By Emon Reiser
Shares for Farmer Bros. soared after the coffee roaster and distributor generated positive cash flow for the first time in years during its second quarter.
The stock gained 33%, to $2.41 a share, in midday Friday trading. Despite the intraday gains, shares remain down 27% over the past 12 months.
Farmer Bros. attributed the positive cash flow to changes it made in direct-store delivery, including divesting its direct-ship-to-warehouse business, plus other restructuring efforts it made over the past 18 months. The company on Thursday posted $90 million in second-quarter sales and a steep drop in quarterly profit to $210,000, which included a $1.5 million loss tied to asset disposals.
"We realized our second straight quarter of positive [adjusted earnings before interest, taxes, debt and amortization] performance at $5.9 million and generated positive free cash flow for the first time in many years," Chief Executive John Moore said on a call with investors.
The coffee company warned that it expects that volatility in the coffee market as well as heightened risk of trade actions on key export markets for coffee will weigh on its results in the coming quarters. President Trump announced a 25% tariff on Mexican imports, including coffee, and the policy comes at a time fast-rising coffee prices are expected to cut into earnings for companies such as Starbucks.
"Looking ahead, the unprecedented coffee markets will likely put pressure on our results over the coming quarters," Chief Financial Officer Vance Fisher said on the call. "We remain focused on execution and our second-quarter results demonstrate we are in a much stronger position to manage these challenges."
Farmer Bros. sells its coffee under brands including its namesake, Boyd's, Cain's, West Coast Coffee and China Mist. Its customer base is made up primarily of hospitality businesses such as restaurants and hotels. The company also services convenience stores and food-service operators.
Write to Emon Reiser at emon.reiser@wsj.com
(END) Dow Jones Newswires
February 07, 2025 14:24 ET (19:24 GMT)
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