Sunday 07 August 2022

Swiss Water reports strong 1Q volumes, revenue, and Ebitda

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VANCOUVER, BC, Canada – Swiss Water Decaffeinated Coffee Inc., a leading specialty coffee company and premium green coffee decaffeinator, reported strong financial results for the three months ended March 31, 2022. First quarter revenue was $38.4 million, an increase of 50% or $12.7 million when compared to the same period in 2021.

Quarterly processing volumes increased by 23% compared to the same period last year, driven by a combination of new customer acquisition and organic growth with existing customers.

North American business growth accelerated with volumes up by 18% compared to the first quarter of 2021. International markets also grew strongly with volumes up by 37%.

First quarter Adjusted EBITDA1 was $3.9 million, an increase of 95% or $1.9 million when compared to the same period in 2021. The improvement was driven by a combination of strong volumes, high capacity utilization of production assets and disciplined cost control.

Net Income was $1.4 million, an increase of $1.5 million compared to the first quarter of 2021.

Construction of the Company’s second production line in Delta, BC continued throughout the three months ended March 31, 2021. This strategic expansion project is currently on time and on budget.

Subsequent to the end of the quarter, an agreement was reached with Mill Road Capital LLC (“MRC”) to increase the Company’s senior debt covenant from $60.0 million to $65.0 million.

Swiss Water is continuing to evaluate opportunities to raise new capital to support its long term strategic objectives, including enhancements to its hedging program, working capital and long term debt facilities, and reviewing other functioning alternatives.

“We are very pleased to report that the strong performance we achieved during the fourth quarter of 2021 strengthened further during the first quarter of this year. Our volumes, revenues and profitability have all exceeded our expectations, leading to a stronger than expected start to the year.

Total first quarter volume grew by 23%, and our biggest market, North America, moved into strong double digit growth during this period. Our existing customers are experiencing strong growth in demand for their chemical free decaf offerings and additionally, we have started to ship products to a number of new out-of-home customers in North America.

We are seeing very good evidence in the marketplace that our competitors’ methylene chloride decaffeination is declining in preference by roasters and consumers in favour of chemical free processes like ours.

Furthermore, we are excited to share that our capacity utilization rates remain high and are continuing to drive improved profitability. This is helping us manage higher than expected inflationary pressure”, said Frank Dennis, Swiss Water ’s President and CEO.

“As we look forward through the balance of 2022, we are continuing to see a strong order book and are optimistic that, despite emerging macroeconomic risks, we will continue to see favourable trading conditions in our key markets.

On a more cautionary note, we are continuing to experience delays in coffee deliveries as supply chain bottlenecks persist. Furthermore, the continuation of very high coffee futures prices has resulted in a significant increase in our working capital and liquidity needs.

We will pay close attention to these emerging risks and increasing costs, and expect that further pricing actions and other mitigation efforts will likely be required”, said Dennis.

1 Adjusted EBITDA is defined in the ‘Non-IFRS Measures’ section of the MD&A and is a “Non-GAAP Financial Measure” as defined by CSA Staff Notice 52-306.

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