Growth led by increased distribution,
diversification of global business model and improved brand
recognition
Jammin Java Corp. (d/b/a Marley Coffee) (JAMN)
(www.marleycoffee.com) ("Marley Coffee", "we, "us" and the
"Company"), the sustainably grown, ethically farmed and
artisan-roasted gourmet coffee company has issued the following
letter to its shareholders in connection with its preliminary
unaudited anticipated financial results for the three months ended
January 31, 2015 and the fiscal year ended January 31, 2015, as
described below.
Highlights
- Projected record revenue of $10
million, an increase of 65.7% compared to the prior year with a
$17-20 million forecast for revenue for the following fiscal year
(F16);
- Record Gross profit increase of ~236%
from a year ago;
- Global expansion
- Launch of ecommerce site and
subscription model;
- $1.5 million in short term capital
credit extensions; and
- Donated ~$83,000 to Waterwise Coffee
(www.waterwisecoffee.com) to clean up the rivers in Ethiopia, which
equals $0.01 from each RealCup sold during the last fiscal
year.
The following is a letter from our Chief
Executive Officer, Brent Toevs:
Dear Valued Shareholders,
It’s been a great year for Marley Coffee. Our goals last year
were to get to $10 million in revenue, improve our operational
efficiencies, establish a national presence, find first class
partners in key foreign markets and leverage the brand identity. We
believe we have accomplished all of these goals, laying the
groundwork for potential significant growth in the next few
years.
Marley Coffee is competing in a category dominated by behemoths
with multi-billion dollar balance sheets yet we have done a
tremendous job going head-to-head against these competitors because
we’ve stayed true to our principles as we’ve grown.
We continue to see strong growth in our top and bottom line
numbers as well as our ability to grow our business wherever coffee
is sold. Alongside our financials and our business strategy for the
upcoming year, we will also be going over an independent study we
did on our brand position in the marketplace.
Anticipated Results of Operations – Below are unaudited
anticipated financial results for the three months ended January
31, 2015 and the fiscal year ended January 31, 2015 as well as a
forecast for the upcoming fiscal year, which is February 1,
2015-January 1, 2016.
- Strong Revenue Growth - Our
revenue growth accelerated in fiscal 2015 compared to fiscal 2014.
Total revenue for the year ending January 31, 2015 is anticipated
to be approximately $10 million (compared to $6.0 million for the
year ended January 31, 2014), an increase of approximately $4
million or 66.7% from the prior year. What traditionally is our
weakest quarter (Q4), we saw a significant increase in revenue. We
anticipate revenue for the quarter ended January 31, 2015 of
approximately $3 million (compared to $1.5 million for the quarter
ended January 31, 2014), an increase of approximately $1.5 million
or 100% from the prior quarter.
- Increased Gross Profit - Cost of
sales for the year ended January 31, 2015 is anticipated to be
approximately $7.0 million alongside discounts and allowances of
$0.6 million, which is anticipated to give the company a gross
profit of approximately $2.4 million compared to a gross profit of
$0.7 million from a year ago, an increase in gross profit of
approximately ~236% from a year ago.
- Narrowing Losses – The objective
for the company is to continue narrowing its losses and get to
positive EBITDA before the end of the year. We anticipate reporting
a net loss of approximately $9.3 million for the year ended January
31, 2015 (compared to a net loss of $6.7 million for the year ended
January 31, 2014), provided that our short-term losses are
narrowing. We anticipate net losses of approximately $1.4 million
for the quarter ended January 31, 2015 (compared to a net loss of
$4.1 million for the quarter ended January 31, 2014).
- Operating Efficiency –
Operationally, we delivered the most efficient quarter to date. Our
quarter-over-quarter revenue growth (projected as a 100% increase)
has significantly outpaced our operating expenses, which shrank
compared to the fourth quarter from a year ago. We’ve built a
business on having strong gross margins and very little capital
expenditures. We also currently believe that we can scale our
operations up to $40 million in revenue without materially
increasing our staffing needs.
Projected Balance Sheet and Future Investments
- Run Rate - Cash on hand as of
January 31, 2015 was approximately $445,000. The company also had
assets of approximately $2.4 million and liabilities of
approximately $2.8 million.
- Investments/ Loans - Recently,
Mother Parkers Tea & Coffee Inc, the company’s largest
supplier, has verbally agreed to extend the company’s payment terms
from 30 days to 120 days, thus putting about $1.5M in free cash
flow back into the company in the near term at no additional costs.
Though this is a short-term measure, we believe that this will
allow the company to extend its run rate to over 12 months given
its current operating needs.
- Growth Capital - Every growth
company, like ours, needs additional capital to expand, but we want
to raise capital with the least shareholder dilution as possible.
The investment litmus test for most beverage companies is that it
generates a dollar for every dollar it has raised. Last year the
company raised $2.5 million and the year before that it raised ~$5
million (the company converted debt into equity, thus producing ~$5
million in free cash during 2014). We anticipate that we have
generated ~$10 million in revenue this year and about $16 million
over the last 2 years, which we believe shows a favorable return on
the investments when comparing revenue to funding raised. The key
in the coming year is to continue executing our plan and exciting
the overall market to raise shareholder value.
Fiscal Year End 2016 Guidance and Projections
- Our revenue expectations for fiscal
2016 still are ~$17-20 million, of which we believe most of the
growth will be in the back half of the year. We expect Q1 and Q2
revenues to come in around $3.5 million for the first quarter and
second quarter of fiscal 2016, but expect to see those numbers
increase significantly in the third and fourth quarters of fiscal
2016 as we continue grow our accounts and launch our previously
announced EcoCup campaign (recyclable compatible cartridges, for
use in most models of Keurig®'s K-Cup brewing system) in the second
half of the year.
- We expect gross profit margins to stay
between 25-30%.
- We anticipate losses narrowing even
further in the first quarter of fiscal 2016 and our goal is to show
positive EBITDA by end of year.
- Senior management will continue to take
most of their compensation via equity conserving available cash for
operations.
Business Growth
The company is still organized around our three pillars of
growth, which are domestic, international and ecommerce.
For the last year, we’ve been laying the foundation for our
continued growth. Here are the main areas we think will move the
needle this year.
- Domestic grocery sales – Our
objective is to build deeper relationships and improve turn rates
within our existing customers while continuing to expand into key
accounts. We have some new accounts, which we are excited about and
which should be launching in early Summer. We ended the year in
approximately 7,500 stores with an average of 5.2 products per
store in the United States.
- eCommerce subscription model –
https://shop.marleycoffee.com/subscriptions/ recently launched and
is starting to gain traction. We have been testing multiple
initiatives to keep our site “sticky” for consumers.
- International - The
International Coffee Organization recently reported that it expects
global coffee demand to rise 25% by 2021. We believe that we are in
a strong position to capitalize on that growth and our goal is to
continue finding top-tier operators like the ones we have in Korea,
Chile and the United Kingdom.
- Mother Parkers Tea & Coffee
Inc has helped launched Marley Coffee in Canada into
approximately 2,000 stores with an average of 5 items per store as
well. They have also added Marley Coffee to their foodservice
portfolio, positioning it as their premium offering in this
channel.
- Our UK partners will be launching a
biodegradable Nespresso compatible this Spring, which should help
push their grocery and away from home business.
- South Korea - This remains the
most exciting new market for the Company. We have several
initiatives that have launched or are launching this year. Being
successful here has the potential to echo throughout Asia and we
believe our success in South Korea will be a springboard to getting
meaningful distribution elsewhere in the region, especially
China.
- EcoCup launch – EcoCup's success
is built on the critical premise that it doesn’t require consumers
to change their behavior. They continue to purchase and use the
product as in the past but with a more sustainable end-of-life
option. This remains the biggest launch for the company in fiscal
2016 and we expect to start shipping product in August.From a
product adoption curve perspective, people using Keurig®'s K-Cup
and compatible brewing systems are in the early adopter phase, with
a base of about 20% household penetration. We believe one of the
key factors in getting this into mass-market adoption at the 40%
penetration levels will be making a truly sustainable product. We
believe EcoCups will be a key driver for the category bringing in
new users into the single serve while making a meaningful step in
the right direction towards sustainability.
Brand Study
In an independent study conducted in January 2015 by Global
Research Partners, Marley Coffees out as a brand with amazing
promise and consumer relevance, which has effectively translated
limited awareness into trial, repeat and advocacy. Out of a dozen
top tier brands that were studied, including multi-billion dollar
premium coffee brands, and premium national-specialty brands, the
study shows that Marley Coffee is doing THE BEST job of converting
trial into favorite brand status, AND ranked Marley Coffee the
highest for word-of-mouth advocacy conversion with Global Research
Partners reporting that 82% of consumers who have tried the brand
recommend it to someone else.
Global Research Partners’ Data also verified Marley Coffee as a
unique brand with the opportunity to drive new consumers to the
premium coffee. According to the research, relative to the average
category consumer, our drinkers are slightly younger and a bit more
affluent with larger households. Additionally, the data indicated
that the majority of Marley Coffee consumers are interested in
natural, organic & GMO-free products and are more likely than
the general premium coffee consumers to shop for LOHAS (lifestyles
of health and sustainability) products, reaffirming our belief in
EcoCup as a key driver for growth. Clean water initiatives also
ranked high as a purchase driver among all target groups (unaware,
aware and current users) when asked specifically about Marley
Coffee, further confirming WaterWise as a clear differentiator
among the competition and a strong driver of purchase intent.
Throughout fiscal 2016, we plan to continue to embrace loyal
users, begin to convert more users of competitive products and
bring new consumers to the category. Preliminary plans include
activating a 6-8 major market sampling tour starting in late Spring
and a PR push to drive awareness via mainstream consumer media and
tapping into passionate Marley Coffee drinkers to introduce the
brand to their friends and family. We believe we have proven
consistently that once consumers find us, Marley Coffee is a brand
that excites, resonates and stands out. We believe we have a clear
path to reach consumers to create success.
Conclusion
Coffee is growing both domestically and abroad. In the category,
there have been lots of investments in specialty brands as well as
M&A activity. Though we may not be as large as some of our
well-established multi-billion dollar competitors, we are growing
and the key for us is building on our story and foundation.
As we grow our business globally or to other business verticals,
we will always adhere to the principles that got us here in the
first place, which is to provide great tasting, sustainable coffee
with a philanthropic mission. This is the way we’ve been able to
successfully compete and delineate ourselves against the big brands
out there and that’s the way we’ll move forward.
As Warren Buffet always says, the first rule of investing in a
company is to ask if the business is understandable. Our objective
and our action plan is very clear and we believe, with our
management team and brand, we have the assets to succeeding
globally in the upcoming years.
About Jammin Java Corp., d/b/a Marley Coffee
Marley Coffee (corporate name Jammin Java Corp.) is a US-based
company that provides premium, artisan roasted coffee to the
grocery, retail, online, service, hospitality, office coffee
service and big box store industry. Under its exclusive licensing
agreement with 56 Hope Road, the company continues to develop its
coffee lines under the Marley Coffee brand. The company is a fully
reporting company quoted on the OTCQB under the symbol "JAMN".
Learn more at www.MarleyCoffee.com or visit the Investor Relations
section at Investor.MarleyCoffee.com.
Join us on Facebook at http://www.facebook.com/MarleyCoffee, or
follow us on Twitter at http://twitter.com/marleycoffee, where we
post information that's material and non-material about the
company.
Forward-Looking Statement
This Press Release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Acts"). In particular, the words "believe," "may,"
"could," "should," "expect," "anticipate," "estimate," "project,"
"propose," "plan," "intend," and similar conditional words and
expressions are intended to identify forward-looking statements and
are subject to the safe harbor created by these Acts. Any
statements made in this news release about an action, event or
development, are forward-looking statements. Such forward looking
statements include, but are not limited to our preliminary
anticipated results of operations and balance sheet totals for the
three months and year ended January 31, 2015, and as of January 31,
2015, which remain subject to review, audit and revision by our
independent auditors. Such statements are based upon assumptions
that in the future may prove not to have been accurate and are
subject to significant risks and uncertainties. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the control of the company. These risks and
others are included from time to time in documents we file with the
Securities and Exchange Commission ("SEC"), including but not
limited to, our Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown
or unpredictable factors also could have material adverse effects
on our future results. Accordingly, you should not place undue
reliance on these forward-looking statements. Although the company
believes that the expectations reflected in the forward-looking
statements are reasonable, it can give no assurance that its
forward-looking statements will prove to be correct. Investors are
cautioned that any forward-looking statements are not guarantees of
future performance and actual results or developments may differ
materially from those projected. The forward-looking statements in
this press release are made as of the date hereof. The company
takes no obligation to update or correct its own forward-looking
statements, except as required by law or those prepared by third
parties that are not paid by the company. The company's SEC filings
are available at http://www.sec.gov.
Media:Havas FormulaJessica Weeg,
212-219-0321Weeg@formulapr.com
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