Swiss Water Reports Second Quarter 2025 Results

Executive Summary

• Swiss Water Decaffeinated Coffee Inc. reported financial results for the three and six months ended June 30, 2025, showing significant revenue growth driven by higher coffee futures prices and volume increases, despite a decline in profitability metrics.
• For Q2 2025, revenue increased 56% year-over-year to $67.7 million, while net loss widened to $0.4 million (compared to a net income of $0.9 million in Q2 2024) due to hedge losses, FX depreciation, and maintenance costs.
• The company executed a subsequent event on July 3, 2025, repurchasing and cancelling outstanding warrants held by Mill Road Capital for $0.7 million to strengthen its balance sheet.

Key Details

• Q2 2025 Financials:
  • Revenue: $67.7 million (up 56% from $43.4 million in Q2 2024).
  • Net Loss: $0.4 million (vs. Net Income of $0.9 million in Q2 2024).
  • Adjusted EBITDA: $1.8 million (down 59% from $4.5 million in Q2 2024).
  • Gross Profit: $5.2 million (down 32% from $7.7 million in Q2 2024).
  • Gross Margin: 8% (vs. 18% in Q2 2024).
• Year-to-Date 2025 Financials:
  • Revenue: $130.0 million (up 58% from $82.1 million in 2024).
  • Net Income: $0.1 million (up from $0.05 million in 2024).
  • Adjusted EBITDA: $3.8 million (down 47% from $7.3 million in 2024).
  • Gross Profit: $12.5 million (down 2% from $12.8 million in 2024).
• Operational Metrics:
  • Q2 2025 processed volumes remained relatively stable compared to Q2 2024.
  • Year-to-date processed volumes increased 2% over 2024.
  • NY’C’ Arabica coffee futures averaged US$3.59/lb in Q2 2025 (up 64% from US$2.20/lb in Q2 2024), peaking at US$4.10/lb in April.
• Balance Sheet & Capital Structure Updates:
  • Operating credit facility renewed and expanded to $80 million.
  • Continued repayment of construction debt.
  • Warrant Repurchase: On July 3, 2025, the company purchased outstanding share purchase warrants from Mill Road Capital for $0.7 million. These warrants entitled the holder to acquire up to 2.25 million common shares at an exercise price of $3.33 per share, expiring April 30, 2026. The warrants were cancelled upon payment.
• Market & Tariff Context:
  • US administration signaled intentions for blanket tariffs on Mexican and Canadian imports.
  • Swiss Water’s decaffeination process is classified as “non-transformational” by US customs, allowing beans to retain country-of-origin status.
  • Exports to the US were not subject to tariffs in Q1 2025 but were subject to a 10% blanket tariff (or applicable origin rate) in Q2 2025.
• Profitability Drivers:
  • Q2 profitability was adversely affected by losses from rolling forward hedge positions in an inverted market, USD depreciation, increased production costs from reduced finished goods inventory, and front-loaded maintenance costs.
  • Gross margin decline attributed to a shift in revenue mix toward green coffee revenue sales (lower percentage margins) and the absence of an inventory provision reversal that occurred in 2024.

Notable Quotes

• “We are pleased to have delivered volume growth and stable net income during the first six months of this year, reflecting the ongoing strength of our customer relationships and the resilience of our business. Despite solid volume performance, our year-over-year second quarter profitability was adversely effected by losses from rolling forward hedge positions within an inverted market, depreciation of the U.S. dollar, increased production costs due to our strategic decision to reduce finished goods inventory, and the front loading of maintenance costs in 2025.” — Frank Dennis, CEO
• “In addition, I am delighted that during the second quarter, we executed initiatives to materially strengthen our balance sheet. We renewed and expanded our operating credit facility, continued to repay construction debt, and reached an agreement to repurchase and cancel the Mill Road Capital warrants. These steps continue to enhance our financial flexibility and support our long-term strategy.” — Frank Dennis, CEO