STATEN ISLAND, NY--(Marketwired - Jun 13, 2017) - Coffee Holding Co., Inc. (
Net sales totaled $17,787,103 for the three months ended April 30, 2017, a decrease of $3,619,836, or 16.9%, from $21,406,939 for the three months ended April 30, 2016. The decrease in net sales reflects our reduced wholesale transactions with our largest wholesale green coffee customer of approximately $7,900,000 which was partially offset by a gain of approximately $4,300,000 in sales of both branded and private label coffee to both new and existing customers.
Cost of sales for the three months ended April 30, 2017 was $15,144,534, or 85.1% of net sales, as compared to $18,097,486, or 84.5% of net sales, for the three months ended April 30, 2016. 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 lower commodity prices during the quarter and our reduced wholesale transactions with our largest wholesale green coffee customer.
Gross profit for the three months ended April 30, 2017 was $2,642,569, a decrease of $666,884 from $3,309,453 for the three months ended April 30, 2016. Gross profit as a percentage of net sales decreased to 14.9% for the three months ended April 30, 2017 from 15.5% for the three months ended April 30, 2016. Although we experienced improved margins on our wholesale and roasted business during the quarter, the decrease in gross profits was due in part to the purchase price paid for our acquisition of CFI.
Total operating expenses decreased by $591,306 to $2,544,645 for the three months ended April 30, 2017 from $1,953,339 for the three months ended April 30, 2016. The quarter ended April 30, 2017 included approximately $187,000 of selling and administrative expenses from our subsidiary "SONO" and approximately $248,000 of selling and administrative expenses from our subsidiary "CFI" which were not included in the April 30, 2016 numbers since those transactions occurred in 2017. Also, we incurred increases in shipping expenses of $89,460, salary expense of $42,485 and medical insurance expense of $28,762. These increases were the result of our reinvestment in our growth and expansion strategy.
The Company had net income of $1,737 or $0.00 per share basic and diluted, for the three months ended April 30, 2017 compared to net income of $830,801, or $0.14 per share basic and diluted for the three months ended April 30, 2016. The decrease in net income was due primarily to the reasons described above.
"Although our sales declined by approximately $3.6 million in the current quarter compared to sales in prior year's quarter, the shortfall can be attributed to a decrease of approximately $7.9 million to our former largest wholesaler green coffee customer. Despite this decrease, the other areas of our business, including roasted and private label coffee sales, increased by approximately $4.3 million, which I believe is a very solid number and a strong indication of where we are headed," said Andrew Gordon President and CEO of Coffee Holding Co., Inc.
"In addition, our results were negatively impacted during the quarter by an increase in operating expenses associated with our two most recent acquisitions, Sonofresco and Comfort Foods; along with increased salary, medical and website costs necessitated by our recent investment in our growth and expansion strategies. We believe once our new acquisitions and subsequent investments are fully integrated and functional, margins will continue to expand, resulting in expected profits," ended Mr. Gordon.
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.
Any statements that are not historical facts contained in this release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's outlook on future margin performance and its share repurchase program. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. We have based these forward-looking statements upon information available to management as of the date of this release and management's expectations and projections about certain future events. It is possible that the assumptions made by management for purposes of such statements may not materialize. Such statements may involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, hedging activities, the effect of economic conditions, intellectual property rights, the outcome of competitive products, risks in product development, the results of financing efforts, the ability to complete transactions, and other factors discussed from time to time in the Company's Securities and Exchange Commission filings. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made.
Coffee Holding Co., Inc.
President & CEO