Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today
announced its operating results for the fiscal quarter ended
January 31, 2022:
Net Sales. Net sales totaled
$16,704,860 for the three months ended January 31, 2022, a decrease
of $1,428,977, or 7.9%, from $18,133,837 for the three months ended
January 31, 2021. The decrease in net sales was due to an
approximately $1,323,000 decline in sales from the Company’s
Generations/Steep N Brew subsidiary due to loss of customers.
Cost of Sales. Cost of sales
for the three months ended January 31, 2022 was $12,433,252, or
74.4% of net sales, as compared to $13,654,169, or 75.3% of net
sales, for the three months January 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 decrease in cost of sales was due to the Company’s
decreased sales.
Gross Profit. Gross profit for
the three months ended January 31, 2022 amounted to $4,271,608 or
25.6% of net sales, as compared to $4,479,668 or 24.7% of net
sales, for the three months ended January 31, 2021. The increase in
gross profits on a percentage basis was attributable to the factors
listed above.
Operating Expenses. Total
operating expenses increased by $407,592 to $3,720,878 for the
three months ended January 31, 2022 from $3,313,286 for the three
months ended January 31, 2021. Selling and administrative expenses
increased by $409,680 and officers’ salaries decreased by $2,088.
Operating expenses increased primarily due to increases of
approximately $213,000 in professional fees, $55,000 in freight
costs and $139,000 in labor costs, partially offset by decreases in
various other operating expense categories.
“We recorded a profit of $0.05 per share in the
first quarter of 2022 compared to a profit of $0.12 per share in
the first quarter of 2021. Although our gross profit margin
increased from 24.7% to 25.6% compared to last year, the increase
in our operating expenses amounted to an additional $0.07 per
share, as inflationary headwinds had a negative effect on the
company’s performance for the quarter. Although our gross profit
margins were healthy by our historical standards, increases in
freight, labor and the cost of steel prevented additional margin
expansion during the three months ended January 31, 2022. Further,
higher legal expenses of approximately $213,000 incurred during the
quarter as a result of ongoing class action lawsuits negatively
affected our results. Adjusted EBITDA for the quarter was
approximately $804,000, including a non-cash charge of
approximately $190,000 relating to our stock option plan.
Fortunately, we expect these expenses will be lower in both our
second and third quarters, amounting to $172,000 and $42,000,
respectively, before being completely expensed prior to the start
of our fourth fiscal quarter of 2022,” said Andrew Gordon,
President and CEO of Coffee Holding Company.
“The decrease in our net sales was entirely due
to the continued loss of customers from our Steep N Brew subsidiary
while sales in our private label and branded coffee products in the
legacy Coffee Holding division were steady compared to the first
quarter of fiscal 2021, as sales to existing and new customers
remained strong at the grocery channel level. However, sales of
green coffee to smaller and medium size roasters declined during
the period as many of our smaller roaster customers cut back on
purchases and chose to purchase green coffee on a ‘hand-to-cup’, or
as-needed, basis due to the elevated prices of green coffee
compared to the prices in fiscal 2021,” continued Andrew
Gordon.
“Overall, our business does remain strong
despite of the current inflationary environment and we believe our
sales, along with our profit margins will continue to improve
throughout fiscal 2022,” 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 the revenue growth and the
Company’s outlook on the launch of CBD-infused coffee and
functional beverages. 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, 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 GordonPresident &
CEO718-832-0800
COFFEE HOLDING CO.,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETSJANUARY 31, 2022 AND OCTOBER 31,
2021
|
|
January 31, 2022 |
|
|
October 31, 2021 |
|
|
|
(Unaudited) |
|
|
|
|
- ASSETS - |
|
|
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,016,775 |
|
|
$ |
3,696,275 |
|
Accounts receivable, net of allowances of $144,000 for 2021 and
2020 |
|
|
8,542,166 |
|
|
|
9,299,978 |
|
Inventories |
|
|
16,816,240 |
|
|
|
15,961,866 |
|
Due from broker |
|
|
581,381 |
|
|
|
725,000 |
|
Prepaid expenses and other current assets |
|
|
649,293 |
|
|
|
542,224 |
|
Prepaid and refundable income taxes |
|
|
72,202 |
|
|
|
75,952 |
|
TOTAL CURRENT ASSETS |
|
|
30,678,057 |
|
|
|
30,301,295 |
|
|
|
|
|
|
|
|
|
|
Building machinery and
equipment, net |
|
|
2,567,236 |
|
|
|
2,662,628 |
|
Customer list and
relationships, net of accumulated amortization of $247,819 and
$237,131 for 2022 and 2021, respectively |
|
|
437,181 |
|
|
|
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 |
|
|
370,519 |
|
|
|
402,245 |
|
Investment - other |
|
|
2,500,000 |
|
|
|
2,500,000 |
|
Deferred income tax asset -
net |
|
|
93,186 |
|
|
|
77,394 |
|
Right of Use Asset |
|
|
3,443,105 |
|
|
|
3,545,786 |
|
Deposits and other assets |
|
|
508,086 |
|
|
|
449,225 |
|
TOTAL ASSETS |
|
$ |
43,518,905 |
|
|
$ |
43,312,927 |
|
|
|
|
|
|
|
|
|
|
- LIABILITIES AND STOCKHOLDERS’ EQUITY
- |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
3,150,300 |
|
|
$ |
5,047,640 |
|
Line of credit – current portion |
|
|
5,400,850 |
|
|
|
3,800,850 |
|
Due to broker |
|
|
631,469 |
|
|
|
708,321 |
|
Note payable – current portion |
|
|
4,200 |
|
|
|
4,200 |
|
Lease liability – current portion |
|
|
311,475 |
|
|
|
340,400 |
|
Dividend payable |
|
|
399,000 |
|
|
|
- |
|
Income taxes payable |
|
|
564,599 |
|
|
|
416,449 |
|
TOTAL CURRENT LIABILITIES |
|
|
10,461,893 |
|
|
|
10,317,860 |
|
|
|
|
|
|
|
|
|
|
Lease liabilities |
|
|
3,239,638 |
|
|
|
3,299,784 |
|
Note payable – long term |
|
|
11,785 |
|
|
|
13,092 |
|
Deferred compensation
payable |
|
|
301,976 |
|
|
|
311,872 |
|
TOTAL LIABILITIES |
|
|
14,015,292 |
|
|
|
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 for 2022 and 2021; 5,708,599
shares outstanding for 2022 and 2021 |
|
|
6,634 |
|
|
|
6,634 |
|
Additional paid-in capital |
|
|
18,878,565 |
|
|
|
18,688,797 |
|
Retained earnings |
|
|
14,353,085 |
|
|
|
14,471,222 |
|
Less: Treasury stock, 925,331 common shares, at cost for 2022 and
2021 |
|
|
(4,633,560 |
) |
|
|
(4,633,560 |
) |
Total Coffee Holding Co., Inc. Stockholders’ Equity |
|
|
28,604,724 |
|
|
|
28,533,093 |
|
Noncontrolling interest |
|
|
898,889 |
|
|
|
837,226 |
|
TOTAL EQUITY |
|
|
29,503,613 |
|
|
|
29,370,319 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
43,518,905 |
|
|
$ |
43,312,927 |
|
COFFEE HOLDING CO.,
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONSTHREE MONTHS ENDED
JANUARY 31, 2022 AND 2021(Unaudited)
|
|
2022 |
|
|
2021 |
|
NET
SALES |
|
$ |
16,704,860 |
|
|
$ |
18,133,837 |
|
|
|
|
|
|
|
|
|
|
COST OF SALES (which
includes purchases of approximately $1.2 million and $0.7 million
in fiscal years 2022 and 2021, respectively, from
a related party) |
|
|
12,433,252 |
|
|
|
13,654,169 |
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
|
4,271,608 |
|
|
|
4,479,668 |
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
3,569,740 |
|
|
|
3,160,060 |
|
Officers’ salaries |
|
|
151,138 |
|
|
|
153,226 |
|
TOTAL |
|
|
3,720,878 |
|
|
|
3,313,286 |
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS |
|
|
550,730 |
|
|
|
1,166,382 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE): |
|
|
|
|
|
|
|
|
Interest income |
|
|
1,537 |
|
|
|
410 |
|
Loss from equity method investments |
|
|
(31,725 |
) |
|
|
(2,598 |
) |
Interest expense |
|
|
(40,610 |
) |
|
|
(26,669 |
) |
TOTAL |
|
|
(70,798 |
) |
|
|
(28,857 |
) |
|
|
|
|
|
|
|
|
|
INCOME BEFORE
PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN
SUBSIDIARY |
|
|
479,932 |
|
|
|
1,137,525 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
137,406 |
|
|
|
381,243 |
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE
NON-CONTROLLING INTEREST IN SUBSIDIARY |
|
|
342,526 |
|
|
|
756,282 |
|
Less: Net income attributable to the non-controlling interest in
subsidiary |
|
|
(61,663 |
) |
|
|
(78,970 |
) |
|
|
|
|
|
|
|
|
|
NET INCOME
ATTRIBUTABLE TO COFFEE HOLDING CO., INC. |
|
$ |
280,863 |
|
|
$ |
677,312 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings
earnings per share |
|
$ |
.05 |
|
|
$ |
.12 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
5,708,599 |
|
|
|
5,708,599 |
|
COFFEE HOLDING CO.,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWSTHREE MONTHS ENDED JANUARY 31, 2022 AND
2021(Unaudited)
|
|
2022 |
|
|
2021 |
|
OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
342,526 |
|
|
$ |
756,282 |
|
Adjustments to reconcile net income to net cash (used in) provided
by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
155,759 |
|
|
|
168,191 |
|
Stock-based compensation |
|
|
189,768 |
|
|
|
189,768 |
|
Unrealized loss (gain) on commodities |
|
|
66,767 |
|
|
|
(415,075 |
) |
Loss on equity method investments |
|
|
31,726 |
|
|
|
2,598 |
|
Amortization of right to use asset |
|
|
102,681 |
|
|
|
112,587 |
|
Deferred income taxes |
|
|
(15,792 |
) |
|
|
180,649 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
757,812 |
|
|
|
(399,548 |
) |
Inventories |
|
|
(854,374 |
) |
|
|
1,403,694 |
|
Prepaid expenses and other current assets |
|
|
(107,069 |
) |
|
|
(19,408 |
) |
Prepaid and refundable income taxes |
|
|
3,750 |
|
|
|
85,114 |
|
Lease liability |
|
|
(89,071 |
) |
|
|
(124,044 |
) |
Deposits and other assets |
|
|
(68,757 |
) |
|
|
- |
|
Accounts payable and accrued expenses |
|
|
(1,897,340 |
) |
|
|
708,929 |
|
Income taxes payable |
|
|
148,150 |
|
|
|
115,411 |
|
Net cash (used in) provided by operating
activities |
|
|
(1,233,464 |
) |
|
|
2,765,148 |
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of machinery and equipment |
|
|
(44,729 |
) |
|
|
(66,151 |
) |
Net cash used in investing activities |
|
|
(44,729 |
) |
|
|
(66,151 |
) |
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Advances under bank line of credit |
|
|
1,600,000 |
|
|
|
910 |
|
Principal payments on note payable |
|
|
(1,307 |
) |
|
|
(1,246 |
) |
Principal payments under bank line of credit |
|
|
- |
|
|
|
(2,845,000 |
) |
Net cash provided by (used in) financing
activities |
|
|
1,598,693 |
|
|
|
(2,845,336 |
) |
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH |
|
|
320,500 |
|
|
|
(146,339 |
) |
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF
PERIOD |
|
|
3,696,275 |
|
|
|
2,875,120 |
|
|
|
|
|
|
|
|
|
|
CASH, END OF
PERIOD |
|
$ |
4,016,775 |
|
|
$ |
2,728,781 |
|
|
|
2022 |
|
|
2021 |
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW DATA: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
36,853 |
|
|
$ |
31,406 |
|
Income taxes paid |
|
$ |
1,298 |
|
|
$ |
69 |
|
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE
To supplement Coffee Holding’s consolidated
financial statements presented in accordance with U.S. GAAP, Coffee
Holding uses a non-GAAP measure, Adjusted Earnings Before Interest,
Income Taxes (benefits), Depreciation and Amortization (Adjusted
EBITDA). This non-GAAP measure is provided to enhance overall
understanding of Coffee Holding’s current financial performance.
Reconciliation of the nearest GAAP measure to Adjusted EBITDA
follows:
Net income (GAAP measure) |
|
$ |
280,863 |
|
Addback: Interest expense |
|
|
40,610 |
|
Income tax provision |
|
|
137,406 |
|
Depreciation and amortization |
|
|
155,759 |
|
Stock compensation |
|
|
189,768 |
|
Total adjusted EBITDA |
|
$ |
804,406 |
|
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