Farmer Bros Co (FARM) 2024 Q4 法說會逐字稿

Good afternoon, and welcome to the Farmer Brothers fiscal fourth quarter and full year 2024 earnings conference call. (Operator Instructions) As a reminder, this call is being recorded. Earlier today, the company filed its Form 10-K and issued its fourth quarter and full year earnings results press release, which is available on the Investor Relations section of Farmer Brothers' website at farmerbrothers.com.

下午好，歡迎參加 Farmer Brothers 第四季和 2024 年全年收益電話會議。 （操作員說明）謹此提醒，此通話正在錄音。今天早些時候，該公司提交了 10-K 表格，並發布了第四季度和全年盈利結果新聞稿，該新聞稿可在 Farmer Brothers 網站 farmerbrothers.com 的投資者關係部分獲取。

The release is also included as an exhibit on the company's Form 10-K and is available on its website and the Securities and Exchange Commission's website at sec.gov. A replay of this audio-only webcast will also be available on the company's website approximately two hours after the conclusion of this call.

該新聞稿也作為附件包含在該公司的 10-K 表格中，並可在其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小時後，也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 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 the 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，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出於安全港目的的前瞻性陳述聯邦證券法律和法規的規定。

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. Results could differ materially from those forward-looking statements and 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 release and public filings.

這些前瞻性陳述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。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有重大差異的因素的其他資訊可在本公司的新聞稿和公開文件中找到。

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 release and SEC filings.

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 GAAP 財務指標與其最直接可比較的 GAAP 指標的對帳也包含在本公司的新聞稿和 SEC 備案中。

I will now turn the call over to Farmer Brothers' President and Chief Executive Officer, John Moore. Mr. Moore, please go ahead.

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

Good afternoon, everyone, and thank you for joining us. Before we jump into our operational and financial discussion, I would like to take a moment to officially welcome our new Chief Financial Officer, Vance Fisher, who is joining our call for the first time. Vance, whom you will hear from in just a bit joined Farmer Brothers in June and has quickly been getting up to speed on our operations and DSD transformation efforts. He brings more than 25 years of financial leadership experience and a proven track record of helping organizations grow revenue and profitability. We're incredibly excited to have them on our leadership team.

大家下午好，感謝您加入我們。在我們開始營運和財務討論之前，我想花一點時間正式歡迎我們的新財務長 Vance Fisher 首次加入我們的電話會議。 Vance 於 6 月加入 Farmer Brothers，稍後您將聽到他的消息，他很快就加快了我們的營運和 DSD 轉型工作的步伐。他擁有超過 25 年的財務領導經驗以及幫助組織增加收入和盈利能力的良好記錄。我們非常高興他們加入我們的領導團隊。

This past year has been a truly transformative one for Farmer Brothers. As you know, we completed the sale of our direct ship business to TreeHouse Foods just prior to the start of fiscal 2024 as we made the decision to focus on our more profitable DSD business. Over the last 12 months, we've been focused on optimizing our value chain, driving operational efficiency, and enhancing our technology capabilities to drive better overall customer service.

過去的一年對農夫兄弟來說是真正改變的一年。如您所知，我們在 2024 財年開始之前完成了將直運業務出售給 TreeHouse Foods，因為我們決定專注於利潤更高的 DSD 業務。在過去 12 個月中，我們一直致力於優化價值鏈、提高營運效率並增強我們的技術能力，以推動更好的整體客戶服務。

During this time, we completed our co-manufacturing agreement with TreeHouse, centralized our roasting and production efforts to our Portland, Oregon facility, and optimize our overall physical footprint to drive both cost savings and improvements to our customer service capabilities. This included the move of our headquarters and exit of Dallas-Fort Worth distribution center during the fourth quarter which allowed us to optimize our distribution network without eliminating routes. We expect these strategic adjustments to deliver meaningful savings in fiscal 2025.

在此期間，我們完成了與TreeHouse 的聯合製造協議，將我們的烘焙和生產工作集中到俄勒岡州波特蘭工廠，並優化我們的整體物理佔地面積，以節省成本並提高我們的客戶服務能力。這包括第四季度我們總部的搬遷和達拉斯-沃斯堡配送中心的退出，這使我們能夠在不取消路線的情況下優化我們的配送網路。我們預計這些策略調整將在 2025 財年實現有意義的節省。

From an operational standpoint, we have built a stronger foundation for growth over the past year. We implemented a new structure within our sales organization, took important steps to address our out-of-stock capabilities, and began a transformative SKU rationalization and brand pyramid initiative to ensure we have the right products in the right place at the right time and at the right value proposition to meet our customers' needs no matter how unique our vast they may be.

從營運角度來看，過去一年我們為成長奠定了更堅實的基礎。我們在銷售組織內實施了新的結構，採取了重要步驟來解決我們的缺貨問題，並開始了變革性的SKU 合理化和品牌金字塔計劃，以確保我們在正確的時間、正確的地點擁有正確的產品。

Overall, our focus on DSD has given us a stronger and more flexible foundation for future growth and has better positioned us to protect margins through market fluctuations, including the record recent highs we have seen in coffee pricing. Furthermore, the value proposition offered within each of the traditional premium and specialty coffee tiers within our brand pyramid will allow us to give customers options to participate at the price structure that works best for them on a nationwide scale.

總體而言，我們對DSD 的關注為我們未來的成長奠定了更強大、更靈活的基礎，並使我們能夠更好地在市場波動中保護利潤，包括我們在咖啡定價中看到的近期創紀錄的高點。此外，我們品牌金字塔內每個傳統優質和精品咖啡等級提供的價值主張將使我們能夠為客戶提供在全國範圍內以最適合他們的價格結構參與的選擇。

While we are proud of the significant progress we've made change of this magnitude takes time. Over the last year, we have gained greater visibility into what is working and identified additional areas where we can make further adjustments as highlighted in our fourth quarter results. This includes further enhancing our operational capability, continuing to rightsize our overall cost structure, and aggressively focusing on customer growth and retention efforts as we look to drive greater performance across the organization.

雖然我們為所取得的重大進展感到自豪，但如此大規模的改變需要時間。在過去的一年裡，我們對正在發揮作用的方面有了更深入的了解，並確定了我們可以進行進一步調整的其他領域，正如我們在第四季度業績中所強調的那樣。這包括進一步增強我們的營運能力，繼續調整我們的整體成本結構，並積極關注客戶成長和保留工作，因為我們希望在整個組織中推動更高的績效。

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

接下來，我將把它交給萬斯，更詳細地討論我們的財務狀況。

Vance?

萬斯？

Thanks, John, and hello, everyone. It's a pleasure to be here, and I appreciate the opportunity to speak with you all today. This is an exciting time to have joined the company. I have a real passion for helping companies grow and grow in a profitable and sustainable way. And I saw that opportunity here at Farmer Brothers. Since joining the company in June, I've been immersing myself in getting up to speed with the business operations and gaining a better understanding of the challenges and opportunities that lie ahead.

謝謝約翰，大家好。很高興來到這裡，我很高興有機會今天與大家交談。這是加入公司的令人興奮的時刻。我非常熱衷於幫助公司以盈利和可持續的方式成長和發展。我在農夫兄弟看到了這個機會。自六月加入公司以來，我一直致力於加快業務運營，更了解未來的挑戰和機會。

I've also been assessing how I can best support the organization and help drive significant value creation for our shareholders. I'm encouraged by what I've seen in my first 90 days, and I'm excited about partnering with John and the rest of the leadership team, and team members on this journey to put Farmer Brothers on a winning path.

我還一直在評估如何才能最好地支持該組織並幫助推動為股東創造重大價值。我對前 90 天所見所聞感到鼓舞，並且很高興能與 John 和領導團隊的其他成員以及團隊成員合作，讓 Farmer Brothers 走上勝利之路。

With that, I'll turn to our fourth quarter and full year fiscal '24 financial results. A quick reminder, these results in the prior year are reported on a continuing operations basis, reflecting our performance of our DSD business in the respective periods. Please refer to our Form 10-K which was filed with the SEC today for further information regarding the respective performance of our discontinued and continuing operations.

接下來，我將談談我們 24 年第四季和全年的財務表現。快速提醒一下，過去一年的這些結果是在持續經營的基礎上報告的，反映了我們在各個時期 DSD 業務的表現。請參閱今天向 SEC 提交的 10-K 表格，以了解有關我們已終止和持續運營業務各自業績的更多資訊。

Our results for both the fourth quarter and fiscal year reflect the progress which has been made in optimizing our operations and capturing efficiencies, as John mentioned. However, they also reflect areas we will continue to focus on as we work to drive renewed sustainable growth and profitability going forward.

正如約翰所提到的，我們第四季和財年的業績反映了我們在優化營運和提高效率方面取得的進展。然而，它們也反映了我們在努力推動未來新的永續成長和獲利能力時將繼續關注的領域。

Net sales for the fourth quarter of fiscal '24 decreased slightly by 1% compared to the prior year to $84.4 million. The decrease was driven by a decline in sales volume. For our full fiscal year '24, we achieved net sales of $341.1 million, which was a $1.1 million increase compared to $340 million in fiscal '23. This increase was primarily due to stronger pricing, partially offset by a decline in sales volume.

2024 財年第四季的淨銷售額與去年同期相比略有下降 1%，至 8,440 萬美元。這一下降是由於銷量下降所致。在 24 財年的整個財年，我們實現了 3.411 億美元的淨銷售額，比 23 財年的 3.4 億美元增加了 110 萬美元。這一增長主要是由於定價走強，但銷售下降部分抵消了這一增長。

During the fourth quarter, gross margins increased to 38.8%, a 630 basis points improvement compared to the prior year period of 32.5%. Gross profit for the quarter was $32.8 million, which was a $5 million improvement compared to $27.8 million in the fourth quarter of fiscal '23. Gross margins for the full fiscal year increased 560 basis points to 39.3% compared to 33.7% in fiscal '23. Gross profit during the year increased $19.3 million or 17% to $133.9 million compared to $114.6 million in fiscal '23. This increase in gross margin was primarily due to our pricing optimization efforts during the year.

第四季毛利率增至38.8%，比去年同期的32.5%提高了630個基點。該季度的毛利為 3,280 萬美元，比 23 財年第四季的 2,780 萬美元增加了 500 萬美元。整個財年的毛利率成長了 560 個基點，達到 39.3%，而 23 財年的毛利率為 33.7%。與 23 財年的 1.146 億美元相比，這一年的毛利增加了 1,930 萬美元，即 17%，達到 1.339 億美元。毛利率的成長主要歸功於我們今年的定價優化工作。

Operating expenses decreased by $1 million in the fourth quarter compared to the prior year period due to a $3.6 million increase in gains related to the sale of branch properties and other assets, and a $700,000 decrease in general and administrative expenses, but was mostly offset by a $3.3 million increase in selling expenses. The increase in selling expenses during the quarter was primarily driven by additional costs related to facility rent and health care benefits. The decrease in G&A was primarily a result of a decrease in personnel costs.

與去年同期相比，第四季度營運費用減少了 100 萬美元，原因是與出售分公司財產和其他資產相關的收益增加了 360 萬美元，一般和管理費用減少了 70 萬美元，但大部分被銷售費用增加330 萬美元。本季銷售費用的增加主要是由與設施租金和醫療保健福利相關的額外成本所推動的。一般行政費用的減少主要是因為人員成本的減少。

For the full fiscal year, operating expenses increased by $600,000 compared to fiscal '23. This was a result of an $8.2 million increase in selling expenses and a $4.1 million increase in G&A expenses, which was mostly offset by $11.7 million increase in gains related to the sale of branch properties and other assets. The increase in selling expenses during the year was primarily driven by additional costs related to facility rent and health care benefits. The increase in G&A was primarily a result of an increase in severance costs and other personnel related costs and facilities rent.

整個財年，營運費用比 23 財年增加了 60 萬美元。這是由於銷售費用增加了 820 萬美元，一般管理費用增加了 410 萬美元，但大部分被與銷售分公司財產和其他資產相關的收益增加 1,170 萬美元所抵消。本年度銷售費用的增加主要是由於與設施租金和醫療保健福利相關的額外成本。一般行政費用的增加主要是由於遣散費以及其他人員相關成本和設施租金的增加。

Our net loss from continuing operations moved to a loss of $4.6 million for the fourth quarter compared to a loss of $16.9 million last year. For the full fiscal year, net loss improved to $3.9 million compared to a loss of $34 million during the prior year period, an improvement of more than $30.1 million on a year over year basis. In addition, our adjusted EBITDA loss for the quarter improved by $5.6 million to a loss of $1.6 million. For the full fiscal year, adjusted EBITDA was positive at $558,000 compared to a $14.2 million loss in fiscal '23, and almost $15 million improvement.

第四季持續經營業務淨虧損為 460 萬美元，去年為 1,690 萬美元。整個財年，淨虧損從上年同期的虧損 3,400 萬美元改善至 390 萬美元，較去年同期改善超過 3,010 萬美元。此外，本季調整後的 EBITDA 虧損減少了 560 萬美元，達到虧損 160 萬美元。整個財年，調整後的 EBITDA 為正，達到 558,000 美元，而 23 財年虧損 1,420 萬美元，改善了近 1,500 萬美元。

Looking at the balance sheet as of June 30, 2024, we had $5.8 million of unrestricted cash and cash equivalents and $23.3 million in outstanding borrowings under our revolving credit facility, with $27.8 million of additional borrowing capacity. We believe we are adequately capitalized to finance our operations in fiscal '25 as we progress towards our targeted positive free cash flow. The significant gross margin and adjusted EBITDA improvements, we have achieved over the past year underscore our confidence that we are building a strong foundation to support long-term value creation.

截至 2024 年 6 月 30 日的資產負債表顯示，我們的循環信貸安排下擁有 580 萬美元的無限制現金和現金等價物以及 2,330 萬美元的未償還借款，還有 2,780 萬美元的額外借款能力。我們相信，隨著我們朝著積極的自由現金流目標邁進，我們有足夠的資本為 25 財年的營運提供資金。我們在過去一年中取得的顯著毛利率和調整後 EBITDA 的改善突顯了我們的信心，即我們正在為支持長期價值創造奠定堅實的基礎。

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

這樣，我會把它轉回給約翰。約翰？

Thanks, Vance. As you have heard, we were able to make significant progress toward enhancing our operations in fiscal 2024 by upgrading our technology, improving our out-of-stock capabilities, reducing SKU redundancies, and realigning our cost structure. While these efforts are already bearing fruit, as is evident in our gross margin and adjusted EBITDA results, we believe there is considerable opportunity to further drive growth and create value as we continue to optimize processes, streamline production, and take full advantage of our industry-leading nationwide DSD network.

謝謝，萬斯。正如您所聽說的，透過升級技術、提高缺貨能力、減少 SKU 冗餘以及重新調整成本結構，我們在 2024 財年增強營運方面取得了重大進展。雖然這些努力已經取得成果，正如我們的毛利率和調整後EBITDA 結果所表明的那樣，但我們相信，隨著我們繼續優化流程、簡化生產並充分利用我們的行業，還有大量機會進一步推動成長並創造價值-領先的全國DSD網路。

Overall, we remain focused on driving top line growth by providing high-quality coffee and on-trend products to meet current customer demands. These efforts will help drive product penetration within our existing customer base while also attracting new profitable customers to Farmer Brothers. Furthermore, the recent launch of Farmer Brothers and Boyd's rebrand and the upcoming launch of our specialty tier coffee brand later this calendar year, clearly identifies and defines our value proposition and allows us to meet potential customers wherever they may be.

總體而言，我們仍然專注於透過提供高品質咖啡和流行產品來滿足當前客戶的需求，從而推動收入成長。這些努力將有助於推動產品在我們現有客戶群中的滲透，同時也為 Farmer Brothers 吸引新的獲利客戶。此外，最近推出的Farmer Brothers 和Boyd's 品牌重塑以及即將在今年稍後推出的精品咖啡品牌，清楚地識別和定義了我們的價值主張，並使我們能夠滿足潛在客戶，無論他們身在何處。

We believe there are early indications in the initiatives and actions we have taken over the past year are having a positive impact. We anticipate improved gross margin and net profitability over the quarters ahead. We are, however, working to manage future headwinds given commodity markets and other macro factors that could impact our financial performance.

我們相信，初步跡象表明我們過去一年採取的措施和行動正在產生積極影響。我們預計未來幾季的毛利率和淨利潤將有所改善。然而，考慮到大宗商品市場和其他可能影響我們財務表現的宏觀因素，我們正在努力應對未來的不利因素。

Before we open it up for questions, I would like to take a moment to thank our teams across the company. Making large-scale change in any organization is challenging, and this is especially true for more than century old industry leaders such as Farmer Brothers. I'm very proud of the strength and resiliency of our teams in response to our new initiatives. And we would not be where we are today without their hard work and continued dedication, so thank you.

在我們開始提問之前，我想花點時間感謝我們整個公司的團隊。在任何組織中進行大規模變革都是具有挑戰性的，對於 Farmer Brothers 等擁有百年歷史的行業領導者來說尤其如此。我對我們團隊應對新措施的實力和彈性感到非常自豪。如果沒有他們的辛勤工作和持續奉獻，我們就不會取得今天的成績，所以謝謝你們。

With that I want to thank you all for joining us on the call today. Operator, we will now open it up for questions.

在此，我要感謝大家今天加入我們的電話會議。接線員，我們現在開始提問。

(Operator Instructions)

（操作員說明）

Eric Des Lauriers, Craig-Hallum Group.

艾瑞克‧德斯‧勞裡爾斯 (Eric Des Lauriers)，克雷格‧哈勒姆集團 (Craig-Hallum Group)。

Great thank you for taking my questions. First one for me. Just looking for an update on your fulfillment rates. I know you saw significant improvements there in the first three quarters of the year. I think last quarter you said you're kind of early to mid innings and those improvements. How did fulfillment rates trend in Q4 and perhaps in the most sense?

非常感謝您回答我的問題。對我來說第一個。只是尋找有關您的履行率的最新資訊。我知道今年前三個季度你們看到了顯著的進步。我想上個季度你說過你在早期到中期的比賽中取得了一些進步。第四季的履行率趨勢如何？

Hello, how are you seeing greater? Great to have you. Thank you for joining the call. I think what you're seeing is that we're continuing on the trend that you had noted in the first part of the fiscal year last year. There was general improvement in the fulfillment rates. We're definitely seeing that that we have early on identified an appropriate reason for some of the degradation and attrition that we were facing. It was specifically ranked according to our time in the field, and then reinforced by the data and the analytics that we had done. It was linked specifically to those fulfillment rates, not only in roasted finished goods and allied products, but also in the equipment side, right? And we've spoken to that in the past.

你好，請問你怎麼看到更大的？很高興有你。感謝您加入通話。我認為您所看到的是，我們正在繼續您在去年財年上半年所注意到的趨勢。履約率普遍提高。我們確實看到，我們很早就確定了我們所面臨的一些退化和消耗的適當原因。它根據我們在該領域的時間進行了專門排名，然後透過我們所做的數據和分析進行了強化。它與這些履行率特別相關，不僅在烘焙成品和相關產品中，而且在設備方面，對嗎？我們過去已經談過這一點。

I'm very happy to say that we've made tremendous progress in that over the course of the last year. And at the moment, we are running at almost, I would say, a completely resolved state. So that meaning we now have identified pretty much demand planning to the extent we feel we need to be accurate in extending those finished good product deliveries all the way from roasting manufacturing sourcing through to the distribution centers through to the 80 plus branches in the network, and then out ultimately to the routes and the customers.

我很高興地說，去年我們在這方面取得了巨大進展。目前，我想說，我們幾乎處於完全解決的狀態。因此，這意味著我們現在已經確定了相當多的需求計劃，我們認為我們需要準確地擴展這些成品交付，從烘焙製造採購到配送中心，再到網路中的 80 多個分支機構，然後最終到達路線和客戶。

And at the same time, we've achieved that with the finished goods inventory. We're also seeing that measures that we've taken on the equipment side have been extremely effective. So we did redeploy some resources. We made sure that we had equipment inventory at the branch level ready to deploy out to the field to accelerate our speed to market and that again has been very successful. So I'm very happy to report that we've made tremendous progress on both fronts.

同時，我們透過成品庫存實現了這一目標。我們也看到，我們在設備方面採取的措施非常有效。所以我們確實重新部署了一些資源。我們確保分公司層級的設備庫存準備好部署到現場，以加快我們的上市速度，這再次非常成功。因此，我很高興地向大家報告，我們在這兩方面都取得了巨大進展。

Yeah, it's great news and great to hear. In terms of your brand pyramid. I know you were sort of partially completed in that and that sort of overhaul, could you just provide an update there on maybe where you are now and perhaps what remains to sort of complete that transition?

是的，這是個好消息，很高興聽到。就您的品牌金字塔而言。我知道您已經部分完成了那種徹底的改革，您能否提供一個最新信息，說明您現在所處的位置以及完成該過渡還需要做什麼？

Sure. That's a great question. And again, very happy to report. We're on schedule. We've completed the Farmer Brothers and Boyd's rebrand efforts. Both of those SKU sets have been transitioned almost completely. And as with any transition, you always have a tail with some finished goods inventory associated with now somewhat obsolete excuse us.

當然。這是一個很好的問題。再次非常高興地報告。我們按計劃進行。我們已經完成了 Farmer Brothers 和 Boyd 的品牌重塑工作。這兩個 SKU 集幾乎已完全轉換。與任何過渡一樣，您總是會留下一些與現在有些過時相關的成品庫存，請原諒。

But happy to report again, that transition is pretty much on schedule. Even the last remaining skews that are left over from the transition period are now being worked through and we really don't see a need to have any kind of reserve activity or other concerns about working through that inventory over the next couple of months.

但很高興再次報告，這種轉變基本上是按計劃進行的。即使是過渡期遺留下來的最後剩餘偏差現在也正在解決中，我們確實認為沒有必要進行任何形式的儲備活動或對未來幾個月處理庫存的其他擔憂。

So on the Farmer Brothers side, in the traditional tier as we've identified it, we see pretty much completion and adoption of the new SKU sets. We see that having been distributed all the way through the network to the right level. When we talk about the Boyds skews it, similarly, we see a successful transition from the other products that we were selling into the Boyds brand, that again has been successfully distributed down to the route level.

因此，在 Farmer Brothers 方面，在我們所確定的傳統層級中，我們看到新 SKU 集的完成和採用已基本完成。我們看到它已經透過網路一路分發到正確的層級。當我們談論 Boyds 時，同樣，我們看到從我們銷售的其他產品到 Boyds 品牌的成功過渡，該品牌再次成功地分銷到路線層面。

What's especially exciting for us is the is the launch of the specialty brand and they're collapsing over the various other sub-brands that we had into it, and that is on schedule, and we're looking forward to launching that at the tail end of the calendar year.

對我們來說特別令人興奮的是專業品牌的推出，它們正在超越我們所涉足的各種其他子品牌，這是按計劃進行的，我們期待在尾部推出它日曆年結束時。

It's great to hear as well on. I guess just last one for me here. Could you provide an update on how your innovative products like shot and liquid Ambien coffee are sort of being accepted in the market? Just how those are progressing would be great.

很高興聽到這一點。我想這對我來說只是最後一件事。您能否介紹一下您的創新產品（例如散裝咖啡和液態 Ambien 咖啡）在市場上的接受情況？這些進展如何就太好了。

Thank you. Sure. No, I think we're always looking to provide our customer base with new interesting products. These represent two of them of many that are part of the portfolio on the shop side with the sharp syrups, again, non-GMO, all natural product shelf, stable, ambient, incredible quality. We're excited about what's going on with Sharp. We have some some new customers that have recently adopted chart. We have some new contracts that are going through that are very exciting for us.

謝謝。當然。不，我認為我們一直在尋求為我們的客戶群提供新的有趣的產品。這些代表了其中的兩個，是商店方面產品組合的一部分，具有鋒利的糖漿，同樣，非基因改造，全天然產品貨架，穩定，環境，令人難以置信的品質。我們對夏普的進展感到非常興奮。我們有一些新客戶最近採用了圖表。我們正在處理一些新合同，這對我們來說非常令人興奮。

So we're seeing some positive growth with Sharp, some positive adoption and similarly with the boys, but that ambient side, we're seeing some positive traction growing with the boys with DMD, and that's significant for us as we did have some supply chain issues associated with the other SKUs that we had in that space in the past.

因此，我們看到夏普有一些積極的增長，有一些積極的採用，男孩們也有類似的增長，但在環境方面，我們看到患有DMD 的男孩們有一些積極的吸引力增長，這對我們來說很重要，因為我們確實有一些供應與我們過去在該領域遇到的其他 SKU 相關的連鎖問題。

And this really allows us to own that supply chain 100%. We're in control of our own destiny with that product quality is outstanding and again, a significant improvement over the experience for the consumer and that this is not a frozen product. So there's no slacking required operationally, it's much easier to work with. And so we're very excited to see what this will do is as our existing customer base continues to adopt, and then we look to expand that into other spaces.

這確實讓我們能夠 100% 擁有該供應鏈。我們掌控自己的命運，因為產品品質非常出色，消費者的體驗得到了顯著改善，而且這不是冷凍產品。因此，操作上不需要懈怠，工作起來更容易。因此，我們非常高興看到隨著我們現有的客戶群繼續採用這項技術，我們將看到它的作用，然後我們希望將其擴展到其他領域。

Great. Congrats on all the progress, and thank you for taking my questions.

偉大的。恭喜所有的進展，並感謝您回答我的問題。

Thank you.

謝謝。

Gerard Sweeney, Roth.

杰拉德·斯威尼，羅斯。

Thanks for taking my call.

感謝您接聽我的電話。

Thank you, Jerry.

謝謝你，傑瑞。

Thanks for calling that, Vance. Welcome aboard too. Wanted to discuss about a third quarter call, you talked a little bit about customer retention, churn. Sounded like you've had some a few weeks where you went from negative to positive our retention retention assets. Can you give us an update on how that is progressing fourth quater and the fiscal year?

謝謝你的來電，萬斯。也歡迎上船。想討論第三季的電話會議，您談到了一些關於客戶保留和客戶流失的問題。聽起來好像有幾週的時間，我們的保留保留資產從負值變成正值。您能否向我們介紹第四季和本財年的最新進展？

Yes. So for us, it's a great question. And we've spoken in the past about this. And in 2024, I think we made tremendous progress versus 2023, and we've seen that attrition rate come into line with industry averages. But at the same time, our total customer count for the pounds associated with them, they are still a little bit down from where we would like.

是的。所以對我們來說，這是一個很好的問題。我們過去曾談過這一點。我認為到 2024 年，我們比 2023 年取得了巨大進步，而且我們已經看到員工流失率與行業平均水平持平。但同時，我們的總客戶數與他們相關的英鎊數，仍然比我們想要的要低。

And we see less pounds per customer due to a few different industry trends like the adoption of that, seeing the car technology really happening at scale now, particularly on the C-store channel, where we play a significant role, but we also see inflationary pressures coming to bear pricing for tea and consumers kind of tightening the belt and purse strings and during a time of relative economic uncertainty.

由於一些不同的行業趨勢（例如汽車技術的採用），我們看到每個客戶的磅數減少了，看到汽車技術現在確實大規模發生，特別是在我們發揮重要作用的便利商店管道上，但我們也看到通貨膨脹在經濟相對不確定的時期，茶葉定價面臨壓力，消費者也開始勒緊褲帶。

So further downstream we see sort of less cups being sold per location to an extent and consumers beginning to take a more measured approach to consuming patterns, whether that's consuming a little bit less than they might normally or consuming a little bit less often than they might typically on a positive note, we do see that the business development team is outperforming in terms of profitability when they're adding customers.

因此，在下游，我們看到每個地點銷售的杯子在一定程度上有所減少，消費者開始對消費模式採取更加謹慎的方法，無論是比平時少一點消費，還是比平時少一點消費。積極的一面是，我們確實看到業務開發團隊在增加客戶時在盈利能力方面表現出色。

So the size of the account and either the bottom line of the account has improved, but the total number being added isn't quite at the rate that we would hope and it isn't really enough to offset that attrition number. The other pieces, as we're as we're taking appropriate steps to steward the business through some of the inflationary pressures on our side of supply chain management.

因此，帳戶的規模和帳戶的底線都得到了改善，但增加的總數並沒有達到我們希望的速度，而且還不足以抵消流失的數量。其他方面，我們正在採取適當的措施來管理業務，以應對供應鏈管理方面的一些通膨壓力。

And we continue to focus on, as we have discussed in previous calls, that customer profitability factor, we do anticipate the possibility of some acceleration in attrition just as people experience this pricing fatigue and they have experienced the general inflationary pressures that scale. And overall, we're focused on higher profitability customers.

正如我們在先前的電話會議中討論的那樣，我們繼續關注客戶獲利能力因素，我們確實預計，隨著人們經歷這種定價疲勞並且經歷了普遍的通膨壓力，流失率可能會加速。總的來說，我們專注於利潤率較高的客戶。

And we're sure and we're seeing that show up in our gross margin and adjusted EBITDA. So as we continue to look to build through strategic review process and keep this as an acute area of focus for our business. We're cognizant of some of the challenges we face, and we're looking to challenge our business development team and leverage our route sales representative network to add value.

我們確信這一點也反映在我們的毛利率和調整後的 EBITDA 中。因此，我們將繼續尋求透過策略審查流程進行建設，並將其作為我們業務的一個重點關注領域。我們認識到我們面臨的一些挑戰，我們希望挑戰我們的業務開發團隊，並利用我們的航線銷售代表網絡來增加價值。

Got it. And obviously, I think we just mentioned our target or goal being free cash flow positive. And I believe this year. Can you give us maybe a little bit of a road map, how you get there time and maybe time potential.

知道了。顯然，我認為我們剛剛提到我們的目標是自由現金流為正。我相信今年。您能否給我們一些路線圖，以及您如何獲得時間以及時間潛力。

This is Vance here to go question. We've talked about that in the past. I would say that we are making good progress in really putting the business in the right position now to reach that milestone, but achieving it in what I would say, a sustainable way is going to require renewed sales growth, continued protection around gross margins, and then obviously, solid working capital management.

我是萬斯來提問。我們過去已經討論過這個問題。我想說的是，我們在真正讓業務處於正確的位置以實現這一里程碑方面取得了良好進展，但以我想說的方式實現這一目標，可持續的方式將需要新的銷售增長，持續保護毛利率，顯然，還有紮實的營運資金管理。

We're focused on all of these areas, feel pretty good about the trajectory that we're on, and the potential going into fiscal '25. In terms of specific time line, I think it's a little early to provide any specifics around that, but we're continuing to work towards that and feel good about where we're at and the progress that we're making.

我們專注於所有這些領域，對我們目前的發展軌跡以及 25 財年的潛力感到非常滿意。就具體時間表而言，我認為現在提供任何具體細節還為時過早，但我們正在繼續努力實現這一目標，並對我們所處的位置和所取得的進展感到滿意。

I appreciate it, and I'll jump back in line. Thanks.

我很感激，我會重新排隊。謝謝。

Thanks. This concludes our question and answer session. And the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.

謝謝。我們的問答環節到此結束。現在會議也結束了。感謝您參加今天的演講。您現在可以斷開連線。