Saturday, June 14, 2008

Legal Prostitution? ~ Rick's Cabaret Int'l, Inc (Public, NASDAQ:RICK)

Call the DIP SQUAD!!! 

Rick's Cabaret (RICK) completes private placement at $20 share.   Buys 2 strip clubs! 

.... a restaurant with sexy "raw costs"


Our original RICK RECO was at $8bucks ... the cover charge has gone up a bit.   Will strip clubs feel the "Great Recession"? ... is $20 the new bottom? shorty get low, low, low!  

* BOTD LONG (RICK) * 

2 comments:

BUY ON THE DIP said...

private placement and cost of a lap dance.

both $20.

hmmmmm.... coincidence?

The Ricker! said...

Who is Rick?
Rick's Cabaret runs 17 adult entertainment nightclubs under the Onyx, Rick's Cabaret, XTC and Tootsie's Cabaret brands in major cities like New York, Dallas and Miami with more to come including the Scores Las Vegas nightclub, which it announced it was buying in April for $21 million. The deal is closing July 2, 2008, adding $19 million in revenue and 29 cents per share in profit.

When Eric Langan, CEO and owner of 19% of the stock, took the helm in 1999, no one took Rick's seriously. Today, 20 institutions own the stock, up from four a few years ago, a sign its business model is no longer taboo. Further proof is competition. In 2002, VCG Holdings (Nasdaq:VCGH) went public and today the two companies are consolidating what was once a very shady business.

Business Is Busting Out
In the second quarter ended March 31, sales were $15.46 million, which is up 104% from $7.57 million a year earlier. Net income is way up to, going to $2.6 million from $492,344 in the previous year. That's an increase of 429%. While acquisitions are a big part of the company's growth plans, it still managed organic sales growth of 8.24% from existing clubs. In the quarter, two new clubs in Miami and Fort Worth added $7.29 million in revenue and most impressively, operating margins went from 9.6% to 28%. That's what I call margin expansion. (Find out how to put this important componenet of equity analysis to work for you in Analyzing Operating Margins.)

In its conference call, the company highlighted the following:
• Same-store sales beating 6% forecasts by 2.24%;
• Customers visiting different clubs in different cities demonstrating growing customer loyalty;
• Continued aggressive expansion plan buying clubs in metropolitan areas with $10 million or more in sales and immediately accretive to earnings; and
• Sales in calendar year 2008 sales between $68 million and $70 million with EPS between $1.55 and $1.60.