US-based Westrock Coffee Company expects to potentially double its consolidated adjusted EBITDA by 2025, despite lowering its 2024 guidance to $50m.
In its third-quarter results, the company outlined it anticipates consolidated adjusted EBITDA to come in around $80m to $100m in fiscal year 2025.
The projection includes the impact of approximately $10m to $15m of scale-up costs associated with the Conway facility.
Westrock Coffee CEO and co-founder Scott Ford said the company “had a strong third quarter, despite what continues to be a challenging macroeconomic environment for the consumer”.
The anticipated growth will be driven by higher coffee volumes, new single-serve customer commitments, cost savings, and the expansion of ready-to-drink can and glass bottle products.
In Q2 2024, Westrock Coffee had expected consolidated adjusted EBITDA to be $60m to $65m for fiscal 2024. It was relatively flat in the third quarter at $10.3m versus $11.6m a year earlier.
For the three months ended on 30 September 2024, Westrock Coffee reported a net loss of $14.3m, as against net income of $16.6m during the same period in 2023.
The net loss for the third quarter of 2024 included $2.5m in transaction, restructuring, and integration expenses, $7.9m in pre-production costs, and $4m in scale-up costs related to the Conway facility.
Additionally, the loss accounted for $1.2m in impairment charges from previously announced plant closures and $5.5m in non-cash gains from changes in the fair value of warrant liabilities.
Net sales for the third quarter of 2024 reached $220.9m, reflecting an increase of 0.6%, compared to the third quarter of 2023.
The beverage solutions segment contributed $164m of net sales and reported segment adjusted EBITDA of $11.8m for the third quarter of 2024, compared to $176.8m and $9.9m, respectively, for the same period in 2023.
Additionally, the Sustainable Sourcing and Traceability (SS&T) segment, net of intersegment revenues, contributed $56.9m of net sales and had segment adjusted EBITDA of $2.5m for the third quarter of 2024, compared to $42.8m and $1.7m, respectively, for the third quarter of 2023.
In the first nine months of 2024, the net loss widened to $55.7m from $14.5m in the comparable period in 2023.
Ford added: “This is the third consecutive quarter of impressive, combined segment, year-over-year performance, which is driven by improvements in our base business, as the Conway extract and ready-to-drink facility will not see substantive revenues until early 2025.
“As it relates to the new Conway facility, the sales and customer onboarding work that the team has excelled at over the past two years is nothing short of phenomenal.
"It has resulted in more than a dozen new customers, who will begin placing orders in the first quarter of 2025, from whom, once fully onboarded, are expected to produce more annual consolidated adjusted EBITDA than the entirety of our current base business.”
