Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the
"Company," "we" or "RMCF"), a leading manufacturer and
international franchiser of gourmet chocolates and other
confectionary products, today announced it has completed the sale
of the franchise rights and associated intellectual property of
U-Swirl International, Inc. (“U-Swirl”), the Company’s yogurt
franchise business, to U Swirl, LLC, a related company of Fosters
Freeze led by the team of Neal Dahya, Nimesh Dahya, and Kishan
Patel. The transaction closed on May 1, 2023.
The Company’s sale of all remaining U-Swirl
franchise-related assets, along with the separate sale of three
formerly corporate-owned frozen yogurt stores to a third party in
February 2023, represents the Company’s complete exit from frozen
yogurt operations. In Fiscal Year 2022, the Company’s frozen yogurt
operations segment generated approximately $2.9 million of revenue
and $0.7 million of adjusted EBITDA (a non-GAAP measure defined
below). Between Fiscal Year 2017 and Fiscal Year 2022, revenue and
adjusted EBITDA for the Company’s frozen yogurt operations segment
declined 45% and 60%, respectively.
“The yogurt business has been a part of the
Rocky Mountain Chocolate Factory family for over a decade,
beginning with the launch of Aspen Leaf in 2010 and then our
acquisition of U-Swirl in 2013,” said CEO Rob Sarlls. “This final
divestiture enables us to focus on our core operations of
manufacturing and marketing premium chocolate products for a
consistently growing marketplace, while strengthening our
commitment to RMCF franchisees. The proceeds from the sale will be
reinvested into our factory and equipment to drive operational
efficiencies, product development, and improve product quality and
consistency.”
Sarlls added, “I want to thank our U-Swirl
franchisees for their contributions over the years. We are excited
for their future prospects with Fosters Freeze and wish them
well.”
North Point Mergers and Acquisitions, Inc.
served as financial advisor and Venable LLP acted as legal advisor
to RMCF on this transaction.
Corporate Strategy UpdateThe
Company will hold a conference call in the coming weeks to discuss
its Fiscal Fourth Quarter and Full Year 2023 results and to
introduce its new strategic transformation plan. Details for the
conference call will be provided in a separate press release.
About Rocky Mountain Chocolate Factory,
Inc.Rocky Mountain Chocolate Factory, Inc., (the
"Company"), ranked number one on Newsweek's list of "America's Best
Retailers 2022" in the chocolate and candy stores category, is
headquartered in Durango, Colorado. The Company is a leading
international franchiser of gourmet chocolate and confection,
manufacturing an extensive line of premium chocolates and other
confectionery products. The Company, its subsidiaries, franchisees
and licensees currently operate over 255 Rocky Mountain Chocolate
Factory stores across the United States, the Republic of Panama,
and the Republic of the Philippines. The Company's common stock is
listed on the Nasdaq Global Market under the symbol "RMCF.”
About Fosters FreezeFosters
Freeze, a beloved Californian institution, has been delighting
generations of customers with its mouthwatering soft-serve ice
cream and delicious fast food since 1946. Known for its iconic
swirl-topped cones and innovative sundae creations, Fosters Freeze
has managed to maintain its original charm while continually
adapting to the evolving tastes of its loyal fan base. With over 60
locations across the Golden State and an exciting expansion into
Georgia on the horizon, this treasured brand continues to be a
cherished symbol of nostalgia and a testament to the power of
community-driven success. As Fosters Freeze heads into its next
thrilling chapter, its unwavering commitment to quality, friendly
service, and irresistible treats promises to keep customers coming
back for more of those cherished memories and delectable
indulgences.
Forward-Looking StatementsThis
communication includes statements of the Company's expectations,
intentions, plans and beliefs that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, and are intended to come within the safe
harbor protection provided by those sections. The statements, other
than statements of historical fact, included in this communication
are forward-looking statements and many may be identified by the
use of forward-looking words such as "will," "intend," "believe,"
"expect," "anticipate," "should," "plan," "estimate," "potential,"
"prospects," "build" or similar expressions. These forward-looking
statements involve various risks and uncertainties, including
statements regarding expectations for the Company following the
completion of its divestiture of U-Swirl. Among others, the
following uncertainties and other factors could cause actual
results to differ from those set forth in the forward-looking
statements: (i) the effectiveness of the Company’s assessments
prior to the divestiture; (ii) the negotiation of terms
advantageous to the Company; (iii) certain financial, managerial,
staffing and talent, and operational risks, including diversion of
management’s attention from existing core businesses; and (iv)
difficulties separating U-Swirl from existing operations. If any of
these risks or uncertainties materialize, or if any of the
Company’s assumptions prove incorrect, the Company’s actual results
could materially differ from those expressed or implied by these
forward-looking statements. For a detailed discussion of the risks
and uncertainties that may cause the Company's actual results to
differ from the forward-looking statements, please see the section
entitled "Risk Factors" contained in Item 1A. of RMCF's Annual
Report on Form 10-K for the fiscal year ended February 28, 2022,
filed with the Securities and Exchange Commission (“SEC”) on May
27, 2022, as amended by Amendment No. 1 on Form 10-K/A filed with
the SEC on June 28, 2022 and those discussed in subsequent
Quarterly Reports on Form 10-Q and other documents filed with the
SEC. These forward-looking statements apply only as of the date
hereof. As such they should not be unduly relied upon for more
current circumstances. Except as required by law, the Company
undertakes no obligation to release publicly any revisions to these
forward-looking statements that might reflect events or
circumstances occurring after the date of this communication or
those that might reflect the occurrence of unanticipated
events.
Non-GAAP Financial MeasuresRMCF
provides investors with certain non-GAAP financial measures, such
as adjusted EBITDA. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared
and presented in accordance with GAAP.
Adjusted EBITDA, a non-GAAP financial measure,
is computed by adding depreciation and amortization, stock-based
compensation expenses, costs associated with non-recurring expenses
(which include costs associated with proxy contests and related
matters, costs associated with the departure of executive officers,
costs recognized to retain new executive officers, and event
specific inventory disposal costs) to GAAP income (loss) from
operations.
This non-GAAP financial measure may have
limitations as an analytical tool, and this measure should not be
considered in isolation or as a substitute for analysis of results
as reported under GAAP. Management uses adjusted EBITDA because it
believes that adjusted EBITDA provides additional analytical
information on the nature of ongoing operations excluding expenses
not expected to recur in future periods, non-cash charges and
variations in the effective tax rate among periods. Management
believes that adjusted EBITDA is useful to investors because it
provides a measure of operating performance and its ability to
generate cash that is unaffected by non-cash accounting measures
and non-recurring expenses.
Media ContactRob
SwadoshSwadoshGroup908-723-2845Rob.swadosh.swadoshgroup@gmail.com
Investor ContactSean Mansouri, CFAElevate
IR720-330-2829RMCF@elevate-ir.com
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