|By Marketwired .||
|May 7, 2014 04:05 PM EDT||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/07/14 -- Ten Peaks Coffee Company Inc. ("Ten Peaks" or "the company") (TSX:TPK) today reported financial results for the three months ended March 31, 2014, the first quarter of its 2014 fiscal year. Ten Peaks is a leading specialty coffee company doing business through two wholly owned subsidiaries, Swiss Water Decaffeinated Coffee Company, Inc. ("SWDCC") and Seaforth Supply Chain Solutions Inc. ("Seaforth"), the company's green coffee handling and storage subsidiary. SWDCC is a premium green coffee decaffeinator located in Burnaby, BC, which employs the proprietary SWISS WATER® Process to decaffeinate green coffee without the use of chemicals. It is the company's primary business, and the results reported here reflect SWDCC's operating performance.
During the first three months of 2014, Ten Peaks recorded solid year-over-year gains in processing volumes and gross profit, two of its key performance indicators.
"With first quarter processing volumes growing by 9% and our gross profit up by 81%, we were able to maintain the positive momentum Ten Peaks has shown over the past several quarters," said Frank Dennis, President and CEO of Ten Peaks.
Ten Peaks' strong operating results were masked, however, by two external factors that weighed heavily on the balance of the company's quarterly financial results.
First, the coffee commodity price, or "NY'C'", rose by 60% during the period, increasing from US$1.11 per lb at the beginning of January, to US$1.78 per lb at the end of March. The commodity price spike led to significant unrealized losses being recorded on the coffee futures contracts the company uses to help manage fluctuations in the NY'C'. (Although losses on these derivatives are offset by corresponding gains in the market value of inventory, the gains cannot be recorded under IFRS until the inventory is sold.) The losses on derivative instruments during the quarter more than offset the increase in gross profit. As a result, Ten Peaks recorded a net loss of $0.7 million and a year-over-year decline in EBITDA during the period.
The second challenge resulted from a four-week work stoppage by local truck drivers at Port Metro Vancouver. The strike, which was resolved in late March, prevented the delivery of goods arriving at the port, including a significant amount of green coffee destined for SWDCC. To offset the supply interruption, SWDCC sourced green coffee at market prices from numerous warehouses across North America, increasing its cost of sales somewhat. While these purchases enabled SWDCC to continue meeting strong customer demand for its decaffeinated coffees, they also significantly increased the number of futures contracts the company had outstanding under its commodity price risk management policy. As a result, the run-up in the NY'C' had a much greater effect on Ten Peaks' quarterly financial results than it otherwise would have had.
Looking ahead, the negative effect of these external factors is expected to be largely reversed through the balance of 2014 as SWDCC's green coffee inventory is processed and sold at market prices.
In $000s except per share amounts 3 Months Ended (unaudited) March 31 2014 2013 --------------- --------------- Sales $ 13,482 $ 12,043 Gross profit 2,116 1,170 EBITDA(1) 123 577 Net income (673) 106 Per share amounts: EBITDA per share 0.02 0.09 Net income per share (0.10) 0.02 (1) EBITDA is defined in the company's Management's Discussion and Analysis, which will be posted on SEDAR on May 7, 2014.
During the first quarter of 2014, SWDCC's processing volumes grew by 9% over Q1 2013. Notably, the growth was achieved despite the truck drivers' job action at Port Metro Vancouver, which limited SWDCC's ability to ship to international markets and held up the delivery of some "toll" orders (for customer-owned green coffee that is decaffeinated by SWDCC for a fee.) The quarterly gains were driven by a 15% volume increase in deliveries to national accounts, with strong growth recorded for both Canadian and American customers. International sales rose slightly over Q1 2013, while volumes to specialty regional accounts were down by 2%, due mainly to strike-related delays in green coffee deliveries.
First quarter revenues rose by 12% to $13.5 million this year, with growth recorded in all three revenue categories. Process revenue increased by 16% for the quarter, driven by higher processing volumes and a stronger US dollar. Green coffee cost recovery revenue (the base amount customers are charged for green coffee) increased by 9%, due to the higher processing volumes and the rising NY'C', as discussed above. Distribution revenue (the amount customers are charged for shipping, handling and warehousing) rose by 44%, also reflecting higher processing volumes, as well as the significant expansion of Seaforth's business during the second half of 2013.
First quarter cost of sales totaled $11.4 million, up by $0.5 million or 5% over the Q1 2013 level. The increase was due to a number of factors, including the higher processing volumes, increased utility charges, and additional freight and handling charges during the port strike. Cost of sales also rose due to increased warehouse costs, which related to Seaforth's expansion.
Gross profit for the first quarter was $2.1 million, up by 81% from the same period last year. The gains were due to higher revenues, which were only partially offset by increased warehouse costs, production overhead and freight and handling charges.
Quarterly sales and marketing expenses declined 12% from the same period last year, to $0.3 million. Administration expenses for the quarter were up, increasing by $0.2 million or 27% to $0.9 million. The increase reflects higher stock-based compensation expenses, as well as higher professional fees.
SWDCC enters into coffee futures contracts to manage the effects of changes in the NY'C' between the time the company commits to buy coffee at a fixed price and the time it sells that coffee at the then-current market price. Realized gains and losses on these contracts are recorded when they mature. In addition, as Ten Peaks does not use hedge accounting, unrealized gains and losses are also recorded at the end of the reporting period, calculated using the market values of the NY'C' at quarter-end.
Due to the rapid increase in the NY'C' during the first quarter, Ten Peaks recorded significant mark-to-market losses on its coffee futures contracts for the period. In contrast, during Q1 of last year the NY'C' was declining, which resulted in gains on these contracts being recorded in the comparative period. Altogether, Ten Peaks recognized $1.3 million in losses on futures contracts in the first quarter of this year, compared to $0.2 million in gains for the same period in 2013. The $1.5 million swing more than offset the company's solid operating results, leading to a decline in EBITDA and a net loss for the quarter.
First quarter EBITDA was $0.1 million, compared to $0.6 million for the same period last year. The company's net loss was $0.7 million for the quarter, compared to net income of $0.1 million in the same period last year.
Mark-to-market losses on coffee futures are offset by corresponding increases in the market value of inventories. However, under International Financial Reporting Standards ("IFRS"), the company cannot mark its inventory to market. Rather, these gains can only be recognized when the coffee is sold in future periods. Accordingly, management expects the financial impact of the losses on derivative instruments recorded in the first quarter to be gradually reversed throughout the year as inventory is sold at market prices.
Cash from operations declined by $2.4 million in the quarter. The change reflects increased working capital needed to purchase additional green coffee inventory and to fund margin calls related to futures contracts. Net debt rose by $3.2 million during the period.
The spike in the NY'C' was driven by a recent drought in Brazil, which could reduce the quality and quantity of Arabica coffees available in 2014. While the overall impact of the drought will not be determined for several months, certain market commentators are forecasting a global supply shortage in 2014/2015. This may keep the NY'C' elevated for an extended period of time, which would slow demand across the coffee industry.
Nevertheless, management's outlook for the balance of 2014 is optimistic. A similar run-up in the NY'C' occurred in 2010/2011, and the company was able to increase processing volumes despite the higher commodity price. Additionally, the strong growth in processing volumes recorded during the first quarter bodes well for upcoming periods.
"For several years now, our focus on delivering premium quality, 100% chemical free decaffeinated coffees and excellent customer service have enabled us to steadily gain market share," said Dennis. "We believe this trend will continue through the balance of 2014, though our growth may be constrained somewhat by the recent run-up in the NY'C'. We also expect to see volumes to specialty regional accounts bounce back later in the year, offsetting the small declines recorded during Q1."
Finally, while Seaforth's storage and handling revenues were negatively affected by the truckers' work stoppage at Port Metro Vancouver, the effects are expected to be offset in the second quarter, as the backlog from the port strike was largely alleviated in April.
Payment of Quarterly Dividend
On April 15, 2014, the company paid an eligible dividend of $0.0625 per share to shareholders of record on March 31, 2014.
A more detailed discussion of Ten Peaks' first quarter financial results and management's outlook can be found in the company's Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2014. This document, along with Ten Peaks' condensed consolidated interim financial statements, will be posted on SEDAR (www.sedar.com) on May 7, 2014.
Readers are cautioned that the summary information contained in this press release is not a suitable source of information for readers who are unfamiliar with Ten Peaks. This press release should be considered a precursor to, and not a substitute for, reading the financial statements and MD&A, which provide more detailed information related to the company's performance and future prospects.
Ten Peaks is a publicly traded company that owns all of the interests of the Swiss Water Decaffeinated Coffee Company Inc. (SWDCC), a premium green coffee decaffeinator located in Burnaby, BC. It also owns and operates Seaforth Supply Chain Solutions Inc. (Seaforth), a green coffee handling and storage business located in Metro Vancouver.
SWDCC employs the proprietary SWISS WATER® Process to decaffeinate green coffee without the use of chemicals, leveraging science-based systems and controls to produce coffee that is 99.9% caffeine free. The SWISS WATER® Process is a 100% chemical free water process for coffee decaffeination, as well as the world's only consumer-branded decaffeination process. It is certified organic by the Organic Crop Improvement Association.
SWISS WATER® Process decaffeinated green coffees are sold to many of North America's leading specialty roaster retailers, specialty coffee importers and commercial coffee roasters. SWDCC also sells coffees internationally through regional distributors.
Seaforth provides a complete range of green coffee handling and storage services, including devanning coffee received from origin; inspecting, weighing and sampling coffees; and storing, handling and preparing green coffee for outbound shipments. Seaforth's warehouse and handling operation is certified organic by Ecocert Canada.
Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements may include such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance, as well as management's current estimates, but which are based on numerous assumptions and may prove to be incorrect. These statements are neither promises nor guarantees, but involve known and unknown risks and uncertainties, including, but not limited to, risks related to processing volumes and sales growth, operating results, supply of coffee, general industry conditions, commodity price risks, technology, competition, foreign exchange rates and general economic conditions.
The forward-looking statements and financial outlook information contained herein are made as of the date of this press release and are expressly qualified in their entirety by this cautionary statement. Except to the extent required by applicable securities law, Ten Peaks Coffee Company Inc. undertakes no obligation to publicly update or revise any such statements to reflect any change in management's expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those described herein.
"Avere Systems is a hybrid cloud solution provider. We have customers that want to use cloud storage and we have customers that want to take advantage of cloud compute," explained Rebecca Thompson, VP of Marketing at Avere Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Oct. 23, 2016 10:00 AM EDT Reads: 3,991
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
Oct. 23, 2016 09:45 AM EDT Reads: 776
The Internet of Things (IoT), in all its myriad manifestations, has great potential. Much of that potential comes from the evolving data management and analytic (DMA) technologies and processes that allow us to gain insight from all of the IoT data that can be generated and gathered. This potential may never be met as those data sets are tied to specific industry verticals and single markets, with no clear way to use IoT data and sensor analytics to fulfill the hype being given the IoT today.
Oct. 23, 2016 09:45 AM EDT Reads: 2,471
Virgil consists of an open-source encryption library, which implements Cryptographic Message Syntax (CMS) and Elliptic Curve Integrated Encryption Scheme (ECIES) (including RSA schema), a Key Management API, and a cloud-based Key Management Service (Virgil Keys). The Virgil Keys Service consists of a public key service and a private key escrow service.
Oct. 23, 2016 09:45 AM EDT Reads: 1,004
Apache Hadoop is a key technology for gaining business insights from your Big Data, but the penetration into enterprises is shockingly low. In fact, Apache Hadoop and Big Data proponents recognize that this technology has not yet achieved its game-changing business potential. In his session at 19th Cloud Expo, John Mertic, director of program management for ODPi at The Linux Foundation, will explain why this is, how we can work together as an open data community to increase adoption, and the i...
Oct. 23, 2016 09:45 AM EDT Reads: 1,870
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Oct. 23, 2016 09:30 AM EDT Reads: 3,811
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
Oct. 23, 2016 09:30 AM EDT Reads: 2,118
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Oct. 23, 2016 09:15 AM EDT Reads: 2,061
SYS-CON Events announced today that eCube Systems, the leading provider of modern development tools and best practices for Continuous Integration on OpenVMS, will exhibit at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. eCube Systems offers a family of middleware products and development tools that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Oct. 23, 2016 09:00 AM EDT Reads: 4,453
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Oct. 23, 2016 08:30 AM EDT Reads: 1,336
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
Oct. 23, 2016 08:15 AM EDT Reads: 4,414
Machine Learning helps make complex systems more efficient. By applying advanced Machine Learning techniques such as Cognitive Fingerprinting, wind project operators can utilize these tools to learn from collected data, detect regular patterns, and optimize their own operations. In his session at 18th Cloud Expo, Stuart Gillen, Director of Business Development at SparkCognition, discussed how research has demonstrated the value of Machine Learning in delivering next generation analytics to impr...
Oct. 23, 2016 08:00 AM EDT Reads: 5,675
@ThingsExpo has been named the Top 5 Most Influential Internet of Things Brand by Onalytica in the ‘The Internet of Things Landscape 2015: Top 100 Individuals and Brands.' Onalytica analyzed Twitter conversations around the #IoT debate to uncover the most influential brands and individuals driving the conversation. Onalytica captured data from 56,224 users. The PageRank based methodology they use to extract influencers on a particular topic (tweets mentioning #InternetofThings or #IoT in this ...
Oct. 23, 2016 08:00 AM EDT Reads: 8,324
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
Oct. 23, 2016 07:00 AM EDT Reads: 4,098
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Oct. 23, 2016 06:30 AM EDT Reads: 4,741