Rocky Mountain Chocolate Factory(RMCF) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q4 2025 was $8.9 million, up from $7.3 million in the same period last year, while full year revenue increased to $29.6 million from $28 million [24][26] - Product sales rose to $7.1 million from $5.6 million year-over-year, but total product and retail gross profit was a negative $800,000 compared to a positive $100,000 last year, primarily due to higher raw material costs [24][26] - Net loss from continuing operations was $2.9 million or negative $0.37 per share, compared to a loss of $1.6 million or negative $0.25 per share in the previous year [25][27] Business Line Data and Key Metrics Changes - Franchise and royalty fees remained flat at $1.8 million, indicating stability in this revenue stream despite overall losses [24] - The company achieved nearly a 100% fulfillment rate for franchisee demand during Q4, marking a significant operational turnaround [15] Market Data and Key Metrics Changes - The company is focusing on building a healthier franchise network through strategic openings and transfers, with plans to evaluate development opportunities in key markets like Atlanta and Sacramento [10][19] - The e-commerce business saw record sales during the holiday season, although profitability was challenged due to inefficient fulfillment and high advertising costs [18] Company Strategy and Development Direction - The company is undergoing a transformation to become more accountable and resilient, with a focus on operational discipline and a revamped pricing strategy [4][12] - A new ERP system has been implemented to enhance operational visibility and support data-driven decision-making, which is expected to capture several million dollars in additional gross profit in fiscal 2026 [14][22] - The company aims to return to profitability in fiscal 2026, supported by a strong foundation and a corporate culture of excellence and accountability [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and profitability, highlighting the significant strides made in positioning the company for future success [21][22] - The leadership team is focused on engaging well-capitalized and entrepreneurial franchisees to drive expansion, particularly in underrepresented markets [36] Other Important Information - The company raised $2.2 million in equity capital and refinanced its credit facility to support its transformation efforts [22] - A brand refresh is underway, including a new logo and store design, with initial feedback being very positive [16][32] Q&A Session Summary Question: What is the process for determining quarterly price adjustments? - The company plans to adjust prices quarterly or more frequently as needed, ensuring alignment with costs while maintaining target margins [29][30] Question: What is the status of the rebranding process? - Feedback on the rebranding has been fantastic, with new packaging and store designs expected to roll out soon [31][32] Question: What is the strategy for new unit growth? - Growth will primarily come from existing franchisees who are interested in opening new stores, focusing on fewer operators with multiple locations [35][36] Question: Why were the filings delayed this year? - Delays were primarily due to the ERP installation and additional testing required by auditors, but there were no underlying issues [38][39]