Armanino Foods of Distinction, Inc. ($AMNF)

Good day, and welcome to the IAccess Alpha Virtual Best Ideas Spring Investment Conference 2026. Our next presenting company is Armanino Foods. [Operator Instructions] I'd now like to turn the floor over to today's host, Deanna Jurgens, CEO of Armanino Foods. Please go ahead.

Thank you. It's great to be with you all today. I'm really looking forward to sharing a little bit about Armanino Foods and answering a few of your questions over the next 30 minutes. And if there are 3 takeaways that I hope you get from this presentation, it's one, that Armanino is the market leader in the pesto sauce category within foodservice, two is we have an incredibly strong and sustainable P&L. And three is the opportunity for growth, which has really led me to this company and what I'm really excited about to share with you today. So we have our standard forward-looking statements, but I won't go into detail there. But I want to start by sharing a little bit about who we are, just in case we are not a familiar company to you. So Armanino is really the leading producer of premium frozen Italian sauces and we sell this across North America and in some select international markets. And so we'll talk a little bit about our market leader position, but how we've gotten there is through our partnerships with all of the national distributors. So Armanino is carried at all the major distributors across the United States, making it very easy for our customers to access our products. I'm really excited about growth and to talk to you a little bit more about the levers that we have into the future as well as our balance sheet. So not only being debt-free, but we have incredible strong cash, and we have a very disciplined use of our capital allocation. And most importantly, what I'm very proud of is the management team that has been here and those that I have brought on. So as you can see in the upper right, some of our financials. And again, great market cap, our revenues, very strong margins, consistent growth on EPS, quarterly dividends. We just raised it at the end of last year. And where our shares outstanding are. So a little bit about our background, but we are a family originated business. And our founder, Bill Armanino, his parents immigrated from Northern Italy. And what his mom brought was a basil pesto recipe and his father brought a knowledge of farming. So as we looked at -- they came to the Bay Area. They started a farm. And Bill was young at the time and just starting off and Bill went to go work for Kraft Foods. He was very interested to say, how do I scale a food product and he got a lot of ideas while there, and he came back and talked to his parents and said, "I think we should start a business. So they made the decision to sell the farm, use mom's recipe for basil pesto. And at that time, people made basil pesto. They didn't buy it in a store. And he really was the first to break into this category. And this is the foundation that we continue to harken back to that guides us from our values, from our culture with how we produce our product and something we're very proud of. The market opportunity, if you look over on the right, there is projected growth of over 5% into 2030. And you also see in the sauces, culinary sauces growth there, too. So we're just a small player within this today, and I'm very excited to focus on how do we get more of our fair share of not only the sauce category, but sauce, dressings and condiments. And why do we have the right to play here? Well, our product appeals across day parts, whether it's breakfast or lunch. It also has an ethnic and fusion appeal. So whether you're talking roasted red bell pepper or Harissa or Core Basil Pesto, we have something for everyone. And because we are a food service business, we are ready to use for our operators. We make it very efficient. We make it very cost advantaged for them and ready to use, which saves them time. And we're not only in the restaurant business, but we're also in retail. So we want to be where the consumers shop and where they can get our sauces. And so to that, if you look at our primary focus, which is today food service, this is where we really lead. You can see that basil pesto is our gateway product. This is really our lead, what Bill Armanino established this company through, but we have a lot more sauces than just basil pesto. We have about 30 sauces in total that we sell today. We also sell pasta and meatballs. And so -- and you can get that full portfolio offering at our retail. It is a full Italian meal occasion that we offer to our consumers. And I talked earlier about the breadth and depth of our offerings. You can see on the left-hand side within foodservice that we are in all of the major distributors today, Sysco, PFG, Dot and US Foods. So no matter where our customers are in the United States, they have the ability to access our products. And just last year, we brought on Affinity Group as our national broker, really excited about their representation of our product, and they have over 900 feet on the street that is selling Armanino every day to those customers within the foodservice channel. And then you can also see where we are currently selling in the retail channel, and that continues to be an area that we expand and grow as well. But as I look at the white space and I talk about the opportunities for growth, these are really the 3 areas that we, as a company, are leaning into and investing behind. And the first is our pesto and our sauce category. So as we look at our existing customers, where our business is today, how do we get them to buy one more sauce. So maybe they buy basil pesto today, how do we get Southwest Chipotle, as an example, added to their menu? And how do we bring our pesto and sauces to new customers within the existing foodservice channel. But then I look at white space. And one of the white space opportunity is Tier 1 QSRs. These are national quick service restaurants and large-scale businesses that we've really never sold to with any focus in the past. And so I've added resources that have expertise in these channels, and we are actively calling on these customers and working on menu development to get into these larger national accounts. And then third is our international business. And while we've had a great business in Asia for quite some time, we've really never expanded beyond that. And so one is how do we really work with our partner in Asia and how do we expand their business, which continues to be to grow at a healthy clip. But how do we also expand beyond Asia and look at North America, Europe, the Middle East and other areas where sauce is very relevant to the menu occasion and helps make a difference for our customers internationally as well. So we have a lot of opportunity in terms of growth. But then as we look at cost management, I'm also focused down the P&L to say, what can we be doing to lock in pricing, ensure we maintain our cost and controls. And so these are a few areas that I've been focused on. One is really looking at where do we buy the most and how do we really get long-term contracts on those commodities or ingredients that is -- potentially could be influenced by whether it's inflation, whether it's tariffs or the uncertainty of the economy. So we have been able to lock in a minimum of 12 months for some of these key ingredients to give us assurance for our margin and our cost. We've also looked at supplier redundancy, and we did not have a lot of redundancy when I started here. So very, very important because as you have these commodity ingredients, things can happen with the weather, with transportation, all kinds of things can go wrong. So really important to us to have that redundancy on our core ingredients. And then as we scale in bulk, so where we buy in scale, how do we negotiate those prices and to ensure to take advantage of our purchasing power. And then lastly is the technology enablement. And as we know, technology and AI is really taking hold. So we want to make sure we're using the latest to help us drive efficiency and effectiveness at scale. But it's not just on those levers, we are also really looking at our trade and where we spend and how we spend, and we realize that adding incentives and promotions are important to our customers, but how are we really thoughtful in how we spend that. So we have been able to get some reduction there, which has enabled us to grow our profit margins. It's not the only lever that we have pulled, but it is one of -- and you can see that, that chart there, we're very proud of. So Armanino within our competitive set is the strongest margin. And it's through these areas of optimization while growing that has enabled us to have gross margins to that degree. But we are investing. So we are investing in growth. We are investing in our manufacturing to say, how do we continue to take advantage of technology. So whether that's automation, robotics, technology itself, we are continuing to make that happen so that I am being the most diligent in managing my cost, but also increasing my efficiency, and this is another way that we're making that happen. So all of this together, you look over the years and kind of where we are as of Q3 in 2025, very strong trajectory of our top line growth, but you can see that we have been able to grow our margins and as a result, to our operating margin and maintaining a very healthy cash position while having no debt as a company. So these are some of the reasons why you should take interest in us as a company because we've got just a really, really strong P&L. And then as I mentioned, really building a world-class team, and I'm very proud of the leadership team we have been able to assemble from our most recent hire, Andrew, as our CFO. But then as I focus on growth, Bryan Jones is helping lead that for me. And Jaimi is really focused on those national accounts. And so really strong team across the Board to enable this growth strategy to take place. So with all of that said, why Armanino? These are some of the things that I hope you take away from we are the market leader in foodservice in the pesto category. We have very strong distribution to enable us to scale and grow. We are looking at growth levers outside of our core and traditionally where we've played with international and national accounts playing a big part of that. Our P&L continues to be very robust and strong and top tier and very happy with the management team that I've put in place. So that tells you a little bit about who we are as Armanino and where we're headed. I did receive a few questions that I would like to answer for you guys. Unfortunately, I won't be able to get to all of the questions that you asked, but I will try to answer just a few here.

So the first one is, how should investors think about the sustainability of current demand across your core Italian food categories and what is driving the recent growth trajectory? So what I would say and one of the reasons that drew me to Armanino is I looked at the last 20 years of the P&L. And basically, what was most impressive is that the CAGR of sales of net revenue over 20 years was 9% growth. So to see a company that provides the consistency over time year-over-year really tells you something about the strength of the product and the channel in which they sell. And so we have really taken that and starting to employ some of these growth levers that I've talked about today, specifically within our foodservice space that is helping us to take growth to the next level. But I feel very confident with our strategy on strengthening our U.S. foodservice business, unlocking our national accounts and scaling internationally that we will see continued growth trajectory for the years to come for this business. Okay. Question number two, can you discuss capacity at your current production facilities and whether additional investment or expansion will be required to support future volume growth? I think this is an excellent question, and it's one that I think about often because for me in running this company and setting out a very aggressive path for growth, I also need to look at our facility that we have been in for 30 years to say, can this support this future growth. And so we are looking at that. We are doing quite an in-depth analysis to say, do we have the space? Do we have the capacity? And do we have the contracts with the facilities to enable that. So we are in process to determine if this is what we need going forward. So more to come on that in the future months, but it is definitely something that we are evaluating. At the same time, what I'll also talk about here is our suppliers. I've gotten a lot of questions to say, gosh, if you were to get a national account and significantly ramp up your business quickly, do you have enough supply that you can access? And I have went and talked with all of our largest ingredient suppliers and have that conversation with them to say, if I was to grow our business, let's just be very optimistic by 30% if we were to add a large customer, could we get that additional supply from you? And consistently, they are saying, as long as we have the lead time, we can supply it. So that is another thing about foodservice is you are working with good lead times, your customers with a new customer, especially want to make sure that you can meet those needs. So I am evaluating not only supply of our products and our ingredients, but I am also looking at supply in terms of manufacturing, all things to make sure we are fully prepared when and if we have the opportunity to scale our business. Okay. Another question. Gross margins have remained strong despite inflationary pressures. What operational efficiencies or pricing actions have allowed you to maintain profitability? And so I think one of the great things if you look back over the 20 years, as I was asking myself that question when I started here is, I would say, two things that the company, which is truly remarkable, has been able to do. So even though our top line at one point, call it, was $10 million and today, it's over $70 million, we have been able to grow this business in the same facility. So our plant in Hayward is the same plant that we were in 20 years ago. So that has enabled us to really manage our cost and while scaling our top line. And so that top line growth has really flowed through positively in our P&L. And then the second is our workforce. So 20 years ago, surprisingly, we had 38 employees. And today, we have a little over 40. So being able to really control your costs being very mindful of how we spend the money while growing our business is what has enabled us, as an example, to have the gross margins that we have enjoyed. And my goal is absolutely to continue that as we go forward. Okay. I think we have time for one more question. So are there opportunities to expand distribution geographically, either domestically or internationally? And the answer here is a resounding yes. So I'll talk about our innovation pipeline here briefly. So one, as I talked about in the presentation, is we have a lot of sauces that we currently produce. We have 30 sauces in our arsenal. I would say today, we sell pretty routinely, for sure, the top 5, but I would call it the top 10 of those sauces that we are selling routinely. So we have a lot of sauces that we're making that we're just not selling. And I think that there wasn't as much of an emphasis on the full portfolio in the past. And I've tried these products, and I will tell you that item 28 and 29 is just as good and flavorful and unique as 1 and 2. So the thing that is so fantastic about our portfolio is that they are very incremental from each other. It's not like we have a basil pesto and then a basil pesto without cheese or nuts or no. We have a basil pesto, and then we have all these different really flavorful, unique sauces and pestos that meet multiple needs, consumers and daypart occasions. So that's number one. We have huge opportunities, both domestically and internationally to sell our existing portfolio in a more meaningful way. The second is we are working with our national accounts to say, what is the unique opportunities based upon the consumers that are shopping these outlets for us to customize sauces to meet their needs. So these may be in some way, similar to some of the things that we make, they may be highly different. But we are looking to drive new innovation with our national accounts and so once a national account accepts the items, we can then make slight changes or augment in a little different ways and then open that up to the rest of the market. Why this works for us is it ensures we have scale, it ensures we have efficiency and we have orders. So for me, with new items coming in, I want to make sure that this is something that consumers are excited about and will be or customers are excited about and we'll be buying against. So it's a really thoughtful strategy of how we leverage innovation in the most profitable and efficient way. So I think that's all we have time for. I hope that you got a lot of value and learned some new things about Armanino. I'm excited to meet some of you later today in our one-with-ones, but really appreciate the opportunity to IAccess and look forward to having future conversations. Thank you, everybody.

That concludes Armanino Foods presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.