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RCI Hospitality Holdings Inc., the adult nightclub and sports bar group, announced financial results for its first fiscal quarter of 2024, which ended on December 31, 2023. Total revenue was $73.9 million, an increase from $70 million a year earlier. same period.
Results are mixed
Despite the increase in revenue, earnings per share (EPS) fell to $0.77 from $1.11 in the first quarter of 2023. Non-GAAP earnings per share also fell, from $1.19 to $0.87. The profit decline resulted in net income attributable to RCIHH common shareholders falling to US$7.2 million from US$10.2 million. The company’s adjusted EBITDA also declined, from $20.5 million to $17.5 million.
Net cash from operating activities and free cash flow fell by 8% and 3% respectively. Although the magnitude was not large, it showed that the company’s financial position had tightened slightly.
Segment Performance: Nightclubs and Bombshells
President and CEO Eric Langan pointed out that the performance of the nightclub business was in line with expectations, and the revenue growth was mainly attributed to newly acquired and renovated clubs. However, same-store sales and profitability were impacted by lower service revenue, higher wages and an increase in the Texas sponsorship tax.
On the other hand, the blockbuster division performed poorly, leading to significant structural management changes and options to improve performance. These options may include finding a partner or selling the business.
Strategic initiatives and financing
To strengthen its financial position, the company is finalizing a $20 million bank loan secured by $30 million of unencumbered real estate. Additionally, the company had $14.6 million in remaining stock repurchase authorization as of December 31, 2023, and its debt decreased slightly due to planned repayments.
RCI Hospitality Holdings Inc. operates more than 60 adult nightclubs and sports bars/restaurants nationwide. As the company navigates the challenges of this fiscal year, it will continue to focus on optimizing performance and creating value for shareholders.
The coming quarters will be critical in assessing the company’s progress in resolving operational challenges and improving its financial position. The fusion of adult nightclub and sports bar/restaurant provides a unique entertainment experience, and the company’s strategic initiatives will play a key role in determining its success in the growing entertainment landscape.
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