RCI Hospitality Purchases 821,000 Shares from ADW Capital Partners for $30 Million
Acquisition Details: RCI Hospitality Holdings acquired 821,000 shares from ADW Capital Partners for $30M, consisting of $8M in cash and $22M in seller financing at 12%, reducing its share count by about 9.5%.
Capital Allocation Plan: The transaction supports RCI's 5-Year Capital Allocation Plan, aiming to reduce shares to 7.5 million by fiscal year 2030, and is expected to be accretive to free cash flow per share from day one.
Management's Perspective: CEO Eric Langan stated that despite the purchase price being above the current market value, the shares are undervalued, making this acquisition a strategic opportunity.
Board Approval: The transaction received approval from RCI's board after a fairness opinion confirmed that the purchase price was fair for shareholders.
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RCI Hospitality (RICK) Reports $70.3M Q1 Sales with Strong Nightclub Performance
- Total Sales Growth: RCI Hospitality reported total sales of $70.3 million for Q1 of fiscal 2026, with nightclubs generating $61.9 million, indicating stable performance in the market.
- New Club Contributions: Five newly opened nightclubs contributed $4.9 million in sales, while same-store sales from 52 clubs produced $57.0 million, showcasing the success of new business expansions.
- Bombshells Restaurant Performance: Bombshells reported quarterly sales of $8.4 million, with two new locations generating $1.8 million and nine same-store locations achieving $6.6 million, despite a $1.2 million sales reduction from four underperforming locations closed last year.
- Market Challenges and Opportunities: Although sales were impacted in October and November due to customer uncertainty from the U.S. government shutdown, RCI still achieved year-over-year growth in higher-margin club service revenues in Q1, demonstrating resilience in adversity.
RCI Hospitality Announces Preliminary Q4 Results
Q4 Revenue and Expansion: RCI Hospitality reported Q4 revenue of $70.9 million, successfully opened Bombshells in Lubbock, TX, and expanded operations at Rick's Cabaret & Steakhouse in Central City, CO.
Share Repurchase and Sales: The company repurchased 72,739 common shares for $2.7 million and sold a small club in Harlingen, TX for $600,000 cash, with a lease starting January 1, 2026.
New Partnerships and Acquisitions: RCI entered a partnership with Jonathan Joseph, selling 49% of Rick's Cabaret Austin for $1.8 million, and acquired 821,000 shares from ADW Capital Partners.
Management Changes and Stock Performance: RCI appointed Reese as interim President and CEO and Molina as interim CFO, while shares fell following Q4 and FY25 club and restaurant sales results.
