Westrock Coffee Company

Thank you for standing by. My name is Alex and I will be your conference operator today. At this time, I would like to welcome everyone to the Westrock Coffee Company first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Press star 1 again. I would now like to turn the call over to Robert Monger with Westrock Coffee. Please go ahead.

Thank you, and welcome to Westrock Coffee Company's first quarter 2024 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 first quarter earnings release issued earlier today. This information is available in 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 measures to the most directly comparable GAAP measures. And with that, it is my pleasure to turn the call over to Scott Ford, our co-founder and chief executive officer.

Thank you, Robert, and good afternoon, everyone. Thank you for joining us for this pivotal financial and operational update. As most of you know, we've been engaged in the development of what we believe is the world's largest roast-to-extract-to-ready-to-drink facility. And today, we are thrilled to announce that it is now operational, producing finished, sellable product, and we have commenced the full-fledged fill-it-up mode. On top of this, our first quarter performance was simply outstanding across a number of fronts. Our first quarter adjusted EBITDA was up 32% over the prior year due to double-digit growth in every product segment except for roasting ground coffee, which remained weak. Our Conway, Arkansas extract and ready-to-drink plant commenced operations on April 16th, exactly as planned almost a year ago, and solely based on our currently committed order book. we already expect to run at roughly 75% of installed capacity utilization in 2025, our first full year of production. Our select milk producers, JV, for two aseptic ESL lines and requisite cold storage capabilities in Littlefield, Texas, continues on pace for an expected closing and funding in the third quarter of this year and a subsequent product launch in mid-2026. our current indicated order book for this already reflects one line essentially spoken for. We are in the midst of a meaningful string of sales victories across multiple customer channels and product types, and our expected volumes for late 24 and 25 are anticipated to be materially higher than current run rates. With our Conway cold chain multi-serve bottle line in commercial operation, we are now in the product commercialization phase with several customers on our high-speed can line, and we continue to expect our glass bottle line to commence operations in the fourth quarter of this year, which remains completely sold out. Given these results, our updated order book outlook, and our ongoing expense reduction plans, we are pleased to reaffirm our adjusted EBITDA guidance range of between $60 and $80 million for 2024. Further, we are introducing our first preliminary view for 2025 adjusted EBITDA of roughly $115 million. This view reflects the current state of our traditional business, plus the addition of those new customers and products that we are in the final stages of contracting, commercializing, and preparing to manufacture. With that overview, I'd like to spend a few minutes drilling down on the key challenges and objectives we are executing against over the remainder of 24 and 25. As I'm sure everyone on this call is aware, fuel and food inflation continue to disproportionately impact a growing segment of American diners and shoppers, which in turn continues to affect our roasting ground coffee volumes. And while part of our volume decline is the result of a customer moving some low margin roasting ground volume, The more important declines seem to be directly attributable to ongoing food price inflation. We simply see no quick fix to the reality that many end consumers will continue to struggle to afford food and beverages, especially when purchased away from home, and we will be adjusting a number of our operating expenses accordingly in the coming months. But of even greater impact to our business is the quickening transition of the coffee consumer from pots of hot coffee to cold-based and single-serve RTD-style coffee offerings. This transformational shift plays directly into our strengths as we launch the Conway Extract and RTD facility and as our single-serve cup business continues to see meaningful share-shift opportunities materialize. In these instances, our growing team of product development, commercialization, logistics and operations professionals continue to be recognized across our industry as one of the premier teams to partner with globally. We are excited to be collaborating on a number of development and scale-up projects with key customers across industry segments who are global leaders in these quickly growing categories. It takes considerable effort and time to execute against this type of multi-layered, consumer-driven product shift, but I believe the Westrock team has distinguished themselves as the leading partner for consumer-facing clients to work with to capture the benefits these rapid consumer and product shifts enable. You can clearly ascertain from our guidance updates that we are winning much more than our traditional fair share of these customer relationships. We view this as critically important strategically because as customers choose their product development, new product launch, and meaningful scale-up partners today, They are making decisions that will ripple through our industry for the next decade. Being dedicated to our customers' long-term success, no matter the short-term dislocation pain to our operations or to preset self-imposed financial metrics, has been a critical differentiator for Westrock in the eyes of our customers. I fully acknowledge this sometimes painful reality. and appreciate the great patience that everyone has shown as we upsized the Conway plant yet again and again, for instance. But I, our executive team, and our board remain steadfastly resolute in our belief that this is how we must have acted in order to help our growing list of customers make the transition from hot to cold and from multi-serve to single-serve coffee and energy-based drinks. It was imperative that we say yes when asked for help. For enduring the attendant dislocations over the past few years, we are today partners with most of the leaders in the various industry sectors we service across multiple product categories. And we are being entrusted by more and more of them each quarter with a growing set of products as their strategic development, product development, ethical sourcing, logistics, and production partners. The guidance we're sharing today about our late 24 and full year 25 adjusted EBITDA serves, I believe, as the first but definitely not last major proof point of the wisdom that our investors and board have placed in our leadership team to execute this non-conventional but value-enhancing corporate transition. I'll be glad to answer questions in a moment, but with that, let me turn the call over to our CFO, Chris Fledger, who will take you through the key metrics that underpin all of these remarks. Chris?