TORRANCE, Calif.--(BUSINESS WIRE)--Farmer
Bros. Co. (Nasdaq:FARM) today reported a net income for its first fiscal
quarter ended Sept. 30, 2006 of $1.0 million or $0.07 per share, compared
with a net loss in the same quarter last year of $1.1 million or $0.08 per
share.
"We continued to work to hold down our
operating costs as we invest in programs to grow sales," said Guenter
Berger, Chairman and CEO. "Our new packaging, which we rolled out in the
first quarter, represents a major effort to elevate our brand and take
advantage of our 94 years in the food-service industry. Our sales team is
now engaging current and prospective customers with the new look and with
an even broader array of quality products."
Net sales in the first quarter were $48.3
million, compared with $48.4 million for the same period last year. Gross
profit margins were essentially unchanged between 2006 and 2005. Although
profit margins on allied products compared favorably with last year, the
average cost of green coffee in this year's first quarter exceeded the
prices last year by 4%.
Selling, general and administrative
expenses increased about 3% in the first quarter over the same period last
year. The increase is primarily due to higher costs of coffee brewing
equipment associated with new sales programs and consulting costs relating
to the continuing upgrade of the Company's computer systems.
The Company also reported "Other, net
income" in the first quarter of $1.3 million compared with last year's net
expense of $1.7 million. This year's result reflects adjustments to the
carrying value of the Company's interest-sensitive investments, primarily
preferred stock. Last year's result reflected a volatile increase in green
coffee costs, which led to a loss in the value of futures and options
contracts that the Company used to hedge against a decline in future
coffee prices.
The Company reported cash and short-term
investments of $180.5 million on Sept. 30, 2006, compared with $181.7
million on June 30, 2006. The Company's cash outlay for its shareholder
dividend during the first quarter was $1.5 million.
Management reported on the progress of its
longer-term growth initiatives:
- Promotion of our brand: The Company
introduced the first of its new packaging in October, and began to roll
out new point-of-sale materials that mirror the new packaging. The
Company introduced its new look at two major trade shows, the Western
Foodservice & Hospitality Expo in Los Angeles in August and the National
Association of Convenience Stores show in October.
- New products: During the first quarter
of fiscal 2007, the Company continued to develop and introduce new
products. In particular, it expanded its line of canned coffees to
include Premium, Premium Decaf, 100% Columbian, Dark-Roast and a
seasonal Holiday Blend. In additional, it introduced a new bag coffee,
Arabica Rush, which has been favorably received.
- Expansion and Cost Control: The Company
is preparing to open new branches in Cincinnati and Shreveport. It has
reduced costs by negotiating more favorable pricing on certain
non-coffee raw materials and continues to refine its business processes
as it implements changes to its information systems.
Farmer Bros. Co. is an institutional coffee
roaster that sells a variety of coffee and allied products to the food
service industry. The Company's signature trucks and vans bearing the
"Consistently Good" logo are seen throughout Farmer Brothers' 28-state
service area. Farmer Brothers has paid a dividend in every year since
1953, increased its dividend in every year since 1997, and its stock price
has risen on a split-adjusted basis from $1.80 a share in 1980. For more
information, go to:
www.farmerbroscousa.com.
Forward-Looking Statements
Certain statements contained in this report
regarding the risks, circumstances and financial trends that may affect
our future operating results, financial position and cash flows are not
based on historical fact and are forward-looking statements within the
meaning of federal securities laws and regulations. These statements are
based on management's current expectations, assumptions, estimates and
observations of future events and include any statements that do not
directly relate to any historical or current fact. These forward-looking
statements can be identified by the use of words like "anticipates,"
"feels," "estimates," "projects," "expects," "plans," "believes,"
"intends," "will," "assumes" and other words of similar meaning. Owing to
the uncertainties inherent in forward-looking statements, actual results
could differ materially from those set forth in forward-looking
statements. A forward-looking statement is neither a prediction nor a
guarantee of future events or circumstances, and those future events or
circumstances may not occur. Users should not place undue reliance on the
forward-looking statements, which speak only as of the date of this
report. The Company undertakes no obligation to update or alter any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by the federal securities laws.
Factors that could cause actual results to differ materially from those in
forward-looking statements include, but are not limited to, fluctuations
in availability and cost of green coffee, competition, organizational
changes, the impact of a weaker economy, business conditions in the coffee
industry and food industry in general, the Company's continued success in
attracting new customers, variances from budgeted sales mix and growth
rates, and weather and special or unusual events, as well as other risks
described in this report and other factors described from time to time in
the Company's filings with the SEC.
FARMER BROS. CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)
(Unaudited)
Three months ended
---------------------------
September 30, September 30,
2006 2005
------------- -------------
Net sales $48,264 $48,424
Cost of goods sold 20,181 19,539
------------- -------------
Gross profit $28,083 $28,885
------------- -------------
Selling expense 24,664 24,069
General and administrative expenses 6,156 5,940
------------- -------------
Operating expenses $30,820 $30,009
------------- -------------
(Loss) income from operations $(2,737) $(1,124)
---------------------------
Other income (expense):
Dividend income 956 869
Interest income 1,460 915
Other, net (expense) income 1,304 ( 1,715)
---------------------------
Total other income, net $3,720 $69
---------------------------
(Loss) income before taxes 983 (1,055)
Income tax expense (30) 24
---------------------------
Net (loss) income $1,013 $(1,079)
===========================
Net (loss) income per common share $0.07 $(0.08)
===========================
Weighted average shares outstanding 14,020,523 13,811,373
Dividends declared per share $0.11 $0.105
The accompanying condensed financial
statements of the Company are subject to year-end audit by independent
auditors, but in Management's opinion all adjustments necessary for a fair
presentation of operating results have been made.