Westrock Coffee Company

Hello, and welcome to West Rock Coffee Company's second quarter 2024 earnings conference call. My name is Kathy Darnell, 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 Robert Munger with West Rock Coffee.

Thank you, and welcome to Westrock Coffee Company's second 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 second quarter earnings release issued earlier today. This information is available in the investor relations section of Westrock Coffee Company's website, 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 is my pleasure to turn the call over to Scott Ford, our co-founder and chief executive officer.

Thank you, Robert. Good afternoon, everyone. We have a number of significant updates that we're pleased to share with you today in conjunction with the second quarter's earnings details, which our CFO, Chris Pledger, will take you through in just a moment. The second quarter of 24 marks a celebratory milestone for all of us that have labored so hard for so long to bring to realization the commencement of commercial operations of our Conway, Arkansas, extract and ready to drink facility we are in full production and sales mold on our multi-serve bottle line we have completed the startup of our rtd canning line and expect to begin commercial sales off that line in the second half of this year and we are on target for the completion of our glass bottle line later this year importantly as we continue our sales effort to fill these lines we have several new commitments in hand that we expect will completely fill our RTD can line over the next 18 months. Our glass bottle line remains fully committed to an anchor tenant that we expect will commence purchasing product in mid-25, and our multi-serve bottle line has already been forced to add a second production ship. This essentially completes our commitment to having the lines in place on time and largely sold through before they begin full production. My hat is off to and my gratitude is profound for each of the team members that financed, designed, built, created products for, sold, and commercialized each of the production and packaging lines in this magnificent facility. I know of no other team in the world who could have accomplished these goals in this timeframe and within this budget. Unprecedented and yet so typical of these fantastic individuals, who sought each other out and came together from every corner of this industry to do something extraordinary for our customers, shareholders, communities, and the farmers who reside at the origin source of these vast and complex global supply chains. As an old and important mentor of mine, Eamon Mahoney, once told me, if you're not happy when you can be, you never will be. So today, we are happy to share this exceptionally good news with all of you. Now, having stopped momentarily to celebrate, and before I turn the call over to Chris, let me say a word or two about our current operations and outlook. The investments we made over the past two years in people, processes, and systems are paying off handsomely, and our core operating and sales metrics are the best they have been in years, hence the 200 basis point improvement in margins. In fact, we were extremely pleased with every key performance metric we measure, except for unit sales in our single serve cup segment this quarter. We could have easily been up over 50% in adjusted EBITDA year over year and not just 20 had the retail customer acted just nearly normal in the quarter. We believe the volume miss is primarily due to the trade down in packaging size that the retail private label customer is executing across multiple products as interest rates and fuel prices continue to absorb a disproportionately higher portion of their disposable income. I doubt that the current single-serve cut volume softness is permanent, and we have a number of new volume opportunities in this category that we are currently working on, which would not only fill this hole but be very additive to our business overall. So I remain very optimistic about the market position and commensurate earnings power we are assembling over the next few years. I'd like to conclude my prepared remarks by offering this important insight. Our 24 and first half of 25 forecasts are still subject to material movement as volume onboarding discussions are likely to continue through the end of this year. That said, we are now much better equipped to gauge the volumes we expect to move through our plans in the back half of 25 once the onboarding transitions are completed. Therefore, we can now estimate an annualized adjusted EBITDA run rate of somewhere between $125 and $150 million as we exit 2025 and enter 2026. Obviously, we have a number of potential opportunities beyond this base level, including the expected continuing development of the Select Milk Producers Joint Venture, which we now expect to wind up later this year as our sales pipeline fills for these products. This is the most accurate and helpful information we can share at the moment. And so with that, I'll now turn the call over to Chris for a review of our financial results.