Farmer Bros. (US:FARM)2021-09-10 00:39Financial Data and Key Metrics Changes - The company reported net sales of $103 million in Q4 2021, an increase of $22 million, or 27%, from the prior year period [37] - Gross profit in Q4 2021 was $28 million, up $13 million from the prior year, with gross margin increasing to 27.6% from 19.2% [37] - The net loss was reduced to $4 million in Q4 2021 compared to a net loss of $9.7 million in the prior year [38] - Adjusted EBITDA for Q4 2021 was $3.4 million, compared to $0.7 million in the prior year, with adjusted EBITDA margin improving from 0.9% to 3.3% [38] Business Line Data and Key Metrics Changes - DSD (Direct Store Delivery) sales improved sequentially in each of the four quarters of fiscal 2021, ending the quarter down 27% relative to pre-COVID levels, an improvement from down 57% one year ago [7][31] - Direct ship sales in Q4 improved from the previous quarter but were slightly below last year's fourth quarter sales, with a full-year decline of 12% year-over-year [33] Market Data and Key Metrics Changes - The company experienced varying recovery rates across end markets, with the most significant declines in the restaurant, hotel, and casino channels, while healthcare and convenience store channels were less impacted [31] - The Delta variant caused some minimal deterioration in DSD performance, particularly in the Southeast region [32] Company Strategy and Development Direction - The company has focused on optimizing its footprint, increasing operational efficiencies, and modernizing sales strategies, including the closure of the Houston facility and expansion of the Dallas-Fort Worth facility [11][12] - Future initiatives include ramping up volumes, optimizing throughput, and leveraging the DSD network for new product commercialization [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business despite ongoing challenges from the pandemic, inflation, and workforce shortages [24][26] - The company anticipates that efficiencies implemented will drive performance gains as volumes improve [26][30] Other Important Information - The company reduced its accrued pension liabilities from approximately $69 million to around $40 million year-over-year, primarily due to pension investment performance [47] - Total capital expenditures for fiscal 2021 were roughly $15 million, down from approximately $18 million in the prior fiscal period [41] Q&A Session Summary Question: Impact of Delta variant on different regions - Management noted that the Southeast was more impacted by the Delta variant, but they do not break out regional performance [49][50] Question: Customer acquisition and market share - The company is aggressively pursuing new customers and has seen recent wins in the casino business, with a focus on premium products [54][56] Question: Direct ship business and contract issues - Management confirmed that they have cleared unprofitable contracts and are focusing on profitable customer growth in the direct ship segment [58][60]