TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN
Swiss Water Decaffeinated Coffee Income Fund will hold a conference
call and webcast to discuss 2007 second quarter and first half results
on August 9, 2007 at 8:00 am Pacific Time (11:00 am Eastern). The
call can be accessed by dialing: 1-866-249-2157 or 416-644-3427. A
replay will be available through August 23, 2007 at: 1-877-289-8525
or 416-640-1917 (Passcode: 21230900 followed by the number sign).
The live and archived webcast can be accessed at:
http://www.vcall.com/IC/CEPage.asp?ID=116584 or on the Fund's
website at www.swisswater.com.
VANCOUVER, Aug. 8 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund
("the Fund") today reported financial results for the three and six months
ended June 30, 2007. The three-month period represents the second quarter of
its 2007 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 per unit amounts 3 months ended 6 months ended
June 30 June 30
2007 2006 2007 2006
Sales 7,618 8,027 14,679 17,360
Gross profit 2,445 2,757 5,399 6,818
EBITDA(1) 1,410 1,754 3,421 4,679
Net income 1,586 1,303 3,103 3,438
Adjusted distributable cash(1) 1,358 1,613 3,221 4,369
Distributions paid 1,502 1,418 2,920 2,836
Per unit amounts:
Net Income per unit 0.238 0.195 0.465 0.515
Adjusted distributable cash generated
per unit(1) 0.203 0.242 0.483 0.655
Distributions paid per unit(1) 0.225 0.212 0.437 0.425
(1) EBITDA, adjusted distributable cash and adjusted distributable cash
per unit are non-GAAP financial measures that are defined in the
second quarter Management's Discussion and Analysis to be posted on
SEDAR on or before August 8, 2007.
In the second quarter and first half of 2007, SWDCC's sales were down by
5.1% and 15.4% respectively over the same periods of 2006. The lower sales
levels are due to several factors:
- The company entered 2006 with a substantial order backlog from the
fourth quarter of 2005, when its new production line was not yet in
full operation. This backlog was processed in the first half of 2006
and did not recur in 2007.
- In the first quarter of 2006, SWDCC received significant initial
stocking orders for new business from two large customers, which did
not recur to the same extent in 2007 as these customers have
normalized their order pattern based on consumption.
- Due to delays in the arrival of green coffee beans from origin,
primarily Colombia and Brazil, toll orders anticipated from some
larger customers in the second quarter of 2007 were moved to the
- Finally, a major customer elected this year not to repeat a
significant in-store promotion it had in the first half of 2006.
SWDCC's sales performance was also affected by the continued
strengthening of the Canadian dollar relative to the US dollar. Absolute
dollar sales revenues generated in US dollars represented approximately 83% of
total revenues in the second quarter and 82% in the first half of 2007. While
SWDCC enters into foreign exchange contracts to reduce its estimated net
exposure to currency fluctuations on a 12-month rolling basis, these contracts
only managed to dampen but not eliminate the negative effect of a continually
strengthening Canadian dollar on its primarily US dollar revenues.
Due to its decreased sales levels, SWDCC's processing volumes declined
year-over-year by 7.5% in the second quarter and by 15.3% in the first half of
2007. Processing rates, expressed in Canadian dollars, also declined in the
first half of 2007 compared to the first half of 2006 as a result of the
stronger Canadian dollar.
The lower sales volumes, coupled with higher costs for green coffee and
other inputs due to foreign exchange, reduced SWDCC's gross profit for the
second quarter and first half of 2007 by 11.3% and 20.8%, respectively,
compared to 2006. Second quarter EBITDA was down by 19.6% year-over-year,
while six-month EBITDA declined by 26.9%.
The company's net income in the second quarter increased by 21.7% over
the same period in 2006, due mainly to the impact of recording realized and
unrealized gains on derivative financial instruments used to manage US dollar
exposure and coffee futures. For the first half of 2007, net income decreased
by 9.7% over the prior year.
Distributions to unitholders in the second quarter were maintained at the
level set in March 2007, when the per-unit monthly distribution was increased
by 5.9% to $0.075. On an annualized basis, the new level of monthly
distributions equals $0.90 per unit. During the second quarter, the Fund
generated distributable cash of $1.4 million, and paid $1.5 million in
distributions to unitholders. In the first six months of 2007, distributable
cash of $3.2 million was generated and $2.9 million was paid to unitholders.
"We remain well positioned to increase our business with both new and
existing customers. Despite softer than expected volumes in the first half of
this year, the outlook for our business remains positive and we continue to
expect that our annual processing volume will grow modestly above our 2006
level," said Frank Dennis, President and CEO of SWDCC and a Trustee of the
Dennis noted that the company has ample capacity for growth with its
plant expansion now completed and also stands to benefit from the relatively
stable New York 'C' market for coffee as well as from continuing growth in
demand for chemical free decaffeinated coffee. "Looking ahead to the third
quarter, based on current customer order patterns, we anticipate that our
volumes will be somewhat ahead of the same period of 2006," Dennis concluded.
A more detailed discussion of the Fund's financial results can be found
in its first quarter Management's Discussion and Analysis, which is to be
posted with the financial statements on SEDAR (www.sedar.com) on or before
August 8, 2007.
SWDCC is the world's only consumer branded chemical-free coffee
decaffeinator, and is certified organic by both the OCIA (Organic Crop
Improvement Association) and Aurora Certified Organic.
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.
Approximately 65% of SWDCC's revenue comes from the US, about 25% from
Canada and the balance from international markets, including the United
Kingdom, Japan and Australia.
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