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 six months ended June 30, 2023. Swiss Water decaffeinated its last bag of coffee at its legacy production facility in Burnaby, BC in April and all production was consolidated at the Company’s new Delta, BC location.
In June, the Burnaby site was returned to the landlord on the lease expiry date.
In July, subsequent to the end of the quarter, construction of the Company’s second production line in Delta was completed and the first bag of trial coffee was decaffeinated on the new line. It is anticipated that commercial production will commence before the end of Q3 2023.
Revenue for the second quarter was $43.4 million, a decline of $5.0 million, or 10%, compared to the same period in 2022. First half revenue was $92.4 million, an increase of $5.6 million or 6%.
The decline in Q2 revenue was expected and resulted from temporary capacity constraints which negatively impacted volumes while all production was consolidated in Delta before the second new production line there was operational. The impact on the year-to-date result was partially offset by increased business during Q1 from customers in preparation for the transition.
Volumes shipped to customers decreased by 25% for the quarter and by 5% for the six months, compared to the same periods last year. The drop in volumes was the expected result of a temporary reduction in production capacity between April and August of this year.
This is the transition period between the retirement of Swiss Water’s Burnaby facility and the full and final commissioning of its second new production line in Delta. As with the revenue result, the impact on first half volumes was partially offset by customers front loading orders during the first quarter to ensure they had sufficient inventory on hand to bridge the transition.
Encouragingly, North American sales volumes remained flat during the first half when compared to 2022, despite the temporary capacity constraint.
Swiss Water recorded a net loss of $0.4 million for the quarter and $1.1 million for the first half, representing a decrease of $1.8 million and $3.9 million, respectively from the 2022 result.
The decrease was due to lower sales volumes, reduced green coffee differential margins, higher finance expenses associated with elevated company borrowings, and one-time incremental depreciation expenses associated with retired assets located at the Company’s vacated facility in Burnaby, BC.
Adjusted EBITDA was $1.8 million for the quarter and $6.8 million for the six months, representing a decrease of $3.5 million and $2.4 million, respectively from the 2022 result. The decrease was driven mainly by lower sales volumes and reduced green coffee differential margin.
