Marzetti Cyclospora Outbreak Cuts First-Quarter Profit

The Tip Desk · November 5, 2026 · 3 min read

Diluted earnings fell to $1.07 a share as the outbreak trimmed both segments and gross profit dropped to $110.8 million.

The Marzetti Company (MZTI), a manufacturer and marketer of specialty food products for retail and foodservice channels, reported first-quarter net sales of $481.5 million for the three months ended September 30, 2026, down 2.4% from $493.5 million a year earlier. Excluding $10.7 million of prior-year non-core sales from a temporary supply agreement with Winland Foods that ended in the March 2026 quarter, adjusted consolidated net sales declined 0.3%.

Chief executive David A. Ciesinski said the cyclospora outbreak had a significant impact on the quarter’s top and bottom line, reducing Retail segment net sales by an estimated 4%. The company’s results discussion estimated that the outbreak reduced Foodservice segment net sales by approximately 2%.

Retail segment net sales rose 2.0% to $252.7 million, including $17.8 million of incremental sales from Bachan’s, Inc., the Japanese barbecue sauce brand acquired on May 1, 2026. Retail volume in pounds shipped increased 0.4%. Bachan’s accounted for 720 basis points of Retail sales growth and 750 basis points of Retail volume growth. The company said the outbreak’s estimated 4% drag on Retail sales partially offset Bachan’s contribution and other growth. Circana scanner data for the quarter ended September showed Bachan’s sales up 10.7% and Texas Roadhouse dinner rolls sales up 21.3%.

Foodservice segment net sales decreased 6.9% to $228.8 million on a reported basis. Excluding the prior-year TSA sales, Foodservice net sales decreased 2.6%. Foodservice volume fell 7.6%, and core volume excluding TSA declined 4.1%.

Consolidated gross profit declined $8.0 million to $110.8 million, and reported gross profit margin decreased 110 basis points to 23.0%. The company attributed the decline to reduced sales and lower production volumes at plants, significantly higher diesel and freight costs, and commissioning costs for new production capacity at its sauce and dressing facility in Atlanta, Georgia. That result reversed the fiscal fourth quarter’s record gross profit of $114.0 million and 24.5% margin.

SG&A expenses increased $10.9 million to $69.3 million, primarily from incremental core SG&A for Bachan’s and $2.4 million of noncash amortization of Bachan’s intangible assets. Consolidated operating income declined $17.8 million to $41.4 million. Adjusted operating income, which excludes the $2.4 million of Bachan’s amortization and $1.1 million of prior-year restructuring and impairment charges tied to the Milpitas, California plant closure, declined $16.6 million to $43.9 million.

Net income decreased $17.9 million to $29.3 million, or $1.07 a share, versus $47.2 million, or $1.71 a share, last year. Adjusted diluted EPS was $1.14 versus $1.74 last year. Interest expense totaled $2.8 million versus none a year earlier, as part of the Bachan’s purchase price was financed with a $200 million term loan. Retail operating income was $37.2 million versus $50.6 million a year earlier; Foodservice operating income was $30.4 million versus $34.8 million. Cash dividends were $1.00 a share versus $0.95.

Ciesinski said other areas of the business continued to perform well and that the cyclospora impact had moderated in recent weeks. Looking ahead to the fiscal second quarter and the remainder of the fiscal year, the company said it anticipates Retail sales will continue to benefit from Bachan’s and from new items recently launched or planned later this year. In Foodservice, it expects sales to remain supported by select quick-service restaurant customers among national chain accounts. It continues to anticipate a moderate level of commodity cost inflation, in addition to significantly higher diesel and freight costs, most or all of which it expects to mitigate through inflationary pricing and cost savings programs as it remains focused on margin improvement.