Monday, July 25, 2022
RCI Hospitality Holdings (RICK)
Another Club Acquisition
With more than 50 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in gentlemen’s clubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, and Scarlett’s Cabaret. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Acquisition. Last Friday, RCI announced closing on purchase agreements that will enable the Company to open a third adult nightclub in the Odessa, TX area. The new club will be RCI’s third in the area, complimenting the existing Rick’s Cabaret Odessa and Jaguar’s Club Odessa. To be called PT’s Showclub, the new location will offer adult entertainment and liquor service and is expected to appeal to a different demographic from the existing clubs.
Details. RCI paid $1.8 million in cash and seller financing for the club’s assets, including all necessary licenses, and for the 5,180 square foot building and one acre property. The property was the former home of a couple of other adult nightclubs. Although financial details were not provided outside of the acquisition cost, other properties in the area are listed in the $70-$80 per sq/ft range, according to LoopNet, suggesting a potential cost of the property in the $400,000 range, leaving $1.4 million for the business. At management’s normal 3-5x EBITDA acquisition target, this would suggest expected annual EBITDA contribution in the $400,000 range. The club should begin contributing to results by the end of September….
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.