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- **Operational Turnaround**: New leadership implemented cost-saving measures, improving factory efficiency and reducing scrap by 20%.
- **Franchise Expansion**: Signed 3 new agreements and remodeled 1 store, targeting 15+ openings annually. Acquired Camarillo store for $165k, projecting $700k+ annual sales.
- **Brand Modernization**: Rolled out new packaging and website, with loyalty program launch in Q1 2026. Third-party delivery partnerships to expand in 2026.
- **Financial Health**: Narrowed net loss to $0.7M, with cash up 186% to $2M. Expecting margin improvements from lower cocoa costs ($5.8k/M vs. $8k/M) in 2027.
- **Growth Catalysts**: Owned stores as test beds, disciplined franchise recruitment, and digital engagement initiatives driving long-term profitability.

**【CEO Summary Section】**
- **Operational Transformation**: New VP of Operations implemented cost-saving strategies (e.g., reducing overtime, scrap, and improving in-stock rates), leading to leaner inventory and faster deliveries. Factory efficiency gains include extended production hours and reduced downtime.
- **Franchise Growth**: Signed 3 new franchise agreements (Folsom, CA; Jersey Shore, NJ; Houston, TX) and remodeled Corpus Christi store, resulting in a 200% sales increase. Targeting 12-18 new store openings annually, prioritizing high-traffic markets like Southern California and international expansion.
- **Brand Modernization**: Rolled out refreshed branding (logo, packaging, website) and hired a new R&D executive to accelerate product innovation. Loyalty program and third-party delivery partnerships (e.g., DoorDash) are being rolled out to enhance customer engagement.
- **Acquisition Strategy**: Acquired Camarillo, CA store for $165k, expecting $700k+ annual sales. Using company-owned stores as test beds for new initiatives and best practices.

**【CFO Financial Commentary】**
- **Q2 2026 Results**: Total revenue $6.8M (+6.2% YoY), driven by product sales ($5.2M, +6.1%) and franchise fees ($1.6M, +6.7%). Net loss narrowed to $0.7M (-28.6% YoY) due to flat expenses ($7.3M) and improved gross margin.
- **Balance Sheet**: Cash increased to $2M (from $0.7M), supported by $1.8M in new debt at 12% interest. Total debt $7.8M, up from $6.6M, reflecting working capital needs.
- **Cost Management**: Factory efficiency gains offset $33k gross profit decline, with ongoing process improvements reducing transportation costs and optimizing inventory.

**【Q&A Highlights】**
- **New COO Background**: Luis Burgos brings 30+ years of manufacturing experience, including roles at Kimberly-Clark, and expertise in FDA compliance.
- **Store Growth Strategy**: Target net-positive annual openings, focusing on multi-unit franchisees and strategic markets. Owned stores will serve as operational proof points.
- **Cash Flow Outlook**: Expect to stop cash burn by Q3 2026, with no immediate plans for equity financing.
- **Cocoa Pricing**: Locked in lower cocoa prices ($5.8k/M vs. prior $8k/M), expecting margin improvements as hedged costs roll off over 12-18 months.

Rocky Mountain Chocolate Factory, Inc. (RMCF) Q2 2026 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

RMCF

RMCF fundamentals

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