Again, all these things and again, I keep going, all of these things are offsetting some of the commodity increases and that’s what we have to do. Right. We are in the commodity business, but if we could be proactive, we could either offset some of it, if not offset all of it when the time comes.
George Kelly: Okay, excellent. And just one more, if I could, the M&A pipeline, I’m curious, you’ve said before that your expectation is that you’d complete one, or maybe it was at least one deal this year. I’m curious if you still think that’s the case in like, as you’re talking to people, is there a common sort of issue that is a hang up and causes nothing to happen? Maybe it’s pricing, maybe it’s something else. Just is there something that’s repeated now that has caused you to not consummate any of these potential transactions?
Adam L. Michaels: Yeah, so a couple things. Yeah, thanks, George. So a couple things. First, just to clarify, I would love and we’re doing a lot of work looking for targets this year. I’m not, I don’t feel stressed about having to. It is actually not part of actually our algorithm that they we share with the board, got aligned with the board on. So the first thing is, well, yes, personally, I’d like to find and I’m actively looking for targets. It is not required to achieve the algorithm we have for this year. So that’s just the first piece. The second piece is I am busy. We are — I am getting a lot of calls, actually, thanks to lots of your friends and others. We’re able to get a lot of people helping us looking for targets.
I probably travel at least once a month on perspective targets. So the deal flow I like to see, I’ll always take more. I’ll never say no to more, but I do like the flow that that we’re getting. The last piece directly to your point, I don’t think there’s anything that’s hanging us up again. I am picky. I know exactly what we want as a company. Right about being in a deli west of the Mississippi with their own manufacturing and/or distribution. So I’m just not rushing to do something that I don’t think is near perfect at a very attractive price and again, I’ve had this job before at Mondelēz and I certainly had a bigger checkbook. And there was certainly a lot more urgency. We were not growing organically at Mondelēz as much as we’re growing here at Mama’s.
And if I don’t find anything that’s attractive at a great price, I will happily reinvest the money even. I hopefully you see our cash balance now. We’re literally at zero on our drawdown of our credit line. I am happy to reinvest that for even further profitable growth internally. So hopefully that’s helpful.
George Kelly: Yes. Thank you.
Operator: Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Anthony Vendetti: Thanks. Yeah, just a couple of quick questions. On the new equipment, Adam, and I know you’ve gotten into detail on this, on the new equipment you’re putting in, what is the incremental upside to operating margins when all that new equipment is installed and fully operational? And then also, if you could talk about the integration from the NetSuite ERP, where that’s at and what’s the incremental upside in terms of margins when that’s fully up and running?
Adam L. Michaels: Yeah. So I’ll go backwards since the last question I just remembered. So Steve is doing just an incredible job with NetSuite. So we are fully integrated now. Every part of our business, all pieces of the business are integrated and it’s awesome. Biggest mistake this company has made is giving me access to everything that I could see on a Saturday or Sunday. Big mistake on their part, but that’s okay. So the fidelity is there. We’re already seeing improvements in our inventory management because you can see everything in real time. I love to see our bombs are being changed. Literally every time we buy some more cranberry sauce, the bomb changes in our products. So the real-time profitability is very powerful.
It helped us. Remember I just told you we’ve taken price on almost every customer. NetSuite actually helped us do that. So I love what we’re doing in NetSuite. There’s still even more. Brian, who’s part of Steve’s team, is helping us with warehouse management. We have these super cool scanners now, stickers everywhere. You can’t hide anything anymore. It’s awesome. So I love what we’re doing on NetSuite. For your first question, the automation is substantial, like really substantial. So again, a piece of a piece of a piece. If you just said super simply, and I’m going to simplify a lot, but we used to pay for chicken, I’m making up all the numbers, a dollar. We used to pay almost another dollar for them just to cut it up for us. Now we’re doing that cutting.
It’s literally that much, 50%. Now is all that. Obviously, we now have to have the people to cut it. Anthony makes me pay for the depreciation of that machine. So I don’t get that full 50%. But this is not 1% or 2%. This is double-digit savings. The stripper, the stripping machine, we used to have an entire team of people spending all day literally cutting by hand these chicken strips. Now this machine does 6,000 pounds an hour. It’s massive. And oh, by the way, it’s safer. All these people cutting by hand, I love that it’s just safer. So this is a step change. This is not nibbling around the edges. This is step change improvement. Now, I have told you already, you guys are not going to see all of that. It’s all going back or actually all plus $1 maybe is going back into seeing what you just saw.
Trade up 85%, marketing up 79%, R&D was up almost 200%. That’s where we’re going to put it all back so we can accelerate growth.
Anthony Vendetti: Okay. So the margin improvements that you’re already realizing from these capital equipment purchases and the new ERPs, all this is going back into accelerating the top line.
Adam L. Michaels: Absolutely. That’s a great — a little simple, but yes, that is a much closer — yes, absolutely.
Anthony Vendetti: Okay, great. All right. I’ll turn it back over to you, hop back in the queue. Thanks for all that color.
Operator: There are no further questions in the queue at this time. I would like to hand it back to management for their closing remarks.
Adam L. Michaels: Thank you, operator and thank you again to each of you for joining us on today’s earnings conference call. Before I go, one ask. I am proud to share that our new retail paninis have been shortlisted as finalists for Deli Business Magazine’s Inaugural Innovation Award Competition. For investors following the Deli space, I would encourage you to head to www.delibusiness.com to review the candidates and cast your vote however you see fit. With that, I will conclude. We look forward to continuing to update you on our progress as we strive to deliver value to my fellow shareholders and execute upon our vision of becoming a national one-stop shop deli solution provider. Thank you.
Operator: Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
