Greetings. Before Swiss Water Decaffeinated Coffee Inc. conference call starts, they are required to remind you that certain information in today's presentation is forward-looking in nature. Any such forward-looking information or statements are based on assumptions that they considered reasonable at the time the information was prepared. Such information involves known and unknown risks, uncertainties, and other factors outside our control that could cause actual results to differ materially from those expressed in the forward-looking information. Swiss Water Decaffeinated Coffee Incorporated does not assume responsibility for the accuracy and completeness of the forward-looking information. Similarly, they do not undertake any obligations to publicly revise this forward-looking information to reflect subsequent events or circumstances, except as required by law. Please refer to Swiss Water Decaffeinated Coffee Incorporated management's discussion and analysis posted on SEDAR and Swiss Water's website for a full discussion regarding forward-looking statements and the risks therein.
I would now like to turn the call over to Frank Dennis, CEO. Sir, the floor is yours.
Thank you, Holly. Morning, everyone, and thanks for taking the time to join us again. I'm Frank Dennis, President and CEO of Swiss Water Decaffeinated Coffee Incorporated. With me today is Iain Carswell, our CFO. Iain and I are here today to discuss Swiss Water's financial results for the 3 and 12 months ended December 31, 2022. As usual, I'll begin with a brief review of our performance, Iain will provide more detail about our financial results before I return to tell you more about our longer term plans and expectations. After that, we'll be happy to take your questions.
As outlined in yesterday's press release and in our MD&A, Iain and I are pleased to report that the strong performance improvement Swiss Water achieved during the third quarter of 2022 carried forward into the fourth quarter, enabling us to post excellent results for the full- year. Our volumes, revenues, and adjusted EBITDA all hit record levels in 2022. Annual revenue grew by 41%, exceeding CAD 175 million for the first time, and adjusted EBITDA increased by 58% to CAD 16.7 million. As always, the volumes were the key driver of our performance, with total annual volumes growing by 15%. In addition to our strong volume growth and the resulting high level of capacity utilization and increased green coffee differential margin and disciplined management of inflationary pressure enabled us to achieve a significant improvement in profit.
Although we recorded a small loss of CAD 300,000 in the 4th quarter, principally due to a one-time non-cash impairment charge on the plant and equipment related to the upcoming shutdown of our legacy Burnaby site, our net income for the year showed a big improvement over 2021. For the 12 months to December 31st, net income of CAD 2.4 million was up by CAD 1.9 million from the 2021 level. adjusted EBITDA reached CAD 16.7 million for the year, which was up CAD 6.1 million or 58% compared to 2021. These firm results were achieved despite the inflationary pressures that all businesses face today because of a number of positive factors that are benefiting Swiss Water.
The first of these is the recovery of demand in the vital out-of-home coffee market as the North American and International Food service economies return to pre-pandemic levels of activity. The second is that as cafes, restaurants, and retail grocery outlets in our key markets adapt to increased environmental responsibility and food safety requirements, coffee roasters and coffee consumers are increasingly choosing chemical-free water-processed decaf like ours over coffee decaffeinated with methylene chloride or ethyl acetate. It's particularly encouraging that in North America, our largest market, we continue to achieve double-digit growth, with year-over-year volume up by 19% in 2022. This strong improvement came from a combination of new customer acquisition and organic growth with existing customers, most of whom ordered ahead of pre-pandemic levels.
As I've noted previously, during the year, we began shipping some new high-profile out-of-home North American customers like Peet's Coffee, a San Francisco-based specialty coffee roaster and retailer with commercial distribution across the U.S. This new business helped boost our results and provides an encouraging indication of future growth potential. Asia-Pacific markets also grew strongly, with volumes shipped to customers there growing by 10% in 2022. Importantly, we also see the positive changes in our customer mix as another clear sign of the strong recovery of the out-of-home coffee market. The removal of restrictions on food service outlets in the U.S. and elsewhere, and the return of more people to their offices and other workplaces helped us increase volume shipped to our higher-margin specialty customers by 28% during the year.
The 10% drop in fourth quarter volume shipped to our commercial customers who primarily serve the grocery channel is likely indicative of the shift from at home to out-of-home coffee consumption. However, with volumes shipped to commercial customers still up 6% for the year, we can see a growing trend in demand for decaf generally, as well as an increasing number of industry participants converting to our chemical-free process. As I've noted before, it's unusual that we've achieved this exceptional volume growth across the business despite a stubbornly high New York Futures contract coffee price for NYC. The NYC rose steadily through the second half of 2021 and remained stubbornly high throughout 2022.
During the year, the NYC averaged $2.13 a pound, down from the peak of $2.58 it hit in the first quarter. Well above the $1.69 it averaged in 2021. Normally, when the NYC rises and remains at such high levels, our customers tend to consume their own inventories as they wait for the price to fall back rather than buy more coffee for us. We experienced some evidence of this in the fourth quarter, particularly with large commercial roasters that service the grocery trade. While we're delighted to see such strong and sustained growth in our business, it does present challenges. The combination of quarter-on-quarter volume increases, a persistently high NYC, and growing inflationary pressure on all our input costs has been putting ever more stress on our working capital resources.
This has been a problem we've been wrestling with for many months. Happily, during the fourth quarter of 2022, we were able to announce an expansion of our credit facilities with our existing senior lenders that goes a long way towards addressing this problem. The expanded facilities resulted in CAD 33.25 million of incremental capital availability, consisting of CAD 21.25 million of expanded revolving credit capacity and CAD 12 million of incremental senior term financing. The increased revolving credit capacity is for working capital purposes, while the increased term financing is dedicated to our immediate capital needs, specifically to help finance the second decaffeination line nearing completion at our Delta, BC production facility.
Before I tell you more about the progress of the Delta Line Two project and our outlook for 2023 and beyond, let me turn the call over to Iain to take you through our financial results. Iain?
Thanks, Frank, and good day, everyone. As always, I'll begin my review with volume shipped to customers, as this is the key metric that drives our financial performance. As Frank indicated, Swiss Water's processing volumes continued to grow in the 12 months to December 31st, largely due to the ongoing recovery of the Food service economy. While total volumes were down by 4% in the fourth quarter, primarily due to timing differences in shipments, volumes were up by 15% for the full year when compared to 2021.
Looking at volumes by customer type, shipments to roasters, those customers who roast and package coffee to sell to consumers in their own coffee shops or for home or office consumption, were up by 12% in the quarter and by 28% in the 12 months. Shipments to importers, those customers who resell our coffees to roasters where and when they need it, were down by 22% in Q4, but up by 28% for the year. Looking at the Roaster segment another way, as Frank noted, specialty Roaster account volumes continued to trend upwards, growing by 3% in the quarter and by 28% for the year. These accounts serve the out-of-home consumer primarily, and the strong annual growth here reflects the return of cafes and restaurants to pre-pandemic operations in our key geographic markets.
Shipments to large commercial roasters were down by 10% in the quarter, but up by 6% for the year. Quarterly shipments to these customers were down due to year-over-year timing differences in order patterns. Turning now to revenues. Fourth quarter revenue of CAD 44 million was up by CAD 8.9 million or 25% from Q4 of 2021. Full- year revenue of CAD 176.9 million also showed very strong growth, increasing by CAD 51.9 million or 41% over 2021. The revenue increase was due to the growth in our volumes as well as higher green coffee prices in 2022. Record levels of activity and an increased financial contribution from our Seaforth Coffee handling and logistics subsidiary also had a positive impact.
Looking at the cost side, on our fourth quarter cost of sales was CAD 38.2 million, an increase of CAD 7.5 million or 24% compared to Q4 of 2021. For the full- year, cost of sales was CAD 150.8 million, up by CAD 43.4 million or 40% from the 2021 level. The increase in both periods was mainly driven by our significantly increased production volumes, the higher cost of green coffee, and increased freight expenses. As Frank noted, while down from its first quarter peak, the NYC coffee commodity price has remained at historically high levels for an unusually extended period. In Q4, the NYC averaged $1.77 per pound, compared to an average of $2.20 per pound in the fourth quarter of 2021.
However, looking at the full- year, the NYC averaged US $2.13 per pound in 2022, up by 26% from an average of U.S. $1.69 in 2021. As you would expect, such a high coffee price triggers a major increase in our working capital needs. The increased value of inventory on our balance sheet is reflective of this. As Frank noted, that's why we were so pleased that we were able to expand our credit facilities during the fourth quarter. We believe that the increased availability of working capital will make it much easier to manage and grow our business going forward. Foreign exchange rates can also have a material impact on our profitability and cash from operations.
This is because the majority of our revenues are generated in U.S. dollars, while a significant portion of our costs are incurred and paid in Canadian funds. Our exposure to changes in the exchange rate is managed in part through derivative financial instruments. All other factors being equal, we benefit when the U.S. dollar appreciates as it did during the fourth quarter and full- year of 2022. In Q4, U.S. dollar averaged $1.36 CAD, up $0.10 from $1.26 CAD in the fourth quarter of 2021. For the full- year, the U.S. dollar averaged $1.30 CAD, up by $0.05 from $1.25 CAD in 2021.
Fourth quarter gross profit was CAD 5.8 million, an increase of CAD 1.4 million or 31% compared to Q4 of 2021. For the 12 months to December 31st, gross profit was CAD 26.1 million, an increase of CAD 8.5 million or 48% compared to 2021. Gross profit percentage for the year was 15%, which is 1 % point higher over the 2021 level. The improvement in gross profit was primarily driven by our higher volumes as well as a significantly higher green coffee differential margin. The increased volumes also drove a high utilization rate on all three of our current decaffeination lines. This, together with record business at our Seaforth subsidiary, enabled us to realize significant production efficiencies in 2022.
At the same time, the comparatively high green coffee price and ongoing inefficiency in the coffee supply chain enabled us to realize very good green coffee differential margin. These positive factors were partially offset by inflationary pressure on our variable cost production and freight costs. Fourth quarter operating expenses were CAD 3 million, up by CAD 100,000 when compared to Q4 2021. For the full- year, operating expenses were CAD 12.7 million, up by CAD 1.77 million over 2021. The administrative portion of operating expenses was down by 14% in Q4, but up by 19% for the year. The primary drivers of the annual increase were general inflationary pressure, higher professional fees, increased headcount and salaries, and the incremental cost of operating from two locations, including depreciation and rental expenses.
The sales and marketing component of annual operating expenses was up by 47% from the 2021 level. This was a result of an increase in headcount and salaries and a return to a more normal level of business travel and trade show participation following the pandemic. Q4 operating income was CAD 2.8 million, up by CAD 1.3 million or 84% from the fourth quarter of 2021. For the full- year, the improvement was even better, with operating income of CAD 13.4 million, double what we recorded in 2021. The big driver here was the improvement in gross profit resulting from our higher processing volumes and improved green coffee differential, partially offset by the higher administrative expenses. Turning now to net income.
We reported a net loss of CAD 254,000 for the quarter, compared to net income of CAD 241,000 in Q3 2021. For the full- year, we posted net income of CAD 2.4 million, an increase of CAD 1.9 million over 2021. As Frank noted, the drop in quarterly net income was primarily a result of a one-time non-cash CAD 2.5 million impairment of plant and equipment. This is a non-cash expense that resulted from an assessment of the salvageable assets at our legacy Burnaby production facility in advance of the lease expiry there in June of this year.
With the help of a third-party engineering consultancy, we carefully considered the potential future use, costs and benefits, and related cash flow impacts involved, and determined that only a portion of the equipment in Burnaby should be salvaged. The improvement in full- year net income reflects our higher operating income materially offset by the Q4 impairment of plant and equipment. Losses on our risk management activities, primarily due to the strengthening of the U.S. dollar and mark-to-market revaluations of our foreign exchange and commodity hedges, as well as higher financing expense due to increased drawings on our debt facilities, also had a negative impact. Fourth quarter net finance costs of CAD 1.4 million were up by CAD 300,000 or 26% over Q4 of 2021.
For the full- year, net finance expenses were CAD 5.1 million, an increase of CAD 1.1 million or 29% compared to 2021. The increase in both periods was primarily due to higher variable interest rates and higher interest on our debentures with warrants, as well as higher outstanding balances on our construction loans and credit facility. Despite inflationary pressure during the quarter and full- year, we achieved a significant improvement in adjusted EBITDA in 2022. Fourth quarter adjusted EBITDA of CAD 3.1 million was up by CAD 1 million or 46% compared to Q4 of 2021. For the year, adjusted EBITDA was CAD 16.7 million, an improvement of CAD 6.1 million or 58% compared to the 2021 result.
Operationally, our adjusted EBITDA improvement was driven by our volume growth and the higher green coffee differential margin achieved in 2022. As I've noted, these positive impacts were partially offset by the higher green coffee cost and incremental labor and production expenses associated with operating at two standalone facilities. Once we consolidate all production at our Delta location and exit the legacy Burnaby facility during the second quarter of this year, the resulting efficiencies will bring down our operating costs going forward. With that, I thank you for your attention, and now I'll turn things back to Frank.
As Iain and I have indicated, we're very encouraged by the fact that the positive momentum we saw building across the business in 2021 continued to gain strength through 2022.
While we remain optimistic with a strong order book and generally favorable trading conditions in our key markets, as ever more industry participants move away from chemical decaffeination in favor of chemical-free processes like ours, caution continues to be called for. Like businesses everywhere, Swiss Water is not immune to current and emerging macroeconomic risks. Inflation is becoming increasingly entrenched, and economies around the world are struggling to get a grip on it by raising interest rates. Russian invasion of Ukraine has disrupted the global order and continues to create a lot of uncertainty in Europe and around the world. Here at Swiss Water, while the supply chain disruptions have eased, we continue to experience some delays in coffee deliveries from certain regions.
The continuation of high coffee futures prices is resulting in a significant increase in our working capital requirements and will also impact coffee demand at the consumer level. As we've noted, we are experiencing very significant inflationary pressure on virtually all of our input costs, from natural gas to freight to labor. These risks and increasing costs demand our close attention and may require further mitigation measures. It could also have a negative impact on our margins and future volumes. Operationally, we continue to run both decaffeination lines at our legacy production facility in Burnaby, BC on a 24/7 basis. Aside from a scheduled maintenance shutdown in January 2022, the initial decaffeination line at our Delta, BC facility, which we designate , operated smoothly and efficiently, also on a 24/7 basis throughout the year.
Since its start up, we've been gradually increasing the processing speed of Line One as we work to optimize and maximize its production. At the same time, we've been sharply focused on completing construction and initiating production on our second decaffeination line here, our Delta Line Two project. Turning to the transition, as you know by now, we must vacate our legacy Burnaby site before the lease expiry in June of this year. We will decaffeinate our last bag of coffee in Burnaby in late April. Following this, we expect to complete construction and commence commercial production from Delta Line Two by late Q3. This transition marks the culmination of a multi-year project to relocate, modernize, and expand the capacity of Swiss Water's production assets. The consolidation of all production in Delta will provide us with a number of operational efficiencies and provide capacity for intermediate term.
To manage expectations, it's important to note that from April through August of this year, our capacity will be temporarily constrained as we move all production to Delta. This transition period is the time between the retirement of the Burnaby assets and the full and final commissioning of Delta Line Two. We have been very proactive in our communication with our customers and suppliers regarding the production of coffee leading up to our exit from Burnaby. During the transition period when our production capacity will be reduced and above the time it will take until Delta Line Two begins producing commercially viable product. We are cautiously optimistic that this proactive approach will help minimize any disruptions to our business.
To build the inventory needed to meet customer demand as we bridge the anticipated production gap, we have been processing as much volume as possible during the first quarter of this year. This risk has required a front-loaded investment in working capital. The curtailment in volume during the transition will temporarily reduce our sales volumes and likely lead to lower earnings year-over-year when we report results for the 2023 fiscal year. However, Swiss Water will be much better positioned for the future when the process is completed. As to budget, the preliminary cost estimate for design and construction of the Line Two project in Delta was approximately CAD 45 million, plus commissioning costs of approximately CAD 2 million.
During the second half of 2022, the impact of global macroeconomic pressures, including inflation, trades disruptions, and supply chain issues, became more acute in terms of their impact on our project budget and schedule. Given the effect of these factors, we currently project a total CAD 53 million final construction cost. There is no change to the original CAD 2 million commissioning budget. The revised cost estimate takes into account the inflationary factors realized or projected to date. With the incremental CAD 12 million expansion of our senior credit term facility, along with our existing available credit and projected internally generated cash flow, we have sufficient funds to complete the projects. That wraps up our comments for today. Iain and I would now be happy to answer any of the questions that you might have.
Certainly. At this time, we will be conducting a question- and- answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to wish you a great day and thank you for joining us. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.