Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased by $49 million or 37% year-over-year to $182 million, driven by a 42% growth in Vita Coco Coconut Water [15][18] - Gross profit for the quarter was $69 million, an increase of $17 million compared to the prior year, with gross margins at 38%, down approximately 110 basis points from 39% in Q3 2024 [17][18] - Net income attributable to shareholders was $24 million or $0.40 per diluted share, compared to $19 million or $0.32 per diluted share in the prior year [18] Business Line Data and Key Metrics Changes - Vita Coco Coconut Water net sales increased by 41% to $132 million, with a volume increase of 30% and a price mix benefit of 8% [16] - Private label sales decreased by 13% to $14 million, while the other product category grew by 182%, primarily due to the national launch of Vita Coco Treats [16] - International segment net sales were up 48%, with Vita Coco Coconut Water growing 47%, driven by strong performance in major markets [16] Market Data and Key Metrics Changes - Coconut water category growth was reported at 22% year-to-date in the U.S., 32% in the U.K., and over 100% in Germany [4][5] - Year-to-date retail growth for Vita Coco Coconut Water was 21% in the U.S., 32% in the U.K., and over 200% in Germany [5] - The company noted strong growth trends in Europe, particularly in the U.K. and Germany, with increased investment paying off [5][6] Company Strategy and Development Direction - The company aims to maintain strong growth trends by investing in and developing the coconut water category in priority markets, transitioning coconut water from niche to mainstream [6][7] - The focus remains on building a better beverage platform and leveraging a global diversified supply chain to navigate tariff challenges [12][13] - The company is optimistic about future pricing strategies and potential tariff waivers, which could enhance competitiveness [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the coconut water category and the company's ability to navigate current challenges [23] - The company anticipates a tougher Q4 due to difficult year-over-year comparisons but remains optimistic about underlying growth trends [15][20] - Management highlighted the importance of monitoring tariff impacts and competitive dynamics before making further pricing decisions [42][44] Other Important Information - The company has a strong balance sheet with total cash on hand of $204 million and no debt under its revolving credit facility [19] - Full-year net sales guidance has been raised to between $580 million and $595 million, with expected gross margins of approximately 36% [20][21] - The company is focused on growth, innovation, and potential M&A opportunities while considering share buybacks if excess cash is available [80][81] Q&A Session Summary Question: Clarification on guidance and Q4 expectations - Management explained that the top-line growth guidance implies a sharp decline in Q4 due to tough comparisons and potential pull-forward of shipments from Q4 into Q3 [25][26] - They emphasized the importance of looking at two-year growth rates for a better understanding of underlying momentum [26][30] Question: Insights on private label business - Management views the private label business as complementary and intends to continue pursuing it, believing they have a competitive advantage in quality and service [31][32] Question: Impact of tariffs on gross margins - Management confirmed that the increased tariffs from Brazil would have a more significant impact in Q4, with expectations for a peak tariff rate of 23% [37][41] Question: Ocean freight and cost structure - Management acknowledged that ocean freight costs have decreased significantly, which could positively impact margins, but cautioned against overestimating its effect [68][70] Question: Capital allocation and use of cash - The company prioritizes growth, innovation, and M&A, with share buybacks considered if excess cash is available [80][81]