UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 12, 2018
Farmer Bros. Co.
(Exact Name of Registrant as Specified in Charter)
Delaware | 001-34249 | 95-0725980 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
1912 Farmer Brothers Drive, Northlake, Texas 76262 | ||||
(Address of Principal Executive Offices) | ||||
888-998-2468 | ||||
(Registrant’s Telephone Number, Including Area Code) | ||||
None | ||||
(Former Address, if Changed Since Last Report) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01 Regulation FD Disclosure.
As of March 12, 2018, representatives of Farmer Bros. Co., a Delaware corporation (the “Company”), will begin making presentations using slides containing the information attached to this Current Report on Form 8-K as Exhibit 99.1 (the “Investor Presentation”). The Company expects to use the Investor Presentation, including on the Company’s website, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others. The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Investor Presentation, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
By filing this report on Form 8-K and furnishing this information, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.
As provided in General Instruction B.2. of Form 8-K, the information included in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing. In addition, the exhibit furnished herewith contains statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibit.
Use of Company Website to Distribute Material Company Information
The Company’s website address is www.farmerbros.com. The Company uses its website as a channel of distribution of important company information. Important information, including press releases and financial information regarding the Company, is routinely posted on and accessible on the Investor Relations subpage of the Company’s website, which is accessible by clicking on “Investor Relations” on the website home page. The Company also uses its website to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to the Investor Relations subpage of the Company’s website for important and time-critical information. Visitors to the Company’s website can also register to receive automatic e-mail notifications alerting them to new information made available on the Investor Relations subpage of the Company’s website.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
99.1 | Investor Presentation Slideshow in use beginning March 12, 2018. | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 12, 2018
FARMER BROS. CO. | |||
By: | /s/ David G. Robson | ||
David G. Robson | |||
Treasurer and Chief Financial Officer | |||
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | ||
UNDERSTANDING, LEADING,
BUILDING & WINNING
IN THE BUSINESS OF COFFEE
FARMER BROTHERS
WE ARE A COFFEE COMPANY
DESIGNED TO DELIVER THE
COFFEE PEOPLE WANT,
THE WAY THEY WANT IT.
FARMER BROTHERS 2
We have transformed from a
100-year-old coffee company to
a growing and profitable
forward-thinking industry leader,
championing coffee culture.
FARMER BROTHERS 3
2012 1 20171 CAGR2
COFFEE VOLUME
(In Pounds) 61,600,000 95,499,000 9.2%
REVENUE
(In Millions) $498.7 $541.5 1.7%
ADJUSTED EBITDA3
(In Millions) $18.0 $46.0 15.8%
STOCK PRICE 4 $7.96 $30.25 30.6%
NOTES
1. Fiscal year ending June 30.
2. Represents the compound annual growth rate over the entire period from June 30, 2012 to June 30, 2017.
3. Adjusted EBITDA is a non-GAAP financial measure; a reconciliation of this non-GAAP measure to its corresponding GAAP measure is included in the appendix.
4. As of the last day of the respective fiscal year.
FARMER BROTHERS 4
POSITIONED TO WIN AND GROW
MORE COFFEE BETTER COFFEE NEW COFFEE
1 2 3
FARMER BROTHERS 5
UNDERSTANDING
THE BUSINESS OF COFFEE
FARMER BROTHERS 6
The days of a
single-origin
pour-over
anytime,
everywhere
are here.
The days of a
cup of joe in
the morning
are over.
UNDERSTANDING
FARMER BROTHERS 7
COFFEE IS A DYNAMIC CATEGORY
DRIVEN BY INNOVATION AND
CHANGING CONSUMER DEMANDS.
UNDERSTANDING
FARMER BROTHERS 8
UNDERSTANDING
VOLUME
A $76B industry with
forecasted growth of
3-5% between 2016-2021.
QUALITY
Specialty coffee currently
accounts for 25% of the
market. It is growing
and commands a
high price point.
INNOVATION
Product, technology and
experience innovation are
driving consumption.
Cold Brew and Nitro
didn't exist in a meaningful
way just three years ago.
NOTE
Please see appendix for sources.
FARMER BROTHERS 9
UNDERSTANDING
TRENDS IMPORTANT
TO US RIGHT NOW
TRENDS IMPORTANT
TO OUR FUTURE
Sourcing
Sustainability and origin stories are influencing
purchasing decisions.
Drinking
Coffee is now consumed across wider dayparts.
Product Innovation
Millennials and Gen Xers now prefer gourmet,
specialty and espresso-based coffee and in
different formats.
Sourcing
100% sustainably sourced coffee will be expected.
Drinking
Understanding of the health benefits of coffee
continue to expand.
Product Innovation
Cold and frozen-format coffee is forecasted
to grow 12.5% between 2016-2021.
NOTE
Please see appendix for sources.
FARMER BROTHERS 10
UNDERSTANDING
SOURCING ROASTING PACKAGING DISTRIBUTION EXPERIENCE
COFFEE IS A MULTISTAGE BUSINESS
FARMER BROTHERS IS A
LEADER IN EACH STAGE
FARMER BROTHERS 11
DELIVERED IN MANY DIFFERENT WAYS
UNDERSTANDING
TO MARKET DISTRIBUTION FARMER BROTHERS
E-COMMERCE Fast-growing delivery channel
Small delivery channel
in its infancy
DIRECT SHIP
Servicing large sophisticated
customers where marketing,
innovation and sustainability are key
Poised for growth following
recent investments
THIRD-PARTY
DISTRIBUTION
Coffee is growing in importance
for distributors
New channel for Farmer Brothers,
exploring partnerships
DIRECT STORE
DELIVERY (DSD)
Independent operators requiring
high-touch service
Established national footprint
undergoing modernization
FARMER BROTHERS 12
UNDERSTANDING
MARKET SHARE
OVERVIEW
By revenue, Farmer Brothers accounts
for less than 1% of the U.S. coffee market
"Significant consolidation lies ahead in the coffee industry."
MARKET CONSOLIDATION
IS UNDERWAY
NOTE
Please see appendix for sources.
- James Watson, Rabobank
FARMER BROTHERS 13
UNDERSTANDING
COFFEE ROASTERS WE COMPETE AGAINST
NOTE
Company logos not owned by Farmer Brothers.
FARMER BROTHERS 14
LEADING
IN THE BUSINESS OF COFFEE
FARMER BROTHERS 15
...in all facets
of coffee.
We are
experts in
coffee...
LEADING
FARMER BROTHERS 16
Sourcing Roasting Turnkey serviceHedging Direct ship
LEADING
Sourcing in 28
countries, including
six with direct
trade relationships,
efficiently delivering
coffee across all
quality levels
Experienced
team of 10
highly-skilled,
certified roasters
with operations
in three SQF-
certified roasting
facilities
Deep expertise
as total-solution
provider,
including set-up,
equipment,
supplies and
service
Industry-leading
hedging program,
and advisor to
large sophisticated
customers
Trusted
partnerships
with recognized
global and
national brands
INDUSTRY-LEADING EXPERTISE
FARMER BROTHERS 17
LEADING
Industry
Founding member of
World Coffee Research
Longstanding direct
trade relationships and
innovative partnerships
Award-winning
sustainability program
with science-based
reduction goals
Driving towards
zero-waste status
in roasting and
distribution facilities
Ethical Sourcing Sustainability Eliminating Waste
PURPOSEFUL LEADERSHIP
FARMER BROTHERS 18
BUILDING
IN THE BUSINESS OF COFFEE
FARMER BROTHERS 19
...and prepared
for change.
We are built
for growth...
BUILDING
FARMER BROTHERS 20
BUILDING
Capacity
& Roasting
Portfolio Customers Commerce Logistics Organization
Farmer Brothers' transformation
and modernization journey
FARMER BROTHERS 21
BUILDING
NOW
Three facilities, including our new
flagship Safe Quality Foods-Certified,
Zero-Waste facility, with total potential
capacity across the system of
200+ million lbs. of coffee per year
THEN
Three facilities with limited ability to meet
the changing needs of coffee consumers
NEXT
Ramp up production at flagship plant
beginning FY2019
CAPACITY & ROASTING
FARMER BROTHERS 22
BUILDING
NOW
Full and focused portfolio with growth
in premium and specialty categories
along with a presence in select adjacent
beverage categories
THEN
Primarily traditional coffee products
with limited premium products
NEXT
Greater traction for premium and
specialty brands and high-growth
innovative segments
PORTFOLIO
FARMER BROTHERS 23
BUILDING
NOW
Profitable legacy customers demanding
premium coffee
Partnerships with sophisticated global
and national brands
THEN
Customer profile heavily weighted towards
offices, truck stops and restaurants
demanding traditional quality coffee
NEXT
Deliver increased ROI and profitability
through winning large customer accounts
and opportunistic M&A
CUSTOMERS
FARMER BROTHERS 24
BUILDING
NOW
Realigned professional, national
account sales operation
THEN
Legacy local sales network with limited
focus on national relationships
NEXT
Drive sales growth through E-commerce
and third-party distributors
Modernize DSD sales capabilities
COMMERCE
FARMER BROTHERS 25
BUILDING
NOW
Outsourced long-haul to 3PL and
implemented fleet management for
a more efficient distribution network
THEN
Owned fleet of long-haul and
delivery trucks moving product
along the network one step at a time
NEXT
Deliver efficiency through technology
LOGISTICS
FARMER BROTHERS 26
BUILDING
ORGANIZATION
NOW
Experienced senior leadership team
In-house sustainability and M&A expertise
Infused culture with vibrant talent
resulting from move of headquarters
THEN
Legacy management steeped in
traditional coffee business
NEXT
Optimize M&A integration capabilities
across all functional teams
Elevate E-commerce talent
FARMER BROTHERS 27
WINNING
IN THE BUSINESS OF COFFEE
FARMER BROTHERS 28
We are positioned to
WIN AND GROW.
WINNING
FARMER BROTHERS 29
WINNING
MORE COFFEE BETTER COFFEE NEW COFFEE
Win more large, national
accounts
Expand E-commerce and
third-party distribution
delivery channels
Maximize DSD Growth
Employ opportunistic M&A
to deliver aligned brands,
customers and innovation
Leverage market shift to
premium and specialty
coffee
Expand trend-relevant
portfolio to meet consumer
needs (e.g., Cold Brew,
Shelf-stable, Frozen)
Consistent investment
in state-of-the art
equipment for customers
to deliver on trends
1 2 3
FARMER BROTHERS 30
APPENDIX
FARMER BROTHERS 31
20121 20131 20141 20151 20161 20171
REVENUE
(In Thousands)
$498,701 $513,869 $528,280 $545,882 $544,382 $541,500
MARGIN 33.4% 36.0% 37.1% 36.1% 38.3% 39.5%
ADJUSTED EBITDA2
(In Thousands)
$17,950 $22,599 $40,400 $41,268 $41,386 $45,973
COFFEE VOLUME
(Pounds In Thousands)
61,600 76,000 87,000 87,685 90,669 95,499
COFFEE VOLUME GROWTH (2.7%) 23.4% 14.5% 0.8% 3.4% 5.3%
NOTE
1. Fiscal year ending June 30.
2. Adjusted EBITDA is a non-GAAP financial measure; a reconciliation of this non-GAAP measure to its corresponding GAAP measure is included in the appendix.
APPENDIX
FARMER BROTHERS 32
RECONCILIATION OF
ADJUSTED EBITDA TO GAAP
APPENDIX
YEAR ENDED JUNE 30
(IN THOUSANDS) 2012 2013 2014 2015 2016 2017
NET INCOME (LOSS), AS REPORTED $(26,576) $(8,462) $12,132 $652 $89,918 $24,400
INCOME TAX EXPENSE (BENEFIT) (347) (825) 705 402 (79,997) 15,954
INTEREST EXPENSE 2,137 1,782 1,258 769 425 2185
INCOME FROM SHORT-TERM INVESTMENTS (2,549) (1,626) (1,907) (1,251) (2,204) (1,853)
DEPRECIATION AND AMORTIZATION EXPENSE 32,113 32,542 27,334 24,179 20,774 22,970
ESOP AND SHARE-BASED COMPENSATION EXPENSE 3,287 3,563 4,692 5,691 4,342 3,959
RESTRUCTURING AND OTHER TRANSITION EXPENSES - - - 10,432 16,533 11,016
NET GAIN FROM SALE OF TORRANCE FACILITY - - - - - (37,449)
NET GAINS FROM SALE OF SPICE ASSETS - - - - (5,603) (919)
NET (GAINS) LOSSES FROM SALES OF OTHER ASSETS (268) (4,467) (3,814) 394 (2,802) (1,210)
NON-RECURRING PROXY CONTEST-RELATED EXPENSES - - - - - 5,186
IMPAIRMENT LOSSES ON GOODWILL AND INTANGIBLE ASSETS 5,585 92 - - - -
PENSION WITHDRAWAL EXPENSE 4,568 - - - - -
ACQUISITION AND INTEGRATION COSTS1 - - - - - 1,734
ADJUSTED EBITDA $17,950 $22,599 $40,400 $41,268 $41,386 $45,973
ADJUSTED EBITDA MARGIN 3.6% 4.4% 7.6% 7.6% 7.6% 8.5%
NOTE
1. Beginning in fiscal 2017, we modified the calculation of Adjusted EBITDA and Adjusted EBITDA Margin to exclude acquisition
and integration costs. We have not adjusted the historical presentation of Adjusted EBITDA and Adjusted EBITDA Margin
because acquisition and integration costs in prior periods were not material to the Company’s results of operations.
FARMER BROTHERS 33
SOURCES
APPENDIX
PAGE 9 PAGE 10 PAGE 13
Industry Volume & Growth
Technomic AFH Beverage Study 2016 RSE,
2014-2016 CAGR
Specialty Coffee Growth
Nielsen XAOC latest 52 weeks WE 1/27/18
Cold & Frozen Format Growth
NCA: National Coffee Drinking Trends 2017;
Technomic AFH Beverage Study 2016 RSE,
2014-2016; Doing well by doing good
Nielsen) 2014
Market Consolidation
James Watson, Coffee Consolidation
Accelerates (2017), Rabobank, available at
https://research.rabobank.com/far/en/
sectors/beverages/Coffee_Consolidation_
Accelerates.html
FARMER BROTHERS 34
FORWARD-LOOKING STATEMENTS
APPENDIX
Certain statements contained in this presentation are not based on historical fact and are forward-looking statements within
the meaning of federal securities laws and regulations. These statements are based on management’s current expectations,
assumptions, estimates and observations of future events and include any statements that do not directly relate to any historical
or current fact; actual results may differ materially due in part to the risk factors set forth in our most recent 10-K and 10-Q
filings. These forward-looking statements can be identified by the use of words like “anticipates,” “estimates,” “projects,”
“expects,” “plans,” “believes,” “intends,” “will,” “assumes” and other words of similar meaning. Owing to the uncertainties inherent
in forward-looking statements, actual results could differ materially from those set forth in forward-looking statements. We
intend these forward-looking statements to speak only at the time of this presentation and do not undertake to update or
revise these statements as more information becomes available except as required under federal securities laws and the rules
and regulations of the SEC. Factors that could cause actual results to differ materially from those in forward looking statements
include, but are not limited to, the Company’s success in consummating acquisitions and integrating acquired businesses,
the adequacy and availability of capital resources to fund the Company’s existing and planned business operations and the
Company’s capital expenditure requirements, the relative effectiveness of compensation-based employee incentives in causing
improvements in Company performance, the capacity to meet the demands of our large national account customers, the extent
of execution of plans for the growth of Company business and achievement of financial metrics related to those plans, the ability
of the Company to retain and/or attract qualified employees, the success of the Company’s adaptation to technology and new
commerce channels, the effect of the capital markets as well as other external factors on stockholder value, fluctuations in
availability and cost of green coffee, competition, organizational changes, the effectiveness of our hedging strategies in reducing
price risk, changes in consumer preferences, our ability to provide sustainability in ways that do not materially impair profitability,
changes in the strength of the economy, business conditions in the coffee industry and food industry in general, our continued
success in attracting new customers, variances from budgeted sales mix and growth rates, weather and special or unusual events,
as well as other risks described in this presentation and other factors described from time to time in our filings with the SEC.
FARMER BROTHERS 35
