Mama's Creations Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
December 12, 2023

There are 6 speakers on the call.

Operator

Afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Mama's Creations Third 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.

Operator

This conference is being recorded today, December 12, 2023, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Mama's Creations' Chairman and CEO, Adam L. Michaels and CFO, Anthony Gruber. 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 federal securities laws regarding Mama's creations.

Operator

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 base, 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 and 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, which the company files with the U. S.

Operator

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 believes better reflects the performance of the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Mama's Creations website under the Investors tab.

Operator

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 take 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 Chairman and CEO, Adam L. Michaels. Adam, the floor is yours.

Speaker 1

Thank you, operator, and thank you to everyone for joining us today. I'd like to welcome you to our Q3 fiscal 2024 financial results conference call. I'm very excited to be speaking with you all today coming out of what was another strong quarter of consistently improving top and bottom line growth, representing even more evidence of what we believe is Mama's true potential over the long term. We continued our reliable cadence of operational execution in the 3rd quarter with strong double digit revenue growth and the year over year expansion of our gross margin profile by 460 basis points to 30.1% validating Our strategy and internal focus on our 3 Cs cost, controls and culture. Both revenue and net income were up over 15% consecutively from the Q2 of fiscal 'twenty four And we are now beginning to see the cumulative results from our efforts over the last year ranging from our acquisition of CIF to formalizing and improving countless processes throughout the company.

Speaker 1

Taken together, I believe we remain on track to continue our cadence A planned, persistent and profitable growth in the years to come. Our team has worked together to drive a significant From operations to logistics to administration, implementing operational KPIs under the mantra of what gets measured gets improved. The results can be clearly seen in our gross margin profile, which improved from 11.9% in Q2 fiscal 2023 to 30.1% today, as well as in our bottom line with our net income transforming from negative $700,000 In Q2 fiscal 'twenty three to over $2,000,000 today. Looking ahead into the next fiscal year, We see even more opportunities to further margin enhancement, particularly by leveraging strategic CapEx investments to build new In house capabilities earlier in the value chain, improving automation at our production facilities and further building the capacity to support potential new Tier 1 national customers. Taken together, these initiatives will position us to invest surplus gross margin into higher and more profitable trade promotion, which will serve as the rocket fuel for the next leg in our revenue growth trajectory.

Speaker 1

Early tests in trade promotion have driven promising results And we look forward to rightsizing our trade promotion investments in the quarters to come. At its core, Our strategy and growth are being fueled by macro trends that continue to point in our favor. We are well positioned to capture share, driven by the rapid shift in consumer preference towards deli prepared foods, which as a sector continue to grow in both price and volume. With the effects of the pandemic normalizing, food retailers are now investing heavily to increase space for the fresh prepared grab and go options to differentiate themselves and appeal to the next generation of shoppers, capturing share from restaurants with healthy, High quality meals and creative new flavors at a favorable price point relative to takeout. Research from the Food Marketing Institute, FMI, reports Gen Zers and millennials consume grocery deli prepared foods more often And both report they expect to increase food service purchases in the future.

Speaker 1

More than half of shoppers recently surveyed Say grocery deli prepared foods represent a good value compared to eating out at a quick service or fast casual restaurant or ordering takeout. Grocers have noticed this undeniable macro trend with 64% of grocery executives Hold by Deloitte saying that the fresh department is the most strategically important area for their sales growth during the next 12 to 36 months, With FMI reporting that 3 quarters of food retailers are planning to increase the space they allocate to food service. In home dining has become a source of respite for consumers seeking to avoid the ever present impacts of inflation, With trailing 12 month in home food inflation running at 2.1% as compared to more than double that at 5.4% for out of home occasions, all on top of what has already been aggressive inflation since COVID began. We firmly believe Prepared Foods will continue to grow and take market share from the frozen, center aisle and especially out of home occasions, Creating a generational opportunity for deli prepared foods providers such as Mama's Creations. As I've said before, realizing our goal of shaping Mama's Creations into a one stop shop for deli prepared foods has required a step change in our corporate structure in many ways.

Speaker 1

Throughout the Q3, we remain laser focused on the continuous Foundational improvement of our 3 C's strategy, cost, controls and culture. Starting with cost. As is plainly visible in our gross margin profile, our new approach to cost management has driven noticeable savings across the organization, which has enabled our gross margin to grow from 12% when I started to the 30% range as you saw today. Our new ability to load share and produce leading products across our two facilities rather than having them each single sourced, has established the framework to enable a much greater level of flexibility and agility that will ultimately provide us with both redundancy in production and lower costs. In addition, our significant investments in automation will position us to grow production capacity to support anticipated future Tier 1 customer wins, as well as to notably enhance margins, which ultimately positions us to reinvest those gains in trade promotion, the rocket fuel for our growth.

Speaker 1

We are already harvesting the fruits or shall I say proteins of our labor. For example, our gross margin saw And over 300 basis point improvement year over year through significant procurement efficiencies, a further nearly 200 basis points through labor As load sharing between facilities help to drive reduced overtime. While most other companies would be ecstatic for such results, Our team only sees it as justification to double down on our 3C strategy to capture more savings for us to reinvest. On the controls front, I'm proud to say that we delivered on time in full with the transitioning of our T and L Creative Sall's division over to our NetSuite ERP system. This means that our full company is now on the NetSuite platform, providing us with a vastly improved degree of actionable insights into the details of our operations.

Speaker 1

Well, not as sexy. We also implemented our new SEC reporting systems Workiva, which automates processing, allows us to close our books faster and frees up our finance team to focus on more value added activities. Having our financial, operational and sales analytics at the touch of a button is truly transformational, something we saw after integrating NetSuite at MamaMancini's and Olive Branch. As I've said before, what gets measured gets improved. We have proven it together over the past several quarters and these analytical capabilities that we are investing in in house will continue to pay dividends for years to come.

Speaker 1

Another form of proof of our strategy comes from the response of our customers To our products, we recently heard from our QVC customers who once again voted MamaMancini's products as number 1 In the I Could Eat This Every Day, Best Sauce and Best Smart Swap categories during the recent 2023 QVC Customer Choice Food Awards. It is truly an honor to receive this level of recognition for the 5th year in a row, QVC continues to be a tremendous, profitable and incremental channel for us, which also serves as an efficient R and D and innovation real time testing platform. Finally, and most importantly, I am proudest of the cultural evolution my teammates and I are creating. This quarter, we launched our first ever employee engagement survey With an impressive 80% participation rate, I've seen early results with our amazing VP of HR, Abby Meeks, And she is already sharing with our leadership team the 3 specific actions we are going to commit to for our people. Abby also helped us implement our first ever performance management system.

Speaker 1

I was lucky enough to have a mentor early in my career, John Katzenbach, And he taught me that you can't change your culture. You change behaviors and behavioral change leads to cultural change. I am living that with my 250 colleagues every day at Mama's, and I couldn't be more excited for the renewed culture we are building together. We continue to invest in our people to further grow capabilities. And while not every hire gets a press release, We had several exciting appointments recently.

Speaker 1

Concurrent with the retirement of COO, Matt Brown at the end of fiscal Q3, We announced the planned evolution of our leadership team with 2 new Vice President of Operations appointments. Eric Felice was promoted to the role of Vice President of Operations, East Rutherford. Eric maintains over 25 years of operational experience, including over 10 years managing operations at our facility in East Rutherford, New Jersey. In addition, Ray Gere was promoted to the role of Vice President of Operations, Farmingdale. Ray draws on over 30 years of operations experience, including nearly 10 years managing operations at our facility in Farmingdale, New York.

Speaker 1

I am fully confident that these tested leaders now managing operations Further supported by the superbly talented T and L Creative Salads founder, Anthony Morello and our tenured Chief Administrative Officer, Steve Burns, that we are well positioned to continue to realize exciting new operational synergies between our new facilities. I want to share congratulations to Eric and Ray and thank Anthony and Steve for their continued leadership. With the successful evolution of our finance and operations organization, I committed to my fellow shareholders that building our sales and marketing organization would be our next area of focus. I'm proud to report that we again are successfully building differentiated capabilities ahead of schedule. We have nearly completed the build out of our sales organization, growing from a single dedicated sales employee to 5 today, further supported by our Chief Marketing Officer and Head of Trade Strategy and Execution.

Speaker 1

Together, Their goal is to continue to drive up our average items carried, accelerate our existing velocities and open new doors, Building broad based distribution. With our new team and capabilities, we increase the likelihood of opening up entirely new channels, Whether that is the convenience channel, e commerce channel, our major mass retailers such as Walmart or Target, Opening these will be impactful to our growth trajectory, hence our strategic CapEx investments to prepare for whatever the future may hold. In summary, I firmly believe that we are well positioned to leverage the build out of our supercharged sales team and a compelling product portfolio To take market share, continue to grow our SKUs per customer and ultimately become the premier one stop shop deli solution provider in the United States. As we continue to 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 our fellow shareholders for years to come. With that, I'd like to turn the call over to Anthony Gruber, our Chief Financial Officer to walk through some key financial details for the Q3 of fiscal 2024.

Speaker 1

Anthony?

Speaker 2

Thank you, Adam. Revenue for the Q3 of fiscal 2024 increased 11.5 percent, dollars 28,700,000 as compared to $25,700,000 in the same year ago quarter. The increase was largely attributable to volume gains driven by same customer cross selling, the acquisition of new customers and successful pricing actions. Gross profit increased 31.6 percent to $8,600,000 or 30.1% of total revenues in the Q3 of fiscal 2024 as compared to $6,600,000 or 25.5 percent of total revenues in the same year ago quarter. The increase in gross margin was primarily attributable to successful pricing actions, the normalization of commodity costs and improvements in procurement, manufacturing and logistics efficiencies.

Speaker 2

Operating expenses totaled $5,900,000 in the Q3 of fiscal 2024 as compared to $5,100,000 in the same year ago quarter. As a percentage of sales, operating expenses increased in the Q3 of fiscal 2024 to 20.7% from 19.7%. Operating expenses as a percentage of sales increased due to the addition of several new key hires, We brought new and differentiated capabilities to the organization. This figure Net income for the Q3 of fiscal 2024 increased 83% The $2,000,000 or $0.05 per diluted share as compared to a net income of 1,100,000 or $0.03 per diluted share in the same year ago quarter. This quarter's net income totaled 7% of revenue, in line with management expectations in the mid single digit range.

Speaker 2

Adjusted EBITDA, A non GAAP term increased 67.6 percent to $3,500,000 for the Q3 of fiscal 2024 as compared to an adjusted EBITDA of $2,100,000 in the same year ago quarter. Cash and cash equivalents As of October 31, 2023 were $5,600,000 as compared to $4,400,000 as of January 31, 2023. The increase in cash and cash equivalents was driven by $1,500,000 in cash flow from operations in the Q3 of fiscal 2024, dollars 1,000,000 of which was used to pay down the company's debt. As of October 31, 2023, total debt stood just under $10,000,000 Looking ahead, we believe that our normalized gross margin profile will continue to hover in the high 20% range. Our long term goal leveraging strategic CapEx investments, procurement efficiencies and continuous operational efficiencies Would be targeting margins consistently maintained in the low 30% range, while rightsizing our trade promotion investments.

Speaker 2

One fact that I'd like to call out that we are quite proud of is that top of the On top of the 460 basis point improvement in gross margins, we still were able to double our trade investment in the quarter. Turning to net income, while we continue to target mid single digit net income margins, our long term goal would be to improve to approximately 10% with adjusted EBITDA margins in the teens percentage range. This completes my prepared comments. Now before we begin for our question and answer session, I'd like to turn the call back to Adam for some closing remarks. Adam?

Speaker 1

Thank you, Anthony. Our ambition is to fortify and expand upon the robust groundwork and strategy presented here today, Positioning us to continue to drive profitable growth and margin expansion. We will seek to reinvest our surplus gross margins as rocket fuel for our trade promotion budget, which we expect will ultimately snowball into increasingly robust revenue growth. Looking ahead, our near term sales goals will be achieved by launching highly incremental products To further increase the SKUs per customer, introducing our products to new Tier 1 customers via our supercharged sales team, Putting in place high ROI trade promotion programs to accelerate existing product velocities and further enhancing our margin through continuous operational improvements at every level of the organization. We believe that this approach will not only position Mama's Creations As a one stop shop deli solution provider, we drive sustainable shareholder value creation over the long term.

Speaker 1

With that, I'll turn it over to the operator to begin our question and answer session. Operator?

Operator

Thank you, sir. We will now begin the question and answer session for telephone participants. Thank you. Our first question comes from the line of Ryan Myers with Lake Street Capital. Please proceed with your question.

Speaker 3

Hey guys, thanks for taking my questions. Congrats on another solid quarter. Obviously, it looks like we saw sequential revenue growth once again along with sequential EBITDA growth. Just wondering if you can comment on how we should be thinking about Q4 and what sort of seasonality we should be expecting?

Speaker 1

Yes. Thanks, Ryan. Great team effort. Yes. I think like we spoke about last year and before Q4 is usually our softest So I think not many people are shopping on Thanksgiving Day and Christmas Day and hopefully people get to take some vacation.

Speaker 1

So we do know like you saw last year it tends to be a little softer. I think we're still shooting for we said We're going to continue to grow faster than the market and continue to gain share. We're seeing that in the high single digits now Between all of that and we think we could continue to beat that.

Speaker 3

Got it. That's helpful. And then just wondering if you can comment a little bit more On the new sales hire, what kind of productivity have you seen on Avail? And then maybe if you can quantify how much new business they generated during the quarter? And then if you have any sort of comments on how much business you think they can generate next year, whether it's in terms of new Customers or just overall revenue growth would be helpful to understand.

Speaker 1

No, it's actually incredible, Ryan. I wish everybody on this call could have joined me. So last week we had our sales meeting, our entire sales team and the extended team got together to plan out next year and to talk about customers. It was Yes. You're going to ask the questions about the numbers and I'm totally great with that and I'll answer that.

Speaker 1

But it's the culture, the energy that We've never had before. Literally when I started we had one salesperson. So that It was great and to see that excitement. From what's going to happen, everything's going to happen. So brought in this great guy Art Who has lived his whole life in the C Store, we have a whopping total of $0 in the C Store.

Speaker 1

We're going to open that up next year. Andrew with E Commerce, the work that Lauren Sella is overseeing in all of our marketing efforts. These are real capabilities that we've never had before at a company and I expect to see significant growth next year. Again, I continue to believe we're going to grow share. These folks are going to help us do that more confidently and at a higher rate than would have without them.

Speaker 1

So new customers, new channels Are going to be incredible. And again, Nick, who's leading all of our trade programming, we didn't have those capabilities before. The level of analysis we're doing now on ROIs on every single program we're doing It's unheard of in this company beforehand. So we know exactly what we're doing. We know what to do more of and equally because you're not going to get it all right.

Speaker 1

If you get it all right, you're not trying hard We know which ones aren't going to work and why we're not going to double down on them next year. So it's been perfect. It has actually exceeded my expectations, This whole sales team coming together and I love it.

Speaker 3

That's great to hear. And then last question for me. I know average SKU per customer was 7 last quarter. Did that trend higher during the quarter? And what is that currently standing at?

Speaker 1

Yes, it's good. So a year ago this time it was at 6. We actually got it up to it's a little over 7 now. So what's happening is we're seeing new customers come in. You know when new customers Remember this is a weighted average.

Speaker 1

So when a new customer comes in and like we said they usually come in with just a couple of SKUs, ironically that Suppresses the average items carried and even we overcame that and still got over 7 for that. The other thing is some of the customers that did really well this quarter tended to have fewer items because they had much more volume to it. But we continue to make progress. We did better than we did before and I expect to do even more with our new sales team.

Operator

Our next question comes from the line of Eric De L'Oreal with Craig Hallum. Please proceed with your question.

Speaker 4

Great. Thank you for taking my questions and congrats on another really impressive quarter here. Thanks, Derek. My first question is a bit of a follow-up to the last question. And so we've seen year over year revenue growth accelerate from 5.9% in Q1 to now 11.5% in Q3.

Speaker 4

I was wondering if you could just help us understand the drivers of that acceleration. Obviously, there's a number of things going on here, presumably Increasing SKUs per store is having the biggest impact there, but if you could just kind of help flush that out a bit. Are there any Sort of velocity changes or new geographies to call out, in addition to the increasing SKUs per store? Thanks.

Speaker 1

Yes, absolutely. So a couple of things. So first, what's great is both of our major businesses, right, the legacy Mancini business and the new Creative Salads business, Both of them grew double digits, which was great. So this is a we're all rowing the boat together. That was great to see.

Speaker 1

Actually a super majority of the growth was volume driven, which is awesome. So I was really happy to see that. So this is actual Real sales, this is not a pricing thing even though we were able to improve our gross margins in price. So we saw that as well. We did get to see great new customers that brought in.

Speaker 1

One that I'm really excited about that I'm sure you guys know Albertsons. We just opened up a whole new division in North Cal, which is one of their biggest divisions, with some of our chicken products. Again, this is something that I love to see. So we had Albertsons. We've been Albertsons has been our customer for a while on the legacy Mancini side.

Speaker 1

What I told you guys is we have customers. Now let's leverage all these creative salads products, all the chicken or the Panini's, we got this great with the Dumoulin's now getting in again a legacy customer. We now have Panini's that are literally flying off the shelf. It's incredible. Cub Foods Holiday Markets, so a lot of new customers exactly to your point.

Speaker 1

And then we just spoke about AIC Getting more items into the stores. And I think one thing that's been great and I mentioned earlier the work that Lauren Sella is doing as our Chief Marketing Officer, We've been testing, right? Test, learn, test. Testing a number of programs this past quarter. They're seeing very promising results.

Speaker 1

It's the marketing That is going to help us from a velocity standpoint. If you're in the actually if you're anywhere on the East Coast, I don't know if you guys know Z100, Elvis Duran and the morning show, I think it's one of the most popular morning shows on the East Coast. Lauren did a program with them. Actually Dan Mancini, the 2 of them went To the studios and they don't stop talking about it. They don't stop talking about the meatballs.

Speaker 1

So that is really starting to help Move and get momentum, people are talking about it and that's helping with velocities. So I really would tell you it's the trifecta. I share with you new customers. I share with you strength in average items carried and now with the marketing driving velocities. So I think it's all 3 working together.

Speaker 1

And this is healthy growth again. This is volume driven growth in both of our major businesses.

Speaker 4

That's great to hear. I appreciate that color. It sounds like everything is moving in the right direction here.

Speaker 1

Now what's

Speaker 4

My next question is on the margin impacts from CIF. If I look back, it looks like that was sort of expected to have 100 basis points to 200 basis point potential gross margin Improvement here. And I'm just wondering how to sort of combine that information with Your sort of target to keep gross margins ideally in the high 20s and sort of reinvest in trade promotion. Is this 1 to 2 percentage points incremental to that high 20s? Or is this now we're staying at high 20s and now we essentially have Another 100 to 200 basis points of surplus margin to reinvest.

Speaker 1

Yes. So first, I need to apologize for over delivering on the high I'm sorry about that. But I'll keep disappointing. I think that there's 2 or 3 things. So I think the first thing is the CIF Acquisition has been tremendous.

Speaker 1

Ron Loeb, Jeff Siegel, the whole team I could go through everybody has just done an amazing job and We're one team now. We don't even talk about CIF anymore. We're one team. The second thing is, yes, we absolutely see The one like we said the one to two points, again, we have over delivered our thesis on what I brought to the Board on the opportunity. So I feel Great about saying that.

Speaker 1

The 3rd, I think is even more important than numbers. The talent that we brought in, The folks so there are folks from CIF that had capabilities that we didn't have before. Rebecca and Our freight, I've mentioned to you freight. When we first started 200 basis points, 280 basis points. As crazy as numbers are, we got another 50 points, 50 basis points of improvement this quarter.

Speaker 1

That's real capabilities that Rebecca brought to the team. What we're able to do in accounts receivables, it is Yes. It's great that the CIF acquisition got us more sales and got us more margin. The real secret is it got us great talent And real capabilities in our business and that's what I'm proudest of.

Speaker 4

That's great to hear. My last couple of questions, I guess, first is just a clarifying question. Did you say earlier, I think it was on the previous Question, that you had hired a sort of a new head of the C store channel. I just wanted to clarify that first.

Speaker 1

We did. Yes. Yes. Yes. Arden is just killing it really already and he's only been here a month or 2 And already connecting with the right brokers, the right distributors, the energy that he brought to the meeting, He actually pushed me.

Speaker 1

He was yelling at me that I was calling the number too conservatively. How's that? It was like his 1st week here and he's already calling me out, which I love. So, yes, we have a new guy that are running C Stores, e commerce now. We are building the team that's going to win.

Speaker 4

Yes. So you have this new C store hire. You press released Sort of launch of direct to consumer e commerce, I think you called out sort of the club opportunity in the press release and then mentioned mass Mark, in your prepared remarks here, just kind of help us like frame these opportunities here. I think you said C store could even drive Near term results here, how should we think about these, I guess, one, just in terms of potential scale Relative to the size of your sort of traditional grocery channel and then perhaps in terms of whether it's Priority or just when we might be able to see some potential results here? I'm just trying to understand these opportunities as they come up.

Speaker 4

Thank you.

Speaker 1

Yes. Look, I think Art puts enough pressure on himself as does everyone on the team. We're not looking so yes, For our fiscal 2025 plan, we built a bottom up model. Obviously, we won't be sharing that bottoms up customer by customer model, but we have it. Let's put this into perspective.

Speaker 1

We're pretty much not in 5 of the top 10 customers. The 3 biggest customers in this country, Target, Walmart and Banner Kroger, we're not in. So I think that should put in perspective for us The level of distribution and again I'm proud with over 8,000 points of distribution, very proud of that. Over $100,000,000 business That's wonderful. We're in like still probably I don't even think we're in the bottom of the first.

Speaker 1

We're probably in like maybe we have one out In the top of the first. That's how early we are in the process. So I think there's tremendous value. But again, we're not going to rush. I'm here for the long haul.

Speaker 1

Anthony is here for the long haul and we're going to do things Very organized. We're going to do it very profitably. So that look at the growth that we're having and the profits Are just getting better the business is getting healthier and healthier. I think if you'd look at our peers or in my old world at Mondelez all the companies That I would look at to acquire, yes, it's super easy to get growth. I mean, we're losing $100,000,000,000 but don't worry about it, someone else will pay for it.

Speaker 1

We are growing smartly. We're growing profitably and we're accelerating our profit. That's the type of growth that you're going to see from this business.

Speaker 4

Well, it's certainly very impressive, what you've all been able to do over the past year or so and certainly looking forward to, as many opportunities to come. Thanks for taking my questions.

Speaker 1

Thanks a lot, Eric.

Operator

Thank you. Our next question comes from the line of Howard Halpern with Taglich Brothers. Please proceed with your question.

Speaker 5

Congratulations guys. Another great quarter.

Speaker 1

Thanks Howard.

Speaker 5

Scanning the queue that's out there I saw, could you describe what was the Primary driver with the growth in the Midwest year over year and sequentially because it seems like it was a nice bump in the quarter.

Speaker 1

Yes. I know it was great and you're probably the only CEO that's happy to see that we're losing share on the East Coast because we're doing so much better on the Midwest West Coast. That was primarily 2 or 3 things. 1, Costco continues to get stronger and stronger for us. And I spoke about this earlier around this trifecta.

Speaker 1

So first, this year we got the largest order ever. It's actually shipping now in the Northeast Over $1,000,000 order. 2, we've had multiple rotations now in some regions. We've already been this year already Northeast, Midwest, Pacific Northwest, LA region, I'm sure I'm missing others. And then the 3rd and I'm super excited, we're producing it now.

Speaker 1

You should see it next month if you're out in the West Coast where we got our sausage and peppers into the LA region of Costco, Which is wonderful. So this is the first time ever we've had a non meatball product in Costco. So we hit the triple threat this Which was awesome. Directly to your question, Costco, we had another rotation in the Midwest and that That's also Midwest sales.

Speaker 5

Okay.

Speaker 1

Roundy's, I believe, is also in the Midwest and we continue to do well at Roundy's, which is, If you guys know a Kroger banner, underneath the Kroger banner is Roundy's. So those are the answers Howard.

Speaker 5

Okay. And what are you seeing in terms of how you talk about the grocery stores building out this part of their store? Is there an opportunity for the bow and a cup to go In that section of grocery stores going forward?

Speaker 1

Well, you must be speaking to Scott Schaeffer on our sales team. So Actually, it's great that you mentioned that. So Jewel is an Albertsonsburg banner. Jewel is crushing it with our Meatballs in a Cup. So just as a reminder, We developed Meatballs on a Cup as a boxing everybody out, so he gets all of the production.

Speaker 1

But we actually Scott, we actually sold into JUUL. I shared with the leadership team the other day, we actually got an end cap. So refrigerated end cap, which is really hard to get and they had both our beef meatballs and our turkey meatballs on that end cap. So Yes, Howard, directly to your point, while the intention was to have the cups in C store only really, They're actually starting to do well in the grocery space with Juul and with others. And then also there's a lot of interest from the club channel for a multipack, which we're investigating as well.

Speaker 1

So it's happening, Howard. It's great.

Speaker 5

And all that eventually too could lead to increased volumes on the e commerce side?

Speaker 1

Yes. We got to actually, Lauren, see that? Now that Lauren must have been happy now too. So yes, if you go on to our website, shop. Mommancinis.com.

Speaker 1

You can actually get our meatballs in a cup on our website. So yes, It should help drive e commerce sales as well.

Speaker 5

Okay. And just SG and A question. Are we now at a new the new level is this sufficient to help fuel that double digit Growth that you hopefully will achieve over the next few years?

Speaker 1

Yes. You know what, let's see. I don't want And I say this respectfully with sitting next to Anthony, my CFO, I don't want necessarily Anthony to be driving what capabilities we need. Obviously, we're going to manage the business well and we're going to grow and we're going to maintain our profitability. But I want to bring in great talent and I'm never going to I don't make decisions.

Speaker 1

We as a leadership team make the decisions on who to bring in, but I want to bring capabilities in. That said, We had a great year this year. You see the talent we brought in from sales and marketing and logistics. I think we're down to Maybe 1 or 2 more people that could really accelerate our business. So I think we're mostly there, but I want to bring in the right talent.

Speaker 1

I want to also bring in, have the right amount of marketing. You know Howard well that marketing is a below the line number. That means it's going to sort of hurt OpEx. I want to do what's right for this company and I don't want to let Short term thinking influence our long term aspirations. We're going to be a $1,000,000,000 company and we need the marketing to do that.

Speaker 1

But I promise you, I'm a big talker, but I get scared faster than you guys do. So I will make sure that we continue to stay profitable and continue to grow.

Speaker 5

Okay. Well, thanks and keep up the great work.

Speaker 1

Thanks so much, Howard.

Operator

Thank you. This concludes our question and answer session. And I will now turn the call back to Chairman and CEO, Adam L. Michaels for his closing remarks.

Speaker 1

Thank you, operator, and thank you again to each of you for joining us on today's earnings conference call. We look forward to continuing to update you on our progress as we strive to deliver value to my fellow shareholders and execute on our vision of becoming a national one stop shop deli solution provider. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time and have a wonderful day.

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Key Takeaways

  • Mama’s Creations achieved double-digit revenue growth (11.5% y/y) and improved gross margin by 460 basis points to 30.1%, while net income rose to $2.0 M in Q3.
  • The company’s 3 Cs strategy—enhancing cost management via procurement and automation, strengthening controls with NetSuite ERP and Workiva systems, and investing in culture—drove margin expansion and operational efficiency.
  • Promising early results from trade promotion tests have led management to reinvest surplus gross margin as “rocket fuel” into higher-ROI promotional budgets to boost product velocity.
  • Mama’s Creations is well-positioned to benefit from the accelerating consumer shift toward deli prepared foods, as grocers expand grab-and-go offerings to capture share from restaurants.
  • Key hires and promotions in sales, e-commerce, C-Store leadership, and operations, coupled with an 80%-participation employee survey and a new performance management system, are building the platform for broader distribution and SKU growth.
AI Generated. May Contain Errors.
Earnings Conference Call
Mama's Creations Q3 2024
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