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| Statement |
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| Significant reduction in SKU counts and brand consolidation will reduce overhead and improve roasting efficiency for better margins |
| While revenue gains were modest on a year over year basis, we saw meaningful improvements with gross margin and adjusted EBITDA |
| Higher pricing along with favorable commodity costs, enabled expansion of our gross profit margin by 550 basis points on a year-over-year basis to 40.4% compared to 34.9% in the second quarter of fiscal '23 |
| In closing, I'll reiterate what John has said: while we recognize progress may not be linear on a quarter over quarter basis, we are feeling increasingly confident about the path we are on as we strive to generate sustainable top-line growth and profitability |
| All of these efforts share a common purpose and goal: improvement in our customer retention and growth |
| Boosted by improved pricing and a favorable position on our coffee costs, our gross margin expanded 550 basis points versus the prior year and rose above 40% for the first time in more than a year |
| We are seeing some positive signs there in that the business being added is actually exceeding expectations on a contribution standpoint |
| We anticipate additional gross margin upside over time as we have now sold through the majority of our older higher-cost inventory |
| We believe the company is now positioned to generate sustainable gross margin in excess of 40% |
| Similarly, while we are encouraged by our adjusted EBITDA improvement in the second quarter, we know we have opportunities to improve there as well, enhancing our ability to have the right product in the right place at the right time will drive top-line sales to better leverage our cost structure |
| Six months into our pivoting of the business to focus solely on DSD, we are proud of the foundational work we have done to position the company for long-term growth |
| We are beginning to see positive momentum on both an operational and financial front |
| Overall, we are pleased to report a strong fiscal second quarter, highlighted by a meaningful uptick in gross margin and adjusted EBITDA profitability |
| So we -- as we took a look at what was driving this customer retention issue, we've seen, it's been really gratifying to see that what our frozen the field state is corroborated by data |
| We are enhancing our point-of-sale management tools and have recently launched a new customer relationship management system, reinforcing the theme of customer retention |
| During the second half of fiscal 2024, we will continue to focus on further improvements as we improve our cost structure and drive incremental margin improvement, drive customer growth and retention, increased market penetration for new on-trend products, and complete the transitional services associated with our direct ship sales |
| In summary, we are pleased with the positive momentum we saw during the second quarter and believe our path to positive free cash flow by early fiscal 2025 is firmly in view |
| We've been able to make meaningful strides in all of these fronts in a short period of time |
| Our second quarter results show some positive trend lines |
| During the first half of fiscal 2024, we made strides in rightsizing our business, becoming more operationally efficient and adjusting our cost structure to support a return to sustainable profitability |
| Whether through better execution in every step of our supply chain or focus on brewing equipment and service, we know giving our customers what they need most is the fastest path to success for Farmer Brothers |
| You show up at the right place at the right time with the right products at the right price consistently, and you have a winning value proposition |
| We believe we are adequately capitalized to finance operations in fiscal '24 and expect to achieve our goal to be free cash flow positive by early fiscal '25 |
| Through what we have internally dubbed Project Symphony, we are also working to improve our customer experience with better processes and technology |
| Net sales were positively impacted by higher pricing but were offset by lower coffee volumes |
| Net income from continuing operations moved from a loss of $8.7 million during the prior year period to a gain of $2.7 million in the second quarter of fiscal '24, an improvement of $11.4 million |
| Is that still a fair thought process or will you be able to do that sooner? John Moore Actually, we're seeing some positive signs there as well |
| We're seeing a positive trend line there |
| Part of our sales growth equation includes adding innovative, on-trend products, and continued product penetration within our existing customer base |
| So we're seeing some positive signs of that leveling off and then turning around |
| Statement |
|---|
| As we know, simply cutting costs and being more efficient won't be enough to achieve sustainable profitability and free cash flow |
| So what we've been seeing is we had some churn in the past that rate is slowing down and slowing down substantively |
| Our improvements to date would not have been possible without their hard work |
| You discussed a little bit -- like as you mentioned, obviously, revenue was up modestly, but you also talked about volumes down slightly |
| No worries |
| The impact of these initiatives will only be amplified as we consolidate our roasting operations and reduce complexity in our Portland facility |
| Operating expenses decreased $2.6 million from $34.3 million in the second quarter of fiscal '23 to $31.7 million in the second quarter of fiscal '24 |
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