Rocky Mountain Chocolate Factory reported its operating results for the first quarter of FY2015.
The Company also announced that its Board of Directors has approved a new 3 million-share stock buyback program.
The Company franchises and operates gourmet chocolate and confection stores and manufactures an extensive line of premium chocolates and other confectionery products. Its controlled subsidiary, U-Swirl, Inc. (OTCQB: SWRL), franchises and operates self-serve frozen yogurt cafés. Rocky Mountain Chocolate Factory will host an investor conference call today at 4:15 p.m. Eastern Time to discuss its operating results and other topics of interest (see details below).
FIRST QUARTER HIGHLIGHTS
Net income attributable to RMCF shareholders totaled $711,334, or $0.12 per basic and $0.11 per diluted share, in the three months ended May 31, 2014, compared with net income attributable to RMCF shareholders of $1,179,307, or $0.19 per basic and diluted share, in the first quarter of the previous fiscal year.
The Company's adjusted diluted earnings per share, a non-GAAP measure defined later in this release, declined to $0.14 in the first quarter of FY2015, compared with $0.19 in the prior-year quarter.
Adjusted EBITDA, a non-GAAP measure defined later in this release, declined 3.7 percent to $2,142,000 in the quarter ended May 31, 2014, versus $2,225,000 in the quarter ended May 31, 2013. The Company's majority-owned subsidiary, U-Swirl, Inc. ("U-Swirl"), reported a 124 percent improvement in net income, which totaled $376,563 in the most recent quarter, compared with net income of $168,079 in the first quarter of FY2014.
The Company's total revenue increased 1.4 percent to approximately $10.3 million in the quarter ended May 31, 2014, compared with approximately $10.2 million in the quarter ended May 31, 2013. System-wide, same-store sales at the Company's domestic Rocky Mountain Chocolate Factory store locations decreased 0.3 percent in the first quarter of FY2015, when compared with the prior-year period. Same-store pounds of product purchased from the Company's factory in Durango declined 4.9 percent from prior-year levels.
Factory sales decreased 6.6 percent in the three months ended May 31, 2014, relative to the prior-year quarter, while factory adjusted gross margins declined 160 basis points to 28.8 percent, from 30.4 percent a year earlier.
Retail sales rose 4.6 percent in the most recent quarter, when compared with the prior-year period, while retail gross margin improved to 67.1 percent of retail sales, versus 65.7 percent in the first quarter of FY2014.
Royalty and marketing fees increased 40.1 percent from the year-earlier quarter, primarily due to an increase of 72.1 percent in domestic franchise stores as a result of the acquisition of four self-serve frozen yogurt franchising companies by U-Swirl, Inc., the Company's controlled subsidiary, during FY2014.
Franchise fees declined to $57,000 in the first quarter of FY2015, from $276,000 in the first quarter of FY2014.
Operating income declined 26.0 percent to $1,346,760 in the most recent quarter, compared with operating income of $1,819,029 in the first quarter of the previous fiscal year.
The Company's franchisees and licensees opened 1 domestic Rocky Mountain Chocolate Factory store, 1 international licensed store, and 1 co-branded Cold Stone Creamery store during the first quarter of FY2015. The Company's subsidiary, U-Swirl, Inc. opened 13 domestic and 2 international franchised or licensed self-serve frozen yogurt cafés in the three months ended May 31, 2014.
On June 13, 2014, the Company paid its 44th consecutive quarterly cash dividend to shareholders, in the amount of $0.11 per share.
The Company's Board of Directors approved a new stock repurchase program that authorizes management to buy back up to $3 million worth of RMCF common shares in the open market or in private transactions. The Board also cancelled a previous stock repurchase program, under the terms of which the Company would have been able to buy back up to $1.2 million of RMCF shares.
