Executive Summary
Farmer Bros Co delivered a resilient QQ2 2025 with revenue of $90.0 million and a gross margin of 43.1%, supporting an adjusted EBITDA of $5.9 million and a positive free cash flow of $0.52 million. The quarter marks the second consecutive period of margin strength and improving cost discipline, underpinned by ongoing DSD optimization, SKU rationalization, and brand simplification initiatives. Management highlighted top-line growth as a strategic priority, aided by leadership additions in the sales organization, an expanding Allied Goods portfolio, and the rollout of a new specialty coffee tier. The company also advanced its portfolio strategy through price actions to navigate tight coffee markets and is progressing toward a B2B e-commerce platform slated for launch in the latter part of the current year, which should enhance product penetration and customer loyalty, albeit with near-term macro headwinds from elevated coffee prices and consumer softness. While coffee volumes declined 8% year-over-year, management remains confident that the mix shift toward Allied products and efficiency gains will sustain margins above the 40% target and enable continued cash generation as normalization of market conditions occurs over the coming quarters.
Key Performance Indicators
QoQ: 136.00% | YoY:-77.13%
QoQ: 104.20% | YoY:-92.23%
QoQ: 104.13% | YoY:-92.38%
Key Insights
Revenue and profitability: QQ2 2025 revenue of $90.021 million, up 5.82% QoQ and 0.63% YoY. Gross profit of $38.839 million yields a gross margin of 43.14%. Operating income was $1.018 million (operating margin 1.13%), while EBITDA stood at $4.971 million (EBITDA margin 5.52%). Net income reached $0.210 million (net margin 0.23%), with basic EPS of $0.0099 and diluted EPS $0.0094. Free cash flow for the quarter was $0.521 million....
Financial Highlights
Revenue and profitability: QQ2 2025 revenue of $90.021 million, up 5.82% QoQ and 0.63% YoY. Gross profit of $38.839 million yields a gross margin of 43.14%. Operating income was $1.018 million (operating margin 1.13%), while EBITDA stood at $4.971 million (EBITDA margin 5.52%). Net income reached $0.210 million (net margin 0.23%), with basic EPS of $0.0099 and diluted EPS $0.0094. Free cash flow for the quarter was $0.521 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
90.02M |
0.63% |
5.82% |
| Gross Profit |
38.84M |
7.56% |
4.08% |
| Operating Income |
1.02M |
-77.13% |
136.00% |
| Net Income |
210.00K |
-92.23% |
104.20% |
| EPS |
0.01 |
-92.38% |
104.13% |
Key Financial Ratios
operatingProfitMargin
1.13%
operatingCashFlowPerShare
$0.12
freeCashFlowPerShare
$0.02
Management Commentary
Key themes from the QQ2 2025 earnings call:
- Strategy and leadership: Management announced the addition of Brian Miller as Vice President of Sales and the transition of Tom Bauer to Chief Field Operations Officer, reinforcing a dual focus on new opportunity development and field execution to drive top-line growth and customer retention. Quote: 'Having dedicated resources to both sides of the equation on the optimization of the DSP organization and the business development efforts, I think are going to yield some exciting results for us going forward.'
- Operational efficiency and brand strategy: SKU rationalization and brand pyramid initiatives are on track to complete by the end of fiscal Q3, with the final phase including a new specialty tier coffee brand already rolled out to select customers. Early feedback has been positive, and these changes are expected to yield ongoing cost efficiencies and simplify go-to-market.
- Market conditions and pricing: Management noted persistent volatility in coffee markets and took proactive pricing actions in early FY2025 to protect the top line; ongoing pricing discipline is anticipated to help sustain margins above the 40% target. Quote: 'We reserve the right to certainly take an additional price if we need to.'
- Urest partnership and specialty opportunities: A collaboration with Urest to develop premium, eco-friendly workplace coffee blends underscores the company’s capability to bring higher-value brands to market, aided by Farmer Bros’ white-glove DSD service and sourcing expertise. The specialty tier is viewed as both a top-line driver and margin enabler over time, starting with optimization in the near term.
- E-commerce and customer engagement: A direct-to-consumer/B2B e-commerce platform is slated for launch in Q4 to enable customers to order more conveniently while benefiting from loyalty and promotional programs. This platform aligns with the brand pyramid strategy and is expected to expand product penetration nationwide.
The second quarter was a strong one for Farmer Brothers despite the challenging market environment. Sales were up slightly on a year-over-year basis and up 6% compared to the first quarter of this year to $90 million. We maintained gross margins above 43%, and our selling and G&A expenses also continued to decline.
— John Moore
Our adjusted EBITDA for the quarter was $5.9 million, a year-over-year increase of $3.6 million compared to the second quarter of last year. This was also a $4.5 million increase sequentially compared to the first quarter of fiscal 2025. Our adjusted EBITDA for the quarter was again supported by healthy gross margins. For the second quarter, our gross margin was 43.1%, a year-over-year increase of 270 basis points compared to 40.4% in the second quarter of last year.
— Vance Fisher
Forward Guidance
Outlook: Management acknowledges that the coffee market dynamics remain challenging, with volatility and potential pricing pressure expected to persist in the near term. Nevertheless, the company is better positioned than in prior years due to disciplined cost management, improved gross margins, and a leaner operating structure. Key drivers to monitor include: (1) the trajectory of coffee commodity prices and the effectiveness of forward pricing and inventory management; (2) the ramp and adoption of the specialty tier brands and the Urest partnership, which should gradually augment mix and pricing power; (3) the adoption and monetization of the upcoming B2B e-commerce platform, which is anticipated to boost product penetration and customer loyalty; (4) ongoing DSD route optimization and density gains which should support better per-stop economics. Management guidance suggests margins should remain above the 40% threshold, even amid commodity volatility, and free cash flow should continue to improve as working capital normalization and capex discipline persist. Investors should monitor commodity price trends, customer counts, and the pace of specialty-brand rollout as key indicators of mid- to long-term profitability and growth potential.