COFFEE HOLDING CO INC - FORM 8-K - EX-99.1 - PRESS RELEASE - March 6, 2015

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8-K - CURRENT REPORT - COFFEE HOLDING CO INCjva_8k.htm
Exhibit 99.1
 
Coffee Holding Co., Inc. Reports Results for Three Months Ended January 31, 2015

STATEN ISLAND, New York – March 6, 2015. Coffee Holding Co., Inc. (Nasdaq: JVA) today announced its operating results for the three months ended January 31, 2015:

The Company reported net income of $71,801, or $0.01 per share basic and diluted, for the three months ended January 31, 2015, compared to net income of $1,371,740 or $0.22 per share basic and $0.21 per share diluted, for the three months ended January 31, 2014. The decrease in net income reflects a $1.7 million or $0.27 per share unrealized loss on our hedging activities.

Net sales totaled $38,405,979 for the three months ended January 31, 2015, an increase of $11,059,632, or 40%, from $27,346,347 for the three months ended January 31, 2014. The increase in net sales reflects a combination of increased sales of green and roasted coffee along with higher coffee prices year over year.

Cost of sales for the three months ended January 31, 2015 was $36,484,535 or 95.0% of net sales, as compared to $23,227,722 or 84.9% of net sales for the three months ended January 31, 2014. The increase in cost of sales reflects higher prices paid for green coffee during this period compared to the same period during 2014 and a $1.7 million unrealized loss on our hedging activities in the three months ended January 31, 2015 compared to a $1 million gain in the three months ended January 31, 2014.

Gross profit decreased $2,197,181 to $1,921,444 for the three months ended January 31, 2015 as compared to gross profit of $4,118,625 for the three months ended January 31, 2014. Gross profit as a percentage of net sales decreased by 10.1% for the three months ended January 31, 2015, as compared to gross profit as a percentage of net sales for the three months ended January 31, 2014. The decrease in our margins reflects unrealized losses in our hedging activities and higher prices paid for green coffee during this period compared to the same period during 2014.

Total operating expenses decreased by $50,620, or 2.7%, to $1,819,092 for the three months ended January 31, 2015 as compared to operating expenses of $1,869,712 for the three months ended January 31, 2014. The decrease in operating expenses was due to a decrease in selling and administrative expenses of $44,255 and a decrease of $6,365 in officers’ salaries.

“In spite of an un-interrupted 15% decline in the price of green coffee during our first quarter, we were able to grow revenues by 40% as increased sales of green coffee and branded products partially offset the decline in the price of green coffee.  We have completed our business rationalization process which began in late 2013 as the volatility in the green coffee market forced us to discontinue doing business with several large accounts that were not willing to pay the higher prices that the coffee market was commanding at the time.  We did not feel it made sense to do business with such accounts in order to grow the top line at razor thin margins.  We believed it was better to concentrate in the areas which have proven to be our strengths in all market conditions, specialty upscale green coffee offerings and growing our Café Caribe brand,” said Andy Gordon, President and CEO.

“Whereas we used to have a 50% roasted, 50% wholesale green sales product mix, the shift away from lower margin private label business into these other areas now gives us an 80% to 20% green coffee to roasted sales mix which we believe will be more effective in maintaining profitability, as well as keeping both long and short term costs in check.  With the significant change over the last few years from traditional sales of can and bagged products to k-cups and out-of-home consumption, we believe that by supplying the base commodity, green coffee, to our customers, rather than being involved in the manufacturing and marketing sides of selling finished product, we will be able to control costs, improve margins and grow revenues all at the same time,” added Mr. Gordon.

About Coffee Holding
 
Coffee Holding 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.
 
 
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COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JANUARY 31, 2015 AND OCTOBER 31, 2014
   
January 31, 2015
    
October 31, 2014
  
   
(Unaudited)
        
- ASSETS -
  
CURRENT ASSETS:
            
Cash
  
$
3,519,981
    
$
3,782,639
  
Accounts receivable, net of allowances of $144,000 for 2015 and 2014
    
21,295,183
      
15,419,860
  
Inventories
    
13,562,889
      
15,210,153
  
Prepaid green coffee
    
218,451
      
467,155
  
Prepaid expenses and other current assets
    
268,670
      
260,112
  
Prepaid and refundable income taxes
    
135,946
      
759
  
Deferred income tax asset
    
819,052
      
343,657
  
TOTAL CURRENT ASSETS
    
39,820,172
      
35,484,335
  
                 
Machinery and equipment, at cost, net of accumulated depreciation of $3,847,166 and $3,704,802 for 2015 and 2014, respectively
    
1,885,769
      
1,991,094
  
Customer list and relationships, net of accumulated amortization of $35,625 and $33,750 for 2015 and 2014, respectively
    
114,375
      
116,250
  
Trademarks
    
180,000
      
180,000
  
Goodwill
    
440,000
      
440,000
  
Equity method investments
    
98,119
      
97,404
  
Deposits and other assets
    
631,158
      
643,549
  
TOTAL ASSETS
  
$
43,169,593
    
$
38,952,632
  
                 
- LIABILITIES AND STOCKHOLDERS’ EQUITY -
  
CURRENT LIABILITIES:
                
Accounts payable and accrued expenses
  
$
8,420,898
    
$
8,693,100
  
Line of credit
    
5,498,458
      
2,498,458
  
Due to broker
    
1,846,733
      
484,924
  
Income taxes payable
    
474,309
      
331,051
  
TOTAL CURRENT LIABILITIES
    
16,240,398
      
12,007,533
  
                 
Deferred income tax liabilities
    
150,052
      
165,157
  
Deferred rent payable
    
212,744
      
209,640
  
Deferred compensation payable
    
503,158
      
515,549
  
TOTAL LIABILITIES
    
17,106,352
      
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 2015 and 2014
    
6,456
      
6,456
  
Additional paid-in capital
    
15,904,109
      
15,904,109
  
Retained earnings
    
11,150,969
      
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
    
25,793,672
      
25,721,871
  
Noncontrolling interest
    
269,569
      
332,882
  
TOTAL EQUITY
    
26,063,241
      
26,054,753
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
43,169,593
    
$
38,952,632
  
 

 
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COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 31, 2015 AND 2014
(Unaudited)
 
   
January 31, 2015
    
January 31, 2014
  
NET SALES
  
$
38,405,979
    
$
27,346,347
  
                 
COST OF SALES (which include purchases of approximately $9.8 million and $5.0 million for the three months ended January 31, 2015 and 2014, respectively, from a related party)
    
36,484,535
      
23,227,722
  
                 
GROSS PROFIT
    
1,921,444
      
4,118,625
  
                 
OPERATING EXPENSES:                
Selling and administrative
    
1,666,357
      
1,710,612
  
               
Officers’ salaries
    
152,735
      
159,100
  
TOTAL
    
1,819,092
      
1,869,712
  
                 
INCOME FROM OPERATIONS
    
102,352
      
2,248,913
  
                 
OTHER INCOME (EXPENSE):
                
Interest income
    
8,297
      
883
  
Gain (Loss) from equity method investments
    
715
      
(182
)
Interest expense
    
(53,979
)
    
(18,088
)
TOTAL
    
(44,967
)
    
(17,387
)
                 
INCOME BEFORE PROVISION FOR INCOME TAXES AND
                
NON-CONTROLLING INTEREST IN SUBSIDIARY
    
57,385
      
2,231,526
  
                 
(Benefit) provision for income taxes
    
(31,104)
      
825,925
  
                 
NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY
    
88,489
      
1,405,601
  
Less: net income attributable to the non-controlling interest in subsidiary
    
(16,688
)
    
(33,861
)
                 
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC.
  
$
71,801
    
$
1,371,740
  
                 
                 
Basic earnings per share
  
$
0.01
    
$
0.22
  
                 
Diluted earnings per share
  
$
0.01
    
$
0.21
  
                 
                 
Weighted average common shares outstanding:
                
Basic
    
6,215,894
      
6,372,309
  
Diluted
    
6,215,894
      
6,639,309
  
 
 
 
 
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COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2015 AND 2014
(Unaudited)

   
January 31, 2015
    
January 31, 2014
  
OPERATING ACTIVITIES:
            
Net income
  
$
88,489
    
$
1,405,601
  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
                
Depreciation and amortization
    
145,673
      
148,248
  
Unrealized loss (gain) on commodities
    
1,361,809
      
(1,179,594
)
(Gain) loss on equity method investments
    
(715)
      
182
  
Deferred rent
    
3,104
      
4,877
  
Deferred income taxes
    
(490,500)
      
414,100
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
(5,875,323)
      
2,325,651
  
Inventories
    
1,647,264
      
406,461
  
Prepaid expenses and other current assets
    
(8,558)
      
102,965
  
Prepaid green coffee
    
248,704
      
(181,670
)
Prepaid and refundable income taxes
    
(135,187)
      
407,704
  
Accounts payable and accrued expenses
    
(272,203
)
    
(2,004,402
)
Income taxes payable
    
143,258
      
200
  
Net cash (used in) provided by operating activities
    
(3,144,185)
      
1,850,323
  
                 
INVESTING ACTIVITIES:
                
Purchases of machinery and equipment
    
(38,473
)
    
(123,874
)
Net cash used in investing activities
    
(38,473
)
    
(123,874
)
                 
FINANCING ACTIVITIES:
                
Advances under bank line of credit
    
5,000,000
      
40,202
  
Principal payments under bank line of credit
    
(2,000,000
)
    
(1,269,384
)
Payment of dividend
    
(80,000)
      
-
  
Net cash provided by (used in) financing activities
    
2,920,000
      
(1,229,182)
  
                 
NET (DECREASE) INCREASE IN CASH
    
(262,658)
      
497,267
  
                 
CASH, BEGINNING OF PERIOD
    
3,782,639
      
4,035,669
  
                 
CASH, END OF PERIOD
  
$
3,519,981
    
$
4,532,936
  
 
 
   
2015
    
2014
  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
            
Interest paid
  
$
46,479
    
$
21,225
  
Income taxes paid
  
$
453,205
    
$
5,089
  
 
CONTACT:
 
Coffee Holding Co., Inc.
Andrew Gordon
President & CEO
(718) 832-0800
 
 
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COFFEE HOLDING CO INC Reports