Farmer Bros Co (NASDAQ:FARM) stock fell 19.74% (As on September 12, 11:25:53 AM UTC-4, Source: Google Finance) after the company reported significant margin improvements in its fourth quarter results, despite missing analyst expectations on both earnings and revenue. The company’s adjusted EBITDA for the fourth quarter reached $5.8 million, a substantial $7.4 million improvement compared to the same period last year. Operating expenses decreased by $2.6 million to $34.3 million, driven by lower selling and general administrative expenses and increased gains from asset sales. The company’s balance sheet showed $6.8 million in unrestricted cash and cash equivalents as of June 30, with $14.3 million in outstanding borrowings and $32.6 million available under its revolving credit facility. For the second quarter ended Aug. 16, net income totaled $609 million, equal to 91¢ per share on the common stock, up from $466 million, or 64¢ per share, a year earlier.
Moreover, total coffee volumes decreased by 10% year-over-year, reflecting challenges in the macroeconomic environment and the coffee industry. The company faces significant market challenges, including a 65%-plus rise in green coffee prices and potential tariff impacts, which are expected to pressure gross margins in fiscal 2026. Farmer Bros Co recorded a net loss of $14.5 million for the full fiscal year, compared to a loss of $3.9 million in the prior year.
Meanwhile, the company successfully launched the Sum>One specialty brand, completing its SKU rationalization and brand pyramid initiatives, which have shown promising early responses. Farmer Bros Co made substantial progress in reducing SG&A expenses and significantly paid down debt, improving its financial position. The company enhanced its technology platforms, including a new CRM tool, which improved customer analytics and supply chain optimization. Farmer Bros Co strengthened its leadership team with new appointments in sales and field operations, leading to better alignment of team KPIs and improved execution.
The company reported a fourth quarter loss of -$0.22 per share, falling short of analyst estimates of -$0.15. Revenue came in at $85.1 million, below the consensus estimate of $87.06 million, though it represented a modest 1% increase YoY. Despite these misses, the company’s gross profit margin expanded significantly to 44.9% from 38.8% in the same quarter last year. The company is activating their DSD network for product penetration and acquisition, leveraging their scale to service large restaurant groups while maintaining service levels for smaller operations. The company is running initiatives to drive interest in different product segments and is well-positioned to meet customer needs with their Good, Better, Best portfolio.
Management indicated that challenging market conditions are expected to continue throughout fiscal 2026, but expressed confidence in the company’s strengthened foundation for future growth. The company anticipates continued pressure on gross margins and overall financial results throughout fiscal 2026 due to elevated green coffee market prices and tariff uncertainties.