Farmer Bros. (US:FARM)2025-05-08 20:48PART I – FINANCIAL INFORMATION (UNAUDITED) Financial Statements This section presents Farmer Bros. Co.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, with detailed notes for the periods ended March 31, 2025 Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $163.2 million from $185.2 million, total liabilities decreased to $125.9 million from $139.7 million, and stockholders' equity fell to $37.3 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $84,560 | $102,981 | | Total Assets | $163,159 | $185,213 | | Total Current Liabilities | $64,943 | $77,033 | | Total Liabilities | $125,895 | $139,664 | | Total Stockholders' Equity | $37,264 | $45,549 | Consolidated Statements of Operations For Q3 FY25, net sales decreased to $82.1 million and net loss widened to $5.0 million, while for the nine-month period, net sales were flat at $257.1 million, but a net loss of $9.8 million was reported Statement of Operations Summary (in thousands, except EPS) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $82,054 | $85,358 | $257,140 | $256,698 | | Gross Profit | $34,504 | $34,231 | $110,660 | $101,127 | | (Loss) Income from Operations | $(3,563) | $(468) | $(5,374) | $1,897 | | Net (Loss) Income | $(4,976) | $(682) | $(9,769) | $717 | | Net (Loss) Income per Share | $(0.23) | $(0.03) | $(0.46) | $0.03 | Consolidated Statements of Comprehensive Loss Total comprehensive loss for the three months ended March 31, 2025, was $4.7 million, and for the nine-month period, it was $9.8 million, a significant downturn from prior-year comprehensive income Comprehensive Loss (in thousands) | Period | Net (Loss) Income | Other Comprehensive Income (Loss) | Total Comprehensive (Loss) Income | | :--- | :--- | :--- | :--- | | Three Months Ended Mar 31, 2025 | $(4,976) | $229 | $(4,747) | | Three Months Ended Mar 31, 2024 | $(682) | $168 | $(514) | | Nine Months Ended Mar 31, 2025 | $(9,769) | $(72) | $(9,841) | | Nine Months Ended Mar 31, 2024 | $717 | $949 | $1,666 | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $45.5 million to $37.3 million, primarily due to a cumulative net loss of $9.8 million over the nine-month period, partially offset by share-based compensation - The accumulated deficit increased from $(30.4) million at the beginning of the fiscal year to $(40.1) million at March 31, 2025, reflecting the net losses incurred during the period16 Consolidated Statements of Cash Flows For the nine months ended March 31, 2025, net cash provided by operating activities was $6.4 million, a significant improvement, while net cash used in investing activities was $8.0 million, resulting in an overall $1.8 million decrease in cash and restricted cash Cash Flow Summary (in thousands) | Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $6,352 | $(13,152) | | Net cash (used in) provided by investing activities | $(7,956) | $13,366 | | Net cash (used in) provided by financing activities | $(169) | $66 | | Net (decrease) increase in cash | $(1,773) | $280 | Notes to Consolidated Financial Statements These notes detail the company's accounting policies and financial statement line items, covering disclosures on business sales, lease obligations, debt, share-based compensation, revenue recognition, and legal contingencies - Roasted coffee sales constituted 48.2% of total net sales in Q3 FY25, up from 46.2% in Q3 FY24101 - As of March 31, 2025, the company had $23.3 million in outstanding borrowings under its Revolver Credit Facility and $22.1 million available for borrowing74 - The company has purchase commitments for green coffee inventory totaling $56.0 million under fixed-price contracts as of March 31, 2025104 - A settlement agreement with TreeHouse Foods, Inc. was executed on March 27, 2025, requiring the company to pay $0.8 million25105 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q3 FY25 financial results, noting a 3.9% net sales decrease, improved gross margin to 42.1%, a $5.0 million net loss, and an increase in Adjusted EBITDA to $1.7 million, with liquidity deemed sufficient for the next 12 months Results of Operations Q3 FY25 net sales decreased by $3.3 million (3.9%) due to lower unit sales, despite a 12.4% price increase, while gross profit slightly increased to $34.5 million with gross margin expanding to 42.1%, and operating expenses rose due to a $2.4 million loss on asset disposals Change in Net Sales (in millions) | Period | Effect of change in unit sales | Effect of pricing and product mix changes | Total (decrease) increase in net sales | | :--- | :--- | :--- | :--- | | Three Months Ended Mar 31, 2025 vs. 2024 | $(13.7) | $10.4 | $(3.3) | | Nine Months Ended Mar 31, 2025 vs. 2024 | $(33.3) | $33.7 | $0.4 | - Gross margin increased to 42.1% for Q3 FY25 from 40.1% in Q3 FY24, and to 43.0% for the nine-month period from 39.4% YoY, primarily due to improved pricing118119120 - Operating expenses for Q3 FY25 included a $2.4 million loss on asset disposal, compared to a $2.9 million gain in the prior year, significantly impacting the operating loss comparison121 Non-GAAP Financial Measures The company utilizes non-GAAP measures like Adjusted EBITDA, which increased to $1.7 million for Q3 FY25 and $9.1 million for the nine-month period, driven by higher gross profit and reduced SG&A expenses after adjustments Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(4,976) | $(682) | $(9,769) | $717 | | Adjustments | $6,712 | $953 | $18,822 | $(1,415) | | Adjusted EBITDA | $1,736 | $271 | $9,053 | $2,132 | - Adjusted EBITDA Margin for Q3 FY25 was 2.1%, compared to 0.3% in the prior-year quarter111133 Liquidity, Capital Resources and Financial Condition The company's liquidity, primarily from operations and its Revolver Credit Facility, includes $4.1 million cash and $22.1 million available credit as of March 31, 2025, with management projecting $9.0 million to $11.0 million in FY25 capital expenditures and sufficient liquidity for the next 12 months - As of March 31, 2025, the company had $4.1 million of unrestricted cash and $22.1 million available on its Revolver Credit Facility145 - Net cash provided by operating activities was $6.4 million for the nine months ended March 31, 2025, compared to net cash used of $13.2 million in the prior-year period146147 - The company anticipates paying between $9.0 million and $11.0 million in capital expenditures in fiscal 2025150 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk from its variable-rate Revolver Credit Facility, where a 100 basis point change impacts annual interest expense by approximately $0.23 million, and commodity price risk from green coffee volatility, managed via inventory and forward contracts Interest Rate Sensitivity Analysis (in thousands) | Rate Change | Principal | New Interest Rate | Annual Interest Expense | | :--- | :--- | :--- | :--- | | -100 basis points | $23,300 | 5.78% | $1,347 | | Unchanged | $23,300 | 6.78% | $1,580 | | +100 basis points | $23,300 | 7.78% | $1,813 | - The company is subject to price risk from the volatility of green coffee prices and uses forward commodity purchase agreements to manage this exposure158 Controls and Procedures As of March 31, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025160 - No material changes to internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025161 PART II – OTHER INFORMATION Legal Proceedings The company is involved in pending legal proceedings, but management does not anticipate a material financial impact, with a $1.9 million settlement recorded in Q2 FY25 and a $0.8 million settlement agreed in March 2025 - Management opines that the outcome of pending legal proceedings will not have a material impact on the Company's financial position, results of operations, or cash flows105 - The company recorded a $1.9 million legal settlement for the quarter ending December 31, 2024, and agreed to a separate $0.8 million settlement effective March 27, 2025105 Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024, occurred during the nine months ended March 31, 2025 - During the nine months ended March 31, 2025, there were no material changes to the risk factors disclosed in the 2024 Form 10‑K163 Other Items (Items 2, 3, 4, 5) This section confirms no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and no Rule 10b5-1 trading arrangement adoptions or terminations by directors or officers during the quarter - The company reports 'None' for Unregistered Sales of Equity Securities and Use of Proceeds, and 'None' for Defaults Upon Senior Securities164 - No directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' during the fiscal quarter ended March 31, 2025164 Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts like a settlement agreement, and Sarbanes-Oxley certifications from the Principal Executive and Financial Officers - Key exhibits filed include the Settlement Agreement and Release with TreeHouse Foods, Inc., and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906166 Signatures