Upgrade costs curtail Westrock Coffee Q1 profitability
by May 11, 2023 6:19 pm 939 views
One-time, long-term investments in newly acquired assets turned Westrock Coffee’s first quarter profit potential into a $4.3 million net loss.
The Little Rock-based integrated coffee, tea, flavors, extracts, and ingredients manufacturer and supplier posted revenue of $205.4 million for the quarter ended March 31, 2023. That was an increase of $19 million from a year ago.
The quarterly net loss of $4.3 million compared to a $4.7 million net loss in the previous year.
The $4.3 million net loss for the first quarter of 2023 included $6.6 million of acquisition, restructuring and integration expense and $5.5 million of non-cash income from the change in fair value of warrant liabilities, the company said.
“We are pleased to report our first quarter results which continue to reflect the key product expansions of our growing platform, even as we work hard to bring through all of the potential EBITDA into our results. As 2023 begins to take shape, we are focused on our two major initiatives of successfully launching our Conway extract and ready-to-drink facility in the first quarter of 2024 and continuing the maturation of our existing operations to be able to capture the profitability intrinsically available from our growing large-scale, global customer base,” said Westrock Coffee CEO and co-founder Scott T. Ford.
“To this end specifically, during the first quarter, we executed an enterprise resource planning system conversion in our Concord, North Carolina facilities so that all our internal systems would operate on a single platform. The conversion resulted in approximately two weeks of production downtime in our roast and ground business, which when combined with the then resource restrained single-serve product line capacities, cost us approximately $4.0 million in net profit for the quarter,” Ford said. “I am pleased that this conversion is now behind us and that the long-awaited equipment expansion in our single-serve business is currently in place. Both of these efforts create a greater foundation for our long-term growth and prepare us to execute the launch of our Conway extract and ready-to-drink facility early next year.”
The company reiterated its guidance for consolidated Adjusted EBITDA to grow 10% to 25% in full-year 2023, representing a range of $66 million to $75 million.
Westrock Coffee shares (NASDAQ: WEST) closed trading Thursday at $11.65. The company’s stock has traded between a low of $9.34 per share and a high of $14.71 per share over the last 52 weeks.