Rick’s Cabaret International, Inc. (RICK) F3Q12 Earnings Call August 9, 2012 4:30 PM ET Executives Allan Priaulx – IR Officer Eric Langan – Chairman, CEO and President Analysts Eric Beder – Brean, Murray David Mau – Montgomery Street Research David Kasorowski Heshy Dubrowski Presentation Operator
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In addition, I would like you to note adjusted EBITDA. It’s a term you will hear during this call, and for your convenience, we’ve included the definition of adjusted EBITDA in our PowerPoint presentation. Finally I’d like to remind you that Rick’s Cabaret files reports and other documents with the SEC and all of them are available on our IR website, again that’s www.ricksinvestor.com. A transcript of this call will be available later this week at ricksinvestor.com.For those of you in the New York area, please come to our popular Due Diligence Ball at Rick’s Cabaret today at 50 West 33rd Street from 6:00 P.M. till 8:00 P.M. We hope, you’ll come to the club, meet Eric and myself, perform your own due diligence on Rick’s Cabaret. You’ll have a great time. And now I’ll turn the call over to Eric Langan and Phil Marshall. Eric Langan Thank you, Allan. We’ll begin the conference call with an overview redoing a summary of our third quarter talking about the chief drivers for the quarter, discussing the new acquisition announcements and joint venture that we’re entering into, talk about the outlook for the remainder of 2012 and then end the call with a question-and-answer session to answer any questions that you may have. Quick snapshot of the third quarter. Total revenue rose 15% to $23.9 million versus $20.8 million in the third quarter last year. Same-store sales rose 5% to a total of $21.3 million for the quarter. Third quarter 2012 income from continuing operations without our legal settlement and loss from the sale of assets would have been $2.2 million versus the $2.5 million in the third quarter and we’ll discuss later in the call what those one-time charges were. Adjusted EBITDA for the quarter $5.7 million without the legal settlement and the loss on the sale of assets versus $6 million last year.
Third quarter ‘12 expenses include one-time costs of a $200,000 settlement of a lawsuit and the sale of assets of $32,000 and we also had some very high legal expenses that for the quarter that we’ll discuss later on as well. Exclusive of the legal settlement and the asset sale, operating margins were 19.1% versus 21.1% in the previous quarter. The majority of that decrease is from the increased legal fees and then other minor costs.Nine months snapshot, revenue rose 15% for the first nine months in line with this quarter to $71.4 million versus $62 million in 2011. Cash flow from operations for the first nine months were $14.1 million versus $13.8 million. So, while our earnings have not been as consistent, our cash flows definitely have, while they have to do with the GAAP accounting. EPS for the first nine months $0.63 versus $0.59 year-over-year. We have strong growth at our biggest club in Miami, Tootsie’s had actually a fantastic order, we hope to see that strength carry on through the remainder of the year. The Rick’s Cabaret at the DFW Airport is continuing to build, we got the liquor license there in February as most of you know and we’re seeing consistent build every single month since February. Club lines in Phili and Charlotte are both resuming growth and Onyx concept in those markets is starting to do very well again. Our debt update, to give you a current update, we have $43.5 million in debt, of which $27.5 million is real estate related. We reduced debt by $3.6 million in the quarter ended June 30, 2012. The Jaguars transaction will add $32 million in total debt, $10 million of which will be for real estate and we believe it will be more than covered by the added cash flow which we base the payments on about 60% of the EBITDA number versus the $7 million I am going to take in. Read the rest of this transcript for free on seekingalpha.com