Westrock Coffee's Q4 2024: Navigating Contradictions in Coffee Costs, Capacity, and Consumer Demand

These are the key contradictions discussed in Westrock Coffee Company's latest 2024Q4 earnings call, specifically including: Impact of Green Coffee Costs on Consumer Demand, Single-Serve Volume Growth, Customer Order Cadence and Pricing Strategy, Plant Capacity and Expansion Plans, Customer Onboarding and Capacity Utilization, and Impact of Higher Coffee Prices:



Record Financial Performance:
- Westrock Coffee Company reported a combined segment adjusted EBITDA of $21 million for Q4 2024, up 53% over the same period a year ago.
- For the full year 2024, segment adjusted EBITDA was $60 million, up 33% over the prior year.
- The growth was driven by significant investments in new facilities and strategic partnerships with leading global CPG brands.

Capacity Expansion and Strategic Partnerships:
- Westrock expanded its roast and ground coffee business, completing the full automation of packaging lines to accommodate new customer demand of over 20 million pounds annually.
- The company secured agreements with several leading CPG brands for integrated product sets, expected to generate a best-ever year in the single serve manufacturing unit in 2025.
- These strategic partnerships and capacity expansions are aimed at becoming a leading manufacturing partner to the preeminent global beverage brands.

Extracts and RTD Business Growth:
- Westrock's extracts and RTD business experienced nearly 25% volume growth and more than that in gross profit expansion due to facility upgrades at the Concord, North Carolina facility.
- The company launched its multi-serve bottle line and largely sold out its glass bottle line and can capacity, catering to large CPG customers and major US coffee brands.
- The growth was supported by the completion of two major facility and system upgrades, enhancing operational efficiency and capacity.

Impact of Higher Green Coffee Prices:
- Despite higher green coffee prices surging by 70% in fiscal 2024, Westrock maintains its strategy of passing these costs on to customers.
- The company anticipates higher coffee prices impacting demand for its products in the back half of the year, which is factored into its 2025 guidance.
- Westrock's credit agreement leverage ratios are within expectations, with a focus on deleveraging as the Conway facility ramps up.