The Vita o pany(COCO) - 2024 Q1 - Quarterly Results

Q1 2024 Financial Highlights & Outlook First Quarter 2024 Performance Summary The Vita Coco Company achieved a strong Q1 2024 with 2% net sales growth, doubled net income to $14 million, and significantly expanded gross margin to 42.2% due to lower costs and improved pricing Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $112 million | $110 million | +2% | | Gross Profit | $47 million | $34 million | +38% | | Gross Margin | 42.2% | 30.7% | +11.5 p.p. | | Net Income | $14 million | $7 million | +100% | | Diluted EPS | $0.24 | $0.12 | +100% | | Adjusted EBITDA | $21 million | $9 million | +133% | - Net sales growth was driven by improved net pricing for Vita Coco Coconut Water and an increase in private label volume, partially offset by a decline in Vita Coco Coconut Water case equivalent (CE) volume[11] - The significant improvement in gross profit and margin was attributed to lower year-on-year global transportation costs and higher net pricing from reduced promotional activity[17] Management Commentary Management expressed satisfaction with Q1 performance, exceeding profit expectations due to strong gross margins, and consequently raised full-year guidance - CEO Martin Roper noted that net income and Adjusted EBITDA exceeded expectations due to stronger gross margins driven by lower transportation costs and higher net pricing[11] - Executive Chairman Michael Kirban stated that the flagship Vita Coco Coconut Water brand grew 9% in dollar sales in Circana measured channels, maintaining its brand share, thanks to investments in expanding consumption occasions[16] Fiscal Year 2024 Full Year Outlook The company raised its FY2024 guidance for net sales to $500-$510 million and Adjusted EBITDA to $76-$82 million, despite anticipating Q2 gross margin pressure from rising freight costs Updated FY 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $500 million - $510 million | | Gross Margin | 37% - 39% | | Adjusted EBITDA | $76 million - $82 million | - The company expects recent increases in ocean freight routes to adversely affect gross margins, with the most severe impact anticipated in the second quarter[20] - SG&A expenses for the full year are expected to be approximately flat to slightly up in dollar terms compared to 2023[20] Balance Sheet and Capital Allocation The company maintained a strong, debt-free balance sheet with $123 million in cash and repurchased $10 million of common stock during the quarter - As of March 31, 2024, the company had $123 million in cash and cash equivalents and no debt[13] - Under its $40 million share repurchase program, the company has repurchased a total of 421,544 shares for an aggregate value of $10 million at an average price of $23.72 per share[19] Consolidated Financial Statements Consolidated Statements of Operations Q1 2024 saw net sales increase to $111.7 million, gross profit rise to $47.2 million, and net income more than double to $14.2 million, or $0.24 per diluted share Q1 Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net sales | $111,698 | $109,759 | | Gross profit | $47,177 | $33,661 | | Income from operations | $18,959 | $6,704 | | Net income | $14,238 | $6,705 | | Diluted EPS | $0.24 | $0.12 | Consolidated Balance Sheets As of March 31, 2024, total assets reached $289.0 million, with cash decreasing to $123.0 million, while total liabilities decreased, and stockholders' equity rose to $209.7 million Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $122,978 | $132,537 | | Inventory | $56,764 | $50,757 | | Total current assets | $266,702 | $262,937 | | Total assets | $289,042 | $285,682 | | Total current liabilities | $79,002 | $82,585 | | Total liabilities | $79,352 | $83,245 | | Total stockholders' equity | $209,690 | $202,437 | Consolidated Statements of Cash Flows Q1 2024 saw net cash used in operating activities of $0.3 million, a shift from the prior year, primarily due to working capital changes and $9.2 million used for treasury stock Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash from operating activities | $(267) | $9,436 | | Net cash used in investing activities | $(124) | $(449) | | Net cash from (used in) financing activities | $(9,086) | $597 | | Net increase/(decrease) in cash | $(9,557) | $9,771 | Non-GAAP Financial Measures & Supplemental Information Reconciliation of GAAP to Non-GAAP Measures Q1 2024 Adjusted EBITDA significantly increased to $21.2 million from $9.0 million, with key adjustments including income tax expense, stock-based compensation, and unrealized derivative losses Adjusted EBITDA Reconciliation (in thousands) | Line Item | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income | $14,238 | $6,705 | | EBITDA | $16,654 | $8,693 | | Adjustments | $4,576 | $338 | | Adjusted EBITDA | $21,230 | $9,031 | Segment Performance Analysis Americas segment net sales slightly decreased, but gross margin expanded, while International segment net sales grew 20% with improved gross margin, despite a 0.5% overall volume decline Net Sales by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Americas | $96,091 | $96,772 | -0.7% | | International | $15,607 | $12,987 | +20.2% | | Total net sales | $111,698 | $109,759 | +1.8% | Gross Margin by Segment | Segment | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Americas | 42.5% | 30.1% | | International | 40.4% | 34.7% | | Consolidated | 42.2% | 30.7% | Volume (CE) Percentage Change (Q1 2024 vs. Q1 2023) | Product | Americas | International | Total | | :--- | :--- | :--- | :--- | | Vita Coco Coconut Water | (3.4)% | (9.0)% | (4.3)% | | Private Label | 3.8% | 69.0% | 12.2% | | Total volume (CE) | (2.0)% | 7.8% | (0.5)% |