DATE

Monday, December 8, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Adam Michaels
• Chief Financial Officer — Anthony Gruber

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TAKEAWAYS

• Revenue — $47.3 million, up 50%, primarily driven by the Crown 1 acquisition and double-digit organic growth in the legacy business.
• Year-to-Date Organic Growth — 20%, with about 80% of the growth volume-driven and 20% price-driven according to management commentary.
• Gross Profit — $11.1 million, a 56.6% increase, with gross margin at 23.6%, up from 22.6%, reflecting operational efficiency and lower chicken costs, partially offset by higher beef prices and the addition of lower-margin Crown 1 sales.
• Operating Expenses — $10.3 million, up from $6.6 million, with percentage of revenue at 21.8% versus 20.8%; $1 million consisted of nonrecurring transaction expenses tied to the Crown 1 acquisition.
• Net Income — $0.5 million ($0.01 per diluted share), up 31.7%, representing 1.1% of revenue, including $1 million of acquisition-related costs.
• Adjusted EBITDA (non-GAAP) — $3.8 million, up 118% from $1.7 million.
• Trade Promotion Spend — Year-to-date trade rate above 3%, representing nearly $2.5 million ahead of prior year, with Q1 trade rates cited above 6%, and subsequent quarters at 3%-4%.
• Marketing Spend — 2% of year-to-date revenue, about $1 million above the prior year, contributing to $6.5 million total investment in trade and marketing year-to-date.
• Cash and Cash Equivalents — $18.1 million as of October 31, 2025, up from $7.2 million as of January 31, 2025; total debt at $6.4 million, up slightly from $5.1 million.
• Bay Shore Facility Acquisition — Centralization of 100% of procurement achieved within 3 months; double-digit reduction in Bay Shore beef costs realized in the first month post-acquisition.
• Production Efficiency — Chicken throughput up nearly 40% with overtime reduced by over 400 basis points year over year, attributed to enhanced demand/supply planning and the make-to-stock transition.
• Retail Wins — Confirmed rollout to 1,995 Target stores and introduction into 1,100 Food Lion stores; additional items to expand in both retailers over time.
• Costco Partnership — National MVM with branded beef meatballs launched in Q4, with national distribution and “noticeable lift in trial and brand awareness” per management.
• SKU Rationalization — Leadership confirmed SKU review to align gross margin, with actionable plans beginning January following customer engagement and operational assessment.

SUMMARY

The acquisition and rapid integration of the Bay Shore facility established a unified operational platform, enabling cost synergies and elevated procurement leverage. Management highlighted that the Crown 1 acquisition doubled annual chicken volume demand, improving supplier relationships and positioning for lower future poultry costs. New national retail relationships, including with Target and Food Lion, are unlocking significant distribution expansion, complemented by proactive digital and in-store marketing programs that generated over 24 million impressions in the quarter. Club channel momentum accelerated, with national Costco MVM programs scheduled to benefit Q4 revenue and visibility. The company cited notable improvements in production throughput and inventory management, supporting further scaling without immediate additional facility buildout.

• CEO Michaels said, “already working through even more synergy capture opportunities, and we expect to lift Bay Shore’s gross margin towards our historical corporate range over the next year.”
• CFO Gruber stated, “Excluding the aforementioned transaction-related expenses, our OpEx as a percent of revenues would remain below 20%.”
• Leadership is finalizing agreements with commodity suppliers for “calendar ’26,” aiming to add supply chain stability and cost visibility.
• The make-to-stock model was described as providing “higher service levels for our customers and lower overtime for our operations,” facilitating faster response to demand surges.
• Management confirmed that Bay Shore and capacity enhancements enable the company to potentially double current business levels without requiring new physical expansion.

INDUSTRY GLOSSARY

• MVM (Multi-Vendor Mailer): A nationwide club retail marketing event, typically involving promotional pricing and broad product exposure across all locations.
• SKU Rationalization: Strategic review and reduction of product variants to focus on those meeting volume and gross margin thresholds.
• AIC (All Items Counted): A metric tracking the number of individual products (SKUs) sold per customer or channel, used internally to benchmark sales penetration.
• Trade Rate: Percentage of sales revenue allocated to trade promotions and discounts given to retail partners.
• ROAS (Return on Advertising Spend): Measurement of revenue generated for each dollar spent on advertising.

Full Conference Call Transcript

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Mama’s Creation’s Third Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Monday, December 8, 2025, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Mama’s Creation’s Chairman and CEO, Adam Michaels; and CFO, Anthony Gruber. Before we get started, I’ll read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of federal securities laws regarding Mama’s Creations.

Forward-looking statements include, but are not limited to, statements that express the company’s intentions, beliefs, expectations, strategies, predictions or any other statements relating to its future earnings activities, events or conditions. These statements are based on current expectations, estimates and projections about the company’s business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in the company’s 10-K and other documents, which the company files with the U.S.

Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to factors beyond the company’s control. Matters that may cause actual results to differ materially from those in the forward-looking statements include, among other factors, the loss of key management personnel, availability of capital and any major litigation regarding the company. In addition, throughout today’s call, the company may refer to adjusted EBITDA, a non-GAAP financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis. Reconciliation of adjusted EBITDA to its most directly comparable GAAP financial measure is included in today’s earnings press release.

It’s available on the Mama’s Creations website under the Investors tab. And finally, this conference call contains time-sensitive information that reflects management’s best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise at the date of this conference call. At this time, I’d like to turn the call over to Chairman and CEO, Adam O’Michaels. Adam, the floor is yours.

Adam Michaels: Thank you, Luke, and thank you to everyone for joining us today. I’d like to welcome you to our third quarter fiscal ’26 financial results conference call. This was a transformational quarter for Mama’s, one where the business continues to scale, our retail momentum accelerated and we took a major step forward in our long-term strategy with the addition of the Bay Shore facility through the recent acquisition of Crown 1. Our performance this quarter reflects both the strength of demand for high-quality deli prepared foods and the work our teams have done to build a modern, scalable, highly efficient platform.

Revenue growth again outpaced the category, accelerating our market share gains, supported by balanced geographic expansion, disciplined trade and marketing promotion investments and new wins across multiple channels. Even in a macro environment where consumers remain selective, our value proposition continues to resonate, grandma quality food at the right price ready when they are. I would like to start with our recent acquired facility in Bay shore, New York, because while many think the acquisition announcement is the finish line for us, just like in a triathlon, it’s just the first leg, and we are already thinking ahead to the next phase of integration.

And I could tell you, we’re off to a tremendous start, passing and picking off competitors left and right. To start, this Bay Shore team is exceptional. Andy has unleashed an incredibly strong management team. This team is eager to win and the tools, resources and colleagues shared amongst East Rutherford and Farmingdale are creating a powerhouse team. Culture must never be underestimated. And now that Bay Shore is back home with its food manufacturing colleagues and their work is core to the Mama’s organization, Bay Shore is reborn.

Our newly acquired facility in Bay Shore brings a recently upgraded USDA facility, automated and artisan production capabilities and a reputation for grandma quality items that fit squarely within our brand promise. It also opens the door to a customer set that historically has been difficult to access. The proximity of their facility to our Farmingdale facility gives us a structural advantage, similar grills, joint training and shared playbooks, which allow us to move quickly on procurement, labor alignment and SKU rationalization. In 3 short months, I am proud to report that 100% of Bay Shore’s procurement is firmly centralized. This means we’re leveraging our volume across all 3 facilities, driving specification alignment and inventory management.

For example, leveraging Mama’s scale, we were able to reduce Bay Shore beef costs double digits in the first month alone. If that is not exciting enough, we’ve already realized our 1 plant 3-location strategy, transitioning some East Rutherford and some Farmingdale production to Bay Shore, unlocking capacity, reducing overtime and increasing absorption across our network. Thanks to Skip and his team, in 3 short months, you can no longer see where one plant begins and the other ends. We are one plant, delivering on our shared one-stop shop strategy. The team is already working through even more synergy capture opportunities, and we expect to lift Bay Shore’s gross margin towards our historical corporate range over the next year.

But stepping back, they immediately strengthened our category position and scale that accelerates our path towards long-term $1 billion revenue ambition. I’m appreciative of the Bay Shore team’s commitment to our vision and thankful for our new teammates. Turning to consumer trends. The grocery deli is becoming one of the most important battlegrounds in modern food service. Consumers aren’t choosing between brands inside the restaurant channel. They’re choosing between the restaurant channel and the grocery prepared food set. Even major restaurant operators like Chipotle noted on their most recent earnings calls that they’re not losing guests to other chains. They’re losing trips to grocery and food at-home occasions. That dynamic directly benefits us.

Industry data shows that the share of shoppers replacing a restaurant meal with deli prepared foods has more than doubled since 2017. Consumers want speed, value, freshness and the ability to shop for the rest of the household at the same time. Fully cooked meats grew 4.8% over the past year. Chicken remains the top performer in the category, and the overall retail foodservice segment has grown to over $52 billion. These are the exact spaces where Mama’s competes and wins. Operationally, we continue to execute against our 4C strategy and strategic pillars: cost, controls, culture and catapult.

On cost, our logistics and procurement teams again delivered measurable improvements with freight down another 30 basis points versus prior year, driven by denser freight, better material planning, lowering our transportation expenses. Impressive work by Anthony and his team has taken advantage of lower chicken commodity prices in the quarter, capturing below-market spot buys and marrying it with [raised] increased trimming execution. While we know this won’t last forever, these opportunities highlight our agility and how quickly we can react when the market shifts. As we plan for fiscal ’27, Bay Shore’s chicken needs will nearly double our overall chicken volume demand, which positions us to negotiate stronger supplier partnerships and unlock better unit economics.

I’m excited to share with you today that we’re in final negotiations with our commodity suppliers to lock in agreements for calendar ’26. This will add much appreciated stability to our supply chain, allowing Skip to better manage his costs and will allow Chris to more effectively manage his pricing strategies. Under controls, the work Alberto is doing to build new capabilities around demand and supply planning are creating massive dividends. The visibility is improving our customer service levels, production efficiency and most importantly, informing our fiscal ’27 planning. For example, because of this demand visibility, we’ve been able to increase our chicken throughput by nearly 40% versus prior year while reducing overtime by over 400 basis points.

What gets measured, gets improved is not just a mantra in our organization. It’s how each of our 600 associates work every single day regardless of which of our 3 facilities we are in. I also must thank John and his IT team for making the Bay Shore transition seamless. We didn’t miss a beat and the work he will be doing over the next 6 months in partnership with Andy and his team will allow us to move to one ERP system, adding even more real-time insights and analysis into our business. On culture, I honestly am not sure what to highlight because everything we do starts with culture.

Abby and her team were there at 5:00 a.m. on Tuesday morning after Labor Day to welcome our new Bay Shore colleagues. Not even sure she left that building for that first week, ensuring our new colleagues had their forms filled out, payroll transitioned, benefits updated and most importantly, had their new Mama swag. A week later, magically, everyone was a new Mama’s employee, and we had only lost one employee at his choosing. In all of my years doing M&A, I think this was the smoothest transition yet. Thank you, Abby, Claudia, Kandi and to the Farmingdale employees who rolled up their sleeves before their day job to ensure our Bay Shore employees felt welcome.

Another culture moment to highlight is the successful transition of our company from a make-to-order to a make-to-stock organization. This means with Skip’s guidance, we have now created inventory stock of our highest velocity items, resulting in higher service levels for our customers and lower overtime for our operations because we’re anticipating our customers needs. This would not be possible without the cross-functional alignment across sales, manufacturing, logistics and finance. This is just one more example of how this organization has evolved from a subscale Northeast meatball company 3 years ago into a national one-stop shop deli solution with the foundation to support anything our customers need.

And did I mention our first ever Battle of the bridges, where our New York employees took on our New Jersey employees at soccer — sorry, football. Let’s just say that I personally won as everyone made it into the factory Monday morning safe and sound. I’ll take the win. In the new year, while I will not be able to speak to the look of their play, I can guarantee you that they will be decked out in new mama’s kit. And on [Katapult], which reflects our purposeful and profitable growth, our teams delivered another quarter of market share gaining momentum. In Q3, we exceeded our goal of adding not 1 but 2 Tier 1 national retailers.

The first is Target, where we have confirmed 2 branded sleeve items to begin shipping in February with a staged rollout to 1,995 stores and additional items in the final setup stages for later distribution. In Food Lion, another major national retailer, we’re entering 1,100 stores this month with 2 new branded chicken items as well as rolling out 3 branded sleeves starting at 400 stores. This is a huge testament to Chris and his team after years of tastings, packaging optimization and handcramping paperwork. Congrats to Peter for getting us over the finish line.

These wins reflect both the credibility of our brand and the demand from retailers for turnkey deli-prepared solutions that drive traffic to their stores and save on labor. The club channel was another bright spot. Thanks to Scott, after a successful 5-region rotation of our branded cheese stuffed chicken meatballs in Q3, our first national Costco MVM with branded beef meatballs hit in Q4 and is already creating a noticeable lift in trial and brand awareness. Thanks to Eric and his East Rutherford team, our production is ahead of schedule, creating confidence that we can deliver whatever Costco needs whenever and wherever they need it.

Costco continues to be one of our strongest strategic partners, and the MVM confirms their confidence in our ability to execute at a national scale. We look forward to reporting Q4 results, which will reflect the revenue from this MVM. Marketing continues to play a meaningful role in amplifying this momentum. From digital programs in club to influencer-driven activation in Sam’s and strategic partnerships with Amazon Fresh and Instacart, we’re building a modern consumer-facing brand that meets shoppers where they are, where they already are online, on mobile and inside the store.

With the successful rollout of our new technology-enabled meals for 1 or MFOs and Paninis at Publix, Lauren and her team took the opportunity to leverage social, digital and in-person marketing execution to amplify the launch, but Publix was just one example. Retail and social support delivered over 24 million impressions in Q3 and a double-digit return on advertising spend. Our digital media is not only attracting new consumers, but also creating FOMO with our retail buyers and prospective buyers in the industry. As our teenage boys would say, sorry, not sorry.

Finally, while our focus remains on executing Bay Shore integration and supporting organic growth, we continue to evaluate additional opportunities that fit our disciplined acquisition framework, fair price, strategic alignment, operational synergy and high confidence in integration. With our strengthened balance sheet, the right systems in place and a deeper team, we have the ability to act when the right opportunities emerge. In summary, Q3 showed the strength of our operating model, the resiliency of our consumer demand for deli prepared foods and the early impact of the Bay Shore acquisition. Our retail wins, club momentum and expanding capabilities give us a clear runway for profitable growth heading into the next fiscal year and beyond.

I am incredibly proud and appreciative of our team and look forward to updating you on our progress in the quarters ahead. I’d now like to turn the call over to Anthony Gruber, our Chief Financial Officer, to walk through some key financial details from the third quarter of fiscal ’26. Anthony?

Anthony Gruber: Thank you, Adam. Moving to the financial results. Revenue for the third quarter of fiscal 2026 increased 50% to $47.3 million as compared to $31.5 million in the same year ago quarter. The increase was largely attributable to the acquisition of Crown 1 as well as robust double-digit growth in the legacy business on a pre-acquisition basis. Year-to-date, our organic growth remains at 20%. Gross profit increased 56.6% to $11.1 million or 23.6% of total revenues in the third quarter of fiscal 2026 as compared to $7.1 million or 22.6% of total revenues in the same year ago quarter.

The increases in gross margin rate were primarily attributable to operational efficiency improvements across the organization in addition to tremendous success managing our raw chicken prices partially offset by beef commodity headwinds and the addition of lower-margin Crown 1 sales, which the company expects to bring in line with the corporate average in the mid-20% range over the next year. As a reminder, all of this is inclusive of rightsizing our trade promotion investments when our margins are achieved and the funds are available. Year-to-date, our trade rate sits over 3%. This is nearly $2.5 million ahead of prior year and even more effective returns.

From a marketing perspective, year-to-date, our spend is at 2%, nearly $1 million ahead of prior year. Combined, this is nearly a $6.5 million year-to-date investment in our future, and we are already seeing the fruits of our labor. We remain vigilant in managing the magnitude and ROI of our trade and marketing spend and see it as a critical tool to achieve our ambitions. Operating expenses totaled $10.3 million in the third quarter of fiscal 2026 as compared to $6.6 million in the same year ago quarter. As a percentage of revenue, operating expenses increased in the third quarter of fiscal 2026 to 21.8% from 20.8%.

Operating expenses in the third quarter were impacted by the recent acquisition of Crown 1 Enterprises as well as $1 million in nonrecurring transaction expenses tied to the aforementioned acquisition. Excluding the aforementioned transaction-related expenses, our OpEx as a percent of revenues would remain below 20%. Net income for the third quarter of fiscal 2026 increased 31.7% to $0.5 million or $0.01 per diluted share as compared to net income of $0.4 million or $0.01 per diluted share in the same year ago quarter. Third quarter net income totaled 1.1% of revenue as compared to 1.3% in the same year ago.

As a reminder, the third quarter of fiscal 2026 net income included the impact of $1 million of costs associated with the acquisition of Crown 1 Enterprises. Adjusted EBITDA, a non-GAAP measure, increased 118% to $3.8 million for the third quarter of fiscal 2026 as compared to $1.7 million in the same year ago quarter. Cash and cash equivalents as of October 31, 2025, grew to $18.1 million as compared to $7.2 million as of January 31, 2025, primarily driven by improved profitability, ongoing working capital optimization and the private placement completed concurrent with the acquisition of Crown 1. As of October 31, 2025, total debt stood at $6.4 million as compared to $5.1 million as of January 31, 2025.

As we clearly demonstrated, this robust balance sheet proactively prepares us to pursue whatever organic or inorganic growth opportunities may come our way. This completes my prepared comments. Now before we begin our question-and-answer session, I’d like to turn the call back to Adam for some closing remarks. Adam?

Adam Michaels: Thank you, Anthony. As we look across the business exiting Q3, the platform is operating with more precision, higher throughput and a stronger growth engine than at any point since I joined Mama’s. Bay Shore is already adding meaningful production depth and giving us access to premium customers with premium items we historically couldn’t reach. Our focus from here is straightforward: elevate Bay Shore’s margin profile, integrate their workflows into our system quickly and cleanly and unlock the synergy opportunities that come with having 3 facilities operating as one coordinated network. This is the same disciplined approach we used when we shaped Mama’s in late 2022, and the proximity of the Bay Shore facility makes execution even more efficient.

Our teams know exactly what to do and in what order, align processes, stabilize labor, optimize procurement and accelerate cross-selling. The opportunity set is significant, and we’re moving with urgency. While our leadership ensures we take every opportunity to celebrate both the large and small wins with our team internally, it is always great to be recognized externally. In Q3, Forbes recognized us as one of the most successful small-cap companies in 2026. Time recognized us as one of America’s growth leaders in 2026. And locally, we are a finalist in NJBIZ 2025 Business of the Year.

I am so happy others are recognizing the hard work our 600 associates do every day to deliver for our customers and delight our consumers. Confidence across the organization is high. The consumer shift towards deli prepared foods is accelerating. Our customer pipeline is expanding with Tier 1 retailers, and our operational backbone is built to support materially more volume. We are entering the next phase of our growth with momentum, commitment and a clear line of sight into the value we could create. With that, Luke, let’s open the line for questions. Our first question comes from Brian Holland with D.A. Davidson.

Operator: [Operator Instructions] Our first question comes from Brian Holland with D.A. Davidson.

Brian Holland: Congratulations on the strong quarter. I wanted to hit on, I guess, maybe first off, obviously, you highlighted the incremental wins at Target Food Lion. That’s fantastic. Anything you could share on the AIC front, progress that you’ve made this quarter?

Adam Michaels: Yes. Thanks, Brian, and really the credit goes to the team. Yes, Chris is doing an incredible job. So I think I’ve shared with you before, Chris’ goals for the year and his team is AIC driven. So you’re seeing more and more items [indiscernible] each customer. So for instance, Publix, we’ve traditionally had some meal products. We just got 2 new Paninis in. New items we’ve had traditionally at BJ’s, we’ve had proteins. We’ve now just got new, I guess, non-proteins. So we got these really great soup potatoes and a tortellini salad. Two new wins at Fresh Market with actually these cool honey thyme carrots and the sweet potatoes. So yes, it’s absolutely the first thing.

Actually, Chris and I, every time we have our one-on-one every week, it starts with our first goal, which is driving AIC, our second goal, which is driving velocities, and we talk about what trade programs he’s doing in partnership with Lauren, what marketing programs they’re doing. So velocity is #2. And actually, a distant third is ACV. And I’ve shared with everyone before, that’s because I’m efficient or maybe I’m just cheap. And it is just way — the ROI is way higher on getting another item into a store that’s already getting a truck delivered or investing in velocities where the product is already there.

ACV is harder in the sense — or sorry, it’s not harder, but it takes longer. At times, if we don’t have any relationship with that customer, you brought up just the great work that Chris and his team did with Target. Look, that took a while. That took probably a year. Food Lion a little shorter. But we get a new item into Publix, we could do it in a week, a new item into a new customer that we haven’t had in the past, it could take a year. So AIC is #1 when we talk about things. So hopefully, that adds some color.

Brian Holland: Appreciate that color. Maybe just pivoting to Costco as this MVM goes into full swing, I believe, later this month. Obviously, important period kind of in front of that from a sell-through standpoint. I think you made some reference to maybe some things that you’re actively doing to drive awareness and visibility. Just curious what you’re seeing from a — understandably qualitatively, you don’t want to isolate the customer. I appreciate that. But just even qualitatively, any reads on sell-through in front of the MVM and maybe specifically what initiatives you can or are executing to build that awareness and visibility in front of the MVM, which is obviously a huge amplifier.

Adam Michaels: Yes. So thanks. So on Costco, so a couple of things. One, it’s actually already shipping. It’s been shipping for a few weeks now. You’re correct that you will get the MVM, the booklet, I think, in a couple of weeks, something my wife and I, that’s our weekend activity when we get that MVM, the book. So that’s going to happen at the end of the month, and that’s when the discount is going to be. But we are in the “MVM” right now in the sense of the product is selling nicely already. So that’s the first part. The second part, it’s the great work that Lauren is doing. I’ve shared in the past, we amplify on Instacart.

So Costco is all over Instacart. It gets great awareness. We do programming on Instacart, and we see great results. Actually, I shared some last quarter. A lot of the customers that we’re getting on Instacart are actually new to the brand. So Instacart gives us that type of data. So things we’re doing there. On other sites, we’re doing a great job and great partnership with Walmart. We invest behind on their search and on their website. Walmart does a great job getting more and more. You guys listen to the calls, I’m sure, getting more stuff through their digital. Well, guess what, they’re actually helping us by amplifying that. Same thing we’re doing on Publix.

There’s programming that Lauren does that actually is pretty cool. It’s like proximity. As you’re driving down, was it jog road or wherever, my parents will be proud, I remember that. But there seems to be a Publix on every street in Florida. As you’re driving through, you’ll actually get text on,”Hey, why don’t you stop in”. So what we talk about a lot and the team makes fun of me, I don’t leave anything to chance, right? So when we get a new item in, what levers can we pull to accelerate that, hang tags, things at the point of sale. So yes, we’re doing all things like that when new items come in.

We absolutely do not just hope it does well. We definitely chum the waters.

Brian Holland: That’s great. I want to be — I could go in a bunch of different directions, but I’ll just — I’ll nail it down to one more question. Just a sense, you mentioned locking in chicken for calendar ’26 or getting close to that. Any sense even directionally where you’re kind of locking in at what levels relative to ’25? I understand that the sole purpose of this is not to get necessarily the lowest price, but it’s more so about driving visibility. But still just interesting with the direction that chicken is moving. You’ve got pricing in. And obviously, that was a headwind for you over the last 12 months.

Just a sense of what kind of benefit that can provide to you looking out to ’26.

Adam Michaels: Yes. So there’s probably 3 things that I’d love to talk about, and I’m glad you bring it up. So the first one is the power — again, there’s just so many benefits from the most recent acquisition with Crown, but one of the 100 is that it literally doubled our chicken needs — and that brought us to another level with who we’re reaching out to and who’s interested in selling us chicken. Remember, when we first started, it was 1 million, right? It’s nothing like a little bit of chicken. Now we’re literally talking about tens of millions of pounds of chicken every year. And Anthony [indiscernible] is doing an incredible job.

So the first thing is we’re getting better looks. People want to work with us, and we’re getting better pricing from our scale. Second thing is chicken is better now. It’s not going to last forever. We’re all aware of that. But it’s good timing, and we’re seeing some positive pricing relative to what we had to deal with this year. As a reminder, and you’ve been following all of this, this is the second worst year for chicken prices after the year after COVID. The average price for the year is going to be the second highest it’s ever been on record. So it’s great to see that the numbers are getting better.

The third, and I do want to actually save some of this until our Investor Day in February, but what’s really wonderful is the Crown business actually gave us a different way to think about our business. And as much as we’ve been Grandma quality, which we always have, we’re thinking about being even more premium. And Chris’s past experience helps us think about where we want to be when we grow up of sorts. And I think that there’s some exciting news that we’re looking to share to become even more Grandma quality, but let’s hold that to the Investor Day.

Operator: Our next question comes from Eric Lauriers with Craig-Hallum.

Eric Des Lauriers: Congrats on yet another impressive quarter here. So one of the things I wanted to touch on was the planned SKU rationalization of some Crown products. Just wondering if you could shed some more color on essentially, I mean, what inning you’re in, in terms of identifying which SKUs to rationalize and then in terms of actually working through those inventories. And if you’re able to just provide a little bit more color on the SKUs that you are rationalizing if you are, presumably, they all do not meet your margin requirements. So wondering if there’s any customer product type or geographic concentrations to be aware of.

Adam Michaels: Yes. Thanks, Eric. So I think we’re doing — so we’ve started that. We’ve had meetings about that. That’s work that Chris and Lauren are leading. — this wasn’t the first thing we wanted to do, right? So first, we want to understand — we wanted Chris to have those meetings with those customers. He’s actually already had face-to-face meetings already with 2 of our top 3 new customers. And the first meeting wasn’t about, hey, here are the things I’m taking away from you. So we knew that the SKU rationalization was probably secondary to a couple of other things, all the work that Skip is doing.

We don’t need to rationalize the SKUs if Skip is able to turn everything around and COGS go down because we could optimize how we produce it. So what I can tell you is the team has already had meetings. They’ve started to put that list together. And again, the intention, I wish every product was wildly profitable, wildly high enough in volume to justify it, right? Everyone knows MOQ, minimum order quantities. So the bias is not to rationalize just so we could share with investors that we’ve cut SKUs. But the team is absolutely clear. It’s all about gross margin, right? We have to be around a year from now, right?

So we need to have the right margin profile. And Chris and Lauren are all over it. So they understand everything, all the products. We’re putting it together. The Bayshore team is doing an incredible job helping us accelerate some of it. So we’ve started on it, but it’s — we wanted — it was very intentional that we weren’t going to do anything until January because Chris wanted to understand all the products, all the customers, meet with all the customers, and then we’ll start that in January. So on track.

Eric Des Lauriers: All right. That’s all very helpful. I appreciate all that color there and makes sense to me. Just last one for me. It’s a bit of a kind of conceptual question. Just wondering how you’re thinking about trade promotion, I guess, target levels over the next year or so. Just wondering how the Crown integration may or may not impact near-term trade promotion levels.

Adam Michaels: Yes. So a couple of things. So the first one is, as a reminder, most, if not all, of the Crown’s products are private label. So they have a very — either very low to negligible, Anthony Gruber would tell me, de minimis trade rate. So that would, on a percentage basis, might lower the number overall. That’s not to say that’s initially. I still am very bullish. I always tell Chris, but Chris is the ultimate boss. I want to invest a, we have it; and two, it’s all about growing the velocity and getting us some new customers through trial.

I would tell you that I still want to push it up if I were to — I was really happy — probably Q1 — I think Q1, we were north of like 6%. Maybe that was a little high then we went down to like 3% and 4% over the past couple of quarters. I’d love it a little bit higher, but I leave that completely to Chris on is the ROI as high as it could be. Remember — sorry, I probably should take something back and say, it’s not about how much trade spend. It’s how do you get efficient and high ROI trade spend.

And that is the lens from which we use, but I will continue to push Chris and Nick on his team to find high ROI trade spend. And then equally, I’d say the same thing with Lauren and her team on marketing spend. The ROAS, like I said, double digits. It’s incredible some of the things that Lauren and Jessica are doing to get some great ROAS is return on advertising spend. So I’ll continue to push the team, but it has to be high ROI.

Operator: Our next question comes from George Kelly with ROTH Capital Partners.

George Kelly: Congrats on a nice quarter. So a few for you. First, it looks like stripping out Crown organic growth was close to 20% in the quarter. I’m curious if you could give the breakdown between volume and pricing.

Adam Michaels: Yes. Super proud of that as well. So about 80% — so actually, it was — about 80% of it was volume driven. So while it’s kind of funny, I don’t know which one I want to see more. I think it’s the right level, but I was super proud of getting the right pricing. This is about 20% price driven. That’s important. You see, right? It’s not about getting a lot, it’s about maintaining our gross margin. We have been speaking, and I’m very thrilled to speak to you about lower chicken prices.

But equally, we all understand because everyone reads the paper every morning, beef prices are through the roof, right, up 50%, the worst heard in 73 years. That has been creating real headwinds for us. So Chris has done a great job, has great partnerships with our customers to share the data, right? We have both actuals and we actually have third-party forecasted data, and it’s collaborative. We share with our customers. We don’t want any more gross margin, right? We just need to maintain what we have, and that means that we have to strategically and targeted raise prices when commodities get too high. So I really like that on that 20% range.

But then equally, find me another CPG company that’s growing 80% in volume. I mean it’s just pretty awesome the work we’re doing. And again, going back to those 3 tenets that Chris is leading on getting more items into every store, getting our velocities higher. You guys read all the time what’s happening in the deli prepared set and getting into new stores like you saw with Target and Food Lion and others.

George Kelly: Okay. Okay. That’s great. And then next question for me. Adam, you mentioned in your prepared remarks that you’re transitioning to a make-to-stock organization. I was wondering if you could give a little more context on the progress there. And I guess just as background, like how much growth were you kind of leaving on the table because you weren’t sort of fully on shelf or availability wasn’t always there. And as you embark on that, do you feel like your inventory at retail is now in a good place? Or should we anticipate there being a few quarters of retail inventory fill as you execute on that?

Adam Michaels: Yes. So first, there’s no — I’m not sure inventory fill. So from a customer perspective, they’re pulling normally. They’re seeing no difference. The difference is the fact that we always have supply for them. Our service levels are perfect or near perfect. So very excited about this idea of make-to-stock. So we have great partnerships, third-party logistics. For instance, I’ll give you, for instance, nearly 100% of everything that’s going out in Costco was prebuilt. Eric and his team in East Rutherford did just an amazing job. So what that means is any time Costco needs anything, it’s there, no matter what. If they need extra accidentally, it’s there, no matter what.

I would tell you, when I first started 3 years ago, I don’t think we left anything on the table per se because, quite honestly, we just didn’t have the demand, right? If I have someone to blame for this, it’s Chris and his amazing sales team for just doing so well that there’s just constant demand and pull in new items. So I think this is a logical evolution of our company, right? My days at Mondelez, PepsiCo, they didn’t — we didn’t wait for someone to order some Oreos for us for us to then start to produce them, right? Everything was a make-to-stock. So yes, no, I think this is the logical next step.

We’re doing it exceptionally well. It provides better results for our customers, like I told you in service levels. But honestly, it makes — it’s better for us because we’re not rushing. We’re not doing triple overtime 8 days a week because we’ve fallen behind. Now we’re able to do it with lower overtime and better service levels. So yes, so I’m loving it. The goal is for all of our major items with multiple customers, right? So the idea there is you don’t get stuck with it. And great work that Skip and his team are doing constantly, I see. You guys know, I look at everything, all day, Sunday.

And I get a report from Eric every — actually a couple of times a week, but I review it in detail every Sunday on every single item that we’re building in stock, looking at the velocities, looking at the movements and the team gets love notes on Sunday on if something is a little slower than I would have expected.

George Kelly: Okay. Okay. And then last question for me is on gross margin. Just trying to think through the next few quarters. With respect to — can you give Crown’s gross margin in 3Q? And then you talked about it reaching that kind of mid-20 range over the next year. Is that going to be a linear ramp? Or how should we sort of map that out? And then secondarily, the legacy business. Curious if you can give any of your expectations just on the next quarter or 2 and high level for fiscal year ’27. And that’s all I had.

Adam Michaels: Yes. Thanks, George. So remember, while obviously, we have 3 plants, I’m not telling you I’m not looking at those 3 plants. There is so much, and I’m proud of this, everything melds together. So I’ve given you examples that we’re buying — when we’re buying from a procurement perspective for oil, we make order of oil and then we distribute it across the 3 facilities. Or equally, there are items now that are made in multiple facilities. So it’s hard — not hard. It’s less relevant to look at individual — the gross margin is this. I will tell you, obviously, we look at everything. And of course, we knew from the acquisition.

Of course, we knew that the Bayshore legacy business had a lower margin. We’re seeing everything pick up. When I look at whatever, SKU 1, 2, 3, 4 meatballs that are in multiple locations, I could see that, that number is rising week-to-week. Another Sunday activity is looking at our top 25 SKUs, the weekly margins, and I’m seeing those move appropriately. So we will get to — like I committed to by — definitely by the end of next year, I think I said 12 to 18 months. We — you won’t know the difference between Bay Shore margins from Farmingdale’s margins from East Rutherford’s margins. And we’re on track to do it.

I would argue, ahead of where I expected. So that’s what’s happening with Bay Shore. Obviously, if you know that from the legacy business, the Bay Shore numbers are lower and you see where our margins are now, you could see that our legacy businesses as clearly the math even so my son’s data analytics now at Wash you, give them props, even he could tell you that, well, if one number is lower and we’re moving up, the legacy business must be quite a bit higher. So we are definitely seeing our legacy business move up.

That’s a function of great production and efficiency that Skip is doing, commodities — chicken commodities is helping us with a little bit of headwinds from beef. But we are seeing a much healthier business today than we were early this year.

Operator: Our next question comes from Ryan Meyers with Lake Street Capital.

Ryan Meyers: Congratulations on the strong quarter. Just kind of curious, obviously, better-than-expected gross margins even with the Crown integration. So as you guys have owned this business now for a couple of months, I mean, do you think this integration is going better than expected as expected? Because it seems like on the surface here, things are continuing to trend very, very favorably and positive with the acquisition.

Adam Michaels: Yes. No. And again, Ryan, that’s a testament to the team [indiscernible], both the Bay Shore team and their openness and their eagerness, like that’s the word. They are truly eager. They are excited. So many of the folks from Bay Shore have come to East Rutherford, how many tons of people to Farmingdale. It’s just truly from a cultural perspective, that is exceeding — massively exceeding expectations, and I’m so appreciative of it. Production-wise, we moved faster than I expected. So thanks to Skip and team on cross producing items in multiple locations, exceeded expectations on the procurement and how quickly Alberto was able to centralize everything. So I’m really happy with it. Has everything been absolutely perfect? No.

I’m not sure which ones yet, but I’m sure there’s something that hasn’t been perfect. I go there every single week. I really enjoy it a lot. Skips there multiple times a week. And no, I’m just really — the fact that it’s so close to the Farmingdale facility just really unlocks a lot, actually more than I would have expected. So yes, overall, I would definitely tell you exceeding expectations.

Ryan Meyers: Yes. That’s great to hear. And then congrats on the 2 new customer wins. So just curious, as you think about the 2,000 or so stores at Target and then roughly 1,100 at Food Lion, is there additional capacity that you think you guys need to bring online? Or do you feel like you, for the most part, will be able to unlock this capacity through the now 3 facilities that you guys have?

Adam Michaels: That’s why there was a little bit of clairvoyance there, right? So the fact that we got 42,000 square feet of space accidentally, of course, with the Bay Shore acquisition, that’s a huge unlock. So they were probably roughly like, I don’t know, let’s call it, 50%. And there is, in the earlier question from Eric on there’ll be some SKU rationalization, right? We want to make sure it’s not just about producing, right? My team knows that they don’t get credit for revenue. They get credit for profitable revenue. So there’ll be some SKU rationalization that will give us even more space.

And then as I’ve shared with many of you, we just took over in our New Jersey facility, we’re in a building that had a wall in the middle. We actually took over that other space. So very excited Skip. Actually, we brought in some new folks, Shane and Carlos to help us expand, and that’s actually already happening and will start early next year. That will unlock additional capacity that almost doubles our New Jersey facility. So between the expanded New Jersey facility and the building out the Bay Shore facility, I feel good that we could double our business just with that. Most importantly, it’s — I don’t stop.

Maybe I took a day or 2 off, but already back in the market looking at what the next acquisition could be, which gives us more space.

Operator: Our next question comes from Anthony Vendetti with Maxim Group.

Anthony Vendetti: Adam, I was wondering if you could give us a count now with the Target rollout — Food Lion rollout. How many stores are you in at this point today? And then from the Crown acquisition, what capacity is that at right now? And has that enabled you to roll out — like how much of that is coming from the target rollout in Food Lion, how much is that coming from your existing facilities versus the new Crown facility? And then as a last question, Costco, what’s the opportunity to continue to build out that relationship?

Adam Michaels: Yes. So the first question, I can get back to you on the exact number if we’re at 12 now. And once we get to full rollout at Target and Food Lion, that’s another 30. So I don’t know, let’s call it, 15,000. But I’m happy to get back to you on the actual number. And again, it’s going to take some time to do the full rollout just as well as we did with Walmart. I am very patient when it comes to executing with excellence. So I’m not in any rush to get to every single store on the first day. So that’s your first question.

Second question, maybe I won’t accept the premise of your question in the sense that we’re all family, all 3 facilities. We don’t talk about legacy, old, this or that. That was a great learning I had from my Mondelez days where 10 years later, people are still talking about being [indiscernible] versus [indiscernible]. We are one team the day the acquisition happened. Lauren did an amazing job and put all the posters and everything up, we’re one team. So to your point, to your question, yes, Food Lion, I believe, is coming out of the Bay Shore facility. Target is likely coming out of the New Jersey facility. Their branded sleeves.

So Skip looks every day at how do we be optimal. We make sure when we speak to customers. And since the acquisition, we’re getting sort of certified. So there are some customers that want to know exactly which facility they’re coming out of, and they’ll do audits. So they’ve already started to do that in Bay Shore. Our strategy is our product can be made in any of our 3 facilities any day of the week. So it’s where do we optimize. Obviously, Bay Shore right this minute has more capacity, has more space, right, 42,000 square feet versus about 25,000 square feet in Farmingdale and about 25,000 square feet in New Jersey. So we’re definitely pushing volume there.

But we look at it as one network. So it’s wherever the best place to produce it at any given day, and it actually might change from day to day. You had a third question on Costco. I forgot — I apologize, what was the question on Costco?

Anthony Vendetti: Just what’s the opportunity to continue to expand that relationship there? Would you say you’re at about 50% saturation there or where are you in terms of the ability to make that into a more lucrative relationship? And how much runway do you have there?

Adam Michaels: Yes. I love actually all my partnerships, all of our partnerships with our customers, some of them are different, but they’re all great. Talking about a question that I could not even begin to answer. The opportunity is huge with Costco. And every day that goes by, thanks to Scott and the team, great relationships now every day with all 8 of the regions. So this — remember, just 3 years ago, when Anthony and I started, we had a relationship with just one, right, with just the Northeast. And maybe we do one rotation all year long, just once with the Northeast. Now every day, we’re having conversations. Remember, we could — and it’s not one or the other.

We actually meet all the time with individual regions, and we might decide to do a rotation with just one. Equally, we have similar conversations on how do we do national buys, which we did last year or MVMs, digital MVMs, which we did earlier this year or MVMs, which we’re doing now. So I love the opportunity. Why? Great customer, great consumers, right? They are our type of consumers, quality, grandma quality, they’re growing. So I think it’s truly limitless with Costco. And thanks to Scott and the team, we have great partnership with them that we’re speaking to them all the time with tons of items, right?

We just did — we’re doing the beef balls now, the cheese up chicken meat balls. Remember, last year, we did the sauce. We did Meat Loaf. We did the sausage and peppers. They’re having tons of conversations now about some new items. So yes, I think that there’s a lot of opportunity. I’m very bullish on club and mass. And I like the [indiscernible] of the world for next year. I understand what’s happening in the marketplace. I know consumers’ purse strings are tight. And I think the winners are going to be in this — the club and mass channel, where we have great relationships. Any other questions, operator?

Operator: This now concludes our question-and-answer session. I would like to turn the call back over to Adam Michaels for closing comments.

Adam Michaels: Thank you, operator, and thank you again to each of you for joining us today. This quarter showed what this organization can do when every part of the engine is aligned. Our sales and marketing teams continue to open meaningful new doors. Our operations team is scaling efficiently. And with discipline in our finance — with discipline and our finance and people teams are building the foundation required for long-term profitable growth.

The early progress with Bay Shore is already strengthening our platform, expanding our capabilities and increasing our access to high-value customers with major retail wins coming online, growing momentum in club and mass and a unified network that can support significantly higher volume, we are entering the next phase of our growth with confidence. As always, we appreciate our investors’ continued support and look forward to updating you on our execution in the quarters to come. Finally, as we head into the eve of the holiday season, I want to thank you — I want to say thank you to the men and women of Mama’s that make me so proud to be called their teammate. Happy holidays to all.

Operator: Ladies and gentlemen, thank you for your participation. This now concludes today’s conference. Please disconnect your lines, and have a wonderful day.