Greetings, and welcome to MamaMancini's Fourth Quarter and Fiscal 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Adam Michaels, Chairman and Chief Executive Officer. Thank you, sir. You may begin.

Thank you, operator, and thank you to everyone for joining us today. I'd like to welcome you to our fourth quarter fiscal 2023 financial results conference call. Throughout the second half of fiscal '23, we continued to execute our [3C] strategy delivering another strong quarter on our sustainable path to profitability, further building the foundations for a national deli solutions company. In the fourth quarter, we saw significant increases in margins and sustained growth and profitability. 68% sequential growth in net income to $1.8 million in the fourth quarter to be exact. We continue to execute on our goal of accelerating and expanding our existing family of brands, while strategically leveraging incremental consumer-driven innovation and accretive potential acquisitions to fill out gaps in our portfolio as needed. Our vision is to become a one-stop shop for prepared foods for grocery, mass, club and convenience channels, addressing the $40 billion-plus food service and prepared foods market with our grocer partners. With food inflation for 2022 rounding out at 12.5%, unemployment at 3.5% with underemployment closer to 7% and recessionary pressures abound, consumers are choosing to eat out less and are transitioning even faster and in greater numbers to grocery food store prepared foods. Even with these pressures, there is still an intense consumer desire for quality with many focusing more than ever on quick, clean and fresh meals made with better ingredients at a price more affordable than eating out. Recent studies show that the private label food and beverage category is growing at twice the rate of branded with 73% of consumers having developed a taste for private label brands with no plan to switch back even after the economy approves, a tailwind for our hybrid strategy of pursuing an even mix of branded and unbranded opportunities. On the other…

Thank you, Adam. Revenue for the fourth quarter of fiscal 2023 increased 64% to $22.8 million as compared to $13.9 million in the same year ago quarter. Revenue for fiscal 2023 increased 98% to $93.2 million as compared to $47.1 million in the prior year. This increase was well balanced between volume and price largely attributable to strong organic growth across all divisions, chiefly through cross-selling as well as by inorganic growth through the acquisition of T&L and Olive Branch. Further -- to provide further color, the organic growth we saw from T&L and Olive Branch in their first year post acquisition exceeded our initial expectations by over 150%. Gross profit increased 147% to $6.4 million or 28.2% of total revenues in the fourth quarter of fiscal 2023, as compared to $2.6 million or 18.7% of total revenues in the same year-ago quarter. Gross profit increased 64% to $19.4 million, or 20.8% of total revenues in fiscal 2023 as compared to $11.9 million or 25.2% of total revenues in the prior year. The increase in gross margin was attributable to the normalization of commodity costs, successful pricing actions and improvements in operational efficiencies across the organization. The company continues to identify procurement and logistics efficiencies and cost savings through stronger buying power created through the acquisition of T&L and Olive Branch. Operating expenses totaled $4.5 million in the fourth quarter of fiscal 2023 as compared to $4 million in the same year ago quarter. As a percentage of sales, operating expenses decreased in the fourth quarter of 2023 to 19.9% from 28.8% in the same year ago quarter. Operating expenses totaled $16.6 million in fiscal 2023 as compared to $11.8 million in fiscal '22. As a percent of sales, operating expenses decreased in fiscal 2023 to 17.8% of sales as…

Thanks, Anthony. It's great when the last chapter of the year ends on a high note and with momentum into the next fiscal year. Operationally, fiscal Q4 2023 did not disappoint. As Adam and Anthony have both mentioned, but it's worth repeating, gross margins in the fourth quarter improved 950 basis points year-over-year to 28.2% further illustrating that fiscal 2023 was a tale of 2 halves. We were successful in reversing the challenging first half numbers and beating our own estimates while laying the foundation for profitability for years to come. Now let's talk about how we achieved this level of success in the fourth quarter. First, we addressed labor. As with Q3, our management team in East Rutherford continued to hold the line with regards to overtime in Q4. To keep a positive working environment, overtime costs were replaced with strategic incentive programs to get more productivity in less time. The cost of the incentives were surpassed by the additional volume the plant was able to generate and the results was a reduction in labor cost of 220 basis points year-over-year and 70 basis points sequentially. Second, we continue to work hard at leveraging the combined purchase power of our 2 facilities to drive down our prices with suppliers of key raw and packaging materials. We took advantage of commodity softening to buy in at aggressive prices, which held through Q4. Carefully watching the ag market in Q4 helped us lock in at a low price just prior to a 90% increase in the category. Overall, we were successful in reducing raw and packaging costs in East Rutherford by 785 basis points year-over-year. Finally, we tackled logistics. Our newly formed logistics team continued to be aggressive in Q4 and challenged our freight carriers to provide best-in-class service at fair…

Thank you, Matt. Our aspiration is to build upon the strong foundation and vision outlined here today, driving sequential increases in profitability throughout this fiscal year, enabled through an increase -- enabled by increasing our average items carried, penetrating new retailers and further strengthening our margin profile. Accomplishing this through the impending build-out of our sales and marketing organization paired with the future acquisitions to further build out our in-house capabilities and product suite will allow us to become a first-of-kind national deli solutions company. All with the goal of delivering sustainable long-term value to my fellow shareholders. With that, I'll turn it over to the operator to begin our question-and-answer session. Operator?

[Operator Instructions] Our first question comes from Ryan Meyers with Lake Street Capital Markets.

Nice work on the quarter. It's always good to see another solid quarter of execution. As we think about the gross margin at 27.5% that you guys reported, is this the new baseline for the business that we should think about? And as we look at FY '24, the goal is going to be to kind of meet or exceed that? Or is there any seasonality going on that we saw here in Q4 that was kind of stronger than, I guess, expected gross margin? Or how should we think about that?

Yes. Thanks, Ryan, and I appreciate the fine words. A great team effort. I think as we said in our calls, we're working to be -- to move from the mid-20s to the high 20s. I think that we'll have to continue to watch commodity prices. We see beef prices moving up and chicken. But I think equally, I'm really excited to see what the team is able to do. There's still tons of stuff that I know Matt is working on, Joselina and others. So I think we're targeting that upper end of the high 20s, maybe the low end of the high 20s, but that's what we're shooting for. And I think that's what the team is working towards every quarter.

Got it. And then can you quantify the revenue during the quarter and how much of that came from cross-selling versus how much of it was just kind of strength in the existing products?

Yes. So we don't do customer by customer, but I can say that, first of all, all 3 of our businesses grew double digits. So all 3 of our businesses are growing organically double digits. I think cross-selling certainly helped a lot. Our sales lead would tell you that it is much easier to sell a plethora of offerings, whether it be beef or chickens or salads or sandwiches versus just historically selling meat balls or just sausages and peppers. So I think the cross-selling is actually working, and I shared some examples of some of the customers that we're getting cross-selling for. I would use this time to mention we spoke a little bit about future growth. I continue -- we continue to be very focused on margin. There are -- in the first half of this year, there was a club rotation that we elected not to renew because we didn't feel it met our margin thresholds. That customer is actually doing great, literally growing double digits but that particular rotation, we -- again, we decided that the focus is on margin. I think that the first half of the year is going to be a little more muted, but I do expect the second half of the year to be growing double digits.

Got it. Yes. No, that's helpful. And then just kind of a bigger picture question. As we look at FY '24, what do you feel like are the biggest milestones that we should be paying attention to? As far as getting a good understanding of the execution of the business and how you're continuing to build this?

Yes. No, thank you. So I mentioned earlier that I am super proud of what Anthony has built in finance and what Matt has built in operations. I said the next thing that we have to go after is continue to build up our sales and marketing organization. That is the -- again, after margin, that is the focus. So I think the big thing that I need, I hope you guys see from us is, one, we get the team in place. You see what we did when we get great finance talent, you see what happens. You see what happens to our margin when you get great operations talent, you see what happens. I want you to see the same thing. So we are very focused on HR to bring in great marketing talent and great sales talent. I think that's the thing that if you see that in the first half of the year, we feel good that in the back half of the year, those investments will reap return. So the last thing I'll say is immediately, what's great, you're seeing an immediate impact when it comes to margin on these new hires. So this is like found money. The ROI is huge when you bring in great talent, and that's what we've seen in the past, and that's what I expect to see with our sales and marketing team that we're hopefully able to hire in the future.

[Operator Instructions] Our next question comes from Howard Halpern with Taglich Brothers.

Congratulations, guys on great quarter and great year. In terms of migrating into the convenience store market, how some of those tests have gone throughout the year?

Yes. So thanks. And Howard, so thanks for talking about the Meatballs-in-a-Cup. I'm really excited. Actually, the team has been working on it, and you're going to see some even more excitement at IDDBA, where we'll be unveiling a portfolio of sorts of Meatballs-in-a-Cup, which has been doing well. I think the tests have been great. The tests have actually done exactly what we hoped it would do, which is give us additional information. You'll see some slight tweaks to the new product that gets unveiled in June, and we're getting great feedback from the customers. I think post-IDDBA, you're going to see us talk about more items, more customers and again, opening creating that billboard effect. I think one item is a challenge. Now I think you're going to see at IDDBA that we have a number of offerings that's going to make it actually easier to drive velocity of the products. So very excited.

Okay. And in terms of getting the sales and marketing team in place in the first half of this year, with the product portfolio that you do have, do you envision the sales cycle being much -- just shorter or a different type of sales cycle to get into brand new customers?

Yes. So I think there are a couple of things directly to your question that help us and create some tailwinds. So the first one is we have a lot of great customers that we're meeting with every single month -- existing customers, every single month and every single quarter, and it is exponentially easier to get a new product in to an existing customer versus finding a new customer, filling out the 833 forms and getting all those approvals. The first thing that we're doing is actually going after existing customers. I've spoken in the past that we're averaging only about 5 to 6 items carry per store. I'm not exaggerating. We should be at not 5 to 6, we should be at 15 to 16. We have all the products there. So I think that's going to help. The other thing that I'm optimistic about is bringing in some new talent, specifically leadership in the direct-to-consumer space will unlock additional areas that, again, have a shorter cycle than again, finding a completely new customer. But it can and it will happen.

Okay. And with the incremental increasing the products on the shelf, that will only help gross margins down the road, correct?

Absolutely. I'm glad you highlighted that. Without a doubt. So keep in mind, you get -- we're already speaking with the customers. Our trucks every day are already going there. So any chance, I know, Matt, make sure definitely reminds me. Every chance to get a full truckload, 24 pallets to a customer, the better we are, actually, to your point, freight actually declines. So yes, absolutely, that's no secret that's what my focus is.

Okay. And then just one last one. CapEx, anything out of the ordinary for this upcoming year or it should be somewhere around the same as it was last fiscal year?

So I actually hope it's slightly more. The great news -- so first, the great news is we had plans, and we got approval from the Board to increase CapEx; two, we made sure that all of that CapEx, 100% is funded from cash flow from operations. We have an amazing team, an amazing relationship with our bank M&T and I actually hope I'm pushing the team to invest more. Now very specifically, I'm looking to invest more CapEx and things that are going to drive higher efficiencies in our facilities. Matt mentioned this, [indiscernible] a 40% improvement. I'm working with Anthony Morello, who leads our Farmingdale, T&L facilities on what we can do to drive greater efficiencies in our chicken production and salad production. So I'm actually looking to increase CapEx. But again, all of that is within plan, within our margin profile and all funded through cash flow from operations.

There are no further questions at this time. I would now like to turn the floor back over to Adam Michaels for closing comments.

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

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.