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What changed in Westrock Coffee Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Westrock Coffee Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+264 added−246 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-15)

Top changes in Westrock Coffee Co's 2024 10-K

264 paragraphs added · 246 removed · 171 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changePepper Inc., Mother Parkers, Trilliant Food and Nutrition, TreeHouse Foods, Finlays, and Harris Tea Company. ● In the flavors, extracts, and ingredients industry, our products compete with Kerry Foods, Finlays, Javo Beverage Company, Givaudan, Symrise, International Flavors & Fragrances, Inc., and Treatt. ● In the international coffee and tea industry, our products compete with JDE Peet’s, Massimo Zanetti, and UCC Ueshima Coffee Company. ​ 9 Table of Contents We seek to differentiate ourselves from other providers by (i) sourcing coffee via traceable and transparent supply chains, (ii) providing our customers best-in-class product development and consumer insights across broad product offerings, and (iii) maintaining a large manufacturing footprint in varied geographic locations both in the U.S. and abroad which drives cost efficiencies due to scale and customer proximity to our products.
Biggest changePepper Inc., Mother Parkers Tea & Coffee Inc, Trilliant Food and Nutrition, LLC, TreeHouse Foods, Inc., Finlays, Massimo Zanetti Beverage Group, Royal Cup Coffee and Sunny Sky Products, among others. ● In the flavors, extracts, and ingredients industry, our products compete with Kerry Foodservice Brands, Finlays, Javo Beverage, Givaudan, Symrise, International Flavors & Fragrances, Inc., Sunny Sky Products and Treatt, among others. 9 Table of Contents ● In the multi-serve and RTD industry, our products compete against historically dominant legacy manufacturers, such as Dairy Farmers of America and O-AT-KA Milk Products LLC, and against newer entrants into this industry, which include Berner Foods, Trilliant, BevHub LLC, Niagara Bottling, HP Hood, Fairlife LLC, Steuben Foods and Mountaintop Beverage, LLC, among many others. ● In the international coffee and tea industry, our products compete with Massimo Zanetti Beverage Group and UCC Ueshima Coffee Co., LTD, among others. ​ We seek to differentiate ourselves from other providers by (i) sourcing coffee via traceable and transparent supply chains, (ii) providing our customers best-in-class product development and consumer insights across broad product offerings, and (iii) maintaining a large manufacturing footprint in varied geographic locations both in the U.S. and abroad which drives cost efficiencies due to scale and customer proximity to our products.
These strategic holdings provide exceptional insight into each segment of the supply chain that allows us to better understand and manage risk. We are focused on delivering a fully traceable and transparent supply chain for our customers. We have multiple programs and strategies designed to meet customers’ varying needs, including the following: Responsible Sourcing Strategy.
These strategic holdings provide exceptional insight into each segment of the supply chain that allows us to better understand and manage risk. We are focused on delivering a traceable and transparent supply chain for our customers. We have multiple programs and strategies designed to meet customers’ varying needs, including the following: Responsible Sourcing Strategy.
As of December 31, 2023, our operating structure consists of two reportable segments: Beverage Solutions and Sustainable Sourcing & Traceability (“SS&T”). Beverage Solutions : Through this segment, we combine our product innovation and customer insights to provide value-added beverage solutions, including coffee, tea, flavors, extracts and ingredients.
As of December 31, 2024, our operating structure consists of two reportable segments: Beverage Solutions and Sustainable Sourcing & Traceability (“SS&T”). Beverage Solutions : Through this segment, we combine our product innovation and customer insights to provide value-added beverage solutions, including coffee, tea, flavors, extracts and ingredients.
The ability to serve global foodservice operators through our international presence, responsible sourcing capabilities, and vertically integrated supply chain positions us as a global full-menu beverage solutions provider. ​ Our comprehensive line of products allows us to create any product platform in a multitude of packaging sizes and formats.
The ability to serve global foodservice operators through our international presence, responsible sourcing capabilities, and vertically integrated supply chain positions us as a global full-menu beverage solutions provider. ​ Our comprehensive line of products allows us to create product platforms in a multitude of packaging sizes and formats.
We are well positioned to support innovation demand from extract development through RTD fulfillment. Liquid Extracts is our highest growth product category that includes iced coffees, cold brew coffee, and RTD mixes, with cold coffee products experiencing the most significant growth.
We are well positioned to support innovation demand from extract development through ready-to-drink (“RTD”) fulfillment. Liquid Extracts is our highest growth product category that includes iced coffees, cold brew coffee, and RTD mixes, with cold coffee products experiencing the most significant growth.
We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, and single serve cups, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.
We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, single serve cups, multi-serve bottles and ready-to-drink bottles and cans, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.
This, combined with multi-year trade relationships, enables deeper collaboration, enforces ethical practices in the supply chain, and lay a foundation to solve the sustainability issues of tomorrow. Communicating supply chain realities allows our customers to make informed decisions for their brands and leads to reinvestment in sustainable farms. Raíz Sustainability .
This, combined with multi-year trade relationships, enables deeper collaboration, encourages ethical practices in the supply chain, and lays a foundation to solve the sustainability issues of tomorrow. Communicating supply chain realities allows our customers to make informed decisions for their brands and leads to reinvestment in sustainable farms. Raíz Sustainability .
Supply Chain Traceability and Community Impact ​ We differentiate ourselves by situating our businesses at each point of aggregation in the supply chain, including coffee exporting through our wholly owned subsidiary Rwanda Trading Company SA (“RTC”), coffee importing and trading through Falcon Coffees Limited (“Falcon”) and coffee roasting.
Supply Chain Traceability and Community Impact ​ We differentiate ourselves by situating our businesses at each point of aggregation in the supply chain, including coffee exporting, coffee importing and trading through our wholly owned subsidiaries Falcon Coffees Limited (“Falcon”) and Rwanda Trading Company (“RTC”).
Sustainable Sourcing & Traceability : Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, tangible economic empowerment and an emphasis on environmental accountability and farmer literacy. Revenues primarily consist of sales from commodity contracts related to forward sales of green coffee.
Sustainable Sourcing & Traceability : Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, provide tangible economic empowerment and emphasize environmental accountability and farmer literacy. Revenues primarily consist of sales from commodity contracts related to forward sales of green coffee.
In addition, the growing trend to “more than hot black coffee” is regulating seasonal variances. ​ Human Capital Management As of December 31, 2023, we had 1,399 employees located around the globe, of which 1,084 employees were located in the United States. Of our employees located in the United States, 546 were hourly production employees.
In addition, the growing trend to “more than hot black coffee” is regulating seasonal variances. ​ Human Capital Management As of December 31, 2024, we had 1,408 employees located around the globe, of which 1,111 employees were located in the United States. Of our employees located in the United States, 642 were hourly production employees.
Our non-U.S. workforce of 315 employees was employed in Rwanda, Germany, Malaysia, South Korea, Peru, England and Ethiopia. Total Compensation and Rewards. We provide competitive compensation and benefits which include market-based pay that is competitive for our geographies and our industry.
Our non-U.S. workforce of 297 employees was employed in Rwanda, Italy, UK, Germany, Malaysia, South Korea, Peru, France, Brazil, Dominican Republic and Ethiopia. Total Compensation and Rewards. We provide competitive compensation and benefits which include market-based pay that is competitive for our geographies and our industry.
We maintain a qualified staff of professionals to oversee, manage and apply all standards related to food safety, environment safety, and workplace safety standards by agencies that audit our facilities throughout the United States. We believe our workforce is prepared to meet the needs of our customers and further the growth of our Company.
We maintain a qualified staff of professionals to oversee, manage and apply all standards related to food safety, environment safety, and workplace safety standards by agencies that audit our facilities throughout the United States.
Regulatory Environment As a leading manufacturer of coffee, tea, flavors, extracts, and ingredients, we comply with the Good Manufacturing Practices promulgated by the Food and Drug Administration (FDA) as part of our commitment to produce safe and high-quality beverage products.
We believe our workforce is prepared to meet the needs of our customers and further the growth of our Company. 10 Table of Contents Regulatory Environment As a leading manufacturer of coffee, tea, flavors, extracts, and ingredients, we comply with the Good Manufacturing Practices promulgated by the Food and Drug Administration (FDA) as part of our commitment to produce safe and high-quality beverage products.
We are capable of tracing individual lots from the farm, through the roaster, to the finished good. We combine IBM Food Trust® blockchain, Oracle NetSuite®, and other technologies to create traceability and connectivity on a global scale. 6 Table of Contents Beginning with the farmer transactions, data is captured at every stage of the supply chain.
We are capable of tracing individual lots from the farm, through the roaster, to the finished good. Our proprietary technology links various points and systems to create traceability and connectivity on a global scale. 6 Table of Contents ​ Beginning with the farmer transactions, data is captured at every stage of the supply chain.
We will continue to increase our scale in order to promote cost of goods sold efficiencies and improve our ability to leverage our fixed cost infrastructure. We will also continue to seek to improve gross profit, through driving sales growth in the high-margin liquid extracts segment.
We will continue to increase our scale in order to promote cost of goods sold efficiencies and improve our ability to leverage our fixed cost infrastructure.
Our quality management systems are periodically reviewed using an internal audit system to assure that our employees understand our commitment to food safety and high quality.
Our quality management systems are periodically reviewed using an internal audit system to assure that our employees understand our commitment to food safety and high quality. We are also subject to the general industry requirements applicable to manufacturers, including the safety standards of the Occupational Safety and Health Administration and the environmental standards of the Environmental Protection Agency.
Capitalizing on growing beverage categories and innovation, we offer a wide array of products that allow our customers to satisfy their customers’ changing tastes and preferences. Our diversified product offering includes whole bean roast and ground coffee, as well as single service cups, food service iced tea, retail and food service hot tea, extract-based products, and our RTD beverage platform.
Capitalizing on growing beverage categories and innovation, we offer a wide array of products that allow our customers to satisfy their customers’ changing tastes and preferences.
We expect to add additional capacity to support our expansion and supply chain over the long term by investing in additional manufacturing facilities. ​ Our Products ​ We are focused on building a brand-behind-the-brand platform supported by an organization with the capabilities to provide comprehensive value-added beverage solutions.
We will also continue to seek to improve gross profit, through driving sales growth in the high-margin liquid extracts segment. ​ Our Products ​ We are focused on building a brand-behind-the-brand platform supported by an organization with the capabilities to provide comprehensive value-added beverage solutions.
The Company operates three manufacturing facilities in Concord, North Carolina, one in North Little Rock, Arkansas, one in Richmond, California, one in Kigali, Rwanda, and one in Johor Bahru, Malaysia.
The Company operates manufacturing and distribution facilities in Concord, North Carolina, North Little Rock, Arkansas, Conway, Arkansas, and Johor Bahru, Malaysia. In addition, the Company operates Trading and Representative offices in Lewes, UK, Austin, Texas, Lima & Jaen, Peru, Addis Ababa, Ethiopia, Johor Bahru, Malaysia, and Seoul, Korea, alongside a coffee milling and exporting facility in Kigali, Rwanda.
Removed
We continue the build-out of our 524,000 square-foot extract and ready-to-drink facility (“RTD”) in Conway, Arkansas, which will be our eighth manufacturing facility, and one of the largest of its type in the United States. The Conway facility is expected to begin commercial production in 2024.
Added
Our diversified product offering includes whole bean and roast and ground coffee, including single serve cups, food service iced tea, retail and food service hot tea, extract-based products, and our RTD bottle and can beverage platform.
Removed
We are also subject to the general industry requirements applicable to manufacturers, including the safety standards of the 10 Table of Contents Occupational Safety and Health Administration and the environmental standards of the Environmental Protection Agency.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur customers may also face financial difficulties, bankruptcy or other business disruptions that may affect their ability to pay for our products, which could adversely affect our sales and profitability. If we are unable to anticipate customer preferences and successfully develop new products, or if we fail to effectively manage the introduction of new products, our business will suffer.
Biggest changeIf we are unable to anticipate customer preferences and successfully develop new products, or if we fail to effectively manage the introduction of new products, our business will suffer. Our business depends on our ability to satisfy our customers with our beverage products and their continued purchase of our products.
If any of these supply relationships deteriorate or we are unable to renegotiate contracts with suppliers (with similar or more favorable terms) or find alternative sources for supply, we may be unable to procure a sufficient quantity of high-quality coffee beans, tea and other raw materials at prices acceptable to us or at all which could negatively affect our results of operations.
If any of these supply relationships deteriorate or we are unable to renegotiate contracts with suppliers (with similar or more favorable terms) or find alternative sources for supply, we may be unable to procure a sufficient quantity of high-quality coffee beans, tea and other ingredients and raw materials at prices acceptable to us or at all which could negatively affect our results of operations.
We have in the past and/or may in the future become subject to legal proceedings (including class actions), disputes, claims, investigations, regulatory proceedings, or similar actions that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial matters, employment claims brought by our employees, product liability, product labeling, public statements and disclosures under securities laws, antitrust, advertising, consumer protection and wage and hour laws.
We have in the past and/or may in the future become subject to legal proceedings (including class actions), disputes, claims, investigations, regulatory proceedings, or similar actions that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial matters, intellectual property claims, employment claims brought by our employees, product liability, product labeling, public statements and disclosures under securities laws, antitrust, advertising, consumer protection and wage and hour laws.
An increase in the price, disruption of supply or shortage of fuel and other energy sources that may be caused by increased demand or by events such as climate change, natural disasters, power outages, cyberattacks or the like, could lead to higher electricity, transportation and other commodity costs, which could negatively impact our profitability, financial condition or results of operations.
An increase in the price, disruption of supply or shortage of water, fuel and other energy sources that may be caused by increased demand or by events such as climate change, natural disasters, power outages, cyberattacks or the like, could lead to higher electricity, utilities, transportation and other commodity costs, which could negatively impact our profitability, financial condition or results of operations.
The rate at which we retain our customers may decline or fluctuate as a result of a number of factors, including our end-use customers’ changing preferences, the shift among millennial coffee drinkers from hot brew towards cold brew and extracts (or any reversion thereof), satisfaction with our products and their prices, the prices of competing products, mergers and acquisitions affecting our direct customers, the effects of global economic conditions, and reductions in customers’ spending levels.
The rate at which we retain our customers may decline or fluctuate as a result of a number of factors, including our end-use customers’ changing preferences, the shift among millennial coffee drinkers from hot brew towards cold brew and 13 Table of Contents extracts (or any reversion thereof), satisfaction with our products and their prices, the prices of competing products, mergers and acquisitions affecting our direct customers, the effects of global economic conditions, and reductions in customers’ spending levels.
Instances or reports of food safety issues involving our products, whether or not accurate, such as unclean water supply, food or beverage-borne illnesses, tampering, contamination, mislabeling, or other food or beverage safety issues, including due to the failure of our third-party co-packers to maintain the quality of our products and to comply with our product specifications, could damage the value of our brands, negatively impact sales of our products, and potentially lead to product recalls, production interruptions, product liability claims, litigation 23 Table of Contents or damages.
Instances or reports of food safety issues involving our products, whether or not accurate, such as unclean water supply, food or beverage-borne illnesses, tampering, contamination, mislabeling, or other food or beverage safety issues, including due to the failure of our third-party co-packers to maintain the quality of our products and to comply with our product specifications, could damage the value of our brands, negatively impact sales of our products, and potentially lead to product recalls, production interruptions, product liability claims, litigation or damages.
If our assumptions, estimates or expectations prove to be inaccurate, there could be a material adverse effect on our business, financial condition and results of operations. 13 Table of Contents We believe that our future growth depends not only on serving existing customers, but also on continuing to get new customers and expanding our distribution base in the United States and internationally.
If our assumptions, estimates or expectations prove to be inaccurate, there could be a material adverse effect on our business, financial condition and results of operations. We believe that our future growth depends not only on serving existing customers, but also on continuing to get new customers and expanding our distribution base in the United States and internationally.
Water is used throughout the production of coffee from growing at the farm, cooling the beans after roasting, and brewing products for consumption. Scarcity of water sources in our supply chain could also constrain our supply and increase costs.
Water is used throughout the production of coffee and our other products from growing at the farm, cooling the beans after roasting, and brewing and bottling products for consumption. Scarcity of water sources in our supply chain could also constrain our supply and increase costs.
Although these commodities are available from a number of sources, we have very little control over the factors that can influence the prices we pay, including economic and political conditions, foreign currency fluctuations, transportation and storage costs, export restrictions, weather conditions and global climate patterns, and natural disasters (including floods, droughts, frosts, earthquakes and hurricanes).
Although these commodities may be available from a number of sources, we have very little control over the factors that can influence the prices we pay, including economic and political conditions, foreign currency fluctuations, transportation and storage costs, export restrictions, weather conditions and global climate patterns, and natural disasters (including floods, droughts, frosts, earthquakes and hurricanes).
After February 26, 2028 (i.e. the five-and-half year anniversary of the Closing), any holder of Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Series A Preferred Shares in cash, subject to applicable law and the terms of any credit agreement or similar arrangement pursuant to which a third-party lender provides debt financing to Westrock or its subsidiaries, at a redemption price per share equal to the greater of (a) the liquidation preference and (b) the product of (i) the number of Common Shares that would have been obtained from converting one Series A Preferred Share on the redemption notice date and (ii) the simple average of the daily volume-weighted average price per Common Share for the ten (10) trading days ending on and including the trading day immediately preceding the redemption notice date.
After February 26, 2028, any holder of Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Series A Preferred Shares in cash, subject to applicable law and the terms of any credit agreement or similar arrangement pursuant to which a third-party lender provides debt financing to Westrock or its subsidiaries, at a redemption price per share equal to the greater of (a) the liquidation preference and (b) the product of (i) the number of Common Shares that would have been obtained from converting one Series A Preferred Share on the redemption notice date and (ii) the simple average of the daily volume-weighted average price per Common Share for the ten (10) trading days ending on and including the trading day immediately preceding the redemption notice date.
Failure to properly execute an effective hedging strategy with respect to the price of green coffee may materially adversely affect our business and operating results. Fluctuations in other commodity prices and in the availability of certain of our ingredients and packaging materials could negatively affect our margins and profitability.
Failure to properly execute an 21 Table of Contents effective hedging strategy with respect to the price of green coffee may materially adversely affect our business and operating results. Fluctuations in other commodity prices and in the availability of certain of our ingredients and packaging materials could negatively affect our margins and profitability.
Further, breaches experienced by other companies may also be leveraged against us. We have technology security initiatives and disaster recovery plans in place to mitigate 15 Table of Contents our risk to these vulnerabilities, but these measures may not be adequately designed or implemented to ensure that our operations are not disrupted or that data security breaches do not occur.
Further, breaches experienced by other companies may also be leveraged against us. We have technology security initiatives and disaster recovery plans in place to mitigate our risk to these vulnerabilities, but these measures may not be adequately designed or implemented to ensure that our operations are not disrupted or that data security breaches do not occur.
Our expanding international business will expose us to additional regulatory regimes, such as the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act 2010, the Malaysian Anti-Corruption Commission Act 2009, and other anti-corruption laws as well as trade control laws such as economic sanctions, customs and import laws, and export control 14 Table of Contents laws and regulations.
Our expanding international business will expose us to additional regulatory regimes, such as the U.S. Foreign Corrupt Practices Act (FCPA), the UK Bribery Act 2010, the Malaysian Anti-Corruption Commission Act 2009, and other anti-corruption laws as well as trade control laws such as economic sanctions, customs and import laws, and export control laws and regulations.
Our primary raw material green coffee is an exchange-traded agricultural commodity that is subject to price fluctuations, depending on a variety of factors, including outside speculative influences such as indexed and algorithmic commodity funds, climate patterns in coffee-producing countries, economic and political conditions affecting coffee-producing countries such as unrest and armed conflict, foreign currency fluctuations, real or perceived supply shortages, crop disease (such as coffee rust) and pests, general increase in farm inputs and costs of production, an increase in green coffee purchased and sold on a negotiated basis rather than directly on commodity markets in response to higher production costs relative to “C” market prices, acts of terrorism, pandemics or other disease outbreaks, government actions and trade barriers or tariffs, and the actions of producer organizations that have historically attempted to influence green coffee prices through agreements establishing export quotas or by otherwise limiting coffee supplies. 21 Table of Contents Additionally, specialty green coffees tend to trade on a negotiated basis at a premium above the “C” market price.
Our primary raw material green coffee is an exchange-traded agricultural commodity that is subject to price fluctuations, depending on a variety of factors, including outside speculative influences such as indexed and algorithmic commodity funds, climate patterns in coffee-producing countries, economic and political conditions affecting coffee-producing countries such as unrest and armed conflict, foreign currency fluctuations, real or perceived supply shortages, crop disease (such as coffee rust) and pests, general increase in farm inputs and costs of production, an increase in green coffee purchased and sold on a negotiated basis rather than directly on commodity markets in response to higher production costs relative to “C” market prices, acts of terrorism, pandemics or other disease outbreaks, government actions and trade barriers or tariffs, and the actions of producer organizations that have historically attempted to influence green coffee prices through agreements establishing export quotas or by otherwise limiting coffee supplies.
In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss.
In addition, we cannot be sure that our existing 16 Table of Contents insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss.
In this competitive environment, our business could be adversely affected by increased labor costs, including wages and benefits, cost increases triggered by compensation-related regulatory actions concerning wages, worktime scheduling and benefits; increased healthcare and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the appropriate skill sets and increased wages, benefits and costs related to any public health issues (such as the COVID-19 pandemic).
In this competitive environment, our business could be adversely affected by increased labor costs, including wages and benefits, cost increases triggered by compensation-related regulatory actions concerning wages, worktime scheduling and benefits; increased healthcare and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the appropriate skill sets and increased wages, benefits and costs related to any public health issues.
There is no assurance that the IRS, any other tax authorities, or a court will agree with the positions taken by us, in 18 Table of Contents which case tax penalties and interest may be imposed that could adversely affect our business, cash flows or financial performance.
There is no assurance that the IRS, any other tax authorities, or a court will agree with the positions taken by us, in which case tax penalties and interest may be imposed that could adversely affect our business, cash flows or financial performance.
Assuming that the liquidation preference of the Series A Preferred Shares remains $11.50 per share and all 23,511,922 Series A Preferred Shares remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $270.4 million.
Assuming that the liquidation preference of the Series A Preferred Shares remains $11.50 per share and all 23,510,527 Series A Preferred Shares remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $270.4 million.
If we are unable to manage our growth and increased complexity effectively, we may be unable to execute our business plan, which could lead to a material adverse effect on our business, financial condition and operating results.
If we are unable to manage our growth and increased complexity 14 Table of Contents effectively, we may be unable to execute our business plan, which could lead to a material adverse effect on our business, financial condition and operating results.
If green coffee beans from a region become unavailable or prohibitively expensive, we could be forced to use alternative coffee beans or discontinue certain blends, which could adversely impact our sales.
If green coffee beans from a 22 Table of Contents region become unavailable or prohibitively expensive, we could be forced to use alternative coffee beans or discontinue certain blends, which could adversely impact our sales.
In addition, where possible, we seek to recover inflation impacted costs by passing these costs onto our customers through periodic pricing increases. However, our pricing increases often lag our cost increases, including increases in commodity costs.
In addition, where possible, we seek to recover inflation impacted 24 Table of Contents costs by passing these costs onto our customers through periodic pricing increases. However, our pricing increases often lag our cost increases, including increases in commodity costs.
If we were to experience a prolonged disruption in the operation of these facilities due to damage from fire, natural disaster, power loss, labor shortages, or a failure of production equipment or information technology systems supporting our production processes, we may not have sufficient capacity at our other facilities to meet our customers’ demands.
If we were to experience a prolonged disruption in the operation of these facilities due to damage from fire, natural disaster, power loss, utilities interruptions, labor shortages, regulatory or food safety issues, water scarcity or a failure of production equipment or information technology systems supporting our production processes, we may not have sufficient capacity at our other facilities to meet our customers’ demands.
In the years ended December 31, 2023, 2022 and 2021, we incurred net losses of $34.6 million, $55.5 million and $21.3 million, respectively.
In the years ended December 31, 2024, 2023 and 2022, we incurred net losses of $80.3 million, $34.6 million and $55.5 million, respectively.
There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, unemployment, inflation, interest rates, energy costs (including the price of gasoline), tax rates in the markets where our products are sold to end-use customers, global conflicts, natural disasters, climate change, acts of terrorism and public health issues (such as the COVID-19 pandemic, which had a material impact on our financial condition in fiscal years 2020 and 2021).
There are a number of factors that influence consumer spending, including actual and perceived economic conditions, consumer confidence, disposable consumer income, consumer credit availability, unemployment, inflation, interest rates, energy costs (including the price of gasoline), tax rates in the markets where our products are sold to end-use customers, global conflicts, natural disasters, climate change, acts of terrorism and public health issues (such as the COVID-19 pandemic).
The availability and prices of green coffee are subject to wide fluctuations, including impacts from factors outside of our control such as changes in weather conditions, climate change, rising sea levels, crop disease, plantings, government programs and policies, competition, and changes in global demand.
The availability and prices of green coffee are subject to wide fluctuations, including impacts from factors outside of our control such as changes in weather conditions, climate change, rising sea levels, crop disease, plantings, government programs and policies, competition, and changes in global demand. These price fluctuations can adversely affect the business of each of Falcon and RTC.
For the fiscal years ended December 31, 2023, 2022 and 2021, our top five customers accounted for approximately 39%, 37% and 35%, respectively, of our net sales. To the extent that we do not have written contracts with customers, they can stop purchasing our products at any time without penalty and are free to purchase products from our competitors.
For the fiscal year ended December 31, 2024, our top five customers accounted for approximately 36% of our net sales. To the extent that we do not have written contracts with customers, they can stop purchasing our products at any time without penalty and are free to purchase products from our competitors.
As of December 31, 2023, Westrock’s directors and executive officers beneficially own, directly or indirectly, in the aggregate, approximately 33,210,832 shares of Common Shares, representing an aggregate of approximately 29.8% of the combined voting power of Westrock’s outstanding capital stock (excluding any Warrants, options or other securities exercisable for Common Shares).
As of December 31, 2024, Westrock’s directors and executive officers beneficially own, directly or indirectly, in the aggregate, 32,153,753 shares of Common Shares, representing an aggregate of approximately 27.3% of the combined voting power of Westrock’s outstanding capital stock (excluding any Warrants, options or other securities exercisable for Common Shares).
If the completion of this facility is delayed or otherwise not completed, or if we incur additional expenses in the process of opening this facility, it might hamper our ability to satisfy customer demand and meet revenue targets, which could cause our profitability to suffer. ​ Disruption in operations at any of our production and distribution facilities could affect our ability to manufacture or distribute products and could adversely affect our business and sales. ​ Our sales and distribution network requires a large investment to maintain and operate, and we rely on a limited number of production and distribution facilities.
If the facility does not become fully operational within our anticipated timeframe, or if we incur additional expenses in the process of opening this facility, it might hamper our ability to satisfy customer demand, meet revenue targets and generate positive operating cash flows. ​ Disruption in operations at any of our production and distribution facilities could affect our ability to manufacture or distribute products and could adversely affect our business and sales. ​ Our sales and distribution network requires a large investment to maintain and operate, and we rely on a limited number of production and distribution facilities.
Additionally, if as a result of these factors, we are unable to obtain these commodities, we may not be able to fulfill the demand for our products, which could have an adverse impact on our business and financial results.
High and volatile commodity prices can also place more pressures on short-term working capital funding. Additionally, if as a result of these factors, we are unable to obtain these commodities, we may not be able to fulfill the demand for our products, which could have an adverse impact on our business and financial results.
Such premium, depending on the supply and demand at the time of purchase, may be significant. Depending on contractual limitations, we may be unable to pass these costs on to our customers by increasing the price of products.
Additionally, specialty green coffees tend to trade on a negotiated basis at a premium above the “C” market price. Such premium, depending on the supply and demand at the time of purchase, may be significant. Depending on contractual limitations, we may be unable to pass these costs on to our customers by increasing the price of products.
These weather pattern changes, by reducing agricultural productivity in certain regions, may reduce the supply and quality of important agricultural ingredients for our products and drive up their costs, and this could have a material adverse effect on our business, financial condition, or results of operations.
The rainy and dry seasons are becoming unpredictable in their start and length, which is affecting the development of coffee cherries. 23 Table of Contents These weather pattern changes, by reducing agricultural productivity in certain regions, may reduce the supply and quality of important agricultural ingredients for our products and drive up their costs, and this could have a material adverse effect on our business, financial condition, or results of operations.
Further, nonperformance by suppliers could expose us to supply risk under coffee purchase commitments for delivery in the future. Additionally, supply is affected by many factors in the coffee-growing countries including weather, pest damage, economic conditions, acts of terrorism, as well as efforts by coffee growers to expand or form cartels or associations.
Additionally, supply is affected by many factors in the coffee-growing countries including weather, pest damage, economic conditions, acts of terrorism, as well as efforts by coffee growers to expand or form cartels or associations.
The Credit Agreement contains various affirmative and negative covenants that may, subject to specified significant exceptions, restrict our ability, including specified material subsidiaries, to incur debt and our ability, including specified material subsidiaries, to, among other things, have liens on our property, merge or consolidate with any other person or sell or convey assets above a specified minimum threshold to any one person, and engage in sale-and-leaseback transactions depending on the characterization of the proceeds.
Increased indebtedness may also limit our ability to adjust to rapidly changing market conditions, making us more vulnerable to general adverse industry and economic conditions, which could create a competitive disadvantage relative to our competitors. 17 Table of Contents The Credit Agreement contains various affirmative and negative covenants that may, subject to specified significant exceptions, restrict our ability, including specified material subsidiaries, to incur debt and our ability, including specified material subsidiaries, to, among other things, have liens on our property, merge or consolidate with any other person or sell or convey assets above a specified minimum threshold to any one person, and engage in sale-and-leaseback transactions depending on the characterization of the proceeds.
Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more than existing facilities or may take significant time to start production, which would have an adverse impact on our financial condition, results of operations and cash flows. 11 Table of Contents In addition, we use a significant amount of electricity, gasoline, diesel and oil, natural gas and other energy sources to operate our production and distribution facilities.
Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more than existing facilities or may take significant time to start production, which would have an adverse impact on our financial condition, results of operations and cash flows.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives, to grow both organically and through acquisitions, and to respond to business opportunities, challenges or unforeseen circumstances, could be significantly limited, and our business, operating results, financial condition and prospects could be materially and adversely affected. 17 Table of Contents Exercise of redemption rights by the holders of our Series A Preferred Shares may adversely affect the cash that we have available for other purposes and our ability to execute our business strategy.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives, to grow both organically and through acquisitions, and to respond to business opportunities, challenges or unforeseen circumstances, could be significantly limited, and our business, operating results, financial condition and prospects could be materially and adversely affected.
This Annual Report on Form 10-K is qualified in its entirety by all these risk factors. ​ Risks Related to Our Business ​ We may not complete the construction of our new production facility in Conway, Arkansas in time or at all and may incur additional expenses in the process, which could hamper our ability to satisfy demand and meet revenue targets.
This Annual Report on Form 10-K is qualified in its entirety by all these risk factors. ​ 11 Table of Contents Risks Related to Our Business ​ We may not be able to successfully build out operations or commercialize customers within the anticipated time frame following the recent opening of our new facility in Conway, Arkansas and may incur additional expenses in the process, which could hamper our ability to satisfy customer demand, meet revenue targets and generate positive operating cash flows.
Any failure to retain key personnel or recruit qualified personnel could adversely impact our financial condition, results of operations and cash flow. ​ Our success depends on the contributions of key personnel and a consistent workforce, including production workers, support staff and executive team members.
Even if we are able to increase sales of our products, there can be no assurance that we will ever achieve or sustain profitability. 12 Table of Contents Any failure to retain key personnel or recruit qualified personnel could adversely impact our financial condition, results of operations and cash flow. ​ Our success depends on the contributions of key personnel and a consistent workforce, including production workers, support staff and executive team members.
Additionally, we may reserve cash, refrain from pursuing other business objectives and/or direct cash away from other business objectives to ensure that we have sufficient available cash to satisfy holder redemptions and this may adversely affect our business, financial condition and ability to execute our business strategy.
Additionally, we may reserve cash, refrain from pursuing other business objectives and/or direct cash away from other business objectives to ensure that we have sufficient available cash to satisfy holder redemptions and this may adversely affect our business, financial condition and ability to execute our business strategy. 18 Table of Contents A change in the assumptions used to value our goodwill or other intangible assets, or the impairment of our goodwill or intangible assets, could negatively impact our financial condition and operating results.
In 2021, we purchased a 524,000 square foot manufacturing facility in Conway, Arkansas with the intent to build out the capacity and capabilities needed to meet our customer demand. Construction on the facility began in late 2022 and we are in active discussions with prospective customers related to price, terms, volume and commitments.
In 2021, we purchased a 524,000 square foot manufacturing facility in Conway, Arkansas with the intent to build out the capacity and capabilities needed to meet our customer demand. Construction on the facility began in late 2022. Portions of the facility began commercial production in 2024, and the facility is expected to be fully operational in fiscal year 2025.
In addition, our reputation within the business community and with our customers and suppliers may be affected, which could result in our customers and suppliers ceasing to do business with us, which could adversely affect our business and results of operations. 16 Table of Contents We may become subject to intellectual property disputes or be forced to defend our intellectual property rights, which can be costly and may subject us to significant liability and increase our costs of doing business.
In addition, our reputation within the business community and with our customers and suppliers may be affected, which could result in our customers and suppliers ceasing to do business with us, which could adversely affect our business and results of operations.
The covenants in our Credit Facilities and our future levels of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility.
The covenants in our Credit Facilities and our future levels of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility. As of December 31, 2024, we had outstanding total indebtedness of $447.7 million, of which $371.1 million bears interest at a variable rate.
Any of these factors could harm discretionary consumer spending, resulting in a reduction in demand for our products, decreased prices, increased costs to make sales, and harm to our business and results of operations. 24 Table of Contents These financial and operational difficulties faced by both us and our suppliers could also increase the cost of the products we purchase, the timing of settlement for our obligations to the suppliers, or our ability to source products from them.
These financial and operational difficulties faced by both us and our suppliers could also increase the cost of the products we purchase, the timing of settlement for our obligations to the suppliers, or our ability to source products from them.
Impairment may result from significant changes in the manner of use of the acquired assets, negative industry, or economic trends, and/or any changes in key assumptions regarding our fair value. At December 31, 2023, we had $116.1 million of goodwill on our Consolidated Balance Sheets.
Goodwill represents the excess of cost over fair value of net assets acquired in a business combination. Impairment may result from significant changes in the manner of use of the acquired assets, negative industry, or economic trends, and/or any changes in key assumptions regarding our fair value.
Our customers may also take actions that we cannot control or anticipate, such as changing their business strategy or introducing products that may compete with ours. Additionally, industry consolidation has generally led to our customers becoming larger and more sophisticated buyers of our products, leveraging their buying power and negotiating strength to improve their profitability through more favorable contractual terms.
Additionally, industry consolidation has generally led to our customers becoming larger and more sophisticated buyers of our products, leveraging their buying power and negotiating strength to improve their profitability through more favorable contractual terms. To the extent we provide contractual concessions such as lower prices or more favorable trade terms, our margins would be reduced.
Further, because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses. Any material legal proceedings (including class actions), disputes, claims, investigations, regulatory proceedings, or similar actions could have a material adverse effect on our business, results of operations, and financial condition.
Further, because of the potential risks, expenses, and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses.
There can be no assurance that our customers will 12 Table of Contents continue to purchase our products in the same mix or quantities or on the same terms as they have in the past.
There can be no assurance that our customers will continue to purchase our products in the same mix or quantities or on the same terms as they have in the past. Our customers may also take actions that we cannot control or anticipate, such as changing their business strategy or introducing products that may compete with ours.
These price fluctuations can adversely affect the business of each of Falcon and RTC. 22 Table of Contents We are exposed to risks associated with the interruption of supply and increased costs as a result of our reliance on third-party transportation carriers for shipment of our products.
We are exposed to risks associated with the interruption of supply and increased costs as a result of our reliance on suppliers and third-party transportation carriers for shipment of our products. Our business depends on our relations with key suppliers to maintain a steady supply of green coffee, tea, and other ingredients and packaging materials.
Changes in the prices we pay may take place on a monthly, quarterly or annual basis depending on the product and supplier. We do not purchase any derivative instruments to hedge cost fluctuations in these other commodities like we do with respect to green coffee, but we may do so in the future.
We do not purchase any derivative instruments to hedge cost fluctuations in these other commodities like we do with respect to green coffee, but we may do so in the future. As a result, to the extent we are unable to pass along such costs through price increases, our margins and profitability will decrease.
Our production capacity is currently concentrated in our Concord, North Carolina, North Little Rock, Arkansas, Richmond, California and Johor Bahru, Malaysia facilities, and will soon be supplemented by our planned production expansion at our new Conway, Arkansas facility.
Our production capacity is currently concentrated in our Concord, North Carolina, North Little Rock, Arkansas and Johor Bahru, Malaysia facilities and, once it is fully operational, a significant portion of our extract and ready-to-drink production capabilities will reside at, and a significant portion of our expected future revenues and operating cash flows will be generated by, our facility in Conway, Arkansas.
Our business reputation and our relationship with our customers, suppliers, and employees may also be adversely impacted by our involvement in legal proceedings.
Any material legal proceedings (including class actions), disputes, claims, investigations, regulatory proceedings, or similar actions could have a material adverse effect on our business, 15 Table of Contents results of operations, and financial condition. Our business reputation and our relationship with our customers, suppliers, and employees may also be adversely impacted by our involvement in legal proceedings.
If demand increases more than we forecast, we will need to either expand our capabilities internally or acquire additional capacity.
While the Company has property and business interruption insurance for its manufacturing facility, such insurance may not be sufficient to cover all of the Company’s potential losses, and may not continue to be available on acceptable terms, or at all. If demand increases more than we forecast, we will need to either expand our capabilities internally or acquire additional capacity.
Coffee growing countries have been dramatically affected by these climate changes. The rainy and dry seasons are becoming unpredictable in their start and length, which is affecting the development of coffee cherries.
Coffee growing countries have been dramatically affected by these climate changes.
Removed
Even if we are able to increase sales of our products, there can be no assurance that we will ever achieve or sustain profitability.
Added
In addition, we use a significant amount of water, electricity, gasoline, diesel and oil, natural gas and other energy sources to operate our production and distribution facilities.
Removed
To the extent we provide contractual concessions such as lower prices or more favorable trade terms, our margins would be reduced. Over time, our inability to extend such concessions may negatively impact our sales revenue.
Added
Over time, our inability to extend such concessions may negatively impact our sales revenue. Our customers may also face financial difficulties, bankruptcy or other business disruptions that may affect their ability to pay for our products, which could adversely affect our sales and profitability.
Removed
Our business depends on our ability to satisfy our customers with our beverage products and their continued purchase of our products.
Added
Any failure to comply with these laws or regulations correctly could result in a temporary halt in distribution of our products and other costs, affecting our business and profitability.
Removed
Our accounts receivable represents a significant portion of our current assets and a substantial portion of our trade accounts receivables relate principally to a limited number of customers, increasing our exposure to bad debts and counterparty risk, which could potentially have a material adverse effect on our results of operations.
Added
Furthermore, there are an increasing number of state and local regulations in the United States related to, among other things, beverage packaging, labeling requirements, container deposits, recycling or beverage taxes. We anticipate more states to adopt similar legislation or regulations, requiring us to continuously monitor various state laws to ensure compliance.
Removed
A significant portion of our trade accounts receivable are from five customers, which represented approximately 44% and 54% of our trade accounts receivable for the years ended December 31, 2023 and 2022, respectively.
Added
We may become subject to intellectual property disputes or be forced to defend our intellectual property rights, which can be costly and may subject us to significant liability and increase our costs of doing business.
Removed
The concentration of our accounts receivable across a limited number of parties subjects us to individual counterparty and credit risk as these parties may breach our agreement, claim that we have breached the agreement, become insolvent and/or declare bankruptcy, thereby delaying or reducing our collection of receivables or rendering collection impossible altogether.
Added
If we are found to infringe on the intellectual property rights of others, we could incur significant liability for damages, be enjoined from continuing to manufacture, market or use the affected product, or be required to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.
Removed
Some of these parties use third-party distributors or do business through a network of affiliate entities which can make collection efforts more challenging and, at times collections may be economically unfeasible. Adverse changes in general economic conditions and/or contraction in global credit markets could lead to liquidity problems among our debtors.
Added
Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. Similarly, changing products or processes to avoid infringing the rights of others may be costly or impracticable.
Removed
This could increase our exposure to losses from bad debts and have a materially adverse effect on our business, financial condition and results of operations.
Added
Exercise of redemption rights by the holders of our Series A Preferred Shares may adversely affect the cash that we have available for other purposes and our ability to execute our business strategy.
Removed
Such claims could subject us to significant liability for damages and could result in our having to stop selling a product or service found to be in violation of a third party’s rights.
Added
At December 31, 2024, we had $116.1 million of goodwill on our Consolidated Balance Sheets.
Removed
As of December 31, 2023, we had outstanding total indebtedness of $279.0 million and $110.0 million of undrawn borrowings available under our Revolving Credit Facility (other than $2.6 million of standby letters of credit outstanding), and outstanding indebtedness under the Credit Agreement bears interest at a variable rate.
Added
During the year ended December 31, 2024, market prices for green coffee increased approximately 70%, and from January 1, 2025 through the date of this Annual Report on Form 10-K, the “C” market price has continued to increase, surpassing $4.00 per pound of green coffee, reaching all-time highs.
Removed
Increased indebtedness may also limit our ability to adjust to rapidly changing market conditions, making us more vulnerable to general adverse industry and economic conditions, which could create a competitive disadvantage relative to our competitors.
Added
In addition, some of our ingredients and packaging materials may only be available from a single or few suppliers, which could exacerbate those factors. Changes in the prices we pay may take place on a monthly, quarterly or annual basis depending on the product and supplier.
Removed
A change in the assumptions used to value our goodwill or other intangible assets, or the impairment of our goodwill or intangible assets, could negatively impact our financial condition and operating results. Goodwill represents the excess of cost over fair value of net assets acquired in a business combination.
Added
Nonperformance by suppliers and the lack of alternative suppliers could expose us to supply risk under purchase commitments for coffee, tea, and other ingredients for delivery in the future.
Removed
Westrock has identified, and may in the future identify additional, material weaknesses in its internal control over financial reporting or fail to maintain effective internal control over financial reporting, which may result in material misstatements of Westrock’s consolidated financial statements or cause Westrock to fail to meet its periodic reporting obligations.
Added
Further, there may be a limited numbers of suppliers for certain ingredients, and, as a result of this concentration, our business and operations may in the future be negatively affected if our key suppliers experience significant disruptions affecting the price, quality, availability or timely delivery of their products, we suffer a partial or complete loss of, or a significant adverse change in the relationship with, any one of our key suppliers or any key suppliers refuse or are unable to provide us with necessary ingredients and raw materials.
Removed
As further described in Item 9A of this Annual Report on Form 10-K, Westrock has identified material weaknesses in its internal control over financial reporting. As a result, management has concluded that, because of these material weaknesses, our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2023.
Added
Further, if any of our municipal water sources to our facilities, including our Conway, Arkansas facility, were curtailed or eliminated as a result of, for example, a natural disaster, work stoppage or other significant event that disrupted water flow from such municipal source, we may have to purchase water from other sources, which could increase water and transportation costs and could result in supply shortages.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CIO and the Audit & Finance Committee monitor the prevention, detection, mitigation and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including regular communication with our DOIS and regular communication with and reporting from an outsourced third party cybersecurity firm and operation of the Company’s cybersecurity incident response plan, which includes escalation to the Cyber Incident Committee. ​ Our DOIS has nearly a decade of experience within cybersecurity functions and his skillset includes security architecture and engineering, incident response and penetration testing.
Biggest changeThe CIO and the Audit & Finance Committee monitor the prevention, detection, mitigation and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes. ​ 25 Table of Contents Our DOIS has nearly a decade of experience within cybersecurity functions and his skillset includes security architecture and engineering, incident response and penetration testing.
The Company also leverages the services and tools of a third-party cybersecurity firm to identify, prioritize, assess, mitigate and remediate reasonably foreseeable cybersecurity risks and threats. ​ To identify, detect and respond to a cybersecurity incident, we conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing, perform incident response capability reviews and exercises, conduct employee training, monitor emerging laws and regulations related to data protection and information security (including intellectual property) and implement appropriate changes.
The Company also leverages the services and tools of a third-party cybersecurity firm to identify, prioritize, assess, mitigate and remediate reasonably foreseeable cybersecurity risks and threats. ​ To identify, detect and respond to a cybersecurity incident, we conduct proactive cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing, perform incident response capability reviews and exercises, conduct annual employee training, monitor emerging laws and regulations related to data protection and information security (including intellectual property) and implement appropriate changes.
Our CIO joined the Company in 2023 and most recently served as CIO and VP at another large organization where he built a high-performing, global, collaborative IT team to focus on digitization, M&A, analytics and cybersecurity and has held other vital IT positions over the course of his career. ​ The Audit & Finance Committee regularly reviews our cybersecurity program with our CIO and management and reports to the Board of Directors.
Our CIO joined the Company in 2023 and most recently served as CIO and VP at another large, publicly-traded organization and has held other vital IT positions over the course of his over 25 year career. ​ The Audit & Finance Committee regularly reviews our cybersecurity program with our CIO and management and reports to the Board of Directors.
Risk Factors “ Risks Related to Our Business” , which are incorporated by reference into this Item 1C. ​ Governance ​ The Company’s board of directors is responsible for overseeing the Company’s risk management program and has designated its Audit & Finance Committee with specific responsibility for overseeing cybersecurity risks, among other risks.
Risk Factors “ Risks Related to Our Business” in this Annual Report on Form 10-K. ​ Governance ​ The Company’s board of directors is responsible for overseeing the Company’s risk management program and has designated its Audit & Finance Committee with specific responsibility for overseeing cybersecurity risks, among other risks.
In such instance, the Cyber Incident Committee monitors the incident through resolution and post-incident analysis. ​ For a discussion of cybersecurity risks or the impact of previous cybersecurity incidents and how they have materially affected us or are reasonably likely to materially affect the Company, including its business strategy, results of 25 Table of Contents operations or financial condition, see Item 1A.
In such instance, the Cyber Incident Committee monitors the incident through resolution and post-incident analysis. ​ To date, we have not identified any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, which have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition .
Added
For additional discussion of cybersecurity risks or the impact of previous cybersecurity incidents, see Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table summarizes the principal properties used by Westrock in connection with its roasting, manufacturing, and distribution operations, by segment as of December 31, 2023. ​ ​ ​ ​ ​ ​ Approximate Size ​ ​ ​ Location in Square Feet Purpose Owned / Leased Segment Concord, NC (Main) 256,000 Roasting, Manufacturing, Distribution Owned Beverage Solutions Concord, NC (West Winds) 49,000 Manufacturing Owned Beverage Solutions Concord, NC (Commercial Park) 110,000 Manufacturing Owned Beverage Solutions North Little Rock, AR (Gregory) 133,000 Distribution Leased Beverage Solutions North Little Rock, AR (Collins) 85,000 Roasting, Manufacturing Owned Beverage Solutions Conway, AR 524,000 Manufacturing, Distribution (1) Owned Beverage Solutions Conway, AR 530,000 Distribution (2) Leased Beverage Solutions Richmond, CA 48,530 Manufacturing, Distribution Leased Beverage Solutions Kigali, Rwanda 64,000 Manufacturing, Export Owned SS&T Johor Bahru, Malaysia 92,000 Roasting, Manufacturing Leased Beverage Solutions (1) - The Company is currently completing the build-out of this facility, which is expected to begin commercial production in 2024.
Biggest changeProperties The following table summarizes the principal properties used by Westrock in connection with its roasting, manufacturing, and distribution operations, by segment as of December 31, 2024. ​ ​ ​ ​ ​ ​ Approximate Size ​ ​ ​ Location in Square Feet Purpose Owned / Leased Segment Concord, NC (Main) 256,000 Roasting, Manufacturing, Distribution Owned Beverage Solutions Concord, NC (Commercial Park) 110,000 Manufacturing Owned Beverage Solutions North Little Rock, AR (Collins) 85,000 Roasting, Manufacturing Owned Beverage Solutions Conway, AR (Exchange) 524,000 Roasting, Manufacturing, Distribution Owned Beverage Solutions Conway, AR (Clark) 530,000 Distribution Leased Beverage Solutions Kigali, Rwanda 64,000 Manufacturing, Export Owned SS&T Johor Bahru, Malaysia 92,000 Roasting, Manufacturing Leased Beverage Solutions ​ Management believes that the Company’s sites are adequate to support the business and that the properties have been well maintained.
Removed
(2) - The accounting lease commencement date occurred in January 2024. Management believes that the Company’s sites are adequate to support the business and that the properties have been well maintained. 26 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not applicable. ​ ​ 27 Table of Contents PART II
Biggest changeMine Safety Disclosures Not applicable. ​ ​ 26 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes $100 was invested in the Company’s Common Shares and each of the indices listed above on August 29, 2022 (and all dividends, if any, were reinvested). ​ ​ ​ ​ 28 Table of Contents Cumulative Total Stockholder Returns Based on Investment of $100.00 Beginning on August 29, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8/29/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Westrock Coffee Company ​ $ 100.00 ​ $ 89.75 ​ $ 116.07 ​ $ 106.33 ​ $ 94.43 ​ $ 76.97 ​ $ 88.69 NASDAQ Composite ​ ​ 100.00 ​ ​ 88.06 ​ ​ 87.37 ​ ​ 102.26 ​ ​ 115.61 ​ ​ 111.06 ​ ​ 126.37 S&P 500 ​ ​ 100.00 ​ ​ 89.11 ​ ​ 95.85 ​ ​ 103.04 ​ ​ 112.04 ​ ​ 108.38 ​ ​ 121.05 S&P Food & Beverage Select Industry Index ​ ​ 100.00 ​ ​ 88.89 ​ ​ 96.87 ​ ​ 99.38 ​ ​ 98.53 ​ ​ 92.82 ​ ​ 98.96 ​ ​ Issuer Purchases of Equity Securities ​ During the quarter ended December 31, 2023, there was no share repurchase activity made by or on behalf of the Company. ​ Item 6. [Reserved] ​
Biggest changeThe graph assumes $100 was invested in the Company’s Common Shares and each of the indices listed above on August 29, 2022 (and all dividends, if any, were reinvested). ​ ​ ​ 27 Table of Contents Cumulative Total Stockholder Returns Based on Investment of $100.00 Beginning on August 29, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 8/29/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 3/31/2024 6/30/2024 9/30/2024 12/31/2024 Westrock Coffee Company ​ $ 100.00 ​ $ 89.75 ​ $ 116.07 ​ $ 106.33 ​ $ 94.43 ​ $ 76.97 ​ $ 88.69 ​ $ 89.73 ​ $ 88.86 ​ $ 56.46 ​ $ 55.76 NASDAQ Composite ​ ​ 100.00 ​ ​ 88.06 ​ ​ 87.37 ​ ​ 102.26 ​ ​ 115.61 ​ ​ 111.06 ​ ​ 126.37 ​ ​ 138.14 ​ ​ 149.84 ​ ​ 153.97 ​ ​ 163.74 S&P 500 ​ ​ 100.00 ​ ​ 89.11 ​ ​ 95.85 ​ ​ 103.04 ​ ​ 112.04 ​ ​ 108.38 ​ ​ 121.05 ​ ​ 133.82 ​ ​ 139.56 ​ ​ 147.77 ​ ​ 151.33 S&P Food & Beverage Select Industry Index ​ ​ 100.00 ​ ​ 88.89 ​ ​ 96.87 ​ ​ 99.38 ​ ​ 98.53 ​ ​ 92.82 ​ ​ 98.96 ​ ​ 104.82 ​ ​ 101.10 ​ ​ 106.94 ​ ​ 104.21 ​ ​ Issuer Purchases of Equity Securities ​ During the quarter ended December 31, 2024, there was no share repurchase activity made by or on behalf of the Company. ​ Item 6. [Reserved] ​
Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. ​ Stock Performance Graph ​ The following graph shows the cumulative total shareholder returns for our Common Shares from August 29, 2022 through December 31, 2023, relative to the performance of the Nasdaq Composite Total Return (broad market comparison), the S&P 500 (broad market comparison) and the S&P Food and Beverage Select Industry Index (line of business comparison).
Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. ​ Stock Performance Graph ​ The following graph shows the cumulative total shareholder returns for our Common Shares from August 29, 2022 through December 31, 2024, relative to the performance of the Nasdaq Composite Total Return (broad market comparison), the S&P 500 (broad market comparison) and the S&P Food and Beverage Select Industry Index (line of business comparison).
As of March 1, 2024, there were 22 holders of record of our Common Shares and 1 holder of record of our Public Warrants, which does not include holders whose shares are held in nominee or “street name” accounts through banks, brokers or other financial institutions. ​ Dividend Policy ​ We have not declared or paid any dividends on our Common Shares as of December 31, 2023.
As of February 28, 2025, there were 18 holders of record of our Common Shares, which does not include holders whose shares are held in nominee or “street name” accounts through banks, brokers or other financial institutions. ​ Dividend Policy ​ We have not declared or paid any dividends on our Common Shares as of December 31, 2024.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ The Company’s common stock and publicly traded warrants are listed on the Nasdaq Global Market under the symbols “WEST” and “WESTW”, respectively.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ The Company’s common stock is listed on the Nasdaq Global Market under the symbol “WEST”.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe acquisition allows Westrock to continue to expand its product marketing and development resources as it capitalizes on shifting consumer consumption trends. 33 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations expressed as dollars and as a percentage of total revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended % of ​ Year Ended % of (Thousands) ​ December 31, 2023 ​ Revenues ​ December 31, 2022 ​ Revenues Net Sales ​ $ 864,714 ​ 100.0 % ​ $ 867,872 ​ 100.0 % Costs of sales ​ 724,856 83.8 % ​ 715,107 82.4 % Gross profit ​ 139,858 16.2 % ​ 152,765 17.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expense ​ 144,577 16.7 % ​ 129,985 15.0 % Transaction, restructuring and integration expense ​ 14,557 1.7 % ​ 13,169 1.5 % Loss on disposal of property, plant and equipment ​ 1,153 0.1 % ​ 935 0.1 % Total operating expenses ​ 160,287 18.5 % ​ 144,089 16.6 % Income (loss) from operations ​ (20,429) (2.4) % ​ 8,676 1.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 29,157 ​ 3.4 % ​ ​ 35,497 ​ 4.1 % Change in fair value of warrant liabilities ​ (10,207) (1.2) % ​ 29,675 3.4 % Other, net ​ 1,446 0.2 % ​ (1,146) (0.1) % Income (loss) before income taxes and equity in earnings from unconsolidated entities ​ (40,825) (4.7) % ​ (55,350) (6.4) % Income tax expense (benefit) ​ (6,358) (0.7) % ​ 111 0.0 % Equity in (earnings) loss from unconsolidated entities ​ ​ 100 0.0 % ​ — 0.0 % Net loss ​ $ (34,567) (4.0) % ​ $ (55,461) (6.4) % Net income (loss) attributable to non-controlling interest ​ 15 0.0 % ​ (276) (0.0) % Net loss attributable to shareholders ​ (34,582) (4.0) % ​ (55,185) (6.4) % Accretion of Series A Convertible Preferred Shares ​ ​ (161) ​ (0.0) % ​ ​ (1,316) ​ (0.2) % Loss on extinguishment of Redeemable Common Equivalent Preferred Units, net ​ ​ — ​ 0.0 % ​ ​ (2,870) ​ (0.3) % Common equivalent preferred dividends ​ ​ — ​ 0.0 % ​ ​ (4,380) ​ (0.5) % Accumulating preferred dividends ​ — 0.0 % ​ (13,882) (1.6) % Net loss attributable to common shareholders ​ $ (34,743) (4.0) % ​ $ (77,633) (8.9) % ​ 34 Table of Contents The following table sets forth selected financial information of our reportable segments for the year ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sustainable ​ ​ Total of ​ ​ Beverage ​ Sourcing & ​ Intersegment ​ Reportable (Thousands) ​ Solutions ​ Traceability ​ Revenues (1) ​ Segments Segment Revenues: ​ ​ ​ ​ ​ 2023 ​ $ 722,865 ​ $ 146,911 ​ $ (5,062) ​ $ 864,714 ​ 2022 ​ ​ 685,303 ​ ​ 207,579 ​ ​ (25,010) ​ ​ 867,872 ​ Segment Costs of Sales: ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ 596,966 ​ ​ 127,890 ​ n/a ​ ​ 724,856 ​ 2022 ​ ​ 544,611 ​ ​ 170,496 ​ n/a ​ ​ 715,107 ​ Segment Gross Profit: ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ 125,899 ​ ​ 13,959 ​ n/a ​ ​ 139,858 ​ 2022 ​ ​ 140,692 ​ ​ 12,073 ​ n/a ​ ​ 152,765 ​ Segment Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ 41,624 ​ ​ 3,457 ​ n/a ​ ​ 45,081 ​ 2022 ​ ​ 53,951 ​ ​ 6,102 ​ n/a ​ ​ 60,053 ​ Segment Adjusted EBITDA Margin: ​ ​ ​ ​ ​ 2023 ​ 5.8 % 2.4 % n/a ​ 5.2 % 2022 ​ 7.9 % 3.3 % n/a ​ 6.9 % (1) Intersegment revenues represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.
Biggest changeOur income tax benefit for the year ended December 31, 2023 is primarily comprised of federal and state benefits, at statutory rates, of $9.4 million and $2.1 million of tax benefit resulting from the change in fair value of warrants, offset by $4.4 million of expense related to increases in the valuation allowance against our deferred tax assets. ​ ​ 37 Table of Contents Comparison of the Years Ended December 31, 2023 and 2022 The following table sets forth our results of operations expressed as dollars and as a percentage of total revenues for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended % of ​ Year Ended % of (Thousands) ​ December 31, 2023 ​ Revenues ​ December 31, 2022 ​ Revenues Net Sales ​ $ 864,714 ​ 100.0 % ​ $ 867,872 ​ 100.0 % Costs of sales ​ 724,856 83.8 % ​ 715,107 82.4 % Gross profit ​ 139,858 16.2 % ​ 152,765 17.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expense ​ 144,577 16.7 % ​ 129,985 15.0 % Transaction, restructuring and integration expense ​ 14,557 1.7 % ​ 13,169 1.5 % Impairment charges ​ ​ — 0.0 % ​ — 0.0 % Loss on disposal of property, plant and equipment ​ 1,153 0.1 % ​ 935 0.1 % Total operating expenses ​ 160,287 18.5 % ​ 144,089 16.6 % Income (loss) from operations ​ (20,429) (2.4) % ​ 8,676 1.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 29,157 ​ 3.4 % ​ ​ 35,497 ​ 4.1 % Change in fair value of warrant liabilities ​ (10,207) (1.2) % ​ 29,675 3.4 % Other, net ​ 1,446 0.2 % ​ (1,146) (0.1) % Loss before income taxes and equity in earnings from unconsolidated entities ​ (40,825) (4.7) % ​ (55,350) (6.4) % Income tax expense (benefit) ​ (6,358) (0.7) % ​ 111 0.0 % Equity in (earnings) loss from unconsolidated entities ​ ​ 100 ​ 0.0 % ​ ​ — 0.0 % Net loss ​ $ (34,567) (4.0) % ​ $ (55,461) (6.4) % Net income (loss) attributable to non-controlling interest ​ 15 0.0 % ​ (276) (0.0) % Net loss attributable to shareholders ​ (34,582) (4.0) % ​ (55,185) (6.4) % Accretion of Series A Convertible Preferred Shares ​ ​ (161) ​ (0.0) % ​ ​ (1,316) ​ (0.2) % Loss on extinguishment of Redeemable Common Equivalent Preferred Units, net ​ ​ — ​ 0.0 % ​ ​ (2,870) ​ (0.3) % Common equivalent preferred dividends ​ ​ — ​ 0.0 % ​ ​ (4,380) ​ (0.5) % Accumulating preferred dividends ​ — 0.0 % ​ (13,882) (1.6) % Net loss attributable to common shareholders ​ $ (34,743) (4.0) % ​ $ (77,633) (8.9) % ​ ​ 38 Table of Contents Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (Thousands) 2023 2022 Beverage Solutions ​ $ 722,865 ​ $ 685,303 Sustainable Sourcing & Traceability (1) ​ 141,849 ​ 182,569 Total net sales ​ $ 864,714 ​ $ 867,872 ​ (1) Net of i ntersegment revenues.
The Company believes that providing these non-GAAP financial measures to investors helps investors evaluate the Company’s operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance. We define “EBITDA” as net income (loss), as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization.
The Company believes that providing these non-GAAP financial measures to investors helps investors evaluate the Company’s operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance. We define “EBITDA” as net (loss) income, as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization.
Net Sales Net Sales from our Beverage Solutions segment were $722.9 million for the year ended December 31, 2023, compared to $685.3 million for the year ended December 31, 2022, an increase of 5.5%.
Net Sales from our Beverage Solutions segment were $722.9 million for the year ended December 31, 2023, compared to $685.3 million for the year ended December 31, 2022, an increase of 5.5%.
During the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 3.00% to 4.00% and for any ABR loan will range from 2.00% to 3.00%, in each case depending on the secured net leverage ratio.
During the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 3.00% to 4.00% and for any ABR loan will range from 2.00% to 3.00%, in each case depending on the secured net leverage ratio.
While we believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA and Adjusted EBITDA are important non-GAAP supplemental measures of operating performance as they contribute to a meaningful evaluation of the Company’s future operating performance and comparisons to the Company’s past operating performance.
While we believe that net (loss) income, as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA and Consolidated Adjusted EBITDA are important non-GAAP supplemental measures of operating performance as they contribute to a meaningful evaluation of the Company’s future operating performance and comparisons to the Company’s past operating performance.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (Thousands) 2023 2022 Interest expense ​ ​ Cash: ​ ​ Term loan facility ​ $ 13,334 ​ $ 3,642 Prior term loan facility ​ ​ — ​ ​ 14,735 Prior term loan facility early termination fee ​ ​ — ​ ​ 1,580 Revolving credit facility ​ ​ 5,221 ​ ​ — Supply chain finance program ​ ​ 2,965 ​ ​ — Prior ABL facility ​ — ​ 2,414 Short-term related party debt ​ — ​ 428 Subordinated related party debt ​ — ​ 642 International trade finance lines ​ 4,537 ​ 3,465 International notes payable ​ 273 ​ 681 Other ​ 2,475 ​ 1,593 Total cash interest ​ 28,805 ​ 29,180 Non-cash: ​ ​ Amortization of deferred financing costs ​ 3,517 ​ 1,726 Write-off of deferred financing costs ​ ​ — ​ ​ 4,296 Payments-in-kind interest ​ — ​ 295 Capitalized interest ​ ​ (3,165) ​ ​ — Total non-cash interest ​ 352 ​ 6,317 Total interest expense ​ $ 29,157 ​ $ 35,497 ​ 36 Table of Contents Interest expense for the year ended December 31, 2023 was $29.2 million compared to $35.5 million for the year ended December 31, 2022.
Interest Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (Thousands) 2023 2022 Interest expense ​ ​ Cash: ​ ​ Term loan facility ​ $ 13,334 ​ $ 3,642 Prior term loan facility ​ ​ — ​ ​ 14,735 Prior term loan facility early termination fee ​ ​ — ​ ​ 1,580 Revolving credit facility ​ ​ 5,221 ​ ​ — Supply chain finance program ​ ​ 2,965 ​ ​ — Prior ABL facility ​ — ​ 2,414 Short-term related party debt ​ — ​ 428 Subordinated related party debt ​ — ​ 642 International trade finance lines ​ 4,537 ​ 3,465 International notes payable ​ 273 ​ 681 Other ​ 2,475 ​ 1,593 Total cash interest ​ 28,805 ​ 29,180 Non-cash: ​ ​ Amortization of deferred financing costs ​ 3,517 ​ 1,726 Capitalized interest ​ ​ (3,165) ​ ​ — Write-off of deferred financing costs ​ ​ — ​ ​ 4,296 Payments-in-kind interest ​ — ​ 295 Total non-cash interest ​ 352 ​ 6,317 Total interest expense ​ $ 29,157 ​ $ 35,497 ​ Interest expense for the year ended December 31, 2023 was $29.2 million compared to $35.5 million for the year ended December 31, 2022.
Since EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, they should be viewed in addition to, and not be considered as alternatives for, net income (loss) determined in accordance with GAAP.
Since EBITDA and Consolidated Adjusted EBITDA are not measures calculated in accordance with GAAP, they should be viewed in addition to, and not be considered as alternatives for, net (loss) income determined in accordance with GAAP.
The Convertible Notes will be unsecured and senior obligations of the Company and will accrue interest at a rate of 5.00% per annum. ​ The purchasers of the Convertible Notes are Westrock Group, LLC (a holder of more than 5% of the outstanding Common Shares and an affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors), an affiliate of The Stephens Group, LLC (a holder of more than 5% of the outstanding Common Shares), an affiliate of Sowell Westrock, L.P.
The Convertible Notes are unsecured and senior obligations of the Company and accrue interest at a rate of 5.00% per annum. ​ The purchasers of the Convertible Notes are Westrock Group, LLC (a holder of more than 5% of the outstanding Common Shares and an affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors), an affiliate of The Stephens Group, LLC (a holder of more than 5% of the outstanding Common Shares), an affiliate of Sowell Westrock, L.P.
Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances: (i) during the period commencing on August 15, 2024, and prior to the close of business on the trading day immediately preceding August 15, 2028, if the closing price for at least 20 trading days (whether or not 46 Table of Contents consecutive) during the period of any 30 consecutive trading days in the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price; (ii) during the period commencing on August 15, 2028, and prior to the close of business on the second scheduled trading day immediately preceding February 15, 2029, at any time; and (iii) during the 35 trading days following the effective date of certain fundamental change transactions that occur prior to the close of business on the trading day immediately preceding August 15, 2028.
Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances: (i) during the period commencing on August 15, 2024, and prior to the close of business on the trading day immediately preceding August 15, 2028, if the closing price for at least 20 trading days (whether or not consecutive) during the period of any 30 consecutive trading days in the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price; (ii) during the period commencing on August 15, 2028, and prior to the close of business on the second scheduled trading day immediately preceding February 15, 2029, at any time; and (iii) during the 35 trading days following the effective date of certain fundamental change transactions that occur prior to the close of business on the trading day immediately preceding August 15, 2028.
The Credit Agreement, as amended, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $15 million and (ii) an anti-cash hoarding covenant, which shall be effective only during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.
The Credit Agreement, as amended through the Third Amendment, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $15 million and (ii) an anti-cash hoarding covenant, which shall be effective only during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.
During the fourth quarter of 2023, the Company completed a qualitative analysis to evaluate impairment of goodwill and concluded that it was more likely than not that the fair value of our goodwill reporting unit exceeded the carrying amount. As a result, the Company concluded that no impairment existed in the year ending December 31, 2023.
During the fourth quarter of 2024, the Company completed a qualitative analysis to evaluate impairment of goodwill and concluded that it was more likely than not that the fair value of our goodwill reporting unit exceeded the carrying amount. As a result, the Company concluded that no impairment existed in the year ending December 31, 2024.
Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%).
Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the 48 Table of Contents greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%).
The Credit Agreement includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $175.0 million (the “Revolving Credit Facility”), (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $175.0 million (the “Term Loan Facility”) and (c) incremental term loan commitments in the form of a senior secured delayed draw term loan credit facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.
The Credit Agreement includes (a) a senior secured first lien revolving credit facility in an aggregate principal amount of $200.0 million (the “Revolving Credit Facility”), (b) a senior secured first lien term loan facility in an aggregate principal amount of $175.0 million (the “Term Loan Facility”) and (c) incremental term loan commitments in the form of a senior secured delayed draw term loan credit facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.
Government Securities Business Days before the Quotation day; or (b) the most recent applicable Term SOFR (as of Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin.
Government Securities Business Days, as defined in the facility, before the Quotation Day, as defined in the facility; or (b) the most recent applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin.
In January 2024, the Company borrowed the $50.0 million available to it under the terms of the Delayed Draw Term Loan Facility. On February 15, 2024, Westrock Beverage Solutions, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “Borrower”), entered into Amendment No. 3 (the “Third Amendment”) to the Credit Agreement.
In January 2024, the Company borrowed the $50.0 million available to it under the terms of the Delayed Draw Term Loan Facility. 30 Table of Contents On February 15, 2024, Westrock Beverage Solutions, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “Borrower”), entered into Amendment No. 3 (the “Third Amendment”) to the Credit Agreement.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a discussion of our financial condition at December 31, 2023 and 2022 and our results of operations for each of the years in the three-year period ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following is a discussion of our financial condition at December 31, 2024 and 2023 and our results of operations for each of the years in the three-year period ended December 31, 2024.
Application of the goodwill impairment test requires significant judgment, including the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. As of December 31, 2023, all of our goodwill is assigned to our Beverage Solutions reporting unit.
Application of the goodwill impairment test requires significant judgment, including the identification of reporting units; assignment of assets and liabilities to reporting units; and assignment of goodwill to reporting units. As of December 31, 2024, all of our goodwill is assigned to our Beverage Solutions reporting unit.
We have future obligations to repurchase $8.3 million of inventory associated with repurchase agreements in which the Company’s SS&T segment has sold inventory to a third party and from whom the Company’s Beverage Solution segment has an obligation to repurchase. ​ Capital Expenditures We categorize our capital expenditures as (i) growth, (ii) maintenance, (iii) customer beverage equipment, or (iv) other.
We have future obligations to repurchase $0.6 million of inventory associated with repurchase agreements in which the Company’s SS&T segment has sold inventory to a third party and from whom the Company’s Beverage Solution segment has an obligation to repurchase. ​ Capital Expenditures We categorize our capital expenditures as (i) growth, (ii) maintenance, (iii) customer beverage equipment, or (iv) other.
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of certain recent accounting pronouncements. ​ 50 Table of Contents
Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of certain recent accounting pronouncements. ​ 51 Table of Contents
We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each in the determination of the concluded fair value. If the carrying value of a reporting unit’s net assets is less than its fair value, no indication of impairment exists.
We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each in the determination of the concluded fair value. 42 Table of Contents If the carrying value of a reporting unit’s net assets is less than its fair value, no indication of impairment exists.
Change in Fair Value of Warrant Liabilities Warrant liabilities are adjusted to fair value at each reporting period, with any change in fair value recognized in the Consolidated Statement of Operations.
Change in Fair Value of Warrant Liabilities Warrant liabilities are adjusted to fair value at each reporting period, with any change in fair value recognized in the Consolidated Statements of Operations.
If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be 42 Table of Contents recognized for the excess and recorded in the Consolidated Statements of Operations not to exceed the carrying value of goodwill.
If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of Operations not to exceed the carrying value of goodwill.
During the Covenant Relief Period, the Company’s ability to incur additional indebtedness and make investments, restricted payments and junior debt restricted payments will be more limited. The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes.
During the Covenant Relief Period, the Company’s ability to incur additional indebtedness and make investments, restricted payments and junior debt restricted payments will be more limited. The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes (as defined herein).
The Third Amendment also includes (i) a minimum liquidity covenant requiring the Company not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $15 million and (ii) an anti-cash hoarding covenant, which shall only be effective during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.
The Credit Agreement, as amended through the Third Amendment, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $15 million and (ii) an anti-cash hoarding covenant, which shall be 46 Table of Contents effective only during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.
Assuming that the liquidation preference of the Series A Preferred Shares remains $11.50 per share and all 23,511,922 Series A Preferred Shares remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $270.4 million.
Assuming that the liquidation preference of the Series A Preferred Shares remains $11.50 per share and all 23,510,527 Series A Preferred Shares remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $270.4 million.
Credit Agreement The Company is party to a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto (the “Credit Agreement”).
Credit Agreement The Company is party to a credit agreement (as amended, modified or supplemented, the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto.
A key component of our long-term growth strategy is to complete the build-out of our extract and ready-to-drink manufacturing facility in Conway, Arkansas, which will utilize state-of-the-art equipment specifically designed to efficiently manufacture and package a wide range of beverages, such as canned or bottled cold brew coffees, lattes, assorted teas, and juice-based products.
A key component of our long-term growth strategy is to complete the commercialization of our extract and ready-to-drink manufacturing facility in Conway, Arkansas, which utilizes state-of-the-art equipment specifically designed to efficiently manufacture and package a wide range of beverages, such as canned or bottled cold brew coffees, lattes, assorted teas, and juice-based products.
At December 31, 2023, there was $5.0 million of outstanding borrowings under the facility, of which $4.5 million and $0.5 million is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Consolidated Balance Sheets.
At December 31, 2024, there was $4.5 million of outstanding borrowings under the facility, of which $3.5 million and $1.0 million is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Consolidated Balance Sheets.
The Third Amendment modified the existing Covenant Relief Period, which commenced on June 30, 2023 pursuant to Amendment No. 2, and will end on the earlier to occur of (i) April 1, 2026 and (ii) any date following June 30, 2024, on which the Borrower elects to terminate the Covenant Relief Period subject to satisfaction of certain conditions.
The Third Amendment modified the existing covenant relief period (the “Covenant Relief Period”), which commenced on June 30, 2023 and will end on the earlier to occur of (i) April 1, 2026 and (ii) any date following June 30, 2024, on which the Borrower elects to terminate the Covenant Relief Period subject to satisfaction of certain conditions.
At December 31, 2023, there was $37.0 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets. Falcon’s facility contains certain restrictive financial covenants which require Falcon to maintain certain levels of working capital, debt, and net worth.
At December 31, 2024, there was $50.6 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets. Falcon’s facility contains certain restrictive financial covenants which require Falcon to maintain certain levels of working capital, debt, and net worth.
We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, and single serve cups, as well as extract 29 Table of Contents solutions to be used in products such as cold brew and ready-to-drink offerings.
We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, single serve cups, multi-serve bottles and ready-to-drink bottles and cans, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.
Supply Chain Finance Program The Company is party to a supply chain finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials.
Supply Chain Finance Program The Company is party to a supply chain finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials of up to $100.0 million.
At December 31, 2023, a 10% change in the price of coffee would have had an approximately $3.3 million impact on the value of our green coffee inventory.
At December 31, 2024, a 10% change in the price of coffee would have had an approximately $4.8 million impact on the value of our green coffee inventory.
We reached this conclusion based on consideration of the significant excess fair value over carrying value of previous quantitative goodwill impairment evaluations, the recently completed HF Investment and PIPE Investments and the Company’s current market capitalization. Our previous quantitative goodwill analysis indicated that the estimated fair value of our reporting units exceeded their carrying values by over 50%.
We reached this conclusion based on consideration of the significant excess fair value over carrying value of previous quantitative goodwill impairment evaluations and the Company’s current market capitalization. Our previous quantitative goodwill analyses indicated that the estimated fair value of our reporting units exceeded their carrying values by over 50%.
All obligations under the 45 Table of Contents Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets. ​ Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) Term SOFR plus a credit spread adjustment of 0.10% for loans with an interest period of one month, 0.15% for loans with an interest period of three months and 0.25% for loans with an interest period of six months, as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50% and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00%, (the “Base Rate”)), in each case plus the applicable margin.
All obligations under the Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets. ​ Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) term SOFR plus a credit spread adjustment of 0.10% for loans with an interest period of one month, 0.15% for loans with an interest period of three months and 0.25% for loans with an interest period of six months, as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the United States as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50% and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00%, (the “Base Rate”)), in each case plus an applicable margin. ​ At December 31, 2024, we had $112.5 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.6%, and we had $2.6 million of standby letters of credit outstanding.
Our income tax expense for the year ended December 31, 2022 is primarily comprised of federal and state benefits, at statutory rates, of $13.1 million, offset by $6.2 million of tax expense resulting from the change in fair value of warrants and $7.3 million of expense related to increases in the valuation allowance against our deferred tax assets. ​ Income tax benefit for the year ended December 31, 2021 was $3.4 million, resulting in an effective tax rate of 13.6%.
Our income tax expense for the year ended December 31, 2024 is primarily comprised of $20.8 million of expense related to increases in the valuation allowance against our deferred tax assets, offset by federal and state benefits, at statutory rates, of $18.2 million and $1.5 million of tax benefit resulting from the change in fair value of warrants. ​ Income tax benefit for the year ended December 31, 2023 was $6.4 million, resulting in an effective tax rate of 15.6%.
The Credit Agreement, as amended, requires the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50:1.00 to 6.25:1.00 and stepping down to 4.50:1.00 by April 2026 and (ii) an interest coverage ratio of at least 1.50:1.00 on and prior to September 30, 2025 and at least 2.00:1.00 on December 31, 2025 and thereafter.
The Credit Agreement, as amended through the Third Amendment, required the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50:1.00 to 6.25:1.00 and stepping down to 4.50:1.00 by April 2026 (which has been further amended by the Fourth Amendment, as discussed below) and (ii) an interest coverage ratio of at least 1.50:1.00 on and prior to September 30, 2025 and at least 2.00:1.00 on December 31, 2025 and thereafter.
We define “Adjusted EBITDA” as EBITDA before equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integration related costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, and other similar or infrequent items (although we may not have had such charges in the periods presented).
We define “Consolidated Adjusted EBITDA” as EBITDA before equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integration related costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain non-capitalizable costs necessary to place the Conway extract and ready-to-drink facility into commercial production, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, and other similar or infrequent items (although we may not have had such charges in the periods presented).
Furthermore, during the year ended December 31, 2023, the Company capitalized approximately $3.2 million of interest costs associated with the build-out of our extract and ready-to-drink facility in Conway, Arkansas, while no such interest was capitalized during the year ended December 31, 2022.
During the year ended December 31, 2024, the Company capitalized approximately $11.7 million of interest costs associated with the build out of our extract and ready-to-drink facility in Conway, Arkansas, compared to $3.2 million of such interest for the year ended December 31, 2023.
Costs of sales for the year ended December 31, 2023 included $0.1 million of net unrealized gains on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory compared to $3.5 million of net unrealized losses on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory for the year ended December 31, 2022 . 35 Table of Contents Selling, General and Administrative Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ % of Segment ​ ​ % of Segment (Thousands) ​ Amount ​ Revenues ​ Amount ​ Revenues Beverage Solutions ​ $ 134,542 18.6 % $ 119,938 17.5 % Sustainable Sourcing & Traceability ​ 10,035 7.1 % 10,047 5.5 % Total selling, general and administrative expense ​ $ 144,577 16.7 % $ 129,985 15.0 % ​ Total selling, general and administrative expense in our Beverage Solutions segment increased $14.6 million to $134.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Selling, General and Administrative Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ % of Segment ​ ​ % of Segment (Thousands) ​ Amount ​ Revenues ​ Amount ​ Revenues Beverage Solutions ​ $ 134,542 18.6 % $ 119,938 17.5 % Sustainable Sourcing & Traceability ​ 10,035 7.1 % 10,047 5.5 % Total selling, general and administrative expense ​ $ 144,577 16.7 % $ 129,985 15.0 % ​ 39 Table of Contents Total selling, general and administrative expense in our Beverage Solutions segment increased $14.6 million to $134.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
In our SS&T segment, selling, general and administrative costs increased $1.3 million for the year ended December 31, 2022, including a $0.4 million increase in personnel-related costs, compared to the year ended December 31, 2021.
In our SS&T segment, selling, general and administrative costs increased $1.2 million for the year ended December 31, 2024, primarily due to a $1.0 million increase in personnel-related costs compared to the year ended December 31, 2023.
Revenues from commodity contracts are recognized in revenues for the contractually stated amount when the contracts are settled. Settlement generally occurs upon shipment or delivery of the product when title and risks and rewards of ownership transfers to the customer.
The Company does not apply the normal purchase and normal sale exception under ASC 815 to these contracts. Revenues from commodity contracts are recognized in revenues for the contractually stated amount when the contracts are settled. Settlement generally occurs upon shipment or delivery of the product when title and risks and rewards of ownership transfers to the customer.
Additionally, we may reserve cash, refrain from pursuing other business objectives and/or direct cash away from other business objectives to ensure that we have sufficient available cash to satisfy holder redemptions and this may adversely affect our business and financial condition and ability to execute on our business strategy. 49 Table of Contents Contractual and Other Obligations Our material contractual and other obligations include the payment of principal and interest under our debt obligations and future purchase of inventory obligations.
Additionally, we may reserve cash, refrain from pursuing other business objectives and/or direct cash away from other business objectives to ensure that we have sufficient available cash to satisfy holder redemptions and this may adversely affect our business and financial condition and ability to execute on our business 50 Table of Contents strategy.
Failure to meet our financial targets may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants and may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition, covenant compliance and ability to achieve our intended business objectives.
Failure to meet our financial targets, including any adverse impact from changes or further delays in the estimated timing and volume of products to be commercialized in our extract and ready-to-drink manufacturing facility in Conway, Arkansas, may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants and may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition, covenant compliance and ability to achieve our intended business objectives.
The Company and Select Milk expect to ship the first product from these lines in the first quarter of 2026. ​ Convertible Notes Offering ​ On February 15, 2024, the Company sold and issued in a private placement $72.0 million in aggregate principal amount of 5.00% convertible senior notes due 2029 (the “Convertible Notes”).
Significant Developments Convertible Notes Offering ​ On February 15, 2024, the Company sold and issued in a private placement $72.0 million in aggregate principal amount of 5.00% convertible senior notes due 2029 (the “Convertible Notes”).
Our income tax benefit for the year ended December 31, 2021 is primarily comprised of federal and state benefits, at statutory rates, of $6.0 million, partially offset by $1.2 million of negative impacts related to the impact of changes in foreign tax rates on our tax benefit. ​ Critical Accounting Estimates Our Consolidated Financial Statements and related notes presented in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K have been prepared in accordance with GAAP.
Our income tax expense for the year ended December 31, 2022 is primarily comprised of federal and state benefits, at statutory rates, of $13.1 million, offset by $6.2 million of tax expense resulting from the change in fair value of warrants and $7.3 million of expense related to increases in the valuation allowance against our deferred tax assets. ​ Critical Accounting Estimates Our Consolidated Financial Statements and related notes presented in Item 8 “Financial Statements and Supplementary Data” in this Annual Report on Form 10-K have been prepared in accordance with GAAP.
Redemptions of Series A Preferred Shares After February 26, 2028, any holder of Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Series A Preferred Shares in cash, subject to applicable law and the terms of any credit agreement or similar arrangement pursuant to which a third-party lender provides debt financing to Westrock or its subsidiaries, at a redemption price per share equal to the greater of (a) the liquidation preference and (b) the product of (i) the number of Common Shares that would have been obtained from converting one Series A Preferred Share on the redemption notice date and (ii) the simple average of the daily volume-weighted average price per Common Share for the ten (10) trading days ending on and including the trading day immediately preceding the redemption notice date.
If it is determined that we have insufficient liquidity to fund our near-term growth strategies, we may delay and/or reprioritize our near-term growth strategies, which may have an adverse impact on our ability to achieve our growth objectives. ​ We believe that cash from operations, borrowings available under the Revolving Credit Facility and our ability to obtain future financing will provide sufficient cash on hand to fund our long-term growth strategies, which include (i) expanding geographically and (ii) finding accretive acquisitions. ​ Redemptions of Series A Preferred Shares After February 26, 2028, any holder of Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Series A Preferred Shares in cash, subject to applicable law and the terms of any credit agreement or similar arrangement pursuant to which a third-party lender provides debt financing to Westrock or its subsidiaries, at a redemption price per share equal to the greater of (a) the liquidation preference and (b) the product of (i) the number of Common Shares that would have been obtained from converting one Series A Preferred Share on the redemption notice date and (ii) the simple average of the daily volume-weighted average price per Common Share for the ten (10) trading days ending on and including the trading day immediately preceding the redemption notice date.
Key Business Metrics We use Adjusted EBITDA to evaluate our performance, identify trends, formulate financial projections, and to make strategic decisions. Adjusted EBITDA We refer to EBITDA and Adjusted EBITDA in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”).
Consolidated Adjusted EBITDA We refer to EBITDA and Consolidated Adjusted EBITDA in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”).
We believe proceeds from the Delayed Draw Term Loans, Convertible Notes, cash from operations and borrowings available under the Revolving Credit Facility will provide sufficient cash on-hand to fund our near-term growth strategies, which include, (i) extending and enhancing product offerings through innovation, (ii) expanding our customer base, (iii) expanding geographically, (iv) funding accretive acquisitions, and (v) continuing to drive margin expansion and (vi) to complete the build-out of our extract and ready-to-drink manufacturing facility in Conway, Arkansas.
We believe cash from operations and borrowings available under the Revolving Credit Facility will provide sufficient cash on-hand to fund our near-term growth strategies, which include, (i) extending and enhancing product offerings through innovation, (ii) expanding our customer base and (iii) continuing to drive margin expansion.
Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal 47 Table of Contents Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%). ​ On September 28, 2023, we entered into a $5.0 million unsecured working capital trade finance facility with responsAbility Climate Smart Agriculture & Food Systems Fund through our subsidiary, Falcon.
Borrowings under the facility bore interest at the borrower’s option at a rate equal to (a) term SOFR, as defined in the facility, plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%). ​ On March 8, 2024, Falcon renewed its working capital trade finance facility with multiple institutions.
These forward sales meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash. The Company does not apply the normal purchase and normal sale exception under ASC 815 to these contracts.
Sales from commodity contracts primarily relate to forward sales of green coffee which are accounted for as derivatives at fair value under ASC 815. These forward sales meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash.
Shipping and handling costs paid by the customer to us are included in revenue and costs incurred by us for shipping and handling activities that are 41 Table of Contents performed after a customer obtains control of the product are accounted for as fulfillment costs.
Shipping and handling costs paid by the customer to us are included in revenue and costs incurred by us for shipping and handling activities that are performed after a customer obtains control of the product are accounted for as fulfillment costs. In addition, we exclude from net revenue and cost of sales taxes assessed by governmental authorities on revenue-producing transactions.
The standalone selling price is the estimated price we would charge for the good or service in a separate transaction with similar customers in similar circumstances. Identifying distinct performance obligations and determining the standalone selling price for each performance obligation within a contract requires management judgment.
The standalone selling price is the estimated price we would charge for the good or service in a separate transaction with similar customers in similar circumstances.
Our ability to generate cash provided by operating activities is dependent on several factors, including our ability to generate net sales and manage costs in line with our expectations.
Our primary sources of liquidity and capital resources are cash on hand, cash provided by operating activities, and available borrowings under our Credit Agreement (as defined herein). Our ability to generate cash provided by operating activities is dependent on several factors, including our ability to generate net sales and manage costs in line with our expectations.
Substantially all our client contracts require that we be compensated for services performed to date. This is upon shipment of goods or upon delivery to the customer, depending on contractual terms.
Identifying distinct performance obligations and determining the standalone selling price for each performance obligation within a contract requires management judgment. 41 Table of Contents Substantially all our client contracts require that we be compensated for services performed to date. This is upon shipment of goods or upon delivery to the customer, depending on contractual terms.
We believe EBITDA and Adjusted EBITDA are important supplemental measures to net (loss) income because they provide additional information to evaluate our operating performance on an unleveraged basis. In addition, Adjusted EBITDA is calculated similar to defined terms in our material debt agreements used to determine compliance with specific financial covenants.
We believe EBITDA and Consolidated Adjusted EBITDA are important supplemental measures to net (loss) income because they provide additional information to evaluate our operating performance on an unleveraged basis.
In our SS&T segment, costs of sales increased $41.1 million to $170.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021. This increase is primarily due to an increase in green coffee costs driven by an increase in underlying commodities pricings.
In our SS&T segment, costs of sales increased $41.6 million or 32.6% to $169.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase is primarily due to a 39.5% increase in green coffee sales volume.
See Note 23 to our Consolidated Financial Statements for additional discussion related to the Convertible Notes offering. ​ 31 Table of Contents Credit Agreement Amendment ​ On February 14, 2023, the Company entered into an Incremental Assumption Agreement and Amendment No. 1 (the “First Amendment”) to its Credit Agreement, which established a new class of incremental term loan commitments in the form of a senior secured delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.
See Note 12 to our Consolidated Financial Statements for additional discussion related to the Convertible Notes offering. ​ Credit Agreement Amendments ​ On February 14, 2023, the Company entered into an Incremental Assumption Agreement and Amendment No. 1 (the “First Amendment”) to its Credit Agreement dated as of August 29, 2022 among the Borrower, the Company, Wells Fargo Bank, N.A., as administrative agent, as collateral agent and as swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, the issuing banks party thereto from time to time and the lenders party thereto from time to time (as amended, restated, amended and restated, supplemented or otherwise modified, the “Credit Agreement”), which established a new class of incremental term loan commitments in the form of a senior secured delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.
During the Covenant Relief Period, the Company will be required to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50:1.00 to 6.25:1.00 and stepping down to 4.50:1.00 by April 2026 and (ii) an interest coverage ratio of at least 1.50:1.00 on and prior to September 30, 2025 and at least 2.00:1.00 on December 31, 2025 and thereafter.
After the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 2.00% to 3.00% and for any ABR loan will range from 1.00% to 2.00%, in each case depending on the secured net leverage ratio. ​ The Credit Agreement, as amended through the Third Amendment, required the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50:1.00 to 6.25:1.00 and stepping down to 4.50:1.00 by April 2026 (which has been further amended by the Fourth Amendment, as discussed below) and (ii) an interest coverage ratio of at least 1.50:1.00 on and prior to September 30, 2025 and at least 2.00:1.00 on December 31, 2025 and thereafter.
(“Riverview”), the Company converted from a Delaware limited liability company to a Delaware corporation (the “Conversion”) and changed its corporate name from “Westrock Coffee Holdings, LLC” to “Westrock Coffee Company.” Our platform is built upon four fundamental pillars that enable us to positively impact the coffee, tea, flavors, extracts, and ingredients ecosystems from crop to cup: (i) we operate a fully transparent supply chain, (ii) we develop innovative beverage solutions tailored to our customers’ specific needs, (iii) we deliver a high quality and comprehensive set of products to our customers, and (iv) we leverage our scaled international presence to serve our blue-chip customer base.
Overview Westrock Coffee Company, a Delaware corporation (the “Company,” “Westrock,” “we,” “us,” or “our”), is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States, providing coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, noncommercial account, CPG, and hospitality industries around the world. ​ Our platform is built upon four fundamental pillars that enable us to positively impact the coffee, tea, flavors, extracts, and ingredients ecosystems from crop to cup: (i) we operate a transparent supply chain, (ii) we develop innovative beverage solutions tailored to our customers’ specific needs, (iii) we deliver a high quality and comprehensive set of products to our customers, and (iv) we leverage our scaled international presence to serve our blue-chip customer base.
The facility replaced Falcon’s then existing working capital trade finance facility. The facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The facility will mature one year from inception.
The facility size was increased from $75.0 million to $85.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The facility will mature one year from inception.
As of December 31, 2023, there were $78.1 million obligations outstanding under the Program. Current and Long-Term Liquidity Our liquidity needs are to fund operating expenses, meet debt service obligations, and fund both current and long-term investment activities, which include capital expenditures.
At December 31, 2024, there were no outstanding Warrants. Liquidity and Capital Resources Our principal liquidity needs are to fund operating expenses, meet debt service obligations, and fund investment activities, which include capital expenditures.
The offer and sale of the Convertible Notes was authorized and approved unanimously by the Audit & Finance Committee of the board of directors in accordance with the Company’s Related Party Transactions Policy. ​ International Debt and Lending Facilities On March 21, 2023, we entered into a $70.0 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon Coffees Limited (“Falcon”).
International Debt and Lending Facilities On March 21, 2023, we entered into a $70.0 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon Coffees Limited (“Falcon”). The facility was set to mature one year from inception.
These transactions are accounted for as financing transactions in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Net cash flows associated with these repurchase agreements are reported as financing activities in the Consolidated Statements of Cash Flows.
Net cash flows associated with these repurchase agreements are reported as financing activities in the Consolidated Statements of Cash Flows. Revenue from Forward Contracts (ASC 815) A portion of the Company’s revenues consist of sales from commodity contracts that are accounted for under ASC 815, Derivatives and Hedging (“ASC 815”).
We have no other material obligations to pay principal amounts of our long-term debt obligations prior to their maturity. Future purchase obligations of $238.7 million as of December 31, 2023 consist of commitments for the purchase of inventory over the next 12 months. These obligations represent the minimum contractual obligations expected under the normal course of business.
Future purchase obligations of $427.6 million as of December 31, 2024 consist of commitments for the purchase of inventory over the next 12 months. These obligations represent the minimum contractual obligations expected under the normal course of business. There are no material purchase obligations beyond 12 months.
Capital expenditures for the years ended December 31, 2023, 2022 and 2021 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beverage ​ ​ ​ ​ ​ ​ (Thousands) ​ Growth ​ Maintenance ​ Equipment ​ Other ​ Total Year ended December 31, 2023 ​ $ 153,604 ​ $ 3,478 ​ $ 2,039 ​ $ 5,490 ​ $ 164,611 Year ended December 31, 2022 ​ $ 56,582 ​ $ 2,344 ​ $ 2,170 ​ $ 2,165 ​ $ 63,261 Year ended December 31, 2021 ​ $ 19,784 ​ $ 1,682 ​ $ 1,577 ​ $ 2,072 ​ $ 25,115 ​ During 2024, we expect to continue to invest to expand our extract and ready-to-drink product manufacturing capacity in Conway, Arkansas.
Capital expenditures for the years ended December 31, 2024, 2023 and 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Customer ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beverage ​ ​ ​ ​ ​ ​ (Thousands) ​ Growth ​ Maintenance ​ Equipment ​ Other ​ Total Year ended December 31, 2024 ​ $ 155,309 ​ $ 1,862 ​ $ 1,088 ​ $ 1,366 ​ $ 159,625 Year ended December 31, 2023 ​ $ 153,604 ​ $ 3,478 ​ $ 2,039 ​ $ 5,490 ​ $ 164,611 Year ended December 31, 2022 ​ $ 56,582 ​ $ 2,344 ​ $ 2,170 ​ $ 2,165 ​ $ 63,261 ​ During 2025, we expect to invest approximately $50.0 million to complete the build-out of our extract and ready-to-drink facility in Conway, Arkansas, which includes approximately $20.0 million to install a second read-to-drink can line, which we expect to be placed into commercial production in the second half of 2025.
Our Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments of 1.25% of the original principal. Quarterly payments increase 1.875% and 2.5% of the original principal balance during the fourth and fifth years of the Credit Facility, respectively.
Quarterly payments increase 1.875% and 2.5% of the original principal balance during the fourth and fifth years of the Credit Facility, respectively. We have no other material obligations to pay principal amounts of our long-term debt obligations prior to their maturity.
Further, our computations of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies that define EBITDA and Adjusted EBITDA differently than we do. 30 Table of Contents The reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (Thousands) 2023 2022 2021 ​ Net loss ​ $ (34,567) ​ $ (55,461) ​ $ (21,308) ​ Interest expense ​ 29,157 ​ 35,497 ​ 32,549 ​ Income tax expense (benefit) ​ (6,358) ​ 111 ​ (3,368) ​ Depreciation and amortization ​ 26,584 ​ 24,210 ​ 25,501 ​ EBITDA ​ 14,816 ​ 4,357 ​ 33,374 ​ Transaction, restructuring and integration expense ​ 14,557 ​ 13,169 ​ 8,835 ​ Change in fair value of warrant liabilities ​ ​ (10,207) ​ ​ 29,675 ​ ​ — ​ Management and consulting fees (S&D Coffee, Inc. acquisition) ​ 556 ​ 3,868 ​ 6,382 ​ Equity-based compensation ​ 8,708 ​ 2,631 ​ 1,223 ​ Conway extract and ready-to-drink facility start-up costs ​ ​ 11,698 ​ ​ — ​ ​ — ​ Mark-to-market adjustments ​ (104) ​ 3,502 ​ (3,585) ​ Loss on disposal of property, plant and equipment ​ 1,153 ​ 935 ​ 243 ​ Other ​ 3,904 ​ 1,916 ​ 702 ​ Adjusted EBITDA ​ $ 45,081 ​ $ 60,053 ​ $ 47,174 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beverage Solutions ​ 41,624 ​ 53,951 ​ 41,468 ​ Sustainable Sourcing & Traceability ​ 3,457 ​ 6,102 ​ 5,706 ​ Total of Reportable Segments ​ $ 45,081 ​ $ 60,053 ​ $ 47,174 ​ ​ Significant Developments Select Milk Joint Venture ​ On February 15, 2024, the Company entered a non-binding letter of intent with Select Milk Producers (“Select Milk”) to establish a joint venture that will construct and operate an extended shelf life and aseptic multi-serve bottle line facility to be co-located at Select Milk’s factory in Littlefield, Texas.
Further, our computations of EBITDA and Consolidated Adjusted EBITDA may not be comparable to that reported by other companies that define EBITDA and Consolidated Adjusted EBITDA differently than we do. 29 Table of Contents The reconciliation of our net (loss) income to EBITDA and Consolidated Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (Thousands) 2024 2023 2022 ​ Net loss ​ $ (80,298) ​ $ (34,567) ​ $ (55,461) ​ Interest expense ​ 33,856 ​ 29,157 ​ 35,497 ​ Income tax expense (benefit) ​ 3,728 ​ (6,358) ​ 111 ​ Depreciation and amortization ​ 34,745 ​ 26,584 ​ 24,210 ​ EBITDA ​ (7,969) ​ 14,816 ​ 4,357 ​ Transaction, restructuring and integration expense ​ 13,797 ​ 14,557 ​ 13,169 ​ Change in fair value of warrant liabilities ​ ​ (7,015) ​ ​ (10,207) ​ ​ 29,675 ​ Management and consulting fees (S&D Coffee, Inc. acquisition) ​ — ​ 556 ​ 3,868 ​ Equity-based compensation ​ 11,608 ​ 8,708 ​ 2,631 ​ Impairment charges ​ ​ 5,686 ​ ​ — ​ ​ — ​ Conway extract and ready-to-drink facility pre-production costs ​ ​ 35,544 ​ ​ 11,698 ​ ​ — ​ Mark-to-market adjustments ​ (4,622) ​ (104) ​ 3,502 ​ (Gain) loss on disposal of property, plant and equipment ​ (1,722) ​ 1,153 ​ 935 ​ Other ​ 1,873 ​ 3,904 ​ 1,916 ​ Consolidated Adjusted EBITDA ​ $ 47,180 ​ $ 45,081 ​ $ 60,053 ​ ​ Refer to footnote 20 of Part II, Item 8 “Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K, for information regarding our reportable segments, including disclosures of the Company’s segment performance measure.
Falcon’s facility contains certain restrictive financial covenants which require Falcon to maintain certain levels of working capital, debt, and tangible net worth.
Falcon’s facility contains certain restrictive financial covenants which require Falcon to maintain certain levels of working capital, debt, and tangible net worth. Falcon was in compliance with these financial covenants as of December 31, 2024. ​ On March 7, 2025, Falcon renewed its working capital trade finance facility with multiple institutions.
Falcon was in compliance with these financial covenants as of December 31, 2023. ​ On March 8, 2024, Falcon renewed its working capital trade finance facility with multiple institutions. The facility size was reduced from $70.0 million to $55.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.
The facility size was reduced from $70.0 million to $55.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The facility will mature one year from inception.
Net Sales Net Sales from our Beverage Solutions segment were $685.3 million for the year ended December 31, 2022, compared to $551.0 million for the year ended December 31, 2021, an increase of 24%.
Net Sales from our Beverage Solutions segment were $659.4 million for the year ended December 31, 2024, compared to $722.9 million for the year ended December 31, 2023, a decrease of 8.8%.
The increase was due to a $121.5 million increase in the sale of coffee & tea products, driven by a 50% increase in single serve cup volumes, and an increase in underlying green coffee prices compared to the year ended December 31, 2021, partially offset by a 7% decrease in roast and ground coffee products and a 5% decrease in tea products, driven in part by higher inflation impacting end-consumer demand.
The decrease in costs of sales was primarily driven by a decrease in the sale volumes of single serve cup and coffee and tea products for the year ended December 31, 2024 compared to the year ended December 31, 2023, partially offset by an increase in costs of sales associated with flavors, extracts and ingredients products, primarily due to an increase in volumes for the year ended December 31, 2024 compared to the year ended December 31, 2023.
The decrease is driven by a 20.6% decrease in sales volume, as a result of a decrease in customer demand. Costs of Sales In our Beverage Solutions segment, costs of sales increased $52.4 million to $597.0 million for the year ended December 31, 2023, from $544.6 million for the year ended December 31, 2022.
Costs of Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (Thousands) 2023 2022 Beverage Solutions ​ $ 596,966 ​ $ 544,611 Sustainable Sourcing & Traceability ​ 127,890 ​ 170,496 Total costs of sales ​ $ 724,856 ​ $ 715,107 ​ In our Beverage Solutions segment, costs of sales increased $52.4 million to $597.0 million for the year ended December 31, 2023, from $544.6 million for the year ended December 31, 2022.
A 10% increase to the volatility input at December 31, 2023 would increase the fair value of the Westrock Private Warrants by approximately $0.5 million. For the year ended December 31, 2023, the Company recognized $10.2 million of gains related to the change in fair value of warrant liabilities.
The primary unobservable input utilized in determining the fair value of the Westrock Private Warrants was the expected volatility of the stock price, which is determined by use of an option pricing model. For the year ended December 31, 2024, the Company recognized $7.0 million of gains related to the change in fair value of warrant liabilities.
Warrant Liabilities We account for warrants in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period.
Warrant Liabilities Prior to October 2024, the Company had outstanding warrants to purchase Common Shares (the “Warrants”), which were accounted for in accordance with the guidance contained in ASC 815, under which the warrants did not meet the criteria for equity treatment and must be recorded as liabilities.
The Convertible Notes will be unsecured and senior obligations of the Company and will accrue interest at a rate of 5.00% per annum.
The Convertible Notes are unsecured, senior obligations of the Company and accrue interest at a rate of 5.00% per annum. The Convertible Notes are carried at amortized cost and are recorded in long-term debt, net and convertible notes payable – related party, net on the Consolidated Balance Sheets.
At times, the Company may enter into agreements in which its Sustainable Sourcing & Traceability segment will sell inventory to a third party, from whom the Company’s Beverage Solutions segment has an obligation to repurchase. Such repurchase agreement obligations are recorded within accrued expenses and other current liabilities on the Consolidated Balances Sheets and are collateralized by the corresponding inventory.
Although we occasionally receive returns of products from our customers, historically returns have not been material. At times, the Company may enter into agreements in which its Sustainable Sourcing & Traceability segment will sell inventory to a third party, from whom the Company’s Beverage Solutions segment has an obligation to repurchase.
The Westrock Private Warrants (as defined in Note 4 to our Consolidated Financial Statements) are valued a binomial lattice valuation model. The primary unobservable input utilized in determining the fair value of the Westrock Private Warrants is the expected volatility of the stock price, which is determined by use of an option pricing model.
The Company re-measured the fair value of the Westrock Public Warrants (as defined in Note 4 to our Consolidated Financial Statements) based on the quoted market price of the Westrock Public Warrants. The Westrock Private Warrants (as defined in Note 4 to our Consolidated Financial Statements) were valued using a binomial lattice valuation model.
Where possible, we seek to recover inflation-impacted costs by passing these costs onto our customers through periodic pricing increases. However, our pricing increases often lag our cost increases, including increases in commodity costs. The persistence of these negative effects on our business could adversely impact our ability to reach our revenue and other financial targets.
In addition, a persistent increase in coffee costs could also adversely affect consumer demand as producers attempt to pass higher costs down the supply chain. Where possible, we seek to recover inflation-impacted costs by passing these costs onto our customers through periodic pricing increases. However, our pricing increases may lag our cost increases, including increases in commodity costs.
Net Sales from our SS&T segment totaled $182.6 million, net of intersegment revenues, during the year ended December 31, 2022, increasing 24% compared to $147.1 million, net of intersegment revenues, during the year ended December 31, 2021.
Net Sales from our SS&T segment totaled $191.3 million, net of intersegment revenues, during the year ended December 31, 2024, increasing 34.9% compared to $141.8 million, net of intersegment revenues, during the year ended December 31, 2023. The increase is driven by an increase in sales volume, which increased 39.5% compared to the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe estimate that the potential impact to our interest rate expense associated with the variable rate Term Loan Facility, assuming a hypothetical 10% change in interest rates as of December 31, 2023, would be an annualized impact of approximately $0.9 million on the Company’s results of operations for the year ended December 31, 2023.
Biggest changeWe estimate that the potential impact to our interest rate expense associated with the variable rate Term Loan Facility and Delayed Draw Term Loan Facility, assuming a hypothetical 10% change in interest rates as of December 31, 2024, would be an annualized impact of approximately $0.9 million on the Company’s results of operations for the year ended December 31, 2024.
However, our pricing increases often lag our cost increases, including increases in commodity costs. ​ 51 Table of Contents
However, our pricing increases often lag our cost increases, including increases in commodity costs. ​ 52 Table of Contents

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