Farmer Bros 2025 Q3 Earnings Misses Targets as Net Income Falls 629.6%

Farmer Bros reported its fiscal 2025 Q3 earnings on May 8th, 2025. The company's results fell short of expectations with revenue declining by 3.9% compared to the previous year. Despite challenges, Farmer Bros maintained gross margins above 42% and achieved its third consecutive quarter of positive adjusted EBITDA, reflecting ongoing operational improvements. The company anticipates continued growth through strategic initiatives, maintaining cautious optimism for future performance.

Revenue
Farmer Bros experienced a revenue decline, totaling $82.05 million in fiscal Q3 2025, a 3.9% decrease from $85.36 million in the same quarter of 2024. Coffee (Roasted) led the product categories with $39.55 million, followed by Tea & Other Beverages at $22.13 million. Culinary products contributed $14.38 million, while Spices added $4.85 million. The Delivery Surcharge brought in $1.14 million, culminating in net sales of $80.92 million for the quarter.

Earnings/Net Income
Farmer Bros saw losses deepen significantly, with earnings per share dropping to a loss of $0.23 in Q3 2025 from a loss of $0.03 per share in Q3 2024, marking a 666.7% wider loss. The company's net loss increased to $4.98 million, a 629.6% increase from the prior year's loss of $682,000, indicating a challenging financial quarter.

Price Action
The stock price of Farmer Bros climbed 5.56% during the latest trading day, increased 6.74% during the most recent full trading week, and edged up 2.70% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Farmer Bros shares following a quarterly revenue increase and holding for 30 days has historically yielded a 12% total shareholder return over the past five years, although this falls below the market average. Despite stable income streams, the strategy underperformed the market, showing a 13% annual TSR reduction. Farmer Bros faces challenges with declining revenues and profitability, impacting share prices. However, insider buying suggests potential optimism, indicating that while the company navigates difficulties, there may be confidence in its future prospects.

CEO Commentary
“The third quarter was another solid quarter for Farmer Brothers,” said John Moore, President and Chief Executive Officer. The company achieved its third consecutive quarter of positive adjusted EBITDA, maintained gross margins above 42%, and improved its cost structure through reductions in selling and administrative expenses. These results reflect the team’s efforts to streamline operations and manage costs amid a challenging market environment. The launch of the Sum>One specialty coffee brand signifies the completion of the brand pyramid and SKU rationalization initiative, enhancing Farmer Brothers' market positioning with a tiered go-to-market strategy.

Guidance
Farmer Brothers anticipates continued growth driven by its structured brand pyramid, allowing customers to adjust to their business needs. The company expects to maintain gross margins above 42% and aims for ongoing improvements in operational efficiencies. The leadership remains cautious but optimistic about navigating the current market challenges while focusing on strategic initiatives that will differentiate Farmer Brothers in the competitive landscape.

Additional News
Farmer Brothers announced several key developments in recent weeks. Brian Miller was appointed as Vice President of Sales, bringing over 25 years of consumer product industry experience to the role. Miller aims to drive top-line growth and enhance the customer base for long-term profitability. In another update, Farmer Brothers confirmed the continued focus on sustainable sourcing practices and enhancements to its Direct Store Delivery network, aiming to strengthen its market position. Additionally, strategic efforts in product innovation and facility expansions have been highlighted, showcasing the company's commitment to operational improvements and customer satisfaction.