What Westrock Coffee (WEST) Said on Its Q3 Earnings Call

Key Points

• Profitability improved despite lower sales: Q3 adjusted EBITDA reached a record $26.4 million, up about 14% year over year, while net sales fell 15.4% to roughly $300 million. The decline largely reflected tariff refunds passed through to customers, lower green coffee prices, and the loss of a single-serve customer.
• Growth outlook relies on contracted programs: Westrock reaffirmed its 2026 adjusted EBITDA forecast of $90 million to $100 million and gave an initial 2027 estimate of about $130 million. Management expects customer programs to lift Conway from about 40% to roughly 85% of capacity over the next 18 months.
• Refinancing eased near-term debt obligations: A new $600 million credit facility is expected to reduce first-year required debt service by about $17 million. The company also reported its second consecutive quarter of positive free cash flow and said debt reduction remains a priority.

Westrock Coffee NASDAQ: WEST reported record third-quarter adjusted EBITDA of $26.4 million, up approximately 14% from a year earlier, even as net sales declined amid tariff refunds, lower green coffee prices and a previously disclosed customer loss.

Management reaffirmed its 2026 adjusted EBITDA outlook of $90 million to $100 million and introduced an initial estimate of about $130 million for 2027. Executives said contracted customer programs at the company’s Conway facility are expected to drive growth, while a new credit facility provides more liquidity and reduces required debt service.

Sales fall as profitability improves

Third-quarter net sales declined 15.4% to approximately $300 million. Chief Financial Officer Chris Pledger said the largest factor was approximately $26 million in tariff refunds passed through or expected to be passed through to customers, which the company recorded as a reduction in sales. Corresponding vendor refunds reduced cost of goods sold, resulting in no gross profit impact, he said.

Excluding the tariff refund item, sales would have been approximately $326 million. Pledger attributed the remaining decline to lower green coffee prices passed through to customers at cost and the previously disclosed loss of a single-serve customer. For the first nine months of 2026, sales rose 8% to $915 million.

Quarterly gross profit was flat at $41.5 million, while operating profit improved to $3.2 million from an $8.6 million loss a year earlier. The net loss narrowed to $10 million from $19.1 million. Through nine months, adjusted EBITDA increased 58% to $73.7 million.

Beverage Solutions segment adjusted EBITDA rose approximately 14% to $23.3 million. Beginning in the third quarter, Westrock no longer adds back Conway’s subscale operating costs when calculating the segment measure, meaning the current result includes costs excluded from the prior-year comparison, Pledger said.

Sustainable Sourcing & Traceability segment adjusted EBITDA fell to $3.2 million from $5.8 million, which Pledger attributed to the timing of sales. The segment’s nine-month adjusted EBITDA rose more than 5% to $11.6 million.

Conway contracts underpin outlook

Co-Founder and Chief Executive Officer Scott Ford said Conway is operating at approximately 40% of its current capacity, with committed programs expected to take it to roughly 85% over the next 18 months. At that level, he said, Conway alone would generate more adjusted EBITDA than the $70 million the company reported on a consolidated basis in 2025.

Ford said Westrock has won new business this year worth an estimated $60 million in annualized EBITDA, with a pipeline exceeding $100 million. In single-serve, the company has contracted enough new business to replace one-third of the business lost last year, with those programs beginning in early 2027.

The 2026 outlook depends largely on final customer mix decisions, Ford said, adding that the company’s current estimate is in the middle of its range. The initial 2027 estimate of about $130 million would represent roughly 35% growth over the 2026 midpoint.

Ford said several customers are scheduled to come online in the middle and latter part of 2027, which he expects to leave Westrock at a higher annualized run rate by year-end. He also said the company thinks adjusted EBITDA could grow another 30% to 40% in 2028, while noting uncertainty around customer allocations and timing.

Ford described the consumer environment as choppy heading into the fourth quarter, particularly where fuel costs affect traffic. He said much of Westrock’s expected growth comes from contracted programs rather than a broad improvement in consumer demand.

Cash flow and refinancing

Westrock generated $9.9 million in operating cash flow and $1.1 million in free cash flow during the quarter, its second consecutive quarter of positive free cash flow. Pledger said some of the approximately $21 million in cumulative free cash flow generated over the second and third quarters reflected working-capital timing that the company expects to reverse.

Capital expenditures fell to $8.8 million from $18.1 million a year earlier. Pledger reiterated a full-year spending forecast of approximately $30 million and said he expects $30 million to $35 million in 2027.

On Oct. 21, Westrock completed a $600 million senior secured first-lien credit facility consisting of $300 million in term loans and $300 million in revolving commitments. The facility matures in October 2031 and reduces required debt service by approximately $17 million in its first year compared with the prior agreement, Pledger said.

As part of the refinancing, the company repurchased $40 million of its $72 million convertible notes due in 2029 for approximately $21 million in cash and about 2.4 million shares. The remaining $32 million of notes were extended to January 2032.

Secured net leverage declined to approximately 3.1 times at Sept. 30 from 3.4 times at the end of the second quarter. Pledger expects leverage to rise temporarily following the refinancing and planned payments before meaningful deleveraging resumes in the second quarter of 2027. Ford said the company’s priority is to retain cash and pay down debt.

About Westrock Coffee (NASDAQ:WEST)

Westrock Coffee Company is a global provider of integrated coffee, tea, flavors, extracts and ready-to-drink beverage solutions. The company sources raw materials from producing regions, then provides processing, roasting, blending, extraction, packaging and distribution services for beverage brands and other commercial customers.

Its products and services support a range of beverage formats, including roasted and ground coffee, single-serve coffee, tea, liquid coffee and tea extracts, ready-to-drink beverages, and customized flavor systems.

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