Core Insights - Coffee Holding Co., Inc. reported net sales of $23.9 million for the fiscal quarter ending July 31, 2025, a 27% increase from $18.8 million in the same period of 2024, but faced a net loss of $1.19 million due to a $2.2 million negative impact from derivative positions [1][2][9] Financial Performance - The company experienced a significant increase in net sales, rising from $18.8 million to $23.9 million, marking a 27% growth year-over-year [1] - Despite the sales growth, the company reported a net loss of $1.19 million, primarily attributed to the negative impact of derivatives [1][9] - The coffee market faced challenges, with prices dropping by $1.25 during the quarter due to tariffs and uncertainties surrounding Brazil's harvest [2] Market Conditions - Coffee prices have recently resumed an upward trend, approaching historic highs, which is expected to secure inventory positions through the end of 2025 [3] - The company anticipates a reversal of unrealized losses on derivatives in the fourth quarter, potentially boosting profits and supporting a previously announced dividend [4] Strategic Initiatives - The acquisition of Second Empire has shown early profitability, and the company expects it to contribute positively to earnings moving forward [5] - The company increased its borrowing to build inventories in anticipation of tariffs, which helped mitigate the impact of declining coffee prices on competitors [6] - Coffee Holding maintained its price increases without passing additional costs from tariffs onto customers, resulting in minimal impact during the quarter [7] Future Outlook - As the company depletes its "tariff-free" inventories, it may need to implement price increases for wholesale and retail customers to maintain margins, a practice that has become normalized in the industry [8] - Despite the disappointing earnings this quarter, the company remains optimistic about future performance, citing a promising outlook for the fourth quarter and beyond [9]