HOUSTON--(BUSINESS WIRE)-- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today filed its Form 10-Q and reported results for the fiscal 2026 third quarter ended June 30, 2026.

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

Travis Reese, Interim President and CEO, said: "We're pleased to report another quarter of improved performance in many key metrics. Sales, EPS, non-GAAP EPS, net income attributable to RCIHH common stockholders, and adjusted EBITDA all increased, while we used our strong cash position to continue to buy back shares and reduce debt."

“Bombshells' performance was driven by new locations and same-store sales growth of 4.7%, while increased activity related to high-profile professional basketball and soccer events benefited Nightclubs as well as Bombshells. These factors helped offset cautious discretionary spending earlier in 3Q26 due to geopolitical uncertainty and its impact on inflation. Results also reflected lower impairment and insurance costs.”

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3Q26 Results (Comparisons are to year-ago periods unless indicated otherwise)

Nightclubs segment: Revenues of $63.0 million increased by 1.0%. Four newly acquired, opened and reformatted clubs generated $4.0 million sales and the 52 clubs in same-store sales produced $58.5 million, more than offsetting $1.2 million in sales from four clubs closed subsequent to the year-ago quarter.2 By revenue type, service increased 7.6%; food, merchandise and other declined 1.4%; and alcoholic beverages declined 4.2%.

Impairments and other charges, net were immaterial compared to $2.3 million. Operating income was $19.6 million compared to $17.9 million or 31.2% of segment revenues compared to 28.6%. Non-GAAP operating income, which excludes impairments and other net charges, was $20.2 million compared to $20.8 million or 32.1% of segment revenues compared to 33.3%.

Bombshells segment: Revenues of $10.8 million increased 25.4%. Three new locations generated $2.6 million in sales and the nine locations in same-store sales produced $8.2 million. The new locations are Denver, CO (opened January 2025), Lubbock, TX (July 2025), and Rowlett, TX (June 2026).2 By revenue type, alcoholic beverages increased 33.6% and food and other increased 16.6%.

Operating income was $759,000 compared to $67,000 or 7.0% of segment revenues compared to 0.8%. Non-GAAP operating income, which excludes other net charges, was $801,000 compared to $80,000 or 7.4% of segment revenues compared to 0.9%.

Corporate segment: Expenses totaled $7.3 million compared to $9.1 million or 9.9% of total revenues compared to 12.9%. Non-GAAP expenses totaled $7.3 million compared to $8.7 million or 9.9% of total revenues compared to 12.3%. GAAP and non-GAAP expenses reflected lower insurance expense compared to the prior-year period.

Impairments and other charges, net within consolidated operations were insignificant compared to $2.3 million.

Income tax was an expense of $2.1 million compared to $0.7 million or an effective rate of 24.7% compared to 15.3%.

Weighted average shares outstanding of 7.65 million declined 13.0% due to share buybacks.

Debt of $240.1 million at June 30, 2026 declined $8.6 million or 3.5% from $248.7 million at March 31, 2026, primarily reflecting debt paydowns. Compared to a year ago, debt declined $1.2 million or 0.5%.

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 23.2% and 17.4% effective tax rate of the pre-tax non-GAAP income before taxes for the nine months ended June 30, 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, sports bar 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 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, sports bar 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.