The Vita o pany(COCO) - 2025 Q1 - Quarterly Results

Executive Summary / Q1 2025 Financial Highlights The Vita Coco Company reported a strong start to 2025, with significant growth in net sales, Vita Coco Coconut Water sales, net income, and Non-GAAP Adjusted EBITDA, reflecting robust category leadership and successful product initiatives 1.1 Key Performance Indicators Vita Coco Company showed strong performance in Q1 2025, with net sales growing 17% to $131 million, and Vita Coco Coconut Water sales increasing by 25%. Net income and Non-GAAP Adjusted EBITDA also saw significant growth Key Performance Indicators | Metric | Q1 2025 | Q1 2024 | YoY Growth | | :--- | :--- | :--- | :--- | | Net Sales | $131 Million | $112 Million | 17% | | Vita Coco Coconut Water Net Sales Growth | 25% | - | - | | Net Income | $19 Million | $14 Million | $5 Million | | Non-GAAP Adjusted EBITDA | $22.5 Million | $21.2 Million | $1.3 Million | - Vita Coco Coconut Water achieved 25% net sales growth globally, with 24% growth in the Americas and 36% internationally[3] 1.2 Management Commentary Management expressed pride in the strong start to Q1 2025, highlighting the continued rapid growth of the coconut water category, driven by focused investments as a category leader and successful new product launches like Vita Coco Treats. The company is confident in achieving its full-year growth targets - The coconut water category remains one of the fastest-growing segments in beverages, showing strong growth in the US, UK, and Germany[3] - Company growth is attributed to focused investments as a category leader, driving household penetration and new consumption occasions, alongside stronger beginning-of-year inventory positions[3] - Full-year expectations are based on mid-to-high double-digit growth for Vita Coco Coconut Water and the national rollout of Vita Coco Treats[3] - The company has secured sufficient capacity to support growth expectations, with some excess capacity anticipated in the second half of the year[3] 2. First Quarter 2025 Consolidated Financial Results The company's Q1 2025 consolidated financial results demonstrate strong net sales growth driven by Vita Coco Coconut Water and new product launches, despite a decline in gross margin due to increased costs, while net income and Adjusted EBITDA saw significant increases 2.1 Net Sales Consolidated net sales for Q1 2025 increased by 17% year-over-year to $131 million, driven by strong growth in Vita Coco Coconut Water and the US launch of Vita Coco Treats Net Sales | Metric | Q1 2025 (Million USD) | Q1 2024 (Million USD) | | :--- | :-------------------- | :-------------------- | | Net Sales | $131 | $112 | - Net sales growth was primarily driven by strong volume growth in Vita Coco Coconut Water and private label coconut water CE, along with growth in the 'Other' category from the US launch of Vita Coco Treats[4] 2.2 Gross Profit and Margin Gross profit slightly increased to $48 million, but gross margin decreased from 42% to 37%, primarily due to higher year-over-year ocean freight rates and finished goods costs, partially offset by branded coconut water pricing and a favorable product mix Gross Profit and Margin | Metric | Q1 2025 (Million USD) | Q1 2024 (Million USD) | | :--- | :-------------------- | :-------------------- | | Gross Profit | $48 | $47 | | Gross Margin | 37% | 42% | - The decrease in gross margin was due to higher year-over-year ocean freight rates and finished goods costs, partially offset by branded coconut water pricing and a favorable product mix[6] 2.3 Operating Expenses (SG&A) Selling, General, and Administrative (SG&A) expenses slightly increased to $29 million, mainly due to increased investments in personnel-related costs, partially offset by reduced distributor-related expenses Operating Expenses (SG&A) | Metric | Q1 2025 (Million USD) | Q1 2024 (Million USD) | | :--- | :-------------------- | :-------------------- | | SG&A Expenses | $29 | $28 | - The increase in SG&A expenses was primarily due to increased investments in personnel-related costs, offset by reduced distributor-related expenses[7] 2.4 Net Income and EPS Net income and diluted EPS for Q1 2025 significantly increased, benefiting from higher gross profit and mark-to-market gains on derivative instruments, despite slightly higher SG&A expenses and an increased effective tax rate Net Income and EPS | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $19 Million | $14 Million | | Diluted EPS | $0.31 | $0.24 | - Net income benefited from higher gross profit and mark-to-market gains on derivative instruments, partially offset by slightly higher SG&A expenses and an increased effective tax rate[8] 2.5 Non-GAAP Adjusted EBITDA Non-GAAP Adjusted EBITDA for Q1 2025 increased to $22.5 million, primarily driven by the increase in gross profit Non-GAAP Adjusted EBITDA | Metric | Q1 2025 (Million USD) | Q1 2024 (Million USD) | | :--- | :-------------------- | :-------------------- | | Adjusted EBITDA | $22.5 | $21.2 | - The growth in Adjusted EBITDA was primarily attributable to the increase in gross profit[9] 3. Financial Position and Capital Allocation The company maintains a strong financial position with substantial cash reserves and no debt, while actively managing capital through a significant share repurchase program 3.1 Balance Sheet Highlights As of March 31, 2025, the company maintained a strong financial position with $154 million in cash and cash equivalents and no debt, while inventory levels continued to improve Balance Sheet Highlights | Metric | March 31, 2025 (Million USD) | | :--- | :--------------------------- | | Cash and Cash Equivalents | $154 | | Debt | $0 | | Inventory | $88 | - Inventory levels continued to improve, increasing from $84 million as of December 31, 2024, to $88 million as of March 31, 2025[9][24] 3.2 Share Repurchase Program The Board of Directors approved an additional $25 million for the share repurchase program, increasing the total authorization to $65 million, with $10.1 million in shares repurchased year-to-date - The Board of Directors approved an additional $25 million to the repurchase program, increasing the authorized limit to $65 million[10] - Repurchased $1.5 million of common stock during the three months ended March 31, 2025, and $8.6 million between April 1 and April 29, 2025, totaling $10.1 million year-to-date[10] - Approximately $42.1 million remained available under the repurchase program authorization as of April 29, 2025[10] 4. Fiscal Year 2025 Full Year Outlook The company reaffirmed its full-year 2025 guidance, projecting continued growth in net sales and Vita Coco Coconut Water, with specific targets for gross margin and Adjusted EBITDA, while acknowledging potential impacts from external uncertainties 4.1 Reaffirmed Guidance The company reaffirmed its full-year 2025 guidance, projecting net sales between $555 million and $570 million, mid-to-high double-digit growth for Vita Coco Coconut Water, gross margin between 35% and 37%, and Adjusted EBITDA between $86 million and $92 million FY 2025 Outlook | Metric | FY 2025 Outlook | | :--- | :--- | | Net Sales | $555 Million - $570 Million | | Gross Margin | 35% - 37% | | SG&A Expenses | Mid-single-digit increase vs. 2024 | | Adjusted EBITDA | $86 Million - $92 Million | - Vita Coco Coconut Water is expected to achieve mid-to-high double-digit growth, benefiting from the launch of Vita Coco Treats and brand price increases, partially offset by increased promotional activity and private label softness[13] - Gross margin outlook considers higher average freight and finished goods costs, partially offset by higher Vita Coco Coconut Water net pricing and an increased mix of branded versus private label volume[13] 4.2 Outlook Caveats The company's reaffirmed FY 2025 outlook incorporates the impact of currently applicable tariff rates and mitigation efforts but excludes potential delayed reciprocal tariff impacts, noting that uncertainties in the operating environment, geopolitical landscape, and global economy could affect future performance - The outlook includes the impact of currently applicable tariff rates and the company's anticipated mitigation efforts but excludes potential delayed reciprocal tariff impacts[11] - Uncertainties and instabilities in the current operating environment, geopolitical landscape, and global economy, including changes in tariff rates, related potential competitive pricing actions, and the company's own price elasticity, could impact this outlook and future results[11] - A GAAP net income outlook for 2025 was not provided due to inherent difficulties in quantifying certain amounts, such as the unpredictability of foreign exchange rates and future expenses or reversals outside the normal course of business[14] 5. Company Information & Disclosures This section provides essential company information, including details on investor communications, the company's mission and brands, its approach to non-GAAP financial measures, forward-looking statements, and website disclosure practices 5.1 Conference Call and Webcast The company provided registration links for participating in the live earnings conference call and Q&A session, along with details for accessing the live audio webcast and archived replay via its investor relations website - Participation in the live earnings conference call and Q&A session requires registration via a designated link to obtain dial-in information[15] - A live audio webcast is accessible in the 'Events' section of the company's investor relations website, with an archived replay available shortly after the live broadcast[15] 5.2 About The Vita Coco Company The Vita Coco Company is a public benefit corporation and Certified B Corp dedicated to providing better-for-you beverage brands, including its flagship Vita Coco coconut water, sustainably packaged water Ever & Ever, and protein-infused water PWR LIFT. Vita Coco is the leading coconut water brand in the US - The Vita Coco Company is a family of brands committed to providing better-for-you, nutritious, and delicious products that are good for consumers and the world[16] - Founded in 2004, the company is a public benefit corporation and Certified B Corp, with its primary brand, Vita Coco, being the leading coconut water brand in the US[16] 5.3 Non-GAAP Financial Measures The company discloses non-GAAP financial results, including Adjusted EBITDA, which are used by management and the Board to assess financial performance by excluding items not representative of core operating performance. These non-GAAP measures should be considered supplementary and not a substitute for GAAP results - Non-GAAP measures are key metrics used by management and the Board to assess the company's financial performance by excluding items not representative of core operating performance for consistency across reporting periods[18] - These measures do not conform to or supersede US GAAP, may differ from non-GAAP measures used by other companies, and investors should not rely solely on a single financial measure[19] 5.4 Forward-Looking Statements This press release contains forward-looking statements regarding future financial and operating performance, strategy, costs, outlook, and supply chain projections, which are based on current expectations and involve known and unknown risks, uncertainties, and other important factors. The company undertakes no obligation to update or revise these statements unless required by applicable law - All statements in this press release that do not relate to historical facts should be considered forward-looking statements, including but not limited to statements regarding future financial and operating performance, strategy, costs, outlook, management objectives, supply chain projections, and net sales and category share growth[20] - Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause actual results, performance, or achievements to differ materially from those expressed or implied by such statements[21] - The company undertakes no obligation to update or revise any forward-looking statements in this press release unless required by applicable law[21] 5.5 Website Disclosure The company plans to use its official website as a means of disclosing material non-public information and complying with SEC Regulation FD and other disclosure obligations - The company intends to use its websites vitacoco.com and investors.thevitacococompany.com as a means of disclosing material non-public information and complying with SEC Regulation FD and other disclosure obligations[22] 6. Consolidated Financial Statements This section presents the company's consolidated financial statements, including the balance sheets, statements of operations, and cash flows, providing a comprehensive overview of its financial health and performance 6.1 Consolidated Balance Sheets The consolidated balance sheets present the company's financial position as of March 31, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets | Metric (Thousands USD) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $383,969 | $362,381 | | Total Liabilities | $106,111 | $103,564 | | Total Stockholders' Equity | $277,858 | $258,817 | | Cash and Cash Equivalents | $153,608 | $164,669 | | Inventory | $88,335 | $83,600 | 6.2 Consolidated Statements of Operations The consolidated statements of operations provide a breakdown of the company's revenues and expenses for the three months ended March 31, 2025, and March 31, 2024, including net sales, cost of goods sold, gross profit, operating expenses, and net income Consolidated Statements of Operations | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Sales | $130,921 | $111,698 | | Cost of Goods Sold | $82,836 | $64,521 | | Gross Profit | $48,085 | $47,177 | | Selling, General and Administrative Expenses | $28,792 | $28,218 | | Operating Income | $19,293 | $18,959 | | Net Income | $18,882 | $14,238 | | Diluted Earnings Per Share | $0.31 | $0.24 | 6.3 Consolidated Statements of Cash Flows The consolidated statements of cash flows detail the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and March 31, 2024, showing a net decrease in cash and cash equivalents Consolidated Statements of Cash Flows | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(9,800) | $(267) | | Net Cash Used in Investing Activities | $(559) | $(124) | | Net Cash Used in Financing Activities | $(1,099) | $(9,086) | | Net Decrease in Cash and Cash Equivalents | $(11,057) | $(9,557) | | Cash and Cash Equivalents at End of Period | $154,876 | $123,310 | 7. Non-GAAP Reconciliation & Supplemental Data This section provides a reconciliation of GAAP net income to Non-GAAP Adjusted EBITDA and detailed supplemental segment information, offering deeper insights into the company's operational performance and regional contributions 7.1 GAAP Net Income to Non-GAAP Adjusted EBITDA Reconciliation This section provides a reconciliation from GAAP net income to Non-GAAP Adjusted EBITDA, detailing adjustments for stock-based compensation, unrealized gains/losses on derivative instruments, foreign exchange gains/losses, and other items GAAP Net Income to Non-GAAP Adjusted EBITDA Reconciliation | Metric (Thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Income | $18,882 | $14,238 | | EBITDA | $23,047 | $16,654 | | Adjusted EBITDA | $22,505 | $21,230 | - Adjustments include stock-based compensation, unrealized gains and losses on derivative instruments, foreign exchange gains and losses, and other adjustments such as the 2023 one-time incentive plan and New York City office rent overlap expenses[29][30] 7.2 Supplemental Segment Information This section provides detailed supplemental information on net sales, cost of goods sold, gross profit, gross margin, and volume (case equivalents) by geographic segment (Americas and International), illustrating specific performance contributions and trends for each segment 7.2.1 Net Sales by Segment Net sales in the Americas segment grew, driven by Vita Coco Coconut Water and the 'Other' category; the International segment also saw growth, primarily from Vita Coco Coconut Water Net Sales by Segment | Segment (Thousands USD) | Q1 2025 Net Sales | Q1 2024 Net Sales | | :--- | :--- | :--- | | Americas Subtotal | $112,600 | $96,091 | | International Subtotal | $18,321 | $15,607 | | Total Net Sales | $130,921 | $111,698 | Americas Segment Net Sales | Americas Segment (Thousands USD) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Vita Coco Coconut Water | $86,118 | $69,522 | | Private Label | $21,197 | $24,273 | | Other | $5,285 | $2,296 | International Segment Net Sales | International Segment (Thousands USD) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Vita Coco Coconut Water | $13,177 | $9,665 | | Private Label | $4,759 | $5,152 | | Other | $385 | $790 | 7.2.2 Cost of Goods Sold & Gross Profit by Segment The Americas segment saw increases in both cost of goods sold and gross profit, while the International segment experienced increased cost of goods sold but decreased gross profit. Overall, consolidated gross profit grew, but gross margins declined in both segments Cost of Goods Sold & Gross Profit by Segment | Metric (Thousands USD) | Q1 2025 Americas | Q1 2024 Americas | Q1 2025 International | Q1 2024 International | | :--- | :--- | :--- | :--- | :--- | | Cost of Goods Sold | $70,288 | $55,219 | $12,548 | $9,302 | | Gross Profit | $42,312 | $40,872 | $5,773 | $6,305 | | Gross Margin | 37.6% | 42.5% | 31.5% | 40.4% | 7.2.3 Volume by Segment (CE) Consolidated volume grew by 20.5%, primarily driven by strong growth in Vita Coco Coconut Water across both Americas and International segments, and significant growth in the 'Other' category in the Americas, partially offset by a decline in Americas private label volume Volume (CE) Percentage Change (Q1 2025 vs. 2024) | Volume (CE) Percentage Change (Q1 2025 vs. 2024) | Americas Segment | International Segment | Total | | :--- | :--- | :--- | :--- | | Vita Coco Coconut Water | 23.5% | 34.7% | 25.2% | | Private Label | (2.3)% | 13.5% | 0.7% | | Other | 187.8% | (2.7)% | 172.4% | | Subtotal | 19.2% | 27.2% | 20.5% | - Case Equivalents (CE) is a standard volume measure used by management, defined as 12 units of 330ml liquid beverage or the same liter volume of oil[33]