MARZETTI CO Q3 FY2025 earnings call

• Dave Ciesinski noted consolidated net sales declined but gross profit and operating income were at records. Retail sales had some declines but licensing and certain brands grew; Foodservice down due to weather and traffic. - Tom Pigott discussed financial results: gross margin and operating income grew, EPS up, dividend increased, strong financial position. - Dave Ciesinski outlined growth plan pillars: accelerate core growth, simplify supply chain, expand core via M&A and licensing. Mentioned closure of California sauce/dressing facility, acquisition of Atlanta facility, and new Retail President Tanya Berman.

In the fiscal third quarter, consolidated net sales declined 2.9% to $458 million. For the Retail segment, net sales decreased 2.6% excluding exited bakery lines; retail sales decreased 0.7%. Licensing program was a growth source with Chick-fil-A sauce in club channel and Texas Roadhouse dinner rolls performing well. New York Bakery frozen garlic bread sales grew. In frozen dinner rolls, Sister Schubert’s and Texas Roadhouse combined grew 11.6% to 60.9% market share. Frozen garlic bread: New York Bakery grew 6.8% to 43.9% share. Produce dressings: Chick-fil-A dressings grew 4%, combined with Marzetti to 27.2% share. Shelf stable sauces: Chick-fil-A sauces grew 2.3%, Buffalo Wild Wings 1.2%. The Foodservice segment had net sales decline 3.2% due to weather, traffic decline, and menu shifts to value.

• Anticipate ongoing consumer environment challenges in Q4. - Retail to focus on innovation and distribution; Foodservice to focus on menu collaboration. - Project Retail sales to benefit from licensing, Foodservice volume down low single digits but price helps. - Tax rate estimated at 22% for remainder of FY2025.

• Consumer environment challenges affecting sales. - Weather impact on Foodservice. - Menu changes and value shifts affecting Foodservice. - Potential impact of tariffs and other macro factors.

Q: Jim Salera asked about Foodservice collaboration and Retail distribution gains.

A: Dave Ciesinski discussed Q3 Foodservice drivers like weather and menu pivots to value, and Retail view that distribution gains can offset consumer softness.

Q: Scott Marks asked about Retail weakness and promotional environment.

A: Dave Ciesinski mentioned Easter timing impact on Retail, and trade rate strategy and promotional environment views.

Q: Andrew Wolf asked about competitive dynamics and Easter impact.

A: Dave Ciesinski discussed competitive landscape and estimated Easter impact on sales.

Q: Alton Stump asked about Foodservice weather impact and Retail new items.

A: Dave Ciesinski talked about Foodservice weather impact quantification and Retail new items like Chick-fil-A sauce in club and Texas Roadhouse rollout.