Westrock fee pany(US:WEST)2023-11-09 22:15Financial Performance - Net sales for the three months ended September 30, 2023, were $219.6 million, a decrease of 4.8% compared to $230.3 million in the same period of 2022[17]. - Gross profit for the three months ended September 30, 2023, was $35.1 million, down from $41.1 million in the same period of 2022, reflecting a gross margin of 15.9%[17]. - The company reported a net income of $16.6 million for the three months ended September 30, 2023, compared to a net loss of $13.0 million in the same period of 2022[17]. - Comprehensive income for the three months ended September 30, 2023, was $19.9 million, compared to a comprehensive loss of $15.8 million in the same period of 2022[18]. - Net income for the three months ended September 30, 2023, was $16.6 million, compared to a net loss of $13.0 million in the same period of 2022[184]. - Adjusted EBITDA for the total reportable segments was $11,595,000 for Q3 2023, down from $17,913,000 in Q3 2022[158]. - Adjusted EBITDA for the three months ended September 30, 2023, was $11.6 million, down from $17.9 million in the same period of 2022, representing a decrease of approximately 35.5%[176]. - The company reported a net loss for the nine months ended September 30, 2023, of $14.5 million, compared to a net loss of $23.5 million for the same period in 2022[176]. Assets and Liabilities - Total assets increased to $891.1 million as of September 30, 2023, up from $746.2 million at the end of 2022[16]. - Total liabilities rose to $490.6 million as of September 30, 2023, compared to $459.5 million at December 31, 2022[16]. - The company’s cash and cash equivalents increased to $44.4 million as of September 30, 2023, from $16.8 million at December 31, 2022[16]. - As of September 30, 2023, Westrock Coffee Company reported a total equity of $126.177 million, with an accumulated deficit of $342.573 million[22]. - The company’s total cash and cash equivalents and restricted cash decreased to $48,815,000 from $95,546,000 year-over-year, a decline of 49%[27]. - Total debt as of September 30, 2023, was $270.7 million, up from $219.7 million at the end of 2022, with a term loan facility of $166.3 million and a revolving credit facility of $45.0 million[105][106]. Shareholder Information - The weighted-average number of shares outstanding for basic earnings per share was 83.4 million for the three months ended September 30, 2023, compared to 49.8 million in the same period of 2022[17]. - Total common shares outstanding increased to 88,039 thousand shares as of September 30, 2023, up from 73,034 thousand shares at the same time last year[22]. - The issuance of common shares related to stock options exercised contributed $786 thousand to additional paid-in capital during the quarter[22]. - The company raised $117.767 million through the issuance of common shares, net of issuance costs, in the latest quarter[22]. - The company issued 12,868,151 common shares at the closing of the De-SPAC merger transaction, receiving $49.8 million in cash proceeds after transaction expenses[62]. - The company completed the HF Investment and PIPE Investments, raising a total of $100.0 million through the issuance of 10.0 million common shares[180]. Expenses - Selling, general and administrative expenses increased to $37.1 million for the three months ended September 30, 2023, from $31.2 million in the same period of 2022[17]. - The company incurred acquisition, restructuring, and integration expenses of $3.1 million for the three months ended September 30, 2023[17]. - The company incurred $121,545,000 in capital expenditures for property, plant, and equipment, significantly higher than $22,966,000 in the previous year, marking a 429% increase[24]. - The company incurred interest expense of $21,216,000 for the nine months ended September 30, 2023[159]. - The company recognized $3.1 million in acquisition, restructuring, and integration expenses for the three months ended September 30, 2023, compared to $4.0 million in the same period of 2022[176]. Revenue Segments - The company’s revenue from coffee and tea for the three months ended September 30, 2023, was $131.8 million, down from $146.7 million in 2022[88]. - The company’s revenue from flavors, extracts, and ingredients increased to $44.3 million for the three months ended September 30, 2023, compared to $26.1 million in 2022[88]. - Total net sales for the Beverage Solutions segment reached $176,818,000, while the Sustainable Sourcing & Traceability segment generated $44,098,000 in sales for the three months ended September 30, 2023[158]. - The Beverage Solutions segment reported net sales of $547.7 million, an increase of approximately 11.2% from $492.7 million in the prior year, driven by a $40.6 million increase in flavors, extracts, and ingredients[199]. - The SS&T segment experienced a significant decline in net sales, totaling $102.0 million, a decrease of 30.8% compared to $147.4 million in the previous year, primarily due to a 32% drop in sales volume[200]. Cash Flow and Financing - Cash flows used in operating activities totaled $75,131,000 for the nine months ended September 30, 2023, compared to $59,534,000 in the prior year, indicating a 26% increase in cash outflow[24]. - Net cash provided by financing activities was $223,147,000, compared to $152,190,000 in the prior year, showing a 47% increase[24]. - The company recognized negative cash flows from operations of $75.1 million for the nine-month period ended September 30, 2023, driven by current overall market and industry conditions[43]. - The company had outstanding borrowings of $42.5 million under a $70 million working capital trade finance facility, with a maturity of one year from inception[115]. Taxation - The effective income tax rate for the nine months ended September 30, 2023, was 18.7%, compared to 13.0% for the same period in 2022, primarily due to an increase in the valuation allowance against domestic deferred tax assets[57]. - Income tax benefit for the three months ended September 30, 2023, was $5.2 million, resulting in an effective tax rate of (45.7%) compared to a benefit of $0.4 million and an effective rate of 3.2% in 2022[196]. - The effective tax rate for the nine months ended September 30, 2023, was (18.7%), with an income tax benefit of $3.3 million, compared to a 13.0% effective tax rate and a $3.5 million benefit in 2022[208]. Acquisitions - The company completed the acquisition of the remaining 15% of Falcon Coffees Limited for $3.2 million, enhancing its Sustainable Sourcing & Traceability segment[36]. - The company completed the acquisition of Bixby Roasting Co. for total consideration of $2.6 million, including 39,778 Common Shares and approximately $2.2 million in cash[89]. - Kohana Coffee was acquired for a total consideration of $39.1 million, including $15.7 million in cash and 1,852,608 common shares[90][91]. - The acquisition allows the company to enhance the development and distribution of ready-to-drink products, targeting retail and CPG industries[90][94]. Derivative and Hedging Activities - The notional amount for coffee futures contracts designated for cash flow hedging was 16.5 million pounds as of September 30, 2023[131]. - The company recognized net realized losses of approximately $3.1 million for the three months ended September 30, 2023, related to cash flow hedges[132]. - The fair value of green coffee associated with forward contracts was $38,169,000 as of September 30, 2023, down from $39,928,000 at December 31, 2022[139]. - The change in fair value of warrant liabilities resulted in a gain of $25.1 million for the three months ended September 30, 2023, compared to a loss of $5.2 million in the prior year[195]. Other Comprehensive Income - The total accumulated other comprehensive income (loss) was $(1.297) million as of September 30, 2023[22]. - The accumulated other comprehensive income (loss) at the end of the period was $(1,297,000) as of September 30, 2023, compared to $1,923,000 at the end of the same period in 2022[145].