Westrock Coffee Company

Hello, and welcome to West Rock Coffee Company's second quarter 2023 earnings conference call. My name is Gigi, and I'll be coordinating your call today. Following prepared remarks, we will open the call to your questions with instructions to be given at that time. I'll now hand the call over to Clay Crumbliss with ICR.

Good afternoon and welcome to Westrock Coffee Company's second quarter 2023 earnings conference call. Today's call is being recorded. With us are Mr. Scott Ford, co-founder and chief executive officer, and Mr. Chris Pledger, chief financial officer. By now, everyone should have access to the company's second quarter earnings release issued earlier today. This information is available on the investor relations section of Westrock Coffee Company's website at investors.westrockcoffee.com. Certain comments made on this call include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, discussions during the call will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, provide reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. And with that, it's my pleasure to turn the call over to Scott Ford, our co-founder and chief executive officer. Scott?

Thank you for joining us this afternoon. Thank you, Clay. In a few moments, Chris Pledger, our CFO, will review our second quarter financial performance and preview our thinking on the second half of 2023. Calendar year 23 carries meaningful costs related to major equipment and systems upgrades and additional overhead expense required to prepare us for the next few years. These impacts are largely transitory in nature and best behind us rather than in front of us as we prepare to open our new Conway facility. At each decision point along the way over the past year, we chose securing our success in launching the new extract and RTD plant in Conway over maximizing this year's earnings. But before I turn the call over to Chris for his update, allow me to spend a few minutes updating you on this new Conway facility. As followers of West know, Conway is our single most important and impactful project. Its successful completion and commercial production launch will radically alter the overall profitability and trajectory of the company. Our recent $119 million equity raise provides the funding necessary for the timely completion of the packaging lines originally envisioned and announced. A high-speed can line, a high-speed glass bottle line, multi-serve bottle line, and bib and bulk packaging capabilities. But importantly, this recent raise also funds the installation of a second and third can line and a state-of-the-art product development lab and pilot plan. Today, we are pleased to announce that the original can and glass bottle packaging lines are sold out. We have more customer demand than available capacity for our multi-serve line, and we've begun discussions with prospective customers who we expect to speak for the available capacity of our two new can lines before they even come online. In addition to this material good news, our recent fundraising also enables us to invest in one to three new aseptic or ESL cold chain multiserve bottle lines, two to three years ahead of our original five-year plan assumption. While we're still working out the details of this specific investment, we're confident that we have multiple paths available to us to bring this capability online much sooner than originally foreseen. These new multiserve bottle lines, together with the glass bottle line, three can lines, and three aseptic bag-in-box lines, will enable us to produce a range of products, including ready-to-drink beverages, concentrates, and our exciting new line of energy products for retail and food service customers, as well as our branded CPG customers. So in simple terms, what does this mean to our EBITDA forecast and the timing thereof for the Conway facility once complete? We previously estimated this plant would be full in 2027. and that once full would generate approximately $100 million in incremental annual EBITDA from the packaging lines previously announced. Due to the developments we are announcing today, we now estimate our once full annual EBITDA run rate will be closer to $125 to $150 million. Just 12 months ago when we went public, we laid out our intention to build a 500,000 square foot combined manufacturing and distribution facility that would house a collection of dry and extract based coffee packaging equipment and serve as a distribution center. We then updated that plan given the strong customer demand for our product by adding a separate standalone 500,000 square foot distribution center as a companion operation to the manufacturing plant and by increasing the RTD lines we would install in the original building. What was simply an idea to fill an industry niche has now been upsized multiple times over with the vast majority of those products, some 70 to 80% of the original and expanded capacity already spoken for by customers. This is nine months before the first product ever rolls off the line. We are obviously very encouraged by these recent developments. The exponential upsizing of this project over the past year was brought about by customer demand for the types of products this facility will produce, and the work of the most extraordinary team I've ever been a part of. Our sales and product development teams have worked tirelessly with customers in our labs. The engineering, production, operations, and construction crews are on the verge of completing not only one world-class, half-million-plus-square-foot facility, but two of them. Our procurement, accounting, and support teams have worked nonstop, to ensure the raw materials and neural networks are in place and appropriately scaled up before we even turn on the lights. And our core investors and lenders have stepped forward to provide the financial resources required for this rapid escalation. I believe we are on the verge of building a uniquely purposeful and profitable global business. And I'm not alone in that assessment. The Westrock Coffee leadership team has been enhanced by the arrival of some of the most seasoned professionals in the beverage creation and production industry. This includes more than a dozen new leaders each with more than 20 years of experience for key roles in project management, plant management, manufacturing accounting, quality assurance and quality control, and in the engineering, installation, and operation of the same equipment we are installing in Conway from major CPGs and product manufacturers such as Pepsi, Dairy Farmers of America, Dean, Yum, General Mills, Land O'Lakes, et cetera, just to name a few. The impact this combined business has on millions of smallholder farmers and their families in 35 countries around the world is literally life-changing. And our unending thanks goes to our customers who have selected us as their coffee, tea, and extract partner and have stayed with us through the challenge of our very rapid scale-up. the employee group that delivers on this mission daily, often without recognition or praise, the communities we live and work in which have cheered for us incessantly and extended a helping hand over and over again, and our investors who took a meaningful chance and supported us along this entire journey. All of these people deserve our thanks, our continued candor, and financial success for themselves. Our aim is to deliver just exactly that over the next three to five years. At this point in time, I'll turn the call over to Chris and let him take you through a review of our current operations and financial results.