RICK - RCI Hospitality (RICK) - Strong Preliminary 2Q22 Sales

Club and Bombshells Sales. RCI reported preliminary second quarter 2022 sales for the nightclubs and Bombshells restaurants of $63.0 million. Same store sales for the quarter rose 9.0% and are up 14.8% for the first six months. This number does not include non-core operations. We projected full 2Q22 revenue of $65.3 million. We expect RCI to report full 2Q22 results by May 10th.Record March. RCI achieved a record month in March, with sales of $24 million, a strong indicator of future normalized performance, in our view. The October acquisitions continue to improve, with the 11 clubs recovering to 95% of their March 2019 sales. Sales for northern clubs hit a twelve month high in March as COVID restrictions eased.Repurchasing Shares. Given the decline in the share price since hitting $80 in mid-February, RCI has been repurchasing shares, as we expected. More than 55,000 shares were purchased during the second quarter and so far in the third quarter for approximately $3.4 million, or an average of $62.02 per share. We believe management will continue to find repurchases attractive in the low $60 range.Other. The rebranded Louisiana club opened in late 2Q22. Another rebranded/reformatted club should open in 3Q22 as well as the first franchised Bombshells in San Antonio. During the quarter, RCI acquired property for the twelfth company-owned Bombshells location. All should contribute to growth going forward.Maintain Outperform. We are maintaining our Outperform rating and $100 12-month price target. RCI is the only publicly traded Gentlemen's club operator with a fast growing military themed sports bar and restaurant chain. We believe the unique combination, with significant inorganic and organic growth opportunities, presents investors with a favorable risk/reward opportunity. Read More >>