RICK Intrinsic Value

RICK

RCI Hospitality Holdings Inc – Theater Companies and Dinner Theaters

rci hospitality holdings, inc., formerly rick's cabaret international, inc., operates upscale gentlemen's clubs and restaurants. subsidiary activities include websites and a media division. founded in 1983, rick’s cabaret pioneered in the creation of elegant gentlemen’s clubs featuring beautiful topless entertainers and high quality restaurant service. rick’s cabaret went public through an ipo in 1995 and is listed on the nasdaq global market under the symbol rick. options in rick are traded on the chicago board of options exchange (cboe). there are currently 46 nightclubs and restaurants nationwide in the rci hospitality holdings group. investors are attracted by strong cash flow, consistent profitability, effective internal financial controls developed by management, local laws that create high barriers to entry by potential competitors, and execution of a roll-up strategy in the consolidating gentlemen’s club industry. in recent years the company has acquired nightclubs in major

Analysis Results

Intrinsic Value	$181.12
Latest Price	$60.21
Relative Value	67% undervalued

Share results:

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Cash Flow (Millions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 25.2%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 7.6%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 25.2%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (million)	Present value (million)
2023	48.8	45.4
2024	61.1	52.7
2025	76.5	61.3
2026	95.8	71.3
2027	120	82.9

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 2170 million. This corresponds to a present value of 1390 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 314 million. Adding in the terminal value gives a total present value of 1710 million.

There are presently 9.42 million outstanding shares, so the intrinsic value per share is 181.12.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	51,161,000
Current Cash	35,980,000
Current Liabilities	31,501,000
Current Debt	11,896,000
Non-Cash Working Capital (NCWC)	-4,424,000
Change in NCWC	-5,097,000
EBIT	71,926,000
Tax Provision	14,071,000
Depreciation and Amortization	12,391,000
Capital Expenditure	-24,003,000
Unlevered Free Cash Flow	38,385,902

Current Assets	52,950,000
Current Cash	35,686,000
Current Liabilities	23,025,000
Current Debt	6,434,000
Non-Cash Working Capital (NCWC)	673,000
Change in NCWC	5,845,000
EBIT	51,734,000
Tax Provision	3,989,000
Depreciation and Amortization	8,238,000
Capital Expenditure	-13,511,000
Unlevered Free Cash Flow	46,261,097

Current Assets	31,433,000
Current Cash	15,605,000
Current Liabilities	37,304,000
Current Debt	16,304,000
Non-Cash Working Capital (NCWC)	-5,172,000
Change in NCWC	-7,392,000
EBIT	13,294,000
Tax Provision	-493,000
Depreciation and Amortization	8,836,000
Capital Expenditure	-5,736,000
Unlevered Free Cash Flow	9,002,000

Current Assets	34,771,000
Current Cash	14,097,000
Current Liabilities	34,208,000
Current Debt	15,754,000
Non-Cash Working Capital (NCWC)	2,220,000
Change in NCWC	-2,058,000
EBIT	37,321,000
Tax Provision	4,863,000
Depreciation and Amortization	9,072,000
Capital Expenditure	-20,708,000
Unlevered Free Cash Flow	16,123,919

Current Assets	36,802,000
Current Cash	17,726,000
Current Liabilities	33,845,000
Current Debt	19,047,000
Non-Cash Working Capital (NCWC)	4,278,000
Change in NCWC	1,629,000
EBIT	36,746,000
Tax Provision	-3,118,000
Depreciation and Amortization	7,722,000
Capital Expenditure	-25,263,000
Unlevered Free Cash Flow	20,834,000

Current Assets	26,242,000
Current Cash	9,922,000
Current Liabilities	31,111,000
Current Debt	17,440,000
Non-Cash Working Capital (NCWC)	2,649,000
Change in NCWC	-904,000
EBIT	30,451,000
Tax Provision	6,359,000
Depreciation and Amortization	6,920,000
Capital Expenditure	-11,249,000
Unlevered Free Cash Flow	11,992,270

Current Assets	29,387,000
Current Cash	11,327,000
Current Liabilities	24,457,000
Current Debt	9,950,000
Non-Cash Working Capital (NCWC)	3,553,000
Change in NCWC	4,733,000
EBIT	26,609,000
Tax Provision	2,657,000
Depreciation and Amortization	7,173,000
Capital Expenditure	-28,148,000
Unlevered Free Cash Flow	4,927,274

Current Assets	20,608,000
Current Cash	8,634,000
Current Liabilities	22,854,000
Current Debt	9,700,000
Non-Cash Working Capital (NCWC)	-1,180,000
Change in NCWC	12,908,000
EBIT	26,908,000
Tax Provision	5,164,000
Depreciation and Amortization	6,894,000
Capital Expenditure	-19,259,000
Unlevered Free Cash Flow	17,633,087

Current Assets	23,351,000
Current Cash	10,560,000
Current Liabilities	39,194,000
Current Debt	12,315,000
Non-Cash Working Capital (NCWC)	-14,088,000
Change in NCWC	-3,442,000
EBIT	25,144,000
Tax Provision	5,916,000
Depreciation and Amortization	6,316,000
Capital Expenditure	-21,359,000
Unlevered Free Cash Flow	-2,136,122

Current Assets	20,681,000
Current Cash	11,211,000
Current Liabilities	28,946,000
Current Debt	8,830,000
Non-Cash Working Capital (NCWC)	-10,646,000
Change in NCWC	-2,525,000
EBIT	22,129,000
Tax Provision	5,501,000
Depreciation and Amortization	5,314,000
Capital Expenditure	-9,675,000
Unlevered Free Cash Flow	7,152,369

Current Assets	14,708,000
Current Cash	6,579,000
Current Liabilities	22,853,000
Current Debt	6,603,000
Non-Cash Working Capital (NCWC)	-8,121,000
Change in NCWC	-5,370,000
EBIT	16,845,000
Tax Provision	4,374,000
Depreciation and Amortization	4,921,000
Capital Expenditure	-6,898,000
Unlevered Free Cash Flow	3,525,234

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