STATEN ISLAND, New York, June 07, 2018 -- Coffee Holding Co., Inc. announced its operating results for the three and six months ended April 30, 2018.
Net Sales. Net sales totaled $22,193,898 for the three months ended April 30, 2018, an increase of $4,406,795, or 24.8%, from $17,787,103 for the three months ended April 30, 2017. Net sales totaled $44,277,116 for the six months ended April 30, 2018, an increase of $6,857,647, or 18.3%, from $37,419,469 for the six months ended April 30, 2017. The increase in net sales reflects the Company’s increased sales of branded and private label coffee and wholesale green beans to both new and existing customers.
Cost of Sales. Cost of sales for the three months ended April 30, 2018 was $18,326,914, or 82.6% of net sales, as compared to $15,144,534, or 85.1% of net sales, for the three months April 30, 2017. Cost of sales for the six months ended April 30, 2018 was $36,614,421, or 82.7% of net sales, as compared to $31,645,614, or 84.6% of net sales, for the six months April 30, 2017. The increase in cost of sales reflects the change in the product mix and the inclusion of results of the Company’s subsidiary CFI which results were partially included for the six months ended April 30, 2017.
Gross Profit. Gross profit for the three months ended April 30 2018 was $3,866,984, an increase of $1,224,415 from $2,642,569 for the three months ended April 30, 2017. Gross profit as a percentage of net sales increased to 17.4% for the three months ended April 30, 2018 from 14.9% for the three months ended April 30, 2017. Gross profit for the six months ended April 30 2018 was $7,662,695, an increase of $1,888,840 from $5,773,855 for the six months ended April 30, 2017. Gross profit as a percentage of net sales increased to 17.3% for the six months ended April 30, 2018 from 15.4% for the six months ended April 30, 2017. The increase in gross profits resulted from improved margins on the Company’s wholesale and roasted business.
Operating Expenses. Total operating expenses increased by $458,853 to $3,003,498 for the three months ended April 30, 2018 from $2,544,645 for the three months ended April 30, 2017. These increases are all the result of the Company’s reinvestment in the Company’s growth and expansion strategy. Total operating expenses increased by $847,063 to $5,910,582 for the six months ended April 30, 2018 from $5,063,519 for the six months ended April 30, 2017.
Net Income. The Company had net income of $510,849 or $0.09 per share basic and diluted, for the three months ended April 30, 2018 compared to net income of $1,737, or $0.00 per share basic and diluted for the three months ended April 30, 2017. The increase in net income was due primarily to the reasons described above. The Company had net income of $942,236 or $0.16 per share basic and diluted, for the six months ended April 30, 2018 compared to net income of $377,519, or $0.06 per share basic and diluted for the six months ended April 30, 2017. The increase in net income was due primarily to the reasons described above.
“For the fourth consecutive reporting period, we have achieved strong top line growth. We increased our sales by 24.8% this quarter as compared to the same period last year. For the first six months of fiscal 2018, we have grown our revenues by 18.3% as compared to the same period last year. Our sales growth has been accompanied by an increase in our gross profit margins of 1.9% during the first six months to 17.3% compared to 15.4% during the first six months of fiscal 2017. This margin expansion has been the result of an improved mix of our product sales and has occurred over all three core areas of our business - Green coffee sales, sales of our Brands and sales of our Private Label to our customers. Although our gross margins improved, I believe that such improvement would have been even better if it were not for the fact that coffee prices remain overly depressed during this period putting pressure on our selling prices for wholesale green coffee, as well as necessitating additional promotions on private label to remain competitive with the national brands. Despite this commodity headwind, we earned $0.09 per share this quarter, which is a notable improvement over recent quarters, reinforcing my belief that we have made the necessary internal changes and have turned the corner in our ability to translate efforts into profits.
Finally, in late April, we acquired substantially all of the assets of Steep N Brew Coffee Company through Generations Coffee Company LLC, the Company’s specialty coffee joint venture in Ohio (“Generations”). Steep N Brew, located in Madison, Wisconsin, is a high-end specialty roaster with a strong presence in the Midwest, with a large widespread customer base. We believe we can leverage their customer base in our favor by expanding our existing branded portfolio into their distribution network as well as utilizing our existing customer base for their coffee brands and ancillary products. Trailing twelve-month revenues at Steep N Brew at the time of the acquisition were approximately $7.0 million. The purchase price was comprised of (i) a cash payment of $1.6 million, (ii) a cash payment of $1.1 million for the payment for the inventory purchased under the asset purchase agreement and (iii) the issuance of a promissory note in the principal amount of $150,000. This acquisition will be operated as part of Generations as Steep N Brew’s business model is highly similar to our highly successful Generations operation and we expect the transaction will be immediately accretive to future earnings,” stated Andrew Gordon, President and CEO of Coffee Holding.
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.
