Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 07, 2023 | |
Document Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
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 | 4009 N. Rodney Parham Road, 3rd Floor | |
Entity Address, City or Town | Little Rock | |
Entity Address State Or Province | AR | |
Entity Address, Postal Zip Code | 72212 | |
City Area Code | 501 | |
Local Phone Number | 320-4880 | |
Entity Current Reporting Status | Yes | |
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 | 87,611,165 | |
Entity Central Index Key | 0001806347 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
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, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 25,245 | $ 16,838 |
Restricted cash | 3,537 | 9,567 |
Accounts receivable, net of allowance for credit losses of $2,672 and $3,023, respectively | 100,863 | 101,639 |
Inventories | 154,682 | 145,836 |
Derivative assets | 18,357 | 15,053 |
Prepaid expenses and other current assets | 13,542 | 9,166 |
Total current assets | 316,226 | 298,099 |
Property, plant and equipment, net | 240,349 | 185,206 |
Goodwill | 116,353 | 113,999 |
Intangible assets, net | 127,022 | 130,886 |
Operating lease right-of-use assets | 15,172 | 11,090 |
Other long-term assets | 7,186 | 6,933 |
Total Assets | 822,308 | 746,213 |
LIABILITIES, CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||
Current maturities of long-term debt | 9,293 | 11,504 |
Short-term debt | 46,190 | 42,905 |
Accounts payable | 102,083 | 116,675 |
Supply chain finance program | 29,026 | |
Derivative liabilities | 7,282 | 7,592 |
Accrued expenses and other current liabilities | 36,084 | 37,459 |
Total current liabilities | 229,958 | 216,135 |
Long-term debt, net | 237,769 | 162,502 |
Deferred income taxes | 17,938 | 14,355 |
Warrant liabilities | 61,280 | 55,521 |
Other long-term liabilities | 14,600 | 11,035 |
Total liabilities | 561,545 | 459,548 |
Commitments and contingencies (Note 20) | ||
Shareholders' (Deficit) Equity | ||
Preferred stock, $0.01 par value, 26,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.01 par value, 300,000 shares authorized, 75,728 shares and 75,020 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 760 | 750 |
Additional paid-in-capital | 348,711 | 342,664 |
Accumulated deficit | (359,194) | (328,042) |
Accumulated other comprehensive loss | (4,539) | (6,103) |
Total shareholders' (deficit) equity attributable to Westrock Coffee Company | (14,262) | 9,269 |
Non-controlling interest | 2,460 | |
Total shareholders' (deficit) equity | (14,262) | 11,729 |
Total Liabilities, Convertible Preferred Shares and Shareholders' (Deficit) Equity | 822,308 | 746,213 |
Series A Redeemable Common Equivalent Preferred Shares | ||
LIABILITIES, CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||
Redeemable Common Equivalent Preferred Shares | $ 275,025 | $ 274,936 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Allowance for credit loss | $ 2,672,000 | $ 3,023,000 |
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Authorized (in shares) | 26,000 | 26,000 |
Preferred Stock, Shares Issued (in shares) | 0 | 0 |
Preferred Stock, Shares outstanding (in shares) | 0 | 0 |
Common stock, Par Value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Shares Authorized (In shares) | 300,000 | 300,000 |
Common stock, Shares Issued (In shares) | 75,728 | 75,020 |
Common stock, Shares Outstanding (In shares) | 75,728 | 75,020 |
Series A Redeemable Common Equivalent Preferred Shares [Member] | ||
Redeemable Common Preferred Shares, Par Value (in dollars per share) | $ 0.01 | $ 0.01 |
Redeemable Common Preferred Shares, Authorized (in shares) | 24,000 | 24,000 |
Redeemable Common Preferred Shares, Issued (in shares) | 23,566 | 23,588 |
Redeemable Common Preferred Shares, Outstanding (in shares) | 23,566 | 23,588 |
Temporary Equity, Liquidation Preference | $ 11.50 | $ 11.50 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
Net sales | $ 224,694 | $ 223,413 | $ 430,136 | $ 409,841 | |
Costs of sales | 189,018 | 184,515 | 360,162 | 332,512 | |
Gross profit | 35,676 | 38,898 | 69,974 | 77,329 | |
Selling, general and administrative expense | 34,170 | 35,048 | 68,292 | 70,109 | |
Acquisition, restructuring and integration expense | 2,901 | 2,304 | 9,545 | 4,787 | |
Loss on disposal of property, plant and equipment | 184 | 896 | 289 | ||
Total operating expenses | 37,071 | 37,536 | 78,733 | 75,185 | |
(Loss) income from operations | (1,395) | 1,362 | (8,759) | 2,144 | |
Interest expense | 7,385 | 8,813 | 13,414 | 16,861 | |
Change in fair value of warrant liabilities | 11,800 | 6,272 | |||
Other, net | (9) | (133) | 811 | (1,110) | |
Loss before income taxes | (20,571) | (7,318) | (29,256) | (13,607) | |
Income tax expense (benefit) | 6,240 | (1,499) | 1,881 | (3,083) | |
Net loss | (26,811) | (5,819) | (31,137) | (10,524) | |
Net (loss) income attributable to non-controlling interest | (106) | 15 | 65 | ||
Net loss attributable to shareholders | (26,811) | (5,713) | (31,152) | (10,589) | |
Accretion of Series A Convertible Preferred Shares | 87 | (341) | |||
Accumulating preferred dividends | (7,145) | (13,882) | |||
Net loss attributable to common shareholders | $ (26,724) | $ (12,858) | $ (31,493) | $ (24,471) | |
Loss per common share: | |||||
Basic (in dollars per share) | [1] | $ (0.35) | $ (0.37) | $ (0.42) | $ (0.70) |
Diluted (in dollars per share) | [1] | $ (0.35) | $ (0.37) | $ (0.42) | $ (0.70) |
Weighted-average number of shares outstanding | |||||
Basic (in shares) | [1] | 75,726 | 34,855 | 75,543 | 34,749 |
Diluted (in shares) | [1] | 75,726 | 34,855 | 75,543 | 34,749 |
[1] (1) Retroactively adjusted the three and six months ended June 30, 2022 for the de-SPAC merger transaction as described in Note 4 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (26,811) | $ (5,819) | $ (31,137) | $ (10,524) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gain (loss) on derivative instruments | (717) | (2,425) | 1,523 | (7,285) |
Foreign currency translation adjustment | 59 | (9) | 41 | (9) |
Total other comprehensive income (loss) | (658) | (2,434) | 1,564 | (7,294) |
Comprehensive loss | (27,469) | (8,253) | (29,573) | (17,818) |
Comprehensive income (loss) attributable to non-controlling interests | (106) | 15 | 65 | |
Comprehensive loss attributable to shareholders | (27,469) | (8,147) | (29,588) | (17,883) |
Accretion of Series A Convertible Preferred Shares | 87 | (341) | ||
Accumulating preferred dividends | (7,145) | (13,882) | ||
Comprehensive loss attributable to common shareholders | $ (27,382) | $ (15,292) | $ (29,929) | $ (31,765) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss). | Non-Controlling Interest | Total | |
Balance at beginning of period at Dec. 31, 2021 | [1] | $ 345 | $ 60,628 | $ (251,725) | $ 12,018 | $ 2,736 | $ (175,998) |
Balance at beginning of period (in shares) at Dec. 31, 2021 | [1] | 34,523 | |||||
Net income (loss) | (10,589) | 65 | (10,524) | ||||
Other comprehensive income (loss) | (7,294) | (7,294) | |||||
Equity-based compensation | $ 3 | 476 | 479 | ||||
Equity-based compensation (in shares) | 333 | ||||||
Net share settlement of equity awards | (477) | (477) | |||||
Accumulating preferred dividends | (13,882) | (13,882) | |||||
Balance at end of period at Jun. 30, 2022 | [1] | $ 348 | 60,627 | (276,196) | 4,724 | 2,801 | (207,696) |
Balance at end of period (in shares) at Jun. 30, 2022 | [1] | 34,856 | |||||
Balance at beginning of period at Mar. 31, 2022 | $ 348 | 60,319 | (263,338) | 7,158 | 2,907 | (192,606) | |
Balance at beginning of period (in shares) at Mar. 31, 2022 | 34,856 | ||||||
Net income (loss) | (5,713) | (106) | (5,819) | ||||
Other comprehensive income (loss) | (2,434) | (2,434) | |||||
Equity-based compensation | 308 | 308 | |||||
Accumulating preferred dividends | (7,145) | (7,145) | |||||
Balance at end of period at Jun. 30, 2022 | [1] | $ 348 | 60,627 | (276,196) | 4,724 | 2,801 | (207,696) |
Balance at end of period (in shares) at Jun. 30, 2022 | [1] | 34,856 | |||||
Balance at beginning of period at Dec. 31, 2022 | $ 750 | 342,664 | (328,042) | (6,103) | 2,460 | 11,729 | |
Balance at beginning of period (in shares) at Dec. 31, 2022 | 75,020 | ||||||
Net income (loss) | (31,152) | 15 | (31,137) | ||||
Issuance of common shares related to acquisitions | $ 2 | 444 | 446 | ||||
Issuance of common shares related to acquisitions (in shares) | 40 | ||||||
Issuance of common shares related to Public Warrant exercise | $ 2 | 3,142 | 3,144 | ||||
Issuance of common shares related to Public Warrant exercise (in shares) | 229 | ||||||
Issuance of common shares related to stock options exercised | $ 1 | 62 | 63 | ||||
Issuance of common shares related to stock options exercised (in shares) | 6 | ||||||
Issuance of common shares related to conversion of Series A Convertible Preferred Shares | $ 1 | 253 | 254 | ||||
Issuance of common shares related to conversion of Series A Convertible Preferred Shares (in shares) | 22 | ||||||
Issuance of common shares related to purchase of non-controlling interest | $ 1 | 474 | (2,000) | ||||
Issuance of common shares related to purchase of non-controlling interest (in shares) | 100 | ||||||
Issuance of common shares related to purchase of non-controlling interest | (2,475) | ||||||
Accretion of Series A Convertible Preferred Shares | (341) | (341) | |||||
Other comprehensive income (loss) | 1,564 | 1,564 | |||||
Equity-based compensation | $ 3 | 3,854 | 3,857 | ||||
Equity-based compensation (in shares) | 311 | ||||||
Net share settlement of equity awards | (1,841) | (1,841) | |||||
Balance at end of period at Jun. 30, 2023 | $ 760 | 348,711 | (359,194) | (4,539) | (14,262) | ||
Balance at end of period (in shares) at Jun. 30, 2023 | 75,728 | ||||||
Balance at beginning of period at Mar. 31, 2023 | $ 759 | 345,840 | (332,383) | (3,881) | 2,475 | 12,810 | |
Balance at beginning of period (in shares) at Mar. 31, 2023 | 75,628 | ||||||
Net income (loss) | (26,811) | (26,811) | |||||
Issuance of common shares related to purchase of non-controlling interest | $ 1 | 474 | (2,000) | ||||
Issuance of common shares related to purchase of non-controlling interest (in shares) | 100 | ||||||
Issuance of common shares related to purchase of non-controlling interest | $ (2,475) | ||||||
Accretion of Series A Convertible Preferred Shares | 87 | 87 | |||||
Other comprehensive income (loss) | (658) | (658) | |||||
Equity-based compensation | 2,310 | 2,310 | |||||
Balance at end of period at Jun. 30, 2023 | $ 760 | $ 348,711 | $ (359,194) | $ (4,539) | $ (14,262) | ||
Balance at end of period (in shares) at Jun. 30, 2023 | 75,728 | ||||||
[1] (1) Retroactively adjusted the three and six months ended June 30, 2022 for the de-SPAC merger transaction as described in Note 4 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (31,137) | $ (10,524) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 12,055 | 11,966 |
Equity-based compensation | 3,857 | 479 |
Paid-in-kind interest added to debt principal | 294 | |
Provision for credit losses | 653 | 922 |
Amortization of deferred financing fees included in interest expense | 988 | 1,046 |
Loss on disposal of property, plant and equipment | 896 | 289 |
Mark-to-market adjustments | (2,205) | 250 |
Change in fair value of warrant liabilities | 6,272 | |
Foreign currency transactions | 907 | 91 |
Deferred income tax (benefit) expense | 1,881 | (3,083) |
Other | 992 | |
Change in operating assets and liabilities: | ||
Accounts receivable | 649 | (11,137) |
Inventories | (6,874) | (53,663) |
Derivative assets and liabilities | 693 | (10,743) |
Prepaid expense and other assets | (8,529) | (14,257) |
Accounts payable | (24,080) | 37,278 |
Accrued liabilities and other | 7,314 | 3,818 |
Net cash used in operating activities | (35,668) | (46,974) |
Cash flows from investing activities: | ||
Additions to property, plant and equipment | (55,745) | (15,163) |
Additions to intangible assets | (95) | (48) |
Acquisition of business, net of cash acquired | (2,392) | |
Proceeds from sale of property, plant and equipment | 57 | 2,248 |
Net cash used in investing activities | (58,175) | (12,963) |
Cash flows from financing activities: | ||
Payments on debt | (79,795) | (51,665) |
Proceeds from debt | 156,118 | 107,423 |
Proceeds from supply chain financing program | 29,026 | |
Payment of debt issuance costs | (2,582) | |
Net repayments from repurchase agreements | (5,236) | |
Proceeds from exercise of stock options | 63 | |
Proceeds from exercise of Public Warrants | 2,632 | |
Payment for purchase of non-controlling interest | (2,000) | |
Payment for taxes for net share settlement of equity awards | (1,841) | (477) |
Net cash provided by financing activities | 96,385 | 55,281 |
Effect of exchange rate changes on cash | (165) | (29) |
Net increase (decrease) in cash and cash equivalents and restricted cash | 2,377 | (4,685) |
Cash and cash equivalents and restricted cash at beginning of period | 26,405 | 22,870 |
Cash and cash equivalents and restricted cash at end of period | 28,782 | 18,185 |
Supplemental non-cash investing and financing activities: | ||
Property, plant and equipment acquired but not yet paid | 17,958 | 372 |
Issuance of common shares related to Public Warrant exercise | 3,144 | |
Issuance of common shares related to acquisitions | 446 | |
Issuance of common shares related to conversion of Series A Preferred Shares | 254 | |
Issuance of common shares related to purchase of non-controlling interest | 475 | |
Accretion of convertible preferred shares | $ 341 | |
Accumulating preferred dividends | $ 13,882 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Cash and cash equivalents | $ 25,245 | $ 16,838 | $ 14,343 | |
Restricted cash | 3,537 | 9,567 | 3,842 | |
Total | $ 28,782 | $ 26,405 | $ 18,185 | $ 22,870 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1. Organization and Description of Business Westrock Coffee Company, a Delaware corporation (the “Company,” “Westrock,” “we,” “us,” or “our”), is a leading integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States, providing coffee sourcing, supply chain management, product development, roasting, packaging, and distribution services to the retail, food service and restaurant, convenience store and travel center, non-commercial account, consumer packaged goods (“CPG”), and hospitality industries around the world. We manage our business in 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 consist of sales from commodity contracts related to forward sales of green coffee. On August 26, 2022 (the “Closing Date”), pursuant to the terms of the Transaction Agreement, dated April 4, 2022, by and among the Company, Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation (“Riverview”), Origin Merger Sub I, Inc. (“Merger Sub I”), and Origin Merger Sub II, LLC (“Merger Sub II”) (as amended, modified or supplemented, the “Transaction Agreement”), the Company completed its de-SPAC merger transaction with Riverview (the “Transaction”). In connection with the closing of the Transaction (the “Closing”), the Company converted from a Delaware limited liability company to a Delaware corporation (the “Conversion”) and changed its corporate name from “Westrock Coffee Holdings, LLC” (the “Converting Company”) to “Westrock Coffee Company.” Pursuant to the Transaction Agreement, Merger Sub I merged with and into Riverview, with Riverview surviving the merger as a direct wholly owned subsidiary of Westrock (such merger, the “SPAC Merger”) and immediately following the consummation of the SPAC Merger, Riverview merged with and into Merger Sub II, with Merger Sub II surviving the merger as a direct wholly owned subsidiary of Westrock (the “LLC Merger”, and together with the SPAC Merger, the “Mergers”). See Note 4 for additional disclosures related to the Transaction. |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 6 Months Ended |
Jun. 30, 2023 | |
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, 2022 was derived from the audited financial statements, but does not include all disclosures required by GAAP. On April 3, 2023, the Company purchased the remaining 15% of the equity interests of Falcon Coffees Limited (“Falcon”) that it did not previously own, resulting in Falcon becoming a wholly owned subsidiary of the Company. Aggregate consideration paid for the interest totaled proportionate share. Falcon operates our trading business and is reported within our Sustainable Sourcing & Traceability segment. The interim financial information is unaudited but, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair statement of results for the interim periods have been included. Operating results from any interim period are not necessarily indicative of the results that may be expected for the full fiscal year. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited December 31, 2022 consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 21, 2023. 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. Common Unit Conversion In connection with the Transaction and pursuant to the Transaction Agreement, (a) each issued and outstanding common unit of the Converting Company (“Common Units”) was automatically converted into 0.1049203474320 shares of common stock, par value $0.01 per share, of the Company (each such share, a “Common Share”), (b) each issued and outstanding common equivalent preferred unit of the Converting Company (the “Common Equivalent Preferred Units”) for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock, par value $0.01 per share, of the Company (the “Series A Preferred Shares”), automatically converted into 0.1086138208640 Common Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Common Equivalent Preferred Unit for which the holder thereof had made an election to convert such unit into Series A Preferred Shares, converted into 0.1086138208740 Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit. For the periods prior to the Closing, the number of outstanding units, weighted average number of outstanding units, loss per common unit, equity-based compensation and other financial amounts previously expressed on the basis of Common Units have been retroactively adjusted on the basis of Common Shares reflecting the common unit conversion ratio, as described above. Reclassifications Certain reclassifications of prior years’ amounts have been made to conform with the current period financial statements presentation. These reclassifications had no impact on prior years’ net income as previously reported. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurement, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, warrant liabilities, share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from the estimates and assumptions used in preparing the accompanying condensed consolidated financial statements. Going Concern In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) million (See Note 22). The Company believes that proceeds from the equity issuance, projected cash flow from operations and available borrowings under its Credit Agreement will be sufficient to fund operations for at least the next twelve months. If we are unable to meet our financial targets and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants. As management’s ability to amend its financial covenants cannot be assured, management has committed to raise additional capital, delay growth capital expenditures and/or reduce operating expenses, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants. The accompanying Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Accounts Receivable and Allowance for Credit Losses Accounts receivable consist principally of amounts billed and currently due from customers and are generally unsecured and due within 30 to 60 days. A portion of our accounts receivable is not expected to be collected due to non-payment, bankruptcies and deductions. Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers. This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers. We consider our accounts receivable delinquent or past due based on payment terms established with each customer. Accounts receivable are written off when the account is determined to be uncollectible. Activity in the allowance for credit losses for the periods indicated was as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Balance at beginning of period $ 2,516 $ 3,011 $ 3,023 $ 3,749 Charged to selling, general and administrative expense 156 25 653 922 Write-offs — (644) (1,004) (2,279) Total $ 2,672 $ 2,392 $ 2,672 $ 2,392 Inventories Within our Sustainable Sourcing & Traceability segment, green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, consistent with our forward purchase contracts recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2023, we recognized million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts. For the three and six months ended June 30, 2022, we recognized million of net unrealized losses, respectively, on green coffee inventory associated with our forward sales and purchase contracts. Supplier Finance Program The Company is party to a supplier finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials. Under the Program, the financing provider remits payment to the Company’s suppliers for approved invoices, and the Company repays the financing provider the amount of the approved invoices, plus a financing charge, on 180 -day terms. The Program is uncommitted and the financing provider may, at its sole discretion, cancel the Program at any time. The Company may request cancellation of the Program in whole or in respect of or more approved suppliers. Due to the extension of payment terms beyond the original due date of approved invoices, obligations under the Program are recorded outside of accounts payable, within supply chain finance program, on our Condensed Consolidated Balance Sheets. Amounts paid by the financing provider to suppliers are reported as cash inflows from financing activities and a corresponding cash outflow from operating activities in our Condensed Consolidated Statements of Cash Flows. Amounts paid to the financing provider are reflected as cash outflows from financing activities in our Condensed Consolidated Statements of Cash Flows. As of June 30, 2023, there were million obligations outstanding under the Program. There were (Thousands) June 30, 2023 Confirmed obligations outstanding at the beginning of the year $ — Invoices confirmed during the year 29,026 Confirmed invoices paid during the year — Confirmed obligations outstanding at the end of the quarter $ 29,026 Warrant Liabilities We account for warrants assumed in connection with the Transaction (see Note 4) in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Condensed Consolidated Statements of Operations. The Company remeasures the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants. The Westrock Private Warrants (as defined in Note 4) are valued using a binomial lattice valuation model. For the three and six months ended June 30, 2023, the Company recognized $11.8 million and $6.3 million of losses, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Condensed Consolidated Statements of Operations. Income Taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases, using enacted income tax rates expected to apply when the deferred tax assets and liabilities are expected to be realized or settled. The Company’s foreign subsidiaries file income tax returns and are subject to tax provisions in their respective foreign tax jurisdictions. A valuation allowance is established to reduce deferred income tax assets if, on the basis of available evidence, it is more likely than not that all or a portion of any deferred tax assets will not be realized. The consideration of available evidence requires significant management judgment including an assessment of the future periods in which the deferred tax assets and liabilities are expected to be realized and projections of future taxable income. Specifically, in assessing the need for a valuation allowance, we consider the reversal of taxable temporary differences, future taxable income, the ability to carryback certain attributes and tax-planning strategies. The ultimate realization of the deferred tax assets, including net operating losses, is dependent upon the generation of future taxable income during the periods prior to their expiration. If our estimates and assumptions about future taxable income are not appropriate, the value of our deferred tax assets may not be recoverable, which may result in an increase to our valuation allowance that will impact current earnings. We re-evaluate our need for a valuation allowance on a quarterly basis. The effective income tax rates for the six months ended June 30, 2023 and 2022 were (6.4%) and 22.7%, respectively. The Company’s effective tax rate for the current period differs from the federal statutory rate primarily due to an increase in the valuation allowance against domestic deferred tax assets and permanent differences, including nondeductible expenses related to a change in the fair value of warrants. The effective tax rate for the six months ended June 30, 2023 differs from the effective tax rate for the same period in 2022 primarily due to the increase in the valuation allowance and permanent differences, including nondeductible expenses related to a change in the fair value of warrants and executive compensation. There were no changes to uncertain tax benefits during the six months ended June 30, 2023, and the Company does not expect any significant changes to uncertain tax benefits within the next twelve months. Recently adopted accounting pronouncements Update ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”, which requires that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company adopted the applicable amendments within ASU 2022-04 on a retrospective basis effective January 1, 2023. The amendments to ASU 2022-04 do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. Update ASU 2021-08 – Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued ASU 2021-08, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, instead of at fair value on the acquisition date as previously required by ASC 805. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for acquired revenue contracts and revenue contracts not acquired in a business combination. ASU 2021-08 was effective for years beginning after December 15, 2022. The adoption of ASU 2021-08 did not have a significant impact on the Company’s financial position or results of operations |
De-SPAC Merger Transaction
De-SPAC Merger Transaction | 6 Months Ended |
Jun. 30, 2023 | |
De-SPAC Merger Transaction | |
De-SPAC Merger Transaction | Note 4. De-SPAC Merger Transaction On the Closing Date, the Company completed the Transaction with Riverview. At Closing, the Company issued Substantially concurrently with the Closing, the Company received $205.9 million in cash proceeds (which amount excludes contribution to the Company of certain related party notes outstanding immediately prior to Closing) from common stock PIPE investments (the “PIPE Financing”), issued 20,590,000 Common Shares to the PIPE investors (which share amount excludes the conversion of the related party notes), and entered into a credit agreement that includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $175.0 million and (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $175.0 million. Prior to the Closing, the Company’s ownership interests consisted of two classes of equity, referred to as Common Units and Common Equivalent Preferred Units. At inception, each Common Equivalent Preferred Unit has a liquidation preference of $1.00 per unit, increased by an amount accruing at the rate of 10% per annum, compounding annually, based on its liquidation preference as of the time of such accrual, and reduced by the cumulative amount of any cash dividends or distributions, if any, made by the Company in respect of such Common Equivalent Preferred Unit (the “Common Equivalent Preferred Unit Liquidation Preference”). In connection with the Closing, holders of Common Equivalent Preferred Units were paid a cash dividend totaling $4.4 million, which is equal to the accreted liquidation preference of the Common Equivalent Preferred Units from June 30, 2022 through Closing. Pursuant to the Transaction Agreement, (a) each issued and outstanding Common Unit converted into 0.1049203474320 Common Shares, (b) each issued and outstanding Common Equivalent Preferred Unit for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock of Westrock (the “Westrock Series A Preferred Shares”) (see Note 13), automatically converted into 0.1086138208640 Common Shares if such Westrock Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Westrock Preferred Unit, for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit. As a result, we issued 34,855,535 Common Shares to holders of Common Units, 2,220,305 Common Shares to holders of Common Equivalent Preferred Units who elected to convert their Common Equivalent Preferred Units into Common Shares, and 23,587,952 Westrock Series A Preferred Shares to holders who elected to convert their Common Equivalent Preferred Units into Westrock Series A Preferred Shares. In addition, at Closing, (i) each outstanding share of class B common stock of Riverview (the “Riverview Class B Shares” together with the Riverview Class A Shares, the “Riverview Shares”) (other than the Riverview Class B Shares held as treasury stock, which were automatically cancelled and extinguished at Closing), automatically converted into one Riverview Class A Share, (ii) each outstanding Riverview Class A Share (including the Riverview Class A Shares resulting from the conversion of Riverview Class B Shares at Closing but excluding any Riverview Class A Shares held as treasury stock, which were automatically cancelled and extinguished at Closing) were exchanged for one Common Share, (iii) each outstanding warrant to purchase Riverview Class A Shares (the “Riverview Warrants”) was, by its terms, automatically converted into a comparable warrant to purchase Common Shares (the “Westrock Warrants”) on the terms and subject to the conditions set forth in the warrant agreement for the Riverview Warrants and the amended and restated warrant agreement for the Westrock Warrants, (iv) each Riverview Share held immediately prior to Closing by Riverview as treasury stock was automatically canceled and extinguished and (v) each share of capital stock of Merger Sub I issued and outstanding immediately prior to Closing was automatically canceled and extinguished and converted into one share of common stock, par value $0.01, of the surviving corporation in the SPAC Merger. In connection with obtaining the approval of the Mergers by Riverview’s stockholders, Riverview provided an opportunity for its stockholders to redeem all or a portion of their outstanding Riverview Class A Shares. The Transaction is a capital transaction in substance and not a business combination under ASC 805, Business Combinations The financial statements of the combined entity represent a continuation of the financial statements of Westrock, and the net assets of Riverview have been stated at historical cost, with no goodwill Proceeds from the Transaction and the $175.0 million term loan facility were used to pay off and terminate our then existing term loan and asset-based lending agreements, and to pay expenses related to the Transaction and the new credit agreement. The Company and Riverview incurred $24.0 million and $17.1 million, respectively, of expenses related to the Transaction. These expenses consist of underwriting fees, professional services (legal, accounting, advisory, etc.) and other direct expenses associated with the Transaction. Costs incurred by Westrock were initially capitalized as incurred in the other assets on the Condensed Consolidated Balance Sheets. As a result of the transaction, million of expenses incurred by Riverview were either paid by Riverview prior to Closing or netted against proceeds received by the Company at Closing. Common Stock Warrants The Company assumed 12,500,000 publicly-traded Riverview Warrants (“Public Warrants”) and 7,400,000 private placement Riverview Warrants (“Private Warrants”), which were originally issued by Riverview in connection with its initial public offering and, as a result of the assumption by the Company, became Westrock Warrants. The Public Warrants assumed by Westrock are referred to as the “Westrock Public Warrants” and the Private Warrants assumed by Westrock are referred to as the “Westrock Private Warrants”. The Westrock Warrants are included in warrant liabilities on the Company’s Condensed Consolidated Balance Sheet. The Westrock Warrants entitle the holder to purchase The Westrock Warrants may only be exercised for a whole number of shares, and will expire on August 26, 2027 (i.e., five years following the Closing), or earlier upon redemption or liquidations. Westrock may redeem the outstanding Westrock Public Warrants (i) in whole and not in part; (ii) at a price of per share. During any period when Westrock fails to maintain an effective registration statement registering the Common Shares issuable upon the exercise of the Westrock Warrants, Westrock is required to permit holders of Westrock Warrants to exercise their Westrock Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, or another exemption. If and when the Public Warrants become redeemable by Westrock, Westrock may exercise its redemption right even if Westrock is unable to register or qualify the underlying securities for sale under all applicable state securities laws. The Westrock Private Warrants, which became transferable, assignable and salable on September 26, 2022 (i.e., 30 days after the Closing), are currently held by the Riverview Sponsor, and are generally identical to the Westrock Public Warrants, except they cannot be redeemable by Westrock so long as they are held by the Riverview Sponsor or its permitted transferees. The Riverview Sponsor, or its permitted transferees, have the option to exercise the Westrock Private Warrants on a cashless basis. If the Westrock Private Warrants are held by holders other than the Riverview Sponsor or its permitted transferees, the Westrock Private Warrants will become redeemable by Westrock and exercisable by the holders on the same basis as the Westrock Public Warrants. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Revenue | Note 5. Revenue Revenue from Contracts with Customers (ASC 606) We measure revenue based on the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. Our principal source of revenue is from the procurement, trade, manufacture, and distribution of coffee, tea and extracts to customers in the United States, Europe, and Asia. The transaction price of a contract, net of discounts and expected returns, is allocated to each distinct performance obligation based on the relative standalone selling price of the obligation and is recognized as revenue when the performance obligation is satisfied. The standalone selling price is the estimated price we would charge for the good or service in a separate transaction with similar customers in similar circumstances. Identifying distinct performance obligations and determining the standalone selling price for each performance obligation within a contract requires management judgment. Substantially all our client contracts require that we be compensated for services performed to date. This is upon shipment of goods or upon delivery to the customer, depending on contractual terms. Shipping and handling costs paid by the customer to us are included in revenue and costs incurred by us for shipping and handling activities that are performed after a customer obtains control of the product are accounted for as fulfillment costs. In addition, we exclude from net revenue and cost of sales taxes assessed by governmental authorities on revenue-producing transactions. Although we occasionally accept returns of products from our customers, historically returns have not been material. At times, the Company may enter into agreements in which its Sustainable Sourcing & Traceability segment will sell inventory to a third party, from whom the Company’s Beverage Solutions segment has an obligation to repurchase. Such transactions are accounted for as financing transactions in accordance with ASC 606. At June 30, 2023, the Company has $9.4 million of such repurchase agreement obligations, collateralized by the corresponding inventory, that are recorded within accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. Net cash flows associated with these repurchase agreements are reported as financing activities in the Condensed Consolidated Statements of Cash Flows. Revenue from Forward Contracts (ASC 815) A portion of the Company’s revenues consist of sales from commodity contracts that are accounted for under ASC 815. Sales from commodity contracts primarily relate to forward sales of green coffee which are accounted for as derivatives at fair value under ASC 815. These forward sales meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash. The Company does not apply the normal purchase and normal sale exception under ASC 815 to these contracts. Revenues from commodity contracts are recognized in revenues for the contractually stated amount when the contracts are settled. Settlement generally occurs upon shipment or delivery of the product when title and risks and rewards of ownership transfers to the customer. Prior to settlement, these forward sales contracts are recognized at fair value with the unrealized gains or losses recorded within costs of sales in our Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2023, we recorded million of net unrealized gains, respectively, within costs of sales. 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, 2023, the Company recognized $34.7 million and $59.1 million in revenues under ASC 815, respectively, and 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, 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 $1.4 million and $1.3 million at June 30, 2023 and December 31, 2022, respectively. 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, 2023 or December 31, 2022. Receivables from contracts with customers are included in accounts receivable, net on the Company’s Condensed Consolidated Balance Sheets. At June 30, 2023 and December 31, 2022, accounts receivable, net included $103.5 million and $104.7 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, 2023 and December 31, 2022, 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 and geographic area, based on customer location, for the periods indicated is as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Coffee & tea $ 144,604 $ 140,614 $ 291,753 $ 262,296 Flavors, extracts & ingredients 44,396 29,397 77,682 55,063 Other 719 854 1,493 1,867 Green coffee 34,975 52,548 59,208 90,615 Net sales $ 224,694 $ 223,413 $ 430,136 $ 409,841 Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 United States $ 193,106 $ 181,526 $ 378,667 $ 334,541 All other countries 31,588 41,887 51,469 75,300 Net sales $ 224,694 $ 223,413 $ 430,136 $ 409,841 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2023 | |
Acquisitions | |
Acquisitions | Note 6. Acquisitions Bixby Roasting Co. On February 28, 2023, the Company completed the acquisition of substantially all of the assets of Bixby Roasting Co. (“Bixby”), a specialty-grade roaster that is a leader in the emerging influencer-led brand space. The transaction is accounted for as a business combination in accordance with ASC 805. Aggregate consideration paid for Bixby included 39,778 Common Shares and approximately $2.2 million in cash, for total consideration of $2.6 million, subject to customary adjustments. Net assets acquired totaled approximately $0.7 million. The acquisition allows the Company to continue to expand its product marketing and development resources as it capitalizes on shifting consumer consumption trends. The acquisition includes Bixby’s roasting facility in Los Angeles, California. The acquisition was recorded by allocating the costs of the assets acquired and liabilities assumed, which consisted of accounts receivable, inventory, property, plant and equipment, and accounts payable, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. The Company finalized its purchase price allocation during the second quarter of 2023, recognizing approximately Kohana Coffee, LLC On November 14, 2022, Westrock Beverage Solutions, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, acquired one hundred percent ( 100% ) of the equity securities of Kohana Coffee, LLC (“Kohana Coffee”), a Texas limited liability company (“Kohana Acquisition”). Kohana Coffee is an extract and ready-to-drink focused business, based in Richmond, California, serving customers in the retail and CPG industries. The acquisition allows the Company to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles. Aggregate consideration paid for Kohana Coffee included 1,852,608 Common Shares and approximately $15.7 million in cash, subject to customary adjustments. The fair value of the stock consideration was based on the closing price of the Company’s common stock on the date of acquisition. The total consideration paid in the Kohana Acquisition is summarized below: (Thousands) Cash consideration $ 15,682 Fair value of stock consideration 23,435 Total Consideration $ 39,117 The assets and liabilities acquired in the Kohana Acquisition are recorded at their estimated fair values. (Thousands) Acquired Value Cash and cash equivalents $ 797 Accounts receivable 881 Inventory 2,306 Property, plant and equipment 8,387 Goodwill 17,275 Intangible assets 11,718 Accounts payable and accrued liabilities (2,247) Total $ 39,117 The above purchase price allocation was finalized during the second quarter of 2023. During the first six months of 2023, we recorded approximately $0.3 million of measurement period adjustments, primarily related to the settlement of post-closing working capital adjustments. The cost of the acquisition in excess of the fair market value of the tangible and intangible assets acquired less liabilities assumed represents acquired goodwill, which is deductible for tax purposes. The goodwill arising from the transaction is primarily attributable to strategic opportunities from the acquisition of Kohana, including our ability to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles to our existing customers. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Inventories | Note 7. Inventories The following table summarizes inventories as of June 30, 2023 and December 31, 2022: (Thousands) June 30, 2023 December 31, 2022 Raw materials $ 70,315 $ 66,925 Finished goods 32,756 21,232 Green coffee 51,611 57,679 Total inventories $ 154,682 $ 145,836 Green coffee inventories represent green coffee held for resale. At June 30, 2023 and December 31, 2022, 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, 2023 | |
Property, Plant and Equipment, Net | |
Property, Plant and Equipment, Net | Note 8. Property, Plant and Equipment, Net The following table summarizes property, plant and equipment, net as of June 30, 2023 and December 31, 2022: (Thousands) Depreciable Lives June 30, 2023 December 31, 2022 Land $ 8,907 $ 9,052 Buildings (4) 10-40 years 35,370 35,499 Leasehold improvements (1) 9,071 1,651 Plant equipment (4) 3-15 years 110,599 107,215 Vehicles and transportation equipment 3-5 years 687 700 IT systems 3-7 years 6,834 3,053 Furniture and fixtures (4) 3-10 years 3,092 3,068 Customer beverage equipment (2) 3-5 years 22,674 21,930 Lease right-of-use assets (3) 36 36 Construction in progress and equipment deposits (4) 116,763 70,004 314,033 252,208 Less: accumulated depreciation (73,684) (67,002) Property, plant and equipment, net $ 240,349 $ 185,206 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. 4 - We identified a $10.1 million classification error in the disclosure of buildings, plant equipment, furniture and fixtures, and construction in progress and equipment deposits for the year ended December 31, 2022 . Amounts presented above reflect the corrected amounts. Depreciation expense for the three and six months ended June 30, 2023 was $4.1 million and $8.0 million, respectively, and depreciation expense for the three and six months ended June 30, 2022 was $4.3 million and $8.5 million, respectively. Assets classified as construction in progress and equipment deposits are not depreciated, as they are not ready for production use. All assets classified as construction in progress and equipment deposits at June 30, 2023 are expected to be in production use. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill | |
Goodwill | Note 9. Goodwill The following table reflects the carrying amount of goodwill as of June 30, 2023 and December 31, 2022: Beverage (Thousands) Solutions Total Balance at December 31, 2022 Goodwill $ 190,882 $ 190,882 Accumulated impairment loss (76,883) (76,883) 113,999 113,999 Changes during the period: Acquisitions 2,025 2,025 Measurement period adjustments 329 329 Balance at June 30, 2023 Goodwill 193,236 193,236 Accumulated impairment loss (76,883) (76,883) $ 116,353 $ 116,353 |
Intangible Assets, Net
Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets, Net | |
Intangible Assets, Net | Note 10. Intangible Assets, Net The following table summarizes intangible assets, net as of June 30, 2023 and December 31, 2022: June 30, 2023 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 148,648 $ (22,634) $ 126,014 Favorable lease asset 790 (281) 509 Software 1,006 (507) 499 Intangible assets, net $ 150,444 $ (23,422) $ 127,022 December 31, 2022 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 148,648 $ (18,778) $ 129,870 Favorable lease asset 710 (140) 570 Software 919 (473) 446 Intangible assets, net $ 150,277 $ (19,391) $ 130,886 Amortization expense of intangible assets was $2.0 million and $4.0 million for the three and six months ended June 30, 2023, respectively, and amortization expense of intangible assets was $1.7 million and $3.4 million for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, the weighted average useful life for definite-lived intangibles is approximately |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
Leases | Note 11. Leases We have operating leases for manufacturing and production facilities, distribution and warehousing facilities, vehicles and machinery and equipment. Some of our lease agreements have renewal options, tenant improvement allowances, rent holidays and rent escalation clauses. The remaining terms on our leases range from . 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, 2023 December 31, 2022 Right-of-use operating lease assets Operating lease right-of-use assets $ 15,172 $ 11,090 Operating lease liabilities - current Accrued expenses and other current liabilities 3,199 2,832 Operating lease liabilities - noncurrent Other long-term liabilities 12,468 8,424 Depending on the nature of the lease, lease costs are classified within costs of sales or selling, general and administrative expense on the Company’s Condensed Consolidated Statements of Operations. The components of lease costs for the three and six months ended June 30, 2023 and 2022, respectively, are as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Operating lease cost $ 1,209 $ 842 $ 2,430 $ 1,771 Short-term lease cost 239 224 479 478 Total $ 1,448 $ 1,066 $ 2,909 $ 2,249 The following table presents information about the Company’s weighted average discount rate and remaining lease term as of June 30, 2023 and June 30, 2022: June 30, 2023 June 30, 2022 Weighted-average discount rate 8.0% 8.5% Weighted-average remaining lease term 5.2 years 5.2 years Supplemental cash flow information about the Company’s leases as of June 30, 2023 and 2022, respectively, is as follows: Six Months Ended June 30, (Thousands) 2023 2022 Operating cash flows from operating leases $ 2,141 $ 806 During the six months ended June 30, 2023, the Company obtained $6.0 million of right-of-use operating lease assets in exchange for lease obligations. Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued expenses and other current liabilities and long-term debt, net on the Condensed Consolidated Balance Sheets. There were Future minimum lease payments under non-cancellable operating leases as of June 30, 2023 are as follows: (Thousands) Remainder of 2023 $ 2,115 2024 4,382 2025 3,277 2026 2,609 2027 2,589 Thereafter 4,239 Total future minimum lease payments 19,211 Less: imputed interest (3,544) Present value of minimum lease payments $ 15,667 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Debt | Note 12. Debt Our long-term debt at June 30, 2023 and December 31, 2022 is as follows: (Thousands) June 30, 2023 December 31, 2022 Term loan facility $ 168,438 $ 175,000 Revolving credit facility 80,000 — International trade finance lines 46,190 42,905 International notes payable 1,356 1,750 Other loans 19 25 Total debt 296,003 219,680 Unamortized debt costs (2,751) (2,769) Current maturities of long-term debt (9,293) (11,504) Short-term debt (46,190) (42,905) Long-term debt, net $ 237,769 $ 162,502 Credit Agreement On August 29, 2022, we entered into a credit agreement (the “Credit Agreement”) among the Company, Westrock Beverage Solutions, LLC, as the borrower (the “Borrower”), Wells Fargo Bank, N.A., as administrative agent, collateral agent, and swingline lender, Wells Fargo Securities, LLC, as sustainability structuring agent, and each issuing bank and lender party thereto. The Credit Agreement includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $175.0 million (the “Revolving Credit Facility”) 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 the Term Loan Facility were used for paying off existing indebtedness. The Revolving Credit Facility and the Term Loan Facility will mature on August 29, 2027. All obligations under the Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets. Borrowings under the Revolving Credit Facility and the Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (i) Term SOFR plus a credit spread adjustment of 0.10% for loans with an interest period of one month, 0.15% for loans with an interest period of three months and 0.25% for loans with an interest period of six months, as applicable, (the “Adjusted Term SOFR”) or (ii) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50% and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00%, (the “Base Rate”)), in each case plus the applicable margin. The Credit Agreement contains two financial covenants requiring the maintenance of a total net leverage ratio and an interest coverage ratio (the “Financial Covenants”). Commitment fees on the daily unused amount of commitments under the Revolving Credit Facility range from 0.20% to 0.35% depending on the total net leverage ratio. At June 30, 2023, we had On February 14, 2023, we entered into an Incremental Assumption Agreement and Amendment No. 1 (the “Amendment”) to the Credit Agreement, which established a new class of incremental term loan commitments in the form of a senior secured delayed draw term loan credit facility (the “Delayed Draw Term Loan Facility”) in the aggregate principal amount of $50.0 million, proceeds of which may be used to fund capital expenditures related to our extract and ready-to-drink facility in Conway, Arkansas, or for general corporate purposes. The interest rates under the Delayed Draw Term Loan Facility are the same as the interest rates with respect to the initial term loans under the existing Term Loan Facility, and the commitment fees applying to the unused portion of the Delayed Draw Term Loan Facility are the same as the commitment fees with respect to the Revolving Credit Facility. Any delayed draw term loan funded under the Delayed Draw Term Loan Facility will mature on August 29, 2027. As of the date of this Quarterly Report on Form 10-Q, no borrowings have been made under the Delayed Draw Term Loan Facility. On June 30, 2023, we entered into Amendment No. 2 (the “Second Amendment”) to the Credit Agreement. The Second Amendment established a covenant relief period (the “Covenant Relief Period”) commencing on June 30, 2023, and ending on the earlier to occur of (i) April 1, 2025 and (ii) the date following December 31, 2023, on which the Borrower delivers to the Administrative Agent a certificate of a responsible officer (a) electing to terminate the Covenant Relief Period, (b) demonstrating a total net leverage ratio less than During the Covenant Relief Period, (i) the total net leverage ratio financial covenant will be (a) 5.00x for the test period ending June 30, 2023, (b) 5.25x for the test period ending September 30, 2023, (c) 5.50x for the test periods ending on or after December 31, 2023 to and including September 30, 2024, (d) 5.00x for the test period ending December 31, 2024 and (e) 4.50x for the test period ending March 31, 2025 and (ii) the applicable margin for any term SOFR rate loan will range from 2.50% to 3.75% and for any ABR loan will range from 1.50% to 2.75%, in each case depending on the total net leverage ratio. After the Covenant Relief Period, the total net leverage ratio financial covenant and the applicable margin for term SOFR rate loans and ABR loans will revert to the pre-amendment terms of the Credit Agreement. During and after the Covenant Relief Period, the minimum interest coverage ratio financial covenant will be 2.00 x. As of June 30, 2023, we were in compliance with the Financial Covenants. The Term Loan Facility requires quarterly principal payments during the first three years of approximately $2.2 million (1.25% of the original principal balance). Quarterly payments increase to approximately $3.3 million and $4.4 million (1.875% and 2.5% of the original principal balance) during the fourth and fifth years, respectively. We incurred a total of $6.6 million of financing fees in connection with the Credit Agreement and related amendments. International Debt and Lending Facilities On March 21, 2023, we entered into a $70 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon. The facility replaced Falcon’s then existing working capital trade finance facility. The new facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility. The new facility will mature one year from inception. Borrowings under the new facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR, as defined in the new facility, plus a margin of 4.00% plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the new facility, at such time, (ii) one-half of 1.00% At June 30, 2023, there was $32.8 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Condensed Consolidated Balance Sheets. Westrock Coffee International, LLC, through its subsidiary Rwanda Trading Company, maintains two mortgage and inventory-backed lending facilities with a local bank in Rwanda: (a) a short-term trade finance facility with a balance of $8.8 million at June 30, 2023 and (b) a long-term note payable with a balance of $1.4 million at June 30, 2023. Additionally, Rwanda Trading Company maintains |
Series A Preferred Shares
Series A Preferred Shares | 6 Months Ended |
Jun. 30, 2023 | |
Series A Preferred Shares. | |
Series A Preferred Shares | Note 13. Series A Preferred Shares In connection with the Transaction, the Company issued 23,587,952 Westrock Series A Preferred Shares, which rank senior to the Common Shares with respect to dividend rights and/or distribution rights upon the liquidation, winding up or dissolution, as applicable, of Westrock. Each holder of Westrock Series A Preferred Shares is entitled to vote, on an as-converted basis, as a single class with the holders of Common Shares and the holders of any other class or series of capital stock of Westrock then entitled to vote with the Common Shares on all matters submitted to a vote of the holders of Common Shares. The initial liquidation preference of Westrock Series A Preferred Shares is $11.50 per share, plus any declared but unpaid dividends and subject to accretion under certain circumstances. In the event of our liquidation, dissolution or winding up, holders of Westrock Series A Preferred Shares are entitled to receive, per Westrock Series A Preferred Share, the greater of (a) the liquidation preference and (b) the amount such holder would have received had they converted their Westrock Series A Preferred Shares into Common Shares immediately prior to such liquidation event. Holders of Westrock Series A Preferred Shares may voluntarily convert their Westrock Series A Preferred Shares into a whole number of Common Shares at any time at a rate equal to the quotient of (a) the liquidation preference as of the applicable conversion date, divided by (b) the conversion price as of the applicable conversion date, which is currently $11.50 per Westrock Series A Preferred Share, plus cash in lieu of fractional shares. The initial conversion price of $11.50 per Westrock Series A Preferred Share is subject to customary adjustments for the issuance of Common Shares as a dividend or distribution to the holders of Common Shares, a subdivision or combination of the Common Shares, reclassification of the Common Shares into a greater or lesser number of Common Shares, certain tender or exchange offers for the Common Shares, and issuances of Common Shares below a specified price. After February 26, 2028 (i.e., the five At any time after February 26, 2028 (i.e., the five and a half year anniversary of the date of Closing), Westrock may redeem, ratably, in whole or, from time to time in part, the Westrock Series A Preferred Shares of any holder then outstanding at the redemption price in cash, equal to the greater of (i) the liquidation preference and (ii) the product of (x) the number of Common Shares that would have been obtained from converting one Westrock Series A Preferred Share on the date of the exercise of such call is notified by Westrock (including fractional shares for this purpose) and (y) the simple average of the daily volume weighted average price per Common Share for the ten trading days ending on and including the trading day immediately preceding the date of the exercise of such call by Westrock. The redemption price for the Westrock Series A Preferred Shares held by controlled affiliates of Brown Brothers Harriman & Co. (“BBH Investors”) may not be less than the $18.50 per Westrock Series A Preferred Share (subject to adjustments); provided that, Westrock may redeem such shares in such a case if it pays an incremental price per share on the redemption date to the BBH Investors equal to the difference between $18.50 (subject to adjustments) and the redemption price otherwise. Upon issuance, the Westrock Series A Preferred Shares were recorded on our Condensed Consolidated Balance Sheets at fair value. Subsequently, the Company will accrete changes in the redemption value from the date of issuance to the earliest redemption date (i.e., the five -and-a-half-year anniversary of the date of Closing) using the effective interest rate method. The accretion will be recorded as a deemed dividend, which adjusts retained earnings (or in the absence of retained earnings, additional paid-in capital) and earnings attributable to common shareholders in computing basic and diluted earnings per share. However, at no time will the Westrock Series A Preferred Shares be reported at a value less than its initial carrying value. For the three and six months ended June 30, 2023, the Company recorded |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2023 | |
Derivatives | |
Derivatives | Note 14. Derivatives We record all derivatives, whether designated in a hedging relationship or not, at fair value on the Condensed Consolidated Balance Sheets. We use various types of derivative instruments including, but not limited to, forward contracts, futures contracts, and options contracts for certain commodities. Forward and futures contracts are agreements to buy or sell a quantity of a commodity at a predetermined future date, and at a predetermined rate or price. Forward contracts are traded over the counter whereas future contracts are traded on an exchange. Option contracts are agreements to facilitate a potential transaction involving the commodity at a preset price and date. The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the types of hedging relationships. Derivatives can be designated as fair value hedges, cash flow hedges or hedges of net investments in foreign operations. The changes in the fair values of derivatives that have not been designated and for which hedge accounting is not applied, are recorded in the same line item in our Condensed Consolidated Statements of Operations as the changes in the fair value of the hedged items attributable to the risk being hedged. The changes in fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) and are reclassified into the line item in the Condensed Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings. For derivatives that will be accounted for as hedging instruments, we formally designate and document, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, we formally assess both at the inception and at least quarterly thereafter, 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, 2023 or 2022. Within our Beverage Solutions segment, we have entered into coffee futures contracts to hedge our exposure to price fluctuations on green coffee associated with certain price-to-be-fixed purchase contracts, which generally range from three to twelve months in length. These derivative instruments have been designated as cash flow hedges. The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of green coffee. The notional amount for the coffee futures contracts that were designated and qualified for our commodity cash flow hedging program was 10.8 million pounds and 29.2 million pounds as of June 30, 2023 and December 31, 2022, respectively. During the three and six months ended June 30, 2023, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amounts of 15.2 million pounds and 23.6 million pounds, 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 million pounds, respectively. Approximately $1.4 million and $2.1 million of net realized losses, representing the effective portion of the cash flow hedge, were subsequently reclassified from AOCI to earnings and recognized in costs of sales in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023, respectively. Approximately 30, 2022, respectively. As of June 30, 2023, the estimated amount of net losses 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 5 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, 2023 December 31, 2022 Derivative assets not designated as cash flow hedging instruments: Forward purchase and sales contracts Derivative assets $ 18,357 $ 15,053 Total derivative assets $ 18,357 $ 15,053 Derivative liabilities designated as cash flow hedging instruments: Coffee futures contracts (1) Derivative liabilities $ 1,298 $ 3,334 Total $ 1,298 $ 3,334 Derivative liabilities not designated as cash flow hedging instruments: Forward purchase and sales contracts Derivative liabilities $ 5,984 $ 4,258 Total derivative liabilities $ 7,282 $ 7,592 1 - The fair value of coffee futures excludes amounts related to margin accounts. The following table presents the pre-tax net gains and losses for our derivative instruments for the three and six months ended June 30, 2023 and 2022, respectively: Three Months Ended June 30, Six Months Ended June 30, (Thousands) Statement of Operations Location 2023 2022 2023 2022 Derivative assets designated as cash flow hedging instruments: Net realized gains (losses) on coffee derivatives Costs of sales $ (1,366) $ 2,701 $ (2,087) $ 6,831 Derivative assets and liabilities not designated as cash flow hedging instruments: Net unrealized gains (losses) on forward sales and purchase contracts Costs of sales $ 2,098 $ 291 $ 1,070 $ 7,237 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | Note 15. 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, 2023: June 30, 2023 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 35,082 $ — $ 35,082 Forward purchase and sales contracts — 18,357 — 18,357 Total $ — $ 53,439 $ — $ 53,439 Liabilities: Coffee futures contracts $ 1,298 $ — $ — $ 1,298 Forward purchase and sales contracts — 5,984 — 5,984 Westrock Public Warrants 35,232 — — 35,232 Westrock Private Warrants — — 26,048 26,048 Total $ 36,530 $ 5,984 $ 26,048 $ 68,562 The following table presents the change in fair value of Level 3 Westrock Private Warrant liabilities: (Thousands) Westrock Private Warrants Fair value as of December 31, 2022 $ 28,342 Change in fair value (2,294) Fair value as of June 30, 2023 $ 26,048 The following table summarizes the fair value of financial instruments at December 31, 2022: December 31, 2022 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 39,928 $ — $ 39,928 Forward purchase and sales contracts — 15,053 — 15,053 Total $ — $ 54,981 $ — $ 54,981 Liabilities: Coffee futures contracts $ 3,334 $ — $ — $ 3,334 Forward purchase and sales contracts — 4,258 — 4,258 Westrock Public Warrants 27,179 — — 27,179 Westrock Private Warrants — — 28,342 28,342 Total $ 30,513 $ 4,258 $ 28,342 $ 63,113 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. Westrock Public Warrants are valued based on their quoted market price of $3.00 and $2.27 per warrant as of June 30, 2023 and December 31, 2022, respectively. Westrock Private Warrants price of per warrant as of June 30, 2023 and December 31, 2022, respectively, are valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement. The primary unobservable inputs were as follows: June 30, 2023 December 31, 2022 Stock price $ 10.87 $ 13.36 Exercise price $ 11.50 $ 11.50 Expected term (years) 5.00 5.00 Expected volatility 35.10% 7.74% Risk-free rate of return 4.24% 3.99% Dividend yield 0.00% 0.00% The most significant of these primary unobservable inputs utilized in determining the fair value of the Westrock Private Warrants is the expected volatility of the stock price, which is determined by use of an option pricing model. Financial instruments consist primarily of cash, accounts receivable, accounts payable, a supply chain finance program and long-term debt. The carrying amount of cash, accounts receivable, accounts payable and the supply chain finance program was estimated by management to approximate fair value due to the relatively short period of time to maturity for those instruments. On June 30, 2023, the Company amended its Credit Agreement, which includes the Term Loan Facility and the Revolving Credit Facility. The Term Loan Facility and the Revolving Credit Facility are carried on the Condensed Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of June 30, 2023 as the interest rate on these facilities is adjusted for changes in the market rates. The fair value of the Term Loan Facility and the Revolving Credit Facility was determined based on Level 2 inputs under the fair value hierarchy. Non-financial assets and liabilities, including property, plant and equipment, goodwill and intangible assets are measured at fair value on a non-recurring basis. No events occurred during the three and six months ended June 30, 2023 or 2022, requiring these non-financial assets and liabilities to be subsequently recognized at fair value. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | Note 16. Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss), net of tax by component for the three and six months ended June 30, 2023 and June 30, 2022 is as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Cash flow hedge changes in fair value gain (loss): Balance at beginning of period $ (4,115) $ 6,899 $ (6,355) $ 11,759 Other comprehensive income (loss) before reclassifications (1,208) (531) 1,146 (2,800) Amounts reclassified from accumulated comprehensive income 1,366 (2,701) 2,087 (6,831) Tax effect (875) 807 (1,710) 2,346 Net other comprehensive income (4,832) 4,474 (4,832) 4,474 Less: Other comprehensive income attributable to non-controlling interests — — — — Balance at end of period (4,832) 4,474 (4,832) 4,474 Foreign currency translation gain Balance at beginning of period 234 259 252 259 Other comprehensive income (loss) before reclassifications 59 (9) 41 (9) Amounts reclassified from accumulated comprehensive income — — — — Tax effect — — — — Net other comprehensive income 293 250 293 250 Less: Other comprehensive income attributable to non-controlling interests — — — — Balance at end of period 293 250 293 250 Accumulated other comprehensive income (loss) at end of period $ (4,539) $ 4,724 $ (4,539) $ 4,724 |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Equity-Based Compensation | |
Equity-Based Compensation | Note 17. Equity-Based Compensation During the three and six months ended June 30, 2023, the Company granted 0.1 million and 1.2 million restricted stock units (“RSUs”), respectively, under the Westrock Coffee Company 2022 Equity Incentive Plan (the “2022 Equity Plan”). The RSUs had a grant date fair value of $0.9 million and $13.9 million, respectively, which was calculated using the closing price of the Company’s Common Shares on the applicable date of grant. The RSUs are amortized on a straight-line basis to expense over the vesting period, which is generally . As of June 30, 2023, there were million shares available for future issuance under the 2022 Equity Plan. The following table sets forth the RSU activity under the 2022 Equity Plan for the six months ended June 30, 2023. Average Fair Units Market Value Outstanding at December 31, 2022 1,127,000 $ 11.49 Granted 1,169,243 11.91 Forfeited (42,515) 11.61 Vested — — Outstanding at June 30, 2023 2,253,728 $ 11.71 |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings per Share | |
Earnings per Share | Note 18. Earnings per Share Prior to the Conversion, the Company’s ownership interests consisted of two classes of equity units, referred to as Common Units and Common Equivalent Preferred Units (“CEP Units”), which have been retroactively adjusted as shares reflecting the conversion ratios discussed in Note 4. Our Series A Preferred Shares and RSUs issued under our 2022 Equity Incentive Plan are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as Common Shares. As participating securities, we include these instruments in the computation of earnings per share under the two-class method described in ASC 260, Earnings per Share. Prior to the Conversion, the dilutive effect of CEP Units was calculated by using the “if-converted” method. This assumed an add-back of dividends on the CEP Units to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares were included in the number of weighted-average units outstanding. The dilutive effect of Westrock Series A Preferred Shares is calculated using the if-converted method, which assumes an add-back of any accretion on preferred shares to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares being included in the number of weighted-average units outstanding. The dilutive effect of time-based option awards and RSUs is calculated using the treasury stock method, while performance-based awards are treated as contingently issuable. The following potentially dilutive securities were excluded from the computation of diluted shares for the periods indicated because their inclusion would have an anti-dilutive effect due to our reported loss. Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Warrants 19,144 — 19,155 — Restricted stock 2,242 475 1,788 475 Options 1,476 1,722 1,505 1,722 If-converted securities 23,566 25,092 23,575 25,092 The following table sets forth the computation of basic and diluted earnings per share under the two-class method for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, (Thousands, except per share data) 2023 2022 2023 2022 Basic Earnings per Common Share Numerator: Net loss attributable to common shareholders $ (26,724) $ (12,858) $ (31,493) $ (24,471) Denominator: Weighted-average common shares outstanding - basic 75,726 34,855 75,543 34,749 Basic loss per common share $ (0.35) $ (0.37) $ (0.42) $ (0.70) Diluted Earnings per Common Share Numerator: Net loss attributable to common shareholders - basic $ (26,724) $ (12,858) $ (31,493) $ (24,471) Effect of non-participating securities — — — — Net loss attributable to common shareholders - diluted $ (26,724) $ (12,858) $ (31,493) $ (24,471) Denominator: Weighted-average common shares outstanding - basic 75,726 34,855 75,543 34,749 Impact of if-converted securities — — — — Effect of other dilutive securities — — — — Weighted-average common shares outstanding - diluted 75,726 34,855 75,543 34,749 Dilutive loss per common share $ (0.35) $ (0.37) $ (0.42) $ (0.70) |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information | |
Segment Information | Note 19. Segment Information Our two operating segments, Beverage Solutions and Sustainable Sourcing & Traceability, are evaluated using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of acquisition, transaction and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc. (“S&D”), impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, and other similar or infrequent items (although we may not have had such charges in the periods presented). Selected financial data related to our segments is presented below for the periods indicated: Three Months Ended June 30, 2023 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 189,719 $ 36,048 $ (1,073) $ 224,694 Adjusted EBITDA 11,660 (350) n/a 11,310 Less: Interest expense 7,385 Income tax expense 6,240 Depreciation and amortization 6,181 Acquisition, restructuring and integration expense 2,901 Change in fair value of warrant liabilities 11,800 Equity-based compensation 2,310 Conway extract and ready-to-drink facility start-up costs 1,711 Mark-to-market adjustments (969) Other 562 Net loss $ (26,811) Total assets 727,471 94,837 n/a 822,308 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 (S&D Coffee, Inc. acquisition) 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 Six Months Ended June 30, 2023 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 370,928 $ 61,439 $ (2,231) $ 430,136 Adjusted EBITDA 20,081 (318) n/a 19,763 Less: Interest expense 13,414 Income tax expense 1,881 Depreciation and amortization 12,055 Acquisition, restructuring and integration expense 9,545 Change in fair value of warrant liabilities 6,272 Management and consulting fees (S&D Coffee, Inc. acquisition) 556 Equity-based compensation 3,857 Conway extract and ready-to-drink facility start-up costs 3,580 Mark-to-market adjustments (2,205) Loss on disposal of property, plant and equipment 896 Other 1,049 Net loss $ (31,137) Total assets 727,471 94,837 n/a 822,308 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 16,861 Income tax benefit (3,083) Depreciation and amortization 11,966 Acquisition, restructuring and integration expense 4,787 Management and consulting fees (S&D Coffee, Inc. acquisition) 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 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 20. Commitments and Contingencies We are subject to various claims and legal proceedings with respect to matters such as governmental regulations, and other actions arising out of the normal course of business. Management believes that the resolution of these matters will not have a material adverse effect on our financial position, results of operations, or cash flow. We have future purchase obligations of $193.3 million as of June 30, 2023 that consist of commitments for the purchase of inventory over the next 12 months. These obligations represent the minimum contractual obligations expected under the normal course of business. In addition, at June 30, 2023, we had an obligation to repurchase $9.4 million of inventory associated with repurchase agreements in which the Company’s Sustainable Sourcing & Traceability segment has sold inventory to a third party and from whom the Company’s Beverage Solutions segment has an obligation to repurchase. The liability for these obligations is recorded within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheet. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | Note 21. Related Party Transactions Prior to the Conversion, the Company had subordinated debt issued to Wooster Capital, LLC, which is owned and controlled by our co-founder and Chairman, Joe T. Ford, and Jo Ellen Ford, who have ownership in the Company. During 2022, Brown Brothers Harriman, who is a holder of Series A Preferred Shares, and prior to the Conversion was holder of Westrock Series A and Series B Preferred Units, participated in Falcon’s working capital trade finance facility. As such, these persons and entities are deemed related parties. The consolidated financial statements reflect the following transactions with related parties: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Interest expense, net: Brown Brothers Harriman — — — 541 Wooster Capital, LLC — 149 — 296 Jo Ellen Ford — 53 — 106 Total $ — $ 202 $ — $ 943 In connection with the acquisition of S&D Coffee, Inc. in February 2020, the Company entered into a Management Services Agreement with Westrock Group, LLC (“Westrock Group”), whose controlling manager and controlling member, Greenbrier Holdings, LLC, is owned and controlled by our co-founder and Chief Executive Officer Scott Ford. Under the terms of the agreement, which expired in February 2023, Westrock Group was paid 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 June 30, 2022, respectively. In addition, million, respectively, for such items, which are recorded in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2022, the Company recognized expenses of million, respectively, for such items. At June 30, 2023 and December 31, 2022, we had |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events | |
Subsequent Events | Note 22. Subsequent Events On June 29, 2023, the Company entered into a subscription agreement (the “Subscription Agreement”) with HF Direct Investments Pool, LLC (the “HF Investor”), an affiliate of HF Capital, LLC, pursuant to which the Company agreed to sell and issue to the HF Investor and the HF Investor agreed to purchase from the Company 5,000,000 shares (the “HF Subscription Amount”) of Common Shares of the Company at a purchase price per share of $10.00 for aggregate gross proceeds to the Company of $50.0 million (such transaction, the “HF Investment”). On August 3, 2023, the HF Investment closed after the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Additionally, on June 29, 2023 and July 18, 2023, the Company entered into definitive agreements with an affiliate of the Herbert Hunt family (the “Hunt Investor”) and the Arkansas Teacher Retirement System (the “ARTRS” and together with the Hunt Investor, the “Investors”), respectively, pursuant to which the Company agreed to sell and issue to the Investors and the Investors agreed to purchase from the Company a total of 5,000,000 Common Shares of the Company at a purchase price per share of $10.00 for aggregate gross proceeds to the Company of $50.0 million (such transactions the “PIPE Investments”). On August 3, 2023, the Company closed on the PIPE Investments. On July 24, 2023, affiliates of Brown Brothers Harriman & Co. (the “BBH Investors”) exercised preemptive rights (the “BBH Preemptive Rights”) to purchase approximately 1.9 million Common Shares at a purchase price per share of $10.00, under the terms of that certain Investor Rights Agreement, dated April 4, 2022, by and among the Company, the BBH Investors, and the other parties thereto. On August 7, 2023, the Company sold and issued the Common Shares to the BBH Investors, receiving aggregate gross proceeds of approximately $18.8 million. The issuance of Common Shares pursuant to the HF Investment, PIPE Investments and BBH Preemptive Rights, is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of the exemption provided by Rule 506(b) of Regulation D promulgated under the Securities Act. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurement, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, warrant liabilities, share-based compensation, contingencies, and income taxes, among others. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from the estimates and assumptions used in preparing the accompanying condensed consolidated financial statements. |
Going Concern | Going Concern In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) million (See Note 22). The Company believes that proceeds from the equity issuance, projected cash flow from operations and available borrowings under its Credit Agreement will be sufficient to fund operations for at least the next twelve months. If we are unable to meet our financial targets and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants. As management’s ability to amend its financial covenants cannot be assured, management has committed to raise additional capital, delay growth capital expenditures and/or reduce operating expenses, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants. The accompanying Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable consist principally of amounts billed and currently due from customers and are generally unsecured and due within 30 to 60 days. A portion of our accounts receivable is not expected to be collected due to non-payment, bankruptcies and deductions. Our accounting policy for the allowance for credit losses requires us to reserve an amount based on the evaluation of the aging of accounts receivable, detailed analysis of high-risk customers’ accounts, and the overall market and economic conditions of our customers. This evaluation considers the customer demographic, such as large commercial customers as compared to small businesses or individual customers. We consider our accounts receivable delinquent or past due based on payment terms established with each customer. Accounts receivable are written off when the account is determined to be uncollectible. Activity in the allowance for credit losses for the periods indicated was as follows: Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Balance at beginning of period $ 2,516 $ 3,011 $ 3,023 $ 3,749 Charged to selling, general and administrative expense 156 25 653 922 Write-offs — (644) (1,004) (2,279) Total $ 2,672 $ 2,392 $ 2,672 $ 2,392 |
Inventories | Inventories Within our Sustainable Sourcing & Traceability segment, green coffee associated with our forward contracts is recorded at net realizable value, which approximates market price, consistent with our forward purchase contracts recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”). Green coffee is a commodity with quoted market prices in active markets, may be sold without significant further processing, has predictable and insignificant disposal costs and is available for immediate delivery. We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2023, we recognized million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts. For the three and six months ended June 30, 2022, we recognized million of net unrealized losses, respectively, on green coffee inventory associated with our forward sales and purchase contracts. |
Supplier Finance Program | Supplier Finance Program The Company is party to a supplier finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials. Under the Program, the financing provider remits payment to the Company’s suppliers for approved invoices, and the Company repays the financing provider the amount of the approved invoices, plus a financing charge, on 180 -day terms. The Program is uncommitted and the financing provider may, at its sole discretion, cancel the Program at any time. The Company may request cancellation of the Program in whole or in respect of or more approved suppliers. Due to the extension of payment terms beyond the original due date of approved invoices, obligations under the Program are recorded outside of accounts payable, within supply chain finance program, on our Condensed Consolidated Balance Sheets. Amounts paid by the financing provider to suppliers are reported as cash inflows from financing activities and a corresponding cash outflow from operating activities in our Condensed Consolidated Statements of Cash Flows. Amounts paid to the financing provider are reflected as cash outflows from financing activities in our Condensed Consolidated Statements of Cash Flows. As of June 30, 2023, there were million obligations outstanding under the Program. There were (Thousands) June 30, 2023 Confirmed obligations outstanding at the beginning of the year $ — Invoices confirmed during the year 29,026 Confirmed invoices paid during the year — Confirmed obligations outstanding at the end of the quarter $ 29,026 |
Warrant Liabilities | Warrant Liabilities We account for warrants assumed in connection with the Transaction (see Note 4) in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Condensed Consolidated Statements of Operations. The Company remeasures the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants. The Westrock Private Warrants (as defined in Note 4) are valued using a binomial lattice valuation model. For the three and six months ended June 30, 2023, the Company recognized $11.8 million and $6.3 million of losses, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Condensed Consolidated Statements of Operations. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases, using enacted income tax rates expected to apply when the deferred tax assets and liabilities are expected to be realized or settled. The Company’s foreign subsidiaries file income tax returns and are subject to tax provisions in their respective foreign tax jurisdictions. A valuation allowance is established to reduce deferred income tax assets if, on the basis of available evidence, it is more likely than not that all or a portion of any deferred tax assets will not be realized. The consideration of available evidence requires significant management judgment including an assessment of the future periods in which the deferred tax assets and liabilities are expected to be realized and projections of future taxable income. Specifically, in assessing the need for a valuation allowance, we consider the reversal of taxable temporary differences, future taxable income, the ability to carryback certain attributes and tax-planning strategies. The ultimate realization of the deferred tax assets, including net operating losses, is dependent upon the generation of future taxable income during the periods prior to their expiration. If our estimates and assumptions about future taxable income are not appropriate, the value of our deferred tax assets may not be recoverable, which may result in an increase to our valuation allowance that will impact current earnings. We re-evaluate our need for a valuation allowance on a quarterly basis. The effective income tax rates for the six months ended June 30, 2023 and 2022 were (6.4%) and 22.7%, respectively. The Company’s effective tax rate for the current period differs from the federal statutory rate primarily due to an increase in the valuation allowance against domestic deferred tax assets and permanent differences, including nondeductible expenses related to a change in the fair value of warrants. The effective tax rate for the six months ended June 30, 2023 differs from the effective tax rate for the same period in 2022 primarily due to the increase in the valuation allowance and permanent differences, including nondeductible expenses related to a change in the fair value of warrants and executive compensation. There were no changes to uncertain tax benefits during the six months ended June 30, 2023, and the Company does not expect any significant changes to uncertain tax benefits within the next twelve months. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements Update ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the FASB issued ASU 2022-04 “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”, which requires that a company that uses a supplier finance program in connection with the purchase of goods or services disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company adopted the applicable amendments within ASU 2022-04 on a retrospective basis effective January 1, 2023. The amendments to ASU 2022-04 do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. Update ASU 2021-08 – Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers In October 2021, the FASB issued ASU 2021-08, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, instead of at fair value on the acquisition date as previously required by ASC 805. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for acquired revenue contracts and revenue contracts not acquired in a business combination. ASU 2021-08 was effective for years beginning after December 15, 2022. The adoption of ASU 2021-08 did not have a significant impact on the Company’s financial position or results of operations |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of activity in allowance of credit losses | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Balance at beginning of period $ 2,516 $ 3,011 $ 3,023 $ 3,749 Charged to selling, general and administrative expense 156 25 653 922 Write-offs — (644) (1,004) (2,279) Total $ 2,672 $ 2,392 $ 2,672 $ 2,392 |
Schedule of contractual obligation | (Thousands) June 30, 2023 Confirmed obligations outstanding at the beginning of the year $ — Invoices confirmed during the year 29,026 Confirmed invoices paid during the year — Confirmed obligations outstanding at the end of the quarter $ 29,026 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue | |
Schedule of disaggregation of revenues by product type and geographic area | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Coffee & tea $ 144,604 $ 140,614 $ 291,753 $ 262,296 Flavors, extracts & ingredients 44,396 29,397 77,682 55,063 Other 719 854 1,493 1,867 Green coffee 34,975 52,548 59,208 90,615 Net sales $ 224,694 $ 223,413 $ 430,136 $ 409,841 Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 United States $ 193,106 $ 181,526 $ 378,667 $ 334,541 All other countries 31,588 41,887 51,469 75,300 Net sales $ 224,694 $ 223,413 $ 430,136 $ 409,841 |
Acquisitions (Tables)
Acquisitions (Tables) - Kohana Coffee, LLC | 6 Months Ended |
Jun. 30, 2023 | |
Business Acquisition [Line Items] | |
Summary of total consideration | (Thousands) Cash consideration $ 15,682 Fair value of stock consideration 23,435 Total Consideration $ 39,117 |
Summary the purchase price allocation of the assets acquired, and liabilities assumed | (Thousands) Acquired Value Cash and cash equivalents $ 797 Accounts receivable 881 Inventory 2,306 Property, plant and equipment 8,387 Goodwill 17,275 Intangible assets 11,718 Accounts payable and accrued liabilities (2,247) Total $ 39,117 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventories | |
Schedule of inventories | (Thousands) June 30, 2023 December 31, 2022 Raw materials $ 70,315 $ 66,925 Finished goods 32,756 21,232 Green coffee 51,611 57,679 Total inventories $ 154,682 $ 145,836 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment, Net | |
Schedule of Property, Plant and Equipment, Net | (Thousands) Depreciable Lives June 30, 2023 December 31, 2022 Land $ 8,907 $ 9,052 Buildings (4) 10-40 years 35,370 35,499 Leasehold improvements (1) 9,071 1,651 Plant equipment (4) 3-15 years 110,599 107,215 Vehicles and transportation equipment 3-5 years 687 700 IT systems 3-7 years 6,834 3,053 Furniture and fixtures (4) 3-10 years 3,092 3,068 Customer beverage equipment (2) 3-5 years 22,674 21,930 Lease right-of-use assets (3) 36 36 Construction in progress and equipment deposits (4) 116,763 70,004 314,033 252,208 Less: accumulated depreciation (73,684) (67,002) Property, plant and equipment, net $ 240,349 $ 185,206 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. 4 - We identified a $10.1 million classification error in the disclosure of buildings, plant equipment, furniture and fixtures, and construction in progress and equipment deposits for the year ended December 31, 2022 . Amounts presented above reflect the corrected amounts. |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill | |
Schedule of changes in carrying amount of goodwill | Beverage (Thousands) Solutions Total Balance at December 31, 2022 Goodwill $ 190,882 $ 190,882 Accumulated impairment loss (76,883) (76,883) 113,999 113,999 Changes during the period: Acquisitions 2,025 2,025 Measurement period adjustments 329 329 Balance at June 30, 2023 Goodwill 193,236 193,236 Accumulated impairment loss (76,883) (76,883) $ 116,353 $ 116,353 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Intangible Assets, Net | |
Schedule of intangible assets | June 30, 2023 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 148,648 $ (22,634) $ 126,014 Favorable lease asset 790 (281) 509 Software 1,006 (507) 499 Intangible assets, net $ 150,444 $ (23,422) $ 127,022 December 31, 2022 Accumulated (Thousands) Cost Amortization Net Customer relationships $ 148,648 $ (18,778) $ 129,870 Favorable lease asset 710 (140) 570 Software 919 (473) 446 Intangible assets, net $ 150,277 $ (19,391) $ 130,886 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
Summary of amount of right-of-use lease assets and lease liabilities | (Thousands) Balance Sheet Location June 30, 2023 December 31, 2022 Right-of-use operating lease assets Operating lease right-of-use assets $ 15,172 $ 11,090 Operating lease liabilities - current Accrued expenses and other current liabilities 3,199 2,832 Operating lease liabilities - noncurrent Other long-term liabilities 12,468 8,424 |
Schedule of components of lease costs | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Operating lease cost $ 1,209 $ 842 $ 2,430 $ 1,771 Short-term lease cost 239 224 479 478 Total $ 1,448 $ 1,066 $ 2,909 $ 2,249 June 30, 2023 June 30, 2022 Weighted-average discount rate 8.0% 8.5% Weighted-average remaining lease term 5.2 years 5.2 years Six Months Ended June 30, (Thousands) 2023 2022 Operating cash flows from operating leases $ 2,141 $ 806 |
Schedule of future minimum lease payments under non-cancellable operating leases | (Thousands) Remainder of 2023 $ 2,115 2024 4,382 2025 3,277 2026 2,609 2027 2,589 Thereafter 4,239 Total future minimum lease payments 19,211 Less: imputed interest (3,544) Present value of minimum lease payments $ 15,667 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt | |
Summary of long-term debt | (Thousands) June 30, 2023 December 31, 2022 Term loan facility $ 168,438 $ 175,000 Revolving credit facility 80,000 — International trade finance lines 46,190 42,905 International notes payable 1,356 1,750 Other loans 19 25 Total debt 296,003 219,680 Unamortized debt costs (2,751) (2,769) Current maturities of long-term debt (9,293) (11,504) Short-term debt (46,190) (42,905) Long-term debt, net $ 237,769 $ 162,502 |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivatives | |
Schedule of fair value of derivative assets and liabilities | (Thousands) Balance Sheet Location June 30, 2023 December 31, 2022 Derivative assets not designated as cash flow hedging instruments: Forward purchase and sales contracts Derivative assets $ 18,357 $ 15,053 Total derivative assets $ 18,357 $ 15,053 Derivative liabilities designated as cash flow hedging instruments: Coffee futures contracts (1) Derivative liabilities $ 1,298 $ 3,334 Total $ 1,298 $ 3,334 Derivative liabilities not designated as cash flow hedging instruments: Forward purchase and sales contracts Derivative liabilities $ 5,984 $ 4,258 Total derivative liabilities $ 7,282 $ 7,592 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 2023 2022 2023 2022 Derivative assets designated as cash flow hedging instruments: Net realized gains (losses) on coffee derivatives Costs of sales $ (1,366) $ 2,701 $ (2,087) $ 6,831 Derivative assets and liabilities not designated as cash flow hedging instruments: Net unrealized gains (losses) on forward sales and purchase contracts Costs of sales $ 2,098 $ 291 $ 1,070 $ 7,237 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurements | |
Summary of the fair value of financial instruments | June 30, 2023 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 35,082 $ — $ 35,082 Forward purchase and sales contracts — 18,357 — 18,357 Total $ — $ 53,439 $ — $ 53,439 Liabilities: Coffee futures contracts $ 1,298 $ — $ — $ 1,298 Forward purchase and sales contracts — 5,984 — 5,984 Westrock Public Warrants 35,232 — — 35,232 Westrock Private Warrants — — 26,048 26,048 Total $ 36,530 $ 5,984 $ 26,048 $ 68,562 December 31, 2022 (Thousands) Level 1 Level 2 Level 3 Total Assets: Green coffee associated with forward contracts $ — $ 39,928 $ — $ 39,928 Forward purchase and sales contracts — 15,053 — 15,053 Total $ — $ 54,981 $ — $ 54,981 Liabilities: Coffee futures contracts $ 3,334 $ — $ — $ 3,334 Forward purchase and sales contracts — 4,258 — 4,258 Westrock Public Warrants 27,179 — — 27,179 Westrock Private Warrants — — 28,342 28,342 Total $ 30,513 $ 4,258 $ 28,342 $ 63,113 |
Schedule of change in fair value | (Thousands) Westrock Private Warrants Fair value as of December 31, 2022 $ 28,342 Change in fair value (2,294) Fair value as of June 30, 2023 $ 26,048 |
Schedule of unobservable inputs | June 30, 2023 December 31, 2022 Stock price $ 10.87 $ 13.36 Exercise price $ 11.50 $ 11.50 Expected term (years) 5.00 5.00 Expected volatility 35.10% 7.74% Risk-free rate of return 4.24% 3.99% Dividend yield 0.00% 0.00% |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Schedule of changes in accumulated other comprehensive (loss) income, net of tax | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Cash flow hedge changes in fair value gain (loss): Balance at beginning of period $ (4,115) $ 6,899 $ (6,355) $ 11,759 Other comprehensive income (loss) before reclassifications (1,208) (531) 1,146 (2,800) Amounts reclassified from accumulated comprehensive income 1,366 (2,701) 2,087 (6,831) Tax effect (875) 807 (1,710) 2,346 Net other comprehensive income (4,832) 4,474 (4,832) 4,474 Less: Other comprehensive income attributable to non-controlling interests — — — — Balance at end of period (4,832) 4,474 (4,832) 4,474 Foreign currency translation gain Balance at beginning of period 234 259 252 259 Other comprehensive income (loss) before reclassifications 59 (9) 41 (9) Amounts reclassified from accumulated comprehensive income — — — — Tax effect — — — — Net other comprehensive income 293 250 293 250 Less: Other comprehensive income attributable to non-controlling interests — — — — Balance at end of period 293 250 293 250 Accumulated other comprehensive income (loss) at end of period $ (4,539) $ 4,724 $ (4,539) $ 4,724 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity-Based Compensation | |
Schedule of number of unvested restricted stock awards | Average Fair Units Market Value Outstanding at December 31, 2022 1,127,000 $ 11.49 Granted 1,169,243 11.91 Forfeited (42,515) 11.61 Vested — — Outstanding at June 30, 2023 2,253,728 $ 11.71 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings per Share | |
Schedule of potentially dilutive securities that were excluded from the computation of dilutive shares | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Warrants 19,144 — 19,155 — Restricted stock 2,242 475 1,788 475 Options 1,476 1,722 1,505 1,722 If-converted securities 23,566 25,092 23,575 25,092 |
Schedule of basic and diluted earning per share | Three Months Ended June 30, Six Months Ended June 30, (Thousands, except per share data) 2023 2022 2023 2022 Basic Earnings per Common Share Numerator: Net loss attributable to common shareholders $ (26,724) $ (12,858) $ (31,493) $ (24,471) Denominator: Weighted-average common shares outstanding - basic 75,726 34,855 75,543 34,749 Basic loss per common share $ (0.35) $ (0.37) $ (0.42) $ (0.70) Diluted Earnings per Common Share Numerator: Net loss attributable to common shareholders - basic $ (26,724) $ (12,858) $ (31,493) $ (24,471) Effect of non-participating securities — — — — Net loss attributable to common shareholders - diluted $ (26,724) $ (12,858) $ (31,493) $ (24,471) Denominator: Weighted-average common shares outstanding - basic 75,726 34,855 75,543 34,749 Impact of if-converted securities — — — — Effect of other dilutive securities — — — — Weighted-average common shares outstanding - diluted 75,726 34,855 75,543 34,749 Dilutive loss per common share $ (0.35) $ (0.37) $ (0.42) $ (0.70) |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Information | |
Summary of selected financial data related to our segments | Three Months Ended June 30, 2023 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 189,719 $ 36,048 $ (1,073) $ 224,694 Adjusted EBITDA 11,660 (350) n/a 11,310 Less: Interest expense 7,385 Income tax expense 6,240 Depreciation and amortization 6,181 Acquisition, restructuring and integration expense 2,901 Change in fair value of warrant liabilities 11,800 Equity-based compensation 2,310 Conway extract and ready-to-drink facility start-up costs 1,711 Mark-to-market adjustments (969) Other 562 Net loss $ (26,811) Total assets 727,471 94,837 n/a 822,308 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 (S&D Coffee, Inc. acquisition) 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 Six Months Ended June 30, 2023 Sustainable Total of Beverage Sourcing & Intersegment Reportable (Thousands) Solutions Traceability Revenues Segments Net sales $ 370,928 $ 61,439 $ (2,231) $ 430,136 Adjusted EBITDA 20,081 (318) n/a 19,763 Less: Interest expense 13,414 Income tax expense 1,881 Depreciation and amortization 12,055 Acquisition, restructuring and integration expense 9,545 Change in fair value of warrant liabilities 6,272 Management and consulting fees (S&D Coffee, Inc. acquisition) 556 Equity-based compensation 3,857 Conway extract and ready-to-drink facility start-up costs 3,580 Mark-to-market adjustments (2,205) Loss on disposal of property, plant and equipment 896 Other 1,049 Net loss $ (31,137) Total assets 727,471 94,837 n/a 822,308 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 16,861 Income tax benefit (3,083) Depreciation and amortization 11,966 Acquisition, restructuring and integration expense 4,787 Management and consulting fees (S&D Coffee, Inc. acquisition) 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 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions | |
Schedule of transactions with related parties | Three Months Ended June 30, Six Months Ended June 30, (Thousands) 2023 2022 2023 2022 Interest expense, net: Brown Brothers Harriman — — — 541 Wooster Capital, LLC — 149 — 296 Jo Ellen Ford — 53 — 106 Total $ — $ 202 $ — $ 943 |
Organization and Description _2
Organization and Description of Business (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
Organization and Description of Business | |
Number of operating segments | 2 |
Basis of Presentation and Con_2
Basis of Presentation and Consolidation (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 03, 2023 | Aug. 26, 2022 |
Investment in Falcon | ||
Class of Stock [Line Items] | ||
Percentage of ownership | 15% | |
Aggregate consideration paid in cash | $ 3.2 | |
Cash paid | $ 2 | |
Aggregate consideration paid in shares | 100,000 | |
Riverview | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 1 | |
Riverview | Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 0.1049203474320 | |
Common stock par value ( in dollars per share) | $ 0.01 | |
Series A Redeemable Common Equivalent Preferred Units | Riverview | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 0.1086138208640 | |
Series B Redeemable Common Equivalent Preferred Units | Riverview | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 0.1049203474320 | |
Series A Redeemable Common Equivalent Preferred Shares | Riverview | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 0.1086138208740 | |
Series B Redeemable Common Equivalent Preferred Shares | Riverview | ||
Class of Stock [Line Items] | ||
Number of shares issued for each unit | 0.0919280171940 |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Allowance for credit loss roll forward | ||||
Balance at beginning of period | $ 2,516 | $ 3,011 | $ 3,023 | $ 3,749 |
Charged to selling, general and administrative expense | 156 | 25 | 653 | 922 |
Write-offs | (644) | (1,004) | (2,279) | |
Total | $ 2,672 | $ 2,392 | $ 2,672 | $ 2,392 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Other (Details) shares in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Mar. 02, 2023 item | Aug. 31, 2023 USD ($) shares | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Summary of Significant Accounting Policies | |||||||
Unrealized gain (loss) on derivative instruments | $ (717,000) | $ (2,425,000) | $ 1,523,000 | $ (7,285,000) | |||
Credit period under the supplier finance program | 180 days | ||||||
Number of approved suppliers | item | 1 | ||||||
Contractual Obligation | 29,026,000 | 29,026,000 | $ 0 | ||||
Gains/Losses related to changes in fair value of warrant liabilities | 11,800,000 | 6,272,000 | |||||
Subsequent Event | |||||||
Summary of Significant Accounting Policies | |||||||
Number of shares issued | shares | 11.9 | ||||||
Aggregate gross proceeds | $ 118,800,000 | ||||||
Green coffee associated with forward contracts | |||||||
Summary of Significant Accounting Policies | |||||||
Unrealized gain (loss) on derivative instruments | $ (1,100,000) | $ (1,700,000) | $ 1,100,000 | $ (7,500,000) |
Disclosure - Summary of Signifi
Disclosure - Summary of Significant Accounting Policies - Obligations Outstanding (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Summary of Significant Accounting Policies | |
Confirmed obligations outstanding at the beginning of the year | $ 0 |
Invoices confirmed during the year | 29,026,000 |
Confirmed obligations outstanding at the end of the quarter | $ 29,026,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Summary of Significant Accounting Policies | ||
Effective tax rate (as percentage) | (6.40%) | 22.70% |
De-SPAC Merger Transaction - Ot
De-SPAC Merger Transaction - Other Information (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | |||
Aug. 26, 2022 USD ($) $ / shares shares | Aug. 25, 2022 class $ / shares | Jun. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | |
De-SPAC Merger Transaction | ||||
Preferred dividends paid | $ | $ 4,400 | |||
Goodwill | $ | 0 | $ 116,353 | $ 113,999 | |
Intangible assets | $ | 0 | $ 127,022 | $ 130,886 | |
Transaction cost incurred capitalized | $ | 24,000 | |||
Transaction costs related to the issuance of shares | $ | 24,000 | |||
Common Stock | ||||
De-SPAC Merger Transaction | ||||
Issuance of common shares related to stock options exercised (in shares) | 6,000 | |||
Term Loan facility | ||||
De-SPAC Merger Transaction | ||||
Proceeds from line of credit | $ | 175,000 | |||
Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued, value | $ | $ 49,800 | |||
Number of shares issued | 12,868,151 | |||
Number of classes of equity | class | 2 | |||
Number of shares issued for each unit | 1 | |||
Transaction cost incurred capitalized | $ | $ 17,100 | |||
Transaction cost incurred expenses | $ | $ 17,100 | |||
Riverview | Common Stock | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued | 34,855,535 | |||
Number of shares issued for each unit | 0.1049203474320 | |||
Common stock par value ( in dollars per share) | $ / shares | $ 0.01 | |||
Issuance of common shares related to stock options exercised (in shares) | 2,220,305 | |||
Riverview | Common Stock PIPE Commitments | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued | 1,910,000 | |||
Series A Redeemable Common Equivalent Preferred Units | Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued for each unit | 0.1086138208640 | |||
Series B Redeemable Common Equivalent Preferred Units | Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued for each unit | 0.1049203474320 | |||
Series Convertible Preferred Shares | ||||
De-SPAC Merger Transaction | ||||
Liquidation preference per share | $ / shares | $ 11.50 | |||
CEP Units | Riverview | ||||
De-SPAC Merger Transaction | ||||
Liquidation preference per share | $ / shares | $ 1 | |||
Percent of increase in liquidation preference per share | 10% | |||
Series A Redeemable Common Equivalent Preferred Shares | Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued for each unit | 0.1086138208740 | |||
Number of new stock classified as temporary equity issued | 23,587,952 | |||
Series B Redeemable Common Equivalent Preferred Shares | Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued for each unit | 0.0919280171940 | |||
Class A share | Riverview | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued for each unit | 1 | |||
New Company | Riverview | Common Stock PIPE Commitments | ||||
De-SPAC Merger Transaction | ||||
Number of shares issued | 20,590,000 | |||
Amount received | $ | $ 205,900 | |||
New Company | Riverview | Wells Fargo | Revolving loan commitment | ||||
De-SPAC Merger Transaction | ||||
Face amount | $ | $ 175,000 |
De-SPAC Merger Transaction - Co
De-SPAC Merger Transaction - Common Stock Warrants (Details) | Aug. 26, 2022 D $ / shares shares |
Common Stock Warrants | |
Warrant to purchase each share | shares | 1 |
Warrant exercise price (in dollars per share) | $ / shares | $ 11.50 |
Westrock Public Warrants | |
Common Stock Warrants | |
Warrants | shares | 12,500,000 |
Warrant expiry term | 5 years |
Redemption price | $ / shares | $ 0.01 |
Number of trading days | D | 20 |
Number of trading days before warrant redemption notice | D | 30 |
Number of business days | D | 3 |
Share price (in dollars per share) | $ / shares | $ 18 |
Westrock Public Warrants | Minimum | |
Common Stock Warrants | |
Term of redemption notice to share holders | 30 days |
Westrock Private Warrants | |
Common Stock Warrants | |
Warrants | shares | 7,400,000 |
Warrant exercisable term | 30 days |
Revenue - Revenue from Forward
Revenue - Revenue from Forward Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivatives | ||||
Net unrealized gains (losses) | $ (717) | $ (2,425) | $ 1,523 | $ (7,285) |
Forward sales contracts | ||||
Derivatives | ||||
Net unrealized gains (losses) | 2,100 | 300 | 1,100 | 7,200 |
Revenue | $ 34,700 | $ 52,400 | $ 59,100 | $ 90,500 |
Revenue - Contract Estimates (D
Revenue - Contract Estimates (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue | ||
Accrued sales incentives | $ 1.4 | $ 1.3 |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue | ||
Capitalized contract costs | $ 0 | $ 0 |
Accounts receivable | ||
Revenue | ||
Receivables from contracts with customers | $ 103.5 | $ 104.7 |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue | ||||
Revenues | $ 224,694 | $ 223,413 | $ 430,136 | $ 409,841 |
Purchase obligations | 193,300 | 193,300 | ||
Sustainable, Sourcing and Traceability | ||||
Revenue | ||||
Purchase obligations | 9,400 | 9,400 | ||
United States | ||||
Revenue | ||||
Revenues | 193,106 | 181,526 | 378,667 | 334,541 |
All other countries | ||||
Revenue | ||||
Revenues | 31,588 | 41,887 | 51,469 | 75,300 |
Coffee & tea | ||||
Revenue | ||||
Revenues | 144,604 | 140,614 | 291,753 | 262,296 |
Flavors, extracts & ingredients | ||||
Revenue | ||||
Revenues | 44,396 | 29,397 | 77,682 | 55,063 |
Other | ||||
Revenue | ||||
Revenues | 719 | 854 | 1,493 | 1,867 |
Green coffee | ||||
Revenue | ||||
Revenues | $ 34,975 | $ 52,548 | $ 59,208 | $ 90,615 |
Acquisitions - Other (Details)
Acquisitions - Other (Details) - USD ($) $ in Thousands | Feb. 28, 2023 | Nov. 14, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | Aug. 26, 2022 |
Business Acquisition | |||||
Goodwill | $ 116,353 | $ 113,999 | $ 0 | ||
Bixby Roasting Co. | |||||
Business Acquisition | |||||
Shares of common stock issued by Company | 39,778 | ||||
Net assets acquired | $ 700 | ||||
Cash consideration | 2,600 | ||||
Cash consideration | $ 2,200 | ||||
Goodwill | 2,000 | ||||
Kohana Coffee, LLC | |||||
Business Acquisition | |||||
Business acquisition ownership, percentage | 100% | ||||
Shares of common stock issued by Company | 1,852,608 | ||||
Cash consideration | $ 39,117 | ||||
Cash consideration | 15,682 | ||||
Goodwill | $ 17,275 | $ 300 |
Acquisitions - Total considerat
Acquisitions - Total consideration (Details) - Kohana Coffee, LLC $ in Thousands | Nov. 14, 2022 USD ($) |
Business Acquisition | |
Cash consideration | $ 15,682 |
Fair Value of stock consideration | 23,435 |
Total Consideration | $ 39,117 |
Acquisitions - Purchase price a
Acquisitions - Purchase price allocation of the assets acquired, and liabilities assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Nov. 14, 2022 | Aug. 26, 2022 |
Business Acquisition | ||||
Goodwill | $ 116,353 | $ 113,999 | $ 0 | |
Kohana Coffee, LLC | ||||
Business Acquisition | ||||
Cash and cash equivalents | $ 797 | |||
Accounts receivable | 881 | |||
Inventory | 2,306 | |||
Property, plant and equipment | 8,387 | |||
Goodwill | $ 300 | 17,275 | ||
Intangible assets | 11,718 | |||
Accounts payable and accrued liabilities | (2,247) | |||
Total | $ 39,117 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Inventories | ||
Raw materials | $ 70,315 | $ 66,925 |
Finished goods | 32,756 | 21,232 |
Green coffee | 51,611 | 57,679 |
Total inventories | $ 154,682 | $ 145,836 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | $ 314,033 | $ 314,033 | $ 252,208 | ||
Less: accumulated depreciation | (73,684) | (73,684) | (67,002) | ||
Property, plant and equipment, net | 240,349 | 240,349 | 185,206 | ||
Depreciation expense | 4,100 | $ 4,300 | 8,000 | $ 8,500 | |
Property, plant and equipment reclassification for error | 10,100 | ||||
Land | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 8,907 | 8,907 | 9,052 | ||
Building | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 35,370 | 35,370 | 35,499 | ||
Leasehold improvements | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 9,071 | 9,071 | 1,651 | ||
Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 110,599 | 110,599 | 107,215 | ||
Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 687 | 687 | 700 | ||
IT systems | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 6,834 | 6,834 | 3,053 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 3,092 | 3,092 | 3,068 | ||
Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 22,674 | 22,674 | 21,930 | ||
Lease right-of-use assets | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | 36 | 36 | 36 | ||
Construction in progress and equipment deposits | |||||
Property, Plant and Equipment, Net | |||||
Property, plant and equipment, gross | $ 116,763 | $ 116,763 | $ 70,004 | ||
Minimum | Building | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 10 years | 10 years | |||
Minimum | Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | 3 years | |||
Minimum | Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | 3 years | |||
Minimum | IT systems | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | 3 years | |||
Minimum | Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | 3 years | |||
Minimum | Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 3 years | 3 years | |||
Maximum | Building | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 40 years | 40 years | |||
Maximum | Plant equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 15 years | 15 years | |||
Maximum | Vehicles and transportation equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 5 years | 5 years | |||
Maximum | IT systems | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 7 years | 7 years | |||
Maximum | Furniture and fixtures | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 10 years | 10 years | |||
Maximum | Customer beverage equipment | |||||
Property, Plant and Equipment, Net | |||||
Useful life | 5 years | 5 years |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 | Dec. 31, 2022 | Aug. 26, 2022 | |
Changes in goodwill | |||
Goodwill, Beginning balance | $ 113,999 | ||
Acquisitions | 2,025 | ||
Measurement period adjustments | 329 | ||
Goodwill, Ending balance | 116,353 | ||
Goodwill, Impaired and Accumulated Impairment Loss | |||
Gross goodwill | 193,236 | $ 190,882 | |
Accumulated impairment loss | (76,883) | (76,883) | |
Goodwill | 116,353 | 113,999 | $ 0 |
Beverage Solutions | |||
Changes in goodwill | |||
Goodwill, Beginning balance | 113,999 | ||
Acquisitions | 2,025 | ||
Measurement period adjustments | 329 | ||
Goodwill, Ending balance | 116,353 | ||
Goodwill, Impaired and Accumulated Impairment Loss | |||
Gross goodwill | 193,236 | 190,882 | |
Accumulated impairment loss | (76,883) | (76,883) | |
Goodwill | $ 116,353 | $ 113,999 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Intangible Assets, Net | |||||
Cost | $ 150,444 | $ 150,444 | $ 150,277 | ||
Accumulated Amortization | (23,422) | (23,422) | (19,391) | ||
Net | 127,022 | 127,022 | 130,886 | ||
Amortization expenses | $ 2,000 | $ 1,700 | $ 4,000 | $ 3,400 | |
Useful life | 20 years | 20 years | |||
Customer relationships | |||||
Intangible Assets, Net | |||||
Cost | $ 148,648 | $ 148,648 | 148,648 | ||
Accumulated Amortization | (22,634) | (22,634) | (18,778) | ||
Net | 126,014 | 126,014 | 129,870 | ||
Favorable lease assets | |||||
Intangible Assets, Net | |||||
Cost | 790 | 790 | 710 | ||
Accumulated Amortization | (281) | (281) | (140) | ||
Net | 509 | 509 | 570 | ||
Software | |||||
Intangible Assets, Net | |||||
Cost | 1,006 | 1,006 | 919 | ||
Accumulated Amortization | (507) | (507) | (473) | ||
Net | $ 499 | $ 499 | $ 446 |
Leases - Other (Details)
Leases - Other (Details) | Jun. 30, 2023 |
Leases | |
Termination term (in years) | 1 year |
Minimum | |
Leases | |
Remaining non-cancelable lease term (in years) | 1 year |
Maximum | |
Leases | |
Remaining non-cancelable lease term (in years) | 7 years |
Leases - Schedule of amount of
Leases - Schedule of amount of right-of-use lease assets and lease liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Right-of-use lease assets and lease liabilities | ||
Right-of-use operating lease assets | $ 15,172 | $ 11,090 |
Operating lease liabilities - current | $ 3,199 | $ 2,832 |
Operating lease liabilities - current, Balance sheet location | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Operating lease liabilities - noncurrent | $ 12,468 | $ 8,424 |
Operating lease liabilities - noncurrent, Balance sheet location | Other long-term liabilities | 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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Lease Cost | ||||
Operating lease cost | $ 1,209 | $ 842 | $ 2,430 | $ 1,771 |
Short-term lease cost | 239 | 224 | 479 | 478 |
Total | $ 1,448 | $ 1,066 | $ 2,909 | $ 2,249 |
Leases - Schedule of weighted a
Leases - Schedule of weighted average discount rate and remaining lease term (Details) | Jun. 30, 2023 | Jun. 30, 2022 |
Leases | ||
Weighted-average discount rate | 8% | 8.50% |
Weighted-average remaining lease term | 5 years 2 months 12 days | 5 years 2 months 12 days |
Leases - Schedule of supplement
Leases - Schedule of supplemental cashflow information (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 USD ($) lease | Jun. 30, 2022 USD ($) | |
Leases | ||
Operating cash flows from operating leases | $ 2,141 | $ 806 |
Right-of-use operating lease assets in exchange for lease obligations | $ 6,000 | |
Number of material finance lease | lease | 0 |
Leases - Schedule of future min
Leases - Schedule of future minimum lease payments under non-cancellable operating leases (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Leases | |
Remainder of 2023 | $ 2,115 |
2024 | 4,382 |
2025 | 3,277 |
2026 | 2,609 |
2027 | 2,589 |
Thereafter | 4,239 |
Total future minimum lease payments | 19,211 |
Less: imputed interest | (3,544) |
Present value of minimum lease payments | $ 15,667 |
Debt - Other (Details)
Debt - Other (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt | ||
Total debt | $ 296,003 | $ 219,680 |
Unamortized debt costs | (2,751) | (2,769) |
Current maturities of long-term debt | (9,293) | (11,504) |
Short-term debt | (46,190) | (42,905) |
Long-term debt, net | 237,769 | 162,502 |
Term loan | ||
Debt | ||
Total debt | 168,438 | 175,000 |
Revolving credit facility | ||
Debt | ||
Total debt | 80,000 | |
International trade finance lines | ||
Debt | ||
Total debt | 46,190 | 42,905 |
International notes payable | ||
Debt | ||
Total debt | 1,356 | 1,750 |
Other loans | ||
Debt | ||
Total debt | $ 19 | $ 25 |
Debt - Additional Information (
Debt - Additional Information (Details) shares in Thousands, $ in Thousands | 6 Months Ended | ||||||||
Mar. 21, 2023 USD ($) | Aug. 29, 2022 USD ($) | Jun. 30, 2023 USD ($) item shares | Mar. 31, 2025 | Dec. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Feb. 14, 2023 USD ($) | Dec. 31, 2022 USD ($) shares | |
Debt | |||||||||
Debt finance costs | $ 6,600 | ||||||||
Variable rate (as a percent) | 0.10% | ||||||||
Short-term debt | $ 46,190 | $ 42,905 | |||||||
Common stock shares issued (in shares) | shares | 75,728 | 75,020 | |||||||
Number of financial covenants | item | 2 | ||||||||
Net Leverage Ratio | 5 | 4.50 | 5 | 5.50 | 5.25 | ||||
Minimum | |||||||||
Debt | |||||||||
Interest coverage ratio | 2 | ||||||||
Maximum | |||||||||
Debt | |||||||||
Net Leverage Ratio | 3.75 | ||||||||
Base rate | One Month Interest Period [Member] | |||||||||
Debt | |||||||||
Interest rate (as a percent) | 1% | ||||||||
Interest period | 1 month | ||||||||
SOFR | Minimum | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 2.50% | ||||||||
SOFR | Maximum | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 3.75% | ||||||||
ABR | Minimum | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 1.50% | ||||||||
ABR | Maximum | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 2.75% | ||||||||
SOFR | One Month Interest Period [Member] | |||||||||
Debt | |||||||||
Interest period | 1 month | ||||||||
SOFR | Three Month Interest Period [Member] | |||||||||
Debt | |||||||||
Interest period | 3 months | ||||||||
Variable rate (as a percent) | 0.15% | ||||||||
SOFR | Six Month Interest Period [Member] | |||||||||
Debt | |||||||||
Interest period | 6 months | ||||||||
Variable rate (as a percent) | 0.25% | ||||||||
NYFRB | |||||||||
Debt | |||||||||
Interest rate (as a percent) | 0.50% | ||||||||
New short-term trade finance facility | |||||||||
Debt | |||||||||
Face amount | $ 70,000 | ||||||||
Variable rate (as a percent) | 4% | ||||||||
Line of credit | $ 32,800 | ||||||||
Debt term | 1 year | ||||||||
New short-term trade finance facility | SOFR one-month | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 1% | ||||||||
New short-term trade finance facility | Federal Funds Rate | |||||||||
Debt | |||||||||
Variable rate (as a percent) | 0.50% | ||||||||
Revolving credit facility | |||||||||
Debt | |||||||||
Debt finance costs | $ 3,300 | ||||||||
Face amount | $ 175,000 | ||||||||
Line of credit | $ 80,000 | ||||||||
Weighted average effective rate (as a percent) | 7.30% | ||||||||
Revolving credit facility | Minimum | |||||||||
Debt | |||||||||
Line of credit, Commitment fee percentage (as a percent) | 0.20% | ||||||||
Revolving credit facility | Maximum | |||||||||
Debt | |||||||||
Line of credit, Commitment fee percentage (as a percent) | 0.35% | ||||||||
Term Loan facility | |||||||||
Debt | |||||||||
Debt finance costs | $ 3,300 | ||||||||
Face amount | $ 175,000 | ||||||||
Variable rate (as a percent) | 7.40% | ||||||||
Percentage of original principal amount | 1.25% | ||||||||
Line of credit, periodic payment term | 3 years | ||||||||
Periodic payment principal amount | $ 2,200 | ||||||||
Term Loan facility | Year four | |||||||||
Debt | |||||||||
Percentage of original principal amount | 1.875% | ||||||||
Periodic payment principal amount | $ 3,300 | ||||||||
Term Loan facility | Year five | |||||||||
Debt | |||||||||
Percentage of original principal amount | 2.50% | ||||||||
Periodic payment principal amount | $ 4,400 | ||||||||
Standby letter of credit | |||||||||
Debt | |||||||||
Letters of credit outstanding | $ 2,600 | ||||||||
Delayed Draw Term Loan Facility | |||||||||
Debt | |||||||||
Face amount | $ 50,000 | ||||||||
Proceeds from line of credit | 0 | ||||||||
International Debt and Lending Facilities | Westrock Coffee Company, LLC. | Mortgage backed securities | |||||||||
Debt | |||||||||
Long term note | $ 1,400 | ||||||||
International Debt and Lending Facilities | Rwanda Trading Company | Mortgage backed securities | |||||||||
Debt | |||||||||
Number of tranches | item | 3 | ||||||||
International Debt and Lending Facilities Loan #1 | Rwanda Trading Company | Mortgage backed securities | |||||||||
Debt | |||||||||
Long term note | $ 2,500 | ||||||||
International Debt and Lending Facilities Loan #2 | Rwanda Trading Company | Mortgage backed securities | |||||||||
Debt | |||||||||
Long term note | 1,200 | ||||||||
International Debt and Lending Facilities Loan #3 | Rwanda Trading Company | Mortgage backed securities | |||||||||
Debt | |||||||||
Long term note | 900 | ||||||||
Working Capital Trade Finance Facility | Westrock Coffee Company, LLC. | Mortgage backed securities | |||||||||
Debt | |||||||||
Short-term debt | $ 8,800 | ||||||||
Number of mortgage-backed lending facilities | item | 2 |
Series A Preferred Shares (Deta
Series A Preferred Shares (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) D $ / shares shares | Jun. 30, 2023 USD ($) D $ / shares shares | |
Temporary Equity [Line Items] | ||
Conversion price | $ 11.50 | $ 11.50 |
Term of anniversary | 5 years 6 months | |
Number of shares converted | $ | 1 | 1 |
Threshold number of days | D | 10 | 10 |
Redemption price per share | $ 18.50 | $ 18.50 |
Series A Preferred Shares | ||
Temporary Equity [Line Items] | ||
Shares issued | shares | 23,587,952 | 23,587,952 |
Liquidation preference per share | $ 11.50 | $ 11.50 |
Conversion price | $ 11.50 | $ 11.50 |
Accretion value | $ | $ 100,000 | $ 300,000 |
Series A Preferred Shares | Minimum | ||
Temporary Equity [Line Items] | ||
Redemption price per share | $ 18.50 | $ 18.50 |
Derivatives - Other (Details)
Derivatives - Other (Details) lb in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 USD ($) lb | Jun. 30, 2022 USD ($) lb | Jun. 30, 2023 USD ($) lb | Jun. 30, 2022 USD ($) lb | Dec. 31, 2022 lb | |
Derivatives | |||||
Net gains reported in AOCI expected to be reclassified | $ | $ (3.1) | ||||
Cash flow hedging | |||||
Derivatives | |||||
Net gains reported in AOCI expected to be reclassified | $ | $ (1.4) | $ 2.7 | $ 2.1 | $ 6.8 | |
Coffee futures contracts | Cash flow hedging | |||||
Derivatives | |||||
Notional amount of derivative purchased | lb | 15.2 | 6.9 | 23.6 | 48.2 | |
Coffee futures contracts | Designated as hedges | Cash flow hedging | |||||
Derivatives | |||||
Derivative notional amount | lb | 10.8 | 29.2 |
Derivatives - Fair value of ass
Derivatives - Fair value of assets and liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Derivatives | ||
Fair value of derivative assets | $ 18,357 | $ 15,053 |
Fair value of derivative liabilities | 7,282 | 7,592 |
Designated as hedges | ||
Derivatives | ||
Fair value of derivative liabilities | 1,298 | 3,334 |
Designated as hedges | Coffee futures contracts | Derivative liabilities | ||
Derivatives | ||
Fair value of derivative liabilities | 1,298 | 3,334 |
Not designated as hedges | Forward purchase and sales contracts | Derivative assets | ||
Derivatives | ||
Fair value of derivative assets | 18,357 | 15,053 |
Not designated as hedges | Forward purchase and sales contracts | Derivative liabilities | ||
Derivatives | ||
Fair value of derivative liabilities | $ 5,984 | $ 4,258 |
Derivatives - Pre-tax net gains
Derivatives - Pre-tax net gains and losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivatives | ||||
Net unrealized gains (losses) | $ (717) | $ (2,425) | $ 1,523 | $ (7,285) |
Designated as hedges | Cash flow hedging | Coffee derivatives | Cost of sales | ||||
Derivatives | ||||
Net realized gains (losses) | (1,366) | 2,701 | (2,087) | 6,831 |
Not designated as hedges | Cash flow hedging | Forward sales and purchase contracts | Cost of sales | ||||
Derivatives | ||||
Net unrealized gains (losses) | $ 2,098 | $ 291 | $ 1,070 | $ 7,237 |
Fair Value Measurements - Other
Fair Value Measurements - Other Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 | Aug. 26, 2022 |
Fair Value Measurements | |||
Assets | $ 53,439 | $ 54,981 | |
Liabilities | 68,562 | 63,113 | |
Warrant exercise price (in dollars per share) | $ 11.50 | ||
Green coffee associated with forward contracts | |||
Fair Value Measurements | |||
Assets | 35,082 | 39,928 | |
Coffee futures contracts | |||
Fair Value Measurements | |||
Liabilities | 1,298 | 3,334 | |
Forward purchase and sales contracts | |||
Fair Value Measurements | |||
Assets | 18,357 | 15,053 | |
Liabilities | 5,984 | 4,258 | |
Westrock Public Warrants | |||
Fair Value Measurements | |||
Liabilities | $ 35,232 | $ 27,179 | |
Warrant exercise price (in dollars per share) | $ 3 | $ 2.27 | |
Westrock Private Warrants | |||
Fair Value Measurements | |||
Liabilities | $ 26,048 | $ 28,342 | |
Warrant exercise price (in dollars per share) | $ 3.52 | $ 3.83 | |
Level 1 | |||
Fair Value Measurements | |||
Liabilities | $ 36,530 | $ 30,513 | |
Level 1 | Coffee futures contracts | |||
Fair Value Measurements | |||
Liabilities | 1,298 | 3,334 | |
Level 1 | Westrock Public Warrants | |||
Fair Value Measurements | |||
Liabilities | 35,232 | 27,179 | |
Level 2 | |||
Fair Value Measurements | |||
Assets | 53,439 | 54,981 | |
Liabilities | 5,984 | 4,258 | |
Level 2 | Green coffee associated with forward contracts | |||
Fair Value Measurements | |||
Assets | 35,082 | 39,928 | |
Level 2 | Forward purchase and sales contracts | |||
Fair Value Measurements | |||
Assets | 18,357 | 15,053 | |
Liabilities | 5,984 | 4,258 | |
Level 3 | |||
Fair Value Measurements | |||
Liabilities | 26,048 | 28,342 | |
Level 3 | Westrock Private Warrants | |||
Fair Value Measurements | |||
Liabilities | $ 26,048 | $ 28,342 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in Fair Value (Details) - Level 3 - Westrock Private Warrants $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Fair Value Measurements | |
Fair value as of beginning | $ 28,342 |
Change in fair value | (2,294) |
Fair value as of ending | $ 26,048 |
Fair Value Measurements - Measu
Fair Value Measurements - Measurements (Details) | Jun. 30, 2023 Y $ / shares | Dec. 31, 2022 $ / shares Y |
Stock price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | 10.87 | 13.36 |
Exercise price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | 11.50 | 11.50 |
Expected term (years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | Y | 5 | 5 |
Expected volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | 0.3510 | 0.0774 |
Risk-free rate of return | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | 0.0424 | 0.0399 |
Dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement inputs | 0 | 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of changes in accumulated other comprehensive loss, net of tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |||
Accumulated Other Comprehensive (Loss) Income | ||||||
Balance at beginning of period | $ 12,810 | $ (192,606) | $ 11,729 | $ (175,998) | [1] | |
Net other comprehensive income (loss) | (658) | (2,434) | 1,564 | (7,294) | ||
Balance at end of period | (14,262) | (207,696) | [1] | (14,262) | (207,696) | [1] |
Cash flow hedge changes in fair value gain (loss) | ||||||
Accumulated Other Comprehensive (Loss) Income | ||||||
Balance at beginning of period | (4,115) | 6,899 | (6,355) | 11,759 | ||
Other comprehensive income (loss) before reclassifications | (1,208) | (531) | 1,146 | (2,800) | ||
Amounts reclassified from accumulated comprehensive income | 1,366 | (2,701) | 2,087 | (6,831) | ||
Tax effect | (875) | 807 | (1,710) | 2,346 | ||
Net other comprehensive income (loss) | (4,832) | 4,474 | (4,832) | 4,474 | ||
Balance at end of period | (4,832) | 4,474 | (4,832) | 4,474 | ||
Foreign currency translation gain (loss) | ||||||
Accumulated Other Comprehensive (Loss) Income | ||||||
Balance at beginning of period | 234 | 259 | 252 | 259 | ||
Other comprehensive income (loss) before reclassifications | 59 | (9) | 41 | (9) | ||
Net other comprehensive income (loss) | 293 | 250 | 293 | 250 | ||
Balance at end of period | 293 | 250 | 293 | 250 | ||
Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | ||||||
Accumulated Other Comprehensive (Loss) Income | ||||||
Balance at end of period | $ (4,539) | $ 4,724 | $ (4,539) | $ 4,724 | ||
[1] (1) Retroactively adjusted the three and six months ended June 30, 2022 for the de-SPAC merger transaction as described in Note 4 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - Restricted common units $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 USD ($) shares | Jun. 30, 2023 USD ($) shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award | ||
Units granted (in shares) | 1,169,243 | |
Shares available for future issuance | 2,300,000 | 2,300,000 |
Employee | ||
Share-Based Compensation Arrangement by Share-Based Payment Award | ||
Units granted (in shares) | 100,000 | 1,200,000 |
Units granted (in value) | $ | $ 0.9 | $ 13.9 |
Vesting period | 3 years |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted common units - Activity (Details) - Restricted common units | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Units | |
Units outstanding, Beginning balance (in shares) | shares | 1,127,000 |
Units granted (in shares) | shares | 1,169,243 |
Units forfeited (in shares) | shares | (42,515) |
Units outstanding, Ending balance (in shares) | shares | 2,253,728 |
Average Fair Market Value | |
Average Fair Market Value outstanding, Beginning balance (in dollars per shares) | $ / shares | $ 11.49 |
Average Fair Market Value granted (in dollars per shares | $ / shares | 11.91 |
Average Fair Market Value forfeited (in dollars per shares | $ / shares | 11.61 |
Average Fair Market Value outstanding, Ending balance (in dollars per shares | $ / shares | $ 11.71 |
Earnings per Shares (Details)
Earnings per Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Numerator: | |||||
Net loss attributable to common unitholders - basic | $ (26,724) | $ (12,858) | $ (31,493) | $ (24,471) | |
Numerator: | |||||
Net loss attributable to common shareholders - basic | (26,724) | (12,858) | (31,493) | (24,471) | |
Net loss attributable to common shareholders - diluted | $ (26,724) | $ (12,858) | $ (31,493) | $ (24,471) | |
Denominator: | |||||
Weighted-average common units outstanding - basic | [1] | 75,726 | 34,855 | 75,543 | 34,749 |
Weighted-average common units outstanding - diluted | [1] | 75,726 | 34,855 | 75,543 | 34,749 |
Basic loss per common share | [1] | $ (0.35) | $ (0.37) | $ (0.42) | $ (0.70) |
Dilutive loss per common share | [1] | $ (0.35) | $ (0.37) | $ (0.42) | $ (0.70) |
Warrants | |||||
Earnings per Unit | |||||
Antidilutive securities | 19,144 | 19,155 | |||
Restricted common units | |||||
Earnings per Unit | |||||
Antidilutive securities | 2,242 | 475 | 1,788 | 475 | |
Employee Stock Option | |||||
Earnings per Unit | |||||
Antidilutive securities | 1,476 | 1,722 | 1,505 | 1,722 | |
Series A Preferred Shares | |||||
Earnings per Unit | |||||
Antidilutive securities | 23,566 | 25,092 | 23,575 | 25,092 | |
[1] (1) Retroactively adjusted the three and six months ended June 30, 2022 for the de-SPAC merger transaction as described in Note 4 |
Segment Information - Other (De
Segment Information - Other (Details) | 6 Months Ended |
Jun. 30, 2023 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, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Segment Information | |||||
Revenues | $ 224,694 | $ 223,413 | $ 430,136 | $ 409,841 | |
Adjusted EBITDA | 11,310 | 13,293 | 19,763 | 24,687 | |
Interest expense | 7,385 | 8,813 | 13,414 | 16,861 | |
Income tax expense (benefit) | 6,240 | (1,499) | 1,881 | (3,083) | |
Depreciation and amortization | 6,181 | 5,952 | 12,055 | 11,966 | |
Acquisition, restructuring and integration expense | 2,901 | 2,304 | 9,545 | 4,787 | |
Change in fair value of warrant liabilities | 11,800 | 6,272 | |||
Management and consulting fees | 866 | 556 | 2,201 | ||
Equity-based compensation | 2,310 | 308 | 3,857 | 479 | |
Conway extract and ready-to-drink facility start-up costs | 1,711 | 3,580 | |||
Mark-to-market adjustments | (969) | 1,395 | (2,205) | 250 | |
Loss on disposal of property, plant and equipment | 184 | 896 | 289 | ||
Other | 562 | 789 | 1,049 | 1,461 | |
Net loss | (26,811) | (5,819) | (31,137) | (10,524) | |
Total assets | 822,308 | 661,446 | 822,308 | 661,446 | $ 746,213 |
Operating Segments | Beverage Solutions. | |||||
Segment Information | |||||
Revenues | 189,719 | 170,865 | 370,928 | 319,226 | |
Adjusted EBITDA | 11,660 | 12,471 | 20,081 | 22,891 | |
Total assets | 727,471 | 546,449 | 727,471 | 546,449 | |
Operating Segments | Sustainable, Sourcing and Traceability | |||||
Segment Information | |||||
Revenues | 36,048 | 58,459 | 61,439 | 106,232 | |
Adjusted EBITDA | (350) | 822 | (318) | 1,796 | |
Total assets | 94,837 | 114,997 | 94,837 | 114,997 | |
Intersegment Eliminations | |||||
Segment Information | |||||
Revenues | $ (1,073) | $ (5,911) | $ (2,231) | $ (15,617) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Commitments and Contingencies. | |
Purchase obligations | $ 193.3 |
Repurchase agreement liability | $ 9.4 |
Related Party Transactions - Tr
Related Party Transactions - Transactions with related party (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Party Transactions | |||||
Other long-term liabilities | $ 14,600 | $ 14,600 | $ 11,035 | ||
Interest expense | $ 7,385 | $ 8,813 | $ 13,414 | $ 16,861 | |
Related Party | |||||
Related Party Transactions | |||||
Interest expense | 202 | 943 | |||
Related Party | Brown Brothers Harriman | |||||
Related Party Transactions | |||||
Interest expense | 541 | ||||
Related Party | Wooster Capital, LLC | |||||
Related Party Transactions | |||||
Interest expense | 149 | 296 | |||
Related Party | Jo Ellen Ford | |||||
Related Party Transactions | |||||
Interest expense | $ 53 | $ 106 |
Related Party Transactions - Ot
Related Party Transactions - Other (Details) - Related Party - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Feb. 29, 2020 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Accrued expenses and other current liabilities | Westrock Group, LLC | ||||||
Related Party Transactions | ||||||
Short-term related party debt | $ 500,000 | $ 500,000 | $ 0 | |||
Selling, general and administrative expenses | ||||||
Related Party Transactions | ||||||
Expenses incurred | 0 | $ 800,000 | 600,000 | $ 1,700,000 | ||
Selling, general and administrative expenses | Westrock Group, LLC | ||||||
Related Party Transactions | ||||||
Expenses incurred | $ 10,000,000 | $ 500,000 | $ 200,000 | $ 800,000 | $ 500,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |||
Jul. 24, 2023 | Jun. 29, 2023 | Aug. 31, 2023 | Jul. 18, 2023 | |
Subscription agreement | ||||
Subsequent Events | ||||
Number of shares agreed to issue | 5,000,000 | |||
Purchase price (in dollars per share) | $ 10 | |||
Aggregate gross proceeds | $ 50 | |||
Subsequent Event | ||||
Subsequent Events | ||||
Aggregate gross proceeds | $ 118.8 | |||
Number of shares issued | 11,900,000 | |||
Subsequent Event | Definitive agreements | ||||
Subsequent Events | ||||
Number of shares agreed to issue | 5,000,000 | |||
Purchase price (in dollars per share) | $ 10 | |||
Aggregate gross proceeds | $ 50 | |||
Subsequent Event | Investor Rights Agreement | ||||
Subsequent Events | ||||
Purchase price (in dollars per share) | $ 10 | |||
Number of shares issued | 1.9 | |||
Proceeds from issuance of common stock | $ 18.8 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (26,811) | $ (5,713) | $ (31,152) | $ (10,589) |
Insider Trading Arrangements
Insider Trading Arrangements - T. Christopher Pledger | 3 Months Ended |
Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 17, 2023 , Mr. T. Christopher Pledger , the Company’s Chief Financial Officer , entered into a Rule 10b5-1 trading arrangement (the “10b5-1 Plan”) to sell up to 28,750 shares of the Company’s common stock during the period starting 90 days after the date of the 10b5-1 Plan and ending on March 31, 2024, subject to certain conditions. On June 15, 2023, all shares covered by the 10b5-1 Plan were sold and, accordingly, the 10b5-1 Plan expired pursuant to its terms |
Name | Mr. T. Christopher Pledger |
Title | Chief Financial Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 17, 2023 |
Arrangement Duration | 90 days |
Aggregate Available | 28,750 |