RCI Hospitality Holdings Inc (RICK) Reports Mixed Fiscal 2023 Results Amid Economic Uncertainty

• RCI Hospitality Holdings Inc (NASDAQ:RICK) sees a 5.4% year-over-year increase in 4Q23 revenues, reaching $75.3 million.

• Net income for RCIHH common stockholders drops to $2.2 million in 4Q23 from $10.6 million in 4Q22.

• Non-GAAP EPS declines to $1.11 in 4Q23 from $1.49 in 4Q22, reflecting economic challenges and impairment charges.

• RCI repurchases shares and maintains a strong capital allocation strategy, with a focus on long-term results.

On December 14, 2023, RCI Hospitality Holdings Inc (NASDAQ:RICK) released its 8-K filing, disclosing its financial results for the fourth quarter and full fiscal year ended September 30, 2023. The company reported a year-over-year increase in total revenues for both the quarter and the fiscal year, yet faced challenges including a soft business environment and non-cash impairment charges that impacted earnings per share (EPS).

Fiscal 2023 Fourth Quarter and Full Year Performance

For the fourth quarter of fiscal 2023, RCI Hospitality Holdings Inc (NASDAQ:RICK) reported total revenues of $75.3 million, a 5.4% increase compared to $71.4 million in the same quarter of the previous year. Despite this growth, net income attributable to RCIHH common stockholders significantly decreased to $2.2 million, or $0.23 per share, from $10.6 million, or $1.15 per share, in 4Q22. The company highlighted non-cash impairment charges of $9.3 million in 4Q23 as a key factor in the reduced net income.

For the full fiscal year, RCI reported total revenues of $293.8 million, up 9.8% from $267.6 million in FY22. However, net income for the year was $29.2 million, or $3.13 per share, down from $46.0 million, or $4.91 per share, in the prior year. Non-GAAP EPS for FY23 was $4.90, compared to $5.38 in FY22, reflecting the economic headwinds and margin pressures the company faced.

Segment Performance and Capital Allocation

The Nightclubs segment saw a revenue increase of $4.3 million in 4Q23, primarily due to the benefit of newly acquired and remodeled clubs. The Bombshells segment experienced a slight decline in revenues due to lower same-store sales, partially offset by new acquisitions. RCI's capital allocation strategy continued with share repurchases, with 37,954 common shares bought back for $2.1 million at an average of $54.59 per share in 1Q24.

"As we previously reported, business was soft during 4Q23 due to the current uncertain economy as well as tough comparisons to last years post-Covid bounce. However, our capital allocation strategy continues to produce strong, long-term results," said Eric Langan, President and CEO of RCI.

Financial Health and Future Outlook

RCI's balance sheet reflects a decrease in debt from $243.8 million at the end of the third quarter to $239.8 million at the close of the fiscal year, primarily due to scheduled paydowns. The company's adjusted EBITDA for FY23 was $85.0 million, a slight decrease from $86.7 million in FY22. Looking forward, RCI is optimistic about FY24, expecting year-over-year comparisons to become easier.

RCI Hospitality Holdings Inc (NASDAQ:RICK) continues to navigate through economic uncertainties with a focus on strategic acquisitions, share repurchases, and operational efficiency. While the company has faced challenges in the fiscal year 2023, its revenue growth and proactive capital management strategies position it to potentially capitalize on future opportunities.

Investors and analysts are invited to participate in the conference call and meet management to discuss the results and future plans in detail.

For a comprehensive understanding of RCI Hospitality Holdings Inc (NASDAQ:RICK)'s financial performance, readers are encouraged to review the full 8-K filing.

Explore the complete 8-K earnings release (here) from RCI Hospitality Holdings Inc for further details.

This article first appeared on GuruFocus.