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Marzetti Earnings: Record Gross Profit, Foodservice Momentum, Bachan’s Deal

MZTI Brands Portfolio
Source: MZTI Earnings Deck

TL;DR

  • Revenue Strength: Reported sales rose despite volume pressure, supported by pricing and foodservice demand.

  • Margin Trends: Record gross profit as productivity and cost savings offset inflation.

  • Forward Outlook: Licensing, foodservice mix, and the Bachan’s acquisition set up the back half.


Business Overview


The Marzetti Company is a specialty food manufacturer serving both Retail and Foodservice channels. Its portfolio spans sauces, dressings, dips, frozen garlic bread, dinner rolls, and licensed restaurant brands.


Retail exposure includes branded and licensed products such as New York Bakery frozen garlic bread, Sister Schubert’s rolls, and licensed Texas Roadhouse® and Chick-fil-A® items. Foodservice serves national chain restaurant customers and branded foodservice offerings. The company operates primarily in North America and maintains a strong balance sheet with no debt.


Marzetti Earnings Performance


Revenue

  • Reported (GAAP):

    • Consolidated net sales increased 1.7% YoY to $518.0 million.

    • Retail sales declined 1.1% to $277.5 million, while Foodservice sales rose 5.2% to $240.4 million.

  • Adjusted (Non-GAAP):

    • Excluding $8.2 million of non-core sales from a temporary supply agreement (TSA) related to the Winland Foods acquisition, Adjusted Consolidated Net Sales increased 0.1% to $509.8 million.

    • Adjusted Foodservice Net Sales grew 1.6% to $232.2 million.


Retail volumes declined against a strong prior-year comparison and were impacted by softer demand during the U.S. government shutdown, while foodservice benefited from pricing and national account demand.


Margins and Profitability

  • Gross Profit (GAAP):

    • Increased 3.4% to a second-quarter record $137.3 million.

    • Gross margin expanded 40 basis points.

  • Gross Margin (Adjusted):

    • Excluding TSA sales, Adjusted Gross Margin improved 80 basis points to 26.9%, driven by cost savings initiatives.

  • Operating Income:

    • Reported operating income declined 0.6% to $75.2 million due to higher SG&A and restructuring charges.

    • Adjusted Operating Income declined 0.6% to $76.9 million, excluding restructuring and prior-year acquisition costs.

  • Earnings:

    • GAAP EPS increased to $2.15, up from $1.78 last year.

    • Prior-year EPS was depressed by a $0.39 non-cash pension settlement charge, while the current quarter included $0.05 per share in restructuring charges.


Forward Guidance


CEO David A. Ciesinski framed the margin performance and outlook as structurally driven:

“We were pleased to complete the quarter with record gross profit and higher gross profit margin.”— David A. Ciesinski, President and Chief Executive Officer

Looking to the back half of fiscal 2026 (excluding the Bachan’s acquisition), management expects retail sales to benefit from licensing momentum and innovation, with continued foodservice growth from select national accounts. The earlier Easter holiday is expected to pull some retail sales into the third quarter.


Risks & Opportunities

  • Opportunities:

    • Licensing expansion, particularly Texas Roadhouse® rolls

    • Productivity programs supporting margin durability

    • Strategic M&A through the Bachan’s acquisition

  • Risks:

    • Consumer demand volatility

    • Input cost inflation and pricing elasticity

    • Execution risk around integration and supply chain transitions


Operational Performance


Marzetti continued to execute against internal productivity goals, with cost savings across procurement, manufacturing, value engineering, and distribution. SG&A rose due to stepped-up brand investment, particularly marketing spend in Retail.


CFO Tom Pigott highlighted the execution balance between cost discipline and reinvestment:

“The gross profit growth was driven by our productivity program… and our pricing actions offset the higher commodity costs we experienced during the quarter.”— Tom Pigott, Chief Financial Officer

Demand, Pricing, and Category Dynamics


Retail demand softened sequentially, reflecting tough comparisons and temporary macro disruption, but scanner data showed continued share gains in core categories such as frozen garlic bread, frozen dinner rolls, and licensed sauces.

Foodservice demand remained resilient, supported by national chain partners and inflationary pricing. Management characterized the environment as broadly stable, with normalization following the government shutdown and modest optimism tied to easing inflation and consumer spending trends.


Takeaway: Category fundamentals appear intact, with Marzetti actively engineering demand through licensing, pricing discipline, and portfolio expansion rather than reacting defensively.


Strategic Initiatives


The defining strategic development of the quarter was the announced acquisition of Bachan’s, Inc., a fast-growing Japanese barbecue sauce brand. Management positioned the deal as a natural extension of Marzetti’s sauces platform and licensing strategy:

“This transaction reinforces Marzetti's position as a leader in sauces by adding a premium brand that is exceptionally well aligned with evolving consumer preferences.”— David A. Ciesinski, President and Chief Executive Officer

The acquisition is expected to be accretive to growth and gross margin beginning in year one.


Capital Allocation


  • Dividends:

    • Quarterly dividend increased to $1.00 per share, marking the 63rd consecutive year of increases.

  • Buybacks:

    • $20.1 million of shares repurchased during the quarter.

  • Liquidity:

    • Debt-free balance sheet with $201.6 million in cash at quarter end.


The Bottom Line


  • Margins are structurally improving, supported by productivity and pricing discipline.

  • Foodservice remains a steady growth engine, offsetting retail volatility.

  • The Bachan’s acquisition meaningfully upgrades the growth profile, reinforcing Marzetti’s sauces leadership.


The demonstrates Marzetti’s ability to expand margins in a mixed demand environment while deploying its balance sheet toward higher-growth, higher-margin adjacencies.


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