FALSE000093541900009354192023-12-142023-12-14

United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 14, 2023
RCI HOSPITALITY HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas001-1399276-0458229
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
10737 Cutten Road
Houston, Texas 77066
(Address of Principal Executive Offices, Including Zip Code)
(281) 397-6730
(Issuer’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueRICKThe Nasdaq Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On December 14, 2023, we issued a press release announcing the filing of our annual report on Form 10-K for the fiscal year ended September 30, 2023 and announced results for the fiscal year and quarter ended September 30, 2023. Also on December 14, 2023, we will hold a conference call to discuss these results and related matters. A copy of the press release is furnished as Exhibit 99.1 to this current report on Form 8-K.
This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
 
(d) Exhibits
 
Exhibit Number Description
   
99.1 
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RCI HOSPITALITY HOLDINGS, INC.
Date: December 14, 2023By:/s/ Eric Langan
Eric Langan
President and Chief Executive Officer
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RCI Reports 4Q23 & FY23 Results; X Spaces Call at 4:30 PM ET Today; Meet Management at 7 PM ET Tonight
HOUSTON—December 14, 2023—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2023 fourth quarter and year ended September 30, 2023. The company also filed its Form 10-K.
Summary Financials (in millions except EPS)4Q234Q22FY23FY22
Total revenues$75.3$71.4$293.8$267.6
Other charges (gains), net$9.9($0.9)$15.6$0.5
EPS$0.23$1.15$3.13$4.91
Non-GAAP EPS1
$1.11$1.49$4.90$5.38
Net cash from operating activities$12.1$17.8$59.1$64.5
Free cash flow1
$11.1$14.5$53.2
$58.92
Net income attributable to RCIHH common stockholders$2.2$10.6$29.2$46.0
Adjusted EBITDA1
$20.2$24.2$85.0$86.7
Weighted average shares used in computing EPS – basic and diluted9.429.259.349.38
Share Repurchases
As of December 8, 2023, we had repurchased 37,954 common shares for $2.1 million or an average of $54.59 per share in 1Q24 and had $14.6 million in remaining stock repurchase authorization. In FY23, RCI repurchased 34,086 common shares for $2.2 million or an average of $65.22 per share.
CEO Comment
Eric Langan, President and CEO, said: “As we previously reported, business was soft during 4Q23 due to the current uncertain economy as well as tough comparisons to last year’s post-Covid bounce. However, our capital allocation strategy continues to produce strong, long-term results.”
“EPS was $0.23 for 4Q23 and $3.13 for FY23, which were impacted by non-cash impairment charges of $9.3 million and $12.6 million, respectively. On a non-GAAP basis, EPS was $1.11 for 4Q23 and $4.90 for FY23. Total revenues increased 5.4% year-over-year for 4Q23 and 9.8% for FY23. Both periods benefited from acquisitions, which helped offset lower same-store sales year-over-year, but not all of the margin decline.”
“Looking at the big picture, proforma FY23 same-store sales increased 9.0% compared to pre-Covid FY19, with Nightclubs +8.3% and Bombshells +12.6%.3 From year-end FY15, when we initiated our capital allocation strategy, through FY23, we have generated compound annual growth of 10.2% for total revenues, 12.1% for adjusted EBITDA, and 17.2% for free cash flow.”
“Subsequent to 4Q23, we continued to move ahead with our strategies and plans, buying back more shares depending on market conditions, opening Bombshells Stafford, and working on potential acquisitions. We believe year-over-year comparisons should become easier in FY24.”
Conference Call at 4:30 PM ET Today
•X Spaces: https://x.com/i/spaces/1rmxPMjzYkdKN (to ask questions during Q&A, you need to use a mobile phone)
•Telephone (listen only): Toll Free: 888-506-0062, International: 973-528-0011, Participant Access Code: 631531
•Webcast (listen only), Slides & Replay: https://www.webcaster4.com/Webcast/Page/2209/49519
Meet Management at 7:00 PM ET Tonight
•Investors are invited to Meet Management at one of RCI’s top revenue generating clubs
•Rick’s Cabaret New York, 50 W 33rd St, New York, NY 10001
•RSVP your contact information to gary.fishman@anreder.com by 5:00 PM ET today
1 See “Non-GAAP Financial Measures” below, 2 FY22 free cash flow included receipt of $2.2M tax refund, 3 The proforma same-store sales calculation includes sales for reporting units that qualify in accordance with our same store sales definition
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4Q23 Results (Comparisons are to 4Q22 unless indicated otherwise)
•Nightclubs Segment: Revenues were $60.9 million compared to $56.6 million. The $4.3 million increase primarily reflected the benefit of newly acquired and remodeled clubs, which more than offset the decline in same-store sales.4 By revenue type, alcoholic beverages increased 17.2%, food and merchandise 15.9%, and other 8.1%, while service declined 2.0%. The differing growth rates primarily reflected a higher alcohol and lower service sales mix from the newly acquired Baby Dolls-Chicas Locas clubs as well as lower same-store sales. 4Q23 also included other charges, net (mainly impairments) and SOB license amortization of $9.5 million compared to $1.1 million. Operating income was $12.1 million (19.8% of revenues) compared to $22.5 million (39.7% of revenues). On a Non-GAAP basis, operating income was $21.6 million (35.4% of revenues) compared to $23.6 million (41.6% of revenues).
•Bombshells Segment: Revenues were $13.6 million compared to $14.0 million. The $452 thousand decline primarily reflected lower same-store sales, partially offset by a $1.6 million increase from newly acquired locations.4 4Q23 also included other charges, net and amortization of $239 thousand. Operating income was $1.2 million (8.7% of revenues) compared to $2.2 million (15.5% of revenues). On a Non-GAAP basis, operating income was $1.4 million (10.4% of revenues) compared to $2.2 million (15.5% of revenues).
•Other Segment: Revenues were approximately level at $727 thousand. 4Q23 included other charges, net (mainly impairments) of $969 thousand. Operating income was a loss of $793 thousand compared to a profit of $216 thousand. On a Non-GAAP basis, operating income was $176 thousand compared to $277 thousand.
•Consolidated operating margin was 7.5% of revenues compared to 25.2% and 22.4% compared to 30.0% non-GAAP. The GAAP and non-GAAP differences reflected 4Q22’s unusually high operating leverage (the third highest in the last five years), which included a $1.0 million legal credit. The GAAP difference also reflected other charges, net of $9.9 million in 4Q23 compared to other gains, net of $890 thousand in 4Q22.
•Interest expense was 5.6% of revenues compared to 4.8% reflecting higher average debt mostly from seller-financed promissory notes related to FY22-23 acquisitions.
•Income tax was a benefit of $0.6 million compared to an expense of $4.0 million. For the year, the Effective Tax Rate was 19.0% compared to 23.4%. The FY23 ETR reflected higher federal state credits that offset a higher portion of income subjected to state income taxes.
•Weighted average shares outstanding increased 1.8% year over year due to shares used in the 2Q23 Baby Dolls-Chicas Locas acquisition, partially offset by subsequent share buybacks.
•Debt was $239.8 million at 9/30/23 compared to $243.8 million at 6/30/23. The difference primarily reflected scheduled paydowns.
4 See our October 10, 2023 news release on 4Q23 sales for more details
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) impairment of assets, (c) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, (e) settlement of lawsuits, (f) costs and charges related to debt refinancing, and (g) stock-based compensation. 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) impairment of assets, (c) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, (e) unrealized loss on equity securities, (f) settlement of lawsuits, (g) gain on debt extinguishment, (h) costs and charges related to debt refinancing, (i) stock-based compensation, (j) the income tax effect of the above-described adjustments, and (k) change in deferred tax asset valuation allowance. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at 20.6%, 22.8%, and 13.5% effective tax rate of the pre-tax non-GAAP income before taxes for 2023, 2022, and 2021, respectively, and the GAAP income tax expense. 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) impairment of assets, (h) settlement of lawsuits, (i) gain on debt extinguishment, and (j) stock-based compensation. 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
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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 multiple is also used as a target benchmark for our acquisitions of nightclubs.
•We also use certain 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.
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)
With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars-restaurants. See all our brands at 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, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant 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) the impact of the COVID-19 pandemic, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant 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, 2023, 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

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RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share, number of shares and percentage data)
For the Three Months EndedFor the Twelve Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Amount% of RevenueAmount% of RevenueAmount% of RevenueAmount% of Revenue
Revenues
Sales of alcoholic beverages$33,325 44.3 %$29,812 41.8 %$127,262 43.3 %$113,316 42.3 %
Sales of food and merchandise11,149 14.8 %10,666 14.9 %43,906 14.9 %44,294 16.6 %
Service revenues25,661 34.1 %26,067 36.5 %103,577 35.3 %93,888 35.1 %
Other5,115 6.8 %4,833 6.8 %19,045 6.5 %16,122 6.0 %
Total revenues75,250 100.0 %71,378 100.0 %293,790 100.0 %267,620 100.0 %
Operating expenses
Cost of goods sold
Alcoholic beverages sold6,155 18.5 %5,248 17.6 %23,291 18.3 %20,155 17.8 %
Food and merchandise sold4,000 35.9 %3,781 35.4 %15,429 35.1 %15,537 35.1 %
Service and other191 0.6 %147 0.5 %282 0.2 %317 0.3 %
Total cost of goods sold (exclusive of items shown below)10,346 13.7 %9,176 12.9 %39,002 13.3 %36,009 13.5 %
Salaries and wages20,818 27.7 %18,025 25.3 %79,500 27.1 %68,447 25.6 %
Selling, general and administrative24,463 32.5 %22,352 31.3 %93,024 31.7 %78,847 29.5 %
Depreciation and amortization4,043 5.4 %4,755 6.7 %15,151 5.2 %12,391 4.6 %
Other charges, net9,936 13.2 %(890)(1.2)%15,629 5.3 %467 0.2 %
Total operating expenses69,606 92.5 %53,418 74.8 %242,306 82.5 %196,161 73.3 %
Income from operations5,644 7.5 %17,960 25.2 %51,484 17.5 %71,459 26.7 %
Other income (expenses)
Interest expense(4,246)(5.6)%(3,454)(4.8)%(15,926)(5.4)%(11,950)(4.5)%
Interest income120 0.2 %90 0.1 %388 0.1 %411 0.2 %
Non-operating gains, net— — %— — %— — %211 0.1 %
Income before income taxes1,518 2.0 %14,596 20.4 %35,946 12.2 %60,131 22.5 %
Income tax expense (benefit)(601)(0.8)%4,015 5.6 %6,846 2.3 %14,071 5.3 %
Net income2,119 2.8 %10,581 14.8 %29,100 9.9 %46,060 17.2 %
Net loss (income) attributable to noncontrolling interests72 0.1 %31 — %146 — %(19)— %
Net income attributable to RCIHH common shareholders$2,191 2.9 %$10,612 14.9 %$29,246 10.0 %$46,041 17.2 %
Earnings per share
Basic and diluted$0.23 $1.15 $3.13 $4.91 
Weighted average shares used in computing earnings per share
Basic and diluted9,417,1669,249,8649,335,9839,383,445
Dividends per share$0.06 $0.05 $0.23 $0.19 


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RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share and percentage data)
For the Three Months EndedFor the Twelve Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Reconciliation of GAAP net income to Adjusted EBITDA
Net income attributable to RCIHH common stockholders$2,191 $10,612 $29,246 $46,041 
Income tax expense(601)4,015 6,846 14,071 
Interest expense, net4,126 3,364 15,538 11,539 
Settlement of lawsuits576 708 3,759 1,417 
Impairment of assets9,336 166 12,629 1,888 
Loss (gain) on sale of businesses and assets10 (1,709)(682)(2,375)
Depreciation and amortization4,043 4,755 15,151 12,391 
Unrealized loss on equity securities— (1)— — 
Gain on debt extinguishment— — — (138)
Loss (gain) on insurance14 (55)(77)(463)
Stock-based compensation471 2,353 2,588 2,353 
Adjusted EBITDA$20,166 $24,208 $84,998 $86,724 
Reconciliation of GAAP net income to non-GAAP net income
Net income attributable to RCIHH common stockholders$2,191 $10,612 $29,246 $46,041 
Amortization of intangibles806 1,994 3,528 2,118 
Settlement of lawsuits576 708 3,759 1,417 
Impairment of assets9,336 166 12,629 1,888 
Loss (gain) on sale of businesses and assets10 (1,709)(682)(2,375)
Unrealized loss on equity securities— (1)— — 
Gain on debt extinguishment— — — (138)
Loss (gain) on insurance14 (55)(77)(463)
Stock-based compensation471 2,353 2,588 2,353 
Change in deferred tax asset valuation allowance(176)343 (176)343 
Net income tax effect(2,810)(670)(5,068)(729)
Non-GAAP net income$10,418 $13,741 $45,747 $50,455 
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share
Diluted shares9,417,1669,249,8649,335,9839,383,445
GAAP diluted earnings per share$0.23 $1.15 $3.13 $4.91 
Amortization of intangibles0.09 0.22 0.38 0.23 
Settlement of lawsuits0.06 0.08 0.40 0.15 
Impairment of assets0.99 0.02 1.35 0.20 
Loss (gain) on sale of businesses and assets— (0.18)(0.07)(0.25)
Unrealized loss on equity securities— — — — 
Gain on debt extinguishment— — — (0.01)
Loss (gain) on insurance— (0.01)(0.01)(0.05)
Stock-based compensation0.05 0.25 0.28 0.25 
Change in deferred tax asset valuation allowance(0.02)0.04 (0.02)0.04 
Net income tax effect(0.30)(0.07)(0.54)(0.08)
Non-GAAP diluted earnings per share$1.11 $1.49 $4.90 $5.38 
Reconciliation of GAAP operating income to non-GAAP operating income
Income from operations$5,644 $17,960 $51,484 $71,459 
Amortization of intangibles806 1,994 3,528 2,118 
Settlement of lawsuits576 708 3,759 1,417 
Impairment of assets9,336 166 12,629 1,888 
Loss (gain) on sale of businesses and assets10 (1,709)(682)(2,375)
Loss (gain) on insurance14 (55)(77)(463)
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Stock-based compensation471 2,353 2,588 2,353 
Non-GAAP operating income$16,857 $21,417 $73,229 $76,397 
Reconciliation of GAAP operating margin to non-GAAP operating margin
Income from operations7.5 %25.2 %17.5 %26.7 %
Amortization of intangibles1.1 %2.8 %1.2 %0.8 %
Settlement of lawsuits0.8 %1.0 %1.3 %0.5 %
Impairment of assets12.4 %0.2 %4.3 %0.7 %
Loss (gain) on sale of businesses and assets— %(2.4)%(0.2)%(0.9)%
Loss (gain) on insurance— %(0.1)%— %(0.2)%
Stock-based compensation0.6 %3.3 %0.9 %0.9 %
Non-GAAP operating margin22.4 %30.0 %24.9 %28.5 %
Reconciliation of net cash provided by operating activities to free cash flow
Net cash provided by operating activities$12,126 $17,755 $59,130 $64,509 
Less: Maintenance capital expenditures1,005 3,213 5,954 5,598 
Free cash flow$11,121 $14,542 $53,176 $58,911 

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RCI HOSPITALITY HOLDINGS, INC.
SEGMENT INFORMATION
(in thousands)
For the Three Months EndedFor the Twelve Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
Revenues
Nightclubs$60,943 $56,612 $236,748 $206,251 
Bombshells13,580 14,032 55,723 59,925 
Other727 734 1,319 1,444 
$75,250 $71,378 $293,790 $267,620 
Income (loss) from operations
Nightclubs$12,060 $22,477 $73,187 $82,798 
Bombshells1,179 2,169 6,502 11,504 
Other(793)216 (1,446)57 
Corporate(6,802)(6,902)(26,759)(22,900)
$5,644 $17,960 $51,484 $71,459 

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RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP SEGMENT INFORMATION
($ in thousands)
For the Three Months Ended September 30, 2023For the Three Months Ended September 30, 2022
NightclubsBombshellsOtherCorporateTotalNightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$12,060 $1,179 $(793)$(6,802)$5,644 $22,477 $2,169 $216 $(6,902)$17,960 
Amortization of intangibles617 30 155 4 806 1,925 1 61 7 1,994 
Settlement of lawsuits378 198 — — 576 709 — — (1)708 
Impairment of assets8,522 — 814 — 9,336 166 — — — 166 
Loss (gain) on sale of businesses and assets— 11 — (1)10 (1,666)— — (43)(1,709)
Loss (gain) on insurance— — — 14 14 (55)— — — (55)
Stock-based compensation— — — 471 471 — — — 2,353 2,353 
Non-GAAP operating income (loss)$21,577 $1,418 $176 $(6,314)$16,857 $23,556 $2,170 $277 $(4,586)$21,417 
GAAP operating margin19.8 %8.7 %(109.1)%(9.0)%7.5 %39.7 %15.5 %29.4 %(9.7)%25.2 %
Non-GAAP operating margin35.4 %10.4 %24.2 %(8.4)%22.4 %41.6 %15.5 %37.7 %(6.4)%30.0 %
For the Twelve Months Ended September 30, 2023For the Twelve Months Ended September 30, 2022
NightclubsBombshellsOtherCorporateTotalNightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$73,187 $6,502 $(1,446)$(26,759)$51,484 $82,798 $11,504 $57 $(22,900)$71,459 
Amortization of intangibles2,497 530 484 17 3,528 2,042 6 61 9 2,118 
Settlement of lawsuits3,552 207 — — 3,759 1,287 18 — 112 1,417 
Impairment of assets11,815 — 814 — 12,629 1,238 650 — — 1,888 
Loss (gain) on sale of businesses and assets(734)77 — (25)(682)(2,010)17 — (382)(2,375)
Gain on insurance(48)— — (29)(77)(463)— — — (463)
Stock-based compensation— — — 2,588 2,588 — — — 2,353 2,353 
Non-GAAP operating income (loss)$90,269 $7,316 $(148)$(24,208)$73,229 $84,892 $12,195 $118 $(20,808)$76,397 
GAAP operating margin30.9 %11.7 %(109.6)%(9.1)%17.5 %40.1 %19.2 %3.9 %(8.6)%26.7 %
Non-GAAP operating margin38.1 %13.1 %(11.2)%(8.2)%24.9 %41.2 %20.4 %8.2 %(7.8)%28.5 %

8


RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months EndedFor the Twelve Months Ended
September 30, 2023September 30, 2022September 30, 2023September 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$2,119 $10,581 $29,100 $46,060 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization4,043 4,755 15,151 12,391 
Deferred tax expense (benefit)(991)3,489 (1,781)3,080 
Loss (gain) on sale of businesses and assets2 (1,688)(870)(2,970)
Impairment of assets9,336 166 12,629 1,888 
Amortization and writeoff of debt discount and issuance costs162 115 615 314 
Doubtful accounts expense (reversal) on notes receivable— — — 753 
Unrealized gain on equity securities— (1)— — 
Loss (gain) on insurance14 (55)(77)(463)
Noncash lease expense752 882 2,978 2,607 
Stock-based compensation expense471 2,353 2,588 2,353 
Gain on debt extinguishment— — — (83)
Changes in operating assets and liabilities, net of business acquisitions:
Accounts receivable(3,863)(3,586)(2,383)(175)
Inventories98 (62)177 (554)
Prepaid expenses, other current, and other assets3,236 3,658 (366)387 
Accounts payable, accrued, and other liabilities(3,253)(2,852)1,369 (1,079)
Net cash provided by operating activities12,126 17,755 59,130 64,509 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets1,434 6,058 4,245 10,669 
Proceeds from notes receivable59 55 229 182 
Proceeds from insurance(5)133 86 648 
Payments for property and equipment and intangible assets(9,265)(6,830)(40,384)(24,003)
Acquisition of businesses, net of cash acquired— (10,991)(29,000)(55,293)
Net cash used in investing activities(7,777)(11,575)(64,824)(67,797)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations— — 11,595 35,820 
Payments on debt obligations(4,219)(4,180)(15,650)(14,894)
Purchase of treasury stock(2,125)(3,040)(2,223)(15,097)
Payment of dividends(566)(462)(2,146)(1,784)
Payment of loan origination costs— (18)(239)(463)
Share in return of investment by noncontrolling partner— — (600)— 
Net cash provided by (used in) financing activities(6,910)(7,700)(9,263)3,582 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(2,561)(1,520)(14,957)294 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD23,584 37,500 35,980 35,686 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$21,023 $35,980 $21,023 $35,980 

9


RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2023September 30, 2022
ASSETS
Current assets
Cash and cash equivalents$21,023 $35,980 
Accounts receivable, net9,846 8,510 
Current portion of notes receivable249 230 
Inventories4,412 3,893 
Prepaid expenses and other current assets1,943 1,499 
Assets held for sale— 1,049 
Total current assets37,473 51,161 
Property and equipment, net282,705 224,615 
Operating lease right-of-use assets, net34,931 37,048 
Notes receivable, net of current portion4,443 4,691 
Goodwill70,772 67,767 
Intangibles, net179,145 144,049 
Other assets1,415 1,407 
Total assets$610,884 $530,738 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$6,111 $5,482 
Accrued liabilities16,051 11,328 
Current portion of debt obligations, net22,843 11,896 
Current portion of operating lease liabilities2,977 2,795 
Total current liabilities47,982 31,501 
Deferred tax liability, net29,143 30,562 
Debt, net of current portion and debt discount and issuance costs216,908 190,567 
Operating lease liabilities, net of current portion35,175 36,001 
Other long-term liabilities352 349 
Total liabilities329,560 288,980 
Commitments and contingencies
Equity
Preferred stock— — 
Common stock94 92 
Additional paid-in capital80,437 67,227 
Retained earnings201,050 173,950 
Total RCIHH stockholders' equity281,581 241,269 
Noncontrolling interests(257)489 
Total equity281,324 241,758 
Total liabilities and equity$610,884 $530,738 
10