Attached files
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| 8-K - CURRENT REPORT - COFFEE HOLDING CO INC | jva_8k.htm |
Exhibit 99.1
Coffee Holding Co., Inc. Reports Year End Results
Year End Results
STATEN ISLAND, New York – January 27, 2017.
Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”)
today announced its operating results for the fiscal year
ended October 31, 2016:
The
Company had net income of $2,212,288 or $0.36 per share basic and
diluted, for the fiscal year ended October 31, 2016 compared to a
net loss of $(1,413,228), or $(0.23) per share basic and diluted
for the fiscal year ended October 31, 2015. The increase in net
income was due primarily to the reasons described
below.
Net
sales totaled $78,948,228 for the fiscal year ended October 31,
2016, a decrease of $39,205,313, or approximately 33%, from
$118,153,541 for the fiscal year ended October 31,
2015. The decrease in net sales reflects reduced
wholesale transactions with our largest wholesale green coffee
customer during fiscal 2016 of approximately
$41,044,000.
Cost of
sales for the fiscal year ended October 31, 2016 was $67,066,050,
or approximately 85% of net sales, as compared to $112,436,831, or
approximately 95% of net sales, for the fiscal year ended October
31, 2015. 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 a more favorable inventory position during
fiscal 2016 and our reduced wholesale transactions with our largest
wholesale green coffee
customer.
Gross
profit for the fiscal year ended October 31, 2016 was $11,882,178,
an increase of $6,165,468 from $5,716,710 for the fiscal year ended
October 31, 2015. Gross profit as a percentage of net
sales increased to approximately 15% for the fiscal year ended
October 31, 2016 from approximately 5% for the fiscal year ended
October 31, 2015. The increase in our margins was due to
improved margins on our wholesale and roasted business as well as a
decrease in our losses period to period on our hedging operations.
Total
operating expenses increased by $365,081 to $8,019,110 for the
fiscal year ended October 31, 2016 from $7,654,029 for the fiscal
year ended October 31, 2015. Selling and administrative
expenses increased $362,966, or approximately 5%, to $7,363,710 for
the fiscal year ended October 31, 2016 from $7,000,744 for the
fiscal year ended October 31, 2015.
“A
combination of improved margins, a 26% jump in revenues from our JV
Generations Coffee LLC combined with increased sales of our
Hispanic brand espresso Café Caribe enabled us to show a
strong increase in our profitability despite a 33% decrease in
revenues year over year. The decline in revenues was from a single
customer and was not unexpected,” said Andrew Gordon CEO and
President of Coffee Holding Company.
“Our
focus in 2016 was to return to profitability and to increase
margins across our three key business areas, wholesale green sales,
private label and branded coffee sales; and in those respects, we
accomplished our goals. In addition, our acquisition in Q3 of
Sonofresco, a manufacturer and seller of table top coffee roasters
and gourmet green coffee beans is an exciting addition to our
already strong horizontally and vertically integrated business
model. We believe we will have the ability to expand their roaster
sales to a much larger customer base using our highly visible
presence in the specialty gourmet coffee space, as well as our
connections with supermarkets and retailers in the U.S., Canada and
the Pacific Rim. Last year’s fiscal results were not
materially impacted by this transaction but I believe they will
have a positive impact in fiscal 2017. In addition, we implemented
other business initiatives late in Q3 and Q4 which did not impact
2016 results, but we look forward to the positive impact on our
financial results that we expect in 2017 from these developments.
As many of the initial start-up costs associated with these new
business activities were expensed in 2016, we expect the bottom
line impact will be even greater going forward. Finally, in fiscal
2016 we increased our in-house sales team for the first time in
several years. Our intent is to use our expanded sales force to
assist in increasing our revenues in food service, tea sales and
wholesale green coffee container sales as well support our
anticipated entry into the highly contested and rapidly expanding
cold brew space; areas in which we have previously underperformed
but believe with a renewed focus can be accretive to our overall
business performance.
Our
ability to accomplish the goals outlined above along with the
strength we are experiencing across our three key business areas
should solidify and build revenues and profitability in fiscal
2017.”
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.
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.
Company Contact
Coffee
Holding Co., Inc.
Andrew
Gordon
President
& CEO
718-832-0800
-2-
COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2016 AND 2015
|
|
2016
|
2015
|
|
|
|
|
|
-
ASSETS -
|
||
|
CURRENT
ASSETS:
|
|
|
|
Cash
|
$3,227,981
|
$3,853,816
|
|
Accounts
receivable, net of allowances of $144,000 for 2016 and
2015
|
13,517,892
|
10,968,237
|
|
Inventories
|
14,276,290
|
13,862,818
|
|
Prepaid green
coffee
|
435,577
|
620,452
|
|
Prepaid expenses
and other current assets
|
535,456
|
256,202
|
|
Prepaid and
refundable income taxes
|
481,977
|
1,434,577
|
|
Due from
broker
|
134,722
|
|
|
Deferred income tax
asset
|
81,545
|
997,720
|
|
TOTAL
CURRENT ASSETS
|
32,691,440
|
31,993,822
|
|
|
|
|
|
Machinery and
equipment, at cost, net of accumulated depreciation of $4,819,828
and $4,241,256 for 2016 and 2015, respectively
|
2,269,863
|
1,845,000
|
|
Customer list and
relationships, net of accumulated amortization of $50,250 and
$41,250 for 2016 and 2015, respectively
|
219,750
|
108,750
|
|
Trademarks
|
180,000
|
180,000
|
|
Goodwill
|
1,017,905
|
440,000
|
|
Equity method
investments
|
95,598
|
96,571
|
|
Deposits and other
assets
|
549,337
|
610,499
|
|
TOTAL
ASSETS
|
$37,023,893
|
$35,274,642
|
|
|
|
|
|
-
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY
-
|
||
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable
and accrued expenses
|
$4,062,573
|
$4,021,389
|
|
Line of
credit
|
6,958,375
|
5,554,121
|
|
Due to
broker
|
-
|
483,835
|
|
Income taxes
payable
|
1,050
|
-
|
|
TOTAL
CURRENT LIABILITIES
|
11,021,998
|
10,059,345
|
|
|
|
|
|
Deferred income tax
liabilities
|
167,470
|
92,370
|
|
Deferred rent
payable
|
231,216
|
222,055
|
|
Deferred
compensation payable
|
489,668
|
482,499
|
|
TOTAL
LIABILITIES
|
11,910,352
|
10,856,269
|
|
|
|
|
|
Redeemable common
stock:
|
|
|
|
Common stock
subject to possible redemption, at $200,004; 38,364 shares issued
and outstanding at redemption value as of October 31, 2016, none as
of October 31, 2015
|
200,004
|
|
|
|
|
|
|
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,
6,494,680 and 6,456,316 shares issued; 5,824,938 and 6,162,207
shares outstanding for 2016 and 2015
|
6,456
|
6,456
|
|
Additional
paid-in capital
|
15,904,109
|
15,904,109
|
|
Retained
earnings
|
11,878,228
|
9,665,940
|
|
Less:
Treasury stock, 631,378 and 294,109 common shares, at cost for 2016
and 2015
|
(3,249,590)
|
(1,494,712)
|
|
Total
Coffee Holding Co., Inc. Stockholders’ Equity
|
24,539,203
|
24,081,793
|
|
Noncontrolling
interest
|
374,334
|
336,580
|
|
TOTAL
EQUITY
|
24,913,537
|
24,418,373
|
|
TOTAL
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’
EQUITY
|
$37,023,893
|
$35,274,642
|
-3-
COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED OCTOBER 31, 2016 AND 2015
|
|
2016
|
2015
|
|
NET
SALES
|
$78,948,228
|
$118,153,541
|
|
|
|
|
|
COST OF SALES (which include purchases
of approximately $8.5 million and $22.1 million in fiscal years
2016 and 2015, respectively, from a related party)
|
67,066,050
|
112,436,831
|
|
|
|
|
|
GROSS
PROFIT
|
11,882,178
|
5,716,710
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
Selling and
administrative
|
7,363,710
|
7,000,744
|
|
Officers’
salaries
|
655,400
|
653,285
|
|
TOTAL
|
8,019,110
|
7,654,029
|
|
INCOME
(LOSS) FROM OPERATIONS
|
3,863,068
|
(1,937,319)
|
|
OTHER
INCOME (EXPENSE):
|
|
|
|
Interest
income
|
41,176
|
45,049
|
|
Loss from equity
method investments
|
(972)
|
(833)
|
|
Interest
expense
|
(187,310)
|
(200,074)
|
|
TOTAL
|
(147,106)
|
(155,858)
|
|
|
|
|
|
INCOME
(LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
|
|
|
|
AND
NON-CONTROLLING INTEREST IN SUBSIDIARY
|
3,715,962
|
(2,093,177)
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
1,365,920
|
(763,647)
|
|
|
|
|
|
NET
INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN
SUBSIDIARY
|
2,350,042
|
(1,329,530)
|
|
Less: Net income
attributable to the non-controlling interest in
subsidiary
|
(137,754)
|
(83,698)
|
|
|
|
|
|
NET
INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC.
|
$2,212,288
|
$(1,413,228)
|
|
|
|
|
|
Basic and diluted
earnings (loss) per share
|
$.36
|
$(.23)
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic and
diluted
|
6,082,777
|
6,212,929
|
-4-
COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 2016 AND 2015
|
|
2016
|
2015
|
|
OPERATING
ACTIVITIES:
|
|
|
|
Net income
(loss)
|
$2,350,042
|
$(1,329,530)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
Depreciation and
amortization
|
587,572
|
545,390
|
|
Unrealized (gain)
on commodities
|
(618,557)
|
(1,089)
|
|
Loss on equity
method investments
|
972
|
833
|
|
Deferred
rent
|
9,161
|
12,415
|
|
Deferred income
taxes
|
991,275
|
(726,850)
|
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
(2,465,512)
|
4,451,623
|
|
Inventories
|
(143,907)
|
1,347,335
|
|
Prepaid expenses
and other current assets
|
(279,254)
|
3,910
|
|
Prepaid green
coffee
|
184,875
|
(153,297)
|
|
Prepaid and
refundable income taxes
|
952,600
|
(1,433,818)
|
|
Accounts payable
and accrued expenses
|
(30,860)
|
(4,671,711)
|
|
Deposits and other
assets
|
68,331
|
-
|
|
Income taxes
payable
|
1,050
|
(331,051)
|
|
Net
cash provided by (used in) operating activities
|
1,607,788
|
(2,285,840)
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
Cash paid for
acquisition of business
|
(819,564)
|
-
|
|
Purchases of
machinery and equipment
|
(963,435)
|
(391,796)
|
|
Net
cash used in investing activities
|
(1,782,999)
|
(391,796)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
Line of
credit
|
1,404,254
|
3,055,663
|
|
Purchase
of treasury stock
|
(1,754,878)
|
(226,850)
|
|
Payment
of dividend
|
(100,000)
|
(80,000)
|
|
Net
cash (used in) provided by financing activities
|
(450,624)
|
2,748,813
|
|
|
|
|
|
|
|
|
|
NET
(DECREASE) INCREASE IN CASH
|
(625,835)
|
71,177
|
|
|
|
|
|
CASH,
BEGINNING OF PERIOD
|
3,853,816
|
3,782,639
|
|
|
|
|
|
CASH,
END OF PERIOD
|
$3,227,981
|
$3,853,816
|
-5-
COFFEE HOLDING CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED OCTOBER 31, 2016 AND 2015
|
|
2016
|
2015
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW DATA:
|
|
|
|
Interest
paid
|
$181,007
|
$196,556
|
|
Income taxes
paid
|
$34,183
|
$1,651,156
|
|
SUPPLEMENTAL
DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
|
|
|
|
On June 29, 2016
Coffee Holding Co., Inc. acquired certain assets of Coffee
Kinetics, LLC:
|
|
|
|
|
|
|
|
Accounts
receivable
|
$84,142
|
|
|
Inventory
|
269,565
|
|
|
Equipment
|
40,000
|
|
|
Customer
list
|
120,000
|
|
|
Goodwill
|
577,905
|
|
|
Less: liabilities
assumed
|
(72,044)
|
|
|
Net assets
acquired:
|
1,019,568
|
|
|
|
|
|
|
Redeemable Common
Stock
|
200,004
|
|
|
|
|
|
|
Net cash
paid
|
$819,564
|
|
-6-