Rocky Mountain Chocolate Factory(RMCF) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 increased to $7.9 million compared to $7.7 million in the same period last year, representing a growth of approximately 2.6% [29] - Product sales rose to $6.4 million from $6.1 million year-over-year, while franchise and royalty fees decreased to $1.1 million from $1.2 million [29] - Total costs and expenses increased to $8.6 million from $8.5 million, driven by non-recurring professional expenses [31] - Net loss for the quarter was $0.8 million or negative $0.10 per share, an improvement from a net loss of $0.12 per share in the previous year [31] - EBITDA improved to a positive $41,000 compared to a negative $0.3 million a year ago [31] Business Line Data and Key Metrics Changes - The company fulfilled nearly 100% of franchisee and specialty market demand during the holiday season, a significant improvement from the previous year [13] - The e-commerce business, including RMCF and Amazon.com, saw sales nearly triple during the holiday months compared to last year [17] Market Data and Key Metrics Changes - The company ended the fiscal third quarter with a cash balance of $1.1 million, down from $2.1 million at the end of February 2024 [32] - Accounts receivable increased to $4.1 million from $2.2 million, reflecting increased demand across all channels [34] - Total inventories rose to $5.7 million from $4.3 million, indicating a strategic buildup to meet franchisee needs during the holiday season [34] Company Strategy and Development Direction - The company is focused on improving liquidity, revitalizing its franchise network, and executing key operational priorities as part of a transformational process [7] - New store openings are planned in Chicago, Charleston, and Brandon, with a focus on enhancing the franchise model and improving average unit volume [8][10] - A new ERP system was launched to improve cost management and decision-making through better data analytics [14][15] - The company is also expanding its loyalty program and utilizing customer engagement applications to drive sales [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing gross and operating margin pressures but believes these issues are transitory and anticipates improved results in the coming quarters [24] - The company is committed to continuous improvement and strategic investments to drive revenue growth and profitability [26][27] Other Important Information - The company secured a $6 million credit facility to support operations and growth initiatives [23] - Strategic hires were made to strengthen the executive management team, including new VPs for Franchise Business Support and Marketing [21][22] Q&A Session Summary Question: What kind of benefits do you expect to drive from the new ERP system? - The new ERP system will provide timely, accurate data and analytics to assist in managerial decisions aimed at driving profitability [38] Question: Can you provide an update on the rebranding initiative and its potential impact on franchisee interest? - Franchisee enthusiasm is high, with existing franchisees willing to open new stores, indicating positive reception of the new branding and store design [40] Question: What progress has been made on new store openings and targeted geographies? - There is a robust pipeline for new store openings, with three stores announced so far, and efforts are ongoing to create more opportunities [42]