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May 09, 2022 4:10 PM
Summary Financials | 2Q22 | Change YoY | 6M22 | Change YoY | ||||
Total Revenues | +44.6% | +52.2% | ||||||
EPS | +69.1% | +30.3% | ||||||
Non-GAAP EPS* | +58.0% | +100.1% | ||||||
+5.7% | +61.6% | |||||||
Free Cash Flow* | +23.3% | +79.8% | ||||||
Net Income Attributable to RCIHH Common Stockholders | +79.8% | +36.8% | ||||||
Adjusted EBITDA* | +46.8% | +70.2% | ||||||
Diluted Shares | 9.489M | +5.4% | 9.448M | +4.9% |
*See "Non-GAAP Financial Measures" below.
Expansion efforts are moving ahead. This includes continuing to improve the performance of clubs acquired in 1Q22, acquiring new ones, harnessing new technology to drive club traffic, and expanding Bombshells. Recent developments:
Nightclubs
Bombshells
Conference Call Today at
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Meet Management Tonight at
2Q22 Segments
Nightclubs
Bombshells
2Q22 Consolidated
Comparisons are to 2Q21 and % are of total revenues unless indicated otherwise
Note
As of the release of this report, we do not know the future extent and duration of the impact of COVID-19 on our businesses. We will continually monitor and evaluate our cash flow situation to determine whether any measures need to be instituted. All references to the "company," "we," "our," and similar terms include
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:
About
With more than 50 units,
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 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 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
Media & Investor Contacts
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
(in thousands, except per share, number of shares and percentage data) | |||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||
Amount | % of | Amount | % of | Amount | % of | Amount | % of | ||||||||||||
Revenues | |||||||||||||||||||
Sales of alcoholic beverages | $ 27,335 | 42.9% | $ 20,273 | 46.0% | $ 53,766 | 42.8% | $ 37,633 | 45.6% | |||||||||||
Sales of food and merchandise | 11,160 | 17.5% | 9,538 | 21.6% | 22,054 | 17.6% | 18,147 | 22.0% | |||||||||||
Service revenues | 21,501 | 33.8% | 11,502 | 26.1% | 42,377 | 33.8% | 21,562 | 26.1% | |||||||||||
Other | 3,696 | 5.8% | 2,746 | 6.2% | 7,331 | 5.8% | 5,115 | 6.2% | |||||||||||
Total revenues | 63,692 | 100.0% | 44,059 | 100.0% | 125,528 | 100.0% | 82,457 | 100.0% | |||||||||||
Operating expenses | |||||||||||||||||||
Cost of goods sold | |||||||||||||||||||
Alcoholic beverages sold | 4,896 | 17.9% | 3,730 | 18.4% | 9,730 | 18.1% | 6,992 | 18.6% | |||||||||||
Food and merchandise sold | 3,840 | 34.4% | 3,029 | 31.8% | 7,797 | 35.4% | 5,918 | 32.6% | |||||||||||
Service and other | 24 | 0.1% | 43 | 0.3% | 124 | 0.2% | 96 | 0.4% | |||||||||||
Total cost of goods sold (exclusive of items shown below) | 8,760 | 13.8% | 6,802 | 15.4% | 17,651 | 14.1% | 13,006 | 15.8% | |||||||||||
Salaries and wages | 16,530 | 26.0% | 11,200 | 25.4% | 33,035 | 26.3% | 22,686 | 27.5% | |||||||||||
Selling, general and administrative | 18,437 | 28.9% | 12,618 | 28.6% | 36,923 | 29.4% | 24,770 | 30.0% | |||||||||||
Depreciation and amortization | 2,877 | 4.5% | 2,117 | 4.8% | 5,071 | 4.0% | 4,140 | 5.0% | |||||||||||
Other charges (gains), net | 7 | 0.0% | 1,481 | 3.4% | (144) | -0.1% | 1,431 | 1.7% | |||||||||||
Total operating expenses | 46,611 | 73.2% | 34,218 | 77.7% | 92,536 | 73.7% | 66,033 | 80.1% | |||||||||||
Income from operations | 17,081 | 26.8% | 9,841 | 22.3% | 32,992 | 26.3% | 16,424 | 19.9% | |||||||||||
Other income (expenses) | |||||||||||||||||||
Interest expense | (2,864) | -4.5% | (2,364) | -5.4% | (5,468) | -4.4% | (4,798) | -5.8% | |||||||||||
Interest income | 112 | 0.2% | 62 | 0.1% | 218 | 0.2% | 122 | 0.1% | |||||||||||
Non-operating gains, net | - | 0.0% | 431 | 1.0% | 84 | 0.1% | 5,347 | 6.5% | |||||||||||
Income before income taxes | 14,329 | 22.5% | 7,970 | 18.1% | 27,826 | 22.2% | 17,095 | 20.7% | |||||||||||
Income tax expense | 3,356 | 5.3% | 1,938 | 4.4% | 6,289 | 5.0% | 1,554 | 1.9% | |||||||||||
Net income | 10,973 | 17.2% | 6,032 | 13.7% | 21,537 | 17.2% | 15,541 | 18.8% | |||||||||||
Net loss (income) attributable to noncontrolling interests | (21) | 0.0% | 59 | 0.1% | (10) | 0.0% | 193 | 0.2% | |||||||||||
Net income attributable to RCIHH common shareholders | $ 10,952 | 17.2% | $ 6,091 | 13.8% | $ 21,527 | 17.1% | $ 15,734 | 19.1% | |||||||||||
Earnings per share | |||||||||||||||||||
Basic and diluted | $ 1.15 | $ 0.68 | $ 2.28 | $ 1.75 | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||
Basic and diluted | 9,489,085 | 8,999,910 | 9,447,854 | 9,009,604 | |||||||||||||||
Dividends per share | $ 0.05 | $ 0.04 | $ 0.09 | $ 0.08 | |||||||||||||||
NON-GAAP FINANCIAL MEASURES | ||||||||
(in thousands, except per share and percentage data) | ||||||||
For the Three Months | For the Six Months | |||||||
Ended | Ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Reconciliation of GAAP net income (loss) to Adjusted EBITDA | ||||||||
Net income attributable to RCIHH common stockholders | $ 10,952 | $ 6,091 | $ 21,527 | $ 15,734 | ||||
Income tax expense (benefit) | 3,356 | 1,938 | 6,289 | 1,554 | ||||
Interest expense, net | 2,752 | 2,302 | 5,250 | 4,676 | ||||
Settlement of lawsuits | 385 | 1 | 577 | 153 | ||||
Impairment of assets | - | 1,401 | - | 1,401 | ||||
Loss (gain) on sale of businesses and assets | (58) | 91 | (400) | 86 | ||||
Gain on debt extinguishment | - | (380) | (85) | (5,329) | ||||
Unrealized loss on equity securities | - | 34 | 1 | 67 | ||||
Gain on insurance | (320) | (12) | (321) | (209) | ||||
Depreciation and amortization | 2,877 | 2,117 | 5,071 | 4,140 | ||||
Adjusted EBITDA | $ 19,944 | $ 13,583 | $ 37,909 | $ 22,273 | ||||
Reconciliation of GAAP net income (loss) to non-GAAP net income | ||||||||
Net income attributable to RCIHH common stockholders | $ 10,952 | $ 6,091 | $ 21,527 | $ 15,734 | ||||
Amortization of intangibles | 49 | 79 | 99 | 158 | ||||
Settlement of lawsuits | 385 | 1 | 577 | 153 | ||||
Impairment of assets | - | 1,401 | - | 1,401 | ||||
Loss (gain) on sale of businesses and assets | (58) | 91 | (400) | 86 | ||||
Gain on debt extinguishment | - | (380) | (85) | (5,329) | ||||
Unrealized loss on equity securities | - | 34 | 1 | 67 | ||||
Gain on insurance | (320) | (12) | (321) | (209) | ||||
Net income tax effect | 291 | (522) | 253 | (1,741) | ||||
Non-GAAP net income | $ 11,299 | $ 6,783 | $ 21,651 | $ 10,320 | ||||
Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share | ||||||||
Diluted shares | 9,489,085 | 8,999,910 | 9,447,854 | 9,009,604 | ||||
GAAP diluted earnings per share | $ 1.15 | $ 0.68 | $ 2.28 | $ 1.75 | ||||
Amortization of intangibles | 0.01 | 0.01 | 0.01 | 0.02 | ||||
Settlement of lawsuits | 0.04 | 0.00 | 0.06 | 0.02 | ||||
Impairment of assets | - | 0.16 | - | 0.16 | ||||
Loss (gain) on sale of businesses and assets | (0.01) | 0.01 | (0.04) | 0.01 | ||||
Gain on debt extinguishment | - | (0.04) | (0.01) | (0.59) | ||||
Unrealized loss on equity securities | - | 0.00 | 0.00 | 0.01 | ||||
Gain on insurance | (0.03) | (0.00) | (0.03) | (0.02) | ||||
Net income tax effect | 0.03 | (0.06) | 0.03 | (0.19) | ||||
Non-GAAP diluted earnings per share | $ 1.19 | $ 0.75 | $ 2.29 | $ 1.15 | ||||
Reconciliation of GAAP operating income to non-GAAP operating income | ||||||||
Income (loss) from operations | $ 17,081 | $ 9,841 | $ 32,992 | $ 16,424 | ||||
Amortization of intangibles | 49 | 79 | 99 | 158 | ||||
Settlement of lawsuits | 385 | 1 | 577 | 153 | ||||
Impairment of assets | - | 1,401 | - | 1,401 | ||||
Loss (gain) on sale of businesses and assets | (58) | 91 | (400) | 86 | ||||
Gain on insurance | (320) | (12) | (321) | (209) | ||||
Non-GAAP operating income | $ 17,137 | $ 11,401 | $ 32,947 | $ 18,013 | ||||
Reconciliation of GAAP operating margin to non-GAAP operating margin | ||||||||
GAAP operating margin | 26.8% | 22.3% | 26.3% | 19.9% | ||||
Amortization of intangibles | 0.1% | 0.2% | 0.1% | 0.2% | ||||
Settlement of lawsuits | 0.6% | 0.0% | 0.5% | 0.2% | ||||
Impairment of assets | 0.0% | 3.2% | 0.0% | 1.7% | ||||
Loss (gain) on sale of businesses and assets | -0.1% | 0.2% | -0.3% | 0.1% | ||||
Gain on insurance | -0.5% | 0.0% | -0.3% | -0.3% | ||||
Non-GAAP operating margin | 26.9% | 25.9% | 26.2% | 21.8% | ||||
Reconciliation of net cash provided by operating activities to free cash flow | ||||||||
Net cash provided by operating activities | $ 11,597 | $ 10,972 | $ 27,861 | $ 17,246 | ||||
Less: Maintenance capital expenditures | 518 | 1,986 | 1,516 | 2,591 | ||||
Free cash flow | $ 11,079 | $ 8,986 | $ 26,345 | $ 14,655 | ||||
SEGMENT INFORMATION | |||||||||
(in thousands) | |||||||||
For the Three Months | For the Six Months | ||||||||
Ended | Ended | ||||||||
2022 | 2021 | 2022 | 2021 | ||||||
Revenues | |||||||||
Nightclubs | $ 48,174 | $ 30,787 | $ 94,955 | $ 55,984 | |||||
Bombshells | 15,333 | 13,135 | 30,104 | 26,141 | |||||
Other | 185 | 137 | 469 | 332 | |||||
$ 63,692 | $ 44,059 | $ 125,528 | $ 82,457 | ||||||
Income (loss) from operations | |||||||||
Nightclubs | $ 19,126 | $ 10,468 | $ 37,862 | $ 18,963 | |||||
Bombshells | 3,468 | 3,142 | 6,270 | 5,859 | |||||
Other | (34) | (139) | (77) | (214) | |||||
General corporate | (5,479) | (3,630) | (11,063) | (8,184) | |||||
$ 17,081 | $ 9,841 | $ 32,992 | $ 16,424 | ||||||
NON-GAAP SEGMENT INFORMATION | ||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||
For the Three Months Ended | For the Three Months Ended | |||||||||||||||||||
Nightclubs | Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||
Income (loss) from operations | $ 19,126 | $ 3,468 | $ (34) | $ (5,479) | $ 17,081 | $ 10,468 | $ 3,142 | $ (139) | $ (3,630) | $ 9,841 | ||||||||||
Amortization of intangibles | 47 | 1 | - | 1 | 49 | 47 | 3 | 29 | - | 79 | ||||||||||
Settlement of lawsuits | 277 | - | - | 108 | 385 | (4) | - | 5 | - | 1 | ||||||||||
Impairment of assets | - | - | - | - | - | 1,401 | - | - | - | 1,401 | ||||||||||
Loss (gain) on sale of businesses and assets | (125) | 4 | - | 63 | (58) | 14 | 47 | - | 30 | 91 | ||||||||||
Gain on insurance | (320) | - | - | - | (320) | 32 | - | - | (44) | (12) | ||||||||||
Non-GAAP operating income (loss) | $ 19,005 | $ 3,473 | $ (34) | $ (5,307) | $ 17,137 | $ 11,958 | $ 3,192 | $ (105) | $ (3,644) | $ 11,401 | ||||||||||
GAAP operating margin | 39.7% | 22.6% | -18.4% | -8.6% | 26.8% | 34.0% | 23.9% | -101.5% | -8.2% | 22.3% | ||||||||||
Non-GAAP operating margin | 39.5% | 22.7% | -18.4% | -8.3% | 26.9% | 38.8% | 24.3% | -76.6% | -8.3% | 25.9% | ||||||||||
For the Six Months Ended | For the Six Months Ended | |||||||||||||||||||
Nightclubs | Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | |||||||||||
Income (loss) from operations | $ 37,862 | $ 6,270 | $ (77) | $ (11,063) | $ 32,992 | $ 18,963 | $ 5,859 | $ (214) | $ (8,184) | $ 16,424 | ||||||||||
Amortization of intangibles | 94 | 4 | - | 1 | 99 | 94 | 7 | 57 | - | 158 | ||||||||||
Settlement of lawsuits | 454 | 10 | - | 113 | 577 | 114 | 34 | 5 | - | 153 | ||||||||||
Impairment of assets | - | - | - | - | - | 1,401 | - | - | - | 1,401 | ||||||||||
Loss (gain) on sale of businesses and assets | (80) | 17 | - | (337) | (400) | 14 | 47 | - | 25 | 86 | ||||||||||
Gain on insurance | (321) | - | - | - | (321) | (165) | - | - | (44) | (209) | ||||||||||
Non-GAAP operating income (loss) | $ 38,009 | $ 6,301 | $ (77) | $ (11,286) | $ 32,947 | $ 20,421 | $ 5,947 | $ (152) | $ (8,203) | $ 18,013 | ||||||||||
GAAP operating margin | 39.9% | 20.8% | -16.4% | -8.8% | 26.3% | 33.9% | 22.4% | -64.5% | -9.9% | 19.9% | ||||||||||
Non-GAAP operating margin | 40.0% | 20.9% | -16.4% | -9.0% | 26.2% | 36.5% | 22.7% | -45.8% | -9.9% | 21.8% | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(in thousands) | ||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
Net income | $ 10,973 | $ 6,032 | $ 21,537 | $ 15,541 | ||||||
Adjustments to reconcile net income to net cash | ||||||||||
provided by operating activities: | ||||||||||
Depreciation and amortization | 2,877 | 2,117 | 5,071 | 4,140 | ||||||
Loss (gain) on sale of businesses and assets | (185) | 91 | (708) | 86 | ||||||
Impairment of assets | - | 1,401 | - | 1,401 | ||||||
Unrealized loss on equity securities | - | 34 | 1 | 67 | ||||||
Amortization of debt discount and issuance costs | 85 | 50 | 136 | 101 | ||||||
Gain on debt extinguishment | - | (378) | (83) | (5,298) | ||||||
Noncash lease expense | 609 | 427 | 1,238 | 848 | ||||||
Gain on insurance | (321) | (44) | (321) | (294) | ||||||
Doubtful accounts expense (reversal) on notes receivable | 36 | 35 | 53 | (58) | ||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (279) | 1,704 | 1,065 | 3,137 | ||||||
Inventories | 169 | (9) | (276) | (31) | ||||||
Prepaid expenses, other current assets and other assets | 1,159 | 369 | (5,360) | 1,494 | ||||||
Accounts payable, accrued and other liabilities | (3,526) | (857) | 5,508 | (3,888) | ||||||
Net cash provided by operating activities | 11,597 | 10,972 | 27,861 | 17,246 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
Proceeds from sale of businesses and assets | 2,107 | 8 | 2,910 | 8 | ||||||
Proceeds from insurance | 300 | 44 | 485 | 294 | ||||||
Proceeds from notes receivable | 48 | 35 | 82 | 61 | ||||||
Payments for property and equipment and intangible assets | (4,140) | (5,429) | (13,990) | (6,718) | ||||||
Acquisition of businesses, net of cash acquired | - | - | (39,302) | - | ||||||
Net cash used in investing activities | (1,685) | (5,342) | (49,815) | (6,355) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
Proceeds from debt obligations | 18,740 | 2,176 | 35,742 | 2,176 | ||||||
Payments on debt obligations | (4,802) | (4,232) | (7,290) | (5,977) | ||||||
Purchase of treasury stock | (2,845) | - | (2,845) | (1,794) | ||||||
Payment of dividends | (474) | (360) | (854) | (720) | ||||||
Payment of loan origination costs | (418) | (25) | (418) | (25) | ||||||
Net cash provided by (used in) financing activities | 10,201 | (2,441) | 24,335 | (6,340) | ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 20,113 | 3,189 | 2,381 | 4,551 | ||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 17,954 | 16,967 | 35,686 | 15,605 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 38,067 | $ 20,156 | $ 38,067 | $ 20,156 | ||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(in thousands) | |||||||||
2022 | 2021 | 2021 | |||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ 38,067 | $ 35,686 | $ 20,156 | ||||||
Accounts receivable, net | 6,262 | 7,570 | 3,630 | ||||||
Current portion of notes receivable | 292 | 220 | 214 | ||||||
Inventories | 3,361 | 2,659 | 2,403 | ||||||
Prepaid expenses and other current assets | 6,880 | 1,928 | 5,020 | ||||||
Assets held for sale | 6,126 | 4,887 | 7,382 | ||||||
Total current assets | 60,988 | 52,950 | 38,805 | ||||||
Property and equipment, net | 203,434 | 175,952 | 175,153 | ||||||
Operating lease right-of-use assets, net | 36,180 | 24,308 | 24,698 | ||||||
Notes receivable, net of current portion | 5,411 | 2,839 | 2,892 | ||||||
54,484 | 39,379 | 45,686 | |||||||
Intangibles, net | 125,284 | 67,824 | 73,070 | ||||||
Other assets | 1,771 | 1,367 | 806 | ||||||
Total assets | $ 487,552 | $ 364,619 | $ 361,110 | ||||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Accounts payable | $ 6,255 | $ 4,408 | $ 4,021 | ||||||
Accrued liabilities | 15,576 | 10,403 | 12,321 | ||||||
Current portion of long-term debt, net | 11,177 | 6,434 | 16,380 | ||||||
Current portion of operating lease liabilities | 2,306 | 1,780 | 1,692 | ||||||
Total current liabilities | 35,314 | 23,025 | 34,414 | ||||||
Deferred tax liability, net | 22,040 | 19,137 | 20,390 | ||||||
Debt, net of current portion and debt discount and issuance costs | 166,903 | 118,734 | 116,032 | ||||||
Operating lease liabilities, net of current portion | 35,517 | 24,150 | 24,583 | ||||||
Other long-term liabilities | 355 | 350 | 357 | ||||||
Total liabilities | 260,129 | 185,396 | 195,776 | ||||||
Commitments and contingencies | |||||||||
Equity | |||||||||
Preferred stock | - | - | - | ||||||
Common stock | 94 | 90 | 90 | ||||||
Additional paid-in capital | 77,553 | 50,040 | 50,040 | ||||||
Retained earnings | 150,366 | 129,693 | 115,811 | ||||||
Total RCIHH stockholders' equity | 228,013 | 179,823 | 165,941 | ||||||
Noncontrolling interests | (590) | (600) | (607) | ||||||
Total equity | 227,423 | 179,223 | 165,334 | ||||||
Total liabilities and equity | $ 487,552 | $ 364,619 | $ 361,110 | ||||||
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