Monday, October 31, 2022
With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs 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, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. 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.
Keeps Getting Clubs. RCI Hospitality announced last week the acquisition of Heartbreakers Adult Nightclub for $9 million. The 5-stage, 23,000 square foot Heartbreakers club is located at 3200 Gulf Freeway, Dickinson, TX, and the Company acquired the club using $4.0 million in cash and $5.0 million in a 15-year, 6% real estate seller financing note. The Company did not release any financials for the club but we would expect the price to be within RCI’s 3-5x adjusted EBITDA for the club.
Area Around the Club. Dickinson, Texas had a population of 20,870 in 2020 according to Data USA with a median household income of $70,468. The median household income is a positive for RICK in our view as it is higher than the median income in the United States ($67,521), which we believe provides the Company with higher spending customers as the population has higher disposable income. The location of the club is also a positive due to it being near a freeway, which provides visibility to potential customers. Established in 1986, Heartbreakers is the number one adult entertainment venue in the Galveston, Texas, area.
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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.