Westrock fee pany(WEST) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section presents the company's unaudited condensed consolidated financial statements and management's analysis Item 1. Financial Statements This section presents unaudited consolidated financial statements and notes for periods ended June 30, 2025 Condensed Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights (Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $43,956 | $26,151 | | Inventories | $194,244 | $163,323 | | Derivative assets | $28,176 | $19,746 | | Total current assets | $376,643 | $333,643 | | Total Assets | $1,157,477 | $1,101,780 | | Total current liabilities | $361,400 | $277,870 | | Supply chain finance program | $98,300 | $78,838 | | Derivative liabilities | $35,099 | $11,966 | | Total liabilities | $865,552 | $730,448 | | Total shareholders' equity | $18,247 | $97,482 | - Accumulated other comprehensive income (loss) shifted from a gain of $19,584 thousand at December 31, 2024, to a loss of $(17,558) thousand at June 30, 2025[11] Condensed Consolidated Statements of Operations This section outlines the company's financial performance, including net sales, gross profit, and net loss Condensed Consolidated Statements of Operations Highlights (Thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $280,859 | $208,389 | $494,655 | $400,889 | | Gross profit | $41,395 | $41,403 | $70,468 | $78,677 | | Loss from operations | $(15,013) | $(16,408) | $(28,082) | $(26,540) | | Interest expense | $13,119 | $7,453 | $25,718 | $15,032 | | Net loss | $(21,563) | $(17,759) | $(48,781) | $(41,432) | | Basic (Loss) earnings per common share | $(0.23) | $(0.20) | $(0.51) | $(0.47) | - Net sales increased by 34.8% for the three months ended June 30, 2025, and by 23.4% for the six months ended June 30, 2025, compared to the respective prior-year periods[12] - Interest expense significantly increased by 71.1% for the six months ended June 30, 2025, compared to the same period in 2024[12] Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents comprehensive income or loss, including net loss and other comprehensive income Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (Thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(21,563) | $(17,759) | $(48,781) | $(41,432) | | Unrealized gain (loss) on derivative instruments | $(35,998) | $3,820 | $(36,766) | $4,006 | | Foreign currency translation adjustment | $(423) | $51 | $(376) | $81 | | Total other comprehensive income (loss) | $(36,421) | $3,871 | $(37,142) | $4,087 | | Comprehensive (loss) income | $(57,984) | $(13,888) | $(85,923) | $(37,345) | - Total other comprehensive income (loss) experienced a significant negative swing, moving from a gain of $4,087 thousand in the six months ended June 30, 2024, to a loss of $(37,142) thousand in the same period of 2025, primarily due to unrealized losses on derivative instruments[13] Condensed Consolidated Statements of Shareholders' Equity This section details changes in shareholders' equity, including common stock, capital, and deficit Condensed Consolidated Statements of Shareholders' Equity Highlights (Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Common Stock (Shares) | 94,708 | 94,221 | | Additional Paid-in Capital | $526,561 | $519,878 | | Accumulated Deficit | $(491,703) | $(442,922) | | Accumulated Other Comprehensive Income (Loss) | $(17,558) | $19,584 | | Total Equity | $18,247 | $97,482 | - Total shareholders' equity decreased significantly from $97,482 thousand at December 31, 2024, to $18,247 thousand at June 30, 2025, primarily driven by the accumulated deficit and a shift in accumulated other comprehensive income from a gain to a loss[14][16] - Equity-based compensation for the six months ended June 30, 2025, was $8,080 thousand, an increase from $5,481 thousand in the prior year[16] Condensed Consolidated Statements of Cash Flows This section presents cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Thousands, Six Months Ended June 30) | Metric | 2025 | 2024 | | :------------------------------------------------- | :------- | :-------- | | Net cash used in operating activities | $(29,073) | $(15,691) | | Net cash used in investing activities | $(64,002) | $(104,760) | | Additions to property, plant and equipment | $(61,826) | $(105,105) | | Net cash provided by financing activities | $109,887 | $108,409 | | Net increase (decrease) in cash and cash equivalents and restricted cash | $16,760 | $(11,813) | | Cash and cash equivalents and restricted cash at end of period | $52,324 | $26,027 | - Net cash used in operating activities increased to $(29,073) thousand for the six months ended June 30, 2025, from $(15,691) thousand in the prior year[17] - Net cash used in investing activities decreased due to lower capital expenditures, with additions to property, plant, and equipment falling from $105,105 thousand in 2024 to $61,826 thousand in 2025[17] Note 1. Organization and Description of Business This note describes Westrock Coffee Company's global operations as an integrated coffee, tea, and ingredients provider - Westrock Coffee Company is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider globally[18] - The company operates in two segments: * Beverage Solutions: Provides value-added beverage solutions, including coffee, tea, flavors, extracts, and ingredients, in various packaging formats to retail, food service, CPG, and hospitality industries[19] * Sustainable Sourcing & Traceability (SS&T): Utilizes proprietary technology and a digitally traceable supply chain to empower farming partners and emphasize environmental accountability, with revenues primarily from forward sales of green coffee[20] Note 2. Basis of Presentation and Consolidation This note explains the basis of financial statement presentation and consolidation, including the Rwandan JV - On April 1, 2025, the Company formed a Rwandan joint venture (Rwandan JV) with ETC Holdings SA (ECOM) to combine Rwandan export operations, contributing its ownership in Rwanda Trading Company (RTC) and $100,000 cash for a 49.9% interest[22] - As a result of the Rwandan JV, the Company de-consolidated RTC, derecognizing $9.3 million of assets and $10.3 million of liabilities, and recognized a $2.3 million gain during the three months ended June 30, 2025[22] Note 3. Summary of Significant Accounting Policies This note outlines the company's significant accounting policies, including liquidity, inventory, debt, and tax - The Company incurred net losses of $48.8 million and net cash outflows from operating activities of $29.1 million for the six months ended June 30, 2025, but believes projected cash flow from operations and available borrowings will be sufficient to fund operations and maintain covenant compliance for at least the next twelve months[26] - On January 15, 2025, the Company amended its Credit Agreement, increasing available borrowings by $25.0 million and modifying certain financial covenants to support liquidity[27] - Green coffee inventory associated with forward contracts resulted in $10.7 million of net unrealized losses for the six months ended June 30, 2025, compared to $1.0 million of net unrealized gains in the prior year[33] - Supply chain finance program obligations increased to $98.3 million at June 30, 2025, from $78.8 million at December 31, 2024[35] - The Company recognized $0.6 million in capitalized interest costs for the six months ended June 30, 2025, a significant decrease from $7.2 million in the prior year, reflecting progress on the Conway Facility[34] - Restructuring activities in 2024 included the closure and sale of the West Winds facility and closure of the Richmond, California facility, incurring $0.8 million in impairment charges on equipment in Q2 2024[39][41] - The effective income tax rate for the six months ended June 30, 2025, was (3.1)%, primarily due to an increase in the valuation allowance against domestic deferred tax assets[47] Note 4. Revenue This note disaggregates revenue by type and geographic area, detailing commodity contract gains - Revenues from commodity contracts (ASC 815) recognized $14.2 million in net unrealized gains for the six months ended June 30, 2025, compared to $2.2 million in 2024[60] Disaggregated Revenue by Type (Thousands, Six Months Ended June 30) | Category | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Coffee & tea | $274,633 | $233,845 | | Flavors, extracts & ingredients | $97,229 | $85,782 | | Other | $1,031 | $1,685 | | Green coffee | $121,762 | $79,577 | | Total Net Sales | $494,655 | $400,889 | Disaggregated Revenue by Geographic Area (Thousands, Six Months Ended June 30) | Region | 2025 | 2024 | | :---------------- | :------- | :------- | | United States | $385,485 | $327,070 | | All other countries | $109,170 | $73,819 | | Total Net Sales | $494,655 | $400,889 | Note 5. Inventories This note details the composition of inventories, including raw materials, finished goods, and green coffee Inventory Composition (Thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Raw materials | $96,170 | $82,412 | | Finished goods | $44,941 | $32,520 | | Green coffee | $53,133 | $48,391 | | Total inventories | $194,244 | $163,323 | - Total inventories increased by $30.9 million from December 31, 2024, to June 30, 2025, with raw materials and finished goods seeing notable increases[67] Note 6. Property, Plant and Equipment, Net This note provides a breakdown of property, plant, and equipment, net, and depreciation expense Property, Plant and Equipment, Net (Thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Land | $5,160 | $6,581 | | Buildings | $182,818 | $175,171 | | Plant equipment | $275,326 | $249,933 | | Construction in progress and equipment deposits | $85,677 | $85,279 | | Property, plant and equipment, net | $480,653 | $467,011 | - Depreciation expense for the six months ended June 30, 2025, was $22.8 million, significantly higher than $11.3 million for the same period in 2024[70] Note 7. Goodwill This note details the carrying amount of goodwill and accumulated impairment loss - The carrying amount of goodwill remained stable at $116,111 thousand for both June 30, 2025, and December 31, 2024, with an accumulated impairment loss of $76,883 thousand[71] Note 8. Intangible Assets, Net This note presents the net carrying amount of intangible assets, including customer relationships and software Intangible Assets, Net (Thousands) | Category | June 30, 2025 (Net) | December 31, 2024 (Net) | | :-------------------- | :------------------ | :-------------------- | | Customer relationships | $110,597 | $114,451 | | Software | $323 | $417 | | Intangible assets, net | $110,920 | $114,879 | - Amortization expense for intangible assets was $3.9 million for the six months ended June 30, 2025, slightly down from $4.1 million in the prior year[72] Note 9. Leases This note details operating lease assets, liabilities, costs, and future minimum lease payments Operating Lease Assets and Liabilities (Thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $61,955 | $63,380 | | Operating lease liabilities - noncurrent | $59,553 | $60,692 | - Total lease costs for the six months ended June 30, 2025, were $5.6 million, a decrease from $6.0 million in the prior year[76] - The weighted-average remaining lease term is 11.8 years as of June 30, 2025[76] Future Minimum Lease Payments (Thousands, as of June 30, 2025) | Year | Amount | | :--------- | :------- | | 2025 | $5,244 | | 2026 | $8,916 | | 2027 | $8,736 | | 2028 | $8,141 | | 2029 | $8,184 | | Thereafter | $62,299 | | Total future minimum lease payments | $101,520 | | Less: imputed interest | $(37,301) | | Present value of minimum lease payments | $64,219 | Note 10. Debt This note provides a breakdown of long-term debt, including term loans, revolving credit, and convertible notes Long-Term Debt (Thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Term loan facility | $150,938 | $155,313 | | Delayed draw term loan facility | $46,875 | $48,125 | | Revolving credit facility | $172,500 | $112,500 | | Convertible notes payable | $72,000 | $72,000 | | International trade finance lines | $75,170 | $54,659 | | Total debt | $521,997 | $447,727 | - The Credit Agreement's Revolving Credit Facility was increased by $25.0 million to $200.0 million on January 15, 2025, via the Fourth Amendment, to fund a second ready-to-drink can line at the Conway Facility and for general corporate purposes[85] - The Fourth Amendment also modified the secured net leverage ratio covenant, increasing the maximum allowable ratio to 6.00x for the test period ending June 30, 2025, 5.50x for September 30, 2025, and 5.25x for December 31, 2025[86] - As of June 30, 2025, the Company was in compliance with its financial covenants[86] - Outstanding borrowings under the Revolving Credit Facility were $172.5 million at June 30, 2025, with a weighted average interest rate of 8.2%[81] - The Company issued $72.0 million in 5.00% convertible senior notes due 2029 on February 15, 2024, with $50.0 million from related parties[89] - Falcon Coffees Limited's working capital trade finance facility was increased from $75.0 million to $85.0 million on March 7, 2025, and further to $102.5 million on July 23, 2025 (subsequent event)[96][175] Note 11. Series A Preferred Shares This note describes Series A Preferred Shares, including outstanding amounts, conversion rights, and redemption terms - There are 23,510,527 Westrock Series A Preferred Shares outstanding, with an initial liquidation preference of $11.50 per share[100][101] - Holders can convert Series A Preferred Shares into common shares at a rate based on the liquidation preference divided by the conversion price ($11.50)[102] - After February 26, 2028, Series A Preferred Shares are redeemable by holders or Westrock at the greater of the liquidation preference or market value, with an estimated aggregate redemption payment of at least $270.4 million[103][104] - The Company recorded $0.2 million of amortization for Series A Convertible Preferred Shares for both the six months ended June 30, 2025, and 2024[105] Note 12. Common Stock Warrants This note details common stock warrants, their fair value measurement, and exchange offer results - The Company classifies warrants as liabilities and re-measures them at fair value each reporting period[106] - No gains or losses were recognized from changes in the fair value of warrant liabilities for the three and six months ended June 30, 2025, compared to gains of $1.6 million and $1.7 million, respectively, in 2024[107] - The Company completed an exchange offer and consent solicitation for its Westrock Warrants in September 2024, resulting in the issuance of 5,423,681 Common Shares[109] - All Westrock Warrants were exchanged and subsequently delisted by October 15, 2024[113][114] Note 13. Derivatives This note explains the company's use of derivative instruments for hedging, fair value, and related gains/losses - The Company uses coffee futures contracts as cash flow hedges to minimize cash flow variability from green coffee price fluctuations, with a notional amount of 49.2 million pounds at June 30, 2025, up from 11.0 million pounds at December 31, 2024[119][120] - Net realized gains from cash flow hedges reclassified from AOCI to costs of sales were $22.3 million for the six months ended June 30, 2025, a significant increase from $3.6 million in the prior year[122] - An estimated $18.0 million of net losses reported in AOCI is expected to be reclassified to the Condensed Consolidated Statements of Operations within the next twelve months[122] Fair Value of Derivative Instruments (Thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Derivative assets | $28,176 | $19,746 | | Derivative liabilities | $35,099 | $11,966 | - Net unrealized gains on forward sales and purchase contracts (not designated as cash flow hedges) recognized in costs of sales were $14.2 million for the six months ended June 30, 2025, compared to $2.2 million in 2024[126] Note 14. Fair Value Measurements This note presents the fair value of financial instruments, categorized by valuation levels and key assumptions Fair Value of Financial Instruments (Thousands, June 30, 2025) | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Assets: | | | | | | Green coffee associated with forward contracts | $— | $52,646 | $— | $52,646 | | Forward purchase and sales contracts | $— | $28,176 | $— | $28,176 | | Total Assets | $— | $80,822 | $— | $80,822 | | Liabilities: | | | | | | Coffee futures contracts | $23,316 | $— | $— | $23,316 | | Options contracts | $1,795 | $— | $— | $1,795 | | Forward purchase and sales contracts | $— | $9,988 | $— | $9,988 | | Total Liabilities | $25,111 | $9,988 | $— | $35,099 | - The estimated fair value of Convertible Notes was $60.0 million as of June 30, 2025, determined using a Level 3 binomial lattice model with unobservable inputs including expected volatility of 50.0% and assumed debt yield of 14.7%[133][134] Note 15. Accumulated Other Comprehensive Income (Loss) This note details changes in accumulated other comprehensive income (loss) from derivative instruments Changes in Accumulated Other Comprehensive Income (Loss) (Thousands, Six Months Ended June 30) | Component | 2025 | 2024 | | :------------------------------------------------- | :--------- | :------- | | Unrealized gain (loss) on derivative instruments (beginning balance) | $18,863 | $3,362 | | Unrealized gain (loss) on derivative instruments (ending balance) | $(17,903) | $7,368 | | Foreign currency translation adjustment (ending balance) | $345 | $537 | | Accumulated other comprehensive income (loss) at end of period | $(17,558) | $7,905 | - Accumulated other comprehensive income (loss) shifted from a gain of $7,905 thousand at June 30, 2024, to a loss of $(17,558) thousand at June 30, 2025, primarily due to unrealized losses on derivative instruments[137] Note 16. Equity-Based Compensation This note describes equity-based compensation, including RSU grants, available shares, and activity - During the six months ended June 30, 2025, the Company granted 1.5 million RSUs with an aggregate fair value of $9.0 million under the 2022 Equity Plan[145] - As of June 30, 2025, 3.1 million shares were available for future issuance under the 2022 Equity Plan[145] RSU Activity (Units, Six Months Ended June 30, 2025) | Category | Service-based Restricted Stock Units | Performance-based Restricted Stock Units | Market-based Restricted Stock Units | | :-------------------------- | :--------------------------------- | :------------------------------------- | :---------------------------------- | | Outstanding at December 31, 2024 | 2,444,228 | — | — | | Granted | 295,654 | 607,610 | 607,644 | | Forfeited | (11,159) | — | — | | Vested | (712,983) | — | — | | Outstanding at June 30, 2025 | 2,015,740 | 607,610 | 607,644 | Note 17. Earnings per Share This note presents basic and diluted earnings per common share and potentially dilutive securities - Basic and diluted earnings per common share for the six months ended June 30, 2025, were $(0.51), compared to $(0.47) for the same period in 2024[150] Potentially Dilutive Securities Excluded (Thousands, Six Months Ended June 30) | Category | 2025 | 2024 | | :-------------------- | :----- | :----- | | Restricted stock units | 2,147 | 2,504 | | Options | 1,255 | 1,322 | | If-converted securities | 34,568 | 25,278 | Note 18. Segment Information This note provides disaggregated financial information for Beverage Solutions and Sustainable Sourcing & Traceability segments Segment Net Sales (Thousands, Six Months Ended June 30) | Segment | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Beverage Solutions | $372,893 | $321,312 | | Sustainable Sourcing & Traceability | $121,762 | $79,577 | | Total Net Sales | $494,655 | $400,889 | Segment Adjusted EBITDA (Thousands, Six Months Ended June 30) | Segment | 2025 | 2024 | | :-------------------------------- | :------- | :------- | | Beverage Solutions | $29,253 | $24,045 | | Sustainable Sourcing & Traceability | $5,243 | $761 | | Total Segment Adjusted EBITDA | $34,496 | $24,806 | - Beverage Solutions net sales increased by 16.1% for the six months ended June 30, 2025, driven by a 10.7% increase in roast and ground coffee volumes and higher coffee commodity prices[196] - Sustainable Sourcing & Traceability net sales increased by 53.0% for the six months ended June 30, 2025, primarily due to a 52.3% increase in the average sales price per pound, correlated to global commodities prices[198] Note 19. Commitments and Contingencies This note outlines legal proceedings, purchase obligations, and inventory repurchase commitments - Dairy Farmers of America, Inc. filed a complaint against the Company alleging trade secret misappropriation, with a trial tentatively scheduled for August 10, 2026[165][166] - Future purchase obligations for inventory total $422.1 million over the next 12 months as of June 30, 2025[168] - The Company had inventory repurchase obligations of $0.5 million for repurchase agreements and $9.9 million for Repo Transactions at June 30, 2025[169][170] Note 20. Related Party Transactions This note details transactions with related parties, including convertible notes and green coffee purchases Convertible Notes Payable - Related Party (Thousands) | Related Party | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Westrock Group | $20,000 | $20,000 | | Wooster Capital | $5,000 | $5,000 | | HF Direct Investments Pool, LLC | $25,000 | $25,000 | | Total (net of unamortized debt costs) | $49,741 | $49,706 | - Interest expense from related party convertible notes was $1.3 million for the six months ended June 30, 2025, an increase from $0.9 million in the prior year[173] - Falcon purchased $0.3 million of green coffee from the Rwandan JV (in which the Company has a 49.9% interest) during the three and six months ended June 30, 2025[174] Note 21. Subsequent Events This note describes significant events occurring after the reporting period, such as facility financing - On July 23, 2025, Falcon's working capital trade finance facility was increased from $85.0 million to $102.5 million[175] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and results of operations Overview This section provides an overview of Westrock Coffee Company's business, segments, and strategic platform - Westrock Coffee Company is a leading integrated provider of coffee, tea, flavors, extracts, and ingredients solutions, serving various industries globally[177] - The company operates through two segments: Beverage Solutions and Sustainable Sourcing & Traceability (SS&T)[179] - Its platform is built on transparent supply chain, innovative beverage solutions, high-quality products, and scaled international presence, emphasizing responsible sourcing and ESG[178] Significant Developments This section highlights key developments, including the Rwandan joint venture and its financial impact - On April 1, 2025, the Company formed a Rwandan joint venture (Rwandan JV) with ETC Holdings SA (ECOM) to combine Rwandan export operations, contributing its ownership in Rwanda Trading Company (RTC) and $100,000 cash for a 49.9% interest[182] - The transaction resulted in the de-consolidation of RTC, derecognizing $9.3 million of assets and $10.3 million of liabilities, and a $2.3 million gain recognized during the three months ended June 30, 2025[182][183] Results of Operations This section analyzes the company's net sales, costs of sales, and other expenses Net Sales by Segment (Thousands, Three Months Ended June 30) | Segment | 2025 | 2024 | YoY Change (%) | | :-------------------------------- | :------- | :------- | :------------- | | Beverage Solutions | $208,814 | $163,253 | 27.9% | | Sustainable Sourcing & Traceability | $72,045 | $45,136 | 59.6% | | Total Net Sales | $280,859 | $208,389 | 34.8% | - Beverage Solutions net sales increased due to a 21.1% rise in single-serve cup volumes, a 13.7% increase in core roast and ground coffee volumes, and higher coffee commodity prices, along with a $6.6 million increase in flavors, extracts & ingredients sales from the Conway Facility ramp-up[186] - Sustainable Sourcing & Traceability net sales increased primarily due to a 50.1% increase in the average sales price per pound, correlated to global commodities prices, and a 10.3% increase in sales volume[187] Costs of Sales by Segment (Thousands, Three Months Ended June 30) | Segment | 2025 | 2024 | YoY Change (%) | | :-------------------------------- | :------- | :------- | :------------- | | Beverage Solutions | $174,528 | $126,638 | 37.8% | | Sustainable Sourcing & Traceability | $64,936 | $40,348 | 60.9% | | Total Costs of Sales | $239,464 | $166,986 | 43.4% | - Transaction, restructuring, and integration expenses decreased to $2.5 million in Q2 2025 (primarily severance and factoring agreement fees) from $4.4 million in Q2 2024 (primarily severance and employee termination costs)[191] - Interest expense for Q2 2025 was $13.1 million, up from $7.5 million in Q2 2024, driven by higher outstanding borrowings on the revolving credit facility and lower capitalized interest[192] Critical Accounting Estimates This section confirms no material changes to critical accounting estimates - There have been no material changes to the critical accounting estimates discussed in the Company's Annual Report on Form 10-K filed on March 12, 2025[207] Key Business Metrics This section discusses key non-GAAP financial measures, including Consolidated Adjusted EBITDA - The Company uses non-GAAP measures, EBITDA and Consolidated Adjusted EBITDA, to evaluate performance and make strategic decisions[208][209] Consolidated Adjusted EBITDA (Thousands) | Period | 2025 | 2024 | | :-------------------------- | :------- | :------- | | Three Months Ended June 30 | $15,338 | $12,434 | | Six Months Ended June 30 | $23,561 | $23,576 | - Consolidated Adjusted EBITDA for the three months ended June 30, 2025, increased by 23.4% to $15,338 thousand, while for the six months ended June 30, 2025, it remained relatively flat at $23,561 thousand[212] - Consolidated Adjusted EBITDA for Q2 2024 and H1 2024 was revised to exclude scale-up operating costs related to the Conway Facility[212] Liquidity and Capital Resources This section details the company's liquidity needs, debt facilities, capital expenditures, and obligations - The Company's principal liquidity needs are to fund operating expenses, meet debt service obligations, and finance capital expenditures, particularly for the commercialization of the Conway Facility[213][247] - Green coffee 'C' market prices increased approximately 70% in 2024 and continue to fluctuate, requiring increased working capital and posing risks of supply chain disruptions[215][216] - The Fourth Amendment to the Credit Agreement on January 15, 2025, increased the Revolving Credit Facility by $25.0 million to $200.0 million and modified the secured net leverage ratio covenant to 6.00x for Q2 2025, 5.50x for Q3 2025, and 5.25x for Q4 2025[228][229] - As of June 30, 2025, the Company's secured net leverage ratio was 4.75:1.00, well within the maximum allowable ratio of 6.00:1.00, and the Company was in compliance with its financial covenants[226][229] - The Company entered into a receivable purchase agreement on June 27, 2025, to sell up to $35.0 million of trade receivables on a nonrecourse basis, receiving $35.0 million in proceeds during the six months ended June 30, 2025[243][244] - Material capital expenditures for the Conway Facility are expected to be completed by the end of the third quarter of 2025[248] - Potential aggregate redemption payment of at least $270.4 million for Series A Preferred Shares after February 26, 2028, could significantly impact future liquidity[251] Capital Expenditures (Thousands, Six Months Ended June 30) | Type | 2025 | 2024 | | :------------------------ | :------- | :------- | | Growth | $58,765 | $102,742 | | Maintenance | $1,110 | $1,043 | | Customer beverage equipment | $846 | $538 | | Other | $1,105 | $782 | | Total | $61,826 | $105,105 | Recent Accounting Pronouncements This section refers to Note 3 for a detailed discussion of recent accounting pronouncements - Refer to Note 3, 'Summary of Significant Accounting Policies,' for a detailed discussion of recent accounting pronouncements[260] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states no material changes in market risks since the last Annual Report on Form 10-K - There have been no material changes in the market risks discussed in the Annual Report on Form 10-K filed on March 12, 2025[261] Item 4. Controls and Procedures This section confirms effective disclosure controls and no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[263] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[264] Part II. Other Information This section provides additional information not covered in the financial statements, including legal and risk factors Item 1. Legal Proceedings This section refers to Note 19 for a description of legal proceedings - A description of legal proceedings can be found in Note 19 'Commitments and Contingencies' to the Condensed Consolidated Financial Statements[265] Item 1A. Risk Factors This section states no material changes to risk factors since the last Annual Report on Form 10-K - There have been no material changes to the risk factors discussed in the Annual Report on Form 10-K filed on March 12, 2025[266] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds - None[267] Item 3. Defaults Upon Senior Securities This section reports no defaults upon senior securities during the period - None[268] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable[269] Item 5. Other Information This section reports no other material information, including no Rule 10b5-1 trading arrangements - No Rule 10b5-1 trading arrangements were adopted or terminated by the Company's directors or officers during the three months ended June 30, 2025[270] Item 6. Exhibits This section provides an index of exhibits, including certifications and XBRL documents - The exhibits include certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL instance, schema, calculation, definition, label, and presentation documents[272]