MARZETTI CO

Previous wording

We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). We have also presented Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Gross Margin and Adjusted Operating Income, each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report. Refer to the “Reconciliation of GAAP to non-GAAP Financial Measures” section below for additional information and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Current wording

We prepare our consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). We have also presented Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income and Adjusted Net Income Per Diluted Share (“Adjusted Diluted EPS”), each of which is considered a non-GAAP financial measure, to supplement the financial information included in this report. Refer to the “Reconciliation of GAAP to non-GAAP Financial Measures” section below for additional information and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Previous wording

•demonstrated success with strategic licensing programs in Retail through both new and established relationships in the foodservice industry;

Current wording

•demonstrated success with strategic licensing programs in Retail through both established relationships in the foodservice industry and new relationships;

Previous 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:

Current wording

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

Previous wording

•the closure of our sauce and dressing production facility in Milpitas, California during the quarter ended September 30, 2025.

Current wording

•the closure of our sauce and dressing production facility in Milpitas, California during the quarter ended September 30, 2025; and

Previous wording

•the acquisition of a sauce and dressing production facility in the Atlanta, Georgia area in February 2025; and

Current wording

•the acquisition of a sauce and dressing production facility in the Atlanta, Georgia area in February 2025.

Previous 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.

Current wording

Consolidated net sales for the three months ended September 30, 2026 decreased 2.4% to $481.5 million versus $493.5 million last year, reflecting higher net sales for the Retail segment, which were more than offset by lower net sales for the Foodservice segment. Retail segment net sales benefited from $17.8 million of incremental sales resulting from the acquisition of Bachan’s that was completed on May 1, 2026, as partially offset by organic volume declines, which included the unfavorable impacts of the cyclospora outbreak on product demand and sales. The decline in Foodservice segment net sales was driven by the impact of prior-year sales attributed to a temporary supply agreement (“TSA”) resulting from our February 2025 acquisition of a sauce and dressing production facility located in Atlanta, Georgia (“Atlanta plant”), as well as the unfavorable impact of the cyclospora outbreak. The TSA sales commenced in March 2025 and concluded during the quarter ended March 31, 2026. Foodservice segment net sales benefited from a modest level of inflationary pricing.

Previous 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%.

Current wording

Consolidated sales volumes, measured in pounds shipped, decreased 4.7% for the three months ended September 30, 2026. Excluding the impact of all sales attributed to the TSA, consolidated sales volumes decreased 2.4%.

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 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.

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 three months ended September 30, 2025, we recorded restructuring and impairment charges of $1.1 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

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:

Current wording

Our effective tax rate was 24.4% and 22.4% for the three months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 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 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.

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 three months ended September 30, 2026, the impact of net shortfalls from stock-based compensation increased our effective tax rate by 0.9%. For the three months ended September 30, 2025, the impact of net windfalls from stock-based compensation reduced our effective tax rate by 0.5%.

Previous 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.

Current wording

As influenced by the factors discussed above, diluted net income per share for the first quarter of 2027 totaled $1.07, as compared to $1.71 per diluted share in the prior year. For the three months ended September 30, 2026, amortization of intangible assets reduced diluted earnings per share by $0.07. For the three months ended September 30, 2025, restructuring and impairment charges reduced diluted earnings per share by $0.03. The resulting Adjusted Diluted EPS was $1.14 in the current-year quarter versus $1.74 last year.

Previous 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%.

Current wording

For the three months ended September 30, 2026, Foodservice segment net sales decreased 6.9% to $228.8 million compared to $245.6 million in the prior-year period due to last year’s TSA sales and lower core sales volumes which reflect the unfavorable impact of the cyclospora outbreak. The outbreak is estimated to have reduced Foodservice segment net sales by approximately 2%, as partially offset by increased demand from select national chain restaurant account customers 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 decreased 2.6%. Foodservice segment sales volumes, measured in pounds shipped, decreased 7.6%. Excluding all TSA sales, Foodservice sales volumes decreased 4.1%.

Previous wording

For the nine months ended March 31, 2026 and 2025, corporate expenses totaled $77.0 million and $72.1 million, respectively. The increase was primarily driven by increased investments in personnel and IT. Corporate expenses in the current year included $3.5 million in incremental expenditures attributed to the Bachan’s acquisition. Corporate expenses in the prior year included $3.3 million in incremental expenditures attributed to the Atlanta plant acquisition.

Current wording

For the three months ended September 30, 2026 and 2025, corporate expenses totaled $26.1 million and $25.0 million, respectively. The increase was primarily driven by increased investments in personnel and IT.

Previous 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.

Current wording

Looking forward to our fiscal second quarter and the remainder of the fiscal year, we anticipate Retail segment sales will continue to benefit from incremental sales attributed to the Bachan’s acquisition in addition to contributions from new items that we recently launched or have planned for introduction later this year. In the Foodservice segment, we expect sales to remain supported by select quick-service restaurant customers in our mix of national chain restaurant accounts. We continue to anticipate a moderate level of commodity cost inflation, in addition to significantly higher diesel and freight costs, most or all of which we expect to mitigate through inflationary pricing and our cost savings programs as we remain focused on margin improvement.

Previous 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.

Current wording

Cash used in investing activities for the three months ended September 30, 2026 was $21.9 million, as compared to $18.8 million in the prior year. This increase primarily reflects a slightly higher level of payments for property additions in the current year.

Previous 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.

Current wording

Cash used in financing activities for the three months ended September 30, 2026 of $36.7 million increased from the prior-year total of $30.0 million. This increase primarily reflects higher levels of share repurchases and current-year debt repayments, net of proceeds from borrowings.

Previous 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.

Current wording

Under our Credit Agreement, 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. At September 30, 2026, we had outstanding borrowings of $197.5 million under the term loan and no revolving loans outstanding. At September 30, 2026, we had $2.5 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Credit Agreement. The Credit Agreement expires in March 2029, and all outstanding revolving loans are then due and payable. The maturity date for the term loan is April 29, 2031; 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 April 29, 2031 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 Credit Agreement. 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.

Previous wording

The Facility contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At March 31, 2026, we were in compliance with all applicable provisions and covenants of this facility, and we exceeded the requirements of the financial covenants by substantial margins. At March 31, 2026, there were no events that would constitute a default under this facility.

Current wording

The Credit Agreement contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At September 30, 2026, we were in compliance with all applicable provisions and covenants of the Credit Agreement, and we exceeded the requirements of the financial covenants by substantial margins. At September 30, 2026, there were no events that would constitute a default under the Credit Agreement.

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 $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.

Current wording

We currently expect to remain in compliance with the Credit Agreement’s covenants for the foreseeable future. However, a default under the Credit Agreement could accelerate the repayment of any then outstanding indebtedness and limit our access to $200 million of additional revolving credit available under the Credit Agreement. 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 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.

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 Credit Agreement, should be adequate to meet our core liquidity needs over the next 12 months, including the projected levels of capital expenditures and dividend payments. If we were to borrow outside of the Credit Agreement 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 2027 could total approximately $90 million.

Previous wording

Beyond the next 12 months, we expect that cash provided by operating activities will be the primary source of liquidity. This source, combined with our existing balances in cash and equivalents and amounts available under the Facility, is expected to be sufficient to meet our overall cash requirements.

Current wording

Beyond the next 12 months, we expect that cash provided by operating activities will be the primary source of liquidity. This source, combined with our existing balances in cash and equivalents and amounts available under the Credit Agreement, is expected to be sufficient to meet our overall cash requirements.

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 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.

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 September 30, 2026, lease commitments that have not yet commenced as of September 30, 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

We prepare our consolidated financial statements in accordance with GAAP. However, from time to time, we may present in our public statements, press releases and SEC filings, non-GAAP financial measures such as Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Gross Margin and Adjusted Operating Income. Management considers such non-GAAP financial measures to provide useful supplemental information to investors in facilitating year-over-year comparisons by removing non-recurring items or other items that management believes do not directly reflect the underlying operations. Management uses these non-GAAP measures in the preparation of our annual operating plan and for our monthly analysis of operating results. Reconciliations of the non-GAAP measures to the most comparable GAAP financial measures are provided below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by other companies. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

Current wording

We prepare our consolidated financial statements in accordance with GAAP. However, from time to time, we may present in our public statements, press releases and SEC filings, non-GAAP financial measures such as Adjusted Consolidated Net Sales, Adjusted Foodservice Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income, and Adjusted Net Income Per Diluted Share (“Adjusted Diluted EPS”). Management considers such non-GAAP financial measures to provide useful supplemental information to investors in facilitating year-over-year comparisons by removing non-recurring items or other items that management believes do not directly reflect the underlying operations. Management uses these non-GAAP measures in the preparation of our annual operating plan and for our monthly analysis of operating results. Reconciliations of the non-GAAP measures to the most comparable GAAP financial measures are provided below. Our definitions of these non-GAAP measures may differ from similarly titled measures used by other companies. These non-GAAP measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP.

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 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.

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 table presents 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 month periods ended September 30, 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 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.

Current wording

Adjusted Operating Income and Adjusted Diluted EPS are non-GAAP financial measures that exclude certain items affecting comparability, which can impact the analysis of our underlying core business performance and trends. The following table presents a reconciliation between 1) operating income as reported in accordance with GAAP and Adjusted Operating Income and 2) diluted EPS as reported in accordance with GAAP and Adjusted Diluted EPS for the three month periods ended September 30, 2026 and 2025. The current-year adjustment reflects incremental SG&A expenses attributed to the amortization of intangible assets resulting from the Bachan’s acquisition. The prior-year adjustment reflects restructuring and impairment charges resulting from the closure of our sauce and dressing production facility in Milpitas, California.

Previous wording

•significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, production planning, operations, and production processes resulting from the impacts of epidemics, pandemics or similar widespread public health concerns and disease outbreaks;

Current wording

•significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, production planning, operations, and production processes resulting from the impacts of epidemics, pandemics or similar widespread public health concerns and foodborne outbreaks;