What changed in this filing

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Item 1. Business

2026-03-19 compared with 2024-12-16 · 28 added, 29 removed, 107 unchanged (35% of the section changed)

1 unchanged sentence

is a holding company that, through its subsidiaries, engages in businesses that offer live adult entertainment and/or high-quality dining experiences to its guests.

Our subsidiaries operated 69 establishments in 13 states as of September 30, 2024.

Our subsidiaries operated 71 establishments in 15 states as of September 30, 2025, including one club that was temporarily closed due to fire damage and one for rebranding.

Together with its subsidiaries, RCI Hospitality Holdings, Inc.

5 unchanged sentences

Our fiscal quarters chronologically end on December 31, March 31, June 30 and September 30.

Through our subsidiaries, we operate several businesses, which we aggregate for financial reporting purposes into two reportable segments – Nightclubs and Bombshells.

Businesses that are not included as Nightclubs or Bombshells are combined as “Other.”

Our subsidiaries operate several businesses, which we aggregate for financial reporting purposes into two reportable segments – Nightclubs and Bombshells.

Businesses that are not included as Nightclubs or Bombshells are combined as “Other.” We adopted Accounting Standards Update 2023-07, Segment Reporting , as of September 30, 2025.

Segment-related disclosures, except for those in Note 4 to our consolidated financial statements, relate to amounts exclusive of intersegment items.

During fiscal 2025, 2024, and 2023, consolidated revenues were $279.4 million, $295.6 million, and $293.8 million, respectively, generating diluted earnings per share of $1.23, $0.33, and $3.13, respectively.

The table below shows the number of Nightclubs and Bombshells open by state as of September 30, 2025:

Nightclubs Bombshells (1)

Nightclubs Bombshells Total

Arizona 1 — 1

5 unchanged sentences

Louisiana 1 — 1

Michigan 1 — 1

Minnesota 3 — 3

2 unchanged sentences

Pennsylvania 2 — 2

South Carolina 1 — 1

Texas 26 10 36

(1) Includes one food hall location.

Nightclubs Segment

2 unchanged sentences

We also operate one dance club under the brand name Studio 80.

In 2025, we acquired clubs doing business as Flight Club, Platinum West, and Platinum Plus.

We generate revenue from our nightclubs through the sale of alcoholic beverages, food, and merchandise items;

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Segment gross margin (revenues less cost of goods sold, divided by revenues) was approximately 88.6%.

Our Nightclubs segment revenue increased by approximately 3.0% and income from operations decreased by 20.6% compared to the prior year.

Our Nightclubs segment revenue decreased by approximately 0.6% and income from operations increased by 20.1% compared to the prior year.

Same-stores sales for Nightclubs in 2025 was -2.1%.

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Their mission, in addition to waitressing, is to interact with guests and generate a fun atmosphere.

During fiscal 2024, we opened one Bombshells location in Stafford, Texas and sold one location in San Antonio, Texas.

During fiscal 2025, we opened two Bombshells locations in Denver, Colorado and Lubbock, Texas and closed three locations in Austin, Houston, and Spring, Texas, and one food hall in Denver, Colorado.

During fiscal 2025, Bombshells sales mix was 52% alcoholic beverages and 48% food, merchandise, and other.

Segment gross margin (revenues less cost of goods sold, divided by revenues) was approximately 76.1%.

Bombshells segment revenue decreased by 9.2%, while income from operations decreased by 263.7% from prior year.

Bombshells segment revenue decreased by 29.2%, while income from operations improved to a $177,000 income from a $10.8 million loss in the prior year.

Same-stores sales for Bombshells in 2025 was -13.6%.

8 unchanged sentences

and more than a dozen industry and social media websites.

Included in the Media Group is ED Publications, publishers of the bimonthly ED Club Bulletin, the only national business magazine serving the 2,200-plus adult nightclubs in North America, which collectively have annual revenues in excess of $5 billion, according to the Association of Club Executives.

ED Publications, founded in 1991, also publishes the Annual VIP Guide of adult nightclubs, touring entertainers and industry vendors;

and produces the Annual Gentlemen’s Club Owners EXPO, a national convention and trade show.

The Media Group produces two nationally recognized industry award shows for the readers of both ED Club Bulletin and StorErotica magazines, and maintains a number of B-to-B and consumer websites for both industries.

Included in the Media Group is ED Publications, publishers of the bimonthly ED (Exotic Dancer) Magazine, the only national business magazine serving the 2,000 adult nightclubs of North America, which collectively have revenue in excess of $5 billion, according to the Association of Club Executives (an industry lobbying organization that was founded by ED Publications in 1999).

In addition, ED Publications produces the bimonthly StorErotica Magazine, which is mailed to over 2,500 adult retail stores and lingerie boutiques across the US.

ED Publications, founded in 1991, also produces the Annual ED EXPO, the only convention and tradeshow in the world for the multi-billion-dollar adult nightclub industry.

The Media Group produces two nationally recognized industry award shows for the readers of both ED Magazine and StorErotica Magazine, and maintains several B-to-B and consumer websites for both industries.

Drink Robust is licensed to sell Robust Energy Drink in the United States.

3 unchanged sentences

and by focusing on unit-level operating performance.

Aside from our operating strategy, we employ a capital allocation strategy.

Capital Allocation Strategy

Our capital allocation strategy provides us with disciplined guidelines on how we should use our free cash flows;

provided however, that we may deviate from this strategy if other strategic rationale warrants.

We calculate free cash flow as net cash flows from operating activities minus maintenance capital expenditures.

Using the after-tax yield of buying our own stock as baseline, management believes that we are able to make better investment decisions.

Based on our current capital allocation strategy:

• We consider buying back our own stock if the after-tax yield on free cash flow is above 10%;

• We consider acquiring or developing our own clubs or restaurants that we believe have the potential to provide a minimum cash on cash return of 25%-33%, absent an otherwise strategic rationale;

• We consider disposing of underperforming units to free up capital for more productive use;

• We consider paying down our most expensive debt if it makes sense on a tax-adjusted basis, or there is an otherwise strategic rationale.

Over a five-year period from fiscal 2019 through fiscal 2024, our diluted earnings per share declined at a compound annual growth rate (“CAGR”) of 30.9%, which was mainly caused by increasing revenue at a CAGR of 10.3%, with impairment of assets as the most significant offset at a CAGR of 44.9% increase.

In December 2024, we launched our five-year Back-to-Basics strategy where we focus on improving performance of existing clubs and Bombshells units to fuel our capital allocation priorities.

For the allocation of our free cash flow, we currently divide it among club acquisitions (investing), share buybacks (financing), and dividends (financing).

Our financial targets by fiscal 2029 are to achieve:

• Total revenues of $400 million

• Free cash flow of $75 million

• Shares outstanding of 7.5 million

Over a five-year period from fiscal 2020 through fiscal 2025, our income from operations increased at a compound annual growth rate (“CAGR”) of 62%, which was mainly caused by increasing revenue at a CAGR of 16% and decreasing impairment of assets at a CAGR of 13%.

Excluding noncash and certain nonrecurring items, our non-GAAP diluted earnings per share improved at a CAGR of 33%.

Net cash provided by operating activities improved at 8.5% and free cash flow also improved at 7.8% CAGR for the same period.

Net cash provided by operating activities improved by 26% and free cash flow also improved by 28% CAGR for the same period.

We have steadily increased our quarterly dividend payments from $0.03 in fiscal 2016 to $0.07 in fiscal 2025.

See discussions of our non-GAAP financial measures starting on page 45 .

During 2022, we achieved our highest financial performance in terms of profitability and cash flow due to government stimulus due to the pandemic and the fact that our restaurants and clubs were among the first to open and resume business operations.

During 2022, we achieved our highest financial performance in terms of profitability and cash flow due to government stimulus prompted by the pandemic and the fact that our restaurants and clubs were among the first to open and resume business operations.

Compared to our record net income in 2022, our 2025 net income decreased by 77%.

1 unchanged sentence

We are managing this by carefully evaluating our Bombshells program in view of recent performance trends.

Currently, we have three locations that are under construction and do not plan to add anymore locations after those.

We terminated our franchising program, and are aggressively closing underperforming locations.

Currently, we have one location that is under construction and do not plan to add anymore locations after that.

The adult entertainment and the restaurant/sports bar businesses are highly competitive with respect to price, service and location.

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Executive officers are employed by the registrant (parent company);

shared services personnel and managers responsible for multiple clubs or restaurants are employed by RCI Management Services, Inc.;

shared services personnel and managers responsible for multiple clubs or restaurants are employed by RCI Internet Services, Inc.

and SWR Consulting, Inc.;

and the rest are employed by the individual operating entities.

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business