Farmer Bros. Co. Reports 4 Percent Net Sales Increase For Third Quarter, Net Loss For 9-Month Period

Farmer Bros. Co., a manufacturer, wholesaler and distributor of coffee, tea and culinary products, today reported financial results for the three and nine months ended March 31, 2012.

"While we are pleased with our financial progress in the third quarter, we believe that there are still many opportunities for us to improve our business operationally and better position Farmer Bros. for long-term profitable growth," said Farmer Bros. Co. President and CEO Mike Keown in a prepared statement. "We will continue to focus on reinvigorating our national direct store delivery operations, the pursuit of increased synergies from recent acquisitions, and further leverage our broad product offering for improved sales with new and existing customers. At the same time, we are intently focused on streamlining non-value added costs and expenses to create a more cost-efficient operating structure."

Net sales for the third quarter of fiscal 2012 increased $4.8 million, or 4 percent, to $121.5 million from $116.7 million in the third quarter of the prior fiscal year. The increase in net sales was primarily due to increases in list prices of the company's coffee, cappuccino, cocoa and selected spice products.

"We are working to consistently improve our operating results as we focus on managing the controllable aspects of our business model," stated Farmer Bros. Co. Chief Financial Officer Jeffrey Wahba. "Going forward, we will continue to further increase our operating efficiencies and reduce operating expenses." 

Gross profit in the third quarter of fiscal 2012 increased $1.2 million, or 3 percent, to $43.1 million, as compared to $41.9 million in the third quarter of fiscal 2011. The gross profit increase is primarily due to the increase in sales and the $2.2 million reduction in cost of goods sold recorded to reflect the expected beneficial effect of the liquidation of LIFO inventory quantities, as compared to the same period in the prior fiscal year when no such effect was expected. Gross margin in the third quarter of fiscal 2012 remained flat at 36 percent compared to the third quarter of fiscal 2011.  

Loss from operations for the third quarter of fiscal 2012 improved $10.4 million to $4.1 million compared to $14.5 million last year. This improvement was due to a $9.1 million decrease in operating expenses primarily due to lower payroll and related expenses associated from a reduction in the number of employees, savings from employee benefit plan restructuring and ongoing cost control measures.  

Total other expense in the third quarter of fiscal 2012 was $2.0 million primarily due to net realized and unrealized derivative losses, compared to total other income of $1.3 million in the same period of the prior fiscal year, primarily due to net realized and unrealized derivative gains. The company recorded an income tax benefit of $0.6 million in the third quarter of fiscal 2012 compared to an income tax expense of $0.1 million in the same period of the prior fiscal year. 

As a result of the forgoing factors, the company recorded a net loss of $5.5 million, or $0.35 per common share, for the third quarter of fiscal 2012, compared to a net loss of $13.2 million, or $0.87 per common share, for the same period of the prior fiscal year.

Net sales for the nine months ended March 31, 2012 increased $29.8 million, or 9 percent, to $374.5 million from $344.7 million in the comparable period of the prior fiscal year.  

For the nine months ended March 31, 2012, the company reported a net loss of $17.2 million, or $1.11 per common share, compared with a net loss of $32.0 million, or $2.13 per common share, for the comparable period in the prior fiscal year. Fiscal nine month 2012 results include a $4.3 million, or $0.29 per common share, non-cash charge for withdrawal from a multiemployer pension plan.