MamaMancini's Holdings, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Mama Mancini's first quarter fiscal 2024 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. This conference is being recorded today, June 13, 2023, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Mama Mancini's Chairman and CEO, Adam L. Michaels, CFO, Anthony Gruber, and COO, Matt Brown. Before we get started, I will read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements within the meanings of the Federal Security's laws regarding Mama Mancini's. Forward-looking statements include, but are not limited to, statements that express 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 or 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 with accompanying files with the U.S. Securities and Exchange Commission. In addition, such statements could 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 any major litigation regarding the company. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes better reflects the performance of the business on its ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable gap financial measure is included in today's earnings release, which is available on the Mama Mancini's website under the Investor tab. And finally, 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. At this time, I'd like to turn the call over to Chairman and CEO, Adam L. Michaels.

Adam, the floor is yours. Thank you, Operator, and thank you to everyone for joining us today. I'd like to welcome you to our first quarter fiscal 2024 financial results conference call. The first quarter of fiscal 24 was highlighted by our continued sequential improvement in normalized profitability with our net income totaling $1.4 million in the quarter or 6.1% of revenue in line with our expectations. Having started this journey with my teammates nine short months ago, I am proud of our sequential growth. from turnaround losses to growing our normalized net profit margin sequentially, with our first quarter at 4.2%, then 5.7%, excluding the one-time tax benefit, and now 6.1%. Three quarters that we are proud of, with further headroom to continue to grow our future profitability. We continue to execute on our goal of accelerating and expanding our existing family of brands, This was most recently seen with positive reviews from retailers and consumers with the launch of Mama's Creations, a platform brand for international cuisine at IDDBA 2023 last week. To complement our existing items, we are strategically leveraging incremental consumer-driven innovation, such as our In-A-Cups portfolio, to enter new occasions, cohorts, and channels. In parallel to our organic growth, we continue to consider accretive potential acquisitions to further fill out gaps in our portfolio as needed. Our vision is to become a one-stop shop for deli prepared foods for grocery, mass, club, and now the convenience channels, addressing the $40 billion plus food service and prepared foods market with our grocer partners. Facing continued macroeconomic headwinds, Consumers are eating out less and transitioning to grocery store prepared foods. Despite economic challenges we saw at IDDBA, the demand remains high for clean ingredient meals that are high quality, affordable, and quick to prepare as part of a modern on-the-go lifestyle. Consumers are not looking for the cheapest product, but rather they're seeking the most value, which is made up of the attributes just mentioned above. On the other side of the counter, retailers today continue to face significant supply chain and labor challenges, which are still running at record highs 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. Realizing our goal of shaping Mama Mancini's into a one-stop shop for deli prepared food solutions has required a step change in our corporate structure in many ways. Throughout the first quarter, we remained laser focused on the continuous foundational improvement of our three C's strategy, cost, controls, and culture. As is plainly visible in our margin profile, our new approach to cost management has driven noticeable savings across the organization, with further improvements enabling gross margins to potentially grow into the 30% range over the longer term. Matt will speak later about the successful commissioning of our new spiral oven, which will drive further efficiencies in our operations. And our work to further integrate our three business units is delivering dividends, as we are now able to load share some of our products across two facilities, driving additional operational efficiencies. On the controls front, I'm proud to say that we officially brought our olive branch business into our NetSuite ERP system in the first quarter. Steve Burns, our Executive Vice President, has been successfully leading this work, and I look forward to bringing our Creative Salads division into ERP system later this year. Having all our financial, operational, and sales analytics at the touch of a button is truly transformational, something we saw after integrating NetSuite and Mama Mancini's, and that we're seeing play out now at Olive Branch. As I've said before, what gets measured gets improved. We have proven it together over the past three quarters, and these analytical capabilities that we are building in-house will continue to deliver for us. Our company culture is now aligned. incentivizing profitable growth at all levels of the organization while understanding that our people are at the core of what we do. Ultimately, hiring, promoting and retaining talent is paramount to our long-term success. We are seeing the pride our employees have in our brand, our products and the consumer focused culture we have imbued in our facilities every day. Just last month, We had one of our consumer focus groups in our new consumer immersion lab for the first time. This is an extra large conference room we have in our East Rutherford facility that truly immerses you into our family of brands. The walls look like you're in mama's kitchen. The last set of focus groups refined our thinking on our new cups offering, gave us added confidence in our new Chana Masala vegetarian product. and provided a first set of feedback on a reformulated grandma-quality breaded chicken. I promise, mama would be proud. We've held company town halls, customer meetings, and for the first time last month, as I mentioned, our consumer focus groups. Culture is owned by each of our employees, and we now have a home for that grandma feeling. We will continue to invest in our people to further grow capabilities. And our new highly capable chief marketing officer, Lauren Sella, who I had the pleasure of working with previously at Mondelez, is just the latest example of how we plan to strengthen our organization. I'm incredibly proud of the rapid progress we have made to strengthen our finance and operations organizations. With the confidence I now have in these two functions, we have a solid foundation from which to grow. We can now focus on the necessary build out of our understaffed sales organization. In the two short months since we have spoken last, we have delivered on our commitment to bring in world-class marketing talent with Lauren's hiring, and we are equally excited about the hiring of additional sales capabilities, particularly with the recent hire of our new West Coast sales lead. We will continue to recruit best-in-class talent to grow our feet on the street, to take our sales reach to the next level, leveraging our passionate following and fresh, clean products to more aggressively sell into both new and existing customers. The expected launch of our new supercharged sales organization in the second half corresponds well with the recent launch of Mama's Creations, our new, highly incremental platform brand, which will serve to broaden our product offerings and enable entry into the branded prepared food space for international cuisine. These products represent entirely incremental dining occasions, and will be a cornerstone of our ability to drive more SKUs into each of our grocery store customers. We launched this brand in significant fanfare last week at our booth at the International Dairy Deli Bakery Association, also known as IDDBA, 2023 annual show. It is the premier trade show in our industry, attracting over 10,000 attendees each year. In addition to our fan favorites of beef meatballs and sausage and peppers, We introduced our new Mama's Creations items, including General Tso's Chicken, Chana Masala, and our Nashville Hot Paninis, my personal favorite. Mama's Creations was well-received, driving productive discussions with both new and existing grocery store customers interested in our expanded offering. In addition, to capture incremental on-the-go snacky occasions with a differentiated consumer base, We pleasantly surprised retailers with the launch of several new in-a-cup products at IDDBA to expand upon the initial success of our meatballs in a cup product line in convenience store trials. These include creations such as sausage and peppers, chicken cacciatore, turkey meatballs, and beef and rice varieties. Our ability to increase the product shelf life from five days to 21 days was a significant driver of customer interest at IDDBA. addressing a key element of early retailer feedback during initial trials. Beyond ensuring quality and safety, this allows us to decrease replenishment time and reduce excess inventory and waste, all of which are critical KPIs for our retailer customers. A great example of us already realizing our vision to become the one-stop shop deli solution provider was the massive execution of our strategy with a major club retailer in the first quarter. We have a great long-standing relationship with this retailer, having had our products in their stores nationwide for more than four years. After we shared our one-stop shop vision with them and shared our new post-acquisition capabilities, they challenged us to put our facilities to the test. Since last summer, we worked collaboratively with this retailer to launch nine additional products for a total of 10 SKUs. Early results have not disappointed. From our Tex-Mex tacos to our Japanese teriyaki chicken or our cilantro shrimp, we are proving that a one-stop shop deli solution is not merely a strategy or a slogan, but it is now a reality. And to conclude, to better reflect our transition into a national deli solutions platform company, we will pursue a corporate name change to Mama's Creations at our next annual meeting this summer, along with a ticker change to Mama, which we have currently reserved with NASDAQ. To be clear, the consumer-facing brand Maui Mancini's will remain unchanged, anchoring our authentic Italian heritage products. We believe this name and ticker change better reflects our identity as a national one-stop shop deli platform company. In summary, I firmly believe that we are well-positioned to leverage the impending build-out of our sales team and the introduction of several highly incremental products to take market share. grow our SKUs per customer, and ultimately become a premier one-stop shop deli solutions provider. 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 Mama Mancini's unrealized potential. With that, I'd now like to turn the call over to Anthony Gruber, our Chief Financial Officer, to walk through some of the key financial details from the first quarter of fiscal 2024. Anthony?

Thank you, Adam. Revenue for the first quarter of fiscal 2024 increased 5.9% to $23.1 million, as compared to $21.8 million in the same year-ago quarter. The increase was largely attributable to the strong organic growth driven by successful cross-selling efforts. Gross profit increased 65% to $6.4 million or 27.6% of total revenues in the first quarter of fiscal 2024, as compared to $3.9 million or 17.7% of total revenues in the same year-ago quarter. The increase in gross margin was primarily attributable to the normalization of commodity costs, successful pricing actions, and improvements in operating efficiencies across the organization. The company continues to identify procurement and logistics efficiencies and cost savings through stronger buying power created through the acquisitions of T&L and Olive Branch. Operating expenses totaled $4.4 million in the first quarter of fiscal 2024 as compared to $3.6 million in the same year-ago quarter. As a percentage of sales, operating expenses increased in the first quarter of fiscal 2024 to 19.2% from 16.5%. Operating expenses as a percentage of sales increased due to the addition of several new key hires throughout the organization who have brought differentiated and much needed capabilities that we were missing. These teammates have already driven significant ROI and their effects will only become more impactful in time. Net income for the fiscal quarter of fiscal 2024 was 1.4 million or 4 cents per diluted share as compared to 0.1 million or zero per diluted share in the same year ago quarter. This quarter's net income totaled 6.1% of revenue, in line with our expectations in the mid single-digit range. Adjusted EBITDA, a non-GAAP term, increased to $2.5 million for the first quarter of fiscal 2024, as compared to an adjusted EBITDA of $0.7 million in the same year-ago quarter. Cash and cash equivalents as of April 30, 2023, were 5.3 million as compared to 4.4 million as of January 31st, 2023. The increase in cash and cash equivalents was driven by 1.6 million in cash flow from operations in the first fiscal quarter of fiscal 2024, 0.5 million of which was used to pay down the company's long-term debt, which now stands at just 8.8 million. Looking ahead, we believe that our normalized gross margin profile will remain in the upper 20% range in the near term. Longer term, with a 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%. Turning to net income, while we are currently triggering single digit net income margins, We believe that over the long term, this could be improved to approximately 10% with adjusted EBITDA margins in the team's percentage range. This completes my prepared comments. I'd now like to turn over the call to Matt Brown, our President and Chief Operating Officer, for an operations update.