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

Staten Island, New York, UNITED STATES


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