MZTI

Image source: The Motley Fool. Tuesday, Aug. 25, 2026 at 10:00 a.m. ET President and CEO - David A. Ciesinski CFO - Thomas K. Pigott Vice President of Corporate Finance and Investor Relations - Dale N. Ganobsik Operator: Good morning. My name is Kevin, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Marzetti Company's fiscal year 26 fourth quarter conference call. Conducting today's call will be David Ciesinski, president and CEO and Tom Pigott, CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press 11 on your telephone keypad. If you would like to withdraw your question, please press 11 again. Thank you. And now to begin the conference call here is Dale Ganobsik, vice president of corporate finance and investor relations for the Mercedes company. Dale N. Ganobsik: Good morning, everyone, and thank you for joining us today. For The Marzetti Company's Fiscal Year 26 fourth quarter conference call. Our discussion this morning may include forward looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 2 thousand. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the audio replay of this call will be archived and available at our website investors.marzetticompany.com, later today. For today's call, David Ciesinski, will begin with a business update and highlights for the quarter. Tom Pigott, our CFO will then provide an overview of the financial results. David will then share some comments regarding our current strategy and outlook. At the conclusion of our prepared remarks, we will be happy to respond to any of your questions. Once again, we appreciate your participation this morning. I will now turn the call over to the Marzetti Company's President and CEO, David Ciesinski. David? David A. Ciesinski: Thanks, Dale, and good morning, everyone. it is a pleasure to be here with you today as we review our financial results and update on the latest developments across our business. Before I provide my comments on our fiscal fourth quarter, I am pleased to share that we completed fiscal year 26 which ended June 30, with record highs in net sales, gross profit, and operating income. FY 26 marks the fourth consecutive year of record highs for net sales and gross profit and the third consecutive year of record operating income. I would like to extend my sincere thanks to all of our teammates throughout our business for their countless contributions to this achievement. Moving on to our results for our fiscal fourth quarter, we were very pleased to deliver record fourth quarter gross profit and operating income. On the sales front, reported consolidated net sales decreased 2.2% to $465 million. Excluding noncore sales at attributed to the temporary supply agreement or TSA, adjusted net sales improved 40 basis points. In our retail segment, net sales increased 0.9%. Including $15.4 million in incremental sales from Bachan's, our newly acquired Japanese barbecue sauce brand, known for its delicious, authentic, and clean label products. Retail sales were unfavorably impacted by reduced sales into the club channel and the comparison to last year's pipeline build of Texas Roadhouse dinner rolls into the traditional grocery channel. Circana scanner data for the quarter ending June 30 showed continued strong performance of the Bachan's brand with sales up 8.7% and total distribution points increasing 16.6% as the brand continues to grow share in the barbecue sauce category. Texas Roadhouse rolls also continued to grow at a torrid pace. During the quarter, sales were up 28.1%. For the 52-week period, the product delivered $58 million in sales, up 76% versus the prior year. Importantly, even with expanded distribution, sales velocity measured in dollar sales per TDP were nearly 2x the category average. When combined with our sister Schubert's brand, we have a combined share of 61.7%. Our category leading New York bakery brand also continued to perform well with sales up 2.8%. Resulting in a market share gain of 220-basis-points for a category leading share of 45.5%. In the crouton category, our branded croutons added 100-basis-points of market share, resulting in category leading share of 28.4%. In the food service segment, excluding the noncore TSA sales, both adjusted net sales and sales volumes measured in pounds shipped were nearly unchanged as gains for our leading national chain restaurant accounts were offset by reduced sales to other chains and lower sales of our branded food service products. I will now turn the call over to Tom Pigott, our CFO, for his commentary on our fourth quarter results. Tom? Thomas K. Pigott: Thanks, David. Overall, the fourth quarter results demonstrated strong execution Gross margin expanded for the 12th consecutive quarter. Reported and adjusted operating income grew by 48.2% and 17.5%, respectively. In addition, record full year operating cash flow has strengthened our capacity to both invest and return capital. Fourth quarter reported net sales decreased by 2.2%, The key drivers were a decline in core volume and product mix of 33 basis points, excluding Bachan's, a pricing contribution of 40 basis points. The addition of 2 months of Bachon's sales, which added 320 basis points of growth, These items were offset by the discontinuation of the temporary supply agreement sales we have previously discussed. This discontinuation unfavorably impacted revenue by 260 basis points. Excluding the temporary supply agreement sales that occurred in the prior year, adjusted net sales grew by 40 basis points. Consolidated gross profit increased by $7.9 million or 7.4% versus the prior year quarter to $114 million. Reported and adjusted gross margins expanded by 22 basis points and 160-basis-points, respectively. The strong gross profit growth was driven by our productivity program where we benefited from cost savings across several areas. Including network changes, procurement, manufacturing, value engineering, and distribution. We also benefited from the addition of Bachan's net sales which were accretive to our gross margins. As I mentioned at the top, this quarter marked the 12th straight quarter of gross margin improvement versus the prior year. This accomplishment reflects the many cost savings initiatives network restructuring programs, revenue growth management projects, and ongoing pricing net of commodity management efforts that the company has successfully implemented. Selling, general, and administrative expenses increased by $12.3 million. This increase was primarily driven by acquisition related costs. These included investment banking fees, integration costs, amortization of intangible assets, and other transaction related expenses. When you exclude the acquisition related costs from both the current year and prior year periods, adjusted SG&A expenses were up by just $100 thousand. This increase reflects the addition of Bachan's core SG&A expenses partially offset by reductions elsewhere. During the quarter, the company completed the sale of the previously closed manufacturing facility in Milpitas, California for more than $20 million As a result, the company recorded an $18.5 million gain on the sale that was recorded within restructuring, impairment, and other. Overall, restructuring, impairment, and other was favorable by $23.1 million versus the prior year. Primarily due to the gain on sale and lower year over year restructuring costs. Consolidated reported operating income increased by $18.8 million or 48.2%. Excluding the acquisition related costs, and restructuring, impairment, and other from both periods, adjusted operating income increased by $7.8 million or 17.5%. This growth was driven by the strong gross margin performance I mentioned. Our tax rate for the quarter was 14.6% compared to 17.9% in the prior year quarter. The lower tax rate was driven by a favorable tax impact from the Milpitas facility sale. We estimate our tax rate for fiscal 27 to be 23%. Fourth quarter reported diluted earnings per share increased $0.58 or 49.2% to $1.76. The growth was driven by the favorable restructuring, impairment, and other impacts I mentioned, as well as the core business performance. These favorable drivers were partially offset by acquisition related costs recorded in SG&A. Excluding all restructuring, impairment, and other items, and the acquisition related costs, adjusted diluted earnings per share increased $0.12 to $1.46. Turning to the balance sheet and cash flow. The company delivered record operating cash flow of $283.8 million, an increase of $22.3 million or 8.5% over the prior year. Year to date payments for property additions totaled $77.7 million. For fiscal year 27, we are forecasting total capital expenditures of $90 million We continue to invest in both cost savings projects and other manufacturing improvements as well as the Atlanta facility we acquired last year to support future growth. Company finished the year with slightly less than $200 million of long term debt on the balance sheet resulting from the Bachan's acquisition The effective interest rate on this term loan was approximately 4.8% at June 30. The company's relatively low debt levels and strong cash flow generating capabilities allow for continued investment in the business and the return of funds to shareholders. Our quarterly cash dividend of $0.01 per share paid on June 30 represented a 5% increase from prior year's amount. Our enduring streak of annual dividend increases stands at 63 years. Our dividend payments for the year totaled $108.8 million. In addition, the company has the financial flexibility to buy back shares. In fiscal 26, the company completed $36.3 million in buybacks a $28.3 million increase over the prior year. Looking at the full fiscal year, we are pleased to report growth across several metrics despite a difficult operating environment. Reported an adjusted net sales increased 1.1%, 0.8%, respectively. Reported and adjusted gross margins increased by 80 and 100-basis-points, respectively. Reported and adjusted operating income grew 8.3%, 4.2%, respectively. So to wrap up my commentary, our results demonstrate strong execution across several areas. We continue to invest to support the growth of our business while returning funds to shareholders. I will now turn it back over to David for his closing remarks. Thank you. David A. Ciesinski: Thanks, Tom. Going forward, the Marzetti company will continue to leverage the combined strength of our team our operating strategy and our balance sheet in support of the 3 simple pillars of our growth plan: 1, accelerate core business growth. 2, simplify our supply chain to reduce our cost and grow our margins. And, 3, expand our core with focused M&A and strategic licensing. As we look ahead to fiscal 27, in addition to the incremental sales attributed to Bachan's, we expect retail sales will benefit from new product introductions, including New York Bakery cheesy focaccia bread, single serve packs of popular Chick fil A avocado lime ranch dressing, and the much anticipated return of the sister Schubert sausage rolls. Pricing is also in place to take effect during our fiscal first quarter which will help offset inflationary cost. Specific to the contribution of Bachan's, driven by our continued investments in marketing and advertising to build the brand's awareness and support trial. In addition to building brand awareness, the team is also launching 2 exciting innovations. First is Bachan's wing sauce, which will be produced at our own Horse Cave, Kentucky facility. Crafted by the Bachan's team in conjunction with our culinary team, the wing sauce features craveable, tamari, based flavors, that deliver rich, savory depth. The second is Bachan's Japanese mayo that offers a smooth silky umami flavor. We expect the addition of the Bachan's business to our portfolio to be a key growth driver for Marzetti in fiscal 27. And we are also pleased to share that the integration of this business remains on track. In the foodservice segment, we anticipate continued growth from select customers in our mix of national chain restaurant accounts. Contractual inflationary pricing will also support the segment sales in the year ahead. External factors, including U. S. Economic performance consumer behavior may impact the demand for our products in fiscal year 27. Furthermore, we continue to monitor the impact of the Cyclospora outbreak on our business At this point, we estimate that the outbreak will result in a net sales headwind of approximately 250 basis points in our fiscal first quarter. With the impact similar for both our retail and our foodservice segments. With respect to input cost in the aggregate, we see a moderate level of inflation in fiscal year 27. That we plan to offset through pricing, and our cost savings program as we remain focused on continued margin improvement. In closing, I would like to thank the entire Marzetti company for all of their hard work this past year and their ongoing commitment to grow our business. Furthermore, specific to Bachan's as the new addition to our team, I look forward to working with all of you in the coming year. And I share your excitement for the next phase of growth and our continued success of Bachan's This concludes our prepared remarks for today, and we would be happy to answer any questions you may have. Operator? Operator: Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press 11 on your telephone. If your question has been answered, you wish to remove yourself from the queue, Our first question comes from Jim Salera with Stephens. Jim Salera: Good morning, guys. Thanks for taking our question. I know you are probably sick of me asking about soybean oil, but you keep delivering gross margin outperformance. And that is against the backdrop of soybean oil up nearly 40% year to date. I am obviously a testament to the skill of your procurement team, but could you give us some color on the moving pieces in gross margin as we think about 2027 given the commodity inflation, obviously, incremental benefit from the Bachan's integration, some of the pricing you mentioned, Can you just kind of walk us through the gross margin build and how we are thinking about that Well, Jim, I never grow tired of talking about soybean oil. David A. Ciesinski: I mean, it is 1 of those elements of our business that we watch closely. Well, a couple of points. I appreciate the shout out for our procurement team. They do a fantastic job And we were able to protect ourselves in the most recent period with hedges we put in place a while ago. And then as was outlined in the script, we also were able to get through pricing which should protect us as soybean oil starts to elevate. So net, we feel like we were able to buy when it was advantageous and able to protect ourself by way of most recent pricing. But as pertains to the buildup of our margin story, what I will do is I will turn it over to Tom and let him walk you through that. Thomas K. Pigott: Sure. So as we look at fiscal 27, we are estimating about a 100-basis-points of margin growth on the consolidated results. About half of that driven by the accretion we get from Bachan's. Adding to the portfolio. A nice high margin business. And then the other half, is our continued commodity-risk-management program and our cost savings initiatives combined. As it relates to pricing, we have you know, we have rolled out our pricing. We feel confident we will get it through. But it is, you know, essentially helping you know, it is an impact on our margins and that the commodity inflation is forecasted to be around 5%. And when you consider the higher revenue, and the commodity inflation, you do get a dilutive impact of about 50 basis points on the consolidated results. However, that as I mentioned before, our commodity our cost savings program is helping offset that. And so overall, our forecast is to grow gross margins by about a 100-basis-points in fiscal 27. Jim Salera: Okay. Great. that is very helpful. And then turning to Bachan's, if I do my napkin math correct here, if I kind of take the 8% growth rate and just roll that forward, I come up with something in the ballpark of a $100 million for the full year 2027. Is that the right way to be thinking about that from a sales contribution standpoint? David A. Ciesinski: I would expect it to be stronger than that. On Bachan's. There are 3 elements of the growth. The first is the growth of the core. that is gonna come by way of expanding awareness trial and household penetration. The second is the launch of their Mayo which is already in the process of being sold in, and they are getting good acceptance. 3 different SKUs and a great tasting product, and it is a category that is about $3.4 billion. Barbecue sauce category is just for a frame of reference, is a little bit bigger than $1 billion. So Mayo presents a really big category expansion opportunity They have 3 great items, and the fastest growing part of the category is in either the natural better for you Mayos, or the ethnic Mayos. So I think they are well positioned to capitalize on that trend. The third piece, also in the space of innovation, is to launch a wing sauce And we are pleased to share that the integration and collaboration with them is gone exceedingly well. They reached out and said, hey. We would like to use the Marzetti culinary team product development team to get into wing sauces, And so we treated them, believe it or not, like a food service operator. James up with a variety of formulas just to build up. The founder, and others tasted them. We iterated on them, and we are in the process of selling them in right now as well. So the reason why I share that is as was mentioned in some of the comments in the script, we expect the sales actually to build as we go deeper into the fiscal year predicated on not just the advertising on the core, but on some of these new items. Jim Salera: Great. Appreciate the color, guys. I will pass it on. Operator: 1 moment for our next question. Our next question comes from Todd Brooks with Benchmark Stonix. Your line is open. Todd Brooks: Hey, thank you, and good morning to you all. Good morning, Todd. Good morning, Todd. Morning, guys. [Inaudible] add on. You just gave us some good color on Bachan's for 27, David. But if we are thinking about the licensed branded product portfolio growth, Obviously, onetime lapse here that made for a bit of a choppy quarter. And you talked in prior quarters about this not being necessarily the same type of growth engine. But still a growth engine for Marzetti going forward, just at a lower level. I guess, can we talk through thoughts on what license branded products should grow And then a follow on to that you kind of teased some new product launches, not just on the branded products like Bachan's, but within the license portfolio as well. Can you give us an idea of maybe some thoughts there and maybe a contribution or magnitude of revenue growth that those can support in your mind? Thanks. David A. Ciesinski: Yeah. So you sort of step back Now I would say we have several things going on in licensed sauces. The first of which is we have another quarter of the noise associated with the pipeline build that we have been referring to. Notwithstanding that, here's how I would think about it. We are exceedingly happy with the performance of our Texas Roadhouse item. In the course of the last year, it grew to almost 60 million in retail sales which up 70%. Velocities are 2x the category average or thereabouts. We are launching a second item into Walmart. And, honestly, there is more room just through better distribution on the core items for it to grow. So go back a year and a half ago when we began to talk about that item, I estimated that you know, it could be a $100 million in retail sales item, and I still believe that it most certainly has the potential to do that. Then you swing through licensed sauces. We continue to be bullish about Buffalo Wild Wings and Chick fil A. Sauces. The area that we are watching a little bit more closely is the salad dressing category overall has been a bit of a drag for the last few quarters. So we have a whole range of activity that is in flight on our own Olive Garden. But that is 1 of the washouts that we have. As it pertains to where we go from licensing from here, we have a couple of different initiatives that are in flight. Unfortunately, we are not far enough along on those to talk to you about them. But some of those actually include us expanding beyond restaurants. So we have restaurant activity that is in flight with some of the banners that you are familiar with. But also some nonrestaurant activity that is in flight. We are just not ready to share with you yet. Todd Brooks: Okay. Fair enough. that is great. And then talked about Texas Roadhouse. And I think when you initially talked about the potential for that category, and you just confirmed it kind of the I think it was the fourth product line that would approach or cross over $100 million. Yep. In kind of sales at retail. Does the second SKU launch get you there? Like, how big does the platform have to be to support that type of success? And I will jump back in queue. David A. Ciesinski: No. it is it is a great question. So here's an interesting thing. that is a $60 million retail sales business. Our household penetration right now is 2.5%. That is a really, really small household penetration. So I think with good execution and good trial, that core has the potential to get there. You add that new item I think it should give us even more confidence that we ought to be able to get there. But what as I look at the at this product, first of all, it is great tasting. And I think there are 2 different themes that our consumers are looking for in this environment. And we live in this world of an incredible amount of noise. Inflation, debt, the War In Iran, gas prices, etcetera, etcetera. But it distilled it down to houses around the country People are looking for a couple of different things. What are affordable solutions to extend their meal dollars? And within that space, you think you see things like our own New York, Texas post playing really, really strong. The second category I would characterize as affordable moments of joy. Just simple things that mom can bring to the house or dad can bring to the house that people can eat bring a little bit of affordable pleasure to the household. And I think Roadhouse, in this moment in time, fits there. The restaurants fit there. If you wanna go and you wanna go visit a restaurant, And I think the product in the home delivers on that as well. I think that same thing is true, by the way, with Buffalo Wild Wings. And with Chick fil A. So I think as we think about where we go with back to your original question with Roadhouse, I think if we can just continue to drive awareness trial and household penetration on that item from 2.5% to closer to 5% that math gets you there. Parenthetically, our own sister, Schubert, has household penetration right now. I think about 8% or maybe closer to 10%. So I think that gives you an idea that there is room to run on that. Todd Brooks: So if you roll that up, David, how would you frame it up for us? Licensed branded product growth in 2027 for the portfolio as a whole? How should we be thinking about that? David A. Ciesinski: I would say if we pull out the noise associated with the Chick fil A pipeline bill, our licensed sauces, I would expect, to be closer to flat with room to grow in our licensed dough items. Todd Brooks: Perfect. Thanks. Operator: Our next question comes from Alton Stump with Loop Capital. Your line is open. Alton Stump: Great. Thanks for taking my questions this morning. I appreciate it. I just want to touch on and I thought was very helpful, you know, with the comments David talking about the expected impact from recent Cyclospora outbreak. Obviously, a lot of your retail products, but also food service do indirectly participate in salad categories. Yeah, you know, it is awfully early on. But, you know, if you had to speculate, you know, for how lasting the impact will be, you know, is it possible that it could it could bleed past the current first quarter? Just kind of what your thoughts are you know, with that recent outbreak in particular. David A. Ciesinski: Alton, first of all, it is nice to speak with you, and I am really glad you asked this question because this is an important 1 for our business. Right? Food in general. Maybe I will start with a couple of factoids. If you go back to when the outbreak started in the first couple of weeks, the last couple of weeks of July. What we found is that the host foods, steak, lettuce, and greens, and veggies, all demonstrated a dip. For that matter, even fruit led by berries demonstrated a dip. In the case of lettuce, the low watermark in those last couple of weeks of July would have been down 30% Veggies during that same period would have been down 16%. Fruit would have been down 13%. You swing around then and you look at what our dressings or, you know, basically, the food that we offer to complement those items they were down correspondingly, not to the same amount, Olive Garden in that period would have been down 11%. Our Marsetti classics would have been down because it is produce right next to the lettuce a little bit closer to 15. Even Chick fil A was down. Having said that, now we roll forward to the most recent period, which is the week of the August 21, what we have seen in the case of produce so lettuce, veggies, and fruit, is all of those categories have begun to improve somewhere in the 5 to 10% range. Off of that low watermark. As we look at our own items, what we are seeing is they too are improving. Olive Garden's low watermark might have been 11%. Now it is off more like 6%. Our classics were up 16. Now they are up more like 8 So the whole thing seemed to hit the low watermark in those last couple of weeks of July. It seems to be coming back. Now how do we think about this going forward? What we have done is we went back and we looked at more outbreaks. We looked at the outbreaks in 2022. Which will remain. But we actually chose to go back and look at the outbreak in 2018. And in that moment in time, there were actually 2 E. Coli outbreaks and there was 1 cyclospora outbreak. And we think that 1 may be the more instructive of the 2. And what we have modeled into our volume assumptions is that it follows the path of that 2018 outbreak not because of the volume of the cyclospora, but just because of the aggregate media that it received in that moment in time. So if you follow that through, this thing kind of has a half-life. The first month, improves, let's say, by 10%, by and then it improves by half of that, and it improves by half of that. So by the time you get more like 4 months past the event, it is trending back to where things were before. So we looked at 2022. It was somewhat similar, but the magnitude of the outbreaks were not as big in terms of media coverage as this 1. So our best estimate is that it is gonna follow that 2018 path. Alton Stump: Yes. Sure. And that is some great color. Thank you so much for that, David. And you know, I have 1 more, and then I will, you know, hop back in the queue. You know, I just wanna talk about the margin outlook. Quite impressive. I think you said, Tom, we expect a 100-basis-points of, you know, margin, you know, even with all the you know, kind of noise going on. You know, how much of that is sort of internal cost saving driven versus is there any cost synergies baked in with the Bachan's field? Just kind of if you could sort, in general, maybe give us a bit more color on sort of how you are confident that you can get to that type of margin expansion this year? David A. Ciesinski: You know, why do not I begin by topside, and then I will turn it over to Tom again. But maybe start with a couple of points. You know, the first thing that I would point to Alton, you have followed us well enough to know over the last handful of years, we have invested in a network reset. The perk the investment at Horse Cave, the purchase of the facility in Georgia, the closing down and the sale of the facility in California, all of those various network moves have facilitated this multi period sequential improvement that we have seen in our gross margin, and we expect it to continue to be a source of that benefit as we go forward. But having said that, for more detail, I will let you. Yeah. Tom will cover it for you. Thomas K. Pigott: Yeah. You know, when you break it down, and you look at it ex-Bachan's, we are about 50 basis points About half that 100-basis-points I mentioned is on the base And, you know, we have been delivering at that level pretty consistently. We feel confident that with the items David had in place, we will continue to deliver on it. And then the other half, represents the accretion from Bashan's, including the synergies that are baked in. And I would say immediately, we are we are realizing some productivity savings on Bachan's synergy savings in the procurement area. And we have plans to do more elsewhere. But overall, that integration's on track. And the synergies are pretty much in line with our expectations. Alton Stump: Great. Thank you so much. I appreciate it, Tom and David. David A. Ciesinski: Our pleasure. Operator: Our next question comes from Scott Marks with Jefferies. Your line is open. Scott Marks: Hey. Good morning, David, Tom. Thanks very much for taking the questions of course. I wanted to first ask, I kind of have a 2-parter just on the retail business. The core retail business. You know, if we strip out Bachan's, it looks like organic volumes were down about 7% driven by some of the lapping dynamics that you called out. Wondering if you can first of all, help us understand how each of those components contributed to that decline. And then secondly, as it relates to chick fil A business within the club channel, you help us understand the latest there in terms of just distribution and overall business you know, since you have launched the 3 bottle pack in place of the 2 in some regions and anything specific you would call out around that? Thanks. David A. Ciesinski: Yeah. No. Our pleasure. So maybe I will start Scott, if you allow me, by sort of laddering back up. We look at the 3 different pieces of our business Foodservice, which really has not been covered so far, continues to meet and exceed our expectations in an environment where we are continuing to win with winners. Chick fil A winning with other consumers, Domino's winning in pizza QSR. And Taco Bell. Even in spite of the more recent news with Cyclospora where they are continuing to win, and we are continuing to win with them. Our supply chain, which we have talked about, where we feel like we are executing quite well, brings us around to retail. Moving Bachan's to the side a second where we are pleased with the integration and focusing on the core. I think there is several things that are going on as you float apart. We continue to be pleased with our progress in specialty bakery. As a group overall. We talked about the growth of New York Texas toast in the script. Which just continues to motor along. We talked about Texas Roadhouse and the continued promise there. As we swing around, I think the soft spot that we are focused on in particular you know, notwithstanding that cycling of the pipeline build, is dressings and licensing as an area where we continue to need to focus. And I think what we look forward to talking about in the quarters ahead is we have a range of different activities in flight around marketing and innovation. That we believe will restore those segments to growth. So laddering back up, how would I encourage you to think about it? I would expect continued sequential growth in the dough space, of our core business, to include the piece that we licensed from Texas Roadhouse. As we think about sauces, notwithstanding the noise from the pipeline build at Chick fil A. We continue to believe overall those brands are healthy as well. The area where we are really focused exacerbated by cyclospora, is the dressing space. Okay. Scott Marks: Appreciate the color there. Thanks for that. And then maybe if we just turn to the margins for a sec across the different segments, just as we look at maybe current quarter, and what happened there. It looks like food service benefited quite a bit more than retail from some of your cost savings initiatives. So just, you know, wondering if you can help us break that down a bit. What was the driver of that as we look ahead to 2027, how should we be thinking about the split between segment profit performance? Thank you. Thomas K. Pigott: So the what you are seeing is the benefit of the network moves that are impacting the food service segment. So exiting the Milpitas plant moving production to Horse Cave where it is we are more efficient. And beginning to ramp up College Park. Is kind of what you are seeing in the current quarter. As you get into next year, retail will benefit from the accretion from Bachan's being added. And both segments will continue to benefit from our productivity program. So we have positive outlooks on both segments as you get into fiscal. 2027. Scott Marks: Appreciate it. I will pass it on. Thanks, Scott. Operator: Our next question comes from Matthew Curtis with D.A. Davidson. Your line is open. Matt Curtis: Hi. Good morning. Thanks for taking the question. Just to hit maybe a follow-up on gross margin expansion in fiscal 27. I mean, in terms of the timing of the expansion, I mean, do you think the gross margin improvement is likely to be balanced or would it maybe be weighted more towards the second half? As Bachan's strengthens or maybe price becomes more fully realized? Thomas K. Pigott: Well, a great question. I think the first thing we need to zoom in and on is Q1 and what our expectations are there. Given the Cyclospora impact, we do expect you know, the impact on revenue on the base business that David highlighted Which gets us into kind of flattish net sales in Q1. We do not expect to be able to grow our margins in the first quarter. So you put that together from an from an operating income standpoint, we are looking at a 15% decline roughly In operating income in Q1. And now your question on the you know, once we get past Q1, I think I think we feel good that, you know, we are gonna give steady pretty consistent gross margin accretion throughout the year. Matt Curtis: Okay. Thanks for the clarification. And then I guess on Bachan's growth that I think you said you expect to strengthen in the second half of the year. If you can help us understand, is this mostly related to the timing of things like new product launches, or do other, drivers like, maybe marketing have also play a role in that outlook? David A. Ciesinski: it is it is an important question. it is actually both. So the new item launches are being sold in now. There will be a couple of customers, and they will take them early, more like, let's call it the holiday time frame. But most of those customers will take those items for their string reset. So they will most certainly be a contributor As you think about the core business, what we have done over the last 4 months is we have worked with the team to help refine their marketing. And in particular, a couple of different components 1, what is-- who are their cohorts that they want to reach out to where the message resonates the most strongly. And the second component of that is what does that message need to say That work is being done now. In short order, they will be reworking their creative we expect to turn that on here within the next couple of months. As that comes on, we expect to see more lift in that space. It may be worth even know, recalibrating for the group. As of today, the trial on the item remains only 5% or 6%. It was 5% when we bought the business. it is moved to 6% and that continues to be the single biggest opportunity The other thing that I would share with you on Bachan's that we have learned is it is a Japanese barbecue sauce, but it is actually an incredibly versatile product. And actually grilling is not 1 of the top occasions that it is used on. it is actually used in a whole range of everyday occasions. Which gives us more confidence that we can grow the business not just in grilling season, but throughout the entire year. Matt Curtis: Okay. Yeah. Interesting. Got it. And then maybe just the last 1 from me on your fiscal 27 CapEx guidance. I think you said $90 million Could you just briefly just walk us through what the major buckets of that spend were for this year? Thomas K. Pigott: Yeah. The biggest piece is really investing in the College Park facility in Atlanta and scaling that. Primarily to support the growth in Chick fil A. We are adding quite a bit of manufacturing capacity to that facility, and that is the largest piece of it. there is also some additional cost savings initiatives contribute to that margin growth. And then some ongoing infrastructure investments we are making. But the biggest piece being the College Park. Matt Curtis: Okay. Sounds good. Thanks for the time. Thank you, Matthew. Operator: I am not showing any further questions this time. I would like to turn the call back over to David for any further remarks. Thomas K. Pigott: Yeah. I want to share a little bit more about our expectations for next year in terms of the top line. With the benefit of Bachan's, we are expecting mid single digit revenue growth Retail is expected to grow revenue in the mid single digits driven really by Bachan's and a modest decline on the base for the factors that David highlighted, including Cyclospora impact. And the food service business is expected to also grow in the low to mid single digits. From a gross profit outlook, we have we have covered that. SG and A is expected to grow in the 10 to 15% range really driven by the addition of Bachan's SG&A. The base SG and A is expected to grow with inflation. So overall, we feel good about our outlook for fiscal 27. Really benefiting from Bachan's the food service business, and some work on retail. David A. Ciesinski: So maybe bringing it all back together. If you bring the quarter together, we were pleased to see progress in some areas, not satisfied with our progress in others. Foodservice continues to, we believe, outperform the peers in the space. Our supply chain executed well. In retail, it was a bit mixed. Super pleased with our progress on the integration of Bachan's. We are pleased with the growth of what we have going on in specialty bakery. But there is areas within the dressing space where we really have a lot of activity going on to restore those important businesses to growth. You swing forward even in this environment of uncertainty, we see line of sight to mid-single-digit top line growth mid single digit bottom line growth when you bring in the benefit of Bachan's. So a lot going on here. We are excited about our progress. Look forward to having more to share with you guys when we are together. Here in November. Have a great rest of the day. Operator: Thank you, ladies and gentlemen. That concludes today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Marzetti (MZTI) Q4 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in The Marzetti Company? Here are five stocks we like better. Marzetti shares rose after fiscal Q4 results confirmed a head-and-shoulders chart reversal following a prolonged decline. Revenue slipped 2.2% to $465 million, but margin improvements drove adjusted earnings growth of 9% for the quarter. Strong institutional buying, a 3.45% dividend yield as a Dividend King, and steady buybacks support the stock's potential recovery. The Marzetti Company’s (NASDAQ: MZTI) stock screamed buy after the company's fiscal Q4 release, advancing to confirm a head and shoulders reversal. The stock was down in the quarters leading up to the release, but the Q4 report proved Marzetti’s true strength, which is cash flow production. While the company is temporarily impaired by a recent acquisition, the results showed better-than-expected profitability and improved capacity for capital return. The capital return is the primary factor, as The Marzetti Company is a Dividend King on track to keep raising its distribution annually for many years to come. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? The head and shoulders reversal pattern is one of the stronger signals a chart can give. It marks the end of a downtrend and the start of a new trend; the only question is whether the change is from down to upward or from down to sideways, as may be the case with Marzetti. The company proved its worth; now it needs to regain traction and reinvigorate market appetite. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding The Marzetti Company had a decent quarter despite its mixed results. The top line, which came in at $465 million, was down 2.2% from last year and slightly below consensus, but was affected by two factors. The first is a non-recurring contract in the prior year. The second is the low level of analyst coverage and revision activity—there just aren’t many analysts covering the stock, and activity over the past year has been tepid at best. Reasons for the light coverage include Marzetti's unexciting business model, as it focuses on selling branded sauces and frozen bread products to retail outlets, and a market cap of only $3.2 billion. Organically, business is improving. The company reported a 0.4% systemwide gain, underpinned by a 0.9% increase in the Retail channel, in turn supported by acquisition. The Food Service segment was the weak link, down 5.3% reported but only 0.1% on an adjusted basis, highlighting both the potential for lumpiness in the results and the strength of the diversified model. When consumers aren’t going out, they turn to the in-store version of their favorite restaurant brands, including Chick-fil-A, Olive Garden, and Texas Roadhouse (NASDAQ: TXRH). → DICK's Sporting Goods Faces Pain Now for a Bigger Prize Margin news was the bright spot in the release. The company’s cost-cutting efforts and operational improvements improved gross margin by more than 200 basis points. Higher SG&A and operating costs partially offset the gains, but much of that impact is linked to acquisition and integration and is expected to diminish over time. The takeaway is that adjusted earnings grew by 9% despite the top-line softness, and the stage is set for accelerated earnings growth to continue in upcoming quarters. Institutional activity is as robust as analyst coverage is tepid. The group signals high confidence in the stock’s long-term outlook, dividend payment, and value by owning more than 65% of the shares and buying aggressively in 2026. MarketBeat data reveals virtually no selling over the trailing 12 months, only buying, with buying spiking in tandem with major price drops. Institutional activity ahead of the Q4 release was especially telling, spiking to a multi-quarter high in alignment with the head and shoulders pattern. The likely outcome is that the group continues to drive market support, potentially leading the market into a full reversal by year’s end. The catalyst for a reversal will likely come in the next release and could include potential for margin improvement. The dividend is attractive. Not only is this company a Dividend King, having proven its ability to pay consistently over time regardless of business cycles, but it is yielding a historically high 3.45% as of late August and growing at a mid-single-digit compound annual growth rate (CAGR). Balance sheet highlights show no red flags aside from the slight debt increase from Bachan’s acquisition. Even so, the debt increase is minimal, leaving leverage at approximately 0.2x equity, with a strong cash position and improving equity. The added bonus is share buybacks. The company is not an aggressive acquirer of its own shares, but it reduces the count incrementally each quarter. This adds leverage and supports the stock price rebound outlook. It will take some time, but Marzetti’s cash flow and capital return say its stock price will recover over time—when consumer trends improve, the recovery will accelerate. The company's biggest risks are commodity cost fluctuations, which can impair margins, and food product recalls. Recalls, especially those tied to foodborne illness, can hurt brand sales and impair long-term revenue and margins. Competition and private labels also pose a risk, but to a lesser degree. The article "Marzetti Stock Confirms Reversal on Earnings Strength, Dividend Growth" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Specialty food company The Marzetti Company (NASDAQ:MZTI) missed Wall Street’s revenue expectations in Q2 CY2026, with sales falling 2.2% year on year to $465 million. Its non-GAAP profit of $1.46 per share was 4.1% above analysts’ consensus estimates. Is now the time to buy The Marzetti Company? Find out in our full research report. Revenue: $465 million vs analyst estimates of $478.9 million (2.2% year-on-year decline, 2.9% miss) Adjusted EPS: $1.46 vs analyst estimates of $1.40 (4.1% beat) Operating Margin: 12.4%, up from 8.2% in the same quarter last year Sales Volumes fell 1.7% year on year (2.1% in the same quarter last year) Market Capitalization: $3.17 billion Known for its frozen garlic bread and Parkerhouse rolls, The Marzetti Company (NASDAQ:MZTI) sells bread, dressing, and dips to the retail and food service channels. A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. With $1.91 billion in revenue over the past 12 months, The Marzetti Company is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. As you can see below, The Marzetti Company grew its sales at a sluggish 1.6% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products. This quarter, The Marzetti Company missed Wall Street’s estimates and reported a rather uninspiring 2.2% year-on-year revenue decline, generating $465 million of revenue. Looking ahead, sell-side analysts expect revenue to grow 7% over the next 12 months, an acceleration versus the last three years. This projection is above the sector average and implies its newer products will fuel better top-line performance. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive. The Marzetti Company’s quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn’t see much volatility. In The Marzetti Company’s Q2 2026, sales volumes dropped 1.7% year on year. This result was a reversal from its historical levels. It was encouraging to see The Marzetti Company beat analysts’ gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue missed. Overall, this was a softer quarter. The stock remained flat at $115.82 immediately following the results. Big picture, is The Marzetti Company a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

WESTERVILLE, Ohio, August 25, 2026--(BUSINESS WIRE)--The Marzetti Company (Nasdaq: MZTI) reported results today for the company’s fiscal fourth quarter and fiscal year ended June 30, 2026. Fourth Quarter Summary Consolidated fourth quarter net sales declined 2.2% to $465.0 million. Excluding the prior-year quarter’s $12.2 million in non-core sales attributed to a temporary supply agreement ("TSA") with Winland Foods, Inc., which concluded during the quarter ended March 31, 2026, consolidated net sales increased 0.4%. Retail segment net sales increased 0.9% to $243.6 million, which includes $15.4 million of incremental sales from Bachan’s, Inc., our newly acquired Japanese Barbecue Sauce brand known for its delicious, authentic, clean-label products. The acquisition closed on May 1, 2026. Foodservice segment net sales decreased 5.3% to $221.4 million on a reported basis. Excluding the non-core TSA sales of $12.2 million in the prior-year quarter, Foodservice segment net sales decreased 0.1%. Consolidated gross profit increased $7.9 million to a fourth quarter record $114.0 million. Reported gross profit margin improved 220 basis points to 24.5% driven by our ongoing cost savings programs. SG&A expenses increased $12.3 million to $74.3 million. The higher SG&A expenses include a $10.5 million increase in acquisition-related costs in addition to $1.6 million in incremental noncash amortization expense attributed to Bachan’s intangible assets. Consolidated operating income grew $18.8 million to $57.7 million. In addition to the impacts of the increased gross profit and higher SG&A expenses, consolidated operating income includes the benefit of an $18.5 million gain on the sale of our property in Milpitas, California, the former location of the sauce and dressing facility that we closed in fiscal 2026. The $18.5 million gain is reported as part of the Restructuring, Impairment and Other line item. In the prior-year period, restructuring and impairment charges of $5.1 million primarily relate to the Milpitas plant closure. Fourth quarter net income was $1.76 per diluted share versus $1.18 per diluted share last year. In the current-year quarter, the acquisition-related SG&A expenses decreased net income by $0.31 per diluted share; the incremental noncash amortization expense for Bachan’s intangible assets reduced net income by $0.05 per diluted share; and the net impact of all restructuring, impairment and other items, most of which is the gain on the Milpitas property sale, increased net income by $0.66 per diluted share. In the prior-year quarter, restructuring and impairment charges reduced net income by $0.15 per diluted share while acquisition-related SG&A costs reduced net income by $0.01 per diluted share. Excluding these items, the resulting Adjusted Net Income Per Diluted Share ("Adjusted Diluted EPS") grew 9.0% to $1.46 in the current-year quarter, versus $1.34 last year, driven by the higher gross profit. CEO David A. Ciesinski commented, "We were pleased to report record gross profit and strong gross margin improvement in our fiscal fourth quarter. In our Retail segment, the newly acquired Bachan’s brand added $15.4 million in incremental sales. Retail scanner data sourced from Circana for the quarter ended June shows continued strong performance for the Bachan’s brand, with sales up 8.7% and total distribution points up 16.6% as the brand continues to grow share in the barbecue sauce category. Retail net sales growth was unfavorably impacted by the lapping of last year’s club channel pipeline fill for Chick-fil-A® sauces, reduced sales of our Sister Schubert’s® dinner rolls in the club channel, and a comparison to the prior year’s rollout of Texas Roadhouse® dinner rolls into traditional grocery chains. Note that Texas Roadhouse rolls remain a strong performer in our portfolio, with Circana retail scanner data showing that sales were up 28.1% for the quarter and 76.3% for the fiscal year. In the Foodservice segment, reported net sales decreased 5.3% while Adjusted Foodservice Net Sales, which exclude the non-core TSA sales, were nearly flat as gains for our leading national chain restaurant accounts were offset by reduced sales to other chains and lower sales for our branded Foodservice products." Fourth Quarter Results Fourth quarter consolidated net sales decreased 2.2% to $465.0 million versus $475.4 million last year. Excluding the non-core sales attributed to the TSA, Adjusted Consolidated Net Sales increased 0.4%. Our newly acquired Bachan’s business added $15.4 million in net sales, or about 320 basis points of growth. Retail segment net sales grew 0.9% to $243.6 million while the segment’s sales volume, measured in pounds shipped, declined 1.7%. Bachan’s accounted for 640 basis points of Retail segment net sales growth and 520 basis points of Retail segment volume growth. In the Foodservice segment, net sales decreased 5.3% to $221.4 million while the segment’s sales volume, measured in pounds shipped, declined 4.1%. Excluding the non-core TSA sales, Foodservice segment net sales decreased 0.1% while the segment’s core sales volume improved 0.1%. Consolidated gross profit increased $7.9 million to a fourth quarter record $114.0 million driven by our cost savings programs. Gross profit margin increased 220 basis points to 24.5%. Adjusted Gross Margin, which excludes all non-core TSA sales as those sales did not contribute meaningfully to gross profit, increased approximately 160 basis points. SG&A expenses increased $12.3 million to $74.3 million, which includes a $10.5 million increase in acquisition-related costs in addition to $1.6 million in incremental noncash amortization expense for intangible assets attributed to Bachan’s. Excluding these items, SG&A expenses were nearly flat as incremental core SG&A expenses attributed to Bachan’s were offset by cost reductions elsewhere. The $18.0 million Restructuring, Impairment and Other line item primarily reflects the benefit of an $18.5 million gain on the sale of our property in Milpitas, California, the former location of the sauce and dressing facility that we closed in fiscal 2026. Restructuring and impairment charges of $5.1 million in the prior-year quarter included $4.5 million in charges attributed to the closure of the Milpitas plant. Consolidated operating income increased $18.8 million to $57.7 million as favorably impacted by the gain on the Milpitas property sale and higher gross profit, partially offset by the increase in SG&A expenses attributed to the acquisition-related costs and incremental amortization expense for Bachan’s. Interest expense totaled $1.8 million in the current year versus no interest expense last year, as a portion of the Bachan’s acquisition purchase price was financed with a $200 million term loan. Net income increased $15.8 million to $48.3 million, or $1.76 per diluted share, versus $32.5 million, or $1.18 per diluted share, last year. In the current-year quarter, income reported on the Restructuring, Impairment and Other line item increased net income by $18.1 million, or $0.66 per diluted share; acquisition-related SG&A costs reduced net income by $8.5 million, or $0.31 per diluted share; and the incremental noncash amortization expense for the Bachan’s intangible assets decreased net income by $1.2 million, or $0.05 per diluted share. In the prior-year quarter, restructuring and impairment charges reduced net income by $4.0 million, or $0.15 per diluted share, while acquisition-related SG&A costs reduced net income by $0.4 million, or $0.01 per diluted share. Resulting Adjusted Diluted EPS was $1.46 in the current-year quarter, versus $1.34 last year. Fiscal Year Results For the fiscal year ended June 30, 2026, net sales increased 1.1% to $1.93 billion compared to $1.91 billion a year ago. Net income for the fiscal year totaled $191.6 million, or $6.98 per diluted share, versus the prior-year amount of $167.3 million, or $6.07 per diluted share. The fiscal 2026 results include a net income benefit of $16.6 million, or $0.60 per diluted share, from income reported on the Restructuring, Impairment and Other line-item, driven by the proceeds from the sale of our property in Milpitas, California. Fiscal 2026 SG&A costs also include acquisition-related expenses that reduced net income by $11.3 million, or $0.41 per diluted share, in addition to incremental noncash amortization expense for intangible assets attributed to the Bachan’s acquisition that reduced net income by $1.2 million, or $0.05 per diluted share. The fiscal 2025 results include a noncash settlement charge attributed to the termination of the company’s legacy pension plans that reduced net income by $10.8 million, or $0.39 per diluted share. In addition, the fiscal 2025 results included restructuring and impairment charges that reduced net income by $4.0 million, or $0.15 per diluted share, and acquisition-related SG&A expenditures that reduced net income by $2.9 million, or $0.11 per diluted share. Resulting Adjusted Diluted EPS was $6.83 in the current year, versus $6.72 last year. Fiscal 2026 cash flows from operating activities increased $22.3 million to a record $283.8 million. In addition, as part of our ongoing commitment to return value to our shareholders, the company increased its regular cash dividend for the 63rd consecutive year in fiscal 2026 with the quarterly cash dividend paid on December 31, 2025. During the fiscal year, the company paid cash dividends to shareholders totaling $108.8 million and repurchased $36.3 million of common stock. Fiscal 2027 Outlook Mr. Ciesinski commented, "Looking ahead to fiscal 2027, Retail segment sales will continue to benefit from incremental sales attributed to the Bachan’s acquisition in addition to contributions from the new items we recently launched or have planned for introduction for both our legacy brands and licensing program. In the Foodservice segment, we expect sales to be supported by select quick-service restaurant customers in our mix of national chain restaurant accounts. Note that external factors, including U.S. economic performance and consumer behavior, may impact the topline growth for both segments in the coming year. We also continue to monitor the impact of the Cyclospora outbreak on product demand and sales. With respect to our input costs, in aggregate we anticipate a moderate level of inflation in fiscal 2027 that we plan to offset through inflationary pricing and our cost savings programs as we remain focused on continued margin improvement." Conference Call on the Web The company’s fourth quarter and fiscal year-end conference call is scheduled for this morning, August 25, at 10:00 a.m. ET. Access to a live webcast and subsequent replay of the call is available through a link on the company’s website at investors.marzetticompany.com. About the Company The Marzetti Company is a manufacturer and marketer of specialty food products for the retail and foodservice channels. Forward-Looking Statements We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). This news release contains various "forward-looking statements" within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words "anticipate," "estimate," "project," "believe," "intend," "plan," "expect," "hope" or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments; and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors, many of which are beyond our control, which could cause our actual results to differ materially from those expressed in the forward-looking statements. Some of the key factors that could cause actual results to differ materially from those expressed in the forward-looking statements include: the ability to successfully integrate the acquired Bachan’s business and achieve operational and financial performance objectives; changes in demand for our products, which may result from changes in consumer behavior or loss of brand reputation or customer goodwill; significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, production planning, operations, and production processes resulting from the impacts of epidemics, pandemics or similar widespread public health concerns and foodborne outbreaks; efficiencies in plant operations and our overall supply chain network; geopolitical events that could create unforeseen business disruptions and impact the cost or availability of raw materials and energy; inflationary pressures resulting in higher input costs; adverse changes in freight, energy or other costs of producing, distributing or transporting our products; fluctuations in the cost and availability of ingredients and packaging; the reaction of customers or consumers to pricing actions we take to offset inflationary costs; price and product competition; changes in our cash flow or use of cash in various business activities; the success and cost of new product development efforts; the lack of market acceptance of new products; the impact of customer store brands on our branded retail volumes; the impact of any laws and regulatory matters affecting our food business, including any additional requirements imposed by the federal, state or local government; adverse changes in trade policies, including increased tariffs, retaliatory trade measures, or other trade restrictions; dependence on key personnel and changes in key personnel; adequate supply of labor for our manufacturing facilities; stability of labor relations; the extent to which good-fitting business acquisitions are identified, acceptably integrated, and achieve operational and financial performance objectives; dependence on a wide array of critical third parties to support our operations, including contract manufacturers, distributors, logistics providers and IT vendors; cyber-security incidents, information technology disruptions, and data breaches; the potential for loss of larger programs or key customer relationships; capacity constraints that may affect our ability to meet demand or may increase our costs; failure to maintain or renew license agreements; the possible occurrence of product recalls or other defective or mislabeled product costs; maintenance of competitive position with respect to other manufacturers; the outcome of any litigation or arbitration; the effect of consolidation of customers within key market channels; changes in estimates in critical accounting judgments; and risks related to other factors described under "Risk Factors" in other reports and statements filed by us with the Securities and Exchange Commission, including without limitation our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (available at www.sec.gov). Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law. Management believes these forward-looking statements to be reasonable; however, you should not place undue reliance on statements that are based on current expectations. Reconciliation of GAAP to non-GAAP Financial Measures The Marzetti Company prepares its consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). However, from time to time, the corporation may present in its public statements, press releases and SEC filings, non-GAAP financial measures such as Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, and Adjusted Net Income Per Diluted Share ("Adjusted Diluted EPS"). Management considers such non-GAAP financial measures to provide useful supplemental information to investors in facilitating year-over-year comparisons by removing non-recurring items or other items that management believes do not directly reflect the underlying operations. Management uses these non-GAAP measures in the preparation of our annual operating plan and for our monthly analysis of operating results. Reconciliations of the non-GAAP measures to the most comparable GAAP financial measures are provided below. The corporation’s definitions of these non-GAAP measures may differ from similarly titled measures used by other companies. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP financial measures that exclude non-core sales and cost of sales attributed to a temporary supply agreement ("TSA") made in connection with our February 2025 acquisition of Winland’s Atlanta-based sauce and dressing production facility. The TSA sales are included in the reported net sales for our Foodservice segment and did not contribute meaningfully to gross profit. The TSA sales commenced in March 2025 and concluded during the quarter ended March 31, 2026. The following tables present a reconciliation between net sales, cost of sales, gross profit and gross margin as reported in accordance with GAAP and Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin for the three months and fiscal years ended June 30, 2026 and 2025. Adjusted Operating Income and Adjusted Diluted EPS are non-GAAP financial measures that exclude certain items affecting comparability, which can impact the analysis of our underlying core business performance and trends. The following tables present a reconciliation between 1) operating income as reported in accordance with GAAP and Adjusted Operating Income and 2) diluted EPS as reported in accordance with GAAP and Adjusted Diluted EPS for the three months and fiscal years ended June 30, 2026 and 2025. For 2026, the adjustments reflect incremental SG&A expenses attributed to the Bachan’s acquisition; incremental SG&A expenses attributed to the amortization of intangible assets resulting from the Bachan’s acquisition; and restructuring, impairment and other, net, which consists of restructuring and impairment charges resulting from the closure of our sauce and dressing production facility in Milpitas, California, the gain on the sale of the Milpitas real property, and charges related to the impairment of manufacturing equipment, net of a recovery through an insurance claim. For 2025, the adjustments reflect incremental SG&A expenses attributed to the Atlanta production facility acquisition; restructuring and impairment charges primarily related to the closure of our production facility in Milpitas, California; and the one-time noncash pension settlement charge. View source version on businesswire.com: https://www.businesswire.com/news/home/20260824316576/en/ Contacts FOR FURTHER INFORMATION:Dale N. GanobsikVice President, Corporate Finance and Investor RelationsThe Marzetti CompanyPhone: 614/224-7141Email: [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record full-year net sales and operating income, marking the fourth consecutive year of top-line growth despite a challenging operating environment. Retail segment performance was driven by the successful acquisition of Bachan's and continued momentum in specialty bakery, specifically Texas Roadhouse dinner rolls which grew 28.1% in the quarter. Gross margin expansion for the 12th consecutive quarter was attributed to a multi-year network restructuring, including the sale of the Milpitas facility and optimization of the Horse Cave and College Park plants. Foodservice stability was maintained through strategic partnerships with high-growth national QSR chains like Chick-fil-A, Domino's, and Taco Bell, offsetting declines in smaller accounts. Management identified the salad dressing category as a current soft spot, exacerbated by broader market trends and the recent Cyclospora outbreak affecting produce-adjacent products. Pricing actions implemented in the fiscal first quarter are designed to neutralize moderate commodity inflation, particularly in soybean oil, while maintaining competitive positioning. Projecting mid-single-digit revenue and bottom-line growth for FY27, heavily supported by the full-year contribution and innovation pipeline of the Bachan's brand. Anticipating a 250-basis-point net sales headwind in Q1 FY27 due to the Cyclospora outbreak, with recovery modeled after the 2018 outbreak's four-month 'half-life' trajectory. Forecasting 100 basis points of consolidated gross margin expansion, split equally between Bachan's accretion and ongoing productivity initiatives. Capital expenditure of $90 million is primarily allocated to scaling the College Park facility to support increased manufacturing capacity for Chick-fil-A products. Strategic focus remains on the 'three pillars': accelerating core growth, simplifying the supply chain to expand margins, and targeted M&A or licensing. Recorded an $18.5 million gain from the sale of the closed Milpitas, California manufacturing facility, which significantly impacted reported operating income and tax rates. The Bachan's acquisition added approximately $200 million in long-term debt with an effective interest rate of 4.8% as of June 30. Discontinuation of a temporary supply agreement (TSA) created a 260-basis-point unfavorable impact on reported revenue comparisons. Management flagged a 10-15% expected increase in SG&A for FY27, almost entirely driven by the integration and marketing support for the Bachan's brand. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management utilizes a combination of long-term hedges and recent pricing actions to protect against the 40% year-to-date increase in soybean oil costs. While 5% commodity inflation creates a 50-basis-point dilutive headwind, it is being fully offset by internal cost-savings programs and the higher-margin Bachan's mix. Sales are expected to exceed $100 million in FY27, driven by expanding household penetration from its current 6% and moving into the $3.4 billion mayonnaise category. New product launches, including a Japanese Mayo and a Wing Sauce developed with Marzetti's culinary team, are scheduled for retail resets in the second half of the fiscal year. Texas Roadhouse rolls reached $58 million in annual sales with only 2.5% household penetration, suggesting significant runway to reach the $100 million target. Management is exploring non-restaurant licensing opportunities to diversify the portfolio beyond existing restaurant brand partnerships. The outbreak caused a temporary 30% dip in lettuce sales and a corresponding 11-15% drop in dressing volumes during late July. Recovery is already visible in August data, and management expects the impact to dissipate over a four-month period based on historical media-driven outbreak cycles.

This article first appeared on GuruFocus. Reported Net Sales: Declined 2.2% to $465 million in the fiscal fourth quarter. Adjusted Net Sales: Improved 40 basis points, excluding noncore temporary supply agreement (TSA) sales. Retail Segment Net Sales: Increased 0.9%, including $15.4 million in incremental sales from Bachan's. Gross Profit: Increased by $7.9 million, or 7.4%, to $114 million. Gross Margin: Reported and adjusted gross margins expanded by 220 basis points and 160 basis points, respectively. Operating Income: Reported operating income grew 48.2%; adjusted operating income grew 17.5%. SG&A Expenses: Increased by $12.3 million, driven by acquisition-related costs; adjusted SG&A was up just $100,000. Diluted EPS: Reported diluted EPS increased $0.58, or 49.2%, to $1.76; adjusted diluted EPS increased $0.12 to $1.46. Operating Cash Flow: Record full-year operating cash flow of $283.8 million, up 8.5%. Capital Expenditures: Fiscal 2026 payments totaled $77.7 million; fiscal 2027 forecast is $90 million. Long-Term Debt: Slightly less than $200 million, with an effective interest rate of approximately 4.8%. Dividends: Quarterly cash dividend of $1 per share, a 5% increase; annual dividend payments totaled $108.8 million. Share Buybacks: Completed $36.3 million in buybacks in fiscal 2026. Bachan's Sales: Circana scanner data showed sales up 8.7% and distribution points up 16.6%. Texas Roadhouse Rolls Sales: Up 28.1% in the quarter; $58 million in sales for the 52-week period, up 76%. New York Bakery Sales: Up 2.8%, with a market share gain of 220 basis points to 45.5%. Foodservice Segment: Excluding TSA sales, adjusted net sales and volumes were nearly unchanged. Warning! GuruFocus has detected 3 Warning Signs with MZTI. Is MZTI fairly valued? Test your thesis with our free DCF calculator. Release Date: August 25, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record fiscal year 2026 with record highs in net sales, gross profit, and operating income, marking the fourth consecutive year of record net sales and gross profit. Gross margin expanded for the 12th consecutive quarter, driven by productivity programs and cost savings initiatives. Bachan's acquisition is performing well, with sales up 8.7% and distribution points increasing 16.6%, and is expected to be a key growth driver in fiscal 2027. Texas Roadhouse dinner rolls continue to grow strongly, with sales up 28.1% in the quarter and 76% for the year, achieving a category-leading market share of 61.7% when combined with Sister Schubert's. Record operating cash flow of $283.8 million, up 8.5%, provides financial flexibility for investments, dividends (63 years of increases), and share buybacks. Foodservice segment continues to outperform, with growth from national chain accounts like Chick-fil-A, Domino's, and Taco Bell. New product innovations for Bachan's (wing sauce and Japanese mayo) are expected to drive growth in the second half of fiscal 2027. Company expects mid-single-digit revenue growth in fiscal 2027, driven by Bachan's and foodservice, with a positive outlook for gross margin expansion of 100 basis points. Reported consolidated net sales declined 2.2% in the fourth quarter, impacted by reduced club channel sales and a pipeline build comparison for Texas Roadhouse rolls. Cyclospora outbreak is expected to cause a 250 basis point net sales headwind in fiscal first quarter 2027, affecting both retail and foodservice segments. Core retail business, excluding Bachan's, saw organic volumes down about 7% in the quarter, with softness in the dressing and licensing categories. Commodity inflation, particularly soybean oil up 40% year-to-date, is expected to be around 5% in fiscal 2027, requiring pricing actions to offset. Fiscal first quarter 2027 is expected to have flattish net sales and a 15% decline in operating income due to the Cyclospora impact. SG&A expenses increased by $12.3 million in the quarter due to acquisition-related costs, though adjusted SG&A was flat. The company faces ongoing challenges in the salad dressing category, which has been a drag for several quarters, requiring focused efforts to restore growth. Q: Can you walk us through the gross margin build for fiscal 2027, given commodity inflation, the incremental benefit from the Bachan's integration, and the pricing you mentioned? A: CFO Tom Pigott stated that the company estimates about 100 basis points of consolidated gross margin growth for fiscal '27. Approximately half of that is driven by the accretion from the high-margin Bachan's business. The other half is driven by the company's continued commodity risk management program and cost savings initiatives. While commodity inflation is forecasted to be around 5%, which would have a dilutive impact of about 50 basis points, the cost savings program is expected to offset that, leading to the overall 100 basis point growth. Q: What is the expected financial impact of the recent Cyclospora outbreak, and how long do you expect the impact to last? A: CEO Dave Ciesinski estimated the outbreak will result in a net sales headwind of approximately 250 basis points in the fiscal first quarter, impacting both retail and foodservice segments. He noted that the impact hit a low watermark in late July and is already improving. The company has modeled the recovery based on the 2018 outbreak, expecting a "half-life" effect where the impact improves by 10% in the first month, then by half of that each subsequent month, trending back to pre-event levels roughly four months out. Q: Can you provide an update on the Bachan's integration and its expected sales contribution for fiscal 2027? A: CEO Dave Ciesinski expects Bachan's growth to be stronger than a simple roll-forward of its current 8% growth rate. He outlined three key growth drivers: 1) Growth of the core business through expanded awareness, trial, and household penetration. 2) The launch of Bachan's Japanese Mayo, which enters a much larger $3.4 billion category. 3) The launch of Bachan's Wing Sauce, produced at the company's Horse Cave, Kentucky facility. He expects sales to build as the fiscal year progresses, driven by new item launches and refined marketing efforts. Q: How should we think about the growth of the licensed branded product portfolio in fiscal 2027? A: CEO Dave Ciesinski stated that excluding the noise from the Chick-fil-A pipeline build, he expects licensed sauces to be closer to flat, with room to grow in licensed items. He highlighted the strong performance of Texas Roadhouse rolls, which grew 76% to $58 million in sales and has a household penetration of only 2.5%, leaving significant room for growth. He reiterated his belief that the Texas Roadhouse item has the potential to become a $100 million retail sales item. Q: What are the key drivers behind the strong gross margin performance, and how much of the fiscal '27 margin expansion is from internal cost savings versus Bachan's synergies? A: CFO Tom Pigott explained that the current quarter's performance benefited from network moves, such as exiting the Milpitas plant and moving production to Horse Cave. For fiscal '27, he confirmed that about half of the 100 basis point margin expansion is from the base business, driven by the productivity program, and the other half is from Bachan's accretion. He noted that the company is already realizing procurement synergies from Bachan's, with plans for more elsewhere, and the integration is on track. Q: Can you break down the drivers of the retail segment's organic volume decline in the fourth quarter? A: CEO Dave Ciesinski attributed the decline to several factors, including reduced sales into the club channel and a comparison to last year's pipeline build of Texas Roadhouse dinner rolls. He identified the dressing and licensing space as a soft spot, exacerbated by the Cyclospora outbreak, but expressed confidence in restoring growth through marketing and innovation. He highlighted continued strength in specialty bakery, including New York Texas Toast and Texas Roadhouse rolls. Q: What is the expected timing of gross margin expansion in fiscal 2027? A: CFO Tom Pigott stated that due to the Cyclospora impact, the company expects flattish net sales in Q1 and does not expect to grow margins in the first quarter. This is expected to result in a roughly 15% decline in operating income in Q1. However, once past Q1, the company feels good about delivering steady and consistent gross margin accretion throughout the rest of the year. Q: What are the major buckets of spend for the fiscal 2027 capital expenditure guidance of $90 million? A: CFO Tom Pigott explained that the largest piece of the CapEx is investing in and scaling the College Park facility in Atlanta, primarily to support the growth of the Chick-fil-A business. The remaining spend is allocated to additional cost savings initiatives that contribute to margin growth and ongoing infrastructure investments. Q: What is the company's overall outlook for fiscal 2027? A: CEO Dave Ciesinski provided a positive outlook, expecting mid-single-digit top-line growth driven by Bachan's and the foodservice business. He acknowledged that the retail base will see a modest decline due to factors like Cyclospora. CFO Tom Pigott added that SG&A is expected to grow 10% to 15% due to the addition of Bachan's, and the company feels good about its overall outlook for fiscal '27. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Shareholders of The Marzetti Company would probably like to forget the past six months even happened. The stock dropped 35.1% and now trades at $111.34. This was partly due to its softer quarterly results and might have investors contemplating their next move. Is now the time to buy The Marzetti Company, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free. Even though the stock has become cheaper, we’re passing on The Marzetti Company for now. Here are three reasons why there are better opportunities than MZTI, plus one stock we’d rather own. A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, The Marzetti Company’s 1.8% annualized revenue growth over the last three years was sluggish. This fell short of our benchmarks. With $1.92 billion in revenue over the past 12 months, The Marzetti Company is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers. All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products, has a stronger brand, and commands pricing power. The Marzetti Company has bad unit economics for a consumer staples company, giving it less room to reinvest and develop new products. As you can see below, it averaged a 23.5% gross margin over the last two years. That means The Marzetti Company paid its suppliers a lot of money ($76.50 for every $100 in revenue) to run its business. The Marzetti Company isn’t a terrible business, but it isn’t one of our picks. Following the recent decline, the stock trades at 15.5× forward P/E (or $111.34 per share). While this valuation is reasonable, we don’t really see a big opportunity at the moment. We’re pretty confident there are more exciting stocks to buy at the moment. Let us point you toward the most entrenched endpoint security platform on the market. ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.