Coffee Service

COVID hammers Farmer Brothers' Q1 2021 sales and earnings

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November 9, 2020

Farmer Bros. net sales in the first quarter of fiscal 2021 ended Sept. 30, 2020 were $97.3 million, a decrease of $41.3 million, or 29.8%, from $138.6 million in the prior year period, according to an earnings release.

The decrease in net sales was driven primarily by lower sales of coffee, beverage and allied products sold through the DSD network due to the COVID-19 pandemic.

Net income fell from $4.65 million in last year's quarter to a $6.27 million loss in this year's third quarter.

Diluted earnings per share fell from 26 cents in last year's third quarter to a 37-cent loss for this year's quarter.

The company's revenue for the quarter missed analysts' expectations by $7.65 million, according to Seeking Alpha, while the non-GAAP EPS 37-cent loss missed by 22 cents.

Shares traded at $3.72 on Friday against a 52-week range of $3.40-$17.38.

"While we continue to face challenges from the impact of COVID-19, we remain focused on maintaining cost savings and we're seeing promising trends as our customers' businesses are showing signs of recovery. As a result, we have been able to bring back some of our team members to support these customers," Deverl Maserang, president and CEO, said in the release.

At the beginning of the fiscal first quarter ended Sept. 30, 2020, sales from DSD customers were down by approximately 45% from pre COVID-19 weekly average sales. However, as of Sept. 30, 2020, due to lifting of some government restrictions and reopening of some customers' businesses, DSD revenues had improved to an approximate decline of 33% from the pre COVID-19 weekly average sales.

The largest DSD revenue declines were from restaurants, hotels and casino channels.

Direct ship sales declined 7.5% compared to the prior year period due to lower coffee volume related to COVID-19, partially offset by the impact of coffee prices for cost plus customers, improved volume from retail business, products sold to key grocery stores under their private labels, and third party e-commerce platforms.

Gross profit in the first quarter of fiscal 2021 was $22.4 million, a decrease of $18.2 million, or 44.8% from the prior year period and gross margin decreased to 23.0% from 29.3%.

The decrease in gross profit was primarily driven by lower net sales of $41.3 million partially offset by lower cost of goods sold. The decrease in gross margin was impacted by COVID-19 and the unfavorable impact it had on customer mix and higher production variances, partially offset by lower freight costs and lower coffee brewing equipment costs resulting from the various costs savings initiatives implemented.

For an update on how the coronavirus pandemic has affected convenience services, click here.