Farmer Brothers Company (NASDAQ: FARM), a leading roaster,
wholesaler, equipment servicer and distributor of coffee, tea and
other allied products, announced today it has completed the sale of
its direct ship business, including its Northlake, Texas facility
to TreeHouse Foods, Inc. for approximately $100 million, subject to
customary purchase price adjustments.
The company used the proceeds to pay off its $47 million term
loan, as well as a portion of its outstanding debt associated with
its asset-based lending (ABL). The amended ABL agreement will
provide more flexibility with regard to financial covenants, as the
fixed charge coverage ratio will no longer be a standing covenant.
The covenant will only be subject to testing should the liquidity
requirements not be met. The close of the sale marks a significant
increase in Farmer Brothers’ balance sheet flexibility and
underlines its focus on improving margins through execution and
strategic growth in its direct store delivery (DSD) and key account
sales channels.
“We’re delighted to have achieved a rapid close to this
transaction and are already applying the proceeds to strengthening
our balance sheet and preparing for future growth with a clear
focus on our DSD business,” said Farmer Brothers President and
Chief Executive Officer Deverl Maserang. “In TreeHouse, we found a
perfect fit with a valued customer and partner who will provide a
good home for our existing direct ship customers and transitioning
team members.”
As part of the terms of the sales agreement, Farmer Brothers and
TreeHouse Foods will continue to manufacture certain products for
one another for a period of time to ensure a successful transition.
As of today, approximately 180 Farmer Brothers team members have
transitioned to TreeHouse Foods and Farmer Brothers has agreed to
provide certain additional transition services for at least the
next nine months as TreeHouse Foods begins to move a portion of its
operations to the newly acquired Northlake, Texas facility.
In addition, Farmer Brothers will begin transitioning the
entirety of its DSD production operations to its Portland, Oregon
roasting and production facility and will continue existing
relationships with third-party roasters for additional capacity as
needed. The company’s corporate headquarters will remain in
Northlake, Texas where it will continue to lease office space from
TreeHouse Foods at its current location.
“Looking ahead our goals are clear – to continue to grow,
enhance our financial flexibility and profit margins and deliver
long-term value for our shareholders through focused operational
and strategic execution,” said Maserang.
Farmer Brothers’ DSD business sells coffee, tea, spices and
breakfast/brunch products through a wholly owned national network
of 80 independent branches, five distribution centers and nearly
240 routes, reaching 45,000 delivery points annually. Moving
forward, the company anticipates its annual revenue will be
approximately $350 million with a shift toward higher margin
products.
Winston & Strawn LLP served as Farmer Brothers’ legal
advisor for the transaction.
About Farmer BrothersFounded in 1912, Farmer
Brothers is a national coffee roaster, wholesaler, equipment
servicer and distributor of coffee, tea and culinary products. The
company’s product lines, include organic, Direct Trade and
sustainably produced coffee. With a robust line of coffee, hot and
iced teas, cappuccino mixes, spices and baking/biscuit mixes,
Farmer Brothers delivers extensive beverage planning services and
culinary products to its U.S.-based customers. It serves a wide
variety of customers, from small independent restaurants and
foodservice operators to large institutional buyers, such as
restaurant, department and convenience store chains, hotels,
casinos, healthcare facilities and gourmet coffee houses, as well
as grocery chains with private brand coffee and consumer branded
coffee and tea products, and foodservice distributors.
Headquartered in Northlake, Texas, Farmer Brothers generated net
sales of $469.2 million in fiscal 2022. The company’s primary
brands include Farmer Brothers, Artisan Collection by Farmer
Brother, Superior, Metropolitan, China Mist and Boyd’s.
About TreeHouse FoodsTreeHouse Foods, Inc. is a
leading private label food and beverage manufacturer in North
America. Our purpose is to engage and delight – one customer at a
time. Through our customer focus and category experience, we strive
to deliver excellent service and build capabilities and insights to
drive mutually profitable growth for TreeHouse and our customers.
Our purpose is supported by investment in depth, capabilities and
operational efficiencies, which are aimed to capitalize on the
long-term growth prospects in the categories in which we
operate.
Additional information, including TreeHouse's most recent
statements on forms 10-Q and 10-K, may be found
at treehousefoods.com.
Forward-looking statementsThis press release
and other documents we file with the Securities and Exchange
Commission (SEC) contain forward-looking statements that are based
on current expectations, estimates, forecasts and projections about
us, our future performance, our financial condition, our products,
our business strategy, our beliefs, our management’s assumptions
and the anticipated benefits to the company as a result of the
sale, including the expected results following the sale. These
forward-looking statements can be identified by the use of words
such as, “anticipates,” “estimates,” “projects,” “expects,”
“plans,” “believes,” “intends,” “will,” “could,” “may,” “assumes”
and other words of similar meaning. These statements are based on
management’s beliefs, assumptions, estimates and observations of
future events based on information available to our management at
the time the statements are made and include any statements that do
not relate to any historical or current fact. These statements are
not guarantees of future performance and they involve certain
risks, uncertainties and assumptions that are difficult to predict.
Actual outcomes and results may differ materially from what is
expressed, implied or forecast by our forward-looking statements
due in part to the risks, uncertainties and assumptions set forth
in this press release and Part I, Item 1A of our annual report on
Form 10-K for the fiscal year ended June 30, 2022 filed with the
SEC on Sept. 2, 2022 (the 2022 Form 10-K) as amended by Amendment
No. 1 to the 2022 Form 10-K, filed with the SEC on Oct. 27, 2022,
as well as other factors described from time to time in our filings
with the SEC.
Factors that could cause actual results to differ materially
from those in forward-looking statements include, but are not
limited to statements regarding the achievement of the anticipated
benefits of the sale, including expected results following the
sale, the risk that any announcements relating to the sale could
impact the market price of the company’s common stock and the risk
that the sale and its announcement could have an adverse effect on
the ability of the parties to retain customers and retain and hire
key personnel and maintain relationships with their suppliers,
distributors and customers, as well as other risks, uncertainties
and assumptions described from time to time in our filings with the
SEC.
Given these risks and uncertainties, you should not rely on
forward-looking statements as a prediction of actual results. Any
or all of the forward-looking statements contained in this press
release and any other public statement made by us, including by our
management, may turn out to be incorrect. We are including this
cautionary note to make applicable and take advantage of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995 for forward-looking statements. We expressly disclaim any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, changes in
assumptions or otherwise, except as required under federal
securities laws and the rules and regulations of the SEC.
Investor relations
contactEllipsisInvestor.relations@farmerbros.com646-776-0886
Media contactBrandi WesselDirector of
Communications405-885-5176bwessel@farmerbros.com
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