Q1 2009 Financial Results Overview
* Revenues rose 3.4% to $13.8 million
- Same stores sales increased for 6 clubs by 3.5% to 21.2%
for the same quarter 2008
* Operating income of $2.2 million
* Net income of $652,000, or $0.04 per share
* EBITDA of $2.4 million
* Cash of $2.8 million
DENVER, May 14, 2009 (GLOBE NEWSWIRE) -- VCG Holding Corp. (Nasdaq:VCGH), a growing and leading consolidator and operator of adult nightclubs, today announced financial results for the first quarter ended March 31, 2009 (see attached tables).
Troy Lowrie, Chairman and Chief Executive Officer, stated, "Our performance for the first quarter included higher revenues, profitability, solid operating and free cash flows, and a strong balance sheet. Our high-amenity 'A' clubs continue to struggle in this sluggish economy, although their impact on overall operations was offset by performance at our 'B' and 'C' venues, increased service revenues, and the implementation of cost-savings initiatives across each of our locations. Our balance sheet at March 31, 2009 reflected cash of $2.8 million, a 25% increase from December 31, 2008. Operating cash flow for the first quarter was $1.7 million, free cash flow totaled $1.1 million, and we generated EBITDA of $2.4 million, or 18% of total revenue."
First Quarter Financial Results
Total revenue for first quarter of 2009 increased 3.4% to $13.8 million from $13.3 million in the first quarter of 2008. Higher total revenue was due primarily to a $1.4 million increase in service revenues in 16 out of 18 clubs, as well as the acquisition of 2 new clubs in the second and third quarter of 2008.
Cost of goods sold (the cost of alcohol, food and merchandise) declined as a percentage of applicable revenues to 23.6% from 25.5% in the first quarter of 2008, primarily attributable to stronger controls over inventory and the operations of four all-nude clubs in operation for the first quarter of 2009, increased by one from the first quarter of 2008. These clubs have a lower cost of sales percentage and a higher gross profit.
Total operating expenses increased 11.2% to $11.6 million from $10.4 million in the first quarter of 2008, and reflected, among other items, increases in taxes and permit fees, legal fees, rent, and depreciation & amortization. Although some of these expenses reflect the acquisition of 2 clubs during 2008, the Company expects legal fees will decrease and professional fees will continue to be lower in 2009.
Operating income was $2.2 million for the first quarter of 2009, down from $2.9 million in the first quarter of 2008.
Net income for the first quarter of 2009 was $652,000, or $0.04 per diluted share, as compared to net income of $1.4 million, or $0.08 per diluted share, in the first quarter of 2008.
EBITDA for the first quarter of 2009 was $2.4 million as compared to $3.1 million for first quarter of 2008.
Mr. Lowrie continued, "We remain optimistic about the future of our business and industry. We have been proactive in implementing strategies to mitigate the impact of the current economic environment, such as the creation of new club-level revenue streams, while continuing to benefit from our tiered-venue operating model. We are focused on achieving operating efficiencies throughout the organization. We remain confident in our ability to generate cash, and are committed to deploying that cash to reduce debt and acquire shares. Where appropriate, we are exploring potential accretive acquisitions in markets where we currently operate and in new geographies."
SHARE REPURCHASE
For the period January 1, 2009 through March 31, 2009, VCGH repurchased an aggregate of 193,625 shares of common stock for an aggregate purchase price of $320,631.
CONFERENCE CALL
Troy Lowrie, Chairman and Chief Executive Officer, and Courtney Cowgill, Chief Financial Officer, will host a conference call today at 11:00 am Eastern Time / 9:00 am Mountain Time, to discuss these results. To participate in the conference call, please dial (877) 852-6543 (domestic) or (719) 325-4748 (international) approximately 10 minutes before the call is scheduled to begin. A replay will be available from 2:00 p.m. Eastern Time May 14, 2009 until midnight May 17, 2009. To hear the teleconference replay dial (888) 203-1112 (domestic) or (719) 457-0820 (international). The pass code for the replay is 9450453. The conference call will also be broadcast live over the Internet. To listen to the call via the Internet and to view a copy of the Company's presentation that will be referenced during the call, please visit the Company's website at http://www.vcgh.com under the heading "Investor Relations," then "Events & Presentations" and follow the instructions at the web cast link. The archived web cast will be available shortly after the call on the Company's website.
ABOUT VCG HOLDING CORP.
VCG Holding Corp. is an owner, operator, and consolidator of adult nightclubs throughout the United States. The Company currently owns 20 adult nightclubs. The nightclubs are located in Anaheim, Indianapolis, St. Louis, Denver, Colorado Springs, Ft. Worth, Dallas, Raleigh, Minneapolis, Louisville, Miami, and Portland, ME.
The VCG Holding Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5105
FORWARD LOOKING STATEMENT
Certain statements in this release are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors identified from time to time in the Company's reports with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2008. All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All guidance and forward-looking statements in this press release are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements, except as may be required by law.
VCG Holding Corp.
Consolidated Balance Sheets
(unaudited) (audited)
March 31, December 31,
2009 2008 (1)
------------- -------------
Assets
Current Assets
Cash and cash equivalents $ 2,770,308 $ 2,209,060
Assets held for sale -- 106,900
Other receivables 60,816 25,473
Income taxes receivable 190,886 276,267
Inventories 927,703 949,088
Prepaid expenses 616,358 282,485
Current portion of deferred
income tax asset 171,000 171,000
------------- -------------
Total current assets 4,737,071 4,020,273
------------- -------------
Property and equipment, net 25,447,172 25,738,388
Deferred income tax asset
(non-current) 3,765,229 4,068,593
Non-compete agreements 36,674 40,933
Licenses 36,413,189 36,413,189
Goodwill 2,416,898 2,453,122
Favorable lease rights 1,684,186 1,705,364
Trade names 619,000 619,000
Other long-term assets 479,687 567,181
------------- -------------
Total assets $ 75,599,106 $ 75,626,043
============= =============
Liabilities and Equity
Current Liabilities
Accounts payable -- trade $ 981,900 $ 847,493
Accrued expenses 2,126,112 2,257,116
Deferred revenue 107,037 109,455
Current portion of
unfavorable lease
liabilities 278,155 278,155
Current portion of
capitalized lease -- 10,000
Current portion of long-term
debt 4,879,427 2,602,000
Current portion of long-term
debt, related party 1,191,307 1,024,000
------------- -------------
Total current liabilities 9,563,938 7,128,219
------------- -------------
Long-term Liabilities
Deferred rent 1,063,942 845,136
Unfavorable lease liabilities,
net of current portion 6,355,842 6,425,626
Capital lease, net of current
portion -- 9,111
Long-term debt, net of current
portion 24,032,901 25,747,631
Long-term debt, related party,
net of current portion 5,788,391 7,083,578
------------- -------------
Total long-term liabilities 37,241,076 40,111,082
------------- -------------
Commitments and contingent liabilities
Equity
Common stock $.0001 par value;
50,000,000 shares authorized;
17,561,753 (2009) and
17,755,378 (2008) shares
issued and outstanding 1,756 1,775
Additional paid-in capital 52,314,224 52,557,047
Accumulated deficit (27,080,381) (27,732,554)
------------- -------------
Total VCG stockholders' equity 25,235,599
24,826,268
Noncontrolling interests in
consolidated partnerships 3,558,493 3,560,474
------------- -------------
Total equity 28,794,092 28,386,742
------------- -------------
Total Liabilities and Equity $ 75,599,106 $ 75,626,043
============= =============
(1) Effective January 1, 2009, the Company adopted Statement of
Financial Accounting Standards No. 160 ("SFAS No. 160") which
requires the amount of consolidated net income attributable to
the parent and noncontrolling interests (formerly minority
interests) to be clearly identified and presented on the face of
the consolidated income statement, with retroactive adoption of
its presentation requirements.
VCG Holding Corp.
Consolidated Statements of Income
For the Three Months Ended
---------------------------------
March 31,
---------------------------------
2009 2008
------------- -------------
(Restated)
Revenue
Sales of alcoholic beverages $ 5,864,663 $ 6,534,618
Sales of food and merchandise 471,532 708,655
Service revenue 6,698,281 5,278,646
Other income 739,942 804,036
------------- -------------
Total revenue 13,774,418 13,325,955
------------- -------------
Operating Expenses
Cost of goods sold 1,492,923 1,848,547
Salaries and wages 3,269,881 3,062,704
Other general and
administrative
Taxes and permits 888,877 456,273
Charge card and bank fees 193,236 200,821
Rent 1,448,516 1,142,948
Legal fees 405,949 191,211
Other professional fees 426,571 456,955
Advertising and marketing 700,196 805,794
Insurance 380,358 376,013
Utilities 281,072 258,317
Repairs and maintenance 292,224 229,181
Other 1,382,140 1,037,077
Depreciation & amortization 425,369 356,465
------------- -------------
Total operating expenses 11,587,312 10,422,306
------------- -------------
Income from operations 2,187,106 2,903,649
------------- -------------
Other income (expenses)
Interest expense (928,856) (773,504)
Interest income 36 3,572
Gain (loss) on sale of assets (936) --
------------- -------------
Total other income (expenses) (929,756) (769,932)
------------- -------------
Income before income taxes 1,257,350 2,133,717
------------- -------------
Income tax expense -- current 140,412 332,970
Income tax expense -- deferred 339,588 317,030
------------- -------------
Total income taxes 480,000 650,000
------------- -------------
Net income 777,350 1,483,717
Net income attributable to
noncontrolling interests (125,177) (111,383)
------------- -------------
Net income attributable to VCG
Holding $ 652,173 $ 1,372,334
============= =============
Earnings per share
Basic income per common share
attributable to VCG's common
stockholders $ 0.04 $ 0.08
Fully diluted income per common
share attributable to VCG's
common stockholders $ 0.04 $ 0.08
Weighted average shares
outstanding 17,658,726 17,431,035
Fully diluted weighted average
shares outstanding 17,658,726 17,923,402
VCG Holding Corp.
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended
March 31,
---------------------------------
2009 2008
------------- -------------
(Restated)
Operating Activities
Net income $ 652,173 $ 1,372,334
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 425,369 356,465
Amortization of leasehold
rights and liabilities, net (48,605) (43,399)
Amortization of loan fees 80,343 50,179
Stock-based compensation
expense 77,789 99,980
Deferred income taxes 339,588 317,030
Noncontrolling interests 125,177 111,383
Loss on disposition of assets 937 --
Accrued interest added to
long-term debt 74,718 --
Changes in operating assets
and liabilities (35,507) (207,526)
------------- -------------
Net cash provided by
operating activities 1,691,982 2,056,446
Investing Activities
Acquisitions of businesses,
net of cash acquired -- (117,811)
Additions to property and
equipment (131,258) (856,860)
Deposits -- (22,183)
Assets held for sale -- (7,866)
Proceeds from sale of assets 107,326 --
------------- -------------
Net cash used by investing
activities (23,932) (1,004,720)
Financing Activities
Repurchase of stock (320,631) --
Payment on capitalized leases (19,111) (2,237)
Proceeds from debt 1,123,100 164,356
Payments on debt (1,763,002) (1,265,585)
Distributions to noncontrolling
interests (127,158) (168,544)
------------- -------------
Net cash used by financing
activities (1,106,802) (1,272,010)
Net increase (decrease) in cash 561,248 (220,284)
Cash beginning of period 2,209,060 2,980,007
------------- -------------
Cash end of period $ 2,770,308 $ 2,759,723
============= =============
Supplemental disclosures of cash
flow information:
Income taxes paid in cash $ 50,000 $ 500,000
Interest paid in cash $ 769,583 $ 593,565
EBITDA Reconciliation
(unaudited)
Quarter ended March 31,
------------------------------------
2009 2008
------------- -------------------
(Restated)
Net Income $ 652,173 $ 1,372,334
Add back:
Depreciation 421,110 351,748
Amortization of non-compete
agreements 4,259 4,717
Amortization of leasehold
rights and liabilities, net (48,605) (43,399)
Interest expense 928,856 773,504
Total income taxes 480,000 650,000
------------- -------------------
EBITDA $ 2,437,793 $ 3,108,904
============= ===================
Total revenue $ 13,774,418 $ 13,325,955
EBITDA as a percentage of
revenue 17.7% 23.3%
VCG Holding Corp.
Calculation of Free Cash Flow
(unaudited)
Quarter ended March 31,
2009 2008
------------------------------------
(Restated)
EBITDA $ 2,437,794 $ 3,108,904
Less:
Interest expense 928,856 773,504
Non-controlling interests 125,177 111,383
Current income tax 140,412 332,970
Capital expenditures 131,258 856,860
------------- -------------------
Free Cash Flow $ 1,112,091 $ 1,034,187
============= ===================