QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation of Organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices; Zip Code) | |||||||||||
(Registrant’s Telephone Number, Including Area Code) | |||||||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||||||
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
None | |||||||||||
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Large accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the | ||||||||||||||||||||
Exchange Act. | ☐ |
Page | |||||
September 30, 2022 | June 30, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Inventories | |||||||||||
Short-term derivative assets | |||||||||||
Prepaid expenses | |||||||||||
Assets held for sale | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Intangible assets, net | |||||||||||
Right-of-use operating lease assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | |||||||||||
Accrued payroll expenses | |||||||||||
Right-of-use operating lease liabilities - current | |||||||||||
Term loan - current | |||||||||||
Short term derivative liability | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term borrowings under revolving credit facility | |||||||||||
Term loan - noncurrent | |||||||||||
Accrued pension liabilities | |||||||||||
Accrued postretirement benefits | |||||||||||
Accrued workers’ compensation liabilities | |||||||||||
Right-of-use operating lease liabilities - noncurrent | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | $ | $ | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | $ | $ | |||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net sales | $ | $ | ||||||||||||
Cost of goods sold | ||||||||||||||
Gross profit | ||||||||||||||
Selling expenses | ||||||||||||||
General and administrative expenses | ||||||||||||||
Net gains from sales of assets | ( | ( | ||||||||||||
Operating expenses | ||||||||||||||
Loss from operations | ( | ( | ||||||||||||
Other (expense) income: | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Other, net | ||||||||||||||
Total other expense | ( | ( | ||||||||||||
Loss before taxes | ( | ( | ||||||||||||
Income tax expense | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | ||||||||||||||
Net loss available to common stockholders | $ | ( | $ | ( | ||||||||||
Net loss available to common stockholders per common share—basic | $ | ( | $ | ( | ||||||||||
Net loss available to common stockholders per common share—diluted | $ | ( | $ | ( | ||||||||||
Weighted average common shares outstanding—basic | ||||||||||||||
Weighted average common shares outstanding—diluted |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Other comprehensive (loss) income: | ||||||||||||||
Unrealized (losses) gains on derivatives designated as cash flow hedges | ( | |||||||||||||
Gains on derivatives designated as cash flow hedges reclassified to cost of goods sold | ( | ( | ||||||||||||
Losses on derivative instruments undesignated as cash flow hedges reclassified to interest expense, net of tax | ||||||||||||||
Total comprehensive (loss) income, net of tax | $ | ( | $ |
FARMER BROS. CO. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash flow hedges, net of taxes | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
401(k) compensation expense, including reclassifications | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Conversion and cancellation of preferred shares | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Preferred Shares | Preferred Stock Amount | Common Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Cash flow hedges, net of taxes | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Change in the funded status of retiree benefit obligations, net of taxes | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
ESOP and 401(k) compensation expense, including reclassifications | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock and stock option exercises | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Conversion and cancellation of preferred shares | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
FARMER BROS. CO. | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
(In thousands) | |||||||||||
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Gain on settlement related to Boyd's acquisition | ( | ||||||||||
Net gains from sales of assets | ( | ( | |||||||||
Net gains on derivatives instruments | ( | ( | |||||||||
ESOP and share-based compensation expense | |||||||||||
Provision for (recovery of) credit losses | ( | ||||||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Inventories | ( | ||||||||||
Derivative assets, net | |||||||||||
Other assets | ( | ( | |||||||||
Accounts payable | ( | ||||||||||
Accrued expenses and other | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from sales of property, plant and equipment | |||||||||||
Net cash provided by investing activities | |||||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from Credit Facilities | |||||||||||
Repayments on Credit Facilities | ( | ( | |||||||||
Payments of finance lease obligations | ( | ( | |||||||||
Payment of financing costs | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net decrease in cash and cash equivalents and restricted cash | ( | ( | |||||||||
Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ |
Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
Non cash additions to property, plant and equipment | $ | $ | |||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities | |||||||||||
Non-cash issuance of ESOP and 401(K) common stock | |||||||||||
Cumulative preferred dividends, undeclared and unpaid |
Standard | Description | Effective Date | Effect on the Financial Statements or Other Significant Matters | |||||||||||||||||
In March 2020, the FASB issued ASU No. 2020-04, “Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”) | The London Interbank Offered Rate (LIBOR) is being discontinued between December 2021 and June 2023. The Company has not entered into any new contracts after December 31, 2021. With the overnight, 1-month, 3-month, 6-month and 12-month USD LIBOR rates being published through June 30, 2023, we will continue to leverage these for the existing contracts. ASU 2020-04 provides temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the transition from LIBOR to alternative reference rate. | Issuance date of March 12, 2020 through December 31, 2022. | The Company does not anticipate any material impacts on its consolidated financial statements. |
Three Months Ended September 30, | ||||||||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||||||||
Operating lease expense | $ | $ | ||||||||||||||||||
Finance lease expense: | ||||||||||||||||||||
Amortization of finance lease assets | ||||||||||||||||||||
Interest on finance lease liabilities | ||||||||||||||||||||
Total lease expense | $ | $ |
September 30, 2022 | ||||||||||||||
(In thousands) | Operating Leases | Finance Leases | ||||||||||||
2023 | $ | $ | ||||||||||||
2024 | ||||||||||||||
2025 | ||||||||||||||
2026 | ||||||||||||||
2027 | ||||||||||||||
Thereafter | ||||||||||||||
Total lease payments | ||||||||||||||
Less: interest | ( | ( | ||||||||||||
Total lease obligations | $ | $ |
September 30, 2022 | June 30, 2022 | |||||||||||||
Weighted-average remaining lease terms (in years): | ||||||||||||||
Operating lease | ||||||||||||||
Finance lease | ||||||||||||||
Weighted-average discount rate: | ||||||||||||||
Operating lease | % | % | ||||||||||||
Finance lease | % | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
Operating cash flows from operating leases | $ | $ | ||||||||||||
Operating cash flows from finance leases | ||||||||||||||
Financing cash flows from finance leases |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | ||||||||||||||
Derivative instruments not designated as cash flow hedges: | ||||||||||||||
Long coffee pounds | ||||||||||||||
Total |
Derivative Instruments Designated as Cash Flow Hedges | Derivative Instruments Not Designated as Accounting Hedges | |||||||||||||||||||||||||
(In thousands) | September 30, 2022 | June 30, 2022 | September 30, 2022 | June 30, 2022 | ||||||||||||||||||||||
Financial Statement Location: | ||||||||||||||||||||||||||
Short-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Interest rate swap derivative instruments (1) | ||||||||||||||||||||||||||
Long-term derivative assets: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (2) | ||||||||||||||||||||||||||
Interest rate swap derivative instruments (2) | ||||||||||||||||||||||||||
Short-term derivative liabilities: | ||||||||||||||||||||||||||
Coffee-related derivative instruments (3) | ||||||||||||||||||||||||||
Three Months Ended September 30, | Financial Statement Classification | |||||||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||||||||
Net losses reclassified from AOCI to earnings for de-designated Interest rate swap | ( | ( | Interest Expense | |||||||||||||||||
Net(losses) gains recognized in AOCI - Coffee-related | ( | AOCI | ||||||||||||||||||
Net gains recognized in earnings - Coffee - related | Cost of goods sold |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net gains on coffee-related derivative instruments (1) | $ | $ | ||||||||||||
Non-operating pension and other postretirement benefits | ||||||||||||||
Other gains, net | ||||||||||||||
Other, net | $ | $ |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Accumulated other comprehensive income beginning balance | $ | ( | $ | ( | ||||||||||
Net losses reclassified from AOCI to earnings for partial unwind of interest swap - Interest rate swap | ( | ( | ||||||||||||
Net losses (gains) recognized in AOCI - Coffee-related | ( | |||||||||||||
Net gains recognized in earnings - Coffee-related | ||||||||||||||
Accumulated other comprehensive income ending balance | $ | ( | $ | ( |
(In thousands) | Gross Amount Reported on Balance Sheet | Netting Adjustments | Cash Collateral Posted | Net Exposure | ||||||||||||||||||||||||||||
September 30, 2022 | Derivative Assets | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||
Derivative Liabilities | ( | |||||||||||||||||||||||||||||||
June 30, 2022 | Derivative Assets | ( | ||||||||||||||||||||||||||||||
Derivative Liabilities | ( |
(In thousands) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
September 30, 2022 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | ||||||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | ||||||||||||||||||||||||||
Interest rate swap derivative assets (2) | ||||||||||||||||||||||||||
Coffee-related derivative liabilities (1) | ||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||
Derivative instruments designated as cash flow hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Coffee-related derivative liabilities (1) | ||||||||||||||||||||||||||
Derivative instruments not designated as accounting hedges: | ||||||||||||||||||||||||||
Coffee-related derivative assets (1) | ||||||||||||||||||||||||||
Coffee-related derivative liabilities (1) | ||||||||||||||||||||||||||
Interest rate swap derivative asset (2) |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Trade receivables | $ | $ | ||||||||||||
Other receivables(1) | ||||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
Accounts receivable, net | $ | $ |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Coffee | ||||||||||||||
Processed | $ | $ | ||||||||||||
Unprocessed | ||||||||||||||
Total | $ | $ | ||||||||||||
Tea and culinary products | ||||||||||||||
Processed | ||||||||||||||
Unprocessed | ||||||||||||||
Total | $ | $ | ||||||||||||
Coffee brewing equipment parts | ||||||||||||||
Total inventories | $ | $ |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Buildings and facilities | $ | $ | ||||||||||||
Machinery, vehicles and equipment | ||||||||||||||
Capitalized software | ||||||||||||||
Office furniture and equipment | ||||||||||||||
$ | $ | |||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Land | ||||||||||||||
Property, plant and equipment, net | $ | $ |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Coffee Brewing Equipment | $ | $ | ||||||||||||
Accumulated depreciation | ( | ( | ||||||||||||
Coffee Brewing Equipment, net | $ | $ |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Depreciation expense in COGS | $ | $ | ||||||||||||
CBE Costs excl. depreciation exp |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Weighted Average Amortization Period as of September 30, 2022 | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Recipes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Trade name/brand name | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Total amortized intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Unamortized intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||
Trademarks, trade names and brand name with indefinite lives | $ | $ | — | $ | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||||
Total unamortized intangible assets | $ | $ | — | $ | $ | $ | — | $ | ||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Interest cost | $ | $ | ||||||||||||
Expected return on plan assets | ( | ( | ||||||||||||
Amortization of net loss (1) | ||||||||||||||
Net periodic benefit (credit) cost | $ | $ | ( |
September 30, 2022 | June 30, 2022 | |||||||||||||
Discount rate | ||||||||||||||
Expected long-term return on plan assets |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Contributions to WCTPP | $ | $ | ||||||||||||
Contributions to All Other Plans |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Components of Net Periodic Postretirement Benefit Cost: | ||||||||||||||
Service cost | $ | $ | ||||||||||||
Interest cost | ||||||||||||||
Amortization of net gain | ||||||||||||||
Net periodic postretirement benefit cost | $ | $ |
Fiscal year | ||||||||||||||
2023 | 2022 | |||||||||||||
Retiree Medical Plan discount rate | N/A | N/A | ||||||||||||
Death Benefit Plan discount rate |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Principal Borrowing Amount | Carrying Value | Weighted Average Interest Rate (1) | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Revolver | Various | 4/26/2027 | N/A | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||
Term Loan | 8/31/2022 | 4/26/2027 | $ | |||||||||||||||||||||||||||||||||||||||||
Unamortized deferred debt financing costs | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Total | $ |
Outstanding NQOs: | Number of NQOs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | ||||||||||||||||||||||
Outstanding at June 30, 2022 | $ | |||||||||||||||||||||||||
Granted | — | — | ||||||||||||||||||||||||
Exercised | — | |||||||||||||||||||||||||
Cancelled/Forfeited | ( | — | — | |||||||||||||||||||||||
Expired | ( | — | — | |||||||||||||||||||||||
Outstanding at September 30, 2022 | $ | |||||||||||||||||||||||||
Exercisable at September 30, 2022 | $ | |||||||||||||||||||||||||
Outstanding PNQs: | Number of PNQs | Weighted Average Exercise Price ($) | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value ($ in thousands) | ||||||||||||||||||||||
Outstanding at June 30, 2022 | $ | |||||||||||||||||||||||||
Granted | — | — | ||||||||||||||||||||||||
Exercised | — | |||||||||||||||||||||||||
Cancelled/Forfeited | — | — | ||||||||||||||||||||||||
Expired | — | — | ||||||||||||||||||||||||
Outstanding at September 30, 2022 | $ | — | ||||||||||||||||||||||||
Exercisable at September 30, 2022 | $ | — | ||||||||||||||||||||||||
Outstanding and Nonvested Restricted Stock Awards: | Shares Awarded | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | ||||||||||||||
Granted | ||||||||||||||
Vested/Released | ( | |||||||||||||
Cancelled/Forfeited | ( | |||||||||||||
Outstanding and nonvested at September 30, 2022 | ||||||||||||||
Outstanding and Nonvested PBRSUs: | PBRSUs Awarded (1) | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | ||||||||||||||
Granted (1) | ||||||||||||||
Vested/Released | ||||||||||||||
Cancelled/Forfeited | ( | |||||||||||||
Outstanding and nonvested at September 30, 2022 | ||||||||||||||
Outstanding and Nonvested CSRSUs: | CSRSUs Awarded | Weighted Average Grant Date Fair Value ($) | ||||||||||||
Outstanding and nonvested at June 30, 2022 | ||||||||||||||
Granted | ||||||||||||||
Vested/Released | ( | |||||||||||||
Cancelled/Forfeited | ( | |||||||||||||
Outstanding and nonvested at September 30, 2022 | ||||||||||||||
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Accrued workers’ compensation liabilities | $ | $ | ||||||||||||
Finance lease liabilities | ||||||||||||||
Other (1) | ||||||||||||||
Other current liabilities | $ | $ |
(In thousands) | September 30, 2022 | June 30, 2022 | ||||||||||||
Deferred compensation (1) | $ | $ | ||||||||||||
Finance lease liabilities | ||||||||||||||
Deferred income taxes and other liabilities | ||||||||||||||
Other long-term liabilities | $ | $ |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Income tax expense | $ | $ | ||||||||||||
Effective tax rate | ( | % | ( | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands, except share and per share amounts) | 2022 | 2021 | ||||||||||||
Undistributed net loss available to common stockholders | $ | ( | $ | ( | ||||||||||
Undistributed net loss available to nonvested restricted stockholders and holders of convertible preferred stock | ( | |||||||||||||
Net loss available to common stockholders - basic | $ | ( | $ | ( | ||||||||||
Weighted average common shares outstanding - basic | ||||||||||||||
Effect of dilutive securities: | ||||||||||||||
Shares issuable under stock options | ||||||||||||||
Weighted average common shares outstanding - diluted | ||||||||||||||
Net loss available to common stockholders per common share—basic | $ | ( | $ | ( | ||||||||||
Net loss available to common stockholders per common share—diluted | $ | ( | $ | ( |
Three Months Ended September 30, | ||||||||||||||
2022 | 2021 | |||||||||||||
Shares issuable under stock options | ||||||||||||||
Shares issuable under convertible preferred stock | ||||||||||||||
Shares issuable under PBRSUs |
Three Months Ended September 30, | ||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||
(In thousands) | $ | % of total | $ | % of total | ||||||||||||||||||||||
Net Sales by Product Category: | ||||||||||||||||||||||||||
Coffee (Roasted) | $ | % | $ | % | ||||||||||||||||||||||
Tea & Other Beverages (1) | % | % | ||||||||||||||||||||||||
Culinary | % | % | ||||||||||||||||||||||||
Spices | % | % | ||||||||||||||||||||||||
Net sales by product category | % | % | ||||||||||||||||||||||||
Delivery Surcharge | % | % | ||||||||||||||||||||||||
Net sales | $ | % | $ | % |
(In thousands) | ||||||||||||||||||||||||||
Name of Branch Property | Date Sold | Sales Price | Net Proceeds | Gain on Sale | ||||||||||||||||||||||
Portland, Oregon | 9/23/2022 | $ | $ | $ | ||||||||||||||||||||||
San Diego, California | 9/19/2022 | |||||||||||||||||||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended September 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||
Net sales | $ | 121,380 | $ | 108,362 | $13,018 | 12.0% | |||||||||||||||||
Gross margin | 21.9 | % | 29.0 | % | (7.1)% | NM | |||||||||||||||||
Operating expenses as a % of sales | 25.5 | % | 30.7 | % | 5.2% | NM | |||||||||||||||||
Loss from operations | $ | (4,298) | $ | (1,780) | $(2,518) | (141.5)% | |||||||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | $(4,950) | (204.2)% | |||||||||||||||||
Operating Data: | |||||||||||||||||||||||
Coffee pounds | 17,387 | 19,876 | (2,489) | (12.5)% | |||||||||||||||||||
EBITDA (1) | $ | 1,796 | $ | 6,089 | $(4,293) | (70.5)% | |||||||||||||||||
EBITDA Margin (1) | 1.5 | % | 5.6 | % | (4.1)% | NM | |||||||||||||||||
Adjusted EBITDA (1) | $ | (4,873) | $ | 3,489 | $(8,362) | (239.7)% | |||||||||||||||||
Adjusted EBITDA Margin (1) | (4.0) | % | 3.2 | % | (7.2)% | NM | |||||||||||||||||
Percentage of Total Net Sales By Product Category | |||||||||||||||||||||||
Coffee (Roasted) | 64.5 | % | 65.1 | % | (0.6)% | (0.9)% | |||||||||||||||||
Tea & Other Beverages (2) | 17.3 | % | 17.6 | % | (0.3)% | (1.7)% | |||||||||||||||||
Culinary | 12.3 | % | 12.1 | % | 0.2% | 1.7% | |||||||||||||||||
Spices | 4.9 | % | 4.8 | % | 0.1% | 2.1% | |||||||||||||||||
Net sales by product category | 99.0 | % | 99.6 | % | (0.7)% | NM | |||||||||||||||||
Delivery Surcharge | 1.0 | % | 0.4 | % | 0.6% | NM | |||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | —% | —% | |||||||||||||||||
Other data: | |||||||||||||||||||||||
Capital expenditures related to maintenance | $ | 2,846 | $ | 2,243 | $ | (603) | (26.9)% | ||||||||||||||||
Total capital expenditures | 2,988 | 2,542 | (446) | (17.5)% | |||||||||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | 627 | 10.0% |
Three Months Ended September 30, | Favorable (Unfavorable) | ||||||||||||||||||||||
2022 | 2021 | Change | % Change | ||||||||||||||||||||
Net sales | $ | 121,380 | $ | 108,362 | $13,018 | 12.0% | |||||||||||||||||
Cost of goods sold | 94,783 | 76,908 | (17,875) | (23.2)% | |||||||||||||||||||
Gross profit | 26,597 | 31,454 | (4,857) | (15.4)% | |||||||||||||||||||
Selling expenses | 27,590 | 26,009 | (1,581) | (6.1)% | |||||||||||||||||||
General and administrative expenses | 10,487 | 11,807 | 1,320 | 11.2% | |||||||||||||||||||
Net gains from sales of assets | (7,182) | (4,582) | 2,600 | NM | |||||||||||||||||||
Operating expenses | 30,895 | 33,234 | 2,339 | 7.0% | |||||||||||||||||||
Loss from operations | (4,298) | (1,780) | (2,518) | (141.5)% | |||||||||||||||||||
Other (expense) income: | |||||||||||||||||||||||
Interest expense | (4,641) | (3,026) | (1,615) | (53.4)% | |||||||||||||||||||
Other, net | 1,608 | 2,444 | 836 | NM | |||||||||||||||||||
Total other expense | (3,033) | (582) | (2,451) | NM | |||||||||||||||||||
Loss before taxes | (7,331) | (2,362) | (4,969) | (210.4)% | |||||||||||||||||||
Income tax expense | 43 | 62 | 19 | NM | |||||||||||||||||||
Net loss | $ | (7,374) | $ | (2,424) | (4,950) | (204.2)% | |||||||||||||||||
Less: Cumulative preferred dividends, undeclared and unpaid | — | 147 | 147 | 100.0% | |||||||||||||||||||
Net loss available to common stockholders | $ | (7,374) | $ | (2,571) | (4,803) | (186.8)% | |||||||||||||||||
Three Months Ended September 30, 2022 vs. 2021 | |||||
Effect of change in unit sales | $ | (15.6) | |||
Effect of pricing and product mix changes | 28.6 | ||||
Total increase in net sales | $ | 13.0 |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (7,374) | $ | (2,424) | ||||||||||
Income tax expense | 43 | 62 | ||||||||||||
Interest expense (1) | 3,475 | 2,172 | ||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | ||||||||||||
EBITDA | $ | 1,796 | $ | 6,089 | ||||||||||
EBITDA Margin | 1.5 | % | 5.6 | % |
Three Months Ended September 30, | ||||||||||||||
(In thousands) | 2022 | 2021 | ||||||||||||
Net loss, as reported | $ | (7,374) | $ | (2,424) | ||||||||||
Income tax expense | 43 | 62 | ||||||||||||
Interest expense (1) | 3,475 | 2,172 | ||||||||||||
Depreciation and amortization expense | 5,652 | 6,279 | ||||||||||||
ESOP and share-based compensation expense | 2,197 | 1,392 | ||||||||||||
Gain on settlement with Boyd's sellers (2) | (1,918) | — | ||||||||||||
Net gains from sale of assets | (7,182) | (4,582) | ||||||||||||
Severance costs | 234 | 590 | ||||||||||||
Adjusted EBITDA | $ | (4,873) | $ | 3,489 | ||||||||||
Adjusted EBITDA Margin | (4.0) | % | 3.2 | % |
September 30, 2022 | June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Debt Origination Date | Maturity | Principal Borrowing Amount | Carrying Value | Weighted Average Interest Rate (1) | Carrying Value | Weighted Average Interest Rate | |||||||||||||||||||||||||||||||||||||
Revolver | Various | 4/26/2027 | N/A | $ | 67,000 | 3.98 | % | $ | 63,000 | 2.75 | % | |||||||||||||||||||||||||||||||||
Term Loan | 8/31/2022 | 4/26/2027 | $47,000 | 47,000 | 45,600 | |||||||||||||||||||||||||||||||||||||||
Total | $ | 114,000 | $ | 108,600 |
Three Months Ended September 30, | |||||||||||
2022 | 2021 | ||||||||||
Consolidated Statements of cash flows data (in thousands) | |||||||||||
Net cash used in operating activities | $ | (13,419) | $ | (6,735) | |||||||
Net cash provided by investing activities | 6,073 | 4,755 | |||||||||
Net cash provided by (used in) financing activities | 5,090 | (2,269) | |||||||||
Net decrease in cash and cash equivalents and restricted cash | $ | (2,256) | $ | (4,249) |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
(In thousands) | Principal | Interest Rate | Annual Interest Expense | |||||||||||||||||
–150 basis points | $49,000 | 3.24 | % | $1,588 | ||||||||||||||||
–100 basis points | $49,000 | 3.74 | % | $1,833 | ||||||||||||||||
Unchanged | $49,000 | 4.74 | % | $2,323 | ||||||||||||||||
+100 basis points | $49,000 | 5.74 | % | $2,813 | ||||||||||||||||
+150 basis points | $49,000 | 6.24 | % | $3,058 |
Increase (Decrease) to Net Loss | Increase (Decrease) to AOCI | |||||||||||||||||||||||||
10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | 10% Increase in Underlying Rate | 10% Decrease in Underlying Rate | |||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Coffee-related derivative instruments (1) | $ | 226 | $ | (226) | $ | 797 | $ | (797) |
Item 4. | Controls and Procedures |
PART II - OTHER INFORMATION |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit No. | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
3.5 | ||||||||
3.6 | ||||||||
3.7 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | Inline XBRL Instance Document | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (included in Exhibit 101). |
* | Filed herewith | ||||
** | Furnished, not filed, herewith |
FARMER BROS. CO. | |||||||||||||||||
By: | /s/ Deverl Maserang | ||||||||||||||||
Deverl Maserang President and Chief Executive Officer (principal executive officer) | |||||||||||||||||
November 3, 2022 | |||||||||||||||||
By: | /s/ Scott R. Drake | ||||||||||||||||
Scott R. Drake Chief Financial Officer (principal financial officer) | |||||||||||||||||
November 3, 2022 |
/S/ DEVERL MASERANG | ||
Deverl Maserang President and Chief Executive Officer (principal executive officer) |
/S/ SCOTT R. DRAKE | ||
Scott R. Drake Chief Financial Officer (principal financial officer) | ||
/S/ DEVERL MASERANG | ||
Deverl Maserang President and Chief Executive Officer (principal executive officer) |
/S/ SCOTT R. DRAKE | ||
Scott R. Drake Chief Financial Officer (principal financial officer) | ||
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Accounts Receivable, Allowance for Credit Loss, Current | $ 190 | $ 195 |
Preferred stock, par value (in US$ per share) | $ 1.00 | $ 1.00 |
Preferred Stock, Shares Authorized (in shares) | 500,000 | 500,000 |
Preferred Stock, Shares Outstanding | 0 | |
Preferred stock, issued (in shares) | 0 | |
Liquidation preference | $ 17,346 | |
Common stock, par value (in US$ per share) | $ 1.00 | $ 1.00 |
Common stock, shares authorized (in shares) | 50,000,000 | |
Common stock, shares issued (in shares) | 19,279,970 | 18,464,966 |
Common stock, shares outstanding (in shares) | 19,279,970 | 18,464,966 |
Preferred Class A | ||
Preferred Stock, Shares Authorized (in shares) | 21,000 | 21,000 |
Preferred Stock, Shares Outstanding | 0 | 14,700 |
Preferred stock, issued (in shares) | 14,700 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (7,374) | $ (2,424) |
Other comprehensive (loss) income: | ||
Unrealized (losses) gains on derivatives designated as cash flow hedges | (527) | 5,859 |
Gains on derivatives designated as cash flow hedges reclassified to cost of goods sold | (1,281) | (1,920) |
Losses on derivative instruments undesignated as cash flow hedges reclassified to interest expense, net of tax | 287 | 314 |
Total comprehensive (loss) income, net of tax | $ (8,895) | $ 1,829 |
Introduction and Basis of Presentation |
3 Months Ended |
---|---|
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Introduction and Basis of Presentation | Note 1. Introduction and Basis of Presentation Farmer Bros. Co., a Delaware corporation (including its consolidated subsidiaries unless the context otherwise requires, the “Company”), is a leading coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea, and other allied products manufactured under our owned brands, as well as under private labels on behalf of certain customers. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2023. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the Securities and Exchange Commission (the “SEC”) on September 2, 2022, and the Form 10-K/A filed on October 27, 2022 (the “2022 Form 10-K”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation and, the parent company of Coffee Bean International, Inc., an Oregon corporation, China Mist Brands, Inc., a Delaware corporation, and Boyd Assets Co., a Delaware corporation. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.
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Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2022 Form 10-K. During the three months ended September 30, 2022, there were no significant updates made to the Company’s significant accounting policies. Concentration of Credit Risk At September 30, 2022 and June 30, 2022, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables. The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative asset positions. At September 30, 2022 and June 30, 2022, none of the cash in the Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of coffee-related derivative instruments held could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements. Approximately 40% and 35% of the Company’s accounts receivable balance was with five customers at September 30, 2022 and June 30, 2022, respectively. The Company estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet. The accounts receivables are generally short-term and all estimated credit losses have been appropriately considered in establishing the allowance for credit losses. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements. The following table provides a brief description of the recent ASUs applicable to the Company:
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Leases (Notes) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 3. Leases The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms through September 30, 2028, some of which have options to extend the lease for up to 10 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease renewal until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease expense are as follows:
Maturities of lease liabilities are as follows:
Lease term and discount rate:
Other Information:
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Leases | Note 3. Leases The Company has entered into leases for building facilities, vehicles and other equipment. The Company’s leases have remaining contractual terms through September 30, 2028, some of which have options to extend the lease for up to 10 years. For purposes of calculating operating lease liabilities, lease terms are deemed not to include options to extend the lease renewal until it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The components of lease expense are as follows:
Maturities of lease liabilities are as follows:
Lease term and discount rate:
Other Information:
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Note 4. Derivative Instruments Derivative Instruments Held Coffee-Related Derivative Instruments The Company is exposed to commodity price risk associated with its price to be fixed green coffee purchase contracts, which are described further in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements in the 2022 Form 10-K. The Company utilizes forward and option contracts to manage exposure to the variability in expected future cash flows from forecasted purchases of green coffee attributable to commodity price risk. Certain of these coffee-related derivative instruments utilized for risk management purposes have been designated as cash flow hedges, while other coffee-related derivative instruments have not been designated as cash flow hedges or do not qualify for hedge accounting despite hedging the Company’s future cash flows on an economic basis. The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at September 30, 2022 and June 30, 2022:
Coffee-related derivative instruments designated as cash flow hedges outstanding as of September 30, 2022 will expire within 1.25 years. At September 30, 2022 and June 30, 2022 approximately 78% and 89%, respectively, of the Company's outstanding coffee-related derivative instruments were designated as cash flow hedges. Interest Rate Swap Derivative Instruments Pursuant to an International Swap Dealers Association, Inc. (“ISDA”) Master Agreement which was effective March 20, 2019, the Company on March 27, 2019, entered into an interest rate swap transaction utilizing a notional amount of $80.0 million, with an effective date of April 11, 2019 and a maturity date of October 11, 2023 (the “Rate Swap”). In December 2019, the Company amended the notional amount to $65.0 million. The Rate Swap was intended to manage the Company’s interest rate risk on its floating-rate indebtedness under the Company’s revolving credit facility. Under the terms of the Rate Swap, the Company received 1-month LIBOR, subject to a 0% floor, and made payments based on a fixed rate of 2.1975%. The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. As a result, the balance in accumulated other comprehensive income, or “AOCI” was frozen at the time of de-designation. The Company recognized $0.3 million, out of AOCI and into interest expense for the three months ended September 30, 2022. The remaining balance of $1.1 million frozen in AOCI will be amortized over the life of the Rate Swap through October 11, 2023. In connection with the revolver credit facility agreement entered into by the Company in April 2021 (see Note 11 for details), the Company also executed a new ISDA agreement (the “Amended Rate Swap”) to transfer its interest swap to Wells Fargo Bank, N.A. (“Wells Fargo”). Under the terms of the Amended Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.4725%, an increase of 0.275% from its original Rate Swap fixed rate of 2.1975%. The Amended Rate Swap utilizes the same notional amount of $65.0 million and maturity date of October 11, 2023 as the original interest rate swap. The Company did not designate the Amended Rate Swap as a cash flow hedge. The Company’s obligations under the Amended Rate Swap are secured by the collateral which secures the loans under the new Revolver Credit Facility (see Note 11 for details) on a pari passu and pro rata basis with the principal of such loans. Effect of Derivative Instruments on the Financial Statements Balance Sheets Fair values of derivative instruments on the Company’s consolidated balance sheets:
________________ (1) Included in “Short-term derivative assets” on the Company's consolidated balance sheets. (2) Included in “Long-term derivative assets” on the Company's consolidated balance sheets. (3) Included in “Short-term derivative liabilities” on the Company's consolidated balance sheets. Statements of Operations The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.
For the three months ended September 30, 2022 and 2021, there were no gains or losses recognized in earnings as a result of excluding amounts from the assessment of hedge effectiveness. Net (gains) losses on derivative instruments in the Company’s consolidated statements of cash flows also include net (gains) losses on coffee-related derivative instruments designated as cash flow hedges reclassified to cost of goods sold from AOCI in the three months ended September 30, 2022 and 2021. Gains and losses on coffee-related derivative instruments not designated as accounting hedges are included in “Other, net” in the Company’s consolidated statements of operations and in Net (gains) losses on derivative instruments in the Company’s consolidated statements of cash flows. Net gains and losses recorded in “Other, net” are as follows:
___________ (1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three months ended September 30, 2022 and 2021. Statement of Comprehensive Income (Loss) The following table provides the balances and changes in accumulated other comprehensive income (loss) related to derivative instruments for the indicated periods:
Offsetting of Derivative Assets and Liabilities The Company has agreements in place that allow for the financial right of offset for derivative assets and liabilities at settlement or in the event of default under the agreements. Additionally, under certain coffee derivative agreements, the Company maintains accounts with its counterparties to facilitate financial derivative transactions in support of its risk management activities. The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
Cash Flow Hedges Changes in the fair value of the Company’s coffee-related derivative instruments designated as cash flow hedges are deferred in AOCI and subsequently reclassified into cost of goods sold in the same period or periods in which the hedged forecasted purchases affect earnings, or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. Based on recorded values at September 30, 2022, $1.2 million of net gains on coffee-related derivative instruments designated as a cash flow hedge are expected to be reclassified into cost of goods sold within the next twelve months. These recorded values are based on market prices of the commodities as of September 30, 2022. The Company had designated the Rate Swap derivative instrument as a cash flow hedge; however, during the three months ended September 30, 2020, the Company de-designated the Rate Swap derivative instrument. The frozen AOCI is subsequently reclassified into interest expense in the period or periods when the hedged transaction affects earnings or when it is probable that the hedged forecasted transaction will not occur by the end of the originally specified time period. As of September 30, 2022, $1.1 million of net losses on the Rate Swap de-designated as a cash flow hedge are expected to be reclassified into interest expense within the next twelve months.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 5. Fair Value Measurements Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:
____________________ (1)The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2. (2)The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.
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Accounts Receivable, Net |
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Accounts Receivable, Net | Note 6. Accounts Receivable, Net
__________ (1) Includes vendor rebates and other non-trade receivables. There was no material change in the allowance for credit losses during the three months ended September 30, 2022.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Note 7. Inventories
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Property, Plant and Equipment |
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Property, Plant and Equipment | Note 8. Property, Plant and Equipment
Coffee Brewing Equipment (“CBE”) and Service Capitalized CBE included in machinery and equipment above are:
Depreciation expense related to capitalized CBE and other CBE related expenses provided to customers and reported in cost of goods sold were as follows:
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Note 9. Intangible Assets The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:
Aggregate amortization expense for the three months ended September 30, 2022 and 2021 was $0.6 million in each period.
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Note 10. Employee Benefit Plans Single Employer Pension Plans As of September 30, 2022, the Company has two defined benefit pension plans for certain employees, the "Farmer Bros. Plan" and the “Hourly Employees' Plan”. The Company froze benefit accruals and participation in these plans effective June 30, 2011 and October 1, 2016, respectively. After the plan freezes, participants do not accrue any benefits under the plan, and new hires are not eligible to participate in the plan. The net periodic benefit (credit) cost for the defined benefit pension plans is as follows:
___________ (1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
Multiemployer Pension Plans The Company participates in one multiemployer defined benefit pension plan that is union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements, called the Western Conference of Teamsters Pension Plan ("WCTPP"). The Company makes contributions to this plan generally based on the number of hours worked by the participants in accordance with the provisions of negotiated labor contracts. The company also contributes to two defined contribution pension plans (All Other Plans) that are union sponsored and collectively bargained for the benefit of certain employees subject to collective bargaining agreements. Contributions made by the Company to the multiemployer pension plans were as follows:
Multiemployer Plans Other Than Pension Plans The Company participates in nine multiemployer defined contribution plans other than pension plans that provide medical, vision, dental and disability benefits for active, union-represented employees subject to collective bargaining agreements. The plans are subject to the provisions of the Employee Retirement Income Security Act of 1974, and provide that participating employers make monthly contributions to the plans in an amount as specified in the collective bargaining agreements. Also, the plans provide that participants make self-payments to the plans, the amounts of which are negotiated through the collective bargaining process. The Company’s participation in these plans is governed by collective bargaining agreements which expire on or before January 31, 2025. 401(k) Plan Farmer Bros. Co. 401(k) Plan (the “401(k) Plan”) is available to all eligible employees. The 401(k) Plan match portion is available to all eligible employees who have worked more than 1,000 hours during a calendar year and were employed at the end of the calendar year. Participants in the 401(k) Plan may choose to contribute a percentage of their annual pay subject to the maximum contribution allowed by the Internal Revenue Service. The Company's matching contribution is discretionary, based on approval by the Company's Board of Directors. Beginning in July 2021, the Company re-instated a 401(k) Plan matching program (the “401(k) Match”) for non-union employees, by matching 50% of any non-union employee's annual contribution to the 401(k) Plan, up to 6% of such employee's eligible income, which is substantially similar to the program prior to its suspension in March 2020. Beginning in January 2022, the Company amended the 401(k) Match, whereby the Company on a quarterly basis, will contribute, instead of cash, shares of the Company’s common stock., par value $1.00 per share (the “Common Stock”) with a value equal to 50% of any non-union employee's annual contribution to the 401(k) Plan, up to 6% of such employee's eligible income. The terms of the match are substantially the same as the safe-harbor non-elective contribution. The Company recorded matching contributions of $0.5 million and $0.6 million in operating expenses in the three months ended September 30, 2022 and 2021, respectively. Additionally, the Company makes an annual safe harbor non-elective contribution of Common Stock equal to 4% of each eligible participant’s annual plan compensation. During the three months ended September 30, 2022 and 2021, the Company contributed a total of 257,052 and 51,597 of shares Common Stock with a value of $0.6 million and $0.7 million, respectively, to eligible participants’ annual plan compensation. Effective January 1, 2022, the Company amended the 401(k) Plan to, among other things, increase the number of shares of Common Stock available for issuance under the 401(k) Plan by 2,000,000 additional shares of Common Stock and permit participants in the 401(k) Plan to invest a portion of their 401(k) Plan accounts into Common Stock. Effective January 1, 2022, the Company merged the Company’s Employee Stock Ownership Plan (“ESOP”) into the 401(k) Plan and transferred all of the assets and shares in the ESOP to the 401(k) Plan. Postretirement Benefits Retiree Medical Plan and Death Benefit On March 23, 2020, the Company announced a plan to amend and terminate the postretirement medical benefit plan that covers qualified non-union retirees and certain qualified union retirees (“Retiree Medical Plan”) effective January 1, 2021. As a result, the re-measurement generated a prior service credit. This credit, along with actuarial gains, were amortized over the remaining months of the plan through January 1, 2021. The Retiree Medical Plan is now terminated. The Company provides a postretirement death benefit (the “Death Benefit” Plan) to certain employees and retirees, subject, in the case of current employees, to continued employment with the Company until retirement and certain other conditions related to the manner of employment termination and manner of death. In June 2021, the Company amended the Death Benefit Plan effective immediately, which triggered re-measurement of the plan. In conjunction with the amendment, the Company created a new Executive Death Benefit Plan (the “Executive Death Benefit Plan”) for a small group of participants in the Death Benefit Plan. Under the Executive Death Benefit Plan, the participants receive the same benefits they would have received under the Death Benefit Plan. The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit Plan for the three months ended September 30, 2022 and 2021.
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Note 11. Debt Obligations The following table summarizes the Company’s debt obligations:
__________ (1) The weighted average interest rate excludes the fixed rate on the de-designated Amended Rate Swap Revolver Facility On April 26, 2021, the Company entered into a senior secured facility which included a Revolver Credit Facility Agreement (the "Revolver Credit Facility"). The Revolver Credit Facility had a commitment of up to $80.0 million and a maturity date of April 25, 2025. On August 8, 2022, the Company and certain of its subsidiaries entered into the Increase Joinder and Amendment No. 2 to Credit Agreement (the “2nd Amendment”), with Wells Fargo, as administrative agent for each member of the lender group and as a lender. The 2nd Amendment amends certain terms and conditions of the Revolver Credit Facility by, among other things: (i) increasing the maximum revolver amount by $10.0 million to an aggregate maximum revolver commitment amount of $90.0 million; and (ii) replacing the London Interbank Offered Rate (LIBOR) interest rate benchmark (which had an applicable margin of 2.25% for LIBOR rate loans) with the secured overnight financing rate (SOFR) interest rate benchmark (which has an applicable margin of 1.75% for SOFR rate loans). Availability under the Revolver Credit Facility is calculated as the lesser of (a) $90.0 million or (b) the amount equal to the sum of (i) 85% of eligible accounts receivable (less a dilution reserve), plus (ii) the lesser of: (a) 80% of eligible raw material inventory, eligible in-transit inventory and eligible finished goods inventory (collectively, “Eligible Inventory”), and (b) 85% of the net orderly liquidation value of eligible inventory, minus (c) applicable reserve. The Revolver Credit Facility contains customary affirmative and negative covenants and restrictions typical for a financing of this type. Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the Revolver Credit Facility becoming immediately due and payable and termination of the commitments. Prior Term Loan Facility On April 26, 2021, the Company borrowed $47.5 million of term loans from various financial institutions as part of a Credit Agreement, dated as of April 26, 2021 (the “Prior Term Loan Facility”). The following is a summary description of the Prior Term Loan Facility: 1.total commitment of $47.5 million in the form of a term loan; 2.maturity date of April 25, 2025 and scheduled payback required on the principal prior to the maturity date; 3.fully collateralized by all existing and future capital stock of the borrowers (other than the Company) and all of the borrowers' personal and real property; 4.interest under the Term Loan is either LIBOR + 6.5% per annum, or (b) base rate + 5.50% per annum, with a 3% floor on base rate; and 5.commencing on the fiscal quarter ending on March 31, 2022, quarterly minimum EBITDA and fixed charge coverage ratio requirements specified therein. Principal payments on the Prior Term Loan Facility were due quarterly in the amount of $0.95 million. New Term Loan Facility On August 31, 2022, the Company entered into Amendment No. 3 to Credit Agreement (the “Term Loan Facility”), with the lenders party thereto, and Wells Fargo Bank, as administrative agent for each member of the lender group and as a lender. The 3rd Amendment amends certain terms and conditions of the Revolver Credit Facility by, among other things: (i) adding a new $47.0 million term loan (the “Term Loan”); (ii) extending the maturity date of the Company’s obligations under the Revolver Credit Facility from April 25, 2025 to April 26, 2027; provided, that if the maturity date of the Revolver Commitments is extended on or prior to April 1, 2027 to a date that is after April 26, 2027, then the maturity of the Term Loan Facility shall be August 31, 2037; (iii) releasing liens securing the obligations under the Revolver Facility Credit on various real properties owned by the Company; (iv) commencing on or around June 30, 2023, obligating the Company to maintain a Fixed Charge Coverage Ratio, calculated for each 12-month period ending on the last day of each fiscal month, of at least 1:00 to 1:00; and (v) lowering the Letter of Credit Fee payable with respect to letters of credit issued under the Credit Agreement from 2.25% to 1.75% of the average amount of the Letter of Credit Usage during the immediately preceding month. The proceeds of the Term Loan Facility were used to repay the outstanding term loans under the Term Credit Facility Agreement. With the repayment of the Company’s outstanding loans and other obligations under the Term Credit Facility Agreement, the Company is no longer subject to the minimum EBITDA covenants contained therein. As part of the refinancing transaction, the Company expensed $1.5 million in unamortized deferred financing costs, discount and payoff premium for the three months ended September 30, 2022, which are included in interest expense on the consolidated statement of operations. The Term Loan Facility contains customary affirmative and negative covenants and restrictions typical for a financing of this type that, among other things, require the Company to satisfy certain financial covenants and restrict the Company's and its subsidiaries' ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, repurchase its stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of its business, transfer and sell material assets and merge or consolidate. Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the Term Loan Facility Agreement and the Revolver Credit Facility becoming immediately due and payable and termination of the commitments. Covenant Compliance As of September 30, 2022, the Company was in compliance with all of the financial covenants under the Revolver Credit Facility and the Term Loan Facility (collectively, the “Credit Facilities”). Furthermore, the Company believes it will be in compliance with the related financial covenants under these agreements for the next twelve months. Interest Rate Swap In connection with the Revolver Credit Facility and Prior Term Loan Facility , the Company executed the Amended Rate Swap. Under the terms of the Amended Rate Swap, the Company receives 1-month LIBOR, subject to a 0% floor, and makes payments based on a fixed rate of 2.4725%, an increase of 0.275% from its original interest rate swap fixed rate of 2.1975%. The Amended Rate Swap utilizes the same notional amount of $65.0 million and maturity date of October 11, 2023 as the original interest rate swap. Beginning with the quarter ended December 31, 2022, the Company is required to make monthly principal payments on the Term Loan debt obligation in the amount of $261 thousand. At September 30, 2022, the Company had outstanding borrowings on the Revolver Credit Facility of $67.0 million and had utilized $4.1 million of the letters of credit sublimit. At September 30, 2022, we had $18.9 million available on our Revolver Credit Facility.
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Share-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Note 12. Share-based Compensation Farmer Bros. Co. Amended and Restated 2017 Long-Term Incentive Plan (the “2017 Plan”) As of September 30, 2022, there were 1,696,690 shares available under the 2017 Plan including shares that were forfeited under the prior plans for future issuance. On December 15, 2021, the Company’s stockholders approved an amendment (the “Plan Amendment”) to the 2017 Plan, which (i) increased the number of shares of Common Stock available for grant under the Plan by 1,500,000 additional shares of Common Stock and (ii) allows the Company to utilize awards to attract and incentivize non-employee consultants. Farmer Bros. Co. 2020 Inducement Incentive Award Plan (the “2020 Inducement Plan”) As of September 30, 2022, there were 60,475 shares available under the 2020 Inducement Plan. Non-qualified stock options with time-based vesting (“NQOs”) One-third of the total number of shares subject to each stock option vest ratably on each of the first three anniversaries of the grant date, contingent on continued employment, and subject to accelerated vesting in certain circumstances. There were no NQOs granted during the three months ended September 30, 2022. The following table summarizes NQO activity for three months ended September 30, 2022:
The aggregate intrinsic values outstanding at the end of period in the table above represent the total pretax intrinsic values, based on the closing price of Common Stock of $4.69 at September 30, 2022 and June 30, 2022, representing the last trading day of the respective periods, which would have been received by NQO holders had all award holders exercised their NQOs that were in-the-money as of those dates. NQOs outstanding that are expected to vest are net of estimated forfeitures. There were no options exercised during three months ended September 30, 2022 and 2021. At September 30, 2022 and June 30, 2022, respectively, there was $0.1 million and $0.2 million of unrecognized NQO compensation cost. The unrecognized NQO compensation cost at September 30, 2022 is expected to be recognized over the weighted average period of five months. Total compensation expense for NQOs was $0.1 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively. Non-qualified stock options with performance-based and time-based vesting (“PNQs”) The following table summarizes PNQ activity for the three months ended September 30, 2022:
The aggregate intrinsic values outstanding at the end of each fiscal period in the table above represent the total pretax intrinsic values, based on the Company’s closing stock price of $4.69 at September 30, 2022 and June 30, 2022, representing the last trading day of the respective fiscal periods, which would have been received by PNQ holders had all award holders exercised their PNQs that were in-the-money as of those dates. There were no options exercised during three months ended September 30, 2022 and 2021. At September 30, 2022 and June 30, 2022, there was no unrecognized PNQ compensation cost. There was no compensation expense related to PNQs in the three months ended September 30, 2022 and 2021. Restricted Stock The following table summarizes restricted stock activity for the three months ended September 30, 2022:
The weighted average grant date fair value of RSUs granted during the quarters ended September 30, 2022 and 2021 were $5.10 and $8.96, respectively. The total grant-date fair value of restricted stock granted during the three months ended September 30, 2022 was $0.6 million. The total fair value of awards vested during the quarter ended September 30, 2022 and 2021 were $0.9 million and $1.2 million, respectively. At September 30, 2022 and June 30, 2022, there was $3.4 million and $3.9 million, respectively, of unrecognized compensation cost related to restricted stock. The unrecognized compensation cost related to restricted stock at September 30, 2022 is expected to be recognized over the weighted average period of 1.0 years. Total compensation expense for restricted stock was $0.7 million and $0.5 million, respectively, in the three months ended September 30, 2022 and 2021. Performance-Based Restricted Stock Units (“PBRSUs”) The following table summarizes PBRSU activity for the three months ended September 30, 2022:
_____________ (1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals. There were no PBRSUs granted or vested during the quarter ended September 30, 2022. At September 30, 2022 and June 30, 2022, there was $1.5 million and $1.7 million, respectively, of unrecognized PBRSU compensation cost. The unrecognized PBRSU compensation cost at September 30, 2022 is expected to be recognized over the weighted average period of 1.7 years. Total compensation expense for PBRSUs was $181.9 thousand and $106.5 thousand, respectively, for the three months ended September 30, 2022 and 2021. Cash-Settled Restricted Stock Units (“CSRSUs”) CSRSUs vest in equal installments over a three-year period from the grant date, and are cash-settled upon vesting based on the closing share price of Common Stock on the vesting date. The CSRSUs are accounted for as liability awards, and compensation expense is measured at fair value on the date of grant and recognized on a straight-line basis over the vesting period net of forfeitures. Compensation expense is remeasured at each reporting date with a cumulative adjustment to compensation cost during the period based on changes in the closing share price of Common Stock. The following table summarizes CSRSU activity for the three months ended September 30, 2022:
There were no CSRSUs granted during the quarter ended September 30, 2022. The total fair value of awards vested during the quarter ended September 30, 2022 was $0.1 million. There were no CSRSUs vested during the quarter ended September 30, 2021. At September 30, 2022 and June 30, 2022, there was $0.4 million and $0.6 million, respectively, of unrecognized compensation cost related to CSRSU. The unrecognized compensation cost related to CSRSU at September 30, 2022 is expected to be recognized over the weighted average period of 1.5 years. Total compensation expense for CSRSUs was $55.5 thousand and $0.1 million, respectively for the three months ended September 30, 2022 and 2021
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Other Current Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Current Liabilities | Note 13. Other Current Liabilities Other current liabilities consist of the following:
_________ (1) Includes accrued property taxes, sales and use taxes and insurance liabilities.
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Other Long-Term Liabilities |
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Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | Note 14. Other Long-Term Liabilities Other long-term liabilities include the following:
___________ (1) Includes payroll taxes and cash-settled restricted stock units liabilities.
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Income Taxes |
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Income Taxes | Note 15. Income Taxes The income tax expense and the related effective tax rates are as follows (in thousands, except effective tax rate):
The Company’s interim tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The Company recognizes the effects of tax legislation in the period in which the law is enacted. Deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the Company estimates the related temporary differences to reverse. The Company evaluates its deferred tax assets quarterly to determine if a valuation allowance is required. In making such assessment, significant weight is given to evidence that can be objectively verified, such as recent operating results, and less consideration is given to less objective indicators such as future income projections. Tax expense in the three months ended September 30, 2022 was $42.7 thousand compared to $0.1 million in the three months ended September 30, 2021, which primarily relates to state income tax expense in certain jurisdictions. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state and local tax authorities. With limited exceptions, as of September 30, 2022, the Company is no longer subject to income tax audits by taxing authorities for any years prior to 2019. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements.
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Net Loss Per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Common Share | Note 16. Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to the Company by the weighted average number of common shares outstanding during the periods presented. Diluted net loss per common share is calculated by dividing diluted net loss attributable to the Company by the weighted average number of common shares outstanding adjusted to include the effect, if dilutive, of the exercise of in-the-money stock options, unvested performance-based restricted stock units, and shares of the Company’s Series A Convertible Participating Cumulative Perpetual Preferred Stock, par value $1.00 per share (“Series A Preferred Stock”), as converted, during the periods presented. The calculation of dilutive shares outstanding excludes out-of-the-money stock options (i.e., such option’s exercise prices were greater than the average market price of our common shares for the period) and unvested performance-based restricted stock units because their inclusion would have been anti-dilutive. The following table presents the computation of basic and diluted net earnings loss per common share:
The following table summarizes anti-dilutive securities excluded from the computation of diluted net loss per common share for the periods indicated:
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Preferred Stock |
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Sep. 30, 2022 | |
Preferred Stock [Abstract] | |
Preferred Stock | Note 17. Preferred Stock The Company is authorized to issue 500,000 shares of preferred stock at a par value of $1.00, including 21,000 authorized shares of Series A Preferred Stock. There are no preferred shares issued and outstanding as of September 30, 2022. Effective August 25, 2022, 12,964 shares of Series A Preferred Stock were converted into 399,208 shares of common stock at a conversion price of $38.32, in accordance with the terms of the Company’s Designation of Series A Preferred Stock. The terms of the Series A Preferred Stock are disclosed in Note 20 to the Consolidated Financial Statements included in the 2022 Form 10-K. The shares of Series A Preferred Stock were originally issued to Boyd Coffee Company (now known as BCC Newco, Inc.) (“BCC”), on October 2, 2017, pursuant to that certain Asset Purchase Agreement, dated as of August 18, 2017 (the “Purchase Agreement”), by and among the Company, Boyd Assets Co., a Delaware corporation and wholly owned subsidiary of the Company, BCC and each of the parties set forth on Exhibit A thereto. 1,736 shares of Series A Preferred Stock originally issued to BCC in accordance with the terms of the Purchase Agreement were previously reacquired and cancelled by the Company as part of a settlement with BCC. The shares of Series A Preferred Stock converted represented all of the issued and outstanding shares of Series A Preferred Stock. The Company withheld 914 shares of Series A Preferred Stock pending satisfaction of certain indemnification claims (“Holdback Shares”) against the Seller. As a result of the settlement entered into with BCC, the Company recorded a $1.9 million gain on settlement with Boyd’s sellers, in general and administrative expense on the consolidated statement of operations, which included the cancellation of preferred shares and settlement of acquisition related contingent liabilities,
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Revenue Recognition |
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Revenue Recognition | Note 18. Revenue Recognition The Company’s primary sources of revenue are sales of coffee, tea and culinary products. The Company recognizes revenue when control of the promised good or service is transferred to the customer and in amounts that the Company expects to collect. The timing of revenue recognition takes into consideration the various shipping terms applicable to the Company’s sales. The Company delivers products to customers through Direct-store-delivery (“DSD”) to the Company’s customers at their place of business and Direct ship from the Company’s warehouse to the customer’s warehouse, facility or address. Each delivery or shipment made to a third party customer is to satisfy a performance obligation. Performance obligations generally occur at a point in time and are satisfied when control of the goods passes to the customer. The Company is entitled to collection of the sales price under normal credit terms in the regions in which it operates. The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:
____________ (1)Includes all beverages other than roasted coffee, including frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee. The Company does not have any material contract assets and liabilities as of September 30, 2022. Receivables from contracts with customers are included in “Accounts receivable, net” on the Company’s consolidated balance sheets. At September 30, 2022 and June 30, 2022, “Accounts receivable, net” included, $46.2 million and $44.2 million, respectively, in receivables from contracts with customers.
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Commitments and Contingencies |
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Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 19. Commitments and Contingencies For a detailed discussion about the Company’s commitments and contingencies, see Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the 2022 Form 10-K. During the three months ended September 30, 2022, other than the following, or as otherwise disclosed herein, there were no material changes in the Company’s commitments and contingencies. Purchase Commitments As of September 30, 2022, the Company had committed to purchase green coffee inventory totaling $103.6 million under fixed-price contracts, and $12.3 million in inventory and other purchases under non-cancelable purchase orders. Legal Proceedings Council for Education and Research on Toxics (“CERT”) v. Brad Berry Company Ltd., et al., Superior Court of the State of California, County of Los Angeles On August 31, 2012, CERT filed an amendment to a private enforcement action adding a number of companies as defendants, including the Company’s subsidiary, Coffee Bean International, Inc., which sell coffee in California under the State of California's Safe Drinking Water and Toxic Enforcement Act of 1986 (“Prop 65”). The suit alleges that the defendants have failed to issue clear and reasonable warnings in accordance with Prop 65 that the coffee they produce, distribute, and sell contains acrylamide. This lawsuit was filed in Los Angeles Superior Court (the “Court”). CERT alleges that the Company and the other defendants failed to provide warnings for their coffee products of exposure to the chemical acrylamide as required under Prop 65. Plaintiff seeks equitable relief and civil penalties in the amount of the statutory maximum of $2,500 per day per violation of Prop 65. The Plaintiff asserts that every consumed cup of coffee, absent a compliant warning, is equivalent to a violation under Prop 65. The Company, as part of a joint defense group (“JDG”) organized to defend against the lawsuit, disputes the claims of CERT. Acrylamide is not added to coffee but is present in all coffee in small amounts (parts per billion) as a byproduct of the coffee bean roasting process. A series of procedural and legislative developments occurred in the ensuing years, and at hearings in August 2020, the Court denied CERT’s motion for summary judgment and granted the JDG’s motion for summary judgment. Notice of Judgment in favor of defendants was entered on October 6, 2020. CERT has appealed. The Company believes that the likelihood that the Company will ultimately incur a loss in connection with this litigation is less than reasonably possible. The Company is a party to various other pending legal and administrative proceedings. It is management’s opinion that the outcome of such proceedings will not have a material impact on the Company’s financial position, results of operations, or cash flows.
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Sales of Assets |
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Sales of Assets | Note 20. Sales of Assets Sale of Branch Property During the three months ended September 30, 2022, the Company completed the sale of the following branch properties:
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Accounting | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial data have been included. Operating results for the three months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2023. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2022, filed with the Securities and Exchange Commission (the “SEC”) on September 2, 2022, and the Form 10-K/A filed on October 27, 2022 (the “2022 Form 10-K”). For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in the 2022 Form 10-K. During the three months ended September 30, 2022, there were no significant updates made to the Company’s significant accounting policies.
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Principles of Consolidation | Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its direct and indirect wholly owned subsidiaries FBC Finance Company, a California corporation, Coffee Bean Holding Co., Inc., a Delaware corporation and, the parent company of Coffee Bean International, Inc., an Oregon corporation, China Mist Brands, Inc., a Delaware corporation, and Boyd Assets Co., a Delaware corporation. All intercompany balances and transactions have been eliminated. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances may result in revised estimates and actual results may differ from those estimates.
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Concentration of Credit Risk | Concentration of Credit Risk At September 30, 2022 and June 30, 2022, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits), derivative instruments and trade receivables. The Company does not have any credit-risk related contingent features that would require it to post additional collateral in support of its net derivative asset positions. At September 30, 2022 and June 30, 2022, none of the cash in the Company’s coffee-related derivative margin accounts was restricted. Further changes in commodity prices and the number of coffee-related derivative instruments held could have a significant impact on cash deposit requirements under certain of the Company's broker and counterparty agreements. Approximately 40% and 35% of the Company’s accounts receivable balance was with five customers at September 30, 2022 and June 30, 2022, respectively. The Company estimates its maximum credit risk for accounts receivable at the amount recorded on the balance sheet. The accounts receivables are generally short-term and all estimated credit losses have been appropriately considered in establishing the allowance for credit losses.
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Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board (the “FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on its consolidated financial statements. The following table provides a brief description of the recent ASUs applicable to the Company:
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | The components of lease expense are as follows:
Other Information:
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Lessee, Operating Lease, Liability, Maturity |
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Assets And Liabilities, Lessee | Lease term and discount rate:
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Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The following table summarizes the notional volumes for the coffee-related derivative instruments held by the Company at September 30, 2022 and June 30, 2022:
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Schedule of Fair Values of Derivative Instruments on the Consolidated Balance Sheets | Fair values of derivative instruments on the Company’s consolidated balance sheets:
________________ (1) Included in “Short-term derivative assets” on the Company's consolidated balance sheets. (2) Included in “Long-term derivative assets” on the Company's consolidated balance sheets. (3) Included in “Short-term derivative liabilities” on the Company's consolidated balance sheets.
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Schedule of Pretax Effect of Derivative Instruments on Earnings and OCI | The following table presents pretax net gains and losses for the Company's derivative instruments designated as cash flow hedges, as recognized in “AOCI,” “Cost of goods sold” and “Other, net”.
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Schedule of Net Realized and Unrealized Gains and Losses Recorded in 'Other, net' | Net gains and losses recorded in “Other, net” are as follows:
___________ (1) Excludes net gains and losses on coffee-related derivative instruments designated as cash flow hedges recorded in cost of goods sold in the three months ended September 30, 2022 and 2021.
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides the balances and changes in accumulated other comprehensive income (loss) related to derivative instruments for the indicated periods:
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Schedule of Offsetting Assets | The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
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Schedule of Offsetting Liabilities | The following table presents the Company’s net exposure from its offsetting derivative asset and liability positions, as well as cash collateral on deposit with its counterparties as of the reporting dates indicated:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | Assets and liabilities measured and recorded at fair value on a recurring basis were as follows:
____________________ (1)The Company's coffee-related derivative instruments are traded over-the-counter and, therefore, classified as Level 2. (2)The Company's interest rate swap derivative instrument are model-derived valuations with directly or indirectly observable significant inputs such as interest rate and, therefore, classified as Level 2.
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Accounts Receivable, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable |
__________ (1) Includes vendor rebates and other non-trade receivables.
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Inventories (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current |
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Property, Plant and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
Coffee Brewing Equipment (“CBE”) and Service Capitalized CBE included in machinery and equipment above are:
Depreciation expense related to capitalized CBE and other CBE related expenses provided to customers and reported in cost of goods sold were as follows:
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Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | The following is a summary of the Company’s amortized and unamortized intangible assets other than goodwill:
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Employee Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Benefit Costs | The net periodic benefit (credit) cost for the defined benefit pension plans is as follows:
___________ (1) These amounts represent the estimated portion of the net loss in AOCI that is expected to be recognized as a component of net periodic benefit cost over the current fiscal year. Contributions made by the Company to the multiemployer pension plans were as follows:
The following table shows the components of net periodic postretirement benefit cost for the Retiree Medical Plan and Death Benefit Plan for the three months ended September 30, 2022 and 2021.
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Defined Benefit Plan, Assumptions | Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
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Debt Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes the Company’s debt obligations:
__________ (1) The weighted average interest rate excludes the fixed rate on the de-designated Amended Rate Swap
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes NQO activity for three months ended September 30, 2022:
The following table summarizes PNQ activity for the three months ended September 30, 2022:
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Schedule of Share-based Compensation, Nonvested Restricted Stock Shares Activity | The following table summarizes restricted stock activity for the three months ended September 30, 2022:
The following table summarizes CSRSU activity for the three months ended September 30, 2022:
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Schedule of Nonvested Performance-Based Restricted Stock Units Activity | The following table summarizes PBRSU activity for the three months ended September 30, 2022:
_____________ (1) The target number of PBRSUs is presented in the table. Under the terms of the awards, the recipient may earn between 0% and 200% of the target number of PBRSUs depending on the extent to which the Company meets or exceeds the achievement of the applicable financial performance goals.
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Other Current Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Liabilities | Other current liabilities consist of the following:
_________ (1) Includes accrued property taxes, sales and use taxes and insurance liabilities.
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Other Long-Term Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Liabilities | Other long-term liabilities include the following:
___________ (1) Includes payroll taxes and cash-settled restricted stock units liabilities.
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Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | The income tax expense and the related effective tax rates are as follows (in thousands, except effective tax rate):
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Net Loss Per Common Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings (Loss) Per Common Share, Basic and Diluted | The following table presents the computation of basic and diluted net earnings loss per common share:
The following table summarizes anti-dilutive securities excluded from the computation of diluted net loss per common share for the periods indicated:
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Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The Company disaggregates net sales from contracts with customers based on the characteristics of the products sold:
____________ (1)Includes all beverages other than roasted coffee, including frozen liquid coffee, and iced and hot tea, including cappuccino, cocoa, granitas, and concentrated and ready-to drink cold brew and iced coffee.
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Sales of Assets (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets held-for-sale | During the three months ended September 30, 2022, the Company completed the sale of the following branch properties:
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Summary of Significant Accounting Policies (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2022 |
Jun. 30, 2022 |
|
Accounts Receivable | Five Customers | Customer Concentration Risk | ||
Property, Plant and Equipment | ||
% of total | 40.00% | 35.00% |
Leases - Narrative (Details) |
Sep. 30, 2022 |
---|---|
Leases [Abstract] | |
Lessee, Operating Lease, Renewal Term | 10 years |
Leases - Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Leases [Abstract] | ||
Operating lease expense | $ 1,960 | $ 1,782 |
Amortization of finance lease assets | 41 | 41 |
Interest on finance lease liabilities | 10 | 12 |
Total lease expense | $ 2,011 | $ 1,835 |
Leases - Lease Obligations (Details) $ in Thousands |
Sep. 30, 2022
USD ($)
|
---|---|
Operating Leases | |
2023 | $ 5,838 |
2024 | 7,524 |
2025 | 6,333 |
2026 | 5,238 |
2027 | 3,784 |
Thereafter | 3,060 |
Total lease payments | 31,777 |
Less: interest | (4,114) |
Total lease obligations | 27,663 |
Finance Leases | |
2023 | 144 |
2024 | 193 |
2025 | 193 |
2026 | 96 |
2027 | 0 |
Thereafter | 0 |
Total lease payments | 626 |
Less: interest | (63) |
Total lease obligations | $ 563 |
Leases - Weighted Average Information (Details) |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Leases [Abstract] | ||
Operating lease | 6 years | 6 years 3 months 18 days |
Finance lease | 3 years 3 months 18 days | 3 years 6 months |
Operating lease | 5.88% | 5.69% |
Finance lease | 6.50% | 6.50% |
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 1,920 | $ 1,615 |
Operating cash flows from finance leases | 10 | 41 |
Financing cash flows from finance leases | $ 48 | $ 12 |
Derivative Instruments - Schedule of Notional Volumes of Derivative Instruments (Details) - lb |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Derivative [Line Items] | ||
Total | 5,410,000 | 4,716,000 |
Cash Flow Hedging | Designated as Hedging Instrument | Long | ||
Derivative [Line Items] | ||
Total | 4,238,000 | 4,200,000 |
Cash Flow Hedging | Not Designated as Hedging Instrument | Long | ||
Derivative [Line Items] | ||
Total | 1,172,000 | 516,000 |
Derivative Instruments - Pretax Effect of Derivative Instruments on Earnings and OCI (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Interest Rate Swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Reclassification for Discontinuance, before Tax | $ (286,000) | $ (314,000) |
Coffee - related | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Reclassification for Discontinuance, before Tax | (527,000) | 5,859,000 |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | 1,281,000 | $ 1,920,000 |
Cost of goods sold | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | $ 0 |
Derivative Instruments - Net Realized and Unrealized Gains and Losses Recorded in "Other, net" (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other, net | $ 1,608 | $ 2,444 |
Coffee | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net gains on coffee-related derivative instruments | 562 | 1,550 |
Non-operating pension and other postretirement benefits | 728 | 894 |
Other gains, net | 318 | 0 |
Other, net | $ 1,608 | $ 2,444 |
Derivative Instruments - Statement of Comprehensive Income (Loss) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
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AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income beginning balance | $ 104,748,000 | $ 104,959,000 |
Accumulated other comprehensive income ending balance | 96,849,000 | 108,033,000 |
Derivative Instruments | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income beginning balance | (1,692,000) | (4,176,000) |
Accumulated other comprehensive income ending balance | (170,000) | (8,429,000) |
Derivative Instruments | Partial Unwind of Interest Swap | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Net gains (losses) recognized in earnings | (286,000) | (314,000) |
Derivative Instruments | Coffee - related | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Net gains (losses) recognized in AOCI | 527,000 | (5,859,000) |
Net gains (losses) recognized in earnings | $ 1,281,000 | $ 1,920,000 |
Derivative Instruments - Schedule of Offsetting Derivative Asset and Liability Positions (Details) - Counterparty A - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative asset, fair value | $ 2,894 | $ 3,365 |
Derivative asset, netting adjustment | (1,469) | (2,349) |
Derivative asset, cash collateral posted | 0 | 0 |
Derivative asset, net | 1,425 | 1,016 |
Derivative liability, fair value | 2,455 | 2,349 |
Derivative liability, netting adjustment | (1,469) | (2,349) |
Derivative liability, cash collateral posted | 0 | 0 |
Derivative liability, net | $ 986 | $ 0 |
Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Receivables [Abstract] | ||
Trade receivables | $ 46,231 | $ 44,219 |
Other receivables | 1,275 | 2,911 |
Allowance for credit losses | (190) | (195) |
Accounts receivable, net | $ 47,316 | $ 46,935 |
Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Product Information | ||
Total | $ 95,759 | $ 99,618 |
Coffee | ||
Product Information | ||
Processed | 28,359 | 32,486 |
Unprocessed | 36,723 | 39,326 |
Total | 65,082 | 71,812 |
Tea and Culinary Products | ||
Product Information | ||
Processed | 26,730 | 24,034 |
Unprocessed | 82 | 58 |
Total | 26,812 | 24,092 |
Coffee Brewing Equipment | ||
Product Information | ||
Total | $ 3,865 | $ 3,714 |
Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 0.6 | $ 0.6 |
Employee Benefit Plans - Schedule of Single Employer Pension Plans (Details) - Pension Plan - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Components of net periodic benefit cost | ||
Interest cost | $ 1,156 | $ 848 |
Expected return on plan assets | (1,009) | (1,237) |
Amortization of net loss (gain) | 281 | 339 |
Net periodic benefit cost | $ 428 | $ (50) |
Weighted average assumptions used to determine benefit obligations | ||
Discount rate | 4.50% | 2.60% |
Expected long-term return on plan assets | 6.50% | 6.25% |
Employee Benefit Plans - Schedule of Multi-Employer Pension Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Multiemployer Plan | ||
Multiemployer Plans [Line Items] | ||
Contributions made by the Company to the multiemployer pension plans | $ 287 | $ 244 |
Other Postretirement Benefit Plan | ||
Multiemployer Plans [Line Items] | ||
Contributions made by the Company to the multiemployer pension plans | 8 | 7 |
Service cost | 0 | 0 |
Interest cost | 10 | 7 |
Amortization of net gain | 0 | (3) |
Net periodic benefit cost | $ 10 | $ 10 |
Postretirement Life Insurance | ||
Multiemployer Plans [Line Items] | ||
Discount rate | 4.77% | 2.72% |
Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued workers’ compensation liabilities | $ 872 | $ 947 |
Finance lease liabilities | 193 | 193 |
Other | 4,725 | 4,955 |
Other current liabilities | $ 5,790 | $ 6,095 |
Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2022 |
Jun. 30, 2022 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Deferred compensation | $ 216 | $ 195 |
Finance lease liabilities | 370 | 409 |
Deferred income taxes | 735 | 735 |
Other long-term liabilities | $ 1,321 | $ 1,339 |
Income Taxes - Income Taxes (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
|
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 42,700 | $ 62,000 |
Effective tax rate | (0.60%) | (2.60%) |
Income Taxes - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Sep. 30, 2022 |
Sep. 30, 2021 |
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Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 42,700 | $ 62,000 |
Commitments and Contingencies (Details) - Inventories $ in Millions |
Sep. 30, 2022
USD ($)
|
---|---|
Coffee | |
Contractual Obligations | |
Purchase Obligation, Due in Next Twelve Months | $ 103.6 |
Other Inventory | |
Contractual Obligations | |
Purchase Obligation, Due in Next Twelve Months | $ 12.3 |
Sales of Assets (Details) |
3 Months Ended |
---|---|
Sep. 30, 2022
USD ($)
| |
Portland, Oregon | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sales Price | $ 1,990,000 |
Net Proceeds | 1,880,000 |
Gain on Sale | 1,770,000 |
San Diego, California | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Sales Price | 7,574,000 |
Net Proceeds | 7,169,000 |
Gain on Sale | $ 6,425,000 |
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