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Swiss Water Reports Third Quarter Results

VANCOUVER, British Columbia, Nov. 05, 2024 (GLOBE NEWSWIRE) — Swiss Water Decaffeinated Coffee Inc. (TSX: SWP) (“Swiss Water” or “the Company”), a leading specialty coffee company and premium green coffee decaffeinator, today reported financial results for the three and nine months ended September 30, 2024.

Third Quarter Financial and Operational Highlights

“We are pleased to report that we delivered volume growth and improved profitability during the third quarter. Total volume grew by 27%, and adjusted EBITDA increased by 40%, when compared to Q3 last year”, said Frank Dennis, Swiss Water’s President and CEO. “Looking forward, interest in chemical-free decaffeinated coffee remains high and we are optimistic about the future. However, the NY’C’ coffee commodity price remained close to an historic peak during the third quarter and evidence is starting to emerge that this is negatively impacting consumer consumption of coffee, roaster demand and importer inventories. If futures prices remain at elevated levels and backwardated, this may have a negative impact on our volume growth in 2024 and into next year.”, Dennis added.

Operational Highlights

The following table shows changes in sales volumes during the three and nine months ended September 30, 2024, compared to the same periods in 2023.

Volumes 3 months ended
September 30, 2024
9 months ended
September 30, 2024
Change in total volumes +27% +4%
By customer type    
Roasters +40% +3%
Importers +13% +5%
Specialty +7% +1%
Commercial +47% +6%
     

Last year’s consolidation of Swiss Water’s operations at a single location generated efficiencies from reduced utilities consumption, staffing, and maintenance during the third quarter and first nine months of this year. However, the Company continued to experience inflationary pressures within other components of its variable cost structure. These include higher costs for packaging, shipping, and labour. Swiss Water has worked diligently to maximize efficiencies across its value chain to limit the need for price increases.

Financial Highlights

The following table shows select financial information related to the three and nine months ended September 30, 2024, compared to the same periods in 2023:

In $000s except per share amounts 3 months ended September 30 9 months ended September 30
(unaudited)   2024       2023     2024     2023  
Revenue $ 41,778     $ 32,627   $ 123,880   $ 125,040  
Gross profit   6,438       3,576     19,216     11,882  
Operating income   2,780       758     7,892     2,258  
Net loss   (791)       (417)     (744)     (1,489)  
Adjusted EBITDA1   2,161       1,539     9,433     8,345  
Net loss per share – basic2 $ (0.08)     $ (0.05)   $ (0.08)   $ (0.16)  
Net loss per share – diluted2 $ (0.08)     $ (0.05)   $ (0.08)   $ (0.16)  
                           
1 Adjusted EBITDA is defined in the ‘Non-IFRS Measures’ section of the MD&A and is a “Non-GAAP Financial Measure” as defined by CSA Staff Notice 52-306.
2 Per-share calculations are based on the weighted average number of shares outstanding during the periods. Diluted earnings per share take into account shares that may be issued upon the exercise of warrants and RSUs.
   

Adjusted EBITDA

Swiss Water defines Adjusted EBITDA as net income before interest, depreciation, amortization, impairments, share-based compensation, gains/losses on foreign exchange, gains/losses on disposal of property and capital equipment, fair value adjustments on embedded options, loss on extinguishment of debt, adjustment for the impact of IFRS 16 – Leases, and provision for income taxes and other non-cash gains related to a remeasurement of asset retirement obligation. The Company’s definition of Adjusted EBITDA also excludes unrealized gains and losses on the undesignated portion of foreign exchange forward contracts.

The following table provides a reconciliation of net income, an IFRS measure, to Adjusted EBITDA as follows:

In $000s (unaudited) 3 months ended September 30   9 months ended September 30  
  2024     2023     2024     2023  
Net loss for the period $ (791)   $ (417)   $ (744)   $ (1,489)  
Income tax (recovery) expense   (309)     (363)     191     (434)  
Loss before tax $ (1,100)   $ (780)   $ (553)   $ (1,923)  
Finance income   (509)     (274)     (1,415)     (1,137)  
Finance expenses   2,294     2,027     6,875     5,939  
Depreciation & amortization   1,765     1,416     5,160     7,436  
Unrealized (gain) loss on foreign exchange forward contracts   (25)     191     (37)     89  
Fair value (gain) loss on the embedded option   (144)     (310)     664     (202)  
Loss (gain) on foreign exchange   269     (265)     (317)     (143)  
Other gains               (175)  
Share-based compensation   251     164     975     467  
Impact of IFRS 16 – Leases   (640)     (630)     (1,919)     (2,005)  
Adjusted EBITDA $ 2,161   $ 1,539   $ 9,433   $ 8,346  
                         

Company Profile

Swiss Water Decaffeinated Coffee Inc. is a leading specialty coffee company and a premium green coffee decaffeinator that employs the proprietary Swiss Water® Process to decaffeinate green coffee without the use of chemical solvents such as methylene chloride. It also owns Seaforth Supply Chain Solutions Inc., a green coffee handling and storage business. Both businesses are located in Delta, British Columbia, Canada.

Additional Information

A conference call to discuss Swiss Water’s recent financial results will be held on Wednesday, November 6, 2024, at 1:00 pm Pacific (4:00 pm Eastern). To access the conference call, please dial:

A replay will be available through November 20, 2024, at

A more detailed discussion of Swiss Water Decaffeinated Coffee Inc.’s recent financial results is provided in the Company’s Management Discussion and Analysis filed on SEDAR+ and Swiss Water’s website (investor.swisswater.com).

For more information, please contact:

Iain Carswell, Chief Financial Officer
Swiss Water Decaffeinated Coffee Inc.
Phone: 604.420.4050
Email: investor-relations@swisswater.com
Website: investor.swisswater.com

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements may include such words as “may”, “will”, “expect”, “believe”, “plan”, “anticipate” and other similar terminology. These statements reflect management’s current expectations regarding future events and operating performance, as well as management’s current estimates, but which are based on numerous assumptions and may prove to be incorrect. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties, including, but not limited to, risks related to processing volumes and sales growth, operating results, the supply of utilities, the supply of coffee and packaging materials, supply of labour force, general industry conditions, commodity price risks, technology, competition, foreign exchange rates, construction timing, costs and financing of capital projects, a potential impact of any pandemics, global and local climate changes, changes in interest rates, inflation, transportation availability, and general economic conditions. The forward-looking statements and financial outlook information contained herein are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Except to the extent required by applicable securities law, Swiss Water undertakes no obligation to publicly update or revise any such statements to reflect any change in management’s expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those described herein.


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