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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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