Farmer Bros. Co. Reports Fourth Quarter and Fiscal 2021 Financial Results
Fourth Quarter Fiscal 2021 Highlights:
- Net sales were
$102.9 million , an increase of$21.8 million , or 26.9%, from the prior year period due to notable improvement in the DSD channel compared to the prior year - Gross margin increased to 27.6% from 19.2% in the prior year period, and was the highest gross margin quarter during fiscal 2021
- Net loss was
$4.0 million compared to a net loss of$9.7 million in the prior year period - Adjusted EBITDA was
$3.4 million compared to$0.7 million in the prior year period* - As of
June 30, 2021 , total debt outstanding was$91.0 million and cash and cash equivalents was$10.3 million - Negotiated new credit facilities, effectively increasing borrowing capacity and flexibility while lowering overall borrowing cost
Fiscal 2021 Highlights:
- Net sales were
$397.8 million , a decrease of$103.5 million , or 20.6%, from the prior year due primarily to the impact of the COVID-19 pandemic - Achieved notable improvement in DSD channel sales compared to pre-COVID levels during fiscal year 2021, with sequential improvement in every quarter, from down 45% at
June 30, 2020 to down 27% for the fourth quarter of 2021 - Gross margin decreased to 25.4% from 27.6% in the prior year, but improved sequentially in every quarter of the year.
- Net loss was
$41.7 million compared to a net loss of$37.1 million in the prior year period - Adjusted EBITDA was
$16.6 million compared to$18.7 million in the prior year period - Successfully completed key initiatives within the company's optimization strategy, including:
- Doubling production and packaging capacity at the
Northlake ,Texas facility - Ending production and fully exiting the aged
Houston, Texas facility - Opening a new
West Coast distribution facility inRialto, California , and - Completing full deployment of new handheld technology on our DSD routes
- Doubling production and packaging capacity at the
(*Adjusted EBITDA, a non-GAAP financial measure, is reconciled to its corresponding GAAP measure at the end of this press release.)
Fourth Quarter and Fiscal 2021 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
Three Months Ended |
Fiscal Year Ended |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Income statement data: | ||||||||||||||||
Net sales | $ | 102,857 | $ | 81,083 | $ | 397,850 | $ | 501,320 | ||||||||
Gross margin | 27.6 | % | 19.2 | % | 25.4 | % | 27.6 | % | ||||||||
Loss from operations | $ | (6,169 | ) | $ | (13,595 | ) | $ | (38,173 | ) | $ | (43,002 | ) | ||||
Net loss | $ | (3,971 | ) | $ | (9,718 | ) | $ | (41,651 | ) | $ | (37,087 | ) | ||||
Net loss available to common stockholders per common share—diluted | $ | (0.24 | ) | $ | (0.57 | ) | $ | (2.39 | ) | $ | (2.19 | ) | ||||
Operating data: | ||||||||||||||||
Total Green Coffee pounds sold | 19,140 | 19,706 | 79,506 | 100,700 | ||||||||||||
Sold through DSD and Other | 5,866 | 5,422 | 21,387 | 31,047 | ||||||||||||
Sold through Direct Ship | 13,274 | 14,283 | 58,119 | 69,653 | ||||||||||||
EBITDA (1) | $ | 8,089 | $ | 184 | $ | 11,480 | $ | (1,796 | ) | |||||||
EBITDA Margin (1) | 7.9 | % | 0.2 | % | 2.9 | % | (0.4 | )% | ||||||||
Adjusted EBITDA (1)(2) | $ | 3,403 | $ | 713 | $ | 16,611 | $ | 18,742 | ||||||||
Adjusted EBITDA Margin (1) | 3.3 | % | 0.9 | % | 4.2 | % | 3.7 | % | ||||||||
Other data: | ||||||||||||||||
Capital expenditures related to maintenance | $ | 1,975 | $ | 1,223 | $ | 7,758 | $ | 11,845 | ||||||||
Total capital expenditures | $ | 2,348 | $ | 4,446 | $ | 15,117 | $ | 17,560 | ||||||||
Depreciation and amortization expense | $ | 6,394 | $ | 7,352 | $ | 27,625 | $ | 29,896 |
(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 fiscal year ended
Net sales in the fourth quarter of fiscal 2021 were
Although our Direct Ship sales channel was also affected by the COVID-19 pandemic, the impact was significantly less due to the types of customers we serve through this channel. These customers include our retail business and products sold by key grocery stores under their private labels, as well as through third party e-commerce platforms. Also, our direct ship sales channel was negatively impacted by accounts we decided to exit during fiscal year 2021 since they were lower or negative profit due to the impacts from COVID-19 on their business.
Gross profit in the fourth quarter of fiscal 2021 was
Operating expenses in the fourth quarter of fiscal 2021 increased
Interest expense in the fourth quarter of fiscal year ended
Also, during the fourth quarter of 2021, we announced the amendment of our post retirement death benefit plan effective immediately. The announcement triggered a re-measurement and resulted in settlement gains of
As a result of the foregoing factors, net loss was
Our maintenance 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
About
Founded in 1912,
Headquartered in
Investor Conference Call
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/wdrttuov 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: (844) 423-9890. The passcode/ID is 1488347.
The audio-only webcast will be archived for at least 30 days on the Investor Relations section of the
Forward-Looking Statements
Certain statements contained in this press release are not based on historical fact and are forward-looking statements within the meaning of federal securities laws and regulations. These statements are based on management's current expectations, assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical or current fact. These forward-looking statements can be identified by the use of words like “anticipates,” “estimates,” “projects,” “expects,” “plans,” “believes,” “intends,” “will,” “could,” “assumes” and other words of similar meaning. Owing to the uncertainties inherent in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. The Company intends these forward-looking statements to speak only at the time of this press release and does not undertake to update or revise these statements as more information becomes available 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)
Year Ended |
Three Months Ended |
|||||||||||||||||||
2021 | 2020 | 2019 | 2021 | 2020 | ||||||||||||||||
Net sales | $ | 397,850 | $ | 501,320 | $ | 595,942 | $ | 102,857 | $ | 81,083 | ||||||||||
Cost of goods sold | 296,925 | 363,198 | 416,840 | 74,478 | 65,536 | |||||||||||||||
Gross profit | 100,925 | 138,122 | 179,102 | 28,379 | 15,547 | |||||||||||||||
Selling expenses | 95,503 | 121,762 | 139,647 | 24,468 | 21,274 | |||||||||||||||
General and administrative expenses | 42,945 | 42,569 | 48,959 | 10,611 | 9,730 | |||||||||||||||
Restructuring and other transition expenses | — | — | 4,733 | — | — | |||||||||||||||
Net (gains) losses from sales of assets | (593 | ) | (25,237 | ) | 465 | (531 | ) | (1,862 | ) | |||||||||||
Impairment of goodwill and intangible assets | — | 42,030 | — | — | — | |||||||||||||||
Impairment of fixed assets | 1,243 | — | — | |||||||||||||||||
Operating expenses | 139,098 | 181,124 | 193,804 | 34,548 | 29,142 | |||||||||||||||
Loss income from operations | (38,173 | ) | (43,002 | ) | (14,702 | ) | (6,169 | ) | (13,595 | ) | ||||||||||
Other (expense) income: | ||||||||||||||||||||
Interest expense | (15,962 | ) | (10,483 | ) | (12,000 | ) | (6,788 | ) | (2,598 | ) | ||||||||||
Postretirement benefits curtailment gains and pension settlement (charge) | 6,359 | 5,760 | (10,948 | ) | 6,359 | — | ||||||||||||||
Other, net | 19,720 | 10,443 | 4,166 | 2,437 | 7,502 | |||||||||||||||
Total other income (expense) | 10,117 | 5,720 | (18,782 | ) | 2,008 | 4,904 | ||||||||||||||
Loss before taxes | (28,056 | ) | (37,282 | ) | (33,484 | ) | (4,161 | ) | (8,691 | ) | ||||||||||
Income tax expense (benefit) | 13,595 | (195 | ) | 40,111 | (190 | ) | 1,027 | |||||||||||||
Net loss | $ | (41,651 | ) | $ | (37,087 | ) | $ | (73,595 | ) | $ | (3,971 | ) | $ | (9,718 | ) | |||||
Less: Cumulative preferred dividends, undeclared and unpaid | 574 | 554 | 535 | 146 | 140 | |||||||||||||||
Net loss available to common stockholders | $ | (42,225 | ) | $ | (37,641 | ) | $ | (74,130 | ) | $ | (4,117 | ) | $ | (9,858 | ) | |||||
Net loss available to common stockholders per common share—basic | $ | (2.39 | ) | $ | (2.19 | ) | $ | (4.36 | ) | $ | (0.24 | ) | $ | (0.57 | ) | |||||
Net loss available to common stockholders per common share—diluted | $ | (2.39 | ) | $ | (2.19 | ) | $ | (4.36 | ) | $ | (0.24 | ) | $ | (0.57 | ) | |||||
Weighted average common shares outstanding—basic | 17,635,402 | 17,205,849 | 16,996,354 | 17,339,939 | 17,339,939 | |||||||||||||||
Weighted average common shares outstanding—diluted | 17,635,402 | 17,205,849 | 16,996,354 | 17,339,939 | 17,339,939 |
FARMER BROS. CO.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share data)
2021 | 2020 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 10,263 | $ | 60,013 | |||
Restricted cash | 175 | — | |||||
Accounts receivable, net of allowance for doubtful accounts of |
40,321 | 40,882 | |||||
Inventories | 76,791 | 67,408 | |||||
Income tax receivable | — | 831 | |||||
Short-term derivative assets | 4,351 | 165 | |||||
Prepaid expenses | 5,594 | 7,414 | |||||
Assets held for sale | 1,591 | — | |||||
Total current assets | 139,086 | 176,713 | |||||
Property, plant and equipment, net | 150,091 | 165,633 | |||||
Intangible assets, net | 18,252 | 20,662 | |||||
Right-of-use operating lease assets | 26,254 | 21,117 | |||||
Other assets | 4,323 | 8,574 | |||||
Total assets | $ | 338,006 | $ | 392,699 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | 45,703 | 36,987 | |||||
Accrued payroll expenses | 15,345 | 9,394 | |||||
Term loan - current | 950 | — | |||||
Operating leases liabilities - current | 6,262 | 5,854 | |||||
Short-term derivative liabilities | 1,555 | 5,255 | |||||
Other current liabilities | 6,425 | 6,802 | |||||
Total current liabilities | 76,240 | 64,292 | |||||
Long-term borrowings under revolving credit facility | 43,500 | 122,000 | |||||
Term loan - noncurrent | 44,328 | — | |||||
Accrued pension liabilities | 39,229 | 58,772 | |||||
Accrued postretirement benefits | 960 | 9,993 | |||||
Accrued workers’ compensation liabilities | 3,649 | 4,569 | |||||
Operating lease liabilities - noncurrent | 20,049 | 15,628 | |||||
Other long-term liabilities | 5,092 | 5,532 | |||||
Total liabilities | $ | 233,047 | $ | 280,786 | |||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, |
15 | 15 | |||||
Common stock, |
17,853 | 17,348 | |||||
Additional paid-in capital | 66,109 | 62,043 | |||||
Retained earnings | 66,311 | 108,536 | |||||
Accumulated other comprehensive loss | (45,329 | ) | (76,029 | ) | |||
Total stockholders’ equity | $ | 104,959 | $ | 111,913 | |||
Total liabilities and stockholders’ equity | $ | 338,006 | $ | 392,699 |
FARMER BROS. CO. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
(In thousands) | |||||||||||
Year Ended |
|||||||||||
2021 | 2020 | 2019 | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (41,651 | ) | $ | (37,087 | ) | $ | (73,595 | ) | ||
Adjustments to reconcile net (loss) to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 27,625 | 29,896 | 31,065 | ||||||||
Provision for doubtful accounts | (877 | ) | 1,379 | 1,363 | |||||||
Impairment of goodwill and intangible assets | — | 42,030 | — | ||||||||
Impairment losses on fixed assets | 1,243 | — | — | ||||||||
Restructuring and other transition expenses, net of payments | — | — | 1,172 | ||||||||
Deferred income taxes | 13,404 | (300 | ) | 41,654 | |||||||
Postretirement benefits and pension settlement cost | (21,077 | ) | (5,760 | ) | 10,948 | ||||||
Net (gains) losses from sales of assets | (593 | ) | (25,237 | ) | 466 | ||||||
ESOP and share-based compensation expense | 4,580 | 4,309 | 3,674 | ||||||||
Net (gains) losses on derivative instruments and investments | (3,250 | ) | 9,818 | 9,196 | |||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | 1,438 | 12,893 | 2,757 | ||||||||
Inventories | (9,383 | ) | 19,530 | 16,192 | |||||||
Income tax receivable | — | — | — | ||||||||
Derivative (liabilities) assets, net | 5,016 | (1,082 | ) | (18,901 | ) | ||||||
Other assets | 11,249 | 990 | 114 | ||||||||
Accounts payable | 7,790 | (35,784 | ) | 16,546 | |||||||
Accrued expenses and other | 3,000 | (14,140 | ) | (7,201 | ) | ||||||
Net cash (used in) provided by operating activities | $ | (1,486 | ) | $ | 1,455 | $ | 35,450 | ||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | (15,117 | ) | (17,560 | ) | (34,760 | ) | |||||
Proceeds from sales of property, plant and equipment | 4,421 | 39,477 | 2,399 | ||||||||
Net cash (used in) provided by investing activities | $ | (10,696 | ) | $ | 21,917 | $ | (32,361 | ) | |||
Cash flows from financing activities: | |||||||||||
Proceeds from revolving and term loan credit facility | $ | 80,742 | $ | 90,000 | $ | 50,642 | |||||
Repayments on revolving and term loan credit facility | (159,242 | ) | (60,000 | ) | (48,429 | ) | |||||
Proceeds from issuance of term loan | 47,500 | — | — | ||||||||
Payments of finance lease obligations | (105 | ) | (53 | ) | (215 | ) | |||||
Payment of financing costs | (6,288 | ) | (418 | ) | (1,049 | ) | |||||
Proceeds from stock option exercises | — | 129 | 507 | ||||||||
Net cash (used in) provided by financing activities | $ | (37,393 | ) | $ | 29,658 | $ | 1,456 | ||||
Net (decrease) increase in cash and cash equivalents | $ | (49,575 | ) | $ | 53,030 | $ | 4,545 | ||||
Cash and cash equivalents and restricted cash at beginning of year | 60,013 | 6,983 | 2,438 | ||||||||
Cash and cash equivalents and restricted cash at end of year | $ | 10,438 | $ | 60,013 | $ | 6,983 |
FARMER BROS. CO. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - (continued) | |||||||||||
(In thousands) | |||||||||||
Year Ended |
|||||||||||
2021 | 2020 | 2019 | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for interest | $ | 5,703 | $ | 4,426 | $ | 5,512 | |||||
Cash paid for income taxes | $ | 355 | $ | 21 | $ | 107 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Non-cash additions to property, plant and equipment | $ | 95 | $ | 446 | $ | 2,619 | |||||
Non-cash portion of earnout payable recognized—West Coast Coffee acquisition | $ | — | $ | — | $ | 400 | |||||
Non-cash Issuance of 401-K shares of Common Stock | $ | 398 | $ | 266 | $ | 37 | |||||
Non-cash post-closing working capital adjustment—Boyd Coffee acquisition | $ | — | $ | — | $ | 2,277 | |||||
Cumulative preferred dividends, undeclared and unpaid | $ | 574 | $ | 554 | $ | 535 |
Non-GAAP Financial Measures
In addition to net (loss) income determined in accordance with
“EBITDA” is defined as net (loss) income excluding the impact of:
- income taxes;
- 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) income excluding the impact of:
- income taxes;
- interest expense (benefit);
- (loss) income from short-term investments;
- depreciation and amortization expense;
- ESOP and share-based compensation expense;
- non-cash impairment losses;
- non-cash pension withdrawal expense;
- restructuring and other transition expenses;
- severance costs;
- proxy contest-related expenses;
- non-recurring costs associated with the COVID-19 pandemic and 2021 severe winter weather;
- net gains and losses from sales of assets;
- non-cash pension settlements and postretirement benefits curtailment; and
- acquisition, integration and strategic initiative 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 excluded the impact of interest expense resulting from the adoption of ASU 2017-07, non-cash pretax pension and postretirement benefits resulting from the amendment and termination of certain
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) income to EBITDA (unaudited):
Year Ended |
Three Months Ended |
|||||||||||||||||||
(In thousands) | 2021 | 2020 | 2019 | 2021 | 2020 | |||||||||||||||
Net loss, as reported | $ | (41,651 | ) | $ | (37,087 | ) | $ | (73,595 | ) | $ | (3,971 | ) | $ | (9,718 | ) | |||||
Income tax expense (benefit) | 13,595 | (195 | ) | 40,111 | (190 | ) | 1,027 | |||||||||||||
Interest expense(1) | 11,911 | 5,590 | 6,036 | 5,856 | 1,523 | |||||||||||||||
Depreciation and amortization expense | 27,625 | 29,896 | 31,065 | 6,394 | 7,352 | |||||||||||||||
EBITDA | $ | 11,480 | $ | (1,796 | ) | $ | 3,617 | $ | 8,089 | $ | 184 | |||||||||
EBITDA Margin | 2.9 | % | (0.4 | )% | 0.6 | % | 7.9 | % | 0.2 | % |
(1) Excludes interest expense related to pension plans and postretirement benefits.
Set forth below is a reconciliation of reported net (loss) income to Adjusted EBITDA (unaudited):
Year Ended |
Three Months Ended |
|||||||||||||||||||
(In thousands) | 2021 | 2020 | 2019 | 2021 | 2020 | |||||||||||||||
Net loss, as reported | $ | (41,651 | ) | $ | (37,087 | ) | $ | (73,595 | ) | $ | (3,971 | ) | $ | (9,718 | ) | |||||
Income tax expense (benefit) | 13,595 | (195 | ) | 40,111 | (190 | ) | 1,027 | |||||||||||||
Interest expense(1) | 11,911 | 5,590 | 6,036 | 5,856 | 1,523 | |||||||||||||||
Depreciation and amortization expense | 27,625 | 29,896 | 31,065 | 6,394 | 7,352 | |||||||||||||||
ESOP and share-based compensation expense | 4,580 | 4,329 | 3,723 | 1,019 | 1,132 | |||||||||||||||
Restructuring and other transition expenses | — | — | 4,733 | — | — | |||||||||||||||
Weather-related event - severe winter weather | 109 | — | — | — | — | |||||||||||||||
Strategic initiatives(2) | 4,203 | 523 | — | 935 | 523 | |||||||||||||||
Net (gains) losses from sales of assets | (593 | ) | (25,237 | ) | 465 | (532 | ) | (1,863 | ) | |||||||||||
Impairment of goodwill and intangible assets | — | 42,030 | — | — | — | |||||||||||||||
Impairment of fixed assets | 1,243 | — | — | — | — | |||||||||||||||
Non-recurring costs associated with the COVID-19 pandemic | 352 | 362 | — | 52 | 233 | |||||||||||||||
Postretirement benefits gains curtailment and pension settlement charge | (6,359 | ) | (5,760 | ) | 10,948 | (6,359 | ) | — | ||||||||||||
Proxy contest-related expenses | — | 463 | — | — | — | |||||||||||||||
Acquisition and integration costs | — | — | 6,123 | — | — | |||||||||||||||
Severance | 1,596 | 3,828 | 2,273 | 199 | 504 | |||||||||||||||
Adjusted EBITDA (3) | $ | 16,611 | $ | 18,742 | $ | 31,882 | $ | 3,403 | $ | 713 | ||||||||||
Adjusted EBITDA Margin | 4.2 | % | 3.7 | % | 5.3 | % |
3.3 | % | 0.9 | % |
(1) Excludes interest expense related to pension plans and postretirement benefits.
(2) Includes initiatives related to the
(3) Adjusted EBITDA for the fiscal year ended
Contact:
Ellipsis
646-776-0886
Source: Farmer Bros. Co.