Good day, everyone, and welcome to The Marzetti Company Annual Meeting. Our host for today's call is Chairman Alan Harris. Now I'll turn the call over to your host. Alan, please go ahead.
The 2025 Annual Meeting of Shareholders of The Marzetti Company will please come to order. I'm Alan Harris, Chairman of The Marzetti Company, and I'm pleased to welcome you to our virtual annual meeting. Our shareholders are attending through the designated web portal today, hosted by our transfer agent, Broadridge. The rules of conduct for participating today were posted on the company's website on November 11, 2025. As always, following the agreement of our formal business today, we will try to answer any questions submitted through the portal pursuant to the rules posted on our website.
Please note that recording of this annual meeting, including any screenshots, is strictly prohibited. As is our custom, I'd like to introduce to the shareholders those of our officers and directors who are with us today: Zena Srivatsa Arnold, Barbara L. Brasier, David A. Ciesinski, Robert L. Fox, Elliot K. Fullen, John B. Gerlach Jr., Michael H. Keown, George F. Knight III, and Robert P. Ostryniec. I'd also like to introduce Thomas Pigott, Chief Financial Officer, Matt Shurte, Secretary and General Counsel, and Dale Ganobsik, Vice President and Treasurer. Welcome also to Elena Cilenti from our independent auditor, Deloitte & Touche.
The company has received affidavits executed by our mailing agents certifying that notice of this meeting has duly been given and was mailed on or about October 20th, 2025, to all shareholders of record as of September 22nd, 2025, the record date for voting at this meeting. We're advised by Broadridge Financial Solutions that the corporation had 27,547,758 common shares outstanding and entitled to vote as of the record date. Matthew Shurte and Jim Raitt of American Election Services will serve as inspectors of election and tellers for the purpose of undertaking any tabulation that may be necessary in connection with counting shareholder votes. May I have a report on the presence of a quorum?
Thank you, Mr. Chairman. I report that more than a majority of the outstanding shares entitled to vote are present in person or by proxy at this meeting. We have a quorum.
Thank you. On the basis of these reports, I find that proper notice of the meeting has been given and a quorum is present. If you're a shareholder who has not previously submitted a proxy, or if you wish to revoke your proxy by voting during this meeting, you may do so by submitting your vote through the designated web portal as explained in the rules of conduct for this meeting. We're now ready to transact business. The first order of business before the shareholders today is the election of four directors to serve until the 2028 annual meeting and until their successors are duly elected and qualified.
The board has nominated Barbara L. Brasier, David A. Ciesinski, Elliot K. Fullen, and Alan F. Harris following recommendation by the Nominating and Governance Committee. The second order of business before the shareholders is the non-binding approval of the compensation of our named executive officers. The board and the compensation committee recommend a vote in favor of this proposal. The third order of business before shareholders is the approval of The Marzetti Company 2025 Omnibus Incentive Plan.
The purpose of the Omnibus Plan is to promote the achievement of both short-term and long-term objectives of the company by aligning the compensation of its participating employees with the company's shareholders, enhancing the interest of participating employees in the growth and success of the company, and attracting and retaining employees of outstanding competence and ability. The board and compensation committee recommend a vote in favor of this proposal. The fourth order of business before shareholders is the ratification of Deloitte & Touche LLP as the corporation's independent registered public accounting firm for our fiscal year ending June 30th, 2026.
The board and the audit committee recommend a vote in favor of this proposal. The polls are now open. Any shareholder who hasn't yet voted or wishes to change their vote may do so by submitting your vote through the designated web portal as explained in the rules of conduct for this meeting. Any questions about matters in the agenda being voted on may also be submitted via the meeting web portal. We'll wait a moment now for voting and questions. Now that all shareholders have had the opportunity to vote and submit questions, I declare the polls closed.
At this time, I would like to ask the Secretary to report the preliminary results of the matters voted upon today.
I hereby report that based upon our preliminary results, the nominees have been elected to the board of directors, the compensation of our named executive officers has been approved, The Marzetti Company 2025 Omnibus Incentive Plan was approved, and our independent auditor has been ratified.
Thank you, Matt. The inspectors of election will furnish the company with a written report of the final count, which will be included in our minutes and made available publicly on a current report filed with the Securities and Exchange Commission and available on our website. As mentioned earlier, we have present with us today representatives of our independent auditor, Deloitte & Touche. If you have any questions for them, please submit those questions through the portal at this time.
Mr. Chairman, we have no questions related to our business of the annual meeting.
As we have no questions, this concludes the formal business for our annual meeting, and so this meeting is now officially adjourned. I'd like to move to the second part, and I'd like to say, firstly, on behalf of all of the shareholders, I'd like to thank all of the employees of The Marzetti Company for their dedication to this business. The efforts that they make every day are very much appreciated and do make a real difference. I'm happy to report that the board of directors has approved an increase in our quarterly dividend rate to $1 per share, effective with the dividend payable on December 31st, 2025.
This will mark the company's 63rd consecutive year of an increase in our annual dividend. We continue to support a growing cash dividend as an important part of our total return to shareholders.
With that, I'd now like to ask Dave Ciesinski to share his comments on the business, and I would very much like to acknowledge and thank him for his commitment and continued strong leadership.
Thank you, Alan, and good afternoon, everyone. It's a pleasure to be here with you today. On June 27th, 2025, we officially changed our name to The Marzetti Company. While Lancaster Colony will always be a proud part of our heritage, The Marzetti name more clearly communicates who we are today: a manufacturer-marketer of high-quality, consumer-relevant specialty foods. Choosing The Marzetti Company as our name pays homage not only to Teresa Marzetti but her other founders, the sauce makers, the bread bakers who created our delicious products, as well as the visionary leaders such as the Gerlachs who founded this company and identified the small family businesses that have grown into the cornerstones of The Marzetti Company.
Accordingly, the theme of this year's annual report is, "We Win with People." This is a nod to legendary Ohio State football coach Woody Hayes' motto and the title of his 1973 biography, "You Win with People." In addition to calling Columbus home, Ohio State football and The Marzetti Company have this in common: our success is not possible without the individual and collective efforts of our teammates. The growth of this company is thanks to the people: those who had the vision for a specialty food company, those who made salad dressing at the original restaurant, those who bake rolls using their grandmother's recipe, and those who work in our offices, kitchens, and factories today. We Win with People.
Turning to the business, for the fiscal year ended June 30th, 2025, consolidated net sales increased 2% to a record high of $1.9 billion, driven by volume gains with both retail and food service segments reporting higher net sales. Retail segment net sales reached a record $1 billion, up 1.5% from fiscal year 2024, on the strength of our licensing program led by Texas Roadhouse Mini Rolls, Chick-fil-A sauces, and Subway sauces, along with the continued growth of New York Bakery frozen garlic bread products. Food service net sales rose 2.5% to a record $905.7 million, thanks to the increased demand from several national chain restaurant customers and volume growth for our Marzetti branded food service products.
Food service net sales also benefited from $14.2 million in sales attributed to a temporary supply agreement with the seller of the Atlanta-based sauce and dressing production facility that we acquired in February of 2025. This facility is an important strategic addition to our manufacturing network, benefiting our operations through improved efficiency, incremental capacity, closer proximity to core customers, and enhanced business continuity. Consolidated gross profit increased 5.4% to $455.6 million, compared to $432.3 million in fiscal year 2024. The increase in gross profit was driven by the positive impacts of our cost savings programs, the higher sales volumes, and some modest cost deflation. Operating income increased 10.5% to $220.3 million due primarily to the increase in gross profit and lower restructuring and impairment charges. Additionally, our team continued to perform well in the important areas of employee safety, food safety, and food quality.
As we look ahead, The Marzetti Company will continue to leverage the combined strength of our team, our operating strategy, and our balance sheet in support of the three pillars of our growth plan: to number one, accelerate core business growth; number two, to simplify our supply chain, reduce our cost, and grow our margins; and number three, to expand our core with focus M&A and strategic licensing. In fiscal year 2026, we anticipate retail sales will continue to benefit from volume growth with contributions from both our licensing program and our core Marzetti, New York Bakery, and Sister Schubert brands. Texas Roadhouse Mini Rolls began shipping nationally to all major retailers this past August, and we have new items planned for our core brands that we'll launch throughout the year ahead.
In the food service segment, we expect sales to be supported by the growth from select QSR customers in our mix of national chain restaurant accounts. Our culinary team continues to provide our food service partners with a wide range of innovation initiatives and craveable flavors to help them drive menu excitement and traffic growth. We continue to monitor external factors, including U.S. economic performance and consumer behavior, that may impact the demand for our products. We anticipate a modest level of cost inflation in 2026, which we plan to offset through contractual pricing and our cost savings programs as we remain focused on continued margin improvement in the year ahead. We also look forward to continuing to incorporate the newly acquired Atlanta-based sauce and dressing plant into our manufacturing network.
When combined with the recent closure of our sauce and dressing facility in Milpitas, California, we believe our supply chain is well positioned to cost-effectively support the growth of our key customers in fiscal year 2026 and beyond. I would like to take this opportunity to thank the entire Marzetti team for their commitment to our business. We Win with People, and we are fortunate to have this incredible talent dedicated to nourishing our growth and helping us win. I look forward to updating you on our progress throughout the year. Mr. Chairman?
Thank you, Dave. That concludes today's meeting. I'd like to thank you for joining us today. I'd like to take the opportunity to wish everybody a very happy Thanksgiving holiday.
That concludes our meeting today. You may now disconnect.