RCI Hospitality 2025 Q3 Earnings Strong Turnaround as Net Income Surges 177.8%

RCI Hospitality (RICK) reported its fiscal 2025 Q3 earnings on August 11, 2025. The company significantly outperformed expectations by returning to profitability, with a strong net income turnaround. Management provided long-term guidance, and the results suggest disciplined capital allocation and strategic focus on core nightclub operations.

Revenue for RCI Hospitality declined 6.6% year-over-year to $71.14 million in the third quarter. Alcoholic beverage sales amounted to $30.78 million, while food and merchandise revenue totaled $10.04 million. Service revenues came in at $25.17 million, and other revenue contributed an additional $5.16 million. The company maintained stable nightclub revenues amid economic headwinds, with margins and profitability benefiting from asset divestitures and reduced impairment charges.

RCI Hospitality returned to profitability with EPS of $0.46 in the third quarter, compared to a loss of $0.56 per share in the same period last year. The company achieved a 177.8% positive swing in net income, rising to $4.06 million from a $5.22 million net loss. The EPS result represents a notable improvement in the company’s financial performance.

The stock price of RCI Hospitality rose 4.26% during the latest trading day and 2.23% during the most recent full trading week. However, the stock has declined 11.28% month-to-date.

Post-earnings performance has historically been mixed for RCI Hospitality. A strategy of buying shares after a quarterly revenue increase and holding for 30 days has generated no return over the past three years, with a CAGR of 0.00% and an excess return of -58.53%, significantly underperforming the benchmark return of 58.53%. This approach has shown no volatility and minimal drawdowns but has failed to capitalize on broader market gains.

CEO Eric Langan highlighted stable nightclub operations and improved margins from asset divestitures and reduced impairment charges. He emphasized progress on the capital allocation plan, including the acquisition of two upscale nightclubs and the repurchase of 75,000 shares. Langan expressed optimism about new locations like Lubbock, Texas, which have performed well post-opening. Strategic priorities include focusing on core nightclub operations, rebranding underperforming units, and pursuing acquisitions at 3–5x EBITDA multiples.

Langan outlined long-term goals: doubling free cash flow per share to $10 by fiscal 2029, achieving $400 million in revenue and $75 million in free cash flow, and reducing shares outstanding to 7.5 million. He emphasized a disciplined, growth-oriented strategy with cautious optimism.

RCI Hospitality expects to grow free cash flow per share at a 10–15% annual rate and has a capital allocation plan targeting 40% of free cash for club acquisitions and 60% for buybacks, debt reduction, and dividends. Qualitative goals include returning Bombshells to same-store sales growth and achieving 15% operating margins. Langan also noted plans to sell underperforming clubs and reinvest proceeds into higher-growth markets or share repurchases.

In non-earnings related news, the *Online Edition of Shanghai Daily* announced subscription options for digital access, including downloadable PDFs and real-time news updates. Subscribers gain unlimited access to current and archived content, with packages ranging from one month to 12 months of digital or combined print/digital editions. The online version does not include print delivery, and subscriptions are non-refundable.