Rocky Mountain Chocolate Factory, Inc. Reports 16.5 Percent Increase in Third Quarter Earnings
Revenue Growth Accelerates to 15.0 Percent in Most Recent Quarter, Compared With 11.6 Percent in First Half of Fiscal Year
DURANGO, CO -- (MARKET WIRE) -- 01/06/11 -- Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the "Company"), which franchises gourmet chocolate and confection stores and manufactures an extensive line of premium chocolates and other confectionery products, today reported higher revenues and earnings for the third quarter and first nine months of FY2011, when compared with prior-year periods.
For the three months ended November 30, 2010, total revenues increased 15.0 percent to approximately $7.9 million, compared with revenues of approximately $6.9 million in the third quarter of the previous fiscal year. Same-store sales at franchised retail outlets increased approximately 2.1 percent during the quarter ended November 30, 2010, when compared with the prior-year period.
Retail sales increased 28.1 percent from last year's third quarter, to $766,000, compared with $598,200 in the same period of FY2010, due to an increase in the average number of Company-owned stores in operation from 8 in the quarter ended November 30, 2009 to 12 in the quarter ended November 30, 2010.
Sales of all franchised and Company-owned stores increased 4.0 percent to approximately $25.3 million in the most recent quarter, compared with approximately $24.4 million in the corresponding prior-year quarter.
Factory product sales of approximately $5.9 million in the quarter ended November 30, 2010 represented an increase of 14.1 percent when compared with approximately $5.1 million in last year's third quarter. The improvement was primarily due to higher sales to the Company's franchise system, reflecting a 2.3 percent increase in same-store pounds purchased by franchisees, along with an increase in sales of factory product to licensed co-branded locations and customers outside the Company's system of franchised stores.
Royalties and marketing fees rose 5.4 percent in the third quarter of FY2011 to approximately $1.2 million, compared with approximately $1.1 million in the third quarter of FY2010. The increase in royalties and marketing fees resulted from higher same-store sales at franchised locations and an increase in royalties from licensed locations, partially offset by a 4.2 percent decrease in the average number of domestic franchised units in operation. Franchise fees more than tripled to $114,000 in the third quarter of FY2011, versus $31,500 in the third quarter of FY2010, primarily due to license fees associated with the opening of eight Cold Stone Creamery co-branded locations in the most recent quarter.
Net income for the quarter ended November 30, 2010 increased 16.5 percent to $873,480, compared with $749,963 in the corresponding prior-year period. Basic and diluted earnings per share increased 16.7 percent to $0.14, versus $0.12 in the quarter ended November 30, 2009.
"Same-store sales at our franchised Rocky Mountain Chocolate Factory stores improved during the third quarter, rising approximately 2.1 percent when compared with the prior-year quarter," stated Bryan Merryman, Chief Operating Officer and Chief Financial Officer of the Company. "By contrast, same-store sales during the first half of Fiscal 2011 increased by approximately 0.1 percent relative to the prior-year period. The moderate strengthening that we saw during the September-November quarter continued through the month of December, as holiday spending by U.S. consumers recovered somewhat in most of the retail venues where our stores are located. It now appears that same-store sales for the twelve months ending February 28, 2011 will improve from prior-year levels. If that occurs, it will represent the first improvement in full-year same-store sales since Fiscal 2007."
"The volume of product purchased from our factory in Durango, Colorado also improved nicely during the third quarter and first nine months of Fiscal 2011. We benefited from higher same-store sales to our franchisees, increased sales to third-party customers, and growing sales to an expanding number of co-branded stores that are operated under a license that we have granted to Cold Stone Creamery."
"The Company's newest retail concept involves Aspen Leaf self-serve yogurt stores, the first of which opened in San Antonio, Texas on December 16, 2010," continued Merryman. "To date, we have signed leases for additional company-owned stores in Greely, Colorado; Farmington, New Mexico; and Boise, Idaho. While we are highly enthusiastic regarding the prospective economics of this new concept, it is too early to forecast the impact of Aspen Leaf upon our operating results in Fiscal 2012 and future years."
For the nine months ended November 30, 2010, total revenues rose 12.8 percent to approximately $22.2 million, versus revenues of approximately $19.6 million in the first nine months of FY2010. Same-store sales at franchised locations increased approximately 0.5 percent during the first nine months of FY2011, when compared with the corresponding period of the previous fiscal year. Retail sales increased 41.0 percent to approximately $2.5 million in the nine months ended November 30, 2010, versus approximately $1.8 million in the year-earlier period, primarily due to an increase in the average number of Company-owned stores in operation from 7 in the nine months ended November 30, 2009 to 12 in the nine months ended November 30, 2010. Same-store sales at Company-owned locations decreased 4.1 percent in the first nine months of FY2011 relative to the corresponding period in FY2010.
Sales of all franchised and Company-owned stores increased 3.5 percent to approximately $80.6 million in the nine months ended November 30, 2010, compared with approximately $77.8 million in the first nine months of FY2010.
Factory product sales rose 11.0 percent to approximately $15.5 million in the most recent nine-month period, compared with approximately $13.9 million in the first nine months of the previous fiscal year. The increase was primarily due to higher shipments of factory products to customers outside of the Company's network of franchised stores, a 1.4 percent increase in same-store pounds purchased by franchised retail stores, and higher shipments to licensed co-branded retail stores.
Net income during the nine months ended November 30, 2010 increased 15.5 percent to $2,748,723, compared with $2,380,039 in the first nine months of FY2010. Basic earnings per share increased 12.5 percent to $0.45, versus $0.40 in the nine months ended November 30, 2009, while diluted earnings per share rose 15.8 percent to $0.44, compared with $0.38 in the corresponding period of the previous year.
During the first nine months of Fiscal 2011, franchisees, licensees and the Company opened 33 new stores, including 19 Cold Stone Creamery co-branded conversions and six stores outside of the United States. Based upon information currently available to the Company, management expects the number of new store openings for the fiscal year ending February 28, 2011 to approximate 40 to 43 units, including 23 to 25 Cold Stone Creamery co-branded locations and one Aspen Leaf self-serve yogurt store. A complete list of stores is available on the Company's website at www.RMCF.com.
During the third quarter of Fiscal 2011, franchisees and licensees opened new stores, including Cold Stone Creamery co-branded conversions, in Albuquerque, New Mexico; Anchorage, Alaska; Bellingham, Washington; Edwardsville, Illinois; Freehold, New Jersey; Gaithersburg, Maryland; Hudson, Wisconsin; Montreal, Quebec; San Antonio, Texas; San Marcos, California; Quebec, Quebec; Pickerington, Ohio; Abu Dhabi, UAE; Vicksburg, Mississippi; and West Jordon, Utah. During the month of December, franchisees and licensees opened new stores, including Cold Stone Creamery co-branded conversions in Calgary, Alberta; Kansas City, Kansas; Lake Elsinore, California; Longmont, Colorado; Temecula, California; and Tulsa, Oklahoma. A complete list of stores is available on the Company's website at www.RMCF.com.
On December 10, 2010, the Company paid its 30th consecutive quarterly cash dividend, in the amount of $0.10 per share, to shareholders of record November 30, 2010.
The Company will host a conference call today, January 6, 2011, at 4:15 p.m. EST to discuss third quarter and nine-month operating results, along with other topics of interest. To access the conference call, please dial 1-877-317-6789 (international/local participants dial 412-858-4600) approximately five minutes prior to 4:15 p.m. EST and ask to be connected to the "Rocky Mountain Chocolate Factory conference call." A replay of the call will be available through January 13, 2011 at 5:00 p.m. EST by dialing 877-344-7529 (international/local callers dial 412-317-0088) and entering the conference I.D. #447169.
Rocky Mountain Chocolate Factory, Inc., headquartered in Durango, Colorado, is an international franchiser of gourmet chocolate and confection stores and a manufacturer of an extensive line of premium chocolates and other confectionery products. The Company and its franchisees currently operate 361 stores in 37 states, Canada, and the United Arab Emirates. The Company's common stock is listed on Nasdaq under the symbol "RMCF."
Certain statements in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties, and the Company undertakes no obligation to update any forward-looking information. Risks and uncertainties that could cause cash flows to decrease or actual results to differ materially include, without limitation, seasonality, consumer interest in the Company's products, general economic conditions, consumer and retail trends, costs and availability of raw materials, competition, the success of the Company's co-branding agreement with Cold Stone Creamery Brands, including but not limited to new store openings, the success of the Company's launch of Aspen Leaf Yogurt, LLC and its ability to open new locations this fiscal year, whether same store sales increase for FY2011 and other risks. Readers are referred to the Company's periodic reports filed with the SEC, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. The information contained in this press release is a statement of the Company's present intentions, beliefs or expectations and is based upon, among other things, the existing business environment, industry conditions, market conditions and prices, the economy in general and the Company's assumptions. The Company may change its intentions, beliefs or expectations at any time and without notice, based upon any changes in such factors, in its assumptions or otherwise. The cautionary statements contained or referred to in this press release should be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.
For Further Information, Contact Bryan J. Merryman COO/CFO (970) 259-0554
STORE INFORMATION
New stores opened during
the nine months ended Stores open as of
November 30, 2010 November 30, 2010
------------------------ ------------------------
United States:
Franchised Stores 8 251
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Company-owned Stores 0 12
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Cold Stone Creamery 19 38
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International Licensed
Stores 6 55
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Total 33 356
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Interim Unaudited
STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Three Months Ended
November 30, November 30,
2010 2009 2010 2009
Revenues
Factory sales $ 5,859 $ 5,135 74.0% 74.6%
Royalty and marketing fees 1,177 1,116 14.9% 16.2%
Franchise fees 114 31 1.4% 0.5%
Retail sales 766 599 9.7% 8.7%
Total revenues 7,916 6,881 100.0% 100.0%
Costs and Expenses
Cost of sales 4,375 3,742 55.3% 54.4%
Franchise costs 403 377 5.1% 5.5%
Sales and marketing 396 358 5.0% 5.2%
General and administrative 686 572 8.7% 8.3%
Retail operating 569 459 7.2% 6.7%
Depreciation and
amortization 163 174 2.0% 2.5%
Total costs and expenses 6,592 5,682 83.3% 82.6%
Income from Operations 1,324 1,199 16.7% 17.4%
Other Income 16 7 0.2% 0.1%
Income Before Income Taxes 1,340 1,206 16.9% 17.5%
Provision for Income Taxes 466 456 5.9% 6.6%
Net Income $ 874 $ 750 11.0% 10.9%
Basic Earnings per Common
Share $ 0.14 $ 0.12
========== ==========
Diluted Earnings per Common
Share $ 0.14 $ 0.12
========== ==========
Weighted Average Common
Shares Outstanding 6,063,720 6,025,938
Dilutive Effect of Stock
Options 244,026 196,913
Weighted Average Common
Shares Outstanding,
Assuming Dilution 6,307,746 6,222,851
Interim Unaudited
STATEMENTS OF INCOME
(in thousands, except per share data)
Nine Months Ended Nine Months Ended
November 30, November 30,
2010 2009 2010 2009
Revenues
Factory sales $ 15,477 $ 13,943 69.8% 71.0%
Royalty and marketing fees 3,935 3,834 17.8% 19.5%
Franchise fees 244 85 1.1% 0.5%
Retail sales 2,502 1,775 11.3% 9.0%
Total revenues 22,158 19,637 100.0% 100.0%
Costs and Expenses
Cost of sales 11,502 10,208 51.9% 52.0%
Franchise costs 1,116 1,149 5.0% 5.9%
Sales and marketing 1,144 1,035 5.2% 5.3%
General and administrative 1,999 1,775 9.0% 9.0%
Retail operating 1,691 1,167 7.6% 5.9%
Depreciation and
amortization 504 529 2.3% 2.7%
Total costs and expenses 17,956 15,863 81.0% 80.8%
Income from Operations 4,202 3,774 19.0% 19.2%
Other Income (Expense) 41 19 0.2% 0.1%
Income Before Income Taxes 4,243 3,793 19.2% 19.3%
Provision for Income Taxes 1,494 1,413 6.8% 7.2%
Net Income $ 2,749 $ 2,380 12.4% 12.1%
Basic Earnings per Common
Share $ 0.45 $ 0.40
========== ==========
Diluted Earnings per Common
Share $ 0.44 $ 0.38
========== ==========
Weighted Average Common
Shares Outstanding 6,045,782 6,008,099
Dilutive Effect of Stock
Options 236,496 199,770
Weighted Average Common
Shares Outstanding,
Assuming Dilution 6,282,278 6,207,869
SELECTED BALANCE SHEET DATA
(in thousands)
November 30, 2010 February 28, 2010
(audited)
Current Assets $13,083 $12,225
Total assets $20,182 $18,920
Current Liabilities $ 3,390 $ 3,294
Stockholders' Equity $15,980 $14,731
For Further Information, Contact: Bryan J. Merryman COO/CFO (970) 259-0554
Source: Rocky Mountain Chocolate Factory, Inc.
Released January 6, 2011