The Marzetti Company

Third-quarter consolidated net sales decreased 1% to $453.4 million; adjusted net sales, excluding TSA-related noncore sales, decreased 0.9% to $452 million. Consolidated gross profit increased 1.2% to $107.2 million, with reported gross margin up 50 basis points; management also said this was the 11th straight quarter of year-over-year gross margin improvement. Diluted EPS was $1.35, down $0.14 or 9.4% from the prior year quarter. For the first nine months of fiscal 2026, reported and adjusted net sales increased 2.2% and 0.9%, reported and adjusted gross margin increased 40 and 80 basis points, reported operating income was flat, adjusted operating income increased 1%, and operating cash flow grew 32%. For fiscal 2026, capital expenditures are expected to total $80 million. In Q4, management expects Bachan’s to contribute for about two-thirds of the quarter and guided to a net sales run rate moderately above $87 million, with an operating margin similar to Marzetti’s current level; tax rate is expected to be about 23%.

Dave Ciesinski framed Bachan’s as a strategically important addition and the first step into what he called “authentic flavors.” He emphasized that the integration will be light-touch, with the California team retained, founder Justin Gill continuing on product development and marketing, and Marzetti providing supply chain, culinary, procurement, and go-to-market support. His tone was upbeat and confident, while still acknowledging macro uncertainty, inflation, soybean oil volatility, and the need to keep investing in innovation and supply chain simplification.

Tom Pigott highlighted that revenue was modestly lower, but gross profit improved because of productivity initiatives across procurement, manufacturing, value engineering, and distribution. He cited SG&A up $5.4 million, or 9.5%, due mainly to acquisition-related costs, higher IT expenses, and personnel investments; operating income declined $3.3 million, and EPS fell to $1.35 because of lower operating income and a higher 23.3% tax rate. On cash and capital allocation, he said year-to-date operating cash flow was up over $55 million, capital additions totaled $54.6 million through nine months, full-year capex is planned at $80 million, and the company ended the quarter debt-free with over $218 million in cash before funding the $400 million Bachan’s deal with a $200 million term loan and cash on hand.

Analysts focused on soybean oil coverage, Bachan’s growth assumptions, club-channel friction, frozen bread seasonality, and whether higher IT/personnel spending will continue. Management said retail soybean oil coverage runs through roughly the end of summer and should give time to implement pricing, while Foodservice is more of a mark-to-market pass-through. On Bachan’s, they said the guide is conservative but reiterated strong enthusiasm because of continued double-digit growth, strong velocities, and the brand’s #2 barbecue sauce position; on club, they explained the issue was mainly overbuilt Chick-fil-A inventory and distribution changes on Olive Garden, not the new Zesty flavor. They also said most IT spending is now behind them and future SG&A should rise only modestly, largely in line with inflation.