HOUSTON, May 11, 2020 /PRNewswire/ -- RCI Hospitality
Holdings, Inc. (Nasdaq: RICK) today reported results for the second
quarter ended March 31, 2020 and
filed its corresponding Form 10-Q. RCI also updated its response to
the coronavirus situation.
2Q20 results are not comparable to prior periods. All company
club and restaurant subsidiaries had to close in March 2020 because of the COVID-19 pandemic.
There will be no conference call this quarter.
Key Points
- EPS: 2Q20 basic and diluted loss per share of
$0.37. Non-GAAP* basic and diluted
earnings per share of $0.47. The
quarter included an $8.2 million
non-cash impairment of clubs and restaurants triggered by the
pandemic, partially offset by a $1.4
million income tax benefit.
- Revenues: 2Q20 total revenues of $40.4 million. Nightclubs contributed
$31.4 million and Bombshells
$8.8 million.
- Cash: $9.8 million in cash
and $3.6 million in accounts
receivable ($2.6 million of which is
income tax refundable) at March 31,
2020.
- Share Repurchases: 132,719 shares at an average price of
$15.42, all of which were acquired
before club and restaurant subsidiaries closed.
- Reopenings: Based upon the small sampling of early
openings in Texas, revenues seem
favorable despite 25% occupancy restrictions. As of today, nine
Bombshells restaurants and Club Onyx Houston (operating as a
restaurant) have reopened. The 10th Bombshells is expected to
reopen Thursday, May 14.
- Employment: To date, subsidiaries have reemployed more
than 700 full and part time staff. This was particularly
significant for those who had not yet received unemployment or
stimulus checks. Subsidiaries plan to return all employees to work
as soon as possible.
- Working Capital: Based on our current working capital
and current store openings, we believe we have enough resources to
fund operations through the end of Fiscal 2020. Please see our 10-Q
for further discussion.
CEO Comment
"After coming to a full stop in March, we're encouraged by
what's happening two months later," said Eric Langan, President & CEO. "Stay-at-home
restrictions are easing in Texas
and other parts of the country. Our subsidiaries are doing
everything they can to reopen as many units and rehire as many
people as possible. We are not taking our reopenings lightly. First
and foremost, we are concerned about the health and well-being of
our employees and guests."
COVID-19 Update
As part of our COVID-19 plan, RCI and its subsidiaries
instituted the following measures to significantly reduce cash
outlays:
- Furloughed more than 1,900 club and restaurant employees,
except for a limited number of managers. With locations reopening,
some of these employees have been or are in the process of being
rehired.
- Reduced pay of the approximately 100 remaining salaried and
hourly employees to 75% of previous levels
- Deferred Board of Director compensation
- Arranged for deferment of principal and interest payment from
major lenders and deferral agreements with others, as well as from
landlords in the small number of locations where subsidiaries
rent
- Deferred or modified certain fixed monthly expenses such as
insurance, rent, and taxes, among others
- Canceled certain additional expenses such as advertising,
cable, and pest control, among others
As of the release of this report, we do not know the extent and
duration of the impact of COVID-19 on our businesses due to the
uncertainty about the spread of the virus. Lower sales, as caused
by social distancing guidelines, could lead to adverse financial
results. However, we will continually monitor and evaluate the
situation and will determine any further measures to be
instituted.
2Q20 Statement of Operations (All comparisons are to 2Q19
unless otherwise noted)
Revenues
- Consolidated revenues of $40.4
million declined 9.8% primarily due to lost sales caused by
the pandemic. Nightclubs segment revenue of $31.4 million declined 15.3%. Bombshells segment
revenue of $8.8 million increased
17.0%.
- Prior to the stay-at-home and social distancing guidelines
imposed by federal, state and local governments, revenues for the
first 10 weeks of 2Q20 increased 11.8% on a consolidated basis,
5.0% for Nightclubs (38 units), and 45.4% for Bombshells (10
units).
- Bombshells total sales during the first 10 weeks of 2Q20
benefitted from four new locations in the Houston area (I-10, Tomball, Katy, and US 59) and a 3.6% increase in
same-store sales.
Operating Expenses & Margin
- Total operating expenses were 106.1% of consolidated revenues
compared to 75.1% primarily due to lost sales caused by the
pandemic, the impairment, and other factors.
- Salaries and wages were 30.2% compared to 26.6% primarily
reflecting lower revenues.
- Selling, general and administrative expenses were 35.7%
compared to 32.0% primarily due to a combination of lower revenues
and fixed costs.
- Other net charges totaled $8.2
million as a result of impairments compared to other net
gains of $1.0 million from the sale
of two real estate properties. We considered the pandemic a
triggering event in the assessment of recoverability of the
goodwill, indefinite-lived intangibles and long-lived tangible
assets in our clubs and restaurants.
- Operating margin was (6.1%) compared to 24.9%. Excluding
impairment charges, amortization of intangibles, and gain on
disposal of assets, non-GAAP operating margin was 14.5% compared to
23.1%.
Interest Expense, Income Taxes & Share Count
- Interest expense of $2.5 million
decreased 7.0% due to a lower debt balance year over year.
- Income taxes were a $1.4 million
benefit compared to a $1.9 million
expense. Our estimated tax rate for FY20 was revised to 7.6% from
21.8%. The cumulative effect of the change was recognized in
2Q20.
- Weighted average number of common shares outstanding of 9.2
million declined 4.7% due to share repurchases over the last 12
months.
March 31, 2020 Balance
Sheet (All comparisons are to December 31, 2Q19 unless otherwise noted)
- Cash and cash equivalents of $9.8
million compared to $13.2
million. The decline primarily reflects lower net cash flow
from operations caused by the pandemic.
- Long-term debt of $140.4 million
compared to $141.8 million. The
decline primarily reflects 2Q20 scheduled debt paydowns.
- March 31, 2020 long-term debt
(including loan origination costs) was comprised of $89.2 million (62.9% of total LT debt) secured by
real estate, $26.8 million (18.9%) in
seller-financing, $14.5 million
(10.2%) unsecured, $8.5 million
(6.0%) secured by other assets, and $2.8
million (2.0%) remaining from the Texas Comptroller
Settlement.
- Fiscal 2020 debt maturities at March 31,
2020 were $3.2 million in the
amortization schedule and $2.1
million in realty balloons.
- During 2Q20, $2.0 million in
non-realty balloons were extended to FY21. Subsequent to the
quarter, all bank debt was deferred for 90 days.
Subsequent to 2Q20, subsidiaries also terminated definitive
agreements to acquire the assets and related real estate of a top
gentlemen's club located in the Northeast Corridor.
*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 (or including) some items that management believes
are not representative of the ongoing business operations of the
Company, but are included in (or excluded from) 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:
- Non-GAAP Operating Income and Non-GAAP Operating Margin.
We calculate non-GAAP operating income and non-GAAP operating
margin by excluding the following items from income from operations
and operating margin: (a) amortization of intangibles, (b) gains or
losses on sale of businesses and assets, (c) gains or losses on
insurance, (d) settlement of lawsuits, and (e) impairment of
assets. We believe that excluding these items assists investors in
evaluating period-over-period changes in our operating income and
operating margin without the impact of items that are not a result
of our day-to-day business and operations.
- Non-GAAP Net Income and Non-GAAP Net Income per Diluted
Share. We calculate non-GAAP net income and non-GAAP net income
per diluted share by excluding or including certain items to net
income attributable to RCIHH common stockholders and diluted
earnings per share. Adjustment items are: (a) amortization of
intangibles, (b) gains or losses on sale of businesses and assets,
(c) gains or losses on insurance, (d) unrealized gains or losses on
equity securities, (e) settlement of lawsuits, (f) impairment of
assets, and (g) the income tax effect of the above described
adjustments. Included in the income tax effect of the above
adjustments is the net effect of the non-GAAP provision for income
taxes, calculated at 7.6% and 22.1% effective tax rate of the
pre-tax non-GAAP income before taxes for the six months ended
March 31, 2020 and 2019,
respectively, and the GAAP income tax expense (benefit). We believe
that excluding and including such items help management and
investors better understand our operating activities.
- Adjusted EBITDA. We calculate adjusted EBITDA by
excluding the following items from net income attributable to RCIHH
common stockholders: (a) depreciation and amortization, (b) income
tax expense (benefit), (c) net interest expense, (d) gains or
losses on sale of businesses and assets, (e) gains or losses on
insurance, (f) unrealized gains or losses on equity securities, (g)
settlement of lawsuits, and (h) impairment of assets. We believe
that adjusting for such items helps management and investors better
understand our operating activities. 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. 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.
- Management also uses non-GAAP cash flow measures such as
free cash flow. Free cash flow is derived from net cash
provided by operating activities less maintenance capital
expenditures. We use free cash flow as the baseline for the
implementation of our capital allocation strategy.
Notes
- All references to the "company," "we," "our," and similar terms
include RCI Hospitality Holdings, Inc. and its subsidiaries, unless
the context indicates otherwise.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK)
With more than 40 units, RCI Hospitality Holdings, Inc., through
its subsidiaries, is the country's leading company in gentlemen's
clubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas/Ft.
Worth, Houston,
Miami, Minneapolis, St.
Louis, Charlotte, Pittsburgh, and other markets operate under
brand names such as Rick's Cabaret, XTC, Club Onyx, Vivid Cabaret,
Jaguars Club, Tootsie's Cabaret, and Scarlett's Cabaret. Sports
bars/restaurants operate under the brand name Bombshells Restaurant
& Bar. 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, but not limited to, the risks and
uncertainties associated with (i) operating and managing an adult
business, (ii) the business climates in cities where it operates,
(iii) the success or lack thereof in launching and building the
company's businesses, (iv) cyber security, (v) conditions relevant
to real estate transactions, (vi) our ability to maintain
compliance with the filing requirements of the SEC and the Nasdaq
Stock Market, (vii) the impact and uncertainty of the coronavirus
pandemic, and (viii) numerous other factors such as laws governing
the operation of adult entertainment businesses, competition and
dependence on key personnel. For more detailed discussion of such
factors and certain risks and uncertainties, see RCI's annual
report on Form 10-K for the year ended September 30, 2019 and its latest Form 10-Q as
well as its other filings with the U.S. Securities and Exchange
Commission. The company has no obligation to update or revise the
forward-looking statements to reflect the occurrence of future
events or circumstances.
Media & Investor Contacts
Gary Fishman and Steven Anreder at 212-532-3232 or
gary.fishman@anreder.com and steven.anreder@anreder.com
RCI HOSPITALITY
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except
per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31,
|
|
For the Six Months
Ended March 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of alcoholic
beverages
|
|
$
16,919
|
|
41.9%
|
|
$
18,486
|
|
41.2%
|
|
$
37,662
|
|
42.4%
|
|
$
36,796
|
|
41.4%
|
|
Sales of food and
merchandise
|
|
6,479
|
|
16.0%
|
|
6,439
|
|
14.4%
|
|
13,926
|
|
15.7%
|
|
12,129
|
|
13.7%
|
|
Service
revenues
|
|
14,348
|
|
35.5%
|
|
16,979
|
|
37.9%
|
|
31,541
|
|
35.5%
|
|
34,310
|
|
38.6%
|
|
Other
|
|
2,680
|
|
6.6%
|
|
2,922
|
|
6.5%
|
|
5,691
|
|
6.4%
|
|
5,614
|
|
6.3%
|
|
|
Total
revenues
|
|
40,426
|
|
100.0%
|
|
44,826
|
|
100.0%
|
|
88,820
|
|
100.0%
|
|
88,849
|
|
100.0%
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alcoholic beverages
sold
|
|
3,435
|
|
20.3%
|
|
3,790
|
|
20.5%
|
|
7,581
|
|
20.1%
|
|
7,526
|
|
20.5%
|
|
|
Food and merchandise
sold
|
|
2,239
|
|
34.6%
|
|
2,308
|
|
35.8%
|
|
4,792
|
|
34.4%
|
|
4,292
|
|
35.4%
|
|
|
Service and
other
|
|
108
|
|
0.6%
|
|
94
|
|
0.5%
|
|
185
|
|
0.5%
|
|
186
|
|
0.5%
|
|
|
|
Total cost of goods
sold (exclusive of items shown below)
|
|
5,782
|
|
14.3%
|
|
6,192
|
|
13.8%
|
|
12,558
|
|
14.1%
|
|
12,004
|
|
13.5%
|
|
Salaries and
wages
|
|
12,222
|
|
30.2%
|
|
11,908
|
|
26.6%
|
|
25,445
|
|
28.6%
|
|
24,004
|
|
27.0%
|
|
Selling, general and
administrative
|
|
14,450
|
|
35.7%
|
|
14,341
|
|
32.0%
|
|
30,981
|
|
34.9%
|
|
28,368
|
|
31.9%
|
|
Depreciation and
amortization
|
|
2,257
|
|
5.6%
|
|
2,200
|
|
4.9%
|
|
4,461
|
|
5.0%
|
|
4,253
|
|
4.8%
|
|
Other charges
(gains), net
|
|
8,190
|
|
20.3%
|
|
(981)
|
|
-2.2%
|
|
8,164
|
|
9.2%
|
|
(2,078)
|
|
-2.3%
|
|
|
Total operating
expenses
|
|
42,901
|
|
106.1%
|
|
33,660
|
|
75.1%
|
|
81,609
|
|
91.9%
|
|
66,551
|
|
74.9%
|
Income (loss) from
operations
|
|
(2,475)
|
|
-6.1%
|
|
11,166
|
|
24.9%
|
|
7,211
|
|
8.1%
|
|
22,298
|
|
25.1%
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(2,459)
|
|
-6.1%
|
|
(2,645)
|
|
-5.9%
|
|
(4,944)
|
|
-5.6%
|
|
(5,166)
|
|
-5.8%
|
|
Interest
income
|
|
85
|
|
0.2%
|
|
75
|
|
0.2%
|
|
183
|
|
0.2%
|
|
126
|
|
0.1%
|
|
Unrealized gain
(loss) on equity securities
|
|
(62)
|
|
-0.2%
|
|
77
|
|
0.2%
|
|
(134)
|
|
-0.2%
|
|
(370)
|
|
-0.4%
|
Income (loss) before
income taxes
|
|
(4,911)
|
|
-12.1%
|
|
8,673
|
|
19.3%
|
|
2,316
|
|
2.6%
|
|
16,888
|
|
19.0%
|
Income tax expense
(benefit)
|
|
(1,418)
|
|
-3.5%
|
|
1,930
|
|
4.3%
|
|
175
|
|
0.2%
|
|
3,741
|
|
4.2%
|
Net income
(loss)
|
|
(3,493)
|
|
-8.6%
|
|
6,743
|
|
15.0%
|
|
2,141
|
|
2.4%
|
|
13,147
|
|
14.8%
|
Net loss (income)
attributable to noncontrolling interests
|
|
41
|
|
0.1%
|
|
(8)
|
|
0.0%
|
|
41
|
|
0.0%
|
|
(68)
|
|
-0.1%
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$
(3,452)
|
|
-8.5%
|
|
$
6,735
|
|
15.0%
|
|
$
2,182
|
|
2.5%
|
|
$
13,079
|
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
(0.37)
|
|
|
|
$
0.70
|
|
|
|
$
0.24
|
|
|
|
$
1.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
9,225
|
|
|
|
9,679
|
|
|
|
9,274
|
|
|
|
9,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
share
|
|
$
0.04
|
|
|
|
$
0.03
|
|
|
|
$
0.07
|
|
|
|
$
0.06
|
|
|
RCI HOSPITALITY
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
MEASURES
|
(in thousands, except
per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Six
Months
|
|
|
Ended March
31,
|
|
Ended March
31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Reconciliation of
GAAP net income (loss) to Adjusted EBITDA
|
|
|
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$ (3,452)
|
|
$
6,735
|
|
$
2,182
|
|
$
13,079
|
Income tax expense
(benefit)
|
|
(1,418)
|
|
1,930
|
|
175
|
|
3,741
|
Interest expense,
net
|
|
2,374
|
|
2,570
|
|
4,761
|
|
5,040
|
Settlement of
lawsuits
|
|
-
|
|
84
|
|
24
|
|
144
|
Impairment of
assets
|
|
8,210
|
|
-
|
|
8,210
|
|
-
|
Gain on sale of
businesses and assets
|
|
(7)
|
|
(1,065)
|
|
(37)
|
|
(2,222)
|
Unrealized loss
(gain) on equity securities
|
|
62
|
|
(77)
|
|
134
|
|
370
|
Gain on
insurance
|
|
(13)
|
|
-
|
|
(33)
|
|
-
|
Depreciation and
amortization
|
|
2,257
|
|
2,200
|
|
4,461
|
|
4,253
|
Adjusted
EBITDA
|
|
$
8,013
|
|
$
12,377
|
|
$
19,877
|
|
$
24,405
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP net income (loss) to non-GAAP net income
|
|
|
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$ (3,452)
|
|
$
6,735
|
|
$
2,182
|
|
$
13,079
|
Amortization of
intangibles
|
|
157
|
|
153
|
|
313
|
|
309
|
Settlement of
lawsuits
|
|
-
|
|
84
|
|
24
|
|
144
|
Impairment of
assets
|
|
8,210
|
|
-
|
|
8,210
|
|
-
|
Gain on sale of
businesses and assets
|
|
(7)
|
|
(1,065)
|
|
(37)
|
|
(2,222)
|
Unrealized loss
(gain) on equity securities
|
|
62
|
|
(77)
|
|
134
|
|
370
|
Gain on
insurance
|
|
(13)
|
|
-
|
|
(33)
|
|
-
|
Net income tax effect
of adjustments above
|
|
(633)
|
|
223
|
|
(659)
|
|
333
|
Non-GAAP net
income
|
|
$
4,324
|
|
$
6,053
|
|
$
10,134
|
|
$
12,013
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP diluted earnings (loss) per share to non-GAAP diluted earnings
per share
|
Diluted
shares
|
|
9,225
|
|
9,679
|
|
9,274
|
|
9,696
|
GAAP diluted earnings
(loss) per share
|
|
$
(0.37)
|
|
$
0.70
|
|
$
0.24
|
|
$
1.35
|
Amortization of
intangibles
|
|
0.02
|
|
0.02
|
|
0.03
|
|
0.03
|
Settlement of
lawsuits
|
|
-
|
|
0.01
|
|
0.00
|
|
0.01
|
Impairment of
assets
|
|
0.89
|
|
-
|
|
0.89
|
|
-
|
Gain on sale of
businesses and assets
|
|
(0.00)
|
|
(0.11)
|
|
(0.00)
|
|
(0.23)
|
Unrealized loss on
equity securities
|
|
0.01
|
|
(0.01)
|
|
0.01
|
|
0.04
|
Gain on
insurance
|
|
(0.00)
|
|
-
|
|
(0.00)
|
|
-
|
Net income tax effect
of adjustments above
|
|
(0.07)
|
|
0.02
|
|
(0.07)
|
|
0.03
|
Non-GAAP diluted
earnings per share
|
|
$
0.47
|
|
$
0.63
|
|
$
1.09
|
|
$
1.24
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP operating income (loss) to non-GAAP operating
income
|
Income (loss) from
operations
|
|
$ (2,475)
|
|
$
11,166
|
|
$
7,211
|
|
$
22,298
|
Amortization of
intangibles
|
|
157
|
|
153
|
|
313
|
|
309
|
Settlement of
lawsuits
|
|
-
|
|
84
|
|
24
|
|
144
|
Impairment of
assets
|
|
8,210
|
|
-
|
|
8,210
|
|
-
|
Gain on sale of
businesses and assets
|
|
(7)
|
|
(1,065)
|
|
(37)
|
|
(2,222)
|
Gain on
insurance
|
|
(13)
|
|
-
|
|
(33)
|
|
-
|
Non-GAAP operating
income
|
|
$
5,872
|
|
$
10,338
|
|
$
15,688
|
|
$
20,529
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP operating margin to non-GAAP operating margin
|
|
GAAP operating
margin
|
|
-6.1%
|
|
24.9%
|
|
8.1%
|
|
25.1%
|
Amortization of
intangibles
|
|
0.4%
|
|
0.3%
|
|
0.4%
|
|
0.3%
|
Settlement of
lawsuits
|
|
0.0%
|
|
0.2%
|
|
0.0%
|
|
0.2%
|
Impairment of
assets
|
|
20.3%
|
|
0.0%
|
|
9.2%
|
|
0.0%
|
Gain on sale of
businesses and assets
|
|
0.0%
|
|
-2.4%
|
|
0.0%
|
|
-2.5%
|
Gain on
insurance
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
Non-GAAP operating
margin
|
|
14.5%
|
|
23.1%
|
|
17.7%
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
net cash provided by operating activities to free cash
flow
|
Net cash provided by
operating activities
|
|
$
1,708
|
|
$
9,519
|
|
$
11,981
|
|
$
20,971
|
Less: Maintenance
capital expenditures
|
|
1,090
|
|
741
|
|
2,111
|
|
1,117
|
Free cash
flow
|
|
$
618
|
|
$
8,778
|
|
$
9,870
|
|
$
19,854
|
RCI HOSPITALITY
HOLDINGS, INC.
|
SEGMENT
INFORMATION
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Six
Months
|
|
|
|
Ended March
31,
|
|
Ended March
31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
|
|
|
|
|
|
|
|
Nightclubs
|
|
$
31,367
|
|
$
37,047
|
|
$
69,226
|
|
$
74,775
|
|
Bombshells
|
|
8,803
|
|
7,527
|
|
19,153
|
|
13,540
|
|
Other
|
|
256
|
|
252
|
|
441
|
|
534
|
|
|
|
$
40,426
|
|
$
44,826
|
|
$
88,820
|
|
$
88,849
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
|
|
|
|
|
|
|
Nightclubs
|
|
$
2,314
|
|
$
15,078
|
|
$
16,090
|
|
$
30,465
|
|
Bombshells
|
|
690
|
|
738
|
|
2,263
|
|
857
|
|
Other
|
|
(178)
|
|
(176)
|
|
(385)
|
|
(295)
|
|
General
corporate
|
|
(5,301)
|
|
(4,474)
|
|
(10,757)
|
|
(8,729)
|
|
|
|
$
(2,475)
|
|
$
11,166
|
|
$
7,211
|
|
$
22,298
|
RCI HOSPITALITY
HOLDINGS, INC.
|
NON-GAAP SEGMENT
INFORMATION
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, 2020
|
|
For the Three
Months Ended March 31, 2019
|
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
Income (loss) from
operations
|
|
$
2,314
|
|
$
690
|
|
$ (178)
|
|
$
(5,301)
|
|
$
(2,475)
|
|
$
15,078
|
|
$
738
|
|
$ (176)
|
|
$ (4,474)
|
|
$
11,166
|
Amortization of
intangibles
|
|
57
|
|
4
|
|
96
|
|
-
|
|
157
|
|
-
|
|
-
|
|
-
|
|
153
|
|
153
|
Settlement of
lawsuits
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
84
|
|
-
|
|
-
|
|
-
|
|
84
|
Impairment of
assets
|
|
7,965
|
|
245
|
|
-
|
|
-
|
|
8,210
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain on sale of
businesses and assets
|
|
(3)
|
|
-
|
|
-
|
|
(4)
|
|
(7)
|
|
(1,000)
|
|
1
|
|
5
|
|
(71)
|
|
(1,065)
|
Gain on
insurance
|
|
-
|
|
-
|
|
-
|
|
(13)
|
|
(13)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-GAAP operating
income (loss)
|
|
$
10,333
|
|
$
939
|
|
$
(82)
|
|
$
(5,318)
|
|
$
5,872
|
|
$
14,162
|
|
$
739
|
|
$ (171)
|
|
$ (4,392)
|
|
$
10,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
7.4%
|
|
7.8%
|
|
-69.5%
|
|
-13.1%
|
|
-6.1%
|
|
40.7%
|
|
9.8%
|
|
-69.8%
|
|
-10.0%
|
|
24.9%
|
Non-GAAP operating
margin
|
|
32.9%
|
|
10.7%
|
|
-32.0%
|
|
-13.2%
|
|
14.5%
|
|
38.2%
|
|
9.8%
|
|
-67.9%
|
|
-9.8%
|
|
23.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended March 31, 2020
|
|
For the Six Months
Ended March 31, 2019
|
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
Income (loss) from
operations
|
|
$
16,090
|
|
$
2,263
|
|
$ (385)
|
|
$ (10,757)
|
|
$
7,211
|
|
$
30,465
|
|
$
857
|
|
$ (295)
|
|
$ (8,729)
|
|
$
22,298
|
Amortization of
intangibles
|
|
114
|
|
8
|
|
191
|
|
-
|
|
313
|
|
-
|
|
-
|
|
-
|
|
309
|
|
309
|
Settlement of
lawsuits
|
|
24
|
|
-
|
|
-
|
|
-
|
|
24
|
|
129
|
|
3
|
|
-
|
|
12
|
|
144
|
Impairment of
assets
|
|
7,965
|
|
245
|
|
-
|
|
-
|
|
8,210
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain on sale of
businesses and assets
|
|
-
|
|
-
|
|
-
|
|
(37)
|
|
(37)
|
|
(2,152)
|
|
1
|
|
-
|
|
(71)
|
|
(2,222)
|
Gain on
insurance
|
|
(20)
|
|
-
|
|
-
|
|
(13)
|
|
(33)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-GAAP operating
income (loss)
|
|
$
24,173
|
|
$
2,516
|
|
$ (194)
|
|
$ (10,807)
|
|
$
15,688
|
|
$
28,442
|
|
$
861
|
|
$ (295)
|
|
$ (8,479)
|
|
$
20,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
23.2%
|
|
11.8%
|
|
-87.3%
|
|
-12.1%
|
|
8.1%
|
|
40.7%
|
|
6.3%
|
|
-55.2%
|
|
-9.8%
|
|
25.1%
|
Non-GAAP operating
margin
|
|
34.9%
|
|
13.1%
|
|
-44.0%
|
|
-12.2%
|
|
17.7%
|
|
38.0%
|
|
6.4%
|
|
-55.2%
|
|
-9.5%
|
|
23.1%
|
RCI HOSPITALITY
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
|
|
|
March 31,
2020
|
|
March 31,
2019
|
|
March 31,
2020
|
|
March 31,
2019
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
(3,493)
|
|
$
6,743
|
|
$
2,141
|
|
$
13,147
|
Adjustments to
reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
2,257
|
|
2,200
|
|
4,461
|
|
4,253
|
|
Deferred tax expense
(credit)
|
|
(1,005)
|
|
673
|
|
(1,155)
|
|
1,131
|
|
Gain on sale of
businesses and assets
|
|
(6)
|
|
(1,021)
|
|
(36)
|
|
(2,197)
|
|
Impairment of
assets
|
|
8,210
|
|
-
|
|
8,210
|
|
-
|
|
Unrealized loss
(gain) on equity securities
|
|
62
|
|
(77)
|
|
134
|
|
370
|
|
Amortization of debt
discount and issuance costs
|
|
68
|
|
107
|
|
129
|
|
202
|
|
Deferred rent
expense
|
|
-
|
|
47
|
|
-
|
|
189
|
|
Noncash lease
expense
|
|
496
|
|
-
|
|
825
|
|
-
|
|
Gain on
insurance
|
|
(13)
|
|
-
|
|
(33)
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(428)
|
|
4
|
|
1,917
|
|
1,727
|
|
|
Inventories
|
|
4
|
|
(19)
|
|
(137)
|
|
(182)
|
|
|
Prepaid expenses,
other current assets and other assets
|
|
1,275
|
|
1,611
|
|
2,840
|
|
3,550
|
|
|
Accounts payable,
accrued and other liabilities
|
|
(5,719)
|
|
(749)
|
|
(7,315)
|
|
(1,219)
|
|
Net cash provided by
operating activities
|
|
1,708
|
|
9,519
|
|
11,981
|
|
20,971
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from sale of
businesses and assets
|
|
54
|
|
1,621
|
|
105
|
|
2,866
|
Proceeds from
insurance
|
|
13
|
|
-
|
|
945
|
|
-
|
Proceeds from notes
receivable
|
|
46
|
|
36
|
|
403
|
|
68
|
Issuance of note
receivable
|
|
-
|
|
(420)
|
|
-
|
|
(420)
|
Payments for property
and equipment and intangible assets
|
|
(1,265)
|
|
(6,607)
|
|
(5,323)
|
|
(13,902)
|
Acquisition of
businesses, net of cash acquired
|
|
-
|
|
-
|
|
-
|
|
(13,500)
|
|
Net cash used in
investing activities
|
|
(1,152)
|
|
(5,370)
|
|
(3,870)
|
|
(24,888)
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
562
|
|
4,644
|
|
880
|
|
10,296
|
Payments on long-term
debt
|
|
(2,016)
|
|
(8,008)
|
|
(4,097)
|
|
(13,287)
|
Purchase of treasury
stock
|
|
(2,047)
|
|
(1,606)
|
|
(8,488)
|
|
(1,961)
|
Payment of
dividends
|
|
(368)
|
|
(291)
|
|
(647)
|
|
(582)
|
Payment of loan
origination costs
|
|
-
|
|
(20)
|
|
-
|
|
(20)
|
Distribution to
noncontrolling interests
|
|
(21)
|
|
-
|
|
(31)
|
|
-
|
|
Net cash used in
financing activities
|
|
(3,890)
|
|
(5,281)
|
|
(12,383)
|
|
(5,554)
|
NET DECREASE IN CASH
AND CASH EQUIVALENTS
|
|
(3,334)
|
|
(1,132)
|
|
(4,272)
|
|
(9,471)
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD
|
|
13,159
|
|
9,387
|
|
14,097
|
|
17,726
|
CASH AND CASH
EQUIVALENTS AT END OF PERIOD
|
|
$
9,825
|
|
$
8,255
|
|
$
9,825
|
|
$
8,255
|
RCI HOSPITALITY
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
September
30,
|
|
March
31,
|
|
|
|
|
|
2020
|
|
2019
|
|
2019
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
9,825
|
|
$
14,097
|
|
$
8,255
|
|
Accounts receivable,
net
|
|
3,559
|
|
6,289
|
|
5,579
|
|
Current portion of
notes receivable
|
|
675
|
|
954
|
|
1,142
|
|
Inventories
|
|
2,735
|
|
2,598
|
|
2,597
|
|
Prepaid
insurance
|
|
2,805
|
|
5,446
|
|
2,097
|
|
Other current
assets
|
|
2,343
|
|
2,521
|
|
1,521
|
|
Assets held for
sale
|
|
4,825
|
|
2,866
|
|
668
|
|
|
Total current
assets
|
|
26,767
|
|
34,771
|
|
21,859
|
Property and
equipment, net
|
|
182,234
|
|
183,956
|
|
191,966
|
Operating lease
right-of-use assets
|
|
26,485
|
|
-
|
|
-
|
Notes receivable, net
of current portion
|
|
4,087
|
|
4,211
|
|
3,859
|
Goodwill
|
|
47,109
|
|
53,630
|
|
55,271
|
Intangibles,
net
|
|
74,251
|
|
75,951
|
|
76,441
|
Other
assets
|
|
963
|
|
1,118
|
|
1,477
|
|
|
|
Total
assets
|
|
$
361,896
|
|
$
353,637
|
|
$
350,873
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
2,805
|
|
$
3,810
|
|
$
3,632
|
|
Accrued
liabilities
|
|
8,671
|
|
14,644
|
|
9,911
|
|
Current portion of
long-term debt
|
|
14,771
|
|
15,754
|
|
10,447
|
|
Current portion of
operating lease liabilities
|
|
1,552
|
|
-
|
|
-
|
|
|
Total current
liabilities
|
|
27,799
|
|
34,208
|
|
23,990
|
Deferred tax
liability, net
|
|
20,503
|
|
21,658
|
|
21,970
|
Long-term debt, net
of current portion and debt discount and issuance costs
|
125,669
|
|
127,774
|
|
139,371
|
Operating lease
liabilities, net of current portion
|
|
26,275
|
|
-
|
|
-
|
Other long-term
liabilities
|
|
374
|
|
1,696
|
|
1,606
|
|
|
Total
liabilities
|
|
200,620
|
|
185,336
|
|
186,937
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
|
-
|
|
Common
stock
|
|
91
|
|
96
|
|
96
|
|
Additional paid-in
capital
|
|
52,829
|
|
61,312
|
|
62,252
|
|
Retained
earnings
|
|
108,584
|
|
107,049
|
|
101,623
|
|
|
Total RCIHH
stockholders' equity
|
|
161,504
|
|
168,457
|
|
163,971
|
|
Noncontrolling
interests
|
|
(228)
|
|
(156)
|
|
(35)
|
|
|
Total
equity
|
|
161,276
|
|
168,301
|
|
163,936
|
|
|
|
Total liabilities and
equity
|
|
$
361,896
|
|
$
353,637
|
|
$
350,873
|
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SOURCE RCI Hospitality Holdings, Inc.