Second Quarter Gross Margins Grew to 30.3%, Driving $1.7 Million in Net Income

Successful Cross Selling Initiatives Spur Increase in Weighted Average Items Carried By More Than One Full Point to Over 7 in the Second Quarter

EAST RUTHERFORD, NJ, Sept. 12, 2023 — Mama’s Creations, Inc. (NASDAQ: MAMA), a leading national marketer and manufacturer of fresh Deli prepared foods, has reported its financial results for the fiscal second quarter ended July 31, 2023.

Financial Summary:

Key Second Quarter Fiscal 2024 & Subsequent Operational Highlights:

• Acquired remaining 76% interest in sales agent Chef Inspirational Foods (CIF) for $3.65 Million in a combination of cash and stock, which is expected to immediately enhance gross margins, add sales talent and drive meaningful overhead synergies.
• Announced corporate name change to Mama’s Creations and ticker symbol change to “MAMA”, reflecting the Company’s transition into a national deli prepared foods platform company
• Attended IDDBA 2023, a premier industry tradeshow with over 10,000 attendees hosted by the International Dairy Deli Bakery Association, where the Company:
  • Launched Mama’s Creations, a new international deli foods platform brand offering Asian, Tex-Mex, Indian and other incremental international cuisine opportunities.
  • Introduced an expanded line of highly incremental on-the-go snacking products – building upon the initial success of Meatballs In a Cup tests in convenience stores – with enhanced packaging that expanded shelf life from 5 days to 21 days.
  • Announced the expansion of the Company’s branded sleeve product line, offering a lunch & dinner entrée in convenient grab-and-go packaging easy for retailers to stock, with initial orders already secured from two large national grocery chains.
• Invited to present at leading investor conferences nationally, including the 13^th Annual LD Micro Invitational, the Planet MicroCap Showcase, the H.C. Wainwright 25^th Annual Global Investment Conference and the Lake Street Capital Markets BIG7 Conference.

Management Commentary

“I am pleased to announce another strong quarter – highlighted by 8.5% revenue growth and the expansion of our gross margin profile into the 30% range – laying the foundation for more robust, profitable growth in the second half,” said Adam L. Michaels, Chairman and CEO of Mama’s Creations. “We continue to fortify our balance sheet to support these near-term growth expectations, growing our cash position to $5.6 million while concurrently paying down $0.6 million in debt and paying the $1 million in cash due at closing as part of the CIF acquisition.

“Our strong gross margin profile was made possible through countless small things done right, further aided by one month of margin synergies from our acquisition of CIF in late June 2023, which we anticipated would enhance corporate-level gross margins by a further 1-2%. Looking ahead to next year, we see further opportunities for improvement via several strategic CapEx projects, which we expect to drive a higher level of automation while concurrently building new in-house capabilities earlier in the value-chain.

“Turning to the 3 C’s, we continue to formalize processes throughout the company with the goal of building a more standardized, resilient organization. These improvements span from the operational basics – such as formalized hiring/HR processes, a consistent company-wide employee handbook, or holding our first-ever town hall meetings – to the more complex, such as a new approach to trade promotion with defined policies and procedures. In addition, by our next earnings call we expect to have our NetSuite ERP software fully implemented across all divisions, providing an incredible level of actionable insight into the details of our operations. Mama’s Creations is committed to a culture of transparency and engagement at all levels of the organization, which will ultimately create long-term value for my fellow shareholders,” concluded Michaels.

Second Quarter Fiscal 2024 Financial Results

Revenue for the second quarter of fiscal 2024 increased 8.5% to $24.8 million, as compared to $22.9 million in the same year-ago quarter. The increase was largely attributable to strong organic growth, driven by successful cross selling efforts, which increased average items carried to over 7 in the second quarter.

Gross profit increased 175% to $7.5 million, or 30.3% of total revenues, in the second quarter of fiscal 2024, as compared to $2.7 million, or 11.9% of total revenues, in the same year-ago quarter. The increase in gross margin was primarily attributable to the normalization of commodity costs, successful pricing actions and improvements in operational efficiencies across the organization. The Company continues to identify procurement and logistics efficiencies and cost savings through stronger buying power created through the acquisitions of T&L Creative Salads, Olive Branch and CIF.

Operating expenses totaled $5.2 million in the second quarter of fiscal 2024, as compared to $3.6 million in the same year-ago quarter. As a percentage of sales, operating expenses increased in the second quarter of fiscal 2024 to 21.1% from 15.6%. Operating expenses, as a percentage of sales, increased due to the addition of several new key hires, who brought new and differentiated capabilities to the organization.

Net income for the second quarter of fiscal 2024 increased 335% to $1.7 million, or $0.05 per diluted share, as compared to a net loss of $0.7 million, or $0.02 per diluted share, in the same year-ago quarter. This quarter’s net income totaled 7.0% of revenue, in line with management expectations in the mid-single-digit range.

Adjusted EBITDA, a non-GAAP term, increased 857% to $2.9 million for the second quarter of fiscal 2024, as compared to an adjusted EBITDA loss of $0.4 million in the same year-ago quarter.

Cash and cash equivalents as of July 31, 2023 were $5.6 million, as compared to $4.4 million as of January 31, 2023. The increase in cash and cash equivalents was driven by $1.8 million in cash flow from operations in the second quarter of fiscal 2024, $0.6 million of which was used to pay down the Company’s debt and $1 million of which was used to pay the cash due at closing as part of the CIF acquisition. As of July 31, 2023 total debt stood at $10.8 million.