STATEN ISLAND, New York, June 15, 2020 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today announced its operating results for the three months and six months ended April 30, 2020:

Net sales Net sales totaled $20,095,876 for the three months ended April 30, 2020, a decrease of $620,615, or 3.0%, from $20,716,491 for the three months ended April 30, 2019. Net sales totaled $39,381,377 for the six months ended April 30, 2020, a decrease of $4,968,922, or 11.2%, from $44,350,299 for the six months ended April 30, 2019. The decrease in net sales was due to lower sales of green coffee during the six months as customers slowed purchases due to the volatility in the green coffee market. Additionally, the COVID-19 pandemic caused many of the Company’s café, restaurant and food service customers to either close or suspend their business operations during the period resulting in lost revenues from that segment of its customer base.

Cost of sales Cost of sales for the three months ended April 30, 2020 was $15,589,450, or 77.6% of net sales, as compared to $17,174,825, or 82.9% of net sales, for the three months April 30, 2019. Cost of sales for the six months ended April 30, 2020 was $31,760,285, or 80.6% of net sales, as compared to $36,239,592, or 81.7% of net sales, for the six months April 30, 2019. The decrease in cost of sales was due to the Company’s decreased sales partially offset by the unrealized losses on its options and futures hedges.

Gross profit Gross profit for the three months ended April 30, 2020 amounted to $4,506,426 or 22.4% of net sales, as compared to $3,541,666 or 17.1% of net sales, for the three months ended April 30, 2019. Gross profit for the six months ended April 30, 2020 amounted to $7,621,092 or 19.4% of net sales, as compared to $8,110,707 or 18.3% of net sales, for the six months ended April 30, 2019. The increase in gross profits as a percentage of sales is attributable to a change in the Company’s product mix where it sold a higher percentage of branded and private label roasted coffee for the six months combined with an improvement in the Company’s hedging operations as compared to 2019.

Total operating expenses Total operating expenses decreased by $21,531 to $3,612,877 for the three months ended April 30, 2020 from $3,634,408 for the three months ended April 30, 2019. Selling and administrative expenses decreased by $21,531 and officers’ salaries remained constant. Total operating expenses decreased by $225,573 to $7,287,842 for the six months ended April 30, 2020 from $7,513,415 for the six months ended April 30, 2019. The Company’s efforts to control costs through the elimination of redundancy in its operations and the elimination of certain unnecessary variable costs were the primary reasons for this decrease.

The Company had a net income of $498,518 or $0.09 per share basic and diluted, for the three months ended April 30, 2020 compared to a net loss of $238,468, or $0.04 per share basic and diluted for the three months ended April 30, 2019. The Company had a net loss of $101,330 or $0.02 per share basic and diluted, for the six months ended April 30, 2020 compared to net income of $76,247, or $0.01 per share basic and diluted for the six months ended April 30, 2019. The decrease in net income was due primarily to the reasons described above.

“Despite the significant turmoil in the markets and economy as a whole, we are pleased to report a profit of $0.09 a share for the quarter ended April 30, 2020. We were able to maintain sales volumes despite the impact of nation-wide shutdowns and stay-at-home orders due to the COVID-19 pandemic. Many of our customers who purchase green coffee from us for their food service, café and restaurant roasting, were forced to significantly curtail, or close altogether, their operations at various times during the quarter. These closures forced our customers to cease all purchases from us. However, the revenue we lost from our food service, café and restaurant customers was offset by increased sales of our branded and private label products to large wholesalers and retailers across the U.S. Because of this offsetting increase, sales were only down by 3% compared to the second quarter of 2019, even as green coffee prices were 10% lower this quarter. We continue to be negatively impacted by the change in the relationship of Steep & Brew’s largest customer from a vendor relationship to a brokerage relationship, which accounted for a decline of $1.3 million in revenue during the first quarter of 2020 and $1.1 million in revenue during the current quarter. The effect of this change in relationship resulted in a change of the characterization of these transactions on our income statement from sales to a brokerage transaction, which ultimately had no net effect on our profits during the quarter,” stated Andrew Gordon, President and CEO of Coffee Holding Co., Inc.

“I thought it was a positive quarter overall,” continued Mr. Gordon. “The COVID-19 pandemic did hurt our overall sales, but as part of an essential industry, our factories continued to operate. Fortunately, we did not have to terminate employees during this period and I am proud to say all of our employees received full pay throughout this period. I believe it is a testament to our business model that we did not have to rely on any government funded programs to do so,” stated Mr. Gordon. “In addition, our profitability was once again negatively impacted on a non-cash basis by $241,000 or $0.04 a share due to the cost of our employee stock option plan which is still being amortized, but only for one more additional quarter.

“Lastly, this was the first quarter in over two years that all of our subsidiary companies contributed to the overall profitability of the parent company and I am confident that the changes we implemented over the past year will now keep this trend intact into future quarters,” 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 at Steep N Brew and Comfort Foods. 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 the COVID-19 pandemic, 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
APRIL 30, 2020 AND OCTOBER 31, 2019

  April 30, 2020  October 31, 2019 
  (Unaudited)    
- ASSETS -        
CURRENT ASSETS:        
Cash $2,647,456  $2,402,556 
Accounts receivable, net of allowances of $144,000 for 2020 and 2019  9,249,966   9,421,427 
Inventories  18,366,782   18,841,225 
Due from broker  -   101,031 
Prepaid expenses and other current assets  516,478   587,626 
Prepaid and refundable income taxes  222,676   385,934 
TOTAL CURRENT ASSETS  31,003,358   31,739,799 
         
Machinery and equipment, at cost, net of accumulated depreciation of $7,279,571 and $6,931,913 for 2020 and 2019, respectively  2,225,649   2,413,533 
Customer list and relationships, net of accumulated amortization of $173,003 and $151,627 for 2020 and 2019, respectively  511,997   533,373 
Trademarks and tradenames  1,488,000   1,488,000 
Non-compete, net of accumulated amortization of $39,600 and $29,700 for 2020 and 2019, respectively  59,400   69,300 
Goodwill  2,488,785   2,488,785 
Equity method investments  83,016   86,008 
Deferred income tax asset  523,725   480,473 
Right of use asset  2,296,687     
Deposits and other assets  317,082   387,453 
TOTAL ASSETS $40,997,699  $39,686,724 
         
- LIABILITIES AND STOCKHOLDERS’ EQUITY -        
CURRENT LIABILITIES:        
Accounts payable and accrued expenses $4,687,344  $4,344,015 
Line of credit  5,108,872   7,167,740 
Note payable – current portion  4,440   - 
Lease liability – current portion  476,754   - 
Due to broker  217,905   - 
Income taxes payable  317   100 
TOTAL CURRENT LIABILITIES  10,495,632   11,511,855 
         
Deferred income tax liabilities  823,682   872,232 
Deferred rent payable      193,461 
Lease liability  1,992,123   - 
Note payable – long term  20,372   - 
Deferred compensation payable  308,082   378,453 
TOTAL LIABILITIES  13,639,891   12,956,001 
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 shares issued; 5,569,349 shares outstanding for 2020 and 2019, respectively  6,494   6,494 
Additional paid-in capital  17,069,914   16,580,974 
Retained earnings  13,208,839   13,310,169 
Less: Treasury stock, 925,331 common shares, at cost for 2020 and 2019, respectively  (4,633,560)  (4,633,560)
Total Coffee Holding Co., Inc. Stockholders’ Equity  25,651,687   25,264,077 
Noncontrolling interest  1,706,121   1,466,646 
TOTAL EQUITY  27,357,808   26,730,723 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $40,997,699  $39,686,724 

COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX AND THREE MONTHS ENDED APRIL 30, 2020 AND 2019
(Unaudited)

  Six Months Ended
April 30,
  Three Months Ended
April 30,
 
  2020  2019  2020  2019 
NET SALES $39,381,377  $44,350,299  $20,095,876  $20,716,491 
                 
COST OF SALES (including $3.0 and $4.1 million of related party costs for the six months ended April 30, 2020 and 2019, respectively. Including $1.7 and $2.3 million for the three months ended April 30, 2020 and 2019, respectively.)  31,760,285   36,239,592   15,589,450   17,174,825 
                 
GROSS PROFIT  7,621,092   8,110,707   4,506,426   3,541,666 
                 
OPERATING EXPENSES:                
Selling and administrative  6,960,438   7,152,915   3,455,723   3,477,254 
Officers’ salaries  327,404   360,500   157,154   157,154 
TOTAL  7,287,842   7,513,415   3,612,877   3,634,408 
                 
INCOME (LOSS) FROM OPERATIONS  333,250   597,292   893,549   (92,742)
                 
OTHER INCOME (EXPENSE)                
Interest income  2,696   5,353   1,952   3,565 
Loss from equity method investment  (2,991)  (78)  (1,680)  (184)
Interest expense  (105,459)  (130,331)  (49,725)  (64,091)
TOTAL  (105,754)  (125,056)  (49,453)  (60,710)
                 
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY  227,496   472,236   844,096   (153,452)
                 
Provision (benefit) for income taxes  89,351   81,130   154,767   (44,790)
                 
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY  138,145   391,106   689,329   (108,662)
Less: Net (income) attributable to the non-controlling interest  (239,475)  (314,859)  (190,811)  (129,806)
                 
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. $(101,330) $76,247  $498,518  $(238,468)
                 
Basic and diluted (loss) earnings per share $(.02) $.01  $.09  $(.04)
                 
Weighted average common shares outstanding:                
Basic and diluted  5,569,349   5,569,349   5,569,349   5,569,349 

COFFEE HOLDING CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED APRIL 30, 2020 AND 2019
(Unaudited)

  2020  2019 
OPERATING ACTIVITIES:        
         
Net income $138,145  $391,106 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  378,934   360,940 
Stock-based compensation  488,940   25,000 
Unrealized loss on commodities  318,936   604,388 
Loss on equity method investments  2,991   78 
Deferred rent  -   (24,101)
Amortization of right to use asset  215,335   - 
Deferred income taxes  (91,802)  (114,038)
Changes in operating assets and liabilities:        
Accounts receivable  171,461   1,173,057 
Inventories  474,443   (1,143,369)
Prepaid expenses and other current assets  71,148   68,526 
Prepaid and refundable income taxes  163,258   152,691 
Accounts payable and accrued expenses  343,330   (1,937,413)
Change in lease liability  (236,607)  - 
Deposits and other assets      (168,914)
Income taxes payable  217   13,609 
Net cash provided by (used in) operating activities  2,438,729   (598,440)
         
INVESTING ACTIVITIES:        
Purchases of machinery and equipment  (132,967)  (286,721)
Net cash used in investing activities  (132,967)  (286,721)
         
FINANCING ACTIVITIES:        
Advances under bank line of credit  641,132   7,526 
Principal payment on note payable  (1,994)  (70,255)
Principal payments under bank line of credit  (2,700,000)  (500,000)
Net cash used in financing activities  (2,060,862)  (562,729)
         
NET INCREASE (DECREASE) IN CASH  244,900   (1,447,890)
         
CASH, BEGINNING OF PERIOD  2,402,556   4,611,384 
         
CASH, END OF PERIOD $2,647,456  $3,163,494 


  2020  2019 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:        
Interest paid $113,647  $131,901 
Income taxes paid $17,678  $28,868 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
         
Initial recognition of operating lease right of use asset $2,512,022     
Initial recognition of operating lease liabilities $2,705,484     
         
Machinery and equipment acquired through financing $26,807