Coffee Holding Company Reports Fiscal Second Quarter 2015 Results
STATEN ISLAND, NY -- (Marketwired) -- 06/11/15 -- 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 Caf� 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, October 31,
2015 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 Three Months Ended
April 30, 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
============= =============
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 [email protected]
Source: Coffee Holding Co., Inc.