GuruFocus -
- Revenue: Increased 10% to $31.5 million from $28.7 million in the same year-ago quarter.
- Gross Profit: $7.1 million or 22.6% of total revenues, down from $8.6 million or 30.1% in the same year-ago quarter.
- Operating Expenses: $6.6 million, representing 20.8% of sales, compared to $5.9 million or 20.7% in the same year-ago quarter.
- Net Income: $0.4 million or $0.01 per diluted share, compared to $2 million or $0.05 per diluted share in the same year-ago quarter.
- Adjusted EBITDA: $1.7 million, compared to $3.5 million in the same year-ago quarter.
- Cash and Cash Equivalents: $9.3 million as of October 31, 2024, down from $11 million as of January 31, 2024.
- Total (EPA:TTEF) Debt: $6.3 million as of October 31, 2024.
- CapEx Investments: $5 million year-to-date.
- Cash Flow from Operations: Increased 23.7% year over year in the third quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mama's Creations Inc (NASDAQ:MAMA) reported a 10% increase in revenue for the third quarter of fiscal 2025, driven by successful pricing actions and volume gains.
- The company completed CapEx investments in its Farmingdale facility, doubling chicken capacity and improving labor efficiencies.
- Mama's Creations Inc (NASDAQ:MAMA) has successfully implemented a NetSuite ERP system, enhancing business visibility and inventory management.
- The company has expanded its product offerings and market reach, with over 47% of sales now occurring west of the Ohio River.
- Mama's Creations Inc (NASDAQ:MAMA) has strengthened its leadership team with experienced executives, positioning the company for optimized operations and growth.
- Gross profit decreased to $7.1 million or 22.6% of total revenues, down from $8.6 million or 30.1% in the same year-ago quarter, due to commodity cost increases and construction impacts.
- Net income for the third quarter of fiscal 2025 fell to $0.4 million, compared to $2 million in the same year-ago quarter.
- Operating expenses increased to $6.6 million, up from $5.9 million in the same year-ago quarter, partially due to a 75% increase in marketing spend.
- The company faced significant construction challenges at its Farmingdale facility, negatively impacting margins by approximately 400 basis points.
- Mama's Creations Inc (NASDAQ:MAMA) experienced a decline in the Northeast region, attributed to a reduction in unprofitable street business sales.
A: The sales team has done an incredible job adjusting for this. While traditionally Q4 has been softer due to seasonal factors like Thanksgiving and Christmas, we've seen stronger trade programs and incremental rotations, such as the Publix Pub Sub program. I feel more confident in Q4 this year than last year due to these efforts.
Q: Have you seen any improvements in commodity pricing, and when will the full impact of the recent CapEx project be reflected in margins?
A: Construction impacts are behind us, and November results already show improvement. While commodity prices remain challenging, chicken prices have decreased from over $2 to around $1.50. Our team is securing better procurement deals, and we expect further margin improvements in Q4 and next year.
Q: Do you need commodity prices to improve to reach your high 20% gross margin target, and what needs to happen to achieve the low 30% target?
A: We do not need commodity prices to return to last year's levels to reach the high 20% margin target. Operational improvements, such as SKU reduction and efficiency gains, are driving margin growth. For the low 30% target, optimizing chicken trimming and other operational efficiencies will be key.
Q: What drove the outperformance in revenues this quarter, and what accounted for the decline in the Northeast region?
A: The balance of our portfolio, including chicken and beef products, and strong performance across club customers like Albertsons contributed to revenue growth. The Northeast decline is due to intentional reduction of unprofitable street business, while core customers like Ahold are performing well.
Q: How much of the 10% growth was driven by pricing, and what are your plans for future pricing actions?
A: Approximately 10% of growth was driven by pricing, with 90% from volume. Future pricing actions will be targeted and based on item-level profitability, ensuring we maintain margin targets without broad price increases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.