VANCOUVER, British Columbia, Canada – Swiss Water Decaffeinated Coffee Inc. (TSX– SWP) (“Swiss Water” or “the company”), a leading specialty coffee company and premium green coffee decaffeinator, reported financial results for the three and nine months ended September 30, 2021.
Three and Nine Months ended September 30, 2021 Financial and Operational Highlights:
- Third quarter revenue was $35.5 million, an increase of 43% or $10.6 million when compared to the same period in 2020. Year-to-date revenue grew strongly and was $89.9 million, an increase of 23% or $16.9 million.
- Quarterly and year-to-date volumes increased by 29% and 15%, respectively, compared to the same periods last year reflecting new customer acquisition and organic growth with existing customers as the food service economy continues to recover.
- European business grew very strongly with volumes up by 84% compared to the first nine months of last year. Year-to-date volumes in the Asia Pacific and North American regions grew strongly at 23% and 10% respectively.
- Production volumes hit record highs during the third quarter and capacity utilization across the company’s three production lines exceeded 85 percent.
- Third quarter Adjusted EBITDA was $4.0 million, compared to $1.3 million in the same quarter last year, representing an increase of 198%. Year-to-date Adjusted EBITDA grew strongly to $8.4 million compared to $5.9 million last year, an increase of 44%.
- Third quarter net income was up only slightly despite the significant increase in Adjusted EBITDA due to increased depreciation, the non-cash loss on the debt extinguishment, and an increase in finance expense. Year-to-date net income also fell to $0.3 million from $3.3 million in the same period last year for primarily the same reasons.
- Financing and permitting have been secured for the construction of the company’s second production line in Delta, BC. Swiss Water formally initiated on site construction in July 2021 and the foundation is complete. The project is currently on time and on budget.
- Inflationary pressure increased within the company’s variable cost structure during the third quarter and will likely drive an increase in processing prices to enable maintenance of margins.
“We are very pleased to report that our volumes and adjusted EBITDA hit record levels during the third quarter. 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 methylene chloride decaffeination is declining in preference by roasters and consumers. Furthermore, we are excited to share that our capacity utilization rate across our three production lines exceeded 85% during the third quarter and that these production rates drive solid profitability”, said Frank Dennis, Swiss Water’s President and CEO. “As we look forward towards the end of this year we are continuing to see a strong order book and we are optimistic that as vaccination programs mature in most developed countries we will continue to see favourable trading conditions in our key markets. On a more cautionary note, we are experiencing a marked slow down in coffee deliveries as supply chain bottlenecks persist. Additionally, a rare double frost occurred in July in Brazil increasing coffee futures prices sharply through the third quarter which caused a significant increase in working capital needs. We will pay close attention to these emerging risks and increasing costs, with an increasing expectation for pricing actions and other mitigation efforts. On a separate note, we initiated construction and completed the foundation of our second line in Delta, BC during the third quarter and we expect to commence above ground construction of production assets by mid November”, said Dennis.
