NORTHLAKE, Texas, Nov. 07, 2017 (GLOBE NEWSWIRE) — Farmer Bros. Co. (NASDAQ:FARM) (the “Company”) today reported financial results for its first fiscal quarter ended September 30, 2017.

First Quarter Fiscal 2018 Highlights:

  • Volume of green coffee pounds processed and sold decreased 0.4% over the prior year period;
  • Gross profit decreased $2.2 million and gross margin decreased 200 basis points to 37.2%, over the prior year period;
  • Net loss was $(1.0) million compared to net income of $1.6 million in the prior year period;
  • Adjusted EBITDA was $9.3 million, and Adjusted EBITDA Margin was 7.1%, a decrease of 130 basis points over the prior year period*
  • Increased coffee production at Northlake, Texas facility with production levels expected to reach 6 million pounds by end of fiscal 2018, on an annual run rate basis;
  • Entered into an agreement in August to acquire substantially all of the assets of Boyd Coffee Company and subsequently completed the acquisition with a combination of cash and stock in October;
  • Made progress on the roll-out of Smart Touch selling platform to help drive efficiency and revenue; and
  • Maintained strong customer service in face of natural disasters;

(*The foregoing non-GAAP financial measures are reconciled to their corresponding GAAP measures at the end of this press release).

“Overall growth was soft in the quarter as we experienced slower than expected demand from some of our larger customers and dealt with the impact of Hurricanes Harvey and Irma, however, the organization performed very well in these challenging circumstances, maintaining strong customer service. Moreover, we secured a number of new business wins which will assist our growth initiatives,” said Mike Keown, President and CEO. “We are also pleased with the progress made during the quarter towards certification of our Northlake, Texas roasting facility and the roll-out of our DSD channel-based sales strategy. Finally, while very early in the integration process, we remain bullish for the potential opportunities resulting from the acquisition of the Boyd Coffee Company business.”

First Quarter Fiscal 2018 Results:

Selected Financial Data

The selected financial data presented below under the captions “Income statement data,” “Operating data” and “Balance sheet and other data” summarizes certain performance measures for the three months ended September 30, 2017 and 2016 (unaudited).

Three Months Ended September 30,

2017
2016		 Y-o-Y
Change
(In thousands, except per share data)
Income statement data:
Net sales $ 131,713 $ 130,488 + 0.9%
Gross margin 37.2 % 39.2 % – 200 bps
(Loss) income from operations $ (1,258 ) $ 2,505 – 150.2%
Net (loss) income $ (978 ) $ 1,618 – 160.4%
Net (loss) income per common share-diluted $ (0.06 ) $ 0.10 – $0.16
Operating data:
Coffee pounds 23,215 23,314 – 0.4%
Non-GAAP net income $ 506 $ 3,386 – 85.1%
Non-GAAP net income per diluted common share $ 0.03 $ 0.21 – $0.18
EBITDA $ 6,088 $ 8,098 – 24.8%
EBITDA Margin 4.6 % 6.2 % – 160 bps
Adjusted EBITDA $ 9,334 $ 11,008 – 15.2%
Adjusted EBITDA Margin 7.1 % 8.4 % – 130 bps
Balance sheet and other data:
Capital expenditures excluding new facility $ 4,510 $ 3,235 + 39.4%
Total capital expenditures $ 7,775 $ 24,550 – 68.3%
Depreciation and amortization expense $ 7,253 $ 5,008 + 44.8%

Non-GAAP net income, Non-GAAP net income per diluted common share, EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures; a reconciliation of these non-GAAP measures to their corresponding GAAP measures is included at the end of this press release.

Volume of green coffee processed and sold declined 0.4% for the quarter notwithstanding the increase in volume associated with the West Coast Coffee business acquired in February 2017, which accounted for approximately 0.8% of the total volume of green coffee processed and sold during the first quarter of fiscal 2018. We estimate that green coffee volume processed and sold during the quarter was negatively impacted by Hurricanes Harvey and Irma by approximately 2.0% compared to the prior year period.

Over the past two quarters less than expected demand from several of our larger Direct Ship customers negatively impacted pounds growth. Additionally, we experienced coffee pound volume declines in sales to customers who take delivery through our DSD network during the first quarter of fiscal 2018 as compared to the prior year period.

In the first quarter of fiscal 2018, green coffee pounds processed and sold through our DSD network were 8.3 million or 35.7% of total green coffee pounds processed and sold, while Direct Ship customers represented 14.9 million pounds or 64.3% of total green coffee pounds processed and sold.

Net sales were $131.7 million in the first quarter of fiscal 2018, an increase of 0.9%, or $1.2 million, over the prior year period. This increase compared to the prior year period was driven primarily by a $1.5 million increase in net sales of roast and ground coffee products and a $1.3 million increase in net sales of tea products, as well as the benefit of higher prices to our cost plus customers due to higher hedged cost of green coffee in the first quarter of fiscal 2018 compared to the prior year period. West Coast Coffee and China Mist contributed $4.1 million in net sales during the first quarter of fiscal 2018, which was offset by a 5.1% reduction in net sales of products other than roast and ground coffee and tea products, which are sold primarily through our DSD network, as well as a 0.4% negative impact from the absence of net sales related to the institutional spice assets. We estimate that net sales were adversely affected by Hurricanes Harvey and Irma by approximately 1% to 2% comp