Rci Hospitality Holdings, Inc. · NASDAQ:RICK
Rci Hospitality — Q2 2023 Earnings Presentation
35 slides from Rci Hospitality's earnings presentation, May 10, 2023
Slide 1: Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants
Building a portfolio of well-managed, high cash-flowing nightclubs and restaurants NASDAQ: RICK | 2Q23 Conference Call | May 10, 2023 | 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: Twitter Spaces Instructions
Twitter Spaces Instructions • Go To: @RicksCEO on Twitter: https://twitter.com/RicksCEO • Select this Twitter Space: https://twitter.com/i/spaces/1kvJpmEEwjgxE • 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 Space with a personal
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: Today's News
Today’s News1 • Total Revenues: $71.5M +12.3% • EPS: $0.83 -27.8% / Non-GAAP EPS2: $1.30 +9.2% 2Q23 • Net Cash from Operating Activities: $16.8M +44.8% Financial • Free Cash Flow2: $14.8M +33.3% Highlights • Net Income3: $7.7M -29.4% • Adjusted EBITDA2: $21.7M +8.8% • Weighted Average Shares Outstan
Slide 7: Income Statement
Income Statement 7 NASDAQ: RICK | 2Q23 Conference Call | May 10, 2023 | www.rcihospitality.com | @RCIHHinc
Slide 8: Nightclubs Segment
Nightclubs Segment Revenues ($M) $57.0 Operating Margin As % of Segment Revenues $56.6 $56.3 $54.7 GAAP Non-GAAP $46.8 $48.2 55% $41.0 $40.3 40% $30.8 25% 10% -5% 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q23 Period Location Status • Revenues: $57.0M,
Slide 9: Bombshells Segment
Bombshells Segment Revenues ($M) Operating Margin As % of Segment Revenues $16.1 $15.8 $15.3 GAAP Non-GAAP $14.4 $14.8 40% $14.0 $14.3 $13.1 $13.4 30% 20% 10% 0% 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q23 Period Location Status • Revenues: $14.3M,
Slide 10: Consolidated Statement of Operations
Consolidated Statement of Operations (% are of total revenues) Line Item 2Q23 2Q22 1Q23 Comment Cost of Goods 12.7% 13.8% 12.9% • 2Q23 vs. 2Q22: Primarily reflected a 19.5% increase in high-margin service revenues Salaries & Wages 27.2% 26.0% 26.7% • 2Q23 vs. 1Q23: Reflected higher minimum wage at c
Slide 11: Cash, FCF & Adjusted EBITDA
Cash, FCF & Adjusted EBITDA ($M) Cash $38.1 $37.5 As % of Total Revenues* $35.7 $36.0 $34.1 35% 35% 34% $29.1 32% 31% 29% 30% 29% 31% $22.8 $20.2 $18.0 25% 21% 25% 20% 22% 20% 19% 17% 15% FCF Adj. EBITDA 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 2Q21 3Q21 4Q21 1Q22 2Q
Slide 12: Geographic Focus
Geographic Focus • Circle sizes based on 2Q23 revenues • Some circles combine multiple locations 12
Slide 13: Balance Sheet
Balance Sheet 13 NASDAQ: RICK | 2Q23 Conference Call | May 10, 2023 | www.rcihospitality.com | @RCIHHinc
Slide 14: Debt Metrics
Debt Metrics Debt, Net of Loan Costs ($M) Weighted Average Interest Rate on Debt $246 $203 $211 $188 $178 6.78% 6.76% $162 6.66% 6.66% 6.52% $132 $128 $125 6.14% 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 2Q18 2Q19 2Q20 2Q21 2Q22 2Q23 Debt Maturities as of 3/31/23 ($M)
Slide 15: Other Debt Related Metrics
Other Debt Related Metrics Debt / Adjusted EBITDA (TTM) Total Occupancy Costs Lease & Interest Expense as % of Total Revenues 6.3* 3.2 3.1 2.7** 7.6% 7.8% 7.6% 2.1 2.3 7.3% 6.9% 7.0% 6.7% 6.0% 5.7% 9/30/18 9/30/19 9/30/20 9/30/21 9/30/22 3/31/23 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 * Reflect
Slide 16: Debt Analysis (as of 3/31/23)
Debt Analysis (as of 3/31/23, $M) Total of $248.91 Weighted Average Interest Rate (WAIR): 6.52% $75.6 Seller Financing (30.4% of total) • Secured by the respective clubs and real estate to which it applies • 5 Baby Dolls-Chicas Locas: $20.5 @ 7.0% WAIR • 11 Clubs: $18.6 @ 6.0% WAIR • Scarlett’s: $12
Slide 17: Our Take: How We Are Looking at Our Investments
Our Take: How We Are Looking at Our Investments 17 NASDAQ: RICK | 2Q23 Conference Call | May 10, 2023 | www.rcihospitality.com | @RCIHHinc
Slide 18: Capital Allocation Strategy
Capital Allocation Strategy* • Repurchase shares when FCF yield is more than 10% Buy Back Shares M&A Organic Buy More Methodically of the Right Expand Nightclubs Bombshells • Buy good, solid, cash Drive Value • Develop critical mass, flowing clubs at 3-5x market awareness, adjusted EBITDA with 10-15
Slide 19: FCF Stock Yield
FCF Stock Yield Key Metric FCF Yield on Stock Price @ FY24 Range of $68M-$78M • After-tax yield on Free Cash Flow (FCF) relative 13% to our market cap $68M $78M Buy Back Shares If FCF Yield… 12% • Exceeds double-digit range or exceeds yield of accelerated payment on our highest interest debt Current
Slide 20: Projected Average Annual Cash on Cash Return: Baby Dolls-Chicas Locas
Baby Dolls-Chicas Locas Acquisition1 • 5 clubs in Dallas, Fort Worth and Houston, TX The • Paid for with: – $15M in cash Acquisition – $16M in stock – $35.5M in bank and seller financing Our Math • $11M estimated adjusted EBITDA in year one • $14-16M estimated adjusted EBITDA annually with remodel a
Slide 21: Rick's Cabaret Steakhouse & Casino Projected Cash on Cash Return
Rick’s Cabaret Steakhouse & Casino1 • $2.4M for building and real estate The • Anticipate $8.0M to finish the location in FY24 which will Investment include 200 slot machines +50% • Excluding casino, similar-sized RCI club generates $8-$10M annual revenue • Central City slots average $129/day, which
Slide 22: We Have the Opportunity to Do More
We Have the Opportunity to Do More Average Number of Licensed Adult Nightclubs in US Number of Club Count at Clubs Clubs Fiscal Years Years Period End Added Added Per Year RICK 56 1983-2010 28 21 20 0.7 Target Market 2011-2017 7 40 19 2.7 ~ 444 2018-Mid-2023 5.5 56 16 2.9 Demonstrated Ability Rest o
Slide 23: We Have The Cash
We Have The Cash 2Q23 Cash Evolution ($M) FY24 $46M- FCF Range of $68M-$78M $56M RICK Debt Projected FY24 Maturities: $21.7M Possible Excess Cash Available for Growth Investments 23
Slide 24: Building Shareholder Value with Strategic Share Buybacks/Issuance
Building Shareholder Value with Strategic Share Buybacks/Issuance Cumulative Cumulative Cumulative Cumulative Shares Used Repurchased Average Price Value Per Shares Used Value of Shares Fiscal Year Shares Average Price for Shares Per Share Share for Used in Repurchased Per Share Acquisitions Acquisi
Slide 25: EXPO 2023
EXPO 2023 https://theedexpo.com/ 25
Slide 26: Appendix
Appendix 26 NASDAQ: RICK | 2Q23 Conference Call | May 10, 2023 | www.rcihospitality.com | @RCIHHinc
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of GAAP net income to Adjusted EBITDA Net income attributable to RCIHH common stockholders $7,732 $10,952 $17,970 $21,527 Income tax expense 2,147 3,356 5,178 6,289 Interest expense, net
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of GAAP net income to non-GAAP net income Net income attributable to RCIHH common stockholders $7,732 $10,952 $17,970 $21,527 Amortization of intangibles 1,109 49 1,804 99 Settlement of
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share Diluted shares 9,265,781 9,489,085 9,247,824 9,447,854 GAAP diluted earnings per share $0.83 $1.15 $1.94 $2.28 A
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of GAAP operating income to non-GAAP operating income Income from operations $13,427 $17,081 $30,325 $32,992 Amortization of intangibles 1,109 49 1,804 99 Settlement of lawsuits 3,120 38
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of GAAP operating margin to non-GAAP operating margin GAAP operating margin 18.8% 26.8% 21.4% 26.3% Amortization of intangibles 1.6% 0.1% 1.3% 0.1% Settlement of lawsuits 4.4% 0.6% 2.2%
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures In 000s Except Per Share & Percentage Data 2Q23 2Q22 6M23 6M22 Reconciliation of net cash provided by operating activities to free cash flow Net cash provided by operating activities $16,789 $11,597 $31,684 $27,861 Less: Maintenance capital expenditures 2,021 518
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures $ in 000s Nightclubs Bombshells Other Corporate Total 2Q23 Non-GAAP Segment Information Income (loss) from operations $17,995 $1,775 $(168) $(6,175) $13,427 Amortization of intangibles 628 417 60 4 1,109 Settlement of lawsuits 3,117 3 - - 3,120 Impairment of asset
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures $ in 000s Nightclubs Bombshells Other Corporate Total 2Q22 Non-GAAP Segment Information Income (loss) from operations $19,126 $3,468 $(34) $(5,479) $17,081 Amortization of intangibles 47 1 - 1 49 Settlement of lawsuits 277 - - 108 385 Impairment of assets - - - -
Slide 35: 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 35
RCI Hospitality Holdings — Q2 2023 Earnings Presentation on 6ix