Coffee Holding Co., Inc. Reports Results for Three Months Ended January 31, 2016
/EINPresswire.com/ -- STATEN ISLAND, NY -- (Marketwired) -- 03/11/16 -- Coffee Holding Co., Inc. (NASDAQ: JVA) (the "Company") today announced its operating results for the three months ended January 31, 2016:
Net sales totaled $22,805,397 for the three months ended January 31, 2016, a decrease of $15,600,582, or 40.62%, from $38,405,979 for the three months ended January 31, 2015. The decrease in net sales reflects lower coffee prices during the quarter and our reduced wholesale transactions with Keurig Green Mountain, Inc. ("GMCR") of approximately $15,541,000.
Cost of sales for the three months ended January 31, 2016 was $20,154,348, or 88.38% of net sales, as compared to $36,484,535, or 95.0% of net sales, for the three months ended January 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 lower commodity prices during the quarter and our reduced wholesale transactions with GMCR.
Gross profit for the three months ended January 31, 2016 was $2,651,049, an increase of $729,605 from $1,921,444 for the three months ended January 31, 2015. Gross profit as a percentage of net sales increased to 11.62% for the three months ended January 31, 2016 from 5.0% for the three months ended January 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 increased by $21,718 to $1,840,810 for the three months ended January 31, 2016 from $1,819,092 for the three months ended January 31, 2015. The increase was primarily the result of an increase of $10,603, or 0.6%, to $1,676,960 in selling and administrative expenses for the three months ended January 31, 2016 from $1,666,357 for the three months ended January 31, 2015.
The Company had net income of $439,569 or $0.07 per share basic and diluted, for the three months ended January 31, 2016 compared to net income of $71,801, or $0.01 per share basic and diluted for the three months ended January 31, 2015. The increase in net income was due primarily to the reasons described above.
"Despite a severely depressed commodity price backdrop along with a significant decline in sales volume to our largest green coffee wholesale customer, we still managed to deliver our third consecutive quarter of positive earnings results. We achieved these results through growth in our three key business areas. We experienced an increase in poundage sold in our specialty green coffee business but in terms of dollars, our sales were lower by $564,000 due to low commodity pricing as the coffee market was down over 30% year over year. Sales of our private label coffees were up by 4.5% in terms of cases and by the same amount in their dollar equivalent. Our flagship brand, Café Caribe, showed a 10% increase in case sales versus the first quarter of 2015, as additional distribution in the Midwest and Texas markets improved these overall results. With the coffee market stabilizing at current levels, and what we believe is the end of a 26 month decline in which coffee prices dropped from $2.25 to a low of $1.11 per pound, we believe that we will see continued increases in both case sales and green coffee poundage sold but at a higher dollar equivalency. Increased sales combined with improving margins should provide us with a positive headwind for the first time in several quarters," said Andrew Gordon President and Chief Executive Officer of Coffee Holding Co., Inc.
Mr. Gordon continued, "Our business remains healthy and we will look for additional ways to continue to improve our margins in addition to growing our already diverse customer base. Although we are experiencing a downturn in revenues from our largest green coffee wholesale customer, we do have contractual arrangements with that customer through calendar 2017 and we believe we will continue to maintain this arrangement for the foreseeable future even if not to the same levels of concentration as in previous years. We do not anticipate this change to materially affect our ability to generate a healthy level of profitability in our overall business model."
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
JANUARY 31, 2016 AND OCTOBER 31, 2015
January 31, October 31,
2016 2015
------------- ------------
(Unaudited)
- ASSETS -
CURRENT ASSETS:
Cash $ 5,927,324 $ 3,853,816
Accounts receivable, net of allowances of
$144,000 for 2016 and 2015 11,271,047 10,968,237
Inventories 11,880,135 13,862,818
Prepaid green coffee 573,580 620,452
Prepaid expenses and other current assets 245,262 256,202
Prepaid income taxes 1,176,727 1,434,577
Refund receivable 613,438 -
Deferred income tax asset 376,973 997,720
------------ ------------
TOTAL CURRENT ASSETS 32,064,486 31,993,822
Machinery and equipment, at cost, net of
accumulated depreciation of $4,374,784 and
$4,241,256 for 2016 and 2015, respectively 1,926,403 1,845,000
Customer list and relationships, net of
accumulated amortization of $43,125 and $41,250
for the periods ended January 31, 2016 and
2015, respectively 106,875 108,750
Trademarks 180,000 180,000
Goodwill 440,000 440,000
Equity method investments 96,114 96,571
Deposits and other assets 580,248 610,499
------------ ------------
TOTAL ASSETS $ 35,394,126 $ 35,274,642
============ ============
- LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 5,178,604 $ 4,021,389
Line of credit 4,154,121 5,554,121
Due to broker 482,284 483,835
Income taxes payable 250 -
------------ ------------
TOTAL CURRENT LIABILITIES 9,815,259 10,059,345
Deferred income tax liabilities 106,473 92,370
Deferred rent payable 224,345 222,055
Deferred compensation payable 452,248 482,499
------------ ------------
TOTAL LIABILITIES 10,598,325 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; 6,162,207 shares outstanding
for the periods ended January 31 2016 and
2015, respectively 6,456 6,456
Additional paid-in capital 15,904,109 15,904,109
Retained earnings 10,105,509 9,665,940
Less: Treasury stock, 294,109 common shares,
at cost for 2016 and 2015 (1,494,712) (1,494,712)
------------ ------------
Total Coffee Holding Co., Inc. Stockholders'
Equity 24,521,362 24,081,793
Noncontrolling interest 274,439 336,580
------------ ------------
TOTAL EQUITY 24,795,801 24,418,373
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,394,126 $ 35,274,642
============ ============
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JANUARY 31, 2016 AND 2015
(Unaudited)
January 31, January 31,
2016 2015
------------ ------------
NET SALES $ 22,805,397 $ 38,405,979
COST OF SALES (which include purchases of
approximately $3.5 million and $9.8 million for
the three months ended January 31, 2016 and
2015, respectively, from a related party) 20,154,348 36,484,535
------------ ------------
GROSS PROFIT 2,651,049 1,921,444
------------ ------------
OPERATING EXPENSES:
Selling and administrative 1,676,960 1,666,357
Officers' salaries 163,850 152,735
------------ ------------
TOTAL 1,840,810 1,819,092
INCOME FROM OPERATIONS 810,239 102,352
OTHER INCOME (EXPENSE):
Interest income 10,012 8,297
(Loss) Gain from equity method investments (456) 715
Interest expense (39,803) (53,979)
------------ ------------
TOTAL (30,247) (44,967)
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
NON-CONTROLLING INTEREST IN SUBSIDIARY 779,992 57,385
Provision (Benefit) for income taxes 302,564 (31,104)
------------ ------------
NET INCOME BEFORE NON-CONTROLLING INTEREST IN
SUBSIDIARY 477,428 88,489
Less: net income attributable to the non-
controlling interest in subsidiary (37,859) (16,688)
------------ ------------
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO.,
INC. $ 439,569 $ 71,801
============ ============
Basic and diluted earnings per share $ 0.07 $ 0.01
============ ============
Weighted average common shares outstanding:
Basic and diluted 6,162,207 6,215,894
============ ============
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2016 AND 2015
(Unaudited)
January 31, January 31,
2016 2015
------------ ------------
OPERATING ACTIVITIES:
Net income $ 477,428 $ 88,489
Adjustments to reconcile net income to net
cash provided (used in) by operating
activities:
Depreciation and amortization 135,402 145,673
Unrealized (gain) loss on commodities (1,551) 1,361,809
Loss (Gain) on equity method investments 457 (715)
Deferred rent 2,290 3,104
Deferred income taxes 634,850 (490,500)
Changes in operating assets and liabilities:
Accounts receivable (302,810) (5,875,323)
Inventories 1,982,683 1,647,264
Prepaid expenses and other current assets 10,940 (8,558)
Prepaid green coffee 46,872 248,704
Prepaid and refundable income taxes 257,850 (135,187)
Refund receivable (613,438) -
Accounts payable and accrued expenses 1,157,215 (272,203)
Income taxes payable 250 143,258
------------ ------------
Net cash provided by (used in) operating
activities 3,788,438 (3,144,185)
------------ ------------
INVESTING ACTIVITIES:
Purchases of machinery and equipment (214,930) (38,473)
------------ ------------
Net cash used in investing activities (214,930) (38,473)
------------ ------------
FINANCING ACTIVITIES:
Advances under bank line of credit 600,000 5,000,000
Principal payments under bank line of credit (2,000,000) (2,000,000)
Payment of dividend (100,000) (80,000)
------------ ------------
Net cash (used in) provided by financing
activities (1,500,000) 2,920,000
------------ ------------
NET INCREASE (DECREASE) IN CASH 2,073,508 (262,658)
CASH, BEGINNING OF PERIOD 3,853,816 3,782,639
------------ ------------
CASH, END OF PERIOD $ 5,927,324 $ 3,519,981
------------ ------------
January 31, January 31,
2016 2015
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
Interest paid $ 72,463 $ 46,479
============ ============
Income taxes paid $ 23,052 $ 453,205
============ ============
Company Contact
Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
718-832-0800
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