STATEN ISLAND, U.S. – Coffee Holding Co., Inc. yesterday announced its operating results for the three months and six months ended April 30, 2019. Net sales totaled $20,716,491 for the three months ended April 30, 2019, a decrease of $1,477,407, or 7%, from $22,193,898 for the three months ended April 30, 2018.
The decrease in net sales reflects the lower selling price of coffee during this quarter as well as a decrease in sales of approximately $2,000,000 to the Company’s former largest wholesale green coffee customer.
Net sales totaled $44,350,299 for the six months ended April 30, 2019, an increase of $73,183 from $44,277,116 for the six months ended April 30, 2018. The increase in net sales reflects the continued integration of the Steep & Brew business into the Company’s sales mix as well as the Company’s increased sales of its branded and private label coffees, partially offset by a decrease of approximately $2,000,000 in sales to the Company’s former largest wholesale green coffee customer and a decrease in sales to Sears due to its bankruptcy filing.
Cost of Sales
Cost of sales for the three months ended April 30, 2019 was $17,174,825, or 82.9% of net sales, as compared to $18,326,914, or 82.6% of net sales, for the three months April 30, 2018. 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 the increased cost of steel cans due to the increased tariffs and an increase in the Company’s losses on its hedging of futures and option contracts.
Cost of sales for the six months ended April 30, 2019 was $36,239,592, or 81.7% of net sales, as compared to $36,614,421, or 82.7% of net sales, for the six months April 30, 2018. 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 offset by the increased cost of steel cans due to the increased tariffs and the Company’s increased losses from its hedging of futures and option contracts.
Gross Profit
Gross profit for the three months ended April 30, 2019 was $3,541,666, a decrease of $325,318 from $3,866,984 for the three months ended April 30, 2018. Gross profit as a percentage of net sales decreased to 17.1% for the three months ended April 30, 2019 from 17.4% for the three months ended April 30, 2018.
The decrease in gross profits resulted from higher steel and trucking costs as well as the Company’s increased losses from its hedging of futures and option contracts.
Gross profit for the six months ended April 30, 2019 was $8,110,707, an increase of $448,012 from $7,662,695 for the six months ended April 30, 2018. Gross profit as a percentage of net sales increased to 18.3% for the six months ended April 30, 2019 from 17.3% for the six months ended April 30, 2018.
The increase in gross profits resulted from improved margins on the Company’s wholesale and roasted business, partially offset by higher steel and trucking costs.
Operating Expenses
Total operating expenses increased by $630,910 to $3,634,408 for the three months ended April 30, 2019 from $3,003,498 for the three months ended April 30, 2018. Selling and administrative expenses increased $644,006, or 22.7%, to $3,477,254 for the three months ended April 30, 2019 from $2,833,248 for the three months ended April 30, 2018. The primary reasons for this increase were the acquisition of Steep & Brew and the increase in the Company’s freight costs as the Company increased and expanded its product distribution. Officers’ salary decreased by $13,096 or 7.7% to $157,154 for the three months ended April 30, 2019 from $170,250 for the three months ended April 30, 2018.
Total operating expenses increased by $1,82,833 to $7,513,415 for the six months ended April 30, 2019 from $5,910,582 for the six months ended April 30, 2018. Selling and administrative expenses increased $1,582,833, or 28.4%, to $7,152,915 for the six months ended April 30, 2019 from $5,570,082 for the six months ended April 30, 2018.
The primary reasons for this increase were the acquisition of Steep & Brew and the increase in the Company’s freight costs as the Company increased and expanded its product distribution. Officers’ salary increased by $20,000 or 5.9% to $360,500 for the six months ended April 30, 2019 from $340,500 for the six months ended April 30, 2018.
Net Income
The Company had a net loss of $238,468 or $0.04 per share basic and diluted, for the three months ended April 30, 2019 compared to net income of $510,849, or $0.09 per share basic and diluted for the three months ended April 30, 2018. The Company had net income of $76,247 or $0.01 per share basic and diluted, for the six months ended April 30, 2019 compared to net income of $942,236, or $0.16 per share basic and diluted for the six months ended April 30, 2018. The decrease in net income was due primarily to the reasons described above.
