WESTERVILLE, Ohio--(BUSINESS WIRE)--May 04, 2026--
The Marzetti Company (Nasdaq: MZTI) reported results today for the company's fiscal third quarter ended March 31, 2026.
Summary
-- Consolidated net sales declined 1.0% to $453.4 million versus $457.8
million last year. Excluding non-core net sales attributed to a temporary
supply agreement ("TSA") with Winland Foods, Inc. that totaled $1.5
million in the current-year quarter and $2.1 million last year, Adjusted
Consolidated Net Sales declined 0.9% to $451.8 million. Retail net sales
declined 3.2% to $233.8 million while Foodservice net sales advanced 1.5%
to $219.6 million on a reported basis. Excluding the non-core TSA sales,
Adjusted Foodservice Net Sales increased 1.8% to $218.1 million.
-- Consolidated gross profit increased $1.3 million, or 1.2%, to a third
quarter record $107.2 million with reported gross margin up approximately
50 basis points to 23.6%. The gross profit improvement reflects the
benefit of our ongoing cost savings programs.
-- SG&A expenses increased $5.4 million to $61.4 million. SG&A expenses
include $3.5 million in acquisition-related costs in the current-year
quarter versus $1.7 million last year. The higher SG&A costs also reflect
increased investments in personnel and IT to enable future growth of the
business.
-- Consolidated operating income declined $3.3 million to $46.6 million.
Excluding all acquisition-related SG&A costs and current-year proceeds of
$0.8 million from an insurance claim, Adjusted Operating Income declined
$2.3 million to $49.3 million. This decrease reflects the impact of the
higher SG&A expenses partially offset by the increase in gross profit.
-- Net income was $1.35 per diluted share versus $1.49 per diluted share
last year. In the current-year quarter, the acquisition-related SG&A
expenses decreased net income by $0.10 per diluted share, while the
insurance claim proceeds increased net income by $0.02 per diluted share.
In the prior-year quarter, acquisition-related SG&A costs reduced net
income by $0.05 per diluted share.
-- As previously announced, on May 1, we completed our acquisition of
Bachan's, Inc., the fast-growing Japanese Barbecue Sauce brand known for
its delicious, authentic, clean-label products.
CEO David A. Ciesinski commented, "We were pleased to report record-high gross profit in the quarter despite the decline in net sales. In our Retail segment, our category-leading frozen bread brands performed well as sales of our New York Bakery$(TM)$ frozen garlic bread products continued to grow and increase market share while sales of our Sister Schubert's$(R)$ dinner rolls benefited from the pull-forward of demand due to the earlier Easter holiday. These sales gains were more than offset by the impacts of category softness and reduced sales into the club channel. In the Foodservice segment, reported net sales increased 1.5% while Adjusted Foodservice Net Sales, which exclude non-core TSA sales, grew 1.8%, led by higher demand from several of our core national chain restaurant accounts."
"Looking ahead to the final quarter of our fiscal year, in addition to incremental sales attributed to the Bachan's acquisition, we expect Retail sales will benefit from new product introductions including Marzetti(R) Protein Ranch dressing and veggie dips, a new Olive Garden(R) Zesty Italian dressing flavor, and the addition of a larger-sized bottle for the popular Chick-fil-A(R) Avocado Lime Ranch dressing. In the Foodservice segment, we anticipate continued growth from select customers in our mix of national chain restaurant accounts."
Third Quarter Results
Consolidated net sales decreased 1.0% to $453.4 million versus $457.8 million last year. Excluding non-core sales attributed to the TSA with Winland Foods, Inc., Adjusted Consolidated Net Sales decreased 0.9% to $451.8 million. Retail segment net sales declined 3.2% to $233.8 million driven by a 5.6% decrease in the segment's sales volume, measured in pounds shipped, partially offset by some inflationary pricing. The non-core TSA sales, which totaled $1.5 million in the current-year quarter and $2.1 million last year, are accounted for as Foodservice segment sales and resulted from our acquisition of the Winland Foods sauce and dressing production facility located in Atlanta, Georgia. The TSA sales commenced in March 2025 and concluded during our fiscal third quarter ended March 31, 2026. Excluding the non-core TSA sales, Adjusted Foodservice Net Sales improved 1.8% to $218.1 million while the segment's sales volumes, measured in pounds shipped, increased 0.8%.
Consolidated gross profit increased $1.3 million, or 1.2%, to a third quarter record $107.2 million. The higher gross profit reflects the benefit of our ongoing cost savings programs. Adjusted Gross Margin, which excludes all non-core TSA sales as those sales did not contribute meaningfully to gross profit, increased approximately 50 basis points to 23.7%.
SG&A expenses increased $5.4 million to $61.4 million. SG&A expenses include $3.5 million and $1.7 million in acquisition-related costs in the current- and prior-year quarters, respectively. The higher SG&A costs also reflect increased investments in personnel and IT to enable future growth of the business.
Income of $0.8 million reported in the Restructuring, Impairment and Other line item represents insurance claim proceeds related to the manufacturing equipment impairment charge that we recognized in this year's fiscal second quarter.
Consolidated operating income declined $3.3 million to $46.6 million. Excluding all acquisition-related SG&A costs and the $0.8 million in insurance claim proceeds, Adjusted Operating Income declined $2.3 million. This decrease reflects the impact of the higher SG&A expenses as partially offset by the increase in gross profit.
Net income declined $4.1 million to $37.1 million, or $1.35 per diluted share, versus $1.49 per diluted share last year. The acquisition-related SG&A costs reduced net income by $0.10 per diluted share while the insurance claim proceeds increased net income by $0.02 per diluted share. In the prior-year quarter, acquisition-related costs in SG&A reduced net income by $0.05 per diluted share.
Fiscal Year-to-Date Results
For the nine months ended March 31, 2026, consolidated net sales increased 2.2% to $1,464.8 million compared to $1,433.7 million a year ago. Excluding all non-core sales attributed to the TSA with Winland Foods, Inc., Adjusted Consolidated Net Sales increased 0.9% to $1,444.4 million. Reported operating income declined 0.2% to $181.0 million while Adjusted Operating Income, which excludes all acquisition-related SG&A costs and Restructuring, Impairment and Other items, increased 1.0% to $186.6 million. Net income for the nine-month period totaled $143.3 million, or $5.21 per diluted share, versus the prior-year amount of $134.8 million, or $4.89 per diluted share. In the current-year period, acquisition-related costs in SG&A reduced net income by $2.7 million, or $0.10 per diluted share, while the net impact of Restructuring, Impairment and Other items reduced net income by $1.6 million, or $0.06 per diluted share. In the prior-year period, a noncash pension settlement charge resulting from our decision to terminate the company's legacy pension plans reduced net income by $10.8 million, or $0.39 per diluted share, and acquisition-related SG&A expenses reduced net income by $2.6 million, or $0.09 per diluted share.
Conference Call on the Web
The company's third quarter conference call is scheduled for this morning, May 4, 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 Marzetti 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, Inc.
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;
-- 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,
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