The Marzetti Company — First Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net sales declined 2.4% year-over-year to $481.5 million; excluding $10.7 million in non-core TSA sales from the prior year, adjusted sales declined 0.3%.
• Consolidated gross profit decreased $8.0 million to $110.8 million, with gross profit margin falling 110 basis points to 23.0%.
• SG&A expenses increased $10.9 million to $69.3 million, driven by incremental core costs for the Bachan's acquisition and $2.4 million in noncash amortization of intangible assets.
• Consolidated operating income dropped $17.8 million to $41.4 million; adjusted operating income declined $16.6 million to $43.9 million.
• Net income fell $17.9 million to $29.3 million, or $1.07 per diluted share, compared to $47.2 million ($1.71 per share) in the prior year.
• Adjusted diluted EPS was $1.14, down from $1.74 in the prior year.
• Interest expense totaled $2.8 million in the current quarter versus zero in the prior year, resulting from a $200 million term loan used to finance the Bachan's acquisition.
• Cash and equivalents decreased to $17.5 million from $25.1 million as of June 30, 2026.
• Long-term debt decreased to $186.8 million from $189.3 million as of June 30, 2026.
• Cash dividends per common share increased to $1.00 from $0.95 in the prior year.

Guidance and Future Outlook:

• Management anticipates Retail segment sales will continue to benefit from the Bachan's acquisition and contributions from new product launches planned for the remainder of the fiscal year.
• Foodservice segment sales are expected to remain supported by select quick-service restaurant customers within national chain accounts.
• The company expects a moderate level of commodity cost inflation and significantly higher diesel and freight costs for the remainder of the fiscal year.
• Management plans to mitigate cost pressures through inflationary pricing and cost savings programs while focusing on margin improvement.

Business Segments and Product Lines:

• Retail segment net sales increased 2.0% to $252.7 million, including $17.8 million in incremental sales from the newly acquired Bachan's brand.
• Retail segment sales volume (pounds shipped) increased 0.4%; Bachan's accounted for 720 basis points of Retail net sales growth and 750 basis points of volume growth.
• Foodservice segment net sales decreased 6.9% to $228.8 million; excluding non-core TSA sales, adjusted Foodservice sales decreased 2.6%.
• Foodservice segment sales volume (pounds shipped) fell 7.6%, with core sales volume declining 4.1%.
• Bachan's brand sales increased 10.7% per Circana scanner data, gaining share in the barbecue sauce category.
• Texas Roadhouse® dinner roll sales increased 21.3% per Circana scanner data.
• A temporary supply agreement (TSA) with Winland Foods, Inc., which contributed $10.7 million in non-core sales in the prior year, concluded during the quarter ended March 31, 2026.

Market and Competitive Landscape:

• Both Retail and Foodservice segments were significantly impacted by a cyclospora outbreak, estimated to reduce Retail net sales by approximately 4% and Foodservice net sales by approximately 2%.
• The cyclospora impact on sales has moderated in recent weeks.
• The company faces competition regarding price and product in the specialty food market.

Risks and Challenges:

• The cyclospora outbreak caused significant headwinds to top and bottom-line results.
• Higher production costs were driven by lower production volumes, significantly higher diesel and freight costs, and commissioning costs for new capacity at the Atlanta, Georgia facility.
• Risks include the ability to successfully integrate the Bachan's business, changes in consumer demand, foodborne outbreaks, inflationary pressures, and adverse changes in freight and energy costs.
• Potential disruptions from geopolitical events, labor availability, and supply chain dependencies are noted.

Management Commentary and Tone:

• CEO David A. Ciesinski acknowledged the significant negative impact of the cyclospora outbreak on the quarter's results but noted that other business areas performed well and the outbreak's impact has moderated.
• Management expressed confidence that the Bachan's acquisition will continue to drive growth in the Retail segment.
• The tone indicates a focus on mitigating cost inflation through pricing and operational efficiency despite current headwinds.

Other Key Points:

• The company completed the acquisition of Bachan's, Inc., a Japanese Barbecue Sauce brand, adding $17.8 million in net sales.
• The acquisition was partially financed with a $200 million term loan, resulting in the first quarter of interest expense.
• In the prior year, the company incurred $1.1 million in restructuring and impairment charges related to the closure of its Milpitas, California facility.
• A conference call regarding these results was held on November 3, 2026.