MamaMancini's Holdings, Inc.

Greetings and welcome to Mama Mancini's fourth quarter and fiscal 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Michaels, Chairman and Chief Executive Officer. Thank you, sir. You may begin.

Thank you, operator, and thank you to everyone for joining us today. I'd like to welcome you to our fourth quarter fiscal 2023 financial results conference call. Throughout the second half of fiscal 2023, we continue to execute our 3C strategy, delivering another strong quarter on our sustainable path to profitability, further building the foundations for a national daily solutions company. In the fourth quarter, we saw significant increases in margin and sustained growth and profitability. 68% sequential growth in net income to 1.8 million in the fourth quarter to be exact. We continue to execute on our goal of accelerating and expanding our existing family of brands while strategically leveraging incremental consumer-driven innovation and accretive potential acquisitions to fill out gaps in our portfolio as needed. Our vision? is to become a one-stop shop for prepared foods for grocery, mass, club, and convenience channels, addressing the $40 billion-plus food service and prepared foods market with our grocer partners. With food inflation for 2022 rounding out at 12.5%, unemployment at 3.5%, with underemployment closer to 7%, and recessionary pressures abound, consumers are choosing to eat out less, and are transitioning even faster and in greater numbers to grocery store prepared foods. Even with these pressures, there is still an intense consumer desire for quality, with many focusing more than ever on quick, clean, and fresh meals made with better ingredients at a price more affordable than eating out. Recent studies show that the private label food and beverage category is growing at twice the rate of branded, with 73% of consumers having developed a taste for private label brands with no plan to switch back even after the economy approves. A tailwind for our hybrid strategy of pursuing an even mix of branded and unbranded opportunities. On the other side of the counter, retailers today continue to face significant supply chain and labor challenges, and are seeking labor efficient, reliable solutions for their hot bar, deli, and grab and go offerings. As we move through 2023 and beyond, today's recessionary pressures will continue to focus our consumers and retailers on high quality, easy to prepare, and affordable meal solutions, all of which Mama Mancini's delivers on. We feel our offerings position us well for any foreseeable macroeconomic forces. The realization of our goal to shape Mama Mancini's into a one-stop shop for these deli prepared food solutions has required a step change in our corporate structure in many ways. Throughout the year, we are highly focused on the continuous foundational improvement of our three C's strategy, cost, controls, and culture. New approaches to cost management have driven noticeable improvements in procurement, an area we expect to improve further with the recent hiring of our first effort chief procurement officer. In manufacturing, where we're making strategic high ROI CapEx investments to enhance throughput and margins, as well as in logistics management, where our recent hiring of a dedicated logistics lead has noticeably driven down our freight costs by consolidating our shipments into fewer but fuller truckloads. Under the mantra of what gets measured gets improved, We now track order profitability on a weekly basis and have implemented the first customer level profitability reviews on a monthly basis. This allows us to track input costs better and bring more agility to our pricing and supplier cost management. Understanding customer level profitability also allows us to decide on trade promotion strategies more efficiently as we are willing to invest more with customers who invest in us. As Matt will mention later, Our efforts to more efficiently manage labor costs, particularly overtime, outbound logistics, and cold storage are realizing noticeable returns, allowing us to reinvest in our business. Commodity prices continue to improve in the quarter as well, providing significant tailwinds for our margin profile, driving a fourth quarter gross margin improvement of over 950 basis points year over year and 260 basis points sequentially. enabling us to achieve $1.8 million of net income in the fourth quarter alone. Without what I expect will be a one-time book-to-tax adjustment that improved our net income by approximately half a million dollars, our net income still saw robust sequential improvement to $1.3 million, representing net income margins in the high 5% range, in line with our expectations in the mid-single-digit range. On the controls front, late last year we brought in our new CFO, Anthony Gruber, as well as our new controller, Peter Munch, who have helped to build a strong foundational finance rigor along with the entrepreneurial spirit critical to succeed. We put new financial and operational controls in place to help our teams and provide agility for sales and operations staff. For example, Deductions have perennially been a profit center for freight operators and retailers. By putting in place dedicated resources, a regular cadence of check-ins, and real-time analytics to track deductions, deduction reasons, and invoices, we have dramatically reduced deductions, directly improving our bottom line. Operationally, we recently strengthened our corporate governance with two qualified independent director appointments. Megan Henson's deep knowledge and experience in the human resources field will be an invaluable asset to the company as we evolve into a truly national platform company. Shirley Romig's corporate governance skills and experience building and leading public companies through various stages of maturity using digital-first social media strategies further strengthens our board and will enable us to better connect with new demographics. I want to thank both of them for their passion trust, and commitment to Mama Mancini's. And last, but certainly not least, building a company culture that is geared for and incentivizes profitable growth. Our people are at the core of what we do, and hiring, promoting, and retaining talent is paramount to our long-term success. We often speak of our vision to reaffirm, reinforce, and remind all of our employees that our one-stop shop Deli Solutions strategy. We have performed full talent assessments for our management level, investing in our people and upgrading our talent not only to support today, but to build for tomorrow. Our newly created performance reviews provide actionable feedback for our teams, with not only the what being measured, but also the how. Our new Chief Financial Officer and Chief Procurement Officer are just the beginning. I am proud of the rapid progress we have made to strengthen our finance and operational organizations. With the confidence I now have in these two functions, we have a solid foundation from which to grow. Now we can focus on the necessary build-out of our understaffed sales and marketing organization. We are already in the process of recruiting best-in-class talent to grow our brand voice and our feet on the street, to take our sales reach to the next level, leveraging our passionate followers and fresh, clean products to more aggressively sell into both new and existing customers. We plan to have this supercharged sales and marketing organization firmly in place in the coming months, which will enable more robust organic growth for the combined company going forward. While margin will remain our first, second, and third priorities, we continue to strengthen our partnerships with new and existing customers. We received our first orders from a new West Coast grocery chain, as well as from Roundy's, a Midwest Kroger subsidiary. We continue to grow our Costco partnership, expanding our strong Northeast relationship into the Midwest region, as well as the Pacific Northwest region. Our initial success in these new regions have opened the door to meetings with a further two regions. While new customers are great, we continue to believe that getting more items into existing stores is even more powerful, and here our sales and marketing team did not disappoint. After terrific work by our sales team, we received commitments from another major warehouse club chain to expand our offerings from five items to nine, all hitting in Q1. Average items carried grew in Ahold, Albertsons, Weiss, and others. You will also be hearing more next quarter about our successful portfolio expansion. Our three businesses, Mama Mancini's, T&L Creative Salads, and Olive Branch, are now working well together as one united team. I mentioned on our last earnings call how by working together, we saw tremendous freight efficiencies, representing north of 200 basis points of savings. As we closed out the fiscal year, the sales team began working together, resulting in cross-selling successes at a warehouse club chain, Del Haze, and Fresh Market. The results have exceeded our already high expectations. In the coming weeks, you will be hearing how we are leveraging our T&L Creative Salads product offerings to expand and strengthen our Montmancini's branding, heritage, and packaging. To better reflect our transition into a national deli solutions platform company, at our next annual meeting, we will pursue a corporate name change. to Mama's Creations, along with a ticker change to Mama, which we have currently reserved with Nasdaq. To be clear, the consumer-facing brand Mama Mancini's will remain unchanged, anchoring our authentic Italian heritage products. In addition to serving as the corporate name of the parent company for our family of brands, we envision Mama's Creations to be a consumer-facing brand for select non-Italian products that don't fit under the Mama Mancini's brand, such as Mama's Asian Creations for our General Tso's Chicken, or Mama's Tex-Mex Creations for our Fajitas, or our Mama's Indian Creations for our Chana Masala. We believe this name and ticker change better reflects our identity as a national one-stop-shop deli platform company and look forward to unveiling this brand to the industry in early June at the IDDBA, or the International Dairy Deli Bakery Association, a major industry trade show. From there, we expect to finalize a corporate name and ticker change this summer. Taking a look ahead, we believe that, supported by strong organic growth and successful cross-selling efforts to grow the average items carried by our grocer partners throughout the pending build-out of our sales and marketing organization in the coming months, we will continue to gain market share for our peers in a highly profitable manner. Given the aforementioned margin tailwinds, I believe we can improve our normalized gross margin profile from the mid-20 range to the upper 20 range in the near term. Longer term, with the recent appointment of our new Chief Procurement Officer, Logistics Director, and the continuous optimization of our operations, we could return to a gross margin profile north of 30%. While we are currently targeting mid-single-digit net income margins, I firmly believe that over the long term, we can improve this figure to approximately 10%, with adjusted EBITDA margins in the teens percentage range. In summary, I believe we are well-positioned to continue this level of operational and financial execution in fiscal 24 and beyond. As we improve our internal processes firm-wide to become brilliant at the basics, we are building a more resilient and flexible organization that I believe can deliver sustainable value to my fellow shareholders for years to come. I look forward to continuing to update you on our achievements as we seek to further unlock Ma Mancini's unrealized potential. With that, I'd like to turn the call over to Anthony Gruber, our Chief Financial Officer, to walk through some key financial details from the fourth quarter of fiscal 2023. Anthony?

Thank you, Adam. Revenue for the fourth quarter of fiscal 2023 increased 64% to $22.8 million, as compared to $13.9 million in the same year-ago quarter. Revenue for fiscal 2023 increased 98% to $93.2 million, as compared to $47.1 million in the prior year. This increase was well-balanced between volume and price, largely attributable to strong organic growth across all divisions, chiefly through cross-selling, as well as by inorganic growth through the acquisition of T&L and Olive Branch. To provide further color, the organic growth we saw from T&L and Olive Branch in their first year post-acquisition exceeded our initial expectations by over 150%. Gross profit increased 147% to 6.4 million or 28.2% of total revenues in the fourth quarter of fiscal 2023, as compared to 2.6 million or 18.7% of total revenues in the same year-ago quarter. Gross profit increased 64% to 19.4 million or 20.8% of total revenues in fiscal 2023 as compared to 11.9 million or 25.2% of total revenues in the prior year. The increase in gross margin was attributable to the normalization of commodity costs, successful pricing actions, and improvements in operational efficiencies across the organization. The company continues to identify procurement and logistics efficiencies and cost savings through stronger buying power created through the acquisition of T&L and Olive Branch. Operating expenses totaled $4.5 million in the fourth quarter of fiscal 2023, as compared to $4 million in the same year-ago quarter. As a percentage of sales, operating expenses decreased in the fourth quarter of 2023 to 19.9% from 28.8% in the same year-ago quarter. Operating expenses totaled $16.6 million in fiscal 2023 as compared to $11.8 million in fiscal 22. As a percent of sales, operating expenses decreased in fiscal 2023 to 17.8% of sales. as compared to 25% in the prior year. Operating expenses as a percentage of sales benefited from synergies created through acquisitions of T&L and Olive Branch. Net income for the fourth quarter of fiscal 2023 was $1.8 million or $0.06 per diluted share as compared to a net loss of $1.3 million or minus four cents per diluted share in the same year-ago quarter. Net income for fiscal 2023 was 2.3 million, or six cents per diluted share, as compared to a net loss of 0.3 million, or minus one cent per diluted share in the prior year. The fourth quarter was impacted by a one-time book-to-tax adjustment that improved net income by approximately 0.5 million. Without this one-time benefit, Net income still saw robust sequential improvements to 1.3 million, representing net income in the high 5% range, in line with the company's expectation in the mid-single-digit range. Adjusted EBITDA, a non-GAAP term, increased to 2.3 million for the fourth quarter of fiscal 2023, as compared to an adjusted EBITDA loss of 0.8 million in the same year-ago quarter. Adjusted EBITDA increased to $4.3 million in fiscal 2023 as compared to $1.1 million in the prior year. Cash and cash equivalents as of January 31, 2023 were $4.4 million as compared to $0.9 million as of January 31, 2022. The increase in cash and cash equivalents was driven by $2.3 million in cash flow from operations in the fourth quarter of fiscal 2023, $1.3 million of which was used to pay down the company's long-term debt, bringing the total debt retired in the second half of fiscal 2023 to $3.2 million. This completes my prepared comments. I'd like to now turn over the call to Matt Brown, our president and chief operating officer, for an operations update. Matt?