TORRANCE, Calif.--(BUSINESS WIRE)--Farmer
Bros. Co. (Nasdaq:FARM) today reported net income of $2.9 million or
$0.21 per share for its second fiscal quarter ended Dec. 31, 2006,
compared with net income of $4.1 million or $0.30 per share in the same
quarter last year. For the first half of fiscal 2007, the Company
reported net income of $3.9 million or $0.28 per share compared with net
income of $3 million or $0.22 per share in the first half of fiscal
2006.
"We continued to see steady progress for
our long-term efforts to hold down our operating costs as we invest in
programs to grow sales," said Guenter Berger, Chairman and Chief
Executive Officer. "Our efforts to promote our brand and re-acquaint our
customers with the full scope of our product offerings are showing early
signs of success."
Sales in the quarter increased 1% to
$55.4 million compared with the same quarter last year, and increased to
$103.7 million for the first half of fiscal 2007. A decline in sales of
roast coffee was offset in the second quarter by an increase in the sale
of allied products. Cost of goods sold were 41% of revenues in the
second quarter of 2007 compared with 40% in last year's second quarter.
Although the Company reported better profit margins on its allied
products in the quarter, it also noted that market prices for green
coffee during this period were about 10% higher than last year's market
prices.
Selling expenses in the second quarter
increased by 4% over the same period last year, primarily reflecting
increased costs of coffee brewing equipment related to new sales
programs.
The Company reported cash and short-term
investments of $183.6 million on Dec. 31, 2006, up from $181.7 million
on June 30, 2006. The Company's cash outlay for its shareholder dividend
during the same six-month period of fiscal 2007 was about $3.1 million.
Management updated the progress of its
longer-term growth initiatives:
- Promotion of our brand: The Company in
October began to roll out new packaging, and expects to continue for
the rest of fiscal 2007 to be rolling out the packaging and
point-of-sale materials, which it designed to enhance brand awareness
and product image.
- New products: During the second
quarter the Company continued to develop and introduce new products.
It reported favorable reception for its expanded line of canned
coffees, which include Premium, Premium Decaf, 100% Columbian, and
Dark-Roast blends. In addition, the new Arabica Rush bagged coffee
continues to be favorably received. The new items are helping the
sales force to reintroduce the Company's broader product line to new
customers.
- Expansion and Cost Control: The
Company opened a new branch in Cincinnati and continued to make
progress toward opening a branch in Shreveport before the end of
fiscal 2007. The Company said it continues to implement changes to its
information systems, which are designed to improve the Company's
effectiveness and efficiency and it expects to install a major upgrade
of its sales system in the second half of fiscal 2007.
Forward-Looking Statements
Certain statements contained in this
report regarding the risks, circumstances and financial trends that may
affect our future operating results, financial position and cash flows
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. These
forward-looking statements can be identified by the use of words like
"anticipates," "feels," "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. A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and those
future events or circumstances may not occur. Users should not place
undue reliance on the forward-looking statements, which speak only as of
the date of this report. The Company undertakes no obligation to update
or alter any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by the
federal securities laws. Factors that could cause actual results to
differ materially from those in forward-looking statements include, but
are not limited to, fluctuations in availability and cost of green
coffee, competition, organizational changes, the impact of a weaker
economy, business conditions in the coffee industry and food industry in
general, the Company's continued success in attracting new customers,
variances from budgeted sales mix and growth rates, and weather and
special or unusual events, as well as other risks described in this
report and other factors described from time to time in the Company's
filings with the SEC.
(Dollars in thousands, except share and per share data)
Three months ended Six months ended
December 31, December 31,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Net sales $ 55,476 $ 54,950 $ 103,740 $ 103,374
Cost of goods sold 22,995 21,796 43,176 41,335
------------ ------------ ------------ ------------
Gross profit $ 32,481 $ 33,154 $ 60,564 $ 62,039
------------ ------------ ------------ ------------
Selling expenses 26,131 25,016 50,795 49,085
General and
administrative
expenses 5,210 4,989 11,366 10,929
------------ ------------ ------------ ------------
Operating expenses $ 31,341 $ 30,005 $ 62,161 $ 60,014
------------ ------------ ------------ ------------
Income (loss) from
operations $ 1,140 $ 3,149 $ (1,597) $ 2,025
------------ ------------ ------------ ------------
Other income:
Dividend income 986 881 1,942 1,750
Interest income 1,457 965 2,917 1,880
Other, net
income
(expense) 387 292 1,691 (1,423)
------------ ------------ ------------ ------------
Total other
income, net $ 2,830 $ 2,138 $ 6,550 $ 2,207
------------ ------------ ------------ ------------
Income before
taxes 3,970 5,287 4,953 4,232
Income tax expense 1,017 1,123 987 1,147
------------ ------------ ------------ ------------
Net income $ 2,953 $ 4,164 $ 3,966 $ 3,085
============ ============ ============ ============
Net income per
common share $ 0.21 $ 0.30 $ 0.28 $ 0.22
============ ============ ============ ============
Weighted average
shares
outstanding 14,075,523 13,875,017 14,048,023 13,843,195
Dividends declared
per share $ 0.11 $ 0.105 $ 0.22 $ 0.21