(FARM) 2023 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Farmer Brothers Fiscal First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Joining me today are Deverl Maserang, President and Chief Executive Officer; and Scott Drake, Chief Financial Officer.

女士們先生們，下午好，歡迎來到 Farmer Brothers 2023 財年第一季度收益電話會議。 [操作員說明] 提醒一下，此通話正在錄音中。今天加入我的是總裁兼首席執行官 Deverl Maserang；和首席財務官 Scott Drake。

Earlier today, the company issued its earnings press release, which is available on the Investor Relations section of Farmer Brothers' website at www.farmerbros.com. The press release is also included as an exhibit to the company's Form 8-K and is available on the company's website and on the Securities and Exchange Commission's website at www.sec.gov. A replay of this audio-only webcast will be available approximately 2 hours after the conclusion of this call. The link to the audio replay will also be available on the company's website.

今天早些時候，該公司發布了收益新聞稿，可在 Farmer Brothers 網站 www.farmerbros.com 的投資者關係部分獲取。該新聞稿還作為公司 8-K 表格的附件，可在公司網站和美國證券交易委員會網站 www.sec.gov 上查閱。本次電話會議結束後約 2 小時，將提供此純音頻網絡廣播的重播。音頻重播的鏈接也將在公司網站上提供。

Before we begin the call, please note that all of the financial information presented is unaudited and that various remarks made by management during this call about the company's future expectations, plans and prospects may constitute forward-looking statements for purposes of the safe harbor provisions under the federal securities laws and regulations. These forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. Results could differ materially from those forward-looking statements. Additional information on factors that can cause actual results and other events to differ materially from those forward-looking statements is available in the company's press release and public filings.

在我們開始電話會議之前，請注意所提供的所有財務信息均未經審計，管理層在此次電話會議期間就公司未來預期、計劃和前景發表的各種評論可能構成前瞻性陳述，以符合安全港條款聯邦證券法律法規。這些前瞻性陳述僅代表公司截至今天的觀點，不應被視為代表公司在任何後續日期的觀點。結果可能與那些前瞻性陳述存在重大差異。有關可能導致實際結果和其他事件與這些前瞻性陳述產生重大差異的因素的更多信息，請參閱公司的新聞稿和公開文件。

On today's call, management will also use certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin in assessing the company's operating performance. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is also included in the company's press release.

在今天的電話會議上，管理層還將使用某些非 GAAP 財務指標，包括調整後的 EBITDA 和調整後的 EBITDA 利潤率來評估公司的經營業績。這些非 GAAP 財務指標與其最直接可比的 GAAP 指標的調節也包含在公司的新聞稿中。

I will now turn the call over to Deverl. Deverl, please go ahead.

我現在將把電話轉給 Deverl。 Deverl，請繼續。

Thanks, operator, and hello, everyone. Our fiscal first quarter results showed continued good progress on rebuilding sales momentum post pandemic, with revenue up 12% against an uncertain macroeconomic environment. And I'm encouraged by the traction we're getting with new customers and some of our catalytic growth initiatives. I'll update you there in a moment. On the downside, our performance reflects significant declines in gross margin and profitability levels in the quarter. There is a complex set of factors at play here that I'll walk you through. But while we're disappointed with the performance, the impacts are largely very short term in nature and already beginning to reverse. Along with that, we are excited about the opportunities we have in front of us and are optimistic about our potential in fiscal 2023.

謝謝接線員，大家好。我們的第一財季業績顯示，在大流行後重建銷售勢頭方面繼續取得良好進展，在不確定的宏觀經濟環境下收入增長了 12%。我對我們吸引新客戶的吸引力以及我們的一些催化增長計劃感到鼓舞。稍後我會在那裡更新你。不利的一面是，我們的業績反映了本季度毛利率和盈利水平的顯著下降。這裡有一系列複雜的因素在起作用，我將向您介紹。但是，儘管我們對業績感到失望，但其影響基本上是非常短期的，並且已經開始逆轉。除此之外，我們對擺在我們面前的機會感到興奮，並對我們在 2023 財年的潛力感到樂觀。

Let's start with the summary of sales performance and the external factors impacting the quarter. And Scott can fill in some of the details. Our total sales came in at $121 million, up 12% year-over-year. Though down slightly from $123 million in our seasonally stronger fiscal Q4, both DSD and Direct Ship sales were up approximately 12% year-over-year. DSD is executing well on all rollouts of recent new customer wins in the convenience and QSR spaces. We've also had a good quarter in customer renewals and maintain a robust pipeline of new opportunities that our sales teams are pursuing.

讓我們從銷售業績總結和影響本季度的外部因素開始。 Scott 可以填寫一些細節。我們的總銷售額為 1.21 億美元，同比增長 12%。儘管 DSD 和 Direct Ship 銷售額比我們季節性強勁的第四季度的 1.23 億美元略有下降，但同比增長約 12%。 DSD 在便利和 QSR 空間最近贏得新客戶的所有推出中都表現良好。我們在客戶續訂方面也有一個很好的季度，並保持了我們的銷售團隊正在尋求的強大的新機會渠道。

While we're certainly pleased with the sales growth and customer momentum, margins did not keep pace due to a combination of pricing, seasonal and inflationary pressures. Our gross margin percentage was down significantly in fiscal Q1 relative to Q4. Both national accounts and DSD were impacted roughly an equal measure. There were several key factors at play.

雖然我們對銷售增長和客戶勢頭當然感到滿意，但由於定價、季節性和通脹壓力的結合，利潤率並沒有跟上步伐。與第四季度相比，我們第一財季的毛利率大幅下降。國民賬戶和 DSD 受到的影響大致相同。有幾個關鍵因素在起作用。

First, looking at Direct Ship. While we have been seeing the benefits of our price increases in recent months, the contractual increases for several of our large national accounts are continuing to follow behind cost inflation as their hedge costs have been accelerating more rapidly in recent months. We already are starting to see the benefit of higher pricing in our current December quarter. Additionally, a number of these Ddirect Ship customers were working off prior inventory builds in the quarter, which impacted our volumes. Total pounds produced were down 13% on a year-over-year basis in the quarter with more than 2/3 of the decline coming on the Direct Ship national account side.

首先，看看直郵。雖然我們最近幾個月看到了價格上漲的好處，但我們幾個大型國民賬戶的合同增長繼續跟隨成本通脹，因為他們的對沖成本在最近幾個月加速增長。我們已經開始看到當前 12 月季度更高定價的好處。此外，許多 Ddirect Ship 客戶在本季度處理之前的庫存構建，這影響了我們的銷量。本季度生產的總磅數同比下降 13%，其中超過 2/3 的下降來自 Direct Ship 國民賬戶方面。

Second, DSD pricing increases are starting to come through, but did not keep up with inflation in the quarter. At the same time, we experienced the impacts of rising coffee costs. At the same time, our hedges were beginning to roll off, exacerbating the margin impact.

其次，DSD 定價開始上漲，但沒有跟上本季度的通貨膨脹。同時，我們也經歷了咖啡成本上漲的影響。與此同時，我們的對沖開始減少，加劇了利潤率的影響。

Third, we've also seen higher average production costs due to economic factors. Recessionary impacts on demand and longer hotter summer added to the normal seasonally weaker consumption patterns in the business. This, along with the inventory drawdowns, I mentioned a moment ago, factors led to underutilization in our production facilities. These impacts were most pronounced in July and the first half of August, but began recovering in September and through October.

第三，由於經濟因素，我們還看到了更高的平均生產成本。經濟衰退對需求的影響和更長的炎熱夏季加劇了該行業正常的季節性消費模式。這一點，連同我剛才提到的庫存減少，是導致我們生產設施利用率不足的因素。這些影響在 7 月和 8 月上半月最為明顯，但在 9 月和 10 月開始恢復。

Put these factors together and you have an unusual quarter that we do not believe will repeat. What I would call the coffee-related pressures, timing of recognizing price increases, inventory drawdowns and seasonal impacts are already alleviating in the December quarter. Scott will share more, but we believe we can recover more than a 1/3 of the year-over-year margin decline reported today during the December quarter. However, we still face inflationary pressures like many businesses. In our case, those include reduced hours at certain customer locations, labor shortages that are hurting food and other service businesses and ongoing supply chain issues.

將這些因素放在一起，您將擁有一個我們認為不會重複的不尋常季度。我所說的與咖啡相關的壓力、確認價格上漲的時機、庫存減少和季節性影響在 12 月季度已經有所緩解。斯科特將分享更多，但我們相信我們可以恢復今天報告的 12 月季度利潤率同比下降的 1/3 以上。然而，我們仍然像許多企業一樣面臨通脹壓力。在我們的案例中，這些包括減少某些客戶地點的工作時間、損害食品和其他服務業務的勞動力短缺以及持續的供應鏈問題。

As we reported to you today, coffee prices have softened significantly from the fiscal Q1 levels. Assuming these trends hold, we will be in a much more favorable position as we move through the latter part of our fiscal year from a margin standpoint. Below the gross margin line, we've done a very good job managing our optimized cost structure over the past couple of years. But inflationary pressures raise the bar that much more. We'll continue to take pricing when warranted and be nimble in identifying and acting on cost opportunities as we move forward.

正如我們今天向您報告的那樣，咖啡價格與第一財季的水平相比已大幅走軟。假設這些趨勢保持不變，從利潤率的角度來看，我們將在本財年的下半年處於更有利的位置。在毛利率線以下，過去幾年我們在管理優化的成本結構方面做得非常好。但通脹壓力將標準提高得更多。我們將繼續在有保證的情況下進行定價，並在我們前進的過程中靈活地識別成本機會並採取行動。

Further, as you saw in August, we completed a favorable refinancing that effectively recapitalizes the company. We're now moving full steam ahead on a company-wide initiative with 2 primary objectives: one, working capital optimization, which will enable us to put more cash to work in the business; and two, executing on our IT road map to put in place the tools, systems and processes we need that will enable us to manage the business with more agility and better navigate industry complexities like those impacting our Q1.

此外，正如您在 8 月份看到的那樣，我們完成了有利的再融資，有效地對公司進行了資本重組。我們現在正全速推進一項全公司範圍的計劃，其主要目標有兩個：一是營運資本優化，這將使我們能夠將更多現金投入到業務中；第二，執行我們的 IT 路線圖以部署我們需要的工具、系統和流程，這將使我們能夠更敏捷地管理業務並更好地駕馭行業複雜性，例如影響我們第一季度的那些。

While we work toward margin recovery, the good news is we are winning in the marketplace and executing on multiple growth vectors. As I talked about last time, we define our growth opportunities in 2 categories: recovery based, as our post-pandemic customer base comes back to life and as new customers and partners engage with us, and new opportunities that we call catalytic growth. These include high-growth adjacencies that leverage our network, including alternate beverage initiatives and our Revive business.

在我們努力恢復利潤率的同時，好消息是我們正在市場上取勝，並在多個增長向量上執行。正如我上次談到的那樣，我們將增長機會定義為兩類：基於恢復，因為我們的大流行後客戶群恢復生機，隨著新客戶和合作夥伴與我們互動，以及我們稱之為催化增長的新機會。其中包括利用我們網絡的高增長相鄰業務，包括替代飲料計劃和我們的 Revive 業務。

I want to start with Revive, which is our vehicle for driving our espresso program and also contributes as a white glove equipment maintenance and service business. Revive is in growth mode. Now driving past mid-6-figure revenues per month, demand is strong. We are actively in discussion for various levels of warranty and field support with several large coffee equipment manufacturers. In recent months, there has been a clear formalization of what was priviently just indicated demand, and that is validating. Our job now is to implement our plans for ramping the hiring of service technicians. We are ramping up our tech support staff and plan to double our team within the next year. We're getting creative there, including working with technical schools to accelerate the sourcing of quality talent.

我想從 Revive 開始，它是我們推動濃縮咖啡計劃的工具，也是白手套設備維護和服務業務的一部分。 Revive 處於增長模式。現在每月收入超過 6 位數，需求強勁。我們正在與幾家大型咖啡設備製造商積極討論各種級別的保修和現場支持。近幾個月來，明確表示的需求已經正式化，這正在驗證中。我們現在的工作是實施我們增加服務技術人員招聘的計劃。我們正在增加我們的技術支持人員，併計劃在明年將我們的團隊擴大一倍。我們在那裡發揮創意，包括與技術學校合作以加速優質人才的採購。

We have several exciting additional catalytic growth opportunities in various stages to develop, including a few alternate beverage programs that I can talk about today. The first is our partnership with Lotus Plant Energy, which produces a line of plant-based energy drinks with natural flavoring and caffeine. We're introducing 4 SKUs into our DSD network as we speak. Research shows significant crossover between coffee and tea drinkers into energy drinks. And these products skew toward millennial and Gen Z consumers. We believe they fit very well with what we're selling into channels like coffee houses, QSRs, hospitality and more.

我們在不同階段有幾個令人興奮的額外催化增長機會，包括我今天可以談論的幾個替代飲料項目。首先是我們與 Lotus Plant Energy 的合作夥伴關係，後者生產一系列含有天然調味劑和咖啡因的植物性能量飲料。我們正在將 4 個 SKU 引入我們的 DSD 網絡。研究表明，喝咖啡和喝茶的人在飲用能量飲料方面存在顯著交叉。這些產品偏向於千禧一代和 Z 世代消費者。我們相信它們非常適合我們在咖啡館、快餐店、酒店等渠道銷售的產品。

A second partnership with New Zealand SERPs Company Shot [Phonetic], should be in launch mode by the end of the year. Shot has been a huge hit in Australia and New Zealand. It's a disruptive SERPs product built from juice pace and without artificial colors or flavors. The sugars and flavors come from a higher juice concentration than used in typical SERPs. However, the real innovation is that they can do this in a shelf-stable product that does not require refrigeration. We're working with Shot in New Zealand on manufacturing and supply chain logistics and should be ready to test launch this product in 2 U.S. markets before year-end.

與新西蘭 SERP Company Shot [Phonetic] 的第二個合作夥伴關係應該在今年年底進入啟動模式。 Shot 在澳大利亞和新西蘭大受歡迎。這是一種顛覆性的 SERPs 產品，它是根據果汁速度構建的，沒有人工色素或香料。糖和香料來自比典型 SERP 中使用的果汁濃度更高的果汁。然而，真正的創新是他們可以在不需要冷藏的貨架穩定產品中做到這一點。我們正在新西蘭與 Shot 合作進行製造和供應鏈物流，應該準備好在年底前在 2 個美國市場測試推出該產品。

Finally, in the back half of our fiscal 2023, we expect to launch a third partnership with a cold brew concentrate manufacturer. Think of it as a concentrate that can be used in a multitude of coffee drinks like iced latte, Americanos, nitro dispensing, and coffee milk shakes. One other application that is phenomenal in espresso martinis, which potentially opens the product to be the fine dining and bar categories. These are all beverages where hot espresso does not work as well and because the product is shelf stable and in concentrate form, it can also be a more effective cold brew option for strength coffee drinkers. We're completing work on manufacturing logistics and should be ready to test launch in the first part of calendar 2023.

最後，在我們 2023 財年的下半年，我們預計將與一家冷萃濃縮液製造商建立第三個合作夥伴關係。可以將其視為一種濃縮物，可用於多種咖啡飲品，如冰拿鐵、美式咖啡、硝基分配器和咖啡奶昔。另一種在意式濃縮馬提尼酒中的非凡應用，可能使該產品成為高級餐飲和酒吧類別。這些都是熱濃縮咖啡效果不佳的飲料，而且由於該產品貨架穩定且呈濃縮形式，因此對於濃咖啡飲用者來說，它也是一種更有效的冷泡咖啡選擇。我們正在完成製造物流方面的工作，應該準備好在 2023 年上半年測試發布。

As I wrap up, growth opportunities like these are a big part of the reason I joined Farmer Brothers. We have the scale and the network to deliver disruptive products that can help drive top line performance and ultimately show the operating leverage we've built into Farmer national footprint. At the same time, we also know we're operating in a really tough environment and are focused on managing short-term pressures. We continue to also prune our portfolio when necessary. In the September quarter, we sold 2 branches for an attractive gain, and we also decided to pause investment in our public domain brand in Oregon. This was primarily an online brand and until we complete work on our consolidated back end e-commerce fulfillment infrastructure, it did not make sense from a cost perspective to operate the brand on a larger scale than needed.

最後，像這樣的成長機會是我加入 Farmer Brothers 的重要原因。我們擁有提供顛覆性產品的規模和網絡，這些產品可以幫助提高頂線績效，並最終展示我們在 Farmer 國家足跡中建立的運營槓桿。與此同時，我們也知道我們在一個非常艱難的環境中運營，並且專注於管理短期壓力。我們還會在必要時繼續削減我們的投資組合。在 9 月季度，我們出售了 2 家分支機構以獲得誘人的收益，我們還決定暫停對我們在俄勒岡州的公共領域品牌的投資。這主要是一個在線品牌，在我們完成整合後端電子商務履行基礎設施的工作之前，從成本的角度來看，以超出需要的規模運營品牌是沒有意義的。

As we look ahead, we're cautiously optimistic. I don't want to -- shouldn't quote the near-term inflationary and recession uncertainties, but we do expect fairly rapid gross margin recovery over the next couple of quarters as we flip the script on the near-term pricing impacts. We will also be very focused on managing our costs prudently, and Scott have more on what we're also working on to improve our working capital position.

展望未來，我們持謹慎樂觀的態度。我不想 - 不應該引用近期通脹和衰退的不確定性，但我們確實預計未來幾個季度毛利率會相當快速地恢復，因為我們會改變近期定價影響的劇本。我們也將非常專注於謹慎地管理我們的成本，斯科特對我們正在努力改善營運資金狀況的工作有更多了解。

Before turning the call over to Scott, I wanted to address the news about our changes at the Board level announced this week. We greatly appreciated the ongoing input and engagement with our large shareholders who have supported us on the journey of restoring Farmer Brothers operations and setting a foundation for profitable growth. We reached an amicable agreement with 2 of our largest investors and look forward to welcoming 2 new members to our Board, including Brad Radoff, here in the immediate term. As we complete the fiscal year, we are also saying goodbye to 2 highly valued Board members in Charles Marcy and Chris Mottern, and we greatly appreciate their service and contributions. No one wants to create value for shareholders more than this management team and the Board. So we look forward to working with our new colleagues toward that objective.

在將電話轉給 Scott 之前，我想談談我們本周宣布的董事會層面變動的消息。我們非常感謝大股東的持續投入和參與，他們支持我們恢復 Farmer Brothers 的運營並為盈利增長奠定基礎。我們與 2 個最大的投資者達成了友好協議，並期待在短期內歡迎 2 位新成員加入我們的董事會，包括 Brad Radoff。在本財年結束之際，我們也將告別 Charles Marcy 和 Chris Mottern 兩位備受重視的董事會成員，我們非常感謝他們的服務和貢獻。沒有人比這個管理團隊和董事會更想為股東創造價值。因此，我們期待著與我們的新同事一起努力實現這一目標。

With that, thanks again to all of you and hear Scott.

有了這個，再次感謝你們所有人並聽取斯科特的意見。

Thanks, Deverl. My comments today will focus on the first quarter fiscal 2023 financial performance, our margin, and how we're managing the balance sheet along with some more color on the key initiatives you mentioned. Overall, net sales in the first quarter of fiscal 2023 were $121.4 million, an increase of $13 million or 12% from the prior year period. The growth in net sales primarily reflects increased customer pricing on both our DSD and Direct Ship networks, both of which generated similar sales increases.

謝謝，德維爾。我今天的評論將集中在 2023 財年第一季度的財務業績、我們的利潤率以及我們如何管理資產負債表，以及您提到的關鍵舉措的更多色彩。總體而言，2023 財年第一季度的淨銷售額為 1.214 億美元，比去年同期增加 1300 萬美元或 12%。淨銷售額的增長主要反映了我們 DSD 和 Direct Ship 網絡上客戶定價的增加，這兩者都產生了類似的銷售額增長。

These results were partially offset by lower volume in both DSD and national accounts compared to the prior year and the lag in recognition of price increases in the Direct Ship business. That said, DSD and national account revenues in the current quarter do reflect some of our historic pricing actions, and that is helping offset decreased volume.

這些結果被 DSD 和國民賬戶與上一年相比較低的數量以及對直接船舶業務價格上漲的認識滯後所部分抵消。也就是說，本季度的 DSD 和國民賬戶收入確實反映了我們的一些歷史定價行為，這有助於抵消銷量下降的影響。

Volumes, as Deverl highlighted, were down 13% year-over-year. More than 2/3 of this decline was on the Direct Ship side. And of that amount, 2/3 was attributable to continuing customers and the rest to exited customers. With continuing customers, a healthy portion of the decline is attributable to inventory drawdowns within just a few of our key accounts. Additional factors impacting volumes include the seasonally weaker summer months as well as recessionary pressures on consumption.

正如 Deverl 強調的那樣，銷量同比下降了 13%。超過 2/3 的下降發生在 Direct Ship 方面。其中，2/3 歸因於持續客戶，其餘歸因於退出客戶。對於持續的客戶，下降的很大一部分歸因於我們幾個主要客戶的庫存減少。影響銷量的其他因素包括季節性較弱的夏季以及消費的衰退壓力。

In the first half of the quarter, a COVID resurgence impacted staffing levels and opening status at a number of customers within the DSD businesses that we support. As Deverl noted, the DSD business has recovered aggressively over the last 2 months. And in fact, during October, we experienced our highest sales weeks since the start of the pandemic, in about 3 years. Week-to-week DSD sales are noticeably improved from our first quarter reported results.

在本季度的前半段，COVID 捲土重來影響了我們支持的 DSD 業務中許多客戶的人員配備水平和開業狀態。正如 Deverl 所指出的，DSD 業務在過去 2 個月中已大幅復甦。事實上，在 10 月份，我們經歷了自大流行開始以來大約 3 年來最高的銷售週。與我們第一季度報告的結果相比，每週 DSD 銷售額都有明顯改善。

Breaking down sales a little further, DSD revenue was up nearly 13% year-over-year as we saw continued sales channel success and benefits from the price increases that we had implemented in the prior quarters. Though these increases were not able to keep up with inflation in the most recent quarter. We began implementing additional price and fee increases in our DSD business, and the benefits of those will start to materialize in the current fiscal quarter.

進一步細分銷售額，DSD 收入同比增長近 13%，因為我們看到銷售渠道持續取得成功，並且受益於我們在前幾個季度實施的價格上漲。儘管這些增長跟不上最近一個季度的通貨膨脹。我們開始在我們的 DSD 業務中實施額外的價格和費用增加，這些好處將在當前財政季度開始顯現。

Our Direct Ship channel sales also improved nearly 11% during the first quarter of fiscal 2023 compared to the prior year period. Although our Direct Ship business operates under a cost-plus model and the pricing pressures flow through to our customers per the terms of our various agreements, the timing of price changes naturally lags and on our fiscal first quarter, that was felt in our margins. As already noted, those contractual increases are merely timing based per each customer contract and are now appearing in our fiscal second quarter.

與去年同期相比，2023 財年第一季度我們的直郵渠道銷售額也增長了近 11%。儘管我們的 Direct Ship 業務在成本加成模式下運營，並且根據我們各種協議的條款，定價壓力會傳遞給我們的客戶，但價格變化的時間自然會滯後，在我們的第一財季，我們的利潤率就會感受到這一點。如前所述，這些合同增加只是基於每個客戶合同的時間，現在出現在我們的第二財季。

Total gross profit was $26.6 million for the 3 months ended September 30, 2022, compared to the $31.5 million in the prior year period. Gross margin decreased to 21.9% in Q1 of fiscal '23 from 29% for the comparative 2022 fiscal year period. Profitability levels reflect a near-term gap in gross margin performance due to timing and pull-through of contractual price increases with large national accounts and demand-related factors, including customer inventory reductions during a seasonally slow period for coffee production, which combined to impact our roasting volumes.

截至 2022 年 9 月 30 日止三個月的毛利潤總額為 2660 萬美元，而去年同期為 3150 萬美元。 23 財年第一季度的毛利率從 2022 財年同期的 29% 降至 21.9%。盈利水平反映了由於大量國民賬戶和需求相關因素導致的合同價格上漲的時間和拉動，導致毛利率表現的近期差距，包括咖啡生產季節性放緩期間客戶庫存減少，這些綜合影響我們的烘焙量。

Additionally, in prior quarters we had been able to offset some pricing changes through our hedging program, but those hedges are naturally maturing at higher cost levels each month and will not have the same beneficial nature in the falling commodity price markets that we are now experiencing.

此外，在前幾個季度，我們已經能夠通過我們的對沖計劃抵消一些價格變化，但這些對沖自然會以每月更高的成本水平到期，並且在我們現在正在經歷的商品價格下跌市場中不會具有相同的有益性質.

We expect that Q1 will be the low point of our fiscal year on the margin front, and we are already seeing recovery. For perspective, I'll share that of the Q1 year-over-year gross margin decline, a little more than half was attributable to inflationary pressures on DSD margins and the remainder was attributable to the contractual delay in price increase recognition from national accounts. The pricing and margin actions across the business now coming through are expected to drive at least a 200 to 300 basis point improvement in the December quarter with more to come in the latter half of our fiscal year.

我們預計第一季度將是我們財年利潤率的最低點，我們已經看到復蘇。從角度來看，我將分享第一季度毛利率同比下降的情況，其中一半多一點是由於 DSD 利潤率的通脹壓力，其餘部分是由於國民賬戶確認價格上漲的合同延遲。目前正在實施的整個業務的定價和利潤率行動預計將在 12 月季度推動至少 200 至 300 個基點的改善，並在我們財政年度的下半年實現更多。

Hedging impacts and outcomes which are not core to our operations, are the only other material wildcard that I see as I look forward at our margin recovery story. Further, softening of coffee prices in recent weeks should that continue, would provide a further tailwind for margins as we would finally face deflation to a key component of our cost structure.

對沖影響和結果不是我們業務的核心，是我在展望我們的利潤率恢復故事時看到的唯一其他重要通配符。此外，如果這種情況持續下去，最近幾週咖啡價格走軟將為利潤率提供進一步的推動力，因為我們最終將面臨成本結構關鍵組成部分的通貨緊縮。

In the first quarter of fiscal 2023, our operating expenses decreased by $2.3 million or 7% to $30.9 million from $33.2 million in the prior year period. As a percentage of net sales, our operating expenses decreased by over 500 basis points to 26% compared to 31% in the prior year period. This decrease was due to modestly higher selling and G&A expenses, offset by net gains from the sale of 2 branch locations during the quarter. The increase in selling expenses was primarily due to an increase in payroll, facility, and fleet inflationary-related costs. The decrease in general and administrative expenses was primarily due to a gain on purchase of assets as a result of the settlement related to the Boyd's acquisition, which included the cancellation of preferred shares and settlement of liabilities. This was partially offset by an increase in contract services. Even when excluding all gains on the sale of assets and preferred shares from this quarter and prior year, the result still leads to meaningful improvement in the operating expense to sales ratio year-over-year.

在 2023 財年第一季度，我們的運營費用從去年同期的 3320 萬美元減少 230 萬美元或 7% 至 3090 萬美元。從占淨銷售額的百分比來看，我們的運營費用從去年同期的 31% 下降了 500 多個基點至 26%。這一減少是由於銷售和 G&A 費用略有增加，被本季度出售 2 個分支機構的淨收益所抵消。銷售費用的增加主要是由於工資、設施和車隊通脹相關成本的增加。一般和行政費用的減少主要是由於與博伊德收購相關的結算產生的資產購買收益，其中包括優先股的註銷和負債的結算。這部分被合同服務的增加所抵消。即使排除本季度和上一年出售資產和優先股的所有收益，結果仍然導致營業費用與銷售額的比率同比顯著改善。

Adjusted EBITDA was a loss of $4.9 million in the first quarter of fiscal 2023 compared to income of $3.5 million in the prior year period. And the adjusted EBITDA margin was negative 4% in the first quarter of fiscal 2023 as compared to 3.2% in the prior year period. Our capital expenditures for the 3 months ended September 30, 2022 were $3 million, an increase of $400,000 compared to the prior year period. This was primarily due to higher CBE, or coffee brewing equipment related capital spend compared to the prior year period as we position our revised business to capitalize on its growth momentum.

調整後的 EBITDA 在 2023 財年第一季度虧損 490 萬美元，而去年同期為收入 350 萬美元。 2023 財年第一季度調整後的 EBITDA 利潤率為負 4%，而去年同期為 3.2%。我們截至 2022 年 9 月 30 日止三個月的資本支出為 300 萬美元，比去年同期增加 400,000 美元。這主要是由於與去年同期相比，CBE 或咖啡釀造設備相關的資本支出增加，因為我們將修訂後的業務定位為利用其增長勢頭。

As of September 30, 2022, the outstanding principal on our revolver and term loan credit facilities was $114 million, an increase of $5.4 million from June 30, 2022. Our cash balance was $7.6 million as of September 30, 2022, a decline of a little over $2 million. Our net reduction in liquidity during the quarter was due to the continued impact of higher product and operating costs. These uses of cash were partially offset by cash proceeds from the sale of branch properties during the quarter. I would also note that despite inventory purchases and inflationary impacts, our overall inventory balance was down in September compared to our June fiscal year-end level. We noted our attention would turn to working capital efficiencies once we completed our work on the debt structure. So it is nice to see improvement, and I will comment more on this in a moment.

截至 2022 年 9 月 30 日，我們的循環貸款和定期貸款信貸額度的未償還本金為 1.14 億美元，比 2022 年 6 月 30 日增加了 540 萬美元。截至 2022 年 9 月 30 日，我們的現金餘額為 760 萬美元，下降了略高於 200 萬美元。本季度我們的流動性淨減少是由於產品和運營成本上升的持續影響。這些現金使用被本季度出售分行財產的現金收益部分抵消。我還要指出，儘管存在庫存購買和通貨膨脹影響，但與我們 6 月份的財年末水平相比，我們 9 月份的總體庫存餘額有所下降。我們指出，一旦我們完成債務結構方面的工作，我們的注意力就會轉向營運資本效率。所以很高興看到改進，稍後我會對此發表更多評論。

But first, as announced in late August, we completed a successful refinancing of our ABL credit facility consisting of a new 5-year $47 million first lien secured credit facility with increased covenant flexibility. This refinancing was structured as a low-cost transactional amendment for our previously amended facility and is expected to provide the company with approximately $2 million in cash savings per year compared to the cost of our previous debt structure. In addition to lowering the interest rate and extending the maturity, the refinancing eliminates the minimum adjusted EBITDA covenant and allows for 15-year amortization on principal payments. The structure gives us enhanced flexibility as we prepare for a number of the growth initiatives that Deverl has highlighted today. It has also set the stage for the comprehensive company-wide working capital and systems improvement initiatives that Deverl had lined earlier.

但首先，正如 8 月下旬宣布的那樣，我們成功完成了 ABL 信貸安排的再融資，其中包括一項新的 5 年期 4700 萬美元的第一留置權擔保信貸安排，具有更高的契約靈活性。此次再融資的結構是對我們之前修改後的貸款的低成本交易修改，與我們之前的債務結構成本相比，預計每年將為公司節省約 200 萬美元的現金。除了降低利率和延長期限外，再融資還取消了最低調整後 EBITDA 契約，並允許對本金付款進行 15 年的攤銷。在我們為 Deverl 今天強調的一些增長計劃做準備時，這種結構為我們提供了更大的靈活性。它還為 Deverl 早些時候提出的全面的全公司營運資金和系統改進計劃奠定了基礎。

Just to add a little more color. When we complete this work, we'll be able to substantially improve our working capital management with access to critical tools, data and new processes needed to manage the natural swings in pricing and costs that are inherent in the coffee business. This project affects operating procedures, metrics, reporting practices, contracts and agreements with customers and vendors and closely ties into our IT road map work, which includes defining the requirements for the systems we use and will be using to operate the business well into the future. Thus, we also expect some efficiency benefits as all of this is fully implemented over the coming quarters.

只是為了增加一點顏色。當我們完成這項工作時，我們將能夠通過訪問管理咖啡業務固有的定價和成本的自然波動所需的關鍵工具、數據和新流程來顯著改善我們的營運資金管理。該項目影響操作程序、指標、報告實踐、與客戶和供應商的合同和協議，並與我們的 IT 路線圖工作密切相關，其中包括定義我們使用的系統的要求，以及將用於在未來很好地運營業務的系統.因此，我們還預計，所有這些都將在未來幾個季度全面實施，從而帶來一些效率上的好處。

As an initial step to these efforts, in the coming days, we are bringing online a new operations planning and ordering tool, which will allow for simultaneous users and collaborative workspaces that will provide improved data, documentation, visibility and clarify all responsibilities in a low-cost, stable environment. We think the timing of this project works in our favor as margins recover from Q1 levels, providing the opportunity to focus more on reducing our leverage. We will gain valuable information that will help to accelerate our previously noted and ongoing optimization efforts.

作為這些努力的第一步，在接下來的幾天裡，我們將推出一個新的運營規劃和訂購工具，這將允許同時使用用戶和協作工作空間，從而提供改進的數據、文檔、可見性並以低廉的方式澄清所有責任-成本，穩定的環境。我們認為這個項目的時機對我們有利，因為利潤率從第一季度水平恢復，提供了更多關注降低杠桿的機會。我們將獲得有價值的信息，這將有助於加快我們之前提到的和正在進行的優化工作。

Wrapping up. On paper, this was clearly a tough quarter, but we view the impacts on margin and profitability as largely short term in nature, and that view is supported by positive trends we're seeing here in the first part of our fiscal Q2. We do not think that our progress towards higher sales, higher margins and higher profitability has been derailed, only delayed by the factors noted. We continue to execute on profitable growth initiatives from customer growth to new products and achievement of internal operating efficiencies and working capital improvement. Of course, the additional headwinds for macro uncertainties will play a role in our performance looking forward, but we are confident that we're in a good position to again build positive momentum into the business as we move through fiscal 2023.

包起來。從表面上看，這顯然是一個艱難的季度，但我們認為對利潤率和盈利能力的影響在很大程度上是短期的，而且我們在第二財季第一部分看到的積極趨勢支持了這一觀點。我們認為，我們在提高銷售額、提高利潤率和提高盈利能力方面取得的進展並沒有偏離軌道，只是被上述因素推遲了。我們繼續執行從客戶增長到新產品以及實現內部運營效率和營運資本改善的盈利增長計劃。當然，宏觀不確定性帶來的額外不利因素將對我們未來的業績產生影響，但我們相信，在我們進入 2023 財年時，我們有能力再次為業務建立積極的勢頭。

With that, I'll now turn the call back over to Deverl. [Technical Issues]

有了這個，我現在將把電話轉回給 Deverl。 [技術問題]

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Gerry Sweeney with ROTH Capital. You may now go ahead.

我們現在開始問答環節。 [操作員說明] 我們的第一個問題將來自 ROTH Capital 的 Gerry Sweeney。你現在可以繼續了。

Good afternoon, Deverl and Scott. Thanks for taking my call.

下午好，Deverl 和 Scott。謝謝你接我的電話。

Hey, Gerard.

嘿，杰拉德。

Hi, Gerard.

嗨，杰拉德。

I want to start on the margins. Obviously, a little bit of a disappointment there. And I know you spent a little bit of time on the call on it. And I think you said half DSD, half Direct Ship. And just wanted to understand a little bit more clearly. It sounds as though, and correct me if I'm wrong, that there were hedges. I'm not sure if the hedges begin to roll off, but even at that point the hedges reduced your cost of goods sold. So when they did roll off, cost of your coffee went up. And this was not -- I guess -- and that increase in cost was not accounted for in higher pricing with your customers at that given point. Did I summarize that correctly?

我想從邊緣開始。顯然，那裡有點失望。我知道你在電話會議上花了一點時間。我想你說的是一半 DSD，一半 Direct Ship。只是想更清楚地了解一點。聽起來好像有樹籬，如果我錯了請糾正我。我不確定對沖是否開始下降，但即使在那個時候對沖也會降低你的銷售成本。因此，當他們確實下架時，您的咖啡成本就會上升。這不是 - 我猜 - 成本的增加並沒有考慮到您在給定點上與客戶的更高定價。我是否正確地總結了這一點？

Yes. Yes, Gerry, you did. You got that right. And just the easier side like the national account side, where it's just a contractual delay. You're exactly right. It was -- the hedges were basically maturing. People were using their hedges over the last year. And so if you imagine that -- because coffee prices have been in that 220 to 240 [Phonetic] range for quite a while, many months. And if you had hedged, like most people do in a 6-month, 9-month, 12-month window, then what was happening is really until very, very recently, Q4 and Q1, you were effectively because of your hedge is having much lower price cost of coffee, the hedging program worked. And really what we're trying to portray there is that the acceleration of that cost has been much more dramatic. So that's the impact before we can pass that through to those accounts.

是的。是的，格里，你做到了。你說對了。更簡單的一面是國民賬戶方面，這只是合同延遲。你完全正確。這是 - 對沖基本上已經成熟。人們在去年使用了他們的對沖。所以如果你想像一下——因為咖啡價格在 220 到 240 [語音] 範圍內已經有很長一段時間，很多個月了。如果你像大多數人一樣在 6 個月、9 個月、12 個月的窗口中進行了對沖，那麼直到最近，第四季度和第一季度，你才有效，因為你的對沖是咖啡的價格成本低得多，套期保值計劃奏效了。實際上，我們試圖在那裡描繪的是，這種成本的加速增長更為顯著。這就是我們可以將其傳遞給這些帳戶之前的影響。

So the key question here is and I think people will probably want to understand is why did it stop working because the hedges rolled off? And was that you? Was that the customer? Or was there some kind of mechanics in the contract that the contract rolled over because it was a new year and there was a gap. This is -- i'm trying to figure this all out.

所以這裡的關鍵問題是，我認為人們可能想了解的是，為什麼它會因為樹籬脫落而停止工作？那是你嗎？那是顧客嗎？或者合同中是否有某種機制使合同延期，因為這是新的一年並且存在差距。這是——我正在努力弄清楚這一切。

Yes. Let me answer it this way, Gerry. Let's just get right to cut the chase. What was the surprise for us. And it really was -- the surprise on margins to the question you're asking, it really comes back to; one, was on the volume side. Large national account businesses were working off inventory in the Q. And if you remember during that Q, we had a lot of national customers and companies had taken on additional inventory, bought product and then they got long and the demand was not yet there in early July and August. It didn't start to come back until the back half of the Q. So the recession was impacting them. The reduction in orders was a surprise for us and the volume we projected didn't come through, and we need to replatform that current reality if that continues, and we're watching that incredibly closely.

是的。讓我這樣回答，格里。讓我們開始吧。對我們來說有什麼驚喜。確實是——你問的問題的邊緣驚喜，它真的回來了；一是在成交量方面。大型國民賬戶企業正在處理 Q 中的庫存。如果你還記得在那個 Q 中，我們有很多國家客戶和公司已經承擔了額外的庫存，購買了產品，然後他們變得很長，需求還沒有出現七月初和八月。直到 Q 的後半部分它才開始恢復。所以經濟衰退正在影響他們。訂單的減少讓我們感到意外，我們預計的數量沒有實現，如果這種情況繼續下去，我們需要重新調整當前的現實，我們正在密切關注這一點。

Point two, pricing. And the pricing, as Scott just alluded to, was reflective of the hedging rolling off and then we're now in one case, our largest impacted customer that we serve impacted us and didn't get the price change per the contractual arrangement until October 15. And so now we're seeing that, and we'll make that up in the coming Q as reflective of what occurred in the last Q. So those were the 2 things that we didn't think would happen to the level they did. They have or has, and we're now reacting and doing many things that Scott pointed out in his comments in the prepared remarks.

第二點，定價。正如斯科特剛才提到的那樣，定價反映了對沖的減少，然後我們現在在一個案例中，我們服務的最大受影響客戶影響了我們，直到 10 月才根據合同安排獲得價格變化15. 所以現在我們看到了這一點，我們將在下一個 Q 中彌補它以反映上一個 Q 中發生的事情。所以這些是我們認為不會發生在他們水平上的兩件事做過。他們已經或已經，我們現在正在做出反應並做很多事情，斯科特在準備好的發言中的評論中指出了這一點。

Yes. And then just plain and simple on the DSD side, Gerry, it's -- hedging is a part of it, but we simply didn't keep pricing ahead of all the inflationary pressures in coffee and all the other things we're facing like everyone else is as well. It was just a simple factor [Speech Overlap] We have new pricing going in, in November and effective kind of December for.

是的。然後在 DSD 方面簡單明了，Gerry，它是 - 對沖是其中的一部分，但我們只是沒有保持定價領先於咖啡的所有通脹壓力以及我們像每個人一樣面臨的所有其他事情其他也是。這只是一個簡單的因素[語音重疊]我們在 11 月和 12 月開始實施新定價。

So let me just say another thing, Gerry, becuase you're going to probably ask this question. I think it's prudent that we just get out there and answer. And that's -- how are these margins going to trend throughout the rest of the fiscal '23, which obviously is a tag on to the question you're asking. And it's -- we believe recovery is underway based on the data and the information we're looking at in the current Q, and volumes, as we said in the prepared remarks, we had our best week in DSD literally, pre-pandemic. We expect to be back on our targeted trajectory exiting this fiscal year into Q3 and Q4. And we'll caveat that by the macro uncertainty, but we're going to have to take pricing, and we've got a pricing move that's coming up in this current month. And we have other levers in place that we are working through if the economic picture darkens further, but the overall impacts that are coming are still somewhat unclear, and we realize that we're going to have to play knowing that, that's the case until it reverses and we see more pickup on the inflationary side, meaning, that inflationary reduces.

所以讓我再說一件事，Gerry，因為你可能會問這個問題。我認為我們只是出去回答是明智的。那就是——這些利潤率將如何在整個 23 財年的剩餘時間裡呈現趨勢，這顯然是你所問問題的一個標籤。它是——我們相信，根據我們在當前 Q 中看到的數據和信息，復甦正在進行中，正如我們在準備好的評論中所說的那樣，我們在 DSD 度過了最好的一周，大流行前。我們預計將回到我們的目標軌跡，從本財年進入第三季度和第四季度。我們會通過宏觀不確定性來警告這一點，但我們將不得不進行定價，而且我們在本月將採取定價行動。如果經濟形勢進一步惡化，我們還有其他措施可以解決，但即將到來的總體影響仍不明朗，我們意識到我們必須知道這一點，情況就是這樣，直到它逆轉了，我們看到通貨膨脹方面有更多回升，這意味著通貨膨脹減少了。

Got it. Are you seeing any let up on the inflationary side? Obviously, green coffee beans. Any letup on inflationary side?

知道了。你看到通貨膨脹方面有任何緩和嗎？顯然，生咖啡豆。通脹方面有緩和嗎？

Yes. We had seen some, trucking rates, fuel to a degree. But I know you watch the news closely as we do, and we're watching this diesel impact given that we're at the lowest levels of diesel in the U.S. and who knows how long. That impact is obviously concerning. So we're looking at options to -- from rail. But then post the midterms, let's see what we see in the rail situation in the country. We're hopeful that, that doesn't go in a negative way or trucking surcharges increase because diesel are deciding to take a further run up, which would impact and also -- the other thing that we're really positive on that will help mitigate some of those, let's say, U.S. inflationary impacts is the fact that for the first time just as we've seen coffee break and come down, we saw 169 [Phonetic] literally in the last 2 weeks. It came back up over the last couple of days. We're expecting that to continue to trend in that until the harvest comes in. But here's the other big impact is we know that differentials had been historically at the all-time high, and we saw massive breaks and differentials in the recent weeks toward the downside, which is also going to be helped to a large portion of our cost basis. So those are a couple.

是的。我們已經看到了一些，卡車運輸率，燃料在一定程度上。但我知道你和我們一樣密切關注新聞，我們正在關注柴油的影響，因為我們處於美國最低的柴油水平，誰知道會持續多久。這種影響顯然令人擔憂。因此，我們正在尋找從鐵路方面的選擇。但是在中期選舉之後，讓我們看看我們在該國的鐵路狀況中看到了什麼。我們希望這不會產生負面影響或卡車運輸附加費增加，因為柴油決定進一步上漲，這將產生影響，而且 - 我們對此非常積極的另一件事將有所幫助減輕其中的一些，比方說，美國的通脹影響是這樣一個事實，就像我們看到咖啡休息和下降一樣，我們在過去兩週內看到了 169 [Phonetic]。它在過去幾天又回來了。我們預計在收成到來之前，這種趨勢會繼續保持下去。但另一個重大影響是，我們知道差異在歷史上一直處於歷史最高水平，而且我們在最近幾週看到了巨大的突破和差異缺點，這也將有助於我們的大部分成本基礎。所以他們是一對。

Got it. How long does it take for lower coffee prices, I think it is green coffee prices to work into the system?

知道了。降低咖啡價格需要多長時間，我認為生咖啡價格才能進入系統？

Yes. Yes. So that's an interesting one. Again, I'll break it into 2 parts because on the national account and the Direct Ship side, we work with those customers, and it's really their book. Each of them, we help them with the trading and with the industry insights and the market insights, but they all kind of build the book to their own specifications. So it's a variable answer on that side of the business. But again, even as prices fall, we'll follow the contractual norm. So we will always be on kind of the historical cost structure of the prior 90 days as we go forward and keep rolling that forward. So there will be -- just like there was a lag in the pricing going up, there'll be a lag in the pricing coming down. Some of those customers will start to see the benefit of lower pricing within, I'd say, just 1 or 2 quarters. Some of them, it's much further. Some of them have hedged out 9 months, even 12 months. So it will be a longer tail on those customers. For us, personally, on our DSD account, we have been kind of trending the market closely and you can [Technical Issues]

是的。是的。所以這是一個有趣的問題。同樣，我將把它分成兩部分，因為在國民賬戶和 Direct Ship 方面，我們與這些客戶合作，這確實是他們的書。他們每個人，我們幫助他們進行交易、行業洞察力和市場洞察力，但他們都按照自己的規格來構建這本書。因此，在業務方面這是一個可變的答案。但同樣，即使價格下跌，我們也會遵循合同規範。因此，我們將始終採用前 90 天的歷史成本結構，並繼續向前推進。所以會有——就像價格上漲有滯後一樣，價格下降也會有滯後。其中一些客戶將開始看到較低定價的好處，我會說，只有 1 或 2 個季度。其中一些，它更遠。他們中的一些人已經對沖了 9 個月，甚至 12 個月。因此，這些客戶的尾巴會更長。就我們個人而言，在我們的 DSD 賬戶上，我們一直在密切關注市場趨勢，您可以 [技術問題]

We may have lost them there. Mr. operator.

我們可能在那裡失去了他們。接線員先生。

I will reconnect them just one moment. Please wait one moment as I reconnect the speaker line.

等會兒我會重新連接它們。請稍等片刻，我正在重新連接揚聲器線路。

Sure.

當然。

Okay. I've joined the speaker line back in. Gerry, you line is still open.

好的。我已經加入了揚聲器線路。格里，你的線路仍然開放。

Hey Scott, I lost you at DSD, you went through Direct Ship coffee prices.

嘿斯科特，我在 DSD 失去了你，你經歷了直運咖啡價格。

Apologies, apologies, the system. I don't know what happened, maybe a power issue in the building or something, but we got dropped. [Speech Overlap] Yes. So DSD, you can tell -- if you look closely at the materials in our Qs, the amount of hedges we have out there. But effectively what I can say is that based on market conditions and what we've been seeing recently is that we've been shortening up our hedge book quite a bit. So we will have benefit from these lower costs -- if the lower costs continue in the back half of the fiscal year. We won't have to wait for 6, 9, 12 months.

道歉，道歉，系統。我不知道發生了什麼，也許是建築物的電源問題或其他原因，但我們被放棄了。 [語音重疊]是的。所以 DSD，你可以看出——如果你仔細查看我們 Qs 中的材料，我們在那裡有多少對沖。但實際上我可以說的是，根據市場狀況和我們最近看到的情況，我們已經大大縮減了對沖賬簿。因此，如果本財年下半年繼續降低成本，我們將從這些較低的成本中受益。我們不必等待 6、9、12 個月。

In the back half of this fiscal year you said, sorry?

在這個財政年度的後半段，你說，對不起？

Yes. Yes. So yes, the March quarter and the June quarter will start to have some good benefits from the lower cost if they continue.

是的。是的。所以是的，如果他們繼續下去，三月季度和六月季度將開始從較低的成本中獲得一些好處。

Got it. Okay. Switching gears to maybe the gross side, Revive. You made a comment about doubling workforce, I think over the course of the year. Now Revive is a new business per se, right? You white labelled it, maybe not necessarily new business. But how many techs do you have in that business? Because you did have techs before you white labeled it. So I'm just curious as to what really that baseline is on the doubling on the tech part.

知道了。好的。將齒輪切換到粗糙的一面，Revive。我認為在這一年中，你對勞動力翻倍發表了評論。現在 Revive 本身就是一項新業務，對嗎？你把它貼上白標，也許不一定是新業務。但是你在那個行業有多少技術人員？因為在貼上白色標籤之前你確實有技術。所以我很好奇技術部分的翻倍到底是什麼基線。

You're right, and it's not a new business, but it's new in the context that we're expanding the third-party areas that previously were offered out to third parties. It's new in the context that we're adding new manufacturers across the board that we did not provide service and support for, and it's also new in the context that we're adding accounts that our coffee type customers that have equipment that can be serviced and that we're servicing that. Our current baseline is 120 at the present roughly and growing weekly, and we have excess demand that we are covering as we add new techs in key markets where the demand is incredibly strongly unmet, and that's what gives us excitement that these avenues of increasing the current amount that we have been handling we know is real and it's profitable and it's accretive to the business, and it will make our overall network both on the DSD side and the customer we served there today that were served heavily through third party, we'll be able to add those with a revitech and then add non-DSD Farmer Brothers accounts, be it manufacturers or other clients that want to service. So it's very exciting, and we'll start continuing to report more and more as this is becoming a substantial impact to our overall network.

你是對的，這不是一項新業務，但在我們正在擴展以前提供給第三方的第三方領域的背景下，它是新的。這是新的，因為我們正在全面添加我們沒有為其提供服務和支持的新製造商，而且它也是新的，因為我們正在添加我們的咖啡類型客戶擁有可以提供服務的設備的帳戶我們正在為此提供服務。我們目前的基線大致是 120，並且每週都在增長，隨著我們在需求極度未得到滿足的關鍵市場添加新技術，我們正在滿足過剩需求，這就是讓我們興奮的是，這些增加我們知道目前處理的數量是真實的，它是有利可圖的，它對業務有增值作用，這將使我們在 DSD 方面的整個網絡和我們今天在那裡服務的客戶都通過第三方大量服務，我們'您將能夠添加帶有 revitech 的帳戶，然後添加非 DSD Farmer Brothers 帳戶，無論是製造商還是其他想要服務的客戶。所以這非常令人興奮，我們將開始繼續報告越來越多，因為這對我們的整個網絡產生了重大影響。

I think you said in the prepared remarks mid-digit 6-digit type revenue on a monthly basis for Revive, correct?

我想你在準備好的備註中說 Revive 每月的中位數 6 位數類型收入，對嗎？

Yes.

是的。

What was... Something, but you have 120 techs. Of that 120, only -- some of the -- a lot of those techs are -- a portion of them are servicing your DSD or existing clients and that revenue is baked into coffee prices that those clients pay for. So that does not -- that mid -- that 6-digit revenue doesn't necessarily reflect that. So if you double your base of techs, that's projecting -- I'm assuming that's for this -- that's going to project -- that's going to be substantial type of revenue opportunity. Do you understand what I'm saying?

什麼是...東西，但你有 120 技術。在這 120 家公司中，只有——其中一些——很多技術公司——他們中的一部分正在為您的 DSD 或現有客戶提供服務，並且這些收入被計入這些客戶支付的咖啡價格中。所以這並不——那個中間——6 位數的收入並不一定反映這一點。因此，如果你將你的技術基礎增加一倍，那就是預測 - 我假設這是為了這個 - 這將是項目 - 這將是一個重要的收入機會。你明白我所說的嗎？

Absolutely. We agree with you on that point. And I would also tell you that with the new general manager we brought in to lead this business to really take it to the next level, he would tell you that even on existing DSD customers that we're starting to change the way we evaluate the service of those with kind of a platinum gold, silver approach, in some cases selling them equipment, in some cases, then selling them a service contract to that equipment, in some cases having a service contract only or in large accounts that purchase volume in the traditional way, we're providing that service, but we're also changing the frequency by which we service on a periodic basis for maintenance. And then if it's something that comes in and it's a one-off that they're asking for a frequent service in their machine is in good order, but somehow it continues to break. We're looking at ways to charge for those services where it becomes well above the cost basis of what we had projected. So lots of different work we're doing to model this out. But to your point, it's going to be higher per tech that we add in total revenue per technician as we go forward and get to this potential of doubling here in the next 12 months. So it should become as we're seeing it now, and as we've not reported in the past, how big we think Revive can be. We're much more pro in terms of the size and the overall margin impact it could have to the business. So we're not yet prepared to give you a range of just how big it can be, but we're trying to start to tee that up as we've done in the last 2 quarters and give you a better sense, and we'll get deeper and deeper into that to give you more information as we continue to grow it. And right now we just land one of our first largest manufacturing contracts that we're executing, and that's really exciting, and we expect that more of those are here to come. And that if we have the techs to service it, the demand is already there.

絕對地。在這一點上我們同意你的看法。而且我還要告訴你，隨著我們聘請的新總經理領導這項業務真正將其提升到一個新的水平，他會告訴你，即使對於現有的 DSD 客戶，我們也開始改變我們評估的方式為那些採用鉑金、白銀方法的人提供服務，在某些情況下向他們出售設備，在某些情況下，然後向他們出售該設備的服務合同，在某些情況下只有服務合同或在大客戶中購買大量設備傳統方式，我們提供該服務，但我們也改變我們定期維護服務的頻率。然後，如果它是一次性的，他們要求在他們的機器中進行頻繁的服務，但它處於良好狀態，但不知何故它繼續中斷。我們正在尋找對那些遠高於我們預計的成本基礎的服務收費的方法。我們正在做很多不同的工作來模擬這一點。但就你的觀點而言，隨著我們向前邁進並在未來 12 個月內實現翻倍的潛力，我們在每位技術人員中增加的總收入將會更高。所以它應該像我們現在看到的那樣，正如我們過去沒有報導過的那樣，我們認為 Revive 可以有多大。就規模和它可能對業務產生的整體利潤影響而言，我們更加專業。所以我們還沒有準備好告訴你它有多大的範圍，但我們正在努力開始準備，就像我們在過去兩個季度所做的那樣，讓你有更好的感覺，我們隨著我們繼續發展它，我們會越來越深入地為您提供更多信息。現在我們剛剛獲得了我們正在執行的第一個最大的製造合同，這真的很令人興奮，我們預計會有更多這樣的合同出現。而且，如果我們有技術來為它服務，那麼需求就已經存在了。

Got it. How about -- I know you don't want to project on how big it can get, but profitability.

知道了。怎麼樣 - 我知道你不想預測它能有多大，而是盈利能力。

Yes. The beauty of that model, as we've talked about a little bit, is the core cost of that business is already in our financial numbers. It's been a part of the business because of DSD for many years. So all of the incremental dollars that we add, primarily in techs, we're adding because they're accretive to the business. So I like to think of it as a highly leverageable model. And yes, we will have some cost increases, but they're more than justified by the revenue increases. And again, as Deverl said, we're in this kind of unique spot that we're very fortunate of is we are fulfilling demand. We're not having to identify and change demand. We're literally at this point fulfilling demand as quickly as we can with tech. So we'll kind of keep you abreast on when that changes, but we think that's quite a runway, for the next several quarters at least of just being in that mode.

是的。正如我們已經談到的那樣，該模型的美妙之處在於該業務的核心成本已經在我們的財務數字中。多年來，由於 DSD，它一直是業務的一部分。因此，我們增加的所有增量美元，主要是在技術方面，我們正在增加，因為它們可以增加業務。所以我喜歡將其視為一種高度可利用的模型。是的，我們會增加一些成本，但收入增加是合理的。再一次，正如 Deverl 所說，我們處於這種獨特的位置，我們非常幸運，因為我們正在滿足需求。我們不必確定和改變需求。在這一點上，我們實際上是在用技術盡快滿足需求。因此，我們會讓您了解何時發生變化，但我們認為這是一條很好的跑道，至少在接下來的幾個季度中只是處於這種模式。

And the obvious question that most people ask is well, with labor, the way it is today, how do you think you're even going to get one additional tech much less doubling of your current over the next 12 months. And the reality is we're going to -- we've changed our recruiting model, which is effectively working right now is point 1. Point 2, we are working with a large tech service school here where we'll be actually training and minting new techs through a technical school with our curriculum and their force combined and then giving these folks a job as soon as they come out of the tech school and then into the workforce with a training program that our new head of learning and development training is helping develop. And that's why we have some assurance that we're very bullish on Revive in the present structure because we've cracked the code. And I think even in this environment we know we can win, and we're going to do everything in our power, because nothing better than having a piece of your business that you're not chasing demand. The demand is there. If you can learn to fill it and execute against it with good margins and higher margins because of the cost base that Scott just alluded to. We'll be leveraging that fixed asset that's there today.

大多數人問的一個明顯問題是，隨著勞動力的發展，以今天的方式，你認為你如何才能獲得一項額外的技術，更不用說在未來 12 個月內將現有技術翻一番。現實是我們要——我們已經改變了我們的招聘模式，現在有效的是第 1 點。第 2 點，我們正在與這裡的一所大型技術服務學校合作，我們將在那裡進行實際培訓和通過一所技術學校結合我們的課程和他們的力量來培養新技術，然後一旦他們從技術學校出來就給這些人一份工作，然後通過我們新的學習和發展培訓負責人的培訓計劃進入勞動力市場幫助發展。這就是為什麼我們可以保證我們非常看好目前結構中的 Revive，因為我們已經破解了密碼。而且我認為即使在這種環境下，我們也知道我們可以獲勝，並且我們將竭盡全力，因為沒有什麼比擁有您不追逐需求的業務更好的了。需求就在那裡。如果你能學會填補它並以良好的利潤率和更高的利潤率來執行它，因為斯科特剛剛提到的成本基礎。我們將利用今天存在的固定資產。

Got it. I'll jump back in line. I appreciate it, guys.

知道了。我會跳回去排隊。我很感激，伙計們。

All right, Gerry. Thank you.

好的，格里。謝謝你。

Gerry, Thanks.

格里，謝謝。

It appears there are no further questions. Gerry, if you have any follow-ups you may present them now.

看來沒有進一步的問題了。 Gerry，如果您有任何後續行動，現在可以提出。

I'm in good shape. Thank you.

我身體很好。謝謝你。

Okay. This concludes our conference. I'd like to turn it back over to Deverl for any closing remarks.

好的。我們的會議到此結束。我想將它轉回給 Deverl 以聽取任何結束語。

Well, thanks for the questions. And I'll close by saying that while we're disappointed with the outcome of the quarter, that disappointment should prove short-lived. Near-term, we are recapturing momentum as we get through the lag impact of our price increases, and we believe that we are positioned well heading to lower coffee price environment with a shorter hedge position in our book. Most important for the long term, we have not been distracted from foundational initiatives underway to achieve Farmers' potential. Those initiatives include the optimization we've made to our business operations, winning new customers, broadening and modernizing the product portfolio we push through our national distribution footprint, and investing in the systems that will make us more nimble. All these initiatives, along with better data and insight should drive higher levels of performance. We appreciate our investors' interest and support and look forward to keeping you posted on our progress. Have a great evening. Thank you.

好吧，謝謝你的問題。最後我要說的是，雖然我們對本季度的結果感到失望，但這種失望應該是短暫的。近期，隨著我們度過價格上漲的滯後影響，我們正在重新獲得動力，並且我們相信我們已經準備好走向較低的咖啡價格環境，我們賬簿中的對沖頭寸較短。從長遠來看，最重要的是，我們沒有從正在進行的旨在實現農民潛力的基礎舉措上分心。這些舉措包括我們對業務運營所做的優化、贏得新客戶、擴大我們在全國分銷足跡中推出的產品組合併使之現代化，以及投資使我們更加靈活的系統。所有這些舉措以及更好的數據和洞察力應該會推動更高水平的績效。我們感謝投資者的興趣和支持，並期待讓您了解我們的進展。祝你有個愉快的夜晚。謝謝你。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。