SOURCE: Coffee Holding Co., Inc.

Coffee Holding Co., Inc.

June 11, 2015 08:30 ET

Coffee Holding Company Reports Fiscal Second Quarter 2015 Results

STATEN ISLAND, NY--(Marketwired - Jun 11, 2015) - Coffee Holding Co., Inc. (NASDAQ: JVA) (Coffee Holding), a leading wholesale coffee dealer and roaster, reported financial results for its fiscal second quarter ended April 30, 2015.

Fiscal Q2 2015 Financial Results

Net sales in the fiscal second quarter of 2015 increased 19% to $30.3 million compared to $25.4 million in the same year-ago quarter. The increase was due to growth across all three of the company's core business operations, which include its green coffee, private label, and branded products business.

Gross profit in the second quarter was ($1.1) million compared to $4.0 million in the year-ago quarter, primarily driven by losses from the company's hedging activities, which include options and futures contracts entered into earlier this year that were subsequently liquidated during the fiscal second quarter. The net loss from this liquidation totaled $3.3 million or ($0.53) per diluted share.

Selling and administrative and officers' salaries in the fiscal second quarter were $2.1 million compared to $1.9 million in the year-ago quarter. As a percentage of revenues, SG&A declined 50 basis points to 6.8% compared to 7.3% in the year-ago quarter.

Net loss in the fiscal second quarter was $2.1 million or ($0.33) per diluted share, compared to net income of $1.3 million or $0.19 per diluted share in the year-ago quarter. The loss was due to the aforementioned losses from the company's hedging activities.

At April 30, 2015, cash totaled $3.6 million compared to $3.8 million at October 31, 2014. Total debt was $5.8 million at April 30, 2015 compared to $2.5 million at October 31, 2014.

Management Commentary

"Despite the continued industry decline in coffee commodity prices during the second quarter, we maintained our top-line momentum with our second consecutive quarter of year-over-year revenue growth," said Andrew Gordon, President & CEO of Coffee Holding. "These results were driven by strong performance across all three of our core business operations, including specialty green coffee distribution and sales of private label and branded products.

"As part of our long-term strategic growth plan introduced in April, we have significantly reduced our hedging and trading activities to focus on our core operations. However, we realized losses during the quarter associated with certain futures contracts that we had entered into prior to initiating this plan. With these trading losses behind us, we expect to move forward with more favorable coffee prices and return to profitability."

"Just last month, we officially launched our Teton Tea offering," continued Mr. Gordon. "This collection includes an array of high quality specialty teas and proprietary blends for roasters and retailers. We've received initial strong interest and positive feedback from many of our current customers, and expect this complementary product offering to eventually provide another significant revenue stream. We have also commenced sales of our Café Caribe label into Stop & Shop, a large retail grocery chain with more than 275 locations throughout New England, New York and New Jersey. With ample room for growth through our core operations and new product offerings, we plan to capitalize on these market opportunities and drive value for our clients and shareholders alike."

Conference Call

Coffee Holding President & CEO Andrew Gordon will host the earnings call, followed by a question and answer period.

Date: Thursday, June 11, 2015
Time: 2:00 p.m. Eastern time (11:00 a.m. Pacific time)
Toll-free dial-in number: 1-888-438-5525
International dial-in number: 1-719-457-1035
Conference ID: 1863312

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after 5:00 p.m. Eastern time on the same day through June 18, 2015.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 1863312

About Coffee Holding

Coffee Holding Co., Inc. (NASDAQ: JVA) is a leading integrated wholesale coffee dealer and roaster, 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. A family-operated business for three generations, Coffee Holding has remained profitable through varying cycles of the coffee industry and 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. For more information, please visit www.coffeeholding.com.

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 statements regarding demand and sales of Don Manuel® coffee. 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. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, coffee prices, pricing of our products, market acceptance, 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, 2015 AND OCTOBER 31, 2014  
   
  April 30, 2015     October 31, 2014  
  (Unaudited)        
- ASSETS -  
CURRENT ASSETS:              
  Cash $ 3,614,411     $ 3,782,639  
  Accounts receivable, net of allowances of $144,000 for 2015 and 2014   13,156,338       15,419,860  
  Inventories   12,673,926       15,210,153  
  Prepaid green coffee   121,112       467,155  
  Prepaid expenses and other current assets   177,365       260,112  
  Prepaid and refundable income taxes   1,388,152       759  
  Due from broker   4,772       -  
    Deferred income tax asset   1,438,883       343,657  
    TOTAL CURRENT ASSETS   32,574,959       35,484,335  
Machinery and equipment, at cost, net of accumulated depreciation of $3,975,074 and $3,704,802 for 2015 and 2014, respectively   2,062,159       1,991,094  
Customer list and relationships, net of accumulated amortization of $37,500 and $33,750 for 2015 and 2014, respectively   112,500       116,250  
Trademarks   180,000       180,000  
Goodwill   440,000       440,000  
Equity method investment   97,852       97,404  
Deposits and other assets   653,727       643,549  
      TOTAL ASSETS $ 36,121,197     $ 38,952,632  
- LIABILITIES AND STOCKHOLDERS' EQUITY -  
CURRENT LIABILITIES:              
  Accounts payable and accrued expenses $ 5,477,459     $ 8,693,100  
  Line of credit   5,771,036       2,498,458  
  Due to broker   -       484,924  
  Income taxes payable   -       331,051  
    TOTAL CURRENT LIABILITIES   11,248,495       12,007,533  
               
Deferred income tax liabilities   116,733       165,157  
Deferred rent payable   215,846       209,640  
Deferred compensation payable   525,727       515,549  
    TOTAL LIABILITIES   12,106,801       12,897,879  
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; 6,215,894 shares outstanding for periods ended April 30, 2015 and October 31, 2014, respectively   6,456       6,456  
  Additional paid-in capital   15,904,109       15,904,109  
  Retained earnings   9,098,409       11,079,168  
  Less: Treasury stock, 240,422 common shares, at cost for 2015 and 2014   (1,267,862 )     (1,267,862 )
    Total Coffee Holding Co., Inc. Stockholders' Equity   23,741,112       25,721,871  
  Non-controlling interest   273,284       332,882  
  TOTAL EQUITY   24,014,396       26,054,753  
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,121,197     $ 38,952,632  
                     
                     
                     
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited)  
   
  Six Months Ended
April 30
,
    Three Months Ended
April 30,
 
  2015     2014     2015     2014  
NET SALES $ 68,669,033     $ 52,745,098     $ 30,263,054     $ 25,398,751  
                               
COST OF SALES (including $14.9 and $9.1 million of related party costs for the six months ended April 30, 2015 and 2014, respectively. Including $5.1 and $4.1 million for the three months ended April 30, 2015 and 2014, respectively.)   67,824,859       44,667,209       31,340,321       21,439,484  
                               
GROSS PROFIT (LOSS)   844,174       8,077,889       (1,077,267 )     3,959,267  
                               
OPERATING EXPENSES:                              
Selling and administrative   3,563,835       3,434,249       1,897,480       1,723,641  
Officers' salaries   325,585       300,200       172,850       141,100  
TOTAL   3,889,420       3,734,449       2,070,330       1,864,741  
                               
(LOSS) INCOME FROM OPERATIONS   (3,045,246 )     4,343,440       (3,147,597 )     2,094,526  
                               
OTHER INCOME (EXPENSE)                              
Interest income   13,228       16,796       4,930       15,913  
Gain (loss) from equity method investment   448       (89 )     (267 )     93  
Interest expense   (118,612 )     (26,069 )     (64,633 )     (7,981 )
TOTAL   (104,936 )     (9,362 )     (59,970 )     8,025  
                               
(LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY   (3,150,182 )     4,334,078       (3,207,567 )     2,102,551  
                               
(Benefit) provision for income taxes   (1,189,825 )     1,663,953       (1,158,721 )     838,028  
                               
NET (LOSS) INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY   (1,960,357 )     2,670,125       (2,048,846 )     1,264,523  
Less: Net (income) attributable to the non-controlling interest   (20,402 )     (37,165 )     (3,714 )     (3,303 )
                               
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ (1,980,759 )   $ 2,632,960     $ (2,052,560 )   $ 1,261,220  
                               
Basic (loss) earnings per share $ (.32 )   $ .41     $ (.33 )   $ .20  
Diluted (loss) earnings per share $ (.32 )   $ .40     $ (.33 )   $ .19  
                               
Weighted average common shares outstanding:                              
Basic   6,215,894       6,372,309       6,215,894       6,372,309  
Diluted   6,215,894       6,639,309       6,215,894       6,639,309  
                               
                               
                               
COFFEE HOLDING CO., INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
SIX MONTHS ENDED APRIL 30, 2015 AND 2014  
(Unaudited)  
   
  2015     2014  
OPERATING ACTIVITIES:              
Net (loss) income $ (1,960,357 )   $ 2,670,125  
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:              
Depreciation and amortization   274,022       295,723  
Unrealized gain on commodities   (489,696 )     (1,173,103 )
(Gain) loss on equity method investment   (448 )     89  
Deferred rent   6,206       7,981  
Deferred income taxes   (1,143,650 )     1,290,800  
Changes in operating assets and liabilities:              
Accounts receivable   2,263,522       1,075,993  
Inventories   2,536,227       (834,330 )
Prepaid expenses and other current assets   82,747       (62,557 )
Prepaid green coffee   346,043       339,290  
Prepaid and refundable income taxes   (1,387,393 )     974,046  
Accounts payable and accrued expenses   (3,215,641 )     (966,536 )
Income taxes payable   (331,051 )     216,658  
Net cash (used in) provided by operating activities   (3,019,469 )     3,834,179  
               
INVESTING ACTIVITIES:              
Purchases of machinery and equipment   (341,337 )     (166,851 )
Net cash used in investing activities   (341,337 )     (166,851 )
               
FINANCING ACTIVITIES:              
Advances under bank line of credit   9,272,578       48,814  
Principal payments under bank line of credit   (6,000,000 )     (1,277,996 )
Payment of dividend   (80,000 )     (52,000 )
Net cash provided by (used in) financing activities   3,192,578       (1,281,182 )
               
               
NET (DECREASE) INCREASE IN CASH   (168,228 )     2,386,146  
               
CASH, BEGINNING OF PERIOD   3,782,639       4,035,669  
               
CASH, END OF PERIOD $ 3,614,411     $ 6,421,815  
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:              
Interest paid $ 112,585     $ 29,836  
Income taxes paid $ 1,641,197     $ 8,500  

Contact Information

  • Company Contact

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

    Investor Relations
    Liolios Group Inc.
    Sean Mansouri or Cody Slach
    949-574-3860
    JVA@liolios.com