Swiss Water Reports Record Quarterly Volume and Adjusted EBITDA
November 04 2021 - 4:05PM
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,
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.
Operational Highlights
The following table shows changes in volumes
during the third quarter and nine months ended September 30, 2021,
compared to the same periods in 2020.
Volumes |
3 months ended September 30, 2021 |
9 months ended September 30, 2021 |
Change in total volumes |
+29% |
+15% |
By customer type |
|
|
Roasters |
+14% |
+3% |
Importers |
+49% |
+43% |
Specialty |
+21% |
+23% |
Commercial |
+34% |
+11% |
-
Total volumes in the third quarter and first nine months of 2021
improved by 29% and 15%, respectively, compared to the same periods
last year. Across all geographical markets, many of the company’s
customers are seeing strong consumer demand and are ordering in
line, and in some cases, ahead of pre-pandemic levels. Furthermore,
volume growth was enhanced during Q3 2021 as the company started to
ship products to some new out-of-home customers within North
America. Encouragingly Swiss Water recorded 17% and 36% growth in
its North America and Asia Pacific regions respectively in the
third quarter of 2021 compared to the same periods in the prior
year. In Europe, volumes increased by an impressive 221% during the
three months ended September 30, 2021.
-
As in the past, Swiss Water’s largest geographical market by volume
continues to be the United States, followed by Canada, Europe and
other international markets. By dollar value, for the six months
ended June 30, 2021, 44% of sales were to customers in the United
States, 33% were to Canada, and the remaining 23% were to other
countries.
-
In September 2020, Swiss Water successfully completed its first
production run of commercial-grade coffee from its new Delta, B.C.
facility. During the first nine months of this year, a significant
portion of production volume was transitioned to Delta, reducing
some of the pressure on the company’s legacy production assets in
Burnaby, B.C. The Delta facility is now running smoothly on a 24/7
basis and contributed to the third quarter capacity utilization
rate exceeding 85% across the company's three production
lines.
Financial Highlights
In $000s except per share amounts |
|
3 months ended September 30 |
9 months ended September 30 |
(unaudited) |
|
2021 |
|
|
2020 |
|
2021 |
|
2020 |
Sales |
$ |
35,496 |
|
$ |
24,862 |
$ |
89,947 |
$ |
73,059 |
Gross profit |
|
6,018 |
|
|
3,431 |
|
13,222 |
|
12,791 |
Operating income |
|
3,325 |
|
|
606 |
|
5,169 |
|
5,011 |
Net income |
|
135 |
|
|
106 |
|
255 |
|
3,269 |
Adjusted EBITDA1 |
|
3,974 |
|
|
1,335 |
|
8,422 |
|
5,853 |
Net income per share – basic2 |
$ |
0.01 |
|
$ |
0.01 |
$ |
0.03 |
$ |
0.36 |
Net income per share – diluted2 |
$ |
0.01 |
|
$ |
0.01 |
$ |
0.03 |
$ |
0.25 |
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
conversion of convertible debt and RSUs as well as the impact on
earnings from changes in the fair market value of the embedded
option in the convertible debt and conversion of RSUs. Basic and
diluted income per share for the nine months ended September 30,
2020, reflects the impact of the convertible debenture instrument
that has was extinguished on July 20, 2021. |
-
Third quarter revenue increased by 43% over Q3 2020 to $35.5
million, and nine-month revenue increased by 23% to $89.9 million
as a result of increased volume growth in the periods, the effect
of higher green coffee prices and compared to the same periods in
2020.
-
Adjusted EBITDA for the three and nine months ended September 30,
2021 was $4.0 million and $8.4 million
respectively, representing increases of 198% and 44%
respectively compared to the same periods last year. Operationally,
the increase in Adjusted EBITDA was driven by volume growth,
efficiency gains due to higher capacity utilization rates, and
increased financial contribution from Seaforth. These gains were
somewhat offset by an increase in green coffee costs and
incremental labour and production expenses associated with
operating at two facilities. The costs associated with
running two plants will cease when the company exits its Burnaby
facility, expected to occur at the end of June 2023.
-
Net Income declined on a year-to-date basis, despite the
significant increase in Adjusted EBITDA, to $0.3 million from $3.3
million in the previous year, driven primarily by the $2.1 million
increase in depreciation and amortization resulting from operating
at two facilities, the non-cash loss of $1.4 million on the
extinguishment of the convertible debenture, and an increase
in finance expense $1.1 million due to the higher debt to
finance the construction of the Delta 2 facility. This was
partially offset by the non-cash gain of $1.4 million on fair value
of the embedded option in 2020 which did not occur in 2021.
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 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 the cities of Burnaby and Delta, British Columbia,
Canada.
Additional Information
A conference call to discuss Swiss Water’s
recent financial results will be held on November 5, 2021
at 10:00 am Pacific Time (1:00 pm Eastern Time). To access
the conference call, please dial 1-888-506-0062
(toll free) or 1-973-528-0011 (international); passcode:
461887. A replay will be available through August
20, 2021 at 1-877-481-4010 (toll free) or 1-919-882-2331
(international); passcode: 43531.
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
(www.sedar.com) and the company’s website
(investor.swisswater.com).
For more information, please
contact:
Iain Carswell, Chief Financial OfficerSwiss
Water Decaffeinated Coffee Inc.Phone: 604.420.4050Email:
investor-relations@swisswater.com Website:
investor.swisswater.com
Forward-Looking Statements
Certain statements in this press release may
constitute “forward-looking” statements which involve known and
unknown risks, uncertainties and other factors which 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” 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, general industry conditions, commodity price
risks, technology, competition, foreign exchange rates,
construction timing, costs and financing of capital projects, a
potential impact of the COVID-19 pandemic, 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.
Swiss Water Decaffeinate... (TSX:SWP)
Historical Stock Chart
From Dec 2024 to Jan 2025
Swiss Water Decaffeinate... (TSX:SWP)
Historical Stock Chart
From Jan 2024 to Jan 2025