SOURCE: Coffee Holding Co., Inc.

Coffee Holding Co., Inc.

June 03, 2016 09:00 ET

Coffee Holding Co., Inc. Reports Results for Three and Six Months Ended April 30, 2016

STATEN ISLAND, NY--(Marketwired - Jun 3, 2016) -  Coffee Holding Co., Inc. (NASDAQ: JVA) (the "Company") today announced its operating results for the three and six months ended April 30, 2016:

Net sales totaled $21,406,939 for the three months ended April 30, 2016, a decrease of $8,856,115, or 29.3%, from $30,263,054 for the three months ended April 30, 2015. The decrease in net sales reflects lower coffee prices during the quarter and our reduced wholesale transactions with Keurig Green Mountain, Inc. of approximately $8,158,000.

Cost of sales for the three months ended April 30, 2016 was $18,097,486, or 84.5% of net sales, as compared to $31,340,321, or 103.6% of net sales, for the three months ended April 30, 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 lower commodity prices during the quarter and our reduced wholesale transactions with our largest wholesale green coffee customer.

Gross profit for the three months ended April 30, 2016 was $3,309,453, an increase of $4,386,720 from $(1,077,267) for the three months ended April 30, 2015. Gross profit as a percentage of net sales increased to 15.5% for the three months ended April 30, 2016 from (3.6%) for the three months ended April 30, 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 $116,991 to $1,953,339 for the three months ended April 30, 2016 from $2,070,330 for the three months ended April 30, 2015. The decrease was primarily the result of a decrease of $107,991to $1,789,489 in selling and administrative expenses for the three months ended April 30, 2016 from $1,897,480 for the three months ended April 30, 2015.

The Company had net income of $830,801 or $0.14 per share basic and diluted, for the three months ended April 30, 2016 compared to a net loss of $(2,052,560), or $(0.33) per share basic and diluted for the three months ended April 30, 2015. The increase in net income was due primarily to the reasons described above.

"We are again pleased to report positive results to our shareholders as we have now successfully achieved four consecutive profitable quarters. Although coffee prices continue to remain at levels where we do on occasion encounter outside competitive pressures, we still improved our profitability in our three key existing business areas. We have increased our efforts in moving away from a focus on commodity type sales of wholesale green coffee to a renewed focus by our green coffee sales team on branding, farm identification, traceability and sales of specialty gourmet micro lots of Arabica coffees, which has helped us sustain and improve our margins during a period of historically low green coffee prices. In addition, sales of our flagship brand, Café Caribe, continue to increase in both existing and new markets, including our anticipated initial roll-out by Wal-Mart at an expected 400 stores later this month as well as an expected additional roll-out by a large regional supermarket chain at an expected 200 stores later this summer," commented Andrew Gordon, the Company's President and Chief Executive Officer.

"Additionally, sales of our tea line and both green and roasted coffee sales into China continue to generate limited revenues on a quarterly basis, but we believe that patience with both of these initiatives is important as we continue to develop them on a firm foundation rather than a hurry to market strategy, which we do not believe will be successful in the long run," continued Mr. Gordon.

"I know that our stockholders remain disappointed with our current share price but we believe we continue to make strides in the right direction," added Mr. Gordon. "We expect to continue to support our stock through strategic use of our existing buyback program and more importantly through future operating results and the operation of our business over the next several quarters," 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.

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.

   
   
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
APRIL 30, 2016 AND OCTOBER 31, 2015  
   
    April 30, 2016     October 31, 2015  
    (Unaudited)        
- ASSETS -            
CURRENT ASSETS:            
  Cash   $ 3,198,097     $ 3,853,816  
  Accounts receivable, net of allowances of $144,000 for 2015 and 2014     11,318,009       10,968,237  
  Inventories     12,333,449       13,862,818  
  Prepaid green coffee     344,439       620,452  
  Prepaid expenses and other current assets     273,395       256,202  
  Prepaid income taxes     931,727       1,434,577  
  Due from broker     205,253       -  
  Deferred income tax asset     53,595       997,720  
    TOTAL CURRENT ASSETS     28,657,964       31,993,822  
Machinery and equipment, at cost, net of accumulated depreciation of $4,516,493 and $4,241,256 for 2016 and 2015, respectively     1,839,981       1,845,000  
Customer list and relationships, net of accumulated amortization of $45,000 and $41,250 for 2016 and 2015, respectively     105,000       108,750  
Trademarks     180,000       180,000  
Goodwill     440,000       440,000  
Equity method investment     96,327       96,571  
Deposits and other assets     601,993       610,499  
    TOTAL ASSETS   $ 31,921,265     $ 35,274,642  
- LIABILITIES AND STOCKHOLDERS' EQUITY -                
CURRENT LIABILITIES:                
  Accounts payable and accrued expenses   $ 3,271,416     $ 4,021,389  
  Line of credit     2,654,121       5,554,121  
  Due to broker     -       483,835  
  Income taxes payable     500       -  
    TOTAL CURRENT LIABILITIES     5,926,037       10,059,345  
                 
Deferred income tax liabilities     20,995       92,370  
Deferred rent payable     226,636       222,055  
Deferred compensation payable     489,826       482,499  
    TOTAL LIABILITIES     6,663,494       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, 6,456,316 shares issued; 6,068,119 and 6,162,207 shares outstanding at April 30, 2016 and October 31, 2015, respectively     6,456       6,456  
  Additional paid-in capital     15,904,109       15,904,109  
  Retained earnings     10,936,310       9,665,940  
  Less: Treasury stock, 388,197 and 294,109 common shares, at cost for six months ended April 30, 2016 and 2015, respectively     (1,881,031 )     (1,494,712 )
    Total Coffee Holding Co., Inc. Stockholders' Equity     24,965,844       24,081,793  
  Non-controlling interest     291,927       336,580  
    TOTAL EQUITY     25,257,771       24,418,373  
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 31,921,265     $ 35,274,642  
                 
                 
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
  Six Months Ended
April 30,
    Three Months Ended
April 30,
 
  2016     2015     2016     2015  
NET SALES $ 44,212,334     $ 68,669,033     $ 21,406,939     $ 30,263,054  
                               
COST OF SALES (including $5.6 and $14.9 million of related party costs for the six months ended April 30, 2016 and 2015, respectively. Including $2.0 and $5.1 million for the three months ended April 30, 2016 and 2015, respectively.)   38,251,840       67,824,859       18,097,486       31,340,321  
                               
GROSS PROFIT (LOSS)   5,960,494       844,174       3,309,453       (1,077,267 )
                               
OPERATING EXPENSES:                              
  Selling and administrative   3,466,440       3,563,835       1,789,489       1,897,480  
  Officers' salaries   327,700       325,585       163,850       172,850  
  TOTAL   3,794,140       3,889,420       1,953,339       2,070,330  
                               
INCOME (LOSS) FROM OPERATIONS   2,166,354       (3,045,246 )     1,356,114       (3,147,597 )
                               
OTHER INCOME (EXPENSE)                              
  Interest income   21,000       13,228       10,988       4,930  
  (Loss) gain from equity method investment   (244 )     448       212       (267 )
  Interest expense   (73,473 )     (118,612 )     (33,670 )     (64,633 )
  TOTAL   (52,717 )     (104,936 )     (22,470 )     (59,970 )
                               
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY   2,113,637       (3,150,182 )     1,333,644       (3,207,567 )
                               
  Provision (benefit) for income taxes   787,920       (1,189,825 )     485,356       (1,158,721 )
                               
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY   1,325,717       (1,960,357 )     848,288       (2,048,846 )
  Less: Net (income) attributable to the non-controlling interest   (55,347 )     (20,402 )     (17,487 )     (3,714 )
                               
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 1,270,370     $ (1,980,759 )   $ 830,801     $ (2,052,560 )
                               
Basic and diluted earnings (loss) per share $ .21     $ (.32 )   $ .14     $ (.33 )
                               
Weighted average common shares outstanding:                              
  Basic and diluted   6,148,039       6,215,894       6,133,557       6,215,894  
                               
                               
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
SIX MONTHS ENDED APRIL 30, 2016 AND 2015  
(Unaudited)  
   
    2016     2015  
OPERATING ACTIVITIES:                
  Net income (loss)   $ 1,325,717     $ (1,960,357 )
  Adjustments to reconcile net income to net cash provided by operating activities:                
  Depreciation and amortization     278,987       274,022  
  Unrealized gain on commodities     (689,088 )     (489,696 )
  Loss (gain) loss on equity method investment     244       (448 )
  Deferred rent     4,581       6,206  
  Deferred income taxes     872,750       (1,143,650 )
Changes in operating assets and liabilities:                
  Accounts receivable     (349,772 )     2,263,522  
  Inventories     1,529,369       2,536,227  
  Prepaid expenses and other current assets     (17,193 )     82,747  
  Prepaid green coffee     276,013       346,043  
  Prepaid and refundable income taxes     502,850       (1,387,393 )
  Deposits and other assets     15,833       -  
  Accounts payable and accrued expenses     (749,970 )     (3,215,641 )
  Income taxes payable     500       (331,051 )
      Net cash provided by (used in) operating activities     3,000,821       (3,019,469 )
                 
INVESTING ACTIVITIES:                
  Purchases of machinery and equipment     (270,221 )     (341,337 )
      Net cash used in investing activities     (270,221 )     (341,337 )
                 
FINANCING ACTIVITIES:                
  Advances under bank line of credit     600,000       9,272,578  
  Principal payments under bank line of credit     (3,500,000 )     (6,000,000 )
  Purchase of treasury stock     (386,319 )     -  
  Payment of dividend     (100,000 )     (80,000 )
      Net cash (used in) provided by financing activities     (3,386,319 )     3,192,578  
                 
                 
NET DECREASE IN CASH     (655,719 )     (168,228 )
                 
CASH, BEGINNING OF PERIOD     3,853,816       3,782,639  
                 
CASH, END OF PERIOD   $ 3,198,097     $ 3,614,411  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:                
  Interest paid   $ 81,276     $ 112,585  
  Income taxes paid   $ 25,008     $ 1,641,197  

Contact Information

  • Company Contact

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