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Item 8. Financial Statements and Supplementary Data

2024-03-15 compared with 2023-03-21 · 435 added, 402 removed, 886 unchanged (49% of the section changed)

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Consolidated Statements of Operations – Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Loss – Years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Shareholders’ Equity (Defecit) - Years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Shareholders’ Equity (Deficit) - Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows - Years ended December 31, 2023, 2022 and 2021

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Westrock Coffee Company and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of comprehensive loss, of shareholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule listed in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Westrock Coffee Company and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15 (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Changes in Accounting Principles

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2022 and the manner in which it accounts for goodwill in 2020.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2022.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Intangible assets, net

Operating lease right-of-use assets

Other long-term assets

LIABILITIES, CONVERTIBLE PREFERRED SHARES, REDEEMABLE UNITS, AND SHAREHOLDERS' EQUITY (DEFICIT)

LIABILITIES, CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt

Short-term debt

Short-term related party debt

Accounts payable

Supply chain finance program

Derivative liabilities

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Long-term debt, net

Subordinated related party debt

Deferred income taxes

Operating lease liabilities

Warrant liabilities

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Commitments and contingencies (Note 21)

Series A Convertible Preferred Shares, $ 0.01 par value, 24,000 shares authorized, 23,588 shares issued and outstanding , $ 11.50 liquidation value

Series A Redeemable Common Equivalent Preferred Units:

$ 0.00 par value, 222,150 units authorized, no units and 222,150 units issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Series B Redeemable Common Equivalent Preferred Units:

$ 0.00 par value, 17,000 units authorized, no units and 17,000 units issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Shareholders' Equity (Deficit) (1)

Series A Convertible Preferred Shares, $ 0.01 par value, 24,000 shares authorized, 23,512 shares and 23,588 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively, $ 11.50 liquidation value

Shareholders' Equity

Preferred stock, $ 0.01 par value, 26,000 shares authorized, no shares issued and outstanding

Common stock, $ 0.01 par value, 300,000 shares authorized, 75,020 shares issued and outstanding at December 31, 2022;

$ 0.00 par value, 39,389 shares authorized, 34,523 shares issued and outstanding at December 31, 2021

Common stock, $ 0.01 par value, 300,000 shares authorized, 88,051 shares and 75,020 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

Additional paid-in-capital

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Accumulated other comprehensive income (loss)

Total shareholders' equity (deficit) attributable to Westrock Coffee Company

Noncontrolling interest

Total shareholders' equity (deficit)

Total Liabilities, Convertible Preferred Shares, Redeemable Units and Shareholders' Equity (Deficit)

(1) Retroactively adjusted for de-SPAC merger transaction as described in Note 4.

Total shareholders' equity attributable to Westrock Coffee Company

Non-controlling interest

Total shareholders' equity

Total Liabilities, Convertible Preferred Shares and Shareholders' Equity

See accompanying notes to the consolidated financial statements.

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Selling, general and administrative expense

Acquisition, restructuring and integration expense

Impairment charges

Transaction, restructuring and integration expense

Loss on disposal of property, plant and equipment

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Change in fair value of warrant liabilities

Loss before income taxes

Loss before income taxes and equity in earnings from unconsolidated entities

Income tax expense (benefit)

Net (loss) income attributable to non-controlling interest

Equity in (earnings) loss from unconsolidated entities

Net income (loss) attributable to non-controlling interest

Net loss attributable to shareholders

Accretion of convertible preferred stock

Accretion of Series A Convertible Preferred Shares

Loss on extinguishment of Redeemable Common Equivalent Preferred Units, net

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WESTROCK COFFEE COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Year Ended December 31,

Other comprehensive income (loss), net of tax:

Unrealized (loss) gain on derivative instruments

Unrealized gain (loss) on derivative instruments

Foreign currency translation adjustment

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Comprehensive loss attributable to shareholders

Accretion of convertible preferred stock

Accretion of Series A Convertible Preferred Shares

Loss on extinguishment of Redeemable Common Equivalent Preferred Units, net

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Non-Controlling

Total Shareholders'

Paid-in Capital

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Balance at December 31, 2020

Change in accounting principle

Net income (loss)

Other comprehensive income

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Accumulating preferred dividends

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Net income (loss)

Other comprehensive income

Issuance of common shares upon closing of de-SPAC merger transaction, net of issuance costs, net of $ 3,178 of taxes

Issuance of common shares related to PIPE financing

Issuance of common shares related to conversion of debt to equity

Issuance of common shares related to conversion of Common Equivalent Preferred Units

Issuance of common shares related to Public Warrant exercise

Issuance of common shares related to stock options exercised

Issuance of common shares related to acquisitions

Common Equivalent Preferred Unit dividends ($ 0.02 per unit)

Loss on extinguishment of Common Equivalent Preferred units

Accretion of Series A Convertible Preferred Shares

Other comprehensive income (loss)

Equity-based compensation

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Non-Controlling

Total Shareholders'

Paid-in Capital

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Net income (loss)

Issuance of common shares upon closing of de-SPAC merger transaction, net of issuance costs, net of $ 3,178 of taxes (see Note 4)

Issuance of common shares related to PIPE financing

Issuance of common shares related to conversion of debt to equity (see Note 12)

Issuance of common shares related to conversion of Common Equivalent Preferred Units (see Note 4)

Issuance of common shares related to acquisitions

Issuance of common shares related to Public Warrant exercise

Issuance of common shares related to stock options exercised

Issuance of common shares related to Kohana acquisition (see Note 6)

Common Equivalent Preferred Unit dividends ($ 0.02 per unit)

Loss on extinguishment of Common Equivalent Preferred units

Accretion of convertible preferred stock

Other comprehensive loss

Issuance of common shares related to conversion of Series A Convertible Preferred Shares

Issuance of common shares related to purchase of non-controlling interest

Issuance of common shares, net of issuance costs

Accretion of Series A Convertible Preferred Shares

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Accumulating preferred dividends

Balance at December 31, 2023

(1) Retroactively adjusted for de-SPAC merger transaction as described in Note 4.

See accompanying notes to the consolidated financial statements.

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Depreciation and amortization

Impairment charges

Equity-based compensation

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Amortization of deferred financing fees included in interest expense

Inventory write-offs

Write-off of unamortized deferred financing fees

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Foreign currency transactions

Deferred income tax (benefit) expense

Deferred income tax benefit

Change in operating assets and liabilities:

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Acquisition of business, net of cash acquired

Acquisition of equity method investments and non-marketable securities

Proceeds from sale of property, plant and equipment

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Proceeds from debt

Payments on supply chain financing program

Proceeds from supply chain financing program

Proceeds from related party debt

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Payment of common equity issuance costs

Proceeds from common equity issuance

Payment of preferred equity issuance costs

Principal payments on capital leases

Net proceeds from repurchase agreements

Common equivalent preferred dividends

Payment of taxes for net share settlement of equity awards

Net proceeds from (repayments of) repurchase agreements

Proceeds from exercise of stock options

Proceeds from exercise of Public Warrants

Common equivalent preferred dividends

Payment for purchase of non-controlling interest

Payment for taxes for net share settlement of equity awards

Proceeds from the issuance of common equivalent preferred units

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Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents and restricted cash

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

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Related party debt exchanged for common shares

Acquisition of Kohana through issuance of common stock

Loss on extinguishment of Common Equivalent Preferred Units

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See accompanying notes to the consolidated financial statements.

WESTROCK COFFEE COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organization and Description of Business

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.

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, non-commercial account, consumer packaged goods (“CPG”), and hospitality industries around the world.

We manage our business in two operating segments.

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Revenues primarily consist of sales from commodity contracts related to forward sales of green coffee.

The Company operates eight manufacturing facilities, three of which are located in Concord, North Carolina, two in North Little Rock, Arkansas, one in Richmond, California, one in Kigali, Rwanda, and one in Johor Bahru, Malaysia.

The Company operates three manufacturing facilities in Concord, North Carolina, one in North Little Rock, Arkansas, one in Richmond, California, one in Kigali, Rwanda, and one in Johor Bahru, Malaysia.

The Company is currently completing the build out of its Conway, Arkansas facility, which is expected to begin commercial production in 2024.

On August 26, 2022, pursuant to the terms of the Transaction Agreement, dated April 4, 2022, by and among the Company, Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation (“Riverview”), Origin Merger Sub I, Inc.

On August 26, 2022 (the “Closing Date”), pursuant to the terms of the Transaction Agreement, dated April 4, 2022, by and among the Company, Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation ( “ Riverview ” ), Origin Merger Sub I, Inc.

( “ Merger Sub I ” ), and Origin Merger Sub II, LLC ( “ Merger Sub II ” ) (as amended, modified or supplemented, the “ Transaction Agreement ” ), the Company completed its de-SPAC merger transaction with Riverview (the “ Transaction ” ).

In connection with the closing of the Transaction (the “Closing”), the Company converted from a Delaware limited liability company to a Delaware corporation (the “Conversion”) and changed its corporate name from “Westrock Coffee Holdings, LLC” (the “Converting Company”) to “Westrock Coffee Company.” Pursuant to the Transaction Agreement, Merger Sub I merged with and into Riverview, with Riverview surviving the merger as a direct wholly owned subsidiary of Westrock (such merger, the “SPAC Merger”) and immediately following the consummation of the SPAC Merger, Riverview merged with and into Merger Sub II, with Merger Sub II surviving the merger as a direct wholly owned subsidiary of Westrock (the “LLC Merger”, and together with the SPAC Merger, the “Mergers”).

” Pursuant to the Transaction Agreement, Merger Sub I merged with and into Riverview, with Riverview surviving the merger as a direct wholly owned subsidiary of the Company (such merger, the “ SPAC Merger ” ) and immediately following the consummation of the SPAC Merger, Riverview merged with and into Merger Sub II, with Merger Sub II surviving the merger as a direct wholly owned subsidiary of the Company (the “ LLC Merger ” , and together with the SPAC Merger, the “ Mergers ” ).

See Note 4 for additional disclosures related to the Transaction .

On June 29, 2023, the Company entered into a subscription agreement (the “Subscription Agreement”) with HF Direct Investments Pool, LLC (the “HF Investor”), an affiliate of HF Capital, LLC, pursuant to which the Company agreed to sell and issue to the HF Investor and the HF Investor agreed to purchase from the Company 5,000,000 shares (the “HF Subscription Amount”) of common stock, par value $ 0.01 per share, of the Company (the “Common Shares”) at a purchase price per share of $ 10.00 for aggregate gross proceeds to the Company of $ 50.0 million (such transaction, the “HF Investment”).

On August 3, 2023, the HF Investment closed after the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Additionally, on June 29, 2023 and July 18, 2023, the Company entered into definitive agreements with an affiliate of the Herbert Hunt family (the “Hunt Investor”) and the Arkansas Teacher Retirement System (the “ARTRS” and together with the Hunt Investor, the “Investors”), respectively, pursuant to which the Company agreed to sell and issue to the Investors and the Investors agreed to purchase from the Company a total of 5,000,000 Common Shares of the Company

at a purchase price per share of $ 10.00 for aggregate gross proceeds to the Company of $ 50.0 million (such transactions the “PIPE Investments”).

On August 3, 2023, the Company closed on the PIPE Investments.

On July 24, 2023, affiliates of Brown Brothers Harriman & Co.

(the “BBH Investors”) exercised preemptive rights (the “BBH Preemptive Rights”) to purchase approximately 1.9 million Common Shares at a purchase price per share of $ 10.00 , under the terms of that certain Investor Rights Agreement, dated April 4, 2022, by and among the Company, the BBH Investors, and the other parties thereto.

On August 7, 2023, the Company sold and issued the Common Shares to the BBH Investors, receiving aggregate gross proceeds of approximately $ 18.8 million.

Basis of Presentation and Consolidation

The Consolidated Financial Statements include the activities of the Company and its wholly owned and/or controlled subsidiaries.

All intercompany balances and transactions have been eliminated.

The Company has an 85 % ownership interest in Falcon Coffees Limited, which operates our trading business and is reported within our Sustainable Sourcing & Traceability segment.

Equity interests not owned by us are reflected as non-controlling interests.

In the Consolidated Statements of Operations, we allocate net income (loss) attributable to non-controlling interest to arrive at net income (loss) attributable to common shareholders based on their proportionate share.

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.

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dollar as the reporting currency.

The Consolidated Financial Statements include the activities of the Company and its wholly owned and/or controlled subsidiaries.

All intercompany balances and transactions have been eliminated.

On April 3, 2023, the Company purchased the remaining 15 % of the equity interests of Falcon Coffees Limited (“Falcon”) that it did not previously own, resulting in Falcon becoming a wholly owned subsidiary of the Company.

Aggregate consideration paid for the interest totaled $ 3.2 million and included $ 2.0 million in cash and 100,000 shares of Common Shares.

Due to the Company’s controlling financial interest in Falcon prior to the purchase, the transaction was accounted for as an equity transaction.

For periods prior to April 3, 2023, equity interests not owned by us are reflected as non-controlling interests.

Falcon operates our trading business and is reported within our Sustainable Sourcing & Traceability segment.

Common Unit Conversion

In connection with the Transaction and pursuant to the Transaction Agreement, (a) each issued and outstanding common unit of the Converting Company (“Common Units”) was automatically converted into 0.1049203474320 shares of common stock, par value $ 0.01 per share, of the Converted Company (each such share, a “Common Share”), (b) each issued and outstanding common equivalent preferred unit of the Converting Company (the “Common Equivalent Preferred Units”) for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock, par value $ 0.01 per share, of the Converted Company (the “Series A Preferred Shares”), automatically converted into 0.1086138208640 Common Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Common Equivalent Preferred Unit for which the holder thereof had made an election to convert such unit into Series A Preferred Shares, converted into 0.1086138208740 Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

In connection with the Transaction and pursuant to the Transaction Agreement, (a) each issued and outstanding common unit of the Converting Company (“Common Units”) was automatically converted into 0.1049203474320 Common Shares, (b) each issued and outstanding common equivalent preferred unit of the Converting Company (the “Common Equivalent Preferred Units”) for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock, par value $ 0.01 per share, of the Company (the “Westrock Series A Preferred Shares”), automatically converted into 0.1086138208640 Common Shares if such Common Equivalent Preferred Unit was designated a Westrock Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Common Equivalent Preferred Unit for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

For the periods prior to the Closing, the number of outstanding units, weighted average number of outstanding units, loss per common unit, equity-based compensation and other financial amounts previously expressed on the basis of Common Units have been retroactively adjusted on the basis of Common Shares reflecting the common unit conversion ratio, as described above.

Reclassifications

Certain reclassifications of prior years’ amounts have been made to conform with the current period financial statements presentation.

These reclassifications had no impact on prior years’ net income as previously reported.

Summary of Significant Accounting Policies

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GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurements, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, warrant liabilities, share-based compensation, contingencies, and income taxes, among others.

We base our estimates on historical experience, current and expected macroeconomic conditions such as inflation, consumer spending trends and interest rates, and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgements about the carrying values of assets and liabilities.

On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurement, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, warrant liabilities, share-based compensation, contingencies, and income taxes, among others.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements.

Going Concern

In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within one year after the date that the financial statements are available to be issued.

The Company is dependent on borrowings under its Credit Agreement (Note 12) and cash generated from operations to finance its operations, service its debt requirements, maintain compliance with its covenants, and to fund capital requirements.

The Company believes that its projected cash flow from operations and available borrowings under our Credit Agreement will be sufficient to fund operations for at least the next twelve months.

During the year ended December 31, 2022, we were impacted by the negative effects of inflation on both our customer volume demand and manufacturing costs, including price increases in fuel, food, materials and labor.

We attempt to mitigate the impacts of inflation wherever possible.

Our mitigation strategies include working with our vendors and suppliers to ensure that we have adequate access to raw materials.

In addition, where possible, we seek to recover inflation-impacted costs by passing these costs onto our customers through periodic pricing increases.

However, our pricing increases often lag our cost increases, including increases in commodity costs.

The persistence of these negative effects on our business could adversely impact our ability to reach our revenue and other financial targets.

If we are unable to meet our financial targets and generate sufficient cash flows from

operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants.

As management’s ability to amend its financial covenants cannot be assured, management has committed to delay growth capital expenditures and/or reduce operating expenses, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants.

The Company is dependent on borrowings under its Credit Agreement and cash generated from operations to finance its operations, service its debt requirements, maintain compliance with its covenants, and to fund capital requirements.

The Company believes that proceeds from the equity issuance in August 2023 described in Note 1, the issuance of convertible notes described in Note 23, projected cash flow from operations and available borrowings under its Credit Agreement, as amended, as described in Note 23, will be sufficient to fund operations for at least the next twelve months.

However, during the years ended December 31, 2023, 2022 and 2021, we incurred net losses of $ 34.6 million, $ 55.5 million and $ 21.3 million, respectively, and if we are unable to meet our financial targets and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants.

During the years ended December 31, 2023 and 2022, net cash used in operating activities was $ 64.1 million and $ 56.6 million, respectively, and during the year ended December 31, 2021, net cash provided by operating activities was $ 2.9 million.

As management’s ability to amend its financial covenants cannot be assured, management has committed to raise additional capital, delay growth capital expenditures and/or reduce operating expenses, including headcount, salary and/or bonus reductions, all of which are in the Company’s control, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants.

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

Change in Accounting Principle

In 2021, the Company elected to change its accounting principle for goodwill by unwinding its previous election of applying the private company alternative accounting for the subsequent measurement of goodwill and apply Accounting Standards Codification (“ASC”) 350-20, Intangibles — Goodwill and Other .

The private company alternative permits companies to amortize goodwill and to test goodwill for an impairment at an enterprise level.

The Company applied ASC 350 retrospectively beginning January 1, 2020, which resulted in the Company unwinding the accumulated amortization of goodwill recognized through January 1, 2020 of $ 6.6 million.

Accordingly, this change resulted in an increase in goodwill and a decrease in accumulated deficit of $ 6.6 million as of January 1, 2020.

The impact to the Consolidated Statement of Operations for the year ended December 31, 2020 was the reversal of $ 14.6 million of

Goodwill amortization previously recognized in selling, general and administrative expenses and the recognition of a

goodwill impairment charge of $ 76.9 million, the net of which resulted in a $ 62.2 million and $ 63.2 million increase to loss before income taxes and net loss, respectively.

Cash and Cash Equivalents

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Charged to selling, general and administrative expense

Inventories are stated at the lower of cost, determined on the first-in, first-out method (“FIFO”), or net realizable value.

Inventories are stated at the lower of cost, determined on the average cost method, or net realizable value.

Finished goods and work-in-process include the inventory costs of raw materials, direct labor and manufacturing overhead costs.

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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 costs of sales in our Consolidated Statements of Operations.

For the years ended December 31, 2022, 2021 and 2020, we recognized $ 12.3 million of net unrealized losses, $ 8.4 million of net unrealized gains and $ 2.0 million of net unrealized losses, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

For the years ended December 31, 2023, 2022 and 2021, we recognized $ 4.2 million of net unrealized gains, $ 12.3 million of net unrealized losses and $ 8.4 million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

Property, Plant and Equipment

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Gains and losses on disposals of assets are presented separately in our Consolidated Statements of Operations as part of operating expenses.

For the year ended December 31, 2020, we recognized a loss on disposal of property, plant and equipment of $ 5.8 million related to equipment associated with the acquired S&D Coffee, Inc.

(“S&D”) Direct-Store-Delivery business, as described in Intangible Assets below.

Capitalized Interest

We capitalize a portion of interest costs incurred related to assets that require a period of time to get them ready for their intended use.

The amount of interest capitalized is based on eligible expenditures incurred during the period involved in bringing the assets to their intended use and the Company’s weighted-average interest rate during the period.

For the year ended December 31, 2023, we capitalized approximately $ 3.2 million of interest costs.

No such interest was capitalized during the year ended December 31, 2022.

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.

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.

Amounts paid by the financing provider to suppliers are reported as cash inflows from financing activities and a corresponding cash outflow from operating activities in our Consolidated Statements of Cash Flows.

Amounts paid to the financing provider are reflected as cash outflows from financing activities in our Consolidated Statements of Cash Flows.

As of December 31, 2023, there were $ 78.1 million obligations outstanding under the Program.

There were no such obligations outstanding as of December 31, 2022.

December 31, 2023

Confirmed obligations outstanding at the beginning of the year

Invoices confirmed during the year

Confirmed invoices paid during the year

Confirmed obligations outstanding at the end of the year

Goodwill and Indefinite Lived Intangible Assets

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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 acquisitions 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.

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.

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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 prove to be an accurate prediction of future results.

As a result, there can be no assurance that the estimates and assumptions made for the purposes of a quantitative goodwill impairment test will prove to be an accurate prediction of future results.

Key assumptions include our expected revenue growth rates, operating profits, levels of capital expenditures, and costs of capital.

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During the fourth quarter of 2023, the Company completed a qualitative analysis to evaluate impairment of goodwill and concluded that it was more likely than not that the fair value of our goodwill reporting unit exceeded the carrying amount.

We reached this conclusion based on the valuation of our recently completed de-SPAC merger transaction, industry tailwinds, and in consideration of the significant excess fair value over carrying value of the prior year quantitative goodwill impairment evaluation.

As a result, the Company concluded that no impairment existed in the year ending December 31, 2023.

During the year ended December 31, 2020, due to the negative economic impacts that COVID-19 had on our business, we determined it was more-likely-than-not that the estimated fair value of our goodwill reporting units was less than its carrying value.

Accordingly, we performed a quantitative assessment to determine whether a goodwill impairment existed during the second quarter of 2020.

The discounted cash flow model reflects our assumptions regarding revenue growth rates, including estimated implications of COVID-19 to our revenues, cost structure, economic and market trends and other expectations around the anticipated operating results of our business.

We discounted the estimated cash flows for the entity using rates that represent a market participant’s weighted average cost of capital commensurate with the

underlying business operations.

The market approach develops an indication of fair value by calculating average market pricing multiples of revenues and EBITDA for selected peer publicly-traded companies, as well as multiples for relevant transactions that have taken place.

As a result of changes in consumer behaviors caused by mitigation strategies enacted to combat the spread of COVID-19, we experienced a decrease in the demand for our products, which resulted in an impairment charge of $ 76.9 million in our Beverage Solutions segment in the second quarter of 2020.

Following the acquisition of S&D, and due to the implications of COVID-19 and its related impacts to our distribution operations, we assessed the acquired S&D Direct-Store-Delivery (“DSD”) distribution business and determined to close the DSD distribution business in June 2020.

As a result of exiting the business and loss of projected revenues that supported the acquired S&D trademark, we fully impaired the associated acquired trademark and recorded a non-cash

impairment charge of $ 5.2 million for the year ended December 31, 2020, which is recognized in impairment charges in the Consolidated Statements of Operations.

We reached this conclusion based on consideration of the significant excess fair value over carrying value of previous quantitative goodwill impairment evaluations, the recently completed PIPE Investment and the Company’s current market capitalization.

Our previous quantitative goodwill analysis indicated that the estimated fair value of our reporting units exceeded their carrying values by over 50%.

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 reporting units exceed their fair value.

Impairment of Property, Plant and Equipment

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The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Consolidated Statements of Operations.

The Company remeasures the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants.

The Company re-measures the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants.

The Westrock Private Warrants (as defined in Note 4) are valued using a binomial lattice valuation model.

For the year ended December 31, 2022, the Company recognized $ 29.7 million of losses related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Consolidated Statements of Operations.

For the years ended December 31, 2023 and 2022, the Company recognized $ 10.2 million of gains and $ 29.7 million of losses, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Consolidated Statements of Operations.

Equity Method Investments

The equity method of accounting is used for investments in entities, partnerships and similar interests in which we have significant influence but do not control.

Under the equity method, we adjust our investment in unconsolidated entities for additional contributions made, distributions received and income or losses from our pro-rata share of these unconsolidated entities’ net income or loss.

At December 31, 2023, we had a $ 0.4 million investment in one unconsolidated entity, which is recorded in other long-term assets on the Consolidated Balance Sheets.

Equity Investments

The Company holds strategic investments in other companies.

These investments are accounted for under the measurement alternative described in ASC 321, Investments - Equity Securities (“ASC 321”) for equity investments that do not have readily determinable fair values.

These investments are measured at cost, less impairment, if any.

The Company does not exercise significant influence over these companies.

These investments are recorded in other long-term assets on the Consolidated Balance Sheets.

At December 31, 2023, the Company had equity investments with a carrying value of approximately $ 1.0 million, for which there is no readily determinable fair value.

Debt Issuance Costs

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Selling, General and Administrative Expense

We record all other expenses not charged to production as selling, general and administrative expense, except those meeting the definition of acquisition, restructuring and integration expenses.

We record all other expenses not charged to production as selling, general and administrative expense, except those meeting the definition of transaction, restructuring and integration expenses.

Advertising costs are expensed at the commencement of an advertising campaign and are recognized as a component of selling, general and administrative expense.

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Any excess of the purchase price over the fair value of the separately identifiable assets acquired and the liabilities assumed is allocated to goodwill.

The fair value

of the acquired assets and liabilities assumed are estimated using the income, market and/or cost approach.

The fair value of the acquired assets and liabilities assumed are estimated using the income, market and/or cost 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.

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The results of operations of businesses acquired are included in the Company’s Consolidated Financial Statements from their dates of acquisition.

Noncontrolling Interest

The Company has an 85 % ownership interest in Falcon Coffees Limited, which operates our trading business and is reported within our Sustainable Sourcing & Traceability segment.

Equity interests not owned by us are reflected as noncontrolling interests.

Acquisition, Restructuring and Integration Expense

The Company expenses non-capitalizable acquisition, restructuring and integration expenses in the period in which they are incurred and services are received.

Acquisition costs represent incremental transaction pursuit and unsuccessful pursuit costs, including professional services (legal, accounting, advisory, etc.), finder’s fees and other direct expenses associated with an acquisition.

Transaction, Restructuring and Integration Expense

The Company expenses non-capitalizable transaction, restructuring and integration expenses in the period in which they are incurred and services are received.

Transaction costs represent incremental transaction pursuit and unsuccessful pursuit costs, including professional services (legal, accounting, advisory, etc.), finder’s fees and other direct expenses associated with an acquisition or other capital markets transactions.

Restructuring and integration costs include direct costs related to restructuring activities, and costs necessary to integrate an acquired business, including professional services, systems and data conversions, severance and retention bonuses to employees of an acquired business.

Restructuring Plans

The Company accounts for exit or disposal of activities in accordance with ASC 420, Exit or Disposal Cost Obligations (“ASC 420”).

The Company defines a business restructuring as an exit or disposal activity that includes but is not limited to a program which is planned and controlled by management and materially changes either the scope of a business or the manner in which that business is conducted.

Business restructuring charges may include (i) one-time termination benefits related to employee separations, (ii) contract termination costs and (iii) other related costs associated with exit or disposal activities.

During the year ended December 31, 2020, as a result of the closure of the acquired DSD business, we recognized $ 13.9 million of pre-tax restructuring charges, consisting of $ 5.6 million of lease termination expenses and $ 8.3 million of employee termination costs, which are reported in acquisition, restructuring and integration expense in the Consolidated Financial Statements.

During the year ended December 31, 2021, the Company incurred $ 2.0 million of restructuring costs, which are recorded within acquisition, restructuring and integration expense on the Consolidated Statement of Operations.

As of December 31, 2022 and 2021, we had no on-going restructuring plans and no restructuring liabilities outstanding.

Recently adopted accounting pronouncements

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Variable lease payments associated with our leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs.

Variable lease payments are included in both costs of sales and selling, general and administrative expense in our Consolidated Statements of Operations.

Variable lease payments are included in both costs of sales and selling, general and administrative expenses in our Consolidated Statements of Operations.

We monitor for events or changes in circumstances that require a reassessment of a lease.

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Non-lease components primarily relate to maintenance services related to the leased asset.

Update ASU 2020-06 – Debt-Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

ASU 2020-06 (i) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt:

Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock;

(ii) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification;

and (iii) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method.

In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted.

We adopted ASU 2020-06 effective January 1, 2021.

Adoption of the new standard did not have a material impact on our Consolidated Financial Statements.

Recently issued accounting pronouncements

Update ASU 2021-08 – Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, instead of at fair value on the acquisition date as previously required by ASC 805.

The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for acquired revenue contracts and revenue contracts not acquired in a business combination.

The updated guidance is effective for public companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted.

The Company has not yet adopted ASU 2021-08;

however, we do not believe this standard will have a material impact on our Consolidated Financial Statements.

Update ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50):

ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations

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Disclosure of Supplier Finance Program Obligations”, which requires that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The Company will adopt applicable amendments within ASU 2022-04 on a retrospective basis beginning January 1, 2023.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted the applicable amendments within ASU 2022-04 on a retrospective basis effective January 1, 2023.

The amendments to ASU 2022-04 do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs.

ASU 2021-08 – Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, instead of at fair value on the acquisition date as previously required by ASC 805, Business Combinations (“ASC 805”).

ASU 2021-08 was effective for years beginning after December 15, 2022.

The adoption of ASU 2021-08 did not have a significant impact on the Company’s financial position or results of operations.

Recently issued accounting pronouncements

ASU 2023-07 – Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The amendments in the update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

ASU 2023-07 requires disclosure to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and a description of other segment items by reportable segment.

ASU 2023-07 also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

The amendments in the update are effective for fiscal years beginning after December 31, 2023, and interim periods within fiscal years beginning after December 31, 2024, with early adoption permitted.

The amendments in the update require retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact that ASU 2023-07 will have on our consolidated financial statements.

ASU 2023-09 – Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

The amendments in the update relate to the rate reconciliation and income taxes paid disclosure and are intended to improve transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the tax reconciliation and (2) income taxes paid disaggregated by jurisdiction.

The other amendments in the update are intended to improve comparability of disclosures by (1) adding disclosures of pretax income (or loss) and income tax expense (or benefit) and (2) removing disclosures that no longer are considered cost beneficial or relevant.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments in the update should be applied on a prospective basis, with retrospective application permitted.

The Company is currently evaluating the impact that ASU 2023-09 will have on our consolidated financial statements.

De-SPAC Merger Transaction

On August 26, 2022, the Company completed the Transaction with Riverview.

On the Closing Date, the Company completed the Transaction with Riverview.

At Closing, the Company issued 12,868,151 Common Shares to public and class B shareholders of Riverview, receiving $ 49.8 million of the cash held in the trust account of Riverview, which is net of $ 17.1 million of Riverview transaction expenses that were either paid by Riverview prior to Closing or offset against proceeds received by the Company at Closing.

The 12,868,151 shares issued at Closing include 1,910,000 shares issued to PIPE investors who elected to satisfy their PIPE commitments through the purchase of shares of Class A common stock of Riverview (“Riverview Class A Shares”) on the public market, pursuant to the terms of their respective subscription agreements.

Substantially concurrently with the Closing, the Company received $ 205.9 million in cash proceeds (which amount excludes contribution to the Company of certain related party notes as described in Note 12) from common stock PIPE investments (the “PIPE Financing”), issued 20,590,000 Common Shares to the PIPE investors (which share amount excludes the conversion of the related party notes as described in Note 12), and entered into a credit agreement that includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $ 175.0 million and (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $ 175.0 million.

See Note 12 for additional disclosures regarding the new credit agreement.

Prior to the Closing, the Company’s ownership interests consist of two classes of equity, referred to as Common Units and Common Equivalent Preferred Units (the “CEP Units”).

At inception, each CEP Unit has a liquidation preference of $ 1.00 per unit, increased by an amount accruing at the rate of 10 % per annum, compounding annually, based on its liquidation preference as of the time of such accrual, and reduced by the cumulative amount of any cash dividends or distributions, if any, made by the Company in respect of such CEP Unit (the “CEP Unit Liquidation Preference”).

During the years ended December 31, 2022, 2021 and 2020, the CEP Units accrued $ 13.9 million, $ 24.2 million and $ 18.5 million of liquidation preference, respectively.

Substantially concurrently with the Closing, the Company received $ 205.9 million in cash proceeds (which amount excludes contribution to the Company of certain related party notes outstanding immediately prior to Closing) from common stock PIPE investments, issued 20,590,000 Common Shares to the PIPE investors (which share amount excludes the conversion of the related party notes), and entered into a credit agreement that includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $ 175.0 million and (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $ 175.0 million.

Prior to the Closing, the Company’s ownership interests consist of two classes of equity, referred to as Common Units and Common Equivalent Preferred Units.

At inception, each Common Equivalent Preferred Unit has a liquidation preference of $ 1.00 per unit, increased by an amount accruing at the rate of 10 % per annum, compounding annually, based on its liquidation preference as of the time of such accrual, and reduced by the cumulative amount of any cash dividends or distributions, if any, made by the Company in respect of such Common Equivalent Preferred Unit.

During the years ended December 31, 2022 and 2021, the Common Equivalent Preferred Units accrued $ 13.9 million and $ 24.2 million of liquidation preference, respectively.

In connection with the Closing, holders of Common Equivalent Preferred Units were paid a cash dividend totaling $ 4.4 million, which is equal to the accreted liquidation preference of the Common Equivalent Preferred Units from June 30, 2022 through Closing.

Pursuant to the Transaction Agreement, (a) each issued and outstanding Common Unit converted into 0.1049203474320 Common Shares, (b) each issued and outstanding Common Equivalent Preferred Unit for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock of Westrock (the “Westrock Series A Preferred Shares”) (see Note 13), automatically converted into 0.1086138208640 Common Shares if such Westrock Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Westrock Preferred Unit, for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

As a result, we issued 34,855,535 Common Shares to holders of Common Units, 2,220,305 Common Shares to holders of Common Equivalent Preferred Units who elected to convert their Common Equivalent Preferred Units into Common Shares, and 23,587,952 Westrock Series A Preferred Shares to holders who elected to convert their Common Equivalent Preferred Units into Westrock Series A Preferred Shares.

The Company realized a net loss on extinguishment of the Common Equivalent Preferred Units of $ 2.9 million, including the payment of approximately $ 1.3 million of issuance costs, which have been recorded within accumulated deficit on our Consolidated Balance Sheets and adjusts earnings attributable to common shareholders in computing basic and diluted earnings per share.

as treasury stock, which were automatically cancelled and extinguished at Closing) were exchanged for one Common Share, (iii) each outstanding warrant to purchase Riverview Class A Shares (the “Riverview Warrants”) was, by its terms, automatically converted into a comparable warrant to purchase Common Shares (the “Westrock Warrants”) on the terms and subject to the conditions set forth in the warrant agreement for the Riverview Warrants and the amended and restated warrant agreement for the Westrock Warrants, (iv) each Riverview Share held immediately prior to Closing by Riverview as treasury stock was automatically canceled and extinguished and (v) each share of capital stock of Merger Sub I issued and outstanding immediately prior to Closing was automatically canceled and extinguished and converted into one share of common stock, par value $ 0.01 , of the surviving corporation in the SPAC Merger.

In connection with obtaining the approval of the Mergers by Riverview’s stockholders, Riverview provided an opportunity for its stockholders to redeem all or a portion of their outstanding Riverview Class A Shares.

The Transaction is a capital transaction in substance and not a business combination under ASC 805, Business Combinations (“ASC 805”) .

Pursuant to the Transaction Agreement, (a) each issued and outstanding Common Unit converted into 0.1049203474320 Common Shares, (b) each issued and outstanding Common Equivalent Preferred Unit for which the holder had not elected to convert such unit into shares of Westrock Series A Preferred Shares (see Note 13), automatically converted into 0.1086138208640 Common Shares if such Westrock Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Westrock Preferred Unit, for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

Preferred Units into Westrock Series A Preferred Shares.

During the year ended December 31, 2022, the Company realized a net loss on extinguishment of the Common Equivalent Preferred Units of $ 2.9 million, including the payment of approximately $ 1.3 million of issuance costs, which have been recorded within accumulated deficit on our Consolidated Balance Sheets and adjusts earnings attributable to common shareholders in computing basic and diluted earnings per share.

In addition, at Closing, (i) each outstanding share of class B common stock of Riverview (the “Riverview Class B Shares” together with the Riverview Class A Shares, the “Riverview Shares”) (other than the Riverview Class B Shares held as treasury stock, which were automatically cancelled and extinguished at Closing), automatically converted into one Riverview Class A Share, (ii) each outstanding Riverview Class A Share (including the Riverview Class A Shares resulting from the conversion of Riverview Class B Shares at Closing but excluding any Riverview Class A Shares held as treasury stock, which were automatically cancelled and extinguished at Closing) were exchanged for one Common Share, (iii) each outstanding warrant to purchase Riverview Class A Shares (the “Riverview Warrants”) was, by its terms, automatically converted into a comparable warrant to purchase Common Shares (the “Westrock Warrants”) on the terms and subject to the conditions set forth in the warrant agreement for the Riverview Warrants and the amended and restated warrant agreement for the Westrock Warrants, (iv) each Riverview Share held immediately prior to Closing by Riverview as treasury stock was automatically canceled and extinguished and (v) each share of capital stock of Merger Sub I issued and outstanding immediately prior to Closing was automatically canceled and extinguished and converted into one share of common stock, par value $ 0.01 , of the surviving corporation in the SPAC Merger.

In connection with obtaining the approval of the Mergers by Riverview’s shareholders, Riverview provided an opportunity for its shareholders to redeem all or a portion of their outstanding Riverview Class A Shares.

The Transaction is a capital transaction in substance and not a business combination under ASC 805.

As a result, Westrock is treated as the accounting acquirer and Riverview is treated as the acquired company for financial reporting purposes per ASC 805.

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The financial statements of the combined entity represent a continuation of the financial statements of Westrock, and the net assets of Riverview have been stated at historical cost, with no goodwill or other intangible assets recorded.

The equity and net loss per unit attributable to common equityholders of the Company, prior to the Closing, have been retroactively adjusted as shares reflecting the common unit conversion ratio discussed above.

The equity and net loss per unit attributable to common equity holders of the Company, prior to the Closing, have been retroactively adjusted as shares reflecting the common unit conversion ratio discussed above.

Proceeds from the Transaction and the $ 175.0 million term loan facility were used to pay off and terminate our then existing term loan and asset-based lending agreements, and to pay expenses related to the Transaction and the new credit agreement.

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The $ 17.1 million of expenses incurred by Riverview were either paid by Riverview prior to Closing or netted against proceeds received by the Company at Closing.

There were no deferred transaction costs recorded in the Consolidated Balance Sheets as of December 31, 2022.

Common Stock Warrants

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The Westrock Warrants are included in warrant liabilities on the Company’s Consolidated Balance Sheet.

The Westrock Warrants entitle the holder to purchase one share of Common Share at an exercise price of $ 11.50 per share.

The Westrock Warrants became exercisable for cash on December 21, 2022 upon the effectiveness of our Registration Statement on Form S-1 (File No.

333-267509) (“Warrant Registration Statement”) registering the Common Shares issuable upon the exercise of the Westrock Warrants.

The Westrock Warrants may only be exercised for a whole number of shares, and will expire on August 26, 2027 (i.e., five years following the Closing), or earlier upon redemption or liquidations.

The Westrock Warrants entitle the holder to purchase one Common Share at an exercise price of $ 11.50 per share.

The Westrock Warrants may only be exercised for a whole number of shares, and will expire on August 26, 2027 (i.e., five years following the Closing), or earlier upon redemption or liquidation.

Westrock may redeem the outstanding Westrock Public Warrants (i) in whole and not in part;

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and (iv) if, and only if, the reported last sale price of the Common Shares for any 20 trading days within a 30 -trading day period ending three business days before Westrock sends the notice of redemption to the warrant holders equals or exceeds $ 18.00 per share.

Westrock Warrants to exercise their Westrock Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, or another exemption.

Between November 25, 2022 and December 21, 2022, the effective date of the Warrant Registration Statement, 527,084 Westrock Public Warrants were exercised on a cashless basis, in accordance with the terms of the Westrock Warrants, resulting in the issuance of 94,453 Common Shares.

There were no other exercises of Warrants for the year ended December 31, 2022.

From December 31, 2022 through the date of these financial statements, Westrock has received $ 2.6 million in cash proceeds from the exercise of 228,796 Public Warrants, resulting in the issuance of 228,796 Common Shares.

The Westrock Private Warrants, which became transferable, assignable and salable on September 26, 2022 (i.e., 30 days after the Closing), are currently held by the Riverview Sponsor, and are generally identical to the Westrock Public Warrants, except they cannot be redeemable by Westrock so long as they are held by the Riverview Sponsor or its permitted transferees.

The Riverview Sponsor, or its permitted transferees, have the option to exercise the Westrock Private Warrants on a cashless basis.

If the Westrock Private Warrants are held by holders other than the Riverview Sponsor or its permitted transferees, the Westrock Private Warrants will become redeemable by Westrock and exercisable by the holders on the same basis as the Westrock Public Warrants.

During any period when Westrock fails to maintain an effective registration statement registering the Common Shares issuable upon the exercise of the Westrock Warrants, Westrock is required to permit holders of Westrock Warrants to exercise their Westrock Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, or another exemption.

If and when the Westrock Public Warrants become redeemable by Westrock, Westrock may exercise its redemption right even if Westrock is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The Westrock Private Warrants, which were initially held by Riverview Sponsor Partners, LLC (the “Riverview Sponsor”), are generally identical to the Westrock Public Warrants, except they cannot be redeemable by Westrock so long as they are held by the Riverview Sponsor or its permitted transferees.

Furthermore, the Riverview Sponsor, or its permitted transferees, have the option to exercise the Westrock Private Warrants on a cashless basis.

During the year ended December 31, 2023, the Riverview Sponsor transferred ownership of its Westrock Private Warrants.

At December 31, 2023, 2,026,046 warrants are held by permitted transferees and retain the rights of the Westrock Private Warrants described above, while 5,373,954 warrants are now redeemable by Westrock and exercisable by the holders on the same basis as the Westrock Public Warrants.

Revenue from Contracts with Customers (ASC 606)

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Such transactions are accounted for as financing transactions in accordance with ASC 606.

At December 31, 2022, the Company has $ 14.6 million of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

At December 31, 2023 and 2022, the Company has $ 8.3 million and $ 14.6 million, respectively, of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Net cash flows associated with these repurchase agreements are reported as financing activities in the Consolidated Statements of Cash Flows.

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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.

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.

Settlement generally occurs upon shipment or delivery of the product when title and risks and rewards of ownership transfer to the customer.

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

For the years ended December 31, 2022, 2021 and 2020, we recorded $ 8.8 million of net unrealized gains, $ 4.8 million of net unrealized losses and $ 2.2 million of net unrealized gains, respectively, within costs of sales.

For the years ended December 31, 2023, 2022 and 2021, we recorded $ 4.1 million of net unrealized losses, $ 8.8 million of net unrealized gains and $ 4.8 million of net unrealized losses, respectively, within costs of sales.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 141.0 million, $ 181.7 million and $ 145.6 million in revenues under ASC 815, respectively, and are reported within the Company’s Sustainable Sourcing & Traceability segment.

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Accrued sales incentives were $ 1.5 million at December 31, 2023 and $ 1.3 million at December 31, 2022.

Other accrued deductions were $ 2.7 million at December 31, 2023 and $ 1.4 million at December 31, 2022 and are included as a reduction to accounts receivable, net in the Consolidated Balance Sheets.

We do not disclose the value of unsatisfied performance obligations for contracts (i) with an original expected length of one year or less or (ii) for which the Company recognizes revenue at the amount in which it has the right to invoice as the product is delivered.

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Concentration of Customers

For the year ended December 31, 2023, one customer, who is represented in the Company’s Beverage Solutions segment, accounted for 10.4 %, or $ 90.0 million, of the Company’s consolidated net revenues.

For the years ended December 31, 2022 and 2021, no customers accounted for more than 10% of our consolidated net revenues.

For the year ended December 31, 2020, one customer, which is reported within our Beverage Solutions segment accounted for approximately 10% of our net revenue.

Disaggregated Revenue

In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of its products and customer relationships and provides meaningful disaggregation of each business segment’s results of operations.

Further disaggregation of revenues from sales to external customers by type and geographic area, based on customer location, is as follows:

Further disaggregation of revenues from sales to external customers by type and geographic area, based on customer location, for the periods indicated is as follows:

Year Ended December 31,

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All other countries

Bixby Roasting Co.

On February 28, 2023, the Company completed the acquisition of substantially all of the assets of Bixby Roasting Co.

(“Bixby”), a specialty-grade roaster that is a leader in the emerging influencer-led brand space.

The transaction is accounted for as a business combination in accordance with ASC 805.

Aggregate consideration paid for Bixby included 39,778 Common Shares and approximately $ 2.2 million in cash, for total consideration of $ 2.6 million, subject to customary adjustments.

Net assets acquired totaled approximately $ 0.7 million.

The acquisition allows the Company to continue to expand its product marketing and development resources as it capitalizes on shifting consumer consumption trends.

The acquisition includes Bixby’s roasting facility in Los Angeles, California.

The acquisition was recorded by allocating the costs of the assets acquired and liabilities assumed, which consisted of accounts receivable, inventory, property, plant and equipment, and accounts payable, based on their estimated fair values at the acquisition date.

The excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill.

The Company finalized its purchase price allocation during the second quarter of 2023, recognizing approximately $ 2.0 million of goodwill, which is deductible for tax purposes, within our Beverage Solutions segment.

The financial results of Bixby are included in the Beverage Solutions segment from the date of acquisition and were not material, individually or in the aggregate, to our results of operations and therefore, pro forma financial information has not been presented.

Kohana Coffee, LLC

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Kohana Coffee is an extract and ready-to-drink focused business, based in Richmond, California, serving customers in the retail and CPG industries.

The acquisition allows the Company to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles.

Aggregate consideration paid for Kohana Coffee included 1,852,608 shares of common stock of the Company, par value $ 0.01 per share, and approximately $ 15.7 million in cash, subject to customary adjustments.

The fair value of the stock consideration was based on the closing price of the Company’s common stock on the date of acquisition.

acquisition allows the Company to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles.

Aggregate consideration paid for Kohana Coffee included 1,852,608 Common Shares and approximately $ 15.7 million in cash, subject to customary adjustments.

The fair value of the stock consideration was based on the closing price of the Common Shares on the date of acquisition.

The total consideration paid in the Kohana Acquisition is summarized below:

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Total Consideration

The table below summarizes the preliminary purchase price allocation of the assets acquired and liabilities assumed:

The assets and liabilities acquired in the Kohana Acquisition are recorded at their estimated fair values.

Acquired Value

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Accounts payable and accrued liabilities

The assets and liabilities acquired in the Kohana Acquisition are recorded at their estimated fair values.

The above purchase price allocation is considered preliminary and is subject to change when the valuation of assets and liabilities is finalized upon receipt of the final valuation report from a third-party valuation expert, and the settlement of post-closing working capital adjustments, which is anticipated to be finalized during 2023.

The above purchase price allocation was finalized during the second quarter of 2023.

The cost of the acquisition in excess of the fair market value of the tangible and intangible assets acquired less liabilities assumed represents acquired goodwill, which is deductible for tax purposes.

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Favorable lease asset

Kohana Coffee, which is reported within our Beverage Solutions segment, contributed net sales of $ 1.5 million and operating loss of $ 0.5 million from the date of acquisition through December 31, 2022.

Kohana Coffee, which is reported within our Beverage Solutions segment, contributed net sales of $ 1.5 million and operating losses of $ 0.5 million from the date of acquisition through December 31, 2022.

Expenses associated with the acquisition were not material.

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The pro forma results are not indicative of future results of operations, or results that might have been achieved had the acquisition been consummated on January 1, 2021.

(Thousands, except per share amounts)

December 31, 2022

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Net loss attributable to common shareholders

S&D Coffee, Inc.

On February 28, 2020, the Company acquired 100 % of the issued and outstanding shares of capital stock of S&D in exchange for $ 401.6 million in cash.

The acquisition was financed with the issuances of Common Equivalent Preferred Units, a $ 240.0 million term loan, and a $ 25.0 million draw from an asset-based lending facility.

The acquisition allowed the Company to expand our blue-chip customer base and product capabilities, creating an integrated coffee, tea, and extract company serving retailers, restaurants, convenience stores, and the hospitality industry.

The total consideration paid in the S&D acquisition is summarized below:

Cash paid to Cott Corporation

Cash paid on behalf of sellers for seller's transaction expenses

Post-close working capital adjustments

Total Consideration

The table below summarizes the purchase price allocation of the assets acquired, and liabilities assumed:

Acquired Value

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

Property, plant and equipment

Intangible assets

Accounts payable and accrued liabilities

Long-term debt

Deferred tax liabilities

Other long-term liabilities

The assets and liabilities acquired in the S&D acquisition are recorded at their estimated fair values per valuations.

The cost of the acquisition in excess of the fair market value of the tangible and intangible assets acquired less liabilities assumed represents acquired goodwill, which is not deductible for tax purposes.

The acquisition provides the Company with an expanded presence and manufacturing and distribution synergies, which provide the basis for the goodwill recognition.

Additionally, the existence of an assembled workforce was not considered an identifiable asset below, and any value attributed to it was subsumed into the valuation of goodwill.

Intangible Assets

In our determination of the fair value of intangible assets, we consider, among other factors, the best use of acquired assets, analysis of historical financial performance and estimates of future performance of the acquired business’ products.

The estimated fair values of identified intangible assets are calculated considering both market participant expectations, using an income approach, as well as estimates and assumptions provided by Westrock management and

management of the acquired business.

Assumptions include, but are not limited to, expected revenue growth, weighted-average terminal growth rates, risk adjusted discount rate and royalty rate.

The estimated fair value of customer relationships represents future after-tax discounted cash flows that will be derived from sales to existing customers of the acquired business as of the date of acquisition.

The estimated fair value of the trademark represents the future projected cost savings associated with the premium and brand image obtained as a result of owning the trademark as opposed to obtaining the benefit of the trademark through a royalty or rental fee.

The following table sets forth the components of identified intangible assets associated with the S&D acquisition and their estimated weighted average useful lives:

Estimated Fair

Estimated Useful

Customer relationships

Favorable lease asset

As described in Note 3, as a result of exiting the acquired DSD business and loss of projected revenues that supported the acquired S&D trademark, we fully impaired the associated acquired trademark during the year ended December 31, 2020.

S&D, which is reported within our Beverage Solutions segment, contributed revenue of $ 349.2 million and operating loss of $ 1.3 million, excluding $ 14.3 million acquisition, restructuring and integration costs, and $ 95.0 million of impairment charges, inventory write-offs and losses on disposal of property, plant and equipment, from the date of acquisition through December 31, 2020.

The following table presents the unaudited pro forma summary of our financial results as if S&D acquisition had occurred on January 1, 2020.

The pro forma results include additional depreciation and amortization resulting from purchase accounting adjustments and interest expense associated with debt used to fund the acquisition.

The pro forma results do not include any synergies or other benefits of the acquisition.

The pro forma results are not indicative of future results of operations, or results that might have been achieved had the acquisition been consummated on January 1, 2020.

(Thousands, except per share amounts)

December 31, 2020

Net loss attributable to common shareholders

The following table summarizes inventories as of December 31, 2023 and 2022:

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December 31, 2022

Buildings (4)

10 - 40 years

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3 - Lease right-of-use assets are amortized over the shorter of the useful life of the asset or the lease term.

4 – We identified a $ 10.1 million classification error in the disclosure of buildings, plant equipment, furniture and fixtures, and construction in progress and equipment deposits for the year ended December 31, 2022.

Amounts presented above reflect the corrected amounts.

Depreciation expense for the years ended December 31, 2023, 2022 and 2021 was $ 18.4 million, $ 17.4 million and $ 18.8 million, respectively.

Assets classified as construction in progress are not depreciated, as they are not ready for production use.

All assets classified as construction in progress on December 31, 2022 are expected to be in production use.

We have operating leases for manufacturing and production facilities, distribution and warehousing facilities, vehicles and machinery and equipment.

Assets classified as construction in progress and equipment deposits are not depreciated, as

they are not ready for production use.

All assets classified as construction in progress and equipment deposits at December 31, 2023 are expected to be in production use.

We have operating leases for manufacturing, production, administrative, distribution and warehousing facilities, vehicles and machinery and equipment.

Some of our lease agreements have renewal options, tenant improvement allowances, rent holidays and rent escalation clauses.

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December 31, 2023

December 31, 2022

Right-of-use operating lease assets

Other long-term assets

Operating lease right-of-use assets

Operating lease liabilities - current

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Operating lease liabilities - noncurrent

Other long-term liabilities

Operating lease liabilities

Depending on the nature of the lease, lease costs are classified within costs of sales or selling, general and administrative expense on the Company’s Consolidated Statements of Operations.

The components of lease costs are as follows:

December 31, 2022

The components of lease costs for the year ended December 31, 2023 and 2022 are as follows:

Year Ended December 31,

Operating lease cost

Short-term lease cost

The following table presents information about the Company’s weighted average discount rate and remaining lease term:

We identified a $ 3.3 million disclosure error in the disclosure of the components of lease costs for the year ended December 31, 2022.

The amounts presented above reflect the corrected amounts.

The following table presents information about the Company’s weighted average discount rate and remaining lease term as of December 31, 2023 and 2022:

December 31, 2023

December 31, 2022

Weighted-average discount rate

Weighted-average remaining lease term

Supplemental cash flow information about the Company’s leases is as follows:

December 31, 2022

Supplemental cash flow information about the Company’s leases as of December 31, 2023 and 2022, respectively, is as follows:

Year Ended December 31,

Operating cash flows from operating leases

We identified a $ 2.5 million disclosure error in the disclosure of operating cash flows from operating leases for the year ended December 31, 2022.

The amount presented above reflects the corrected amount.

During the year ended December 31, 2023, the Company obtained $ 60.2 million of right-of-use operating lease assets in exchange for lease obligations.

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued expenses and other current liabilities and long-term debt, net on the Consolidated Balance Sheets.

There were no material finance leases as of December 31, 2023.

Future minimum lease payments under non-cancellable operating leases as of December 31, 2023 are as follows:

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Present value of minimum lease payments

Disclosures related to periods prior to adoption of ASC 842

Rent expense for operating lease agreements under the previous lease guidance was $ 4.4 million and $ 5.7 million, for the years ended December 31, 2021 and 2020, respectively.

As previously reported in our audited Consolidated Financial Statements for year ended December 31, 2021, the minimum future lease payments under the previous lease guidance as of December 31, 2021 were as follows:

On February 12, 2024, following the completion of its 530,000 square foot distribution center in Conway, Arkansas, the Company entered into a lease termination agreement for the premises located at 1601 Gregory Street, North Little Rock, Arkansas, 72114, originally entered into on October 24, 2018.

The lease will terminate by mutual agreement, effective June 30, 2024.

As of December 31, 2023, the premises associated with this lease was classified as held and used.

As of the date of this Annual Report on Form 10-K, no costs have been incurred, and no costs are expected to be incurred, by the Company as a result of the lease termination.

This lease termination event does not significantly alter the Company’s operational capabilities or its financial position.

Changes in the carrying amount of goodwill occurring during the years ended December 31, 2023 and 2022 were as follows:

Balance at December 31, 2021

Changes during the period:

Balance at December 31, 2020

Accumulated impairment loss

Changes during the period:

Balance at December 31, 2022

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Changes during the period:

Measurement period and other adjustments

Balance at December 31, 2023

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Term loan facility

Prior term loan facility

Prior ABL facility

Revolving credit facility

International trade finance lines

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Credit Agreement

On August 29, 2022, the Company entered into a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto.

Proceeds from the Term Loan Facility were used for paying off existing indebtedness.

The Revolving Credit Facility and the Term Loan Facility will mature on August 29, 2027.

The Company is party to a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto.

The Credit Agreement includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $ 175.0 million (the “Revolving Credit Facility”), (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $ 175.0 million (the “Term Loan Facility”), and (c) incremental term loan commitments in the form of a senior secured delayed draw term loan credit facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $ 50.0 million.

The 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 and the Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (i) 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 (ii) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S.

as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50 % and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00 %, (the “Base Rate”)), in each case plus the Applicable Margin.

The Applicable Margin ranges from 1.50 % to 2.50 % for Adjusted Term SOFR loans and from 0.50 % to 1.50 % for Base Rate loans, in each case depending on the total net leverage ratio.

Commitment fees on the daily unused amount of commitments under the Revolving Credit Facility range from 0.20 % to 0.35 % depending on the total net leverage ratio.

At December 31, 2022, the Revolving Credit Facility was undrawn (other than the standby letters of credit outstanding described below) and the interest rate applicable to our Term Loan Facility was 5.7 %.

The Term Loan Facility requires quarterly principal payments during the first three years of approximately $ 2.2 million ( 1.25 % of the original principal balance).

Quarterly payments increase to approximately $ 3.3 million and $ 4.4 million ( 1.875 % and 2.5 % of the original principal balance) during the fourth and fifth years, respectively.

We incurred $ 6.0 million of financing fees in connection with the Credit Agreement.

Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) Term SOFR plus a credit spread adjustment of 0.10 % for loans with an interest period of one month , 0.15 % for loans with an interest period of three months and 0.25 % for loans with an interest period of six months , as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S.

At December 31, 2023, we had $ 65.0 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.9 %, and the interest rate applicable to our Term Loan Facility was 9.2 %, and we had $ 2.6 million of standby letters of credit outstanding.

At December 31, 2023, no amounts were outstanding under the Delayed Draw Term Loan Facility;

however, on January 8, 2024, the Company borrowed $ 50.0 million under the Delayed Draw Term Loan Facility, using a portion of the proceeds to repay outstanding borrowings under the Revolving Credit Facility.

On June 30, 2023, we entered into Amendment No.

2 (the “Second Amendment”) to the Credit Agreement.

The Second Amendment established a covenant relief period (the “Covenant Relief Period”) commencing on June 30, 2023, and ending on the earlier to occur of (i) April 1, 2025 and (ii) the date following December 31, 2023, on which the Borrower delivers to the administrative agent a certificate of a responsible officer (a) electing to terminate the Covenant Relief Period, (b) demonstrating a total net leverage ratio less than 3.75 :1.00 and (c) attaching projections demonstrating compliance with the total net leverage ratio financial covenant (as in effect prior to giving effect to the Covenant Relief Period) until the then-existing latest maturity date.

During the Covenant Relief Period, (i) the total net leverage ratio financial covenant will be (a) 5.00 :1.00 for the test period ending June 30, 2023, (b) 5.25 :1.00 for the test period ending September 30, 2023, (c) 5.50 :1.00 for the test periods ending on or after December 31, 2023 to and including September 30, 2024, (d) 5.00 :1.00 for the test period ending December 31, 2024 and (e) 4.50 :1.00 for the test period ending March 31, 2025 and (ii) the applicable margin for any term SOFR rate loan will range from 2.50 % to 3.75 % and for any ABR loan will range from 1.50 % to 2.75 %, in each case depending on the total net leverage ratio.

After the Covenant Relief Period, the total net leverage ratio financial covenant and the applicable margin for term SOFR rate loans and ABR loans will revert to the pre-amendment terms of the Credit Agreement.

During and after the Covenant Relief Period, the minimum interest coverage ratio financial covenant will be 2.00 :1.00.

As of December 31, 2023, we were in compliance with the Financial Covenants.

See Note 23 for disclosures regarding the entry into Amendment No.

3 to the Credit Agreement on February 15, 2024, which modifies certain requirements of the Company during the Covenant Relief Period.

The Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments during the first three years of 1.25 % of the original principal balance.

Quarterly payments increase to 1.875 % and 2.5 % of the original principal balance during the fourth and fifth years, respectively.

We incurred a total of $ 6.6 million of financing fees in connection with the Credit Agreement and related amendments.

$ 3.3 million of the fees were allocated to the Term Loan Facility and are being amortized utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility.

$ 3.0 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 term of the Revolving Credit Facility.

We had $ 2.6 million of standby letters of credit outstanding at December 31, 2022.

The Credit Agreement contains two financial covenants requiring maintenance of a total net leverage ratio not to exceed 4.50 to 1.00, with a stepdown to 4.00 to 1.00 on the 18-month anniversary of the closing date of the Credit Agreement (with an option to increase to 4.50 to 1.00 following certain permitted acquisitions), and an interest coverage ratio of at least 1.50 to 1.00 (the “Financial Covenants”).

At December 31, 2022, and the date of these financial statements, we were in compliance with the Financial Covenants.

$ 3.3 million of the fees were allocated to the Revolving Credit Facility, which are reported within other long-term assets on the Consolidated Balance Sheets and are being amortized ratably over the term of the Revolving Credit Facility.

Prior Term Loan Facility

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International Debt and Lending Facilities

Falcon maintains a working capital trade finance facility with multiple financial institutions, which prior to March 16, 2022, was agented by Brown Brothers Harriman (“BBH”), a related party of the Company through its equity interests in the Company, and was reported as short-term related party debt on the Consolidated Balance Sheets.

On March 16, 2022, Falcon refinanced its working capital trade finance facility, and the facility was transferred to different lenders with the same terms as the previous facility.

At the time of refinance, there was $ 49.3 million outstanding under the facility.

The new facility is uncommitted and repayable on demand.

Certain of Falcon’s assets with a net book amount of $ 39.8 million have been pledged as collateral against the facility as of December 31, 2022.

On April 29, 2022, the facility size increased from $ 50.0 million to $ 55.0 million and subsequently, on June 16, 2022, the facility size increased to $ 62.5 million.

On December 9, 2022, the facility size decreased from $ 62.5 million to $ 47.5 million and subsequently, on December 20, 2022, the facility was modified for various definitions, clauses and schedules within the facility agreement.

At December 31, 2022, there was $ 36.3 million outstanding under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets.

Interest is payable monthly at the U.S.

Prime Rate plus 2.50 %, subject to a minimum rate of 5.00 %.

The facility carries an agent fee of 0.25 % of total available capital.

Availability under the facility is subject to a borrowing base calculation.

On March 21, 2023, we entered into a $ 70 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon.

The facility replaced Falcon’s then existing working capital trade finance facility.

The facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility will mature one year from inception.

Borrowings under the facility will bear 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 %).

At December 31, 2023, there was $ 37.0 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets.

Falcon’s facility contains certain restrictive financial covenants which require Falcon to maintain certain levels of working capital, debt, and net worth.

Falcon was in compliance with these financial covenants as of December 31, 2022, and the date of these financial statements.

Westrock Coffee International, LLC, through its subsidiary Rwanda Trading Company, maintains two stock and mortgage-backed lending facilities with a local bank in Rwanda:

a short-term trade finance facility with a balance of $ 6.6 million at December 31, 2022 and a long-term note payable with a balance of $ 1.8 million at December 31, 2022.

Subordinated Related Party Debt

On February 28, 2020, we issued $ 13.3 million of subordinated debt (the “Subordinated Notes”) to Wooster Capital, LLC (“Wooster”) and Jo Ellen Ford, related parties of the Company through their equity ownership and relation with Joe Ford, the chairman of our board of directors.

The Subordinated Notes provided for maturity on the earlier of (i) six months after the Prior Term Loan Facility due in 2025 was paid in full or (ii) 10 years from the date of issuance (February 2030).

Interest was payable quarterly at the end of each calendar quarter at a rate of 6 % per annum.

Substantially concurrently with the Closing and pursuant to the terms of their respective subscription agreements with the Company, Wooster and Jo Ellen Ford contributed their respective Subordinated Notes to the Company and in exchange for such contribution, the Company issued Common Shares to Wooster and Jo Ellen Ford.

The Company issued a total of 1,330,000 Common Shares in exchange for the contribution of the Subordinated Notes, which were subsequently extinguished.

In connection with the Transaction, on July 14, 2022, pursuant to the terms of the subscription agreement entered into between the Company and Wooster, in which Wooster agreed to subscribe for and purchase, and the Company agreed to issue and sell to Wooster, prior to and substantially concurrently with the Closing, an aggregate of 2,150,000 Common Shares at a purchase price of $ 10.00 per share, for aggregate gross proceeds of $ 21,500,000 to the Company, Wooster pre-funded $ 11.7 million of its commitment (the “Wooster Pre-fund”) and in exchange thereof was issued a subordinated convertible note by the Company (the “Convertible Note”).

The Convertible Note had a principal amount of $ 11.7 million, a maturity of one year and an interest rate of 8 % per annum which was payable quarterly on the last business day of each quarter.

On August 26, 2022, in connection with the Closing, the Convertible Note automatically converted, in accordance with its terms, into 1,170,000 Common Shares.

Falcon was in compliance with these financial covenants as of December 31, 2023.

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 before the Quotation day;

or (b) the most recent applicable Term SOFR (as of Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin.

At December 31, 2023, there was $ 5.0 million of outstanding borrowings under the facility, of which $ 4.5 million and $ 0.5 million is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Consolidated Balance Sheets.

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, 2023.

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 $ 6.7 million at December 31, 2023 and (b) a long-term note payable with a balance of $ 1.2 million at December 31, 2023.

Series A Preferred Shares

In connection with the Transaction, the Company issued 23,587,952 Westrock Series A Preferred Shares, which rank senior to the Common Shares with respect to dividend rights and/or distribution rights upon the liquidation, winding up or dissolution, as applicable, of Westrock.

Each holder of Westrock Series A Preferred Shares is entitled to vote, on an

as-converted basis, as a single class with the holders of Common Shares and the holders of any other class or series of capital stock of Westrock then entitled to vote with the Common Shares on all matters submitted to a vote of the holders of Common Shares.

Each holder of Westrock Series A Preferred Shares is entitled to vote, on an as-converted basis, as a single class with the holders of Common Shares and the holders of any other class or series of capital stock of Westrock then entitled to vote with the Common Shares on all matters submitted to a vote of the holders of Common Shares.

The initial liquidation preference of Westrock Series A Preferred Shares is $ 11.50 per share, plus any declared but unpaid dividends and subject to accretion under certain circumstances.

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The initial conversion price of $ 11.50 per Westrock Series A Preferred Share is subject to customary adjustments for the issuance of Common Shares as a dividend or distribution to the holders of Common Shares, a subdivision or combination of the Common Shares, reclassification of the Common Shares into a greater or lesser number of Common Shares, certain tender or exchange offers for the Common Shares, and issuances of Common Shares below a specified price.

During the year ended December 31, 2023, the Company issued 76,030 Common Shares upon the conversion of 76,030 Westrock Series A Preferred Shares, receiving no proceeds upon the issuance of the Common Shares.

After February 26, 2028 (i.e., the five and a half year anniversary of the Closing), any holder of Westrock Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Westrock 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 Westrock 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 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 23,511,922 Series A Preferred Shares outstanding at December 31, 2023 remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $ 270.4 million.

At any time after February 26, 2028 (i.e., the five and a half year anniversary of the date of Closing), Westrock may redeem, ratably, in whole or, from time to time in part, the Westrock Series A Preferred Shares of any holder then outstanding at the redemption price in cash, equal to the greater of (i) the liquidation preference and (ii) the product of (x) the number of Common Shares that would have been obtained from converting one Westrock Series A Preferred Share on the date of the exercise of such call is notified by Westrock (including fractional shares for this purpose) and (y) the simple average of the daily volume weighted average price per Common Share for the ten trading days ending on and including the trading day immediately preceding the date of the exercise of such call by Westrock.

6 unchanged sentences

However, at no time will the Westrock Series A Preferred Shares be reported at a value less than its initial carrying value.

For the year ended December 31, 2022 the Company recorded $ 1.3 million of accretion with respect to the Westrock Series A Preferred Shares.

For the years ended December 31, 2023 and 2022, the Company recorded $ 0.2 million and $ 1.3 million of accretion, respectively, with respect to the Westrock Series A Preferred Shares.

We record all derivatives, whether designated in a hedging relationship or not, at fair value on the Consolidated Balance Sheets.

We use various types of derivative instruments including, but not limited to, forward contracts, futures contracts, and options contracts for certain commodities.

Forward and futures contracts are agreements to buy or sell a quantity of

a commodity at a predetermined future date, and at a predetermined rate or price.

Forward contracts are traded over the counter whereas future contracts are traded on an exchange.

Forward and futures contracts are agreements to buy or sell a quantity of a commodity at a predetermined future date, and at a predetermined rate or price.

Forward contracts are traded over the counter whereas futures contracts are traded on an exchange.

Option contracts are agreements to facilitate a potential transaction involving the commodity at a preset price and date.

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Derivatives can be designated as fair value hedges, cash flow hedges or hedges of net investments in foreign operations.

The changes in the fair values of derivatives that have been designated and qualify for fair value hedge accounting are recorded in the same line item in our Consolidated Statements of Operations as the changes in the fair value of the hedged items attributable to the risk being hedged.

The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in AOCI and are reclassified into the line item in the Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings.

The changes in the fair values of derivatives that have not been designated and for which hedge accounting is not applied, are recorded in the same line item in our Consolidated Statements of Operations as the changes in the fair value of the hedged items attributable to the risk being hedged.

The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) and are reclassified into the line item in the Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings.

For derivatives that will be accounted for as hedging instruments, we formally designate and document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction.

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During the years ended December 31, 2023 and 2022, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amount of 63.4 million pounds and 98.6 million pounds, respectively.

Approximately $ 13.1 million, $ 7.2 million and $ 1.7 million of net realized gains, representing the effective portion of the cash-flow hedge, were subsequently reclassified from AOCI to earnings and recognized in cost of sales in the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020, respectively.

Approximately $ 6.4 million of net realized loss, $ 13.1 million of net realized gains and $ 7.2 million of net realized gains, representing the effective portion of the cash-flow hedge, were subsequently reclassified from AOCI to earnings and recognized in cost of sales in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, respectively.

As of December 31, 2023, the estimated amount of net gains reported in AOCI that is expected to be reclassified to the Consolidated Statements of Operations within the next twelve months is $ 6.6 million.

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1 - The fair value of coffee futures excludes amounts related to margin accounts.

The following table presents the pre-tax net gains and losses for our derivative instruments:

The following table presents the pre-tax net gains and losses for our derivative instruments for the years ended December 31, 2023, 2022 and 2021:

Year Ended December 31,

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Green coffee associated with forward contracts

Forward purchase and sales contracts

Coffee futures contracts

Forward purchase and sales contracts

Westrock Public Warrants

Westrock Private Warrants

The following table presents the change in the fair value of Level 3 Westrock Private Warrants liabilities:

The following table presents the change in the fair value of Level 3 Westrock Private Warrants liabilities during the year ended December 31, 2023:

Private Warrants

Fair value as of January 1, 2022

Assumption of warrants

Fair value as of December 31, 2022

Transfer out of level 3

Change in fair value

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Green coffee associated with forward contracts

Coffee futures contracts

Forward purchase and sales contracts

Coffee futures contracts

Forward purchase and sales contracts

Westrock Public Warrants

Westrock Private Warrants

The following table presents the change in the fair value of Level 3 Westrock Private Warrants liabilities during the year ended December 31, 2022:

Private Warrants

Fair value as of December 31, 2021

Assumption of warrants

Change in fair value

Fair value as of December 31, 2022

Coffee futures contracts and coffee options are valued based on quoted market prices.

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As a result, green coffee associated with forward contracts and forward sales and purchase contracts are classified within Level 2 of the fair value hierarchy.

Westrock Public Warrants are valued based on their quoted market price of $ 2.27 per warrant as of December 31, 2022.

Westrock Private Warrants price of $ 3.83 per warrant are valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement.

Westrock Public Warrants are valued based on their quoted market price of $ 2.30 and $ 2.27 per warrant as of December 31, 2023 and 2022, respectively.

Westrock Private Warrants price of $ 2.68 and $ 3.83 per warrant as of December 31, 2023 and 2022, respectively, are valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement.

The primary unobservable inputs were as follows:

December 31, 2023

December 31, 2022

Exercise price

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The most significant of these primary unobservable inputs utilized in determining the fair value of the Westrock Private Warrants is the expected volatility of the stock price, which is determined by use of an option pricing model.

Financial instruments consist primarily of cash, accounts receivable, accounts payable, and long-term debt.

The carrying amount of cash, accounts receivable and accounts payable was estimated by management to approximate fair value due to the relatively short period of time to maturity for those instruments.

On August 29, 2022, the Company entered into the Credit Agreement, which includes the Term Loan Facility and the Revolving Credit Facility.

The Term Loan Facility and the Revolving Credit Facility are carried on the Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of December 31, 2022.

In November 2021, we amended our Prior Term Loan Agreement and our Prior ABL Credit Agreement, which comprised our material long-term debt obligations at December 31, 2021.

As there was no re-pricing of those obligations in connection with the amendments, the carrying amount of these obligations was estimated by management to approximate fair value as of December 31, 2021.

The Prior Term Loan Facility and the Prior ABL Facility were carried on the Consolidated Balance Sheets at amortized cost.

The fair value of the Term Loan Facility, Revolving Credit Facility, Prior Term Loan Facility and the Prior ABL Facility was determined based on Level 2 inputs under the fair value hierarchy

Financial instruments consist primarily of cash, accounts receivable, accounts payable, a supply chain finance program and long-term debt.

The carrying amount of cash, accounts receivable, accounts payable and the supply chain finance program was estimated by management to approximate fair value due to the relatively short period of time to maturity

for those instruments.

The fair value of the Term Loan Facility and the Revolving Credit Facility was determined based on Level 2 inputs under the fair value hierarchy.

Non-financial assets and liabilities, including property, plant and equipment, goodwill, and intangible assets are measured at fair value on a non-recurring basis.

No events occurred during the years ended December 31, 2023 and 2022 requiring these non-financial assets and liabilities to be subsequently recognized at fair value.

During the year ended December 31, 2020, we determined that goodwill and certain intangible assets required subsequent recognition at

fair value (see Note 3).

The fair value of goodwill and certain intangible assets was determined based on Level 3 inputs under the fair value hierarchy.

Equity-Based Compensation

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Stock Options

In August 2022, in connection with the Transaction, unit option awards issued under the Company’s 2020 Unit Option Incentive Plan, as amended (the “2020 Plan”), were equitably converted in accordance with the terms of the 2020 Plan and the Transaction Agreement.

In August 2022, in connection with the Transaction, unit option awards issued under the Company’s 2020 Unit Option Incentive Plan, as amended (the “2020 Option Plan”), were equitably converted in accordance with the terms of the 2020 Option Plan and the Transaction Agreement.

Each outstanding option to purchase units of Westrock Coffee Holdings, LLC, whether vested or unvested, was converted into an option to purchase Common Shares based on an exchange ratio (the “Exchange Ratio”) defined in the Transaction Agreement.

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however, these modifications did not result in any additional compensation expense to be recognized by the Company.

As of August 26, 2022, the effective date of the Company’s 2022 Equity Incentive Plan (the “2022 Plan”), no additional awards will be granted under the 2020 Plan.

As of August 26, 2022, the effective date of the Company’s 2022 Equity Incentive Plan (the “2022 Equity Plan”), no additional awards will be granted under the 2020 Option Plan.

The fair value of the Westrock common units underlying the options granted under the 2020 Option Plan had been determined by the Westrock board of directors, with input from management and corroboration from contemporaneous, independent third-party valuations.

Given the absence of a public trading market for the Westrock common units when the options were granted under the 2020 Option Plan, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide:

Valuation of Privately Held Company Equity Securities Issued as Compensation (the “AICPA Practice Guide”), the Westrock board exercised reasonable judgement and considered a number of objective and subjective factors to determine the best estimate of the fair value of the Westrock common units at each grant date, including obtaining independent third-party valuations.

Valuation of Privately Held Company Equity Securities Issued as Compensation (the “AICPA Practice Guide”), the Westrock board exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value of the Westrock common units at each grant date, including obtaining independent third-party valuations.

Independent third-party valuations that we utilized to estimate the fair value of the Westrock common units underlying the unit options under the 2020 Option Plan included 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.

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During the year ended December 31, 2022 we granted 0.3 million options to employees.

One-half of the options granted vest over four years of continuous service by the employee, and one-half of the options vest once the simple average of the daily volume weighted average price per share of Common Shares for 10 trading days in any consecutive 30-day period is $ 18.50 per share (“Performance Options”), provided that the recipient is either still working for the Company at the date of such realization event or that the performance goals are achieved within one year following a qualified

termination of the recipient’s employment.

All option grants have an exercise price of $ 9.54 and generally have a ten-year term prior to expiration.

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Weighted-Average

Exercise Price

Contractual Term

Options outstanding at December 31, 2022

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Exercisable at December 31, 2023

The aggregate intrinsic value of outstanding options was $ 12.3 million at December 31, 2022.

Intrinsic value for stock options is defined as the amount by which the current market price of the underlying stock exceeds the weighted-average exercise price.

For stock options where the weighted-average exercise price exceeds the current market price of the underlying stock, the intrinsic value is zero.

The intrinsic value of options outstanding as of December 31, 2023 was $ 1.9 million, calculated using $ 10.21 per share, which was the closing price of our common stock on December 29, 2023, the last trading day of 2023.

Restricted Stock

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Such RCSs carry the same rights and limitations as the Common Shares under the organizational documents of the Company, except that the RCSs are subject to vesting and forfeiture.

The RCSs vest in three installments on each anniversary of the grant date.

The RCSs vest in three installments on each anniversary of the grant date, vesting in full on February 28, 2023.

During the years ended December 31, 2023, 2022 and 2021, the Company issued 310,670 , 332,251 and 320,998 Common Shares upon vesting of RCSs, for which no proceeds were recorded.

RCS expense is based on the fair value of the common units on the date of grant and is amortized over the vesting period, which is generally three years .

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The Company recognized approximately $ 0.1 million, $ 0.3 million and $ 0.8 million in expense for the RCSs in the years ended December 31, 2023, 2022 and 2021, respectively, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

Total compensation expense of unvested RCSs not yet recognized is less than $ 0.1 million and will be recognized by February 28, 2023.

During the year ended December 31, 2022, 475,032 RCSs vested, resulting in the issuance of approximately 330,000 Common Shares.

As of December 31, 2022, 475,032 RCSs remained outstanding.

Restricted Stock Unit Awards

During 2022, the Company granted 1.1 million restricted stock units (“RSUs”) in accordance with the terms of the 2022 Plan.

The RSUs had a grant date fair value of $ 13.1 million, which was calculated using the closing price of the Company’s Common Shares on the applicable date of grant.

During the years ended December 31, 2023 and 2022, the Company granted 1.4 million and 1.1 million restricted stock units (“RSUs”), respectively, under the 2022 Equity Plan.

The RSUs had a grant date fair value of $ 15.8 million and $ 13.1 million, respectively, which was calculated using the closing price of the Common Shares on the applicable date of grant.

The RSUs are amortized on a straight-line basis to expense over the vesting period, which is generally three years .

The Company recognized approximately $ 1.7 million in expense for the RSUs in the year ended December 31, 2022, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

As of December 31, 2022, there were 3.4 million shares available for future issuance under the 2022 Plan.

During the years ended December 31, 2023 and 2022, the Company recognized approximately $ 8.3 and $ 1.7 million, respectively, in expense for the RSUs, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

As of December 31, 2023, there were 2.2 million shares available for future issuance under the 2022 Equity Plan.

The following table sets forth the RSU activity under the 2022 Equity Plan for the year ended December 31, 2023.

Weighted-Average

Fair Value at

Outstanding at December 31, 2022

Outstanding at December 31, 2023

The aggregate intrinsic value of outstanding RSUs was approximately $ 15.1 million on December 31, 2022.

During the year ended December 31, 2023, the Company issued 310,635 Common Shares upon the vesting of RSUs, for which no proceeds were recorded.

The aggregate intrinsic value of RSUs vested for the year ended December 31, 2023 was $ 4.8 million.

Accumulated Other Comprehensive Income (Loss)

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Amounts reclassified from accumulated comprehensive income

Net other comprehensive income

Other comprehensive income attributable to noncontrolling interests

Net accumulated other comprehensive income

Other comprehensive income attributable to non-controlling interests

Balance at end of period

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Amounts reclassified from accumulated comprehensive income

Net other comprehensive income

Other comprehensive income attributable to noncontrolling interests

Net accumulated other comprehensive income

Other comprehensive income attributable to non-controlling interests

Balance at end of period

Accumulated other comprehensive income (loss) at end of period

and international components of income (loss) before income taxes is as follows:

and international components of loss before income taxes is as follows:

Year Ended December 31,

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Year Ended December 31,

Income tax expense (benefit) at US statutory income tax rate

Income tax expense (benefit) at U.S.

statutory income tax rate

State income tax expense (benefit), net of federal benefit

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Change in fair value of warrants

Goodwill impairment

Global intangible low-taxed income ("GILTI") inclusion

Transaction costs

Stock compensation (windfall)/shortfall

Corporate interest restriction

Excess compensation (§162(m))

Other permanent differences

Step-up on C Corp conversion

Change in valuation allowance

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We establish a valuation allowance to reduce deferred tax assets if, based on the weight of the available evidence, both positive and negative, for each respective tax jurisdiction, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance related to domestic deferred tax assets of $ 6.9 million was recorded, of which $ 5.5 million was against a portion of the Company’s Section 163(j) interest limitation carryforward, and the remainder was against certain state net operating losses as of December 31, 2022.

There was no such valuation allowance against domestic deferred tax assets as of December 31, 2021.

A valuation allowance related to domestic deferred tax assets of $ 9.9 million and $ 6.9 million, respectively, was recorded, of which $ 7.6 million and $ 5.5 million, respectively, was against a portion of the Company’s Section 163(j) interest limitation carryforward, and the remainder was against certain state net operating losses as of December 31, 2023 and 2022, respectively.

A valuation allowance related to foreign deferred tax assets of $ 3.0 million and $ 1.6 million was recorded against certain foreign net operating losses as of December 31, 2023 and 2022, respectively.

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December 31, 2022

December 31, 2021

Beginning balance

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As of December 31, 2023, the Company had foreign net operating loss carryforwards of approximately $ 10.9 million which begin to expire in 2025.

As of December 31, 2022 and 2021, the Company’s reserve for uncertain tax positions was $ 0.1 million and includes potential interest and penalties, which are recorded as a component of income tax expense (benefit).

The Company does not expect any significant changes to unrecognized tax benefits within the next twelve months.

As of December 31, 2023 and 2022, the Company’s reserve for uncertain tax positions was $ 4.0 million and $ 0.1 million, respectively.

It is reasonably possible the Company’s reserve for uncertain tax positions could increase or decrease in the next 12 months.

However, it is not practical to estimate the change, which may be influenced by several factors.

Of the total reserve for uncertain tax positions as of December 31, 2023, only $ 0.1 million would impact the

effective tax rate if released.

As indicated in Note 3, the Company re-evaluates uncertain tax positions on a quarterly basis.

The Company recognizes potential interest and penalties relating to unrecognized tax positions as a component of income tax expense (benefit).

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

December 31, 2023

December 31, 2022

December 31, 2021

Beginning balance

Additions for tax positions in prior period

Additions for tax positions in current period

Ending Balance

As a result of the U.S.

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Prior to the Conversion, the Company’s ownership interests consisted of two classes of equity units, referred to as Common Units and Common Equivalent Preferred Units (“CEP Units”), which have been retroactively adjusted as shares reflecting the conversion ratios discussed in Note 4.

Westrock Series A Preferred Shares and our RSUs issued under our 2022 Equity Plan are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as Common Shares.

As participating securities, we include these instruments in the computation of earnings per share under the two-class method described in ASC 260 Earnings per Share (“ASC 260”) .

Neither the Series A Preferred Shares nor the RSUs have a contractual obligation to share in losses of the Company.

However, undistributed earnings are allocated to the participating securities.

Prior to the Conversion, the dilutive effect of CEP Units was calculated by using the “if-converted” method.

This assumed an add-back of dividends on the CEP Units to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares were included in the number of weighted-average units outstanding.

The dilutive effect of Westrock Series A Preferred Shares is calculated using the if-converted method, which assumes that add-back any accretion on preferred shares to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares were included in the number of weighted-average units outstanding.

The dilutive effect of Westrock Series A Preferred Shares is calculated using the if-converted method, which assumes an add-back of any accretion on preferred shares to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares being included in the number of weighted-average units outstanding.

The dilutive effect of time-based option awards and RSUs is calculated using the treasury stock method, while performance-based awards are treated as contingently issuable.

The following potentially dilutive securities were excluded from the computation of diluted shares because their inclusion would have an anti-dilutive effect due to our reported loss.

The following potentially dilutive securities were excluded from the computation of diluted shares for the periods indicated because their inclusion would have an anti-dilutive effect on dilutive earnings (loss) per common share.

Year Ended December 31,

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If-converted securities

The following table sets forth the computation of basic and diluted earnings per share under the two-class method.

The following table sets forth the computation of basic and diluted earnings per share under the two-class method for the periods indicated.

Year Ended December 31,

(Thousands, except per share data)

Basic Earnings per Common Share

Net income (loss) attributable to common shareholders

Weighted-average common shares outstanding - basic

Basic earnings (loss) per common share

Diluted Earnings per Common Share

Net loss attributable to common shareholders - basic

Net income (loss) attributable to common shareholders - basic

Effect of participating securities

Effect of non-participating securities

Net loss attributable to common shareholders - diluted

Net income (loss) attributable to common shareholders - diluted

Weighted-average common shares outstanding - basic

Impact of if-converted securities

Effect of other dilutive securities

Effect of dilutive participating securities

Effect of dilutive non-participating securities

Weighted-average common shares outstanding - diluted

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Segment Information

Our two operating segments are evaluated using Adjusted EBITDA as a segment operating metric.

Management evaluates the performance of each segment using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of acquisition, transaction and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D, impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, and other similar or infrequent items (although we may not have had such charges in the periods presented).

Selected financial data related to our segments is presented below:

Our two operating segments, Beverage Solutions and Sustainable Sourcing & Traceability, are evaluated using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, and other similar or infrequent items (although we may not have had such charges in the periods presented).

Selected financial data related to our segments is presented below for the periods indicated:

Year Ended December 31, 2023

Adjusted EBITDA

Interest expense, net

Income tax expense

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Acquisition, restructuring and integration expense

Transaction, restructuring and integration expense

Change in fair value of warrants

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Equity-based compensation

Conway extract and ready-to-drink facility start-up costs

Mark-to-market adjustments

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Adjusted EBITDA

Interest expense, net

Income tax benefit

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Acquisition, restructuring and integration expense

Transaction, restructuring and integration expense

Change in fair value of warrants

Management and consulting fees (S&D acquisition)

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Adjusted EBITDA

Interest expense, net

Income tax benefit

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Acquisition, restructuring and integration expense

Transaction, restructuring and integration expense

Management and consulting fees (S&D acquisition)

Equity-based compensation

Impairment charges

Inventory write-offs

Mark-to-market adjustments

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Related Party Transactions

The company transacts with certain entities or persons that have ownership in the Company, and/or for which our co-founder and Chief Executive Officer Scott Ford, our co-founder and Chairman, Joe Ford, or close family members of the Fords, have ownership interests in.

Prior to the Conversion, the Company had subordinated debt issued to Wooster Capital, LLC, which is owned and controlled by our co-founder and Chairman, Joe T.

Ford, and the estate of Jo Ellen Ford, who have or had ownership in the Company.

During 2022, Brown Brothers Harriman & Co., which is a holder of Westrock Series A Preferred Shares and participant of the August 2023 equity issuance, and prior to the Conversion was a holder of Westrock Series A and Series B Preferred Units, participated in Falcon’s working capital trade finance facility.

As such, these persons and entities are deemed related parties.

In connection with the acquisition of S&D on February 28, 2020, certain affiliates of BBH were issued CEP Units, at which time BBH became a related party.

The Consolidated Financial Statements reflect the following transactions with related parties:

December 31, 2022

December 31, 2021

Short-term related party debt:

Brown Brothers Harriman (1)

Subordinated related party debt:

Wooster Capital (2)

Jo Ellen Ford (1)

Year Ended December 31,

Interest expense, net:

Interest expense:

Brown Brothers Harriman

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Westrock Finance, LLC

1 – Related through common ownership.

2 – Related through common ownership and management.

In connection with the acquisition of S&D in February 2020, the Company entered into a Management Services Agreement with Westrock Group, LLC (“Westrock Group”), which expired February 2023.

Under the terms of the agreement, Westrock Group will be paid $ 10.0 million in return for financial, managerial, operational, and strategic services.

In connection with the acquisition of S&D Coffee, Inc.

in February 2020, the Company entered into a Management Services Agreement with Westrock Group, LLC (“Westrock Group”), whose controlling manager and controlling member, Greenbrier Holdings, LLC, is owned and controlled by our co-founder and Chief Executive Officer Scott Ford.

Under the terms of the agreement, which expired in February 2023, Westrock Group was paid $ 10.0 million in return for financial, managerial, operational, and strategic services.

The associated expense is recorded within selling, general and administrative expense in our Consolidated Statements of Operations.

During each year ended December 31, 2023, 2022 and 2021, the Company recognized $ 0.6 million, $ 3.3 million and $ 3.3 million, respectively, of such expenses.

In addition, the Company reimburses Westrock Group for the usage of a corporate aircraft, and its portion of shared office space.

For the years ended December 31, 2022, 2021 and 2020, the Company incurred expenses of $ 0.9 million, $ 0.8 million and $ 1.5 million, respectively, for such items, which are recorded in selling, general and administrative expenses on our Consolidated Statements of Operations.

At December 31, 2022, we had no amounts payable to Westrock Group.

In addition, the Company reimburses Westrock Group for the usage of a corporate aircraft, and its portion of shared administrative expense.

For the years ended December 31, 2023, 2022 and 2021, the Company incurred expenses of $ 1.5 million, $ 0.9 million and $ 0.8 million, respectively, for such items, which are recorded in selling, general and administrative expense on our Consolidated Statements of Operations.

At December 31, 2023, we had $ 0.2 million payable to Westrock Group.

Subsequent Events

On February 14, 2023, the Company entered into an Incremental Assumption Agreement and Amendment No.

1 (the “Amendment”) to its Credit Agreement, which establishes a new class of 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, proceeds of which may be used to fund capital expenditures related to our extract and ready-to-drink facility in Conway, Arkansas, or for general corporate purposes.

The interest rates under the Delayed Draw Term Loan Facility are the same as the interest rates with respect to the initial term loans under the existing Term Loan Facility, and the commitment fees applying to the unused portion of the Delayed Draw Term Loan Facility are the same as the commitment fees with respect to the Revolving Credit Facility.

Any delayed draw term loan funded under the Delayed Draw Term Loan Facility will mature on August 29, 2027.

As of the date of this Annual Report on Form 10-K, no borrowings have been made under the Delayed Draw Term Loan Facility.

On February 28, 2023, the Company completed the acquisition of Bixby Roasting Co.

(“Bixby”), a specialty-grade roaster that is a leader in the emerging influencer-led brand space.

The acquisition allows Westrock to continue to expand its product marketing and development resources as it capitalizes on shifting consumer consumption trends.

The acquisiton includes Bixby’s roasting facility in Los Angeles, California.

Aggregate consideration paid for Bixby

included 39,778 shares of common stock of the Company, par value $ 0.01 per share, and approximately $ 2.2 million in cash, subject to customary adjustments.

Due to the timing of the acquisition, the initial accounting for the acquisition is incomplete.

As such, we are not able to disclose certain information relating to the acquisition, including the preliminary fair value of assets acquired and liabilities assumed.

On March 21, 2023, the Company entered into a $ 70 million working capital trade finance facility with multiple financial institutions through its subsidiary, Falcon.

The facility replaces Falcon’s existing working capital trade finance facility.

The new facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The new facility will mature one year from inception.

Borrowings under the new facility will bear interest at the borrower’s option at a rate equal to i) Term SOFR plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or ii) the Base Rate (determined by reference to the greatest of i) the Prime Rate at such time, ii) ½ of 1% in excess of the Federal Funds Effective Rate at such time, and iii) Term SOFR for a one-month tenor in effect at such time plus 1 %.

On January 8, 2024, the Company borrowed $ 50.0 million under the Delayed Draw Term Loan Facility, using a portion of the proceeds to repay outstanding borrowings under the Revolving Credit Facility.

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 will be unsecured and senior obligations of the Company and will accrue interest at a rate of 5.00 % per annum.

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.

The Convertible Notes do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries.

The Convertible Notes contain customary terms regarding events of default.

If any event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, then each noteholder may, by written notice to the Company, declare the principal amount of, and all accrued and unpaid interest on, such noteholder’s Convertible Notes to become due and payable immediately.

If an event of default involving certain events

of bankruptcy, insolvency or reorganization occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person.

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.

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, requires the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50 :1.00 to 6.25 :1.00 and stepping down to 4.50 :1.00 by April 2026 and (ii) an interest coverage ratio of at least 1.50 :1.00 on and prior to September 30, 2025 and at least 2.00 :1.00 on December 31, 2025 and thereafter.

The Credit Agreement, as amended, 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 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 %).

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data