STATEN ISLAND, NY--(Marketwired - Sep 14, 2016) - Coffee Holding Co., Inc. announced its operating results for the three and nine months ended July 31, 2016:
Net sales totaled $17,354,533 for the three months ended July 31, 2016, a decrease of $9,685,324, or 35.8%, from $27,039,857 for the three months ended July 31, 2015. The decrease in net sales reflects reduced wholesale transactions with our largest wholesale green coffee customer during the quarter of approximately $9,379,000.
Cost of sales for the three months ended July 31, 2016 was $14,203,343, or 81.9% of net sales, as compared to $24,991,366, or 92.5% of net sales, for the three months ended July 31, 2015. 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 reflects a more favorable inventory position during the quarter and reduced wholesale transactions with our largest wholesale green coffee customer.
Gross profit for the three months ended July 31, 2016 was $3,151,190, an increase of $1,102,699 from $2,048,491 for the three months ended July 31, 2015. Gross profit as a percentage of net sales increased to 18.1% for the three months ended July 31, 2016 from 7.5% for the three months ended July 31, 2015. The increase in gross profits was due to improved margins on our wholesale and roasted business as well as a decrease in our losses quarter to quarter on our hedging operations.
Total operating expenses decreased by $18,785 to $1,868,223 for the three months ended July 31, 2016 from $1,887,008 for the three months ended July 31, 2015. The decrease was primarily the result of a decrease of $18,785 to $1,704,373 in selling and administrative expenses for the three months ended July 31, 2016 from $1,723,158 for the three months ended July 31, 2015.
The Company had net income of $755,518 or $0.12 per share basic and diluted, for the three months ended July 31, 2016 compared to net income of $139,162, or $0.02 per share basic and diluted for the three months ended July 31, 2015. The increase in net income was due primarily to the reasons described above.
"I'm pleased to report another solid quarter to our shareholders as we earned $0.12 per share for the quarter ended July 31, 2016 versus $0.02 per share for last year's corresponding quarter. The second half of the quarter saw positive developments for the green coffee market as prices continued to rise from previous lows. These higher prices have translated into improved margins on our sales of specialty green coffee as we are able to take advantage of our favorable inventory position. This trend continues into the fourth quarter as the market is currently trading at highest level since February of 2015 and we believe this trend will be sustainable for the foreseeable future. Also, during the quarter, we completed our acquisition of the assets of Coffee Kinetics LLC, doing business as Sonofresco, a seller of electrical table top roasters and specialty green coffee. Sonofresco's financial results from the month of July are reflected in this quarter's results and going forward, will be fully integrated in our consolidated financial statements. The Sonofresco acquisition has already been accretive to both top and bottom line results and the effects of a higher green coffee market will assist in meeting our positive expectations," commented Andrew Gordon, the Company's President and Chief Executive Officer.
"As previously announced, we are excited about the rollout of our Café Caribe flagship brand, a popular Spanish style espresso roast coffee, in approximately 900 Food Lion grocery stores and our new business developments with Smart&Final and Wal-Mart. Food Lion is a prominent food retailer located in areas where we previously had limited distribution of Café Caribe and we are excited about the opportunity for expansion into this market. While we have not yet seen the impact of our Smart&Final and Wal-Mart partnerships on our financial statements as these took place late in the quarter, we look forward to these results in upcoming quarters.
"We remain upbeat that going forward we will begin to rebuild top line revenue growth in conjunction with our improved bottom line results by continuing our aggressive approach to seeking new business opportunities and sustaining our margins on both current and new business," concluded Mr. Gordon. Full report.
