VANCOUVER, British Columbia, Colombia – Swiss Water Decaffeinated Coffee Inc., a leading specialty coffee company and premium green coffee decaffeinator, reported financial results for the three months and year ended December 31, 2023. During late Q3, commercial decaffeination on Swiss Water’s second production line in Delta, BC started for the first time.
This marked the completion of the consolidation of all production activities into one site, and the end of the transition away from the Company’s legacy production facility in Burnaby, BC.
Production volumes and quality metrics on the new line steadily increased during the final three months of the year and enabled the delivery of a very strong fourth quarter.
Total sales volume for the fourth quarter increased by 17%, when compared to Q4 2022. For the full year, volume decreased by 7%, primarily due to production constraints realized during the second and third quarters of 2023. This temporary limitation of capacity occurred as the Company vacated its old Burnaby site due to the lease expiry there and before the full commissioning of its second line in Delta.
Revenue for the quarter and year ended December 31, 2023, was $41.2 million and $166.3 million respectively. This represents a $2.8 million decrease in Q4 and a $10.7 million decrease for the full year when compared to the 2022 result. Volume decline and a drop in the NY ‘C’ contributed to the year-over-year drop in revenue.
Swiss Water recorded a net income of $1.0 million for the fourth quarter, up by $1.2 million from 2022. For the full year, a net loss of $0.5 million was generated, down by $2.9 million from net income of $2.4 million in 2022.
The fourth quarter increase in net income was primarily due to higher volumes and efficiencies of scale. The drop in annual gross profit was due to the lower volume, as well as materially lower green coffee differential margins and a one-time incremental depreciation expense of $2.5 million related to the closure of the old Burnaby facility.
In addition, Swiss Water experienced a material increase in finance expenses due to higher borrowings. These negative factors were partially offset by gains on risk management activities, higher finance income, reduced losses on foreign exchange, and lower income tax expense.
Fourth quarter adjusted EBITDA was $5.0 million, an increase of $1.9 million over Q4 of 2022. For the full year, adjusted EBITDA was $13.4 million down by $3.3 million, when compared to 2022.
The commissioning of Swiss Water’s second production line in Delta led to an acceleration in raw materials usage and increased shipments of finished goods during the third and fourth quarters of the year.
As a result, inventories closed 2023 at their lowest levels since Q1 of 2022 generating a material release of working capital back into the business. By the end of the fourth quarter, the value of inventory on hand had dropped to $30.3 million from $60.2 million at December 31, 2022. This provided an opportunity for the Company to pay down some debt while leaving adequate inventory on hand to support operations and near-term growth.
Swiss Water finished the year in a strong liquidity position with over $11.0 million cash on hand in anticipation of the maturity of the $15.0 million debenture in October 2024.
