Executive Summary

Q3 FY2025 revenue grew 10.0% YoY to $31.5M; gross margin fell to 22.6% on commodity inflation (chicken) and ~400 bps construction headwinds at Farmingdale; management said November margins showed a “step change” fully reversing construction impacts, with “significant room for further improvement” .
Net income declined to $0.4M ($0.01 diluted EPS) vs $2.0M ($0.05) a year ago; Adjusted EBITDA was $1.7M vs $3.5M in Q3’24 as margin pressure offset pricing and volume gains .
Balance sheet/liquidity: Cash $9.3M; total debt $6.3M as of 10/31/24; YTD capex $5.0M and $2.5M debt paydown; Q3 CFO up 23.7% YoY, supporting growth and optionality for M&A .
No formal numerical guidance; management reiterated a normalized gross margin profile in the “high-20%” with a long-term goal in the “low-30%,” and long-term Adjusted EBITDA margin target in the teens; trade spend targeted to scale toward 10% of revenue over time .
Stock-reaction catalysts: proof of gross margin recovery in Q4 and early FY26 prints; continued traction from Walmart roll-in and Costco National Buy; operating leverage from completed capex and SKU rationalization .

What Went Well and What Went Wrong

What Went Well
- 10% YoY revenue growth to $31.5M on pricing and broad-based volume gains; new doors, cross-sell, and trade promotions contributed; reorders at Walmart and strong Costco programs highlighted in call .
- Capex completion doubled chicken throughput and enabled insourcing/trimming to offset commodities; management reports November margins fully reversed construction headwinds; quote: “preliminary unaudited November gross margin profile saw a step change improvement” (CEO) .
- Leadership upgrades (CCO, COO) and tighter controls (ERP/warehouse mgmt) improved visibility, inventory, and freight efficiency; quote: “warehouse management system… driving our inventory to its lowest level since our team came together” (CEO) .
What Went Wrong
- Gross margin compressed to 22.6% (vs 30.1% LY) on chicken inflation and ~400 bps construction impact; Adjusted EBITDA down to $1.7M (vs $3.5M LY) .
- Net income fell to $0.4M (1.3% margin) vs $2.0M (7.0%) a year ago; EPS $0.01 vs $0.05; higher marketing spend (+75% YoY) and commodities weighed on profitability despite opex % roughly flat YoY .
- Regional softness in the Northeast tied to intentional reduction of unprofitable legacy “Street” business, even as other regions grow; management confirmed “Street business accounts for 100% of the Northeast decline” .

Financial Results

Overall P&L (USD millions, except per-share and margins)

Metric	Q3 2024 (YoY comp)	Q1 2025	Q2 2025	Q3 2025
Revenue	$28.6	$29.8	$28.4	$31.5
Gross Profit	$8.6	$7.5	$6.9	$7.1
Gross Margin %	30.1%	25.0%	24.2%	22.6%
Operating Expenses	$5.9	$6.7	$5.3	$6.6
Net Income	$2.0	$0.6	$1.1	$0.4
Diluted EPS ($)	$0.05	$0.01	$0.03	$0.01
Adjusted EBITDA (non-GAAP)	$3.5	$2.5	$2.7	$1.7

Additional KPIs and balance sheet

KPI	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Opex as % of Sales	20.7%	19.4%	18.6%	20.8%
Cash & Equivalents (end of period)	—	$13.0	$7.4	$9.3
Total Debt (end of period)	—	$8.3	$6.8	$6.3
CFO YoY growth	—	—	—	+23.7% YoY in Q3

Notes:

Gross margin decline driven by chicken inflation and construction (~400 bps Q3 hit); management cited step-change improvement in November reversing construction headwind .
Non-GAAP: Adjusted EBITDA excludes interest, taxes, D&A, stock comp, and one-time items; reconciliation provided in the 8-K .

Guidance Changes

Management provided directional commentary rather than formal numerical guidance; reiterated medium/long-term targets.

Metric	Period	Previous Guidance/Commentary	Current Guidance/Commentary	Change
Normalized Gross Margin Profile	Go-forward	“High-20% range” normalized; long-term “low-30%” target	Reiterated “high-20%” normalized; November margins fully reversed construction headwinds; long-term “low-30%” target intact	Maintained; added confirmation of post-capex reversal
Adjusted EBITDA Margin Target	Long-term	Teens % long-term target	Teens % long-term target reiterated	Maintained
Trade Promotion Spend	Long-term	Grow from low-single-digit % toward 10% of revenue	Reiterated 10% long-term target; marketing +75% YoY in Q3 as investments ramp	Maintained; ramp continuing
Capex/Throughput	FY25-FY26	Doubling chicken capacity; optimize trimming/insourcing to offset commodity pressure	Construction complete; step-up in throughput; focus shifts to optimizing trimming and further productivity (East Rutherford next)	Transition from build to optimization

No revenue, EPS, or opex/tax-rate guidance was issued in the materials reviewed -.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 FY2025)	Current Period (Q3 FY2025)	Trend
Gross margin trajectory	Target high-20% normalized; long-term low-30%; construction at Farmingdale impacted Q2 by ~500 bps; chicken at multi-year highs	Q3 GM 22.6% with ~400 bps construction impact; November margins “fully reversed” construction headwind; aim to reach high-20s without needing commodity relief	Improving post-capex; optimization underway
Capex & throughput	Doubling chicken capacity; new grills/processing; ERP and automation; SKU rationalization to reduce complexity	Capex completed in Sept.; two new grills operational; focus on trimming optimization and using byproducts; East Rutherford productivity next	Build→Optimize; execution focus
Channel/customer wins	Costco rotations/Roadshow; Walmart ~2,000 stores starting; West region growth; C-store early innings	Reorders at Walmart; Costco National Buy broad; Publix programs; BJ’s digital promo drove sustained lift; regional breadth >47% of sales west of Ohio	Broader distribution and velocities
Trade/marketing	Intend to scale trade toward 10% as margins allow; marketing activations increased	Trade spend up; marketing +75% YoY; strong ROAS cited; plan to continue increasing into FY26	Continued ramp with ROI discipline
Pricing vs volume	Majority of growth volume-driven; pricing taken where needed	~90% of growth volume-driven in Q3; pricing ~10% contribution; ongoing SKU/invoice-level margin management	Volume-led growth persists
Regional mix	West/Midwest expanding; national footprint growing	Northeast decline tied to exiting unprofitable Street business; otherwise broad-based growth	Portfolio quality over volume
Supply chain/controls	NetSuite ERP; WMS; freight efficiencies; quality investments (X-ray/PCR)	Inventory at lows; further overtime reduction via 3-shift model; procurement leverage via volume commitments	Structural efficiency gains
M&A	Active pipeline; disciplined on multiples; balance sheet supports optionality	Increased CEO time on M&A with COO/CCO hires; many NDAs/data rooms; will not overpay	Pipeline progressing; disciplined stance

Management Commentary

“Preliminary unaudited November gross margin profile saw a step change improvement, indicative of a full reversal of the construction headwinds with significant room for further improvement.” — Adam L. Michaels, CEO .
“We believe that our normalized gross margin profile, not including major commodity fluctuations, will continue to hover in the high 20% range… long-term goal… low 30% range.” — Anthony Gruber, CFO .
“Over 90% of our growth is volume driven. We have continued to gain share in all 9 quarters since this team has been together.” — Anthony Gruber, CFO .
“Two new grills in our Farmingdale facility… doubles our chicken capacity… insourcing key value-added services… potential to lower our cost by close to a full $1 per pound.” — Adam L. Michaels .
“Walmart… reorders are more than twice the size of the initial orders… Costco National Buy is seriously legit… multiple regions and items.” — Adam L. Michaels .

Q&A Highlights

Seasonality and Q4 view: Historically softer Q4 (holiday shelf resets), but management expects less of a pullback this year aided by stronger programs (e.g., Publix Pub Sub) and new rotations .
Margin recovery path: Construction impacts fully behind; commodities remain tough but improving procurement/volume commitments and internal trimming/insourcing reduce COGS; aim to reach high-20s GM without needing commodity deflation .
Capex outlook: Focus on optimizing chicken trimming and selling byproducts to unlock margin; East Rutherford productivity opportunities next; expand capacity only after Farmingdale margins normalize .
Regional dynamics: Northeast decline entirely due to exiting unprofitable Street business; otherwise broad-based customer and regional strength .
Pricing vs. volume: ~10% of Q3 growth from price; ~90% from volume; pricing actions now targeted at underperforming SKUs/customers with weekly invoice-level reviews .
Trade/marketing: Spend rising with strong ROAS; larger ramp expected as margin normalization progresses into FY26 .
M&A: Active pipeline with disciplined valuation; leadership additions free CEO time to pursue opportunities .

Estimates Context

We attempted to retrieve S&P Global consensus for Q3 FY2025 (EPS, revenue, EBITDA) but were unable to access due to S&P daily request limits at the time of query; as a result, a quantitative beat/miss versus consensus cannot be shown here. If you’d like, we can refresh and insert the consensus comparison when access is available.

Key Takeaways for Investors

Margin inflection set-up: Construction headwinds are behind; November showed full reversal; optimization of trimming and procurement should push normalized gross margins back toward high-20% with upside to low-30% longer term .
Durable top-line drivers: Volume-led growth, expanding national accounts (Walmart reorders, Costco National Buy), and higher ROI trade/marketing support sustained revenue momentum into FY26 .
Operating leverage potential: As gross margins normalize and trade scales, Adjusted EBITDA should benefit given opex percentages relatively stable and freight efficiencies continuing .
Portfolio quality over volume: Intentional exit of unprofitable legacy Street business in Northeast improves mix and profitability trajectory despite regional headline softness .
Execution credibility: ERP/WMS, SKU rationalization, three-shift staffing, and leadership upgrades indicate structural improvements that can compound margins and cash flow .
Optionality via balance sheet: Cash $9.3M and debt $6.3M at quarter-end with improving CFO provide flexibility for targeted, disciplined M&A .
Near-term trading setup: Watch for Q4/FY prints to confirm margin recovery and velocity from Costco/Walmart; evidence of sequential GM improvement and sustained volume should be key narrative drivers .

Supporting documents and data:

Q3 FY2025 8-K press release and financials .
Q3 FY2025 earnings call transcript (prepared remarks and Q&A) -.
Q2 FY2025 8-K and call for trend context - -.
Q1 FY2025 8-K and call for trend context - -.

Mama's Creations, Inc. (MAMA)·Q3 2025 Earnings Summary