Westrock Coffee Company (NASDAQ:WEST) Q3 2023 Earnings Conference Call November 9, 2023 4:30 PM ET

Company Participants

Clay Crumbliss - ICR, IR

Scott Ford - Co-Founder and CEO

Chris Pledger - CFO

Conference Call Participants

Jack Hardin - Stephens, Inc.

Todd Brooks - Benchmark Company

Matt Smith - Stifel

Joseph Feldman - Telsey Advisory Group

Operator

Hello, and welcome to the Westrock Coffee Company's Third Quarter 2023 Earnings Conference call. My name is Tanya, and I'll be coordinating your call today. Following prepared remarks we will open your call to questions with instructions to be given at that time. I would now like to hand it over to Clay Crumbliss with ICR.

Clay Crumbliss

Good afternoon, and welcome to the Westrock Coffee Company's third quarter 2023 earnings conference call. Today's call is being recorded. With us are Mr. Scott Ford, Co-Founder and Chief Executive Officer; and Mr. Chris Pledger, Chief Financial Officer. By now, everyone should have access to the company's third quarter earnings release issued earlier today. This information is available on the Investor Relations section of Westrock Coffee Company's website at investors.westrockcoffee.com. Certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Please refer to today's press releases and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, discussions during the call will use some non-GAAP financial measures as we describe business performance. The SEC filings as well as the earnings press release provide reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. And with that, it is my pleasure to turn the call over to Scott Ford, our Co-Founder and Chief Executive Officer. Scott?

Scott Ford

Thank you, Clay and good afternoon, everyone. Thank you for joining us today. I'll be the first to acknowledge that our third quarter this year looks like a bit of a mess as a variance from our targeted performance of roughly $20 million in adjusted EBITDA for the period and our reported results of $11.6 million appears quite large at first glance. That said, I think it's critically important to call out that virtually 100% of the miss comes from two distinct causes that were unique to the period. First, over $6 million of the miss happened in July and August alone in our traditional roast and ground coffee unit, where these customers ordered fewer pounds in this period than they did in the depths of COVID. As we work with them and our forecast analysts, we were repeatedly informed that the spike in gasoline prices, coupled with the spike in interest rates, combined with a measurably hot summer kept consumers out of restaurants and C-stores in the first two months of the quarter.