NTG Nordic Transport Group publishes interim report for H1 2025
NTG Nordic Transport Group publishes interim report for H1 2025 The interim report for H1 2025 is enclosed.
In connection with publication of the results for H1 2025, a conference call will be hosted on 12 August 2025 at 10:00 AM CEST. The conference call will be held in English and can be followed live via NTG's website; investor.ntg.com.
Additional information
For additional information, please contact:
Investor relations and press:Sebastian Rosborg,Head of Investor Relations
+45 42 12 80 99 Sebastian.rosborg@ntg.com ir@ntg.com|press@ntg.com
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NTG Interim Report H1 2025
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Company announcement no. 9 2025
NTG Interim Report H1 2025
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Hovnanian (HOV) Q3 2025 Earnings Call Transcript
Image source: The Motley Fool. Date Thursday, Aug. 21, 2025 at 11:00 a.m. ET Call participants Chairman, President, and Chief Executive Officer — Ara Hovnanian Chief Financial Officer — Brad O'Connor Vice President, Corporate Controller — David Mitrisin Vice President, Finance and Treasurer — Paul Everly Investor Relations — Jeff O'Keefe Need a quote from a Motley Fool analyst? Email pr@ Full Conference Call Transcript Jeff O'Keefe: Thank you, Michelle, and thank you all for participating in this morning's call to review the results for our third quarter. All statements in this conference call that are not historical facts should be considered as forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements of the company to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such forward-looking statements include, but are not limited to, statements related to the company's goals and expectations with respect to its financial results for future financial periods. Although we believe that our plans, intentions, and expectations reflected and are suggested by such forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations will be achieved. By their nature, forward-looking statements speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties, and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties, and other factors are described in detail in the sections entitled risk factors in management's discussion and analysis, particularly the portion of MD&A entitled safe harbor statement in our annual report on Form 10-K for the fiscal year ended 10/31/2024 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable security laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or change of circumstances, or any other reason. Joining me today on the call are Ara Hovnanian, chairman and president and CEO; Brad O'Connor, chief financial officer; David Mitrisin, vice president corporate controller; and Paul Everly, vice president finance and treasurer. Ara, you can go ahead. Ara Hovnanian: Thanks, Jeff. I'm going to review our third quarter results and I'll also comment on the current housing environment. Brad will follow me with more details as usual, and, of course, we'll open it up to Q&A afterwards. Let me begin on slide five. Here, we show our third quarter guidance compared to our actual results. Given all of the political and economic uncertainty that was present throughout the quarter, we're pleased that we met or exceeded the guidance we provided for all of the metrics. Starting at the top of the slide, revenues were $801 million, which was right at the midpoint of our guidance. Our adjusted gross margin was 17.3% for the quarter, which was just below the midpoint of the guidance range. Our SG&A ratio was 11.3%, which was better than the midpoint of our guidance. Our income from unconsolidated joint ventures was $16 million, which was within the guidance range although on the lower end. Adjusted EBITDA was $77 million for the quarter, which was above the high end of the guidance range. And finally, our adjusted pretax income was $40 million, which was at the very top of our guidance range. While this is adjusted pretax income, which excludes land charges, we did have higher walkaway costs and impairment charges during this year's third quarter. The majority of the impairments were in the West segment and were related to communities where we also walked away from land that didn't meet our return thresholds. Again, given the challenging operating environment, we're satisfied that we are able to meet or exceed the guidance we provided. On slide six, we show our third quarter results compared to last year's third quarter. Keep in mind that last year's third quarter was particularly strong partly because it contained $46 million from a gain on consolidation of a joint venture. As Brad will discuss later, we anticipate yet another gain from consolidation of a joint venture in the fourth quarter. Given the current high level of incentives, it's no surprise that adjusted gross margin and adjusted pretax profit experienced year-over-year declines. Starting in the upper left-hand portion of the slide, you can see that our total revenues increased 11% year-over-year due to an increase in deliveries. Moving across the top to adjusted gross margin, our gross margin was down year-over-year mainly due to increased incentives for affordability and also related to our focus on pace versus price and our short-term strategy of burning through low-margin lots. During this year's third quarter, incentives were 11.6% of the average sales price. The majority of this cost is related to buying down mortgage rates. This is up 390 basis points from a year ago. It's up 110 basis points from the '25 and it's up 860 basis points from fiscal year '22, which was prior to the mortgage rates spike impacting our deliveries. Other than the extraordinary cost to buy down mortgage rates to make our homes affordable today, our gross margin would be very healthy. Moving to the bottom left, you can see that our total SG&A improved 110 basis points year-over-year to 11.3%. In the bottom right-hand portion of the slide, you can see the negative impact the gross margin decline had on our year-over-year profitability. Again, while much lower than last year, it was at the top of our guidance range. Which was consistent with our focus on burning through our older vintage lots and QMIs and emphasizing sales pace over price and clearing our balance sheet for our newer land contracts, which have much higher margins. If you turn to Slide seven, you can see that contracts for the third quarter increased 1% year-over-year. Once again, there was considerable variability in monthly sales shown on slide eight. Contracts were down 4% in May, then bounced back with a 1% increase in June, and followed by a 7% increase in July. On slide nine, you can see that the most recent three months continued a trend of choppiness over the last year. If you turn to slide 10, you can see that contracts per community increased this year compared to last year's third quarter. Additionally, the 9.8 contracts per community this year's third quarter was higher than our quarterly average of 9.1 for the third quarter since 02/2008, but we didn't get back to the 97 through 02 levels that we consider to be a normal sales environment. On slide 11, we give more granularity and show the trend of monthly contracts per community compared to the same month a year ago until long-term monthly averages. Here, you can see that for the first two months of the quarter, this year's sales pace was lower than last year. This trend flipped in the month of July when we sold 3.4 homes per community compared to 3.2 homes in July '24. When you look at the most recent month compared to the monthly average since 02/2008, the last two months of the quarter were better than the long-term average. Jeff O'Keefe: Turning to slide 12. Ara Hovnanian: We show contracts per community as if we had a June 30 quarter end. This way, we can compare our results to our peers that report contracts per community on the calendar quarter end. At 9.6 contracts per community, our sales pace is the third highest among the public homebuilders. On slide 13, you can see that year-over-year contracts per community declined for all homebuilders shown on the slide that report this metric. While any decline is not desirable, we outperformed all but two of our peers. Again, this was as if our quarter ended in June so that we can compare our results to these other home companies. Our July quarter was stronger with a 3% year-over-year increase in contracts per community and the month of July was up 6% over the prior year in contracts per community. What we're trying to illustrate in these last two slides is that even though the sales pace is not what everyone had hoped for, our focus on pace over price has resulted in an above-average number of contracts per community for us compared to our peers. On slide 14, you can see that for a considerable percentage of our deliveries, our homebuyers continued to utilize mortgage rate buy downs. The percentage of homebuyers using buy downs in this year's third quarter was 75%. The buy down usage in our deliveries indicates that buyers continue to rely on these rate buy downs to combat affordability at the current mortgage rates. Given the persistently high mortgage rate environment, we assume buy downs will remain at similar levels going forward. In order to meet homebuyers' needs from lower mortgage rates and certainty, we're intentionally operating at an elevated level of quick move-in homes or QMIs as we call them. Since QMIs with a delivery date in sixty to ninety days can have mortgage rates bought down and locked in a cost-efficient manner. On slide 15, we show that we had 8.2 QMIs per community at the end of the third quarter. This is the second consecutive quarter of sequential reductions in QMI per community. We are down from 9.3 in the '25 to 8.6 in the second quarter '25 to 8.2 in the third quarter. This gets us closer to our current target of about eight QMIs per community with varied delivery dates and model types. As a reminder, we define QMIs as any unsold home where we've begun framing. On slide 16, we show the decline in total QMIs from January '25 until July '25. Here, you can see that QMIs decreased from 1,163 in January to 1,073 in April and then to 1,016 in July. This is a 13% decrease from January to July. In the '25, QMI sales were 79% of our total sales. This was equal to last quarter, which was the highest quarter since we started reporting this number twelve quarters ago. Historically, that percentage was 40%, about half. So, obviously, the demand for QMIs remains high, so we're comfortable with the current level of QMIs in this environment. We ended the third quarter with 323 finished QMIs. On a per community basis, that puts us at 2.6 finished QMIs per community. Jeff O'Keefe: The focus on quick move-in homes results in more contracts Ara Hovnanian: that are signed and delivered in the same quarter. That leads to lower levels of backlog at quarter ends but a higher backlog conversion rate. During the '25, 34% of our homes delivered in the quarter were contracted in the same quarter. This obviously makes it a little more challenging when providing guidance for the next quarter. It also resulted in a high backlog conversion ratio of 84% which is significantly higher than the third quarter average backlog conversion rate of 55% going all the way back to 1998. We continue to manage our QMIs on a community level and we're highly focused on matching our QMI starts pace with our QMI sales pace. If you move to slide 17, you can see that even with higher mortgage rates, and a slower than anticipated sales pace, nationally we are still able to raise net prices in 21% of our communities during the third quarter. 71% of the communities with price increases were in Delaware, Maryland, New Jersey, South Carolina, Virginia, and West Virginia. Which are among our better-performing markets. While the sales environment has been difficult, we've been focusing on pace versus price as we have been for many quarters now. But we're still raising prices and lowering incentives when our sales pace at certain communities warranted. Economic uncertainty, high mortgage rates, affordability, and low consumer confidence have caused many consumers to delay purchasing a new home. To increase our sales pace, and make our homes affordable, we continue to offer mortgage rate buy downs. Our gross margins, ignoring the mortgage rate incentives, continue to be strong. However, offering mortgage rate buy downs is very expensive. And continues to negatively impact our gross margin at many locations. Our new lab purchases show excellent margins at current sales pace and price. And excellent IRRs even after the expensive buy downs. I'll now turn it over to Brad O'Connor, our chief financial officer. Brad O'Connor: Thank you, Ara. Turning to slide 18, you can see that we ended the quarter with a total of 146 open for sale communities, which is the same total as last year's third quarter. 124 of those communities were wholly owned. During the third quarter, we opened 25 newly new wholly owned communities and sold out of 26 wholly owned communities. Additionally, we had 22 domestic unconsolidated joint venture communities at the end of the third quarter. We closed one during the quarter. We continue to experience delays in opening new communities primarily related to utility hookups and permitting delays throughout the country, we do expect unit count will grow sequentially in the 2025. The leading indicator for further community count growth is shown on slide 19. Ended the quarter with 40,246 controlled lots, which equates to a seven-year supply of controlled lots. Our lot count increased 2% year-over-year but 36% from two years ago. If you include lots from our domestic unconsolidated joint ventures, we now control 43,343 lots. We added 3,500 lots in 30 future communities during the third quarter. Our land teams are actively engaging with land sellers negotiating for new land parcels that meet our underwriting standards, even with high incentives and the current sales pace. In fiscal '24, we began talking about our pivot to growth. This followed a stretch of several years when we had used a significant amount of cash generated to pay down debt. One interesting trend to point out about the growth on this slide, our lot options grew by more than 13,000 and our lots owned shrunk. By more than 2,400 lots as we continue to focus on our land light strategy. On the far right side of slide 20, you can see that our lot count decreased sequentially for the second quarter in a row. These recent declines are reflective of the operating environment. We are definitely being more selective with the new lots that we control during these last two quarters we also walked away from about 6,500 lots during the same two quarters, including 4,059 lots in the third quarter. Having said that, we were able to put 6,500 lots under contract in the last two quarters that met or exceeded our margin and IRR hurdle rates. Even after factoring in our current high level of incentives. On slide 21, we show our land and land development spend for each quarter going back five years. You can see for much of the time shown on this slide, how that pivot to growth impacted our land and land development spend. However, for the past two quarters, you can see decreases due to the current market environment. This is another indication of our discipline in underwriting new land acquisitions. Again, we always use current home prices, including the current high level of mortgage rate buy and other incentives, current construction costs and current sales pace to underwrite to a 20% plus internal rate of return. And then right before we are about to acquire the lots, we re-underwrite them based on the then-current conditions just to be sure that it still makes sense to go forward with the land purchase. We feel good that our new acquisitions will yield solid IRRs we are building huge incentives and a slower sales pace. Our underwriting standards automatically adjust to any changes in market conditions. We are still finding opportunities in our markets and are very focused on growing our top and bottom lines for the long term but we are not stretching to make deals work. We are being very disciplined. Thus, we would expect our land and land development spend in the fourth quarter will be significantly less than last year. On slide 22, we show the percentage of our lots controlled via option Jeff O'Keefe: increased from 46% in the third quarter of fiscal 'fifteen to 86% in the '25. This is the highest percentage of option lots we've ever had Ara Hovnanian: continuing our strategic focus on land life. Jeff O'Keefe: Turning now to Slide 23. You see that we continue to have one of the highest percentages of land controlled via option compared to our peers. Ara Hovnanian: Needless to say, with the fourth highest percentage of option loss, we are significantly above the median. On Slide 24, compared to our peers, we have the third highest inventory turnover rate. High inventory turns are a key component of our overall strategy. We believe we have opportunities to continue to increase our use of land options further improve our inventory terms in future periods. Our focus on pace versus price is evident here. Turning to slide 25. Even after spending $190 million on land and land development, we ended the third quarter with $278 million of liquidity. Which is well above our targeted liquidity range. Turning to slide 26. This slide shows our maturity ladder as of 07/31/2025. Keep in mind that during the second quarter, we paid off early the remaining $27 million of the 13.5% notes, our highest cost debt. Was scheduled to mature in February 2026. This is the latest example of the steps we have taken over the past several years to improve our maturity ladder and reduce our interest cost. We remain committed to further strengthening our balance sheet going forward. Turning to slide 27. We show the progress we've made to date to grow our equity and reduce our debt. Starting on the upper left-hand part of the slide, we show the $1.3 billion growth in equity over the past few years. During that same time period on the upper right-hand portion, you can see that $769 million reduction in debt. On the bottom of the slide, you can see that our net debt, the net cap, at the end of the third quarter fiscal 'twenty five was 47.9%, which is a significant 146.2% at the beginning of fiscal twenty. We still have more work to do to achieve our goal of 30%, but we are comfortable that we are on a path to achieve our targets soon. Before we move on, I want to comment briefly on our interest expense for the quarter. Interest expense as a percentage of total revenues increased year-over-year in the third quarter to 4.2% compared with 4% in the prior year's third quarter despite reductions in our debt balance. This increase was predominantly due to a year-over-year increase in land banking arrangements under inventory not owned. Note that when we land bank inventory after we already purchased a lot, we must reflect the transaction as a financing showing the inventory and inventory not owned and the cash received as a liability from inventory not owned. The cost paid to the land banker in this situation is shown as interest expense. When the land banker purchases the land directly from the seller, the cost paid to the land banker is shown as part of land costs and cost of sales. The latter cases are more common approach, but sometimes we are unable to align the timing of the purchase with the land banker and therefore we own the lots for a short period of time before the land banker buys them. While land banking is more expensive than debt, downside risk is lower and more significant market downturns. Given our remaining $221 million of deferred tax assets, we will not have to pay federal income taxes on $700 million of future pretax earnings. Benefit will continue to significantly enhance our cash flow in years to come and will accelerate our growth plans. Regarding guidance, given the volatility and the difficulty in projecting margins with moving interest rates and volatility in general, we will focus our guidance only on the next quarter. Our financial guidance assumes no adverse changes in current market conditions including no further deterioration in our supply chain material increases in mortgage rates, tariffs, inflation, or cancellation rates. Our guidance assumes continued extended construction cycle times averaging five months compared to our pre-COVID cycle times for construction of approximately four months. We continue to be more reliant on QMI sales, forecasting profits becomes more difficult. We recognize that we beat pretax guidance in the first quarter and performed at the very high end of the guidance range in the second and third quarters. Notwithstanding the challenge of projecting even one quarter in the environment, we endeavor to provide guidance that we can meet and if situations are ideal, beat. Our guidance assumes continued use of mortgage rate buy downs other incentives similar to recent months. Further, it excludes any impact to SG&A expenses from our Phantom stock expense related solely to the stock price movement the $119.47 stock price at the end of the '25. Slide 28 shows our guidance for the '25 compared to actual results for the '25. Our expectation for total revenues for the fourth quarter is between $750 million and $850 million the midpoint of our total revenue guidance would be the same as the third quarter. Adjusted gross margin is expected to be in the range of 15% to 16.5%. This is lower than a typical gross margin, particularly because of the increased cost of mortgage rate buy downs and our focus on pace versus price. Expect the range of SG&A as a percentage of total revenues to be between 11-12%, which is still higher than usual. One of the reasons our SG&A is running a little high is that we are gearing up for significant community count growth, and we have to make new hires in advance of those communities. Our expectations for adjusted pretax income for the fourth quarter is between $45 million and $55 million. This would be down from last year, but up from our third quarter. This includes the expectation of other income from the consolidation of a joint venture in the fourth quarter when the partner is expected to reach their full return of all capital as prescribed in JV agreement. As a reminder, this has become a normal part of the life cycle of our joint ventures as if we had we as we have had other income from JV related transactions three times in the past nine quarters. Moving to slide 29, we show all of the guidance we gave for the fourth quarter. The only two lines on here that we have not mentioned are income from unconsolidated joint ventures, and adjusted EBITDA. We expect income from joint ventures to be between $8 million and $12 million and our guidance for adjusted EBITDA is between $77 million and $87 million. Turning to slide 30. We show that our return on equity was 19%. Over the last twelve months, we are the second highest amongst our midsize peers shown in the dark green on this slide and the fourth highest including the larger peer group. Obviously, this is helped by our higher leverage. On slide 31, we show that compared to our peers, have one of the highest adjusted EBITDA returns on investment at 22.1%. On this basis, we are the highest amongst the midsized peers and fifth highest overall. While our ROE was helped by our leverage, our adjusted EBIT return on investment is a true measure of pure homebuilding operating performance. Over the last several years, we've consistently had one of the highest ROIs and ROEs among our peers. On slide 32, we show our price to book value compared to our peers, and we are slightly higher than the median for all of the peers shown on the slide. On slide 33, we show the trailing twelve-month price to earnings ratio for us and our peer group. Based on our price to earnings multiple of 7.24 times, using Wednesday's stock price of $148.95, we are trading at a 31% discount to the homebuilding industry average PE ratio if you consider all public builders at an 18% discount when considering our midsized peers. Even though we have the highest ROI among the midsized peers. We recognize that our stock may trade at a discount to the group because of our higher leverage, our leverage has been shrinking and our equity has been growing rapidly. On slide 34, we show that despite our extremely high ROE, there are a number of peers that have a higher price to book ratio than us. This slide more visually demonstrates how much we are undervalued relative to other builders when looking at the relationship between ROE and price to book. A very similar result exists when looking at ROE to price to earnings. On slide 35, you can see an even more glaring disconnect with our high EBIT ROI. And our PE. We have the fifth highest EBIT ROI and yet our stock trades at the lowest multiple to earnings of the entire group. These last six slides further emphasize our point that given our high return on equity and return on investment, combined with our rapidly improving balance sheet, we believe our stock continues to be the most undervalued in the entire universe of public homebuilders. I'll now turn it back to Ara for some brief closing comments. Ara Hovnanian: Thanks, Brad. I want to emphasize that in this more challenging environment, we continue to work with some of our land sellers currently under option in order to find a compromise where we both share a bit of the pain in a slow market. We've made a strategic decision to burn through certain less profitable land parcels at lower gross margins that clear the way for our newer land acquisitions which meet our historical return metrics even after the big incentive. Fortunately, we're still finding new land opportunities that meet our return hurdles. Again, even after the high level of incentives, and at the slower sales pace. To wrap up, we met or exceeded our expectations for the third quarter. Regardless of market conditions, we closely monitor our communities and adjust our local strategies on a weekly basis. Given the tough operating environment, we are focusing on this even more today. Our goal is to be able to deliver strong ROE and ROI results even in difficult markets. That concludes our formal comments, and we'll be happy to turn it over for Q&A now. Operator: Thank you. The company will now answer questions. So that everyone has an opportunity to ask questions, participants will be limited to two questions and a follow-up. After which they will get back into the queue to ask another question. We'll open the call to questions. If you'd like to ask a question, please press 11. If your question has been answered and you'd like to remove yourself from the queue, please press 11 again. And our first question comes from Alan Ratner with Zelman and Associates. Your line is open. Alan Ratner: Hey guys, good morning. Thanks as always for the great information so far. First, I'd love to just drill in a little bit on the improvement you guys saw in order activity in July. I'm curious if you feel like that was more macro and market-driven based on maybe some of the tariff noise subsiding and rates coming down? Or were there any company-specific actions you guys took to drive that improvement, i.e., higher incentives or community openings or anything like that? Ara Hovnanian: I'd say in general, Alan, as you saw with our incentives, we did increase incentives a bit this quarter versus last quarter. But, overall, I'd say the market is more macro and political uncertainty, you know, news-driven. I mean, it's just amazing. There's a good headline. Sales are good that week. If there's a bad, the world headline, the sale, you know, it can go back and forth and back and forth. But other than a slightly more, you know, buy down rate, we really didn't do anything very different. It was more macro. Alan Ratner: Got it. And then just in terms of August activity, month to date, would you say that July improvement has continued thus far? Or just remaining choppy here so far? Ara Hovnanian: I would say really, I would hate to say it's just remaining choppy. I think we see week-to-week changes just like we kinda showed in the monthly data we were showing there. Just bounces back and forth. Alan Ratner: Got it. Okay. Appreciate that. Second question, on the gross margin guide down sequentially, obviously, it makes sense given the strategy you guys are working through some of the maybe the underperforming assets. But I'm just curious if you can kind of give some framework on how when we you have a very helpful slide in there with the vintage of your lots and you can kind of see, I guess, land that was underwritten during a better time. When you think about the headwind that might continue from working through these assets, is this like a couple of quarters type phenomena? Is this something that's likely going to persist through 'twenty six? Just can you help frame the size of the bucket of assets that you're kind of focusing on burning through at this point? Jeff O'Keefe: You know, it's it's hard to comment on that, and I can't say we specifically project it. The prices and the margins are not just lot vintage driven. But are also geography driven. I mentioned earlier the markets, that are mostly East Coast that are doing, far better than some of our West Coast markets. Plus, Texas has been a little slower, and Florida has been a little slower. So some of it depends on really burning through the tougher communities, in the tougher geographies. Having said that too, we are having some success working with our, the sellers of lots to us to share some of the pain, which helps margins. And allows us to feel more comfortable burning through some of the lower margins rather than walking from lots. We prefer not to walk from lots where we really can avoid it. So the long-winded answer, Alan, is I'm not sure. We really haven't focused on how long it's gonna be. I will say that we've reduced the number of lots that we bought in '23 and '24 by almost 2,000 homes. And we've increased our recent purchases, our recent lots, that we bought this year in '25 by about a thousand homes. So the recent purchases have excellent margins even with the rate buy downs as we've said several times. So when that, you know, gets into better balance, I can't quite say, but I'm feeling pretty good about our new land acquisitions. And eager to clear the road in our balance sheet to pursue more and more of the new land acquisitions. Alan Ratner: That's great. I appreciate that. And, Brad, can I just squeak in one last housekeeping question? Brad O'Connor: Sure. Alan Ratner: Consolidation on the JV, next quarter, did you give a dollar amount what's going to flow through the other income line? Brad O'Connor: We didn't give a dollar amount, but on those three previous transactions I mentioned, we averaged about $30 million. And this will probably be in that same neighborhood. Alan Ratner: And that's embedded within the pretax income. Correct? Brad O'Connor: Correct. Alan Ratner: Perfect. Thanks a lot, guys. Appreciate it. Ara Hovnanian: Mhmm. Operator: Thank you. As a reminder, to ask a question, please press 11. Our next question comes from Jay McCanless with Wedbush. Your line is open. Jay McCanless: Hey, good morning everyone. Thanks for taking my questions. I guess, first, can we talk about the balance sheet and what type of debt restructuring opportunities might be out there at this point? Brad O'Connor: Sure. I mean, we as we've said in the past, I'm always looking at ways to continue to improve our balance sheet. And one of those that we talked about previously with the market is the idea of refinancing our secured debt into unsecured and it's something we're certainly continuing to take a look at. We'll take advantage of if the opportunity arises. Something I pay a lot of attention to. On a regular basis. Ara Hovnanian: Yeah. Overall, I'd say the market for high yield, even in the homebuilding industry is, getting a little better and a little stronger. So we think there will be opportunities in the very near future. Jay McCanless: Great. Thank you. And then the second question kinda following on what Alan's asking. Are there opportunities maybe to do bulk sales in terms of moving through some of these lots, going ahead and taking an even larger gross margin hit to get that off your book so that these newer communities and the better gross margins can shine through a little easier? Ara Hovnanian: You know, we look at that regularly and we're constantly looking at the potential loss in a sale or a walk away versus building out. And we haven't done a lot of land sales in bulk. We have done a couple of walkaways. But generally speaking, as I mentioned earlier, we're finding some better opportunities with sharing the pain with our landline partners. So I think that's probably more of the strategy. I will also say I can't you know, we've mentioned Brad mentioned three times in the last nine quarters, we've had a gain from consolidation. We've also had probably three or four quarters with gains from land sales. So we tend to do more of the latter, the gain from land sales than the loss from land sales. And it makes sense if you consider 85% of our lots are optioned we don't have a lot of bulk land on our balance sheet today to sell in bulk at a loss. But we do have, from time to time, entitled land that's more than that where the entitlements come through a little earlier than we planned and more than we need for a and we've been having good success selling those at a profit. Brad O'Connor: Just to add to your comment, one of the land sales we had earlier this year was basically what you described. It was an underperforming community that we did flip to somebody else. So it's something we do look at. Jay McCanless: Got it. Okay. Great. And then the, the 21% of communities where you could raise price this quarter, I know they were mostly focused in the Northeast, Mid-Atlantic. I think that's the second quarter in a row where you all see good performance there. But diving down a little further, is that entry-level, active adult? Any color you can give us on what buyer groups are resilient enough where you can raise price at this point? Ara Hovnanian: I'd say, generically, the entry level is the tougher market. We've had some good success in active adult as a couple of our peers have had. And we've had some good success on first-time and time move up. It's been a more challenging environment in the tertiary super low entry price points. Jay McCanless: That's great. Thanks for taking my questions. Operator: Thank you. There are no further questions. I'd like to turn the call back over to Ara for any further comments. Ara Hovnanian: Thank you very much. Again, we're pleased to have met our expectations and guidance even though we're not as good as we performed last year. But we are excited about the opportunities in the land market and replenish our land supply, and we'll look forward to delivering some good results. I think we've shown that we have a great franchise that can really deliver some in the leading ROEs and ROIs. And I think as we continue to replace our land, position with newer and newer land parcels, I think our performance is gonna get just that much better. Thank you very much. Operator: Thank you. This concludes our conference call for today. Thank you all for participating, and have a nice day. All parties may now disconnect. Trump's Tariffs Could Create $1.5 Trillion AI Gold Rush The Motley Fool's analysts are tracking a massive shift in U.S. tech. Over $1.5 trillion is already flowing into infrastructure, AI, and advanced manufacturing… and the number keeps climbing. Following a major tariff policy shift, a new AI Gold Rush is taking shape, and we think . It builds the tech infrastructure that Apple, OpenAI, and others suddenly can't live without. We just released a full write-up on this under-the-radar stock — and why now might be the exact moment to move. Continue » *Stock Advisor returns as of August 18, 2025 This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Hovnanian (HOV) Q3 2025 Earnings Call Transcript was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Marzetti MZTI Q4 2025 Earnings Call Transcript
Image source: The Motley Fool. Date Thursday, August 21, 2025 at 10:00 a.m. ET Call participants President and CEO — Dave Ciesinski Chief Financial Officer — Tom Pigott Vice President, Investor Relations — Dale Ganobsik Need a quote from a Motley Fool analyst? Email pr@ Full Conference Call Transcript Dale Ganobsik: Good morning, everyone, and thank you for joining us today for The Marzetti Company's fiscal year 2025 fourth quarter conference call. Formerly known as Lancaster Colony Corporation, our business rebranded as The Marzetti Company effective June 27. This rebranding honors the 130-year history of our flagship Marzetti brand and signals our future as a food company with an ongoing commitment to delivering high-quality, flavorful products that make every meal better. While Lancaster Colony will always be an important part of our heritage, we believe the Marzetti name is critical to positioning our business in today's food industry and communicating the value we deliver to all of our stakeholders. We felt that our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, and the company undertakes no obligation to update these statements based upon subsequent events. A detailed review of these risks and uncertainties is contained in the company's filings with the SEC. Also note that the audio replay of this call will be archived and available on our website later today. For today's call, Dave Ciesinski, our President and CEO, will begin with a business update and highlights for the quarter. Tom Pigott, our CFO, will then provide an overview of the financial results. Dave will then share some comments regarding our current strategy and outlook. At the conclusion of our prepared remarks, we'll be happy to respond to any of your questions. Once again, we appreciate your participation this morning. I'll now turn the call over to The Marzetti Company's President and CEO, Dave Ciesinski. Dave? Dave Ciesinski: Thanks, Dale, and good morning, everyone. It's a pleasure to be here with you today as we review our financial results and provide you with an update on our business. Before I provide comments on our fiscal fourth quarter results, I am pleased to share that we completed fiscal year 2025, which ended June 30, with record high net sales, gross profit, and operating income. I want to extend a sincere thank you to all of our teammates throughout our business for their countless contributions to this achievement, as well as their continued commitment to our ongoing success. Moving on to our results for our fiscal fourth quarter, which ended June 30, we are pleased to report that consolidated net sales grew 5% to a fourth quarter record $475.4 million, and gross profit advanced 8.7% to a fourth quarter record $106.1 million. In our retail segment, net sales increased 3.1% to $241.6 million, driven by growth from both our licensing program and our own brand. During the quarter, we increased our marketing investments with a proven strategy and noted improved household penetration trends for our brands in several key categories. In licensing, sales growth was led by expanding distribution for our popular Texas Roadhouse dinner rolls and new club channel sales for Chick-fil-A sauce. Buffalo Wild Wings sauce has also added to the growth of our licensed items. Our category-leading New York Bakery frozen garlic bread remained a key contributor to the growth of our retail segment, driven by contributions from our recently introduced gluten-free Texas toast. Our Sister Schubert's brand frozen dinner rolls also performed well, including the benefit of the later Easter holiday that shifted some sales into the fiscal fourth quarter. Excluding all sales attributed to the perimeter of the store bakery items that we just exited in fiscal year 2024, the Retail segment's fourth quarter net sales increased 3.6%, and retail sales volumes measured in pounds shipped increased 2.9%. Circana scanner data for the quarter ending June 30 showed strong results with both sales dollars and volume for our branded products of 5.5%. In the frozen dinner roll category, our own Sister Schubert's brand and our licensed Texas Roadhouse brand combined to grow 52.4%, resulting in a market share increase of 690 basis points to a category-leading market share of 63.8%. In the frozen garlic bread category, our New York Bakery brand continues to perform very well as sales grew 10% versus a 3.5% increase for the category, driving New York Bakery's market share up 260 basis points to a category-leading 43.3%. In the shelf-stable sauces and condiments category, sales of Chick-fil-A sauce grew 17.2% with market share up 30 basis points as we introduced the popular sauce into the club channel during the quarter. In the produce dressing category, sales of Chick-fil-A dressings grew 2.6%. When combined with our Marzetti brand dressings, our market share totaled a category-leading 27.6%. In the foodservice segment, excluding noncore sales attributed to a temporary supply agreement, sales improved 1.4%, while sales volume declined 1.7%. In addition to the benefit of inflationary pricing, foodservice segment net sales reflect increased demand from some of our national chain restaurant account customers, as well as sales gains for our own Marzetti branded food service products. Our focus on supply chain productivity, value engineering, and revenue management all remain core elements to further improve our margins and financial performance. I'll now turn the call over to Tom Pigott, our CFO, for his comments on our fourth quarter results. Tom? Tom Pigott: Thanks, Dave. Overall, this quarter, the company delivered improved top-line and gross margin performance and continued to invest to drive growth. Fourth quarter consolidated net sales increased by 5% to $475.4 million. Breaking down the revenue performance, higher core volume and product mix drove a 190 basis point increase. Net pricing was accretive by approximately 60 basis points. In addition, the company reported $12.2 million in sales, or 270 basis points of growth, that resulted from a temporary supply agreement with Windland Foods, the seller of the Atlanta-based manufacturing facility that we acquired in mid-February. We entered into this agreement to facilitate the closing of the transaction. It's important to note that these temporary and noncore sales are expected to end by March '26. And finally, last year's exit of the perimeter of the store bakery product lines accounted for a 20 basis point decline. Consolidated gross profit increased by $8.5 million or 8.7% versus the prior year quarter to $106.1 million, and gross margin expanded by 70 basis points. The gross profit growth was driven by higher volume and mix in our retail segment and our ongoing cost savings programs. Note that excluding the $12.2 million in sales from the temporary supply agreement, which did not contribute to gross profit, gross margin expanded by 130 basis points. Selling, general, and administrative expenses grew $8.9 million or 16.7%. This increase reflects a higher marketing spend in our Retail segment to drive growth, higher personnel costs, increased legal spend, and costs related to the integration of the Atlanta facility. During the quarter, the company reported $5.1 million of restructuring and impairment charges. $4.5 million of the charges are attributed to the planned closure of our sauce and dressing facility in Milpitas, California, that we announced last quarter. This closure is part of our ongoing initiative to optimize our manufacturing network. Production at that facility is expected to conclude during the quarter ended September 30. In our prior year quarter, restructuring impairment charges of $2.7 million were attributed to our decision to exit our perimeter of the store bakery product lines. Consolidated operating income decreased $2.8 million due to higher SG&A and increased restructuring impairment costs, partially offset by the improved gross profit performance. Our tax rate for the quarter was 19.7%, versus 20.5% in the prior year quarter. We estimate our tax rate for fiscal '26 to be 23%. Fourth quarter diluted earnings per share decreased 6.3% to $1.18. The restructuring impairment charges I mentioned reduced EPS by $0.15 in the current year quarter and $0.08 in the prior year quarter. In the current year quarter, we also incurred the last of our Atlanta facility integration costs in the SG&A line, which accounted for $0.01 per share. With regard to capital expenditures, our payment for property additions totaled $58 million for the full year. In addition, we invested $78.8 million to acquire the Atlanta-based dressing and sauce facility. For fiscal '26, we are forecasting total capital expense of between $75 and $85 million. We will continue to invest in both cost savings projects and other manufacturing improvements, as well as the newly acquired Atlanta facility. In addition to investing in our business, we also returned funds to shareholders. Our quarterly cash dividend of $0.95 per share paid on June 30 represents a 6% increase from the prior year's amount. Our enduring streak of annual dividend increases stands at 62 years. Our financial position remains strong with a debt-free balance sheet and $161.5 million in cash. In regard to the full year results, overall, the company delivered against its growth algorithm. Net sales grew 2%, primarily driven by volume. Gross margins expanded by 80 basis points due to cost savings initiatives and some modest cost deflation. Reported operating income grew 10.5%. When you adjust operating income for restructuring impairment costs recorded in both years, the current year's acquisition costs, as well as last year's inventory write-down for business exit, operating income was up 5.7%. This growth was driven by higher volumes and the gross margin expansion. To wrap up my commentary, our fourth quarter and full year results demonstrate strong execution across a number of areas in a more difficult operating environment. In addition, we continue to make investments to support further growth and cost savings. I will now turn it back over to Dave for his closing remarks. Dave Ciesinski: Thanks, Tom. Going forward, 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 simple pillars of our growth plan: to one, accelerate core business growth; two, to simplify our supply chain to reduce our cost and grow our margin; and three, to expand our core with focused M&A and strategic licensing. Looking ahead to fiscal year 2026, we anticipate retail segment 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. The popular Texas Roadhouse dinner rolls will begin shipping nationally to all major retailers this fall, and we also have some new items planned for our core brands that will launch in the year ahead. In the foodservice segment, we expect sales to be supported by growth from select QSR customers in our mix of national chain restaurant accounts. As our culinary team continues to provide our food service partners with a wide range of innovation initiatives and flavorful flavors to help them drive menu excitement and ultimately traffic growth. Like many of you, we continue to monitor external factors, including US economic performance and consumer behavior, that may impact the demand for our products. With respect to input costs in the aggregate, we anticipate a modest level of cost inflation in 2026, that 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 incorporating our newly acquired Atlanta-based sauce and dressing plant into our manufacturing network. When combined with the closure of our sauce and dressing facility in Milpitas, California that we announced last quarter, we believe our supply chain is well-positioned to cost-effectively support the growth of our key customers in fiscal year 2026 and beyond. This concludes our prepared remarks for today, and we'd be happy to answer any questions that you might have. Operator: At this time, I would like to remind you that your first question comes from Jim Salera with Stephens. Jim Salera: Hi, Tom. Good morning. Thanks for taking our question. Dave, I wanted to start with some thoughts around food service because there's a lot of noise right now around the consumer. It seems like there are certain QSR platforms that are really focusing on value, but other ones that continue to do well kind of despite the backdrop. And a lot of the menu innovation seems to be more focused around chicken, which I would anticipate benefits your business. So can you maybe just walk us through as we think about FY '26? What are your expectations around QSR industry traffic as a whole? And then innovation for the accounts that you service and maybe how we put that all together to come up with expectations for the foodservice business in '26. Dave Ciesinski: Yeah. Well, great question, Jim. And maybe I'll start by framing it as follows. If you go back, let's say, eighteen months or a year ago, the industry was still wrestling with inflation and passing through pricing. I think that pricing that went through created value issues for a range of consumers, particularly consumers in the middle and the lower incomes, they started to manifest itself in trade down. I think as we've rolled forward now, most of the operators have cycled past that pricing. And as we look at our core operators, we can see that they're not passing through pricing like they've had. And I would tell you as a whole, it looks like commercial food service has modestly is either flat or very modestly improving within, let's say, the last couple of months. When I say modestly, I mean about one point, approaching closer to flat. Now within there, it becomes somewhat divergent. And a little bit different than we've seen in prior periods where seeing segments with higher price points like casual dining, that are struggling a little bit more, and you've read about that. I know you follow the space. You're seeing the casual dining guys, the likes of Chili's and even Applebee's, starting to perform a little bit better as they've really focused on simplifying their menu, their back of house operations, and striving to give consumers value. In the QSR space, I think we've seen them over the last, let's say, three quarters struggle with getting on the better side of pricing, and now we're starting to see their traffic get closer to flat overall. And that's in fact true with a lot of our customers. It's still below what we would have seen historically, but I would tell you it's modestly improving. As we go forward, you know, what we would expect is neither a catalyst for a significant downturn nor a significant improvement. I think we're just gonna continue to operate in this sort of broader macro environment. Now bring it closer to us. Where is it that we're gonna find pockets of growth? I think there are several themes that remain true. One is you're gonna see these operators continue to look for ways to present value. In the casual dining space, the Chili's and guys like that, I think you're gonna see them continue to hover around meals for the $15 mark to attract guests and then look to plus that up with incremental items. In QSR, I wouldn't be surprised if we see things like what McDonald's has done around snacking and with chicken. And then I think the trend that really is gonna continue to benefit us is going to play probably a couple of ways, and it's in chicken. The chicken operators continue to do better than most of the others, let's say hamburger, etcetera. So I think that's going to present an opportunity for continued growth and an opportunity for us to continue to innovate with those operators that are out there. I also think I didn't talk about pizza QSR. I think pizza QSR will continue to be relevant, particularly as they focus on absolute price points. At the end of the day, you know, consumers, I think, are trying to balance their sources and uses of cash, and they're still looking for affordable ways to feed their family and find sources of happiness. And I think food service will continue to factor into that. The onus is on us to figure out ways to help these operators present that and grow. Jim Salera: That's great. And then, Tom, if I could, ask one of you on the commodity side, sounds like you guys have a pretty robust productivity program continuing into FY '26. We've heard some commentary around soybean oil specifically and potential supply crunch there with some of the domestic production going towards biofuels. And, no commodity but I know if I just look at the spot price for soybean oil, it's up pretty significantly year to date, and it kinda took a leg up more recently when the EPA announced some news around biofuel. So can you just give us any thoughts around your visibility in the soybean oil pricing? If you're able to tell us, you know, how much of the commodity basket that is for you guys, if you're hedged. Just kinda any thoughts around that and, you know, potential variability as we go into the new year and have kind of this biofuel demand that could potentially pull. Dave Ciesinski: So, Jim, it's a great question. It's an important part of our commodity basket. Maybe I'll lead off and then let Tom get into some of the specifics as well. You know, as you noted, over the last probably seven or eight years, we've started to see soybean oil play a more prominent role in renewable diesel. As we got to the end of the Biden administration, there was somewhat some uncertainty regarding how much volume would be renewed in RVOs or the amount of gallons that are gonna go towards renewable diesel. Earlier this summer, the EPA came out with guidelines that elevated the soybean oil being diverted into renewable diesel. And to your point, it resulted in a spike. Up until that point on the board, it was probably trading, I would say, in the mid-forties or thereabouts. And then it jumped into the mid-fifties. It got up to as high as 55¢, and now it's eased off. I looked at it this morning actually on the board. It was about 51¢. There are still a couple of areas that have yet to be resolved in this space that I think could ultimately dictate where the price nets out. Ordinarily, what they do is they allow an exception for small refiners. And if they continue to grant that exception, what you might see is those commodity costs for soybean oil continue to fall back a little bit more. So it remains within our expectations, so we don't see it as a near-term headwind for our business. We do take hedging positions with our suppliers on this. And maybe with that, I'll turn it over to Tom, and he can provide you with a little bit more. Tom Pigott: Yeah. I think Dave said on the broader market indicators and what I would share with you is that we do have we do utilize a consultant to help us analyze this market because it's very complex. And we have a team that goes out and takes positions when we think they're advantageous to us. So as we look at the total cost as a percent of our COGS, soybean oil is about 10%, depending on the market at that point. And in terms of our outlook for next year, from our internal cost projections, based on the current markets and our hedging positions, it's neither a big headwind nor tailwind for us. Dave Ciesinski: Yeah. We've been layering in on this for a while, Jim, anticipating this. So these changes aren't anything new. You know, just to give you an idea, if we went back seven years ago, took a bean and you crushed it, the meal went to feed essentially chickens and cattle and hogs and everything else, and the oil then would be diverted into the food supply. Now virtually half of that oil is being directed into renewable diesel. So this is sort of a phenomenon that we've been watching here very carefully. And not only do we buy for ourselves, but we sit down on a regular basis with all of our big customers in the QSR space and we advise them and work with them to take positions as well so we can create an element of predictability with this important commodity. Jim Salera: Great. Well, I appreciate all the detail, guys. I'll hop back in the queue. Dave Ciesinski: Thanks, Jim. Operator: Your next question comes from Todd Brooks from The Benchmark Company. Todd Brooks: Hey, good morning. Thanks. Two questions for me as well. First, if we can look at the G&A spend, I know we talked about some incremental marketing investment behind the retail operation. I think you called out about $500,000 of one-time costs related to the new facility. I'm just wondering. I'm seeing kind of a 140 basis point uptick year over year. How much of that was the marketing spend? And were there some other one-time items around the corporate name change or anything that didn't get called out in the release? And how should we think about maybe a normalized type of percent of sales spending for G&A as we think about fiscal 2026? Tom Pigott: Great question, Todd. So the spend was up for three factors. One was the marketing, which was almost half of the increase, and I'll let Dave talk to that. The other two drivers were, as you mentioned, the Atlanta integration and the legal cost. Those are more transient items. We don't expect them to continue. And then the third driver is that some timing of costs from Q3 flowed into Q4. So broadly, we don't expect to grow that line more than inflation. Dave Ciesinski: And we're very happy with the reinvestment we made into the marketing spend. I'll let Dave talk a little bit about that. Dave Ciesinski: Yeah. So as Tom pointed out, half of it was directed into marketing, and essentially, what we're doing, Todd, is we have a new leader in the marketing organization that's doing a great job digging into the data that we have and looking at the digital tools at our disposal. We invested in some very specific programs that helped us drive household penetration. If you look across our shares, we were up share-wise in five of our seven categories. And I'll give you sort of anecdotally why we feel good about it. You look at our own Texas toast brand, right now, we ended the quarter with about a 43 share. With that product, our household penetration was up eight points in the quarter. And our repeat rate on that item is almost 60%. And our belief continues to be if we can make smart marketing investments at reasonable prices and we can drive household penetration, the performance of that product keeps those consumers in the fold and allows that business to continue to grow period on period. And we took that same sort of formula, and we use it across a range of different products in a very point-specific basis. And we think it's, along with innovation, going to be an important part of our overall algorithm that allows us to deliver profitable volumetric growth. Todd Brooks: That's great. And then just a follow-up on that, Tom, before I get to the question. When we talk about kind of growth in line with inflation for '26, what's the normalized base that we should be thinking about growing that off of? Tom Pigott: I would take the reported number, pull out the Atlanta integration cost, and that would be your base. Todd Brooks: Yeah. Okay. Perfect. Thanks. And then my second question, and you talked about this as one of your offsets for the moderate inflation that you're expecting in fiscal '26, can we talk to, and this is something you've long been expert at, the cost savings that the team was able to realize in '25 and then the outlook for '26 on cost savings, just thinking that we've got some pipe chunkier opportunities around the Milpitas exit and ramping that volume to the right spots in the rest of the sauce and dressing production system? Tom Pigott: Yeah. So when you look at '25, the team did an outstanding job against a number of pillars: procurement savings, negotiating more favorable contracts for us, value engineering, which is optimizing our products to make them more efficient and less costly to produce, labor management. We also benefited from the SAP implementations. We got better information on our cost. So a number of things contributed to the performance that the team was able to achieve in '25. As we look forward into '26, what I would add to that list is the network reset that we're doing. So essentially, between closing the Milpitas facility and ramping up College Park, that gives us another pillar to drive cost savings into '26. And I think as we look at it, right now, we're in the midst of that transition. So we're decommissioning lines in California, commissioning lines in Atlanta, and moving volume into Horse Cave as well. There's a lot of change going on right now in our networks, and we're executing well against those. As we get into the back half of fiscal '26, I think we'll begin to see more of those benefits flow through to our margin as the year progresses. Todd Brooks: Okay. Great. Thank you, both. Tom Pigott: Thank you, Todd. Operator: Your next question comes from Alton Stump from Loop Capital. Alton Stump: Great. Thank you. Good morning, guys. Thanks for taking my question, as always. Just to clarify, from a modeling perspective, of course, you mentioned, Tom, that the agreement will go through March, obviously, the first three fiscal quarters. Should we kind of think about the revenue contribution from that similar to what it was in the most recent 4Q? Tom Pigott: And you're referring to the temporary supply agreement that we have and the rate of sales on that? Consistent throughout the first three quarters. Yep. Alton Stump: So our preference would be that you exclude that revenue from your model just because it's temporary and noncore. And project off of a more organic number, which would exclude that revenue. Alton Stump: Got it. Okay. Thank you for that on the modeling front. And then, I guess just fundamentally, there's obviously a lot of mixed signals as far as the consumer. You guys, of course, have an off a good view of things because, of course, food service business has a benefit when consumers eat more at home, and, whereas, obviously, retail, well, I'm sorry, vice versa, that food service benefits and people are eating out more. Where is retail? Benefits when they're staying at home eating more? So I guess, as you kinda look at that overall dynamic, how do you think the consumer environment will impact each of your businesses separately? Dave Ciesinski: Well, maybe I'll take a shot at that. I'll let Tom add in. As we kind of roll our way through the end of this calendar year and we go into the next, as long as we don't see things like inflation spike, I think there are two things that could be potential catalysts for tailwinds. One is the fact that we see interest rates start to recede. I think that could be a net benefit. I think the other is we're watching crude oil prices and gas prices, which remain flat to down. And if they continue to pull back, I think we've seen in the past that gives consumers discretionary spending to be able to use on eating out or spending more to eat at home. The other is, and we've read a fair amount about the fact that with the OB three, the one big beautiful bill, the sense is when we get into the calendar year, there's going to be potentially tax benefits to consumers that could give them an incremental discretionary spending to use. So I think as we look into the future, we're cautiously optimistic that the consumer might start to see some modest tailwinds as long as we can keep inflation in check. You come around then and you say, what does that mean to our business overall? I would expect to see the food service situation continue to sequentially improve for all of our customers, really. And I think as long as we remain in this sort of value environment, there's gonna be winners and losers. And I think that we tend to line up more with the winners. I think on the retail business, sort of independent of the macro environment, we're excited about the pipeline of new items that we're bringing to the marketplace. We're just now starting to roll out Texas Roadhouse rolls to all of retail. We think that's gonna be a source of continued growth for our business. We have a range of other new items for Texas Toast and Sister Schubert that we're excited about. We have a new item of Olive Garden, zesty Italian, which allows us to attack a part of that category that we don't play in today, which we think is just growth waiting for us. So we have kind of a continuation of different pockets that we're working on that allow us to look at the environment as it stands today without a material change, see line of sight to low single-digit volume lead growth. If the environment gets better, particularly in food service, well, you know, be happy to go back and revisit those numbers. But that's kind of our view right now. And I would say the consumer has proven to be resilient so far. And I think adaptable organizations, CPG organizations, in tune with that. They're figuring out how to meet those consumers' needs, and the good ones will figure out how to grow. Tom Pigott: Yeah. I'll just add overall, I think we expect '26 just to be a continuation of our growth algorithm where we see revenue growing in the low single digit, really driven by volume in retail. And some pricing for the egg commodity. Foodservice, I think we're looking at more of a flattish profile in '26. And then on the gross profit, we expect to continue to grow our margins probably in the around the 50 basis point range. And SG&A, as I mentioned, growing with inflation. So that's kind of the broader outlook to power for forecasting '26, which gets us overall to low single digit on the top line, mid single digit on the bottom line. Sort of a continuation of our outlook for this year. Alton Stump: Great. Thank you so much, Tom and Dave, for all of the color. I'll hop back in the queue. Dave Ciesinski: Thank you, Alton. Operator: Your next question comes from Scott Marks from Jefferies. Scott Marks: Hey, good morning, guys. Thanks for taking our questions. Dave Ciesinski: Hey. Thanks. Good morning. Scott Marks: Wanted to ask just one technical question as it relates to the $5 million restructuring charges, were those associated with the retail segment? Or were they kind of unallocated? Tom Pigott: Those were unallocated. Yeah. Unallocated. And that would be just disclosure because it includes both segments in that. So yeah. Scott Marks: Okay. Understood. And, yeah, I guess, that leads me into my next question on the retail segment, which is, obviously, up a pretty good top line number. But I think profitability came in a little bit below what some folks were looking for, and it sounds like there was some incremental marketing expense that was kind of the reason for that. How do you think about, or how should we be thinking about the marketing investments that you spoke to? I know you spoke about change in leadership on that part of the business, some incremental investments upfront. Should we anticipate maybe some higher spend upfront with the expectation that growth will come down the line? Just trying to gauge the right level of profitability for the segment that we should be kinda thinking about going forward. Tom Pigott: Yes. So it's an excellent question. And you're right. We did choose to take advantage of some good potential programs to invest in the quarter, and it did impact retail's profitability. There are a couple other things I'll mention, then I'll let Dave talk a little bit about the marketing spend. The other thing on retail is we had a very difficult comp this particular quarter. The prior year quarter was a record Q4 on operating income for the retail segment. And then the other thing that impacted the profitability was, you know, particular quarter, PNOC was a little bit negative due to the egg inflation. In time, we expect that PNOC to balance out. So that's kind of some additional color on the retail operating income line. I'll let Dave talk a little bit about the marketing spending and how we're thinking about it. Dave Ciesinski: Yeah. So, you know, Scott, bring it around to you. We don't expect a reset on marketing for the retail segment. We saw an opportunity in this period to raise it. And I think as we continue to generate cost savings in other areas of the P&L, I think we're going to look for opportunities to plow some back into the business longer term. I think to Tom's point on this business, you know, I would expect our operating margins to remain in line here. So if you're looking at both gross margins and operating margins over the foreseeable future, we expect those to be flat or low. In line with our productivity programs. Scott Marks: Understood. Thank you for that. And then maybe one on the food service side. I know last quarter, you called out the impact from some larger customers of yours who kind of pulled back on some LTOs. As we think about this quarter's performance, down 17% on the volume side, excluding those TSA sales, does that mean that those kind of, like, one-off headwinds were still in there, but you saw growth elsewhere in the portfolio? Just trying to gauge how we should be thinking about the volume trajectory on a go-forward basis as it relates to impact from those LTO reductions versus other, you know, potential wins and business opportunities. Tom Pigott: You're precisely right. That's exactly what that is. So we did see favorability with some of our other customers that was able to offset some of that. So as we sort of work our way through this, you can expect to see us begin to lap those headwinds as we get to the back part of the year. If you look at it, we saw growth from a handful of our QSR customers, and we continue to see growth with the branded part of our portfolio, which is our own Marzetti branded items that we sell through distributors. So and if you look at the pipeline that we have of new items and the traffic performance of our existing customers, we would expect to see those trends continue. Scott Marks: Understood. Thanks so much. I'll pass it on. Tom Pigott: Thank you. Thank you. Operator: If there are no further questions, we will now turn the call to Mr. Ciesinski for his closing comments. Dave Ciesinski: Well, thank you, everybody, for joining us today. We look forward to being back together with you in November as we share with you our results for the first quarter of this fiscal year. Look forward to seeing you guys on the road. Take care. This concludes today's conference call. Thank you for participating. You may now disconnect. 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Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Marzetti MZTI Q4 2025 Earnings Call Transcript was originally published by The Motley Fool
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- Gizmodo
Ozempic Maker Novo Nordisk Freezes Hiring Amid Ongoing Struggles
No one stays on top forever. It's a lesson that Ozempic maker Novo Nordisk may be painfully learning about. The Danish pharmaceutical company has enacted a hiring freeze—the latest sign of a sinking financial outlook for the once-titan of the obesity treatment world. Reuters reported on the hiring freeze Wednesday. The company has faced numerous setbacks in recent months, including billions shaved off its stock market value and continued competition from cheaper, compounded versions of its blockbuster drug semaglutide. Though the freeze will apparently only apply to certain segments of the company, layoffs are likely not far off in the distance. 'We currently have a hiring freeze in non-business critical areas,' said Novo Nordisk in a statement to Reuters. Semaglutide is the active ingredient in Novo Nordisk's diabetes drug Ozempic and obesity medication Wegovy. It and similar compounds mimic the hormone GLP-1, which helps regulate insulin production and our appetite (among other functions). Though GLP-1 drugs have existed for two decades, semaglutide has proven more effective at helping people lose weight than diet and exercise alone, as well as other older medications. The approval of Wegovy in 2021 greatly reshaped the field of obesity medicine and earned plenty of money for Novo Nordisk. In 2024, the company reported about $42 billion dollars of revenue, driven by increasing sales of Wegovy and Ozempic (sometimes prescribed off-label for weight loss treatment). The company's success was so tremendous that it even helped bolster Denmark's local economy. But the company's meteoric rise has stumbled as of late for several reasons. For starters, it's no longer the only game in town, following the approval of Eli Lilly's tirzepatide for obesity (under the name Zepbound) in 2023. The drug, which combines GLP-1 with another weight-related hormone, is generally more effective than semaglutide, and people have steadily started to prefer it. Though Ozempic and Wegovy might still be more well known to the public, prescriptions of Zepbound in the U.S. now appear to be surpassing the former. Ozempic-Maker CEO Ousted Over Pharma Company's Rocky Market Downturn Novo Nordisk has also explicitly cited the emergence of the compounded drug market for GLP-1 therapy for its recent struggles. Compounded drugs are custom-made formulations of semaglutide and tirzepatide, often much cheaper, and produced by specialized pharmacies. The Food and Drug Administration has attempted to crack down on this industry, but many companies are still producing these drugs, and many people are still buying them. The fight over these compounded drugs has become so fierce that Novo Nordisk abruptly ended its newly formed partnership with telehealth company Hims in June. The company alleged that Hims was trying to deceptively market their compounded version of semaglutide over Wegovy to its users (Hims, for its part, has denied the accusation). These headwinds led Novo Nordisk to admit earlier this year that its projected sales growth in 2025 will fall short of past projections, which has since fueled further financial calamity. In May, the company fired its longtime CEO amid declining stocks. In July, investors wiped off $70 billion from the company's market value after it once again lowered its sales growth forecast for the remainder of the year. Sales of Wegovy and Ozempic do remain strong overall. And Novo Nordisk is developing other treatments intended to reclaim its throne in the obesity medicine field (including weight loss pills and drugs potentially more effective than any other treatment to date). But the company's fortunes are likely to worsen before they get better. Novo Nordisk Abruptly Ends Partnership with Hims, Claiming 'Sham Compounding' GLP-1 Drugs Departing CEO Lars Fruergaard Jørgensen stated in early August that the company, which currently employs nearly 80,000 people, will probably experience layoffs. The company's new CEO, Maziar Mike Doustdar, is also considering layoffs, according to a recent report from Danish TV2. This new era of obesity treatment isn't going anywhere anytime soon. But whether Novo Nordisk will remain the big dog on top is much more in question today than it would have been even just a few months ago.
