RCI Hospitality Holdings Q3 2025 Earnings Call Transcript

RCI Hospitality Holdings Inc. has reported its Q3 2025 earnings, with President and CEO Eric Lang and CFO Bradley Shea discussing the company's financial performance. The call was exclusively held on Xpas, where participants could ask questions using a mobile device.

RCI Hospitality Holdings Inc. (RICK) reported its third-quarter 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company's stock, however, rose 3.45% in aftermarket trading, closing at $35.75. According to InvestingPro data, the stock is currently trading near its 52-week low of $34.58, having declined over 31% in the past six months.

Key Takeaways:

- Revenue and Profitability: RCI Hospitality's total revenues for Q3 2025 were $71.1 million, down from $76.2 million in Q3 2024, reflecting a $5 million decrease. The company reported a net income of $4.1 million, compared to a loss of $5.2 million in the same period last year, indicating a $9.3 million improvement [1].
- Nightclub Segment: Nightclub revenues were nearly level at $62.3 million, with a 3.7% decline in same-store sales, partially offset by new acquisitions. Operating income for nightclubs increased from $13.6 million to $17.8 million, with a margin improvement from 21.7% to 28.5% [1].
- Bombshells Segment: Bombshells revenues were $8.6 million, down from $13.1 million in Q3 2024, impacted by the sale of underperforming locations and a 13.5% decline in same-store sales. The operating loss was reduced from $8.9 million in Q2 to $87,000 in Q3 [1].
- Capital Allocation: RCI acquired two upscale nightclubs and repurchased 75,000 shares for $3 million, supporting 10-15% annual free cash flow per share growth targets [1].

Market Reaction:

Despite the earnings miss, RCI Hospitality's stock rose by 3.45% in aftermarket trading. The stock closed at $35.75, up from the last close value of $35.04. This movement suggests that investors may be optimistic about the company's strategic initiatives and future growth prospects.

Outlook and Guidance:

The company has set ambitious targets, including achieving $400 million in revenue and $75 million in free cash flow. It also aims to reduce its outstanding shares to 7.5 million and double its free cash flow per share to $10. Future guidance projects an EPS of $4.79 for FY2025 and $6.37 for FY2026.

Risks and Challenges:

Economic uncertainties affecting nightclub revenues, a decline in alcoholic beverage sales, slower money movement in the market impacting cash flow, potential challenges in optimizing new acquisitions, and macroeconomic pressures that could affect consumer spending are among the risks and challenges RCI Hospitality faces.

Executive Commentary:

CEO Eric Langan emphasized the company's strategic focus, stating, "We are not interested in sale leasebacks." CFO Bradley Shea added, "As new locations generate revenue and EBITDA, occupancy costs and debt metrics should improve." These comments highlight the company's commitment to sustainable growth and financial stability.

References:

[1] https://www.ainvest.com/news/rci-hospitality-q3-2025-earnings-call-unraveling-contradictions-acquisitions-cash-flow-real-estate-strategy-2508/
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-rci-hospitality-q3-2025-misses-forecasts-stock-rises-93CH-4183943