FALSE000093541900009354192022-12-142022-12-14

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, 2022
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, 2022, we issued a press release announcing the filing of our annual report on Form 10-K for the fiscal year ended September 30, 2022 and announced results for the fiscal year and quarter ended September 30, 2022. Also on December 14, 2022, 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 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, 2022By:/s/ Eric Langan
Eric Langan
President and Chief Executive Officer
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RCI Reports 4Q22 Results: Total Revenues $71.4M, GAAP EPS $1.15, Non-GAAP EPS $1.45
Twitter Spaces Conference Call at 4:30 PM ET Today; Meet Management at 7 PM ET Tonight
HOUSTON—December 14, 2022—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results and filed its Form 10-K for the fiscal 2022 fourth quarter and year ended September 30, 2022.
Summary Financials4Q22Change YoYFY22Change YoY
Total Revenues$71.4M29.9%$267.6M37.1%
EPS$1.15342.3%$4.9145.7%
Non-GAAP EPS*$1.45-8.2%$5.3831.9%
Net Cash from Operating Activities$17.8M81.7%$64.5M53.6%
Free Cash Flow*$14.5M71.6%$58.9M63.3%
Net Income Attributable to RCIHH Common Stockholders$10.6M361.4%$46.0M51.8%
Adjusted EBITDA*$24.237.8%$86.7M44.0%
Basic & Diluted Shares9.3M2.8%9.4M4.2%
* See “Non-GAAP Financial Measures” below.
Status FY23 Share BuybacksRepurchased SharesCash Used for RepurchaseAverage Price Per Share
1Q23 to Date as of 12/9/22**1,500$97,530$65.02
** Remaining stock purchase authorization of $18.8 million.
Eric Langan, President and CEO of RCI Hospitality Holdings, Inc., said: “We had a great FY22 and look forward to a strong FY23. Our nightclub business should see the full year benefit of the 15 acquisitions and two reopenings in FY22; the addition of the FY23 acquisition of Heartbreakers and the pending acquisition of the Baby Dolls and Chicas Locas chains; and other possible acquisitions under consideration. We’ll also be developing our exciting new Rick’s Cabaret Steakhouse & Casino in Central City, CO. The focus of our Bombshells business will be creating a strong lineup of new company-owned and franchised units in Texas, Alabama, and Colorado that should start opening in FY24. As always, thanks to our loyal and dedicated teams for all their hard work and effort.”
Conference Call at 4:30 PM ET Today
Participants need to use Twitter Spaces on their mobile phones to ask questions during the Q&A
Twitter Spaces
TelephoneWebcast, Slides & Replay
•https://twitter.com/i/spaces/1PlJQpoNQVaGE
•Hosted by: @RicksCEO, @ZeroTangoTango, @BradleyChhay, and @itsmarkmoran
•Toll Free 888-506-0062
•International: 973-528-0011
•Passcode: 847129
•https://www.webcaster4.com/Webcast/Page/2209/47126
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
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4Q22 Segments
•Nightclubs: Revenues of $56.6 million, operating margin of 39.7% (41.6% non-GAAP), and operating income of $22.5 million ($23.6 million non-GAAP). The fourth quarter of FY22 was the second period since 1Q20 not affected by COVID. The 15 new club acquisitions in FY22 contributed sales of $14.9 million, high-margin service revenues increased 53.6% year-over-year, and same-store sales increased.1
•Bombshells: Revenues of $14.0 million, operating margin of 15.5%, and operating income of $2.2 million. The company-owned Arlington, TX, location (opened December 2021) contributed $1.4 million in sales, and same-store sales declined.1 The first full quarter of the franchise-owned San Antonio location (opened late June 2022) contributed more than $0.1 million in royalties and incurred $0.3 million in start-up expenses as per the franchising agreement. Excluding these costs, segment operating margin would have been approximately 18%.
4Q22 Consolidated (Comparisons are to 4Q21 and % are of total revenues unless indicated otherwise)
•Cost of goods sold: 12.9% vs. 14.9% due to the increased mix of higher-margin service revenues of 36.5% vs. 31.0%.
•Salaries and wages: Approximately level at 25.3% vs. 25.6%.
•SG&A: 31.3% vs. 27.6%. 4Q22 included increased expenses related to newly acquired and reopened locations. SG&A also included $2.4 million non-cash stock-based compensation related to previously announced $100 per share options granted to a limited number of top executives and management team members. Excluding stock-based compensation, 4Q22 SG&A would have been approximately 28%.
•Depreciation and amortization: 6.7% vs. 3.7%. 4Q22 reflected non-cash amortization of intangible assets on newly acquired leased locations.
•Other charges and gains: The Nightclubs segment included a $1.7 million gain on sales of a business and assets in 4Q22 compared to $11.9 million impairment in 4Q21.
•Operating margin: 25.2% vs. 6.6% (30.0% vs. 28.4% non-GAAP).
•Interest expense: 4.8% vs. 5.3% reflecting higher sales partially offset by higher debt from club and Bombshells site acquisitions over the course of the year.
•Income tax: $4.0 million expense compared to $1.6 million benefit. The FY22 effective tax rate was 23.4% vs. 11.7%.
•Weighted average shares outstanding: Increased 2.8% due to shares issued for clubs acquired in October 2021, partially offset by subsequent share repurchases.
•Debt: $202.5 million at 9/30/22 compared to $188.0 million at 6/30/22. The increase primarily reflected seller financing used in the July 2022 Cheetah acquisition.
Note
The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt our business, which has and could continue to materially affect our operations, financial condition, and results of operations for an extended period of time. All references to the “company,” “we,” “our,” and similar terms include RCI Hospitality Holdings, Inc., and its subsidiaries, unless the context indicates otherwise.
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)
1 See our October 11, 2022 news release on 4Q22 sales for more details.
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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 22.8%, 13.5%, and 26.0% effective tax rate of the pre-tax non-GAAP income before taxes for the 2022, 2021, and 2020, respectively, and the GAAP income tax expense (benefit). 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 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.
•Management also uses 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) (Twitter: @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, 2022, 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, 2022September 30, 2021September 30, 2022September 30, 2021
Amount% of
Revenue		Amount% of
Revenue		Amount% of
Revenue		Amount% of
Revenue
Revenues
Sales of alcoholic beverages$29,81241.8 %$23,96043.6 %$113,31642.3 %$86,68544.4 %
Sales of food and merchandise10,666 14.9 %10,906 19.9 %44,294 16.6 %41,111 21.1 %
Service revenues26,067 36.5 %17,019 31.0 %93,888 35.1 %55,461 28.4 %
Other4,833 6.8 %3,056 5.6 %16,122 6.0 %12,001 6.1 %
Total revenues71,378 100.0 %54,941 100.0 %267,620 100.0 %195,258 100.0 %
Operating expenses
Cost of goods sold
Alcoholic beverages sold5,248 17.6 %4,270 17.8 %20,155 17.8 %15,883 18.3 %
Food and merchandise sold3,781 35.4 %3,833 35.1 %15,537 35.1 %13,794 33.6 %
Service and other147 0.5 %70 0.3 %317 0.3 %374 0.6 %
Total cost of goods sold (exclusive of items shown below)9,176 12.9 %8,173 14.9 %36,009 13.5 %30,051 15.4 %
Salaries and wages18,025 25.3 %14,071 25.6 %68,447 25.6 %50,627 25.9 %
Selling, general and administrative22,352 31.3 %15,141 27.6 %78,847 29.5 %54,608 28.0 %
Depreciation and amortization4,755 6.7 %2,041 3.7 %12,391 4.6 %8,238 4.2 %
Other charges (gains), net(890)-1.2 %11,898 21.7 %467 0.2 %13,186 6.8 %
Total operating expenses53,418 74.8 %51,324 93.4 %196,161 73.3 %156,710 80.3 %
Income from operations17,960 25.2 %3,617 6.6 %71,459 26.7 %38,548 19.7 %
Other income (expenses)
Interest expense(3,454)-4.8 %(2,913)-5.3 %(11,950)-4.5 %(9,992)-5.1 %
Interest income90 0.1 %59 0.1 %411 0.2 %253 0.1 %
Non-operating gains (losses), net— — %(26)— %211 0.1 %5,330 2.7 %
Income before income taxes14,596 20.4 %737 1.3 %60,131 22.5 %34,139 17.5 %
Income tax expense (benefit)4,015 5.6 %(1,551)-2.8 %14,071 5.3 %3,989 2.0 %
Net income10,581 14.8 %2,288 4.2 %46,060 17.2 %30,150 15.4 %
Net loss (income) attributable to noncontrolling interests31 — %12 — %(19)— %186 0.1 %
Net income attributable to RCIHH common shareholders$10,61214.9 %$2,3004.2 %$46,04117.2 %$30,33615.5 %
Earnings per share
Basic and diluted$1.15 $0.26 $4.91 $3.37 
Weighted average shares outstanding
Basic and diluted9,249,864 8,999,910 9,383,445 9,004,744 
Dividends per share$0.05 $0.04 $0.19 $0.16 

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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,September 30,September 30,September 30,
2022202120222021
Reconciliation of GAAP net income to Adjusted EBITDA
Net income attributable to RCIHH common stockholders$10,612$2,300$46,041$30,336
Income tax expense4,015 (1,551)14,071 3,989 
Interest expense, net3,364 2,854 11,539 9,739 
Settlement of lawsuits708 1,069 1,417 1,349 
Impairment of assets166 11,940 1,888 13,612 
Gain on sale of businesses and assets(1,709)(67)(2,375)(522)
Gain on debt extinguishment— — (138)(5,329)
Unrealized loss on equity securities(1)26 — 84 
Gain on insurance(55)(1,044)(463)(1,253)
Depreciation and amortization4,755 2,041 12,391 8,238 
Stock-based compensation2,353 — 2,353 — 
Adjusted EBITDA$24,208$17,568$86,724$60,243
Reconciliation of GAAP net income to non-GAAP net income
Net income attributable to RCIHH common stockholders$10,612$2,300$46,041$30,336
Amortization of intangibles1,994 49 2,118 258 
Settlement of lawsuits708 1,069 1,417 1,349 
Impairment of assets166 11,940 1,888 13,612 
Gain on sale of businesses and assets(1,709)(67)(2,375)(522)
Costs and charges related to debt refinancing— 694 — 694 
Gain on debt extinguishment— — (138)(5,329)
Unrealized loss on equity securities(1)26 — 84 
Gain on insurance(55)(1,044)(463)(1,253)
Stock-based compensation2,353 — 2,353 — 
Change in deferred tax asset valuation allowance— (632)343 (632)
Net income tax effect(670)(143)(729)(1,845)
Non-GAAP net income$13,398$14,192$50,455$36,752
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share
Diluted shares9,249,864 8,999,910 9,383,445 9,004,744 
GAAP diluted earnings per share$1.15 $0.26 $4.91 $3.37 
Amortization of intangibles0.22 0.01 0.23 0.03 
Settlement of lawsuits0.08 0.12 0.15 0.15 
Impairment of assets0.02 1.33 0.20 1.51 
Gain on sale of businesses and assets(0.18)(0.01)(0.25)(0.06)
Costs and charges related to debt refinancing— 0.08 — 0.08 
Gain on debt extinguishment— — (0.01)(0.59)
Unrealized loss on equity securities— — — 0.01 
Gain on insurance(0.01)(0.12)(0.05)(0.14)
5

Stock-based compensation0.25 — 0.25 — 
Change in deferred tax asset valuation allowance— (0.07)0.04 (0.07)
Net income tax effect(0.07)(0.02)(0.08)(0.20)
Non-GAAP diluted earnings per share$1.45 $1.58 $5.38 $4.08 
Reconciliation of GAAP operating income to non-GAAP operating income
Income from operations$17,960$3,617$71,459$38,548
Amortization of intangibles1,994 49 2,118 258 
Settlement of lawsuits708 1,069 1,417 1,349 
Impairment of assets166 11,940 1,888 13,612 
Gain on sale of businesses and assets(1,709)(67)(2,375)(522)
Costs and charges related to debt refinancing— 57 — 57 
Gain on insurance(55)(1,044)(463)(1,253)
Stock-based compensation2,353 — 2,353 — 
Non-GAAP operating income$21,417$15,621$76,397$52,049
Reconciliation of GAAP operating margin to non-GAAP operating margin
GAAP operating margin25.2 %6.6 %26.7 %19.7 %
Amortization of intangibles2.8 %0.1 %0.8 %0.1 %
Settlement of lawsuits1.0 %1.9 %0.5 %0.7 %
Impairment of assets0.2 %21.7 %0.7 %7.0 %
Gain on sale of businesses and assets-2.4 %-0.1 %-0.9 %-0.3 %
Costs and charges related to debt refinancing— %0.1 %— %— %
Gain on insurance-0.1 %-1.9 %-0.2 %-0.6 %
Stock-based compensation3.3 %— %0.9 %— %
Non-GAAP operating margin30.0 %28.4 %28.5 %26.7 %
Reconciliation of net cash provided by operating activities to free cash flow
Net cash provided by operating activities$17,755$9,774$64,509$41,991
Less: Maintenance capital expenditures3,213 1,299 5,598 5,907 
Free cash flow$14,542$8,475$58,911$36,084

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RCI HOSPITALITY HOLDINGS, INC.
SEGMENT INFORMATION
(in thousands)
For the Three Months EndedFor the Twelve Months Ended
September 30,September 30,September 30,September 30,
2022202120222021
Revenues
Nightclubs$56,612$40,333$206,251$137,348
Bombshells14,032 14,403 59,925 56,621 
Other734 205 1,444 1,289 
$71,378$54,941$267,620$195,258
Income (loss) from operations
Nightclubs$22,477$6,502$82,798$43,815
Bombshells2,169 3,001 11,504 13,264 
Other216 (72)57 35 
Corporate(6,902)(5,814)(22,900)(18,566)
$17,960$3,617$71,459$38,548

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RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP SEGMENT INFORMATION
($ in thousands)
For the Three Months Ended September 30, 2022For the Three Months Ended September 30, 2021
NightclubsBombshellsOtherCorporateTotalNightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$22,477$2,169$216$(6,902)$17,960$6,502$3,001$(72)$(5,814)$3,617
Amortization of intangibles1,925 1 61 7 1,994 46 3 — — 49 
Stock-based compensation— — — 2,353 2,353 — — — — — 
Settlement of lawsuits709 — — (1)708 38 21 — 1,010 1,069 
Costs and charges related to debt refinancing— — — — — 17 — — 40 57 
Impairment of assets166 — — — 166 11,940 — — — 11,940 
Loss (gain) on sale of businesses and assets(1,666)— — (43)(1,709)(82)16 — (1)(67)
Gain on insurance(55)— — — (55)(1,044)— — — (1,044)
Non-GAAP operating income (loss)$23,556$2,170$277$(4,586)$21,417$17,417$3,041$(72)$(4,765)$15,621
GAAP operating margin39.7 %15.5 %29.4 %-9.7 %25.2 %16.1 %20.8 %-35.1 %-10.6 %6.6 %
Non-GAAP operating margin41.6 %15.5 %37.7 %-6.4 %30.0 %43.2 %21.1 %-35.1 %-8.7 %28.4 %
For the Twelve Months Ended September 30, 2022For the Twelve Months Ended September 30, 2021
NightclubsBombshellsOtherCorporateTotalNightclubsBombshellsOtherCorporateTotal
Income (loss) from operations$82,798$11,504$57$(22,900)$71,459$43,815$13,264$35$(18,566)$38,548
Amortization of intangibles2,042 6 61 9 2,118 187 14 57 — 258 
Stock-based compensation— — — 2,353 2,353 — — — — — 
Settlement of lawsuits1,287 18 — 112 1,417 275 59 5 1,010 1,349 
Costs and charges related to debt refinancing— — — — — 17 — — 40 57 
Impairment of assets1,238 650 — — 1,888 13,612 — — — 13,612 
Loss (gain) on sale of businesses and assets(2,010)17 — (382)(2,375)(580)72 — (14)(522)
Gain on insurance(463)— — — (463)(1,209)— — (44)(1,253)
Non-GAAP operating income (loss)$84,892$12,195$118$(20,808)$76,397$56,117$13,409$97$(17,574)$52,049
GAAP operating margin40.1 %19.2 %3.9 %-8.6 %26.7 %31.9 %23.4 %2.7 %-9.5 %19.7 %
Non-GAAP operating margin41.2 %20.4 %8.2 %-7.8 %28.5 %40.9 %23.7 %7.5 %-9.0 %26.7 %

8

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months EndedFor the Twelve Months Ended
September 30,
2022		September 30,
2021		September 30,
2022		September 30,
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$10,581$2,288$46,060$30,150
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization4,755 2,041 12,391 8,238 
Deferred income tax benefit3,489 (823)3,080 (1,253)
Gain on sale of businesses and assets(1,688)(88)(2,970)(714)
Impairment of assets166 11,940 1,888 13,612 
Unrealized loss (gain) on equity securities(1)26 — 84 
Amortization of debt discount and issuance costs115 151 314 311 
Gain on debt extinguishment— — (83)(5,298)
Stock-based compensation2,353 — 2,353 — 
Noncash lease expense882 447 2,607 1,729 
Gain on insurance(55)(1,043)(463)(1,337)
Doubtful accounts expense (reversal) on notes receivable— (58)753 (80)
Changes in operating assets and liabilities:
Accounts receivable(3,586)(5,078)(175)(769)
Inventories(62)(180)(554)(287)
Prepaid expenses, other current assets and other assets3,658 1,774 387 4,120 
Accounts payable, accrued and other liabilities(2,852)(1,623)(1,079)(6,515)
Net cash provided by operating activities17,755 9,774 64,509 41,991 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets6,058 2,202 10,669 5,415 
Proceeds from insurance133 858 648 1,152 
Proceeds from notes receivable55 35 182 130 
Payments for property and equipment and intangible assets(6,830)(2,723)(24,003)(13,511)
Acquisition of businesses, net of cash acquired(10,991)— (55,293)— 
Net cash provided by (used in) investing activities(11,575)372 (67,797)(6,814)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations— 36,314 35,820 38,490 
Payments on debt obligations(4,180)(38,333)(14,894)(49,178)
Purchase of treasury stock(3,040)— (15,097)(1,794)
Payment of dividends(462)(360)(1,784)(1,440)
Payment of loan origination costs(18)(1,149)(463)(1,174)
Net cash provided by (used in) financing activities(7,700)(3,528)3,582 (15,096)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(1,520)6,618 294 20,081 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD37,500 29,068 35,686 15,605 
CASH AND CASH EQUIVALENTS AT END OF PERIOD$35,980$35,686$35,980$35,686

9

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30,September 30,
20222021
ASSETS
Current assets
Cash and cash equivalents$35,980$35,686
Accounts receivable, net8,510 7,570 
Current portion of notes receivable230 220 
Inventories3,893 2,659 
Prepaid expenses and other current assets1,499 1,928 
Assets held for sale1,049 4,887 
Total current assets51,161 52,950 
Property and equipment, net224,615 175,952 
Operating lease right-of-use assets, net37,048 24,308 
Notes receivable, net of current portion4,691 2,839 
Goodwill67,767 39,379 
Intangibles, net144,049 67,824 
Other assets1,407 1,367 
Total assets$530,738$364,619
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$5,482$4,408
Accrued liabilities11,328 10,403 
Current portion of long-term debt, net11,896 6,434 
Current portion of operating lease liabilities2,795 1,780 
Total current liabilities31,501 23,025 
Deferred tax liability, net30,562 19,137 
Long-term debt, net of current portion and debt discount and issuance costs190,567 118,734 
Operating lease liabilities, net of current portion36,001 24,150 
Other long-term liabilities349 350 
Total liabilities288,980 185,396 
Commitments and contingencies
Equity
Preferred stock— — 
Common stock92 90 
Additional paid-in capital67,227 50,040 
Retained earnings173,950 129,693 
Total RCIHH stockholders' equity241,269 179,823 
Noncontrolling interests489 (600)
Total equity241,758 179,223 
Total liabilities and equity$530,738$364,619
10