FARM - Earnings call transcript Q1 2025

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Farmer Brothers Fiscal First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Earlier today, the company filed its Form 10-Q and issued its first quarter 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-Q 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.

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

of could which comparable adjusted differ their adjusted also factors On Additional measures, EBITDA actual forward-looking these SEC results is to on information measures assessing GAAP management EBITDA financial and the measures and the reference filings. also events other company's most cause release in the financial to and materially statements will included and performance. filings. non-GAAP today's call, public in directly those including from certain margin company's available non-GAAP is in release Reconciliation company's operating

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

John Moore

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

a These The margin and progress sales adjusted and both meaningful in recently. Farmer showed gross improvement we results basis. year-over-year underscore on made We the growth saw have gains EBITDA quarter-over-quarter steady first Brothers. quarter solid and for positive

realignments pricing and initiatives, SKU are our They updates, our to our inventory and also the result enhancements with rationalization favorable processes, related pyramid and sales of brand efforts management team. proactive within

light, Coast entertainment diverse related offerings. C-store Boyd's health classic, dining medium brand. casual with restaurants, specifically refresh premium toward West the another Historically, of been the brand. addition Coffee dark During geared care, single roasts initiative customers. quarter, is in Boyd's gaming has a includes a origin Boyd's flavored predominantly of hospitality, achieved to and to our and and pyramid our milestone brand we Boyd's our range

offering. premium our However, it initiative, will be now coffee as part nationwide of our premier brand pyramid

new our few have announcing the call. We specialty we'll will tier details months, next be and next in more our brand on

of the about as of excited space. and of incredibly the marks a brand this our the it into are Brothers phase coffee We specialty Farmer addition brand pyramid reintroduction initiative final

we our By streamline to simplifying able operational offerings, facilities, product roasting, brands redundancies, the overall experience. optimize been and remove have and enhance our customer

achieved have best working will is managing and We customers Once at something and help price have our flavor This allowing of we participate to this customer and options profiles chain, multiple for across all and them. while drive up retention. our aggressively the complete, and the level works believe which capital will value them structure growth down costs. us

mantra time add right right Additionally, important and our to efforts been thanks is customer at role believe working by one plays the DSD restructured of the our customer We has stabilize, aspects and of routes commitment right to our our in force. business and This value to place service as to have growth at of execution having we the retention. most crucial to for proposition improved the density these retention sales and part products continued right in optimize a existing the customers. our and

navigate purchasing mitigate and in changes commodity We management. in coffee behaviors. markets seeing the consumer nimble in is being also volatility working the proactively are To are impacts, industry to and inventory we these

understanding impact data base habits. the and insight customer as and way a macroeconomic into our We a are also deeper their further have customer on trends to gain ordering utilizing our

short-term with customer-focused sales a during recent To incentive we positive that quarter. results the piloted end,

existing in to customers. products will while to addition focus on these offset We efforts headwinds, continue explore and potential opportunities continuing to selling additional also

macroeconomic us to headwinds the operational and we XXXX posed by improvements the put made commodity are and the initiatives throughout Overall, fiscal volatile we we a place pricing helping environment. are challenges confident in navigate

strategic as to years. the on better goods our has been true value initiatives in we proposition demands market provider, a specialty From many can meet customers to ongoing it provide fundamentally focus Brothers to a positioned is than enhance efficiency we pricing operational feel Farmer

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

Vance Fisher

Thanks, good and afternoon, John, everyone.

solid Our a our results future Farmer represent quarter to on year solid and a growth. meaningful positioning Brothers progress first start reflect fiscal in for more foundation

compared improvement $X.X for EBITDA in in first $XXX,XXX loss million, positive loss compared of quarter when $X.X an almost last year-over-year quarter $X basis quarter-over-quarter adjusted also Our on This year. of $X.X of 'XX. fourth the fiscal of a to million was improvement quarter million when at a to million was a the a the

improved adjusted Our largely expansion. margin by driven gross EBITDA was

our quarter, year-over-year XX.X% first last increased quarter. to increased first to the XX.X% XX.X% last points to year basis points compared margin gross and basis the For of quarter XXX sequentially XXX in compared

address margin gross commodity Our actions elevating continued to optimization results primarily efforts as markets. our taken price as coffee well reflect

to growth, with last million increase sales $XX.X nearly to the quarter in million million, increased year. million compared $XX.X resulted a compared a in along $XX.X the net sales or For This expansion, first same million of to quarter increase year. for quarter, $X.X X% the $X.X last to the period margin of first profit gross

sales in XX.X% driven in year. sales no the $XX.X This during difference last year. net first the on Operating sales million of million quarter of increase or as an were the net to were by sales this in of there gains first quarter quarter branch expenses asset $X.X of or first $XX.X year-over-year XX.X% million compared net fiscal was

optimizing accomplished by declined continued asset the X.X% in progress structure. cost sales efficiencies reflecting been sales, for of our and When or adjusted which operational expenses our net year-over-year, have $X.X million operating

$X compared was for million quarter $X.X net a net Our the year. the million loss of last of quarter loss to first in

disposals. asset note should this while to last quarter to that included a net related net of million million gains related year $X.X You loss included $X.X disposals, asset

balance the Looking sheet. at

cash $XX.X million borrowings operating negative goal cash outstanding credit unrestricted of activities, compared of This in negative million improvement positive which million positive borrowing additional a $X.X under solid making operating $X.X of from quarter to of in quarters improved restricted million the had as cash we X million quarter. and and represents cash, in $X.X XXXX, our $X.X $XX.X improved million equivalents, consecutive to cash in the XX, $X.X quarter first million last last million year. this free $X.X facility progress activities. our September our a demonstrated of marks improvement of to We're towards improved flow compared year cash As and This $X from flow million capacity. first of with in

quarter the significant we and EBITDA have the flow. solid We gross margin, achieved improvements cash in by and are encouraged adjusted

We the are, in coffee however, commodity mindful markets of and environment. the current volatility macroeconomic

we do value foundation expect to proactively we that, turn to quarter-to-quarter. results remain While our sustainable John? financial in on I'll these address building working are generate back We the be path not right conditions, we confident creation. right linear to the it are John. With to

John Moore

believe adjusted March a Thanks, and Vance. of can which we're on should initiatives capital gains provides internal track. the potential throughout of performance, traction, starting what we this fiscal we long-term Farmer our gain seen and working to we are and level believe margins and efficiency, realize It beyond. this operational additional of year allow appears positive the XXXX Overall, EBITDA achieve. not since Brothers glimpse reaching gross quarter a With us to right

We top significant generate results need will growth. continued to know do, and us scale recognize emphasis for revenue selling additional long-term point DSD protect routes, seeing we growth, our density however, line across be the adding and not focus additional we This are as on customer our existing a into our we as we fiscal margins. XXXX means base of existing drive to in customer a products and

will build growth on shareholders. momentum customer proactively factors this drive focused We are strong on and long-term market as we for outstanding execution, service, positive remain fundamental value to confident mitigating sustainable performance providing to we operational our and continue

open evident it to we moment up spirit commitment questions, work. take Their a I results. Before is to entrepreneurial team their improvement and would continuous like our recent to our tremendous in for thank for

term, call be Operator, it for Our without will not for would and to on all the them. questions. today. you now possible With open success, in thank up joining us I that, the both long want we near

Operator

Gerry comes Capital. [Operator of Sweeney Instructions] first ROTH Our from question

Gerard Sweeney

it churn, maybe how density. how understand Wondering start growth density the And along and routes. to I in talk coming the they've that something then paid route wanted about some if was with initiatives we that's place. of could and And can the we but to, growth and attention particular the taken

John Moore

Sure.

degradation that seeing seeing even soft. in consumer low within spend question no industry, comes sales, some since some we're spend general comparable trend it's there are double-digit And in to and and to frequency churn. our are it declines, -- visits, when last unit year-on-year relatively there. a continued call, is of So There's the you're average single-digit headwinds positive consumer

are of over last Having said we necessary have that that, retention we quarters, had anticipated, taken even actions the levels given the some we're given price of markets. the better seeing that coffee our than

much at So weekly. And you we point imagine, inflection we're pretty this reaching an there. point, at this look can

And some that weeks are under some But weeks that, a cases, XX,XXX negative we're are positive -- are estate XX,XXX somewhat, of little some approximately are about an digits -- in in single values customers. talking bit somewhat.

So good and getting better. we're space very there we're like in a feeling

those as to where doubling right needed growth we've where flipping of in stock service, customer resolving product, pretty outstanding trajectory, of much really keeping some all issues. place, over having our mind commitment resolved We've though those out-of-stock it We that's commit needed what a When comes it, year last were issues, not when down that to into to value. then right to time, on right strides I right feel we the need think in the it. we taken significant we're

equipment need there, We've other equipment, and a We've system. refurb our capability. we again, we it leveraged Again, when. needed The rapid now had we where where got was theme deployment major it.

a the do this to place, increase our right finished related -- and having with days-on-hand inventory in time of our portfolio in finished equipment. in brewing goods no fact, we've a with a right to So in managed all CapEx in decrease decrease goods

So all going is with where to very, and improve that looking forward. of going very that pleased

Gerard Sweeney

then can the that's Got Is everything, at that right et issues, addressed of so cetera. have part you. brand rationalization. correct? the pyramid the product right out-of-stock the you time, SKU right And by collapses place, And

John Moore

sure things. by is in things set of number SKU team white-glove any and service the a and customer of coached customers members of to field that. look deliberate communication done careful in and were It mitigate congruence really making to then we all and a that with the converting And most a from through it's thoughtful the in about that attrition very the that real how addition fashion. are those to again the was definitely related treated taking into potential at deliberate to transition another think a one process being I customer

Gerard Sweeney

maybe Got how it. growing it then not, But obviously, and, stop? growth of from product routes new then said, limiting obviously, much more more or per of routes? part is adjusting I stops, like comes growth, adding And And churn sales if customers.

John Moore

Sure.

that's I a think great question.

if are, add out significantly more network. we routes our to think don't route and have. even we the we that I get to I of optimize to anything, know value that routes looking our need

We have simply a number to business we utilization routes another our can focusing specific where by -- those development areas. improve efforts of

way density of better our optimize business as it deliberate a ahead, focused are things route value sure development and getting efforts of bit over much as one that looking a get that the to that making so really in possible. out structure that the achieved that's about very is we're quarters that, And with

of brewers. value through other customers potential of had the that accounts, But really there there's I to be the piece existing is in estate best where or approximately better additional that's within, unlocking deployment no mean the that the dollars XX,XXX again, product are already penetration. of CapEx

just selling and have you in on products your basically of already realizing them. that the value truck You're

tremendous opportunity we So I think there. have a

Gerard Sweeney

do -- that? Just How you how follow-up. unlock do as a we

John Moore

Sure.

make product think into customers, and our mix, with enabling more and also and with we're getting sales about our and they with customers to I approaching route totality conversations with profitable, account our to be thoughtful better need of more our that representatives the those then planning get out customers. better deliberate enabling to execution, think executives the comprehensive equipped I tools better and go

they they should now So that mean they're, selling have. mix. orange the tea. in they selling along syrup And with can with go that, selling they again, juice, that Clearly, the coffee, mix, selling be what pancake they goes right should selling I if should should tools they pancake be be by be that

Operator

Capital Craig-Hallum of Lauriers Des Eric from Group. comes question next Our

Eric Des Lauriers

on guess Congrats thus buying think I'm premium this of Maybe just any more be strong they impacting can't revenue here. I there months the premium think new where of on brand category with that's question of this specialty should of Should mostly how coming to we announced in I should And start Or existing How a essentially incremental the we guess, buy can is sales about and into your of we getting customers quarter as reentering while cannibalization revenues? new we here. is in specialty? sort impact the to side regards first opportunities? that the revenues. coffee My like -- financials? kind about just think wondering kind things. with back of,

John Moore

question, great Eric. a That's

distribution into in of and term, the in built pounds in be would our specialty short number space. significant already manufacturing think network the optimization I the and we that have on a it side sourcing

brand any been ever in of and around that's really for regional. had that somewhat our We unified haven't history, a message always

the the customers seen, launching can that think specialty in start as will step to incremental the of as that in roaster think before. you'll there, that's brand space. nationally coffee to But do as volume a I how new coffee expression, side where this exposed so specialty, specialty have to the revenue to about brand. goods people to Farmer business we brand have been from the Brothers portfolio And see most experience. through the And out transitioning never in new And coffee roll the we is new that's space start fastest-growing be a of this first specialty existing

really about we're So what excited us. mean that to for think might

Eric Des Lauriers

brings on me That up makes of sense. question another And for I Boyd's. sort guess that

You it's that mentioned brand. West a been Coast

this is didn't it premium You're you a sort or to there coffee? disparate sort brand now some much of incremental under-indexed to exposure similar represent Are were thus, could not approach? where of and brands bringing it Or Boyd's also areas perhaps brand any nationally. just have And unified opportunity?

John Moore

for Boyd's. as that say would comes some will C-store a that in it's brand experience, new It's opportunities with I initiatives channel. a And materials, No, relaunching build mostly but phenomenon equity date, comes with really there as will a POS that been with that marketing, performing into be Coast the that comes that incremental are comprehensive with relatively West to Boyd's. program well it particularly

had really we are checks explored we of in as with It entertainment, there. not proposition. in of messaging, the country boxes strong, people uniform experience lot parts And value coffee, gaming. better opportunity health definitely very also any care, of an It's looking that have a for mentioned, better other casino, so we comprehensively that for kind brand see that somewhat in

Eric Des Lauriers

sales. that not All understood right. incremental new I guess helpful. for That's so just And is a margin-wise, specialty opportunity, that just incremental but then is like opportunity there

if X difference help you there's at Just all categories? between us can we kind I as all gross So on about of of just of margins much kind guess, these side, how understand between, think us help them. understand margin the of you see that, a

John Moore

a I different know as mean basis. I point that them don't particularly percentage see we on

the to Of course, commercial you'll contribution -- the basis are proposition, said you space. where for to tip on line that volume specialty premiers on the contribution a the typically, goes modicum than had be from given in -- or more of excited truly And or there dollars line system to us. is and in might in a from future. really the We're top in the just different then iceberg more will is our space Having perspective, the there then see top commercial of in that the value premium the date, premium. volume dollars see that, specialty be from they're based a

Eric Des Lauriers

mentioned efforts? elaborate a was a Yes. the and improvement more price we've I That's commodity the your seen Could Vance, gross you guess, just I guess, optimization drivers confused just margin I I besides you awesome. around little, pricing, there. bit -- the but on else that was something drivers?

Vance Fisher

Sure, Yes. Yes. Eric.

the the really we several seeing of markets to throughout in you We rising quarters, that optimization response been last we've working the were know, what curve, course and terms market. behind on so effort as in we that pricing So -- the commodity to we make response taking markets. were wanted weren't sure coffee elevating to in of pricing in that we actions

behind. And and that so make -- to was not we're obviously falling sure that just

where offset be inventory, to in first next couple the that's seeing that comes still higher the realizing to we're over of that of necessary pricing a quarter, not so it seeing And quite that the through going cost action little the bit effect but quarters. full we're as of

Eric Des Lauriers

it. on there's kind asset of behind it. of wondering Can just then And the disposals? this comment is opportunities for we some if prospect Got us if something still think me. forward? Got further going you last that largely potential or now Just for question should as

John Moore

not as strategy the I as form. in think or relying what on we shape business mean we've said in past, way, -- those we're a I any

us, For matches that as an truly it's branches area at have cases, looked changed And and a have in any network we know, we dating span, branches we the opportunistically. centers some that -- back urban have need in decades. not may And over all it's longer. of

offers entertain business So ongoing in no our needs, branches but it's perfectly longer of part some our suited that for cases, we'll strategy. are not for

Operator

for XXXX concludes Brothers Earnings And Fiscal questions, Instructions] Thank [Operator First Call. Farmer this you attending. today's seeing no Quarter further

Farmer Bros. (FARM) 7 Nov 242025 Q1 Earnings call transcript