Executive Summary

Q3 FY2024 net sales were $18.81M, up 19% year over year; gross margin expanded to 20.9% and diluted EPS was $0.11, marking a material swing from a prior-year loss .
Sales growth was driven by new private label customers and renewed growth of the Café Caribe brand; price increases and a favorable inventory position supported margin expansion .
Management highlighted aggressive deleveraging: over $7M paid down on the line of credit across nine months and a “zero-balance outstanding” as of the press release date, implying ~$0.10/share pretax interest savings annualized; note the quarter-end line of credit was $1.9M on July 31, 2024, indicating subsequent paydown post-quarter .
The terminated Delta Corp merger (June 24) removes strategic uncertainty; management expects price increases to fully offset Robusta price spikes by Q4 FY2024, potentially catalyzing further margin gains .

What Went Well and What Went Wrong

What Went Well

Private label customer wins and Café Caribe brand growth drove top-line strength: “The addition of new customers for our private label business along with renewed growth of our flagship Café Caribe Brand have led the way to the strong growth in sales” .
Margin expansion from pricing actions and inventory positioning: cost of sales fell to 79.1% of sales vs. 84.5% YoY, lifting gross margin to 20.9% (from 15.5%) .
Deleveraging and interest savings: >$7M line-of-credit paydown in nine months, with “zero-balance outstanding” as of the release date; management estimates ~$0.10/share pretax annualized benefit .

What Went Wrong

Other income declined vs. prior year due to non-repeat insurance gains ($400K in prior year), partially offset by a lease extinguishment gain; Q3 other income decreased to $166K from $251K YoY .
Operating expenses rose $354K YoY on higher payroll, professional fees, and insurance, partially offset by declines in medical, auto, and advertising .
Earlier quarters showed lingering control weaknesses and going-concern caveats tied to credit facility renewal; while Q3 commentary is constructive, Q2 filings disclosed material weaknesses in internal controls and substantial doubt pending renewal (context for risk oversight) .

Financial Results

Metric	Q3 FY2023	Q1 FY2024	Q2 FY2024	Q3 FY2024
Net Sales ($USD)	$15,764,365	$19,540,402	$18,995,913	$18,813,162
Cost of Sales ($USD)	$13,315,602	$16,060,103	$15,291,933	$14,887,098
Gross Profit ($USD)	$2,448,763	$3,480,299	$3,703,980	$3,926,064
Gross Margin (%)	15.5%	18.0%	19.5%	20.9%
Operating Expenses ($USD)	$2,852,010	$2,863,388	$3,770,630	$3,206,201
Income from Operations ($USD)	$(403,247)	$616,911	$(66,650)	$719,863
Other Income (Expense) ($USD)	$251,116	$(123,550)	$(32,823)	$166,182
Income Taxes ($USD)	$(40,250) benefit	$142,337	$(77,632) benefit	$259,249
Net Income ($USD)	$(111,881)	$351,024	$(21,841)	$626,796
Diluted EPS ($USD)	$(0.02)	$0.06	$— (0.00)	$0.11

Balance Sheet KPIs (trend across FY2024)

Metric	Q1 FY2024	Q2 FY2024	Q3 FY2024
Cash & Cash Equivalents ($USD)	$2,407,863	$2,427,689	$3,098,158
Accounts Receivable ($USD)	$8,070,427	$7,393,037	$7,449,547
Inventories ($USD)	$17,012,265	$15,512,363	$14,506,015
Line of Credit ($USD)	$4,700,000	$3,000,000	$1,900,000

Product Line Mix (no Q3 disclosure; prior quarters shown)

Product Line Revenue ($USD)	Q1 FY2024	Q2 FY2024
Green Coffee	$7,479,202	$7,230,703
Packaged Coffee	$12,061,200	$11,765,210
Total	$19,540,402	$18,995,913

YTD Cash Flow (nine months ended July 31, 2024)

Metric	9M FY2024
Net Cash Provided by Operating Activities ($USD)	$5,209,235
Net Cash Used in Financing Activities ($USD)	$(7,724,374)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Gross Margin trajectory	Q4 FY2024	Not provided	Management expects price increases to offset elevated Robusta and be recognized by Q4 FY2024	Raised (qualitative)
Line of Credit borrowings	Near-term	$3.0M outstanding (as of Apr 30, 2024, Q2)	“Zero-balance outstanding” as of Sept 16, 2024 press release date	Lowered
Interest expense impact	Annualized	Not provided	~$0.10/share pretax annualized savings from debt paydown	New qualitative metric
Revenue/Margins/Tax/OpEx formal ranges	FY/Qtr	Not provided	Not provided	Maintained (no formal guidance)

Note: JVA does not issue formal quantitative guidance ranges; commentary above reflects management statements.

Earnings Call Themes & Trends

No Q3 FY2024 earnings call transcript was found; the company appears not to have held a call for Q3 FY2024 based on available documents [List: earnings-call-transcript none]. Themes are derived from the Q3 press release and prior 10-Qs.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3 FY2024)	Trend
Private label & brand growth	Q1: Net sales up 6.6% on new private label customers; pack vs. green mix improved . Q2: Net sales up 24% YoY on private label adds .	Explicitly credited for Q3 sales growth; Café Caribe brand noted .	Strengthening contribution to top-line.
Pricing actions	Q1: Higher margins on roasted/packaged products . Q2: Cost of sales elevated, margin improved YoY .	Price increases initiated in Q3 helped margins; favorable inventory position .	Margin tailwinds building.
Commodities/hedging	Q1/Q2: Hedging scaled back; gains/losses run through cost of sales; volatility risk noted .	Margin gains from inventory/pricing; prior Robusta surge cited in June PR as headwind in Q2 .	Risk managed cautiously; normalization expected into Q4.
Balance sheet/credit facility	Q1: LOC $4.7M; going-concern uncertainty pending renewal . Q2: LOC $3.0M; waiver received; still renewal uncertainty .	LOC $1.9M at quarter end; “zero” as of PR date; interest savings highlighted .	Deleveraging, improved liquidity optics.
Strategic transactions	Ongoing Delta merger process; stockholder vote scheduled in March .	Delta merger terminated (June 24) .	Uncertainty removed; focus on core growth.
Internal controls	Material weaknesses disclosed Q1/Q2; remediation plans outlined .	Not updated in Q3 PR; assume ongoing remediation.	Monitoring needed.

Management Commentary

“We are pleased to deliver a strong third quarter performance… The addition of new customers for our private label business along with renewed growth of our flagship Café Caribe Brand have led the way to the strong growth in sales…” .
“We have paid down our line of credit by over $7 million during the last nine months… As of today, we have a zero-balance outstanding… Annualized, these savings would translate into approximately $.10 a share in pretax earnings.” .
On merger: “The board of directors has elected to terminate the Merger Agreement and move forward as an independent company… We have secured several new pieces of business… helped us grow our revenue for four consecutive quarters…” .
On commodity pressures: “Historic surge in the London Robusta market… dramatically impacted profit margins… We have since initiated a series of price increases… expect them to be fully recognized… for our fiscal fourth quarter 2024.” .

Q&A Highlights

No Q3 FY2024 earnings call transcript available; no Q&A content found [List: earnings-call-transcript none].

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable for Q3 FY2024 (data access limited); as such, we cannot provide revenue/EPS vs. consensus comparisons for this quarter. If needed, we can re-run when access is restored to evaluate beats/misses.

Key Takeaways for Investors

The quarter delivered clean YoY growth and margin expansion, with EPS inflecting to $0.11; private label momentum and brand mix are tangible drivers .
Pricing actions and inventory positioning are offsetting commodity volatility; management expects full benefit by Q4 FY2024, suggesting near-term margin support .
Deleveraging is notable: quarter-end LOC down to $1.9M with a “zero-balance” post-quarter as of the PR date; interest savings (~$0.10/share pretax annualized) can bolster earnings power .
The terminated Delta merger clears strategic overhang and aligns focus on execution; recent customer wins (large Northeast retailer; national retail chain) underpin demand visibility .
Watch internal control remediation and formal credit renewal documentation (risks flagged in prior 10-Qs); continued working-capital discipline and cash generation remain important .
Near-term trading: margin follow-through in Q4 and confirmation of sustained low borrowings could be positive catalysts; any slip in commodity normalization or pricing realization would be a headwind .
Medium-term: private label and brand growth, coupled with normalized commodity inputs and leaner financing costs, can support a more durable margin profile; execution on cost controls and internal controls will influence valuation credibility .

Citations:

COFFEE HOLDING CO INC (JVA)·Q3 2024 Earnings Summary