Mama's Creations Q2 2026 Earnings Call: Contradictions in Gross Margins, Crown Acquisition, Chicken Pricing, and Walmart Partnership

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 8, 2025

Financials Results

• Revenue: $35.2M, up 24% YOY (vs $28.4M prior year)
• EPS: $0.03 per diluted share, flat YOY (net income $1.3M, up 11% vs $1.1M prior year)
• Gross Margin: 25%, compared to 24% in the prior year

Guidance:

• Post-acquisition revenue run-rate ~$200M; Crown I ~$56M TTM and accretive in FY26.
• Near-term normalized gross margin expected in low-20% due to Crown; targeted to rise toward mid-to-high 20% in 12–18 months via efficiencies/procurement/throughput.
• Trade spend will flex with commodity costs and margin; Crown’s private label mix implies lower trade rates.
• Chicken prices down ~$1/lb since June, supporting 2H margin improvement; beef remains a watch item.
• No major CapEx needed at Crown; migrate Crown to NetSuite early next year; pursue cross-selling; Costco national MVM scheduled for Q4.

Business Commentary:

• Revenue and Market Growth:
• Mama's Creations reported a 24% increase in revenue to $35.2 million for Q2 fiscal 2026 compared to $28.4 million in the previous year.

• This growth was driven by volume gains from same customer cross-selling, accelerating velocities of existing items, and expansion into new customer doors, supported by strategic pricing and operational efficiencies.

• Operating Efficiency and Cost Management:

• Gross profit increased 28% to $8.8 million, representing 25% of total revenues, compared to 24% in the previous year.

• The company achieved operational efficiencies with freight costs reduced by 60 basis points from the previous year, supported by better planning and fuller trucks.

• Acquisition Strategy and Integration:

• Mama's Creations completed the acquisition of Crown I Enterprises for $17.5 million, adding $56 million in revenue and expanding into new retail channels.

• The acquisition is expected to be accretive in the current fiscal year, enhancing production capacity and providing new product cross-selling opportunities.

• Challenges and Market Dynamics:

• Despite facing continued macroeconomic challenges, Mama's Creations observed strong demand for its value-oriented, high-quality deli prepared foods, supporting the notion of their relevance across economic conditions.
• Market trends indicated a strong connection between refrigerated products and consumer health goals, with protein being the most sought-after nutrient in consumer diets.

Sentiment Analysis:

• Management reported revenue up 24% YOY to $35.2M and said the Crown I acquisition is accretive this fiscal year with a ~$200M run-rate. They highlighted a national Costco MVM in Q4 and noted chicken prices fell by about $1/lb since the last call, aiding margins. They also stated no major CapEx is needed at Crown due to recent upgrades, and expect to lift gross margins toward mid-to-high 20% over 12–18 months.

Q&A:

• Question from Ryan Meyers (Lake Street Capital Markets): Outlook for organic gross margins in 2H amid chicken costs and trade spend; confidence in rebound?
  Response: Management expects a 2H margin rebound as chicken prices fell ~$1/lb, throughput improved with more grills, and trade spend remains a flexible lever.

• Question from Ryan Meyers (Lake Street Capital Markets): Will Crown’s ~$56M revenue grow and require SKU/channel rationalization?
  Response: They’ll right-size SKUs collaboratively, leverage shared equipment and proximity, and follow their prior integration playbook to drive synergies and growth.

• Question from Eric Des Lauriers (Craig-Hallum Capital Group): Costco progress and significance of national MVM; path to everyday item?
  Response: The national MVM is the next step after digital; strong execution could lead to an everyday national item, materially expanding sales.

• Question from Eric Des Lauriers (Craig-Hallum Capital Group): Differences between Crown’s and Mama’s MAP capabilities?
  Response: Crown adds more equipment and years of MAP experience; teams will cross-learn, boosting capacity and execution quality.

• Question from Eric Des Lauriers (Craig-Hallum Capital Group): How will trade promotion change with Crown’s lower margins; new thresholds?
  Response: Trade/marketing spend will flex with margins and commodity trends; Crown’s private label mix lowers trade needs; no fixed new threshold—spend is modulated opportunistically.

• Question from George Kelly (ROTH Capital Partners): What is Crown’s facility revenue capacity and expected CapEx?
  Response: No major CapEx is needed due to recent upgrades; combined network efficiency and capacity could support roughly doubling current revenue over time.

• Question from George Kelly (ROTH Capital Partners): Can the three facilities roughly double revenue from the ~$200M run-rate?
  Response: Yes; added grills, shift flexibility, and process efficiencies provide significant headroom beyond current utilization.

• Question from George Kelly (ROTH Capital Partners): Update on Sam’s Club panini performance and 2H expectations?
  Response: Chicken pesto panini exceeded velocity expectations and expanded doors; expect continued rotations and potential item additions in 2H.

• Question from Nicholas Sherwood (Maxim Group): Walmart marketing success and relationship outlook?
  Response: From zero last year to ~1,800–2,000 doors for a 4-count chicken item; digital programs show strong returns and the partnership is expanding.

• Question from Nicholas Sherwood (Maxim Group): Convenience channel strategy following Sheetz launch?
  Response: Now in all key distributors and using Sheetz momentum to expand; testing channel-fit items to grow broader C-store penetration.

• Question from Nicholas Sherwood (Maxim Group): Impact of Crown acquisition on East Rutherford improvements?
  Response: ER investments continue, but Crown’s surplus equipment reduces planned CapEx; equipment sharing across plants increases flexibility and throughput.