Annual Report for Fiscal Year Ending 12-31, 2024 (Form 10-K)

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. The purpose of this Item 7 is to focus on material information relevant to an assessment of our financial condition and results of operations that is not otherwise apparent from the consolidated financial statements and footnotes. This discussion should be read in conjunction with the disclosure regarding "Forward-Looking Statements" as well as the risks discussed under Part I, Item 1A "Risk Factors", and our consolidated financial statements and notes thereto included under Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

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.

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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. These four tenets comprise the backbone of our platform and position us as a leading provider of value-added beverage solutions. By partnering with Westrock, our customers also benefit from the benchmark-setting responsible sourcing policies and strong Environmental, Social, and Governance focus surrounding our products, top tier consumer insights, and a differentiated product ideation process. Leading brands choose us because we are singularly positioned to meet their needs, while simultaneously driving a new standard for sustainably and responsibly sourced products.

We operate our business in two 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. 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. Currently, we serve customers in the United States, Europe, and Asia through the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG and hospitality industries.

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 relate to the physical delivery and settlement of forward sales contracts for green coffee.

Key Business Metrics

We use Consolidated Adjusted EBITDA to evaluate our performance, identify trends, formulate financial projections, and to make strategic decisions.

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"). 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. 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. 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). 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.

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. 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.

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	​

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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.

Significant Developments

Convertible Notes Offering

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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"). The Convertible Notes are unsecured and senior obligations of the Company and accrue interest at a rate of 5.00% per annum.

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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. (a holder of more than 5% of the outstanding Common Shares), HF Direct Investments Pool, LLC (a holder of more than 10% of the outstanding Common Shares), an affiliate of the Herbert Hunt family and an individual investor. 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. See Note 12 to our Consolidated Financial Statements for additional discussion related to the Convertible Notes offering.

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Credit Agreement Amendments

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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. 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. 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. 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 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. 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. 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.

On January 15, 2025, the Company, entered into an Incremental Assumption Agreement and Amendment No. 4 (the "Fourth Amendment") to the Credit Agreement.

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The Fourth Amendment expanded the syndicate to include member banks from the Farm Credit System and increased the amount of revolving facility commitments (the "Existing Revolving Facility Commitments", and any loans thereunder, the "Existing Revolving Loans") available to the Borrower under the Credit Agreement by $25.0 million (the "Incremental Revolving Facility Commitments" and any loans thereunder, the "Incremental Revolving Loans"). The amount of revolving facility commitments available to the Borrower under the Credit Agreement, as amended, is $200.0 million. The Incremental Revolving Facility Commitments and the Incremental Revolving Loans are subject to the same interest rates, commitment fees, maturity dates and other terms as the Existing Revolving Facility Commitments and the Existing Revolving Loans.

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The proceeds from any Incremental Revolving Loans will be used by the Company to fund the previously announced installation of a second ready-to-drink can line at the Company's extract and ready-to-drink manufacturing facility in Conway, Arkansas, and for general corporate purposes.

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The Fourth Amendment also modified the secured net leverage ratio that the Company must comply with during the Covenant Relief Period to increase the maximum secured net leverage ratio to (a) 6.00x for the test period ending June 30, 2025, (b) 5.50x for the test period ending September 30, 2025, and (c) 5.25x for the test period ending December 31, 2025. In addition, the minimum liquidity covenant will not apply after the Covenant Relief Period ends. As of the date of this Annual Report on Form 10-K, the Company was in compliance with its financial covenants.

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Equity Distribution Agreement

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On March 15, 2024, the Company entered into an Equity Distribution Agreement (the "Equity Distribution Agreement") with Wells Fargo Securities, LLC and Truist Securities, Inc. (the "Agents"), pursuant to which the Company may from time to time offer and sell Common Shares not to exceed 5,000,000 Common Shares in the aggregate (the "Placement Securities") through the Agents as part of an "at the market" offering program (the "ATM Program").

The offer and sale of the Placement Securities will be made pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-274827) that was declared effective by the SEC on November 17, 2023, and a related prospectus supplement, which the Company filed with the SEC on March 15, 2024.

The Company is not obligated to sell any Placement Securities pursuant to the Equity Distribution Agreement. Subject to the terms and conditions of the Equity Distribution Agreement, the Agents have agreed to use commercially reasonable efforts, consistent with their normal trading and sales practices, to sell Placement Securities from time to time in accordance with the Company's placement notice, including any price, time or size limits or other customary parameters or conditions the Company may deem appropriate.

Under the Equity Distribution Agreement and subject to the terms of the placement notice delivered by the Company, an Agent may sell Placement Securities by (x) any method permitted by law and deemed to be an "at-the-market offering" as defined in Rule 415 of the Securities Act and the rules and regulations thereunder, including, without limitation, sales made directly on the Nasdaq Global Select Market at market prices prevailing at the time of sale or at prices related to prevailing market prices, on any other existing trading market for the Common Shares or to or through a market maker, and (y) any other method permitted by law, including but not limited to in privately negotiated transactions. Subject to the terms and conditions of the Equity Distribution Agreement, the Company may also from time to time sell Placement Securities to an Agent as principal.

The Equity Distribution Agreement may be terminated for any reason, at any time by either the Company or any of the Agents upon ten days' prior written notice to the other parties, or by the Agents at any time in certain circumstances, including the occurrence of a material adverse change in the Company. In addition, the Equity Distribution Agreement will automatically terminate upon the earlier of (1) two years from the date of the Equity Distribution Agreement and (2) the issuance and sale of all of the Placement Securities through the Agents.

The Company will pay each Agent a commission of 1.5% of the gross proceeds from the sales of Common Shares sold by such Agent pursuant to the Equity Distribution Agreement. The Company has agreed to provide the Agents with customary indemnification and contribution rights. The Company has agreed to pay certain specified expenses incurred by the Agents in connection with the offering. The Equity Distribution Agreement contains customary representations and warranties and conditions to the placements of the Placement Securities pursuant thereto.

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During the year ended December 31, 2024, the Company sold 60,000 Common Shares under the ATM Program, resulting in net proceeds of $0.6 million. This program is intended to provide additional financial flexibility and an alternative mechanism to access the capital markets at an efficient cost as and when we need financing, including for acquisitions.

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Restructuring Activities

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During the second quarter of 2024, the Company committed to a plan to consolidate its manufacturing operations in its Beverage Solutions segment, which resulted in the closure and sale of its West Winds manufacturing facility in Concord, North Carolina, and the closure of its manufacturing facility in Richmond, California. All production from the impacted facilities was consolidated into other facilities operated by the Company in Concord, North Carolina and Conway, Arkansas.

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The closure of the West Winds facility was completed as of June 30, 2024, and the Company completed the sale of the associated land and buildings during the fourth quarter of 2024, recognizing a $3.4 million gain, which is recorded in (gain) loss on disposal of property, plant and equipment in the Consolidated Statements of Operations. Production in our Richmond, California facility ceased during the third quarter of 2024. During the year ended December 31, 2024, the Company recognized $5.6 million and $0.1 million of impairment charges on property, plant and equipment and intangible assets, respectively, as a result of the consolidation of manufacturing facilities, which are recorded in impairment charges in the Consolidated Statements of Operations. The Company estimates total charges related to the plant consolidations of approximately $4.0 million, of which $3.1 million have been incurred during the year ended December 31, 2024. These charges primarily relate to costs to remove and re-install production equipment into other manufacturing facilities.

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In addition, during the second quarter of 2024, the Company committed to targeted restructuring activities to improve operational efficiency by reducing excess workforce capacity. As a result of this reduction, and the impacts of the consolidation of manufacturing facilities noted above, the Company recognized approximately $4.7 million of one-time employee severance costs during the year ended December 31, 2024, which are recorded in transaction, restructuring and integration expense in the Consolidated Statements of Operations. At December 31, 2024, approximately $0.6 million of such termination benefits were accrued for within accrued expenses and other current liabilities in the Consolidated Balance Sheets. See Note 3 to our Consolidated Financial Statements for additional discussion related to the restructuring activities.

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Falcon Credit Agreement Amendment

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On August 21, 2024, Falcon Coffees Limited, a wholly owned subsidiary of the Company, amended its working capital trade finance facility. The amendment increased the facility size from $55.0 million to $75.0 million. The interest rates and maturity date were unchanged as a result of the amendment. See Note 12 to our Consolidated Financial Statements for additional discussion related to the working capital trade finance facility.

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On March 7, 2025, Falcon renewed its working capital trade finance facility with multiple institutions. 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. 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%).

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Warrant Exchange

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On August 28, 2024, the Company announced that it had commenced an exchange offer (the "Offer") and consent solicitation (the "Consent Solicitation") relating to its outstanding (i) public warrants to purchase Common Shares, which warrants trade on The Nasdaq Global Market (the "Nasdaq") under the symbol "WESTW" (the "Westrock Public Warrants"), and (ii) private placement warrants to purchase Common Shares (the "Westrock Private Warrants" and, together with the Westrock Public Warrants, the "Westrock Warrants"). The Company offered to all holders of the Westrock Warrants the opportunity to receive 0.290 Common Shares in exchange for each of the Westrock Warrants tendered pursuant to the Offer. Concurrently with the Offer, the Company also solicited consents from the holders of each of the Westrock Public Warrants and the Westrock Private Warrants to amend that certain Warrant Agreement, dated as of August 25, 2022, by and between the Company and Computershare Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., a federally chartered trust company, as warrant agent (the "Warrant Agent"), which governs all of the Warrants (the "Warrant Agreement"), to permit the Company to require that (x) each Westrock Public Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 Common Shares, which is a ratio 10% less than the exchange ratio applicable to the Offer and (y) each Westrock Private Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 Common Shares, which is a ratio 10% less than the exchange ratio applicable to the Offer (such amendment, the "Warrant Amendment").

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The Offer and Consent Solicitation expired on September 26, 2024 (the "Expiration Date"). As of the Expiration Date, (x) 16,676,541 outstanding Westrock Public Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing approximately 97.42% of the Westrock Public Warrants and (y) 2,026,046 outstanding Westrock Private Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing 100% of the Westrock Private Warrants. On September 30, 2024, the Company issued 5,423,681 Common Shares in exchange for the tendered Westrock Warrants.

In addition, pursuant to the Consent Solicitation, the Company received the approval of holders of approximately 97.42% of the outstanding Westrock Public Warrants and 100% of the outstanding Westrock Private Warrants to adopt the Warrant Amendment, which exceeded (x) the 50% threshold of the outstanding Westrock Public Warrants required

to amend the Warrant Agreement with respect to the Westrock Public Warrants and (y) the 50% threshold of the outstanding Westrock Private Warrants required to amend the Warrant Agreement with respect to the Westrock Private Warrants. Accordingly, the Company and the Warrant Agent entered into the Warrant Amendment, dated September 30, 2024. On September 30, 2024, the Company announced that it would exercise its right, in accordance with the terms of the Warrant Amendment, to exchange each Westrock Public Warrant that is outstanding following the closing of the Offer for 0.261 Common Shares per warrant (the "Post-Offer Exchange"). In lieu of issuing fractional shares, any holder of warrants who would otherwise have been entitled to receive fractional shares, after aggregating all such fractional shares of such holder, was paid in cash (without interest) in an amount equal to such fractional part of a share multiplied by $6.74. The Company fixed the date for the Post-Offer Exchange as October 15, 2024. On October 16, 2024, the Company issued 115,220 Common Shares for the untendered Westrock Public Warrants. Following the completion of the Offer and Post-Offer Exchange, no Westrock Warrants remain outstanding. Accordingly, the Westrock Public Warrants were suspended from trading on Nasdaq as of the close of business on October 15, 2024, and were delisted.

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Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

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
(Dollars in Thousands)	​	December 31, 2024		​	Revenues		​	December 31, 2023		​	Revenues
Net Sales	​	$	850,726	​	100.0	%	​	$	864,714	​	100.0	%
Costs of sales	​		696,952		81.9	%	​		724,856		83.8	%
Gross profit	​		153,774		18.1	%	​		139,858		16.2	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Selling, general and administrative expense	​		185,137		21.8	%	​		144,577		16.7	%
Transaction, restructuring and integration expense	​		13,797		1.6	%	​		14,557		1.7	%
Impairment charges	​	​	5,686		0.7	%	​		-		0.0	%
(Gain) loss on disposal of property, plant and equipment	​		(1,722)		(0.2)	%	​		1,153		0.1	%
Total operating expenses	​		202,898		23.8	%	​		160,287		18.5	%
Loss from operations	​		(49,124)		(5.8)	%	​		(20,429)		(2.4)	%
​	​	​	​	​	​	​	​	​	​	​	​	​
Other (income) expense	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	33,856	​	4.0	%	​	​	29,157	​	3.4	%
Change in fair value of warrant liabilities	​		(7,015)		(0.8)	%	​		(10,207)		(1.2)	%
Other, net	​		413		0.0	%	​		1,446		0.2	%
Loss before income taxes and equity in earnings from unconsolidated entities	​		(76,378)		(9.0)	%	​		(40,825)		(4.7)	%
Income tax expense (benefit)	​		3,728		0.4	%	​		(6,358)		(0.7)	%
Equity in (earnings) loss from unconsolidated entities	​	​	192		0.0	%	​		100		0.0	%
Net loss	​	$	(80,298)		(9.4)	%	​	$	(34,567)		(4.0)	%
Net income (loss) attributable to non-controlling interest	​		-		0.0	%	​		15		0.0	%
Net loss attributable to shareholders	​		(80,298)		(9.4)	%	​		(34,582)		(4.0)	%
Accretion of Series A Convertible Preferred Shares	​	​	349	​	0.0	%	​	​	(161)	​	(0.0)	%
Net loss attributable to common shareholders	​	$	(79,949)		(9.4)	%	​	$	(34,743)		(4.0)	%

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Net Sales

​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Thousands)		2024			2023
Beverage Solutions	​	$	659,383	​	$	722,865
Sustainable Sourcing & Traceability(1)	​		191,343	​		141,849
Total net sales	​	$	850,726	​	$	864,714

(1)	Net of intersegment revenues.

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 decrease was primarily due to a $79.4 million decrease in the sale of coffee and tea products, driven by a 16.4% decrease in single serve cup volumes and a 13.2% decrease in roast and ground coffee volumes, partially offset by a $13.8 million increase in the sale of flavors, extracts and ingredients products, driven by a 24.1% increase in flavors, extracts and ingredients volumes.

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.

Costs of Sales

​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Thousands)		2024			2023
Beverage Solutions	​	$	527,432	​	$	596,966
Sustainable Sourcing & Traceability	​		169,520	​		127,890
Total costs of sales	​	$	696,952	​	$	724,856

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In our Beverage Solutions segment, costs of sales decreased $69.5 million or 11.6% to $527.4 million for the year ended December 31, 2024, from $597.0 million for the year ended December 31, 2023. 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.

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. Costs of sales for the year ended December 31, 2024 included $4.8 million of net unrealized gains on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory compared to $0.1 million of net unrealized gains on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory for the year ended December 31, 2023.

Selling, General and Administrative Expense

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​	​	2024				​	2023
​		​	​		% of Segment		​	​		% of Segment
(Dollars in Thousands)	​	Amount		​	Revenues	​	Amount		​	Revenues
Beverage Solutions	​	$	173,879		26.4	%	$	134,542		18.6	%
Sustainable Sourcing & Traceability	​		11,258		5.9	%		10,035		7.1	%
Total selling, general and administrative expense	​	$	185,137		21.8	%	$	144,577		16.7	%

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Total selling, general and administrative expense in our Beverage Solutions segment increased $39.3 million to $173.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase is primarily due to a $30.6 million increase in expenses associated with our extract and ready-to-drink facility in Conway, Arkansas and a $6.7 million increase in personnel-related costs. 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.

Transaction, Restructuring and Integration Expense

Transaction, restructuring and integration expense for the year ended December 31, 2024 were $13.8 million, approximately $4.7 million of which related to severance and other employee termination and benefit costs associated with the elimination of various positions as part of cost reduction objectives, $3.1 million of which related to plant closure costs, $2.4 million of which related to the establishment of our at-the-market common stock offering program and $1.6 million of which related to professional and legal costs associated with the Westrock Warrant exchange. During the year ended December 31, 2023, we incurred $14.6 million of transaction, restructuring and integration expenses, $10.5 million of which related to the costs associated with the integration of our new enterprise resource-planning system, including internal and external costs related to go-live system support and duplicative systems costs and $2.5 million of non-capitalizable costs associated with acquisitions and registration statements.

Interest Expense

​	​	​	​	​	​	​
​	​	Year Ended December 31,
(Thousands)		2024			2023
Interest expense		​			​
Cash:		​			​
Term loan and delayed draw term loan facilities	​	$	18,674	​	$	13,334
Revolving credit facility	​	​	6,442	​	​	5,221
Convertible notes payable	​	​	978	​	​	-
Convertible notes payable - related party	​	​	2,222	​	​	-
Supply chain finance program	​	​	7,023	​	​	2,965
International trade finance lines	​		4,939	​		4,537
International notes payable	​		826	​		273
Other	​		1,260	​		2,475
Total cash interest	​		42,364	​		28,805
Non-cash:	​			​
Amortization of deferred financing costs	​		3,224	​		3,517
Capitalized interest	​	​	(11,732)	​	​	(3,165)
Total non-cash interest	​		(8,508)	​		352
Total interest expense	​	$	33,856	​	$	29,157

​

Interest expense for the year ended December 31, 2024 was $33.9 million compared to $29.2 million for the year ended December 31, 2023. Cash interest increased $13.6 million and is attributable to increased interest associated with our term loan and delayed draw term loan facilities, primarily due to higher outstanding borrowings, $3.2 million of interest on our Convertible Notes that were issued in February of 2024, and $4.1 million of increased interest expense associated with our supply chain financing program, due to increased average borrowings outstanding in 2024 compared to 2023. 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.

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. The change in fair value of warrant liabilities for the year ended December 31,

2024 resulted in recognition of $7.0 million of gains compared to recognition of $10.2 million of gains during the year ended December 31, 2023.

Income Tax Expense (Benefit)

Income tax expense for the year ended December 31, 2024 was $3.7 million, resulting in an effective tax rate of (4.9%). 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%. Our 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.

​

​

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)	%

​

​

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 intersegment revenues.

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%. The increase was primarily due to a $49.9 million increase in the sale of flavors, extracts and ingredients products, driven by a 16.0% increase in flavors, extracts and ingredients volumes, partially offset by a $10.4 million decrease in the sale of coffee and tea products, driven by a 9.0% decrease in roast and ground coffee volumes and a 5.6% decrease in tea volumes. Single serve cup volumes increased 2.7% during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Net Sales from our SS&T segment totaled $141.8 million, net of intersegment revenues, during the year ended December 31, 2023, decreasing 22.3% compared to $182.6 million, net of intersegment revenues, during the year ended December 31, 2022. The decrease is driven by a 20.6% decrease in sales volume, as a result of a decrease in customer demand.

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. The increase in costs of sales was primarily driven by an increase in costs related to the acquisition of Kohana, increases in materials costs and an increase in flavors, extracts and ingredients volumes for the year ended December 31, 2023 compared to the year ended December 31, 2022.

In our SS&T segment, costs of sales decreased $42.6 million to $127.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. This decrease is primarily due to a 20.6% decrease in green coffee sales volume. 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.

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. The increase is primarily due to an $11.7 million increase in expenses associated with the start-up of our extract and ready-to-drink facility in Conway, Arkansas and a $6.1 million increase in equity-based compensation costs, partially offset by a $3.3 million decrease in management and consulting fees associated with the S&D Coffee, Inc. acquisition, 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 were relatively unchanged compared to the year ended December 31, 2022.

Transaction, Restructuring and Integration Expense

​

Transaction, restructuring and integration expense for the year ended December 31, 2023 were $14.6 million, $10.5 million of which related to the costs associated with the integration of our new enterprise resource-planning system, including internal and external costs related to go-live system support and duplicative systems costs and $2.5 million of non-capitalizable costs associated with acquisitions and registration statements. During the year ended December 31, 2022, we incurred $13.2 million of transaction, restructuring and integration expenses, $5.3 million of which related to the integration of the acquired S&D business onto our enterprise resource planning system and $5.6 million of which related to public-company preparedness costs.

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. The decrease is primarily due to $4.3 million of unamortized deferred financing costs associated with the termination of the prior term loan facility and prior ABL facility, and $1.6 million of early termination payments associated with the prior term loan facility that were incurred during the year ended December 31, 2022. No such costs were incurred during the year ended December 31, 2023. This decrease was partially offset by $5.2 million in interest on the outstanding revolving credit facility and $3.0 million in interest on our supply chain finance program borrowings for the year ended December 31, 2023 compared to no such interest during the year ended December 31, 2022. 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.

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. The change in fair value of warrant liabilities for the year ended December 31, 2023 resulted in recognition of $10.2 million of gains compared to recognition of $29.7 million of losses during the year ended December 31, 2022.

Income Tax Expense (Benefit)

Income tax benefit for the year ended December 31, 2023 was $6.4 million, resulting in an effective tax rate of 15.6%. Our 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.

​

Income tax expense for the year ended December 31, 2022 was $0.1 million, resulting in an effective tax rate of (0.2%). 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. Our significant accounting policies are discussed in Note 3 to the Consolidated Financial Statements. Certain accounting estimates involve a significant level of estimation and uncertainty and require management to make difficult, subjective or complex judgments about matters that are uncertain and have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Because of the uncertainty involved in these estimates, materially different amounts could be reported under different conditions or using different assumptions.

We make certain judgments and use certain estimates and assumptions when applying accounting principles in the preparation of our financial statements. The nature of those estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. We have identified the following critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.

We believe the current assumptions and other considerations used to estimate amounts reflected in our financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in our financial statements, the resulting changes could have a material adverse effect on our results of operations and, in certain situations, could have a material adverse effect on our financial condition.

Revenue from Contracts with Customers (ASC 606)

We measure revenue based on the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. Our principal source of revenue is from the procurement, trade, manufacture, and distribution of coffee, tea and extracts to customers in the United States, Europe, and Asia.

The transaction price of a contract, net of discounts and expected returns, is allocated to each distinct performance obligation based on the relative standalone selling price of the obligation and is recognized as revenue when the performance obligation is satisfied. 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.

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. 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. 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. 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. 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.

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"). 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. 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. Prior to settlement, these forward sales contracts are recognized at fair value with the unrealized gains or losses recorded within costs of sales in our Consolidated Statements of Operations.

Goodwill and Indefinite Lived Intangible Assets

Goodwill represents the excess purchase price of acquired businesses over the fair value of the net assets acquired. Goodwill is reviewed for impairment at least annually. In accordance with ASC 350, Intangibles - Goodwill and Other, ("ASC 350"),we evaluate goodwill for impairment between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. 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. Unless circumstances otherwise dictate, the annual impairment test is performed as of October 1.

We first evaluate impairment of goodwill by assessing qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount (the "Step Zero" analysis). If the Step Zero analysis indicates that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, we will perform a quantitative assessment of goodwill impairment.

Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and circumstances affecting the reporting unit. If we choose to perform a qualitative assessment, and after consideration of all relevant factors and circumstances we determine that it is more likely than not that a reporting unit's fair value is less than its carrying value, we would perform a quantitative fair value test.

When performing a quantitative assessment, we estimate the fair value of our reporting unit using a combination of an income approach based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses and acquisition multiples paid in recent transactions. 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. 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.

Fair value determinations of the business require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for the purposes of a quantitative goodwill impairment test proves to be an accurate prediction of future results. Key assumptions include our expected revenue growth rates, operating profits, levels of capital expenditures, and cost of capital. In determining these assumptions, we considered our ability to execute on our plans, future economic conditions, interest rates, and other market data. Many factors are outside the control of management, and these assumptions and estimates may change in future periods. Small changes in these assumptions or estimates could materially affect our cash flow projections; and therefore, could affect the likelihood and amount of potential impairment in future periods. Accordingly, if our current cash flow assumptions are not realized, it is possible that an impairment charge may be recorded in the future.

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.

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%. Subsequent to that evaluation, we have noted no events or circumstances that would indicate that it is more likely than not that the carrying value of our goodwill reporting units exceed their fair value.

The conclusions reached as a result of our qualitative assessment are highly subjective. If our conclusions are proven to be incorrect, we may be required to perform a quantitative goodwill analysis in the future, and there can be no assurances that such analysis would not result in an impairment loss.

Intangible Assets

​

Finite-lived intangible assets are tested for impairment with the applicable asset group and evaluated for impairment along with property, plant and equipment in accordance with ASC 360, Property, Plant and Equipment. Impairment testing is required when events or changes in circumstances exist that indicate that an asset may not be recoverable. An asset is tested for recoverability by comparing the net carrying value of the asset to the entity-specific, undiscounted net cash flows to be generated from the use and eventual disposition of that asset group. If the carrying amount of an asset group is not recoverable, an impairment loss is recognized in the amount of the excess of the carrying value of the asset group over its fair value. Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach.

​

Estimating cash flows for the purposes of the recoverability test is subjective and requires significant judgment and is sensitive to changes in the underlying assumptions, such as estimates regarding revenue growth rates, cost structure, economic and market trends and cash flows expected to result in the disposition of the asset group. As a result, there can be no assurance that the estimates and assumptions made for the purpose of the recoverability test prove to be an accurate prediction of future results. Accordingly, if our current estimates of undiscounted cash flows are not realized, it is possible that an impairment charge may be recorded in the future.

​

Income Taxes

We are subject to federal, state, local and foreign tax laws. We utilize the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based upon the difference between the values of the assets and liabilities as reflected in the financial statements and their related tax bases using enacted tax rates in effect for the year or years in which the differences are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Company's foreign subsidiaries file income tax returns and are subject to tax provisions in their respective foreign tax jurisdictions.

A valuation allowance is established to reduce deferred income tax assets if, on the basis of available evidence, it is not more likely than not that all or a portion of any deferred tax assets will be realized. The consideration of available evidence requires significant management judgment including an assessment of the future periods in which the deferred tax assets and liabilities are expected to be realized and projections of future taxable income. Specifically, in assessing the need for a valuation allowance, we consider the reversal of taxable temporary differences, future taxable income, the ability to carryback certain attributes and tax-planning strategies. The ultimate realization of the deferred tax assets, including net operating losses, is dependent upon the generation of future taxable income during the periods prior to their expiration. If our estimates and assumptions about future taxable income are not appropriate, the value of our deferred tax assets may not be recoverable, which may result in an increase to our valuation allowance that will impact current earnings. We re-evaluate our need for a valuation allowance on a quarterly basis.

Tax laws are complex and subject to different interpretation by the taxpayer and the relevant government taxing authorities. In the normal course of business, we are routinely subjected to examinations and audits from federal, state and local taxing authorities regarding tax positions taken by us and the determination of the amount of tax due. Challenges made by taxing authorities may result in adjustments to the amount of taxes due and may result in the imposition of penalties and interest. If any such challenges are not resolved in our favor, they could have a material adverse effect on our financial condition, results of operations and liquidity.

Business Combinations

We record business combinations using the acquisition method of accounting. All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. Any excess of the purchase price over the fair value of the net tangible and intangible assets acquired is recorded as goodwill.

The application of the acquisition method of accounting for business combinations requires management to make significant estimates and assumptions in determination of the fair value of assets acquired and liabilities assumed. The fair value of the acquired assets and liabilities are estimated using the income, market and/or cost valuation approach. The income approach utilizes the present value of estimated future cash flows that a business or asset can be expected to generate, while under the market approach, the fair value of an asset or business reflects the price at which comparable assets are purchased under similar circumstances. Inherent in our preparation of cash flow projections are significant assumptions and estimates derived from a review of operating results, business plans, expected growth rates, capital expenditure plans, cost of capital and tax rates. We also make certain forecasts about future economic conditions, interest rates and other market data. Many of the factors used in assessing fair value are outside the control of management. Small changes in these assumptions or estimates could materially affect the estimated fair value. Additional information, which existed as of the acquisition date but unknown to the Company at that time, may become known during the remainder of the measurement period, a period not to exceed twelve months from the acquisition date. Adjustments in the purchase price allocation may require a recasting of the amounts allocated to goodwill and intangible assets. If such an adjustment is required, the Company will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment, including the effect on earnings of any amounts it would have recorded in previous periods if the accounting had been completed at the acquisition date.

If actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the consolidated financial statements may be exposed to potential impairment of the intangible assets and goodwill, as discussed in the Goodwill and Indefinite Lived Intangible Assets section above.

Green Coffee Inventories

Green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, within our SS&T segment, consistent with our forward purchase contracts recorded at fair value in accordance with ASC 815. Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs, and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of cost of sales in our Consolidated Statements of Operations. 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.

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. Accordingly, we classified the warrants as liabilities at their fair value and adjusted the warrants to fair value at each reporting period, with changes in fair value being recognized in our Consolidated Statements of Operations.

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. 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. 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. 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. 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.

Green coffee, which is our primary raw material, is an exchange traded agricultural commodity that is subject to price fluctuations, the reasons for which are outside of the control of the Company. During the year ended December 31, 2024, the exchange traded "C" market price of 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. This increase impacts the entire coffee supply chain, as exporters, traders, suppliers, and roasters require increased working capital to fund rising green coffee costs, and without having access to sufficient working capital, supply chain disruptions may emerge. 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. A prolonged increase in "C" market prices may require us to evaluate our allocation of working capital, and if we are not able to effectively manage our working capital, or do not have access to sufficient working capital to meet our

purchasing needs for green coffee, other commodity inputs, ingredients or supplies (such as materials used in our packaging), we may need to access the debt or equity capital markets, and there is no assurance that we will be able to do so on terms that are favorable to the Company or at all. In addition, we may be required 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.

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. 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. The Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will mature on August 29, 2027. 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. At December 31, 2024, the interest rate applicable to our Term Loan Facility was 8.2% and the interest rate applicable to our Delayed Draw Term Loan Facility was 9.2%.

​

On February 15, 2024, the Borrower entered into Amendment No. 3 (the "Third Amendment") to the Credit Agreement. 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. 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).

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. 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. 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. Failure to comply with these covenants or make payments when due could result in an event of default, which, if not cured or waived, could accelerate our repayment obligations under the Credit Agreement and could result in a default and acceleration under other agreements containing cross-default provisions. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations.

​

The Company believes that its secured net leverage under the Credit Agreement is important to the understanding of the Company's financial condition and liquidity. At December 31, 2024, the Company's secured net leverage ratio was 4.71:1.00, compared to a maximum allowable ratio of 6.00:1.00, with such calculation set forth below:

​

​	​	​	​	​
​	​	​	​
(Thousands, except leverage ratio)			Trailing Twelve-Months
Beverage Solutions Segment Adjusted EBITDA	​	​	$	53,639
Permissible credit agreement adjustments1	​	​	​	9,126
Trailing Twelve-Months Credit Agreement Adjusted EBITDA	​	​	$	62,765
​	​	​	​	​
End of period:	​	​	​	​
Term loan facility	​	​	$	155,313
Delayed draw term loan facility	​	​	​	48,125
Revolving credit facility	​	​	​	112,500
Letters of credit outstanding	​	​	​	2,560
Secured debt	​	​	​	318,498
Beverage Solutions unrestricted cash and cash equivalents	​	​	​	(22,917)
Secured net debt	​	​	$	295,581
​	​	​	​	​
Beverage Solutions Credit Agreement secured net leverage ratio	​	​	​	4.71x

​

1 - Primarily consists of $6.6 million of pro forma run-rate impact of cost savings initiatives enacted during the second quarter of 2024, as permitted by the Credit Agreement.

​

The Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments totaling approximately $2.8 million (1.25% of the original principal balance). Quarterly payments increase to approximately $4.2 million and $5.6 million (1.875% and 2.5% of the original principal balance) during the final two years of the agreements, respectively.

​

We incurred a total of $2.4 million in financing fees in connection with the Third Amendment. Approximately $1.3 million of the fees were allocated to the Term Loan Facility and are being amortized over the remaining term of the Term Loan Facility utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility. Approximately $1.0 million of the fees were allocated to the Revolving Credit Facility, are reported within other long-term assets on the Consolidated Balance Sheets and are being amortized ratably over the remaining term of the Revolving Credit Facility.

​

On January 15, 2025, the Company, entered into an Incremental Assumption Agreement and Amendment No. 4 (the "Fourth Amendment") to the Credit Agreement. The Fourth Amendment expanded the syndicate to include member banks from the Farm Credit System and increased the amount of revolving facility commitments (the "Existing Revolving Facility Commitments", and any loans thereunder, the "Existing Revolving Loans") available to the Borrower under the Credit Agreement by $25.0 million (the "Incremental Revolving Facility Commitments" and any loans thereunder, the "Incremental Revolving Loans"). The amount of revolving facility commitments available to the Borrower under the Credit Agreement, as amended, is $200.0 million. The Incremental Revolving Facility Commitments and the Incremental Revolving Loans are subject to the same interest rates, commitment fees, maturity dates and other terms as the Existing Revolving Facility Commitments and the Existing Revolving Loans. The proceeds from any Incremental Revolving Loans will be used by the Company to fund the previously announced installation of a second

ready-to-drink can line at the Company's extract and ready-to-drink manufacturing facility in Conway, Arkansas, and for general corporate purposes.

​

The Fourth Amendment also modified the secured net leverage ratio that the Company must comply with during the Covenant Relief Period to increase the maximum secured net leverage ratio to (a) 6.00x for the test period ending June 30, 2025, (b) 5.50x for the test period ending September 30, 2025, and (c) 5.25x for the test period ending December 31, 2025. In addition, the minimum liquidity covenant will not apply after the Covenant Relief Period ends. As of the date of this Annual Report on Form 10-K, the Company was in compliance with its financial covenants.

​

Convertible Notes

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"), of which $50.0 million was from related parties. 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 December 31, 2024, the carrying value of the Convertible Notes was $71.6 million, of which $49.7 million was from related parties. We incurred a total of $0.5 million of financing fees in connection with the Convertible Notes, which were ratably allocated to the convertible notes payable and the convertible notes payable - related party, respectively, and are being amortized into interest expense over the remaining term of the Convertible Notes utilizing the effective interest rate method.

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 Company will settle conversions by paying or delivering, as applicable, at the Company's election, cash, Common Shares, or a combination of cash and Common Shares. The Company may not issue more than 19.99% of the issued and outstanding Common Shares immediately prior to the issuance of the Convertible Notes in respect of the conversion of the Convertible Notes. The initial conversion price of the Convertible Notes is $12.84, which corresponds to an initial conversion rate of approximately 77.88 Common Shares per $1,000 principal amount of Convertible Notes. The conversion price and conversion rate are subject to customary adjustments.

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. 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. 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. 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%). On August 21, 2024, Falcon amended its working capital trade finance facility, increasing the facility size from $55.0 million to $75.0 million. The interest rates and maturity date were unchanged as a result of the amendment. 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. Falcon was in compliance with these financial covenants as of December 31, 2024.

​

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. The facility will mature on December 31, 2026, and requires stepped repayments of $0.5 million on December 31, 2024, $1.0 million on December 31, 2025 and $3.5 million on December 31, 2026. Borrowings under the facility will bear interest at the borrower's option at a rate equal to (a) (i) the most recent applicable Term SOFR for the longest period (for which Term SOFR is available) which is less than the applicable interest period of the loan or (ii) if no such Term SOFR is available for a period which is less than the applicable interest period, SOFR for the day which is two U.S. 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. 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.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. 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. 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%).

​

Westrock Coffee International, LLC, through its subsidiary Rwanda Trading Company, maintains two mortgage and inventory-backed lending facilities with a local bank in Rwanda: (a) a short-term trade finance facility with a balance of $4.0 million at December 31, 2024 and (b) a long-term note payable with a balance of $0.6 million at December 31, 2024, of which $0.4 million is reported in current maturities of long-term debt on the Consolidated Balance Sheets.

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. Under the Program, the financing provider remits payment to the Company's suppliers for approved invoices, and the Company repays the financing provider the amount of the approved invoices, plus a financing charge, on 180-day terms. The Program is uncommitted and the financing provider may, at its sole discretion, cancel the Program at any time. The Company may request cancellation of the Program in whole or in respect of one or more approved suppliers. Due to the extension of payment terms beyond the original due date of approved invoices, obligations under the Program are recorded outside of accounts payable, within our supply chain finance program, on our Consolidated Balance Sheets. As of December 31, 2024, there were $78.8 million obligations outstanding under the Program.

At-the-Market Common Stock Offering Program

We have an effective shelf registration statement on file with the SEC (the "Registration Statement") to offer and sell various securities from time to time. Under the Registration Statement, we have established an at-the-market common

stock offering program (the "ATM Program") to sell shares of common stock not to exceed 5,000,000 Common Shares in the aggregate. During the year ended December 31, 2024, the Company sold 60,000 Common Shares under the ATM Program, resulting in net proceeds of $0.6 million. This program is intended to provide additional financial flexibility and an alternative mechanism to access the capital markets at an efficient cost as and when we need financing, including for acquisitions.

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. 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. During the second and fourth quarters of 2024, we commenced commercial production in portions of the facility. We are continuing to build out the remaining portions of the facility and 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 an additional approximately $20.0 million in 2025 to install a second ready-to-drink can line in the Conway facility, which we expect to place into commercial production in the second half of 2025.

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. However, the Company will continuously evaluate its liquidity needs, and may seek to opportunistically access additional liquidity, including through either the debt or equity capital markets. 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. 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 Westrock was required by the holders to redeem a significant number of Series A Preferred Shares, Westrock may not have enough cash available (including through draws on its credit facility) for other purposes such as paying dividends on the Common Shares, repurchases of Common Shares, financing acquisitions or other expansions, paying employee incentives and executing its business strategy. An outflow of a significant amount of cash from Westrock as a result of redemptions of the Series A Preferred Shares may cause a deterioration in the financial condition of Westrock and our ability to pay our other obligations and/or execute our business strategy. The impact of such redemptions on Westrock will depend, among other things, on the financial condition of Westrock at the time of such redemptions, including the amount of available cash on hand and ability to draw on Westrock's credit facilities or obtain other sources of financing, the business strategies and objectives of Westrock at that time and the magnitude of such redemptions. 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.

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. 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. We have no other material obligations to pay principal amounts of our long-term debt obligations prior to their maturity.

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.

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.

We define growth capital expenditures as investments in our manufacturing facilities that will contribute to revenue growth by increasing production capacity, improving production efficiencies, or related to production of new products. Maintenance capital expenditures are those necessary to keep our existing manufacturing equipment fully operational. Customer beverage equipment represents Company-owned equipment that is deployed in our customers' locations.

Capital expenditures for the years ended December 31, 2024, 2023 and 2022 were as follows:

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​

​

​

​

​

​

​

​

​

​

​

​

​

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​

​

​

​

​

Customer

​

​

​

​

​

​

​

​

​

​

​

​

Beverage

​

​

​

​

​

​

(Thousands)

​

Growth

​

Maintenance

​

Equipment

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Other

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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.

If circumstances warrant, we may need to take measures to conserve cash, which may include a suspension, delay, or reduction in growth and/or maintenance capital expenditures. We continually assess our capital expenditure plans in light of developments impacting our business, including the needs of our customers.

Off-Balance Sheet Arrangements

As of the date of this Annual Report on Form 10-K, we do not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

See Note 3, Summary of Significant Accounting Policies, to the Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of certain recent accounting pronouncements.

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