Organic Growth and Recent Acquisitions Drive 89% Increase in Q2 Fiscal 2023 Revenues to Record $22.9 Million
EAST RUTHERFORD, NJ, Sept. 14, 2022 (GLOBE NEWSWIRE) -- MamaMancini's Holdings, Inc. (NASDAQ: MMMB), a leading marketer and manufacturer of fresh, clean and easy to prepare foods, today reported its financial results for the fiscal second quarter ended July 31, 2022.
Financial Summary:
| Three Months Ended July 31, | |||||||
| $ in millions | 2022 | 2021 | % Change | ||||
| Revenues | $ | 22.9 | $ | 12.1 | 89.4 | % | |
| Gross Profit | $ | 2.7 | $ | 3.4 | -19.1 | % | |
| Operating Expenses | $ | 3.6 | $ | 2.8 | 27.8 | % | |
| Net Income (Loss) | $ | (0.7 | ) | $ | 0.4 | - | |
| Earnings per Share (Diluted) | $ | (0.02 | ) | $ | 0.01 | - | |
| Adj. EBTIDA (non-GAAP) | $ | (0.3 | ) | $ | 0.8 | - | |
Key Second Quarter Fiscal 2023 Operational Highlights
- Appointed respected food industry executive Adam L. Michaels as Chief Executive Officer and member of the Board of Directors, with Carl Wolf continuing to serve as Chairman.
- Appointed experienced financial executive Anthony J. Gruber as Chief Financial Officer, effective September 19, 2022.
- Acquired a 24% minority interest in Chef Inspirational Foods with a fixed price option to purchase the remainder, representing an immediately accretive investment into a leading prepared foods sales agent, whose largest partner is MamaMancini’s subsidiary T&L Creative Salads.
- Began a convenience store market test for branded Meatballs in a Cup™ and Meals for One with one of the largest wholesale distributors in the United States, opening an incremental sales platform for convenient, on the go, high protein snacks and meals.
- Secured new customer authorizations representing over 10,500 new spots on tier-1 retailer shelves nationwide, with initial shipments taking place from August through October 2022.
- Attended leading investor conferences nationally, including the Proactive Investors One2One Virtual Forum and the Q3 Investor Summit, with an addition registration to attend the upcoming LD Micro Main Event XV.
Management Commentary
“The second quarter was highlighted by record revenues, supported by healthy growth from our recent acquisitions, bringing us roughly in-line with Carl’s previously announced goal of a $100 million annualized sales run-rate by year-end,” said Adam L. Michaels, newly appointed CEO of MamaMancini’s. “While I started at MamaMancini’s one short week ago, the passion of our people and the difficult to replicate story of Anna “Mama” Mancini dating back to 1921 is incredible. The quality of our products and our service is recognized by our consumers and retailers. Equally, we all recognize the major areas of focus our Company needs to immediately address to improve our cost structure, corporate culture as well as operational and financial controls – enabling us to more fully realize synergies across our family of brands and enhance profitability both from a price realization and operating cost perspective.
“MamaMancini’s is building the foundations for a national Deli Solutions company that – leveraging organic growth and expansion of our existing portfolio, incremental consumer-driven innovation, and accretive near-in acquisitions to fill out the gaps – has the potential to become a one-stop-shop for prepared foods for grocery, mass, club and convenience stores. I realize this is certainly no small feat – but I am confident that, with our storied, family recipes and on-trend portfolio, we are well positioned to achieve it.
“To address the specific headwinds we faced this quarter, we have been aggressive in seeking out new ways to strengthen our firm-wide margin profile. For example, we have instituted a new pricing process that more accurately and rapidly tracks inputs costs – including commodity costs – to ensure that every single sale we make is meeting our required margin profile. In addition, we are conducting a thorough analysis of our suppliers and have already identified several areas where we have the potential to realize meaningful cost savings. We have instituted KPIs to track progress, targets to measure success, and monthly meetings to hold our teams accountable for results. We believe that these efforts, as well as incremental improvements at every level of the company, will only serve to fuel our growth and accelerate our return to profitability.
“In summary, while we saw some margin headwinds in the quarter, we are well positioned to build significant momentum in calendar year 2023 as we drive organic growth, grow the team, expand our capabilities and seek to become brilliant at the basics – all with the goal of building sustainable value for our shareholders over the long-term. I look forward to driving new momentum towards the realization of MamaMancini’s significant potential.”
Second Quarter Fiscal 2023 Financial Results
Revenue for the second quarter of fiscal 2023 increased 89.4% to $22.9 million, as compared to $12.1 million in the same year-ago quarter. The increase in revenue for the second quarter was primarily driven by the December 2021 acquisition of T&L Creative Salads, Inc. and Olive Branch LLC, as well as organic growth by adding new products with existing customers, particularly in club stores.
Gross profit totaled to $2.7 million, or 11.9% of total revenues, in the second quarter of fiscal 2023, as compared to $3.4 million, or 27.9% of total revenues, in the same year-ago quarter. The margin compression was caused by inflation of raw materials, packaging, and freight costs – which outpaced price increases – as well as lower margins in the T&L Creative Salads and Olive Branch LLC business lines, partially offset by the low overhead of the acquired businesses.
Operating expenses totaled $3.6 million in the second quarter of fiscal 2023, as compared to $2.8 million in the same year-ago quarter. As a percentage of sales, operating expenses totaled 15.6% in the second quarter of fiscal 2023, as compared to 23.1% in the same year-ago quarter. Operating expenses in the second quarter increased mainly due to transportation rate increases as well as one-time fees related to the purchase of Chef Inspirational Foods, higher professional fees and payroll related to the acquisition of T&L Creative Salads and the management of control reporting.
Net loss for the second quarter of fiscal 2023 totaled $743 thousand, or $0.02 per diluted share, as compared to a net income of $432 thousand, or $0.01 per diluted share, in the same year-ago quarter.
Adjusted EBITDA loss, a non-GAAP term, totaled $271 thousand for the second quarter of fiscal 2023, as compared to adjusted EBITDA of $829 thousand in the same year-ago quarter.
Cash and cash equivalents as of July 31, 2022 were $1.9 million, as compared to $0.9 million at January 31, 2022.
“Of note, our GAAP financial results year-to-date have reflected significant acquisition related and non-cash expenses. Taking a look at our cash flows, operating activities provided $296 thousand in net cash in the six months ended July 31, 2022. As we continue to realize synergies from the acquired companies and implement new measures company-wide to improve margins, I believe we are well positioned to return to GAAP profitability,” concluded Michaels.
Second Quarter Fiscal 2023 Earnings Conference Call
Management will host an investor conference call at 4:30 p.m. Eastern time today to discuss the Company’s second quarter fiscal 2023 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Q2 2023 Earnings Conference Call
Date: Wednesday, September 14, 2022
Time: 4:30 p.m. Eastern time
U.S. Dial-in: 1-844-889-4326
International Dial-in: 1-412-317-9264
Conference ID: 9017859
Webcast: MMMB Q2 2023 Earnings Conference Call
Please dial in at least five minutes before the start of the call to ensure timely participation.
A telephone playback of the call will be available through September 21, 2022. To listen, please call 1-877-344-7529 within the United States or 1-412-317-0088 when calling internationally and use replay pin number 9017859.
About MamaMancini’s Holdings, Inc.
MamaMancini's Holdings, Inc. (NASDAQ: MMMB) strives to become the largest marketer and distributor of fresh, clean, easy to prepare foods in North America. MamaMancini’s broad product portfolio consists of meatballs, meatloaf, sausages and pasta bowls with beef, turkey, chicken and pork varieties – as well as an assortment of chicken-based dishes, olives, savory products and salads through its T&L Creative Salads and Olive Branch subsidiaries. The Company’s products are sold in over 45,000 locations nationwide, including at regional delis and well-known retailers such as Sam’s Club, ALDI Markets, Schnuck Markets, Whole Foods, Publix, ShopRite, Stop & Shop, Costco and Albertsons – as well as through national distributors such as Sysco and United Natural Foods. The Company also maintains a direct-to-consumer presence on QVC. For more information, please visit www.mamamancinis.com.
Use of Non-GAAP Financial Measures
This press release includes the following non-GAAP measure – adjusted EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company’s results of operations. However, this non-GAAP measure has significant limitations 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 GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. For a definition and reconciliation of EBITDA to net income, its corresponding GAAP measure, please see the reconciliation table shown in this press release below.
US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
| Three Months Ended July 31, | |||||
| 2022 | 2021 | ||||
| Net Income / (Loss) | $ | (743,246 | ) | $ | 431,925 |
| Depreciation | $ | 192,297 | $ | 197,941 | |
| Amortization of Debt discount | $ | 3,015 | - | ||
| Amortization of Right of Use Assets | $ | 113,518 | 48,039 | ||
| Amortization of Intangibles | $ | 116,986 | $ | - | |
| Taxes | $ | (217,465 | ) | 143,230 | |
| Interest | $ | 139,064 | 7,549 | ||
| Acquisition Related Expenses | $ | 155,119 | $ | - | |
| Adj. EBITDA (non-GAAP) | $ | (271,244 | ) | $ | 828,684 |
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, 2022 and other filings made by the Company with the Securities and Exchange Commission.
Investor Relations Contact:
Lucas A. Zimmerman
Director
MZ Group - MZ North America
(949) 259-4987
MMMB@mzgroup.us
www.mzgroup.us
MamaMancini’s Holdings, Inc.
Condensed Consolidated Balance Sheets
| July 31, 2022 | January 31, 2022 | |||||||
| (unaudited) | ||||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 1,896,412 | $ | 850,598 | ||||
| Accounts receivable, net | 6,877,758 | 7,627,717 | ||||||
| Inventories | 4,193,726 | 2,890,793 | ||||||
| Prepaid expenses | 516,697 | 269,209 | ||||||
| Total current assets | 13,484,593 | 11,638,317 | ||||||
| Property and equipment, net | 3,617,221 | 3,678,532 | ||||||
| Intangibles, net | 1,754,823 | 1,984,979 | ||||||
| Goodwill | 8,633,334 | 8,633,334 | ||||||
| Operating lease right of use assets, net | 3,413,455 | 3,596,317 | ||||||
| Deferred tax asset | 636,581 | 448,501 | ||||||
| Equity method investment in Chef Inspirational | 1,218,540 | - | ||||||
| Deposits | 52,249 | 52,249 | ||||||
| Total Assets | $ | 32,810,796 | $ | 30,032,229 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Liabilities: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 7,649,420 | $ | 6,479,140 | ||||
| Term loan, net of debt discount of $51,741 and $57,771, respectively | 1,499,983 | 1,235,333 | ||||||
| Operating lease liability | 368,993 | 292,699 | ||||||
| Finance leases payable | 175,213 | 218,039 | ||||||
| Promissory note – related party | 813,273 | 759,917 | ||||||
| Liability for Series B Preferred Shares to be issued, net | 515,000 | - | ||||||
| Total current liabilities | 11,021,882 | 8,985,128 | ||||||
| Line of credit | 2,490,000 | 765,000 | ||||||
| Operating lease liability – net of current | 3,086,427 | 3,339,255 | ||||||
| Finance leases payable – net of current | 322,600 | 376,132 | ||||||
| Promissory note – related party, net of current | 2,250,000 | 2,250,000 | ||||||
| Term loan – net of current | 5,431,035 | 6,206,896 | ||||||
| Total long-term liabilities | 13,580,062 | 12,937,283 | ||||||
| Total Liabilities | 24,601,944 | 21,922,411 | ||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 23,400 issued as of July 31, 2022 and January 31, 2022, 0 and 0 shares outstanding as of July 31, 2022 and January 31, 2022 | - | - | ||||||
| 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; 36,317,857 and 35,758,792 shares issued and outstanding as of July 31, 2022 and January 31, 2022 | 364 | 359 | ||||||
| Additional paid in capital | 21,326,367 | 20,587,789 | ||||||
| Accumulated deficit | (12,968,379 | ) | (12,328,830 | ) | ||||
| Less: Treasury stock, 230,000 shares at cost, respectively | (149,500 | ) | (149,500 | ) | ||||
| Total Stockholders’ Equity | 8,208,852 | 8,109,818 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 32,810,796 | $ | 30,032,229 | ||||
MamaMancini’s Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Sales-net of slotting fees and discounts | $ | 22,846,474 | $ | 12,064,584 | $ | 44,677,054 | $ | 22,377,984 | ||||||||
| Costs of sales | 20,119,862 | 8,695,300 | 38,090,179 | 15,664,347 | ||||||||||||
| Gross profit | 2,726,612 | 3,369,284 | 6,586,875 | 6,713,637 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 41,792 | 30,541 | 68,327 | 53,977 | ||||||||||||
| General and administrative | 3,516,115 | 2,753,830 | 7,088,870 | 5,222,548 | ||||||||||||
| Total operating expenses | 3,557,907 | 2,784,371 | 7,157,197 | 5,276,525 | ||||||||||||
| Income (loss) from operations | (831,295 | ) | 584,913 | (570,322 | ) | 1,437,112 | ||||||||||
| Other income (expenses) | ||||||||||||||||
| Interest | (139,064 | ) | (7,549 | ) | (263,315 | ) | (17,979 | ) | ||||||||
| Amortization of debt discount | (3,015 | ) | - | (6,655 | ) | - | ||||||||||
| Other income | 2,596 | - | 2,596 | 37,704 | ||||||||||||
| Total other income (expenses) | (139,483 | ) | (7,549 | ) | (267,374 | ) | 19,725 | |||||||||
| Net income (loss) before income tax provision and income from equity method investment | (970,778 | ) | 577,364 | (837,696 | ) | 1,456,837 | ||||||||||
| Income from equity method investment in Chef Inspirational | 18,540 | - | 18,540 | - | ||||||||||||
| Income tax benefit (provision) | 208,992 | (145,439 | ) | 179,607 | (393,388 | ) | ||||||||||
| Net income (loss) | $ | (743,246 | ) | $ | 431,925 | $ | (639,549 | ) | $ | 1,063,449 | ||||||
| Net income (loss) per common share | ||||||||||||||||
| – basic | $ | (0.02 | ) | $ | 0.01 | $ | (0.02 | ) | $ | 0.03 | ||||||
| – diluted | $ | (0.02 | ) | $ | 0.01 | $ | (0.02 | ) | $ | 0.03 | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| – basic | 35,811,087 | 35,697,568 | 35,785,719 | 35,660,440 | ||||||||||||
| – diluted | 35,811,087 | 36,223,674 | 35,785,719 | 36,181,353 | ||||||||||||
MamaMancini’s Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended July 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (639,549 | ) | $ | 1,063,449 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 401,126 | 381,732 | ||||||
| Amortization of debt discount | 6,655 | - | ||||||
| Amortization of right of use assets | 182,862 | 91,660 | ||||||
| Amortization of intangibles | 230,156 | - | ||||||
| Share-based compensation | 12,333 | 786 | ||||||
| Change in deferred tax asset | (188,080 | ) | 391,179 | |||||
| Income from equity method investment in Chef Inspirational | (18,540 | ) | - | |||||
| Paid in kind interest | 53,356 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 749,959 | (728,920 | ) | |||||
| Accounts receivable - other | - | (107,896 | ) | |||||
| Inventories | (1,302,933 | ) | (212,403 | ) | ||||
| Prepaid expenses | (248,113 | ) | 71,993 | |||||
| Security deposits | - | (2,979 | ) | |||||
| Accounts payable and accrued expenses | 1,170,280 | 749,822 | ||||||
| Operating lease liability | (176,534 | ) | (79,813 | ) | ||||
| Net Cash Provided by Operating Activities | 232,978 | 1,618,610 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for fixed assets | (305,547 | ) | (481,295 | ) | ||||
| Cash paid for investment in Chef Inspirational | (500,000 | ) | - | |||||
| Net Cash (Used in) Investing Activities | (805,547 | ) | (481,295 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds in advance of preferred stock offering | 515,000 | - | ||||||
| Repayment of term loan | (517,241 | ) | - | |||||
| Borrowings of line of credit, net | 1,725,000 | - | ||||||
| Repayment of capital lease obligations | (130,626 | ) | (94,074 | ) | ||||
| Proceeds from exercise of options | 26,250 | 19,080 | ||||||
| Net Cash Provided by (Used in) Financing Activities | 1,618,383 | (74,994 | ) | |||||
| Net Increase in Cash | 1,045,814 | 1,062,321 | ||||||
| Cash - Beginning of Period | 850,598 | 3,190,560 | ||||||
| Cash - End of Period | $ | 1,896,412 | $ | 4,252,881 | ||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||
| Cash Paid During the Period for: | ||||||||
| Income taxes | $ | - | $ | - | ||||
| Interest | $ | 182,873 | $ | 17,979 | ||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Finance lease asset additions | $ | 34,268 | $ | - | ||||
| Operating lease asset additions | $ | - | 347,585 | |||||
| Non-cash consideration paid in common stock for equity investment in Chef Inspirational | $ | 700,000 | $ | - | ||||
