EX-99.1 2 ex99-1.htm

 

Exhibit 99.1

 

CoffeeHoldingsCo_Inc.jpg

 

Coffee Holding Co., Inc. Reports Results for Three Months Ended January 31, 2021

 

STATEN ISLAND, New York – March 17, 2021. Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company”) today announced its operating results for the three months ended January 31, 2021:

 

Net Sales. Net sales totaled $18,133,837 for the three months ended January 31, 2021, a decrease of $1,151,664, or 6%, from $19,285,501 for the three months ended January 31, 2020. The decrease in net sales was due to the COVID-19 pandemic which caused many of the Company’s green coffee customers who service the restaurant and food service industries to either remain closed or suspend their business operations during the period resulting in lost revenues from that segment of the Company’s customer base.

 

Cost of Sales. Cost of sales for the three months ended January 31, 2021 was $13,654,169, or 75.3% of net sales, as compared to $16,170,747, or 83.8% of net sales, for the three months January 31, 2020. 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 partially offset by its favorable green coffee position and hedging.

 

Gross Profit. Gross profit for the three months ended January 31, 2021 amounted to $4,479,668 or 24.7% of net sales, as compared to $3,114,754 or 16.2% of net sales, for the three months ended January 31, 2020. The increase in gross profits was attributable to increased margins on the Company’s roasted and branded products partially due to the movement of lower cost green coffee inventory built up in previous quarters.

 

Operating Expenses. Total operating expenses decreased by $361,767 to $3,313,286 for the three months ended January 31, 2021 from $3,675,053 for the three months ended January 31, 2020. Selling and administrative expenses decreased by $344,743 and officers’ salaries decreased by $17,024. 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. These efforts were partially offset by stock compensation expense of $189,000 and the increase in the Company’s freight costs as it increased and expanded its product distribution.

 

Net Income. The Company had net income of $677,312 or $0.12 per share basic and diluted, for the three months ended January 31, 2021 compared to a net loss of $599,848, or $0.11 per share basic and diluted for the three months ended January 31, 2020. The increase in net income was due primarily to the reasons described above.

 

“We are pleased to begin the new fiscal year by reporting a big improvement in our operating results,” stated Andrew Gordon, Chief Executive Officer of Coffee Holding Co. “With last quarter’s inventory write-downs from our Generations/Steep & Brew subsidiary behind us, we were able to earn net income of $677,312, or $0.12 a share, as our profit margins improved substantially compared to last quarter. Adjusted EBITDA was $1,443,183 in the current quarter. With the price of green coffee at three year highs, we are no longer experiencing the downward pricing pressure of the previous three years which saw coffee prices languish below a $1 per pound for extended periods of time,” continued Mr. Gordon. “Those low commodity prices had a negative impact on the margins of our sales of green unroasted beans as well as forcing us to discount prices of our private label and branded products to remain competitive in a low priced national retail coffee environment.

 

 
 

 

“In addition, during the first quarter of 2021, we also reduced our operating expenses by approximately 10% as our past efforts to control costs had a positive impact on our operations during the quarter. We also were able to absorb the stock option compensation expense of $189,000 incurred during this quarter, and with only two quarters of expenses remaining, we are two thirds of the way home to eliminating this expense which resulted from our previous grant of stock options under our option plan,” said Mr. Gordon.

 

“Although sales decreased by approximately 6% compared to the first quarter of last year, we believe that as businesses continue to reopen, and the new customers we were able to attract over the last several months, we will begin to see a return of positive quarter over quarter revenue growth.

 

“Lastly, we have nearly completed our initial testing of our CBD infused single serve cups and are hopeful that we will be able to begin offering these for sale to our customers during the second calendar quarter of 2021,” 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 Gordon

President & CEO

718-832-0800

 

 
 

 

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2021 AND OCTOBER 31, 2020

 

   January 31, 2021   October 31, 2020 
   (Unaudited)     
- ASSETS -          
CURRENT ASSETS:          
Cash  $2,728,781   $2,875,120 
Accounts receivable, net of allowances of $144,000 for 2021 and 2020   7,808,453    7,408,905 
Inventories   15,699,299    17,102,993 
Prepaid expenses and other current assets   509,654    490,246 
Prepaid and refundable income taxes   60,191    145,305 
TOTAL CURRENT ASSETS   26,806,378    28,022,569 
           
Machinery and equipment, at cost, net of accumulated depreciation of $7,763,417 and $7,610,864 for 2021 and 2020, respectively   2,110,917    2,197,319 
Customer list and relationships, net of accumulated amortization of $205,067 and $194,379 for 2021 and 2020, respectively   479,933    490,621 
Trademarks and tradenames   1,488,000    1,488,000 
Non-compete, net of accumulated amortization of $54,450 and $49,500 for 2021 and 2020, respectively   44,550    49,500 
Goodwill   2,488,785    2,488,785 
Equity method investments   558,807    561,405 
Deferred income tax asset   664,276    782,175 
Right of Use Asset   2,001,641    2,114,228 
Deposits and other assets   275,097    285,548 
TOTAL ASSETS  $36,918,384   $38,480,150 
           
- LIABILITIES AND STOCKHOLDERS’ EQUITY -          
CURRENT LIABILITIES:          
Accounts payable and accrued expenses  $3,745,026   $3,036,097 
Lease liability – current portion   360,119    484,163 
Note payable – current portion   3,829    5,075 
Due to broker   37,250    452,325 
Income taxes payable   120,782    5,371 
TOTAL CURRENT LIABILITIES   4,267,006    3,983,031 
           
Deferred income tax liabilities   945,332    882,582 
Line of credit   952,732    3,796,822 
Lease liability   1,780,306    1,780,306 
Note payable – long term   17,292    17,292 
Deferred compensation payable   266,097    276,548 
TOTAL LIABILITIES   8,228,765    10,736,581 
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 2021 and 2020; 5,708,599 shares outstanding for 2021 and 2020   6,634    6,634 
Additional paid-in capital   18,119,492    17,929,724 
Retained earnings   13,893,180    13,215,868 
Less: Treasury stock, 925,331 common shares, at cost for 2021 and 2020   (4,633,560)   (4,633,560)
Total Coffee Holding Co., Inc. Stockholders’ Equity   27,385,746    26,518,666 
Noncontrolling interest   1,303,873    1,224,903 
TOTAL EQUITY   28,689,619    27,743,569 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $36,918,384   $38,480,150 

 

 
 

 

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JANUARY 31, 2021 AND 2020

(Unaudited)

 

   2021   2020 
NET SALES  $18,133,837   $19,285,501 
           
COST OF SALES (which includes purchases of approximately $0.7 million and $1.3 million in fiscal years 2021 and 2020, respectively, from a related party)   13,654,169    16,170,747 
           
GROSS PROFIT   4,479,668    3,114,754 
           
OPERATING EXPENSES:          
Selling and administrative   3,160,060    3,504,803 
Officers’ salaries   153,226    170,250 
TOTAL   3,313,286    3,675,053 
           
INCOME (LOSS) FROM OPERATIONS   1,166,382    (560,299)
           
OTHER INCOME (EXPENSE):          
Interest income   410    744 
Loss from equity method investments   (2,598)   (1,311)
Interest expense   (26,669)   (55,734)
TOTAL   (28,857)   (56,301)
           
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY   1,137,525    (616,600)
           
Provision (benefit) for income taxes   381,243    (65,416)
           
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY   756,282    (551,184)
Less: Net income attributable to the non-controlling interest in subsidiary   (78,970)   (48,664)
           
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC.  $677,312   $(599,848)
           
Basic and diluted earnings (loss) earnings per share  $.12   $(.11)
           
Weighted average common shares outstanding:          
Basic and diluted   5,708,599    5,569,349 

 

 
 

 

COFFEE HOLDING CO., INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED JANUARY 31, 2021 AND 2020

(Unaudited)

 

   2021   2020 
OPERATING ACTIVITIES:          
           
Net income (loss)  $756,282   $(551,184)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization   168,191    187,793 
Stock-based compensation   189,768    248,031 
Unrealized (gain) loss on commodities   (415,075)   985,837 
Loss on equity method investments   2,598    1,311 
Amortization of right to use asset   112,587    106,961 
Change in lease liability   (124,044)   (117,468)
Deferred income taxes   180,649    (213,102)
Changes in operating assets and liabilities:          
Accounts receivable   (399,548)   811,251 
Inventories   1,403,694    785,372 
Prepaid expenses and other current assets   (19,408)   (26,258)
Prepaid and refundable income taxes   85,114    138,033 
Accounts payable and accrued expenses   708,929    (636,344)
Income taxes payable   115,411    217 
Net cash provided by operating activities   2,765,148    1,720,450 
           
INVESTING ACTIVITIES:          
Purchases of machinery and equipment   (66,151)   (71,974)
Net cash used in investing activities   (66,151)   (71,974)
           
FINANCING ACTIVITIES:          
Advances under bank line of credit   910    600,100 
Principal payments on note payable   (1,246)     
Principal payments under bank line of credit   (2,845,000)   (1,900,000)
Net cash used in financing activities   (2,845,336)   (1,299,900)
           
NET (DECREASE) INCREASE IN CASH   (146,339)   348,576 
           
CASH, BEGINNING OF PERIOD   2,875,120    2,402,556 
           
CASH, END OF PERIOD  $2,728,781   $2,751,132 

 

 
 

 

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, Earnings Before Interest, Income taxes (benefits), Depreciation and Amortization adjusted for stock compensation expense (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)  $677,312 
Add back:
Interest expense		   26,669 
Income tax   381,243 
Depreciation and amortization   168,191 
Stock compensation   189,768 
Total adjusted EBITDA  $1,443,183