Farmer Brothers Company · NASDAQ:FARM
Farmer Brothers — Conference Presentation (March 2022)
28 slides from Farmer Brothers's conference presentation, Mar 14, 2022
Slide 1: March 2022 Conference Presentation
March 2022Conference Presentation
Slide 2: Safe Harbor
2 Safe Harbor Certain statements 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 expectations, assumptions, estimates and observations
Slide 3: Contents
3 Contents Business Update 1 3 Business Overview 2 Our Story: The Farmer Bros. Advantage 5 Financials4 Appendix
Slide 4: Business Overview
Business Overview (1)
Slide 5: If It's Coffee, We Do It
5 If It’s Coffee, We Do It Farmer Brothers is a Leading Manufacturer, Wholesaler, Distributor & Equipment Servicer of Regular & Specialty Coffee, Tea & Other Allied(1) Products in The U.S. • At Farmer Bros., We… • Roast, produce, and package more than 80 million lbs. of coffee per year • Offer more
Slide 6: Coffee is an Attractive Growth Industry
6 Coffee is an Attractive Growth Industry • Coffee is a $76 billion industry that is growing at 3-5% annually(1) • 63% of American adults drink coffee at least once a day(2) • Specialty coffee trend provides growth tailwind • Refrigerated ready-to-drink (RTD) tea & coffee sales grew 13.6%(3); refrig
Slide 7: Operating Across Three Complementary Verticals
7 Operating Across Three Complementary Verticals Direct-Store-Delivery (“DSD”) Direct-Ship (“DS”) eCommerce (“eComm”) Increasingly selling DS products via eComm Innovating in DS; low-cost pilot launching via DSD (1) Includes restaurants, hotels, casinos, convenience stores, fast food chains, coffee
Slide 8: Established Distribution & Servicing Network
Established Distribution & Servicing Network 3 Roasting Plants Portland, OR (x2) Headquarters: Northlake, TX 4 Distribution Centers Northlake, TX Northlake, IL Moonachie, NJ Opened Early 2021: Rialto, CA 3 Equipment Refurbishing Centers(1) Oklahoma City, OK Los Angeles, CA(2) Portland, OR 94 Branche
Slide 9: Three Distinct Advantages Built Over Years
9 Three Distinct Advantages Built Over 110 Years Vertically-Integrated Source-to-Consumption Model • One of the largest, nation-wide coffee & tea distribution & servicing networks in the U.S. • National leading coffee wholesaler, roaster, distributor, equipment servicer & manufacturer • Established,
Slide 10: Business Update
Business Update 2
Slide 11: Turnaround Taking Hold: High-level Update
11 Turnaround Taking Hold: High-level Update • Continued gross margin expansion despite inflationary headwinds • Margins inline with pre-COVID, despite lower DSD volumes • Dallas/Ft. Worth (“DFW”) roasting facility output at the highest level in history, with potential for expansion • Recent price i
Slide 12: Direct-Store-Delivery ("DSD") Update
12 Direct-Store-Delivery (“DSD”) Update Sales Volumes • F2Q marked our 6th consecutive quarter of growth • YTD has hovered in the (14)% to (17)% range(1); impacted by holidays & regional weather issues • Nationally now within (5)% to (10)% with some individual regions performing even better(1) (1) C
Slide 13: Our Story
Our Story 3
Slide 14: Our History At-a-Glance: Turnaround
Pre-2019: Events That Led to Management Change: 14 Our History At-a-Glance: Turnaround Operational Inefficiencies • Relocated corporate headquarters from CA to TX • New DFW facility lacked manufacturing capacity build-out • Closed Torrance & Boyd’s distribution & manufacturing facilities in the West
Slide 15: New Management Team
15 New Management Team Deverl Maserang President & CEO Scott Drake CFO & Treasurer Maurice Moragne, Chief Sales Officer Ruben Inofuentes Chief Supply Officer Nathalie Fontanilla Oetzel VP of Product Marketing & Innovation Amber Jefferson Chief Human Resources Officer
Slide 16: Embarked on Comprehensive Turnaround Strategy
16 New Management Team Embarked on Comprehensive Turnaround Strategy Fixed Inefficient Footprint • Exited inefficient Houston facility • Expanded Dallas/Ft. Worth facility (“DFW”) • Re-opened West Coast distribution center • Continue to review IT & digital platforms Optimized Operations & Increased
Slide 17: Reduced Volumes = Deeper Business Insights = Ground-Up Optimization
Reduced Volumes = Deeper Business Insights = Ground-Up Optimization 17 Our Story At-a-Glance: COVID Acceleration Conducted Detailed Audit of Our Product Portfolio & Rationalized Our Business • Developed new targeting strategies, tiered DSD customers & national DS accounts • Refined our SKU rationali
Slide 18: Forward-Looking Initiatives
18 Forward-Looking Initiatives Move Closer to Customers • White Glove services; keeping our customers in-stock & expanding our customer base • Revive/CBE business; piloting third-party maintenance & repair revenue opportunities Further Unlock 110-Year-Old National Distribution Network • Leverage net
Slide 19: Near-Term Priorities
19 Near-Term Priorities Operate with a Cost Avoidance Mentality • Continuing to find new ways to mitigate macro challenges via: • Procurement improvements & streamlining product flow across the network • Rationalizing truck fleet departures & routes; shipping directly to branches/DCs instead of thro
Slide 20: Financials
Financials 4
Slide 21: Financial Highlights & Update
21 Financial Highlights & Update Income Statement • Long-term cost savings materializing in COGS • Commitment to more efficient SG&A cost structure going forward • Expect sales recovery in key segments (COVID & labor shortages are primary hurdles) Balance Sheet • Improved working capital in recent y
Slide 22: Selected Income Data
22 Selected Income Data(1) (1) Unaudited ($ in thousands, except per share data) JUN '20 SEP '20 DEC '20 MAR '21 JUN '21 SEP '21 DEC ‘21 Sales 81,083 97,270 104,571 93,152 102,857 108,362 118,445 Cost of Goods Sold (COGS) incl. D&A 66,361 75,215 78,561 70,257 74,831 78,828 87,163 Gross Income 14,722
Slide 23: Historical Gross Profit & Margin
23 Historical Gross Profit & Margin(1) Cost Improvements Reflected in Gross Margins Are Accelerating (1) Unaudited Historical Gross Margins ~35% Pre-Boyd’s Acquisition ~30% Post-Boyd’s Integration (in thousands) 10% 15% 20% 25% 30% 35% $10,000 $20,000 $30,000 $40,000 $50,000 SEP '19 DEC '19 MAR '20
Slide 24: Adjusted EBITDA
24 Adjusted EBITDA(1)(2) (1) Unaudited, (2) As defined by, and per FactSet data as of 3/10/22. Full reconciliation can be found in our latest SEC filings. ($ in thousands) JUN '20 SEP '20 DEC '20 MAR '21 JUN '21 SEP '21 DEC '21 GAAP EBITDA(2) 184 2,906 5,288 (4,800) 8,089 6,089 2,389 Restructuring c
Slide 25: Selected Balance Sheet Data
25 Selected Balance Sheet Data(1) (1) Unaudited ($ in thousands) JUN '20 SEP '20 DEC '20 MAR '21 JUN '21 SEP '21 DEC '21 Cash & Short-Term Investments 60,013 11,025 5,857 8,474 10,438 6,189 3,799 Accounts Receivables, Net 38,899 40,125 39,730 35,846 36,883 41,989 46,461 Inventories 67,408 71,729 80,
Slide 26: Contact Us
Contact Us Investor Relations investor.relations@farmerbros.com
Slide 27: Farmer Brothers' Appendix
27 Farmer Brothers’
Slide 28: Community & Sustainably Driven
28 Community & Sustainably Driven Sustainability Leadership Abroad • Dedicated staffing focused on sustainability; 9-year history of sustainability reporting with yearly reports • Co-founding member of World Coffee Research (WCR); supports research in origin countries to increase sustainability • Pr
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