SOURCE: MamaMancini's Holdings, Inc.

MamaMancini's Holdings, Inc.

December 15, 2016 16:05 ET

MamaMancini's Reports Third Quarter Fiscal Year 2017 Financial Results

Company Achieves First Profitable Quarter

Net Income of $80,603 vs. Loss of $975,522 Prior Year

Third Quarter Revenue Up 41%

Gross Margin Up to 37% vs. 30%

EAST RUTHERFORD, NJ--(Marketwired - Dec 15, 2016) - MamaMancini's Holdings, Inc. (the "Company" or "MamaMancini's") (OTCQB: MMMB), a marketer of specialty pre-prepared, frozen and refrigerated all natural food products (as defined by the United States Department of Agriculture), today announced financial results for the third quarter of fiscal year 2017, ended October 31, 2016.

Fiscal Third Quarter Highlights:

  • Third quarter 2017 revenue increased 41% to $4.6 million compared to third quarter 2016 revenue of $3.2 million.
  • Third quarter 2017 gross margin increased to 37% compared to 30% in the third quarter of fiscal 2016. Gross margin for full year fiscal 2017 expected to be approximately 35%.
  • Total operating expenses for the third quarter increased seven percent versus the comparable quarter of fiscal 2016. As a percentage of sales, operating expenses decreased to 31.5% of net sales from 41.4% in the comparable 2016 quarter.
  • Income from operations for the third quarter fiscal 2017 improved to $243,563 versus $(358,159) in the prior year third quarter; an increase of more than $600,000.
  • Net income for third quarter fiscal 2017 improved to $80,603 compared to $(975,522) in the third quarter of fiscal 2016. EPS for third quarter fiscal 2017 was $0.00 compared to $(0.04) in third quarter fiscal 2016.
  • Placements on grocer's shelves increased at the end of the third quarter to 37,700, up sequentially from approximately 36,000 at the end of the second quarter of this fiscal year, and up from 31,900 as of October 31, 2015.
  • Cash EBITDA, a non-GAAP financial metric (please refer to Non-GAAP Financial Measures paragraph below), for the third quarter of fiscal 2017 was positive $470,959 compared with negative $(174,461) in the third fiscal quarter of 2016.

Carl Wolf, Chief Executive Officer of MamaMancini's, commented, "The third quarter of fiscal year 2017 was historic in nature as we reported our first profitable quarter. Over the past year we have achieved considerable traction on developing larger customers and exiting underperforming accounts that do not generate reasonable returns. Revenue increased 41% and 35% for the third quarter and the first nine months of fiscal year 2017, respectively. We have worked long and hard to get to this point. Although it is a modest profit for the quarter, we expect to build on these results in the quarters and the years to come."

"Gross margin for the quarter improved to 37% from 30% in last year's comparable quarter as our now more sustainable customer base, combined with manufacturing efficiencies and increased volumes drive positive results. Our operating income for the third quarter improved by more than $600,000 as we continue to develop new retail store accounts, drive revenue and operate on a more efficient basis. We are very pleased with the results of the third quarter and the fiscal year to date. We look forward to ending the fiscal year on a strong note."

Mr. Wolf added, "Having achieved an important strategic goal in breaking into profitability, we are able to be more aggressive in building upon the MamaMancini's brand. Operationally speaking, we will continue to focus our presence on the perimeter of the retail grocery store, where fresh, minimally or non-processed, healthy foods are offered and the growth opportunities lie. As we concentrate mostly on selling into the food service area of the store, we continue to develop new product offerings that will add value to the end-user customers relying on great tasting food with superior nutritional profiles and minimal prep time. We also announced earlier this week the introduction of a new advertising and marketing campaign. Our goal is to leverage different mediums to expand our reach, attract new large national accounts, and gain a substantial number of new consumers around the country."

Third Quarter 2017 Results
Sales, net of slotting fees and discounts, were $4.6 million for the third quarter of fiscal 2017, a 41% increase compared to $3.2 million reported in the third quarter of fiscal 2016. The increase in sales was primarily driven by the addition of new customers in the first half of fiscal 2017. As of October 31, 2016, the Company's products were sold in approximately 10,700 stores, with an average of 3.5 product SKUs in each store, aggregating to approximately 37,700 retail and grocery shelf placements throughout the U.S.

Gross profit for the third quarter of fiscal 2017 was $1.7 million, or 37% of sales, compared to $982,131, or 30% of sales, in the year ago period. The increase in gross margin is primarily attributed to increased revenue during the third quarter of fiscal 2017 from new retail store customers and the exiting of a substantial number of underperforming low margin accounts during the previous fiscal year.

Net income for the third quarter of fiscal 2017 was $80,603, or $0.00 per basic and diluted share, compared to a net loss of $(975,522), or ($0.04) per basic and diluted share, in the third quarter of fiscal 2016.

Nine Months Fiscal 2017 Results
Sales, net of slotting fees and discounts, were $12.6 million for the first nine months of fiscal 2017, a 36% increase compared to $9.3 million reported in the first nine months of fiscal 2016. The increase in sales was primarily driven by the addition of new customers in the first half of fiscal 2017 and in the final months of fiscal year 2016.

Gross profit for the first nine months of fiscal 2017 was $4.5 million, or 36% of sales, compared to $2.6 million, or 28% of sales, in the year ago period. The increase in gross margin is primarily attributed to increased revenue during the first half of fiscal 2017 from new retail store customers and the exiting of a substantial number of underperforming low margin accounts during the previous fiscal year.

Net loss for the first nine months of fiscal 2017 was ($422,313), or ($0.02) per basic and diluted share, compared to a net loss of $(3.1 million), or ($0.12) per basic and diluted share, in the first nine months of fiscal 2016.

Outlook
The Company's strategy of developing larger customers and exiting underperforming accounts that do not generate attractive returns is achieving improving operating results. The Company expects a continuation of revenue growth for the foreseeable future. As a result, the company is anticipating fiscal 2017 revenues for the fourth quarter to be in the range of $5.0 million to $5.5 million and $17.6 million to $18.1 million for the year, both ending January 31, 2017. In addition, the company expects its profitability to improve in the coming quarters.

Non-GAAP Financial Measures
The Company uses Cash EBITDA as a non-GAAP financial measure. The Company defines Cash EBITDA as earnings before income taxes, depreciation and amortization plus any non-cash stock payments for expenses. The Company believes that the use of Cash EBITDA is useful to investors and other users of its financial statements in evaluating the Company's operating performance because it provides them with an additional tool to compare business performance across companies and across periods. The Company uses Cash EBITDA in conjunction with traditional GAAP operating performance measures as part of its overall assessment of its performance, for planning purposes, including the preparation of its annual operating budget, and to evaluate the effectiveness of its business strategies. Management does not place undue reliance on Cash EBITDA as its only measure of operating performance. Cash EBITDA should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP.

Conference Call
The Company has scheduled a conference call for today, Thursday, December 15, 2016, at 4:30 pm ET to review the results.

Interested parties may participate on the conference call by dialing (844) 889-4326 or (412) 317-9264. A replay of the conference call will be available by dialing (877) 344-7529 or (412) 317-0088, confirmation code 10095668, through December 22, 2016.

About MamaMancini's
MamaMancini's is a marketer and distributor of a line of beef meatballs, turkey meatballs, and chicken meatballs all with sauce, five cheese stuffed beef, turkey and chicken meatballs all with sauce, original beef and turkey meatloaves and bacon gorgonzola beef meatloaf, and other similar Italian cuisine products. The Company's sales have been growing on a consistent basis as the Company expands its distribution channel, which includes major retailers such as Costco, Publix, Shop Rite, Price Chopper, Jewel, SaveMarts, Luckys, Lunds/Byerly's, SuperValu, Safeway, Albertsons, Spartan Stores, Bashas, Whole Foods, Shaw's Supermarkets, Kings, Roche Brothers, Key Foods, Stop-n-Shop, Giant Stores, Giant Eagle, Food Town, Randalls, Kroger, Shoppers, Marsh's Supermarkets, King Kullen, Lowes Stores, Central Markets, Weis Markets, Ingles, and The Fresh Market.

Forward Looking Statements
This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in the Company's 10-K for the fiscal year ended January 31, 2016 and other filings made by the Company with the Securities and Exchange Commission.

Financial Tables to Follow

   
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Balance Sheets  
   
  October 31,     January 31,  
  2016     2016  
  (Unaudited)        
Assets  
               
Assets:              
Cash $ 655,030     $ 587,422  
Accounts receivable, net   1,871,200       1,476,582  
Inventories   459,504       252,752  
Prepaid expenses   202,416       154,458  
Due from manufacturer - related party   2,136,646       2,248,781  
Total current assets   5,324,796       4,719,995  
               
Property and equipment, net   1,022,050       1,047,455  
Total Assets $ 6,346,846     $ 5,767,450  
               
Liabilities and Stockholders' Equity  
               
Liabilities:              
Accounts payable and accrued expenses $ 383,567     $ 769,551  
Line of credit, net   -       933,001  
Term loan   140,004       120,000  
Promissory notes   94,746       266,808  
Notes payable - related party   -       125,000  
Note payable - net   2,848,523       -  
Convertible note payable - net   -       2,540,000  
Total current liabilities   3,466,840       4,754,360  
               
Term loan - net of current   548,329       320,000  
Line of credit - net of current portion   1,450,480       -  
Promissory notes - net of current portion   -       69,767  
Notes payable - related party   117,656       -  
Total long-term liabilities   2,116,465       389,767  
               
Total Liabilities   5,583,305       5,144,127  
               
Commitments and contingencies              
               
Stockholders' Equity:              
Series A Preferred stock, $0.00001 par value; 120,000 shares authorized;              
23,400 shares issued and outstanding, respectively   -       -  
Preferred stock, $0.00001 par value; 19,880,000 shares authorized;              
no shares issued and outstanding   -       -  
Common stock, $0.00001 par value; 250,000,000 shares authorized;              
27,562,906 and 26,507,516 shares issued and outstanding, respectively   275       265  
Additional paid in capital   15,675,571       14,954,928  
Common stock subscribed, $0.00001 par value; 66,667 shares, respectively   1       1  
Accumulated deficit   (14,762,806 )     (14,182,371 )
               
Less: Treasury stock, 230,000 shares, respectively   (149,500 )     (149,500 )
Total Stockholders' Equity   763,541       623,323  
               
Total Liabilities and Stockholders' Equity $ 6,346,846     $ 5,767,450  
               
   
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Operations  
(Unaudited)  
                       
  For the Three Months Ended     For the Nine Months Ended  
  October 31, 2016     October 31, 2015     October 31, 2016     October 31, 2015  
                               
                               
Sales - net of slotting fees and discounts $ 4,576,225     $ 3,237,780     $ 12,638,482     $ 9,330,259  
                               
Cost of sales   2,892,012       2,255,649       8,113,756       6,754,980  
                               
Gross profit   1,684,213       982,131       4,524,726       2,575,279  
                               
Operating expenses                              
  Research and development   38,529       33,877       106,316       77,435  
  General and administrative expenses   1,402,121       1,306,413       4,339,234       4,480,159  
    Total operating expenses   1,440,650       1,340,290       4,445,550       4,557,594  
                               
Income (loss) from operations   243,563       (358,159 )     79,176       (1,982,315 )
                               
Other expenses                              
  Interest expense   (153,159 )     (145,252 )     (472,870 )     (393,314 )
  Amortization of debt discount   (9,801 )     (79,400 )     (28,620 )     (261,670 )
  Amortization of closing costs   -       (12,622 )     -       (52,996 )
  Loss on debt extinguishment   -       (380,089 )     -       (380,089 )
    Total other expenses   (162,960 )     (617,363 )     (501,490 )     (1,088,069 )
                               
Net income (loss)   80,603       (975,522 )     (422,314 )     (3,070,384 )
                               
Less: preferred dividends   (46,800 )     (20,000 )     (158,121 )     (30,959 )
                               
Net income (loss) available to common stockholders $ 33,803     $ (995,522 )   $ (580,435 )   $ (3,101,343 )
                               
Net income (loss) per common share - basic $ 0.00     $ (0.04 )   $ (0.02 )   $ (0.12 )
Net income (loss) per common share - diluted $ 0.00     $ (0.04 )   $ (0.02 )   $ (0.12 )
                               
Weighted average common shares outstanding                              
  - basic   27,257,834       26,147,207       26,937,969       26,096,965  
  - diluted   27,507,834       26,147,207       26,937,969       26,096,965  
                               
   
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
           
  For the Nine Months Ended  
  October 31, 2016     October 31, 2015  
               
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net loss $ (422,314 )   $ (3,070,384 )
  Adjustments to reconcile net loss to net cash used in operating activities:              
    Depreciation   251,197       209,884  
    Amortization of debt discount and debt issuance costs   28,620       314,666  
    Share-based compensation   488,039       114,504  
    Loss on extinguishment of debt   -       380,089  
Changes in operating assets and liabilities:              
  (Increase) Decrease in:              
    Accounts receivable   (394,618 )     853,767  
    Inventories   (206,752 )     (23,701 )
    Prepaid expenses   (42,458 )     (37,697 )
    Due from manufacturer - related party   112,135       113,252  
  Increase (Decrease) in:              
    Accounts payable and accrued expenses   39,532       256,306  
      Net Cash Used In Operating Activities   (146,619 )     (889,314 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
Cash paid for fixed assets   (225,792 )     (204,024 )
      Net Cash Used In Investing Activities   (225,792 )     (204,024 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
Proceeds from issuance of preferred stock   -       560,000  
Stock issuance costs   -       (266,672 )
Deferred offering costs   -       (10,021 )
Proceeds from demand notes   -       650,000  
Proceeds from notes payable - related party   -       125,000  
Repayment of note payable - related party   (7,344 )     -  
Debt issuance costs   (50,000 )     (11,191 )
Borrowings (repayments) of line of credit, net   490,859       (331,799 )
Borrowings from term loan   340,000       -  
Repayment of term loan   (91,667 )     (90,000 )
Repayment of promissory notes   (241,829 )     -  
      Net Cash Provided By Financing Activities   440,019       625,317  
               
Net Increase (Decrease) in Cash   67,608       (468,021 )
               
Cash - Beginning of Period   587,422       854,995  
               
Cash - End of Period $ 655,030     $ 386,974  
               
SUPPLEMENTARY CASH FLOW INFORMATION:              
Cash Paid During the Period for:              
  Income taxes $ -     $ -  
  Interest $ 191,423     $ 363,647  
               
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:              
               
Stock issued for Series A Preferred dividends $ 225,114     $ -  
Prepaid stock-based compensation $ 7,500     $ -  
Accrued interest reclassified to principal balance of convertible note $ 358,523     $ 220,000  
Accrued dividends $ -     $ 30,959  
Stock issuance costs paid in the form of warrants $ -     $ 84,547  
Conversion of demand notes to preferred stock $ -     $ 650,000  
Stock issued for debt discount on convertible note $ -     $ 39,600  
Repurchase of common stock amendment of convertible note $ -     $ 149,500  
Promissory note issued for accounts payable $ -     $ 358,832  
               

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