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 reported financial and operating
results for the three months and full year ended February 28, 2023.
The Company will hold its conference call today at 8:30 a.m.
Eastern time.
“After spending the past several months
conducting a full review of our business, I’m excited to announce
and roll out our Strategic Transformation Plan,” said Rob Sarlls,
CEO of Rocky Mountain Chocolate Factory. “The plan is designed to
streamline end-to-end operations and exit non-core businesses,
revitalize the in-store experience, revamp and expand our digital
presence and elevate the Rocky Mountain Chocolate Factory brand.
The three-part plan will be executed over the next 3-5 years,
establishing Rocky Mountain Chocolate as America’s preferred
premium chocolatier with first-class manufacturing and omni-channel
retail.
“We have already taken bold steps to transform
the business. In addition to attracting talented and experienced
senior and mid-level executives, we completely exited the yogurt
business, right sized our inventory levels and eliminated many
slow-moving SKUs. We have also improved our franchise relations by
establishing a Franchisee Advisory Council and completing in-person
visits to 50 RMCF stores in 50 weeks. With respect to the store
visits, it was an honor and pleasure to meet a large universe of
our dedicated franchisees, as well as their hard-working and
passionate staffers. I look forward to discussing our plans in more
depth, and reporting on our continued progress, to all Rocky
Mountain Chocolate Factory stakeholders over the coming periods, as
we work to take the business to new and exciting levels of growth
and profitability.”
Recent U-Swirl Divestiture
On February 24, 2023, and May 1, 2023, the
Company completed the sale of its U-Swirl Company-owned locations
and U-Swirl franchise rights, respectively. As a result, the
historical and current results of U-Swirl operations are reported
as discontinued operations. Therefore, for all periods presented in
this release, all figures incorporate these changes and reflect
continuing operations only, unless otherwise noted.
Fiscal Q4 2023 Results vs. Year-Ago
Quarter
- Total revenue
increased 5% to $8.1 million compared to $7.8 million. The increase
was driven primarily by higher pricing, partially offset lower
pound volume. Systemwide revenue per store was up 1.5%.
- Total factory and
retail gross profit decreased to $0.1 million compared to $0.9
million, with gross margin of 1.2% compared to 14.7%. The decrease
was primarily due to the Company writing off $0.6 million of
obsolete inventory as a result of undertaking an aggressive effort
to rationalize the products it offers and to reduce total inventory
levels.
- Total operating
expenses increased to $10.1 million compared to $7.2 million. The
increase was primarily driven by one-time items, including costs
associated with the solicitation of proxies and severance payments.
Excluding these non-recurring items, fiscal Q4 operating expenses
were $8.5 million.
- Net loss from
continuing operations increased to $1.9 million or $(0.29) per
share, compared to net income from continuing operations of $0.4
million or $0.06 per share.
- Adjusted EBITDA (a
non-GAAP measure defined below) was $0.1 million compared to $1.0
million, with the decrease primarily driven by the aforementioned
inventory write-down.
- Cash generated from
operations was $1.5 million compared to $2.0 million.
Fiscal Year 2023 Results vs. Fiscal Year
2022
- Total revenue
increased 3% to $30.4 million compared to $29.5 million.
- Total factory and
retail gross profit was $4.0 million compared to $4.9 million, with
gross margin of 16.4% compared to 20.9%. The decrease was primarily
due to lower production volumes, expenses associated with obsolete
inventory and higher costs of raw materials.
- Total operating
expenses increased to $35.3 million compared to $30.2 million.
Excluding one-time costs, including those related to the
solicitation of proxies and severance payments, fiscal year 2023
operating expenses were $29.2 million.
- Net loss from
continuing operations increased to $5.5 million or $(0.88) per
share, compared to net loss from continuing operations of $0.5
million or $(0.08) per share.
- Adjusted EBITDA (a
non-GAAP measure defined below) was $2.6 million compared to $4.1
million.
- Cash used from
operations was $2.1 million compared to cash generated from
operations of $2.9 million.
- Inventory as a
percentage of Factory Sales was reduced to 15.6% compared to 19.2%
-- the lowest in ten years.
Strategic Transformation
Plan
Key Pillars
Rocky Mountain Chocolate Factory’s management
team and board of directors are excited to unveil their plan to
accelerate growth and profitability. After undergoing a full
strategic review, a three-part transformation plan has been
devised:
- Do More with Less:
Several opportunities in the Company’s retail and factory
businesses have been identified to increase manufacturing and labor
productivity, improve product consistency, reduce waste, and
streamline its transportation and logistics. From a retail
perspective, the company is focused on improving its franchisee
relations and the consistency of its offerings, services and
in-store experiences.
- Simplify and
Focus: The Company is exiting non-core businesses and
focusing on high volume SKUs. In addition, RMCF is right sizing the
brick-and-mortar footprint by eliminating 25-35 underperforming
stores. New and/or upgraded technological infrastructure will also
enable the Company to make better data-driven decisions at both the
factory and retail level.
- Amplify and
Elevate: The Company intends to revitalize its image by
rebranding and working with franchisees to upgrade stores, invest
in the omni-channel experience, and roll out new products. The
Company also plans to work with multi-unit operators to add 75-100
new stores in highly visible and trafficked locations, while
selectively introducing a new premium store concept in top US
luxury retail markets.
Multi-Year Outcomes
The Company is intently focused on executing its
plan over the next 3-5 years. In addition to accelerating growth
and profitability, the Company intends to achieve the following
milestones:
- Firmly establish
Rocky Mountain Chocolate as America’s preferred premium chocolatier
with first-class manufacturing and omni-channel retail.
- More than double
chocolate revenue and factory pound volume.
- Establish a
network of 250+ revitalized chocolate shops doing over $800k
revenue per store – doubling annual system-wide sales.
- Increase
e-commerce sales to approximately 10% of the total revenue mix
(currently less than 2%).
- Restore factory
gross margins to 25-30% levels.
- Drive operating
leverage through better efficiencies and more cost-effective 3rd
party supplier partners, leading to $1.2 million of annualized cost
savings in the next 18 months.
- Launch a subset of premium-plus,
company-owned stores, providing an additional value-creation
channel.
For a full review of the Company’s Strategic
Transformation Plan, goals and KPIs, please join today’s conference
call and click here to access the Company’s new investor
presentation.Conference Call Information
The Company will conduct a conference call
today, May 24, 2023 at 8:30 a.m. Eastern time to discuss its
financial results and the new Strategic Transformation Plan. A
question-and-answer session will follow management’s opening
remarks. The conference call details are as follows:
Date: Wednesday, May 24, 2023Time: 8:30 a.m.
Eastern timeDial-in registration link: hereLive webcast
registration link: here
Please dial into the conference call 5-10
minutes prior to the start time. An operator will register your
name and organization. If you have any difficulty connecting with
the conference call, please contact the company’s investor
relations team at RMCF@elevate-ir.com.
Non-GAAP Financial Measures
To supplement RMCF’s consolidated financial
statements, which are prepared and presented in accordance with
GAAP, RMCF 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, event specific
inventory disposal costs, and gains and losses associated with
long-lived asset sales and impairment) 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. However, due to these limitations,
management uses adjusted EBITDA as a measure of performance only in
conjunction with GAAP measures of performance such as income from
operations and net income. Reconciliations of this non-GAAP measure
to its most comparable GAAP measure are included at the end of this
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 and
headquartered in Durango, Colorado, is a leading international
franchiser of gourmet chocolate and confection stores and a
manufacturer of an extensive line of premium chocolates and other
confectionery products. The Company, its subsidiaries, franchisees
and licensees currently operate over 270 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."
Forward-Looking Statements
This press release includes statements of our
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 (the “Exchange Act”),
and are intended to come within the safe harbor protection provided
by those sections. These forward-looking statements involve various
risks and uncertainties. The statements, other than statements of
historical fact, included in this Quarterly Report are
forward-looking statements. Many of the forward-looking statements
contained in this document may be identified by the use of
forward-looking words such as "will," "intend," "believe,"
"expect," "anticipate," "should," "plan," "estimate," "potential,"
or similar expressions. However, the absence of these words or
similar expressions does not mean that a statement is not
forward-looking. All statements that address operating performance,
events or developments that we expect or anticipate will occur in
the future - including statements expressing general views about
future operating results - are forward-looking statements.
Management of the Company believes that these forward-looking
statements are reasonable as and when made. However, caution should
be taken not to place undue reliance on any such forward-looking
statements because such statements speak only as of the date of
this press release. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as required by law. In addition, forward-looking statements are
subject to certain risks and uncertainties that could cause our
Company’s actual results to differ materially from historical
experience and our present expectations or projections. These risks
and uncertainties include, but are not limited to: inflationary
impacts, the impacts of the COVID-19 pandemic on our business, the
outcome of legal proceedings, changes in the confectionery business
environment, seasonality, consumer interest in our products, the
success of our frozen yogurt business, receptiveness of our
products internationally, consumer and retail trends, costs and
availability of raw materials, competition, the success of our
co-branding strategy, the success of international expansion
efforts and the effect of government regulations. For a detailed
discussion of the risks and uncertainties that may cause our actual
results to differ from the forward-looking statements contained
herein, please see the section entitled “Risk Factors” contained in
our most recent Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, each filed with the Securities and Exchange
Commission.
Investor Contact
Sean Mansouri, CFAElevate
IR720-330-2829RMCF@elevate-ir.com
Media Contact
Rob
SwadoshSwadoshGroup908-723-2845Rob.swadosh.swadoshgroup@gmail.com
STORE INFORMATION |
|
|
|
|
|
New stores opened during |
|
|
|
the three months ended |
|
Stores open as of |
|
February 28, 2023 |
|
February 28, 2023 |
United States |
|
|
|
Rocky Mountain Chocolate Factory |
|
|
|
Franchise Stores |
1 |
|
153 |
Company-Owned Stores |
0 |
|
1 |
Co-brand Stores |
1 |
|
111 |
International License Stores |
0 |
|
4 |
Total |
2 |
|
269 |
|
|
|
|
SELECTED BALANCE SHEET DATA (in thousands)(unaudited) |
|
|
|
|
February 28,
2023 |
February 28,
2022 |
Current Assets |
$ |
11,205 |
|
$ |
14,998 |
Total
Assets |
|
21,987 |
|
|
26,881 |
Current
Liabilities |
|
5,010 |
|
|
5,312 |
Total
Liabilities |
|
7,617 |
|
|
7,481 |
Stockholder's Equity |
$ |
14,370 |
|
$ |
19,400 |
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except share
and per share data)(unaudited) |
|
|
|
|
Three Months Ended February 28, |
Three Months Ended February 28, |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
2022 |
|
Revenues |
|
|
|
|
Factory sales |
$ |
6,121 |
|
|
$ |
5,796 |
|
|
75.1 |
% |
74.3 |
% |
Royalty and marketing fees |
|
1,700 |
|
|
|
1,626 |
|
|
20.9 |
% |
20.9 |
% |
Franchise fees |
|
57 |
|
|
|
43 |
|
|
0.7 |
% |
0.6 |
% |
Retail sales |
|
270 |
|
|
|
331 |
|
|
3.3 |
% |
4.2 |
% |
Total Revenues |
|
8,148 |
|
|
|
7,796 |
|
|
100.0 |
% |
100.0 |
% |
|
|
|
|
|
Costs and expenses |
|
|
|
|
Cost of sales |
|
6,312 |
|
|
|
5,228 |
|
|
77.5 |
% |
67.1 |
% |
Franchise costs |
|
481 |
|
|
|
374 |
|
|
5.9 |
% |
4.8 |
% |
Sales and marketing |
|
578 |
|
|
|
389 |
|
|
7.1 |
% |
5.0 |
% |
General and administrative |
|
2,603 |
|
|
|
982 |
|
|
31.9 |
% |
12.6 |
% |
Retail operating |
|
90 |
|
|
|
172 |
|
|
1.1 |
% |
2.2 |
% |
Depreciation and amortization, exclusive of depreciation and
amortization expense of $166 and $156 included in cost of sales,
respectively |
|
32 |
|
|
|
29 |
|
|
0.4 |
% |
0.4 |
% |
Total Costs and Expenses |
|
10,096 |
|
|
|
7,174 |
|
|
123.9 |
% |
92.0 |
% |
|
|
|
|
|
Income (loss) from operations |
|
(1,948 |
) |
|
|
622 |
|
|
-23.9 |
% |
8.0 |
% |
|
|
|
|
|
Other income |
|
|
|
|
Interest expense |
|
(6 |
) |
|
|
- |
|
|
-0.1 |
% |
0.0 |
% |
Interest income |
|
12 |
|
|
|
2 |
|
|
0.1 |
% |
0.0 |
% |
Investment gain |
|
- |
|
|
|
- |
|
|
0.0 |
% |
0.0 |
% |
Gain on insurance recovery |
|
- |
|
|
|
- |
|
|
0.0 |
% |
0.0 |
% |
Other Income, net |
|
6 |
|
|
|
2 |
|
|
0.1 |
% |
0.0 |
% |
|
|
|
|
|
Income (loss) before income taxes |
|
(1,942 |
) |
|
|
624 |
|
|
-23.8 |
% |
8.0 |
% |
|
|
|
|
|
Provision for income taxes |
|
(88 |
) |
|
|
243 |
|
|
-1.1 |
% |
3.1 |
% |
|
|
|
|
|
Net income (loss) from continuing operations |
|
(1,854 |
) |
|
|
381 |
|
|
-22.8 |
% |
4.9 |
% |
|
|
|
|
|
Net income (loss) from discontinued operations, net of
tax |
|
141 |
|
|
|
(22 |
) |
|
|
|
Consolidated Net (Loss) Earnings |
|
(1,713 |
) |
|
|
359 |
|
|
|
|
Basic Earnings (loss) Per Common |
|
|
|
|
Share |
|
|
|
|
Loss from continuing operations |
$ |
(0.29 |
) |
|
$ |
0.06 |
|
|
|
|
Earnings (loss) from discontinued operations |
$ |
0.02 |
|
|
$ |
- |
|
|
|
|
Net Earnings |
$ |
(0.27 |
) |
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Diluted Earnings (loss) Per Common |
|
|
|
|
Share |
|
|
|
|
Loss from continuing operations |
$ |
(0.29 |
) |
|
$ |
0.06 |
|
|
|
|
Earnings (loss) from discontinued operations |
$ |
0.02 |
|
|
$ |
- |
|
|
|
|
Net Earnings |
$ |
(0.27 |
) |
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Weighted Average Common |
|
|
|
|
Shares Outstanding |
|
6,247,414 |
|
|
|
6,179,805 |
|
|
|
|
|
|
|
|
|
Dilutive Effect of Employee Stock |
|
|
|
|
Awards |
|
- |
|
|
|
106,084 |
|
|
|
|
|
|
|
|
|
Weighted Average Common |
|
|
|
|
Shares Outstanding, |
|
|
|
|
Assuming Dilution |
|
6,247,414 |
|
|
|
6,285,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
(in thousands, except share and per share data)(unaudited) |
|
|
|
|
Twelve Months Ended February 28, |
|
|
Twelve Months Ended February 28, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|
Revenues |
|
|
|
|
Factory sales |
$ |
23,372 |
|
$ |
22,374 |
|
|
76.8 |
% |
75.9 |
% |
Royalty and marketing fees |
|
5,771 |
|
|
5,774 |
|
|
19.0 |
% |
19.6 |
% |
Franchise fees |
|
204 |
|
|
180 |
|
|
0.7 |
% |
0.6 |
% |
Retail sales |
|
1,085 |
|
|
1,160 |
|
|
3.6 |
% |
3.9 |
% |
Total Revenues |
|
30,432 |
|
|
29,488 |
|
|
100.0 |
% |
100.0 |
% |
|
|
|
|
|
Costs and expenses |
|
|
|
|
Cost of sales |
|
20,455 |
|
|
18,611 |
|
|
67.2 |
% |
63.1 |
% |
Franchise costs |
|
1,826 |
|
|
1,915 |
|
|
6.0 |
% |
6.5 |
% |
Sales and marketing |
|
2,060 |
|
|
1,475 |
|
|
6.8 |
% |
5.0 |
% |
General and administrative |
|
10,326 |
|
|
7,456 |
|
|
33.9 |
% |
25.3 |
% |
Retail operating |
|
537 |
|
|
607 |
|
|
1.8 |
% |
2.1 |
% |
Depreciation and amortization, exclusive of depreciation and
amortization expense of $646 and $621 included in cost of sales,
respectively |
|
119 |
|
|
119 |
|
|
0.4 |
% |
0.4 |
% |
Total Costs and Expenses |
|
35,323 |
|
|
30,183 |
|
|
116.1 |
% |
102.4 |
% |
|
|
|
- |
|
|
|
|
Income (loss) from operations |
|
(4,891 |
) |
|
(695 |
) |
|
-16.1 |
% |
-2.4 |
% |
|
|
|
|
|
Other income |
|
|
|
|
Interest expense |
|
(10 |
) |
|
- |
|
|
0.0 |
% |
0.0 |
% |
Interest income |
|
26 |
|
|
11 |
|
|
0.1 |
% |
0.0 |
% |
Gain on insurance recovery |
|
- |
|
|
167 |
|
|
0.0 |
% |
0.6 |
% |
Other Income, net |
|
16 |
|
|
178 |
|
|
0.1 |
% |
0.6 |
% |
|
|
|
|
|
Income (loss) before income taxes |
|
(4,875 |
) |
|
(517 |
) |
|
-16.0 |
% |
-1.8 |
% |
|
|
|
|
|
Provision for income taxes |
|
614 |
|
|
(17 |
) |
|
2.0 |
% |
-0.1 |
% |
|
|
|
|
|
Net loss from continuing operations |
|
(5,489 |
) |
|
(500 |
) |
|
-18.0 |
% |
-1.7 |
% |
|
|
|
|
|
Net income from discontinued operations, net of
tax |
|
(192 |
) |
|
158 |
|
|
|
|
Consolidated Net Loss |
|
(5,681 |
) |
|
(342 |
) |
|
|
|
Basic Earnings (loss) Per Common |
|
|
|
|
Share |
|
|
|
|
Loss from continuing operations |
$ |
(0.88 |
) |
$ |
(0.08 |
) |
|
|
|
Earnings (loss) from discontinued operations |
$ |
(0.03 |
) |
$ |
0.02 |
|
|
|
|
Net Earnings |
$ |
(0.91 |
) |
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
Diluted Earnings (loss) Per Common |
|
|
|
|
Share |
|
|
|
|
Loss from continuing operations |
$ |
(0.88 |
) |
$ |
(0.08 |
) |
|
|
|
Earnings (loss) from discontinued operations |
$ |
(0.03 |
) |
$ |
0.02 |
|
|
|
|
Net Earnings |
$ |
(0.91 |
) |
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
Weighted Average Common |
|
|
|
|
Shares Outstanding |
|
6,226,279 |
|
|
6,140,687 |
|
|
|
|
|
|
|
|
|
Dilutive Effect of Employee Stock |
|
|
|
|
Awards |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
Weighted Average Common |
|
|
|
|
Shares Outstanding, |
|
|
|
|
Assuming Dilution |
|
6,226,279 |
|
|
6,140,687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP RECONCILIATIONADJUSTED EBITDA(in thousands)
(unaudited) |
|
Three Months Ended February 28, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
GAAP: Income from Operations |
$ |
(1,948 |
) |
|
$ |
622 |
|
|
n/m |
Depreciation and Amortization |
|
198 |
|
|
|
185 |
|
|
|
Stock-Based Compensation Expense |
|
179 |
|
|
|
126 |
|
|
|
Costs associated with non-recurring expenses (1) |
|
1,627 |
|
|
|
96 |
|
|
|
Non-GAAP, adjusted EBITDA |
$ |
56 |
|
|
$ |
1,029 |
|
|
-94.6 |
% |
|
|
|
|
|
Twelve Months Ended February 28, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Change |
GAAP: Income (loss) from Operations |
$ |
(4,891 |
) |
|
$ |
(695 |
) |
|
n/m |
Depreciation and Amortization |
|
765 |
|
|
|
740 |
|
|
|
Stock-Based Compensation Expense |
|
651 |
|
|
|
835 |
|
|
|
Costs associated with non-recurring expenses (1) |
|
6,092 |
|
|
|
3,226 |
|
|
|
Non-GAAP, adjusted EBITDA |
$ |
2,617 |
|
|
$ |
4,106 |
|
|
-36.3 |
% |
|
|
|
|
(1) Non-recurring expenses include costs associated with the
departure of the former Chief Executive Officer, the retention of a
new Chief Executive and Financial Officers, and costs associated
with a stockholder’s contested solicitation of proxies. |
Rocky Mountain Chocolate... (NASDAQ:RMCF)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Rocky Mountain Chocolate... (NASDAQ:RMCF)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024