RCI Hospitality Holdings Reports Q1 Fiscal 2025 Results with Revenue Decline and Increased Net Income

RCI Hospitality Holdings, Inc. reported its financial results for the first quarter of fiscal 2025, ending December 31, 2024, revealing total revenues of $71.5 million, a decrease of 3.3% from $73.9 million in the same period last year. The decline was primarily attributed to the impact of closed locations, which accounted for a $4.4 million reduction in revenue. However, the company noted a $487,000 increase in sales from new locations and a $1.5 million boost from consolidated same-store sales, which rose by 2.3%. The net income attributable to common stockholders increased by 24.9% to $9.0 million, or $1.01 per share, compared to $7.2 million, or $0.77 per share, in the prior year.

In terms of operational performance, RCI's Nightclubs segment generated $61.7 million in revenue, reflecting a 1.1% increase from $61.0 million in the previous year. This growth was driven by a $436,000 contribution from newly acquired clubs and a $2.1 million increase in same-store sales, despite a $1.8 million loss from closed clubs. Conversely, the Bombshells segment experienced a significant revenue decline of 24.7%, down to $9.6 million, largely due to a 7.5% decrease in same-store sales and the impact of closed or sold locations.

The company also reported a decrease in total operating expenses as a percentage of revenues, which fell to 80.5% from 82.2% year-over-year. This reduction was attributed to a $3.2 million decrease in operating expenses, with notable declines in the cost of goods sold and salaries and wages. The operating income for the quarter was $13.9 million, up from $13.2 million in the same quarter last year, resulting in an operating margin improvement to 19.5% from 17.8%.

Strategically, RCI Hospitality has been active in expanding its footprint, having recently acquired a club in Detroit for $11 million, which includes both cash and seller-financed notes. The company continues to explore opportunities for growth through acquisitions and new openings, particularly in markets with high growth potential. As of December 31, 2024, RCI operated a total of 64 establishments, with plans to open a new Bombshells location in Denver, Colorado, in January 2025. The company remains focused on maintaining its operational efficiency and enhancing shareholder value through disciplined capital allocation strategies.

Looking ahead, RCI Hospitality Holdings anticipates generating adequate cash flows from operations over the next 12 months, despite potential challenges posed by macroeconomic factors such as inflation. The company is committed to addressing previously identified material weaknesses in its internal controls and is actively working on remediation efforts to enhance its financial reporting processes.