I look forward to speaking with many of you in the near future, and with that, I’ll turn it over to Scott. Scott?
Scott Drake: Thank you, John. I’ll cover our results for the quarter and the year. As we are in the midst of a transition, we won’t be introducing specific guidance today, but our Interim CFO, Brad Bollner, will provide some color on how we see the business unfolding this fiscal year. Before diving into the performance, I’d want to remind you we’re reporting on a continuing operations basis, reflecting our DSD business. In July, we filed pro forma financial statements to give investors a view of the impacts of the direct shift divestiture on Farmer Brothers financials. As a headline comment, what you see in the fourth quarter are the beginnings of positive pricing impacts on sales, improving margins as we gain pricing leverage, and good cost containment.
Our net sales increased 1% on a year-over-year basis to $85.5 million. The comparison reflects stronger pricing in the fiscal 2023 fourth quarter offset by lower volumes. A gross margin of 32.5% was a decrease from 42.6% a year ago, reflecting inflationary impacts and our focus on working down inventory of higher priced coffee bought in previous quarters. We see this latter impact subsiding however, as we move through the year. The year ago gross margin is a more normalized margin for DSD and we fully anticipate returning to those levels. As Deverl highlighted, what you won’t see in the fourth quarter gross margin is that we picked up several 100 basis points in the second-half of the quarter as we implemented the AI pricing engine. This will be a tailwind for us as we advance.
Against the backdrop of high inflation, operating expenses were only up 3%, which was primarily due to higher selling expenses. Overall, general and administrative expenses were down 9% during the quarter as we optimized our cost structure. Our adjusted EBITDA loss in the fourth quarter was $7.2 million against the $7.1 million profit last year. This swing primarily reflects lower gross profit flowing through the P&L. Recapping the year quickly, total revenue was $340 million, up 8% on pricing, but somewhat offset by lower volume. Those pricing benefits showed up in mid to late fourth quarter. Margins were pressured over the year, due to an unfavorable price of coffee and inflationary impacts on labor and other costs in our cost of goods sold.
We were able to mitigate some of this impact with operating cost reductions, bringing our G&A down by 13%, but adjusted EBITDA for the year moved to a loss of $14.2 million. Looking at the balance sheet, we ended the year with $5.2 million in cash and equivalents. Our liquidity position has improved overall, however, as we applied the proceeds from the direct ship sale transaction to reduce our revolving credit facility balance. On June 30, 2023, we had outstanding borrowings under our credit facility of $23 million, utilized $4 million of the letters of credit sub-limit under the credited facility, and had $35.8 million of availability under our credit facility. We believe we are adequately capitalized to finance our operations in fiscal 2024, as we progress towards our target of positive free cash flow by the end of the fiscal year.
With that, let me introduce our Interim CFO, Brad Bollner. Brad?
Brad Bollner: Thanks, Scott, and hello, everyone. I’d also like to express my gratitude to Deverl and Scott for their leadership and echo my excitement about where we’re going. To provide some color on how we see the business unfolding in fiscal 2024, we’re anticipating flattish sales quarter-over-quarter in the first quarter of 2024 with some gross margin improvement as we benefit from favorable pricing. The bottom line, however, is we will show transitional impacts from two factors throughout the year: our DSD reorganization and the expiration of our co-manufacturing and transition services agreement with TreeHouse. We expect to gain significant production and operating efficiencies resulting from this transition, generating favorable impact to results over the next couple of quarters, with the full advantage starting to appear on a run rate basis as we exit the year.
