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Farmer Bros. relocation to Fort Worth expected in 3Q 2017

Farmer Bros. Co.’s relocation to Northlake is on track, the company said during a conference call announcing the coffee and beverage company’s most recent earnings.

“Currently we continue to expect to begin our move into the new facility in the second quarter of fiscal 2017 and to be operational in the third quarter,” said Mike Keown, CEO of the company, currently based in Torrance, California.’

For the year, the company reported profit of $89.9 million, or $5.41 per share. Revenue was reported as $544.4 million.

Farmer Brothers shares have increased nearly 4 percent since the beginning of the year. In the final minutes of trading on Monday, shares hit $33.46, an increase of 26 percent in the last 12 months.

Farmer Brothers Co. reported fiscal fourth-quarter net income of $84.2 million, after reporting a loss in the same period a year earlier.

On a per-share basis, the company said it had net income of $5.05. Earnings, adjusted for non-recurring gains, came to 23 cents per share.

The results fell short of Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 33 cents per share.

The coffee and tea company posted revenue of $134.2 million in the period, also missing Street forecasts. Three analysts surveyed by Zacks expected $135.7 million.

A stockholder group led by Carol Farmer Waite and other members of the Farmer Bros. founding family, which owns about 23 percent of outstanding shares of the company’s stock recently delivered a letter to the board of directors saying they had concerns with the company’s strategic direction.

In the call, company officials noted that the business strategy and initiatives made by management, such as relocating to North Texas, was done with the support of the board and are “designed to continue creating value for our stockholders.”

CFO Isaac Johnston discussed plans for the company new Northlake headquarters, located just across the boundary from Fort Worth near the Texas Motor Speedway.

“As you know last year we entered into a lease agreement for an approximate 538,000 square foot facility being constructed on just over 28 acres of land located in the city of Northlake, Texas, which will include corporate offices, areas for manufacturing and distribution, in addition to housing a coffee lab,” he said.

In March 2016, the company updated the cost and size of the facility, with the cost increasing to between $55 million to $60 million and the machinery and equipment capital expenditures to $35 million to $39 million, he said.

“In June 2016, the company exercised its purchase option to purchase the new facility under construction in Northlake, Texas, and expects to close on the purchase option in the first quarter of 2017,” Johnston said.

Also on Sept. 12, Farmer Bros., a national coffee roaster, wholesaler and distributor of coffee, tea and culinary products, announced it will acquire all the assets of premium tea manufacturer and distributor China Mist Brands Inc. for $10.8 million, plus a performance-based payment of $0.5 million if certain sales levels are achieved in calendar years 2017 and 2018.

About 350 staff members are expected to work at the new headquarters.

Assisting the company recruiting and hiring is Futurestep, a Korn Ferry company specializing in talent acquisition solutions.

www.farmerbros.com

Transcript of the conference call from Seeking Alpha:

http://seekingalpha.com

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Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

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