Core Insights - Westrock Coffee Company reported a quarterly loss of $0.05 per share, consistent with the Zacks Consensus Estimate, and the same as the loss reported a year ago [1] - The company achieved revenues of $354.83 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 24.20%, compared to $220.86 million in the same quarter last year [2] - The stock has underperformed, losing approximately 33.7% year-to-date, while the S&P 500 has gained 15.6% [3] Financial Performance - The company has surpassed consensus revenue estimates four times over the last four quarters [2] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $295.37 million, and for the current fiscal year, it is -$0.29 on revenues of $1.08 billion [7] Market Outlook - The Zacks Rank for Westrock Coffee Company is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] - The Beverages - Soft drinks industry, to which the company belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Insights - The company reported record-breaking quarterly results for the second consecutive quarter, driven by new customer volume additions and effective cost management [2][11] - The company is focusing on expanding its product offerings, particularly in ultra-filtered milk-based high-protein products, due to strong customer interest [1][24] - The company has successfully managed to optimize its supply chain and control expenses, contributing to significant year-over-year growth in net sales and adjusted EBITDA [11][12] Financial Performance - The adjusted EBITDA for the beverage solutions and SS&T segments reached $26.2 million, marking a 14% increase from the previous quarter and an 84% increase year-over-year [1] - Consolidated net sales increased by 61% compared to the third quarter of 2024, with a reported net loss of $19.1 million attributed to ongoing investments in the Conway facility [11][12] - The company expects consolidated adjusted EBITDA for 2025 to be between $60 million and $65 million, consistent with earlier guidance [16] Operational Developments - The Conway facility has reached production levels nearing 80% of its planned capacity, with significant investments made to enhance operational efficiency [5][12] - A new $30 million capital infusion from core shareholders has been secured, which will support operational delivery and address working capital needs due to elevated coffee prices and tariffs [9][15] - The company is optimistic about future growth opportunities, particularly in the ultra-filtered milk segment, which is expected to compete with traditional ready-to-drink coffee products [24][25] Market Dynamics - The company faces challenges from historically high coffee prices and tariffs, which have impacted gross margins and consumer demand [14][28] - There is uncertainty regarding a key customer's commitment to single-serve cup volumes due to an ongoing M&A transaction, which may affect future sales [17][30] - Despite these challenges, the company remains confident in its ability to replace any lost volume with new customer acquisitions and existing customer expansions [19][39]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $26.2 million for Q3 2025, up 14% from Q2 and up 84% year-over-year [5] - Consolidated net sales increased by 61% compared to Q3 2024, with a reported net loss of $19.1 million due to ongoing investments in the Conway facility [11] - Consolidated adjusted EBITDA was $23.2 million, representing a 125% growth over Q3 2024 [11] Business Line Data and Key Metrics Changes - The beverage solution segment saw net sales increase by 60% year-over-year, with segment-adjusted EBITDA growing 74% to $20.4 million [11] - The sustainable sourcing and traceability segment also posted strong results, with net sales growth of 62% over Q3 2024 and segment-adjusted EBITDA rising to $5.8 million from $2.5 million [12] Market Data and Key Metrics Changes - Coffee prices remain historically high, impacting sourcing strategies, with 60% of coffee sourced from Brazil, which has the highest tariffs [29] - The company is managing the dynamics of high coffee prices and tariffs by optimizing coffee blends and sourcing [29] Company Strategy and Development Direction - The company aims to become the premier integrated strategic supplier for leading beverage brands globally, with a focus on innovation and sustainable sourcing [4][7] - A new focus on ultra-filtered milk-based high-protein products is being developed, with significant customer interest [4][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current business and new opportunities, despite uncertainties related to a key customer's M&A transaction [50] - The company updated its guidance for 2025, estimating consolidated adjusted EBITDA between $60 million and $65 million [16] Other Important Information - A $30 million capital infusion was announced to support operational delivery and address working capital needs due to elevated coffee prices and tariffs [9][15] - The company has approximately $52 million in unrestricted cash and liquidity available under its revolving credit facility [13] Q&A Session Summary Question: Update on production lines after delays - Management confirmed that production levels are at 80-125% of expected volumes, with all customers caught up [21] Question: Details on the ultra-filtered high-protein milk product - The product development cycle is expected to take about 12 months, with significant demand anticipated [24] Question: Managing high coffee prices and tariffs - The company is optimizing coffee sourcing and blends, and feels prepared to navigate the current market environment [29] Question: Impact of a key customer involved in an M&A transaction - The customer was expected to ramp up in 2025, and management is cautious about the potential impact on guidance [32] Question: Customer contracts and demand - Management indicated that while they have not lost any customers aside from the one involved in the M&A, they are actively managing competitive pressures [46]

Financial Performance - Net sales for the three months ended September 30, 2025, increased to $354.8 million, up 60.5% from $220.9 million in the same period of 2024[13] - Gross profit for the three months ended September 30, 2025, was $41.4 million, compared to $37.1 million in 2024, reflecting a gross margin of 11.7%[13] - The company reported a net loss of $19.1 million for the three months ended September 30, 2025, compared to a net loss of $14.3 million in the same period of 2024[14] - Net loss for the nine months ended September 30, 2025, was $67.884 million, compared to a net loss of $55.691 million for the same period in 2024, representing an increase in losses of approximately 21.5%[18] - For the three months ended September 30, 2025, the company recognized $354.8 million in net sales, a 60.5% increase from $220.9 million in the same period of 2024[69] - Revenue from coffee and tea for the three months ended September 30, 2025, was $186.4 million, up 61.5% from $115.5 million in 2024[69] - For the nine months ended September 30, 2025, net sales totaled $849.480 million, compared to $621.749 million for the same period in 2024, marking an increase of about 36.5%[157][158] Assets and Liabilities - Total current assets increased to $393.6 million as of September 30, 2025, from $333.6 million at December 31, 2024, representing an increase of 17.9%[12] - Total liabilities rose to $893.0 million as of September 30, 2025, compared to $730.4 million at December 31, 2024, indicating an increase of 22.2%[12] - The company’s total assets reached $1.18 billion as of September 30, 2025, compared to $1.10 billion at December 31, 2024[12] - The company’s total shareholders' equity decreased to $11.4 million as of September 30, 2025, from $97.5 million at December 31, 2024[12] - Total debt increased to $538.13 million as of September 30, 2025, up from $447.73 million on December 31, 2024, marking a 20.2% increase[82] Cash Flow and Expenses - Cash and cash equivalents at the end of the period on September 30, 2025, were $33.971 million, up from $22.359 million at the end of September 30, 2024, indicating a year-over-year increase of approximately 52.5%[18] - Cash flows from operating activities resulted in a net cash used of $55.703 million for the nine months ended September 30, 2025, compared to $16.023 million for the same period in 2024, indicating a significant increase in cash outflow[18] - Selling, general and administrative expenses were $47.0 million for the three months ended September 30, 2025, slightly up from $46.1 million in 2024[13] - Interest expense for the three months ended September 30, 2025, was $14.0 million, significantly higher than $6.9 million in the same period of 2024[13] - The company incurred interest expenses of $39.741 million for the nine months ended September 30, 2025, compared to $21.921 million for the same period in 2024, representing an increase of approximately 81%[157][158] Equity and Investments - The company recognized a $2.3 million gain from the de-consolidation of Rwanda Trading Company during the three months ended June 30, 2025[23] - The company holds a 49.9% equity method investment in a joint venture with a balance of $7.5 million as of September 30, 2025[44] - The company had an equity investment with a carrying value of approximately $1.0 million as of September 30, 2025, with no adjustments made to its carrying value[139] Legal Matters - The company is currently involved in legal proceedings with Dairy Farmers of America, Inc., alleging trade secret misappropriation, which may impact its financial position[167][168] - The company intends to vigorously defend against the legal claims and has not yet determined the potential financial impact of the lawsuit[168][169] Future Obligations and Financing - Future purchase obligations amount to $218.5 million as of September 30, 2025, primarily for inventory purchases over the next 12 months[170] - The company issued $30.0 million in 5.00% convertible senior notes due 2031 on November 4, 2025, with an initial conversion price of $5.25[176][177] - The company modified its Credit Agreement on November 4, 2025, extending the Covenant Relief Period until October 1, 2026[180] Segment Performance - Segment Adjusted EBITDA for the Beverage Solutions segment was $20.422 million for Q3 2025, up from $11.752 million in Q3 2024, indicating a year-over-year increase of about 74%[159][161] - Employee-related costs for the Beverage Solutions segment were $42.326 million for the nine months ended September 30, 2025, up from $35.017 million in the same period of 2024, reflecting an increase of about 20%[163][165] Inventory and Cost of Sales - Total inventories increased to $212.97 million as of September 30, 2025, up from $163.32 million on December 31, 2024, representing a 30.3% increase[70] - The company reported total costs of sales of $509.311 million for the nine months ended September 30, 2025, compared to $369.282 million for the same period in 2024, indicating an increase of approximately 38%[163][165]

Financing and Debt - The Borrower has raised not less than $30,000,000 from unsecured convertible debt securities, preferred equity interests, and/or common equity interests as part of the Amendment No. 5 Equity Contribution[6] - The Borrower has entered into a credit agreement with Wells Fargo Bank, N.A. as the administrative agent, with amendments made on February 14, 2023, June 30, 2023, February 15, 2024, January 15, 2025, and November 4, 2025[43] - The agreement includes a sustainability investment-linked revolving credit facility, indicating a focus on sustainable financing[44] - The credit facility is structured to support the Borrower's growth and expansion strategies, particularly in sustainability initiatives[44] - The Borrower has committed to using proceeds from the credit facility for specific purposes, including potential acquisitions and operational enhancements[36] - The Borrower is subject to Bail-In Legislation, which may affect its financial obligations[117] - The Borrower must comply with the Bankruptcy Code, which governs its financial restructuring processes[118] - The minimum borrowing amount for Term Benchmark Loans and ABR Loans is set at $1,000,000[137] - The borrowing multiple for Term Benchmark Loans is $500,000, while for ABR Loans it is $250,000[138] Credit Agreement and Amendments - The Amendment No. 5 was executed on November 4, 2025, amending the Existing Credit Agreement originally dated August 29, 2022[32] - The Existing Credit Agreement remains in full force and effect, ratified and confirmed by the parties[13] - The Borrower has executed the Amendment, constituting a legal, valid, and binding obligation enforceable against the Borrower[7] - The Borrower has paid all fees and expenses required on the Amendment No. 5 Effective Date pursuant to the Engagement Letter dated October 17, 2025[6] - The Borrower has confirmed that all representations and warranties in the Amended Credit Agreement are true and correct in all material respects as of the Amendment No. 5 Effective Date[8] - The Amendment No. 5 Arranger is entitled to all rights, privileges, and immunities applicable to the "Arranger" under the Loan Documents[18] Financial Performance - Adjusted Consolidated EBITDA for the fiscal quarter ended September 30, 2021, was $11,462,000[60] - Adjusted Consolidated EBITDA for the fiscal quarter ended December 31, 2021, was $11,544,000[60] - Adjusted Consolidated EBITDA for the fiscal quarter ended March 31, 2022, was $10,420,000[60] - Adjusted Consolidated EBITDA for the fiscal quarter ended June 30, 2022, was $12,471,000[60] - The Borrower reported a cumulative Consolidated Net Income of 50% since the fiscal quarter of the Closing Date[112] Compliance and Covenants - The agreement outlines various financial covenants and conditions of lending, ensuring compliance and risk management[36] - The Borrower is required to maintain certain financial ratios and provide regular compliance certificates to the lenders[36] - The Borrower is expected to provide regular updates on financial performance and strategic initiatives to the lenders[36] - The Borrower must provide a certificate from a Responsible Officer to terminate the Covenant Relief Period, demonstrating compliance with financial covenants[186] - The Secured Net Leverage Ratio must be less than 4.00 to 1.00 for the Borrower to terminate the Covenant Relief Period[186] - The Covenant Relief Period is set to end on October 1, 2026, unless terminated earlier by the Borrower[185] Collateral and Security Interests - The Collateral Agreement is to be executed on the Closing Date and may be amended or modified over time[161] - The Collateral and Guarantee Requirement includes the pledge of all outstanding Equity Interests directly owned by the Loan Parties[162] - The Borrower and its subsidiaries have made commercially reasonable efforts to perfect security interests in collateral, with a 90-day period post-closing for any collateral that could not be perfected on the closing date[165] - The provision and perfection of security interests in collateral are not conditions precedent to any Credit Event on the Closing Date[165] - The Borrower is required to deliver additional security documents as needed after the Closing Date[164] - The Collateral Agent requires evidence of insurance as per the terms outlined in Section 5.02[164] Legal and Regulatory Considerations - The Borrower is subject to Debtor Relief Laws, which affect the rights of creditors generally[192] - The Borrower has established a Benchmark Replacement mechanism to adapt to changes in interest rate benchmarks[120] - The Borrower has defined a Benchmark Transition Event that may trigger changes in its financial agreements[127] - The Borrower has a Beneficial Ownership Certification requirement as part of its compliance obligations[131] Other Financial Provisions - The definition of "Change of Control" includes the acquisition of 40% or more of the voting power of Holdings by any person or group[149] - The term "Capitalized Lease Obligations" refers to liabilities that must be capitalized on the balance sheet in accordance with GAAP[140] - The term "Cash Management Agreement" encompasses various treasury management services provided to the Borrower or its Subsidiaries[144] - Consolidated Debt includes all indebtedness for borrowed money and guarantees, determined on a consolidated basis[170] - Consolidated Net Income excludes extraordinary gains or losses, transaction costs, and any income from investments accounted for using the equity method[173] - Consolidated Total Assets are determined on a consolidated basis in accordance with GAAP, excluding amounts from Unrestricted Subsidiaries[180] - Consolidated Total Net Debt is calculated as Consolidated Debt minus the Unrestricted Cash Amount[181] - The Cumulative Qualified Equity Proceeds Amount includes 100% of net proceeds from the sale of Qualified Equity Interests received after the Closing Date[188] - The definition of "Default" includes any event that would constitute an Event of Default upon notice or lapse of time[193] - The term "Disqualified Lender" includes any person identified as a competitor of the Borrower or its Subsidiaries[200] - The term "Cure Amount" is defined in Section 7.02(a) and relates to the Borrower's obligations[190] - The Borrower may engage in Customary Bridge Financings, provided the long-term debt has a final maturity date no earlier than the Latest Maturity Date[190] Project Updates - The Borrower has completed the "water flow" project at its extraction, bottling, and canning facility in Conway, Arkansas, restoring operations to pre-project levels[6]

Core Insights - Westrock Coffee Company reported record financial results for Q3 2025, highlighting the effectiveness of its customer-centered model and strategic investments made over the past three years [4][8] - The company issued $30.0 million in 5.00% convertible senior notes due 2031, which are convertible into common stock at a price of $5.25 per share [4][7] - An amendment to the existing credit agreement was announced, increasing net leverage compliance levels and decreasing minimum interest coverage ratio requirements through Q3 2026 [7] Financial Performance - Net sales reached $354.8 million, a 60.7% increase year-over-year [8] - Gross profit was $41.4 million, reflecting an 11.6% increase compared to the prior year [8] - The net loss was $19.1 million, compared to a net loss of $14.3 million in the same period last year [8] - Consolidated Adjusted EBITDA was $23.2 million, including $3.0 million of scale-up costs, compared to $10.3 million and $4.0 million of scale-up costs in the prior year [8] Segment Performance - Beverage Solutions segment net sales were $263.0 million, a 60.4% increase, with Segment Adjusted EBITDA of $20.4 million, up 73.8% [8][28] - Sustainable Sourcing & Traceability segment net sales were $91.8 million, a 61.5% increase, with Segment Adjusted EBITDA rising to $5.8 million from $2.5 million in the prior year [8][28] Guidance and Outlook - The company updated its 2025 outlook for Consolidated Adjusted EBITDA to a range of $60.0 million to $65.0 million [9] - Segment Adjusted EBITDA guidance for Beverage Solutions is set between $63.0 million and $68.0 million, while for Sustainable Sourcing & Traceability, it is between $14.0 million and $16.0 million [10] - The company is re-evaluating its 2026 outlook due to uncertainties in customer demand and rising coffee prices [11] Capital Structure - The company has amended its credit agreement to enhance financial flexibility, allowing for increased net leverage and reduced interest coverage ratios [7] - As of September 30, 2025, total assets were $1,178.0 million, up from $1,101.8 million at the end of 2024 [18][20]

Core Viewpoint - Westrock Coffee Company is set to report its third quarter 2025 results on November 6, 2025, after market close, followed by a live earnings conference call [1]. Company Overview - Westrock Coffee is a leading integrated provider of coffee, tea, flavors, extracts, and ingredients solutions in the U.S. [3] - The company offers a wide range of services including coffee sourcing, supply chain management, product development, roasting, packaging, and distribution [3] - Westrock Coffee operates in 10 countries and sources coffee and tea from 35 origin countries [3]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against West Pharmaceutical Services, Inc. due to allegations of fiduciary duty breaches by the board of directors during the class period from February 16, 2023, to February 12, 2025 [1][6]. Company Overview - West Pharmaceutical Services, Inc. is a medical supplies company based in Exton, Pennsylvania, serving as a key supplier to the pharmaceutical, biotechnology, and generic drug industries [6]. Allegations and Issues - The class action complaint alleges that West failed to disclose significant destocking issues in its high-margin High-Value Products portfolio, contrary to claims of strong visibility into customer demand [6]. - It is claimed that West's SmartDose device, intended as a high-margin growth product, was actually dilutive to profit margins due to operational inefficiencies [6]. - The complaint also highlights that margin pressures could lead to costly restructuring activities, including the exit from continuous glucose monitoring contracts with long-standing customers [6]. - Positive statements made by the company regarding its business and prospects were allegedly materially false or misleading [6]. Disclosure and Impact - The truth about the alleged fraud was revealed through a series of disclosures, culminating on February 13, 2025, when West issued weak revenue and earnings forecasts for 2025 [6]. - The disappointing guidance was attributed to contract manufacturing headwinds, including the loss of two major continuous glucose monitoring customers transitioning to in-house manufacturing [6]. - Following this news, West's stock experienced a significant decline, dropping $123.17 per share, or 38%, to close at $199.11 on February 13, 2025 [6].

Core Viewpoint - Westrock Coffee Company (WEST) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining stock price movements, as there is a strong correlation between earnings estimate revisions and near-term stock performance [4][6]. - Rising earnings estimates for Westrock Coffee indicate an improvement in the company's underlying business, which is expected to positively influence its stock price [5][10]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The upgrade of Westrock Coffee to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [9][10]. Earnings Estimate Revisions for Westrock Coffee - For the fiscal year ending December 2025, Westrock Coffee is expected to earn -$0.28 per share, which remains unchanged from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Westrock Coffee has increased by 3.4%, indicating a positive trend in earnings expectations [8].

Financial Performance - Westrock Coffee Company reported a quarterly loss of $0.12 per share, which was better than the Zacks Consensus Estimate of a loss of $0.14, representing an earnings surprise of +14.29% [1] - The company posted revenues of $280.86 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 17.06%, compared to year-ago revenues of $208.39 million [2] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $285.9 million, and for the current fiscal year, it is -$0.28 on revenues of $1.04 billion [7] Stock Performance - Westrock Coffee Company shares have increased by approximately 8.9% since the beginning of the year, outperforming the S&P 500's gain of 7.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Industry Outlook - The Beverages - Soft drinks industry, to which Westrock Coffee Company belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook [8]