Green Coffee Pounds Increased 6.9%
Income from Operations Increased $1.8 million; Net Income Increased $0.4 million
EBITDA Up 52.7%; Adjusted EBITDA Up by 24.0%
NORTHLAKE, Texas, May 09, 2017 (GLOBE NEWSWIRE) — Farmer Bros. Co. (NASDAQ:FARM) (the “Company”) today reported financial results for the third quarter ended March 31, 2017.
Third Quarter Fiscal 2017 Highlights:
- Volume of green coffee pounds processed and sold increased 6.9% year-over-year
- Gross profit increased 2.4% to $53.8 million
- Income from operations increased $1.8 million to $2.1 million
- Net income increased $0.4 million to $1.6 million
- EBITDA increased 52.7% to $10.0 million and EBITDA Margin was 7.3% an increase of 240 basis points year-over-year*
- Adjusted EBITDA increased 24.0% to $12.2 million, and Adjusted EBITDA Margin was 8.8%, an increase of 150 basis points year-over-year*
- Fully diluted EPS increased to $0.10 from $0.07 in the prior period of last year
(*The non-GAAP financial measures included above are reconciled to their corresponding GAAP measures at the end of this press release).
“We continue to make solid progress in our efforts to successfully execute our turnaround plan as demonstrated by the positive year-over-year improvement in our profitability levels,” said President and CEO, Michael Keown. “We delivered our fifth consecutive quarter of at least mid-single digit volume growth and generated strong momentum within our customer pipeline, particularly in our national accounts. Our recent restructuring efforts are delivering positive results and we remain focused on continuously improving both our operational and financial performance to create substantial value for all stakeholders.”
“We are also excited to announce that with our relocation to Northlake essentially complete, we have now fired up our roasters and have begun to roast coffee in the new facility,” continued Keown. “While we continue to run quality tests and progress towards SQF Level 3 certification, we recently had the opportunity to host an Open House for the media and community leaders to showcase our state-of-the-art facility. Once fully operational, this facility will provide increased capacity as our business expands in the future, both organically and through potential acquisitions.”
Third Quarter 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 ended March 31, 2017 and 2016.
| Three Months Ended March 31, | |||||||||||||
| (In thousands, except per share data) | 2017 | 2016 | Y-o-Y Change | ||||||||||
| Income statement data: | |||||||||||||
| Net sales | $ | 138,187 | $ | 134,468 | +2.8 | % | |||||||
| Gross margin | 38.9 | % | 39.1 | % | -20 bps | ||||||||
| Income from operations | $ | 2,058 | $ | 306 | +572.5 | % | |||||||
| Net income | $ | 1,594 | $ | 1,192 | +33.7 | % | |||||||
| Net income per common share-diluted | $ | 0.10 | $ | 0.07 | $ | 0.03 | |||||||
| Operating data: | |||||||||||||
| Coffee pounds | 24,395 | 22,821 | +6.9 | % | |||||||||
| Non-GAAP net income | $ | 3,049 | $ | 4,022 | -24.2 | % | |||||||
| Non-GAAP net income per diluted common share | $ | 0.17 | $ | 0.24 | $ | (0.07 | ) | ||||||
| EBITDA | $ | 10,049 | $ | 6,580 | +52.7 | % | |||||||
| EBITDA Margin | 7.3 | % | 4.9 | % | +240 bps | ||||||||
| Adjusted EBITDA | $ | 12,180 | $ | 9,820 | +24.0 | % | |||||||
| Adjusted EBITDA Margin | 8.8 | % | 7.3 | % | +150 bps | ||||||||
| Balance sheet and other data: | |||||||||||||
| Total capital expenditures excluding new facility | $ | 6,421 | $ | 2,876 | +123.3 | % | |||||||
| Total capital expenditures | $ | 13,503 | $ | 12,564 | +7.5 | % | |||||||
| Depreciation and amortization expense | $ | 6,527 | $ | 5,234 | +24.7 | % | |||||||
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 increased by 6.9% for the quarter.
Net sales were $138.2 million in the quarter, an increase of 2.8% over the prior year period, primarily as a result of a $5.3 million, or 6.4%, increase in net sales of roast and ground coffee products and a $1.5 million, or 24.4%, increase in net sales of tea products primarily driven by the addition of China Mist, partially offset by a $2.4 million decrease in net sales of spice products resulting from the divestiture of our institutional spice assets and a $0.7 million, or 7.6%, decline in net sales of frozen liquid coffee products resulting from the loss of a large casino customer. Excluding the impact from both the acquisition of China Mist and West Coast Coffee, and the divestiture of our spice assets, net sales increased 2.4%.
Gross profit increased $1.2 million, or 2.4%, in the quarter on higher sales volume but gross margin decreased by 20 basis points. Gross margin decreased by 20 basis points impacted by the startup costs for the Texas production facility partially offset by favorable pricing.
Operating expenses decreased $0.5 million or 0.9% in the quarter, due to a $1.8 million reduction in general and administrative expenses and a $0.6 million decrease in restructuring and other transition expenses offset by a $1.9 million increase in selling expenses. General and administrative expenses decreased primarily due to $1.9 million in lower medical costs partially offset by $0.3 million in acquisition related consulting expenses and $0.2 million in expenses incurred in connection with successfully defending against a proxy contest. Restructuring and other transition expenses declined primarily because most of the planned expenses related to our corporate relocation plan have already been recognized in prior periods partially offset by $1.3 million in costs incurred in the current quarter associated with our D