The Marzetti Company (NASDAQ:MZTI) reported a decline in revenue and profitability for its fiscal first quarter ended September 30, 2026, as a cyclospora outbreak disrupted demand across its Retail and Foodservice businesses. Consolidated net sales fell 2.4% to $481.5 million, while net income declined to $29.3 million from $47.2 million a year earlier.
The specialty food manufacturer reported diluted earnings per share of $1.07, compared with $1.71 in the corresponding period last year. Adjusted earnings per share decreased to $1.14 from $1.74, reflecting weaker sales, lower production volumes and higher operating expenses.
Despite these pressures, the company’s recently acquired Bachan’s Japanese Barbecue Sauce brand contributed $17.8 million in additional revenue, helping support growth in the Retail segment.
Management said the impact of the cyclospora outbreak had moderated in recent weeks and expects the Bachan’s acquisition, new product launches and demand from selected restaurant customers to support performance during the remainder of fiscal 2027.
The Marzetti Company reported consolidated net sales of $481.5 million, down 2.4% from $493.5 million in the prior-year quarter.
The comparison was affected by $10.7 million in non-core revenue generated under a temporary supply agreement with Winland Foods, which ended during the quarter to March 31, 2026.
Excluding those sales from the previous year’s figures, adjusted consolidated revenue declined by a more modest 0.3%.
The newly acquired Bachan’s business contributed $17.8 million in sales, equivalent to approximately 3.6 percentage points of consolidated revenue growth.
However, weaker demand associated with the cyclospora outbreak affected both major operating segments.
Consolidated gross profit declined by $8.0 million to $110.8 million, while the gross profit margin decreased by 110 basis points to 23.0%.
Operating income fell by $17.8 million to $41.4 million, reflecting reduced gross profit and higher selling, general and administrative expenses.
The cyclospora outbreak was a significant factor behind the company’s weaker quarterly performance, reducing demand for several retail food products and affecting its Foodservice operations.
Chief Executive Officer David A. Ciesinski said the disruption had a substantial effect on both revenue and profitability.
“The cyclospora outbreak had a significant impact on this quarter’s top and bottom-line results,” Ciesinski said.
He explained that the outbreak affected both operating segments, with the impact particularly pronounced in Retail.
According to company estimates, the outbreak reduced Retail net sales by approximately 4% year over year, primarily because of lower demand for dressings, dips and croutons.
Foodservice revenue was also affected, with the company estimating a reduction of approximately 2% attributable to the outbreak.
Ciesinski added that other parts of the business continued to perform well and that the impact of the outbreak had moderated in recent weeks.
The improvement could help stabilise demand as the company progresses through its second fiscal quarter.
The Retail segment generated net sales of $252.7 million during the first quarter, representing an increase of 2.0% compared with the previous year.
Sales volume, measured in pounds shipped, increased by 0.4%.
Growth was supported by the acquisition of Bachan’s, which added $17.8 million in incremental revenue.
The newly acquired brand contributed approximately 7.2 percentage points to Retail revenue growth and 7.5 percentage points to volume growth.
Without this contribution, the segment would have faced greater pressure from weaker demand for certain existing products.
Management estimated that the cyclospora outbreak reduced Retail revenue by approximately 4%.
The results demonstrated the importance of Bachan’s to the company’s first-quarter performance, particularly as other product categories experienced disruption.
Bachan’s Japanese Barbecue Sauce continued to gain market share during the quarter, according to retail sales data cited by The Marzetti Company.
Figures from Circana for the quarter ended September showed that Bachan’s sales increased by 10.7%.
The brand, which specialises in Japanese-style barbecue sauces, contributed $17.8 million in additional sales to Marzetti’s Retail business.
The acquisition also brought additional operating expenses, including costs associated with the brand’s integration and amortisation of acquired intangible assets.
Nevertheless, management expects Bachan’s to remain an important contributor to Retail revenue during the remainder of the fiscal year.
The company also highlighted continued consumer demand for its Texas Roadhouse-branded dinner rolls.
Circana data showed that sales of Texas Roadhouse dinner rolls increased by 21.3% during the quarter.
The performance of both brands provided positive developments within a Retail business otherwise affected by weaker demand for dressings, dips and croutons.
The Foodservice segment reported first-quarter net sales of $228.8 million, representing a decline of 6.9% year over year.
Sales volume, measured in pounds shipped, decreased by 7.6%.
The reported revenue decline partly reflected the absence of $10.7 million in non-core sales generated under the previous year’s temporary supply agreement with Winland Foods.
Excluding those sales, adjusted Foodservice revenue declined by 2.6%.
Core sales volume fell by 4.1%.
The cyclospora outbreak was another significant factor, with management estimating that it reduced Foodservice net sales by approximately 2%.
Despite these pressures, the company expects selected quick-service restaurant customers within its national chain restaurant portfolio to continue supporting Foodservice sales.
The outlook suggests that demand from certain major restaurant accounts could help offset ongoing weakness elsewhere in the segment.
The Marzetti Company’s consolidated gross profit decreased by $8.0 million to $110.8 million during the quarter.
Gross profit margin fell to 23.0%, a reduction of 110 basis points from the prior-year period.
Management attributed the decline to several factors, including weaker sales and reduced production volumes.
Lower manufacturing activity affected plant operating efficiency, as fixed production costs were spread across fewer units.
The company also faced significantly higher diesel and freight expenses.
Additional costs were incurred in connection with commissioning new production capacity at its sauce and dressing manufacturing facility in Atlanta, Georgia.
These pressures combined to reduce profitability despite the positive revenue contribution from Bachan’s.
The company expects cost management and pricing measures to play an important role in supporting margins during the remainder of the fiscal year.
Selling, general and administrative expenses increased by $10.9 million to $69.3 million during the first quarter.
The increase was primarily associated with additional operating expenses from Bachan’s following the acquisition.
The company also recorded $2.4 million in noncash amortisation expenses related to intangible assets acquired with the brand.
Higher expenses, combined with lower gross profit, contributed to a $17.8 million decline in consolidated operating income to $41.4 million.
The prior-year quarter included $1.1 million in restructuring and impairment charges related to the closure of the company’s sauce and dressing facility in Milpitas, California.
Excluding the current year’s Bachan’s amortisation expense and the previous year’s restructuring charges, adjusted operating income declined by $16.6 million to $43.9 million.
The decrease highlighted the combined effect of reduced manufacturing efficiency, elevated transportation costs and acquisition-related expenses.
The Marzetti Company reported first-quarter net income of $29.3 million, down $17.9 million from $47.2 million in the corresponding period last year.
Diluted earnings per share decreased to $1.07 from $1.71.
The current quarter included $1.9 million in noncash amortisation expenses related to Bachan’s intangible assets, equivalent to $0.07 per diluted share.
In the previous year’s quarter, restructuring and impairment charges reduced net income by $0.9 million, or $0.03 per diluted share.
Excluding these items, adjusted diluted earnings per share declined to $1.14 from $1.74.
The company also recorded interest expense of $2.8 million, compared with no interest expense in the prior-year period.
The additional financing cost was associated with a $200 million term loan used to fund part of the Bachan’s acquisition.
The combination of weaker operating profitability, acquisition-related costs and interest expenses contributed to the decline in net income.
Management expects inflationary pressures to remain a factor during the remainder of fiscal 2027.
The company anticipates moderate commodity cost inflation alongside significantly higher diesel and freight expenses.
To address these pressures, Marzetti plans to rely on pricing adjustments and cost-saving initiatives.
Ciesinski said the company expects to mitigate most or all of the anticipated cost increases through these measures.
The strategy is intended to support margin improvement following the first-quarter decline in gross profitability.
The company will also continue bringing additional production capacity online at its Atlanta sauce and dressing facility.
Although commissioning costs weighed on first-quarter earnings, the investment forms part of Marzetti’s manufacturing capacity expansion.
The effectiveness of pricing measures, operational improvements and cost savings will be important to profitability over the coming quarters.
The Marzetti Company expects its Retail segment to benefit from additional sales generated by the Bachan’s acquisition during the second fiscal quarter and the remainder of the year.
Management also anticipates contributions from recently introduced products and further launches planned for later in fiscal 2027.
The continued growth of Bachan’s and strong consumer demand for Texas Roadhouse dinner rolls provide potential support for Retail performance.
Within Foodservice, the company expects sales to remain supported by selected quick-service restaurant customers among its national chain accounts.
Management also indicated that the impact of the cyclospora outbreak had moderated in recent weeks.
However, higher diesel and freight expenses, commodity inflation and manufacturing costs remain challenges.
The company intends to address these pressures through pricing actions and cost-saving programmes while maintaining its focus on improving margins.
No specific full-year revenue or earnings guidance was provided in the announcement.
The Marzetti Company’s first-quarter results reflected a difficult operating environment, with the cyclospora outbreak contributing to lower sales and weaker profitability.
Consolidated revenue declined 2.4% to $481.5 million, while adjusted diluted earnings per share fell to $1.14 from $1.74.
Retail revenue increased 2.0% to $252.7 million, supported by $17.8 million in incremental sales from Bachan’s.
Foodservice revenue declined 6.9% to $228.8 million, or 2.6% after excluding the previous year’s non-core temporary supply agreement revenue.
Gross profit decreased to $110.8 million, while adjusted operating income fell to $43.9 million.
Looking ahead, the company expects the Bachan’s acquisition, new product introductions and selected restaurant customers to support sales.
Investors will be monitoring the recovery in demand following the cyclospora outbreak, the performance of newly acquired brands and the company’s ability to offset higher transportation and commodity costs.
Margin improvement will remain a central consideration as Marzetti works to recover from the first-quarter decline in profitability.
The Marzetti Company is a US-based manufacturer and marketer of specialty food products serving retail consumers and foodservice customers.
Its product portfolio includes sauces, dressings, dips, croutons, frozen bakery products and other specialty foods.
The company operates through Retail and Foodservice segments, supplying products to grocery retailers, restaurants and other commercial customers.
Its brands include Marzetti, New York Bakery, Sister Schubert’s and the recently acquired Bachan’s Japanese Barbecue Sauce.
The company also produces certain licensed branded products, including Texas Roadhouse dinner rolls.
Marzetti focuses on branded specialty food products, manufacturing operations and partnerships with restaurant chains and retail customers.
Marzetti stock price
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