RCI Files 10-Q and Reports Results for 2Q26

Key Terms

form 10-q regulatory

A Form 10-Q is a detailed report that publicly traded companies are required to file with regulators three times a year, providing an update on their financial health and business activities. It is important for investors because it offers timely insights into a company's performance, helping them make informed decisions about buying or selling stocks. Think of it as a regular check-up report that shows how well a company is doing.

non-gaap financial

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

adjusted ebitda financial

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

free cash flow financial

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

stock-based compensation financial

Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.

adjusted ebitda financial

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

free cash flow financial

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

accounting standards update (asu) 2023-07 regulatory

Accounting Standards Update (ASU) 2023-07 is a formal change issued by the U.S. accounting standard setter that requires companies to provide clearer, more detailed information about their operating segments and the revenue and performance measures used to evaluate them. For investors it matters because the rule makes it easier to see which parts of a business drive results—think of it as breaking a company’s financial “black box” into labeled compartments so you can better compare performance, spot risks, and make more informed investment decisions.

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HOUSTON--(BUSINESS WIRE)-- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today filed its Form 10-Q and reported results for the fiscal 2026 second quarter ended March 31, 2026.

Summary Financials (in millions, except EPS)	2Q26		2Q25		6M26		6M25
Total revenues	$68.7		$65.9		$139.6		$137.4
EPS	$(0.04)		$0.36		$(0.63)		$1.38
Non-GAAP EPS1	$0.78		$0.65		$1.52		$1.46
Impairments and other charges, net	$7.6		$2.1		$7.9		$(0.1)
Net cash provided by operating activities	$9.9		$8.5		$17.7		$21.9
Free cash flow1	$8.4		$6.9		$15.1		$19.0
Net income (loss) attributable to RCIHH common stockholders	$(0.3)		$3.2		$(5.1)		$12.3
Adjusted EBITDA1	$15.6		$14.2		$31.3		$29.9
Weighted average shares used in computing EPS – basic and diluted	7.74		8.86		8.02		8.89
1 See “Non-GAAP Financial Measures” below.

Summary (Comparisons are to year-ago periods unless indicated otherwise)

Travis Reese, Interim President and CEO, said: "We're pleased to report improved performance in many key metrics. While net income attributable to RCIHH common stockholders and EPS declined due to non-cash impairments, non-GAAP EPS, net cash provided by operating activities, free cash flow, and adjusted EBITDA all increased."

"This performance was despite freezing weather in late January-early February that caused a number of clubs to close for one to two days each, mostly on weekends."

"As previously reported, Nightclubs total sales increased and same-store sales were nearly level. Bombshells total sales also increased. While same-store sales declined, the initial implementation of our ‘pre-game and party all in one’ strategy to increase the mix of higher-margin alcoholic beverage sales resulted in a 3.6% same-store sales increase at Bombshells 59 in Houston, making it the best‑performing same-store location."

"In line with our 5-Year Capital Allocation Plan, we have continued to buy back shares. As of May 22, 2026, we had approximately 7,644,500 shares outstanding."

Note: There will be no conference call as RCI just held one on May 7, 2026, when it reported its delayed 1Q26 results.

2Q26 Results (Comparisons are to year-ago periods unless indicated otherwise)

Nightclubs segment: Revenues of $60.3 million increased by 4.8%. Five newly acquired, opened and reformatted clubs generated $4.8 million in sales, the 51 clubs in same-store sales produced $54.5 million, and one club was closed during the quarter.² By revenue type, service increased 11.3%; food, merchandise and other increased 3.8%; and alcoholic beverages declined 0.9%.

Impairments and other charges, net of $7.6 million compared to $2.0 million. Operating income was $10.8 million compared to $14.5 million or 17.8% of segment revenues compared to 25.3%. Non-GAAP operating income, which excludes impairment and other net charges, was $19.0 million compared to $17.1 million or 31.5% of segment revenues compared to 29.7%.

Bombshells segment: Revenues of $8.4 million increased 1.6%. Sales reflected $1.6 million from two newly opened locations and $6.8 million from the nine same-store locations.² By revenue type, alcoholic beverages increased 4.0% and food was level with 2Q25.

Other charges, net of $67,000 compared to $159,000. Operating loss was $267,000 compared to $245,000 or -3.2% of segment revenues compared to -3.0%. Non-GAAP operating loss, which excludes other net charges, was $200,000 compared to $85,000 or -2.4% of segment revenues compared to -1.0%.

Corporate segment: Expenses totaled $6.6 million compared to $5.9 million or 9.6% of total revenues compared to 9.0%. Most of the year over year change reflected increased insurance costs. Non-GAAP expenses totaled $6.4 million compared to $5.8 million or 9.3% of total revenues compared to 8.8%.

Impairments and other charges, net within consolidated operations totaled $7.6 million compared to $2.1 million.

Income tax was a benefit of $0.4 million compared to an expense of $1.1 million.

Weighted average shares outstanding of 7.74 million declined 12.6% due to share buybacks.

Debt of $248.7 million at March 31, 2026 declined 3.0% from $256.4 million at December 31, 2025, primarily reflecting debt paydowns. Compared to a year ago, debt increased 3.0%.

2 See our April 9, 2026 news release on 2Q26 sales for more details.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because they describe the operating performance of the Company and help management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:

Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.

Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income or loss attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) premium on stock repurchase, (h) gains or losses on lease termination, and (i) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at approximately 22.3% and 18.1% effective tax rate of the pre-tax non-GAAP income before taxes for the six months ended March 31, 2026, and 2025, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.

Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income or loss attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) income tax expense, (c) net interest expense, (d) impairment of assets, (e) settlement of lawsuits, net of recoveries, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, (i) premium on stock repurchase, and (j) gains or losses on lease termination. We believe that adjusting for such items helps management and investors better understand our operating activities. 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. 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.

We also use certain non-GAAP cash flow measures such as free cash flow. Free cash flow is derived from net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.

Accounting Standards Update (ASU) 2023-07

The Company has adopted Accounting Standards Update (ASU) 2023-07, which requires enhanced reportable segment disclosures. As a result, certain prior-year segment information has been recast.

About RCI Hospitality Holdings, Inc. (Nasdaq: RICK) (X: @RCIHHinc)

With more than 60 locations, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars-restaurants. See all our brands at www.rcihospitality.com.

Forward-Looking Statements

This press release may contain forward-looking statements that involve a number of risks and uncertainties that could cause the Company's actual results to differ materially from those indicated, including, but not limited to, the risks and uncertainties associated with (i) operating and managing an adult entertainment or restaurant business, (ii) the business climates in cities where it operates, (iii) the success or lack thereof in launching and building the Company's businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) our ability to regain and maintain compliance with the filing requirements of the U.S. Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, and (vii) numerous other factors such as laws governing the operation of adult entertainment or restaurant businesses, competition and dependence on key personnel. For more detailed discussion of such factors and certain risks and uncertainties, see RCI's annual report on Form 10-K for the year ended September 30, 2025, as well as its other filings with the SEC. The Company has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share, number of shares, and percentage data)
		Three Months Ended														Six Months Ended
		March 31, 2026							March 31, 2025							March 31, 2026							March 31, 2025
		Amount				% of Revenue			Amount				% of Revenue			Amount				% of Revenue			Amount				% of Revenue
Revenues
Sales of alcoholic beverages		$	28,817			41.9	%		$	28,866			43.8	%		$	58,956			42.2	%		$	61,054			44.4	%
Sales of food and merchandise			9,539			13.9	%			9,411			14.3	%			19,505			14.0	%			19,517			14.2	%
Service revenues			25,448			37.0	%			22,912			34.8	%			51,259			36.7	%			47,093			34.3	%
Other			4,918			7.2	%			4,687			7.1	%			9,830			7.0	%			9,695			7.1	%
Total revenues			68,722			100.0	%			65,876			100.0	%			139,550			100.0	%			137,359			100.0	%
Operating expenses
Cost of goods sold
Alcoholic beverages sold			5,231			18.2	%			5,204			18.0	%			10,742			18.2	%			11,050			18.1	%
Food and merchandise sold			3,558			37.3	%			3,182			33.8	%			7,187			36.8	%			6,745			34.6	%
Service and other			16			0.1	%			25			0.1	%			117			0.2	%			97			0.2	%
Total cost of goods sold (exclusive of items shown below)			8,805			12.8	%			8,411			12.8	%			18,046			12.9	%			17,892			13.0	%
Salaries and wages			21,242			30.9	%			20,491			31.1	%			42,685			30.6	%			41,055			29.9	%
Selling, general and administrative			23,197			33.8	%			22,900			34.8	%			47,901			34.3	%			49,107			35.8	%
Depreciation and amortization			4,017			5.8	%			3,776			5.7	%			8,204			5.9	%			7,345			5.3	%
Impairments and other charges (gains), net			7,649			11.1	%			2,127			3.2	%			7,866			5.6	%			(117	)		(0.1	)%
Total operating expenses			64,910			94.5	%			57,705			87.6	%			124,702			89.4	%			115,282			83.9	%
Income from operations			3,812			5.5	%			8,171			12.4	%			14,848			10.6	%			22,077			16.1	%
Other income (expenses)
Interest expense			(4,515	)		(6.6	)%			(4,048	)		(6.1	)%			(8,865	)		(6.4	)%			(8,200	)		(6.0	)%
Interest income			82			0.1	%			139			0.2	%			181			0.1	%			318			0.2	%
Non-operating gains (losses), net			4			0.0	%			—			0.0	%			(9,881	)		(7.1	)%			979			0.7	%
Income (loss) before income taxes			(617	)		(0.9	)%			4,262			6.5	%			(3,717	)		(2.7	)%			15,174			11.0	%
Income tax expense (benefit)			(398	)		(0.6	)%			1,068			1.6	%			1,151			0.8	%			2,915			2.1	%
Net income (loss)			(219	)		(0.3	)%			3,194			4.8	%			(4,868	)		(3.5	)%			12,259			8.9	%
Net loss (income) attributable to noncontrolling interests			(107	)		(0.2	)%			37			0.1	%			(192	)		(0.1	)%			(4	)		0.0	%
Net income (loss) attributable to RCIHH common shareholders		$	(326	)		(0.5	)%		$	3,231			4.9	%		$	(5,060	)		(3.6	)%		$	12,255			8.9	%
Earnings (loss) per share
Basic and diluted		$	(0.04	)					$	0.36						$	(0.63	)					$	1.38
Weighted average shares used in computing earnings (loss) per share
Basic and diluted			7,741,522							8,861,854							8,021,747							8,891,638

RCI HOSPITALITY HOLDINGS, INC.
SEGMENT INFORMATION
(in thousands)
		Three Months Ended								Six Months Ended
		March 31, 2026				March 31, 2025				March 31, 2026				March 31, 2025
Revenues
Nightclubs		$	60,275			$	57,541			$	122,584			$	119,265
Bombshells			8,359				8,229				16,740				17,816
Other			88				106				226				278
		$	68,722			$	65,876			$	139,550			$	137,359
Income (loss) from operations
Nightclubs		$	10,758			$	14,532			$	29,480			$	35,385
Bombshells			(267	)			(245	)			(406	)			1,700
Other			(112	)			(171	)			(262	)			(274	)
Corporate			(6,567	)			(5,945	)			(13,964	)			(14,734	)
		$	3,812			$	8,171			$	14,848			$	22,077

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
		Three Months Ended								Six Months Ended
		March 31, 2026				March 31, 2025				March 31, 2026				March 31, 2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)		$	(219	)		$	3,194			$	(4,868	)		$	12,259
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			4,017				3,776				8,204				7,345
Impairment of assets			7,270				1,780				8,433				1,780
Deferred income tax benefit			(2,223	)			(853	)			(2,223	)			(1,242	)
Stock-based compensation			197				118				589				588
Loss (gain) on sale of businesses and assets			154				215				184				(1,248	)
Amortization of debt discount and issuance costs			128				227				265				290
Noncash lease expense			745				668				1,479				1,326
Gain on insurance			(46	)			—				(187	)			(1,150	)
Credit loss reversal on notes receivable			(86	)			—				(11	)			—
Premium on stock repurchase			—				—				9,885				—
Changes in operating assets and liabilities, net of business acquisitions:
Receivables			1,099				(659	)			745				1,714
Inventories			87				68				112				64
Prepaid expenses, other current, and other assets			1,613				68				(1,209	)			(530	)
Accounts payable, accrued, and other liabilities			(2,855	)			(55	)			(3,701	)			695
Net cash provided by operating activities			9,881				8,547				17,697				21,891
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets			1,075				956				1,675				1,085
Proceeds from insurance			46				—				184				1,150
Proceeds from notes receivable			57				76				107				147
Payments for property and equipment and intangible assets			(1,868	)			(2,854	)			(4,199	)			(8,608	)
Acquisition of businesses, net of cash acquired			—				(6,000	)			—				(6,000	)
Net cash used in investing activities			(690	)			(7,822	)			(2,233	)			(12,226	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations			—				5,433				2,253				8,396
Payments on debt obligations			(7,833	)			(4,627	)			(12,785	)			(10,321	)
Payment of loan origination costs			—				(71	)			(40	)			(71	)
Purchase of treasury stock			(2,438	)			(2,896	)			(12,269	)			(6,114	)
Payment of dividends			(617	)			(619	)			(1,162	)			(1,242	)
Investment from noncontrolling partner			—				—				1,800				—
Payments to noncontrolling interests			(44	)			—				(80	)			—
Net cash used in financing activities			(10,932	)			(2,780	)			(22,283	)			(9,352	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(1,741	)			(2,055	)			(6,819	)			313
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			28,631				34,718				33,709				32,350
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	26,890			$	32,663			$	26,890			$	32,663

RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
		March 31, 2026			September 30, 2025				March 31, 2025
ASSETS
Current assets
Cash and cash equivalents		$	26,890		$	33,709			$	32,663
Receivables, net			2,627			3,940				4,174
Inventories			4,745			4,857				4,645
Prepaid expenses and other current assets			6,284			4,968				4,071
Assets held for sale			—			3,394				—
Total current assets			40,546			50,868				45,553
Property and equipment, net			278,069			279,027				283,442
Operating lease right-of-use assets			24,311			25,781				24,905
Notes receivable, net of current portion			4,326			3,849				4,031
Goodwill			62,242			62,725				62,524
Intangibles, net			162,271			171,948				167,383
Other assets			2,627			2,737				1,918
Total assets		$	574,392		$	596,935			$	589,756
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	6,258		$	5,836			$	5,652
Accrued liabilities			30,242			32,607				18,161
Current portion of debt obligations, net			33,396			21,198				19,737
Current portion of operating lease liabilities			3,379			3,314				3,073
Total current liabilities			73,275			62,955				46,623
Deferred tax liability, net			19,466			21,689				21,451
Debt, net of current portion and debt discount and issuance costs			215,325			214,583				221,725
Operating lease liabilities, net of current portion			25,628			27,320				26,677
Other long-term liabilities			8,167			9,509				4,741
Total liabilities			341,861			336,056				321,217
Commitments and contingencies
Equity
Preferred stock			—			—				—
Common stock			77			87				88
Additional paid-in capital			26,880			50,908				55,925
Retained earnings			203,094			210,106				212,772
Total RCIHH stockholders' equity			230,051			261,101				268,785
Noncontrolling interests			2,480			(222	)			(246	)
Total equity			232,531			260,879				268,539
Total liabilities and equity		$	574,392		$	596,935			$	589,756

RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP FINANCIAL MEASURES
(in thousands, except per share, number of shares, and percentage data)
		Three Months Ended March 31,								Six Months Ended March 31,
		2026				2025				2026				2025
Reconciliation of GAAP net income (loss) to Adjusted EBITDA
Net income (loss) attributable to RCIHH common stockholders		$	(326	)		$	3,231			$	(5,060	)		$	12,255
Income tax expense (benefit)			(398	)			1,068				1,151				2,915
Interest expense, net			4,433				3,909				8,684				7,882
Depreciation and amortization			4,017				3,776				8,204				7,345
Impairment of assets			7,270				1,780				8,433				1,780
Settlement of lawsuits, net of recoveries			207				127				(595	)			306
Stock-based compensation			197				118				589				588
Loss (gain) on sale of businesses and assets			218				220				251				(1,186	)
Gain on insurance			(46	)			—				(223	)			(1,017	)
Premium on stock repurchase			—				—				9,885				—
Gain on lease termination			—				—				—				(979	)
Adjusted EBITDA		$	15,572			$	14,229			$	31,319			$	29,889
Adjusted EBITDA as a percentage of revenues			22.7	%			21.6	%			22.4	%			21.8	%
Reconciliation of GAAP net income (loss) to non-GAAP net income
Net income (loss) attributable to RCIHH common stockholders		$	(326	)		$	3,231			$	(5,060	)		$	12,255
Amortization of intangibles			620				577				1,235				1,157
Impairment of assets			7,270				1,780				8,433				1,780
Settlement of lawsuits, net of recoveries			207				127				(595	)			306
Stock-based compensation			197				118				589				588
Loss (gain) on sale of businesses and assets			218				220				251				(1,186	)
Gain on insurance			(46	)			—				(223	)			(1,017	)
Premium on stock repurchase			—				—				9,885				—
Gain on lease termination			—				—				—				(979	)
Net income tax effect			(2,075	)			(263	)			(2,336	)			47
Non-GAAP net income		$	6,065			$	5,790			$	12,179			$	12,951
Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share
Diluted shares			7,741,522				8,861,854				8,021,747				8,891,638
GAAP diluted earnings (loss) per share		$	(0.04	)		$	0.36			$	(0.63	)		$	1.38
Amortization of intangibles			0.08				0.07				0.15				0.13
Impairment of assets			0.94				0.20				1.05				0.20
Settlement of lawsuits, net of recoveries			0.03				0.01				(0.07	)			0.03
Stock-based compensation			0.03				0.01				0.07				0.07
Loss (gain) on sale of businesses and assets			0.03				0.02				0.03				(0.13	)
Gain on insurance			(0.01	)			—				(0.03	)			(0.11	)
Premium on stock repurchase			—				—				1.23				—
Gain on lease termination			—				—				—				(0.11	)
Net income tax effect			(0.27	)			(0.03	)			(0.29	)			0.01
Non-GAAP diluted earnings per share		$	0.78			$	0.65			$	1.52			$	1.46

		Three Months Ended March 31,								Six Months Ended March 31,
		2026				2025				2026				2025
Reconciliation of GAAP operating income to non-GAAP operating income
Income from operations		$	3,812			$	8,171			$	14,848			$	22,077
Amortization of intangibles			620				577				1,235				1,157
Impairment of assets			7,270				1,780				8,433				1,780
Settlement of lawsuits, net of recoveries			207				127				(595	)			306
Stock-based compensation			197				118				589				588
Loss (gain) on sale of businesses and assets			218				220				251				(1,186	)
Gain on insurance			(46	)			—				(223	)			(1,017	)
Non-GAAP operating income		$	12,278			$	10,993			$	24,538			$	23,705
Reconciliation of GAAP operating margin to non-GAAP operating margin
GAAP operating margin			5.5	%			12.4	%			10.6	%			16.1	%
Amortization of intangibles			0.9	%			0.9	%			0.9	%			0.8	%
Impairment of assets			10.6	%			2.7	%			6.0	%			1.3	%
Settlement of lawsuits, net of recoveries			0.3	%			0.2	%			(0.4	)%			0.2	%
Stock-based compensation			0.3	%			0.2	%			0.4	%			0.4	%
Loss (gain) on sale of businesses and assets			0.3	%			0.3	%			0.2	%			(0.9	)%
Gain on insurance			(0.1	)%			—	%			(0.2	)%			(0.7	)%
Non-GAAP operating margin			17.9	%			16.7	%			17.6	%			17.3	%
Reconciliation of net cash provided by operating activities to free cash flow
Net cash provided by operating activities		$	9,881			$	8,547			$	17,697			$	21,891
Less: Maintenance capital expenditures			1,462				1,611				2,598				2,887
Free cash flow		$	8,419			$	6,936			$	15,099			$	19,004
Free cash flow as a percentage of revenues			12.3	%			10.5	%			10.8	%			13.8	%

RCI HOSPITALITY HOLDINGS, INC.
NON-GAAP SEGMENT INFORMATION
($ in thousands)
		Three Months Ended March 31, 2026																				Three Months Ended March 31, 2025
		Nightclubs				Bombshells				Other				Corporate				Total				Nightclubs				Bombshells				Other				Corporate				Total
Income (loss) from operations		$	10,758			$	(267	)		$	(112	)		$	(6,567	)		$	3,812			$	14,532			$	(245	)		$	(171	)		$	(5,945	)		$	8,171
Amortization of intangibles			618				—				—				2				620				572				1				—				4				577
Impairment of assets			7,270				—				—				—				7,270				1,780				—				—				—				1,780
Settlement of lawsuits, net of recoveries			142				65				—				—				207				97				30				—				—				127
Stock-based compensation			—				—				—				197				197				—				—				—				118				118
Loss (gain) on sale of businesses and assets			218				2				—				(2	)			218				93				129				—				(2	)			220
Gain on insurance			(46	)			—				—				—				(46	)			—				—				—				—				—
Non-GAAP operating income (loss)		$	18,960			$	(200	)		$	(112	)		$	(6,370	)		$	12,278			$	17,074			$	(85	)		$	(171	)		$	(5,825	)		$	10,993
GAAP operating margin			17.8	%			(3.2	)%			(127.3	)%			(9.6	)%			5.5	%			25.3	%			(3.0	)%			(161.3	)%			(9.0	)%			12.4	%
Non-GAAP operating margin			31.5	%			(2.4	)%			(127.3	)%			(9.3	)%			17.9	%			29.7	%			(1.0	)%			(161.3	)%			(8.8	)%			16.7	%
		Six Months Ended March 31, 2026																				Six Months Ended March 31, 2025
		Nightclubs				Bombshells				Other				Corporate				Total				Nightclubs				Bombshells				Other				Corporate				Total
Income (loss) from operations		$	29,480			$	(406	)		$	(262	)		$	(13,964	)		$	14,848			$	35,385			$	1,700			$	(274	)		$	(14,734	)		$	22,077
Amortization of intangibles			1,231				—				—				4				1,235				1,146				2				—				9				1,157
Impairment of assets			8,433				—				—				—				8,433				1,780				—				—				—				1,780
Settlement of lawsuits, net of recoveries			(685	)			90				—				—				(595	)			276				30				—				—				306
Stock-based compensation			—				—				—				589				589				—				—				—				588				588
Loss (gain) on sale of businesses and assets			240				6				—				5				251				109				(1,201	)			—				(94	)			(1,186	)
Gain on insurance			(223	)			—				—				—				(223	)			(1,017	)			—				—				—				(1,017	)
Non-GAAP operating income (loss)		$	38,476			$	(310	)		$	(262	)		$	(13,366	)		$	24,538			$	37,679			$	531			$	(274	)		$	(14,231	)		$	23,705
GAAP operating margin			24.0	%			(2.4	)%			(115.9	)%			(10.0	)%			10.6	%			29.7	%			9.5	%			(98.6	)%			(10.7	)%			16.1	%
Non-GAAP operating margin			31.4	%			(1.9	)%			(115.9	)%			(9.6	)%			17.6	%			31.6	%			3.0	%			(98.6	)%			(10.4	)%			17.3	%

 

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Source: RCI Hospitality Holdings, Inc.