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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Farmer Brothers Company | NASDAQ:FARM | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.15 | 6.00% | 2.65 | 2.52 | 3.17 | 2.71 | 2.53 | 2.55 | 27,087 | 00:10:23 |
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Page | |||||
September 30, 2022 | June 30, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 7,563 | $ | 9,819 | |||||||
Restricted cash | 175 | 175 | |||||||||
Accounts receivable, net of allowance for credit losses of $190 and $195, respectively | 47,316 | 46,935 | |||||||||
Inventories | 95,759 | 99,618 | |||||||||
Short-term derivative assets | 2,859 | 3,022 | |||||||||
Prepaid expenses | 4,480 | 4,491 | |||||||||
Assets held for sale | 177 | 1,032 | |||||||||
Total current assets | 158,329 | 165,092 | |||||||||
Property, plant and equipment, net | 135,741 | 138,150 | |||||||||
Intangible assets, net | 15,271 | 15,863 | |||||||||
Right-of-use operating lease assets | 27,116 | 27,957 | |||||||||
Other assets | 2,821 | 3,009 | |||||||||
Total assets | $ | 339,278 | $ | 350,071 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | 45,700 | 52,877 | |||||||||
Accrued payroll expenses | 14,003 | 14,761 | |||||||||
Right-of-use operating lease liabilities - current | 7,756 | 7,721 | |||||||||
Term loan - current | 3,133 | 3,800 | |||||||||
Short term derivative liability | 2,455 | 2,349 | |||||||||
Other current liabilities | 5,790 | 6,095 | |||||||||
Total current liabilities | 78,837 | 87,603 | |||||||||
Long-term borrowings under revolving credit facility | 67,000 | 63,000 | |||||||||
Term loan - noncurrent | 42,849 | 40,123 | |||||||||
Accrued pension liabilities | 28,549 | 28,540 | |||||||||
Accrued postretirement benefits | 797 | 787 | |||||||||
Accrued workers’ compensation liabilities | 3,169 | 3,169 | |||||||||
Right-of-use operating lease liabilities - noncurrent | 19,907 | 20,762 | |||||||||
Other long-term liabilities | 1,321 | 1,339 | |||||||||
Total liabilities | $ | 242,429 | $ | 245,323 | |||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $1.00 par value, 500,000 shares authorized; Series A Convertible Participating Cumulative Perpetual Preferred Stock, 21,000 shares authorized; no shares outstanding as of September 30, 2022 and 14,700 shares issued and outstanding as of June 30, 2022; liquidation preference of $17,346 as of June 30, 2022 | — | 15 | |||||||||
Common stock, $1.00 par value, 50,000,000 shares authorized; 19,279,970 and 18,464,966 shares issued and outstanding as of September 30, 2022 and June 30, 2022, respectively | 19,281 | 18,466 | |||||||||
Additional paid-in capital | 72,193 | 71,997 | |||||||||
Retained earnings | 45,327 | 52,701 | |||||||||
Accumulated other comprehensive loss | (39,952) | (38,431) | |||||||||
Total stockholders’ equity | $ | 96,849 | $ | 104,748 | |||||||
Total liabilities and stockholders’ equity | $ | 339,278 | $ | 350,071 |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net sales | $ | 121,380 | $ | 108,362 | ||||||||||
Cost of goods sold | 94,783 | 76,908 | ||||||||||||
Gross profit | 26,597 | 31,454 | ||||||||||||
Selling expenses | 27,590 | 26,009 | ||||||||||||
General and administrative expenses | 10,487 | 11,807 | ||||||||||||
Net gains from sales of assets | (7,182) | (4,582) | ||||||||||||
Operating expenses | 30,895 | 33,234 | ||||||||||||
Loss from operations | (4,298) | (1,780) | ||||||||||||
Other (expense) income: | ||||||||||||||
Interest expense | (4,641) | (3,026) | ||||||||||||
Other, net | 1,608 | 2,444 | ||||||||||||
Total other expense | (3,033) | (582) | ||||||||||||
Loss before taxes | (7,331) | (2,362) | ||||||||||||
Income tax expense | 43 | 62 | ||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | ||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | — | 147 | ||||||||||||
Net loss available to common stockholders | $ | (7,374) | $ | (2,571) | ||||||||||
Net loss available to common stockholders per common share—basic | $ | (0.39) | $ | (0.14) | ||||||||||
Net loss available to common stockholders per common share—diluted | $ | (0.39) | $ | (0.14) | ||||||||||
Weighted average common shares outstanding—basic | 18,948,453 | 17,969,694 | ||||||||||||
Weighted average common shares outstanding—diluted | 18,948,453 | 17,969,694 |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | ||||||||||
Other comprehensive (loss) income: | ||||||||||||||
Unrealized (losses) gains on derivatives designated as cash flow hedges | (527) | 5,859 | ||||||||||||
Gains on derivatives designated as cash flow hedges reclassified to cost of goods sold | (1,281) | (1,920) | ||||||||||||
Losses on derivative instruments undesignated as cash flow hedges reclassified to interest expense, net of tax | 287 | 314 | ||||||||||||
Total comprehensive (loss) income, net of tax | $ | (8,895) | $ | 1,829 |
FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | 14,700 | $ | 15 | 18,464,966 | $ | 18,466 | $ | 71,997 | $ | 52,701 | $ | (38,431) | $ | 104,748 | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (7,374) | — | (7,374) | |||||||||||||||||||||||||||||||||||||||
Cash flow hedges, net of taxes | — | — | — | — | — | — | (1,521) | (1,521) | |||||||||||||||||||||||||||||||||||||||
401(k) compensation expense, including reclassifications | — | — | 257,052 | 257 | 940 | — | — | 1,197 | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 1,165 | — | — | 1,165 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | 158,744 | 159 | (159) | — | — | — | |||||||||||||||||||||||||||||||||||||||
Conversion and cancellation of preferred shares | (14,700) | (15) | 399,208 | 399 | (1,750) | — | — | (1,366) | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | — | $ | — | 19,279,970 | $ | 19,281 | $ | 72,193 | $ | 45,327 | $ | (39,952) | $ | 96,849 | |||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | 14,700 | $ | 15 | 17,852,793 | $ | 17,853 | $ | 66,109 | $ | 66,311 | $ | (45,329) | $ | 104,959 | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (2,424) | — | (2,424) | |||||||||||||||||||||||||||||||||||||||
Cash flow hedges, net of taxes | — | — | — | — | — | — | 4,253 | 4,253 | |||||||||||||||||||||||||||||||||||||||
Change in the funded status of retiree benefit obligations, net of taxes | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
ESOP and 401(k) compensation expense, including reclassifications | — | — | 51,597 | 52 | 619 | — | — | 671 | |||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 721 | — | — | 721 | |||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | 94,407 | 94 | (94) | — | — | — | |||||||||||||||||||||||||||||||||||||||
Conversion and cancellation of preferred shares | — | — | — | — | — | (147) | — | (147) | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | 14,700 | $ | 15 | 17,998,797 | $ | 17,999 | $ | 67,355 | $ | 63,740 | $ | (41,076) | $ | 108,033 | |||||||||||||||||||||||||||||||||
FARMER BROS. CO. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (7,374) | $ | (2,424) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 5,652 | 6,279 | |||||||||
Gain on settlement related to Boyd's acquisition | (1,917) | — | |||||||||
Net gains from sales of assets | (7,182) | (4,582) | |||||||||
Net gains on derivatives instruments | (2,011) | (3,192) | |||||||||
ESOP and share-based compensation expense | 2,362 | 1,392 | |||||||||
Provision for (recovery of) credit losses | (43) | 105 | |||||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | (339) | (3,160) | |||||||||
Inventories | 3,859 | (7,753) | |||||||||
Derivative assets, net | 1,069 | 2,946 | |||||||||
Other assets | (67) | (19) | |||||||||
Accounts payable | (7,243) | 6,863 | |||||||||
Accrued expenses and other | (185) | (3,190) | |||||||||
Net cash used in operating activities | (13,419) | (6,735) | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | (2,988) | (2,542) | |||||||||
Proceeds from sales of property, plant and equipment | 9,061 | 7,297 | |||||||||
Net cash provided by investing activities | 6,073 | 4,755 | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from Credit Facilities | 54,000 | 2,000 | |||||||||
Repayments on Credit Facilities | (48,600) | (4,000) | |||||||||
Payments of finance lease obligations | (48) | (48) | |||||||||
Payment of financing costs | (262) | (221) | |||||||||
Net cash provided by (used in) financing activities | 5,090 | (2,269) | |||||||||
Net decrease in cash and cash equivalents and restricted cash | (2,256) | (4,249) | |||||||||
Cash and cash equivalents and restricted cash at beginning of period | 9,994 | 10,438 | |||||||||
Cash and cash equivalents and restricted cash at end of period | $ | 7,738 | $ | 6,189 |
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Non cash additions to property, plant and equipment | $ | 65 | $ | 250 | |||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,205 | 4,320 | |||||||||
Non-cash issuance of ESOP and 401(K) common stock | 257 | 52 | |||||||||
Cumulative preferred dividends, undeclared and unpaid | — | 147 |
Standard | Description | Effective Date | Effect on the Financial Statements or Other Significant Matters | |||||||||||||||||
In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) | The London Interbank Offered Rate (LIBOR) is being discontinued between December 2021 and June 2023. The Company has not entered into any new contracts after December 31, 2021. With the overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR rates being published through June 30, 2023, we will continue to leverage these for the existing contracts. ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the transition from LIBOR to alternative reference rate. | Issuance date of March 12, 2020 through December 31, 2022. | The Company does not anticipate any material impacts on its consolidated financial statements. |
Three Months Ended September 30, | ||||||||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||||||||
Operating lease expense | $ | 1,960 | $ | 1,782 | ||||||||||||||||
Finance lease expense: | ||||||||||||||||||||
Amortization of finance lease assets | 41 | 41 | ||||||||||||||||||
Interest on finance lease liabilities | 10 | 12 | ||||||||||||||||||
Total lease expense | $ | 2,011 | $ | 1,835 |
September 30, 2022 | ||||||||||||||
(In thousands) | Operating Leases | Finance Leases | ||||||||||||
2023 | $ | 5,838 | $ | 144 | ||||||||||
2024 | 7,524 | 193 | ||||||||||||
2025 | 6,333 | 193 | ||||||||||||
2026 | 5,238 | 96 | ||||||||||||
2027 | 3,784 | — | ||||||||||||
Thereafter | 3,060 | — | ||||||||||||
Total lease payments | 31,777 | 626 | ||||||||||||
Less: interest | (4,114) | (63) | ||||||||||||
Total lease obligations | $ | 27,663 | $ | 563 |
September 30, 2022 | June 30, 2022 | |||||||||||||
Weighted-average remaining lease terms (in years): | ||||||||||||||
Operating lease | 6.0 | 6.3 | ||||||||||||
Finance lease | 3.3 | 3.5 | ||||||||||||
Weighted-average discount rate: | ||||||||||||||
Operating lease | 5.88 | % | 5.69 | % | ||||||||||
Finance lease | 6.50 | % | 6.50 | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
Operating cash flows from operating leases | $ | 1,920 | $ | 1,615 | ||||||||||
Operating cash flows from finance leases | 10 | 41 | ||||||||||||
Financing cash flows from finance leases | 48 | 12 |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | 4,238 | 4,200 | ||||||||||||
Derivative instruments not designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | 1,172 | 516 | ||||||||||||
Total | 5,410 | 4,716 |
Derivative Instruments Designated as Cash Flow Hedges | Derivative Instruments Not Designated as Accounting Hedges | |||||||||||||||||||||||||
(In thousands) | September 30, 2022 | June 30, 2022 | September 30, 2022 | June 30, 2022 | ||||||||||||||||||||||
Financial Statement Location: | ||||||||||||||||||||||||||
Short-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (1) | $ | 803 | $ | 2,144 | $ | 927 | $ | 555 | ||||||||||||||||||
Interest rate swap derivative instruments (1) | — | — | 1,129 | 323 | ||||||||||||||||||||||
Long-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (2) | 34 | 37 | — | 140 | ||||||||||||||||||||||
Interest rate swap derivative instruments (2) | — | — | 102 | 166 | ||||||||||||||||||||||
Short-term derivative liabilities: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (3) | 42 | 3 | 2,413 | 2,346 | ||||||||||||||||||||||
Three Months Ended September 30, | Financial Statement Classification | |||||||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||||||||
Net losses reclassified from AOCI to earnings for de-designated Interest rate swap | (286) | (314) | Interest Expense | |||||||||||||||||
Net(losses) gains recognized in AOCI - Coffee-related | (527) | 5,859 | AOCI | |||||||||||||||||
Net gains recognized in earnings - Coffee - related | 1,281 | 1,920 | Cost of goods sold |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net gains on coffee-related derivative instruments (1) | $ | 562 | $ | 1,550 | ||||||||||
Non-operating pension and other postretirement benefits | 728 | 894 | ||||||||||||
Other gains, net | 318 | — | ||||||||||||
Other, net | $ | 1,608 | $ | 2,444 |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Accumulated other comprehensive income beginning balance | $ | (1,692) | $ | (4,176) | ||||||||||
Net losses reclassified from AOCI to earnings for partial unwind of interest swap - Interest rate swap | (286) | (314) | ||||||||||||
Net losses (gains) recognized in AOCI - Coffee-related | 527 | (5,859) | ||||||||||||
Net gains recognized in earnings - Coffee-related | 1,281 | 1,920 | ||||||||||||
Accumulated other comprehensive income ending balance | $ | (170) | $ | (8,429) |
(In thousands) | Gross Amount Reported on Balance Sheet | Netting Adjustments | Cash Collateral Posted | Net Exposure | ||||||||||||||||||||||||||||
September 30, 2022 | Derivative Assets | $ | 2,894 | $ | (1,469) | $ | — | $ | 1,425 | |||||||||||||||||||||||
Derivative Liabilities | 2,455 | (1,469) | — | 986 | ||||||||||||||||||||||||||||
June 30, 2022 | Derivative Assets | 3,365 | (2,349) | — | 1,016 | |||||||||||||||||||||||||||
Derivative Liabilities | 2,349 | (2,349) | — | — |
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
September 30, 2022 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | 837 | $ | — | $ | 837 | $ | — | ||||||||||||||||||
Coffee-related derivative liabilities (1) | 42 | — | 42 | — | ||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | 927 | — | 927 | — | ||||||||||||||||||||||
Interest rate swap derivative assets (2) | 1,231 | — | 1,231 | — | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | 2,413 | — | 2,413 | — | ||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | 2,181 | $ | — | $ | 2,181 | $ | — | ||||||||||||||||||
Coffee-related derivative liabilities (1) | 3 | — | 3 | — | ||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | 695 | — | 695 | — | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | 2,346 | — | 2,346 | — | ||||||||||||||||||||||
Interest rate swap derivative asset (2) | 489 | — | 489 | — |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Trade receivables | $ | 46,231 | $ | 44,219 | ||||||||||
Other receivables(1) | 1,275 | 2,911 | ||||||||||||
Allowance for credit losses | (190) | (195) | ||||||||||||
Accounts receivable, net | $ | 47,316 | $ | 46,935 |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Coffee | ||||||||||||||
Processed | $ | 28,359 | $ | 32,486 | ||||||||||
Unprocessed | 36,723 | 39,326 | ||||||||||||
Total | $ | 65,082 | $ | 71,812 | ||||||||||
Tea and culinary products | ||||||||||||||
Processed | 26,730 | 24,034 | ||||||||||||
Unprocessed | 82 | 58 | ||||||||||||
Total | $ | 26,812 | $ | 24,092 | ||||||||||
Coffee brewing equipment parts | 3,865 | 3,714 | ||||||||||||
Total inventories | $ | 95,759 | $ | 99,618 |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Buildings and facilities | $ | 92,939 | $ | 92,948 | ||||||||||
Machinery, vehicles and equipment | 219,225 | 219,095 | ||||||||||||
Capitalized software | 15,482 | 25,467 | ||||||||||||
Office furniture and equipment | 14,008 | 14,347 | ||||||||||||
$ | 341,654 | $ | 351,857 | |||||||||||
Accumulated depreciation | (216,966) | (224,760) | ||||||||||||
Land | 11,053 | 11,053 | ||||||||||||
Property, plant and equipment, net | $ | 135,741 | $ | 138,150 |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Coffee Brewing Equipment | $ | 93,417 | $ | 93,549 | ||||||||||
Accumulated depreciation | (68,469) | (68,938) | ||||||||||||
Coffee Brewing Equipment, net | $ | 24,948 | $ | 24,611 |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Depreciation expense in COGS | $ | 1,808 | $ | 1,964 | ||||||||||
CBE Costs excl. depreciation exp | 7,204 | 6,048 |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Weighted Average Amortization Period as of September 30, 2022 | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | 4.5 | $ | 33,003 | $ | (22,441) | $ | 10,562 | $ | 33,003 | $ | (21,893) | $ | 11,110 | |||||||||||||||||||||||||||||||
Recipes | 1.1 | 930 | (786) | 144 | 930 | (752) | 178 | |||||||||||||||||||||||||||||||||||||
Trade name/brand name | 1.2 | 510 | (467) | 43 | 510 | (457) | 53 | |||||||||||||||||||||||||||||||||||||
Total amortized intangible assets | $ | 34,443 | $ | (23,694) | $ | 10,749 | $ | 34,443 | $ | (23,102) | $ | 11,341 | ||||||||||||||||||||||||||||||||
Unamortized intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||
Trademarks, trade names and brand name with indefinite lives | $ | 4,522 | $ | — | $ | 4,522 | $ | 4,522 | $ | — | $ | 4,522 | ||||||||||||||||||||||||||||||||
Total unamortized intangible assets | $ | 4,522 | $ | — | $ | 4,522 | $ | 4,522 | $ | — | $ | 4,522 | ||||||||||||||||||||||||||||||||
Total intangible assets | $ | 38,965 | $ | (23,694) | $ | 15,271 | $ | 38,965 | $ | (23,102) | $ | 15,863 | ||||||||||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Interest cost | $ | 1,156 | $ | 848 | ||||||||||
Expected return on plan assets | (1,009) | (1,237) | ||||||||||||
Amortization of net loss (1) | 281 | 339 | ||||||||||||
Net periodic benefit (credit) cost | $ | 428 | $ | (50) |
September 30, 2022 | June 30, 2022 | |||||||||||||
Discount rate | 4.50% | 2.60% | ||||||||||||
Expected long-term return on plan assets | 6.50% | 6.25% |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Contributions to WCTPP | $ | 287 | $ | 244 | ||||||||||
Contributions to All Other Plans | 8 | 7 |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Components of Net Periodic Postretirement Benefit Cost: | ||||||||||||||
Service cost | $ | — | $ | — | ||||||||||
Interest cost | 10 | 7 | ||||||||||||
Amortization of net gain | — | 3 | ||||||||||||
Net periodic postretirement benefit cost | $ | 10 | $ | 10 |
Fiscal year | ||||||||||||||
2023 | 2022 | |||||||||||||
Retiree Medical Plan discount rate | N/A | N/A | ||||||||||||
Death Benefit Plan discount rate | 4.77% | 2.72% |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Principal Borrowing Amount | Carrying Value | Weighted Average Interest Rate (1) | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Revolver | Various | 4/26/2027 | N/A | $ | 67,000 | 3.98 | % | $ | 63,000 | 2.75 | % | |||||||||||||||||||||||||||||||||
Term Loan | 8/31/2022 | 4/26/2027 | $47,000 | 47,000 | 45,600 | |||||||||||||||||||||||||||||||||||||||
114,000 | 108,600 | |||||||||||||||||||||||||||||||||||||||||||
Unamortized deferred debt financing costs | (1,018) | (1,677) | ||||||||||||||||||||||||||||||||||||||||||
Total | 112,982 | $ | 106,923 |
Outstanding NQOs: | Number of NQOs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | ||||||||||||||||||||||
Outstanding at June 30, 2022 | 450,687 | 12.39 | 4.34 | $ | — | |||||||||||||||||||||
Granted | — | — | — | — | ||||||||||||||||||||||
Exercised | — | — | — | — | ||||||||||||||||||||||
Cancelled/Forfeited | (8,096) | 15.94 | — | — | ||||||||||||||||||||||
Expired | (3,273) | 15.94 | — | — | ||||||||||||||||||||||
Outstanding at September 30, 2022 | 439,318 | 12.30 | 3.92 | $ | — | |||||||||||||||||||||
Exercisable at September 30, 2022 | 375,501 | 12.69 | 3.84 | $ | — | |||||||||||||||||||||
Outstanding PNQs: | Number of PNQs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | ||||||||||||||||||||||
Outstanding at June 30, 2022 | 2,212 | 30.91 | 0.83 | $ | — | |||||||||||||||||||||
Granted | — | — | — | — | ||||||||||||||||||||||
Exercised | — | — | — | — | ||||||||||||||||||||||
Cancelled/Forfeited | — | — | — | — | ||||||||||||||||||||||
Expired | — | — | — | — | ||||||||||||||||||||||
Outstanding at September 30, 2022 | 2,212 | 30.91 | 0.57 | $ | — | |||||||||||||||||||||
Exercisable at September 30, 2022 | 2,211 | 30.91 | 0.57 | $ | — | |||||||||||||||||||||
Outstanding and Nonvested Restricted Stock Awards: | Shares Awarded | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | 816,811 | 6.67 | ||||||||||||
Granted | 93,255 | 5.10 | ||||||||||||
Vested/Released | (164,681) | 7.46 | ||||||||||||
Cancelled/Forfeited | (40,044) | 6.25 | ||||||||||||
Outstanding and nonvested at September 30, 2022 | 705,341 | 6.47 | ||||||||||||
Outstanding and Nonvested PBRSUs: | PBRSUs Awarded (1) | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | 456,993 | 6.16 | ||||||||||||
Granted (1) | — | — | ||||||||||||
Vested/Released | — | — | ||||||||||||
Cancelled/Forfeited | (19,540) | 15.35 | ||||||||||||
Outstanding and nonvested at September 30, 2022 | 437,453 | 5.75 | ||||||||||||
Outstanding and Nonvested CSRSUs: | CSRSUs Awarded | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | 145,645 | 6.36 | ||||||||||||
Granted | — | — | ||||||||||||
Vested/Released | (17,924) | 8.91 | ||||||||||||
Cancelled/Forfeited | (25,935) | 6.44 | ||||||||||||
Outstanding and nonvested at September 30, 2022 | 101,786 | 5.89 | ||||||||||||
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Accrued workers’ compensation liabilities | $ | 872 | $ | 947 | ||||||||||
Finance lease liabilities | 193 | 193 | ||||||||||||
Other (1) | 4,725 | 4,955 | ||||||||||||
Other current liabilities | $ | 5,790 | $ | 6,095 |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Deferred compensation (1) | $ | 216 | $ | 195 | ||||||||||
Finance lease liabilities | 370 | 409 | ||||||||||||
Deferred income taxes and other liabilities | 735 | 735 | ||||||||||||
Other long-term liabilities | $ | 1,321 | $ | 1,339 |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Income tax expense | $ | 43 | $ | 62 | ||||||||||
Effective tax rate | (0.6) | % | (2.6) | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2022 | 2021 | ||||||||||||
Undistributed net loss available to common stockholders | $ | (7,374) | $ | (2,474) | ||||||||||
Undistributed net loss available to nonvested restricted stockholders and holders of convertible preferred stock | — | (97) | ||||||||||||
Net loss available to common stockholders - basic | $ | (7,374) | $ | (2,571) | ||||||||||
Weighted average common shares outstanding - basic | 18,948,453 | 17,969,694 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||
Shares issuable under stock options | — | — | ||||||||||||
Weighted average common shares outstanding - diluted | 18,948,453 | 17,969,694 | ||||||||||||
Net loss available to common stockholders per common share—basic | $ | (0.39) | $ | (0.14) | ||||||||||
Net loss available to common stockholders per common share—diluted | $ | (0.39) | $ | (0.14) |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Shares issuable under stock options | 439,318 | 384,520 | ||||||||||||
Shares issuable under convertible preferred stock | — | 440,990 | ||||||||||||
Shares issuable under PBRSUs | 437,453 | 383,783 |
Three Months Ended September 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(In thousands) | $ | % of total | $ | % of total | ||||||||||||||||||||||
Net Sales by Product Category: | ||||||||||||||||||||||||||
Coffee (Roasted) | $ | 78,295 | 64.5 | % | $ | 70,597 | 65.1 | % | ||||||||||||||||||
Tea & Other Beverages (1) | 20,946 | 17.3 | % | 19,037 | 17.6 | % | ||||||||||||||||||||
Culinary | 14,896 | 12.3 | % | 13,075 | 12.1 | % | ||||||||||||||||||||
Spices | 6,024 | 4.9 | % | 5,199 | 4.8 | % | ||||||||||||||||||||
Net sales by product category | 120,161 | 99.0 | % | 107,908 | 99.6 | % | ||||||||||||||||||||
Delivery Surcharge | 1,219 | 1.0 | % | 454 | 0.4 | % | ||||||||||||||||||||
Net sales | $ | 121,380 | 100.0 | % | $ | 108,362 | 100.0 | % |
(In thousands) | ||||||||||||||||||||||||||
Name of Branch Property | Date Sold | Sales Price | Net Proceeds | Gain on Sale | ||||||||||||||||||||||
Portland, Oregon | 9/23/2022 | $ | 1,990 | $ | 1,880 | $ | 1,770 | |||||||||||||||||||
San Diego, California | 9/19/2022 | 7,574 | 7,169 | 6,425 | ||||||||||||||||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||
Net sales | $ | 121,380 | $ | 108,362 | $13,018 | 12.0% | |||||||||||||||||
Gross margin | 21.9 | % | 29.0 | % | (7.1)% | NM | |||||||||||||||||
Operating expenses as a % of sales | 25.5 | % | 30.7 | % | 5.2% | NM | |||||||||||||||||
Loss from operations | $ | (4,298) | $ | (1,780) | $(2,518) | (141.5)% | |||||||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | $(4,950) | (204.2)% | |||||||||||||||||
Operating Data: | |||||||||||||||||||||||
Coffee pounds | 17,387 | 19,876 | (2,489) | (12.5)% | |||||||||||||||||||
EBITDA (1) | $ | 1,796 | $ | 6,089 | $(4,293) | (70.5)% | |||||||||||||||||
EBITDA Margin (1) | 1.5 | % | 5.6 | % | (4.1)% | NM | |||||||||||||||||
Adjusted EBITDA (1) | $ | (4,873) | $ | 3,489 | $(8,362) | (239.7)% | |||||||||||||||||
Adjusted EBITDA Margin (1) | (4.0) | % | 3.2 | % | (7.2)% | NM | |||||||||||||||||
Percentage of Total Net Sales By Product Category | |||||||||||||||||||||||
Coffee (Roasted) | 64.5 | % | 65.1 | % | (0.6)% | (0.9)% | |||||||||||||||||
Tea & Other Beverages (2) | 17.3 | % | 17.6 | % | (0.3)% | (1.7)% | |||||||||||||||||
Culinary | 12.3 | % | 12.1 | % | 0.2% | 1.7% | |||||||||||||||||
Spices | 4.9 | % | 4.8 | % | 0.1% | 2.1% | |||||||||||||||||
Net sales by product category | 99.0 | % | 99.6 | % | (0.7)% | NM | |||||||||||||||||
Delivery Surcharge | 1.0 | % | 0.4 | % | 0.6% | NM | |||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | —% | —% | |||||||||||||||||
Other data: | |||||||||||||||||||||||
Capital expenditures related to maintenance | $ | 2,846 | $ | 2,243 | $ | (603) | (26.9)% | ||||||||||||||||
Total capital expenditures | 2,988 | 2,542 | (446) | (17.5)% | |||||||||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | 627 | 10.0% |
Three Months Ended September 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Net sales | $ | 121,380 | $ | 108,362 | $13,018 | 12.0% | |||||||||||||||||
Cost of goods sold | 94,783 | 76,908 | (17,875) | (23.2)% | |||||||||||||||||||
Gross profit | 26,597 | 31,454 | (4,857) | (15.4)% | |||||||||||||||||||
Selling expenses | 27,590 | 26,009 | (1,581) | (6.1)% | |||||||||||||||||||
General and administrative expenses | 10,487 | 11,807 | 1,320 | 11.2% | |||||||||||||||||||
Net gains from sales of assets | (7,182) | (4,582) | 2,600 | NM | |||||||||||||||||||
Operating expenses | 30,895 | 33,234 | 2,339 | 7.0% | |||||||||||||||||||
Loss from operations | (4,298) | (1,780) | (2,518) | (141.5)% | |||||||||||||||||||
Other (expense) income: | |||||||||||||||||||||||
Interest expense | (4,641) | (3,026) | (1,615) | (53.4)% | |||||||||||||||||||
Other, net | 1,608 | 2,444 | 836 | NM | |||||||||||||||||||
Total other expense | (3,033) | (582) | (2,451) | NM | |||||||||||||||||||
Loss before taxes | (7,331) | (2,362) | (4,969) | (210.4)% | |||||||||||||||||||
Income tax expense | 43 | 62 | 19 | NM | |||||||||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | (4,950) | (204.2)% | |||||||||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | — | 147 | 147 | 100.0% | |||||||||||||||||||
Net loss available to common stockholders | $ | (7,374) | $ | (2,571) | (4,803) | (186.8)% | |||||||||||||||||
Three Months Ended September 30, 2022 vs. 2021 | |||||
Effect of change in unit sales | $ | (15.6) | |||
Effect of pricing and product mix changes | 28.6 | ||||
Total increase in net sales | $ | 13.0 |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (7,374) | $ | (2,424) | ||||||||||
Income tax expense | 43 | 62 | ||||||||||||
Interest expense (1) | 3,475 | 2,172 | ||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | ||||||||||||
EBITDA | $ | 1,796 | $ | 6,089 | ||||||||||
EBITDA Margin | 1.5 | % | 5.6 | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (7,374) | $ | (2,424) | ||||||||||
Income tax expense | 43 | 62 | ||||||||||||
Interest expense (1) | 3,475 | 2,172 | ||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | ||||||||||||
ESOP and share-based compensation expense | 2,197 | 1,392 | ||||||||||||
Gain on settlement with Boyd's sellers (2) | (1,918) | — | ||||||||||||
Net gains from sale of assets | (7,182) | (4,582) | ||||||||||||
Severance costs | 234 | 590 | ||||||||||||
Adjusted EBITDA | $ | (4,873) | $ | 3,489 | ||||||||||
Adjusted EBITDA Margin | (4.0) | % | 3.2 | % |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Principal Borrowing Amount | Carrying Value | Weighted Average Interest Rate (1) | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Revolver | Various | 4/26/2027 | N/A | $ | 67,000 | 3.98 | % | $ | 63,000 | 2.75 | % | |||||||||||||||||||||||||||||||||
Term Loan | 8/31/2022 | 4/26/2027 | $47,000 | 47,000 | 45,600 | |||||||||||||||||||||||||||||||||||||||
Total | $ | 114,000 | $ | 108,600 |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Consolidated Statements of cash flows data (in thousands) | |||||||||||
Net cash used in operating activities | $ | (13,419) | $ | (6,735) | |||||||
Net cash provided by investing activities | 6,073 | 4,755 | |||||||||
Net cash provided by (used in) financing activities | 5,090 | (2,269) | |||||||||
Net decrease in cash and cash equivalents and restricted cash | $ | (2,256) | $ | (4,249) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
(In thousands) | Principal | Interest Rate | Annual Interest Expense | |||||||||||||||||
–150 basis points | $49,000 | 3.24 | % | $1,588 | ||||||||||||||||
–100 basis points | $49,000 | 3.74 | % | $1,833 | ||||||||||||||||
Unchanged | $49,000 | 4.74 | % | $2,323 | ||||||||||||||||
+100 basis points | $49,000 | 5.74 | % | $2,813 | ||||||||||||||||
+150 basis points | $49,000 | 6.24 | % | $3,058 |
Increase (Decrease) to Net Loss | Increase (Decrease) to AOCI | |||||||||||||||||||||||||
10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | 10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Coffee-related derivative instruments (1) | $ | 226 | $ | (226) | $ | 797 | $ | (797) |
Item 4. | Controls and Procedures |
PART II - OTHER INFORMATION |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit No. | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
3.5 | ||||||||
3.6 | ||||||||
3.7 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | Inline XBRL Instance Document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (included in Exhibit 101). |
* | Filed herewith | ||||
** | Furnished, not filed, herewith |
FARMER BROS. CO. | |||||||||||||||||
By: | /s/ Deverl Maserang | ||||||||||||||||
Deverl Maserang President and Chief Executive Officer (principal executive officer) | |||||||||||||||||
November 3, 2022 | |||||||||||||||||
By: | /s/ Scott R. Drake | ||||||||||||||||
Scott R. Drake Chief Financial Officer (principal financial officer) | |||||||||||||||||
November 3, 2022 |
1 Year Farmer Brothers Chart |
1 Month Farmer Brothers Chart |
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