PART I – FINANCIAL INFORMATION (UNAUDITED) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Farmer Bros. Co.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, with detailed notes for the periods ended March 31, 2025 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to $163.2 million from $185.2 million, total liabilities decreased to $125.9 million from $139.7 million, and stockholders' equity fell to $37.3 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $84,560 | $102,981 | | **Total Assets** | $163,159 | $185,213 | | **Total Current Liabilities** | $64,943 | $77,033 | | **Total Liabilities** | $125,895 | $139,664 | | **Total Stockholders' Equity** | $37,264 | $45,549 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q3 FY25, net sales decreased to $82.1 million and net loss widened to $5.0 million, while for the nine-month period, net sales were flat at $257.1 million, but a net loss of $9.8 million was reported Statement of Operations Summary (in thousands, except EPS) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $82,054 | $85,358 | $257,140 | $256,698 | | Gross Profit | $34,504 | $34,231 | $110,660 | $101,127 | | (Loss) Income from Operations | $(3,563) | $(468) | $(5,374) | $1,897 | | Net (Loss) Income | $(4,976) | $(682) | $(9,769) | $717 | | Net (Loss) Income per Share | $(0.23) | $(0.03) | $(0.46) | $0.03 | [Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Total comprehensive loss for the three months ended March 31, 2025, was $4.7 million, and for the nine-month period, it was $9.8 million, a significant downturn from prior-year comprehensive income Comprehensive Loss (in thousands) | Period | Net (Loss) Income | Other Comprehensive Income (Loss) | Total Comprehensive (Loss) Income | | :--- | :--- | :--- | :--- | | **Three Months Ended Mar 31, 2025** | $(4,976) | $229 | $(4,747) | | **Three Months Ended Mar 31, 2024** | $(682) | $168 | $(514) | | **Nine Months Ended Mar 31, 2025** | $(9,769) | $(72) | $(9,841) | | **Nine Months Ended Mar 31, 2024** | $717 | $949 | $1,666 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from $45.5 million to $37.3 million, primarily due to a cumulative net loss of $9.8 million over the nine-month period, partially offset by share-based compensation - The accumulated deficit increased from **$(30.4) million** at the beginning of the fiscal year to **$(40.1) million** at March 31, 2025, reflecting the net losses incurred during the period[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2025, net cash provided by operating activities was $6.4 million, a significant improvement, while net cash used in investing activities was $8.0 million, resulting in an overall $1.8 million decrease in cash and restricted cash Cash Flow Summary (in thousands) | Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $6,352 | $(13,152) | | Net cash (used in) provided by investing activities | $(7,956) | $13,366 | | Net cash (used in) provided by financing activities | $(169) | $66 | | **Net (decrease) increase in cash** | **$(1,773)** | **$280** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies and financial statement line items, covering disclosures on business sales, lease obligations, debt, share-based compensation, revenue recognition, and legal contingencies - Roasted coffee sales constituted **48.2%** of total net sales in Q3 FY25, up from 46.2% in Q3 FY24[101](index=101&type=chunk) - As of March 31, 2025, the company had **$23.3 million** in outstanding borrowings under its Revolver Credit Facility and **$22.1 million** available for borrowing[74](index=74&type=chunk) - The company has purchase commitments for green coffee inventory totaling **$56.0 million** under fixed-price contracts as of March 31, 2025[104](index=104&type=chunk) - A settlement agreement with TreeHouse Foods, Inc. was executed on March 27, 2025, requiring the company to pay **$0.8 million**[25](index=25&type=chunk)[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 FY25 financial results, noting a 3.9% net sales decrease, improved gross margin to 42.1%, a $5.0 million net loss, and an increase in Adjusted EBITDA to $1.7 million, with liquidity deemed sufficient for the next 12 months [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q3 FY25 net sales decreased by **$3.3 million** (3.9%) due to lower unit sales, despite a 12.4% price increase, while gross profit slightly increased to **$34.5 million** with gross margin expanding to **42.1%**, and operating expenses rose due to a **$2.4 million** loss on asset disposals Change in Net Sales (in millions) | Period | Effect of change in unit sales | Effect of pricing and product mix changes | Total (decrease) increase in net sales | | :--- | :--- | :--- | :--- | | **Three Months Ended Mar 31, 2025 vs. 2024** | $(13.7) | $10.4 | $(3.3) | | **Nine Months Ended Mar 31, 2025 vs. 2024** | $(33.3) | $33.7 | $0.4 | - Gross margin increased to **42.1%** for Q3 FY25 from 40.1% in Q3 FY24, and to **43.0%** for the nine-month period from 39.4% YoY, primarily due to improved pricing[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - Operating expenses for Q3 FY25 included a **$2.4 million** loss on asset disposal, compared to a **$2.9 million** gain in the prior year, significantly impacting the operating loss comparison[121](index=121&type=chunk) [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like Adjusted EBITDA, which increased to **$1.7 million** for Q3 FY25 and **$9.1 million** for the nine-month period, driven by higher gross profit and reduced SG&A expenses after adjustments Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(4,976) | $(682) | $(9,769) | $717 | | Adjustments | $6,712 | $953 | $18,822 | $(1,415) | | **Adjusted EBITDA** | **$1,736** | **$271** | **$9,053** | **$2,132** | - Adjusted EBITDA Margin for Q3 FY25 was **2.1%**, compared to 0.3% in the prior-year quarter[111](index=111&type=chunk)[133](index=133&type=chunk) [Liquidity, Capital Resources and Financial Condition](index=35&type=section&id=Liquidity,%20Capital%20Resources%20and%20Financial%20Condition) The company's liquidity, primarily from operations and its Revolver Credit Facility, includes **$4.1 million** cash and **$22.1 million** available credit as of March 31, 2025, with management projecting **$9.0 million** to **$11.0 million** in FY25 capital expenditures and sufficient liquidity for the next 12 months - As of March 31, 2025, the company had **$4.1 million** of unrestricted cash and **$22.1 million** available on its Revolver Credit Facility[145](index=145&type=chunk) - Net cash provided by operating activities was **$6.4 million** for the nine months ended March 31, 2025, compared to net cash used of **$13.2 million** in the prior-year period[146](index=146&type=chunk)[147](index=147&type=chunk) - The company anticipates paying between **$9.0 million** and **$11.0 million** in capital expenditures in fiscal 2025[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from its variable-rate Revolver Credit Facility, where a 100 basis point change impacts annual interest expense by approximately **$0.23 million**, and commodity price risk from green coffee volatility, managed via inventory and forward contracts Interest Rate Sensitivity Analysis (in thousands) | Rate Change | Principal | New Interest Rate | Annual Interest Expense | | :--- | :--- | :--- | :--- | | -100 basis points | $23,300 | 5.78% | $1,347 | | **Unchanged** | **$23,300** | **6.78%** | **$1,580** | | +100 basis points | $23,300 | 7.78% | $1,813 | - The company is subject to price risk from the volatility of green coffee prices and uses forward commodity purchase agreements to manage this exposure[158](index=158&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2025, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[160](index=160&type=chunk) - No material changes to internal control over financial reporting occurred during the fiscal quarter ended March 31, 2025[161](index=161&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in pending legal proceedings, but management does not anticipate a material financial impact, with a **$1.9 million** settlement recorded in Q2 FY25 and a **$0.8 million** settlement agreed in March 2025 - Management opines that the outcome of pending legal proceedings will not have a material impact on the Company's financial position, results of operations, or cash flows[105](index=105&type=chunk) - The company recorded a **$1.9 million** legal settlement for the quarter ending December 31, 2024, and agreed to a separate **$0.8 million** settlement effective March 27, 2025[105](index=105&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024, occurred during the nine months ended March 31, 2025 - During the nine months ended March 31, 2025, there were no material changes to the risk factors disclosed in the 2024 Form 10‑K[163](index=163&type=chunk) [Other Items (Items 2, 3, 4, 5)](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and no Rule 10b5-1 trading arrangement adoptions or terminations by directors or officers during the quarter - The company reports 'None' for Unregistered Sales of Equity Securities and Use of Proceeds, and 'None' for Defaults Upon Senior Securities[164](index=164&type=chunk) - No directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' during the fiscal quarter ended March 31, 2025[164](index=164&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts like a settlement agreement, and Sarbanes-Oxley certifications from the Principal Executive and Financial Officers - Key exhibits filed include the Settlement Agreement and Release with TreeHouse Foods, Inc., and CEO/CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[166](index=166&type=chunk) [Signatures](index=40&type=section&id=SIGNATURES)

[Financial & Operational Highlights](index=1&type=section&id=Third%20quarter%202025%20business%20highlights) Q3 FY2025 highlights include $82.1 million net sales, a $5 million net loss, $1.7 million positive adjusted EBITDA, improved gross margin, and completed brand initiatives Q3 FY2025 Key Financial Metrics (vs. Q3 FY2024) | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $82.1 million | $85.4 million | -3.9% | | Gross Profit | $34.5 million | $34.2 million | +0.9% | | Gross Margin | 42.1% | 40.1% | +200 bps | | Net Loss | $5.0 million | $0.7 million | Increased Loss | | Adjusted EBITDA | $1.7 million | $0.3 million | +$1.4 million | - Key strategic initiatives completed during the quarter include the launch of the new specialty coffee brand, **Sum>One Coffee Roasters**, and the completion of the company's brand pyramid and coffee SKU rationalization initiative, creating a tiered go-to-market strategy[4](index=4&type=chunk)[8](index=8&type=chunk) - As of March 31, 2025, the company had **$4.1 million** in unrestricted cash, **$23.3 million** in outstanding borrowings, and **$22.1 million** of additional borrowing capacity under its credit facility[5](index=5&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) This section presents unaudited consolidated financial statements for Q3 FY2025, covering Statements of Operations, Balance Sheets, and Cash Flows [Consolidated Statements of Operations (Income Statement)](index=3&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20%28UNAUDITED%29) Q3 FY2025 net sales decreased 3.9% to $82.1 million, resulting in a $5.0 million net loss, largely due to a $2.4 million net loss on asset disposals Q3 FY2025 Income Statement Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net sales | $82,054 | $85,358 | | Gross profit | $34,504 | $34,231 | | (Loss) income from operations | $(3,563) | $(468) | | Net (loss) income | $(4,976) | $(682) | | Net (loss) income per share | $(0.23) | $(0.03) | [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20%28UNAUDITED%29) As of March 31, 2025, total assets decreased to $163.2 million, total liabilities to $125.9 million, and stockholders' equity to $37.3 million Balance Sheet Summary (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,054 | $5,830 | | Total current assets | $84,560 | $102,981 | | Total assets | $163,159 | $185,213 | | Total current liabilities | $64,943 | $77,033 | | Total liabilities | $125,895 | $139,664 | | Total stockholders' equity | $37,264 | $45,549 | [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20%28UNAUDITED%29) For the nine months ended March 31, 2025, operating activities generated $6.4 million cash, investing activities used $8.0 million, resulting in a $1.8 million decrease in cash balance Cash Flow Summary for Nine Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $6,352 | $(13,152) | | Net cash (used in) provided by investing activities | $(7,956) | $13,366 | | Net cash (used in) provided by financing activities | $(169) | $66 | | **Net (decrease) increase in cash** | **$(1,773)** | **$280** | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) This section details the company's use of non-GAAP financial measures, EBITDA and Adjusted EBITDA, providing reconciliations to net (loss) income for performance analysis - The company uses non-GAAP measures like EBITDA and Adjusted EBITDA to facilitate operating performance comparisons by isolating the effects of items like capital structure, tax positions, and non-recurring costs[24](index=24&type=chunk)[25](index=25&type=chunk) - Adjusted EBITDA excludes items such as income tax, interest, depreciation, share-based compensation, net gains/losses on asset disposals, loss on sale of business, and severance costs[27](index=27&type=chunk) [Reconciliation to EBITDA](index=6&type=section&id=Reconciliation%20of%20reported%20net%20%28loss%29%20income%20to%20EBITDA%20%28unaudited%29) Q3 FY2025 EBITDA was a loss of $1.3 million, a significant downturn from $2.8 million in Q3 FY2024, with EBITDA margin shifting from 3.3% to -1.6% Reconciliation of Net (Loss) Income to EBITDA (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net (loss) income | $(4,976) | $(682) | | Income tax expense | $187 | $— | | Interest expense | $655 | $635 | | Depreciation and amortization | $2,838 | $2,883 | | **EBITDA** | **$(1,296)** | **$2,836** | [Reconciliation to Adjusted EBITDA](index=7&type=section&id=Set%20forth%20below%20is%20a%20reconciliation%20of%20reported%20net%20%28loss%29%20income%20to%20Adjusted%20EBITDA%20%28unaudited%29) Adjusted EBITDA significantly improved to $1.7 million in Q3 FY2025 from $0.3 million in Q3 FY2024, expanding the margin to 2.1% from 0.3% Reconciliation of Net (Loss) Income to Adjusted EBITDA (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net (loss) income | $(4,976) | $(682) | | Adjustments (Taxes, Interest, D&A, etc.) | $6,712 | $953 | | **Adjusted EBITDA** | **$1,736** | **$271** |

Core Insights - Farmer Bros. Coffee Co. reported third quarter fiscal 2025 net sales of $82.1 million, a decrease from $85.4 million in the same period last year [7] - The company achieved a gross margin of 42.1%, an increase of 200 basis points year-over-year [1][7] - A net loss of $5 million was reported, which included a $2.4 million loss related to asset disposals, compared to a net loss of $700,000 in the third quarter of fiscal 2024 [7] - Adjusted EBITDA improved to $1.7 million, up from $271,000 in the prior year [1][7] Financial Performance - Net sales for the third quarter of fiscal 2025 were $82.1 million, down from $85.4 million in the third quarter of fiscal 2024 [7] - Gross profit was $34.5 million, or 42.1%, compared to $34.2 million, or 40.1%, in the prior year [7] - Operating expenses increased to $38.1 million from $34.7 million in the prior year, primarily due to a decrease in net gains related to asset disposals [7] - The company reported a net loss of $5 million, which included a $2.4 million loss from asset disposals [7] Strategic Initiatives - The launch of the Sum>One specialty coffee brand marked the completion of a 12-month brand pyramid and SKU rationalization initiative [3][7] - The company has implemented a tiered go-to-market strategy, allowing customers to navigate the value chain more effectively [3] Balance Sheet and Liquidity - As of March 31, 2025, Farmer Bros. had $4.1 million in unrestricted cash and cash equivalents, $200,000 in restricted cash, and $23.3 million in outstanding borrowings under its credit facility [5] - The company has an additional borrowing capacity of $22.1 million [5] Management Commentary - The CEO highlighted the third quarter as a solid performance, noting the third consecutive quarter of positive adjusted EBITDA and maintained gross margins above 42% [2] - The management emphasized ongoing efforts to streamline operations and improve cost structures in a challenging market environment [2]

Core Points - Farmer Bros. Co. will release its fiscal third quarter 2025 financial results on May 8, 2025, after market close [1] - An audio-only investor conference call and webcast will be held on the same day at 5 p.m. Eastern to discuss the quarter and provide a business update [2] - The company, founded in 1912, is a national coffee roaster and distributor, offering a variety of products including organic and sustainably produced coffee [3][4] Company Overview - Farmer Bros. Co. provides beverage planning services and culinary products to a diverse range of U.S. customers, including independent restaurants, large chains, and healthcare facilities [4] - The company's product lines include coffee, tea, cappuccino mixes, spices, and baking mixes, with primary brands such as Farmer Brothers, Boyd's Coffee, and SUM>ONE Coffee Roasters [4]

Core Viewpoint - Farmer Bros. Co. (FARM) has seen a significant stock price increase of 29.8% over the past three months, outperforming the broader market and raising questions about future growth potential [1][2]. Company Performance - The stock closed at $2.35, which is 37.5% below its 52-week high of $6.89, indicating room for recovery [3]. - FARM is trading above its 50-day and 200-day moving averages, suggesting a bullish trend [3]. - The forward 12-month price-to-sales (P/S) ratio for FARM is 0.14, significantly lower than the industry average of 0.24, making it an attractive value investment [4]. Competitive Positioning - FARM has outperformed major competitors like Performance Food Group Company (PFGC), SpartanNash Company (SPTN), and Sprouts Farmers Market, Inc. (SFM) in the food sector [2]. - The company is focusing on expanding its Direct-Store Delivery (DSD) and branded coffee segments, which are high-margin growth areas [8]. Strategic Initiatives - FARM is set to complete its SKU rationalization and brand pyramid projects by the end of the third quarter of fiscal 2025, aimed at streamlining operations and enhancing efficiency [9]. - The introduction of a specialty-tier coffee brand has received positive early feedback, expected to boost customer engagement [9]. Financial Performance - The company reported notable gross margin expansion in the fiscal second quarter and positive adjusted EBITDA, indicating a significant milestone in financial recovery [10]. - FARM's operational execution benefits from improved pricing, cost efficiencies, and supply chain optimization, which help mitigate inflationary pressures [10][11]. Growth Prospects - The ability to retain and expand the customer base, along with ongoing cost discipline, supports FARM's growth narrative [11]. - Despite challenges such as rising operating expenses and macroeconomic uncertainties, FARM's recent stock performance and strategic initiatives make it a compelling investment consideration [13].

Group 1 - Momentum investing contrasts with the traditional strategy of "buy low and sell high," focusing instead on "buying high and selling higher" [1] - Identifying the right entry point for fast-moving stocks can be challenging, as they may lose momentum if future growth does not justify their high valuations [1] - A safer investment approach involves targeting bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score [2] Group 2 - Farmer Brothers (FARM) is highlighted as a strong candidate for momentum investing, showing a four-week price change of 43.8% [3] - The stock has gained 7.5% over the past 12 weeks, indicating its ability to deliver positive returns over a longer timeframe [4] - FARM has a beta of 1.78, suggesting it moves 78% higher than the market in either direction, reflecting its fast-paced momentum [4] Group 3 - FARM has a Momentum Score of B, indicating a favorable time to invest in the stock to capitalize on its momentum [5] - The stock has earned a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which attract more investor interest [6] - FARM is trading at a Price-to-Sales ratio of 0.15, suggesting it is undervalued at 15 cents for each dollar of sales [6] Group 4 - In addition to FARM, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [7] - The Zacks Premium Screens offer over 45 different strategies to help investors find winning stock picks based on their personal investing styles [8]

Group 1 - Farmer Bros. Co. (FARM) has seen a 32.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Root, Inc. (ROOT) has experienced a 93.4% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Roku, Inc. (ROKU) has had a 14% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - FinWise Bancorp (FINW) has seen a 10.8% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Peoples Financial Services Corp. (PFIS) has experienced a 10.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Farmer Bros. Co. (FARM) reported second-quarter fiscal 2025 results, with the top line increasing year over year but missing the Zacks Consensus Estimate. Meanwhile, the bottom line declined year over year but beat the consensus mark. The company achieved improvements in sales while maintaining gross margins above 43% for the second consecutive quarter. FARM’s primary focus remains on driving top-line growth, expanding coffee volume and growing its customer base while enhancing operational efficiency. With ...

Group 1 - The focus has shifted from primarily tech stocks to include offshore drilling, supply industry, and shipping sectors such as tankers, containers, and dry bulk [1] - There is an emerging interest in the fuel cell industry, which is still in its nascent stage [1] Group 2 - The individual has a background in auditing with PricewaterhouseCoopers and transitioned to day trading nearly 20 years ago [2] - The experience includes navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2]

Financial Data and Key Metrics Changes - Sales increased slightly year-over-year and rose 6% compared to the first quarter of 2025, reaching $90 million [6][19] - Gross margins were maintained above 43%, with a gross margin of 43.1% for the quarter, up 270 basis points from 40.4% in the same quarter last year [7][21] - Adjusted EBITDA for the quarter was $5.9 million, a year-over-year increase of $3.6 million and a sequential increase of $4.5 million [20][19] - Operating expenses were $37.8 million, or 42% of net sales, compared to $31.7 million, or 35.4% of net sales, in the same quarter last year [24] - Net income for the quarter was $0.2 million, down from $2.7 million in the second quarter of fiscal 2024 [25] Business Line Data and Key Metrics Changes - Allied products, which include teas and other beverages, accounted for approximately half of total sales, helping to protect gross margins during volatile market conditions [14] - Coffee volumes were down 8% year-over-year, primarily due to customer count degradation and lower consumer spending [13] Market Data and Key Metrics Changes - The company experienced customer attrition during the second quarter, impacting overall coffee volumes [13] - The macroeconomic environment remains challenging, with high prices and volatility in commodity markets affecting the industry [15][17] Company Strategy and Development Direction - The company is focused on driving customer and volume growth while optimizing operations, with a new premium coffee program partnership announced [8] - A comprehensive SKU rationalization and brand pyramid project is expected to be completed by the end of the fiscal third quarter, aimed at creating operational efficiencies [11][12] - The company is enhancing its leadership team to improve business development and operational capabilities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's improved financial position and ability to navigate market challenges, emphasizing a proactive approach to pricing and inventory management [28][91] - The company is optimistic about long-term growth potential despite current market volatility [30][35] Other Important Information - The company achieved positive free cash flow for the first time in many years, with free cash flow of $0.5 million for the quarter [27] - The company is launching a B2B web-based ordering platform to enhance customer convenience and product penetration [74][75] Q&A Session Summary Question: Can you elaborate on the sales strategy with the new hire? - Management highlighted the excitement around the new VP of Sales, Brian Miller, who is expected to revitalize business development efforts and optimize the sales process [41][42] Question: What is the current status of operational optimization? - Management indicated they are in early to mid-innings of optimizing operations, with significant potential remaining in the existing customer base [46][49] Question: How material is the Urest partnership? - Management described the Urest partnership as a meaningful opportunity, emphasizing their capability to provide high-quality production and sourcing [68][69] Question: What are the plans for the direct-to-consumer e-commerce platform? - Management discussed the alignment of existing brands and the launch of a B2B web-based ordering platform, which will enhance customer engagement and product awareness [72][74] Question: How does the company plan to manage price increases in the current market? - Management acknowledged the volatility in coffee prices and expressed confidence in their proactive pricing strategies to maintain margins [88][94]