Farmer Bros. Co. (NASDAQ:FARM) Q2 2023 Earnings Call Transcript

Scott Drake: Yes. You’re exactly right that our inventory should get some natural benefit of lower cost as we move forward. But in Q2, what you really saw was the benefit of some of the actions we’ve talked about through the summer months of 2022 and then into the fall where we were focused on restructuring our debt, which we did successfully. And then we had mentioned how we were going to really turn our focus to getting more efficient with working capital. And Q2 was really the result of that. The inventory and some of the other efficiencies you see were really the result of us getting in and getting more efficient with our inventory, with our processes, safety stops, all those different components that go into that got a little better for us.

And quite honestly, it’s also been helpful and it was the right time to do so, because more of the supply chain returning is normal. At the time where we can have more reliance on vendors and products and timing, so we’re able to do a lot of this progress. But we’re not done yet. We’ll continue with the efficiency and have the benefit of lower cost with coffee certain.

Gerry Sweeney: I’m going to ask one more. I’m not sure if there’s anyone in queue. But labor, historically, it’s been challenging to get labor in the last couple of years and trouble €“ led to some challenges around rolling out additional routes or reinstating routes, et cetera. Any issues there? Or what’s that looking like? And obviously, you also had the Revive business, but curious to on that front.

Deverl Maserang: So Gerry, labor is €“ we’ve invested in HR. We’ve pulled some new resources in use, we pulled in a new CHR just over a year ago. She’s put her fingerprints on the organization, new head of recruiting, working on different programs with various technical schools and training program, and what that has resulted, and I’ll speak to Revive first. We’ve been able to recruit against our turnover in Revive on techs and have net adds per week, which is what’s contributing to being able to get more techs on the street. And now we’re just working those folks getting fully trained and productive on their specific tech routes in Revive. And then on the DSD side, we’ve had I’d say, a little less success from where we were with Revive, but solid performance on maintaining our RSR headcount and being able to get people back on routes and continue to add routes as the volume justifies those routes.

We’re still very much focused on optimization of those RSRs as we add them back. Would it be for turnover or specifically coverage on PTO or for adding additional RSRs to be able to change route structures when the route starts to get to a point where it has too much volume on the route, and we need to add a route, so we can pick up additional volume for customers that may be underserved? So that’s an ongoing optimization. We have a group that continues to lead that with our DSD team, and that’s been very successful. And the HR side we’ve been able to turn the tide. I’d say from a macroeconomic perspective over the past quarter, we’ve seen €“ while the labor rates have continued to €“ unemployment rates still quite low. We’ve been able to react to that and be able to get more applicants through and hired than on the street.