Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 29, 2022 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-41485 | |
Entity Registrant Name | WESTROCK COFFEE COMPANY | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 80-0977200 | |
Entity Address, Address Line One | 100 River Bluff Drive, Suite 210 | |
Entity Address, City or Town | Little Rock | |
Entity Address State Or Province | AR | |
Entity Address, Postal Zip Code | 72202 | |
City Area Code | 501 | |
Local Phone Number | 320-4880 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 73,033,991 | |
Entity Central Index Key | 0001806347 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock | ||
Document Information | ||
Title of 12(b) Security | Shares of common stock, par value $0.01 per share | |
Trading Symbol | WEST | |
Security Exchange Name | NASDAQ | |
Public Warrants | ||
Document Information | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of common stock, par value $0.01 per share | |
Trading Symbol | WESTW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 14,343 | $ 19,344 |
Restricted cash | 3,842 | 3,526 |
Accounts receivable, net of allowance for credit losses of $2,392 and $3,749, respectively | 96,001 | 85,795 |
Inventories | 155,323 | 109,166 |
Derivative assets | 15,692 | 13,765 |
Prepaid expenses and other current assets | 8,894 | 6,410 |
Total current assets | 294,095 | 238,006 |
Property, plant and equipment, net | 131,802 | 127,613 |
Goodwill | 97,053 | 97,053 |
Intangible assets, net | 122,565 | 125,914 |
Other long-term assets | 15,931 | 4,434 |
Total Assets | 661,446 | 593,020 |
LIABILITIES, REDEEMABLE UNITS, AND UNITHOLDERS' DEFICIT | ||
Current maturities of long-term debt | 8,157 | 8,735 |
Short-term debt | 67,871 | 4,510 |
Short-term related party debt | 34,199 | |
Accounts payable | 117,871 | 80,405 |
Derivative liabilities | 7,583 | 14,021 |
Accrued expenses and other current liabilities | 29,842 | 26,370 |
Total current liabilities | 231,324 | 168,240 |
Long-term debt, net | 297,044 | 277,064 |
Subordinated related party debt | 13,300 | 13,300 |
Deferred income taxes | 20,132 | 25,515 |
Other long-term liabilities | 11,589 | 3,028 |
Total liabilities | 573,389 | 487,147 |
Commitments and contingencies (Note 16) | ||
Unitholders' Deficit | ||
Common Units: $0 par value 375,420,213 units authorized; 332,209,476 units and 329,042,787 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||
Additional paid-in-capital | 60,975 | 60,973 |
Accumulated deficit | (276,196) | (251,725) |
Accumulated other comprehensive income | 4,724 | 12,018 |
Total unitholders' deficit attributable to Westrock Coffee Holdings, LLC | (210,497) | (178,734) |
Noncontrolling interest | 2,801 | 2,736 |
Total unitholders' deficit | (207,696) | (175,998) |
Total Liabilities, Redeemable Units and Unitholders' Deficit | 661,446 | 593,020 |
Series A Redeemable Common Equivalent Preferred Units [Member] | ||
LIABILITIES, REDEEMABLE UNITS, AND UNITHOLDERS' DEFICIT | ||
Redeemable Common Equivalent Preferred Units | 277,762 | 264,729 |
Series B Redeemable Common Equivalent Preferred Units [Member] | ||
LIABILITIES, REDEEMABLE UNITS, AND UNITHOLDERS' DEFICIT | ||
Redeemable Common Equivalent Preferred Units | $ 17,991 | $ 17,142 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Allowance for credit loss | $ 2,392 | $ 3,749 |
Common units : Par Value (in dollars per unit) | $ 0 | $ 0 |
Common units: Authorized (in units) | 375,420,213 | 375,420,213 |
Common units: Issued (in units) | 332,209,476 | 329,042,787 |
Common units: Outstanding (in units) | 332,209,476 | 329,042,787 |
Series A Redeemable Common Equivalent Preferred Units [Member] | ||
Redeemable Common Preferred Units, Par Value (in dollars per unit) | $ 0 | $ 0 |
Redeemable Common Preferred Units Authorized (in units) | 222,150,000 | 222,150,000 |
Redeemable Common Preferred Units Issued (in units) | 222,150,000 | 222,150,000 |
Redeemable Common Preferred Units Outstanding (in units) | 222,150,000 | 222,150,000 |
Series B Redeemable Common Equivalent Preferred Units [Member] | ||
Redeemable Common Preferred Units, Par Value (in dollars per unit) | $ 0 | $ 0 |
Redeemable Common Preferred Units Authorized (in units) | 17,000,000 | 17,000,000 |
Redeemable Common Preferred Units Issued (in units) | 17,000,000 | 17,000,000 |
Redeemable Common Preferred Units Outstanding (in units) | 17,000,000 | 17,000,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 223,413 | $ 171,144 | $ 409,841 | $ 326,475 |
Costs of sales | 184,515 | 136,791 | 332,512 | 258,987 |
Gross profit | 38,898 | 34,353 | 77,329 | 67,488 |
Selling, general and administrative expense | 35,048 | 31,819 | 70,109 | 63,506 |
Acquisition, restructuring and integration expense | 2,304 | 926 | 4,787 | 1,943 |
Loss (gain) on disposal of property, plant and equipment | 184 | (25) | 289 | 243 |
Total operating expenses | 37,536 | 32,720 | 75,185 | 65,692 |
Income from operations | 1,362 | 1,633 | 2,144 | 1,796 |
Other (income) expense, net | (133) | (58) | (1,110) | (238) |
Interest expense | 8,813 | 8,261 | 16,861 | 15,669 |
Loss before income taxes | (7,318) | (6,570) | (13,607) | (13,635) |
Income tax benefit | (1,499) | (502) | (3,083) | (1,443) |
Net loss | (5,819) | (6,068) | (10,524) | (12,192) |
Net (loss) income attributable to non-controlling interest | (106) | 26 | 65 | 336 |
Net loss attributable to unitholders | (5,713) | (6,094) | (10,589) | (12,528) |
Accumulating preferred dividends | (7,145) | (6,109) | (13,882) | (11,848) |
Net loss attributable to common unitholders | $ (12,858) | $ (12,203) | $ (24,471) | $ (24,376) |
Loss per common unit: | ||||
Basic (in dollars per unit) | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.07) |
Diluted (in dollars per unit) | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.07) |
Weighted-average number of units outstanding | ||||
Basic (in units) | 332,209 | 329,043 | 331,195 | 328,062 |
Diluted (in units) | 332,209 | 329,043 | 331,195 | 328,062 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (5,819) | $ (6,068) | $ (10,524) | $ (12,192) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized (loss) gain on derivative instruments | (2,425) | 4,526 | (7,285) | 3,510 |
Foreign currency translation adjustment | (9) | 21 | (9) | (65) |
Total other comprehensive (loss) income | (2,434) | 4,547 | (7,294) | 3,445 |
Comprehensive loss | (8,253) | (1,521) | (17,818) | (8,747) |
Comprehensive (loss) income attributable to non-controlling interests | (106) | 26 | 65 | 336 |
Comprehensive loss attributable to unitholders | (8,147) | (1,547) | (17,883) | (9,083) |
Accumulating preferred dividends | (7,145) | (6,109) | (13,882) | (11,848) |
Comprehensive loss attributable to common unitholders | $ (15,292) | $ (7,656) | $ (31,765) | $ (20,931) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF UNITHOLDERS' DEFICIT - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Balance at beginning of period | $ (192,606) | $ (152,562) | $ (175,998) | $ (139,741) |
Balance at the beginning (in units) | 329,042,787 | |||
Net income (loss) | (5,819) | (6,068) | $ (10,524) | (12,192) |
Other comprehensive income (loss) | (2,434) | 4,547 | (7,294) | 3,445 |
Equity-based compensation | 308 | 306 | 479 | 612 |
Net unit settlement | (477) | (162) | ||
Accumulating preferred dividends | (7,145) | (6,109) | (13,882) | (11,848) |
Balance at end of period | $ (207,696) | $ (159,886) | $ (207,696) | $ (159,886) |
Balance at the end (in units) | 332,209,476 | 332,209,476 | ||
Common Units | ||||
Balance at the beginning (in units) | 332,210,000 | 329,043,000 | 329,043,000 | 325,983,000 |
Equity-based compensation (Units) | 3,167,000 | 3,060,000 | ||
Balance at the end (in units) | 332,210,000 | 329,043,000 | 332,210,000 | 329,043,000 |
Additional Paid-in Capital | ||||
Balance at beginning of period | $ 60,667 | $ 60,056 | $ 60,973 | $ 59,912 |
Equity-based compensation | 308 | 306 | 479 | 612 |
Net unit settlement | (477) | (162) | ||
Balance at end of period | 60,975 | 60,362 | 60,975 | 60,362 |
Accumulated Deficit | ||||
Balance at beginning of period | (263,338) | (217,743) | (251,725) | (205,570) |
Net income (loss) | (5,713) | (6,094) | (10,589) | (12,528) |
Accumulating preferred dividends | (7,145) | (6,109) | (13,882) | (11,848) |
Balance at end of period | (276,196) | (229,946) | (276,196) | (229,946) |
Accumulated Other Comprehensive Income | ||||
Balance at beginning of period | 7,158 | 2,718 | 12,018 | 3,820 |
Other comprehensive income (loss) | (2,434) | 4,547 | (7,294) | 3,445 |
Balance at end of period | 4,724 | 7,265 | 4,724 | 7,265 |
Non-Controlling Interest | ||||
Balance at beginning of period | 2,907 | 2,407 | 2,736 | 2,097 |
Net income (loss) | (106) | 26 | 65 | 336 |
Balance at end of period | $ 2,801 | $ 2,433 | $ 2,801 | $ 2,433 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (10,524) | $ (12,192) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 11,966 | 12,314 |
Equity-based compensation | 479 | 612 |
Paid-in-Kind interest added to debt principal | 294 | 991 |
Allowance for credit losses | 922 | 100 |
Amortization of deferred financing fees included in interest expense | 1,046 | 903 |
Loss (gain) on disposal of property, plant and equipment | 289 | 243 |
Mark-to-market adjustments | 250 | (1,975) |
Foreign currency transactions | 91 | 48 |
Change in deferred income taxes | (3,083) | (1,454) |
Change in operating assets and liabilities: | ||
Accounts receivable | (11,137) | (5,017) |
Inventories | (53,663) | (7,564) |
Derivative assets and liabilities | (10,743) | 4,289 |
Prepaid expense and other assets | (14,257) | (2,000) |
Accounts payable | 37,278 | 9,463 |
Accrued liabilities and other | 3,818 | 457 |
Net cash used in operating activities | (46,974) | (782) |
Cash flows from investing activities: | ||
Additions to property and equipment | (15,163) | (8,556) |
Additions to intangible assets | (48) | (253) |
Proceeds from sale of property and equipment | 2,248 | 1,354 |
Net cash used in investing activities | (12,963) | (7,455) |
Cash flows from financing activities: | ||
Payments on debt | (51,665) | (46,453) |
Proceeds from debt | 107,423 | 54,888 |
Payment of debt issuance costs | (597) | |
Net unit settlement | (477) | (162) |
Net cash provided by financing activities | 55,281 | 7,676 |
Effect of exchange rate changes on cash | (29) | 112 |
Net decrease in cash and cash equivalents and restricted cash | (4,685) | (449) |
Cash and cash equivalents and restricted cash at beginning of period | 22,870 | 18,652 |
Cash and cash equivalents and restricted cash at end of period | 18,185 | 18,203 |
Supplemental non-cash investing and financing activities: | ||
Property, plant and equipment acquired but not yet paid | 372 | 2,160 |
Accumulating preferred dividends | $ 13,882 | $ 11,848 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Cash and cash equivalents | $ 14,343 | $ 19,344 | $ 17,040 | |
Restricted cash | 3,842 | 3,526 | 1,163 | |
Total | $ 18,185 | $ 22,870 | $ 18,203 | $ 18,652 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2022 | |
Organization and Description of Business | |
Organization and Description of Business | WESTROCK COFFEE COMPANY (f/k/a Westrock Coffee Holdings, LLC) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Organization and Description of Business Westrock Coffee Company (f/k/a Westrock Coffee Holdings, LLC) (the “Company,” “Westrock,” “we,” “us,” or “our”), a Delaware corporation is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States, providing coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG, and hospitality industries around the world. The Company has an 85% ownership interest in Falcon Coffees Limited, which operates our trading business and is reported within our Sustainable Sourcing & Traceability segment. Equity interests not owned by us are reflected as non-controlling interests. In the Condensed Consolidated Statements of Operations, we allocate net income (loss) attributable to non-controlling interest to arrive at net income (loss) attributable to unitholders based on their proportionate share. The Company operates seven manufacturing facilities, three of which are located in Concord, North Carolina, two in North Little Rock, Arkansas, one in Kigali, Rwanda, and one in Johor Bahru, Malaysia. On August 26, 2022, in accordance with the transaction agreement, dated April 4, 2022, by and among the Company, Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation (“Riverview”), and the other parties thereto (as amended, modified or supplemented, the “Transaction Agreement”), the Company completed its previously announced de-SPAC merger transaction (the “Transaction”) with Riverview. In connection with the closing of the Transaction, the Company converted from a Delaware limited liability company to a Delaware corporation and changed its corporate name from “Westrock Coffee Holdings, LLC” to “Westrock Coffee Company” (the “Conversion”). Substantially concurrently with the closing of the Transaction, the Company has received $230.9 million in gross proceeds (which amount includes contribution to the Company of certain notes) from common stock PIPE investments at $10.00 per share (the “PIPE Financing”), $66.3 million from the trust account of Riverview, and has entered into a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC (f/k/a Westrock Coffee Company, LLC), a Delaware limited liability company and wholly owned subsidiary of the Company (“WBS”), as the borrower, Wells Fargo Bank, N.A. as administrative agent, as collateral agent, and as swingline leader, Wells Fargo Securities, LLC as sustainability structuring agent, and each issuing bank and lender party thereto, that includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $175.0 million (the “Revolving Credit Facility”) and (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $175.0 million (the “Term Loan Facility”). Proceeds from Transaction and new Term Loan Facility of million of available borrowing capacity under our Revolving Credit Facility. See Note 18 for additional disclosures related to the Transaction. |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation and Consolidation | |
Basis of Presentation and Consolidation | Note 2. Basis of Presentation and Consolidation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) using the U.S. dollar as the reporting currency. They do not include all the information and footnotes required by GAAP for complete financial statements. The Condensed Consolidated Financial Statements include the activities of the Company and its wholly owned and/or controlled subsidiaries. All intercompany balances and transactions have been eliminated. The Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from the audited financial statements, but does not include all disclosures required by GAAP. The interim financial information is unaudited but, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair statement of results for the interim periods have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited December 31, 2021 consolidated financial statements and notes thereto included in our Registration Statement on Form S-4 (File No. 333-264464) filed with the U.S. Securities and Exchange Commission (“SEC”) on April 25, 2022, as amended by Amendments No. 1, 2, 3 and 4 thereto filed with SEC on June 10, 2022, July 15, 2022, August 1, 2022 and August 3, 2022, respectively. Accordingly, certain significant accounting policies and other disclosures normally provided have been omitted from the accompanying Condensed Consolidated Financial Statements and related notes since such items are disclosed in our audited financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Accounts Receivable and Allowance for Credit Losses Accounts receivable consists principally of amounts billed and currently due from customers and are generally unsecured and due within 30 to 60 days. A portion of our accounts receivable is not expected to be collected due to non-payment, bankruptcies and deductions. Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers. This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers. We consider our accounts receivable delinquent or past due based on payment terms established with each customer. Accounts receivable are written off when the account is determined to be uncollectible. Activity in the allowance for credit losses was as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Balance at beginning of period $ 3,011 $ 4,005 $ 3,749 $ 3,977 Charged to selling, general and administrative expense 25 56 922 100 Write-offs (644) (395) (2,279) (411) Total $ 2,392 $ 3,666 $ 2,392 $ 3,666 Inventories Green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, within our Sustainable Sourcing & Traceability segment, consistent with our forward purchase contracts recorded at fair value in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations. Recently issued accounting pronouncements Update ASU 2016-02 – Leases (Topic 842) and Update ASU 2018-10 – Codification Improvements to Topic 842, Leases Effective January 1, 2022, we account for leases in accordance with Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”). The standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. We adopted ASC 842 using a modified retrospective transition approach as permitted by the amendments of ASU 2018-11 Leases (Topic 842): Target Improvements , which provides an alternative modified retrospective transition method. As a result, we were not required to adjust our comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e., January 1, 2022). We have elected to adopt the package of transition practical We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (i) there is an identified asset in the contract that is land or a depreciable asset, and (ii) the customer has a right to control the use of the identified asset. We enter into lease contracts for manufacturing and production facilities, warehouse facilities, vehicles and machinery and equipment. Upon adoption, we recognized lease liabilities on our Condensed Consolidated Balance Sheets. See Note 9 for additional disclosures related to leases. ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date. Lease expense, for operating leases, is recognized on a straight-line basis over the lease term. Key estimates and judgements include the following: (i) Discount rate – ASC 842 requires a lessee to discount its unpaid lease payments using the rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As we generally do not know the rate implicit in our leases, we use our incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of our lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. (ii) Lease term – The lease term for all of our leases includes the noncancellable period of the lease plus any additional periods covered by either a lessee option to extend (or not to terminate) the lease that is reasonably certain to be exercised. Variable lease payments associated with our leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are included in both costs of sales and selling, general and administrative expense in our Condensed Consolidated Statements of Operations. We monitor for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the associated ROU asset, unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset is recorded in the Condensed Consolidated Statements of Operations. We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Furthermore, we have elected to combine lease and non-lease components for all contracts. Non-lease components primarily relate to maintenance services related to the leased asset. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2022 | |
Revenue | |
Revenue | Note 4. Revenue Revenue from Contracts with Customers (ASC 606) We measure revenue based on the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied in accordance with ASC 606, Revenue from Contracts with Customers The transaction price of a contract, net of discounts and expected returns, is allocated to each distinct performance obligation based on the relative standalone selling price of the obligation and is recognized as revenue when the performance obligation is satisfied. The standalone selling price is the estimated price we would charge for the good or service in a separate transaction with similar customers in similar circumstances. Identifying distinct performance obligations and determining the standalone selling price for each performance obligation within a contract requires management judgment. Substantially all our client contracts require that we be compensated for services performed to date. This is upon shipment of goods or upon delivery to the customer, depending on contractual terms. Shipping and handling costs paid by the customer to us are included in revenue and costs incurred by us for shipping and handling activities that are performed after a customer obtains control of the product are accounted for as fulfillment costs. In addition, we exclude from net revenue and cost of sales taxes assessed by governmental authorities on revenue-producing transactions. Although we occasionally accept returns of products from our customers, historically returns have not been material. Revenue from Forward Contracts (ASC 815) A portion of the Company’s revenues relate to the physical delivery and settlement of forward sales contracts for green coffee that are accounted for under ASC 815. These forward sales contracts meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash. The Company does not apply the normal purchase and normal sale exception under ASC 815 to these contracts. Revenues from forward sales contracts are recognized 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 six months ended June 30, 2022, we recorded million of net unrealized gains, respectively, within costs of sales. For the three and six months ended June 30, 2021, we recorded For the three and six months ended June 30, 2022, the Company recognized $52.4 million and $90.5 million in revenues under ASC 815, respectively, and for the three and six months ended June 30, 2021, the Company recognized $36.5 million and $63.9 million in revenues under ASC 815, respectively, which are reported within the Company’s Sustainable Sourcing & Traceability segment. Contract Estimates The nature of the Company’s contracts give rise to variable consideration including cash discounts, volume-based rebates, point of sale promotions, and other promotional discounts to certain customers. For all promotional programs and discounts, the Company estimates the rebate or discount that will be granted to the customer and records an accrual upon invoicing. These estimated rebates or discounts are included in the transaction price of the Company’s contracts with customers as a reduction to net revenues and are included as accrued sales incentives in accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheets. Accrued sales incentives were $1.7 million and $1.9 million at June 30, 2022 and December 31, 2021. We do not disclose the value of unsatisfied performance obligations for contracts (i) with an original expected length of one year or less or (ii) for which the Company recognizes revenue at the amount in which it has the right to invoice as the product is delivered. Contract Balances Contract balances relate primarily to advances received from the Company’s customers before revenue is recognized. The Company does not have any material contract liabilities as of June 30, 2022 or December 31, 2021. Receivables from contracts with customers are included in accounts receivable, net on the Company’s Condensed Consolidated Balance Sheets. At June 30, 2022 and December 31, 2021, accounts receivable, net included $98.1 million and $89.0 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 June 30, 2022 and December 31, 2021, no costs were capitalized as all arrangements were less than a year. Disaggregated Revenue In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of its products and customer relationships and provides meaningful disaggregation of each business segment’s results of operations. Further disaggregation of revenues from sales to external customers by type are presented below: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Coffee & tea $ 140,614 $ 108,725 $ 262,296 $ 211,609 Flavors, extracts & ingredients 29,397 24,607 55,063 47,335 Other 854 1,073 1,867 2,724 Green coffee 52,548 36,739 90,615 64,807 Net sales $ 223,413 $ 171,144 $ 409,841 $ 326,475 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2022 | |
Inventories | |
Inventories | Note 5. Inventories The following table summarizes inventories as of June 30, 2022 and December 31, 2021: (Thousands) June 30, 2022 December 31, 2021 Raw materials $ 55,887 $ 45,079 Finished goods 21,955 14,895 Green coffee 77,481 49,192 Total inventories $ 155,323 $ 109,166 Green coffee inventories represent green coffee held for re-sale. At June 30, 2022 and December 31, 2021, all green coffee held for resale was included within our Sustainable Sourcing & Traceability segment. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment, Net. | |
Property, Plant and Equipment, Net | Note 6. Property, Plant and Equipment, Net The following table summarizes property, plant and equipment, net: (Thousands) Depreciable Lives June 30, 2022 December 31, 2021 Land $ 9,123 $ 9,150 Buildings 10 44,082 43,895 Leasehold improvements 1 786 613 Plant equipment 3 89,951 88,155 Vehicles and transportation equipment 3 799 876 IT systems 3 2,454 2,453 Furniture and fixtures 3 2,929 2,746 Customer beverage equipment 2 3 23,184 24,341 Lease right-of-use assets 3 10 — Construction in progress and equipment deposits 18,066 8,025 191,384 180,254 Less: accumulated depreciation (59,582) (52,641) Property, plant and equipment, net $ 131,802 $ 127,613 1 - Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease life. 2 - Customer beverage equipment consists of brewers held on site at customer locations. 3 - Lease right-of-use assets are amortized over the shorter of the useful life of the asset or the lease term. Depreciation expense for the three and six months ended June 30, 2022 was $4.3 million and $8.5 million, respectively, and depreciation expense for the three and six months ended June 30, 2021 was $4.4 million and $9.0 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 June 30, 2022 are expected to be in production use. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill. | |
Goodwill | Note 7. Goodwill The following table reflects the carrying amount of goodwill: Beverage (Thousands) Solutions Total Goodwill $ 173,936 $ 173,936 Accumulated impairment loss (76,883) (76,883) Balance at June 30, 2022, net $ 97,053 $ 97,053 |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2022 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 8. Intangible Assets, Net The following table summarizes intangible assets, net as of June 30, 2022 and December 31, 2021: June 30, 2022 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 137,500 $ (15,388) $ 122,112 Favorable lease asset 220 (101) 119 Software 805 (471) 334 Intangible assets, net $ 138,525 $ (15,960) $ 122,565 December 31, 2021 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 137,500 $ (12,091) $ 125,409 Favorable lease asset 220 (79) 141 Software 758 (394) 364 Intangible assets, net $ 138,478 $ (12,564) $ 125,914 Amortization expense of intangible assets was $1.7 million and $3.4 million for the three and six months ended June 30, 2022, respectively, and amortization expense of intangible assets was $1.7 million and $3.3 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022, the weighted average useful life for definite-lived intangibles is approximately |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Leases | Note 9. Leases We have operating leases for manufacturing and production facilities, warehouse facilities, vehicles and machinery and equipment. The remaining non-cancelable terms on our leases range from 1 year to 22 years, some of which may include options to extend the leases generally between 1 . We do not have any leases with material residual value guarantees or restrictive covenants. The following table summarizes the amount of right-of-use lease assets and lease liabilities included in each respective line item on the Company’s Condensed Consolidated Balance Sheets: (Thousands) Balance Sheet Location June 30, 2022 Right-of-use operating lease assets Other long-term assets $ 11,260 Operating lease liabilities - current Accrued expenses and other current liabilities 2,382 Operating lease liabilities - noncurrent Other long-term liabilities 8,873 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 are as follow: (Thousands) Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Operating lease cost $ 842 $ 1,771 Short-term lease cost 224 478 Total $ 1,066 $ 2,249 The following table presents information about the Company’s weighted average discount rate and remaining lease term: June 30, 2022 Weighted-average discount rate 8.5% Weighted-average remaining lease term 5.2 years Supplemental cash flow information about the Company’s leases is as follows: (Thousands) Six Months Ended June 30, 2022 Operating cash flows from operating leases $ 806 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 June 30, 2022. Future minimum lease payments under non-cancellable operating leases as of June 30, 2022 are as follows: (Thousands) Remainder of 2022 $ 1,633 2023 3,121 2024 2,743 2025 2,075 2026 1,439 Thereafter 3,125 Total future minimum lease payments 14,136 Less: imputed interest (2,881) Present value of minimum lease payments $ 11,255 Disclosures related to periods prior to adoption of ASC 842 Rent expense for operating lease agreements under the previous lease guidance was $1.1 million and $2.2 million for the three and six months ended June 30, 2021, respectively. As previously reported in our audited Consolidated Financial Statements for year ended December 31, 2021, the minimum future lease payments under the previous lease guidance as of December 31, 2021 were as follows: (Thousands) 2022 $ 4,334 2023 4,332 2024 4,174 2025 3,286 2026 2,377 Thereafter 4,373 Total $ 22,876 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2022 | |
Debt | |
Debt | Note 10. Debt Our long-term debt was as follows: (Thousands) June 30, 2022 December 31, 2021 Term loan $ 232,961 $ 235,668 ABL facility 72,842 51,890 International trade finance lines 67,871 4,510 International notes payable 3,516 3,126 Other loans 7 25 Total debt 377,197 295,219 Unamortized debt costs (4,125) (4,910) Current maturities of long-term debt (8,157) (8,735) Short-term debt (67,871) (4,510) Long-term debt, net $ 297,044 $ 277,064 Prior Term Loan Facility On February 28, 2020, WBS, as borrower, borrowed $240.0 million of term loans from various financial institutions pursuant to a loan and security agreement (the “Prior Term Loan Agreement”) (such term loans, the “Prior Term Loan Facility”). The Prior Term Loan Facility, which was secured by substantially all the assets of WBS, accrued interest quarterly, at the borrower’s option, at the LIBOR or Prime Rate plus an Applicable Margin, as such terms were defined in the Prior Term Loan Agreement, that corresponded to our total leverage ratio at the end of each quarter. All outstanding loans during the period presented accrued interest at the LIBOR Rate, and the interest rate on the Prior Term Loan Facility was 9.75% on June 30, 2022. The outstanding Prior Term Loan Facility also carried a Payment-in-Kind (“PIK”) interest rate of 0.25% that accrued to the outstanding balance quarterly as long as the Run-Rate EBITDA, as such term is defined in the Prior Term Loan Agreement, was under certain defined thresholds. For the three and six months ended June 30, 2022, $0.1 million and $0.3 million of PIK interest was accrued, respectively. For the three and six months ended June 30, 2021, Principal payments on the Prior Term Loan Facility were due quarterly, in the amount of 0.625% of the original principal beginning June 30, 2021, 0.9375% of the original principal beginning June 30, 2023, and 1.25% of the original principal balance beginning June 30, 2024 through maturity. We incurred $5.6 million of financing fees in connection with the issuance of the Prior Term Loan Facility. The financing fees were being amortized using the straight-line method, which is approximate to the effective interest method, over a period of five years, which represents the term to maturity of the Prior Term Loan Facility. On July 13, 2022, the Company entered into Amendment No. 6 to the Prior Term Loan Agreement (the “Sixth Term Loan Amendment”) to permit the Wooster Pre-fund, as defined in Note 18. The Sixth Term Loan Amendment included the following modifications: (i) permitting the incurrence of subordinated debt from Wooster in the form of the Convertible Note, as defined in Note 18; (ii) extending the PIK interest period to December 31, 2022; (iii) amending the definitions of EBITDA, Fixed Charge Coverage Ratio and Total Debt (which excludes the Convertible Note); and (iv) amending the level of the Minimum Liquidity covenant that the Company is required to comply with. The definition of EBITDA was modified to increase the cap on add-backs for the quarter ended June 30, 2022 and the quarter ended September 30, 2022 from 15% of EBITDA to 20% of EBITDA. The Wooster Pre-fund, together with the Sixth Term Loan Amendment, allowed the Company to meet increased capital expenditure and working capital needs of the business and to remain in compliance with its financial covenants as of June 30, 2022. In connection with the closing of the Transaction, all outstanding Prior Term Loan Facility balances were repaid, and the associated Prior Term Loan Agreement was terminated. See Note 18 for additional disclosures related to the new credit agreement. Prior ABL Facility On February 28, 2020, WBS, as borrower, entered into a credit agreement with Bank of America as administrative agent (the “Prior ABL Credit Agreement”) that created an asset-based loan of $90.0 million (the “Prior ABL Facility”). Proceeds from the Prior ABL Facility could be used for any lawful corporate purposes, including working capital. Depending on the loan type, interest accrued, at the borrower’s option, at the LIBOR or Base Rate plus an Applicable Margin, as such terms were defined in the Prior ABL Credit Agreement. The Applicable Margin ranged from We incurred related financing fees of $2.6 million which were capitalized and reported within other long-term assets on our Condensed Consolidated Balance Sheets and were being amortized using the straight-line method over the duration of the amended Prior ABL Facility. As of June 30, 2022, our total availability under the Prior ABL Facility was $14.5 million, which was based on our borrowing base (accounts receivables and inventory as of May 31, 2022). As of June 30, 2022, we had $72.8 million of outstanding borrowings under the Prior ABL Facility and $2.7 million of outstanding letters of credit. The Prior ABL Facility carried a commitment fee on any of the unused commitment of 0.375% per annum. The weighted average effective interest rate on our outstanding borrowings was 5.8% on June 30, 2022. On July 13, 2022, the Company entered into Amendment No. 4 to the Prior ABL Credit Agreement, which included the following modifications: (i) permitting the incurrence of the Wooster Pre-fund, as defined in Note 18, and (ii) amending the definitions of EBITDA, Fixed Charge Coverage Ratio and Total Debt (which excludes the Convertible Note, as defined in Note 18). The definition of EBITDA was modified to increase the cap on add-backs for the quarter ended June 30, 2022 and the quarter ended September 30, 2022 from 15% of EBITDA to 20% of EBITDA. In connection with the closing of the Transaction, all outstanding Prior ABL Facility balances were repaid, and the associated Prior ABL Credit Agreement was terminated. Outstanding letters of credit will be replaced by letters of credit under the new credit agreement entered into in connection with the Transaction. See Note 18 for additional disclosures related to the new credit agreement. Covenant Compliance The respective loan and security agreements, as amended, governing the Prior ABL Facility and the Prior Term Loan Facility each contain a number of covenants and restrictions, including covenants that limit our and certain of our subsidiaries’ ability, subject to certain exceptions and qualifications, to (i) pay dividends or make distributions, repurchase equity securities, prepay subordinated debt or make certain investments, (ii) incur additional debt or issue certain disqualified stock or preferred stock, (iii) create or incur liens on assets securing indebtedness, (iv) merge or consolidate with another company or sell all or substantially all of our assets taken as a whole, (v) enter into transactions with affiliates, and (vi) sell assets. The covenants and restrictions are substantially similar across both credit facilities. As of June 30, 2022, and the Closing, we were in compliance with covenants under both the Prior Term Loan Facility and Prior ABL Facility. As of August 29, 2022, upon termination of the Prior Term Loan Facility and Prior ABL Facility, the Company is no longer subject to the covenants and restrictions under these agreements. Under the terms of the Credit Agreement entered into on August 29, 2022, beginning on September 30, 2022, the Company will be subject to a number of covenants and restrictions, including a maximum net leverage ratio and minimum interest coverage ratio, each as defined in the Credit Agreement. International Debt and Lending Facilities At June 30, 2022, Westrock Coffee International, LLC, an Arkansas limited liability company and wholly owned subsidiary of the Company, through its subsidiary Falcon Coffees Limited (“Falcon”) had a $1.6 million promissory note payable with responsAbility SICAV (Lux), split into two tranches. Proceeds from the note are restricted for the sole purpose of financing Falcon’s trading activities. The note was amended in January 2022 to adjust the maturity of certain tranches, and to re-set interest rates. Borrowings on the note bear interest at a fixed rate of 9.5% for both the $0.9 million tranche and the $0.7 million tranche maturing on September 30, 2022 and December 31, 2022, respectively. Westrock Coffee International, LLC, through its subsidiary Rwanda Trading Company, maintains Falcon maintains a working capital trade finance facility with multiple financial institutions, which prior to March 16, 2022, was agented by Brown Brothers Harriman (“BBH”), a related party of the Company through its equity interests in the Company, and was reported as short-term related party debt on the Condensed Consolidated Balance Sheets. On March 16, 2022, Falcon refinanced its working capital trade finance facility, and the facility was transferred to different lenders with the same terms as the previous facility. At the time of refinance, there was million outstanding under the facility. The new facility is uncommitted, repayable on demand and secured by Falcon’s assets. The facility is renewable on an annual basis beginning in March 2023. On April 29, 2022, the facility size increased from Subordinated Related Party Debt On February 28, 2020, we issued $13.3 million of subordinated debt (the “Subordinated Notes”) to Wooster Capital, LLC (“Wooster”) and Jo Ellen Ford, related parties of the Company through their equity ownership and relation with Joe Ford, the chairman of our board of directors. The Subordinated Notes provided for maturity on the earlier of (i) six months after the Prior Term Loan Facility due in 2025 is paid in full or (ii) 10 years from the date of issuance (February 2030). Interest was payable quarterly at the end of each calendar quarter at a rate of 6% per annum. Substantially concurrently with the closing of the Transaction and pursuant to the terms of their respective subscription agreements with the Company, Wooster and Jo Ellen Ford contributed their respective Subordinated Notes to the Company and in exchange for such contribution, the Company issued shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) to Wooster and Jo Ellen Ford. The Company issued a total of |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2022 | |
Derivatives | |
Derivatives | Note 11. Derivatives We record all derivatives, whether designated in a hedging relationship or not, at fair value on the Condensed Consolidated Balance Sheets. We use various types of derivative instruments including, but not limited to, forward contracts, futures contracts, and options contracts for certain commodities. Forward and futures contracts are agreements to buy or sell a quantity of a commodity at a predetermined future date, and at a predetermined rate or price. Forward contracts are traded over the counter whereas future contracts are traded on an exchange. Option contracts are agreements to facilitate a potential transaction involving the commodity at a preset price and date. The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the types of hedging relationships. Derivatives can be designated as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. The changes in the fair values of derivatives that have not been designated and for which hedge accounting is not applied, are recorded in the same line item in our Condensed Consolidated Statements of Operations as the changes in the fair value of the hedged items attributable to the risk being hedged. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and are reclassified into the line item in the Condensed Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings. For derivatives that will be accounted for as hedging instruments, we formally designate and document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, we formally assess both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are highly effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. We use cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in commodity prices. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. We did not discontinue any cash flow hedging relationships during the six months ended June 30, 2022 or 2021. Within our Beverage Solutions segment, we have entered into coffee futures and options contracts to hedge our exposure to price fluctuations on green coffee associated with certain price-to-be-fixed purchase contracts, which generally range from three to twelve months in length. These derivative instruments have been designated and qualified as a part of our commodity cash flow hedging program. 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 1.5 million pounds and 7.9 million pounds as of June 30, 2022 and December 31, 2021, respectively. During the three and six months ended June 30, 2022, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 6.9 million pounds and 48.2 million pounds, respectively. During the three and six months ended June 30, 2021, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of Approximately $2.7 million and $6.8 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 six months ended June 30, 2022, respectively. Approximately June 30, 2021, respectively. As of June 30, 2022, 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 $ Within our Sustainable Sourcing & Traceability segment, the Company’s forward sales and forward purchase contracts are for physical delivery of green coffee in a future period. While the Company considers these contracts to be effective economic hedges, the Company does not designate or account for forward sales or forward purchase contracts as hedges as defined under current accounting standards. See Note 4 for a description of the treatment of realized and unrealized gains and losses on forward sales and forward purchase contracts. The fair value of our derivative assets and liabilities included in the Condensed Consolidated Balance Sheets are set forth below: (Thousands) Balance Sheet Location June 30, 2022 December 31, 2021 Derivative assets designated as cash flow hedging instruments: Coffee futures contracts 1 Derivative assets $ — $ 172 Coffee options Derivative assets 702 — Total $ 702 $ 172 Derivative assets not designated as cash flow hedging instruments: Forward sales contracts Derivative assets $ 14,990 $ 13,593 Total 14,990 13,593 Total derivative assets $ 15,692 $ 13,765 Derivative liabilities designated as cash flow hedging instruments: Coffee futures contracts 1 Derivative liabilities $ 829 $ — Coffee options Derivative liabilities — — Total $ 829 $ — Derivative liabilities not designated as cash flow hedging instruments: Forward purchase contracts Derivative liabilities $ 6,754 $ 14,021 Total 6,754 14,021 Total derivative liabilities $ 7,583 $ 14,021 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: Three Months Ended June 30, Six Months Ended June 30, (Thousands) Statement of Operations Location 2022 2021 2022 2021 Derivative assets designated as cash flow hedging instruments: Net realized gains (losses) on coffee derivatives Costs of sales $ 2,701 $ 1,302 $ 6,831 $ 1,900 Derivative assets and liabilities not designated as cash flow hedging instruments: Net unrealized gains (losses) on forward sales and purchase contracts Costs of sales $ 291 $ (3,038) $ 7,237 $ (581) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12. Fair Value Measurements ASC 820, Fair Value Measurements The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. These levels are: ● Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets. ● Level 2—Valuation is based upon inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (i.e. interest rate and yield curves observable at commonly quoted intervals, default rates, etc.). Observable inputs include quoted prices for similar instruments in active and non-active markets. Level 2 includes those financial instruments that are valued with industry standard valuation models that incorporate inputs that are observable in the marketplace throughout the full term of the instrument or can otherwise be derived from or supported by observable market data in the marketplace. Level 2 inputs may also include insignificant adjustments to market observable inputs. ● Level 3—Valuation is based upon one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are used to the extent relevant observable inputs are not available and are developed based on the best information available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The following table summarizes the fair value of financial instruments at June 30, 2022: June 30, 2022 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 55,952 $ — $ 55,952 Forward sales contracts — 14,990 — 14,990 Coffee options 702 — — 702 Total $ 702 $ 70,942 $ — $ 71,644 Liabilities: Coffee futures contracts $ 829 $ — $ — $ 829 Forward purchase contracts — 6,754 — 6,754 Total $ 829 $ 6,754 $ — $ 7,583 The following table summarizes the fair value of financial instruments at December 31, 2021: December 31, 2021 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 47,845 $ — $ 47,845 Coffee futures contracts 172 — — 172 Forward sales contracts — 13,593 — 13,593 Total $ 172 $ 61,438 $ — $ 61,610 Liabilities: Forward purchase contracts $ — $ 14,021 $ — $ 14,021 Total $ — $ 14,021 $ — $ 14,021 Coffee futures contracts and coffee options are valued based on quoted market prices. The estimated fair value for green coffee inventories associated with forward contracts and forward sales and purchase contracts are based on exchange-quoted prices, adjusted for differences in origin, quantity, quality, and future delivery period, as the exchange quoted prices represent standardized terms for the commodity. These adjustments are generally determined using broker or dealer quotes or based upon observable market transactions. As a result, green coffee associated with forward contracts and forward sales and purchase contracts are classified within Level 2 of the fair value hierarchy. Financial instruments consist primarily of cash, accounts receivable, accounts payable, and long-term debt. The carrying amount of cash, accounts receivable and accounts payable was estimated by management to approximate fair value due to the relatively short period of time to maturity for those instruments. In November 2021, we amended our Prior Term Loan Agreement and our Prior ABL Credit Agreement, which comprise our material long-term debt obligations. As there was no re-pricing of those obligations in connection with the amendments, the carrying amount of these obligations was estimated by management to approximate fair value as of June 30, 2022 and December 31, 2021. Due to the LIBOR-based nature of the Prior Term Loan Facility and the Prior ABL Facility, the Prior Term Loan Facility and the Prior ABL Facility are carried on the Condensed Consolidated Balance Sheets at amortized costs. The fair value of the Prior Term Loan Facility and the Prior ABL Facility was determined based on Level 2 inputs under the fair value hierarchy. Non-financial assets and liabilities, including property, plant and equipment, goodwill, and intangible assets are measured at fair value on a non-recurring basis. No events occurred during the three or six months ended June 30, 2022 and 2021, requiring these non-financial assets and liabilities to be subsequently recognized at fair value. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 6 Months Ended |
Jun. 30, 2022 | |
Accumulated Other Comprehensive Income. | |
Accumulated Other Comprehensive Income | Note 13. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive loss, net of tax by component is as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Cash flow hedge changes in fair value gain (loss): Balance at beginning of period $ 6,899 $ 2,565 $ 11,759 $ 3,581 Other comprehensive income (loss) before reclassifications (531) 7,289 (2,800) 6,545 Amounts reclassified from accumulated comprehensive income (2,701) (1,302) (6,831) (1,900) Tax effect 807 (1,461) 2,346 (1,135) Net accumulated other comprehensive income 4,474 7,091 4,474 7,091 Less: Other comprehensive income attributable to noncontrolling interests — — — — Balance at end of period 4,474 7,091 4,474 7,091 Foreign currency translation gain Balance at beginning of period 259 153 259 239 Other comprehensive income (loss) before reclassifications (9) 21 (9) (65) Amounts reclassified from accumulated comprehensive income — — — — Tax effect — — — — Net other comprehensive income 250 174 250 174 Less: Other comprehensive income attributable to noncontrolling interests — — — — Balance at end of period 250 174 250 174 Accumulated other comprehensive income at end of period $ 4,724 $ 7,265 $ 4,724 $ 7,265 |
Earnings per Unit
Earnings per Unit | 6 Months Ended |
Jun. 30, 2022 | |
Earnings per Unit | |
Earnings per Unit | Note 14. Earnings per Unit Prior to the Conversion, the Company’s ownership interests consisted of two classes of equity units, referred to as Common Units and Common Equivalent Preferred Units (“CEP Units”). The dilutive effect of CEP Units is calculated by using the “if-converted” method. This assumes an add-back of dividends on the CEP Units to net income attributable to unitholders as if the securities were converted to Common Units at the beginning of the reporting period (or at the time of issuance, if later), and the resulting Common Units are included in the number of weighted-average units outstanding. The dilutive effect of time-based option awards and restricted stock units is calculated using the treasury stock method, while performance-based vesting units are treated as contingently issuable. We have excluded from the computation of diluted units the effect of time-based unit options, restricted Common Units, and CEP Units because their inclusion would have an anti-dilutive effect due to our reported net loss. We had 16.4 million unit options, 4.5 million restricted Common Units, and 239.2 million CEP Units outstanding at June 30, 2022, and 13.1 million, 9.1 million and 222.2 million of unit options, restricted Common Units, and CEP Units outstanding, respectively, at June 30, 2021. Three Months Ended June 30, Six Months Ended June 30, (Thousands, except per unit data) 2022 2021 2022 2021 Diluted Earnings per Common Unit Numerator: Net loss attributable to common unitholders - basic $ (12,858) $ (12,203) $ (24,471) $ (24,376) Impact of if-converted securities — — — — Net loss attributable to common unitholders - diluted $ (12,858) $ (12,203) $ (24,471) $ (24,376) Denominator: Weighted-average common units outstanding - basic 332,209 329,043 331,195 328,062 Impact of if-converted securities — — — — Effect of other dilutive securities — — — — Weighted-average common units outstanding - diluted 332,209 329,043 331,195 328,062 Dilutive loss per common unit $ (0.04) $ (0.04) $ (0.07) $ (0.07) |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Segment Information | Note 15. Segment Information Management, including our chief executive officer, who is our chief operating decision maker, manages our business in two operating segments. Beverage Solutions: 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. Management evaluates the performance of each segment using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of acquisition, transaction and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc. (“S&D”), impairment charges, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, 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: Three Months Ended June 30, 2022 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 170,865 $ 58,459 $ (5,911) $ 223,413 Adjusted EBITDA 12,471 822 n/a 13,293 Less: Interest expense 8,813 Income tax benefit (1,499) Depreciation and amortization 5,952 Acquisition, restructuring and integration expense 2,304 Management and consulting fees 866 Equity-based compensation 308 Mark-to-market adjustments 1,395 Loss on disposal of property, plant and equipment 184 Other 789 Net loss $ (5,819) Total assets 546,449 114,997 n/a 661,446 Three Months Ended June 30, 2021 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 134,405 $ 41,322 $ (4,583) $ 171,144 Adjusted EBITDA 10,330 853 n/a 11,183 Less: Interest expense 8,261 Income tax benefit (502) Depreciation and amortization 6,071 Acquisition, restructuring and integration expense 926 Management and consulting fees 1,595 Equity-based compensation 306 Mark-to-market adjustments (2) Gain on disposal of property, plant and equipment (25) Other 621 Net loss $ (6,068) Total assets 493,686 69,077 n/a 562,763 Six Months Ended June 30, 2022 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 319,226 $ 106,232 $ (15,617) $ 409,841 Adjusted EBITDA 22,891 1,796 n/a 24,687 Less: Interest expense, net 16,861 Income tax benefit (3,083) Depreciation and amortization 11,966 Acquisition, restructuring and integration expense 4,787 Management and consulting fees 2,201 Equity-based compensation 479 Mark-to-market adjustments 250 Loss on disposal of property, plant and equipment 289 Other 1,461 Net loss $ (10,524) Total assets 546,449 114,997 n/a 661,446 Six Months Ended June 30, 2021 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 261,668 $ 74,021 $ (9,214) $ 326,475 Adjusted EBITDA 18,462 1,030 n/a 19,492 Less: Interest expense, net 15,669 Income tax benefit (1,443) Depreciation and amortization 12,314 Acquisition, restructuring and integration expense 1,943 Management and consulting fees 3,200 Equity-based compensation 612 Mark-to-market adjustments (1,975) Loss on disposal of property, plant and equipment 243 Other 1,121 Net loss $ (12,192) Total assets 493,686 69,077 n/a 562,763 The following table presents net sales information by geographic area. Net sales are attributed to countries based on the customer invoice location. Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 United States $ 181,526 $ 141,487 $ 334,541 $ 276,882 All other countries 41,887 29,657 75,300 49,593 Net sales $ 223,413 $ 171,144 $ 409,841 $ 326,475 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 16. Commitments and Contingencies We are subject to various claims and legal proceedings with respect to matters such as governmental regulations, and other actions arising out of the ordinary course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flow. We had $2.7 million in standby letters of credit outstanding as of June 30, 2022. We have future purchase obligations of $371.7 million as of June 30, 2022 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. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 17. Related Party Transactions The Company transacts with certain entities or persons that have ownership in the Company, and/or for which our co-founder and Chief Executive Officer Scott Ford, our co-founder and Chairman, Joe Ford, or close family members of the Fords, have ownership interests in. As such, these persons and entities are deemed related parties. In connection with the acquisition of S&D on February 28, 2020, certain affiliates of BBH were issued CEP Units, at which time BBH became a related party. The consolidated financial statements reflect the following transactions with related parties: (Thousands) June 30, 2022 December 31, 2021 Short-term related party debt: Brown Brothers Harriman 1 $ — $ 34,199 Subordinated related party debt: Wooster Capital 2 9,800 9,800 Jo Ellen Ford 1 3,500 3,500 Total $ 13,300 $ 13,300 Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Interest expense, net: Brown Brothers Harriman 1 $ — $ 287 $ 541 $ 578 Wooster Capital 2 149 147 296 297 Jo Ellen Ford 1 53 52 106 106 Westrock Finance, LLC 2 — 97 — 192 Total $ 202 $ 583 $ 943 $ 1,173 1 – Related through common ownership 2 – Related through common ownership and management In connection with the acquisition of S&D in February 2020, the Company entered into a Management Services Agreement with Westrock Group, LLC (“Westrock Group”), which expires February 2023. Under the terms of the agreement Westrock Group will be paid 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 million of such expenses during the three and six months ended, respectively, for both June 30, 2022 and 2021. In addition, million, respectively, for such items, which are recorded in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2021, the Company incurred expenses of million, respectively, for such items. At June 30, 2022 and December 31, 2021, we had payables to Westrock Group of million, respectively, reported within accrued expenses and other current liabilities on our Condensed Consolidated Balance Sheets. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Subsequent Events | Note 18. Subsequent Events On August 26, 2022, in accordance with the Transaction Agreement, the Company completed its previously announced de-SPAC merger transaction with Riverview. The Company issued 6,618,151 million shares of Common Stock to shareholders of Riverview, receiving $66.3 million of the cash held in the trust account of Riverview. The 6,618,151 million shares include 1,910,000 shares issued to PIPE investors who elected to satisfy their PIPE commitments through the purchase of Riverview Class A Shares on the public market, as permitted under the terms of their subscription agreements. As a part of the Transaction, Westrock converted from a Delaware limited liability company to a Delaware corporation and the Company changed its corporate name from “Westrock Coffee Holdings, LLC” to “Westrock Coffee Company.” Substantially concurrently with the closing of the Transaction, the Company has received million. Proceeds from the Transaction and the Term Loan Facility were used, in part, to retire borrowings under the Company’s existing term loan agreement and asset-based lending facility. The Revolving Credit Facility and the Term Loan Facility will mature on August 29, 2027. In connection with the Transaction, on July 14, 2022, and as discussed within Note 10, pursuant to the terms of the subscription agreement entered into between the Company and Wooster, in which Wooster agreed to subscribe for and purchase, and the Company agreed to issue and sell to Wooster, prior to and substantially concurrently with the closing of the Transaction, an aggregate of 2,150,000 shares of Common Stock at a purchase price of $10.00 per share, for aggregate gross proceeds of $21,500,000 to the Company, Wooster pre-funded $11.7 million of its commitment (the “Wooster Pre-fund”) and in exchange thereof was issued a subordinated convertible note by the Company (the “Convertible Note”). The Convertible Note had a principal amount of $11.7 million, a maturity of one year and an interest rate of 8% per annum which was payable quarterly on the last business day of each quarter. On August 26, 2022, in connection with the closing of the Transaction, the Convertible Note automatically converted, in accordance with its terms, into |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable consists principally of amounts billed and currently due from customers and are generally unsecured and due within 30 to 60 days. A portion of our accounts receivable is not expected to be collected due to non-payment, bankruptcies and deductions. Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers. This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers. We consider our accounts receivable delinquent or past due based on payment terms established with each customer. Accounts receivable are written off when the account is determined to be uncollectible. Activity in the allowance for credit losses was as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Balance at beginning of period $ 3,011 $ 4,005 $ 3,749 $ 3,977 Charged to selling, general and administrative expense 25 56 922 100 Write-offs (644) (395) (2,279) (411) Total $ 2,392 $ 3,666 $ 2,392 $ 3,666 |
Inventories | Inventories Green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, within our Sustainable Sourcing & Traceability segment, consistent with our forward purchase contracts recorded at fair value in accordance with ASC 815, Derivatives and Hedging (“ASC 815”). Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements Update ASU 2016-02 – Leases (Topic 842) and Update ASU 2018-10 – Codification Improvements to Topic 842, Leases Effective January 1, 2022, we account for leases in accordance with Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”). The standard establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. We adopted ASC 842 using a modified retrospective transition approach as permitted by the amendments of ASU 2018-11 Leases (Topic 842): Target Improvements , which provides an alternative modified retrospective transition method. As a result, we were not required to adjust our comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e., January 1, 2022). We have elected to adopt the package of transition practical We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (i) there is an identified asset in the contract that is land or a depreciable asset, and (ii) the customer has a right to control the use of the identified asset. We enter into lease contracts for manufacturing and production facilities, warehouse facilities, vehicles and machinery and equipment. Upon adoption, we recognized lease liabilities on our Condensed Consolidated Balance Sheets. See Note 9 for additional disclosures related to leases. ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date. Lease expense, for operating leases, is recognized on a straight-line basis over the lease term. Key estimates and judgements include the following: (i) Discount rate – ASC 842 requires a lessee to discount its unpaid lease payments using the rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As we generally do not know the rate implicit in our leases, we use our incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of our lease payments. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. (ii) Lease term – The lease term for all of our leases includes the noncancellable period of the lease plus any additional periods covered by either a lessee option to extend (or not to terminate) the lease that is reasonably certain to be exercised. Variable lease payments associated with our leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are included in both costs of sales and selling, general and administrative expense in our Condensed Consolidated Statements of Operations. We monitor for events or changes in circumstances that require a reassessment of a lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the associated ROU asset, unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset is recorded in the Condensed Consolidated Statements of Operations. We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term. Furthermore, we have elected to combine lease and non-lease components for all contracts. Non-lease components primarily relate to maintenance services related to the leased asset. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of activity in allowance of credit losses | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Balance at beginning of period $ 3,011 $ 4,005 $ 3,749 $ 3,977 Charged to selling, general and administrative expense 25 56 922 100 Write-offs (644) (395) (2,279) (411) Total $ 2,392 $ 3,666 $ 2,392 $ 3,666 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Revenue | |
Schedule of disaggregation of revenues from sales to external customers | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Coffee & tea $ 140,614 $ 108,725 $ 262,296 $ 211,609 Flavors, extracts & ingredients 29,397 24,607 55,063 47,335 Other 854 1,073 1,867 2,724 Green coffee 52,548 36,739 90,615 64,807 Net sales $ 223,413 $ 171,144 $ 409,841 $ 326,475 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Inventories | |
Schedule of inventories | (Thousands) June 30, 2022 December 31, 2021 Raw materials $ 55,887 $ 45,079 Finished goods 21,955 14,895 Green coffee 77,481 49,192 Total inventories $ 155,323 $ 109,166 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Property, Plant and Equipment, Net. | |
Schedule of Property, Plant and Equipment, Net | (Thousands) Depreciable Lives June 30, 2022 December 31, 2021 Land $ 9,123 $ 9,150 Buildings 10 44,082 43,895 Leasehold improvements 1 786 613 Plant equipment 3 89,951 88,155 Vehicles and transportation equipment 3 799 876 IT systems 3 2,454 2,453 Furniture and fixtures 3 2,929 2,746 Customer beverage equipment 2 3 23,184 24,341 Lease right-of-use assets 3 10 — Construction in progress and equipment deposits 18,066 8,025 191,384 180,254 Less: accumulated depreciation (59,582) (52,641) Property, plant and equipment, net $ 131,802 $ 127,613 1 - Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease life. 2 - Customer beverage equipment consists of brewers held on site at customer locations. 3 - Lease right-of-use assets are amortized over the shorter of the useful life of the asset or the lease term. |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Goodwill. | |
Schedule of carrying goodwill | Beverage (Thousands) Solutions Total Goodwill $ 173,936 $ 173,936 Accumulated impairment loss (76,883) (76,883) Balance at June 30, 2022, net $ 97,053 $ 97,053 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Intangible Assets, Net | |
Schedule of intangible assets | June 30, 2022 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 137,500 $ (15,388) $ 122,112 Favorable lease asset 220 (101) 119 Software 805 (471) 334 Intangible assets, net $ 138,525 $ (15,960) $ 122,565 December 31, 2021 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 137,500 $ (12,091) $ 125,409 Favorable lease asset 220 (79) 141 Software 758 (394) 364 Intangible assets, net $ 138,478 $ (12,564) $ 125,914 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases | |
Summary of amount of right-of-use lease assets and lease liabilities | (Thousands) Balance Sheet Location June 30, 2022 Right-of-use operating lease assets Other long-term assets $ 11,260 Operating lease liabilities - current Accrued expenses and other current liabilities 2,382 Operating lease liabilities - noncurrent Other long-term liabilities 8,873 |
Schedule of components of lease costs | (Thousands) Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Operating lease cost $ 842 $ 1,771 Short-term lease cost 224 478 Total $ 1,066 $ 2,249 June 30, 2022 Weighted-average discount rate 8.5% Weighted-average remaining lease term 5.2 years (Thousands) Six Months Ended June 30, 2022 Operating cash flows from operating leases $ 806 |
Schedule of future minimum lease payments under non-cancellable operating leases | (Thousands) Remainder of 2022 $ 1,633 2023 3,121 2024 2,743 2025 2,075 2026 1,439 Thereafter 3,125 Total future minimum lease payments 14,136 Less: imputed interest (2,881) Present value of minimum lease payments $ 11,255 |
Schedule of minimum future lease payments under the previous lease guidance | (Thousands) 2022 $ 4,334 2023 4,332 2024 4,174 2025 3,286 2026 2,377 Thereafter 4,373 Total $ 22,876 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Debt | |
Summary of long-term debt | (Thousands) June 30, 2022 December 31, 2021 Term loan $ 232,961 $ 235,668 ABL facility 72,842 51,890 International trade finance lines 67,871 4,510 International notes payable 3,516 3,126 Other loans 7 25 Total debt 377,197 295,219 Unamortized debt costs (4,125) (4,910) Current maturities of long-term debt (8,157) (8,735) Short-term debt (67,871) (4,510) Long-term debt, net $ 297,044 $ 277,064 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivatives | |
Schedule of fair value of derivative assets and liabilities | (Thousands) Balance Sheet Location June 30, 2022 December 31, 2021 Derivative assets designated as cash flow hedging instruments: Coffee futures contracts 1 Derivative assets $ — $ 172 Coffee options Derivative assets 702 — Total $ 702 $ 172 Derivative assets not designated as cash flow hedging instruments: Forward sales contracts Derivative assets $ 14,990 $ 13,593 Total 14,990 13,593 Total derivative assets $ 15,692 $ 13,765 Derivative liabilities designated as cash flow hedging instruments: Coffee futures contracts 1 Derivative liabilities $ 829 $ — Coffee options Derivative liabilities — — Total $ 829 $ — Derivative liabilities not designated as cash flow hedging instruments: Forward purchase contracts Derivative liabilities $ 6,754 $ 14,021 Total 6,754 14,021 Total derivative liabilities $ 7,583 $ 14,021 1 - The fair value of coffee futures excludes amounts related to margin accounts. |
Schedule of pre-tax net gains and losses for derivative instruments | Three Months Ended June 30, Six Months Ended June 30, (Thousands) Statement of Operations Location 2022 2021 2022 2021 Derivative assets designated as cash flow hedging instruments: Net realized gains (losses) on coffee derivatives Costs of sales $ 2,701 $ 1,302 $ 6,831 $ 1,900 Derivative assets and liabilities not designated as cash flow hedging instruments: Net unrealized gains (losses) on forward sales and purchase contracts Costs of sales $ 291 $ (3,038) $ 7,237 $ (581) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurements | |
Summarizes the fair value of financial instruments | June 30, 2022 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 55,952 $ — $ 55,952 Forward sales contracts — 14,990 — 14,990 Coffee options 702 — — 702 Total $ 702 $ 70,942 $ — $ 71,644 Liabilities: Coffee futures contracts $ 829 $ — $ — $ 829 Forward purchase contracts — 6,754 — 6,754 Total $ 829 $ 6,754 $ — $ 7,583 December 31, 2021 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 47,845 $ — $ 47,845 Coffee futures contracts 172 — — 172 Forward sales contracts — 13,593 — 13,593 Total $ 172 $ 61,438 $ — $ 61,610 Liabilities: Forward purchase contracts $ — $ 14,021 $ — $ 14,021 Total $ — $ 14,021 $ — $ 14,021 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accumulated Other Comprehensive Income. | |
Schedule of changes in accumulated other comprehensive loss, net of tax | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Cash flow hedge changes in fair value gain (loss): Balance at beginning of period $ 6,899 $ 2,565 $ 11,759 $ 3,581 Other comprehensive income (loss) before reclassifications (531) 7,289 (2,800) 6,545 Amounts reclassified from accumulated comprehensive income (2,701) (1,302) (6,831) (1,900) Tax effect 807 (1,461) 2,346 (1,135) Net accumulated other comprehensive income 4,474 7,091 4,474 7,091 Less: Other comprehensive income attributable to noncontrolling interests — — — — Balance at end of period 4,474 7,091 4,474 7,091 Foreign currency translation gain Balance at beginning of period 259 153 259 239 Other comprehensive income (loss) before reclassifications (9) 21 (9) (65) Amounts reclassified from accumulated comprehensive income — — — — Tax effect — — — — Net other comprehensive income 250 174 250 174 Less: Other comprehensive income attributable to noncontrolling interests — — — — Balance at end of period 250 174 250 174 Accumulated other comprehensive income at end of period $ 4,724 $ 7,265 $ 4,724 $ 7,265 |
Earnings per Unit (Tables)
Earnings per Unit (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings per Unit | |
Schedule of basic and diluted earning per share | Three Months Ended June 30, Six Months Ended June 30, (Thousands, except per unit data) 2022 2021 2022 2021 Diluted Earnings per Common Unit Numerator: Net loss attributable to common unitholders - basic $ (12,858) $ (12,203) $ (24,471) $ (24,376) Impact of if-converted securities — — — — Net loss attributable to common unitholders - diluted $ (12,858) $ (12,203) $ (24,471) $ (24,376) Denominator: Weighted-average common units outstanding - basic 332,209 329,043 331,195 328,062 Impact of if-converted securities — — — — Effect of other dilutive securities — — — — Weighted-average common units outstanding - diluted 332,209 329,043 331,195 328,062 Dilutive loss per common unit $ (0.04) $ (0.04) $ (0.07) $ (0.07) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Summary of selected financial data related to our segments | Three Months Ended June 30, 2022 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 170,865 $ 58,459 $ (5,911) $ 223,413 Adjusted EBITDA 12,471 822 n/a 13,293 Less: Interest expense 8,813 Income tax benefit (1,499) Depreciation and amortization 5,952 Acquisition, restructuring and integration expense 2,304 Management and consulting fees 866 Equity-based compensation 308 Mark-to-market adjustments 1,395 Loss on disposal of property, plant and equipment 184 Other 789 Net loss $ (5,819) Total assets 546,449 114,997 n/a 661,446 Three Months Ended June 30, 2021 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 134,405 $ 41,322 $ (4,583) $ 171,144 Adjusted EBITDA 10,330 853 n/a 11,183 Less: Interest expense 8,261 Income tax benefit (502) Depreciation and amortization 6,071 Acquisition, restructuring and integration expense 926 Management and consulting fees 1,595 Equity-based compensation 306 Mark-to-market adjustments (2) Gain on disposal of property, plant and equipment (25) Other 621 Net loss $ (6,068) Total assets 493,686 69,077 n/a 562,763 Six Months Ended June 30, 2022 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 319,226 $ 106,232 $ (15,617) $ 409,841 Adjusted EBITDA 22,891 1,796 n/a 24,687 Less: Interest expense, net 16,861 Income tax benefit (3,083) Depreciation and amortization 11,966 Acquisition, restructuring and integration expense 4,787 Management and consulting fees 2,201 Equity-based compensation 479 Mark-to-market adjustments 250 Loss on disposal of property, plant and equipment 289 Other 1,461 Net loss $ (10,524) Total assets 546,449 114,997 n/a 661,446 Six Months Ended June 30, 2021 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 261,668 $ 74,021 $ (9,214) $ 326,475 Adjusted EBITDA 18,462 1,030 n/a 19,492 Less: Interest expense, net 15,669 Income tax benefit (1,443) Depreciation and amortization 12,314 Acquisition, restructuring and integration expense 1,943 Management and consulting fees 3,200 Equity-based compensation 612 Mark-to-market adjustments (1,975) Loss on disposal of property, plant and equipment 243 Other 1,121 Net loss $ (12,192) Total assets 493,686 69,077 n/a 562,763 |
Summary of net sales information by geographic area | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 United States $ 181,526 $ 141,487 $ 334,541 $ 276,882 All other countries 41,887 29,657 75,300 49,593 Net sales $ 223,413 $ 171,144 $ 409,841 $ 326,475 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Related Party Transactions | |
Schedule of transactions with related parties | (Thousands) June 30, 2022 December 31, 2021 Short-term related party debt: Brown Brothers Harriman 1 $ — $ 34,199 Subordinated related party debt: Wooster Capital 2 9,800 9,800 Jo Ellen Ford 1 3,500 3,500 Total $ 13,300 $ 13,300 Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2022 2021 2022 2021 Interest expense, net: Brown Brothers Harriman 1 $ — $ 287 $ 541 $ 578 Wooster Capital 2 149 147 296 297 Jo Ellen Ford 1 53 52 106 106 Westrock Finance, LLC 2 — 97 — 192 Total $ 202 $ 583 $ 943 $ 1,173 1 – Related through common ownership 2 – Related through common ownership and management |
Organization and Description _2
Organization and Description of Business (Details) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2022 facility | Aug. 26, 2022 USD ($) $ / shares | |
Organization and Description of Business | ||
Number of manufacturing facilities | facility | 7 | |
Concord, North Carolina | ||
Organization and Description of Business | ||
Number of manufacturing facilities | facility | 3 | |
North Little Rock, Arkansas | ||
Organization and Description of Business | ||
Number of manufacturing facilities | facility | 2 | |
Kigali, Rwanda | ||
Organization and Description of Business | ||
Number of manufacturing facilities | facility | 1 | |
Johor Bahru, Malaysia | ||
Organization and Description of Business | ||
Number of manufacturing facilities | facility | 1 | |
Riverview | New Company | Subsequent Event | ||
Organization and Description of Business | ||
Amount received | $ | $ 66.3 | |
Riverview | New Company | Wells Fargo | Term loan | Subsequent Event | ||
Organization and Description of Business | ||
Face amount | $ | 175 | |
Riverview | New Company | Wells Fargo | Revolving loan commitment | Subsequent Event | ||
Organization and Description of Business | ||
Amount received | $ | 87 | |
Face amount | $ | 175 | |
Riverview | New Company | Common Stock PIPE Commitments | Subsequent Event | ||
Organization and Description of Business | ||
Amount received | $ | $ 230.9 | |
Share Price | $ / shares | $ 10 | |
Westrock Coffee Company, LLC. | Falcon Coffees Limited | ||
Organization and Description of Business | ||
Percentage of ownership interest | 85% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Allowance for credit losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Allowance for credit loss roll forward | ||||
Balance at beginning of period | $ 3,011 | $ 4,005 | $ 3,749 | $ 3,977 |
Charged to selling, general and administrative expense | 25 | 56 | 922 | 100 |
Write-offs | (644) | (395) | (2,279) | (411) |
Total | $ 2,392 | $ 3,666 | $ 2,392 | $ 3,666 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Jun. 30, 2022 | |
Summary of Significant Accounting Policies | ||
Right-of-use operating lease assets | $ 11,260 | |
Lease liabilities recognized | $ 11,255 | |
ASU 2016-02 | ||
Summary of Significant Accounting Policies | ||
Practical expedients election | true | |
ASU 2016-02 | Adjustment | ||
Summary of Significant Accounting Policies | ||
Right-of-use operating lease assets | $ 13,000 | |
Lease liabilities recognized | $ 13,000 |
Revenue - Revenue from Forward
Revenue - Revenue from Forward Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Derivatives | ||||
Net unrealized gains (losses) | $ (2,425) | $ 4,526 | $ (7,285) | $ 3,510 |
Forward sales contracts | ||||
Derivatives | ||||
Net unrealized gains (losses) | 300 | (3,000) | 7,200 | (600) |
Revenue | $ 52,400 | $ 36,500 | $ 90,500 | $ 63,900 |
Revenue - Contract Estimates (D
Revenue - Contract Estimates (Details) - USD ($) $ in Millions | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue | ||
Accrued sales incentives | $ 1.7 | $ 1.9 |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Revenue | ||
Capitalized contract costs | $ 0 | $ 0 |
Revenue | ||
Revenue | ||
Receivables from contracts with customers | $ 98,100,000 | $ 89,000,000 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue | ||||
Net sales | $ 223,413 | $ 171,144 | $ 409,841 | $ 326,475 |
Coffee & tea | ||||
Revenue | ||||
Net sales | 140,614 | 108,725 | 262,296 | 211,609 |
Flavors, extracts & ingredients | ||||
Revenue | ||||
Net sales | 29,397 | 24,607 | 55,063 | 47,335 |
Other | ||||
Revenue | ||||
Net sales | 854 | 1,073 | 1,867 | 2,724 |
Green coffee | ||||
Revenue | ||||
Net sales | $ 52,548 | $ 36,739 | $ 90,615 | $ 64,807 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Inventories | ||
Raw materials | $ 55,887 | $ 45,079 |
Finished goods | 21,955 | 14,895 |
Green coffee | 77,481 | 49,192 |
Total inventories | $ 155,323 | $ 109,166 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | $ 191,384 | $ 191,384 | $ 180,254 | ||
Less: accumulated depreciation | (59,582) | (59,582) | (52,641) | ||
Property, plant and equipment, net | 131,802 | 131,802 | 127,613 | ||
Depreciation expense | 4,300 | $ 4,400 | 8,500 | $ 9,000 | |
Land | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 9,123 | 9,123 | 9,150 | ||
Building | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 44,082 | 44,082 | 43,895 | ||
Leasehold improvements | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 786 | 786 | 613 | ||
Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 89,951 | 89,951 | 88,155 | ||
Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 799 | 799 | 876 | ||
IT systems | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 2,454 | 2,454 | 2,453 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 2,929 | 2,929 | 2,746 | ||
Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 23,184 | 23,184 | 24,341 | ||
Lease right-of-use assets | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 10 | 10 | |||
Construction in progress and equipment deposits | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | $ 18,066 | $ 18,066 | $ 8,025 | ||
Minimum | Building | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 10 years | ||||
Minimum | Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | ||||
Minimum | Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | ||||
Minimum | IT systems | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | ||||
Minimum | Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | ||||
Minimum | Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | ||||
Maximum | Building | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 40 years | ||||
Maximum | Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 15 years | ||||
Maximum | Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 5 years | ||||
Maximum | IT systems | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 7 years | ||||
Maximum | Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 10 years | ||||
Maximum | Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 5 years |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Goodwill | ||
Goodwill | $ 173,936 | |
Accumulated impairment loss | (76,883) | |
Balance at end of period | 97,053 | $ 97,053 |
Beverage Solutions | ||
Goodwill | ||
Goodwill | 173,936 | |
Accumulated impairment loss | (76,883) | |
Balance at end of period | $ 97,053 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Intangible Assets, Net | |||||
Cost | $ 138,525 | $ 138,525 | $ 138,478 | ||
Accumulated Amortization | (15,960) | (15,960) | (12,564) | ||
Net | 122,565 | 122,565 | 125,914 | ||
Amortization expenses | 1,700 | $ 1,700 | $ 3,400 | $ 3,300 | |
Useful life | 20 years | ||||
Customer relationships | |||||
Intangible Assets, Net | |||||
Cost | 137,500 | $ 137,500 | 137,500 | ||
Accumulated Amortization | (15,388) | (15,388) | (12,091) | ||
Net | 122,112 | 122,112 | 125,409 | ||
Favorable lease assets | |||||
Intangible Assets, Net | |||||
Cost | 220 | 220 | 220 | ||
Accumulated Amortization | (101) | (101) | (79) | ||
Net | 119 | 119 | 141 | ||
Software | |||||
Intangible Assets, Net | |||||
Cost | 805 | 805 | 758 | ||
Accumulated Amortization | (471) | (471) | (394) | ||
Net | $ 334 | $ 334 | $ 364 |
Leases - Other (Details)
Leases - Other (Details) | Jun. 30, 2022 |
Leases | |
Termination term (in years) | 1 year |
Minimum | |
Leases | |
Remaining non-cancelable lease term (in years) | 1 year |
Option to extend term (in years) | 1 year |
Maximum | |
Leases | |
Remaining non-cancelable lease term (in years) | 22 years |
Option to extend term (in years) | 10 years |
Leases - Schedule of amount of
Leases - Schedule of amount of right-of-use lease assets and lease liabilities (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Right-of-use lease assets and lease liabilities | |
Right-of-use operating lease assets | $ 11,260 |
Right-of-use operating lease assets, Balance sheet location | Other long-term assets |
Operating lease liabilities - current | $ 2,382 |
Operating lease liabilities - current, Balance sheet location | Accrued expenses and other current liabilities |
Operating lease liabilities - noncurrent | $ 8,873 |
Operating lease liabilities - noncurrent, Balance sheet location | Other long-term liabilities |
Leases - Schedule of components
Leases - Schedule of components of lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 | Jun. 30, 2022 | |
Lease Cost | ||
Operating lease cost | $ 842 | $ 1,771 |
Short-term lease cost | 224 | 478 |
Total | $ 1,066 | $ 2,249 |
Leases - Schedule of weighted a
Leases - Schedule of weighted average discount rate and remaining lease term (Details) | Jun. 30, 2022 |
Leases | |
Weighted-average discount rate | 8.50% |
Weighted-average remaining lease term | 5 years 2 months 12 days |
Leases - Schedule of supplement
Leases - Schedule of supplemental cashflow information (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Leases | |
Operating cash flows from operating lease | $ 806 |
Leases - Schedule of future min
Leases - Schedule of future minimum lease payments under non-cancellable operating leases (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Leases | |
Remainder of 2022 | $ 1,633 |
2023 | 3,121 |
2024 | 2,743 |
2025 | 2,075 |
2026 | 1,439 |
Thereafter | 3,125 |
Total future minimum lease payments | 14,136 |
Less: imputed interest | (2,881) |
Present value of minimum lease payments | $ 11,255 |
Leases - Schedule of minimum fu
Leases - Schedule of minimum future lease payments under the previous lease guidance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2021 | |
Leases | |||
Rent expense | $ 1,100 | $ 2,200 | |
Operating leases | |||
2022 | $ 4,334 | ||
2023 | 4,332 | ||
2024 | 4,174 | ||
2025 | 3,286 | ||
2026 | 2,377 | ||
Thereafter | 4,373 | ||
Total | $ 22,876 |
Debt - Other (Details)
Debt - Other (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Debt | ||
Total debt | $ 377,197 | $ 295,219 |
Unamortized debt costs | (4,125) | (4,910) |
Current maturities of long-term debt | (8,157) | (8,735) |
Short-term debt | (67,871) | (4,510) |
Long-term debt, net | 297,044 | 277,064 |
Term loan | ||
Debt | ||
Total debt | 232,961 | 235,668 |
ABL facility | ||
Debt | ||
Total debt | 72,842 | 51,890 |
International trade finance lines | ||
Debt | ||
Total debt | 67,871 | 4,510 |
International notes payable | ||
Debt | ||
Total debt | 3,516 | 3,126 |
Other loans | ||
Debt | ||
Total debt | $ 7 | $ 25 |
Debt - Additional Information (
Debt - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||||||
Jul. 13, 2022 | Jul. 12, 2022 | Feb. 28, 2020 USD ($) | Jun. 30, 2022 USD ($) item $ / shares shares | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) item $ / shares shares | Jun. 30, 2021 USD ($) | Jun. 16, 2022 USD ($) | Apr. 29, 2022 USD ($) | Mar. 16, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Debt | |||||||||||
Paid in kind interest | $ 400 | $ 294 | $ 991 | ||||||||
Short-term debt | $ 67,871 | $ 67,871 | $ 4,510 | ||||||||
Term Loan Due in 2025 | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Paid in kind interest rate (as a percent) | 0.25% | ||||||||||
Paid in kind interest | 100 | $ 400 | $ 300 | $ 1,000 | |||||||
Debt finance costs | $ 5,600 | $ 5,600 | |||||||||
Face amount | $ 240,000 | ||||||||||
Cap on add-backs for EBITDA (as a percent) | 20% | 15% | |||||||||
Debt term | 5 years | ||||||||||
Term Loan Due in 2025 | Westrock Coffee Company, LLC. | LIBOR | |||||||||||
Debt | |||||||||||
Effective rate (as a percent) | 9.75% | 9.75% | |||||||||
Term Loan Due in 2025 | Westrock Coffee Company, LLC. | Term Loan are due June 30, 2021 | |||||||||||
Debt | |||||||||||
Principal payment percentage (as a percent) | 0.625% | ||||||||||
Term Loan Due in 2025 | Westrock Coffee Company, LLC. | Term Loan are due June 30, 2023 | |||||||||||
Debt | |||||||||||
Principal payment percentage (as a percent) | 0.9375% | ||||||||||
Term Loan Due in 2025 | Westrock Coffee Company, LLC. | Term Loan are due June 30, 2024 | |||||||||||
Debt | |||||||||||
Principal payment percentage (as a percent) | 1.25% | ||||||||||
US Asset Based Lending Facility | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Long term debt | $ 72,800 | $ 72,800 | |||||||||
Debt finance costs | 2,600 | 2,600 | |||||||||
Face amount | $ 90,000 | ||||||||||
Maximum borrowing capacity | 14,500 | 14,500 | |||||||||
Line of credit | $ 2,700 | $ 2,700 | |||||||||
Cap on add-backs for EBITDA (as a percent) | 20% | 15% | |||||||||
Line of credit, Commitment fee percentage (as a percent) | 0.375% | ||||||||||
Weighted average effective rate (as a percent) | 5.80% | 5.80% | |||||||||
US Asset Based Lending Facility | Westrock Coffee Company, LLC. | Base rate | Minimum | |||||||||||
Debt | |||||||||||
Variable rate (as a percent) | 0.50% | ||||||||||
US Asset Based Lending Facility | Westrock Coffee Company, LLC. | Base rate | Maximum | |||||||||||
Debt | |||||||||||
Variable rate (as a percent) | 2% | ||||||||||
US Asset Based Lending Facility | Westrock Coffee Company, LLC. | LIBOR | Minimum | |||||||||||
Debt | |||||||||||
Variable rate (as a percent) | 1.50% | ||||||||||
US Asset Based Lending Facility | Westrock Coffee Company, LLC. | LIBOR | Maximum | |||||||||||
Debt | |||||||||||
Variable rate (as a percent) | 3% | ||||||||||
International Debt and Lending Facilities | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Short-term debt | $ 1,600 | $ 1,600 | |||||||||
Number of tranches | item | 2 | 2 | |||||||||
International Debt and Lending Facilities | Westrock Coffee Company, LLC. | Mortgage backed securities | |||||||||||
Debt | |||||||||||
Long term note | $ 1,900 | $ 1,900 | |||||||||
International Debt and Lending Facilities, 9.5%, 30 September 2022 | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 9.50% | 9.50% | |||||||||
Short-term debt | $ 900 | $ 900 | |||||||||
International Debt and Lending Facilities, 9.5%, 31 December 2022 | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Short-term debt | 700 | 700 | |||||||||
Working Capital Trade Finance Facility | Westrock Coffee Company, LLC. | |||||||||||
Debt | |||||||||||
Maximum borrowing capacity | $ 62,500 | $ 55,000 | $ 50,000 | ||||||||
Short-term debt | 52,000 | $ 52,000 | $ 49,300 | ||||||||
Agent fees percentage (as a percent) | 0.25% | ||||||||||
Working Capital Trade Finance Facility | Westrock Coffee Company, LLC. | Mortgage backed securities | |||||||||||
Debt | |||||||||||
Short-term debt | $ 8,900 | $ 8,900 | |||||||||
Number of mortgage-backed lending facilities | item | 2 | 2 | |||||||||
Working Capital Trade Finance Facility | Westrock Coffee Company, LLC. | Prime rate | Minimum | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 1.50% | 1.50% | |||||||||
Working Capital Trade Finance Facility | Westrock Coffee Company, LLC. | Prime rate | Maximum | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 5% | 5% | |||||||||
Subordinated related party debt | Wooster Capital, LLC ("Wooster") and Jo Ellen Ford | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 6% | ||||||||||
Face amount | $ 13,300 | ||||||||||
Debt term | 10 years | ||||||||||
Grace period | 6 months | ||||||||||
Common stock shares issued (in shares) | shares | 1,330,000 | 1,330,000 | |||||||||
Par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 |
Derivatives - Other (Details)
Derivatives - Other (Details) lb in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 USD ($) lb | Jun. 30, 2021 USD ($) lb | Jun. 30, 2022 USD ($) lb | Jun. 30, 2021 USD ($) lb | Dec. 31, 2021 lb | |
Derivatives | |||||
Net gains reported in AOCI expected to be reclassified | $ | $ 2.1 | ||||
Cash flow hedging | |||||
Derivatives | |||||
Gain (loss) reclassified from accumulated other comprehensive income | $ | $ 1.3 | $ 1.9 | |||
Net gains reported in AOCI expected to be reclassified | $ | $ 2.7 | $ 6.8 | |||
Coffee futures contracts | Cash flow hedging | |||||
Derivatives | |||||
Notional amount of derivative purchased | lb | 6.9 | 21.3 | |||
Coffee futures contracts | Designated as hedges | Cash flow hedging | |||||
Derivatives | |||||
Derivative notional amount | lb | 1.5 | 7.9 | |||
Coffee options | Cash flow hedging | |||||
Derivatives | |||||
Notional amount of derivative purchased | lb | 48.2 | 48.6 |
Derivatives - Fair value of ass
Derivatives - Fair value of assets and liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Derivatives | ||
Fair value of derivative assets | $ 15,692 | $ 13,765 |
Fair value of derivative liabilities | 7,583 | 14,021 |
Designated as hedges | ||
Derivatives | ||
Fair value of derivative assets | 702 | 172 |
Fair value of derivative liabilities | 829 | |
Designated as hedges | Coffee futures contracts | Derivative assets | ||
Derivatives | ||
Fair value of derivative assets | 172 | |
Designated as hedges | Coffee futures contracts | Derivative liabilities | ||
Derivatives | ||
Fair value of derivative liabilities | 829 | |
Designated as hedges | Coffee options | Derivative assets | ||
Derivatives | ||
Fair value of derivative assets | 702 | |
Not designated as hedges | ||
Derivatives | ||
Fair value of derivative assets | 14,990 | 13,593 |
Fair value of derivative liabilities | 6,754 | 14,021 |
Not designated as hedges | Forward sales contracts | Derivative assets | ||
Derivatives | ||
Fair value of derivative assets | 14,990 | 13,593 |
Not designated as hedges | Forward purchase contracts | Derivative liabilities | ||
Derivatives | ||
Fair value of derivative liabilities | $ 6,754 | $ 14,021 |
Derivatives - Pre-tax net gains
Derivatives - Pre-tax net gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Derivatives | ||||
Net unrealized gains (losses) | $ (2,425) | $ 4,526 | $ (7,285) | $ 3,510 |
Designated as hedges | Cash flow hedging | Coffee derivatives | Cost of sales | ||||
Derivatives | ||||
Net realized gains (losses) | 2,701 | 1,302 | 6,831 | 1,900 |
Not designated as hedges | Cash flow hedging | Forward sales and purchase contracts | Cost of sales | ||||
Derivatives | ||||
Net unrealized gains (losses) | $ 291 | $ (3,038) | $ 7,237 | $ (581) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Assets | $ 71,644 | $ 61,610 |
Liabilities | 7,583 | 14,021 |
Green coffee associated with forward contracts | ||
Fair Value Measurements | ||
Assets | 55,952 | 47,845 |
Forward sales contracts | ||
Fair Value Measurements | ||
Assets | 14,990 | 13,593 |
Coffee futures contracts | ||
Fair Value Measurements | ||
Assets | 172 | |
Liabilities | 829 | |
Forward purchase contracts | ||
Fair Value Measurements | ||
Liabilities | 6,754 | 14,021 |
Coffee options | ||
Fair Value Measurements | ||
Assets | 702 | |
Level 1 | ||
Fair Value Measurements | ||
Assets | 702 | 172 |
Liabilities | 829 | |
Level 1 | Coffee futures contracts | ||
Fair Value Measurements | ||
Assets | 172 | |
Liabilities | 829 | |
Level 1 | Coffee options | ||
Fair Value Measurements | ||
Assets | 702 | |
Level 2 | ||
Fair Value Measurements | ||
Assets | 70,942 | 61,438 |
Liabilities | 6,754 | 14,021 |
Level 2 | Green coffee associated with forward contracts | ||
Fair Value Measurements | ||
Assets | 55,952 | 47,845 |
Level 2 | Forward sales contracts | ||
Fair Value Measurements | ||
Assets | 14,990 | 13,593 |
Level 2 | Forward purchase contracts | ||
Fair Value Measurements | ||
Liabilities | $ 6,754 | $ 14,021 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income - Schedule of changes in accumulated other comprehensive loss, net of tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Accumulated Other Comprehensive Income | ||||
Balance at beginning of period | $ (192,606) | $ (152,562) | $ (175,998) | $ (139,741) |
Net accumulated other comprehensive income | (2,434) | 4,547 | (7,294) | 3,445 |
Balance at end of period | (207,696) | (159,886) | (207,696) | (159,886) |
Cash flow hedge changes in fair value gain (loss) | ||||
Accumulated Other Comprehensive Income | ||||
Balance at beginning of period | 6,899 | 2,565 | 11,759 | 3,581 |
Other comprehensive income (loss) before reclassifications | (531) | 7,289 | (2,800) | 6,545 |
Amounts reclassified from accumulated comprehensive income | (2,701) | (1,302) | (6,831) | (1,900) |
Tax effect | 807 | (1,461) | 2,346 | (1,135) |
Net accumulated other comprehensive income | 4,474 | 7,091 | 4,474 | 7,091 |
Balance at end of period | 4,474 | 7,091 | 4,474 | 7,091 |
Foreign currency translation gain | ||||
Accumulated Other Comprehensive Income | ||||
Balance at beginning of period | 259 | 153 | 259 | 239 |
Other comprehensive income (loss) before reclassifications | (9) | 21 | (9) | (65) |
Net accumulated other comprehensive income | 250 | 174 | 250 | 174 |
Balance at end of period | 250 | 174 | 250 | 174 |
Accumulated other comprehensive income (loss) | ||||
Accumulated Other Comprehensive Income | ||||
Balance at end of period | $ 4,724 | $ 7,265 | $ 4,724 | $ 7,265 |
Earnings per Unit (Details)
Earnings per Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Numerator: | ||||
Net loss attributable to common unitholders - basic | $ (12,858) | $ (12,203) | $ (24,471) | $ (24,376) |
Net loss attributable to common unitholders - diluted | $ (12,858) | $ (12,203) | $ (24,471) | $ (24,376) |
Denominator: | ||||
Weighted-average common units outstanding - basic | 332,209 | 329,043 | 331,195 | 328,062 |
Weighted-average common units outstanding - diluted | 332,209 | 329,043 | 331,195 | 328,062 |
Dilutive loss per common unit | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.07) |
Units options | ||||
Earnings per Unit | ||||
Antidilutive securities | 16,400 | 13,100 | ||
Restricted common units | ||||
Earnings per Unit | ||||
Antidilutive securities | 4,500 | 9,100 | ||
CEP units | ||||
Earnings per Unit | ||||
Antidilutive securities | 239,200 | 222,200 |
Segment Information - Other (De
Segment Information - Other (Details) | 6 Months Ended |
Jun. 30, 2022 segment | |
Segment Information | |
Number of operating segments | 2 |
Segment Information - Selected
Segment Information - Selected Financial Data (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Segment Information | |||||
Net sales | $ 223,413 | $ 171,144 | $ 409,841 | $ 326,475 | |
Adjusted EBITDA | 13,293 | 11,183 | 24,687 | 19,492 | |
Interest expense, net | 8,813 | 8,261 | 16,861 | 15,669 | |
Income tax benefit | (1,499) | (502) | (3,083) | (1,443) | |
Depreciation and amortization | 5,952 | 6,071 | 11,966 | 12,314 | |
Acquisition, restructuring and integration expense | 2,304 | 926 | 4,787 | 1,943 | |
Management and consulting fees | 866 | 1,595 | 2,201 | 3,200 | |
Equity-based compensation | 308 | 306 | 479 | 612 | |
Mark-to-market adjustments | 1,395 | (2) | 250 | (1,975) | |
Loss (gain) on disposal of property, plant and equipment | 184 | (25) | 289 | 243 | |
Other | (789) | 621 | (1,461) | 1,121 | |
Net loss | (5,819) | (6,068) | (10,524) | (12,192) | |
Total assets | 661,446 | 562,763 | 661,446 | 562,763 | $ 593,020 |
Operating Segments | Beverage Solutions. | |||||
Segment Information | |||||
Net sales | 170,865 | 134,405 | 319,226 | 261,668 | |
Adjusted EBITDA | 12,471 | 10,330 | 22,891 | 18,462 | |
Total assets | 546,449 | 493,686 | 546,449 | 493,686 | |
Operating Segments | Sustainable, Sourcing and Traceability | |||||
Segment Information | |||||
Net sales | 58,459 | 41,322 | 106,232 | 74,021 | |
Adjusted EBITDA | 822 | 853 | 1,796 | 1,030 | |
Total assets | 114,997 | 69,077 | 114,997 | 69,077 | |
Intersegment Eliminations | |||||
Segment Information | |||||
Net sales | $ (5,911) | $ (4,583) | $ (15,617) | $ (9,214) |
Segment Information - Net sales
Segment Information - Net sales information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Segment Information | ||||
Net sales | $ 223,413 | $ 171,144 | $ 409,841 | $ 326,475 |
United States | ||||
Segment Information | ||||
Net sales | 181,526 | 141,487 | 334,541 | 276,882 |
All other countries | ||||
Segment Information | ||||
Net sales | $ 41,887 | $ 29,657 | $ 75,300 | $ 49,593 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 30, 2022 USD ($) |
Commitments and Contingencies | |
Purchase obligations | $ 371.7 |
Standby Letters of Credit | |
Commitments and Contingencies | |
Letters of credit outstanding | $ 2.7 |
Related Party Transactions - Tr
Related Party Transactions - Transactions with related party (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions | |||||
Short-term related party debt | $ 34,199 | ||||
Interest expense, net | $ 202 | $ 583 | $ 943 | $ 1,173 | |
Brown Brothers Harriman | |||||
Related Party Transactions | |||||
Interest expense, net | 287 | 541 | 578 | ||
Wooster Capital | |||||
Related Party Transactions | |||||
Interest expense, net | 149 | 147 | 296 | 297 | |
Jo Ellen Ford | |||||
Related Party Transactions | |||||
Interest expense, net | 53 | 52 | 106 | 106 | |
Westrock Finance, LLC | |||||
Related Party Transactions | |||||
Interest expense, net | $ 97 | $ 192 | |||
Short-term related party debt | Brown Brothers Harriman | |||||
Related Party Transactions | |||||
Short-term related party debt | 34,199 | ||||
Subordinated related party debt | |||||
Related Party Transactions | |||||
Subordinated related party debt | 13,300 | 13,300 | 13,300 | ||
Subordinated related party debt | Wooster Capital | |||||
Related Party Transactions | |||||
Subordinated related party debt | 9,800 | 9,800 | 9,800 | ||
Subordinated related party debt | Jo Ellen Ford | |||||
Related Party Transactions | |||||
Subordinated related party debt | $ 3,500 | $ 3,500 | $ 3,500 |
Related Party Transactions - Ot
Related Party Transactions - Other (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 29, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions | ||||||
Short-term related party debt | $ 34,199 | |||||
Selling, general and administrative expenses | ||||||
Related Party Transactions | ||||||
Expenses incurred | $ 800 | $ 1,700 | $ 800 | $ 1,700 | ||
Westrock Group, LLC | ||||||
Related Party Transactions | ||||||
Expenses incurred | $ 200 | $ 300 | ||||
Westrock Group, LLC | Accrued expenses and other current liabilities | ||||||
Related Party Transactions | ||||||
Short-term related party debt | 500 | 500 | $ 200 | |||
Westrock Group, LLC | Selling, general and administrative expenses | ||||||
Related Party Transactions | ||||||
Expenses incurred | $ 10,000 | $ 200 | $ 500 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - USD ($) | Aug. 26, 2022 | Jul. 14, 2022 | Aug. 29, 2022 |
Wooster Capital | |||
Subsequent Events | |||
Number of shares issued | 2,150,000 | ||
Purchase price (in dollars per share) | $ 10 | ||
Proceeds from issuance of common stock | $ 21,500,000 | ||
Pre-funded commitment | 11,700,000 | ||
Wooster Capital | Convertible Debt | |||
Subsequent Events | |||
Face amount | $ 11,700,000 | ||
Debt term | 1 year | ||
Interest rate (as a percent) | 8% | ||
Debt converted into shares | 1,170,000 | ||
Riverview | |||
Subsequent Events | |||
Number of shares issued | 6,618,151 | ||
Number of shares issued, value | $ 66,300,000 | ||
Riverview | Common Stock PIPE Commitments | |||
Subsequent Events | |||
Number of shares issued | 1,910,000 | ||
Riverview | New Company | |||
Subsequent Events | |||
Amount received | $ 66,300,000 | ||
Riverview | New Company | Wells Fargo | Term loan | |||
Subsequent Events | |||
Face amount | 175,000,000 | ||
Riverview | New Company | Wells Fargo | Revolving loan commitment | |||
Subsequent Events | |||
Outstanding borrowing | $ 0 | ||
Amount received | 87,000,000 | ||
Face amount | 175,000,000 | ||
Riverview | New Company | Common Stock PIPE Commitments | |||
Subsequent Events | |||
Amount received | $ 230,900,000 |