Westrock Coffee Co Fair Value Disclosure
Note 15. Fair Value Measurements
ASC 820, Fair Value Measurements, defines fair value at the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. These levels are:
| ● | Level 1—Valuation is based upon quoted prices for identical instruments traded in active markets. |
| ● | Level 2—Valuation is based upon inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (i.e. interest rate and yield curves observable at commonly quoted intervals, default rates, etc.). Observable inputs include quoted prices for similar instruments in active and non-active markets. Level 2 includes those financial instruments that are valued with industry standard valuation models that incorporate inputs that are observable in the marketplace throughout the full term of the instrument or can otherwise be derived from or supported by observable market data in the marketplace. Level 2 inputs may also include insignificant adjustments to market observable inputs. |
| ● | Level 3—Valuation is based upon one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are used to the extent relevant observable inputs are not available and are developed based on the best information available. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. |
The following table summarizes the fair value of financial instruments at December 31, 2025:
December 31, 2025 | ||||||||||||
(Thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Assets: | ||||||||||||
Green coffee associated with forward contracts | $ | — | $ | 75,335 | $ | — | $ | 75,335 | ||||
Forward purchase and sales contracts | — | 15,049 | — | 15,049 | ||||||||
Total | $ | — | $ | 90,384 | $ | — | $ | 90,384 | ||||
Liabilities: | ||||||||||||
Coffee futures contracts | $ | 110 | $ | — | $ | — | $ | 110 | ||||
Commodity swaps | — | 8,235 | — | 8,235 | ||||||||
Options contracts(1) | 1,106 | 16,800 | — | 17,906 | ||||||||
Forward purchase and sales contracts | — | 2,349 | — | 2,349 | ||||||||
Total | $ | 1,216 | $ | 27,384 | $ | — | $ | 28,600 | ||||
1 – Options contracts include counterparty netting.
The following table summarizes the fair value of financial instruments at December 31, 2024:
December 31, 2024 | ||||||||||||
(Thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||
Assets: | ||||||||||||
Green coffee associated with forward contracts | $ | — | $ | 47,644 | $ | — | $ | 47,644 | ||||
Coffee futures contracts | 3,815 | — | — | 3,815 | ||||||||
Options contracts | 228 | — | — | 228 | ||||||||
Forward purchase and sales contracts | — | 15,703 | — | 15,703 | ||||||||
Total | $ | 4,043 | $ | 63,347 | $ | — | $ | 67,390 | ||||
Liabilities: | ||||||||||||
Forward purchase and sales contracts | — | 11,966 | — | 11,966 | ||||||||
Total | $ | — | $ | 11,966 | $ | — | $ | 11,966 | ||||
The following table presents the change in the fair value of Level 3 Westrock Private Warrants liabilities during the year ended December 31, 2024:
Westrock | |||
(Thousands) | | Private Warrants | |
Fair value as of December 31, 2023 | $ | 5,430 | |
(1,511) | |||
Warrant exchange | (3,919) | ||
Fair value as of December 31, 2024 | $ | — | |
Financial instruments consist primarily of cash, accounts receivable, accounts payable, supply chain finance program obligations, inventory repurchase obligations, convertible notes payable, short-term debt and long-term debt. The carrying amount of cash, accounts receivable, accounts payable, short-term debt and the supply chain finance program was estimated by management to approximate fair value due to the relatively short period of time to maturity for those instruments. The Term Loan Facility, Delayed Draw Term Loan Facility and Revolving Credit Facility are carried on the Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of December 31, 2025, as the interest rate on these facilities is adjusted for changes in the market rates. The fair value of the Term Loan Facility, Delayed Draw Term Loan Facility and Revolving Credit Facility was determined based on Level 2 inputs under the fair value hierarchy.
Coffee futures contracts and coffee options are valued based on quoted market prices. The estimated fair value for green coffee inventories associated with forward contracts, commodity swaps, OTC options contracts, and forward sales and purchase contracts are based on exchange-quoted prices, adjusted for differences in origin, quantity, quality, and future delivery period, as the exchange quoted prices represent standardized terms for the commodity. These adjustments are generally determined using broker or dealer quotes or based upon observable market transactions. As a result, green coffee associated with forward contracts, commodity swaps, OTC options contracts, and forward sales and purchase contracts are classified within Level 2 of the fair value hierarchy.
The 2029 Convertible Notes and 2031 Convertible Notes are carried on the Consolidated Balance Sheets at amortized cost. The estimated fair value of the 2029 Convertible Notes and 2031 Convertible Notes as of December 31, 2025 was $59.1 million and $30.2 million, respectively, and was determined using a binomial lattice model, which is considered to be a Level 3 fair value measurement. The primary unobservable inputs at December 31, 2025 include the expected of 50.0% and assumed debt yield of 14.5% and 14.6% for the 2029 Convertible Notes and 2031 Convertible Notes, respectively.
Non-financial assets and liabilities, including property, plant and equipment, goodwill, and intangible assets are measured at fair value on a non-recurring basis. No events occurred during the years ended December 31, 2025 and 2024 requiring these non-financial assets and liabilities to be subsequently recognized at fair value, with the exception of the impairment charges on equipment related to the restructuring activities disclosed in Note 3.
At December 31, 2025, the Company had an equity investment with a carrying value of approximately $1.0 million, for which there is no readily determinable fair value. This investment is recorded at cost within other long-term assets on the Consolidated Balance Sheets. As of December 31, 2025, there have been no adjustments, upward or , to the carrying value.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 21, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.