Westrock's Q2 2025 Earnings Call: Unpacking Contradictions in Production Timelines, Market Strategy, and Tariff Challenges

RTD production timeline and capacity expansion, visibility on orders and production capacity, market share and growth strategy, tariff optimization and sourcing strategy, and production and market growth strategy are the key contradictions discussed in Westrock's latest 2025Q2 earnings call.



Record-Breaking Quarterly Performance:
- Westrock Coffee Company reported record production, record deliveries, and record profits for Q2 2025.
- This was driven by strong customer demand, improved margin performance, and successful execution across their integrated platform.

Conway Facility Ramp-Up and Challenges:
- The company's new extract and RTD facility in Conway, Arkansas, saw a fivefold increase in sales in Q2 and is expected to quadruple in Q3.
- While the ramp-up faced challenges with slower-than-expected volume start and higher start-up costs, the facility is now approaching planned production levels.

Single-Serve Cup Production Expansion:
- The second single-serve cup manufacturing facility in Conway increased production from 3% to 25% of total manufactured cups in just 3 months.
- This expansion supports increased customer demand and enables the company to take on new clients.

Impact of Tariffs and Green Coffee Prices:
- The U.S. implemented a 50% tariff on imports from Brazil, impacting Westrock's working capital and liquidity due to its green coffee inventory policy.
- Relief from historically high green coffee prices is expected to provide a working capital benefit in early 2026.

Beverage Solutions Segment Growth:
- The Beverage Solutions segment saw net sales increase by 27.9% year-over-year in Q2 2025, with segment adjusted EBITDA growing by 48.5%.
- Growth was driven by a 13.7% volume increase in core roast and ground coffee, a 21.1% volume increase in single-serve cups, and higher coffee prices.