FORT WORTH, Texas, May 05, 2016 (GLOBE NEWSWIRE) -- Farmer Bros. Co. reported financial results for the third quarter ended March 31, 2016.
Third Quarter Fiscal 2016 Highlights:
- Net sales increased 1.5% to $134.5 million in the third quarter of fiscal 2016, as compared to the prior year period;
- Gross profit increased 12.9% to $52.6 million and gross margin increased to 39.1% in the third quarter of fiscal 2016, as compared to the prior year period;
- Net income was $1.2 million, or $0.07 per diluted common share, in the third quarter of fiscal 2016, as compared to net loss of $2.6 million, or $0.16 per common share, in the prior year period;
- Non-GAAP net income and Non-GAAP net income per diluted common share in the third quarter of fiscal 2016 were $4.0 million and $0.24, respectively, as compared to $1.1 million and $0.07, respectively, in the prior year period; and
- Adjusted EBITDA and Adjusted EBITDA Margin in the third quarter of fiscal 2016 were $10.2 million and 7.6%, respectively, as compared to $8.9 million and 6.7%, respectively, in the prior year period.
The foregoing non-GAAP financial measures are reconciled to their corresponding GAAP measures at the end of this press release.
Third Quarter Fiscal 2016 Results:
Net sales in the third quarter of fiscal 2016 increased $2.0 million, or 1.5%, to $134.5 million from $132.5 million in the third quarter of the prior fiscal year primarily due to an increase in net sales of our coffee (roast & ground) and spice products, resulting from higher volumes sold, and an increase in net sales of culinary and other beverages, resulting from pricing and product mix changes compared to the same period in the prior fiscal year. In the third quarter of fiscal 2016, green coffee processed and sold was approximately 22.8 million pounds, compared to approximately 20.9 million pounds in the third quarter of fiscal 2015, up 9% versus the same period in the prior fiscal year.
Gross profit in the third quarter of fiscal 2016 increased $6.0 million, or 12.9%, to $52.6 million as compared to $46.6 million in the third quarter of fiscal 2015. Gross margin increased 400 basis points to 39.1% in the third quarter of fiscal 2016 from 35.1% in the third quarter of fiscal 2015. The increase in gross profit was due to the increase in net sales as well as due to the decrease in cost of goods sold. The decrease in cost of goods sold was primarily due to lower coffee commodity costs compared to the same period in the prior fiscal year, 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. Gross profit in the third quarter of fiscal 2016 and 2015, respectively, also included the beneficial effect of the liquidation of LIFO inventory quantities in the amount of $0.8 million and $0.7 million.
Michael H. Keown, President and CEO said, “We are pleased with the results of this quarter as we returned to strong coffee pound growth (9%) while continuing to see significant improvements in supply chain management. Overall, we feel good about the quarter results, and are optimistic about the future.”
Operating expenses in the third quarter of fiscal 2016 increased $4.3 million to $52.3 million, or 38.9% of net sales, as compared to $48.0 million, or 36.2% of net sales, in the third quarter of the prior fiscal year primarily due to a $4.4 million increase in general and administrative expenses and a $0.8 million increase in selling expenses partially offset by a $0.4 million decrease in restructuring and other transition expenses relating to the Company's corporate relocation plan. The increase in general and administrative expenses in the third quarter of fiscal 2016 was primarily due to higher accrual for incentive compensation to eligible employees as compared to a reduction in accrual for incentive compensation to eligible employees in the prior year period and an increase in retiree medical costs. The increase in selling expenses in the third quarter of fiscal 2016 was primarily due to higher accrual for incentive compensation to eligible employees and an increase in expenses due to a minor realignment of the DSD operations, as compared to a reduction in accrual for incentive compensation to eligible employees in the prior year period, partially offset by lower fuel, freight and depreciation expense.
Income from operations in the third quarter of fiscal 2016 was $0.3 million as compared to loss from operations of $1.4 million in the third quarter of the prior fiscal year, primarily due to the increase in gross profit, partially offset by higher general and administrative expenses and selling expenses.
Total other income in the third quarter of fiscal 2016 was $0.9 million, which included interest expense of $0.1 million and $0.4 million in miscellaneous income, while total other expense in the third quarter of the prior fiscal year was $1.4 million, which included $0.5 million in interest expense and $1.8 million in net losses on coffee-related derivative instruments.
As a result, net income in the third quarter of fiscal 2016 was $1.2 million, or $0.07 per diluted common share, compared to net loss of $2.6 million, or $0.16 per common share, in the third quarter of the prior fiscal year. Full report.
