Farmer Bros (NASDAQ:FARM) released second-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Full Transcript
Vance
Thanks, John and good afternoon everyone. As we communicated last quarter and as John stated earlier, during the second quarter we started to more fully realize the impact of green coffee inflation on our cost of goods sold. As such, adjusted EBITDA for the quarter was 484,000 compared to 5.9 million dollars in the prior year period. From a top line perspective, net sales during the quarter were down 1% to 88.9 million dollars compared to 90 million dollars during the prior year period. As we stated on last quarter’s call, due to the rise in green coffee costs and our decision to hold on further pricing actions, we expected a decline in gross margins throughout the year. During the quarter, gross margin was 36.3 percent, a 680 basis points decline compared to the prior year period. Overall year to date gross margin was in line with our expectation at 38 percent. We do expect gross margins to remain pressured and average in the high 30 percent range for the fiscal year. But as John mentioned earlier, we do anticipate some relief starting in the fourth quarter due to recent declines in the green coffee market. Overall operating costs for the quarter decreased 1.4 million to 36.4 million dollars or 40.9 percent of net sales compared to 37.8 million dollars or 42 percent of net sales in the prior year period. This included 100,000 decrease in selling expenses and a 700,000 decrease in G and A expenses primarily due to reduced personnel related costs. We recorded a net loss of 4.9 million dollars in the second quarter compared to 200,000 dollars of net income in the second quarter of fiscal 25. As of December 31, 2025, we had $4.2 million dollars of unrestricted cash and cash equivalents and $24.6 million dollars available under our revolving credit facility. With that, I’ll turn it back over to John. John. Thanks, Vance.
John
In summary, we did see expected pressure on our overall results during the quarter, but we remain confident we are on the right path. We will continue to focus on controlling what we can control as we work to grow our top line as well as overall coffee pounds and customer counts in the back half of fiscal 2026 and beyond. With that, I’d like to thank our teams for their continued commitment and execution and to thank each of you for joining us on the call today. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
Summary
Adjusted EBITDA for the quarter was $484,000, significantly down from $5.9 million in the prior year period, due to the impact of green coffee inflation.
Net sales decreased by 1% to $88.9 million compared to $90 million in the prior year period.
Gross margin for the quarter was 36.3%, showing a 680 basis point decline from the previous year, with expectations for margins to remain in the high 30s for the fiscal year.
Operating costs decreased by $1.4 million, with reductions in selling expenses and G&A expenses due to lower personnel-related costs.
The company recorded a net loss of $4.9 million in the second quarter, compared to a net income of $200,000 in the same quarter of the previous year.
Management anticipates some relief in gross margins starting in the fourth quarter due to recent declines in the green coffee market.
The company aims to grow top line as well as coffee pounds and customer counts in the latter half of fiscal 2026 and beyond.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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