Mama's Creations Sales Rise 24 Percent

Mama's Creations(NASDAQ:MAMA) reported second quarter fiscal 2026 results on September 8, 2025, delivering 24% year-over-year revenue growth to $35.2 million and announcing the $17.5 million all-cash acquisition of Crown One Enterprises. Gross profit rose 28% year-over-year to $8.8 million, and management detailed strategic integration plans and capacity expansion following recent M&A. The following insights highlight key strategic, operational, and financial developments from the call.

Crown One acquisition accelerates scale

Crown One contributed $56 million in trailing-twelve-month revenue, adding a USDA-certified 42,000 square foot facility and nearly 200 operators, nearly doubling Mama's Creations' raw chicken needs. The acquisition was completed at 0.3 times trailing fiscal 2025 revenue, fully financed via private placement and supported by a $27.4 million credit facility with M&T Bank.

"This $17.5 million all-cash opportunistic acquisition brings meaningful synergies to our core business while bolting on an attractive business at 0.3 times their fiscal 2025 revenue, fully financed through a private placement with institutional investors and further supported by a long-term credit facility with our existing commercial banking partner, M&T Bank, which further supports future opportunities that may come our way. Strategically, Crown adds immediate derisked capacity on familiar grill platforms, nearly 200 experienced operators, and a culture of grandma-quality offering rivaling Mama's. The plan combines automated and hand-cut portion-controlled proteins with modified atmospheric pressure packaging to extend shelf life, capabilities we can scale across our network. With about $56 million in revenue for the twelve months ending June 30, Crown One meaningfully advances our path to $1 billion of revenue. The deal is accretive this fiscal year, and we see substantial growth potential with their premium customers and cross-selling opportunities."
-- Adam L. Michaels, Chairman and CEO

This acquisition positions Mama's Creations to accelerate its path toward $1 billion in revenue, expand its customer base, and leverage new operational capabilities for both organic and inorganic growth.

Gross margin expands as Mama's Creations drives efficiency

Second quarter revenue increased to $35.2 million from $28.4 million year-over-year, with gross margin expanding 100 basis points to 25% due to improved yields and supply chain optimization. Trade spending doubled year-over-year, supporting broad volume gains and new product velocity, including over 2,000 doors for the Panini line after the IDDBA event.

"Gross profit increased 28% to $8.8 million or 25% of total revenues in 2026 as compared to $6.9 million or 24% of total revenues in the same year-ago quarter. The difference in gross margin was primarily attributable to operational efficiency improvements across the organization partially offset by continued protein commodity headwinds and increased investment in trade."
-- Anthony Gruber, Chief Financial Officer

Operational leverage and disciplined pricing enabled management to increase high-return marketing and trade spend, fueling brand awareness and club channel expansion while maintaining profitability despite inflationary pressures.

Integration playbook targets higher margins and scale

Crown One operates below Mama's Creations' historical gross margin levels, but management aims to structurally lift the combined gross margin profile from the low 20% range toward the mid-to-high 20% range over the next 12 to 18 months through procurement, throughput, and SKU optimization. The combined production platform now supports potential revenue scaling to $400 million without material incremental capital expenditures, leveraging upgraded automation and equipment synergies across three locations.

"Looking ahead, following the acquisition of Crown One, our revenue run rate stands at approximately $200 million today, we believe that our normalized gross margin profile not including major commodity fluctuations, will hover in the low 20% range. This is driven by Crown's lower gross margin profile standing in the mid-teens percentage range. About 10 points short of our historical margin profile at Mama's Creations, Inc. And we believe that over the next twelve to eighteen months, by instilling our operational discipline into Crown's operations, and realizing meaningful procurement and throughput cost savings across the enterprise, that we can structurally lift our combined gross margin profile from the low 20% range today towards Mama's historical levels in the mid to high 20% range."
-- Anthony Gruber, Chief Financial Officer

Successful integration and margin improvement at Crown One are critical to achieving the company’s long-term profitability targets and maximizing the value of recent acquisitions.

Looking Ahead

Management provided explicit forward-looking guidance, citing a post-acquisition annualized revenue run rate of approximately $200 million and a targeted gross margin improvement from the current low 20% range to Mama's Creations' historical mid-to-high 20% range within 12 to 18 months as Crown One is integrated. Capital expenditure requirements are expected to remain minimal, with additional capacity and equipment synergies already in place. No specific EPS or net income guidance was disclosed for upcoming quarters.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.