RICK - Earnings call transcript Q3 2024 | RCI Hospitality Holdings, Inc.

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Mark Moran

Greetings, and welcome to RCI Hospitality Holdings Third Quarter 2024 Earnings Conference Call.

You can find the company's presentation on RCI's website. Go to the Investor Relations section, all the necessary links are at the top of the page.

[Audio Gap] with me to Slide 2 of our presentation.

of CEO Moran, Mark Equity Animal. I'm the be host of call. our I'll to I'm and Commonwealth of Bradley CEO from Virginia; the our Houston. coming in Hospitality; Chhay you RCI Eric are CFO, and of Langan, President

computer. Please on turn RCI this need a exclusively only, call device. to ask can Slide a join X the To with you you is To a Spaces. mobile making on question, me with to personal X. will space the join space listen

conference This recorded. Instructions] being [Operator call is

Please everybody me to statement. to turn Slide with X. of want I harbor remind our safe

You call forward-looking materially and from hear a that developments as information any that differ uncertainties. anticipated. currently involve update We disclaim result of may risks or afterwards. see those obligation occur may this Actual in results to statements disclosed

with turn of explanation non-GAAP Please also I to X. to me direct the you financial measures. Rick's Slide

CEO Eric, Now President introduce Eric to Langan, and Hospitality. of I'm RCI away. it pleased take

Eric Langan

everyone capital third Slide And we If turn first business Basics today. lot progress of approach Back you. to a our It our us to like the reflects of during X. to you and full the joining made allocation will to Thank strategy. quarter. thank for quarter our I'd

aggressive we margins. revenues, Specifically, taking actions reduce are increase to costs, expand

Gap] [Audio

that free the impairment noncash. kind core of was per the increasing Our third cash we with of a quarter, club Bombshells improving lot flow and business, GAAP all that share. of our goal buying back results but the shares, had affected Yes, in

sales and year-over-year sales record 'XX. are quarter year-over-year takeaways in with increase since the total of second quarter key Nightclubs fiscal first achieved of the revenues The that in same-store increase

Back from sales last Basics and last XXXX. to the Gap] from our approach this XX.X% increased Sales X.X% sequentially quarter, in starting of Bombshells reflecting increased February also quarter to margin. [Audio quarter.

opening, have year, projects, reopening list we are our at new this on fiscal enhanced working of X more. and to locations or date opened, we or converted reformatting Looking X

As possible. efficiently fast as and

license As focus results. our projects effort, will withdrew that casino better to we Colorado immediate the per on this more formally application for provide

million of available Looking strategy, a Board the by fourth increasing at our our Directors the added The bank stock allocation we war our low through authorized $XX estate during real share loan. repurchase and price took amount to we of chest And under million. advantage third quarters. program our capital $XX

To million. that than reducing we to pleased end, I'm less of reached announce outstanding our X objective to have short-term shares

part our Slide October same bought the Please 'XX acquisitions. shares used our of turn I'm share share our of I and in our XXXX to we buyback number part -- open, pleased program, as X. in by that announce we of count to also XXX,XXX reducing March the big back

those to bought slide, at discount XX% average As back XXX,XXX in a on share we you the see this transactions. price used will shares those

Please X. Slide turn to

last we acquisitions have them, results. major the we X Then managed years, through then post-COVID more our ever, made bounce. few than accomplishments. improved and survived Over We We biggest integrated COVID. successfully the achieved their some

the at given and share flow we take hard value and should good uncertain a what our return down want settled have investors. to look cash per economic to things next that Now free increase do environment, best we to

on and quarter call. about a implement on fiscal We are fiscal it the We -- in more now our XXXX tell working X-year earnings you next plan. plan XXXX to starting strategic year

see outline. pillars general Right the a to Here's now, X plan. we

to business. is We Basics approach continue our want to running our and efficiently to as our The first Back possible. as locations sure make are the profitably to

sell and reformat improve sales locations underperforming would be them. authorities margins Our same-store rebrand or to grow and

capital second allocation. The is pillar

we flow no to deploy. cash free Assuming of growth, $XXX million approximately should have

stable of dividend. the occasional and discretionary would discretionary and focusing target priorities Target to hits XX% free base sure ensure cash home about than XX% making M&A, for a modestly flow on be cash selective growing to run, less Our we free of synergies flow capture

and cash Gap] clubs to regular dividends for [Audio used M&A any share in and buybacks. target excess not

Now here's Bradley.

Bradley Chhay

turn business $XX.X enabled our EPS X. of Please was Slide to The revenue core GAAP This improvements A to in the the strength Eric. million a to and quarter. reflected impairment of on per noncash Thanks, . share. $X.XX million quarter. of several generate right-of-use third portion is loss in in current operating primarily of leasehold related of the $XX.X impairment leases. good that us

Now $X.XX. on a totaled EPS basis, non-GAAP

EBITDA flow free adjusted year cash addition, $XX.X million million. did as at In reached a $XX.X high of

did X.X%. [Audio in Gap] new revenues offset pro Texas Nightclub This being of partially and South liquor sever sales May. XX. reformate a clubs year-over-year. and primarily $XXX,XXX Slide BYOB in and sports reflected by to lineup same-store turn was playoff closings and clubs temporary weather $XX.X million some Turn, increased to from of reformatted Please this growth Florida. strong

revenue By type, alcoholic

by decreased food, and Gap] X.X%; increased [Audio X.X%; X.X%. and by merchandise service revenue other

lower The improvement higher revenue mix to in X and of the Noncash reflected related X.X goodwill, in impairments a acquired and service different SOB clubs primarily clubs. leasehold rate alcohol million past impairment growth years. from $X.X

with operating to compared of XX.X%. GAAP a margin margin to XX.X% $XX.X income was revenues million of of compared was operating compared XX.X% $XX.X million Non-GAAP to compared $XX.X $XX.X a with income to million XX.X%. million

and X.X%. increased margin XX.X% Gap] to last from to Non-GAAP revenues increase the XX.X%. operating XX.X% increased -- [Audio income increased quarter,

higher reflected improvements these sales, including of service and reduced All costs.

in weather Antonio; revenues primarily closings XX. Cherry same-store temporary in Kitchen. Please Bombshells, Texas; and Hall turn This to by of turn, in reflected offset Slide Stafford million sales with severe sales. its X.X%. this Bombshells to Food was locations, by Creek and brewery and partially Texas. and $XX.X Colorado, In reduced due San declined in Bombshells not same-store X

lineup in also May million pro impairment Non sports strong playoff $XX.X The of helped.

Bombshells. compared compared and lease to income Gap] operating were million GAAP leasehold revenues of impairment [Audio X loss $X.X a operating an improvement right-of-use results with of $X.X margin related XX.X%. negative XX.X% a million, asset to to of of impairment

compared was $X.X compared income operating a of to XX.X% XX.X%. margin $X.X Non-GAAP million to with million

last it comparing increased revenues income to from increased non-GAAP -- quarter, XX.X% however, increased margin operating and X.X%, X.X%. looking to XX.X% Now

mid-February initiated full in These of improvements reflect XXXX. the first changes quarter

made some to And Slide to Year-over-year, progress X.X%. on X.X% compared GAAP of compared a non-GAAP quarter, at But turn X.X% basis. were XX. total Please a corporate revenues they reducing they X.X% they expenses. to last compared were to on X.X%. on We've level basis, were

to Slide quarter. turn performance Please perspective, at operating into second to the third puts quarter XX. That compared our the looking

basis. So on you can a how results non-GAAP see improved

weather. the location added and also on closures data for third severe during We the number day Bombshells to some quarter due club of

had XX clubs day clubs we've Houston date, to due for and Bombshells, fourth had closures quarter, for During all the Hurricane the day and XX Bombshells. To closure for quarter, X we third XX in in Beryl. for

Please XX. turn to Slide

that GAAP up this operating have which cash non-GAAP. which adjusted the equivalent income. couple In discuss slide. We free of present are a advance are of and that, on EBITDA, to slides closest flow and we coming net wanted

Please our XX. third loan. $XX.X million turn of quarter $XX proceeds bank million. cash included the real to We Slide estate and from ended This with cash equivalents

During the shares. $X.X back quarter, we used million buy to

As XX%, highs flow a both free XX% was adjusted and EBITDA was percentage year-to-date. cash of revenues,

The a average the ago. year Slide March XX, new XX XX. Please from downs. weighted XX rate increased reflected of basis $XX.X interest X.XX%, scheduled million pay turn combination was This bank a June higher Debt loan than only and by at to points

on sequential and declined that come the locations to the decline have that occupancy a coming been to sequential have Total adjusted due X.X% This should from a sales online XX-month grow new on -- -- basis. trailing from to Debt bank year-over-year quarter X% at anticipated and from EBITDA loan. basis over X.XXx, year-over-year quarter increased those year primarily costs to as open. recently

payment Debt $X.X the on remained Playmate payment maturities unchanged. balance balloon the the XX and months was extended adjusted to Subsequent notes to accordingly. The interest monthly maturity we manageable. paid The continue and principal at extended and remain down date and the reasonable out. has million installment quarter,

Please XX. turn to Slide

continue We all real loan. because the pay new debt the slices to bank of of of estate exception with our down

that pay slice downs. lower larger their As is and proportionally for other the at net a XX.X%, adjusted debt slices result, are all

the turn back let Now over Eric. to me presentation

Eric Langan

Bradley. Thanks, allocation I employ centered X We our make Slide we strategy. do want that is XX. Please to different everything to turn around clear capital

there cash on our yield whether acquisitions, shares buying Mergers do back our flow, otherwise. organic or -- and is cash flow rationale compelling per free share that. to about the Gap] subject XX% [Audio to free is when growth a sorry than more

Please turn to

Fort [Audio down our Worth reviewing currently the location and Gap] With and that Dolls they burned opening X Rebuilding efficiently laser-focused to ensure in on reformatted mind, possible, clubs are that we as financial Baby operating under as all the units meet fast objectives. July in development. new and Bombshells

shares debt and of free Selling up non-income-producing more to flow using and cash more to reduce facilitate free clubs. buyback real and of estate cash acquisitions

of strategy of Slide have compound to adjusted for XX.X% for Please our free XXXX, fiscal EBITDA, sticking growth for turn capital end to XX. allocation rates total XX.X% the XX.X% we revenues, flow. By cash generated since annual

past We shareholders their make also and all I'd hard teams in diluted work and to success count. reduced for our fully have and the special our possible. dedicated for and like share all quarter our our loyal effort who thanks this believe

Mark. Now here's

Mark Moran

Bradley. we'd then and larger and shareholders. of [Operator Eric take some like questions To start off, things Instructions] analysts from you, Rick's Thank its to

First have it Scott Wainwright. take H.C. Scott away. of Buck off, we

Scott Buck

in in what the on process restructuring the if margins. you're there? back can we get progress the we use Bombshells -- far we Nice of I'm those are how XX%? curious to baseball margins along analogy And inning

Eric Langan

in October, fiscal certainly on December is headed I'd I XX% how stores stores to in then like towards inning, as -- better new to have I We're new believe will of then we margins. the the finals be the that And new -- open and these up probably us might I analogy. hit XX move those inning clubs back say getting November, calendar bottom fifth. and September quarter my a probably second and deals. probably the for We we're which year. these XX% see goal in mean I'd we XXXX, the seventh where heading that I get base do. to just on our now, of stretch, back sure. think we'll see right maybe the into into to fifth

They're all excited handpick and flagship locations very I'm

Gap] locations. [Audio

locations underperforming those off may those the of through we of we also maybe and will see. either well. move forward some consider as We some locations end or So of even closing as selling taking locations September

a chains doing on the -- just locations make looking I at that. lot I've restaurant it may And locations. numbers of of underperforming couple this have been to sense at taking probably been XX next to know those to point a And up versus efforts into efforts fixing with the We'll locations others. days. over put them XX and continue the put come eliminate on them decisions those and more those

Scott Buck

the guys in you a were Great. that I you color. some out Eric, And checking is environment what Midwest, weeks clubs. appreciate an property? a give Can it are the of And is update few you Upper us for for think maybe a looking in club I back, what on reminder M&A?

Eric Langan

as this been are weekend to pipeline been in. meeting with as will There owners Sure. get not We've heated to getting by And some some People of calls. is really We've we've then we a those sale. more It's reasonable. are and The owners some told some with. talking next that through clubs of to other -- starting We market. we're are We're been the in lots well meet actually probably week. coming market. EXPO up. went hopefully, the for of successful market and of those the Detroit very talking club

realize They're to that starting

[Audio event. Gap] was a onetime

from industry a into their clubs sell 'XX, number 'XX, the more reasonable those 'XX, at -- earnings the XXXX. that versus high to going and For realizing that

that included. forward Xx XX so And forward real optimistic over see estate acquisitions with some to going we're and going at multiple next closer very months, nice I'm XX to coming the to

Scott Buck

to Great. properties. ask about wanted Colorado That's helpful. And the then I

I on to still the in time other properties the the mind? steakhouse, there, full-go think liquid. [Audio you're you line what's Gap] have have but else something

Eric Langan

LOI an probably sell sooner. lease We've those people. may weeks, particular not got that I in several one We're may properties. groups We talking properties. if those We on several property, few on the next property expect with

The with other there. -- it's in talking tenant but property, additional it in right got we're several now. a there's space

to to. that to tenants may additional add property that we property operator may we find the casino we sell or if right sell that So

and to The very hoping property will -- we up that to there. will, make October make open Rick's October, if Steakhouse don't I'm Cabaret we it's property. winter open difficult full

So spring and while like we that. may for a do center opening maybe we or push opening or that to some may something a like weekend-only temporary

finished right they to get in that's October. is because time that done on by -- I'm a out so plan now But whether be just for my I to one. full it's be haven't plan can currently get planning really going of to But got do that. it unfortunately, the construction hands us

Scott Buck

Bradley, with cash Great. any a That's decline rates? helpful. opportunities see And refinancings potential then in for should could last help interest question. Are meaningful flow? we that there

Bradley Chhay

As what yesterday far debt, for and seeing occur trying our to and spoken we've the debt a in anything quite there's news But media. we're or I'm you're refinance immediately right on. now, seeing there as future service -- that us as the to of that, interest bit the we're closely watching bank because I've like rate that. to nothing lower got

Mark Moran

Next up, we have

Please [Audio Gap] Orchard Wealth. take away. it

Unknown Analyst

All right.

were, I'm things assuming, for $XX but million paid right? the forgot share you both the about Colorado that buybacks the earnings And Xx you you what clubs from on talk old purchased. for I Locas, and Chicas Let's saved about guys

Eric Langan

for were -- plus estate -- the yes. Colorado, on we real Baby the Burch I acquisition, -- Xx the believe Xx -- it on and Dolls, the Dolls the the estate plus real I Well, on call

Unknown Analyst

what you've then over seen numbers improvements from correct? And those guys you were their have before, since sales taken properties,

Eric Langan

B-U-C-K. Correct. name is [indiscernible] Buck, Last

Unknown Analyst

what idea on been you you've what paid to the being now guys it it you you is then you have have able able clubs was a for was prices, if terms that guys adjusted what like new earnings to for the for it right? been X%, paid in the XX% So X.X% up get or a lower and paid you of the

Eric Langan

for that Colorado it's acquisition. paid thing -- so do is baby mean million only all it, say XX% -- revenue less million look how million a -- But no you mean total how savings at go purchase we $XX take you at not less we Dolls can nice have want split paid not there's share it's those and overall coming look way. you cash ] that the would the basis, But And I Baby -- you That's those considerable Audio a figure in. $XX price. the you flow new deal. to longer. [ for shares still the I stock, yes. multiples But I $X for if million the $XX the Gap all out on acquisition, the on per are it. free that split

Unknown Analyst

to you below the into of like like seems it Great. shares the market there was down Because took when majority like grow the of huge like stock $XX. it the basically a amount shares, came shorts in X that are the XXX,XXX to that shares X let's put going and XXX,XXX to looks to last weeks they're back. max. on total they outstanding buy have the say, It bringing

So you bought guys were shorts... the those

Eric Langan

look We XXX,XXX far we we over few at months, believe quarter, XX% the you so -- I this bought shares. the of if XXX,XXX probably X quarter. last bought had

June very lot days, under for of shares the and It a the when only but under made we more shares. amount were basically in some -- probably buying about we large X maximum And went long. [ stock purchases those wasn't it July. million So $XX. or It ] bought about we was of very of few a

target, bought million basically I'd got target then say average of think. I steady by August an was every think we of could I being just under we bumping We I occasionally under under just buy heavily. up couple for $XX we've X $XX. because day, shares X. between days shares it $XX-and-change, internal bought much number pretty a think and $XX bought $XX a to those we under down -- pretty then day -- it And when of $XX, And a

number by So to buying we the buy, dividing needed the left. shares needed number days basically total taking we we trading were it the of

we probably shares get we a back and we a were to buying or stock brief couldn't we it think X,XXX again. get a so And day were a number shares I normalized stack. period, didn't then someday, X,XXX it dropped buying down day, a shares if for and day X,XXX get And

So.

Unknown Analyst

out obviously, this in did or of the of standing Okay. dude And tweet clubs a my picture some put front be, Cave Bear there and people was would question last then like the any this to it seem like no make whatever, good about? can stuff were up with were of guys on trying that comment whatever thing was BS that you they to like you police

Eric Langan

investigations our would see I ongoing I was time. on base you at the this want that ongoing the type you'll accusations, the that of off little and to XX-Q refer a Gap] Q to is. if any comments any disclosures [Audio on and disclosures made. see, And that make in But XX-Q you cannot see there are he what he state --

Unknown Analyst

little blown able to you or massive. save great. right, All a away guys million on just by price. bit $XX A like the lot I'm that bit. purchase fact were the of That's

Bradley Chhay

Thank you. too. I me, to mean that was very important

Mark Moran

call. with And our this you. Thank conclude that, On will of the Eric... behalf earnings

Eric Langan

You wants have you hands, can... a I to question ask check If again. anybody a think,

Mark Moran

away. it take Liam,

Eric Langan

There few there. are more a in

Mark Moran

we There go.

bring I'm was. So next going up -- we're what sure to that not

bring [indiscernible] Let's up Biotech.

Unknown Analyst

Great. Okay.

cumulatively, invested Bombshells cash So in the and has the much curious been how just business casinos?

Eric Langan

million properties casino Cabaret, and so of there. properties remodel invested open. to $X it out Rick's will we million up. of Steakhouse that Cabaret And the about we'll Well, about have non-income kind that actually and will have in divide in producing the There's $X Rick's

the We price, get don't think it. $X for get have properties close. I asking sale full know for on think a right very X if million, and I we'll be we'll we'll I LOI now of an but

tenant. a recouped will recouped of the have than other be have almost we nonincome-producing property, properties almost we'll but the So X XXX%

It producing a actually significant I it's shouldn't income is just nonincome-producing. not income-producing. amount. it's So say really

-- opens, is but are that the did $XX loan. million And when we'll investment big [Audio that X pretty -- on now properties because the when debt lot the Rick's loan, of think a I we did then we quickly. million those repeat And $XX Gap] collateral

back. got So cash our actually we

So the Bradley a overall investment cash that haven't to do it true concerned in been from do material wasn't I'll because right it with to have on have the calculation. a cash, I company now. really

today. Bombshells I haven't cash-on-cash ran mean, we're again first Where of the were into we Bombshells. As far XX% X know XXX% stores. I next 'XX, haven't for at that invested recently. we know goes, these return as I stores XX I

cash XXX% into has been profits probably of So profit. the only we're the past in the made that amount more We've has full and cash or to invested nowhere still concept on us. Bombshells returned we're near

So of on an that And standpoint, really I think to assets of to adult have still be We money that reinvest is and no which we million can them Bombshells in back a the basis, amount significant off margins. you're money need XX% those ROI from million we talking made probably and concept. to $X.X Bombshells, quarter. We'll money we into this then past $XX about we be, where back get club invested making and way another in business. look take monetize revenue and of our

Mark Moran

question an have anonymous we submitted. Eric,

discuss fire if you'd happened? like the that If to

Eric Langan

fire based fire Okay, electrical in investigation. in sure. We XXXX. don't fire room inconclusive remodeled was It and type part was it Where roof of believe know fire what of happened. the electrical was was area. through at. on first. the on which completely where It some hottest collapsed the walls the results burned building that the That We was

gas There was there. there. kitchen no natural no There's kitchen, real

leak a have gas anything. couldn't or been So

according X:XX the you eliminate -- the to that a or crew person was XX:XX at those building left all when the system. cleaning morning things, the in a.m. alarm So last

was redesigning it's in It freak the the West -- -- one of image be hired we to well. new to we've are $XX,XXX it doing already about Dolls a of tough things. clean sales. started very But Club an X It's was rebuilt location so architect a of of loss those -- just is started Baby within remodeled they're deal. days up. week and fire property because We've a and newly the us up building. the rough to It's for the

quickly pretty open along get moving and there been back that us. we've So for

Mark Moran

on of that, good night. behalf company and our subsidiaries, you, thank have Bradley, Fantastic. a Eric, And with and

visit or restaurants As always, our please clubs have one of great and time. a

RCI Hospitality (RICK) 8 Aug 242024 Q3 Earnings call transcript