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Westrock Coffee Co (WEST)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a top-line beat and record segment performance: Net sales $280.9M (+34.8% YoY), Beverage Solutions Segment Adjusted EBITDA $19.7M (+48.5% YoY), SS&T Segment Adjusted EBITDA $3.3M (vs. $0.4M YoY) .
  • Against S&P Global Street consensus, revenue materially beat (actual $280.9M vs. $238.3M*) while EPS missed (actual -$0.23 vs. -$0.15*); management reaffirmed 2025 and 2026 guidance, highlighting Conway ramp and robust demand .
  • Near-term leverage improved versus outlook: Beverage Solutions secured net leverage ratio 4.75x vs. guided 5.70x at 6/30/2025, aided by segment strength and cost controls .
  • Catalysts: Conway extract/RTD and single-serve capacity ramp, new customer wins, and potential tariff-driven sourcing shifts; watch the second can line and glass line timing (October/November start) and tariff impacts on working capital/liquidity .

What Went Well and What Went Wrong

  • What Went Well

    • Record quarterly segment performance driven by Conway ramp and single-serve cup plant launch; Beverage Solutions Segment Adjusted EBITDA up 48.5% YoY to $19.7M and SS&T EBITDA to $3.3M .
    • Strong operational execution and data-driven improvements: “process, data intelligence and risk mitigation insights brought about through our now two year old relationship with Palantir were the key drivers of this quarter's earnings beat” (CEO) .
    • Leverage better than guided: “Beverage Solutions secured net leverage ratio... 4.75x, nearly a full turn better than the guidance... of 5.7x” (CFO) .

  • What Went Wrong

    • EPS loss widened vs. prior-year quarter (-$0.23 vs. -$0.20 YoY) amid higher interest and Conway scale-up costs; net loss increased to $21.6M (vs. $17.8M prior-year) .
    • Gross profit was flat YoY ($41.4M vs. $41.4M), compressing gross margin (14.7%) vs. Q2 2024 (~19.9%) due to cost/mix and ramp friction .
    • Tariff headwinds: “US implemented a 50% tariff on imports from Brazil... the tariffs impact the value of our inventory... place additional pressure on our working capital and liquidity in the short term” (CFO) .

Financial Results

Consolidated results vs. prior periods and estimates

MetricQ2 2024Q1 2025Q2 2025Street Consensus (Q2 2025)
Revenue ($USD Millions)$208.4 $213.8 $280.9 $238.3*
Gross Profit ($USD Millions)$41.4 $29.1 $41.4 N/A
Gross Margin (%)19.9% 13.6% 14.7% N/A
Consolidated Adjusted EBITDA ($USD Millions)$12.4 $8.2 $15.3 N/A
Diluted EPS ($USD)-$0.20 -$0.29 -$0.23 -$0.15*

Notes: Asterisk indicates values retrieved from S&P Global.

Highlights vs estimates:

  • Revenue: $280.9M beat vs. $238.3M* — bold positive surprise .
  • EPS: -$0.23 missed vs. -$0.15* — bold negative surprise .

Segment breakdown

SegmentMetricQ2 2024Q1 2025Q2 2025
Beverage SolutionsNet Sales ($USD Millions)$163.3 $164.1 $208.8
Beverage SolutionsSegment Adjusted EBITDA ($USD Millions)$13.2 $9.6 $19.7
SS&TNet Sales ($USD Millions)$45.1 $49.7 $72.0
SS&TSegment Adjusted EBITDA ($USD Millions)$0.4 $1.9 $3.3

KPIs

KPIQ4 2024Q1 2025Q2 2025Commentary
Roast & Ground Coffee Volume YoY GrowthN/A+7.6% +13.7% Broad-based demand and share gains
Single-Serve Cups Volume YoY GrowthN/ARamp began late Q2 per Q1 call +21.1% New facility and wins driving growth
Flavors/Extracts Sales Change YoYN/AN/A+14% Supported by Conway ramp
Beverage Solutions Secured Net Leverage Ratio4.71x 5.31x 4.75x Improved vs. guided 5.70x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Adjusted EBITDA ($M)1H 2025$17.5–$24.0 Reaffirmed Maintained
Consolidated Adjusted EBITDA ($M)2H 2025$42.5–$49.0 Reaffirmed Maintained
Consolidated Adjusted EBITDA ($M)FY 2026$130.0–$150.0 Reaffirmed Maintained
Beverage Solutions Segment Adj. EBITDA ($M)1H 2025$25.0–$30.0 Reaffirmed Maintained
Beverage Solutions Segment Adj. EBITDA ($M)2H 2025$45.0–$50.0 Reaffirmed Maintained
Beverage Solutions Segment Adj. EBITDA ($M)FY 2026$125.0–$142.0 Reaffirmed Maintained
SS&T Segment Adj. EBITDA ($M)1H 2025$2.5–$4.0 Reaffirmed Maintained
SS&T Segment Adj. EBITDA ($M)2H 2025$2.5–$4.0 Reaffirmed Maintained
SS&T Segment Adj. EBITDA ($M)FY 2026$5.0–$8.0 Reaffirmed Maintained
Beverage Solutions Secured Net Leverage RatioJun 30, 20255.70x Actual 4.75x Better than outlook

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
AI/Data & technologyNot highlightedPlatform build; multi-product strategy Palantir analytics driving profitability and risk mgmt (CEO) Increasing adoption and impact
Supply chain & rampPlant coming online, capacity plans Conway ramp, second can & glass lines scheduled Throughput improving; second can line Oct/Nov; glass line Q4 start possible Accelerating ramp
Tariffs/macroMonitoring trade restrictions Tariffs to impact later Q2; liquidity plans 50% Brazil tariff; pass-through to customers; short-term WC pressure Heightened focus
Product performanceSegment EBITDA +50%+ in Q4 Early single-serve and RTD wins Roast & ground +13.7%; single-serve +21.1%; FEI +14% Broad-based strength
Market share & customersNew major brand wins Winning whales + top 10–15 players; cross-sell Customers lining up for downtime slots; strong pipeline Expanding demand
Liquidity/LeverageRevolver upsized to $200M ~$86M cash + revolver availability ~$72M unrestricted cash and available liquidity; covenants in compliance Adequate liquidity

Management Commentary

  • “Record production, deliveries and quarterly segment performance… launch of our new single-serve cup plant and the production ramp-up at the extract and RTD facility” (CEO) .
  • “Key drivers of this quarter's earnings beat… production ramp… cost controls… and risk mitigation insights brought about through our… relationship with Palantir” (CEO) .
  • “Net sales increased by 34.8% YoY… consolidated adjusted EBITDA was $15.3M… Beverage Solutions Segment Adjusted EBITDA grew 48.5%” (CFO) .
  • “US implemented a 50% tariff on imports from Brazil… tariffs… place additional pressure on our working capital and liquidity in the short term” (CFO) .

Q&A Highlights

  • Capacity and visibility: Management has “pretty good line of sight” for existing customers and expects new customers post second can line; glass line trials progressing with potential Q4 start (CEO/CFO) .
  • Single-serve market structure and scale: Industry dominated by Keurig; Westrock scaling modular capacity with strong wins across private label and branded customers (CEO) .
  • Tariffs and sourcing: Some substitution possible (e.g., Colombia/East Africa), but “no flip of the switch” given Brazil’s dominance; mixed impact across contracts (CEO) .
  • Strategic ambition: Working toward $200M EBITDA over 3–4 years with 85% of relationships needed in place (CEO) .
  • Liquidity and leverage: ~$72M unrestricted cash and available liquidity; covenant compliance; levers to manage liquidity (CFO) .

Estimates Context

  • Q2 2025 results vs. consensus: Revenue $280.9M vs. $238.3M* (beat), Diluted EPS -$0.23 vs. -$0.15* (miss) .
  • FY 2025 Street outlook: Revenue $1.169B*, EBITDA $62.6M*; target price consensus $9.60* (5 ests) — directional context only. Values retrieved from S&P Global.
MetricQ2 2025 ActualQ2 2025 Consensus# of Estimates
Revenue ($USD Millions)$280.9 $238.3*5*
Diluted EPS ($USD)-$0.23 -$0.15*4*

Asterisk indicates values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue beat driven by strong single-serve and FEI demand plus Conway ramp; EPS miss reflects interest and scale-up costs, which management expects to moderate as volumes scale .
  • Leverage improving faster than guided (4.75x vs. 5.70x outlook), reducing risk and enhancing flexibility ahead of second can and glass line starts .
  • Tariffs are a near-term working capital headwind; pass-through mechanisms mitigate P&L, but monitor cash conversion cycle and inventory valuation impacts .
  • Conway capacity remains the core catalyst; watch commissioning milestones (second can line October/November, glass line Q4) for further step-ups in EBITDA .
  • Cross-selling momentum across top 20–30 accounts and modular expansion in single-serve support sustained share gains and multi-year EBITDA trajectory (management targeting ~$200M over 3–4 years) .
  • Liquidity adequate with $200M revolver and covenant compliance; maintain focus on CapEx completion by year-end and tariff-driven liquidity dynamics .
  • Near-term trading: Favorable setup into H2 on volume ramps; stock likely sensitive to execution updates on line starts, tariff newsflow, and any changes to guidance reaffirmation cadence .

Appendix: Supporting Financials (from Company 8-Ks)

  • Q2 2025 Statement of Operations (key excerpts): Net sales $280.859M; Gross profit $41.395M; Net loss $21.563M; Diluted EPS -$0.23 .
  • Q1 2025 Statement of Operations: Net sales $213.796M; Gross profit $29.073M; Net loss $27.218M; Diluted EPS -$0.29 .
  • Segment results and leverage metrics detailed in exhibits: Beverage Solutions net sales $208.814M and Segment Adjusted EBITDA $19.670M; SS&T net sales $72.045M and Segment Adjusted EBITDA $3.315M; Beverage Solutions secured net leverage ratio 4.75x .
  • Relevant press release: New Conway single-serve “Clark” facility (525k sq. ft.) designed to produce millions of cups daily and expand innovation capacity in Arkansas .