Coffee Service

Farmer Brothers amends bank credit to sustain COVID-19 impact

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July 29, 2020

Farmer Bros. Co. has amended its credit facility with JPMorgan Chase Bank to increase the company's flexibility in supporting its current and future business operations as the COVID-19 situation continues to evolve.

"With this added financial flexibility and our ongoing cost-cutting efforts, we believe Farmer Brothers is well-positioned to weather these challenging times," Deverl Maserang, president and CEO, said in a press release.

As previously reported, the COVID-19 pandemic has had a significant impact on Farmer Brothers' DSD sales network. The company disclosed on its third quarter fiscal 2020 earnings call that during the middle weeks of April, sales from the company's DSD customers declined between 66% to 69% from pre-COVID-19 pandemic average sales.

Since that time, the company saw consistent improvement through early July, with DSD sales currently holding in a range of decline to pre-COVID-19 pandemic average sales of 44% to 47%. Throughout the COVID-19 timeframe, the company's Direct Ship business has remained relatively stable overall with areas of growth generally offsetting areas of decline.

As previously announced, on a combined basis, the company targeted cost-savings actions that would reduce monthly expenses by approximately $6.5 million per month. This goal was exceeded during the fourth fiscal quarter.

As of today's date, the company's total debt was $68.8 million and the company had cash on hand of $12 million and $21 million of availability on its amended credit facility.

As a point of reference, the 2019 fiscal year end reported figure for total debt was $92 million and cash on hand was reported as $7.0 million as of June 30, 2019.

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