Q4 2026 The Marzetti Company Earnings Call Transcript
Key Points
- Record fiscal year 2026 with record highs in net sales, gross profit, and operating income, marking the fourth consecutive year of record net sales and gross profit.
- Gross margin expanded for the 12th consecutive quarter, driven by productivity programs and cost savings initiatives.
- Bachan's acquisition is performing well, with sales up 8.7% and distribution points increasing 16.6%, and is expected to be a key growth driver in fiscal 2027.
- Texas Roadhouse dinner rolls continue to grow strongly, with sales up 28.1% in the quarter and 76% for the year, achieving a category-leading market share of 61.7% when combined with Sister Schubert's.
- Record operating cash flow of $283.8 million, up 8.5%, provides financial flexibility for investments, dividends (63 years of increases), and share buybacks.
- Foodservice segment continues to outperform, with growth from national chain accounts like Chick-fil-A, Domino's, and Taco Bell.
- New product innovations for Bachan's (wing sauce and Japanese mayo) are expected to drive growth in the second half of fiscal 2027.
- Company expects mid-single-digit revenue growth in fiscal 2027, driven by Bachan's and foodservice, with a positive outlook for gross margin expansion of 100 basis points.
- Reported consolidated net sales declined 2.2% in the fourth quarter, impacted by reduced club channel sales and a pipeline build comparison for Texas Roadhouse rolls.
- Cyclospora outbreak is expected to cause a 250 basis point net sales headwind in fiscal first quarter 2027, affecting both retail and foodservice segments.
- Core retail business, excluding Bachan's, saw organic volumes down about 7% in the quarter, with softness in the dressing and licensing categories.
- Commodity inflation, particularly soybean oil up 40% year-to-date, is expected to be around 5% in fiscal 2027, requiring pricing actions to offset.
- Fiscal first quarter 2027 is expected to have flattish net sales and a 15% decline in operating income due to the Cyclospora impact.
- SG&A expenses increased by $12.3 million in the quarter due to acquisition-related costs, though adjusted SG&A was flat.
- The company faces ongoing challenges in the salad dressing category, which has been a drag for several quarters, requiring focused efforts to restore growth.
Good morning. My name is Kevin and I'll be your conference call facilitator today. At this time, I'd like to welcome everyone to the Marzetti Company's fiscal year 2026 fourth quarter conference call. Conducting today's call will be Dave Ciesinski, President and CEO; and Tom Pigott, CFO. All lines have been placed on mute to prevent any background noise.
After the speakers have completed their prepared remarks, there will be a question-and-answer period. (Operator Instructions)
And now to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for the Marzetti Company.
Good morning, everyone, and thank you for joining us today for The Marzetti Company's fiscal year 2026 fourth quarter conference call. Our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
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