we can consolidate the industry • Focus on club groups with market presence
Slide 15: Bombshells: We've Proven the Concept
December 2015 Investor Presentation Bombshells: We’ve Proven the Concept • First military-themed franchise in the sports bar/casual dining segment • Theme comes alive through design strategy and Bombshell Girls • Feature local bands, DJs, large outdoor patios, and +75 flat screen TVs, complete bar a
Slide 16: Bombshells Segment Results
December 2015 Investor Presentation Bombshells Segment Results $ in millions 9M15 9M14 Change Revenues $14.5 $3.7 4.0x Units 5 2 2.5x Operating Income $1.5 ($0.268) +$1.75 Operating Margin 10.2% (7.3%) +1751 bps Bombshells Future • Gradually roll out new units • Sell first franchises in FY16 • FY17
Slide 17: Steady Total Revenue Growth
December 2015 Investor Presentation Steady Total Revenue Growth ($ in millions) $130 $129.2 $112.2 $105 $109.7 $95.2 $95.6 $80 $83.5 $74.1 $55 $30 2010 2011 2012 2013 2014 9M14 9M15 • 9M15: Up 14.7% YoY • FY10-14: 14.9% CAGR 17
Slide 18: Continued Non-GAAP EPS Growth
December 2015 Investor Presentation Continued Non-GAAP EPS* Growth $1.25 $1.25 $1.21 $1.22 $1.00 $1.04 $1.05 $0.99 $0.75 $0.76 $0.50 $0.25 2010 2011 2012 2013 2014 9M14 9M15 • As of 9M15, we have earned nearly as much as all of FY14 • 9M15: Up 23.2% YoY • FY10-14: 13.3% CAGR * See Appendix for recon
Slide 19: Summary: Why Invest in RICK?
December 2015 Investor Presentation Summary: Why Invest in RICK? 1. EPS to benefit in FY16 and beyond from expanding 120% RICK Stock vs. Revenues & Non-GAAP EPS margins 100% 2. Cash flow expected to grow due to increased earnings and access to lower cost bank financing 80% 3. Lengthy litigation endi
Slide 20: Appendix
2015 – 20th Anniversary of RCI’s IPO Two decades of innovation in the adult club segment of the hospitality industry APPENDIX
Slide 21: Explanation of Non-GAAP Terms
December 2015 Investor Presentation Explanation of Non-GAAP Terms 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
Slide 22: Annual Non-GAAP Reconciliation Data
December 2015 Investor Presentation Annual Non-GAAP Reconciliation Data (in thousands, except per share data) 2010 2011 2012 2013 2014 Reconciliation of GAAP net income to Adjusted EBITDA GAAP net income $ (7,958) $ 7,846 $ 7,578 $ 9,191 $ 11,240 Income tax expense 2,998 5,403 4,292 5,414 5,916 Inte
Slide 23: Annual Non-GAAP Reconciliation Data
December 2015 Investor Presentation Annual Non-GAAP Reconciliation Data (in thousands, except per share data) 2010 2011 2012 2013 2014 Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share Fully diluted shares 9,697 9,932 9,697 9,615 10,637 GAAP net income $ (0
Slide 24: Quarterly Non-GAAP Reconciliation Data
December 2015 Investor Presentation Quarterly Non-GAAP Reconciliation Data (in thousands, except per share data) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Reconciliation of GAAP net income to Adjusted EBITDA GAAP net income (loss) $ 2,404 $ 3,722 $ 691 $ 4,424 $ 3,360 $ (2,841) $ 8,267 Income tax expense 1
Slide 25: Quarterly Non-GAAP Reconciliation Data
December 2015 Investor Presentation Quarterly Non-GAAP Reconciliation Data (in thousands, except per share data) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share Fully diluted shares 9,855 10,853 9,968 11,014 10,929 10,27
Slide 26: Non-GAAP Reconciliation Data for Nightclubs Segment
December 2015 Investor Presentation Non-GAAP Reconciliation Data for Nightclubs Segment For the Nine Months Ended June 30, (in thousands) 2015 2014 Reconciliation of Nightclubs GAAP operating income to non-GAAP operating income Nightclubs operating income $ 26,000 $ 25,947 Gain on settlement of Patr
Slide 27: Strong Management Team
December 2015 Investor Presentation Strong Management Team Executive Background • 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 hi
Slide 28: Contact Information
December 2015 Investor Presentation Contact Information Corporate Office 10959 Cutten Road Houston, TX 77066 Phone: (281) 397-6730 Investor Relations Gary Fishman Steven Anreder Phone: (212) 532-3232 IR Website www.rcihospitality.com NasdaqGM: RICK 28
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