Episode Details

The Marzetti Company (MZTI) Q4 FY2026 — Q4 FY2026 (quarter and fiscal year ended June 30, 2026): Q4 net sales $465.0m, DOWN 2.19%; adjusted diluted EPS $1.46 vs a $1.40 bar; GAAP $1.76. FY2026 net sales $1,929.8m, adjusted EPS $6.83. Reported BEFORE the bell Aug 25 (8-K accepted 07:38 ET); shares gapped +2.74%, closed +1.37%, then fell 3.32% on Aug 26. Marzetti (formerly Lancaster Colony) reported adjusted EPS of $1.46 against a $1.40 bar and net sales of $465.0m against $479.0m. But the fact that reframes the business is in the 10-K: one privately held restaurant chain, Chick-fil-A, is 30% of consolidated net sales ($575.7m of $1,929.8m), up from 29% and 28%, and Marzetti sits on BOTH sides of it - licensee of the brand in the grocery aisle, private-label supplier to the kitchens. In FY2026 the licensed half (Retail) saw operating profit FALL 3.79% to $203.7m while the private-label half (Foodservice) grew it 17.70% to $131.3m. We value MZTI at $136.61 against $113.45 and rate it BUY, conviction 3/5. THE CALL: BUY (3/5, THE PROFIT ENGINE MOVED TO THE UNBRANDED HALF) — base-case value ~$136.61 vs ~$113.45 today. KEY METRICS: - CONCENTRATION: Chick-fil-A is $575.7m of $1,929.8m of FY2026 net sales - 30%, up from 29% and 28% - across BOTH a Foodservice supply relationship and an exclusive Retail licence. Its sales grew $27.5m; the company grew $20.7m, so the other $1.35bn FELL 0.50%. - THE TWO HALVES: Foodservice operating profit +17.70% to $131.3m at a 14.17% margin, best of five filed years; Retail -3.79% to $203.7m at 20.31%. Segment profit rose $11.7m and Foodservice supplied $19.8m of it - 168.5%. - THE BRANDED PREMIUM: Retail's margin advantage over Foodservice was 1,002bp in FY2024, 878bp in FY2025 and 614bp now - 38.7% of it gone in two filed years. - EPS BASIS, PROVED: the four filed FY2026 quarters of GAAP diluted EPS (1.71+2.15+1.35+1.76) sum to $6.97 vs a filed annual $6.98. The $1.46 reported as 'actual' is ADJUSTED; GAAP Q4 was $1.76 on an $18.5m land-sale gain in operating income. - THE MISS WAS PRE-ANNOUNCED: $465.0m against a $479.0m bar is a $13.9m shortfall, and $12.2m of it - 87.5% - is a supply agreement the company said in May had already ended. - THE DEAL: Bachan's closed May 1 for $399.3m, the largest in company history and 27% of total assets, adding $15.4m in two months - 4.31x annualised sales against 1.61x for MZTI itself. $161.5m of net cash became $174.9m of net debt. - THE MODEL: owner earnings $182.2m (midpoint of a $193.8m cash build and a $170.5m profit build), 6.97% WACC carrying a full point of concentration premium, blended 50/50 with 12.0x EBITDA = $136.61. Street average $131.67, all holds. What to watch: UP: a 63rd straight year of dividend increases, a 3.48% yield covered 1.90x by free cash flow, Foodservice margin at a five-year high, and a $170.04 bull case. DOWN: Retail pounds fell 3.2% ex-Bachan's and the licence agreements can end on short notice. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.