The Marzetti Company Q4 FY2025 earnings call

• Fiscal year 2025 ended with record net sales, gross profit, and operating income. Thanks to teammates' contributions.
• Fourth quarter consolidated net sales grew 5% to $475.4 million, gross profit advanced 8.7% to $106.1 million.
• Retail segment growth driven by licensing (Texas Roadhouse dinner rolls, Chick-fil-A sauces, etc.) and own brands (Sister Schubert's, New York Bakery).
• Foodservice segment focused on supply chain productivity, value engineering, and revenue management.
• Tom Pigott discussed financial results: net sales breakdown (core volume, product mix, net pricing, temporary supply agreement, prior year exit impact), gross margin expansion, SG&A expenses (marketing, Atlanta integration, legal costs), dividends (6% increase), and capital expenditures (forecast $75-85M for 2026).

Retail Segment

• Net sales increased 3.1% to $241.6 million in the fourth quarter. Excluding sales from exited perimeter-of-the-store bakery items, Retail segment net sales grew 3.6%, and sales volumes in pounds shipped increased 2.9%.
• Branded products saw strong results: in frozen dinner rolls, Sister Schubert's and Texas Roadhouse brands combined to grow 52.4% with a market share of 63.8%; New York Bakery frozen garlic bread sales grew 10% (category up 3.5%) with a market share of 43.3%; Chick-fil-A sauce sales grew 17.2% with a 30 basis point market share increase; Marzetti and Chick-fil-A dressings combined for a 27.6% market share in produce dressings.

Foodservice Segment

• Excluding noncore sales from a temporary supply agreement, sales improved 1.4%, but sales volume declined 1.7%. Benefited from inflationary pricing and demand from national chain restaurant accounts.

• Fiscal 2026 retail sales expected to benefit from volume growth in licensing and core brands (Texas Roadhouse dinner rolls to ship nationally in fall 2025).
• Foodservice sales supported by select QSR customers and innovation. Anticipate modest cost inflation in 2026, offset by contractual pricing and cost savings.
• Incorporate newly acquired Atlanta-based sauce and dressing plant into manufacturing network, closing Milpitas, California sauce and dressing facility.

• Potential impact of soybean oil pricing due to biofuel demand, which is part of the commodity basket (约10% of COGS).
• Uncertainty in macroeconomic factors affecting consumer spending and product demand.
• Fluctuations in input costs and their effect on margins.

Q: Jim Salera asked about Foodservice industry traffic and innovation for FY '26.

A: David Ciesinski said commercial foodservice is modestly improving, with casual dining struggling, QSR traffic flat, and chicken operators doing better. Innovation in casual dining (meals at $15), QSR (snacking, chicken), and pizza QSR (absolute price points) will drive growth.

Q: Todd Brooks asked about G&A spend.

A: Thomas Pigott said G&A spend increase was due to marketing (almost half), Atlanta integration, legal costs, and timing of costs. Normalized G&A spend expected to grow with inflation. David Ciesinski added marketing investments drove household penetration, with 5 of 7 categories up in share.

Q: Alton Stump asked about temporary supply agreement revenue and consumer impact.

A: David Ciesinski said to exclude temporary supply agreement revenue from models. Cautiously optimistic about consumer tailwinds from interest rate and gas price changes, expecting Foodservice to improve and Retail to have growth from new items.

Q: Scott Marks asked about Retail segment profitability and Foodservice volume trajectory.

A: Thomas Pigott said Retail profitability impacted by difficult comp and ag inflation, but expected to balance out. David Ciesinski said Foodservice volume decline from some customers was offset by others, with growth expected from QSR customers and branded portfolio.