RCI Hospitality expands with South Carolina club purchase

HOUSTON - RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has completed the acquisition of Platinum West Gentlemen's Club in West Columbia, South Carolina, expanding its portfolio of upscale adult entertainment venues. The transaction, valued at $8 million, aligns with RCI's strategic valuation targets and marks a continuation of its recent 'Back to Basics' Capital Allocation Plan. According to InvestingPro data, RCI maintains impressive gross profit margins of 84.68%, suggesting strong operational efficiency in its existing venues. Analysis from InvestingPro indicates the stock is currently trading below its Fair Value, potentially making this expansion timely for the company's growth strategy.

The acquisition comprises $3.75 million in cash and $2.5 million in seller financing at a 7% interest rate for the club, alongside an additional $1.75 million cash for the associated real estate. With a market capitalization of $336.5 million and last twelve months EBITDA of $68.92 million, this acquisition represents a strategic expansion for RCI. Platinum West is recognized as the only high-end adult nightclub in the central region of the state.

Eric Langan, President and CEO of RCI, stated that the new addition is expected to synergize with the company's existing establishments, leveraging RCI's expertise in marketing, purchasing, and operational systems. With a seasoned management team in place, Platinum West is anticipated to integrate smoothly into RCI's portfolio, which includes six other clubs across Southeast states.

Located strategically near key landmarks, the 10,000 square-foot club at 1995 Old Dunbar Road is in proximity to the Columbia Metropolitan Airport, downtown Columbia, and Fort Jackson, a significant U.S. Army training base. Platinum West operates throughout the week, offering extended hours over the weekend.

RCI Hospitality Holdings, Inc., with over 60 locations, leads the adult nightclub and sports bar-restaurant industry in the United States. The company's expansion reflects its ongoing efforts to grow its footprint in the adult entertainment sector.

This acquisition is part of the company's publicly disclosed information and is based on a press release statement. As with all business ventures, there are inherent risks and uncertainties that could impact future results, including the operational challenges of managing adult entertainment venues, local business climates, and real estate conditions, as outlined by RCI's filings with the U.S. Securities and Exchange Commission.

Investors and interested parties are encouraged to review RCI's annual report and other SEC filings for a more comprehensive understanding of these factors.

In other recent news, RCI Hospitality Holdings reported mixed results for its fiscal first-quarter sales, with nightclub sales rising by 1.2% to $61.3 million, while sales at its Bombshells restaurant chain fell by 24.7% to $9.6 million. The company also announced the acquisition of Detroit's Flight Club for $11 million, which is expected to add approximately $2 million to its annualized adjusted EBITDA. Additionally, RCI declared a quarterly dividend of $0.07 per share, marking its 37th consecutive quarter of dividend payouts. H.C. Wainwright maintained a Buy rating on RCI Hospitality, with a price target of $98, expressing optimism about the potential revenue impact of three new restaurant properties set to open in 2025.

Furthermore, RCI Hospitality switched its independent registered public accounting firm to CBIZ CPAs P.C., following the acquisition of Marcum LLP's attest business. The change comes after Marcum identified material weaknesses in RCI's internal control over financial reporting for fiscal years 2023 and 2024. The company has over 60 locations and continues to focus on strategic growth through mergers and acquisitions. RCI's strategic initiatives aim to meet its 2029 financial goals, which include $400 million in revenue and $75 million in free cash flow. These developments reflect RCI's ongoing efforts to enhance its operational performance and return value to shareholders.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.