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| Statement |
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| In our Beverage Solutions segment in the fourth quarter, we continue to see strength in our single serve cup platform as well as our sales of flavors, extracts and ingredients, which grew 30% |
| It's a very powerful earnings adder that we're saving up for everybody in '26 |
| And so we feel good about the run rate, as Scott talked about in his comments as we exit 2023, we feel good about kind of based on the base business being able to get to the bottom end of our range |
| The business is off to a solid start in 2024 and we're pleased with our performance thus far in the first quarter with our adjusted EBITDA results coming in line with our expectations |
| As we exit 2023, we do so with strength in the areas we expect to drive growth in future years, single serve cups and flavors, extracts and ingredients and a new approach to pricing in our traditional roasting ground business, which we expect to drive results in 2024 |
| But we are now thrilled that these challenges are behind us and then we are extremely excited for 2024 |
| We believe that these are key investments that position Westrock to capitalize on the expanding customer demand for RTD products |
| And the plans that we have for '24 through the commercialization and then monetizing some of that should give us a really good year, and it's setting '25 up to be absolutely fantastic |
| We are super excited |
| We have recently enjoyed several new contract wins on each of our platforms from roasting ground coffee and tea to single serve cups to extracts and to ready to drink finished goods |
| Today, we're pleased to reiterate that our guidance for our expected adjusted EBITDA for the year 2024 should be up somewhere between 30% and 75% for the year |
| All of that's going to come back on is coming back on now, and we're seeing it in our results now and we're excited about it and if people want to get on board with us, great |
| We also have good news in that we have a number of customers that are in commercialization process now |
| In our Sustainable Sourcing and Traceability segment, we started to see a return to more normal operating results as sales net of intersegment revenues were $39.8 million during the fourth quarter of 2023, an increase of 13% compared to the fourth quarter of 2022 |
| In terms of kind of product mix and margin improvement, I think you're going to continue to see growth in our single serve, which is a higher-margin part of our business, you're going to continue to see FE&I growth in kind of our base business with extracts |
| The power that has been built up in the last 2 years when we suffered and spent the money to take lines off-line to get them automated and to get the MIS system built in is really much more powerful than anything I'm reading about |
| And we are super excited about getting that plant |
| I feel good about how that's going to kind of sequence itself out |
| And those large wins help fill a high fixed cost throughput-based set of facilities |
| And when we are able to do that, we are able to better price |
| After enduring the expenses brought about by these significant upgrades and improvements, we now enter the year 2024 with the infrastructure in place to scale this business multiple fold and with our current adjusted EBITDA run rate already 30% to 40% above our year-end results for 20 23 |
| And so that ability to get really found in on our cost has allowed us to go customer-by-customer, SKU by SKU and rationalize the price to the right point, higher or lower |
| So the good news is we are ahead of schedule on every one of the line installation projects |
| I don't know that it's going to get any more products in through the pipeline in the year '24, but it allows us the opportunity to maybe be able to do that |
| We are better to commercialize more customers in '24, and slow production to just meeting our contractual commitments in '24, so that we get everybody lined up to run in full in '25 |
| The news is we are off to a great start in '24 |
| It's required tremendous effort, persistence and patience on everyone's part and it is a delight to be able to walk through these plans today and see the new commercial realities of these investments coming to life |
| We are in the middle of a massive -- well, we have just finished a massive systems rebuild and the systems rebuild has allowed us to get to a level of cost transparency by machine, by operator, by a shift that was not available previously |
| For 2023, our Beverage Solutions segment contributed $722.9 million of net sales, which is an increase of approximately 5% compared to the prior year |
| And then when you start layering on the products for Conway that come on in -- we start selling them in April and the volumes really start to ramp in the back half of the year, you're going to continue to see growth from that |
| Statement |
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| This is due to the unrelenting and unwavering work by the entire Westrock team, our vendor partners and our customers |
| We are also turning the page on an ERP conversion and single serve scale up that pressured our 2023 results in the first half of the year |
| So that kind of data system installation, which has been unbelievably burdensome to the operations to current financial operations of '23 suffered because we had to slow down, drag out, rebuild, turn lines off, get this automation in |
| Beverage Solutions gross profit was $31 million for the quarter, down 4% compared to the fourth quarter of 2022 |
| It was an extremely difficult year because of this |
| I want to strip out FE&I though and talk about both single serve, which there was a tough first half with the equipment delays last year and then roasting ground where we've really kind of seen a little bit of a collapse in customer demand here in the second half of this year |
| We chose to bear the pain of fully modernizing all parts of our business in 2023, so that when the new Conway facility was launched, those challenges would be seen in our rearview mirror and not in our face |
| In the fourth quarter of 2023, our Beverage Solutions segment contributed $175.1 million of net sales, which is a decrease of approximately 9% compared to the fourth quarter of 2022 |
| Adjusted EBITDA from our SS&T segment for the quarter was $2.1 million, which is $200,000 less than the prior year fourth quarter |
| This was partially offset by continued softness in our traditional roast and ground coffee business |
| On meanwhile, back in the core business, we have been -- we spent an enormous amount of time and energy and money through lost EBITDA from taking things down and actually suffering through the windows of turning MIS systems up in the old business |
| In 2023, our SS&T segment contributed sales net of intersegment revenues of $141.8 million, representing a 22% decrease compared to 2022 |
| And so I don't expect the ramp of Conway really to create margin compression as you take on the fixed cost |
| There is no doubt about that |
| 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 |
| This decline, as previously stated, was almost entirely the result of a onetime compensation accrual reversal in the fourth quarter of 2022 that was not repeated in fourth quarter 2023 |
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