U-Swirl, Inc. (SWRL) - BV at $0.25/share w/ excellent growth possibilities
I recently started a position in SWRL which operates and franchises self-serve frozen yogurt cafés in the United States. In January 2013, Rocky Mountain Chocolate Factory Inc. (RMCF) acquired a 60% equity interest in SWRL. The company recently acquired several franchises to own and operate as company owned stores and issued shares to finance this purchase.
The company now has 17.5 mln shares outstanding w/ a book value of $0.25/share.
U-Swirl, Inc. Announces Management and Operational Changes to Enhance Franchise Support, Profitability and Cash Flow
U-Swirl, Inc. (otcqb:SWRL) ("U-Swirl" or "the Company"), parent to U-SWIRL International, Inc., through which it owns and franchises self-serve frozen yogurt cafes, today announced that its Board of Directors has appointed Bryan Merryman Chairman and Chief Executive Officer of the Company, replacing Ulderico Conte, the Company's previous CEO. Mr. Merryman will also replace Frank Crail as the Company's Chairman of the Board. Mr. Crail will continue to serve on the Board of Directors. The Board of Directors also appointed two additional experienced and proven executives to its management team: Alan Stribling, formerly CEO of Yogurtini, as the Company's new President; and Jeremy Kinney, Vice President of Finance at Rocky Mountain Chocolate Factory, Inc., as the Company's new Chief Financial Officer. The value proposition for me is if now with the company owned stores, new management w/ RMCF ties can get SWRL back on their growth track w/ sustained profitability.
Stock is selling at/near their 52wk low w/ Phase 2 of their restructure to begin.
"During the past two years, U-Swirl has completed the acquisitions of seven self-serve frozen yogurt companies," stated Bryan Merryman, the Company's new CEO. "The next phase in our consolidation strategy involves taking the appropriate steps to maximize the returns on our investments in these acquisitions. We intend to do this by rationalizing the expense structures of the acquired companies; eliminating duplicative personnel, responsibilities and positions; taking advantage of volume purchasing discounts for raw materials and supplies; and working more closely with Rocky Mountain Chocolate Factory on franchise development and support programs and marketing strategies." These changes will take effect on October 6, 2014, while existing management assists in an orderly transition. The following objectives will be pursued vigorously over the next 12-18 months:
-- Elimination of duplicate and/or redundant personnel positions in order to reduce corporate overhead. -- Changes in U-Swirl's corporate management team and Board of Directors that will enhance the Company's ability to work more closely with its parent company (Rocky Mountain Chocolate Factory).
-- Taking advantage of the resources available from Rocky Mountain Chocolate Factory, which has over three decades of experience in the development and successful execution of franchisee support, franchise marketing, and in-store sales promotion strategies.
-- Closure of the Company's corporate facility in Henderson, Nevada, and the relocation of the Company's headquarters to Rocky Mountain Chocolate Factory's facility in Durango, Colorado.
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I am betting that SWRL will begin to show better than expected results Spring of next year. It's possible that RCMF may want to integrate their chocolate products into these stores and/or buy out SWRL to bring these stores under the parent. My price target for Summer next year is $0.69/share.
I current have a full position w/ an average cost of $0.28/share.
EKS
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