STATEN ISLAND, NY -- (Marketwired) -- 03/06/15 -- Coffee Holding Co., Inc. (NASDAQ: JVA) today announced its operating results for the three months ended January 31, 2015:
The Company reported net income of $71,801, or $0.01 per share basic and diluted, for the three months ended January 31, 2015, compared to net income of $1,371,740 or $0.22 per share basic and $0.21 per share diluted, for the three months ended January 31, 2014. The decrease in net income reflects a $1.7 million or $0.27 per share unrealized loss on our hedging activities.
Net sales totaled $38,405,979 for the three months ended January 31, 2015, an increase of $11,059,632, or 40%, from $27,346,347 for the three months ended January 31, 2014. The increase in net sales reflects a combination of increased sales of green and roasted coffee along with higher coffee prices year over year.
Cost of sales for the three months ended January 31, 2015 was $36,484,535 or 95.0% of net sales, as compared to $23,227,722 or 84.9% of net sales for the three months ended January 31, 2014. The increase in cost of sales reflects higher prices paid for green coffee during this period compared to the same period during 2014 and a $1.7 million unrealized loss on our hedging activities in the three months ended January 31, 2015 compared to a $1 million gain in the three months ended January 31, 2014.
Gross profit decreased $2,197,181 to $1,921,444 for the three months ended January 31, 2015 as compared to gross profit of $4,118,625 for the three months ended January 31, 2014. Gross profit as a percentage of net sales decreased by 10.1% for the three months ended January 31, 2015, as compared to gross profit as a percentage of net sales for the three months ended January 31, 2014. The decrease in our margins reflects unrealized losses in our hedging activities and higher prices paid for green coffee during this period compared to the same period during 2014.
Total operating expenses decreased by $50,620, or 2.7%, to $1,819,092 for the three months ended January 31, 2015 as compared to operating expenses of $1,869,712 for the three months ended January 31, 2014. The decrease in operating expenses was due to a decrease in selling and administrative expenses of $44,255 and a decrease of $6,365 in officers' salaries.
"In spite of an un-interrupted 15% decline in the price of green coffee during our first quarter, we were able to grow revenues by 40% as increased sales of green coffee and branded products partially offset the decline in the price of green coffee. We have completed our business rationalization process which began in late 2013 as the volatility in the green coffee market forced us to discontinue doing business with several large accounts that were not willing to pay the higher prices that the coffee market was commanding at the time. We did not feel it made sense to do business with such accounts in order to grow the top line at razor thin margins. We believed it was better to concentrate in the areas which have proven to be our strengths in all market conditions, specialty upscale green coffee offerings and growing our Café Caribe brand," said Andy Gordon, President and CEO.
"Whereas we used to have a 50% roasted, 50% wholesale green sales product mix, the shift away from lower margin private label business into these other areas now gives us an 80% to 20% green coffee to roasted sales mix which we believe will be more effective in maintaining profitability, as well as keeping both long and short term costs in check. With the significant change over the last few years from traditional sales of can and bagged products to k-cups and out-of-home consumption, we believe that by supplying the base commodity, green coffee, to our customers, rather than being involved in the manufacturing and marketing sides of selling finished product, we will be able to control costs, improve margins and grow revenues all at the same time," added 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 CONDENSED CONSOLIDATED BALANCE SHEETS JANUARY 31, 2015 AND OCTOBER 31, 2014 January 31, October 31, 2015 2014 ------------- ------------- (Unaudited) - ASSETS - CURRENT ASSETS: Cash $ 3,519,981 $ 3,782,639 Accounts receivable, net of allowances of $144,000 for 2015 and 2014 21,295,183 15,419,860 Inventories 13,562,889 15,210,153 Prepaid green coffee 218,451 467,155 Prepaid expenses and other current assets 268,670 260,112 Prepaid and refundable income taxes 135,946 759 Deferred income tax asset 819,052 343,657 ------------- ------------- TOTAL CURRENT ASSETS 39,820,172 35,484,335 Machinery and equipment, at cost, net of accumulated depreciation of $3,847,166 and $3,704,802 for 2015 and 2014, respectively 1,885,769 1,991,094 Customer list and relationships, net of accumulated amortization of $35,625 and $33,750 for 2015 and 2014, respectively 114,375 116,250 Trademarks 180,000 180,000 Goodwill 440,000 440,000 Equity method investments 98,119 97,404 Deposits and other assets 631,158 643,549 ------------- ------------- TOTAL ASSETS $ 43,169,593 $ 38,952,632 ============= ============= - LIABILITIES AND STOCKHOLDERS' EQUITY - CURRENT LIABILITIES: Accounts payable and accrued expenses $ 8,420,898 $ 8,693,100 Line of credit 5,498,458 2,498,458 Due to broker 1,846,733 484,924 Income taxes payable 474,309 331,051 ------------- ------------- TOTAL CURRENT LIABILITIES 16,240,398 12,007,533 Deferred income tax liabilities 150,052 165,157 Deferred rent payable 212,744 209,640 Deferred compensation payable 503,158 515,549 ------------- ------------- TOTAL LIABILITIES 17,106,352 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 2015 and 2014 6,456 6,456 Additional paid-in capital 15,904,109 15,904,109 Retained earnings 11,150,969 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 25,793,672 25,721,871 Noncontrolling interest 269,569 332,882 ------------- ------------- TOTAL EQUITY 26,063,241 26,054,753 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,169,593 $ 38,952,632 ============= ============= COFFEE HOLDING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED JANUARY 31, 2015 AND 2014 (Unaudited) January 31, January 31, 2015 2014 ------------- ------------- NET SALES $ 38,405,979 $ 27,346,347 COST OF SALES (which include purchases of approximately $9.8 million and $5.0 million for the three months ended January 31, 2015 and 2014, respectively, from a related party) 36,484,535 23,227,722 ------------- ------------- GROSS PROFIT 1,921,444 4,118,625 ------------- ------------- OPERATING EXPENSES: Selling and administrative 1,666,357 1,710,612 Officers' salaries 152,735 159,100 ------------- ------------- TOTAL 1,819,092 1,869,712 INCOME FROM OPERATIONS 102,352 2,248,913 OTHER INCOME (EXPENSE): Interest income 8,297 883 Gain (Loss) from equity method investments 715 (182) Interest expense (53,979) (18,088) ------------- ------------- TOTAL (44,967) (17,387) ------------- ------------- INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY 57,385 2,231,526 (Benefit) provision for income taxes (31,104) 825,925 ------------- ------------- NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY 88,489 1,405,601 Less: net income attributable to the non- controlling interest in subsidiary (16,688) (33,861) ------------- ------------- NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 71,801 $ 1,371,740 ============= ============= Basic earnings per share $ 0.01 $ 0.22 ============= ============= Diluted earnings per share $ 0.01 $ 0.21 ============= ============= Weighted average common shares outstanding: Basic 6,215,894 6,372,309 ============= ============= Diluted 6,215,894 6,639,309 ============= ============= COFFEE HOLDING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 2015 AND 2014 (Unaudited) January 31, January 31, 2015 2014 ------------- ------------- OPERATING ACTIVITIES: Net income $ 88,489 $ 1,405,601 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 145,673 148,248 Unrealized loss (gain) on commodities 1,361,809 (1,179,594) (Gain) loss on equity method investments (715) 182 Deferred rent 3,104 4,877 Deferred income taxes (490,500) 414,100 Changes in operating assets and liabilities: Accounts receivable (5,875,323) 2,325,651 Inventories 1,647,264 406,461 Prepaid expenses and other current assets (8,558) 102,965 Prepaid green coffee 248,704 (181,670) Prepaid and refundable income taxes (135,187) 407,704 Accounts payable and accrued expenses (272,203) (2,004,402) Income taxes payable 143,258 200 ------------- ------------- Net cash (used in) provided by operating activities (3,144,185) 1,850,323 ------------- ------------- INVESTING ACTIVITIES: Purchases of machinery and equipment (38,473) (123,874) ------------- ------------- Net cash used in investing activities (38,473) (123,874) ------------- ------------- FINANCING ACTIVITIES: Advances under bank line of credit 5,000,000 40,202 Principal payments under bank line of credit (2,000,000) (1,269,384) Payment of dividend (80,000) - ------------- ------------- Net cash provided by (used in) financing activities 2,920,000 (1,229,182) ------------- ------------- NET (DECREASE) INCREASE IN CASH (262,658) 497,267 CASH, BEGINNING OF PERIOD 3,782,639 4,035,669 ------------- ------------- CASH, END OF PERIOD $ 3,519,981 $ 4,532,936 ============= ============= 2015 2014 ------------- ------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: Interest paid $ 46,479 $ 21,225 ============= ============= Income taxes paid $ 453,205 $ 5,089 ============= =============
CONTACT:
Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
(718) 832-0800