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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission File Number: 001-41485

WESTROCK COFFEE COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Delaware

80-0977200

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

100 River Bluff Drive, Suite 210

Little Rock, Arkansas

72202

(Address of Principal Executive Offices)

(Zip Code)

(501) 320-4880

(Registrant’s Telephone Number, Including Area Code)

WESTROCK COFFEE HOLDINGS, LLC

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Shares of common stock, par value $0.01 per share

WEST

The Nasdaq Stock Market LLC

Warrants, each whole warrant exercisable for one share of common stock, par value $0.01 per share

WESTW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes    No  

As of August 29, 2022, the Registrant had 73,033,991 shares of common stock, par value $0.01 per share, outstanding.

EXPLANATORY NOTE

During the quarter ended June 30, 2022, the registrant was a Delaware limited liability company called Westrock Coffee Holdings, LLC. On August 26, 2022, the registrant converted from a Delaware limited liability company to a Delaware corporation called “Westrock Coffee Company” in connection with the closing of its de-SPAC merger transaction with Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation. References to “Westrock,” “we,” “us,” and “our,” prior to the effective time of the conversion, refer to the registrant when it was a Delaware limited liability company called “Westrock Coffee Holdings, LLC” and such references following the effective time of the conversion, refer to the registrant in its current corporate form as a Delaware corporation called “Westrock Coffee Company.”

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined under U.S. federal securities laws. Forward-looking statements include all statements that are not historical statements of fact and statements regarding, but not limited to, our expectations, hopes, beliefs, intention or strategies regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to significant risks and uncertainties. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, risk related to the following:

our history of net losses;

volatility and increases in the cost of green coffee, tea and other ingredients and packaging, and our inability to pass these costs on to customers;

our inability to secure an adequate supply of key raw materials, including green coffee and tea, or disruption in our supply chain;

deterioration in general macroeconomic conditions;

disruption in operations at any of our production and distribution facilities;

climate change, which may increase commodity costs, damage our facilities and disrupt our production capabilities and supply chain;

failure to retain key personnel or recruit qualified personnel;

risks associated with operating a coffee trading business and a coffee-exporting business;

consolidation among our distributors and customers or the loss of any key customer;

complex and evolving U.S. and international laws and regulations, and noncompliance subjecting us to criminal or civil liability;

future acquisitions of businesses, which may divert our management’s attention, prove difficult to effectively integrate and fail to achieve their projected benefits;

our inability to effectively manage the growth and increased complexity of our business;

our inability to maintain or grow market share through continued differentiation of our product and competitive pricing;

our inability to secure the additional capital needed to operate and grow our business;

future litigation or legal disputes, which could lead us to incur significant liabilities and costs or harm our reputation;

a material failure, inadequacy or interruption of our information technology systems;

the unauthorized access, theft, use or destruction of personal, financial or other confidential information relating to our customers, suppliers, employees or business;

our future level of indebtedness, which may reduce funds available for other business purposes and reduce our operational flexibility;

our inability to comply with the financial covenants contained in our credit agreement;

our inability to complete the construction of our new facility in Conway, Arkansas in time or incurring additional expenses in the process;

our corporate structure and organization; and

our being a public company;

the possible resurgence of COVID-19 and emergence of new variants of the virus on the foregoing; and

other risks, uncertainties and factors set forth in the “Risk Factors” section in the Company’s Form S-4 (File No. 333-264464) filed with the U.S. Securities and Exchange Commission (“SEC”) on April 25, 2022, as amended by Amendments No. 1, 2, 3 and 4 thereto filed with SEC on June 10, 2022, July 15, 2022, August 1, 2022 and August 3, 2022, respectively (the “Registration Statement”), and in the “Management’s Discussion and Analysis” section of this Quarterly Report on Form 10-Q.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the Registration Statement or in this Quarterly Report on Form 10-Q. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Westrock Coffee Company

(f/k/a Westrock Coffee Holdings, LLC)

FORM 10-Q

June 30, 2022

Table of Contents

Part I.

Financial Information

5

Item 1.

Financial Statements

5

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Operations

6

Condensed Consolidated Statements of Comprehensive Income (Loss)

7

Condensed Consolidated Statements of Unitholders’ Deficit

8

Condensed Consolidated Statements of Cash Flows

9

Notes to Condensed Consolidated Financial Statements

10

1. Organization and Description of Business

10

2. Basis of Presentation and Consolidation

10

3. Summary of Significant Accounting Policies

11

4. Revenue

13

5. Inventories

14

6. Property, Plant and Equipment, Net

15

7. Goodwill

15

8. Intangible Assets, Net

16

9. Leases

16

10. Debt

18

11. Derivatives

20

12. Fair Value Measurements

22

13. Accumulated Other Comprehensive Income

24

14. Earnings per Unit

24

15. Segment Information

25

16. Commitments and Contingencies

28

17. Related Party Transactions

28

18. Subsequent Events

29

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

Overview

30

Key Business Metrics

30

Significant Developments

32

Results of Operations

33

Critical Accounting Policies and Estimates

39

Liquidity and Capital Resources

39

Recent Accounting Pronouncements

43

Item 3.

Quantitative and Qualitative Disclosures Regarding Market Risk

44

Item 4.

Controls and Procedures

44

Part II.

Other Information

46

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 3.

Defaults Upon Senior Securities

47

Item 4.

Mine Safety Disclosures

47

Item 5.

Other Information

47

Item 6.

Exhibits

48

Signatures

51

Part I. Financial Information

Item 1. Financial Statements

WESTROCK COFFEE COMPANY

(f/k/a Westrock Coffee Holdings, LLC)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Thousands, except unit values)

    

June 30, 2022

    

December 31, 2021

ASSETS

Cash and cash equivalents

$

14,343

$

19,344

Restricted cash

3,842

3,526

Accounts receivable, net of allowance for credit losses of $2,392 and $3,749, respectively

96,001

85,795

Inventories

155,323

109,166

Derivative assets

15,692

13,765

Prepaid expenses and other current assets

8,894

6,410

Total current assets

294,095

238,006

Property, plant and equipment, net

131,802

127,613

Goodwill

97,053

97,053

Intangible assets, net

122,565

125,914

Other long-term assets

15,931

4,434

Total Assets

$

661,446

$

593,020

LIABILITIES, REDEEMABLE UNITS, AND UNITHOLDERS' DEFICIT

Current maturities of long-term debt

$

8,157

$

8,735

Short-term debt

67,871

4,510

Short-term related party debt

34,199

Accounts payable

117,871

80,405

Derivative liabilities

7,583

14,021

Accrued expenses and other current liabilities

29,842

26,370

Total current liabilities

231,324

168,240

Long-term debt, net

297,044

277,064

Subordinated related party debt

13,300

13,300

Deferred income taxes

20,132

25,515

Other long-term liabilities

11,589

3,028

Total liabilities

573,389

487,147

Commitments and contingencies (Note 16)

Series A Redeemable Common Equivalent Preferred Units: $0 par value, 222,150,000 units authorized, issued and outstanding

277,762

264,729

Series B Redeemable Common Equivalent Preferred Units: $0 par value, 17,000,000 units authorized, issued and outstanding

17,991

17,142

Unitholders' Deficit

Common Units: $0 par value 375,420,213 units authorized; 332,209,476 units and 329,042,787 units issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in-capital

60,975

60,973

Accumulated deficit

(276,196)

(251,725)

Accumulated other comprehensive income

4,724

12,018

Total unitholders' deficit attributable to Westrock Coffee Holdings, LLC

(210,497)

(178,734)

Noncontrolling interest

2,801

2,736

Total unitholders' deficit

(207,696)

(175,998)

Total Liabilities, Redeemable Units and Unitholders' Deficit

$

661,446

$

593,020

See accompanying notes to condensed consolidated financial statements.

5

WESTROCK COFFEE COMPANY

(f/k/a Westrock Coffee Holdings, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended June 30, 

Six Months Ended June 30, 

(Thousands, except per unit data)

    

2022

    

2021

    

2022

    

2021

Net sales

$

223,413

$

171,144

$

409,841

$

326,475

Costs of sales

184,515

136,791

332,512

258,987

Gross profit

38,898

34,353

77,329

67,488

Selling, general and administrative expense

35,048

31,819

70,109

63,506

Acquisition, restructuring and integration expense

2,304

926

4,787

1,943

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

184

(25)

289

243

Total operating expenses

37,536

32,720

75,185

65,692

Income from operations

1,362

1,633

2,144

1,796

Other (income) expense, net

(133)

(58)

(1,110)

(238)

Interest expense

8,813

8,261

16,861

15,669

Loss before income taxes

(7,318)

(6,570)

(13,607)

(13,635)

Income tax benefit

(1,499)

(502)

(3,083)

(1,443)

Net loss

$

(5,819)

$

(6,068)

$

(10,524)

$

(12,192)

Net (loss) income attributable to non-controlling interest

(106)

26

65

336

Net loss attributable to unitholders

(5,713)

(6,094)

(10,589)

(12,528)

Accumulating preferred dividends

(7,145)

(6,109)

(13,882)

(11,848)

Net loss attributable to common unitholders

$

(12,858)

$

(12,203)

$

(24,471)

$

(24,376)

Loss per common unit:

Basic

$

(0.04)

$

(0.04)

$

(0.07)

$

(0.07)

Diluted

$

(0.04)

$

(0.04)

$

(0.07)

$

(0.07)

Weighted-average number of units outstanding

Basic

332,209

329,043

331,195

328,062

Diluted

332,209

329,043

331,195

328,062

See accompanying notes to condensed consolidated financial statements.

6

WESTROCK COFFEE COMPANY

(f/k/a Westrock Coffee Holdings, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended June 30, 

Six Months Ended June 30, 

(Thousands)

    

2022

    

2021

    

2022

    

2021

Net loss

$

(5,819)

$

(6,068)

$

(10,524)

$

(12,192)

Other comprehensive income (loss), net of tax:

Unrealized (loss) gain on derivative instruments

(2,425)

4,526

(7,285)

3,510

Foreign currency translation adjustment

(9)

21

(9)

(65)

Total other comprehensive (loss) income

(2,434)

4,547

(7,294)

3,445

Comprehensive loss

(8,253)

(1,521)

(17,818)

(8,747)

Comprehensive (loss) income attributable to non-controlling interests

(106)

26

65

336

Comprehensive loss attributable to unitholders

(8,147)

(1,547)

(17,883)

(9,083)

Accumulating preferred dividends

(7,145)

(6,109)

(13,882)

(11,848)

Comprehensive loss attributable to common unitholders

$

(15,292)

$

(7,656)

$

(31,765)

$

(20,931)

See accompanying notes to condensed consolidated financial statements.

7

WESTROCK COFFEE COMPANY

(f/k/a Westrock Coffee Holdings, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF UNITHOLDERS’ DEFICIT

(Unaudited)

Accumulated

Other

Common Units

Additional

Accumulated

Comprehensive

Non-Controlling

(Thousands)

    

Units

    

Amount

    

Paid-in Capital

    

Deficit

    

Income

    

Interest

    

Total Deficit

Balance at March 31, 2021

329,043

$

$

60,056

$

(217,743)

$

2,718

$

2,407

$

(152,562)

Net income (loss)

(6,094)

26

(6,068)

Other comprehensive income (loss)

4,547

4,547

Equity-based compensation

306

306

Accumulating preferred dividends

(6,109)

(6,109)

Balance at June 30, 2021

329,043

$

$

60,362

$

(229,946)

$

7,265

$

2,433

$

(159,886)

Balance at March 31, 2022

332,210

$

$

60,667

$

(263,338)

$

7,158

$

2,907

$

(192,606)

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 June 30, 2022

332,210

$

$

60,975

$

(276,196)

$

4,724

$

2,801

$

(207,696)

Accumulated

Other

Common Units

Additional

Accumulated

Comprehensive

Non-Controlling

(Thousands)

    

Units

    

Amount

    

Paid-in Capital

    

Deficit

    

Income

    

Interest

    

Total Deficit

Balance at December 31, 2020

325,983

$

$

59,912

$

(205,570)

$

3,820

$

2,097

$

(139,741)

Net income (loss)

(12,528)

336

(12,192)

Other comprehensive income

3,445

3,445

Equity-based compensation

3,060

612

612

Net unit settlement

(162)

(162)

Accumulating preferred dividends

(11,848)

(11,848)

Balance at June 30, 2021

329,043

$

$

60,362

$

(229,946)

$

7,265

$

2,433

$

(159,886)

Balance at December 31, 2021

329,043

$

$

60,973

$

(251,725)

$

12,018

$

2,736

$

(175,998)

Net income (loss)

(10,589)

65

(10,524)

Other comprehensive income

(7,294)

(7,294)

Equity-based compensation

3,167

479

479

Net unit settlement

(477)

(477)

Accumulating preferred dividends

(13,882)

(13,882)

Balance at June 30, 2022

332,210

$

$

60,975

$

(276,196)

$

4,724

$

2,801

$

(207,696)

See accompanying notes to condensed consolidated financial statements.

8

WESTROCK COFFEE COMPANY

(f/k/a Westrock Coffee Holdings, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30, 

(Thousands)

    

2022

    

2021

Cash flows from operating activities:

Net loss

$

(10,524)

$

(12,192)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

11,966

12,314

Equity-based compensation

479

612

Paid-in-Kind interest added to debt principal

294

991

Allowance for credit losses

922

100

Amortization of deferred financing fees included in interest expense

1,046

903

Loss on disposal of property, plant and equipment

289

243

Mark-to-market adjustments

250

(1,975)

Foreign currency transactions

91

48

Change in deferred income taxes

(3,083)

(1,454)

Change in operating assets and liabilities:

Accounts receivable

(11,137)

(5,017)

Inventories

(53,663)

(7,564)

Derivative assets and liabilities

(10,743)

4,289

Prepaid expense and other assets

(14,257)

(2,000)

Accounts payable

37,278

9,463

Accrued liabilities and other

3,818

457

Net cash used in operating activities

(46,974)

(782)

Cash flows from investing activities:

Additions to property and equipment

(15,163)

(8,556)

Additions to intangible assets

(48)

(253)

Proceeds from sale of property and equipment

2,248

1,354

Net cash used in investing activities

(12,963)

(7,455)

Cash flows from financing activities:

Payments on debt

(51,665)

(46,453)

Proceeds from debt

107,423

54,888

Payment of debt issuance costs

(597)

Net unit settlement

(477)

(162)

Net cash provided by financing activities

55,281

7,676

Effect of exchange rate changes on cash

(29)

112

Net decrease in cash and cash equivalents and restricted cash

(4,685)

(449)

Cash and cash equivalents and restricted cash at beginning of period

22,870

18,652

Cash and cash equivalents and restricted cash at end of period

$

18,185

$

18,203

Supplemental non-cash investing and financing activities:

Property, plant and equipment acquired but not yet paid

$

372

$

2,160