Westrock Coffee Co (WEST)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered 11.1% net sales growth to $213.8M, while gross profit fell 22.0% to $29.1M and net loss widened to $27.2M; Consolidated Adjusted EBITDA was $8.2M and included $3.3M of Conway scale-up costs .
• Versus S&P Global consensus, revenue beat ($213.8M vs. $206.4M) while EPS missed (−$0.29 vs. −$0.21); coverage remains thin (4 revenue, 2 EPS estimates)*.
• Management reaffirmed all previously issued 2025/2026 guidance (Consolidated Adjusted EBITDA, Segment Adjusted EBITDA, leverage targets), citing strong visibility from the Conway facility ramp and single-serve wins .
• Call tone confident: commercial runs are underway; second can line and glass line scheduled to ramp in 2H25, with capacity expansion optionality and continued share gains across RTD and single-serve .

What Went Well and What Went Wrong

What Went Well

• Revenue growth and segment breadth: Net sales +11.1% YoY to $213.8M; SS&T net sales +44.4% YoY and Segment Adjusted EBITDA improved sharply to $1.9M .
• Conway ramp progress: “commercial quantity production runs” have begun; second can line slated for Q3, glass line ramps across Q3–Q1 next year, supporting back-half EBITDA growth visibility .
• Strategic wins in single‑serve: multiple private label and major branded wins; volumes expected to ramp in late Q2 and through H2, positioning the platform for its “best year ever” .

What Went Wrong

• Profitability pressure: Gross profit down 22.0% YoY to $29.1M and net loss widened to $27.2M; Consolidated Adjusted EBITDA declined vs. prior year (burdened by $3.3M scale-up costs) .
• Margin headwinds and liquidity pressure from commodity/tariff dynamics: historically high green coffee prices and pending tariffs raise inventory values and working capital needs (though costs are passed through) .
• Beverage Solutions Segment Adjusted EBITDA fell 11.3% YoY to $9.6M despite net sales growth (+3.8%), reflecting start-up and scale-up friction early in the ramp .

Financial Results

Consolidated Metrics: Q3 2024 → Q4 2024 → Q1 2025

Segment Breakdown: Q3 2024 → Q4 2024 → Q1 2025

Selected KPIs: Q3 2024 → Q4 2024 → Q1 2025

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are off to a great start in 2025… making great progress as we scale up… launch of our second single serve cup facility in Conway has exceeded our expectations.” — Scott T. Ford, CEO .
• “Combination of Beverage Solutions and SS&T segment adjusted EBITDA of $11.5M, up 3.3%… reaffirm our guidance for both the first half…and entire year of 2025.” — Scott T. Ford .
• “We expect the balance of the Conway CapEx spend to be completed by the end of the third quarter… leverage remains within expectations.” — CFO (Thomas/Chris Pledger) .
• “We are now bringing a second can line online in the third quarter… glass line turns on in the third quarter and then ramps up over 3 quarters… fully utilized by end of Q1 next year.” — Scott T. Ford .

Q&A Highlights

• Ramp schedule clarity: First large can line started with material ramp in May–June; second can line in Aug–Sep; glass line starts in Q3 with 3‑quarter ramp to capacity by end of Q1 next year .
• Single‑serve demand: Significant private label and branded wins; volumes ramp late Q2 into H2; expectation of a “really good year” for single‑serve .
• Back‑half visibility: Customers are lined up; demand at least as strong as forecast; slot‑filling dynamics if downtime occurs indicate robust appetite .
• Capacity optionality: Ability to add billions of single‑serve cups and additional RTD capacity within or adjacent to Conway footprint; “just add machines” approach .
• Tariffs/coffee costs: Pass‑through to customers; short‑term working capital impact; day tariffs announced, “C” price moved similarly, muting net price effect .

Estimates Context

• Q1 2025 vs. S&P Global consensus: Revenue $213.8M vs. $206.4M — bold beat; EPS −$0.29 vs. −$0.21 — bold miss; Revenue estimates (n=4), EPS estimates (n=2). Values retrieved from S&P Global.*

Implication: Expect upward revisions to revenue near-term; EPS likely to be tempered by scale-up costs and interest expense until operating throughput and mix improve.*

Key Takeaways for Investors

• The story remains a ramp and mix narrative: H2’25 should inflect on RTD/Conway throughput, with single‑serve wins adding volume leverage; reaffirmed guidance underscores confidence .
• Near‑term profitability constrained by scale‑up and interest costs; EBITDA trajectory should improve as lines reach capacity and non‑GAAP scale-up effects recede .
• Commodity/tariff pass‑through limits margin impact but elevates working capital needs; liquidity (revolver upsized to $200M) and covenant headroom appear adequate .
• Strategic share gains across RTD and single‑serve are the core equity driver; capacity expansion optionality provides a path to sustain growth beyond current sold‑out lines .
• Monitoring points for Q2/Q3: evidence of volume ramp per plan (can/glass), single‑serve onboarding pace, and leverage ratio trend toward 5.7x by June and 4.9x by year‑end .
• Expect estimates dispersion (low coverage); revenue likely to lift, EPS dependent on ramp timing and cost absorption; guide reaffirmation reduces downside scenario risk.*
• Execution and timing are catalysts: hitting ramp milestones and securing incremental capacity orders are likely stock reaction drivers in the coming quarters .

Footnote: *Values retrieved from S&P Global.