Company Overview
Mama's Creations, Inc. is a leading national marketer and manufacturer of fresh deli-prepared foods, headquartered in East Rutherford, New Jersey. The company's rich history in Italian foods, combined with its focus on quality, convenience, and innovative product development, has positioned it as a key player in the rapidly evolving deli-prepared foods market. Mama's Creations' products are now found in over 8,000 grocery, mass, club and convenience stores nationally.
History and Development
Founded in 2009 as Mascot Properties, Inc., a Nevada corporation, the company's subsidiary, MamaMancinis Inc., began marketing and distributing beef and turkey meatballs with sauce, grilled and breaded chicken, sausage and peppers, and other similar meats and sauces. Over the years, Mama's Creations has steadily diversified its product portfolio, introducing new offerings such as ready-to-serve meals, single-serve pasta bowls, bulk deli, and packaged refrigerated protein products.
In 2021, the company made a strategic acquisition, purchasing TL Acquisition Corp., a premier gourmet food manufacturer based in New York. This move expanded Mama's Creations' capabilities, allowing it to offer a full line of foods for retail food chains, club stores, delis, bagel stores, caterers, and provision distributors. The company's portfolio now includes the TL Creative Salads and Olive Branch brands, further strengthening its position in the growing deli-prepared foods market.
Also in 2021, Mama's Creations acquired a 24% minority interest in Chef Inspirational Foods, LLC (CIF), a leading developer, innovator, marketer, and sales company of prepared foods. The company later acquired the remaining 76% interest in CIF in June 2023 for approximately $3.7 million, further expanding its capabilities and market reach.
The company faced some challenges early on, reporting a net loss in fiscal year 2022. However, it was able to turn things around, reporting net income of $2.3 million in fiscal year 2023 and $6.6 million in fiscal year 2024 as it continued to diversify its product portfolio and expand its distribution footprint.
In July 2023, the company changed its name from MamaMancinis Holdings, Inc. to Mama's Creations, Inc. to better reflect its expanded product offerings and broader focus beyond just Italian-style meatballs.
Financials
Mama's Creations' financial performance has been impressive in recent years. In the fiscal year ended January 31, 2024, the company reported total revenue of $103.28 million, up from $93.19 million in the prior year. Net income for the same period was $6.56 million, a significant improvement from the $2.30 million reported in fiscal 2023. Operating cash flow for fiscal 2024 was $11.62 million, while free cash flow reached $10.84 million.
For the most recent quarter ended October 31, 2024, the company reported net sales of $31.52 million, up 10% from $28.65 million in the prior year period. The increase in sales was driven by volume gains, successful pricing actions, and increased demand. Net income for the quarter was $410,000, compared to $2 million in the same quarter last year. The decrease in net income was primarily due to increased costs of sales and operating expenses.
For the nine months ended October 31, 2024, the company reported net sales of $89.74 million, up 17.2% from $76.56 million in the prior year period. The increase was attributed to volume gains, successful pricing actions, and the acquisition of CIF in June 2023.
Liquidity
The company's strong financial position is reflected in its balance sheet. As of January 31, 2024, Mama's Creations had $11.02 million in cash and cash equivalents, with total debt of $13.10 million. The company's current ratio stood at 1.17, indicating a healthy liquidity position. The quick ratio was 1, further demonstrating the company's ability to meet its short-term obligations.
Mama's Creations has a $5.5 million working capital line of credit with MT Bank, which was undrawn as of the most recent quarter. It also has a $7.5 million term loan outstanding with MT Bank, with a maturity date of January 17, 2027. The company's debt-to-equity ratio is 0.17, indicating a conservative capital structure.
Strategic Investments and Growth Strategy
Mama's Creations has made strategic investments to drive future growth and expand its operational capabilities. In fiscal 2024, the company invested $786,000 in capital expenditures, primarily to enhance its production facilities and improve automation. These investments are expected to contribute to improved operational efficiency and margin expansion in the years ahead.
The company's growth strategy is centered around four key pillars: cost, controls, culture, and catapult. The cost initiatives have focused on improving procurement, manufacturing, and labor efficiency, which have helped offset rising commodity costs. The controls pillar has seen the successful implementation of a new ERP system, providing greater visibility and enabling better pricing, margin, and inventory management decisions.
The culture pillar has prioritized employee engagement and retention, with the company rolling out a comprehensive culture program and formal processes to ensure its workforce is aligned and motivated. Finally, the catapult pillar represents the investments in trade promotion and marketing to drive increased velocities of existing products and support the launch of new offerings.
Strategic Acquisitions
Mama's Creations has also been actively pursuing strategic acquisitions to further strengthen its market position and product portfolio. In June 2023, the company completed the acquisition of the remaining 76% interest in Chef Inspirational Foods, LLC, a leading developer, innovator, marketer, and sales company of prepared foods. This transaction has enabled Mama's Creations to expand its capabilities and leverage synergies to drive additional growth.
Market Opportunity and Competitive Landscape
The deli-prepared foods market is experiencing significant growth, driven by changing consumer preferences and the ongoing shift towards convenient, high-quality meal solutions. According to industry data, the deli-prepared foods segment is expected to grow at a rate of over 5% annually, outpacing the broader retail food and beverage market, which is expected to grow 0-1% next year. Notably, Mama's Creations has been consistently growing at around three times the rate of the overall deli prepared foods market.
Mama's Creations is well-positioned to capitalize on this industry trend, with its diverse product portfolio, focus on quality and innovation, and strategic investments in operational excellence. The company's strong relationships with major retailers and its growing presence in key channels, such as club stores, convenience stores, and the expanding deli section of grocery stores, further support its growth potential.
The company's product portfolio consists of a variety of high-quality, fresh, clean and easy to prepare foods, including beef and turkey meatballs with sauce, grilled, roasted and breaded chicken, sausage and peppers, and other similar meats and sauces. Many of these products under the MamaMancinis brand have been approved by the United States Department of Agriculture (USDA) as all-natural, containing no artificial ingredients, coloring ingredients or chemical preservatives and being minimally processed.
However, Mama's Creations is not without its challenges. The company operates in a highly competitive industry, facing competition from larger, well-established players as well as emerging niche players. Fluctuations in commodity prices, particularly for proteins like chicken and beef, can also impact the company's profitability. Additionally, the company's reliance on a limited number of large customers presents a degree of concentration risk.
Geographic Expansion
Mama's Creations has successfully expanded its geographic footprint, selling its products across all 50 states, the District of Columbia, and Puerto Rico. Notably, over 47% of its sales are now west of the Ohio River, compared to historically being a Northeast-focused meatball company. This geographic diversification helps mitigate regional risks and provides opportunities for further expansion.
Future Outlook
Looking ahead, Mama's Creations is focused on continued product innovation, expanding its customer base, and leveraging its operational improvements to drive margin expansion. The company expects its normalized gross margin profile, excluding major commodity fluctuations, to continue to hover in the high 20% range. The long-term goal is to target gross margins consistently maintained in the low 30% range, leveraging strategic capital expenditure investments, procurement efficiencies, and continuous operational improvements.
Mama's Creations also aims to increase its trade promotion investments from low-single-digit percent of revenue today towards a long-term goal of 10%. The company's long-term adjusted EBITDA margin target is in the teens percentage range.
Conclusion
In conclusion, Mama's Creations has established itself as a leading player in the rapidly growing deli-prepared foods market. With its focus on quality, innovation, and operational excellence, the company is well-positioned to capitalize on the shifting consumer preferences and industry trends that favor convenient, high-quality meal solutions. As Mama's Creations continues to execute on its strategic initiatives, including geographic expansion, product diversification, and operational improvements, it aims to become a leading "One Stop Shop Deli Solution" provider on a national scale. While challenges such as commodity price fluctuations and intense competition remain, the company's strong financial performance and strategic focus provide a solid foundation for future growth.