World News: 14:00 GMT Friday 14th September 2018. [Coffee Holding Co., Inc. via Globe Newswire via SPi World News]
STATEN ISLAND, New York, Sept. 14, 2018 (GLOBE NEWSWIRE) -- Coffee Holding Co., Inc. (Nasdaq: JVA) (the “Company” or “Coffee Holding Company”) today announced its operating results for the three and nine months ended July 31, 2018.
“We are pleased to report a fifth consecutive quarter of revenue growth. Our net sales totaled approximately $23.4 million for the three month period ended July 31, 2018 versus approximately $18.0 million for the same period in the prior year. This 30.4% net sales increase includes approximately $2.8 million in sales from Steep & Brew, which was acquired by Generations Coffee Company, the entity formed as a result of our joint venture with Caruso’s Coffee, Inc. Without Steep & Brew, our growth for our organic sales was still 14.6% in the period. Our revenues would have been higher if not for the fact that the coffee market slipped to five-year lows during the reporting period. The collapse of 21% in the price of coffee had a materially depressing effect on both our revenues and profitability. The collapse in coffee prices during this period can be attributed to a number of external factors; tariff concerns, a collapse in emerging market currencies, most notably the Brazilian real and an all-time record short position built up during the period by the non-commercial funds. In fact, the short fund position amassed by the non-commercial funds is as large as the total record Brazil Arabica crop for this year. These distortions in the price of the commodity contributed to an end quarter unrealized loss on our open futures position of $528,000, or approximately $0.10 per share versus a realized gain in the prior period of $600,000, or approximately $0.11 per share. We believe that this unrealized loss is not representative of our performance during this period as the contracts which are marked to market for GAAP purposes at the end of quarter represent strong long term value for our coffee contracts. We will be using these contracts to conduct our future business and convert to finished product or sell to our wholesale green coffee customers for the balance of 2018 and the first half of 2019.
Besides pricing pressure due to the collapse in coffee prices during this quarter, we also experienced increased freight and shipping costs, as well as higher prices for our cans due to recently imposed steel tariffs. All of these factors contributed to a decrease in gross profits for the period. However, excluding the additional expenses resulting from the Steep & Brew acquisition, our operating expenses decreased by approximately $96,000. This decrease in operating expenses, during a period in which we achieved 14.6% sales growth in our organic products, exemplifies our scalable business model. As we continue to grow our revenues, we believe we will see increased profitability once green commodity and shipping costs normalize.
In addition, during this period, we extended our contract with our second largest retail customer for two years. Although we faced many challenges during this reporting period, we are pleased we were able to manage our overall costs and increase revenues for a fifth consecutive quarter. We believe once these external macro headwinds begin to mitigate, we will be able to leverage our growing business base to improve our profitability,” stated Andrew Gordon, Chief Executive Officer of the Company.
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.
Coffee Holding Co., Inc.
President & CEO
Globe Newswire: 14:00 GMT Friday 14th September 2018
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