On June 11, 2024, Mama's Creations Inc (MAMA, Financial) released its 8-K filing for the first quarter of fiscal 2025, ending April 30, 2024. Mama's Creations Inc is a marketer and manufacturer of fresh deli-prepared foods, found in over 8,400 grocery, mass, club, and convenience stores nationally. The company's broad product portfolio, born from a 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 consumers and retailers.
Performance Overview
Mama's Creations Inc reported a 29% increase in revenue to $29.8 million for Q1 FY2025, surpassing the analyst estimate of $26.13 million. However, the company's earnings per share (EPS) fell short of expectations, coming in at $0.01 per diluted share compared to the estimated $0.02. This represents a 75% decline from the $0.04 EPS reported in the same quarter last year.
Financial Achievements and Challenges
The company achieved a gross profit of $7.5 million, up 17% from $6.4 million in the same period last year. Despite this growth, the gross margin decreased from 27.6% to 25.0%, primarily due to increased commodity costs. Operating expenses rose significantly by 51% to $6.7 million, driven by new hires and non-cash expenses, including a one-time charge of $0.9 million related to stock compensation.
Income Statement Highlights
| Three Months Ended April 30 | 2024 | 2023 | % Increase |
|---|---|---|---|
| Revenues ($ in millions) | $29.8 | $23.1 | 29% |
| Gross Profit ($ in millions) | $7.5 | $6.4 | 17% |
| Operating Expenses ($ in millions) | $6.7 | $4.4 | 51% |
| Net Income ($ in millions) | $0.6 | $1.4 | (61%) |
| Earnings per Share (Diluted) | $0.01 | $0.04 | (75%) |
| Adj. EBITDA (non-GAAP) ($ in millions) | $2.5 | $2.5 | 1% |
Balance Sheet and Cash Flow
As of April 30, 2024, Mama's Creations Inc reported cash and cash equivalents of $13.0 million, up from $11.0 million as of January 31, 2024. This increase was driven by $3.6 million in cash flow from operations. Total debt stood at $8.3 million.
Management Commentary
"Our continued focus on purposeful and profitable growth drove a 29% increase in first quarter revenues to a record $29.8 million," said Adam L. Michaels, Chairman and CEO of Mama’s Creations. "Some commodity price increases, particularly chicken, impacted our gross margin profile during the quarter, however our proactive efforts to improve labor and procurement efficiencies enabled us to maintain a mid-20% gross margin profile in the quarter. We generated $3.6 million in cash flow from operations in the quarter, fortifying our balance sheet, which is further supported by our untapped line of credit and a strong relationship with our commercial bank."
Operational Highlights
During the quarter, Mama's Creations Inc was selected by Costco Wholesale Corporation to participate in a Costco Roadshow in the Northeast Region. The company also introduced multiple new products at the International Dairy Deli Bakery Association (IDDBA) 2024 Show, including Breakfast Wraps, Grilled Chicken Breast in Vacuum Packs, Meatball Entertaining Sleeves, and Gourmet Paninis.
Analysis
Mama's Creations Inc's strong revenue growth and operational achievements highlight its potential in the Consumer Packaged Goods industry. However, the decline in net income and EPS, coupled with increased operating expenses, indicates challenges that the company needs to address. The proactive measures taken to improve efficiency and manage commodity costs are positive steps towards sustaining profitability.
For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Mama`s Creations Inc for further details.
