Farmer Bros. Co. (NASDAQ: FARM) (the “Company”) today announced it
has amended its credit facility with JPMorgan Chase Bank, N.A to
increase the Company’s flexibility in supporting its current and
future business operations as the COVID-19 situation continues to
evolve. The Company also provided a business update for the fourth
quarter of 2020.
Deverl Maserang, Farmer Brothers’ President and CEO said, “The
amended credit facility marks another important step in our ongoing
efforts to support the business both near- and long-term. With this
added financial flexibility and our ongoing cost-cutting efforts,
we believe Farmer Brothers is well-positioned to weather these
challenging times. We appreciate the support of our lenders and
believe the execution of this credit facility reflects their
confidence in Farmer Brothers and our transformation strategy.”
The full details relating to the amendment will be available in
a Form 8-K that the Company will file with the U.S. Securities and
Exchange Commission that will also be available on the Company’s
website.
Business Update
As previously reported, the COVID-19 pandemic has had a
significant impact on Farmer Brothers’ DSD sales network. The
Company disclosed on its third quarter fiscal 2020 earnings call
that, during the middle weeks of April, sales from the Company’s
DSD customers declined between 66% to 69% from pre-COVID-19
pandemic average sales. Since that time, the Company saw consistent
improvement through early July, with DSD sales currently holding in
a range of decline to pre-COVID-19 pandemic average sales of 44% to
47%. Throughout the COVID-19 timeframe, the Company’s Direct Ship
business has remained relatively stable overall with areas of
growth generally offsetting areas of decline.
Farmer Brothers has taken swift action to reduce expenses and
preserve cash with the goal of operating as efficiently and
effectively as possible. As previously announced, on a combined
basis, the Company targeted cost-savings actions that would reduce
monthly expenses by approximately $6.5 million per month. This goal
was exceeded during the fourth fiscal quarter and Farmer Brothers
continues to actively manage costs as areas of the business
partially return to pre-pandemic sales levels.
As of today’s date, the Company’s total debt was $68.8 million
and the Company had cash on hand of $12 million and $21 million of
availability on its amended credit facility. As a point of
reference, the 2019 fiscal year end reported figure for total debt
was $92 million and cash on hand was reported as $7.0 million as of
June 30, 2019. Additionally, the Company expects to report lower
Accounts Receivable, Accounts Payable and Inventory balances for
fiscal year 2020 than were reported for fiscal year 2019.
Mr. Maserang continued, “While COVID-19 continues to present
challenges and uncertainty, we have continued to see improvement in
business trends since mid-April. Our immediate focus remains on the
health and safety of our employees while serving our customers as
demand increases and economies reopen. We will continue to take
appropriate actions to control spending, support the business and
operate efficiently. We are confident that we are on the right path
to return Farmer Brothers to a position of strength for the long
term.”
The Company will provide a more detailed review of its financial
results and business when it reports its fiscal year 2020 results
in September.
About Farmer Bros. Co.
Founded in 1912, Farmer Bros. Co. is a national coffee roaster,
wholesaler and distributor of coffee, tea and culinary products.
The Company’s product lines include organic, Direct Trade and
sustainably-produced coffee. With a robust line of coffee, hot and
iced teas, cappuccino mixes, spices, and baking/biscuit mixes, the
Company delivers extensive beverage planning services and culinary
products to its U.S. based customers. The Company serves a wide
variety of customers, from small independent restaurants and
foodservice operators to large institutional buyers like restaurant
and convenience store chains, hotels, casinos, healthcare
facilities, and gourmet coffee houses, as well as grocery chains
with private brand coffee and consumer branded coffee and tea
products, and foodservice distributors.
Headquartered in Northlake, Texas, Farmer Bros. Co. generated
net sales of $595.9 million in fiscal 2019. The Company’s primary
brands include Farmer Brothers®, Artisan Collection by Farmer
Brothers™, Superior®, Metropolitan™, China Mist® and Boyds®.
Forward-Looking Statements
Certain statements contained in this press release are not based
on historical fact and are forward-looking statements within the
meaning of federal securities laws and regulations. These
statements are based on management's current expectations,
assumptions, estimates and observations of future events and
include any statements that do not directly relate to any
historical or current fact. These forward-looking statements can be
identified by the use of words like “anticipates,” “estimates,”
“projects,” “expects,” “plans,” “believes,” “intends,” “will,”
“could,” “assumes” and other words of similar meaning. Owing to the
uncertainties inherent in forward-looking statements, actual
results could differ materially from those set forth in
forward-looking statements. The Company intends these
forward-looking statements to speak only at the time of this press
release and does not undertake to update or revise these statements
as more information becomes available except as required under
federal securities laws and the rules and regulations of
the Securities and Exchange Commission (“SEC”).
Factors that could cause actual results to differ materially from
those in forward-looking statements include, but are not limited
to, the finalization of our financial statements as of and for the
quarter and year ended June 30, 2020, the duration of the COVID-19
pandemic’s disruption to the Company’s business and customers,
levels of consumer confidence, the duration and magnitude of the
pandemic’s impact on unemployment rates, the success of the
Company’s strategy to recover from the effects of the pandemic, the
success of the Company's turnaround strategy, the impact of capital
improvement projects, the adequacy and availability of capital
resources to fund the Company’s existing and planned business
operations and the Company’s capital expenditure requirements, the
capacity to meet the demands of our large national account
customers, the extent of execution of plans for the growth of
Company business and achievement of financial metrics related to
those plans, the success of the Company to retain and/or attract
qualified employees, the success of the Company’s adaptation to
technology and new commerce channels, the effect of the capital
markets as well as other external factors on stockholder value,
fluctuations in availability and cost of green coffee, competition,
organizational changes, the effectiveness of our hedging strategies
in reducing price and interest rate risk, changes in consumer
preferences, our ability to provide sustainability in ways that do
not materially impair profitability, changes in the strength of the
economy, business conditions in the coffee industry and food
industry in general, our continued success in attracting new
customers, variances from budgeted sales mix and growth rates,
weather and special or unusual events, as well as other risks
described in this report and other factors described from time to
time in our filings with the SEC.
Contact:
Joele
Frank, Wilkinson Brimmer
Katcher
Leigh Parrish212-355-4449
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