The last decade and where we're going to go from here. Then I'll take your questions. Forward-looking statements, please review closely. Swiss Water Process has been around for almost 40 years. We started as part of Nabob Coffee Company in Vancouver and then spent some time under Kraft Foods ownership, then became public in 2002 as an income trust. We buy green coffee, which is unroasted coffee, decaffeinated in Delta using only water, temperature, and time, and ship it to roasters in more than 65 markets around the world. Our subsidiary, Seaforth, handles warehousing and logistics. We're a processor, not a roaster. Our customers put our coffee in their own bags. Today, our capacity is five times what it was when we started. Plant runs 24/7, 365, and we've announced a 15% expansion next year.
We're adding that capacity because demand continues to grow in this category. Yes, decaf is growing, and it starts with the consumer. When most people picture a decaf drinker, they picture someone maybe ordering it after dinner. That's still part of the market, but it's not the whole picture. Biggest decaf drinkers today are 18- to 24-year-olds. They're influencing trends across many consumer products, as you know, and they're building habits, particularly here around sleep, wellness, and steady energy. They read labels, and they'll pay more for something that's cleaner and better for you, and that's what we are. Habits like these tend to last. For investors, what that means is two things. A, the market's getting bigger, and people driving it care how decaf is made. How it's made is actually where the opportunity opens up.
Roughly two-thirds of the world's decaf is still made using chemical solvents, though demand for chemical-free decaf is growing as more consumers pay attention to how their decaf is made. We are the global premium provider of chemical-free decaffeinated coffee. A solvent process uses a chemical to strip the caffeine out. Ours uses water, temperature, and time. Three forces are driving that growth. Number one, regulators. In the U.S., the FDA, and also in the EU, Europe, they're reviewing the use of methylene chloride in food, including in decaf. Second, consumers. Once they know the difference, once they know that they have a choice to not buy methylene chloride decaffeinated coffee, the vast majority prefer a natural process, and they'll pay more for it. Third, brands. There is brand risk around this.
Regulatory actions in the U.S. and Canada are putting decaf ingredients under a brighter spotlight, and roasters are paying more attention to what's in their supply chain. Regardless of how this plays out, whether there's an FDA action or not, the industry is absolutely watching this, and this will remain a trend. It's been a trend for the 20 years that I've been in this industry, slowly, inexorably moving away from methylene chloride to water. We see it in our own business now. Large roasters are constantly asking us about additional capacity. In our experience, those asks turn into volume. We don't need to push this change. Our large customers just need an orderly path to conversion, and that's what we're helping them with. When consumers, though, go looking for chemical-free decaf, there's one name they know, and that's Swiss Water, because we're an unusual business.
We don't sell to consumers, yet consumers look for our name. When a roaster puts our logo on their coffee bag, it sells their coffee. Our customers pay more for our decaf, and they earn it back on shelf with a premium of $0.30-$0.40 a pound or a size premium on shelf. The question consumers ask us the most is, "Where can I find it?" We're relaunching and putting ad support and socials behind our new U.S. online marketplace, featuring many of the brands that use Swiss Water. Every bag sold there is a sale for our customers, and it's also a sale for us. Our brand is a big part of why our customer list looks the way it does. Our customers range from global brands to independent roasters in more than 65 markets, as I'd mentioned.
North America is about 80% of our volume today. Fastest growth is overseas, and that tells you how much room there is to grow for us. What I really point to is how our customers have been behaving over the past couple of years. In 2025, with coffee prices hitting record levels, they were buying hand-to-mouth. Today, they're booking well into the first half of next year, and our order book is strong. Capacity is tight in this marketplace. For several quarters, we said that when coffee prices came off their highs, our customers would return, and that's what's happened. That helps you a little bit about what the market and what the opportunity is. Those of you have followed us in the past decade know that the past decade has asked a lot of this business, for sure.
We think of it in three chapters: the build, the shock, and the scale-up. First, the build. Our lease in Burnaby was ending, and that was the catalyst. We chose to build for the long term. Delta was a CAD 125 million investment. We brought the first line up in 2020 during the pandemic, ran both plants side by side until the second line came on in 2023. Now, our capital spending is down to about CAD 1 million a year in maintenance CapEx. Then came the shock through this process. A frost in Brazil, record coffee prices, a futures market that made it very expensive to hold coffee, and a change in U.S. tariff policy. We hold coffee for our customers, and it's valued at market prices. When prices spiked, cash tied up in that coffee spiked with them.
Many in the trade stepped back from holding coffee. We kept carrying it because our customers needed it, and we were there and able to deliver. On tariffs, decaffeination doesn't change the origin of a coffee. Colombian coffee still stays a Colombian coffee. For a while, the Brazil and Colombian issue last May caused a problem. That's been erased as of this point, and U.S. tariff policy is essentially a non-issue. Then the scale-up. Growing into Delta, we didn't just move across town, we added about another 40% of volume, or 40% of capacity. We're learning there every day. We're optimizing constantly. It's performing very well, and again, now running near capacity. Today, the major build is behind us. Coffee prices are coming off their peak on the back of a very strong Brazilian coffee harvest this year, which is great to see.
Cash tied up in our working capital is starting to come down. It is not in a straight line because coffee never moves in a straight line. It is important to know, importantly, that through all of that process, this business kept growing. Our trailing gross profit has nearly tripled over this period from about CAD 12 million to CAD 32.5 million. The two dips you see are coffee price shocks. Through those and the build, gross profit kept climbing, and today it is at its highest level. Because we pass green coffee costs through to our customers, gross profit gives you a cleaner read on the business without the noise of coffee prices. We really like looking at GP. This is not a business that just survived that decade. We grew through it. Now more of that gross profit is reaching the bottom line.
Over the past 12 months, adjusted EBITDA reached CAD 17.1 million, the highest in our history. Delta's cost base is largely fixed. It is heavy capital intensive, very limited variable costs. As volume fills the plant, more of every additional pound flows right down to earnings. You can see that in the margins in this slide. We are also recovering the cost of carrying higher-priced coffee for our customers and running the plant more efficiently. Seaforth's warehousing business contributes to the bottom line as well. Adjusted EBITDA has improved four quarters in a row. That consistency, more than any one quarter, truly is the measure of our progress. This is a slightly longer-term view. From 2020 to today, our volume is up 37% since 2020, and adjusted EBITDA is up about 2.5 times. Volume is the engine.
With the plant near full, economies of scale absolutely drive additional margin. That brings me how we are using the cash the business generates now. Our priorities are in order: capacity, then debt, and then a capital allocation plan into early next year. Capacity comes first. We are adding 15% more capacity inside our existing building for about CAD 6 million, which is roughly 5% of what the plant cost. In our business, what you do is you put capacity in place first, and then you go get volume. Our debt comes in two kinds. We have construction debt, and the construction loans come down on a fixed schedule, about CAD 6 million a year. Our working capital lines, ABL, moves with coffee prices, and they come down as coffee prices decline or maybe go up.
In just six months, we repaid over CAD 15 million in debt and brought construction debt to EBITDA down into our target range. We also have about CAD 62 million in tax losses from the builds that we have just done, which we expect will shield us from cash taxes for the next four to six years, means more of our earnings are converting to free cash flow. We have also put a normal course issuer bid in place so that we can buy back stock when we see it as undervalued. In early 2027, we will present a full capital allocation plan to our shareholders.
That is the same discipline that got us through the build that we just executed. Here is how we see growth playing out going forward. In the near term, it is volume, growth with current customers, and , plus, new customers converting in North America and, in particular, Asia.
That is what our expansion is for. Building alongside that is our online marketplace, which turns awareness of our brand into sales for roasters and helps roasters, particularly small roasters, specialty roasters, use our brand, which is critical to us and our brand awareness. You saw that 65% brand awareness against U.S. decaf customers. That is a big number for a small brand coming out of Canada, for sure. We are extremely well known. Over the longer term, there is caffeine. Today, it is a by-product of our process. Recovering caffeine from a water process is very technically demanding. We have a pilot plant going on in Northern Alberta at the end of December. We will see how that goes.
This has been done in the past with a major plant in Germany that has since been shut down, but the methodology that we are focused on does have some precursors, and we are excited about that opportunity, and we see that as a $3 million-$5 million incremental EBIT opportunity in the future. Each of these initiatives adds either volume or margin. We will leave you with this. Nice shot of the plant. We are coming out of a heavy investment cycle with an expanded plant, growing market, and a brand no one else has. The next 15% capacity comes online in the second half of 2027, and there is room on our site to grow beyond that. The hard, expensive part is done. Growth from here costs a lot less, for sure.
What we see is real demand, we see tight capacity, and we are the leader from a branded point of view as this industry shifts away from methylene chloride to water. We did the hard work when the conditions were the toughest, and now we are growing from a much stronger base, which makes us very excited. Happy to share this story with you. Now I would be happy to take some of your questions.
What would be the CapEx for the caffeine recovery for that generate that
Yeah. The question was what would be the CapEx for caffeine recovery? Right now, it's super early to say, but we're kind of in the range of possibly CAD 20 million. With that type of EBITDA payback, it's pretty enticing. We're excited about that opportunity. Back here.
Yeah. You've gone through a lot of the heavy lift growth wise. It seems like there's a CapEx appreciate growth probably here. If I step back and I thought, okay, what does the next five years look like? Is there a chance you repeat the spend cycle one more time, or are you looking to maybe focus on moving from cash flows to the rest?
Yeah. The question is: what do we focus on for the next five years? I think that the expansion that we're doing, this 15% that we're adding, basically we're hooking up some tanks that we put in place when we built this first line. We left some empty tanks, so this is a natural, just quick add-on for us to do. I know there's optimization beyond that in terms of trying to find additional capacity for a very limited additional CapEx. We have probably three to four years of growth run room here, maybe less, because this category is moving quickly. So that's exciting. Then beyond that, as I said, a capital allocation plan. What are we looking at?
We don't exactly know, but there are opportunities either to divert some of that to caffeine recovery or the big next step could be another operating line here on that site in Delta. We do have an option to purchase that site. We don't want to make the mistake that we had from Burnaby. That is a big opportunity for us and so much of the growth in decaffeination is coming, yes, it's in the U.S., but Asia is a big deal right now. Korea, Taiwan, Japan, none of them allow methylene chloride. China is starting to pick up growth in decaf finally, and we also have countries like Indonesia and also into Saudi Arabia, Muslim countries, not a lot of alcohol consumed, a lot of coffee consumed, and they stay up late. We're developing those markets.
Another line in Vancouver is a very interesting opportunity for us looking westbound.
Back of the house.
Back of the room. Sorry. I will come back to you. It is all the way to the back of the room, and then I will come forward. There is actually someone behind you, so sorry.
I do not have a question.
All the way.
How many shares are outstanding? Is this process for a license in Asia?
Yeah. The question was how many shares are outstanding, 9.6 million. Is there a licensing opportunity in Asia? Possibly. We have looked at that over time. We've also stepped away from some of those opportunities because pricing can all of a sudden get out of your hands, and that's a major concern for us as we deal in a hyper-competitive market that we're in, despite the fact that it's growing. There was a question back here again. Sorry.
Yeah. The leverage component has been a risk factor for a while for you. You've gone that control there to say if things were to happen to return something like that, would you consider that a near-term share target or would you like to work below that? If you can just put that all together with the fact that you thought it was sensitivity to the price of coffee and where the rest of your working capital. I'm just trying to think about what you want ultimately about coffee.
Yeah. We are driving down construction debt. That is absolutely something that we are working on. We are paying that down at about CAD 6 million a year. In terms of the working capital, that ABL, that is what drives so much of our profitability, and we have gotten way smarter as to how we price that working capital, i.e., coffee, as we run it through our plant and take position of that for our customers. We have about seven different levers that we can use to price coffee as it comes through our plant. So the working capital, the ABL number, I go by weeks of supply that we want to have on hand, and we have to just deal with where the coffee market goes, and we have an ABL in place that does that.
In terms of managing construction debt down, I think there is some more work that needs to be done. Not a lot. I think we might come to a point we say, "Hey, maybe two times is a great spot from a construction debt point of view." Because I do not like looking at a total debt point of view. I know you do. I get that, but I absolutely split them apart. Question.
Can you tell me if you have any ROE aspirations or ROIC and ROIC?
That's-
Construction is done, yeah.
Yeah. Well, certainly all of those numbers improve significantly as you have stopped building, and as we see the economies of scale that we have coming through our plant. I do not have an exact target number, but I know that optimizing for a little bit more capacity and also using the last years of demonstrated effectiveness of improving our process with the engineering and operations team that we have in place, that we will find additional opportunities for some capacity, which will provide significantly more ROIC. I did not answer your question perfectly about ROIC, but I think that it is natural that it is going to be increasing significantly. Question. You already had new entrant. You, yeah. Sorry.
Can you talk about what is involved in converting some of this chemical-based process to your process and the timeline? What kind of ramp-up would you see?
The question is: what does it take to get someone off of methylene chloride, basically, and into our space? Basically, large brands are seeing additional risk in being in methylene chloride. The more that consumers know that there is a choice and they have a choice, and this is why the FDA is on this is why the National Coffee Association in the States is on this, is they do not like having consumers know that there is a choice, but we do, and there is, and consumers do know that. Brands like Peet's, for example, who recognized, "Hey, there is brand risk on using this stuff," converted to us. It took a year and a half.
When you are in an organization like Peet's, we got part of that business first with our competitor, and then just proving out that, A, our quality worked better, our logistics and supply chain worked better. We took over all of that and do Peet's exclusively now. That is how big end of town works. For the small roasters, we are just providing great quality coffees in spot positions, let them know that we have wonderful capabilities, and they will come to us and we help them use our brand, which is what we really want from the specialty end of town. That will happen pretty quickly. Sorry, new question here?
Pardon. So of the, you said 67% of decaf market is using the solvents.
Solvents, yes.
So of the chemical free portion, what's your market share of that?
Yeah. Okay, so the question is of the 30% or so that's chemical free, which is essentially, it's water and CO2. We're probably about 40% of that share. Another 35%-40% would be Descamex, which is both Mexico and Brazil. And then the new competitor in the space is, in fact, the largest methylene chloride decaffeinator in the world that has opened up a water operation in Bremen, and they probably have about 20% now. They've announced a capacity expansion as well. They all see this coming, and the industry needs more capacity in this space. We're at the forefront of it, and we're super excited with how this market is moving towards us. I think I have one minute maybe or so. Only because you're very persistent.
Just from a capital markets point of view.
Yes.
The stock is very illiquid. Have you considered perhaps floating the stock or other initiatives? Because for me, being a small-time investor, it's not somewhere I'd put any money to work in because it is so-
The question is this an illiquid stock? It's not the most liquid in the world. We're trying to find ways to provide liquidity, for sure, and certainly liquidity improves as pricing has improved, so there has been some turnover, which is good. As I said, looking at a capital allocation plan next year, and I think something like, I don't like guaranteeing it at all, but something like a stock split could potentially become part of a conversation as pricing in this stock moves forward. Any other questions?
Just for the equipment and the process you have, are there any hyper-specialized suppliers, or is it pretty generic equipment but you put your special sauce in the process?
That is the inside of the plant, just so you know. There is a decaffeination plant. The tanks that we get built are, they are custom built, but are they hyper specialized? No. They are not pressure vessels. A lot of stainless in there, so a lot of spooling, et cetera. There is nothing that is crazy. It is how we manage the carbon within the plant that is the magic in terms of driving high quality coffee.
It is not a trademarked process or-
It is trademarked. Our brand is trademarked, but in terms of patent or anything like that, no. All the intellectual property we keep internally. We know we have competitors. I do not want to let them know what we are doing. We have so much expertise built up in terms of how we deliver quality. It is all internal. Just like Nestlé. Nestlé does not release a darn thing for exactly that reason. All right. If there are no other questions, we will wrap it up today. Thank you very much for your time and attention. Appreciate it. Thank you.