This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Hello, ladies and gentlemen. Thank you for standing by. Welcome to MonoLancini's fourth quarter fiscal 2022 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star key followed by one on your touchtone phone. If you would like to withdraw your question, please press the star followed by two. If you're using speaker equipment, please lift a handset before making your selections. This conference call is being recorded today, May 31, 2022, and the earnings press release accompanying this conference call was issued at Market Open today. On our call today is Walmart Mancini's Chairman and CEO, Carl Wolf, President and COO, Matthew Brown, and CFO, Larry Morgenstein. Before we get started, I'll read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements within the meeting of federal securities laws regarding Marlon Mancini's. Forward-looking statements include, but are not limited to, statements expressed the company's intentions, beliefs, expectations, strategies, predictions, or any other statements relating to its future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this report and in other documents the company files with the U.S. Securities and Exchange Commission. In addition, such statements can be affected by risks and uncertainties related to factors beyond the company's control. Matters that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the loss of key management personnel, availability of capital, and other major litigation regarding the company. In addition, this conference call contains time-sensitive information that reflects management's best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events information, or circumstances that arise after the date of this conference call. At this time, I'd like to turn our conference over to Carl Wolf, the company's chairman and chief executive officer. Carl, the floor is yours.
spk00: Thank you, operator, and thank you, everyone, for joining us today. I'd like to welcome you to our fourth quarter fiscal 2022 financials results conference call. The fourth quarter was highlighted by the acquisition of Premier Gourmet Food Manufacturer's T&L, and Olive Branch, a highly symbiotic pairing with our distribution network. We expect to generate at least 35 million in sales in fiscal 2023 from the two acquisitions. The acquisition significantly expanded our existing business in the rapidly growing fresh prepared food segment, where we believe we can achieve a substantial increase in sales in EBITDA by leveraging established national distribution partnerships. This was quickly demonstrated during the quarter with the addition of T&L products into existing relationships at Sam's Club. Integration of the acquisition has proceeded rapidly, bringing with it over 3,000 new locations for the combined company and over 10,000 spots on retailer shelves. Given our ongoing growth and the addition of revenue from the acquisitions, we believe Mama Mancini's will generate substantially over 20 million sales in the first quarter of fiscal year 2023 and approach 100 million sales run rate over the next year. This is possible through pushing warmer SQs per relationship and driving stronger sales per location with complementary products with minimal overlap. Looking ahead to continue this momentum, we see attractive multiples in the food product space and will evaluate additional acquisition opportunities that are immediately accretive and have complementary products that are good candidates for our national distribution network. Our continued new product innovations paid off in April as our first ever QV sale of the original meatballs in a cup product promptly sold out and received the notable order backlog, which we filled in the weeks following the QVC live presentation. The high protein content of 16 grams of very modest calories are attractive attributes to health-conscious consumers. This product has the potential to efficiently service the existing convenience store, supermarket, and university food service opportunities. On the margin front, we are starting to more rapidly pass along price increases to our customers with minimal lead time, which should enhance margins going forward. This margin compression compared with $748,000 in acquisition expenses and $276,000 in inventory write-offs and increased expense accruals is what drove our temporary reduction in profitability in the fourth quarter. Our growing sales are a result of our high quality and innovative new products and our effective multi-pronged marketing efforts. These have historically included radio campaigns, social media efforts, and continue work with QVC. I'd like to touch on a few of these now. On the social media side of things, we continue to maintain a robust reach, engaging new customers and encouraging repeat purchases. To date, we have over 500,000 likes and continue to geo-target likely consumers who live within a five-mile radius of specific retail locations. Our QVC efforts have seen record successes as well, with Dan Mancini live pitches driving impressive sales on their platform. As many of you are aware, we were winners for three QVC Consumer Choice Awards, Best Meatball, Best Sauce, and most of all, Most Trusted Brand. Perhaps most notably, Amama Mancini's product was named the coveted Today's Special Value Deal on QVC on December 8th, securing approximately five hours of airtime throughout the day, which drove expected sales of 2 million spread throughout fiscal 2022 and 23, inclusive of auto delivery customers over the year. QVC is North America's largest direct-to-consumer marketer and is available over 100 million homes throughout the US. In summary, the last several months were a time of foundation building for the year ahead from which our vision of Mama Mancini's as a national platform company will emerge. I'd now like to turn the call over to Larry Morgenstein, our Chief Financial Officer, to walk through some key financial details in the fourth quarter of 2022. Larry?
spk03: Thank you, Carl. Revenue for the fourth quarter of fiscal 2022 increased 38.5% to a record $13.9 million compared to $10 million in the same year-ago quarter. Revenue for fiscal 2022 increased 15.4% to a record $47.1 million compared to $40.8 million in fiscal 2021. The revenue increase for the year was a result of establishing a greater balance of major customer volume attributed to growth in sales across the strong portfolio of both national and large regional grocery chains and club stores. Gross profit decreased 26.8% to $2.4 million or 17.4% of total revenue. in the fourth quarter of fiscal 2022 compared to 3.3 million or 32.9% of total revenue in the same year ago quarter. Gross profit decreased 6.3% to 11.9 million or 25.2% of total revenue in fiscal 2022 compared to 12.7 million or 31.1% of total revenue in fiscal 2021. The decrease in gross profit in the fourth quarter is primarily due to increases in raw material, packaging, and inbound freight costs, which outpaced sales price increases during fiscal 2022 Q3 and Q4. Operating expenses totaled $3.8 million in the fourth quarter of fiscal 2022, compared to $2.4 million in the same year-ago quarter. As a percentage of sales, operating expenses increased in the fourth quarter of 2022 to 27.2% from 23.8%. Operating expenses totaled $11.8 million in fiscal 2022 compared to $9.3 million in fiscal 2021 as a percentage of sales. Operating expenses increased in fiscal 2022 at 25% of sales as compared to to 22.7% in fiscal 2021. Operating expenses in the fourth quarter increased mainly due to transportation rate increases and fuel surcharges, 0.75 million in acquisition-related expenses, 0.2 million in increased accruals for freight and marketing expenses, as well as costs associated with uplisting to the NASDAQ. Net loss for the fourth quarter of fiscal 2022 was 1.3 million, or $0.04 per diluted share as compared to a net income of $1.7 million, or $0.05 per diluted share on the same year-ago quarter. Net loss for fiscal 2022 was $0.04 million, or $0.01 per diluted share as compared to net income of $4.1 million, or $0.12 per diluted share in fiscal 2021. The decrease in net income was attributed to lower gross margin, higher freight and shipping expenses, acquisition-related expenses as well as increases in marketing accruals and tax expenses compared to a tax benefit of $0.7 million in the prior period. Cash and cash equivalents as of January 31, 2022 was $0.9 million as compared to $3.2 million as of January 31, 2021. The difference in cash balance is chiefly due to substantial use of cash to fund the acquisition made in December 2021. We do not anticipate raising additional equity this time and are confident the cash on hand combined with the cash generated from operations each quarter will be sufficient to sustain our core operations as we grow. This completes my comments. I now like to turn over the call to Matt Brown, our President and Chief Operating Officer, for an operations update. Matt?
spk01: Thanks, Larry. On the operations side of the business, fiscal Q4 2022 was an exciting time as well as a challenging time. With the acquisition of T&L and Olive Branch, production for Mama Mancini Holdings doubled overnight, requiring numerous trips back and forth on the Long Island Expressway to help learn the operations and meet the team. Once acclimated with the business, our first task was to evaluate and identify purchasing scenarios between the companies. Packaging material was an immediate low-hanging fruit as we were able to introduce T&L to a key supplier of Mama Mancini's. Through this introduction, T&L was able to switch over from their current packaging supplier, saving the company over 50% on key items by late spring. Basic suppliers were another easy switch, and we anticipate 25% savings across the board on these items moving forward. We are currently working together on sharing common raw material suppliers for protein and other volume items, where our buying power, again, will enable us to see some major cost savings. The operations at T&L are not all that different from those at Mama Mancini's, which will enable us to better evaluate on a project-by-project basis where we see the best fit for the production of these projects based on facility capabilities and line time. I am excited to open the doors and see what we can achieve between these two facilities. Meanwhile, back home in East Rutherford, the plant was busy with the launch of two new projects that were mentioned earlier and prepping for these projects back in fiscal Q3. Our Meals for One line and our Meatballs in a Cup. Meals for One, or MFO, grew out of the post-pandemic needs of our supermarket partners, to have access to ready-made meals due to labor shortages internally in their commissaries. To accomplish this, the plant, in record time, built a dedicated room for the assembly of these meals over the Christmas holiday and began first shipments in early January. Products included our mainstay spaghetti and meatballs, chicken parmesan, chicken fettuccine alfredo, and sausage with peppers and onions. All were made available in a microwavable 14-ounce tray. This MFO line continues to gain traction and has increased to include a total now of 12 offerings to date. Project number two, Meatballs in a Cup, grew out of an old concept to offer our traditional beef meatballs and sauce in a portable cup that could be heated and consumed on the go. As Carl mentioned, QVC was the first to launch Meatballs in a Cup in fiscal Q4, and to no surprise, it was an immediate sellout. In addition to QVC, in fiscal Q4, we obtained authorizations from two convenience store chains and a supermarket distributor. We anticipate first orders to occur within the next 60 days. As mentioned earlier, all this success was not without challenges. Supply chain delays continue to become the norm, and we spent a good part of fiscal Q4 looking for more alternative suppliers for raw materials. We were successful in keeping production in full swing, but at a cost of the overall margins in the plant as key components saw as much as a 25% increase in cost. We continue to monitor commodities of beef, turkey, chicken, milk, and wheat with hopes that consumer pushback will eventually cause a softening of these never seen before inflationary prices. We are quicker to react to these increases with appropriate adjustments to our customers. However, the laws of supply and demand must eventually play its role and we can once again see the margins that we've been accustomed to seeing in the past. At this point, I will turn the call back over to Carl for some final notes before wrapping up the call for Q&A. Carl?
spk02: Okay. Mr. Wolf's line has disconnected. We will reconnect him as soon as he arrives.
spk00: Hello? Can people hear me? This is Carl Wolf.
spk02: Yeah, yes, Mr. Wolf. You have been reconnected to the conference.
spk00: I don't know what happened. Okay. Hi, everyone. Hopefully you can hear me. I was online. I don't know.
Disclaimer