Q3 2025 Mama's Creations Inc Earnings Call

December 16, 2024

In the presentation the conference will be open for questions.

This conference is being recorded today December 16, 2024, and the earnings press release accompanying this conference call was issued after the market closed today.

On our call today, as Mama creations, Chairman and CEO, Adam Al Michaels and CFO Anthony Gruber.

Speaker Change: Before we get started I'll read a disclaimer about forward looking statements.

Speaker Change: This conference call May contain in addition to historical information forward looking statements within the meaning of federal Securities laws regarding Mama creation.

Speaker Change: 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.

Speaker Change: These statements are based on current expectations estimates and projections about the company's business based in part on assumptions made by management. These.

Speaker Change: These statements are not guarantees of future performance and involve risks uncertainties and assumptions that are difficult to predict.

Speaker Change: 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 the Companys 10-K, and other documents, which the company filed with the U S Securities and Exchange Commission.

Speaker Change: In addition, such statements could be affected by risks and uncertainties related to factors beyond the Companys control.

Speaker Change: 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.

Speaker Change: <unk> ability to have capital and any major litigation regarding the company and.

Speaker Change: In addition throughout today's call the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about 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 three.

Speaker Change: Your website under investors tab 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.

Speaker Change: Company does not undertake any obligation to publicly update or revise any forward looking statements to reflect future events information or circumstances that arise. After the date of this conference call at this time I'd like to turn the call over to chairman and CEO Adam Michaels.

Adam the floor is yours.

Adam Michaels: Thank you operator, and thank you to everyone for joining us today I'd like to welcome you to our third quarter fiscal 25 financial results Conference call.

Adam Michaels: Third quarter was highlighted by 10% broad based revenue growth as we completed capex investments in our Farmingdale facility to double our chicken capacity added World class Executive leadership and a continued focus on our four c's cost controls culture and catapult our goal to emerge as the leading one.

Adam Michaels: One stop shop Deli solution on a national scale is grounded in a purposeful persistent and patient strategic plan to capture what is a generational change in consumer preferences.

Adam Michaels: Rising restaurant prices and inflation are bringing consumers back to the grocery store, both higher expectations. They wanted to experience and to be excited about quality products across formats and flavors in turn grocery retailers have had to pivot quickly and differentiate to be able to cater to customers, including the <unk>.

Adam Michaels: Production of new Deli prepared meals, the shelf space of which continues to expand.

Adam Michaels: Whilst arcana forecast volume growth and total retail food and beverage next year to be between zero and 1% Deli prepared is growing at more than 5% today and mamas creations is growing around three ex that fast consistently and methodically gaining market share. So we are all in the right segment of the Mark.

Adam Michaels: With the right products at the right time.

Adam Michaels: With this kind of growth prepared foods have become the most important parameter category for retailers and wholesalers in a recent survey by supermarket news, 66% of retailers and wholesalers said that they plan to increase their assortment of prepared foods in the year ahead more than any other perimeter department.

Adam Michaels: 38% of retailers and wholesalers said they plan to expand the space of their prepared foods, which was the most of any of the fresh departments.

Adam Michaels: The plans to expand prepared foods can be explained very simply it is grounded in the increasing sales and profitability of these areas of the store.

Adam Michaels: The opportunity we are facing it's clearly significant we're in the right place at the right time and with the right product portfolio. The <unk> product offering is in my opinion second to none and variety quality and service.

Adam Michaels: <unk> are recognizing that.

Adam Michaels: Since I joined as CEO in September of 2022, we have refocused to address this incredible opportunity. We formed an initial <unk> strategy to improve our cost controls and culture areas that in my opinion required the most attention we rebuilt and strengthened the foundations of our business and became <unk>.

Adam Michaels: At the basics.

Adam Michaels: We methodically address the biggest pain points across each of these areas and implemented key operational kpis under the mantra of what gets measured gets improved.

Adam Michaels: First what's cost our gross margins were 11, 9% in the quarter ending July 31, 2022 with significant potential that needs to be unlocked.

Adam Michaels: The path to our targeted high 20% gross margin profile for countless small improvements throughout the organization.

Adam Michaels: From step changes in freight and procurement efficiencies to implementing processes to reduce labor overtime, our operations run much more efficiently today than ever before.

Adam Michaels: Being able to successfully navigate as we have recently seen with historically high chicken prices commodity headwinds that may come our way.

Adam Michaels: The improved margins and cash flow are being directly and immediately put back into further investment in capex such as the Grilles, we installed in our farmingdale facility, doubling chicken capacity and increasing labor efficiencies through reduced over time, creating a cycle of higher and higher gross margins.

Adam Michaels: Beyond Cogs, we're building new capabilities in house, which has allowed us to wean ourselves off of the higher professional services and support we relied on in the past.

And strengthened the foundations of our business and became brilliant at the basics.

Adam Michaels: Second we're all controls I have been sharing with you over the past year. The successful implementation of our Netsuite ERP system, providing unparalleled visibility to our business improving pricing margins inventory management and so much more.

We methodically address the biggest pain points across each of these areas and implemented key operational kpis under the mantra of what gets measured gets improved.

The first what's cost our gross margins were 11, 9% in the quarter ending July 31, 2022 with significant potential that needs to be unlocked.

Adam Michaels: Just this quarter, we added new modules to our net suite system, including a warehouse management system, which is already delivering value driving our inventory to its lowest level since our team came together freeing up even more cash flow new controls and quality are strengthening our policies and procedures make us even prouder of our grandma.

Speaker Change: The path to our targeted high 20% gross margin profile took countless small improvements throughout the organization.

Speaker Change: From step changes in freight and procurement efficiencies to implementing processes to reduce labor overtime, our operations run much more efficiently today than ever before being able to successfully navigate as we have recently seen with historically high chicken prices commodity headwinds that may come our way.

Adam Michaels: <unk> manufacturing just.

Adam Michaels: Just recently, we added X-ray technology to our existing metal detection and are installing cutting edge PCR testing to ensure that what comes into our plant is as safe as possible.

Speaker Change: The improved margins and cash flow are being directly and immediately put back into further investment in capex such as the Grilles, we installed in our farmingdale facility, doubling chicken capacity and increasing labor efficiencies through reduced over time, creating a cycle of higher and higher gross margins.

Adam Michaels: I wanted to share my congratulations to our team teams across east Rutherford in Farmingdale facilities for successfully navigating our third party audits this year, including two industry recognized S. QF audits as well as two major customer audits with scores of 97 and $2 90 nines, we're incredibly proud of that.

Speaker Change: Beyond Cogs, we're building new capabilities in house, which has allowed us to wean ourselves off of the higher professional services and support we relied on in the past.

Adam Michaels: Our accomplishments.

Adam Michaels: That said my mother did ask where that one outstanding point went.

Adam Michaels: To further focus on our first two <unk>, we recently completed the build out of our industry, leading senior team.

Speaker Change: Second we're our controls I've been sharing with you over the past year. The successful implementation of our Netsuite ERP system, providing unparalleled visibility to our business improving pricing margins inventory management and so much more.

Chris Darling, our new Chief commercial officer brings over 20 years of experience in executive leadership from a storied career in the Deli, where he led world class commercial organizations at industry, leading firms such as Boris had HEB, a hold and Albertsons. Most importantly, Chris knows how to build a national brand.

Speaker Change: This quarter, we added new modules to our net suite system, including a warehouse management system, which is already delivering value driving our inventory to its lowest level since our team came together freeing up even more cash flow new controls and quality are strengthening our policies and procedures make us even prouder of our grandma.

Adam Michaels: And particularly in the prepared meals solution space.

Adam Michaels: He has already picked up the ball and is leading our fiscal year 'twenty six planning hold on tight I'm not sure Chris has ever plan to anything small.

Speaker Change: Quality manufacturing just.

Speaker Change: Just recently, we added X-ray technology to our existing metal detection and are installing cutting edge PCR testing to ensure that what comes into our plant is as safe as possible.

Adam Michaels: Chris joined Skip tapping, our chief operating officer, and end to end supply chain leader, bringing over 30 years of experience with Gordon Foodservice, Walmart Campbell's soup, and Procter and Gamble and his first few weeks here Skip has already had a deep impact on our business, bringing much needed structure to our staffing models to many.

Speaker Change: I wanted to share my congratulations to our team teams across east Rutherford in Farmingdale facilities for successfully navigating our third party audits this year, including two industry recognized S. QF audits as well as two major customer audits with scores of 97 and $2 90 nines, we're incredibly proud of that.

Adam Michaels: <unk> overtime, which we are now moving from two extended shifts to a three shift model as well as implementing rigorous project management and kpis to our growing operations and implementations.

Speaker Change: Our accomplishments.

Adam Michaels: Most importantly, skip has a great attitude and a hands on approach to management, which has ingratiated himself quickly to the team.

That said my mother did ask where that one outstanding point went.

Speaker Change: To further focus on our first two CS we recently completed the build out of our industry, leading senior team.

Adam Michaels: With our World Class leadership team now in place, we are better positioned to fully optimize operations execute on our catapult growth strategy and begin to more rigorously evaluate acquire and integrate potential future M&A opportunities.

Speaker Change: Chris Darling, our new Chief commercial officer brings over 20 years of experience in executive leadership from a storied career in the Deli, where he led world class commercial organizations and industry, leading firms such as Boris had HEB, a holding albertsons. Most importantly, Chris knows how to build a national brand.

Adam Michaels: I cannot stress enough the quality of our team that we have for a company our size we are truly blessed.

The third was culture, where we implemented formalized processes in a company wide culture Committee to ensure we are doing right by our employees at every level of the organization.

Speaker Change: And particularly in the prepared meals solution space.

Speaker Change: He has already picked up the ball and is leading our fiscal year 'twenty six planning hold on tight I'm not sure Chris has ever planned anything small.

Adam Michaels: Our team has a passion for learning and everyone on our team is striving to do more we just rolled out our second annual employee engagement survey and are excited to see the results next month.

Speaker Change: Chris joined Skip tapping, our chief operating officer, and end to end supply chain leader, bringing over 30 years of experience with Gordon Foodservice, Walmart Campbell's soup and Procter and Gamble in his first few weeks here Skip has already had a deep impact on our business, bringing much needed structure to our staffing models to many.

Adam Michaels: Our focus on culture is driving more production efficiency higher retention and higher quality of our products because we're all pulling the wagon together.

Adam Michaels: With the successful evolution of our finance operations and HR organizations underway in financial results, reflecting this we have put in place the processes and culture to begin to accelerate growth at our Investor day in East Rutherford and farm in February we announced the introduction of a fourth C catapult, representing the investments in trade promotion and marketing that.

Speaker Change: <unk> overtime, which we are now moving from two extended shifts to a three shift model as well as implementing rigorous project management and kpis to our growing operations and implementations.

Speaker Change: Most importantly, skip has a great attitude and a hands on approach to management, which has ingratiated himself quickly to the team.

Adam Michaels: We are making to grow the business profitably at a faster rate.

Speaker Change: With our World Class leadership team now in place, we are better positioned to fully optimize operations execute on our catapult growth strategy and begin to more rigorously evaluate acquire and integrate potential future M&A opportunities.

Our continued success demonstrates with some help from new stores, new items, and a little bit of trade rocket fuel what type of growth as possible.

With the hiring of Chris Darling, the Buildout of our sales leadership team. Our first catapult lever is now complete the sales team now works more seamlessly with their operations counterparts, and stronger demand and supply planning is enabling enhanced service levels and lower logistics costs I am proud of how our new sales team has come together and we are.

Speaker Change: I cannot stress enough the quality of our team that we have for a company our size we are truly blessed.

Speaker Change: The third C was culture, where we implemented formalized processes in a company wide culture Committee to ensure we are doing right by our employees at every level of the organization.

Adam Michaels: Actively seeking out additional talent in areas that can step change our growth.

Speaker Change: Our team has a passion for learning and everyone on our team is striving to do more we just rolled out our second annual employee engagement survey and are excited to see the results next month.

Adam Michaels: The team delivered this quarter in spades nicely balancing across our three growth pillars, driving average items carried at existing customers such as four new items at Bj's driving velocities of existing items, such as the successful publix pumps up program and getting into new doors, such as our first orders.

Speaker Change: Our focus on culture is driving more production efficiency higher retention and higher quality of our products because we're all pulling the wagon together.

With the successful evolution of our finance operations and HR organizations underway in financial results, reflecting this we have put in place the processes and culture to begin to accelerate growth at our Investor day in East Rutherford and farm in February we announced the introduction of a fourth C catapult, representing the investments in trade promotion and marketing that.

Adam Michaels: At Walmart and our national buyer Costco opening up the Texas region, and the South East region for the first time.

Adam Michaels: Coming from a humble northeast authentic Italian meatball company in two short years meat balls are no longer our biggest item sold and as of this quarter over 47% of our sales are west of the Ohio River or.

Speaker Change: We are making to grow the business profitably at a faster rate.

Speaker Change: Our continued success demonstrates with some help from new stores, new items, and a little bit of trade rocket fuel what type of growth as possible.

Adam Michaels: Our one stop shop Deli solution is not a mantra or a tagline for a stress ball. It is our new way of working.

Adam Michaels: The second catapult lever is trade promotion seeking to accelerate the velocities of our existing skus by driving trial and larger baskets combo buys with complementary products multi buys of our family of products and print and online circulars are just a few of the recent tactics. We have used to deliver growth we have seen this.

Speaker Change: With the hiring of Chris Darling, the Buildout of our sales leadership team. Our first catapult lever is now complete the sales team now works more seamlessly with their operations counterparts, and stronger demand and supply planning is enabling enhanced service levels and lower logistics costs I am proud of how our new sales team has come together and we are.

Year.

Adam Michaels: This quarter saw our trade spend nearly tripled sequentially anchored by strong ROI programs at Publix with their pumps up program as well as digital coupon programs at Bj's.

Speaker Change: Actively seeking out additional talent in areas that can step change our growth.

The team delivered this quarter in spades nicely balancing across our three growth pillars, driving average items carried at existing customers such as four new items at Bj's driving velocities of existing items, such as the successful Publix hub sub program and getting into new doors, such as our first orders.

Adam Michaels: Bj's is a great example of a strong program rois, but even stronger stickiness. After our successful digital promotion our weekly volumes have consistently stayed at nearly 40% higher than the pre program volume, even though we have stopped promoting.

Speaker Change: At Walmart and our national buyer Costco opening up the Texas region, and the South East region for the first time.

On <unk>. Another example, our ROE ads, which is return on advertising spend it's consistently over $5 and only getting better.

Speaker Change: Coming from a humble northeast authentic Italian meatball company in two short years meat balls are no longer our biggest item sold and as of this quarter over 47% of our sales are west of the Ohio River or.

While we are happy with the revenue part of circular promo we find an added benefit with this type of promotion. This stores are more vigilant about ensuring our products are on the shelves at all times driving even further velocity.

Speaker Change: Our one stop shop Deli solution is not a mantra or a tagline for a stress ball. It is our new way of working.

Adam Michaels: The third lever and catapult led by Lauren sellout, our CMO is marketing, which saw a 75% increase in investment this quarter, reflecting a return to norms and correcting historical underinvestment in this area. We had a significant step up in media investment in Q3 supporting with search the rollout of <unk>.

Speaker Change: The second catapult lever is trade promotion seeking to accelerate the velocities of our existing skus by driving trial and larger baskets combo buys with complementary products multi buys of our family of products and print and online circulars are just a few of the recent tactics. We have used to deliver growth we have seen this.

Adam Michaels: New Walmart items as well as our BJ items.

Adam Michaels: In addition, we invested in promoting our three pounds jumbo meat balls sleeve as part of the Costco National VI as well as marketing, our <unk> branded meals and public stores.

Speaker Change: Year.

Speaker Change: This quarter saw our trade spend nearly tripled sequentially anchored by strong ROI programs at Publix with their pumps up program as well as digital coupon programs at Bj's.

Adam Michaels: This media was precisely targeted to Costco shoppers in the national by regions as well as shoppers around the public school locations through social programmatic and search campaigns with the Costco National buy we also ramped up our <unk> presence and an impressive 70% of our sales through the platform in the quarter.

Speaker Change: Bj's is a great example of a strong program rois, but even stronger stickiness. After our successful digital promotion our weekly volumes have consistently stayed nearly 40% higher than the pre program volume, even though we have stopped promoting.

Speaker Change: On <unk>. Another example, our ROE ads, which is return on advertising spend is consistently over $5 and only getting better.

Adam Michaels: <unk> were new to brand, helping to bring in new buyers to our portfolio.

Adam Michaels: We're also thrilled to announce that mom is being recognized by the industry for our innovation having received two additional trade innovation awards.

Speaker Change: While we are happy with the revenue part of circular promo we find an added benefit with this type of promotion. This stores are more vigilant about ensuring our products are on the shelves at all times driving even further velocity.

Our on the go Cups won the prepared foods spirit of Innovation Awards, and the alternative channel category and our retail <unk> received the convenience store news 2020 for best New product award in the Deli category.

Speaker Change: The third lever and catapult led by Lauren sell our CMO is marketing, which saw a 75% increase in investment this quarter, reflecting returned to norm and correcting historical underinvestment in this area. We had a significant step up in media investment in Q3 supporting with search the rollout of our.

Adam Michaels: These awards not only drive awareness of those specific products, but also bring additional valuable trade visibility to moms creations.

Adam Michaels: As we discussed last quarter, we're continuing to drive our convenience store channel penetration in October we are first time exhibitors at the National Association of convenience stores next trade show in Las Vegas, We saw a lot of positive response to our offerings and are continuing the discussions with potential retailers.

Speaker Change: New Walmart items as well as our BJ items.

In addition, we invested in promoting our three pounds jumbo meat balls sleeve as part of the Costco National VI as well as marketing, our Mama <unk> branded meals and public stores.

Speaker Change: This media was precisely targeted to Costco shoppers in the national by regions as well as shoppers around the public school locations through social programmatic and search campaigns with the Costco National buy we also ramped up our <unk> presence and an impressive 70% of our sales through the platform in the quarter.

Adam Michaels: We're investing mid single digit millions in Capex. This year already paid for and funded from cash flow from operations with the goal of improving automation at both of our production facilities, while concurrently building new in house capabilities earlier in the value chain.

Adam Michaels: These investments paired with ongoing operational improvements have the potential to offset some of the commodity pricing fluctuations and ultimately move our gross margins into the low 30% range over the long term, while concurrently growing our trade promotion investments from low single digit percentage of revenue today towards our long term goal of 10.

Speaker Change: We're new to brand, helping to bring in new buyers to our portfolio.

We're also thrilled to announce that mom is being recognized by the industry for our innovation having received two additional trading innovation awards.

Adam Michaels: Percent.

Speaker Change: After six long months of construction I can now say, our farmingdale facility is construction hat free.

Speaker Change: I'll be the first to tell you that did not go as planned and we all learned a lot about town permitting limited pride equipment providers have in their trade and the quality of their installations.

These awards not only drive awareness of those specific products, but also bring additional valuable trade visibility to moms creations.

Speaker Change: While there are so many things I'm excited about with the recent hiring of skip it's the structure and project management that skip will bring to our next capex expansion that makes me feel even better about what's to come.

Speaker Change: As we discussed last quarter, we're continuing to drive our convenience store channel penetration in October were first time exhibitors at the National Association of convenience stores next trade show in Las Vegas, We saw a lot of positive response to our offerings and are continuing the discussions with potential retailers.

Speaker Change: But as they say it is all behind us and we continue to March forward.

Speaker Change: We now have two new roles in our Farmingdale facility.

Speaker Change: We're investing mid single digit millions in Capex. This year already paid for and funded from cash flow from operations with the goal of improving automation at both of our production facilities, while concurrently building new in house capabilities earlier in the value chain.

Speaker Change: Doubles, our chicken capacity, which will allow for higher labor efficiencies through reduced overtime as previously our chicken roles were running effectively 20 plus hours a day.

Speaker Change: We also were able to upgrade our existing roles with new parts, which have increased their reliability substantially.

Speaker Change: These investments paired with ongoing operational improvements have the potential to offset some of the commodity pricing fluctuations and ultimately move our gross margins into the low 30% range over the long term, while concurrently growing our trade promotion investments from low single digit percentage of revenue today towards our long term goal of 10.

In addition, the installation of additional chicken processing equipment in sources key value added services that are previously outsourced lowering our cost of goods and in the case of chicken. It has the potential to lower our cost by close to a full dollar per pound.

Speaker Change: And improve margins in what remains a difficult commodity environment with chicken prices still nearly 50% higher year over year.

Speaker Change: Percent.

Speaker Change: After six long months of construction I can now say, our farmingdale facility is construction hat free.

Speaker Change: We have been learning how to effectively trim, our chicken balanced sales of the various chicken output cuts to maximize how much we can trim and expect it to start to make a more meaningful impact on our margin profile early next year.

That being said nothing worth doing is easy and the installation of these new chicken grows we're no different as previously discussed the conclusion of significant construction at Farmingdale bled into the first half of the third quarter. While it is now complete that pain impacted margins by about 400 basis points in the third quarter with all.

Speaker Change: But as they say it is all behind us and we continue to March forward.

Speaker Change: We now have two new roles in our Farmingdale facility.

Speaker Change: Doubles, our chicken capacity, which will allow for higher labor efficiencies through reduced overtime as previously our chicken Roes were running effectively 20 plus hours a day.

Speaker Change: <unk> now completed the team has already done a great job bouncing back and results from November have already seen this impact being fully reversed.

Speaker Change: We also were able to upgrade our existing roles with new parts, which have increased their reliability substantially.

Speaker Change: These capex investments are incredibly important given the commodity pressures, we're seeing today from jumbo chicken breast that were on the market for about $1 per pound in January to a recent high over the summer of $2 a pound. It is now stabilizing around $1 50, a pound.

Speaker Change: In addition, the installation of additional chicken processing equipment in sources key value added services that are previously outsourced lowering our cost of goods and in the case of chicken. It has the potential to lower our cost by close to a full dollar per pound.

Speaker Change: Nearly 50% higher than prior year at this time.

Speaker Change: We've been incredibly proactive and aggressive in addressing these trends through the aforementioned capex investments labor management improvements and successful pricing actions across the board with only a select few necessary pricing actions remaining which will help us to weather the worst of future storms.

Speaker Change: And improve margins in what remains a difficult commodity environment with chicken prices still nearly 50% higher year over year.

Speaker Change: While we may be fairly differentiated in our ability to maintain relative margin strength in this unprecedented commodity cost environment. Our retailer partners are well aware of these pressures and have been understanding of what is needed to combat these industry wide headwinds.

Speaker Change: That being said nothing worth doing is easy and the installation of these new chicken grows we're no different as previously discussed the conclusion of significant construction at Farmingdale bled into the first half of the third quarter. While it is now complete that pain impacted margins by about 400 basis points in the third quarter with all.

Speaker Change: As we continue to improve and build on our four CS I am incredibly proud of our team's accomplishments and believe we are only at the beginning of our journey and.

Speaker Change: In 2023, we built the foundation of a more resilient and flexible organization and now in 2024, we are investing in the Capex. Upon this foundation to position us for a high level of purposeful and profitable growth in the year ahead, as we strive to create sustainable long term value.

<unk> now completed the team has already done a great job bouncing back and results from November have already seen this impact being fully reversed.

Speaker Change: These capex investments are incredibly important given the commodity pressures, we're seeing today from jumbo chicken breast that were on the market for about a dollar per pound in January to a recent high over the summer of $2 a pound. It is now stabilizing around $1 50, a pound.

Speaker Change: For our fellow shareholders.

With that I'd now like to turn the call over to Anthony Gruber, Our Chief Financial Officer to walk through some key financial details for the third quarter of fiscal 'twenty five.

Speaker Change: Nearly 50% higher than prior year at this time.

Speaker Change: Anthony.

We've been incredibly proactive and aggressive in addressing these trends through the aforementioned capex investments labor management improvements and successful pricing actions across the board with only a select few necessary pricing actions remaining which will help us to weather the worst of future storms.

Anthony Gruber: Thank you Adam revenue for the third quarter of fiscal 2025 increased 10% to $31 5 million as compared to $28 7 million in the same year ago quarter.

Anthony Gruber: The increase was largely attributable to successful pricing actions as well as volume gains driven by increased demand successful trade promotions and customer cross selling of new items and new customer door expansion.

Anthony Gruber: While we continue to take appropriate pricing actions.

Anthony Gruber: Over 90% of our growth is volume driven.

Speaker Change: As we continue to improve and build on our four CS I'm incredibly proud of our team's accomplishments and believe we are only at the beginning of our journey and.

Anthony Gruber: We have continued to gain share in all nine quarters. Since this team has been together.

Anthony Gruber: Gross profit totaled $7 1 million or $22 six of 20 total revenues in the third quarter of fiscal 2025, as compared to $8 6 million or 31% of total revenues in the same year ago quarter.

Anthony Gruber: The difference in gross margin was primarily attributable to significant commodity cost increases from historical averages as well as nonrecurring impact from construction surrounding.

Speaker Change: For our fellow shareholders.

With that I'd now like to turn the call over to Anthony Gruber, Our Chief Financial Officer to walk through some key financial details for the third quarter of fiscal 'twenty five.

Anthony Gruber: The now completed installation of strategic Capex projects at the Companys Farmingdale facility.

Speaker Change: Anthony.

Anthony Gruber: Thank you Adam revenue for the third quarter of fiscal 2025 increased 10% to $31 5 million as compared to $28 7 million in the same year ago quarter.

Anthony Gruber: Management estimates construction pressures negatively impacted corporate margins by approximately 400 basis points with additional pressures coming from chicken pricing.

Anthony Gruber: These construction challenges are now firmly behind us as we saw.

Anthony Gruber: Change improvement in our preliminary unaudited November gross margin profile.

Anthony Gruber: Fully reversing the construction headwinds seen in Q3 with significant room for further growth.

Anthony Gruber: While we continue to take appropriate pricing actions.

Operating expenses were $6 6 million in the third quarter of fiscal 2025, as compared to $5 9 million in the same year ago quarter as.

Anthony Gruber: Over 90% of our growth is volume driven.

Anthony Gruber: Continued to gain share in all nine quarters. Since this team has been together.

Anthony Gruber: Gross profit totaled $7 1 million or $22 six of 2000 and total revenues in the third quarter of fiscal 2025, as compared to $8 6 million or 31% of total revenues in the same year ago quarter.

Anthony Gruber: As a percentage of sales operating expenses were 28% as compared to 27% in the same year ago quarter.

Anthony Gruber: Operating expenses as a percentage of sales were relatively flat driven by further fleet efficiency improvements of an additional 90 basis points versus prior year.

Anthony Gruber: Set by a 75% increase in marketing spend versus prior year.

Anthony Gruber: Area of historical Underinvestment to help drive repeatable and profitable growth.

Anthony Gruber: The now completed installation of strategic Capex projects at the Companys Farmingdale facility.

Anthony Gruber: Net income for the third quarter of fiscal 2025 totaled <unk> 4 million or <unk> <unk> per diluted share as compared to net income of $2 million were <unk> <unk> per diluted share in the same year ago quarter.

Anthony Gruber: Management estimates construction pressures negatively impacted corporate margins by approximately 400 basis points with additional pressures coming from chicken pricing.

Anthony Gruber: Third quarter net income totaled one 3% of revenue as compared to 7% in the same year ago quarter.

Anthony Gruber: These construction challenges are now firmly behind us as we saw a step change improvement in our preliminary unaudited November gross margin profile.

Anthony Gruber: Adjusted EBITDA, a non-GAAP measure.

Anthony Gruber: Fully reversing the construction headwinds seen in Q3 with significant room for further growth.

Anthony Gruber: <unk> totaled $1 7 million for the third quarter of fiscal 'twenty fives as compared to $3 5 million in the same year ago quarter.

Anthony Gruber: Operating expenses were $6 6 million in the third quarter of fiscal 2025 as compared.

Anthony Gruber: Cash and cash equivalents as of October 31, 2024 totaled $9 3 million as compared to $11 million as of January 31, 2024.

Anthony Gruber: Paired to $5 9 million in the same year ago quarter as a percentage of sales operating expenses were 28% as compared to 27% in the same year ago quarter.

Anthony Gruber: The change in cash and cash equivalents was primarily driven by $5 million in capital investments and $2 5 million of debt paydown year to date.

Anthony Gruber: Operating expenses as a percentage of sales were relatively flat driven by further fleet efficiency improvements of an additional 90 basis points versus prior year.

Anthony Gruber: Partially offset by working capital improvements as third quarter cash flow from operations increased 23, 7% year over year.

Anthony Gruber: All set by a 75% increase in marketing spend versus prior year.

Anthony Gruber: As of October 31, 2024, total debt stood at $6 3 million.

Anthony Gruber: In the area of historical Underinvestment.

Anthony Gruber: Helped drive repeatable and profitable growth.

Anthony Gruber: This cash forecast, coupled with our commercial lines of credit reduced debt and a stronger balance sheet is preparing as well for whatever inorganic opportunities proactively or reactively come our way.

Anthony Gruber: Net income for the third quarter of fiscal 2025.

<unk> 4 million or <unk> <unk> per diluted share as compared to net income of $2 million were <unk> <unk> per diluted share in the same year ago quarter.

Anthony Gruber: Looking ahead, we believe that our normalized gross margin profile not including major commodity fluctuations, we will continue to hover in the high 20% range.

Anthony Gruber: Third quarter net income totaled one 3% of revenue as compared to 7% in the same year ago quarter.

Anthony Gruber: Adjusted EBITDA, a non-GAAP measure.

Anthony Gruber: Our long term goal leveraging strategic capex investments procurement efficiencies and continuous operational improvements would be targeting margins consistently maintained in the low 30% range, while right sizing our trade promotion investments from low single digit percent of revenue today.

Anthony Gruber: The $1 7 million for the third quarter of fiscal 'twenty five.

Anthony Gruber: As compared to $3 5 million in the same year ago quarter.

Anthony Gruber: Cash and cash equivalents as of October 31, 2024 totaled $9 3 million as compared to $11 million as of January 31, 2024.

Closer to our goal of 10%.

Anthony Gruber: Turning to adjusted EBITDA, our long term goal is to achieve adjusted EBITDA margins in the teens percentage range.

Anthony Gruber: The change in cash and cash equivalents was primarily driven by $5 million in capital investments and $2 5 million of debt paydown year to date.

Adam Michaels: This completes my prepared comments now before we begin our question and answer session I would like to turn the call back to Adam for some closing remarks.

Anthony Gruber: Partially offset by working capital improvements as third quarter cash flow from operations increased 23, 7% year over year.

Anthony Gruber: Adam.

Anthony Gruber: Anthony in summary, the quarter continued our cadence of purposeful and profitable growth with a temporary construction related pressures now largely behind us as of the middle of the third quarter. Looking ahead, there is a compelling and growing opportunity in the deli space as grocery stores invest in grab and go food offerings to inch in.

Anthony Gruber: As of October 31, 2024, total debt stood at $6 3 million.

Anthony Gruber: The restaurant territory and inflation pushes consumers towards alternatives in the past two years, we have built the team and company to become an innovative prepared foods leader and what is currently a fragmented market. We have several levers available to drive growth from new skus and existing customers to new.

Anthony Gruber: Looking ahead, we believe that our normalized gross margin profile not including major commodity fluctuations will continue to hover in the high 20% range.

Our long term goal leveraging strategic capex investments procurement efficiencies and continuous operational improvements would be targeting margins consistently maintained in the low 30% range, while right sizing our trade promotion investments firms low single digit percent of revenue today.

Anthony Gruber: New tier one customers and continued investments in marketing and trade promotion to increase velocities of our existing in store items.

Anthony Gruber: We also believe that supported by our strong balance sheet attractively priced M&A opportunities in the industry could enable us to become a consolidator in the fragmented prepared foods market and emerge as a leading one stop shop deli solution on a national scale.

Closer to our goal of 10%.

Anthony Gruber: Turning to adjusted EBITDA, our long term goal is to achieve adjusted EBITDA margins in the teens percentage range.

Anthony Gruber: One has only just begun.

Speaker Change: This completes my prepared comments now before we begin our question and answer session I would like to turn the call back to Adam for some closing remarks.

Anthony Gruber: Look forward to speaking with you all in the year ahead.

Anthony Gruber: With that I'll turn it over to the operator to begin our question and answer session operator.

Adam: Adam Thank.

Speaker Change: Thank you Sir we will now begin the question and answer session for telephone participants. If you have a question. Please press star cluster.

Thank you Anthony.

Speaker Change: In summary, the quarter continued our cadence of purposeful and profitable growth with a temporary construction related pressures now largely behind us as of the middle of the third quarter.

Speaker Change: Press the star followed by one on your Touchtone phone.

Speaker Change: We would like to withdraw your question. Please press the star followed by the two again that is star followed by the one if you have a question.

Speaker Change: Looking ahead, there is a compelling and growing opportunity in the deli space as grocery stores invest and grab and go food offerings to inch into the restaurant territory and inflation pushes consumers towards alternatives.

Speaker Change: You are using speaker equipment, it will need to lift the handset before making.

Speaker Change: Action.

Speaker Change: We also ask to please limit yourself.

Speaker Change: In the past two years, we have built the team and company to become an innovative prepared foods leader in what it is currently a fragmented market. We have several levers available to drive growth from new skus and existing customers to new tier one customers and continued investments in marketing and trade promotion to incur.

Speaker Change: One question and one follow up question for each questioner.

Speaker Change: I will now pause as we assemble a queue.

Our first question comes from the line of Ryan Meyers with Lake Street capital.

Speaker Change: Please proceed with your question.

Speaker Change: <unk> velocities of our existing in store items.

Speaker Change: Hey, guys. Thanks for taking my question as we think about the revenue for the fourth quarter. Obviously traditionally we will see a step down from the third quarter.

Speaker Change: We also believe that supported by our strong balance sheet attractively priced M&A opportunities in the industry could enable us to become a consolidator in the fragmented prepared foods market and emerge as a leading one stop shop deli solution on a national scale.

Speaker Change: Do you expect that trend will continue here in Q4 or are some of the recent customer wins with Walmart and even costco enough to offset what we traditionally see here sequentially any commentary on Q4 would be helpful.

One has only just begun and I look forward to speaking with you all in the year ahead.

Speaker Change: Thanks, Brian.

Speaker Change: Actually I think the sales team has done an incredible job.

Speaker Change: With that I'll turn it over to the operator to begin our question and answer session operator.

Speaker Change: Trying to.

Speaker Change: Fix that I know historically, we didn't have a little softer in Q4. Some of the things are still there right. So think of Thanksgiving people you know they take our products off the shelf for a week put more turkeys. There same thing for Christmas time to take our products off and put more hands there, but what we're seeing is actually that the sales team did a great job at getting some.

Thank you Sir we will now begin the question and answer session for telephone participants. If you have a question. Please press Star Press the star followed by one on your Touchtone phone.

Speaker Change: If you would like to withdraw your question. Please press the star followed by the two again that is star followed by the one if you have a question.

Speaker Change: Incremental rotations.

Speaker Change: You are using speaker equipment, it will need to lift the handset before making your selection.

Speaker Change: Mentioned I just mentioned earlier that our trade programs are getting.

Speaker Change: We also ask to please limit yourself.

Speaker Change: A lot stronger a lot deeper a lot broader with respect to seeing the same public Stubhub program, we're doing it again.

Speaker Change: One question and one follow up question for each questioner.

Speaker Change: I will now pause as we assemble a queue.

Speaker Change: In Q4 definitely we've had more abused rotations of sub pub programs than we've had in the past, so maybe a little bit but I.

Speaker Change: Our first question comes from the line of Ryan Meyers with Lake Street capital.

Speaker Change: Please proceed with your question.

Speaker Change: I certainly feel even more confident in Q4 this year than I did last year because of the great work. The sales team is doing and then equally I have to say the operations team to fulfill this.

Speaker Change: Hey, guys. Thanks for taking my question.

Speaker Change: As we think about the revenue for the fourth quarter, obviously traditionally we will see a step down from the third quarter.

Speaker Change: As awesome as well so.

Speaker Change: I hope to tell you that not as strong as.

Speaker Change: As much of a pullback as it was in Pi prior years.

Okay got it and then thinking about the gross margins something called out the 400 basis point impact from the construction related costs and the remainder was commodity now have you guys seen any improvements in the commodity pricing yet.

Speaker Change: Thanks Ryan.

Actually I think the sales team has done an incredible job.

Speaker Change: I'm trying to.

Fixed that I know historically, we didn't have a little softer in Q4. Some of the things are still there right. So think of Thanksgiving people you know they take our products off the shelf for a week put more turkeys. There same thing for Christmas time, they take our products off and put more hands there, but what we're seeing is actually the sales team did a great job at getting some <unk>.

Speaker Change: And then kind of as a follow up to that when do you think youll see the full impact of the margin improvement some of the recent Capex project.

Speaker Change: Yes.

Speaker Change: So sort of two questions. The first one is you know are we done with all the construction stuff. The answer is yes, absolutely that impact we.

Speaker Change: We did not see in November already in and things are going well there commodity wise, it's still tough, but again I got to give credit to my team. So.

Speaker Change: Incremental rotations.

Speaker Change: Mentioned I just mentioned earlier that our trade programs are getting.

Speaker Change: A lot stronger a lot deeper a lot broader with respect to seeing the same public sub pump program, we're doing it again.

Speaker Change: We're talking about so chicken for instance that has come down so I think when I spoke to you last where if you were looking at the market numbers there north of $2 now it's close to a $1 50.

In Q4 definitely we've had more abused rotations of sub pub programs than we've had in the past, so maybe a little bit but I.

Speaker Change: And I think that there is some slight improvement that could could still be there and then beef prices again is equally right equally important to us the team's done a great job at doing some.

I certainly feel even more confident in Q4 this year than I did last year because of the great where the sales team is doing and then equally I have to say the operations team to fulfill this.

Speaker Change: Working with our partners Youre seeing some really good top line numbers that allows us to commit.

Speaker Change: As awesome as well so.

Speaker Change: I hope to tell you that not as strong as.

Speaker Change: To partner with our suppliers to say look things are going really well here. If I could tell you that we're going to have this amount of volume can you get a better price on your side and the answer is yes, so not only do I see the numbers coming down a little bit for us, but because we have a better sense of our business and the business is doing better.

Speaker Change: As much of a pullback as it was in Pi prior years.

Speaker Change: Okay got it and then thinking about the gross margins you called out the 400 basis point impact from the construction related costs and the remainder was commodity have you guys seen any improvements in the commodity pricing yet and.

Speaker Change: And then kind of as a follow up to that when do you think youll see the full impact of the margin improvement some of the recent Capex project.

Speaker Change: <unk>, we're actually able to capture.

Speaker Change: Yes.

Speaker Change: Some better procurement number some some better numbers on our cost so I'm optimistic.

Speaker Change: So sort of two questions. The first one is are we done with all the construction stuff. The answer is yes, absolutely that impact.

Speaker Change: Stick that Q4, and then going into next year, So anti morello and team are doing a great job I spoke with you in the past about possibly looking at contracts for the year right. These are not financial contracts. These are just actual we're going to take in X amount of chicken or beef for that matter as well.

Speaker Change: We did not see in November already in and things are going well there commodity wise, it's still tough, but again I got to give credit to my team. So we're talking about so chicken for instance that has come down. So I think when I spoke to you last where if youre looking at the market numbers, there north of $2.

Speaker Change: And if we're able to do that our suppliers are getting are able to get us better rates. So I will tell you is as challenging the markets are going to continue to be challenging next year and you can read the same stuff I am.

Speaker Change: Now, it's close to $1 50.

Speaker Change: And I think that there is some slight improvement that could it still be there and then our beef prices again is equally right equally important to us the team has done a great job at doing some.

Speaker Change: Potential things that impact tariffs, obviously that doesn't impact us personally because everything we do is domestic but that has a knock on effect on people that don't do that right.

Speaker Change: Working with our partners Youre seeing some really good top line numbers that allows us to commit.

Although there are some headwinds there our team is doing an amazing job preparing for next year and we're already seeing some of the contract conversations that we're having a superior pricing model relative to this year, so I'm really optimistic going forward.

Speaker Change:

Speaker Change: Got it that's sounds good thanks for taking my questions.

Speaker Change: Thanks Ryan.

Speaker Change: Thank you.

Speaker Change: We're able to capture.

Speaker Change: Our next question comes from the line of Eric.

Speaker Change: Some better procurement number some some better numbers on our cost so.

Speaker Change: This movie is with Craig Hallum.

Speaker Change: With your question.

Speaker Change: Im optimistic that Q4, and then going into next year, So anti morello and team are doing a great job I spoke with you in the past about possibly looking at contracts for the year right. These are not financial contracts. These are just actual we're going to take in X amount of chicken or beef for that.

Speaker Change: Great. Thank you for taking my questions.

First one from me just a bit of a follow up.

Speaker Change: On gross margins here, so obviously chicken prices commodity prices overall headwind in the quarter backing out the construction headwinds about mid Twenty's gross margins.

Speaker Change: Do you need commodity prices to improve to get you back to your.

Speaker Change: <unk> as well and if we're able to do that our suppliers are getting are able to get us better rates. So I will tell you is as challenging the markets are going to continue to be challenging next year and you can read the same stuff I am.

Speaker Change: High Twenty's gross margin target or some of these things that you just mentioned contracts in other areas of efficiency can those in and of themselves gets you back to that high Twenty's target and then just on the kind of new longer term target of the low <unk>, just wondering what might need to happen to get you into that range.

Potential things that impact tariffs, obviously that doesn't impact us personally because everything we do is domestic but that has a knock on effect on people that don't do that right.

Speaker Change: Yes, So first Eric I'd tell you the holidays are coming up so as a gift if you could give me a lower commodity prices I'm all for that so I won't I'll totally accept that that said, we do not need commodity prices to go back down to last year's numbers to get us to the mid.

Speaker Change: The high Twenty's that we've always been talking about again, the beauty of bringing skip in and Chris and all of these new folks is the ability to have bringing great ideas and to give US me included a release valve. So I could do other things I'll give you a great example.

Speaker Change: Got it that's sounds good thanks for taking my questions.

Speaker Change: Thanks Ryan.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Eric.

Speaker Change: This movie is with Craig Hallum.

Speaker Change: Steven Farmingdale, and our team has cut skus another hundred another 100 skus.

With your question.

Speaker Change: Alright, Thank you for taking my questions.

Speaker Change: First one from me just a bit of a follow up.

Speaker Change: So we're now down to 250 Skus in our Farmingdale facility that that was a total of half a point.

Speaker Change: On gross margins here, so obviously chicken prices.

Speaker Change: <unk> prices overall headwind in the quarter and backing out the construction headwinds about mid Twenty's gross margins.

Speaker Change: Revenue of all those numbers, but we're seeing actually two thirds of that.

Speaker Change: Do you need commodity prices to improve to get you back to your.

Speaker Change: Revenue flowing back into our existing products. So I am able to have significant improvement in operation lowering cogs lowering our costs, increasing our efficiencies and labor all bye.

Speaker Change: High Twenty's gross margin target or some of these things that you just mentioned you know contracts in other areas of efficiency can those in and of themselves gets you back to that high Twenty's target and then just on the kind of new longer term target of the low <unk>, just wondering what might need to happen to get you into that range. Thanks.

Speaker Change: Almost for free.

Speaker Change: That's the type of focus those are the types of things that I can give you 10 more that are going to help us continue to move that gross margin up but I love more commodity tailwind, absolutely, but do I need them for us to be successful in our high Twenty's, we do not.

Speaker Change: Thank you that's very helpful and then just.

Speaker Change: The new longer term targets in the low Thirty's I guess this kind of parlays into the the next question I have just wondering if you have any other capex projects sort of earmarked for the quarters ahead.

Speaker Change: And if so could you just sort of talk about.

Speaker Change: How we should be thinking about those are these sort of intensive and installation process as we saw this year.

Speaker Change: Steven Farmingdale, and our team has cut skus another hundred another 100 skus.

Speaker Change: So I guess just a comment overall on any.

Speaker Change: The new Capex projects over the next couple of quarters, and then the ability to sort of what you need to do to get to the low thirties longer term target. Thanks.

Speaker Change: So we're now down to 250 Skus in our Farmingdale facility that that was a total of half a point.

Revenue of all those numbers, but we are seeing actually two thirds of that.

Speaker Change: Yeah. They are.

Speaker Change: Still again I'll tell you and this is what always happens right you put the money and you don't get the return that day. The biggest thing for us has to be optimizing the trimming of the chicken. So we have the machinery and it is working there's nothing to keep anymore. Thank goodness, but ah, but we haven't optimized it right, we have and optimize it on how we do it.

Speaker Change: Revenue flowing back into our existing products. So I am able to have significant improvement in operations lowering cogs lowering our costs, increasing our efficiencies and labor all bye.

Speaker Change: Almost for free.

Speaker Change: That's the type of focus those are the types of things and I gave you 10 more that are going to help us continue to move that gross margin up but I love more commodity tailwind, absolutely, but do I need them for us to be successful in our high Twenty's, we do not.

Speaker Change: And we have and optimize it on being able to sell all of the items I'm really excited next week, we have a big major launch at another.

Speaker Change: With one of our club customers on this exact trim product of chicken youre going to look at it and Youre going to say that's awesome because of the revenue youre going to say it it's often because it's branded youre going to say it because its in Austin customer I'm going to say actually I don't care about all three of those I care about it because it unlocks it uses up some.

Speaker Change: Thank you that's very helpful.

And then just in terms of the new longer term targets in the low Thirty's I guess this kind of parlays into the the next question I have just wondering if you have any other capex projects sort of earmarked for the quarters ahead.

Speaker Change: Other parts of the chicken that allows us to sell our portion chicken or chicken breasts at a lower price.

Speaker Change: And if so could you just sort of talk about.

How we should be thinking about those are these sort of intensive of an installation process as we saw this year.

Speaker Change: That is just one example of many that I could give to help us understand how we're going to keep getting further and further up into the high <unk> and then again guys, let's remember and I take responsibility that construction did not go and I would like it.

Speaker Change: So I guess just comment overall on any.

Speaker Change: The new Capex projects over the next couple of quarters, and then the ability to sort of.

Speaker Change: We are in the 30 is last year. There is no reason why we were not going to absolutely get there again.

Speaker Change: What you need to do to get to the low thirties longer term target. Thanks.

Speaker Change: Yeah, Theres still again I will tell you and this is what always happens right you put the money in and you don't get the returns that day. The biggest thing for us has to be optimizing the trimming of the chicken. So we have the machinery and it is working there's nothing to keep anymore. Thank goodness, but ah, but we haven't optimized it right we have and optimize.

Speaker Change: To your question on more Capex I do like to Digest My mother always yell at me, if I get too too much too quickly.

Speaker Change: I think we're.

Speaker Change: Perfectly fine and our Farmingdale facility I think I'm really excited about some opportunities next year in our east Rutherford facility.

Speaker Change: There is more opportunities to drive more productivity and Oh by the way.

Speaker Change: Is it on how we do it and we have and optimize it on being able to sell all of the items I'm really excited next week, we have a big major launch at another.

Speaker Change: We don't we cant seem to make the chicken fast enough.

Speaker Change: We can add more capacity there, but we're going to do that after we see the farmingdale facility, making the margins that they've made a year ago and <unk>.

Speaker Change: With one of our club customers on its exact our trim product of chicken youre going to look at it and Youre going to say that's awesome because of the revenue youre going to say it it's often because it's branded youre going to say it because it's an awesome customer I'm going to say actually I don't care about all three of those I care about it because it unlocks it uses up some of it.

Speaker Change: Again, I'm patient if you take one thing from.

Speaker Change: My conversation earlier my messages earlier, it's patience and profitability I'm, not going anywhere and and we're gonna be patient.

Speaker Change: Other parts of the chicken that allows us to sell our portion chicken or chicken breasts at a lower price.

Speaker Change: Hope that's helpful. Great. Thank you for taking my questions. Yeah. That's very helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: That is just one example of many that I could give to help us understand how we're going to keep getting further and further up into the high Twenty's and then again guys, let's remember and I take responsibility. The construction did not go and I would like it.

Speaker Change: Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Anthony Vendetti: Thank you.

Anthony Vendetti: Yes, just a couple of questions on the on the on the revenues and then.

Anthony Vendetti: Well the northeast region.

Speaker Change: We are in the 30 is last year. There is no reason why we were not going to absolutely get there again.

Anthony Vendetti: If you could talk about that.

Anthony Vendetti: What specifically was it a particular customer like Walmart Costco.

Speaker Change: To your question on more Capex I do like to Digest My mother always yell at me, if I get too too much too quickly.

Anthony Vendetti: Drove the outperformance in revenues this quarter and then.

Speaker Change: I think we're.

Anthony Vendetti: Or was it a region you mentioned western Mississippi, I think it's 47% of revenues.

Speaker Change: Perfectly fine and our Farmingdale facility I think I'm really excited about some opportunities next year in our east Rutherford facility.

Anthony Vendetti: And then also.

Anthony Vendetti: The regions I think the northeast was down 12, 6%.

Speaker Change: There is more opportunities to drive more productivity and Oh by the way.

Anthony Vendetti: Any.

I think reason there what's going on in the northeast region. Obviously, you made up for that in other regions. So maybe if you could tie all that together.

Speaker Change: We don't we cant seem to make the chicken fast enough.

Speaker Change: So we can add more capacity there, but we're going to do that after we see the farmingdale facility, making the margins that they've made a year ago and <unk>.

Speaker Change: Those are my questions. Thanks.

Speaker Change: Yeah, that's perfect. Thank you.

Speaker Change: So I think that the thing that I loved the most of your first question I love the balance of our portfolio. So you know.

Speaker Change: Again, I'm patient if you take one thing from.

My my conversation earlier, my messages earlier, it's patience and profitability I'm not going anywhere.

Speaker Change: Looking at it chicken versus beef looking at our different club customers. All three of them did extraordinarily well this quarter. Our retailers you know I've spoken to you earlier last time about the growth on the West Coast Albertsons is doing a great job I think we added three or four new divisions of Albertsons, thanks to Tony.

Speaker Change: And we're gonna be patient.

Speaker Change: Hope that's helpful. All right. Thank you for taking my questions. Yeah. That's very helpful. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Speaker Change: And the team so new items I told you the balance of new items that we got in like Bj's, the new programming the new doors Walmart, it's still very early.

Speaker Change: Thank you.

Speaker Change: Just a couple of questions on the on the on the revenues and then.

Well the northeast region. So if you could talk about what.

Speaker Change: Could tell you that we're getting reorders, that's probably a good thing the reorders are twice the size more than twice the size of the initial orders. That's a good thing. So I would tell you everywhere, we're doing well there is no one thing that you know.

Speaker Change: Typically.

Speaker Change: Taking a customer like Walmart Costco that drove the outperformance in revenues this quarter and then.

Speaker Change: Or was it a region you mentioned western Mississippi, I think it's 47% of revenues.

Thinking.

Speaker Change: <unk> the curve.

Speaker Change: You mentioned earlier the regions. It's amazing I mentioned this earlier, it's quite possibly the thing I am proud us up.

Speaker Change: And then also on the regions.

Speaker Change: I think the northeast was down 12, 6% any any specific reason there what's going on in the northeast region. Obviously, you made up for that in other regions. So maybe if you could tie all that together.

Speaker Change: Northeast Meatball company.

Speaker Change: To a fact that meet both arent, even the biggest item we have anymore, though I'd like it to continue to grow fast.

Well.

Speaker Change: And we're in all 50 states actually Luke.

Speaker Change: Those are my questions. Thanks.

Speaker Change: Yeah, that's perfect. Thank you.

Speaker Change: Very proud to say, it's the only thing that he cares about me, making sure I'm doing we sold in Puerto Rico. This year because of the Costco southeast rotation.

Speaker Change: So I think that the thing that I loved the most of your first question I love the balance of our portfolio. So you know.

Speaker Change: Looking at it chicken versus beef looking at our different club customers. All three of them did extraordinarily well this quarter. Our retailers you know I've spoken to you earlier last time, it's about the growth on the West Coast Albertsons is doing a great job I think we added three or four new divisions of Albertsons, thanks to Tony.

Speaker Change: Hi.

Speaker Change: You name it we're in all 50 States district of Columbia, and Puerto Rico, I Love that our breadth you did mention and I spoke to you we spoke about it last quarter as well there is a legacy business that we had from our acquisition.

Speaker Change: New York Street business.

And the team so new items I told you the balance of new items that we got in like Bj's, the new programming the new doors Walmart, it's still very early.

Speaker Change: That for some of it some of it is very good other parts of it.

Speaker Change: Honestly, it was not profitable and I've been very transparent with you last quarter that we only sell profitable we only take profitable growth. So I have been very the team and I have been very intentional about reducing that unprofitable sales well first obviously, giving them the opportunity to make it profitable.

Speaker Change: I could tell you that we're getting reorders, that's probably a good thing the reorders are twice the size more than twice the size of the initial orders. That's a good thing. So I would tell you everywhere, we're doing well there is no one thing that you know.

Speaker Change: Thinking the curve.

Speaker Change: And if not you know.

Speaker Change: Pulling back from it so the slight decline that you see on the East coast.

Speaker Change: You mentioned earlier the regions. It's amazing I mentioned this earlier, it's quite possibly the thing I am proudest of.

Speaker Change: Our core customers every customer that you would know.

Speaker Change: Northeast Meatball company.

Speaker Change: <unk> is actually doing better than the all holds up the world right. These are doing better Weiss.

Speaker Change: To a fact that meet both arent, even the biggest item we have anymore, though I'd like it to continue to grow fast.

Speaker Change: Is doing tremendous.

Speaker Change: We actually have some historic new C store customers, some new cups customers, they're doing really well.

Speaker Change: Well.

And we're in all 50 states actually Luke.

Speaker Change: Proud to say, it's the only thing that he cares about me, making sure I'm doing we sold in Puerto Rico. This year because of the Costco southeast rotation.

Speaker Change: That's over 100% growth what's happening is we're being very intentional pullback on the unprofitable our street business, which is not the future of our $1 billion company.

Speaker Change: Hi.

Okay. So just the last follow up on that as.

Speaker Change: The northeast region, what do you think accounted for the decline there.

Speaker Change: Yes, the street business account for 100% of the northeast decline.

Speaker Change: Okay great.

Speaker Change: New York Street business.

Speaker Change: Okay.

Speaker Change: That for some of it some of it is very good other parts of it.

Speaker Change: Yes, no problem thanks, absolutely.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.

Speaker Change: Hey, everybody thanks for taking my questions.

Speaker Change: First one is just on the quarterly impact.

Speaker Change: From pricing curious how much of that 10% growth was driven from pricing and then you talked in your prepared remarks about pointing.

And if not you know.

Speaker Change: Pulling back from it so the slight decline that you see on the East coast.

Speaker Change: Planning to take additional pricing I was just curious how much you plan on taking in wind.

Speaker Change: Our core customers every customer that you would know.

Speaker Change: Yeah.

Speaker Change: Is actually doing better than the all holds of the world right. These are doing better Weiss.

Speaker Change: As hard as I work to take price and see that our realized my sales team is doing too well at driving too much volume and selling too well.

Speaker Change: Is doing tremendous.

Speaker Change: We actually have some historic new C store customers, some new cups customers, they're doing really well.

Speaker Change: Pricing, probably accounts for 10%, 10% of that growth. So almost 90% of our growth is volume driven and I promise you I'm working hard on taking pricing. That's just the sales team is doing better than me at selling.

Speaker Change: That's over 100% growth what's happening is we're being very intentional pullback on the unprofitable our street business, which is not the future of our $1 billion company.

Speaker Change: Okay. So just the last follow up on that is.

Speaker Change: So that's to your first question.

Speaker Change: The northeast region, what do you think accounted for the decline there.

Speaker Change: The pricing that we're taking is is targeted so if you. If you remember from when we all started two years ago pretty much I took pricing in mass on every single customer every single product every single everything because we are so out of place on our pricing we have done a great job sales team gets all the credit.

Speaker Change: Yes, the street business account for 100% of the northeast decline.

Speaker Change: Okay great.

Speaker Change: Okay.

Speaker Change: Yes, no problem thanks, absolutely.

Speaker Change: Thank you. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.

Speaker Change: For getting us to a place where it is now and you guys have heard me say this before you know me every quarter I look at every single item on every single invoice for every single customer friend Bill Gates helps me with a sort function and every single item that it does not hit.

George Kelly: Hey, everybody thanks for taking my questions.

Speaker Change: First one is just on on the quarterly impact.

Speaker Change: From pricing curious how much of that 10% growth was driven from pricing and then you talked in your prepared remarks about <unk>.

Speaker Change: Our margin target sales team knows they get a call from me.

Speaker Change: Planning to take additional pricing I was just curious how much you plan on taking in wind.

Speaker Change: It is a very very very short list now it is hard for me to find stuff. So the pricing that we have to take is not going to be dramatic.

Speaker Change: Yeah, so as hard as I work to take price and see that our realized my sales team is doing too well at driving too much volume and selling too well.

Speaker Change: Its because its down to only a few items on a few customers, but it's not something I do quarterly or annually. It's literally something I do every week every week I'm looking at order level profitability and we don't wait too.

Speaker Change: Two.

Speaker Change: Identify issues and immediately speak with the customers to to either take price right we have to.

Speaker Change: So that's to your first question.

The pricing that we're taking is is a targeted so if you remember from when we all started two years ago pretty much I took pricing in mass on every single customer every single product every single everything because we are so out of place on our pricing we have done a great job sales team gets all the credit.

Speaker Change: Or are we offer them alternative items that we already have existing but we cannot.

Speaker Change: Again, you guys know I do a lot of nonprofit work, but I do that at night not during the day.

Speaker Change: Okay. That's helpful. Thank you and then two.

Speaker Change: Two additional quick unrelated follow up questions first can you just comment on what Youre seeing with respect to M&A multiples are there things you are being shown etcetera, just a quick update there and then second question.

Speaker Change: For getting us to a place where it is now and you guys have heard me say this before you know me every quarter I look at every single item on every single invoice for every single customer friend Bill Gates helps me with the sort function and every single item that it does not hit.

You laid out the construction and commodity improvement and some internal measures to improve your gross margin I know, that's really sort of put a damper the gross margin this year.

Speaker Change: Our margin target sales team knows they get a call from me.

Speaker Change: Some of these unexpected things that really kind of limited your ability to accelerate trade spend and I'm curious with what you see now.

Speaker Change: It is a very very very short list now it is hard for me to find stuff. So the pricing that we have to take is not going to be dramatic it because its down to only a few items on a few customers, but it's not something I do quarterly or annually. It's literally something I do every week every week I'm looking.

Speaker Change: Do you think next year in fiscal year 'twenty, six you'll have an ability to really accelerate trade spend.

Speaker Change: That's all I had thank you.

Speaker Change: So I'll go backwards since you just asked the question.

Speaker Change: Trade, we're moving up so just to put in perspective, and you guys are better at this math and I am trade.

At order level profitability, and we don't wait too.

Speaker Change: Two.

Speaker Change: Trade between trade R&D and marketing.

Speaker Change: Identify issues and immediately speak with the customers to to either take price right, we have to but.

Speaker Change: We increased our spend 42%.

Speaker Change: So it's significant so trade it.

Speaker Change: It was like $1 million more than a million and $5 in those areas trades up 25% from last year. I told you marketing was up 75%. So we're getting there right couldn't do I want to spend more absolutely, but did you see some of this trade spend in marketing in this quarter.

Speaker Change: Or are we offer them alternative items that we already have existing but we cannot.

Speaker Change: Again, you guys know I do a lot of nonprofit work, but I do that at night not during the day.

Speaker Change: Okay. That's helpful. Thank you and then two.

Speaker Change: Two additional quick unrelated follow up questions first can you just comment on what Youre seeing with respect to M&A multiples are there things you are being shown et cetera, just a quick update there and then second question.

Speaker Change: Did I have to be able to invest I'm gonna be vary.

Speaker Change: Prudent, but we are definitely investing.

Speaker Change: I can tell you that I have more trade in the fiscal year plan for next year that we actually have a board meeting on Wednesday, So I gotta get the board to approve it but I will continue to drive towards our goals on increasing trade and increasing marketing.

Speaker Change: You laid out the construction and commodity improvement and some internal measures to improve your gross margin I know, that's really sort of put a damper the gross margin this year.

Speaker Change: I'm expecting things to really kind of limited your ability to accelerate trade spend and I'm curious with what you see now.

Speaker Change: To your first question on M&A.

Speaker Change: I guess I'm cheating because I keep talking about all of the reasons why I'm excited with skip and Chris coming in here.

Speaker Change: Do you think next year in fiscal year 'twenty, six you'll have an ability to really accelerate trade spend.

Speaker Change: Recent 73, why I'm, so excited to discuss it actually frees up some of my time.

Speaker Change: All I had thank you.

Speaker Change: I will tell you I, probably shouldn't have been spending as much time as I was on all the construction and all the running the day to day.

Speaker Change: So I'll go backwards since you just asked the question.

Speaker Change: Trade, we're moving up so just to put into perspective, and you guys are better at this math than I am.

Speaker Change: What's happening is now the team has freed me up to be focusing I'm already spending more time in just this quarter on M&A than I have in the past.

Trade between trade R&D and marketing.

Speaker Change: We increased our spend 42%.

Speaker Change: I like what I see.

Speaker Change: It's significant so trade.

Speaker Change: We have a nice pipeline again this is something that I share with the board every quarter.

Speaker Change: It was like $1 million in more than a million and half dollars in those areas trades up 25% from last year I told you marketing was up 75%. So we're getting there right.

Speaker Change: Anthony is.

Speaker Change: <unk> is already giving me a hard time with the number of NDA is that we have to sign and everything in data rooms that we're opening up but I'm busy doing that that said I just will not overpay, we I want M&A I expect that we'll have M&A, but unlike in my past careers I do not need Emma.

Speaker Change: Do I want to spend more absolutely, but did you see some of this trade spend in marketing in this quarter, we did I have to be able to invest I'm gonna be vary.

Speaker Change: Prudent, but we are definitely investing.

And that means that I'm not going to overpay for something when we have such great growth internally, so I'm happy with the pipeline.

I can tell you that I have more trade in the fiscal year plan for next year that we actually have a board meeting on Wednesday, So I gotta get the board to approve it but I will continue to drive towards our goals on increasing trade and increasing marketing.

There are some people that are off a bit more realistic than others on what those multiple should be and that's fine. That's their prerogative. It's equally my prerogative to say no. Thank you there've been times that people have.

Speaker Change: To your first question on M&A.

Speaker Change: I guess I'm cheating because I keep talking about all of the reasons why I'm excited with skip and Chris coming in here you know recent 73 why I'm. So excited is because it actually frees up some of my time.

Speaker Change: Given our multiple I've I've respectfully hopefully they said no. Thank you and they came back six months later, so again I feel good about the pipeline of M&A I feel great about the time I'm going to have now that skip and Chris are here.

Speaker Change: I will tell you I, probably shouldn't have been spending as much time as I was on all the construction and all the running the day to day.

Speaker Change: With that that's happening is now the team is freeing up to be focusing I'm already spending more time in just this quarter on M&A than I have in the past.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: And this concludes our question and answer session I'll now hand, the call back to the chairman and CEO, Adam Michael for his closing remarks.

Speaker Change: I like what I see we have a nice pipeline again this is something that I share with the board every quarter Anthony as.

Speaker Change: 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 our fellow shareholders and execute upon our vision of becoming a national one stop shop Deli solution provider.

Is already giving me a hard time with the number of NDA is that we have to sign and everything in data rooms that we're opening up but I'm busy doing that that said I just will not overpay.

I want M&A I expect that we will have M&A, but unlike in my past careers I do not need M&A and that means that I'm not going to overpay for something when we have such great growth internally, so I'm happy with the pipeline.

Speaker Change: You and happy holidays.

Speaker Change: Okay.

Speaker Change: And 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.

Speaker Change:

Speaker Change: There are some people that are off a bit more realistic than others on what those multiples should be and that's fine. That's their prerogative. It's equally my prerogative to say no. Thank you there've been times that people have.

Speaker Change: Understood. Thank you.

Speaker Change: Thank you.

Speaker Change: And this concludes our question and answer session I'll now hand, the call back to the chairman and CEO, Adam Michael for his closing remarks.

Speaker Change: Thank you and happy holidays.

Speaker Change: Okay.

Speaker Change: And 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.

Speaker Change: [noise] [music].

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

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