STATEN ISLAND, New York, March 17, 2021 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today announced its operating results for the three months ended January 31, 2021:
Net Sales. Net sales totaled $18,133,837 for the three months ended January 31, 2021, a decrease of $1,151,664, or 6%, from $19,285,501 for the three months ended January 31, 2020. The decrease in net sales was due to the COVID-19 pandemic which caused many of the Company’s green coffee customers who service the restaurant and food service industries to either remain closed or suspend their business operations during the period resulting in lost revenues from that segment of the Company’s customer base.
Cost of Sales. Cost of sales for the three months ended January 31, 2021 was $13,654,169, or 75.3% of net sales, as compared to $16,170,747, or 83.8% of net sales, for the three months January 31, 2020. 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 was due to the Company’s decreased sales partially offset by its favorable green coffee position and hedging.
Gross Profit. Gross profit for the three months ended January 31, 2021 amounted to $4,479,668 or 24.7% of net sales, as compared to $3,114,754 or 16.2% of net sales, for the three months ended January 31, 2020. The increase in gross profits was attributable to increased margins on the Company’s roasted and branded products partially due to the movement of lower cost green coffee inventory built up in previous quarters
Operating Expenses. Total operating expenses decreased by $361,767 to $3,313,286 for the three months ended January 31, 2021 from $3,675,053 for the three months ended January 31, 2020. Selling and administrative expenses decreased by $344,743 and officers’ salaries decreased by $17,024. The company’s efforts to control costs through the elimination of redundancy in its operations and the elimination of certain unnecessary variable costs were the primary reasons for this decrease. These efforts were partially offset by stock compensation expense of $189,000 and the increase in the Company’s freight costs as it increased and expanded its product distribution.
Net Income. The Company had net income of $677,312 or $0.12 per share basic and diluted, for the three months ended January 31, 2021 compared to a net loss of $599,848, or $0.11 per share basic and diluted for the three months ended January 31, 2020. The increase in net income was due primarily to the reasons described above.
“We are pleased to begin the new fiscal year by reporting a big improvement in our operating results,” stated Andrew Gordon, Chief Executive Officer of Coffee Holding Co. “With last quarter’s inventory write-downs from our Generations/Steep & Brew subsidiary behind us, we were able to earn net income of $677,312, or $0.12 a share, as our profit margins improved substantially compared to last quarter. Adjusted EBITDA was $1,443,183 in the current quarter. With the price of green coffee at three year highs, we are no longer experiencing the downward pricing pressure of the previous three years which saw coffee prices languish below a $1 per pound for extended periods of time,” continued Mr. Gordon. “Those low commodity prices had a negative impact on the margins of our sales of green unroasted beans as well as forcing us to discount prices of our private label and branded products to remain competitive in a low priced national retail coffee environment.
“In addition, during the first quarter of 2021, we also reduced our operating expenses by approximately 10% as our past efforts to control costs had a positive impact on our operations during the quarter. We also were able to absorb the stock option compensation expense of $189,000 incurred during this quarter, and with only two quarters of expenses remaining, we are two thirds of the way home to eliminating this expense which resulted from our previous grant of stock options under our option plan,” said Mr. Gordon.
“Although sales decreased by approximately 6% compared to the first quarter of last year, we believe that as businesses continue to reopen, and the new customers we were able to attract over the last several months, we will begin to see a return of positive quarter over quarter revenue growth.
“Lastly, we have nearly completed our initial testing of our CBD infused single serve cups and are hopeful that we will be able to begin offering these for sale to our customers during the second calendar quarter of 2021,” 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.
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 the Company’s outlook on the revenue growth and the Company’s outlook on the launch of CBD-infused coffee and functional beverages. 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, the effect of any pandemics including the one caused by Covid-19, 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.
Company Contact
Coffee Holding Co., Inc.Andrew GordonPresident & CEO718-832-0800
COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED BALANCE SHEETSJANUARY 31, 2021 AND OCTOBER 31, 2020
| January 31, 2021 | October 31, 2020 | |||||||
| (Unaudited) | ||||||||
| - ASSETS - | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 2,728,781 | $ | 2,875,120 | ||||
| Accounts receivable, net of allowances of $144,000 for 2021 and 2020 | 7,808,453 | 7,408,905 | ||||||
| Inventories | 15,699,299 | 17,102,993 | ||||||
| Prepaid expenses and other current assets | 509,654 | 490,246 | ||||||
| Prepaid and refundable income taxes | 60,191 | 145,305 | ||||||
| TOTAL CURRENT ASSETS | 26,806,378 | 28,022,569 | ||||||
| Machinery and equipment, at cost, net of accumulated depreciation of $7,763,417 and $7,610,864 for 2021 and 2020, respectively | 2,110,917 | 2,197,319 | ||||||
| Customer list and relationships, net of accumulated amortization of $205,067 and $194,379 for 2021 and 2020, respectively | 479,933 | 490,621 | ||||||
| Trademarks and tradenames | 1,488,000 | 1,488,000 | ||||||
| Non-compete, net of accumulated amortization of $54,450 and $49,500 for 2021 and 2020, respectively | 44,550 | 49,500 | ||||||
| Goodwill | 2,488,785 | 2,488,785 | ||||||
| Equity method investments | 558,807 | 561,405 | ||||||
| Deferred income tax asset | 664,276 | 782,175 | ||||||
| Right of Use Asset | 2,001,641 | 2,114,228 | ||||||
| Deposits and other assets | 275,097 | 285,548 | ||||||
| TOTAL ASSETS | $ | 36,918,384 | $ | 38,480,150 | ||||
| - LIABILITIES AND STOCKHOLDERS’ EQUITY - | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | 3,745,026 | $ | 3,036,097 | ||||
| Lease liability – current portion | 360,119 | 484,163 | ||||||
| Note payable – current portion | 3,829 | 5,075 | ||||||
| Due to broker | 37,250 | 452,325 | ||||||
| Income taxes payable | 120,782 | 5,371 | ||||||
| TOTAL CURRENT LIABILITIES | 4,267,006 | 3,983,031 | ||||||
| Deferred income tax liabilities | 945,332 | 882,582 | ||||||
| Line of credit | 952,732 | 3,796,822 | ||||||
| Lease liability | 1,780,306 | 1,780,306 | ||||||
| Note payable – long term | 17,292 | 17,292 | ||||||
| Deferred compensation payable | 266,097 | 276,548 | ||||||
| TOTAL LIABILITIES | 8,228,765 | 10,736,581 | ||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Coffee Holding Co., Inc. stockholders’ equity: | ||||||||
| Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued | - | - | ||||||
| Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,633,930 shares issued for 2021 and 2020; 5,708,599 shares outstanding for 2021 and 2020 | 6,634 | 6,634 | ||||||
| Additional paid-in capital | 18,119,492 | 17,929,724 | ||||||
| Retained earnings | 13,893,180 | 13,215,868 | ||||||
| Less: Treasury stock, 925,331 common shares, at cost for 2021 and 2020 | (4,633,560 | ) | (4,633,560 | ) | ||||
| Total Coffee Holding Co., Inc. Stockholders’ Equity | 27,385,746 | 26,518,666 | ||||||
| Noncontrolling interest | 1,303,873 | 1,224,903 | ||||||
| TOTAL EQUITY | 28,689,619 | 27,743,569 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 36,918,384 | $ | 38,480,150 | ||||
COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTHREE MONTHS ENDED JANUARY 31, 2021 AND 2020(Unaudited)
| 2021 | 2020 | |||||||
| NET SALES | $ | 18,133,837 | $ | 19,285,501 | ||||
| COST OF SALES (which includes purchases of approximately $0.7 million and $1.3 million in fiscal years 2021 and 2020, respectively, from a related party) | 13,654,169 | 16,170,747 | ||||||
| GROSS PROFIT | 4,479,668 | 3,114,754 | ||||||
| OPERATING EXPENSES: | ||||||||
| Selling and administrative | 3,160,060 | 3,504,803 | ||||||
| Officers’ salaries | 153,226 | 170,250 | ||||||
| TOTAL | 3,313,286 | 3,675,053 | ||||||
| INCOME (LOSS) FROM OPERATIONS | 1,166,382 | (560,299 | ) | |||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest income | 410 | 744 | ||||||
| Loss from equity method investments | (2,598 | ) | (1,311 | ) | ||||
| Interest expense | (26,669 | ) | (55,734 | ) | ||||
| TOTAL | (28,857 | ) | (56,301 | ) | ||||
| INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY | 1,137,525 | (616,600 | ) | |||||
| Provision (benefit) for income taxes | 381,243 | (65,416 | ) | |||||
| NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 756,282 | (551,184 | ) | |||||
| Less: Net income attributable to the non-controlling interest in subsidiary | (78,970 | ) | (48,664 | ) | ||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ | 677,312 | $ | (599,848 | ) | |||
| Basic and diluted earnings (loss) earnings per share | $ | .12 | $ | (.11 | ) | |||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | 5,708,599 | 5,569,349 | ||||||
COFFEE HOLDING CO., INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSTHREE MONTHS ENDED JANUARY 31, 2021 AND 2020(Unaudited)
| 2021 | 2020 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 756,282 | $ | (551,184 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 168,191 | 187,793 | ||||||
| Stock-based compensation | 189,768 | 248,031 | ||||||
| Unrealized (gain) loss on commodities | (415,075 | ) | 985,837 | |||||
| Loss on equity method investments | 2,598 | 1,311 | ||||||
| Amortization of right to use asset | 112,587 | 106,961 | ||||||
| Change in lease liability | (124,044 | ) | (117,468 | ) | ||||
| Deferred income taxes | 180,649 | (213,102 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (399,548 | ) | 811,251 | |||||
| Inventories | 1,403,694 | 785,372 | ||||||
| Prepaid expenses and other current assets | (19,408 | ) | (26,258 | ) | ||||
| Prepaid and refundable income taxes | 85,114 | 138,033 | ||||||
| Accounts payable and accrued expenses | 708,929 | (636,344 | ) | |||||
| Income taxes payable | 115,411 | 217 | ||||||
| Net cash provided by operating activities | 2,765,148 | 1,720,450 | ||||||
| INVESTING ACTIVITIES: | ||||||||
| Purchases of machinery and equipment | (66,151 | ) | (71,974 | ) | ||||
| Net cash used in investing activities | (66,151 | ) | (71,974 | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Advances under bank line of credit | 910 | 600,100 | ||||||
| Principal payments on note payable | (1,246 | ) | ||||||
| Principal payments under bank line of credit | (2,845,000 | ) | (1,900,000 | ) | ||||
| Net cash used in financing activities | (2,845,336 | ) | (1,299,900 | ) | ||||
| NET (DECREASE) INCREASE IN CASH | (146,339 | ) | 348,576 | |||||
| CASH, BEGINNING OF PERIOD | 2,875,120 | 2,402,556 | ||||||
| CASH, END OF PERIOD | $ | 2,728,781 | $ | 2,751,132 | ||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
To supplement Coffee Holding’s consolidated financial statements presented in accordance with U.S. GAAP, Coffee Holding uses a non-GAAP measure, Earnings Before Interest, Income taxes (benefits), Depreciation and Amortization adjusted for stock compensation expense (adjusted EBITDA). This non-GAAP measure is provided to enhance overall understanding of Coffee Holding’s current financial performance. Reconciliation of the nearest GAAP measure to adjusted EBITDA follows:
| Net income (GAAP measure) | $ | 677,312 | ||
| Add back: Interest expense | 26,669 | |||
| Income tax | 381,243 | |||
| Depreciation and amortization | 168,191 | |||
| Stock compensation | 189,768 | |||
| Total adjusted EBITDA | $ | 1,443,183 |
