Q2 2026 The Marzetti Co Earnings Call

February 3, 2026

The Marzetti company's fiscal year, 2026 second quarter conference call.

Operator: The Marzetti Company’s Fiscal Year 2026, Q2 conference call. Conducting today’s call will be Dave Ciesinski, President and CEO, and Tom Pigott, CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star one one on your telephone keypad. If you would like to withdraw your question, please press star one one again. And now, to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for The Marzetti Company.

Operator: The Marzetti Company’s Fiscal Year 2026, Second Quarter Conference Call. Conducting today’s call will be Dave Ciesinski, President and CEO, and Tom Pigott, CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star one one on your telephone keypad. If you would like to withdraw your question, please press star one one again. And now, to begin the conference call, here is Dale Ganobsik, Vice President of Corporate Finance and Investor Relations for The Marzetti Company.

Conducting today's call will be Dave Sinskey president and CEO and Tom pigot CFO. All lines have been placed on mute to prevent any background noise. After the speakers have completed their prepared remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star 1 1 on your telephone keypad, if you would like to withdraw your question, please press star 1 1 again and now to begin the conference call here is Dale synopsis vice president of corporate finance and investor relations for the Marzetti company.

Dale Ganobsik: Good morning, everyone, and thank you for joining us today for The Marzetti Company's Fiscal Year 2026 Q2 conference call. Our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the Company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the Company's filings with the SEC. Also note that the audio replay of this call will be archived and available on our website, investors.marzetticompany.com, later today. For today's call, Dave Ciesinski, our President and CEO, will begin with a business update and highlights for the quarter.

Q2 2026 The Marzetti Co Earnings Call

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Q2 2026 The Marzetti Co Earnings Call

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Tuesday, February 3rd, 2026 at 3:00 PM

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David Ciesinski: Thanks, Dale, and good morning, everyone. It's a big day here for The Marzetti Company because in addition to reporting our Q2 results for fiscal year 2026, we are thrilled to announce that The Marzetti Company has entered into a definitive agreement to acquire Bachan’s, the authentic, great-tasting, and rapidly growing Japanese-American barbecue sauce brand. I will have more details to share on the acquisition later in the call, following the review of our second quarter results. In our fiscal second quarter, which ended December 31, consolidated net sales increased 1.7% to $518 million. Excluding non-core sales attributed to a temporary supply agreement, or TSA, adjusted net sales increased 0.1% to $510 million. Gross profit grew 3.4% to a second quarter record $137 million.

David Ciesinski: In the frozen dinner roll category, our Sister Schubert’s brand and our licensed Texas Roadhouse brand combined to grow 7.1%, resulting in a market share increase of 40 basis points to a category-leading 60.8%. In the shelf-stable sauces and condiments category, sales of our licensed Chick-fil-A sauces grew 6.7%, resulting in 13 basis points of share growth. Chick-fil-A sauces benefited from expanded distribution into the club channel that began during our fiscal Q4, which ended 30 June. In the produce dips category, sales of our Marzetti brand increased 0.3%, adding 130 basis points of market share for a category-leading 75.5%. In the food service segment, excluding the non-core TSA sales, adjusted net sales grew 1.6%, while volume measured in pounds shipped declined 0.4%.

Thomas Pigott: Consolidated gross profit increased by $4.5 million, or 3.4%, versus the prior year quarter to $137.3 million, and reported gross margin expanded by 40 basis points. The gross profit growth was driven by our productivity program, where we benefited from cost savings across a number of areas, including procurement, manufacturing, value engineering, and distribution. In addition, our pricing actions offset the higher commodity costs we experienced during the quarter. Note that excluding the $8.2 million in sales from the temporary supply agreement, which did not contribute meaningfully to gross profit, adjusted gross margin expanded by 80 basis points. Selling general and administrative expenses grew by $3.3 million, or 5.8%.

Thomas Pigott: Thanks, Dave. Overall, the company delivered improved performance against a strong comparative period. In addition, investments were made to support future growth. Q2 consolidated net sales increased by 1.7% to $518 million. Breaking down the revenue performance, net pricing was accretive by approximately 140 basis points. Core volume and product mix drove a 130 basis point decline. In addition, the company reported $8.2 million in sales, or 160 basis points of growth, that resulted from a temporary supply agreement with Winland Foods, the seller of the Atlanta-based manufacturing facility that we acquired last year. We entered into this agreement to facilitate the closing of the transaction. It's important to note that these temporary and non-core sales are expected to conclude during the quarter ending 31 March 2026.

Tom Pigott: Thanks, Dave. Overall, the company delivered improved performance against a strong comparative period. In addition, investments were made to support future growth. Q2 consolidated net sales increased by 1.7% to $518 million. Breaking down the revenue performance, net pricing was accretive by approximately 140 basis points. Core volume and product mix drove a 130 basis point decline. In addition, the company reported $8.2 million in sales, or 160 basis points of growth, that resulted from a temporary supply agreement with Winland Foods, the seller of the Atlanta-based manufacturing facility that we acquired last year. We entered into this agreement to facilitate the closing of the transaction. It's important to note that these temporary and non-core sales are expected to conclude during the quarter ending 31 March 2026.

Thomas Pigott: The increase was primarily driven by a higher marketing spend as we invested to support the continued growth of our retail brands and the expanded launch of Texas Roadhouse Rolls. Note that last year, SG&A expenses included acquisition-related costs of $1.6 million. During the quarter, the company recorded $1.7 million in restructuring and impairment charges. The charges are attributed to a non-cash impairment charge on manufacturing equipment in our food service segment, as well as the planned closure of our sauce and dressing facility in Milpitas, California, that we previously announced. Consolidated reported operating income decreased by $500 thousand. The gross profit growth was offset by the higher investments we made in SG&A and the restructuring impairment costs. Excluding the restructuring impairment charges and the acquisition-related costs recorded in the prior year, adjusted operating income declined by $400 thousand.

Thomas Pigott: Consolidated gross profit increased by $4.5 million, or 3.4%, versus the prior year quarter to $137.3 million, and reported gross margin expanded by 40 basis points. The gross profit growth was driven by our productivity program, where we benefited from cost savings across a number of areas, including procurement, manufacturing, value engineering, and distribution. In addition, our pricing actions offset the higher commodity costs we experienced during the quarter. Note that excluding the $8.2 million in sales from the temporary supply agreement, which did not contribute meaningfully to gross profit, adjusted gross margin expanded by 80 basis points. Selling, general, and administrative expenses grew by $3.3 million, or 5.8%.

The increase was primarily driven by a higher marketing spend as we invested to support the continued growth of our retail brands and the expanded launch of Texas Roadhouse Rolls. Note that last year, SG&A expenses included acquisition-related costs of $1.6 million. During the quarter, the company recorded $1.7 million in restructuring and impairment charges. The charges are attributed to a non-cash impairment charge on manufacturing equipment in our food service segment, as well as the planned closure of our sauce and dressing facility in Milpitas, California, that we previously announced. Consolidated reported operating income decreased by $500 thousand. The gross profit growth was offset by the higher investments we made in SG&A and the restructuring impairment costs. Excluding the restructuring impairment charges and the acquisition-related costs recorded in the prior year, adjusted operating income declined by $400 thousand.

Thomas Pigott: We will continue to invest in both cost savings projects and other manufacturing improvements, as well as the Atlanta facility we acquired last year. In addition to investing in our business, we also returned funds to shareholders. Our quarterly cash dividend of $1 per share, paid on December 31, represented a 5% increase from the prior year's amount. It marked 63 consecutive years of regular cash dividend increases. In addition to the $27.6 million paid in dividends, the company repurchased $20.1 million in common stock in Q2. Our financial position remains strong, with a debt-free balance sheet and over $201 million in cash. As Dave will discuss, we plan to take advantage of that strong position to invest for further growth with the acquisition of Bachan’s.

Thomas Pigott: We will continue to have a strong balance sheet following the acquisition. As we complete the first half of the year, we're pleased to report growth in net sales of 3.6% and adjusted net sales of 1.7%. Reported and adjusted gross margin reflected increases of 30 and 80 basis points, respectively. Reported operating income was up 2.2%, while adjusted operating income increased 3.1%. In addition, operating cash flow grew by $30.6 million, or 24%. To wrap up my commentary, our results demonstrate strong execution across a number of areas that drove solid top and bottom line performance in a difficult operating environment. In addition, we returned funds to shareholders through our increased dividend and share repurchase, and also continued to make investments to support further growth and cost savings.

We will continue to invest in both cost savings projects and other manufacturing improvements, as well as the Atlanta facility we acquired last year. In addition to investing in our business, we also returned funds to shareholders. Our quarterly cash dividend of $1 per share, paid on December 31, represented a 5% increase from the prior year's amount. It marked 63 consecutive years of regular cash dividend increases. In addition to the $27.6 million paid in dividends, the company repurchased $20.1 million in common stock in Q2. Our financial position remains strong, with a debt-free balance sheet and over $201 million in cash. As Dave will discuss, we plan to take advantage of that strong position to invest for further growth with the acquisition of Bachan's.

David Ciesinski: Thanks, Tom. As we look ahead, the Marzetti Company will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan. To one, accelerate core business growth... Two, to simplify our supply chain to reduce our costs and grow our margins. And three, to expand our core with focused M&A and strategic licensing. As an example of how we're executing against that third pillar, this morning, we announced that the Marzetti Company had entered into a definitive agreement to acquire Bachan’s, the authentic, great-tasting, and rapidly growing Japanese-American barbecues brand. Bachan’s has been built around a multi-generational family recipe, passed down to its founder, Justin Gill, who has done an amazing job of developing the products and building this brand. We are extremely excited to add Bachan’s to our portfolio.

Thomas Pigott: We will continue to have a strong balance sheet following the acquisition. As we complete the first half of the year, we're pleased to report growth in net sales of 3.6% and adjusted net sales of 1.7%. Reported and adjusted gross margin reflected increases of 30 and 80 basis points, respectively. Reported operating income was up 2.2%, while adjusted operating income increased 3.1%. In addition, operating cash flow grew by $30.6 million, or 24%.... To wrap up my commentary, our results demonstrate strong execution across a number of areas that drove solid top and bottom line performance in a difficult operating environment. In addition, we returned funds to shareholders through our increased dividend and share repurchases, and also continued to make investments to support further growth and cost savings.

We will continue to have a strong balance sheet following the acquisition. As we complete the first half of the year, we're pleased to report growth in net sales of 3.6% and adjusted net sales of 1.7%. Reported and adjusted gross margin reflected increases of 30 and 80 basis points, respectively. Reported operating income was up 2.2%, while adjusted operating income increased 3.1%. In addition, operating cash flow grew by $30.6 million, or 24%.... To wrap up my commentary, our results demonstrate strong execution across a number of areas that drove solid top and bottom line performance in a difficult operating environment. In addition, we returned funds to shareholders through our increased dividend and share repurchases, and also continued to make investments to support further growth and cost savings.

David Ciesinski: In the months ahead, we look forward to sharing with you our plans to leverage our industry-leading culinary and product development capabilities, and working shoulder to shoulder with the Bachan’s team to deliver long-term growth while maintaining the authenticity and quality that makes Bachan’s brand so special. This transaction reinforces Marzetti's position as a leader in sauces by adding a premium brand that is exceptionally well aligned with evolving consumer preferences for authentic, global flavors, and better for you products. From 2022 to 2025, Bachan’s delivered net revenue compound annual growth of approximately 48%, driven by strong consumer demand and expanded distribution. We see meaningful opportunities to accelerate Bachan’s next chapter of growth by leveraging Marzetti's culinary capability, retail relationships, and food service partnerships.

David A. Ciesinski: Thanks, Tom. As we look ahead, the Marzetti Company will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan. To one, accelerate core business growth. Two, to simplify our supply chain, to reduce our cost, and grow our margins. And three, to expand our core with focused M&A and strategic licensing. As an example of how we're executing against that third pillar, this morning, we announced that the Marzetti Company had entered into a definitive agreement to acquire Bachan's, the authentic, great tasting, and rapidly growing Japanese American barbecue brand. Bachan's has been built around a multigenerational family recipe, passed down to its founder, Justin Gill, who has done an amazing job of developing the products and building this brand. We are extremely excited to add Bachan's to our portfolio.

Dave Ciesinski: Thanks, Tom. As we look ahead, the Marzetti Company will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three simple pillars of our growth plan. To one, accelerate core business growth. Two, to simplify our supply chain, to reduce our cost, and grow our margins. And three, to expand our core with focused M&A and strategic licensing. As an example of how we're executing against that third pillar, this morning, we announced that the Marzetti Company had entered into a definitive agreement to acquire Bachan's, the authentic, great tasting, and rapidly growing Japanese American barbecue brand. Bachan's has been built around a multigenerational family recipe, passed down to its founder, Justin Gill, who has done an amazing job of developing the products and building this brand. We are extremely excited to add Bachan's to our portfolio.

David Ciesinski: Over time, we intend to broaden distribution, support continued product innovation, and thoughtfully extend the brand into new channels and adjacent categories. We also expect to capture substantial synergies as we carefully integrate Bachan’s into our supply chain by leveraging our scale and expertise in making many of the world's most iconic and great-tasting sauces. The total consideration for the acquisition was approximately $400 million in cash. Overall, we expect this acquisition to be accretive to both top line growth and gross margins beginning in year one. Looking ahead to the back half of our fiscal year, excluding any impact from the planned acquisition, we project retail sales will continue to benefit from our expanding licensing program, led by Texas Roadhouse Dinner Rolls, in addition to investments in innovation and growth for our own brands.

David A. Ciesinski: In the months ahead, we look forward to sharing with you our plans to leverage our industry-leading culinary and product development capabilities, and working shoulder to shoulder with the Bachan's team to deliver long-term growth while maintaining the authenticity and quality that makes Bachan's brand so special. This transaction reinforces Marzetti's position as a leader in sauces by adding a premium brand that is exceptionally well aligned with evolving consumer preferences for authentic, global flavors and better for you products. From 2022 to 2025, Bachan's delivered net revenue compound annual growth of approximately 48%, driven by strong consumer demand and expanded distribution. We see meaningful opportunities to accelerate Bachan's next chapter of growth by leveraging Marzetti's culinary capability, retail relationships, and food service partnerships.

In the months ahead, we look forward to sharing with you our plans to leverage our industry-leading culinary and product development capabilities, and working shoulder to shoulder with the Bachan's team to deliver long-term growth while maintaining the authenticity and quality that makes Bachan's brand so special. This transaction reinforces Marzetti's position as a leader in sauces by adding a premium brand that is exceptionally well aligned with evolving consumer preferences for authentic, global flavors and better for you products. From 2022 to 2025, Bachan's delivered net revenue compound annual growth of approximately 48%, driven by strong consumer demand and expanded distribution. We see meaningful opportunities to accelerate Bachan's next chapter of growth by leveraging Marzetti's culinary capability, retail relationships, and food service partnerships.

David Ciesinski: Note, with this year's earlier Easter holiday, we anticipate some retail segment sales will be pulled forward into our fiscal third quarter. In the food service segment, we expect continued growth from select customers in our mix of national accounts. Like many of you, we continue to monitor external factors, including US economic performance and consumer behavior, that may impact the demand for our products. With respect to our input cost, in the aggregate, we anticipate a modest level of cost inflation that we planned to offset through contractual pricing and our cost savings program as we remain focused on continued margin improvement. In closing, I would like to thank the entire Marzetti Company for all their hard work this past quarter and their ongoing commitment to grow our business.

David A. Ciesinski: Over time, we intend to broaden distribution, support continued product innovation, and thoughtfully extend the brand into new channels and adjacent categories. We also expect to capture substantial synergies as we carefully integrate Bachan's into our supply chain by leveraging our scale and expertise in making many of the world's most iconic and great tasting sauces. The total consideration for the acquisition was approximately $400 million in cash. Overall, we expect this acquisition to be accretive to both top line growth and gross margins beginning in year one. Looking ahead to the back half of our fiscal year, excluding any impact from the planned acquisition, we project retail sales will continue to benefit from our expanding licensing program, led by Texas Roadhouse Dinner Rolls, in addition to investments in innovation and growth for our own brands.

Over time, we intend to broaden distribution, support continued product innovation, and thoughtfully extend the brand into new channels and adjacent categories. We also expect to capture substantial synergies as we carefully integrate Bachan's into our supply chain by leveraging our scale and expertise in making many of the world's most iconic and great tasting sauces. The total consideration for the acquisition was approximately $400 million in cash. Overall, we expect this acquisition to be accretive to both top line growth and gross margins beginning in year one. Looking ahead to the back half of our fiscal year, excluding any impact from the planned acquisition, we project retail sales will continue to benefit from our expanding licensing program, led by Texas Roadhouse Dinner Rolls, in addition to investments in innovation and growth for our own brands.

David A. Ciesinski: Note, with this year's earlier Easter holiday, we anticipate some retail segment sales will be pulled forward into our fiscal third quarter. In the food service segment, we expect continued growth from select customers in our mix of national accounts. Like many of you, we continue to monitor external factors, including US economic performance and consumer behavior, that may impact the demand for our products. With respect to our input costs, in the aggregate, we anticipate a modest level of cost inflation that we planned to offset through contractual pricing and our cost savings program as we remain focused on continued margin improvement. In closing, I would like to thank the entire Marzetti Company for all their hard work this past quarter and their ongoing commitment to grow our business.

Note, with this year's earlier Easter holiday, we anticipate some retail segment sales will be pulled forward into our fiscal third quarter. In the food service segment, we expect continued growth from select customers in our mix of national accounts. Like many of you, we continue to monitor external factors, including US economic performance and consumer behavior, that may impact the demand for our products. With respect to our input costs, in the aggregate, we anticipate a modest level of cost inflation that we planned to offset through contractual pricing and our cost savings program as we remain focused on continued margin improvement. In closing, I would like to thank the entire Marzetti Company for all their hard work this past quarter and their ongoing commitment to grow our business.

Um, I think, after last quarter uh, the commentary was pretty pretty positive, you know, just around some of the initiatives within food service and being able to continue with with some of the volume momentum, uh, obviously, um, the volumes came in a little bit, uh, a little bit softer than folks were expecting, so just wondering if you can share with us maybe. Um, you know, what happened in the quarter, what was the reason for the, the organic volume declines. And then, how are you thinking about that rest of the year for that food service segment? Thanks. Yeah, let's do the same thing. Let's kind of ladder up and set a little context for the industry and then we'll bring it down specifically to our business. So at a overall industry level, I think the best way to categorize things that essentially they're flat.

David Ciesinski: You know, all eyes are on the consumer to see what happens, but, you know, it's really hard to envision as we move now into calendar year 2026, you know, short of a black swan, something changing materially on the downside. I think there are a couple of things that are working in our favor for everybody that services food service. First, gas prices are down year-over-year, which we know gives consumers discretionary spending that oftentimes comes back in a way from home dining. The other thing that we're seeing here is like you, I think we're expecting income tax returns to be a little bit stronger this year than they were last year because of some of these changes, and those ordinarily hit around the time of President's Weekend or so. So you put the fact that inflation remains relatively in check.

David A. Ciesinski: You know, all eyes are on the consumer to see what happens, but, you know, it's really hard to envision as we move now into calendar year 2026, you know, short of a black swan, something changing materially on the downside. I think there are a couple of things that are working in our favor for everybody that services Food Service. First, gas prices are down year-over-year, which we know gives consumers discretionary spending that oftentimes comes back in away-from-home dining. The other thing that we're seeing here is like you, I think we're expecting income tax returns to be a little bit stronger this year than they were last year because of some of these changes, and those ordinarily hit around the time of President's weekend or so. So you put the fact that inflation remains relatively in check.

You know, all eyes are on the consumer to see what happens, but, you know, it's really hard to envision as we move now into calendar year 2026, you know, short of a black swan, something changing materially on the downside. I think there are a couple of things that are working in our favor for everybody that services Food Service. First, gas prices are down year-over-year, which we know gives consumers discretionary spending that oftentimes comes back in away-from-home dining. The other thing that we're seeing here is like you, I think we're expecting income tax returns to be a little bit stronger this year than they were last year because of some of these changes, and those ordinarily hit around the time of President's weekend or so. So you put the fact that inflation remains relatively in check.

David Ciesinski: Yeah. So why don't I maybe step back and frame it, if you'll allow me, a little more broadly. But first of all, this is a business that we had been tracking in the industry for the better part of four years. It's a really an amazing product and amazing brand. It's an authentic founder story. It's great tasting, clean label, and what we love about this product, Todd, is that when you look at it, it significantly over indexes with millennials and Gen Z. So it does well with all of the various cohorts. But if you look at sort of the future of food consumption, and these are people that love their sauces, it does particularly well with those cohorts. And that in conjunction with the fact that the brand has very broad shoulders.

David Ciesinski: It plays in sauces, it plays in marinades, plays in glazes, even plays in dips. We tested all of these items. It gave us reason to believe that this could be a very meaningful brand platform for us. And as we talked to, you know, Justin Gill, the founder of the business, and his team, really what we focused on was the fact that we believe we have best in industry, culinary, and product development capabilities. We can't develop everything, but when it comes to sauces and dips and flavor systems, we believe that we really have, you know, top-of-the-peer group capabilities. And I think that became part of a selling point for our partnership together. Now, as you pointed out, you know, the business did $87 million in sales, strong growth rate.

David A. Ciesinski: Yeah. So why don't I maybe step back and frame it, if you'll allow me, a little more broadly. But first of all, this is a business that we had been tracking in the industry for the better part of four years... It's really an amazing product and amazing brand. It's an authentic founder story, it's great tasting, clean label. And what we love about this product, Todd, is that when you look at it, it significantly over indexes with millennials and Gen Z. So it does well with all of the various cohorts. But if you look at sort of the future of food consumption, and these are people that love their sauces, it does particularly well with those cohorts. And that in conjunction with the fact that the brand has very broad shoulders.

Dave Ciesinski: Yeah. So why don't I maybe step back and frame it, if you'll allow me, a little more broadly. But first of all, this is a business that we had been tracking in the industry for the better part of four years... It's really an amazing product and amazing brand. It's an authentic founder story, it's great tasting, clean label. And what we love about this product, Todd, is that when you look at it, it significantly over indexes with millennials and Gen Z. So it does well with all of the various cohorts. But if you look at sort of the future of food consumption, and these are people that love their sauces, it does particularly well with those cohorts. And that in conjunction with the fact that the brand has very broad shoulders.

Focused on was the fact that we believe we have best in Industry culinary and product development capabilities. We can't develop everything, but when it comes to sauces and dips and flavor systems, we believe that we really have, you know, top of the peer group capabilities, and I think that became part of a, a selling point for our partnership together. Now, as you pointed out, you know, the business did 87 million in sales, uh, strong growth rate, you know, if you look at the history of the business, it it grew principally through Costco and then began to diversify into Mass, uh, into, um, with Walmart and into retail. So, the mix of the business was growing a little bit faster, this most recent year in mass and in retail, um, the price point is premium, which gives it the ability to make it margin accretive. And as you might imagine, there is a Synergy case here given that this is in sauces. And it's

David A. Ciesinski: It plays in sauces, it plays in marinades, it plays in glazes, even plays in dips. We tested all of these items. It gave us reason to believe that this could be a very meaningful brand platform for us. And as we talked to, you know, Justin Gill, the founder of the business, and his team, really what we focused on was the fact that we believe we have best in industry, culinary, and product development capabilities. We can't develop everything, but when it comes to sauces, dips, and flavor systems, we believe that we really have, you know, top of the peer group capabilities. And I think that became part of a selling point for our partnership together. Now, as you pointed out, you know, the business did $87 million in sales, strong growth rate.

It plays in sauces, it plays in marinades, it plays in glazes, even plays in dips. We tested all of these items. It gave us reason to believe that this could be a very meaningful brand platform for us. And as we talked to, you know, Justin Gill, the founder of the business, and his team, really what we focused on was the fact that we believe we have best in industry, culinary, and product development capabilities. We can't develop everything, but when it comes to sauces, dips, and flavor systems, we believe that we really have, you know, top of the peer group capabilities. And I think that became part of a selling point for our partnership together. Now, as you pointed out, you know, the business did $87 million in sales, strong growth rate.

David Ciesinski: So, and I'm gonna give you a little inside baseball for those listening. We literally signed this last night. We had been following this business for four years. We have participated in the process. We've been diligencing it for months, but literally, we signed last night, so it's relatively fresh news. And we'd like to come back to you with a more complete story for how we intend to grow the business and, and outline for you the synergy case and, and everything else. But suffice it to say, if you look at us, our history really started in dressings, and our most recent chapter of growth in sauces has come by way of brands that we've licensed, and we love those brands. That being said, we've always wanted brand platforms that we could own, that we could also grow, so we could have multiple pathways to growth.

David A. Ciesinski: So now I'm gonna give you a little inside baseball for those listening. We literally signed this last night. We had been following this business for four years. We had participated in the process. We've been diligencing it for months, but literally, we signed last night, so it's relatively fresh news. We'd like to come back to you with a more complete story for how we intend to grow the business, and outline for you the synergy case, and everything else. But suffice it to say, if you look at us, our history really started in dressings, and our most recent chapter of growth in sauces has come by way of brands that we've licensed, and we love those brands. That being said, we've always wanted brand platforms that we could own, that we could also grow, so we could have multiple pathways to growth.

So now I'm gonna give you a little inside baseball for those listening. We literally signed this last night. We had been following this business for four years. We had participated in the process. We've been diligencing it for months, but literally, we signed last night, so it's relatively fresh news. We'd like to come back to you with a more complete story for how we intend to grow the business, and outline for you the synergy case, and everything else. But suffice it to say, if you look at us, our history really started in dressings, and our most recent chapter of growth in sauces has come by way of brands that we've licensed, and we love those brands. That being said, we've always wanted brand platforms that we could own, that we could also grow, so we could have multiple pathways to growth.

Great. Yeah, if you look at the history of the business, it it grew principally through Costco and then began to diversify into Mass, uh, into um, with Walmart and into retail. So, the mix of the business was growing a little bit faster, this most recent year in mass and in retail, um, the price point is premium, which gives it the ability to make it margin accretive. And as it might imagine, there is a Synergy case here given that this is in sauces and it's it's really our our wheelhouse to be able to support this business. So overall you you bring it all together authentic founder story, great tasting product, aligned with where consumers are going GOP, friendly it. It really just made a lot of a sense for us. So a very, very exciting, um, item here. So and I'm going to give you a little inside baseball. For those listening, we literally signed this last night. We had been following this business for 4.

Even on a full year basis that you bought back and over a decade. So I guess, you know, anything to read from that. As far as you know, your appetite for, you know, buy basket with Ford, obviously you just completed a, you know, besides well deal. So that probably, you know, hasn't it back but just kind of what your thoughts are when it comes to BuyBacks. Yeah. So, uh, great question. So, you know, obviously with the stock trading off and and with the rest of the sector, um, you know, we felt opportunistically, there was an opportunity to buy back. Um, so we executed a limited number of BuyBacks during the quarter now. As you've mentioned, uh, we were Levering that balance sheet against um, the acquisition of bosons which, you know, is Dave, articulated will be tremendously, um, positive for our, our financials over time. So I think at this time, it's safe to say, We'll kind of go back to our traditional approach on BuyBacks. Um, that said, uh, on the dividend policy,

Thomas Pigott: Yeah. So, great question. So, you know, obviously with the stock trading off and with the rest of the sector, you know, we felt opportunistically there was an opportunity to buy back. So we executed a limited number of buybacks during the quarter. Now, as you've mentioned, we're levering that balance sheet against the acquisition of Bachan's, which, you know, as Dave articulated, will be tremendously positive for our financials over time. So I think at this time, it's safe to say we'll kind of go back to our traditional approach on buybacks. That said, on the dividend policy, we continue to expect to grow it consistent with our history, even with this acquisition, given the very strong cash position the company has developed over time.

Tom Pigott: Yeah. So, great question. So, you know, obviously with the stock trading off and with the rest of the sector, you know, we felt opportunistically there was an opportunity to buy back. So we executed a limited number of buybacks during the quarter. Now, as you've mentioned, we're levering that balance sheet against the acquisition of Bachan's, which, you know, as Dave articulated, will be tremendously positive for our financials over time. So I think at this time, it's safe to say we'll kind of go back to our traditional approach on buybacks. That said, on the dividend policy, we continue to expect to grow it consistent with our history, even with this acquisition, given the very strong cash position the company has developed over time.

Understood makes sense. Uh you know and Dave and you know thank you for the color that you just signed this deal last night. So I'm sure there's going to be some more information to come, uh, you know, you know on the opportunities as you kind of work through things. But, uh, I think you mentioned that, it grew, you know, 48% annually, uh, you know, during 20 to 2025 so, clearly, and we're just established in 1919. Like I said, in the release. So, um, it's obviously a brand new brand. I always think that there's a ton of distribution opportunities, like, you mentioned that they've obviously, you know, had a lot of their growth in Costco and Walmart. So, you know, just a high level of color on kind of what the, you know, distribution, you know, upside potential could look like

Understood makes sense. Uh, you know, and Dave and you know, thank you for the color that you just signed to steal last night. So I'm sure there's going to be some more information to come, uh, you know, you know on the opportunities as you kind of work through things. But uh, I think you mentioned that it grew, you know, 48% annually, uh, you know, during 20 to 2025 so clearly and we're just established in 1949 except in the release. So um, it's obviously a brand new brand. I always think that there's a ton of distribution opportunities, you know, like you mentioned that they've obviously, you know, had a lot of growth in Costco and Walmart. So, you know, we've just a high level of color on kind of what's the, you know, distribution, you know, upside potential could look like

This is a a very, very capable team very cohesive team and Our intention is to keep the team together and really augment them with our resources to help them grow rather than to to to, you know, do anything. Other than that really continue that momentum as as we think about how we intend to grow that it's likely to come in 3 stages, where the first phase is going to be focused on really refining the distribution that they have in place. The second phase would come by driving new items that were in their Pipeline and, and our Pipeline and really helping them, uh, execute those. And then, the third phase would be extending them. Even, uh, more in into broader adjacencies with new items. So, this is a brand that that plays most certainly well in the United States. We've seen it and it's also a brand that that we believe could play in a very meaningful way. In Canada, if not other countries are Beyond

David Ciesinski: Yeah. No, it's... You know, Brian, I'm really glad you asked that question, and you followed us long enough and closely enough that I think really, you know, appreciate the journey that we've been on. And I, I think I would maybe talk to several things. Over the course of the last handful of years, we've really begun to narrow our focus into building end-to-end capabilities in sauces, dressings, and dips. Even when we think about our dough items, we think about the ability to stick flavor on top of those oftentimes. But focusing narrowly on sauces and dressings and dips, which is our core, this whole transformation has taken place in, in several steps. One has been going back and looking at our asset base to modernize those, to make sure that we can move from slower, less efficient filling lines to highly efficient, scalable manufacturing and filling lines.

David A. Ciesinski: Yeah. No, it's... You know, Brian, I'm really glad you asked that question, and you've followed us long enough and closely enough, so I think really, you know, appreciate the journey that we've been on. And I, I think I would maybe talk to several things. Over the course of the last handful of years, we've really begun to narrow our focus into building end-to-end capabilities in sauces, dressings, and dips. Even when we think about our dough items, we think about the ability to stick flavor on top of those oftentimes. But focusing narrowly on sauces and dressings and dips, which is our core, this whole transformation has taken place in, in several steps. One has been going back and looking at our asset base to modernize those, to make sure that we can move from slower, less efficient filling lines to highly efficient, scalable manufacturing and filling lines.

Dave Ciesinski: Yeah. No, it's... You know, Brian, I'm really glad you asked that question, and you've followed us long enough and closely enough, so I think really, you know, appreciate the journey that we've been on. And I, I think I would maybe talk to several things. Over the course of the last handful of years, we've really begun to narrow our focus into building end-to-end capabilities in sauces, dressings, and dips. Even when we think about our dough items, we think about the ability to stick flavor on top of those oftentimes. But focusing narrowly on sauces and dressings and dips, which is our core, this whole transformation has taken place in, in several steps. One has been going back and looking at our asset base to modernize those, to make sure that we can move from slower, less efficient filling lines to highly efficient, scalable manufacturing and filling lines.

David Ciesinski: We had a COBOL-based system installed in 1994 that we tore out and replaced during COVID, and we went to really end-to-end SAP S/4HANA, all based in the cloud, all of our data in one place, in one data lake. So another element of modernization. So as we've worked to grow by way of organic activity and inorganic activity with licensing, we've also worked in earnest to strengthen our capabilities so we can get to a point where we feel like we have industry-leading culinary and product development capabilities, industry-leading manufacturing capabilities, and then industry-leading marketing and selling capabilities. So we're at a moment in time now where most of the infrastructure, let's call it remediation and rebuilding, is behind us, whether it's in the IT space or whether it's in the physical space.

As we worked our way through that, as you're aware, we looked at assets to buy. But the prices didn't make sense or the asset didn't make sense for what we were trying to achieve. And instead we we leaned into another inorganic growth pathway which for us has been licensing. And we've added as you know over that period of time, you know I'm guessing 400 million plus or so uh profitable Revenue by way of that licensing. Art, you continue to move forward with that. We had an Antiquated it infrastructure system. We we had a Kobalt based system installed in 1994 that we tore out and replaced during coid. And we went to really end to end sap s4hana all based in the cloud, all of with our data in 1 day in, in 1 day. So another element of modernization. So as we've worked to grow by way of organic activity and inorganic activity

David A. Ciesinski: We had a COBOL-based system installed in 1994 that we tore out and replaced during COVID, and we went to really end-to-end SAP S/4HANA, all based in the cloud, all with our data in one data lake. So another element of modernization. So as we've worked to grow by way of organic activity and inorganic activity with licensing, we've also worked in earnest to strengthen our capabilities so we could get to a point where we feel like we have industry-leading culinary and product development capabilities, industry-leading manufacturing capabilities, and then industry-leading marketing and selling capabilities. So we're at a moment in time now where most of the infrastructure, let's call it remediation and rebuilding, is behind us, whether it's in the IT space or whether it's in the physical space.

We had a COBOL-based system installed in 1994 that we tore out and replaced during COVID, and we went to really end-to-end SAP S/4HANA, all based in the cloud, all with our data in one data lake. So another element of modernization. So as we've worked to grow by way of organic activity and inorganic activity with licensing, we've also worked in earnest to strengthen our capabilities so we could get to a point where we feel like we have industry-leading culinary and product development capabilities, industry-leading manufacturing capabilities, and then industry-leading marketing and selling capabilities. So we're at a moment in time now where most of the infrastructure, let's call it remediation and rebuilding, is behind us, whether it's in the IT space or whether it's in the physical space.

The system. We we had a Kobalt based system installed in 1994 that we tore out and replaced during coid. And we went to really end to end sap s4hana all based in the cloud, all of with our data in 1 day and in 1 day to Lake. So another element of modernization. So as we've worked to grow by way of organic activity and inorganic activity with licensing, we've also worked in Earnest to strengthen our capabilities. So we could get to a point where we feel like we have industry-leading culinary and product development capabilities, industry-leading manufacturing capabilities and then industry-leading marketing and selling capabilities. So we're at a moment in time now where most of the infrastructure, let's call it remediation and rebuilding is behind us whether it's in the it space or whether it's in the physical space. And it was a logical.

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Q2 2026 The Marzetti Co Earnings Call

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Q2 2026 The Marzetti Co Earnings Call

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