Westrock Coffee Company (WEST) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $208.4 million, down 7.3% year-over-year, while gross profit rose to $41.4 million and net loss narrowed to $17.7 million from $26.7 million in Q2 2023, with significant start-up costs and transaction expenses impacting results.

• Beverage Solutions segment sales declined 14% year-over-year, while Sustainable Sourcing & Traceability segment sales rose 29.1%.

• Gross margin improved to 19.9% from 15.9% in the prior year quarter, driven by higher margins in both segments.

• Adjusted EBITDA increased 20.8% year-over-year to $13.7 million, marking the second consecutive quarter of year-over-year growth.

• Commercial production and first sales of multi-serve bottles and cans commenced at the Conway, Arkansas extract and ready-to-drink facility.

Financial highlights

• Q2 2024 net sales: $208.4 million (Q2 2023: $224.7 million); six-month sales: $400.9 million (down 6.8% year-over-year).

• Q2 2024 net loss attributable to common shareholders: $17.7 million (Q2 2023: $26.7 million); six-month net loss: $41.3 million (2023: $31.5 million).

• Adjusted EBITDA for Q2 2024 was $13.7 million, up 21% year-over-year; six-month Adjusted EBITDA: $24.8 million (2023: $19.8 million).

• Gross profit improved to $41.4 million from $35.7 million year-over-year, aided by higher non-cash mark-to-market gains.

• Gross profit margin increased to 19.9% in Q2 2024 from 15.9% in Q2 2023.

Outlook and guidance

• 2024 consolidated Adjusted EBITDA guidance narrowed to $60–$65 million, reflecting single-serve cup softness and Conway commercialization ramp.

• 2025 consolidated Adjusted EBITDA guidance reaffirmed at $115 million.

• Annualized Adjusted EBITDA run rate projected at $125–$150 million as of late 2025/early 2026, excluding potential upside from the Select Milk Producers JV.

• Free cash flow expected to turn positive in the second half of 2025 as CapEx intensity declines and sales ramp up.

• Full build-out of the Conway facility expected by Q1 2025.