Fourth Quarter Highlights
Green Coffee Pounds Increased 0.9%
Gross Margin Improved 100 bps to 40.1%
Income from Operations Declined $1.4 million
Net Income Decreased to $1.1 million
Adjusted EBITDA Increased 30.7% to $11.6 million

NORTHLAKE, Texas, Sept. 28, 2017 (GLOBE NEWSWIRE) — Farmer Bros. Co. (NASDAQ:FARM) (the “Company”) today reported financial results for its fourth quarter and fiscal year ended June 30, 2017.

Fourth Quarter Fiscal 2017 Highlights:

  • Volume of green coffee pounds processed and sold increased 0.9%;
  • Gross profit increased $1.2 million and gross margin increased 100 basis points to 40.1%, year-over-year;
  • Income from operations declined by $1.4 million to $1.7 million due to higher one-time costs and fewer one-time benefits;
  • Net income decreased to $1.1 million from $84.2 million primarily due to the non-cash income tax benefit of $80.3 million from the release of valuation allowance on deferred tax assets in the fourth quarter of the prior fiscal year; and
  • Adjusted EBITDA increased 30.7% to $11.6 million, and Adjusted EBITDA Margin was 8.7%, an increase of 210 basis points.*

Fiscal 2017 Highlights:

  • Volume of green coffee pounds processed and sold increased 5.3%;
  • Gross profit increased $5.3 million and gross margin increased 120 basis points to 39.5%;
  • Income from operations increased 415.5% to $42.2 million from $8.2 million, including $37.4 million in net gain from the sale of our Torrance facility in fiscal 2017;
  • Net income was $24.4 million, or $1.45 per common share-diluted, compared to $89.9 million, or $5.41 per common share-diluted, last year, including non-cash income tax benefit of $80.3 million from the release of valuation allowance on deferred tax assets in fiscal 2016; and
  • Adjusted EBITDA increased 11.1% to $46.0 million and Adjusted EBITDA Margin was 8.5%, an increase of 90 basis points.*

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

“Overall, it was a very solid quarter to close a transformational year and one that we believe further positions Farmer Brothers for future success,” said Mike Keown, President and CEO. “Our continued progress in gross margin and Adjusted EBITDA improvement shows the ongoing benefits of our restructure. During the fourth quarter, we extended contracts with key customers covering approximately 20 million pounds of green coffee and won approximately 2 million pounds of new business, which is currently expected to begin shipping in the second quarter of fiscal 2018. We believe this demonstrates the industry’s support for our talented organization and new capabilities.”

Recent Operational Updates

  • Initiated roasting production at Northlake, Texas facility with current production levels at 6 million pounds, on an annual run rate basis;
  • Announced agreement to acquire substantially all the assets of Boyd Coffee Company with a combination of cash and stock;
  • Developed Artisan Direct Trade Coffee Line; and
  • Launched several new products, including the New China Mist Naturally Flavored Iced Tea product line, Artisan Hot Tea and Artisan Cold Brew Coffee.

Fourth Quarter and Fiscal 2017 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 and fiscal years ended June 30, 2017 and 2016 (unaudited).

Three Months Ended June 30, Fiscal Year Ended June 30,
2017 2016 Y-o-Y
Change		 2017 2016 Y-o-Y
Change
(In thousands, except per share data)
Income statement data:
Net sales $ 133,800 $ 134,162 – 0.3% $ 541,500 $ 544,382 – 0.5%
Gross margin 40.1% 39.1% + 100 bps 39.5% 38.3% + 120 bps
Income from operations $ 1,693 $ 3,075 – 44.9% $ 42,166 $ 8,179 + 415.5%
Net income $ 1,112 $ 84,239 – 98.7% $ 24,400 $ 89,918 – 72.9%
Net income per common share-diluted $ 0.07 $ 5.05 – $4.98 $ 1.45 $ 5.41 – $3.96
Operating data:
Coffee pounds 23,285 23,088 + 0.9% 95,499 90,669 + 5.3%
Non-GAAP net income $ 3,166 $ 3,801 – 16.7% $ 11,614 $ 17,607 – 34.0%
Non-GAAP net income per diluted common share $ 0.19 $ 0.23 – $0.04 $ 0.70 $ 1.06 – $0.36
EBITDA $ 8,268 $ 9,061 – 8.8% $ 65,509 $ 31,120 + 110.5%
EBITDA Margin 6.2% 6.8% – 60 bps 12.1% 5.7% + 640 bps
Adjusted EBITDA $ 11,629 $ 8,900 + 30.7% $ 45,973 $ 41,386 + 11.1%
Adjusted EBITDA Margin 8.7% 6.6% + 210