Ten Peaks Coffee Company Inc. Declares Quarterly Dividend and Reports Fourth Quarter and Year End Results for 2013

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 13, 2014) - Ten Peaks Coffee Company Inc. (TSX:TPK) -

Ten Peaks Coffee Company Inc. will hold a conference call to discuss its financial results for the three months and year ended December 31, 2013 today, March 13, 2014 at 2:30 pm Pacific Time (5:30 pm Eastern Time). To participate, please dial 1-800-952-4972 (toll free) or 416-340-8527 (GTA and international) approximately five minutes before the call and provide the company name or Conference ID: 4185931. A replay will be available through March 28, 2014 at 1-800-408-3053 (toll free) or 905-694-9451 (GTA and international) passcode: 5888593.

Ten Peaks Coffee Company Inc. ("Ten Peaks" or "the company") today reported financial results for the three months and year ended December 31, 2013. 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.

Ten Peaks achieved strong results during 2013, with annual processing volumes, gross profit, net income, and EBITDA all up over 2012. In addition, cash from operations rose by 18%, allowing the company to reduce its bank indebtedness and strengthen its balance sheet. Ten Peaks also paid $1.7 million in dividends to shareholders during 2013. This is a payout level the company has maintained since converting to a corporation from an income fund on January 1, 2011.

"We are very pleased with our performance in 2013," said Frank Dennis, President and CEO of Ten Peaks. "For several years, we have been working to enhance the quality of our premium 100% chemical free decaffeinated coffees, to deliver first-class customer service and to educate the specialty coffee trade - and coffee consumers - about our proprietary SWISS WATER® Process and its unique benefits. These efforts have positioned us to steadily win market share in both new and established geographic markets over the past 12 months, driving our strong financial results."

Operating Results

In $000s except per share amounts	3 Months Ended						12 Months Ended
	December 31						December 31
	2013			2012			2013			2012
Sales	$	15,794		$	14,718		$	53,873		$	59,713
Gross profit		1,948			1,496			6,211			4,663
EBITDA(1)		1,201			1,271			4,211			3,393
Net income		343			590			1,654			1,504
Per share amounts:
EBITDA per share		0.18			0.19			0.63			0.51
Net income per share		0.05			0.09			0.25			0.23

(1) EBITDA is defined in the company's Management's Discussion and Analysis, which will be posted on SEDAR on March 13, 2014.

During the fourth quarter of 2013, SWDCC's consolidated processing volumes increased by 20% over the same period last year. Volumes to specialty regional accounts grew by 11%, while volumes to the company's national accounts rose by 24%. The sales gains with national accounts were partially driven by the decline of the coffee futures market, or NY'C', which spurred large coffee customers to expand their inventory levels.

For the full year, consolidated processing volumes grew by a total of 7%, with specialty regional volumes rising by 17% and national volumes up by 3%. SWDCC's annual volumes have steadily grown for the past four years, increasing by 24% since the beginning of 2010. The volume gains are largely related to the company's growth strategy, which has centered around consistently delivering superior quality, 100% chemical free decaffeinated green coffee backed by excellent customer service.

In recent years, SWDCC has also successfully focused on winning higher-margin specialty regional accounts. These smaller, quality-oriented roaster-retailers are a natural fit with SWDCC, as they are committed to delivering only the finest coffees to their own customers. They also appreciate SWDCC's many value-added services, such as small batch decaffeination and the provision of attractive, educational and well-branded point-of-sale materials. In addition to sending their green coffees to SWDCC for decaffeination, these accounts are increasingly choosing to purchase green decaffeinated coffees from SWDCC's inventories, as they know its green coffee buying team sources distinctive coffees that will be appreciated by the end consumer.

Last year, the NY'C' continued to decline from the historical highs reached in 2011. During 2013, the NY'C' averaged US$1.26 per lb. This is down by 28% from 2012, when the NY'C' averaged US$1.75 per lb. All else being equal, a lower average NY'C' will decrease the value of green coffee included in both SWDCC's sales and cost of sales.

During 2013, SWDCC's green coffee cost recovery revenue (the base amount it charges customer for green coffee) declined by 16% compared to 2012. This was due to the lower NY'C', as discussed above. Green revenue for the fourth quarter rose by 1%, as higher sales volumes more than offset the reduced commodity price. Process revenue increased by 21% for the quarter and by 7% for the year, which is in line with each period's higher processing volumes. Distribution revenue (the amount Ten Peaks charges its customers for shipping, handling and warehousing) was also up, rising by 48% for Q4 and by 39% for the year. In both cases, the increase was due to the higher processing volumes as well as the growth in Seaforth's business. Overall, sales for the three months and year ended December 31, 2013 totaled $15.8 million and $53.9 million, respectively. This compares to $14.7 million and $59.7 million for the same periods of 2012.

Cost of sales totaled $13.8 million for the fourth quarter of 2013, up by 5% over the 2012 level. The increase was due to higher processing volumes, partially offset by a lower NY'C'. Cost of sales for 2013 were down by 13%, as the lower coffee commodity cost more than offset higher utility charges and increased warehousing costs associated with the expansion of Seaforth's business.

Gross profit also improved significantly for both the three-month and full-year periods. Fourth quarter gross profit of $1.9 million was up 30% year-over-year, while annual gross profit of $6.2 million, was up by 33% from the 2012 level. The gains reflect SWDCC's increased volumes, as well as the substantial decline in the NY'C', which reduced its cost of sales.

Sales and marketing expenses were $0.4 million for Q4 2013 and $1.4 million for the full year. In both periods, this represents an increase of $0.1 million, due to higher staff-related expenses, including performance-based compensation. Administration expenses were also up over 2012, increasing by 13% in the fourth quarter and by 7% for the year. The increases were mainly related to Ten Peaks' strong financial performance, which boosted stock-based compensation expenses.

SWDCC enters into coffee futures contracts and foreign exchange forward contracts to manage the effects of changes in the NY'C' and the US-Canadian dollar exchange rate on its business. As the company does not use hedge accounting, it records realized gains and losses on these contracts when they mature, and unrealized gains and losses based on the closing market values of the NY'C' and the US-Canadian exchange rate at the end of a reporting period.

During Q4 2013, Ten Peaks recorded no gains or losses on futures contracts, compared to $0.6 million in gains during the fourth quarter of last year. The company also recognized $0.1 million in losses on foreign exchange forward contracts during the period, compared to no gains or losses in Q4 2012. For 2013, Ten Peaks recorded a $0.8 million net gain on commodity futures contracts, compared to a net gain of $1.5 million during 2012. The company also realized gains of $0.1 million on foreign currency derivatives and recorded an unrealized loss of $0.3 million on such contracts. This compares to no realized or unrealized gains or losses on foreign exchange forward contracts during 2012.

Ten Peaks realizes gains and losses on transactions denominated in foreign currencies when they occur, and on assets and liabilities denominated in foreign currencies when they are translated into Canadian dollars as at the financial statement date. During 2013, the company recorded a loss of $0.1 million on foreign exchange in both the fourth quarter and for the full year. This compares to losses of $0.1 million and gains of $0.2 million in the same periods of 2012.

Fourth quarter EBITDA was $1.2 million, compared to $1.3 million in 2012. The change related to the reduced gains on derivative instruments, which more than offset higher gross profit for the period. For 2013, EBITDA totaled $4.2 million, compared to $3.4 million for 2012. The 24% increase was due to the year's improved gross profit, partially offset by the lower net gains on futures contracts.

Fourth quarter net income was $0.3 million, compared to $0.6 million in the same period last year. Although gross profit was higher in Q4 2013 than in the previous year, the company's earnings were reduced by losses on derivatives, compared to gains during Q4 2012. For 2013, net income totaled $1.7 million, up by $0.2 million over 2012. Higher gross profit drove the increase, but was partially offset by the higher expenses, reduced gains on derivative instruments and a loss on foreign exchange.

During 2013, cash from operations was $5.7 million, up from $4.9 million in 2012. Higher earnings and lower working capital requirements (due to the lower NY'C') allowed Ten Peaks to reduce its net debt (bank indebtedness less cash) by $3.5 million in 2013. Accordingly, interest expense for the year also declined.

Seaforth, the company's green coffee handling and storage subsidiary, expanded its operations in mid-2013 after a local competitor exited the industry. The reduced competition resulted in a significant boost in demand for Seaforth's services, which required the addition of a second warehouse and more staff. Seaforth is now the main green coffee warehouse in Metro Vancouver. It handles and stores green coffee for a diverse range of customers, including multinational commodity traders, niche importers and regional roasters. While it is not expected to become a significant driver of Ten Peaks' financial results, Seaforth bolsters SWDCC's commitment to delivering exceptional customer service by enabling it to provide a more integrated approach to green coffee decaffeination.

Outlook

Management expects Ten Peaks' business to continue to grow during 2014. Gains will come primarily from SWDCC, which will continue to focus on advancing its key objective: providing premium-quality, 100% chemical free decaffeinated coffees supported by excellent service.

"SWDCC is an acknowledged leader in the science of decaffeination," said Dennis. "Over the past five years, we have dedicated considerable resources to developing a chemical free decaffeination process that preserves the quality of green coffees throughout the decaffeination process. While many people are already aware of the unique benefits of the SWISS WATER® Process, we expect to continue winning market share as these benefits become even more well-recognized and respected by our customers."

Management will also leverage SWDCC's well-established green coffee expertise to build its business. Many of SWDCC's national accounts now trust the company to manage their entire decaffeinated coffee program, from the procurement of green coffee beans to the delivery of decaffeinated coffee at their plant. This integrated customer service approach enabled SWDCC to grow its business with large national customers in 2013 and is expected to keep doing so in 2014.

Internationally, Ten Peaks is continuing to work with regional distributors to build awareness of the SWISS WATER® brand and to introduce more consumers to exceptional quality, 100% chemical free decaffeinated coffees. In 2013, management added a number of new markets, bringing the total number of countries that SWDCC is doing business in to 23. While this is a long-term process, management expects to advance its international growth initiatives in the coming year.

One cautionary note relates to recent developments in the coffee market. In the first months of 2014, the NY'C' has rallied due to market concerns about a drought in Brazil (the largest producer of coffee in the world). If the commodity price continues to climb, it will likely weigh on SWDCC's efforts to grow its decaffeination business this year. Generally speaking, when the NY'C' increases rapidly, SWDCC's customers temporarily reduce their orders with the company while they wait to see if the price increase will be sustained.

Quarterly Dividend

On January 15, 2014, the company paid an eligible dividend of $0.0625 per share to shareholders of record on December 30, 2013.

In addition, the company today announced that its board of directors has declared an eligible dividend of $0.0625 per share, to be paid on April 15, 2014 to shareholders of record on March 31, 2014.

Additional Information

A more detailed discussion of Ten Peaks' fourth quarter and annual financial results and management's outlook can be found in the company's Management's Discussion and Analysis ("MD&A") for the three months and year ended December 31, 2013. This document, along with Ten Peaks' consolidated financial statements, will be posted on SEDAR (www.sedar.com) on March 13, 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.

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 coffee that is 99.9% caffeine free. The SWISS WATER® Process is a 100% chemical free water process for coffee decaffeination, and is 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 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.

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 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.