HOUSTON, TX – Rick’s Cabaret International, Inc. (NASDAQ:RICK), the nation’s only publicly traded group of gentlemen’s clubs, reported revenues of $25.4 million for the quarter ended March 31, 2012; a 17.8 percent increase over the same period last year. Operating income was $4.5 million, compared with $5.6 million in the same period last year, a decrease primarily due to one-time legal expenses of $1.8 million.
Fully diluted earnings per share for the quarter were 22 cents, compared with 29 cents in the same quarter a year ago. The one-time legal expense reduced per share earnings by 12 cents.
“Our new clubs are adding revenues as expected. We are continuing to tighten cost controls and will maintain that pressure throughout our operations,” said Eric Langan, president and CEO of Rick’s Cabaret International. Langan will discuss the results at 4:30 pm ET today during a conference call for investors. The participant dial-in number is 877-407-8033 (domestic) or 201-689-8033 (international).
The increase in total revenues was primarily attributable to clubs acquired during the last year and an increase in same-store sales. Revenues improved as a result of pricing plans and marketing programs implemented at the club level.
Total operating expenses during the quarter increased to $20.9 million from $16 million, primarily due to increases in cost of goods sold and payroll costs for the increased employee headcount at new clubs acquired in the past year. Payroll for same-location-same-period of club operations was $3.8 million compared to $3.6 million for the same period a year ago. Without the legal settlement, the operating margin would have been 24.7 percent, compared with 25.9 percent last year. Margins were also impacted by an increase in higher-end “bottle sales” revenues that carry a lower gross margin compared with single drink sales.
Adjusted EBITDA* for the three months ended March 31, 2012, without the lawsuit settlement would have been $7.5 million versus $6.9 million last year,
*Adjusted EBITDA is a financial statement measure not derived in accordance with GAAP. We use adjusted EBITDA (earnings before interest expense, income taxes, depreciation, amortization and impairment charges) as a non-GAAP performance measure. In calculating adjusted EBITDA, we exclude our largest recurring non-cash charge, depreciation, and amortization, and impairment charges. 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. Also, we exclude interest cost in our calculation of adjusted EBITDA. 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.
All models were at least 18 years old at the time of their performance. 18 U.S.C. 2257 Record-Keeping Requirements Compliance Statement.
