Rick's Cabaret International, Inc. F2Q10 (Qtr End 03/31/10) Earnings Call Transcript

Rick's Cabaret International, Inc. F2Q10 (Qtr End 03/31/10) Earnings Call Transcript
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Rick's Cabaret International, Inc. (RICK)

F2Q10 (Qtr End 03/31/10) Earnings Call Transcript

May 11, 2010 4:30 pm ET

Executives

Allan Priaulx – IR Officer & Corporate Communications

Eric Langan – Chairman, President & CEO

Phillip Marshall – CFO

Analysts

Eric Beder – Brean Murray, Carret

Peter Heise – RedChip Company

Richard Keim – Kensington Management

Steven Martin – Slater Asset Management

Phillip Bartlett – Deutsche Bank

Barry Burns [ph]

Presentation

Operator

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Greetings and welcome to Rick's Cabaret International Inc. second quarter conference call and webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. On the call are President and CEO Eric Langan, CFO Phil Marshall, Investor Relations Counsel Allan Priaulx.

It is now my pleasure to introduce your host Allan Priaulx. Thank you. Mr. Priaulx, you may begin.

Allan Priaulx

Thanks, Doug. Good afternoon, I'm Allan Priaulx, Investor Relations Counsel for Rick's Cabaret. And welcome to our second quarter 2010 conference call and webcast. In a moment I'll turn the call over to Eric Langan and Phil Marshall, and they will present our second quarter results and then answer any questions you might have.

Before we begin I'd like to call your attention to our Safe Harbor Statement, which is included on slide two of our PowerPoint presentation available on our website and at precisionir.com. Please take a good look at this statement as this conference call may contain forward-looking information, within the meaning of Section 21E of the Securities and Exchange Act of 1934.

I'd also like to remind you that Rick's Cabaret files reports and other documents with the Securities and Exchange Commission and all of them are available on our IR website which has a new address, www.ricksinvestor.com. This is a new discreet investor relations web address for our investors. It's different from the www.ricks.com address which formerly was in use.

Also I want to invite anyone in the New York City area to attend our due diligence event tonight at Rick's Cabaret in Manhattan. We start at 6 pm. You will have a chance to meet Eric Langan and to get a guided tour of the club and see how we conduct our business at the club level.

And now I turn the call over to Eric Langan. Eric?

Eric Langan

Thank you, Alan. And thanks everyone for calling in. I'll begin the presentation with a quick overview of 2010 reviewing our second quarter 2010 performance, the impact on our bottom line emphasis in this quarter, the impact of the debenture redemption that we did here in May and update you on the balance sheet a little bit as well and an outlook for the remainder of the year and conclude with a question and answer session as always.

To provide a quick snapshot of 2010 versus 2009, you see our total revenues were $22.5 million versus $18.4 million or a 21.9% increase over the last year and our net income was $2.94 million versus $839,000 last year, earnings per share of $0.30 on a fully diluted basis versus $0.09 last year. Same store sales for the quarter were up 14.9% over the second quarter of last year.

Our primary factors were improved customer spend. What we've really seen this quarter was a return to what I call top of the menu spending where guys would get a menu, a bottle menu or menu and they'd go down and look for medium priced or small priced bottles, order a bottle so they can continue to get for bottle service and VIP service. Back to the, just give me the top bottle here on the menu; find the most expensive thing on the menu which definitely helped in that quarter.

We also reduced our marketing expenses in this last year as we said we could at the end of the December quarter and we had a turnaround in Las Vegas by changing a few things out there and seeing that we've matured and learned that market a little bit. I'd like to let everyone know that our cash flow does continue strong. On a going forward basis, we believe that will continue.

Aggressive marketing and other improvements continue to pay off with very strong sales. We cut back a lot of marketing and at the end of December, we let that marketing not run all the way through the end of March and yet we will continue to see our revenues increase month after month in those markets, especially in the Dallas-Ft. Worth market and we also had of course the big boost from the Super Bowl and the NBA All Star Game.

We moved our focus to the bottom line instead of top line revenue. In the October to December quarter as we told you we were really focused on top line growth. We wanted to keep our clubs busy regardless of whether we were able to much a bunch of money of the customers coming in, we wanted to our clubs as one of the busiest clubs because we've seen at September, a slow turnaround was coming in the economy and it seemed like the customer was starting to – consumer spending was starting up in our locations again and so as that happened we wanted to keep the customers in our clubs so that as we were able to go in and build the top quality girls and as the quality retainers we're trying to settle in and find a home future where they were going to work that they would be attracted to our location because we were busy. As we moved into the January quarter, we changed that focus to more of a bottom line emphasis. We wanted to have customers in our building and we wanted to be busy, but we wanted to make money of both the customers as well.

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