LITTLE ROCK, Ark., USA – Westrock Coffee Company today reported financial results for the third quarter ended September 30, 2022 and announced updates regarding its near and long-term extract and ready-to-drink (“RTD”) production capabilities.
Consolidated net sales were $230.3 million for the third quarter of 2022, an increase of $49.0 million, or 27% compared to the third quarter of 2021.
Consolidated gross profit was $41.1 million for the third quarter of 2022, an increase of $2.9 million, or 7% compared to the third quarter of 2021.
Net loss for the period was $13.0 million compared to a net loss of $3.9 million for the same period in 2021. The $13.0 million net loss for the third quarter of 2022 included $4.0 million of acquisition, restructuring and integration expense, $5.2 million of non-cash expense from the change in fair value of warrant liabilities, and $5.9 million of interest expense related to the early extinguishment of debt.
Adjusted EBITDA was $17.9 million for the third quarter of 2022, an increase of $4.4 million, or 33% compared to the third quarter of 2021.
At September 30, 2022, the Company had approximately $266 million of unrestricted cash and undrawn borrowings available under its revolving credit facility.
Scott T. Ford, CEO and Co-founder stated, “Our third quarter results again highlight the product mix shift we are seeing across our business.
The year-over-year growth in our single serve cup volumes drove Adjusted EBITDA growth of 33% in the third quarter.
We held higher expectations for our core coffee and tea business but that was obviously impacted by the negative effects of inflation as both our customer volume demand and our manufacturing costs reflected the rapid acceleration of price increases in fuel, food, materials, and labor.
Fortunately, we were able to partially mitigate these impacts through operational efficiencies, and we expect to recapture many of these cost increases over the next several quarters as our cost pass-through contracts typically reset six months in arrears.”
Westrock Coffee Company: Conway Phase II Acceleration
The Company announced today that given the strong customer demand for the originally planned and announced Phase I capacity of its new Conway, Arkansas extract and RTD facility, the Company is accelerating capital spending that was originally slated for Phase II of the project into Phase I. The Company will now be adding a state-of-the-art extraction technology system, a multi-serve bottling line, and Bag-in-a-Box packaging lines to its Phase I projects that previously included a standard extraction system and high-speed glass bottle and canning lines. The Company now expects to incur approximately $275 million of capital expenditures over the next 3 years to complete the enhanced build-out of Phase I and Phase II. While not impacting guidance during fiscal 2023 or 2024, this additional $90 million in capital expenditures above the amount previously forecasted for the Conway facility, positions the Company for continued volume and Adjusted EBITDA growth in 2025 and beyond.
Renovation of the facility has begun in earnest with the Company making initial deposits on equipment and the commencement of work by the general contractor in the 524,000 square foot facility. The official ground-breaking ceremony took place on November 9, 2022. In addition, the Company has made significant progress in hiring the operations team who will manage the buildout of the facility and operate the facility once it is commissioned. This includes key hires in manufacturing, maintenance, and quality assurance. The plant is scheduled to enter commercial production in the first half of 2024.
Kohana Acquisition Highlights
The Company also announced today that it completed the acquisition of Kohana Coffee, LLC (“Kohana Coffee”). Kohana Coffee is an extract and RTD focused business in Richmond, California serving numerous retailers and CPG coffee brands.
- The acquisition of Kohana Coffee allows Westrock Coffee to accelerate the development, production, and distribution of RTD products in cans and multi-serve bottles to customers of both Kohana Coffee and Westrock Coffee.
- The owners of Kohana Coffee, Jonathan Reinemund and his father, Steve Reinemund, have become shareholders of Westrock Coffee. Steve Reinemund is the former CEO of PepsiCo, Inc.
Mr. Ford, commented, “We are thrilled to welcome the Kohana Coffee team to Westrock Coffee. The addition of Kohana Coffee will further our collective efforts to build and efficiently operate the preeminent integrated coffee, tea, flavors, extracts, and ingredients-based supply chain in the world. Their manufacturing facility on the West Coast not only adds to our RTD and multi-serve bottling capabilities, but also adds significant capacity to our extract manufacturing. Even more importantly, they have a fantastic stable of customers and a knowledgeable, experienced work force.”
Steve Reinemund said, “It is very exciting for Jonathan and me to join as shareholders of Westrock Coffee, not only for the commercial prospects that the combined business offers, but also for the measurable impact that this business has on the farmers who produce the crops upon which we all depend. Jonathan and I remain extremely bullish on the RTD coffee category and look forward to our new partnership with Westrock Coffee.”
