Specialty food company The Marzetti Company (NASDAQ: MZTI) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 5% year on year to $475.4 million. Its non-GAAP profit of $1.34 per share was in line with analysts’ consensus estimates.

Is now the time to buy MZTI? Find out in our full research report (it’s free).

StockStory’s Take

The Marzetti Company’s Q2 results reflected a combination of strong top-line growth and margin pressures. While revenue growth outpaced Wall Street expectations, profitability came in below consensus, as management cited increased marketing investments and integration costs related to its newly acquired Atlanta facility. CEO Dave Ciesinski pointed to gains across key retail brands and licensing programs, including the rollout of gluten-free Texas Toast and expanded Chick-fil-A sauce distribution. He acknowledged that higher expenses were driven by targeted marketing efforts designed to boost household penetration, as well as one-off costs from ongoing restructuring initiatives.

Looking ahead, management expects the company’s growth to be driven by volume gains in its core retail brands and the expansion of new licensed products. Ciesinski outlined plans for a national launch of Texas Roadhouse dinner rolls and additional product innovation across the Marzetti, New York Bakery, and Sister Schubert’s brands. He emphasized ongoing supply chain optimization, including the integration of the Atlanta facility and closure of the Milpitas plant, as key to future margin improvement. The company anticipates modest inflation in input costs, which it aims to offset through contractual pricing and operational efficiencies.

Key Insights from Management’s Remarks

Management attributed the quarter’s top-line momentum to successful product innovation and expanded licensing partnerships, while acknowledging that increased costs from marketing and facility integration weighed on margins.

• Retail brand momentum: The company saw growth from flagship products like New York Bakery and Sister Schubert’s, supported by the introduction of gluten-free Texas Toast and expanded distribution for Chick-fil-A sauces.
• Licensing and club channel expansion: Licensing programs, particularly for Texas Roadhouse dinner rolls and Chick-fil-A sauces, drove top-line gains, with new club channel sales expanding reach and market share.
• Elevated marketing investment: Nearly half of the increase in SG&A expenses was attributed to marketing initiatives aimed at improving household penetration, with management noting notable share gains in five of seven core categories.
• Supply chain restructuring: The integration of the Atlanta dressing and sauces facility and planned closure of the Milpitas, California plant are part of a broader effort to optimize manufacturing and reduce costs, though related restructuring and integration expenses impacted current operating margins.
• Temporary supply agreement contributions: Noncore sales from a temporary supply agreement provided a boost to reported revenue but are expected to end by March 2026, with management urging analysts to exclude these from organic growth assessments.

Drivers of Future Performance

Management expects future performance to hinge on core brand innovation, supply chain optimization, and disciplined cost management amid mixed consumer demand trends.

• Core brand and product innovation: The national launch of Texas Roadhouse dinner rolls and new product rollouts for established brands are expected to drive retail volume growth, with management targeting low single-digit revenue gains and further market share expansion in key categories.
• Supply chain and cost initiatives: The closure of the Milpitas facility and ramp-up of the Atlanta plant are projected to enhance operational efficiency and support margin improvement, with cost savings from procurement and value engineering expected to partially offset modest input cost inflation.
• Consumer and commodity environment: The company anticipates a stable but cautious consumer backdrop; it views stable interest rates and fuel prices as potential tailwinds, while ongoing monitoring of commodity markets, particularly soybean oil pricing, remains a priority in managing cost volatility.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be watching (1) the nationwide rollout and consumer reception of Texas Roadhouse dinner rolls and other new retail offerings, (2) the impact of supply chain restructuring, especially the transition from Milpitas to Atlanta, on operating margins, and (3) the trajectory of consumer demand across both Retail and Foodservice segments. Continued discipline in cost management and the outcome of licensing partnerships will also serve as important markers.

The Marzetti Company currently trades at $177.92, in line with $178.48 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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