Coffee Holding Co., Inc. Reports Results For The Three And Six Months Ended April 30, 2014
STATEN ISLAND, NY--(Marketwired - Jun 10, 2014) - Coffee Holding Co., Inc. ("Coffee Holding") (NASDAQ: JVA) today announced its operating results for the three and six months ended April 30, 2014. In this release, the Company:
- Reports an increase in gross profit of 186% for the three months ended April 30, 2014;
- Reports net sales of $52,745,098 for the six months ended April 30, 2014 and $25,398,751 for the three months ended April 30, 2014 compared to net sales of $68,004,850 for the six months ended April 30, 2013 and $36,686,047 for the three months ended April 30, 2013; and
- Reports net income of $2,632,960 for the six months ended April 30, 2014 and $1,261,220 for the three months ended April 30, 2014 compared to $542,025 for the six months ended April 30, 2013 and a net loss of $395,512 for the three months ended April 30, 2013
Results of Operations
The Company had net income of $1,261,220, or $0.20 per share basic and $0.19 per share diluted, for the three months ended April 30, 2014 compared to a net loss of $395,512, or ($0.06) per share basic and diluted, for the three months ended April 30, 2013. The increase in net income reflects increased profitability on our sales. The Company had net income of $2,632,960, or $0.41 per share basic and $0.40 diluted, for the six months ended April 30, 2014 compared to net income of $542,025, or $0.09 per share basic and $0.08 diluted, for the six months ended April 30, 2013. The increase in net income reflects increased profitability on our sales.
Net sales totaled $25,398,751 for the three months ended April 30, 2014, a decrease of $11,287,296, or 30.8%, from $36,686,047 for the three months ended April 30, 2013. The decrease in net sales primarily reflected a decrease of 20% in pounds of green coffee sold during the quarter as compared to the quarter ended April 30, 2013. We believe that the decrease in pounds sold resulted from a decrease in purchases by customers as a result of market volatility and a significant increase in coffee prices during the quarter. Net sales totaled $52,745,098 for the six months ended April 30, 2014, a decrease of $15,259,752, or 22.4%, from $68,004,850 for the six months ended April 30, 2013. The decrease in net sales primarily reflected a decrease of 5% in pounds of green coffee sold during the six month period ended April 30, 2014 as compared to the six months ended April 30, 2013. We believe that the decrease in pounds sold resulted from a decrease in purchases by customers as a result of market volatility and a significant increase in coffee prices during the quarter ended April 30, 2014.
Cost of sales for the three months ended April 30, 2014 was $21,439,484 or 84.4% of net sales, as compared to $35,301,868 or 96.2% of net sales for the three months ended April 30, 2013. The decrease in cost of sales reflects favorable inventory positions and increased coffee prices which allowed for improved margins during the quarter. Cost of sales for the six months ended April 30, 2014 was $44,667,209 or 84.7% of net sales, as compared to $62,936,854 or 92.6% of net sales for the six months ended April 30, 2013. The decrease in cost of sales reflects favorable inventory positions and increased coffee prices which allowed for improved margins during the period.
Total operating expenses decreased by $29,514, or 1.6%, to $1,864,741 for the three months ended April 30, 2014 as compared to operating expenses of $1,894,255 for the three months ended April 30, 2013. The decrease in operating expenses was due to a decrease in selling and administrative expenses of $29,514. Total operating expenses decreased by $56,202, or 1.5%, to $3,734,449 for the six months ended April 30, 2014 as compared to operating expenses of $3,790,651 for the six months ended April 30, 2013. The decrease in operating expenses was due to a decrease in selling and administrative expense of $85,365, partially offset by an increase in officers' salaries of $29,163.
"We are pleased to report that our gross profit for the three months ended April 30, 2014 increased by 186% as compared to the same quarter of 2013 as our continued efforts on margin expansion were aided by the increase in green coffee commodity prices during the recent quarter. However, these same increases had a surprisingly negative effect on revenues due to the rapid rise in the green coffee market. Although we did increase our margins, as we generally benefit from high commodity prices, many of our customers chose to reduce or curtail purchases during the quarter due to increasing uncertainty as well as the consistent increase of the commodity price during such a short period of time. We believe increased volatility in daily market conditions exacerbated this situation to further add to the unease of our customers' mindsets. Rather than keep inventory levels at normal rates, our customers drew down their inventories and adopted a hand to mouth approach rather than pay increased prices in the current market," said Andrew Gordon, President and Chief Executive Officer.
"The fact that the leading national brands held off on raising their coffee prices until this past week further impacted purchases as competitors were uncertain as to the level they could comfortably buy coffee while continuing to maintain their existing profit margins. Therefore, we also maintained our existing pricing structure on all of our private label and branded coffee products during this time which put pressure on our margins towards the end of the quarter," continued Mr. Gordon.
"Fortunately, we were able to increase prices on our wholesale green coffee sales and food service offerings, which offset margin compression on our branded and private label businesses. We believe the recent announcement by Folgers of a 9% price increase should help normalize our margins in these two areas and additionally have the effect of changing the 'buy and hold for now' mentality that has pervaded over the commercial retail roasted coffee market for the past several months. We look forward to continuing to post solid results in the upcoming quarters," concluded Mr. Gordon.
