Westrock Coffee Co 10-Q

Item 1. Financial Statements ​ WESTROCK COFFEE COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ (Thousands, except par value) March 31, 2024 December 31, 2023 ASSETS ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 12,571 ​ $ 37,196 Restricted cash ​ ​ 1,205 ​ ​ 644 Accounts receivable, net of allowance for credit losses of $ 3,356 and 2,915 , respectively ​ ​ 90,214 ​ ​ 99,158 Inventories ​ ​ 140,354 ​ ​ 149,921 Derivative assets ​ ​ 15,424 ​ ​ 13,658 Prepaid expenses and other current assets ​ ​ 13,457 ​ ​ 12,473 Total current assets ​ ​ 273,225 ​ ​ 313,050 ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, net ​ ​ 400,839 ​ ​ 344,038 Goodwill ​ ​ 116,111 ​ ​ 116,111 Intangible assets, net ​ ​ 120,950 ​ ​ 122,945 Operating lease right-of-use assets ​ ​ 64,000 ​ ​ 67,601 Other long-term assets ​ ​ 8,131 ​ ​ 7,769 Total Assets ​ $ 983,256 ​ $ 971,514 ​ ​ ​ ​ ​ ​ ​ LIABILITIES, CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current maturities of long-term debt ​ $ 12,118 ​ $ 9,811 Short-term debt ​ ​ 34,432 ​ ​ 43,694 Accounts payable ​ ​ 44,230 ​ ​ 69,106 Supply chain finance program ​ ​ 78,706 ​ ​ 78,076 Derivative liabilities ​ ​ 4,229 ​ ​ 3,731 Accrued expenses and other current liabilities ​ ​ 46,573 ​ ​ 35,217 Total current liabilities ​ ​ 220,288 ​ ​ 239,635 ​ ​ ​ ​ ​ ​ ​ Long-term debt, net ​ ​ 224,090 ​ ​ 223,092 Convertible notes payable - related party, net ​ ​ 49,654 ​ ​ — Deferred income taxes ​ ​ 16,722 ​ ​ 10,847 Operating lease liabilities ​ ​ 60,400 ​ ​ 63,554 Warrant liabilities ​ ​ 44,761 ​ ​ 44,801 Other long-term liabilities ​ ​ 1,528 ​ ​ 1,629 Total liabilities ​ ​ 617,443 ​ ​ 583,558 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 20) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Series A Convertible Preferred Shares, $ 0.01 par value, 24,000 shares authorized, 23,512 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively, $ 11.50 liquidation value ​ ​ 274,129 ​ ​ 274,216 ​ ​ ​ ​ ​ ​ ​ 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, 88,282 shares and 88,051 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively ​ ​ 883 ​ ​ 880 Additional paid-in-capital ​ ​ 473,064 ​ ​ 471,666 Accumulated deficit ​ ​ ( 386,297 ) ​ ​ ( 362,624 ) Accumulated other comprehensive income ​ ​ 4,034 ​ ​ 3,818 Total shareholders' equity ​ ​ 91,684 ​ ​ 113,740 ​ ​ ​ ​ ​ ​ ​ Total Liabilities, Convertible Preferred Shares and Shareholders' Equity ​ $ 983,256 ​ $ 971,514 ​ ​ ​ ​ See accompanying notes to condensed consolidated financial statements. 5 Table of Contents WESTROCK COFFEE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands, except per share data) 2024 2023 Net sales ​ $ 192,500 ​ $ 205,442 Costs of sales ​ ​ 155,226 ​ ​ 171,144 Gross profit ​ ​ 37,274 ​ ​ 34,298 ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expense ​ ​ 44,440 ​ ​ 34,122 Transaction, restructuring and integration expense ​ ​ 2,964 ​ ​ 6,644 Loss on disposal of property, plant and equipment ​ ​ 2 ​ ​ 896 Total operating expenses ​ ​ 47,406 ​ ​ 41,662 Loss from operations ​ ​ ( 10,132 ) ​ ​ ( 7,364 ) ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 7,579 ​ ​ 6,029 Change in fair value of warrant liabilities ​ ​ ( 41 ) ​ ​ ( 5,529 ) Other, net ​ ​ 135 ​ ​ 821 Loss before income taxes and equity in earnings from unconsolidated entities ​ ​ ( 17,805 ) ​ ​ ( 8,685 ) Income tax expense (benefit) ​ ​ 5,815 ​ ​ ( 4,359 ) Equity in (earnings) loss from unconsolidated entities ​ ​ 53 ​ ​ — Net loss ​ $ ( 23,673 ) ​ $ ( 4,326 ) Net income (loss) attributable to non-controlling interest ​ ​ — ​ ​ 15 Net loss attributable to shareholders ​ ​ ( 23,673 ) ​ ​ ( 4,341 ) Accretion of Series A Convertible Preferred Shares ​ ​ 87 ​ ​ ( 429 ) Net loss attributable to common shareholders ​ $ ( 23,586 ) ​ $ ( 4,770 ) ​ ​ ​ ​ ​ ​ ​ Loss per common share: ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.27 ) ​ $ ( 0.06 ) Diluted ​ $ ( 0.27 ) ​ $ ( 0.13 ) ​ ​ ​ ​ ​ ​ ​ Weighted-average number of shares outstanding: ​ ​ ​ ​ ​ ​ Basic ​ ​ 88,095 ​ ​ 75,358 Diluted ​ ​ 88,095 ​ ​ 76,693 ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to condensed consolidated financial statements. 6 Table of Contents WESTROCK COFFEE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Net loss ​ $ ( 23,673 ) ​ $ ( 4,326 ) Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ ​ Unrealized gain (loss) on derivative instruments ​ ​ 186 ​ ​ 2,240 Foreign currency translation adjustment ​ ​ 30 ​ ​ ( 18 ) Total other comprehensive income (loss) ​ ​ 216 ​ ​ 2,222 Comprehensive loss ​ ​ ( 23,457 ) ​ ​ ( 2,104 ) Comprehensive income (loss) attributable to non-controlling interests ​ ​ — ​ ​ 15 Comprehensive loss attributable to shareholders ​ ​ ( 23,457 ) ​ ​ ( 2,119 ) Accretion of Series A Convertible Preferred Shares ​ ​ 87 ​ ​ ( 429 ) Comprehensive loss attributable to common shareholders ​ $ ( 23,370 ) ​ $ ( 2,548 ) ​ ​ ​ See accompanying notes to condensed consolidated financial statements. 7 Table of Contents ​ WESTROCK COFFEE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Additional ​ Accumulated ​ Comprehensive ​ Non-Controlling ​ Total (Thousands) Shares Amount Paid-in Capital Deficit Income (Loss) Interest Equity Balance at December 31, 2022 ​ 75,020 ​ $ 750 ​ $ 342,664 ​ $ ( 328,042 ) ​ $ ( 6,103 ) ​ $ 2,460 ​ $ 11,729 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ ( 4,341 ) ​ ​ — ​ ​ 15 ​ ​ ( 4,326 ) Issuance of common shares related to acquisitions ​ 40 ​ ​ 2 ​ ​ 444 ​ ​ — ​ ​ — ​ ​ — ​ ​ 446 Issuance of common shares related to Public Warrant exercise ​ 229 ​ ​ 2 ​ ​ 3,142 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,144 Issuance of common shares related to stock options exercised ​ 6 ​ ​ 1 ​ ​ 62 ​ ​ — ​ ​ — ​ ​ — ​ ​ 63 Issuance of common shares related to conversion of Series A Convertible Preferred Shares ​ 22 ​ ​ 1 ​ ​ 253 ​ ​ — ​ ​ — ​ ​ — ​ ​ 254 Accretion of Series A Convertible Preferred Shares ​ — ​ ​ — ​ ​ ( 429 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 429 ) Other comprehensive income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,222 ​ ​ — ​ ​ 2,222 Equity-based compensation ​ 311 ​ ​ 3 ​ ​ 1,545 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,548 Net share settlement of equity awards ​ — ​ ​ — ​ ​ ( 1,841 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,841 ) Balance at March 31, 2023 ​ 75,628 ​ $ 759 ​ $ 345,840 ​ $ ( 332,383 ) ​ $ ( 3,881 ) ​ $ 2,475 ​ $ 12,810 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 ​ 88,051 ​ $ 880 ​ $ 471,666 ​ $ ( 362,624 ) ​ $ 3,818 ​ $ — ​ $ 113,740 Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ ( 23,673 ) ​ ​ — ​ ​ — ​ ​ ( 23,673 ) Accretion of Series A Convertible Preferred Shares ​ — ​ ​ — ​ ​ 87 ​ ​ — ​ ​ — ​ ​ — ​ ​ 87 Other comprehensive income (loss) ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 216 ​ ​ — ​ ​ 216 Equity-based compensation ​ 231 ​ ​ 3 ​ ​ 2,452 ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,455 Net share settlement of equity awards ​ — ​ ​ — ​ ​ ( 1,141 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,141 ) Balance at March 31, 2024 ​ 88,282 ​ $ 883 ​ $ 473,064 ​ $ ( 386,297 ) ​ $ 4,034 ​ $ — ​ $ 91,684 ​ ​ ​ ​ ​ See accompanying notes to condensed consolidated financial statements. 8 Table of Contents WESTROCK COFFEE COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 23,673 ) ​ $ ( 4,326 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 7,548 ​ ​ 5,874 Equity-based compensation ​ ​ 2,455 ​ ​ 1,548 Provision for credit losses ​ ​ 441 ​ ​ 497 Amortization of deferred financing fees included in interest expense ​ ​ 1,050 ​ ​ 453 Loss on disposal of property, plant and equipment ​ ​ 2 ​ ​ 896 Mark-to-market adjustments ​ ​ ( 1,640 ) ​ ​ ( 1,236 ) Change in fair value of warrant liabilities ​ ​ ( 41 ) ​ ​ ( 5,529 ) Foreign currency transactions ​ ​ 245 ​ ​ 307 Deferred income tax expense (benefit) ​ ​ 5,815 ​ ​ ( 4,359 ) Other ​ ​ 343 ​ ​ 259 Change in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ 8,397 ​ ​ ( 14,048 ) Inventories ​ ​ 8,907 ​ ​ 6,626 Derivative assets and liabilities ​ ​ 1,302 ​ ​ ( 76 ) Prepaid expense and other assets ​ ​ 494 ​ ​ ( 9,510 ) Accounts payable ​ ​ ( 18,038 ) ​ ​ ( 10,756 ) Accrued liabilities and other ​ ​ 14,372 ​ ​ 8,249 Net cash provided by (used in) operating activities ​ ​ 7,979 ​ ​ ( 25,131 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Additions to property, plant and equipment ​ ​ ( 68,914 ) ​ ​ ( 19,625 ) Additions to intangible assets ​ ​ ( 43 ) ​ ​ ( 41 ) Acquisition of business, net of cash acquired ​ ​ — ​ ​ ( 2,392 ) Proceeds from sale of property, plant and equipment ​ ​ 21 ​ ​ 30 Net cash used in investing activities ​ ​ ( 68,936 ) ​ ​ ( 22,028 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Payments on debt ​ ​ ( 100,462 ) ​ ​ ( 56,358 ) Proceeds from debt ​ ​ 73,813 ​ ​ 106,706 Payments on supply chain financing program ​ ​ ( 38,980 ) ​ ​ — Proceeds from supply chain financing program ​ ​ 39,610 ​ ​ — Proceeds from convertible notes payable ​ ​ 72,000 ​ ​ — Payment of debt issuance costs ​ ​ ( 2,934 ) ​ ​ ( 405 ) Net proceeds from (repayments of) repurchase agreements ​ ​ ( 4,933 ) ​ ​ ( 4,418 ) Proceeds from exercise of stock options ​ ​ — ​ ​ 63 Proceeds from exercise of Public Warrants ​ ​ — ​ ​ 2,632 Payment for taxes for net share settlement of equity awards ​ ​ ( 1,141 ) ​ ​ ( 1,841 ) Net cash provided by financing activities ​ ​ 36,973 ​ ​ 46,379 Effect of exchange rate changes on cash ​ ​ ( 80 ) ​ ​ ( 55 ) Net decrease in cash and cash equivalents and restricted cash ​ ​ ( 24,064 ) ​ ​ ( 835 ) Cash and cash equivalents and restricted cash at beginning of period ​ ​ 37,840 ​ ​ 26,405 Cash and cash equivalents and restricted cash at end of period ​ $ 13,776 ​ $ 25,570 ​ ​ ​ ​ ​ ​ ​ Supplemental non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Property, plant and equipment acquired but not yet paid ​ $ 17,508 ​ $ 4,168 ​ The total cash and cash equivalents and restricted cash is as follows: ​ ​ ​ ​ ​ ​ ​ (Thousands) March 31, 2024 March 31, 2023 Cash and cash equivalents ​ $ 12,571 ​ $ 23,688 Restricted cash ​ ​ 1,205 ​ ​ 1,882 Total ​ $ 13,776 ​ $ 25,570 ​ ​ ​ See accompanying notes to condensed consolidated financial statements. 9 Table of Contents WESTROCK COFFEE COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) ​ Note 1. 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, non-commercial account, consumer packaged goods (“CPG”), and hospitality industries around the world. We manage our business in two operating segments. Beverage Solutions: Through this segment, we combine our product innovation and customer insights to provide value-added beverage solutions, including coffee, tea, flavors, extracts and ingredients. We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, and single serve cups, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings. Currently, we serve customers in the United States, Europe and Asia, through the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG, and hospitality industries. Sustainable Sourcing & Traceability: Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, tangible economic empowerment and an emphasis on environmental accountability and farmer literacy. Revenues primarily consist of sales from commodity contracts related to forward sales of green coffee. Note 2. Basis of Presentation and Consolidation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) using the U.S. dollar as the reporting currency. They do not include all the information and footnotes required by GAAP for complete financial statements. The Condensed 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 Condensed Consolidated Balance Sheet as of December 31, 2023 was derived from the audited financial statements, but does not include all disclosures required by GAAP. 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 stock, par value $ 0.01 per share, of the Company (“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. In the Condensed 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. Falcon operates our trading business and is reported within our Sustainable Sourcing & Traceability segment. ​ The interim financial information is unaudited but, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair statement of results for the interim periods have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited December 31, 2023 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2024. Accordingly, certain significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our audited financial statements. ​ 10 Table of Contents Note 3. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with 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 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 condensed 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 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 projected cash flow from operations, including current projections of the timing and amount of cash flows to be generated from our Conway, Arkansas extract and ready-to-drink manufacturing facility (the “Conway Facility”), and available borrowings under its Credit Agreement, as amended, will be sufficient to fund operations for at least the next twelve months. However, during the three months ended March 31, 2024, the Company incurred net losses of $ 23.7 million. If we are unable to achieve our profitability growth projections and maintain our minimum liquidity requirements, as a result of, for example, experiencing any adverse impact of changes or delays in the estimated timing and volume of products to be commercialized in our Conway Facility over the next twelve months, 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 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 Condensed 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. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist principally of amounts billed and currently due from customers and are generally unsecured and due within 30 to 60 days . A portion of our accounts receivable is not expected to be collected due to non-payment, bankruptcies and deductions. Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers. This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers. We consider our accounts receivable delinquent or past due based on payment terms established with each customer. Accounts receivable are written off when the account is determined to be uncollectible. 11 Table of Contents Activity in the allowance for credit losses for the periods indicated was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Balance at beginning of period ​ $ 2,915 ​ $ 3,023 Charged to selling, general and administrative expense ​ ​ 441 ​ ​ 497 Write-offs ​ ​ — ​ ​ ( 1,004 ) Total ​ $ 3,356 ​ $ 2,516 ​ Inventories ​ Within our Sustainable Sourcing & Traceability segment, green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, consistent with our forward purchase contracts recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations. For the three months ended March 31, 2024 and 2023, we recognized $ 0.7 million of net unrealized losses and $ 2.3 million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts. 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 three months ended March 31, 2024, we capitalized $ 2.8 million of interest costs. No such interest was capitalized during the three months ended March 31, 2023. 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 Condensed 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 Condensed Consolidated Statements of Cash Flows. Amounts paid to the financing provider are reflected as cash outflows from financing activities in our Condensed Consolidated Statements of Cash Flows. At March 31, 2024 and December 31, 2023, there were $ 78.7 million and $ 78.1 million of obligations outstanding under the Program, respectively. ​ Income Taxes ​ We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases, using enacted income tax rates expected to apply when the deferred tax assets and liabilities are expected to be realized or settled. The Company’s foreign subsidiaries file income tax returns and are subject to tax provisions in their respective foreign tax jurisdictions. ​ 12 Table of Contents A valuation allowance is established to reduce deferred income tax assets if, on the basis of available evidence, it is more likely than not that all or a portion of any deferred tax assets will not be realized. The consideration of available evidence requires significant management judgment including an assessment of the future periods in which the deferred tax assets and liabilities are expected to be realized and projections of future taxable income. Specifically, in assessing the need for a valuation allowance, we consider the reversal of taxable temporary differences, future taxable income, the ability to carryback certain attributes and tax-planning strategies. The ultimate realization of the deferred tax assets, including net operating losses, is dependent upon the generation of future taxable income during the periods prior to their expiration. If our estimates and assumptions about future taxable income are not appropriate, the value of our deferred tax assets may not be recoverable, which may result in an increase to our valuation allowance that will impact current earnings. We re-evaluate our need for a valuation allowance on a quarterly basis. ​ The effective income tax rates for the three months ended March 31, 2024 and 2023 were ( 32.6 )% and 50.2 %, respectively. The Company’s effective tax rate for the current period differs from the federal statutory rate primarily due to an increase in the valuation allowance against domestic deferred tax assets and certain permanent differences, including nondeductible expenses related to executive compensation. The effective tax rate for the three months ended March 31, 2024 differs from the effective tax rate for the same period in 2023 primarily due to the Company’s full year forecasted ordinary income (loss) in the periods. ​ On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") released Pillar Two Model Rules, which provide for a global minimum tax of 15% on multinational entities. Although the U.S. has not yet adopted the Pillar Two Model Rules, several foreign countries enacted Pillar Two legislation in 2023 with an initial effective date of January 1, 2024. The impact of Pillar Two legislation on the Company's 2024 effective tax rate is expected to be minimal. Management will continue to monitor future Pillar Two legislation in relevant jurisdictions for any impacts to the Company's effective tax rate. ​ Recently adopted accounting pronouncements ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): 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 roll forward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the 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. 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. 13 Table of Contents 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. The Enhancement and Standardization of Climate-Related Disclosure for Investors In March 2024, the SEC adopted final rules requiring registrants to provide certain climate-related disclosures, including Scope 1 and Scope 2 greenhouse gas emissions to the extent they are material. These rules require certain disclosures related to severe weather events and other natural conditions in the notes to audited financial statements. These disclosures are required to phase-in over multiple years beginning with fiscal 2025 for large accelerated filers and fiscal 2026 for accelerated filers. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the impact of the new rules. Note 4. Revenue Revenue from Contracts with Customers (ASC 606) We measure revenue based on the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. Our principal source of revenue is from the procurement, trade, manufacture, and distribution of coffee, tea and extracts to customers in the United States, Europe, and Asia. The transaction price of a contract, net of discounts and expected returns, is allocated to each distinct performance obligation based on the relative standalone selling price of the obligation and is recognized as revenue when the performance obligation is satisfied. The standalone selling price is the estimated price we would charge for the good or service in a separate transaction with similar customers in similar circumstances. Identifying distinct performance obligations and determining the standalone selling price for each performance obligation within a contract requires management judgment. Substantially all our client contracts require that we be compensated for services performed to date. This is upon shipment of goods or upon delivery to the customer, depending on contractual terms. Shipping and handling costs paid by the customer to us are included in revenue and costs incurred by us for shipping and handling activities that are performed after a customer obtains control of the product are accounted for as fulfillment costs. In addition, we exclude from net revenue and cost of sales taxes assessed by governmental authorities on revenue-producing transactions. Although we occasionally accept returns of products from our customers, historically returns have not been material. At times, the Company may enter into agreements in which its Sustainable Sourcing & Traceability segment will sell inventory to a third party, from whom the Company’s Beverage Solutions segment has an obligation to repurchase. Such transactions are accounted for as financing transactions in accordance with ASC 606. At March 31, 2024 and December 31, 2023, the Company has $ 3.4 million and $ 8.3 million, respectively, of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. Net cash flows associated with these repurchase agreements are reported as financing activities in the Condensed Consolidated Statements of Cash Flows. 14 Table of Contents Revenue from Forward Contracts (ASC 815) A portion of the Company’s revenues consist of sales from commodity contracts that are accounted for under ASC 815. Sales from commodity contracts primarily relate to forward sales of green coffee which are accounted for as derivatives at fair value under ASC 815. These forward sales meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash. The Company does not apply the normal purchase and normal sale exception under ASC 815 to these contracts. Revenues from commodity contracts are recognized in revenues for the contractually stated amount when the contracts are settled. Settlement generally occurs upon shipment or delivery of the product when title and risks and rewards of ownership transfers to the customer. Prior to settlement, these forward sales contracts are recognized at fair value with the unrealized gains or losses recorded within costs of sales in our Condensed Consolidated Statements of Operations. For the three months ended March 31, 2024 and 2023, we recorded $ 2.3 million of net unrealized gains and $ 1.0 million of net unrealized losses, respectively, within costs of sales. For the three months ended March 31, 2024 and 2023, the Company recognized $ 35.0 million and $ 24.4 million in revenues under ASC 815, respectively, which are reported within the Company’s Sustainable Sourcing & Traceability segment. Contract Estimates The nature of the Company’s contracts give rise to variable consideration including cash discounts, volume-based rebates, point of sale promotions, and other promotional discounts to certain customers. For all promotional programs and discounts, the Company estimates the rebate or discount that will be granted to the customer and records an accrual upon invoicing. These estimated rebates or discounts are included in the transaction price of the Company’s contracts with customers as a reduction to net revenues and are included as accrued sales incentives in accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. Accrued sales incentives were $ 1.8 million and $ 1.5 million at March 31, 2024 and December 31, 2023, respectively. Other accrued deductions were $ 3.4 million and $ 2.7 million at March 31, 2024 and December 31, 2023, respectively, and are included as a reduction to accounts receivable, net in the Condensed 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. Contract Balances Contract balances relate primarily to advances received from the Company’s customers before revenue is recognized. The Company does not have any material contract liabilities as of March 31, 2024 or December 31, 2023. Receivables from contracts with customers are included in accounts receivable, net on the Company’s Condensed Consolidated Balance Sheets. At March 31, 2024 and December 31, 2023, accounts receivable, net included $ 96.1 million and $ 104.8 million in receivables from contracts with customers, respectively. Contract acquisition costs for obtaining contracts that are deemed recoverable are capitalized as contract costs. Such costs result from the payment of sales incentives and are amortized over the contract life. As of March 31, 2024 and December 31, 2023, no costs were capitalized as all arrangements were less than a year. 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. 15 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Coffee & tea ​ $ 118,768 ​ $ 146,349 Flavors, extracts & ingredients ​ ​ 38,416 ​ ​ 33,862 Other ​ ​ 875 ​ ​ 998 Green coffee ​ ​ 34,441 ​ ​ 24,233 Net sales ​ $ 192,500 ​ $ 205,442 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 United States ​ $ 160,134 ​ $ 185,561 All other countries ​ ​ 32,366 ​ ​ 19,881 Net sales ​ $ 192,500 ​ $ 205,442 ​ ​ Note 5. Acquisitions 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. ​ ​ Note 6. Inventories The following table summarizes inventories as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) March 31, 2024 December 31, 2023 Raw materials ​ $ 78,720 ​ $ 78,882 Finished goods ​ ​ 30,074 ​ ​ 26,857 Green coffee ​ ​ 31,560 ​ ​ 44,182 Total inventories ​ $ 140,354 ​ $ 149,921 ​ Green coffee inventories represent green coffee held for resale. At March 31, 2024 and December 31, 2023, all green coffee held for resale was included within our Sustainable Sourcing & Traceability segment. ​ ​ 16 Table of Contents Note 7. Property, Plant and Equipment, Net The following table summarizes property, plant and equipment, net as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) Depreciable Lives March 31, 2024 December 31, 2023 Land ​ ​ ​ $ 8,756 ​ $ 8,778 Buildings ​ 10 - 40 years ​ ​ 45,975 ​ ​ 35,911 Leasehold improvements (1) ​ ​ ​ ​ 12,465 ​ ​ 9,800 Plant equipment ​ 3 - 15 years ​ ​ 130,648 ​ ​ 128,639 Vehicles and transportation equipment ​ 3 - 5 years ​ ​ 632 ​ ​ 648 IT systems ​ 3 - 7 years ​ ​ 12,576 ​ ​ 8,909 Furniture and fixtures ​ 3 - 10 years ​ ​ 3,289 ​ ​ 3,294 Customer beverage equipment (2) ​ 3 - 5 years ​ ​ 22,982 ​ ​ 22,931 Lease right-of-use assets (3) ​ ​ ​ ​ 81 ​ ​ 81 Construction in progress and equipment deposits ​ ​ ​ ​ 251,852 ​ ​ 208,308 ​ ​ ​ ​ ​ 489,256 ​ ​ 427,299 Less: accumulated depreciation ​ ​ ​ ​ ( 88,417 ) ​ ​ ( 83,261 ) Property, plant and equipment, net ​ ​ ​ $ 400,839 ​ $ 344,038 1 - Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease life. 2 - Customer beverage equipment consists of brewers held on site at customer locations. 3 - Lease right-of-use assets are amortized over the shorter of the useful life of the asset or the lease term. ​ Depreciation expense for the three months ended March 31, 2024 and 2023 was $ 5.5 million and $ 3.9 million, respectively. 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 March 31, 2024 are expected to be in production use. Note 8. Goodwill The following table reflects the carrying amount of goodwill as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beverage ​ (Thousands) ​ Solutions ​ Total Balance at December 31, 2023 ​ ​ ​ ​ ​ ​ Goodwill ​ $ 192,994 ​ $ 192,994 Accumulated impairment loss ​ ​ ( 76,883 ) ​ ​ ( 76,883 ) ​ ​ ​ 116,111 ​ ​ 116,111 Balance at March 31, 2024 ​ ​ ​ ​ ​ ​ Goodwill ​ $ 192,994 ​ $ 192,994 Accumulated impairment loss ​ ​ ( 76,883 ) ​ ​ ( 76,883 ) ​ ​ $ 116,111 ​ $ 116,111 ​ ​ 17 Table of Contents Note 9. Intangible Assets, Net The following table summarizes intangible assets, net as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ ​ ​ ​ Accumulated ​ ​ (Thousands) Cost Amortization Net Customer relationships ​ $ 148,648 ​ $ ( 28,415 ) ​ $ 120,233 Favorable lease asset ​ ​ 790 ​ ​ ( 481 ) ​ ​ 309 Software ​ ​ 1,119 ​ ​ ( 711 ) ​ ​ 408 Intangible assets, net ​ $ 150,557 ​ $ ( 29,607 ) ​ $ 120,950 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ Accumulated ​ ​ (Thousands) Cost Amortization Net Customer relationships ​ $ 148,648 ​ $ ( 26,487 ) ​ $ 122,161 Favorable lease asset ​ ​ 790 ​ ​ ( 413 ) ​ ​ 377 Software ​ ​ 1,079 ​ ​ ( 672 ) ​ ​ 407 Intangible assets, net ​ $ 150,517 ​ $ ( 27,572 ) ​ $ 122,945 ​ Amortization expense of intangible assets was $ 2.0 million and $ 2.0 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the weighted average useful life for definite-lived intangibles is approximately 20 years . ​ Note 10. Leases 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. The remaining terms on our leases range from 1 year to 15 years , some of which may include options to extend the leases and some of which may include options to terminate the leases within 1 year . The following table summarizes the amount of right-of-use lease assets and lease liabilities included in each respective line item on the Company’s Condensed Consolidated Balance Sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) Balance Sheet Location March 31, 2024 December 31, 2023 Right-of-use operating lease assets ​ Operating lease right-of-use assets ​ $ 64,000 ​ $ 67,601 Operating lease liabilities - current ​ Accrued expenses and other current liabilities ​ ​ 4,650 ​ ​ 4,809 Operating lease liabilities - noncurrent ​ Operating lease liabilities ​ ​ 60,400 ​ ​ 63,554 ​ During the three months ended March 31, 2024 and 2023, the Company obtained $ 1.0 million and $ 6.0 million of right-of-use operating lease assets in exchange for lease obligations. 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 the date of this Quarterly Report on Form 10-Q, no costs have been incurred, and no costs are 18 Table of Contents 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. 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 Condensed Consolidated Statements of Operations. The components of lease costs for the three months ended March 31, 2024 and 2023, respectively, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) ​ 2024 2023 Operating lease cost ​ $ 2,792 ​ $ 1,221 Short-term lease cost ​ ​ 232 ​ ​ 234 Total ​ $ 3,024 ​ $ 1,455 ​ The following table presents information about the Company’s weighted average discount rate and remaining lease term as of March 31, 2024 and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 Weighted-average discount rate ​ ​ 7.8 % ​ ​ 7.8 % Weighted-average remaining lease term ​ ​ 12.6 years ​ ​ 12.9 years ​ Supplemental cash flow information about the Company’s leases as of March 31, 2024 and 2023, respectively, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Cash paid related to operating lease liabilities ​ $ 2,503 ​ $ 1,065 ​ 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 Condensed Consolidated Balance Sheets. There were no material finance leases as of March 31, 2024. Future minimum lease payments under non-cancellable operating leases as of March 31, 2024 are as follows: ​ ​ ​ ​ ​ (Thousands) ​ ​ Remainder of 2024 ​ $ 7,012 2025 ​ ​ 8,271 2026 ​ ​ 7,651 2027 ​ ​ 7,698 2028 ​ ​ 7,157 Thereafter ​ ​ 68,540 Total future minimum lease payments ​ ​ 106,329 Less: imputed interest ​ ​ ( 41,279 ) Present value of minimum lease payments ​ $ 65,050 ​ ​ ​ 19 Table of Contents Note 11. Debt Our long-term debt at March 31, 2024 and December 31, 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) March 31, 2024 December 31, 2023 Term loan facility ​ $ 161,875 ​ $ 164,063 Delayed draw term loan facility ​ ​ 50,000 ​ ​ — Revolving credit facility ​ ​ — ​ ​ 65,000 Convertible notes payable ​ ​ 72,000 ​ ​ — International trade finance lines ​ ​ 34,432 ​ ​ 43,694 International notes payable ​ ​ 5,985 ​ ​ 6,179 Other loans ​ ​ 34 ​ ​ 39 Total debt ​ ​ 324,326 ​ ​ 278,975 Unamortized debt costs ​ ​ ( 4,032 ) ​ ​ ( 2,378 ) Current maturities of long-term debt ​ ​ ( 12,118 ) ​ ​ ( 9,811 ) Convertible notes payable - related party, net ​ ​ ( 49,654 ) ​ ​ — Short-term debt ​ ​ ( 34,432 ) ​ ​ ( 43,694 ) Long-term debt, net ​ $ 224,090 ​ $ 223,092 ​ Credit Agreement The Company is party to a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto. The Credit Agreement 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, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) Term SOFR plus a credit spread adjustment of 0.10 % for loans with an interest period of one month , 0.15 % for loans with an interest period of three months and 0.25 % for loans with an interest period of six months , as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50 % and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00 %, (the “Base Rate”)), in each case plus an applicable margin. ​ At March 31, 2024, the interest rate applicable to our Term Loan Facility was 9.2 %, and the interest rate applicable to our Delayed Draw Term Loan Facility was 8.7 %. At March 31, 2024, no amounts were outstanding under the Revolving Credit Facility and we had $ 2.6 million of standby letters of credit outstanding. 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 (as defined below). 20 Table of Contents 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. As of the date of this Quarterly Report on Form 10-Q, the Company was in compliance with its financial covenants. ​ The Term Loan Facility and Delayed Draw Term Loan Facility requires quarterly principal payments totaling approximately $ 2.8 million ( 1.25 % of the original principal balance). Quarterly payments increase to approximately $ 4.2 million and $ 5.6 million ( 1.875 % and 2.5 % of the original principal balance) during the final two years of the agreements, respectively. ​ We incurred a total of $ 2.4 million in financing fees in connection with the Third Amendment. Approximately $ 1.3 million of the fees were allocated to the Term Loan Facility and are being amortized over the remaining term of the Term Loan Facility utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility. Approximately $ 1.0 million of the fees were allocated to the Revolving Credit Facility, are reported within other long-term assets on the Condensed Consolidated Balance Sheets and are being amortized ratably over the remaining term of the Revolving Credit Facility. ​ Convertible Notes On February 15, 2024, the Company sold and issued in a private placement $ 72.0 million in aggregate principal amount of 5.00 % convertible senior notes due 2029 (the “Convertible Notes”), of which $ 50.0 million was from related parties (See Note 21). The Convertible Notes are unsecured, senior obligations of the Company and accrue interest at a rate of 5.00 % per annum. The Convertible Notes are carried at amortized cost and are recorded in long-term debt, net and convertible notes payable – related party, net on the Condensed Consolidated Balance Sheets. At March 31, 2024, the carrying value of the Convertible Notes was $71.5 million, of which $ 49.7 million was from related parties. We incurred a total of $ 0.5 million of financing fees in connection with the Convertible Notes, which were ratably allocated to the convertible notes payable and the convertible notes payable – related party, respectively, and are being amortized into interest expense over the remaining term of the Convertible Notes utilizing the effective interest rate method. Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances: (i) during the period commencing on August 15, 2024, and prior to the close of business on the trading day immediately preceding August 15, 2028, if the closing price for at least 20 trading days (whether or not consecutive) during the period of any 30 consecutive trading days in the immediately preceding calendar quarter is equal to or greater than 130 % of the conversion price; (ii) during the period commencing on August 15, 2028, and prior to the close of business on the second scheduled trading day immediately preceding February 15, 2029, at any time; and (iii) during the 35 trading days following the effective date of certain fundamental change transactions that occur prior to the close of business on the trading day immediately preceding August 15, 2028. The Company will settle conversions by paying or delivering, as applicable, at the Company’s election, cash, Common Shares, or a combination of cash and Common Shares. The Company may not issue more than 19.99 % of the issued and outstanding Common Shares immediately prior to the issuance of the Convertible Notes in respect of the conversion of the Convertible Notes. The initial conversion price of the Convertible Notes is $ 12.84 , which corresponds to an initial 21 Table of Contents conversion rate of approximately 77.88 Common Shares per $ 1,000 principal amount of Convertible Notes. The conversion price and conversion rate are subject to customary adjustments. ​ International Debt and Lending Facilities ​ On March 21, 2023, we entered into a $ 70 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon. The facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The facility was set to mature one year from inception. Borrowings under the facility bore interest at the borrower’s option at a rate equal to (a) Term SOFR, as defined in the facility, plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 %). ​ On March 8, 2024, Falcon renewed its working capital trade finance facility with multiple institutions. The facility size was reduced from $ 70.0 million to $ 55.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The facility will mature one year from inception. Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00 % in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 % ). At March 31, 2024, there was $ 27.8 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Condensed 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 March 31, 2024. ​ On September 28, 2023, we entered into a $ 5.0 million unsecured working capital trade finance facility with responsAbility Climate Smart Agriculture & Food Systems Fund through our subsidiary, Falcon. The facility will mature on December 31, 2026, and requires stepped repayments of $ 0.5 million on December 31, 2024, $ 1.0 million on December 31, 2025 and $ 3.5 million on December 31, 2026. Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) (i) the most recent applicable Term SOFR for the longest period (for which Term SOFR is available) which is less than the applicable interest period of the loan or (ii) if no such Term SOFR is available for a period which is less than the applicable interest period, SOFR for the day which is two U.S. Government Securities Business Days before the Quotation Day; or (b) the most recent applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin. At March 31, 2024, 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 Condensed 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 March 31, 2024. ​ 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 March 31, 2024 and (b) a long-term note payable with a balance of $ 1.0 million at March 31, 2024. Note 12. Series A Preferred Shares The Company has 23,511,922 Westrock Series A Preferred Shares outstanding, 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. ​ 22 Table of Contents 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. In the event of our liquidation, dissolution or winding up, holders of Westrock Series A Preferred Shares are entitled to receive, per Westrock Series A Preferred Share, the greater of (a) the liquidation preference and (b) the amount such holder would have received had they converted their Westrock Series A Preferred Shares into Common Shares immediately prior to such liquidation event. ​ Holders of Westrock Series A Preferred Shares may voluntarily convert their Westrock Series A Preferred Shares into a whole number of Common Shares at any time at a rate equal to the quotient of (a) the liquidation preference as of the applicable conversion date, divided by (b) the conversion price as of the applicable conversion date, which is currently $ 11.50 per Westrock Series A Preferred Share, plus cash in lieu of fractional shares. 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. ​ After February 26, 2028, 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 March 31, 2024 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, 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. The redemption price for the Westrock Series A Preferred Shares held by controlled affiliates of Brown Brothers Harriman & Co. (“BBH Investors”) may not be less than the $ 18.50 per Westrock Series A Preferred Share (subject to adjustments); provided that, Westrock may redeem such shares in such a case if it pays an incremental price per share on the redemption date to the BBH Investors equal to the difference between $ 18.50 (subject to adjustments) and the redemption price otherwise. Upon issuance, the Westrock Series A Preferred Shares were recorded on our Condensed Consolidated Balance Sheets at fair value. Subsequently, the Company will accrete changes in the redemption value from the date of issuance to the earliest redemption date using the effective interest rate method. The accretion will be recorded as a deemed dividend, which adjusts retained earnings (or in the absence of retained earnings, additional paid-in capital) and earnings attributable to common shareholders in computing basic and diluted earnings per share. However, at no time will the Westrock Series A Preferred Shares be reported at a value less than its initial carrying value. For the three months ended March 31, 2024 and 2023, the Company recorded $ 0.1 million of amortization and $ 0.4 million of accretion, respectively, with respect to the Westrock Series A Preferred Shares. Note 13. Common Stock Warrants The Company has 19,144,120 common stock warrants outstanding at March 31, 2024. 17,118,074 of the warrants are publicly-traded (the “Westrock Public Warrants”) and 2,026,046 of the warrants are private placements warrants (the “Westrock Private Warrants” and together with the Westrock Public Warrants, the “Westrock Warrants”). The Westrock Warrants are included in warrant liabilities on the Company’s Condensed 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. 23 Table of Contents 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; (ii) at a price of $ 0.01 per warrant; (iii) upon not less than 30 days ’ prior written notice of redemption to each warrant holder; 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. 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 are generally identical to the Westrock Public Warrants, except they cannot be redeemable by Westrock so long as they are held by the existing holders or its permitted transferees. Furthermore, the existing holders, or their permitted transferees, have the option to exercise the Westrock Private Warrants on a cashless basis. We account for the Westrock Warrants in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Condensed Consolidated Statements of Operations. The Company re-measures the fair value of the Westrock Public Warrants based on the quoted market price of the Westrock Public Warrants. The Westrock Private Warrants are valued using a binomial lattice valuation model. For the three months ended March 31, 2024 and 2023, the Company recognized less than $0.1 million and $ 5.5 million of gains, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Condensed Consolidated Statements of Operations. Note 14. Derivatives We record all derivatives, whether designated in a hedging relationship or not, at fair value on the Condensed 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. Option contracts are agreements to facilitate a potential transaction involving the commodity at a preset price and date. The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the types of hedging relationships. 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 not been designated and for which hedge accounting is not applied, are recorded in the same line item in our Condensed 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 Condensed 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. In addition, we formally assess both at the inception and at least quarterly thereafter, 24 Table of Contents whether the financial instruments used in hedging transactions are highly effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. We use cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in commodity prices. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. We did not discontinue any cash flow hedging relationships during the three months ended March 31, 2024 or 2023. Within our Beverage Solutions segment, we have entered into coffee futures contracts to hedge our exposure to price fluctuations on green coffee associated with certain price-to-be-fixed purchase contracts, which generally range from three to twelve months in length. These derivative instruments have been designated as cash flow hedges. The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of green coffee. The notional amount for the coffee futures contracts that were designated and qualified for our commodity cash flow hedging program was 16.1 million pounds and 11.5 million pounds as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024 and 2023, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 9.9 million pounds and 8.4 million pounds, respectively. Approximately $ 0.1 million of net realized gains and $ 0.7 million of net realized losses, representing the effective portion of the cash flow hedge, were subsequently reclassified from AOCI to earnings and recognized in costs of sales in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the estimated amount of net gains reported in AOCI that is expected to be reclassified to the Condensed Consolidated Statements of Operations within the next twelve months is $3.6 million. Within our Sustainable Sourcing & Traceability segment, the Company’s forward sales and forward purchase contracts are for physical delivery of green coffee in a future period. While the Company considers these contracts to be effective economic hedges, the Company does not designate or account for forward sales or forward purchase contracts as hedges as defined under current accounting standards. See Note 4 for a description of the treatment of realized and unrealized gains and losses on forward sales and forward purchase contracts. The fair value of our derivative assets and liabilities included in the Condensed Consolidated Balance Sheets are set forth below: ​ 25 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) Balance Sheet Location March 31, 2024 December 31, 2023 Derivative assets designated as cash flow hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Coffee futures contracts (1) ​ Derivative assets ​ $ 2,772 ​ $ 3,355 Total ​ ​ ​ $ 2,772 ​ $ 3,355 ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative assets not designated as cash flow hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Forward purchase and sales contracts ​ Derivative assets ​ $ 12,652 ​ $ 10,303 Total ​ ​ ​ ​ 12,652 ​ ​ 10,303 Total derivative assets ​ ​ ​ $ 15,424 ​ $ 13,658 ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative liabilities not designated as cash flow hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Forward purchase and sales contracts ​ Derivative liabilities ​ $ 4,229 ​ $ 3,731 Total derivative liabilities ​ ​ ​ $ 4,229 ​ $ 3,731 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 for the three months ended March 31, 2024 and 2023, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) Statement of Operations Location 2024 2023 Derivative assets designated as cash flow hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Net realized gains (losses) on coffee derivatives ​ Costs of sales ​ $ 92 ​ $ ( 721 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative assets and liabilities not designated as cash flow hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized gains (losses) on forward sales and purchase contracts ​ Costs of sales ​ $ 2,340 ​ $ ( 1,028 ) ​ Note 15. Fair Value Measurements ASC 820, Fair Value Measurements , defines fair value at the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. These levels are: ● Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets. ● Level 2—Valuation is based upon inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (i.e. interest rate and yield curves observable at commonly quoted intervals, default rates, etc.). Observable inputs include quoted prices for similar instruments in active and non-active markets. Level 2 includes those financial instruments that are valued with industry standard valuation models that incorporate inputs that are observable in the marketplace throughout the full term of the instrument or can otherwise be derived from or supported by observable market data in the marketplace. Level 2 inputs may also include insignificant adjustments to market observable inputs. 26 Table of Contents ● Level 3—Valuation is based upon one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are used to the extent relevant observable inputs are not available and are developed based on the best information available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The following table summarizes the fair value of financial instruments at March 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 (Thousands) ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Green coffee associated with forward contracts ​ $ — ​ $ 27,017 ​ $ — ​ $ 27,017 Coffee futures contracts ​ ​ 2,772 ​ ​ — ​ ​ — ​ ​ 2,772 Forward purchase and sales contracts ​ ​ — ​ ​ 12,652 ​ ​ — ​ ​ 12,652 Total ​ $ 2,772 ​ $ 39,669 ​ $ — ​ $ 42,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Forward purchase and sales contracts ​ ​ — ​ ​ 4,229 ​ ​ — ​ ​ 4,229 Westrock Public Warrants ​ ​ 39,372 ​ ​ — ​ ​ — ​ ​ 39,372 Westrock Private Warrants ​ ​ — ​ ​ — ​ ​ 5,389 ​ ​ 5,389 Total ​ $ 39,372 ​ $ 4,229 ​ $ 5,389 ​ $ 48,990 ​ The following table presents the change in fair value of Level 3 Westrock Private Warrant liabilities: ​ ​ ​ ​ ​ ​ ​ Westrock (Thousands) Private Warrants Fair value as of December 31, 2023 ​ $ 5,430 Change in fair value ​ ​ ( 41 ) Fair value as of March 31, 2024 ​ $ 5,389 ​ The following table summarizes the fair value of financial instruments at December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 (Thousands) ​ Level 1 ​ Level 2 ​ Level 3 ​ Total Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Green coffee associated with forward contracts ​ $ — ​ $ 33,447 ​ $ — ​ $ 33,447 Coffee futures contracts ​ ​ 3,355 ​ ​ — ​ ​ — ​ ​ 3,355 Forward purchase and sales contracts ​ ​ — ​ ​ 10,303 ​ ​ — ​ ​ 10,303 Total ​ $ 3,355 ​ $ 43,750 ​ $ — ​ $ 47,105 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Forward purchase and sales contracts ​ ​ — ​ ​ 3,731 ​ ​ — ​ ​ 3,731 Westrock Public Warrants ​ ​ 39,371 ​ ​ — ​ ​ — ​ ​ 39,371 Westrock Private Warrants ​ ​ — ​ ​ — ​ ​ 5,430 ​ ​ 5,430 Total ​ $ 39,371 ​ $ 3,731 ​ $ 5,430 ​ $ 48,532 ​ Coffee futures contracts and coffee options are valued based on quoted market prices. The estimated fair value for green coffee inventories associated with forward contracts and forward sales and purchase contracts are based on exchange-quoted prices, adjusted for differences in origin, quantity, quality, and future delivery period, as the exchange quoted prices represent standardized terms for the commodity. These adjustments are generally determined using broker or dealer quotes or based upon observable market transactions. 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. 27 Table of Contents Westrock Public Warrants are valued based on their quoted market price of $ 2.30 per warrant as of March 31, 2024 and December 31, 2023, respectively. Westrock Private Warrants price of $ 2.66 and $ 2.68 per warrant as of March 31, 2024 and December 31, 2023, 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 Stock price ​ $ 10.33 ​ $ 10.21 Exercise price ​ ​ 11.50 ​ ​ 11.50 Expected term (years) ​ ​ 5.00 ​ ​ 5.00 Expected volatility ​ ​ 33.40 % ​ ​ 33.80 % Risk-free rate of return ​ ​ 4.31 % ​ ​ 3.91 % Dividend yield ​ ​ 0.00 % ​ ​ 0.00 % ​ 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, a supply chain finance program, convertible notes payable, short-term debt and long-term debt. The carrying amount of cash, accounts receivable, accounts payable, short-term debt 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 Term Loan Facility, Revolving Credit Facility and Delayed Draw Term Loan Facility are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of March 31, 2024 as the interest rate on these facilities is adjusted for changes in the market rates. The Convertible Notes are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of March 31, 2024, as the Convertible Notes were issued on February 15, 2024. The fair value of the Term Loan Facility, Revolving Credit Facility, Delayed Draw Term Loan Facility and Convertible Notes 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 three months ended March 31, 2024 or 2023, requiring these non-financial assets and liabilities to be subsequently recognized at fair value. At March 31, 2024, the Company had an equity investment with a carrying value of approximately $ 1.0 million, for which there is no readily determinable fair value. This investment is recorded at cost within other long-term assets on the Condensed Consolidated Balance Sheets. As of March 31, 2024, there have been no adjustments, upward or downward, to the carrying value. 28 Table of Contents Note 16. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss), net of tax by component for the three months ended March 31, 2024 and 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Unrealized gain (loss) on derivative instruments: ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 3,362 ​ $ ( 6,355 ) Other comprehensive income (loss) before reclassifications ​ ​ 337 ​ ​ 2,354 Amounts reclassified from accumulated comprehensive income ​ ​ ( 92 ) ​ ​ 721 Tax effect ​ ​ ( 59 ) ​ ​ ( 835 ) Net accumulated other comprehensive income ​ ​ 3,548 ​ ​ ( 4,115 ) Less: Other comprehensive income attributable to non-controlling interests ​ ​ — ​ ​ — Balance at end of period ​ ​ 3,548 ​ ​ ( 4,115 ) Foreign currency translation adjustment ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ ​ 456 ​ ​ 252 Other comprehensive income (loss) before reclassifications ​ ​ 30 ​ ​ ( 18 ) Amounts reclassified from accumulated comprehensive income ​ ​ — ​ ​ — Tax effect ​ ​ — ​ ​ — Net accumulated other comprehensive income ​ ​ 486 ​ ​ 234 Less: Other comprehensive income attributable to non-controlling interests ​ ​ — ​ ​ — Balance at end of period ​ ​ 486 ​ ​ 234 Accumulated other comprehensive income (loss) at end of period ​ $ 4,034 ​ $ ( 3,881 ) ​ Note 17. Equity-Based Compensation During the three months ended March 31, 2024 and 2023, the Company granted 1.3 million and 1.1 million restricted stock units (“RSUs”), respectively, under the Westrock Coffee Company 2022 Equity Incentive Plan (the “2022 Equity Plan”). The RSUs had a grant date fair value of $ 12.3 million and $ 13.0 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. For RSUs issued during 2024, the vesting period is four year s, and for RSUs issued prior to 2024, the vesting period is three years . As of March 31, 2024, there were 2.7 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 three months ended March 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ ​ ​ ​ Fair Value at ​ ​ Units ​ Grant Date Outstanding at December 31, 2023 ​ 1,989,782 ​ $ 11.51 Granted ​ 1,276,276 ​ ​ 9.60 Forfeited ​ ( 17,563 ) ​ ​ 11.63 Vested ​ ( 348,895 ) ​ ​ 11.93 Outstanding at March 31, 2024 ​ 2,899,600 ​ $ 10.62 ​ ​ Note 18. Earnings per Share Westrock Series A Preferred Shares and our RSUs issued under our 2022 Equity Incentive 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”) . 29 Table of Contents The dilutive effect of Westrock Series A Preferred Shares and the Convertible Notes is calculated using the if-converted method, which assumes an add-back of any accretion on preferred shares and interest expense associated with the Convertible Notes 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 for the periods indicated because their inclusion would have an anti-dilutive effect on dilutive earnings (loss) per common share. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Warrants ​ ​ 19,144 ​ ​ — Restricted stock ​ ​ 2,148 ​ ​ 2,210 Options ​ ​ 1,328 ​ ​ 1,517 If-converted securities ​ ​ 27,073 ​ ​ 23,583 ​ The following table sets forth the computation of basic and diluted earnings per share under the two-class method for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands, except per share data) 2024 2023 Basic Earnings per Common Share ​ ​ ​ ​ ​ ​ Numerator: ​ ​ ​ ​ ​ ​ Net income (loss) attributable to common shareholders ​ $ ( 23,586 ) ​ $ ( 4,770 ) Denominator: ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding - basic ​ ​ 88,095 ​ ​ 75,358 Basic earnings (loss) per common share ​ $ ( 0.27 ) ​ $ ( 0.06 ) ​ ​ ​ ​ ​ ​ ​ Diluted Earnings per Common Share ​ ​ ​ ​ ​ ​ Numerator: ​ ​ ​ ​ ​ ​ Net income (loss) attributable to common shareholders - basic ​ $ ( 23,586 ) ​ $ ( 4,770 ) Effect of participating securities ​ ​ — ​ ​ — Effect of non-participating securities ​ ​ — ​ ​ ( 5,529 ) Net income (loss) attributable to common shareholders - diluted ​ $ ( 23,586 ) ​ $ ( 10,299 ) Denominator: ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding - basic ​ ​ 88,095 ​ ​ 75,358 Effect of dilutive participating securities ​ ​ — ​ ​ 1,335 Effect of dilutive non-participating securities ​ ​ — ​ ​ — Weighted-average common shares outstanding - diluted ​ ​ 88,095 ​ ​ 76,693 ​ ​ ​ ​ ​ ​ ​ Dilutive loss per common share ​ $ ( 0.27 ) ​ $ ( 0.13 ) ​ ​ Note 19. Segment Information 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 acquisition, transaction 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 30 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2024 ​ ​ ​ Sustainable ​ ​ Total of ​ ​ Beverage ​ Sourcing & ​ Intersegment ​ Reportable (Thousands) ​ Solutions ​ Traceability ​ Revenues ​ Segments Net sales ​ $ 158,059 ​ $ 36,320 ​ $ ( 1,879 ) ​ $ 192,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ ​ 10,800 ​ ​ 342 ​ ​ n/a ​ ​ 11,142 Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,579 Income tax expense (benefit) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,815 Depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,548 Transaction, restructuring and integration expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,964 Change in fair value of warrant liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 41 ) Equity-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,455 Conway extract and ready-to-drink facility start-up costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9,796 Mark-to-market adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,640 ) Loss (gain) on disposal of property, plant and equipment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2 Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 337 Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ ( 23,673 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ ​ 917,091 ​ ​ 66,165 ​ ​ n/a ​ ​ 983,256 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ Sustainable ​ ​ Total of ​ ​ Beverage ​ Sourcing & ​ Intersegment ​ Reportable (Thousands) ​ Solutions ​ Traceability ​ Revenues ​ Segments Net sales ​ $ 181,209 ​ $ 25,391 ​ $ ( 1,158 ) ​ $ 205,442 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ ​ 8,421 ​ ​ 32 ​ ​ n/a ​ ​ 8,453 Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6,029 Income tax expense (benefit) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,359 ) Depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 5,874 Transaction, restructuring and integration expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6,644 Change in fair value of warrant liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 5,529 ) Management and consulting fees (S&D Coffee, Inc. acquisition) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 556 Equity-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,548 Conway extract and ready-to-drink facility start-up costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,869 Mark-to-market adjustments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,236 ) Loss (gain) on disposal of property, plant and equipment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 896 Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 487 Net loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ ( 4,326 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ ​ 688,403 ​ ​ 84,898 ​ ​ n/a ​ ​ 773,301 ​ 31 Table of Contents Note 20. Commitments and Contingencies We are subject to various claims and legal proceedings with respect to matters such as governmental regulations, and other actions arising out of the normal course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flow. We have future purchase obligations of $ 160.1 million as of March 31, 2024 that consist of commitments for the purchase of inventory over the next 12 months. These obligations represent the minimum contractual obligations expected under the normal course of business. In addition, at March 31, 2024, we had an obligation to repurchase $ 3.4 million of inventory associated with repurchase agreements in which the Company’s Sustainable Sourcing & Traceability segment has sold inventory to a third party and from whom the Company’s Beverage Solutions segment has an obligation to repurchase. The liability for these obligations is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheet. ​ Note 21. Related Party Transactions In February 2024, the Company sold and issued Convertible Notes to Westrock Group, LLC (a holder of more than 5 % of the outstanding Common Shares and affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company, “Westrock Group”), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors) and HF Direct Investments Pool, LLC (a holder of more than 10 % of the outstanding Common Shares), each a related party. The Consolidated Financial Statements reflect the following transactions with related parties: ​ ​ ​ ​ ​ ​ ​ (Thousands) March 31, 2024 December 31, 2023 Accrued expenses and other current liabilities ​ ​ ​ ​ ​ ​ Westrock Group ​ $ 125 ​ $ — Wooster Capital ​ ​ 31 ​ ​ — HF Direct Investment Pool, LLC ​ ​ 156 ​ ​ — Total ​ $ 312 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ (Thousands) March 31, 2024 December 31, 2023 Convertible notes payable - related party, net: ​ ​ ​ ​ ​ ​ Westrock Group ​ $ 20,000 ​ $ — Wooster Capital ​ ​ 5,000 ​ ​ — HF Direct Investment Pool, LLC ​ ​ 25,000 ​ ​ — Total ​ ​ 50,000 ​ ​ — Unamortized debt costs ​ ​ ( 346 ) ​ ​ — Total ​ $ 49,654 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (Thousands) 2024 2023 Interest expense: ​ ​ ​ ​ ​ ​ Westrock Group ​ $ 125 ​ $ — Wooster Capital ​ ​ 31 ​ ​ — HF Direct Investment Pool, LLC ​ ​ 156 ​ ​ — Total ​ $ 312 ​ $ — ​ In connection with the acquisition of S&D Coffee, Inc. in February 2020, the Company entered into a Management Services Agreement with Westrock Group, whose controlling manager and controlling member, Greenbrier Holdings, 32 Table of Contents 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 Condensed Consolidated Statements of Operations. The Company recognized $ 0.6 million of such expenses during the three months ended March 31, 2023 and no such expenses during the three months ended March 31, 2024. In addition, the Company reimburses Westrock Group for the usage of a corporate aircraft, and its portion of shared administrative expenses. For the three months ended March 31, 2024 and 2023, the Company recognized expenses of $ 0.3 million and $ 0.3 million, respectively, for such items, which are recorded in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations. At March 31, 2024 and December 31, 2023, we had $ 0.1 million and $ 0.2 million payable to Westrock Group, respectively, related to such items. ​ 33 Table of Contents