Coffee Holding Co. Inc., a leading integrated wholesale coffee roaster and dealer in the U.S., announced its operating results for the fiscal quarter ending April 30, 2022.
Net sales totaled $16,498,169 for the three months ending April 30, 2022, an increase of $2,029,611, or 14.0%, from $14,468,558 for the three months ended April 30, 2021. The increase in net sales was due to an increase of sales to the company’s legacy customers partially offset by a decrease in sales from the company’s Generations/Steep N Brew subsidiary.
Cost of sales for the three months ending April 30, 2022. was $14,505,415, or 87.9% of net sales, as compared to $10,699,090, or 74% of net sales, for the three months April 30, 2021. The increase in cost of sales was due to the company’s increased sales to the company’s legacy customers, increased prices of green coffee and packaging materials and the company’s continued losses from the company’s Generations/Steep N Brew subsidiary, which included obsolete inventory write-off of approximately $718,000.
Gross profit for the three months ending April 30, 2022, amounted to $1,992,754 or 12.1% of net sales, as compared to $3,769,468 or 26.1% of net sales, for the three months ending April 30, 2021. The decrease in gross profits on a percentage basis was attributable to the factors listed above.
Total operating expenses increased by $50,899 to $3,366,223 for the three months ending April 30, 2022, from $3,315,324 for the three months ending April 30, 2021. Selling and administrative expenses increased by $53,399 and officers’ salaries decreased by $2,500.
The company had a net loss of $368,096 or $(0.06) per share basic and diluted, for the three months ending April 30, 2022, compared to net income of $357,044, or $0.06 per share basic and diluted for the three months ending April 30, 2021. The decrease in net income was due primarily to the continued losses from the company’s Generations/Steep N Brew subsidiary.
“Although we increased sales by approximately $2.0 million or 14.0% compared to last year and business remained strong in both the Coffee Holding legacy and Optco divisions, we recorded a loss of $0.06 per share for this fiscal period, primarily as a result of an operating loss at our Generations/Steep N Brew division. After several periods of losses at Generations/Steep N Brew, stemming from increasing costs, impacts of the COVID pandemic and poor performance, we are now looking to restructure the operational activities at Generations/Steep N Brew. Unfortunately, we incurred write offs relating to accounts receivables, inventory and packaging materials at this division, resulting in an operating loss of approximately $508,000 (net of tax) or $0.09 per share,” Andrew Gordon, president and CEO of Coffee Holding Company, said in the announcement.
“Moving forward, I believe we have a clear direction on how to grow both our sales and profits as we had in the past by focusing on sales of unroasted green coffee beans to small and medium size roasters, sales of private label products to large wholesalers and retailers and a continued push on our own legacy brands. I believe this has been and will continue to be a winning formula in our efforts to grow both our sales and profits. We have increased our sales now for seven consecutive months compared to the prior year despite low meaningful sales from our Generations/Steep N Brew subsidiary, including a 14% increase this quarter and I anticipate that trend will continue in spite of the inflationary headwinds that many of our green coffee customers now face. We appreciate our shareholders’ loyalty and patience and we look forward to a clearer path forward in the immediate future,” Gordon added in the announcement.
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.