Mama's Creations Revenue Jumps 24% in Q2

Key Points

• Revenue rose 24.0% year over year to $35.2 million in Q2 FY2026.

• but higher operating expenses, including a 75% surge in marketing spend, limited earnings growth.

• The acquisition of Crown 1 added new distribution and capacity, but is expected to pressure near-term gross margins.

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Mama's Creations (NASDAQ:MAMA), a leading maker of refrigerated prepared foods rooted in old-world Italian recipes, reported quarterly financial results on September 8, 2025, for the quarter ended July 31, 2025. The most notable news was a 24.0% jump in revenue, robust distribution expansion, and completion of a major acquisition, offset by sharply higher operating expenses and only modest earnings per share improvement. Overall, the quarter saw strong top-line momentum and continued innovation, but margin pressures and higher costs limited bottom-line progress as integration of new assets begins.

Company Background and Key Success Factors

Mama's Creations is centered on bringing authentic, high-quality prepared foods to grocery, club, mass market, and convenience retailers throughout the United States. Its roots lie with its founder's classic recipes, emphasizing all-natural ingredients and strict flavor standards. The company’s brand reputation is closely tied to both authenticity and quality, key differentiators in the crowded specialty foods space.

Recent growth has come from expanding distribution into more retailers, launching new products in fresh foods, and seeking operational improvements to support future scaling. Sustaining product quality, successfully launching new foods, widening retail presence, and effectively integrating acquisitions remain core to its business model and future success.

Quarterly Highlights: Growth, Product Launches, and Acquisition

The company delivered another period of double-digit revenue growth, with the $35.2 million top line up 24.0% from the prior-year quarter. Management cited “volume-led” growth far ahead of the overall specialty foods category. Expansion included both higher sales to existing customers ("cross-selling") and new distribution, with mentions of new branded chicken items such as BJ’s Fajita Chicken Strips (ready-to-eat protein strips), Costco Chicken Stuffed Meatballs (prepared entrée), and Sam’s Chicken Paninis (convenience hot sandwich). These new foods helped expand Mama's Creations beyond traditional Italian core products, especially into single-serve and “Meals for One” prepared meal solutions.

Distribution gains spanned across major retail chains and sales channels. Notably, the company secured its first nationwide multi-vendor mailer with Costco for Beef Meatballs and achieved new placements with Walmart, Sheetz, Amazon Fresh, and Publix. This broadening of customer “doors” is a signal of accelerating market penetration as management continues to leverage its core brand identity and new product portfolio for growth.

Operational improvements in sourcing and plant efficiency offset continued commodity pressures in chicken inputs. However, operating expenses rose even faster, up 34.3%. A significant driver was a 75% year-over-year jump in marketing outlays to support brand growth and capture new consumer occasions. This expansion of spend, which management describes as addressing “historical underinvestment,” brought operating expenses to 20.1% of sales, up from 18.6% in the prior year. This outpaced gross profit gains, leading to only modest increases in net income and earnings per share, while net margin actually declined slightly year over year.

A key strategic development was the all-cash acquisition of Crown 1 Enterprises, which operates a 42,000-square-foot USDA-inspected facility and generates approximately $56 million in sales for the 12 months ended June 30, 2025. The deal, completed for $17.5 million at a 0.3x FY25 revenue multiple, provides operational capacity close to the company’s existing plant and new access to premium retail partners. The company expects Crown 1’s lower profit margins to weigh on consolidated gross margin in the near term, but aims to raise acquired margins toward Mama’s levels within 12 to 18 months, relying on cost synergies and process improvements. The transaction was funded through a $20 million private placement and an amended $27.4 million credit facility. Management indicated that leverage remains “conservative” even after the deal.

Financial Position, Cash Flow, and One-Time Items

Mama’s Creations ended the quarter with $9.4 million in cash, up from $7.15 million at January 31, 2025. Total debt was $2.7 million, a notable reduction from $6.8 million a year earlier. Net cash from operating activities for the first six months rose to $4.3 million, compared to $1.2 million in the prior year period, as higher profitability outweighed increased investment in inventory for new volume and product launches.

The integration of Crown 1 resulted in one-time merger and acquisition (M&A) costs of $0.23 million.

Looking Ahead: Management Outlook and Areas to Watch

However, its commentary emphasizes the priority of integrating Crown 1 quickly, delivering on expected cost synergies, and working to restore consolidated gross margins toward previous company levels. The initial margin dilution from Crown 1 is anticipated to persist for several quarters, with recovery dependent on process and procurement improvements.

In the coming quarters, investors should monitor gross margin recovery, expense discipline (particularly the returns from increased marketing outlays), and the pace of Crown 1’s integration. Other focus points include further expansion into new channels, continued product innovation, and whether the company can sustain its volume-led sales momentum. With leverage remaining low post-acquisition and cash generation improving, Mama's Creations enters the back half of the year with greater scale but also increased complexity as it works to align new assets with its long-term brand and profitability goals.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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