MamaMancini’s Holdings, Inc. (NASDAQ:MMMB) Q2 2023 Earnings Convention Name September 14, 2022 4:30 PM ET
Firm Contributors
Carl Wolf – Chairman
Adam Michaels – Chief Govt Officer
Larry Morgenstein – Chief Monetary Officer
Matthew Brown – President and Chief Working Officer
Convention Name Contributors
Operator
Good afternoon, women and gents, and thanks for standing by. Welcome to MamaMancini’s Second Quarter 2023 Earnings Convention Name. Throughout immediately’s presentation all events shall be in a listen-only mode. Following the presentation, the convention shall be open for questions. [Operator Instructions] This convention is being recorded immediately, September 14, 2022, and the earnings press launch accompanying this convention name was issued after the market shut immediately.
On our name immediately is MamaMancini’s Chairman, Carl Wolf; CEO, Adam Michaels, COO, Matt Brown; and CFO, Larry Morgenstein.
Earlier than we get began, I’ll learn a disclaimer about forward-looking statements. This convention name could include along with historic info, forward-looking statements inside the that means of federal securities legal guidelines concerning MamaMancini’s. Ahead-looking statements embrace, however will not be restricted to, statements that categorical the corporate’s intentions, beliefs, expectations, methods, predictions or every other statements regarding its future earnings, actions, occasions or situations.
These statements are primarily based on present expectations, estimates and projections in regards to the firm’s enterprise primarily based partly on assumptions made by administration. These statements will not be ensures of future efficiency and contain dangers, uncertainties and assumptions which might be tough to foretell.
Subsequently, precise outcomes and outcomes could and are more likely to differ materially from what’s expressed or forecasted within the forward-looking statements, because of quite a few components mentioned infrequently on this report and in different paperwork, which the corporate recordsdata with the U.S. Securities and Alternate Fee.
As well as, such statements may very well be affected by dangers and uncertainties associated to components past the firm’s management. Issues that will trigger precise outcomes to vary materially from these within the forward-looking statements embrace, amongst different components, the lack of key administration personnel, availability of capital and any main litigation concerning the corporate.
And at last, this convention name accommodates time-sensitive info that displays administration’s finest evaluation solely as of the date and time of this convention name. The corporate doesn’t undertake any obligation to publicly replace or revise any forward-looking statements to replicate future occasions, info or circumstances that come up after the date of this convention name.
At the moment, I’d like to show the decision over to Chairman, Carl Wolf. Carl, the ground is yours.
Carl Wolf
Thanks, operator, and thanks, everybody, for becoming a member of us immediately. I might prefer to welcome you to our second quarter 2023 monetary outcomes convention name. Earlier this summer time, we issued a press launch asserting that as of September 6, I shall be passing the torch as CEO of MamaMancini’s to Adam Michaels, retaining my position as Chairman.
In an identical reign, earlier this week we introduced the appointment of skilled monetary government Anthony Gruber as CFO efficient September nineteenth. This can be a resolution the Board and I’ve been discussing for a while. We each felt that the timing of this resolution couldn’t be higher as MamaMancini is quickly evolving for what was a single model, MPC listed regional agency right into a NASDAQ listed nationwide platform firm spanning an rising variety of award-winning manufacturers.
It’s really been a privilege to spend the final twelve years main the MamaMancini household to the place it stands immediately. I’m extremely happy with all that we’ve got achieved in the course of the previous decade at this unimaginable firm and I stay up for offering continued steerage for my position as Chairman of the Board of Administrators.
As we move the CEO torch to Adam, I’m totally assured that I’m handing it to an skilled chief who can really take MamaMancini to the subsequent degree.
With that, I’m happy to introduce MamaMancini’s CEO, Adam Michaels. Adam, please go forward.
Adam Michaels
Thanks, Carl. It’s an honor to be right here with you all immediately and I couldn’t be extra excited with the chance going through MamaMancini’s. For these of you who haven’t had the chance to satisfy, I’d prefer to take a second to introduce myself. Earlier this month, I used to be privileged to take the place of CEO at a essential inflection level within the maturity of MamaMancini’s.
By means of background, I’ve spent the final 15 years within the meals & beverage business, an area I’m extremely ardour about. Most not too long ago, I had the good fortune of working and studying at Mondelez Worldwide, the makers and bakers of bullet manufacturers equivalent to Oreo, Ritz, Tate’s Bake Store and Bitter Patch Youngsters.
Over the previous 9 years at Mondelez, I used to be fortunate sufficient to work throughout classes and capabilities, most not too long ago serving to to determine, purchase and shepherd our latest and most progressive companies. I’m excited to take this expertise and straight apply to the equally thrilling and progressive deli class into MamaMancini’s.
As Carl alluded to earlier, we’re constructing the foundations for a nationwide deli options firm. This can speed up and increase our present portfolio of manufacturers whereas strategically leveraging incremental consumer-driven innovation and accretive mirroring acquisitions to fill out gaps in our portfolio. Our imaginative and prescient is to turn into a one cease store for ready meals for grocery, match membership and comfort shops.
This method matches properly with the numerous pandemic-related life-style modifications that buyers confronted during the last three years with many focusing greater than ever on fast, clear and recent meals, with higher components at a worth extra reasonably priced than consuming out.
On the opposite aspect of the counter, retailers immediately proceed to face vital provide chain and labor challenges and are in search of labor-efficient, dependable options for his or her sizzling bar, deli and Seize-n-Go choices.
Realizing that after I took this seat seven quick days in the past, I’ve had the fortune to spend the previous few months talking with my fellow Board members understanding each the parallels and variations of the deli ready meals class and iterating on an enhanced imaginative and prescient for our enterprise. Even on this quick period of time, supported by Dan Mancini’s and his grandmother Anna and MamaMancini’s recipes and early conversations with retailers, we are able to really envision MamaMancini’s as a one cease store for our deli ready meals options.
This can require a step change in our company construction in some ways. To begin, we’ll proceed to construct out our management bench and produce new capabilities to boost the tradition at MamaMancini’s. My first rent, Anthony Gruber is a wonderful instance bringing sturdy foundational finance rigor, together with the entrepreneurial spirit essential to succeed.
We’re already beginning to placing new monetary and operational controls in place to assist our groups and supply agility for gross sales and operation employees and we should drive even better value synergies all through our enterprise processes the place these financial savings would be the rocket gas for our future development. I understand that that is no small piece and it definitely received’t be achieved in a single day, however I’m assured that we really have a differentiated benefit and are properly positioned to attain this imaginative and prescient in partnership with our retailers and repair of our shoppers.
Now, turning to the quarter, Q2 was highlighted by our strategic acquisition of a 24% minority curiosity in Chef Inspirational Meals or CIF for $1.2 million. They’re a number one ready meals gross sales agent, with our subsidiary T&L Inventive Salads, being their largest companion offering us a better diploma of management and potential to carry the efficient margin profile for T&L’s merchandise in keeping with that of MamaMancini’s.
As a reminder, we retain the choice to accumulate the rest of CIF at a set worth providing vital optionality and upside potential from CIF appearing as our in-house gross sales agent as we develop each organically and inorganically.
In the course of the quarter, we noticed document revenues for MamaMancini’s, each natural and inorganic supported by wholesome development from our latest acquisitions bringing us about in keeping with Carl’s beforehand introduced objective of $100 million annualized gross sales runrate by 12 months finish. Whereas I began at MamaMancini’s one quick week in the past, I’ve already been sharing with the Board, my 30, 60, and 90 day plan, in addition to my focus areas, all in service to development.
Our three Cs, value, controls and tradition, will present a construction and framework wanted to be laser targeted on essentially the most essential enchancment alternatives. Our value focus will present the rocket gas for development. Our monetary and operational controls focus will make us thick for development and our tradition focus will present us the design for development.
Over the subsequent few months, you’ll be listening to extra from me and Anthony on these three Cs. To handle the precise headwinds we confronted this quarter, we’ve got already been aggressive in in search of out new methods to strengthen our firm-wide margin profile. For instance, we’ve got instituted a brand new pricing course of that extra precisely and quickly tracks enter prices together with commodity value to make sure that each single sale we make is assembly our required margin profile.
As well as, we’re conducting a radical evaluation of our suppliers and have already recognized a number of areas the place we’ve got the potential to understand vital value financial savings.
In abstract, whereas we’ve got seen some margin headwinds in calendar 12 months 2022, we’re properly positioned to construct vital momentum in calendar 12 months 2023 as we drive natural development, develop our staff, increase our capabilities and search [Indiscernible] on the fundamentals, all with the objective of constructing sustainable worth for our shareholders over the long-term.
I stay up for driving new momentum in the direction of the belief of MamaMancini’s vital potential. With that, I’d now like to show the decision over to Larry Morgenstein, our Chief Monetary Officer to stroll by way of some key monetary particulars from the second quarter of fiscal 2023. Larry?
Larry Morgenstein
Thanks, Adam. Income for the second quarter of fiscal 2023 elevated 89.4% to 22.9 million, as in comparison with $12.1 million in the identical 12 months in the past quarter. The rise in income for the second quarter was primarily pushed by the December 21 acquisition of T&L Inventive Salads Inc. and Olive Department LLC, in addition to natural development by including new merchandise with present clients, notably in membership shops.
Gross revenue totaled $2.7 million, or 11.9% of whole revenues within the second quarter of fiscal 2023, as in comparison with $3.4 million, or 27.9% of whole revenues in the identical year-ago quarter. The margin compression was brought on by inflation of uncooked supplies, packaging, and freight prices, which outpaced worth will increase, in addition to decrease margins within the T&L Inventive Salads and Olive Department LLC enterprise strains, partially offset by the decrease overhead of the acquired companies.
Working bills totaled $3.6 million within the second quarter of fiscal 2023, as in comparison with $2.8 million in the identical year-ago quarter. As a proportion of gross sales, working bills totaled 15.6% within the second quarter of fiscal 2023, as in comparison with 23.1% in the identical year-ago quarter. Working bills within the second quarter elevated primarily because of transportation fee will increase, in addition to skilled charges and payroll associated to the acquisition of T&L Inventive Salads.
Internet loss for the second quarter of fiscal 2023 totaled $743,000 or $0.02 per diluted share, as in comparison with a web revenue of $432,000 or $0.01 per diluted share in the identical year-ago quarter.
Adjusted EBITDA, a non-GAAP time period, totaled a lack of $271,000 for the second quarter of fiscal 2023, as in comparison with an adjusted EBITDA of $829,000 in the identical year-ago quarter.
Money and money equivalents as of July 31, 2022 had been $1.9 million, as in comparison with $0.9 million at January 31, 2022.
Of observe, our GAAP monetary outcomes year-to-date have mirrored vital acquisition-related and non-cash bills. Looking at our money flows, working actions offered $296,000 in web money within the six months ended July 2022 as we proceed to understand synergies from the acquired firms and implement our new measures company-wide to enhance margins, I consider we’re properly positioned to return to GAAP profitability.
This completes my ready remarks. I now like to show over the decision over to Chief Working Officer, Matt Brown for an operations replace earlier than start our questions and reply classes. Matt?
Matthew Brown
Thanks, Larry. On the operations aspect of the enterprise, fiscal Q2 2023 was anticipating unstable commodity and transportation enter prices, proactively adjusting buyer pricing and driving operational efficiencies within the crops. At our New Jersey facility, we continued to proactively monitor commodity inflation and modify our enterprise with our provide companions accordingly. Whereas inflation continued to be unstable in the course of the quarter, our procurement staff did a terrific job working with our strategic suppliers to maintain costs at comparable ranges to Q1, no small price.
I commend our procurement staff for working good and laborious to handle prices and thereby permitting us to extra strategically handle our pricing. In fiscal Q2, we noticed the total scale introduction of our lengthy awaited Meatballs in a Cup by way of preliminary airings on QVC. As a reminder, our Meatballs in a Cup is a recreation changer for our enterprise because it permits us to enter fully new incremental events for our shoppers and new incremental retailers, notably within the fast-growing handy retailer channel.
The reveals on QVC had been sellouts and we’re delivery a truckload per week over the subsequent three weeks to accommodate the e book gross sales. As Meatballs in a Cup and Meals for One launched in Q1 proceed to develop, we’ve already put a plan to paper to increase our devoted manufacturing area for this stuff by creating further area in our present packaging room.
As anticipated, the extra we produce this stuff, the extra we enhance our labor efficiencies. Over Q2, we introduced down that labor value per unit on this stuff by 20% and hope to see this enhance much more as we introduce know-how to satisfy the elevated demand.
At our Lengthy Island facility, we skilled an identical begin to fiscal Q2 as seen in New Jersey focusing efforts on managing commodity costs and transportation inflation. We had been pleased to see a noticeable worth softening in our largest commodity ingredient hen permitting us to enter the third quarter with tailwinds to our margin profile.
Plant in Lengthy Island additionally made some enhancements throughout Q2 almost about SQF or Protected High quality Meals protocols as we started to align the 2 amenities in the direction of identical finest practices throughout the corporate in anticipation of subsequent 12 months’s meals security audit.
As Adam talked about, we’ve begun the method of updating our costing fashions on each SKU produced by way of the 2 amenities. What the previous 18 months have taught us is that the world has modified and we should be extra proactive in how we reply to changes in prices related to commodities, packaging and different elements that pertain to our value of products manufactured.
The fashions now replace with real-time value modifications in an effort to offer us revised really useful pricing and costs to our commerce to make sure that we preserve the margins essential for achievement. Associate with our inside gross sales staff and exterior clients to research, talk, and implement these worth modifications in a clear and proactive approach.
I stay up for working with Adam and Anthony as we transfer ahead with the imaginative and prescient of turning into the one cease store for best-in-class deli options.
With that, I’ll flip it over to the operator to start our Q&A session. Operator?
Query-And-Reply Session
Operator
Adam Michaels
Sure. Thanks, a lot. I’m tremendous excited and honored for the chance to guide MamaMancini’s. I see large alternative going ahead, proceed to see the excitements that the staff is having fun with and I consider that there’s large alternative going ahead. With any questions, please attain out to Lucas Zimmerman.
Aside from that, again to you operator.
Operator
This does conclude immediately’s teleconference. You might now disconnect.
