The Marzetti Company (MZTI) drops on deep earnings miss
May 4, 202610 min read
Key Takeaway
The Marzetti Company (MZTI) dropped after fiscal Q3 results missed on both revenue and EPS, with shares falling 8.67% as investors focused on weaker Retail demand. Gross margin improved again, but higher SG&A and softer top-line trends outweighed the benefit, signaling that cost control is not yet enough to fully offset volume pressure.
The Marzetti Company (MZTI) drops after a fiscal Q3 miss that gave investors an awkward mix of weaker sales, lower EPS, and better gross margin. Shares were down 8.67% in regular trading to $113.60 as the market focused on the revenue shortfall and softer Retail trends more than the company’s margin gains and new Bachan’s acquisition.
Key Takeaways
MZTI earnings missed on both headline lines. EPS came in at $1.35 versus a $1.57 estimate, while revenue was $453.4M versus roughly $460M to $464.53M expected.
Retail was the weakest segment in the quarter. Retail net sales fell 3.2% and volume declined 5.6%, offsetting better trends in frozen garlic bread, dinner rolls, Chick-fil-A sauces, and croutons.
Foodservice held up better. Excluding the temporary supply agreement impact, Foodservice net sales rose 1.8% and volume improved 0.8%, helped by demand from national chain restaurant customers.
Gross profit was a bright spot. Gross profit rose 1.2% to $107.2M, and gross margin expanded 50 basis points to 23.6%, marking the 11th straight quarter of year-over-year margin improvement.
Management highlighted the Bachan’s acquisition as the main strategic growth driver. The company closed the $400M deal on May 1 and said the business is running at a net sales pace moderately above the $87M reported in calendar 2025.
The CFO pointed to higher SG&A as a key drag on earnings. Selling, general, and administrative expense rose $5.4M, or 9.5%, driven by acquisition-related costs, IT expense, and personnel investments.
Analyst sentiment was already cautious and remained that way after the print. Consensus stands at Hold, and the clearest recent target change was Stephens cutting its target to $160 from $180 on April 27.
Financial Performance Breakdown From MZTI Earnings
The Marzetti Company earnings analysis starts with the simple part: the quarter missed expectations. Fiscal Q3 revenue was $453.4M, down 1% from $457.8M a year earlier. EPS was $1.35, down from $1.49 in the year-ago quarter and below the $1.57 consensus estimate.
That miss also extended a choppy recent pattern. In the prior four reported quarters, MZTI posted EPS of $2.15, $1.71, $1.18, and $1.49. This quarter’s $1.35 sits below the December quarter’s $2.15 and below the March 2025 quarter’s $1.49. In other words, this was not a one-line stumble. It fits a broader pattern of uneven earnings delivery.
Revenue also stepped down from the prior quarter. MZTI posted $0.52B in the December quarter, then $0.45B in the March quarter. Net income followed the same direction, falling from $0.06B in the prior quarter to $0.04B.
However, the quarter was not weak across the board. Gross profit rose to a record $107.2M, up 1.2% year over year. Gross margin expanded 50 basis points to 23.6%. That matters because it shows the company’s cost savings work is still real, even when volume is not cooperating.
This quarter marked the eleventh straight quarter of gross margin improvement versus the prior year. — Thomas K. Pigott, CFO, Earnings Call
The margin gains came from procurement, manufacturing, value engineering, and distribution savings. That is the good news. The bad news is that SG&A climbed faster than gross profit. Selling, general, and administrative expense increased $5.4M, or 9.5%. As a result, operating income fell by $3.3M.
By segment, Retail was the pressure point. Retail net sales declined 3.2%, and volume measured in pounds shipped fell 5.6%. Management said category softness and reduced sales into the club channel more than offset gains in New York Bakery frozen garlic bread and Sister Schubert’s dinner rolls. Chick-fil-A sauces and branded croutons also posted share gains, but those wins did not carry the full segment.
Foodservice was steadier. Excluding the non-core temporary supply agreement impact, Foodservice net sales increased 1.8% and volume improved 0.8%. That growth was tied to inflationary pricing and stronger demand from several national chain restaurant customers.
Longer-term segment data shows why Foodservice still matters to the story. For fiscal 2025, Foodservice generated $905.7M in revenue and Retail generated $1.003B. Retail remains larger, but not by much. Therefore, a stable Foodservice business can cushion a soft Retail quarter, though it did not fully rescue this one.
Market Reaction and Analyst Response After The Marzetti Company Earnings
The market reaction was blunt. MZTI drops 8.67% in regular trading to $113.60, with volume of 681,896 against an average of 287,521. That is more than double normal turnover, which usually means the market did not treat this as a routine miss.
The first reaction started before the opening bell. One market report said the shares fell 1.51% in premarket trading after the company posted the EPS and revenue miss. Then the selling deepened during the regular session. That sequence fits the usual pattern when a defensive food name misses on the top line and does not offset it with a cleaner earnings beat.
Analyst sentiment was already cautious before the report. The current consensus is Hold, with 3 Buy ratings, 9 Hold ratings, and 1 Sell rating. That setup matters because a stock with a Hold-heavy base often gets less benefit of the doubt when a quarter comes in light.
The clearest recent analyst action was Stephens lowering its price target to $160 from $180 on April 27, one week before earnings, while maintaining its rating. That target cut now looks less like an overreaction and more like a warning shot.
Other published analyst snapshots also frame a restrained view. Benzinga listed a consensus target of $182.67 based on 3 analysts, while TipRanks showed an average 12-month target of $164.33 and a Hold consensus. There was no verified wave of fresh post-earnings upgrades to counter the stock’s drop. On a day like this, silence from the Street can be its own commentary.
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The strategic center of the MZTI earnings call was Bachan’s. CEO David Ciesinski spent significant time on the newly closed acquisition, and that emphasis was not accidental. When the quarter itself is mixed, management often points investors to the next growth engine. In this case, the company has a real asset to discuss, not just polished adjectives.
Since our announcement, the Bachan's business has continued on a path of strong growth, with Circana data for the quarter ending March 31 showing sales growth of over 25% and TDPs up over 50%. — David A. Ciesinski, President and CEO, Earnings Call
Ciesinski also tied the deal directly to Marzetti’s category focus. Sauces, dressings, and dips now represent about two-thirds of consolidated net sales, while sauces alone account for nearly 40%. That gives the Bachan’s acquisition a clear strategic fit. It is not a random bolt-on. It is an attempt to put more growth inside the company’s strongest lane.
In the era of M&A and GLP-1s, we believe consumers will continue to seek flavor enhancements for their meals. — David A. Ciesinski, President and CEO, Earnings Call
That quote is classic CEO framing, but it also carries a practical message. Plain English: if eating habits change, flavor still sells. Marzetti wants to own more of that wallet share.
CFO Thomas Pigott handled the harder math. He acknowledged the revenue decline, then focused on profit structure, cash flow, and capital allocation. The company ended the quarter with over $218M in cash and a debt-free balance sheet before closing Bachan’s. The $400M acquisition was funded with a $200M term loan and cash, and Pigott said the interest rate on the debt is currently below 5%.
Selling, general, and administrative expenses grew $5.4 million, or 9.5%. The increase was primarily driven by a net increase in acquisition-related costs, higher IT expenses, and personnel-related costs as we invested to support continued growth. — Thomas K. Pigott, CFO, Earnings Call
Pigott also gave one of the quarter’s most useful guideposts. For the full year of fiscal 2026, capital expenditures are forecast at $80M. Meanwhile, the company expects the Bachan’s business, for the portion included in fiscal Q4, to run at net sales moderately above the $87M it reported in calendar 2025, with an operating margin similar to Marzetti’s current level.
Analyst Q and A Highlights From the MZTI Earnings Call
The most revealing exchange in the Q&A focused on soybean oil, a key input cost and one of the fastest ways to test whether margin progress is durable or just temporary. James Salera of Stephens went straight at the issue, asking how long Marzetti’s commodity coverage lasts and how the recent run-up affects margin planning for fiscal 2027.
Can you give us a sense for the duration of the coverage in place right now? ... As you are doing demand forecasting and procurement planning for 2027, how does the recent run-up impact the mix and the margin outlook? — James Salera, Stephens
Ciesinski’s answer mattered because it was specific. He said the company has intermediate-term coverage through essentially the end of the summer on board and basis. He also said that window gives Marzetti enough time to move into the market and implement pricing. That response did not erase commodity risk, but it did show the company is not walking into the next few months unprotected.
We have what I would call intermediate-term coverage that takes us through essentially the end of the summer on board and basis, which should be more than enough time for us to be able to get into the marketplace and implement pricing. — David A. Ciesinski, President and CEO, Earnings Call
That exchange also exposed the tension inside the quarter. Gross margin improved again, but analysts wanted to know how much of that strength can survive if input costs rise. Management defended its pricing and commodity risk management playbook. The fact that Stephens led with soybean oil, not Bachan’s, says a lot about where the Street’s skepticism sits right now.
A second important topic came from management’s prepared remarks and framed the likely analyst pushback around Bachan’s economics. The company said Bachan’s posted sales growth above 25% in the latest Circana period and that the acquired business is entering Marzetti at a net sales run-rate moderately above $87M. That gives analysts a baseline for evaluating whether the $400M purchase price can produce enough growth and margin support.
A third revealing thread was the split between Retail softness and Foodservice resilience. Analysts did not need to ask the obvious question for the numbers to answer it. Retail volume fell 5.6%, while Foodservice volume rose 0.8%. Management defended the Retail business with market share gains in several categories, but the quarter still showed that share gains do not help much if category demand and channel mix move the wrong way.
Bottom Line on The Marzetti Company Earnings Analysis
The Marzetti Company earnings analysis comes down to a familiar market verdict: margin progress was real, but the miss on EPS and revenue mattered more. MZTI drops because investors saw a defensive food company with soft Retail volume, higher SG&A, and a growth story that now leans heavily on Bachan’s.
For investors, the next phase is straightforward. If Bachan’s scales as management expects and Foodservice stays firm, the stock has a cleaner recovery path. If Retail softness persists, the quarter will look less like a bump and more like a warning.
+Why did The Marzetti Company stock fall after earnings?
The Marzetti Company (MZTI) fell because fiscal Q3 EPS of $1.35 missed the $1.57 estimate and revenue of $453.4 million came in below expectations. Investors also reacted to a 3.2% decline in Retail net sales and a 5.6% drop in Retail volume.
+Did Marzetti's margins improve in the latest quarter?
Yes, gross profit rose 1.2% to $107.2 million and gross margin expanded 50 basis points to 23.6%. That marked the 11th straight quarter of year-over-year gross margin improvement.
+How did Marzetti's Retail and Foodservice segments perform?
Retail was the weak spot, with net sales down 3.2% and volume down 5.6% as club channel softness offset gains in garlic bread, dinner rolls, sauces, and croutons. Foodservice held up better, with net sales up 1.8% and volume up 0.8% excluding the temporary supply agreement impact.
+What is the impact of the Bachan's acquisition on MZTI?
Marzetti closed the $400 million Bachan's acquisition on May 1 and said the business is running at a net sales pace moderately above the $87 million reported in calendar 2025. Management views it as a key growth driver, but acquisition-related costs also helped push SG&A higher in the quarter.
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