MamaMancini’s Holdings, Inc. — Form 10-Q Summary
Business context and reporting period. The filing is for the quarter ended July 31, 2021 (the three and six months ended July 31), for MamaMancini’s Holdings, Inc. (ticker MMMB), a manufacturer and distributor of prepared meat and sauce products. The company’s fiscal year ends January 31.
Key financial results
| Metric | Three months ended July 31, 2021 | Three months ended July 31, 2020 | Six months ended July 31, 2021 | Six months ended July 31, 2020 |
|---|---|---|---|---|
| Net sales | $12.06 million | $10.25 million | $22.38 million | $21.08 million |
| Gross profit | $3.37 million | $3.08 million | $6.71 million | $6.54 million |
| Gross margin | 28% | 30% | 30% | 31% |
| Operating income | $0.58 million | $0.81 million | $1.44 million | $1.78 million |
| Net income | $0.43 million | $0.74 million | $1.06 million | $1.65 million |
| Basic and diluted EPS | $0.01 | $0.02 | $0.03 | $0.05 |
| Operating cash flow | Not separately presented | Not separately presented | $1.62 million | $1.47 million |
For the six months, investing cash outflow was $481,295, primarily for machinery, equipment and leasehold improvements; financing cash outflow was $74,994. Cash increased $1.06 million to $4.25 million from January 31, 2021. At July 31, current assets were $10.92 million, current liabilities $4.85 million, and working capital $6.07 million.
The company reported no balance on its M&T term loan or working-capital line at July 31. Finance lease liabilities totaled $571,223 and operating lease liabilities $1.61 million. Cash was $4.25 million; $4.01 million was above federally insured limits.
Changes versus the prior comparable period
- Net sales rose 18% for the quarter and 6% for the six-month period, attributed to new products and higher volume from major customers.
- Gross margin declined 2 percentage points in the quarter and 1 point for the six months. Management cited higher raw-material, packaging and inbound-freight costs.
- Net income fell to $431,925 for the quarter and $1.06 million for the six months. In addition to weaker gross margin, 2021 results included income-tax provisions of $145,439 and $393,388, respectively; the comparable 2020 periods had no tax provision.
- Operating expenses increased 23% for the quarter and 11% for the six months. Drivers included freight and postage, compensation, director fees and $80,000 of NASDAQ uplisting costs. Six-month increases were partly offset by lower professional fees and stock compensation.
- The company revised 2020 comparative revenue and general and administrative expense presentation for promotion costs: reductions of $136,920 for the quarter and $402,898 for the six months. The revisions did not change operating income or net income.
Outlook, risks and unusual items
- No specific revenue or earnings guidance was provided. Management said cash resources were expected to cover requirements through September 9, 2022 at current and projected operating levels, while noting that additional financing might be needed for growth and that availability on acceptable terms was not assured.
- After quarter-end, M&T amended the working-capital line to $6 million and extended its maturity to August 4, 2026. A separate $6 million acquisition line was approved on August 3, with two years to draw and, if drawn, repayment over 60 months. Neither facility had an outstanding balance at July 31.
- A December 2020 plant fire disrupted a spiral oven; it returned to service in late February 2021. The estimated loss was approximately $656,700. Insurance proceeds were recorded, including a $107,896 receivable at July 31; the claim remained open for possible additional business-interruption recovery.
- Customer concentration was significant: three customers represented approximately 33%, 21% and 10% of six-month gross sales. The filing also identifies competition, changing consumer demand, food-price volatility and broader economic conditions as risks.
- The company disclosed no litigation it believed would have a material adverse effect, no defaults on indebtedness, and no material changes to internal control over financial reporting. It reported no off-balance-sheet arrangements or hedging activities.
Important facts for investors to verify
- Whether the margin pressure from commodity, packaging and freight costs persists and whether pricing or efficiencies can offset it.
- Major-customer concentration and collections: the filing gives receivables concentration figures but labels the measurement date as April 30, 2021, which does not clearly align with the July 31 reporting date.
- The status and final proceeds of the open fire-insurance claim, including the $107,896 receivable.
- The terms, availability and any borrowing under the working-capital and acquisition facilities, and management’s liquidity assumptions through September 2022.
- The effect of the recorded tax provisions and the realizability of the deferred tax asset, which declined to $353,794 from $744,973 at January 31, 2021.