Investor’s Watch List: Farmer Bros. Co. (NASDAQ: FARM)

On Monday, Shares of Farmer Bros. Co. (NASDAQ: FARM) showed the bullish trend with a higher momentum of 0.28% and ended its trading session at $25.04. The company traded total volume of 239,673 shares as contrast to its average volume of 54.93K shares. The company has a market value of $422.68M and about 16.88M shares outstanding.

Farmer Bros. Co. (FARM) stated financial results for its first fiscal quarter ended September 30, 2018.

First Quarter Fiscal 2019 Results:

Selected Financial Data:

Net sales in the first quarter of fiscal 2019 were $147.40M, a boost of $15.70M, or 11.9%, over the prior year period. This increase was driven by a $12.50M increase in net sales of roasted coffee products, a $2.20M increase in net sales of culinary products, a $1.20M increase in net sales of tea products, and a $0.70M increase in net sales of frozen liquid coffee, offset by a $(1.0)M decrease in net sales of other beverages and a $(0.10)M decrease in net sales of spice products. The addition of the Boyd business contributed $20.50M to net sales, offset by a $(4.80)M decline in our base business driven mostly by lower volume on a few large direct ship customers and the impact of pricing to our cost plus customers.

Gross profit in the first quarter of fiscal 2019 increased $2.20M, or 4.7%, to $48.20M from $46.10M in the prior year period, and gross margin reduced 230 basis points to 32.7% from 35.0% in the prior year period. The increase in gross profit was mainly because of the addition of the Boyd business, while the decrease in gross margin was mainly because of a lower gross margin rate on the Boyd business, higher coffee brewing equipment costs associated with increased installation activity during the quarter and higher freight costs.

Operating expenses in the first quarter of fiscal 2019 increased $6.10M, or 13.7%, to $50.30M, or 34.1% of net sales, from $44.20M, or 33.6% of net sales, in the prior year period. The increase in operating expenses during the period was mainly because of a $4.50M increase in selling expenses and a $4.30M increase in restructuring and other transition expenses, counting $3.40M in pension withdrawal liability because of the Company’s partial withdrawal from the Western Conference of Teamsters Pension Plan (“WCTPP”) as a result of employment actions taken by the Company in 2016 in connection with the corporate relocation plan, and $1.10M in DSD restructuring plan expenses. The increase in operating expenses was partially offset by a $(2.7)0M decrease in general and administrative expenses mainly because of a decline in acquisition and integration costs contrast to the prior year period of $1.40M. The increase in selling expenses during the first quarter of fiscal 2019 was mainly driven by the addition of the Boyd business which added $4.30M to selling expenses exclusive of related depreciation and amortization expense, and a boost of $0.50M in depreciation and amortization expense.

As a result of the foregoing factors, loss from operations in the first quarter of fiscal 2019 was $(2.1)0M, as contrast to income from operations of $1.80M in the prior year period.

Total other expense in the first quarter of fiscal 2019 was $(2.2)0M as contrast to $(0.4)0M in the prior year period, mainly because of higher outstanding borrowings on the revolving credit which resulted in higher interest expense, and net losses on coffee-related derivative instruments. In the first quarter of fiscal 2019, net losses on coffee-related derivative instruments were $(1.1)0M contrast to net gains of $0.10M in the prior year period. Interest expense in the three months ended September 30, 2018 was $2.90M as contrast to $2.20M in the prior year period.

Income tax benefit was $(1.3)0M in the first quarter of fiscal 2019 as contrast to income tax expense of $0.60M in the prior year period. The decrease in income tax expense was mainly a result of the change in net (loss) income.

As a result of the foregoing factors, net loss was $(3.0)0M in the first quarter of fiscal 2019 as contrast to net income of $0.80M in the prior year period. Net loss available to common stockholders was $(3.1)0M, or $(0.18) per common share available to common stockholders-diluted, in the first quarter of fiscal 2019, contrast to net income available to common stockholders of $0.80M, or $0.05 per common share available to common stockholders-diluted, in the prior year period.

The Company offered net profit margin of -4.00% while its gross profit margin was 33.10%. ROE was recorded as -11.40% while beta factor was 0.18. The stock, as of recent close, has shown the weekly upbeat performance of 6.64% which was maintained at -22.12% in this year.

Marion Frost

Marion Frost

I am Marion Frost and I have over 16 years experience in the financial services industry giving me a vast understanding of how news affects the financial markets. I am an active day trader spending the majority of my time analyzing earnings reports and watching commodities and derivatives. I have a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.