Loading...
01/11 03:07
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates several challenges, including a 4% revenue decline, gross margin compression to 39.7%, and continued pressure from high coffee costs and tariffs. Despite operational efficiencies, the economic environment remains tough with declining restaurant traffic and consumer spending shifts. The focus on strategic growth initiatives and operational adjustments is positive, but the overall outlook is negative due to persistent market challenges and financial pressures.
Revenue Revenues decreased 4% to $81.6 million year-over-year. The decline was attributed to a challenging economic environment and a decrease in overall coffee pounds.
Adjusted EBITDA Adjusted EBITDA was flat year-over-year at $1.4 million. This was due to operational efficiency and cost management initiatives offsetting the impact of green coffee inflation and revenue softening.
Gross Margins Gross margins were approximately 39.7%, a decline of roughly 400 basis points compared to the prior year. The decline was driven by the rise in green coffee costs and the decision not to take further pricing actions.
Operating Expenses Operating expenses decreased by $4.5 million to $35.6 million, or 43.6% of net sales, compared to $40.1 million, or 47.2% of net sales, in the prior year. This included a $1.4 million decrease in selling expenses and a $2.5 million decrease in general and administrative expenses, primarily due to reduced personnel-related costs.
Net Loss Net loss was $4 million compared to a $5 million net loss in the prior year. The improvement was due to cost structure efficiencies.
Cash and Cash Equivalents As of September 30, 2025, unrestricted cash and cash equivalents were $3.8 million, with $31.2 million available under the revolving credit facility.
Sum>One Coffee Roasters specialty brand: Achieved early wins with the brand. Partnership with Eurest to open 50 branded cafes across the country. Already appearing in higher education institutions like UCLA.
White label customer portfolio: Renewed focus on growing this portfolio to fully utilize the Portland, Oregon roasting and manufacturing facility.
Operational efficiency and cost management: Achieved $4 million improvement in SG&A expenses compared to Q1 fiscal 2025. Operating expenses decreased by $4.5 million, driven by reduced personnel-related costs.
DSD network reenergization: Implemented sales and field operation initiatives to drive product penetration within existing accounts and add new ones.
Sourcing methodologies: Reconstructed sourcing methodologies to increase elasticity without sacrificing quality amidst rising coffee costs and tariffs.
Focus on Portland facility: Leveraging the SQF and LEED Silver certified facility to scale production and offer diverse packaging options.
Economic Environment: Farmer Brothers faces significant challenges due to a tough macro and microeconomic environment, including declining restaurant foot traffic and shifts in consumer spending and dining habits.
Revenue Decline: The company experienced a 4% year-over-year revenue decline, attributed to economic pressures and reduced coffee pound sales.
Green Coffee Costs: Unprecedented inflation in green coffee prices, driven by tariffs, supply chain issues, and weather conditions, has significantly increased the cost of goods sold.
Tariffs on Coffee Imports: A 50% tariff on U.S. imports from Brazil, a major coffee supplier, has further pressured costs and market conditions.
Gross Margin Compression: Gross margins have declined to 39.7% in Q1 2026, with expectations of continued pressure throughout the fiscal year.
Customer and Coffee Pound Degradation: The company is facing challenges in maintaining customer accounts and coffee pound sales, which are critical to revenue growth.
Market Conditions: Challenging market conditions are expected to persist, impacting financial results and operational performance throughout fiscal 2026.
Revenue and Gross Margin Outlook: Farmer Brothers expects continued pressure on gross margins, which are anticipated to average in the high 30% range throughout fiscal 2026 due to rising green coffee costs and the decision to hold off on further pricing actions.
Cost of Goods Sold: The company expects a significant increase in the cost of goods sold throughout fiscal 2026, driven by tariffs, supply chain concerns, and weather forecasts impacting coffee prices.
Market Conditions: Farmer Brothers anticipates challenging market conditions to persist throughout fiscal 2026, including economic uncertainty, declining restaurant foot traffic, and high coffee prices.
Strategic Growth Initiatives: The company plans to reenergize its DSD network, grow its white label customer portfolio, and better utilize its Portland roasting and manufacturing facility to drive revenue and address customer and coffee pound degradation.
Operational Adjustments: Farmer Brothers has made adjustments to its cost structure and sourcing methodologies to weather challenging market conditions and position itself for growth once market conditions normalize.
The selected topic was not discussed during the call.
The earnings call indicates several challenges, including a 4% revenue decline, gross margin compression to 39.7%, and continued pressure from high coffee costs and tariffs. Despite operational efficiencies, the economic environment remains tough with declining restaurant traffic and consumer spending shifts. The focus on strategic growth initiatives and operational adjustments is positive, but the overall outlook is negative due to persistent market challenges and financial pressures.
The earnings call highlighted strong financial performance with improvements in gross margins and adjusted EBITDA, despite a challenging revenue environment. The Q&A session revealed a strategic shift towards operational efficiency and customer retention, which is positive. However, management's lack of clarity on churn and macro headwinds is a concern. Overall, the positive financial metrics and strategic focus outweigh the uncertainties, indicating a likely positive stock price movement.
The earnings call reveals mixed financial performance, with improved EBITDA and gross margin but declining net sales and a significant net loss. The Q&A section highlights confidence in maintaining margins but acknowledges macroeconomic challenges and competitive pressures. Despite operational improvements, the absence of a share repurchase program and unclear management responses on growth impact contribute to a negative outlook. The declining coffee volumes and consumer confidence further exacerbate concerns, suggesting a likely stock price decline in the range of -2% to -8%.
The earnings call presents a mixed picture: financial performance shows improvement in EBITDA and gross margin, but challenges remain with net loss and macroeconomic headwinds. The Q&A section highlights positive churn trends and route optimization, but lacks clarity on the new brand's impact. The absence of a shareholder return plan and potential asset disposals add uncertainty. Overall, the sentiment is neutral, reflecting both positive operational efficiencies and ongoing risks.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
