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Coffee Holding Co., Inc. Reports Three and Six Months Ended April 30, 2021
المصدر: Nasdaq GlobeNewswire / 14 يونيو 2021 08:00:01 America/Chicago
STATEN ISLAND, New York , June 14, 2021 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today announced its operating results for the three months and six months ended April 30, 2021:
Net Sales. Net sales totaled $14,468,558 for the three months ended April 30, 2021, a decrease of $5,627,318, or 28%, from $20,095,876 for the three months ended April 30, 2020. Net sales totaled $32,602,395 for the six months ended April 30, 2021, a decrease of $6,778,982, or 17.2%, from $39,381,377 for the six months ended April 30, 2020. The decrease in net sales was due to multiple factors, including the continued loss of sales of packed coffee to the Company’s customers who have not fully re-opened due to COVID-19 restrictions. The decreases in net sales were slightly offset by gains in sales to new private label accounts as well as an increase in sales of the Company’s flagship Café Caribe brand.
Cost of Sales. Cost of sales for the three months ended April 30, 2021 was $10,699,090, or 74% of net sales, as compared to $15,589,450, or 77.6% of net sales, for the three months April 30, 2020. Cost of sales for the six months ended April 30, 2021 was $24,353,356, or 74.7% of net sales, as compared to $31,760,285, or 80.6% of net sales, for the six months April 30, 2020. The decrease in cost of sales was due to the Company’s decreased sales partially offset by higher packaging costs due to increases in materials, most notably steel for the Company’s cans.
Gross Profit. Gross profit for the three months ended April 30, 2021 amounted to $3,769,468 or 26% of net sales, as compared to $4,506,426 or 22.4% of net sales, for the three months ended April 30, 2020. Gross profit for the six months ended April 30, 2021 amounted to $8,249,039 or 25.3% of net sales, as compared to $7,621,092 or 19.4% of net sales, for the six months ended April 30, 2020. The increase in gross profit percentage 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, partially offset by higher packaging costs due to increases in materials, most notably steel for the Company’s cans.
Operating Expenses. Total operating expenses decreased by $297,553 to $3,315,324 for the three months ended April 30, 2021 from $3,612,877 for the three months ended April 30, 2020. Total operating expenses decreased by $659,328 to $6,628,514 for the six months ended April 30, 2021 from $7,287,842 for the six months ended April 30, 2020. 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 the increase in the Company’s freight costs as the cost of truckload deliveries to our largest wholesale customers was up approximately 20% year over year.
Net (Loss) Income. The Company had net income of $357,044 or $0.06 per share basic and diluted, for the three months ended April 30, 2021 compared to net income of $498,518, or $0.09 per share basic and diluted for the three months ended April 30, 2020. The Company had net income of $1,034,355 or $0.18 per share basic and diluted, for the six months ended April 30, 2021 compared to net loss of $101,330, or $0.02 per share basic and diluted for the six months ended April 30, 2020. The increase in net income was due primarily to the reasons described above.
“Despite a 28% decline in sales for the three months ended April 30, 2021 compared to the same period last year, we still earned $0.06 a share, as our gross margins continue to improve through a combination of higher selling prices on green coffee sales and lower operating costs,” stated Andrew Gordon, Chief Executive Officer of Coffee Holding Co. “Sales were negatively impacted by a $5.2 million decline in sales of packed coffee beans compared to last year to customers who have not fully reopened due to continued Covid-19 restrictions in many states where a large percentage of our business is concentrated. In addition, we were not the beneficiary of the same boost in supermarket sales witnessed last year during the March and April months of the pandemic. Because there was no inventory buildup by supermarkets during 2021 as there was in 2020, production at our largest roasting facility in Colorado was down by 50% compared to last year,” continued Mr. Gordon. “We did see increased volumes from our new private label customers and our flagship brand Café Caribe Latin espresso, which helped mitigate the revenue decline predominately due to decreased sales in our packed coffee division.
“However, we now believe that with most states fully reopening, we should begin to see an increase in sales volumes compared to last year, as we have acquired new customers during the last twelve months along with our long term customers normalizing their buying activities,” said Mr. Gordon.
“Adjusted EBITDA for the quarter was $861,900, or $0.15 cents per share for the three months ended April 30, 2021. Our interest expenses for the quarter was $16,839, as we have essentially paid down our entire line of credit for the first time in company history as operations continue to generate positive free cash flow.
“I believe our results for the quarter were positive despite a few headwinds,” continued Mr. Gordon. “Sales of green coffee beans remained under pressure for the reasons previously mentioned. Also, freight rates have increased by as much as 58% to several of our largest accounts and cannot yet be offset by price increases (to these accounts) having the net effect of negatively impacting operating results. In addition, inflationary pressures have impacted our packing costs, and we have seen an increase in both the costs of our steel for our cans and fiber for our corrugated. At the moment, we have had to absorb these cost increases, but we believe as other major players in the coffee industry begin to increase prices to supermarkets, we will be able to do so as well, offsetting these increased costs. Finally, our Generations LLC subsidiary continues to be a drag on our profitability as they have been slow to convert the Steep N Brew operations in Madison, Wisconsin and consolidate all the production in Cleveland, Ohio, which has resulted in an increase in costs for the quarter resulting in a loss in this division.
“Lastly, at the end of the quarter, our CBD partnership with The Jorde Well LLC began shipping complimentary pilot run samples of CBD infused single serve cups of both our Harmony Bay and Café Caribe brands to prospective customers. The feedback on these samples has been positive with most customers commenting on the incredibly smooth taste of the coffee without any aftertaste or noticeable change in the flavor profile due to the infusion of the CBD oil. Subsequently, we launched our direct to consumer (DTC) E-commerce website, www.thejordewell.com, to begin selling our products online. We are currently planning our official initial launch of our CBD infused brands during our third fiscal quarter of 2021. We have identified at least 27 states, that subject to certain restrictions, will allow sales of CBD beverage products as we prepare our go-to-market strategy for our CBD infused brands,” 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, 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 Gordon
President & CEO
718-832-0800COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETSApril 30, 2021 October 31, 2020 (Unaudited) - ASSETS - CURRENT ASSETS: Cash $ 3,528,137 $ 2,875,120 Accounts receivable, net of allowances of $144,000 for 2021 and 2020 6,699,429 7,408,905 Inventories 15,166,997 17,102,993 Prepaid expenses and other current assets 663,423 490,246 Due from broker 107,083 - Prepaid and refundable income taxes 53,621 145,305 TOTAL CURRENT ASSETS 26,218,690 28,022,569 Machinery and equipment, at cost, net of accumulated depreciation of $7,916,941 and $7,610,864 for 2021 and 2020, respectively 2,488,686 2,197,319 Customer list and relationships, net of accumulated amortization of $215,755 and $194,379 for 2021 and 2020, respectively 469,245 490,621 Trademarks and tradenames 1,488,000 1,488,000 Non-compete, net of accumulated amortization of $59,400 and $49,500 for 2021 and 2020, respectively 39,600 49,500 Goodwill 2,488,785 2,488,785 Equity method investments 557,489 561,405 Deferred income tax asset 714,076 782,175 Right of Use Asset 1,954,072 2,114,228 Deposits and other assets 416,476 285,548 TOTAL ASSETS $ 36,835,119 $ 38,480,150 - LIABILITIES AND STOCKHOLDERS’ EQUITY - CURRENT LIABILITIES: Accounts payable and accrued expenses $ 4,006,972 $ 3,036,097 Lease liability – current portion 500,804 484,163 Note payable – current portion 2,568 5,075 Due to broker - 452,325 Income taxes payable 260,982 5,371 TOTAL CURRENT LIABILITIES 4,771,326 3,983,031 Deferred income tax liabilities 969,032 882,582 Line of credit 2,500 3,796,822 Lease liability 1,580,684 1,780,306 Note payable – long term 17,292 17,292 Deferred compensation payable 307,476 276,548 TOTAL LIABILITIES 7,648,310 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 18,309,261 17,929,724 Retained earnings 14,250,224 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 27,932,559 26,518,666 Non-controlling interest 1,254,250 1,224,903 TOTAL EQUITY 29,186,809 27,743,569 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 36,835,119 $ 38,480,150
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED APRIL 30, 2021 AND 2020
(Unaudited)Six Months Ended
April 30,Three Months Ended
April 30,2021 2020 2021 2020 NET SALES $ 32,602,395 $ 39,381,377 $ 14,468,558 $ 20,095,876 COST OF SALES 24,353,356 31,760,285 10,699,090 15,589,450 GROSS PROFIT 8,249,039 7,621,092 3,769,468 4,506,426 OPERATING EXPENSES: Selling and administrative 6,321,651 6,960,438 3,161,686 3,455,723 Officers’ salaries 306,863 327,404 153,638 157,154 TOTAL 6,628,514 7,287,842 3,315,324 3,612,877 INCOME FROM OPERATIONS 1,620,525 333,250 454,144 893,549 OTHER INCOME (EXPENSE) Interest income 929 2,696 519 1,952 Loss from equity method investment (3,915 ) (2,991 ) (1,317 ) (1,680 ) Interest expense (43,507 ) (105,459 ) (16,839 ) (49,725 ) TOTAL (46,493 ) (105,754 ) (17,637 ) (49,453 ) INCOME BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY 1,574,032 227,496 436,507 844,096 Provision for income taxes 510,329 89,351 129,086 154,767 NET INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY 1,063,703 138,145 307,421 689,329 Less: Net (income) loss attributable to the non-controlling interest (29,348 ) (239,475 ) 49,623 (190,811 ) NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $ 1,034,355 $ (101,330 ) $ 357,044 $ 498,518 Basic and diluted earnings (loss) per share $ .18 $ (.02) $ .06 $ .09 Weighted average common shares outstanding: Basic and diluted 5,708,599 5,569,349 5,708,599 5,569,349
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 2021 AND 2020
(Unaudited)2021 2020 OPERATING ACTIVITIES: Net income $ 1,063,703 $ 138,145 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 337,353 378,934 Stock-based compensation 379,537 488,940 Unrealized (gain) loss on commodities (559,408 ) 318,936 Loss on equity method investments 3,915 2,991 Amortization of right of use asset 226,155 215,335 Deferred income taxes 154,550 (91,802 ) Changes in operating assets and liabilities: Accounts receivable 709,476 171,461 Inventories 1,935,996 474,443 Prepaid expenses and other current assets (173,177 ) 71,148 Prepaid and refundable income taxes 91,684 163,258 Accounts payable and accrued expenses 970,875 343,330 Deposits and other assets (100,000 ) - Change in lease liability (248,980 ) (236,607 ) Income taxes payable 255,611 217 Net cash provided by operating activities 5,047,290 2,438,729 INVESTING ACTIVITIES: Purchases of machinery and equipment (597,444 ) (132,967 ) Net cash used in investing activities (597,444 ) (132,967 ) FINANCING ACTIVITIES: Advances under bank line of credit 15,563 641,132 Principal payments on note payable (2,507 ) (1,994 ) Principal payments under bank line of credit (3,809,885 ) (2,700,000 ) Net cash used in financing activities (3,796,829 ) (2,060,862 ) NET INCREASE IN CASH 653,017 244,900 CASH, BEGINNING OF PERIOD 2,875,120 2,402,556 CASH, END OF PERIOD $ 3,528,137 $ 2,647,456
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 2021 AND 2020
(Unaudited)2021 2020 SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: Interest paid $ 54,943 $ 113,647 Income taxes paid $ 8,485 $ 17,678 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Initial recognition of operating lease right of use asset $ 65,999 $ 2,512,022 Initial recognition of operating lease liabilities $ 65,999 $ 2,705,484 Machinery and equipment acquired through financing $ - $ 26,807
RECONCILIATION OF NON-GAAP FINANCIAL MEASURETo 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:
4/30/21 Net Income 357,044 Depreciation & Amortization 169,162 Interest 16,839 Tax 129,086 Stock compensation 189,769 Adjusted EBITDA 861,900