MamaMancini's Holdings, Inc.
Q4 2021 Earnings Call Transcript

Published: 20 Apr 2021

[Operator:]

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to MamaMancini's Fourth Quarter Fiscal 2021 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 call is being recorded today, April 20, 2021, and the earnings press release accompanying this conference call was issued at the close of market today. On our call today is MamaMancini's Chairman and CEO, Carl Wolf; President and COO, Matthew Brown; CFO, Larry Morgenstein; and Greg Falesnik, CEO of MZ North America, MamaMancini's Investor Relations firm.

[Greg Falesnik:]

Thank you, operator. 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 meaning of the federal securities laws regarding MamaMancini's. Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions and 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 vary and are likely to differ materially from what is expressed or forecasted in forward-looking statements, due to numerous factors discussed from time to time in this report and another documents which the company 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 cause actual results to differ materially from those 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, this conference call contains time-sensitive information that reflects management's best analysis only as of the date of this time -- 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 the call over to Carl Wolf, the company's Chairman and Chief Executive Officer. Carl, the floor is yours.

[Carl Wolf:]

Thank you, Greg, and thank you, everyone, for joining us today. I'd like to welcome you to our fourth quarter and fiscal 2021 financial results conference call. Our fiscal 2021 was a record year of growth despite intense hardships at the national level, driven by a shift in consumer purchasing power from restaurants to grocery stores in light of the COVID-19 pandemic.

[Larry Morgenstein:]

Thank you, Carl. Revenue for the fourth quarter of fiscal 2021 increased 1.4% to record $10 million compared to $9.9 million in the same year-ago quarter. Revenue for fiscal 2021 increased 20.8% to record $40.8 million as compared to $33.8 million in fiscal 2020. Revenue increased from the year was a results of the increased volume in club store accounts and spring and through new product introduction later in the year. Gross profit increase 15% to $3.3 million or 32.9% of total revenue in the fourth quarter of fiscal 2021 compared to $2.9 million or 29.0% of total revenue in the same year-ago quarter. Gross profit increased 27.6% to $12.7 million or 31.3% of total revenue in fiscal 2021, compared to $10 million or 29.6% of total revenue in fiscal 2020. The increase in gross profit in the fourth quarter is primarily due to a change in customer mix to higher margin accounts, including QVC. Operating expenses totaled $2.4 million in fourth quarter of fiscal 2021, compared to $2.2 million in the same year ago quarter. As a percentage of sales, operating expenses increased in the fourth quarter of 2021 to 23.8% from 22.4%. Operating expenses totaled $9.3 million in fiscal 2021, as compared to $7.9 million in fiscal 2020.

[Matt Brown:]

Thanks, Larry. Fiscal 2020 can be summarized in one word, COVID. COVID-19 impacted our sales, our operations, our protocols and our morale. We watched this demand for our packaged and kit business rapidly increased, while our bulk hot bar business all disappeared. We watched this raw material prices skyrocketed and we took swift actions to offset these increases. We watched as employees nervously came to work each day not knowing what the future may hold. And if at any moment, they were going to be told not to come back to work. We scrambled to cover ourselves with financial aid in the form of the PPP only to return this 8 weeks later, so it could be used by a business in greater need as our plant kept running and the orders kept coming. And through it all, we came out stronger as an operation and as a team, as was evident by our SQF or Safe Quality Food Audit score of 97%, the highest score of the plant has achieved since we began these audits 10 years ago. As Carl and Larry have highlighted, we experienced record sales and record profits at the close of fiscal 2021. There were multiple factors that led to these results, I will highlight just a few. In fiscal Q1 2021, the plant brought Steve Burns on board as our Executive Vice President of Operations and Financial projects.

[Carl Wolf:]

Thank you, Matt and Larry. As I noted in my opening remarks, we continue to execute on all fronts and have laid the foundation for an incredible year. I am proud of the operational progress our team made for 2021, realizing strong year-over-year growth amidst the backdrop of COVID-19. While fiscal 2021 was a record year, there are still extremely attractive growth areas for the core business as we enter fiscal 2022. From major box retailer engagements with our branded family and jumbo pack meatballs as well as our pasta pol line to hot bar placements at leading groceries nationwide, our outlook on the near-term food market remains optimistic. When take an intending with the acquisition strategy as well as our recent application to up to the NASDAQ capital market, I believe that fiscal 2022 will mark another record year for the creation of sustainable long-term valuation for our shareholders. With that, I turn it over to the operator for questions.

[Operator:]

[Q - Howard Halpern:]

Congratulations on navigating a very tough year.

[Carl Wolf:]

Thank you.

[Howard Halpern:]

What do you anticipate CapEx to be for this upcoming year? Are there going to be any significant changes to the plant or more tweaks to the plant?

[Carl Wolf:]

In general, I would say more tweaks to the plant. However, if our volume grows very substantially as we hope, we may have to look for an expansion of facilities some time past this year.

[Howard Halpern:]

Okay. And in terms of what you both guys are speaking about earlier, is there going to be – once -- at the bulk deli hot bars and such come back to the more normal levels, is there going to be any cannibalization from kits? Or are both going to start growing robustly throughout the year?

[Carl Wolf:]

I don't think there will be substantial cannibalization. I think the consumer wants both, and they didn't have the variety in the kits that area as much. So I don't think -- I don't see any substantial cannibalization.

[Howard Halpern:]

Okay. And based on the customer and sales mix, can we assume that gross margin should be able to maintain that 32% area that you achieved in the fourth quarter?

[Carl Wolf:]

Right. We expect gross margin to slowly go up as our plant capacity is further utilized. So we are expecting a further increase in gross margin.

[Howard Halpern:]

Okay. And in the very beginning, you talked about the food service area. What type of efforts are you making right now? And I know you don't have any -- you would announce if you had any type of deals, but what when would you expect, hopefully, to see your first significant revenue from your food service efforts?

[Carl Wolf:]

Well, first of all, you really couldn't get anybody's attention a little bit starting in February. So everybody was either -- was operationally oriented, the ones who had a quick serve, handling that part of the business, mainly drive up business. And then the medium priced restaurants, et cetera, we're just dealing with lower volume. So now that they're first getting back to normal for seeing us. So it's several months away. We do have a number of appointments and contacts and I do think there will be probably around in third quarter, when we think we'll see some significant opportunities. You have to remember that food service includes convenience stores, colleges and -- these are all areas we're working on now very actively. Convenience stores, college and universities, which we're doing great. Independent delis, where we have put together a kiosk concept as well as hotels and institutions. All that is going on right now. They're each separate. That is in addition to what we commonly know as food services, restaurant chains.

[Howard Halpern:]

Okay. And is the team that's involved in this? Or is it just a couple of people or one person to have.

[Carl Wolf:]

We have a dedicated person handling it, and then we've got some help from some affiliates of our company, and we like to use agents who are sales -- commission salespeople, some of them are on retainer. So we have appointed a number of people in that to help us.

[Howard Halpern:]

Okay. And one final question. What does the acquisition landscape look like? And what opportunities are you seeing or being brought to you that seem intriguing?

[Carl Wolf:]

Well, there are a number of opportunities and a number of them haven't met our criteria, either that they're not making substantial income, or they can't be integrated well or their price is higher than we'd like to pay. We're looking for an acquisition that would be immediately accretive to the company. We do have candidates.

[Howard Halpern:]

Okay. Well, keep up the good work, guys.

[Carl Wolf:]

Thank you.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Carl Wolf for any closing remarks.

[Carl Wolf:]

Thank you, operator. As a final note, once COVID-19 subsides, we will continue to be active in attending top investor conferences and investor nondeal roadshows, marketing on both coasts of the U.S. In the meantime, we will continue our efforts on a virtual basis. If interested in schedule a meeting with management, when we are in your region, please reach out our IR firm, MZ Group, to arrange. I might mention that I'm giving a presentation tomorrow on the Planet Microcap seminar, and I am holding one-on-one meetings, which you can do by signing up. There's a press release on that. Anybody would like to do that. So on that, I want to thank everyone again, and we look forward to continuing to update you on our progress in the coming quarters. We also -- I should also mention that we'll be holding a virtual annual meeting. The date is June 24, and it will be at 12

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.