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RICK
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RCI Reports 2Q25 Results, Hosts X Spaces Call at 4:30 PM ET Today

1. RICK reports lower revenues primarily due to weather impacts and divestitures. 2. Acquisition of Flight Club and newly opened locations signal strategic growth. 3. Share buybacks indicate strong capital management despite lower profitability. 4. Non-GAAP results show challenges but improving cash flow dynamics. 5. Debt levels rose slightly, mainly from recent acquisitions and financing.

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Why Neutral?

The overall performance signals some decline in revenue and negative profitability, but growth initiatives and strategic acquisitions may counterbalance immediate threats to share price. Historically, companies that manage growth amid temporary setbacks can recover; for example, during 2020 market fluctuations, RICK also struggled but managed a comeback through strategic planning.

How important is it?

The pressing financial setbacks and revenue declines are notable yet countered by progressive strategies; hence, the score reflects moderate importance relative to RICK's performance landscape. Insights into revenue challenges and growth ventures are critical for investors' decision-making.

Why Short Term?

Immediate impacts from current financial reports are evident; however, measures like acquisitions and buybacks can positively influence future performance within the next 1-2 quarters. This is similar to past scenarios where short-term volatility led to growth after several quarters of strategic expansion.

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RICK
HOUSTON--(BUSINESS WIRE)--RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today reported results for the fiscal 2025 second quarter ended March 31, 2025. The Company also filed its Form 10-Q today. 1 See “Non-GAAP Financial Measures” below. 2Q25 Summary (Comparisons are to the year-ago period unless indicated otherwise) Eric Langan, President and CEO, said: "As previously announced, revenues primarily reflect the sale/divestiture of five underperforming Bombshells segment locations and the effect of severe weather on company same-store sales in January and February, partially offset by improving trends in March. Profitability primarily reflects lower SSS, lower costs from the sale/divestiture of the Bombshells related units, and lower impairments. During and subsequent to 2Q25, we continued to make progress with our Back to Basics 5-Year Capital Allocation Plan, acquiring clubs, completing projects, and buying back shares." Back to Basics 5-Year Capital Allocation Plan (FY25-29) 2Q25: Acquired Flight Club, the premier gentlemen's club in the Detroit market ($8.0 million for the club and $3.0 million for the real estate). 2Q25: Opened Bombshells in Denver, CO, and the rebranded/reformatted Chicas Locas in El Paso, TX. 2Q25: Repurchased 56,875 common shares for $2.9 million ($50.92 average per share), with 8,832,125 shares outstanding at March 31, 2025. 3Q25: Acquired Platinum West of West Columbia, SC, the only upscale adult nightclub in the central part of the state ($6.25 million for the club and $1.75 million for the real estate). X Spaces Conference Call at 4:30 PM ET Today Hosted by RCI President and CEO Eric Langan, CFO Bradley Chhay, and Mark Moran of Equity Animal. Call link: https://x.com/i/spaces/1djGXVvkXgkxZ (X log in required). Presentation link: https://www.rcihospitality.com/investor-relations/. To ask questions: Participants must join the X Space using a mobile device. To listen only: Participants can access the X Space from a computer. There will be no other types of telephone or webcast access. 2Q25 Results (Comparisons are to the year-ago period unless indicated otherwise) Nightclubs segment: Revenues of $57.5 million declined by 3.1%. Sales, which were affected by weather in January and February, reflected a 3.5% decline in same-store sales and the absence of Baby Dolls Fort Worth due to fire in July 2024, partially offset by five new and/or reformatted clubs not in SSS.2 By type of revenue, alcoholic beverages declined 5.3%, service declined 2.9%, and food, merchandise and other increased 2.4%. Impairments and other charges totaled $2.0 million compared to $8.2 million. Operating income was $14.6 million (25.4% of segment revenues) compared to $11.0 million (18.6%). Results primarily reflected the impairment decline, partially offset by the sales decline. Non-GAAP operating income was $17.1 million (29.8% of segment revenues) compared to $19.8 million (33.4%). Non-GAAP results primarily reflected the sales decline. Bombshells segment: Revenues of $8.2 million declined 35.6%. Sales, which were similarly affected by bad weather in January and February, reflected the sale/divestiture of five underperforming locations and a 13.4% decline in SSS, partially offset by two locations not in SSS (Stafford, TX, and Denver, CO).2 Operating loss was $227,000 (-2.8% of segment revenues) compared to income of $699,000 (5.5%). Non-GAAP operating loss was $67,000 (-0.8% of segment revenues) compared to income of $750,000 (5.9%). Results primarily reflected the sales decline from open locations and Bombshells Denver pre-opening costs, most of which were offset by the sale/divestiture of non-performing locations. Corporate segment: Expenses totaled $5.5 million (8.4% of total revenues) compared to $6.8 million (9.4%). Non-GAAP expenses totaled $5.4 million (8.2% of total revenues) compared to $6.3 million (8.8%). The decline primarily reflected lower overhead from fewer locations. Impairments and other charges (gains), net within consolidated operations totaled $2.1 million compared to $8.2 million. Income tax expense was $1.1 million compared to $5,000. The effective tax rate was 25.1% compared to 0.7%. Weighted average shares outstanding of 8.86 million declined 5.2% due to share buybacks. Debt was $241.5 million at March 31, 2025 compared to $235.5 million at December 31, 2024. The increase primarily reflected Flight Club new acquisition related debt and Bombshells Rowlett and Lubbock construction financing, partially offset by scheduled pay downs. 2 See our April 8, 2025 news release on 2Q25 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) settlement of lawsuits, (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, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) gains or losses on lease termination, and (h) 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 18.1% and 18.4% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2025, and 2024, 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) impairment of assets, (c) income tax expense, (d) net interest expense, (e) settlement of lawsuits, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, and (i) 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. 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, and (vi) 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, 2024, 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. More News From RCI Hospitality Holdings, Inc.

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