NORTHLAKE, Texas, Feb. 11, 2019 (GLOBE NEWSWIRE) — Farmer Bros. Co. (NASDAQ: FARM) (the “Company”) today reported financial results for its second fiscal quarter ended December 31, 2018.

Second Quarter Fiscal 2019 Highlights:

  • Volume of green coffee processed and sold decreased by 1.7 million pounds to 27.4 million pounds, a 5.8% decrease over the prior year period;
    • Green coffee pounds processed and sold through our DSD network were 9.9 million, or 36.0% of total green coffee pounds processed and sold
    • Direct ship customers represented 17.0 million, or 62.2%, of total green coffee pounds processed and sold
    • Distributor customers represented 0.5 million pounds, or 1.8%, of total green coffee pounds processed and sold
  • Net loss was $(10.1) million compared to net loss of $(17.1) million in the prior year period; and
  • Adjusted EBITDA was $12.4 million compared to $10.5 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.)

“As we pass the halfway mark in fiscal 2019, while sales were softer than anticipated during the quarter, our team has continued to make progress in executing our strategy and implementing initiatives to strengthen our platform,” said Mike Keown, President and CEO. “Our results in the second quarter reflect the realization of the synergies from the Boyd’s acquisition and we are pleased to have improved Adjusted EBITDA by 18%, while also remaining on track to achieve our targeted range for the fiscal year of $49 million to $52 million. We are making headway in optimizing our DSD routes and consolidating branches, while also continuing to enhance our street sales teams. Our team continues to focus on adding new customers as well as increasing business with existing customers. Looking forward, we remain optimistic about Farmer Brothers’ long-term growth opportunities and we believe that we have the right foundation in place to deliver value for our shareholders.”

Second Quarter 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 and six months ended December 31, 2018 and 2017 (unaudited). Reported prior periods have been retrospectively adjusted to reflect the impact of certain changes in accounting principles and corrections to previously issued financial statements adopted in the fourth quarter of fiscal 2018, and the adoption of new accounting standards in the three and six months ended December 31, 2018 that required retrospective application.

Three Months Ended December 31, Six Months Ended December 31,
2018 2017 2018 2017
(In thousands, except per share data)
Income statement data:
Net sales $ 159,773 $ 167,366 $ 307,213 $ 299,079
Gross margin 33.3 % 33.6 % 33.0 % 34.2 %
Income (loss) from operations $ 502 $ 10 $ (1,576 ) $ 1,854
Net loss $ (10,100 ) $ (17,060 ) $ (13,086 ) $ (16,220 )
Net loss available to common stockholders per common share-diluted $ (0.60 ) $ (1.03 ) $ (0.79 ) $ (0.98 )
Operating data:
Coffee pounds 27,398 29,086 52,845 52,301
EBITDA $ (3,188 ) $ 8,666 $ 1,470 $ 17,874
EBITDA Margin (2.0 )% 5.2 % 0.5 % 6.0 %
Adjusted EBITDA $ 12,443 $ 10,510 $ 23,410 $ 22,958
Adjusted EBITDA Margin 7.8 % 6.3 % 7.6 % 7.7 %
Other data:
Capital expenditures related to maintenance $ 7,104 $ 7,247 $ 12,567 $ 11,757
Total capital expenditures $ 15,332 $ 8,474 $ 23,120 $ 16,249
Depreciation and amortization expense $ 7,902 $ 8,077 $ 15,630 $ 15,330

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 second quarter of fiscal 2019 were $159.8 million, a decrease of $7.6 million, or 4.5%, over the prior year period. The decline was driven primarily by lower volume in our direct ship business, the impact of lower coffee prices for our cost plus customers, a reduction in industrial soup base revenues associated with the Boyd business acquisition which we stopped selling in the first quarter of the current fiscal year, and a decline in revenues sold through our DSD network.

Gross profit in the second quarter of fiscal 2019 was $53.2 million, a decrease of $3.0 million, or 5.4% over the prior year period and gross margin decreased to 33.3% from 33.6%. The decrease in gross profit in the second quarter of fiscal 2019 was primarily due to higher coffee brewing equipment costs associated with increased installation activity during the period, higher freight