Ongoing Margin Enhancement Initiatives Sequentially Grow Gross Margins to 28.2% with $1.8 Million in Net Income in the Fourth Quarter
Company Grows Cash Position to $4.4 Million as of January 31, 2023; Concurrently Pays Down $3.2 Million in Debt in the Second Half of Fiscal 2023
EAST RUTHERFORD, NJ, April 26, 2023 (GLOBE NEWSWIRE) -- MamaMancini's Holdings, Inc. (NASDAQ: MMMB), a leading national marketer and manufacturer of fresh Deli prepared foods, has reported its financial results for the fourth quarter and fiscal year ended January 31, 2023.
Financial Summary:
| Three Months Ended Jan. 31, | Fiscal Year Ended Jan. 31, | |||||||||||||||||||||||
| $ in millions | 2023 | 2022 | % Increase | 2023 | 2022 | % Increase | ||||||||||||||||||
| Revenues | $ | 22.8 | $ | 13.9 | 64 | % | $ | 93.2 | $ | 47.1 | 98 | % | ||||||||||||
| Gross Profit | $ | 6.4 | $ | 2.6 | 147 | % | $ | 19.4 | $ | 11.9 | 64 | % | ||||||||||||
| Operating Expenses | $ | 4.5 | $ | 4.0 | 14 | % | $ | 16.6 | $ | 11.8 | 41 | % | ||||||||||||
| Net Income (Loss) | $ | 1.8 | $ | (1.3 | ) | 241 | % | $ | 2.3 | $ | (0.3 | ) | 1,014 | % | ||||||||||
| Earnings per Share (Diluted) | $ | 0.06 | $ | (0.04 | ) | 250 | % | $ | 0.06 | $ | (0.01 | ) | 700 | % | ||||||||||
| Adj. EBITDA (non-GAAP) | $ | 2.3 | $ | (0.8 | ) | 374 | % | $ | 4.3 | $ | 1.1 | 282 | % | |||||||||||
Key Fourth Quarter Fiscal 2023 & Subsequent Operational Highlights:
- Hired 20-year supply chain veteran Joselina Peralta as Chief Procurement Officer and SVP of End to End Supply Chain, with the objective of optimizing procurement activities across both manufacturing facilities to further enhance the Company’s gross margin profile.
- Strengthened corporate governance with the appointment of seasoned human resources executive Meghan Henson as well as digital-first operations executive Shirley Romig to the Board of Directors, who each bring more than 20 years of experience in their respective fields.
- Invited to present at leading investor conferences nationally, including the 35th Annual ROTH Conference and the Diamond Equity Research Emerging Growth Invitational – in addition to hosting a successful in-person Investor Day in East Rutherford, NJ.
- Continued to expand the breadth and depth of the business, both from new customers as well as from an average items carried perspective in existing customers, with new grocery and club store customers in the West and Midwest, including opening new regions with a major club store chain and selling additional items into another major club store chain.
Management Commentary
“The fourth quarter of fiscal 2023 was underscored by continuous improvement in our gross margin profile – which drove strong sequential net income growth, even with the seasonality we typically see in the fourth quarter,” said Adam L. Michaels, Chairman and CEO of MamaMancini’s. “These initial improvements in procurement, manufacturing and logistics are just the beginning – which when paired with our continued efforts to sell more items into our existing retailer partners through the pending buildout of our sales and marketing capabilities in the coming months – positions us to continue to gain market share in a highly profitable manner.
“Since I took the role of CEO, the team has been highly focused on the continuous foundational improvement of our 3 ‘Cs’ – namely our Cost, Controls and Culture. New approaches to cost management have driven procurement and logistics savings, 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 and pay down $1.3 million in debt in the fourth quarter alone.
“Given these tailwinds, I believe we can improve our normalized gross margin profile from the mid-20% range to the upper 20% range this year. Longer term, considering the recent appointment of our new Chief Procurement Officer, the strength of our new 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.
“On the corporate governance front, we recently strengthened our Board with the appointment of two qualified independent directors. Meghan 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.
“Our aspiration is to build upon this strong foundation to realize sequential increases in profitability throughout fiscal 2024 – enabled by increasing average items carried, penetrating new retailers and further strengthening our margin profile. Accomplishing this through the impending buildout of our sales and marketing organization, paired with future acquisitions to further build our in-house capabilities and product suite, will allow us to become a first-of-kind national deli solutions company – all with the goal of delivering sustainable, long-term value to my fellow shareholders,” concluded Michaels.
Fourth Quarter and Fiscal 2023 Financial Results
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 a $93.2 million, as compared to $47.1 million in the prior year. The increase is 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.
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 in the fourth quarter 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 acquisitions of T&L Creative Salads and Olive Branch.
Operating expenses totaled $4.5 million in the fourth quarter of fiscal 2023, as compared to $4.0 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%. Operating expenses totaled $16.6 million in fiscal 2023, as compared to $11.8 million in fiscal 2022. As a percentage of sales, operating expenses decreased in fiscal 2023 to 17.8% of sales, as compared to 25.0% in the prior year. Operating expenses, as a percentage of sales, benefited from synergies created through the 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 ($0.04) per diluted share, in the same year-ago quarter. Net income for fiscal 2023 was $2.3 million, or $0.06 per diluted share, as compared to net loss of $0.3 million, or ($0.01) 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 improvement to $1.3 million, representing net income margins 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 2024, as compared to ($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.
Conference Call
Management will host an investor conference call at 4:30 p.m. Eastern time today to discuss the Company’s fourth quarter & fiscal year 2023 financial results, provide a corporate update, and conclude with a Q&A from participants. To participate, please use the following information:
Q4 & FY2023 Earnings Conference Call
Date: Wednesday, April 26, 2023
Time: 4:30 p.m. Eastern time
U.S. Dial-in: 1-877-451-6152
International Dial-in: 1-201-389-0879
Conference ID: 13737915
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1608685&tp_key=65a4e59ad1
Please join at least five minutes before the start of the call to ensure timely participation.
A playback of the call will be available through Friday, May 26, 2023. To listen, please call 1-844-512-2921 within the United States and Canada or 1-412-317-6671 when calling internationally, using replay pin number 13737915. A webcast replay will also be available using the webcast link above.
About MamaMancini’s Holdings, Inc.
MamaMancini's Holdings, Inc. (NASDAQ: MMMB) is a leading marketer and manufacturer of prepared foods with over 45,000 product placements in grocery, mass, club and convenience stores nationally. The Company’s broad product portfolio, born from a rich history in Italian foods, now consists of a variety of high quality, fresh, clean and easy to prepare foods to address the needs of both our consumers and retailers. Our vision is to become a one-stop-shop deli solutions platform, leveraging vertical integration and a diverse family of brands to offer a wide array of prepared foods to meet the changing demands of the modern consumer. 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 | Fiscal Year Ended | ||||||||||||||
| January 31, | January 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net Income (Loss) | $ | 1,822,626 | $ | (1,309,920 | ) | $ | 2,268,604 | $ | (251,926 | ) | |||||
| Depreciation | 242,008 | 207,204 | 920,718 | 779,442 | |||||||||||
| Amortization of Debt Discount | 12,451 | 2,437 | 22,121 | 2,437 | |||||||||||
| Amortization of Right of Use Assets | 4,881 | 27,657 | 16,680 | 190,798 | |||||||||||
| Amortization of Intangibles | 115,183 | 43,660 | 482,469 | 43,660 | |||||||||||
| Taxes | (96,975 | ) | 94,841 | (9,104 | ) | 296,472 | |||||||||
| Interest | 186,730 | 100,197 | 633,889 | 73,487 | |||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 2,286,904 | $ | (833,924 | ) | $ | 4,337,400 | $ | 1,136,392 | ||||||
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, 2023 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.
Consolidated Balance Sheets
| January 31, 2023 | January 31, 2022 | |||||||
| Assets: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 4,378,383 | $ | 850,598 | ||||
| Accounts receivable, net | 6,832,046 | 7,627,717 | ||||||
| Inventories, net | 3,635,881 | 2,890,793 | ||||||
| Prepaid expenses and other current assets | 828,391 | 269,209 | ||||||
| Total current assets | 15,674,701 | 11,638,317 | ||||||
| Property and equipment, net | 3,423,096 | 3,678,532 | ||||||
| Intangibles, net | 1,502,510 | 1,984,979 | ||||||
| Goodwill | 8,633,334 | 8,633,334 | ||||||
| Operating lease right of use assets, net | 3,236,690 | 3,596,317 | ||||||
| Deferred tax asset | 717,556- | 448,501 | ||||||
| Equity method investment | 1,343,486 | - | ||||||
| Deposits | 53,819 | 52,249 | ||||||
| Total Assets | $ | 34,587,320 | $ | 30,032,229 | ||||
| Liabilities and Stockholders’ Equity: | ||||||||
| Liabilities: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 9,065,389 | $ | 6,479,140 | ||||
| Term loan, net of debt discount of $60,082 and $57,771, respectively | 1,491,642 | 1,235,333 | ||||||
| Operating lease liability | 391,802 | 292,699 | ||||||
| Finance leases payable | 182,391 | 218,039 | ||||||
| Promissory note – related party | 750,000 | 759,917 | ||||||
| Total current liabilities | 11,881,224 | 8,985,128 | ||||||
| Line of credit | 890,000 | 765,000 | ||||||
| Operating lease liability – net of current | 2,897,205 | 3,339,255 | ||||||
| Finance leases payable – net of current | 248,640 | 376,132 | ||||||
| Promissory note – related party, net of current | 1,500,000 | 2,250,000 | ||||||
| Term loan – net of current | 4,655,173 | 6,206,896 | ||||||
| Total long-term liabilities | 10,191,018 | 12,937,283 | ||||||
| Total Liabilities | 22,072,242 | 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 January 31, 2023 and January 31, 2022, 0 shares outstanding as of January 31, 2023 and January 31, 2022 | - | - | ||||||
| Series B Preferred stock, $0.00001 par value; 200,000 shares authorized; 54,600 and 0 issued and outstanding as of January 31, 2023 and January 31, 2022 | - | - | ||||||
| Preferred stock, $0.00001 par value; 19,680,000 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 January 31, 2023 and January 31, 2022 | 364 | 359 | ||||||
| Additional paid in capital | 22,724,440 | 20,587,789 | ||||||
| Accumulated deficit | (10,060,026 | ) | (12,328,830 | ) | ||||
| Less: Treasury stock, 230,000 shares at cost | (149,500 | ) | (149,500 | ) | ||||
| Total Stockholders’ Equity | 12,515,078 | 8,109,818 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 34,587,320 | $ | 30,032,229 | ||||
MamaMancini’s Holdings, Inc.
Consolidated Statements of Operations
| For the Years Ended January 31, | ||||||||
| 2023 | 2022 | |||||||
| Sales-net of slotting fees and discounts | $ | 93,187,621 | $ | 47,083,740 | ||||
| Costs of sales | 73,769,359 | 35,229,867 | ||||||
| Gross profit | 19,418,262 | 11,853,873 | ||||||
| Operating expenses: | ||||||||
| Research and development | 135,141 | 120,692 | ||||||
| General and administrative | 16,461,467 | 11,650,414 | ||||||
| Total operating expenses | 16,596,608 | 11,771,106 | ||||||
| Income from operations | 2,821,654 | 82,767 | ||||||
| Other income (expenses) | ||||||||
| Interest | (633,889 | ) | (73,487 | ) | ||||
| Amortization of debt discount | (22,121 | ) | (2,438 | ) | ||||
| Other income | 2,648 | 37,704 | ||||||
| Total other income (expenses) | (653,362 | ) | (38,221 | ) | ||||
| Net income before income tax provision and income from equity method investment | 2,168,292 | 44,546 | ||||||
| Income from equity method investment | 143,486 | - | ||||||
| Income tax provision | (9,104 | ) | (296,472 | )_ | ||||
| Net income (loss) | 2,302,674 | (251,926 | ) | |||||
| Less: series B preferred dividends | (34,070 | ) | - | |||||
| Net income (loss) available to common stockholders | 2,268,604 | $ | (251,926 | ) | ||||
| Net income (loss) per common share | ||||||||
| – basic | $ | 0.06 | $ | (0.01 | ) | |||
| – diluted | $ | 0.06 | $ | (0.01 | ) | |||
| Weighted average common shares outstanding | ||||||||
| – basic | 36,093,858 | 35,702,197 | ||||||
| – diluted | 36,494,178 | 35,702,197 | ||||||
MamaMancini’s Holdings, Inc.
Consolidated Statements of Cash Flows
| For the Years Ended January 31, | ||||||||||
| 2023 | 2022 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net income (loss) | $ | 2,302,674 | $ | (251,926 | ) | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation | 920,718 | 779,442 | ||||||||
| Provision for doubtful accounts | 233,000 | - | ||||||||
| Amortization of debt discount | 22,121 | 2,437 | ||||||||
| Amortization of right of use assets | 16,680 | 190,798 | ||||||||
| Amortization of intangibles | 482,469 | 43,660 | ||||||||
| Share-based compensation | 110,006 | 32,918 | ||||||||
| Change in deferred tax asset | (271,183 | ) | 296,472 | |||||||
| Income from equity method investment | (143,486 | ) | - | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 562,671 | (938,409 | ) | |||||||
| Inventories | (745,088 | ) | (474,527 | ) | ||||||
| Prepaid expenses | (174,460 | ) | 254,220 | |||||||
| Security deposits | (1,570 | ) | (32,072 | ) | ||||||
| Accounts payable and accrued expenses | 2,191,610 | 1,175,677 | ||||||||
| Operating lease liability | - | (168,849 | ) | |||||||
| Net Cash Provided by Operating Activities | 5,506,162 | 909,841 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Cash paid for fixed assets | (593,214 | ) | (862,415 | ) | ||||||
| Cash paid for equity method investment | (500,000 | ) | - | |||||||
| Acquisition of companies – net of cash acquired | - | (10,408,542 | ) | |||||||
| Net Cash (Used in) Investing Activities | (1,093,214 | ) | (11,270,957 | ) | ||||||
| - | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Proceeds from preferred stock offering | 1,365,000 | - | ||||||||
| Payment of stock offering costs | (64,600 | ) | - | |||||||
| Borrowings from term loan | - | 7,500,000 | ||||||||
| Cash paid for financing fees | - | (63,750 | ) | |||||||
| Repayment of term loan | (1,317,535 | ) | - | |||||||
| Borrowings of line of credit, net | 125,000 | 765,000 | ||||||||
| Repayment of term loan - related party | (750,000 | ) | - | |||||||
| Repayment of finance lease obligations | (235,208 | ) | (199,176 | ) | ||||||
| Payment of Series B Preferred dividends | (34,070 | ) | - | |||||||
| Proceeds from exercise of options | 26,250 | 19,080 | ||||||||
| Net Cash (Used in) Provided by Financing Activities | (885,163 | ) | 8,021,154 | |||||||
| Net Increase (Decrease) in Cash | 3,527,785 | (2,339,962 | ) | |||||||
| Cash - Beginning of Period | 850,598 | 3,190,560 | ||||||||
| Cash - End of Period | $ | 4,378,383 | $ | 850,598 | ||||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||||
| Cash Paid During the Period for: | ||||||||||
| Income taxes | $ | 9,170 | $ | - | ||||||
| Interest | $ | 633,827 | $ | 52,221 | ||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||
| Finance lease asset additions | $ | 72,068 | $ | 128,050 | ||||||
| Operating lease asset additions | $ | - | $ | 2,457,502 | ||||||
| Related party loan to finance acquisition | $ | - | $ | 3,000,000 | ||||||
| Non-cash consideration paid in common stock for equity method investment | $ | 700,000 | $ | - | ||||||
| Non-cash deposits on prepaid additions | $ | 384,722 | $ | - | ||||||
