Release Date: September 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross margins increased to 38.8% in Q4, a 630 basis points improvement compared to the prior year.
- Full fiscal year gross profit increased by $19.3 million or 17% to $133.9 million.
- Operating expenses decreased by $1 million in Q4 due to gains related to the sale of branch properties and other assets.
- Net loss from continuing operations improved significantly to $3.9 million for the full fiscal year compared to a loss of $34 million in the prior year.
- Adjusted EBITDA for the full fiscal year turned positive at $558,000 compared to a $14.2 million loss in fiscal '23.
Negative Points
- Net sales for Q4 decreased by 1% compared to the prior year, driven by a decline in sales volume.
- Operating expenses for the full fiscal year increased by $600,000 due to higher selling and G&A expenses.
- The company experienced a $3.3 million increase in selling expenses in Q4, primarily driven by additional costs related to facility rent and health care benefits.
- Total customer count and pounds per customer are still below desired levels due to industry trends and inflationary pressures.
- The company anticipates potential acceleration in customer attrition due to pricing fatigue and general inflationary pressures.
Q & A Highlights
Q: Can you provide an update on your fulfillment rates? How did they trend in Q4 and recently?
A: We have seen continued improvement in fulfillment rates throughout the year. We identified the root causes of previous issues and have made significant progress. Currently, we are operating at almost a completely resolved state, with accurate demand planning and effective measures on the equipment side.
Q: Could you provide an update on the brand pyramid overhaul?
A: We are on schedule with the Farmer Brothers and Boyd's rebrand efforts, with almost complete transition of SKU sets. The specialty brand launch is also on track for the end of the calendar year.
Q: How are your innovative products like shot and liquid ambient coffee being accepted in the market?
A: We are seeing positive growth and adoption for both Sharp syrups and the ambient coffee products. New customer contracts and improved supply chain control are contributing to this success.
Q: Can you give an update on customer retention and churn?
A: We have made significant progress in reducing attrition rates to industry averages. However, total customer count and pounds per customer are still below desired levels due to industry trends and economic pressures. Our business development team is adding more profitable customers, but not enough to offset attrition.
Q: What is the roadmap to achieving free cash flow positive status?
A: Achieving sustainable free cash flow positive status will require renewed sales growth, continued gross margin protection, and solid working capital management. We are making good progress and feel optimistic about fiscal '25, but it's too early to provide a specific timeline.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
