FORT WORTH, Texas, Nov. 07, 2016 (GLOBE NEWSWIRE) -- Farmer Bros. Co. reported financial results for the first quarter ended September 30, 2016.
First Quarter Fiscal 2017 Highlights
- Volume of green coffee pounds processed and sold increased 8.1% in the first quarter of fiscal 2017 as compared to the first quarter of fiscal 2016.
- Gross profit increased 1.2% to $51.2 million in the first quarter of fiscal 2017 from $50.6 million in the first quarter of fiscal 2016, and gross margin increased to 39.2% in the first quarter of fiscal 2017 from 37.9% in the first quarter of fiscal 2016.
- Income from operations was $2.5 million in the first quarter of fiscal 2017 as compared to a loss from operations of $(0.6) million in the first quarter of fiscal 2016.
- Net income was $1.6 million, or $0.10 per diluted common share, in the first quarter of fiscal 2017, including net gains of $1.7 million from sales of assets and earnout from last year's sale of spice assets, as compared to a net loss of $(1.1) million, or $(0.07) per common share, in the first quarter of fiscal 2016.
- Adjusted EBITDA increased to $11.6 million in the first quarter of fiscal 2017, from $10.7 million in the first quarter of fiscal 2016, and Adjusted EBITDA Margin increased to 8.9% in the first quarter of fiscal 2017, from 8.0% in the first quarter of fiscal 2016.
“We are pleased to see our team’s efforts in strengthening our DSD organization, winning new customers and increasing volume with existing customers, along with enhancing efficiencies in our supply chain reflected in our first quarter results,” said President and CEO, Michael Keown. “We grew volume of green coffee pounds sold in the high-single to low-double digits for the third consecutive quarter and believe we are positioned to continue this positive trend through the remainder of the year. Further, our ongoing strong execution allowed us to deliver gross margin expansion and a reduction in operating expenses. We are integrating China Mist into our business since closing the acquisition in October and look forward to accelerating the Company’s growth in the fresh brewed tea category. With the improvements we have made throughout our operations in recent months and our ongoing focus on key strategic initiatives, including our corporate relocation, we are establishing a strong foundation that we can continue to leverage for long-term, sustainable growth and value creation for all stockholders.”
First Quarter Fiscal 2017 Results
Net sales in the first quarter of fiscal 2017 were $130.5 million, a decrease of $2.9 million, or 2.2%, from $133.4 million in the first quarter of fiscal 2016. Net sales of tea, culinary and other beverages increased as compared to the first quarter of fiscal 2016, offset by decreases in net sales of spice products and coffee products. Volume of green coffee processed and sold increased 8.1% in the first quarter of fiscal 2017 as compared to the first quarter of fiscal 2016, while net sales of roast and ground coffee decreased 0.8%, driven primarily by price decreases to customers utilizing commodity-based pricing arrangements as compared to price increases in the prior year period. In addition, spice sales decreased by $2.3 million, driven primarily by last year's sale of the Company's spice assets.
Gross profit in the first quarter of fiscal 2017 increased $0.6 million, or 1.2%, to $51.2 million from $50.6 million in the first quarter of fiscal 2016. Gross margin increased 130 basis points to 39.2% in the first quarter of fiscal 2017 from 37.9% in the first quarter of fiscal 2016. The increase in gross profit was largely due to lower hedged cost of green coffee compared to the first quarter of fiscal 2016, offset by a reduction in spice products gross profit resulting from the sale last year of the Company's spice assets. Gross profit in the first quarter of fiscal 2017 included the beneficial effect of the liquidation of LIFO inventory quantities in the amount of $0.8 million. No such beneficial effect was included in the first quarter of fiscal 2016.
In the first quarter of fiscal 2017, operating expenses decreased $2.4 million, or 4.8%, to $48.7 million or 37.3% of net sales, from $51.1 million, or 38.3% of net sales, in the first quarter of fiscal 2016, due to lower restructuring and other transition expenses associated with the corporate relocation plan, net gains of $1.7 million primarily from the sale of real estate and the earnout from last year's sale of spice assets, and lower general and administrative expenses, partially offset by an increase in selling expenses.
Income from operations in the first quarter of fiscal 2017 was $2.5 million as compared to a loss from operations of $(0.6) million in the first quarter of fiscal 2016.
Total other income in the first quarter of fiscal 2017 was $0.2 million which included net gains from investments and lower net losses on derivative instruments, partially offset by higher interest expense, as compared to total other expense of $(0.6) million in the first quarter of fiscal 2016, which included net losses on derivative instruments and investments of $(0.9) million. Interest expense in the first quarter of fiscal 2017 included $0.3 million in non-cash interest expense accrued on the Torrance facility sale-leaseback financing obligation, which will be included in the computation of the gain on sale upon conclusion of the leaseback arrangement.
In the first quarter of fiscal 2017, the Company recorded income tax expense of $1.1 million, or $0.06 per diluted common share, as compared to income tax benefit of $0.1 million in the first quarter of fiscal 2016, primarily due to the effect of the release of the valuation allowance on the Company's deferred tax assets in the fourth quarter of fiscal 2016.
Net income was $1.6 million, or $0.10 per diluted common share, in the first quarter of fiscal 2017 as compared to a net loss of $(1.1) million, or $(0.07) per common share, in the first quarter of fiscal 2016. Full report.
