RCI Hospitality (RICK) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenues were $76.2M, down 1.2% year-over-year, while nine-month revenues rose 1.8% to $222.4M.

• Net loss attributable to shareholders was $5.2M for Q3 2024, compared to net income of $9.1M in Q3 2023, mainly due to $17.9M in non-cash impairments.

• Nightclubs achieved record revenues, with same-store sales up 1.7% year-over-year and sequential revenue growth; Bombshells revenues declined 8.7% year-over-year but improved 2.9% sequentially.

• Share buybacks reduced shares outstanding below 9 million, with 700,000 shares repurchased at a 22% discount to prior acquisition prices; new $25M buyback authorization in place.

• Withdrew from Colorado casino license process to focus on projects with more immediate returns.

Financial highlights

• Q3 GAAP EPS was a loss of $0.56, while non-GAAP EPS was $1.35; free cash flow for Q3 was $13.8M, and Adjusted EBITDA was $20.1M.

• Nine-month net income was $2.8M, down 89.8% year-over-year; nine-month Adjusted EBITDA was $54.8M, down from $64.8M.

• Nightclub revenues for Q3 were $62.8M, up $374,000 year-over-year, driven by 1.7% same-store sales growth and new/reformatted clubs.

• Bombshells Q3 revenues were $13.1M, down 8.7% year-over-year, but up 2.9% sequentially; non-GAAP operating margin improved to 10.8% from 5.9% last quarter.

• Debt increased to $245.4M at June 30, 2024, due to a $20M bank loan; weighted average interest rate was 6.74%.

Outlook and guidance

• Developing a five-year strategic plan focused on operational efficiency, margin improvement, and capital allocation, with $200–250M in free cash flow targeted for deployment.

• Priorities include dividends, selective M&A, and share buybacks, with dividend growth using less than 10% of free cash flow.

• Management expects to generate adequate cash flows from operations for the next 12 months and aims to increase free cash flow per share.