HOUSTON, Dec. 31, 2018 /PRNewswire/ -- RCI Hospitality
Holdings, Inc. (Nasdaq: RICK) today reported 4Q18 and FY18 results
and the filing of its 10-K for the fiscal year ended September 30, 2018.
4Q18 vs. 4Q17
- Loss of $0.27 per share compared
to a loss of $0.23
- Non-GAAP* profit of $0.41 per
diluted share compared to $0.36
- GAAP results included $5.5
million in other charges compared to $6.2 million in 4Q17, mostly non-cash in both
periods
- Free cash flow (FCF) totaled $2.7
million based on net cash provided by operating activities
of $3.4 million, less maintenance
capital expenditures of $0.7
million
- Total revenues of $40.7 million
compared to $39.2 million on 43 and
45 units, respectively
FY18 vs. FY17
- Diluted EPS of $2.23 compared to
$0.85
- Non-GAAP Diluted EPS of $2.18
compared to $1.43
- FCF totaled $23.2 million based
on net cash provided by operating activities of $25.8 million, less maintenance capital
expenditures of $2.5 million
- Total revenues of $165.7 million
compared to $144.9 million
FY19 Initial Outlook
- FY19 is expected to benefit from, in addition to other factors,
recent nightclub acquisitions in Chicago and Pittsburgh, the opening of additional
Bombshells Restaurant & Bar locations in the Houston area, and the sale or lease of
non-income producing properties.
Conference Call Today at 4:30 PM
ET
- A conference call to discuss 4Q18 results, outlook and related
matters will be held today, December 31,
2018, at 4:30 PM ET
- Live Participant Dial In: Toll
Free at 877-407-9210 and International at 201-689-8049
- To access the live webcast, slides or replay, visit:
https://www.investornetwork.com/event/presentation/41443
- Phone replay: Toll Free at
877-481-4010 and International at 919-882-2331 (Passcode:
41443)
CEO Comment
"We performed well in Fiscal 2018," said Eric Langan, President & CEO. "Revenues
increased 14.4%, a combination of 4.6% in consolidated same-store
sales and solid results from our club acquisitions and new
Bombshells. The only challenge was a number of one-time factors
that affected Bombshells growth in 4Q18, but we're in the process
of rebuilding and it's headed in the right direction. FY18 free
cash flow exceeded our original target of $23 million, and non-GAAP EPS diluted increased
52.4% to $2.18.
"During the fourth quarter, which is our seasonally weakest
period, revenues increased 3.7%, a combination of 2.1% in
consolidated same-store sales and contributions from acquisitions
and new restaurants. FCF was $2.7
million, and non-GAAP EPS diluted of $0.41 increased 13.9% year over year.
"FY19 should benefit from the Chicago and Pittsburgh acquisitions, the opening of new
Bombshells in the Houston area,
the sale or lease of non-income producing properties, and other
factors. Blush and VIP's, both to be rebranded Rick's Cabaret, have
performed well since their November acquisitions, while the new
Bombshells has also performed well since opening December 19th.
"For the first two months of 1Q19, Nightclubs total and
comparable same store-sales increased year over year, while
Bombshells total sales increased compared to the first two months
of 4Q18. Bombshells will have challenging year over year same-store
comparisons because of extra business generated in October 2017 when the Houston Astros were in the
pro baseball championship. 1Q19 club and restaurant sales are
scheduled to be announced January 10,
2019. We'll hold a related conference call that day.
"Now that we've reported results, we'll resume our capital
allocation strategy as it applies to buybacks. That calls for
repurchasing shares in the open market if the yield on our FCF run
rate relative to our market cap approaches or exceeds double
digits. With an FCF run rate of $26
million that would correspond to a share price of
approximately $27. As of September 30, 2018, we had $3.1 million in remaining share repurchase
authorization."
Recent Developments
- Philadelphia: In
October 2018, subsidiaries sold the
former Club Onyx gentlemen's club business for $1.0 million ($375K
cash and 10-year note at 9%), and entered into a 10-year triple net
lease with the new club's owners to rent the real estate.
- Chicago: In
November 2018, a subsidiary acquired
VIP's Gentlemen's Club and associated real estate. With its ability
to generate $2 million annually in
adjusted EBITDA, the club was acquired for $2.0 million cash and $4.5
million in seller financing, and the associated real estate
for $4.0 million cash.
- Pittsburgh: In
November 2018, a subsidiary acquired
Blush Gentlemen's Club & Sports Bar and associated real estate.
With its ability to generate $3
million-plus annually in adjusted EBITDA, the club was
acquired for $2.5 million cash and
$7.5 million in seller financing, and
the associated real estate for $5.0
million cash.
- Houston: In
December 2018, a subsidiary opened a
Bombshells Restaurant & Bar on I-10 East, the chain's 7th
location. Three more Houston area
units are under construction: US 249 in Tomball (north of the city) should open
February 2019; Katy (west of the
city) in April-May 2019; and US 59
(southwest Houston) in
May-June 2019.
- Debt Financing: In 4Q18, $3.1
million was borrowed from banks to acquire club real estate
in Philadelphia and finance
Bombshells land acquisition in the Houston area, and $5.0
million was borrowed from a bank and $2.8 million from third parties to finance part
of the cash needed to complete the Pittsburgh and Chicago club and real estate
acquisitions.
4Q18 & FY18 REVIEW
All comparisons to year ago periods unless otherwise
noted
Revenue Analysis
- 4Q18: Total revenues of $40.7
million increased 3.7%. Growth reflected 2.1% increase in
consolidated same-store sales and contributions from new units,
namely Bombshells Restaurant & Bar in Pearland (just south of Houston), which opened in April, and Kappa
Men's Club in Central Illinois,
acquired in May. By revenue line, growth reflected increases of
$629K (+4.2%) in service revenues,
$472K (+9.3%) in food, and
$434K (+16.3%) in other. The increase
in other reflected the revitalization of the Drink Robust business
and a strong Gentlemen's Club Expo trade show in August.
- FY18: Total revenues of $165.7
million increased 14.4%. Growth reflected 4.6% increase in
consolidated same-store sales and contributions from new units,
namely Scarlett's Cabarets in St.
Louis and Miami, which were
acquired in 3Q17; Bombshells on Highway 290 in Houston, which opened in July 2017; and Bombshells in Pearland and Kappa Men's Club as mentioned
above. By revenue line, growth reflected increases of $8.7 million (+14.4%) in beverage, $6.0 million (+10.3%) in service, $4.2 million (+22.9%) in food, and $2.0 million (+25.1%) in other.
Operating Income
- 4Q18: Operating income increased 6.8% to $1.5 million (3.8% of revenues) from $1.4 million (3.7%). Expenses increased
$1.4 million, but as a percent of
revenues, declined 11 basis points to 96.2%. Most of the dollar
increase was due to state sales tax settlements. Other charges,
consisting primarily of year-end impairments and loss on sale of
assets, decreased $707K. On a
non-GAAP basis, operating income was $7.1
million (17.6%) compared to $7.7
million (19.7%). The difference was largely due to the fact
that our non-GAAP methodology does not exclude sales tax
settlements.
- FY18: Operating income increased 22.7% to $28.4 million (17.1% of revenues) from
$23.1 million (16.0%). Operating
expenses increased $15.6 million, but
as a percent of revenues, declined 116 basis points to 82.9%. Other
charges increased $1.0 million due to
lawsuit settlements. On a non-GAAP basis, operating income
increased 20.6% to $37.0 million
(22.3%) from $30.7 million
(21.2%).
Nightclubs Segment
- 4Q18: Sales increased 3.9% to $34.1
million, with 37 units compared to 40. Same-store sales
increased 6.1%. Operating income increased 36.7% to $6.6 million (19.4% of sales) from $4.8 million (14.7%) primarily due to lower club
impairments as mentioned above. On a non-GAAP basis, operating
income increased 8.5% to $10.8
million (31.6%) from $9.9
million (30.2%).
- FY18: Sales increased 12.3% to $140.1
million. Same-store sales increased 5.8%. Operating income
increased 26.5% to $44.5 million
(31.7% of sales) from $35.1 million
(28.2%) primarily due to lower club impairments as mentioned above.
On a non-GAAP basis, operating income increased 19.1% to
$49.1 million (35.1%) from
$41.2 million (33.1%).
Bombshells Segment
- 4Q18: Sales were approximately level at $5.5 million, with 6 units compared to 5.
Comparable same-store sales declined 21.3%, but that was offset by
the addition of the Bombshells in Pearland. Operating income was a loss of
$1.2 million (-21.8% of sales)
compared to a profit of $0.953
million (17.2%). The operating loss reflected $1.4 million to write down fixed and other
assets, partially offset by a small profit. On a non-GAAP basis,
operating income was $183K (3.3%)
compared to $933K (16.8%).
- FY18: Sales increased 28.0% to $24.1
million compared to $18.8
million. Comparable same-store sales declined 3.3%, which
was more than offset by the addition of Bombshells in Pearland. Operating income declined 33.9% to
$2.0 million (8.5% of sales) compared
to $3.1 million (16.4%). On a
non-GAAP basis, operating income was $3.6
million (15.1%) compared to $3.1
million (16.4%).
Other Metrics
- Cash and cash equivalents of $17.7
million at September 30, 2018
increased 34.6% from $13.2 million at
June 30, 2018 and 78.7% from
$9.9 million at September 30, 2017. The year-end cash position
included proceeds from debt later used to finance the two November
club and related real estate acquisitions.
- Occupancy costs (rent and interest expense as a percentage of
total revenues) fell to 7.8% from 9.2%, 4Q18 vs. 4Q17, and to 7.7%
from 8.3%, FY18 vs. FY17.
- Adjusted EBITDA was $9.0 million
in 4Q18 compared to $9.6 million in
4Q17 and increased 18.8% to $44.4
million in FY18 from $37.3
million in FY17.
- Effective Tax Rate for FY18 was a benefit of 16.7%, which
included the benefit of $8.8 million
as a final calculation of the reduction of deferred tax liability
as a consequence of the new Tax Cuts and Jobs Act. The FY18 ETR
resulted in a 4Q18 income tax increase to adjust for the year. On a
non-GAAP basis, FY18 ETR was an expense of 24.5%, which resulted in
a 4Q18 income tax reduction to adjust for the year.
- RCI's FY19 FCF Target of $26
million is based on estimated net cash provided by operating
activities of approximately $29
million, less projected maintenance capex of approximately
$3 million.
*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: amortization of intangibles, gain on
settlement of patron tax case, gains or losses on sale of assets,
impairment of assets, stock-based compensation, settlement of
lawsuits, and gain on insurance. 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 shareholders and diluted
earnings per share. Excluded items are: amortization of
intangibles, gain on settlement of patron tax case, income tax
expense (benefit), impairment charges, gains or losses on sale of
assets, stock-based compensation, settlement of lawsuits, costs and
charges related to debt refinancing, and gain on insurance.
Included item is the non-GAAP provision for current and deferred
income taxes, calculated as the tax effect at 24.5%, 37%, and 35%
in 2018, 2017, and 2016, respectively, effective tax rate of the
pre-tax non-GAAP income before taxes. 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 shareholders: depreciation expense, amortization of
intangibles, impairment of assets, income tax expense (benefit),
interest expense, interest income, gains or losses on sale of
assets, settlement of lawsuits, gain on settlement of patron tax
case, and gain on insurance. 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
the 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
- Unit counts above are at period end.
- All references to the "company," "we," "our," and similar terms
include RCI Hospitality Holdings, Inc. and its subsidiaries, unless
the context indicates otherwise.
- Planned opening dates are subject to change due to weather,
which could affect construction schedules, and scheduling of final
municipal inspections.
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, 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 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 cybersecurity, 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.
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 INCOME
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30,
|
|
For the Twelve
Months Ended September 30,
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
|
Amount
|
|
% of
Revenue
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of alcoholic
beverages
|
|
$
16,285
|
|
40.0%
|
|
$
16,354
|
|
41.7%
|
|
$
69,120
|
|
41.7%
|
|
$
60,439
|
|
41.7%
|
|
Sales of food and
merchandise
|
|
5,527
|
|
13.6%
|
|
5,055
|
|
12.9%
|
|
22,433
|
|
13.5%
|
|
18,256
|
|
12.6%
|
|
Service
revenues
|
|
15,766
|
|
38.8%
|
|
15,137
|
|
38.6%
|
|
64,104
|
|
38.7%
|
|
58,132
|
|
40.1%
|
|
Other
|
|
3,098
|
|
7.6%
|
|
2,664
|
|
6.8%
|
|
10,091
|
|
6.1%
|
|
8,069
|
|
5.6%
|
|
|
Total
revenues
|
|
40,676
|
|
100.0%
|
|
39,210
|
|
100.0%
|
|
165,748
|
|
100.0%
|
|
144,896
|
|
100.0%
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alcoholic beverages
sold
|
|
3,351
|
|
20.6%
|
|
3,511
|
|
21.5%
|
|
14,327
|
|
20.7%
|
|
13,114
|
|
21.7%
|
|
|
Food and merchandise
sold
|
|
1,935
|
|
35.0%
|
|
2,042
|
|
40.4%
|
|
8,133
|
|
36.3%
|
|
7,398
|
|
40.5%
|
|
|
Service and
other
|
|
276
|
|
1.5%
|
|
50
|
|
0.3%
|
|
449
|
|
0.6%
|
|
209
|
|
0.3%
|
|
|
|
Total cost of goods
sold (exclusive of items shown below)
|
|
5,562
|
|
13.7%
|
|
5,603
|
|
14.3%
|
|
22,909
|
|
13.8%
|
|
20,721
|
|
14.3%
|
|
Salaries and
wages
|
|
11,461
|
|
28.2%
|
|
10,758
|
|
27.4%
|
|
44,547
|
|
26.9%
|
|
40,029
|
|
27.6%
|
|
Selling, general and
administrative
|
|
14,688
|
|
36.1%
|
|
13,206
|
|
33.7%
|
|
53,824
|
|
32.5%
|
|
46,775
|
|
32.3%
|
|
Depreciation and
amortization
|
|
1,916
|
|
4.7%
|
|
1,984
|
|
5.1%
|
|
7,722
|
|
4.7%
|
|
6,920
|
|
4.8%
|
|
Other charges,
net
|
|
5,516
|
|
13.6%
|
|
6,223
|
|
15.9%
|
|
8,350
|
|
5.0%
|
|
7,312
|
|
5.0%
|
|
|
Total operating
expenses
|
|
39,143
|
|
96.2%
|
|
37,774
|
|
96.3%
|
|
137,352
|
|
82.9%
|
|
121,757
|
|
84.0%
|
Income from
operations
|
|
1,533
|
|
3.8%
|
|
1,436
|
|
3.7%
|
|
28,396
|
|
17.1%
|
|
23,139
|
|
16.0%
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(2,461)
|
|
-6.1%
|
|
(2,632)
|
|
-6.7%
|
|
(9,954)
|
|
-6.0%
|
|
(8,764)
|
|
-6.0%
|
|
Interest
income
|
|
47
|
|
0.1%
|
|
79
|
|
0.2%
|
|
234
|
|
0.1%
|
|
266
|
|
0.2%
|
Income before income
taxes
|
|
(881)
|
|
-2.2%
|
|
(1,117)
|
|
-2.8%
|
|
18,676
|
|
11.3%
|
|
14,641
|
|
10.1%
|
Income tax expense
(benefit)
|
|
1,781
|
|
4.4%
|
|
1,112
|
|
2.8%
|
|
(3,118)
|
|
-1.9%
|
|
6,359
|
|
4.4%
|
Net income
|
|
(2,662)
|
|
-6.5%
|
|
(2,229)
|
|
-5.7%
|
|
21,794
|
|
13.1%
|
|
8,282
|
|
5.7%
|
Net loss (income)
attributable to noncontrolling interests
|
|
(10)
|
|
0.0%
|
|
(10)
|
|
0.0%
|
|
(81)
|
|
0.0%
|
|
(23)
|
|
0.0%
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$
(2,672)
|
|
-6.6%
|
|
$
(2,239)
|
|
-5.7%
|
|
$
21,713
|
|
13.1%
|
|
$
8,259
|
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.27)
|
|
|
|
$
(0.23)
|
|
|
|
$
2.23
|
|
|
|
$
0.85
|
|
|
|
Diluted
|
|
$
(0.27)
|
|
|
|
$
(0.23)
|
|
|
|
$
2.23
|
|
|
|
$
0.85
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
9,719
|
|
|
|
9,719
|
|
|
|
9,719
|
|
|
|
9,731
|
|
|
|
Diluted
|
|
9,719
|
|
|
|
9,719
|
|
|
|
9,719
|
|
|
|
9,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends per
share
|
|
$
0.03
|
|
|
|
$
0.03
|
|
|
|
$
0.12
|
|
|
|
$
0.12
|
|
|
RCI HOSPITALITY
HOLDINGS, INC.
|
NON-GAAP FINANCIAL
MEASURES
|
(in thousands, except
per share and percentage data)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Twelve
Months
|
|
|
Ended September
30,
|
|
Ended September
30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reconciliation of
GAAP net income (loss) to Adjusted EBITDA
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$ (2,672)
|
|
$ (2,239)
|
|
$
21,713
|
|
$
8,259
|
Income tax expense
(benefit)
|
|
1,781
|
|
1,112
|
|
(3,118)
|
|
6,359
|
Interest expense,
net
|
|
2,414
|
|
2,553
|
|
9,720
|
|
8,498
|
Settlement of
lawsuits
|
|
395
|
|
14
|
|
1,669
|
|
317
|
Impairment of
assets
|
|
3,186
|
|
6,228
|
|
4,736
|
|
7,639
|
Loss (gain) on sale
of assets
|
|
1,935
|
|
(19)
|
|
1,965
|
|
(542)
|
Gain on
insurance
|
|
-
|
|
-
|
|
(20)
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
(102)
|
Depreciation and
amortization
|
|
1,916
|
|
1,984
|
|
7,722
|
|
6,920
|
Adjusted
EBITDA
|
|
$
8,955
|
|
$
9,633
|
|
$
44,387
|
|
$
37,348
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP net income (loss) to non-GAAP net income
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to RCIHH common shareholders
|
|
$ (2,672)
|
|
$ (2,239)
|
|
$
21,713
|
|
$
8,259
|
Amortization of
intangibles
|
|
93
|
|
67
|
|
254
|
|
217
|
Income tax expense
(benefit)
|
|
1,781
|
|
1,112
|
|
(3,118)
|
|
6,359
|
Settlement of
lawsuits
|
|
395
|
|
14
|
|
1,669
|
|
317
|
Impairment of
assets
|
|
3,186
|
|
6,228
|
|
4,736
|
|
7,639
|
Loss (gain) on sale
of assets
|
|
1,935
|
|
(19)
|
|
1,965
|
|
(542)
|
Gain on
insurance
|
|
-
|
|
-
|
|
(20)
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
(102)
|
Costs and charges
related to debt refinancing
|
|
-
|
|
-
|
|
827
|
|
-
|
Effect of change in
effective tax rate and uncertain tax position in the fourth
quarter
|
|
-
|
|
962
|
|
-
|
|
-
|
Non-GAAP income tax
benefit (expense)
|
|
(689)
|
|
(2,589)
|
|
(6,866)
|
|
(8,194)
|
Non-GAAP net
income
|
|
$
4,029
|
|
$
3,536
|
|
$
21,160
|
|
$
13,953
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP diluted earnings (loss) per share to non-GAAP diluted earnings
per share
|
|
|
|
|
|
|
Fully diluted
shares
|
|
9,719
|
|
9,719
|
|
9,719
|
|
9,743
|
GAAP diluted earnings
(loss) per share
|
|
$
(0.27)
|
|
$
(0.23)
|
|
$
2.23
|
|
$
0.85
|
Amortization of
intangibles
|
|
0.01
|
|
0.01
|
|
0.03
|
|
0.02
|
Income tax expense
(benefit)
|
|
0.18
|
|
0.11
|
|
(0.32)
|
|
0.65
|
Settlement of
lawsuits
|
|
0.04
|
|
0.00
|
|
0.17
|
|
0.03
|
Impairment of
assets
|
|
0.33
|
|
0.64
|
|
0.49
|
|
0.78
|
Loss (gain) on sale
of assets
|
|
0.20
|
|
(0.00)
|
|
0.20
|
|
(0.06)
|
Gain on
insurance
|
|
-
|
|
-
|
|
(0.00)
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
(0.01)
|
Costs and charges
related to debt refinancing
|
|
-
|
|
-
|
|
0.09
|
|
-
|
Effect of change in
effective tax rate and uncertain tax position in the fourth
quarter
|
|
-
|
|
0.10
|
|
-
|
|
-
|
Non-GAAP income tax
benefit (expense)
|
|
(0.07)
|
|
(0.27)
|
|
(0.71)
|
|
(0.83)
|
Non-GAAP diluted
earnings per share
|
|
$
0.41
|
|
$
0.36
|
|
$
2.18
|
|
$
1.43
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP operating income to non-GAAP operating income
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
$
1,533
|
|
$
1,436
|
|
$
28,396
|
|
$
23,139
|
Amortization of
intangibles
|
|
93
|
|
67
|
|
254
|
|
217
|
Settlement of
lawsuits
|
|
395
|
|
14
|
|
1,669
|
|
317
|
Impairment of
assets
|
|
3,186
|
|
6,228
|
|
4,736
|
|
7,639
|
Loss (gain) on sale
of assets
|
|
1,935
|
|
(19)
|
|
1,965
|
|
(542)
|
Gain on
insurance
|
|
-
|
|
-
|
|
(20)
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
(102)
|
Non-GAAP operating
income
|
|
$
7,142
|
|
$
7,726
|
|
$
37,000
|
|
$
30,668
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP operating margin to non-GAAP operating margin
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
3.8%
|
|
3.7%
|
|
17.1%
|
|
16.0%
|
Amortization of
intangibles
|
|
0.2%
|
|
0.2%
|
|
0.2%
|
|
0.1%
|
Settlement of
lawsuits
|
|
1.0%
|
|
0.0%
|
|
1.0%
|
|
0.2%
|
Impairment of
assets
|
|
7.8%
|
|
15.9%
|
|
2.9%
|
|
5.3%
|
Loss (gain) on sale
of assets
|
|
4.8%
|
|
0.0%
|
|
1.2%
|
|
-0.4%
|
Gain on
insurance
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
Gain on settlement of
patron tax
|
|
0.0%
|
|
0.0%
|
|
0.0%
|
|
-0.1%
|
Non-GAAP operating
margin
|
|
17.6%
|
|
19.7%
|
|
22.3%
|
|
21.2%
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP net cash provided by operating activities to non-GAAP free
cash flow
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
3,358
|
|
$
3,197
|
|
$
25,769
|
|
$
21,094
|
Less: Maintenance
capital expenditures
|
|
680
|
|
508
|
|
2,527
|
|
1,813
|
Free cash
flow
|
|
$
2,678
|
|
$
2,689
|
|
$
23,242
|
|
$
19,281
|
RCI HOSPITALITY
HOLDINGS, INC.
|
SEGMENT
INFORMATION
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Twelve
Months
|
|
|
|
Ended September
30,
|
|
Ended September
30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
|
|
|
|
|
|
|
|
|
Nightclubs
|
|
$
34,146
|
|
$
32,863
|
|
$
140,060
|
|
$
124,687
|
|
Bombshells
|
|
5,544
|
|
5,549
|
|
24,094
|
|
18,830
|
|
Other
|
|
986
|
|
798
|
|
1,594
|
|
1,379
|
|
|
|
$
40,676
|
|
$
39,210
|
|
$
165,748
|
|
$
144,896
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
|
|
|
|
|
|
|
|
Nightclubs
|
|
$
6,623
|
|
$
4,845
|
|
$
44,458
|
|
$
35,138
|
|
Bombshells
|
|
(1,207)
|
|
953
|
|
2,040
|
|
3,084
|
|
Other
|
|
295
|
|
171
|
|
(252)
|
|
(522)
|
|
General
corporate
|
|
(4,178)
|
|
(4,533)
|
|
(17,850)
|
|
(14,561)
|
|
|
|
$
1,533
|
|
$
1,436
|
|
$
28,396
|
|
$
23,139
|
|
|
|
|
|
|
|
|
|
|
RCI HOSPITALITY
HOLDINGS, INC.
|
NON-GAAP SEGMENT
INFORMATION
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended September 30, 2018
|
|
For the Three
Months Ended September 30, 2017
|
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
Income from
operations (loss)
|
|
$
6,623
|
|
$
(1,207)
|
|
$
295
|
|
$
(4,178)
|
|
$
1,533
|
|
$
4,845
|
|
$
953
|
|
$
171
|
|
$
(4,533)
|
|
$
1,436
|
Amortization of
intangibles
|
|
-
|
|
-
|
|
-
|
|
93
|
|
93
|
|
-
|
|
-
|
|
-
|
|
67
|
|
67
|
Settlement of
lawsuits
|
|
366
|
|
-
|
|
-
|
|
29
|
|
395
|
|
14
|
|
-
|
|
-
|
|
-
|
|
14
|
Impairment of
assets
|
|
3,613
|
|
1,123
|
|
-
|
|
-
|
|
4,736
|
|
5,072
|
|
-
|
|
-
|
|
1,156
|
|
6,228
|
Loss (gain) on sale
of assets
|
|
188
|
|
267
|
|
(63)
|
|
(7)
|
|
385
|
|
10
|
|
(20)
|
|
(1)
|
|
(8)
|
|
(19)
|
Gain on
insurance
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Non-GAAP operating
income (loss)
|
|
$
10,790
|
|
$
183
|
|
$
232
|
|
$
(4,063)
|
|
$
7,142
|
|
$
9,941
|
|
$
933
|
|
$
170
|
|
$
(3,318)
|
|
$
7,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
19.4%
|
|
-21.8%
|
|
29.9%
|
|
-10.3%
|
|
3.8%
|
|
14.7%
|
|
17.2%
|
|
21.4%
|
|
-11.6%
|
|
3.7%
|
Non-GAAP operating
margin
|
|
31.6%
|
|
3.3%
|
|
23.5%
|
|
-10.0%
|
|
17.6%
|
|
30.2%
|
|
16.8%
|
|
21.3%
|
|
-8.5%
|
|
19.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve
Months Ended September 30, 2018
|
|
For the Twelve
Months Ended September 30, 2017
|
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
|
Nightclubs
|
|
Bombshells
|
|
Other
|
|
Corporate
|
|
Total
|
Income from
operations (loss)
|
|
$
44,458
|
|
$
2,040
|
|
$ (252)
|
|
$ (17,850)
|
|
$
28,396
|
|
$
35,138
|
|
$
3,084
|
|
$ (522)
|
|
$ (14,561)
|
|
$
23,139
|
Amortization of
intangibles
|
|
-
|
|
-
|
|
-
|
|
254
|
|
254
|
|
-
|
|
-
|
|
-
|
|
217
|
|
217
|
Settlement of
lawsuits
|
|
1,440
|
|
200
|
|
-
|
|
29
|
|
1,669
|
|
317
|
|
-
|
|
-
|
|
-
|
|
317
|
Impairment of
assets
|
|
3,613
|
|
1,123
|
|
-
|
|
-
|
|
4,736
|
|
6,483
|
|
-
|
|
-
|
|
1,156
|
|
7,639
|
Loss (gain) on sale
of assets
|
|
(400)
|
|
267
|
|
-
|
|
2,098
|
|
1,965
|
|
(594)
|
|
-
|
|
88
|
|
(36)
|
|
(542)
|
Gain on
insurance
|
|
-
|
|
-
|
|
-
|
|
(20)
|
|
(20)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Gain on settlement of
patron tax
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(102)
|
|
-
|
|
-
|
|
-
|
|
(102)
|
Non-GAAP operating
income (loss)
|
|
$
49,111
|
|
$
3,630
|
|
$ (252)
|
|
$ (15,489)
|
|
$
37,000
|
|
$
41,242
|
|
$
3,084
|
|
$ (434)
|
|
$ (13,224)
|
|
$
30,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
margin
|
|
31.7%
|
|
8.5%
|
|
-15.8%
|
|
-10.8%
|
|
17.1%
|
|
28.2%
|
|
16.4%
|
|
-37.9%
|
|
-10.0%
|
|
16.0%
|
Non-GAAP operating
margin
|
|
35.1%
|
|
15.1%
|
|
-15.8%
|
|
-9.3%
|
|
22.3%
|
|
33.1%
|
|
16.4%
|
|
-31.5%
|
|
-9.1%
|
|
21.2%
|
RCI HOSPITALITY
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
17,726
|
|
$
9,922
|
|
Accounts receivable,
net
|
|
7,320
|
|
3,187
|
|
Inventories
|
|
2,353
|
|
2,149
|
|
Prepaid
insurance
|
|
4,910
|
|
3,826
|
|
Other current
assets
|
|
1,591
|
|
1,399
|
|
Assets held for
sale
|
|
2,902
|
|
5,759
|
|
|
Total current
assets
|
|
36,802
|
|
26,242
|
Property and
equipment, net
|
|
172,403
|
|
148,410
|
Notes
receivable
|
|
2,874
|
|
4,993
|
Goodwill
|
|
44,425
|
|
43,866
|
Intangibles,
net
|
|
71,532
|
|
74,424
|
Other
assets
|
|
2,530
|
|
1,949
|
|
|
|
Total
assets
|
|
$
330,566
|
|
$
299,884
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
2,825
|
|
$
2,147
|
|
Accrued
liabilities
|
|
11,973
|
|
11,524
|
|
Current portion of
long-term debt
|
|
19,047
|
|
17,440
|
|
|
Total current
liabilities
|
|
33,845
|
|
31,111
|
Deferred tax
liability
|
|
19,552
|
|
25,541
|
Long-term
debt
|
|
121,580
|
|
106,912
|
Other long-term
liabilities
|
|
1,423
|
|
1,095
|
|
|
Total
liabilities
|
|
176,400
|
|
164,659
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Preferred
stock
|
|
-
|
|
-
|
|
Common
stock
|
|
97
|
|
97
|
|
Additional paid-in
capital
|
|
64,212
|
|
63,453
|
|
Retained
earnings
|
|
89,740
|
|
69,195
|
|
Accumulated other
comprehensive income
|
|
220
|
|
-
|
|
|
Total RCIHH
stockholders' equity
|
|
154,269
|
|
132,745
|
|
Noncontrolling
interests
|
|
(103)
|
|
2,480
|
|
|
Total stockholders'
equity
|
|
154,166
|
|
135,225
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
330,566
|
|
$
299,884
|
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SOURCE RCI Hospitality Holdings, Inc.