farm-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-34249

FARMER BROS. CO.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		95-0725980
(State or Other Jurisdiction of Incorporation of Organization)		(I.R.S. Employer Identification No.)
14501 N Fwy, Fort Worth, Texas 76177
(Address of Principal Executive Offices; Zip Code)

682-549-6600
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $1.00 per share	FARM	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☒

As of November 4, 2024, the registrant had 21,268,223 shares outstanding of its common stock, par value $1.00 per share, which is the registrant’s only class of common stock.

TABLE OF CONTENTS


			Page
PART I – FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements			1

Consolidated Balance Sheets at September 30, 2024 and June 30, 2024			1

Consolidated Statements of Operations for the Three Months Ended September 30, 2024 and 2023			2

Consolidated Statements of Comprehensive Loss for the Three Months Ended September 30, 2024 and 2023			3

Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2024 and 2023			4

Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and 2023			5

Notes to Consolidated Financial Statements			6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17

Item 3. Quantitative and Qualitative Disclosures About Market Risk			24

Item 4. Controls and Procedures			25

PART II – OTHER INFORMATION

Item 1. Legal Proceedings			25

Item 1A. Risk Factors			25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			25

Item 3. Defaults Upon Senior Securities			25

Item 4. Mine Safety Disclosures			25

Item 5. Other Information			25

Item 6. Exhibits			26

SIGNATURES			27

PART I - FINANCIAL INFORMATION (UNAUDITED)

Item 1. Financial Statements

FARMER BROS. CO.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)


	September 30, 2024		June 30, 2024

ASSETS
Current assets:
Cash and cash equivalents	$	3,282	$	5,830
Restricted cash	1,856		175
Accounts receivable, net of allowance for credit losses of $710 for both periods	34,673		35,147
Inventories	57,615		57,230

Short-term derivative assets	21		11
Prepaid expenses	4,874		4,236
Assets held for sale	352		352
Total current assets	102,673		102,981
Property, plant and equipment, net	33,343		34,002
Intangible assets, net	10,683		11,233
Right-of-use operating lease assets	33,697		35,241
Other assets	1,587		1,756
Total assets	$	181,983	$	185,213
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	49,660		48,478
Accrued payroll expenses	10,454		10,782
Right-of-use operating lease liabilities - current	12,589		14,046

Short-term derivative liability	1,321		730
Other current liabilities	3,902		2,997
Total current liabilities	77,926		77,033
Long-term borrowings under revolving credit facility	23,300		23,300

Accrued pension liabilities	11,971		12,287
Accrued postretirement benefits	800		789
Accrued workers’ compensation liabilities	2,378		2,378
Right-of-use operating lease liabilities - noncurrent	21,625		21,766
Other long-term liabilities	3,057		2,111
Total liabilities	$	141,057	$	139,664
Commitments and contingencies
Stockholders’ equity:

Common stock, $1.00 par value, 50,000,000 shares authorized; 21,268,223 and 21,264,327 shares issued and outstanding as of September 30, 2024 and June 30, 2024, respectively	21,268		21,265
Additional paid-in capital	80,455		79,963
Accumulated deficit	(35,356)		(30,354)

Accumulated other comprehensive loss	(25,441)		(25,325)
Total stockholders’ equity	$	40,926	$	45,549
Total liabilities and stockholders’ equity	$	181,983	$	185,213

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FARMER BROS. CO.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except share and per share data)


	Three Months Ended September 30,
		2024		2023
Net sales		$	85,066	$	81,888
Cost of goods sold		47,748		51,100
Gross profit		37,318		30,788
Selling expenses		27,228		26,829
General and administrative expenses		11,252		12,832
Net losses (gains) on disposal of assets		1,666		(6,785)

Operating expenses		40,146		32,876
Loss from operations		(2,828)		(2,088)
Other (expense) income:
Interest expense		(1,791)		(2,222)
Other, net		(250)		2,871
Total other (expense) income		(2,041)		649
Loss before taxes		(4,869)		(1,439)
Income tax expense (benefit)		133		(132)


Net loss		$	(5,002)	$	(1,307)


Net loss available to common stockholders per common share, basic and diluted		$	(0.24)	$	(0.06)
Weighted average common shares outstanding—basic and diluted		21,263,245		20,366,017

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FARMER BROS. CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(In thousands)


	Three Months Ended September 30,
		2024		2023
Net loss		$	(5,002)	$	(1,307)
Other comprehensive income (loss), net of taxes:
Unrealized gains (losses) on derivatives designated as cash flow hedges		7		(456)
Gain on derivatives designated as cash flow hedges reclassified to cost of goods sold		(122)		(172)



Total comprehensive loss		$	(5,117)	$	(1,935)

The accompanying notes are an integral part of these unaudited consolidated financial statements.


FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data)

	Common Shares	Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
Balance at June 30, 2024	21,264,327	$	21,265	$	79,963	$	(30,354)	$	(25,325)	$	45,549
Net loss	—	—		—		(5,002)		—		(5,002)
Cash flow hedges, net of taxes	—	—		—		—		(116)		(116)



Share-based compensation	—	—		495		—		—		495
Issuance of common stock and stock option exercises	3,896	3		(3)		—		—		—

Balance at September 30, 2024	21,268,223	$	21,268	$	80,455	$	(35,356)	$	(25,441)	$	40,926


FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data)

	Common Shares	Common Stock Amount		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
Balance at June 30, 2023	20,142,973	$	20,144	$	77,278	$	(26,479)	$	(32,831)	$	38,112
Net loss	—	—		—		(1,307)		—		(1,307)
Cash flow hedges, net of taxes	—	—		—		—		(628)		(628)


401(k) compensation expense, including reclassifications	154,046	154		653		—		—		807
Share-based compensation	—	—		814		—		—		814
Issuance of common stock and stock option exercises	279,464	280		(280)		—		—		—

Balance at September 30, 2023	20,576,483	$	20,578	$	78,465	$	(27,786)	$	(33,459)	$	37,798

The accompanying notes are an integral part of these unaudited consolidated financial statements.


FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
	Three Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(5,002)	$	(1,307)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization	2,897		2,948



Net losses (gains) on disposal of assets	1,666		(6,785)
Net losses (gains) on derivative instruments	1,310		(1,551)
401(k) and share-based compensation expense	495		1,621
Provision for credit losses	79		53
Change in operating assets and liabilities:
Accounts receivable, net	396		10,067
Inventories	(385)		(5,015)
Derivative assets, net	83		(760)
Other assets	(461)		504
Accounts payable	1,208		(7,470)
Accrued expenses and other	207		558
Net cash provided by (used in) operating activities	2,493		(7,137)
Cash flows from investing activities:

Purchases of property, plant and equipment	(3,330)		(3,511)
Proceeds from sales of property, plant and equipment	26		9,258
Net cash (used in) provided by investing activities	(3,304)		5,747
Cash flows from financing activities:
Proceeds from Credit Facilities	3,000		2,279
Repayments on Credit Facilities	(3,000)		(2,000)
Payments of finance lease obligations	(48)		(48)
Payment of financing costs	(8)		(47)
Net cash (used in) provided by financing activities	(56)		184
Net decrease in cash and cash equivalents and restricted cash	(867)		(1,206)
Cash and cash equivalents and restricted cash at beginning of period	6,005		5,419
Cash and cash equivalents and restricted cash at end of period	$	5,138	$	4,213


Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,745	$	847
Non-cash issuance of 401(K) common stock	—		154
Non cash additions to property, plant and equipment	27		10

The accompanying notes are an integral part of these unaudited consolidated financial statements.

FARMER BROS. CO.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Introduction and Basis of Presentation

Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company,” or “Farmer Bros.”), is a leading coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea and other allied products. The Company serves a wide variety of customers, from small independent restaurants and foodservice operators to large institutional buyers like restaurants, department and convenience store retailers, hotels, casinos, healthcare facilities, and gourmet coffee houses, as well as grocery chains with private brand and consumer-branded coffee and tea products, and foodservice distributors.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2025.

On June 30, 2023, the Company completed the sale of certain assets of the Company related to its direct ship and private label business, including the Company’s production facility and corporate office building in Northlake, Texas, pursuant to that certain Asset Purchase Agreement dated as of June 6, 2023, by and between the Company and TreeHouse Foods, Inc. (the "Buyer"), as amended by that certain Amendment to the Asset Purchase Agreement, dated June 30, 2023.

The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission (the “SEC”) on September 12, 2024, as amended by the Form 10-K/A filed on October 25, 2024 (as amended, the “2024 Form 10-K”).

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2024 Form 10-K.

During the three months ended September 30, 2024, there were no significant updates made to the Company’s significant accounting policies.

Cash Equivalents

At September 30, 2024, we had $3.3 million of unrestricted cash and cash equivalents and $1.9 million in restricted cash on deposit in broker accounts to satisfy margin requirements associated with certain coffee-related derivative instruments resulting from an increase in the “C” market price of green coffee during the three months ended September 30, 2024. Further changes in commodity prices and the number of coffee-related derivative instruments held could have an impact on cash deposit requirements under our broker and counterparty agreements and may adversely affect our liquidity.

Concentration of Credit Risk

At September 30, 2024 and June 30, 2024, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables.

Farmer Bros. Co.

Notes to Unaudited Consolidated Financial Statements (continued)

The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative liability positions.

The Company estimates its credit risk for accounts receivable at the amount recorded on the balance sheet. The accounts receivable are generally short-term and all estimated credit losses have been appropriately considered in establishing the allowance for credit losses. There were

SEC Form 10-Q filed by Farmer Brothers Company