Westrock fee pany(WEST) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, Westrock Coffee Company reported a segment adjusted EBITDA of $21 million, a 53$17.8 million, up 53% from the previous year [7][28] - For the full year 2024, consolidated adjusted EBITDA was $47.2 million, which included$12.8 million of Conway facility scale-up operating costs, compared to $45.1 million in 2023 [26][32] - Net sales for Q4 2024 increased by 6.5$659.9 million in net sales for 2024, an 8.8% decrease compared to 2023, while the SS&T segment saw a 40% increase in volumes, resulting in net sales of 191.3 million [32][33] - The SS&T segment adjusted EBITDA for 2024 was 6.4 million, reflecting an 84% increase from the previous year [27][33] - The extracts and RTD business experienced nearly 25% volume growth, contributing to significant gross profit expansion [14] Market Data and Key Metrics Changes - Green coffee prices surged approximately 70% in fiscal 2024, impacting inventory values and liquidity due to increased working capital requirements [37][38] - The company expects potential demand decline in the back half of the year due to higher coffee prices being passed on to consumers [39][40] Company Strategy and Development Direction - Westrock Coffee aims to be the leading manufacturing partner for global beverage brands, focusing on innovation, sustainable sourcing, and low-cost processing [10][11] - The company has invested nearly $400 million in expanding its facilities to meet growing customer demand, positioning itself to capitalize on consumer-driven value shifts in the beverage market [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving significant EBITDA growth over the next few years, driven by new customer contracts and increased production capacity [15][41] - The company anticipates volume growth in its core coffee business from new retail customers onboarded in late 2024, with strong visibility into growth for the next two years [41][42] Other Important Information - The company spent approximately$160 million in capital expenditures for 2024, with $140 million allocated to the Conway facility [35] - As of year-end 2024, Westrock had approximately$90 million in unrestricted cash and undrawn revolving credit commitments [36] Q&A Session Summary Question: Impact of higher coffee prices on customer orders - Management acknowledged that higher coffee prices could impact demand later in the year, as customers begin to pass costs to consumers [54][56] Question: Scale-up costs in 2026 guidance - Management confirmed that there would be no scale-up costs in 2026, as operations would be fully ramped up by then [58][59] Question: Customer product development and market share - Management indicated that the company is both taking market share and developing new products with existing customers, leveraging its integrated solutions [64][66] Question: Higher green coffee costs and customer volumes - Management noted that the impact of higher coffee costs would likely be felt in the back half of the year, particularly in heavy coffee products [78][79] Question: Change in guidance for 2025 - The change in guidance was primarily due to conservatism around the start-up of the Conway facility rather than solely from higher coffee prices [81][82]