The Marzetti Company

Fourth-quarter reported consolidated net sales decreased 2.2% to $465 million. Excluding noncore TSA sales, adjusted net sales improved 40 basis points. Consolidated gross profit increased $7.9 million, or 7.4%, to $114 million. Reported operating income increased 48.2%, and adjusted operating income increased 17.5%; reported diluted EPS increased $0.58, or 49.2%, to $1.76, while adjusted diluted EPS increased $0.12 to $1.46. For the full year, reported and adjusted net sales increased 1.1% and 0.8%, reported and adjusted gross margins increased 80 and 100 basis points, and reported and adjusted operating income grew 8.3% and 4.2%, respectively. Full-year operating cash flow was a record $283.8 million. Looking to fiscal 2027, management expects mid-single-digit revenue growth, gross margin expansion of about 100 basis points, SG&A growth of 10% to 15%, capital expenditures of $90 million, and a fiscal 27 tax rate of about 23%. They also said Q1 fiscal 27 revenue will be roughly flat because of Cyclospora and that operating income in Q1 is expected to decline about 15%.

David Ciesinski emphasized that FY26 was a record year and said the company is entering FY27 with a clear three-part growth plan: accelerate core growth, simplify the supply chain to improve margins, and expand the core through focused M&A and licensing. He highlighted Bachan’s as a key growth driver, pointing to new innovation, marketing investment, and integration progress, and said the business is expected to strengthen as the year progresses. His tone was constructive but measured, with repeated references to mixed retail performance and the need to restore some dressing and licensing businesses to growth.

Tom Pigott focused on margin execution, saying gross margin improved for the 12th consecutive quarter and that Q4 gross margin expanded 22 basis points reported and 160 basis points adjusted. He attributed the improvement to productivity initiatives across procurement, manufacturing, value engineering, and distribution, plus Bachan’s accretion; he also noted the Milpitas facility sale generated an $18.5 million gain and helped the tax rate, which was 14.6% in Q4 and is expected to be 23% in fiscal 27. On capital allocation, he highlighted record operating cash flow of $283.8 million, year-to-date property additions of $77.7 million, expected FY27 capex of $90 million, long-term debt of slightly less than $200 million at June 30, $108.8 million of dividends paid in FY26, and $36.3 million of share repurchases.

Analysts focused on soybean oil inflation, Bachan’s growth potential, licensed branded product growth, Cyclospora, segment margins, and FY27 capex. Management said hedges and pricing should help protect margins from soybean oil, and Tom Pigott said FY27 gross margin is still expected to rise about 100 basis points, with roughly half from Bachan’s accretion and half from cost savings and commodity management. On Bachan’s, David Ciesinski said the business should be stronger than a simple roll-forward suggests because of core growth, mayo and wing sauce launches, and improved marketing; on Cyclospora, he said the pattern appears to be following a 2018 outbreak model and should fade over roughly four months. For licensed products, he said the portfolio should be closer to flat once Chick-fil-A pipeline noise is stripped out, with room to grow dough items.