MARZETTI CO

Previous wording

With respect to long-term growth, we continually evaluate the future opportunities and needs for our business specific to our plant infrastructure, production capacity, IT platforms and initiatives to support and strengthen our operations. Recent examples of resulting strategic actions include:

Current wording

With respect to long-term growth, in addition to complementary acquisitions, we continually evaluate the future opportunities and needs for our business specific to our plant infrastructure, production capacity, IT platforms and initiatives to support and strengthen our operations. Recent examples of resulting strategic actions include:

Previous wording

Consolidated net sales for the three months ended December 31, 2025 increased 1.7% to $518.0 million versus $509.3 million last year, reflecting higher net sales for the Foodservice segment, as partially offset by lower net sales for the Retail segment. Net sales for both segments were unfavorably impacted by core volume declines and favorably impacted by inflationary pricing. Foodservice segment net sales benefited from incremental sales attributed to a temporary supply agreement (“TSA”) resulting from our acquisition of a sauce and dressing production facility located in Atlanta, Georgia (“Atlanta plant”). The acquisition was completed in February 2025. The TSA sales commenced in March 2025 and are expected to conclude during the quarter ending March 31, 2026. Breaking down the 1.7% increase in consolidated net sales as summarized in the table below, lower core volumes and product mix accounted for a decrease of approximately 130 basis points, the net pricing impact accounted for an increase of approximately 140 basis points, and incremental sales attributed to the TSA added approximately 160 basis points. Excluding all sales attributed to the TSA, Adjusted Consolidated Net Sales for the three months ended December 31, 2025 increased 0.1% to $509.8 million.

Current wording

Consolidated net sales for the three months ended March 31, 2026 decreased 1.0% to $453.4 million versus $457.8 million last year, reflecting lower net sales for the Retail segment, as partially offset by higher net sales for the Foodservice segment. Retail segment net sales were unfavorably impacted by volume declines while net sales for both segments benefited from a modest level of inflationary pricing. Foodservice segment net sales in both the current-year and prior-year periods included sales attributed to a temporary supply agreement (“TSA”) resulting from our acquisition of a sauce and dressing production facility located in Atlanta, Georgia (“Atlanta plant”). The acquisition was completed in February 2025. The TSA sales commenced in March 2025 and concluded during the quarter ended March 31, 2026. Breaking down the 1.0% decrease in consolidated net sales as summarized in the table below, lower core volumes and product mix accounted for a decrease of approximately 120 basis points, the net pricing impact accounted for an increase of approximately 30 basis points, and lower sales attributed to the TSA accounted for a decline of approximately 10 basis points. Excluding all sales attributed to the TSA, Adjusted Consolidated Net Sales for the three months ended March 31, 2026 decreased 0.9% to $451.8 million.

Previous wording

Consolidated net sales for the six months ended December 31, 2025 increased 3.6% to $1,011.4 million versus $975.9 million last year, reflecting higher net sales for both the Retail and Foodservice segments driven by a more favorable product mix in our Retail segment, inflationary pricing in both segments and incremental Foodservice sales attributed to the TSA. Breaking down the 3.6% increase in consolidated net sales as summarized in the table below, changes in core volumes and product mix accounted for an increase of approximately 30 basis points, the net pricing impact accounted for an increase of approximately 140 basis points, and incremental sales attributed to the TSA added approximately 190 basis points. Excluding all sales attributed to the TSA, Adjusted Consolidated Net Sales for the six months ended December 31, 2025 increased 1.7% to $992.5 million.

Current wording

Consolidated net sales for the nine months ended March 31, 2026 increased 2.2% to $1,464.8 million versus $1,433.7 million last year, reflecting higher net sales for the Foodservice segment, as partially offset by lower net sales for the Retail segment. Foodservice segment net sales were favorably impacted by sales attributed to the TSA while Retail segment net sales were unfavorably impacted by core volume declines. Inflationary pricing benefited both segments. Breaking down the 2.2% increase in consolidated net sales as summarized in the table below, lower core volumes and product mix accounted for a decrease of approximately 20 basis points, the net pricing impact accounted for an increase of approximately 110 basis points, and incremental sales attributed to the TSA added approximately 130 basis points. Excluding all sales attributed to the TSA, Adjusted Consolidated Net Sales for the nine months ended March 31, 2026 increased 0.9% to $1,444.4 million.

Previous wording

Consolidated sales volumes, measured in pounds shipped, increased 0.3% for the three months ended December 31, 2025. Excluding the impact of all sales attributed to the TSA, adjusted sales volumes decreased 1.5%.

Current wording

Consolidated sales volumes, measured in pounds shipped, decreased 1.8% for the three months ended March 31, 2026. Excluding the impact of all sales attributed to the TSA, adjusted sales volumes decreased 1.7%.

Previous wording

Consolidated sales volumes, measured in pounds shipped, increased 2.1% for the six months ended December 31, 2025. Excluding the impact of all sales attributed to the TSA, adjusted sales volumes were flat.

Current wording

Consolidated sales volumes, measured in pounds shipped, increased 0.8% for the nine months ended March 31, 2026. Excluding the impact of all sales attributed to the TSA, adjusted sales volumes decreased 0.6%.

Previous wording

Consolidated gross profit for the three months ended December 31, 2025 increased $4.5 million to a second quarter record $137.3 million. Consolidated gross profit benefited from our cost savings programs while inflationary pricing served to offset cost inflation. Reported gross margin improved 40 basis points while Adjusted Gross Margin increased 80 basis points.

Current wording

Consolidated gross profit for the three months ended March 31, 2026 increased $1.3 million to a third quarter record $107.2 million. Consolidated gross profit benefited from our cost savings programs while inflationary pricing helped to offset cost inflation. Reported gross margin and Adjusted Gross Margin improved 50 basis points.

Previous wording

Consolidated gross profit for the six months ended December 31, 2025 increased $12.5 million to $256.1 million. Consolidated gross profit benefited from our cost savings programs. Reported gross margin improved 30 basis points while Adjusted Gross Margin increased 80 basis points.

Current wording

Consolidated gross profit for the nine months ended March 31, 2026 increased $13.7 million to $363.3 million. Consolidated gross profit benefited from our cost savings programs, as partially offset by the unfavorable impacts of a less favorable sales mix and lower core sales volumes. Reported gross margin improved 40 basis points while Adjusted Gross Margin increased 80 basis points.

Previous wording

Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2025 increased 5.8% to $60.4 million compared to $57.1 million in the prior-year period. This increase was primarily driven by higher marketing costs as we invested to support our Retail brands. SG&A expenses in the prior year included $1.6 million in incremental expenditures attributed to the Atlanta plant acquisition.

Current wording

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2026 increased 9.5% to $61.4 million compared to $56.1 million in the prior-year period. Excluding acquisition-related costs in SG&A, this increase was primarily driven by increased investments in personnel and IT. SG&A expenses in the current year included $3.5 million in incremental expenditures attributed to the Bachan’s acquisition. SG&A expenses in the prior year included $1.7 million in incremental expenditures attributed to the Atlanta plant acquisition.

Previous wording

SG&A expenses for the six months ended December 31, 2025 increased 6.0% to $118.8 million compared to $112.1 million in the prior year. This increase primarily reflects higher marketing costs as we invested to support the continued growth of our Retail brands, in addition to increased expenditures for compensation and benefits.

Current wording

SG&A expenses for the nine months ended March 31, 2026 increased 7.2% to $180.3 million compared to $168.2 million in the prior year. This increase primarily reflects higher marketing costs as we invested to support the continued growth of our Retail brands, in addition to increased expenditures for compensation and benefits. SG&A expenses in the current year included $3.5 million in incremental expenditures attributed to the Bachan’s acquisition. SG&A expenses in the prior year included $3.3 million in incremental expenditures attributed to the Atlanta plant acquisition.

Previous wording

In April 2025, we committed to a plan to close our sauce and dressing production facility in Milpitas, California as part of our ongoing strategic initiative to better optimize our manufacturing network. Production at the facility concluded in August 2025. In the three and six months ended December 31, 2025, we recorded restructuring and impairment charges of $0.3 million and $1.4 million, respectively, related to this closure. These charges consisted of one-time termination benefits and other closing costs. The operations of this facility were not classified as discontinued operations as the closure did not represent a strategic shift that would have a major effect on our operations or financial results.

Current wording

In April 2025, we committed to a plan to close our sauce and dressing production facility in Milpitas, California as part of our ongoing strategic initiative to better optimize our manufacturing network. Production at the facility concluded in August 2025. In the nine months ended March 31, 2026, we recorded restructuring and impairment charges of $1.4 million related to this closure. These charges consisted of one-time termination benefits and other closing costs. The operations of this facility were not classified as discontinued operations as the closure did not represent a strategic shift that would have a major effect on our operations or financial results.

Previous wording

During the three and six months ended December 31, 2025, we also recorded a noncash impairment charge of $1.4 million related to manufacturing equipment. This charge was reflected in our Foodservice segment.

Current wording

During the nine months ended March 31, 2026, we also recorded a noncash impairment charge of $1.4 million related to manufacturing equipment. During the three and nine months ended March 31, 2026, we recognized a recovery of $0.8 million through an insurance claim related to the previously recognized impairment charge. These amounts were reflected in our Foodservice segment.

Previous wording

Operating income decreased $0.5 million to $75.2 million for the three months ended December 31, 2025. The lower level of operating income reflects the increased SG&A expenses and the impact of the $1.7 million in restructuring and impairment charges, as partially offset by the higher gross profit. Excluding the current-year restructuring and impairment charges and the prior-year acquisition costs, Adjusted Operating Income decreased $0.4 million to $76.9 million.

Current wording

Operating income decreased $3.3 million to $46.6 million for the three months ended March 31, 2026. The lower level of operating income reflects the increased SG&A expenses, as partially offset by the higher gross profit. Excluding the current-year insurance recovery recorded in Restructuring, Impairment and Other, as well as the current-year and prior-year acquisition costs in SG&A, Adjusted Operating Income decreased $2.3 million to $49.3 million.

Previous wording

Operating income grew $2.9 million to $134.4 million for the six months ended December 31, 2025 due to the increase in gross profit, as partially offset by the higher SG&A expenses and the impact of the $2.8 million in restructuring and impairment charges. Excluding the current-year restructuring and impairment charges and the prior-year acquisition costs, Adjusted Operating Income increased $4.1 million to $137.3 million.

Current wording

Operating income decreased $0.4 million to $181.0 million for the nine months ended March 31, 2026 due to the higher SG&A expenses and the impact of the $2.0 million net expense in Restructuring, Impairment and Other, which were largely offset by the increase in gross profit. Excluding the current-year net expense in Restructuring, Impairment and Other, as well as the current-year and prior-year acquisition costs in SG&A, Adjusted Operating Income increased $1.8 million to $186.6 million.

Previous wording

Prior to November 30, 2024, we sponsored multiple defined benefit pension plans that covered certain former employees under collective bargaining contracts related to closed or sold operations. All these plans were previously frozen. In August 2024, our Board of Directors approved the merger of all five pension plans and the termination of the resulting merged plan. The merged plan was terminated effective November 30, 2024. Lump sum distributions and annuity purchases from a highly rated insurance company were completed in December 2024. As a result of the pension termination, we incurred a one-time noncash settlement charge of $14.0 million for the three and six months ended December 31, 2024.

Current wording

Prior to November 30, 2024, we sponsored multiple defined benefit pension plans that covered certain former employees under collective bargaining contracts related to closed or sold operations. All these plans were previously frozen. In August 2024, our Board of Directors approved the merger of all five pension plans and the termination of the resulting merged plan. The merged plan was terminated effective November 30, 2024. Lump sum distributions and annuity purchases from a highly rated insurance company were completed in December 2024. As a result of the pension termination, we incurred a one-time noncash settlement charge of $14.0 million for the nine months ended March 31, 2025.

Previous wording

Our effective tax rate was 22.5% and 22.6% for the six months ended December 31, 2025 and 2024, respectively. For the six months ended December 31, 2025 and 2024, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:

Current wording

Our effective tax rate was 22.7% and 22.0% for the nine months ended March 31, 2026 and 2025, respectively. For the nine months ended March 31, 2026 and 2025, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:

Previous wording

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased volatility to our income tax expense and resulting net income dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vestings of restricted stock awards, restricted stock units and performance units. For the six months ended December 31, 2025 and 2024, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by 0.2% and 0.1%, respectively.

Current wording

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased volatility to our income tax expense and resulting net income dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights and vestings of restricted stock awards, restricted stock units and performance units. For the nine months ended March 31, 2026 and 2025, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by 0.2% and 0.1%, respectively.

Previous wording

As influenced by the factors discussed above, diluted net income per share for the second quarter of 2026 totaled $2.15, as compared to $1.78 per diluted share in the prior year. For the three months ended December 31, 2025, restructuring and impairment charges reduced diluted earnings per share by $0.05. For the three months ended December 31, 2024, the pension settlement charge reduced diluted earnings per share by $0.39 and costs related to the planned Atlanta plant acquisition reduced diluted earnings per share by $0.05.

Current wording

As influenced by the factors discussed above, diluted net income per share for the third quarter of 2026 totaled $1.35, as compared to $1.49 per diluted share in the prior year. For the three months ended March 31, 2026, costs related to the Bachan’s acquisition reduced diluted earnings per share by $0.10 and the insurance recovery recorded in Restructuring, Impairment and Other increased diluted earnings per share by $0.02. For the three months ended March 31, 2025, costs related to the Atlanta plant acquisition reduced diluted earnings per share by $0.05.

Previous wording

For the six months ended December 31, 2025, diluted net income per share totaled $3.86, as compared to $3.40 per diluted share in the prior year. For the six months ended December 31, 2025, restructuring and impairment charges reduced diluted earnings per share by $0.08. For the six months ended December 31, 2024, the pension settlement charge reduced diluted earnings per share by $0.39 and costs related to the planned Atlanta plant acquisition reduced diluted earnings per share by $0.05.

Current wording

For the nine months ended March 31, 2026, diluted net income per share totaled $5.21, as compared to $4.89 per diluted share in the prior year. For the nine months ended March 31, 2026, costs related to the Bachan’s acquisition reduced diluted earnings per share by $0.10 and the net expense in Restructuring, Impairment and Other reduced diluted earnings per share by $0.06. For the nine months ended March 31, 2025, the pension settlement charge reduced diluted earnings per share by $0.39 and costs related to the Atlanta plant acquisition reduced diluted earnings per share by $0.09.

Previous wording

For the three months ended December 31, 2025, Retail segment net sales decreased 1.1% to $277.5 million from the prior-year total of $280.8 million. The decrease in Retail segment net sales reflected lower sales volumes partially offset by some inflationary pricing. Note that the 1.1% decrease in Retail segment net sales compares to strong prior-year growth of 6.3% and reflects softer demand during the timeframe of the U.S. government shutdown. Retail segment highlights include continued growth from our category-leading New York Bakery TM frozen garlic bread products, including our recently introduced gluten-free Texas Toast, and expanding distribution for our licensed Texas Roadhouse® dinner rolls. Retail segment sales volumes, measured in pounds shipped, decreased 3.1%.

Current wording

For the three months ended March 31, 2026, Retail segment net sales decreased 3.2% to $233.8 million from the prior-year total of $241.5 million. The decrease in Retail segment net sales reflects lower sales volumes partially offset by some inflationary pricing. Retail segment highlights included continued growth from our category-leading New York Bakery TM frozen garlic bread products, including our recently introduced gluten-free Texas Toast, in addition to increased sales for our Sister Schubert’s® dinner rolls, which benefited from the pull-forward of demand due to the earlier Easter holiday. These sales gains were more than offset by the impacts of category softness and reduced sales into the club channel. Retail segment sales volumes, measured in pounds shipped, decreased 5.6%.

Previous wording

For the six months ended December 31, 2025, Retail segment net sales increased 1.0% to $525.4 million compared to the prior-year total of $520.3 million. Net sales for our category-leading New York Bakery TM frozen garlic bread products, including our recently introduced gluten-free Texas Toast, were a strong contributor to the higher sales. Our Retail segment’s licensing program also remained a source for growth in the quarter led by expanding distribution of our Texas Roadhouse® dinner rolls. The Chick-fil-A® sauce we began shipping into the club channel in late fiscal 2025 also delivered incremental sales. Retail segment sales volumes, measured in pounds shipped, decreased 0.2%.

Current wording

For the nine months ended March 31, 2026, Retail segment net sales decreased 0.4% to $759.1 million compared to the prior-year total of $761.9 million due to a decline in sales volumes as partially offset by some inflationary pricing. Sales highlights for the nine-month period included continued strong growth for our category-leading New York Bakery TM frozen garlic bread products and expanding distribution for our recently introduced Texas Roadhouse® dinner rolls. Retail segment sales volumes, measured in pounds shipped, decreased 2.0%.

Previous wording

For the three months ended December 31, 2025, Retail segment operating income decreased 9.1% to $62.8 million driven by the unfavorable impacts of the lower sales volumes, inflationary costs and higher marketing spend, as partially offset by our cost savings programs.

Current wording

For the three months ended March 31, 2026, Retail segment operating income increased 3.4% to $47.1 million driven by our cost savings programs and some inflationary pricing, as partially offset by the unfavorable impacts of the lower sales volumes and inflationary costs.

Previous wording

For the six months ended December 31, 2025, Retail segment operating income decreased 9.5% to $113.4 million due to inflationary costs and higher marketing spend, as partially offset by our cost savings programs.

Current wording

For the nine months ended March 31, 2026, Retail segment operating income decreased 6.0% to $160.5 million due to inflationary costs, higher marketing spend and lower sales volumes, as partially offset by our cost savings programs and some inflationary pricing.

Previous wording

For the three months ended December 31, 2025, Foodservice segment net sales grew 5.2% to $240.4 million compared to $228.5 million in the prior-year period driven by increased demand from several of our national chain restaurant account customers, increased sales for our branded Foodservice products, and the benefit of inflationary pricing. Excluding all sales attributed to the TSA resulting from the February 2025 Atlanta plant acquisition, Adjusted Foodservice Net Sales increased 1.6%. Foodservice segment sales volumes, measured in pounds shipped, increased 2.7%. Excluding all TSA sales, adjusted Foodservice sales volumes decreased 0.4%.

Current wording

For the three months ended March 31, 2026, Foodservice segment net sales grew 1.5% to $219.6 million compared to $216.3 million in the prior-year period driven by increased demand from several of our national chain restaurant account customers. Excluding all sales attributed to the TSA resulting from the February 2025 Atlanta plant acquisition, Adjusted Foodservice Net Sales increased 1.8%. Foodservice segment sales volumes, measured in pounds shipped, increased 0.7%. Excluding all TSA sales, adjusted Foodservice sales volumes increased 0.8%.

Previous wording

For the six months ended December 31, 2025, Foodservice segment net sales increased 6.7% to $486.1 million from the prior-year total of $455.5 million driven by increased demand from several of our national chain restaurant account customers and the benefit of inflationary pricing. Excluding all sales attributed to the TSA, Adjusted Foodservice Net Sales increased 2.6%. Foodservice segment sales volumes, measured in pounds shipped, increased 3.5%. Excluding all TSA sales, adjusted Foodservice sales volumes were flat.

Current wording

For the nine months ended March 31, 2026, Foodservice segment net sales increased 5.0% to $705.7 million from the prior-year total of $671.8 million driven by the TSA sales, increased demand from several of our national chain restaurant account customers, and the benefit of inflationary pricing. Excluding all sales attributed to the TSA, Adjusted Foodservice Net Sales increased 2.3%. Foodservice segment sales volumes, measured in pounds shipped, increased 2.6%. Excluding all TSA sales, adjusted Foodservice sales volumes increased 0.3%.

Previous wording

For the six months ended December 31, 2025, Foodservice segment operating income increased 31.0% to $71.6 million driven by our cost savings programs, inflationary pricing, and a more favorable sales mix, as partially offset by some modest cost inflation.

Current wording

For the three months ended March 31, 2026, Foodservice segment operating income decreased 2.6% to $27.4 million due to inflationary costs, as partially offset by our cost savings programs and a more favorable sales volume / mix.

Previous wording

For the three months ended December 31, 2025, Foodservice segment operating income increased 21.3% to $36.8 million driven by our cost savings programs, inflationary pricing, and the benefit of recent IT investments to support a more optimized trade spend system, as partially offset by some modest cost inflation.

Current wording

For the nine months ended March 31, 2026, Foodservice segment operating income increased 19.6% to $98.9 million driven by our cost savings programs, inflationary pricing, a more favorable sales mix and the benefit of recent IT investments to support a more optimized trade spend system, as partially offset by inflationary costs.

Previous wording

Looking forward to the back half of our fiscal year, excluding any impact from the planned acquisition of Bachan’s, Inc., we anticipate Retail segment 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. Note that with this year’s earlier Easter holiday, we anticipate some Retail segment sales to be pulled forward into our fiscal third quarter. In the Foodservice segment, we expect sales to be supported by select quick-service restaurant customers in our mix of national chain restaurant accounts, while external factors, including U.S. economic performance and consumer behavior, may impact demand. With respect to our input costs, in aggregate we anticipate a modest level of inflation for the remainder of the fiscal year that we plan to offset through contractual pricing and our cost savings programs as we remain focused on continued margin improvement.

Current wording

Looking forward to our fiscal fourth quarter, in addition to incremental sales attributed to the Bachan’s acquisition, we expect Retail sales will benefit from new product introductions including Marzetti® Protein Ranch dressing and veggie dips, a new Olive Garden® Zesty Italian dressing flavor, and the addition of a larger-sized bottle for the popular Chick-fil-A® Avocado Lime Ranch dressing. In the Foodservice segment, we anticipate continued growth from select quick-service restaurant customers in our mix of national chain restaurant accounts. Note that external factors, including U.S. economic performance and consumer behavior, may impact demand in both segments. With respect to our input costs, in aggregate we anticipate a modest level of inflationary pressure that we plan to offset through contractual pricing and our cost savings programs as we remain focused on continued margin improvement.

Previous wording

For the six months ended December 31, 2025, net cash provided by operating activities totaled $158.1 million, as compared to $127.5 million in the prior-year period. This increase was primarily due to the change in deferred income taxes resulting from tax timing benefits of the One Big Beautiful Bill Act, which was enacted in July 2025. Higher net income was offset by the impact of the prior-year noncash pension settlement charge.

Current wording

For the nine months ended March 31, 2026, net cash provided by operating activities totaled $228.7 million, as compared to $173.3 million in the prior-year period. This increase was primarily due to the favorable year-over-year changes in net working capital, as well as the change in deferred income taxes resulting from tax timing benefits of the One Big Beautiful Bill Act, which was enacted in July 2025. The favorable net working capital changes reflected the impacts of a current-year increase in accounts payable, as well as prior-year increases in accounts receivable and inventories. Higher net income was offset by the impact of the prior-year noncash pension settlement charge.

Previous wording

Cash used in investing activities for the six months ended December 31, 2025 was $39.8 million, as compared to $32.7 million in the prior year. This increase primarily reflects a higher level of payments for property additions in the current year.

Current wording

Cash used in investing activities for the nine months ended March 31, 2026 was $64.5 million, as compared to $130.3 million in the prior year. This decrease primarily reflects the $78.8 million of cash paid in the prior year for the February 2025 Atlanta plant acquisition, as partially offset by a higher level of payments for property additions in the current year.

Previous wording

Cash used in financing activities for the six months ended December 31, 2025 of $78.2 million increased from the prior-year total of $55.2 million. This increase primarily reflects higher levels of share repurchases, as well as higher dividend payments.

Current wording

Cash used in financing activities for the nine months ended March 31, 2026 of $107.2 million increased from the prior-year total of $81.9 million. This increase primarily reflects higher levels of share repurchases, as well as higher dividend payments.

Previous wording

Under our unsecured revolving credit facility (“Facility”), we may borrow up to a maximum of $150 million at any one time. We had no borrowings outstanding under the Facility at December 31, 2025. At December 31, 2025, we had $2.6 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. The Facility expires in March 2029, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to SOFR or an alternate base rate defined in the Facility. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.

Current wording

Under our unsecured credit facility (“Facility”), which was amended in March 2026, we may borrow up to a maximum of $200 million at any one time on a revolving credit basis, as well as an additional $200 million under a term loan to finance our acquisition of Bachan’s. We had no borrowings outstanding under the Facility at March 31, 2026. At March 31, 2026, we had $2.6 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. The Facility expires in March 2029, and all outstanding revolving loans are then due and payable. The maturity date for the term loan is five years after the term loan is made; however, there is a springing maturity date of March 6, 2029, if, by December 6, 2028, the Facility termination date has not been extended to a date that is five years after the term loan is made or later with an aggregate revolving commitment equal to or greater than the outstanding principal balance of the term loan. Interest is variable based upon formulas tied to SOFR or an alternate base rate defined in the Facility. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Revolving loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.

Previous wording

We currently expect to remain in compliance with the Facility’s covenants for the foreseeable future. However, a default under the Facility could accelerate the repayment of any then outstanding indebtedness and limit our access to $75 million of additional credit available under the Facility. Such an event could require a reduction in or curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due.

Current wording

We currently expect to remain in compliance with the Facility’s covenants for the foreseeable future. However, a default under the Facility could accelerate the repayment of any then outstanding indebtedness and limit our access to $200 million of additional revolving credit available under the Facility. Such an event could require a reduction in or curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due.

Previous wording

We believe that cash provided by operating activities and our existing balances in cash and equivalents, in addition to that available under the Facility, should be adequate to meet our core liquidity needs over the next 12 months, including the projected levels of capital expenditures and dividend payments. The planned acquisition of Bachan’s, Inc. will be funded by a combination of cash on hand and additional financing, the details of which will be provided in a subsequent filing. If we were to borrow outside of the Facility under current market terms, our average interest rate may increase and have an adverse effect on our results of operations. Based on our current plans and expectations, we believe our capital expenditures for 2026 could total between $75 and $85 million.

Current wording

We believe that cash provided by operating activities and our existing balances in cash and equivalents, in addition to that available under the Facility, should be adequate to meet our core liquidity needs over the next 12 months, including the projected levels of capital expenditures and dividend payments. The acquisition of Bachan’s will be funded by a combination of cash on hand and borrowings under the Facility, including the $200 million term loan discussed above. If we were to borrow outside of the Facility under current market terms, our average interest rate may increase and have an adverse effect on our results of operations. Based on our current plans and expectations, we believe our capital expenditures for 2026 will total approximately $80 million.

Previous wording

We have various contractual and other obligations that are appropriately recorded as liabilities in our condensed consolidated financial statements. Certain other contractual obligations are not recognized as liabilities in our condensed consolidated financial statements. Examples of such obligations are commitments to purchase raw materials or packaging inventory that has not yet been received as of December 31, 2025, lease commitments that have not yet commenced as of December 31, 2025, and purchase orders and longer-term purchase arrangements related to the procurement of services, including IT service agreements, and property, plant and equipment. The majority of these obligations, other than lease commitments, is expected to be due within one year.

Current wording

We have various contractual and other obligations that are appropriately recorded as liabilities in our condensed consolidated financial statements. Certain other contractual obligations are not recognized as liabilities in our condensed consolidated financial statements. Examples of such obligations are commitments to purchase raw materials or packaging inventory that has not yet been received as of March 31, 2026, the Bachan’s acquisition discussed above, lease commitments that have not yet commenced as of March 31, 2026, and purchase orders and longer-term purchase arrangements related to the procurement of services, including IT service agreements, and property, plant and equipment. The majority of these obligations, other than lease commitments, is expected to be due within one year.

Previous wording

Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP financial measures that exclude non-core sales and cost of sales attributed to the TSA made in connection with our February 2025 acquisition of Winland’s Atlanta-based sauce and dressing production facility. The TSA sales are included in the reported net sales for our Foodservice segment and did not contribute meaningfully to gross profit. The TSA sales commenced in March 2025 and are expected to conclude during the quarter ending March 31, 2026. The following tables present a reconciliation between net sales, cost of sales, gross profit and gross margin as reported in accordance with GAAP and Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin for the three and six month periods ended December 31, 2025.

Current wording

Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP financial measures that exclude non-core sales and cost of sales attributed to the TSA made in connection with our February 2025 acquisition of Winland’s Atlanta-based sauce and dressing production facility. The TSA sales are included in the reported net sales for our Foodservice segment and did not contribute meaningfully to gross profit. The TSA sales commenced in March 2025 and concluded during the quarter ended March 31, 2026. The following tables present a reconciliation between net sales, cost of sales, gross profit and gross margin as reported in accordance with GAAP and Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit and Adjusted Gross Margin for the three and nine month periods ended March 31, 2026 and 2025.

Previous wording

Adjusted Operating Income is a non-GAAP financial measure that excludes certain items affecting comparability, which can impact the analysis of our underlying core business performance and trends. The following table presents a reconciliation between operating income as reported in accordance with GAAP and Adjusted Operating Income for the three and six month periods ended December 31, 2025 and 2024. The $1.7 million adjustment in the reconciliation below for the three months ended December 31, 2025 includes $1.4 million in restructuring and impairment charges related to the impairment of manufacturing equipment. The remaining $0.3 million in restructuring and impairment charges for the three-month period are attributed to the closure of our sauce and dressing production facility in Milpitas, California. The $2.8 million adjustment in the reconciliation below for the six months ended December 31, 2025 consists of the $1.4 million in charges for the aforementioned impairment of manufacturing equipment with the remaining $1.4 million attributed to the restructuring and impairment charges resulting from the closure of our sauce and dressing production facility in Milpitas, California. The prior-year adjustment for the three and six months ended December 31, 2024 reflects incremental SG&A expenses attributed to the Atlanta production facility acquisition.

Current wording

Adjusted Operating Income is a non-GAAP financial measure that excludes certain items affecting comparability, which can impact the analysis of our underlying core business performance and trends. The following table presents a reconciliation between operating income as reported in accordance with GAAP and Adjusted Operating Income for the three and nine month periods ended March 31, 2026 and 2025. The $3.5 million adjustment for the three and nine months ended March 31, 2026 reflects incremental SG&A expenses attributed to the Bachan’s acquisition. The $0.8 million adjustment for the three months ended March 31, 2026 reflects a recovery through an insurance claim related to a previously recognized asset impairment charge. The $2.0 million adjustment for the nine months ended March 31, 2026 consists of $1.4 million in charges related to the impairment of manufacturing equipment, the $0.8 million insurance recovery, and $1.4 million attributed to the restructuring and impairment charges resulting from the closure of our sauce and dressing production facility in Milpitas, California. The prior-year adjustments of $1.7 million and $3.3 million for the three and nine months ended March 31, 2025, respectively, reflect incremental SG&A expenses attributed to the Atlanta production facility acquisition.

Previous wording

•the ability to successfully close the Bachan’s, Inc. transaction, integrate the acquired business, and achieve operational and financial performance objectives;

Current wording

•the ability to successfully integrate the acquired Bachan’s business and achieve operational and financial performance objectives;