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“As part of our continued focus on our 4 Cs – Cost, Controls, Culture and Catapult – during the third quarter we focused on implementing automation and operational efficiency improvements across the organization. This included the aforementioned CapEx investments that were completed in September, improvements in chicken trimming capabilities as well as labor cost savings through a new lower-overtime staffing model that will be fully implemented in December, and additional procurement efficiencies and recent upgrades to our existing grills that will drive meaningful improvements in throughput. When taken together, we expect to see a materially stronger go-forward margin profile more in-line with historical norms.

“To lead us forward and emerge as a dominant player in the prepared foods space, we also completed the build-out of our industry-leading executive team during the quarter. Chris Darling, our new Chief Commercial Officer, brings over 20 years of experience in executive leadership from a storied career in the deli – where he led world class commercial organizations at industry-leading firms such as Boar’s Head, HEB, Ahold and Albertsons. Most importantly, Chris knows how to build a national brand, particularly in the prepared meal solutions space. Chris joins Skip Tappan, our Chief Operating Officer, an end-to-end supply chain leader, bringing over 30 years of experience with Gordon Food Service, Walmart, Campbell’s and Procter & Gamble. With this world-class leadership team now in place, we are better positioned to fully optimize operations, execute on our Catapult growth plan and identify, acquire and integrate future M&A opportunities.

“The fundamentals of our operations are incredibly strong, and with these growing pains behind us – supplemented by our investments in CapEx, senior leadership, and marketing – have enabled our team to sell with confidence and fulfill pent-up demand as we enter the new year. Ultimately, I believe this will support a return to the high end of our historical margin profile. Combined with a reversal of recent commodity highs and strong November results, we believe we are well positioned for profitable growth in the months and years ahead,” concluded Michaels.

Third Quarter Fiscal 2025 Financial Results

Revenue for the third quarter of fiscal 2025 increased 10.0% to $31.5 million, as compared to $28.7 million in the same year-ago quarter. The increase was largely attributable to successful pricing actions, as well as volume gains driven by increased demand, successful trade promotions, same-customer cross selling of new items and new customer door expansion.

Gross profit totaled $7.1 million, or 22.6% of total revenues, in the third quarter of fiscal 2025, as compared to $8.6 million, or 30.1% of total revenues, in the same year-ago quarter. The difference in gross margin was primarily attributable to significant commodity cost increases from historical averages as well as a non-recurring impact from construction surrounding the now completed installation of strategic CapEx projects at the Company’s Farmingdale facility, which management estimates negatively impacted corporate gross margins by approximately 400 basis points. Subsequent to the end of the third quarter, preliminary unaudited gross margins in the month of November saw a step change improvement, indicative of a full reversal of the construction headwinds.

Operating expenses were $6.6 million in the third quarter of fiscal 2025, as compared to $5.9 million in the same year-ago quarter. As a percentage of sales, operating expenses were 20.8%, as compared to 20.7% in the same year-ago quarter. Operating expenses as a percentage of sales were relatively flat, driven by a 90 basis point year-over-year improvement in freight efficiency, offset by a 75% year-over-year increase in marketing spend – an area of historical underinvestment – to help drive repeatable and profitable growth.

Net income for the third quarter of fiscal 2025 totaled $0.4 million, or $0.01 per diluted share, as compared to net income of $2.0 million, or $0.05 per diluted share, in the same year-ago quarter. Third quarter net income totaled 1.3% of revenue, as compared to 7.0% in the same year-ago quarter.

Adjusted EBITDA, a non-GAAP measure, totaled $1.7 million for the third quarter of fiscal 2025, as compared to $3.5 million in the same year-ago quarter.

Cash and cash equivalents as of October 31, 2024 totaled $9.3 million, as compared to $11.0 million as of January 31, 2024. The change in cash and cash equivalents was primarily driven by $5.0 million in capital investments and $2.5 million of debt paydown year-to-date, partially offset by working capital improvements as third quarter cash flow from operations increased 23.7% year-over-year. As of October 31, 2024, total debt stood at $6.3 million.

Conference Call

Management will host an investor conference call at 4:30 p.m. Eastern time today, Monday, December 16, 2024, to discuss the Company’s third quarter fiscal 2025 financial results, provide a corporate update, and conclude with Q&A from telephone participants. To participate, please use the following information:

Q3 FY2025 Earnings Conference Call
Date: Monday, December 16, 2024
Time: 4:30 p.m. Eastern time
U.S. Dial-in: 1-877-451-6152
International Dial-in: 1-201-389-0879
Conference ID: 13749939
Webcast: MAMA Q3 FY2025 Earnings Conference Call

Please join at least five minutes before the start of the call to ensure timely participation.

A playback of the call will be available through Thursday, January 16, 2024. To listen, please call 1-844-512-2921 within the United States and Canada or 1-412-317-6671 when calling internationally, using replay pin number 13749939. A webcast replay will also be available using the webcast link above.

About Mama’s Creations, Inc.

Mama’s Creations, Inc. (NASDAQ: MAMA) is a leading marketer and manufacturer of fresh deli prepared foods, found in over 8,000 grocery, mass, club and convenience stores nationally. The Company’s broad product portfolio, born from MamaMancini’s rich history in Italian foods, now consists of a variety of high quality, fresh, clean and easy to prepare foods to address the needs of both our consumers and retailers. Our vision is to become a one-stop-shop deli solutions platform, leveraging vertical integration and a diverse family of brands to offer a wide array of prepared foods to meet the changing demands of the modern consumer. For more information, please visit https://mamascreations.com.

Use of Non-GAAP Financial Measures

This press release includes the following non-GAAP measure – Adjusted EBITDA, which is not a measure of financial performance under GAAP and should not be considered as an alternative to net income as a measure of financial performance. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization adjusted for stock-based compensation and one-time costs associated with a legal settlement. The company believes this non-GAAP measure, when considered together with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to the company’s results of operations. However, this non-GAAP measure has significant limitations in that it does not reflect all the costs and other items associated with the operation of the company’s business as determined in accordance with GAAP. In addition, the company’s non-GAAP measures may be calculated differently and are therefore not comparable to similar measures by other companies. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, measures of financial performance in accordance with GAAP. A reconciliation of Adjusted EBITDA to net income, its corresponding GAAP measure, is shown below.

GAAP NET INCOME TO ADJUSTED EBITDA RECONCILIATION
(Unaudited)
(in thousands)

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27 A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include information about management’s view of the Company’s future expectations, plans and prospects, including future business opportunities or strategies and are generally preceded by words such as “may,” “believe,” “future,” “plan” or “planned,” “will” or “should,” “expect,” “anticipates,” “eventually” or “projected.” You are cautioned that such statements are subject to a multitude of known and unknown risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors , including the impacts of public health emergencies, such as the COVID-19 pandemic, on our business, financial condition and results of operations, and our inability to mitigate such impacts; the adequacy of our liquidity to pursue our business objectives; reliance on a limited number of customers; loss or retirement of key executives, including prior to identifying a successor; adverse economic conditions or intense competition; pricing pressures in the market and lack of control over the pricing of raw materials and freight; entry of new competitors and products; adverse federal, state and local government regulation (including, but not limited to, the Food and Drug Administration); liability related to the consumption of our products ability to secure placement of our products in key retail locations; wage and price inflation; maintenance of quality control; and issues related to the enforcement of our intellectual property rights, and other risks identified in the Company’s 10-K for the fiscal year ended January 31, 2024 and other filings made by the Company with the Securities and Exchange Commission.

Investor Relations Contact:
Lucas A. Zimmerman
Managing Director
MZ Group – MZ North America
(949) 259-4987
MAMA@mzgroup.us
www.mzgroup.us

Mama’s Creations, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

Mama’s Creations, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)

Mama’s Creations, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)