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Rocky Mountain Chocolate Factory, Inc. Reports First Six Months of

PR-Inside.com: 2018-10-11 12:03:05
DURANGO, CO / ACCESSWIRE / October 11, 2018 / Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the "Company") today reported its operating results for the three and six months ended August 31, 2018. The Company franchises and operates gourmet chocolate and confection stores and self-serve frozen yogurt cafés, and manufactures an extensive line of premium chocolates and other confectionery products. SECOND QUARTER HIGHLIGHTS - Total revenue decreased 5.6 percent to $7.8 million during the three months ended August 31, 2018 compared to $8.3 million during the three months ended August 31, 2017. - Same-store pounds of product purchased from the Company's factory by franchisees and co-branded licensees decreased 2.2 percent during the three months ended August 31, 2018 compared to the three months ended August 31, 2017. - Net income decreased 19.1 percent to $751,000, or $0.13 per basic and diluted share, in the three months ended August 31, 2018 compared to net income of $928,000, or $0.16 per basic share and diluted share, in the three months ended August 31, 2017. - Operating income decreased 30.7 percent to $1.0 million in the three months ended August 31, 2018, compared to operating income of $1.5 million during the three months ended August 31, 2017. - Adjusted EBITDA (a non-GAAP measure defined later in this release) decreased 14.6 percent to $1.7 million in the three months ended August 31, 2018 compared to $2.0 million in the three months ended August 31, 2017. - Factory sales decreased 2.0 percent during the three months ended August 31, 2018 compared to the three months ended August 31, 2017, primarily due to a 13.3 percent decrease in shipments of products to customers outside our network of franchised retail stores. - Royalty and marketing fees decreased 4.1 percent in the three months ended August 31, 2018, primarily due to a 10.2 percent decrease in the number of domestic franchised locations in operation (primarily yogurt locations)during the three months ended August 31, 2018 compared to the three months ended August 31, 2017. - Franchise fees decreased 34.0 percent in the three months ended August 31, 2018, primarily due to a decrease in international license fees during the three months ended August 31, 2018 compared to three months ended August 31, 2017. - The Company's franchisees and licensees opened three domestic Rocky Mountain Chocolate Factory franchised locations, one domestic U-Swirl franchised location and one international Rocky Mountain Chocolate Factory licensed location during the three months ended August 31, 2018. - On September 14, 2018, the Company paid its 61st consecutive quarterly cash dividend to shareholders, in the amount of $0.12 per share.SECOND QUARTER OPERATING RESULTS Total revenue decreased 5.6 percent to $7.8 million during the three months ended August 31, 2018 compared to $8.3 million during the three months ended August 31, 2017. Total factory sales decreased 2.0 percent to $4.8 million in the three months ended August 31, 2018 compared to $4.9 million in the three months ended August 31, 2017. The decrease was due primarily to a 13.3 percent decrease in shipments to customers outside the Company's network of franchise retail locations. This change was primarily the result of a decrease in purchases by the Company's largest customer. Factory gross margins decreased 390 basis points to 25.2 percent of factory sales in the three months ended August 31, 2018 compared to 29.1 percent in the three months ended August 31, 2017.Retail sales declined 19.3 percent to $954,000 in the three months ended August 31, 2018 compared to $1.2 million in the three months ended August 31, 2017. This decrease in retail sales was primarily due to the closure of certain underperforming Company-owned locations. Same-store sales at all Company-owned stores and cafés decreased 0.1 percent during the three months ended August 31, 2018 compared to the three months ended August 31, 2017. Royalty and marketing fees decreased 4.1 percent to $1.96 million in the three months ended August 31, 2018 compared to $2.04 million in the three months ended August 31, 2017, primarily due to a 10.2 percent decrease in the number of domestic franchise stores and cafés in operation (primarily yogurt locations) resulting from domestic store closures exceeding domestic store openings. The Company's franchisees and licensees opened three Rocky Mountain Chocolate Factory franchised locations, one domestic U-Swirl franchised location and one international Rocky Mountain Chocolate Factory licensed location during the three months ended August 31, 2018. Complete lists of stores and cafés currently in operation are available on the Company's websites at www.rmcf.com and www.u-swirlinc.com.Franchise fees decreased 34.0 percent to $108,000 in the three months ended August 31, 2018 compared to $163,000 in the three months ended August 31, 2017, as a result of a decrease in franchise fees associated with new international license agreements recognized during the three months ended August 31, 2017 with no comparable fees recognized during the three months ended August 31, 2018.Income from operations decreased 30.7 percent in the three months ended August 31, 2018 to $1.0 million compared to $1.5 million in the three months ended August 31, 2017. The Company's effective income tax rate in the three months ended August 31, 2018 was 26.8 percent compared with 37.1 percent in the three months ended August 31, 2017. The change is the result of the lower enacted U.S. corporate tax rate of 21 percent under the Tax Cuts and Jobs Act.Net income decreased 19.1 percent to $751,000, or $0.13 per basic and diluted share, in the three months ended August 31, 2018, compared to net income of $928,000, or $0.16 per basic and diluted share, in the three months ended August 31, 2017. Adjusted EBITDA (a non-GAAP financial measure defined later in this release) decreased 14.6 percent for the three months ended August 31, 2018 to $1.7 million compared to $2.0 million for the three months ended August 31, 2017. SIX-MONTH OPERATING RESULTS Total revenue decreased 8.2 percent to $16.2 million during the six months ended August 31, 2018 compared to $17.6 million during the six months ended August 31, 2017. Total factory sales decreased 6.5 percent to $10.3 million in the six months ended August 31, 2018 compared to $11.1 million in the six months ended August 31, 2017. The decrease was due primarily to a 26.0 percent decrease in shipments to customers outside the Company's network of franchise retail locations. This decrease was primarily the result of a change in purchases by the Company's largest customer. Factory gross margins decreased 250 basis points to 24.1 percent of factory sales in the six months ended August 31, 2018 compared to 26.6 percent in the six months ended
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