Westrock Coffee Company reported its financial results for the three and nine months ended September 30, 2024, revealing significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the three months ended September 30, 2024, Westrock generated net sales of $220.9 million, a slight increase from $219.6 million in the same period of 2023. However, for the nine-month period, net sales decreased to $621.7 million from $649.7 million year-over-year. The Beverage Solutions segment saw a decline in sales, dropping approximately 7.2% to $164.0 million, while the Sustainable Sourcing & Traceability (SS&T) segment experienced a notable increase of 32.8%, reaching $60.1 million.

Gross profit for the third quarter rose to $37.1 million from $35.1 million in 2023, while gross profit for the nine months increased to $115.8 million from $105.0 million. However, selling, general, and administrative expenses surged to $46.1 million for the quarter, up from $37.1 million, and $142.2 million for the nine months, compared to $105.3 million in the prior year. This increase was primarily attributed to higher costs associated with the start-up of the new extract and ready-to-drink facility in Conway, Arkansas.

Westrock reported a net loss of $14.3 million for the third quarter, a stark contrast to a net income of $16.6 million in the same quarter of 2023. For the nine months, the net loss widened to $55.7 million from $14.5 million. The basic loss per share for the third quarter was $(0.16), compared to earnings of $0.15 in the prior year.

Strategically, Westrock completed the acquisition of Falcon Coffees Limited in April 2023 and Bixby Roasting Co. in February 2023, enhancing its market position. The company also undertook significant restructuring efforts, including the consolidation of manufacturing operations and a targeted reduction in workforce capacity, which incurred approximately $5.0 million in charges.

As of September 30, 2024, Westrock's total assets increased to $1.08 billion from $971.5 million at the end of 2023, while total liabilities rose significantly, with long-term debt increasing to $326.1 million from $223.1 million. The company reported an accumulated deficit of $(418.3 million) as of September 30, 2024, compared to $(362.6 million) at the end of 2023.

Westrock's management has committed to delaying growth capital expenditures and reducing operating expenses to ensure adequate liquidity and compliance with debt covenants, as the company navigates its financial challenges and focuses on operational efficiency.