HOUSTON--(BUSINESS WIRE)-- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today filed its Form 10-Q and reported results for the fiscal 2026 second quarter ended March 31, 2026.

Summary (Comparisons are to year-ago periods unless indicated otherwise)

Travis Reese, Interim President and CEO, said: "We're pleased to report improved performance in many key metrics. While net income attributable to RCIHH common stockholders and EPS declined due to non-cash impairments, non-GAAP EPS, net cash provided by operating activities, free cash flow, and adjusted EBITDA all increased."

"This performance was despite freezing weather in late January-early February that caused a number of clubs to close for one to two days each, mostly on weekends."

"As previously reported, Nightclubs total sales increased and same-store sales were nearly level. Bombshells total sales also increased. While same-store sales declined, the initial implementation of our ‘pre-game and party all in one’ strategy to increase the mix of higher-margin alcoholic beverage sales resulted in a 3.6% same-store sales increase at Bombshells 59 in Houston, making it the best‑performing same-store location."

"In line with our 5-Year Capital Allocation Plan, we have continued to buy back shares. As of May 22, 2026, we had approximately 7,644,500 shares outstanding."

Note: There will be no conference call as RCI just held one on May 7, 2026, when it reported its delayed 1Q26 results.

2Q26 Results (Comparisons are to year-ago periods unless indicated otherwise)

Nightclubs segment: Revenues of $60.3 million increased by 4.8%. Five newly acquired, opened and reformatted clubs generated $4.8 million in sales, the 51 clubs in same-store sales produced $54.5 million, and one club was closed during the quarter.2 By revenue type, service increased 11.3%; food, merchandise and other increased 3.8%; and alcoholic beverages declined 0.9%.

Impairments and other charges, net of $7.6 million compared to $2.0 million. Operating income was $10.8 million compared to $14.5 million or 17.8% of segment revenues compared to 25.3%. Non-GAAP operating income, which excludes impairment and other net charges, was $19.0 million compared to $17.1 million or 31.5% of segment revenues compared to 29.7%.

Bombshells segment: Revenues of $8.4 million increased 1.6%. Sales reflected $1.6 million from two newly opened locations and $6.8 million from the nine same-store locations.2 By revenue type, alcoholic beverages increased 4.0% and food was level with 2Q25.

Other charges, net of $67,000 compared to $159,000. Operating loss was $267,000 compared to $245,000 or -3.2% of segment revenues compared to -3.0%. Non-GAAP operating loss, which excludes other net charges, was $200,000 compared to $85,000 or -2.4% of segment revenues compared to -1.0%.

Corporate segment: Expenses totaled $6.6 million compared to $5.9 million or 9.6% of total revenues compared to 9.0%. Most of the year over year change reflected increased insurance costs. Non-GAAP expenses totaled $6.4 million compared to $5.8 million or 9.3% of total revenues compared to 8.8%.

Impairments and other charges, net within consolidated operations totaled $7.6 million compared to $2.1 million.

Income tax was a benefit of $0.4 million compared to an expense of $1.1 million.

Weighted average shares outstanding of 7.74 million declined 12.6% due to share buybacks.

Debt of $248.7 million at March 31, 2026 declined 3.0% from $256.4 million at December 31, 2025, primarily reflecting debt paydowns. Compared to a year ago, debt increased 3.0%.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because they describe the operating performance of the Company and help management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:

Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.

Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income or loss attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) premium on stock repurchase, (h) gains or losses on lease termination, and (i) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at approximately 22.3% and 18.1% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2026, and 2025, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.

Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income or loss attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) income tax expense, (c) net interest expense, (d) impairment of assets, (e) settlement of lawsuits, net of recoveries, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, (i) premium on stock repurchase, and (j) gains or losses on lease termination. We believe that adjusting for such items helps management and investors better understand our operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.

We also use certain non-GAAP cash flow measures such as free cash flow. Free cash flow is derived from net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.

Accounting Standards Update (ASU) 2023-07

The Company has adopted Accounting Standards Update (ASU) 2023-07, which requires enhanced reportable segment disclosures. As a result, certain prior-year segment information has been recast.

About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)

With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars-restaurants. See all our brands at www.rcihospitality.com.

Forward-Looking Statements

This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the Company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the Company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) our ability to regain and maintain compliance with the filing requirements of the U.S. Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2025, as well as its other filings with the SEC. The Company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.