MamaMancini's Holdings, Inc.

Q1 2023 Earnings Conference Call


spk_0: good morning ladies and gentlemen thank you for standing by welcome to my mom and seen these first quarter fiscal twenty twenty three earnings conference call during today's presentation all participants will be and on listen only mode following the presentation the conference will be open for questions if you have a question please press the star followed by the one on your touched home phone if you would like to withdraw your question please press the star followed by the to if you're using speaker equipment please lift the handset before making your selections this conference is being recorded today june fifteenth twenty twenty two and the earnings press release accompanying this conference call was issued earlier this morning on i called today is mom and insane is chairman and ceo karl was president and ceo matthew brown and see fo larry morgan seen before we get started out read a disclaimer about forward looking statements this conference call may contain in addition to historical information forward looking statements within the meaning of federal securities laws regarding muslim and cds or looking statements include but are not limited to statements said express the company's intentions the lease expectations strategies predictions for any other statements relating to it's 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 predict to predict therefore actual outcomes and results may and are likely to differ materially from what is expressed were forecasted in the forward looking statements due to numerous factors discussed from time to time in this report and and other documents which the company files with us securities and exchange commission in addition such statements could be affected by risks and uncertainties related to factors beyond the companies control matters that may cause actual results to differ materially from those in the forward looking statements include among other factors the loss of keep me management personnel availability of capital and any major litigation regarding the company this call also includes the following gap measure adjusted ebitda which is not a measure of financial performance under gas and should not be considered as an alternative to that income as a measure of financial performance the company believes this non gap measure when considered together with the corresponding gap measures provide useful information to investors and management regarding financial and business trends relating to the company's results of operations however this don't get measure has significantly stations in that it does not reflect all the costs and other items associated with the operation of the company's business as determined in accordance with gap in addition the company's non get measures may be calculated differently and are therefore not comparable to similar measures by other companies therefore investors should consider not get measures in addition to and not as a substitute for for superior to measures of financial performance in accordance with gap for a definition and reconciliation of the our to net income it's corresponding gap measure please see the reconciliation table shown in the earnings press release the cross a wire at market sultan today in addition this conference call concerns time sensitive information that reflects management's best analysis only as a date and time of his conference call the company does not undertake any obligation to probably update or revise any forward looking statements to reflect future events information or circumstances that arise after the date of this conference call if you require operator assistance please press star than zero on your touchstone phone at this time i'd like to turn the call over to curl wolf the company's chairman and chief executive officer carl the for is yours
spk_1: thank you operator
spk_0: and thank you everyone for joining us today i like to welcome you to our first quarter two thousand twenty three financial results conference call
spk_1: since our last call was a few weeks ago we are limiting our comments today
spk_0: the first quarter of physical two thousand and twenty three saw record first quarter revenues from mom and sienese reinforced by a recent acquisitions and bringing as significantly closer to our goal of the hundred million annual i sales run rate by year end a shared in our fourth quarter fiscal two thousand twenty two earnings call a few weeks ago we have strong growing preference
spk_1: in a fresh prepared food segments
spk_0: to support these initiatives we are focusing on product innovation based on customer feedback creating promising favorite such as or new original meatballs and a cup products
spk_1: which quickly sold out it's first ever q v c shown it to better meet our customers multifaceted needs this product has the potential to efficiently service the exciting convenience store supermarket and university food service opportunities
spk_0: and the financial frank with nonrecurring acquisition related france is largely behind us the returned to profitability and are beginning to enhance margins by rapidly passing along price increases our customers from an industry perspective this phenomenon is new and you need to the inflationary environment we find ourselves said that is to serve to fortify or margin profile going forward
spk_1: regardless of huge commodity course the increases in addition has come commodity request normalize and are employed for course come down expect that further enhance long term margins through the defense their recent price increases are growing sales or results of our high quality and innovative new products
spk_0: in are effective multi prong marketing efforts these have it's sorry for him into the radio campaign social media efforts and continue work with you the c
spk_1: like to touch on a few of these now as you already know that we have often hit five hundred thousand plus likes
spk_0: our social media and send campaigns have several million views looking ahead to continue didn't to continue this or meant and we continue to see in multiples in the food products space and world i wait additional acquisition opportunities that are legally treated and have complimentary products that are good candidates for our national distribution network in summary the last several months or a time of foundation building for the your head from which her vision and mother nancy news as a national for can we will emerge i now like to turn the call over larry more things our chief financial officer to walk through some financial details from the first quarter of two thousand and twenty three larry
spk_2: thank you call revenue for the first quarter of fiscal twenty twenty three increased one hundred and eleven point seven percent to record twenty one point eight million as compared to ten point three million to the same year ago quarter the revenue increases a corner was primarily as a result of the first quarter from december twenty twenty one acquisition of kenya created sounds think you know of french l l c gross profits increased to three point nine million or seventeen point seven percent of total revenues in first quarter of fiscal twenty twenty three as compared to three point three million or thirty two points four percent of total revenue for the same year ago quarter the margin compression was caused by inflation raw materials packaging and freak course as well as lot lower margins and latino creator salads and our french l c besides partially offset by the lower overhead require businesses management believes the balance between weight of room to of course the companies price increases or normalize in the second call after returning roach profits to which the store range operating expenses told three point six million first quarter of fiscal twenty twenty three as compared to two point five million in the same year ago quarter as a percentage of sales operating expenses told sixteen point five percent or school or fiscal twenty twenty three as compared to twenty four point two for said the same year ago quarter operating expenses and the first quarter increase mainly due to transportation rate increases fuel surcharges and acquisition related expenses the income for the first quarter of fiscal twenty twenty three total point one million or zero seven zero cents per share as compared to a net income a point six million or two cents per share diluted share in the same year ago quarter adjusted ebitda and on gap term total points of lay in full force quarter of twenty twenty three as compared to one point one million in the same year ago quarter cash and cash equivalents as of april thirty twenty twenty two was point nine million as compared to point nine billion said january thirty one twenty twenty two this completes my comments have like turned the call all over to map around or president and chief operating officer for operations update met
spk_3: thanks larry
spk_4: on the operation side of the business fiscal que one twenty twenty three was about recertification and new business as mentioned on our ten k call the acquisition of tnl an olive branch required numerous trips between facilities to help from the operations and meet the team
spk_3: q one started with those facilities heavily involved in their annual safe quality food audits or ask us both plants or sql level to facilities requiring detail documentation of all production from pre ops to in op's to post ups were in the past the primary focus of these audits was ah
spk_4: on the facilities has a program or the flow of production and how we address critical control points this year the focus has shifted to more emphasis on food safety good manufacturing practices algae control programs and lot trace ability or being heavily scrutinized across food manufacturers nationally i am proud to say that both facilities pass with record scores of ninety eight and ninety nine percent the scores are shared with all our major customers who are more inclined to do business with facilities that can demonstrate an ongoing ability to professionally and safely produce to their needs in particular are new york p system was extremely helpful with regards to lot trace ability and the speed and ease at which we can identify products specific issues should the need arise on the production from both tnl and mama man seen the operations continued to work together and sharing common raw material suppliers for protein and other volume items were are buying power enabled us to at least keep inflationary price increases to a minimum while tnl battle chicken prices mom and seen he was working hard to eat beef prices and check while no one can predict with certainty with a commodity market is heading we have seen some signs that prices just might start be softening and we can take advantage of better margins during the softening period at a man scenes we have taken steps at further reducing our labor costs through the implementation of better technology to record the hours of our employees and in turn have reduced overtime we hope to continue to see tighter control in this area
spk_3: our new projects continue to take hold as we pick up new authorizations on our meals for one line as a quick refresher meals for one or am fo grew out of the pell posts pandemic needs of our supermarket partners to have access to ready made meals do to labour shortages and finally in their commissaries products include our mainstay spaghetti and me
spk_4: paul's chicken parm chicken fettuccine alfredo and sausage with peppers and onions all are made available in a microwavable fourteen out trade in que one we were asked by one of our retail chain partners to develop the product in a twenty eight ounce version with quick are indie work and some calls to iran packaging suppliers we were able the turn this option around in less than four weeks mama man seen and tnl had it's first joint appearance at the recently attended international delhi's dairy bakery association conference or i d v a the show took place in atlanta and i joined participation was well received by buyers purchasing agents and brokers who attended the show the meals for one and meatballs and a cup created tremendous buzz as well as our char grilled chicken products the shows an important one for us as it reminds existing customers of our commitment to quality a new offerings while at the same time introducing the line to new potential customers speaking of new offerings in addition to the meals for one and meatballs and a cup we brought along our brand new penny i'll a vodka and it did not disappoint we already have an order in production coming out of the show and hope to pick up new business with this item that is now of l was part of the fourteen out meals for one line overall setting aside a two year hiatus from the showed you the covered restrictions this was one of the best advantage shows for us in the past five years we expect to see the rewards from our efforts over the next few months with new authorizations and new orders
spk_3: that concludes my update i will now trying to call back over to coral for some final note before wrapping up the call for q in a car
spk_1: thank you larry and matt in summary we continue to grow our national footprints falcon currently innovating on the product from driving more as use for store or positioning as a national platform companies clear and we can see the see attract the multiples her companies and food products space providing an exciting pipeline a potential i'm in a opportunities
spk_5: as we see fit
spk_0: we are incredibly well positioned to create sansa says that say both long term value for my fellow shareholders and i look forward to a strong cadence and operating execution in quarters ahead with that i'll turn it over to the operator to begin our q and a session operator thank you sir we will now begin to question and answer session as reminder if you have a question please press the star followed by the one on your touchstone phone if you'd like to withdraw your question please press the star followed by the to and if you are using speaker equipment you will need to live the handset for for making your selection the first question comes from howard halperin was tablets brothers please go ahead ah congratulations great kickoff to that
spk_6: first quarter
spk_7: he is in in conundrum gross margin do you anticipate a you're gonna be able to get back into that twenty percent area in a second yeah for the year
spk_8: well where yes
spk_0: right now are adjusted it does which means them and minor just under fifty five thousand for acquisition expenses as running around or three and a half the center sales are norm is around eight the have so most of that will come from gross margins are we should
spk_9: and
spk_1: three to four percent increase in gross margin and as ourselves grow
spk_0: we're in expenses should come down so on we should be significantly above twenty percent as things normalize okay
spk_10: and along that mean with the operating expenses the only really huge variable you see going forward is that is afraid and in our transportation costs everything else should be truly sustainable even as you ramp up to that twenty five million in quarterly revenue
spk_11: ah yes
spk_1: pyro as dna without trace should be relatively go down as sales go up
spk_0: freight should be a direct variable sales however we just added them some legit logistics and and support so we think that there's a good possibility that trade will go down as a percentage of sales
spk_7: okay as and in terms of are you know your applications that tnl and our branch have you seen ah
spk_10: any real possibility of distribution into your national wide network has any occurred yeah for what are you seeing on that front
spk_0: ah we seem very substantially already begun substantial distribution rather tnl products
spk_1: ah into a man and and seen is network we have other commitments
spk_9: which i will carry the summer
spk_1: i'm very worried been authorized and first ships you're actually i'm coming as this month
spk_0: and then we have several additional and likely and occurrences so when we we see very substantial cells coming from man
spk_1: a man i'm in or expansion to now and we see some opportunities as well for tnl expansion mammalian seniors and products
spk_10: lucas and guy just a brief update on and meatballs and that cop slam one do anticipate
spk_7: the was within that the convenience stores the and it
spk_0: jones are packaging know what we needed that special technology for microwave ability the qvc products and was shit frozen the product we something stories are shit frozen and managed to for us it's showing you different technology so that since coming in late july that's literally july and we have charged and what is that will be shipping out
spk_1: we have a lot of indicated interest hopefully we will have some substantial additional business right now i think we have three commitments
spk_0: other than you see someone will see what happens so but the reaction is tremendous
spk_7: okay
spk_12: okay guys just keep up the great war
spk_0: thank you again as you have a question please press stars and one
spk_13: the next question comes from bruce martin would still lake capital please go ahead morning
spk_14: have a quick follow up on the last question and then and into other questions your when you say it just adjusted either does now running a three have percent are you saying that's what is running now and in the second quarter and when you say northward eight in the first course color friends
spk_0: and so when you say your plan is to get third normal which is eight and a half percent does that right incrementally slowly increase as the year goes on and you hit that run rate in the fourth quarter for do you anticipate sort of the that or later than that for when you what's the i would say
spk_5: close to it in the third quarter
spk_0: and should be by the fourth quarter ah that a fourth quarter we definitely have to be running that
spk_15: one hundred million in sales or morphs could be substantially more
spk_13: and so you know that same as a half million there he die
spk_1: and as where it was just staying on that note is that a half a percent as quote unquote normal
spk_13: is that a longer term normal for you or do you see that growing beyond that for the look at gets hurt them the long term is nine to cancel said says we are take efficiencies in or overheads
spk_1: any
spk_0: and then or my second question is is and done liquidity as you guys have obviously been investing in inventory and other working capital and there was a casper and the first quarter
spk_1: how do we how comfortable or how do we think about liquidity as as the your place through here sure there was a reduction substantial reduction accounts payable in the first quarter and
spk_0: we have because very heavy sales increase around increases in that inventory and receivables
spk_13: that is stabilizing and and we should start soon sam the positive cash flow going forward we anticipate an increase of are working capital bank line
spk_4: and which is now for and a half million are going up to five and a half million
spk_13: and are we have around twelve the as of the first quarter when ranch was only in an asset supporting that so we think are working capital needs iran are good
spk_0: we'll be paying down somewhere long term that and and we may look at some man very modest increase in equity and their next few months just as a safety valve
spk_9: right so eddie and you've been you've been this is my third question which is you been talking a fair bit feel they can be talking more about a recently made to change the board level
spk_16: so when you think about emanate going forward
spk_1: is it safe to assume that that would require an equity raise as opposed to that or
spk_16: ah well there's a whole or three different ways you can help when you can get that from the seller
spk_5: two
spk_17: depending on
spk_13: the numbers we can get that from the outside capital and three minutes by the three is that is equity with his salary and for his equity firm the markets she had to look at each saying any cash flow
spk_1: and then make a decision however at each and acquisitions should be significantly credence
spk_13: the earnings per share
spk_8: and would you say that sir should expect to see another acquisition or to this year the fiscal years are not necessarily i would say there should be the sheer at least one more investment
spk_0: and then i will one and were growing so fast and one absorb that and then i think that will come back around them later this year we do have opportunities available and the fact that markets a has and seen some margin confessions august well for making that physicians and is there anything you're targeting specifically that additional products are digital distribution
spk_1: ah it's products
spk_0: in a more more than distribution
spk_9: the in a key is to new products international network
spk_0: and also some distribution as well so anyway yes i do we have right now we have them
spk_1: focus upon a fresh prepared foods
spk_8: ready to serve either some so that has been and our focus percent to now that's a growing category
spk_0: and although in the last them
spk_5: two years because a coded the center of the store has done much better over time
spk_0: as an habits come back to normal
spk_5: that will not be growing area
spk_13: so now as you just seen in dry goods and down number retailers have been them
spk_18: have overstock certain segments of their inventory with us consumers are very rapidly move back to the rules old patterns
spk_0: so the the core part of the business for as as the
spk_1: take home prepared foods or segment it fits are many many things in today's lifestyle
spk_0: right okay thank you very much

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