# Marzetti Co: Form 10-Q for the period ended Dec 31, 2024

- Company: [Marzetti Co](/companies/mzti.md) (CIK 57515)
- Form: 10-Q
- Filed: 2025-02-04
- Accepted by EDGAR: Feb 4, 2025, 07:46 ET
- Period: 2024-12-31
- Accession: 0000057515-25-000005
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/57515/000005751525000005/lanc-20241231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/57515/000005751525000005/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-10-01 to 2024-12-31 | $509.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-07-01 to 2024-12-31 | $975.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-10-01 to 2024-12-31 | $376.5m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-07-01 to 2024-12-31 | $732.3m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-10-01 to 2024-12-31 | $132.8m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-07-01 to 2024-12-31 | $243.6m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-10-01 to 2024-12-31 | $57.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-07-01 to 2024-12-31 | $112.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-10-01 to 2024-12-31 | $75.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-07-01 to 2024-12-31 | $131.5m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-10-01 to 2024-12-31 | $14.2m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-07-01 to 2024-12-31 | $27.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-10-01 to 2024-12-31 | $49.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-07-01 to 2024-12-31 | $93.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-10-01 to 2024-12-31 | $1.78 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-07-01 to 2024-12-31 | $3.40 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-10-01 to 2024-12-31 | $1.78 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-07-01 to 2024-12-31 | $3.40 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-10-01 to 2024-12-31 | 27,495,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-07-01 to 2024-12-31 | 27,487,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-07-01 to 2024-12-31 | $127.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-07-01 to 2024-12-31 | $28.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-07-01 to 2024-12-31 | $51.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2024-07-01 to 2024-12-31 | $1.4m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-12-31 | $203.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-12-31 | $481.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-12-31 | $1.24bn | us-gaap:Assets |
| Current liabilities | at 2024-12-31 | $167.3m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2024-12-31 | $979.9m | us-gaap:StockholdersEquity |
| Shares outstanding | at 2025-01-10 | 27,572,000 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 32,041 characters.

*Our fiscal year begins on July 1 and ends on June 30. Unless otherwise noted, references to “year” pertain to our fiscal year; for example, 2025 refers to fiscal 2025, which is the period from July 1, 2024 to June 30, 2025.*

*The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto, all included elsewhere in this report, and our 2024 Annual Report on Form 10-K. The forward-looking statements in this section and other parts of this report involve risks, uncertainties and other factors, including statements regarding our plans, objectives, goals, strategies, and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements due to these factors. For more information, see the section below entitled “Forward-Looking Statements.”*

### OVERVIEW

### Business Overview

Lancaster Colony Corporation is a manufacturer and marketer of specialty food products for the retail and foodservice channels.

Our financial results are presented as two reportable segments: Retail and Foodservice. Costs that are directly attributable to either Retail or Foodservice are charged directly to the appropriate segment. Costs that are deemed to be indirect, excluding corporate expenses and other unusual significant transactions, are allocated to the two reportable segments using a reasonable methodology that is consistently applied.

Over 95% of our products are sold in the United States. Foreign operations and export sales have not been significant in the past and are not expected to be significant in the future based upon existing operations. We do not have any fixed assets located outside of the United States.

Our business has the potential to achieve future growth in sales and profitability due to attributes such as:

- leading Retail market positions in several product categories with a high-quality perception;
- recognized innovation in Retail products;
- a broad customer base in both Retail and Foodservice accounts;
- well-regarded culinary expertise among Foodservice customers;
- long-standing Foodservice customer relationships that help to support strategic licensing opportunities in Retail;
- demonstrated success with strategic licensing programs in Retail through both new and established relationships in the foodservice industry;
- recognized leadership in Foodservice product development;
- experience in integrating complementary business acquisitions; and
- historically strong cash flow generation that supports growth opportunities.

Our goal is to grow both Retail and Foodservice segment sales over time by:

- introducing new products and expanding distribution;
- leveraging the strength of our Retail brands to increase current product sales;
- expanding Retail growth through strategic licensing agreements;
- continuing to rely upon the strength of our reputation in Foodservice product development and quality; and
- acquiring complementary businesses.

With respect to long-term growth, we continually evaluate the future opportunities and needs for our business specific to our plant infrastructure, IT platforms and other initiatives to support and strengthen our operations. Recent examples of resulting investments include:

- a significant capacity expansion project for our Marzetti dressing and sauce facility in Horse Cave, Kentucky that reached substantial completion in March 2023; and
- our enterprise resource planning system (“ERP”) project and related initiatives, Project Ascent, that reached completion of the implementation phase in August 2023.

Project Ascent entailed the replacement of our primary customer and manufacturing transactional systems, warehousing systems, and financial systems with an integrated SAP S/4HANA system. Implementation of this system began in July 2022 and continued throughout fiscal 2023. Customer fulfillment levels remained strong before and after the initial system cutover with no unplanned disruptions in receiving orders, producing products or shipping orders. During fiscal 2023, we progressed through our ERP implementation with no major disruptions. We completed the final wave of the implementation phase in August 2023 as planned and have shifted our focus towards leveraging the capabilities of our new ERP system.

### RESULTS OF CONSOLIDATED OPERATIONS

*(Dollars in thousands, except per share data)*

| 2024 | Three Months Ended December 31, 2023 |  | Change | 2024 | Six Months Ended December 31, 2023 |  | Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net Sales | **$509,301** | $485,916 | **$23,385** | **4.8%** | **$975,859** | $947,488 | **$28,371** | **3.0%** |
| Cost of Sales | **376,533** | 364,448 | **12,085** | **3.3%** | **732,267** | 717,298 | **14,969** | **2.1%** |
| Gross Profit | **132,768** | 121,468 | **11,300** | **9.3%** | **243,592** | 230,190 | **13,402** | **5.8%** |
| Gross Margin | **26.1%** | 25.0% |  |  | **25.0%** | 24.3% |  |  |
| Selling, General and Administrative Expenses | **57,107** | 55,714 | **1,393** | **2.5%** | **112,067** | 107,661 | **4,406** | **4.1%** |
| Operating Income | **75,661** | 65,754 | **9,907** | **15.1%** | **131,525** | 122,529 | **8,996** | **7.3%** |
| Operating Margin | **14.9%** | 13.5% |  |  | **13.5%** | 12.9% |  |  |
| Pension Settlement Charge | **(13,968)** | — | **(13,968)** | **N/M** | **(13,968)** | — | **(13,968)** | **N/M** |
| Other, Net | **1,541** | 1,425 | **116** | **8.1%** | **3,560** | 2,282 | **1,278** | **56.0%** |
| Income Before Income Taxes | **63,234** | 67,179 | **(3,945)** | **(5.9)%** | **121,117** | 124,811 | **(3,694)** | **(3.0)%** |
| Taxes Based on Income | **14,241** | 15,695 | **(1,454)** | **(9.3)%** | **27,423** | 29,376 | **(1,953)** | **(6.6)%** |
| Effective Tax Rate | **22.5%** | 23.4% |  |  | **22.6%** | 23.5% |  |  |
| Net Income | **$48,993** | $51,484 | **$(2,491)** | **(4.8)%** | **$93,694** | $95,435 | **$(1,741)** | **(1.8)%** |
| Diluted Net Income Per Common Share | **$1.78** | $1.87 | **$(0.09)** | **(4.8)%** | **$3.40** | $3.47 | **$(0.07)** | **(2.0)%** |

### Net Sales

Consolidated net sales for the three months ended December 31, 2024 increased 4.8% to a second quarter record $509.3 million versus $485.9 million last year, reflecting higher net sales for both the Retail and Foodservice segments driven primarily by volume gains. Year-over-year comparisons for the Retail segment were unfavorably impacted by prior-year sales attributed to the perimeter-of-the-store bakery product lines we exited in March 2024. Breaking down the 4.8% increase in consolidated net sales, higher core volumes and product mix contributed approximately 580 basis points, as partially offset by approximately 110 basis points attributed to the perimeter-of-the-store bakery product lines we exited. The remaining impact was net pricing. Consolidated sales volumes, measured in pounds shipped, increased 3.3% for the three months ended December 31, 2024. Excluding the impact of all sales attributed to the perimeter-of-the-store bakery product lines, consolidated sales volumes increased 3.8%.

Consolidated net sales for the six months ended December 31, 2024 increased 3.0% to $975.9 million versus $947.5 million last year, reflecting higher net sales for both the Retail and Foodservice segments driven primarily by volume gains. As noted above, year-over-year comparisons for the Retail segment were unfavorably impacted by prior-year sales attributed to the perimeter-of-the-store bakery product lines we exited in March 2024. Breaking down the 3.0% increase in consolidated net sales, higher core volumes and product mix contributed approximately 470 basis points, as partially offset by approximately 120 basis points attributed to the perimeter-of-the-store bakery product lines we exited. The remaining impact was net pricing, including a higher level of trade spending in Retail. Consolidated sales volumes, measured in pounds shipped, increased 2.7% for the six months ended December 31, 2024. Excluding the impact of all sales attributed to the perimeter-of-the-store bakery product lines, consolidated sales volumes increased 3.3%.

See discussion of net sales by segment following the discussion of “Earnings Per Share” below.

### Gross Profit

Consolidated gross profit for the three months ended December 31, 2024 increased $11.3 million to a second quarter record $132.8 million driven by the higher sales volumes and more favorable sales mix, the positive impacts of our ongoing cost savings initiatives and some modest cost deflation.

Consolidated gross profit for the six months ended December 31, 2024 increased $13.4 million to $243.6 million driven by volume growth, the positive impacts of our cost savings programs and some modest cost deflation.

### Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses for the three months ended December 31, 2024 increased 2.5% to $57.1 million compared to $55.7 million in the prior-year period. This increase reflects $1.6 million in incremental expenditures attributed to our planned acquisition of an Atlanta-based sauce and dressing production facility in addition to increased investments in personnel and IT, as partially offset by reduced brokerage costs and prior-year expenses for Project Ascent.

SG&A expenses for the six months ended December 31, 2024 increased 4.1% to $112.1 million compared to $107.7 million in the prior year. This increase reflects higher expenditures to support the continued growth of our business, including investments in personnel and IT, in addition to costs related to the planned Atlanta plant acquisition and higher legal costs, as partially offset by prior-year expenses for Project Ascent and reduced brokerage costs.

Expenses attributed to Project Ascent, our ERP initiative, were included within Corporate Expenses and classified separately through 2024. A portion of the costs classified as Project Ascent expenses represent ongoing costs that have continued subsequent to the completion of our ERP implementation in 2024. Beginning in 2025, these ongoing costs are no longer classified separately as Project Ascent expenses.

### Operating Income

*(Dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Change |  | Six Months Ended December 31, 2024 | 2023 | Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating Income - Excluding Acquisition Costs | **$77,281** | $65,754 | **$11,527** | **17.5%** | **$133,145** | $122,529 | **$10,616** | **8.7%** |
| SG&A Expenses - Acquisition Costs | **(1,620)** | — | **(1,620)** | **N/M** | **(1,620)** | — | **(1,620)** | **N/M** |
| Total Operating Income | **$75,661** | $65,754 | **$9,907** | **15.1%** | **$131,525** | $122,529 | **$8,996** | **7.3%** |

Operating income increased $9.9 million to $75.7 million for the three months ended December 31, 2024 due to the increase in gross profit, as partially offset by the higher SG&A expenses. Costs related to the planned Atlanta plant acquisition totaled $1.6 million for the three months ended December 31, 2024.

Operating income increased $9.0 million to $131.5 million for the six months ended December 31, 2024 due to the increase in gross profit, as partially offset by the higher SG&A expenses. Costs related to the planned Atlanta plant acquisition totaled $1.6 million for the six months ended December 31, 2024.

See discussion of operating results by segment following the discussion of “Earnings Per Share” below.

### Pension Settlement Charge

Prior to November 30, 2024, we sponsored multiple defined benefit pension plans that covered certain former employees under collective bargaining contracts related to closed or sold operations. All these plans were previously frozen. In August 2024, our Board of Directors approved the merger of all five pension plans and the termination of the resulting merged plan. The merged plan was terminated effective November 30, 2024. Lump sum distributions and annuity purchases from a highly rated insurance company were completed in December 2024. As a result of the pension termination, we incurred a one-time noncash settlement charge of $14.0 million for the three and six months ended December 31, 2024. See further discussion in Note 8 to the condensed consolidated financial statements.

### Taxes Based on Income

Our effective tax rate was 22.6% and 23.5% for the six months ended December 31, 2024 and 2023, respectively. For the six months ended December 31, 2024 and 2023, our effective tax rate varied from the statutory federal income tax rate as a result of the following factors:

|  | Six Months Ended December 31, 2024 | 2023 |
| --- | ---: | ---: |
| Statutory rate | **21.0%** | 21.0% |
| State and local income taxes | **1.4** | 2.3 |
| Net windfall tax benefits - stock-based compensation | **(0.1)** | — |
| Other | **0.3** | 0.2 |
| **Effective rate** | **22.6%** | 23.5% |

We include the tax consequences related to stock-based compensation within the computation of income tax expense. We may experience increased volatility to our income tax expense and resulting net income dependent upon, among other variables, the price of our common stock and the timing and volume of share-based payment award activity such as employee exercises of stock-settled stock appreciation rights, vesting of restricted stock awards and vesting of performance units. For the six months ended December 31, 2024 and 2023, the impact of net windfall tax benefits from stock-based compensation reduced our effective tax rate by 0.1% and less than 0.1%, respectively.

### Earnings Per Share

As influenced by the factors discussed above, diluted net income per share for the second quarter of 2025 totaled $1.78, as compared to $1.87 per diluted share in the prior year. For the three months ended December 31, 2024, the pension settlement charge reduced diluted earnings per share by $0.39 and costs related to the planned Atlanta plant acquisition reduced diluted earnings per share by $0.05. For the three months ended December 31, 2023, expenditures for Project Ascent reduced diluted earnings per share by $0.06.

For the six months ended December 31, 2024, diluted net income per share totaled $3.40, as compared to $3.47 per diluted share in the prior year. For the six months ended December 31, 2024, the pension settlement charge reduced diluted earnings per share by $0.39 and costs related to the planned Atlanta plant acquisition reduced diluted earnings per share by $0.05. For the six months ended December 31, 2023, expenditures for Project Ascent reduced diluted earnings per share by $0.16.

Diluted weighted average common shares outstanding have remained relatively stable for the current and prior-year periods ended December 31.

### RESULTS OF OPERATIONS - SEGMENTS

### Retail Segment

*(Dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Change |  | Six Months Ended December 31, 2024 | 2023 | Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net Sales** | **$280,752** | $263,992 | **$16,760** | **6.3%** | **$520,323** | $506,176 | **$14,147** | **2.8%** |
| **Operating Income** | **$69,037** | $59,521 | **$9,516** | **16.0%** | **$125,212** | $112,645 | **$12,567** | **11.2%** |
| **Operating Margin** | **24.6%** | 22.5% |  |  | **24.1%** | 22.3% |  |  |

For the three months ended December 31, 2024, Retail segment net sales increased 6.3% to $280.8 million from the prior-year total of $264.0 million. The increase in Retail segment net sales reflects higher sales volumes resulting from growth in both our licensing program and our own brands. Year-over-year comparisons for the Retail segment were unfavorably impacted by prior-year sales attributed to the perimeter-of-the-store bakery product lines we exited in March 2024. Excluding the perimeter-of-the-store bakery product lines we exited, Retail net sales increased 8.4%. Key contributors to the increase in Retail segment net sales included our licensing program, most notably our recently introduced Texas Roadhouse® dinner rolls, as well as Buffalo Wild Wings® sauces, Subway® sauces and Olive Garden® dressings. Our Marzetti® brand caramel dips and refrigerated dressings also helped drive the increase in Retail net sales. Retail segment sales volumes, measured in pounds shipped, increased 6.0%. Excluding the impact of all sales attributed to our perimeter-of-the-store bakery product lines, Retail sales volumes increased 7.4%.

For the six months ended December 31, 2024, Retail segment net sales increased 2.8% to $520.3 million compared to the prior-year total of $506.2 million. The increase in Retail segment net sales reflects higher sales volumes. Year-over-year comparisons for the Retail segment were unfavorably impacted by prior-year sales attributed to the perimeter-of-the-store bakery product lines we exited in March 2024. Excluding the perimeter-of-the-store bakery product lines we exited, Retail net sales increased 5.1%. Retail segment net sales growth was driven by our licensing program led by Texas Roadhouse® dinner rolls, Subway® sauces and Buffalo Wild Wings® sauces. Our Marzetti® brand caramel dips and refrigerated dressings, in addition to our recently introduced gluten-free New York BRAND® Bakery frozen garlic bread, also added to the growth in Retail net sales. Retail segment sales volumes, measured in pounds shipped, increased 3.3%. Excluding the impact of all sales attributed to our perimeter-of-the-store bakery product lines, Retail sales volumes increased 4.8%.

For the three months ended December 31, 2024, Retail segment operating income increased 16.0% to $69.0 million due to the higher sales volume and more favorable sales mix, our cost savings programs and some modest cost deflation.

For the six months ended December 31, 2024, Retail segment operating income increased 11.2% to $125.2 million due to the higher sales volume and more favorable sales mix, our cost savings programs and some modest cost deflation.

### Foodservice Segment

*(Dollars in thousands)*

|  | Three Months Ended December 31, 2024 | 2023 | Change |  | Six Months Ended December 31, 2024 | 2023 | Change |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net Sales** | **$228,549** | $221,924 | **$6,625** | **3.0%** | **$455,536** | $441,312 | **$14,224** | **3.2%** |
| **Operating Income** | **$30,324** | $27,145 | **$3,179** | **11.7%** | **$54,633** | $53,778 | **$855** | **1.6%** |
| **Operating Margin** | **13.3%** | 12.2% |  |  | **12.0%** | 12.2% |  |  |

18

For the three months ended December 31, 2024, Foodservice segment net sales grew 3.0% to $228.5 million compared to $221.9 million in the prior-year period driven by increased demand from several of our national chain restaurant account customers and growth for our Marzetti® branded Foodservice products. Foodservice segment sales volumes, measured in pounds shipped, increased 1.5%.

For the six months ended December 31, 2024, Foodservice segment net sales increased 3.2% to $455.5 million from the prior-year total of $441.3 million driven by increased demand from several of our national chain restaurant account customers and growth for our Marzetti® branded Foodservice products. Foodservice segment sales volumes, measured in pounds shipped, increased 2.3%.

For the three months ended December 31, 2024, Foodservice segment operating income increased 11.7% to $30.3 million driven by our cost savings programs, the beneficial impact of the higher sales volumes and some modest cost deflation, as partially offset by higher supply chain costs.

For the six months ended December 31, 2024, Foodservice segment operating income increased 1.6% to $54.6 million driven by the beneficial impact of the higher sales volumes and modest cost deflation, as partially offset by higher supply chain costs and investments in customer programs.

### Corporate Expenses

For the three months ended December 31, 2024 and 2023, corporate expenses totaled $23.7 million and $20.9 million, respectively. This increase primarily reflects investments in personnel and costs related to the planned Atlanta plant acquisition.

For the six months ended December 31, 2024 and 2023, corporate expenses totaled $48.3 million and $43.9 million, respectively. This increase primarily reflects investments in personnel, costs related to the planned Atlanta plant acquisition and higher legal expenses.

### LOOKING FORWARD

Looking forward to our fiscal third quarter and the remainder of our fiscal year, we project Retail sales will continue to benefit from our expanding licensing program and growth from investments in innovation for our own brands such as New York BRAND® Bakery. In the Foodservice segment, we anticipate continued volume growth from select customers in our mix of national chain restaurant accounts. With respect to our input costs, in aggregate we do not foresee significant impacts from commodity cost inflation or deflation.

We also look forward to completing the asset purchase transaction for the Atlanta-based sauce and dressing production facility during our fiscal third quarter as an important strategic addition to our manufacturing network. This facility will benefit our core sauce and dressing operations through improved operational efficiency, incremental capacity, and closer proximity to certain core customers while enhancing our manufacturing network from a business continuity standpoint.

We will continue to periodically reassess our allocation of capital to ensure that we maintain adequate operating flexibility while providing appropriate levels of cash returns to our shareholders.

### FINANCIAL CONDITION

### Cash Flows

For the six months ended December 31, 2024, net cash provided by operating activities totaled $127.5 million, as compared to $141.5 million in the prior-year period. This decrease was primarily due to the year-over-year changes in net working capital, particularly accounts receivable and accounts payable, as partially offset by inventories. The accounts receivable impact related to a large decline in the prior-year period due to the timing of sales and customer payments. The current-year period reflected the unfavorable cash flow impact of lower accounts payable as impacted by the timing of payments. These fluctuations were partially offset by the favorable cash flow impact of a decline in inventories due to lower levels of finished goods on-hand at December 31, 2024. Excluding the current-year noncash pension settlement charge, higher net income also provided a partial offset to the unfavorable working capital changes.

Cash used in investing activities for the six months ended December 31, 2024 was $32.7 million, as compared to $40.2 million in the prior year. This decrease primarily reflects a lower level of payments for property additions in the current year.

Cash used in financing activities for the six months ended December 31, 2024 of $55.2 million decreased from the prior-year total of $55.9 million. This decrease reflects lower levels of share repurchases, as partially offset by higher levels of dividend payments and tax withholdings for stock-based compensation.

### Liquidity and Capital Resources

Under our unsecured revolving credit facility (“Facility”), we may borrow up to a maximum of $150 million at any one time. We had no borrowings outstanding under the Facility at December 31, 2024. At December 31, 2024, we had $2.6 million of standby letters of credit outstanding, which reduced the amount available for borrowing under the Facility. The Facility expires in March 2029, and all outstanding amounts are then due and payable. Interest is variable based upon formulas tied to SOFR or an alternate base rate defined in the Facility. We must also pay facility fees that are tied to our then-applicable consolidated leverage ratio. Loans may be used for general corporate purposes. Due to the nature of its terms, when we have outstanding borrowings under the Facility, they will be classified as long-term debt.

The Facility contains certain restrictive covenants, including limitations on liens, asset sales and acquisitions, and financial covenants relating to interest coverage and leverage. At December 31, 2024, we were in compliance with all applicable provisions and covenants of this facility, and we exceeded the requirements of the financial covenants by substantial margins. At December 31, 2024, there were no events that would constitute a default under this facility.

We currently expect to remain in compliance with the Facility’s covenants for the foreseeable future. However, a default under the Facility could accelerate the repayment of any then outstanding indebtedness and limit our access to $75 million of additional credit available under the Facility. Such an event could require a reduction in or curtailment of cash dividends or share repurchases, reduce or delay beneficial expansion or investment plans, or otherwise impact our ability to meet our obligations when due.

On November 18, 2024, we entered into a purchase agreement to acquire a sauce and dressing production facility and related real estate in the Atlanta, Georgia area along with certain equipment and assets contained in the facility for a purchase price of $75 million in cash, subject to closing adjustments. We intend to pay the purchase price with cash on hand. The transaction is expected to close during our fiscal third quarter ending March 31, 2025.

We believe that cash provided by operating activities and our existing balances in cash and equivalents, in addition to that available under the Facility, should be adequate to meet our liquidity needs over the next 12 months, including the projected levels of capital expenditures, dividend payments and the acquisition discussed above. If we were to borrow outside of the Facility under current market terms, our average interest rate may increase and have an adverse effect on our results of operations. Based on our current plans and expectations, we believe our capital expenditures for 2025 could total between $70 and $80 million.

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

We have various contractual and other obligations that are appropriately recorded as liabilities in our condensed consolidated financial statements. Certain other contractual obligations are not recognized as liabilities in our condensed consolidated financial statements. Examples of such obligations are commitments to purchase raw materials or packaging inventory that has not yet been received as of December 31, 2024, the planned Atlanta plant acquisition discussed above, and purchase orders and longer-term purchase arrangements related to the procurement of services, including IT service agreements, and property, plant and equipment. The majority of these obligations is expected to be due within one year.

### CRITICAL ACCOUNTING POLICIES

There have been no changes in critical accounting policies from those policies disclosed in our 2024 Annual Report on Form 10-K.

### RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements and their impact on our consolidated financial statements are disclosed in Note 1 to the condensed consolidated financial statements.

### FORWARD-LOOKING STATEMENTS

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). This Quarterly Report on Form 10-Q contains various “forward-looking statements” within the meaning of the PSLRA and other applicable securities laws. Such statements can be identified by the use of the forward-looking words “anticipate,” “estimate,” “project,” “believe,” “intend,” “plan,” “expect,” “hope” or similar words. These statements discuss future expectations; contain projections regarding future developments, operations or financial conditions; or state other forward-looking information. Such statements are based upon assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results to differ materially from those expressed in the forward-looking statements. Actual results may differ as a result of factors over which we have no, or limited, control including, without limitation, the specific influences outlined below. Management believes these forward-looking statements to be reasonable; however, one should not place undue reliance on such statements that are based on current expectations. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law.

Items which could impact these forward-looking statements include, but are not limited to:

- efficiencies in plant operations and our overall supply chain network;
- the extent to which good-fitting business acquisitions are identified, acceptably integrated, and achieve operational and financial performance objectives;
- price and product competition;
- changes in demand for our products, which may result from changes in consumer behavior or loss of brand reputation or customer goodwill;
- the impact of customer store brands on our branded retail volumes;
- the impact of any regulatory matters affecting our food business, including any additional requirements imposed by the FDA or any state or local government;
- adequate supply of labor for our manufacturing facilities;
- stability of labor relations;
- adverse changes in freight, energy or other costs of producing, distributing or transporting our products;
- the reaction of customers or consumers to pricing actions we take to offset inflationary costs;
- inflationary pressures resulting in higher input costs;
- fluctuations in the cost and availability of ingredients and packaging;
- capacity constraints that may affect our ability to meet demand or may increase our costs;
- dependence on contract manufacturers, distributors and freight transporters, including their operational capacity and financial strength in continuing to support our business;
- dependence on key personnel and changes in key personnel;
- cyber-security incidents, information technology disruptions, and data breaches;
- the potential for loss of larger programs or key customer relationships;
- failure to maintain or renew license agreements;
- geopolitical events that could create unforeseen business disruptions and impact the cost or availability of raw materials and energy;
- the possible occurrence of product recalls or other defective or mislabeled product costs;
- the success and cost of new product development efforts;
- the lack of market acceptance of new products;
- the effect of consolidation of customers within key market channels;
- maintenance of competitive position with respect to other manufacturers;
- the outcome of any litigation or arbitration;
- significant shifts in consumer demand and disruptions to our employees, communities, customers, supply chains, production planning, operations, and production processes resulting from the impacts of epidemics, pandemics or similar widespread public health concerns and disease outbreaks;
- changes in estimates in critical accounting judgments; and
- certain other factors, including the information disclosed in our discussion of risk factors under Item 1A of our 2024 Annual Report on Form 10-K.

## Controls and procedures

As filed, 1,404 characters.

(a) *Evaluation of Disclosure Controls and Procedures.* As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024 to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is 1) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and 2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

(b) *Changes in Internal Control Over Financial Reporting.* No changes were made to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Filed Feb 4, 2025.
Source: SEC EDGAR, the filing index for accession 0000057515-25-000005. Last ingested by Listed: Nov 4, 2026, 14:58 ET. No prices; not investment advice.