Rick's Cabaret International, Inc. Reports Third Quarter Revenue Increase to $20.8 Million and Adjusted EBITDA of $6.0 Million

Aug 09, 2011, 16:05 ET from Rick's Cabaret International, Inc.

HOUSTON, Aug. 9, 2011 /PRNewswire/ -- Rick's Cabaret International, Inc. (NASDAQ: RICK), the leading group of upscale gentlemen's clubs, had revenues of $20.8 million in its third quarter ended June 30, a 15.4 percent increase over the $18.0 million in the same period last year. The company reported adjusted EBITDA* of $6.0 million a 52.7 percent increase over $3.9 million in the same period last year.

(Logo: http://photos.prnewswire.com/prnh/20110418/MM85342LOGO)

The company reported net income from continuing operations for the quarter of $2.5 million, compared with $1.1 million in 2010, with earnings per diluted share from continuing operations of 25 cents versus 11 cents last year. After accounting for a loss from discontinued operations including the now closed club in Las Vegas, net income was $888,000 versus $857,000. Net income per diluted share for both periods was nine cents.

"With this quarter we have now put the pain of the Las Vegas situation behind us and we are well positioned to move forward on an apples-to-apples basis," said Eric Langan, President and CEO of Rick's Cabaret. "Apart from the Las Vegas loss, we had a strong third quarter, with increases in cash flows, EBITDA and income from continuing operations.  Our larger clubs across the country are doing well and we will have a positive outlook on the remainder of the year as long as the general economy maintains its present levels."

Mr. Langan will discuss the third quarter results in detail at a conference call and webcast today at 4:30 pm EDT that can be accessed at http://www.investorcalendar.com/IC/CEPage.asp?ID=165509 or though the Rick's Cabaret investor website, www.ricksinvestor.com. The toll free participant dial-in number is 877-407-8033 (International 201-689-8033). The toll free replay number is 877-660-6853 (international 201-612-7415). Replay pass codes required for playback are: Account number 286 and Conference ID 376967.

The increase in total revenues was primarily attributable to clubs acquired during the past year, additional traffic generated during the NBA Championship series in Dallas and Miami, and gains at the Rick's locations in San Antonio, North Austin and Minneapolis.

Total revenues for same-location-same-period of club operations open more than one year increased by 9.0 percent to $19.2 million in the quarter from $17.6 million for the same period last year.  Comparable club operating income was $5.7 million compared with $4.7 million last year.

Net cash generated from continuing operations was $13.7 million, compared with $12.0 million last year.  Interest expense dropped to $1.0 million from $1.2 million.

*Adjusted EBITDA is a financial statement measure that was not derived in accordance with GAAP. We use adjusted EBITDA (earnings from continuing operations before interest expense, income taxes, depreciation, amortization and impairment charges) as a non-GAAP performance measure. In calculating adjusted EBITDA, we exclude our largest recurring non-cash charge, depreciation, amortization and impairment charges. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for Federal, state and local taxes which have considerable variation between domestic jurisdictions.  Also, we exclude interest cost in our calculation of adjusted EBITDA. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

(in thousands, except per share data)

June 30,

2011

September 30,

2010

Assets

(UNAUDITED)

Current assets:

Cash and cash equivalents

$                12,356

$       18,614

Accounts receivable:

Trade, net

840

662

Other, net

3,133

207

Marketable securities

500

-

Inventories

1,169

1,093

Deferred tax asset

2,285

2,037

Prepaid expenses and other current assets

1,292

333

Assets of discontinued operations

129

4,629

Total current assets

21,704

27,575

Property and equipment, net

62,507

56,900

Other assets:

Goodwill and indefinite lived intangibles, net

63,706

61,835

Definite lived intangibles, net

904

1,139

Other

2,987

922

Total other assets

67,597

63,896

Total assets

$             151,808

$     148,371

LIABILITIES AND STOCKHOLDERS' EQUITY

(in thousands, except per share data)

June 30,

2011

September 30,

2010

Liabilities and Stockholders' Equity

(UNAUDITED)

Current liabilities:

Accounts payable

$                    782

$             699

Accrued liabilities

3,187

4,313

Texas patron tax liability

6,136

3,955

Current portion of derivative liabilities

1,143

1,276

Current portion of long-term debt

6,238

5,461

Liabilities of discontinued operations

127

2,995

Total current liabilities

17,613

18,699

Deferred tax liability

21,275

15,288

Other long-term liabilities

769

719

Long-term debt

30,699

34,803

Derivative liabilities at fair value, less current portion

238

1,243

Total liabilities

70,594

70,752

Commitments and contingencies

Temporary equity - Common stock, subject to put rights 84 and 198 shares, respectively

1,932

4,366

PERMANENT STOCKHOLDERS' EQUITY:

Preferred stock, $.10 par, 1,000 shares authorized; none issued and outstanding

-

-

Common stock, $.01 par, 20,000 shares authorized; 9,723 and 9,766 shares issued and outstanding, respectively

97

98

Additional paid-in capital

62,446

62,326

Accumulated other comprehensive loss

(5)

-

Retained earnings

13,401

7,515

Total Rick's permanent stockholders' equity

75,939

69,939

Noncontrolling interests

3,343

3,314

Total permanent stockholders' equity

79,282

73,253

Total liabilities and stockholders' equity

$             151,808

$     148,371

RICK'S CABARET INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

FOR THE THREE MONTHS

ENDED JUNE 30,

FOR THE NINE MONTHS

ENDED JUNE 30,

2011

2010

2011

2010

(UNAUDITED)

(UNAUDITED)

Revenues:

Sales of alcoholic beverages

$            8,149

$          7,029

$         24,312

$        21,371

Sales of food and merchandise

1,891

1,578

5,469

4,648

Service revenues

9,553

8,331

28,637

25,507

Internet revenues

113

144

359

433

Media revenues

176

203

585

771

Other

911

737

2,678

2,202

Total revenues

20,793

18,022

62,040

54,932

Operating expenses:

Cost of goods sold

2,710

2,254

7,793

6,887

Salaries and wages

4,683

4,109

13,503

12,074

Stock compensation

-

44

-

132

Other general and administrative:

Taxes and permits

3,101

2,750

9,333

8,426

Charge card fees

405

315

1,047

907

Rent

756

668

2,305

1,957

Legal and professional

635

854

1,547

2,207

Advertising and marketing

838

665

2,651

2,465

Insurance

300

244

851

687

Utilities

394

349

1,143

1,077

Depreciation and amortization

980

837

2,855

2,363

Other

1,626

1,419

4,646

4,341

Total operating expenses

16,428

14,508

47,674

43,523

Operating income

4,365

3,514

14,366

11,409

Other income (expense):

Interest income and other

2

5

57

11

Interest expense

(1,033)

(1,231)

(3,170)

(3,227)

Gain on settlement of debt

903

-

903

-

Gain (loss) on change in fair value of derivative instruments

(216)

(407)

266

22

Income from continuing operations before income taxes

4,021

1,881

12,422

8,215

Income taxes

1,500

762

4,231

2,869

Income from continuing operations

2,521

1,119

8,191

5,346

Loss from discontinued operations, net of income taxes

(1,580)

(202)

(2,146)

(555)

Net income

941

917

6,045

4,791

Less: net income attributable to noncontrolling  interests

(53)

(60)

(159)

(207)

Net income attributable to Rick's Cabaret International, Inc.

$        888

$       857

$      5,886

$     4,584

Basic earnings (loss) per share attributable to Rick's shareholders:

Income from continuing operations

$               0.25

$               0.11

$               0.81

$               0.54

Loss from discontinued operations

$              (0.16)

$              (0.02)

$              (0.22)

$              (0.06)

Net income

$               0.09

$               0.09

$               0.59

$               0.48

Diluted earnings (loss) per share attributable to Rick's shareholders:

Income from continuing operations

$               0.25

$               0.11

$               0.80

$               0.53

Loss from discontinued operations

$              (0.16)

$              (0.02)

$              (0.21)

$              (0.06)

Net income

$               0.09

$               0.09

$               0.59

$               0.48

Weighted average number of common  shares outstanding:

Basic

9,924

9,905

9,968

9,546

Diluted

9,941

9,958

9,983

9,876

About Rick's Cabaret: Rick's Cabaret International, Inc. (NASDAQ: RICK) is home to 22 upscale adult nightclubs serving primarily businessmen and professionals that offer live entertainment, dining and bar operations. Nightclubs in New York City, Miami, Philadelphia, Charlotte, Dallas, Houston, Minneapolis and other cities operate under the names "Rick's Cabaret," "XTC," "Club Onyx" and "Tootsie's Cabaret". Sexual contact is not permitted at these locations. Rick's Cabaret also operates a media division, ED Publications, and owns the adult Internet membership Website couplestouch.com as well as a network of online adult auction sites under the flagship URL naughtybids.com. Rick's Cabaret common stock is traded on NASDAQ under the symbol RICK. For further information contact ir@ricks.com or visit www.ricksinvestor.com.

Forward-looking Statements: This document contains 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 document, 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 our 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. Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements are described in forms filed with the SEC from time to time and available at www.ricksinvestor.com or on the SEC's internet website at www.sec.gov.  Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances. For further information visit www.ricksinvestor.com.

SOURCE Rick's Cabaret International, Inc.



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