Farmer Bros (FARM) Q2 2026 earnings summary

Executive summary

• Net sales for the quarter ended December 31, 2025, decreased 1.2% year-over-year to $88.9 million, primarily due to declining volumes despite higher average unit prices.

• Gross margin fell to 36.3% from 43.1% year-over-year, driven by increased green coffee commodity costs and higher inventory costs.

• Net loss for the quarter was $4.9 million, compared to net income of $0.2 million in the prior year.

• Adjusted EBITDA was $484,000, a significant decline from $5.9 million in the prior year.

• Operating expenses decreased to $36.4 million, including a $700,000 reduction in general and administrative costs.

Financial highlights

• Six-month net sales decreased 2.6% year-over-year to $170.5 million.

• Six-month gross margin declined to 37.9% from 43.5% year-over-year.

• Adjusted EBITDA for the quarter was $484,000 (0.5% margin), down from $5.9 million (6.6% margin) year-over-year.

• Net cash used in operating activities for the six months was $5.8 million, compared to $5.0 million provided in the prior year.

• As of December 31, 2025, unrestricted cash and equivalents were $4.2 million, with $24.6 million available under the revolver.

Outlook and guidance

• Gross margins are expected to remain pressured and average in the high 30s for fiscal 2026, with potential improvement starting in Q4 2026 if commodity trends continue.

• Management expects capital expenditures for fiscal 2026 to be between $9.0 million and $11.0 million, funded by operations and credit facility.

• The company believes current liquidity and credit facility availability are sufficient for the next 12 months and beyond.

• Focus remains on growing top-line revenue, coffee pounds, and customer counts in the second half of fiscal 2026.