With its Conway, Arkansas production facility now fully operational, Westrock Coffee Company is projecting significant growth this year, according to the company’s latest earnings report this week.
While announcing its full year 2024 and Q4 earnings yesterday afternoon, Westrock leadership said it expects to see strong volume growth in its core coffee business this year, with new retail customers, production partners and increased capacity all fueling momentum.
Full year 2024 earnings were down, with net sales decreasing 1.6% to $850.7 million. The decline was primarily due to an increase in net losses ($80.3 million), as gross profit rose 10% to $153.8 million.
Q4 results were more positive, as net sales grew 6.5% to $229 million with gross profit increasing 9.2% to $38 million. Net losses were only $24.6 million in the quarter, compared to a loss of $20.1 million in the same period in 2023.
“Westrock Coffee’s value proposition in the market is to be the premiere integrated strategic supplier to the pre-eminent coffee, tea, and energy beverage brands globally,” said co-founder and CEO Scott Ford in a statement. “And, in 2024 we made considerable progress executing against this strategy as evidenced by the dozen new major brands that we began to provide product development and manufacturing services to.”
Ford noted that the new brand partnerships helped drive Adjusted EBITDA growth of over 50% in Q4, with the company now looking towards taking full advantage of its 524,000 sq. ft. Arkansas facility, which can produce single-serve products.
According to Ford, the Arkansas site was not yet at full operational speed last year and did not make a major impact on the earnings, but with the facility finalizing the full automation of two new packaging lines this month it is ready to run at “production level scale” – capable of producing 20 million pounds of coffee per year – and the company anticipates it will help to drive significant growth throughout 2025 and beyond.
While Westrock felt setbacks in its single-serve business last year, Ford said that in late 2024 and earlier this year the company entered new agreements with “several additional leading CPG brands” via contracts at the Arkansas facility which will further contribute to sales growth going forward.
“To summarize 2024, we now have in hand executed contracts with purchase orders from over a dozen premier global CPG brands and another dozen plus retailers and distributors that fill over 80% of our initial production and packaging capacity in Conway,” he said.
The Arkansas plant has also been the target of some controversy in recent months. In November, Dairy Farmers of America (DFA) sued Westrock, alleging it poached talent and stole trade secrets after it hired six former DFA employees to work at the new facility. The company has denied any wrongdoing and the lawsuit was not mentioned during the earnings call.
There are also anticipated supply headwinds. CFO Chris Pledger noted on the call that high green coffee costs are having an impact on the business, putting “additional pressure on our liquidity through increased working capital”, he said, but cautioned that the company believes it is “well-positioned from a liquidity standpoint” to take the hit.
“Higher coffee prices are more likely to impact our business, as the higher coffee costs are passed on to coffee consumers, which could affect demand for our products,” Pledger said. “While our volumes in the first quarter have been impacted by severe weather events – not higher coffee prices – we could see a decline in product demand due to higher coffee prices in the back half of the year and are adjusting our forward guidance to take this into account.”