Sign in

You're signed outSign in or to get full access.

MC

MARZETTI CO (MZTI)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 delivered record results: revenue $493.5M (+5.8% YoY), gross profit $118.8M (+7.2% YoY), and operating income $59.3M (+6.1% YoY), with adjusted operating income $60.4M (+8.1% YoY) as Milpitas restructuring reduced EPS by $0.03 to $1.71 .
  • Revenue, EPS, and EBITDA all beat Wall Street consensus: revenue $493.5M vs $474.2M estimate*, EPS $1.71 vs $1.696 estimate*, EBITDA $77.1M vs $74.3M estimate*; the beat was driven by robust Foodservice demand from national accounts, licensing momentum (Chick‑fil‑A, Texas Roadhouse), and cost savings initiatives .
  • Margin quality improved: reported gross margin expanded 30bps; adjusted gross margin expanded 80bps to 24.6% excluding non-core TSA sales, reflecting supply chain productivity and revenue management .
  • Outlook: management expects Retail growth from licensing and core brands and Foodservice supported by select QSR customers; tax rate guided to ~23% FY26, capex $75–$85M, and Foodservice outlook “modestly improved” vs prior caution, while TSA sales conclude by Q3 FY26, aiding mix and margin .

What Went Well and What Went Wrong

What Went Well

  • Record sales, gross profit, and operating income; adjusted operating income +8.1% YoY amid disciplined SG&A investment .
  • Foodservice strength with national accounts (Chick‑fil‑A, Domino’s, Taco Bell) driving outperformance despite a softer industry backdrop; management: “we are blessed enough to be able to win with the winners… scream flavor” .
  • Retail licensing and brands momentum: Chick‑fil‑A sauces sell‑through +9.6% YoY with club channel expansion; New York Bakery garlic bread +8.6% share gain; Texas Roadhouse dinner rolls and gluten‑free toast boosting category share .

What Went Wrong

  • Retail segment operating income declined YoY; margin headwinds from higher egg costs (near-term pricing lag) and increased marketing spend to support growth .
  • Non-core TSA sales ($10.7M) diluted margin mix (no meaningful gross profit contribution), necessitating adjusted margin disclosures .
  • Continued restructuring/impairment charges ($1.1M) tied to Milpitas closure pressured GAAP EPS by ~$0.03, indicating ongoing network optimization costs .

Financial Results

Consolidated Performance

Metric (USD, unless noted)Q1 2025 (YoY comp)Q4 2025 (prior qtr)Q1 2026 (current)Q1 2026 Consensus*
Revenue ($ Millions)$466.6 $475.4 $493.5 $474.2*
Gross Profit ($ Millions)$110.8 $106.1 $118.8 —
Gross Margin (%)23.8% (calc from 110.8/466.6) — use reported: 24.1% 22.3% 24.1% reported; 24.6% adjusted —
SG&A ($ Millions)$55.0 $62.1 $58.4 —
Operating Income ($ Millions)$55.9 $38.9 $59.3 (GAAP); $60.4 adjusted —
Diluted EPS ($)$1.62 $1.18 $1.71 $1.696*
EBITDA ($ Millions)—$61.206*$77.112*$74.280*

Values marked with * retrieved from S&P Global.

Segment Results

Segment MetricQ1 2025Q4 2025Q1 2026
Retail Net Sales ($ Millions)$239.6 $241.6 $247.8
Foodservice Net Sales ($ Millions)$227.0 $233.9 $245.6 (reported) / $234.9 adjusted
Retail Operating Income ($ Millions)$56.2 $40.9 $50.6
Foodservice Operating Income ($ Millions)$24.3 $28.8 $34.8

KPIs and Cash Flow

KPIQ1 2025Q4 2025Q1 2026
Retail Volume (% YoY, lbs shipped)—+2.1% +3.2%
Foodservice Volume (% YoY, lbs shipped)—−1.7% (ex‑TSA) +0.5% (ex‑TSA)
Adjusted Consolidated Net Sales ($ Millions)——$482.8
Adjusted Gross Margin (%)——24.6%
Operating Cash Flow ($ Millions)——$69.5 (up $49.6 YoY)
Cash & Equivalents ($ Millions)—$161.5 (Jun 30) $182.2 (Sep 30)
Dividend per Share ($)$0.90 $0.95 $0.95
Capex ($ Millions)——$15.6 (Q1); FY26 $75–$85 guided

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax Rate (%)FY 2026—~23% New disclosure
Capital Expenditures ($)FY 2026—$75–$85M New disclosure
Foodservice Sales OutlookFY 2026“Flattish” commentary at Q4 FY25 Modestly improved outlook Raised qualitatively
TSA Sales ConclusionThrough Q3 FY 2026Commenced Mar 2025; up to 12 months Expected to conclude by quarter ending 3/31/2026 Timing affirmed
DividendOngoing$0.90 prior year $0.95 per quarter Increased YoY

Note: Company did not provide explicit revenue or margin ranges; guidance focuses on operational drivers and qualitative outlook .

Earnings Call Themes & Trends

TopicQ-2 (Q3 FY2025)Q-1 (Q4 FY2025)Q1 FY2026Trend
Licensing momentum (Chick‑fil‑A, Texas Roadhouse)Not available in filings reviewedExpansion into club channel; Texas Roadhouse rolls distribution growth Chick‑fil‑A sell‑through +9.6%; continued club expansion; strong household penetration Strengthening
Supply chain/productivity—Ongoing cost savings driving margin improvement Focus on supply chain productivity, value engineering, revenue management; adjusted GM +80bps Improving margins
Foodservice demand—Supported by select QSR accounts; cautious volume outlook Outperformance vs industry; 5 of 7 largest national accounts growing; outlook modestly improved Improving
Tariffs/macro/consumer—Anticipated modest inflation offset via pricing and savings Dynamic environment; modest inflation expected, offset via contract pricing; consumer under pressure Stable caution
Network optimization—Milpitas closure charges; production to conclude by Sep 30, 2025 Restructuring/impairment $1.1M; Milpitas closed; property marketed for sale Nearing completion

Management Commentary

  • “We were pleased to report record sales, gross profit and operating income for our fiscal first quarter” highlighting Retail leadership and Foodservice demand from national chains .
  • On Foodservice resilience: “We are blessed enough to be able to win with the winners… cut through this noisy backdrop and scream flavor… that really is our wheelhouse” .
  • Strategic pillars: “Accelerate core business growth; simplify our supply chain… grow our margins; expand our core with focused M&A and strategic licensing” .
  • Inflation pass-through: “We mark to market quarterly… modest inflation… we can cover by way of pricing and value engineering” .

Q&A Highlights

  • Inflation mechanics in Foodservice: quarterly mark‑to‑market pass‑through with national accounts; modest inflation manageable via pricing and value engineering .
  • Chick‑fil‑A retail momentum: ~10% sell‑through growth driven mainly by club channel distribution, plus core retail growth; retail sauces/dressings now a ~$200–$220M business in retail channels .
  • Foodservice outperformance vs industry: strength concentrated in top national accounts (Chick‑fil‑A LTO sauces, Domino’s, Taco Bell); outlook modestly improved vs prior “flattish” commentary .
  • Retail profitability drivers: near‑term margin headwind from egg cost timing and elevated marketing spend; network savings currently flow more to Foodservice, expected to balance over time .
  • Consumer tone: softer U.S. consumer, but “affordable luxuries” and flavor-led innovation sustaining demand across New York Bakery, Texas Roadhouse rolls, Marzetti dips .

Estimates Context

  • Q1 2026 results beat consensus: revenue $493.5M vs $474.2M estimate*; EPS $1.71 vs $1.696 estimate*; EBITDA $77.1M vs $74.3M estimate* . Values retrieved from S&P Global.
  • Prior quarter (Q4 2025) was roughly in-line: revenue $475.4M vs $458.0M estimate*; EPS $1.18 vs $1.334 estimate*; EBITDA $61.2M vs $60.2M estimate* . Values retrieved from S&P Global.
  • Implications: upward estimate revisions likely for Foodservice and consolidated margins given adjusted gross margin expansion and improved Foodservice outlook; Retail profitability cadence may temper near-term EPS lift due to marketing and egg cost timing .

Key Takeaways for Investors

  • Mix quality is improving as TSA sales wind down by Q3 FY26, supporting adjusted margin expansion and cleaner Foodservice comparables .
  • Licensing flywheel remains a growth engine (Chick‑fil‑A, Texas Roadhouse) with channel expansion (club) boosting household penetration and category share—sustained Retail volume momentum despite consumer softness .
  • Foodservice is outperforming peers due to concentration in winning national accounts and flavor‑differentiated categories; management raised qualitative outlook, a positive catalyst for estimate momentum .
  • Margin trajectory remains positive (adj. GM +80bps), powered by supply chain productivity and revenue management; watch for incremental flow‑through to Retail as network optimization benefits rebalance .
  • Capital allocation is balanced: capex $75–$85M focused on cost savings and Atlanta facility integration; dividend growth sustained at $0.95/share with a debt‑free balance sheet and $182M cash, providing flexibility .
  • Near‑term risks: commodity cost variability (eggs), promotional investment cadence, and broader consumer softness; pass‑through mechanisms and value engineering mitigate inflation risk in Foodservice .
  • Trading lens: the all‑around beat, improved Foodservice outlook, and margin expansion are positive near‑term catalysts; monitor forthcoming quarters for Retail margin normalization and TSA sunset benefits.

Footnote: Values marked with * retrieved from S&P Global.