Arkansas-based Westrock Coffee reported its highest sales quarter despite losses from new production buildouts and tariff-related costs to green coffee inventory.
- Net sales in Q2 were up 34.8% year-over-year to $280.9 million
- Gross profit was $41.4, flat compared to the prior year period
- Net loss was $21.6 million, versus $17.8 million in Q2 2024
Westrock’s ambitious production build-out “has not been without its challenges,” said CEO and co-founder Scott Ford in the prepared remarks. “We got off to a much slower volume start than we originally anticipated, our startup costs exceeded our plan, and it was as difficult as our most ardent critics intimated. However, our primary liquid product volumes are now approaching planned levels, and we’re closing in on our budgeted unit economics.”
The coffee company began commercial operations at its single-serve cup facility in Q1 and has been ramping up its production at its extract and RTD plant at the same time. Westrock leadership said it expects its second RTD line to come online at the Conway facility in October.
The coffee co-packer did not go into details about how much of its new production capacity it is expecting to fill with new clients and orders in the second half of 2025, but Ford announced there were already customers lined up for the new RTD line.
From a volume perspective, customer demand continues to be really strong,” added CFO Chris Pledger during the Q&A section of the call. “There’s capacity in not only the single serve roast-and-ground, but also in the Conway [RTD] products.”
With tariffs imposed on Brazil’s coffee-growing industry, Westrock has added inventory costs during the quarter that were “ultimately passed through to our customers,” Pledger said. “While this dynamic adds some incremental strain, we have several levers available to manage liquidity should the need arise, and continue to monitor the situation closely.”
“There is no flip of the switch that just says: ‘Okay, we’re just going to avoid 50% tariffs when they are the largest producer of coffee in the world,’” Ford said in response to a question about pivoting out of Brazil to offset green coffee costs.
Pledger went on to recognize that “persistent inflation and softening of consumer confidence” could impact Westrock customer ordering patterns, but the company remained confident in its FY2025 outlook and maintained its previous guidance.
Westrock’s Beverage Solutions segment tallied net sales of $208.8 million, a 27.9% increase from the year-ago period. The Sustainable Sourcing & Traceability segment’s sales were $72 million, an increase of 59.6% year-over-year.
Westrock leadership maintained that as the company incrementally builds out its single-serve facilities capacity with new equipment and onboards new clients, it can reach its goal of hitting $200 million EBITDA in the next three to four years.
“We think we have eyes on everything we have to do, and we have 85% of all the relationships we have to have from a customer and product perspective to deliver that,” Ford said.
At the time of publication, Westrock shares were up around 5% today to about $7.00.