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Denton County lands Farmer Bros. headquarters

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Farmer Bros. Co. is planning to break ground on a new state-of-the-art manufacturing facility off Interstate 35W just north of Hwy 114 in southern Denton County.
Farmer Bros. Co. is planning to break ground on a new state-of-the-art manufacturing facility off Interstate 35W just north of Hwy 114 in southern Denton County.

Denton County Commissioners on Tuesday approved a 10-year, 60 percent tax abatement to lure Farmer Bros. Co., which is planning to break ground before the end of June on a new state-of-the-art manufacturing facility off Interstate 35W just north of Texas 114 in Denton County.

The company is moving more than 300 jobs as part of a manufacturing, distribution and corporate headquarters facility designed to make the company more competitive and better positioned to capitalize on growth opportunities. The relocation will be from Torrance, Calif., near Los Angeles to Northlake.

“I am proud that our hard work and partnership between Denton County, the Town of Northlake and Farmer Brothers has resulted in their relocation to Denton County,” said Denton County Commissioner Andy Eads, whose precinct will be home to this state-of-the-art facility. “This is the type of high-wage, high-quality development we work to attract, and we look forward to all that Farmer Brothers will bring to our area. The quality of life, ready workforce, improved road system, and business-friendly environment in Denton County continues to be attractive to companies looking to relocate.”

Denton County joins Northlake in approving relocation incentives should the company establish a new facility in a designated location, create new jobs at the location and make investments in real property improvements at the same location.

“We are extremely pleased with the support and assistance of the Town of Northlake and Denton County along with the effort and spirit of cooperation we experienced working with the officials representing those jurisdictions,” said Mike Keown, CEO of Farmer Brothers, in a news release issued Tuesday. “We are working to finalizing our plans for relocation and securing eligibility for incentives represents an important step in our process.”

In a news release issued in February, the company indicated the move would result in annualized savings in the range of $12 to $15 million beginning in the latter half of fiscal 2016. At the time, the company was considering the Dallas-Fort Worth area and Oklahoma City.

“This is the type of clean development we have been trying to attract to Denton County,” Eads said of the company, founded in 1912, that serves as a manufacturer, wholesaler and distributor of coffee, tea and culinary products. “It’s going to be great for the local economy, housing and jobs.”

From the coffee bean to the end product, Farmer Bros. Co. will bring jobs for all employment levels, Eads said, adding that an annual national sales training event also will pump dollars into the local economies through hotel and restaurant usage.

“Today we are unveiling a logical extension of the strategies that have guided the Company’s recent turnaround, enabling us to better compete and grow,” Keown said in a February news release. “As we execute on our long-term strategic plans, we will relocate our Company headquarters to a state-of-the-art facility in a location central to our nation-wide customer base, and provide incremental manufacturing capacity to support future growth. Our plan will introduce new efficiencies, automation and quality-control processes improving our ability to win in an extremely competitive market.”

The Torrance facility is expected to be closed down in phases beginning this summer with construction on the new facility finished by the end of summer in 2016.

Company officials estimated it would cost about $25 million to exit the Torrance facility and approximately $35 million to $40 million to build the new facility with an additional $20 million to $25 million in anticipated capital expenditures for machinery and equipment, furniture and fixtures, and related expenditures, according to the news release.

The incurred costs are expected to be offset by net proceeds from the sale of the company’s facility in Torrance which could bring between $28 million and $35 million, officials noted.

“As we begin to implement the relocation of our Torrance facility and during this transition period, we remain steadfast in our commitment to ensuring continued and uninterrupted service to our thousands of customers nationwide,” Keown said. “We are excited at the tremendous opportunities ahead as we prepare Farmer Brothers for the next hundred years.”

As part of their second quarter fiscal 2015 report, company officials reported a net income of $2.9 million compared to $4.7 million from the same period in 2014.

Net sales for the second quarter of fiscal 2015 increased $1.7 million, or 1.2%, to $144.8 million from $143.1 million in the second quarter of the prior fiscal year primarily due to increases in sales of coffee, tea and other beverage products, according to the news release.

Treasurer and CFO, Mark Nelson said, “In the second quarter, volume growth did not meet our expectations which, coupled with an increase in our coffee commodity input costs, put pressure on our realized gross margin.” Mr. Nelson continued, “We believe our continuing focus on optimizing our supply chain and back office functions will help improve profitability and make the company more competitive for the future.”

The company lists an extensive product line from roasted coffee, liquid coffee, coffee-related products such as coffee filters, sugar and creamers, assorted iced and hot teas, cappuccino and cocoa to spices, gelatins and puddings, soup bases, dressings, gravy and sauce mixes, pancake and biscuit mixes, and jellies and preserves.

Net sales in fiscal 2014 for Farmer Bros. Co. totaled more than $500 million. and has approximately 1,800 employees nationwide. The company, which has approximately 1,800 employees nationwide, provides products under such primary brands as Farmer Brothers, Artisan Collection by Farmer Brothers, Superior, Metropolitan, Cain’s and McGarvey.

For information about the company, visit: www.farmerbros.com.

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