Marzetti Navigates Cyclospora and Bachan's Growth to Deliver Record Margins

The Marzetti Company closed fiscal year 26 with a strong finish, delivering record fourth-quarter gross profit and operating income despite a 2.2% dip in reported net sales to $465 million. Excluding the noncore temporary supply agreement, adjusted net sales actually improved 40 basis points. Management framed the quarter as a testament to execution: “we were very pleased to deliver record fourth quarter gross profit and operating income” — David A. Ciesinski, President and CEO · 2026-08-25.

The star of the quarter remains the addition of Bachan's, the Japanese barbecue sauce brand acquired earlier this year. Bachan's contributed $15.4 million in incremental sales, and its high-margin profile helped drive adjusted gross margin expansion of 160 basis points. CEO David Ciesinski highlighted that the brand is already expanding beyond its core, with a wing sauce and a Japanese mayo in market. "We expect the addition of the Bachan's business to our portfolio to be a key growth driver for Marzetti in fiscal 27," he said.

The bigger story for the year ahead, however, is the Cyclospora outbreak that hit the produce and salad categories in July. Management estimates a 250-basis-point net sales headwind in fiscal Q1, and they've modeled the recovery on the 2018 outbreak pattern. In prepared remarks, Ciesinski noted:

we estimate that the outbreak will result in a net sales headwind of approximately 250 basis points in our fiscal first quarter

Beyond the outbreak, the company's margin trajectory remains the core investment thesis. Gross profit rose 7.4% to $114 million in Q4, and gross margin has now expanded for 12 consecutive quarters. CFO Tom Pigott attributed the progress to productivity initiatives, network changes, and the accretion from Bachan's. For fiscal 27, the company expects consolidated gross margin to grow another 100 basis points, with half from Bachan's and half from cost savings. "We are estimating about a 100-basis-points of margin growth on the consolidated results," he said.

The Texas Roadhouse dinner rolls franchise continues to be a major success story, with sales up 28% in the quarter and a 76% increase over a 52-week period to $58 million. Ciesinski reaffirmed his belief that the product can reach $100 million in retail sales, driven by a household penetration of just 2.5% that leaves ample room to grow. "That core has the potential to get there," he said.

Prior quarters had already set the stage: in February, management discussed the Bachan's acquisition as a strategic move into authentic flavors, and in May they emphasized soybean oil hedging and the momentum of the brand. “We have what I would call intermediate-term coverage that takes us through essentially the end of the summer” — David A. Ciesinski, President and CEO · 2026-05-04 was the comfort they offered on commodity risk. Now, the focus has shifted to navigating the outbreak while scaling Bachan's.

Fiscal 27 guidance implies mid-single-digit revenue growth and mid-single-digit EPS growth, but Q1 will be tough as the Cyclospora impact hits. Tom Pigott outlined expectations: "We do not expect to be able to grow our margins in the first quarter... we are looking at a 15% decline roughly in operating income in Q1." Long-term shareholders are used to volatility; the stock is down 17% over the past 90 days, reflecting both the broader market and this latest uncertainty. Yet the fundamental story remains intact: operating income has grown steadily from a trough in 2022, and the balance sheet is solid, with ~$200 million in debt and record free cash flow.

Ultimately, the quarter showcases Marzetti's ability to drive profitability through acquisition and productivity, but the Cyclospora outbreak is a reminder that external shocks can disrupt even the best-laid plans. As David Ciesinski concluded, "We see line of sight to mid-single-digit top line growth and mid-single-digit bottom line growth when you bring in the benefit of Bachan's." The market will be watching whether the 2018 trajectory holds.