Coffee Holding Co., Inc. ("Coffee Holding" or the "Company")
(NASDAQ: JVA) today announced its operating results for the three
months ended January 31, 2013.
"We are pleased with our results for the quarter. In the first
fiscal quarter of 2012, we recorded record revenue of $56.6
million, which was more than 121% of the first fiscal quarter of
2011 revenue and well in excess of any previous fiscal first
quarter and not consistent with our historical growth. We believe
this year's level of sales of $31.3 million in the first fiscal
quarter of 2013, while below the first fiscal quarter of 2012, is
more normalized from a historical perspective. Excluding 2012, our
revenue for the first quarter of 2013 well exceeded previous first
fiscal quarter results. In the first fiscal quarters of 2011, 2010,
2009, and 2008, we had revenues of $25.6 million, $21.4 million,
$18.9 million, $15.0 million, respectively. In addition, during
this quarter our gross margins increased on a percentage basis from
7.9% to 11.8% reflecting our efforts to increase our profit margins
which we believe will result in greater future profitability for
the company. We also believe this is a successful result given the
negative impact on our profitability attributable to our withdrawal
of our investment in Global Mark during the quarter," noted Andrew
Gordon, our President and CEO.
"We experienced growth in key areas compared to the first
quarter of fiscal 2012, most importantly on the branded and private
label sides of the business. We believe it is the growth in these
two areas that will ultimately enable us to achieve the targeted
annualized gross profit level of nine percent for our 2013 fiscal
year. A more favorable revenue mix is the first step for overall
increased margins. We also believe coffee prices will rebound in
the second half of 2013, helping to improve both our revenues and
profits on the sales of wholesale green coffee. We anticipate a
more normalized growth pattern on a going forward basis, while we
remain focused on margin expansion and new business opportunities,"
stated Mr. Gordon.
Results of Operations
The Company had net income of $937,537, or $0.15 per share basic
and $0.14 diluted, for the three months ended January 31, 2013
compared to net income of $1,578,345 or $0.25 per share basic and
$0.24 diluted, for the three months ended January 31, 2012. The
decrease in net income primarily reflects lower sales for the
period year over year and the write off involving the Company's
investment in Global Mark partially offset by higher gross margins
of 11.8% during the three month period.
Net sales totaled $31,318,804 for the three months ended January
31, 2013, a decrease of $25,282,880, or 44.7%, from $56,601,684 for
the three months ended January 31, 2012. The decrease in net sales
primarily reflects lower coffee prices as well as reduced volumes
of wholesale green coffee sales during the three month period.
Cost of sales for the three months ended January 31, 2013 was
$27,636,207 or 88.2% of net sales, as compared to $52,151,940 or
92.1% of net sales for the three months ended January 31, 2012. The
decrease in cost of sales reflects a shift in our overall business
to a higher percentage of roasted coffee sales which tend to be
more profitable on a percentage basis than our green coffee.
Total operating expenses increased by $65,686, or 3.6%, to
$1,895,178 for the three months ended January 31, 2013 as compared
to operating expenses of $1,829,492 for the three months ended
January 31, 2012. The increase in operating expenses was due to
increases in selling and administrative expense of $82,907
partially offset by a decrease in officers' salaries of
$17,221.
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
JANUARY 31, 2013 AND OCTOBER 31, 2012
January 31, October 31,
2013 2012
------------ ------------
(unaudited)
- ASSETS -
CURRENT ASSETS:
Cash $ 8,271,965 $ 7,568,583
Accounts receivable, net of allowances of
$213,674 for 2013 and 2012 10,223,591 12,633,128
Inventories 10,241,463 11,303,581
Prepaid green coffee 205,000 150,000
Prepaid expenses and other current assets 650,455 704,013
Prepaid and refundable income taxes 52,106 62,763
Deferred income tax asset 477,443 702,655
------------ ------------
TOTAL CURRENT ASSETS 30,122,023 33,124,723
Machinery and equipment, at cost, net of
accumulated depreciation of $2,747,212 and
$2,631,468 for 2013 and 2012, respectively 1,744,407 1,791,754
Customer list and relationships, net of
accumulated amortization of $20,625 and $18,750
for 2013 and 2012, respectively 129,375 131,250
Trademarks 180,000 180,000
Goodwill 440,000 440,000
Equity method investments 99,522 1,931,931
Deposits and other assets 648,385 648,094
------------ ------------
TOTAL ASSETS $ 33,363,712 $ 38,247,752
- LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 6,260,622 $ 11,769,107
Line of credit 953,571 562,500
Due to broker 913,507 1,367,389
Income taxes payable 96,115 21,122
------------ ------------
TOTAL CURRENT LIABILITIES 8,223,815 13,720,118
Deferred income tax liabilities 9,443 32,655
Deferred rent payable 170,680 166,668
Deferred compensation payable 530,851 528,687
------------ ------------
TOTAL LIABILITIES 8,934,789 14,448,128
------------ ------------
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, 6,456,316 shares
issued; 6,372,309 shares outstanding for 2013
and 2012 6,456 6,456
Additional paid-in capital 15,904,109 15,904,109
Retained earnings 8,529,405 7,979,247
Less: Treasury stock, 84,007 common shares, at
cost for 2013 and 2012 (272,133) (272,133)
------------ ------------
Total Coffee Holding Co., Inc. Stockholders'
Equity 24,167,837 23,617,679
Noncontrolling interest 261,086 181,945
------------ ------------
TOTAL EQUITY 24,428,923 23,799,624
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,363,712 $ 38,247,752
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JANUARY 31, 2013 AND 2012
(Unaudited)
2013 2012
------------ ------------
NET SALES $ 31,318,804 $ 56,601,684
COST OF SALES (which includes purchases of
approximately $9.7 million and $10.5 million
for the three months ended January 31, 2013 and
2012, respectively from a related party) 27,636,207 52,151,940
------------ ------------
GROSS PROFIT 3,682,597 4,449,744
------------ ------------
OPERATING EXPENSES:
Selling and administrative 1,765,241 1,682,334
Officers' salaries 129,937 147,158
------------ ------------
TOTAL 1,895,178 1,829,492
------------ ------------
INCOME FROM OPERATIONS 1,787,419 2,620,252
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 7,579 13,884
Loss from equity method investments (104,437) (20,137)
Interest expense (38,399) (65,730)
------------ ------------
TOTAL (135,257) (71,983)
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
NONCONTROLLING INTEREST IN SUBSIDIARY 1,652,162 2,548,269
Provision for income taxes 635,484 962,900
------------ ------------
NET INCOME BEFORE NONCONTROLLING INTEREST IN
SUBSIDIARY 1,016,678 1,585,369
Less: Net income attributable to the
noncontrolling interest (79,141) (7,024)
------------ ------------
NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO.,
INC. $ 937,537 $ 1,578,345
Basic earnings per share $ .15 $ .25
Diluted earnings per share $ .14 $ .24
Dividends declared per share $ .06 $ .03
Weighted average common shares outstanding:
Basic 6,372,309 6,372,309
Diluted 6,639,309 6,644,309
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2013 AND 2012
(Unaudited)
2013 2012
------------ ------------
OPERATING ACTIVITIES:
Net income $ 1,016,678 $ 1,585,369
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 117,616 112,693
Unrealized gain on commodities (453,882) (1,577,294)
Loss on equity method investment 380 20,137
Loss on disposition of equity method investment 104,057 -
Deferred rent 4,012 4,937
Deferred income taxes 202,000 599,000
Changes in operating assets and liabilities:
Accounts receivable 2,409,537 (1,937,860)
Inventories 1,565,618 1,497,745
Prepaid expenses and other current assets 53,558 43,768
Prepaid green coffee (55,000) 152,036
Prepaid and refundable income taxes 10,657 267,757
Accounts payable and accrued expenses (4,516,084) 2,781,754
Deposits and other assets 1,873 4,873
Income taxes payable 74,993 35,918
------------ ------------
Net cash provided by operating activities 536,013 3,590,833
------------ ------------
INVESTING ACTIVITIES:
Purchase of equity method investment - (200,000)
Proceeds from disposition of equity method
investment 232,069 -
Purchases of machinery and equipment (68,394) (54,590)
------------ ------------
Net cash provided by (used in) investing
activities 163,675 (254,590)
------------ ------------
FINANCING ACTIVITIES:
Advances under bank line of credit 3,441,192 48,525,026
Principal payments under bank line of credit (3,050,121) (48,549,137)
Payment of dividend (387,377) (193,689)
------------ ------------
Net cash provided by (used in) financing
activities 3,694 (217,800)
------------ ------------
NET INCREASE IN CASH 703,382 3,118,443
CASH, BEGINNING OF PERIOD 7,568,583 4,244,335
------------ ------------
CASH, END OF PERIOD $ 8,271,965 $ 7,362,778
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
Interest paid $ 41,191 $ 71,340
Income taxes paid $ 347,834 $ 60,225
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2013 AND 2012
(Unaudited)
Schedule of noncash investing and financing activities:
Proceeds from disposition of equity method investment:
2013 2012
----------- -----------
Inventory received $ 503,500 $ -
Settlement of accounts payable 992,402 -
----------- -----------
Total noncash proceeds $ 1,495,902 $ -
----------- -----------
CONTACT: Coffee Holding Co., Inc. Andrew Gordon President &
CEO (718) 832-0800
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