- Reports Quarter and Six Months Financial Results.
- Company Retains Akin Bay Company and Kernick Advisory Group to Explore Strategic Options.
- Forecasts for Q3 and Q4 Sales and Profits Look Strong.
- Forecasted Cash Flow Expected to Finance Sales Increase.
- Company Completes Plant Expansion in Q2 2019.
- Company Wins Two QVC Best Consumer Choice Awards.
EAST RUTHERFORD, NJ, Sept. 17, 2018 (GLOBE NEWSWIRE) -- MamaMancini's Holdings, Inc. (OTCQB: MMMB), a manufacturer and marketer of specialty pre-prepared, frozen and refrigerated all-natural food products (as defined by the United States Department of Agriculture), today announced financial results for the second quarter of fiscal year 2019, ended July 31, 2018.
Financial Highlights for the quarter and six month period:
- Second quarter fiscal 2019 sales were $5.6 million compared to $7.0 million in the prior year period. Sales for the first half of fiscal 2019 increased 8% to $13.4 million compared to $12.4 million in the prior year six-month period.
- Net loss available to common stockholders was $(210,195), or $(0.01) per diluted share, during the second quarter of fiscal 2019, compared to net income available to common stockholders of $168,306 or $0.00 per diluted share in the same quarter last year. For the six-month period: net income available to common shareholders was $113, 806 or $0.00 per diluted share, compared to $164,127 or $0.00 per diluted share, last year.
- Gross margin for the quarter was 36.6% versus 33.6% in the second quarter of last year. Gross margin for the six-month comparable periods was 36.6% this year and 34.8% last year.
- EBITDA, for the second quarter was $312,000 compared to $443,000 in the second quarter of fiscal 2018. Six-month EBITDA was $1,021,000 versus $712,000 for the comparable period; an increase of 43.4%
- Operating cash flow for the six-month period this year increased 343% to $1.5 million versus $328,000 last year.
- Other Income and Net Income in the quarter ended July 2018, was negatively affected by $112,500 in non-recurring charges related to the extension of the Manatuck Hill Partners note to May 1, 2019.
Carl Wolf, Chairman and CEO of MamaMancini's, commented, "The just completed quarter was very challenging. Sales for the quarter were negatively impacted by changes in the purchasing offices in a number of our major retailer customers - not reflective of our product quality, trade relationships or consumer acceptance. Also, during last year’s second quarter we had an extraordinarily high one-time customer inventory build with new programs that went into effect. While we are not pleased with these developments, we recognize that this is a dynamic business and we understand that we will experience ebbs and flows from time to time. It’s part and parcel of running a business, but we do not expect a significant impact on long-term trends.”
Outlook Positive for Record Sales and Strong Profits in Quarter 3 and 4:
Mr. Wolf continued, “We are off to a good start in the first two months of the third quarter ending October 31, 2018 and we have expectations of record sales and solid profitability when we report results for the full quarter. The Company expects sales to be near a $40 million annualized run rate range by the end of this fiscal year. This is due in part to our ability to grow our retail product placement spots by approximately 7,000 to 10,000 placements which would increase our current 43,300 spots to between 50,000 to 53,000 in our retail partner locations.
“Indications continue to build for our products across all categories and retailers, with a view that we will see a substantial increase in sales and profits in fiscal 2020. A factor in our forecasting is that a major national retailer has strongly indicated a start date for selling our products next spring. This would further support our view that the next 12 to 18 months will show increases in sales and profitability. The above is subject to change and the Company will periodically update its guidance on future prospects as they arise.”
Strategic Alternatives Initiative:
Mr. Wolf also commented, “We have retained Akin Bay Company in partnership with Kernick Advisory Group, to investigate strategic options for the shareholders of MamaMancini’s. Akin Bay and Kernick Advisory Group are experienced independent investment bankers in the natural and organic foods category. Given the current strong U.S. economic environment, management and the Company’s Board of Directors believe that this is an appropriate time to evaluate the Company’s market position and prospects and investigate if there are alternatives where shareholder value can be substantially enhanced. Potential options could include, but not be limited to, strategic acquisitions, a merger with, or purchase by a larger strategic food company or investors or recapitalization of the Company. There is no guarantee that any transaction will occur. However, given the positive fundamentals of the economy and MamaMancini's, we believe that our shareholders deserve a comprehensive review of our options. We intend to further comment on this process when appropriate.”
Cash Flow and Financing:
“We believe that cash flow in the second half of the year and next year will be sufficient to finance the growth of the Company going forward,” continued Mr. Wolf. “The Company has either paid in full or financed its capital improvements completed this summer. We have restructured our Senior Note with Manatuck Hill Partners, extending the maturity date to May 1, 2019 and the Company expects to pay down the Manatuck Hill note by that date. This past quarter the Company also extended its working capital financing with EGC for two additional years to October 2020 and entered into a two-year $300,000 secured note, payable in monthly installments, with EGC which partially finances the new construction just completed.”
Plant Expansion Completion:
The Company completed its plant expansion in July; expanding manufacturing capacity to $50 million to $60 million in sales, given the anticipated product mix going forward. The Company also received the prestigious SQF Level 2 (Safe Quality Food) designation by the USDA this August with a rating of 95%.
QVC Consumer Best Choice Awards:
The Company won two prestigious consumer awards which was reported and aired live on QVC on September 12. The Company’s beef meatballs in sauce won the “Best Quick and Easy Entrée” category and the “Best Meatball” award with its cocktail sized products.
Conference Call
The Company has scheduled a conference call for today, Monday, September 17, 2018 at 10:00 a.m. ET, to review the results. Interested parties may participate on the conference call by dialing (844) 889-4326 or (412) 317-9264. A replay of the conference call will be available by dialing (877) 344-7529 or (412) 317-0088, confirmation code 10123796, through September 24, 2018.
About MamaMancini's
MamaMancini's is a marketer and distributor of a line of beef meatballs, turkey meatballs, and chicken meatballs all with sauce, five cheese and mozzarella stuffed beef, turkey and chicken meatballs all with sauce, original beef and turkey meatloaves, stuffed pepper mix; sausage and peppers; chicken parmesan; pasta entrees; and other similar Italian cuisine products. The Company's sales have been growing on a consistent basis as the Company expands its distribution channel, which includes major retailers such as Publix, Costco, Shop Rite, Jewel, Lunds and Byerlys, SuperValu, Safeway, Albertsons, Whole Foods Market, Shaw's, Kings, Roche Bros., Key Foods, Stop & Shop, Giant, Giant Eagle, Hannaford, Martins, Foodtown, Sam's Club, Topps, Kroger, Shoppers, King Kullen, Schnucks Markets, Central Markets, HEB, Stew Leonard’s, Weis Markets, Ingles, and The Fresh Market. The Company sells to distributors such as Sysco, AWI, UNFI, SUPERVALU, Monterrey Provision Co., Kehe, Burris Logistics and C&S Wholesale Grocers. In addition, the Company sells a wide variety of its products through QVC, the world's largest direct to consumer marketer, via on air presentations, auto ship programs, and direct purchases through the internet or phone.
Forward Looking Statements
This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in the Company's 10-K for the fiscal year ended January 31, 2017 and other filings made by the Company with the Securities and Exchange Commission.
Financial Tables to Follow
MamaMancini’s Holdings, Inc.
Condensed Consolidated Balance Sheets
| July 31, 2018 | January 31, 2018 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 347,032 | $ | 581,322 | ||||
| Accounts receivable, net | 1,749,977 | 3,084,715 | ||||||
| Inventories | 1,279,557 | 824,276 | ||||||
| Prepaid expenses | 421,524 | 261,980 | ||||||
| Total current assets | 3,798,090 | 4,752,293 | ||||||
| Property and equipment, net | 3,096,001 | 2,499,875 | ||||||
| Deposits | 20,177 | 20,177 | ||||||
| Total Assets | $ | 6,914,268 | $ | 7,272,345 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Liabilities: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 3,473,533 | $ | 3,456,918 | ||||
| Line of credit, net | 2,028,555 | 2,688,764 | ||||||
| Term loan | 106,938 | 106,938 | ||||||
| Capital lease payable | 43,835 | - | ||||||
| Secured promissory note | 150,000 | - | ||||||
| Notes payable – related party | 109,844 | - | ||||||
| Note payable – net | 1,215,729 | 1,403,082 | ||||||
| Total current liabilities | 7,128,434 | 7,655,702 | ||||||
| Term loan - net of current | 530,112 | 651,677 | ||||||
| Capital lease payable – net of current portion | 186,153 | - | ||||||
| Secured promissory note – net of current portion | 150,000 | - | ||||||
| Note payable - net of current portion | - | 250,000 | ||||||
| Notes payable - related party | 532,000 | 649,656 | ||||||
| Total long-term liabilities | 1,398,265 | 1,551,333 | ||||||
| Total Liabilities | 8,526,699 | 9,207,035 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit: | ||||||||
| Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 23,400 issued as of July 31, 2018 and January 31, 2018, 0 and 23,400 shares outstanding as of July 31, 2018 and January 31, 2018 | — | — | ||||||
| Preferred stock, $0.00001 par value; 19,880,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Common stock, $0.00001 par value; 250,000,000 shares authorized; 31,866,241 and 31,753,437 shares issued and outstanding as of July 31, 2018 and January 31, 2018, respectively | 320 | 319 | ||||||
| Additional paid in capital | 16,463,956 | 16,344,794 | ||||||
| Accumulated deficit | (17,927,207 | ) | (18,130,303 | ) | ||||
| Less: Treasury stock, 230,000 shares, respectively | (149,500 | ) | (149,500 | ) | ||||
| Total Stockholders’ Deficit | (1,612,431 | ) | (1,934,690 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 6,914,268 | $ | 7,272,345 | ||||
MamaMancini’s Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
| For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Sales-net of slotting fees and discounts | $ | 5,640,830 | $ | 7,005,434 | $ | 13,382,824 | $ | 12,362,735 | ||||||||
| Costs of Sales | 3,588,413 | 4,652,820 | 8,501,861 | 8,067,627 | ||||||||||||
| Gross profit | 2,052,417 | 2,352,614 | 4,880,963 | 4,295,108 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 37,083 | 33,333 | 67,179 | 67,331 | ||||||||||||
| General and administrative | 1,906,233 | 1,953,961 | 4,151,170 | 3,664,678 | ||||||||||||
| Total operating expenses | 1,943,316 | 1,987,294 | 4,218,349 | 3,732,009 | ||||||||||||
| Income from operations | 109,101 | 365,320 | 662,614 | 563,099 | ||||||||||||
| Other expenses | ||||||||||||||||
| Interest expense | (177,770 | ) | (191,903 | ) | (365,911 | ) | (372,962 | ) | ||||||||
| Amortization of debt discount | (52,236 | ) | (5,157 | ) | (93,607 | ) | (26,010 | ) | ||||||||
| Total other expenses | (230,006 | ) | (196,960 | ) | (459,518 | ) | (398,972 | ) | ||||||||
| Net income (loss) | (120,905 | ) | 168,360 | 203,096 | 164,127 | |||||||||||
| Less: preferred dividends | - | (44,765 | ) | - | (91,565 | ) | ||||||||||
| Net income (loss) available to common stockholders | $ | (120,905 | ) | $ | 123,595 | $ | 203,096 | $ | 72,562 | |||||||
| Net loss per common share - basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.01 | $ | 0.00 | |||||||
| Net loss per common share - diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.01 | $ | 0.00 | |||||||
| Weighted average common shares outstanding – basic | 31,852,464 | 28,100,066 | 31,765,870 | 27,957,789 | ||||||||||||
| Weighted average common shares outstanding – diluted | 31,852,464 | 30,817,281 | 34,873,500 | 30,675,004 | ||||||||||||
MamaMancini’s Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
| For the Six Months Ended | ||||||||
| July 31, 2018 | July 31, 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 203,096 | $ | 164,127 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 337,833 | 240,205 | ||||||
| Amortization of debt discount | 98,717 | 26,011 | ||||||
| Share-based compensation | 79,163 | 147,499 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) Decrease in: | ||||||||
| Accounts receivable | 1,334,738 | (1,246,756 | ) | |||||
| Inventories | (455,281 | ) | (174,834 | ) | ||||
| Prepaid expenses | (159,544 | ) | (545,598 | ) | ||||
| Increase (Decrease) in: | ||||||||
| Accounts payable and accrued expenses | 12,959 | 1,717,514 | ||||||
| Net Cash Provided by Operating Activities | 1,451,681 | 328,168 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for fixed assets | (690,709 | ) | (765,740 | ) | ||||
| Net Cash Used in Investing Activities | (690,709 | ) | (765,740 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from secured promissory note | 300,000 | - | ||||||
| Repayment of note payable - related party | (7,812 | ) | - | |||||
| Repayment of term loan | (121,565 | ) | (70,002 | ) | ||||
| Repayment of note payable | (500,000 | ) | (600,000 | ) | ||||
| Debt issuance costs | (27,304 | ) | - | |||||
| Borrowings (repayments) of line of credit, net | (665,319 | ) | 1,091,006 | |||||
| Repayment of capital lease obligations | (13,262 | ) | - | |||||
| Proceeds from exercise of options | 40,000 | - | ||||||
| Net Cash Provided by (Used in) Financing Activities | (995,262 | ) | 421,004 | |||||
| Net Decrease in Cash | (234,290 | ) | (16,568 | ) | ||||
| Cash - Beginning of Period | 581,322 | 670,807 | ||||||
| Cash - End of Period | $ | 347,032 | $ | 654,239 | ||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||
| Cash Paid During the Period for: | ||||||||
| Income taxes | $ | - | $ | - | ||||
| Interest | $ | 464,958 | $ | 212,182 | ||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Stock issued for Series A Preferred dividends | $ | - | $ | 91,565 | ||||
| Debt issuance costs included in principal balance of note | $ | - | $ | 52,236 | ||||
| Capital lease asset additions | $ | 243,250 | $ | - | ||||