Swiss Water Decaffeinated Coffee Inc.

Q2 2026 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. Processing volumes rose 17% in Q2 and 8% year to date. Q2 cost of sales was $55.8 million, down 11% year over year. 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 last year; first-half net income was $2.3 million versus $100,000 last year. Q2 adjusted EBITDA was $5.3 million, up $3.5 million or 191%; first-half adjusted EBITDA was $9.6 million, up $5.8 million or 151%; trailing 12-month adjusted EBITDA was $17.1 million. Cash from operating activities was $10.7 million in Q2 and $16.2 million in the first half. Cash at quarter-end was $5.9 million, net working capital was $34.1 million, and the operating credit facility balance was $27.5 million, down from $38.4 million at December 31. Management did not give formal quarterly or full-year revenue/EPS guidance, but said it expects strong demand, high utilization and a strong order book into 2027, while inventory volumes should remain at or close to current levels near term.

Frank Dennis said the quarter reflected a market normalizing in Swiss Water’s favor: lower coffee futures and easing inversion brought customers back, extended booking horizons and lifted volumes. He emphasized that the business is now seeing strong forward visibility, a robust order book into the first quarter of 2027, and a balance sheet that is “rapidly improving.” His tone was confident but measured, noting volatility remains and that the company is preparing for both opportunity and caution in the coffee market.

Ian Carswell focused on the financial leverage from higher volumes and lower input costs: Q2 gross profit of $10.2 million was supported by lower NYC futures, the elimination of U.S. tariff expense, labor efficiencies and lower utilities, while adjusted EBITDA rose to $5.3 million. He highlighted improved cash generation, with $10.7 million of operating cash flow in Q2, and debt reduction including $12 million repaid on the operating credit facility, $2.8 million on construction debt and $500,000 on the EDC facility in the first half. He also noted the operating credit facility maturity was extended to June 23, 2028, and said the company remains focused on debt reduction, lower interest expense and financial flexibility while keeping capacity for future growth.

Analysts pressed management on how long the “channel fill” opportunity can last, how much more working capital tailwind remains, and whether the strong Q2 volume growth was unusually high. Management said roasters are still not fully inventoried but are more comfortable than in 2025, while warning that Q3 working capital could reverse if coffee futures rise again. Questions also covered tax loss carryforwards, with management saying the benefit likely spans roughly 3 to 5 years or more, and the planned buyback, where management said the NCIB would be controllable, likely preferable to a dividend, and capped at up to 600,000 shares if approved. Analysts also asked about tariffs, U.S. market access and a possible U.S. listing; management said tariff pressure has become much less burdensome and dismissed a U.S. listing as a distraction for now.