Mama's Creations (MAMA) Q2 2026 Earnings Transcript

Image source: The Motley Fool.

DATE

Monday, Sept. 8, 2025, at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Adam L. Michaels
• Chief Financial Officer — Anthony Gruber
• Director of Investor Relations — Luke Zimmerman

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Revenue-- $35.2 million for Q2 FY2026, up 24% year over year, driven by volume gains, same-customer cross-selling of new items, increasing velocities, and new customer door expansion.
• Gross Profit-- $8.8 million for Q2 FY2026, increasing 28% year over year, and representing 25% of total revenue compared to 24% in the prior year's comparable quarter, led by operational efficiency improvements and partially offset by protein headwinds and higher trade.
• Operating Expenses-- $7.1 million for Q2 FY2026, up from $5.3 million in Q2 FY2025, with operating expenses as a percentage of sales at 21% versus 18.6% in Q2 FY2025, attributed in part to a 75% year-over-year increase in marketing spend.
• Trade Spend-- 2.2%, more than doubling versus the prior year; year-to-date trade spend is three times the previous year's level, exceeding $3 million versus less than $1 million for the first half of the year.
• Net Income-- $1.3 million net income for Q2 FY2026, increasing 11% year-over-year, or $0.03 per diluted share, compared to $1.1 million or $0.03 per diluted share for Q2 FY2025; net income was 3.6% of revenue versus 4% in the prior year.
• Adjusted EBITDA-- $3.3 million adjusted EBITDA for Q2 FY2026, up 18% (non-GAAP), compared to $2.7 million in the year-ago quarter.
• Cash and Debt Position-- $9.4 million in cash and cash equivalents as of July 31, 2025, up from $7.2 million as of January 31, 2025; total debt reduced to $2.7 million from $6.8 million year-over-year as of July 31, 2025.
• Acquisition of Crown One Enterprises-- Completed for $17.5 million all-cash, acquiring a $56 million annual revenue business with an upgraded 42,000 sq. ft. USDA-certified facility and ~200 operators; accretive in FY2026, financed through private placement and new M&T Bank credit facility.
• Crown One Revenue Run Rate Impact-- With Crown One, the company’s revenue run rate is approximately $200 million, accelerating the path to the stated $1 billion goal.
• Gross Margin Outlook-- Management expects blended gross margins in the low 20% range following the acquisition of Crown One, reflecting Crown’s mid-teens gross margin profile, and targeting structural improvement toward Mama’s historical mid-to-high 20% gross margin range over the next 12-18 months through operational integration and cost synergies.
• Club Channel Performance-- National multi-vendor mailer (MVM) promotional event at Costco confirmed for the fourth quarter, with CEO Michaels describing the event as "massive and completely not in budget."
• Product and Channel Expansion-- The new panini line has achieved placement in more than 2,000 doors as of Q2 FY2026, outperforming velocity expectations, with expansion underway into additional retail banners.
• CapEx Expectation for Crown Facility-- CEO Michaels stated, "We really have to put nothing into this facility," referencing recently completed $6 million upgrades and automation; Crown facility expected to drive efficiency with minimal additional capital expenditure required.

SUMMARY

Mama's Creations' (NASDAQ:MAMA) management has a disciplined acquisition strategy, underscored by the purchase of Crown One Enterprises -- a transaction characterized as immediately accretive and operationally synergistic. Integrating Crown One’s private-label and manufacturing capabilities is a strategic lever toward bolstering production capacity and extending market reach, with CEO Adam L. Michaels emphasizing a patient, methodical approach to customer and SKU optimization. CFO Anthony Gruber quantified that the enhanced balance sheet, now boasting a $27.4 million credit facility, provides optionality for both organic and inorganic growth opportunities. Management provided clear gross margin guidance reflecting the blended profile post-acquisition, with structural gains targeted through operational discipline and procurement savings.

• CEO Michaels highlighted, "Crown provides $56 million in revenue in retailers that are largely incremental to our base while providing meaningful new product cross-selling opportunities both in their customers and ours." This $56 million in revenue refers to the 12 months ending June 30, 2025, clarifying the acquisition’s additive customer exposure.
• Leadership cited ongoing productivity initiatives, with new warehouse management systems and NetSuite upgrades improving inventory visibility and cost controls, and plans to extend these efficiencies to Crown One early next year.
• The company’s M&A playbook, previously exercised with Creative Salads and Chef Inspirational Foods, will guide the Crown integration, and operational plans are underpinned by cross-facility collaboration and shared equipment resources across locations.
• Club and mass retail partnerships, including new meal launches for Publix and strong digital ROI at Walmart, are accelerating brand penetration and sales velocity, further supported by high-ROI trade and marketing investment.
• Management stated, "We are confident in our ability to successfully integrate Crown over the next year and thereafter any opportunities that may arise," explicitly asserting integration confidence and future deal readiness.

INDUSTRY GLOSSARY

• MVM (Multi-Vendor Mailer): A promotional event involving multiple brands in a widely distributed retailer circular, frequently used by Costco for national marketing campaigns that can significantly affect product reach and sales momentum.
• SKU: Stock Keeping Unit; a unique identifier for each distinct product and service that can be purchased, used here in reference to specific prepared food lines and expansion opportunities.
• MAP Technology: Modified atmosphere packaging; a packaging method that alters the atmosphere inside the package to extend shelf life and maintain food quality, cited for enabling meal innovation and labor efficiency.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Mama's Creations, Inc. Second Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. It is now my pleasure to introduce your host, Luke Zimmerman. Thank you. You may begin. Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Mama's Creations, Inc. Second Quarter Fiscal 2026 Earnings Conference Call.

Luke Zimmerman: During today's presentation, all parties will be in a listen-only mode. Following this presentation, the conference will be open for questions. This conference is being recorded today, Monday, September 8, 2025. The earnings press release accompanying this conference call was issued after the market closed today. On our call today is Mama's Creations, Inc.'s Chairman and CEO, Adam L. Michaels, and CFO, Anthony Gruber. Before we get started, I'll read you this disclaimer about forward-looking statements. The conference call may contain, in addition to historical information, forward-looking statements within the meaning of federal securities laws, regarding Mama's Creations, Inc.

Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions, or any other statements relating to future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in the company's 10-Ks and other documents which the company files with the U.S. Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to factors beyond the company's control. Matters that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the loss of key management personnel, availability of capital, and any major litigation regarding the company. In addition, throughout today's call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. A reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today's earnings release, which is available on the Mama's Creations, Inc. website under the Investors tab.

Finally, this conference call contains time-sensitive information that reflects management's best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this conference call. At this time, I'd like to turn the call over to Chairman and CEO, Adam L. Michaels. Adam, the floor is yours.

Adam L. Michaels: Thank you, Luke. Thank you to everyone for joining us today. I'd like to welcome you to our second quarter fiscal 2026 financial results conference call. Our fiscal second quarter saw broad-based momentum. Revenue growth outpaced the category. We intelligently and judiciously leaned into high ROI trade investment and saw continued geographic balance with volume-led growth supported by new branded placements and incremental doors. We also worked collaboratively with our retail partners and implemented targeted pricing by early Q2 while operational work in chicken improved yields, increased throughput, and optimized labor, helping to manage commodity and inflationary headwinds.

I'd also like to call out that we achieved these gains despite a continued challenging macroeconomic environment for our consumers, highlighting the resiliency, reliability, and relevance of our value-oriented high-quality deli prepared foods offerings across any macroeconomic environment. Most notably, we recently announced our acquisition of Crown One Enterprises from Cisco Corporation, a full-service manufacturer of value-added meats and ready-to-eat meals. As competitors, we had long admired their commitment to grandma-quality products, and I would like to personally welcome Andy and his entire team to the Mama's Creations, Inc. family. Together, I know we can accomplish great things. Crown One was originally part of J. King's Food Service and was acquired by Cisco in February 2019.

It operates a recently upgraded and expanded 42,000 square foot USDA-certified facility in Bay Shore, New York, just 10 miles from our Farmingdale location, operating much of the same grilling equipment we do in Farmingdale. Its customer roster includes hard-to-break-into retailers with huge cultural followings where we haven't penetrated. 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 de-risked 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. Crown One adds significant scale and immediate production capacity, especially in chicken, to our operation, and we also gained an incredible team as well as management bench strength.

We plan to expand SKU penetration across Crown One's customer base and bring their facility into our network quickly, leveraging our incredible Farmingdale operations team to drive integration given its proximity. Over time, we expect to evolve Crown One's margins closer to our current levels through operational efficiencies, improved throughput, joint chicken purchasing, and better coordination of machinery and logistics. Most importantly, the Crown One acquisition, following the successful acquisition of Creative Salads and Olive Branch in 2022 and Chef Inspirational Foods in 2023, proves once again that our one-stop-shop strategy is working. With patient searching, prudent diligence, and a practical transition, our Mama's family can acquire and integrate businesses at attractive multiples to drive outsized value for our shareholders.

Turning to market dynamics, during 2025, we have seen growth for private label brands continue to outpace national brands. The Private Label Manufacturers Association reported that private brands outpaced national brands by 4x during the six months ending June 15. Leading the charge was refrigerated products, which recorded the highest sales growth at 13% over the period. This reaffirms our strategy and remains a tailwind for Mama's. Speaking of refrigerated foods, according to new research from the National Frozen and Refrigerated Foods Association, shoppers have a strong and growing connection to the refrigerated section, especially when it comes to healthy, quick meal solutions, and everyday family basics.

This study discovered that 77% of adults associate refrigerated products with high-quality ingredients and that 70% believe these products support health or wellness goals. Another feather in Mama's cap. In addition, protein remains the most sought-after nutrient in American consumers' diets according to results from two recent consumer surveys from the International Food Information Council. This was the fifth straight year in a row that protein was the top nutrient that most Americans say they're trying to consume. Approximately 80% of consumers reported prioritizing protein intake during a daily meal. High restaurant prices continue to bring consumers back to grocery stores for both savings and variety.

The July Consumer Price Index highlighted these trends as away-from-home inflation increased from June to 3.9% over the past fifty-two weeks, while at-home was down from June to 2.2%, creating almost a 2x variance between away-from-home and at-home inflation over the last twelve months. These away-from-home price increases provide significant market potential for our deli prepared foods to capture, particularly in recessionary environments where consumers eat out less. Operationally, we executed against our four C's: Cost, Controls, Culture, Catapult, and will run the same playbook at Crown. The first is cost. Skip and his team have done a tremendous job driving efficiency in our facilities.

Freight continues to be a highlight with greater freight line management, fuller trucks, and better planning, driving down our costs another 60 basis points from last year and last quarter. We've created new centers of excellence starting in logistics, procurement, and IT, which allows us to use our scale more effectively. We can't wait to add Crown's muscle to our growing frame. Crown will nearly double our raw chicken needs, and early conversations with our suppliers reflect they couldn't be more excited to partner with us for growth and sharing improved costing. One year ago, we only had two chicken grills in Farmingdale.

Today, we have six, expertly maintained, skillfully run, and eagerly awaiting our sales team to fill them up. The second C is controls. As promised last year, we have successfully implemented the start of our warehouse management in East Rutherford. This has provided us unparalleled visibility into our inventories, allowing for reduced waste, as well as more agility and higher service levels for our customers. We've also deployed new NetSuite upgrades throughout our network to alert users immediately if the cost of raw materials or assembly builds change in cost above a certain threshold. As you hear me say often, what gets measured gets improved.

This is just one more example of our strategy coming to life and not just sitting in a PowerPoint deck. While Crown is already successfully managing their business on an alternative ERP system, we're already planning to bring Crown onto our NetSuite instance early next year to ensure we're optimizing every aspect of our business across all three facilities. As our team knows, our operations mantra is one plant, now three locations. The third C is culture. Abby and her team recognize that our people are our most important ingredient and have been working to turn jobs into careers. Last month, we announced our first-ever heritage mentorship inaugural class.

This program is for high-potential associates to match up with a leadership team member over a structured nine-month journey with themes, developmental activities, and enrichment experiences rooted in Mama's core values of commit to craftsmanship, honor heritage, and nurture relationships to develop leadership and EQ skills. The best part of being in a fast, profitably growing business is that there are always opportunities to step up and lead. This will become our breeding ground for the leaders of Mama's tomorrow.

While our team is always prepared for the next acquisition, the Crown deal allowed us to break out our M&A people playbook once again and use these repeatable tools to ensure on day one, our Crown colleagues feel protected, provided for, with a sense of purpose, in grandma's house. Culture remains our secret weapon. The final C being catapult speaks for itself. We saw another quarter of 20 plus percent growth, nearly 10x category growth. The capabilities that Chris is building are incredible, and part of me thinks we should change Catapult to Crush. Most importantly, the sales team is focused on the right things.

Accelerating the club channel this quarter, with new pro non-protein items at BJ's, using the entire white meat chicken breast for paninis at Sam's, chicken meatballs at Costco. We have partnered with our biggest grocery partner to launch four new meals for one, leveraging our new map technology, adding shelf life, and reducing labor for Publix. We've also leveraged our map technology to launch new meals for one, offline in Amazon Fresh stores, as well as online. We're excited to share that we recently received confirmation that Costco would like to partner with us on our first-ever national multi-vendor mailer in Q4, allowing the entire country to buy the meatballs that got this company started.

This was not planned for in the budget, but Chris and Skip are ready for it. Our biggest surprise this year has been what we thought would be a quiet launch of a new Panini line. Boy, was I wrong. Following our IDDBA event this summer, our paninis exploded and are now in over 2,000 doors, anchored by Sheets, Sam's Club, and Publix, just to name a few. More importantly, they're beating all velocity expectations, and we're already being asked to expand the door count. All this excitement makes it that much more impressive that our sales team across Crown and Mama's are already talking about how to accelerate this amazing growth.

As a reminder, Crown provides $56 million in revenue in retailers that are largely incremental to our base today while providing meaningful new product cross-selling opportunities both in their customers and ours. This provides us a baseline of nearly $200 million in run-rate sales from which to grow, catapulting us to even closer to our $1 billion goal. I would be remiss and likely in trouble if I didn't share with my fellow shareholders the incredible work Lauren and her team are doing on the marketing front to capture wins today and strengthen our brand for tomorrow. The stronger our brand, the more we can help our retail partners drive more trips, larger baskets, and more profitable sales.

Our success in the club this quarter didn't come by chance. The Sam's Club influencer campaign drove awareness to the new Panini items we launched. The BJ's digital program drove trial and, more importantly, repeat levels above historic numbers. Our Walmart web partnership is seeing double-digit returns on advertising investment, and our Instacart partnership is adding fuel to our Costco beef meatball fire. As I hope you see, we do not leave much to chance. We don't hope new items succeed. We develop in advance the plans, partnership, and promotion to allow our items to explode.

Lastly, while organic growth in the Crown One integration remains our clear priority, we continue to keep our eyes open for our next potential M&A opportunity. As we made clear with Crown One, we are disciplined in our approach, seeking targets that enhance our category leadership, expand our capabilities, and further scale our operations at a fair price. With our robust balance sheet and operational infrastructure, we are confident in our ability to successfully integrate Crown over the next year and thereafter any opportunities that may arise. In closing, the strategic and operational improvements made in the quarter paired with our acquisition of Crown One have created a stronger, more agile, and efficient business platform.

With significant new customer wins coming online in the second half of the year, successful product expansions, and continued operational improvements now realized, Mama's Creations, Inc. is exceptionally well-positioned for profitable growth and market share gains throughout fiscal 2026 and beyond. I remain incredibly proud of our team's execution, energy, and relentless commitment to excellence. I look forward to sharing our continued progress in the quarters ahead. I'd now like to turn the call over to Anthony Gruber, our Chief Financial Officer, to walk through some key financial details from 2026. Anthony?

Anthony Gruber: Thank you, Adam. Moving to the financial results. Revenue for 2026 increased 24% to $35.2 million as compared to $28.4 million in the same year-ago quarter. The increase was largely attributable to volume gains driven by same-customer cross-selling of new items, accelerating velocities of existing items, and new customer door expansion. Trade spend was prudently managed to drive outsized returns and remain 2x larger than the prior year. Targeted pricing actions were successfully negotiated in Q1, implemented in Q2, and now more accurately reflect the current macroeconomic conditions. 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. Operating expenses totaled $7.1 million in 2026, as compared to $5.3 million in the same year-ago quarter. As a percentage of sales, operating expenses remained within our targeted range, 21% in the fiscal second quarter of 2026, up from 18.6% in the same year-ago quarter. Operating expenses in the second quarter benefited from increased operating leverage and ongoing operational efficiency improvements, partially offset by a 75% year-over-year increase in marketing spend, an area of historical underinvestment, to help drive repeatable and profitable brand growth.

Year-to-date, our high ROI marketing spend has nearly doubled versus the prior year. 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.

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, 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. As a reminder, all of this is inclusive of rightsizing our trade promotion investments. When our margins are achieved and the funds are availed, in Q2, we knew we had commodity headwinds, and we adjusted accordingly. Trade came in at 2.2%, more than two times higher than the prior year.

For the first half of the year, trade is running three times the prior year, with over $3 million invested in growing our velocities, brands, and retailer partnerships versus less than $1 million last year. We remain vigilant on managing the magnitude and ROI of our trade spend. We see it as a critical tool to achieve our ambitions. Net income for 2026 increased 11% to $1.3 million or $0.03 per diluted share as compared to net income of $1.1 million or $0.03 per diluted share in the same year-ago quarter. Second quarter net income totaled 3.6% of revenue, as compared to 4% in the same year-ago quarter.

Adjusted EBITDA, a non-GAAP measure, increased 18% to $3.3 million for 2026, as compared to $2.7 million in the same year-ago quarter. Cash and cash equivalents as of July 31, 2025, grew to $9.4 million as compared to $7.2 million as of January 31, 2025. The increase in cash and cash equivalents was primarily driven by improved profitability and working capital optimization. As of July 31, 2025, total debt fell to $2.7 million as compared to $6.8 million as of July 31, 2024. As we clearly demonstrated, the robust balance sheet further supported by a $27.4 million credit facility with M&T Bank proactively prepares us to pursue whatever organic or inorganic growth opportunities may come our way.

This completes my prepared comments. Now before we begin our question and answer session, I'd like to turn the call back to Adam for some closing remarks. Adam?

Adam L. Michaels: Thank you, Anthony. We exited the quarter with a tighter, higher throughput platform, now amplified by Crown's capacity and premium customer access. Our priorities are clear: enhance Crown's margin profile, integrate them quickly and efficiently, and drive aggressive synergy realization and cross-selling by helping them to be brilliant at the basics. This is a playbook not dissimilar from when I first joined Mama's Creations, Inc. back in late 2022, and equally straightforward to implement given their proximity. I can promise you that our entire management team is laser-focused on executing upon this goal. We're approaching escape velocity, well-positioned to compound profitable growth as consumers shift to convenient, high-quality deli prepared foods. With that, operator, let's open the line for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Operator: Our first question comes from the line of Ryan Meyers with Lake Street Capital Markets. Please proceed with your question.

Ryan Meyers: Hey, guys. Thanks for taking my questions. First one for me, just on the gross margins. And I know things will be a little difficult to predict as you guys are integrating the acquisition. But if we think about just the organic Mama's business, do you still feel confident in the gross margin rebound in the second half of the year? Are you maybe seeing ongoing chicken commodity headwinds? Are you planning to pull back on trade spend at all? Just how we should be thinking about the Mama's business organically as itself, the gross margins in the second half of the year.

Adam L. Michaels: Yeah. Absolutely. Thanks, Ryan. And before I begin, I just really want to thank the team again. Everyone's done an incredible job operating the business. My partner, Anthony, here, through the whole M&A process, I really appreciate him and just a huge thank you to everybody. Directly to your question, yeah, we feel really good. If you look at what's happening with chicken, I think there was a little bit of a god smile or something. But if you remember when we had this conversation in June at the last call, I told you we hadn't seen chicken prices go down. And literally, the day after our earnings call, it started to go down.

Chicken is literally a full dollar a pound cheaper than it was when I last spoke with you guys. So I feel really good there. Obviously, Skip's doing a great job with his team on continuing to drive efficiency in the process. Our throughput's really impressive. You know, we're seeing now that we have, well, we have four grills, now we have six. But you're seeing just a lot more throughput, which is really helping us. So, yeah, from a core business perspective, and Crown will after this call, become core. But, yeah, we feel good with what's happening with chicken. Beef is pulling up a little bit. It's something that we want to keep looking at.

But, again, we have contracts in both places. But, yeah, everything, you know, knock wood, is going our way. Chris and his team is doing an incredible job. I know, I mentioned in just a minute ago, the first-ever Costco national buy that we just got in Q4. That is massive and completely not in budget. So, yeah, I feel good. Look. We just have to keep doing what we're doing. Been doing this now for the past three years together as a team. And I feel great with, you know, how we're doing and so I feel really good there.

Ryan Meyers: Got it. That's good to know. And then, you know, thinking about the $56 million in revenue that the Crown acquisition will add. You know, is that growing? Is it expected to continue to grow? Is there any kind of SKU rationalization or channel rationalization that you need to do? I know you did some of that when you first joined Mama's, there was some stuff you guys walked away from. But just kind of help us understand, you know, where that Crown business is from a revenue standpoint and kind of anything we should be understanding with that.

Adam L. Michaels: You know, it's really interesting. You know, I'm a recovering former management consultant and the sort of inside joke when we used to go to each of our clients, you know, we'd speak to the CEO, and the first thing the CEO would say is, guys, you've never seen this before. We're really special. We're really different than can't use what you've done in the past. And, you know, for seven, eight, however long years I did it, you know, we ran the same playbook. I gotta honestly tell you guys we're cheating. Full stop. We're cheating. We've done this as a leadership team with the Creative Salads acquisition. Anthony Morello helped us. Right? And Anthony's still here.

We've done this once before. Gonna do it all over again. It's literally 10 miles away. Using the same equipment. So everything you just mentioned, absolutely, we're going to look and look at the business, right-size the business. We're not making any decisions right now. Right? Chris is the boss. With Andy who leads Crown. We're going to meet with each of our customers. We're super excited. We bought the business for our So you know, we're gonna have conversations and see how we could help them more. Right? That's the whole power we have with the business to share more to have more capacity for them.

So I think we're going to do a I feel very comfortable from a revenue side of the house. Yeah. If there are SKUs that aren't selling at all, but we keep all of the raw materials in the back, and we throw it out every three months? Yeah. We're gonna probably stop that. We're gonna look at what we have. Hey. We're gonna look at do we need two meatloafs? Do we need two meatballs? Right? You know, which one's better? We'll share with our customer both. They like the one they have, great. If not, wow. I just improved the quality for your product and actually, from what we're seeing, lower your cost.

From an operations perspective, Skip's already is he's he's been there the whole time. Poor Tammy, his wife, you know, he's been in Bayshore and looking at our products. Just added two more grills. That means that when we used to have to push hard and pay for overtime in Farmingdale, we don't have to do that anymore. Right? Because we have two more grills. We have additional capacity. This 42,000 square feet is literal feet. Yeah. 42,000 square feet. It is twice the size of both of our other two facilities. This is a big space for us to allow a lot of efficiencies.

So you know, I think the so what for all of this is we are all super excited. We are super patient. Anyone that you guys know me, I'm not rushing after anything. We're gonna take a very patient approach. Speak to our customers first. Right? This is a grandma quality business. And learn together and together see where we could help each other. Across. Right? One plant, three facilities, three locations, and I think that's where we're going to drive a lot of synergies.

Ryan Meyers: Got it. Makes sense. For taking my questions.

Adam L. Michaels: Thanks, Ryan.

Operator: Thank you. Our next question comes from the line of Eric Des Lauriers with Craig Hallum Capital Group. Please proceed with your question.

Eric Des Lauriers: Great. Thanks for taking my questions, and congrats on another very strong quarter here. First question from me on the Costco news. Congrats there as well. I was wondering if you could just kind of recap the progress you've made penetrating Costco over the past two years and then expand on the importance of the MVM here. Do you see this as a step closer towards everyday product status, or is this kind of a, you know, nice to have with Costco? And how impactful could everyday product status be at Costco?

Adam L. Michaels: Yeah. Thanks, Eric. And I'm super proud. Scott gets a lot of credit from our sales team. Remember, when I started here, Scott and I, we had about $570,000, I think, thousand dollars of sales. One product, one region. All of last year, we got into all eight regions at different times. We had about $10 million of sales all of last year. If you remember, we had the digital MVM in Q1. We hit $10 million just in Q1. So I explained in the past, it's an evolution. Get one item. You do exceptionally well in one region. You get more regions. As you do exceptionally well, you get a get all regions. You get a national buy.

Do exceptionally well, you get a digital MVM. Right? That's what we did in Q1. You do exceptionally well, get a national MVM, a print MVM. Every house in America, if they have a Costco membership, they're gonna see Mama Mansini meatballs in their brochure. In the holiday season. Another brilliant move by, by Scott for timing. You think it's pretty good to be, have a national buy during the holidays? It's awesome. To your point, if we do exceptionally well, grandma quality, great service, the next step is the national the everyday item. I just gave you some numbers there. It keeps you know, what we used to do in a year, we did in a quarter.

Could you only imagine what the national MVM is gonna look like in could you only imagine if we have an everyday item? So as long as you stay grandma quality, great service, Costco's a great partner for us. And you see that over the three years that we've been partnering since I've been here.

Eric Des Lauriers: That's helpful. Appreciate that. And very nice progress over the past few years. Looking forward to the years to come here. Switching gears to Crown a little bit. So you called out their map capabilities. You also kind of highlighted yours in your prepared remarks as well. Just wondering if you could help us understand the differences between Crown's map capabilities and yours. You know, what are they bringing to the table? Is it just is it more scale? Is it are there some differences in their capabilities compared to yours? If you just flush that out, that'd be helpful.

Adam L. Michaels: Yeah. There are a couple things and I really am so excited. You know, I've been sort of privately over the past many months during the acquisition. Obviously, I had a chance to work with Andy during the M&A process. I obviously couldn't speak to the folks on the line every day. But I've already started to. Last Sunday, and what I'm excited about, I love the talent there. I love the people. Again, we're buying people. We're buying capabilities. These are really excited folks that you know, I think we're seeing, and Abby and Skip could speak better to this, but you know, I think they found their home. Right? Cisco is an amazing company.

We could only aspire to reach those levels. They're a distributor. Right? That is their expertise, and that's where they're exceptional at. They're not a manufacturer. Right? Actually, this Crown business was the only manufacturing element of their business. So I think that you know, in these few, this week or so that we've been able to speak to our new colleagues, I think they're really excited to be back to being core to the business, and that's what's very exciting. You know, you asked very specifically, yes. They have more they actually have more equipment than we do. Full stop. And that's great, and that gives us more space.

But the other thing it does is they have more experience than we do. We've had this map technology now for months. They've been doing it for years. So remember, this is not a one-way street. This is not us telling them what to do. Right? This is them teaching us. Why you get brilliant people. Not to tell them what to do. It's for them to tell you what to do. So I am really excited for I'm already seeing people moving around the three plants. We have a very permeable across the three plants. I want to see a lot of learning. So it's not just the equipment that they have and capacity that they have.

But it's actually, they know how to do things better than we do in some areas. And I want to learn from that. So, you know, I mentioned earlier that the Publix is doing really well for new items at Publix. With the map technology. That's better for them. Right? That reduces Publix swell. Which means they want to buy from us more. We help them out. We actually got two new paninis in there as well. So, yeah, the things are going really well. Amazon Fresh is another one that's starting with our map, to item. So I feel great.

I could sleep a little better at night, knowing that, we have more capacity if things really accelerate and Chris and his team do their job, which they are. So, yeah, hopefully, that's helpful.

Eric Des Lauriers: No. That was very helpful. Thank you. And then just last one for me. Anthony, you touched on this in your prepared remarks, but just wondering if you could expand how your trade promotion plans or targets this year might change with Crown expecting to weigh on gross margins for the next four to six quarters.

Anthony Gruber: We always look at the gross margin and balance it out with our marketing spend. So we try and optimize there. Where we if there's a quarter where commodity prices are up, we're gonna tap the brakes on the marketing spend and make sure to kind of bolster our margin up. It's a seesaw. It's a little bit of feel all the time of what's out in the market, how much we're paying for input, and then what we do as far as a customer standpoint and growing the customer base. We'll always look at that margin number and offset it basically with the marketing spend.

If we're seeing a whole lot more margin than we anticipated, we're gonna use some of those dollars to drive velocities on the top line by spending marketing dollars. If the margins and things are going very well for us right now, not good, as Adam said, chicken prices are a whole dollar less than what they've been. So we have some opportunities now. The MVM will be one of those opportunities.

Adam L. Michaels: Yeah. I agree with what Anthony said. Just one other part with Crown. Crown is predominantly a private label business. So their trade rate is significantly lower. So what that does is, you know, understand just the numerator and denominator, it's going to we don't have to spend as much in some of those customers that sort of want a fixed price. So yeah. So we'll see. And I think the other thing that's important is hopefully, you've seen this. You saw it in Q1. You saw it in Q2 now. Chris and his team do a very good job at it's a lever that they're able to prove, you know, move up and down, fluidly.

And the partnership that Chris and Anthony have together weekly. You know, we see what the numbers are. If we need to pull back, we need to pull forward. So this is it's a very flexible tool that Anthony and Chris used together.

Eric Des Lauriers: That's very helpful. If I could just kind of press that a little bit further. So I think previously, you know, the goal was high 20% gross margins and you know, when it exceeds that. You know, you would increase trade promotion.

Should we kind of think of that you know, high twenties is now being moved down to the low twenties where, you say you guys are looking at a quarter you know, coming up where, you know, maybe you're at just call it, 22% gross margin or something, you know, lower than you previous would, maybe that's a quarter that you would typically not spend a whole lot of trade promotion, but with this kind of new normal unquote, is that like, could that be a level where we could see more trade promotion than we would if it was, you know, Mama's stand-alone gross margin.

Adam L. Michaels: So I really think and you've seen we've been together for a few years now. We have to see how the business goes. So we've shown that we could easily move it forward and we again, I mentioned earlier, I don't want to rush this integration. That's where you fail. I want to start see where we are, we have the patience. As Anthony said, with chicken coming down, actually gives us more than, you know, we had in Q2. Remember, Q2 started in May. That was the absolute peak of chicken prices.

So you can only imagine what Q2 would've looked like if, you know, chicken wasn't I mean, I think the day of our earnings call, chicken was, I think, $2.83, something like that, a pound. Now it's, like, a dollar 70 a pound. So you know, again, we're in it for the long haul. I think that we're gonna be patient. See where it is. Our core business will help the Crown business get up to a higher number. And, it's really important to remember again, this is exactly what we did at Creative Sales. When we started, right, three years ago, Creative Salads was exactly was below the Mama's average. A year later, had Creative Salads above Mama's average.

So this is a team that did it. It's the same team. Anthony, myself, Lauren. Right? And now we have Skip and Chris. So I think we're gonna do even better than we did with the Creative Salad acquisition. And the movement right up on gross margin.

Eric Des Lauriers: That's very helpful. I appreciate you taking all my questions.

Adam L. Michaels: You got it. Thanks, Eric.

Operator: Thank you. Our next question comes from the line of George Kelly with Roth Capital Partners. Please proceed with your question.

George Kelly: Hey, everybody. Thanks for taking my questions. To start, I was curious if you could be more specific just on the sort of potential revenue capacity out of Crown's manufacturing facility. And is there a lot of CapEx that you anticipate investing to get you up to whatever that potential capacity number is?

Adam L. Michaels: Yeah. And actually, I'll take the second question the second part first because it's so cool, and then this is just another awesome factor. So this is one of this is the most recently enhanced expanded business. So to Cisco's credit, I think they put something like $6 million into this facility over the past couple years. So it is actually one of the more automated, definitely the more enhanced, temp-controlled, and it's, again, the biggest facility. We really have to put nothing into this facility. This is the cool part of this acquisition. The net, you know, book value of the fixed assets this is a great we acquired a lot of great assets. So that's really good.

Other than maintenance that we always put in, we do not expect any major CapEx whatsoever to the Crown business. If anything, we're actually going to take some stuff that maybe is underutilized and bring it to Farmingdale, to East Rutherford where we were going to buy something completely new. Now we don't have to. I would argue from a system perspective, it's like a net negative CapEx if that's such a thing. So that's to your second part. I think the first part on the revenue potential this is again, remember the Creative Salads acquisition. We actually went down a little bit because we saw some businesses, you know, there's some part.

They have a legacy street business as well. Similar to how Creative Salads does that allows us to drive more efficiency with our trucks. Right? We have the trucks and we do the route rides. But I could imagine, yeah, there will be some stuff, that we're gonna speak to customers. It's a collaborative conversation. We have to show you know, we'll show them this is what it costs. We have to hit a certain, you know, margin profile. And we might decide similar to what happened when I got here at Mama Mansini's, similar to how when we were at Creative Salads. There may be some business that we both collaboratively choose not to continue.

That's gonna lower it, and then it shoots up again. Right? We went down in Creative Salads, and now we're 3x where we started. So I think there's space there. Could easily across the three facilities, double our business from what we have today. So, you know, actually, I was speaking to Skip earlier today and I was looking for at least, you know, a candy, a Hershey Kiss, or something, you know, now that I got him 42,000 additional square feet. I did not get the toaster roll I was looking for, but it's okay. Yeah, I feel good with we really I'm breathing significantly better now. From an operational standpoint now that we have this facility.

A lot more space now.

George Kelly: Okay. Excellent. And just to you said you think you could double your revenue productivity. So roughly a $200 million business now, you think you could double that number with the three properties?

Adam L. Michaels: Yes. And, again, it's not just the physical space. And as Skip talks about bolted down capacity. It's also the efficiency that what we have. So I could speak to you more about Crown, Crown really does works two shifts. They don't work a third shift. They don't work the weekends. Right? Now that we have the two additional grills at in Farmingdale, we really don't work weekends. So there's a lot more space. There's also more efficiency on how we do things. I showed you before we didn't just increase our throughput in Farmingdale because we got two more grills. We're doing things more efficiently. So that's another place.

So it's not just the physical space, not just the equipment. It's the fact that we're being more efficient at what we do. You know, I could speak to you all day about what we're doing in East Rutherford. The automation that we have in East Rutherford now, told you about the map machine, the way we are doing with the spiral oven. So, yes, I feel very good. I've told I'm sure I've used this before. I don't play tennis. My son does. But, you know, I've a little bit of game with Skip and Chris. Right? The goal is Skip should be calling Chris saying, hey. I have all this excess capacity.

What you're doing what are you doing? Chris should be calling Skip saying, hey. You want me to slow down if you can't keep up? I constantly want them to play back and forth very was it Sinner Alcaraz? Right? That's, you know, Chris and Skip could figure out which one of them they are. But yeah, I feel really good now with the capacity we have.

George Kelly: Okay. That's great. And then just one other question for me. You spoke congrats. The news you offered on Costco and the Q4 promotion, that seems like a big deal. Was hoping that you could talk a little about the other big club customer, Sam's. And I think you mentioned in the press release the Panini has performed well. Maybe if you could give a little more detail just on the performance of that SKU. And what are your expectations in the back half? Are there potentially additional products coming or anything else you can flag for the back half?

Adam L. Michaels: Yeah. I love it. It's so it's actually one of my favorite products. It's a chicken pesto panini. And it's doing well. They expanded the door count. It was a rotation that went through the summer, and they're still ordering. So I'm excited for, you know, the teams to chat and see what we could do more of. But, again, these paninis are really picking up. I would very much love to continue to partner with Sam's on a Panini. I told you we got two Paninis into Publix. Sheets has three paninis. So the Paninis are doing exceptionally well. And, again, just keep going back to feel great that Crown has additional space.

Again, the way we do things is it doesn't have to be look. Panini's, we're only making it in one place. No other place gets to do it. It gives us huge flexibility on our production. So teams are doing well. Sam's is doing well. The chicken, the stuffed pepper mix, really proud and appreciate the strong legacy, long partnership we've had with Sam's. It's great.

George Kelly: Okay. Thanks.

Adam L. Michaels: Thanks, George.

Operator: Thank you. Our next question comes from the line of Nicholas Sherwood with Maxim LLC. Please proceed with your question.

Nicholas Sherwood: Hi. Thank you for taking my questions. My first question is, can you expand a little bit more on the success you had at Walmart in the quarter, you know, from the marketing perspective and, you know, sort of how that relationship has evolved and where you see that going through the rest of the year?

Adam L. Michaels: Yeah. Another great partnership. Remember, we had a whopping total of zero sales this time last year. Right? This is something that happened towards the end in Q4. Another great chicken product of ours, the four the it's a this four count's doing exceptionally well. I think make this number up. But I think when we started, I think there was maybe two or 400 doors along those lines. I think we're up to 18, almost 2,000 doors. And, again, it's not just the individual item. Chris and Scott and team were down there just a month or so ago. I love the partnerships that we create. It is not it is not it is not transactional.

How do we work together? What new items are you looking for? What are consumers looking for? How do we work together on it? So I love it, and I'm really know, I've said this to folks before. I really believe you know, there's just a lot of momentum because of our consumers. Right? Our three and thirty million friends across America. You know, things are tough for them. People are spending more of their dollars in club and mass. And that's where our teams are trying to bring the best products, promotions to be, you know, be where the consumer's gonna be. So really good great partnership with Walmart as well.

Nicholas Sherwood: Appreciate the detail. And then kind of switching gears, you know, Sheets is your first convenience channel, customer. Can you kind of talk about the experience and expanding in that channel and where you see yourself growing more, is that a near-term priority, or you more focused on club and mass and then maybe really getting into convenience is something further in the future?

Adam L. Michaels: Yeah. Look. If we're gonna be the one-stop shop in a deli, we wanna win everywhere. So it's absolutely a focus of ours. There's other convenience channels. If you remember, you know, when we really started this a year so ago, the first step was getting into all the distributors. Right? Because that's that's how you get into the convenience channel. It's sort of a chicken or egg. The distributors don't want you unless you have a c store customer. The c stores won't buy from you unless you have distributors that could actually sell there. So in the beginning, was very hard. What's amazing is we're now in all distributors. Right? Starting with Cisco. Right? Dot. Starting with Kehi.

So we have McLean. So we have we're in all the distributors now with makes easier every day. You know, Tony or others are getting us into different c store banners. Again, we want to go where the consumers are going. And it is tougher now. You know, the convenience channel is by definition for convenience. Right? It's not for low cost. But our goal is to meet the needs of our of every consumer regardless of where they are. And we're gonna create different products. Possibly at lower price points. To meet their needs in a particular channel. So there's a lot of testing we're doing. With some different products that are wanna keep to ourselves for now.

But that I'm excited about and has some, some interest from a couple of other c store banners.

Nicholas Sherwood: Okay. Perfect. And then my final question is, how does this affect any of the planned improvements to the East Rutherford facility?

Adam L. Michaels: So like I mentioned to you earlier so first of all, we're absolutely continuing to develop our East Rutherford facility. We've put a bunch of stuff in already. And if you remember last time, we actually more than doubled the space doubled the space that we have in East Rutherford. So that's not changing. I mentioned earlier, what is changing is I'll give you a really specific example. We are gonna actually spend money on a shredder. Right? Pulled chicken, shredded chicken. We're gonna go out and buy a brand new machine. Takes forever to get, pay top dollar, all these things. Hey. The Bayshore facility, the Crown has an extra one. Wow. Could bring it over.

Literally, just this weekend, we have, one of our great products. If you guys it's in five regions today. At Costco is our cheese stuffed chicken stuffed cheese stuffed chicken meatballs. Again, one of my son's favorites. And it's really complicated. Right? It's a special machine that stuffs the cheese inside. Right? You always wanna know how they got whatever into the tootsie roll pop. Eric and Ray. Eric runs our East Rutherford facility. Ray runs our Farmingdale facility. We have just a lot of demand. Eric gave Ray a call. Hey. Can I borrow, one of your stuffing machines? Absolutely, Eric. And we should go back and forth every day with our, trucks.

And now we have three machines here. So, hopefully, that's just one example of many. One plant, three locations, and now getting a lot of equipment from Crown. There's things that we were going to buy in East Rutherford, that were, for all intents and purposes, gonna get for free. And that's awesome. So that's one example that we're absolutely investing in East Rutherford. We're just gonna Anthony's smiling. Know? We're just gonna invest less than we were going to because oops, we actually have the equipment. Which is wonderful.

Nicholas Sherwood: Thank you for answering all my questions, and I will return to the queue.

Adam L. Michaels: Thank you.

Operator: And we have reached the end of the question and answer session. I would like to turn the floor back to CEO Adam L. Michaels for closing remarks.

Adam L. Michaels: Thank you, operator, and thank you again each of you for joining us today. I hope you see that our team is starting to hit our stride. Our sales and marketing teams have the products and relationships needed to accelerate our business. Our operations team has the capacity and know-how to continue to drive meaningful efficiencies throughout our network. Our finance team continues to prove we have the balance sheet management and capital markets expertise for most any investment that lies ahead. And most importantly, our people operations team continues to bring in great talent and lift up existing talents to create the Graham Aqua culture critical to our success.

Fanning our flame is our new Crown family, which we're integrating with speed and discipline, focusing on growth while maintaining our margin targets and leveraging added capacity and premium customer access to drive a profitable business. Looking ahead, we're positioned to take share as we execute our one-stop-shop deli solution strategy. As always, I appreciate your continued support.

Operator: Thank you. And this concludes today's conference, and you may disconnect your line at this time. Thank you for your participation.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 1,052%* — a market-crushing outperformance compared to 185% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks »

*Stock Advisor returns as of September 8, 2025

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were 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. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has positions in and recommends Oracle and Walmart. The Motley Fool has a disclosure policy.