Financial Data and Key Metrics Changes - The company reported record high net sales, gross profit, and operating income for fiscal year 2025, with consolidated net sales growing 5% to $475.4 million in the fourth quarter [4][8] - Gross profit increased by 8.7% to $106.1 million, with gross margin expanding by 70 basis points [10][12] - Diluted earnings per share decreased by 6.3% to $1.18, impacted by restructuring and impairment charges [13][15] Business Line Data and Key Metrics Changes - In the retail segment, net sales increased by 3.1% to $241.6 million, driven by growth from licensing and the company's own brand [4][5] - The frozen dinner roll category saw a significant growth of 52.4%, increasing market share to 63.8% [6] - The food service segment's sales improved by 1.4%, although sales volume declined by 1.7% [7][8] Market Data and Key Metrics Changes - The company experienced strong results in the frozen garlic bread category, with sales growing 10% compared to a 3.5% increase for the category overall [6] - Sales of Chick-fil-A sauce grew by 17.2%, contributing to a market share increase of 30 basis points [6] - The overall market for the food service segment is showing modest improvement, with casual dining and QSR segments performing variably [25][26] Company Strategy and Development Direction - The company aims to accelerate core business growth, simplify the supply chain, and expand through focused M&A and strategic licensing [18][19] - New product launches are planned for the upcoming year, including Texas Roadhouse dinner rolls and other core brand items [19][20] - The company is focused on integrating the newly acquired Atlanta-based facility into its operations while optimizing its manufacturing network [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer spending, anticipating modest tailwinds from potential decreases in interest rates and stable crude oil prices [60][61] - The company expects to see low single-digit volume growth in retail and a flattish profile in food service for fiscal year 2026 [65][66] - Input costs are anticipated to experience modest inflation, which the company plans to offset through pricing strategies and cost savings programs [20][66] Other Important Information - The company reported a 16.7% increase in selling, general, and administrative expenses, primarily due to higher marketing investments [10][11] - Capital expenditures for fiscal year 2026 are forecasted to be between $75 million and $85 million, with continued investments in cost-saving projects [14] Q&A Session Summary Question: Thoughts around food service and QSR industry traffic expectations for FY 2026 - Management noted that the food service industry is showing modest improvement, with casual dining focusing on value and QSRs beginning to stabilize [25][26] Question: Visibility into soybean oil pricing and its impact - Management acknowledged soybean oil's significance in their commodity basket, indicating that current pricing is manageable and not expected to be a near-term headwind [30][36] Question: G&A spend and its components - The increase in G&A spend was attributed to marketing investments, integration costs, and timing of expenses, with expectations to grow in line with inflation moving forward [44][50] Question: Volume trajectory in food service and impact from LTO reductions - Management confirmed that while there were headwinds from LTO reductions, growth from other customers helped offset these impacts, with expectations for continued positive trends [78][80]

Financial Data and Key Metrics Changes - The company reported record high net sales, gross profit, and operating income for fiscal year 2025, with consolidated net sales growing 5% to $475.4 million in the fourth quarter [6][10] - Gross profit increased by 8.7% to $106.1 million, with gross margin expanding by 70 basis points [12][14] - Fourth quarter diluted earnings per share decreased by 6.3% to $1.18, impacted by restructuring and impairment charges [14][15] Business Line Data and Key Metrics Changes - In the retail segment, net sales increased by 3.1% to $241.6 million, driven by growth from licensing and own brands [6][7] - The frozen dinner roll category saw a combined growth of 52.4% for Sister Schubert's and Texas Roadhouse brands, increasing market share to 63.8% [8] - In the food service segment, net sales improved by 1.4%, although sales volume declined by 1.7% [9] Market Data and Key Metrics Changes - Circana scanner data indicated a 5.5% increase in sales dollars and volume for branded products [8] - The frozen garlic bread category saw New York Bakery brand sales grow by 10%, leading to a market share increase to 43.3% [8] - Chick-fil-A sauce sales grew by 17.2%, with market share up 30 basis points [8] Company Strategy and Development Direction - The company aims to accelerate core business growth, simplify the supply chain, and expand through focused M&A and strategic licensing [20] - New product launches are planned for the upcoming year, including Texas Roadhouse dinner rolls shipping nationally [21] - The company is focused on integrating the newly acquired Atlanta facility into its manufacturing network [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer behavior, anticipating modest tailwinds if inflation remains in check [56] - The food service segment is expected to improve sequentially, while retail growth is anticipated from new product introductions [58][60] - Input costs are expected to see modest inflation, which the company plans to offset through pricing and cost savings programs [22] Other Important Information - The company reported a 6% increase in quarterly cash dividends, maintaining a strong financial position with a debt-free balance sheet and $161.5 million in cash [17] - Restructuring and impairment charges totaled $5.1 million, primarily related to the closure of a sauce and dressing facility [13][66] Q&A Session Summary Question: Expectations around food service industry traffic and innovation - Management noted that the food service industry is seeing modest improvement, with casual dining focusing on value and QSRs beginning to stabilize [25][26] Question: Visibility into soybean oil pricing and its impact - Management acknowledged soybean oil's significance in their commodity basket, indicating that current market conditions do not pose a near-term headwind [31][35] Question: G&A spending and its components - The increase in G&A spending was attributed to marketing investments, Atlanta facility integration costs, and legal expenses, with expectations to grow in line with inflation [41][44] Question: Cost savings outlook for fiscal year 2026 - Management highlighted successful cost-saving initiatives in fiscal year 2025 and anticipated further savings from the network reset due to facility closures [48][49] Question: Impact of consumer environment on retail and food service businesses - Management expressed optimism about potential consumer spending increases if inflation remains controlled, with expectations for low single-digit growth in retail and a flat profile in food service [56][60]

PART I [Business Overview](index=3&type=section&id=Item%201.%20Business) The Marzetti Company, formerly Lancaster Colony Corporation, rebranded on June 27, 2025, focusing on manufacturing and marketing specialty food products for retail and foodservice channels, aiming for core business growth, supply chain optimization, and expansion through licensing and acquisitions [General Development of Business](index=4&type=section&id=GENERAL%20DEVELOPMENT%20OF%20BUSINESS) The company officially rebranded as The Marzetti Company on June 27, 2025, to unify its brand image and reflect its evolution as a pure-play food business, driven by a strategic growth plan focused on accelerating core business, simplifying the supply chain, and expanding through licensing and acquisitions - The company officially rebranded as The Marzetti Company on June 27, 2025, to unify its brand image and reflect its evolution and growth as a pure-play food business[12](index=12&type=chunk) - The company's vision is to be "The Better Food Company," committed to creating delicious foods and building deep, lasting relationships with customers and consumers[14](index=14&type=chunk) - The company's strategic growth plan has three pillars: accelerating core business growth, simplifying the supply chain to reduce costs and improve margins, and expanding the core business through retail licensing programs and complementary acquisitions[15](index=15&type=chunk)[19](index=19&type=chunk) [Available Information](index=4&type=section&id=Available%20Information) The company's annual, quarterly, and current reports are freely available on its investor relations website and the SEC website - The company's annual reports (Form 10-K), quarterly reports (Form 10-Q), and current reports (Form 8-K) are available free of charge on its investor relations website investors.marzetticompany.com[16](index=16&type=chunk) - Reports, proxy statements, and other information filed by the company are also available on the SEC website www.sec.gov[17](index=17&type=chunk) [Description of and Financial Information About Business Segments](index=4&type=section&id=DESCRIPTION%20OF%20AND%20FINANCIAL%20INFORMATION%20ABOUT%20BUSINESS%20SEGMENTS) The company's financial performance is reported across two segments, Retail and Foodservice, each offering proprietary and licensed products through various channels, with significant customer concentration and some seasonal sales fluctuations - The company's financial performance is divided into two reporting segments: Retail and Foodservice[18](index=18&type=chunk) - The Retail segment primarily sells proprietary and licensed brand products, such as frozen bread, refrigerated and shelf-stable dressings, and dips, in the United States through sales personnel, food brokers, and distributors[20](index=20&type=chunk) Retail Segment Key Products and Brands | Product | Brand Name | | :--- | :--- | | Frozen Bread | New York Bakery®, Sister Schubert's® | | Refrigerated Dressings and Dips | Marzetti®, Marzetti Simply® | | Shelf-Stable Dressings and Croutons | Marzetti®, Cardini's®, Girard's®, New York Bakery®, Chatham Village® | - The Foodservice segment primarily sells proprietary and custom-formulated sauces, salad dressings, frozen bread, and yeast rolls to national chain restaurant customers, with most sales under proprietary brands[24](index=24&type=chunk)[25](index=25&type=chunk) Foodservice Segment Key Products and Brands | Product | Brand Name | | :--- | :--- | | Dressings and Sauces | Marzetti® | | Frozen Bread and Other | New York Bakery®, Sister Schubert's®, Marzetti® Frozen Pasta | - The top five customers in the Retail segment accounted for **62%**, **59%**, and **59%** of the segment's net sales in fiscal years 2025, 2024, and 2023, respectively[21](index=21&type=chunk) - The top five direct customers in the Foodservice segment accounted for **53%**, **53%**, and **58%** of the segment's net sales in fiscal years 2025, 2024, and 2023, respectively[26](index=26&type=chunk) - Retail segment sales are subject to seasonal fluctuations, primarily in the second fiscal quarter and around the Easter holiday, while Foodservice segment operations are not significantly affected by seasonality[23](index=23&type=chunk)[28](index=28&type=chunk) [Net Sales Attributed to Significant Customer Relationships](index=6&type=section&id=NET%20SALES%20ATTRIBUTED%20TO%20SIGNIFICANT%20CUSTOMER%20RELATIONSHIPS) Walmart Inc. and Chick-fil-A, Inc. are significant customers, contributing substantially to consolidated net sales, with Chick-fil-A's sales including both retail licensed products and foodservice supplies Significant Customer Contribution to Consolidated Net Sales | Customer | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Walmart Inc. | 19% | 18% | 18% | | Chick-fil-A, Inc. | 29% | 28% | 26% | - Chick-fil-A sales, including licensed product sales in the retail channel and supplies in the foodservice channel, represent a significant portion of the company's consolidated net sales[30](index=30&type=chunk) [Net Sales by Class of Products](index=6&type=section&id=NET%20SALES%20BY%20CLASS%20OF%20PRODUCTS) The company's net sales are categorized across retail and foodservice segments, with shelf-stable dressings, sauces, and croutons, and foodservice dressings and sauces being the largest contributors Percentage of Net Sales by Product Class | Product Class | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | **Retail Business:** |||| | Shelf-Stable Dressings, Sauces, and Croutons | 23% | 23% | 23% | | Frozen Bread | 20% | 19% | 19% | | Refrigerated Dressings, Dips, and Other | 10% | 11% | 11% | | **Foodservice Business:** |||| | Dressings and Sauces | 35% | 35% | 35% | | Frozen Bread and Other | 12% | 12% | 12% | [Manufacturing](index=6&type=section&id=MANUFACTURING) As of June 30, 2025, most products are manufactured and packaged in 14 U.S. food plants, many serving both retail and foodservice segments, with a focus on efficient and cost-effective production - As of June 30, 2025, most of the company's products are manufactured and packaged in **14** U.S. food plants, with many producing for both the Retail and Foodservice segments[32](index=32&type=chunk) - The company focuses on efficient and cost-effective production through cost-saving initiatives[32](index=32&type=chunk) [Competition](index=6&type=section&id=COMPETITION) The company faces intense competition across all food product markets, with key competitive factors including price, quality, customer service, brand positioning, product innovation, and marketing - The company faces intense competition in all food product markets, with competitive factors including price, quality, customer service, brand positioning, product innovation, and marketing activities[33](index=33&type=chunk) [Government Regulation](index=7&type=section&id=GOVERNMENT%20REGULATION) The company's operations are subject to stringent federal, state, and local government regulations concerning production, packaging, quality, labeling, distribution, and environmental protection, with no significant impact on capital expenditures, earnings, or competitive position expected in fiscal years 2025 or 2026 - The company's business operations are subject to stringent regulation by federal, state, and local governmental entities and agencies, covering production, packaging, quality, labeling, and distribution standards, as well as environmental protection laws[34](index=34&type=chunk) - Compliance with these laws and regulations had no material effect on capital expenditures, earnings, or competitive position in fiscal year 2025, and no material effect is anticipated for fiscal year 2026[34](index=34&type=chunk) [Human Capital](index=7&type=section&id=HUMAN%20CAPITAL) As of June 30, 2025, the company employs 3,700 individuals, with a focus on health and safety, talent acquisition, total rewards, employee engagement, respect and belonging, and community involvement, offering competitive compensation and benefits - As of June 30, 2025, the company has **3,700** employees, with **18%** covered by collective bargaining agreements and **5%** of those contracts expiring within one year[35](index=35&type=chunk) - The company's human capital management strategy focuses on six key areas: health and safety, talent acquisition, total rewards, employee engagement, respect and belonging, and community involvement[37](index=37&type=chunk) - The company offers competitive compensation and benefits, including medical, dental, vision, life insurance, paid parental leave, 401(k) plans, and employee assistance programs[41](index=41&type=chunk) - The company enhances employee engagement through continuous feedback mechanisms, annual employee engagement surveys, and management action plans[43](index=43&type=chunk) - The company engages with communities through volunteerism and philanthropic activities, focusing on reducing poverty and food insecurity, and promoting health and quality education[45](index=45&type=chunk) [Raw Materials](index=8&type=section&id=RAW%20MATERIALS) In fiscal year 2025, the company secured adequate supplies of raw materials and packaging, primarily sourcing through open markets and short-term fixed-price contracts for key ingredients like soybean oil, sweeteners, eggs, dairy, and flour - In 2025, the company obtained adequate supplies of raw materials and packaging, with key raw materials including soybean oil, sweeteners, eggs, dairy, flour, and various packaging materials[46](index=46&type=chunk) - Most materials are purchased through open markets, with some procured under fixed-price contracts for one year or less[47](index=47&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including product recalls, supply chain disruptions, rising costs, labor shortages, intense competition, reliance on key customers, cybersecurity threats, and regulatory compliance [Risks Related to Health and Food Safety](index=8&type=section&id=RISKS%20RELATED%20TO%20HEALTH%20AND%20FOOD%20SAFETY) The company faces risks of business disruption, product recalls, and reputational damage due to product safety issues or negative consumer perceptions regarding food quality and health attributes - The company may face business disruptions, product recalls, or claims due to product safety issues such as mislabeling, adulteration, contamination, or spoilage, leading to significant losses and reputational damage[51](index=51&type=chunk) - Negative consumer perceptions regarding food safety, quality, or health attributes, even if unfounded, could lead to decreased product demand, lower prices, and lost sales[52](index=52&type=chunk) - The food industry faces negative publicity regarding "ultra-processed foods," genetically modified organisms, added sugars, and trans fats, which could increase operating costs or harm brand image[53](index=53&type=chunk)[54](index=54&type=chunk) [Risks Related to Our Operations](index=9&type=section&id=RISKS%20RELATED%20TO%20OUR%20OPERATIONS) Operational risks include increased costs for raw materials, packaging, and transportation, supply chain disruptions, labor shortages, infrastructure limitations, and the challenges of integrating acquisitions, all potentially impacting profitability and customer satisfaction - Increased costs for raw materials, packaging, and transportation, influenced by inflation and geopolitical events, could raise production costs and adversely affect business[56](index=56&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - Disruptions in production facilities, labor shortages, fluctuations in transportation and warehousing availability and costs, and reliance on third-party suppliers could lead to unmet customer demand and increased operating costs[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Fluctuations in energy-related costs could increase product manufacturing and distribution expenses[68](index=68&type=chunk) - Epidemics, pandemics, or similar public health emergencies could disrupt consumption, supply chains, management, and production processes[70](index=70&type=chunk) - Failure to successfully renegotiate collective bargaining agreements or prolonged work stoppages could adversely affect business[71](index=71&type=chunk) - The loss of key senior management team members could significantly and adversely impact business management and strategic execution[72](index=72&type=chunk) - Manufacturing capacity limitations could prevent meeting customer demand, thereby affecting customer service levels and relationships[73](index=73&type=chunk)[74](index=74&type=chunk) - Maintaining, improving, or replacing aging infrastructure and facilities may require significant capital expenditures, impacting cash flow[75](index=75&type=chunk) - Failure to successfully complete acquisitions or divestitures, and integrating acquired businesses, could present financial, managerial, and operational challenges[76](index=76&type=chunk)[77](index=77&type=chunk) - Climate change, including droughts, and increasingly stringent environmental regulations could affect agricultural productivity, raw material supply and costs, and increase compliance expenses[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [Risks Related to the Brands We Sell and Customer Demand for Our Products](index=13&type=section&id=RISKS%20RELATED%20TO%20THE%20BRANDS%20WE%20SELL%20AND%20CUSTOMER%20DEMAND%20FOR%20OUR%20PRODUCTS) Risks include damage to brand reputation, failure to renew key licensing agreements, intense market competition, and the loss or significant reduction of business from major customers like Walmart and Chick-fil-A, all of which could adversely affect sales and profitability - The company relies on brand reputation and value, and failure to maintain and enhance brand image, including due to negative publicity, could adversely affect business[84](index=84&type=chunk)[85](index=85&type=chunk) - Failure to maintain or renew significant brand licensing agreements, such as with Chick-fil-A or Olive Garden, could materially and adversely affect business, operating results, and cash flow[89](index=89&type=chunk) - Intense competition in the retail and foodservice markets could impact sales volume and operating margins, including through price pressure, insufficient product innovation, or changes in consumer preferences[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The loss or significant reduction of business from Walmart, the largest retail customer, or an adverse change in its financial condition, could materially and adversely affect the company's business[94](index=94&type=chunk) - The loss or significant reduction of business from Chick-fil-A, a key Foodservice segment customer, or an adverse change in its financial condition, could materially and adversely affect the company's business[95](index=95&type=chunk) - The company relies on the performance of major retailers, wholesalers, food brokers, distributors, and foodservice customers, and their underperformance or prioritization of other brands could adversely affect the company's business[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) [Risks Related to Cybersecurity and Information Technology](index=15&type=section&id=RISKS%20RELATED%20TO%20CYBERSECURITY%20AND%20INFORMATION%20TECHNOLOGY) Cybersecurity risks, including attacks, data breaches, and IT system failures, could lead to operational disruptions, sensitive information disclosure, significant expenses, fines, and reputational damage, compounded by the need to comply with evolving data privacy regulations - Cyberattacks, data breaches, or vulnerabilities in information security systems could lead to equipment failures, operational disruptions, disclosure of sensitive information, and result in significant expenses, fines, and reputational damage[101](index=101&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Information technology system failures could interrupt company operations and cause financial losses due to lost or misappropriated information[106](index=106&type=chunk) - Failure to comply with current or future federal, state, and foreign privacy and data protection laws and regulations, such as CCPA and CPRA, could increase compliance costs, operational changes, and potential liabilities[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Risks Related to Regulatory and Legal Matters](index=17&type=section&id=RISKS%20RELATED%20TO%20REGULATORY%20AND%20LEGAL%20MATTERS) The company's operations are subject to extensive government regulations, with potential for increased compliance costs and litigation risks from evolving requirements, including environmental laws, and uncertainty from judicial decisions like the overturning of the "Chevron doctrine" - The company's business operations are subject to federal, state, and local government regulations, and potential future increased regulatory requirements, such as product labeling and environmental policies, could raise compliance costs and litigation risks[111](index=111&type=chunk)[113](index=113&type=chunk) - The Supreme Court's overturning of the "Chevron doctrine" could lead to more companies challenging regulatory agencies, increasing industry uncertainty[112](index=112&type=chunk) - Potential environmental liabilities and remediation costs related to environmental laws and regulations could materially and adversely affect the company's financial condition[114](index=114&type=chunk)[115](index=115&type=chunk) [Risks Related to Investments in Our Common Stock](index=18&type=section&id=RISKS%20RELATED%20TO%20INVESTMENTS%20IN%20OUR%20COMMON%20STOCK) Investment risks include the significant influence of Mr. Gerlach and his family trusts, who hold approximately 27% of common stock, potentially leading to conflicts of interest, and anti-takeover provisions that could hinder changes in control or management - Mr. Gerlach and his family trusts hold approximately **27%** of the company's common stock, exerting significant influence over all matters submitted to shareholder vote, and their interests may conflict with other shareholders[117](index=117&type=chunk)[118](index=118&type=chunk) - Anti-takeover provisions in the company's charter documents and Ohio corporate law could make it more difficult for third parties to acquire the company or influence the Board of Directors, potentially delaying or preventing changes in control or management[119](index=119&type=chunk)[120](index=120&type=chunk) - The Board of Directors has the authority to issue Class B Voting Preferred Stock and Class C Non-Voting Preferred Stock, which could affect the rights of common stock holders[121](index=121&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - There are no unresolved staff comments in this report[122](index=122&type=chunk) [Cybersecurity](index=18&type=section&id=Item%201C.%20Cybersecurity) The company has established processes for identifying, assessing, monitoring, and managing significant cybersecurity risks related to information technology, overseen by the Audit Committee, and includes incident response policies and employee training [Risk Management and Strategy](index=18&type=section&id=RISK%20MANAGEMENT%20AND%20STRATEGY) The company employs processes to identify, assess, monitor, and manage significant IT-related cybersecurity risks, including regular third-party assessments, vendor monitoring, incident response policies, and employee training - The company has established processes to identify, assess, monitor, and manage significant cybersecurity risks related to information technology, including threat management, vulnerability management, incident management, data protection, and recoverability[123](index=123&type=chunk) - The company regularly engages third-party security firms and consultants to conduct cybersecurity risk assessments, with results reported to the Audit Committee[123](index=123&type=chunk) - The company conducts cybersecurity risk assessments and monitoring of third-party service providers, requiring them to manage cybersecurity risks through contractual agreements[124](index=124&type=chunk) - The company has adopted an incident response policy and regularly conducts information security awareness training for employees[125](index=125&type=chunk) [Governance](index=19&type=section&id=GOVERNANCE) The Audit Committee oversees cybersecurity threat risks, receiving regular reports from the Enterprise Risk Management Committee and the Chief Information Officer, who leads the cybersecurity risk management process with extensive IT and cybersecurity experience - The Audit Committee is responsible for overseeing cybersecurity threat risks and regularly receives reports from the Enterprise Risk Management Committee and the Chief Information Officer[127](index=127&type=chunk) - The company's cybersecurity risk management process is led by the Chief Information Officer and the Vice President of Infrastructure and Security, both possessing extensive IT and cybersecurity experience[128](index=128&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) The company operates 2.9 million square feet of space, with 0.9 million square feet leased, and owns 14 primary production plants across the U.S. for retail and foodservice products, supplemented by owned and leased warehouse facilities for distribution - The company operates using **2.9 million** square feet of space, of which **0.9 million** square feet are leased[129](index=129&type=chunk) Key Production Locations | Location | Primary Products | Business Segment | Occupancy Terms | | :--- | :--- | :--- | :--- | | Altoona, IA | Frozen Pasta | Retail and Foodservice | Owned | | Atlanta, GA | Sauces and Dressings | Retail and Foodservice | Owned | | Bedford Heights, OH | Frozen Bread | Retail and Foodservice | Owned | | Columbus, OH | Sauces, Dressings, Dips | Retail and Foodservice | Owned | | Horse Cave, KY | Sauces, Dressings, Frozen Rolls | Retail and Foodservice | Owned | | Luverne, AL | Frozen Rolls | Retail and Foodservice | Owned | | Vineland, NJ | Frozen Bread | Retail and Foodservice | Owned | | Wareham, MA | Croutons | Retail and Foodservice | Leased | Key Warehouse Locations | Location | Business Segment | Occupancy Terms | | :--- | :--- | :--- | | Columbus, OH | Retail and Foodservice | Leased | | Grove City, OH | Retail and Foodservice | Owned and Third-Party Services | | Horse Cave, KY | Retail and Foodservice | Owned | | Union City, GA | Retail and Foodservice | Leased | [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, but the ultimate outcome is not expected to materially impact consolidated financial statements, and there are no environmental matters requiring disclosure above the $1 million threshold - The company is involved in various legal proceedings from time to time, but the ultimate outcome of these is not expected to materially impact the consolidated financial statements[132](index=132&type=chunk) - The company has set a disclosure threshold of **$1 million** for environmental matters, and currently, there are no such matters requiring disclosure[133](index=133&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable[134](index=134&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq Global Select Market under MZTI, with approximately 610 shareholders of record as of August 1, 2025, and a history of 62 consecutive years of increased cash dividends, while the board-approved share repurchase authorization still has 1,083,830 shares available - The company's common stock trades on the Nasdaq Global Select Market under the symbol MZTI[135](index=135&type=chunk) - As of August 1, 2025, approximately **27,534,000** shares of common stock were outstanding, held by approximately **610** shareholders of record[7](index=7&type=chunk)[135](index=135&type=chunk) - The company has increased its regular cash dividend for **62** consecutive years[136](index=136&type=chunk)[188](index=188&type=chunk) Issuer Purchases of Equity Securities for the Fourth Quarter of Fiscal Year 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares That May Yet Be Purchased Under the Plans | | :--- | :--- | :--- | :--- | :--- | | April 1-30, 2025 | 12 | $189.03 | 12 | 1,123,830 | | May 1-31, 2025 | 40,000 | $161.78 | 40,000 | 1,083,830 | | June 1-30, 2025 | — | — | — | 1,083,830 | | **Total** | **40,012** | **$161.79** | **40,012** | **1,083,830** | - As of June 30, 2025, the board-approved share repurchase authorization still had **1,083,830** shares of common stock available for future repurchase[137](index=137&type=chunk) [Performance Graph](index=22&type=section&id=PERFORMANCE%20GRAPH) The performance graph illustrates the five-year cumulative total shareholder return for The Marzetti Company compared to the S&P Midcap 400 and S&P 1500 Packaged Foods & Meats indices Five-Year Cumulative Total Shareholder Return (USD) | | June 2020 | June 2021 | June 2022 | June 2023 | June 2024 | June 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | The Marzetti Company | 100.00 | 126.90 | 86.28 | 137.12 | 131.44 | 122.70 | | S&P Midcap 400 | 100.00 | 153.24 | 130.80 | 153.84 | 174.72 | 187.87 | | S&P 1500 Packaged Foods & Meats | 100.00 | 117.24 | 124.61 | 133.00 | 119.09 | 114.90 | [Item 6. [Reserved]](index=22&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved - This item is reserved[143](index=143&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2025, net sales grew 2.0% to $1.9091 billion, driven by volume and product mix, with gross profit increasing 5.4% to $455.6 million due to cost savings and moderate cost deflation, and operating income rising 10.5% to $220.3 million, despite a $14 million non-cash pension settlement charge [Overview](index=23&type=section&id=OVERVIEW) The company, a specialty food manufacturer and marketer for retail and foodservice, reports financial results in two segments, with over 95% of products sold in the U.S., pursuing growth through new products, expanded distribution, licensing, and strategic acquisitions - The company is a manufacturer and marketer of specialty food products, serving both retail and foodservice channels[147](index=147&type=chunk) - The company's financial performance is divided into two reporting segments, Retail and Foodservice, with over **95%** of products sold in the United States[148](index=148&type=chunk)[149](index=149&type=chunk) - The company achieves sales growth by introducing new products, expanding distribution, leveraging retail brand strength, extending licensing agreements, and acquiring complementary businesses[149](index=149&type=chunk) - Recent investments include the acquisition of an Atlanta sauce and dressing manufacturing facility, a capacity expansion project at the Kentucky plant, and the completion of the Enterprise Resource Planning (ERP) system "Project Ascent" implementation[149](index=149&type=chunk) [Results of Consolidated Operations](index=24&type=section&id=RESULTS%20OF%20CONSOLIDATED%20OPERATIONS) In fiscal year 2025, consolidated net sales increased 2.0% to $1.9091 billion, with gross profit up 5.4% to $455.6 million, and operating income rising 10.5% to $220.3 million, despite a $14 million non-cash pension settlement charge Summary of Consolidated Operating Results (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | 2025 vs. 2024 Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,909,122 | $1,871,759 | $1,822,527 | 2.0% | | Cost of Sales | $1,453,476 | $1,439,457 | $1,433,959 | 1.0% | | Gross Profit | $455,646 | $432,302 | $388,568 | 5.4% | | Gross Margin | 23.9% | 23.1% | 21.3% | +0.8pp | | Selling, General, and Administrative Expenses | $230,227 | $218,065 | $222,091 | 5.6% | | Restructuring and Impairment Charges | $5,102 | $14,874 | $24,969 | -65.7% | | Operating Income | $220,317 | $199,363 | $141,508 | 10.5% | | Operating Margin | 11.5% | 10.7% | 7.8% | +0.8pp | | Pension Settlement Charge | $(13,968) | — | — | N/M | | Other, Net | $7,114 | $6,152 | $1,789 | 15.6% | | Income Before Income Taxes | $213,463 | $205,515 | $143,297 | 3.9% | | Income Taxes | $46,116 | $46,902 | $32,011 | -1.7% | | Effective Tax Rate | 21.6% | 22.8% | 22.3% | -1.2pp | | Net Income | $167,347 | $158,613 | $111,286 | 5.5% | | Diluted Net Earnings per Share | $6.07 | $5.76 | $4.04 | 5.4% | - Fiscal year 2025 net sales increased by **2.0%** to **$1.9091 billion**, primarily driven by approximately **220 basis points** from core volume and product mix, partially offset by **90 basis points** from exiting a baked goods product line, and **80 basis points** from incremental sales due to a temporary supply agreement at the Atlanta facility[152](index=152&type=chunk)[153](index=153&type=chunk) - Fiscal year 2025 gross profit increased by **5.4%** to **$455.6 million**, primarily benefiting from cost savings initiatives, volume growth, and moderate cost deflation[155](index=155&type=chunk) - Fiscal year 2025 selling, general, and administrative expenses increased by **5.6%** to **$230.2 million**, primarily including **$3.8 million** in incremental spending related to IT investments and the Atlanta facility acquisition[156](index=156&type=chunk) - Fiscal year 2025 restructuring and impairment charges were **$5.1 million**, primarily related to the closure of the Milpitas sauce and dressing manufacturing facility and the transformation of internal transportation fleet operations[158](index=158&type=chunk)[159](index=159&type=chunk) - Fiscal year 2025 operating income increased by **10.5%** to **$220.3 million**, driven by higher gross profit and reduced restructuring and impairment charges[161](index=161&type=chunk) - In fiscal year 2025, the company incurred a one-time non-cash settlement charge of **$14 million** due to the termination of several frozen defined benefit pension plans[164](index=164&type=chunk) - Fiscal year 2025 diluted net earnings per share were **$6.07**, an increase from **$5.76** in fiscal year 2024[167](index=167&type=chunk) [Results of Operations - Segments](index=26&type=section&id=RESULTS%20OF%20OPERATIONS%20-%20SEGMENTS) In fiscal year 2025, the Retail segment's net sales grew 1.5% to $1.0034 billion, driven by licensing programs and new product introductions, while the Foodservice segment's net sales increased 2.5% to $905.7 million due to increased demand from national chain restaurant customers Retail Segment Operating Results (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | 2025 vs. 2024 Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,003,409 | $988,424 | $965,370 | 1.5% | | Operating Income | $211,695 | $207,660 | $139,464 | 1.9% | | Operating Margin | 21.1% | 21.0% | 14.4% | +0.1pp | - Fiscal year 2025 Retail segment net sales increased by **1.5%** to **$1.0034 billion**, primarily driven by volume growth, particularly from licensing programs such as Texas Roadhouse dinner rolls, Chick-fil-A sauces, and Subway sauces, and the newly launched gluten-free New York Bakery frozen garlic bread[170](index=170&type=chunk) Foodservice Segment Operating Results (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | 2025 vs. 2024 Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $905,713 | $883,335 | $857,157 | 2.5% | | Operating Income | $111,579 | $97,094 | $106,349 | 14.9% | | Operating Margin | 12.3% | 11.0% | 12.4% | +1.3pp | - Fiscal year 2025 Foodservice segment net sales increased by **2.5%** to **$905.7 million**, primarily driven by increased demand from national chain restaurant customers and growth in Marzetti branded foodservice products[171](index=171&type=chunk) - Fiscal year 2025 corporate expenses totaled **$97.9 million**, an increase from **$90.5 million** in fiscal year 2024, primarily reflecting incremental spending related to IT investments and the Atlanta facility acquisition[172](index=172&type=chunk) [Looking Forward](index=27&type=section&id=LOOKING%20FORWARD) The company anticipates continued sales growth in the Retail segment from volume and licensing programs, while Foodservice sales will be supported by quick-service restaurant customers, with moderate input cost inflation expected to be offset by pricing and cost savings initiatives in fiscal year 2026 - The company expects fiscal year 2026 Retail segment sales to continue benefiting from volume growth, licensing programs, and the Marzetti, New York Bakery, and Sister Schubert's brands[173](index=173&type=chunk) - Foodservice segment sales are expected to be supported by certain quick-service restaurant customers, though external factors such as U.S. economic performance and consumer behavior may impact demand[173](index=173&type=chunk) - The company anticipates moderate input cost inflation in fiscal year 2026, planning to offset it through contractual pricing and cost savings initiatives, while continuing to focus on margin enhancement[173](index=173&type=chunk) - The company expects the "One Big Beautiful Bill Act" (OBBBA) to primarily provide cash tax timing benefits with no material impact on the effective tax rate[175](index=175&type=chunk) [Financial Condition](index=27&type=section&id=FINANCIAL%20CONDITION) As of June 30, 2025, the company maintains a strong financial position with $161 million in cash and equivalents, $998 million in shareholders' equity, no debt, and a $150 million unsecured revolving credit facility, expecting sufficient liquidity for the next 12 months - As of June 30, 2025, the company held **$161 million** in cash and equivalents, **$998 million** in shareholders' equity, no debt, and maintained ample flexibility in its capital structure[177](index=177&type=chunk) - The company has a **$150 million** unsecured revolving credit facility, with no outstanding borrowings as of June 30, 2025, and is in full compliance with all covenant terms[178](index=178&type=chunk)[179](index=179&type=chunk)[297](index=297&type=chunk) - The company anticipates that cash flows from operating activities, existing cash and equivalents, and the revolving credit facility will be sufficient to meet liquidity needs for the next **12 months**, including projected capital expenditures and dividend payments[181](index=181&type=chunk)[182](index=182&type=chunk) - Fiscal year 2025 cash flow from operating activities was **$261.5 million**, a **4.0%** increase year-over-year, primarily due to higher net income and the impact of non-cash items[186](index=186&type=chunk) - Fiscal year 2025 cash outflow from investing activities was **$148.2 million**, primarily for the acquisition of the Atlanta facility in February 2025 (**$78.8 million**)[187](index=187&type=chunk) - Fiscal year 2025 cash outflow from financing activities was **$115.3 million**, primarily for dividend payments, with a regular dividend payout of **$3.75** per share[188](index=188&type=chunk) [Impact of Inflation](index=29&type=section&id=IMPACT%20OF%20INFLATION) The company's performance is significantly affected by changes in raw material, packaging, and transportation costs, which it mitigates through long-term fixed-price contracts, transportation management systems, and price adjustments in both foodservice and retail segments - The company's business performance is significantly affected by substantial changes in raw material, packaging, and transportation costs[192](index=192&type=chunk) - The company mitigates the impact of raw material and transportation cost inflation through long-term fixed-price contracts and transportation management systems, though price adjustments may lag behind cost changes[192](index=192&type=chunk) - Supply contracts with foodservice customers allow the company to pass on commodity price increases, further helping to reduce profit volatility[194](index=194&type=chunk) - The Retail segment offsets inflationary costs through price increases, reduced promotions, and changes in packaging sizes, and implements value engineering initiatives to lower product costs[194](index=194&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Key accounting policies and estimates include allowances for accounts receivable, distribution costs, asset impairment, and self-insurance reserves, with goodwill tested annually for impairment - Key accounting policies and estimates include allowances for accounts receivable, distribution costs, asset impairment, and self-insurance reserves[195](index=195&type=chunk) - Accounts receivable are net of trade-related allowances, including sales discounts, trade promotions, and other sales incentives[196](index=196&type=chunk) - Goodwill is not amortized and is tested for impairment annually on April 30[197](index=197&type=chunk) [Forward-Looking Statements](index=30&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements based on management's assessment of future expectations, developments, operations, or financial conditions, with actual results potentially differing significantly due to various risks and uncertainties - This report contains forward-looking statements regarding future expectations, developments, operations, or financial conditions, based on management's assessment of historical trends, current conditions, and future developments[199](index=199&type=chunk) - Actual results may differ materially from forward-looking statements due to various risks and uncertainties, including factory operating efficiency, market competition, new product development, changes in product demand, regulatory impacts, acquisition integration, inflationary pressures, raw material and transportation cost fluctuations, changes in trade policy, reliance on key personnel, labor relations, geopolitical events, third-party reliance, cybersecurity incidents, and customer relationships[199](index=199&type=chunk)[200](index=200&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company primarily faces market risk from raw material price fluctuations, managing this through structured forward purchasing and short-term fixed-price contracts, and passing on commodity price increases to foodservice customers, while having no interest rate risk due to absence of borrowings [Raw Material Price Risk](index=31&type=section&id=RAW%20MATERIAL%20PRICE%20RISK) The company procures various commodities and raw materials whose market prices can fluctuate due to economic factors, managing this risk through structured forward purchasing and short-term fixed-price arrangements, and by passing on price increases to foodservice customers - The company procures various commodities and raw materials, such as soybean oil, flour, eggs, and dairy products, whose market prices can fluctuate due to various economic factors[202](index=202&type=chunk) - The company manages price risk for key raw materials like soybean oil and flour through structured forward purchasing programs and short-term fixed-price arrangements to reduce profit volatility during commodity market fluctuations[202](index=202&type=chunk) - Supply contracts with foodservice customers allow the company to pass on commodity price increases, further helping to reduce profit volatility[202](index=202&type=chunk) [Financial Statements and Supplementary Data](index=31&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's consolidated financial statements for the fiscal year ended June 30, 2025, and the preceding two fiscal years, including the auditor's unqualified opinions on both financial statements and internal controls, along with detailed notes on accounting policies, acquisitions, debt, leases, and other financial matters [Report of Independent Registered Public Accounting Firm](index=32&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) Deloitte & Touche LLP issued unqualified opinions on the company's consolidated financial statements for the fiscal year ended June 30, 2025, and the effectiveness of its internal control over financial reporting, identifying trade-related allowances as a critical audit matter - Deloitte & Touche LLP issued an unqualified opinion on the company's consolidated financial statements for the fiscal year ended June 30, 2025, and the preceding two fiscal years[205](index=205&type=chunk) - Deloitte & Touche LLP issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of June 30, 2025[206](index=206&type=chunk) - Trade-related allowances were identified as a critical audit matter due to their complexity and high volume of transactions, requiring extensive audit work on promotional programs and information systems[210](index=210&type=chunk)[211](index=211&type=chunk) [Consolidated Balance Sheets](index=34&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets present the company's financial position as of June 30, 2025, and 2024, detailing assets, liabilities, and shareholders' equity Summary of Consolidated Balance Sheets (Fiscal Years 2024-2025) | Metric (Thousands of USD) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** ||| | Cash and Equivalents | $161,476 | $163,443 | | Accounts Receivable | $95,817 | $95,560 | | Total Inventories | $169,301 | $173,252 | | Total Current Assets | $443,631 | $443,993 | | Property, Plant, and Equipment—Net | $534,543 | $477,696 | | Goodwill | $222,772 | $208,371 | | Total Assets | $1,274,724 | $1,206,931 | | **Liabilities and Shareholders' Equity** ||| | Total Current Liabilities | $186,294 | $183,969 | | Total Shareholders' Equity | $998,495 | $925,772 | | Total Liabilities and Shareholders' Equity | $1,274,724 | $1,206,931 | [Consolidated Statements of Income](index=35&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The consolidated statements of income provide a summary of the company's financial performance for the fiscal years 2023, 2024, and 2025, detailing net sales, costs, and net income Summary of Consolidated Statements of Income (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net Sales | $1,909,122 | $1,871,759 | $1,822,527 | | Cost of Sales | $1,453,476 | $1,439,457 | $1,433,959 | | Gross Profit | $455,646 | $432,302 | $388,568 | | Selling, General, and Administrative Expenses | $230,227 | $218,065 | $222,091 | | Restructuring and Impairment Charges | $5,102 | $14,874 | $24,969 | | Operating Income | $220,317 | $199,363 | $141,508 | | Pension Settlement Charge | $(13,968) | — | — | | Other, Net | $7,114 | $6,152 | $1,789 | | Income Before Income Taxes | $213,463 | $205,515 | $143,297 | | Income Taxes | $46,116 | $46,902 | $32,011 | | Net Income | $167,347 | $158,613 | $111,286 | | Diluted Net Earnings per Share | $6.07 | $5.76 | $4.04 | [Consolidated Statements of Comprehensive Income](index=36&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The consolidated statements of comprehensive income present the company's net income and other comprehensive income (loss) for fiscal years 2023, 2024, and 2025 Summary of Consolidated Statements of Comprehensive Income (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net Income | $167,347 | $158,613 | $111,286 | | Other Comprehensive Income, Net of Tax | $9,601 | $725 | $1,807 | | Comprehensive Income | $176,948 | $159,338 | $113,093 | [Consolidated Statements of Cash Flows](index=37&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The consolidated statements of cash flows detail the company's cash movements from operating, investing, and financing activities for fiscal years 2023, 2024, and 2025 Summary of Consolidated Statements of Cash Flows (Fiscal Years 2023-2025) | Metric (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $261,496 | $251,553 | $225,901 | | Net Cash Used in Investing Activities | $(148,206) | $(67,433) | $(90,782) | | Net Cash Used in Financing Activities | $(115,257) | $(109,150) | $(106,929) | | Net Change in Cash and Equivalents | $(1,967) | $74,970 | $28,190 | | Cash and Equivalents at End of Year | $161,476 | $163,443 | $88,473 | [Consolidated Statements of Shareholders' Equity](index=38&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) The consolidated statements of shareholders' equity provide a summary of changes in equity for fiscal years 2023, 2024, and 2025, including net income, cash dividends, and stock repurchases Summary of Consolidated Statements of Shareholders' Equity (Fiscal Years 2023-2025) | Metric (Thousands of USD) | June 30, 2025 | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Shareholders' Equity | $998,495 | $925,772 | $862,267 | | Net Income | $167,347 | $158,613 | $111,286 | | Cash Dividends | $(103,502) | $(97,934) | $(92,368) | | Purchases of Treasury Stock | $(7,993) | $(7,645) | $(9,201) | | Common Stock | $160,886 | $153,616 | $143,870 | | Retained Earnings | $1,628,487 | $1,564,642 | $1,503,963 | | Accumulated Other Comprehensive Income (Loss) | $961 | $(8,640) | $(9,365) | [Note 1 – Summary of Significant Accounting Policies](index=39&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's significant accounting policies and estimates, including those for revenue recognition, cash equivalents, accounts receivable, inventory, property, plant and equipment, goodwill, leases, and income taxes, all prepared in accordance with U.S. GAAP - The company's consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), involving estimates and assumptions for customer deductions, inventory net realizable value, depreciation and amortization periods, pension assumptions, and self-insurance reserves[230](index=230&type=chunk) - The company considers liquid investments with original maturities of three months or less to be cash equivalents[235](index=235&type=chunk) - Accounts receivable are net of trade-related allowances, including sales discounts, trade promotions, and other sales incentives[236](index=236&type=chunk) - Inventories are valued at the lower of cost or net realizable value, using the first-in, first-out (FIFO) method to approximate actual cost[240](index=240&type=chunk) - Property, plant, and equipment are recorded at cost and depreciated using the straight-line method[241](index=241&type=chunk) - Goodwill is not amortized and is tested for impairment annually on April 30[248](index=248&type=chunk) - The company records right-of-use assets and lease liabilities for operating and finance leases based on the present value of lease payments[253](index=253&type=chunk) - Revenue is recognized when performance obligations are satisfied, typically upon product delivery or customer pickup[260](index=260&type=chunk) - The company expenses advertising costs as incurred, and research and development expenses are also expensed as incurred[271](index=271&type=chunk)[272](index=272&type=chunk) - The company recognizes compensation expense for stock-based compensation plans based on the fair value at the grant date[273](index=273&type=chunk) - The company's income tax expense, deferred tax assets and liabilities, and unrecognized tax benefit reserves reflect management's best assessment of future tax payments[274](index=274&type=chunk) - In November 2023, the FASB issued new accounting guidance requiring enhanced disclosures for reportable segments, adopted in the fiscal year 2025 annual disclosures[285](index=285&type=chunk) - In December 2023, the FASB issued new accounting guidance requiring enhanced income tax disclosures, effective for annual disclosures in fiscal year 2026[286](index=286&type=chunk) - In November 2024, the FASB issued new accounting guidance requiring disaggregated income statement expense disclosures, effective for annual disclosures in fiscal year 2028[287](index=287&type=chunk)[289](index=289&type=chunk) [Note 2 – Acquisition](index=46&type=section&id=Note%202%20%E2%80%93%20Acquisition) On February 18, 2025, the company acquired an Atlanta sauce and dressing manufacturing facility and related assets for $78.8 million in cash to enhance operational efficiency and capacity, resulting in $14.4 million of goodwill allocated to the Foodservice segment - On February 18, 2025, the company acquired an Atlanta sauce and dressing manufacturing facility and related assets for **$78.8 million** in cash to improve operational efficiency and capacity[290](index=290&type=chunk) Preliminary Purchase Price Allocation | Item | Amount (Thousands of USD) | | :--- | :--- | | Inventories | $4,065 | | Property, Plant, and Equipment | $60,073 | | Goodwill (Tax Deductible) | $14,401 | | Other Non-Current Assets | $301 | | Current Liabilities | $(21) | | **Net Assets Acquired** | **$78,819** | - The **$14.4 million** of goodwill generated from this acquisition was entirely recorded in the Foodservice segment, primarily reflecting the facility's production capabilities, future expansion potential, and the acquired workforce[293](index=293&type=chunk) [Note 3 – Long-Term Debt](index=46&type=section&id=Note%203%20%E2%80%93%20Long-Term%20Debt) The company maintains a $150 million unsecured revolving credit facility, maturing on March 6, 2029, with no outstanding borrowings as of June 30, 2025, and is in full compliance with all financial covenants - The company has a **$150 million** unsecured revolving credit facility, expandable to **$225 million** with bank consent and specific conditions, which matures on March 6, 2029[295](index=295&type=chunk) - As of June 30, 2025, and June 30, 2024, the company had no outstanding borrowings under its revolving credit facility[297](index=297&type=chunk) - The credit facility includes financial covenants such as interest coverage and leverage ratios, and the company was in full compliance with all applicable terms and covenants as of June 30, 2025[296](index=296&type=chunk)[297](index=297&type=chunk) [Note 4 – Leases](index=47&type=section&id=Note%204%20%E2%80%93%20Leases) The company holds operating and finance leases for various facilities and equipment with initial non-cancelable terms exceeding one year, with a weighted-average remaining lease term of 6.7 years for operating leases and 6.1 years for finance leases as of June 30, 2025 - The company has operating and finance leases for various facilities and equipment with initial non-cancelable lease terms exceeding one year[299](index=299&type=chunk)[300](index=300&type=chunk) Lease Expense Components (Fiscal Years 2023-2025) | Lease Type (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Operating Lease Cost | $14,222 | $10,004 | $9,702 | | Total Finance Lease Cost | $2,234 | $2,122 | $2,325 | | Short-Term Lease Cost | $3,526 | $5,653 | $4,362 | | **Total Lease Cost** | **$19,982** | **$17,779** | **$16,389** | Lease Liability Maturities (As of June 30, 2025) | Year | Operating Leases (Thousands of USD) | Finance Leases (Thousands of USD) | | :--- | :--- | :--- | | 2026 | $13,747 | $524 | | 2027 | $10,303 | $217 | | 2028 | $7,099 | $217 | | 2029 | $6,861 | $217 | | 2030 | $5,713 | $188 | | Thereafter | $21,028 | $479 | | **Total Minimum Payments** | **$64,751** | **$1,842** | | Less Interest | $(10,776) | $(264) | | **Present Value of Lease Obligations** | **$53,975** | **$1,578** | - As of June 30, 2025, the weighted-average remaining lease term for operating leases was **6.7 years**, and for finance leases was **6.1 years**[303](index=303&type=chunk) [Note 5 – Commitments and Contingencies](index=48&type=section&id=Note%205%20%E2%80%93%20Commitments%20and%20Contingencies) The company is involved in various claims and legal proceedings, whose ultimate outcome is not expected to materially impact consolidated financial statements, and 18% of its employees are covered by collective bargaining agreements, with 5% expiring by December 31, 2025 - The company is involved in various claims and lawsuits from time to time, but their ultimate outcome is not expected to materially impact the consolidated financial statements[304](index=304&type=chunk) - **18%** of the company's employees are covered by collective bargaining agreements, with the labor contract for the Vineland, New Jersey plant, covering **5%** of employees, expiring on December 31, 2025[305](index=305&type=chunk) [Note 6 – Goodwill](index=48&type=section&id=Note%206%20%E2%80%93%20Goodwill) Goodwill increased primarily due to the February 2025 acquisition of the Atlanta facility, adding $14.4 million to the Foodservice segment, reflecting its production capabilities, future expansion potential, and acquired workforce Changes in Goodwill by Reporting Segment (Fiscal Years 2024-2025) | Segment (Thousands of USD) | Retail | Foodservice | Total | | :--- | :--- | :--- | :--- | | Goodwill at Beginning of Year | $157,396 | $50,975 | $208,371 | | Goodwill Acquired During Year | — | $14,401 | $14,401 | | Goodwill at End of Year | $157,396 | $65,376 | $222,772 | - The increase in goodwill primarily resulted from the acquisition of the Atlanta facility in February 2025, which added **$14.4 million** in goodwill to the Foodservice segment[306](index=306&type=chunk) [Note 7 – Liabilities](index=49&type=section&id=Note%207%20%E2%80%93%20Liabilities) This note details the composition of accrued liabilities and other non-current liabilities as of June 30, 2025, and 2024, including compensation, operating leases, royalties, distribution, and various taxes Accrued Liabilities Components (As of June 30, 2025) | Item (Thousands of USD) | 2025 | 2024 | | :--- | :--- | :--- | | Compensation and Employee Benefits | $33,753 | $31,569 | | Operating Leases | $11,255 | $10,335 | | Royalties | $8,469 | $7,524 | | Distribution | $6,192 | $7,116 | | Other Taxes | $4,250 | $2,868 | | Finance Leases | $463 | $1,993 | | Other | $3,950 | $3,753 | | **Total Accrued Liabilities** | **$68,332** | **$65,158** | Other Non-Current Liabilities Components (As of June 30, 2025) | Item (Thousands of USD) | 2025 | 2024 | | :--- | :--- | :--- | | Deferred Compensation and Accrued Interest | $4,607 | $4,501 | | Workers' Compensation | $4,330 | $6,681 | | Finance Leases | $1,115 | $782 | | Total Tax Contingency Reserve | $747 | $802 | | Postretirement Benefit Liability | $554 | $576 | | Pension Benefit Liability | — | $345 | | Other | $1,747 | $1,670 | | **Total Other Non-Current Liabilities** | **$13,100** | **$15,357** | [Note 8 – Income Taxes](index=49&type=section&id=Note%208%20%E2%80%93%20Income%20Taxes) This note provides a breakdown of income tax expense, the reconciliation of the effective tax rate to the statutory federal income tax rate, and the components of deferred tax assets and liabilities for fiscal years 2023-2025 Income Tax Components (Fiscal Years 2023-2025) | Item (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total Current Payable | $52,205 | $57,172 | $24,125 | | Deferred Federal, State, and Local (Benefit) Expense | $(6,089) | $(10,270) | $7,886 | | **Total Income Taxes** | **$46,116** | **$46,902** | **$32,011** | Effective Tax Rate Reconciliation to Statutory Federal Income Tax Rate (Fiscal Years 2023-2025) | Factor | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Statutory Rate | 21.0% | 21.0% | 21.0% | | State and Local Income Taxes | 1.1% | 1.9% | 2.4% | | Research and Development Tax Credits | (1.1)% | (0.7)% | (1.1)% | | Net Windfall Tax Benefit from Stock-Based Compensation | (0.1)% | — | (0.4)% | | Other | 0.7% | 0.6% | 0.4% | | **Effective Tax Rate** | **21.6%** | **22.8%** | **22.3%** | Deferred Tax Assets and Liabilities Components (As of June 30, 2025) | Item (Thousands of USD) | 2025 | 2024 | | :--- | :--- | :--- | | Total Deferred Tax Assets | $45,662 | $43,822 | | Total Deferred Tax Liabilities | $(79,777) | $(81,098) | | **Net Deferred Tax Liabilities** | **$(34,115)** | **$(37,276)** | - Net cash paid for income taxes was **$52.515 million** in fiscal year 2025, **$53.583 million** in fiscal year 2024, and **$26.327 million** in fiscal year 2023[312](index=312&type=chunk) - As of June 30, 2025, total unrecognized tax benefits were **$0.747 million**, with no significant changes anticipated within the next **12 months**[312](index=312&type=chunk)[313](index=313&type=chunk) [Note 9 – Business Segment Information](index=51&type=section&id=Note%209%20%E2%80%93%20Business%20Segment%20Information) The company's financial performance is reported in two segments, Retail and Foodservice, with the CEO as the chief operating decision maker, evaluating segment performance based on net sales and operating income, and significant customer concentrations with Chick-fil-A and Walmart - The company's financial performance is divided into two reporting segments, Retail and Foodservice, with the Chief Executive Officer as the Chief Operating Decision Maker (CODM), who assesses segment performance based on net sales and operating income[316](index=316&type=chunk)[319](index=319&type=chunk) Net Sales by Product Class (Fiscal Years 2023-2025) | Product Class (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total Retail Net Sales | $1,003,409 | $988,424 | $965,370 | | Total Foodservice Net Sales | $905,713 | $883,335 | $857,157 | | **Total Net Sales** | **$1,909,122** | **$1,871,759** | **$1,822,527** | Foodservice Net Sales by Customer Type (Fiscal Years 2023-2025) | Customer Type (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | National Customers | $693,583 | $692,340 | $676,665 | | Branded and Other | $197,893 | $190,995 | $180,492 | | TSA Other Dressings and Sauces | $14,237 | — | — | | **Total Foodservice Net Sales** | **$905,713** | **$883,335** | **$857,157** | Financial Information by Reporting Segment (Fiscal Year 2025) | Item (Thousands of USD) | Retail | Foodservice | Total | | :--- | :--- | :--- | :--- | | Net Sales | $1,003,409 | $905,713 | $1,909,122 | | Cost of Sales | $700,254 | $753,222 | | | Selling, General, and Administrative Expenses | $91,460 | $40,912 | | | **Total Segment Operating Income** | **$211,695** | **$111,579** | **$323,274** | | Unallocated Corporate Expenses | | | $97,855 | | Unallocated Restructuring and Impairment Charges | | | $5,102 | | **Operating Income** | | | **$220,317** | Significant Customer Contribution to Consolidated Net Sales (Fiscal Years 2023-2025) | Customer | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Chick-fil-A | 29% | 28% | 26% | | Walmart | 19% | 18% | 18% | [Note 10 – Stock-Based Compensation](index=54&type=section&id=Note%2010%20%E2%80%93%20Stock-Based%20Compensation) The company grants stock-based compensation, including Stock-Settled Stock Appreciation Rights (SSSARs), restricted stock, and performance units, under its 2015 Omnibus Incentive Plan, with associated compensation expenses and tax benefits recognized over the vesting periods - The company grants stock-based compensation, including Stock-Settled Stock Appreciation Rights (SSSARs), restricted stock, and performance units, to employees and directors under its 2015 Omnibus Incentive Plan[331](index=331&type=chunk) SSSARs Compensation Expense and Tax Benefit (Fiscal Years 2023-2025) | Item (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Compensation Expense | — | $1,038 | $1,972 | | Tax Benefit | — | $90 | $216 | | Intrinsic Value Exercised | $(18) | $677 | $3,873 | - As of June 30, 2025, there were no unvested SSSARs and no unrecognized SSSARs compensation expense[333](index=333&type=chunk)[336](index=336&type=chunk) Restricted Stock Compensation Expense and Tax Benefit (Fiscal Years 2023-2025) | Item (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Compensation Expense | $5,673 | $5,479 | $4,432 | | Tax Benefit | $859 | $841 | $677 | - As of June 30, 2025, unrecognized compensation expense related to restricted stock was **$7.1 million**, to be recognized over the next **2 years**[340](index=340&type=chunk) - Performance units are based on two metrics: relative total shareholder return and revenue growth, with a **3-year** vesting period and settlement in common stock[341](index=341&type=chunk) Performance Unit Compensation Expense and Tax Benefit (Fiscal Years 2023-2025) | Item (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Compensation Expense | $3,306 | $4,842 | $2,678 | | Tax Benefit | $321 | $620 | $355 | - As of June 30, 2025, unrecognized compensation expense related to performance units was **$4.4 million**, to be recognized over the next **2 years**[345](index=345&type=chunk) [Note 11 – Pension Benefits](index=57&type=section&id=Note%2011%20%E2%80%93%20Pension%20Benefits) In August 2024, the Board approved the termination of all defined benefit pension plans, effective November 30, 2024, resulting in a one-time non-cash settlement charge of $14 million in fiscal year 2025, and as of June 30, 2025, the company has no further pension benefit obligations or plan assets - In August 2024, the company's Board of Directors approved the merger and termination of all defined benefit pension plans, effective November 30, 2024, resulting in a one-time non-cash settlement charge of **$14 million** in fiscal year 2025[346](index=346&type=chunk) Pension Plan Net Periodic Benefit Cost Components (Fiscal Years 2023-2025) | Item (Thousands of USD) | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Interest Cost | $659 | $1,382 | $1,344 | | Expected Return on Plan Assets | $(668) | $(1,375) | $(1,416) | | Amortization of Unrecognized Net Loss | $294 | $633 | $725 | | Settlement Cost | $13,968 | — | — | | **Net Periodic Benefit Cost** | **$14,253** | **$640** | **$653** | - As of June 30, 2025, the company no longer has pension benefit obligations or plan assets[350](index=350&type=chunk) [Note 12 – Defined Contribution and Other Employee Plans](index=59&type=section&id=Note%2012%20%E2%80%93%20Defined%20Contribution%20and%20Other%20Employee%20Plans) The company sponsors four 401(k) defined contribution plans, incurring $8.282 million in costs in fiscal year 2025, and contributes to a multiemployer pension plan that was in "green zone" status in 2024 and 2023, along with providing a deferred compensation plan - The company sponsors four 401(k) defined contribution plans, with associated costs of **$8.282 million** in fiscal year 2025[353](index=353&type=chunk) - A company subsidiary participates in a multiemployer pension plan, which was in "green zone" (well-funded) status in both 2024 and 2023[354](index=354&type=chunk)[356](index=356&type=chunk) Multiemployer Pension Plan Contributions (Fiscal Years 2023-2025) | Plan Name | 2025 Contributions (Thousands of USD) | 2024 Contributions (Thousands of USD) | 2023 Contributions (Thousands of USD) | | :--- | :--- | :--- | :--- | | Western Conference of Teamsters Pension Plan | $277 | $215 | $250 | - The company also provides contributions

[Company Announcement & Name Change](index=1&type=section&id=FOR%20IMMEDIATE%20RELEASE%20SYMBOL%3A%20MZTI) Lancaster Colony Corporation officially changed its name to The Marzetti Company, effective June 27, 2025 - Effective June 27, 2025, Lancaster Colony Corporation changed its name to **The Marzetti Company**[1](index=1&type=chunk) [Fourth Quarter Summary](index=1&type=section&id=Fourth%20Quarter%20Summary) The company reported record sales and gross profit for the fourth quarter, driven by strong performance in both Retail and Foodservice segments, despite a decline in operating income and diluted EPS [CEO Commentary on Q4 Performance](index=1&type=section&id=CEO%20David%20A.%20Ciesinski%20commented) CEO David A. Ciesinski highlighted record sales and gross profit for the quarter, attributing Retail segment growth to expanding distribution of popular products and new club channel sales, and Foodservice growth to inflationary pricing and increased demand from national chain customers - Retail segment sales growth of **3.1%** was led by expanding distribution for Texas Roadhouse dinner rolls and new club channel sales for Chick-fil-A sauce[3](index=3&type=chunk) - New York Bakery frozen garlic bread achieved strong volume gains, including contributions from new gluten-free Texas Toast[3](index=3&type=chunk) - Foodservice segment net sales, excluding non-core TSA sales, increased **1.4%** due to inflationary pricing, increased demand from national chain restaurant accounts, and branded Foodservice product sales gains[3](index=3&type=chunk) [Fourth Quarter Key Financial Highlights](index=1&type=section&id=Consolidated%20fourth%20quarter%20net%20sales%20increased%205.0%25) Consolidated net sales increased 5.0% to a record $475.4 million, with gross profit also reaching a record $106.1 million. Operating income declined due to higher SG&A and increased restructuring charges, leading to a decrease in diluted EPS Fourth Quarter Key Financial Highlights | Metric | Q4 FY2025 | Q4 FY2024 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Consolidated Net Sales | $475.4 million | $452.8 million | +5.0% | | Consolidated Gross Profit | $106.1 million | $97.6 million | +8.7% | | Gross Profit Margin | 22.3% | 21.6% | +0.7 pp | | SG&A Expenses | $62.1 million | $53.2 million | +16.7% | | Consolidated Operating Income | $38.9 million | $41.7 million | -6.7% | | Net Income per Diluted Share | $1.18 | $1.26 | -6.3% | - Consolidated net sales increased **5.0%** to a fourth quarter record **$475.4 million**; excluding **$12.2 million** in non-core TSA sales, consolidated net sales increased **2.3%**[4](index=4&type=chunk) - SG&A expenses increased **$8.9 million** to **$62.1 million**, driven by higher marketing costs to support retail brands[4](index=4&type=chunk) - Consolidated operating income declined **$2.8 million** to **$38.9 million**, impacted by higher SG&A and increased restructuring and impairment charges (**$5.1 million** vs. **$2.7 million** last year)[4](index=4&type=chunk) [Fourth Quarter Detailed Financial Results](index=2&type=section&id=Fourth%20Quarter%20Results) This section provides a detailed breakdown of the company's fourth-quarter financial performance, including net sales, gross profit, operating expenses, and net income across segments [Net Sales and Segment Performance](index=2&type=section&id=Consolidated%20net%20sales%20increased%205.0%25) Consolidated net sales grew 5.0% to $475.4 million. Retail segment sales increased 3.1% (3.6% excluding exited bakery lines), while Foodservice sales grew 7.0% (1.4% excluding non-core TSA sales) Net Sales and Segment Performance | Segment | Q4 FY2025 Net Sales | Q4 FY2024 Net Sales | Change (%) | Volume Change (lbs) | | :---------- | :------------------ | :------------------ | :--------- | :------------------ | | Consolidated | $475.4 million | $452.8 million | +5.0% | N/A | | Retail | $241.6 million | $234.2 million | +3.1% | +2.1% | | Retail (excl. exited bakery) | N/A | N/A | +3.6% | +2.9% | | Foodservice | $233.9 million | $218.6 million | +7.0% | -1.7% | | Foodservice (excl. TSA) | N/A | N/A | +1.4% | -1.7% | - Foodservice segment sales include **$12.2 million** in non-core sales from a temporary supply agreement (TSA) with Winland Foods, Inc., related to an acquisition completed in February 2025[5](index=5&type=chunk) [Gross Profit](index=2&type=section&id=Consolidated%20gross%20profit%20increased%20%248.5%20million) Consolidated gross profit increased by $8.5 million to a record $106.1 million, with the gross profit margin improving by 70 basis points to 22.3%, primarily due to cost savings programs and a favorable volume/mix in the Retail segment Gross Profit | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :----------- | :---------- | :---------- | :------- | | Gross Profit | $106.1 million | $97.6 million | +$8.5 million | | Gross Margin | 22.3% | 21.6% | +70 bps | - Improvement driven by ongoing cost savings programs and a more favorable volume/mix for the Retail segment[5](index=5&type=chunk) [Selling, General & Administrative Expenses](index=2&type=section&id=SG%26A%20expenses%20increased%20%248.9%20million) SG&A expenses rose by $8.9 million to $62.1 million, mainly due to increased marketing investments for retail brands, higher personnel costs, and $0.5 million in incremental costs from the sauce and dressing plant acquisition Selling, General & Administrative Expenses | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :---------------- | :---------- | :---------- | :------- | | SG&A Expenses | $62.1 million | $53.2 million | +$8.9 million | - Drivers include higher marketing costs to support retail brands, increased investments in personnel, and **$0.5 million** in incremental costs from the sauce and dressing plant acquisition[6](index=6&type=chunk) [Restructuring and Impairment Charges](index=2&type=section&id=Restructuring%20and%20impairment%20charges%20of%20%245.1%20million) Restructuring and impairment charges totaled $5.1 million in Q4 FY2025, primarily related to the planned closure of the Milpitas, California sauce and dressing facility. This compares to $2.7 million in the prior-year quarter for exiting bakery product lines Restructuring and Impairment Charges | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :-------------------------------- | :---------- | :---------- | :------- | | Restructuring & Impairment Charges | $5.1 million | $2.7 million | +$2.4 million | - Current year charges (**$4.5 million**) are attributed to the planned closure of the Milpitas, California sauce and dressing facility, including impairment charges, termination benefits, and other closure costs[7](index=7&type=chunk) - Production at the Milpitas facility is expected to conclude during the quarter ending September 30, 2025[7](index=7&type=chunk) [Operating Income](index=2&type=section&id=Consolidated%20operating%20income%20declined%20%242.8%20million) Consolidated operating income decreased by $2.8 million to $38.9 million, primarily due to higher SG&A expenses and a $2.4 million increase in restructuring and impairment charges, partially offset by the higher gross profit Operating Income | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--------------- | :---------- | :---------- | :------- | | Operating Income | $38.9 million | $41.7 million | -$2.8 million | - Decline was impacted by higher SG&A expenses and the increase in restructuring and impairment charges, partially offset by higher gross profit[8](index=8&type=chunk) [Net Income and Diluted Earnings Per Share](index=2&type=section&id=Net%20income%20decreased%20%242.3%20million) Net income decreased by $2.3 million to $32.5 million, resulting in $1.18 per diluted share, down from $1.26 last year. Restructuring and impairment charges reduced current-year net income by $0.15 per diluted share, compared to $0.08 last year Net Income and Diluted Earnings Per Share | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :----------------------- | :---------- | :---------- | :------- | | Net Income | $32.5 million | $34.8 million | -$2.3 million | | Diluted EPS | $1.18 | $1.26 | -$0.08 | - Restructuring and impairment charges reduced current-year net income by **$4.0 million**, or **$0.15 per diluted share**, compared to **$2.1 million**, or **$0.08 per diluted share**, in the prior year[9](index=9&type=chunk) - Incremental SG&A expenditures from the plant acquisition reduced net income by **$0.4 million**, or **$0.01 per diluted share**[9](index=9&type=chunk) [Fiscal Year 2025 Financial Results](index=3&type=section&id=Fiscal%20Year%20Results) The company reported a 2.0% increase in net sales to $1.91 billion and a 5.5% rise in net income to $167.3 million for fiscal year 2025, with diluted EPS reaching $6.07 Fiscal Year 2025 Financial Results | Metric | FY2025 | FY2024 | Change (%) | | :----------------------- | :----------- | :----------- | :--------- | | Net Sales | $1.91 billion | $1.87 billion | +2.0% | | Net Income | $167.3 million | $158.6 million | +5.5% | | Diluted EPS | $6.07 | $5.76 | +5.4% | - Fiscal 2025 results include a noncash pension settlement charge that reduced net income by **$10.8 million**, or **$0.39 per diluted share**[10](index=10&type=chunk) - Restructuring and impairment charges reduced net income by **$4.0 million**, or **$0.15 per diluted share** in FY2025, compared to **$11.4 million**, or **$0.42 per diluted share** in FY2024[10](index=10&type=chunk) - Incremental SG&A expenditures from the Atlanta-based sauce and dressing facility acquisition reduced net income by **$2.9 million**, or **$0.11 per diluted share** in FY2025[10](index=10&type=chunk) [Fiscal Year 2026 Outlook](index=3&type=section&id=Fiscal%202026%20Outlook) The company anticipates sales growth in the Retail segment and support for Foodservice sales, while planning to offset modest input cost inflation through pricing and cost savings programs - Retail segment sales are expected to benefit from volume growth, including contributions from licensing programs and Marzetti, New York Bakery, and Sister Schubert's brands[11](index=11&type=chunk) - Foodservice segment sales are expected to be supported by select quick-service restaurant customers, with overall demand potentially impacted by external factors like U.S. economic performance and consumer behavior[11](index=11&type=chunk) - The company anticipates modest input cost inflation in fiscal 2026, which it plans to offset through contractual pricing and cost savings programs, focusing on continued margin improvement[11](index=11&type=chunk) [Company Information & Disclosures](index=3&type=section&id=About%20the%20Company) This section provides an overview of The Marzetti Company, details regarding its conference call, and important disclosures about forward-looking statements and associated risk factors [About The Marzetti Company](index=3&type=section&id=About%20the%20Company) The Marzetti Company is a manufacturer and marketer of specialty food products for both retail and foodservice channels - The Marzetti Company manufactures and markets specialty food products for retail and foodservice channels[13](index=13&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call%20on%20the%20Web) A conference call for the fourth quarter and fiscal year-end results was scheduled for August 21, 2025, at 10:00 a.m. ET, with access available via webcast on the company's investor relations website - The conference call was scheduled for **August 21, 2025, at 10:00 a.m. ET**[12](index=12&type=chunk) - A live webcast and replay are available on investors.marzetticompany.com[12](index=12&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements) The report includes forward-looking statements under the PSLRA safe harbor provisions, based on management's assumptions. These statements involve various risks and uncertainties that could cause actual results to differ materially, including operational efficiencies, competition, demand changes, inflation, and supply chain issues - The news release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 (PSLRA) safe harbor provisions[14](index=14&type=chunk) - Statements are based on management's assumptions and involve risks and uncertainties that could cause actual results to differ materially[14](index=14&type=chunk) - Key risk factors include plant operational efficiencies, price and product competition, success of new product development, changes in demand, impact of customer store brands, regulatory matters, acquisition integration, inflationary pressures, cost and availability of ingredients/packaging, freight/energy costs, customer reaction to pricing, trade policies, dependence on key personnel, labor supply/relations, geopolitical events, third-party dependence, cyber-security incidents, loss of key customer relationships, capacity constraints, license agreement failures, product recalls, customer consolidation, competitive position, litigation, consumer demand shifts, and critical accounting judgments[14](index=14&type=chunk)[17](index=17&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including statements of income, business segment information, and balance sheets for the specified periods [Condensed Consolidated Statements of Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(Unaudited)) The unaudited condensed consolidated statements of income show detailed revenue, cost of sales, gross profit, operating expenses, and net income for the three months and fiscal years ended June 30, 2025, and 2024 Condensed Consolidated Statements of Income | Metric (in thousands) | Q4 FY2025 (in thousands) | Q4 FY2024 (in thousands) | FY2025 (in thousands) | FY2024 (in thousands) | | :-------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net sales | $475,427 | $452,825 | $1,909,122 | $1,871,759 | | Cost of sales | $369,335 | $355,207 | $1,453,476 | $1,439,457 | | Gross profit | $106,092 | $97,618 | $455,646 | $432,302 | | Selling, general & administrative expenses | $62,075 | $53,193 | $230,227 | $218,065 | | Restructuring and impairment charges | $5,102 | $2,737 | $5,102 | $14,874 | | Operating income | $38,915 | $41,688 | $220,317 | $199,363 | | Pension settlement charge | — | — | ($13,968) | — | | Net income | $32,529 | $34,828 | $167,347 | $158,613 | | Diluted EPS | $1.18 | $1.26 | $6.07 | $5.76 | | Cash dividends per common share | $0.95 | $0.90 | $3.75 | $3.55 | [Business Segment Information](index=6&type=section&id=BUSINESS%20SEGMENT%20INFORMATION%20(Unaudited)) This table provides a breakdown of net sales and operating income by segment (Retail and Foodservice) for the three months and fiscal years ended June 30, 2025, and 2024, along with nonallocated restructuring charges and corporate expenses Business Segment Information | Segment (in thousands) | Q4 FY2025 Net Sales (in thousands) | Q4 FY2024 Net Sales (in thousands) | FY2025 Net Sales (in thousands) | FY2024 Net Sales (in thousands) | | :--------------------- | :------------------ | :------------------ | :--------------- | :--------------- | | Retail | $241,554 | $234,194 | $1,003,409 | $988,424 | | Foodservice | $233,873 | $218,631 | $905,713 | $883,335 | | **Total Net Sales** | **$475,427** | **$452,825** | **$1,909,122** | **$1,871,759** | | | | | | | | Segment (in thousands) | Q4 FY2025 Operating Income (in thousands) | Q4 FY2024 Operating Income (in thousands) | FY2025 Operating Income (in thousands) | FY2024 Operating Income (in thousands) | | :--------------------- | :------------------------- | :------------------------- | :-------------------- | :-------------------- | | Retail | $40,905 | $47,702 | $211,695 | $207,660 | | Foodservice | $28,835 | $18,982 | $111,579 | $97,094 | | Nonallocated Restructuring and Impairment Charges | ($5,102) | ($2,737) | ($5,102) | ($14,874) | | Corporate Expenses | ($25,723) | ($22,259) | ($97,855) | ($90,517) | | **Total Operating Income** | **$38,915** | **$41,688** | **$220,317** | **$199,363** | [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS%20(Unaudited)) The unaudited condensed consolidated balance sheets present the company's assets, liabilities, and shareholders' equity as of June 30, 2025, and June 30, 2024, showing changes in current assets, property, plant & equipment, and equity Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :-------------- | :-------------- | | **ASSETS** | | | | Cash and equivalents | $161,476 | $163,443 | | Receivables | $95,817 | $95,560 | | Inventories | $169,301 | $173,252 | | Total current assets | $443,631 | $443,993 | | Net property, plant and equipment | $534,543 | $477,696 | | Total assets | $1,274,724 | $1,206,931 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Accounts payable | $117,962 | $118,811 | | Accrued liabilities | $68,332 | $65,158 | | Total current liabilities | $186,294 | $183,969 | | Noncurrent liabilities and deferred income taxes | $89,935 | $97,190 | | Shareholders' equity | $998,495 | $925,772 | | Total liabilities and shareholders' equity | $1,274,724 | $1,206,931 |

Company Overview - Lancaster Colony Corporation (LANC) is involved in the manufacturing, marketing, and distribution of food products, operating through two segments: Retail and Foodservice [1] - The company has a current market capitalization of approximately $4.6 billion and employs around 3,400 people [1] Investment Insights - The stock performance and investment potential of Lancaster Colony Corporation are of interest to analysts and investors, particularly in the context of dividend investing [1]

Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1]. Group 1 - The investment strategy is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1].

Financial Data and Key Metrics Changes - Consolidated net sales declined 2.9% to $458 million in the fiscal third quarter [5][9] - Gross profit reached a record $106 million, with a gross profit margin improvement of 90 basis points to 23.1% [8][11] - Operating income increased by 41.9% to $50 million, driven by lower SG&A costs and gross margin improvement [11][13] - Diluted earnings per share increased by 44.7% to $1.49 [12] Business Line Data and Key Metrics Changes - Retail segment net sales decreased by 2.6%, with a 0.7% decline when excluding exited bakery lines [5][6] - Foodservice segment net sales declined by 3.2%, impacted by weather and industry-wide declines in restaurant traffic [7][8] - Licensing program in the retail segment showed growth, particularly with Chick-fil-A sauce and Texas Roadhouse dinner rolls [6][16] Market Data and Key Metrics Changes - In the frozen dinner roll category, the combined growth of Sister Schubert's and Texas Roadhouse brands was 11.6%, increasing market share to 60.9% [6] - Frozen garlic bread sales grew by 6.8%, with a market share increase to 43.9% [6] - Chick-fil-A dressings grew by 4%, contributing to a category-leading share of 27.2% [7] Company Strategy and Development Direction - The company aims to accelerate core business growth, simplify the supply chain, and expand through focused M&A and strategic licensing [15][16] - Planned closure of the sauce and dressing facility in Milpitas, California, to optimize the manufacturing network [17] - Acquisition of the Atlanta-based facility is expected to enhance the manufacturing network and support growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management anticipates ongoing challenges in the consumer environment but is positioned to respond effectively [16] - Input costs are not expected to significantly impact the upcoming quarter [17] - The company is focused on innovation and distribution expansion in the retail segment [16] Other Important Information - The company reported a cash dividend of $0.95 per share, marking a 6% increase from the previous year [13] - The financial position remains strong with a debt-free balance sheet and $124.6 million in cash [13] Q&A Session Summary Question: Impact of consumer slowdown on foodservice collaboration - Management noted that weather significantly impacted traffic and sales, with expectations of low single-digit declines in foodservice volume [25][28] Question: Balancing distribution gains against consumer softness in retail - Management believes distribution gains from new items will offset consumer softness, projecting low single-digit growth in retail volume [30][32] Question: Weakness in refrigerated dressings and dips - The decline was attributed to the timing of Easter, which shifted sales to the next quarter, impacting consumption data [40][42] Question: Promotional environment at retail - Management indicated a careful approach to trade spending, focusing on effective promotional strategies rather than broad price reductions [46][48] Question: Competitive dynamics and promotional stance - Management emphasized the importance of strategic placements over discounts, noting that private label competition remains manageable [52][54] Question: Quantifying the impact of Easter shift - Management estimated the Easter shift impacted the quarter by at least one percentage point [59][60]

Financial Data and Key Metrics Changes - Consolidated net sales decreased by 2.9% to $458 million for the third quarter [5] - Gross profit reached a record $106 million, with a gross profit margin improvement of 90 basis points to 23.1% [8][9] - Operating income increased by 41.9% to $50 million, driven by lower selling, general and administrative expenses and gross margin improvement [11][12] - Diluted earnings per share increased by 44.7% to $1.49 [12][15] Business Line Data and Key Metrics Changes - Retail segment net sales decreased by 2.6%, with a 0.7% decline when excluding exited bakery lines [5][6] - Foodservice segment net sales declined by 3.2%, impacted by weather and industry-wide declines in restaurant traffic [7][8] - Licensing program in the retail segment showed growth, with Chick-fil-A sauce and Texas Roadhouse dinner rolls performing well [6][18] Market Data and Key Metrics Changes - In the frozen dinner roll category, the combined market share of Sister Schubert's and Texas Roadhouse brands increased by 520 basis points to 60.9% [6] - Frozen garlic bread category saw New York Bakery brand sales grow by 6.8%, increasing market share by 180 basis points to 43.9% [6] - Chick-fil-A dressings grew by 4%, contributing to a category-leading share of 27.2% when combined with Marzetti brand dressings [7] Company Strategy and Development Direction - The company aims to accelerate core business growth, simplify the supply chain, and expand through focused M&A and strategic licensing [17][20] - Planned closure of the sauce and dressing facility in Milpitas, California, to optimize the manufacturing network [19] - Acquisition of the Atlanta-based sauce and dressing facility is expected to enhance the manufacturing network and support growth [20][21] Management's Comments on Operating Environment and Future Outlook - Management anticipates ongoing challenges in the consumer environment but is positioned to respond effectively [18] - Input costs are not expected to significantly impact the upcoming quarter [19] - The company is focused on innovation and distribution expansion for new items in the retail segment [18] Other Important Information - The company reported a cash dividend of $0.95 per share, representing a 6% increase from the prior year [15] - The company maintains a debt-free balance sheet with $124.6 million in cash [15] Q&A Session Summary Question: Impact of consumer slowdown on foodservice collaboration - Management noted that weather significantly impacted Q3 volumes, with some customers closing stores for up to ten days [28][30] Question: Balancing distribution gains against consumer softness in retail - Management believes distribution gains from new items will offset consumer softness, projecting low single-digit volumetric growth [32][34] Question: Weakness in refrigerated dressings and dips - The weakness was attributed to the timing of Easter, which shifted to April, impacting consumption data [44][46] Question: Promotional environment at retail - Management indicated a careful approach to trade spending, focusing on effective promotional strategies rather than broad price reductions [48][50] Question: Competitive dynamics and promotional stance - Management emphasized the importance of relevant new items and effective execution over heavy promotional spending [56][60] Question: Quantifying the impact of Easter shift - Management estimated the Easter shift impacted the quarter by at least one percentage point [62] Question: Impact of weather on foodservice volumes - Management noted that traffic was significantly affected by weather, particularly in January and February [68] Question: Potential of new Chick-fil-A sauce in club channels - Management expressed optimism about the Chick-fil-A sauce's performance in club channels, viewing it as a significant opportunity for growth [70][72]

Company Performance - Lancaster Colony reported quarterly earnings of $1.54 per share, missing the Zacks Consensus Estimate of $1.61 per share, but showing an increase from $1.44 per share a year ago, resulting in an earnings surprise of -4.35% [1] - The company posted revenues of $457.84 million for the quarter, missing the Zacks Consensus Estimate by 5.46%, and down from $471.45 million year-over-year [2] - Over the last four quarters, Lancaster Colony has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance - Lancaster Colony shares have increased approximately 11.4% since the beginning of the year, contrasting with a -5.5% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.46 on revenues of $468.3 million, and for the current fiscal year, it is $6.85 on revenues of $1.93 billion [7] Industry Outlook - The Zacks Industry Rank for Food - Miscellaneous is currently in the bottom 43% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor decisions [5]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents unaudited condensed consolidated financial statements, notes, and management's discussion and analysis of operations [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated balance sheets, statements of income, comprehensive income, cash flows, and shareholders' equity for Lancaster Colony Corporation and its subsidiaries, providing a snapshot of the company's financial position and performance for the periods ended March 31, 2025, and June 30, 2024 (balance sheet), and March 31, 2025 and 2024 (income, comprehensive income, cash flows, equity) [Condensed Consolidated Balance Sheets – March 31, 2025 and June 30, 2024](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%93%20March%2031%2C%202025%20and%20June%2030%2C%202024) This section provides a snapshot of the company's financial position at March 31, 2025, and June 30, 2024 | Metric | March 31, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :---------------------------- | :--------------------------- | | Total Assets | $1,276,612 | $1,206,931 | | Property, Plant and Equipment-net | $537,887 | $477,696 | | Goodwill | $223,472 | $208,371 | | Total Shareholders' Equity | $996,248 | $925,772 | [Condensed Consolidated Statements of Income – Three and Nine Months Ended March 31, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section presents the company's financial performance for the three and nine months ended March 31, 2025 and 2024 Three Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $457,836 | $471,446 | (2.9)% | | Gross Profit | $105,962 | $104,494 | 1.4% | | Operating Income | $49,877 | $35,146 | 41.9% | | Net Income | $41,124 | $28,350 | 45.1% | | Diluted Net Income Per Common Share | $1.49 | $1.03 | 44.7% | Nine Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net Sales | $1,433,695 | $1,418,934 | 1.0% | | Gross Profit | $349,554 | $334,684 | 4.4% | | Operating Income | $181,402 | $157,675 | 15.0% | | Pension Settlement Charge | $(13,968) | $0 | N/M | | Net Income | $134,818 | $123,785 | 8.9% | | Diluted Net Income Per Common Share | $4.89 | $4.50 | 8.7% | [Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended March 31, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section details the company's comprehensive income for the three and nine months ended March 31, 2025 and 2024 Three Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------- | :------------------ | :------------------ | | Net Income | $41,124 | $28,350 | | Other Comprehensive (Loss) Income, Net of Tax | $(46) | $75 | | Comprehensive Income | $41,078 | $28,425 | Nine Months Ended March 31 | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------- | :------------------ | :------------------ | | Net Income | $134,818 | $123,785 | | Other Comprehensive (Loss) Income, Net of Tax | $9,604 | $226 | | Comprehensive Income | $144,422 | $124,011 | [Condensed Consolidated Statements of Cash Flows –Nine Months Ended March 31, 2025 and 2024](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section outlines the company's cash flow activities for the nine months ended March 31, 2025 and 2024 Nine Months Ended March 31 | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $173,317 | $217,454 | | Net cash used in investing activities | $(130,254) | $(57,358) | | Net cash used in financing activities | $(81,945) | $(83,813) | | Net change in cash and equivalents | $(38,882) | $76,283 | | Cash and equivalents at end of period | $124,561 | $164,756 | - Cash paid for acquisition: **$78,819 thousand** (2025)[17](index=17&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity – Nine Months Ended March 31, 2025 and 2024](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity%20%E2%80%93%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%202024) This section details changes in the company's shareholders' equity for the nine months ended March 31, 2025 and 2024 Shareholders' Equity Changes (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------- | :------------ | | Total Shareholders' Equity | $996,248 | $925,772 | | Retained Earnings | $1,622,155 | $1,564,642 | | Accumulated Other Comprehensive Income (Loss) | $964 | $(8,640) | - Cash dividends for common stock: **$77,305 thousand** for the nine months ended March 31, 2025, compared to **$73,113 thousand** for the prior-year period[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering significant accounting policies, recent acquisition details, long-term debt, commitments, goodwill, income taxes, business segment performance, stock-based compensation, and pension benefits [Note 1 – Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and recent accounting pronouncements impacting the financial statements - Planned closure of Milpitas, California sauce and dressing production facility, expected to conclude production by September 30, 2025, with estimated restructuring and impairment charges of approximately **$6 million** in the quarter ending June 30, 2025[25](index=25&type=chunk) - In the three months ended March 31, 2024, recorded an impairment charge of **$6.2 million** for property, plant and equipment and **$4.5 million** for intangible assets related to the decision to exit perimeter-of-the-store bakery product lines (Angelic Bakehouse and Flatout)[26](index=26&type=chunk)[27](index=27&type=chunk) - New FASB guidance on segment expenses (effective FY2025 annual, FY2026 interim), income taxes (effective FY2026 annual), and disaggregated income statement expenses (effective FY2028 annual, FY2029 interim) will impact disclosures but not financial position or results of operations[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2 – Acquisition](index=13&type=section&id=Note%202%20%E2%80%93%20Acquisition) This note details the recent acquisition of a sauce and dressing production facility in Atlanta, Georgia - Acquisition of a sauce and dressing production facility in Atlanta, Georgia, from Winland Foods, Inc. completed on **February 18, 2025**[39](index=39&type=chunk) - Purchase price of **$78.8 million**, funded with cash on hand[39](index=39&type=chunk) - Goodwill recognized from acquisition: **$15.1 million**, allocated to the Foodservice segment[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 3 – Long-Term Debt](index=13&type=section&id=Note%203%20%E2%80%93%20Long-Term%20Debt) This note describes the company's unsecured revolving credit facility and outstanding letters of credit - Unsecured revolving credit facility of up to **$150 million**, expiring **March 6, 2029**[44](index=44&type=chunk) - No borrowings outstanding under the Facility at **March 31, 2025**[47](index=47&type=chunk) - Standby letters of credit outstanding: **$2.6 million** at **March 31, 2025**[47](index=47&type=chunk) [Note 4 – Commitments and Contingencies](index=14&type=section&id=Note%204%20%E2%80%93%20Commitments%20and%20Contingencies) This note addresses various claims and litigation matters arising in the ordinary course of business - Various claims and litigation matters arising in the ordinary course of business are not expected to have a material effect on consolidated financial statements[48](index=48&type=chunk) [Note 5 – Goodwill](index=14&type=section&id=Note%205%20%E2%80%93%20Goodwill) This note provides a breakdown of goodwill by segment and explains changes due to recent acquisition Goodwill by Segment (in thousands) | Segment | March 31, 2025 | June 30, 2024 | | :---------- | :------------- | :------------ | | Retail | $157,396 | $157,396 | | Foodservice | $66,076 | $50,975 | | Total | $223,472 | $208,371 | - Increase in goodwill is primarily due to the **$15.1 million** Atlanta plant acquisition in February 2025, allocated to the Foodservice segment[49](index=49&type=chunk) [Note 6 – Income Taxes](index=14&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) This note presents the company's prepaid federal and accrued state and local income tax balances Income Tax Balances (in thousands) | Metric | March 31, 2025 | June 30, 2024 | | :-------------------------- | :------------- | :------------ | | Prepaid federal income taxes | $2,600 | $800 | | Accrued state and local income taxes | $700 | $300 | [Note 7 – Business Segment Information](index=14&type=section&id=Note%207%20%E2%80%93%20Business%20Segment%20Information) This note provides detailed net sales and operating income data for the Retail and Foodservice segments Net Sales by Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :---------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Retail | $241,532 | $248,054 | $761,855 | $754,230 | | Foodservice | $216,304 | $223,392 | $671,840 | $664,704 | | Total | $457,836 | $471,446 | $1,433,695 | $1,418,934 | Operating Income by Segment (in thousands) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Retail | $45,578 | $47,313 | $170,790 | $159,958 | | Foodservice | $28,111 | $24,334 | $82,744 | $78,112 | | Nonallocated Restructuring and Impairment Charges | — | $(12,137) | — | $(12,137) | | Corporate Expenses | $(23,812) | $(24,364) | $(72,132) | $(68,258) | | Total | $49,877 | $35,146 | $181,402 | $157,675 | - Foodservice segment includes **$2.063 million** in net sales from a temporary supply agreement (TSA) for other dressings and sauces, commencing March 2025[56](index=56&type=chunk) [Note 8 – Stock-Based Compensation](index=16&type=section&id=Note%208%20%E2%80%93%20Stock-Based%20Compensation) This note details the company's stock-based compensation expense for various equity awards Stock-Based Compensation Expense (in thousands) | Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Nine Months Ended March 31, 2025 | Nine Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Restricted Stock | $1,400 | $1,500 | $4,200 | $4,200 | | Performance Units | $200 | $1,600 | $2,300 | $3,700 | | Stock-Settled Stock Appreciation Rights (SSSARs) | $0 | $400 | $0 | $1,000 | - Unrecognized compensation expense for restricted stock: **$8.1 million** (weighted-average period of 2 years)[59](index=59&type=chunk) - Unrecognized compensation expense for performance units: **$5.4 million** (weighted-average period of 2 years)[60](index=60&type=chunk) [Note 9 – Pension Benefits](index=16&type=section&id=Note%209%20%E2%80%93%20Pension%20Benefits) This note discusses the termination of defined benefit pension plans and related settlement charges - Defined benefit pension plans were terminated effective **November 30, 2024**, following the merger of five frozen plans[62](index=62&type=chunk) - Incurred a one-time noncash settlement charge of **$14.0 million** for the nine months ended March 31, 2025, due to pension termination[62](index=62&type=chunk)[63](index=63&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a narrative analysis of the company's financial condition and results of operations, discussing net sales, gross profit, operating income, segment performance, cash flows, liquidity, and future outlook for the three and nine months ended March 31, 2025, compared to the prior year [Overview](index=17&type=section&id=Overview) This section introduces Lancaster Colony Corporation's business, growth strategies, and recent strategic investments - Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels, with over **95%** of products sold in the United States[67](index=67&type=chunk)[69](index=69&type=chunk) - Growth goals include introducing new products, expanding distribution, leveraging Retail brands, expanding Retail through strategic licensing, relying on Foodservice product development, and acquiring complementary businesses[70](index=70&type=chunk) - Recent investments include the acquisition of an Atlanta sauce and dressing facility (Feb 2025), a significant capacity expansion for the Marzetti dressing and sauce facility (completed March 2023), and the completion of the ERP system ('Project Ascent') implementation phase (August 2023)[70](index=70&type=chunk) [Results of Consolidated Operations](index=18&type=section&id=Results%20of%20Consolidated%20Operations) This section analyzes the company's consolidated net sales, gross profit, operating income, and diluted net income per share Breakdown of % Change in Consolidated Net Sales (Three Months Ended March 31, 2025) | Category | Change (%) | | :------------------------------------------ | :--------- | | Change in Core Sales Volume / Mix | (2.5)% | | Net Pricing Impact | 0.2 | | Perimeter-of-the-Store Bakery Product Lines Exited March 2024 | (1.0) | | Incremental Sales for Temporary Supply Agreement (TSA) | 0.4 | | Total Change in Net Sales | (2.9)% | Breakdown of % Change in Consolidated Net Sales (Nine Months Ended March 31, 2025) | Category | Change (%) | | :------------------------------------------ | :--------- | | Change in Core Sales Volume / Mix | 2.3 % | | Net Pricing Impact | (0.3) | | Perimeter-of-the-Store Bakery Product Lines Exited March 2024 | (1.1) | | Incremental Sales for Temporary Supply Agreement (TSA) | 0.1 | | Total Change in Net Sales | 1.0 % | - Consolidated gross profit for the three months ended March 31, 2025, increased **$1.5 million** to a record **$106.0 million**, benefiting from cost savings and modest cost deflation, offsetting lower sales volume and Atlanta plant startup costs[77](index=77&type=chunk) - Operating income for the three months ended March 31, 2025, grew **$14.7 million** to a record **$49.9 million**, reflecting higher gross profit, reduced SG&A expenses, and the absence of prior-year **$12.1 million** restructuring and impairment charges[84](index=84&type=chunk) - A one-time noncash pension settlement charge of **$14.0 million** was incurred for the nine months ended March 31, 2025[88](index=88&type=chunk) Effective Tax Rate (Nine Months Ended March 31) | Metric | 2025 | 2024 | | :------------- | :--- | :--- | | Effective rate | 22.0 % | 23.5 % | - Diluted net income per share for the three months ended March 31, 2025, was **$1.49**, up from **$1.03** in the prior year[91](index=91&type=chunk) - For the nine months, it was **$4.89**, up from **$4.50**[92](index=92&type=chunk) [Results of Operations - Segments](index=22&type=section&id=Results%20of%20Operations%20-%20Segments) This section provides a detailed analysis of net sales and operating income performance for the Retail and Foodservice segments - Retail segment net sales decreased **2.6%** for the three months ended March 31, 2025, due to the exit of perimeter-of-the-store bakery product lines (**1.9%** impact) and a challenging consumer environment[94](index=94&type=chunk) - For the nine months, Retail net sales increased **1.0%**, or **3.2%** excluding exited product lines, driven by licensing programs (Texas Roadhouse, Chick-fil-A, Subway sauces) and new gluten-free garlic bread[94](index=94&type=chunk) - Foodservice segment net sales decreased **3.2%** for the three months ended March 31, 2025, due to an industry-wide slowdown in restaurant traffic and menu changes[96](index=96&type=chunk) - For the nine months, Foodservice net sales increased **1.1%** due to increased demand from national chain restaurant accounts and Marzetti branded products[97](index=97&type=chunk) - Retail segment operating income decreased **3.7%** for the three months but increased **6.8%** for the nine months, benefiting from higher sales volume, favorable sales mix, cost savings, and modest cost deflation[94](index=94&type=chunk)[95](index=95&type=chunk) - Foodservice segment operating income increased **15.5%** for the three months and **5.9%** for the nine months, driven by cost savings, modest cost deflation, and higher sales volumes, partially offset by Atlanta plant startup costs and higher supply chain costs[97](index=97&type=chunk)[98](index=98&type=chunk) - Corporate expenses decreased for the three months but increased for the nine months, influenced by IT investments and incremental expenditures related to the Atlanta plant acquisition (**$1.7 million** for 3 months, **$3.3 million** for 9 months), partially offset by reduced compensation/benefits and prior-year Project Ascent expenses[99](index=99&type=chunk)[100](index=100&type=chunk) [Looking Forward](index=23&type=section&id=Looking%20Forward) This section outlines the company's expectations for future performance, market conditions, and strategic initiatives - Anticipates ongoing challenges in the consumer environment, with plans to respond through innovation and incremental distribution in Retail and continued partnership with Foodservice customers[101](index=101&type=chunk) - Retail segment sales are expected to benefit from licensing programs, including expanded distribution for Texas Roadhouse dinner rolls and Chick-fil-A sauce in the club channel[101](index=101&type=chunk) - Foodservice segment anticipates continued growth from select national chain restaurant accounts[101](index=101&type=chunk) - No significant impacts from commodity cost inflation or deflation are foreseen[101](index=101&type=chunk) - Further incorporation of the newly acquired Atlanta-based sauce and dressing plant into the manufacturing network is expected in the fiscal fourth quarter[101](index=101&type=chunk) [Financial Condition](index=24&type=section&id=Financial%20Condition) This section discusses the company's cash flow activities, liquidity, and capital expenditure plans - Net cash provided by operating activities for the nine months ended March 31, 2025, decreased to **$173.3 million** from **$217.5 million** in the prior year, primarily due to year-over-year changes in net working capital[103](index=103&type=chunk) - Cash used in investing activities for the nine months ended March 31, 2025, increased to **$130.3 million** from **$57.4 million** in the prior year, primarily reflecting the **$78.8 million** Atlanta plant acquisition[104](index=104&type=chunk) - Cash used in financing activities for the nine months ended March 31, 2025, decreased to **$81.9 million** from **$83.8 million** in the prior year, reflecting lower share repurchases partially offset by higher dividend payments[105](index=105&type=chunk) - The company has an unsecured revolving credit facility of up to **$150 million** with no outstanding borrowings at March 31, 2025, and believes its liquidity sources are adequate for the next 12 months and beyond[106](index=106&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Estimated capital expenditures for fiscal 2025 are **$65 million**[109](index=109&type=chunk) [Critical Accounting Policies](index=24&type=section&id=Critical%20Accounting%20Policies) This section confirms no changes to the critical accounting policies from the prior annual report - No changes in critical accounting policies from those disclosed in the 2024 Annual Report on Form 10-K[112](index=112&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for disclosures regarding recent accounting pronouncements - Recent accounting pronouncements and their impact are disclosed in Note 1 to the condensed consolidated financial statements[113](index=113&type=chunk) [Forward-Looking Statements](index=25&type=section&id=Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to various important risks, uncertainties, and other factors that could cause actual results to differ materially[114](index=114&type=chunk) - Risk factors include plant efficiencies, successful business acquisitions, price and product competition, changes in demand, regulatory matters, labor supply, cost fluctuations (freight, energy, ingredients), tariffs, geopolitical events, dependence on contract manufacturers/distributors, key personnel, cyber-security incidents, loss of key customer relationships, capacity constraints, failure to maintain license agreements, product recalls, new product development success, customer consolidation, and litigation[115](index=115&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms that there have been no material changes to the company's market risks since the disclosures in its 2024 Annual Report on Form 10-K - Market risks have not changed materially from those disclosed in the 2024 Annual Report on Form 10-K[116](index=116&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, and confirms no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of **March 31, 2025**[117](index=117&type=chunk) - No material changes were made to internal control over financial reporting during the most recent fiscal quarter[118](index=118&type=chunk) [PART II – OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and a list of exhibits [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no material legal proceedings, specifically environmental matters exceeding a $1 million threshold, to disclose in this quarterly report - No environmental matters to disclose in this Form 10-Q, using a **$1 million** materiality threshold[120](index=120&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section confirms that there have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed under Item 1A in the 2024 Annual Report on Form 10-K[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase program, including the remaining authorization and shares repurchased during the quarter, primarily for tax withholding obligations - Board of Directors approved a share repurchase authorization of **2,000,000** common shares in November 2010[122](index=122&type=chunk) - **1,123,842** common shares remained authorized for future repurchases at **March 31, 2025**[122](index=122&type=chunk) Common Stock Repurchases (Q3 FY2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :----------------- | :----------------------------- | :--------------------------- | | January 1-31, 2025 | 48 | $173.14 | | February 1-28, 2025 | 49 | $191.40 | | March 1-31, 2025 | 336 | $175.00 | | Total | 433 | $176.65 | - Repurchases primarily represent shares acquired in satisfaction of tax withholding obligations from vesting restricted stock[122](index=122&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - Includes certifications of CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[125](index=125&type=chunk) - Includes XBRL Instance Document and Taxonomy Extension Documents[125](index=125&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section provides the official signatures of the company's President, CEO, and CFO, certifying the report - Report signed by David A. Ciesinski (President, Chief Executive Officer and Director) and Thomas K. Pigott (Vice President, Chief Financial Officer and Assistant Secretary) on **April 30, 2025**[128](index=128&type=chunk)