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RCI Hospitality Holdings (RICK) – All Cash Flow, All The Time; Raising PT to $150

Media and Entertainment
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Thursday, December 22, 2022

With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

4Q22 Operating Results. RCI recorded revenue of $71.4 million for 4Q22, up 29.9% y-o-y. Adjusted EBITDA in the quarter was $24.2 million, up 37.8% y-o-y and net income rose 361.4% to $10.6 million. EPS was $1.15 and adjusted EPS was $1.45, down 8.2% y-o-y due to a much higher tax rate this year. We had forecast revenue of $68.5 million, adjusted EBITDA of $21 million, and EPS of $1.27.

Segments. Acquisitions drove Nightclubs top line up 40.4% to $56.6 million in the quarter, SSS were up 3.2%. Non-GAAP operating margin was 41.6%, driven by a 53.6% increase in high margin service revenue. Bombshells revenues of $14 million were down slightly from $14.4 million a year ago, SSS were off 13.3%. Operating margin was 18%, ex one time start up costs for the San Antonio location.


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