SOURCE: Coffee Holding Co., Inc.

Coffee Holding Co., Inc.

January 24, 2014 09:00 ET

Coffee Holding Co., Inc. Reports Year End Results

Year End Results

STATEN ISLAND, NY--(Marketwired - Jan 24, 2014) - Coffee Holding Co., Inc. (NASDAQ: JVA) today announced its operating results for the year ended October 31, 2013:

The Company had a net loss of $1,480,235, or $0.23 per share basic and diluted, for the fiscal year ended October 31, 2013 compared to a net income of $2,485,677, or $0.39 per share basic and $0.37 diluted for the fiscal year ended October 31, 2012. The decrease in net income reflects the increased realized loss and decreased unrealized gains on hedging activities during the fiscal year.

Net sales totaled $133,980,759 for the fiscal year ended October 31, 2013, a decrease of $39,675,456, or 22.8%, from $173,656,215 for the fiscal year ended October 31, 2012. The decrease in net sales reflects an approximate 60% lower commodity price during the fiscal year which resulted in a decrease in the price per pound of coffee sold.

Cost of sales for the fiscal year ended October 31, 2013 was $128,011,678, or 95.5% of net sales, as compared to $161,649,282, or 93.1%, of net sales for the fiscal year ended October 31, 2012. 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 primarily reflects our lower green coffee prices offset by increased realized losses and decreased unrealized gains on hedging activities. Cost of sales includes purchases of approximately $31.2 million and $31.9 million in fiscal years 2013 and 2012, respectively, from a related party.

Gross profit for the fiscal year ended October 31, 2013 was $5,969,081, a decrease of $6,037,852 from $12,006,933 for the fiscal year ended October 31, 2012. Gross profit as a percentage of net sales decreased to 4.5% for the fiscal year ended October 31, 2013 from 6.9% for the fiscal year ended October 31, 2012 due to net realized hedging losses and unrealized hedging gains of $6,208,648 and $383,349, respectively, during fiscal 2013 as compared to net realized and unrealized hedging losses and gains of $667,302 and $500,169, respectively, during fiscal 2012.

Total operating expenses decreased $85,359, or 1.1%, to $7,521,910 for the fiscal year ended October 31, 2013 from $7,607,269 for the fiscal year ended October 31, 2012. Selling and administrative expenses increased $39,620, or 0.6%, to $6,939,819 for the year ended October 31, 2013 from $6,900,199 for the year ended October 31, 2012. Officers' salary decreased $124,979 or 17.7% to $582,091 for the year ended October 31, 2013 from $707,070 for the year ended October 31, 2012.

Share Repurchase Program

The Company also announced today that its Board of Directors has approved a share repurchase program pursuant to which the Company may repurchase up to $1 million of its outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors. The Company intends to fund the repurchase program with available cash and from future cash flow from operations.

The timing and amount of any shares repurchased will be determined based on the Company's evaluation of market conditions and other factors and the program may be discontinued or suspended at any time. Repurchases will be made in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and certain other legal requirements to which the Company may be subject from time to time, including restrictions under its credit facility, if a waiver is not obtained. Repurchases may be made, in part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so.

"Although 2013 certainly represents a disappointment to management and our fellow shareholders, our company's overall health should not be measured purely by one metric, net profits. Our history of reporting positive results was disrupted by an unprecedented collapse in the price of green coffee which traded to new seven year lows during our fiscal fourth quarter. Our hedging strategy, which in the past has been an important tool in helping maintain our margins, adversely impacted our results; as there was virtually no abatement in the decline of green coffee prices -- with prices falling by almost sixty percent during fiscal 2013. In addition, our gross sales declined in tandem with these lower commodity prices. However, we believe last year's problems are behind us and 2014 should produce more normalized results in our operations," said Andrew Gordon, President and Chief Executive Officer.

"We have continued to grow our business during this past year, recording record sales of 65.6 million pounds of coffee (both roasted and sold). Our Café Caribe brand sales continue to improve and it is now ranked as the #2 leading Hispanic Espresso coffee in the Northeast, according to Nielsen IRI data, due, in part, to the continued efforts of our in-house distributor network along with our external sales force. We expect this trend to continue since growing our own brands is vital to our long term performance," Mr. Gordon continued.

"Sales of our private label coffee and specialty green coffee continue to increase, reaffirming our strong industry position in both these areas, which should enable us to realize our overall target gross profit of 9% during fiscal 2014. In addition, total sales of roasted and raw specialty green coffee in China totaled approximately $1 million as we continue to slowly gain traction in this market, potentially representing an increased source of revenue in the near future. Our balance sheet remains strong and our cash position is solid as shown by our ability to run our normal business operations without extensively using our $7million line of credit," added Mr. Gordon.

"We further believe that the authorization of our share repurchase program of up to $1 million worth of our shares supports the Board of Director's confidence in our capacity for growth and the ability to maximize shareholder value. We thank our shareholders for their patience and we believe that their patience will be rewarded in 2014," 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 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. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
OCTOBER 31, 2013 AND 2012  
   
    2013     2012  
                 
- ASSETS -  
CURRENT ASSETS:                
  Cash   $ 4,035,669     $ 7,568,583  
  Accounts receivable, net of allowances of $144,000 and $213,674 for 2013 and 2012, respectively     12,362,792       12,633,128  
  Inventories     9,373,018       11,303,581  
  Prepaid green coffee     439,290       150,000  
  Prepaid expenses and other current assets     336,494       704,013  
  Prepaid and refundable income taxes     1,000,317       62,763  
  Deferred income tax asset     1,330,666       702,655  
TOTAL CURRENT ASSETS     28,878,246       33,124,723  
                 
Machinery and equipment, at cost, net of accumulated depreciation of $3,130,902 and $2,631,468 for 2013 and 2012, respectively     2,060,350       1,791,754  
Customer list and relationships, net of accumulated amortization of $26,250 and $18,750 for 2013 and 2012, respectively     123,750       131,250  
Trademarks     180,000       180,000  
Goodwill     440,000       440,000  
Equity method investments     98,178       1,931,931  
Deposits and other assets     618,498       648,094  
TOTAL ASSETS   $ 32,399,022     $ 38,247,752  
                 
- LIABILITIES AND STOCKHOLDERS' EQUITY -         
CURRENT LIABILITIES:                
Accounts payable and accrued expenses   $ 7,244,822     $ 11,769,107  
Line of credit     1,229,182       562,500  
Due to broker     984,040       1,367,389  
Income taxes payable     -       21,122  
TOTAL CURRENT LIABILITIES     9,458,044       13,720,118  
                 
Deferred income tax liabilities     145,666       32,655  
Deferred rent payable     195,452       166,668  
Deferred compensation payable     515,498       528,687  
TOTAL LIABILITIES     10,314,660       14,448,128  
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 2013 and 2012     6,456       6,456  
  Additional paid-in capital     15,904,109       15,904,109  
  Contingent consideration     -       -  
  Retained earnings     6,111,633       7,979,247  
  Less: Treasury stock, 84,007 common shares, at cost for 2013 and 2012     (272,133 )     (272,133 )
  Total Coffee Holding Co., Inc. Stockholders' Equity     21,750,065       23,617,679  
  Noncontrolling interest     334,297       181,945  
  TOTAL EQUITY     22,084,362       23,799,624  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 32,399,022     $ 38,247,752  
                 
                 
   
   
COFFEE HOLDING CO., INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
FISCAL YEARS ENDED OCTOBER 31, 2013 AND 2012  
   
    2013     2012  
NET SALES   $ 133,980,759     $ 173,656,215  
                 
COST OF SALES (which include purchases of approximately $31.2 million and $31.9 million in fiscal years 2013 and 2012, respectively, from a related party)     128,011,678       161,649,282  
                 
GROSS PROFIT     5,969,081       12,006,933  
                 
OPERATING EXPENSES:                
  Selling and administrative     6,939,819       6,900,199  
  Officers' salaries     582,091       707,070  
TOTAL     7,521,910       7,607,269  
(LOSS) INCOME FROM OPERATIONS     (1,552,829 )     4,399,664  
OTHER INCOME (EXPENSE):                
  Interest income     43,144       32,967  
  Other income and losses             (14,690 )
  Loss from equity method investments     (105,781 )     (168,069 )
  Interest expense     (106,184 )     (195,093 )
TOTAL     (168,821 )     (344,885 )
                 
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY  
 
 
 
 
(1,721,650
 
)
 
 
 
 
 
4,054,779
 
 
                 
  (Benefit) provision for income taxes     (393,767 )     1,470,381  
                 
NET (LOSS) INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY     (1,327,883 )     2,584,398  
  Less: Net income attributable to the non-controlling interest in subsidiary     (152,352 )     (98,721 )
                 
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.   $ (1,480,235 )   $ 2,485,677  
                 
                 
Basic (loss) earnings per share   $ (.23 )   $ .39  
                 
Diluted (loss) earnings per share   $ (.23 )   $ .37  
                 
Dividends declared per share   $ .06     $ .12  
                 
Weighted average common shares outstanding:                
Basic     6,372,309       6,372,309  
Diluted     6,372,309       6,639,309  
                 
                 
   
   
COFFEE HOLDING CO., INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
FISCAL YEARS ENDED OCTOBER 31, 2013 AND 2012  
   
    2013     2012  
OPERATING ACTIVITIES:                
  Net (loss) income   $ (1,327,883 )   $ 2,584,398  
  Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:                
    Depreciation and amortization     506,934       447,404  
    Unrealized (gain) on commodities     (383,349 )     (500,169 )
    Loss on equity method investments     105,781       168,069  
    Deferred rent     28,784       19,747  
    Deferred income taxes     (515,000 )     190,500  
  Changes in operating assets and liabilities:                
    Accounts receivable     270,336       3,388,453  
    Inventories     2,434,063       2,172,274  
    Prepaid expenses and other current assets     367,519       (428,334 )
    Prepaid green coffee     (289,290 )     238,754  
    Prepaid and refundable income taxes     (937,554 )     315,209  
    Accounts payable and accrued expenses     (3,531,885 )     (610,307 )
    Deposits and other assets     16,407       19,492  
    Income taxes payable     (21,122 )     21,022  
Net cash (used in) provided by operating activities     (3,276,259 )     8,026,512  
                 
INVESTING ACTIVITIES:                
    Purchases of equity method investments     -       (2,100,000 )
    Proceeds from disposition of equity method investment     232,069       -  
    Purchases of machinery and equipment     (768,029 )     (569,899 )
Net cash used in investing activities     (535,960 )     (2,669,899 )
                 
FINANCING ACTIVITIES:                
    Advances under bank line of credit     6,821,366       134,801,724  
    Principal payments under bank line of credit     (6,154,684 )     (136,059,333 )
    Payment of dividend     (387,377 )     (774,756 )
Net cash provided by (used in) financing activities     279,305       (2,032,365 )
                 
NET (DECREASE) INCREASE IN CASH     (3,532,914 )     3,324,248  
                 
CASH, BEGINNING OF PERIOD     7,568,583       4,244,335  
                 
CASH, END OF PERIOD   $ 4,035,669     $ 7,568,583  
                 
      2013       2012  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:                
    Interest paid   $ 108,608     $ 208,064  
    Income taxes paid   $ 803,626     $ 879,756  
                 
                 

Contact Information

  • CONTACT:
    Coffee Holding Co., Inc.
    Andrew Gordon
    President & CEO
    (718) 832-0800