2Q Results Exceed Expectations; Catalysts in Place to Drive Accelerated Earnings Growth in FY24
2Q Summary. RCI reported another strong quarter, surpassing our projections. The company has proven its ability to generate significant FCF, driving accelerated growth. We see several catalysts on the near-term horizon (Rick's Cabaret Steakhouse & Casino, organic growth from Bombshells, and club acquisitions), which should drive a reacceleration in earnings growth in FY24. With the company's industry-leading growth metrics and margins (40%+ for nightclubs), RCI's valuation remains compelling on both an EV/EBITDA and P/E basis vs. its peers (see page 3 for valuation analysis)...RCI Hospitality Holdings is a holding company. Through its subsidiaries, the company is engaged in the hospitality and related businesses. The company's reportable segments include: Nightclubs, which owns and/or operates adult nightclubs serving primarily businessmen and personnel, and also owns and operates a Studio 80 dance club; and Bombshells, which owns and operates restaurants and sports bars under the brand name Bombshells Restaurant & Bar. The company's subsidiaries own a media division, including the trade magazine serving the adult nightclubs industry and the adult retail products industry. The company also owns an industry trade show, an industry trade publication and various industry and social media websites.
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