Attached files
| file | filename |
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| 8-K - FORM 8-K - FARMER BROTHERS CO | d284095d8k.htm |
| EX-99.2 - RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES - FARMER BROTHERS CO | d284095dex992.htm |
 INVESTOR
PRESENTATION JANUARY 2012
Exhibit 99.1 |
 CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
2
Certain
statements
contained
in
this
presentation,
including,
but
not
limited
to,
statements
regarding
the
development and growth of our business, our intent, belief or current
expectations, primarily with respect to future operating
performance and the products and services we expect to offer and other statements contained
herein
regarding
matters
that
are
not
historical
facts
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. Stockholders and other readers should not place undue
reliance on the forward- looking
statements,
which
speak
only
as
of
the
date
of
this
presentation.
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, our ability to successfully integrate the
CBI and DSD Coffee Business acquisitions, 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, our continued success in attracting new customers, variances from budgeted sales
mix
and
growth
rates,
weather
and
special
or
unusual
events,
and
changes
in
the
quality
or
dividend
stream
of
third parties’
securities and other investment vehicles in which we have invested our
assets, as well as other risks described from time to time in
our filings with the Securities and Exchange Commission. |
 FARMER BROTHERS
OVERVIEW 3
Leading manufacturer, wholesaler and distributor
of coffee, tea and culinary products
•
Founded in 1912
•
Today, the country’s largest direct store delivery
(DSD) coffee company
Differentiated business model
•
Most complete local, regional and national DSD
network in the coffee industry
•
Unique low cost production capabilities
•
Unparalleled distribution network serving multiple
segments of foodservice and retail channels
Experienced and motivated management team
•
Significant experience across consumer branded,
packaged good and beverage companies
FY11 Revenue -
$464M |
 FARMER BROTHERS
KEY INVESTMENT HIGHLIGHTS 4
A recognized leader in both premium and cost competitive
product offerings
Product Offering
Leading national direct delivery footprint
National
Coverage
Opportunities to continue to realize synergies from the recent
acquisitions
Acquisition
Synergies
State of the art development and production capabilities
Technical
Expertise
Leverage customer base of 63,000 and one of the most
experienced sales, marketing and operations teams in the industry
Market Position |
 COFFEE AND TEA
MARKETS CONTINUE TO GROW 5
1
Mintel
Coffee
&
Tea
(2010);
2
National
Coffee
Association
Trends
Report
(2011);
3
New
York
Times
(July
2011) |
 Division
Description
Farmer Brothers roasts and distributes coffee, tea and culinary
solutions such as spices, soup bases and salad dressings through
direct store delivery and broad line distribution.
Coffee Bean International, an independent, wholly-owned
subsidiary of Farmer Brothers, is one of the nation’s leading
specialty coffee roasters, focusing on private brand retail programs.
Custom Coffee Plan is a division of Farmer Bros. Co., an established
leader in coffee service supplying business and hospitality venues
within its operating regions.
Spice Products Company is an industrial spice ingredients supplier
which brings the highest levels of quality and consistency to the
foodservice and industrial food manufacturing industries.
6
DIVERSIFIED BUSINESS MODEL TO TAKE ADVANTAGE OF
GROWING INDUSTRY |
  NATIONWIDE
DISTRIBUTION NETWORK 7
•
Total facility square footage exceeds 1.5 million square feet
•
6 distribution centers and 114 branch warehouses
•
Approximately 500 routes servicing 63,000 customers |
 OUR COFFEE
BUSINESS TRANSITION 8
TODAY
Traditional, Premium & Specialty Coffees
PRE 2007
Only Traditional Coffee
Three roasting facilities; DSD distribution in 48 states
West Coast primarily
Multiple brands:
–
Farmer Brothers
–
Superior
–
Coffee Bean International
–
Panache
One brand: Farmer Brothers
–
Prebica
–
Cain’s
–
Metropolitan
2010 Vendor of the Year for both Sheetz, Inc. &
Target Corporation
Known primarily for
supplying small operators
Industry leading coffee development lab and green
coffee purchasing capabilities
Basic coffee resources
High Touch Customer Service Strategy Since 1912 |
 9
FARM 5 KEY POINTS OF DIFFERENTIATION
Product
-
Our products include coffee and tea,
along with a diverse selection of culinary
products and other hot and cold beverages.
Delivery -
Nearly 3 million square miles of direct
and multi-channel distribution.
Service -
Our high touch service model allows
63,000 foodservice customers to operate their
business more efficiently.
Equipment -
We own and operate responsive
nationwide equipment service coverage
24/7/365.
Procurement -
Deep, long lasting connections in
coffee, tea and spices, combined with strong co-
packing supplier partnerships in our other
categories
Procurement |
 QUALITY
EXECUTION AT ALL TIERS Using small batch, large batch and continuous roasting
processes in parallel,
we achieve exceptional consistency and quality control over multiple tiers.
10 |
 PRODUCTION
CAPABILITIES TORRANCE
1
HOUSTON
PORTLAND
11
coffee, spices
coffee, tea
coffee
1
Headquarters
•
Capacity Utilization Currently at 50 to 60% |
 NATIONAL
ACCOUNT APPEAL 12
•
Broad selection of consistently high quality products and
services
•
Customization capabilities to support individual programs
•
National direct delivery distribution coverage
•
Responsive equipment service model with 24hr support
•
Comprehensive partnership model, including
•
Brand development / strategy
•
Coffee / tea market expertise and consumer insight trends
•
Strategic commodity cost management programs |
 WE SELL MORE
THAN JUST COFFEE Our broad array of products provide diverse menu solutions for our
customers 13 |
 SIGNIFICANT
CONSUMER ACCOUNTS 14 |
 PRIVATE LABEL,
WITH ADDED VALUE 15
•
Accounts for approximately 15% of sales |
 MAJOR WINS /
RECENT WINS 16 |
 FARMER
BROTHERS' GROWTH STRATEGY 17
•
Increase synergies from the recent acquisitions of Coffee Bean
International and Sara Lee
•
Grow all tiers of Foodservice business –
leveraging our competitive
advantages:
•
Low cost producer with available roasting capacity
•
Unparalleled coffee and allied products distribution network
•
Customer
service
excellence
–
high
touch,
expert
capability
•
The most complete local, regional and national DSD network in the coffee
industry
•
Grow average order size and improve gross margin by focusing on
the following product categories:
•
Continue to grow national accounts business by leveraging our
differentiated partnership model
•
Specialty coffee
•
Iced coffee
•
Iced Tea
•
Cappuccino mix
•
Culinary products |
 SR. MANAGEMENT
TEAM/KEY SALES LEADERS 18
Name
Title
Prior Experience
Jeffrey Wahba
Interim Co-CEO, CFO and Treasurer
Patrick Criteser
Interim Co-CEO, President and CEO CBI
Mark Harding
Sr. VP of Operations
Larry Garrett
General Counsel
Hortensia Gomez
VP, Controller and Assistant Treasurer
Joe Prewett
VP of Marketing
Steve Heyman
VP of Sales
Tom Mortensen
VP of Field Operations -
West
Bryan Csehi
VP of Field Operations –
East
Jay Wilkins
SVP National Accounts -
CBI |
 FINANCIAL
OVERVIEW |
 RECENT
OPPORTUNITIES AND CHALLENGES 20
•
Coffee commodity market more than doubled from July 2010 to May 2011 but is
currently about 20% below its 2011 highs
•
Farmer Brothers increased its prices to cover the cost increase but like its
competitors lagged behind the rapid run-up in costs
•
Commodity costs have retreated more recently providing margin opportunities
and the Company has “locked in”
some of its future purchases which will provide
more margin stability going forward |
 KEY 2011
EXECUTED INITIATIVES 21
•
Aligned organization to meet current economic needs –
reduced headcount by 10%
while focusing resources on local markets
•
Significantly reduced operating expenses as a result of integration efforts –
current
run rate down more than 15% year over year
•
Despite unfavorable external factors, increased top line by 3% and grew National
Account business by 20%
•
Took necessary pricing actions to maintain $/lb. margins
•
Instituted a comprehensive hedging strategy to help smooth the impact of the
recently volatile coffee markets
•
Increased product breadth, technical expertise and marketing and
sales capabilities
leading to substantial increases in revenue per customer |
 5 YEAR REVENUE
GROWTH TREND 22
CBI acquisition –
April 2007; Sara Lee DSD acquisition –
February 2009 |
 FY11 ADJUSTED
EBITDAE RECONCILIATION 23
•
LIFO accounting impact of $40.3M in FY11
•
Adjusted EBITDAE -
$18.0M, $21.1M better than 2010
1
First full year after Sara Lee DSD Coffee and Tea acquisition; one time costs related to
integration efforts included |
 Q1 FINANCIAL
PERFORMANCE FY12 VS. FY11 24
Q1 –
quarter ending September 30. |
 STRONG BALANCE
SHEET WITH A FOCUS ON ASSET MANAGEMENT
25
•
Inventory -
includes LIFO reserve of $70.0 million
•
PP&E -
includes over 50 owned properties
(In millions)
September 30, 2011
Cash and Cash Equivalents
4.6
Short-Term Investments
16.2
Accounts
and Notes Receivable 44.6
Inventories
83.4
Other
Current Assets 2.4
Net PP&E
108.7
Other Assets
18.1
Total
Assets 277.9
Total Liabilities
excluding Credit Facility 123.2
Credit
Facility 33.4
Stockholders' Equity
121.3
Total Liabilities and
Stockholders' Equity 277.9
|
 INVESTMENT
HIGHLIGHTS 26
A recognized leader in both premium and cost competitive
product offerings
Product Offering
Leading national direct delivery footprint
National Coverage
Opportunities to continue to realize synergies from the recent
acquisitions
Acquisition
Synergies
State of the art development and production capabilities
Technical
Expertise
Leverage customer base of 63,000 and one of the most
experienced sales, marketing and operations teams in the industry
Market Position |
 NASDAQ:
FARM |