TORRANCE, Calif. – Farmer Bros. Co. today (Nov. 6, 2014) reported financial results for the first quarter ended September 30, 2014.
First Quarter Fiscal 2015 Highlights:
- Net sales increased 5.0% to $136.0 million in the first quarter;
- Gross profit increased $0.1 million to $48.1 million in the first quarter;
- Income from operations was $2.6 million in the first quarter compared to $3.0 million; and
- Net income was $2.5 million, or $0.16 per diluted common share, compared to $1.8 million, or $0.11 per diluted common share.
(All comparisons above are to the first quarter of fiscal 2014.)
“We are pleased with our revenue and volume growth as we enter our new fiscal year,” stated Mike Keown, President and CEO of Farmer Brothers. “Growth was well balanced coming from both national account and independent customers. We remain focused on transforming our supply chain to lower costs, improve service, and drive quality.”
First Quarter Fiscal 2015 Results:
Net sales for the first quarter of fiscal 2015 increased $6.5 million, or 5.0%, to $136.0 million from $129.5 million in the first quarter of the prior fiscal year primarily due to increases in sales of our coffee and other beverage products.
Gross profit in the first quarter of fiscal 2015 increased $0.1 million, or 0.2%, to $48.1 million as compared to $48.0 million in the first quarter of fiscal 2014, primarily due to the increase in net sales. Gross margin decreased 170 basis points to 35.4% in the fiscal quarter ended September 30, 2014 from 37.1% in the comparable period in the prior fiscal year, primarily due to a 27% higher average cost of green coffee purchased.
Treasurer and CFO, Mark Nelson said, “In Q1 we worked through the remainder of our green coffee receipts where the corresponding large marked-to-market hedging gains were previously recognized in our prior fiscal year. We believe our hedged commodity position is adequate to provide ample reaction time to any potential commodity price changes going forward.”
Operating expenses in the first quarter of fiscal 2015 increased $0.5 million, or 1.2%, to $45.5 million from $45.0 million in the first quarter of the prior fiscal year primarily due to an increase in freight charges, self-insurance costs and ESOP expenses, partially offset by the absence of expenses related to the restatement of certain prior period financial statements. As a percentage of net sales, operating expenses in the first quarter of fiscal 2015 decreased to 33.5% of net sales from 34.7% of net sales in the first quarter of the prior fiscal year.
Income from operations in the first quarter of fiscal 2015 was $2.6 million compared to $3.0 million in the first quarter of the prior fiscal year.
Total other income in the first quarter of fiscal 2015 was $0.1 million compared to total other expense of $0.9 million in the first quarter of the prior fiscal year, primarily due to $0.1 million in net losses from coffee-related derivative instruments and investments in the first quarter of fiscal 2015 as compared to $1.5 million in net losses from coffee-related derivative instruments and investments in the first quarter of the prior fiscal year.
Income tax expense in the first quarter of fiscal 2015 was $0.2 million compared to $0.3 million in the first quarter of the prior fiscal year.
As a result of the foregoing factors, net income for the first quarter of fiscal 2015 was $2.5 million, or $0.16 per diluted common share, compared to $1.8 million, or $0.11 per diluted common share, in the first quarter of the prior fiscal year.
Mr. Nelson commented further, “We are pleased with the growth in our net income and earnings per share recorded in the first quarter, and believe this solid start to our year positions us well as we enter into our seasonally strong second fiscal quarter.”
Adjusted EBITDA in the first quarter of fiscal 2015 decreased to $10.4 million from $10.8 million in the first quarter of the prior fiscal year. Adjusted EBITDA is a non-GAAP financial measure.
