Good afternoon, ladies and gentlemen, and welcome to the Farmer Brothers Fiscal First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded. Joining me today are Deverl Maserang, President and Chief Executive Officer; and Scott Drake, Chief Financial Officer. Earlier today, the company issued its earnings press release, which is available on the Investor Relations section of Farmer Brothers' website. The press release is also included as an exhibit to the company's Form 8-K and is available on the company's website and on the Securities and Exchange Commission's website. A replay of this audio-only webcast will be available approximately two hours after the conclusion of this call. The link to the audio replay will also be available on the company's website. Before we begin the call, please note that all of the financial information presented is unaudited and that various remarks made by management during this call about the company's future expectations, plans and prospects, may constitute forward-looking statements for purposes of the safe harbor provisions under the federal securities laws and regulations. These forward-looking statements represent the company's views only as of today and should not be relied upon as representing the company's views as of any subsequent date. Results could differ materially from those forward-looking statements. Additional information on factors that can cause actual results and other events to differ materially from those forward-looking statements is available in the company's press release and public filings. On today's call, management will also use certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, in assessing the company's operating performance. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures is also included in the company's press release. I will now turn the call over to Deverl. Deverl, please go ahead.

Thanks, operator, and hello everyone. Our fiscal first quarter results showed continued good progress on rebuilding sales momentum post-pandemic, with revenue up 12% against an uncertain macroeconomic environment. I'm encouraged by the traction we're getting with new customers and some of our catalytic growth initiatives. I'll update you there in a moment. On the downside, our performance reflects significant declines in gross margin and profitability in the quarter. There is a complex set of factors at play here that I'll walk you through. But while we're disappointed with the performance, the impacts are largely very short-term in nature and already beginning to reverse. Along with that, we are excited about the opportunities we have in front of us and are optimistic about our potential in fiscal 2023. Let's start with the summary of sales performance and the external factors impacting the quarter. And Scott can fill in some of the details. Our total sales came in at $121 million, up 12% year-over-year, though down slightly from $123 million in our seasonally stronger fiscal Q4. Both DSD and Direct Ship sales were up approximately 12% year-over-year. DSD is executing well on all rollouts of recent wins in the convenience and QSR spaces. We've also had a good quarter in customer renewals and maintain a robust pipeline of new opportunities that our sales teams are pursuing. While we're certainly pleased with the sales growth and customer momentum, margins did not keep pace due to a combination of pricing, seasonal and inflationary pressures. Our gross margin percentage was significantly down in fiscal Q1 relative to Q4. Both national accounts and DSD were impacted roughly in equal measure. There were several key factors at play. First, looking at Direct Ship. While we have been seeing the benefits of our price increases in recent months, the contractual increases for several of our large national accounts are continuing to follow behind cost inflation, as their hedge costs have been accelerating more rapidly. We already are starting to see the benefit of higher pricing in our current December quarter. Additionally, a number of these Direct Ship customers were working off prior inventory builds in the quarter, which impacted our volumes. Total pounds produced were down 13% on a year-over-year basis in the quarter, with more than two-thirds of the decline coming on the Direct Ship national account side. Second, DSD pricing increases are starting to come through but did not keep up with inflation in the quarter. At the same time, we experienced the impacts of rising coffee costs. Additionally, our hedges were beginning to roll off, exacerbating the margin impact. Third, we've also seen higher average production costs due to economic factors. Recessionary impacts on demand and a longer, hotter summer added to the normal seasonally weaker consumption patterns in the business. This, along with the inventory drawdowns I mentioned a moment ago, factors led to underutilization in our production facilities. These impacts were most pronounced in July and the first half of August, but began recovering in September and through October. Put these factors together, and you have an unusual quarter that we do not believe will repeat. What I would call the coffee timing of recognizing price increases, inventory drawdowns and seasonal impacts are already alleviating in the December quarter. Scott will share more, but we believe we can recover more than a one-third of the year-over-year margin decline reported today during the December quarter. However, we still face inflationary pressures like many businesses. In our case, those include reduced hours at certain customer locations, labor shortages that are hurting food and other service businesses and ongoing supply chain issues. As we reported to you today, coffee prices have softened significantly from the fiscal Q1 levels. Assuming these trends hold, we will be in a much more favorable position as we move through the latter part of our fiscal year from a margin standpoint. Below the gross margin line, we've done a very good job managing our optimized cost structure over the past couple of years. But inflationary pressures raise the bar that much more. We'll continue to take pricing when warranted and be nimble in identifying and acting on cost opportunities as we move forward. Further, as you saw in August, we completed a favorable refinancing that effectively recapitalizes the company. We're now moving full steam ahead on a company-wide initiative with two primary objectives; one, working capital optimization, which will enable us to put more cash to work in the business; and two, executing on our IT roadmap to put in place the tools, systems and processes we need to manage the business with more agility and better navigate industry complexities like those impacting our Q1. While we work toward margin recovery, the good news is we are winning in the marketplace and executing on multiple growth vectors. As I talked about last time, we define our growth opportunities in two categories: recovery-based, as our post-pandemic customer base comes back to life, and as new customers and partners engage with us, and new opportunities that we call catalytic growth. These include high-growth adjacencies that leverage our network, including alternate beverage initiatives and our Revive business. I want to start with Revive, which is our vehicle for driving our espresso program and also contributes as a white glove equipment maintenance and service business. Revive is in growth mode, now driving past mid-six-figure revenues per month; demand is strong. We are actively in discussion for various levels of warranty and field support with several large coffee equipment manufacturers. In recent months, there has been a clear formalization of what was previously just indicated demand and that is validating. Our job now is to implement our plans for ramping the hiring of service technicians. We are ramping up our tech support staff and plan to double our team within the next year. We're getting creative there, including working with technical schools to accelerate the sourcing of quality talent. We have several exciting additional catalytic growth opportunities in various stages to develop, including a few alternate beverage programs that I can talk about today. The first is our partnership with Lotus Plant Energy, which produces a line of plant-based energy drinks with natural flavoring and caffeine. We're introducing four SKUs into our DSD network as we speak. Research shows significant crossover between coffee and tea drinkers into energy drinks. And these products skew toward millennial and Gen Z consumers. We believe they fit very well with what we're selling into channels like coffee houses, QSRs, hospitality, and more. A second partnership with New Zealand SERPS Company Shot should be in launch mode by the end of the year. Shot has been a huge hit in Australia and New Zealand. It is a disruptive SERPS product built from juice paste and without artificial colors or flavors. The sugars and flavors come from a higher juice concentration than used in typical SERPS. However, the real innovation is that they can do this in a shelf-stable product that does not require refrigeration. We're working with Shot in New Zealand on manufacturing and supply chain logistics, and should be ready to test launch this product in two US markets before year-end. Finally, in the back half of our fiscal 2023, we expect to launch a third partnership with a cold brew concentrate manufacturer. Think of it as a concentrate that can be used in a multitude of coffee drinks like iced latte, Americanos, nitro dispensing, and coffee milkshakes. One other application that is phenomenal in espresso martinis, which potentially opens the product to be in the fine dining and bar categories. These are all beverages where hot espresso does not work as well, and because the product is shelf-stable and in concentrate form, it can also be a more effective cold brew option for strength coffee drinkers. We're completing work on manufacturing logistics and should be ready to test launch in the first part of calendar 2023. As I wrap up, growth opportunities like these are a big part of the reason I joined Farmer Brothers. We have the scale and the network to deliver disruptive products that can help drive top-line performance on Holdco, the operating leverage we've built into Farmer's national footprint. At the same time, we also know we're operating in a really tough environment and are focused on managing short-term pressures. We continue to prune our portfolio when necessary. In the September quarter, we sold two branches for an attractive gain, and we also decided to pause investment in our public domain brand in Oregon. This was primarily an online brand and until we complete work on our consolidated back-end e-commerce fulfillment infrastructure, it did not make sense from a cost perspective to operate the brand on a larger scale than needed. As we look ahead, we're cautiously optimistic. I don't want to ignore the near-term inflationary and recession uncertainties, but we do expect fairly rapid gross margin recovery over the next couple of quarters as we flip the script on the near-term pricing impacts. We will also be very focused on managing our costs prudently, and Scott will have more on what we're also working on to improve our working capital position. Before turning the call over to Scott, I wanted to address the news about our changes at the Board level announced this week. We greatly appreciated the ongoing input and engagement with our large shareholders who have supported us on the journey of restoring Farmer Brothers' operations and setting a foundation for profitable growth. We reached an amicable agreement with two of our largest investors and look forward to welcoming two new members to our Board, including Brad Radoff here in the immediate term. As we complete the fiscal year, we are also saying goodbye to two highly valued Board members in Charles Marcy and Chris Mottern, and we greatly appreciate their service and contributions. No one wants to create value for shareholders more than this management team and the Board. So we look forward to working with our new colleagues toward that objective. With that, thanks again to all of you, and I will turn it over to Scott.

Thanks, Deverl. My comments today will focus on the first quarter fiscal 2023 financial performance, our margin and how we're managing the balance sheet, along with some more color on the key initiatives you mentioned. Overall, net sales in the first quarter of fiscal 2023 were $121.4 million, an increase of $13 million, or 12% from the prior year period. The growth in net sales primarily reflects increased customer pricing on both our DSD and Direct Ship networks, both of which generated similar sales increases. These results were partially offset by lower volume in both DSD and national accounts compared to the prior year, and the lag in recognition of price increases in the Direct Ship business. That said, DSD and national account revenues in the current quarter do reflect some of our historic pricing actions and that is helping offset decreased volume. Volumes, as Deverl highlighted, were down 13% year-over-year. More than two-thirds of this decline was on the Direct Ship side. And of that amount, two-thirds was attributable to continuing customers and the rest to exited customers. With continuing customers, a healthy portion of the decline is attributable to inventory drawdowns within just a few of our key accounts. Additional factors impacting volumes include the seasonally weaker summer months, as well as recessionary pressures on consumption. In the first half of the quarter, a COVID resurgence impacted staffing levels and opening status at a number of customers within the DSD businesses that we support. As Deverl noted, the DSD business has recovered aggressively over the last two months. And in fact, during October, we experienced our highest sales weeks since the start of the pandemic in about three years. Week-to-week DSD sales are noticeably improved from our first quarter reported results. Breaking down sales a little further, DSD revenue was up nearly 13% year-over-year, as we saw continued sales channel success and benefits from the price increases that we had implemented in the prior quarters. Though these increases were not able to keep up with inflation in the most recent quarter, we began implementing additional price and fee increases in our DSD business, and the benefits of those will start to materialize in the current fiscal quarter. Our Direct Ship channel sales also improved nearly 11% during the first quarter of fiscal 2023 compared to the prior year period. Although our Direct Ship business operates under a cost-plus model and the pricing pressures flow through to our customers per the terms of our various agreements, the timing of price changes naturally lags, and in our fiscal first quarter, that was felt in our margins. As already noted, those contractual increases are merely timing based per each customer contract and are now appearing in our fiscal second quarter. Total gross profit was $26.6 million for the three months ended September 30, 2022, compared to the $31.5 million in the prior year period. Gross margin decreased to 21.9% in Q1 of fiscal 2023 from 29% for the comparative 2022 fiscal year period. Profitability levels reflect a near-term gap in gross margin performance due to timing and pull-through of contractual price increases with large national accounts and demand-related factors including customer inventory reductions during a seasonally slow period for coffee production, which combined to impact our roasting volumes. Additionally, in prior quarters, we had been able to offset some pricing changes through our hedging program, but those hedges are naturally maturing at higher cost levels each month and will not have the same beneficial nature in the falling commodity price markets that we are now experiencing. We expect that Q1 will be the low point of our fiscal year on the margin front and we are already seeing recovery. For perspective, I'll share that of the Q1 year-over-year gross margin decline a little more than half was attributable to inflationary pressures on DSD margins and the remainder was attributable to the contractual delay in price increase recognition from national accounts. The pricing and margin actions across the business now coming through are expected to drive at least a 200 to 300 basis point improvement in the December quarter with more to come in the latter half of our fiscal year. Hedging impacts and outcomes, which are not core to our operations, are the only other material wildcard that I see as I look forward at our margin recovery story. Further, the softening of coffee prices in recent weeks, should that continue, would provide a further tailwind for margins as we would finally face deflation to a key component of our cost structure. In the first quarter of fiscal 2023, our operating expenses decreased by $2.3 million or 7% to $30.9 million from $33.2 million in the prior year period. As a percentage of net sales, our operating expenses decreased by over 500 basis points to 26% compared to 31% in the prior year period. This decrease was due to modestly higher selling and G&A expenses offset by net gains from the sale of two branch locations during the quarter. The increase in selling expenses was primarily due to an increase in payroll, facility, and fleet inflation-related costs. The decrease in general and administrative expenses was primarily due to a gain on the purchase of assets as a result of the settlement related to the Boyd's acquisition, which included the cancellation of preferred shares and settlement of liabilities. This was partially offset by an increase in contract services. Even when excluding all gains on the sale of assets and preferred shares from this quarter and prior year, the result still leads to meaningful improvement in the operating expense to sales ratio year-over-year. Adjusted EBITDA was a loss of $4.9 million in the first quarter of fiscal 2023 compared to income of $3.5 million in the prior year period. And the adjusted EBITDA margin was negative 4% in the first quarter of fiscal 2023, as compared to 3.2% in the prior year period. Our capital expenditures for the three months ended September 30, 2022, were $3 million, an increase of $400,000 compared to the prior year period. This was primarily due to higher CBE or coffee brewing equipment related capital spend compared to the prior year period, as we position our revised business to capitalize on its growth momentum. As of September 30, 2022, the outstanding principal on our revolver and term loan credit facilities was $114 million, an increase of $5.4 million from June 30, 2022. Our cash balance was $7.6 million as of September 30, 2022, a decline of a little over $2 million. Our net reduction in liquidity during the quarter was due to the continued impact of higher product and operating costs. These uses of cash were partially offset by cash proceeds from the sale of branch properties during the quarter. I would also note that despite inventory purchases and inflationary impacts, our overall inventory balance was down in September compared to our June fiscal year-end level. We noted our attention would turn to working capital efficiencies once we completed our work on the debt structure. So it is nice to see improvement and I will comment more on this in a moment. But first, as announced in late August, we completed a successful refinancing of our ABL credit facility consisting of a new five-year $47 million first lien secured credit facility with increased covenant flexibility. This refinancing was structured as a low-cost transactional amendment for our previously amended facility and is expected to provide the company with approximately $2 million in cash savings per year compared to the cost of our previous debt structure. In addition to lowering the interest rate and extending the maturity, the refinancing eliminates the minimum adjusted EBITDA covenant and allows for 15-year amortization on principal payments. The structure gives us enhanced flexibility as we prepare for a number of the growth initiatives that Deverl has highlighted today. It has also set the stage for the comprehensive company-wide working capital and systems improvement initiatives that Deverl lined earlier. Just to add a little more color. When we complete this work, we'll be able to substantially improve our working capital management with access to critical tools, data, and new processes needed to manage the natural swings in pricing and costs that are inherent in the coffee business. This project affects operating procedures, metrics, reporting practices, contracts, and agreements with customers and vendors, and closely ties into our IT roadmap work which includes defining the requirements for the systems we use and will be using to operate the business well into the future. Thus, we also expect some efficiency benefits as all of this is fully implemented over the coming quarters. As an initial step to these efforts in the coming days, we are bringing online a new operations planning and ordering tool, which will allow for simultaneous users and collaborative workspaces that will provide improved data, documentation, visibility and clarity on all responsibilities in a low-cost stable environment. We think the timing of this project works in our favor, as margins recover from Q1 levels, providing the opportunity to focus more on reducing our leverage. We will gain valuable information that will help to accelerate our previously noted and ongoing optimization efforts. Wrapping up, on paper, this was clearly a tough quarter, but we view the impacts on margin and profitability as largely short-term in nature and that view is supported by positive trends we're seeing here in the first part of our fiscal Q2. We do not think that our progress towards higher sales, higher margins, and higher profitability has been derailed, only delayed by the factors noted. We continue to execute on profitable growth initiatives from cost to new products and achievement of internal operating efficiencies and working capital improvement. Of course, the additional headwinds for macro uncertainties will play a role in our performance looking forward, but we are confident that we're in a good position to again build positive momentum into the business as we move through fiscal 2023.

We will now begin the question-and-answer session. Our first question will come from Gerry Sweeney with ROTH Capital. You may now go ahead.

Good afternoon, Deverl and Scott. Thanks for taking my call.

Hey, Gerard.

Hi Gerard.

On margins, there was a bit of disappointment. I know you discussed it during the call, mentioning it was half DSD and half Direct Ship. I would like to clarify something. It seems that there were hedges in place, and I’m not clear if those hedges have started to roll off. However, it appears that while the hedges were in effect, they helped lower your cost of goods sold. Once they rolled off, your cost of goods sold increased, and this rise was not reflected in higher pricing for your customers at that time. Did I capture that correctly?

Yes, Gerry, you are correct. On the national account side, there was just a contractual delay. The hedges were maturing, and people were utilizing them over the past year. Given that coffee prices have been in the 220 to 240 range for several months, if you had hedged in a six-month, nine-month, or 12-month window, what happened was that until very recently, in Q4 and Q1, your hedges resulted in a significantly lower cost of coffee. The hedging program was effective. What we're trying to convey is that the acceleration of costs has been much more dramatic, which has impacted our ability to pass those costs through to our accounts.

So, the key question here is why did it stop working, was it because the hedges rolled off? Was it you or the customer, or was there some kind of mechanism in the contract that changed because it was a new year and there was a gap? I’m trying to figure this all out.

Let me address the question directly, Gerry. The unexpected aspect for us was related to margins, particularly concerning volume. Our large national account businesses were working through their inventory during the quarter. As you may recall, many of these national customers had accumulated extra inventory, purchased products, but by early July and August, the supply had not yet arrived. It wasn't until the latter half of the quarter that we began to see improvements. The recession had an effect on them, and the drop in orders was unexpected; the volume we anticipated didn't materialize, and we need to adapt to this ongoing situation, which we are monitoring very closely. The second point relates to pricing. As Scott mentioned, it was influenced by the hedging rolling off, and in one significant case, our largest affected customer did not receive the agreed price change until October 15. We're now observing this shift and will recoup it in the next quarter in light of last quarter's events. These were two developments that exceeded our initial expectations, and we are responding with various strategies, as highlighted by Scott in his earlier comments.

Yes. On the DSD side, hedging is one aspect, but we simply did not keep pricing ahead of all the inflationary pressures in coffee and other areas we're facing, just like everyone else. It was a straightforward issue. We have new pricing set to take effect in November, with full implementation in December.

Let me mention one more thing, Gerry, since you will likely ask this. It's important that we ensure everything is correct. The question at hand is how these margins will trend for the remainder of fiscal 2023. We believe a recovery is in progress based on the data and information we're currently analyzing. As mentioned in the prepared remarks, we had our best week in DSD since before the pandemic. We anticipate returning to our targeted trajectory as we move into Q3 and Q4, although we acknowledge the macroeconomic uncertainty. We will need to adjust our pricing, and we have a pricing change set for this month. Additionally, we have various strategies we are implementing. If the economic situation worsens, the overall effects on the economy remain somewhat uncertain. We recognize that we will need to adapt as the situation evolves, and we hope to see improvements on the inflation front, meaning a reduction in inflation.

Got it. Are you seeing any let-up on the inflationary side? Obviously, green coffee beans. Any let-up on the inflationary side?

We have noticed some fluctuations in trucking rates and fuel. We're keeping a close eye on diesel prices, particularly since they are currently at their lowest levels in the US for an extended period. This situation is concerning, so we are exploring alternatives such as rail transportation. After the midterm elections, we'll monitor the rail situation in the country and hope for a favorable outcome to avoid increased trucking surcharges or a further rise in diesel prices. On a positive note, which may help cushion some inflationary pressures in the US, we've recently observed a decrease in coffee prices, although they've experienced a slight uptick in the past few days. We anticipate this trend will continue until the harvest is in. Additionally, we have seen significant drops in differentials, which have been historically high, and this will also contribute positively to our cost structure.

Got it. How long does it take for lower coffee prices, I think it is green coffee prices to work into the system?

That's an interesting question. I'll divide it into two parts. On the national account and Direct Ship side, we collaborate with those customers, and they essentially manage their own books. We assist them with trading, industry insights, and market insights, but they customize their books according to their specifications. Therefore, the response varies in that segment of the business. Even as prices decline, we will adhere to the contractual norms, maintaining the historical cost structure from the previous 90 days as we move forward. Consequently, similar to the delay we experienced when prices increased, there will also be a delay when prices decrease. Some customers will begin to see the advantages of lower pricing in one to two quarters, while others may take much longer, with some having locked in prices for nine to twelve months. This means a longer adjustment period for those clients. On our part, regarding our DSD account, we have been closely monitoring market trends.

Please wait one moment, as I reconnect the speaker line. Okay. I've joined the speaker line back in. Gerry, your line is still open.

Hey, Scott I lost you at DSD, you went through Direct Ship coffee prices.

Yeah. Apologies, apologies the system, I don't know what happened maybe a power issue in the building or something, but we got dropped. We can see from our Qs the amount of hedges we have in place. Based on current market conditions and recent observations, we have been reducing our hedge book significantly. This means we will benefit from lower costs if they persist in the latter half of the fiscal year.

Yeah. In the back half of this fiscal year, you said sorry?

Yeah. Yes. So yes the March quarter and the June quarter will start to have some good benefits from the lower cost if they continue.

Got it. Okay. Switching gears to maybe the gross side Revive. You made a comment about doubling workforce I think over the course of the year. Now, Revive is a new business per se, right? You white labeled it maybe not necessarily new business. But how many techs do you have in that business? Because you did have techs, before you white labeled it. So I'm just curious, as to what really that baseline is on the doubling on the tech part.

Yeah. You're right. And it's not a new business, but it's new in the context that we're expanding the third-party areas that previously were offered out to third parties. It's new in the context that we're adding new manufacturers across the board that we did not provide service and support for. And it's also new in the context that we're adding accounts that our coffee-type customers that have equipment that can be serviced and that we're servicing that. Our current baseline is 120 at present, roughly, and growing weekly. And we have excess demand that we are covering, as we add new techs in key markets where the demand is incredibly strongly unmet. And that's what gives us excitement that these avenues of increasing the current amount that we have been handling. We know is real. And it's profitable. And it's accretive to the business. And it will make our overall network both on the DSD side and the customers we served there today that were served heavily through third-party we'll be able to add those with a Revive tech and then add non-DSD Farmer Brothers accounts, be it manufacturers or other clients that want to service. So it's very exciting. And we'll start continuing to report more-and-more as this is becoming a substantial impact to our overall network.

I think you said in the prepared remarks, mid-six-digit type revenue on a monthly basis for Revive, correct?

Yes.

You have 120 technicians, but only a portion of them are servicing your direct store delivery clients, and the revenue from that is included in the coffee prices they pay. Therefore, that mid-six-digit revenue does not necessarily represent the full picture. If you were to double your number of technicians, I believe that would create a significant revenue opportunity. Do you understand what I'm saying?

Absolutely. We agree with you on that point. And I would also tell you that with the new general manager we brought in to lead this business to really take it to the next level, he would tell you that even on existing DSD customers that we're starting to change the way we evaluate the service of those with kind of a platinum, gold, silver approach in some cases selling them equipment, in some cases then selling them a service contract to that equipment, in some cases having a service contract only, or in large accounts that purchase volume in the traditional way; we're providing that service, but we're also changing the frequency by which we service on a periodic basis for maintenance. And then if it's something that comes in and it's a one-off that they're asking for a frequent service in their machine is in good order, but somehow it continues to break. We're looking at ways to charge for those services where it becomes well above the cost basis of what we had projected. So, lots of different work we're doing to model this out. But to your point, it's going to be higher per tech that we add in total revenue per technician as we go forward and get to this potential of doubling here in the next 12 months. So, it should become as we're seeing it now and as we've not reported in the past how big we think Revive can be. We're much more pro in terms of the size and the overall margin impact it could have to the business. So, we're not yet prepared to give you a range of just how big it can be, but we're trying to start to tee that up as we've done in the last two quarters and give you a better sense and we'll get deeper and deeper into that to give you more information as we continue to grow it. And right now, we just landed one of our first largest manufacturing contracts that we're executing and that's really exciting and we expect that more of those are here to come. And that if we have the techs to service it, the demand is already there.

Got it. What about profitability?

Yes. The beauty of that model as we've talked about a little bit is the core cost of that business is already in our financial numbers. It's been a part of the business because of DSD for many years. So all of the incremental dollars that we add primarily in techs we're adding because they're accretive to the business. So, I like to think of it as a highly leverageable model. And yes we will have some cost increases, but they're more than justified by the revenue increases. And again, as Deverl said, we're in this kind of unique spot that we're very fortunate of is we are fulfilling demand. We're not having to identify and change demand. We're literally at this point fulfilling demand as quickly as we can with tech. So, we'll kind of keep you abreast on when that changes, but we think that's quite a runway for the next several quarters at least of just being in that mode.

The obvious question that many people ask is how we plan to hire more technicians given the current labor situation, particularly if we're aiming to double our workforce in the next year. The truth is that we have revamped our recruiting strategy, which is proving effective. Additionally, we are collaborating with a large technical service school to train and graduate new technicians using our curriculum in partnership with their resources. We intend to offer these graduates jobs immediately after they finish their training, supported by a program developed by our new Head of Learning and Development. This gives us confidence in our current structure because we believe we have found a successful approach. Even in this challenging environment, we are optimistic about our prospects with Revive. We believe we can meet demand without having to chase it, as the demand exists. If we can learn to fulfill it while maintaining good margins, especially with the cost efficiencies mentioned, we will be able to utilize our existing fixed assets effectively.

Got it. I'll jump back in line. I appreciate it guys.

All right, Gerry. Thank you.

Gerry thanks.

It appears there are no further questions. Gerry if you have any follow-ups you may present them now.

I'm in good shape. Thank you.

Okay. This concludes our conference. I'd like to turn it back over to Deverl for any closing remarks.

Well, thanks for the questions. And I'll close by saying that while we're disappointed with the outcome of the quarter, that disappointment should prove short-lived. Near-term we are recapturing momentum as we get through the lag impact of our price increases and we believe that we are positioned well heading to lower coffee price environment with a shorter hedge position in our book. Most important for the long-term, we have not been distracted from foundational initiatives underway to achieve Farmer's potential. Those initiatives include the optimization we've made to our business operations winning new customers broadening and modernizing the product portfolio we push through our national distribution footprint and investing in the systems that will make us more nimble. All these initiatives along with better data and insight should drive higher levels of performance. We appreciate our investors' interest and support and look forward to keeping you posted on our progress. Have a great evening. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.