TORRANCE, Calif. –Farmer Bros. Co. (the “Company”), a manufacturer, wholesaler and distributor of coffee, tea and culinary products, today reported financial results for the fourth quarter and fiscal year ended June 30, 2013.
The Company also announced that it has filed its Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (the “Form 10-K”).
The Company had delayed the filing due to the restatement of certain prior period financial statements resulting from errors related to the Company’s accounting for certain postretirement benefit obligations for its retiree medical plan, failure to timely adopt accounting guidance relating to a postretirement death benefit, when originally issued, and failure to record the appropriate amounts reflecting the cash surrender value of life insurance policies purchased to fund the postretirement death benefit.
Fourth Quarter and Fiscal Year 2013 Highlights:
- Net sales increased 6.5% to $128.8 million for the fourth quarter and 2.9% to $510.0 million for the full fiscal year compared to the same periods in fiscal 2012;
- Gross profit increased 4.3% to $47.5 million for the fourth quarter and 10.5% to $191.1 million for the full fiscal year compared to the same periods in fiscal 2012;
- Loss from operations was $2.7 million for the fourth quarter and $4.1 million for the full fiscal year;
- Net loss was $3.0 million, or $0.19 per common share, for the fourth quarter and $8.5 million, or $0.54 per common share, for the full fiscal year; and
- EBITDAE was $6.5 million for the fourth quarter and $33.7 million for the full fiscal year. EBITDAE is a non-GAAP financial measure.
“Our product innovation efforts, combined with our increased emphasis on sales and marketing, enabled us to realize growth in our national account business and report improved fourth quarter and fiscal year financial results,” said Mike Keown, Farmer Bros. President and CEO.
“In addition, our team worked to maintain price across our DSD customer base which has contributed to our improved margins. Going forward, I believe we have made considerable progress in the year and I am confident that we have the right strategies and organization to continue.”
Restated Financial Results
The Form 10-K includes restated audited consolidated financial statements for the fiscal years ended June 30, 2012 and 2011, as well as footnote disclosures of the restated unaudited interim financial information for the four quarters included in the fiscal year ended June 30, 2012 and the first three quarters included in the fiscal year ended June 30, 2013 along with reconciliations of the previously issued annual and quarterly financial information to the restated information.
Certain restated and unaudited selected financial information and data for the fiscal years ended and as of June 30, 2010 and 2009 are also included in the Form 10-K. Any comparisons to prior periods discussed below reflect restated financial results for those periods. Accordingly, investors should no longer rely upon the Company’s previously issued financial statements for these periods and any earnings releases or similar communications relating to these periods.
Fiscal Fourth Quarter Results
Net sales increased $7.9 million, or 6.5%, to $128.8 million as compared to $120.9 million in the fourth quarter of the prior fiscal year. The increase was primarily due to increases in sales of the Company’s coffee and tea products.
Gross profit increased $2.0 million, or 4.3%, to $47.5 million, as compared to $45.5 million in the fourth quarter of the prior fiscal year. The increase in gross profit is primarily due to a 27% reduction in the average cost of green coffee beans purchased compared to the same period in the prior fiscal year. Gross profit as a percentage of net sales decreased 70 basis points to 36.9% from 37.6% in the fourth quarter of fiscal 2012 primarily due to a lower beneficial effect of the liquidation of LIFO inventory quantities in the amount of $0.4 million as compared to $6.4 million in the fourth quarter of the prior fiscal year.
Operating expenses decreased $3.9 million, or 7.2%, to $50.2 million from $54.1 million in the fourth quarter of the prior fiscal year. Operating expenses as a percentage of net sales decreased 580 basis points to 39.0% versus 44.8% in the fourth quarter of fiscal 2012. The decrease was primarily due to lower impairment losses and absence of pension withdrawal expense compared to the fourth quarter of fiscal 2012.
