Westrock Coffee Company, LLC (NASDAQ:WEST) Q4 2022 Earnings Call Transcript

Todd Brooks: That’s great. Thanks, Scott. One more for Chris and then I will hop back in queue. Chris, when you look at the forward guidance for EBITDA growth of 10% to 25%, as you are looking at variables that drive you to one end of that spectrum or the other, can you highlight two or three that would unlock where you land in that guidance range? Thank you.

Chris Pledger: Yeah. Yeah. I think it’s a couple of things. I think as we looked at it this year, we weren’t going to make any predictions about what was going to happen with inflation. We just took the year as it is and just assume that it would continue the way that it is. So bad things could happen and it could continue to impact customer demand and that would negatively impact our ability to hit the higher end of that range that would put you to the lower end of the range. The other thing that I am excited about this year, is that we have got a number of new customer and new product wins and the lion’s share of those wins are in our single-serve in our extracts out of the business, which as we talked about our growth algorithm and being able to move to the higher margin part of the business, being able to accelerate that into 2023 recognizing that that’s going to be a huge part of the story in 2024, is a huge plus, and I guess, tailwind for the business.

So being able to deliver to those customers, we don’t always control exactly the timing of when those customer contracts will come online, but having those customers come online when they expect — when we expect them to with the volume that we expect to have them, it’s something that with plus or minus provide some sort of benefit to us being towards the top range — the higher range of the guidance.

Todd Brooks: Okay. Great. Thanks to you both.

Operator: Thank you. Our next question our next question comes from the line of Sarang Vora of Telsey Group. Your line is open.

Sarang Vora: Hi. Good afternoon, guys. Just staying on the guidance, the prior question on the guidance, how do you — the beverage solution is the main segment over here, it seems like sales were stronger in the fourth quarter, seems like new customer on-boarding as you look out at 2023. So help us understand, the — if you can provide any sales outlook or a range or color on how we should think about sales in 2023 especially beverage solutions versus SS&T? It seems like SS&T is primarily impacted by lower coffee prices, but it’s just forward future business versus the core business which is beverage solutions. So can you help us understand any color on the sales for 2023, like how we should think between the segments? Thank you.

Scott Ford: We talked a lot about this and whether or not, it was really valuable to put sales guidance out in addition to EBITDA guidance and recognize that we have done that as part of the de-SPAC transaction. But when you look at and we talked about this on prior calls and I know we have had these conversations around the impact of the commodity prices on our sales, because we don’t know what that’s going to be, it’s hard to put guidance on where the coffee prices. If you think about last year, we sort of planned for the coffee price to be around 220 for the year, I mean if you look at where it is now, it be below that as you embark into 2023. But the reality is that we don’t know where that’s going to stay for the year, whether it’s going to go up or down and given the pass-through nature of the coffee in our net sales, it’s just — it’s something that we decided not to provide guidance on.

I think when you see the growth in the customers and the new products, net sales is clearly going to go up from where it is now, but the lower commodity prices is going to offset the sales, which is why we continue to focus everybody on our EBITDA generation.