VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 14, 2017) -

Ten Peaks Coffee Company Inc. will hold a conference call to discuss its financial results for the three and six months ended June 30, 2017 today, Monday, August 14^th at 9:00 am Pacific Time (12:00 pm Eastern Time). To participate, please dial (888) 567-1603 (toll free) or (862) 255-5347 (international) approximately five minutes before the call and provide the company name. A replay will be available through August 28, 2017 at (877) 481-4010 (toll free) or (919) 882-2331 (international) passcode: 19773.

Ten Peaks Coffee Company Inc. (TSX:TPK) ("Ten Peaks" or "the company") today reported financial results for the three and six months ended June 30, 2017. The three-month period represents the second quarter of the company's 2017 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. This is the company's primary business, and the results reported here reflect SWDCC's operating performance.

During the three and six months ended June 30, 2017, Ten Peaks recorded year-over-year increases in revenue, gross profit, operating income, net income and EBITDA. The gains were related to several factors, including higher shipped volumes and margin expansion.

"Demand for our SWISS WATER® Process decaffeinated coffees continued to build through the first half of this year," said Frank Dennis, President and CEO of Ten Peaks. "During the second quarter, shipments of our decaffeinated coffees rose by 19% over the same period last year and were up by 10% for the year-to-date. This is the third quarter in a row we have recorded volume growth, with gains coming from across the business. Looking ahead, we expect our volume shipments to continue increasing, but to slow somewhat, as the second half of last year was particularly strong. As a result, we anticipate our annual volumes will be up by between 3% and 7% over 2016."

Performance Highlights
In $000s except per share amounts (unaudited)		3 months ended June 30						6 months ended June 30
		2017			2016			2017			2016
Sales		$	21,915		$	18,074		$	41,138		$	38,726
Gross profit			3,364			2,601			6,399			5,616
Operating income			1,470			999			2,739			2,161
EBITDA(1)			2,235			1,000			3,914			2,261
Net income			1,720			758			3,156			1,946
Earnings per share,(2) basic			0.19			0.08			0.35			0.22
Earnings per share,(2) diluted			0.17			0.08			0.25			0.22

(1)	EBITDA is calculated and defined in the section on 'Non-IFRS Financial Measures' below.
(2)	Per-share calculations are based on the weighted average number of shares outstanding during the period.

Looking at six-month volumes by customer type, shipments to coffee importers and coffee roasters grew by 22% and 4%, respectively. SWDCC's large commercial accounts recorded gains of 12%, while shipments to its specialty accounts rose by 6% for the year- to-date.

During the first half of this year, the New York 'C' (or NY'C') Arabica coffee futures price averaged US$1.38/lb compared to US$1.24/lb in the first six months of 2016. However, while the NY'C' was higher on average, it has trended downward through 2017. This has had a positive impact on SWDCC's business, contributing to its higher year-over-year volumes. When the NY'C' declines over a sustained period, customers tend to add to their inventories. In 2016, sales orders declined when the NY'C' started rising, as customers chose to consume inventories rather than build them.

Higher volumes boosted revenues for both the second quarter and year-to-date. Second quarter sales totaled $21.9 million, an increase of $3.8 million, or 21%, over the same period last year. Process revenue (the amount SWDCC charges its customers for decaffeinating green coffee) increased by 15% due to higher volumes. This was partially offset by lower processing rates due to the sales mix. Green revenue (the amount SWDCC charges its customers for the green coffee it purchases for decaffeination) increased by 24%, reflecting higher volumes and the higher NY'C' year-over-year. Distribution revenue (the shipping, handling and warehousing charges billed to customers) rose by 14%, due to higher volumes and growth in Seaforth's business.

Six-month sales totaled $41.1 million, an increase of $2.4 million, or 6%, over the same period last year. Process revenue and green revenue also increased by 6% due to higher volumes. Distribution revenue rose by 14%, with higher volumes and growth in Seaforth's business driving the increase.

Cost of sales for the second quarter grew by 20% to $18.6 million, due to higher volumes. Six-month cost of sales was $34.7 million, up by $1.6 million, or 5% over the first half of 2016. The increase in both periods was driven by higher volumes and higher depreciation expenses, which rose following the expansion of SWDCC's capacity in Q1 2016. This was partially offset by lower labour, and repair and maintenance costs.

Gross profit grew by 29% in the second quarter and by 14% in the first half of 2017, as higher revenues more than offset the increases in cost of sales.

Second quarter administration expenses increased by 10% to $1.2 million. The increase related to share-based compensation expense, as well as higher research and development expenses. First-half administration expenses grew by 2% to $2.4 million, also due to a change in share-based compensation expense.

Operating income was up by 47% to $1.5 million for the second quarter and by 27% to $2.7 million for the year-to-date. The higher gross profit in both periods more than offset the increase in operating expenses.

Ten Peaks entered into a convertible debenture in October 2016. Under IFRS, this instrument is deemed to contain an embedded option which must be revalued at each balance sheet date. Revaluation of this option resulted in a gain of $0.1 million in the second quarter and a gain of $1.0 million for the year-to-date. These were recorded as income in each of the respective periods.

Net income for the second quarter increased by 127% to $1.7 million and by 62% to $3.2 million for the year-to-date, compared to the same periods last year. Higher operating income, gains on risk management activities and a fair value adjustment boosted net income in both periods.

EBITDA for the second quarter rose by 124% to $2.2 million. EBITDA for the year-to-date grew by 73% to $3.9 million. In both periods, higher operating income and improved performance on risk management activities contributed to the year-over-year increase.

Outlook

For the balance of 2017, the company will continue to focus on executing its capacity expansion plan, and working to grow its market share in the US and internationally. Margins in the second half of this year may be reduced if the current weakness in the US dollar continues.

A number of factors support an expectation of future growth in SWDCC's (and therefore Ten Peaks') business. The most recent market research from STUDYLOGIC¹ continues to show that decaffeinated coffee is the fastest growing segment of the US coffee market. Total decaffeinated coffee sales are up year-over-year, and specialty decaffeinated coffee sales are particularly strong, especially in out-of-home markets. In fact, growth in the sales of decaffeinated coffee is offsetting declines in regular (caffeinated) coffees.

¹ STUDYLOGIC report July 6, 2017

"Thanks to amazing, premium decaffeinated coffees like ours, more people are discovering that they can drink great coffee all day long without worrying about the side effects of caffeine," said Dennis. "Our coffees also satisfy a growing consumer desire for higher quality, chemical free ingredients - a fact that's spurring more food companies to offer SWISS WATER® Process coffees to their customers."

At the same time, Ten Peaks' commitment to sustainability responds to heightened awareness from consumers regarding how their food is produced. The SWISS WATER® Process is inherently sustainable and the company pays close attention to coffee sourcing sustainability, community involvement, a healthy workplace and sustainable manufacturing. Readers can learn more about the company's sustainability initiatives in its first-ever sustainability report, found on SWDCC's website at www.swisswater.com.

In addition to consumer-driven trends, changes in the global decaffeination market are enhancing SWDCC's growth prospects. Certain older decaffeination plants in Europe have closed recently, reducing the available third-party decaffeinators. SWDCC expects to win some additional business from coffee companies affected by these shut downs, as they seek alternative providers.

As noted previously, Ten Peaks is building a new state-of-the-art production facility that will enable the company to meet the anticipated long-term growth in demand for its decaffeinated coffees. Construction of the facility, which will be located in Delta, B.C., began in May 2017 and is expected to be completed in mid-2018. Initially, the plant will house one new production line, although the site is large enough for expansion to meet growing demand well into the future. Construction of the new production line is expected to be completed in early 2019 and commissioned in the first half of 2019. The additional capacity that was added at Ten Peaks' Burnaby, B.C. facility in Q1 2016 is expected to be sufficient to meet anticipated growth in demand until the new line is operational.

Quarterly Dividends

On July 17, 2017, Ten Peaks paid an eligible quarterly dividend of $0.0625 per share to shareholders of record on June 30, 2017.

Non-IFRS Financial Measures

EBITDA

Ten Peaks defines EBITDA as net income before interest, depreciation, amortization, impairments, share-based compensation, gains/losses on foreign exchange, gains/losses on disposal of capital equipment, fair value adjustments on the embedded option, and provision for income taxes. EBITDA also excludes unrealized gains and losses on the undesignated portion of foreign exchange forward contracts.

The reconciliation of net income to EBITDA is as follows:

(In $000s) (unaudited)

	3 months ended June 30, 2017			3 months ended June 30, 2016			6 months ended June 30, 2017			6 months ended June 30, 2016
Income for the period	$	1,720		$	758		$	3,156		$	1,946
Income taxes		823			200			967		$	606
Income before tax		2,543			958			4,123			2,552
Finance (income) expense		183			(64	)		388			(139	)
Depreciation & amortization		525			533			1,058			931
Unrealized (gain) loss on foreign exchange forward contracts		(870	)		(411	)		(632	)		(628	)
Fair value gain on embedded option		(115	)		-			(965	)		-
(Gain) loss on foreign exchange		(65	)		27			(112	)		(227	)
Share-based compensation		34			(43	)		53			(228	)
EBITDA	$	2,235		$	1,000		$	3,914		$	2,261

Additional Information

A more detailed discussion of Ten Peaks' recent financial results and management's outlook can be found in the company's MD&A for the three and six months ended June 30, 2017. This document, along with Ten Peaks' condensed consolidated interim financial statements, will be posted on SEDAR (www.sedar.com) and on the company's website (http://www.tenpeakscoffee.ca) on or before August 14, 2017.

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.

Company Profile

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.

About SWDCC

SWDCC employs the proprietary SWISS WATER® Process to decaffeinate green coffee without the use of chemicals, leveraging science-based systems and controls to produce amazing 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.

About Seaforth

Seaforth provides a complete range of green coffee logistics 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.

Forward-Looking Statements

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, construction timing, costs and financing of capital projects, 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.