RCI Hospitality (NASDAQ: RICK) posts 2Q26 loss on impairments as cash flow and adjusted earnings rise
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
RCI Hospitality Holdings reported mixed results for the fiscal 2026 second quarter ended March 31, 2026. Total revenues rose to $68.7 million from $65.9 million a year earlier, driven mainly by higher Nightclubs sales, while Bombshells revenue was roughly flat.
GAAP results weakened as net income attributable to common stockholders moved to a loss of $0.3 million, or $(0.04) per share, compared with profit of $3.2 million, or $0.36 per share, largely due to higher non-cash impairments of $7.6 million. However, non-GAAP diluted EPS improved to $0.78 from $0.65, and Adjusted EBITDA increased to $15.6 million from $14.2 million.
Cash generation strengthened: net cash provided by operating activities rose to $9.9 million from $8.5 million, and free cash flow increased to $8.4 million from $6.9 million. Management highlighted weather-related club closures and continued share repurchases; as of May 22, 2026, shares outstanding were about 7.64 million under its 5-Year Capital Allocation Plan.
Positive
- None.
Negative
- None.
Insights
Revenue and cash flow improved, but GAAP earnings were hit by higher impairments.
RCI Hospitality grew total revenues to $68.7M in 2Q26 from $65.9M while Nightclubs and Bombshells sales both increased. Segment data show Nightclubs remained the core driver, with Bombshells still struggling to generate positive operating income.
GAAP net income attributable to common stockholders swung to a small loss of $0.3M, primarily because impairment charges rose to $7.6M versus $2.1M. On an adjusted basis, performance strengthened: non-GAAP EPS climbed to $0.78 from $0.65, and Adjusted EBITDA reached $15.6M, indicating healthier underlying operations.
Operating cash flow improved to $9.9M and free cash flow to $8.4M, supporting ongoing share repurchases under the 5‑Year Capital Allocation Plan. Management also cited temporary weather-related club closures and early progress in Bombshells’ higher-margin beverage strategy as important operational factors for upcoming quarters.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
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): May 28, 2026
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(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:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) | |||||
| Pre-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 class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 May 28, 2026, we issued a press release announcing results for the fiscal quarter ended March 31, 2026, and the filing of our quarterly report on Form 10-Q for that quarter. 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 | Press release of RCI Hospitality Holdings, Inc. dated May 28, 2026 | |||||||
| 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: May 28, 2026 | By: | /s/ Travis Reese | ||||||
| Travis Reese | ||||||||
| Interim President and Chief Executive Officer | ||||||||
3
RCI Files 10-Q and Reports Results for 2Q26
HOUSTON—May 28, 2026—RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today filed its Form 10-Q and reported results for the fiscal 2026 second quarter ended March 31, 2026.
Summary Financials (in millions, except EPS) | 2Q26 | 2Q25 | 6M26 | 6M25 | ||||||||||
Total revenues | $68.7 | $65.9 | $139.6 | $137.4 | ||||||||||
EPS | $(0.04) | $0.36 | $(0.63) | $1.38 | ||||||||||
Non-GAAP EPS1 | $0.78 | $0.65 | $1.52 | $1.46 | ||||||||||
Impairments and other charges, net | $7.6 | $2.1 | $7.9 | $(0.1) | ||||||||||
Net cash provided by operating activities | $9.9 | $8.5 | $17.7 | $21.9 | ||||||||||
Free cash flow1 | $8.4 | $6.9 | $15.1 | $19.0 | ||||||||||
Net income (loss) attributable to RCIHH common stockholders | $(0.3) | $3.2 | $(5.1) | $12.3 | ||||||||||
Adjusted EBITDA1 | $15.6 | $14.2 | $31.3 | $29.9 | ||||||||||
Weighted average shares used in computing EPS – basic and diluted | 7.74 | 8.86 | 8.02 | 8.89 | ||||||||||
1 See “Non-GAAP Financial Measures” below.
Summary (Comparisons are to year-ago periods unless indicated otherwise)
Travis Reese, Interim President and CEO, said: "We're pleased to report improved performance in many key metrics. While net income attributable to RCIHH common stockholders and EPS declined due to non-cash impairments, non-GAAP EPS, net cash provided by operating activities, free cash flow, and adjusted EBITDA all increased."
"This performance was despite freezing weather in late January-early February that caused a number of clubs to close for one to two days each, mostly on weekends."
"As previously reported, Nightclubs total sales increased and same-store sales were nearly level. Bombshells total sales also increased. While same-store sales declined, the initial implementation of our ‘pre-game and party all in one’ strategy to increase the mix of higher-margin alcoholic beverage sales resulted in a 3.6% same-store sales increase at Bombshells 59 in Houston, making it the best‑performing same-store location."
"In line with our 5-Year Capital Allocation Plan, we have continued to buy back shares. As of May 22, 2026, we had approximately 7,644,500 shares outstanding."
Note: There will be no conference call as RCI just held one on May 7, 2026, when it reported its delayed 1Q26 results.
2Q26 Results (Comparisons are to year-ago periods unless indicated otherwise)
Nightclubs segment: Revenues of $60.3 million increased by 4.8%. Five newly acquired, opened and reformatted clubs generated $4.8 million in sales, the 51 clubs in same-store sales produced $54.5 million, and one club was closed during the quarter.2 By revenue type, service increased 11.3%; food, merchandise and other increased 3.8%; and alcoholic beverages declined 0.9%.
Impairments and other charges, net of $7.6 million compared to $2.0 million. Operating income was $10.8 million compared to $14.5 million or 17.8% of segment revenues compared to 25.3%. Non-GAAP operating income, which excludes impairment and other net charges, was $19.0 million compared to $17.1 million or 31.5% of segment revenues compared to 29.7%.
Bombshells segment: Revenues of $8.4 million increased 1.6%. Sales reflected $1.6 million from two newly opened locations and $6.8 million from the nine same-store locations.2 By revenue type, alcoholic beverages increased 4.0% and food was level with 2Q25.
1
Other charges, net of $67,000 compared to $159,000. Operating loss was $267,000 compared to $245,000 or -3.2% of segment revenues compared to -3.0%. Non-GAAP operating loss, which excludes other net charges, was $200,000 compared to $85,000 or -2.4% of segment revenues compared to -1.0%.
Corporate segment: Expenses totaled $6.6 million compared to $5.9 million or 9.6% of total revenues compared to 9.0%. Most of the year over year change reflected increased insurance costs. Non-GAAP expenses totaled $6.4 million compared to $5.8 million or 9.3% of total revenues compared to 8.8%.
Impairments and other charges, net within consolidated operations totaled $7.6 million compared to $2.1 million.
Income tax was a benefit of $0.4 million compared to an expense of $1.1 million.
Weighted average shares outstanding of 7.74 million declined 12.6% due to share buybacks.
Debt of $248.7 million at March 31, 2026 declined 3.0% from $256.4 million at December 31, 2025, primarily reflecting debt paydowns. Compared to a year ago, debt increased 3.0%.
2 See our April 9, 2026 news release on 2Q26 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 they describe the operating performance of the Company and help 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) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) 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 or loss attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) premium on stock repurchase, (h) gains or losses on lease termination, and (i) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at approximately 22.3% and 18.1% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2026, and 2025, 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 or loss attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) income tax expense, (c) net interest expense, (d) impairment of assets, (e) settlement of lawsuits, net of recoveries, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, (i) premium on stock repurchase, and (j) gains or losses on lease termination. 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 our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.
2
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.
Accounting Standards Update (ASU) 2023-07
The Company has adopted Accounting Standards Update (ASU) 2023-07, which requires enhanced reportable segment disclosures. As a result, certain prior-year segment information has been recast.
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) our ability to regain and maintain compliance with the filing requirements of the U.S. Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, 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, 2025, as well as its other filings with the SEC. 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 Michael Wichman at 212-883-0655 or gfishman@pondel.com and mwichman@pondel.com.
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RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except per share, number of shares, and percentage data) | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2026 | March 31, 2025 | March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | Amount | % of Revenue | ||||||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
Sales of alcoholic beverages | $ | 28,817 | 41.9 | % | $ | 28,866 | 43.8 | % | $ | 58,956 | 42.2 | % | $ | 61,054 | 44.4 | % | |||||||||||||||||||||||||||||||
Sales of food and merchandise | 9,539 | 13.9 | % | 9,411 | 14.3 | % | 19,505 | 14.0 | % | 19,517 | 14.2 | % | |||||||||||||||||||||||||||||||||||
Service revenues | 25,448 | 37.0 | % | 22,912 | 34.8 | % | 51,259 | 36.7 | % | 47,093 | 34.3 | % | |||||||||||||||||||||||||||||||||||
Other | 4,918 | 7.2 | % | 4,687 | 7.1 | % | 9,830 | 7.0 | % | 9,695 | 7.1 | % | |||||||||||||||||||||||||||||||||||
Total revenues | 68,722 | 100.0 | % | 65,876 | 100.0 | % | 139,550 | 100.0 | % | 137,359 | 100.0 | % | |||||||||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||||||||||||||||||||||||||
Alcoholic beverages sold | 5,231 | 18.2 | % | 5,204 | 18.0 | % | 10,742 | 18.2 | % | 11,050 | 18.1 | % | |||||||||||||||||||||||||||||||||||
Food and merchandise sold | 3,558 | 37.3 | % | 3,182 | 33.8 | % | 7,187 | 36.8 | % | 6,745 | 34.6 | % | |||||||||||||||||||||||||||||||||||
Service and other | 16 | 0.1 | % | 25 | 0.1 | % | 117 | 0.2 | % | 97 | 0.2 | % | |||||||||||||||||||||||||||||||||||
Total cost of goods sold (exclusive of items shown below) | 8,805 | 12.8 | % | 8,411 | 12.8 | % | 18,046 | 12.9 | % | 17,892 | 13.0 | % | |||||||||||||||||||||||||||||||||||
Salaries and wages | 21,242 | 30.9 | % | 20,491 | 31.1 | % | 42,685 | 30.6 | % | 41,055 | 29.9 | % | |||||||||||||||||||||||||||||||||||
Selling, general and administrative | 23,197 | 33.8 | % | 22,900 | 34.8 | % | 47,901 | 34.3 | % | 49,107 | 35.8 | % | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 4,017 | 5.8 | % | 3,776 | 5.7 | % | 8,204 | 5.9 | % | 7,345 | 5.3 | % | |||||||||||||||||||||||||||||||||||
Impairments and other charges (gains), net | 7,649 | 11.1 | % | 2,127 | 3.2 | % | 7,866 | 5.6 | % | (117) | (0.1) | % | |||||||||||||||||||||||||||||||||||
Total operating expenses | 64,910 | 94.5 | % | 57,705 | 87.6 | % | 124,702 | 89.4 | % | 115,282 | 83.9 | % | |||||||||||||||||||||||||||||||||||
Income from operations | 3,812 | 5.5 | % | 8,171 | 12.4 | % | 14,848 | 10.6 | % | 22,077 | 16.1 | % | |||||||||||||||||||||||||||||||||||
Other income (expenses) | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (4,515) | (6.6) | % | (4,048) | (6.1) | % | (8,865) | (6.4) | % | (8,200) | (6.0) | % | |||||||||||||||||||||||||||||||||||
Interest income | 82 | 0.1 | % | 139 | 0.2 | % | 181 | 0.1 | % | 318 | 0.2 | % | |||||||||||||||||||||||||||||||||||
Non-operating gains (losses), net | 4 | 0.0 | % | — | 0.0 | % | (9,881) | (7.1) | % | 979 | 0.7 | % | |||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (617) | (0.9) | % | 4,262 | 6.5 | % | (3,717) | (2.7) | % | 15,174 | 11.0 | % | |||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | (398) | (0.6) | % | 1,068 | 1.6 | % | 1,151 | 0.8 | % | 2,915 | 2.1 | % | |||||||||||||||||||||||||||||||||||
Net income (loss) | (219) | (0.3) | % | 3,194 | 4.8 | % | (4,868) | (3.5) | % | 12,259 | 8.9 | % | |||||||||||||||||||||||||||||||||||
Net loss (income) attributable to noncontrolling interests | (107) | (0.2) | % | 37 | 0.1 | % | (192) | (0.1) | % | (4) | 0.0 | % | |||||||||||||||||||||||||||||||||||
Net income (loss) attributable to RCIHH common shareholders | $ | (326) | (0.5) | % | $ | 3,231 | 4.9 | % | $ | (5,060) | (3.6) | % | $ | 12,255 | 8.9 | % | |||||||||||||||||||||||||||||||
Earnings (loss) per share | |||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.04) | $ | 0.36 | $ | (0.63) | $ | 1.38 | |||||||||||||||||||||||||||||||||||||||
Weighted average shares used in computing earnings (loss) per share | |||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted | 7,741,522 | 8,861,854 | 8,021,747 | 8,891,638 | |||||||||||||||||||||||||||||||||||||||||||
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RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||
SEGMENT INFORMATION | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
March 31, 2026 | March 31, 2025 | March 31, 2026 | March 31, 2025 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Nightclubs | $ | 60,275 | $ | 57,541 | $ | 122,584 | $ | 119,265 | |||||||||||||||
Bombshells | 8,359 | 8,229 | 16,740 | 17,816 | |||||||||||||||||||
Other | 88 | 106 | 226 | 278 | |||||||||||||||||||
$ | 68,722 | $ | 65,876 | $ | 139,550 | $ | 137,359 | ||||||||||||||||
Income (loss) from operations | |||||||||||||||||||||||
Nightclubs | $ | 10,758 | $ | 14,532 | $ | 29,480 | $ | 35,385 | |||||||||||||||
Bombshells | (267) | (245) | (406) | 1,700 | |||||||||||||||||||
Other | (112) | (171) | (262) | (274) | |||||||||||||||||||
Corporate | (6,567) | (5,945) | (13,964) | (14,734) | |||||||||||||||||||
$ | 3,812 | $ | 8,171 | $ | 14,848 | $ | 22,077 | ||||||||||||||||
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RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
March 31, 2026 | March 31, 2025 | March 31, 2026 | March 31, 2025 | ||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||||||||
Net income (loss) | $ | (219) | $ | 3,194 | $ | (4,868) | $ | 12,259 | |||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 4,017 | 3,776 | 8,204 | 7,345 | |||||||||||||||||||
Impairment of assets | 7,270 | 1,780 | 8,433 | 1,780 | |||||||||||||||||||
Deferred income tax benefit | (2,223) | (853) | (2,223) | (1,242) | |||||||||||||||||||
Stock-based compensation | 197 | 118 | 589 | 588 | |||||||||||||||||||
Loss (gain) on sale of businesses and assets | 154 | 215 | 184 | (1,248) | |||||||||||||||||||
Amortization of debt discount and issuance costs | 128 | 227 | 265 | 290 | |||||||||||||||||||
Noncash lease expense | 745 | 668 | 1,479 | 1,326 | |||||||||||||||||||
Gain on insurance | (46) | — | (187) | (1,150) | |||||||||||||||||||
Credit loss reversal on notes receivable | (86) | — | (11) | — | |||||||||||||||||||
Premium on stock repurchase | — | — | 9,885 | — | |||||||||||||||||||
Changes in operating assets and liabilities, net of business acquisitions: | |||||||||||||||||||||||
Receivables | 1,099 | (659) | 745 | 1,714 | |||||||||||||||||||
Inventories | 87 | 68 | 112 | 64 | |||||||||||||||||||
Prepaid expenses, other current, and other assets | 1,613 | 68 | (1,209) | (530) | |||||||||||||||||||
Accounts payable, accrued, and other liabilities | (2,855) | (55) | (3,701) | 695 | |||||||||||||||||||
Net cash provided by operating activities | 9,881 | 8,547 | 17,697 | 21,891 | |||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||||||||
Proceeds from sale of businesses and assets | 1,075 | 956 | 1,675 | 1,085 | |||||||||||||||||||
Proceeds from insurance | 46 | — | 184 | 1,150 | |||||||||||||||||||
Proceeds from notes receivable | 57 | 76 | 107 | 147 | |||||||||||||||||||
Payments for property and equipment and intangible assets | (1,868) | (2,854) | (4,199) | (8,608) | |||||||||||||||||||
Acquisition of businesses, net of cash acquired | — | (6,000) | — | (6,000) | |||||||||||||||||||
Net cash used in investing activities | (690) | (7,822) | (2,233) | (12,226) | |||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||||||||
Proceeds from debt obligations | — | 5,433 | 2,253 | 8,396 | |||||||||||||||||||
Payments on debt obligations | (7,833) | (4,627) | (12,785) | (10,321) | |||||||||||||||||||
Payment of loan origination costs | — | (71) | (40) | (71) | |||||||||||||||||||
Purchase of treasury stock | (2,438) | (2,896) | (12,269) | (6,114) | |||||||||||||||||||
Payment of dividends | (617) | (619) | (1,162) | (1,242) | |||||||||||||||||||
Investment from noncontrolling partner | — | — | 1,800 | — | |||||||||||||||||||
Payments to noncontrolling interests | (44) | — | (80) | — | |||||||||||||||||||
Net cash used in financing activities | (10,932) | (2,780) | (22,283) | (9,352) | |||||||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,741) | (2,055) | (6,819) | 313 | |||||||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 28,631 | 34,718 | 33,709 | 32,350 | |||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 26,890 | $ | 32,663 | $ | 26,890 | $ | 32,663 | |||||||||||||||
6
RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
(in thousands) | |||||||||||||||||
March 31, 2026 | September 30, 2025 | March 31, 2025 | |||||||||||||||
ASSETS | |||||||||||||||||
Current assets | |||||||||||||||||
Cash and cash equivalents | $ | 26,890 | $ | 33,709 | $ | 32,663 | |||||||||||
Receivables, net | 2,627 | 3,940 | 4,174 | ||||||||||||||
Inventories | 4,745 | 4,857 | 4,645 | ||||||||||||||
Prepaid expenses and other current assets | 6,284 | 4,968 | 4,071 | ||||||||||||||
Assets held for sale | — | 3,394 | — | ||||||||||||||
Total current assets | 40,546 | 50,868 | 45,553 | ||||||||||||||
Property and equipment, net | 278,069 | 279,027 | 283,442 | ||||||||||||||
Operating lease right-of-use assets | 24,311 | 25,781 | 24,905 | ||||||||||||||
Notes receivable, net of current portion | 4,326 | 3,849 | 4,031 | ||||||||||||||
Goodwill | 62,242 | 62,725 | 62,524 | ||||||||||||||
Intangibles, net | 162,271 | 171,948 | 167,383 | ||||||||||||||
Other assets | 2,627 | 2,737 | 1,918 | ||||||||||||||
Total assets | $ | 574,392 | $ | 596,935 | $ | 589,756 | |||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||
Current liabilities | |||||||||||||||||
Accounts payable | $ | 6,258 | $ | 5,836 | $ | 5,652 | |||||||||||
Accrued liabilities | 30,242 | 32,607 | 18,161 | ||||||||||||||
Current portion of debt obligations, net | 33,396 | 21,198 | 19,737 | ||||||||||||||
Current portion of operating lease liabilities | 3,379 | 3,314 | 3,073 | ||||||||||||||
Total current liabilities | 73,275 | 62,955 | 46,623 | ||||||||||||||
Deferred tax liability, net | 19,466 | 21,689 | 21,451 | ||||||||||||||
Debt, net of current portion and debt discount and issuance costs | 215,325 | 214,583 | 221,725 | ||||||||||||||
Operating lease liabilities, net of current portion | 25,628 | 27,320 | 26,677 | ||||||||||||||
Other long-term liabilities | 8,167 | 9,509 | 4,741 | ||||||||||||||
Total liabilities | 341,861 | 336,056 | 321,217 | ||||||||||||||
Commitments and contingencies | |||||||||||||||||
Equity | |||||||||||||||||
Preferred stock | — | — | — | ||||||||||||||
Common stock | 77 | 87 | 88 | ||||||||||||||
Additional paid-in capital | 26,880 | 50,908 | 55,925 | ||||||||||||||
Retained earnings | 203,094 | 210,106 | 212,772 | ||||||||||||||
Total RCIHH stockholders' equity | 230,051 | 261,101 | 268,785 | ||||||||||||||
Noncontrolling interests | 2,480 | (222) | (246) | ||||||||||||||
Total equity | 232,531 | 260,879 | 268,539 | ||||||||||||||
Total liabilities and equity | $ | 574,392 | $ | 596,935 | $ | 589,756 | |||||||||||
7
RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||||
(in thousands, except per share, number of shares, and percentage data) | |||||||||||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of GAAP net income (loss) to Adjusted EBITDA | |||||||||||||||||||||||
Net income (loss) attributable to RCIHH common stockholders | $ | (326) | $ | 3,231 | $ | (5,060) | $ | 12,255 | |||||||||||||||
Income tax expense (benefit) | (398) | 1,068 | 1,151 | 2,915 | |||||||||||||||||||
Interest expense, net | 4,433 | 3,909 | 8,684 | 7,882 | |||||||||||||||||||
Depreciation and amortization | 4,017 | 3,776 | 8,204 | 7,345 | |||||||||||||||||||
Impairment of assets | 7,270 | 1,780 | 8,433 | 1,780 | |||||||||||||||||||
Settlement of lawsuits, net of recoveries | 207 | 127 | (595) | 306 | |||||||||||||||||||
Stock-based compensation | 197 | 118 | 589 | 588 | |||||||||||||||||||
Loss (gain) on sale of businesses and assets | 218 | 220 | 251 | (1,186) | |||||||||||||||||||
Gain on insurance | (46) | — | (223) | (1,017) | |||||||||||||||||||
Premium on stock repurchase | — | — | 9,885 | — | |||||||||||||||||||
Gain on lease termination | — | — | — | (979) | |||||||||||||||||||
Adjusted EBITDA | $ | 15,572 | $ | 14,229 | $ | 31,319 | $ | 29,889 | |||||||||||||||
Adjusted EBITDA as a percentage of revenues | 22.7 | % | 21.6 | % | 22.4 | % | 21.8 | % | |||||||||||||||
Reconciliation of GAAP net income (loss) to non-GAAP net income | |||||||||||||||||||||||
Net income (loss) attributable to RCIHH common stockholders | $ | (326) | $ | 3,231 | $ | (5,060) | $ | 12,255 | |||||||||||||||
Amortization of intangibles | 620 | 577 | 1,235 | 1,157 | |||||||||||||||||||
Impairment of assets | 7,270 | 1,780 | 8,433 | 1,780 | |||||||||||||||||||
Settlement of lawsuits, net of recoveries | 207 | 127 | (595) | 306 | |||||||||||||||||||
Stock-based compensation | 197 | 118 | 589 | 588 | |||||||||||||||||||
Loss (gain) on sale of businesses and assets | 218 | 220 | 251 | (1,186) | |||||||||||||||||||
Gain on insurance | (46) | — | (223) | (1,017) | |||||||||||||||||||
Premium on stock repurchase | — | — | 9,885 | — | |||||||||||||||||||
Gain on lease termination | — | — | — | (979) | |||||||||||||||||||
Net income tax effect | (2,075) | (263) | (2,336) | 47 | |||||||||||||||||||
Non-GAAP net income | $ | 6,065 | $ | 5,790 | $ | 12,179 | $ | 12,951 | |||||||||||||||
Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share | |||||||||||||||||||||||
Diluted shares | 7,741,522 | 8,861,854 | 8,021,747 | 8,891,638 | |||||||||||||||||||
GAAP diluted earnings (loss) per share | $ | (0.04) | $ | 0.36 | $ | (0.63) | $ | 1.38 | |||||||||||||||
Amortization of intangibles | 0.08 | 0.07 | 0.15 | 0.13 | |||||||||||||||||||
Impairment of assets | 0.94 | 0.20 | 1.05 | 0.20 | |||||||||||||||||||
Settlement of lawsuits, net of recoveries | 0.03 | 0.01 | (0.07) | 0.03 | |||||||||||||||||||
Stock-based compensation | 0.03 | 0.01 | 0.07 | 0.07 | |||||||||||||||||||
Loss (gain) on sale of businesses and assets | 0.03 | 0.02 | 0.03 | (0.13) | |||||||||||||||||||
Gain on insurance | (0.01) | — | (0.03) | (0.11) | |||||||||||||||||||
Premium on stock repurchase | — | — | 1.23 | — | |||||||||||||||||||
Gain on lease termination | — | — | — | (0.11) | |||||||||||||||||||
Net income tax effect | (0.27) | (0.03) | (0.29) | 0.01 | |||||||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.78 | $ | 0.65 | $ | 1.52 | $ | 1.46 | |||||||||||||||
8
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Reconciliation of GAAP operating income to non-GAAP operating income | |||||||||||||||||||||||
Income from operations | $ | 3,812 | $ | 8,171 | $ | 14,848 | $ | 22,077 | |||||||||||||||
Amortization of intangibles | 620 | 577 | 1,235 | 1,157 | |||||||||||||||||||
Impairment of assets | 7,270 | 1,780 | 8,433 | 1,780 | |||||||||||||||||||
Settlement of lawsuits, net of recoveries | 207 | 127 | (595) | 306 | |||||||||||||||||||
Stock-based compensation | 197 | 118 | 589 | 588 | |||||||||||||||||||
Loss (gain) on sale of businesses and assets | 218 | 220 | 251 | (1,186) | |||||||||||||||||||
Gain on insurance | (46) | — | (223) | (1,017) | |||||||||||||||||||
Non-GAAP operating income | $ | 12,278 | $ | 10,993 | $ | 24,538 | $ | 23,705 | |||||||||||||||
Reconciliation of GAAP operating margin to non-GAAP operating margin | |||||||||||||||||||||||
GAAP operating margin | 5.5 | % | 12.4 | % | 10.6 | % | 16.1 | % | |||||||||||||||
Amortization of intangibles | 0.9 | % | 0.9 | % | 0.9 | % | 0.8 | % | |||||||||||||||
Impairment of assets | 10.6 | % | 2.7 | % | 6.0 | % | 1.3 | % | |||||||||||||||
Settlement of lawsuits, net of recoveries | 0.3 | % | 0.2 | % | (0.4) | % | 0.2 | % | |||||||||||||||
Stock-based compensation | 0.3 | % | 0.2 | % | 0.4 | % | 0.4 | % | |||||||||||||||
Loss (gain) on sale of businesses and assets | 0.3 | % | 0.3 | % | 0.2 | % | (0.9) | % | |||||||||||||||
Gain on insurance | (0.1) | % | — | % | (0.2) | % | (0.7) | % | |||||||||||||||
Non-GAAP operating margin | 17.9 | % | 16.7 | % | 17.6 | % | 17.3 | % | |||||||||||||||
Reconciliation of net cash provided by operating activities to free cash flow | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 9,881 | $ | 8,547 | $ | 17,697 | $ | 21,891 | |||||||||||||||
Less: Maintenance capital expenditures | 1,462 | 1,611 | 2,598 | 2,887 | |||||||||||||||||||
Free cash flow | $ | 8,419 | $ | 6,936 | $ | 15,099 | $ | 19,004 | |||||||||||||||
Free cash flow as a percentage of revenues | 12.3 | % | 10.5 | % | 10.8 | % | 13.8 | % | |||||||||||||||
9
RCI HOSPITALITY HOLDINGS, INC. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NON-GAAP SEGMENT INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nightclubs | Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from operations | $ | 10,758 | $ | (267) | $ | (112) | $ | (6,567) | $ | 3,812 | $ | 14,532 | $ | (245) | $ | (171) | $ | (5,945) | $ | 8,171 | |||||||||||||||||||||||||||||||||||||||
Amortization of intangibles | 618 | — | — | 2 | 620 | 572 | 1 | — | 4 | 577 | |||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of assets | 7,270 | — | — | — | 7,270 | 1,780 | — | — | — | 1,780 | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of lawsuits, net of recoveries | 142 | 65 | — | — | 207 | 97 | 30 | — | — | 127 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 197 | 197 | — | — | — | 118 | 118 | |||||||||||||||||||||||||||||||||||||||||||||||||
Loss (gain) on sale of businesses and assets | 218 | 2 | — | (2) | 218 | 93 | 129 | — | (2) | 220 | |||||||||||||||||||||||||||||||||||||||||||||||||
Gain on insurance | (46) | — | — | — | (46) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP operating income (loss) | $ | 18,960 | $ | (200) | $ | (112) | $ | (6,370) | $ | 12,278 | $ | 17,074 | $ | (85) | $ | (171) | $ | (5,825) | $ | 10,993 | |||||||||||||||||||||||||||||||||||||||
GAAP operating margin | 17.8 | % | (3.2) | % | (127.3) | % | (9.6) | % | 5.5 | % | 25.3 | % | (3.0) | % | (161.3) | % | (9.0) | % | 12.4 | % | |||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin | 31.5 | % | (2.4) | % | (127.3) | % | (9.3) | % | 17.9 | % | 29.7 | % | (1.0) | % | (161.3) | % | (8.8) | % | 16.7 | % | |||||||||||||||||||||||||||||||||||||||
Six Months Ended March 31, 2026 | Six Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nightclubs | Bombshells | Other | Corporate | Total | Nightclubs | Bombshells | Other | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from operations | $ | 29,480 | $ | (406) | $ | (262) | $ | (13,964) | $ | 14,848 | $ | 35,385 | $ | 1,700 | $ | (274) | $ | (14,734) | $ | 22,077 | |||||||||||||||||||||||||||||||||||||||
Amortization of intangibles | 1,231 | — | — | 4 | 1,235 | 1,146 | 2 | — | 9 | 1,157 | |||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of assets | 8,433 | — | — | — | 8,433 | 1,780 | — | — | — | 1,780 | |||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of lawsuits, net of recoveries | (685) | 90 | — | — | (595) | 276 | 30 | — | — | 306 | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | 589 | 589 | — | — | — | 588 | 588 | |||||||||||||||||||||||||||||||||||||||||||||||||
Loss (gain) on sale of businesses and assets | 240 | 6 | — | 5 | 251 | 109 | (1,201) | — | (94) | (1,186) | |||||||||||||||||||||||||||||||||||||||||||||||||
Gain on insurance | (223) | — | — | — | (223) | (1,017) | — | — | — | (1,017) | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP operating income (loss) | $ | 38,476 | $ | (310) | $ | (262) | $ | (13,366) | $ | 24,538 | $ | 37,679 | $ | 531 | $ | (274) | $ | (14,231) | $ | 23,705 | |||||||||||||||||||||||||||||||||||||||
GAAP operating margin | 24.0 | % | (2.4) | % | (115.9) | % | (10.0) | % | 10.6 | % | 29.7 | % | 9.5 | % | (98.6) | % | (10.7) | % | 16.1 | % | |||||||||||||||||||||||||||||||||||||||
Non-GAAP operating margin | 31.4 | % | (1.9) | % | (115.9) | % | (9.6) | % | 17.6 | % | 31.6 | % | 3.0 | % | (98.6) | % | (10.4) | % | 17.3 | % | |||||||||||||||||||||||||||||||||||||||
10