U-Swirl, Inc. Reports Profitable First Quarter, Compared With Net Loss in Prior-Year Period

HENDERSON, NV - (Marketwired - Jul 11, 2013) - U-Swirl, Inc. (OTCQB: SWRL) ("the Company"), parent to U-SWIRL International, Inc., which through its subsidiary owns and franchises U-SWIRL Frozen Yogurt® cafes, today announced results of for the quarter ended May 31, 2013 (first quarter of FY2014).

First Quarter Highlights

  • Total revenue increased 114 percent to $1,717,000 in the first quarter of FY2014, compared with total revenue of $802,000 in the quarter ended May 31, 2012.
  • Company-owned frozen yogurt cafés generated $1,378,000 in net sales, which represented a 104 percent increase when compared with the first quarter of the previous fiscal year.
  • Franchise royalties and fees rose 171 percent to $339,000 in the most recent quarter, compared with $125,000 in the prior-year period, primarily due to the acquisition, from Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF), of certain assets related to frozen yogurt cafés in January 2013.
  • Operating income improved to $182,000 in the three months ended May 31, 2013, versus an operating loss of ($77,000) in the prior-year quarter.
  • Net income for the first quarter of FY2014 increased by $245,000 to $168,000, compared with a net loss of ($77,000) in the first quarter of the previous fiscal year.
  • On a diluted per-share basis, the Company earned $0.01 in the most recent quarter, compared with a net loss of ($0.02) per share in the year-earlier period. The weighted average number of common shares outstanding, on a basic and diluted basis, totaled 14,402,088, versus 4,900,401 a year earlier. The increase in shares outstanding was primarily due to the shares issued to Rocky Mountain Chocolate Factory, Inc. in January 2013 in partial payment for certain Aspen Leaf Yogurt and Yogurtini assets.
  • Working capital increased from a negative ($61,000) as of February 28, 2013 to $202,000 as of May 31, 2013.
  • Cash on hand increased from $359,000 as of February 28, 2013 to $453,000 as of May 31, 2013
  • New U-SWIRL Frozen Yogurt cafés were opened by franchisees in Houston, TX; Dupont, WA; and Wayne, NJ during the first quarter of FY2014. The first co-branded U-SWIRL Frozen Yogurt / Rocky Mountain Chocolate Factory store was opened by a franchisee in Collierville, TN in March 2013.

Management Comments

"We are delighted to report strong operating results for the first full three-month period following our acquisition of self-serve frozen yogurt cafés, franchise rights, and related assets from Rocky Mountain Chocolate Company, Inc. in January 2013," stated Ulderico Conte, Chief Executive Officer of U-Swirl, Inc. "This acquisition increased the number of stores operated and/or franchised by U-Swirl by more than 100% and provided us with the 'critical mass' to achieve profitability during the most recent quarter. The integration of these assets into the U-Swirl organization has proceeded smoothly, and we are currently transitioning a number of Aspen Leaf Yogurt and Yogurtini stores to the U-SWIRL Frozen Yogurt brand.

"In March, we opened our first U-SWIRL Frozen Yogurt / Rocky Mountain Chocolate Factory co-branded café in Collierville, Tennessee. We believe that, by offering consumers delicious frozen desserts and gourmet chocolate products in a single location, our cafés can capitalize upon the offsetting seasonal demand patterns for frozen yogurt and chocolate. Demand for frozen yogurt typically peaks in the hot summer months, while demand for gourmet chocolate products is stronger during the fall, winter and spring seasons. We are optimistic that co-branded stores will experience greater stability in seasonal sales, while offering customers a more exciting selection of desserts on a year-round basis.

"We remain confident that U-Swirl is now positioned to pursue a store expansion program and consolidation strategy that can prove highly rewarding to our shareholders in coming years. The self-serve frozen yogurt segment of the $6 billion away-from-home frozen desserts market is highly fragmented, and we have identified a number of industry participants that do not appear to have the financial and management resources to achieve sustainable profitability and growth. These and other frozen yogurt chains may represent acquisition opportunities for U-Swirl, and we are currently in discussions with a number of frozen yogurt café operators and franchisors regarding potential strategic relationships.

"As we move through the second and third quarters of Fiscal 2014, during which demand for frozen yogurt is seasonally strong, we are optimistic that our financial and operating results will continue to compare favorably with prior-year periods. Based upon currently available information, we expect Fiscal 2014 to be a record year for the Company," concluded Conte.

About U-Swirl, Inc.

U-Swirl, Inc. is an operator and franchisor of self-serve frozen yogurt cafés that operate under the following names: U-SWIRL Frozen Yogurt, Aspen Leaf Yogurt, and Yogurtini. The cafés offer frozen yogurt in 20 non-fat and low-fat flavors, including tart, traditional, and no-sugar-added options, along with fresh sorbet. Approximately 70 toppings such as fresh fruit, sauces, candies, and granola are available to customize each serving of yogurt to the customer's individual taste.

In January 2013, the Company acquired frozen yogurt café assets, franchise rights and certain other assets from Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) in exchange for a 60 percent controlling ownership interest in the Company, certain warrants and notes payable.

U-Swirl, Inc. is headquartered in Henderson, Nevada, and its common stock trades on the OTCQB under the symbol "SWRL". As of May 31, 2013, the Company and/or its franchisees operated 71 self-serve frozen yogurt cafés in 23 states.

Forward-Looking Statements

Certain statements in this press release are "forward-looking statements". 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, market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company's control. 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, and it undertakes no obligation to revise or update publicly any forward-looking statements for any reason. 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.

 

STORE INFORMATION
         
    New stores opened during    
    three months ended   Stores open as of
    May 31, 2013   May 31, 2013
   Franchise Stores   3   57
   Company-Owned Stores   0   14
 Total   3   71
         
         
 
 
SELECTED BALANCE SHEET DATA
(in thousands)
         
    May 31, 2013   February 28, 2013
    (unaudited)    
Current Assets   $ 776   $ 604
Total Assets   $ 3,787   $ 3,718
Current Liabilities   $ 574   $ 665
Stockholder's Equity   $ 1,889   $ 1,693
             
             

   
   
Interim Unaudited  
STATEMENTS OPERATIONS  
(in thousands, except per share data)  
   
    Three Months Ended
May 31,
    Three Months Ended
May 31,
 
    2013     2012     2013     2012  
Revenues                            
  Franchise, royalty and marketing fees     339       125     19.7 %   15.6 %
  Retail sales     1,378       677     80.3 %   84.4 %
  Total Revenues     1,717       802     100.0 %   100.0 %
                             
Costs and expenses                            
  Food, beverage and packaging costs     451       220     26.3 %   27.4 %
  Labor and related expenses     268       134     15.6 %   16.7 %
  Occupancy and related expenses     248       114     14.4 %   14.2 %
  Marketing and advertising     35       13     2.0 %   1.6 %
  General and administrative     427       321     24.9 %   40.0 %
  Depreciation and amortization     106       77     6.2 %   9.6 %
  Total Costs and Expenses     1,535       879     89.4 %   109.6 %
                             
Income (loss) from operations     182       (77 )   10.6 %   -9.6 %
                             
Interest expense     (14 )     -     -0.8 %   0.0 %
                             
Income (loss) before income taxes     168       (77 )   9.8 %   -9.6 %
                             
Provision for income taxes     -       -     0.0 %   0.0 %
                             
Net income (loss)     168       (77 )   9.8 %   -9.6 %
                             
                             
Basic and Diluted Earnings (Loss)                            
  Per Common Share   $ 0.01     $ (0.02 )            
                             
Weighted Average Common Shares                            
  Outstanding, Basic and Diluted     14,402,088       4,900,401              
                   

Contact:

U-Swirl, Inc.
(702) 586-8700
info@u-swirl.com

 

###

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