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): September 13, 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 September 13, 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 | ||
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: September 13, 2018
FARMER BROS. CO. | |||
By: | /s/ David G. Robson | ||
David G. Robson | |||
Treasurer and Chief Financial Officer | |||
UNDERSTANDING, LEADING, BUILDING & WINNING IN THE BUSINESS OF COFFEE FARMER BROTHERS 1
WE ARE A COFFEE COMPANY DESIGNED TO DELIVER THE COFFEE PEOPLE WANT, THE WAY THEY WANT IT. 2
We have transformed from a 100-year-old coffee company to a growing and profitable forward-thinking industry leader, championing coffee culture. 3
FINANCIAL INFORMATION The following fiscal 2018 financial information is unaudited. Prior year financial information has been retrospectively adjusted to reflect the impact of certain changes in accounting principles and corrections to previously issued financial statements. 4
20151 20181,2 CAGR3 COFFEE VOLUME 87,685,000 107,429,000 7.0% (In Pounds) REVENUE $545.9 $606.5 3.6% (In Millions) 4 ADJUSTED EBITDA $30.9 $47.6 15.5% (In Millions) STOCK PRICE 5 $23.50 $30.55 9.1% NOTES 1.Fiscal year ending June 30. 2.Includes Boyd's Coffee, newly acquired in fiscal 2018 3. Represents the compound annual growth rate over the entire period from June 30, 2015 to June 30, 2018. 4. 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. 5.As of the last day of the respective fiscal year. 5
INVESTMENT HIGHLIGHTS MARKET INDUSTRY COMPREHENSIVE CAPACITY OPPORTUNITY LEADERSHIP CAPABILITIES TO GROW A significant opportunity Purposeful leadership in A business model Recent SQF certification, to expand market share in sustainability, ethical sourcing designed to effectively and and focus on leveraging the $76B coffee industry and waste elimination creates efficiently deliver across all investment in state-of-the- growing at 3-5% annually superior customer offerings stages of the coffee art Northlake facility,create business significant opportunities for customer acquisitionand sustainable long-term growth STRONG DSD BOYD’S M&A CASH FLOW NETWORK INTEGRATION GROWTH Balancing top-line DSD sales channel Boyd’s integration on Well-positioned to pursue growth with increased better positions the track to deliver growth through additional operating leverage company to capture forecasted synergies opportunistic M&A generates strong free national accounts and cash flow reduce customer churn NOTE Please see appendix for sources. 6
UNDERSTANDING THE BUSINESS OF COFFEE 7
UNDERSTANDING The days of a The days of a single-origin cup of joe in pour-over the morning anytime, are over. everywhere are here. 8
UNDERSTANDING COFFEE IS A DYNAMIC CATEGORY DRIVEN BY INNOVATION AND CHANGING CONSUMER DEMANDS. VOLUME QUALITY INNOVATION Specialty coffee currently Product, technology and A $76B industry with an accounts for 25% of the experience innovation are driving annual growth rate of 3-5%. market. It is growing and consumption. Cold Brew and Nitro commands a highest price point. didn't exist in a meaningful way just three years ago. NOTE Please see appendix for sources. 9
UNDERSTANDING TRENDS IMPORTANT TRENDS IMPORTANT TO US RIGHT NOW TO OUR FUTURE Sourcing Sourcing Sustainability and origin stories are 100% sustainably sourced coffee will be expected. influencing purchasing decisions. Drinking Drinking Understanding of the health benefits of coffee Coffee is now consumed across wider dayparts. continue to expand. Product Innovation Product Innovation Millennials and Gen Xers now prefer gourmet, Cold and frozen-format coffee is forecasted to grow specialty and espresso-based coffee and in 12.5% between 2016-2021. different formats. NOTE Please see appendix for sources. 10
UNDERSTANDING MARKET SHARE OVERVIEW By revenue, Farmer Brothers accounts for less than 1% of the U.S. coffee market MARKET CONSOLIDATION IS UNDERWAY "Significant consolidation lies ahead in the coffee industry." - James Watson, Rabobank NOTE Please see appendix for sources. 11
UNDERSTANDING COFFEE ROASTERS WE COMPETE AGAINST NOTE Company logos not owned by Farmer Brothers. 12
LEADING IN THE BUSINESS OF COFFEE 13
LEADING We are …in all facets experts in of coffee coffee... 14
LEADING INDUSTRY-LEADING EXPERTISE Sourcing Hedging Roasting Direct Ship Turnkey Service Sourcing in 28 Industry-leading Experienced team Trusted Deep expertise as countries, hedging of 10 highly- partnerships with total-solution including six program, and skilled, certified recognized global provider, including with direct trade advisor to large roasters with and national set-up, equipment, relationships, sophisticated operations in three brands supplies and efficiently delivering customers SQF-certified service coffee across all roasting facilities qualitylevels 15
LEADING PURPOSEFUL LEADERSHIP Industry Ethical Sourcing Sustainability Eliminating Waste Founding member of Longstanding direct trade Award-winning sustainability Driving towards zero- World Coffee Research relationships and innovative program with science-based waste status in roasting partnerships reductiongoals and distributionfacilities 16
BUILDING IN THE BUSINESS OF COFFEE 17
BUILDING We are built …and prepared for growth... for change. 18
BUILDING Farmer Brothers' transformation and modernization journey Capacity & Roasting Portfolio Customers Commerce Logistics Organization 19
BUILDING CAPACITY & ROASTING THEN NOW NEXT Three facilities with limited ability to Three facilities, including our new Ramp up production at flagship meet the changing needs of coffee flagship Safe Quality Foods- plant beginning FY2019 consumers Certified, Zero-Waste facility, with total potential capacity across the system of 200+ million lbs. of coffee per year 20
BUILDING PORTFOLIO THEN NOW NEXT Primarily traditional coffee products Full and focused portfolio with Greater traction for premium and with limited premium products growth in premium and specialty specialty brands and high-growth categories along with a presence innovative segments in select adjacent beverage categories 21
BUILDING CUSTOMERS THEN NOW NEXT Customer profile heavily weighted Profitable legacy customers Deliver increased ROI and towards officers, truck stops and demanding premium coffee profitability through winning large restaurants demanding traditional customer accounts and quality coffee opportunistic M&A Partnerships with sophisticated global and national brands 22
BUILDING COMMERCE THEN NOW NEXT Legacy local sales network with Realign professional, national Drive sales growth through limited focus on national relationships account sales operation E-commerce and third-party distributors Modernize DSD sales capabilities 23
BUILDING LOGISTICS THEN NOW NEXT Owned fleet of long-haul and delivery Outsourced long-haul to 3PL and Deliver efficiency through trucks moving product along the implemented fleet management technology network one step at a time for a more efficient distribution network 24
BUILDING ORGANIZATION THEN NOW NEXT Legacy management steeped in Experienced senior leadership team Optimize M&A integration traditional coffee business capabilities across all functional teams In-house sustainability and M&A expertise Elevate E-commerce talent Infused culture with vibrant talent resulting from move of headquarters 25
WINNING IN THE BUSINESS OF COFFEE 26
WINNING We are positioned to WIN AND GROW 27
WINNING 1 2 3 MORE COFFEE BETTER COFFEE NEW COFFEE Win more large, national Leverage market shift to Expand trend-relevant accounts premium and specialty coffee portfolio to meet consumer needs Expand E-commerce and Produce highest quality coffee (e.g., Cold Brew, Shelf- third-party distribution at new flagship facility stable, Frozen) delivery channels Consistent investment in Maximize DSD Growth state-of-the art equipment for customers to deliver Employ opportunistic on trends M&A to deliver aligned brands, customers and innovation 28
WINNING INVESTMENT HIGHLIGHTS MARKET INDUSTRY COMPREHENSIVE CAPACITY OPPORTUNITY LEADERSHIP CAPABILITIES TO GROW A significant opportunity Purposeful leadership in A business model Recent SQF certification, to expand market share in sustainability, ethical sourcing designed to effectively and and focus on leveraging the $76B coffee industry and waste elimination creates efficiently deliver across all investment in state-of-the- growing at 3-5% annually superior customer offerings stages of the coffee art Northlake facility,create business significant opportunities for customer acquisitionand sustainable long-term growth STRONG DSD BOYD’S M&A CASH FLOW NETWORK INTEGRATION GROWTH Balancing top-line DSD sales channel Boyd’s integration on Well-positioned to pursue growth with increased better positions the track to deliver growth through additional operating leverage company to capture forecasted synergies opportunistic M&A generates strong free national accounts and cash flow reduce customer churn 29
APPENDIX 30
APPENDIX 1 1 1 1 2015 2016 2017 2018 REVENUE $545,882 $544,382 $541,500 $606,544 (In Thousands) MARGIN 29.2% 31.4% 34.5% 34.1% ADJUSTED EBITDA2 (In Thousands) $30,908 $31,017 $42,985 $47,562 COFFEE VOLUME 87,685 90,669 95,499 107,429 (Pounds In Thousands) COFFEE VOLUME GROWTH 0.8% 3.4% 5.3% 12.5% 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. 31
APPENDIXAPENDIX RECONCILIATION OF ADJUSTED EBITDA TO GAPP YEAR ENDED JUNE 30 (IN THOUSANDS) 2015 2016 2017 2018 NET INCOME (LOSS), AS REPORTED $(9,708) $71,791 $22,551 $(18,280) INCOME TAX EXPENSE (BENEFIT) 402 (72,239) 14,815 17,312 INTEREST EXPENSE 769 425 2,185 3,177 INCOME FROM SHORT-TERM INVESTMENTS (1,251) (2,204) (1,853) (19) DEPRECIATION AND AMORTIZATION EXPENSE 24,179 20,774 22,970 30,464 ESOP AND SHARE-BASED COMPENSATION EXPENSE 5,691 4,342 3,959 3,822 RESTRUCTURING AND OTHER TRANSITION EXPENSES 10,432 16,533 11,016 662 NET GAIN FROM SALE OF TORRANCE FACILITY - - (37,449) - NET GAINS FROM SALE OF SPICE ASSETS - (5,603) (919) (770) NET (GAINS) LOSSES FROM SALES OF OTHER ASSETS 394 (2,802) (1,210) (196) NON-RECURRING PROXY CONTEST-RELATED EXPENSES - - 5,186 - IMPAIRMENT LOSSES ON GOODWILL AND INTANGIBLE ASSETS - - - 3,820 ACQUISITION AND INTEGRATION COSTS1 - - 1,734 7,570 ADJUSTED EBITDA $30,908 $31,017 $42.985 $47,562 ADJUSTED EBITDA MARGIN 5.7% 5.7% 7.9% 7.8% 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. 32
APPENDIX SOURCES Page 5 & 8 Page 9 Page 10 Industry Volume & Growth Cold & Frozen Format Growth Market Consolidation Technomic AFH Beverage Study NCA: National Coffee Drinking James Watson, Coffee Consolidation 2016 RSE, 2014-2016 CAGR Trends 2017; Technomic AFH Accelerates (2017), Rabobank, Beverage Study 2016 RSE, 2014- available at Specialty Coffee Growth 2016; Doing well by doing good http://research.rabobank.com/far/en/se Nielsen XAOC latest 52 weeks Nielsen 2014 ctors/beverages/Coffee_Consolidation WE 1/27/18 _Accelerates.html 33
APPENDIX FORWARD-LOOKING STATEMENTS 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 causeactual results to differ materially from those in forward looking statements include, but are not limited to, the success of our corporate relocation plan, the timing and success of our DSD restructuring plan, the Company’s success in consummating acquisitions and integrating acquired businesses, the impact of capital improvement projects, 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 fromtime to time in our filings with the SEC. 34
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