Mama's Creations Reports 14.5% Revenue Growth, Net Income Decline in Q3 2024

Mama's Creations, Inc. reported its financial results for the three and six months ended July 31, 2024, showing notable changes in revenue and profitability compared to the previous fiscal period. The company achieved net sales of $28.4 million for the third quarter, a 14.5% increase from $24.8 million in the same period of 2023. For the six months, net sales rose to $58.2 million, up 21.5% from $47.9 million year-over-year.

Despite the revenue growth, net income for the third quarter decreased to $1.1 million, down approximately 34.1% from $1.7 million in the prior year. For the six-month period, net income also fell to $1.7 million from $3.1 million in 2023. The decline in profitability was attributed to increased costs of sales, which rose by 24% in the third quarter, totaling $21.5 million, and represented 76% of net sales. The gross profit margin decreased to 24% from 30% in the same quarter of the previous year, primarily due to rising commodity costs, particularly for chicken.

Operating expenses for the six months ended July 31, 2024, increased to $12.0 million from $9.7 million in 2023, driven by a one-time legal settlement expense of approximately $900,000 and higher advertising costs. The company reported a gross profit of $14.3 million for the six months, slightly up from $13.9 million in the prior year.

Strategically, Mama's Creations completed the acquisition of Chef Inspirational Foods, LLC (CIF) in June 2023, which contributed to revenue growth. The acquisition involved an initial 24% interest for $1.2 million, followed by the remaining 76% for approximately $3.7 million. The CIF acquisition is expected to enhance product diversification, including ready-to-serve meals and refrigerated protein products.

As of July 31, 2024, total assets decreased to $42.9 million from $45.1 million at the end of January 2024, while total liabilities also fell to $20.7 million from $25.5 million. Stockholders' equity increased to $22.3 million, up from $19.6 million. The accumulated deficit improved to $(1.8 million) from $(3.5 million) in January 2024.

Cash and cash equivalents at the end of the period were $7.4 million, compared to $5.6 million a year earlier. The company reported a net cash decrease of $3.6 million for the six months ended July 31, 2024, primarily due to increased cash used in investing activities.