The Marzetti (MZTI) Q4 2016 earnings summary

Executive summary

• FY16 delivered record net sales, net income and diluted EPS; sales rose 8% and net income rose 20% YoY.

• Retail mix reached 52% of sales, supported by Flatout and growth in branded dressings; frozen bread sales were soft but improved toward year-end.

Financial highlights

• Net sales were $1,191.1M, up 8% YoY; excluding Flatout, sales increased 5%.

• Gross profit rose 16% to $299.6M; gross margin expanded to 25.2% from 23.3%.

• Net income was $121.8M, up from $101.7M; diluted EPS increased to $4.44 from $3.72.

• Operating income was $184.6M, up 19%; income before taxes was $184.6M, also up 19%.

Outlook and guidance

• FY17 retail sales are expected to grow on volume, supported by new products and increased Flatout sales.

• In H1 FY17, foodservice volume growth from continuing customers is expected to be largely offset by lower pricing and customer rationalization.

• Material costs are expected to be modestly favorable in H1 FY17, mainly from lower egg costs, then more neutral in H2.

• Planned FY17 capital spending is $20–22M, with cash from operations expected to fund capital needs.