Q2 2023 Westrock Coffee Co Earnings Call
Participants
Scott Thomas Ford; Co-Founder, Director & CEO; Westrock Coffee Company, LLC
Thomas Christopher Pledger; CFO; Westrock Coffee Company, LLC
Benjamin Shelton Bienvenu; MD & Analyst; Stephens Inc., Research Division
Matthew Edward Smith; Associate Analyst ; Stifel, Nicolaus & Company, Incorporated, Research Division
Sarang Vora; Associate; Telsey Advisory Group LLC
Todd Morrison Brooks; Senior Equity Analyst; The Benchmark Company, LLC, Research Division
Clay Crumbliss; MD; ICR, Inc.
Presentation
Operator
Hello, and welcome to Westrock Coffee Company's Second Quarter 2023 Earnings Conference Call. My name is Gigi, and I'll be coordinating your call today. Following prepared remarks, we will open the call to your questions with instructions to be given at that time.
I'll now hand the call over to Clay Crumbliss with ICR.
Clay Crumbliss
Good afternoon, and welcome to Westrock Coffee Company's Second 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 second 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 release 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's my pleasure to turn the call over to Scott Ford, our Co-Founder and Chief Executive Officer. Scott?
Scott Thomas Ford
Thank you for joining us this afternoon, and thank you, Clay. In a few moments, Chris Pledger, our CFO, will review our second quarter financial performance and preview our thinking on the second half of 2023.
Calendar year '23 carries meaningful costs related to major equipment and systems upgrades and additional overhead expense required to prepare us for the next few years. These impacts are largely transitory in nature and best behind us rather than in front of us as we prepare to open our new Conway facility. At each decision point along the way over the past year, we chose securing our success in launching the new extract, an RTD plant in Conway over maximizing this year's earnings.
But before I turn the call over to Chris for his update, allow me to spend a few minutes updating you on this new Conway facility. As followers of West know, Conway is our single most important and impactful project. Its successful completion and commercial production launch will radically alter the overall profitability and trajectory of the company. Our recent $119 million equity raise provides the funding necessary for the timely completion of the packaging lines originally envisioned and announced, a high-speed can line, a high-speed glass bottle line, multi-serve bottle line and BiB and bulk packaging capabilities. But importantly, this recent raise also funds the installation of a second and third can line and a state-of-the-art product development lab and pilot plant.
Today, we are pleased to announce that the original can and glass bottle packaging lines are sold out. We have more customer demand than available capacity for our multi-serve line and we've begun discussions with prospective customers who we expect to speak for the available capacity of our 2 new can lines before they even come online.
In addition to this material good news, our recent fundraising also enables us to invest in 1 to 3 new aseptic or ESL cold chain multi-serve bottle line, 2 to 3 years ahead of our original 5-year plan assumption. While we're still working out the details of this specific investment, we're confident that we have multiple paths available to us to bring this capability online much sooner than originally foreseen.
These new multi-serve bottle lines, together with the glass bottle line, 3 can lines and 3 aseptic Bag-in-a-Box lines will enable us to produce a range of products, including ready-to-drink beverages, concentrate and our exciting new line of energy products for retail and foodservice customers as well as our branded CPG customers.
So in simple terms, what does this mean to our EBITDA forecast and the timing thereof for the Conway facility once complete. We previously estimated this plant would be full in 2027 and that once full, would generate approximately $100 million in incremental annual EBITDA from the packaging lines previously announced.
Due to the developments we are announcing today, we now estimate our once full annual EBITDA run rate will be closer to $125 million to $150 million. Just 12 months ago, when we went public, we laid out our intention to build a 500,000 square foot combined manufacturing and distribution facility that would house a collection of dry and extract-based coffee packaging equipment and serve as a distribution center. We then updated that plan, given the strong customer demand for our product by adding a separate stand-alone 500,000 square foot distribution center as a companion operation to the manufacturing plant and by increasing the RTD lines we would install in the original building.
What was simply an idea to fill an industry niche has now been upsized multiple times over with the vast majority of those products, some 70% to 80% of the original and expanded capacity already spoken for by customers. This is 9 months before the first product ever rolls off the line. We are obviously very encouraged by these recent developments. The exponential upsizing of this project over the past year was brought about by customer demand for the types of products this facility will produce and the work of the most extraordinary team I've ever been a part of.
Our sales and product development teams have worked tirelessly with customers and in our labs, the engineering, production, operations and construction crews are on the verge of completing not only 1 world-class 0.5 million-plus square foot facility, but 2 of them. Our procurement, accounting and support teams have worked nonstop to ensure the raw materials and neural networks are in place and appropriately scaled up before we even turn on the lights. And our core investors and lenders have stepped forward to provide the financial resources required for this rapid escalation.
I believe we are on the verge of building a uniquely purposeful and profitable global business, and I'm not alone in that assessment. The Westrock Coffee leadership team has been enhanced by the arrival of some of the most seasoned professionals in the beverage creation and production industry. This includes more than a dozen new leaders each with more than 20 years of experience for key roles in project management, plant management, manufacturing accounting, quality assurance and quality control and in the engineering, installation and operation of the same equipment we are installing in Conway from major CPGs and product manufacturers such as Pepsi, Dairy Farmers of America, Dean, Yum!, General Mills, Land O'Lakes, et cetera, just to name a few.
The impact this combined business has on millions of smallholder farmers and their families in 35 countries around the world is literally life changing. And our unending thanks goes to our customers who have selected us as their coffee, tea and extract partner and have stayed with us through the challenge of our very rapid scale-up. The employee group that delivers on this mission daily often without recognition or praise, the communities we live and work in, which have cheered for us incessantly and extended a helping hand over and over again, and our investors, who took a meaningful chance and supported us along this entire journey. All of these people deserve our thanks, our continued candor and financial success for themselves. Our aim is to deliver just exactly that over the next 3 to 5 years.
At this point in time, I'll turn the call over to Chris and let him take you through a review of our current operations and financial results.
Thomas Christopher Pledger
Thanks, Scott, and good afternoon, everyone. Since this is the first opportunity we have to talk about our recent capital markets activity, I'll begin my remarks by providing some context for both our recent equity raise and credit agreement amendment. After that, I'll provide an overview of our second quarter results and end with an update on our 2023 outlook.
As Scott mentioned, when we went public last August, we did so with the 2-part strategy. First, we wanted to expand our flavors, extracts and ingredients platform through the build-out of our Conway extract and RTD facility; and second, we wanted to expand internationally with our blue-chip customer base. Our go-public transaction was designed to provide us with all the capital we needed to jump start that plan.
As we began 2023, a few things became apparent. First, customer demand for the products we plan to produce out of our Conway facility exceeded our expectations, both in terms of volume and in the variety of formats our customers wanted. Second, this customer demand and the opportunities it presented was growing faster than our ability to access the capital we needed to fund them under the terms of our existing credit facility. And third, the overall U.S. macroeconomic picture with higher inflation, higher interest rates and the turmoil in the banking sector, created uncertainty around expectations for consumer demand in 2023.
Collectively, these factors led us to conclude we needed to build a fortress around our balance sheet to ensure we have the capital necessary to fund the expanded opportunities we were seeing out of our Conway extract and RTD facility and to take advantage of any other opportunities that arose along the way.
To accomplish this goal, we look to our lending syndicate to adjust our covenant package, while at the same time, we sought to raise $100 million in equity we could use to keep leverage low, even through the now expanded build-out of the Conway facility. Despite the macroeconomic environment, we were able to successfully execute on both.
First, we have a world-class lending syndicate who worked with us to develop a covenant package better suited for the opportunities we are trying to capitalize on in our Conway facility within the accelerated window in which they were being presented. We then were able to raise approximately $119 million through the sale of common stock at $10 per share or go-public price. We raised $69 million from 2 existing Westrock Coffee investors, the Herbert Hunt family and Brown Brothers Harriman, which we took as a strong vote of confidence in our team, our strategy and how we have gone about executing that strategy.
We also raised $50 million from 2 new investors who are excited for the opportunity to partner with us as we grow our business. The expansion of our extracts and RTD business in Conway is the gateway to future EBITDA expansion and remains our top strategic priority and key enabler of future growth. The equity investments and credit agreement amendment form part of the capital plan that ensures the complete build-out of the now expanded Conway facility and allows us to remain active as we look for other opportunities to grow the business.
Shifting to our second quarter results. Total company net sales for the second quarter were $224.7 million compared to $223.4 million for the second quarter of 2022. Consolidated top line momentum was driven by 11% sales growth in Beverage Solutions, which was partially offset by a 33% decrease in net sales in Sustainable Sourcing & Traceability.
Gross profit, excluding the impact of mark-to-market adjustments, decreased $5.6 million to $34.7 million due to a combination of onetime costs associated with our ERP conversion, onetime costs associated with the rapid scale-up of our single-serve platform and higher coffee and production labor cost in Beverage Solutions compared to the prior year quarter.
Consolidated adjusted EBITDA was $11.3 million compared to $13.3 million for the second quarter of 2022. On a segment basis, our Beverage Solutions segment contributed $189.7 million of net sales for the second quarter of 2023, which represents year-over-year growth of 11%.
Adjusted EBITDA for the second quarter of 2023 was $11.7 million compared to $12.5 million for the prior year second quarter. Overall, our Beverage Solutions segment benefited from 51% growth in the sales of flavors, extracts and ingredient products year-over-year. And although we did not see the economic benefits of our growth in single-serve volume in our second quarter, we feel confident that the operational improvements are in place to drive improved financial performance from this platform in the back half of the year.
Turning to our SS&T segment. Sales net of intersegment revenue were $35 million during the second quarter of 2023, a decrease of 33% compared to the second quarter of 2022, which was driven by lower sales volume as global coffee roasters continue to roast through their buffer stock and we experienced an unfavorable sales mix.
Adjusted EBITDA for the quarter was negative $400,000 compared to positive $800,000 for the prior year second quarter. With respect to capital expenditures, during the second quarter, we deployed approximately $35 million of CapEx, primarily related to our Conway extract and RTD facility. And at quarter end, we had approximately $120 million of consolidated unrestricted cash and undrawn revolving credit commitments.
Our consolidated net leverage ratio at June 30 was 4.9x based on LTM adjusted EBITDA. But if you take into account the aggregate gross proceeds from our equity raise, which closed earlier this month, our consolidated net leverage ratio at June 30 would have been 2.7x based on LTM adjusted EBITDA. We believe these investments provide sufficient liquidity to achieve our near-term growth targets and capital expenditure needs.
Turning to our outlook for 2023. Today, we are reaffirming the guidance we provided in late June for adjusted EBITDA to reflect flat to up 10% growth over 2022. As we look to the back half of 2023, there are several headwinds that are now behind us. The first is our ERP conversion, which collectively cost us $4 million to $5 million in gross profit in the first half of the year. These costs will be out of our run rate for the second half of 2023.
Secondly, the operational challenges of scaling up our single-serve platform and the related costs, which cost us approximately $4 million in the first half of 2023 are largely behind us. These costs will be out of our run rate in the second half of '23 as well.
In addition, in the back half of 2023, we'll benefit from new sales coming online, improved operational efficiencies throughout our manufacturing operations and pricing improvements, which helped offset higher material and labor costs we experienced over the past 4 quarters.
Finally, we expect to see improvement in our SS&T segment as sales volume and sales mix returned to more normal levels. Just a reminder that this guidance is an estimate of what the company believes is realizable as of the date of this call, and actual results may vary from this guidance and the variations may be material.
With that, I'll hand the call back over to Scott for a few closing remarks.
Scott Thomas Ford
Thanks, Chris. 14 years ago, we started a small coffee export operation in Rwanda in order to ensure that farmers in that region receive a fair market price for their crop. Many said it couldn't be done. That business ended up creating the world's first fully digitally traceable coffee supply chain, which paved the way for major consumer brands to demand digital price transparency all the way back to the farmer at origin. It literally changed pricing discussions for the entire global industry.
We then launched a roasting business in the United States, and got into the single-serve cup manufacturing business when Keryx patents ran out. Many said we could not possibly be successful in such a highly technical venture against an operator with such manufacturing scale. Today, we are one of the leading providers of these products to some of the largest branded retailers in the world.
We then purchased the largest provider of coffee and tea to restaurants and C-stores unluckily 3 weeks before COVID shut them down for almost a year. Many predicted we would certainly fail because several other similarly situated did. We survived that and took the nascent coffee extract business that was resident in that business and the core team that had created it and launched what will soon be the largest roast to extract to ready-to-drink plant in the country. And today, we are pleased to share that not only is that plant being considerably upsized, accelerated and is essentially fully funded but its capacity is largely sold out and under contract.
I believe that completing the plant and producing and packaging the contracted product is well within the reach of this team now that the capital structure impediments have been fully removed.
With that, I'd like to thank you for your interest in Westrock. And I'll turn the call back over to the operator for questions.
Question and Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Ben Bienvenu from Stephens Inc.
Benjamin Shelton Bienvenu
So Scott, I wanted to start off kind of picking up where you left off with the expansion of the Conway facility, the update to the long-term incremental EBITDA from that facility, I think you said $125 million to $150 million versus the original $100 million by 2027. First, is the time frame still the same by 2027 to get to that $125 million to $150 million.
And then second, when you cited some of the equipment delays that are impacting this year, to what degree do those linger into next year? And how should we think about the bridge from '23 to that substantially higher EBITDA run rate?
Scott Thomas Ford
Yes. So first of all, the time frame is substantially the same. We're using the fifth year of the model, if you will, 2027 when we look at the up and running EBITDA. As we are currently looking at it right now, we will have a fairly hefty, very low debt balance sheet at that point in time. And so my guess is we won't just run it off flat but we -- and we will actually look to continue to invest CapEx to grow our EBITDA. But in the current model, where we are assuming that we go on and let the leverage largely completely unwind, that is apple-to-apple against what we originally forecast when we went public in our SPAC. And so we think that's the apple-to-apple comparison.
So the lift, although essentially at the same time frame comes at a moment when we should experience fairly low leverage and is incremental because of the sales and the additional lines that we've been able to put in and get contracted over the last 12 months.
As it goes to the equipment delays in single-serve -- I'm sorry...
Benjamin Shelton Bienvenu
No, you're going, right. I has kind of follow-up. Perfect.
Scott Thomas Ford
Yes. So that equipment is all in. We have rebuilt of the almost 20 different machines that we had that had to be installed or rebuilt, we are down to only 3 rebuilds left. That equipment is up and running. Our metrics have largely come back in the line with our experience before we went through the scale up without the equipment that didn't come in.
We are very pleased with where we sit at that point. We have built inventory. We are ready for the fall. I -- you can always have some other problem, but the problem that we wrote through for a year where we had a material uptick in demand and the equipment that we had planned to have in to deliver it didn't come in, that is behind us.
Benjamin Shelton Bienvenu
Okay. That's great to hear. My second question kind of pivots to the balance sheet a bit. Chris, I think you cited, if you want to call it, pro forma leverage of 2.7x at June 30 with the new investment that you've secured, would you expect to maintain the balance sheet at that level moving forward even as you ramp up the capital spend? And then if you could talk a little bit about why you chose to bring on additional equity investors versus scaling up the balance sheet in the backdrop that we have and why that makes the most sense?
Thomas Christopher Pledger
Well, I think for us in terms of -- I guess, from a leverage standpoint, I'll answer that one first. The 2.7 on a pro forma basis, I mean, that's going to grow a little bit. My guess is probably 100 basis points or so as we get into the into the teeth of the CapEx spend, which we kind of start now through the end of the first to second quarter of next year. But our goal is to keep leverage low throughout the process. And we were able to do that really in -- from a -- we started a credit agreement and an expansion of our covenant package and then went and raised the equity for 2 reasons.
First of all, that we wanted to be able to -- we can use that, obviously, as we grow Conway, but the other thing is to make sure that from an equity perspective, that we've got the dry powder if we want to look at or as other things arise in the future.
Operator
Our next question comes from the line of Matt Smith from Stifel.
Matthew Edward Smith
Scott, I wanted to follow up on your comments around the initial lines for Conway now essentially being fully under contract. Can you talk about how the mix of the business for those lines and the profitability of those contracts compared to your initial expectations as you began to contemplate the Conway project? And then if I could, as you look more into the future at the extract capabilities that will come online in the coming years, have your expectations changed for the mix of that business, the profitability of that business? Or they remain fairly consistent with your initial expectations?
Scott Thomas Ford
Yes, super question. When we actually spent time on with the Board this morning. The mix has come in, actually, I would say, better than we expected. We thought that it might be super highly concentrated. It looks like the way that we've landed. And most of this is now, I would say, probably we have room for one more contractual piece on our -- on 1 of the first 2 lines, and then we are down to just the small line available with space.
And the spread there is we're probably dealing with 6 of the 10 largest CPG coffee ready-to-drink brands in the country on that set of contracts. So that's the mix expectation that came in a little broader than we thought. The MOQs on it are still very large because the players that are coming in are all large in the space on a relative basis. So we've been very pleased with that.
As we look at the expected margins relative to the pricing we assumed when we went out, we were basically right on top of that, plus or minus 10% at an EBITDA level, not at a pricing, at a revenue level. So we're very pleased with that. That's a lot tighter than we actually had any reason to expect we could guess from the market.
And then finally, as you look forward, this is, I think, the core driver of the business. And Matt, your question is kind of where we've been living, which is it's reminiscent to me of wireless data. We never got our wireless data -- I used to run a wireless business called Alltel, it doesn't matter now, but we never got our wireless data growth forecast high enough. We just never could guess how much people were going to shift to wireless data away from terrestrial-based wireline networks. And we were -- no matter how much we invested and how aggressive we were, we were always behind the curve. I have seen this curve before, and we are still behind it.
We have literally $100 million of additional EBITDA in a pipeline that we are busily trying to find places to make the product to bring it through. We have caught the bus. And we are trying to actually get it to slow down a little, so that we can catch up with it to actually wrestle it down, if you will.
Matthew Edward Smith
That's great. If I could follow up with a question around what you're seeing across the industry given the really robust demand that you're speaking of. Are you seeing other capacity plans that may impact just how strong the demand is for the Conway space?
Scott Thomas Ford
I wouldn't want to get out hold myself out as a professional insightful analyst of what other people are doing. I've got all I can say grace over here. We're not seeing a tremendous amount of capacity being discussed. We have customers that are already asking us to go build another facility like the one we're building in Conway in another part of the country. I don't have any idea if that will pan out or not. We have other projects that we're looking at doing to diversify the physical location where we make products. We have other projects. If you look at the ESL line that I mentioned in my comments, where we may go do that in some other form or fashion in addition to the Conway plant.
And so we have a, I would say, corporate development effort that is busy all the time trying to find homes for the products that people are trying to buy from us. And it comes from not the capacity of the can or the bottle line, Matt, this is the key thing. It comes from the extract. The extract that we make, the extracts that we match, the extracts that we can create for people is what brings the customer base through our doors. They start in our labs. They don't start with an RFP for putting stuff in a bottle. They start in the labs, and we co-develop a lot of these formulations.
And then as we put them in a can or a bottle, they start to then want to be able to put them in all the various form -- packaging forms, if you will. And that experience is what we never guessed we would be -- that is the experience we're having with customers that are so far outrunning what we expected when we started this, that we've doubled the footprint. We're going to put 1 million square feet under production in less than 18 months, and it's woefully short of the products people are talking to us about making and then packaging for them.
Operator
Our next question comes from the line of Sarang Vora from TAG.
Sarang Vora
Great on equity raise and progress on the Conway and EBITDA estimates. Just taking a step back, can you help us understand how the facility is in the construction phase right now? Are you on track in terms of getting the equipment, hiring the talent for it because it's a massive project for you guys. So just curious as you have these milestones, like how are you tracking in terms of milestones? Anything that you are more mindful of or anything we should be worried about on -- related to the opening?
Scott Thomas Ford
Well, we can always worry. But at this point in time, we are actually, thank to good Lord ahead of schedule and under budget, not on time, on budget. Now we have a long way to go, but we have equipment that is already being installed. The leadership team is already in place. We have set eyes on physically 90% of the equipment that is coming into Conway in the manufacturing hub where it's being manufactured. The last 10% will be knocked out over the next few weeks.
Part of our crew has lived in an airplane around the world, making sure that we physically see it and talk to the engineers that are building it after our experience in the single-serve business where it was going to be here and then it wasn't. So we learned a lesson from that, and we've tried to -- with recency bias, we fixed the last thing that jumped up. Whether or not the weather holds, et cetera, on the distribution center, that's almost -- that's 90% under roof. That's the last thing that has to come under roof. I think we are on track.
Now where it could go bumpy is every product that comes through here has to be -- first of all, it has to be created or matched, then it has to go through the commercialization process. Every product has to go through the regulatory process, every line that we turn on has to go through the regulatory process. And everyone wants someone else to go first, right, because these things are difficult to start up as everybody knows. So when we get towards the end of this year, we will give some view about what impact in EBITDA we expect in '24.
The '25 number is actually looking really good in terms of where we should be because most people are planning on coming in and taking their full allocation on an annual basis in the back half of '24. Should that waiver? We could have a startup EBITDA transition issue, but I don't think we're going to have a physical start-up issue from where we sit today.
Sarang Vora
That's great. And I have just one follow-up question for Chris. Gross margin as such has been -- this is more like a P&L question, but gross margin has been declining past few quarters. And this ERP conversion and systems and equipment and stuff. Do we expect to see a turn in the back half of the year? I know you gave a few reasons why gross margin should be improving. But is it positive in the back half of the year in your estimate, just give...
Thomas Christopher Pledger
I do think you'll see a turnaround. I think we'll see a turnaround in gross margins. I think what you're seeing is if you go through and add back the specific onetimes that we talked about related to the ERP conversion, the cost of the single-serve platform, getting that where it needed to be and then some of the other costs that we've incurred kind of in the first half of the year that will be out of our run rate in the back half of the year. When you start looking at that, you start to see a shift in margin from the -- going the wrong way to go in the right way. And I think you'll see that in the back half of the year.
Operator
Our next question comes from the line of Todd Brooks from The Benchmark Company.
Todd Morrison Brooks
On Conway, and Scott, you kind of started to get at this question in the previous answer, but I just want to understand. So at one point, this was a very phased project over 3 phases across that window into '27. And now it seems like given the scale of the opportunity and the fact that you've been able to bring this additional capital in, it's not really phased anymore. It's really, okay, (inaudible) 3 lines up, we're matching them with customer needs. What's the right way to think about the EBITDA recognition of the opportunity, the $125 million to $150 million? Is the main bolus of that in '25, '26 with the tag end in '27 and an initial piece of EBITDA in '24? Just -- if you can help us match how these lines are envisioned to come on now with this EBITDA opportunity, that would be a big help.
Scott Thomas Ford
Yes. I -- we will give you a really, I would say, a cogent view of that as we get towards the end of this year. But I would think you need to be on the maybe 10% in the first year, and then we will build it up 20% to 50% and then 50% to 75%, 75% to 100%, something like that is what we're expecting. And if we hit that, we actually end up in that 5-year plan essentially unlevered. And so we won't just stop there.
But you are right, we have pulled all 3 phases where we were going to use the operation cash -- operating cash flow of the first 2 or 3 lines to build the third and fourth and fifth line, we went on and pulled them all forward. And that's why the $150 million number -- if you go back to some of the discussions we had as we were on the road and people said, how much could it make? That is the number, and those are the 3 phases.
Todd Morrison Brooks
Okay. Great. Second follow-up now. You guys dealt with ERP in the first half, you dealt with the single-serve issues in the first half. Are you getting to a place where you're feeling a little more front-footed and able to play some more offense versus defense? And how are you going to use that bandwidth to go out and [tag] opportunities to grow the business?
Scott Thomas Ford
Yes. Very much the mood has changed. We had established -- we established a really good beachhead in this business from scratch. And then we had a really tough set of battles that the group just stayed focused and thought through. I have not been in a better Board meeting since the day we sold Alltel to private equity in 2007 until today. When the Board went through all of the things that you're asking, plus 1,000 more about our run rate, about our team, about our bandwidth, about our options that are in front of us, about value-creating paths we could pursue. Today was the best Board meeting I've been in 16 years, and it reflects just exactly what you're asking.
Operator
At this time, I would now like to turn the conference back over to Scott Ford for closing remarks.
Scott Thomas Ford
Well, I want to thank you. I know that this is a start-up venture and they're hard to follow, and they're lumpy, and that's always hard to model. And it's hard to keep up with the changes. But I believe we have turned the corner operationally on the core business. I believe we have upside in the Conway facility that is going to live up to its initial early hopes. And I believe we've got opportunities beyond that, that the balance sheet is going to allow us to pursue that are going to continue to let us leg this business up in a material way over the next several years. And we're excited, but we work here.
But I want to thank you for staying with us and for all of the work that you guys do to try to stay up and communicate it back out. So thank you very much for your interest and your time. You guys have a great evening.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
