SOURCE: Coffee Holding Co., Inc.

Coffee Holding Co., Inc.

September 14, 2016 09:00 ET

Coffee Holding Co., Inc. Reports Results for Three and Nine Months Ended July 31, 2016

STATEN ISLAND, NY--(Marketwired - Sep 14, 2016) -  Coffee Holding Co., Inc. (NASDAQ: JVA) (the "Company") today announced its operating results for the three and nine months ended July 31, 2016:

Net sales totaled $17,354,533 for the three months ended July 31, 2016, a decrease of $9,685,324, or 35.8%, from $27,039,857 for the three months ended July 31, 2015. The decrease in net sales reflects reduced wholesale transactions with our largest wholesale green coffee customer during the quarter of approximately $9,379,000.

Cost of sales for the three months ended July 31, 2016 was $14,203,343, or 81.9% of net sales, as compared to $24,991,366, or 92.5% of net sales, for the three months ended July 31, 2015. 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 decrease in cost of sales reflects a more favorable inventory position during the quarter and reduced wholesale transactions with our largest wholesale green coffee customer.

Gross profit for the three months ended July 31, 2016 was $3,151,190, an increase of $1,102,699 from $2,048,491 for the three months ended July 31, 2015. Gross profit as a percentage of net sales increased to 18.1% for the three months ended July 31, 2016 from 7.5% for the three months ended July 31, 2015. The increase in gross profits was due to improved margins on our wholesale and roasted business as well as a decrease in our losses quarter to quarter on our hedging operations.

Total operating expenses decreased by $18,785 to $1,868,223 for the three months ended July 31, 2016 from $1,887,008 for the three months ended July 31, 2015. The decrease was primarily the result of a decrease of $18,785 to $1,704,373 in selling and administrative expenses for the three months ended July 31, 2016 from $1,723,158 for the three months ended July 31, 2015.

The Company had net income of $755,518 or $0.12 per share basic and diluted, for the three months ended July 31, 2016 compared to net income of $139,162, or $0.02 per share basic and diluted for the three months ended July 31, 2015. The increase in net income was due primarily to the reasons described above.

"I'm pleased to report another solid quarter to our shareholders as we earned $0.12 per share for the quarter ended July 31, 2016 versus $0.02 per share for last year's corresponding quarter. The second half of the quarter saw positive developments for the green coffee market as prices continued to rise from previous lows. These higher prices have translated into improved margins on our sales of specialty green coffee as we are able to take advantage of our favorable inventory position. This trend continues into the fourth quarter as the market is currently trading at highest level since February of 2015 and we believe this trend will be sustainable for the foreseeable future. Also, during the quarter, we completed our acquisition of the assets of Coffee Kinetics LLC, doing business as Sonofresco, a seller of electrical table top roasters and specialty green coffee. Sonofresco's financial results from the month of July are reflected in this quarter's results and going forward, will be fully integrated in our consolidated financial statements. The Sonofresco acquisition has already been accretive to both top and bottom line results and the effects of a higher green coffee market will assist in meeting our positive expectations," commented Andrew Gordon, the Company's President and Chief Executive Officer.

"As previously announced, we are excited about the rollout of our Café Caribe flagship brand, a popular Spanish style espresso roast coffee, in approximately 900 Food Lion grocery stores and our new business developments with Smart&Final and Wal-Mart. Food Lion is a prominent food retailer located in areas where we previously had limited distribution of Café Caribe and we are excited about the opportunity for expansion into this market. While we have not yet seen the impact of our Smart&Final and Wal-Mart partnerships on our financial statements as these took place late in the quarter, we look forward to these results in upcoming quarters.

"We remain upbeat that going forward we will begin to rebuild top line revenue growth in conjunction with our improved bottom line results by continuing our aggressive approach to seeking new business opportunities and sustaining our margins on both current and new business," concluded Mr. Gordon.

About Coffee Holding

Coffee Holding Co., Inc. 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.

Forward-Looking Statements

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 on future margin performance and its share repurchase program. 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.

Company Contact

Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
718-832-0800

   
   
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
JULY 31, 2016 AND OCTOBER 31, 2015  
   
    July 31, 2016     October 31, 2015  
    (Unaudited)        
- ASSETS -  
CURRENT ASSETS:                
    Cash   $ 1,830,441     $ 3,853,816  
    Accounts receivable, net of allowances of $144,000 for 2015 and 2014     15,819,019       10,968,237  
    Inventories     12,737,022       13,862,818  
    Prepaid green coffee     562,142       620,452  
    Prepaid expenses and other current assets     518,909       256,202  
    Prepaid income taxes     503,327       1,434,577  
    Due from broker     107,731          
    Deferred income tax asset     85,272       997,720  
TOTAL CURRENT ASSETS     32,163,863       31,993,822  
  Machinery and equipment, at cost, net of accumulated depreciation of $4,661,610 and $4,241,256 for 2016 and 2015, respectively     2,126,239       1,845,000  
Customer list and relationships, net of accumulated amortization of $46,875 and $41,250 for 2016 and 2015, respectively     223,125       108,750  
Trademarks     180,000       180,000  
Goodwill     1,017,905       440,000  
Equity method investments     95,522       96,571  
Deposits and other assets     593,476       610,499  
TOTAL ASSETS   $ 36,400,130     $ 35,274,642  
- LIABILITIES AND STOCKHOLDERS' EQUITY -  
CURRENT LIABILITIES:                
    Accounts payable and accrued expenses   $ 2,539,048     $ 4,021,389  
    Line of credit     7,258,375       5,554,121  
      Due to broker             483,835  
    Income taxes payable     925          
TOTAL CURRENT LIABILITIES     9,798,348       10,059,345  
                 
Deferred income tax liabilities     70,672       92,370  
Deferred rent payable     228,927       222,055  
Deferred compensation payable     497,034       482,499  
TOTAL LIABILITIES     10,594,981       10,856,269  
STOCKHOLDERS' EQUITY:                
    Coffee Holding Co., Inc. stockholders' equity:                
    Preferred stock, par value $.001 per share; 10,000,000 shares authorized; no shares issued and outstanding     -       -  
    Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,494,680 and 6,456,316 shares issued; 6,026,283 and 6,162,207 shares outstanding at July 31, 2016 and October 31, 2015, respectively     6,495       6,456  
    Additional paid-in capital     16,104,074       15,904,109  
    Retained earnings     11,691,828       9,665,940  
    Less: Treasury stock, 468,397 and 294,109 common shares, at cost at July 31, 2016 and October 31, 2015, respectively     (2,334,639 )     (1,494,712 )
        Total Coffee Holding Co., Inc. Stockholders' Equity     25,467,758       24,081,793  
    Non-controlling interest     337,391       336,580  
      TOTAL EQUITY     25,805,149       24,418,373  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 36,400,130     $ 35,274,642  
                 
                 
                 
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(Unaudited)  
   
  Nine Months Ended
July 31
,
    Three Months Ended
July 31,
 
  2016     2015     2016     2015  
NET SALES $ 61,566,868     $ 95,708,890     $ 17,354,533     $ 27,039,857  
                               
COST OF SALES (including $7.4 and $17.9 million of related party costs for the nine months ended July 31, 2016 and 2015, respectively. Including $1.9 and $3.0 million for the three months ended July 31, 2016 and 2015, respectively.)   52,455,081       92,816,224       14,203,343       24,991,366  
                               
GROSS PROFIT   9,111,787       2,892,666       3,151,190       2,048,491  
                               
OPERATING EXPENSES:                              
    Selling and administrative   5,170,915       5,286,993       1,704,373       1,723,158  
    Officers' salaries   491,550       489,435       163,850       163,850  
TOTALS   5,662,465       5,776,428       1,868,223       1,887,008  
                               
INCOME (LOSS) FROM OPERATIONS   3,449,322       (2,883,762 )     1,282,967       161,483  
                               
OTHER INCOME (EXPENSE)                              
  Interest income   30,889       26,302       9,890       13,074  
  Loss from equity method investment   (1,049 )     (162 )     (805 )     (610 )
  Interest expense   (116,144 )     (153,768 )     (42,671 )     (35,156 )
TOTAL   (86,304 )     (127,628 )     (33,586 )     (22,692 )
                               
INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARIES   3,363,018       (3,011,390 )     1,249,381       138,791  
                               
  Provision (benefit) for income taxes   1,236,319       (1,189,785 )     448,399       40  
                               
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY   2,126,699       (1,821,605 )     800,982       138,751  
  Less: net income attributable to the non-controlling interest   (100,811 )     (19,992 )     (45,464 )     411  
                               
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 2,025,888     $ (1,841,597 )   $ 755,518     $ 139,162  
                               
Basic earnings (loss) per share $ .33     $ (.30 )   $ .12     $ .02  
                               
Diluted earnings (loss) per share $ .33     $ (.30 )   $ .12     $ .02  
                               
                               
Weighted average common shares outstanding:                              
      Basic and Diluted   6,117,610       6,215,894       6,056,420       6,215,894  
                                     
                                     
                                     
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
NINE MONTHS ENDED JULY 31, 2016 AND 2015  
(Unaudited)  
   
    2016     2015  
OPERATING ACTIVITIES:                
    Net income (loss)   $ 2,126,699     $ (1,821,605 )
    Adjustments to reconcile net income (loss) to net cash used in operating activities:                
        Depreciation and amortization     425,977       408,436  
        Unrealized gain on commodities     (591,566 )     (8,263 )
        Loss on equity method investments     1,049       162  
        Deferred rent     6,872       9,311  
        Deferred income taxes     890,750       (1,149,500 )
    Changes in operating assets and liabilities:                
      Accounts receivable     (4,766,640 )     3,424,104  
      Inventories     1,432,701       2,765,836  
        Prepaid expenses and other current assets     (262,707 )     (29,039 )
        Prepaid green coffee     58,310       (547,756 )
        Prepaid and refundable income taxes     931,250       (1,433,818 )
      Deposits and other assets     31,558          
      Accounts payable and accrued expenses     (1,554,385 )     (3,093,085 )
      Income taxes payable     925       (331,051 )
Net cash used in operating activities     (1,269,207 )     (1,806,268 )
                 
  INVESTING ACTIVITIES:                
      Cash paid for acquisition of business     (856,904 )        
      Purchases of machinery and equipment     (661,591 )     (351,194 )
Net cash used in investing activities     (1,518,495 )     (351,194 )
                 
FINANCING ACTIVITIES:                
      Advances under bank line of credit     5,204,254       9,272,578  
      Principal payments under bank line of credit     (3,500,000 )     (7,502,578 )
      Purchase of treasury stock     (839,927 )        
      Payment of dividend     (100,000 )     (80,000 )
Net cash provided by financing activities     764,327       1,690,000  
                 
                 
NET DECREASE IN CASH     (2,023,375 )     (467,462 )
                 
CASH, BEGINNING OF PERIOD     3,853,816       3,782,639  
                 
CASH, END OF PERIOD   $ 1,830,441     $ 3,315,177  
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:                
      Interest paid   $ 111,060     $ 152,765  
      Income taxes paid   $ 26,582     $ 1,647,668  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                
      On June 29, 2016 Coffee Holding Co., Inc. acquired certain assets of Coffee Kinetics, LLC:                
                       
      Fair value of assets acquired           $ 1,128,952  
      Less: liabilities assumed             (72,045 )
      Net assets acquired:             1,056,907  
                 
Common stock, par value $.001 per share, 38,364 shares             38  
Additional paid-in capital             199,965  
Non-cash payment             200,003  
                 
Net cash paid           $ 856,904  
                 

Contact Information

  • Company Contact

    Coffee Holding Co., Inc.
    Andrew Gordon
    President & CEO
    718-832-0800