Coffee Holding Co., Inc. Reports Fiscal Third Quarter 2015 Results
STATEN ISLAND, NY -- (Marketwired) -- 09/14/15 -- Coffee Holding Co., Inc. (NASDAQ: JVA) ("Coffee Holding"), a leading wholesale coffee dealer and roaster, reported financial results for its fiscal third quarter ended July 31, 2015.
Fiscal Q3 2015 Financial Results
Net sales in the fiscal third quarter of 2015 increased to approximately $27.0 million compared to approximately $26.6 million in the same year-ago quarter. The increase reflects an increase in sales of our roasted product offerings of approximately $850,000, which was achieved despite a commodity pricing decrease of almost $0.75 per pound of green coffee period over period, which negatively impacted our wholesale green coffee sales.
Gross profit in the third quarter was approximately $2.0 million compared to approximately $3.1 million in the year-ago quarter. The decrease in profit reflects a significant gain on hedging activity during the 2014 period as compared to the 2015 period and a commodity pricing decrease of almost $0.75 per pound of green coffee period over period, which negatively impacted our wholesale green coffee sales.
Selling, general and administrative expenses in the fiscal third quarter were approximately $1.9 million compared to approximately $1.8 million in the year-ago quarter. As a percentage of revenues, SG&A was 7.0% compared to 6.8%.
Net income in the fiscal third quarter was approximately $0.1 million, or $0.02 per diluted share, compared to net income of approximately $0.8 million, or $0.11 per diluted share, in the year-ago quarter. Without the impact of hedging activities for the three months ended July 31, 2014 and 2015, our basic earnings per share would have been $0.08 for the 2014 period compared to approximately $0.05 per share for the 2015 period.
At July 31, 2015, cash totaled approximately $3.3 million compared to approximately $3.8 million at October 31, 2014. Total debt was approximately $4.3 million at July 31, 2015 compared to approximately $2.5 million at October 31, 2014.
Management Commentary
"Our fiscal third quarter represents the first clean look at our core coffee business without speculative trading activities," said Andrew Gordon, President and CEO of Coffee Holding. "This is also our third consecutive quarter of year over-year sales growth despite continued headwinds in the overall coffee market and commodity pricing. While the top-line growth was modest, we returned to profitability, as expected.
"Operationally, our three business segments remain strong, with growth across specialty green coffee distribution and sales of private label and branded products. Our new channels of distribution in the Texas market for our Caf� Caribe label and expected continued growth in that market, has now made this the second most important marketing area for us for our Caf� Caribe label, surpassing our distribution efforts in the Chicago mid-west market and trailing only our distribution in the New York, New Jersey and Pennsylvania marketing area. We also remain on target to hit our 2015 goal of 56.1 million pounds of coffee sold, which represents a 4% increase from 2014."
"Just last month," continued Mr. Gordon, "we began selling our own single cup product line which we manufacture through our joint venture, Generations Coffee Company, LLC, to address the continued shift in consumer demand from packaged ground coffee to single cup product offerings. We do not expect this new initiative to affect any of our current wholesale client or partner relationships. With this new product offering, we are solely targeting our current customer base and potential new customers, both of which we believe would otherwise purchase their single cup needs from other smaller third parties. We expect this single cup initiative to supplement our other avenues for growth potential in 2016."
Conference Call
Coffee Holding President & CEO Andrew Gordon will host the earnings call, followed by a question and answer period.
Date: Tuesday, September 15, 2015 Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time) Toll-free dial-in number: 1-877-407-8133 International dial-in number: 201-689-8040 Conference ID: 13619682
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 on the same day through September 22, 2015.
Toll-free replay number: 1-877-660-6853 International replay number: 1-201-612-7415 Replay ID: 13619682
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 single cup sales and other growth initiatives for 2016. 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
JULY 31, 2015 AND OCTOBER 31, 2014
July 31, October 31,
2015 2014
------------ ------------
(Unaudited)
- ASSETS -
CURRENT ASSETS:
Cash $ 3,315,177 $ 3,782,639
Accounts receivable, net of allowances of
$144,000 for 2015 and 2014 11,995,756 15,419,860
Inventories 12,444,317 15,210,153
Prepaid green coffee 1,014,911 467,155
Prepaid expenses and other current assets 289,151 260,112
Prepaid and refundable income taxes 1,434,577 759
Deferred income tax asset 1,442,747 343,657
------------ ------------
TOTAL CURRENT ASSETS 31,936,636 35,484,335
Machinery and equipment, at cost, net of
accumulated depreciation of $4,106,177 and
$3,704,802 for 2015 and 2014, respectively 1,939,477 1,991,094
Customer list and relationships, net of
accumulated amortization of $39,375 and $33,750
for 2015 and 2014, respectively 110,625 116,250
Trademarks 180,000 180,000
Goodwill 440,000 440,000
Equity method investments 97,242 97,404
Deposits and other assets 605,478 643,549
------------ ------------
TOTAL ASSETS $ 35,309,458 $ 38,952,632
============ ============
- LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 5,600,015 $ 8,693,100
Line of credit 4,268,458 2,498,458
Due to broker 476,661 484,924
Income taxes payable - 331,051
------------ ------------
TOTAL CURRENT LIABILITIES 10,345,134 12,007,533
Deferred income tax liabilities 114,747 165,157
Deferred rent payable 218,951 209,640
Deferred compensation payable 477,478 515,549
------------ ------------
TOTAL LIABILITIES 11,156,310 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 July 31, 2015 and 2014,
respectively 6,456 6,456
Additional paid-in capital 15,904,109 15,904,109
Retained earnings 9,237,571 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 23,880,274 25,721,871
Non-controlling interest 272,874 332,882
------------ ------------
TOTAL EQUITY 24,153,148 26,054,753
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 35,309,458 $ 38,952,632
============ ============
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
July 31, July 31,
------------------------ ------------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
NET SALES $95,708,890 $79,373,667 $27,039,857 $26,628,571
COST OF SALES (Including
$17.9 and $13.2 million
of related party costs
for the nine months
ended July 31, 2015 and
2014, respectively.
Including $3.0 and $4.1
million for the three
months ended July 31,
2015 and 2014,
respectively.) 92,816,224 68,239,903 24,991,366 23,574,095
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS) 2,892,666 11,133,764 2,048,491 3,054,476
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Selling and
administrative 5,286,993 5,094,939 1,723,158 1,656,789
Officers' salaries 489,435 459,300 163,850 159,100
----------- ----------- ----------- -----------
TOTALS 5,776,428 5,554,239 1,887,008 1,815,889
----------- ----------- ----------- -----------
(LOSS) INCOME FROM
OPERATIONS (2,883,762) 5,579,525 161,483 1,238,587
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income 26,302 32,064 13,074 12,769
(Loss) income from
equity investment (162) (847) (610) (759)
Interest expense (153,768) (42,340) (35,156) (16,271)
----------- ----------- ----------- -----------
TOTALS (127,628) (11,123) (22,692) (4,261)
----------- ----------- ----------- -----------
(LOSS) INCOME BEFORE
INCOME TAXES AND NON-
CONTROLLING INTEREST IN
SUBSIDIARY (3,011,390) 5,568,402 138,791 1,234,326
(Benefit) provision for
income taxes (1,189,785) 2,114,905 40 450,952
----------- ----------- ----------- -----------
NET (LOSS) INCOME BEFORE
NON-CONTROLING INTEREST
IN SUBSIDIARY (1,821,605) 3,453,497 138,751 783,374
Less: net (income) loss
attributable to the
non-controlling
interest (19,992) (61,590) 411 (24,427)
----------- ----------- ----------- -----------
NET (LOSS) INCOME
ATTRIBUTABLE TO COFFEE
HOLDING CO., INC. $(1,841,597) $ 3,391,907 $ 139,162 $ 758,947
=========== =========== =========== ===========
Basic (loss) earnings per
share $ (.30) $ .53 $ .02 $ .12
=========== =========== =========== ===========
Diluted (loss) earnings
per share $ (.30) $ .51 $ .02 $ .11
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 6,215,894 6,362,933 6,215,894 6,344,487
=========== =========== =========== ===========
Diluted 6,215,894 6,629,933 6,215,894 6,611,487
=========== =========== =========== ===========
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2015 AND 2014
(Unaudited)
2015 2014
------------- -------------
OPERATING ACTIVITIES:
Net (loss) income $ (1,821,605) $ 3,453,497
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 408,436 436,277
Unrealized gain on commodities (8,263) (1,211,540)
Loss on equity method investments 162 847
Deferred rent 9,311 11,084
Deferred income taxes (1,149,500) 1,311,000
Changes in operating assets and liabilities:
Accounts receivable 3,424,104 (1,001,691)
Inventories 2,765,836 (3,588,269)
Prepaid expenses and other current assets (29,039) (77,445)
Prepaid green coffee (547,756) (85,044)
Prepaid and refundable income taxes (1,433,818) 201,800
Accounts payable and accrued expenses (3,093,085) (1,256,666)
Income taxes payable (331,051) 700
------------- -------------
Net cash used in operating activities (1,806,268) (1,805,450)
------------- -------------
INVESTING ACTIVITIES:
Purchases of machinery and equipment (351,194) (398,847)
------------- -------------
Net cash used in investing activities (351,194) (398,847)
------------- -------------
FINANCING ACTIVITIES:
Advances under bank line of credit 9,272,578 3,551,522
Principal payments under bank line of credit (7,502,578) (1,280,704)
Purchase of treasury stock - (660,778)
Payment of dividend (80,000) (52,000)
------------- -------------
Net cash provided by financing activities 1,690,000 1,558,040
------------- -------------
NET DECREASE IN CASH (467,462) (646,257)
CASH, BEGINNING OF PERIOD 3,782,639 4,035,669
------------- -------------
CASH, END OF PERIOD $ 3,315,177 $ 3,389,412
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
Interest paid $ 152,765 $ 37,513
============= =============
Income taxes paid $ 1,647,668 $ 715,000
============= =============
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.