Farmer Brothers Company

A replay of this audio-only webcast will be available approximately two hours after the conclusion of this call. The link to the audio replay will also be available on the company's website. Before we begin the call, please note that all of the financial information presented is unaudited and that various remarks made by management during this call about the company's future expectations, plans, and prospects may constitute forward-looking statements for purposes of the safe harbor provisions under the federal securities laws and regulations. These forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. Results could differ materially from those forward-looking statements. Additional information on factors that could cause actual results and other events to differ materially from those forward-looking statements is available in the company's press release and public filings. On today's call, management will also use certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, in assessing the company's operating performance. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is also included in the company's press release. I will now turn the call over to DePearl. Please go ahead.

Thank you, Jeff.

Good afternoon, everyone, and thanks for joining us. We hope you and your families are continuing to stay safe and healthy. Since the onset of the pandemic, Farmer Brothers has made great strides in stabilizing the business in the face of unprecedented challenges. On today's call, I'll discuss the important steps Farmer Brothers has continued to take early in our new fiscal year to lay a strong foundation that we can build upon as we move forward. Then Scott will discuss our first quarter results in more detail. we will then take your questions. Throughout the first quarter, we continued to deliver on our strategic initiatives, made solid progress in executing our turnaround strategy, and we fundamentally strengthened Farmer Brothers for the long term. In response to challenges associated with the COVID-19 environment, we have learned to operate more efficiently and effectively. I'm incredibly proud of how we've pivoted and adapted to the current environment. Early in the year, We primarily work to stabilize the business, and this quarter, we have laid solid groundwork to build upon the future. I firmly believe the progress we are making will enable us to emerge from this unprecedented time able to better serve our customers for years to come. Before I walk through our turnaround strategy and progress we have made across our five E's, I'd like to provide an overview of our DSD and direct shift businesses. First and foremost, we saw continued stability and recovery in the DSD business throughout the quarter, with steady improvement reported each month. By the end of the quarter, DSD revenues improved to a decline in the low 30% range from pre-COVID-19 levels that we averaged prior to the start of the pandemic, with some days reaching the 20% range. As we have mentioned, sales from our DSC customers have declined between 65% to 70% at the height of the pandemic in April 2020, compared to pre-COVID-19 weekly average sales. We are proud of how the business has steadily and significantly improved, as this is a testament to the team's hard work to stabilize the business and position Farmer Brothers for success. We have over-indexed on our cost saving initiatives, held overall SG&A at a lower run rate than pre-COVID levels, and accelerated our top strategic projects along with driving sales glitches in DSD and improving our production capability to serve e-commerce and grocery customers that are experiencing unprecedented growth due to the pandemic. While we've made significant progress since the onset of the pandemic, the largest DSD sales declines continue to be from restaurants, hotels, and casino channels. while demand from healthcare and convenience store channels have been less impacted. Our direct ship sales channel has been able to mitigate some of the impacts of COVID-19 due to the types of customers we serve through this channel. We have seen increases in our retail business, products sold to key grocery stores under their product labels, and third-party e-commerce platforms. We have aggressively supported continued organic growth with key strategic customers, improved customer mix in favor of category growth-focused customers, and are responding effectively as consumers' purchase habits shift to retail grocery and e-commerce. All this was achieved by pivoting and executing at record retail packaging production levels to take advantage of the upside growth opportunities with these strategic direct ship customers. Throughout the quarter, we made important operational and technological improvements that have strengthened our foundation and business. We continue to take strategic actions to pivot our business and accelerate certain operating initiatives, guided by our turnaround strategy. Now I'd like to review our progress on the five E's. First and foremost, executing our supply chain optimization initiatives. We continue to advance the de-risking of our Houston facility, build out our state-of-the-art DFW facility, and move forward with opening of our West Coast distribution facility. At our DFW facility, we completed the installation of our additional roaster to further enhance our roasting capability. We've also operationalized several new retail packaging lines. Additionally, We are pleased to announce that we have signed a definitive lease for our new West Coast distribution facility in Rialto, California. We expect this facility to begin operating in the fiscal third quarter. As we have communicated previously, 40% of our customers are located in the western U.S., and our new distribution facility will provide the ability to achieve substantial transportation and distribution savings while At the same time, enhancing the service we provide to our West Coast branches and customers. Taken together, we remain confident that the de-risk infusion, build out of the DFW facility, and the opening of our West Coast distribution facility will improve profitability and provide manufacturing flexibility. In turn, enhancing Farmer Brothers' competitive position for the long term. The second element of our turnaround strategy is enhancing our systems and processes. I'm excited to provide an update on our new technology that we have rolled out over the last few quarters. First, HiJump, our new handheld technology, will be fully deployed on 100% of our routes within the next week. This new technology represents one of the biggest opportunities to support our DSD team with tools to capture more cells, save time, and improve accuracy. I recently spent time in the field with our sales and distribution teams in California and have heard incredibly positive feedback about this new technology. Our frontline RSRs are excited about the amount of time it is saving them weekly so they can spend that time on focusing on the customer. As we discussed last quarter, we also adopted a software platform that supports our new online websites and better enables retail shopping and subscription services. The board's website has continued to gain traction with consumers throughout the quarter, and we are launching another series of new sites for other brands and companies, including Public Domain, China Mist, and Farmer Brothers in the coming months. We also continue to see opportunity to leverage this platform with B2B, such as our Roaster Direct program, which allows customers to get smaller shipments delivered from our distribution centers to their location through third-party carrier shipping. In addition to optimizing our supply chain and enhancing our systems, we continue to work to enrich our customer relationships. We are seeing positive response from an enhanced business development strategy, building new customers through the pre-sale and sell-sale approach in our DSC business. We have dedicated selling teams, hourly delivery drivers, and related warehouse support in place that we believe will help drive better customer service and higher sales while being less costly than our historical structure. We also wanted to provide additional color on our coffee brewing equipment pilot that we spoke about last quarter. We continue to execute the pilot, and in the back half of the year, we will be launching the core building blocks with a new back office infrastructure and processes to ensure an improved customer experience. We are currently working to finalize various contractual offerings and service level agreements, SLAs, options, while completing the initial scoping of equipment coverage and ensuring certifications and training across our service technician population in the pilot area. We are also in follow-up conversation with key customers and manufacturers that have expressed interest in such service agreements and continue to ask us to support this much-required service capability across the U.S. Additionally, as you may have seen, we are very pleased to announce a new production agreement with Newsy Inc. a leading U.S. producer of specialty single-serve pour-over pouches and tea bag coffee pouches. As part of this agreement, Newsy will place up to 32 co-packing machines in our North Lake facility, leveraging our manufacturing capacity and distribution network to roll out their popular Asian products in the U.S. At full capacity, these machines are estimated to produce a total capacity of 300 million single-serve tea bag coffee pouches, and pour-over drip cups. For Farmer Brothers, the agreement, while not immediately material financially, provides us with incremental fixed cost leverage along with the opportunity for upside at Newsy's customer-based gross. We have also continued to deliver on our commitment to elevate innovation. Our investment in a new e-commerce platform and linkage to a new distribution platform Order management capability with full inventory visibility will provide a state-of-the-art capability to improve and enhance how we are marketing and serving customers. In addition, as I mentioned last quarter, our new equipment that allows for hands-free dispensing of beverages is helping our customers drive increased consumption of self-service coffee and tea beverages. While we are prioritizing near-term initiatives that we believe will have the most benefit through the COVID-19 operating environment, looking past the pandemic, we also see great opportunities to innovate within our product portfolio to capitalize on evolving consumer demand trends. And finally, as it relates to our talent, the safety and health of our Farmer Brothers team members remains our top priority. Our team members working on-site in manufacturing, distribution, and other areas continue to do a terrific job adhering to our enhanced safety guidelines. We are also continuing to allow team members who are able to work from home to do so if they choose, and we also continue to welcome back previously furloughed team members as business conditions permit. As a result of our efforts to pivot the business, we have already seen meaningful improvement to our results since the beginning of the pandemic in March. As we look forward, the pandemic remains a risk as we have seen in recent weeks, but we believe the positive trends we have seen combined with our solid execution positions us for continued improvement in sales, particularly as we enter our busier fiscal second quarter. Before I turn the call over to Scott, I'd like to emphasize that our business has not only survived through this unprecedented state of crisis, but our fundamental strengths remain intact, and we are strengthening our platform. We remain focused on leveraging our strong foundation to emerge from this global crisis as a stronger organization. Looking ahead, we remain committed to executing on all fronts, and I look forward to being able to provide updates on our performance and continued progress on our initiatives on future earning calls. With that, I'll now turn the call over to Scott for a more detailed review of the financial results. Scott?