(FARM) 2023 Q4 法說會逐字稿

Hello, good afternoon, and welcome to the Farmer Brothers Fiscal Fourth Quarter and Full Year 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

大家下午好，歡迎參加 Farmer Brothers 2023 年第四季和全年財報電話會議。 （操作員說明）謹此提醒，此通話正在錄音。

Earlier today, the company issued its quarterly shareholder letter available on the Investor Relations section of Farmer Bros.' website at farmerbros.com. The shareholder letter is also included as an exhibit on the company's Form 8-K and is available on the company's website and the Securities and Exchange Commission's website at sec.gov.

今天早些時候，該公司發布了季度股東信函，可在 Farmer Bros. 的投資者關係部分查看。網址為 farmerbros.com。股東信函也作為附件包含在公司的 8-K 表格中，並可在公司網站和美國證券交易委員會網站 sec.gov 上取得。

A replay is available on the company's website and the Securities and Exchange Commission website at sec.gov.

重播可在該公司網站和美國證券交易委員會網站 sec.gov 上查看。

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.

本次電話會議結束後約 2 小時將提供此純音訊網路廣播的重播。音頻重播的連結也將在該公司的網站上提供。

Before we begin the call, please note all of the financial information presented is unaudited and 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.

在我們開始電話會議之前，請注意，所提供的所有財務資訊均未經審計，管理層在本次電話會議中就公司未來預期、計劃和前景發表的各種言論可能構成聯邦安全港條款中的前瞻性陳述。證券法規。這些前瞻性陳述僅代表本公司截至目前的觀點，不應被視為代表本公司截至任何後續日期的觀點。

Results could differ materially from those forward-looking statements. Additional information on factors which could cause actual results and other events to differ materially from those forward-looking statements is available in the company's shareholder letter and public filings.

結果可能與這些前瞻性陳述有重大差異。有關可能導致實際結果和其他事件與這些前瞻性陳述存在重大差異的因素的更多信息，請參閱公司的股東信和公開文件。

On today's call, management will also reference 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 shareholders letter.

在今天的電話會議上，管理層還將參考某些非公認會計原則財務指標，包括調整後的 EBITDA 和調整後的 EBITDA 利潤率來評估公司的營運績效。這些非公認會計原則財務指標與其最直接可比較的公認會計原則指標的調節也包含在公司的股東信中。

I will now turn the call over to Farmer Brothers Chief Executive Officer, Deverl Maserang. Mr. Maserang, please go ahead.

我現在將把電話轉給 Farmer Brothers 執行長 Deverl Maserang。馬塞朗先生，請繼續。

Thank you, operator, and thank you, everyone, for joining us this afternoon. Hopefully, you've had a chance to look at the shareholder letter we filed earlier today.

謝謝接線生，也謝謝大家今天下午加入我們。希望您有機會閱讀我們今天早些時候提交的股東信。

We've had several significant news announcements these last few weeks, and we want to take some time here to walk you through those and make introductions to our new interim CEO, John Moore; and Interim CFO, Brad Bollner. Most importantly, we want our investors to come out of today's call with a good sense of the company's positioning over the next several quarters and for the long term. Scott, the Board and I fully believe Farmer Brothers has a bright future in front of it.

過去幾週我們發布了幾條重大新聞，我們想花一些時間向您介紹這些新聞，並向您介紹我們的新任臨時首席執行官約翰·摩爾 (John Moore)；臨時財務長布拉德·博爾納 (Brad Bollner)。最重要的是，我們希望投資者在今天的電話會議後能夠對公司未來幾季和長期的定位有一個良好的認識。史考特、董事會和我完全相信 Farmer Brothers 有著光明的未來。

The sale of our direct ship business was a transformative moment in Farmer Brother's history and creates a significant inflection point for our shareholders. It trains our full focus on what we do best as a company, it strengthens our balance sheet and best positions us to unlock the company's full margin expansion and growth potential.

出售我們的直航業務是 Farmer Brother 歷史上的一個變革時刻，也為我們的股東創造了一個重要的轉捩點。它訓練我們全神貫注於我們作為一家公司最擅長的事情，它加強了我們的資產負債表，並使我們處於最佳位置，以釋放公司的全部利潤擴張和成長潛力。

We already hit the ground running, showing rapidly improving margins in our DSD business. In May, we began rolling out our AI-based pricing model, which uses more than 200 data points from more than 40,000 customers to facilitate dynamic pricing adjustments.

我們已經開始運作，DSD 業務的利潤率迅速提高。 5 月份，我們開始推出基於人工智慧的定價模型，該模型使用來自 40,000 多名客戶的 200 多個數據點來促進動態定價調整。

In the last weeks of the quarter alone, we saw several hundred basis point improvements in gross margins. We really are excited about this capability. As we noted in our letter, DSD's stand-alone gross margins historically have run above 40% even without sophisticated pricing capabilities. Since the closing of our direct ship transaction, several important steps have been taken to position the company for what we believe will be an accelerated return to positive free cash flow.

僅在本季的最後幾週，我們就看到毛利率提高了數百個基點。我們對這種能力感到非常興奮。正如我們在信中指出的那樣，即使沒有先進的定價能力，DSD 的獨立毛利率也已超過 40%。自從我們的直接船舶交易結束以來，我們已經採取了幾項重要步驟，以使公司能夠加速恢復正自由現金流。

First, we used $100 million in transaction proceeds to pay down outstanding debt and increase our balance sheet flexibility. This allows the team to focus on execution, improving margins and driving strategic growth in our continuing DSD operations.

首先，我們使用 1 億美元的交易收益來償還未償債務並提高資產負債表的靈活性。這使得團隊能夠專注於執行、提高利潤並推動我們持續的 DSD 業務的策略成長。

Second, we underwent a significant reorganization within DSD, which allows us to apply 100% focus to this important business. We introduced a new field organization structure which will drive a more sales and profit centric approach to account management, and we've improved accountability and reporting throughout this organization to better align with our goals and priorities.

其次，我們在 DSD 內部進行了重大重組，這使我們能夠 100% 專注於這項重要業務。我們引入了新的現場組織結構，這將推動更加以銷售和利潤為中心的客戶管理方法，並且我們改進了整個組織的問責制和報告，以更好地符合我們的目標和優先事項。

We have also taken steps to lower product costs, locking in COGS gains, which will benefit performance throughout the year, and we are optimizing operations across the board, including inventory management, procurement and manufacturing. We continue to elevate opportunities and implement changes to adjust our cost structure to align with our now smaller and leaner organization.

我們還採取措施降低產品成本，鎖定銷貨成本收益，這將有利於全年業績，並且我們正在全面優化運營，包括庫存管理、採購和製造。我們繼續增加機會並實施變革，以調整我們的成本結構，以適應我們現在更小、更精簡的組織。

Finally, we are ramping up new growth initiatives. Our REVIVE business is performing well, growing revenue by 50% on a year-on-year basis in fiscal '23. Our launch of SHOTT branded syrup concentrate has also gone well, especially on the West Coast, and we're excited about our ambient liquid coffee program offered under our Boyd's brand. This is in test markets ahead of the broader launch expected in the fall. We are confident its innovative proprietary design will allow us to capture significant market share in a critical segment for our customers.

最後，我們正在加強新的成長計劃。我們的 REVIVE 業務表現良好，23 財年營收年增 50%。我們推出的 SHOTT 品牌濃縮糖漿也進展順利，尤其是在西海岸，我們對 Boyd 品牌下提供的常溫液態咖啡計劃感到興奮。這是在預計秋季更廣泛推出之前進行的測試市場。我們相信，其創新的專有設計將使我們能夠在客戶的關鍵細分市場中佔據重要的市場份額。

Now to discuss what the company will be focused on in fiscal 2024, let me introduce you to our interim CEO, John Moore. John joined us earlier this year as Vice President and Head of Coffee. He's a proven industry leader with more than 30 years of experience and one of the most knowledgeable people I know in the coffee industry. He will do an outstanding job leading Farmer Brothers through this management transition.

現在，為了討論公司 2024 財年的重點，讓我向您介紹我們的臨時執行長約翰·摩爾 (John Moore)。約翰今年稍早加入我們，擔任副總裁兼咖啡主管。他是一位公認的行業領導者，擁有 30 多年的經驗，也是我所認識的咖啡行業知識最豐富的人之一。他將出色地領導 Farmer Brothers 完成這次管理層過渡。

Thanks, Deverl, and hello, everyone. One of the reasons I joined Farmer Brothers back in May was the groundwork, which has been laid for future growth and profitability.

謝謝德維爾，大家好。我五月加入 Farmer Brothers 的原因之一是為未來的成長和獲利能力奠定了基礎。

Speaking from an industry perspective, the last several years have been among the most challenging I've ever seen across the coffee business. Farmer Brothers has participated and have been impacted by those challenges, but the opportunity is apparent. Beneath the hood, significant operational and financial work has been done, which we're now ready to capitalize on as industry conditions become more favorable.

從行業角度來看，過去幾年是我在咖啡業見過的最具挑戰性的幾年。農夫兄弟參與了這些挑戰並受到了影響，但機會是顯而易見的。在幕後，重要的營運和財務工作已經完成，隨著行業條件變得更加有利，我們現在已經準備好利用這些工作。

I want to make some points to amplify and build on Deverl's previous comments. First, our margins are already improving and are set to continue to do so throughout this year. That's not just because we're getting better at pricing, it's also because we're entering a softer coffee market. Toward the end of the past fiscal year, we've seen a notable shift from bullish to bearish in arabicas. Macroeconomic conditions, optimal weather in growing regions and a strong forecasted '23, '24 Arabica harvest in Brazil, are providing downward momentum in arabica prices.

我想提出一些觀點來闡述和發展德維爾之前的評論。首先，我們的利潤率已經在改善，並將在今年繼續改善。這不僅是因為我們在定價方面做得越來越好，還因為我們正在進入一個更軟的咖啡市場。在上一財年末，我們看到阿拉比卡咖啡從看漲轉向看跌的顯著轉變。宏觀經濟條件、種植地區的最佳天氣以及巴西「23」和「24」阿拉比卡咖啡收成的強勁預測，正在為阿拉比卡咖啡價格提供下行動力。

As this trend is forecast to continue, we look to opportunistically participate and further optimize margins going forward. In short, the market we're moving into is one in which Farmer Brothers historically has thrived with our full focus on DSD now, we have visibly improved our performance.

由於預計這一趨勢將持續下去，我們希望抓住機會參與並進一步優化未來的利潤率。簡而言之，我們正在進入的市場是 Farmer Brothers 歷史上蓬勃發展的市場，現在我們完全專注於 DSD，我們的表現得到了明顯的改善。

Second, the changes executed in the DSD business are meaningful. Farmer Brothers has been around a long time, so operational changes sometimes take more work than you would think. They require cultural change, too. It's a way of doing business where we need to maintain the strong relationship-driven approach our brand is known for while increasing discipline and accountability throughout the organization. I feel good about the changes and believe we have an energized and talented team to execute.

其次，DSD業務的改變是有意義的。 Farmer Brothers 已經存在很長時間了，因此營運變更有時需要比您想像的更多的工作。他們也需要文化變革。這是一種開展業務的方式，我們需要保持我們品牌聞名的強大的關係驅動方法，同時加強整個組織的紀律和問責制。我對這些變化感到滿意，並相信我們有一支充滿活力和才華橫溢的團隊來執行。

Finally, our goal is sustainable, profitable growth. We're already better at pricing and getting much more efficient. In addition, as we leverage our revitalized and optimized nationwide network with new products such as Revive, SHOTT and Boyd's ambient liquid coffee, we see exciting sales leverage opportunities, which can enhance cash flows over time. I look forward to speaking with many of you in the near future.

最後，我們的目標是可持續的、獲利的成長。我們在定價方面已經做得更好，效率也更高。此外，當我們利用 Revive、SHOTT 和 Boyd 常溫液體咖啡等新產品來利用我們振興和優化的全國網絡時，我們看到了令人興奮的銷售槓桿機會，隨著時間的推移，這可以增強現金流。我期待在不久的將來與你們中的許多人交談。

And with that, I'll turn it over to Scott. Scott?

有了這個，我會把它交給史考特。史考特？

Thank you, John. I will cover our results for the quarter in the year. As we are in the midst of a transition, we won't be introducing specific guidance today, but our interim CFO, Brad Bollner, will provide some color on how we see the business unfolding this fiscal year.

謝謝你，約翰。我將介紹今年季度的業績。由於我們正處於過渡階段，我們今天不會推出具體指導，但我們的臨時財務長布拉德·博爾納（Brad Bollner）將提供一些關於我們如何看待本財年業務發展的資訊。

Before diving into the performance, I want to remind you we're reporting on a continuing operations basis, reflecting our DSD business. In July, we filed pro forma financial statements to give investors a view of the impacts of the direct shift divestiture on Farmer Brothers Financials.

在深入探討業績之前，我想提醒您，我們正在持續營運的基礎上進行報告，反映我們的 DSD 業務。 7 月，我們提交了備考財務報表，讓投資者了解直接轉移剝離對 Farmer Brothers Financials 的影響。

As a headline comment, what you see in the fourth quarter are the beginnings of positive pricing impacts on sales, improving margins as we gain pricing leverage and good cost containment. Our net sales increased 1% on a year-over-year basis to $85.5 million. The comparison reflects stronger pricing in the fiscal 2023 4th quarter, offset by lower volumes.

作為標題評論，您在第四季度看到的是定價對銷售產生積極影響的開始，隨著我們獲得定價槓桿和良好的成本控制，利潤率不斷提高。我們的淨銷售額年增 1%，達到 8,550 萬美元。這項比較反映出 2023 財年第四季的定價走強，但被銷售量下降所抵銷。

A gross margin of 32.5% was a decrease from 42.6% a year ago, reflecting inflationary impacts and our focus on working down inventory of higher-priced coffee bought in previous quarters. We see this latter impact subsiding, however, as we move through the year.

毛利率為 32.5%，較去年同期的 42.6% 有所下降，反映了通貨膨脹的影響以及我們專注於減少前幾季購買的高價咖啡庫存。然而，隨著時間的推移，我們看到後一種影響正在減弱。

The year ago gross margin is a more normalized margin for DSD, and we fully anticipate returning to those levels. As Deverl highlighted, what you won't see in the fourth quarter gross margin is that we picked up several hundred basis points in the second half of the quarter as we implemented the AI pricing engine. This will be a tailwind for us as we advance.

去年的毛利率對於 DSD 來說是一個更正常化的利潤率，我們完全預期會回到這些水準。正如德維爾所強調的那樣，你在第四季度的毛利率中看不到的是，由於我們實施了人工智慧定價引擎，我們在本季度下半年提高了數百個基點。這將成為我們前進的順風車。

Against the backdrop of high inflation, operating expenses were only up 3%, which was primarily due to higher selling expenses. Overall, general and administrative expenses were down 9% during the quarter as we optimized our cost structure. Our adjusted EBITDA loss in the fourth quarter was $7.2 million against the $7.1 million profit last year. This swing primarily reflects lower gross profit flowing through the P&L.

在高通膨的背景下，營業費用僅增加3%，主要是因為銷售費用增加。總體而言，隨著我們優化成本結構，本季的一般和管理費用下降了 9%。第四季調整後 EBITDA 虧損為 720 萬美元，而去年利潤為 710 萬美元。這種波動主要反映了流經損益表的毛利下降。

Recapping the year quickly, total revenue was $340 million, up 8% on pricing, but somewhat offset by lower volume. Those pricing benefits showed up in mid- to late fourth quarter, Margins were pressured over the year due to an unfavorable price of coffee and inflationary impacts on labor and other costs in our cost of goods sold. We were able to mitigate some of this impact with operating cost reductions, bringing our G&A down by 13%, but adjusted EBITDA for the year moved to a loss of $14.2 million.

快速回顧這一年，總收入為 3.4 億美元，定價成長 8%，但銷量下降有所抵消。這些定價優勢在第四季度中後期顯現出來，由於咖啡價格不利以及通貨膨脹對勞動力和銷售成本中其他成本的影響，全年利潤率受到壓力。我們透過降低營運成本來減輕部分影響，使我們的一般管理費用下降了 13%，但今年調整後的 EBITDA 卻出現了 1,420 萬美元的虧損。

Looking at the balance sheet. We ended the year with $5.2 million in cash and equivalents. Our liquidity position has improved overall, however, as we applied the proceeds from the direct ship sales transaction to reduce our revolving credit facility balance. On June 30, 2023, we had outstanding borrowings under our credit facility of $23 million, utilized $4 million of the letters of credit sublimit under the credited facility and had $35.8 million of availability under our credit facility. We believe we are adequately capitalized to finance our operations in fiscal 2024 as we progress towards our target of positive free cash flow by the end of the fiscal year.

看資產負債表。年底，我們擁有 520 萬美元的現金及等價物。然而，我們的流動性狀況總體有所改善，因為我們利用直接船舶銷售交易的收益來減少我們的循環信貸額度餘額。 2023 年 6 月 30 日，我們的信貸安排下的未償還借款為 2,300 萬美元，已使用信貸安排下的信用證次級限額 400 萬美元，並且我們的信貸安排下有 3,580 萬美元的可用資金。我們相信，隨著我們在本財年末實現正自由現金流的目標，我們有足夠的資本為 2024 財年的營運提供資金。

With that, let me introduce our Interim CFO, Brad Bollner, Brad?

接下來，讓我介紹一下我們的臨時財務長布拉德·博爾納（Brad Bollner），布拉德？

Thanks, Scott, and hello, everyone. I'd also like to express my gratitude to Deverl and Scott for their leadership and echo my excitement about where we're going. To provide some color on how we see the business unfolding in fiscal 2024, we're anticipating flattish sales quarter-over-quarter in the first quarter of 2024 with some gross margin improvement as we benefit from favorable pricing.

謝謝斯科特，大家好。我還要對德維爾和斯科特的領導表示感謝，並表達我對我們前進方向的興奮。為了說明我們對 2024 財年業務發展的看法，我們預計 2024 年第一季的銷售額將與上一季持平，但由於我們受益於有利的定價，毛利率將有所改善。

The bottom line, however, is we will show transitional impacts from 2 factors throughout the year: Our DSD reorganization and the expiration of our co-manufacturing and transition services agreement with TreeHouse. We expect to gain significant production and operating efficiencies resulting from this transition, generating favorable impact to results over the next couple of quarters, with the full advantage starting to appear on a run rate basis as we exit the year. We also expect to see improvement in sales and margin as the year progresses and assuming favorable industry pricing continues we believe we can inflect a free cash flow positive looking several quarters out.

然而，最重要的是，我們將在全年展示來自兩個因素的過渡影響：我們的 DSD 重組以及我們與 TreeHouse 的聯合製造和過渡服務協議的到期。我們預計，這項轉型將帶來顯著的生產和營運效率，對未來幾季的業績產生有利影響，隨著我們今年結束時，在運行率的基礎上開始顯現出全部優勢。我們也預計，隨著今年的進展，銷售額和利潤率將有所改善，並假設有利的行業定價持續下去，我們相信我們可以在未來幾季實現自由現金流的正向成長。

With that, I'll turn it back to Deverl.

有了這個，我會把它轉回德維爾。

Thanks, John and Brad, and thank you, Scott, for your hard work and leadership over the last several years. I note we both remain strong believers in the future of this organization and as shareholders are excited about the opportunities that lie ahead. I'm confident this team can execute and I believe the organization is aligned on what it needs to be done to drive success and create long-term shareholder value. Thank you for your continued support of Farmer Brothers.

感謝約翰和布拉德，感謝斯科特過去幾年的辛勤工作和領導。我注意到我們都仍然堅信組織的未來，並且股東對未來的機會感到興奮。我相信這個團隊能夠執行，我相信該組織在推動成功和創造長期股東價值所需要做的事情上是一致的。感謝您一直以來對農夫兄弟的支持。

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

會議現已結束。感謝您參加今天的演講。現在您可以斷開線路。