""We are seeing a steady improvement in our margin capture as the adjusted pricing flows through our financial results," - Jeff Geygan, CEO." - Jeff Geygan
In Q1 2026, Rocky Mountain Chocolate Factory Inc (RMCF) reported total revenues of $6.37 million, representing a small decline from the $7.97 million reported in the same quarter last year, primarily due to the discontinuation of a less profitable wholesale account. However, management noted a significant improvement in gross profit margins, which increased to $1.98 million from a negative gross profit of $0.3 million year-over-year. This turnaround reflects management's successful strategy of enhancing operational efficiencies and adjusting pricing structures. The net loss narrowed to $0.32 million, or $0.04 per share, compared to a loss of $1.7 million last year. The company also achieved a positive EBITDA of $2 million compared to a negative EBITDA of $1.4 million in Q1 2025, highlighting a notable operational turnaround. RMCF remains optimistic about continuing this positive momentum going forward.
Key Performance Indicators
Revenue
6.37M
QoQ: -19.26% | YoY:-12.21%
Gross Profit
1.98M
31.08% margin
QoQ: 7.14% | YoY:150.32%
Operating Income
-145.00K
QoQ: 79.29% | YoY:90.79%
Net Income
-324.00K
QoQ: 61.75% | YoY:79.65%
EPS
-0.04
QoQ: 63.64% | YoY:84.00%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $6.37M (Q1 2026), down 20.74% YoY but flat QoQ.
**Gross Profit**: $1.98M, reflecting a 150.32% YoY increase.
**Operating Loss**: $0.15M compared to $0.13M loss last year.
**Net Loss**: $0.32M ($0.04 per share), significantly improved from $1.7M loss YOY.
**EBITDA**: $2.00M, a positive shift from negative $1.4M last year.
Financial Highlights
Financial Performance Overview
- Revenue: $6.37M (Q1 2026), down 20.74% YoY but flat QoQ.
- Gross Profit: $1.98M, reflecting a 150.32% YoY increase.
- Operating Loss: $0.15M compared to $0.13M loss last year.
- Net Loss: $0.32M ($0.04 per share), significantly improved from $1.7M loss YOY.
- EBITDA: $2.00M, a positive shift from negative $1.4M last year.
- Cash: $893K at period end, compared to $720K at the beginning of the quarter.
- Total Liabilities: $13.36M, a decrease correlated with improved cash management and operational efficiency.
Management noted that the improved results were driven by the transition away from low-margin products, enhancing store-level operating results, and implementing pricing adjustments which have positively flowed through to gross margin capture.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.37M
-12.21%
-19.26%
Gross Profit
1.98M
150.32%
7.14%
Operating Income
-145.00K
90.79%
79.29%
Net Income
-324.00K
79.65%
61.75%
EPS
-0.04
84.00%
63.64%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key Insights from Management
1. Operational Excellence Initiatives: CEO Jeff Geygan stated, "We're no longer in a rebuilding mode. We're now in an execution mode. After laying the groundwork through a series of foundational initiatives, we are operating with greater precision."
2. Supply Chain Improvements: Geygan also mentioned a shift to a flat fee program for freight delivery, stating, "We believe this plan will encourage more frequent store orders and provide a more consistent and higher quality in-store experience for consumers."
3. Store Expansion Strategy: The company opened a new storefront and is in negotiations for additional locations, as Geygan emphasized the importance of finding capable franchisees with strong backgrounds.
4. Positive E-commerce Developments: Management is focused on modernizing their digital presence to drive direct consumer traffic and improve online conversions, an initiative that aligns with contemporary consumer preferences.
"We are seeing a steady improvement in our margin capture as the adjusted pricing flows through our financial results," - Jeff Geygan, CEO.
— Jeff Geygan
"For the first time in several quarters, we have positive EBITDA. That's attributed to our improved pricing, our SG&A discipline and some factory level efficiencies," - Carrie Cass, CFO.
— Carrie Cass
Forward Guidance
Looking ahead, management remains cautiously optimistic about the future, with CEO Geygan noting, "We believe we are in a better position to execute than we've been in many years with the right strategy, team, and infrastructure for sustainable growth and long-term value creation." Key metrics to monitor include franchise expansion, consistency in margin growth, and advancements in the e-commerce space. Additionally, Geygan indicated that improvements in EBITDA and store-level profitability are expected to continue as operational systems mature.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
RMCF Focus
31.08%
N/A
N/A
N/A
MDLZ
26.10%
7.30%
1.56%
56.48%
TR
35.30%
15.50%
2.05%
31.80%
LDSVF
0.00%
0.00%
0.00%
0.00%
BRRLY
14.40%
7.31%
1.34%
51.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment outlook for RMCF appears cautiously optimistic. The company has demonstrated a strong commitment to improving its operational framework and franchisee support systems, which should encourage sales stability and growth. Given the financial performance indicators—specifically the reduction in losses and transition to positive EBITDA—the company is well-positioned for a turnaround. Investors should watch for execution of new store openings, progress in the e-commerce strategy, and continued improvements in profit margins to gauge ongoing viability and success.
Key Investment Factors
Growth Potential
RMCF has significant opportunities for growth, particularly in new store openings and enhancements in franchisee support and supply chain efficiencies. Their emphasis on online sales expansion and product quality enhancements aligns with market trends favoring premium offerings in the confectionery space.
Profitability Risk
Certain risks persist, including reliance on franchisee performance and potential supply chain disruptions, especially as management adjusts pricing strategies. Changes in consumer preferences and economic conditions could also affect sales.
Financial Position
RMCF shows improved financial health with increasing cash reserves and a reduction in operational losses. However, leverage remains a concern with total liabilities at $13.36 million and net debt at $6.21 million.
SWOT Analysis
Strengths
Improved gross margins and operational efficiencies
Positive shift to EBITDA for the first time in years
Strategic repositioning to focus on premium products and franchisee support
Weaknesses
Dependence on franchisee operations which may exhibit variability in performance
Recent revenue decline due to loss of a low-margin wholesale customer
Opportunities
Expansion into new locations and markets
Increased online presence and e-commerce sales potential
Strengthening the loyalty program as consumer engagement increases
Threats
Economic pressures affecting consumer spending
Competition from larger players in the confectionery industry
Potential fluctuations in raw material prices affecting margins