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Westrock Coffee, which has been in 3-yr, $350 mil sprint to build out comprehensive capacity to play in all facets of coffee biz from pods to RTDs, scored another record sales qtr in Q3 but indicated it's been raising additional money to deal with impact of soaring green bean costs and tariffs. With 60% of coffee it uses sourced from Brazil, co induced longtime shareholders to put another $30 mil in senior convertible notes into venture, Ford announced. So "we have handled the cash crunch, if you will, that was caused by 50% tariffs on Brazil," said cofounder/CEO Scott Ford. "It was a painful solve, but we have been able to solve it, and I think in good order." Thru all the hard work - not without severe past glitches - "we remain on track toward our goal of becoming the premier integrated strategic supplier to the preeminent coffee, tea and energy beverage brands globally," he said. Meanwhile, other opportunity is beckoning. For all the bases it's covered format-wise, Westrock now is plugging in a gap in fast-growing segment, as Ford informed investors yesterday afternoon. "Due to great customer interest, we're excited to be adding a new body of work focused on ultra-filtered milk-based high-protein products as well."Besides tariffs and impact on consumer behavior of higher coffee costs, there's another looming threat on horizon: "One of our key customers is involved in a large M&A transaction within the coffee category" and clouding its commitment for pod production in 2026. That of course would have to reference to planned merger of pod giant Keurig Dr Pepper and JDE Peet's. In resetting all credit covenants, Westrock decided it should take conservative tack and assume the worst, "that all single-serve cup volume related to the impacted customer will be off our platform by the end of this year, thereby assuring we don't need to seek additional relief if this scenario plays out," as CFO put it. That unidentified customer had come on this year, with full rampup anticipated in 2026, as he told questioner. He added: "Even if it does, we're confident that over time we'll be able to replace any lost volume on our single-serve cup platform with expanded volume from existing customers and new customer wins." Indeed, word of merger already drew inquiries from several potential customers inquiring whether that run time might be available to them.Balanced Growth in Both Segments By the numbers, net sales in Q3 rose 60.7% to $354.8 mil, tho some of gain derived from passthru of elevated coffee bean prices and Trump tariffs. CFO Chris Pledger credited 4% increase in core roast & ground coffee volumes, 85% volume increase in single-serve cups along with supply chain optimization and expense mgmt. Adjusted EBITDA widened to $23.2 mil from $10.3 mil a year earlier but was still ahead of expectations. Ford attributed that to "growing volumes at both our new single-serve cup and extract-to-RTD plants in Conway, Arkansas, combined with cost controls across our core business units derived from process, data intelligence and risk mitigation insights via our ongoing relationship with Palantir."By segment, core Beverage Solutions unit scored 60.4% net sales rise to $263 mil and adjusted EBITDA rose 73.8% to $20.4 mil as Westrock continued to bring on its massive new plant in Conway, Ark. Smaller Sustainable Sourcing & Traceability (SS&T) unit enjoyed 61.5% net sales gain to $91.8 mil, with adjusted EBITDA more than doubling to $5.8 mil from $2.5 mil a year earlier.Buildout: 2d Can Line Is In, 2d Pod Plant Running, Glass Line Starts Up Next Month So how's the buildout going? In progress report, Ford said output levels already are approaching 80% of original planned capacity, and co has been adding water and tank farm capacity so future lines can be quickly added. Second canning line has completed installation and should begin commercial runs early next year. He said co's second pod-making plant located in Conway complex enjoyed startup that went "seamlessly" and was key contributor to improved profitability in period. Glass line will be running commercial product starting in Dec. CFO Pledger estimated that buildout has 2 more qtrs. to go to complete extract and RTD facility at $15 mil in budgeted capital spending.Ultrafiltered Dairy Protein Surge Demands Retort Capacity As for ultrafiltered opportunity, the unlock is move by many producers from aseptic plastic bottles to cans. That requires retort process and Westrock is augmenting its existing retort line, one of largest in US, with a 2d line due to be running commercially in Jan. Ultrafiltered dairy, of course, offers potent protein punch with far lower sugar than conventional dairy milk. How big can it be? Ford readily allowed it's too early to say. "I don't know that it will turn into anything, but the demand and the forecasted numbers that people are talking about, I would not be surprised that it is not as big as our ready-to-drink coffee business over the next 2 to 4 years," he said. While one analyst on call worried that move will require further capex, CEO assured her it won't. "We have probably $5 million or $6 million of capital that we or our distribution milk partner would have to put up to fully enable that. That's the kind of thing that, as we moved into production contract levels, we could easily put in place," he assured.Financial Maneuvering Mitigates Coffee Costs To mitigate the impact on working capital of higher coffee prices and tariffs, Westrock raised $12 mil in Q3 via common stock sales, then yesterday announced the $30 mil issuance of convertible notes as well as a credit agreement amendment. "While it's impossible to predict how macroeconomic influences might impact our business, we believe we now have the working capital and credit capacity needed to navigate the continued elevated coffee prices and tariffs, and we do not anticipate any additional capital markets activity in response to these headwinds," Pledger said. (We got assist from Investing.com transcript in writing this story.)

Westrock Coffee Nears Completion of Massive Conway Buildout; Pulls in $30M to Counter Bean Costs & Tariffs; Pushing into Ultrafiltered Dairy Segment; Q3 Sales Rise 61%

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