Farmer Brothers Company · NASDAQ:FARM
Farmer Brothers — Investor Presentation (November 2017)
35 slides from Farmer Brothers's investor presentation, Nov 15, 2017
Slide 1: Farmer Brothers Investor Presentation
Farmer Brothers INVESTOR PRESENTATION §
Slide 2: Forward-looking statements
Certain statements contained in this presentation are not based on historical fact and are forwardJooking 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 event
Slide 3: Corporate Overview
CORPORATE OVERVIEW National manufacturer, wholesaler, and distributor of foodservice products with over 100 years in the business = Founded in 1912 + National roaster, manufacturer, wholesaler, and distributor of high-quality branded and private label coffees and distributor of teas, spices, and cul
Slide 4: Consumption & Occasion
CONSUMPTION & OCCASION % Past Day consumption by Time of Day Evening Dinner Traditional oy 4 Coffee — a Not = vn ternoon 2 peer [| a ath 3 e Gourmet <3 corres aa 92 ISIE ae av Lunch Gourmet penetration has surpassed traditional coffee Coe Onion eta romnea nnn among Millennials and Gen Xers “SPECIALT
Slide 5: Beneficial Credit Processing Protocol
Beneficial Cred Processing Protocol Reuse & Upcycle Farmers use the coffee cherry skins to produce coffee flour so they can use it for baking Consumers enjoyed steeped skins (Cascara) as an emerging specialty beverage a Next: Cascara sodas and adult beverages ce & Coffee Reputation getsa healthy boo
Slide 6: Artisan Collection Panache Coffee
ARTISAN COLLECTION PANACHE COFFEE = EAUINAMIST. = EY TRADITIONAL — Traditional coffees for the classic consumer METROPOLITAN’ MOMENI
Slide 7: Private Brand Program Development
PRIVATE BRAND PROGRAM DEVELOPMENT OUR MODEL WHY WE’RE DIFFERENT THE BENEFIT SPECIALTY COFFEE QUALITY RGBCALE ip score /buyng philosophy Pe State-of-the-art roastery Extensive coffee innovation expertise CONSISTENCY 40 years of wholesaling ial CONFIDENCE & TRUST Exacting quality standards 7 Year Jour
Slide 8: Nationwide Distribution Network
NATIONWIDE DISTRIBUTION NETWORK 7 Manufacturing Facilities/Distribution Centers and 111 branch warehouses @ SD ° ; P { Z ° e ° ° ° e oS e ° eo? ? ° o e 2 'o °e @ e a @ e ° ° a a e Manufacturing Facility | a | Distribution Center e @ Branch Location C)
Slide 9: First roaster in the Northwest to be LEED Silver Certified
First roaster in the Northwest to be LEED® Silver Certified. 400% of electricity used at our roasting facilities is offset by renewable energy credits, part of our ongoing carbon footprint reduction strategy. We've lowered our carbon footprint by 32,400 Metric Tonnes, equivalent to removing ~6,800 p
Slide 10: Experienced Senior Management Team
EXPERIENCED SENIOR MANAGEMENT TEAM Name Title Mike Keown President and Chief Executive Officer David Robson | Treasurer and Chief Financial Officer Tom Mattei General Counsel and Assistant Secretary weintraubltobin LATHAMSWATKINSY Ellen lobst | Chief Operations Officer P&G Mike Walsh | wie Pissldeai
Slide 11: Moving Forward
MOVI NG FO RWARD November 2017
Slide 12: Current Strategic Objectives
CURRENT STRATEGIC OBJECTIVES = Drive volume growth from a larger, national account base = Redefine the DSD Model = Announced restructuring of the Company's DSD sales model in February 2017 = Leveraged mobile sales and fleet routing tools to improve efficiency = Invested in high-growth and profitable
Slide 13: Growth Expansion Opportunities
GROWTH EXPANSION OPPORTUNITIES = Positive industry trends = ~2-4% aggregate annual growth rates expected with specialty coffee and iced coffee beverages growing at higher rates? = Consumption dynamic changing = Large addressable market = Potential market share improvement through new customers and t
Slide 14: Corporate Relocation Plan
CORPORATE RELOCATION PLAN New HQ and distribution center in Northlake, Texas up and running = Effectively transitioned all remaining key functions into the new facility = Installed roasters in new state-of-the-art facility = Expect to be SOF certified by Q3 of FY18 Corporate relocation plan complete
Slide 15: Boyd's Acquisition
BOYD’S ACQUISITION Family-owned business established in 1900 in Portland, Oregon Strong presence on the West Coast and meaningful national account and retail business in the Midwest and East Coast Processes and sells coffee, other beverages and related food products, and coffee brewing equipment = O
Slide 16: Boyd's Acquisition Financial Terms
D’S ACQUISITON FINANCIAL TERMS Purchase Price Terms: = $42 million cash and 21,000 shares of Preferred Stock = Subject to adjustments related to working capital and certain hold-backs to address indemnification and other liabilities of Sellers Preliminary estimated value of purchase price of $58.6 m
Slide 17: Impact of Preferred Stock and Credit Facility
IMPACT OF PREFERRED STOCK AND CREDIT FACILITY Purchase price is a combination of cash and stock = Preferred stock helps to align the interests of the Sellers with Farmer Bros., including during the transition and integration periods Series A Convertible Participating Cumulative Perpetual Preferred S
Slide 18: Recent Acquisitions
RECENT ACQUISITIONS = China Mist Brands, Inc. Acquired October 2016 for ~$11.8 million including working capital adjustments (before earnout) (Ol 4 | N A Strong premium tea brand = Fast growing market segment ea National distribution in over 20,000 foodservice locations M | >) | e Strong management
Slide 19: Financial Overview
FINANCIAL OVERVIEW November 2017
Slide 20: Strong Balance Sheet
STRONG BALANCE SHEET (in millions) Cash and Cash Equivalents Short-Term Investments Accounts Receivable, net Inventories Other Current Assets Net PP&E Other Assets Total Assets Total Liabilities excluding Credit Facility Credit Facility Stockholders’ Equity Total Liabilities and Stockholders’ Equity
Slide 21: Delivering Volume and Profitability Growth
DELIVERING VOLUME AND PROFITABILITY GROWTH x0 1200 1000 soo 7 coo by soo FRE ge noo 388 ag? (20.0) (40.0) (60.0) wit m2 ms mia ms ris fa7TIM-Seps7 mticsies ton GHP Hethcome —Grencateeis-sld —AdumdESTOA * Coffee pounds CAGR of 6.6% from FY 2011 through September 2017 + Adjusted EBITDA CAGR of 18.1% f
Slide 22: FY Outlook
FY 18 OUTLOOK = We believe we can grow coffee pounds at market rates or faster* = The acquisition of Boyd's Coffee expands our brand portfolio, density and access to desirable customers with the potential to deliver significant synergies * The acquisition of China Mist provides new opportunities to
Slide 23: Key Activities to Propel Future Growth
KEY ACTIVITIES TO PROPEL FUTURE GROWTH = Strong product market with growing categories = Increased coffee and tea consumption = Upgrading manufacturing facilities and distribution practices = New Northlake facility can initially increase system-wide roasting capacity by up to 25% to support increase
Slide 24: Farmer Brothers
Farmer Brothers INVESTOR PRESENTATION §
Slide 25: Appendix
APPENDIX ay
Slide 26: Q1 FY18 and Q1 FY17 Selected Financial Data
Q1 FY18 AND Q1 FY17 SELECTED FINANCIAL DAT. ‘Taree Months Ended September 20, 207 2016 chuze thousands, except per share data Income statement data Net sales $131,713 $130.488 — +0.9% Gross margin 37.2% 39.2% -200 bps (Loss) income from operations $ (1,258) $ 2,505 - 150.2% Net (loss) income $ (978)
Slide 27: Condensed Consolidated Statements of Operations
Q1 FY18 AND Q1 FY17 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Endl September 30, 2017 2016 Net sales 5 BLT § 130,888 Cost of goods sold $2,706 79,290 Gross profit 49,007 31198, Selling expenses 38,915 38.438 General and administrative expenses 11327 8.936 Restructuring and other t
Slide 28: Reconciliation of Net Loss to Adjusted EBITDA
Qi FY18 AND Q1 FY17 RECONCILIATION OF REPORTED NET (LOSS) INCOME TO ADJUSTED EBITDA ThreeMonths Endl September 30, (in thowsands) War as Net (loss) income, as reported 5 78) 1,618 Income tax (benefit) expense 710) 1,083 Interest expense 23 389 Loss income) from short-term investments 7 (621) Depreci
Slide 29: Reconciliation to Non-GAAP Net Income
Q1 FY18 AND Q1 FY17 RECONCILIATION OF REPORTED NET (LOSS) INCOME TO NON-GAAP NET INCOME ‘ThreeMonths Endl September 30, (lnthowsands) 2017 2016 ‘Net (loss) income, as reported s C78) § 1618 Restructuring and other transition expenses 120 3,030 Net gains from sale of spice assets (450) (158) Net loss
Slide 30: Condensed Consolidated Statements of Cash Flow
Q1 FY18 AND Q1 FY17 CONDENSED CONSOLIDAED STATEMENTS OF CASH FLOW ‘Three Months Ended September 20, 2017 2016 Cash flows from operating activities: Net (loss) income s (078) § 1618 Adjustments to reconcile net (loss) income to net cash provided by operating activities Depreciation and amortization 1
Slide 31: Q4 and FY Selected Financial Data
Q4 AND FY 17 AND FY 16 SELECTED FINANCIAL DAT. ‘Three Months nded June 30, Fiscal ear Ended June 30 YoY YoY 207 216 Change 2017 2016 i (Gn thousands, excnt per sharedata) Jncome statement data Net sales $133,800 $134,162 -0.3% $541,500 $544382 _-0.5% Gross margin 40.1% 39.1% +100bps «39.5% += 38.3%
Slide 32: Consolidated Statements of Operations FY17 and FY16
FY17 AND FY16 CONSOLIDATED STATEMENTS OF OPERATIONS VeurEnded June 30, 2017 2016 Net sales s 541,500 $ 544,382 Cost of goods sold 327,765 335,907 Gross profit 213.735 208,475 Selling expenses 157,198 General and administrative expenses 42.933 41,970 Restructuring and other transition expenses 11,016
Slide 33: Reconciliation of Net Income to Adjusted EBITDA
FY17 AND FY16 RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED EBIT! ‘(Gn thousands) ‘Net income, as reported Income tax expense (benefit) Interest expense Income from short-term investments Depreciation and amortization expense ESOP and share-based compensation expense Restructuring and other tran
Slide 34: Reconciliation to Non-GAAP Net Income
FY17 AND FY16 RECONCILIATION OF REPORTED NET INCOME TO NON-GAAP NET INCOME YeurEndedJune30,__ ThreeMouths Ended June 30, cise nr 06 30172016 ‘Net income, as reported $ 24400 $ 89,918 $ 1112 $ 84,239 ‘Restructuring and other transition expenses 11,016 16,533 1,474 2.678 Net gain from sale of Torrance
Slide 35: Farmer Brothers
Farmer Brothers INVESTOR PRESENTATION §
Farmer Brothers — Investor Presentation (November 2017) on 6ix