Mr. Frank Dennis reports

SWISS WATER REPORTS STRONG 2023 FIRST QUARTER

Swiss Water Decaffeinated Coffee Inc. has released strong financial results for the three months ended March 31, 2023.

First quarter 2023 financial and operational highlights:

• First quarter revenue was $49.0-million, an increase of 28 per cent or $10.6-million when compared with the same period in 2022. This was a quarterly record for Swiss Water.
• Quarterly volumes increased by 21 per cent compared with the same period in 2022, driven by an increased concentration of volume produced in advance of the Burnaby facility shutdown and a coming short period of reduced available capacity.
• North American business continued its strong growth trajectory with volumes up by 35 per cent compared with the first quarter of 2022.
• Production volumes were higher than normal during the first quarter, and capacity utilization across the company's three production lines exceeded 80 per cent.
• First quarter net income was a loss of $700,000, compared with net income of $1.4-million in Q1 2022, representing a year-over-year decrease of $2.1-million. The quarterly loss was mainly due to a $2.1-million one-time increase in depreciation expense associated with the writedown of non-salvaged assets located at Swiss Water's production facility in Burnaby, B.C. This legacy facility is currently being shut down as all production is relocated to the company's new Delta, B.C., location. A $1.0-million non-cash loss on the revaluation of the embedded option within Swiss Water's debenture with warrants also contributed to the quarterly loss.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) was up by 28 per cent, or $1.1-million, to $5.0-million for the first quarter. The improvement was driven mainly by the positive impact of increased sales volume.

"We are pleased to report that the strong performance we achieved during 2022 carried forward into the first quarter of this year. The strong volume result during the quarter was driven by many of our customers moving orders ahead in the year to manage their inventory needs ahead of the transition from our Burnaby facility to our new second production line in Delta. As a result of our high volumes, revenues and adjusted EBITDA both hit record levels. Quarterly revenue exceeded $49-million for the first time, and adjusted EBITDA increased by 28 per cent to $5.0-million," said Frank Dennis, Swiss Water's president and chief executive officer. "As we look forward into the balance of 2023, we are continuing to see a strong order book, particularly in late [third quarter] and early [fourth quarter], and are sharply focused on initiating production on our second production line in Delta. We decaffeinated our last bag of coffee at our Burnaby factory in late April and are now preparing the site for return to the landlord in June. In Delta, we expect to complete construction and commence commercial production from our second decaffeination line there (Delta line 2) by late Q3. This transition marks the culmination of a decade-long project to relocate, modernize and expand the capacity of Swiss Water's production assets. The consolidation of all production in Delta will provide us with a number of operational efficiencies and will provide capacity for intermediate-term growth. This will help enable roasters to accelerate their migration to chemical-free decaffeinated coffee. As I have previously discussed, it is important to note that from April through August, we will have capacity limitations. This transition period is the time between the retirement of the Burnaby assets and the full and final commissioning of Delta line 2. During this period, we will experience reduced sales volumes and therefore earnings. This temporary curtailment in volume will likely lead to lower earnings year over year when we report results for the full 2023 fiscal year," Mr. Dennis added.

About Swiss Water Decaffeinated Coffee Inc.

Swiss Water 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, B.C., Canada.

Additional information

A conference call to discuss Swiss Water's recent financial results will be held on May 11, 2023, at 10 a.m. Pacific Time (1 p.m. Eastern Time). To listen to the conference call, please dial:

• 1-888-506-0062 (toll-free);
• 1-973-528-0011 (international); participant access code: 515157.

A replay will be available through May 25, 2023, at 1-877-481-4010 (toll-free) or 1-919-882-2331 (international), passcode: 48420.

A more detailed discussion of Swiss Water's recent financial results is provided in the company's management's discussion and analysis filed on SEDAR and Swiss Water's website.

(1) Adjusted EBITDA is defined in the non-international financial reporting standard measures section of the MD&A and is a non-generally accepted accounting principle financial measure as defined by Canadian Securities Administrators' staff notice 52-306.

We seek Safe Harbor.