George Kelly with ROTH. Excited to have Adam Michaels with me today from Mama's Creations. We don't have a ton of time, 25 minutes. I'll pause every once in a while to take questions, so if folks have questions, please shout them out. I'll get it kicked off. The three main topics I want to cover are, first, growth. Said you're growing like a weed, in organic, inorganic. There's a lot to cover there. Then margin, and then I want to talk about M&A. Oh, that's it? I think so. Okay. I guess we'll see how this morphs. Starting with growth, I want to first hit on some of your key customers and key retail partners. You recently laid out a target for this year, this fiscal year, to grow double-digit organically, and you've had a lot of success. Let's start with Sam's Club. That's been a great partner of yours. Costco. The club channel's been big. Maybe walk through your expectations this year in that channel, and Costco, a lot of recent news. I guess there's a fair amount to cover in club, but if you could lay out your expectations for this year and what you're most excited about. Thanks George, and thank you guys for having me. We're very focused. We believe strongly that club and mass are the two areas that are going to grow the most and win in this environment, and that's where we're focusing our efforts, our new product development efforts, our promo efforts, our marketing efforts. Yeah. We have a really broad-based success in that. You mentioned, actually, BJ's. You may not have mentioned, but BJ's is doing very well. Always adding new items there. Some really good non-protein items. It's good from a margin perspective. We just did this tortellini salad, roasted sweet potatoes. Costco has been a real winner for us last year. Actually, for the past 10 years. Some of you might have seen, we had our first ever MVM. This is their multi-vendor mailer. That's their highest ROI promo in Q4. That did pretty okay. Earnings haven't come out yet. We already announced that because of that success, we actually became an everyday item, at least in the Northeast. We haven't heard back from the other seven regions, but that has been really good. This is a business that's continuing to grow. Literally, just when I started, I think the first year, we had $570,000 of sales total, and I just started three and a half years ago. $570,000. Last year, meaning two years ago, we did roughly around $10 million of sales. In Q1 last year, we did $10 million alone in sales. We haven't shared our Q4 numbers, but the MVM should be doing better than what we did in Q1. Now we're an everyday item. Costco continues to do well, and not just with one product. They're playing around with lots of different products, new products. They're a great partner of ours. The last is Sam's Club, like you said, another long-standing customer, great partnership, multiple items there. From a club perspective, I feel great and I know we're winning share in that space, seeing great increases in velocities, which is very important to us. That's the long-term success. When you're seeing velocities increase, you know you have something right, and we're seeing that in all three of our club channels. Mass is new for us. Just go back a year and a half and there was no mass. We got into Walmart at the end of, I guess two years ago. What was it? November or December of- A year and a half ago. A year and a half ago. Calendar a year and a half ago. Calendar. Yep. That's amazing. We had one major item there. Actually, they did so well, actually, we got a second item in. I swear to God I didn't even know about it. How's that for keeping my hand on the wheel of the company? We just announced at Chris is doing just an absolute incredible job, our head of sales, and his team. He has built an amazing team. We just announced at our investor day last month that we got seven additional items in in one shot at Walmart. That is absolutely unheard of. Chris has something magic. Walmart's doing incredibly well, and again, I see it every week. Velocities continue to move up there. Actually next week, we will launch our first item at Target. Yes, from a top-line perspective, we are doing pretty okay. If we go back to Costco, you mentioned getting everyday status in the Northeast. What's the chances of you earning everyday status in other regions over the next few quarters? Who knows? I'm keeping my fingers crossed. Yeah. Look, we have a great product that's moving really nice from a velocity perspective. It's a differentiated offering that consumers are liking. I feel really good. There's nothing magical in the Northeast that's not as magical in the Midwest or Southeast or Texas or. Actually, there's three regions in California. California's a big state. I didn't realize that. Yeah. We're doing pretty okay. We talked about this this morning. You shared with us that the MVM success was pretty broad-based, right? It wasn't just the Northeast where the MVM. No performed well. Actually, I'm not sure. I don't think, actually, the Northeast was even the lead market from a velocity perspective. Yes, it is a beef meatballs play in all regions, which is a good thing. I've been in the food space for most of my career, and you name it, from kombucha to refrigerated nutrition bars. I've played with some pretty esoteric items. There's only so big kombucha, right, will ever get. It's a niche-y type thing. One thing that made Mama's so attractive to me was, I would really challenge you that there's anyone that won't eat one of our offerings. If you don't like beef, our meatloaf, sausage, and peppers, meatballs, great. We have chicken. If you don't like our chicken, we got sausage and peppers. You don't like sausage and peppers, we have paninis. My Nashville Hot Panini is my go-to lunch. Great, you don't like bread, we got salads, Mediterranean farro. You don't like salads, we have olives. You don't like olives, I could just keep going. I would challenge any of my 330 million friends in America who can't eat something from Mama's, and that's pretty powerful. On Sam's Club, you built a big business there primarily on two products. I guess you had a third seasonal item for part of last- Yeah. That did well fiscal year. paninis, actually. That did well. It did really well, yeah. Is there an opportunity this year, you think, to add more SKUs at Sam's Club? Chris, better. Yeah. Yeah, there's no reason. Again, I've been sharing this, and I'm being very honest with myself and to you guys, that I could tell you I could look anybody in the eye here and tell you we're everywhere. We're in all 50 states. Albertsons on the West Coast, Ahold on the East Coast, every Costco, BJ's, Sam's, Publix down South. I could look you in the eye and tell you we're everywhere. I swear to God, I could look you all in the eye and say, "We're nowhere." Because we're just so thinly distributed. We have roughly maybe seven items, seven SKUs in each store. We should be 27 items. That's without innovation. Yeah. Yes, am I happy with Sam's? It's tens of millions of dollars of sales, profitable sales. Yeah, it's great, but that's pathetic. Two items. It's shame on me. Okay, a lot of opportunity. Yeah, go ahead. All this growth, capacity additions, how are you planning for that? I planned for it by hiring Skip Tappan a year and a half ago. Skip is our COO, our first-ever COO. He ran logistics at companies you haven't heard of, like Walmart, Campbell's, and chief supply chain officer at Gordon Food Service. He has built an amazing team, an amazing infrastructure. We made an acquisition, a division of Sysco, last year, and doubled our manufacturing footprint. Skip is just doing an incredible job, driving efficiency through the plants. I think Skip shared at the investor day, we could double our revenue with our footprint. That was the thing. Yeah. I think you've got a $1 billion revenue goal. No, no, we will be $1 billion. It's not in a goal. Okay. Sounds like that's so terrible. What is your plan for after that? Have you planned it? After that? My wife said I got to take a day off, sleep a little bit. I don't know. Go to $2 billion. $1 billion is pretty pathetic. This is a $40 billion category. That's a 2.5 share. That is the lowest share I've ever had in my professional career. That is nothing to be proud of. That is something to build off of, but that's not that impressive. On M&A, can you address that? What do you look for when you're looking at acquisitions? Got you. I'm a pretty simple man. Three things. One, it has to be in the deli. Ideally incremental. Incremental could be incremental customers, like with the Sysco deal, we got two of their top three biggest customers we didn't have. That got us incremental customers. Incremental categories gets us into new subcategories within the deli. Incremental capabilities. One thing that actually the Crown business had, a really good MAP technology, modified atmosphere packaging, all natural, but doubles the shelf life naturally. Capabilities, anything like that. That's number 1. 2, has their own manufacturing. That's my secret way of adding capacity. I've had a lot of experience building facilities at PepsiCo and Nabisco, and I have failed 100% of the time, which you got to appreciate my consistency. Putting up four walls is the easy part of building a facility. It's building that culture within the facility that makes everything. That's number 2, has their own manufacturing. Third, my boys like to ski, so if you guys could find me a facility at the base of Aspen or Deer Valley, give me a call. That's it. Three things. Super simple strategy. Can you expand on number 2? You were telling us this morning just about the culture element in more detail about tenure. I think that was really an interesting. Actually, that was my secret question. Thanks. Strike the record. Look, there's a lot of great companies out there, lots of companies that have revenue, lots of companies, there's fewer of them, but lots of companies that have profitable revenue. For me, culture is everything. I spend a lot of time walking the lines. Every day I spend walking the lines, but particularly looking at acquisitions. To me, what's very important is understanding the tenure of the blue-collar workers. Most blue-collar industries, tenure is actually measured in months. Not even years, literally months. Mama's is a special place, right? Our tenure is literally in the high single digits in years. That's how cool it is. I believe that's what differentiates us in the marketplace when we have these crazy Costco rotations and just how could you possibly make that many meatballs or breasts of chicken or whatever. It's because our team does amazing things, because we've been doing it for years together, and everyone rolls up their sleeves, and that means possibly working an extra hour or having to come in on the weekends or whatever they have to do. That's why we win. It's our team. If I see a company that, for whatever reason, their tenure's 12 months, 18 months, that's legitimately a year from now, what did I buy? Everyone's gone. That's really important to me. Culture is everything when it comes to both identification and then also continuing to build our culture within the company. I'm so proud that Crown acquisition has been doing great. Skip has been leading the charge. A lot of it has to do with the culture of the employees. I love these guys, and they're taking on expanded roles. People are moving more around the business. That's what's pretty special. Great. Still on M&A, what kind of size targets are you most interested in? Crown was such a unique Maybe it wasn't unique. Tell us if there's more Crowns out there, but the dynamics and the valuation and the proximity, it checked so many boxes for you. With whatever you're looking at next, what's in the pipeline, like size, and should we expect things that are similar to Crown or maybe think more institutional-looking businesses? It was pretty special. It was cool. If you go back to the Creative Salads deal, who would've thought we could buy an amazing business for half times revenue, right? That was supposed to be an anomaly. We bought Chef Inspirational at a third times revenue. Okay, well, we just got lucky twice. That must have been an anomaly. We bought the Crown business at 0.3 times revenue. I don't know. Yeah. I think two points determine a line. Three points, sounds like something more than that. Okay. We'll see. Look, the beauty is there's two verbs that I talk about a lot that, this might sound silly, but make all the difference in the world. I want to buy other companies. I don't need to buy other companies. Our business is growing, what, 20% the past many quarters. That puts us in a much different place to be able to not have to jump at something because, and again, I promise you, my time at Mondelez, I had this experience. It's a so-so okay deal. At least it gets us an extra $100 million of revenue, and Wall Street gets off our back for a couple of months until the next one. I don't have to worry about that. I have a great business, and if I can't find an awesome business at a very attractive price, I'll just give Skip more money to build more facilities. I'll give Chris more money to put into trade. I'll give Lauren more money to put into marketing. That's a great ROI for me. The difference between want and need makes all the difference in the world. Is there, though, a minimum size that, if it's below, I don't know what kind of revenue threshold would- Yeah, I think it's not a number as much as Look, I've been doing this for a little bit of time now, right? Both at Mondelez and here, and I find that integrations take time, and it's actually not correlated to revenue. If anything, I haven't done the math. My son's a data analytics at school. Maybe I should have him do the correlation and see what it is. I'll bet you $1 it's inversely correlated. I have found that the bigger the deal is, actually the easier because they're a little more structured. These small businesses, you are what? That makes it pretty hard. Look, we bought a $50 million business when we were $150 million. Now we're 200 going north of 200. I don't know. Hopefully, it has three digits. Okay. Other questions from the group? Not including the cents at the end. Other questions from the group? No. Okay. I've got one. Yeah. What's the KPI or two that you're most focused on to measure your success? My personal success? Wow. I think he means work. The board is looking at you and not the stock price at some point. One of the things that I'm really proud of that we did when I came in was we redid all of the way we did compensation. Everybody on the team has six goals. Three team goals and three individual goals. This is important because when I first got here, literally the sales team job was just a revenue number. Sell at a loss because they'd get a bigger bonus. Right now we have a top line, bottom line cash management, and Skip could totally try to mess up with Chris and not sell, but that means he doesn't get his bonus. The fact that literally half of our bonus, we have to help each other out, makes all the difference in the world. For me, particularly because when I got here, this was an unprofitable business, margin for me, gross margin for me is most important. I can't pay my team if I'm not making any money. There's a lot of margin metrics. I would happily forego revenue to improve margin. That's important. I've created these 10 mantras for the company, and the first one is the most important one, is what gets measured gets improved. I track everything. Sunday is my work day. Don't feel guilty. I want to do this. I get up at 5:00 A.M., I work till 5:00 P.M., and by 4:59 P.M., I am the smartest guy in the company. I track everything. I am looking at profitability of every order, profitability of every customer. I'm looking at shipments. I'm looking at everything. Sunday is my day that no one's bothering me, and that's when I get smarter. The team knows they get lots of love notes on Sunday. The order went out wrong, customer, if there's an item that seems to be not as profitable as it was. Literally, I'm looking at our top 25 SKUs weekly profitability, and you don't get one week off. If it goes down a percentage point. This happened on Sunday. One of our items, one customer, for some reason, the margin went down literally four points in one week. Again, I'm pretty close to this business, so I know these prices didn't change. I know I didn't take a price increase or decrease. Carlene got a love note on Sunday. "Hey, what happened?" She sent me, "It's Monday today? I don't even know what day it is. Monday? Yeah. Monday. She sent me a note saying, "Adam, got your note. I'll get you back as to what happened." I don't let anything go to chance. I think the most interesting thing that maybe I'm doing a little differently than my predecessor is I don't hope that costs come down. I don't hope that commodities change. I don't hope anything. Actually, the best money we spent is actually Alberto, our Procurement Leader, helped us get this thing called Expana that has literally actual prices of commodities and forecasts for like 8 trillion items in every country. It's the wildest thing ever. If you want to go down a rabbit hole, I do that every Sunday. When we see that they're forecasting beef or chicken to move, Chris is already getting a love note on, "Hey, this is what happens. Let's call the customer in advance to say, 'Hey, I'm not asking for a price increase now, but I'm submitting something because you're not going to be playing a game with me that let me wait three months before I get my price increase.' Let me submit something. If nothing happens, great. I'll un-submit it or you can reject it. If it does move like this data Expana says, this third party, has nothing to do with me, says." Not only do I not hope things change, I'm proactively making recommendations. Is that a common practice among food companies? How do the clients respond? I don't know. That's George's. He knows all the food companies. I don't know. Okay. I know what I do. Well, I meant the grocers. Your clients. What's really cool is it took me a couple of years. I love the margin we have in our legacy business. I'm still working on the Crown acquisition. I told you guys that I'd have a year to fix the business, which we're doing, and Skip's ahead of plan. For the original business before we acquired Crown, I love where we are. The margins are perfect. That means I don't have to quote unquote "fix anything." However, if chicken goes up $1, I'm getting a $1 increase. I'm not asking for more profit. I'm just asking for the same profit that I had that you and I agreed to before. I think the fact that I'm not asking for anything. I'm telling you, I'm showing you, I'm not looking to get more profitable. I'm just looking to hold the level of profitability. By having that data, I think it's easier. Now, Chris would say, "Adam, you're smoking something," and it's really hard, but Chris is a magician at that, too. Why can't the customer, the grocer, substitute away from you and the competitors if they're not making the price? They could. How often does that happen? Another thing that our friend Jack Welch taught us, remember back in the 1800s, remember he said, he wants to be number 1 or number 2 in the industry or get out. I look at that the same way of our products. We're not just in Sam's. George said we're in Sam's. No, we're not just in Sam's. We are the number 1 item in the deli set in the entire country. We're not just in BJ's. We're the number 1 item. We're not just in Publix. We're one of the number 1 items in the entire set. You're absolutely right. If you just want to be in a customer, and you want to be the 83rd item in that customer, you do not have a lot of power. If you're the number 1 item, and I'm not asking for anything egregious, I'm just asking for where we are. It happens. That's why we choose which customers we want to be into. There are some customers that are strictly on price. We're never going to win there. Right? Year ago back if you had a $1 cut, you say we maybe cut it for you? I'm sorry, I don't have any clue what you just said. Meaning- I'm joking. No. Sometimes. Some customers might do that, and I'm open-minded, but that's, I don't know. Have you ever seen OREO go down in price in your lifetime? No. I learn from a lot of people. I guess, just quick, the grocers talk about the margin profile for the fresh deli for the grocer. It's a big margin category. Yeah. The other thing is it's a real win-win for everybody. The center aisle margin in a grocery store is about 30%. Right? They make about 30% on their OREO or Frito-Lay chips. Meat section, seafood, maybe let's call it a 40% margin. Deli's a 50% margin. That means that if I'm selling that to them for $5, they're selling it to you for $9.99. First, it's one of the most profitable parts of the store. Bakery's slightly better. Second, it drives more trips. Right? You don't just go into the store to pick up toilet paper. Maybe toilet paper, but if you forgot OREO, you'll wait till next week. This is your dinner that night, so you're going in. Third, George is very focused, but most of us will go in if we're going to get the meal. Ooh, OREO came out with a new flavor, I picked that up." The baskets are bigger. That sort of trifecta makes the deli space really attractive. They're adding more shelf space, more linear feet of space. It's win-win. It's awesome for the retailer. It's terrific for the consumer. Right? You can't even Ian's body is a temple, but have you guys been to McDonald's recently? No, of course not. I've been to McDonald's recently. You can't get out of there for more than $10. Right? This is a better-priced item. Right? Our products, I want it to be $9.99. Chris will end up selling it for $8.99, but that's fine. It's pretty okay for the manufacturer. We got to end it there. Apologies, we're already over. Thank you very much. Thank you. Appreciate it. Thanks everybody.