NORTHLAKE, Texas, U.S. – Farmer Brothers Co. yesterday announced it has amended its credit facility with JPMorgan Chase Bank, N.A to increase the Company’s flexibility in supporting its current and future business operations as the COVID-19 situation continues to evolve. The Company also provided a business update for the fourth quarter of 2020.
Deverl Maserang, Farmer Brothers’ President and CEO said, “The amended credit facility marks another important step in our ongoing efforts to support the business both near- and long-term. With this added financial flexibility and our ongoing cost-cutting efforts, we believe Farmer Brothers is well-positioned to weather these challenging times. We appreciate the support of our lenders and believe the execution of this credit facility reflects their confidence in Farmer Brothers and our transformation strategy.”
The full details relating to the amendment will be available in a Form 8-K that the Company will file with the U.S. Securities and Exchange Commission that will also be available on the Company’s website.
Farmer Brothers – Business Update
As previously reported, the COVID-19 pandemic has had a significant impact on Farmer Brothers’ DSD sales network. The Company disclosed on its third quarter fiscal 2020 earnings call that, during the middle weeks of April, sales from the Company’s DSD customers declined between 66% to 69% from pre-COVID-19 pandemic average sales. Since that time, the Company saw consistent improvement through early July, with DSD sales currently holding in a range of decline to pre-COVID-19 pandemic average sales of 44% to 47%. Throughout the COVID-19 timeframe, the Company’s Direct Ship business has remained relatively stable overall with areas of growth generally offsetting areas of decline.
Farmer Brothers has taken swift action to reduce expenses and preserve cash with the goal of operating as efficiently and effectively as possible. As previously announced, on a combined basis, the Company targeted cost-savings actions that would reduce monthly expenses by approximately $6.5 million per month. This goal was exceeded during the fourth fiscal quarter and Farmer Brothers continues to actively manage costs as areas of the business partially return to pre-pandemic sales levels.
As of today’s date, the Company’s total debt was $68.8 million and the Company had cash on hand of $12 million and $21 million of availability on its amended credit facility. As a point of reference, the 2019 fiscal year end reported figure for total debt was $92 million and cash on hand was reported as $7.0 million as of June 30, 2019. Additionally, the Company expects to report lower Accounts Receivable, Accounts Payable and Inventory balances for fiscal year 2020 than were reported for fiscal year 2019.
Mr. Maserang continued, “While COVID-19 continues to present challenges and uncertainty, we have continued to see improvement in business trends since mid-April. Our immediate focus remains on the health and safety of our employees while serving our customers as demand increases and economies reopen. We will continue to take appropriate actions to control spending, support the business and operate efficiently. We are confident that we are on the right path to return Farmer Brothers to a position of strength for the long term.”
The Company will provide a more detailed review of its financial results and business when it reports its fiscal year 2020 results in September.