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Coffee Holding Co., Inc. Reports Results for Three and Six Months Ended April 30, 2016


/EINPresswire.com/ -- STATEN ISLAND, NY -- (Marketwired) -- 06/03/16 -- Coffee Holding Co., Inc. (NASDAQ: JVA) (the "Company") today announced its operating results for the three and six months ended April 30, 2016:

Net sales totaled $21,406,939 for the three months ended April 30, 2016, a decrease of $8,856,115, or 29.3%, from $30,263,054 for the three months ended April 30, 2015. The decrease in net sales reflects lower coffee prices during the quarter and our reduced wholesale transactions with Keurig Green Mountain, Inc. of approximately $8,158,000.

Cost of sales for the three months ended April 30, 2016 was $18,097,486, or 84.5% of net sales, as compared to $31,340,321, or 103.6% of net sales, for the three months ended April 30, 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 our largest wholesale green coffee customer.

Gross profit for the three months ended April 30, 2016 was $3,309,453, an increase of $4,386,720 from $(1,077,267) for the three months ended April 30, 2015. Gross profit as a percentage of net sales increased to 15.5% for the three months ended April 30, 2016 from (3.6%) for the three months ended April 30, 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 decreased by $116,991 to $1,953,339 for the three months ended April 30, 2016 from $2,070,330 for the three months ended April 30, 2015. The decrease was primarily the result of a decrease of $107,991to $1,789,489 in selling and administrative expenses for the three months ended April 30, 2016 from $1,897,480 for the three months ended April 30, 2015.

The Company had net income of $830,801 or $0.14 per share basic and diluted, for the three months ended April 30, 2016 compared to a net loss of $(2,052,560), or $(0.33) per share basic and diluted for the three months ended April 30, 2015. The increase in net income was due primarily to the reasons described above.

"We are again pleased to report positive results to our shareholders as we have now successfully achieved four consecutive profitable quarters. Although coffee prices continue to remain at levels where we do on occasion encounter outside competitive pressures, we still improved our profitability in our three key existing business areas. We have increased our efforts in moving away from a focus on commodity type sales of wholesale green coffee to a renewed focus by our green coffee sales team on branding, farm identification, traceability and sales of specialty gourmet micro lots of Arabica coffees, which has helped us sustain and improve our margins during a period of historically low green coffee prices. In addition, sales of our flagship brand, Café Caribe, continue to increase in both existing and new markets, including our anticipated initial roll-out by Wal-Mart at an expected 400 stores later this month as well as an expected additional roll-out by a large regional supermarket chain at an expected 200 stores later this summer," commented Andrew Gordon, the Company's President and Chief Executive Officer.

"Additionally, sales of our tea line and both green and roasted coffee sales into China continue to generate limited revenues on a quarterly basis, but we believe that patience with both of these initiatives is important as we continue to develop them on a firm foundation rather than a hurry to market strategy, which we do not believe will be successful in the long run," continued Mr. Gordon.

"I know that our stockholders remain disappointed with our current share price but we believe we continue to make strides in the right direction," added Mr. Gordon. "We expect to continue to support our stock through strategic use of our existing buyback program and more importantly through future operating results and the operation of our business over the next several quarters," concluded Mr. Gordon.

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
                                        APRIL 30, 2016 AND OCTOBER 31, 2015
                    
                                                                       April 30,    October 31,
                                                                         2016          2015
                                                                     ------------  ------------
                                                                      (Unaudited)
                                       - ASSETS -
                    CURRENT ASSETS:
                      Cash                                           $  3,198,097  $  3,853,816
                      Accounts receivable, net of allowances of
                       $144,000 for 2015 and 2014                      11,318,009    10,968,237
                      Inventories                                      12,333,449    13,862,818
                      Prepaid green coffee                                344,439       620,452
                      Prepaid expenses and other current assets           273,395       256,202
                      Prepaid income taxes                                931,727     1,434,577
                      Due from broker                                     205,253             -
                      Deferred income tax asset                            53,595       997,720
                                                                     ------------  ------------
                        TOTAL CURRENT ASSETS                           28,657,964    31,993,822
                    Machinery and equipment, at cost, net of
                     accumulated depreciation of $4,516,493 and
                     $4,241,256 for 2016 and 2015, respectively         1,839,981     1,845,000
                    Customer list and relationships, net of
                     accumulated amortization of $45,000 and $41,250
                     for 2016 and 2015, respectively                      105,000       108,750
                    Trademarks                                            180,000       180,000
                    Goodwill                                              440,000       440,000
                    Equity method investment                               96,327        96,571
                    Deposits and other assets                             601,993       610,499
                                                                     ------------  ------------
                        TOTAL ASSETS                                 $ 31,921,265  $ 35,274,642
                                                                     ============  ============
                        - LIABILITIES AND STOCKHOLDERS' EQUITY -
                    CURRENT LIABILITIES:
                      Accounts payable and accrued expenses          $  3,271,416  $  4,021,389
                      Line of credit                                    2,654,121     5,554,121
                      Due to broker                                             -       483,835
                      Income taxes payable                                    500             -
                                                                     ------------  ------------
                        TOTAL CURRENT LIABILITIES                       5,926,037    10,059,345
                    
                    Deferred income tax liabilities                        20,995        92,370
                    Deferred rent payable                                 226,636       222,055
                    Deferred compensation payable                         489,826       482,499
                                                                     ------------  ------------
                        TOTAL LIABILITIES                               6,663,494    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; 6,068,119 and 6,162,207 shares
                       outstanding at April 30, 2016 and October 31,
                       2015, respectively                                   6,456         6,456
                      Additional paid-in capital                       15,904,109    15,904,109
                      Retained earnings                                10,936,310     9,665,940
                      Less: Treasury stock, 388,197 and 294,109
                       common shares, at cost for six months ended
                       April 30, 2016 and 2015, respectively           (1,881,031)   (1,494,712)
                                                                     ------------  ------------
                        Total Coffee Holding Co., Inc. Stockholders'
                         Equity                                        24,965,844    24,081,793
                      Non-controlling interest                            291,927       336,580
                                                                     ------------  ------------
                        TOTAL EQUITY                                   25,257,771    24,418,373
                                                                     ------------  ------------
                          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,921,265  $ 35,274,642
                                                                     ============  ============
                    
                    
                                              COFFEE HOLDING CO., INC.
                                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    (Unaudited)
                    
                                                 Six Months Ended         Three Months Ended
                                                     April 30,                 April 30,
                                             ------------------------  ------------------------
                                                 2016         2015         2016         2015
                                             -----------  -----------  -----------  -----------
                    NET SALES                $44,212,334  $68,669,033  $21,406,939  $30,263,054
                    
                    COST OF SALES (including
                     $5.6 and $14.9 million
                     of related party costs
                     for the six months ended
                     April 30, 2016 and 2015,
                     respectively. Including
                     $2.0 and $5.1 million
                     for the three months
                     ended April 30, 2016 and
                     2015, respectively.)     38,251,840   67,824,859   18,097,486   31,340,321
                                             -----------  -----------  -----------  -----------
                    
                    GROSS PROFIT (LOSS)        5,960,494      844,174    3,309,453   (1,077,267)
                                             -----------  -----------  -----------  -----------
                    
                    OPERATING EXPENSES:
                      Selling and
                       administrative          3,466,440    3,563,835    1,789,489    1,897,480
                      Officers' salaries         327,700      325,585      163,850      172,850
                                             -----------  -----------  -----------  -----------
                      TOTAL                    3,794,140    3,889,420    1,953,339    2,070,330
                                             -----------  -----------  -----------  -----------
                    
                    INCOME (LOSS) FROM
                     OPERATIONS                2,166,354   (3,045,246)   1,356,114   (3,147,597)
                                             -----------  -----------  -----------  -----------
                    
                    OTHER INCOME (EXPENSE)
                      Interest income             21,000       13,228       10,988        4,930
                      (Loss) gain from equity
                       method investment            (244)         448          212         (267)
                      Interest expense           (73,473)    (118,612)     (33,670)     (64,633)
                                             -----------  -----------  -----------  -----------
                      TOTAL                      (52,717)    (104,936)     (22,470)     (59,970)
                                             -----------  -----------  -----------  -----------
                    
                    INCOME (LOSS) BEFORE
                     PROVISION FOR INCOME
                     TAXES AND NON-
                     CONTROLLING INTEREST IN
                     SUBSIDIARY                2,113,637   (3,150,182)   1,333,644   (3,207,567)
                    
                      Provision (benefit) for
                       income taxes              787,920   (1,189,825)     485,356   (1,158,721)
                                             -----------  -----------  -----------  -----------
                    
                    NET INCOME (LOSS) BEFORE
                     NON-CONTROLLING INTEREST
                     IN SUBSIDIARY             1,325,717   (1,960,357)     848,288   (2,048,846)
                      Less: Net (income)
                       attributable to the
                       non-controlling
                       interest                  (55,347)     (20,402)     (17,487)      (3,714)
                                             -----------  -----------  -----------  -----------
                    
                    NET INCOME (LOSS)
                     ATTRIBUTABLE TO COFFEE
                     HOLDING CO., INC.       $ 1,270,370  $(1,980,759) $   830,801  $(2,052,560)
                                             ===========  ===========  ===========  ===========
                    
                    Basic and diluted
                     earnings (loss) per
                     share                   $       .21  $      (.32) $       .14  $      (.33)
                                             ===========  ===========  ===========  ===========
                    
                    Weighted average common
                     shares outstanding:
                      Basic and diluted        6,148,039    6,215,894    6,133,557    6,215,894
                                             ===========  ===========  ===========  ===========
                    
                    
                                              COFFEE HOLDING CO., INC.
                                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      SIX MONTHS ENDED APRIL 30, 2016 AND 2015
                                                    (Unaudited)
                    
                                                                        2016           2015
                                                                   -------------  -------------
                    OPERATING ACTIVITIES:
                      Net income (loss)                            $   1,325,717  $  (1,960,357)
                      Adjustments to reconcile net income to net
                       cash provided by operating activities:
                      Depreciation and amortization                      278,987        274,022
                      Unrealized gain on commodities                    (689,088)      (489,696)
                      Loss (gain) loss on equity method investment           244           (448)
                      Deferred rent                                        4,581          6,206
                      Deferred income taxes                              872,750     (1,143,650)
                    Changes in operating assets and liabilities:
                      Accounts receivable                               (349,772)     2,263,522
                      Inventories                                      1,529,369      2,536,227
                      Prepaid expenses and other current assets          (17,193)        82,747
                      Prepaid green coffee                               276,013        346,043
                      Prepaid and refundable income taxes                502,850     (1,387,393)
                      Deposits and other assets                           15,833              -
                      Accounts payable and accrued expenses             (749,970)    (3,215,641)
                      Income taxes payable                                   500       (331,051)
                                                                   -------------  -------------
                          Net cash provided by (used in) operating
                           activities                                  3,000,821     (3,019,469)
                                                                   -------------  -------------
                    
                    INVESTING ACTIVITIES:
                      Purchases of machinery and equipment              (270,221)      (341,337)
                                                                   -------------  -------------
                          Net cash used in investing activities         (270,221)      (341,337)
                                                                   -------------  -------------
                    
                    FINANCING ACTIVITIES:
                      Advances under bank line of credit                 600,000      9,272,578
                      Principal payments under bank line of credit    (3,500,000)    (6,000,000)
                      Purchase of treasury stock                        (386,319)             -
                      Payment of dividend                               (100,000)       (80,000)
                                                                   -------------  -------------
                          Net cash (used in) provided by financing
                           activities                                 (3,386,319)     3,192,578
                                                                   -------------  -------------
                    
                    
                    NET DECREASE IN CASH                                (655,719)      (168,228)
                    
                    CASH, BEGINNING OF PERIOD                          3,853,816      3,782,639
                                                                   -------------  -------------
                    
                    CASH, END OF PERIOD                            $   3,198,097  $   3,614,411
                                                                   =============  =============
                    
                    SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
                      Interest paid                                $      81,276  $     112,585
                                                                   =============  =============
                      Income taxes paid                            $      25,008  $   1,641,197
                                                                   =============  =============
                    

Company Contact

Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
718-832-0800


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