HOUSTON, Feb. 9, 2016 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today announced results for the fiscal 2016 first quarter ended December 31, 2015, its first dividend, latest share buybacks, and plans to open a third gentlemen's club in Manhattan.
1Q16 Highlights
Cash Dividend & Share Buy Backs
New Club in NYC
Conference Call
A conference call to discuss these results, outlook and related matters will be held today at 4:30 PM ET:
Meet Management Tonight
Eric Langan, President & CEO, invites investors to meet management and tour one of the company's top clubs.
CEO Comment
"We are pleased we were nicely profitable in 1Q16 and generated strong free cash flow, but this was still very much a transition quarter," Mr. Langan said. "We have more work to do on costs and efficiencies. Our plan is to expand margins to grow profits and free cash flow on what we expect to be flattish revenues in 2016.
"While legal costs and settlements were still high, we are down to a handful of open insurance cases, and these expenses should begin to decline. With the 2Q16 acquisition of the Rick's Cabaret New York real estate, we anticipate further reductions in occupancy costs. We have initiated additional saving initiatives, which we anticipate will kick in in the upcoming quarters.
"We also have work to do to resume same store sales growth, but we have significant experience dealing with such situations. We have already begun to test new marketing strategies and tactics with success and are working on how to best implement them at other units. As part of this effort, we closed two gentlemen clubs in January for re-concepting and remodeling to what we believe will be a better use. Both should reopen in March.
"Regarding new units, we have formed a joint venture to develop the first sports-themed gentlemen's club in Manhattan, which has been a great market for RCI. The new club only requires a relatively modest $1.5 million investment on our part.
"In addition, we are pleased to announce we are declaring a quarterly dividend of $0.03 per share and have begun to make a noticeable reduction in our share count to below 10 million. Our current intent is to continue to retire our shares until our stock, in our view, is more fully valued.
"We are dedicated to improving our valuation. With major legal issues behind us, we are free to use our superior cash generating power to return capital to shareholders by buying back shares and paying a dividend. While opportunities may arise, such as the new club announced today, we generally believe the best allocation of our capital is the risk-adjusted, after-tax, free cash flow yield of buying our own shares, versus acquiring or opening new units or paying down debt ahead of schedule, for as long as our stock stays at this low valuation relative to RCI's cash flow generation."
1Q16 Analysis (all comparisons to year ago periods unless otherwise noted)
Total Revenues
Operating Income & Margin
Occupancy Costs (Rent+Interest)
Adjusted EBITDA & Free Cash Flow
Nightclubs Segment
Bombshells Segment
Balance Sheet (December 31, 2015 compared to September 30, 2015)
*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 non-GAAP financial measure is a numerical measure of a company's operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the company and helps management and investors gauge our ability to generate cash flow, excluding some non-recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK)
With 43 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult gentlemen clubs and sports bars/restaurants. Adult clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names, such as "Rick's Cabaret," "XTC," "Club Onyx," "Vivid Cabaret," "Jaguars" and "Tootsie's Cabaret." Sports bars/restaurants operate under the brand name "Bombshells." Please visit http://www.rcihospitality.com
Forward-Looking Statements
This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the company's actual results to differ materially from those indicated in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company's businesses, risks and uncertainties related to the operational and financial results of its Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.
RCI HOSPITALITY HOLDINGS, INC. |
||||||||
CONSOLIDATED STATEMENTS OF INCOME |
||||||||
Three Months Ended |
||||||||
December 31, |
||||||||
(in thousands, except per share data) |
2015 |
2014 |
||||||
(UNAUDITED) |
||||||||
Revenues: |
||||||||
Sales of alcoholic beverages |
$ |
14,597 |
$ |
14,004 |
||||
Sales of food and merchandise |
4,334 |
4,834 |
||||||
Service revenues |
12,641 |
13,528 |
||||||
Other |
1,903 |
1,838 |
||||||
Total revenues |
33,475 |
34,204 |
||||||
Operating expenses: |
||||||||
Cost of goods sold |
5,184 |
5,111 |
||||||
Salaries and wages |
8,135 |
8,032 |
||||||
Stock-based compensation |
120 |
120 |
||||||
Other general and administrative: |
||||||||
Taxes and permits |
3,227 |
3,110 |
||||||
Charge card fees |
613 |
547 |
||||||
Rent |
948 |
1,141 |
||||||
Legal and professional |
1,105 |
959 |
||||||
Advertising and marketing |
1,305 |
1,367 |
||||||
Depreciation and amortization |
1,817 |
1,645 |
||||||
Insurance |
874 |
820 |
||||||
Utilities |
710 |
734 |
||||||
Impairment of assets |
- |
1,358 |
||||||
Settlement of lawsuits and other one-time costs |
540 |
247 |
||||||
Other |
3,180 |
2,873 |
||||||
Total operating expenses |
27,758 |
28,064 |
||||||
Income from operations |
5,717 |
6,140 |
||||||
Other income (expense): |
||||||||
Interest income and other |
4 |
13 |
||||||
Interest expense |
(1,915) |
(1,619) |
||||||
Gain from acquisition of controlling interest in subsidiary |
- |
577 |
||||||
Income before income taxes |
3,806 |
5,111 |
||||||
Income taxes |
1,367 |
1,846 |
||||||
Net income |
2,439 |
3,265 |
||||||
Less: Net (income) loss attributable to noncontrolling interests |
113 |
95 |
||||||
Net income attributable to RCI Hospitality Holdings, Inc. |
$ |
2,552 |
$ |
3,360 |
||||
Basic earnings per share attributable to RCIHH shareholders: |
||||||||
Net income |
$ |
0.25 |
$ |
0.33 |
||||
Diluted earnings per share attributable to RCIHH shareholders: |
||||||||
Net income |
$ |
0.25 |
$ |
0.32 |
||||
Weighted average number of common shares outstanding: |
||||||||
Basic |
10,296 |
10,264 |
||||||
Diluted |
10,635 |
10,929 |
RCI HOSPITALITY HOLDINGS, INC. |
||||
NON-GAAP FINANCIAL MEASURES |
||||
Three Months Ended |
||||
December 31, |
||||
(in thousands, except per share data) |
2015 |
2014 |
||
Reconciliation of GAAP net income to Adjusted EBITDA |
||||
GAAP net income |
$2,552 |
$3,360 |
||
Income tax expense |
1,367 |
1,846 |
||
Interest expense and income |
1,911 |
1,606 |
||
Litigation and other one-time settlements |
540 |
247 |
||
Impairment of assets |
- |
1,358 |
||
Pre-opening costs |
- |
158 |
||
Acquisition costs |
- |
83 |
||
Other |
- |
(577) |
||
Depreciation and amortization |
1,817 |
1,645 |
||
Adjusted EBITDA |
$8,187 |
$9,726 |
||
Reconciliation of GAAP net income (loss) to non-GAAP net income |
||||
GAAP net income |
$2,552 |
$3,360 |
||
Amortization of intangibles |
202 |
244 |
||
Stock-based compensation |
120 |
120 |
||
Litigation and other one-time settlements |
540 |
247 |
||
Impairment of assets |
- |
1,358 |
||
Income tax expense |
1,367 |
1,846 |
||
Pre-opening costs |
- |
158 |
||
Acquisition costs |
- |
83 |
||
Other |
- |
(577) |
||
Non-GAAP provision for income taxes |
(1,673) |
(2,394) |
||
Non-GAAP net income |
$3,108 |
$4,445 |
||
Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share |
||||
Fully diluted shares |
10,635 |
10,929 |
||
GAAP net income |
$0.25 |
$0.32 |
||
Amortization of intangibles |
0.02 |
0.02 |
||
Stock-based compensation |
0.01 |
0.01 |
||
Litigation and other one-time settlements |
0.05 |
0.02 |
||
Impairment of assets |
- |
0.12 |
||
Income tax expense |
0.13 |
0.17 |
||
Pre-opening costs |
- |
0.01 |
||
Acquisition costs |
- |
0.01 |
||
Other |
- |
(0.05) |
||
Non-GAAP provision for income taxes |
(0.16) |
(0.22) |
||
Non-GAAP diluted net income per share |
$0.30 |
$0.42 |
||
Reconciliation of GAAP operating income to non-GAAP operating income |
||||
GAAP operating income |
$5,717 |
$6,140 |
||
Amortization of intangibles |
202 |
244 |
||
Stock-based compensation |
120 |
120 |
||
Litigation and other one-time settlements |
540 |
247 |
||
Impairment of assets |
- |
1,358 |
||
Other |
- |
(577) |
||
Pre-opening costs |
- |
158 |
||
Acquisition costs |
- |
83 |
||
Non-GAAP operating income |
$6,579 |
$7,773 |
||
Reconciliation of GAAP operating margin to non-GAAP operating margin |
||||
GAAP operating income |
17.1% |
18.0% |
||
Amortization of intangibles |
0.6% |
0.7% |
||
Stock-based compensation |
0.4% |
0.4% |
||
Litigation and other one-time settlements |
1.6% |
0.7% |
||
Impairment of assets |
0.0% |
4.0% |
||
Loss on sale of property and other |
0.0% |
-1.7% |
||
Pre-opening costs |
0.0% |
0.5% |
||
Acquisition costs |
0.0% |
0.2% |
||
Non-GAAP operating margin |
19.7% |
22.7% |
RCI HOSPITALITY HOLDINGS, INC. |
|||||||
SEGMENT INFORMATION |
|||||||
Three Months Ended |
|||||||
December 31, |
|||||||
(in thousands) |
2015 |
2014 |
|||||
Business segment revenues: |
|||||||
Nightclubs |
$ |
28,170 |
$ |
29,167 |
|||
Bombshells |
4,379 |
4,534 |
|||||
Other |
926 |
503 |
|||||
$ |
33,475 |
$ |
34,204 |
||||
Business segment operating income (loss): |
|||||||
Nightclubs |
$ |
8,508 |
$ |
8,284 |
|||
Bombshells |
487 |
539 |
|||||
Other |
(648) |
(546) |
|||||
General corporate |
(2,630) |
(2,137) |
|||||
$ |
5,717 |
$ |
6,140 |
||||
Reconciliation of Nightclubs GAAP operating income to |
|||||||
non-GAAP operating income |
|||||||
Nightclubs operating income |
$ |
8,508 |
$ |
8,284 |
|||
Impairment of assets |
- |
1,358 |
|||||
Litigation and other one-time settlements |
540 |
247 |
|||||
Nightclubs non-GAAP operating income |
$ |
9,048 |
$ |
9,889 |
|||
Nightclubs non-GAAP operating margin |
32.1% |
33.9% |
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SOURCE RCI Hospitality Holdings, Inc.
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