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Farmer Bros. Co. (NASDAQ:FARM) today reported financial results for the first quarter ended September 30, 2015.
First Quarter Fiscal 2016 Highlights:
– Net sales decreased 1.9% to $133.4 million in the first quarter of fiscal 2016, as compared to the prior year period;
– Gross profit increased $2.5 million, or 5.1%, in the first quarter of fiscal 2016, as compared to the prior year period;
– Net loss was $(1.1) million, or $(0.07) per common share, in the first quarter of fiscal 2016, as compared to net income of $2.5 million, or $0.16 per diluted common share in the prior year period;
– Non-GAAP net income and Non-GAAP net income per diluted common share in the first quarter of fiscal 2016 were $4.2 million and $0.25, respectively, as compared to $2.6 million and $0.16, respectively, in the prior year period; and
– Adjusted EBITDA and Adjusted EBITDA Margin in the first quarter of fiscal 2016 were $10.7 million and 8.0%, respectively, as compared to $10.5 million and 7.7%, respectively, in the prior year period.
First Quarter Fiscal 2016 Results:
Net sales for the first quarter of fiscal 2016 decreased $2.6 million, or 1.9%, to $133.4 million, as compared to $136.0 million in the first quarter of the prior fiscal year primarily due to decreases in sales of our coffee, tea and culinary products resulting primarily from the effects of pricing and product mix changes. In the first quarter of fiscal 2016, green coffee processed and sold was approximately 21.6 million pounds, a decrease of 5.3% versus the first quarter of fiscal 2015.
Gross profit in the first quarter of fiscal 2016 increased $2.5 million, or 5.1%, to $50.6 million, as compared to $48.1 million in the first quarter of fiscal 2015. Gross margin increased 250 basis points to 37.9% in the first quarter of fiscal 2016 from 35.4% in the comparable period in the prior fiscal year. The improvements in gross profit and gross margin were primarily due to increased supply chain efficiencies realized primarily through the consolidation of our former Torrance coffee production volumes into our Houston manufacturing facility, and other supply chain improvements.
Michael H. Keown, President and CEO said, “We are pleased with the improvement in our gross margin, and cautiously optimistic that the volume declines we have experienced over the past four quarters will begin to change direction in the coming quarters.”
Operating expenses in the first quarter of fiscal 2016 increased $5.6 million, or 12.4%, to $51.1 million from $45.5 million in the first quarter of the prior fiscal year primarily due to $5.5 million in restructuring and other transition expenses incurred in relation to the Company’s corporate relocation plan. In addition an increase in general and administrative expenses of $2.5 million was partially offset by a $2.0 million decrease in selling expenses, as compared to the first quarter of the prior fiscal year. The increase in the general and administrative expenses in the first quarter of fiscal 2016 was primarily due to an increase in employee medical costs and accruals for incentive compensation as compared to the same period in the prior fiscal year. The decrease in selling expenses in the first quarter of fiscal 2016 was primarily due to lower fuel and freight expenses and lower depreciation expense as compared to the same period in the prior fiscal year.
Loss from operations in the first quarter of fiscal 2016 was $(0.6) million as compared to income from operations of $2.6 million in the first quarter of the prior fiscal year, primarily due to restructuring and other transition expenses of $5.5 million incurred in connection with the Company’s corporate relocation plan.
Total other expense in the first quarter of fiscal 2016 was $0.6 million, primarily due to net losses on coffee-related derivative instruments of $(0.7) million, as compared to total other income in the first quarter of fiscal 2015 of $0.1 million, primarily due to $49,000 in net gains on coffee-related derivative instruments in the prior year period.
As a result, net loss in the first quarter of fiscal 2016 was $(1.1) million, or $(0.07) per common share, compared to net income of $2.5 million, or $0.16 per diluted common share, in the first quarter of the prior fiscal year.
