NORTHLAKE, Texas, Sept. 10, 2019 (GLOBE NEWSWIRE) — Farmer Bros. Co. (NASDAQ: FARM) (the “Company”) today reported financial results for its fourth quarter and fiscal year ended June 30, 2019.
Fourth Quarter Fiscal 2019 Highlights:
- Volume of green coffee processed and sold was flat at 27.4 million pounds compared to the prior year period.
Green coffee pounds processed and sold through our DSD network were 8.9 million, or 32.4% of total green coffee pounds processed and sold
Direct ship customers represented 18.2 million, or 66.5%, of total green coffee pounds processed and sold
Distributor customers represented 0.3 million pounds, or 1.1%, of total green coffee pounds processed and sold - Net sales were $142.1 million, a decrease of $7.5 million, or 5.0%, from the prior year period;
- Gross margin decreased to 26.6% from 35.3% in the prior year period, while operating expenses as percentage of sales improved to 31.5% from 33.9% in the prior year period;
- Net loss was $8.8 million compared to net income of $0.1 million in the prior year period; and
- Adjusted EBITDA was $3.9 million compared to $14.0 million in the prior year period.*
Fiscal 2019 Highlights:
- Volume of green coffee processed and sold increased by 0.7 million pounds, reaching 108.1 million pounds, a 0.6% increase over the prior year;
Green coffee pounds processed and sold through our DSD network were 39.4 million, or 36.4% of total green coffee pounds processed and sold
Direct ship customers represented 67.5 million, or 62.4%, of total green coffee pounds processed and sold
Distributor customers represented 1.2 million pounds, or 1.2%, of total green coffee pounds processed and sold - Net sales were $595.9 million, a decrease of $10.6 million, or 1.7%, from the prior year period;
- Gross margin decreased to 30.1% from 34.2% in the prior year period, while operating expenses as percentage of sales improved to 32.5% from 34.0% in the prior year period;
- Net loss was $73.6 million compared to net loss of $18.3 million in the prior year period; and
- Adjusted EBITDA was $31.9 million compared to $47.6 million in the prior year period.*
(*Adjusted EBITDA, a non-GAAP financial measure, is reconciled to its corresponding GAAP measure at the end of this press release.)
“During the fourth quarter and entering fiscal 2020, we took significant steps to address recent issues in the business and put the Company back on a path of improved financial results,” said Chris Mottern, Interim CEO. “With strategic intent and contributions from across the Company, we developed five key priorities that the team is executing against with urgency. These priorities are: effective cash management and debt reduction; customer retention and acquisition; efficiently managing coffee brewing equipment, installation and service; enhancing processes and systems; and reducing our SKU counts, and achieving 100% product availability. We entered the new fiscal year in a stronger financial position and have formed a solid foundation on which the Company will be able to stabilize, move forward with momentum and be positioned for long-term success.”
Mr. Mottern, continued, “As announced separately today, we have appointed Deverl Maserang as CEO and look forward to him joining the Company later this month. With more than three decades of innovative leadership in turnarounds, supply chain management expertise, along with deep experience in the food and beverage industry, we believe he is the ideal executive to lead Farmer Brothers into its next stage of growth in the future. The Company remains committed to improving execution and new business generation, with the goal to deliver enhanced value to shareholders.”
Fourth Quarter and Fiscal 2019 Results:
Selected Financial Data
The selected financial data presented below under the captions “Income statement data,” “Operating data” and “Other data” summarizes certain performance measures for the three months and fiscal years ended June 30, 2019 and 2018 (unaudited). In the fourth quarter, the Company adopted changes in accounting principles converting from the last in, first out inventory method to the first in, first out inventory method and reclassifying and capitalizing certain freight, warehousing and other expenses as inventory costs. These changes were adopted retrospectively and all reported prior periods have been adjusted.
| Three Months Ended June 30, | Fiscal Year Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Income statement data: | ||||||||||||||||
| Net sales | $ | 142,050 | $ | 149,538 | $ | 595,942 | $ | 606,544 | ||||||||
| Gross margin | 26.6 | % | 35.3 | % | 30.1 | % | 34.2 | % | ||||||||
| (Loss) income from operations | $ | (7,024 | ) | $ | 1,984 | $ | (14,702 | ) | $ | 1,053 | ||||||
| Net (loss) income | $ | (8,760 | ) | $ | 133 | $ | (73,595 | ) | $ | (18,280 | ) | |||||
| Net income (loss) available to common stockholders per common share-diluted | $ | (0.52 | ) | $ | – | $ | (4.36 | ) | $ | (1.11 | ) | |||||
| Operating data: | ||||||||||||||||
| Coffee pounds | 27,379 | 27,396 | 108,098 | 107,429 | ||||||||||||
| EBITDA | $ | 1,508 | $ | 10,015 | $ | 3,617 | $ | 32,673 | ||||||||
| EBITDA Margin | 1.1 | % | 6.7 | % | 0.6 | % | 5.4 | % | ||||||||
| Adjusted EBITDA | $ | 3,937 | $ | 13,975 | $ | 31,882 | $ | 47,562 | ||||||||
| Adjusted EBITDA Margin | 2.8 | % | 9.3 | % | 5.3 | % | 7.8 | % | ||||||||
| Other data: | ||||||||||||||||
| Capital expenditures related to maintenance | $ | 4,087 | $ | 4,409 | $ | 21,088 | $ | 21,782 | ||||||||
| Total capital expenditures | $ | 4,366 | $ | 9,554 | $ | 34,759 | $ | 37,020 | ||||||||
| Depreciation and amortization expense | $ | 7,835 | $ | 7,737 | $ | 31,065 | $ | 30,464 | ||||||||
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.
Net sales in the fourth quarter of fiscal 2019 were $142.1 million, a decrease of $7.5 million, or 5.0%, from the prior year period. The decrease in net sales was driven primarily by lower sales of coffee and allied products sold through our DSD network, offset by slightly positive growth within our direct sales channel, net of the impact of lower coffee prices for our cost plus customers. Net sales for our direct ship channel continued to improve as we ramped volume of our new large global convenience store retailer and trends improved from one of our largest customers. Sales through our DSD network was impacted by higher customer attrition related