The Colorado-based Rocky Mountain Chocolate Factory announced yesterday (4 May) that its board of directors has approved the repurchase of up to US$2m of the company’s common stock on the open market.
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“In light of the fact that the Company generated an after-tax return on beginning shareholders’ equity of more than 29% in Fiscal 2006 and expects another record year in fiscal 2006, we view the repurchase of our common stock as an attractive opportunity for our shareholders,” stated Bryan Merryman, COO and CFO of Rocky Mountain Chocolate Factory.
“The company’s operating cash flows and balance sheet remain very strong, as evidenced by the fact that we retired all of our outstanding debt earlier this fiscal year and ended our fiscal year with approximately $3.5 million of cash in the bank. However, our bank balances are earning interest at a relatively low annual rate, whereas our cash dividend yield on the current stock price approximates 2.2%. Given the potential for continued earnings growth, we believe the recent pullback in our stock price has provided an attractive opportunity for the company to repurchase additional shares, and our board has authorized the 8th repurchase program in the past six years,” he said.
Over the past six years, the company has repurchased over 3m shares of its common stock at an average price of £3.54 per share.
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