FOR IMMEDIATE RELEASE
Contact: Andrew Gordon, President & CEO
Telephone: (718) 832-0800
Coffee Holding Co., Inc. Reports First Quarter Results
STATEN ISLAND, N.Y., March 17, 2010. Coffee Holding Co., Inc. (Nasdaq: JVA) today announced its operating results for the three months ended January 31, 2010. In this release, the Company:
· | Reports net income of $557,978, or $0.10 per share (basic and diluted) for the three months ended January 31, 2010; |
· | Reports net sales of $21,359,151 for the three months ended January 31, 2010; and |
· | Reports sales growth of 13.3% for the three months ended January 31, 2010 compared to the three months ended January 31, 2009. |
The Company had net income of $557,978, or $0.10 per share (basic and diluted), for the three months ended January 31, 2010 compared to net income of $391,801, or $0.07 per share (basic and diluted), for the three months ended January 31, 2009. The increase in net income primarily reflects increased net sales, which resulted in an increase in gross profit.
Net sales totaled $21,359,151 for the three months ended January 31, 2010, an increase of $2,501,281, or 13.3%, from $18,857,870 for the three months ended January 31, 2009. The increase in net sales reflects increased sales of both green coffee and private label coffee to our largest customers.
Cost of sales for the three months ended January 31, 2010 was $18,721,387, or 87.7% of net sales, as compared to $16,742,775, or 88.8%, of net sales for the three months ended January 31, 2009. The decrease in cost of sales as a percentage of net sales reflects the benefits we are beginning to realize due to our cost cutting measures as well as a more favorable green coffee inventory position. Net gains on options and futures contracts, a component of cost of sales, decreased $148,322 from $283,011 for the quarter ended January 31, 2009 to $134,689 for the quarter ended January 31, 2010.
Total operating expenses increased by $182,228, or 13.0%, to $1,588,908 for the three months ended January 31, 2010 as compared to operating expenses of $1,406,680 for the three months ended January 31, 2009. The increase in operating expenses was due to increased selling and administrative expense due mainly to increases of approximately $170,000 in contract labor expense, $30,000 in Entenmann’s setup expenses, $28,000 in freight expense, $27,000 in travel and entertainment expense, $10,000 in packaging development costs and $9,000 in advertising expense, partially offset by $60,000 in insurance expense, decreases of approximately $7,000 in payroll costs, and $8,000 in each of depreciation, security and utilities expenses. The added expenses were justified due to the high level of business during this period.
“We are pleased to begin the New Year where we left off at the end of 2009, with better earnings and a reduced cost basis," said Andrew Gordon, President and Chief Executive Officer. "We also reversed the decline in revenues experienced in the fourth quarter of 2009, as this quarter’s sales increased by $2.5 million, or 13.3% year over year.”
“We have completed the transition from our Brooklyn facility to our Colorado plant with our Ohio specialty roasting facility taking on a greater importance in our everyday business. Our new lower cost platform will allow us to enhance our margins on previously existing business as well as give us the ability to seek new business opportunities utilizing our spare capacity for customers who fit our improved business model which focuses on expanded margin and increased penetration at the individual account level. Our balance sheet is now the strongest it has been in the history of the company and we are hoping to use this strength to capitalize on market opportunities that exist in the current business climate,” Mr. Gordon added.
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, pricing, 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, 2010 AND OCTOBER 31, 2009
| | | | | | | |
| | | (unaudited) | | | | |
| - ASSETS - | |
| CURRENT ASSETS: | | | | | | |
| Cash and cash equivalents | | $ | 1,543,042 | | | $ | 1,367,933 | |
| Commodities held at broker | | | 617,530 | | | | 482,746 | |
| Accounts receivable, net of allowances of $165,078 for 2010 and 2009 | | | 9,616,508 | | | | 10,174,221 | |
| Inventories | | | 4,949,728 | | | | 4,800,143 | |
| Prepaid expenses and other current assets | | | 432,441 | | | | 419,740 | |
| Prepaid and refundable income taxes | | | 40,356 | | | | 36,068 | |
| Deferred income tax assets | | | 394,000 | | | | 286,000 | |
| TOTAL CURRENT ASSETS | | | 17,593,605 | | | | 17,566,851 | |
| Property and equipment, at cost, net of accumulated depreciation of $4,792,560 and $4,681,558 for 2010 and 2009, respectively | | | 1,618,206 | | | | 1,648,214 | |
| Deposits and other assets | | | 587,455 | | | | 588,573 | |
| TOTAL ASSETS | | $ | 19,799,266 | | | $ | 19,803,638 | |
| - LIABILITIES AND STOCKHOLDERS’ EQUITY - | |
| CURRENT LIABILITIES: | | | | | | | | |
| Accounts payable and accrued expenses | | $ | 5,414,333 | | | $ | 6,655,916 | |
| Line of credit | | | 1,424,553 | | | | 791,628 | |
| Income taxes payable | | | 401,709 | | | | 453,512 | |
| Deferred income tax liabilities | | | - | | | | 121,000 | |
| TOTAL CURRENT LIABILITIES | | | 7,240,595 | | | | 8,022,056 | |
| Deferred income tax liabilities | | | 205,000 | | | | 14,500 | |
| Deferred rent payable | | | 105,489 | | | | 99,067 | |
| Deferred compensation payable | | | 514,451 | | | | 489,782 | |
| TOTAL LIABILITIES | | | 8,065,535 | | | | 8,625,405 | |
| 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, 5,529,830 shares issued; 5,440,823 shares outstanding for 2010 and 2009 | | | 5,530 | | | | 5,530 | |
| Additional paid-in capital | | | 7,327,023 | | | | 7,327,023 | |
| Retained earnings | | | 4,653,649 | | | | 4,095,671 | |
| Less: Treasury stock, 89,007 common shares, at cost for 2010 and 2009 | | | (295,261 | ) | | | (295,261 | ) |
| Total Coffee Holding Co., Inc. Stockholders’ Equity | | | 11,690,941 | | | | 11,132,963 | |
| Noncontrolling interest | | | 42,790 | | | | 45,270 | |
| TOTAL EQUITY | | | 11,733,731 | | | | 11,178,233 | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 19,799,266 | | | $ | 19,803,638 | |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JANUARY 31, 2010 AND 2009
(UNAUDITED)
| | | | | | | |
| NET SALES | | $ | 21,359,151 | | | $ | 18,857,870 | |
| | | | | | | | | |
COST OF SALES (which includes $6.6 million and $3.4 million of related party costs in 2010 and 2009, respectively) | | | 18,721,387 | | | | 16,742,775 | |
| | | | | | | | | |
| GROSS PROFIT | | | 2,637,764 | | | | 2,115,095 | |
| | | | | | | | | |
| OPERATING EXPENSES: | | | | | | | | |
| Selling and administrative | | | 1,439,025 | | | | 1,256,831 | |
| Officers’ salaries | | | 149,849 | | | | 149,849 | |
| TOTALS | | | 1,588,908 | | | | 1,406,680 | |
| | | | | | | | | |
| INCOME FROM OPERATIONS | | | 1,048,856 | | | | 708,415 | |
| | | | | | | | | |
| OTHER INCOME (EXPENSE): | | | | | | | | |
| Interest income | | | 1,319 | | | | 2,265 | |
| Interest expense | | | (53,415 | ) | | | (40,794 | ) |
| TOTALS | | | (52,096 | ) | | | (38,529 | ) |
| | | | | | | | | |
| INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTEREST IN SUBSIDIARY | | | 996,760 | | | | 669,886 | |
| | | | | | | | | |
| Provision for income taxes | | | 441,262 | | | | 276,636 | |
| | | | | | | | | |
| NET INCOME | | | 555,498 | | | | 393,250 | |
| Less: Net loss (income) attributable to the noncontrolling interest | | | 2,480 | | | | (1,449 | ) |
| | | | | | | | | |
| NET INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | | $ | 557,978 | | | $ | 391,801 | |
| | | | | | | | | |
| Basic and diluted earnings per share attributable to Coffee Holding, Co., Inc. stockholders | | $ | .10 | | | $ | .07 | |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 5,440,823 | | | | 5,442,603 | |
| Diluted | | | 5,440,823 | | | | 5,442,603 | |
COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2010 AND 2009
(UNAUDITED)
| | | | | | | |
| OPERATING ACTIVITIES: | | | | | | |
| Net income | | $ | 555,498 | | | $ | 393,250 | |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 111,002 | | | | 141,059 | |
| Unrealized loss (gain) on commodities | | | 262,862 | | | | (130,636 | ) |
| Realized gain on commodities | | | (397,551 | ) | | | (152,375 | ) |
| Bad debt expense | | | 13,500 | | | | - | |
| Deferred rent | | | 6,422 | | | | 7,276 | |
| Deferred income taxes | | | (38,500 | ) | | | 264,500 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Commodities held at broker | | | (95 | ) | | | (150,328 | ) |
| Accounts receivable | | | 544,213 | | | | 1,042,416 | |
| Inventories | | | (149,585 | ) | | | 243,060 | |
| Prepaid expenses and other current assets | | | (12,701 | ) | | | 32,127 | |
| Prepaid and refundable income taxes | | | (4,288 | ) | | | 11,136 | |
| Accounts payable and accrued expenses | | | (1,241,583 | ) | | | (281,312 | ) |
| Deposits, other assets, and deferred compensation | | | 25,787 | | | | (28,419 | ) |
| Income taxes payable | | | (51,803 | ) | | | 1,000 | |
| Net cash (used in) provided by operating activities | | | (376,822 | ) | | | 1,392,754 | |
| | | | | | | | | |
| INVESTING ACTIVITIES: | | | | | | | | |
| Purchases of property and equipment | | | (80,994 | ) | | | (67,327 | ) |
| Net cash used in investing activities | | | (80,994 | ) | | | (67,327 | ) |
| | | | | | | | | |
| FINANCING ACTIVITIES: | | | | | | | | |
| Advances under bank line of credit | | | 22,465,558 | | | | 14,919,844 | |
| Principal payments under bank line of credit | | | (21,832,633 | ) | | | (15,359,975 | ) |
| Purchase of treasury stock | | | - | | | | (4,132 | ) |
| Net cash provided by (used in) financing activities | | | 632,925 | | | | (444,263 | ) |
| | | | | | | | | |
| | | | | | | | | |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | | | 175,109 | | | | 881,164 | |
| | | | | | | | | |
| Cash and cash equivalents, beginning of period | | | 1,367,933 | | | | 963,298 | |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 1,543,042 | | | $ | 1,844,462 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | | | | | | | | |
| Interest paid | | $ | 63,366 | | | $ | 51,879 | |
| Income taxes paid | | $ | 489,788 | | | $- _ | |
