Swiss Water Decaffeinated Coffee Inc.

Q2 revenue was $66 million, down 3% from $67.7 million in Q2 2025; first-half revenue was $123.4 million, down 5% from $129.9 million. Q2 cost of sales was $55.8 million, down 11% year over year, and Q2 gross profit was $10.2 million, up $4.9 million or 94%; first-half gross profit was $18.1 million, up $5.6 million or 44%. Q2 net income was $1.9 million versus a net loss of $400,000 a year ago, and adjusted EBITDA was $5.3 million, up 191% from $1.8 million; first-half adjusted EBITDA was $9.6 million, up 151%, and trailing 12-month adjusted EBITDA was $17.1 million. Operating cash flow was $10.7 million in Q2 and $16.2 million year to date, cash was $5.9 million at quarter end, net working capital was $34.1 million, and the operating credit facility balance fell to $27.5 million from $38.4 million at year-end. No formal revenue or EPS guidance was given; management said it expects strong demand, high utilization, and a strong order book into 2027, while noting inventory tailwinds may not repeat at the same pace in Q3 and that a large move in NYC futures could change customer behavior.

Frank Dennis framed the quarter as evidence that the market is normalizing: as coffee prices fell and the futures inversion eased, customers returned to replenish inventories and extend coverage. He said the order book is the strongest they have seen, with bookings extending into the first quarter of 2027, and emphasized that the company is entering the back half of the year with stronger demand, better visibility, and meaningfully less debt. He was constructive but cautious, repeatedly noting that coffee prices remain volatile and that the company is still watching U.S. grocery pricing and customer behavior.

Iain Carswell highlighted the financial inflection: processing volume rose 17%, Q2 gross profit climbed to $10.2 million, adjusted EBITDA reached $5.3 million, and operating cash flow was $10.7 million. He said cost of sales fell 11% on lower NYC futures, the elimination of U.S. tariff expense, labor efficiencies, and lower utility usage, while operating expenses rose 53% mainly from higher noncash share-based compensation and professional fees. He also noted inventory was down $10.5 million or 23% from December 31, cash was $5.9 million, the company repaid $12 million on its operating credit facility plus $2.8 million of construction debt and $500,000 on the EDC facility, and the operating credit facility maturity was extended to June 23, 2028.

Analysts focused on channel fill, inventory, and the sustainability of volume growth. Management said customers are still not back to full inventory levels, Q2 reflected late-2025 replenishment decisions, and while they like the 8% year-to-date volume growth rate, they do not expect every quarter to match Q2’s strength. Questions also covered capacity expansion, taxes, tariffs, and capital returns: management said it is evaluating targeted capacity investments for possible execution into Q2 next year, believes tax loss carryforwards could support low cash taxes for roughly 3 to 5 years or more, sees tariffs as much less burdensome now because coffee has effectively been given a pass, and is pursuing an NCIB rather than a dividend because buybacks are more controllable given future capital needs.