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MZTI
Earnings call · Jun 2026 (Q4 FY26)

MARZETTI Q4 FY26 earnings call MZTI

Aug 25, 2026 Source

Executive summary

The Marzetti Company Q4 FY26 — Record Gross Profit and Operating Income, Bachan's Integration on Track

The Marzetti Company concluded FY26 with record net sales, gross profit, and operating income, marking several consecutive years of growth, driven by strong execution and productivity programs. While Q4 saw a slight reported net sales decline due to non-core sales discontinuation and club channel softness, adjusted operating income grew significantly, and gross margins expanded for the twelfth consecutive quarter. The company is focused on accelerating core business growth, supply chain simplification, and strategic M&A, with Bachan's integration on track and new product introductions planned for FY27, despite an anticipated Q1 headwind from the Cyclospora outbreak.

Highlights

5

  • Achieved record FY26 net sales, gross profit, and operating income, marking the fourth consecutive year for sales/gross profit and third for operating income.

  • Delivered record Q4 gross profit and operating income, with adjusted operating income increasing 17.5%.

  • Bachan's sales grew 8.7% with total distribution points up 16.6%, and Texas Roadhouse rolls sales increased 28.1% in Q4, reaching $58 million for the 52-week period (up 76% YoY).

  • Gross margin expanded for the 12th consecutive quarter, increasing 220 basis points on a reported basis and 160 basis points adjusted.

  • Generated record operating cash flow of $283.8 million for FY26, an 8.5% increase over the prior year, supporting a 63-year streak of annual dividend increases.

Concerns

5

  • Reported consolidated net sales declined 2.2% in Q4, primarily due to the discontinuation of a temporary supply agreement and reduced sales into the club channel.

  • Retail sales were unfavorably impacted by reduced sales into the club channel and comparison to last year's pipeline build of Texas Roadhouse dinner rolls.

  • Foodservice sales volumes were nearly unchanged, with gains in national chain accounts offset by reduced sales to other chains and lower branded foodservice proxy sales.

  • The Cyclospora outbreak is estimated to result in a net sales headwind of approximately 250 basis points in Q1 FY27 for both retail and foodservice segments.

  • Q1 FY27 operating income is expected to decline by roughly 15% due to the Cyclospora impact, despite a forecast of moderate inflation for the full fiscal year.

Guidance & targets

CategoryTargetConfidence
Effective tax rate
23%
medium materiality
High
Total capital expenditures
$90 million
medium materiality
High
Consolidated gross margins growth
about 100 basis points
high materiality
High
Consolidated revenue growth
mid-single-digit
high materiality
High
Retail revenue growth
mid-single digits
medium materiality
High
Foodservice revenue growth
low to mid-single digits
medium materiality
High
SG&A growth
10% to 15%
medium materiality
High
Bottom line growth
mid-single digit
high materiality
High
Operating income decline
15%
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Retail
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. Bachan's and specialty bakery items performed strongly.
Bachan's incremental sales: $15.4 millionBachan's sales growth: 8.7%Bachan's total distribution points growth: 16.6%Texas Roadhouse rolls sales growth: 28.1%Texas Roadhouse rolls 52-week sales: $58 millionTexas Roadhouse rolls 52-week sales growth: 76% vs prior yearTexas Roadhouse rolls sales velocity: nearly 2x category averageSister Schubert's + Texas Roadhouse market share: 61.7%New York Bakery sales growth: 2.8%New York Bakery market share: 45.5%New York Bakery market share gain: 220 bpsKoutons market share: 28.4%Koutons market share gain: 100 bps
increased 0.9%0.9%——
Foodservice
Adjusted net sales and sales volumes were nearly unchanged. Gains with leading national chain restaurant accounts were offset by reduced sales to other chains and lower sales of branded foodservice proxy.
Sales volumes (pound ship): nearly unchanged
nearly unchangednearly unchanged——

Product announcements

ProductTypeDetails
Bachan's wing saucelaunch
Bachan's Japanese Mayolaunch
New York Bakery, Chase Prakash Breadlaunch
Chick-fil-A avocado lime ranch dressing (single-serve packs)launch
Sister Schubert sausage rollslaunch

Deals & partnerships

Bachan's Acquisition of a Japanese barbecue sauce brand.

Bachan's is known for its authentic and clean label products. The acquisition resulted in slightly less than $200 million of long-term debt on the balance sheet.

Capital programs

Atlanta facility (College Park) expansion underway

Benefit:quite a bit of manufacturing capacity

Investing in the College Park facility in Atlanta and scaling it, primarily to support the growth in Chick-fil-A. This is the largest piece of the $90 million FY27 CapEx.

Risks & headwinds

Cyclospora outbreak Q1 FY27, with recovery expected over ~4 months

Net sales headwind of approximately 250 basis points in Q1 FY27 for both retail and foodservice segments. Produce categories (lettuce, veggies, fruit) saw declines of 13-30% in late July, and dressings (Olive Garden, Marzetti Classics) were down 11-15%.

Mitigation:Monitoring impact and modeling recovery based on the 2018 outbreak, which showed a 'half-life' improvement trend.

Moderate level of inflation FY27

Approximately 5% commodity inflation forecast for FY27. Soybean oil prices were up nearly 40% year-to-date.

Mitigation:Plan to offset through pricing actions and ongoing cost savings programs, focusing on continued margin improvement.

External economic factors and consumer behavior FY27

Not quantified, but noted as potentially impacting demand.

Mitigation:Focus on providing affordable solutions and 'affordable moments of joy' to consumers in an uncertain economic environment.

Softness in salad dressing category Recent quarters, Q1 FY27

Olive Garden dressings down 11% (low watermark), Marzetti Classics down 15% (low watermark) due to Cyclospora.

Mitigation:Range of marketing and innovation activities in flight to restore these segments to growth.

What to watch in Q1 FY27

Cyclospora outbreak impact on net sales

Next quarter (Q1 FY27)
Current ~250 bps headwind in Q1 FY27
Target Improvement off low watermark, trending towards pre-outbreak levels

Why it matters

Significant short-term sales headwind; recovery trajectory is key to FY27 outlook and overall business performance.

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 food service segments.

Q&A highlights

How will gross margin evolve in FY27 given commodity inflation (soybean oil), Bachan's integration, and pricing actions?

Management expects about 100 basis points of consolidated gross margin growth in FY27. Approximately half will be driven by Bachan's accretion, and the other half by continued commodity risk management and cost savings initiatives. Pricing actions are in place to offset an estimated 5% commodity inflation, which would otherwise be dilutive.

“As we look at fiscal '27, we're estimating about 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 hand are continued commodity risk management program and our cost savings initiatives combined.”

asked by Jim Salera · answered by Thomas K. Pigott

2 min read 7 chapters

Detailed narrative

FY26 Performance Highlights

The company achieved record highs in net sales, gross profit, and operating income for fiscal year 2026, marking the fourth consecutive year of record net sales and gross profit, and the third consecutive year for operating income. This performance was attributed to strong execution, productivity programs, and revenue growth management, demonstrating resilience in a challenging operating environment.

Bachan's Brand Performance & Outlook

Bachan's, the newly acquired Japanese barbecue sauce brand, showed strong performance with sales up 8.7% and total distribution points increasing 16.6% in Q4 FY26. The integration is on track, and the company projects stronger top-line growth in H2 FY27 driven by marketing investments and new product launches, including Bachan's wing sauce and Japanese Mayo, which target significant category expansion opportunities.

Texas Roadhouse & Sister Schubert's Rolls

Texas Roadhouse rolls delivered $58 million in sales for the 52-week period, up 76% year-over-year, with sales velocity nearly 2x the category average. Combined with Sister Schubert's, the brands hold a category-leading market share of 61.7%. Management believes the Texas Roadhouse item has the potential to reach $100 million in retail sales, driven by expanding household penetration from its current 2.5%.

Gross Margin Expansion Drivers

Gross margin expanded for the 12th consecutive quarter, driven by productivity programs (cost savings across network changes, procurement, manufacturing, value engineering, distribution), revenue growth management, and ongoing pricing net of commodity management efforts. The addition of Bachan's also contributed accretive gross margins, with an expected 100 basis points of consolidated margin growth in FY27.

Cyclospora Outbreak Impact and Recovery

The Cyclospora outbreak is estimated to cause a net sales headwind of approximately 250 basis points in Q1 FY27 for both retail and foodservice segments. Management observed significant declines in produce and dressing categories in late July, but trends are showing improvement. Based on the 2018 outbreak, they model a 'half-life' recovery, with trends returning to normal levels within about four months.

Strategic Growth Pillars for FY27

The company's growth plan for FY27 is built on three pillars: accelerating core business growth, simplifying the supply chain to reduce costs and grow margins, and expanding the core through focused M&A and strategic licensing. This strategy aims to leverage team strength, operating strategy, and balance sheet to drive continued performance.

Capital Allocation & Financial Flexibility

The company delivered record operating cash flow of $283.8 million in FY26, an 8.5% increase. With relatively low long-term debt of under $200 million and strong cash flow, the company has financial flexibility for continued investment in the business and shareholder returns, including a 63-year streak of annual dividend increases and $36.3 million in share buybacks in FY26.

AI-generated summary of the company's earnings call. Not investment advice.