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Coffee Holding Co., Inc. Reports an Approximately 25% Increase in Net Sales During Third Quarter of 2022

·9 min read
Coffee Holding Co., Inc.
Coffee Holding Co., Inc.

STATEN ISLAND, New York, Sept. 14, 2022 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today announced its operating results for the fiscal quarter ended July 31, 2022:

Net Sales. Net sales totaled $17,013,286 for the three months ended July 31, 2022, an increase of $3,378,973, or 24.8%, from $13,634,313 for the three months ended July 31, 2021. The increase in net sales was due to an increase of sales to the Company’s legacy customers along with incremental sales to several significant new customers in the quarter.

Cost of Sales. Cost of sales for the three months ended July 31, 2022 was $13,867,710, or 81.5% of net sales, as compared to $10,708,461, or 78.5% of net sales, for the three months July 31, 2021. 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 increase in cost of sales was due to the Company’s increased sales to its customers, increased prices of green coffee and packaging materials.

Gross Profit. Gross profit for the three months ended July 31, 2022 amounted to $3,145,576 or 18.5% of net sales, as compared to $2,925,852 or 21.5% of net sales, for the three months ended July 31, 2021. The decrease in gross profits on a percentage basis was attributable to the factors listed above.

Operating Expenses. Total operating expenses decreased by $333,223 to $2,906,094 for the three months ended July 31, 2022 from $3,239,317 for the three months ended July 31, 2021. Selling and administrative expenses decreased by $326,684 and officers’ salaries decreased by $6,539.

Net (Loss) Income. The Company had net income of $132,381 or $0.02 per share basic and diluted, for the three months ended July 31, 2022 compared to a net loss of $127,051, or $(0.02) per share basic and diluted for the three months ended July 31, 2021.

“Following a 14% increase in revenues during our second quarter of 2022, we experienced an even greater increase this quarter as our sales rose 24.8% compared to the third quarter of 2021. A combination of increased sales of our branded products, most notably our Latin espressos, Café Caribe and Café Supremo, along with sales to new customers were responsible for the increase. The increase in sales occurred despite a decrease in revenues of approximately $660,000 at our Generations/Steep and Brew subsidiary over the first six months of fiscal 2022 as compared to 2021, and a decrease in sales at Generations/Steep and Brew of approximately $5.5 million over the first nine months of fiscal 2022 as compared to 2021,” stated Andrew Gordon, President and CEO of the Company.

“I believe we have found the simple solution to continue to grow revenues by remaining focused on our core legacy business of sales of gourmet green coffee beans, sales of our specialty proprietary brands and sales of private label products to some of the largest wholesalers and retailers in the United States, rather than relying on acquisitions and/or joint ventures,” continued Mr. Gordon. “However, the unfortunate downside of our renewed sales growth is the headwinds we continue to face from logistics as our freight factors increased by approximately $500,000, or approximately $0.10 a share, during this third quarter of 2022. We expect this increase in transportation costs in both bringing green coffee and other supplies to our factories, and shipping finished product to our customers, to continue to weigh our profitability for the immediate future, until supply chain issues mitigate and diesel fuel levels show a meaningful decline,” 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 its revenue growth and operations. 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 the Company’s control, and which may cause the Company’s 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. The Company has 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, the effect of any pandemics including the one caused by Covid-19, 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
718-832-0800

COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

July 31, 2022

 

 

October 31, 2021

 

 

 

(Unaudited)

 

 

 

 

- ASSETS -

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash

 

$

1,430,477

 

 

$

3,696,275

 

Accounts receivable, net of allowances of $144,000 for 2022 and 2021

 

 

7,535,104

 

 

 

9,299,978

 

Inventories

 

 

19,239,461

 

 

 

15,961,866

 

Prepaid expenses and other current assets

 

 

707,643

 

 

 

542,224

 

Due from broker

 

 

417,685

 

 

 

725,000

 

Prepaid and refundable income taxes

 

 

652,995

 

 

 

75,952

 

TOTAL CURRENT ASSETS

 

 

29,983,365

 

 

 

30,301,295

 

 

 

 

 

 

 

 

 

 

Building machinery and equipment, net

 

 

3,628,921

 

 

 

2,662,628

 

Customer list and relationships, net of accumulated amortization of $263,069 and $237,131 for 2022 and 2021, respectively

 

 

421,931

 

 

 

447,869

 

Trademarks and tradenames

 

 

408,000

 

 

 

408,000

 

Non-compete, net of accumulated amortization of $74,250 and $69,300 for 2022 and 2021, respectively

 

 

24,750

 

 

 

29,700

 

Goodwill

 

 

2,488,785

 

 

 

2,488,785

 

Equity method investments

 

 

359,090

 

 

 

402,245

 

Investment - other

 

 

2,500,000

 

 

 

2,500,000

 

Deferred income tax asset - net

 

 

148,586

 

 

 

77,394

 

Right of Use Asset

 

 

3,287,758

 

 

 

3,545,786

 

Deposits and other assets

 

 

506,123

 

 

 

449,225

 

TOTAL ASSETS

 

$

43,757,309

 

 

$

43,312,927

 

 

 

 

 

 

 

 

 

 

- LIABILITIES AND STOCKHOLDERS’ EQUITY -

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

4,872,467

 

 

$

5,047,640

 

Line of credit – current portion

 

 

-

 

 

 

3,800,850

 

Lease liability – current portion

 

 

122,456

 

 

 

340,400

 

Note payable – current portion

 

 

4,200

 

 

 

4,200

 

Due to broker

 

 

439,247

 

 

 

708,321

 

Income taxes payable

 

 

1,500

 

 

 

416,449

 

TOTAL CURRENT LIABILITIES

 

 

5,439,870

 

 

 

10,317,860

 

 

 

 

 

 

 

 

 

 

Lease liabilities

 

 

3,299,951

 

 

 

3,299,784

 

Line of credit net of current portion

 

 

6,114,000

 

 

 

-

 

Note payable – long term

 

 

10,461

 

 

 

13,092

 

Deferred compensation payable

 

 

300,013

 

 

 

311,872

 

TOTAL LIABILITIES

 

 

15,164,295

 

 

 

13,942,608

 

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 as of July 31, 2022 and October 31, 2021; 5,708,599 shares outstanding as of July 31, 2022 and October 31, 2021

 

 

6,634

 

 

 

6,634

 

Additional paid-in capital

 

 

19,094,618

 

 

 

18,688,797

 

Retained earnings

 

 

14,117,370

 

 

 

14,471,222

 

Less: Treasury stock, 925,331 common shares, at cost as of July 31, 2022 and October 31, 2021

 

 

(4,633,560

)

 

 

(4,633,560

)

Total Coffee Holding Co., Inc. Stockholders’ Equity

 

 

28,585,062

 

 

 

28,533,093

 

Non-controlling interest

 

 

7,952

 

 

 

837,226

 

TOTAL EQUITY

 

 

28,593,014

 

 

 

29,370,319

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

43,757,309

 

 

$

43,312,927

 

 

COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE AND THREE MONTHS ENDED JULY 31, 2022 AND 2021
(Unaudited)

 

 

Nine Months Ended
July 31,

 

 

Three Months Ended
July 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

NET SALES

 

$

50,216,316

 

 

$

46,236,708

 

 

$

17,013,286

 

 

$

13,634,313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF SALES

 

 

40,806,381

 

 

 

35,061,947

 

 

 

13,867,710

 

 

 

10,708,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

9,409,935

 

 

 

11,174,761

 

 

 

3,145,576

 

 

 

2,925,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

9,530,817

 

 

 

9,407,199

 

 

 

2,758,995

 

 

 

3,085,679

 

Officers’ salaries

 

 

449,375

 

 

 

460,501

 

 

 

147,099

 

 

 

153,638

 

TOTAL

 

 

9,980,192

 

 

 

9,867,700

 

 

 

2,906,094

 

 

 

3,239,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) INCOME FROM OPERATIONS

 

 

(570,257

)

 

 

1,307,061

 

 

 

239,482

 

 

 

(313,465

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

4,095

 

 

 

3,629

 

 

 

2

 

 

 

2,700

 

Loss from equity method investment

 

 

(43,154

 

 

(7,369

)

 

 

(7,354

)

 

 

(3,454

)

Interest expense

 

 

(143,393

)

 

 

(48,710

)

 

 

(53,100

)

 

 

(5,202

)

TOTAL

 

 

(182,452

)

 

 

(52,450

)

 

 

(60,452

)

 

 

(5,956

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(LOSS) INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY

 

 

(752,709

 

 

1,254,611

 

 

 

179,030

 

 

 

(319,421

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Benefit) provision for income taxes

 

 

(188,626

)

 

 

419,326

 

 

 

46,649

 

 

 

(91,003

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY

 

 

(564,083

)

 

 

835,285

 

 

 

132,381

 

 

 

(228,418

)

Less: Net loss attributable to the non-controlling interest

 

 

609,231

 

 

 

72,020

 

 

 

-

 

 

 

101,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC.

 

$

45,148

 

 

$

907,305

 

 

$

132,381

 

 

$

(127,051

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (loss) earnings per share

 

$

.01

 

 

$

.16

 

 

$

.02

 

 

$

(.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

5,708,599

 

 

 

5,708,599

 

 

 

5,708,599

 

 

 

5,708,599

 


COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JULY 31, 2022 AND 2021
(Unaudited)

 

 

2022

 

 

2021

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(564,083

)

 

$

835,285

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

421,661

 

 

 

504,280

 

Stock-based compensation

 

 

405,821

 

 

 

569,305

 

Unrealized loss (gain) on commodities

 

 

38,241

 

 

 

(315,569

)

Loss on equity method investments

 

 

43,155

 

 

 

7,369

 

Write-off of accounts receivable

 

 

415,096

 

 

 

-

 

Write-down of obsolete inventory

 

 

718,353

 

 

 

-

 

Amortization of right of use asset

 

 

258,028

 

 

 

321,921

 

Deferred income taxes

 

 

(71,192

)

 

 

4,849

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,349,778

 

 

 

1,156,932

 

Inventories

 

 

(4,215,991

)

 

 

750,468

 

Prepaid expenses and other current assets

 

 

(165,419

)

 

 

(339,855

)

Prepaid and refundable income taxes

 

 

(577,043

)

 

 

92,597

 

Accounts payable and accrued expenses

 

 

(175,173

)

 

 

1,048,073

 

Deposits and other assets

 

 

(68,757

)

 

 

(128,353

)

Change in lease liability

 

 

(217,777

)

 

 

(367,458

)

Income taxes payable

 

 

(414,949

)

 

 

288,294

 

Net cash (used in) provided by operating activities

 

 

(2,820,251

)

 

 

4,428,138

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of machinery and equipment

 

 

(1,357,066

)

 

 

(1,491,233

)

Net cash used in investing activities

 

 

(1,357,066

)

 

 

(1,491,233

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Advances under bank line of credit

 

 

3,027,654

 

 

 

2,515,563

 

Principal payments on note payable

 

 

(2,631

)

 

 

(3,783

)

Payment of dividend

 

 

(399,000

)

 

 

-

 

Principal payments under bank line of credit

 

 

(714,504

)

 

 

(3,812,385

)

Net cash provided by (used in) financing activities

 

 

1,911,519

 

 

 

(1,300,605

)

 

 

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH

 

 

(2,265,798

)

 

 

1,636,300

 

 

 

 

 

 

 

 

 

 

CASH, BEGINNING OF PERIOD

 

 

3,696,275

 

 

 

2,875,120

 

 

 

 

 

 

 

 

 

 

CASH, END OF PERIOD

 

$

1,430,477

 

 

$

4,511,420

 


 

 

2022

 

 

2021

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:

 

 

 

 

 

 

 

 

Interest paid

 

$

136,682

 

 

$

55,389

 

Income taxes paid

 

$

519,229

 

 

$

10,307

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of inventory by non-controlling interest

 

$

220,043

 

 

 

 

 

Initial recognition of operating lease right of use asset

 

 

-

 

 

$

65,999

 

Initial recognition of operating lease liabilities

 

 

-

 

 

$

65,999