SOURCE: Coffee Holding Co., Inc.

January 28, 2013 09:00 ET

Coffee Holding Co., Inc. Reports Record Sales and Year End Results

STATEN ISLAND, NY--(Marketwire - Jan 28, 2013) - Coffee Holding Co., Inc. (NASDAQ: JVA) today announced its operating results for the year ended October 31, 2012. In this release, the Company:

  • Reports record net sales of $173,656,215 for the fiscal year ended October 31, 2012;

  • Reports sales growth of 18.3% for the fiscal year ended October 31, 2012 compared to the fiscal year ended October 31, 2011;

  • Reports net income of $2,485,677, or $0.39 per share (basic) and $0.37 per share (diluted) for the fiscal year ended October 31, 2012; and

  • Reports payment of $0.15 in quarterly dividends in fiscal 2012 as compared to $0.12 paid during fiscal 2011. 

The Company had net income of $2,485,677, or $0.39 per share (basic) and $0.37 per share (diluted) for the year ended October 31, 2012 compared to a net income of $811,930, or $0.14 per share (basic and diluted) for the year ended October 31, 2011. The increase in net income primarily reflects an increase in our sales and gross margin.

Net sales totaled $173,656,215 for the fiscal year ended October 31, 2012, an increase of $26,901,050 or 18.3%, from $146,755,165 for the fiscal year ended October 31, 2011. The increase in net sales reflects an increase in pounds of coffee sold as we surpassed 55 million pounds sold in a fiscal year for the first time in the history of the Company.

Cost of sales for the fiscal year ended October 31, 2012 was $161,649,282, or 93.1% of net sales, as compared to $138,210,277, or 94.2%, of net sales for the fiscal year ended October 31, 2011. Cost of sales consists primarily of the cost of green coffee and packaging materials and realized and unrealized gains or losses on hedging activity. The increase in cost of sales reflects the increased cost of green coffee and partially offset by our reduced realized losses and increased unrealized gains on hedging activities. Cost of sales includes purchases of approximately $31.9 million and $25.3 million in fiscal years 2012 and 2011, respectively, from a related party. 

Total operating expenses increased $262,117, or 3.6%, to $7,607,269 for the fiscal year ended October 31, 2012 from $7,345,152 for the fiscal year ended October 31, 2011. Selling and administrative expenses increased $184,446, or 2.7%, to $6,900,199 for the year ended October 31, 2012 from $6,715,753 for 2011. The increase in selling and administrative expenses reflects several factors, including increases of approximately $120,000 in labor and related taxes, $42,000 in freight costs, $95,000 in insurance cost, $50,000 in travel/show and demo expense, $28,000 in office and computer related costs, and $31,000 in equipment maintenance, partially offset by a decrease of approximately $56,000 in professional fees, $28,000 in advertising costs, $30,000 in packaging development costs, $55,000 in commission expenses and $13,000 in charitable contributions. 

"We are pleased to report what we believe to be extremely positive results to our shareholders. Even though coffee prices fell over 40% and coffee was the worst performing traded commodity according to the Standard & Poor's GSCI during calendar 2012, we increased our revenues by 18% for 2012 as a substantial increase in poundage offset lower and extremely volatile coffee prices during the year. More importantly, our efforts to improve our gross margin were rewarded as we were able to increase gross margins by 1% to 6.8% for the year. With our renewed focus on margins and brand development at the forefront of our initiatives for 2013, we believe a 9% gross margin for the year is achievable," said Andrew Gordon, President and Chief Executive Officer. 

"During 2012, we saw major growth in sales of our flagship brand, Café Caribe, and we believe we will be able to build upon such growth during 2013. In addition, we made our first sales of green coffee into China, validating our belief that this can be a promising new avenue for revenue growth. Our wholesale green coffee and private label sales also remained strong in spite of the volatility in both the coffee market and the macro environment," added Mr. Gordon. 

"In addition, our subsidiaries, OPTCO and Generations, continued to provide solid revenue growth during 2012. Unfortunately, in the case of OPTCO, the collapse in green coffee prices had a negative effect on its profitability, which negatively impacted our profitability as a whole. However, we believe the disposal of our high priced inventories at OPTCO combined with a more favorable green coffee market heading into 2013, will return our OPTCO subsidiary to the levels of profitability achieved in prior years. With our strong balance sheet and growing customer base, we expect to remain on the path of steady growth and profitability for the 2013 fiscal year," concluded Mr. Gordon.

About Coffee Holding

Coffee Holding is a leading integrated wholesale coffee roaster and dealer in the United States and one of the few coffee companies that offers a broad array of coffee products across the entire spectrum of consumer tastes, preferences and price points. Coffee Holding has been a family-operated business for three generations and has remained profitable through varying cycles in the coffee industry and the economy. The Company's private label and branded coffee products are sold throughout the United States, Canada and abroad to supermarkets, wholesalers, and individually owned and multi-unit retail customers.

Any statements that are not historical facts contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's outlook for future margin performance. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. We have based these forward-looking statements upon information available to management as of the date of this release and management's expectations and projections about certain future events. It is possible that the assumptions made by management for purposes of such statements may not materialize. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, hedging activities, the effect of economic conditions, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions, and other factors discussed from time to time in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.

   
   
COFFEE HOLDING CO., INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
OCTOBER 31, 2012 AND 2011  
   
    2012     2011  
             
- ASSETS -  
CURRENT ASSETS:                
Cash   $ 7,568,583     $ 4,244,335  
Accounts receivable, net of allowances of $213,674 and $269,611 for 2012 and 2011, respectively     12,633,128       16,021,581  
Inventories     11,303,581       13,475,855  
Prepaid green coffee     150,000       388,754  
Prepaid expenses and other current assets     704,013       275,679  
Prepaid and refundable income taxes     62,763       377,972  
Deferred income tax asset     702,655       896,400  
TOTAL CURRENT ASSETS     33,124,723       35,680,576  
                 
Machinery and equipment, at cost, net of accumulated depreciation of $2,631,468 and $2,191,566 for 2012 and 2011, respectively     1,791,754       1,661,759  
Customer list and relationships, net of accumulated amortization of $18,750 and $11,250 for 2012 and 2011, respectively     131,250       138,750  
Trademarks     180,000       180,000  
Goodwill     440,000       440,000  
Equity method investments     1,931,931       -  
Deposits and other assets     648,094       677,606  
    TOTAL ASSETS   $ 38,247,752     $ 38,778,691  
                 
- LIABILITIES AND STOCKHOLDERS' EQUITY -  
CURRENT LIABILITIES:                
Accounts payable and accrued expenses   $ 11,769,107     $ 12,379,414  
Line of credit     562,500       1,820,109  
Due to broker     1,367,389       1,867,558  
Income taxes payable     21,122       100  
TOTAL CURRENT LIABILITIES     13,720,118       16,067,181  
                 
Deferred income tax liabilities     32,655       35,900  
Deferred rent payable     166,668       146,921  
Deferred compensation payable     528,687       538,707  
TOTAL LIABILITIES     14,448,128       16,788,709  
STOCKHOLDERS' EQUITY:                
Coffee Holding Co., Inc. stockholders' equity:                
  Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued     -       -  
  Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,456,316 shares issued; 6,372,309 shares outstanding for 2012 and 2011     6,456       6,456  
  Additional paid-in capital     15,904,109       15,884,609  
  Contingent consideration     -       19,500  
  Retained earnings     7,979,247       6,268,326  
  Less: Treasury stock, 84,007 common shares, at cost for 2012 and 2011     (272,133 )     (272,133 )
  Total Coffee Holding Co., Inc. Stockholders' Equity     23,617,679       21,906,758  
Noncontrolling interest     181,945       83,224  
  TOTAL EQUITY     23,799,624       21,989,982  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 38,247,752     $ 38,778,691  
                 
                 
                 
COFFEE HOLDING CO., INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME  
FISCAL YEARS ENDED OCTOBER 31, 2012 AND 2011  
   
    2012     2011  
                 
NET SALES   $ 173,656,215     $ 146,755,165  
                 
COST OF SALES (which include purchases of approximately $31.9 million and $25.3 million in fiscal years 2012 and 2011, respectively, from a related party)     161,649,282       138,210,277  
                 
GROSS PROFIT     12,006,933       8,544,888  
                 
OPERATING EXPENSES:                
Selling and administrative     6,900,199       6,715,753  
Officers' salaries     707,070       629,399  
      TOTAL     7,607,269       7,345,152  
INCOME FROM OPERATIONS     4,399,664       1,199,736  
OTHER INCOME (EXPENSE):                
Interest income     32,967       150,442  
Other income and losses     (14,690 )     14,848  
Loss from equity method investments     (168,069 )     -  
Interest expense     (195,093 )     (289,521 )
      TOTAL     (344,885 )     (124,231 )
                 
INCOME BEFORE PROVISION FOR INCOME TAXES AND                
NONCONTROLLING INTEREST IN SUBSIDIARY     4,054,779       1,075,505  
                 
Provision for income taxes     1,470,381       229,522  
                 
NET INCOME BEFORE NONCONTROLLING INTEREST IN SUBSIDIARY     2,584,398       845,983  
Less: Net income attributable to the noncontrolling interest in subsidiary     (98,721 )     (34,053 )
                 
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.   $ 2,485,677     $ 811,930  
                 
Basic earnings per share   $ .39     $ .15  
                 
Diluted earnings per share   $ .37     $ .14  
                 
Dividends declared per share   $ .12     $ .12  
                 
Weighted average common shares outstanding:                
Basic     6,372,309       5,563,802  
Diluted     6,639,309       5,835,802  
                 
                 
                 
COFFEE HOLDING CO., INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FISCAL YEARS ENDED OCTOBER 31, 2012 AND 2011  
   
    2012     2011  
OPERATING ACTIVITIES:                
Net income   $ 2,584,398     $ 845,983  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization     447,404       433,199  
Unrealized (gain) loss on commodities     (500,169 )     2,143,057  
Loss on equity method investments     168,069       -  
Stock cancellation     -       (24,650 )
Bad debt expense     -       72,533  
Deferred rent     19,747       22,165  
Deferred income taxes     190,500       (822,500 )
Changes in operating assets and liabilities:                
Accounts receivable     3,388,453       (7,241,742 )
Inventories     2,172,274       (5,285,435 )
Prepaid expenses and other current assets     (428,334 )     227,173  
Prepaid green coffee     238,754       946,922  
Prepaid and refundable income taxes     315,209       (368,451 )
Accounts payable and accrued expenses     (610,307 )     5,214,342  
Deposits and other assets     19,492       19,488  
Income taxes payable     21,022       (234,644 )
Net cash provided by (used in) operating activities     8,026,512       (4,052,560 )
                 
INVESTING ACTIVITIES:                
Purchases of equity method investments     (2,100,000 )     -  
Purchases of machinery and equipment     (569,899 )     (526,518 )
Net cash used in investing activities     (2,669,899 )     (526,518 )
                 
FINANCING ACTIVITIES:                
  Advances under bank line of credit     134,801,724       128,456,096  
  Principal payments under bank line of credit     (136,059,333 )     (128,942,736 )
  Proceeds from issuance of stock, net of offering costs     -       8,331,790  
  Payment of dividend     (774,756 )     (694,658 )
Net cash (used in) provided by financing activities     (2,032,365 )     7,150,492  
                 
                 
NET INCREASE IN CASH     3,324,248       2,571,414  
                 
CASH, BEGINNING OF PERIOD     4,244,335       1,672,921  
                 
CASH, END OF PERIOD   $ 7,568,583     $ 4,244,335  
                 
    2012     2011
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:              
  Interest paid   $ 208,064   $ 289,866
  Income taxes paid   $ 879,756     $ 1,041,731

Contact Information

  • Contact:
    Andrew Gordon
    President & CEO
    Telephone: (718) 832-0800