Summary of The Vita Coco Company (COCO) Conference Call - May 13, 2025 Company Overview - The Vita Coco Company is a market leader in the coconut water category, founded in 2004, and has a diverse product pipeline including the recently launched Vita Coco treats [2][6][12]. Industry Insights - The coconut water category is experiencing significant growth, with a reported category growth of 23% and Vita Coco brand growth of 20% in Q1 [6][12]. - The company aims to establish coconut water as a household staple across North America and other markets [7][12]. Consumer Trends - Consumer focus on health and wellness is driving demand, with consumers willing to pay for these benefits [7][10]. - The Hispanic consumer segment is a key demographic for Vita Coco, with a strong index of 60% among this group, indicating a more affluent and health-conscious consumer base [10][12]. Growth Strategy - The company plans to double its business in the next four to six years by increasing household penetration and expanding distribution channels [13][14]. - Growth drivers include increasing household usage occasions for coconut water, such as smoothies, cocktails, and hydration [15][16]. Financial Performance - Q1 results showed a 17% top-line growth, with guidance for the year set at 8% to 10% growth, driven by mid to high teens growth in coconut water [19][20]. - The company anticipates continued growth despite some losses in regional private label business [23][30]. Pricing and Tariffs - A small price increase was implemented, and further pricing adjustments are planned for Q3, influenced by a 10% baseline tariff affecting 60% of global COGS [33][35][36]. - The company is exploring ways to mitigate tariff impacts through pricing strategies and supply chain adjustments [84][86]. Distribution and Retail Relationships - Vita Coco is working to improve its distribution at Walmart, moving to a more prominent shelf space in the juice aisle, which is expected to drive future growth [42][49]. - Despite a 50% decline in distribution at Walmart, the company is gaining distribution in other channels, including convenience stores and food service [52][55]. Innovation and Product Development - The introduction of multipacks has been a significant innovation, now accounting for 50% of volume, and is expected to continue driving growth [63][64]. - The company is also focusing on expanding its product offerings, including coconut milk and treats, which are attracting new consumer segments [61][62]. International Expansion - The international segment is seen as a growth opportunity, particularly in Western Europe, where the company is investing in marketing and distribution [69][70][73]. - The UK and Germany markets are highlighted as areas of significant growth potential [70][72]. Gross Margin Outlook - Gross margins expanded in Q1, with guidance maintained for the year despite pressures from ocean freight rates and product costs [74][75]. - The company aims for long-term gross margins to approach 40%, driven by a shift from private label to branded products and successful innovation [94][96]. Marketing and SG&A - SG&A expenses are expected to grow in the low to mid-single digits, with a focus on marketing to drive brand awareness in the coconut water category [98][100]. Food Service Opportunities - The company is expanding its presence in the food service sector, targeting partnerships with coffee shops and restaurants to increase usage occasions for coconut water [101][102]. M&A Strategy - While M&A is not seen as essential for growth, the company is open to acquiring brands that align with its health and wellness focus, provided they are at the right valuation [105][110][112].

Core Insights - The Vita Coco Company, Inc. released its 2024 Impact Report, highlighting significant progress in its Environmental, Social, and Governance (ESG) initiatives, particularly through its Seedlings for Sustainability program [1][2] Group 1: Environmental Initiatives - The Seedlings for Sustainability initiative has successfully distributed over 1 million seedlings, moving towards a goal of 10 million by 2030 [2][7] - The company completed its first climate impact assessment, identifying supply chain vulnerabilities to weather changes, and implemented two water-reduction projects estimated to conserve 1.5 million liters annually [7] Group 2: Social Contributions - Vita Coco built three new classrooms in the Philippines, increasing the total to 39 schools and positively impacting over 24,500 students [7] - The Growing Roots Grant Program was launched in the U.S. to create green spaces at underserved schools, starting with Oak Street Elementary in Los Angeles [7] Group 3: Governance and Community Engagement - Approximately 97% of the company's primary packaging materials met its responsible packaging definition, and 100% of its branded products are certified non-GMO [7] - The company provided cash and in-kind donations to various nonprofit and community-based organizations across the U.S., U.K., Latin America, and Europe, addressing food insecurity and disaster relief [7] Group 4: Future Outlook - The company plans to expand its regenerative agriculture programs, set climate targets, and grow the reach of the Vita Coco Community Foundation [5]

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Company Overview - The Vita Coco Company is a leading high-growth platform of better-for-you beverage brands, including its flagship coconut water brand, Vita Coco, sustainably packaged water Ever & Ever, and protein-infused water PWR LIFT [3] - The company was co-founded in 2004 by Michael Kirban and Ira Liran and operates as a public benefit corporation and Certified B Corporation [3] - Vita Coco is recognized as the leading coconut water brand in the U.S., appealing to consumers for its electrolytes, nutrients, and vitamins [3] Upcoming Events - The company will participate in the Goldman Sachs Global Staples Forum on May 13, 2025, in New York [1] - Michael Kirban, Co-Founder and Executive Chairman, will engage in an in-person fireside chat at 10:20 a.m. Eastern Time on the same day [2] - A live webcast of the presentation will be available on the company's Investor Relations website, with an archived replay accessible shortly after the event [2]

Core Insights - Pomerantz LLP is investigating claims on behalf of investors of The Vita Coco Company, Inc. regarding potential securities fraud or unlawful business practices [1] - A report from NINGI Research alleges that Vita Coco misled investors about its growth and operations, including the potential loss of a key contract with Costco, which accounts for approximately 25% of its net sales [3] - Following the allegations, Vita Coco's stock price dropped by $3.90, or 11%, closing at $31.55 per share on March 26, 2025 [4] Company Overview - The Vita Coco Company, Inc. is publicly traded on NASDAQ under the ticker COCO [1] - The company is primarily known for its coconut water business, but is reportedly facing operational challenges beyond this core segment [3] Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [5] - The firm is currently seeking to gather information from investors who may have been affected by the alleged misconduct of Vita Coco [1][5]

Just in time for summer, this new release provides a tropical escape with every sip NEW YORK, May 05, 2025 (GLOBE NEWSWIRE) -- Vita Coco (NASDAQ: COCO), the leading coconut water brand in the U.S., is excited to introduce the newest flavor to its lineup of Coconut Juices: Piña Colada with pulp. Perfectly timed for the sunny season ahead, this flavor delivers that vacation-in-a-bottle feeling, blending juicy pineapple flavors and hydrating coconut water for a refreshingly bold, tropical taste, complete with ...

Financial Data and Key Metrics Changes - In Q1 2025, net sales increased by $19 million or 17% year-over-year to $131 million, driven by a 25% growth in Vita Coco coconut water net sales [22][24] - Gross profit for the quarter was $48 million, an increase of $1 million compared to the prior year, with gross margins at 37%, down approximately 550 basis points from 42% in Q1 2024 [23][24] - Net income attributable to shareholders was $19 million or $0.31 per diluted share, compared to $14 million or $0.24 per diluted share in the prior year [24] Business Line Data and Key Metrics Changes - Vita Coco coconut water net sales increased by 25%, while private label sales decreased by 12%, with private label coconut water experiencing a 10% growth offset by a decline in coconut oil [22][24] - The other product category saw an 84% growth, primarily due to the positive impact from Vita Coco treats [15][24] - In the Americas, Vita Coco coconut water net sales increased by 24% to $86 million, while private label decreased by 13% to $21 million [22] Market Data and Key Metrics Changes - Vita Coco coconut water grew by 20% in retail dollars in the US and 21% in the UK during Q1 2025 [10] - The coconut water category is one of the fastest-growing beverage categories, with growth rates of 23% in the US and 19% in the UK [9][10] - The international segment reported a 17% increase in net sales, with Vita Coco coconut water growing by 36% across major markets [23] Company Strategy and Development Direction - The company aims to grow the Vita Coco brand by expanding the coconut water category and innovating around core offerings [8] - International growth is a priority, with significant investments planned for the UK, Germany, and other European markets [13] - The company is exploring innovation in adjacent categories and potential M&A opportunities to enhance shareholder value [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the coconut water growth trajectory, citing a strong inventory position and positive retail programming [14][21] - The company anticipates that the coconut water category will continue to grow, with expectations of doubling the category in the coming years [13] - Management is confident in navigating the current environment, including potential tariff impacts, due to a diversified sourcing strategy [20][21] Other Important Information - The company has a strong balance sheet with total cash on hand of $154 million and no debt under its revolving credit facility [26] - The board approved an additional $25 million for share repurchases, increasing the total authorization to $65 million [26][27] - The company expects net sales for the full year 2025 to be between $555 million and $570 million, with gross margins projected at 35% to 37% [27][28] Q&A Session Summary Question: Can you elaborate on your mitigation efforts regarding tariffs? - Management indicated that they entered the year with healthy inventory, which helps delay tariff impacts. Mitigation efforts include continuous cost improvements and potential pricing adjustments to offset tariff costs [34][35][36] Question: What is the expected impact of pricing on demand? - Management plans to take pricing to cover the unmitigated costs of tariffs, with expectations that the category's health will support consumer acceptance of price increases [41][42][56] Question: How is the company planning to grow internationally? - The company is investing in both marketing and supply chain resources to support growth in international markets, emphasizing the need for boots on the ground to establish relationships with retailers [89][90] Question: What are the drivers behind higher finished goods costs? - Higher finished goods costs are attributed to new factory setups and increased ocean freight rates compared to the previous year [59][63][65] Question: How flexible is the company in adjusting sourcing in response to tariffs? - The company is well-positioned to adapt sourcing strategies, with a lead time of 12 to 24 months for new factories, but can reallocate supply more quickly between markets [97][100][102]

Core Viewpoint - Vita Coco Company, Inc. reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, and showing an increase from $0.24 per share a year ago, representing a 40.91% earnings surprise [1] Financial Performance - The company achieved revenues of $130.92 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.85% and increasing from $111.7 million year-over-year [2] - Over the last four quarters, the company has exceeded consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - Vita Coco shares have declined approximately 14.5% since the beginning of the year, compared to a 5.5% decline in the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.39 on revenues of $161.53 million, and for the current fiscal year, it is $1.13 on revenues of $570.33 million [7] Industry Context - The Beverages - Soft drinks industry, to which Vita Coco belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, indicating potential challenges ahead [8]

Financial Performance - For the three months ended March 31, 2025, net sales increased by 17.2% to $130,921,000 compared to $111,698,000 in the same period of 2024[120] - Gross profit for the first quarter of 2025 was $48,085,000, slightly up from $47,177,000 in the prior year[120] - Operating income increased to $19,293,000 in Q1 2025 from $18,959,000 in Q1 2024[120] - Net income for the three months ended March 31, 2025, was $18.9 million, a 32.5% increase from $14.2 million in the prior year[120] - Adjusted EBITDA for the three months ended March 31, 2025, was $22.5 million, compared to $21.2 million for the same period in 2024, reflecting improved operational performance[147] - EBITDA increased by $6.4 million, or 38.4%, to $23.0 million for the three months ended March 31, 2025, compared to $16.7 million in the same period of 2024[147] Sales Performance - Vita Coco Coconut Water net sales grew by 25.4%, with a case equivalents volume increase of 25.2%[123] - The Americas segment reported a 17.2% increase in net sales, driven primarily by a 23.9% increase in Vita Coco Coconut Water sales[123] - Americas net sales increased by $16.5 million, or 17.2%, to $112.6 million for the three months ended March 31, 2025, driven by a 23.5% growth in CE volume of Vita Coco Coconut Water[126] - Vita Coco Coconut Water net sales rose by $16.6 million, or 23.9%, to $86.1 million for the three months ended March 31, 2025, attributed to a 23.5% increase in CE volume due to heightened demand[127] - International net sales increased by $2.7 million, or 17.4%, to $18.3 million for the three months ended March 31, 2025, primarily driven by a 27.2% growth in CE volume in Germany and the United Kingdom[130] - Net sales from Other products increased by $3.0 million, or 130.2%, to $5.3 million for the three months ended March 31, 2025, driven by the national rollout of Vita Coco Treats[129] Cost and Expenses - Gross profit increased by $0.9 million, or 1.9%, to $48.1 million for the three months ended March 31, 2025, despite a 28.4% increase in cost of goods sold to $82.8 million[134] - Operating expenses rose to $28.8 million from $28.2 million, reflecting ongoing investments in sales and marketing[120] - Total cost of goods sold increased by $18.3 million, or 28.4%, to $82.8 million for the three months ended March 31, 2025, primarily due to higher sales volume and increased transportation costs[133] - Selling, general, and administrative expenses increased by $0.6 million, or 2.0%, to $28.8 million for the three months ended March 31, 2025, mainly due to higher personnel-related expenses[136] Tax and Income - The effective income tax rate rose to 22.5% for the three months ended March 31, 2025, compared to 21.0% in the prior year, primarily due to increased pre-tax profits in higher tax jurisdictions[143] - Income tax expense rose by $1.7 million, or 45.1%, to $5.5 million for the three months ended March 31, 2025, with an effective tax rate of 22.5% compared to 21.0% in the prior year[142] Cash Flow and Liquidity - Cash flows from operating activities showed a significant decrease, with a net outflow of $9.8 million for the three months ended March 31, 2025, compared to an outflow of $267,000 in the prior year[151] - The company had $153.6 million in cash and cash equivalents as of March 31, 2025, down from $164.7 million at the end of 2024[148] - Cash used in operating activities increased by $9.5 million compared to the prior year, influenced by timing differences in accounts receivable collection[154] - Cash used in investing activities rose to $0.6 million, primarily due to capital expenditures for new office locations[155] - Net cash used by financing activities decreased by $8.0 million to $(1.1) million for the three months ended March 31, 2025, due to fewer share repurchases compared to the previous year[156] - As of March 31, 2025, the outstanding balance on the Revolving Facility was zero, indicating strong liquidity management[160] Private Label Sales - Private label net sales decreased by 12.7% to $21,197,000, impacted by the transition out of private label coconut oil sales[123] - Private label net sales decreased by $3.1 million, or 12.7%, to $21.2 million for the three months ended March 31, 2025, primarily due to a decline in the private label coconut oil business[128] - Private label net sales decreased by $0.4 million, or 7.6%, to $4.8 million for the three months ended March 31, 2025, primarily due to a decline in the coconut oil business[132] Tariff and Cost Management - The company anticipates that the imposition of a new 10% baseline tariff will increase the cost of goods sold, affecting future financial results[103] - The company is closely monitoring the evolving tariff landscape and implementing cost-mitigation measures[103] Operational Overview - The company operates in over 35 countries, with primary markets in North America, the United Kingdom, and Germany[102] - As of March 31, 2025, the company sources coconut water from a diversified network of 16 factories across six countries[101] Accounting and Compliance - The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments that may affect reported amounts[164] - There were no material changes to critical accounting policies during the three months ended March 31, 2025, ensuring consistency in financial reporting[166] - The Company evaluates its estimates and assumptions on an ongoing basis, which may lead to differences in actual results under varying conditions[165] - Recent accounting pronouncements that may impact financial position and results of operations are disclosed in the Summary of Significant Accounting Policies[167]

Financial Data and Key Metrics Changes - In Q1 2025, net sales increased by $19 million or 17% year-over-year to $131 million, driven by a 25% growth in Vita Coco coconut water net sales [23][26] - Gross profit for the quarter was $48 million, an increase of $1 million compared to the prior year, with gross margins at 37%, down approximately 550 basis points from 42% in Q1 2024 [25][26] - Net income attributable to shareholders was $19 million or $0.31 per diluted share, compared to $14 million or $0.24 per diluted share in the prior year [26] Business Line Data and Key Metrics Changes - Vita Coco coconut water net sales increased by 25%, while private label sales decreased by 12%, with private label coconut water growth of 10% offset by a decline in coconut oil [23][26] - The International segment saw net sales up 17%, with Vita Coco coconut water growing 36% across major markets [25] Market Data and Key Metrics Changes - Coconut water category growth was reported at 23% in the US and 19% in the UK for Q1 2025 [8] - Vita Coco coconut water grew 20% in retail dollars in the US and 21% in the UK [10] Company Strategy and Development Direction - The company aims to grow the Vita Coco brand by expanding the coconut water category and innovating around core offerings [7] - International growth is a priority, particularly in underdeveloped markets like Germany, which saw a doubling of volume sold compared to the same quarter last year [7][13] - The company is exploring innovation in adjacent categories and potential M&A opportunities to enhance shareholder value [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about branded coconut water growth in 2025, supported by a stronger inventory position and retail programming [10][14] - The company anticipates that international operations will eventually match the size of its American business [14] - Management is confident in navigating the current environment, including potential tariff impacts, due to a diversified sourcing strategy [21][22] Other Important Information - The company has a strong balance sheet with total cash of $154 million and no debt [28] - Share repurchase program has been increased to $65 million, with $23 million already utilized [28] Q&A Session Summary Question: Guidance for the year and mitigation efforts regarding tariffs - Management confirmed that the guidance includes the 10% baseline tariff and discussed ongoing cost-saving initiatives and potential pricing adjustments to offset tariff impacts [36][39] Question: SG&A growth guidance - The slight increase in SG&A growth guidance reflects a broader range due to uncertainty, with investments focused on marketing and team expansion [42][45] Question: Supply availability for growth - Management indicated that while coconut supply is abundant, planning and timing are critical for scaling operations [56][57] Question: Pricing strategy amidst growth - The company plans to take pricing in response to cost increases, balancing the need to maintain brand momentum [58][59] Question: Drivers of higher finished goods costs - Higher finished goods costs are attributed to new factory setups and elevated ocean freight rates compared to the previous year [62][67] Question: Shelf space and distribution strategy - The company expects improved shelf space and distribution gains, particularly in convenience stores and through successful product launches [114][116]