Farmer Bros (FARM) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 FY2025 increased to $90 million, driven by higher pricing despite a decline in unit sales, and supported by brand and SKU rationalization, inventory management, and sales team realignment.

• Gross margin improved to 43.1%, up 270 basis points year-over-year, reflecting pricing actions and operational efficiencies.

• Adjusted EBITDA rose to $5.9 million, nearly $3.6 million higher than the prior year, with margin expanding to 6.6%.

• Net income for Q2 FY2025 was $0.2 million, down from $2.7 million in the prior year, impacted by a $1.5 million loss on asset disposals.

• Leadership changes and operational initiatives, including SKU rationalization and DSD route optimization, continued to progress.

Financial highlights

• Net sales were $90.0 million for Q2 FY2025, up 0.6% year-over-year; gross profit increased to $38.8 million (43.1% margin).

• Adjusted EBITDA was $5.9 million for Q2, up from $2.3 million year-over-year; margin improved to 6.6%.

• Net income was $0.2 million for Q2, with a six-month net loss of $4.8 million.

• Operating expenses rose to $37.8 million (42% of sales), mainly due to fewer asset disposal gains.

• Cash and cash equivalents stood at $5.5 million, with $23.3 million in outstanding borrowings and $23.7 million available under the credit facility as of December 31, 2024.

Outlook and guidance

• Management remains focused on top-line growth, customer expansion, and product penetration, while optimizing operations.

• Company expects to complete SKU rationalization and specialty brand rollout by end of Q3 FY2025.

• Capital expenditures for fiscal 2025 are expected to be $9–11 million, funded by operations and credit facility.

• Liquidity and credit facility are considered sufficient for the next 12 months and beyond.