Q1 2026 Mama's Creations Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Mama's Creations first quarter fiscal 2026 earnings conference.

Good afternoon, ladies and gentlemen, and thank you for standing by.

Welcome to my almost creations first quarter fiscal 'twenty 'twenty six earnings conference call.

Operator: During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions.

During todays presentation, all parties will be in a listen only mode.

Following the presentation the conference will be opened for questions.

Operator: This conference is being recorded today, Tuesday, June 3rd, 2025, and the earnings press release accompanying this conference call was issued after the market closed today.

Speaker Change: This conference is being recorded today Tuesday June 3rd 2025 in the earnings press release accompanying this conference call was issued after the market closed today on our call today, It's marvelous creations, chairman and CEO, Adam L. Michael its CFO Anthony scrubber.

Operator: On our call today is Mama's Creations Chairman and CEO, Adam L.

Operator: Michaels, and CFO, Anthony Gruber.

Unknown Executive: Before we get started, I'll read a disclaimer about forward-looking Thank you. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the federal security laws regarding Mama's Creations. 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, based in part on assumptions made by many. These statements are not guarantees of the future performance and involve risk, uncertainties, and assumptions that are difficult to predict.

Speaker Change: Before we get started.

Really a disclaimer about forward looking statements.

This conference call May contain in addition to historical information forward looking statements within the meaning of the federal security laws regarding Mommas creations.

<unk> 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 based in PAH.

Speaker Change: 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.

Unknown Executive: 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 company's 10-K and other documents which the company files with the U.S. Securities and Exchange Commission.

Speaker Change: Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in.

Speaker Change: The forward looking statements due to numerous factors discussed from time to time in the company's 10-K, and other documents, which the company files with the U S Securities and Exchange Commission.

Unknown Executive: In addition, such statements could be affected by risk and uncertainties related to the 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.

Speaker Change: In addition, such statements could be affected by risks and uncertainties related to the factors beyond the companys 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 <unk>.

Speaker Change: Company.

Unknown Executive: In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-gap financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. The Reconciliation of Adjusted EBITDA to its Most Directly Comparable Gap Financial Measure is included in today's earnings. which is available on Mama's Creations website under the inbox.

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 earning.

Speaker Change: Release, which is available on our moms creations website under the Investor tab.

Unknown Executive: And finally, this conference call contains time-sensitive information that reflects management's best analysis only as of today and time of this conference. The company does not take any obligation to publicly update or revise any forward-looking statements to reflect the future events, information, or circumstances that arise after the date of this conference.

Speaker Change: Finally, this conference call contains time sensitive information that reflects management's best analysis only as of today and time of this conference call.

Speaker Change: 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. Michael. Thank you Adam the floor is yours.

Operator: At this time, I'd like to turn the call over to Chairman and CEO, Adam L. Michaels.

Operator: Thank you, Adam. The floor is yours.

Adam Michaels: Thank you, Operator, and thank you to everyone for joining us today.

Speaker Change: Thank you operator, and thank you to everyone for joining us today I'd like to welcome you to our first quarter fiscal 'twenty six financial results Conference call.

Adam Michaels: I'd like to welcome you to our first quarter Fiscal 26 Financial Results Conference Call. Our fiscal first quarter saw robust performance driven by sustained momentum in market share gains and significant progress across our core four C's. Revenue grew approximately 18% year over year to a record $35.3 million, driven more than 90% by volume, further supported by targeted customer expansions and successful new product introductions across multiple channels. We achieve these gains despite a continued challenging macroeconomic environment, highlighting the resiliency and relevance of our value oriented, grandma quality deli prepared foods offerings across any macroeconomic landscape. We are pleased to report that gross margins returned to our near-term target range, achieving 26.1% in the quarter, and that is with a record investment throughout the quarter in high ROI trade promotion, which was a robust 6% of gross revenue in the quarter, up from 2% last quarter.

Speaker Change: Our fiscal first quarter saw robust performance driven by sustained momentum and market share gains and significant progress across our core four six.

Speaker Change: Revenue grew approximately 18% year over year to a record $35 $3 million driven more than 90% by volume.

Speaker Change: They're supported by targeted customer expansions and successful new product introductions across multiple channels.

Speaker Change: We achieved these gains despite a continued challenging macroeconomic environment, highlighting the resiliency and relevance of our value oriented grandma quality deli prepared foods offerings across any macroeconomic landscape.

Speaker Change: We are pleased to report that gross margins returned to our near term target range, achieving 26, 1% in the quarter and that is with a record investment throughout the quarter and high ROI trade promotion, which was a robust 6% of gross revenue in the quarter up from 2% last quarter.

Adam Michaels: This improvement reflects our strategic CapEx investments, as well as ongoing efficiency gains in both procurement and production. While inflationary pressures remain elevated, our proactive measures to manage commodity volatility continues to bear fruit. Specifically, we secured fixed price contracts covering more than half of our anticipated by protein volume needs for fiscal 26, providing substantial margin stability in an unpredictable macro environment. Turning to market dynamics, we continue to benefit from ongoing shifts towards deli prepared foods due to increasing restaurant price fatigue and consumer trade downtrend. The latest CPI data underscores this dynamic, revealing a nearly two-fold disparity between at-home and away-from-home inflation rates.

Speaker Change: This improvement reflects our strategic capex investments as well as ongoing efficiency gains in both procurement and production.

Speaker Change: While inflationary pressures remain elevated our proactive measures to manage commodity volatility continues to bear fruit specifically.

Speaker Change: Specifically, we secured fixed price contracts covering more than half of our anticipated by protein volume needs for fiscal 'twenty, six providing substantial margin stability and an unpredictable macro environment.

Speaker Change: Turning to market dynamics, we continue to benefit from ongoing shifts towards deli prepared foods due to increasing restaurant price fatigue, and consumer trade down trends. The latest CPI data underscores this dynamic revealing a nearly two fold disparity between at home and away from her.

Speaker Change: Inflation range in.

Adam Michaels: In April, while at home inflation actually decreased 40 basis points, away from home increased the same amount, putting further pressure on restaurants. With grocery store inflation notably lower, shoppers are increasingly opting for supermarket prepared foods, positioning Mama's Creations to capture incremental consumer spend. This generational shift is clearly supported by recent progressive growth for data indicating that more than two thirds of shoppers have purchased deli-prepared meals recently, with millennials and Gen Z consumers significantly driving growth, both key demographic segments for Mama.

Speaker Change: In April while at home inflation actually decreased 40 basis points away from home increase the same amount putting further pressure on restaurants.

Speaker Change: With grocery store inflation, notably lower shoppers are increasingly opting for supermarket prepared foods' positioning moms creations to capture incremental consumer spend is.

Speaker Change: This generational shift is clearly supported by recent progressive grocer data, indicating that more than two thirds of shoppers have purchased deli prepared meals recently with millennials and Gen Z consumers significantly driving growth both key demographic segments for moms.

Adam Michaels: Operationally, this quarter marked another significant step forward in our executing our foundational four C's strategy, cost, controls, culture, and catapult. Starting with cost, our meticulous incremental efforts to improve efficiency across the entire value chain continue to deliver meaningful gains. As those that know us well, our what-gets-measured-gets-improved mantra is at the core of our culture. And this quarter was no different. Chicken operations, bolstered by our new installed grill lines, realized ongoing throughput improvements with capacity more than doubling year-over-year. Concurrently, labor efficiency improved significantly, with overtime hours declining nearly 70% compared to prior periods, now that our capacity allows for steady production across a more efficient five-day work For more information visit www.fema.gov In-house trimming processes are also outperforming initial targets, already running 35% ahead of plan, while new tumbling procedures have increased yields by roughly 10%.

Speaker Change: Operationally this quarter marked another significant step forward in our executing our foundational for C strategy cost controls culture and catapult.

Speaker Change: Starting with cost are meticulous incremental efforts to improve efficiency across the entire value chain continued to deliver meaningful gains.

Speaker Change: So as those that know us well, our what gets measured gets improved mantra is that the core of our culture and this quarter was no different chicken operations bolstered by our new installed grill lines realized ongoing throughput improvements with capacity more than doubling year over year.

Speaker Change: Concurrently labor efficiency improved significantly with overtime hours declining nearly 70% compared to prior periods now that our capacity allows for steady production across our more efficient five day workweek.

Speaker Change: And how is trimming processes are also outperforming initial targets already running 35% ahead of plan, while new tumbling procedures have increased yields by roughly 10%.

Adam Michaels: Collectively, these initiatives are translating into tangible and sustainable margin enhancements that enable our record trade promotion investment.

Speaker Change: Collectively these initiatives are translating into tangible and sustainable margin enhancements that enable our record trade promotion investments.

Adam Michaels: The second C, Controls, saw equally impactful progress. Our recently implemented warehouse management system at the Farmingdale facility has provided real-time visibility into our inventory management, significantly improving accuracy, minimizing waste, and unlocking valuable working capital. This system will be replicated and fully operational in our East Rutherford facility before the end of Q2. I also continue to be excited about our sales and operations planning, S&OP implementation being rolled out in Q2, allowing us further production efficiency while delivering higher quality and improved service levels to our customers. Our third C, culture, remains central to our operational excellence. We recently appointed a seasoned head of procurement and planning, tasked with optimizing sourcing across our product lines and proactively managing risk related to tariffs and commodity volatility.

Speaker Change: The second C controls so equally impactful progress our recently implemented warehouse management system at the Farmingdale facility has provided real time visibility into our inventory management significantly improving accuracy, minimizing waste and unlocking valuable working capital.

Speaker Change: This system will be replicated and fully operational in our east Rutherford facility before the end of Q2.

Speaker Change: I also continue to be excited about our sales and operations planning S. N O P implementation being rolled out in Q2, allowing us further production efficiency, while delivering higher quality and improved service levels to our customers.

Speaker Change: Our third seed culture remains central to our operational excellence, we recently appointed a seasoned head of procurement and planning tasked with optimizing sourcing across our about product lines and proactively managing risk related to tariffs and commodity volatility.

Adam Michaels: This hire complements our broader leadership team improvements and strengthens our capacity to execute strategic supply chain initiatives. I'm also super excited about the work Abby is doing in people operations, partnering with Skip to launch a First for Mamas career pathing initiative, aligning compensation and job progression for our over 300 colleagues, creating not just jobs, but careers. As our friend Richard Branson once said, train people well enough so they can leave, treat them well enough so they don't want to.

Speaker Change: Higher complements our broader leadership team improvements and strengthens our capacity to execute strategic supply chain initiatives.

Speaker Change: I'm also super excited about the work Abbvie is doing and people operations partnering with skip to launch a first for Mam as career Pathing initiative aligning compensation and job progression for our over 300 colleagues, creating not just jobs, but careers.

Speaker Change: As our friend Richard Branch, and one said trained people well enough. So they can leave treat them well enough. So they don't want to.

Adam Michaels: Turning to our fourth strategic pillar, Catapult, we saw exciting new distribution wins during the quarter, securing new customer accounts and product placements at major national retailers. As this is the year of the entire chicken breast, which, as a reminder, allows us to trim in-house and significantly improve chicken margins, Chris and his team continue to over-deliver, getting new grandma-quality chicken items into Albertsons and BJs with their strips, Costco with chicken meatballs, and most recently, we received new commitments from Publix with our enhanced Meals for One. I'm also excited about new customers we're now shipping, utilizing once again the entire chicken breast, including Chicken Stuffed Meatballs at Lidl, Chicken Based MFOs Meals for One at Amazon Fresh, and Chicken Based Paninis at Sheetz.

Speaker Change: Turning to our fourth strategic pillar catapult, we saw exciting new distribution wins during the quarter, securing new customer accounts and product placements at major national retailers. As this is the year of the entire chicken breast, which as a reminder, allows us to trim in house and significantly improved chicken margins.

Speaker Change: Chris and his team continue to over deliver getting new grandma quality chicken items into Albertsons M. B j's with their strips Costco with chicken meat balls and most recently, we received new commitments from publics with our enhanced meals for one.

Speaker Change: I'm also excited about new customers, we're now shipping utilizing once again, the entire chicken breast, including chicken stuff meatballs that lidl chicken based M. F O's meals for one at Amazon fresh and chicken based pennies at sheets.

Adam Michaels: If I have not mentioned this before, I continue to marvel at the partnership Skip, Chris, and Lauren have created over six short months. They deliver for each other, allowing me to deliver for you, my fellow shareholders. We intensified our trade promotion strategy in the quarter as well, increasing spend to a record 6% of gross revenues, more than tripling our investment relative to the fourth quarter and our historical averages. We decided to double down, no, triple down on trade promotion for one reason, because it's working. Investments at Publix are accelerating, prompting Publix to add us to their weekly circulars, and for the first time in our 10-plus year partnership, our branding of their meatball pub sub.

Speaker Change: If I have not mentioned this before I continue to Marvel at the partnership Skip Chris and Laura and have created over six short months they deliver for each other allowing me to deliver for you My fellow shareholders.

Speaker Change: We intensified our trade promotion strategy in the quarter as well increasing spend to a record 6% of gross revenues more than tripling, our investment relative to the fourth quarter and of course, our historical averages we decided to double down no triple down on trade promotion for one reason because it's.

Speaker Change: Working.

Speaker Change: Investments at Publix are accelerating, prompting publics to add us to their weekly circulars and for the first time in our 10 plus year partnership.

Speaker Change: Our branding of their meat ball pumps up.

Adam Michaels: At Costco, trade investments are made in the quarter, open the door for the first time ever to be invited to participate in their digital multi-vendor mailer or MVM, not in one or two or even three regions, but nationally in all eight regions at once. This 4X our revenue versus last year's rotation, and more importantly, 4X our gross profit while maintaining margins at the customer level. These are just two examples, but I hope you see that we are not deploying trade just to increase sales, which we did, but rather to build a national branded business for the future and become an indispensable partner for our customers.

Speaker Change: At Costco trade investments are made in the quarter opened the door for the first time ever to be invited to participate in their digital multi vendor mailer or N V M not in one or two or even three regions, but nationally in all eight regions at once.

Speaker Change: This for XR revenue versus last year's worth rotation and more importantly for AXT, our gross profit while maintaining margins at the customer level.

Speaker Change: These are just two examples but I hope you see that we are not deploying trade just to increase sales, which we did.

Speaker Change: But rather to build a national branded business for the future and become an indispensable partner for our customers.

Adam Michaels: Lauren and the marketing team also delivered in the quarter, delivering amazing results, investing 70% more than the team did last year, while delivering record returns on ad spend. For example, our Instacart promotions delivered over a $6 ROAS return on advertising spend, while our highly successful Walmart digital campaigns supporting our new Walmart chicken items which achieved an outstanding double-digit ROAS. When something works, we lean in and these campaigns brought new households to the mama's brand, expanding our consumer base with the goal of creating sustainable, lasting growth.

Speaker Change: Lorne and the marketing team also delivered in the quarter delivering amazing results investing 70% more than the team did last year, while delivering a record returns on ad spend.

Speaker Change: For example, our instant card promotions delivered over a six dollar rollouts return on advertising spend while our highly successful Walmart digital campaigns.

Speaker Change: Our new Walmart chicken items, which achieved an outstanding double digit Roe <expletive>.

Speaker Change: When something works, we lean in and these campaigns brought new households to the mom as brand expanding our consumer base with the goal of creating sustainable lasting growth.

Adam Michaels: From a financial perspective, our discipline approach continues to bear fruit. We saw a robust cash flow from operations of $6 million, enabling us to strengthen our balance sheet with cash and equivalents rising to $12 million. This fortified balance sheet positions us exceptionally well to capitalize on potential strategic acquisitions and ongoing operational investment. Lastly, while organic growth remains our clear priority, we continue to actively evaluate potential M&A opportunities. We have refined our acquisition criteria and remain disciplined in our approach, seeking targets that enhance our category leadership, expand our capabilities, and or further scale our operations at a fair price.

Speaker Change: From a financial perspective, our disciplined approach continues to bear fruit, we saw robust cash flow from operations of $6 million, enabling us to strengthen our balance sheet with cash and equivalents rising to $12 million.

Speaker Change: This fortified balance sheet positions us exceptionally well to capitalize on potential strategic acquisitions and ongoing operational investments.

Speaker Change: Lastly, while organic growth remains our clear priority, we continue to actively evaluate potential M&A opportunities, we have refined our acquisition criteria and remain disciplined in our approach seeking targets that enhance our category leadership.

Speaker Change: Spanned our capabilities and.

Speaker Change: And our further scale our operations at a fair price.

Adam Michaels: With our improved balance sheet and operational infrastructure, we are confident in our ability to successfully integrate any opportunities that may arise.

Speaker Change: With our improved balance sheet and operational infrastructure, we are confident in our ability to successfully integrate any opportunities that may arise.

Adam Michaels: In closing, the strategic and operational improvements made in the quarter have created a stronger, more agile, and efficient business platform. With significant new customer wins, product expansions, and continued operational improvements now realized, Mama's is exceptionally well-positioned for profitable growth, margin expansion, and market share gains throughout Fiscal 26 and beyond. I remain incredibly proud of our team's execution, adaptability, and relentless commitment to excellence. And I look forward to sharing our continued progress in the quarters ahead.

Speaker Change: In closing the strategic and operational improvements made in the quarter have created a stronger more agile and efficient business platform with significant new customer wins product expansions and continued operational improvements now realized mama's is exceptionally well positioned for profitable growth.

Speaker Change: Margin expansion and market share gains throughout fiscal 'twenty six and beyond.

Speaker Change: Incredibly proud of our team's execution adaptability and relentless commitment to excellence.

Speaker Change: I look forward to sharing our continued progress in the quarters ahead.

Anthony Gruber: 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 first quarter of Fiscal 26. Anthony?

Ethan Gruber: I'd now like to turn the call over to ethane Gruber, our chief financial Officer to walk through some key financial details for the first quarter of fiscal 'twenty six Anthony.

Anthony Gruber: Thank you, Adam. Moving to the financial results, revenue for the first quarter of fiscal 2026 increased 18% to $35.3 million as compared to $29.8 million in the same year-ago quarter. The increase was largely attributable to volume gains driven by same customer cross-selling of new items. accelerating velocities of existing items, and new customer door expansion, partially offset by a tripling of trade promotion investments from 2.1% to 6% of gross revenue, which grew 23.4% to $37.5 million in the quarter. Targeted pricing actions were successfully negotiated in Q1 and all pricing implemented by the beginning of May to ensure the company maintained gross margin targets.

Ethan Gruber: Thank you Adam moving to the financial results revenue for the first quarter of fiscal 2026 increased 18% to $35 3 million as compared to $29 8 million in the same year ago quarter.

Speaker Change: The increase was largely attributable to volume gains driven by same customer cross selling and new items.

Adam: <unk> velocities of existing items and new customer door expansion.

Adam: Really offset by a tripling of trade promotion investments.

Adam: 2.1%, 6% of gross revenue.

Adam: Which grew 23, 4% and 37 5 million in the quarter.

Adam: Targeted pricing actions through successfully negotiated in Q1 and all pricing implemented at the beginning of May to ensure the company maintained gross margin targets.

Anthony Gruber: Gross profit increased 23.1% to $9.2 million, or 26.1% of total revenues in the first fiscal quarter of fiscal 2026, as compared to $7.5 million, or 25% of total revenues in the same year-ago quarter. The difference in gross margin was primarily attributable to operational efficiency improvements across the organization, partially offset by continued chicken commodity headway. Operating expenses totaled $7.6 million in the first quarter of fiscal 2026 as compared to $6.7 million in the same year-ago quarter. As a percentage of sales, operating expenses decreased in the first fiscal quarter of 2026 to 21.6% from 22.4%. Operating expenses in the first quarter benefited from increased operating leverage and ongoing operational efficiency improvements, partially offset by a 71% year-over-year increase in marketing spend, an area of historical underinvestment, helped drive repeatable and profitable brand growth.

Adam: Gross profit increased 23, 1% $9 2 million or 26, 1% of total revenues in the fiscal first fiscal quarter of fiscal 2026, as compared to $7 5 million or 25% of total revenues in the same year ago quarter.

Adam: The difference in gross margin was primarily attributable to operational efficiency improvements across the organization, partially offset by continued chicken commodity headwinds.

Adam: Operating expenses totaled $7 6 million in the first quarter of fiscal 2026 as compared to $6 7 million in the same year ago quarter.

Adam: As a percentage of sales operating expenses decreased in the first fiscal quarter of 2026.

Adam: One 6% from 22, 4%.

Adam: Operating expenses in the first quarter benefited from increased operating leverage and ongoing operational efficiency improvements, partially offset by a 71% year over year increase in marketing spend.

Adam: In the area of historical Underinvestment.

Adam: Drive repeatable and profitable brand growth.

Anthony Gruber: Looking ahead, we continue to believe that our normalized gross margin profile, not including major commodity fluctuations, will continue to hover in the high 20% range, while right-sizing our trade promotion investments from the low single-digit percent of revenue today, closer to our goal of 10%, which we made meaningful steps towards in the first quarter, growing trade from 2% to 6% of gross revenue, but never at the expense of hitting our gross margin target.

Adam: Looking ahead, we continue to believe that our normalized gross margin profile now include.

Adam: Including major commodity fluctuations will continue to hover in the high 20% range, while right sizing our trade promotion investments from low single digit percent of revenue today closer to our goal of 10%, which we made meaningful steps towards in the first quarter growing trade from 2%.

Adam: Two 6% of gross revenue.

Adam: Never at the expense of hitting our gross margin targets.

Anthony Gruber: Net income for the first quarter of fiscal 2026 increased 123% to $1.2 million or $0.03 per diluted share as compared to net income of $0.6 million or $0.01 per diluted share in the same year-ago quarter. First quarter net income totaled 3.5% of revenue as compared to 1.9% in the same year ago quarter. Adjusted EBITDA, a non-GAAP measure, increased 12% to $2.8 million for the first quarter of fiscal 2026, as compared to $2.5 million in the same year-ago quarter. Cash and cash equivalents as of April 30, 2025 grew to $12 million as compared to $7.2 million as of January 31, 2025.

Adam: Net income for the first quarter of fiscal 2026 increased by 123% to $1 2 million or three cents per diluted share as compared to net income of <unk> 6 million or one cent per diluted share in the same year ago quarter.

Adam: First quarter net income totaled three 5% of revenue as compared to one 9% in the same year ago quarter.

Adam: Adjusted EBITDA, a non-GAAP measure increased 12% to $2 8 million for the first quarter of fiscal 2026 as compared to $2 5 million in the same year ago quarter.

Adam: Cash and cash equivalents as of April 32025 grew to $12 million as compared to $7 2 million as of January 31, 2025, and change in cash and cash equivalents was primarily driven by $6 million in cash flow from operations during the first quarter primarily.

Anthony Gruber: The change in cash and cash equivalents was primarily driven by $6 million in cash flow from operations during the first quarter, primarily driven by improved profitability and working capital optimization. As of April 30, 2025, total debt stood at $4.6 million as compared to $8.3 million as of April 30, 2024.

Adam: Driven by improved profitability and working capital optimization.

Adam: As of April 32025, total debt stood at $4 6 million as compared to $8 3 million.

Adam: April 30th 2024.

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

Adam: This cash war chest.

Adam: With our commercial lines of credit.

Adam: <unk>.

Adam: And a stronger balance sheet preparing as well for whatever inorganic opportunities proactively or reactively come our way.

Anthony Gruber: This completes my prepared comments.

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

Adam Michaels: Now, before we begin our question and answer session, I'd like to turn the call back to Adam for some closing remarks. Adam.

Adam Michaels: Thank you, Anthony. In closing, we're incredibly optimistic about the road ahead, having emerged from recent operational challenges stronger, wiser, and better positioned for sustainable growth. The strategic investments we've made in new production capabilities, enhanced automation, and stronger management are now fully operational and already delivering meaningful returns. These improvements are matched by our expanded distribution footprint, deepened customer relationships, and increasingly robust grandma quality product offers.

Adam: Thank you Anthony.

Adam: In closing, we're incredibly optimistic about the road ahead, having emerged from recent operational challenges stronger wiser and better positioned for sustainable growth. The strategic investments. We've made in new production capabilities enhanced automation and stronger management are now fully operational and already deliver.

Adam: During meaningful returns.

Adam: These improvements are matched by our expanded distribution footprint deepened customer relationships and increasingly robust grandma quality product offerings.

Adam Michaels: As consumer habits continue shifting towards convenient, high-quality, deli-prepared foods, and our customers continuing to grapple with labor shortages, we are well-prepared to capitalize on these trends, continuing our transformation into a truly national, one-stop-shop deli solutions provider.

Adam: As consumer habits continue shifting towards convenient high quality deli prepared foods and our customers continuing to grapple with labor shortages, we are well prepared to capitalize on these trends continuing our transformation into a truly national one stop shop Deli solutions provider.

Adam Michaels: I couldn't be prouder of what our team has achieved this quarter and throughout the past year, and I am truly excited about the opportunities that lie ahead.

Adam: I couldnt be prouder of what our team has achieved this quarter and throughout the past year and I am truly excited about the opportunities that lie ahead with that operator, let's open the lines for questions.

Operator: With that, operator, let's open the lines for questions. Thank you.

Adam: Thank you.

Operator: With that, we will now be conducting a question and answer session for telephone participants. If you have a question, please press star followed by one on your touchtone keypad. If you would like to withdraw your question, please press the star followed by the number 2. Again, that is star 1 if you have a question. If you are using speaker equipment, you will need to lift the handset before making your selection. One moment while we pull.

Adam: With that we will now be conducting a question and answer session for telephone participants. If you have a question. Please press star followed by one on your Touchtone keypad.

Adam: If you would like to withdraw your question. Please press the star followed by the number too.

Adam: Again that is star one if you have a question.

Adam: If you were using speaker equipment, you'll need to lift the handset before making your selection.

Adam: One moment, while we poll for questions.

Ryan Meyers: And our first question comes from the line of Ryan Meyers with the Lake Street Capital. Please proceed with your question. Hey guys, thanks for taking my questions. You know, congrats on another really strong quarter of growth here, ahead of our expectations.

Speaker Change: And our first question comes from the line of Ryan Meyers with Lake Street Capital. Please proceed with your question.

Ryan Meyers: Hey, guys. Thanks for taking my question Congrats on another really strong quarter of growth here are ahead of our expectations. So just wondering how we should be thinking about growth rates for the balance of the rest of the year given the strong growth rate you reported this quarter.

Adam Michaels: So you know, just wondering how we should be thinking about growth rate for the balance of the rest of the year, given the strong growth rate you reported this quarter, you know, maybe what you're seeing here in Q2 and kind of if you're still confident and be able to kind of generate that double digit growth rate. Yeah, thanks, Brian. Again, continue to be just prouder and prouder every, every quarter on the team of the team. Look, I feel good. I'm proud. You know, I think we had Q4 around 25-26% growth. Now we have 18% growth.

Ryan Meyers: What you're seeing here in Q2, and kind of if you're still confident in being able to kind of generate that double digit culprit.

Ryan Meyers: Yeah. Thanks, Bryan again continue to be just prouder and prouder every every quarter on the team of the team.

Ryan Meyers: Look I feel good I'm proud I think we had Q4 around 25, 26% growth now have 18% growth.

Adam Michaels: You know, I still feel comfortable at the double digit growth number. Obviously, we don't know lots of things are happening to our end consumers. What I do know, though, is I feel stronger and stronger that our customers, our retailers are asking for this stuff. So consumers are looking for it. They're expanding the shelf set. Labor is getting harder and harder, which they need more of our help with, which we're able to do. So, you know, I feel good with the double digit growth.

Ryan Meyers: I still feel comfortable at the double digit growth number obviously, we don't know lots of things are happening to our end consumers, but I do know, though is I feel stronger and stronger that our customers are retailers are asking for this stuff. So consumers are looking for they are expanding the shelf set labor is getting harder and harder.

Ryan Meyers: <unk>, which they need more of our help with which we're able to do so.

Ryan Meyers: I feel good with the double digit growth, but you know we have to you.

Adam Michaels: But, you know, we have to You know, I want to stay focused and also it has to be profitable growth, right? So it's important that the stuff that we're bringing forward, we're developing in our new product development process is profitable for us, is a good value to the end consumer and then of course to the retailer.

Ryan Meyers: You know I don't want to stay focused and also it has to be profitable growth right. So it's important that the stuff that we're.

Ryan Meyers: Bringing forward, we're developing in our new product development process.

Ryan Meyers: Profitable for US is a good value to the end consumer and then of course to the retailer as well.

Adam Michaels: Okay, got it. And then, you know, switching gears a bit here and thinking about the gross margins for the business, you know, are you confident in the sense that you have part of the chicken hedged as well as the efficiencies and throughput improvements that you guys are making that you can see gross margin improvement throughout the year? Or is there a little too much volatility in the kind of chicken suppliers? Or how should we be thinking about kind of gross margins as we progress through the year? Yeah, so absolutely, you know, there is that volatility out there.

Speaker Change: Okay got it and then switching gears a bit here and thinking about the gross margins for the business.

Speaker Change: Are you confident in the sense that you have part of the chicken hedged as well as the efficiencies.

Speaker Change: And throughput improvements that you guys are making that you can see gross margin improvement throughout the year or is there a little too much volatility in the kind of chicken suppliers or how should we be thinking about kind of gross margins as we progressed through the year.

Speaker Change: Yeah. So absolutely yes, there is that volatility out there, but let's start again and I think it's really important and.

Adam Michaels: But let's start again. And I think it's really important. And, you know, understanding gross net, I know, it's something I've done my entire life, I know, not everybody has done it. So for all intents and purposes, as a reminder, we grew about, we had about 26% gross margin. In addition to that, we put six points of margin of trade on that. So in reality, theoretically, if we did not do the trade, our gross margin would have been 26 plus six is a 32% margin. It's an incredible margin that Skip and our operations team was able to deliver.

Speaker Change: Understanding gross to net I know, it's something I've done my entire life I know not everybody has done it so for all intents and purposes. As a reminder, we grew about we had about 26% gross margin. In addition to that we put six points of margin of trade on that so in reality theoretically if we did not do the trade our gross.

Speaker Change: Margin would've been 26, plus six is a 32% margin, it's an incredible margin that skip and our operations team was able to.

Speaker Change: To deliver now.

Adam Michaels: Now. We said, hopefully we've been very clear, that we see great opportunities now that we have Chris here, Lauren, to invest that trade, you know, at the right places to build our brands. It's a good ROI, we feel, certainly we feel internally, that's why we did it. And we think it's a good return for our investors, that this is where you want to invest, this is where you want to see the accelerated growth, this is where you want to see the stronger brand, getting our name out in the marketplace, I think that's really important. You know, going forward, yeah, it's hard.

Speaker Change: We said it would hopefully we've been very clear and when we see great opportunities now that we have Chris here Lauren to invest that trade you know at the right places to build our brands. It's a good ROI, we feel certainly we feel internally and it's why we did it and we think it's a good return for our investors that this is where.

Speaker Change: You want to invest this is where you want to see the accelerated growth. This is where you want to see the stronger brand getting our name out on in the marketplace. I think that's really important going forward. Yeah. It's hard you know I did the team has done incredible work Chick.

Adam Michaels: You know, I, the team has done incredible work. Chicken is literally, without exaggeration, 50% up versus prior year. That's a hard number. Obviously, you don't nearly see any, see that at all in our numbers. But that's because the team has done a great job. We have, you know, we have contracts for our chicken. The team has done an amazing job, as I mentioned just a minute ago. We're trimming more than we had planned. The tumbling that we're doing is actually increasing the yield. So while you do see these macro headwinds, our team is doing an incredible job to blunt those headwinds.

Speaker Change: <unk> is literally without exaggeration, 50% up versus prior year. That's a hard number obviously you don't nearly see any see that at all in our numbers, but thats because the team has done a great job we have.

Speaker Change: We have contracts for our chicken the team has done an amazing job as I mentioned, just a minute ago are we're trimming more than we had planned.

Speaker Change: Humbling that we're doing is actually increasing the yield so while you do see these macro headwinds our team is doing an incredible job to blunt those headwinds and Youre seeing again 26, plus six to me is a 32% margin that's pretty amazing I really do hope chicken prices gone down chicken prices have literally not.

Adam Michaels: And you're seeing, again, 26 plus 6 to me is a 32% margin.

Adam Michaels: That's pretty amazing. I really do hope chicken prices have gone down. Chicken prices have literally not changed for the entire month of May. It was the easiest average calculation that Anthony did for us. Super simple. But all of the, quote unquote, experts say that chicken prices are going to come down. That's going to help our gross margin. So our job is to detect these high 20 numbers. When we feel that the number's quite a bit higher than that, reinvest that into trade. And that's what we're going to do.

Speaker Change: <unk> for the entire month of May it was the easiest ER average calculation that Anthony did for us.

Speaker Change: I'm Super simple, but you know all of the quote unquote experts say that chicken prices are going to come down that's going to to help our gross margin. So our job is.

Speaker Change: We can hit these high Twenty's numbers, when we feel that the numbers are quite a bit higher than that and reinvest that into trade and that's what we're going to do.

Ryan Meyers: Got it. That's super helpful. Thanks for taking my questions. You got it. Thanks.

Speaker Change: Got it that's super helpful. Thanks for taking my questions.

Speaker Change: You got it thanks, Brian.

Speaker Change: Yeah.

Speaker Change: And our next question comes from the line of Eric Deslauriers with Craig Hallum. Please proceed with your question.

Eric Lauriers: Great, thank you for taking my questions and congrats on another very strong quarter here and on that chicken trimming coming in nicely ahead of expectations. That's actually where my first question is. So could you just kind of help us understand the sort of ability you have to continue increasing the mix of, you know, in-house trimmed chicken? I would imagine, you know, you sort of get to an appropriate sales mix and then it's more about increasing overall sales.

Eric Deslauriers: Great. Thanks for taking my questions and.

Eric Deslauriers: Congrats on another very strong quarter here.

Speaker Change: On that.

Speaker Change: Chicken chairman coming in nicely ahead of expectations.

Speaker Change: That's actually where my first question is.

Speaker Change: So could you just kind of help us understand the sort of ability you have to continue increasing the mix of.

Speaker Change: In house trimmed chicken I would imagine you sort of get to an appropriate sales mix and then it's more about increasing overall sales. So just kind of I'm trying to understand if trimming a 100% of chicken in house is something achievable within the next year or is this maybe like a two or three year goals can you just kind of help us understand sort of where you are in this.

Adam Michaels: So just kind of trying to understand if, you know, trimming 100% of chicken in-house is something achievable, you know, within the next year, or is this maybe like a two or three-year goal? Can you just kind of help us understand sort of where you are in this, you know, broader strategy?

Speaker Change: Broader strategy.

Adam Michaels: Absolutely, Eric. And thank you. So it is absolutely this year.

Eric Deslauriers: Absolutely Eric and thank you.

Eric Deslauriers: So it is absolutely this year. So my our goal is to develop the sales items I Should've mentioned from the very beginning I actually I just got back last night. My team is still at a ITD be a few guys remember international dairy Deli and Bakery Association is our Super Bowl in La.

Adam Michaels: So my our goal is to develop the sales items. I should have mentioned from the very beginning, actually, I just got back last night, my team's still at IDDBA. If you guys remember, International Dairy, Deli and Bakery Association, this is our Super Bowl. And Lauren has done an amazing job putting it all together for us. Our sales team is down there. Chef Chris is down there and we're getting great reactions. So as we develop these new items, which we have, it's about selling them in. And Chris and his team have done an amazing job getting strips into BJs, like I mentioned, Albertsons.

Speaker Change: Warren has done an amazing job, putting it altogether for us our sales team is down there chef chris's down there and we're getting great reactions. So as we develop these new items, which we have it's about selling them in and Chris and his team have done an amazing job getting strips into bj's like I mentioned albertsons either.

Adam Michaels: These are major players, right? The chicken stuffed meatballs, personally, most importantly, is my house favorite. Our kids love them and they're doing a great job at Costco. And then I mentioned some great work that we just got with Publix and getting these new Meals for One, which uses our chicken trim. So super clearly, from an operational standpoint, we could do all of the trimming today, 100%. It's not an operational issue. Thanks to you and Eric, I know you've been there. You've seen the trimmers, right? We have multiple trimmers, multiple. We have exactly what we need from an operational standpoint.

Speaker Change: Ager players right that the chicken stuffed meatballs personally and most importantly, our is my house favorites.

Speaker Change: Our kids love them and Theyre doing a great job at Costco and then I mentioned some great work that we just got it with Publix and getting these new meals for one which uses our chicken trim. So super clearly from an operational standpoint, we can do all of the trimming today, 100%.

Speaker Change: It's not an operational issue thanks to you and Eric I know you've been there you've seen the trimmers right we have multiple <unk> multiple.

Speaker Change: We have exactly we need from an operational standpoint. It is now the job, which we've done really well.

Adam Michaels: It is now the job, which we've done really well. develop the products, which we've done, get them sold in, which we're doing. And that's why we're ahead of plan on on the trimming. And the more we sell in, the faster we sell it in, the more we can trim ourselves. So this is absolutely a, an in year thing. It's great to hear how crucial that can be for margins. So great to hear.

Speaker Change: Develop the products, which we've done get them sold in which we're doing and that's why we're ahead of plan on on the trimming and the more we sell in the faster we sell it in the more we can trim ourselves. So this is absolutely a and in your thing.

Speaker Change: That's great to hear.

Speaker Change: How crucial that can be for margin so great to hear.

Adam Michaels: So I guess just kind of sticking on this topic, quickly, so it's clear that all the, you know, capital investments you've made into the facilities the past year, year and a half, like really starting to bear fruit here. What other CAPEX projects are on the horizon? If any, I mean, I know, you know... significantly expanded your capacity. Maybe there's not any, you know, near term need to add any new pieces of equipment, but just kind of wanted to check in here, see if there's any other CapEx projects, you know, over the next, call it 12 months or so that we should be aware of.

Speaker Change: So I guess just kind of sticking on this topic.

Speaker Change: Quickly so it's clear that all of the capital investments you've made into the facilities in the past year year, and a half really starting to bear fruit here.

Speaker Change: What other capex projects are on the horizon.

Speaker Change: If any I mean I know you.

Speaker Change: <unk> significantly expanded your capacity, maybe theres not any.

Speaker Change: Near term need to add any new pieces of equipment, but just kind of wanted to check in here see if there's any other capex projects over the next call. It 12 months or so that we should be aware of.

Adam Michaels: Yeah, nothing too major. Again, we do stuff every day. You know, we just Anthony just approved for us a new stuffing machine, the chicken stuff, meatballs are doing well, already exceeding plan. And already we anticipate the machinery is not gonna be enough. We already got another machine. The situation though, is it's $100,000. And we get it in three weeks. It's not like the $1 million plus grills that you saw installed last year.

Speaker Change: Yeah, nothing too major again, we do stuff every day, we just Anthony just approved for us a new stuffing machine. The chicken stuffed nipples are doing well already exceeding plan and already we anticipate the machinery is not going to be enough. We already got another machine. The situation, though is it's a $100000 when we get it in three weeks it.

Speaker Change: Not like the one youre right.

Speaker Change: Million dollar plus Grilles that you saw installed last year or so.

Adam Michaels: So There's nothing super major that I expect this year from Capital. Anthony and I look at our, we actually do two things. I'm not sure if you're allowed, you know, if others do it, but Anthony and I look at our CapEx and our actual M&A spending in one bucket. So last year was the year about us investing in ourselves, right? Go to the gym and things like that, right? Investing in ourselves. This year we feel good. Again, we don't need it, but we very much want an acquisition this year. So Anthony says, Adam, you can't get both.

Speaker Change: Theres nothing Supermajor that I expect this year from capital Anthony and I look at our we actually do two things I'm not sure if you're allowed.

Speaker Change: Others do it, but Anthony and I look at our Capex and our actual M&A spending in one bucket. So last year was the year about us investing in ourselves right.

Speaker Change: Go to the gym and things like that right investing in ourselves. This year, we feel good again, we don't need it but we very much want an acquisition. This year. So as he says Adam you can get both you can't get a new a new grille and the company. So Adam this is the year that we're going to put our money into acquisitions.

Adam Michaels: You can't get a new grill and a company. So Adam, you know, this is the year that we're going to put our money into acquisition. That's what we're doing very well. I feel good with the progress we're making and, you know, excited to hopefully share more in Awesome. That's all great to hear.

Speaker Change: And that's what.

Speaker Change: We're doing very well I feel good with the progress, we're making and I'm excited to hopefully share more in the future.

Speaker Change: Awesome.

Unknown Executive: Thank you for taking my questions and congrats again.

Speaker Change: Great to hear thanks for taking my questions and congrats again.

Speaker Change: Thanks, Eric.

George Kelly: And our next question comes from the line of George Kelly with Roth Capital. Hey everybody, thanks for taking my question. A couple for you. First, Adam, I think you said in your prepared remarks that you refined your M&A criteria. So I was wondering if that's the case, could you walk through any changes there? Yeah, it's not. Thanks, George. Again, it just it's getting more focused. Again, the three things are the three things, right? It hasn't changed. We worked hard on those. What's wonderful is we're seeing and actually, it's a bit of a surprise, a lot of inbound interest.

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

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

Speaker Change: A couple for you first Adam I think you said in your prepared remarks that you.

Speaker Change: Refined your M&A criteria.

Speaker Change: So I was wondering if that's the case could you walk through any changes there.

Speaker Change: Yeah. Thanks George.

Speaker Change: Again, it just it's getting a more focused again the three things are the three things right. It Hasnt changed we worked hard on those.

Speaker Change: It's wonderful is we are seeing and actually it's a bit of a surprise.

Adam Michaels: So people are coming to us and saying, Hey, I heard you're, you know, you might be interested in expanding organically, inorganically, you know, what do you think about us? So what it's been great is our pipeline is quite full. And the more you see, the more we realize that we want and what is more important and less important. So again, and I've shared some of this with you already. Absolutely.

Speaker Change: A lot of inbound.

Speaker Change: Interest so people are coming to us and saying, Hey, I heard you're you might be interested in expanding organically Inorganically you know what do you think about us.

Speaker Change: So what it has been great is our pipeline is quite full.

Speaker Change: And the more you see the more we realize that we want and what is more important than less important so again and I've shared with you already absolutely. There's an alien in my body, if I buy a non deli company right Deli company with their own manufacturing that is absolutely critical.

Adam Michaels: You know, there's an alien in my body. If I buy a non deli company, right? Deli company with their own manufacturing, that is absolutely critical. Does it have to be west of the Mississippi? You know, our team, Rebecca, is doing an incredible job from a logistics standpoint. The improvements we have made in logistics are mind-blowing. So, can we save more by being on the west coast or on the western side of the country? Yeah, we can save a little bit of money, but it's not critical. I hope you guys, I don't expect you guys to have read the entire 10Q in five minutes, but I am super impressed with our geographic distribution.

Speaker Change: Does it have to be west of the Mississippi, Our team are back as <unk> and.

Speaker Change: An incredible job from a logistics standpoint, the improvements we have made in logistics are mind blowing so can we save more by being on the west coast on the western side of the country.

Speaker Change: Yeah, we can save a little bit of money, but it's not critical I hope you guys are unexpected you guys have read the entire a 10-Q five.

Speaker Change: Five minutes, but I am Super impressed with our geographic distribution remember when when we all started when asked and I first started here your northeast Meatball company.

Adam Michaels: Remember, when we all started, when Anthony and I first started here, we were a Northeast meatball company. I mean, if you look at the geographical split of our products, we're all around 25%, 26, 27. I don't think much bigger than that. So we are showing, we're proving that because we have the volume across the country, going out to Seattle is not that huge a deal. We are doing an incredible job. Most of our stuff almost entirely is full truckload. The sales, the business is getting so big, we don't need to do LTL. So that drives a lot of efficiency internally.

Speaker Change: Our if you look at the geographical split of our products were all around 25% 26, 27, and I don't think much.

Speaker Change: Bigger than that so we are showing we are proving that because we have the volume across the country going out to Seattle is not that huge a deal. We are doing an incredible job most of our stuff almost entirely is full truckloads. Their sales. The business is getting so big we don't need to do L. T. L C.

Speaker Change: That drives a lot of efficiency internally. So that's just one example of you know we just continue to refine and see where we are but the core three things hasnt changed and were doing a great job. The team is getting.

Adam Michaels: So that's just one example of, you know, we just continue to refine and see where we are. But the core three things hasn't changed. We're doing a great job. The team is getting very hands on. My extended leadership team, so I'll give you one last thing. You know, I spent I was the M&A guy and I did, you know, 98.3% of the work. There are a couple opportunities that are getting pretty live. I have brought the rest of my leadership team in.

Speaker Change: Getting very hands on.

Speaker Change: The my extended leadership team. So I'll give you one last thing.

Speaker Change: You know I spend I was the M&A guy than I did 98, 3% of the work.

Speaker Change: There are a couple of opportunities that are getting pretty life I have brought the rest of my leadership team and so hopefully that gives you. Some sense that you know I'm really not even in the let's just build a pipeline stage, where we're well past that so hopefully that helps.

George Kelly: So hopefully that gives you some sense that, you know, I'm really not even in the let's just build a pipeline stage where we're well past Hopefully that helps. It does. Yeah, that's good context. Thank you. And then, second question for you on Costco, you included a little note about the MVM that you ran in the quarter in your press release and commented in your prepared remarks. So I guess the question is two questions. A, do you have additional promotions with Costco planned for the year, and can you give any update on timing or what those promotions might look like?

Speaker Change: It does yeah. That's good context. Thank you and then second question for you on Costco.

Speaker Change: You included.

Speaker Change: A little note about MGM that you ran in the quarter in your press release and commented in your prepared remarks. So I guess my question is two questions.

Speaker Change: A do you have additional promotions with Costco planned for the year and can you give any update on timing or what those promotions might look like and then b.

Adam Michaels: And then B, you know, you've done so well at Club. I'm curious with respect to Costco, what's like the near and medium-term opportunity? So the first question around Costco. Yes, we have an incredible partnership. Scott gets a lot of that credit, how he's built these relationships with these eight different buyers. As a reminder, Costco is somewhat unique in the sense that there is no national buyer. So we work with eight different buyers and they share learnings with each other. I hope to do more. We'll see more. You know, I could tell you coming up, we have actually a rotation next quarter on our chicken stuff meatballs.

Speaker Change: You've done so well it's club.

Speaker Change: I'm curious with with respect to Costco, what's what's like the near and medium term opportunity.

Speaker Change: So the first question around Cosco, Yes, we have an incredible partnership Scott.

Speaker Change: Scott.

Speaker Change: It gets a lot of that credit how he's built these relationships with these eight different buyers as a reminder, costco is somewhat unique in the sense that there is no national buyer. So we work with eight different buyers and they share learnings with each other.

Speaker Change: I hope to do more we will see more I could tell you.

Speaker Change: Coming up we have actually a rotation next quarter on our chicken stuffed meatballs, we're constantly talking with them about other things we're in conversations with them and just for clarity we did a digital MVM in Q1, we're in conversations about a MVM, possibly theres no guarantees but.

Adam Michaels: We're constantly talking with them about other things. We're in conversations with them. And just for clarity, we did a digital MVM in Q1. We're in conversations about a MVM possibly. There's no guarantees, but we're in talks there. So I expect Costco to get stronger and stronger. I will tell you. I personally believe that Costco is in a very strong position as a retailer for the consumers today. So much to your second point, I love the broader club channel as well. I could speak to you forever on Costco, I could equally speak to you forever on BJ's.

Speaker Change: Where we're in talks there so I expect costco to get stronger and stronger I will tell you.

Speaker Change: I personally believe that Costco is in a very strong position.

Speaker Change: As a retailer right for for the for.

Speaker Change: For the consumers today.

Speaker Change: So much of your second point I love the broader a club channel as well I can speak to you forever on Costco I get equally speech you forever on Bj's, great New items. If you guys are a if you have a bj's near you my new favorite item actually is our roasted sweet potatoes Super clean taste.

Adam Michaels: Great new items. If you have a BJ's near you, my new favorite item actually is our roasted sweet potatoes. Super clean, tastes great. We are actually sharing those at IDDBA, beautiful color. So we have that product. We have a new tortellini product that's coming out with BJ's. Now two things that are really interesting, hopefully you noticed something on those two that I just shared. There's no camaraderie. There's no chicken in there, there's no beef in there. Obviously, that that helps a lot, you know, it gives me at least an extra 13 or 14 minutes of sleep at night, that we have some more of those type items. So BJ's we're doing great.

Speaker Change: Great we're actually sharing those.

Speaker Change: At ITD be a beautiful color. So we have that product we have a new tortellini product that's coming out with Bj's now two things that are really interesting hopefully you noticed something on those two that I just shared.

Speaker Change: Theres no commodities no chicken in there theres no beef in there.

Speaker Change: Obviously that that helps a lot. It gives me at least an extra 13 or 14 minutes of sleep at night that we.

Speaker Change: I have some more of those type items, so bj's, we're doing great.

Adam Michaels: And Sam's is a tremendous partner getting stronger and stronger with the items that we have there, some possibly new items coming up. So you know, I'm very bullish on the club space. And each of these three that I just mentioned could be massive partner. and the already are.

Speaker Change: And Sam's is.

Speaker Change: Tremendous partner getting stronger and stronger with the items that we have there some possibly new items coming up so I'm very bullish on the club's space in each of these three that I just mentioned could be.

Speaker Change: Mass of partners for us and they already are.

Anthony Gruber: Okay, excellent. And then just a quick one, maybe for Anthony on pricing, the pricing that you had fully implemented in May, I think you said, how much is there any way to think about just can you give any kind of quantification there? And that's all I had. Thank you. Yeah, I would, can't give a quantification at this time. I think we'll be speaking about that probably during our next call. So don't want to go into that just yet. It's different by item. It's different by customer. But the goal is that, you know, we maintain our, our ultimate margin.

Speaker Change: Okay excellent and then just a quick one maybe for Anthony on pricing the pricing that you had fully implemented in May I think you said how much is there any way to think about just can you give any kind of quantification there and that's all I had thank you.

Speaker Change: Yeah, I would can't give a quantification at this time I think we'll be speaking about that probably during our next call. So I don't want to go into that just yes, it's different by item, it's different by customer, but the goal is that we maintain our our ultimate margin and the customers realize.

Anthony Gruber: And the customers realize that what's wonderful about our business, positive or negative, I'm always the optimist, is you could go right now to the USDA website, and you can see what the price of chicken is and see what the price of beef is. So when we go and speak with our customers, first of all, it's very collaborative, right? They see the same thing we do. And we work jointly to find the best way. I'll give you actually one quick example. It's not just about price per se. We have some partners that will work with us and say, hey, why don't we double the size of our packaging?

Speaker Change: That what's wonderful about our business positive or negative I'm always the optimist is you can go right now to the USDA website and you can see what the price of chicken is and see what the price of beef is so when we go and speak with our call our customer our yeah. Our customers first of all it's very collaborative right. They see the same thing we do and we worked.

Speaker Change: <unk> to find the best way I will give you actually one quick example, it's not just about price per se.

Speaker Change: Have some partners that will work with us and say Hey, why don't we double the size of our packaging right first of all that cuts packaging cost right. If we can put twice as much in the same corrugate box that saves on packaging. It also saves on logistics, we could get more on the pallet and the Super double top secret thing that's awesome.

Anthony Gruber: Right? First of all, that cuts packaging costs, right? If we could put twice as much in the same corrugate box, that saves on packaging. It also saves on logistics, we could get more on the pallet. And the super double top secret thing that's awesome is that by having a bit having more in each box, when the team opens that box to put it out on the shelf, there's twice as much that's going out on the shelf, which gives us a better shelf life. So yes, it is incredibly collaborative, and we do it one-on-one with customers.

Speaker Change: Is that by having having more in each box when the team opens that box to put it out on the shelf there is twice as much.

Speaker Change: That's going out on the shelf, which gives us a better shelf presence. So yes. It is incredibly collaborative and we do it one on one with customers.

Unknown Executive: Thanks.

Speaker Change: Thanks.

Anthony Vendetti: And our final question comes from the line of Anthony Vendetti with Max. Please proceed with your Thank you. Adam, I was wondering if you can give us any any update on how the rollout is going in Walmart and then Any, any color. Kroger or Tariq. Yeah, absolutely. So Chris and Peter are spending a lot of time in Cincinnati with Kroger and in Minneapolis with Target. We got to see a number of them at IDDBA. That's going well. We'll see how that goes. But definitely we've made the most progress this year with Chris on board than we have in my two years prior.

Speaker Change: And our final question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Anthony Vendetti: Thank you.

Anthony Vendetti: Adam I was wondering if you can give us any any update on how the rollout is.

Anthony Vendetti: Going in Walmart.

Anthony Vendetti: Any any color on.

Anthony Vendetti: Kroger or target.

Speaker Change: Yeah, absolutely, so Chris and and Peter are spending a lot of time in Cincinnati with Kroger and in Minneapolis with target Oh, we got to see a number of them that ITD be a that's going well, we'll see how that goes but.

Speaker Change: Definitely we've made the most progress this year with Chris on board than we have in.

Speaker Change: Two years prior.

Adam Michaels: Walmart's also doing well. I mentioned to you, and again, I love these broader partnerships. I told you about how well we're doing with their digital partnership and their digital team, literally double digit ROAS. We're actually expanding the four count. The four count's doing quite well. And we're actually expanding doors to that item. We've had a number of conversations about expanding the number of items. So I feel really good. Again, I want, and it's important to us, just like I just spoke to you earlier about, I like nice equal distribution of geographic split. I always talk to you about, we have a great balance of beef versus chicken.

Speaker Change: Walmart is also doing well I mentioned to you and again I Love. This these brought our partnerships I told you about how well we're doing with their digital partnership and their digital team literally double digit Roe as.

Adam Michaels: We're actually expanding the four count the four counts doing quite well and we're actually expanding our doors to that item.

Speaker Change: We've had a number of conversations about expanding the number of items.

Speaker Change: So I feel I feel really good again, I want and it's important to US just like I just spoke to you earlier about I like nice equal distribution of geographic.

Speaker Change: Geographic split I like I always talk to you about we have a great balance of beef versus chicken.

Adam Michaels: It's equally important to me that, you know, as best as we can, we continue to diversify our customers, which makes, you know, a potential Kroger or Target opportunity really exciting. But then also, and look already, you can already see it in stores, if you guys go out. We just got two new items into Lidl, chicken stuffed meatballs, one being one of them. Sheets, the paninis at Sheets are doing incredibly well. Just launched in Amazon Fresh. So again, you know, I love all my children equally, same sort of thing, lots of great opportunity with Kroger. And then just a follow up, just to make sure I'm doing the math correct here.

Speaker Change: It's equally important to me that as best as we can we continue to diversify our customers, which makes a potential kroger or a target opportunity really exciting, but then also and look we're already you could already see it in stores. If you guys go out.

Speaker Change: We just got two new items into Lidl chicken stuffed meatballs, one being one of them sheets. The panini at sheets are doing incredibly well.

Speaker Change: <unk> just launched in Amazon fresh. So again, you know I love all my children equally same sort of thing and lots of great opportunity with <unk> with customers.

Speaker Change: And then as a follow up just to make sure I'm doing the math correct here so.

Anthony Vendetti: So you obviously saw the ROI of putting 6% of gross revenue into trade promotion. If you had, instead of putting 6%, hadn't put anything in there, would your gross margin be 32%? Um... So, obviously an easy answer would be sure, but the truth of the matter is, to understand the elasticity of, you know, would we have gotten the digital MVM at Costco? It's sort of binary. I don't know, maybe, but this certainly helped a lot. Would we have gotten, you know, I was, you know, my mom, my parents live in Florida. They're very proud when they see it in the public circular that says Mama Mancini's PubSub program.

Speaker Change: You, obviously saw the ROI.

Speaker Change: 6% of gross revenue into trade promotion.

Speaker Change: If you put if you had instead of putting 6% hadn't put anything in there would your gross margin be 32%.

Speaker Change:

Speaker Change: So obviously, an easy answer would be sure, but the truth of the matter is.

Speaker Change: To understand the elasticity of.

Speaker Change: Would we have gotten the MVM at Costco sort of binary.

Speaker Change: Maybe but this certainly helped a lot what do we have gotten you know I was my mom My parents live in Florida, they're very proud when they see it in the public circular that says mom <unk> Pops up program, what they have branded the item. If we didn't use all the trade I don't know maybe.

Adam Michaels: Would they have branded the item if we didn't use all the trade? I don't know, maybe, but what I can tell you, and this is something that Chris and I look at a lot, we actually compare like the Publix work that we did, the amount of gross margin increase that we got at Publix. Transcripts provided by Transcription Outsourcing, LLC. So hopefully that's helpful to answer. Sure, sure. No, there's always a balance slash trade off there.

Speaker Change: But what I can tell you and this is something that.

Speaker Change: Chris and I look at a lot, we actually compare like the Publix work that we did.

Speaker Change: Amount of gross margin increase that we got at public.

Speaker Change: Higher than the incremental trade that we put in.

Speaker Change: Comparing year over year, so that to me says that's a really good ROI.

Speaker Change: So hopefully that's helpful to to answer your question.

Speaker Change: Sure sure. So there's always a balance the tradeoff there just lastly.

Anthony Vendetti: Just lastly, I know you've significantly increased the number of chicken skews. Maybe just just to put things in context, when when you took over as chairman and CEO, how many skews? Total SKUs were there. And how many total SKUs do you have at this point? Including, yeah, I know some of the SKUs are like, okay, it comes in this single-serve pack versus multi-pack. But if you included all, not just the difference of, let's say, a chicken SKU, but like, okay, you know, it also comes in a different form. How would you count the number of SKUs today versus what you what you had when you?

Speaker Change: I know you've significantly increased the number of chicken Skus, maybe just just to put things in context. When you took over as chairman and CEO, how many skus.

Speaker Change: Total skus were there and how many total skus do you have at this point, including I know some of the Skus are like Okay. It comes in this single serve pack versus multi pack, but if you included all not just the.

Speaker Change: The difference.

Speaker Change: Let's say chicken SKU, but okay.

Speaker Change: It also comes in different forms.

Speaker Change: Would you count the number of Skus today versus what you had when you took over.

Adam Michaels: Yeah, so I don't know what you think about this, but I can actually tell you that we've significantly reduced the number of SKUs since I've started, like actually cut more than 50% of the SKUs. Why? Well, first of all, you know, I'm cheap, and we're more efficient if we need to have fewer raw materials, and we could strengthen increase the volume of fewer items. Two, there are lots of items that just were not profitable at all. So why do you why do you need that? Why do you need a blueberry and a boysenberry cream cheese?

Speaker Change: Yeah. So I don't know if you think about this but I can actually tell you that we have significantly reduced the number of skus since I've started like actually cut more than 50% of the Skus why well first of all you know them cheap and we're more efficient if we need to have fewer raw materials and we could.

Speaker Change: Strength and increase the volume of fewer items to <unk>.

Speaker Change: Lots of items that just were not profitable at all so why do you why do you need that why do you need a blueberry Ana boysenberry cream cheese, it's important that I kept the chocolate chip cream cheese, because that's what my boys loved the most.

Adam Michaels: It's important that I kept the chocolate chip cream cheese, because that's what my boys love the most. But we actually have fewer SKUs. Now, what we have is more strategic, So we have massively more, when I say massively, maybe it's a dozen, Lauren will yell at me, maybe it's a little more, a little less, but of these chicken, quote unquote, bottom skews, the artisan cut chicken, we have more of those because that's what we need to sell. So, you know, to me, it's. It's less about how many SKUs do we have, the answer is fewer, it's more about do we have the right SKUs and we absolutely, compared to where I was three years ago, here, I'll give you one more.

Speaker Change: But we actually have fewer skus now what we have is more strategic skus. So we have massively more when I say massively maybe it's a dozen Lauren will yell at me, maybe its a little more a little less but.

Speaker Change: Chicken clinical bottoms skews the artisan cut chicken, we have more of those because thats, what we need to sell so to me. It's it's less about how many skus. We have the answer is fewer it's more about do we have the right skus and we absolutely compared to where it was three years ago here I'll give you one more.

Adam Michaels: We had nothing for C-Store when Anthony and I first started, right? Everything that we made was, you know, a three pound container, not many people go into, you know, sheets looking for three pounds of meatballs. So we developed the cups, we developed these incredibly successful paninis. I will tell you, the number one taker at IDDBA this year was the paninis. That was the most requested item, both by customers and I just mostly think people just needed something to eat for lunch while they were there. So we didn't have, you know, those things before. Now we can get into the convenience channel.

Speaker Change: We had nothing for C store, when Anthony and I first started right everything that we made was three pound container not many people go into you know sheets looking for three pounds of meat balls. So we developed the cups. We developed these incredibly successful Panini is I will tell you.

Speaker Change: The number one taker at I D. DBA. This this year was the <unk> that was the most requested item both by customers and I, just mostly think people just needed somebody eat for lunch, while they're there.

Speaker Change: So we didn't have.

Speaker Change: Those things before.

Speaker Change: Now we could get into the convenience channel. That's why we're doing so well at sheets and others. So it's about the strategic customer are items that are more important than just the absolute amount.

Adam Michaels: That's why we're doing so well at Sheets and others. So it's about the strategic items that are more important than just the apps.

Unknown Executive: Okay, very helpful. Thanks so much. I'll hop back in the queue. Absolutely. Thank you.

Speaker Change: Okay very helpful. Thanks, So much I'll hop back in the queue.

Speaker Change: Absolutely.

Speaker Change: Okay.

Speaker Change: Thank you and with that this does conclude our question and answer session I would now like to hand, the call back over to chairman and CEO, Adam Al Michaels for closing remarks.

Operator: And with that, this does conclude our question and answer session.

Adam Michaels: I'll now like to hand the call back over to Chairman and CEO Adam L. Michaels for closing Thank you, operator. And thank you again to each of you for joining us today. 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 leading national one stop shop deli solution provider. Thank you very much. Thank you, ladies and gentlemen.

Speaker Change: Thank you operator, and thank you again to each of you for joining US today, 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 leading national one stop shop Deli solution provider.

Speaker Change: Thank you very much.

Adam Michaels: Thank you, ladies and gentlemen, and with that this does conclude today's teleconference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

Operator: And with that, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful. and more. www.mytrendyphone.co.uk

Speaker Change: Mhm.

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Operator: Hello.

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Speaker Change: Okay.

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