Processing Volumes and Revenues Both Up Over 2007
TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN
VANCOUVER, Aug. 11 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund
("the Fund") today reported financial results for the three and six months
ended June 30, 2008. The three-month period represents the second quarter of
its 2008 fiscal year. The Fund holds all of the outstanding securities of
Swiss Water Decaffeinated Coffee Company, Inc. ("SWDCC" or "the company") and
its results are dependent on the operating results of SWDCC.
In $000s except 3 months ended 6 months ended
per unit amounts June 30 June 30
2008 2007 2008 2007
Sales 7,764 7,618 15,934 14,679
Gross profit 2,756 2,445 5,975 5,399
EBITDA(1) 1,479 1,410 3,662 3,421
Net income 131 1,586 1,780 3,103
Adjusted distributable cash(1) 2,067 1,284 4,224 3,108
Distributions paid 1,502 1,502 3,004 2,920
Per unit amounts:
Net Income per unit 0.020 0.238 0.267 0.465
Adjusted distributable cash
generated per unit(1) 0.310 0.192 0.633 0.466
Distributions paid per unit(1) 0.225 0.225 0.450 0.437
(1) EBITDA, adjusted distributable cash and adjusted distributable cash
per unit are non-GAAP financial measures. Definitions of these terms
can be found in SWDCC's Management's Discussion and Analysis to be
posted on SEDAR on or before August 11, 2008.
During the second quarter and the first half of 2008, SWDCC's processing
volumes grew by 9.4% and 13.8% respectively, over the same periods of 2007.
The higher sales volumes were due to several factors including:
- a modest order backlog from the fourth quarter of 2007 which was
related to a customer supply issue. Volume from this customer grew by
57% in the second quarter and by 35% in the first half of 2008.
- the addition of a significant new customer in late 2007 which
increased year-over-year demand throughout the first half of 2008.
- strong demand from existing customers, which offset a volume
reduction related to a customer's decision to discontinue a long-
standing in-store promotion program that drove significant volume
Revenues increased by 1.9% in Q2 2008 and by 8.5% in the first half of
2008 compared to the same periods in 2007. Revenue did not grow at the same
rate as processing volumes largely due to the relative weakness of the US
dollar in 2008 compared to a year ago. As a result, SWDCC realized
significantly less foreign exchange on its US dollar denominated sales in
2008, which comprised 83% and 86% of total revenues in the second quarter and
the first half, respectively. In addition, revenues for both periods were
affected by a shift in product mix to lower revenue business.
SWDCC's gross profit for the second quarter and first half of 2008
increased by 12.7% and 10.7%, respectively, compared to 2007. The improvement
was mainly the result of the higher sales volumes, reduced costs of goods sold
and lower foreign exchange on US dollar denominated input costs. These factors
more than offset higher green coffee costs and a reduction in foreign exchange
on US revenues. Second quarter EBITDA was up by 4.9% year-over-year, while
six-month EBITDA increased by 7.0%. The increases were related to the same
factors discussed above, which more than offset the $0.3 million increase in
consumer advertising expense recorded in both periods.
During the second quarter, the company's net income decreased by 91.7%
over the same period in 2007. This was mainly due to the recording of net
losses on derivative financial instruments used to manage its US dollar
exposure and coffee futures. During the first half of 2008, net income
decreased by 42.6% over the prior year for the same reason.
Monthly distributions to unitholders were maintained at the level set in
March 2007, when they were increased by 5.9% to $0.075 per unit. During the
second quarter, the Fund generated distributable cash of $2.1 million, and
paid $1.5 million in distributions to unitholders. In the first six months of
2008, distributable cash of $4.2 million was generated and $3.0 million was
paid to unitholders. This resulted in a payout ratio of 73% for the second
quarter and 71% for the first half.
"During the second quarter and through the first half of 2008, we met our
volume expectations and were generally pleased with the gains made in most
segments of our business. With net growth from new and existing customers in
all segments except our toll business expected to continue, we foresee our
annual volumes to increase over 2007," said Frank Dennis, President and CEO of
SWDCC and a Trustee of the Fund. "We launched a multi-media advertising
campaign during the second quarter. This marketing program clearly
communicates the advantages of the SWISS WATER(R) Process, and highlights our
ability to provide consumers with decaffeinated coffee that has not been
exposed to chemical solvents such as Methylene Chloride or Ethyl Acetate - the
chemicals used in approximately 80% of decaffeinated coffee now available to
consumers worldwide. We expect this important investment to grow our business
over the balance of this year and into next."
A more detailed discussion of the Fund's financial results can be found
in its second quarter Management's Discussion and Analysis, which is to be
posted with the Fund's audited financial statements on SEDAR (www.sedar.com)
on or before August 11, 2008.
SWDCC is the world's only consumer-branded chemical free coffee
decaffeinator, and is certified organic by the OCIA (Organic Crop Improvement
SWDCC decaffeinates customer-owned coffees, including organically
certified coffees, for a toll fee. The company also purchases high-quality
green coffees from more than 10 different countries, decaffeinates them and
markets them to the green coffee trade. These two revenue streams are known as
the company's "toll" and "non-toll" businesses, respectively.
As of June 30, 2008 approximately 55% of SWDCC's revenue came from the
US, 32% from Canada and the balance from international markets, including the
United Kingdom, Japan and Australia. Consistent with most global,
commodity-based businesses, the bulk of the Fund's revenues are earned in US
For further information:
For further information: Stan Thompson, Chief Financial Officer, Swiss
Water Decaffeinated Coffee Company Inc., Phone: (604) 444-8780, Fax: (604)
420-8711, Email: email@example.com, Website: www.swisswater.com