No recession, according to a reliable inflation-resistant 'Index'
There might not be a recession, according to the rising indicators of a well-known, reliable, but unmentionable, inflation-resistant leading ‘Index’ of a growing or shrinking economy…
the Strip Club ‘Index.’
The ‘Index’ is represented by RCI Hospitality Holdings, which owns and operates upscale gentlemen's clubs, strip clubs, and restaurants.
Founded in 1983, the ‘Index’ pioneered the creation of elegant gentlemen's clubs featuring beautiful topless dancers and high quality restaurant service.
Since going public in 1995, the whispered ‘Index’ has transformed into a leading hospitality holding company. Its subsidiaries own and operate over 50 establishments under multiple brands throughout the US:
Rick's Cabaret: Elegant clubs with restaurants
Scarlett's Cabaret: High-end, high-energy “party" style club
Vivid Cabaret: High-end, high-energy “party" style club
Tootsie's Cabaret: The US's mega club with 74,000 square feet
Club Onyx: High-end clubs for African-American professionals
Jaguars Club: Lively BYOB clubs for blue collar patrons and the college crowd
XTC Cabaret: Lively BYOB clubs for blue collar patrons and the college crowd
Bombshells: Franchisable, military themed sports bars/restaurants for a great time and great food
The ‘Index’ has built powerful brand name awareness for its upscale environments and enjoyable adult entertainment, and all its economic indicators are pointing up.
Revenues are growing:
December 2019: $185.4 million
December 2020: $122.3 million (Covid lockdown)
December 2021: $218.7 million
March 2022 (Last 12 months): $238.3 million
Estimated September 2022 (12 months): $265.1 million
Earnings are up:
December 2019: $19.6 million
December 2020: -$2.1 million (Covid lockdown)
December 2021: $31.3 million
March 2022 (Last 12 months): $36.1 million
Estimated September 2022 (12 months): $46.8 million
More importantly, free cash flows are rising and sustainable:
December 2019: $18.5 million
December 2020: $8.7 million (Covid lockdown)
December 2021: $29.9 million
March 2022 (Last 12 months): $31.8 million
Estimated September 2022 (12 months): $35.1 million
Analysts are titillatingly optimistic and expect ‘Index’ earnings to grow 20.7% per year, over the next few years.
‘Index’ facts
Leading entertainment sites Gothamist, Thrillist, Time Out, Trip Savvy, and Yelp have named Rick's Cabaret and other ‘Index’ clubs to their Best Strip Club lists.
Zagat's New York Nightlife and Time Out New York TONY 100 lists of fine Manhattan dining establishments have featured Rick's Cabaret steakhouse restaurant.
Forbes has listed the ‘Index’ as one of America's 200 Best Small Companies.
The ‘Index’ has been profiled in The Wall Street Journal, Fortune, MarketWatch, Corporate Board Member, Smart Money, USA Today, New York Daily News, Chicago Tribune, and other publications.
Restaurant Business magazine has named Bombshells Restaurant & Bar to its "The Future 50" list of fastest-growing concepts.
BuzzFeed News calls Club Onyx "Houston's Most Famous Strip Club."
Anna Nicole Smith met her oil billionaire husband while dancing at one of the ‘Index’ establishments and many performers have become Penthouse Pets and Playboy Playmates.
CEO Eric Langan acquired his first club in Texas at age 21, with $40,000 from the sale of his baseball card collection.
Langan recently stated:
“We had an outstanding quarter [March 2022] across the board. We ended the quarter with $38.1 million in cash, and favorable trends are continuing, with total revenues in April exceeding March.”
“I think people are going to party through the summer no matter what; I think people are going to travel no matter what. We’ve been locked down for too long with Covid. I don’t care what the Fed does, or inflation does, I think people will spend now and worry later.”
The International Investor provides profitable investment intelligence. We search the world for high quality businesses, with high and sustainable returns on capital, and attractive prices and margins of safety to what they're intrinsically worth.
The author does not own shares of the above-mentioned company, although he intends to, as a hedge against inflation and any possible recession, and after he conducts the necessary physical due diligence.
This post is excerpted, edited, and sourced from analyst notes, company filings, and S&P Global Market Intelligence. The content is for general informational and entertainment purposes only and should not be construed as investment advice.