RCI Hospitality Holdings Inc【RICK】株式ニュース

RCI Continues Rebound with 2Q16 EPS at $0.54 GAAP & $0.40 Non-GAAP
PR Newswire RCI Hospitality Holdings, Inc.
May 10, 2016 4:05 PM
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HOUSTON, May 10, 2016 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (RICK) today announced its performance continued to rebound in the fiscal 2016 second quarter ended March 31, 2016.

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.RCI Hospitality Holdings Corporate Logo (PRNewsFoto/RCI Hospitality Holdings, Inc.)
2Q16 Highlights

GAAP EPS diluted was $0.54, which included a $1.75 million tax credit. Excluding non-recurring items, non-GAAP* EPS diluted was $0.40.
In the year ago quarter, GAAP EPS was a loss of ($0.28), which included a $10.3 million pre-tax expense for a legal settlement. Non-GAAP EPS diluted was $0.44. 2Q15 was a record quarter for sales and non-GAAP earnings.
2Q16 results reflect a continued recovery in performance following a falloff after 2Q15.
2Q16 free cash flow (FCF) totaled $6.4 million, the second largest quarter on record, and $10.3 million for the first half of FY16.
As a result, RCI has revised its FY16 FCF target upward to $16-$19 million from $15-18 million.
Cash Dividend & Share Buy Backs

RCI accelerated its share buyback program in FY16, taking advantage of its strong FCF to return capital to shareholders.
Through April 30, 2016, the company purchased 566,921 common shares to date in FY16 at a cost of $5.4 million, reducing shares outstanding to 9.889 million from 10.348 million a year ago.
RCI yesterday announced a $5.0 million increase in its authorization to repurchase common shares, resulting in a total of $6.2 million available to buy back stock.
RCI also announced yesterday the company's 3Q16 $0.03 dividend will be paid June 27, 2016 to shareholders of record June 10, 2016.
Conference Call

A conference call to discuss these results, outlook and related matters will be held today at 4:30 PM ET
Dial In: 877-407-9210 (toll free) or 201-689-8049 (domestic or international)
Webcast URL: http://www.investorcalendar.com/event/174973
Meet Management Tonight

Eric Langan, President & CEO, invites investors to meet management and tour one of the company's top clubs.

When: Tonight, May 10, 2016, 6:00 PM to 8:00 PM ET
Where: Rick's Cabaret New York, at 50 W. 33rd Street, between Fifth Avenue and Broadway
RSVP: With your contact information to gary.fishman@anreder.com
CEO Comment

"We are pleased 2Q16 revenues, margins, profits and free cash flow performed better than our original expectations," Mr. Langan said.

"This is especially encouraging as we were up against our largest sales quarter ever in the year ago period. Moreover, two clubs were closed in 2Q16 undergoing reformatting and remodeling.

"Our FY16 plan is to continue to grow margins, EPS and FCF on what we expect to be flattish revenues on an annual basis, while adhering to our capital allocation policy.

"Costs as a percentage of revenues are going down. Operating margin has improved two quarters in a row.

"Sales are moving in the right direction. Same store sales were nearly level with the year-ago quarter. 3Q16 should benefit from reopening of the two reformatted clubs, and we anticipate opening the first sports-themed club in Manhattan in 4Q16.

"As a result of our first six months' performance, we have increased our FY16 free cash flow target to $16-$19 million.

"The company remains committed to our capital allocation policy of using FCF to enhance shareholder value through share repurchases and dividends. As part of this policy, we will continue to evaluate the risk adjusted returns on capital expenditures or acquisitions relative to the after tax yield on free cash flow we can obtain by repurchasing our own shares.

"While opportunities may arise to acquire or open new units or pay down debt ahead of schedule, we generally believe the best allocation of our capital is the risk-adjusted, after-tax, FCF yield of buying our own shares as long as our stock stays at this low valuation relative to RCI's cash flow generation."

2Q16 Analysis

Total Revenues

Total revenues of $34.4 million increased $0.9 million or 2.8% from 1Q16, reflecting improvements in almost all major categories.
High-margin service revenues increased $0.6 million or 4.5% from 1Q16 as club customers began to spend more per visit and new marketing strategies started to prove effective. Food sales increased $0.3 million or 6.3% from 1Q16 due to Bombshells' growing business.
Same store sales of $32.9 million declined only 0.9% year over year, representing a significant increase from our performance in 1Q16 and 4Q15.
Operating Income & Margin

Income from operations was $7.6 million, or 22.0% of revenues, up from 17.1% in 1Q16.
Excluding non-recurring items, non-GAAP operating income was $7.9 million, or 23.1% of revenues, up from 19.7% in 1Q16.
The improvement in operating income as compared to 1Q16 reflects the increase in sales, in particular service revenues, as well as reduced costs as a percentage of revenues.
2Q16 Segment Analysis

Nightclubs

Sales of $29.1 million compared to $29.9 in the year ago quarter, with 36 units in operation compared to 40.
Operating income was $9.7 million, or 33.5% of revenues, compared to a loss of ($0.8) million, or (2.7%), in 2Q15.
Non-GAAP operating income was $9.8 million, or 33.7% of revenues, compared to $9.5 million, or 31.7%, in 2Q15.
Bombshells

Sales of $4.6 million compared to $4.4 million in the year ago quarter, with five units in operation in both periods.
Operating income was $0.64 million compared to $0.46 million in 2Q15.
Operating margin was 13.9% compared to 10.3% in 2Q15.
2Q16 Other Metrics

Occupancy Costs: Occupancy costs, which the company measures as a combination of rent plus interest expense, declined to 8.2% of revenues compared to 8.5% in 2Q15. The decline reflects significantly lower rent due to the acquisitions of club real estate in New York City in early 2Q16 and of Miami Gardens in 4Q15.
Effective Tax Rate: $1.75 million was deducted from income tax expense, due to the benefit of certain FICA credits not previously claimed. Excluding this deduction, RCI would have paid an effective tax rate of 36.6%.
Adjusted EBITDA & Free Cash Flow: RCI's cash generating power, as reflected by adjusted EBITDA, amounted to $9.7 million compared to $8.2 million in 1Q16. As a result, RCI generated FCF of $6.4 million compared to $3.9 million in 1Q16.
Balance Sheet (March 31, 2016 compared to December 31, 2015): Total stockholders' equity increased to $131.9 million from $128.2 million due to the increase in retained earnings partially offset by share buy backs.
*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 some non-recurring charges that are included in 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 exclude from non-GAAP operating income and non-GAAP operating margin amortization of intangibles, gain on settlement of patron tax case, pre-opening costs, gains and losses from asset sales, gain on settlement of patron tax issue, impairment of assets, pre-opening costs, stock-based compensation charges, litigation and other one-time legal settlements and acquisition costs. 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. While we were in litigation in the patron tax case, we also included patron taxes as an exclusion, but after settlement of the case, we no longer exclude patron taxes from operating income.
Non-GAAP Net Income and Non-GAAP Net Income per Basic Share and per Diluted Share. We exclude from non-GAAP net income and non-GAAP net income per diluted share and per basic share amortization of intangibles, gain on settlement of patron tax case, pre-opening costs, income tax expense, impairment charges, gains and losses from asset sales, stock-based compensation, litigation and other one-time legal settlements, gain on contractual debt reduction and acquisition costs, and include the Non-GAAP provision for income taxes, calculated as the tax-effect at 35% effective tax rate of the pre-tax non-GAAP income before taxes less stock-based compensation, because we believe that excluding such measures helps management and investors better understand our operating activities. While we were in litigation in the patron tax case, we also included patron taxes as an exclusion, but after settlement of the case, we no longer exclude patron taxes from net income.
Adjusted EBITDA. We exclude from Adjusted EBITDA depreciation expense, amortization of intangibles, income tax, interest expense, interest income, gains and losses from asset sales, pre-opening costs, acquisition costs, litigation and other one-time legal settlements, gain on settlement of patron tax case, gain on contractual debt reduction and impairment charges because we believe that adjusting for such items helps management and investors better understand 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. Also, we exclude interest cost in our calculation of Adjusted EBITDA. 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.
Other Notes

Starting with 1Q16, total revenues (including prior comparable periods) are being reported net of sales taxes and other revenue related taxes, RCI having chosen to early adopt new revenue accounting standards.
Free cash flow is defined as cash flows from operating activities less maintenance capex.
Unit counts are at period end.
About RCI Hospitality Holdings, Inc. (RICK)

With 43 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in gentlemen clubs and sports bars/restaurants. Clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names, such as "Rick's Cabaret," "XTC," "Club Onyx," "Vivid Cabaret," "Jaguars" and "Tootsie's Cabaret." Sports bars/restaurants operate under the brand name "Bombshells." Please visit http://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 in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company's businesses, risks and uncertainties related to cybersecurity, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS

FOR THE SIX MONTHS

ENDED MARCH 31,
ENDED MARCH 31,
(in thousands, except per share data)

2016

2015

2016

2015

(UNAUDITED)

(UNAUDITED)
Revenues:

Sales of alcoholic beverages

$
14,581

$
14,311

$
29,178

$
28,316
Sales of food and merchandise

4,609

4,837

8,943

9,670
Service revenues

13,205

13,847

25,846

27,376
Other

2,001

1,994

3,904

3,832
Total revenues

34,396

34,989

67,871

69,194

Operating expenses:

Cost of goods sold

5,227

5,381

10,411

10,492
Salaries and wages

7,917

8,115

16,052

16,147
Stock compensation

120

120

240

240
Other general and administrative:

Taxes and permits

3,274

3,288

6,501

6,399
Charge card fees

557

544

1,170

1,091
Rent

859

1,184

1,807

2,325
Legal and professional

982

1,064

2,087

2,023
Advertising and marketing

1,225

1,312

2,530

2,679
Insurance

907

801

1,781

1,621
Utilities

694

708

1,404

1,442
Depreciation and amortization

1,826

1,886

3,643

3,531
(Gain) loss on sale of property and marketable securities

(127)

(18)

(127)

(18)
Impairment of assets

-

-

-

1,358
Settlement of lawsuits and other one-time costs

62

10,303

602

10,550
Other

3,323

2,917

6,503

5,790
Total operating expenses

26,846

37,605

54,604

65,670
Operating income (loss)

7,550

(2,616)

13,267

3,524

Other income (expense):

Interest income

1

26

3

39
Interest expense

(1,965)

(1,783)

(3,878)

(3,402)
Gain from acquisition of controlling interest in subsidiary

-

-

-

577
Income (loss) before income taxes

5,586

(4,373)

9,392

738
Income taxes (benefit)

293

(1,265)

1,660

581
Net income (loss)

5,293

(3,108)

7,732

157
Less: net loss attributable to noncontrolling interests

212

267

325

362
Net income (loss) attributable to RCI Hospitality Holdings, Inc.

$
5,505

$
(2,841)

$
8,057

$
519

Basic earnings (loss) per share attributable to RCIHH shareholders:

Net income

$
0.55

$
(0.28)

$
0.79

$
0.05
Diluted earnings (loss) per share attributable to RCIHH shareholders:

Net income

$
0.54

$
(0.28)

$
0.78

$
0.05

Weighted average number of common shares outstanding:

Basic

10,013

10,275

10,154

10,269
Diluted

10,215

10,275

10,356

10,273

Dividends per share

$
0.03

$
-

$
0.03

$
-

RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES

FOR THE THREE MONTHS

FOR THE SIX MONTHS

FOR THE THREE MONTHS

ENDED MARCH 31,

ENDED MARCH 31,

ENDED DECEMBER 31,
($ in thousands, except per share data)

2016

2015

2016

2015

2015

Reconciliation of GAAP net income to Adjusted EBITDA

GAAP net income (loss)

$5,505

($2,841)

$8,057

$519

$2,552
Income tax expense

293

(1,265)

1,660

581

1,367
Interest expense and income and gain on Drink Robust investment

1,964

1,757

3,875

2,786

1,911
Litigation and other one-time legal settlements

62

10,303

602

10,550

540
Pre-opening costs

-

268

-

328

-
Acquisition costs

-

95

-

178

-
Impairment of assets

-

-

-

1,358

-
Depreciation and amortization

1,826

1,886

3,643

3,531

1,817
Adjusted EBITDA

$9,650

$10,203

$17,837

$19,831

$8,187

Reconciliation of GAAP net income (loss) to non-GAAP net income

GAAP net income (loss)

$5,505

($2,841)

$8,057

$519

$2,552
Amortization of intangibles

197

336

399

579

202
Gain on Drink Robust investment

-

-

-

(577)

-
Stock-based compensation

120

120

240

240

120
Litigation and other one-time settlements

62

10,303

602

10,550

540
Pre-opening costs

-

268

-

328

-
Income tax expense

293

(1,265)

1,660

581

1,367
Acquisition costs

-

95

-

178

-
Impairment of assets

-

-

-

1,358

-
Non-GAAP provision for income taxes

(2,120)

(2,414)

(3,751)

(4,731)

(1,673)
Non-GAAP net income

$4,057

$4,602

$7,207

$9,025

$3,108

Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share

Fully diluted shares

10,215

10,275

10,356

10,273

10,635
GAAP net income (loss)

$0.54

($0.28)

$0.78

$0.05

$0.25
Amortization of intangibles

0.02

0.03

0.04

0.06

0.02
Gain on Drink Robust investment

-

-

-

(0.06)

-
Stock-based compensation

0.01

0.01

0.02

0.02

0.01
Litigation and other one-time settlements

0.01

1.00

0.06

1.03

0.05
Pre-opening costs

-

0.03

-

0.03

-
Income tax expense

0.03

(0.12)

0.16

0.06

0.13
Acquisition costs

-

0.01

-

0.02

-
Impairment of assets

-

-

-

0.13

-
Non-GAAP provision for income taxes

(0.21)

(0.23)

(0.36)

(0.46)

(0.16)
Non-GAAP diluted net income per share

$0.40

$0.44

$0.70

$0.88

$0.30

Reconciliation of GAAP operating income to non-GAAP operating income

GAAP operating income (loss)

$7,550

($2,616)

$13,267

$3,524

$5,717
Amortization of intangibles

197

336

399

579

202
Stock-based compensation

120

120

240

240

120
Impairment of assets

-

-

-

1,358

-
Litigation and other one-time settlements

62

10,303

602

10,550

540
Pre-opening costs

-

268

-

328

-
Acquisition costs

-

95

-

178

-
Non-GAAP operating income

$7,929

$8,506

$14,508

$16,757

$6,579

Reconciliation of GAAP operating margin to non-GAAP operating margin

GAAP operating income

22.0%

-7.5%

19.5%

5.1%

17.1%
Amortization of intangibles

0.6%

1.0%

0.6%

0.8%

0.6%
Stock-based compensation

0.3%

0.3%

0.4%

0.3%

0.4%
Impairment of assets

0.0%

0.0%

0.0%

2.0%

0.0%
Litigation and other one-time settlements

0.2%

29.4%

0.9%

15.2%

1.6%
Pre-opening costs

0.0%

0.8%

0.0%

0.5%

0.0%
Acquisition costs

0.0%

0.3%

0.0%

0.3%

0.0%
Non-GAAP operating margin

23.1%

24.3%

21.4%

24.2%

19.7%

RCI HOSPITALITY HOLDINGS, INC.
SEGMENT INFORMATION

FOR THE THREE MONTHS

FOR THE SIX MONTHS

ENDED MARCH 31,

ENDED MARCH 31,
(in thousands)

2016

2015

2016

2015

Business segment sales:

Nightclubs

$
29,062

$
29,916

$
57,514

$
59,030
Bombshells

4,629

4,448

9,008

8,982
Other

705

625

1,349

1,182

$
34,396

$
34,989

$
67,871

$
69,194

Business segment operating income (loss):

Nightclubs

$
9,734

$
(818)

$
18,195

$
6,836
Bombshells

643

457

1,245

882
Other

(799)

(724)

(1,504)

(1,189)
General corporate

(2,028)

(1,531)

(4,669)

(3,005)

$
7,550

$
(2,616)

$
13,267

$
3,524

Reconciliation of Nightclubs GAAP operating income to non-GAAP operating income

Nightclubs operating income

$
9,734

$
(818)

$
18,195

$
6,836
Impairment of assets

-

-

-

1,358
Settlement of lawsuits and other one-time costs

62

10,303

602

10,550
Nightclubs non-GAAP operating income

$
9,796

$
9,485

$
18,797

$
18,744

Nightclubs non-GAAP operating margin

33.7%

31.7%

32.7%

31.8%

RCI Hospitality Holdings, Inc. Reports Fiscal 3Q15 Results

GAAP EPS of $0.78 Up 11x YoY on Gain from Tax Settlement

RCI Hospitality Holdings, Inc.
21 hours ago

HOUSTON, Aug. 10, 2015 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (RICK) today announced results for the fiscal 2015 third quarter ended June 30, 2015.

..
View photo
.RCI HOSPITALITY HOLDINGS INC
3Q15 Highlights
•GAAP EPS diluted of $0.78 includes the previously announced gain from the settlement of the Patron Tax issue with the State of Texas. This compares to $0.07 in 3Q14.
•Non-GAAP EPS* diluted of $0.32 increased 6.7% from $0.30 in 3Q14. Non-GAAP EPS excludes the above mentioned tax settlement as well as other items from both periods for comparability.
•Total revenues of $35.8 million grew 7.3% year over year.
•$2.3 million used to buy back shares in the open market in the first nine months of Fiscal 2015.
•Company on track for a solid FY15 and another year of growth in FY16.

Conference Call

A conference call to discuss these results, outlook and related matters will be held today, August 10, 2015, at 4:30 PM ET:
•Live Participant Dial In (Toll Free): 877-407-9210
•Live Participant Dial In (International): 201-689-8049
•Webcast URL: http://www.investorcalendar.com/event/174217

Meet Management

Eric Langan, President and CEO, invites investors for a "Due Diligence Ball" to meet, talk and tour one of RCI's top revenue generating clubs.
•When: Monday, August 10, 2015, 6:00 PM to 8:00 PM ET
•Where: Vivid Cabaret New York, 61 W 37th St, NY, NY 10018, bet. 5th and 6th avenues
•RSVP: By 5:00 PM ET, August 10, 2015, with your contact information, to gary.fishman@anreder.com

CEO Comment

"We're pleased to have generated a 6.7% year over year increase in non-GAAP EPS on a 7.3% year over year in total revenues in 3Q15 despite particularly bad weather in Texas that affected sales there," said Mr. Langan.

"This underscores the soundness of our bar/restaurant strategy, reflecting Bombshells sales up more than threefold year over year; the success of new clubs and our recent acquisitions; and the elimination of some underperforming clubs last year.

"We are particularly pleased to have settled the Texas Patron Tax issue. This resulted in a pre-tax gain of $8.2 million, increasing GAAP EPS to $0.78. This gain will cover close to 80% of 2Q15's New York federal wage and hour class action settlement, which is being implemented as planned.

"Also during 3Q15, we continued to repurchase stock in the open market, reflecting confidence in our favorable outlook, combined with the market's undervaluation of our shares.

"We are on track for a solid Fiscal 2015. Year to date, total revenues are up 14.7%, adjusted EBITDA is up 16.9%, and GAAP EPS and non-GAAP EPS are both up 23.2%. With better weather, same store sales have begun to rebound in 4Q15. Recently, we acquired the retail plaza in Florida where Tootsie's Cabaret, our largest adult club subsidiary and the plaza's largest tenant, is located. We expect this transaction to also be accretive.

"We look forward to Fiscal 2016 as another year of continued growth. With all major outstanding issues behind us, we'll have the ability to apply even more cash generated toward the repurchase of shares."

3Q15 Analysis (all comparisons to 3Q14 unless otherwise noted)

Total Revenues
•Total revenues of $35.8 million compared to $33.3 million, up 7.3%.
•46 units in operation versus 43, up 7.0%.
•Same store sales declined 5.3% due to unusually severe rain and flooding in Texas that affected our nightclub segment, in particular, as previously announced.
•Units opened less than a year added $5.2 million from new adult clubs – Rick's Cabaret in Odessa, TX, the January acquisition of Down in Texas Saloon in Austin, TX, and the May acquisition of The Seville Club of Minneapolis, plus new Bombshells in Austin, Spring, and Houston, TX.

Operating Margin & Costs (as % of revenues)
•GAAP operating margin was 39.6% compared to 8.7%. 3Q15 benefitted from the $8.2 million gain from the settlement of the Texas Patron Tax. 3Q14 was adversely affected by $3.2 million from the settlement of lawsuits and other one-time costs.
•As reported, in May RCI reached a settlement with the State of Texas over payment of a Patron Tax on adult club customers. RCI agreed to pay $10.0 million in taxes owed in 84 equal monthly installments without interest and to remit the tax on a monthly basis going forward. Because RCI had accrued more than the $10 million owed, the company recorded an $8.2 million pre-tax gain in 3Q15.
•Non-GAAP operating margin, which excludes the gain and certain other non-operating items from both periods for more meaningful analysis, was 18.3% compared to 19.6%. 3Q14 primarily reflects growth of the Bombshells segment, whose margins, while growing, are less than that of the nightclub segment.

Adjusted EBITDA
•RCI's cash generating power for the quarter, as reflected by adjusted EBITDA, amounted to $8.2 million, up 6.1% from $7.7 million in the year ago quarter.

Business Segments (all comparisons to 3Q14 unless otherwise noted)

Nightclubs
•Includes 41 units, the same as in the year ago quarter.
•Sales of $30.6 million compared to $31.5 million, a 2.9% decline.
•Operating income of $17.3 million compared to $8.5 million.
•Adjusted operating income, which excludes the previously mentioned gain and certain other non-operating items from both periods for more meaningful analysis, was $9.1 million (29.8% of sales) compared to $11.8 million (37.3% of sales).
•In May, RCI subsidiaries acquired The Seville Club, a popular gentlemen's club in Minneapolis, for total consideration of $8.5 million.
•In August, an RCI subsidiary acquired the Miami Gardens Square retail plaza in Florida, where Tootsie's Cabaret is located. Total consideration of $15.3 million consisted of $3.975 million in cash and a 5.45%, $11.325 million bank loan.

Bombshells
•Includes five Bombshells, all in Texas, compared to two in the year ago quarter.
•Sales totaled $4.8 million, up from $1.6 million.
•Operating income improved to a profit of $369,000 compared to a loss of $170,000, a $539,000 turnaround.
•Operating margin expanded to 7.7% of revenues from (10.7%) and should increase as revenues continue to build and training costs subside.

Balance Sheet (June 30, 2015 compared to March 31, 2015)
•Assets increased 1.7% to $265.0 million, primarily due to the acquisition of The Seville Club and related real estate.
•Current liabilities declined 37.6% to $28.8 million and long-term debt increased 15.9% to $72.9 million, primarily due to the Texas Patron Tax settlement.
•Total permanent stockholders' equity increased 6.7% to $129.0 million, primarily reflecting the after-tax benefit of the gain from the Patron Tax Settlement and core profits.

Stock Buy Backs
•The Board of Directors increased its stock repurchase authorization to $10.0 million in May 2014.
•During 3Q15, RCI purchased 32,853 shares in the open market for an aggregate cost of $370,799, leaving $6.6 million of remaining authorization.
•For the nine months ended June 30, 2015, RCI purchased 225,280 shares at a cost of $2.3 million.

*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 some recurring charges that are included in 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 exclude from non-GAAP operating income and non-GAAP operating margin amortization of intangibles, gain on settlement of patron tax case, pre-opening costs, gains and losses from asset sales, stock-based compensation charges, litigation and other one-time legal settlements and acquisition costs. 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. While we were in litigation in the patron tax case, we also included patron taxes as an exclusion, but after settlement of the case, we no longer exclude patron taxes from operating income.
•Non-GAAP Net Income and Non-GAAP Net Income per Basic Share and per Diluted Share. We exclude from non-GAAP net income and non-GAAP net income per diluted share and per basic share amortization of intangibles, gain on settlement of patron tax case, pre-opening costs, income tax expense, impairment charges, gains and losses from asset sales, stock-based compensation, litigation and other one-time legal settlements and acquisition costs, and include the Non-GAAP provision for income taxes, calculated as the tax-effect at 35% effective tax rate of the pre-tax non-GAAP income before taxes less stock-based compensation, because we believe that excluding such measures helps management and investors better understand our operating activities. While we were in litigation in the patron tax case, we also included patron taxes as an exclusion, but after settlement of the case, we no longer exclude patron taxes from net income.
•Adjusted EBITDA. We exclude from Adjusted EBITDA depreciation expense, amortization of intangibles, income tax, interest expense, interest income, gains and losses from asset sales, acquisition costs, litigation and other one-time legal settlements, gain on settlement of patron tax case and impairment charges because we believe that adjusting for such items helps management and investors better understand 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. Also, we exclude interest cost in our calculation of Adjusted EBITDA. 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.

Full Financial Tables

RCI's Form 10Q for the fiscal third quarter ended June 30, 2015 with full financial tables can be found on the company's corporate site at http://www.rcihospitality.com.

About RCI Hospitality Holdings, Inc. (RICK)

With 46 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country's leading company in adult gentlemen clubs and sports bars/restaurants. Adult clubs in New York City, Miami, Philadelphia, Charlotte, Dallas/Ft. Worth, Houston, Minneapolis, Indianapolis and other cities operate under brand names, such as "Rick's Cabaret," "XTC," "Club Onyx," "Vivid Cabaret," "Jaguars" and "Tootsie's Cabaret." Sports bars/restaurants operate under the brand name "Bombshells." Please visit http://www.rcihospitality.com/

RCI Hospitality in 2015 is celebrating the 20th anniversary of its IPO – two decades of innovation in the adult club segment of the hospitality industry.

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 in this press release, including the risks and uncertainties associated with operating and managing an adult business, the business climates in cities where it operates, the success or lack thereof in launching and building the company's businesses, risks and uncertainties related to the operational and financial results of its Web sites, conditions relevant to real estate transactions, and numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. The company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.

RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS

FOR THE NINE MONTHS

ENDED JUNE 30,

ENDED JUNE 30,

2015

2014

2015

2014

(in thousands, except per share data)

(UNAUDITED)

(UNAUDITED)

Revenues:

Sales of alcoholic beverages

$

15,148

$

13,626

$

45,963

$

38,300

Sales of food and merchandise

5,049

4,076

15,515

11,478

Service revenues

13,870

14,035

42,623

41,112

Other

1,694

1,606

5,557

4,746

Total revenues

35,761

33,343

109,658

95,636

Operating expenses:

Cost of goods sold

5,033

4,295

15,525

12,083

Salaries and wages

8,176

7,219

24,323

20,650

Stock compensation

120

2

360

156

Other general and administrative:

Taxes and permits

5,444

5,150

16,546

14,707

Charge card fees

562

479

1,653

1,356

Rent

1,189

1,315

3,514

3,699

Legal and professional

939

1,206

2,962

2,420

Advertising and marketing

1,506

1,420

4,185

4,111

Insurance

866

1,014

2,487

2,785

Utilities

727

650

2,169

1,891

Depreciation and amortization

1,923

1,532

5,454

4,438

Loss on sale of property

178

334

160

248

Impairment of assets

-

-

1,358

-

Settlement of lawsuits and other one-time costs

10

3,233

10,560

3,503

Gain on settlement of patron tax

(8,167)

-

(8,167)

-

Other

3,103

2,602

8,893

7,624

Total operating expenses

21,609

30,451

91,982

79,671

Operating income

14,152

2,892

17,676

15,965

Other income (expense):

Interest income

-

-

39

112

Interest expense

(1,630)

(2,060)

(5,032)

(5,996)

Gain from original investment in Drink Robust

-

-

577

-

Income before income taxes

12,522

832

13,260

10,081

Income taxes

4,442

203

5,023

3,448

Net income

8,080

629

8,237

6,633

Less: net loss attributable to noncontrolling interests

187

62

549

183

Net income attributable to RCI Hospitality Holdings, Inc.

$

8,267

$

691

$

8,786

$

6,816

Basic earnings per share attributable to RCIHH's shareholders:

Net income

$

0.81

$

0.07

$

0.86

$

0.70

Diluted earnings per share attributable to RCIHH's shareholders:

Net income

$

0.78

$

0.07

$

0.85

$

0.69

Weighted average number of common shares outstanding:

Basic

10,245

9,883

10,262

9,695

Diluted

10,707

9,968

10,724

9,922

RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

For the Three Months

For the Nine Months

Ended June 30,

Ended June 30,

(in thousands, except per share data)

2015

2014

2015

2014

Reconciliation of GAAP net income to Adjusted EBITDA

GAAP net income attributable to RCIHH

$8,267

$691

$8,786

$6,816

Income tax expense

4,442

203

5,023

3,448

Interest expense and income

1,630

2,060

4,993

5,884

Litigation and other one-time legal settlements

10

3,233

10,560

3,503

Gain on settlement of Patron tax case

(8,167)

-

(8,167)

-

Impairment of assets

-

-

1,358

-

Acquisition costs

105

22

283

111

Depreciation and amortization

1,923

1,532

5,454

4,438

Adjusted EBITDA

$8,210

$7,741

$28,290

$24,200

Reconciliation of GAAP net income to non-GAAP net income

GAAP net income attributable to RCIHH

$8,267

$691

$8,786

$6,816

Amortization of intangibles

312

82

892

254

Stock-based compensation

120

2

360

156

Litigation and other one-time settlements

10

3,233

10,560

3,503

Gain on settlement of Patron tax case

(8,167)

-

(8,167)

-

Pre-opening costs

-

306

328

743

Income tax expense

4,442

203

5,023

3,448

Impairment of assets

-

-

1,358

-

Acquisition costs

105

22

283

111

Non-GAAP provision for income taxes

(1,739)

(1,588)

(6,672)

(5,206)

Non-GAAP net income

$3,350

$2,951

$12,751

$9,825

Reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share

Fully diluted shares

10,707

9,968

10,724

9,922

GAAP net income attributable to RCIHH

$0.78

$0.07

$0.85

$0.69

Amortization of intangibles

0.03

0.01

0.08

0.03

Stock-based compensation

0.01

0.00

0.03

0.02

Litigation and other one-time settlements

0.00

0.32

0.99

0.35

Gain on settlement of Patron tax case

(0.76)

-

(0.76)

-

Pre-opening costs

-

0.03

0.03

0.07

Impairment of assets

-

-

0.13

-

Income tax expense

0.41

0.02

0.47

0.35

Acquisition costs

0.01

0.00

0.03

0.01

Non-GAAP provision for income taxes

(0.16)

(0.16)

(0.62)

(0.52)

Non-GAAP diluted net income per share

$0.32

$0.30

$1.22

$0.99

RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

For the Three Months

For the Nine Months

Ended June 30,

Ended June 30,

(in thousands, except per share data)

2015

2014

2015

2014

Reconciliation of GAAP operating income to non-GAAP operating income

GAAP operating income

$14,152

$2,892

$17,676

$15,965

Amortization of intangibles

312

82

892

254

Stock-based compensation

120

2

360

156

Litigation and other one-time settlements

10

3,233

10,560

3,503

Gain on settlement of Patron tax case

(8,167)

-

(8,167)

-

Impairment of assets

-

-

1,358

-

Pre-opening costs

-

306

328

743

Acquisition costs

105

22

283

111

Non-GAAP operating income

$6,532

$6,537

$23,290

$20,732

Reconciliation of GAAP operating margin to non-GAAP operating margin

GAAP operating income

39.6%

8.7%

16.1%

16.7%

Amortization of intangibles

0.9%

0.2%

0.8%

0.3%

Stock-based compensation

0.3%

0.0%

0.3%

0.2%

Litigation and other one-time settlements

0.0%

9.7%

9.6%

3.7%

Gain on settlement of Patron tax case

-22.8%

0.0%

-7.4%

0.0%

Impairment of assets

0.0%

0.0%

1.2%

0.0%

Pre-opening costs

0.0%

0.9%

0.3%

0.8%

Acquisition costs

0.3%

0.1%

0.3%

0.1%

Non-GAAP operating margin

18.3%

19.6%

21.2%

21.7%

RCI HOSPITALITY HOLDINGS, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

For the Three Months

For the Nine Months

Ended June 30,

Ended June 30,

(in thousands)

2015

2014

2015

2014

Business segment sales:

Nightclubs

$

30,568

$

31,486

$

93,564

$

91,037

Bombshells

4,789

1,585

14,510

3,668

Other

404

272

1,584

931

$

35,761

$

33,343

$

109,658

$

95,636

Business segment operating income:

Nightclubs

$

17,271

$

8,526

$

26,000

$

25,947

Bombshells

369

(170)

1,480

(268)

Other

(682)

(220)

(1,995)

(521)

General corporate

(2,806)

(5,244)

(7,809)

(9,193)

$

14,152

$

2,892

$

17,676

$

15,965

Reconciliation of Nightclubs GAAP operating income to non-GAAP operating income

Nightclubs operating income

$

17,271

$

8,526

$

26,000

$

25,947

Gain on settlement of Patron tax case

(8,167)

-

(8,167)

-

Litigation and other one-time settlements

10

3,233

10,560

3,503

Impairment of assets

-

-

1,358

-

Nightclubs non-GAAP operating income

$

9,114

$

11,759

$

29,751

$

29,450

Nightclubs non-GAAP operating margin

29.8%

37.3%

31.8%

32.3%

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