FARMER BROTHERS CO Q1 FY2024 earnings call

• Immediately after joining, executed sale of direct ship business and refocused on direct store delivery.
• Revenue increased year over year, margins expanded, adjusted EBITDA approaching breakeven.
• Costs from direct ship transition and sluggish coffee volumes offset some gross margin improvement.
• Coffee costs trended lower, cost per pound of coffee down 12% YOY and 1.6% QOQ.
• Centralizing roasting and production to Portland, Oregon facility to reduce conversion cost.
• Evaluating and reducing brand and SKU redundancies to simplify lineup and streamline operations.
• AI-driven pricing engine helping optimize pricing strategy, already driving gross margin improvement.
• New on-trend product additions like SHOTT natural-flavored syrups and Boyd's ambient liquid coffee performing well.
• Revive equipment and service business as a differentiator for DSD business.

Net sales for the first quarter were $81.9 million, an increase from $79.8 million in the first quarter of fiscal '23, driven by higher pricing but offset by lower volumes. Gross profit margin increased to 37.6% in Q1 2024 from 33.8% in Q1 2023, a 380 basis point improvement. Adjusted EBITDA approached breakeven for the first quarter at a loss of $452,000 compared to a loss of $3.9 million in the same period last year. The company had $4 million of unrestricted cash and cash equivalents, $23.3 million in outstanding borrowings under credit facility, $4.6 million utilized from letters of credit sublimit, and $25.4 million of availability.

• Anticipate improvement in revenue, gross margins, and operating costs.
• Focus on driving customer growth, retention, and product penetration.
• Confident in continuing improvement with coffee costs trending lower.
• Expect to be laser focused on improving operational efficiency, reducing costs, and streamlining go-to-market.
• Believe in generating positive free cash flow in early fiscal 2025 and delivering long-term value to shareholders.

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