Westrock fee pany(WEST) - 2024 Q3 - Quarterly Report

Financial Performance - Total net sales for the three months ended September 30, 2024, were $220.86 million, compared to$219.61 million for the same period in 2023, representing a 0.6% increase[8]. - Gross profit for the three months ended September 30, 2024, was $37.09 million, up from$35.07 million in the same period last year, indicating a 5.8% increase[8]. - The company reported a net loss of $14.26 million for the three months ended September 30, 2024, compared to a net income of$16.62 million for the same period in 2023[9]. - The company reported a comprehensive loss of $10.38 million for the three months ended September 30, 2024, compared to a comprehensive income of$19.86 million for the same period in 2023[9]. - The company reported a net loss of $55.691 million for the year ending December 31, 2023, reflecting a significant decline in performance[12]. - The company reported a net loss of$55.7 million for the nine months ended September 30, 2024, compared to a net loss of $14.5 million for the same period in 2023[15]. - The company reported a net loss of$14,259,000 for Q3 2024, compared to a net income of $16,621,000 in Q3 2023[175]. - The company reported a net loss attributable to common shareholders of$(14.2) million for the three months ended September 30, 2024, compared to a profit of $12.8 million in the same period of 2023[183]. Assets and Liabilities - Total current assets increased to$336.63 million as of September 30, 2024, from $313.05 million as of December 31, 2023, reflecting a 7.5$692.84 million as of September 30, 2024, compared to $583.56 million as of December 31, 2023, marking an 18.7$1.08 billion as of September 30, 2024, from $971.51 million as of December 31, 2023, representing an 11$22.36 million as of September 30, 2024, down from $37.20 million as of December 31, 2023[6]. - Total cash and cash equivalents at the end of the period were$32.7 million, down from $48.8 million at the end of September 2023[15]. - Total debt increased significantly from$279.0 million on December 31, 2023, to $449.6 million on September 30, 2024[75]. Expenses - Selling, general and administrative expenses for the three months ended September 30, 2024, were$46.13 million, compared to $37.05 million in the same period last year, a 24.6$2.54 million for the three months ended September 30, 2024, down from $3.14 million in the same period in 2023[8]. - The company incurred depreciation and amortization expenses of$23.2 million, up from $18.4 million in the previous year[15]. - The company incurred interest expense of$6,889 thousand and transaction, restructuring, and integration expenses of $2,538 thousand during the three months ended September 30, 2024[148]. - Selling, general and administrative expenses increased to$142.2 million, representing 22.9% of total revenues, up from 16.2% in the prior year[203]. Segment Performance - Beverage Solutions segment net sales for the three months ended September 30, 2024, were $164.0 million, primarily due to a$16.4 million decrease in coffee and tea product sales[185]. - Sustainable Sourcing & Traceability segment net sales increased by 32.8% to $56.9 million, driven by a 35.9$485,322,000, and for Sustainable Sourcing & Traceability were $143,204,000, totaling$621,749,000[152]. - Segment Adjusted EBITDA for the total reportable segments was $14,227 thousand for the three months ended September 30, 2024, with Beverage Solutions at$11,752 thousand and Sustainable Sourcing & Traceability at $2,475 thousand[148]. - Segment Adjusted EBITDA for the total reportable segments for the nine months ended September 30, 2024, was$39,033,000[152]. Equity and Capital - The issuance of common shares related to warrant exchange amounted to 5,424 shares, generating $36,938,000 in additional capital[10]. - The balance of common stock shares increased from 75,728,000 on June 30, 2023, to 88,039,000 by September 30, 2023[10]. - The total number of common stock shares is projected to reach 94,073,000 by September 30, 2024[12]. - The company granted 1,370,222 RSUs during the nine months ended September 30, 2024, with a weighted-average fair value at grant date of$9.66[136]. - The company recognized approximately $4.1 million of one-time employee severance costs during the nine months ended September 30, 2024, related to targeted restructuring activities[35]. Cash Flow and Financing - Cash flows from operating activities showed a net cash outflow of$16.0 million for the nine months ended September 30, 2024, an improvement from a net cash outflow of $75.1 million in the prior year[15]. - The company made capital expenditures of$141.5 million in property, plant, and equipment during the nine months ended September 30, 2024, compared to $121.5 million in the prior year[15]. - The company is required to maintain a secured net leverage ratio ranging from 4.50:1.00 to 6.25:1.00, stepping down to 4.50:1.00 by April 2026[81]. - The Company issued$72.0 million in convertible senior notes at a 5.00% interest rate, with $50.0 million from related parties[84]. - The company entered into a$5.0 million unsecured working capital trade finance facility, maturing on December 31, 2026, with stepped repayments totaling $5.0 million[91]. Market and Strategic Initiatives - The company has plans for market expansion and new product development, as indicated by the ongoing issuance of common shares and capital raising activities[12]. - The company’s proprietary technology in the SS&T segment aims to improve the lives of farming partners and enhance environmental accountability[169]. - The company is currently evaluating the impact of several recently issued accounting pronouncements, including ASU 2023-07 and ASU 2023-09, on its consolidated financial statements[44][45]. Taxation - The effective income tax rate for the nine months ended September 30, 2024, was (2.3%), significantly lower than the 18.7% rate for the same period in 2023, primarily due to an increase in the valuation allowance against domestic deferred tax assets[40]. - The company expects minimal impact from the OECD's Pillar Two legislation on its 2024 effective tax rate[41].