Participants

Jeffrey Geygan; Interim Chief Executive Officer; Rocky Mountain Chocolate Factory Inc

Carrie Cass; Chief Financial Officer; Rocky Mountain Chocolate Factory Inc

Sean Mansouri; Investor Relations; Elevate IR

Presentation

Operator

Good evening ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Rocky Mountains Chocolate Factory financial results for the fiscal second quarter, 2025. (Operator Instructions) As a reminder, this conference is being recorded. Joining us on the call today is the company's Intern CEO, Jeff Geygan and CFO, Carrie Cass.
Please be advised this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that can cause actual results to differ materially from those reflected in these forward-looking statements.
These forward-looking statements are also subject to the other risks and uncertainties that are described from time to time in the company's filings with the SCC. Please do not excuse me. Please do not place undue reliance on these forward-looking statements which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements.
The company's presentation also includes certain non GAAP financial measures including adjusted EBITA as supplemental measures of performance of the business. All non GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SCC rules.
You will find reconciliation tables and other important information in the earnings press release and form 8-K furnished on right firms to the SEC earlier today, which are currently available on the company's HR page on the SECs website and will be available on the company's investor relations section of its website within approximately 24 hours after this call has ended.
And now I would like to turn the call over to the company's Interim CEO, Jeff Geygan. Jeff please go ahead.

Jeffrey Geygan

Thank you and good evening. This quarter, we made strides in executing our multiyear strategic plan. As I mentioned on our last call, we've been focused on several critical areas, strengthening the company's liquidity, rebuilding a strong executive team, and laying a solid foundation for sustainable growth and profitability. Today, we'll be providing updates on these initiatives and sharing details about additional progress across the organization.
Let's begin with new store openings. As we mentioned last quarter, we're targeting new stores across various strategic markets beginning next month with our first new store opening in Edmond, Oklahoma. In addition, we're in the process of finalizing lease and franchise agreements for another three locations which we expect to announce soon.
We have a growing pipeline of additional sites and qualified operators. These expansion efforts underscore our commitment to scaling the business and bringing the Rocky Mountain Chocolate Factory experience to more communities across the United States.
In this vein, we're pleased to share the Rocky Mountain Chocolate Factory has been included in the franchise 400 for 2024 by the franchise times. This recognition reinforces our position as a leader in the premium chocolate category and highlights the attractiveness of our model for franchisees.
Turning to our company rebrand, I'm able to report that we're nearing completion with 90% plus of the process now behind us. We also expect to finalize the new RMCF store design very soon. This is a major step for us as it further enables our sales team to drive new franchise interest with mock ups of our new store design and branding.
We're targeting the rebrand launch before the end of the year and look forward to unveiling our work to redefine our brand and elevate the in store experience for our customers. With the holiday season quickly approaching, we're carefully managing our inventory to meet the demands of each RMCF franchisee.
Our focus is on prioritizing fulfilment to our network to ensure every franchisee has a product they need to maximize sales during this important peak season. Our franchisees are central to our growth strategy. They're the lifeblood of our company. We're continuing to improve our order fulfilment rates across the network and working closely with our franchisees to provide an improved experience, helping stores to increase sales and improve profitability.
One example of our improved collaboration with the network is the recently formed franchisee product innovation group or fig, a group composed of Rocky Mountains product development team and a handful of our most creative and innovative franchisees who work together sharing new product ideas and trends across the industry, specifically focused on developing innovative product for all of our franchisees and customers.
Although it's early in the process of introducing new product to the network, this group is creating a valuable source of inspiration for our product development team that incorporate a variety of new flavours, colors and packaging ideas. We look forward to sharing updates as these product innovations go live in the future.
On the personnel front, we've implemented several key strategic changes. During the quarter, we increased hourly wages at the factory for our vitally important production workers which immediately helped to both attract and retain the talent necessary to ensure our daily operations run consistently with minimal downtime. Historically, we've contended with high employee turnover at the factory.
The constant starts and stops with hiring and training was detrimental to factory utilization levels. We want to ensure we have the best talent in the Durango area working at our factory. And equally important, we need to incentivize employees to remain employed after we spend time and resources, training them within our system.
This change will help increase ROI on our human capital investment over time. At the corporate level, we were excited to welcome Carrie Cass, our new CFO in August. She brings deep experience in finance and business strategy, as well as a strong track record of leadership.
She's positioned to play an important role in advancing our growth initiatives, managing our continued cost control efforts, and reinforcing the principles of our improved operational discipline. As I mentioned earlier, improving the company's liquidity position has been essential to executing our multiyear strategic plan.
Earlier this month, we announced a new $6 million, three year credit facility with a group of investors led by one of our Board members, Steve Craig. This facility enabled us to retire our previous $4 million credit facility while providing additional capital for investment in equipment, machinery, inventory, and our strategic growth initiatives.
With an eye toward early 2025, we're gearing up to deploy a new ERP system that will dramatically improve our approach to business integration and data reporting across all departments. A much needed condition to allow for accelerated growth and more intelligent decision making.
The strategic initiative is focused on boosting operational efficiencies and streamlining processes throughout our organization. The new system will integrate key business functions such as finance, inventory management, procurement, [with this] logistics, production scheduling, franchise development and support.
This integration will also provide for greater visibility into our operations, minimizing manual process errors and enhancing decision making capabilities with real time actionable data, so we can adapt more quickly to changing market dynamics. Two other key initiatives for fiscal 25 include the roll out of a customer loyalty program and e-commerce strategy.
Today, our loyalty program is active in just 21 stores, a small fraction of our total store network. We're working closely with our RMCF business consultants to ensure smooth and consistent implementation across the network. We're making good progress during this transitional phase and look forward to sharing more updates in the future.
Our e-commerce sales channel is an important driver of our revenue growth plan. We've set up an e-commerce sales team as an independent unit of our business, similar to a company owned store. We're laying the foundation to create a large e-commerce presence that will seamlessly integrate with and complement our physical store locations all designed to drive traffic from our website to brick and mortar locations.
We're managing our e-commerce business with the intent of increasing store level traffic. It's still early to share complete details about our plan for this initiative, but you should know we expect e-commerce to be an important contributor to revenue growth and profitability in the future.
In summary, we're starting to see increased momentum across the business from new store openings and brand enhancements to operational and personnel improvements. We're encouraged by visible improvement occurring both within the company and across our network of franchisees as we continue to develop our path forward and execute our long term strategy.
We're intensely focused on making sound decisions today that will lead to creating long term value for all of our shareholders. With that said, I'll now turn it over to our CFO, Carrie Cass to walk you through fiscal Q2 financial results.