Coffee Holding Co., Inc. Reports Results for Three and Six Months Ended April 30, 2016
/EINPresswire.com/ -- STATEN ISLAND, NY -- (Marketwired) -- 06/03/16 -- 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, October 31, 2016 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 Three Months Ended April 30, 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 ============= =============
Company Contact
Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
718-832-0800