Mama's Creations (MAMA) 2027 財年第二季法說會：營收大增 55%，克羅格推出時程確定

重點摘要

• 受惠於新品牌零售產品上市、客戶與品項擴展，以及收購 Bay Shore，2027 財年第二季營收年增 55% 至 5,460 萬美元。
• 淨利成長 100.9% 至 260 萬美元，或稀釋後每股盈餘 0.06 美元。調整後 EBITDA 成長 68.9% 至 550 萬美元，利潤率擴增 80 個基點至 10.1%。
• 毛利率達 24.0%，低於去年同期的 24.9%，但高於上一季的 23.6%，主因是新包裝技術與蛋白質產品型態逐漸邁向穩定生產階段。
• Mama’s Creations 將攜四款產品進駐克羅格 (Kroger) 旗下位在路易斯維爾分區的 100 多家門市。好市多 (Costco) 也批准該公司參與全美所有八個區域的全國多廠商郵寄廣告促銷。
• 在獲得普通股發行淨收益 1.086 億美元後，截至 2026 年 7 月 31 日，現金總額為 1.386 億美元。總負債為 480 萬美元。
• 管理層重申整體毛利率達到 25% 至 29% 左右（20% 中段至高段）的目標，並對雙位數的營收成長表達信心，同時強調追求獲利型成長勝過低毛利的銷售。

核心財務業績

業務與營運表現

第一財季主要零售商引進的新品牌產品持續放量。第二財季推出了十幾款新上架產品，其中超過 60% 使用「雞底料 (chicken bottoms)」，而第三財季已有二十多款新上架產品獲得批准。

Mama’s Creations 計劃在克羅格 (Kroger) 位在路易斯維爾分區的 100 多家門市推出四款產品，包括三款雞底料 SKU。管理層將初期推廣視為在克羅格約 1,300 家門市中擴展的起點。

沃爾瑪 (Walmart) 的通路擴展至 2,300 多家門市，而最初約為 2,000 家。該公司在沃爾瑪有九款產品，其中烤雞產品展現出特別強勁且持續提升的週轉率。管理層正在評估將銷售較慢的香腸甜椒和肉餅產品替換為更高週轉率品項的可能性。

好市多 (Costco) 已批准 Mama’s Creations 參與下半年涵蓋所有八個區域的多廠商郵寄廣告促銷。管理層預計該促銷活動將產生比去年同期更多的營收，並表示好市多的輪播上架已在四個區域進行中。山姆會員店 (Sam’s Club) 推出日式麵包粉裹粉雞胸肉正於 300 家分店展開。

在將近 9,000 萬次曝光的支援下，零售媒體歸因銷售額較第一財季成長近 30%。在沃爾瑪，歸因銷售額比上一季成長超過 50%，同時保持雙位數的廣告支出回報率。

隨著額外的產量提高了固定成本的吸收，加上採購舉措降低了原料成本，Bay Shore 廠區狀況持續改善。管理層預期該廠區的經濟效益將與網路中其他設施越來越接近。East Rutherford 的擴建也使冷凍和冷藏儲存容量幾乎翻倍。

管理層展望

管理層仍專注於三大優先事項：優化整合的三廠網路、加速零售通路拓展，以及尋求能提升能力、產能或客戶接觸管道的增值型收購。

該公司重申其整體毛利率達到 25% 至 29% 左右（20% 中段至高段）的目標。隨著 Bay Shore 的效率提升，以及雞底料產品在銷售組合中的比重增加，管理層預期第三財季毛利率將比上一季改善。

管理層指出毛利率有 4 至 5 個百分點的潛在改善空間，歸因於三個因素：約 1 個百分點與較高渠道推廣費用 (trade spending) 相關、2 至 3 個百分點來自增加雞底料使用量，以及約 1 個百分點來自使 Bay Shore 接近公司平均水準。這些是管理層的估算而非已實現的改善。

在沃爾瑪、塔吉特 (Target)、克羅格、好市多、山姆會員店、BJ's 和其他管道上架的支援下，公司對維持雙位數營收成長保持信心。管理層強調，提高獲利能力成長仍是首要任務，即使產品組合優化會減少部分低毛利營收。

憑藉 1.386 億美元的現金和有限的負債，Mama’s Creations 正在評估規模較大的收購標的。管理層表示，營收約為 2,500 萬美元的收購案現在可能太小，不足以證明整合工作具備合理性，且戰略能力與客戶接觸管道比單純獲得的營收更重要。

風險與關注領域

• 儘管毛利率較上一季有所改善，但仍低於去年同期報告的 24.9%。
• 產品組合對利潤率擴增至關重要。分切雞肉 (Portion chicken) 具有更高的銷售週轉率，而需要提高雞底料利用率以改善裁切經濟效益。
• 管理層無法在新產品接觸消費者之前確定產品週轉率，這使得由產品組合驅動的利潤率提升時機存在不確定性。
• 較高的渠道推廣費用可支援通路拓展與週轉率，但會降低報告的毛利率。該公司在第二季將約 50 萬美元從行銷轉向渠道推廣，且渠道推廣支出比去年同期增加了 100 多萬美元。
• 規模較大的收購需要大量的盡職調查與整合工作。管理層表示，儘管現金餘額增加，仍將保持其估值與資本配置紀律。

分析師問答亮點

克羅格推廣：管理層計劃先從一個分區以及經過市場驗證的肉丸和雞肉產品開始，然後再尋求更廣泛的通路擴展。初期推廣約占克羅格旗下約 1,300 家門市的 10%。

好市多展望：即將推出的多廠商郵寄廣告促銷預計規模將大於去年的活動。管理層強調，好市多的銷售維持了公司的目標利潤率，並非虧損經營。

毛利率分析：管理層將目前 24.0% 的毛利率歸因於渠道推廣投資增加、分切雞肉與雞底料產品的不利組合，以及 Bay Shore 仍存在的利潤率差距。

生產產能：管理層表示，現有設施可支援約前一年業務量的兩倍。自動化的進一步提升，而非實體空間，是主要的營運重點。

併購與海鮮：海鮮是一項潛在的長期能力，可透過 Bay Shore 或併購來實現。管理層指出，需要解決專用設備、處理要求和法規計劃等問題。

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管理層陳述

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Mama's Creations, Inc. Second Quarter Fiscal 2027 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, September 3, 2026, and the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Mama's Creations Chairman and CEO, Adam L. Michaels, and CFO, Anthony Gruber. Before we get started, I'd like to note that some of the statements on this call will be forward-looking statements that reflect management's current expectations about future operating and financial results. Although management believes their expectations and assumptions are reasonable, they remain subject to significant risks and uncertainty, and actual results for future periods may differ materially from what is stated or implied during today's call.

For more information, please refer to the forward-looking statement section in today's press release and the risk factors disclosed in the company's most recent Form 10-K and any subsequent reports it files with the SEC. Please also note that today's call will include a discussion of adjusted EBITDA, which is a non-GAAP financial measure. Important information, including required disclosures containing a reconciliation to the most directly comparable GAAP measure, is also detailed in today's press release. At this time, I'd like to turn the call over to Chairman and CEO, Adam L. 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 second quarter fiscal '27 financial results conference call. The second quarter was another step change quarter for Mama's. Thanks to the creativity of our sales team, the resilience of our operations team, and the increased capacity from the acquisition of Bay Shore, we grew revenue 55% to $54.6 million and expanded adjusted EBITDA 69% to $5.5 million. Though the real story of this quarter is not the impressive growth rate, but the shape of it. Every single bottom line metric grew faster than revenue. Income from operations, adjusted EBITDA, and net income, which more than doubled. Overheads did not grow with the business. It shrank as a share of it, and gross margin turned back up sequentially as the items we launched in Q1 settled into steady-state production, with room still to run.

Anthony will take you through the detail, but what I want you to hear is the sequence, because it is exactly the one we laid out three months ago. Invest into the launch, then harvest the leverage. And this team delivered without skipping even a beat on new distribution gains. Looking forward to potential future M&A, we also fundamentally changed the kind of transaction this company is capable of pursuing. Following our recent offering, we closed the quarter with over $138 million cash war chest and virtually no debt, supported by the strong operating cash flow the business generated on its own. Until now, the size of the opportunity we could chase was largely set by the size of our balance sheet. The dynamics have changed. We can pursue accretive M&A that brings incremental capabilities, capacity, or customer access into the platform, and we can do it from a position of strength.

As always, regardless of the size of our increasing war chest, we will remain as steadfast and disciplined in our approach as we did when we started this journey four years ago. Before we get into the quarter itself, let me spend a moment on the macro trends because it keeps getting better. One of, one of the earliest lessons I picked up in my career is that catching an existing current is far easier and far cheaper than trying to manufacture one of your own. In June, McKinsey published research naming the shift from restaurant to ready-to-eat grocery meals as one of the top themes reshaping the entire grocery industry. And, I mean, right up there with e-commerce, retail media, and even AI.

Roughly one in four consumers now buy grocery prepared food, specifically as a substitute for ordering from a restaurant, most often replacing quick service and fast casual occasions. And, here's the line I keep coming back to. Prepared foods, by far, the leading driver of trip frequency across every single section of the store. Not one of the drivers, the leading driver, which means that the strategic alignment we have with our retail customers is getting deeper, and our value to their business is only getting stronger. If that's not enough, GLP-1s are only accelerating it. Consumers are walking past the packaged snack aisle and reaching for a high protein meal instead. We continue to be in the right place at the right time with the right product portfolio. And now, finally, with the balance sheet to capture far more than our fair share. And then, there is one that made me smile the most when I sent it to Chris and Lauren. The Wall Street Journal and Yelp have both now put a name to a consumer trend called grandmacore. Slow cooked, simply made family recipes, food that tastes like somebody who loves you made it.

Yelp named it a 2026 dining trend. Rubix Foods found that 44% of consumers would rather a brand improve a familiar favorite than chase a trend. Fellow shareholders, we did not pivot into this. Anna Mancini carried her meatballs and sauce recipe through Ellis Island 105 years ago. For most brands, grandmacore is a marketing stunt. For Mama's, it is our founding principle. So, the current is strong and the playbook we run has not shifted one iota.

Cost, controls, culture, and catapult, our four Cs. Starting with our first C, cost. I'm excited to report that thanks to Skip and his team, we officially opened the new expansion of the East Rutherford, New Jersey facility at the end of last month, nearly doubling frozen and refrigerated storage capacity, which will reduce our outside storage costs as well as increase logistics flexibility. In addition, as our associates come back from their Labor Day break, they'll be coming home to a new break room, locker rooms, and training spaces in our signature Mulberry color palette and our values on the wall throughout, thanks to Lauren and her team. Our New York facilities continue to merge and blur, sharing equipment and people across facilities. Our new Walmart launches and recent Sam's launch would not have been possible without the Bay Shore facility and our Bay Shore associates. With the added volume of new items across Walmart, Sam's, Albertsons, and BJ's, the Bay Shore facility continues to steadily improve towards our goal of margins being in line with our East Rutherford and Farmingdale gross margins as promised.

Finally, continued improvements in below-the-line direct variable costs continue to be captured as our first half freight, royalties, and commissions percentage is below prior year. This allows our operating margins to show up exactly where it should. Operating expenses fell 160 basis points as a percentage of revenue year over year, and margins improved sequentially off the first quarter. All of this with plenty of room to grow. On gross margin specifically, in June we told you that labor and raw material inefficiencies tied to the startup of new packaging technologies and protein form factors were front loaded investments, not a new normal. The second quarter was the first proof point.

Margin improved sequentially to 24.0% from 23.6% while spending more trade in Q2 than in Q1 and spending over $1 million more in high ROI trade versus prior year. We remain firmly on track with our mid- to high 20% corporate gross margin target as those items move fully into steady state. Moving to controls, our second C, I am proud to share that we continue to invest in more data analytics to expand our Power BI efforts, now incorporating AI plugins, thanks to Melissa and Lauren. This is providing faster, more granular, connected information, delivering savings in materials, production efficiencies, and inventory management. Our singular ERP system allows us to provide more visibility to our teams, real-time performance management, and benchmarking across each of our sites. Another great example of our controls is the impactful work that Alberto is doing with his procurement team. Since Alberto has joined, we have completely reimagined our supplier base. We have consolidated in some places and opened the aperture in others.

For example, recent changes with our packaging supplier base avoided a 12% increase in materials through vendor diversification and business migration. We've added three new beef suppliers, increasing our quality even further without increasing our costs, sharing the benefit with our customers and end consumers. Another huge benefit Alberto brought to the team is his experience with supply planning. The enhancements he has brought to Mama's is allowing us to add further safety stock levels to our top 10 items, facilitating absorption-based production, reducing our costs while increasing our customer service levels. Now, if that is not a win-win, I'm not sure what is. I will continue to simply repeat what I said last quarter. In an industry where food safety sits at the top of every conversation, the discipline this team demonstrates across all three facilities is nothing short of remarkable and nothing we ever take for granted.

Our third C, culture. I'm ecstatic to share that last month, Yun Lee, our first ever Chief People Officer, joined us with over 25 years of experience building and leading high performing organizations. I could not be more excited to partner with Yun and the rest of the people operations team to maintain and enhance the same entrepreneurial passion and spirit that got us to where we are today. With Yun coming on board, we've been able to supercharge our capability building. In Q2, we grew our team and our capabilities by onboarding more than a dozen new operational leaders in functions like food safety and quality assurance, enterprise safety and production management, bringing new capabilities that did not previously exist within the organization and upgrading leadership across critical functions to strengthen the infrastructure required to support continued growth and scale. All these hires bring energy, experience, and renewed engagement throughout our entire organization. I am so proud to add seats at Mama's dinner table and excited to see what our new family members can do. Another great example of culture is the new innovation lab that Chris and his team have built to wow and excite our customers in only a way Mama can.

Appropriately and playfully called Mama's Secret Pantry, this is an experiential space that key partners will be invited to, to co-create and collaborate to exceed and excite our consumers. I can't wait to share more about the space and, more importantly, the future wins coming out of this unique experience. We are not here just to win at the prepared foods game. We are truly redefining it. As Abby keeps reminding me, culture is not a destination. It is a mindset that needs love, attention, and reinforcement every single day. And I will say this about the quarter we just had. We raised more than $100 million on the strength of a proven story this team wrote with their own hands.

The capital markets did not fund a theory. They funded a successful track record that was written down and codified four years ago by our over 600 associates. And for that, I am truly thankful. Our fourth and final C, catapult. This is where the quarter really showed itself. I am honored to announce that next month we officially launch, for the first time, in banner Kroger. We will start in the Louisville division in over 100 stores with four items, three of which are chicken bottom SKUs.

I cannot express how impressed I am with Chris and the sales team. We set an audacious goal, literally three months into Chris's tenure, to get into the top three food retailers in the country. And Chris and his team delivered ahead of schedule. The Board and leadership team keep setting up the pins and Chris and his sales team keep knocking them down. Congrats to the entire team. If that's not enough, we recently heard from Costco that we have been confirmed for a second half multi-vendor mailer, MVM. Their most productive promotion nationwide, across all eight regions. To me, this is much bigger than just more revenue, which is forecasted to be ahead of prior year, but rather a testament and reinforcement of the terrific partnership Scott has built over the past four years. As a reminder, Scott has taken this business from about $0.5 million four years ago to over $25 million last year.

Now, that is a partnership. And having all eight regions eagerly sign up tells me that Anna Mancini's recipe is doing just fine west of the Mississippi. But I hope I don't make it seem that there's only one or two customers. In Q2 and upcoming in Q3, we have new placements launching in over a dozen new customers, new and existing. Over a dozen new placements launched in Q2 with more than 60% using chicken bottoms. And coming up in Q3, over 2 dozen new placements have already been approved. That is the one-stop-shop model at work. In Q2, we scaled our marketing efforts while putting our most comprehensive launch support yet behind new distribution.

Across our retail media platforms, attributed sales increased nearly 30% versus Q1, while delivering nearly 90 million impressions. Walmart continues to be a standout as we increased our investment behind our expanded assortment, attributed sales were up more than 50% from Q1, while still generating a very healthy double-digit return on ad spend. What excites me most is that we're building a repeatable playbook around our launches. For our seven new Walmart items and our Target beef meatball launch, the team surrounded the distribution with ratings and reviews, PR, retail media, social and influencer support. We generated more than 2.6 million potential impressions through earned media, collecting 225 product reviews to help build trust and conversion, and activating 50 micro-influencers.

We also had our biggest presence ever at IDDBA this year, with our largest booth to date and a strong presence across the show floor. We had the opportunity to engage with nearly all of our major customers, not only around the breadth of what we could offer them today, but where we are going next. And for the first time, we shared early stage innovation concepts with customers, giving us the opportunity to bring their input into our innovation pipeline before those ideas ever reached the shelf.

And finally, the team isn't limiting marketing to consumer activation. We tested strategically placed outdoor media in key markets in Q2 to excite our existing customers and as well as some prospective holdout customers. If you think FOMO is only afflicting Gregory and Alexander, you have not met the EVPs of some of our customers. Looking to the balance of fiscal '27, our priorities are unchanged. Ramp the new branded introductions across Walmart and Target, keep executing it against our goal of net plus two SKUs in each of our top 10 accounts, pull efficiency, margin, and absorption through the three-plant network as recent launches reach steady state, and now with over $138 million of cash on the balance sheet, put capital to work behind capacity and accretive M&A.

Looking forward, the company I see in front of me bears very little resemblance to the one we ran even 12 months ago, 3 plants, a broader and still expanding customer roster, a balance sheet with real firepower, and a team that has demonstrated in practice, not in theory, that it could integrate acquisitions and execute with excellence across the plant. Our line of sight to $1 billion in revenue has never been sharper, and I am convinced in our ability to compound profitable growth well into the future. 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 second quarter.

Anthony Gruber

Thank you, Adam. Moving to the financial results. Revenue for the second quarter of fiscal 2027 increased 55% to $54.6 million as compared to $35.2 million in the same year-ago quarter. The increase was primarily due to the ramp of the new branded items we launched with major retailers in the first quarter, item expansion at new and existing customers, and the contribution of the Bay Shore acquisition. Gross profit increased 49.1% to $13.1 million, or 24% of total revenues, in the second quarter of fiscal 2027, as compared to $8.8 million, or 24.9% of total revenues in the same year-ago quarter. Importantly, the prior year did not include Bay Shore as it was prior to the acquisition of the same. Gross margin improved sequentially from 23.6% in the first quarter as the new packaging technologies and protein form factors deployed to support our Q1 launches moved towards steady state production. We remain on track toward our mid to high 20% corporate gross margin target. Operating expenses totaled $10.1 million in the second quarter of fiscal 2027, as compared to $7.1 million in the same year-ago quarter.

As a percentage of revenue, operating expenses declined 160 basis points to 18.5% from 20.1% in the prior year quarter, demonstrating the improved operating leverage in our model as we scale. The change in absolute dollars was primarily attributable to the Bay Shore acquisition. Net income for the second quarter of fiscal 2027 increased 100.9% to $2.6 million, or $0.06 per diluted share, as compared to net income of $1.3 million, or $0.03 per diluted share, in the same year-ago quarter. Second quarter net income totals 4.7% of revenue as compared to 3.6% in the same year-ago quarter.

Adjusted EBITDA, a non-GAAP measure, increased 68.9% to $5.5 million for the second quarter of fiscal 2027 as compared to $3.3 million in the same year-ago quarter. Adjusted EBITDA margin expanded to 10.1% of revenue from 9.3% a year ago. Turning to the balance sheet, cash and cash equivalents as of July 31, 2026, totaled $138.6 million as compared to $20 million as of January 31, 2026. The increase was primarily driven by $108.6 million of net proceeds from our July common stock offering, together with $11.9 million of cash provided by operating activities during the first six months of the fiscal year. As of July 31, 2026, total debt stood at $4.8 million. This balance sheet, combined with our credit facilities and strong cash flow generation, positions us well to pursue the organic and inorganic growth opportunities that Adam described. 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 I turn the page to the balance of fiscal '27, our priorities are consistent. First, we will continue to optimize the integrated three-facility network, pulling efficiency, margin and capacity utilization forward. Second, we will press the accelerator on retail distribution, leaning into the Walmart, Target and now Kroger ramps, while continuing to deepen our partnerships in the Club channel with our upcoming Costco MVM, as well as the new Sam's Club and BJ's launches. And third, we will deploy the big balance sheet we've built to selectively pursue accretive acquisitions that bring incremental capabilities, capacity, or customer access into the platform. The $40 billion deli-prepared foods category is large, still expanding, and remains highly fragmented.

The consumer trends, fresher formats, higher quality protein, value-oriented meal solutions, and now a genuine cultural pull towards the food our grandmothers made, continue to break in our direction. Retailers, in turn, want a partner who can simplify the deli prepared meal space, deliver consistently at national scale, and bring real innovation to the case. This is precisely the role Mama's Creations is built to play, and our long-term vision of becoming the leading national one-stop-shop deli solutions provider has never felt more within reach. To our team across all 3 facilities, thank you for the energy, the ownership and the relentless execution. And to our shareholders, including the many of you who joined us in July, thank you for your continued trust in our team. I have never been more convinced that the most exciting chapter of Mama's Creations is the one in front of us. With that, operator, let's open the line for questions.

Operator

[Operator Instructions]. And your first question comes from Jon Andersen with William Blair.

分析師問答

Jon Andersen

Yes, good afternoon everybody. Thanks for the questions. I thought I'd start with I guess your announcement of achieving distribution with I guess kind of the third strategic account you were targeting, Kroger. Could you talk about how you kind of got there with the relationship, what the initial launch looks like, and how you're thinking about maybe the roadmap to building the relationship over time?

Adam Michaels

Yes, thanks Jon. Look, as always, a tremendous team effort. Chris has great long-term relationships with Kroger well before him joining Mama's. We speak often about having relationships at the top and then equally at the buyer level is another thing. And then it's another good example of actually some of the work that Lauren and Chris did partner together on from a marketing perspective. We did some creative marketing around the Cincinnati area and it worked out. And again, we've had some conversations. Chris has been talking to them for some time. This is the type of stuff Mama likes, right? Let's start smaller, let's start in one division, let's start strong with the items that are great, right? Our strong meatball items and chicken items that we know that have strong velocities and then slowly, you know, slow and grow.

So very excited. Again, you start small and you build out. And, you know, I think Kroger has maybe 13 -- banner Kroger has about, let's call it about 1,300 locations, you know, start with 10% of the business and then work your way up. So really happy, really appreciative of all the work that Chris and the team have done to get here. And again, I think this is something that's really important and it's been the past four years here at Mama's. We tell you what we're going to do and we do it. We started three years ago. We said we'd get in one a year, two years ago we did Walmart, last year with Target, and now with Kroger, again, slow and steady. So yes, very proud of the whole team.

Jon Andersen

Yes. Congratulations on that. Kind of sticking with important customers as well for a minute. I wanted to ask about the MVM with Costco in the second half. Is that, I guess that's a new kind of new disclosure. How recently did that kind of come together? And can you size it for us? Like you talked about how that relationship has become a $25 million relationship as of last year, based on the plans that you now have in place for the current year. How does this affect maybe the second half outlook in the Costco business in aggregate? Do we grow it this year in other words? What are any margin considerations that we should take into account as a result of this as well?

Adam Michaels

Yes. No, absolutely. Again, another great team effort and just as much, and we all say it as a leadership team, just as much of the great sales work Scott, in this case, has been able to do. You can't do anything without operations and Skip and his whole team making sure that we can actually deliver and exceed expectations is just as important as getting it in. Yes, that we, we are speaking to the Costco team has if not every day, certainly every week. There's constantly rotations that I guess we don't even share all the time because it's constantly happening. The MVM, I don't know if it's technically started yet, but we're in four of the regions right now, and we're not even talking about it. So great relationship, yes. We were voted in as you know, well, there's eight regions, eight regions have to vote on it. And we, we got voted in for all eight regions.

Um, I think we're probably in about four regions as we speak. And by next month we'll be in all eight regions. I did share that this rotation is forecasted planned to be bigger than last year, which is great. We'll have to see how things go and how the velocities keep moving. Another thing you know about us is we keep to our margin profiles. And what's really important and, again, another thing that's just wonderful about the Costco partnership is it's not something that -- I know some companies will sell at a loss to get into Costco. That is not us whatsoever, as everybody knows. This is a great win for Costco's end consumers, great for Costco. Velocities keep moving higher and higher, and that's why you're seeing the repeat of the MVM and more and more rotations. So it's a great testament to Scott, the whole team, both sales and operations.

Jon Andersen

Great. One more, I'll get in the queue. It feels like, at least relative to, I guess, our estimates for what that's worth, that maybe there was a little bit more OpEx leverage in the model this quarter, a little less on the gross margin line. Are there some decisions, planned decisions you're making there around how you're investing? Maybe moving some marketing dollars into trade based on the desire to support some of the branded launches or am I overreading that we're still kind of progressing as -- progressing as planned.

Adam Michaels

No, you are a very good reader, musician and reader all at once. So impressive. No, you're absolutely right. So let's be very specific. We very intentionally moved about $0.5 million. That's a full point of margin out of marketing into trade because we were seeing higher effectiveness and great returns, again, as you're seeing. So you're absolutely right.

I could have easily increased gross margin a full point, legitimately, right? $0.5 million, a little more than $0.5 million is about a point of gross margin. Our goal is long term. I know this team and this team knows we have to deliver every 91 days for you guys, but we are building a $1 billion business. And if that means that we're going to invest a little more this quarter, I'll give you another number. We spent more than $1 million. That's two points of margin. We spent over $1 million more in trade this year than we did last year.

Again, as long as we see the ROIs, you guys know what gets measured gets improved. We understand the effectiveness of every promotion that we're doing. If it does well, we'll do it again. If it doesn't do well, we're not going to do it. But we are spending more on trade, more than $1 million, more than we did last year because we're seeing the effectiveness and we will continue to invest behind the business to drive higher velocities, to exceed our customers' expectations so we could drive more items into the store, like you're seeing. And, like my boys say, a little bit of FOMO. And Chris is getting a lot of phone calls from customers saying, hey, why don't we have that item? And that's a wonderful thing.

Operator

Your next question comes from George Kelly with ROTH Capital Partners.

George Kelly

Just to start, I think I heard in your prepared remarks that Sam's Club took an additional item. Did I hear that right? And can you detail, like, what the item was and when it went in?

Adam Michaels

Yeah, again, great team effort. Again, this was another great example with partnership with operations. This was a new product for us, a Panko chicken that just went in, I think literally -- I think this week possibly. So it's probably not even through the whole system yet. But yes, excited, breaded chicken breast. As you know full well since you've been with us the whole time, this is a chicken bottom, which you know is critical for us. But yes, really great example. I'll give you another thing that's so special about this product. Yeah, I'll just leave it at great team effort. So really happy with it. So yes, new item just came into Sam's.

George Kelly

And it's going in all stores?

Adam Michaels

Let me get back to you on that. I forgot to ask Chris that question. The orders are quite nice, so I think so, but let me get back to you on that. I'll get it from Chris, exactly how many stores.

George Kelly

Okay, sounds good. And then next question on Walmart. Just hoping you could update us on number of stores and how the velocities are progressing and just any kind of update on what you're seeing at Walmart and maybe if there's products that are working especially well or not working as well. All that would be helpful.

Adam Michaels

Really happy for how things are going. I think we -- I looked the last time, and we're now over 2,300 stores. So I think when we first started, I think we said around 2,000. So I think we're now north of 2,300 stores. So definitely getting more stores, definitely seeing greater velocities. Good or bad, the grilled chicken is just exceptional, and that is always the winner. And we're seeing velocities literally go up every week. It's crazy that we could see this.

There's some items that are not doing as well. My wife taught me I'm supposed to love all my children equally. We have a sausage and peppers in the store. We have a meatloaf in the store. Chris and I discussed. We always know that at some point we want to take some items out, proactively actually, and bring in items with higher velocities. Those items tend to see a little lower velocity than our beef meatballs and cheese stuffed chicken meatballs. So we definitely see all, actually we have nine items in there. Chris and I -- Chris speaks with his team all the time looking at it, and I promise you we are very proactive. It's not going to be Walmart that says, let's take this item out. It's going to be our team that says, hey, Walmart, I'm seeing -- I have this better item for you. Why don't I just pop this one in, take this other one out? So we're looking at that every week.

Operator

Your next question comes from Ben Klieve with StoneX.

Benjamin Klieve

Congratulations on a good quarter here. You talked about the flexibility you have with your balance sheet now for M&A ambitions, and I'm wondering if you can elaborate on this a little bit. I'm wondering, first of all, the degree to which the kind of smaller opportunities that you had been historically pursuing are just less enticing to you now that you have more flexibility. And then also can you kind of distinguish between the characteristics of some of the smaller operations that you were looking at versus the more transformative ones both in terms of the quality of the operations and the multiples that you have to pay.

Adam Michaels

That's a lot, Ben. Thank you. So, yes, I think we understand, we've done this a number of times as a team here between the Chef Inspirational, Creative Salads, Crown, and obviously I've done one or two or more before coming here. Integration takes work, takes effort. And quite honestly, just it probably just doesn't make sense to buy a $25 million revenue company anymore. The great news is there's also lots of benefits to that, right? Because some of the bigger companies have more capabilities. Remember, for us, it has nothing to do with revenue. It's all about capabilities. It's all about getting new customers. It's all about bringing in great culture with our people. And yeah, what is wonderful about this last raise and I've shared it when we did the raise, there were a couple companies that we were looking at that they said, yeah, sure, Adam. This is the grown-up table here next time.

And by having the raise and everyone sees it, we get a call back. Actually, I was sort of just joking. I would love to talk to you. So I think it has brought us to a different place. The conversations that we have had, I will tell you, as great as -- Chris is doing in sales and Skip's doing in operations, and Anthony and Lauren and the whole team, I'm keeping them busy. I took Chris and Skip on a bit of a vacation over the past couple weeks for a couple tours of places. We're getting busy, which is wonderful. It's what we should be doing. But, yes, it has to be meaningful. It takes a lot of time for us to do the diligence. It takes a lot of time. So it just doesn't make sense to buy, and I'm making up what that number is, but that $25 million company is just too small. So we're looking a little bigger, but obviously anyone that knows me knows that -- just like how we manage our money, just how we look at multiples. It doesn't matter how much money we have. We are as diligent as we were when we actually had no money -- sorry we had negative $15 million of debt when I -- when Anthony and I first started.

Benjamin Klieve

Very good. That's helpful to hear that perspective. Very good. Well, congratulations again on a great quarter and having a seat at the grown-up table, as you say.

Adam Michaels

And just before the next one, since Chris is an overachiever, George, we're starting with 300 clubs with the Sam's breaded chicken.

Operator

Your next question comes from Ryan Meyers with Lake Street Capital.

Ryan Meyers

Congrats on another strong quarter. I wonder if you could just talk about what needs to happen in the back half of the year to trend toward that mid to high 20s gross margin target, maybe the kind of high 20s. What you would need to see to get closer to that as we exit the year?

Adam Michaels

Yes, I mean, look, I think, and I like that it's consistent. There's really three things that, and again, I hope we can all agree that 24%, never enough for me, but 24% is mid to high 20s. There's three things that placed us at that 24% this quarter. The first one we mentioned earlier, right? We are investing in trade. We were very intentional to take $0.5 million of marketing and put it into trade. That's a point of margin.

The biggest one, which we've been talking about for some time now, is we need to keep selling the bottoms, right? I just told you three of the four items at Kroger are chicken bottoms. The new Sam's items, chicken bottoms, I could go on forever. It's a great problem to have. Chris and team are just too good at selling the tops. The portion chicken is just exceptional and we just need to, as a percentage, just sell more and more of the bottoms. That's going to allow us to trim more.

Operationally, we could trim. Skip and team could trim all day long, but we have to sell a higher percentage of the bottoms because we said a day of trimming, if there's five days in a week, a day of trimming is about a point of margin. We're probably still in that one to two days of trimming, which to me says that there's two to three more points we can get. We could just increase the percentage, not the absolute money, the absolute. We've added, I think we added more than $10 million of chicken bottom sales versus last year, which is an incredible job. It's the percentage that we need to have, and that two to three points.

And then I think the third, I'm so proud of the Bay Shore team. We are moving really nicely, probably ahead of where Anthony and I had planned. I love what the Bay Shore team's doing. They're still probably, I'll make up a number roughly of a point of margin there to get that up to the corporate average. So right then and there, that's what, four to five points, right? One, two to three, and one. So that's four to five points. That says that we're 28%, 29%. We need nothing special. We need nothing. We don't have to cure any major diseases. These are blocking and tackling things that if we can do right, we're absolutely there to do it. So hopefully that adds some color as to how the leadership team thinks about and makes trade-offs, right? So the trade, we make trade-offs.

One thing that's great that Chris is doing now and makes you feel good that we could continue to trim, we could continue to sell more of the bottoms is we actually accidentally forget to bring the portion chicken when Chris pitches it, right? When we have tastings and cuttings, we accidentally forget the portions. Everyone knows about it. Like, literally Chris sells stuff sight unseen. That's how amazing that is. But we are trying to do things. Another thing that Chris and team do is if we, if you want the portion chicken, you have to at least buy chicken strips or you have to buy chicken meatballs, or you have to buy MFOs with chicken or you have to buy the shredded chicken. Again, we have a great, Lauren helps lead our NPD process. We have tons of chicken bottom items. That's another great thing that Chris and team do to increase the likelihood that we could continue to increase the chicken bottom percentage.

Ryan Meyers

Got it. That's helpful. And then just lastly, as we think about the momentum across the business and the new placements you're expecting in Q3, how should we think about the growth rate in the third quarter and the fourth quarter? Obviously, we're now lapping the Crown acquisition for the first time in a couple of quarters. So any commentary you can give us on how you're thinking about revenue growth. I mean, I know you've talked in the past that you're comfortable with double digits. Does that still apply? Just any commentary would be helpful.

Adam Michaels

Yes, I'm not going to move off that. And again, I think we're, I don't know, I think, 17 on over-delivering our revenue targets. But look, double-digit, I hope you guys see from whether the Kroger stuff, whether the Sam's stuff, actually, just all the stuff that we already have. Walmart is still, we're not even in our first full year of all the Walmart items. I hope everyone feels, and we feel internally -- this makes us very confident that we could achieve that double digit growth. And what's important, more important than any revenue growth, is profitable growth. And you guys know that about me as well. So we're still doing cleaning of our portfolio. There's still more stuff within possibly the Bay Shore portfolio, but every day, every quarter, this is something that Chris and Skip look at to drive more efficiency in our processes. And if that means losing a little bit of less profitable revenue so we can have a more profitable business. We hold hands together and we make the right decisions. So it's profitable growth, increasingly profitable growth, that is the important question and the important thing that we focus on.

Ryan Meyers

That's great to hear and congrats on the continued progress.

Operator

Your next question comes from Eric Des Lauriers with Craig-Hallum Capital Group.

Eric Des Lauriers

Congrats on another strong quarter here and all the continued momentum on these product wins. My first question here is kind of going back to the gross margin outlook. Obviously, chicken bottoms are a big driver of that. You mentioned 60% of the Q2 product placements use chicken bottoms. How should we think about the mix of these two dozen new product placements for Q3? How do you think about the mix of chicken bottoms for those?

Adam Michaels

So again, what's wonderful is much of it is the chicken bottoms. It's something we focus on. I shared the Q2 numbers. We have to see how Q3 goes. It's also the volume. So one thing that I will, that -- not that we get challenged, but we have to see how it does. It's up to the end consumer, right? So Chris and team make sure that we are selling more bottom items in than top items, right, that we know. What we don't know is the velocity of those items and which one's going to sell more than the others.

What has been happening, and again, such a horrible problem that I believe every publicly traded company wants, every company wants, the portion chicken, even though that's one versus the four bottom items, the velocities of that portion chicken item just moves at a lot faster pace. And that's where we run into the "challenge" of the chicken bottom percentages not growing as fast as the portion.

So we are doing our job. We are, like I just mentioned, we don't sell in a top if the bottom doesn't come with it. But we have to see how the items land from a velocity perspective. I'm optimistic, I feel good. Obviously the leadership team, we know all the items that we're getting in. I'm optimistic that we could continue to increase the percentage of the bottoms, which will lead to, again, if I could just get one more percent right, one more day of trimming that gives me one more gross margin percent, which obviously would be really helpful.

Another point I know, because Bay Shore keeps getting better, I think we're going to be in exactly the position we expected to be a year ago. I think we're going to get one more at Bay Shore and okay. So now that 24 is 25 and 26 and we feel good that just like we sequentially improved versus last quarter. I feel good that we will sequentially improve in Q3 versus Q2.

Eric Des Lauriers

On Costco, congrats here. That sounds like quite the win. So you mentioned you expect it to be larger from revenue perspective year-over-year. You also mentioned that it's already started, at least in some of the -- some of the regions. If I recall, I think last year's was just around the holiday season, so a bit shorter here. Can you just comment on maybe the scope of this MVM compared to when you had last year whether that's a number of weeks or number of items? Just any additional color there would be great.

Adam Michaels

Yeah, it's going to be roughly the same time. Actually I think it's a little longer. I don't remember starting this early last time. And the other thing that's really important, and I do, I want everyone to be proud of the MVM. I want everyone to be excited. I think the MVM's going to be actually at the same time as last year, the last two weeks of December or the beginning of January. I know everyone likes to see it in the print, mailer, you're going to see that.

What I see, but what's important is, the business is so integrated now. Like I just told you, we're doing rotations before the MVM even starts. So I feel really good. Again, we mentioned from an MVM perspective, the order, the intention from Costco is that this is actually going to be bigger. We're already getting orders in. It is going to be bigger than last year. I think it's going to be a little longer, right? I don't remember it starting this early last year, but, what's really important is this is continuing to strengthen the relationship. It stays in longer, right? That's what -- if you remember what happened last time, the "MVM" was supposed to end in January and some regions "forgot" and they just kept buying into February. That's what we're looking to do. Just like we spoke about last time. So we are an everyday item now in the Northeast. It doesn't come out.

The MVM will, because of the promotion, there definitely will be more volume, but we're there every day. Same thing with the San Diego region. Try to make my parents happy. It's already in the Southeast now. So that's what's really important for it.

Eric Des Lauriers

Certainly, encouraging on all fronts on Costco. Congrats again.

Operator

Your next question comes from Matt Curtis with D.A. Davidson.

Matthew Curtis

I just had a question on Bay Shore for starters. Could you bring us up to speed on where Bay Shore's gross margin stands today relative to the other facilities. And I guess to ask it another way, how much of the original margin gap has been closed at this point?

Adam Michaels

Yes, so we don't have business P&Ls. So much of the stuff, and I think I mentioned earlier, the legacy Walmart stuff, we're actually doing in Bay Shore now and vice versa. Actually the Shaw's shredded chicken, we're doing in Bay Shore. So we don't have, kind of, line item. We run the business as one business. What we're seeing and why we're feeling confident is the absorption. So what was really big when we started was the Bay Shore facility was a big facility. It was twice as large, or it still is, twice as large as our other facilities, and didn't have the volume.

What's been wonderful, thanks to our sales team, is we have filled up the Bay Shore facility with more volume, which is lowering as you understand the overheads percentage. The other thing that's happening is the Bay Shore legacy Crown items, thanks to Alberto, the procurement team, we've gotten significant savings on beef and on chicken and on other ingredients. So the so what is, I believe, we're -- when I speak to you guys next quarter, that -- there, we won't see any of that. Again, more the word, like the words I said, the blurring, it's going to look one and the same. So, directionally that's how we're able to figure out what where the margins are in the legacy facility.

Matthew Curtis

So I guess maybe to ask a related question, at this point, how much unused capacity do you still have at Bay Shore after supporting some of the recent launches that you talked about.

Adam Michaels

So we certainly still have lots of capacity there. We're not working seven days a week in all parts of the facility. We're not working actually 24 hours in all parts of the facility. So there's definitely a lot more room. It's a function of the items that we sell in and what we do with them. So I still feel very good. Look, we're growing, which is great, but I'll stick to what I said last time and nothing's really changed.

We could pretty much double our business from last year with the current facilities we're in. The other one that I don't want to forget, and everyone's always welcome to come in. I really love, I got some good pictures for you. We are opening up. I mentioned, thanks to Shane and team. We doubled our East Rutherford facility this quarter. So a lot more cold storage, freezer storage, something I'm so proud of, a lot more room for our associates. So we have training rooms now. I'm so excited, Yun and Abby and team. We're doing trainings. A much bigger cafeteria, walls of microwaves, so we definitely have a lot more room.

What we have to keep doing is using it more efficiently. That is the key. So we just brought in two new Proseal machines. So we have automated, again, for many folks that have started, if you guys have taken tours with me, in our Farmingdale facility, we used to use pretty much hand sealers to seal, I'll give you an example, something like the Walmart chicken that we do. We literally used almost hand sealers, this machine, it was -- sorry, let's call it a tabletop machine.

We brought this Proseal machine in. It's amazing. Literally Milton and Lenny, we literally get done what we used to be able to get done for a day. By noon, we have it done. So it's not about the physical space. We have to continue to bring more automation in and use the space we have more efficiently, but I'm not -- we have room to grow. I'm not worried about that quite yet.

Operator

Your next question comes from Nick Sherwood with Maxim Group.

Nicholas Sherwood

So seafood seems like it's a pretty important part of the prepared meals categories. How much of a priority are you putting on adding seafood capabilities when you're evaluating M&A options? And what do you see as some of the challenges of, kind of, integrating a product that would have a very different procurement and production infrastructure.

Adam Michaels

And for a guy who likes seafood, I'd like that very much. So there are a couple of things we have to do. First, what's wonderful, actually, Bay Shore used to make seafood products. So they have some of the capabilities and obviously the know-how. It's not that easy in the sense that I'm sure, and I'm speaking at a turn here, but we need different HACCP plans, USDA, approvals to get it back. But first of all we have plenty of room to run. Remember, $40 billion category, as great as we're doing with beef and chicken and vegetables, Chris would be the first one to tell you that we still have tons of room to grow. But it's also, maybe that's an M&A opportunity. Maybe there's special equipment, there's special handling, there's a company that I'm speaking to now that I know, I've seen. They have seafood items, so maybe it's an M&A approach. But it's absolutely something that should make all of our investors feel good that, wow, these guys are doing this well, and they're missing an entire segment, right, in seafood. And when we are $1 billion, I have no doubts that there will be a seafood element to it.

Nicholas Sherwood

I appreciate the detail. And then I noticed that you had expanded placements at Sheetz. Can you kind of talk about how the opportunity and the convenience channel has progressed?

Adam Michaels

Yes, no, it's -- so actually I'll tell you, so yes, we got some new stuff in the Sheetz. I think have some new paninis coming in and some new wraps, but the C-Stores is still one and Chris and I speak about it. That's one that I would have said a couple years ago it would have been easier. We have the right partners, right? We have a distributor partners. We now have the right portfolio of items. We have these paninis are doing exceptionally well. We actually made smaller paninis now, so it's a better price point in addition to the ones that we have. I told you about these wraps. I will still believe the meatballs in a cup solution somehow will come around for us. So we have the right third-party partners with distributors. We have the right portfolio. And again, the team will keep trying. But, yeah, we're in some places, but there's still a lot of opportunity.

Operator

And at this point, we have no further questions, so I'll hand the floor back to Adam Michaels for closing remarks.

Adam Michaels

Thank you, operator, and thank you again to each of you for joining us today. To close, the second quarter of fiscal '27 delivered on the promise we made in June. Revenue up 55%, net income up 101%, adjusted EBITDA up 69%, operating expenses down 160 basis points. Our first ever win at Kroger, another even bigger Costco MVM, and much, much more. All with a balance sheet carrying $138.6 million in cash. This is the output of the four C's operating system at work. The macro tailwinds in deli-prepared continue. Our three-facility network is humming. Our balance sheet is built for accretive M&A, and our team is executing with real conviction. The course we have charted towards national deli leadership is set, and our commitment to that destination is unwavering. As always, we appreciate our shareholders' continued support, and we look forward to updating you on our progress in the quarters ahead. Thank you.

Operator

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you all for your participation.