Mama's (MAMA) Q1 2027 Earnings Transcript

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DATE

Monday, June 8, 2026, at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman, President, and Chief Executive Officer — Adam L. Michaels
• Chief Financial Officer — Anthony J. Gruber

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TAKEAWAYS

• Revenue -- $52.8 million, up 49.7%, driven by item expansion at existing customers, over 12 new branded item launches at major retailers, contribution from the Crown 1 acquisition, and broad-based growth despite lapping a $10 million digital Costco MVM and with less trade investment.
• Net Income -- $2.1 million, a 66.3% increase, representing 3.9% of revenue versus 3.5% in the prior-year quarter.
• Adjusted EBITDA (non-GAAP) -- $4.9 million, up 71.2% from $2.8 million.
• Gross Profit -- $12.4 million, up 35.3%; gross margin at 23.6%, compared to 26.1%, impacted by labor and raw material inefficiencies, and start-up costs related to new product and packaging technology launches.
• Operating Expenses -- $9.8 million, rising from $7.6 million; as a percentage of revenue, declined to 18.5% from 21.6% due to scale leverage and a shift of some SG&A marketing costs into trade.
• Cash and Cash Equivalents -- $24.4 million as of April 30, 2026, up from $20 million on January 31, 2026, supported by strong operating cash flow and profitability.
• Total Debt -- $5.1 million as of April 30, 2026.
• Retail Presence Expansion -- Achieved over 12 new item launches at major retailers, including Walmart, Target, Food Lion, three Albertsons divisions, and others, supporting increased ACV and store count.
• Instacart Channel -- Platform sales exceeded $1 million; units rose 34%, achieving a 5.6x return on ad spend, with 45% of sponsored sales from new customers.
• Walmart Performance -- New launches live in over 2,000 stores within 30-45 days, with attributed sales tripling to nearly $1 million and return on ad spend increasing from $10.50 to $29.50.
• Costco Everyday Status -- Second region, San Diego, confirmed as an everyday item region for beef meatballs, establishing structural — not just promotional — distribution in multiple geographies.
• Bayshore Facility Capacity -- Management indicated current available capacity could support a doubling of company revenue to approximately $400 million, and recent East Rutherford expansion further adds capacity for the next few years.
• Pricing Contribution -- Management stated "90% of our sales growth was volume driven, which is amazing, and about 10% of it was pricing driven."
• Gross Margin Outlook -- Management reiterated the target for consolidated gross margins in the "mid- to high 20%" range as new item launches move into steady-state production.
• SG&A Outlook -- Commented that the decline below 20% of sales in Q1 is temporary, and expects to return to a steady-state ratio in subsequent quarters.
• Digital and Retail Media -- At BJ's Wholesale Club, attributed sales rose by nearly 10x and return on ad spend grew by nearly 5x year over year, with scalable efficiency seen across digital programs.

SUMMARY

Mama's Creations (NASDAQ:MAMA) reported significant top- and bottom-line expansion, with sequential investment in product innovation and national retail relationships accelerating store presence and distribution. The full ERP and systems integration across three manufacturing sites is now finished, leading to enhanced operating leverage and management focus, while the company also cited the successful absorption and optimization of new technologies and product forms. Management described available plant capacity to support meaningful further scale, and highlighted strategic flexibility from a fortified cash position.

• Management stated, "we could double our revenue for a roughly 200 million today we could be 400 million with this new space," indicating headroom for long-term growth without near-term facility constraints.
• Recent product launches at Walmart and Target began shipping mid-to-late in the quarter, so the related revenue will largely impact future periods, while start-up costs reduced immediate gross margin.
• The organization emphasized the transition toward everyday items at Costco as foundational to a stable, recurring channel revenue base.
• Management confirmed confidence in sustaining double-digit organic growth for the full year, supported by new SKUs and ramping channel partner activity.
• Investment in automation and shelf-life technologies, including modified atmospheric packaging and HPP, positions the company to address key retailer pain points and drive incremental wins.
• The full ERP, warehouse management, and transportation management system roll-out across all sites is described as a major operational milestone, freeing up senior leadership for further growth initiatives and M&A opportunities.

INDUSTRY GLOSSARY

• MVM: Member Value Mailer, a targeted Costco digital promotion event driving high seasonal sales uplift.
• ACV: All-Commodity Volume, a metric representing store count weighted by total store sales to measure retail distribution breadth.
• ERP: Enterprise Resource Planning, integrated software to manage core business processes across production, procurement, and sales functions.
• WMS: Warehouse Management System to optimize labor, inventory, and stock locations within manufacturing operations.
• TMS: Transportation Management System, technology designed for optimizing routing, logistics, and inbound/outbound service metrics.
• HPP: High Pressure Processing, a cold pasteurization method to extend product shelf life through high pressure without heat.
• MAP: Modified Atmosphere Packaging, technology that extends food shelf life by altering package gas composition, such as by increasing nitrogen.
• ROAS: Return on Ad Spend, measures revenue generated for each dollar spent on advertising.
• SG&A: Selling, General, and Administrative expenses, the total expenses not directly tied to product manufacturing.

Full Conference Call Transcript

Adam L. Michaels: Thank you, Luke, and thank you to everyone for joining us today. I would like to welcome you to our first quarter fiscal 2027 financial results Conference Call. Fiscal 2027 is off to another strong start. We grew revenue 50% to $52.8 million in the first quarter, grew net income 66% to $2.1 million, and expanded adjusted EBITDA 71% to $4.9 million. All while successfully lapping without repeat a nearly $10 million digital Costco MVM in the prior year first quarter.

Growing on top of that comp with meaningfully less trade investment, is frankly a remarkable accomplishment. and 1 that I believe speaks volumes about the durability, and breadth of the demand we are seeing across our customer base, the strength of our brand and innovation pipeline, and the execution of our integrated 3-facility platform. Beyond the headline numbers, what excites me most is the strategic position we now hold. We entered fiscal 2027 as a scaled platform with 3 facilities. A diversified and growing customer base, a fortified balance sheet, and a clear path towards our long term vision of becoming the leading national 1-stop-shop deli solutions provider. The first quarter validated every element of that thesis.

Before we dig into the quarter, let me spend a moment on the macro backdrop. 1 of the earliest lessons I picked up in my career is that catching an existing current is far easier and far cheaper than trying to manufacture 1 of your own. And in the deli prepared, that current is still building into what I would call a tidal wave. Progressive Grocer's just released its 93rd annual report in the 2026 state of the industry survey validates exactly what we are seeing every day at Mama's. Among grocery retailers surveyed, 79% said that the meat department is the most successful at generating sales. A remarkable 30-percentage point increase from last year.

Said differently, in the span of a single year, meat and more broadly protein has gone from a category retailers manage to a category that retailers expect to grow with. 70-7 percent of retailers further told Progressive Grocer that prepared foods and food service represents its top strategy for merchandising and brand enhancement. Underscoring the growth opportunity this year in the fresh perimeter and prepared foods. The very intersection where Mama's competes every day, and 89% of retailers said that private label and store brands are a top merchandising strategy, a 16-percentage point increase over last year reinforcing the relevance of our dual track approach of growing both our branded and private label portfolios.

Last month, FMI came out with their annual US grocery shopper trends 2026, and reinforced and put math to this tidal wave we are seeing. 70% of respondents visit the deli department at least once a month. And 1 third visit at least weekly. In our target demographic, 38% of Gen Z and 43% of millennials buy deli prepared foods at least weekly. They are more likely to buy deli prepared foods to save money and to eat healthier suggesting deli prepared foods tends to replace dining out more often. Deli prepared departments offer shoppers an opportunity to explore and take a break from their everyday routines. This is what I foresaw nearly 4 years ago.

And why this highly overqualified team we have assembled at MAMA's was willing to plant those early seeds. I could tell you these green shoots have already turned into vibrant saplings. Layered on top of these survey findings, fresh format grocers continue to capture the largest share of incremental foot traffic, with grocery stores grabbing a growing share of short midday visits, from quick serve restaurants as consumers replace restaurant meals with more cost conscious and healthier options. Meat sales remain at record highs with consumers increasingly viewing high quality meats and poultry as part of a healthy diet. We continue to be in the right place, at the right time with the right product portfolio.

And we now have the platform to capture far more than our fair share. The last 3.5 years have brought meaningful progress and laid down a durable base from which to construct a category leading deli platform. But the underlying playbook we run against our 4 C's framework, has not shifted 1 iota. Starting with our first C, cost. The Bayshore integration continues to be the clearest illustration of the structural margin work Skip and his team are driving. Sourcing and logistics are now run from a single centralized desk covering all 3 plants. Bayshore successfully transitioned to Mama's corporate ERP system providing unparalleled insights across the business.

Our production footprint has been reflowed to lift utilization, take out overtime, and pull more absorption through the system. Bayshore associates have leaned into the mama's way of doing things, and we, in turn, are picking up best practices from them. In particular, the premium product know how they brought with them is already unlocking customer doors that have previously been closed to us. I am so excited to share that we have officially moved into our new Rutherford expansion. Adjacent and literally sharing a wall with our existing facility. While there is more work to do, additional blast freezer and refrigerated storage is currently being installed, allowing for more efficient runs, lower overtime, and better customer service.

I am so proud of Shane and the team. From our project managers to line workers who execute our major projects faster than the time before, and further below budget. On gross margin specifically, Q1 reflected some labor and raw material inefficiencies and other start up costs associated with the launch of new packaging technologies and protein form factors that we deployed to support the introduction of over 12 new items with major retailers in the quarter. The most ever in a single quarter for Mama's. These are investments in our future, and they are exactly the kind of front loaded cost you would expect to see as we scale our business.

Bayshore's gross margins continued to improve since acquisition, and we remain on track to bring that facility and the consolidated business in line with our mid to high twenties corporate target as these new items move from launch into steady state production. Moving to controls, our second C. In an industry where food safety sits at the top of every conversation, the discipline our team is demonstrating across all 3 facilities, is nothing short of remarkable. And is nothing we take for granted. This quarter saw 2 successful FDA unannounced audits, and while some companies fear and dread these types of audits, the only thing our team thinks to say is bring it on.

Our team loves these opportunities to show our customers and the entire country what they are used to doing every single day. For me and Skip, the best part is seeing our colleagues across facilities share learnings highlight best practices so their sisters and brothers can do even better than they did. If that does not describe a family, I do not know what does. An important milestone underpinning our controls discipline this quarter was the completion of our enterprise resource planning or ERP, integration across all 3 of our manufacturing facilities.

With Bayshore now fully transitioned onto the same enterprise platform that runs East Rutherford and Farmingdale, we operate as a single unified system for procurement, production, inventory, and sales. The benefits are already showing up in how we run the business. A faster month end close, sharper inventory accuracy, more granular cost visibility by line and by SKU, and a stronger foundation for our analytical tools. This integrated ERP backbone is a key enabler of the operating leverage you are starting to see come through our financials. An important capability as we continue to scale towards our $1 billion vision. A huge thank you to John and his IT team.

As well as to Tony and his Bayshore team for the long hours, planning, execution, and hypercare you both partnered on to deliver on time and on budget. Thank you. In addition to our ERP system, we have also advanced the implementation and capabilities associated with our WMS, or warehouse management system, impacting areas of labor efficiency, stock location, and inventory accuracy. We also successfully introduced and implemented the company's first ever TMS, or transportation management system, which will be a huge unlock for transportation, planning efficiency, improved route and stop optimization, improved OTIP and service visibility, our capabilities, and carrier compliance. Not to mention, Rebecca, finally retiring her letter size dry erase board.

With the map of The United States. Skip would have me go on and on about the tools and capabilities we have successfully implemented at MAMA's over the past 12 months. But I hope this gives our investors just a taste of the technology we are bringing in well ahead of similarly sized companies. Let alone a company in the deli prepared space. As our boys, Gregory and Alexander, would say, we are just built different. As I have said in the past, cost and controls may earn us a seat at the table, but it is our third C, culture, that keeps us there.

With nearly 600 teammates now operating across 3 facilities, The enterprise wide shared services model we put in place is producing real, measurable results. As Abby continues to tell me, culture is not a destination. But rather a mindset that always needs love, attention, and reinforcement. Q1 saw the launch of 3 employee engagement recognition, and retention programs. To do just that. Grandma's table our first cross facility referral and retention program, Mama's welcome crew and first taste enhance onboarding and orientation processes with Primo or buddy assignments for new hires. And a grandma's favorite, spot recognition program designed to reinforce culture, engagement, and positive employee experience.

Yes, the customers we capture the new items we develop, and margins we enhance are needed for a strong business. But I could honestly tell you that the P and L is missing our most important ingredient. It is the team we are hiring nurturing, promoting that is truly the secret sauce of our $1 billion destination. Our catapult strategy, our fourth and final C, was on full display this quarter. In addition to strong velocity acceleration and high ROI programming, we launched over 12 new items with major retailers. Including new branded SKUs at Walmart, Target, and Food Lion.

Supported by the startup of new packaging technologies and protein form factors, These wins are the direct result of our continued investment in product innovation, our integrated operating platform, and our deepening partnerships with the largest grocers in the country. We expect these placements to ramp meaningfully through the balance of fiscal 27. If I may, let me spend a moment on Costco which continues to be a marquee example of our Catapult strategy in motion. As a reminder, Q1 of last year included our first ever digital MVM at Costco. Which alone delivered nearly $10 million in revenue in that single quarter. Incorporating meaningful trade investment to successfully drive household penetration and step change velocity acceleration that exceeded expectations.

The important point is that we lapped that $10 million comp on a whole company basis year over year, adjusting out our recent acquisition. And this was without any incremental Costco programming. In other words, this is not a story of Costco growing on top of itself. This is the entire enterprise stepping up on top of last year's higher promotional base. To me, that is 1 of the strongest signals you could ask for. It tells us that the Costco business itself has become structural rather than promotional. The everyday item status we secured in the Northeast late last year is delivering exactly the steady-state, plannable volume we expected.

And at the same time, the rest of the business has grown into a much larger and more diversified contributor. Oh, and I forgot to mention that Chris just shared with me that earlier last week, we were told that the San Diego region of Costco actually the last holdout to ever offer us a rotation back in 2024, has decided to take our beef meatballs on as an everyday item. The second region to confirm our everyday status. Maybe Mama Mancini really was onto something 105 years ago, when she made her way to Ellis Island with her now famous meatballs and sauce recipe.

We continue to make progress against our goal this year of adding at least 2 new SKUs to each of our top 10 customers. In addition to Walmart, Target, and Food Lion, we saw successful new launches across 3 Albertsons divisions. 2 new Panini items at Weiss, 2 non-protein items at Fresh Market, as well as a number of new wins in the convenience and meal kit channel. I am so proud of Chris and his entire team not just for the individual wins, but rather how they prove out quarter over quarter that our 1-stop-shop strategy is not just theory. But an intentional road map for our success for years to come.

A key driver of our catapult success continues to be our commitment to quality. Our NAE, No Antibiotics Ever, chicken initiative continues to resonate with today's consumers. And we are leveraging the Bayshore acquisition to cross sell capabilities and new products into both our legacy accounts and our Crown 1 customer base. Lauren and her marketing team are also delivering in a meaningful way. Our investment in marketing and retail media continued to compound in Q1. We delivered strong returns across our top retailers, while continuing to bring new customers into the brand. On Instacart, Our Northeast everyday and rotational businesses carry the momentum forward. We grew total platform sales to over $1 million with units up 34%.

Delivering a 5.6x return on ad spend. And 45% of our sponsored sales came from new customers. At Walmart, our branded launches went live in April, and early platform results are strong. In the quarter, attributed sales more than tripled year over year, growing to nearly $1 million with our ROAS expanding $10.50 last year to $29.50. Meaning, every dollar we spent in Walmart media returned $30 in retail sales. BJ's was another standout. Attributed sales were up nearly 10x year over year. And our ROAS grew nearly 5x. The team is scaling that program efficiently. And we see meaningful room to continue.

Looking ahead with new items now on shelf across Walmart and Target, and our activation calendar running through the back half of the year, we expect this media retail momentum to continue driving trial, repeat, and branded growth. Looking to the balance of fiscal 2027, we are planning to meaningfully increase our branded sales across our retail footprint. Through the ramp of these new introductions at Walmart and Target, the conversion of legacy private label items to branded, and the continued execution of our strategic goal of adding net-plus-2 SKUs in each of our top 10 accounts.

Our trade and marketing investments are delivering strong returns with digital and in store programming generating measurable lifts in consumer awareness, and retail velocities. Looking forward, the company I see in front of me bears very little resemblance to the 1 we ran even 12 months ago. We now operate a scaled 3-plant manufacturing footprint, serve a broader and still expanding customer roster, sit on a fortified balance sheet with meaningful firepower for M&A, and rely on a team that has demonstrated in practice, not in theory, that it can integrate acquisitions and execute with excellence. against the plan.

Our line of sight to $1 billion in revenue has never been sharper and I have real conviction in our ability to compound profitable growth well into the future. I would now like to turn the call over to Anthony J. Gruber, our Chief Financial Officer, to walk through some key financial details from the first quarter. Anthony?

Anthony J. Gruber: Thank you, Adam. Moving to the financial results. Revenue for the first quarter of fiscal 27 increased 49.7% to $52.8 million as compared to $35.3 million in the same year ago quarter. The increase was primarily due to item expansion at existing customers, the successful launch of over 12 new branded items at major retailers. The contribution of the Crown 1 acquisition and continued broad based growth which the company achieved despite lapping a $10 million digital Costco MVM in the prior year quarter and meaningfully less trade investment in the current quarter.

Gross profit increased 35.3% to $12.4 million or 23.6% of total revenues in the first quarter of fiscal 2027 as compared to $9.2 million or 26.1% of total revenues in the same year ago quarter. The first quarter gross margin was impacted by labor, and raw material inefficiencies and the start up of new technologies and protein form factors supporting the launch of more than 12 new items with major retailers. As well as the continued integration of the Bayshore facility. We remain on track towards our mid- to high 20% corporate gross margin target as these new items transition into steady state production.

Operating expenses totaled $9.8 million in the first quarter of fiscal 27 as compared to $7.6 million in the same year ago quarter. As a percentage of revenue, operating expenses declined to 18.5% from 21.6% in the prior year quarter. Demonstrating the operating leverage our model as we scale as well as intentional decisions to move some SG&A marketing investments into gross to net trade to support our new item launches. The change in absolute dollars was partially due to the Bayshore acquisition new digital strategies and enhanced product marketing new management hires and further technology upgrades to drive actionable insights faster and deeper into the organization.

Net income for the first quarter of fiscal 27 increased 66.3% to $2.1 million or $0.05 per diluted share as compared to net income of $1.2 million or $0.03 per diluted share in the same year ago quarter. First quarter net income totaled 3.9% of revenue as compared 3.5% in the same year ago quarter. Adjusted EBITDA a non GAAP measure, increased 71.2% to $4.9 million for the first quarter of fiscal 2027 as compared to $2.8 million in the same year ago quarter. Cash and cash equivalents as of April 30, 2026, totaled $24.4 million as compared to $20 million as of January 31, 2026.

This increase was primarily driven by improved profitability strong operating cash flow generation, and ongoing working capital optimization. As of April 30, 2026, total debt stood at $5.1 million The robust balance sheet combined with our credit facilities and strong cash flow generation, positions us extremely well to pursue the organic and inorganic growth opportunities that Adam described. This completes my prepared comments. Now before we begin our question and answer session, I would like to turn the call back to Adam for some closing remarks. Adam?

Adam L. Michaels: Thank you, Anthony. As I reflect on the first quarter, what stands out most to me is not any single number, but rather the way every part of our nearly 600-person team executed against the playbook. The 4 C's—costs, controls, culture, and catapult is no longer aspirational language at MAMA's. They are the operating cadence by which we run the business. Cost discipline showed up in the Bayshore integration, in our centralized procurement and logistics, and in the more balanced production footprint. Control showed up in the completed 3-facility ERP integration. And the expansion of our Power BI analytics. And in the food safety standards, our team upholds every single day.

Culture showed up in Mama's Pantry, Mama's university, grandma's table, first taste orientation, and in the shared services backbone, now linking all 3 sites. And Catapult showed up in the new customers we are partnering with for the first time. New items that bring new flavors, functions, form factors to our end consumers, and to our marketing partners who help us bring Mama's story to new to brand households across this great country. As I turn the page to the balance of fiscal 2027, our priorities are consistent. First, we will continue to optimize the integrated 3-facility network. Pulling efficiency, margin, and capacity utilization forward. As our recent new item launches move into steady state.

Second, we will press the accelerator on retail distribution leading into the Walmart and Target ramps while continuing to deepen our partnerships in the club channel with Costco, Sam's Club, and BJ's. And third, we will use our strengthened balance sheet to selectively pursue accretive acquisitions that bring incremental capabilities, capacity, or customer access into the platform. The $40 billion deli prepared foods category is large. Still expanding, and remains highly fragmented. The consumer trends, fresher formats, higher quality proteins, value oriented meal solutions, continue to break in our direction. Retailers, in turn, want a partner who can simplify the deli prepared meal space, deliver consistently at a national scale, and bring genuine innovation to the case.

That is precisely the role Mama's Creations is built to play. And our long term vision of becoming the leading national 1-stop-shop deli solution provider has never felt more within reach. With our strengthened platform, fortified balance sheet, and demonstrated track record of execution. We are better positioned than ever to capture this generational opportunity and to compound value for our shareholders over the long term. To our team across all 3 facilities, thank you. For your energy, the ownership, and your relentless execution. And to our shareholders, thank you for your continued trust in this story. I have never been more convinced that the most exciting chapter of Mama's Creations is the 1 in front of us.

With that, operator, let's open the line for questions.

Operator: 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. 1 moment, while we poll for questions. Our first question is from Brian Holland with D. A. Davidson.

Brian Holland: Thanks. Good afternoon. I wanted to start with the contribution from some of the new products in the quarter. Just curious, like, maybe some of that was geared towards the end of the quarter. So even qualitatively, can you help understand how meaningful the contribution from those new items across at Walmart and then the new customers—Target, Food line, etcetera. How they contributed in the quarter. And I guess where I am going with this is would the expectation be that revenues would increase sequentially in 2Q versus 1Q? And if not, just any caveats that I am not thinking about.

Adam L. Michaels: Yeah. Thanks, Brian. I guess, actually, let's call it double hit. So you are absolutely right. So these did not launch till the middle to end of April. So we had all the costs. Right? Because we built it all out and we got them there. The cost is all in Q1. But really, very little of the revenue was in Q1. So, hopefully, that gives some direction. Obviously, we expect we are already seeing it in the items, we have been more efficient. Right? We are literally, for I will give you 1 example. Walmart, the first round of chicken items that we gave, they have we have 3 new items in Walmart at chicken.

The first round actually had 2 labels on it. that is how we originally did it. We optimized with Walmart And now if you go into the store, you are seeing 1 label. We literally cut our we literally cut our label costs not just the label. Remember, it is the labor. In half. And that is just in the first round. So we are already starting to see lower costs. And, obviously, the acceleration, the velocities are already increasing substantially. So, hopefully, that is helpful.

Brian Holland: That is helpful. I appreciate the color. You may have answered my second question in that answer, but I will ask it anyway as I got on the call just a few minutes late. So apologies. If you, detailed this in your prepared remarks, like, just maybe just going back right to that point on the gross margin and seeing all the cost and not seeing the revenue. I know when you and I spoke at the end of the quarter, you talked about you know, hey. The first couple of times we run these lines through, we learn a lot. We implement it, and then, hopefully, we improve.

So I guess just confirming that we are now past all of that, and we do indeed have evidence that these lines after the first initial runs of some of the new products, that everything is operating exactly as you would anticipate. Or close to.

Adam L. Michaels: Yeah. No. Absolutely. And, hopefully, that very hopefully colorful example on the Walmart labels is a real example that helps. But yes. And, again, we will keep getting better and better. Right, Skip? I you know, Skip and I will never be satisfied. But certainly the beginnings of it. You know, another 1—we just got new items into Shaw's, which is an Albertsons division. And it is this great shredded chicken. it is actually my new go-to lunch. You know, it took forever. Right? Is it too shredded? Is it not shredded enough? Is it too colorful? Is it not colorful enough? So there was a lot of those iterations now that we have it.

For the next customer, obviously, we do not have those start up costs. So the answer is yes. Absolutely. We are seeing it a lot better than we were before. From the March You will leave it there. Congrats. Keep up the great work. Thank you, sir.

Operator: Our next question is from Eric Des Lauriers with Craig Hallum Capital Group.

Eric Des Lauriers: Great. Thank you for taking my questions. Congrats on me. Impressive broad based growth. And now the second everyday item win in San Diego. My first question here is a bit of a bit of a follow on to just, you know, understanding these the sort of start up costs of these initial new products. Could you just expand on kind of what those costs were? Should we think of this as basically building inventory that you had not yet sold?

Or was there any new equipment that you know, essentially had low initial capacity utilization? just kind of how to think about that more broadly and then how to think about the overall sort of duration of this you know, low margin ramp period before steady state production?

Adam L. Michaels: Yeah. So I think, you know, I think that it was a combination of a couple of things. So we used some new technology. Right? We actually used some HPP technology. Which helped clean you know, naturally extend shelf life. You know, that was the first time that we have done stuff like that. So there was a lot of back and forth multiple touches. So I would say a lot of it had to do with labor. Right? Us learning how to use this new packaging. I will give you another colorful example, hopefully. So in the past so with Food Lion, we our chicken is in a trace. Right? We are used to that.

We do that with other things. Right? Remember all the meals-for-1. This is the first time, at Walmart, we used sort of a see-through because our product is beautiful, sort of a vacuum-sealed plastic, shall we say. Again, that was new stuff. We had some new machinery. The team had to learn. Right? They keep getting more and more efficient. We see the throughputs. Increasing a lot. I gave you examples of the labels. So yeah, there is a lot of both the packaging, the technology, the form factors. Look, I gave the example of the shredded chicken. that is the first time. This is something that Crown had the technology for, but we have not used a lot.

So, again, the great thing about it is these are more 1-time things that obviously, Anthony and I have the luxury. We are a month ahead. right, of these numbers, and we are already seeing the improvement. So, you know, huge congratulations to Skip and his whole team, the Bayshore folks are leading the charge. Right? So 1 of the things that I shared with you last quarter is we have this amazing Bay Shore facility. it is twice as big as the other facilities with almost half the volume. Guess what that meant? Guess where all the Walmart items are being produced? Guess where all the Food Lion items are being produced.

So we are able to improve the absorption in Bayshore and it is going—it is going exactly as we had planned. it is it is beautiful. Alright. that is very helpful.

Eric Des Lauriers: And color. Thank you for that. And then just touching on Bayshore here. So ERP conversion integration now complete. Certainly, great to see. those are, you know, no walk in the park. Anything that remains on the integration front for Bayshore, and what kind of capacity does this kind of free up for the senior management team? Is this more freeing up more time to focus on M&A, or, you know, should we sort of be looking for any step up in gross margins or operating leverage it is a bit of all the above, but kinda just give us a, you know, status check on the Bayshore integration and kind of how to think about the implications there.

Thank you.

Adam L. Michaels: Yeah. I mean, that was absolutely the last major step and kudos to Anthony. Anthony led the charge with John Dillon and his team. Look, it is scary, right? I have done it at a number of different places, and, you know, you do not need me to tell you how dangerous it can be. We crushed it. It was absolutely perfect. Let's keep in mind, I think I shared that you know, this was going to happen mid to end of summer. We actually did this ahead of schedule, and that is a testament to the integration that Skip is leading in Bayshore. Look, as I said before, I am never going to stop improving this business.

But there is nothing major left to do at Bayshore. That was the last major hurdle. As my team knows, I think I am on the road the literally, the past 2 weeks and the next 2 weeks some for investor stuff, some for other stuff. And I am a lot more confident now and a lot easier for me to travel because that last hurdle is done. Again, Skip remains, the boss. And he has told me I am allowed to leave the office. Now more. So I feel a lot better that you know, again, there is always more to do and there will be more to do.

But, that was the last major hurdle at Bayshore with the integration. Good stuff. Appreciate that color, and congrats again on all the progress. Thank you, Eric.

Operator: Our next question is from George Kelly with Roth Capital everyone.

George Kelly: Thanks for taking my questions. So first 1, another question for you on the gross margin and kind of inefficiencies related to the start up costs. Are you able to quantify that? Maybe it is too hard, but is it possible to give any numbers around that?

Adam L. Michaels: Yeah. You know, I think there are 2 sets of numbers. I think roughly you know, I would say there is probably somewhere between almost $500 thousand to, I do not think, a million. But in that range, from a, labor and raw material inefficiency, there is probably half a million dollars of, as Anthony mentioned, we made an intentional decision, and Lauren's still upset with me, but we took about half a million dollars out of marketing to put that into trade to support the new launches at Target. Target was a big, you know, promo to get things started. Same thing at Food Lion.

So, actually, at Publix also, we had I think I told you guys we just launched the 2 new Paninis at Publix. We did programming there. So we definitely took some out of marketing and into trade. You guys see that. Hopefully, you noticed, you know, SG&A as a percentage, which traditionally is in the 20% range. Was in the, I think, 18 and a half percent range. So, you know, you think between those 2 things, that would have put our gross margin you know, I think north of 25%. But those were intentional decisions. As a leadership team, we feel like we made the right decisions to support our new launches. and to exceed our customers' expectations.

I will tell you that these new customers way faster than I expected are already reaching back out to Chris on what is next. Already. And that is a testament to the work Chris and his team is doing to be true partners. This is not a transactional business. Right? It is not about, hey. what is the next item we are getting in? How do we work collaboratively? How do we become the partner that is high quality, right, high service, Chris talks about all the time. It starts with, we get in with grandma quality products. And we stay and exceed with grandma quality service.

And that is what Chris has been able to show time and time again that we are now collaborating with new items with some of these customers. So I think it is an incredibly great and strong ROI.

George Kelly: Okay. Okay. Thank you. that is helpful. And then second question for me on Walmart. I know you have not been on shelves that long there, but can you talk to us just about the performance that you have seen so far and any kind of takeaways? Are you pleased with the velocities, etcetera? Just anything on Walmart. Thanks.

Adam L. Michaels: Yeah. Very pleasantly surprised. And actually, the word is I am a little surprised. Of course, Chris said, you know, I told you so, but the products are doing very well. The ramp up I am terribly impressed. We are again, the chicken items are north of 2,000 stores already. I told you we just launched 30 days ago, 45 days ago, and we are already north of 2,000, doors with the new chicken items. So I love the ACV. Meaning the number of doors we are in. I love every week the velocities are going up. So, yeah, I feel really good with it.

Hopefully, you just you know, I just mentioned earlier the work that Lauren is doing to, you know, chum the waters, shall we say, the ROAS at Walmart I mean, this guy is $30. I give a dollar, They give me $30 of retail sales back. that is a pretty good ROI. So, I love across the board. How Skip got the product together. How Chris is able to continue to drive those velocities, how Lauren is helping with the marketing. it is an incredible team effort which is wonderful. Okay. Okay. Great.

George Kelly: And then last 1 for me. Just on the quarter, was there much impact from you raising pricing at all And I guess, subsequent to the quarter, has there been any kind of pricing? And that is all I had. Thank you.

Adam L. Michaels: As you know, right, because you have been with us from the very beginning, pricing is something we take every day. This is not a once in a year type thing. We have the right pricing and as inflation unfortunately, moves up for all of us, Chris does a great job partnering with the our customers. I think so I do not think anything I know, obviously. 90% of our sales growth was volume driven, which is amazing, and about 10% of it was pricing driven.

So, the right amount of pricing of course, I will always, challenge Chris to make sure that you know, most, if not all of our customers are bigger than we are, so we should not be taking it on the chin. But what is great is our pricing is at the right place that it is only a conversation of, inflation. And I have shared with you guys before the research and the data that we, subscribe to. That gives us real time commodity inflation we are able to share that in partnership with our customers every time. Thank you. Thanks, George.

Operator: Our next question is from Ryan Myers with Lake Street Capital.

Ryan Meyers: First 1 for me, and, you know, it might seem like this is a given just given all the momentum you are seeing across the business with the new retailers and the new products. But Adam, do you still feel comfortable with the double digit organic growth for the year?

Adam L. Michaels: Yeah. No. Absolutely. Again, Chris and his team continue to not just deliver, overdeliver for us. You know, it is wonderful. And you and I have spoken about it, and I have spoken about it with our fellow investors, yeah, it is pretty awesome. You know, we are sort of everywhere, but equally, we are nowhere. Right? Chris is still staying true to his, you know, plus 2 items in each of our top 10 customers. he is done a great job already. Actually, I tell him he is not pacing himself well because he is ahead of plan.

You know, between the 7 new items at Walmart, the 5 new items at Food Lion, 2 new items at Fresh Market, 2 new items at Albertsons. I mean, I could go on. The new item at Target, with the additional second item coming in next month. Or in August. So yeah. No. I feel good with our growth, continued growth and yeah. No. Absolutely.

Ryan Meyers: Got it. Nope. that is good to hear. And then just kinda circling back on your comments on the, you know, marketing dollars that were in G&A Coming out shifting into trade promotion. You know, how should we think about that mix going forward? Was the numbers you posted in Q1 just a 1-time thing? Because, you know, as you mentioned, it is below 20% of sales. so I just kind of want to get a feel for that for the rest of this year.

Adam L. Michaels: No. I think I would—you know, I think—I hope our fellow investors see You know, I tell you guys, Anthony and I have our hands on the wheel at all times. We knew that we are investing in these new item launches and this new innovation, and we knew that margin would be somewhat impacted by that. And that is why, again, our leadership team does everything together as a team Therefore, we knew that we wanted to pull back other places to reinvest. You know, I think we would stay—you know, I would like to stay true to that 20% we continue to be investing in new technologies, new teammates.

You know, we are doing I will actually mention unfortunately, I am not able to be at IDDBA today. So if you guys remember IDDBA, the International Dairy, Deli, and Bakery Association, this is our Super Bowl. And, you know, obviously, I wanna hang with you guys more than with my fellow teammates. So I am pretty upset. But Chris and Lauren are out there with our teams. Doing an amazing job Again, they are meeting with all the top customers. Highlighting a bunch of new items. You guys saw, I think, last week, Lauren sent out a press release on all the new items that were launched and, I feel really bullish. On, what we are doing.

But Anthony and I, our hands are on the wheel. When we know we are doing well, we will lean into trade. And marketing. If we know that we are investing elsewhere, But, I would not say I would say We will be able to pull it back. And that is what you saw in Q1. I would go back to our steady state. For Q2 and onwards.

Ryan Meyers: Okay. Got it. No. that is helpful commentary. Thank you.

Operator: Our next question is from Anthony Vendetti with Maxim Group Thanks.

Anthony Vendetti: Just a follow on to the Bayshore facility. Adam, you mentioned that with the extra capacity, you have been able to supply Walmart and Food Lion's How much capacity is left after supplying Walmart and Food Lion in the Bayshore facility and then if and when that capacity gets filled, and maybe the time line for when you are expecting that to happen, does that necessitate either another facility or an acquisition, you know, in the near term?

Adam L. Michaels: Yeah. So what is really wonderful, and this is why the Crown acquisition was so amazing, It was a huge unlock for us from a capacity standpoint. You know, I would still say, you know, as strong as Chris works hard to stress us out, we should be able to double our business. What we have said is we could double our revenue for a roughly 200 million today we could be 400 million with this new space. The other thing as a reminder, I think I just mentioned earlier, we just opened up. We just almost doubled our space in the East Rutherford facility also.

So we had a lot of foresight into what we were doing in East Rutherford with the Bayshore acquisition that I think we are good for the next couple of years. Now that said, it does not slow me down 1 bit on what is the next acquisition. I still believe that it will include I am looking for companies with their own manufacturing and distribution. That means that I will get additional capacity But the great news, unlike a year ago, before the Crown deal we feel really good. there is definitely a lot more opportunity for us capacity wise. Okay.

Anthony Vendetti: And then just 1 quick follow-up. Any insight on the new packaging technologies and protein form factors that you have planned?

Adam L. Michaels: I think that we will continue to try to be true partners with our customers. You know, the biggest things that we continue to hear is, 1, I just do not have the labor anymore. And we are listening to that, and you see the examples of, like, Publix that we transitioned our bulk and kit items into our meals-for-1 items. That was an investment on our part, you know, on—I do not know. Let's call it a year ago, less, that, added this new mapping technology, which stands for modified atmospheric pressure. What it does is it pushes nitrogen in, pushes oxygen out, and almost doubled our shelf life on our products. So labor is important.

Shelf life is the second 1. So I spoke about the mapping just now. The HPP technology that we are using at Walmart is another example that extends shelf life naturally. So these are the conversations that Chris and team have with our customers, and that is what we try to be responsive to. So I hope to continue that so we can continue to be great partners. Okay. Thanks very much. Appreciate all the color. Thanks, Anthony.

Operator: Thank you. There are no further questions at this time. I would like to hand the floor back over to Adam L. Michaels for any closing remarks.

Adam L. Michaels: Thank you, operator. And thank you again to each of you for joining us today. To close, the first quarter of fiscal 27 was, in my view, the clearest evidence yet that the platform we have spent the last 3.5 years building is working exactly as designed. The flawless transition of our now enterprise-wide ERP system to ensure that what gets measured gets improved. Lapping a $10 million digital Costco MVM effortlessly. And still delivering revenue growth adjusting out acquisitions. Launching more than 12 new items with major retailers, expanding adjusted EBITDA 71%, and ending the quarter with $24.4 million in cash. All in a single 90-day window. it is not a coincidence.

It is the output of the 4 C's operating system at work. The macro tailwind in deli-prepared continues to outpace total food and beverage. Our 3-facility network is humming, Our balance sheet is positioned for accretive M&A. And our team is executing with real conviction. The course we have charted towards national deli leadership is set. And our commitment to that destination is unwavering. As always, we appreciate our shareholders' continued support and look forward to updating you on our progress in the quarters ahead. Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.

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