The Marzetti Company

Reported first-quarter consolidated net sales declined 2.4% to $481.5 million. Operating income decreased $17.8 million to $41.4 million, gross profit fell $8 million to $110.8 million, reported gross margin declined 110 basis points, and diluted EPS was $1.07, down $0.64 or 37.4% from the prior year. Excluding noncore TSA sales, adjusted net sales declined 0.3%; management estimated cyclospora reduced revenue by about 300 basis points. Retail sales increased 2.0% to $252.7 million, while Foodservice sales excluding TSA fell 2.6%. For the full year, management still expects mid-single-digit net sales growth, expects Q2 gross margins to be flat, and now sees full-year gross margin expansion of 25 to 75 basis points. Capex remains forecast at $90 million, the tax rate for the remainder of fiscal 2027 is expected to be 23%, and the company ended the quarter with less than $200 million of debt and an effective interest rate of about 5%.

Dave Ciesinski framed the quarter as an unusual disruption rather than a structural break, pointing to cyclospora and freight inflation as the main hits. He said the outbreak was concentrated in the Great Lakes, where the company has outsized exposure, and noted that the impact has moderated in recent weeks. He sounded constructive on the rest of the year, highlighting the return of marketing spending, pricing actions, and a pipeline of new items across Retail and Foodservice.

Tom Pigott emphasized that first-quarter results were worse than expected because both cyclospora and fuel-related freight costs were heavier than planned. He quantified a roughly 120 basis point freight headwind and an additional 40 basis point hit from cyclospora-related mix and lost cost savings, then said Q2 margins should be flat before improvement returns in the second half. He also gave specific capital and balance-sheet details: operating cash flow was $51 million, capex was $17.8 million in the quarter with a full-year capex forecast of $90 million, the quarterly dividend was $1 per share, and debt was below $200 million.

Analysts focused on whether cyclospora could set up an outsized recovery, and management said the Great Lakes concentration could create a stronger rebound as the category normalizes and advertising returns in January. Questions also centered on freight and gross margin, with management saying the freight headwind continues through Q2 but should moderate later, supporting the updated 25 to 75 basis point full-year margin expansion view. On growth drivers, management said Chick-fil-A sauce should add to Foodservice in Q2 and Q3, Bachan's should remain a lower-double-digit growth brand this year, and newer initiatives like mayo, Tajin, and Marzetti-branded sauces are more likely to matter in fiscal 2028 than in fiscal 2027.