STATEN ISLAND, NY-(Marketwired - Mar 17, 2017) - Coffee Holding
Co., Inc. (NASDAQ: JVA) (the "Company" or "Coffee Holding Company")
today announced its operating results for the three months ended
January 31, 2017.
Net Sales. Net sales totaled $19,632,367 for the three months
ended January 31, 2017, a decrease of $3,173,030, or 13.9%, from
$22,805,397 for the three months ended January 31, 2016. The
decrease in net sales reflects the Company's reduced wholesale
transactions with our largest wholesale green coffee customer of
approximately $7,645,000 which was partially offset by a gain of
approximately $4.4 million in sales of both branded and private
label coffee to both new and existing customers.
Cost of Sales. Cost of sales for the three months ended January
31, 2017 was $16,500,776, or 84.1% of net sales, as compared to
$20,154,348, or 88.4% of net sales, for the three months January
31, 2016. 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 reflects
lower commodity prices during the quarter and reduced wholesale
transactions with the Company's largest wholesale green coffee
customer.
Gross Profit. Gross profit for the three months ended January
31, 2017 was $3,131,591, an increase of $480,542 from $2,651,049
for the three months ended January 31, 2016. Gross profit as a
percentage of net sales increased to 16% for the three months ended
January 31, 2017 from 11.6% for the three months ended January 31,
2016. The increase in gross profits was due to improved margins on
the Company's wholesale and roasted business.
Operating Expenses. Total operating expenses increased by
$678,371 to $2,519,181 for the three months ended January 31, 2017
from $1,840,810 for the three months ended January 31, 2016. The
quarter ended January 31, 2017 included approximately $245,000 of
selling and administrative expenses from the Company's subsidiary
"SONO," which was not in the January 31, 2016 numbers. Also, the
Company incurred increases in shipping expenses of $190,056, salary
expense of $69,534, commission expense of $20,984, medical
insurance expense of $30,423, depreciation expense of $22,439,
professional fees of $61,301 and bank charges of $8,945. These
increases are all the result of the Company's reinvestment in its
growth and expansion strategy.
Net Income. The Company had net income of $375,782 or $0.06 per
share basic and diluted, for the three months ended January 31,
2017 compared to net income of $439,569, or $0.07 per share basic
and diluted for the three months ended January 31, 2016. The
decrease in net income was due primarily to the reasons described
above.
"A sales decline of approximately $7.6 million to our largest
wholesale green coffee customer was offset by a gain of
approximately $4.4 million in sales of both branded and private
label coffee to both new and existing customers. Excluding that
sales decline, I am happy to report we grew our business by 19%.
Our continued focus has been to grow the business while not
sacrificing margins and I believe we accomplished both of those
objectives during the quarter as we achieved a 16% gross profit
margin versus last year's 11.6% gross profit margin even as coffee
prices fell to seven month lows during the period," said Andrew
Gordon, President and CEO of Coffee Holding Company.
"Our profitability for the quarter was impacted by an increase
in our selling, general and administrative expenses, which rose by
$678,000, reflecting the growth and expansion within our business.
Many of these costs are non-recurring, but impacted our financial
statements at one time and prevented us from having a stronger
performance from a bottom line perspective. Going forward, we
believe our growth initiatives will continue to have a positive
impact on both revenues and profitability. Also, towards the end of
the quarter, we initiated a price increase as many national brands
increased their selling prices which we believe will have a
positive impact on our gross margins. We also gained distribution
in approximately 125 Kmart stores on our Café Caribe, building upon
the momentum we achieved last year for new distribution of our
leading flagship brand. Although our Sonofresco acquisition, which
was completed in June 2016, has not yet had a meaningful impact on
our profitability as expected, we have entered the Dubai market
with a transaction of roaster sales confirming our belief that we
can gain market presence in the United States and internationally
with our table top roaster concept."
"In addition, at the end of February, we completed our
acquisition of Comfort Foods, Inc., a regional roaster in the
Northeast with trailing twelve month revenue of approximately $7.3
million. This transaction gives us the distribution rights to the
Harmony Bay brand with its uniquely patented molded canisters and
diverse flavor profiles, currently sold in over 1,000 stores, to
accompany our already diverse portfolio of strong regional retail
coffee brands. We believe this acquisition will increase our
overall presence and subsequent economies of scale at many of
Harmony's current retail accounts in the Northeast. Through our
national platform, we believe we can expand the brand's
distribution over an even wider marketing area."
"In conjunction with this transaction, we renegotiated the ten
year lease for the fully equipped and spacious modern roasting
facility of Comfort Foods on much more favorable terms which we
expect will provide us with a highly efficient and economical space
in which to conduct our roasting and packaging operations. We will
begin roasting coffee on the East coast again, giving us our third
manufacturing facility. We believe that our ability to roast in
Colorado, Massachusetts and Ohio will add synergistic value to our
manufacturing and roasting abilities and enable us to achieve
higher margins and renewed efficiencies for both current and
potential new business over the next several years. We also believe
this transaction will create logistical savings for many of our
sales transacted on the Eastern seaboard and will also increase our
competitive advantage at a number of current and potential accounts
in the Northeast marketing area," added Mr. Gordon.
About Coffee HoldingCoffee 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.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. Contact InformationCompany
Contact
Coffee Holding Co., Inc.
Andrew Gordon
President &
CEO
718-832-0800
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