Dis bitch is up 105% YoY since their initiation of a dividend.
This could be a false positive, but SP seems highly correlated with the housing/mortgage market (rose from $2 in 2004 to top out at $27 in December 2007 where it immediately plummeted to $4). Maybe mortgage sales folks love strippers, idfk. The next ~8 years to EOY 2015 saw SP rise ~140%, in line with the S&P (compared on a logarithmic scale, which Yahoo will let you see but won’t create a custom link for the view. poop.) It has only been in the last year, with the stock rising another 100% YoY, that $RICK has really outperformed the market.
One possible catalyst is the settlement of a lawsuit in fall of 2015.
MANHATTAN (CN) - Thousands of strippers represented in a class-action labor lawsuit against New York's Rick's Cabaret hope to end six years of protracted litigation by accepting a $15 million settlement. U.S. District Judge Paul Engelmayer awarded the class $10.8 million late last year on three of the charges of the lawsuit, resolving minimum wage violations, unlawfully retained tips, and improper fees under state law. That partial judgment, however, did not stop the court wrangling. The club brought an interlocutory appeal to the 2nd Circuit, and the remaining claims still faced a trial. On Wednesday, the women's lawyer Anna Prakash asked the judge to approve a settlement between the parties.
At least on this point Google is there for us with the court case so let’s have a looky Fuck PACER.
Dancers were not paid any wage by Rick's NY; rather, they received various fees paid by customers. Id. ¶¶ 20, 181. A personal dance cost $20, although customers were permitted to pay dancers more. Id. ¶¶ 180, 182. If the customer paid the dancer in cash, the customer did so by paying the dancer directly, and the dancer retained the entire performance fee. If a customer wished to pay by credit card, he or she could purchase, for $24 each, vouchers worth $20 and known as "Dance Dollars" from Rick's NY. Id. ¶ 185. The customer could then give the dancer the Dance Dollar as payment for a personal dance. Id. ¶¶ 181, 183. The dancer later redeemed, from Rick's NY, the Dance Dollar that she had received. Rick's NY paid dancers $18 for each Dance Dollar that they redeemed; Rick's NY retained the remaining $6. Id. ¶¶ 185, 190. The dancers were also subject to a variety of mandatory fees, including nightly "tip-out" fees of $20 each for the "house mom," the DJ, and club management, although the frequency with which such tip-outs were actually paid — and the damages traceable to this practice — were disputed issues that, but for the settlement, would have been resolved at trial.
TIL: “house mom”--its a thing. Also, this is essentially a token economy, which is fine when aimed at befuddling customers but lends itself to unacceptable abuse when applied to employee wages. Once you pay employees in tokens, its essentially company scrip. But what if its the customers paying the employees in company scrip? Its not clear since they settled the case before going to trial, but the courts were clearly leaning to a NO, not ok (at least in relation to the opportunities for abuse that scrip systems invite, and which RICKs appeared to take advantage of).
Even assuming RCI NY and RCII were found to be joint employers, it is not clear that the defendants could withstand a substantially greater judgment. The defendants' consolidated net income was less than the settlement amount in each of the last three fiscal years. The settlement amount thus represents a significant sum for defendants to pay.
So perhaps SP rose because the settlement precluded a trial that could have bankrupted the company? Doesn’t seem likely as SP declined in the short term when settlement was finalized.
On the other hand, company issued its first dividend shortly thereafter. So maybe its just as simple as the market agreeing with how the company is handling its cash flow.
Financials/Business
First thing to note about financials is that EPS had been falling for the first 3 quarters last year while earnings estimates started the year flat and have been rising since. (Side note, I usually fuck with Google Finance to get a historical view of companies, but for some reason they only have 2 years of data whereas Yahoo has data since 1995 IPO. I fucking hate Yahoo.)
The latest ER, from Feb 9, was pretty sexy tho.] (http://ift.tt/2khPjHb)
Diluted EPS of $0.30 compared to $0.25, up 20.0% Non-GAAP * Diluted EPS of $0.31 compared to $0.30, up 3.3% Total revenues of $33.7 million compared to $33.5 million, up 0.8% Net income of $2.9 million compared to $2.4 million, up 19.1% Free Cash Flow (FCF) *of $5.1 million compared to $3.9 million, up 33.1%
FCF as shown should be suspect though as its calculated in Non-GAAP.
The EPS has also been flattered by the share buyback program.
In 1Q17, RCI acquired 89,685 shares for $1.1million, reducing shares outstanding to 9.7 million Basic and diluted share counts fell 5.1% and 7.7%, respectively, 1Q17 vs. 1Q16
The combined share buyback and dividend program seems to deserve approximately equal credit for SP increase as the business highlights are good but nothing singularly impressive.
“Key to our profitability was expanded margins in the Nightclubs, Bombshells and Other segments, in part due to previously disclosed 4Q16 dispositions of under performing clubs, a restaurant, and our energy drink business. “While total sales increased slightly, same store sales grew in RCI’s two core segments—Nightclubs at 2.8% and Bombshells at 9.6%—reflecting the continued momentum that began in the second half of FY16. Higher margin service revenues increased 6.6%, the second quarter in a row where these revenues have rebounded year over year and the fourth quarter in a row of improvement. Occupancy Costs: Occupancy costs, one of RCI’s largest fixed costs, measured as a combination of rent plus interest expense, declined to 8.0% of revenues compared to 8.6%. The reduction reflects significantly lower rent due to the acquisition of New York City club real estate in 2Q16. Balance Sheet (December 31, 2016 compared to September 30, 2016):Cash increased 6.5% to $12.1 million. Total stockholders’ equity increased 1.1% to $131.6 million, primarily due to net income for 1Q17 partially offset by share repurchases and dividends.
Finally, the selling off of poor-performing properties to pay off ridiculously high notes (11%) is taking a lot of pressure off of the equity portion of the balance sheet. Oddly, this announcement doesn’t appear to have been filed with SEC.
RCI said a subsidiary closed on the sale of the property off US 820 in Fort Worth for $2.2 million in cash. The price was in the range of expected value. Proceeds were used to pay off the remaining $1.5 million balance of a related 11% balloon note,due in 2018, and related fees. Balance of the proceeds will be used to repurchase stock, fund growth, or repay debt. “Today’s news represents the first concrete results of another process we have initiated to free up capital and continue to improve cash flow,” said Eric Langan, President and CEO. “We currently estimate the planned sale of our seven other non-income producing properties could approximate$10 million in total proceeds.”
Also from 10Q:
On January 4, 2017, the Company paid off $392,000 of convertible 6% notes, which would have matured on March 4, 2023.
Overall, RICK appears to be a solid hold. A lot of catalysts have already contributed to SP but the CEO thinks Trump can provide some more.
"I think overall the election is turning out to be very, very positive for us so far," Eric Langan, the CEO of RCI (which also owns six nightclub concepts), said on a call with analysts in December. Langan said that the company is "very excited" about the nomination of Andy Puzder, the CEO of Carl's Jr. and Hardee's parent company, as secretary of labor. Puzder, who is no stranger to utilizing scantily-clad women in advertising himself, is expected to cut regulation and reduce costs in the restaurant industry.
Submitted February 11, 2017 at 01:40PM by MoreHamPlease http://ift.tt/2khME0b
