Farmer Bros.: Reports Fiscal Q3-2024 Financial Results

Northlake / TX. (bc) Farmer Bros. Company reported its third quarter fiscal 2024 financial results for the period ended March 31, 2024. The company filed its Form 10-Q and published its quarterly shareholder letter, which contains additional details regarding the results. Both of those documents can be found on the Investor Relations section of the company’s website.

Financial results

Third quarter fiscal 2024 net sales were USD 85.4 million compared to USD 85.7 million in the third quarter of fiscal 2023. Overall, net sales decreased slightly on a year-over-year basis due to a reduction in unit sales, offset by higher pricing.

Gross margins increased 660 basis points on a year-over-year basis to 40.1 percent compared to 33.5 percent for the third quarter of the prior year. Gross profit during the quarter increased USD 5.5 million to USD 34.2 million, or 19 percent on a year-over-year basis, compared to USD 28.8 million for the third quarter of fiscal 2023. The increase in gross margin was primarily due to improved pricing and a decrease in underlying commodity cost compared to the prior year period. While the company does not expect results to be linear quarter to quarter, it remains confident it is well positioned to sustain gross margins within this range over time.

Operating expenses decreased slightly from USD 35.6 million in the third quarter of fiscal 2023 to USD 34.7 million in the third quarter of fiscal 2024. This decrease was due to a USD 2.3 million increase in net gains associated with the sale of branch properties and other assets, but was partially offset by a USD 1.3 million increase in selling expenses and a USD 0.2 million increase in general and administrative expenses during the third quarter. The selling expense increase was primarily due to additional costs related to vehicle rent expense, healthcare benefits and other benefit-related expenses, partially offset by a decrease in advertising-related expenses.

Net income from continuing operations moved to a loss of USD 0.7 million in the third quarter of fiscal 2024 compared to a loss of USD 6.9 million during the prior year period, an improvement of approximately USD 6.2 million on a year-over-year basis.

Adjusted Ebitda for the third quarter of fiscal 2024 remained positive for the second consecutive quarter at USD 0.3 million compared to a loss of USD 0.6 million in the third quarter of fiscal 2023.

Balance Sheet and Liquidity

As of March 31, 2024, Farmer Brothers had USD 5.5 million of unrestricted cash and cash equivalents and USD 0.2 million in restricted cash. The company had outstanding borrowings of USD 23.3 million, utilized USD 4.6 million of the letters of credit sub-limit and had USD 30.5 million of availability under its revolver credit facility. The company believes it is adequately capitalized to finance its operations in fiscal 2024 and expects to achieve its goal to be free cash flow2 positive in early fiscal 2025.

«Farmer Brothers delivered another solid quarter of execution. Highlighted by year-over-year improvement in gross margin and adjusted Ebitda, our recent performance reflects the strides we have made and the early wins we have achieved related to the transformation of our direct store delivery (DSD) business,» said President and Chief Executive Officer John Moore. «There is still much work to be done though as we are just beginning to realize results associated with a number of our initiatives. Overall, we remain focused on streamlining production, realizing sustainable operational and cost efficiencies, and driving customer growth and retention. We are confident the foundation we are building will create long-term, sustainable growth and profitable value creation.»