The Marzetti (MZTI) Q3 2026 earnings summary

Executive summary

• Consolidated net sales for the third quarter declined 1.0% year-over-year to $453.4 million, with Retail segment sales down 3.2% and Foodservice segment sales up 1.5%.

• Gross profit reached a record $107.2 million, up 1.2% year-over-year, with gross margin improving by 50 basis points to 23.6%.

• Net income for the quarter was $37.1 million, or $1.35 per diluted share, down 9.4% from the prior year, impacted by higher SG&A and acquisition costs.

• Completed $400 million acquisition of Bachan's, a fast-growing Japanese-American barbecue sauce brand, now the #2 retail BBQ sauce, funded by $200 million term loan and cash.

• Operating cash flow year-to-date rose over 30% to $229 million, with strong liquidity and a 5% dividend increase marking 63 consecutive years of increases.

Financial highlights

• Adjusted net sales (excluding non-core TSA) declined 0.9% to $451.8 million.

• Gross margin improved to 23.6% (reported) and 23.7% (adjusted), marking the 11th consecutive quarter of improvement.

• SG&A expenses increased $5.4 million to $61.4 million, including $3.5 million in acquisition-related costs.

• Operating income for the quarter was $46.6 million, down 6.6% year-over-year, mainly due to higher SG&A.

• Diluted EPS fell $0.14 (9.4%) to $1.35.

• Operating cash flow for the nine months was $228.7 million, up from $173.3 million.

Outlook and guidance

• Q4 retail sales expected to benefit from new product launches, including Marzetti Protein Ranch and new Olive Garden and Chick-fil-A dressing flavors.

• Foodservice segment anticipates continued growth from select national chain restaurant customers.

• Bachan's expected to contribute incremental sales in Q4, with annualized run rate moderately above $87 million and operating margins similar to current levels.

• Modest inflationary pressures, especially on input costs like soybean oil, are expected to persist but are being mitigated by coverage and pricing strategies.

• FY2026 capital expenditures projected at $80 million.