Little Rock-based Westrock Coffee boosted third quarter sales by 27% but posted a net loss of $13.018 million, above the $3.89 million loss in the same quarter of 2021. The company also is investing another $90 million to expand its Conway extract and ready-to-drink (RTD) plant.
Third quarter revenue was $230.308 million, up 27% compared with the $181.277 million in the same quarter of 2021. Revenue in the first nine months of 2022 was $640.149 million, up 26.1% compared with the same period in 2021. The company posted a net loss of $23.542 million in the first nine months, above the $16.082 million loss in the same period of 2021.
“Our third quarter results again highlight the product mix shift we are seeing across our business. The year-over-year growth in our single serve cup volumes drove Adjusted EBITDA growth of 33% in the third quarter. We held higher expectations for our core coffee and tea business but that was obviously impacted by the negative effects of inflation as both our customer volume demand and our manufacturing costs reflected the rapid acceleration of price increases in fuel, food, materials, and labor,” Scott Ford, CEO and co-founder, noted in the report. “Fortunately, we were able to partially mitigate these impacts through operational efficiencies, and we expect to recapture many of these cost increases over the next several quarters as our cost pass-through contracts typically reset six months in arrears.”
The company ended the quarter with cash and cash equivalents of $90.984 million, and has $266 remaining in its credit lines. Westrock announced in August new credit agreements that provide the company $350 million in loans to pay debt, fund operations and support growth plans.
A key part of the growth plans include the extract and RTD plant in Conway. Westrock previously announced $185 million to build the first two phases of the facility, and announced Monday another $90 million to enhance extract and bottling capacity. The operations are expected to begin in the first half of 2024, with an estimated 300 employees when fully operational.
“The Company will now be adding a state-of-the-art extraction technology system, a multi-serve bottling line, and Bag-in-a-Box packaging lines to its Phase I projects that previously included a standard extraction system and high-speed glass bottle and canning lines. … Renovation of the facility has begun in earnest with the Company making initial deposits on equipment and the commencement of work by the general contractor in the 524,000 square foot facility,” the company noted.
Ford, the former CEO of Little Rock-based Alltel, said in a recent interview with Talk Business & Politics that the company’s goal is to be one of the world’s best known coffee, tea and flavor suppliers. He said a key part of that goal is to push transparency in the industry to ensure farmers in third world countries also benefit.
“We want to build one of the preeminent coffee, tea, flavor, extract ingredient companies in the world over the next five to 10 years. And we want to do that on the behalf of the farmer network that we buy coffee, tea and ingredients from, because when we do that on a non-premium, non-charity basis, we force everybody else in the industry to start paying a fair wage and be held accountable for what they buy at the beginning of the origin,” Ford said. “If we do a good job of that we’ll also make a ton of money for our shareholders and be a good steward both for the investment people trusted us with and the crop that farmers trusted us with.”
Westrok also on Monday said it completed acquisition of Richmond, Calif.-based Kohana Coffee, an extract and RTD business. Kohana Coffee owners Jonathan Reinemund and his father, Steve Reinemund, have become shareholders of Westrock Coffee. Steve Reinemund is the former CEO of PepsiCo, Inc.
Westrock Coffee is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States, providing coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG, and hospitality industries around the world. With offices in 10 countries, the company sources coffee and tea from 35 origin countries.
Westrock shares (NASDAQ: WEST) closed Monday at $12.65, down 24 cents.