FARM - Earnings call transcript Q4 2024

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Operator

Good afternoon, and welcome to the Farmer Brothers Fiscal Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

Earlier today, the company filed its Form 10-K and issued its fourth quarter and full year earnings results press release, which is available on the Investor Relations section of Farmer Brothers website at farmerbros.com. The release is also included as an exhibit on the company's Form 10-K and is available on its website and the Securities and Exchange Commission's website at sec.gov. A replay of this audio-only webcast will also be available on the company's website approximately 2 hours after the conclusion of this call.

company's call, unaudited all by statements and this and about the information the management for begin and regulations. the call is plans federal the presented various the provisions the we purposes please constitute safe of note financial during prospects of Before may expectations, harbor forward-looking under future remarks laws made securities views and as statements the any representing company's should today not represent of as be forward-looking These the date. as company's of subsequent upon relied views Results materially differ from could those forward-looking statements.

could Additional factors statements actual on company's events information other in to available materially which release forward-looking cause those results filings. public from and and the differ is

margin, call, certain comparable operating also reference company's in management non-GAAP including performance. SEC non-GAAP Reconciliation today's release of adjusted is measures measures will the directly assessing adjusted most in company's to their and these the measures, On included EBITDA also financial GAAP financial EBITDA and filings.

the Farmer please will go call Moore, I over ahead. Mr. and turn Brothers Chief Officer, Moore. to now John Executive President

John Moore

Good thank for you joining and afternoon, us. everyone,

than profitability. speed bit, grow proven joined more organizations Farmer operational our of experience our into years operations first on been Vance, would Financial we just in to our record DSD Brothers whom has and efforts. Vance revenue track will up Chief like is to officially and a and helping the our financial welcome and new discussion, in brings XX June jump Officer, who hear from Fisher, to call Before financial getting for take joining of I transformation He and quickly moment you time. a a leadership

him to leadership on excited team. incredibly our are have We

for a year truly transformative This been has Farmer Brothers. one past

on the our of focus we know, sale the the more to XXXX TreeHouse to you profitable As Foods decision business. fiscal as just to prior our made DSD direct ship we start of business completed

operational driving value our capabilities focused have customer efficiency to on technology optimizing overall last drive chain, the been XX months, we better and Over our enhancing service.

our with Portland, headquarters Oregon agreement Dallas-Fort the facility distribution to our move During center to to this our improvements our during centralized time, service and Worth This savings exit quarter, we which footprint efforts to production us of cost physical co-manufacturing TreeHouse, capabilities. the our included roasting and overall of optimized routes. drive both and completed optimize eliminating network distribution and fourth customer allowed without our our

expect savings We strategic XXXX. in these meaningful deliver adjustments to fiscal

our implemented we operational for new structure stronger a have within took SKU From rationalization capabilities important steps address and over to a a an sales foundation transformative year. began growth past built out-of-stock organization, We standpoint, the our no have needs time ensure right pyramid brand customers' we and proposition place the to unique matter right be. value vast or the meet how initiative and they may our at at products in to right the the right

the allow of on future recent us seen including given best works to focus foundation Furthermore, structure and has specialty has within them pyramid margins fluctuations, a coffee stronger give our highs brand our DSD each Overall, a us the for traditional within offered premium on us price that will positioned to in coffee growth proposition flexible options value and protect market record have better we the nationwide the at customers scale. and participate pricing. to tiers through more for

While time. takes this made, change we progress magnitude we of proud have of significant are the

organization. drive structure our focusing adjustments continuing can make retention we to visibility the look areas further and where as and have Over as greater identified on results. last is greater aggressively our operational gained we to what growth fourth efforts and quarter cost overall performance our in highlighted further capability, across the we working rightsize enhancing This year, additional customer includes into

turn I'll over detail. to that, Vance? our Vance it in financials discuss to more With

Vance Fisher

Thanks, John, have way, a you company. is opportunity at with grow and today. that and here, profitable grow to and for passion an and appreciate and This Brothers. in the be a everyone. opportunity real Farmer companies a speak the to have I here all I joined I helping pleasure exciting It's hello, saw time to sustainable

significant can the the I've ahead. of company the and Since the gaining path. of John joining that what on help I'm with organization lie and Brothers on excited shareholders. getting value how drive leadership winning seen been to this in and operations immersing the better first I've a creation and days, speed encouraged members and been I'm by myself our assessing to team journey put understanding challenges and XX business rest opportunities with the best and June, for partnering I about I've in support team up my Farmer also a

continuing fourth results. With financial quick in reported a 'XX that, to I'll and A turn operations the our reflecting our are basis, these year fiscal performance on quarter full year prior reminder, results performance in Form periods. the refer DSD XX-K, to and business information respective for of which SEC our discontinued our regarding operations. respective continuing the with of filed the was our further Please today,

the both which quarter the and fourth year fiscal has reflect been and our efficiencies, made John mentioned. optimizing progress as for results capturing operations in Our

we we renewed areas forward. going to drive continue growth However, they focus profitability to sustainable as also work reflect and will on

decreased was of Net to sales year to slightly fourth a fiscal volume. 'XX by prior sales for driven in compared X% decline the The by quarter million. $XX.X the decrease

due pricing, a in sales net of compared was $XXX to This increase volume. our we 'XX. year 'XX, which fiscal offset For sales million, million stronger decline was in partially a fiscal achieved $XXX.X to $X.X by million full increase primarily

compared a which quarter, to margins or the the in fiscal year prior profit of for Gross fiscal increased margins to fourth year. the Gross of due to in optimization $XX.X pricing million 'XX. for Gross increased basis full XXX XX.X%. increase fiscal million, compared XX.X%, in fourth year million million XX.X% in million profit the to This a to primarily 'XX. was gross point during the period XXX fiscal $XX.X compared quarter year $XXX.X was efforts million $XXX.X 'XX. our gross increased during to improvement quarter $XX.X the margin to the basis points $X to During improvement XX.X% compared was XX%

by facility increase the year expenses the was decrease Operating $X benefits. The to in a in and by The increase personnel period to million related decreased prior sale $X.X offset a decrease primarily branch administrative in of properties due other and health million a expenses and the $X.X selling compared assets general was of by the expenses to quarter in a million mostly quarter fourth $XXX,XXX result decrease gains driven to in but costs. expenses. increase in related during selling additional rent care costs G&A primarily in was a and

year, a increase increased in which costs result was in The and primarily selling severance G&A and the fiscal increase primarily expenses related increase by other costs increase properties personnel-related fiscal full The and expenses driven $X.X rent offset a of care was other For related in by $XX.X an in $X.X branch of year the of selling expenses health $XXX,XXX to expenses, was the 'XX. million an during was sale in benefits. compared assets. costs increase rent. a to result G&A and facilities and additional million million to operating by This mostly gains increase in facility

$X.X of to loss for million Our from loss a continuing loss a quarter million last to moved net of fourth the compared $XX.X operations year.

year-over-year full a For of compared a $XX.X $XX of on loss during basis. than million year improved net period, to to improvement fiscal the million the year, more loss $X.X prior million an

million. In addition, our quarter adjusted by to EBITDA loss of million $X.X loss for the $X.X improved a

fiscal adjusted $XXX,XXX $XX at full million EBITDA positive fiscal loss the improvement. compared an almost in to a year, $XX.X was For 'XX, million

sheet. the at Looking balance

believe in cash as cash outstanding we equivalents borrowings the to credit we and to are June significant have of finance our that million adjusted million over support we are capitalized targeted operations our adequately we of facility our unrestricted towards additional margin of with building As and underscore our long-term EBITDA under a $XX.X in and gross flow. achieved $X.X capacity. XXXX, borrowing $XX.X revolving year fiscal we XX, creation. had million free past foundation improvements strong positive The value 'XX cash progress confidence We

it John. turn I'll back to that, John? With

John Moore

Thanks, Vance.

we significant XXXX by enhancing reducing cost our our structure. operations upgrading technology, out-of-stock fiscal realigning improving toward have progress in As capabilities, heard, our make you to able our SKU were redundancies and

Brothers. customers Farmer production product are penetration as take growth specialty bearing meet there products launch is drive to industry-leading attracting potential value we customer our clearly year allows efforts efforts is proposition streamline brand upcoming and launch create our coffee customers our our network. Overall, advantage and we customer the and adjusted identifies further fruit, Furthermore, as these us already and later demands. margin value full providing gross continue top optimize line defines the while we results, of on in focused recent profitable to drive our they These growth of help evidenced to While tier of on-trend wherever and Farmer also Boyd's and new this be. considerable and meet rebrand base driving high-quality processes, believe will coffee remain nationwide may by EBITDA to and current calendar within existing to opportunity DSD Brothers

profitability anticipate initiatives We and the are there improved over year we past We having and have a impact. indications quarters the margin believe ahead. over the are actions net taken early positive gross

future manage given commodity could and markets performance. impact to We are, macro that headwinds financial however, factors working other our

moment for to Farmer in our we for of Before century-old would and like of we resiliency more organization company. as teams questions, teams the and hard not work especially a response today it our any the is Brothers. their change to without I'm true where dedication. would such and in be we this and take new proud across to leaders continued are challenging, open I Making is initiatives, strength very up large-scale thank than industry our

So thank you.

it on call that, all will you for open up questions. we for today. With thank to Operator, want now joining us the I

Operator

Group. [Operator Instructions] The is from Craig-Hallum first Des Eric Lauriers with question

Eric Des Lauriers

looking on in for the one year. significant rates. an of know your the X you first fulfillment update I First me, quarters for saw improvements there just

think you're QX to early I said those trend in you and mid-innings improvements. in of in fulfillment kind did rates quarter, months the How since? perhaps last

John Moore

you for to joining great Thank call. have Eric, the you.

last in that the you're identified I we degradation the definitely of seeing and is year continuing year. early in We're part that we're noted attrition first rates. There the general had reason of appropriate we've fiscal the was that an think some improvement facing. that for on fulfillment you seeing the what on trend were

It very time reinforced roasted in only and I'm products specifically to finished And we've linked that by the happy past. that according but progress the then to was and was to we allied equipment course tremendous rates last It in goods had also field we've in right? data not side, analytics the that in the over the of linked in say done. and that the to fulfillment specifically spoken year. our the those made

we at are And completely running at moment, would almost, the state. say, I resolved a

we be the XX-plus the accurate So we the have planning roasting, in branches now to the the network the the and meaning from deliveries ultimately and good extending pretty feel to through that out then distribution way and product routes centers, much all extent need to manufacturing, finished identified customers. to we sourcing to demand those through

At achieved we're we've been have measures inventory, equipment the that finished on we've taken the goods seeing the with time effective. same extremely side that also

deploy the branch that, made been at redeploy that accelerate equipment again, to level successful. resources. the to has out So sure field market. speed We some And did we we to to very inventories ready our had

happy fronts. progress very both report that on tremendous made I'm to So we've

Eric Des Lauriers

to Yes. Great That's hear. news. great

of you of now perhaps of that sort partially pyramid, your what an to just terms of sort were there transition? you that are completed brand provide and overhaul. know maybe sort where update I complete In you remains on Could in

John Moore

Again, great very those Farmer to schedule. on we're SKU transitioned Sure. completely. That's completed happy rebrand Both We've Brothers efforts. question. sets the and Boyd's been of almost report a have

report finished the over remaining always again any transition, couple that Even the are the concerns SKUs worked months. being have period left we from that somewhat last some or pretty with transition of with next really any through, other tail have goods inventory and is happy reserve associated on working schedule. sets. don't now transition activity to SKU much through But see need about that you with obsolete inventory to a of now kind over are a As

has When the the side Brothers route as from been pretty and see network identified Farmer and set we were we've through on Boyd's transition route we is Boyd's end schedule, we collapsing that brand. of new the calendar products SKU talk year. So exciting tail selling specialty especially to SKU for it. that a various into traditional been the the to sub-brands successful looking we And all And the of the tier That, us see and adoption the on had down completion to the into distributed what's successfully level. we other again, brand other at much sets. of way the the we're launch that the forward and distributed see level. the the launching that it, the the is that We having of similarly, about

Eric Des Lauriers

market? be your how would great ambient as last on update provide an are just me of guess one great. the SHOTT are That's Just hear liquid coffee products here. I accepted and All Could progressing well. to right. those how sort for in you being innovative like

John Moore

our think that I of are all-natural interesting shelf-stable X SHOTT non-GMO, the of These new, on base about what's on products. We're the always No, customer syrups, provide the going incredible part again, with to SHOTT quality. excited with side SHOTT. with product, Sure. many looking represent portfolio we're ambient,

We SHOTT. adopted customers that have recently have some new

exciting that new are are that some contracts have us. through for We going very

with positive we're some growth adoption. some SHOTT, positive So seeing

of XXX%. our ambient with -- us positive destiny for us improvement the is have associated liquid consumer the side, significant chain past. with with on outstanding. And that ambient. that's for product. that that And SKUs control we in own this We're frozen chain is some not to And as supply in over in product. the allows quality did this growing had that liquid the again, a The significant we similarly, the seeing Boyd's space Boyd's own the supply experience in that other the we're really a issues And traction with some

acquired slacking work operationally. easier So with. no much there's to It's

that this do so we spaces. to customer our very look as continues we're into And what see excited existing base expand to then will and to adopt, other

Eric Des Lauriers

all on Congrats the progress. Great.

John Moore

Thank you, Eric.

Operator

is Sweeney Gerard next The question ROTH. from with

Gerard Sweeney

call, few Vance, weeks update went -- little like quarter new aspect. from quarter negative an terms you Can retention give to talked progressing to retention discuss of you -- had welcome that in into how you fiscal this too. aboard, some Wanted fourth and positive third you churn. on where the It a is us year? about customer sounded on and bit a

John Moore

customer at a to technology have down pounds happening like. different of role. in C-store and time, I bean-to-cup industry play And still progress would We've But less XXXX, tremendous bit few spoken pounds XXXX. industry think the that That's the channel, the from we trends where we a the Sure. total particularly into the this. rate we've a great versus seen And averages. made question. little And they with past about count the customer really same like are per them, coming our or due in attrition scale we with we associated line significant at in now, where see adoption a

tightening we time fatigue economic coming belt of kind and bear, pricing see relative during inflationary of strings consumers purse and a the to pressures uncertainty. But also

often per than of a So than being beginning and further they normally to cups approach little consumers typically. that's a take little less to less downstream, we a consuming location more might bit patterns, consuming less an bit to sort consuming whether or measured they see might sold extent

note, terms development positive when of team that a adding customers. is we business they're On profitability see in do the outperforming

attrition size and added improved. rate total number. the offset really it account and to bottom eye that quite isn't has isn't we to would of But the account of So enough that hope, number the line the being the the the at

inflationary experience we're through calls, at anticipate as the do as attrition previous on and is to experience business piece some of the acceleration factor. fatigue appropriate chain other this side in the our as discussed the of taking focus in of they supply some steps on, to pricing pressures continue steward general management. We inflationary scale. profitability just we we've The customer at people pressures And possibility

our gross we're up and customers, EBITDA. seeing focused adjusted overall, and margin we're And show in on that higher-profitability

continue of leverage development acute our business this we're So to focus route as to we of business, looking area cognizant keep and of the to we challenges challenge representative for build strategic our process an some and sales team face, as add through review we're look to our network and value.

Gerard Sweeney

little year. Got cash it. just a you bit a of a Can get us goal maybe And of obviously, think target and potential I believe, I give mentioned this how time or free positive, you road there maybe flow frame? map to being you

Vance Fisher

question. Gerry, good this is a It's Vance.

past. talked I putting that then renewed sustainable We're progress management. going growth, about we the business position good now achieving pretty but the right potential would areas, the say we're these making are protection reach have that the a sales really around is way to feel good going require say trajectory in what would and the capital all 'XX. it obviously, I into in continued in We fiscal on milestone working in that gross that focused and margins about of to on solid

In terms to and But early feel line, of it's making. progress that and good towards the we're little time around any specific that. provide about continuing a specifics that at we're we're where to work think I

Operator

Thank This question-and-answer attending the concludes presentation. you and for our conference session, also concluded. today's has now

You may now disconnect.

Farmer Bros. (FARM) 12 Sep 242024 Q4 Earnings call transcript