Mama's Creations (MAMA) Q1 FY27 earnings call: guidance and Q&A

How significant was the revenue contribution from new products launched mid-to-late April in Q1, and should we expect sequential revenue increase in Q2?

New product launches in mid-to-late April incurred all costs in Q1 but contributed very little revenue. The company expects improved efficiency and increasing velocities for these items in Q2, suggesting a positive sequential trend.

“these didn't launch till the middle to end of April. So we had all the costs, right, because we built it all out and we got them there. The cost is all in Q1, but really very little of the revenue was in Q1.”

asked by Brian Holland · answered by Adam Michaels

Are the initial startup inefficiencies for new products now resolved, and are the lines operating as anticipated?

Yes, the company is seeing lower costs and increasing throughputs for new products. An example given was optimizing Walmart chicken items from two labels to one, effectively halving labor and label costs. The initial iterations and learning curves are largely past.

“We literally cut our label costs, not just the label. Remember, it's the labor, in half. And that's just the first round. So we're already starting to see lower costs.”

asked by Brian Holland · answered by Adam Michaels

Could you elaborate on the specific nature of the startup costs (e.g., inventory build, low capacity utilization of new equipment) and the expected duration of this low margin ramp period?

Startup costs were a combination of using new technologies like HPP for shelf life extension and new packaging (e.g., vacuum-sealed plastic for Walmart). This involved labor learning curves and new machinery. These are largely one-time issues, and improvements are already being seen. The Bayshore facility is absorbing much of this new production, improving its utilization.

“So, I'd say a lot of it had to do with labor, right? Us learning how to use this new packaging. ... So yes, so there's a lot of both the packaging, the technology, the form factors.”

asked by Eric Delorier · answered by Adam Michaels

With ERP integration complete for Bayshore, what remaining integration tasks are there, and how does this free up management time for M&A or impact gross margins/operating leverage?

The ERP integration was the last major step for Bayshore, completed ahead of schedule. There are no other major integration hurdles. This frees up senior management, making them more confident to pursue M&A. The improved absorption at Bayshore from new product production is already contributing positively.

“Yes, I mean, that was absolutely the last major step... Look, like I said before, I'm never going to stop improving this business, but there is nothing major left to do it at Bayshore. That was the last major hurdle.”

asked by Eric Delorier · answered by Adam Michaels

Can the gross margin inefficiencies related to startup costs be quantified?

Roughly $500,000 to $1 million in labor and raw material inefficiencies, plus about $500,000 shifted from marketing to trade promotion. These intentional decisions, if not made, would have put gross margin north of 25%.

“I think there's two sets of numbers. I think roughly... You know, I'd say there's probably somewhere between almost $500,000 to, I don't think, a million, but in that range from a labor and raw material inefficiency, there's probably half a million dollars of, as Anthony mentioned, we made an intentional decision, and Lauren's still upset with me, but we took about $500,000. half a million dollars out of marketing to put that into trade to support the new launches at Target.”

asked by George Kelly · answered by Adam Michaels

How has Walmart performance been so far, particularly regarding velocities and overall satisfaction?

The company is very pleasantly surprised with Walmart performance. Chicken items are in over 2,000 stores, and velocities are increasing weekly. The ROAS at Walmart is $29.50, indicating a strong return on marketing investment.

“Yes, very pleasantly surprised. And actually, the word is I'm a little surprised. Of course, Chris said, you know, I told you so, but the products are doing very well. The ramp up, actually, I'm terribly impressed where, again, the chicken items are north of 2,000 stores already.”

asked by George Kelly · answered by Adam Michaels

How much capacity is left at Bayshore after supplying Walmart and Food Lion, and when that fills up, will another facility or acquisition be necessary?

The Bayshore facility, combined with the recently expanded East Rutherford facility, provides enough capacity to double current revenue to $400 million. This capacity is expected to last for a couple of years. The company continues to seek acquisitions that include manufacturing and distribution to gain additional capacity.

“I would still say, as strong as Chris works hard to try to stress us out, we should be able to double our business. What we've said is we could double our revenue if we're at roughly $200 million. today we could be 400 million with this new space.”

asked by Anthony Vendetti · answered by Adam Michaels