VANCOUVER, British Columbia, Canada – Swiss Water Decaffeinated Coffee Inc., a leading specialty coffee company and premium green coffee decaffeinator, today reported financial results for the three and nine months ended September 30, 2024. Total sales volumes increased by 27% in the third quarter and by 4% for the year-to-date, when compared to the same periods last year.
The year-over-year differences were expected, as the volumes reported in Q3 last year were lower than normal due to the capacity constraints experienced during the period as Swiss Water exited its legacy production facility in Burnaby BC and consolidated all operations in Delta. BC.
Third quarter gross profit was $6.4 million, up by $2.9 million, when compared to Q3 of last year. For the nine months, gross profit was $19.2 million, up by $7.3 million from the same period in 2023. Gross margin percentage was 15% for the quarter and 16% for the year-to-date, compared to 11% and 10% respectively for the same periods last year. The improvements were driven by higher processing volumes, cost savings associated with the consolidation of operations at one location, lower utility rates, and a decrease in one-time depreciation expenses. In 2023, Swiss Water incurred a $2.5 million one-time depreciation cost related to the shuttering of its legacy Burnaby facility.
Net losses for the three and nine months ended September 30, 2024, were $0.8 million and $0.7 million respectively, compared to net losses of $0.4 million and $1.5 million for the same periods in 2023. Despite this year’s improved gross margin, higher interest expenses on construction loans and increased mark-to-market losses on risk management activities offset much of the benefit. Non-cash losses on the revaluation of the Company’s embedded option, and mark-to-market adjustments on stock-based compensation also impacted profitability.
Adjusted EBITDA for the three and nine months ended September 30, 2024, was $2.2 million and $9.4 million respectively, which represents a $0.6 million increase for the quarter and a $1.1 million increase for the year-to-date, when compared to the same periods in 2023. The increases in adjusted EBITDA were primarily due to the same factors driving higher gross profit. These positive impacts were partially offset by increased losses on risk management activities as a result of the near record high coffee futures prices experienced this year.
Subsequent to the end of Q3, on October 31, 2024, Swiss Water fully repaid the debenture with warrants, which was due to Mill Road Capital (“MRC”). The total repayment of $15.9 million consisted of $15.0 million of principal and $0.9 million of accrued interest. Following this payment, all obligations, duties and responsibilities of the parties to the debenture were terminated. The maturity of the debenture did not affect the obligations of the Company or the rights of MRC under their existing warrant agreement.
