What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 259 added, 373 removed, 549 unchanged (54% of the section changed)

3 unchanged sentences

(Thousands, except par value)

September 30, 2024

March 31, 2025

December 31, 2024

21 unchanged sentences

Operating lease liabilities

Warrant liabilities

Other long-term liabilities

1 unchanged sentence

Commitments and contingencies (Note 19)

Series A Convertible Preferred Shares, $ 0.01 par value, 24,000 shares authorized, 23,511 shares and 23,512 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively, $ 11.50 liquidation value

Series A Convertible Preferred Shares, $ 0.01 par value, 24,000 shares authorized, 23,511 shares and 23,511 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively, $ 11.50 liquidation value

Shareholders' Equity

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

Common stock, $ 0.01 par value, 300,000 shares authorized, 94,073 shares and 88,051 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 300,000 shares authorized, 94,622 shares and 94,221 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in-capital

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Thousands, except per share data)

2 unchanged sentences

Transaction, restructuring and integration expense

Impairment charges

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

4 unchanged sentences

Change in fair value of warrant liabilities

(Loss) income 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)

Equity in (earnings) loss from unconsolidated entities

Net (loss) income

Net loss attributable to non-controlling interest

Net (loss) income attributable to shareholders

Participating securities' share in earnings

Accretion of Series A Convertible Preferred Shares

Net (loss) income attributable to common shareholders

Amortization of Series A Convertible Preferred Shares

Net loss attributable to common shareholders

(Loss) earnings per common share:

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Three Months Ended March 31,

Other comprehensive income (loss), net of tax:

3 unchanged sentences

Comprehensive (loss) income

Comprehensive income (loss) attributable to non-controlling interests

Comprehensive (loss) income attributable to shareholders

Participating securities' share in earnings

Accretion of Series A Convertible Preferred Shares

Comprehensive (loss) income attributable to common shareholders

See accompanying notes to condensed consolidated financial statements.

WESTROCK COFFEE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

Comprehensive

Paid-in Capital

Income (Loss)

Equity (Deficit)

Balance at June 30, 2023

Net income (loss)

Issuance of common shares, net of issuance costs

Issuance of common shares related to stock options exercised

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

Accretion of Series A Convertible Preferred Shares

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Balance at September 30, 2023

Balance at June 30, 2024

Net income (loss)

Issuance of common shares related to warrant exchange

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

Accretion of Series A Convertible Preferred Shares

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Balance at September 30, 2024

Amortization of Series A Convertible Preferred Shares

Comprehensive loss attributable to common shareholders

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

(Unaudited) (continued)

Comprehensive

Non-Controlling

Paid-in Capital

3 unchanged sentences

Net income (loss)

Issuance of common shares related to acquisitions

Issuance of common shares related to Public Warrant exercise

Issuance of common shares related to stock options exercised

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

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

Issuance of common shares, net of issuance costs

Accretion of Series A Convertible Preferred Shares

Amortization of Series A Convertible Preferred Shares

Other comprehensive income (loss)

1 unchanged sentence

Net share settlement of equity awards

Balance at September 30, 2023

Balance at March 31, 2024

Balance at December 31, 2024

Net income (loss)

Issuance of common shares related to "at-the-market" offering program, net of issuance costs

Issuance of common shares related to stock options exercised

Issuance of common shares related to warrant exchange

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

Accretion of Series A Convertible Preferred Shares

Amortization of Series A Convertible Preferred Shares

Other comprehensive income (loss)

1 unchanged sentence

Net share settlement of equity awards

Balance at September 30, 2024

Balance at March 31, 2025

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Impairment charges

Equity-based compensation

1 unchanged sentence

Amortization of deferred financing fees included in interest expense

Loss on disposal of property, plant and equipment

Write-off of unamortized deferred financing fees

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

Mark-to-market adjustments

8 unchanged sentences

Accrued liabilities and other

Net cash used in operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

Additions to intangible assets

Acquisition of business, net of cash acquired

Acquisition of equity method investments and non-marketable securities

Proceeds from sale of equity method investments and non-marketable securities

Proceeds from sale of property, plant and equipment

8 unchanged sentences

Payment of debt issuance costs

Payment of convertible notes payable issuance costs

Net proceeds from (repayments of) repurchase agreements

Proceeds from exercise of stock options

Proceeds from exercise of Public Warrants

Proceeds from issuance of common stock

Payment of equity issuance costs

Payment for purchase of non-controlling interest

Payment for taxes for net share settlement of equity awards

1 unchanged sentence

Effect of exchange rate changes on cash

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

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

Cash and cash equivalents and restricted cash at beginning of period

2 unchanged sentences

Property, plant and equipment acquired but not yet paid

The total cash and cash equivalents and restricted cash at September 30, 2024 and 2023 is as follows:

September 30, 2024

September 30, 2023

The total cash and cash equivalents and restricted cash at March 31, 2025 and 2024 is as follows:

March 31, 2025

March 31, 2024

Cash and cash equivalents

Restricted cash

Cash and cash equivalents - held for sale (Note 3)

See accompanying notes to condensed consolidated financial statements.

6 unchanged sentences

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.

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

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

Basis of Presentation and Consolidation

6 unchanged sentences

The Condensed Consolidated Balance Sheet as of December 31, 2024 was derived from the audited financial statements, but does not include all disclosures required by GAAP.

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

Aggregate consideration paid for the interest totaled $ 3.2 million and included $ 2.0 million in cash and 100,000 shares of common stock, par value $ 0.01 per share, of the Company (“Common Shares”).

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

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

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

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

The interim financial information is unaudited but, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair statement of results for the interim periods have been included.

5 unchanged sentences

Use of Estimates

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

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

The preparation of consolidated financial statements in conformity with U.S.

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

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

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

3 unchanged sentences

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

The Company believes that projected cash flow from operations, including current projections of the timing and amount of cash flows to be generated from our Conway, Arkansas extract and ready-to-drink manufacturing facility (the “Conway Facility”), and available borrowings under its Credit Agreement, as amended, will be sufficient to fund operations and to maintain covenant compliance for at least the next twelve months.

However, during the nine months ended September 30, 2024, the Company incurred net losses of $ 55.7 million and net cash outflows from operating activities of $ 16.0 million.

The Company believes that projected cash flow from operations, including current projections of the timing and amount of cash flows to be generated from our Conway, Arkansas extract and ready-to-drink manufacturing facility (the “Conway Facility”), and available borrowings under its Credit Agreement, as amended, as described in Note 10, will be sufficient to fund operations and to maintain covenant compliance for at least the next twelve months.

However, during the three months ended March 31, 2025, the Company incurred net losses of $ 27.2 million and net cash outflows from operating activities of $22.1 million.

If we are unable to achieve our profitability growth projections and maintain our covenant leverage ratio and minimum liquidity requirements, as a result of, for example, experiencing any adverse impact of changes or further delays in the estimated timing and volume of products to be commercialized in our Conway Facility over the next twelve months, and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants.

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

As further discussed in Restructuring Activities below, the Company has recently consolidated its manufacturing operations, signed a purchase and sale agreement of its West Winds facility, and executed a targeted reduction in excess workforce capacity, which were designed to improve operational efficiency.

As further discussed in Note 10, on January 15, 2025, the Company entered into an Incremental Assumption Agreement and Amendment No.

4 to its Credit Agreement (as defined in Note 10), which increased available borrowings under the Credit Agreement by $ 25.0 million and modified certain financial covenants.

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

As further discussed in Restructuring Activities below, the Company recently consolidated its manufacturing operations, completed the sale of its West Winds facility, and executed a targeted reduction in excess workforce capacity, which were designed to improve operational efficiency.

If required, the Company will further reduce operating costs to ensure compliance with its financial covenants.

4 unchanged sentences

Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers.

This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers.

We consider our accounts

receivable delinquent or past due based on payment terms established with each customer.

This evaluation considers the customer demographic, such as

large commercial customers as compared to small businesses or individual customers.

We consider our accounts receivable delinquent or past due based on payment terms established with each customer.

Accounts receivable are written off when the account is determined to be uncollectible.

Activity in the allowance for credit losses for the periods indicated was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Activity in the allowance for credit losses was as follows:

Three Months Ended March 31,

Balance at beginning of period

Charged to selling, general and administrative expense

Write-offs, net

Allowance for credit losses - held for sale (Note 3)

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

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

Within our Sustainable Sourcing & Traceability segment, green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, consistent with our forward purchase contracts recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”).

1 unchanged sentence

We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2024, we recognized $ 2.7 million and $ 3.7 million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

For the three and nine months ended September 30, 2023, we recognized $ 0.5 million of net unrealized losses and $ 0.6 million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

For the three months ended March 31, 2025 and 2024, we recognized $ 1.5 million of net unrealized losses and $ 0.7 million of net unrealized losses, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

Capitalized Interest

1 unchanged sentence

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

For the three and nine months ended September 30, 2024, we capitalized $ 4.0 million and $ 11.1 million of interest costs, respectively.

For the three and nine months ended September 30, 2023, we capitalized $ 1.0 million of interest costs.

For the three months ended March 31, 2025 and 2024, we capitalized $ 0.2 million and $ 2.8 million of interest costs, respectively.

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.

4 unchanged sentences

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

At September 30, 2024 and December 31, 2023, there were $ 70.9 million and $ 78.1 million of obligations outstanding under the Program, respectively.

At March 31, 2025 and December 31, 2024, there were $ 95.4 million and $ 78.8 million of obligations outstanding under the Program, respectively.

Green Coffee Repurchase Program

On March 28, 2025, the Company entered into a master commodity purchase and sale agreement (the “Commodity Program”) with a third-party financing provider whereby the Company may enter into commodities purchase and sales, including transactions in which the Company sells green coffee to the financing provider, but retains a right, or obligation, to re-purchase the green coffee at the original sales price, plus a finance charge (“Repo Transactions”).

The Commodity Program is uncommitted and may be canceled by the financing provider at any time.

At March 31, 2025 and December 31, 2024, the Company had a right, or obligation, to repurchase $ 13.6 million and $ 0 , respectively, of green coffee from the financing provider.

The liability for Repo Transactions is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets.

Cash flows related to Repo Transactions are recorded within financing activities in our Condensed Consolidated Statements of Cash Flows.

Restructuring Activities

5 unchanged sentences

Restructuring charges are not included in the Company’s measurement of segment profitability as discussed in Note 18.

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, NC, and the closure of its manufacturing facility in Richmond, CA.

All production from the impacted facilities was consolidated into other facilities operated by the Company in Concord, NC and Conway, AR.

The closure of the West Winds facility was completed as of June 30, 2024.

The Company is under contract to sell the land and buildings, which is expected to be completed in the fourth quarter of 2024.

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

The Company currently estimates total charges related to the plant consolidations of $ 5.0 million, of which $ 0.7 million have been incurred during the three and nine months ended September 30, 2024.

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.

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

The Company estimates total charges related to the plant consolidations of $ 4.0 million, of which $ 3.2 million was incurred during the year ended December 31, 2024 and $ 0.9 million have been incurred during the three months ended March 31, 2025.

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

At September 30, 2024 , the Company classified approximately $ 9.1 million of land and buildings as held-for-sale, which are reported within prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2024, the Company incurred impairment charges of approximately $ 1.2 million and $ 2.0 million, respectively, on equipment associated with the plant consolidations, which is reported within impairment charges on the Condensed Consolidated Statements of Operations.

The Company is continuing to evaluate which plant assets will be moved to other manufacturing facilities and which plant assets will be disposed of;

therefore, there may be additional impairment charges in the future related to the consolidation of our 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 $ 4.1 million of one-time employee severance costs during the nine months ended September 30, 2024, which are recorded in transaction, restructuring and integration expense in the Condensed Consolidated Statements of Operations.

At September 30, 2024, approximately $ 1.0 million of such termination benefits were accrued for within accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

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.

At March 31, 2025, approximately $ 0.3 million of such termination benefits were accrued for within accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

The following table summarizes the changes in the Company’s accrual for employee termination benefits:

Three Months Ended

Nine Months Ended

September 30,

Balance at beginning of period

Balance at end of the period

On February 12, 2024, following the completion of its 530,000 square foot distribution center in Conway, AR, the Company entered into a lease termination agreement for its distribution center located in North Little Rock, AR (the “Gregory Distribution Center”).

On February 12, 2024, following the completion of the Conway Facility, the Company entered into a lease termination agreement for its distribution center located in North Little Rock, AR (the “Gregory Distribution Center”).

The Gregory Distribution Center lease terminated, by mutual agreement, on June 30, 2024.

No costs were incurred as a result of the lease termination.

During the first quarter of 2024, the Company

remeasured the Gregory Distribution Center lease liability, and related right-of-use asset, in accordance with ASC 842, Leases , resulting in a reduction of the lease liability and right-of-use asset of approximately $ 3.0 million.

At September 30, 2024, there was no remaining lease liability or right-of-use assets related to the Gregory Distribution Center recorded in the Condensed Consolidated Balance Sheets.

During the first quarter of 2024, the Company remeasured the Gregory Distribution Center lease liability, and related right-of-use asset, in accordance with ASC 842, Leases , resulting in a reduction of the lease liability and right-of-use asset of approximately $ 3.0 million.

As of June 30, 2024, there was no remaining lease liability or right-of-use assets related to the Gregory Distribution Center recorded in the Condensed Consolidated Balance Sheets.

Assets and Liabilities Held-for-Sale

On April 1, 2025, the Company entered into a joint venture with ETC Holdings SA (“ECOM”) that combines Westrock’s and ECOM’s Rwandan export operations.

At March 31, 2025, the assets and liabilities of the Company’s Rwandan operations, which are reported within the Company’s Sustainable Sourcing & Traceability segment , met the criteria to be presented as held-for-sale.

As such, the Company reported approximately $ 9.3 million of assets and $ 10.3 million of liabilities as held-for-sale in prepaid expenses and other current assets and accrued expenses and other current liabilities, respectively, in the Condensed Consolidated Balance Sheets.

The $ 9.3 million of assets held-for-sale include approximately $ 2.9 million of cash and cash equivalents, $ 1.8 million of accounts receivable, $ 1.7 million of inventories, and $ 2.5 million of property, plant and equipment, net.

The $ 10.3 million of liabilities held-for-sale includes $ 9.4 million of short-term debt.

We account for income taxes under the asset and liability method.

7 unchanged sentences

We re-evaluate our need for a valuation allowance on a quarterly basis.

The effective income tax rates for the nine months ended September 30, 2024 and 2023 were ( 2.3 %) and 18.7 %, respectively.

The effective income tax rates for the three months ended March 31, 2025 and 2024 were ( 7.2 )% and ( 32.6 )%, respectively.

The Company’s effective tax rate for the current period differs from the federal statutory rate primarily due to an increase in the valuation allowance against domestic deferred tax assets.

The effective tax rate for the nine months ended September 30, 2024 differs from the effective tax rate for the same period in 2023 primarily due to the Company’s full year forecasted ordinary income (loss) in the periods and the permanent difference for changes in the fair value of warrants.

The effective tax rate for the three months ended March 31, 2025 differs from the effective tax rate for the same period in 2024 primarily due to the Company’s full year forecasted ordinary income (loss) in the periods and the change in the valuation allowance.

On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") released Pillar Two Model Rules, which provide for a global minimum tax of 15% on multinational entities.

Although the United States has not yet adopted the Pillar Two Model Rules, several foreign countries enacted Pillar Two legislation in 2023 with an initial effective date of January 1, 2024.

The impact of Pillar Two legislation on the Company's 2024 effective tax rate is expected to be minimal.

Although the United States has not yet adopted the Pillar Two Model Rules, several foreign countries have enacted Pillar Two legislation since 2023.

The impact of Pillar Two on the Company's 2025 effective tax rate is expected to be minimal.

Management will continue to monitor future Pillar Two legislation in relevant jurisdictions for any impacts to the Company's effective tax rate.

Recently adopted accounting pronouncements

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

Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50):

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

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

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

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

Recently issued accounting pronouncements

ASU 2023-05 – Business Combinations – Joint Venture Formations (Subtopic 805-60):

4 unchanged sentences

The amendments in this update are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted.

The Company will apply the provisions of ASU 2023-05 to new joint ventures, as applicable, but does not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements.

The Company adopted the amendments within ASU 2023-05 effective January 1, 2025.

The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.

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

4 unchanged sentences

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

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

The amendments in the update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

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

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

While we do not expect the adoption of this guidance to have a material impact on our financial position, results of operations or cash flows’, we will be required to provide enhanced segment disclosures beginning in our Annual Report for the fiscal year ended December 31, 2024 and subsequent interim periods.

The Company adopted the amendments within ASU 2023-07 when it became effective, in our 2024 annual reporting, on a retrospective basis.

The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.

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

5 unchanged sentences

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

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

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

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

The adoption of ASU 2023-09 will result in additional annual tax disclosures but does not otherwise have a material impact on our financial position, results of operations or cash flows.

Recently issued accounting pronouncements

ASU 2024-03 – Income Statement – Reporting Comprehensive Income (Topic 220):

3 unchanged sentences

The amendments in this update include requirements for public business entities to provide disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The amendments in this update may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements.

The Enhancement and Standardization of Climate-Related Disclosure for Investors

In March 2024, the SEC adopted final rules requiring registrants to provide certain climate-related disclosures, including Scope 1 and Scope 2 greenhouse gas emissions to the extent they are material.

These rules require certain disclosures related to severe weather events and other natural conditions in the notes to audited financial statements.

These disclosures are required to phase-in over multiple years beginning with fiscal 2025 for large accelerated filers and fiscal 2026 for accelerated filers.

On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges.

The Company is currently evaluating the impact of the new rules.

Revenue from Contracts with Customers (ASC 606)

7 unchanged sentences

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.

In addition, we exclude from net revenue and costs of sales taxes assessed by governmental authorities on revenue-producing transactions.

Although we occasionally accept returns of products from our customers, historically returns have not been material.

1 unchanged sentence

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

At September 30, 2024 and December 31, 2023, the Company had $ 1.2 million and $ 8.3 million, respectively, of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.

At March 31, 2025 and December 31, 2024, the Company had $ 0.5 million and $ 0.6 million, respectively, of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets.

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

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Revenues from commodity contracts are recognized in revenues for the contractually stated amount when the contracts are settled.

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

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

For the three and nine months ended September 30, 2024, we recorded $ 3.3 million of net unrealized losses and $ 1.0 million of net unrealized losses, respectively, within costs of sales.

For the three and nine months ended September 30, 2023, we recorded $ 0.7 million of net unrealized losses and $ 0.4 million of net unrealized gains, respectively, within costs of sales.

For the three and nine months ended September 30, 2024, the Company recognized $ 56.6 million and $ 135.7 million in revenues under ASC 815, respectively, and for the three and nine months ended September 30, 2023, the Company recognized $ 42.4 million and $ 101.6 million in revenues under ASC 815, respectively, which are reported within the Company’s Sustainable Sourcing & Traceability segment.

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

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

For the three months ended March 31, 2025 and 2024, we recorded $ 3.6 million and $ 2.3 million of net unrealized gains, respectively, within costs of sales.

For the three months ended March 31, 2025 and 2024, the Company recognized $ 49.6 million and $ 35.0 million in revenues under ASC 815, respectively, which are reported within the Company’s Sustainable Sourcing & Traceability segment.

Contract Estimates

The nature of the Company’s contracts gives rise to variable consideration including cash discounts, volume-based rebates, point of sale promotions, and other promotional discounts to certain customers.

For all promotional programs and discounts, the Company estimates the rebate or discount that will be granted to the customer and records an accrual upon invoicing.

The nature of the Company’s contracts give rise to variable consideration including cash discounts, volume-based rebates, point of sale promotions, and other promotional discounts to certain customers.

For all promotional programs and discounts, the Company estimates the rebate or discount that will be granted to the customer and records an accrual

upon invoicing.

These estimated rebates or discounts are included in the transaction price of the Company’s contracts with customers as a reduction to net revenues and are included as accrued sales incentives in accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets.

Accrued sales incentives were $ 1.5 million and $ 1.5 million at September 30, 2024 and December 31, 2023, respectively.

Other accrued deductions were $ 2.5 million and $ 2.7 million at September 30, 2024 and December 31, 2023, respectively, and are included as a reduction to accounts receivable, net in the Condensed Consolidated Balance Sheets.

Accrued sales incentives were $ 1.9 million and $ 1.8 million at March 31, 2025 and December 31, 2024, respectively.

Other accrued deductions were $ 2.3 million and $ 2.0 million at March 31, 2025 and December 31, 2024, respectively, and are included as a reduction to accounts receivable, net in the Condensed Consolidated Balance Sheets.

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

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Contract balances relate primarily to advances received from the Company’s customers before revenue is recognized.

The Company does not have any material contract liabilities as of September 30, 2024 or December 31, 2023.

The Company did not have any material contract liabilities as of March 31, 2025 or December 31, 2024.

Receivables from contracts with customers are included in accounts receivable, net on the Company’s Condensed Consolidated Balance Sheets.

At September 30, 2024 and December 31, 2023, accounts receivable, net included $ 107.8 million and $ 104.8 million in receivables from contracts with customers, respectively.

At March 31, 2025 and December 31, 2024, accounts receivable, net included $ 87.4 million and $ 104.8 million in receivables from contracts with customers, respectively.

Contract acquisition costs for obtaining contracts that are deemed recoverable are capitalized as contract costs.

Such costs result from the payment of sales incentives and are amortized over the contract life.

As of September 30, 2024 and December 31, 2023, no costs were capitalized as all arrangements were less than a year.

As of March 31, 2025 and December 31, 2024, no costs were capitalized as all arrangements were less than a year.

Disaggregated Revenue

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Flavors, extracts & ingredients

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

United States

All other countries

Bixby Roasting Co.

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

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

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

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

Net assets acquired totaled approximately $ 0.7 million.

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

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

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

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

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

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

The following table summarizes inventories as of September 30, 2024 and December 31, 2023:

September 30, 2024

For the three months ended March 31, 2025 and 2024, other than the United States, no country accounted for more than 10 percent of our consolidated net sales.

The following table summarizes inventories as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

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Green coffee inventories represent green coffee held for resale.

At September 30, 2024 and December 31, 2023, all green coffee held for resale was included within our Sustainable Sourcing & Traceability segment.

At March 31, 2025 and December 31, 2024, all green coffee held for resale was included within our Sustainable Sourcing & Traceability segment.

Property, Plant and Equipment, Net

The following table summarizes property, plant and equipment, net as of September 30, 2024 and December 31, 2023:

The following table summarizes property, plant and equipment, net as of March 31, 2025 and December 31, 2024:

(Dollars in Thousands)

Depreciable Lives

September 30, 2024

March 31, 2025

December 31, 2024

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

Depreciation expense for the three and nine months ended September 30, 2024 was $ 5.8 million and $ 17.1 million, respectively, and depreciation expense for the three and nine months ended September 30, 2023 was $ 4.4 million and $ 12.4 million, respectively.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $ 9.8 million and $ 5.5 million, respectively.

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

All assets classified as construction in progress and equipment deposits at September 30, 2024 are expected to be in production use.

The following table reflects the carrying amount of goodwill as of September 30, 2024 and December 31, 2023:

All assets classified as construction in progress and equipment deposits at March 31, 2025 are expected to be in production use.

The following table reflects the carrying amount of goodwill as of March 31, 2025 and December 31, 2024:

Balance at December 31, 2024

Accumulated impairment loss

Balance at September 30, 2024

Balance at March 31, 2025

Accumulated impairment loss

Intangible Assets, Net

The following table summarizes intangible assets, net as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following table summarizes intangible assets, net as of March 31, 2025 and December 31, 2024:

March 31, 2025

Customer relationships

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Intangible assets, net

Amortization expense of intangible assets was $ 2.0 million and $ 6.1 million for the three and nine months ended September 30, 2024, respectively, and amortization expense of intangible assets was $ 2.0 million and $ 6.0 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the weighted average useful life for definite-lived intangibles is approximately 20 years .

Amortization expense of intangible assets was $ 2.0 million and $ 2.0 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the weighted average useful life for definite-lived intangibles is approximately 20 years .

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

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Balance Sheet Location

September 30, 2024

March 31, 2025

December 31, 2024

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Operating lease liabilities

During the nine months ended September 30, 2024 and 2023, the Company obtained approximately $ 1.0 million and $ 6.0 million, respectively, of right-of-use operating lease assets in exchange for lease obligations.

During the three months ended March 31, 2025 and 2024, the Company obtained approximately $ 0.7 million and $ 1.0 million, respectively, of right-of-use operating lease assets in exchange for lease obligations.

On February 12, 2024, following the completion of its 530,000 square foot distribution center in Conway, Arkansas, the Company entered into a lease termination agreement for the Gregory Distribution Center lease.

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

The components of lease costs for the three and nine months ended September 30, 2024 and 2023, respectively, are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

The components of lease costs for the three months ended March 31, 2025 and 2024, respectively, are as follows:

Three Months Ended March 31,

Operating lease cost

Short-term lease cost

The following table presents information about the Company’s weighted average discount rate and remaining lease term as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following table presents information about the Company’s weighted average discount rate and remaining lease term as of March 31, 2025 and December 31, 2024:

March 31, 2025

December 31, 2024

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Weighted-average remaining lease term

Supplemental cash flow information about the Company’s leases as of September 30, 2024 and 2023, respectively, is as follows:

Nine Months Ended September 30,

Supplemental cash flow information about the Company’s leases as of March 31, 2025 and 2024, respectively, is as follows:

Three Months Ended March 31,

Cash paid related to operating lease liabilities

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

There were no material finance leases as of September 30, 2024.

Future minimum lease payments under non-cancellable operating leases as of September 30, 2024 are as follows:

Remainder of 2024

There were no material finance leases as of March 31, 2025.

Future minimum lease payments under non-cancellable operating leases as of March 31, 2025 are as follows:

Total future minimum lease payments

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Present value of minimum lease payments

Our long-term debt at September 30, 2024 and December 31, 2023 is as follows:

September 30, 2024

Our long-term debt at March 31, 2025 and December 31, 2024 is as follows:

March 31, 2025

December 31, 2024

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Credit Agreement

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

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

The 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.

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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 September 30, 2024, we had $ 107.5 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.8 %, and we had $ 2.6 million of standby letters of credit outstanding.

At September 30, 2024, the interest rate applicable to our Term Loan Facility was 8.0 % and the interest rate applicable to our Delayed Draw Term Loan Facility was 8.9 %.

At March 31, 2025, we had $ 147.5 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.3 %, and we had $ 2.6 million of standby letters of credit outstanding.

At March 31, 2025, 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 8.3 %.

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

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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.

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

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 included (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 $ 15.0 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 $ 20.0 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 Conway Facility, 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) 6.00 x for the test period ending June 30, 2025, (b) 5.50 x for the test period ending September 30, 2025, and (c) 5.25 x 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 March 31, 2025, the Company was in compliance with its financial covenants.

We incurred a total of $ 1.4 million in financing fees in connection with the Fourth Amendment.

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

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 Condensed Consolidated Balance Sheets and are being amortized ratably over the remaining term of the Revolving Credit Facility.

Convertible Notes

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

At September 30, 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.

At March 31, 2025, 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:

2 unchanged sentences

and (iii) during the 35 trading days following the effective date of certain fundamental change transactions that occur prior to the close of business on the trading day immediately preceding August 15, 2028.

The Company will settle conversions by paying or delivering, as applicable, at the Company’s election, cash, Common Shares, or a combination of cash and Common Shares.

The Company will settle conversions by paying or delivering, as applicable, at the Company’s election, cash, common stock, par value $ 0.01 per share (“Common Shares”), or a combination of cash and Common Shares.

The Company may not issue more than 19.99 % of the issued and outstanding Common Shares immediately prior to the issuance of the Convertible Notes in respect of the conversion of the Convertible Notes.

The initial conversion price of the Convertible Notes is $ 12.84 , which corresponds to an initial

conversion rate of approximately 77.88 Common Shares per $ 1,000 principal amount of Convertible Notes.

The initial conversion price of the Convertible Notes is $ 12.84 , which corresponds to an initial conversion rate of approximately 77.88 Common Shares per $ 1,000 principal amount of Convertible Notes.

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

International Debt and Lending Facilities

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

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

The facility was set to mature one year from inception.

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

On March 8, 2024, Falcon Coffees Limited (“Falcon”), our subsidiary, renewed its working capital trade finance facility with multiple institutions.

The facility size was reduced from $ 70.0 million to $ 55.0 million and was uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility matured one year from inception.

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

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

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

On March 7, 2025, 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 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 %).

On August 21, 2024, Falcon 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.

At September 30, 2024, there was $ 48.5 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Condensed Consolidated Balance Sheets.

At March 31, 2025, there was $ 58.8 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Condensed Consolidated Balance Sheets.

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

Falcon was in compliance with these financial covenants as of September 30, 2024.

On September 28, 2023, we entered into a $ 5.0 million unsecured working capital trade finance facility with responsAbility Climate Smart Agriculture & Food Systems Fund through our subsidiary, Falcon.

Falcon was in compliance with these financial covenants as of March 31, 2025.

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 Falcon.

The facility will mature on December 31, 2026, and requires stepped repayments of $ 0.5 million on December 31, 2024, $ 1.0 million on December 31, 2025 and $ 3.5 million on December 31, 2026.

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

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

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 September 30, 2024, there was $ 5.0 million of outstanding borrowings under the facility, of which $ 4.5 million and $ 0.5 million, is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Condensed Consolidated Balance Sheets.

At March 31, 2025, 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 Condensed Consolidated Balance Sheets.

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

Falcon was in compliance with these financial covenants as of September 30, 2024.

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

(a) a short-term trade finance facility with a balance of $ 6.6 million at September 30, 2024 and (b) a long-term note payable with a balance of $ 0.8 million at September 30, 2024.

Additionally, Rwanda Trading Company maintains two short-term futures contract-based lending facilities from international institutions with outstanding balances of $ 0.6 million and $ 2.4 million at September 30, 2024.

Falcon was in compliance with these financial covenants as of March 31, 2025.

Series A Preferred Shares

6 unchanged sentences

After February 26, 2028, any holder of Westrock Series A Preferred Shares may require Westrock to redeem all or any whole number of such holder’s Westrock Series A Preferred Shares in cash, subject to applicable law and the terms of any credit agreement or similar arrangement pursuant to which a third-party lender provides debt financing to Westrock or its subsidiaries, at a redemption price per share equal to the greater of (a) the liquidation preference and (b) the product of (i) the number of Common Shares that would have been obtained from converting one Westrock Series A Preferred Share on the redemption notice date and (ii) the simple average of the daily volume weighted average price per Common Share for the ten trading days ending on and including the trading day immediately preceding the redemption notice date.

Assuming that the liquidation preference of the Series A Preferred Shares remains $ 11.50 per share and all 23,510,527 Series A Preferred Shares outstanding at September 30, 2024 remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $ 270.4 million.

Assuming that the liquidation preference of the Series A Preferred Shares remains $ 11.50 per share and all 23,510,527 Series A Preferred Shares outstanding at March 31, 2025 remain outstanding after February 26, 2028, we estimate an aggregate redemption payment of at least approximately $ 270.4 million.

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

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

For the three and nine months ended September 30, 2024, the Company recorded $ 0.1 million and $ 0.3 million of amortization, respectively,

with respect to the Westrock Series A Preferred Shares.

For the three and nine months ended September 30, 2023, the Company recorded $ 0.1 million of amortization and $ 0.2 million of accretion, respectively, with respect to the Westrock Series A Preferred Shares.

For the three months ended March 31, 2025 and 2024, the Company recorded $ 0.1 million and $ 0.1 million of amortization, respectively, with respect to the Westrock Series A Preferred Shares.

Common Stock Warrants

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.

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

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

Prior to the Offer described below, the Westrock Private Warrants (defined below) were valued using a binomial lattice valuation model.

For the three months ended March 31, 2024, the Company recognized less than $ 0.1 million of gains related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Condensed Consolidated Statements of Operations.

No such gains or losses were recognized during the three months ended March 31, 2025.

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”).

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

At September 30, 2024, following the completion of the Offer, the Company had 441,522 Westrock Public Warrants and no Westrock Private Warrants outstanding.

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

We account for the Westrock Warrants in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities.

Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period.

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

The Company re-measures the fair value of the Westrock Public Warrants based on the quoted market price of the Westrock Public Warrants.

Prior to the Offer, the Westrock Private Warrants were valued using a binomial lattice valuation model.

For the three and nine months ended September 30, 2024, the Company recognized $5.5 million and $7.1 million of gains, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2023, the Company recognized $ 25.1 million and $ 18.8 million of gains, respectively, related to the change in fair value of warrant liabilities.

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 Westrock Warrants (the “Warrant Agreement”), to permit the Company to require that (x) each Westrock Public Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 common shares, which is a ratio 10 % less than the exchange ratio applicable to the Offer and (y) each Westrock Private Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 common shares, which is a ratio 10 % less than the exchange ratio applicable to the Offer (such amendment, the “Warrant Amendment”).

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

On October 16, 2024, the Post-Offer Exchange related to the Westrock Public Warrants was completed, resulting in the issuance of 115,220 Common Shares in exchange for then outstanding Westrock Public Warrants.

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

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

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

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

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

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

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

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The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings.

We did not discontinue any cash flow hedging relationships during the nine months ended September 30, 2024 and 2023.

We did not discontinue any cash flow hedging relationships during the three months ended March 31, 2025 and 2024.

Within our Beverage Solutions segment, we have entered into coffee futures contracts to hedge our exposure to price fluctuations on green coffee associated with certain price-to-be-fixed purchase contracts, which generally range from three to twelve months in length.

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The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of green coffee.

The notional amount for the coffee futures contracts that were designated and qualified for our commodity cash flow hedging program was 4.8 million pounds and 11.5 million pounds as of September 30, 2024 and December 31, 2023, respectively.

During the three and nine months ended September 30, 2024, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 28.7 million pounds and 58.5 million pounds, respectively.

During the three and nine months ended September 30, 2023, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 30.3 million pounds and 53.9 million pounds, respectively.

Approximately $ 4.3 million and $ 7.9 million of net realized gains, representing the effective portion of the cash flow hedge, were subsequently reclassified from AOCI to earnings and recognized in costs of sales in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024, respectively.

Approximately $ 3.1 million and $ 5.2 million of net realized losses, representing the effective portion of the cash flow hedge, were subsequently reclassified from AOCI to earnings and recognized in costs of sales in the Condensed

Consolidated Statements of Operations for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the estimated amount of net gains reported in AOCI that is expected to be reclassified to the Condensed Consolidated Statements of Operations within the next twelve months is $ 13.6 million.

The notional amount for the coffee futures contracts that were designated and qualified for our commodity cash flow hedging program was 26.0 million pounds and 11.0 million pounds as of March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025 and 2024, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 46.7 million pounds and 9.9 million pounds, respectively.

Approximately $ 10.2 million of net realized gains and $ 0.1 million of net realized gains, representing the effective portion of the cash flow hedge, were subsequently reclassified from AOCI to earnings and recognized in costs of sales in

the Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the estimated amount of net gains reported in AOCI that is expected to be reclassified to the Condensed Consolidated Statements of Operations within the next twelve months is $ 18.1 million.

Within our Sustainable Sourcing & Traceability segment, the Company’s forward sales and forward purchase contracts are for physical delivery of green coffee in a future period.

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Balance Sheet Location

September 30, 2024

March 31, 2025

December 31, 2024

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

The following table presents the pre-tax net gains and losses for our derivative instruments for the three and nine months ended September 30, 2024 and 2023, respectively:

Three Months Ended September 30,

Nine Months Ended September 30,

2 - Option contracts include counterparty netting.

The following table presents the pre-tax net gains and losses for our derivative instruments for the three months ended March 31, 2025 and 2024, respectively:

Three Months Ended March 31,

Statement of Operations Location

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These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table summarizes the fair value of financial instruments at September 30, 2024:

September 30, 2024

The following table summarizes the fair value of financial instruments at March 31, 2025:

March 31, 2025

Green coffee associated with forward contracts

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Forward purchase and sales contracts

Westrock Public Warrants

Westrock Private Warrants

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

Private Warrants

Fair value as of December 31, 2023

Change in fair value

Warrant exchange

Fair value as of September 30, 2024

1 - Option contracts include counterparty netting.

The following table summarizes the fair value of financial instruments at December 31, 2024:

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Coffee futures contracts

Options contracts

Forward purchase and sales contracts

Westrock Public Warrants

Westrock Private Warrants

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

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

The Term Loan Facility, Delayed Draw Term Loan Facility and Revolving Credit Facility are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of March 31, 2025, as the interest rate on these facilities is adjusted for changes in the market rates.

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

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

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

Westrock Public Warrants are valued based on their quoted market price of $ 1.65 and $ 2.30 per warrant as of September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024, there were no outstanding Westrock Private Warrants.

As of December 31, 2023, the Westrock Private Warrants price of $ 2.68 per warrant was valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement.

The primary unobservable inputs were as follows:

December 31, 2023

Exercise price

Expected term (years)

Expected volatility

Risk-free rate of return

Dividend yield

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

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

The Term Loan Facility, Revolving Credit Facility and Delayed Draw Term Loan Facility are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of September 30, 2024 as the interest rate on these facilities is adjusted for changes in the market rates.

The Convertible Notes are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of September 30, 2024.

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

The Convertible Notes are carried on the Condensed Consolidated Balance Sheets at amortized cost.

The estimated fair value of the Convertible Notes was $ 63.1 million as of March 31, 2025, and was determined using a binomial lattice model, which is considered to be a Level 3 fair value measurement.

The primary unobservable inputs at March 31, 2025 include the expected volatility and assumed debt yield of 50.0 % and 15.3 %, respectively.

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

No events occurred during the three and nine months ended September 30, 2024 or 2023, requiring these non-financial assets and liabilities to be subsequently recognized at fair value, with the exception of the $ 1.2 million and $ 2.0 million of impairment charges for the three and nine months ended September 30, 2024, respectively, on equipment related to the restructuring activities disclosed in Note 3.

The equipment is no longer in use and was determined to have no salvage value.

At September 30, 2024, the Company had an equity investment with a carrying value of approximately $ 1.0 million, for which there is no readily determinable fair value.

No events occurred during the three months ended March 31, 2025 or 2024, requiring these non-financial assets and liabilities to be subsequently recognized at fair value.

At March 31, 2025, the Company had an equity investment with a carrying value of approximately $ 1.0 million, for which there is no readily determinable fair value.

This investment is recorded at cost within other long-term assets on the Condensed Consolidated Balance Sheets.

As of September 30, 2024, there have been no adjustments, upward or downward, to the carrying value.

As of March 31, 2025, there have been no adjustments, upward or downward, to the carrying value.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of tax by component for the three and nine months ended September 30, 2024 and 2023 is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Changes in accumulated other comprehensive income (loss), net of tax by component for the three months ended March 31, 2025 and 2024 is as follows:

Three Months Ended March 31,

Unrealized gain (loss) on derivative instruments:

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Amounts reclassified from accumulated comprehensive income

Net accumulated other comprehensive income

Other comprehensive income attributable to non-controlling interests

Balance at end of period

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Amounts reclassified from accumulated comprehensive income

Net accumulated other comprehensive income

Other comprehensive income attributable to non-controlling interests

Balance at end of period

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Equity-Based Compensation

During the three and nine months ended September 30, 2024, the Company granted three thousand and 1.4 million restricted stock units (“RSUs”), respectively, under the Westrock Coffee Company 2022 Equity Incentive Plan (the “2022 Equity Plan”).

The RSUs had a grant date fair value of thirty thousand and $ 13.2 million, respectively, which was calculated using the closing price of the Common Shares on the applicable date of grant.

The RSUs are amortized on a straight-line basis to expense over the vesting period.

For RSUs issued during 2024, the vesting period is four year s, and for RSUs issued prior to 2024, the vesting period is three years .

As of September 30, 2024, there were 2.7 million shares available for future issuance under the 2022 Equity Plan.

The following table sets forth the RSU activity under the 2022 Equity Plan for the nine months ended September 30, 2024.

The Company grants restricted stock units (“RSUs”) under the Westrock Coffee Company 2022 Equity Incentive Plan (the “2022 Equity Plan”).

The RSUs are amortized on a straight-line basis to expense over the vesting period, which ranges from one to four years .

As of March 31, 2025, there were 4.4 million shares available for future issuance under the 2022 Equity Plan.

The following table sets forth the RSU activity under the 2022 Equity Plan for the three months ended March 31, 2025.

Weighted-Average

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Outstanding at December 31, 2024

Outstanding at September 30, 2024

Outstanding at March 31, 2025

Earnings per Share

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

As a result of the Company’s net income position for the three months ended September 30, 2023, a portion of our undistributed earnings have been allocated to participating securities in accordance with the provisions of ASC 260.

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Restricted stock units

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Thousands, except per share data)

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Effect of participating securities

Effect of non-participating securities

Net income (loss) attributable to common shareholders - diluted

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Our two operating segments, Beverage Solutions and Sustainable Sourcing & Traceability, are evaluated using Segment Adjusted EBITDA, which is a segment performance measure.

We define Segment Adjusted EBITDA as net (loss) income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in 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, certain recurring operating costs related to the scale-up of operations of the Conway extract and ready-to-drink facility, 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).

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

Three Months Ended September 30, 2024

certain recurring operating costs related to the scale-up of operations of the Conway Facility, 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).

The Company’s Chief Executive Officer, it’s chief operating decision maker (“CODM”), reviews Segment Adjusted EBITDA for the purpose of making operating decisions, assessing financial performance, and deciding how to allocate resources.

Segment Adjusted EBITDA is used by the CODM to review operating trends and to monitor budget-to-actual variances in order to make key operating decisions.

Selected financial data, including a reconciliation of total reportable segments’ Segment Adjusted EBITDA to loss before income taxes and equity in earnings from unconsolidated entities, is presented below for the periods indicated:

Three Months Ended March 31, 2025

Net sales (1)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrant liabilities

Equity-based compensation

Impairment charges

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

1 unchanged sentence

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

Three Months Ended September 30, 2023

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

Loss before income taxes and equity in earnings from unconsolidated entities

Excludes $ 3.9 million of intersegment revenues that represent sales of green coffee from our SS&T segment to our Beverage Solutions segment .

Three Months Ended March 31, 2024

Net sales (1)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

4 unchanged sentences

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

Nine Months Ended September 30, 2024

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

Loss before income taxes and equity in earnings from unconsolidated entities

(1) Excludes $ 1.9 million of intersegment revenues that represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.

Significant segment expense for our reportable segments is presented below for the periods indicated:

Three Months Ended March 31, 2025

Costs of sales

Employee related (1)

Information technology

Advertising & marketing

Professional fees

Corporate insurance

Other segment expense (2)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrant liabilities

Equity-based compensation

Impairment charges

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

Conway extract and ready-to-drink facility scale up operating costs

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

Nine Months Ended September 30, 2023

(1) Employee related costs are costs reported within selling, general and administrative expense in our Consolidated Statements of Operations, and include employee salaries, related taxes and benefits, short-term cash incentive compensation and travel and entertainment expenses.

(2) Other segment expense includes equipment and real estate rent, equipment parts, supplies and service expenses and other overhead expenses .

Three Months Ended March 31, 2024

Costs of sales

Employee related (1)

Information technology

Advertising & marketing

Professional fees

Corporate insurance

Other segment expense (2)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrant liabilities

Management and consulting fees (S&D acquisition)

Equity-based compensation

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

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

Employee related costs are costs reported within selling, general and administrative expense in our Consolidated Statements of Operations, and include employee salaries, related taxes and benefits, short-term cash incentive compensation and travel and entertainment expenses.

Other segment expense includes equipment and real estate rent, equipment parts, supplies and service expenses and other overhead expenses .

Commitments and Contingencies

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Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flow.

We have future purchase obligations of $ 266.8 million as of September 30, 2024 that consist of commitments for the purchase of inventory over the next 12 months.

We have future purchase obligations of $ 409.2 million as of March 31, 2025 that consist of commitments for the purchase of inventory over the next 12 months.

These obligations represent the minimum contractual obligations expected under the normal course of business.

In addition, at September 30, 2024, we had an obligation to repurchase $ 1.2 million of inventory associated with repurchase agreements in which the Company’s Sustainable Sourcing & Traceability segment has sold inventory to a third party and from whom the Company’s Beverage Solutions segment has an obligation to repurchase.

The liability for these obligations is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2025, we had an obligation to repurchase $ 0.5 million of inventory associated with repurchase agreements in which the Company’s Sustainable Sourcing & Traceability segment has sold inventory to a third party and from whom the Company’s Beverage Solutions segment has an obligation to repurchase.

The liability for these obligations is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets.

At March 31, 2025 we had a right or obligation to repurchase $ 13.6 million of inventory associated with Repo Transactions, for which the liability is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheets.

Related Party Transactions

1 unchanged sentence

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

September 30, 2024

March 31, 2025

December 31, 2024

2 unchanged sentences

Wooster Capital

HF Direct Investment Pool, LLC

September 30, 2024

HF Direct Investments Pool, LLC

March 31, 2025

December 31, 2024

2 unchanged sentences

Wooster Capital

HF Direct Investment Pool, LLC

HF Direct Investments Pool, LLC

Unamortized debt costs

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest expense:

1 unchanged sentence

Wooster Capital

HF Direct Investment Pool, LLC

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

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

Under the terms of the

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

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

The Company recognized no such expenses during the three or nine months ended September 30, 2024.

The Company recognized no expenses and $ 0.6 million of such expenses during the three and nine months ended September 30, 2023.

HF Direct Investments Pool, LLC

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

For the three and nine months ended September 30, 2024, the Company recognized expenses of $ 0.1 million and $ 0.7 million, respectively, for such items, which are recorded in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2023, the Company recognized expenses of $ 0.5 million and $ 1.3 million, respectively, for such items.

At September 30, 2024 and December 31, 2023, we had no amounts payable and $ 0.2 million payable to Westrock Group, respectively, related to such items.

For the three months ended March 31, 2025 and 2024, the Company recognized expenses of $ 0.1 million and $ 0.3 million, respectively, for such items, which are recorded in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.

At March 31, 2025 and December 31, 2024, we had $ 0.1 million payable and $ 0.1 million payable to Westrock Group, respectively, related to such items.

Subsequent Events

On October 16, 2024, the Post-Offer Exchange (Note 13) related to the Westrock Public Warrants was completed, resulting in the issuance of 115,220 Common Shares in exchange for then outstanding Westrock Public Warrants.

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

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

On April 1, 2025, the Company entered into a joint venture with ETC Holdings SA (“ECOM”) that combines Westrock’s and ECOM’s Rwandan export operations.

This strategic partnership allows Westrock to scale its operations in Rwanda, improve profitability, and strengthen our ability to provide smallholder farmers and their families the ability to advance their quality of life and economic well-being.

As a result of the transaction, Westrock will hold a 49.9 % equity method investment in the joint venture and will de-consolidate its Rwandan operations.

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-Q

Item 1. Financial Statements