VANCOUVER, British Columbia, Canada – Swiss Water Decaffeinated Coffee Inc., a leading specialty coffee company and premium green coffee decaffeinator, today reported strong financial results for the three months ended March 31, 2023. 2023 First Quarter Financial and Operational Highlights:
- First quarter revenue was $49.0 million, an increase of 28% or $10.6 million when compared to the same period in 2022. This was a quarterly record for Swiss Water.
- Quarterly volumes increased by 21% compared to the same period in 2022, driven by an increased concentration of volume produced in advance of the Burnaby facility shutdown and an upcoming short period of reduced available capacity.
- North American business continued its strong growth trajectory with volumes up by 35% compared to the first quarter of 2022.
- Production volumes were higher than normal during the first quarter and capacity utilization across the Company’s three production lines exceeded 80%.
- First quarter net income was a loss of $0.7 million, compared to net income of $1.4 million in Q1 2022, representing a year-over-year decrease of $2.1 million. The quarterly loss was mainly due to a $2.1 million one-time increase in depreciation expense associated with the write down of non-salvaged assets located at Swiss Water’s production facility in Burnaby, BC. This legacy facility is currently being shut down as all production is relocated to the Company’s new Delta, BC location. A $1.0 million non-cash loss on the revaluation of the embedded option within Swiss Water’s debenture with warrants also contributed to the quarterly loss.
- Adjusted EBITDA1 was up by 28%, or $1.1 million, to $5.0 million for the first quarter. The improvement was driven mainly by the positive impact of increased sales volume.
“We are pleased to report that the strong performance we achieved during 2022 carried forward into the first quarter of this year. The strong volume result during the quarter was driven by many of our customers moving orders ahead in the year to manage their inventory needs ahead of the transition from our Burnaby facility to our new second production line in Delta.
As a result of our high volumes, revenues and adjusted EBITDA both hit record levels. Quarterly revenue exceeded $49 million for the first time, and adjusted EBITDA increased by 28% to $5.0 million,” said Frank Dennis, Swiss Water ’s President and CEO.
“As we look forward into the balance of 2023, we are continuing to see a strong order book, particularly in late Q3 and early Q4, and are sharply focused on initiating production on our second production line in Delta. We decaffeinated our last bag of coffee at our Burnaby factory in late April and are now preparing the site for return to the landlord in June. In Delta, we expect to complete construction and commence commercial production from our second decaffeination line there (Delta Line 2) by late Q3.
This transition marks the culmination of a decade long project to relocate, modernize and expand the capacity of Swiss Water’s production assets. The consolidation of all production in Delta will provide us with a number of operational efficiencies and will provide capacity for intermediate-term growth. This will help enable roasters to accelerate their migration to chemical free decaffeinated coffee.
As I have previously discussed, it is important to note that from April through August we will have capacity limitations. This transition period is the time between the retirement of the Burnaby assets and the full and final commissioning of Delta Line 2. During this period we will experience reduced sales volumes and therefore earnings. This temporary curtailment in volume will likely lead to lower earnings year-over-year when we report results for the full 2023 fiscal year,” Dennis added.
