More Westrock Coffee Co. news:
► Westrock Partners With Dallas-Based Milk Cooperative on Bottle Facility
► Westrock Coffee Completes New $70M Distribution Center in Conway
► Scott Ford: Plans in Place for Growth at Westrock in Conway
► Arkansas Teacher Retirement System Invests $25M in Westrock
Westrock Coffee Co. of Little Rock (Nasdaq: WEST) reported a net loss of $23.7 million for the quarter that ended March 31, a wider loss than the $4.3 million it posted in the same quarter in 2023.
But the publicly traded coffee, tea and extracts company expects better results as its $300 million extract and ready-to-drink plant in Conway delivered its first commercial products from its multi-serve bottle line on April 16.
And based on its current orders, Westrock expects to run at 75% capacity of its plant in 2025, the first full year of production, Scott T. Ford, CEO and co-founder, said during the earnings call.
He said the company is “in the midst of a meaningful string of sales victories across multiple customer channels and product types and our expected volumes for late [20]24 and [20]25 are anticipated to be materially higher than current run rates.”
Westrock also reported net sales were down in the first quarter by 6.3% to $192.5 million compared with the same period a year earlier. Its Beverage Solutions segment generated $158.1 million sales in the first quarter, a drop of about 13% from the same quarter in 2023.
Westrock’s Sustainable Sourcing & Traceability segment generated $34.4 million in sales in the quarter, an increase from the $24.2 million in the same period last year.
The loss for the quarter included $9.8 million of start-up costs related to the Conway plant.
Inflationary pressure
Ford said rising prices for fuel and food hurt American diners and shoppers, “which in turn continues to affect our roasting ground coffee volumes.”
“We simply see no quick fix to the reality that many end consumers will continue to struggle to afford food and beverages, especially when purchased away from home,” Ford said. “And we will be adjusting a number of our operating expenses accordingly in the coming months.”
He said that coffee drinkers are switching from hot coffee to cold, single-serve, ready-to-drink coffees.
“This transformational shift plays directly into our strengths as we launched the Conway extract and [ready-to-drink] facility,” he said.
Westrock said its guidance for consolidated adjusted earnings before interest, taxes, depreciation and amortization to be between $60 million and $80 million in 2024.
Its consolidated adjusted EBITDA was $11.1 million for the first quarter of 2024, an increase of 31.8% from the same quarter a year ago.
But it said the preliminary guidance for consolidated adjusted EBITDA for 2025 is $115 million, as a result of the operations of the Conway plant.
Ford said that while the guidance for 2025 is further out than what other companies would do, “we’ve been going through something exceptional.”
“We’ve been building the world’s largest roast to ready-to-drink facility, and I thought it was important — and our board thought it was important — that we share with you some level of indication about what we’ve already sold,” Ford said.
He said there’s about 25% of the capacity of the facility to fill, which Westrock expects to do in the next few months.
The EBITDA projection is expected to change, he said.
“It will move up or down based on whether things happen on time and on a mark that we think they’re going to hit,” Ford said. “But we had to start someplace, so you had a sense of order of magnitude about what it is that has happened as Conway turns on.”
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