Westrock Coffee Company Common Stock 2026 Q2 Earnings Call

Welcome to Westrock Coffee Company's second quarter 2026 earnings conference call. Today's call is being recorded. With us are Mr. Scott Ford, Co-founder and Chief Executive Officer, and Mr. Chris Pledger, Chief Financial Officer. By now, everyone should have access to the company's second quarter earnings release issued earlier today. This information is available on the investor relations section of Westrock Coffee Company's website at investors.westrockcoffee.com. Certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Discussions during this call will use some non-GAAP financial measures as we describe business performance. The SEC filings as well as the earnings press release provide reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, it is my pleasure to turn the call over to Scott Ford, our Co-founder and Chief Executive Officer.

Thank you, Juan. Good afternoon, everyone. Thanks for joining us. I'm pleased to report that the second quarter of 2026 was another strong quarter across every part of our business. It was our fifth consecutive quarter of year-over-year consolidated adjusted EBITDA growth. We turned free cash flow positive ahead of our anticipated schedule. We ended the first half of the year almost 10% ahead of our internal EBITDA plan. The platform we spent the last three years building no longer requires capital. Rather, it is a generator of cash. Second quarter consolidated adjusted EBITDA was $21.3 million, a second quarter record, and up nearly 39% year-over-year. Through the first six months, consolidated adjusted EBITDA of $47.3 million was more than twice the first half of 2025.

Our credit agreement secured net leverage ratio improved to 3.36 times, our fifth consecutive quarter of sequential deleveraging. Significantly, we were free cash flow positive both for the quarter and on a year-to-date basis. Commercially, our momentum continues to build. Second quarter Beverage Solutions net sales grew nearly 17% year-over-year, led by the continued volume growth of our RTD can, glass, and multi-serve bottle formats in Conway, and driven by increasing volumes from both existing and new brand partners across the portfolio, from packaged coffee and single-serve cups to coffee RTD beverages. We have a pipeline of new products in queue, from refreshers, energy, and high-protein drinks to functional and nutraceutical single-serve cups. Our customer and sales pipeline has never been more robust, and the fact that our recently expanded manufacturing capacity is now fully operational continues to shorten our sales cycle with brand partners.

Further, our recent market wins enable us to forecast revenue and profit growth that builds materially over the next several quarters without the need for additional CapEx or new sales wins. Prime examples of which are recent incremental can format volume wins from both historic and new customers in our Conway facility. This facility will be an increasingly meaningful contributor to segment profitability through the balance of this year and into next. Turning to single-serve cups, our volumes were up over 9% year-over-year, excluding the volumes lost to a customer that departed us through industry acquisition and consolidation. New customer inbound interest remains strong. We continue to expect new volumes to begin arriving in late 2026, with full replacement targeted by the end of 2027. Our work with Palantir is increasingly showing up in how we run the business day to day.

Foundry's AI is now driving real-time analysis across our manufacturing, logistics, and planning systems, giving our teams live visibility into performance as it happens rather than after the fact. This is structural, not cosmetic. We are not bolting AI onto a beverage company. Instead, we are running this platform on an AI-native operating core, and the operating leverage it creates is only beginning to show up in our results. With the first half behind us, we are reaffirming our 2026 consolidated adjusted EBITDA outlook of $90 million to $100 million, while acknowledging that both of our first two quarters came in ahead of our internal plan. We feel quite optimistic about the back half of the year. Our sales and operational momentum is continuing to build. Our story this quarter is a simple one.

We have become a cash-generating platform, executing at pace, with a strong team again delivering record results. We are growing sales, expanding EBITDA, de-leveraging the balance sheet, and now generating free cash flow. That is the business model working exactly as promised. I want to thank our entire team, from the folks on the plant floors in North Carolina, Arkansas, and Malaysia, to our sourcing and logistics offices around the world, to our systems and corporate teams, and to our shareholders, whose conviction and steadfast partnership through our expansive build-out phase made this quarter's milestone earnings and free cash flow generation possible. With that, I'll turn it over to Chris Pledger, our CFO, for the financial details.

Chris? Thank you, Scott, good afternoon, everyone.

Our second quarter results reflect continued momentum across our platform. Consolidated net sales were approximately $306 million, up 8.8% versus the second quarter of 2025, led by Beverage Solutions, where net sales grew nearly 17% versus the same period. Through six months, consolidated net sales were approximately $614 million, up 24% versus the first half of last year. Consolidated gross profit was $37.7 million in the second quarter, down $3.6 million compared to the prior year. This was due to $4.1 million of incremental depreciation and amortization expense associated with placing assets into service at the Conway facility and a $2 million negative impact year-over-year from non-cash mark-to-market adjustments in our SS&T segment. Through the first half of 2026, consolidated gross profit was $83.5 million, up 19% over the first half of 2025.

Our operating loss for the quarter narrowed to $1.4 million from $15 million a year ago. Through the first half of 2026, we are operating income positive compared to a $28 million operating loss in the first half of 2025. As with last quarter, our reported net loss of $13.7 million narrowed significantly from the $21.6 million net loss incurred in the second quarter of 2025. Consolidated adjusted EBITDA was $21.3 million, which reflects a record second quarter result for Westrock, increasing almost 40% compared to the consolidated adjusted EBITDA generated in the second quarter of 2025. In Beverage Solutions, second quarter segment adjusted EBITDA was $22.2 million, up 13% versus the same period of 2025.

Growth was driven by the continued ramp of our RTD canned, glass, and multi-serve bottle formats in Conway, new customer wins in our flavors, extracts, and ingredients business, including the launch of a lemonade refreshers program, and improved fixed cost absorption across our manufacturing footprint. Once you exclude volumes from the customer that departed following an industry acquisition, single-serve cup volumes grew 9% across both existing and new brand partners, consistent with the recovery trajectory we outlined earlier this year. Our SS&T segment delivered segment adjusted EBITDA of $2 million in the second quarter, compared to $3.3 million in the second quarter of 2025. On a year-to-date basis, SS&T segment adjusted EBITDA was $8.4 million, up more than 60% versus the $5.2 million generated in the first half of 2025. The variance between quarters is simply a function of shipment timing.

SS&T continues to be a strategic capability for the platform. Capital expenditures for the quarter were approximately $6.5 million, compared to over $20.5 million in the second quarter of 2025. We're on pace for estimated capital expenditures in 2026 of approximately $30 million, down from the $160 million in 2024 and the $89 million in 2025, which again represents a structural shift in the capital profile of this company. As previously announced on June 30th, we extended the maturity of the vast majority of our Beverage Solutions credit facility to November 2028 and elected to terminate our covenant relief period ahead of schedule, which lowers our borrowing cost. That extension reflects the underlying momentum of the platform and gives us meaningful financial flexibility now that Conway is fully commercialized.

At quarter end, we had approximately $73 million of unrestricted cash and revolver availability under our Beverage Solutions credit facility, we remain fully in compliance with our credit agreement. We ended the second quarter with Beverage Solutions credit agreement secured net leverage of 3.36 times, de-leveraging slightly from the first quarter. Finally, in the second quarter, Westrock Coffee generated $20.2 million in free cash flow and is now free cash flow positive for the first half of the year. We told you to expect this inflection in the second half of 2026, we got there a quarter early. Our second quarter results again demonstrate the earnings power of a platform that is not just built, performing. Five consecutive quarters of year-over-year consolidated adjusted EBITDA growth, five consecutive quarters of sequential de-leveraging, now turning free cash flow positive a quarter ahead of schedule.