Rocky Mountain Chocolate Manufacturing facility (RMCF) reported a web lack of $0.7 million in Fiscal Q2 2025, an enchancment from the $1 million loss in the identical interval final 12 months. The corporate’s complete income barely decreased to $6.4 million from $6.6 million within the earlier 12 months.
Key Takeaways:
• Complete income: $6.4 million
• Internet loss: $0.7 million
• Product gross sales: $4.9 million
• Franchise charges: $1.5 million (flat)
• New retailer opening deliberate in Edmond, Oklahoma
• Rebranding course of over 90% full
Firm Outlook
• Plans to open three further places
• Acknowledged within the Franchise 400 for 2024
• Implementing new ERP system in early 2025
• Rolling out buyer loyalty program
• Strengthening e-commerce technique
Bullish Highlights
• Improved worker retention after wage will increase
• New $6 million credit score facility established
• Potential enlargement in strategic markets like Boston, New York, and Atlanta
• Constructive inside suggestions on rebranding initiative
Bearish Highlights
• Slight lower in complete income year-over-year
• Restricted influence on fiscal 2025 income from new retailer openings
Q&A Highlights
• At the moment operates 147 shops throughout 36 states
• 80% of shops positioned west of the Mississippi
• Untapped alternatives recognized within the Northeast
• Franchise growth workforce actively engaged on optimizing retailer places and operator picks
Rocky Mountain Chocolate Manufacturing facility’s Interim CEO Jeff Geygan and CFO Carrie Cass mentioned the corporate’s monetary outcomes and strategic initiatives through the earnings name. Regardless of reporting a web loss, the corporate confirmed enchancment in comparison with the earlier 12 months and outlined plans for enlargement and operational enhancements.
The corporate is specializing in development by present shops and e-commerce for fiscal 2025, which ends on February 28. Whereas new retailer openings are deliberate, their influence on income for the present fiscal 12 months is predicted to be restricted. RMCF is concentrating on enlargement in densely populated jap U.S. cities, the place it presently has a restricted presence.
The rebranding initiative, which is almost full, goals to reinforce buyer expertise and appeal to franchisee curiosity. Moreover, the corporate has secured a brand new $6 million credit score facility to help its strategic development plans.
Worker retention has improved following wage will increase on the manufacturing unit, which is essential for assembly manufacturing objectives. The corporate can also be getting ready to implement a brand new ERP system and roll out a buyer loyalty program to additional improve operational efficiencies and buyer engagement.
Whereas dealing with challenges, Rocky Mountain Chocolate Manufacturing facility seems to be taking steps to enhance its monetary efficiency and place itself for future development within the aggressive confectionery market.
InvestingPro Insights
Rocky Mountain Chocolate Manufacturing facility’s current monetary efficiency aligns with a number of key insights from InvestingPro. The corporate’s reported web lack of $0.7 million in Fiscal Q2 2025 is in line with InvestingPro information indicating that RMCF isn’t worthwhile over the past twelve months. That is additional mirrored within the unfavourable P/E ratio of -4.04 for the final twelve months as of Q1 2025.
The slight lower in complete income to $6.4 million from $6.6 million year-over-year corresponds with InvestingPro information exhibiting a income decline of 6.82% over the past twelve months. This development underscores the challenges RMCF faces in its present market surroundings.
InvestingPro Ideas spotlight that RMCF is “shortly burning by money” and “suffers from weak gross revenue margins.” These observations are notably related given the corporate’s give attention to enlargement and operational enhancements talked about within the article. The gross revenue margin of 11.56% for the final twelve months helps this concern about profitability.
Regardless of these challenges, it is price noting that InvestingPro information reveals a robust return of 18.08% over the past month, which might point out some optimistic market sentiment in direction of the corporate’s current strategic initiatives, such because the rebranding effort and deliberate retailer openings.
For buyers searching for a extra complete evaluation, InvestingPro provides 8 further ideas for Rocky Mountain Chocolate Manufacturing facility, offering deeper insights into the corporate’s monetary well being and market place.
Full transcript – Rocky Mountain Chocolate Manufacturing facility (RMCF) Q2 2025:
Operator: Good night, women and gents. Thanks for standing by. Welcome to as we speak’s convention name to debate Rocky Mountain Chocolate Manufacturing facility’s monetary outcomes for the Fiscal Second Quarter 2025. Right now, all individuals are in listen-only mode. As a reminder, this convention is being recorded. Becoming a member of us on the decision as we speak is the corporate’s Interim CEO, Jeff Geygan; and CFO, Carrie Cass. Please be suggested, this convention name will include statements which are thought-about forward-looking statements underneath the Non-public Securities Litigation Reform Act of 1995. These forward-looking statements are topic to sure identified and unknown dangers and uncertainties, in addition to assumptions that may trigger precise outcomes to vary materially from these mirrored in these forward-looking statements. These forward-looking statements are additionally topic to the opposite dangers and uncertainties which are described every so often within the firm’s filings with the SEC. Please don’t place undue reliance on these forward-looking statements, that are being made solely as of the date of this name. Besides as required by legislation, the corporate undertakes no obligation to publicly replace or revise any forward-looking statements. The corporate’s presentation additionally contains sure non-GAAP monetary measures, together with adjusted EBITDA, as supplemental measures of efficiency of the enterprise. All non-GAAP measures have been reconciled to probably the most instantly comparable GAAP measures in accordance with SEC guidelines. One can find reconciliation tables and different vital info within the earnings press launch and Kind 8-Ok, furnished to the SEC earlier as we speak, that are presently accessible on the corporate’s EDGAR web page on the SEC’s web site and can be accessible on the corporate’s investor relations sections of its web site inside roughly 24 hours after this name has ended. And now, I want to flip the decision over to the corporate’s Interim CEO, Jeff Geygan. Jeff, please go forward.
Jeff Geygan: Thanks and good night. This quarter we made strides in executing our multi-year strategic plan. As I discussed on our final name, we have been targeted on a number of vital areas, strengthening the corporate’s liquidity, rebuilding a robust government workforce, and laying a strong basis for sustainable development and profitability. Immediately we’ll be offering updates on these initiatives and sharing particulars about further progress throughout the group. Let’s start with new retailer openings. As we talked about final quarter, we’re concentrating on new shops throughout numerous strategic markets starting subsequent month with our first new retailer opening in Edmond, Oklahoma. As well as, we’re within the means of finalizing lease and franchise agreements for one more three places, which we count on to announce quickly. We have now a rising pipeline of further websites and certified operators. These enlargement efforts underscore our dedication to scaling the enterprise and bringing the Rocky Mountain Chocolate Manufacturing facility expertise to extra communities throughout the US. On this vein, we’re happy to share that Rocky Mountain Chocolate Manufacturing facility has been included within the Franchise 400 for 2024 by the Franchise Occasions. This recognition reinforces our place as a pacesetter within the premium chocolate class and highlights the attractiveness of our mannequin for franchisees. Turning to our firm rebrand, I will report that we’re nearing completion with 90% plus of the method now behind us. We additionally count on to finalize the brand new RMCF retailer design very quickly. This can be a main step for us because it additional permits our gross sales workforce to drive new franchise pursuits with mock-ups of our new retailer design and branding. We’re concentrating on the re-brand launch earlier than the top of the 12 months and stay up for unveiling our work to redefine our model and elevate the in-store expertise for our prospects. With the vacation season shortly approaching, we’re rigorously managing our stock to satisfy the calls for of every RMCF franchisee. Our focus is on prioritizing achievement to our community to make sure each franchisee has the product they should maximize gross sales throughout this vital peak season. Our franchisees are central to our development technique. They’re the lifeblood of our firm. We’re persevering with to enhance our order achievement charges throughout the community and dealing intently with our franchisees to offer an improved expertise, serving to shops to extend gross sales and enhance profitability. One instance of our improved collaboration with the community is the not too long ago shaped Franchisee Product Innovation Group, or FIG, a gaggle composed of Rocky Mountain’s product growth workforce and a handful of our most artistic and revolutionary franchisees who work collectively sharing new product concepts and traits throughout the business, particularly targeted on creating revolutionary product for all of our franchisees and prospects. Though it is early within the means of introducing new product to the community, this group is making a helpful supply of inspiration for our product growth workforce that incorporate quite a lot of new flavors, colours, and packaging concepts. We stay up for sharing updates as these product improvements go dwell sooner or later. On the personnel entrance, we have carried out a number of key strategic modifications. Through the quarter, we elevated hourly wages on the manufacturing unit for our vitally vital manufacturing employees, which instantly helped to each appeal to and retain the expertise vital to make sure our every day operations run constantly with minimal downtime. Traditionally we have contended with excessive worker turnover on the manufacturing unit. The fixed begins and stops with hiring and coaching was detrimental to manufacturing unit utilization ranges, we need to guarantee we’ve the very best expertise within the Durango space working at our manufacturing unit. And equally vital, we have to incentivize workers to stay employed after we spend time and assets coaching them inside our system. This variation will assist improve ROI on our human capital funding over time. On the company degree, we have been excited to welcome Carrie Cass, our new CFO, in August. She brings deep expertise in finance and enterprise technique, in addition to a robust monitor document of management. She’s positioned to play an vital position in advancing our development initiatives, managing our continued value management efforts, and reinforcing the ideas of our improved operational self-discipline. As I discussed earlier, bettering the corporate’s liquidity place has been important to executing our multi-year strategic plan. Earlier this month, we introduced a brand new $6 million three-year credit score facility with a gaggle of buyers led by one in all our board members, Steve Craig. This facility enabled us to retire our earlier $4 million credit score facility, whereas offering further capital for funding in gear, equipment, stock, and our strategic development initiatives. With a watch towards early 2025, we’re gearing as much as deploy a brand new ERP system that may dramatically enhance our strategy to enterprise integration and information reporting throughout all departments. A a lot wanted situation to permit for accelerated development and extra clever resolution making. The strategic initiative is concentrated on boosting operational efficiencies and streamlining processes all through our group. The brand new system will combine key enterprise features akin to finance, stock administration, procurement, logistics, manufacturing scheduling, franchise growth and help. This integration can even present for better visibility into our operations, minimizing handbook course of errors and enhancing decision-making capabilities with real-time actionable information in order that we will adapt extra shortly to altering market dynamics. Two different key initiatives for fiscal 2025 embody the rollout of a buyer loyalty program and e-commerce technique. Immediately our loyalty program is energetic in simply 21 shops, a small fraction of our complete retailer community. We’re working intently with RMCF’s enterprise consultants to make sure a easy and constant implementation throughout the community. We’re making good progress throughout this transitional part and stay up for sharing extra updates sooner or later. Our e-commerce gross sales channel is a crucial driver of our income development plan. We have arrange an e-commerce gross sales workforce as an unbiased unit of our enterprise, just like a company-owned retailer. We’re laying the inspiration to create a big e-commerce presence that may seamlessly combine with and complement our bodily retailer places, all designed to drive visitors from our web site to brick and mortar places. We’re managing our e-commerce enterprise with the intent of accelerating retailer degree visitors. It is nonetheless early to share full particulars about our plan for this initiative, however it is best to know we count on e-commerce to be an vital contributor to income development and profitability sooner or later. In abstract, we’re beginning to see elevated momentum throughout the enterprise from new retailer openings and model enhancements to operational and personnel enhancements. We’re inspired by seen enchancment occurring each inside the firm and throughout our community of franchisees as we proceed to develop our path ahead and execute our long-term technique. We’re intensely targeted on making sound selections as we speak that may result in creating long-term worth for all of our shareholders. With that stated, I am going to now flip it over to our CFO, Carrie Cass, to stroll you thru fiscal Q2 monetary outcomes.
Carrie Cass: Thanks, Jeff. I am thrilled to affix Rocky Mountain Chocolate Manufacturing facility and to work alongside this gifted workforce as we give attention to driving development and delivering worth to our shareholders. Transferring on to our fiscal Q2 2025 outcomes. Until in any other case said, all comparisons are on a year-over-year foundation. Complete income for the quarter was $6.4 million in comparison with $6.6 million in the identical interval final 12 months. Product gross sales have been $4.9 million in comparison with $5 million final 12 months and franchise and royalty charges have been primarily flat at $1.5 million. The overall product and income and retail gross revenue was $0.6 million in comparison with $0.4 million, with gross revenue bettering to 11.5% in comparison with $7.7. The rise in gross margin was primarily attributed to cost will increase and improved working effectivity. Complete prices and bills improved to $7.3 million in comparison with $7.6 million within the — from a 12 months in the past. Internet loss for the quarter was $0.7 million or $0.11 per share in contrast with the lack of $1 million or $0.16 per share in fiscal quarter two of 2024. Turning to the stability sheet, we ended the fiscal second quarter with a money stability of $1 million in comparison with $2.1 million at February 29, 2024. We additionally ended the fiscal quarter with complete inventories of $6.1 million in comparison with $4.4 million at February 29, 2024, which displays our strategic buildup of stock as a manufacturing unit to make sure we’re properly positioned to satisfy the wants of our franchisees through the vital vacation season. As of October 31, 2024, we had $3.5 million excellent on our line of credit score and remained freed from long-term debt. This compares to $1.3 million excellent on our line of credit score at February 29, 2024. As Jeff talked about earlier, subsequent to the quarter finish, we entered right into a $6 million credit score facility, which has enabled us to retire our earlier line of credit score. This concludes our ready remarks. We’ll be glad to reply any questions you’ve got presently. Lisa, again to you.
Operator: Thanks. [Operator Instructions] Right now, there aren’t any questions within the queue. I want to flip the decision over to the corporate’s investor relations advisor, Sean Mansouri. Please go forward.
Sean Mansouri: Thanks, Lisa. Whereas we’re ready for a dwell Q&A to construct up right here, we want to handle some questions which have are available in through electronic mail over the previous week. So kicking issues off, Jeff, Carrie, have you ever seen any measurable enchancment in operational effectivity since rising worker wages on the manufacturing unit degree?
Jeff Geygan: Sure. Hey, Sean, that is Jeff. Thanks. It is a bit of bit early to inform as we have only in the near past carried out this, however I can say that the extent of retention is dramatically greater than what it had been traditionally. So we’re very inspired by that enchancment. And including to my feedback from earlier, having well-trained workers that report back to work on a well timed foundation that enable us to run all of our manufacturing strains is important to attaining our manufacturing objectives.
Sean Mansouri: Wonderful. And this one really got here in through the name. With 90% to 95% of the rebranding course of full, how do you count on a brand new model and retailer design to have an effect on buyer engagement and franchisee curiosity? Are you able to share any early suggestions from the rebranding efforts?
Jeff Geygan: Properly, I do not need to let the cat out of the bag. We have spent an terrible lot of money and time on this initiative. It is taken a large amount of effort. We can be rolling that out shortly. I feel everybody can be excited with what we have provide you with. I do know the workforce internally who’s checked out it has reacted very favorably.
Sean Mansouri: Nice. You talked about concentrating on new retailer openings throughout eight strategic markets. How do you prioritize these markets and what particular components are you contemplating when choosing new retailer places? How do you foresee these openings impacting general income development in fiscal 2025?
Jeff Geygan: Sure. Excellent query. Let me reply the latter half first. It takes time to determine the correct web site, determine the suitable operator. A few of these operators are present franchisees, so we all know them properly. However then it takes time to truly put a — get a retailer up and operating. So so far as the influence for fiscal 2025, which ends on February 28, I would not see a major quantity of income development from model new shops. The income development alternative is actually from present shops rising gross sales, in addition to e-commerce, which might be turned on in a short time. We have now 147 shops throughout 36 states in the US. One of many challenges we face is logistics, that’s getting product to the shops on a well timed foundation. I’ve stated to our new retailer growth division, they usually’re really a superb group, that if you happen to take a look at the map the place we’ve all these pins that are — the place our shops are positioned. One of the best location goes to be between two pins, as a result of which means I have already got a truck going from web site A to web site B. If we will put one thing in between that may be nice. Within the scheme of issues, about 80% of our shops are west of the Mississippi. So there’s actually virgin territory for us east of the Mississippi the place we have already got a presence extra so within the southeast, considerably within the mid-west, however little or no within the northeast. So when it comes to the place you may determine apparent alternative, you suppose Boston, New York, Philly, D.C., and then you definately begin to come right down to Atlanta, that are clearly key areas for us. There’s dense inhabitants. The suggestions from the few shops that we’ve on the market is excellent. So we predict there’s nice alternative for us in these areas particularly. However Kara Conklin, who heads our franchise growth workforce has a eager eye on creating the suitable places with the suitable operators. So we’re very inspired by the pipeline of potential places and operators that we’ve creating.
Sean Mansouri: Thanks, Jeff. That concludes the Q&A we obtained through electronic mail. Operator, again to you.
Operator: Thanks. Thanks all for collaborating in as we speak’s name. Chances are you’ll cling up your cellphone strains now. And all people, have a beautiful day.
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