TRADING SYMBOL: The Toronto Stock Exchange - SWS.UN
Swiss Water Decaffeinated Coffee Income Fund will hold a conference call
and webcast to discuss 2007 first quarter results on May 8, 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 May 22, 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(equal sign)116584
or on the Fund's website at www.swisswater.com
VANCOUVER, May 7 /CNW/ - Swiss Water Decaffeinated Coffee Income Fund ("the Fund") today reported financial results for the three months ended March 31, 2007. 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.
Operating Results (Unaudited) In $000s except per unit amounts 3 months ended March 31 2007 2006 ------------------- Sales 7,061 9,333 Gross profit 2,954 4,060 EBITDA(1) 2,011 2,924 Net income 1,517 2,135 Distributable cash(1) 1,863 2,756 Distributions paid 1,418 1,418 Per unit amounts: ----------------- Net Income per unit 0.227 0.320 Distributable cash generated per unit(1) 0.279 0.413 Distributions paid per unit(1) 0.212 0.212 (1) EBITDA, distributable cash and distributable cash per unit are non-GAAP financial measures that are defined in the first quarter Management's Discussion and Analysis to be posted on SEDAR on or before May 7, 2007.
In the three months ended March 31, 2007, SWDCC's sales were down by 24% over the first quarter of 2006, when the company experienced a substantial order backlog from the fourth quarter of 2005. This backlog was eliminated in the first half of 2006 following the launch of the SWDCC's second production line and did not recur in the first quarter of 2007. The first quarter sales in 2006 also benefited from significant initial stocking orders for new business from two large customers. This business has normalized with order patterns now based on consumption and therefore did not repeat in the same magnitude in Q1 2007. As a result of these factors, first quarter processing volumes were down by 22% year-over-year.
EBITDA for the three months was down by 31% year-over-year. The lower EBITDA was due to the quarter's $1.1 million decrease in gross profit as a result of the lower processing volumes and was partially offset by lower selling and administration expenses. Net income decreased by 29% from the first quarter of 2006, due mainly to the lower gross profit and increased depreciation costs following the activation of the company's second production line in mid-February 2006. The higher depreciation costs were offset by $0.7 million in gains from derivative financial instruments used to manage US dollar exposure and coffee futures.
Distributions to unitholders in the first two months of the year were maintained at the level set in December 2005. As previously announced, in March 2007, 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 first quarter, the Fund generated distributable cash of $1.9 million, and paid $1.4 million in distributions to unitholders.
"The outlook for our business remains positive and we continue to expect that this year's annual processing volumes will surpass our 2006 levels, growing at rates in excess of industry averages," said Frank Dennis, President and CEO of SWDCC and a Trustee of the Fund. "With our plant expansion now completed, a relatively stable New York 'C' market for coffee and continuing growth in demand for chemical free coffee, we believe we are well positioned to increase our business with both new and existing customers. In the second quarter, we anticipate that our volumes will be higher than in the same period of 2006, based on current expected customer order patterns."
Dennis added, "The notable improvements in our balance sheet position versus this time a year ago provide us with greater financial flexibility to react quickly to anticipated increases in customer demand as we move into the second quarter."
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 May 7, 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.