Westrock Coffee's Q3 2025: Contradictions Emerge on Production Line Delays, Single-Serve Facility, High-Protein Milk Product, Coffee Sourcing, and Customer Contracts

Date of Call: November 6, 2025

Financials Results

• Revenue: Net sales increased 61% year-over-year (Q3 2025 vs Q3 2024)

Guidance:

• Consolidated Adjusted EBITDA for 2025 expected to be $60M–$65M.
• Beverage Solutions Segment Adjusted EBITDA for 2025 expected to be $63M–$68M.
• Sustainable Sourcing & Traceability (SS&T) Segment Adjusted EBITDA for 2025 expected to be $14M–$16M.
• Beverage Solutions secured net leverage ratio expected to be 4.5% (40 bps beat to prior guidance).
• 2026 guidance unchanged for now; uncertainty from a key customer's M&A could affect single-serve volume and was conservatively assumed off-platform for covenant reset.

Business Commentary:

* Record Quarterly Results: - Westrock Coffee Company reported a combination of their Beverage Solutions and SS&T Adjusted EBITDA of $26.2 million, up 14% over the second quarter and 84% over the same quarter last year. - The growth was driven by continued new customer volume additions and cost management execution.

• Production Capacity and Growth:
• Production levels on key packaging lines in Conway reached 80% of their original planned capacity, with significant water and tank farm capacity added.

• The growth is attributed to the successful start-up of the second single-serve cup manufacturing facility and cost controls across core business units.

• Capital Infusion and Debt Covenant Realignment:

• A new $30 million capital infusion from the traditional core shareholder group was announced, coupled with a realignment of debt covenants.

• This allows Westrock to focus resources on operational delivery and drive results for customers and stockholders.

• Volume Growth and Supply Chain Optimization:

• Year-over-year volume growth was reported in roast and ground, single-serve, and flavors, extracts, and ingredients platforms.

• The growth is due to supply chain optimization and disciplined expense management, supported by ongoing relationships with Palantir for data intelligence and risk mitigation insights.

• Working Capital and Credit Capacity:

• Westrock raised approximately $12 million in the third quarter via sales of common stock under the ATM program and announced the issuance of $30 million of convertible notes.
• These actions strengthen the balance sheet and provide additional liquidity to navigate elevated coffee prices and tariffs, ensuring no further capital markets activity is required in response to these headwinds.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted 'record-breaking quarterly results', combined Beverage Solutions and SS&T Adjusted EBITDA of $26.2M (up 14% sequentially, 84% YOY) and Consolidated Adjusted EBITDA $23.2M (up 125% YOY); they announced a $30M capital infusion and an amended credit agreement and said they are 'very optimistic' and expect Conway lines to be EBITDA and free-cash-flow positive soon.

Q&A:

• Question from Eric Des Lauriers (Craig-Hallum Capital Group LLC): Update on production-line progress after prior delays—how did volumes trend in Q3 and are you on track to be fully caught up?
  Response: Main can line is running ~80–125% of expected volumes, customers are caught up, and the glass line will begin commercial product sales in December.

• Question from Eric Des Lauriers (Craig-Hallum Capital Group LLC): Can you expand on timing, size and scale for the newly announced ultra-filtered high-protein milk product?
  Response: Early-stage with strong interest; company has the large retort capacity and a second line coming commercial in January; product development ~12 months and could approach RTD coffee scale over 2–4 years, but outcomes are uncertain.

• Question from Sarang Vora (Telsey Advisory Group LLC): Will you need incremental investment to build the ultra-filtered protein line or can existing lines be leveraged?
  Response: Existing lines can run the product today; approximately $5–6M incremental capex (company or partner) would fully enable commercial production.

• Question from Sarang Vora (Telsey Advisory Group LLC): How are you managing higher coffee prices and tariffs and what is your outlook into next year?
  Response: With ~60% sourcing from Brazil it's hard to avoid higher tariffs; they optimize blends, expect innovation over time, and the recent capital raise/ATM liquidity positions them to navigate elevated prices and tariffs.

• Question from Todd Brooks (The Benchmark Company, LLC): Was the single-serve customer affected by M&A an existing customer included in the original 2026 guidance or a prospective one?
  Response: They were expected to come on in 2025 and ramp to full volume by early 2026 and were included in the original 2026 guidance.

• Question from Todd Brooks (The Benchmark Company, LLC): With improved financing, where will you 'play offense' in 2026—what initiatives will you pursue?
  Response: Priority is conservative, incremental opportunities: reduce leverage to ~4.5x, drive Conway to EBITDA and free-cash-flow positive in the near term, and selectively deploy CapEx to meet confirmed customer demand.

• Question from Davis (Truist Securities): Is there a backlog of customer demand ready to fill the expanded single-serve capacity or is confidence based on historical performance?
  Response: Management said they don't yet know; they haven't changed guidance and expect greater clarity by year-end; the M&A could both remove volume and spur other customers to consider moving to their platform.

• Question from Unknown Analyst (general follow-up): Any customer contract shakeups—are contracts holding or have customers unexpectedly left or joined?
  Response: Day-to-day the company wins and loses SKUs and customers, but they haven't lost a single-serve customer historically except the one tied to the ongoing M&A, and they will wait for the transaction outcome before speculating.

Contradiction Point 1

Production Line Delays and Capacity Expansion

It involves the timeline and progress of production line expansions, which could impact the company's production capacity and revenue projections.

How has production line progress evolved since last quarter's delays? - Eric Des Lauriers (Craig-Hallum Capital Group)

2025Q3: We've run 80% to 125% of the standard volumes on the main can line, catching up all of our customers. - Scott Ford(CEO)

What is the status of the second RTD can line for Q3? - Eric Des Lauriers (Craig-Hallum Capital Group)

2025Q2: The second RTD can line is still on schedule to be installed in mid-October and start production in early November. - Scott Ford(CEO)

Contradiction Point 2

Single-Serve Facility and Customer Demand

It involves the status of the single-serve facility and the demand for its capacity, which affects the company's production planning and market positioning.

Is there a backlog of demand for the expanded single-serve capacity? - Davis (Truist Securities)

2025Q3: We're in an uncertain period, and while we haven't changed guidance, we're aware of a large customer possibly leaving due to M&A. - Scott Ford(CEO)

Have you started winning new business to quickly fill the single-serve facility’s capacity? - William Bates Chappell (Truist Securities)

2025Q2: We have won new business that prompted the expansion of the single-serve facility. There is still capacity for further expansion, with a strong pipeline of customers. - Thomas Pledger(CFO)

Contradiction Point 3

Impact of Ultra-Filtered High-Protein Milk Product

It involves the anticipated impact of a new product line on the company's growth and revenue, which is crucial for investor expectations.

Can you detail the new ultra-filtered high-protein milk product and its potential impact? - Eric Des Lauriers (Craig-Hallum Capital Group)

2025Q3: There is significant interest in this product, with demand potentially exceeding our current ready-to-drink coffee business in the next 2 to 4 years. - Scott Ford(CEO)

Can you update us on cross-selling momentum and if it's accelerating? - Todd Morrison Brooks (The Benchmark Company)

2025Q2: The demand for products in the SS&T segment increased by approximately 10% in Q2. - Thomas Pledger(CFO)

Contradiction Point 4

Coffee Sourcing and Pricing Pressures

It concerns the company's strategy to manage coffee sourcing and pricing pressures, which can directly impact production costs and profitability.

How are you handling coffee sourcing and pricing challenges? - Sarang Vora (Telsey Advisory Group)

2025Q3: 60% of coffee comes from Brazil, which has the highest tariffs. We optimize our coffee use and blends, and innovation will arise as prices remain high. - Thomas Pledger(CFO)

What is your view on end markets and coffee demand given current conditions? - Todd Brooks (The Benchmark Company)

2025Q1: Demand is holding strong, with a 95-97% share of last year's volumes in the last couple of months. The introduction of tariffs has not significantly impacted unit demand, although roast and ground is down 8-10%. - Scott Ford(CEO)

Contradiction Point 5

Customer Contracts and M&A Impact

It involves differing statements regarding the impact of M&A transactions on customer contracts and potential customer loss, which can influence the company's growth and revenue stability.

Are potential customers being lost due to M&A-related friction with existing customers? - Todd Brooks (The Benchmark Company)

2025Q3: The customers were incorporated in our original '26 guidance and were expected to be fully ramped by early '26. - Scott Ford(CEO)

When will customer onboarding on Conway be completed? - Bill Chappell (Truist Securities)

2024Q4: We expect high visibility into the volume step function by the third quarter, as we have broken our guidance into first and second halves for clarity. This will provide better insight into the back half of the year. - Scott Ford(CEO)