Westrock Coffee Reports 11% Revenue Growth but Wider Net Loss in Q1 2025

Westrock Coffee Company reported its financial results for the first quarter of 2025, revealing a net sales increase to $213.8 million, up from $192.5 million in the same period last year, representing an 11.0% growth. The company's Beverage Solutions segment contributed $164.1 million, a 3.8% increase from $158.1 million, while the Sustainable Sourcing & Traceability segment saw a significant rise of 44.4%, reaching $49.7 million compared to $34.4 million. Despite the revenue growth, Westrock Coffee experienced a net loss of $27.2 million, widening from a loss of $23.7 million in the prior year, primarily due to increased costs of sales and higher interest expenses.

The company's cost of sales rose to $184.7 million from $155.2 million, driven by escalating coffee commodity prices. Selling, general, and administrative expenses decreased to $40.3 million from $44.4 million, reflecting reduced start-up costs associated with the new Conway Facility. Interest expenses also surged to $12.6 million, up from $7.6 million, largely due to higher borrowings under the revolving credit facility. The overall gross profit margin fell to 13.6% from 19.4%, indicating pressure from rising costs.

In terms of strategic developments, Westrock Coffee has made significant operational changes, including the consolidation of its manufacturing operations and the completion of its Conway Facility, which is expected to enhance production capabilities. The company also entered into an Incremental Assumption Agreement and Amendment No. 4 to its Credit Agreement, increasing available borrowings by $25 million to support the installation of a second ready-to-drink can line. Additionally, Westrock formed a joint venture with ETC Holdings SA to combine Rwandan export operations, aiming to improve profitability and support smallholder farmers.

Operationally, Westrock Coffee reported a total employee headcount of 94,622 as of March 31, 2025, an increase from 94,221 at the end of 2024. The company continues to focus on expanding its geographic reach and enhancing product offerings, with plans to complete the build-out of the Conway Facility by the end of the third quarter of 2025. The company’s liquidity remains a concern, as it incurred net cash outflows from operating activities of $22.1 million during the quarter, prompting management to evaluate its capital expenditures and operational costs to ensure compliance with financial covenants.

Looking ahead, Westrock Coffee anticipates that cash from operations and available borrowings will be sufficient to fund its growth strategies. However, the company acknowledges the potential impact of rising commodity prices and market conditions on its liquidity and operational flexibility. Management remains committed to monitoring these factors closely and may adjust its strategies accordingly to maintain financial stability and achieve its long-term objectives.