STATEN ISLAND, N.Y., Sept. 13, 2011 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. ("Coffee Holding") (Nasdaq:JVA) today announced its operating results for the three and nine months ended July 31, 2011. In this release, the Company:
- Reports net sales of $98,737,976 for the nine months ended July 31, 2011 and $35,764,866 for the three months ended July 31, 2011 compared to net sales of $60,309,228 for the nine months ended July 31, 2010 and $19,032,770 for the three months ended July 31, 2010;
- Reports sales growth of 88% for the three months ended July 31, 2011 compared to the three months ended July 31, 2010; and
- Reports net income of $168,236, or $0.03 per share (basic and diluted) for the three months ended July 31, 2011 compared to net income of $424,091, or $0.08 per share (basic and diluted) for the three months ended July 31, 2010.
Results of Operations
The Company had net income of $168,236, or $0.03 per share (basic and diluted), for the three months ended July 31, 2011 compared to net income of $424,091 or $0.08 per share (basic and diluted), for the three months ended July 31, 2010. The decrease in net income primarily reflects unrealized losses on the Company's option positions of $1,202,443, which were marked to the market at the end of the quarter. The Company had net income of $2,397,265, or $0.44 per share (basic and diluted) for the nine months ended July 31, 2011 compared to net income of $1,782,517 or $0.33 per share (basic and diluted), for the nine months ended July 31, 2010. The increase in net income primarily reflects increased gross profit.
Net sales totaled $35,764,866 for the three months ended July 31, 2011, an increase of $16,732,096, or 88%, from $19,032,770 for the three months ended July 31, 2010. The increase in net sales reflects higher sales prices compared to the third quarter of fiscal 2010 as well as additional poundage sold due to the addition of our subsidiary, OPTCO, and additional sales to our largest green coffee customer and three largest private label customers. Net sales totaled $98,737,976 for the nine months ended July 31, 2011, an increase of $38,428,748, or 64%, from $60,309,228 for the nine months ended July 31, 2010. The increase in net sales reflects higher sales prices compared to the second quarter of fiscal 2010 as well as additional poundage sold due to the addition of the Company's subsidiary, OPTCO, as well as additional sales of green coffee to new customers and increased private label sales.
Cost of sales for the three months ended July 31, 2011 was $33,670,406 or 94.2% of net sales, as compared to $16,574,355 or 87.1% of net sales for the three months ended July 31, 2010. The increase in cost of sales reflects the increased cost of green coffee, as well as unrealized losses on the Company's option positions of $1,202,443, which were marked to market at the end of the quarter. Cost of sales for the nine months ended July 31, 2011 was $89,963,400 or 91.1% of net sales, as compared to $52,655,415 or 87.3% of net sales for the nine months ended July 31, 2010. The increase in cost of sales reflects the increased cost of green coffee, as well as a greater percentage of sales of green coffee versus roasted coffee sales, as well as the unrealized losses relating to the Company's option positions, which were marked to market at the end of the quarter.
Total operating expenses increased by $78,661, or 4.7%, to $1,754,024 for the three months ended July 31, 2011 as compared to operating expenses of $1,675,363 for the three months ended July 31, 2010. The increase in operating expenses was due to increases in selling and administrative expense due to a higher level of business during this period. Total operating expenses increased by $679,129, or 14.9%, to $5,229,089 for the nine months ended July 31, 2011 as compared to operating expenses of $4,549,960 for the nine months ended July 31, 2010. The increase in operating expenses was due to increases in selling and administrative expense resulting from increased trade shows and traveling activities.
"This quarter posed many challenges for the Company as market conditions in the coffee industry continued to be volatile. Even with these challenges, the Company continued to deliver growth and good operating results. Our revenues grew 88% during a period in which both outside economic factors, as well as a declining coffee market, worked in tandem against us. Our horizontally integrated business model was an important factor in helping us meet and overcome these headwinds. Although our gross margins declined in the specialty green coffee areas, our sales of private label partially offset that decline as we grew our business in dollars with our five largest accounts as well as increasing our cases sold in three out of these five accounts. Unfortunately, coffee futures fell unexpectedly at the very end of the quarter putting many of our hedging positions underwater. An unrealized loss of $1.2 million (the value of our option positions held as of July 31, 2011) is reflected in our cost of sales, but this loss remains unrealized and could change during our fourth quarter. Without this unrealized loss, our gross margins remained at traditional levels. We remain focused on continued revenue growth and believe that we are taking the necessary steps to achieve the growth necessary to make us a more vital player within this industry," said Mr. Andrew Gordon, President and CEO of Coffee Holding Co.
Quarterly Dividend
The Company's previously announced quarterly cash dividend of $0.03 per share will be paid to stockholders of record as of the close of business on October 17, 2011. The dividend will be paid on October 31, 2011.
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. 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, 2011 AND OCTOBER 31, 2010 | ||
|
July 31, 2011 |
October 31, 2010 |
|
| (unaudited) | ||
| - ASSETS -- | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 3,772,322 | $ 1,672,921 |
| Commodities held at broker | -- | 275,499 |
| Accounts receivable, net of allowances of $197,078 for 2011 and 2010 | 13,107,671 | 8,852,372 |
| Inventories | 13,125,081 | 8,190,420 |
| Prepaid green coffee | 1,167,153 | 1,335,676 |
| Prepaid expenses and other current assets | 264,761 | 502,852 |
| Prepaid and refundable income taxes | 81,390 | 9,521 |
| Deferred income tax asset | 555,150 | 55,659 |
| TOTAL CURRENT ASSETS | 32,073,528 | 20,894,920 |
|
Machinery and equipment, at cost, net of accumulated depreciation of $5,465,207 and $5,147,593 for 2011 and 2010, respectively |
1,662,538 | 1,560,940 |
|
Customer list and relationships, net of accumulated amortization of $9,375 and $3,750 for 2011 and 2010, respectively |
140,625 | 146,250 |
| Trademarks | 180,000 | 180,000 |
| Goodwill | 440,000 | 440,000 |
| Deferred income tax asset | 68,600 | -- |
| Deposits and other assets | 750,370 | 699,029 |
| TOTAL ASSETS | $ 35,315,661 | $ 23,921,139 |
| - LIABILITIES AND STOCKHOLDERS' EQUITY -- | ||
| CURRENT LIABILITIES: | ||
| Accounts payable and accrued expenses | $ 10,899,650 | $ 7,124,072 |
| Line of credit | 6,712,086 | 2,306,749 |
| Due to broker | 879,058 | -- |
| Income taxes payable | 629,518 | 234,744 |
| Contingent liability | -- | 41,000 |
| TOTAL CURRENT LIABILITIES | 19,120,312 | 9,706,565 |
| Deferred income tax liabilities | -- | 17,659 |
| Deferred rent payable | 141,380 | 124,756 |
| Deferred compensation payable | 606,599 | 540,642 |
| TOTAL LIABILITIES | 19,868,291 | 10,389,622 |
| STOCKHOLDERS' EQUITY: | ||
| Coffee Holding Co., Inc. stockholders' equity: | ||
| Preferred stock, par value $.001 per share; 10,000,000 shares authorized; 0 issued | -- | -- |
|
Common stock, par value $.001 per share; 30,000,000 shares authorized, 5,579,830 shares issued; 5,490,823 shares outstanding for 2011 and 2010 |
5,580 | 5,580 |
| Additional paid-in capital | 7,581,973 | 7,581,973 |
| Contingent consideration | 39,000 | 39,000 |
| Retained earnings | 8,047,352 | 6,151,054 |
| Less: Treasury stock, 89,007 common shares, at cost for 2011 and 2010 | (295,261) | (295,261) |
| Total Coffee Holding Co., Inc. Stockholders' Equity | 15,378,644 | 13,482,346 |
| Noncontrolling interest | 68,726 | 49,171 |
| TOTAL EQUITY | 15,447,370 | 13,531,517 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 35,315,661 | $ 23,921,139 |
| COFFEE HOLDING CO., INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
| (Unaudited) | ||||
|
Nine Months Ended July 31, |
Three Months Ended July 31, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| NET SALES | $ 98,737,976 | $ 60,309,228 | $ 35,764,866 | $ 19,032,770 |
|
COST OF SALES (including $18.5 and $15.3 million of related party costs for the nine months ended July 31, 2011 and 2010, respectively. Including $6.8 and $3.7 million for the three months ended July 31, 2011 and 2010, respectively.) |
89,963,400 | 52,655,415 | 33,670,406 | 16,574,355 |
| GROSS PROFIT | 8,774,576 | 7,653,813 | 2,094,460 | 2,458,415 |
| OPERATING EXPENSES: | ||||
| Selling and administrative | 4,749,540 | 4,100,410 | 1,604,175 | 1,525,513 |
| Officers' salaries | 479,549 | 449,550 | 149,849 | 149,850 |
| TOTALS | 5,229,089 | 4,549,960 | 1,754,024 | 1,675,363 |
| INCOME FROM OPERATIONS | 3,545,487 | 3,103,853 | 340,436 | 783,052 |
| OTHER INCOME (EXPENSE) | ||||
| Interest income | 131,628 | 8,713 | 20,297 | 6,062 |
| Interest expense | (195,477) | (145,927) | (76,817) | (51,297) |
| TOTALS | (63,849) | (137,214) | (56,520) | (45,235) |
|
INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARIES |
3,481,638 | 2,966,639 | 283,916 | 737,817 |
| Provision for income taxes | 1,064,817 | 1,181,865 | 106,161 | 303,935 |
| NET INCOME | 2,416,821 | 1,784,774 | 177,755 | 433,882 |
|
Less: net (income) loss attributable to the noncontrolling interest |
(19,556) | (2,257) | (9,519) | (9,791) |
|
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. |
$ 2,397,265 | $ 1,782,517 | $ 168,236 | $ 424,091 |
| Basic and diluted earnings per share | $ .44 | $ .33 | $ .03 | $ .08 |
| Dividends declared per share | $ .09 | $ -- | $ .03 | $ -- |
| Weighted average common shares outstanding: | ||||
| Basic | 5,490,823 | 5,454,742 | 5,490,823 | 5,482,127 |
| Diluted | 5,500,823 | 5,464,742 | 5,500,823 | 5,492,127 |
| COFFEE HOLDING CO., INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| NINE MONTHS ENDED JULY 31, 2011 AND 2010 | ||
| (Unaudited) | ||
| 2011 | 2010 | |
| OPERATING ACTIVITIES: | ||
| Net income | $ 2,416,821 | $ 1,784,774 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
| Depreciation and amortization | 323,239 | 345,949 |
| Unrealized loss (gain) on commodities | 1,154,557 | (553,819) |
| Bad debt expense | -- | 13,400 |
| Deferred rent | 16,624 | 19,267 |
| Deferred income taxes | (585,750) | 98,500 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (4,255,299) | 3,414,186 |
| Inventories | (4,934,661) | (1,187,852) |
| Prepaid expenses and other current assets | 238,091 | (4,776) |
| Prepaid green coffee | 168,523 | (1,656,300) |
| Prepaid and refundable income taxes | (71,869) | 4,548 |
| Accounts payable and accrued expenses | 3,734,577 | (1,836,075) |
| Deposits and other assets | 14,616 | 35,532 |
| Income taxes payable | 394,774 | (216,979) |
| Net cash (used in) provided by operating activities | (1,385,757) | 260,355 |
| INVESTING ACTIVITIES: | ||
| Purchases of assets of OPTCO | -- | (2,259,924) |
| Purchases of machinery and equipment | (419,212) | (253,421) |
| Net cash used in investing activities | (419,212) | (2,513,345) |
| FINANCING ACTIVITIES: | ||
| Advances under bank line of credit | 96,021,666 | 65,316,659 |
| Principal payments under bank line of credit | (91,616,329) | (64,048,367) |
| Payment of dividend | (500,967) | (166,989) |
| Net cash provided by financing activities | 3,904,370 | 1,101,303 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2,099,401 | (1,151,687) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,672,921 | 1,367,933 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 3,772,322 | $ 216,246 |
| COFFEE HOLDING CO., INC. | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| NINE MONTHS ENDED JULY 31, 2011 AND 2010 | ||
| (Unaudited) | ||
| 2011 | 2010 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||
| Interest paid | $ 179,857 | $ 157,566 |
| Income taxes paid | $ 1,317,698 | $ 1,218,474 |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES: | ||
|
On May 17, 2010, Coffee Holding Co., Inc. acquired substantially all of the assets of Organic Products Trading Company, Inc. ("OPTCO"): |
||
| Assets acquired: | ||
| Inventory | $ -- | $ 1,809,924 |
| Equipment | -- | 15,000 |
| Customer list and relationships | -- | 150,000 |
| Trademarks | -- | 180,000 |
| Goodwill | -- | 440,000 |
| Total assets acquired: | -- | 2,594,924 |
| Purchase of assets funded by: | ||
| Contingent liability | -- | 41,000 |
| Contingent consideration | -- | 39,000 |
| Common stock, par value $.001 per share, 50,000 shares | -- | 50 |
| Additional paid-in capital | -- | 254,950 |
| -- | 335,000 | |
| Net cash paid | $ -- | $ 2,259,924 |