Staten Island / NY. (chc) Coffee Holding Company Inc. announced its operating results for the three months and nine months ended January 31, 2021.
Net Sales. Net sales totaled USD 18,133,837 for the three months ended January 31, 2021, a decrease of USD 1,151,664, or 6 percent, from USD 19,285,501 for the three months ended January 31, 2020. The decrease in net sales was due to the Covid-19 pandemic which caused many of the Company’s green coffee customers who service the restaurant and food service industries to either remain closed or suspend their business operations during the period resulting in lost revenues from that segment of the Company’s customer base.
Cost of Sales. Cost of sales for the three months ended January 31, 2021 was USD 13,654,169, or 75.3 percent of net sales, as compared to USD 16,170,747, or 83.8 percent of net sales, for the three months January 31, 2020. 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 was due to the Company’s decreased sales partially offset by its favorable green coffee position and hedging.
Gross Profit. Gross profit for the three months ended January 31, 2021 amounted to USD 4,479,668 or 24.7 percent of net sales, as compared to USD 3,114,754 or 16.2 percent of net sales, for the three months ended January 31, 2020. The increase in gross profits was attributable to increased margins on the Company’s roasted and branded products partially due to the movement of lower cost green coffee inventory built up in previous quarters
Operating Expenses. Total operating expenses decreased by USD 361,767 to USD 3,313,286 for the three months ended January 31, 2021 from USD 3,675,053 for the three months ended January 31, 2020. Selling and administrative expenses decreased by USD 344,743 and officers’ salaries decreased by USD 17,024. The company’s efforts to control costs through the elimination of redundancy in its operations and the elimination of certain unnecessary variable costs were the primary reasons for this decrease. These efforts were partially offset by stock compensation expense of USD 189,000 and the increase in the Company’s freight costs as it increased and expanded its product distribution.
Net Income. The Company had net income of USD 677,312 or USD 0.12 per share basic and diluted, for the three months ended January 31, 2021 compared to a net loss of USD 599,848, or USD 0.11 per share basic and diluted for the three months ended January 31, 2020. The increase in net income was due primarily to the reasons described above.
«We are pleased to begin the new fiscal year by reporting a big improvement in our operating results,» stated Andrew Gordon, Chief Executive Officer of Coffee Holding Co. «With last quarter’s inventory write-downs from our Generations/Steep and Brew subsidiary behind us, we were able to earn net income of USD 677,312, or USD 0.12 a share, as our profit margins improved substantially compared to last quarter. Adjusted Ebitda was USD 1,443,183 in the current quarter. With the price of green coffee at three year highs, we are no longer experiencing the downward pricing pressure of the previous three years which saw coffee prices languish below a USD 1 per pound for extended periods of time,» continued Gordon. «Those low commodity prices had a negative impact on the margins of our sales of green unroasted beans as well as forcing us to discount prices of our private label and branded products to remain competitive in a low priced national retail coffee environment.
«In addition, during the first quarter of 2021, we also reduced our operating expenses by approximately 10 percent as our past efforts to control costs had a positive impact on our operations during the quarter. We also were able to absorb the stock option compensation expense of USD 189,000 incurred during this quarter, and with only two quarters of expenses remaining, we are two thirds of the way home to eliminating this expense which resulted from our previous grant of stock options under our option plan,» said Gordon.
«Although sales decreased by approximately 6 percent compared to the first quarter of last year, we believe that as businesses continue to reopen, and the new customers we were able to attract over the last several months, we will begin to see a return of positive quarter over quarter revenue growth.
«Lastly, we have nearly completed our initial testing of our CBD infused single serve cups and are hopeful that we will be able to begin offering these for sale to our customers during the second calendar quarter of 2021,» concluded Gordon.
Coffee Holding Company 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.