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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-15 · 263 added, 202 removed, 315 unchanged (60% of the section changed)

4 unchanged sentences

Westrock Coffee Company, a Delaware corporation (the “Company,” “Westrock,” “we,” “us,” or “our”), is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States, providing coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, noncommercial account, CPG, and hospitality industries around the world.

In connection with the closing of our de-SPAC merger transaction (the “Transaction”) with Riverview Acquisition Corp.

(“Riverview”), the Company converted from a Delaware limited liability company to a Delaware corporation (the “Conversion”) and changed its corporate name from “Westrock Coffee Holdings, LLC” to “Westrock Coffee Company.”

Our platform is built upon four fundamental pillars that enable us to positively impact the coffee, tea, flavors, extracts, and ingredients ecosystems from crop to cup:

(i) we operate a fully transparent supply chain, (ii) we develop innovative beverage solutions tailored to our customers’ specific needs, (iii) we deliver a high quality and comprehensive set of products to our customers, and (iv) we leverage our scaled international presence to serve our blue-chip customer base.

(i) we operate a transparent supply chain, (ii) we develop innovative beverage solutions tailored to our customers’ specific needs, (iii) we deliver a high quality and comprehensive set of products to our customers, and (iv) we leverage our scaled international presence to serve our blue-chip customer base.

These four tenets comprise the backbone of our platform and position us as a leading provider of value-added beverage solutions.

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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.

We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, single serve cups, multi-serve bottles and ready-to-drink bottles and cans, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.

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

Sustainable Sourcing & Traceability :

Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, tangible economic empowerment and an emphasis on environmental accountability and farmer literacy.

Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, provide tangible economic empowerment and emphasize environmental accountability and farmer literacy.

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

Key Business Metrics

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

Adjusted EBITDA

We refer to EBITDA and Adjusted EBITDA in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”).

While we believe that net income (loss), as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA and Adjusted EBITDA are important non-GAAP supplemental measures of operating performance as they contribute to a meaningful evaluation of the Company’s future operating performance and comparisons to the Company’s past operating performance.

Additionally, we use these non-GAAP financial measures in evaluating the performance of our segments, to make operational and financial decisions and in our budgeting and planning process.

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

Consolidated Adjusted EBITDA

We refer to EBITDA and Consolidated Adjusted EBITDA in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”).

While we believe that net (loss) income, as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA and Consolidated Adjusted EBITDA are important non-GAAP supplemental measures of operating performance as they contribute to a meaningful evaluation of the Company’s future operating performance and comparisons to the Company’s past operating performance.

The Company believes that providing these non-GAAP financial measures to investors helps investors evaluate the Company’s operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance.

We define “EBITDA” as net income (loss), as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization.

We define “Adjusted EBITDA” as EBITDA before equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integration related costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, and other similar or infrequent items (although we may not have had such charges in the periods presented).

We believe EBITDA and Adjusted EBITDA are important supplemental measures to net (loss) income because they provide additional information to evaluate our operating performance on an unleveraged basis.

In addition, Adjusted EBITDA is calculated similar to defined terms in our material debt agreements used to determine compliance with specific financial covenants.

Since EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, they should be viewed in addition to, and not be considered as alternatives for, net income (loss) determined in accordance with GAAP.

Further, our computations of EBITDA and Adjusted EBITDA may not be comparable to that reported by other companies that define EBITDA and Adjusted EBITDA differently than we do.

The reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA for the years ended December 31, 2023, 2022 and 2021 is as follows:

We define “EBITDA” as net (loss) income, as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization.

We define “Consolidated Adjusted EBITDA” as EBITDA before equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integration related costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain non-capitalizable costs necessary to place the Conway extract and ready-to-drink facility into commercial production, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, and other similar or infrequent items (although we may not have had such charges in the periods presented).

We believe EBITDA and Consolidated Adjusted EBITDA are important supplemental measures to net (loss) income because they provide additional information to evaluate our operating performance on an unleveraged basis.

Since EBITDA and Consolidated Adjusted EBITDA are not measures calculated in accordance with GAAP, they should be viewed in addition to, and not be considered as alternatives for, net (loss) income determined in accordance with GAAP.

Further, our computations of EBITDA and Consolidated Adjusted EBITDA may not be comparable to that reported by other companies that define EBITDA and Consolidated Adjusted EBITDA differently than we do.

The reconciliation of our net (loss) income to EBITDA and Consolidated Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022 is as follows:

Year Ended December 31,

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Equity-based compensation

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

Impairment charges

Conway extract and ready-to-drink facility pre-production costs

Mark-to-market adjustments

Loss on disposal of property, plant and equipment

Adjusted EBITDA

Beverage Solutions

Sustainable Sourcing & Traceability

Total of Reportable Segments

(Gain) loss on disposal of property, plant and equipment

Consolidated Adjusted EBITDA

Refer to footnote 20 of Part II, Item 8 “Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K, for information regarding our reportable segments, including disclosures of the Company’s segment performance measure.

Significant Developments

Select Milk Joint Venture

On February 15, 2024, the Company entered a non-binding letter of intent with Select Milk Producers (“Select Milk”) to establish a joint venture that will construct and operate an extended shelf life and aseptic multi-serve bottle line facility to be co-located at Select Milk’s factory in Littlefield, Texas.

Westrock will produce and provide the joint venture with coffee extract from its extract and ready-to-drink facility in Conway, Arkansas and Select Milk will provide the joint venture with milk from its Littlefield facility.

The Company and Select Milk expect to ship the first product from these lines in the first quarter of 2026.

Convertible Notes Offering

On February 15, 2024, the Company sold and issued in a private placement $72.0 million in aggregate principal amount of 5.00% convertible senior notes due 2029 (the “Convertible Notes”).

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

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

The purchasers of the Convertible Notes are Westrock Group, LLC (a holder of more than 5% of the outstanding Common Shares and an affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors), an affiliate of The Stephens Group, LLC (a holder of more than 5% of the outstanding Common Shares), an affiliate of Sowell Westrock, L.P.

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See Note 12 to our Consolidated Financial Statements for additional discussion related to the Convertible Notes offering.

Credit Agreement Amendment

Credit Agreement Amendments

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

1 (the “First Amendment”) to its Credit Agreement, which established a new class of incremental term loan commitments in the form of a senior secured delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.

1 (the “First Amendment”) to its Credit Agreement dated as of August 29, 2022 among the Borrower, the Company, Wells Fargo Bank, N.A., as administrative agent, as collateral agent and as swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, the issuing banks party thereto from time to time and the lenders party thereto from time to time (as amended, restated, amended and restated, supplemented or otherwise modified, the “Credit Agreement”), which established a new class of incremental term loan commitments in the form of a senior secured delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.

In January 2024, the Company borrowed the $50.0 million available to it under the terms of the Delayed Draw Term Loan Facility.

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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.

PIPE Investment & Amended and Restated Investor Rights Agreement

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

Additionally, on June 29, 2023 and July 18, 2023, the Company entered into definitive agreements with an affiliate of the Herbert Hunt family (the “Hunt Investor”) and the Arkansas Teacher Retirement System (the “ARTRS” and together with the Hunt Investor, the “Investors”), respectively, pursuant to which the Company agreed to sell and issue to the Investors and the Investors agreed to purchase from the Company a total of 5,000,000 Common Shares of the Company at a purchase price per share of $10.00 for aggregate gross proceeds to the Company of $50.0 million (such transactions the “PIPE Investments”).

On August 3, 2023, the Company closed the HF Investment and PIPE Investments, issuing 10,000,000 Common Shares, receiving aggregate gross proceeds of $100.0 million.

In connection with the HF Investment, the HF Investor and the current parties to that certain Investor Rights Agreement, dated April 4, 2022 (the “Investor Rights Agreement”), by and among the Company, affiliates of Brown Brothers Harriman & Co.

(the “BBH Investors”), and the other parties thereto entered into an amendment and restatement of the Investor Rights Agreement (the “Amended and Restated Investor Rights Agreement”), which became effective upon closing of the HF Investment.

Among other things, the Amended and Restated Investor Rights Agreement amended the

Investor Rights Agreement to provide the HF Investor with the right to designate one (1) director to Class II of the board, subject to the HF Investor (together with certain affiliates) owning at least 5% of the capital stock of the Company and the other terms and conditions set forth therein.

As of the date of this Annual Report on Form 10-K, the HF Investor has not exercised the right to designate a director to the board.

The HF Investment and PIPE Investments were subject to the potential exercise of preemptive rights (the “BBH Preemptive Rights”) of the BBH Investors to subscribe up to their pro-rata ownership of the capital stock of the Company, under the terms of the Investor Rights Agreement.

On July 24, 2023, the BBH Investors exercised the BBH Preemptive Rights to purchase approximately 1.9 million Common Shares at a purchase price per share of $10.00, under the terms of the Investor Rights Agreement.

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

Acquisition of Bixby Roasting Co.

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

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

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

The Credit Agreement, as amended through the Third Amendment, required the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50:1.00 to 6.25:1.00 and stepping down to 4.50:1.00 by April 2026 (which has been further amended by the Fourth Amendment, as discussed below) and (ii) an interest coverage ratio of at least 1.50:1.00 on and prior to September 30, 2025 and at least 2.00:1.00 on December 31, 2025 and thereafter.

The Credit Agreement, as amended through the Third Amendment, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $15 million and (ii) an anti-cash hoarding covenant, which shall be effective only during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.

On January 15, 2025, the Company, entered into an Incremental Assumption Agreement and Amendment No.

4 (the “Fourth Amendment”) to the Credit Agreement.

The Fourth Amendment expanded the syndicate to include member banks from the Farm Credit System and increased the amount of revolving facility commitments (the “Existing Revolving Facility Commitments”, and any loans thereunder, the “Existing Revolving Loans”) available to the Borrower under the Credit Agreement by $25.0 million (the “Incremental Revolving Facility Commitments” and any loans thereunder, the “Incremental Revolving Loans”).

The amount of revolving facility commitments available to the Borrower under the Credit Agreement, as amended, is $200.0 million.

The Incremental Revolving Facility Commitments and the Incremental Revolving Loans are subject to the same interest rates, commitment fees, maturity dates and other terms as the Existing Revolving Facility Commitments and the Existing Revolving Loans.

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

The Fourth Amendment also modified the secured net leverage ratio that the Company must comply with during the Covenant Relief Period to increase the maximum secured net leverage ratio to (a) 6.00x for the test period ending June 30, 2025, (b) 5.50x for the test period ending September 30, 2025, and (c) 5.25x for the test period ending December 31, 2025.

In addition, the minimum liquidity covenant will not apply after the Covenant Relief Period ends.

As of the date of this Annual Report on Form 10-K, the Company was in compliance with its financial covenants.

Equity Distribution Agreement

On March 15, 2024, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Wells Fargo Securities, LLC and Truist Securities, Inc.

(the “Agents”), pursuant to which the Company may from time to time offer and sell Common Shares not to exceed 5,000,000 Common Shares in the aggregate (the “Placement Securities”) through the Agents as part of an “at the market” offering program (the “ATM Program”).

The offer and sale of the Placement Securities will be made pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-274827) that was declared effective by the SEC on November 17, 2023, and a related prospectus supplement, which the Company filed with the SEC on March 15, 2024.

The Company is not obligated to sell any Placement Securities pursuant to the Equity Distribution Agreement.

Subject to the terms and conditions of the Equity Distribution Agreement, the Agents have agreed to use commercially reasonable efforts, consistent with their normal trading and sales practices, to sell Placement Securities from time to time in accordance with the Company’s placement notice, including any price, time or size limits or other customary parameters or conditions the Company may deem appropriate.

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

Subject to the terms and conditions of the Equity Distribution Agreement, the Company may also from time to time sell Placement Securities to an Agent as principal.

The Equity Distribution Agreement may be terminated for any reason, at any time by either the Company or any of the Agents upon ten days’ prior written notice to the other parties, or by the Agents at any time in certain circumstances, including the occurrence of a material adverse change in the Company.

In addition, the Equity Distribution Agreement will automatically terminate upon the earlier of (1) two years from the date of the Equity Distribution Agreement and (2) the issuance and sale of all of the Placement Securities through the Agents.

The Company will pay each Agent a commission of 1.5% of the gross proceeds from the sales of Common Shares sold by such Agent pursuant to the Equity Distribution Agreement.

The Company has agreed to provide the Agents with customary indemnification and contribution rights.

The Company has agreed to pay certain specified expenses incurred by the Agents in connection with the offering.

The Equity Distribution Agreement contains customary representations and warranties and conditions to the placements of the Placement Securities pursuant thereto.

During the year ended December 31, 2024, the Company sold 60,000 Common Shares under the ATM Program, resulting in net proceeds of $0.6 million.

This program is intended to provide additional financial flexibility and an alternative mechanism to access the capital markets at an efficient cost as and when we need financing, including for acquisitions .

Restructuring Activities

During the second quarter of 2024, the Company committed to a plan to consolidate its manufacturing operations in its Beverage Solutions segment, which resulted in the closure and sale of its West Winds manufacturing facility in Concord, North Carolina, and the closure of its manufacturing facility in Richmond, California.

All production from the impacted facilities was consolidated into other facilities operated by the Company in Concord, North Carolina and Conway, Arkansas.

The closure of the West Winds facility was completed as of June 30, 2024, and the Company completed the sale of the associated land and buildings during the fourth quarter of 2024, recognizing a $3.4 million gain, which is recorded in (gain) loss on disposal of property, plant and equipment in the Consolidated Statements of Operations .

Production in our Richmond, California facility ceased during the third quarter of 2024.

During the year ended December 31, 2024, the Company recognized $5.6 million and $0.1 million of impairment charges on property, plant and equipment and intangible assets, respectively, as a result of the consolidation of manufacturing facilities, which are recorded in impairment charges in the Consolidated Statements of Operations.

The Company estimates total charges related to the plant consolidations of approximately $4.0 million, of which $3.1 million have been incurred during the year ended December 31, 2024.

These charges primarily relate to costs to remove and re-install production equipment into other manufacturing facilities.

In addition, during the second quarter of 2024, the Company committed to targeted restructuring activities to improve operational efficiency by reducing excess workforce capacity.

As a result of this reduction, and the impacts of the consolidation of manufacturing facilities noted above, the Company recognized approximately $4.7 million of one-time employee severance costs during the year ended December 31, 2024, which are recorded in transaction, restructuring and integration expense in the Consolidated Statements of Operations.

At December 31, 2024, approximately $0.6 million of such termination benefits were accrued for within accrued expenses and other current liabilities in the Consolidated Balance Sheets.

See Note 3 to our Consolidated Financial Statements for additional discussion related to the restructuring activities.

Falcon Credit Agreement Amendment

On August 21, 2024, Falcon Coffees Limited, a wholly owned subsidiary of the Company, amended its working capital trade finance facility.

The amendment increased the facility size from $55.0 million to $75.0 million.

The interest rates and maturity date were unchanged as a result of the amendment.

See Note 12 to our Consolidated Financial Statements for additional discussion related to the working capital trade finance facility.

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

The facility size was increased from $75.0 million to $85.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility will mature one year from inception.

Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%) .

Warrant Exchange

On August 28, 2024, the Company announced that it had commenced an exchange offer (the “Offer”) and consent solicitation (the “Consent Solicitation”) relating to its outstanding (i) public warrants to purchase Common Shares, which warrants trade on The Nasdaq Global Market (the “Nasdaq”) under the symbol “WESTW” (the “Westrock Public Warrants”), and (ii) private placement warrants to purchase Common Shares (the “Westrock Private Warrants” and, together with the Westrock Public Warrants, the “Westrock Warrants”).

The Company offered to all holders of the Westrock Warrants the opportunity to receive 0.290 Common Shares in exchange for each of the Westrock Warrants tendered pursuant to the Offer.

Concurrently with the Offer, the Company also solicited consents from the holders of each of the Westrock Public Warrants and the Westrock Private Warrants to amend that certain Warrant Agreement, dated as of August 25, 2022, by and between the Company and Computershare Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., a federally chartered trust company, as warrant agent (the “Warrant Agent”), which governs all of the Warrants (the “Warrant Agreement”), to permit the Company to require that (x) each Westrock Public Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 Common Shares, which is a ratio 10% less than the exchange ratio applicable to the Offer and (y) each Westrock Private Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 Common Shares, which is a ratio 10% less than the exchange ratio applicable to the Offer (such amendment, the “Warrant Amendment”).

The Offer and Consent Solicitation expired on September 26, 2024 (the “Expiration Date”).

As of the Expiration Date, (x) 16,676,541 outstanding Westrock Public Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing approximately 97.42% of the Westrock Public Warrants and (y) 2,026,046 outstanding Westrock Private Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing 100% of the Westrock Private Warrants.

On September 30, 2024, the Company issued 5,423,681 Common Shares in exchange for the tendered Westrock Warrants.

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

to amend the Warrant Agreement with respect to the Westrock Public Warrants and (y) the 50% threshold of the outstanding Westrock Private Warrants required to amend the Warrant Agreement with respect to the Westrock Private Warrants.

Accordingly, the Company and the Warrant Agent entered into the Warrant Amendment, dated September 30, 2024.

On September 30, 2024, the Company announced that it would exercise its right, in accordance with the terms of the Warrant Amendment, to exchange each Westrock Public Warrant that is outstanding following the closing of the Offer for 0.261 Common Shares per warrant (the “Post-Offer Exchange”).

In lieu of issuing fractional shares, any holder of warrants who would otherwise have been entitled to receive fractional shares, after aggregating all such fractional shares of such holder, was paid in cash (without interest) in an amount equal to such fractional part of a share multiplied by $6.74.

The Company fixed the date for the Post-Offer Exchange as October 15, 2024.

On October 16, 2024, the Company issued 115,220 Common Shares for the untendered Westrock Public Warrants.

Following the completion of the Offer and Post-Offer Exchange, no Westrock Warrants remain outstanding.

Accordingly, the Westrock Public Warrants were suspended from trading on Nasdaq as of the close of business on October 15, 2024, and were delisted.

Results of Operations

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The following table sets forth our results of operations expressed as dollars and as a percentage of total revenues for the periods indicated:

(Dollars in Thousands)

December 31, 2024

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Transaction, restructuring and integration expense

Loss on disposal of property, plant and equipment

Impairment charges

(Gain) loss on disposal of property, plant and equipment

Total operating expenses

Income (loss) from operations

Loss from operations

Other (income) expense

1 unchanged sentence

Change in fair value of warrant liabilities

Income (loss) before income taxes and equity in earnings from unconsolidated entities

Loss before income taxes and equity in earnings from unconsolidated entities

Income tax expense (benefit)

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Accretion of Series A Convertible Preferred Shares

Loss on extinguishment of Redeemable Common Equivalent Preferred Units, net

Common equivalent preferred dividends

Accumulating preferred dividends

Net loss attributable to common shareholders

The following table sets forth selected financial information of our reportable segments for the year ended December 31, 2023 and 2022:

Segment Revenues:

Segment Costs of Sales:

Segment Gross Profit:

Segment Adjusted EBITDA:

Segment Adjusted EBITDA Margin:

Intersegment revenues represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.

Net Sales from our Beverage Solutions segment were $722.9 million for the year ended December 31, 2023, compared to $685.3 million for the year ended December 31, 2022, an increase of 5.5%.

The increase was primarily due to a $49.9 million increase in the sale of flavors, extracts and ingredients products, driven by a 16.0% increase in flavors, extracts and ingredients volumes, partially offset by a $10.4 million decrease in the sale of coffee and tea products, driven by a 9.0% decrease in roast and ground coffee volumes and a 5.6% decrease in tea volumes.

Single serve cup volumes increased 2.7% during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Net Sales from our SS&T segment totaled $141.8 million, net of intersegment revenues, during the year ended December 31, 2023, decreasing 22.3% compared to $182.6 million, net of intersegment revenues, during the year ended December 31, 2022.

The decrease is driven by a 20.6% decrease in sales volume, as a result of a decrease in customer demand.

Year Ended December 31,

Beverage Solutions

Sustainable Sourcing & Traceability (1)

Total net sales

Net of i ntersegment revenues.

Net Sales from our Beverage Solutions segment were $659.4 million for the year ended December 31, 2024, compared to $722.9 million for the year ended December 31, 2023, a decrease of 8.8%.

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

Net Sales from our SS&T segment totaled $191.3 million, net of intersegment revenues, during the year ended December 31, 2024, increasing 34.9% compared to $141.8 million, net of intersegment revenues, during the year ended December 31, 2023.

The increase is driven by an increase in sales volume, which increased 39.5% compared to the year ended December 31, 2023.

Costs of Sales

In our Beverage Solutions segment, costs of sales increased $52.4 million to $597.0 million for the year ended December 31, 2023, from $544.6 million for the year ended December 31, 2022.

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

In our SS&T segment, costs of sales decreased $42.6 million to $127.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This decrease is primarily due to a 20.6% decrease in green coffee sales volume.

Costs of sales for the year ended December 31, 2023 included $0.1 million of net unrealized gains on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory compared to $3.5 million of net unrealized losses on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory for the year ended December 31, 2022 .

Year Ended December 31,

Beverage Solutions

Sustainable Sourcing & Traceability

Total costs of sales

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

The decrease in costs of sales was primarily driven by a decrease in the sale volumes of single serve cup and coffee and tea products for the year ended December 31, 2024 compared to the year ended December 31, 2023, partially offset by an increase in costs of sales associated with flavors, extracts and ingredients products, primarily due to an increase in volumes for the year ended December 31, 2024 compared to the year ended December 31, 2023.

In our SS&T segment, costs of sales increased $41.6 million or 32.6% to $169.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

This increase is primarily due to a 39.5% increase in green coffee sales volume.

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

Selling, General and Administrative Expense

Year Ended December 31,

(Dollars in Thousands)

Beverage Solutions

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Total selling, general and administrative expense in our Beverage Solutions segment increased $39.3 million to $173.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.

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

acquisition, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

In our SS&T segment, selling, general and administrative costs were relatively unchanged compared to the year ended December 31, 2022.

The increase is primarily due to a $30.6 million increase in expenses associated with our extract and ready-to-drink facility in Conway, Arkansas and a $6.7 million increase in personnel-related costs.

In our SS&T segment, selling, general and administrative costs increased $1.2 million for the year ended December 31, 2024, primarily due to a $1.0 million increase in personnel-related costs compared to the year ended December 31, 2023.

Transaction, Restructuring and Integration Expense

Transaction, restructuring and integration expense for the year ended December 31, 2023 were $14.6 million, $10.5 million of which related to the costs associated with the integration of our new enterprise resource-planning system, including internal and external costs related to go-live system support and duplicative systems costs and $2.5 million of non-capitalizable costs associated with acquisitions and registration statements.

During the year ended December 31, 2022, we incurred $13.2 million of transaction, restructuring and integration expenses, $5.3 million of which related to the integration of the acquired S&D business onto our enterprise resource planning system and $5.6 million of which related to public-company preparedness costs.

Transaction, restructuring and integration expense for the year ended December 31, 2024 were $13.8 million, approximately $4.7 million of which related to severance and other employee termination and benefit costs associated with the elimination of various positions as part of cost reduction objectives, $3.1 million of which related to plant closure costs, $2.4 million of which related to the establishment of our at-the-market common stock offering program and $1.6 million of which related to professional and legal costs associated with the Westrock Warrant exchange.

During the year ended December 31, 2023, we incurred $14.6 million of transaction, restructuring and integration expenses, $10.5 million of which related to the costs associated with the integration of our new enterprise resource-planning system, including internal and external costs related to go-live system support and duplicative systems costs and $2.5 million of non-capitalizable costs associated with acquisitions and registration statements.

Interest Expense

1 unchanged sentence

Interest expense

Term loan facility

Prior term loan facility

Prior term loan facility early termination fee

Term loan and delayed draw term loan facilities

Revolving credit facility

Convertible notes payable

Convertible notes payable - related party

Supply chain finance program

Prior ABL facility

Short-term related party debt

Subordinated related party debt

International trade finance lines

2 unchanged sentences

Amortization of deferred financing costs

Write-off of deferred financing costs

Payments-in-kind interest

Capitalized interest

2 unchanged sentences

Interest expense for the year ended December 31, 2024 was $33.9 million compared to $29.2 million for the year ended December 31, 2023.

The decrease is primarily due to $4.3 million of unamortized deferred financing costs associated with the termination of the prior term loan facility and prior ABL facility, and $1.6 million of early termination payments associated with the prior term loan facility that were incurred during the year ended December 31, 2022.

No such costs were incurred during the year ended December 31, 2023.

This decrease was partially offset by $5.2 million in interest on the outstanding revolving credit facility and $3.0 million in interest on our supply chain finance program borrowings for the year ended December 31, 2023 compared to no such interest during the year ended December 31, 2022.

Furthermore, during the year ended December 31, 2023, the Company capitalized approximately $3.2 million of interest costs associated with the build-out of our extract and ready-to-drink facility in Conway, Arkansas, while no such interest was capitalized during the year ended December 31, 2022.

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

During the year ended December 31, 2024, the Company capitalized approximately $11.7 million of interest costs associated with the build out of our extract and ready-to-drink facility in Conway, Arkansas, compared to $3.2 million of such interest for the year ended December 31, 2023.

Change in Fair Value of Warrant Liabilities

Warrant liabilities are adjusted to fair value at each reporting period, with any change in fair value recognized in the Consolidated Statement of Operations.

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

Warrant liabilities are adjusted to fair value at each reporting period, with any change in fair value recognized in the Consolidated Statements of Operations.

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

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

Income Tax Expense (Benefit)

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

Our income tax expense for the year ended December 31, 2024 is primarily comprised of $20.8 million of expense related to increases in the valuation allowance against our deferred tax assets, offset by federal and state benefits, at statutory rates, of $18.2 million and $1.5 million of tax benefit resulting from the change in fair value of warrants.

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

Our income tax benefit for the year ended December 31, 2023 is primarily comprised of federal and state benefits, at statutory rates, of $9.4 million and $2.1 million of tax benefit resulting from the change in fair value of warrants, offset by $4.4 million of expense related to increases in the valuation allowance against our deferred tax assets.

Income tax expense for the year ended December 31, 2022 was $0.1 million, resulting in an effective tax rate of (0.2%).

Our income tax expense for the year ended December 31, 2022 is primarily comprised of federal and state benefits, at statutory rates, of $13.1 million, offset by $6.2 million of tax expense resulting from the change in fair value of warrants and $7.3 million of expense related to increases in the valuation allowance against our deferred tax assets.

Results of Operations

Comparison of the Years Ended December 31, 2023 and 2022

5 unchanged sentences

Transaction, restructuring and integration expense

Impairment charges

Loss on disposal of property, plant and equipment

6 unchanged sentences

Income tax expense (benefit)

Equity in (earnings) loss from unconsolidated entities

Net income (loss) attributable to non-controlling interest

5 unchanged sentences

Net loss attributable to common shareholders

The following table sets forth selected financial information of our reportable segments for the years ended December 31, 2022 and 2021.

Segment Revenues:

Segment Costs of Sales:

Segment Gross Profit:

Segment Adjusted EBITDA:

Segment Adjusted EBITDA Margin:

Intersegment revenues represent sales of green coffee from our SS&T segment to our Beverage Solutions Segment.

Year Ended December 31,

Beverage Solutions

Sustainable Sourcing & Traceability (1)

Total net sales

Net of i ntersegment revenues.

Net Sales from our Beverage Solutions segment were $722.9 million for the year ended December 31, 2023, compared to $685.3 million for the year ended December 31, 2022, an increase of 5.5%.

The increase was due to a $121.5 million increase in the sale of coffee & tea products, driven by a 50% increase in single serve cup volumes, and an increase in underlying green coffee prices compared to the year ended December 31, 2021, partially offset by a 7% decrease in roast and ground coffee products and a 5% decrease in tea products, driven in part by higher inflation impacting end-consumer demand.

Net Sales from our SS&T segment totaled $182.6 million, net of intersegment revenues, during the year ended December 31, 2022, increasing 24% compared to $147.1 million, net of intersegment revenues, during the year ended December 31, 2021.

The increase is driven by an increase in the average sales price per pound, which increased 35% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase in the average sales price per pound is directly correlated to the global commodities price.

SS&T sales volume decreased 9% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Single serve cup volumes increased 2.7% during the year ended December 31, 2023 compared to the year ended December 31, 2022.

The decrease is driven by a 20.6% decrease in sales volume, as a result of a decrease in customer demand.

Costs of Sales

In our Beverage Solutions segment, costs of sales increased to $544.6 million for the year ended December 31, 2022, from $423.3 million for the year ended December 31, 2021.

The increase in costs of sales is primarily due to a $116.7 million increase in green coffee and tea, driven by higher single serve cup sales volume and commodity price increases, specifically related to green coffee.

In our SS&T segment, costs of sales increased $41.1 million to $170.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.

This increase is primarily due to an increase in green coffee costs driven by an increase in underlying commodities pricings.

Costs of sales for the year ended December 31, 2022 included $3.5 million of net unrealized losses on forward sales and purchase contracts and mark-to-market adjustment on green coffee inventory compared to $3.6 million of net unrealized gains on forward sales and purchase contracts and mark-to-market adjustments on green coffee inventory for the year ended December 31, 2021.

Year Ended December 31,

Beverage Solutions

Sustainable Sourcing & Traceability

Total costs of sales

In our Beverage Solutions segment, costs of sales increased $52.4 million to $597.0 million for the year ended December 31, 2023, from $544.6 million for the year ended December 31, 2022.

In our SS&T segment, costs of sales decreased $42.6 million to $127.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.

This decrease is primarily due to a 20.6% decrease in green coffee sales volume.

Selling, General and Administrative Expense

3 unchanged sentences

Total selling, general and administrative expense

Total selling, general and administrative expenses in our Beverage Solutions segment increased $0.2 million to $119.9 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.

The increase is primarily due to a $5.3 million increase in legal and professional fees, which primarily related to additional costs of operations as a public company, and a $1.9 million increase in freight costs, partially offset by a $5.4 million decrease in personnel-related expenses, primarily the reduction of short-term cash incentive compensation, for the year ended December 31, 2022 compared to the year ended December 31, 2021.

In our SS&T segment, selling, general and administrative costs increased $1.3 million for the year ended December 31, 2022, including a $0.4 million increase in personnel-related costs, compared to the year ended December 31, 2021.

Total selling, general and administrative expense in our Beverage Solutions segment increased $14.6 million to $134.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.

acquisition, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

In our SS&T segment, selling, general and administrative costs were relatively unchanged compared to the year ended December 31, 2022.

Transaction, Restructuring and Integration Expense

Transaction, restructuring and integration expenses for the year ended December 31, 2022 were $13.2 million, $5.3 million of which related to the continued integration of the acquired S&D business onto our enterprise resource planning system and $5.6 million of which related to public-company preparedness costs.

During the year ended December 31, 2021, we incurred $8.8 million of transaction, restructuring and integration expenses, $3.2 million of which related to restructuring costs, primarily attributable to optimizing our sales organization, $2.0 million of which related to integration costs related to the acquired S&D business, $1.7 million of which related to the integration of our enterprise resource planning system and $1.0 million of public-company preparedness costs.

Interest Expense

4 unchanged sentences

Prior term loan facility early termination fee

Revolving credit facility

Supply chain finance program

Prior ABL facility

5 unchanged sentences

Amortization of deferred financing costs

Capitalized interest

Write-off of deferred financing costs

3 unchanged sentences

Interest expense for the year ended December 31, 2023 was $29.2 million compared to $35.5 million for the year ended December 31, 2022.

The increase is primarily due to a $4.3 million write off of unamortized deferred financing fees

associated with the termination of the Prior Term Loan Facility and Prior ABL Facility and $1.6 million of early termination payments associated with the Prior Term Loan Facility.

No such costs were incurred in the year ended December 31, 2021.

These increases were partially offset by $4.1 million of cash interest savings as a result of the entry into the Credit Agreement.

No such costs were incurred during the year ended December 31, 2023.

Change in Fair Value of Warrant Liabilities

Warrant liabilities are adjusted to fair value at each reporting period, with any change in fair value recognized in the Consolidated Statements of Operations.

Income Tax Expense (Benefit)

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

Income tax expense for the year ended December 31, 2022 was $0.1 million, resulting in an effective tax rate of (0.2%).

Income tax benefit for the year ended December 31, 2021 was $3.4 million, resulting in an effective tax rate of 13.6%.

Our income tax benefit for the year ended December 31, 2021 is primarily comprised of federal and state benefits, at statutory rates, of $6.0 million, partially offset by $1.2 million of negative impacts related to the impact of changes in foreign tax rates on our tax benefit.

Critical Accounting Estimates

16 unchanged sentences

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.

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.

28 unchanged sentences

If the carrying value of a reporting unit’s net assets is less than its fair value, no indication of impairment exists.

If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be

recognized for the excess and recorded in the Consolidated Statements of Operations not to exceed the carrying value of goodwill.

If the carrying amount of the reporting unit is greater than the fair value of the reporting unit, an impairment loss must be recognized for the excess and recorded in the Consolidated Statements of Operations not to exceed the carrying value of goodwill.

Fair value determinations of the business require considerable judgment and are sensitive to changes in underlying assumptions and factors.

8 unchanged sentences

As a result, the Company concluded that no impairment existed in the year ending December 31, 2024.

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

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

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

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

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

46 unchanged sentences

Warrant Liabilities

We account for 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.

This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our consolidated statements of operations.

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

The Westrock Private Warrants (as defined in Note 4 to our Consolidated Financial Statements) are valued a binomial lattice valuation model.

The primary unobservable input 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.

A 10% increase to the volatility input at December 31, 2023 would increase the fair value of the Westrock Private Warrants by approximately $0.5 million.

Prior to October 2024, the Company had outstanding warrants to purchase Common Shares (the “Warrants”), which were accounted for in accordance with the guidance contained in ASC 815, under which the warrants did not meet the criteria for equity treatment and must be recorded as liabilities.

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

The Company re-measured the fair value of the Westrock Public Warrants (as defined in Note 4 to our Consolidated Financial Statements) based on the quoted market price of the Westrock Public Warrants.

The Westrock Private Warrants (as defined in Note 4 to our Consolidated Financial Statements) were valued using a binomial lattice valuation model.

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

For the year ended December 31, 2024, the Company recognized $7.0 million of gains related to the change in fair value of warrant liabilities.

At December 31, 2024, there were no outstanding Warrants.

Liquidity and Capital Resources

Our principal liquidity needs are to fund operating expenses, meet debt service obligations, and fund investment activities, which include capital expenditures.

Our primary sources of liquidity and capital resources are cash on hand, cash provided by operating activities, and available borrowings under our Credit Agreement.

Our primary sources of liquidity and capital resources are cash on hand, cash provided by operating activities, and available borrowings under our Credit Agreement (as defined herein).

Our ability to generate cash provided by operating activities is dependent on several factors, including our ability to generate net sales and manage costs in line with our expectations.

Failure to meet our financial targets may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants and may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition, covenant compliance and ability to achieve our intended business objectives.

Failure to meet our financial targets, including any adverse impact from changes or further delays in the estimated timing and volume of products to be commercialized in our extract and ready-to-drink manufacturing facility in Conway, Arkansas, may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants and may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition, covenant compliance and ability to achieve our intended business objectives.

Green coffee, which is our primary raw material, is an exchange traded agricultural commodity that is subject to price fluctuations, the reasons for which are outside of the control of the Company.

During the year ended December 31, 2024, the exchange traded “C” market price of green coffee increased approximately 70%, and from January 1, 2025 through the date of this Annual Report on Form 10-K, the “C” market price has continued to increase, surpassing $4.00 per pound of green coffee, reaching all-time highs.

This increase impacts the entire coffee supply chain, as exporters, traders, suppliers, and roasters require increased working capital to fund rising green coffee costs, and without having access to sufficient working capital, supply chain disruptions may emerge.

In addition, a persistent increase in coffee costs could also adversely affect consumer demand as producers attempt to pass higher costs down the supply chain.

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

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

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

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

A prolonged increase in “C” market prices may require us to evaluate our allocation of working capital, and if we are not able to effectively manage our working capital, or do not have access to sufficient working capital to meet our

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

In addition, we may be required to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions, which could have a material adverse effect on our business, operating results, financial condition, covenant compliance and ability to achieve our intended business objectives.

Credit Agreement

The Company is party to a credit agreement (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”).

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

The Credit Agreement includes (a) a senior secured first lien revolving credit facility in an aggregate principal amount of $200.0 million (the “Revolving Credit Facility”), (b) a senior secured first lien term loan facility in an aggregate principal amount of $175.0 million (the “Term Loan Facility”) and (c) incremental term loan commitments in the form of a senior secured delayed draw term loan credit facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million.

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

All obligations under the

Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets.

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

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

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

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

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

On February 15, 2024, the Company entered into the Third Amendment to the Credit Agreement.

The Third Amendment modified the existing Covenant Relief Period, which commenced on June 30, 2023 pursuant to Amendment No.

2, 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.

All obligations under the Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets.

Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) term SOFR plus a credit spread adjustment of 0.10% for loans with an interest period of one month, 0.15% for loans with an interest period of three months and 0.25% for loans with an interest period of six months, as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the United States as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50% and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00%, (the “Base Rate”)), in each case plus an applicable margin.

At December 31, 2024, we had $112.5 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.6%, and we had $2.6 million of standby letters of credit outstanding.

At December 31, 2024, the interest rate applicable to our Term Loan Facility was 8.2% and the interest rate applicable to our Delayed Draw Term Loan Facility was 9.2%.

On February 15, 2024, the Borrower entered into Amendment No.

3 (the “Third Amendment”) to the Credit Agreement.

The Third Amendment modified the existing covenant relief period (the “Covenant Relief Period”), which commenced on June 30, 2023 and will end on the earlier to occur of (i) April 1, 2026 and (ii) any date following June 30, 2024, on which the Borrower elects to terminate the Covenant Relief Period subject to satisfaction of certain conditions.

During the Covenant Relief Period, the Company’s ability to incur additional indebtedness and make investments, restricted payments and junior debt restricted payments will be more limited.

The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes.

The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes (as defined herein).

During the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 3.00% to 4.00% and for any ABR loan will range from 2.00% to 3.00%, in each case depending on the secured net leverage ratio.

During the Covenant Relief Period, the Company will be required 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 Third Amendment also includes (i) a minimum liquidity covenant requiring the Company 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 only be effective 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.

effective only during the Covenant Relief Period, requiring the Borrower to have no more than $20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.

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

Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations.

The Company believes that its secured net leverage under the Credit Agreement is important to the understanding of the Company’s financial condition and liquidity.

At December 31, 2024, the Company’s secured net leverage ratio was 4.71:1.00, compared to a maximum allowable ratio of 6.00:1.00, with such calculation set forth below:

(Thousands, except leverage ratio)

Trailing Twelve-Months

Beverage Solutions Segment Adjusted EBITDA

Permissible credit agreement adjustments 1

Trailing Twelve-Months Credit Agreement Adjusted EBITDA

End of period:

Term loan facility

Delayed draw term loan facility

Revolving credit facility

Letters of credit outstanding

Beverage Solutions unrestricted cash and cash equivalents

Secured net debt

Beverage Solutions Credit Agreement secured net leverage ratio

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

The Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments totaling approximately $2.8 million (1.25% of the original principal balance).

Quarterly payments increase to approximately $4.2 million and $5.6 million (1.875% and 2.5% of the original principal balance) during the final two years of the agreements, respectively.

We incurred a total of $2.4 million in financing fees in connection with the Third Amendment.

Approximately $1.3 million of the fees were allocated to the Term Loan Facility and are being amortized over the remaining term of the Term Loan Facility utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility.

Approximately $1.0 million of the fees were allocated to the Revolving Credit Facility, are reported within other long-term assets on the Consolidated Balance Sheets and are being amortized ratably over the remaining term of the Revolving Credit Facility.

On January 15, 2025, the Company, entered into an Incremental Assumption Agreement and Amendment No.

4 (the “Fourth Amendment”) to the Credit Agreement.

The amount of revolving facility commitments available to the Borrower under the Credit Agreement, as amended, is $200.0 million.

The proceeds from any Incremental Revolving Loans will be used by the Company to fund the previously announced installation of a second

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

In addition, the minimum liquidity covenant will not apply after the Covenant Relief Period ends.

As of the date of this Annual Report on Form 10-K, the Company was in compliance with its financial covenants.

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

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

Convertible Notes

On February 15, 2024, the Company sold and issued in a private placement $72.0 million in aggregate principal amount of Convertible Notes.

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

On February 15, 2024, the Company sold and issued in a private placement $72.0 million in aggregate principal amount of 5.00% convertible senior notes due 2029 (the “Convertible Notes”), of which $50.0 million was from related parties.

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

The Convertible Notes are carried at amortized cost and are recorded in long-term debt, net and convertible notes payable – related party, net on the Consolidated Balance Sheets.

At December 31, 2024, the carrying value of the Convertible Notes was $71.6 million, of which $49.7 million was from related parties.

We incurred a total of $0.5 million of financing fees in connection with the Convertible Notes, which were ratably allocated to the convertible notes payable and the convertible notes payable – related party, respectively, and are being amortized into interest expense over the remaining term of the Convertible Notes utilizing the effective interest rate method.

Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances:

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;

(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;

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The conversion price and conversion rate are subject to customary adjustments.

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

The Convertible Notes contain customary terms regarding events of default.

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

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

(a holder of more than 5% of the outstanding Common Shares), HF Direct Investments Pool, LLC (a holder of more than 10% of the outstanding Common Shares), an affiliate of the Herbert Hunt family and an individual investor.

The offer and sale of the Convertible Notes was authorized and approved unanimously by the Audit & Finance Committee of the board of directors in accordance with the Company’s Related Party Transactions Policy.

International Debt and Lending Facilities

On March 21, 2023, we entered into a $70.0 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon Coffees Limited (“Falcon”).

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

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

The facility 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.

greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00%).

On August 21, 2024, Falcon amended its working capital trade finance facility, increasing the facility size from $55.0 million to $75.0 million.

The interest rates and maturity date were unchanged as a result of the amendment.

At December 31, 2024, there was $50.6 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets.

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Falcon was in compliance with these financial covenants as of December 31, 2024.

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.

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 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.

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Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) (i) the most recent applicable Term SOFR for the longest period (for which Term SOFR is available) which is less than the applicable interest period of the loan or (ii) if no such Term SOFR is available for a period which is less than the applicable interest period, SOFR for the day which is two U.S.

Government Securities Business Days before the Quotation day;

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

Government Securities Business Days, as defined in the facility, before the Quotation Day, as defined in the facility;

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

At December 31, 2024, there was $4.5 million of outstanding borrowings under the facility, of which $3.5 million and $1.0 million is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Consolidated Balance Sheets.

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Falcon was in compliance with these financial covenants as of December 31, 2024.

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

The facility size was increased from $75.0 million to $85.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility will mature one year from inception.

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

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

(a) a short-term trade finance facility with a balance of $4.0 million at December 31, 2024 and (b) a long-term note payable with a balance of $0.6 million at December 31, 2024, of which $0.4 million is reported in current maturities of long-term debt on the Consolidated Balance Sheets .

Supply Chain Finance Program

The Company is party to a supply chain finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials.

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.

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As of December 31, 2024, there were $78.8 million obligations outstanding under the Program.

At-the-Market Common Stock Offering Program

We have an effective shelf registration statement on file with the SEC (the “Registration Statement”) to offer and sell various securities from time to time.

Under the Registration Statement, we have established an at-the-market common

stock offering program (the “ATM Program”) to sell shares of common stock not to exceed 5,000,000 Common Shares in the aggregate.

During the year ended December 31, 2024, the Company sold 60,000 Common Shares under the ATM Program, resulting in net proceeds of $0.6 million.

Current and Long-Term Liquidity

Our liquidity needs are to fund operating expenses, meet debt service obligations, and fund both current and long-term investment activities, which include capital expenditures.

A key component of our long-term growth strategy is to complete the build-out of our extract and ready-to-drink manufacturing facility in Conway, Arkansas, which will utilize state-of-the-art equipment specifically designed to efficiently manufacture and package a wide range of beverages, such as canned or bottled cold brew coffees, lattes, assorted teas, and juice-based products.

We expect that the material capital expenditures related to the facility will be completed by the first quarter of 2025.

We believe proceeds from the Delayed Draw Term Loans, Convertible Notes, cash from operations and borrowings available under the Revolving Credit Facility will provide sufficient cash on-hand to fund our near-term growth strategies, which include, (i) extending and enhancing product offerings through innovation, (ii) expanding our customer base, (iii) expanding geographically, (iv) funding accretive acquisitions, and (v) continuing to drive margin expansion and (vi) to complete the build-out of our extract and ready-to-drink manufacturing facility in Conway, Arkansas.

A key component of our long-term growth strategy is to complete the commercialization of our extract and ready-to-drink manufacturing facility in Conway, Arkansas, which utilizes state-of-the-art equipment specifically designed to efficiently manufacture and package a wide range of beverages, such as canned or bottled cold brew coffees, lattes, assorted teas, and juice-based products.

During the second and fourth quarters of 2024, we commenced commercial production in portions of the facility.

We are continuing to build out the remaining portions of the facility and expect to invest approximately $50.0 million to complete the build-out of our extract and ready-to-drink facility in Conway, Arkansas, which includes an additional approximately $20.0 million in 2025 to install a second ready-to-drink can line in the Conway facility, which we expect to place into commercial production in the second half of 2025.

We believe cash from operations and borrowings available under the Revolving Credit Facility will provide sufficient cash on-hand to fund our near-term growth strategies, which include, (i) extending and enhancing product offerings through innovation, (ii) expanding our customer base and (iii) continuing to drive margin expansion.

However, the Company will continuously evaluate its liquidity needs, and may seek to opportunistically access additional liquidity, including through either the debt or equity capital markets.

If it is determined that we have insufficient liquidity to fund the Conway facility build-out or fund our acquisition strategy, we may delay the build-out of the Conway facility and/or modify the scope of the build-out and we may reprioritize our strategy to focus on organic growth opportunities, which may have an adverse impact on our ability to achieve our growth objectives.

Warrant Proceeds

As of December 31, 2023, we had 19,144,120 outstanding warrants to purchase 19,144,120 Common Shares, exercisable at an exercise price of $11.50 per share, which expire on the earliest to occur of August 26, 2027 (i.e.

the five year anniversary of the Closing), redemption or liquidation.

The exercise of warrants, and any proceeds we may receive from their exercise, are highly dependent on the price of our Common Shares and the spread between the exercise price of the warrant and the price of our Common Shares at the time of exercise.

For example, to the extent that the price of our Common Shares exceeds $11.50 per share, it is more likely that holders of our warrants will exercise their warrants.

If the price of our Common Shares is less than $11.50 per share, it is unlikely that such holders will exercise their warrants.

Even if our warrants are in the money, there can be no assurance that warrant holders will exercise their warrants prior to their expiration.

Our Westrock Public Warrants under certain conditions, as described in their warrant agreement, are redeemable by the Company at a price of $0.01 per warrant or on a cashless basis.

Our Westrock Private Placement Warrants, of which there were 2,026,046 outstanding at December 31, 2023, are not redeemable so long as they are held by the Riverview Sponsor Partners, LLC or its permitted transferees.

As such, it is possible that we may never generate any or only very limited cash proceeds from the exercise of our warrants.

As of the date of this Annual Report on Form 10-K, we have neither included nor intend to include any potential cash proceeds from the exercise of our warrants in our short-term or long-term liquidity sources or capital resource planning.

We do not expect to rely on the cash exercise of warrants to fund our operations.

Instead, we intend to rely on our primary sources of cash discussed above to continue to support our operations.

Therefore, the availability or unavailability of any proceeds from the exercise of our warrants is not expected to affect our ability to fund our operations.

We will continue to evaluate the probability of warrant exercise over the life of our warrants and the merit of including potential cash proceeds from the exercise thereof in our liquidity sources and capital resources planning.

To the extent such warrants are exercised, additional Common Shares will be issued, which will result in dilution to the holders of our Common Shares and increase the number of Common Shares eligible for resale in the public market.

Sales of substantial numbers of such shares in the public market could adversely affect the market price of our Common Shares, which increases the likelihood of periods when our warrants will not be in the money prior to their expiration.

If it is determined that we have insufficient liquidity to fund our near-term growth strategies, we may delay and/or reprioritize our near-term growth strategies, which may have an adverse impact on our ability to achieve our growth objectives.

We believe that cash from operations, borrowings available under the Revolving Credit Facility and our ability to obtain future financing will provide sufficient cash on hand to fund our long-term growth strategies, which include (i) expanding geographically and (ii) finding accretive acquisitions.

Redemptions of Series A Preferred Shares

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The impact of such redemptions on Westrock will depend, among other things, on the financial condition of Westrock at the time of such redemptions, including the amount of available cash on hand and ability to draw on Westrock’s credit facilities or obtain other sources of financing, the business strategies and objectives of Westrock at that time and the magnitude of such redemptions.

Additionally, we may reserve cash, refrain from pursuing other business objectives and/or direct cash away from other business objectives to ensure that we have sufficient available cash to satisfy holder redemptions and this may adversely affect our business and financial condition and ability to execute on our business strategy.

Contractual and Other Obligations

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Year ended December 31, 2022

During 2024, we expect to continue to invest to expand our extract and ready-to-drink product manufacturing capacity in Conway, Arkansas.

During 2025, we expect to invest approximately $50.0 million to complete the build-out of our extract and ready-to-drink facility in Conway, Arkansas, which includes approximately $20.0 million to install a second read-to-drink can line, which we expect to be placed into commercial production in the second half of 2025.

If circumstances warrant, we may need to take measures to conserve cash, which may include a suspension, delay, or reduction in growth and/or maintenance capital expenditures.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis