The Marzetti (MZTI) Q3 2026 earnings summary

Executive summary

• Completed acquisition of Bachan's, a fast-growing Japanese-American barbecue sauce brand, now the #2 retail barbecue sauce brand, with sales growth over 25% and significant market share gains.

• Consolidated net sales for Q3 FY2026 declined 1.0% year-over-year to $453.4 million, but gross profit reached a record $107.2 million, with gross margin up 50 basis points.

• Operating income for the quarter was $46.6 million, down 6.6% year-over-year, impacted by higher SG&A and acquisition-related costs.

• Diluted EPS fell $0.14 (9.4%) to $1.35, impacted by lower operating income and a higher tax rate.

• Operating cash flow year-to-date rose 30% to $229 million, with a debt-free balance sheet and $218 million in cash at quarter-end.

Financial highlights

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

• Gross profit: $107.2 million, a record for Q3; gross margin improved to 23.6% reported and 23.7% adjusted.

• SG&A expenses increased $5.4 million (9.5%) due to acquisition costs, IT, and personnel investments.

• Adjusted operating income for the quarter declined $2.3 million to $49.3 million.

• Year-to-date operating cash flow up over $55 million; capital expenditures YTD at $54.6 million, with FY2026 capex forecasted at $80 million.

Outlook and guidance

• Expect incremental sales from Bachan's in Q4, with a net sales run rate moderately above $87 million annually and operating margin similar to current levels.

• Retail sales to benefit from new product launches, including Marzetti Protein Ranch dressing, new Olive Garden Zesty Italian, and expanded Chick-fil-A offerings.

• Foodservice segment anticipated to see continued growth from select national chain customers.

• Modest input cost inflation anticipated for the remainder of FY26, to be offset by pricing and cost savings.

• FY2026 capital expenditures projected at approximately $80 million.