RCI Hospitality (RICK) investor relations material

Executive summary

• Total revenues for the quarter increased 3.9% year-over-year to $73.9 million, with net income attributable to shareholders rising to $6.4 million and EPS up to $0.83 from $0.46.

• Adjusted EBITDA grew to $16.9 million, up 10% year-over-year, and free cash flow margin improved for the second consecutive quarter.

• Share buybacks and debt reduction continued, with weighted average shares outstanding down 13% year-over-year.

• Strategic focus on debt reduction, with $16 million paid down in the last six months and plans for further reductions.

• High-profile sports events boosted late-quarter activity, offsetting early softness from inflation and geopolitical concerns.

Financial highlights

• Nightclubs segment revenues grew 1.0% to $63.0 million; Bombshells segment revenues surged 25.4% to $10.8 million.

• Operating margin improved to 17.5% for the quarter, and adjusted EBITDA margin was 22.9%.

• Free cash flow for the quarter was $10.6 million, down from $13.3 million in the prior year.

• Debt at quarter-end was $240.1 million, down $8.6 million sequentially.

• Net cash provided by operating activities was $11.3 million for the quarter.

Outlook and guidance

• Five-year strategy targets $400 million in revenue, $75 million in free cash flow, and 7.5 million shares outstanding by fiscal 2029.

• Plan to allocate 40% of free cash flow to acquisitions and 60% to buybacks, debt reduction, and dividends.

• Management expects continued benefits from new locations and high-profile events, with cautious discretionary spending due to inflation and geopolitical uncertainty.