Farmer Bros. Co. Reports Fiscal Third Quarter 2022 Financial Results
Third Quarter Fiscal 2022 Highlights:
- Net sales were
$119.4 million , an increase of$26.2 million , or 28.2%, from the prior year period due to continued improvement in direct-store-delivery ("DSD") and Direct ship channels - Gross margin expanded for the seventh consecutive quarter to 29.8%, compared to 25.6% in the prior year period
- Net loss improved to
$4.0 million compared to a net loss of$13.7 million in the prior year period - Adjusted EBITDA of
$5.0 million was the highest since the onset of COVID, and compares to a negative EBITDA of$0.8 million in the prior year period - As of
March 31, 2022 , total debt outstanding was$101.1 million , and cash and equivalents were$10.4 million
(*Adjusted EBITDA, a non-GAAP financial measure, is reconciled to its corresponding GAAP measure at the end of this press release.)
Third Quarter Fiscal 2022 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 nine months ended
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(In thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Income statement data: | ||||||||||||||||
Net sales | $ | 119,398 | $ | 93,152 | $ | 346,205 | $ | 294,993 | ||||||||
Gross margin | 29.8 | % | 25.6 | % | 29.5 | % | 24.6 | % | ||||||||
Loss from operations | $ | (3,938 | ) | $ | (10,395 | ) | $ | (10,290 | ) | $ | (32,004 | ) | ||||
Net loss | (4,016 | ) | (13,684 | ) | (11,860 | ) | (37,680 | ) | ||||||||
Net loss available to common stockholders per common share—diluted | $ | (0.23 | ) | $ | (0.78 | ) | $ | (0.68 | ) | $ | (2.17 | ) | ||||
Operating data: | ||||||||||||||||
Total Green Coffee pounds sold | 18,798 | 18,026 | 58,466 | 60,366 | ||||||||||||
Sold through DSD and Other | 5,848 | 5,336 | 18,310 | 15,522 | ||||||||||||
Sold through Direct Ship | 12,950 | 12,690 | 40,156 | 44,844 | ||||||||||||
EBITDA (1) | $ | 2,577 | $ | (4,800 | ) | $ | 11,055 | $ | 3,391 | |||||||
EBITDA Margin (1) | 2.2 | % | (5.2 | )% | 3.2 | % | 1.1 | % | ||||||||
Adjusted EBITDA (1)(2) | $ | 5,021 | $ | (759 | ) | $ | 13,009 | $ | 13,207 | |||||||
Adjusted EBITDA Margin (1) | 4.2 | % | (0.8 | )% | 3.8 | % | 4.5 | % | ||||||||
Other data: | ||||||||||||||||
Capital expenditures related to maintenance | $ | 2,985 | $ | 2,042 | $ | 7,893 | $ | 5,783 | ||||||||
Total capital expenditures | 3,009 | 3,133 | 8,896 | 12,769 | ||||||||||||
Depreciation & amortization expense | 5,791 | 6,883 | 18,119 | 21,231 |
(1) | 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. |
(2) | Adjusted EBITDA for the nine months ended |
Net sales in the third quarter of fiscal 2022 were
Throughout the quarter ended
Our Direct ship channel sales improved 23.7% during the three months ended
Gross profit in the third quarter of fiscal 2022 was
Operating expenses in the third quarter of fiscal 2022 increased
Interest expense in the third quarter of fiscal 2022 decreased
Other, net in the three months ended
Tax expense in the three months ended
As a result of the foregoing factors, net loss was
Our capital expenditures for the three months ended
As of
Non-GAAP Financial Measures:
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP (
Adjusted EBITDA was positive
Investor Conference Call
The Company will host an audio-only investor conference call today,
The call will be open to all interested investors through a live audio web broadcast via the Internet at https://edge.media-server.com/mmc/p/5cwe5vqg and at the Company’s website www.farmerbros.com under “Investor Relations.” The call also will be available to investors and analysts by dialing Toll Free: (877) 270-2148.
The audio-only webcast will be archived for at least 30 days on the Investor Relations section of the
About
Founded in 1912,
Headquartered in
Forward-Looking Statements
This press release and other documents we file with the
Factors that could cause actual results to differ materially from those in forward-looking statements include, but are not limited to, duration of the disruption to our business and customers from the COVID-19 pandemic and severe winter weather, levels of consumer confidence in national and local economic business conditions, the duration and magnitude of the pandemic’s impact on unemployment rates, the success of our strategy to recover from the effects of the pandemic, the success of our turnaround strategy, the execution of our five strategic initiatives, the impact of capital improvement projects, the adequacy and availability of capital resources to fund our existing and planned business operations and our capital expenditure requirements, the relative effectiveness of compensation-based employee incentives in causing improvements in our performance, the capacity to meet the demands of our large national account customers, the extent of execution of plans for the growth of our business and achievement of financial metrics related to those plans, our success in retaining and/or attracting qualified employees, our success in adapting to technology and new commerce channels, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in availability and cost of green coffee, competition, organizational changes, the effectiveness of our hedging strategies in reducing price and interest rate risk, changes in consumer preferences, our ability to provide sustainability in ways that do not materially impair profitability, changes in the strength of the economy, business conditions in the coffee industry and food industry in general, our continued success in attracting new customers, variances from budgeted sales mix and growth rates, weather and special or unusual events, as well as other risks, uncertainties and assumptions described from time to time in our filings with the
Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this press release and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise, except as required under federal securities laws and the rules and regulations of the
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales | $ | 119,398 | $ | 93,152 | $ | 346,205 | $ | 294,993 | ||||||||
Cost of goods sold | 83,838 | 69,274 | 244,197 | 222,447 | ||||||||||||
Gross profit | 35,560 | 23,878 | 102,008 | 72,546 | ||||||||||||
Selling expenses | 27,477 | 22,767 | 81,505 | 71,035 | ||||||||||||
General and administrative expenses | 11,595 | 11,018 | 34,796 | 32,334 | ||||||||||||
Net losses (gains) from sales of assets | 426 | 488 | (4,003 | ) | (62 | ) | ||||||||||
Impairment of fixed assets | — | — | — | 1,243 | ||||||||||||
Operating expenses | 39,498 | 34,273 | 112,298 | 104,550 | ||||||||||||
Loss from operations | (3,938 | ) | (10,395 | ) | (10,290 | ) | (32,004 | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest income | (1,591 | ) | (2,993 | ) | (7,106 | ) | (9,174 | ) | ||||||||
Other, net | 1,579 | (356 | ) | 5,790 | 17,283 | |||||||||||
Total other income (expense) | (12 | ) | (3,349 | ) | (1,316 | ) | 8,109 | |||||||||
Loss before taxes | (3,950 | ) | (13,744 | ) | (11,606 | ) | (23,895 | ) | ||||||||
Income tax expense | 66 | (60 | ) | 254 | 13,785 | |||||||||||
Net loss | $ | (4,016 | ) | $ | (13,684 | ) | $ | (11,860 | ) | $ | (37,680 | ) | ||||
Less: Cumulative preferred dividends, undeclared and unpaid | 149 | 144 | 444 | 428 | ||||||||||||
Net loss available to common stock holders | $ | (4,165 | ) | $ | (13,828 | ) | $ | (12,304 | ) | $ | (38,108 | ) | ||||
Net loss available to common stockholders per common share—basic | $ | (0.23 | ) | $ | (0.78 | ) | $ | (0.68 | ) | $ | (2.17 | ) | ||||
Net loss available to common stockholders per common share—diluted | $ | (0.23 | ) | $ | (0.78 | ) | $ | (0.68 | ) | $ | (2.17 | ) | ||||
Weighted average common shares outstanding—basic | 18,289,522 | 17,756,619 | 18,118,320 | 17,569,026 | ||||||||||||
Weighted average common shares outstanding—diluted | 18,289,522 | 17,756,619 | 18,118,320 | 17,569,026 |
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share data)
2022 | 2021 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 10,378 | $ | 10,263 | |||
Restricted cash | 175 | 175 | |||||
Accounts and notes receivable, net of allowance for doubtful accounts of |
47,443 | 40,321 | |||||
Inventories | 100,645 | 76,791 | |||||
Short-term derivative assets | 6,088 | 4,351 | |||||
Prepaid expenses | 4,834 | 5,594 | |||||
Assets held for sale | — | 1,591 | |||||
Total current assets | 169,563 | 139,086 | |||||
Property, plant and equipment, net | 141,614 | 150,091 | |||||
Intangible assets, net | 16,456 | 18,252 | |||||
Other assets | 3,145 | 4,323 | |||||
Right-of-use operating lease assets | 28,011 | 26,254 | |||||
Total assets | $ | 358,789 | $ | 338,006 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | 63,059 | 45,703 | |||||
Accrued payroll expenses | 13,662 | 15,345 | |||||
Right-of-use operating lease liabilities - current | 7,311 | 6,262 | |||||
Term loan - current | 3,800 | 950 | |||||
Short-term derivative liability | 1,691 | 1,555 | |||||
Other current liabilities | 7,810 | 6,425 | |||||
Total current liabilities | 97,333 | 76,240 | |||||
Long-term borrowings under revolving credit facility | 54,500 | 43,500 | |||||
Term loan - noncurrent | 40,894 | 44,328 | |||||
Accrued pension liabilities | 37,947 | 39,229 | |||||
Accrued postretirement benefits | 1,007 | 960 | |||||
Accrued workers’ compensation liabilities | 3,381 | 3,649 | |||||
Right-of-use operating lease liabilities | 21,175 | 20,049 | |||||
Other long-term liabilities | 1,822 | 5,092 | |||||
Total liabilities | $ | 258,059 | $ | 233,047 | |||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, |
15 | 15 | |||||
Common stock, |
18,302 | 17,853 | |||||
Additional paid-in capital | 70,187 | 66,109 | |||||
Retained earnings | 54,007 | 66,311 | |||||
Less accumulated other comprehensive loss | (41,781 | ) | (45,329 | ) | |||
Total stockholders’ equity | $ | 100,730 | $ | 104,959 | |||
Total liabilities and stockholders’ equity | $ | 358,789 | $ | 338,006 |
FARMER BROS. CO. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||
(In thousands) | |||||||
Nine Months Ended |
|||||||
2022 | 2021 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (11,860 | ) | $ | (37,680 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 18,119 | 21,231 | |||||
Impairment of fixed assets | — | 1,243 | |||||
Postretirement Medical benefits gains | — | (14,577 | ) | ||||
Deferred income taxes | — | 13,472 | |||||
Net gains from sales of assets | (4,003 | ) | (62 | ) | |||
Net gains on derivatives instruments | (12,798 | ) | (2,875 | ) | |||
Other adjustments | 4,963 | 3,124 | |||||
Change in operating assets and liabilities: | |||||||
Accounts receivable | (7,559 | ) | 4,210 | ||||
Inventories | (25,610 | ) | (7,744 | ) | |||
Derivative assets, net | 13,223 | 3,309 | |||||
Other assets | 1,989 | 3,184 | |||||
Accounts payable | 16,921 | 6,496 | |||||
Accrued expenses and other | (3,012 | ) | 3,181 | ||||
Net cash used in operating activities | (9,627 | ) | (3,488 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property, plant and equipment | (8,896 | ) | (12,796 | ) | |||
Proceeds from sales of property, plant and equipment | 9,062 | 2,009 | |||||
Net cash provided by (used in) investing activities | 166 | (10,787 | ) | ||||
Cash flows from financing activities: | |||||||
Proceeds from Credit Facilities | 15,000 | 27,150 | |||||
Repayments on Credit Facilities | (4,950 | ) | (61,150 | ) | |||
Payments of finance lease obligations | (144 | ) | (57 | ) | |||
Payment of financing costs | (330 | ) | (3,207 | ) | |||
Net cash provided by (used in) financing activities | 9,576 | (37,264 | ) | ||||
Net decrease in cash and cash equivalents and restricted cash | 115 | (51,539 | ) | ||||
Cash and cash equivalents and restricted cash at beginning of period | 10,438 | 60,013 | |||||
Cash and cash equivalents and restricted cash at end of period | $ | 10,553 | $ | 8,474 |
Non-GAAP Financial Measures
In addition to net loss determined in accordance with
“EBITDA” is defined as net loss excluding the impact of:
- income tax expense;
- interest expense; and
- depreciation and amortization expense.
“EBITDA Margin” is defined as EBITDA expressed as a percentage of net sales.
“Adjusted EBITDA” is defined as net loss excluding the impact of:
- income tax expense;
- interest expense;
- depreciation and amortization expense;
- ESOP and share-based compensation expense;
- restructuring and other transition expenses;
- strategic initiatives;
- impairment of fixed assets;
- non-recurring costs associated with the COVID-19 pandemic and 2021 severe winter weather;
- net gains and losses from sales of assets; and
- severance costs.
“Adjusted EBITDA Margin” is defined as Adjusted EBITDA expressed as a percentage of net sales.
For purposes of calculating EBITDA and EBITDA Margin and Adjusted EBITDA and Adjusted EBITDA Margin, we have not adjusted for the impact of interest expense on our pension and postretirement benefit plans.
We believe these non-GAAP financial measures provide a useful measure of the Company’s operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company’s ongoing operating performance. Further, management utilizes these measures, in addition to GAAP measures, when evaluating and comparing the Company’s operating performance against internal financial forecasts and budgets.
We believe that EBITDA facilitates operating performance comparisons from period to period by isolating the effects of certain items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense). We also present EBITDA and EBITDA Margin because (i) we believe that these measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry, (ii) we believe that investors will find these measures useful in assessing our ability to service or incur indebtedness, and (iii) we use these measures internally as benchmarks to compare our performance to that of our competitors.
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin, as defined by us, may not be comparable to similarly titled measures reported by other companies. We do not intend for non-GAAP financial measures to be considered in isolation or as a substitute for other measures prepared in accordance with GAAP.
Set forth below is a reconciliation of reported net loss to EBITDA (unaudited) and EBITDA Margin:
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (4,016 | ) | $ | (13,684 | ) | $ | (11,860 | ) | $ | (37,680 | ) | ||||
Income tax (benefit) expense | 66 | (60 | ) | 254 | 13,785 | |||||||||||
Interest expense (1) | 736 | 2,061 | 4,542 | 6,055 | ||||||||||||
Depreciation and amortization expense | 5,791 | 6,883 | 18,119 | 21,231 | ||||||||||||
EBITDA | $ | 2,577 | $ | (4,800 | ) | $ | 11,055 | $ | 3,391 | |||||||
EBITDA Margin | 2.2 | % | (5.2 | )% | 3.2 | % | 1.1 | % |
(1) | Excludes interest expense related to pension plans and postretirement benefits plan. |
Set forth below is a reconciliation of reported net loss to Adjusted EBITDA (unaudited) and Adjusted EBITDA Margin:
Three Months Ended |
Nine Months Ended |
|||||||||||||||
(In thousands) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (4,016 | ) | $ | (13,684 | ) | $ | (11,860 | ) | $ | (37,680 | ) | ||||
Income tax (benefit) expense | 66 | (60 | ) | 254 | 13,785 | |||||||||||
Interest expense(1) | 736 | 2,061 | 4,542 | 6,055 | ||||||||||||
Depreciation and amortization expense | 5,791 | 6,883 | 18,119 | 21,231 | ||||||||||||
ESOP and share-based compensation expense | 2,018 | 1,611 | 5,015 | 3,561 | ||||||||||||
Strategic initiatives | — | 1,593 | — | 3,268 | ||||||||||||
Net losses (gains) from sale of assets | 426 | 488 | (4,003 | ) | (62 | ) | ||||||||||
Severance | — | 200 | 942 | 1,397 | ||||||||||||
Weather-related event - 2021 severe winter weather | — | 109 | — | 109 | ||||||||||||
Non-recurring costs associated with the COVID-19 pandemic | — | 40 | — | 300 | ||||||||||||
Impairment of fixed assets | — | — | — | 1,243 | ||||||||||||
Adjusted EBITDA(2) | $ | 5,021 | $ | (759 | ) | $ | 13,009 | $ | 13,207 | |||||||
Adjusted EBITDA Margin | 4.2 | % | (0.8 | )% | 3.8 | % | 4.5 | % |
(1) | Excludes interest expense related to pension plans and postretirement benefit plans. |
(2) | Adjusted EBITDA for the nine months ended |
Investor Relations Contact
Ellipsis IR
Investor.relations@farmerbros.com
646-776-0886
Source: Farmer Bros. Co.