Mama's Creations Q3 2026 Earnings Call: Contradictions in AI and Productivity Focus, Costco MVM Strategy, Bayshore Integration, and Trade Promotion Approaches

Date of Call: None provided

Financials Results

• Revenue: $47.3M, up 50% YOY (vs $31.5M in the same prior-year quarter)
• EPS: $0.01 per diluted share, flat YOY (net income $0.5M, up 31.7% YOY vs $0.4M)
• Gross Margin: 23.6% of revenue (gross profit $11.1M), up from 22.6% (gross profit $7.1M) YOY; gross profit +56.6% YOY
• Operating Margin: Operating expenses 21.8% of revenue vs 20.8% prior year; implied operating margin approx 1.7% (operating income ≈ $0.8M)

Guidance:

• Lift Bayshore (Crown One) gross margin toward corporate historical range (mid-20% range) over the next 12–18 months.
• Finalizing commodity (chicken) supply agreements for calendar 2026 to provide cost stability and improved unit economics.
• Execute SKU rationalization and centralize procurement/ERP integration to capture synergies starting January; continue organic retail and club rollouts.
• No specific quarterly revenue or EPS numeric guidance provided on the call.

Business Commentary:

* **Revenue and Acquisitions: - Mama's Creations reported revenue of $47.3 million for Q3, marking a 50% increase compared to the previous year. - This growth was largely due to the acquisition of Crown One and robust double-digit growth in the legacy business.

• **Gross Margin and Operational Efficiency:
• Gross profit increased 56.6% to $11.1 million, representing 23.6% of total revenues.

• The improvement was driven by operational efficiency gains, better raw material planning, and strategic procurement efforts that lowered transportation expenses.

• **Bayshore Integration and Synergies:

• The acquisition of the Bayshore facility led to a 100% centralization of its procurement within three months, reducing costs and enhancing operational efficiency.
• The integration has been successful, with the Bayshore team contributing significantly to the company's growth strategy.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management reported revenue +50% to $47.3M and adjusted EBITDA +118% to $3.8M; CEO described the Bayshore integration as "exceeding expectations" and said the "platform is operating with more precision, higher throughput and a stronger growth engine," signaling confidence in growth and margin recovery.

Q&A:

• Question from Brian Holland (D.A. Davidson): Anything you can share on the AIC front progress that you've made this quarter?
  Response: Management said the priority is AIC (adding items per customer) to drive velocity—AIC is #1, velocity #2, ACV tertiary; new items can ship quickly for existing customers but take longer for new customer rollouts.

• Question from Brian Holland (D.A. Davidson): On Costco MVM, any qualitative read on sell-through and initiatives to build awareness/visibility ahead of the MVM?
  Response: Product is already shipping and selling well; they are amplifying with Instacart, Walmart digital/search, Publix proximity marketing, POS hang-tags and targeted promotional programs to drive trial ahead of the MVM.

• Question from Brian Holland (D.A. Davidson): Any directional sense of where you're locking in chicken for calendar '26 relative to '25 and what benefit that provides?
  Response: Acquisition doubled chicken volume improving supplier leverage; chicken prices have improved vs the prior year and they're finalizing 2026 contracts to add cost visibility and better unit economics.

• Question from Eric Des Lauriers (Craig-Hallum): Can you shed more color on the planned SKU rationalization of some Crown products—what inning you're in and customer/geographic impacts?
  Response: They've started meetings led by Chris and Lauren with top customers, will prioritize production/COGS optimization first, and plan to begin deliberate SKU rationalization in January focused solely on improving gross margins—not cutting SKUs for its own sake.

• Question from Eric Des Lauriers (Craig-Hallum): How are you thinking about trade promotion target levels next year and how Crown integration may impact near-term trade promotion?
  Response: Crown's private-label sales carry low trade rates (which may lower the aggregate percentage), but management will continue to invest in high-ROI trade/marketing spend where it drives velocity and trial, leaving levels to commercial teams based on ROI.

• Question from George Kelly (ROTH Capital Partners): For organic growth, what's the breakdown between volume and pricing?
  Response: About 80% of the organic growth was volume-driven and ~20% price-driven.

• Question from George Kelly (ROTH Capital Partners): Progress on the transition to make-to-stock—are retail inventories in a good place or should we anticipate quarters of retail inventory fill?
  Response: Make-to-stock is already implemented for high-velocity items with near-perfect service levels, reducing overtime and improving customer availability; they do not expect a prolonged retail fill period.

• Question from George Kelly (ROTH Capital Partners): Can you quantify Crown's Q3 gross margin and the cadence to reach mid-20% range; expectations for legacy margins next quarter/fiscal '27?
  Response: Management declined to break out current facility-level margins, reiterated plan to align Bayshore/Crown margins to corporate mid-20% range within 12–18 months and said legacy margins are improving week-to-week driven by procurement and production efficiencies.

• Question from Ryan Meyers (Lake Street Capital): Is the Crown/Bayshore integration going better than expected?
  Response: Yes—cultural fit, production cross-sourcing and centralized procurement have moved faster than expected; overall integration is exceeding expectations.

• Question from Ryan Meyers (Lake Street Capital): With Target (~2,000 stores) and Food Lion (~1,100 stores) wins, will you need additional capacity or can the three facilities handle it?
  Response: The Bayshore acquisition added ~42k sq ft and NJ expansion will nearly double that facility; combined with SKU rationalization they expect to unlock sufficient capacity to at least double business without immediate new facilities.

• Question from Anthony Vendetti (Maxim Group): How many stores are you in today and how is capacity allocated across facilities (Target, Food Lion) and what runway exists with Costco?
  Response: Store count approximate now (~12k) and ~15k at full rollout (management to confirm exact number); they treat the three plants as one network—Food Lion volume routed from Bayshore, Target from NJ—Bayshore currently has greatest available capacity; Costco opportunity is large and growing via regional and national programs.

Contradiction Point 1

AI and Productivity Focus

It involves the company's strategic focus on AI and productivity, which is crucial for its growth and market positioning.

Are there any updates on AI progress and what is the status of sales and sell-through for Costco's MVM? - Brian Holland (D.A. Davidson & Co., Research Division)

20251209-2026 Q3: The team's focus is on increasing items and velocities in stores. Chris's goals for the year are AIC-driven. - [Adam Michaels](CEO)

What were the key developments in AIC this quarter? - Brian Holland (D.A. Davidson & Co., Research Division)

2026Q3: Chris's goals for the year focus on increasing AIC (Average Item Count). The team is focused on getting more items into each customer, increasing velocities, and expanding into new stores. - [Adam Michaels](CEO)

Contradiction Point 2

Costco MVM Sales and Marketing Strategy

It highlights differing approaches to sales and marketing strategies for a key product line, which affects market presence and customer engagement.

Any AI progress updates and Costco's MVM sales/sell-through performance? - Brian Holland (D.A. Davidson & Co., Research Division)

20251209-2026 Q3: Costco's MVM is already selling well, with additional programming on Instacart and Walmart. The strategy includes chumming orders and leveraging digital platforms for awareness. - [Adam Michaels](CEO)

How are you addressing Costco's upcoming MVM and what initiatives are driving awareness and visibility? - Brian Holland (D.A. Davidson & Co., Research Division)

2026Q3: Costco MVM is already shipping and will likely receive a discount at the end of the month. The product is selling well. Initiatives include programming on Instacart, partnerships with Walmart and Publix, and leveraging social media for new item promotions. - [Adam Michaels](CEO)

Contradiction Point 3

AI Integration and Progress

It involves the company's progress and focus on AI integration, which is a key strategic initiative for driving growth and innovation.

Are there updates on AI progress and Costco's MVM sales/sell-through? - Brian Holland (D.A. Davidson)

20251209-2026 Q3: The team's focus is on increasing items and velocities in stores. Chris's goals for the year are AIC-driven. - [Adam Michaels](CEO)

Gross margin outlook for the Mama's business in H2? Impact of chicken commodity prices on gross margins? Planned changes to trade spend? - Ryan Meyers (Lake Street Capital Markets)

2026Q2: We will continue to make investments in R&D and technology, and we're investing to build manufacturing capabilities that cater to e-commerce and AI, which are building blocks for future growth. - [Adam Michaels](CEO)

Contradiction Point 4

Bayshore Integration Progress and Impact on Gross Margins

It reflects differing perspectives on the progress of the Bayshore integration and its impact on gross margins, which are crucial for assessing the company's operational efficiency and financial health.

How is the Bayshore integration affecting gross margins? - George Kelly (ROTH Capital Partners)

20251209-2026 Q3: Bayshore's gross margins are improving. We expect them to align with legacy business margins within 12-18 months. - [Adam Michaels](CEO)

How do CIF margin impacts contribute to the high 20s gross margin target, and is there surplus margin for reinvestment? - Eric Des Lauriers (Craig Hallum)

2024Q3: CIF acquisition has surpassed expectations, contributing 1 to 2 percentage points of margin improvement. - [Adam L. Michaels](Chairman and CEO)

Contradiction Point 5

Trade Promotion Strategy

It involves the company's approach to trade promotion spending, which directly impacts financial planning and growth strategies.

What are your plans for trade promotion levels next year? - Eric Des Lauriers (Craig-Hallum)

20251209-2026 Q3: Our strategy is to increase trade spend while ensuring high ROI. Trade spend remains a critical tool for growth, and we will maintain a focus on efficient and effective use of trade and marketing investments. - [Adam Michaels](CEO)

How might your trade promotion plans change due to Crown's lower trade rates affecting gross margins? - Eric Des Lauriers (Craig-Hallum)

2026Q2: We balance gross margin and marketing spend. As margins rise, we could increase marketing spend, and vice versa. Crown's lower trade rates will help us optimize trade spend. - [Anthony Gruber](CFO)