Aug 25, 2026 earnings call — Bachan's drives growth; margins improve
Reported consolidated net sales fell 2.2% to $465 million, while gross profit reached $114 million and operating cash flow was $283.8 million.
Revenue $0.5B (est $0.5B) · EPS $1.46 (est $1.40)
Key quotes
"We expect the addition of the Bachan's business to our portfolio to be a key growth driver for Marzetti in fiscal 27."
"The strong gross profit growth was driven by our productivity program where we benefited from cost savings across several areas. Including network changes, procurement, manufacturing, value engineering, and distribution."
"At this point, we estimate that the outbreak will result in a net sales headwind of approximately 250 basis points in our fiscal first quarter."
Analyst Q&A 5
Gross margin drivers and Bachan's sales
Q (Jim Salera · Stephens): Analyst asked how gross margin should build in fiscal 2027 given soybean oil inflation, pricing, and the Bachan's integration. He also asked if Bachan's could contribute about $100 million of sales in fiscal 2027.
A: Management said they hedged soybean oil and used pricing to protect margins as soybean oil rose. They estimate about 100-basis-points of consolidated gross margin growth in fiscal 27, with roughly half from Bachan's accretion and half from commodity risk management and cost savings. Management also said Bachan's sales should be stronger than the $100 million napkin estimate, driven by core growth, a Mayo launch and a new wing sauce.
"So as we look at fiscal 27, we are estimating about a 100-basis-points of margin growth on the consolidated results." — Thomas K. Pigott (CFO)
Licensed brand growth and new launches
Q (Todd Brooks · Benchmark Stonix): Analyst asked how the licensed branded product portfolio should grow in 2027, and what revenue contribution new licensed-product launches might provide.
A: Management said there is pipeline noise this quarter but highlighted strong performance of Texas Roadhouse, which reached almost $60 million in retail sales and has room to grow with a second SKU in Walmart. They remain positive on Buffalo Wild Wings and Chick-fil-A sauces but noted salad dressings have been a drag. Pulling out the Chick-fil-A pipeline noise, they expect licensed sauces to be closer to flat with room to grow in licensed dough items, and they have other licensing initiatives in flight but are not ready to share details.
"I would say if we pull out the noise associated with the Chick fil A pipeline bill, our licensed sauces, I would expect, to be closer to flat with room to grow in our licensed dough items." — David A. Ciesinski (CEO)
Cyclospora impact and margin drivers
Q (Alton Stump · Loop Capital): Analyst asked how long the Cyclospora outbreak impact on produce and salad categories might last and whether margin expansion comes from internal savings or Bachan's synergies.
A: Management said the outbreak hit a low in late July with lettuce down about 30%, veggies down 16%, and fruit down 13%, and that by the week of August 21 those categories and their dressings had improved roughly 5% to 10% off the low point. They modeled recovery using the 2018 outbreak pattern and expect a half-life style recovery trending back toward prior levels by about four months. On margin expansion, ex-Bachan's they expect about 50 basis points from the base program and the other half from Bachan's accretion and synergies; they are already realizing procurement productivity savings and the integration is on track.
"And then the other half, represents the accretion from Bashan's, including the synergies that are baked in." — Thomas K. Pigott (CFO)
Retail volume decline and segment margins
Q (Scott Marks · Jefferies): Analyst asked which factors drove roughly 7% organic retail volume decline and for an update on Chick-fil-A distribution and the 3-bottle pack. He also asked why foodservice benefited more than retail from cost savings and how segment profit should split in 2027.
A: Management said foodservice remains strong and they are winning with major customers, while retail softness is concentrated in dressings and parts of licensing; specialty bakery and some items like New York Texas toast are performing well. They noted network moves (exiting Milpitas, moving production to Horse Cave, ramping College Park) drove much of the cost benefits seen in foodservice this quarter. Looking into 2027, retail will gain from Bachan's accretion and both segments will continue to benefit from the productivity program.
"So the what you are seeing is the benefit of the network moves that are impacting the food service segment." — Thomas K. Pigott (CFO)
Timing of margins, Bachan's drivers, and CapEx
Q (Matt Curtis · D.A. Davidson): Analyst asked whether gross margin improvement in fiscal 27 will be balanced or backloaded, whether Bachan's second-half strength is from new product timing or marketing, and to break down the $90 million CapEx guidance.
A: Management said they do not expect to grow margins in Q1 due to the Cyclospora impact, and they project roughly a 15% decline in operating income in Q1, with steady gross margin accretion thereafter. Bachan's strength is from both new item timing (some sells in now, many come with store resets) and refined marketing and creative to be turned on soon; trial remains low (about 5% to 6%) and is the biggest growth opportunity. For CapEx, the largest piece is investing in the College Park facility to add manufacturing capacity to support Chick-fil-A, with additional spend on cost-savings initiatives and ongoing infrastructure.
"We do not expect to be able to grow our margins in the first quarter." — Thomas K. Pigott (CFO)