SPRINGFIELD, Mass.--(EON: Enhanced Online News)--Hot Mama’s Foods, Inc., (OTC:HOTF) a leading specialty food manufacturer, co-packer and private label resource for innovative organic, all-natural, and gourmet foods, which include fresh hummus, salsas, and pestos sold under both its own label as well as for other leading food retailers, today is providing a business update.
“An important step solidifying our future growth was becoming a publicly traded company. Being a public Company will provide additional financial flexibility as we continue to grow our business both organically and through acquisitions.”
“The current year has been an exciting and busy one for us as we position the company for future growth” commented Matthew Morse, Chief Executive Officer. "We have expanded both the executive and senior leadership teams and have made substantial progress on a larger manufacturing facility in Chicago. We also continue to increase our product offerings and add new clients which is being reflected in record revenue.” Mr. Morse further commented, “An important step solidifying our future growth was becoming a publicly traded company. Being a public Company will provide additional financial flexibility as we continue to grow our business both organically and through acquisitions.”
Financials. For the three month period ended June 30, 2013, Hot Mama’s Foods’ revenue increased 20.7% to a record $9.4 million compared to the same period in the prior year. This good performance was driven by the Hummus product line which accounted for 72% of revenue, up from 66% in second quarter 2012. Higher volumes reflect effective marketing campaigns as well as increased customer demand for Hot Mama’s higher quality products. Total revenue for the six month period was $17.0 million, an increase of 18.8% over six months 2012. Looking ahead, revenue growth will be driven by additional product offerings as well as increased sales to existing customers.
Higher revenue also contributed to the gross profit increase of 8.7% in the quarter. Gross profit as a percent of sales, however, was lower due to a combination of higher raw material and labor costs. The company is taking steps to improve this with productivity enhancements at the plant level. Selling General & Administrative costs increased 22.4% in the quarter, with the increase primarily attributable to an increase in payroll as the company expanded its executive and leadership ranks, as well as costs associated with the September 2013 merger. As a result, profitability was impacted as the company made the necessary investments to support future growth.
Plants. Hot Mama’s is increasing production capacity to meet growing demand. Earlier in the year, the company signed a lease for a 70,000 square foot facility in Wheeling, IL. Completion of this facility is moving along as planned with first production anticipated to begin before year end. By early 2014, the company estimates it will have sufficient capacity to support upwards of $100 million in revenue. The company is also planning to expand and upgrade its owned facility in Springfield, MA. Projects underway will not only increase capacity but will enable the company to produce a more diversified portfolio of natural and organic food products.
Products. Innovation and new product development are key drivers of the business. The company has been able to successfully drive top line growth through increased market penetration, additional product offerings as well as promotional and marketing efforts. Hummus sales, which accounted for 68% and 72% of revenue in 2012 and second quarter 2013, respectively have also benefitted from increased category growth with sales fueled in part by increased consumer awareness. During the year the company introduced several new flavors of existing products and began production on frozen entrée’s and side dishes. Salsa is also an important category for the company and accounts for approximately 12% of revenue and similar to Hummus, the company continues to develop new and exciting products for its grocery customers. “Diversification of our product portfolio is a key component to our growth strategy,” commented Joseph Ward, President & COO. “Our movement into the frozen entrée and frozen side dish category has been driven through the on-boarding of two new co-pack customers.” The company expects to introduce more than two dozen new products in various categories over the coming year.
Customers. Recent new customer wins and growth within an existing private label customer will add approximately $5 million to revenue in the first year. Two new co-pack customers include (1) Mama Mae’s, LLC (www.mamamaes.com) which markets a variety of frozen entrees and side dishes under its brand name “Mama Mae’s” and (2) BeetNPath, LLC (www.grainful.com) which markets a savory, steel cut oat frozen entrée line under the “Grainful” brand.
Leadership Team. Having the right team in place was necessary in order for the company to reach the next level of growth. To that end, additional hires were required across many areas of the company. The first of the year, Joseph Ward came onboard as President and Chief Operating Officer. Joe brings over 16 years of related food industry experience, most recently at Hanover Foods Corporation, one of the largest privately held food processors in the U.S. In late summer, William Kenealy joined as Chief Financial Officer. He has 20 years of experience in the consumer products industry, including 13 years as CFO. Joe and Bill join Matt Morse, CEO in the Executive Suite. Also joining earlier in the year, was Evelyn Rivera-Riffenburg as Director of Human Resources. Evelyn is a seasoned executive bringing over 20 years experience in all aspects of Human Resources to Hot Mama’s. On the operations side, the new team is also very experienced with Carl Haag, Director of Business Development bringing 24 years of food industry experience, both branded and private label and Mark Kretzinger, VP of Research & Development having of 25 years of culinary experience, including 14 years of new product development. Jose Reyes rounds out the new hires having joined last month as General Manager – Midwest Operations. He has extensive experience in Lean manufacturing as well as, a strong solution focused, analytical approach to manufacturing.
ABOUT HOT MAMA’S FOODS
Hot Mama's Foods is a leading specialty food manufacturer, co-packer and private label resource for innovative organic, all-natural, and gourmet foods. The Company has proven expertise in developing and manufacturing top quality salsas, sauces, pesto, hummus, salads, dips, prepared deli salads, and many other gourmet foods. Hot Mama’s Foods is one of the largest producers of hummus and salsa in the United States. The Company’s products are USDA Certified, Certified Organic, and independently audited. Hot Mama’s provides versatile, highly time-sensitive services to discerning food retailers, foodservice customers and food brokers nationwide. Hot Mama’s Foods also develops, produces and sells fresh salsas, hummus and other fresh food products under its own label – Hot Mama’s Foods. The Company has state-of-the-art production facilities in Springfield, MA and Elk Grove Village, IL.
Hot Mama’s Foods was formed in Wendell, Massachusetts, in 1984 as a maker of a variety of fresh salsa recipes, distributed directly to small local retailers by its owner-operator. In 1991, the Company was purchased from its founder by Matthew Morse and maintained as a sole-proprietorship until its incorporation on January 29, 1999 under the name Lansal, Inc. under the laws of the Commonwealth of Massachusetts.
The Company has experienced rapid growth in recent years. Since 2008, revenue has increased slightly over 100%. In 2012 revenue increased 35.8% to $28.9 million. Growth has been driven by increased market penetration, additional product offerings, and, in part, by promotional and marketing efforts increasing awareness of the hummus category in particular. Additional information about the Company can be found at www.hotmamasfoods.com, and at the SEC’s web site www.sec.gov.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this press release are forward-looking statements. These statements relate to future events or to the Company’s future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company’s control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Such risks, uncertainties and other factors, which could impact the Company and the forward-looking statements contained herein, are included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.