Rocky Mountain Chocolate Factory(RMCF) - 2026 Q1 - Quarterly Results

Overview and Management Commentary Management Commentary Interim CEO Jeff Geygan described Fiscal 2025 as the start of a "transformative era" for the company, initiating restructuring, cultural rebuilding, operational discipline, and system modernization - Fiscal 2025 marked the beginning of a major transformation focused on restructuring the business, rebuilding culture, restoring operational discipline, and modernizing core systems[2] - Key changes included bringing consumer packaging back in-house, implementing a new point-of-sale system, overhauling the e-commerce platform, and realigning product pricing[2] - With operational changes effective March 1, 2025, management believes the company has been stabilized and is now focused on disciplined, profitable growth for fiscal 2026[2] Operational Highlights and Strategic Initiatives Operational and Franchise Network Improvements The company resolved key operational challenges, strengthened its franchise network by retiring co-packing, exiting unprofitable markets, and implementing a new pricing model - Retired the company's co-packing operations in Salt Lake City in February 2025[5] - Adjusted or exited unprofitable Specialty Market relationships during fiscal 2025[5] - A new franchise product pricing model was implemented on March 1, 2025, to address systemic margin pressures for franchisees[5] Brand Modernization and Digital Enhancements The company is advancing brand modernization with new store designs, a Charleston opening, a Chicago flagship, systemwide signage, and a redesigned website launching July 2025 - A new store opened in Charleston, South Carolina on June 3, 2025, featuring the refreshed branding and design[5] - Construction is planned for a flagship location in downtown Chicago, with an expected opening before the holiday season[5] - A redesigned website is expected to launch in July 2025, followed by updated packaging aligned with the new brand identity in early August 2025[7] Financial Performance Fiscal Fourth Quarter 2025 Financial Results Q4 FY2025 revenue increased to $8.9 million, but gross loss widened to $(0.8) million due to higher raw material costs, leading to a net loss of $(2.9) million Q4 FY2025 vs. Q4 FY2024 Financial Highlights (in millions, except per share data) | Metric | Q4 FY2025 | Q4 FY2024 | | :--- | :--- | :--- | | Total Revenue | $8.9 | $7.3 | | Total Product and Retail Gross Profit | $(0.8) | $0.1 | | Total Costs and Expenses | $11.6 | $8.8 | | Net Loss from Continuing Operations | $(2.9) | $(1.6) | | Loss per Share from Continuing Operations | $(0.37) | $(0.25) | - The decrease in gross profit was primarily due to higher raw material costs[13] - The increase in total costs and expenses was mainly attributed to investments in marketing and administrative infrastructure related to the brand refresh and prototype store rollout[13] Fiscal Year 2025 Financial Results FY2025 revenue grew to $29.6 million, but gross profit significantly declined to $0.1 million due to inflationary pressures, resulting in an expanded net loss of $(6.1) million Fiscal Year 2025 vs. 2024 Financial Highlights (in millions, except per share data) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Total Revenue | $29.6 | $28.0 | | Total Product and Retail Gross Profit | $0.1 | $1.4 | | Total Costs and Expenses | $35.5 | $32.9 | | Net Loss from Continuing Operations | $(6.1) | $(4.9) | | Loss per Share from Continuing Operations | $(0.86) | $(0.77) | - The decrease in annual gross profit was primarily due to a sharp increase in the cost of cocoa, other inflationary pressures, higher overhead costs, and reduced production volume[13] Financial Statements Consolidated Balance Sheets As of February 28, 2025, total assets increased to $21.2 million, but total liabilities significantly rose to $14.2 million, decreasing stockholders' equity to $7.0 million Selected Balance Sheet Data (in thousands) | Account | Feb 28, 2025 | Feb 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $720 | $2,082 | | Total Assets | $21,175 | $20,577 | | Total Liabilities | $14,200 | $9,941 | | Total stockholders' equity | $6,975 | $10,636 | Consolidated Statements of Operations FY2025 total revenues increased to $29.6 million, but rising costs led to a wider loss from operations of $(5.9) million and a net loss of $(6.1) million Fiscal Year Statement of Operations Summary (in thousands) | Account | Year Ended Feb 28, 2025 | Year Ended Feb 28, 2024 | | :--- | :--- | :--- | | Total Revenue | $29,579 | $27,950 | | Total costs and expenses | $35,521 | $32,852 | | Loss from Operations | $(5,942) | $(4,902) | | Loss from Continuing Operations | $(6,122) | $(4,875) | | Net Loss | $(6,122) | $(4,172) | Conference Call and Company Information Conference Call Information The company will host a conference call on June 18, 2025, at 9:00 a.m. Eastern time to discuss its financial results - A conference call to discuss financial results is scheduled for June 18, 2025, at 9:00 a.m. Eastern time[9] About Rocky Mountain Chocolate Factory, Inc. Rocky Mountain Chocolate Factory, Inc. is a leading franchiser of premium chocolate and confectionery retail stores, operating nearly 260 locations - The company is a leading franchiser of premium chocolate stores, operating nearly 260 locations across the United States and internationally[11] Forward-Looking Statements This section provides a standard disclaimer for forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ - The press release includes forward-looking statements that are subject to various risks and uncertainties which could cause actual results to differ materially from expectations[12] - Key risks include inflationary impacts, changes in the business environment, seasonality, raw material costs, and competition[14]