Coffee Holding Co. (JVA) - Amazon Simple Storage Service (S3)
This document contains certain summary information regarding Coffee Holding Company Inc. (the “Company”). Statements in this document regarding the Company that are not historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on current expectations that involve risks and uncertainties. Such forward-looking statements may include, without limitation, statements concerning: the Company's growth and business strategies; the Company’s acquisitions, joint ventures and alliances; the Company’s market; the Company’s services, the Company's competition; market trends; projected sources and uses of funds from operations; use of the proceeds of the proposed offering; and the other factors discussed in the "Risk Factors" section of the Prospectus. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. This document does not constitute, or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, or act as an inducement to enter into, any contract or commitment whatsoever with respect to any offer or otherwise.
Although all reasonable care has been taken to ensure that the facts stated and opinions and projections given in this document are fair and accurate as of the date of publication hereof, the Underwriter has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. The information and opinions in this document are subject to change without notice. The Company shall not be liable in any way whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection herewith.
2
Stock Price
$4.72
Net Sales (ttm)
$124.8M
52 Week Low/High
$4.39 - $7.40
Avg. Daily Vol. (3m)
33,572
Diluted EPS (ttm)
$0.05
6.2M
Total Assets (mrq)
$36.1M
Total Liabilities (mrq)
$12.1M
Total Equity (mrq)
$24.0M
Shares Outstanding
Institutional Holdings Insider Holdings
9% 11%
Market Cap
$29.3M
Enterprise Value
$31.8M
P/BV (ttm)
Fiscal year ends October 31 Source: Capital IQ
EBITDA (ttm)
$1.2M
1.3x
3
Coffee Holding Co. (JVA) is a premier wholesale coffee dealer and roaster with a strong 40-year history We have 115+ specialty coffee offerings and seven proprietary/licensed brands across the entire pricing spectrum Riding strong industry growth trends
Highly scalable business model with limited capital requirements Runway for growth through market penetration overseas and new product offerings, including Tea
4
Total coffee category is a ~$15B market¹ Global coffee consumption projected to increase ~25% over next six years¹
World Coffee Consumption¹ In MM bags (bag weighs ~132 lbs)
176
Coffee & Tea represent the 2nd largest non-alcoholic beverage category in food service²
Growing Hispanic-American population bodes well for U.S. coffee consumption
145 133 118 108
Hispanic-Americans consume more coffee than any other ethnicity in the U.S.³
¹International Coffee Organization ²NPD Crest ³NCA National Coffee Drinking Trends 2013 Market Study
2000
2005
2010
2015E
2020E 5
Green Mountain Coffee Roasters (Nasdaq: GMCR) has revolutionized the coffee industry through its proprietary K-Cup system
% of U.S. Adults Consuming Specialty Coffee Daily¹
While we do not directly produce K-Cups, we have been a partner and supplier to Green Mountain for 26+ years
34% 31%
We expect to grow as their business grows
Specialty coffee has become the fastest growing segment in the coffee industry ~98% of our green coffee offering is specialty Arabica coffee
Competition raising retail prices, driving consumers elsewhere
¹Specialty Coffee Association of America
24%
31%
25%
14%
2009 2010 2011 2012 2013 2014 6
Wholesale Green Coffee
Private Label
Sell unroasted green coffee beans to roasters and coffee shop operators of all sizes throughout North America and Asia-Pacific
Branded Coffee Our Green Coffee Customers
Fastest growing category in the coffee industry
Over 115 different high-end Arabica specialty coffee offerings
465 150 1998
2014
Long-term supplier to GMCR (~26 years)
Shipments to any given customer range from one bag (132 lbs) to a full truckload (44,000 lbs)
7
Wholesale Green Coffee
Private Label
Branded Coffee
Roast, blend and package coffee for ~30 different private labels that wholesalers and retailers sell as their own brand (non-coffee companies) Ideal for companies that want to sell their own coffee label without entering the coffee manufacturing business Coffees produced from high-quality coffee beans using a slow-roasting process that we’ve perfected over the course of our ~40 year history. 8
Wholesale Green Coffee
Private Label
Includes five proprietary brands and two exclusive license agreements
Branded Coffee
Each brand targets a particular consumer in the coffee market; limited cannibalization
Proprietary brands
Licensed brands from Del Monte • Exclusive right to use the S&W and Il Classico
trademarks in the U.S. and other countries approved by Del Monte • Original agreement signed in 2004; renewed 10-
year agreement in 2014 9
We provide more than just green coffee beans to our wholesale customers – We’re a value-add supplier Provide guidance on coffee blending techniques and market identification to help grow their customer base
Our Private Label coffee accommodates the customer, both operationally and financially Can be sold in cans, brick packages, and instants in a variety of sizes High-quality coffee equivalent to major national brands provided at a lower cost to grocers and retailers
Prices and flavor profiles across the entire spectrum accommodate all forms of coffee consumers Mainstream, Hispanic, Italiano Espresso, Gourmet, Organics, etc. 10
Diverse coffee sourcing across the globe insulates us from geopolitical risk in emerging markets, as well as volatile commodity prices 50,000 sf. Facility La Junta, Colorado Corporate HQ Staten Island, NY
28,000 sf. Facility Brecksville, Ohio
JVA Manufacturing Facilities & Offices Green Coffee Storage Facilities Coffee Sources (Country) Food Service Licensing (one open; four more expected) 11
Consistent growth in 10 of last 12 fiscal years $173.7 $146.8
$MM
Significant commodity bubble; coffee prices more than doubled in 18 months. We’ve now returned to normalized levels.
$134.0
$124.8 $108.9
$71.2 $74.5
$83.5
$51.2 $57.4 $41.5 $17.4 $20.2
$28.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TTM Apr 2015 12
Returning to Growth for Second Consecutive Qtr $MM
$38.4 $30.3 $27.3
Q1'14
$25.4
Q1'15
Q2'14
Q2'15 13
Leading the Packaged Foods Industry¹ $MM
$2.1
$0.7
¹SmarTrend via COMTEX, May 2015
$0.9
$1.0
$1.1
14
Core Business is Profitable
$0.72
$0.68
$0.64
$0.40 $0.27
$0.20
$0.19
2009
2010
2011
2012
2013
2014
TTM Apr'15
15
Millions of Pounds of Coffee Sold Every Year
In lbs.
56.3M
60.0M
56.1M 53.9M
48.2M 40.1M
2010
2011
2012
2013
2014
2015F 16
At April 30, 2015:
Select Balance Sheet Items
$3.6 million cash
Apr 30, 2015
Oct 31, 2014
Total cash
$3.6
$3.8
Receivables
13.2
15.4
Inventories
12.7
15.2
$23.3 million book value (total
Goodwill & Intangibles
0.7
0.7
stockholders’ equity minus goodwill & intangibles)
Total assets
36.1
39.0
Debt
11.2
11.2
Total liabilities
12.1
12.9
Total stockholders’ equity
24.0
26.1
($ Millions)
$9.0 million term loan and $3.0 million revolving line of credit $4.5 million and $1.2 million outstanding, respectively
Book value per share: $3.76 Recent share price:
$4.98¹
Fiscal year ends October 31 ¹ Share price as of June 30, 2015
17
Sharply reducing hedging and short-term trading of coffee futures to focus on core business operations Expected to drive more consistent profitability
Win new customers through expanded sales & marketing Rebranding individual green coffee SKU’s to better market our differentiated products
Organic growth through existing customer base
Educate customer base on our diverse product offering and socially sustainable initiatives/value-add services Source
18
Café Supremo and Café Caribe flavor profiles specifically target U.S.-based Hispanic demographic
U.S. Hispanic Population²
Hispanic-Americans consume more coffee than any other ethnicity in the U.S.¹
87.6 73.0
Hispanics made up more than half of total U.S. population growth from 20002010²
59.7
50.5
Strong brand loyalty
35.3 22.4
¹NCA National Coffee Drinking Trends 2013 Market Study ²U.S. Census 2010
1990
2000
2010
2020E
2030E
2040E 19
Launching inaugural tea initiative May 2015 First mover advantage – no other green coffee distributor also sells tea Significant runway for growth through existing wholesale customer base Nearly all 300 of our green coffee customers also have tea offerings We become a one-stop shop for all roasters and coffee shops
Over 27 high-end specialty teas in the collection Targeting 40% gross margins – more than 2x higher than coffee margins
20
Limited competition in fast-growing Chinese coffee market Chinese coffee consumption has grown ~13% per year from 1998-2012¹
Chinese Coffee Consumption¹ In 000 bags (bag weighs ~132 lbs)
2,822
Could reach 2.8 million bags by 2020 (nearly equivalent to consumption in U.K.)¹
2,230
Marketing of S&W brand gaining traction 1,761
Began selling through one of the largest Chinese retail chains in 2014 (~200 locations)
1,392
Licensed our Don Manuel brand to DTS8 Coffee Co. in China in 2013 Expansion into new retail outlets expected in 2015
1,100 695
2010 ¹International Coffee Organization Estimates
2012
2014
2016E
2018E
2020E 21
We will continue to seek accretive opportunities that can be easily integrated onto our robust platform 2004 Acquired Premier Roasters and took over their 50,000 sq. ft. Colorado roasting facility
2006 Joint venture with Caruso’s Coffee to form Generations Coffee Co. Now utilize their specialty roasting facility in Ohio
2013 Licensed Don Manuel to DTS8 Coffee Co. for use in China; largest gourmet coffee roaster in Shanghai¹
Successful History of Integrating Accretive Acquisitions & Joint Ventures 2004 Took over Del Monte licenses as a result of Premier Roasters acquisition
¹Per DTS8 Coffee Co.
2010 Acquired Organic Products Trading Co. (OPTCO). Enhanced our vertical integration with direct coffee supplier relationships
2014 Renewed Del Monte License for another 10 years
22
Leading coffee dealer and roaster with 40year reputation of high-quality and consistent offerings Unique market position with price points and flavor profiles across the entire coffee spectrum Diverse portfolio of proprietary and licensed brands that target specific demographics Highly scalable business model with limited capital requirements Significant room for growth through new product offerings, geographic expansion, and increased organic penetration 23
3475 Victory Boulevard Staten Island, NY 10314
Andrew Gordon CEO & CFO (718) 832-0800 [email protected]
Liolios Group Sean Mansouri or Cody Slach (949) 574-3860 [email protected]
24
A family-owned and operated business for over 40 years Andrew Gordon, President and CEO Employed by Coffee Holding for over 32 years Successfully expanded Coffee Holding from a privately-held small family business into a publicly traded growth company Has published dozens of reports on the coffee commodity industry Bachelor of Business Administration, Emory University
David Gordon, Executive Vice President – Operations Employed by Coffee Holding for over 34 years and brother of CEO Andrew Gordon
Original member of the Specialty Coffee Association of America Key contact to Green Mountain Coffee Roasters account; oversees Colorado operations. 26
In addition to the continued increase in coffee consumption around the world, JVA’s range of product offerings and capabilities position it to take advantage of organic and strategic growth opportunities
JVA has been a familyoperated business for three generations and is led by brothers who have been with the Company for over 32 years
Blue Chip Customer Base Across Multiple Channels & Price Points
JVA has developed entrenched partnerships with leading companies across the coffee value chain and through multiple channels JVA is uniquely positioned to offer products across the full spectrum of consumer tastes, preferences and price points
Significant Growth Opportunities
Favorable Industry Focus
JVA is well positioned to capture growth in the specialty coffee market, which represents the fastest growing segment in the industry
Experienced & Proven Management Team
Diverse Product Offering
JVA has developed a diverse portfolio of products with a wide array of flavors ranging from wholesale green coffee to private label and branded coffee
JVA’s deep relationships with coffee dealers across the globe allow the company to source high quality beans from a wide variety of geographic locations
Deep Relationships with Quality Suppliers
27
Profitable in 5 of last 6 fiscal years $0.78
$0.60
$0.44 $0.37
$0.14 $0.05 ($0.10)
2009
2010
2011
¹2013 fluctuations were the result of our hedging and trading program, which have been sharply reduced to focus on core business operations.
2012
2013¹
2014
TTM Apr'15
28
29
Although all reasonable care has been taken to ensure that the facts stated and opinions and projections given in this document are fair and accurate as of the date of publication hereof, the Underwriter has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document. The information and opinions in this document are subject to change without notice. The Company shall not be liable in any way whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection herewith.
2
Stock Price
$4.72
Net Sales (ttm)
$124.8M
52 Week Low/High
$4.39 - $7.40
Avg. Daily Vol. (3m)
33,572
Diluted EPS (ttm)
$0.05
6.2M
Total Assets (mrq)
$36.1M
Total Liabilities (mrq)
$12.1M
Total Equity (mrq)
$24.0M
Shares Outstanding
Institutional Holdings Insider Holdings
9% 11%
Market Cap
$29.3M
Enterprise Value
$31.8M
P/BV (ttm)
Fiscal year ends October 31 Source: Capital IQ
EBITDA (ttm)
$1.2M
1.3x
3
Coffee Holding Co. (JVA) is a premier wholesale coffee dealer and roaster with a strong 40-year history We have 115+ specialty coffee offerings and seven proprietary/licensed brands across the entire pricing spectrum Riding strong industry growth trends
Highly scalable business model with limited capital requirements Runway for growth through market penetration overseas and new product offerings, including Tea
4
Total coffee category is a ~$15B market¹ Global coffee consumption projected to increase ~25% over next six years¹
World Coffee Consumption¹ In MM bags (bag weighs ~132 lbs)
176
Coffee & Tea represent the 2nd largest non-alcoholic beverage category in food service²
Growing Hispanic-American population bodes well for U.S. coffee consumption
145 133 118 108
Hispanic-Americans consume more coffee than any other ethnicity in the U.S.³
¹International Coffee Organization ²NPD Crest ³NCA National Coffee Drinking Trends 2013 Market Study
2000
2005
2010
2015E
2020E 5
Green Mountain Coffee Roasters (Nasdaq: GMCR) has revolutionized the coffee industry through its proprietary K-Cup system
% of U.S. Adults Consuming Specialty Coffee Daily¹
While we do not directly produce K-Cups, we have been a partner and supplier to Green Mountain for 26+ years
34% 31%
We expect to grow as their business grows
Specialty coffee has become the fastest growing segment in the coffee industry ~98% of our green coffee offering is specialty Arabica coffee
Competition raising retail prices, driving consumers elsewhere
¹Specialty Coffee Association of America
24%
31%
25%
14%
2009 2010 2011 2012 2013 2014 6
Wholesale Green Coffee
Private Label
Sell unroasted green coffee beans to roasters and coffee shop operators of all sizes throughout North America and Asia-Pacific
Branded Coffee Our Green Coffee Customers
Fastest growing category in the coffee industry
Over 115 different high-end Arabica specialty coffee offerings
465 150 1998
2014
Long-term supplier to GMCR (~26 years)
Shipments to any given customer range from one bag (132 lbs) to a full truckload (44,000 lbs)
7
Wholesale Green Coffee
Private Label
Branded Coffee
Roast, blend and package coffee for ~30 different private labels that wholesalers and retailers sell as their own brand (non-coffee companies) Ideal for companies that want to sell their own coffee label without entering the coffee manufacturing business Coffees produced from high-quality coffee beans using a slow-roasting process that we’ve perfected over the course of our ~40 year history. 8
Wholesale Green Coffee
Private Label
Includes five proprietary brands and two exclusive license agreements
Branded Coffee
Each brand targets a particular consumer in the coffee market; limited cannibalization
Proprietary brands
Licensed brands from Del Monte • Exclusive right to use the S&W and Il Classico
trademarks in the U.S. and other countries approved by Del Monte • Original agreement signed in 2004; renewed 10-
year agreement in 2014 9
We provide more than just green coffee beans to our wholesale customers – We’re a value-add supplier Provide guidance on coffee blending techniques and market identification to help grow their customer base
Our Private Label coffee accommodates the customer, both operationally and financially Can be sold in cans, brick packages, and instants in a variety of sizes High-quality coffee equivalent to major national brands provided at a lower cost to grocers and retailers
Prices and flavor profiles across the entire spectrum accommodate all forms of coffee consumers Mainstream, Hispanic, Italiano Espresso, Gourmet, Organics, etc. 10
Diverse coffee sourcing across the globe insulates us from geopolitical risk in emerging markets, as well as volatile commodity prices 50,000 sf. Facility La Junta, Colorado Corporate HQ Staten Island, NY
28,000 sf. Facility Brecksville, Ohio
JVA Manufacturing Facilities & Offices Green Coffee Storage Facilities Coffee Sources (Country) Food Service Licensing (one open; four more expected) 11
Consistent growth in 10 of last 12 fiscal years $173.7 $146.8
$MM
Significant commodity bubble; coffee prices more than doubled in 18 months. We’ve now returned to normalized levels.
$134.0
$124.8 $108.9
$71.2 $74.5
$83.5
$51.2 $57.4 $41.5 $17.4 $20.2
$28.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TTM Apr 2015 12
Returning to Growth for Second Consecutive Qtr $MM
$38.4 $30.3 $27.3
Q1'14
$25.4
Q1'15
Q2'14
Q2'15 13
Leading the Packaged Foods Industry¹ $MM
$2.1
$0.7
¹SmarTrend via COMTEX, May 2015
$0.9
$1.0
$1.1
14
Core Business is Profitable
$0.72
$0.68
$0.64
$0.40 $0.27
$0.20
$0.19
2009
2010
2011
2012
2013
2014
TTM Apr'15
15
Millions of Pounds of Coffee Sold Every Year
In lbs.
56.3M
60.0M
56.1M 53.9M
48.2M 40.1M
2010
2011
2012
2013
2014
2015F 16
At April 30, 2015:
Select Balance Sheet Items
$3.6 million cash
Apr 30, 2015
Oct 31, 2014
Total cash
$3.6
$3.8
Receivables
13.2
15.4
Inventories
12.7
15.2
$23.3 million book value (total
Goodwill & Intangibles
0.7
0.7
stockholders’ equity minus goodwill & intangibles)
Total assets
36.1
39.0
Debt
11.2
11.2
Total liabilities
12.1
12.9
Total stockholders’ equity
24.0
26.1
($ Millions)
$9.0 million term loan and $3.0 million revolving line of credit $4.5 million and $1.2 million outstanding, respectively
Book value per share: $3.76 Recent share price:
$4.98¹
Fiscal year ends October 31 ¹ Share price as of June 30, 2015
17
Sharply reducing hedging and short-term trading of coffee futures to focus on core business operations Expected to drive more consistent profitability
Win new customers through expanded sales & marketing Rebranding individual green coffee SKU’s to better market our differentiated products
Organic growth through existing customer base
Educate customer base on our diverse product offering and socially sustainable initiatives/value-add services Source
18
Café Supremo and Café Caribe flavor profiles specifically target U.S.-based Hispanic demographic
U.S. Hispanic Population²
Hispanic-Americans consume more coffee than any other ethnicity in the U.S.¹
87.6 73.0
Hispanics made up more than half of total U.S. population growth from 20002010²
59.7
50.5
Strong brand loyalty
35.3 22.4
¹NCA National Coffee Drinking Trends 2013 Market Study ²U.S. Census 2010
1990
2000
2010
2020E
2030E
2040E 19
Launching inaugural tea initiative May 2015 First mover advantage – no other green coffee distributor also sells tea Significant runway for growth through existing wholesale customer base Nearly all 300 of our green coffee customers also have tea offerings We become a one-stop shop for all roasters and coffee shops
Over 27 high-end specialty teas in the collection Targeting 40% gross margins – more than 2x higher than coffee margins
20
Limited competition in fast-growing Chinese coffee market Chinese coffee consumption has grown ~13% per year from 1998-2012¹
Chinese Coffee Consumption¹ In 000 bags (bag weighs ~132 lbs)
2,822
Could reach 2.8 million bags by 2020 (nearly equivalent to consumption in U.K.)¹
2,230
Marketing of S&W brand gaining traction 1,761
Began selling through one of the largest Chinese retail chains in 2014 (~200 locations)
1,392
Licensed our Don Manuel brand to DTS8 Coffee Co. in China in 2013 Expansion into new retail outlets expected in 2015
1,100 695
2010 ¹International Coffee Organization Estimates
2012
2014
2016E
2018E
2020E 21
We will continue to seek accretive opportunities that can be easily integrated onto our robust platform 2004 Acquired Premier Roasters and took over their 50,000 sq. ft. Colorado roasting facility
2006 Joint venture with Caruso’s Coffee to form Generations Coffee Co. Now utilize their specialty roasting facility in Ohio
2013 Licensed Don Manuel to DTS8 Coffee Co. for use in China; largest gourmet coffee roaster in Shanghai¹
Successful History of Integrating Accretive Acquisitions & Joint Ventures 2004 Took over Del Monte licenses as a result of Premier Roasters acquisition
¹Per DTS8 Coffee Co.
2010 Acquired Organic Products Trading Co. (OPTCO). Enhanced our vertical integration with direct coffee supplier relationships
2014 Renewed Del Monte License for another 10 years
22
Leading coffee dealer and roaster with 40year reputation of high-quality and consistent offerings Unique market position with price points and flavor profiles across the entire coffee spectrum Diverse portfolio of proprietary and licensed brands that target specific demographics Highly scalable business model with limited capital requirements Significant room for growth through new product offerings, geographic expansion, and increased organic penetration 23
3475 Victory Boulevard Staten Island, NY 10314
Andrew Gordon CEO & CFO (718) 832-0800 [email protected]
Liolios Group Sean Mansouri or Cody Slach (949) 574-3860 [email protected]
24
A family-owned and operated business for over 40 years Andrew Gordon, President and CEO Employed by Coffee Holding for over 32 years Successfully expanded Coffee Holding from a privately-held small family business into a publicly traded growth company Has published dozens of reports on the coffee commodity industry Bachelor of Business Administration, Emory University
David Gordon, Executive Vice President – Operations Employed by Coffee Holding for over 34 years and brother of CEO Andrew Gordon
Original member of the Specialty Coffee Association of America Key contact to Green Mountain Coffee Roasters account; oversees Colorado operations. 26
In addition to the continued increase in coffee consumption around the world, JVA’s range of product offerings and capabilities position it to take advantage of organic and strategic growth opportunities
JVA has been a familyoperated business for three generations and is led by brothers who have been with the Company for over 32 years
Blue Chip Customer Base Across Multiple Channels & Price Points
JVA has developed entrenched partnerships with leading companies across the coffee value chain and through multiple channels JVA is uniquely positioned to offer products across the full spectrum of consumer tastes, preferences and price points
Significant Growth Opportunities
Favorable Industry Focus
JVA is well positioned to capture growth in the specialty coffee market, which represents the fastest growing segment in the industry
Experienced & Proven Management Team
Diverse Product Offering
JVA has developed a diverse portfolio of products with a wide array of flavors ranging from wholesale green coffee to private label and branded coffee
JVA’s deep relationships with coffee dealers across the globe allow the company to source high quality beans from a wide variety of geographic locations
Deep Relationships with Quality Suppliers
27
Profitable in 5 of last 6 fiscal years $0.78
$0.60
$0.44 $0.37
$0.14 $0.05 ($0.10)
2009
2010
2011
¹2013 fluctuations were the result of our hedging and trading program, which have been sharply reduced to focus on core business operations.
2012
2013¹
2014
TTM Apr'15
28
29
