Slide 1: Driving Improved Performance & Higher Value
November 7, 2016 driving Improved performance & higher value
Slide 2: Forward-looking statements
Certain statements regarding Farmer Bros. Co. (the “Company” or “Farmer Bros.”) contained in this presentation 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 expecta
Slide 3: A well-regarded national manufacturer, wholesaler, and distributor of foodservice products
A well-regarded, national manufacturer, wholesaler, and distributor of foodservice products with over 100 years in the business Founded in 1912 Farmer Bros. is a national roaster, manufacturer, wholesaler, and distributor of high-quality branded and private label coffees and distributor of teas, spi
Slide 4: Executive Summary
Executive Summary Delivering Superior Value Executing a Proven Turnaround Strategy Highly Qualified Board & Corporate Governance Aligned with Stockholders Dissident Group Offers NO Plan & Adds NO Value The Company’s stock price has appreciated over 225% since Michael Keown was appointed President an
Slide 5: Delivering Superior Value
Delivering Superior Value
Slide 6: Outstanding Stock Price Performance Since Current Management Took Over
Outstanding Stock Price Performance Since Current Management Took Over Stock Price Performance Since March 20121 Source: FactSet as of 09/28/2016; Peers include: THS, DNKN, BGS, FIZZ, SPTN, SNAK and JVA; excludes Boulder Brands in all periods presented as they are no longer a public company 1 As of
Slide 7: 43% Decline in Stock Price During Waite and Samore Board Service
43% Decline in Stock Price During Time Carol Farmer Waite and / or John Samore Served on Farmer Bros.’ Board Source: FactSet as of 04/30/2003 to 12/10/2009; Peers include: THS, DNKN, BGS, FIZZ, SPTN, SNAK and JVA; excludes Boulder Brands in all periods presented as they are no longer a public compan
Slide 8: Total Stockholder Return Outperforming the Market and Peers
Total Stockholder Return Outperforming the Market and Peers Source: FactSet as of 09/28/2016; Note: TSR represents total stockholder return assuming dividends reinvested in the security as of the ex-date Peers include: THS, DNKN, BGS, FIZZ, SPTN, SNAK and JVA; excludes Boulder Brands in all periods
Slide 9: Faster Trading Multiple Expansion vs. Peers Since 2012
Faster Trading Multiple Expansion vs. Peers Since 2012 Source: FactSet as of 09/28/2016; Peer multiples reflect peer medians; missing data due to lack of research estimates available at the time Peers include: THS, DNKN, BGS, FIZZ, SPTN, SNAK and JVA; excludes Boulder Brands in all periods presented
Slide 10: Executing a Proven Turnaround Strategy
Executing a Proven Turnaround Strategy
Slide 11: Successfully Implementing Initiatives to Drive Volume and Sales Increases
Successfully Implementing Initiatives to Drive Volume and Sales Increases Realigned DSD organization Improving and accelerating customer acquisition efforts Driving high-growth product categories Strategically optimizing pricing Strengthening value proposition through sustainability Growing through
Slide 12: Effectively Reducing Costs and Strategically Utilizing Assets
Effectively Reducing Costs and Strategically Utilizing Assets Rationalizing and simplifying supply chain On track with corporate relocation plan expected to improve production efficiency, provide a more cost-competitive offering of high-quality products and operate at a lower cost New Facility to re
Slide 13: Growing Green Coffee Pounds Sold and Driving New Customer Wins
Farmer Bros.’ Strategy is Growing Green Coffee Pounds Sold and Driving New Customer Wins Farmer Bros.’ management team has continued to position the Company for success by winning significant new customers and driving an increase in green coffee pounds sold and processed of over 40% from FY2012 to F
Slide 14: Achieved Profitability Through Steady Financial Performance Improvements
Farmer Bros. Has Achieved Profitability Through Steady Financial Performance Improvements CAGR ~2% CAGR ~6% Source: Company filings Revenue (in millions) Gross Profit (in millions) Series 1
Slide 15: Margins Improved Since 2012 While Peers' Declined
Farmer Bros.’ Margins have Improved since 2012, while its Peers’ have Declined Source: FactSet as of 09/28/2016 Note: Data has been calendarized using the most recent four fiscal quarters reported prior to 06/30 Peers include: THS, DNKN, BGS, FIZZ, SPTN, SNAK and JVA; excludes Boulder Brands in all
Slide 16: Research Community Supports Sales and Cost Initiatives
The Research and Investment Community Supports the Farmer Bros. Sales and Cost Initiatives “Changes to DSD model. FARM announced new internal initiatives to drive top line growth in its DSD business. We are pleased to see the company officially putting greater emphasis on DSD that has really suffere
Slide 17: Culture of Continuous and Consistent Improvements
Farmer Bros.’ Current Board and Management Operate Under a Culture of Continuous and Consistent Improvements FY2013 August 2013: Board begins formal evaluation of potential corporate relocation FY2015 FY2014 FY2016 FY2017 Q3 FY2015: Publicly announce Corporate Relocation Plan Q2 FY2016: Sold spice a
Slide 18: Corporate Relocation Will Drive Operational and Financial Improvements
Corporate Relocation Will Drive Operational and Financial Improvements The Corporate Relocation Plan and related initiatives are expected to produce annualized cost savings of approximately $18 to $20 million Texas is central to the Company’s nation-wide customer base Expected to introduce new effic
Slide 19: Thoughtful Capital Allocation Policy to Drive Stockholder Value
Farmer Bros. has a Thoughtful Capital Allocation Policy to Drive Stockholder Value Capital Allocation Policy Overview Prior to current management, previous capital allocation programs were not implemented thoughtfully Farmer Bros. was losing on average over $20mm per year from 2008 to 2010 and still
Slide 20: Research Community Supports the Corporate Relocation
The Research and Investment Community Supports the Farmer Bros. Corporate Relocation “The move to a location central to the nationwide customer base will propel more-efficient manufacturing capacity to support growth, which management expects to result in $18-$20 million of annual savings. By our mo
Slide 21: Highly Qualified Board & Corporate Governance Aligned with Stockholders
Highly Qualified Board & CORPORATE Governance Aligned with STOCKHOLDERS
Slide 22: Board Leadership and Corporate Governance Aligned with Stockholder Interests
Board Leadership and Corporate Governance Aligned with Stockholder Interests Effective Board Leadership Corporate Governance Aligned with Stockholder Interests Stockholder Representation Engaged, independent Board with significant industry and operational expertise that is relevant to the Company’s
Slide 23: Named Executive Officer Compensation is in Line with Peers
Farmer Bros.’ Named Executive Officer Compensation is in Line with Peers Note: Based on last completed fiscal year compensation as reported in proxies filed prior to November 2016; Reflects CEO and next four highest paid NEOs Note: Peers for purposes of executive compensation include: B&G Foods Inc.
Slide 24: Director Compensation is in Line with Peers
Cash = 76% Equity = 24% Cash = 51% Equity = 49% Peer Group TSR Farmer Bros.’ Director Compensation is in Line with Peers Composition of Total Director Annual Compensation Meeting fees are a more prominent feature of Farmer Bros.’ director pay program relative to peers The peer group and the general
Slide 25: Nominees Offer Superior Skills and Expertise
Farmer Bros.’ Nominees Offer Superior Skills and Expertise to Support Company Strategy and Drive Value Appointed President and Chief Executive Officer of Farmer Bros. in 2012 Brings over 25 years of consumer goods industry knowledge and executive experience Executive experience includes roles at Coc
Slide 26: Michael Keown is Leading Improvements at Farmer Bros.
Michael Keown is Leading Improvements at Farmer Bros. to Enhance Stockholder Value and Increase Engagement Improved Financial Performance From FY2012 through FY2016, increased green coffee pounds sold and processed by over 40% through new customer wins and expansion of existing customer programs In
Slide 27: Research Community Supports Michael Keown and the Strategy
The Research and Investment Community Supports Michael Keown and the Farmer Bros. Strategy “Mr. Keown and his team have, over the last four years, begun to tackle the problems created by the Farmer family’s poor operation of the business in the years preceding his hiring.” – Grand Slam Asset Managem
Slide 28: Dissident Group Offers NO Plan & Adds NO Value
Dissident Group Offers NO Plan & Adds NO Value
Slide 29: Waite Group Materially Overstates its Voting Power
The Waite Group Materially Overstates its Voting Power and Support Among the Extended Farmer Family The Waite Group’s voting power of 24.9% includes trusts under which the Waite Group does not control The Waite Group purports to include 21 trusts with cumulative voting power of ~14.7% (“Co-Trustee S
Slide 30: Dr. Richard Farmer Publicly Announced Support for the Board
Dr. Richard Farmer Publicly Announced his Support for the Farmer Bros.’ Board of Directors and Management Team “As a longtime Farmer Bros. Co. stockholder personally owning approximately 0.6 million shares, a co-trustee of numerous Farmer family trusts that collectively own over 2.1 million shares,
Slide 31: Waite Group Falsely Claims CEO Packed the Board
The Waite Group Falsely Claims that the Company’s CEO “Packed” the Board with “Personal Appointees” Farmer Bros.’ Board has a Robust, Thorough, and Independent Nomination and Review Process Randy Clark Charles Marcy and Christopher Mottern All three directors were selected via a rigorous and lengthy
Slide 32: Waite Group Nominees Are NOT Additive to Board Experience
The Waite Group Nominees Are NOT Additive to Farmer Bros.’ Board Experience Board Members CEO Experience Public Co. Board Experience Finance / Capital Management Operating Expertise Company Knowledge Michael H. Keown ü ü ü ü ü Charles F. Marcy ü ü ü ü ü Christopher P. Mottern ü ü ü ü ü The Waite Gro
Slide 33: Waite Group Nominees Lack Necessary Qualifications
The Waite Group Nominees Do NOT Offer Qualifications or Experience Necessary to Enhance Stockholder Value Mr. Mortensen’s knowledge of Farmer Bros. is already well represented on the Board, including by Mr. Keown, Mr. Berger, Ms. Assadi, and Ms. Grossman He does not have any C-level executive experi
Slide 34: Delivering superior value; Waite Group has no plan
ü Delivering superior value for stockholders – stock price appreciating over 225%, representing over $400 million in value creation1 Executing proven turnaround strategy to expand the customer base, improve operational performance, reduce costs and drive growth Advancing corporate relocation plan ex
Slide 35: Proven management team overseen by an effective Board
Farmer Bros. has a proven management team overseen by an effective Board of Directors who we believe are best positioned to guide Farmer Bros. into the future and deliver maximum value to stockholders
Slide 36: Appendix
Appendix
Slide 37: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Year ended June 30, 2016 2012 (In thousands) Net income as reported $89,918 $(26,576) Income tax benefit (79,997) (347) Interest expense 425 2,137 Depreciation and amortization expense 20,774 32,113 ESOP and share-based compensation expense 4,342 3,287 I
Slide 38: Important Additional Information and Where to Find It
Important Additional Information and Where to Find It Farmer Bros. Co. has filed a definitive proxy statement and accompanying GOLD proxy card with the SEC in connection with the solicitation of proxies from the Company’s stockholders in connection with the matters to be considered at the Company’s