(FARM) 2024 Q2 法說會逐字稿

Good afternoon, and welcome to the Farmer Brothers fiscal second quarter 2024 earnings conference call.

下午好，歡迎參加 Farmer Brothers 2024 財年第二季財報電話會議。

(Operator Instructions) As a reminder, this call is being recorded.

（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 Brothers' website at farmerbrothers.com. The shareholder letter is also included as an exhibit on the company's Form 10-Q and is available on its website and the Securities Exchange Commission's website at SEC.gov. A replay of this audio-only webcast will be available on the company's website approximately two hours after the conclusion of this call.

今天早些時候，該公司發布了季度股東信函，可在 Farmer Brothers 網站 farmerbrothers.com 的投資者關係部分查看。股東信函也作為附件包含在公司的 10-Q 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。本次電話會議結束後約兩個小時，將在公司網站上提供此純音訊網路廣播的重播。

Before we begin the call, please note all 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.

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期間發表的有關公司未來預期、計劃和前景的各種言論可能構成聯邦證券安全港條款中的前瞻性陳述。法律法規。

These forward-looking statements represent the company's views as of today and should not be relied upon as representing the company's views as of any subsequent date.

這些前瞻性陳述代表了本公司截至目前為止的觀點，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.

結果可能與這些前瞻性陳述有重大差異。

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

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.

在今天的電話會議上，管理層還將參考某些非公認會計準則財務指標，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。

Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is also included in the company's shareholder letter.

這些非公認會計原則財務指標與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' President and Chief Executive Officer, John Moore.

我現在將把電話轉給 Farmer Brothers 總裁兼執行長約翰·摩爾 (John Moore)。

Mr. Moore, please go ahead.

摩爾先生，請繼續。

Good afternoon, everyone, and thank you for joining us.

大家下午好，感謝您加入我們。

Before we get started, I would like to thank the Board of Directors and the entire Farmer Brothers organization for the appointment to President and Chief Executive Officer.

在我們開始之前，我要感謝董事會和整個 Farmer Brothers 組織任命總裁兼執行長。

It is an honor and privilege to lead such a storied coffee company.

能夠領導這樣傳奇的咖啡公司是一種榮幸。

Today, we are just over six months into the transition from the sale of our direct ship business to a sole focus on direct store delivery.

如今，我們從出售直運業務過渡到只專注於直營店配送業務，僅過了六個月的時間。

We are beginning to see positive momentum on both an operational and financial front.

我們開始在營運和財務方面看到積極的勢頭。

During the first half of fiscal 2024, we made strides in rightsizing our business, becoming more operationally efficient and adjusting our cost structure to support a return to sustainable profitability.

2024 財年上半年，我們在調整業務規模、提高營運效率和調整成本結構以支持恢復可持續獲利能力方面取得了長足進步。

Our second quarter results show some positive trend lines.

我們第二季的業績顯示出一些正面的趨勢線。

While revenue gains were modest on a year over year basis, we saw meaningful improvements with gross margin and adjusted EBITDA.

雖然營收年增幅不大，但我們看到毛利率和調整後 EBITDA 顯著改善。

Boosted by improved pricing and a favorable position on our coffee costs, our gross margin expanded 550 basis points versus the prior year and rose above 40% for the first time in more than a year.

由於定價改善和咖啡成本優勢，我們的毛利率比上年增長了 550 個基點，一年多來首次升至 40% 以上。

Even with the progress we have made on gross margin, we know we still have opportunities to improve this metric going forward.

儘管我們在毛利率方面取得了進步，但我們知道未來仍有機會改善這項指標。

We anticipate additional gross margin upside over time as we have now sold through the majority of our older higher-cost inventory.

我們預計隨著時間的推移，毛利率將會進一步上升，因為我們現在已經售出了大部分舊的高成本庫存。

We believe the company is now positioned to generate sustainable gross margin in excess of 40%.

我們相信該公司目前的毛利率可持續超過 40%。

Similarly, while we are encouraged by our adjusted EBITDA improvement in the second quarter, we know we have opportunities to improve there as well, enhancing our ability to have the right product in the right place at the right time will drive top-line sales to better leverage our cost structure.

同樣，雖然我們對第二季度調整後的 EBITDA 改善感到鼓舞，但我們知道我們也有機會在這方面進行改進，增強我們在正確的時間在正確的地點提供正確產品的能力將推動頂線銷售額更好地利用我們的成本結構。

Significant reduction in SKU counts and brand consolidation will reduce overhead and improve roasting efficiency for better margins.

SKU 數量的大幅減少和品牌整合將減少管理費用並提高烘焙效率，從而獲得更高的利潤。

The impact of these initiatives will only be amplified as we consolidate our roasting operations and reduce complexity in our Portland facility.

當我們鞏固我們的烘焙業務並降低波特蘭工廠的複雜性時，這些措施的影響只會放大。

All of these efforts share a common purpose and goal: improvement in our customer retention and growth.

所有這些努力都有一個共同的目的和目標：提高客戶保留率和成長。

Whether through better execution in every step of our supply chain or focus on brewing equipment and service, we know giving our customers what they need most is the fastest path to success for Farmer Brothers.

無論是透過更好地執行供應鏈的每一步，還是專注於釀造設備和服務，我們知道為客戶提供他們最需要的東西是 Farmer Brothers 成功的最快途徑。

Through what we have internally dubbed Project Symphony, we are also working to improve our customer experience with better processes and technology.

透過我們內部稱為「交響樂專案」的項目，我們也致力於透過更好的流程和技術來改善客戶體驗。

We are enhancing our point-of-sale management tools and have recently launched a new customer relationship management system, reinforcing the theme of customer retention.

我們正在增強我們的銷售點管理工具，並於最近推出了新的客戶關係管理系統，強化了客戶保留的主題。

These advances are critical.

這些進步至關重要。

As we know, simply cutting costs and being more efficient won't be enough to achieve sustainable profitability and free cash flow.

眾所周知，僅僅削減成本和提高效率不足以實現可持續的獲利能力和自由現金流。

Part of our sales growth equation includes adding innovative, on-trend products, and continued product penetration within our existing customer base.

我們的銷售成長方程式的一部分包括增加創新的、流行的產品，以及在現有客戶群中持續的產品滲透。

In summary, we are pleased with the positive momentum we saw during the second quarter and believe our path to positive free cash flow by early fiscal 2025 is firmly in view.

總之，我們對第二季度看到的積極勢頭感到高興，並相信在 2025 財年初實現正自由現金流的道路是堅定的。

With that, I'll turn it over to Brad to discuss our financials in more detail.

這樣，我將把它交給布拉德，更詳細地討論我們的財務狀況。

Brad?

布拉德？

Thanks, John.

謝謝，約翰。

And hello, everyone.

大家好。

As a reminder, results for fiscal '24 and prior year second quarter are reported on a continuing operations basis, reflecting performance of our DSD business in the respective periods.

謹此提醒，24 財年和去年第二季的業績是在持續經營的基礎上報告的，反映了我們 DSD 業務在相應時期的業績。

Please refer to our Form 10-Q, which was filed with the SEC today for further information regarding their respective performance of our discontinued and continuing operations.

請參閱我們今天向 SEC 提交的 10-Q 表格，以了解有關我們已終止和持續營運業務各自績效的更多資訊。

Overall, we are pleased to report a strong fiscal second quarter, highlighted by a meaningful uptick in gross margin and adjusted EBITDA profitability.

總體而言，我們很高興地報告第二季的強勁業績，毛利率和調整後 EBITDA 獲利能力的顯著上升凸顯了這一點。

Net sales for the second quarter of fiscal '24 were $89.5 million, an increase of $600,000 compared to $88.9 million in the prior year period.

2024 財年第二季的淨銷售額為 8,950 萬美元，比去年同期的 8,890 萬美元增加了 60 萬美元。

Net sales were positively impacted by higher pricing but were offset by lower coffee volumes.

淨銷售額受到定價上漲的正面影響，但被咖啡銷售下降所抵銷。

Higher pricing along with favorable commodity costs, enabled expansion of our gross profit margin by 550 basis points on a year-over-year basis to 40.4% compared to 34.9% in the second quarter of fiscal '23.

更高的定價加上有利的商品成本，使我們的毛利率年增 550 個基點，達到 40.4%，而 23 財年第二季的毛利率為 34.9%。

Operating expenses decreased $2.6 million from $34.3 million in the second quarter of fiscal '23 to $31.7 million in the second quarter of fiscal '24.

營運支出從 23 財年第二季的 3,430 萬美元減少到 24 財年第二季的 3,170 萬美元，減少了 260 萬美元。

For this included a $1.1 million increase in G&A costs driven by lower incentive compensation expense in the prior year and a $2.5 million increase in selling expenses driven by increased healthcare expense and the same prior year incentive reduction.

其中包括因上一年激勵補償費用減少而導致的一般管理費用增加 110 萬美元，以及因醫療費用增加和上一年激勵費用減少而導致銷售費用增加 250 萬美元。

Our overall improvement in operating expense was driven by a $6.2 million increase in net gains from the sale of branch properties and other assets during the quarter.

本季出售分行物業和其他資產的淨收益增加了 620 萬美元，推動了我們營運費用的整體改善。

Net income from continuing operations moved from a loss of $8.7 million during the prior year period to a gain of $2.7 million in the second quarter of fiscal '24, an improvement of $11.4 million.

持續經營業務的淨利潤從去年同期的虧損 870 萬美元轉為 2024 財年第二季的獲利 270 萬美元，增加了 1,140 萬美元。

Our capital expenditures for the quarter were $3.3 million compared to $4.7 million in the prior year period.

我們本季的資本支出為 330 萬美元，而去年同期為 470 萬美元。

In fiscal '24, we anticipate between $12 million and $15 million in capital expense.

在 24 財年，我們預計資本支出將在 1,200 萬至 1,500 萬美元之間。

We expect to finance these expenditures through cash flow from operations and borrowings under our credit facility.

我們預計透過營運現金流和信貸額度下的借款來為這些支出提供資金。

Adjusted EBITDA for the quarter was $2.3 million, an increase of $4.5 million compared to a net loss of $2.2 million in the same period a year ago.

該季度調整後 EBITDA 為 230 萬美元，比去年同期淨虧損 220 萬美元增加了 450 萬美元。

This is a significant swing which highlights the work we have done to right size the business to support healthy DSD growth.

這是一個重大轉變，突顯了我們為調整業務規模以支持 DSD 健康成長所做的工作。

Turning to the balance sheet.

轉向資產負債表。

As of December 31, 2023, we had $6.9 million of unrestricted cash and cash equivalents.

截至 2023 年 12 月 31 日，我們擁有 690 萬美元的不受限制的現金和現金等價物。

We had outstanding borrowings of $23.3 million utilized $4.6 million of the letters of credit sublimit and had $24.5 million of availability under our credit facility.

我們有 2,330 萬美元的未償還借款，使用了 460 萬美元的信用證次級限額，並且我們的信貸安排下有 2,450 萬美元的可用資金。

We believe we are adequately capitalized to finance operations in fiscal '24 and expect to achieve our goal to be free cash flow positive by early fiscal '25.

我們相信，我們有足夠的資本為 24 財年的營運提供資金，並預計在 25 財年初期實現自由現金流為正的目標。

In closing, I'll reiterate what John has said: while we recognize progress may not be linear on a quarter over quarter basis, we are feeling increasingly confident about the path we are on as we strive to generate sustainable top-line growth and profitability.

最後，我將重申約翰所說的話：雖然我們認識到季度與季度之間的進展可能不是線性的，但隨著我們努力實現可持續的營收成長和獲利能力，我們對我們所走的道路越來越有信心。

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

這樣，我會把它轉回給約翰。

John?

約翰？

Thanks, Brad.

謝謝，布拉德。

Six months into our pivoting of the business to focus solely on DSD, we are proud of the foundational work we have done to position the company for long-term growth.

在我們將業務重點轉向 DSD 六個月後，我們為我們為公司實現長期成長所做的基礎工作感到自豪。

While Farmer Brothers has always remained an industry leader in terms of size, service, and product offerings, we needed a fresh look across the board from product lineup to operational structure to production systems.

雖然 Farmer Brothers 在規模、服務和產品供應方面始終保持行業領先地位，但我們需要從產品陣容到營運結構再到生產系統全面煥然一新。

We've been able to make meaningful strides in all of these fronts in a short period of time.

我們已經能夠在短時間內在所有這些方面取得有意義的進展。

But we know there's still work to be done.

但我們知道仍有工作要做。

During the second half of fiscal 2024, we will continue to focus on further improvements as we improve our cost structure and drive incremental margin improvement, drive customer growth and retention, increased market penetration for new on-trend products, and complete the transitional services associated with our direct ship sales.

在 2024 財年下半年，我們將繼續專注於進一步改進，改善成本結構，推動增量利潤改善，推動客戶成長和保留，提高新流行產品的市場滲透率，並完成相關的過渡服務透過我們的直接船舶銷售。

I want to take a moment to thank our entire Farmer Brothers team for their continued dedication and commitment to the company as we move through this transition.

我想花點時間感謝我們整個 Farmer Brothers 團隊在我們經歷這段過渡期間對公司的持續奉獻和承諾。

Our improvements to date would not have been possible without their hard work.

如果沒有他們的辛勤工作，我們迄今為止的進步是不可能實現的。

Thank you also to all of you for joining this call and for your continued support of Farmer Brothers.

也感謝大家參加本次電話會議以及對農夫兄弟的持續支持。

We look forward to keeping you posted on our progress.

我們期待向您通報我們的進展。

We will now open it up for questions.

我們現在將開放提問。

Thank you.

謝謝。

We will now begin the question-and-answer session.

我們現在開始問答環節。

(Operator Instructions) Gerry Sweeney, Roth.

（操作員說明）Gerry Sweeney，Roth。

Good afternoon.

午安.

Thanks for taking my questions.

感謝您回答我的問題。

Pleasure

樂趣

(multiple speakers)

（多個發言者）

Thanks, Gerry.

謝謝，格里。

You discussed a little bit -- like as you mentioned, obviously, revenue was up modestly, but you also talked about volumes down slightly.

您討論了一點——就像您提到的那樣，顯然，收入略有增長，但您也談到了銷量略有下降。

I'm just curious how customer retention is going and maybe -- if you can discuss maybe utilization of DSD assets and how that's going to move forward?

我只是好奇客戶保留情況如何——您是否可以討論一下 DSD 資產的利用情況以及這將如何向前發展？

Sure, Gerry.

當然，格里。

I can start that off and I'm sure Brad can add a little bit more color to that one.

我可以從這個開始，我相信布拉德可以為這個添加更多的色彩。

We've been very deliberate in how we approach this issue.

我們在如何處理這個問題上經過了深思熟慮。

We spent a lot of time in the field first and foremost, learning from the boots on the ground, so to speak, where they see the issues.

我們首先在現場花了很多時間，從實地的靴子那裡學習，可以說，從他們看到問題的地方學習。

And then we coupled that with the utilization of our AI technology -- the same one that we've utilized successfully to help us through the pricing issues that we've been working through over the last year.

然後我們將其與我們的人工智慧技術的利用相結合——我們已經成功地利用了同樣的技術來幫助我們解決去年我們一直在解決的定價問題。

And it's interesting in that the resounding messages came out exactly the same.

有趣的是，響亮的訊息完全相同。

So we came out of that process with a crystal-clear idea of where the opportunities are in the DSD service side.

因此，我們在完成流程後，對 DSD 服務的機會所在有了清楚的認識。

And since then, we've actually acted very quickly to address what those challenges might be.

從那時起，我們實際上很快就採取了行動來應對這些挑戰。

And it ultimately boils down to the idea that the value proposition is simple, but it's not very easy.

最終歸結為這樣一個想法：價值主張很簡單，但並不容易。

You show up at the right place at the right time with the right products at the right price consistently, and you have a winning value proposition.

您在正確的時間出現在正確的地點，始終以正確的價格提供正確的產品，並且您擁有獲勝的價值主張。

And what we're doing right now is shoring up all of the systems on the back end to better equip the field to serve the customers going forward.

我們現在正在做的是支撐後端的所有系統，以更好地裝備該領域，為未來的客戶提供服務。

We do see that we're leveling off on our customer rates.

我們確實看到我們的客戶價格正在趨於平穩。

We're seeing a positive trend line there.

我們在那裡看到了一條正面的趨勢線。

And going forward, that should have an amplifying effect as some of the other initiatives like the gross margin increase, the improvement in OpEx get realized then at greater scale.

展望未來，隨著其他一些措施（例如毛利率的提高、營運支出的改善）在更大範圍內實現，這應該會產生放大效應。

Yeah, I can add a little color (multiple speakers) No worries.

是的，我可以添加一點顏色（多個揚聲器），不用擔心。

So we -- as we took a look at what was driving this customer retention issue, we've seen, it's been really gratifying to see that what our frozen the field state is corroborated by data.

因此，當我們研究導致客戶保留問題的原因時，我們發現，看到我們凍結的現場狀態得到了數據的證實，我們感到非常高興。

John would say data corroborates them; I would say they corroborate data, but we came into the middle there.

約翰會說數據證實了他們的觀點；我想說他們證實了數據，但我們處於中間位置。

The benefit is that coming out of it, we have seen that our price increases we have taken have not really been predictive of losing customers.

這樣做的好處是，我們發現我們所採取的漲價並沒有真正預示著會失去客戶。

So we know that we can turn our focus to what John stated: having the right product at the right place at the right time.

因此，我們知道我們可以將重點轉向約翰所說的：在正確的時間、正確的地點提供正確的產品。

Got it.

知道了。

And -- sorry, John, when you talked about leveling off with customers, do you mean leveling off as in -- some of the customer churn was leveling off and you're maybe accelerating the opposite direction?

而且 - 抱歉，約翰，當您談到與客戶保持穩定時，您的意思是指某些客戶流失正在趨於穩定，而您可能正在加速相反的方向嗎？

I just wanted to get some clarity on that.

我只是想弄清楚這一點。

That's exactly right, Jerry.

完全正確，傑瑞。

So what we've been seeing is we had some churn in the past that rate is slowing down and slowing down substantively.

所以我們看到的是，我們過去有過一些流失，速度正在放緩，而且正在大幅放緩。

We see it leveling off.

我們看到它趨於平穩。

And we also see that coupled with the fact our sales team is beginning to get their feet under them.

我們也看到，加上我們的銷售團隊開始站穩腳步的事實。

Let's keep in mind that new sales infrastructure has been in place now for about six months or so.

讓我們記住，新的銷售基礎設施已經到位大約六個月左右。

We are seeing some positive signs there in that the business being added is actually exceeding expectations on a contribution standpoint.

我們看到了一些正面的跡象，從貢獻的角度來看，所增加的業務實際上超出了預期。

So we're seeing some positive signs of that leveling off and then turning around.

因此，我們看到了一些積極的跡象，表明這種情況趨於平穩然後出現逆轉。

Okay. is it fair to say of sales process is in place, infrastructure in place, that's driving this leveling off in the re-acceleration of customer volume growth?

好的。可以公平地說，銷售流程已經到位，基礎設施已經到位，這推動了客戶數量重新加速成長的趨於平穩？

I'd say that's fair to say.

我想說這是公平的。

Got it.

知道了。

Talked about, I think, SKU rationalization -- my understanding from the last call was, that was probably later this year after the TreeHouse service agreement runs off.

我認為談到了 SKU 合理化——我對上次通話的理解是，那可能是在今年稍後 TreeHouse 服務協議到期之後。

Is that still a fair thought process or will you be able to do that sooner?

這仍然是一個公平的思考過程嗎？或者你能更快做到這一點嗎？

Actually, we're seeing some positive signs there as well.

事實上，我們也看到了一些正面的跡象。

We've defined exactly which SKUs we are rolling forward with.

我們已經準確地定義了我們要推出的 SKU。

As we have mentioned in a previous session, this will be the first time in the company's history that all of these brands are represented throughout the estate nationwide.

正如我們在上一次會議中提到的，這將是公司歷史上第一次所有這些品牌在全國範圍內都有代表。

We've never really had that before as we grew through acquisition in the past.

我們以前從未真正經歷過這種情況，因為我們過去是透過收購來成長的。

So that streamlining should give us quite a bit of efficiency going forward.

因此，這種精簡應該會為我們帶來相當大的效率。

And we actually just executed training sessions with the entire state of our branch network over the last two weeks rolling out in two of the three tiers, what that mix will look like.

實際上，我們剛剛在過去兩週內對我們的分支機構網絡的整個狀態進行了培訓課程，在三層中的兩層中推出，這種組合會是什麼樣子。

And we've started production of the new SKU sets.

我們已經開始生產新的 SKU 套裝。

So that represents a reduction of about 60% of the overall SKU count and what we're referring to as the traditional and premium tiers.

因此，這意味著整體 SKU 數量以及我們所說的傳統層和高端層減少了約 60%。

Got it.

知道了。

One more question for me.

還有一個問題想問我。

Because I know we do have a follow-up -- just the inventories, I think running at $55.5 million.

因為我知道我們確實有後續行動——只是庫存，我認為其價格為 5550 萬美元。

Just curious as to maybe where that could go past -- once you get past the SKU rationalization, TreeHouse service agreement runs off.

只是好奇這可能會過去——一旦你通過了 SKU 合理化，TreeHouse 服務協議就會終止。

Is there an opportunity to maybe to unlock a little bit more cash from working capital on the inventory side?

是否有機會從庫存方面的營運資金中釋放更多現金？

Yeah, I'll take that one.

是的，我會接受那個。

So TBD on amount, Gerry, just because at this point, we're still unwinding some of the TreeHouse interactions.

所以，Gerry，關於數量的待定，只是因為此時我們仍在解除一些 TreeHouse 交互。

So inventory is a bit clouded through that lens, but (multiple speakers) it's easy to understand that as we minimize SKUs, we don't need to carry as much amount.

因此，從這個角度來看，庫存有點模糊，但（多個發言者）很容易理解，當我們最大限度地減少 SKU 時，我們不需要攜帶那麼多數量。

Yeah.

是的。

Okay.

好的。

That's fair.

這還算公平。

I appreciate it.

我很感激。

Thanks, guys.

多謝你們。

Thanks, Gerry.

謝謝，格里。

(Operator Instructions) And ladies and gentlemen, this concludes your question-and-answer session.

（操作員說明）女士們、先生們，問答環節到此結束。

I'd like to turn the conference back over to John Moore for closing remarks.

我想將會議轉回約翰·摩爾致閉幕詞。

Well, everyone, we certainly appreciate you joining us today.

好的，各位，我們非常感謝您今天加入我們。

We'll have a lot more to report over the months ahead and look forward to speaking with you again next quarter.

未來幾個月我們將有更多報告要報告，並期待下個季度再次與您交談。

Thank you.

謝謝。

This concludes today's conference call.

今天的電話會議到此結束。

We thank you all for attending today's presentation.

我們感謝大家參加今天的演講。

You may now disconnect your lines and have a wonderful day.

您現在可以斷開線路並度過美好的一天。