Vita Coco (COCO 0.03%), a leading producer of coconut water and plant-based beverages, reported results for Q2 2025 on July 30, 2025. The company announced GAAP revenue and earnings per share that both topped analyst estimates, boosted by robust branded coconut water sales and new product rollouts. Net sales (GAAP) reached $168.8 million versus the $161.3 million consensus, and Diluted earnings per share (GAAP) were $0.38, compared to the $0.36 estimate. Despite these gains, gross margin (GAAP) shrank marke ...

The Vita Coco Company (COCO) Q2 2025 Earnings Call July 30, 2025 08:30 AM ET Company ParticipantsJohn Mills - Managing PartnerMichael Kirban - Co-Founder & Executive ChairmanMartin Roper - CEO & DirectorCorey Baker - CFOKaumil Gajrawala - Managing DirectorBonnie Herzog - Managing Director Robert Ottenstein - Senior MDGlenn West - Equity Research AssociateConference Call ParticipantsChristian Junquera - Equity Research AnalystEric Des Lauriers - Senior Research AnalystJim Salera - Research AnalystMichael Lav ...

Financial Data and Key Metrics Changes - Net sales increased by $25 million or 17% year-over-year to $169 million, driven by a 25% growth in Vita Coco Coconut Water [20][23] - Gross profit for the quarter was $61 million, an increase of $3 million compared to the prior year, with gross margins at 36%, down approximately 450 basis points from 41% in Q2 2024 [19][21] - Net income attributable to shareholders was $23 million or $0.38 per diluted share, compared to $19 million or $0.32 per diluted share for the prior year [20][21] Business Line Data and Key Metrics Changes - Vita Coco Coconut Water grew 25%, while the private label segment saw a decline of 25% [20][23] - The international segment reported a 37% increase in net sales, with Vita Coco Coconut Water growing 43% [18][19] - Other products, primarily from Vita Coco Treats, experienced a 102% growth [11] Market Data and Key Metrics Changes - Coconut water category grew 20% year-to-date in the US and 35% in the UK [5] - Vita Coco Coconut Water grew 16% in retail dollars in the US and 39% in the UK year-to-date [6] - The international business is expected to become a larger part of the consolidated growth story, with European operations potentially matching the size of the Americas business [9] Company Strategy and Development Direction - The company is focusing on expanding its product offerings, including Vita Coco multipacks, organic products, and the national launch of Vita Coco Treats [6][7] - There is a strong emphasis on increasing investments in select European markets to drive long-term growth [7][9] - The company aims to double the US coconut water category in the coming years, indicating significant long-term potential [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment, citing strong category growth and brand performance [25] - The company anticipates a strong third quarter due to improved inventory levels and reduced promotional activity from the previous year [14][23] - There is an expectation of gross margins improving sequentially in Q4, despite short-term pressures from tariffs and freight rates [24][80] Other Important Information - The effective tax rate for Q2 2025 was 19%, down from 25% the previous year, primarily due to discrete tax benefits [21] - The company raised its full-year net sales guidance to between $565 million and $580 million [23][24] - Management is focused on maintaining strong branded growth momentum into 2026 [24] Q&A Session Summary Question: How much of the revenue growth is due to inventory rebuild versus same-store sales trends? - Management indicated that while retail scan data reflects healthy inventory, it is not solely due to easy comparisons from the previous year [28][29] Question: Can you provide insights on the contribution of Vita Coco Treats? - Vita Coco Treats was rolled out nationally at the end of Q1, contributing positively to total branded scan volumes [30][31] Question: What are the expectations for gross margins and EBITDA guidance? - Management noted that gross margins are expected to be approximately 36%, with some pressures from higher ocean freight rates and tariffs impacting the outlook [41][44] Question: How is the company addressing potential higher tariffs? - The company is currently operating under a 10% baseline tariff and is focused on growth while preparing for potential changes in tariff rates [59][60] Question: What is the strategy for private label sales moving forward? - Management acknowledged the complexity of private label sales but indicated that Q2 reflects known losses, with expectations for modest growth in the future [68][70] Question: What is the timing for Walmart's shelf resets? - The expected timing for Walmart's shelf resets is around September to October, with clarity anticipated in early Q4 [72][73]

Net Sales Increased 17% to $169 million driven by Vita Coco Coconut Water growth of 25% Net Income Increased $4 million to $23 million and Non-GAAP Adjusted EBITDA Decreased $3 million to $29 million Company Raises Full Year Net Sales Guidance Gross profit increased to $61 million, from $59 million in the prior year period. The increase was driven by higher CE volume partially offset by the decreased gross margin. Gross margin was 36% compared to 41% in the prior year period. The decrease in gross margin re ...

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 Insights - The Vita Coco Company reported a 17% increase in net sales to $131 million for Q1 2025, driven by a 25% growth in Vita Coco Coconut Water sales [5][9] - Net income rose to $19 million, up from $14 million in the prior year, with Non-GAAP Adjusted EBITDA increasing to $22.5 million [8][9] - The company reaffirmed its full-year outlook, expecting continued growth in the coconut water category and the rollout of new products [12][4] Financial Performance - Net sales increased by $19 million, or 17%, to $131 million compared to $112 million in the prior year [5][9] - Gross profit rose to $48 million from $47 million, but gross margin decreased to 37% from 42% due to higher ocean freight rates and finished goods costs [6][9] - Selling, general and administrative expenses were $29 million, up from $28 million, primarily due to increased personnel-related expenses [7] Earnings and Profitability - Net income for Q1 2025 was $19 million, or $0.31 per diluted share, compared to $14 million, or $0.24 per diluted share in the prior year [8][9] - Non-GAAP Adjusted EBITDA was $22.5 million, an increase from $21.2 million in the prior year, mainly due to higher gross profit [8][9] Market and Product Insights - The coconut water category is experiencing strong growth, particularly in the U.S., U.K., and Germany, with the Americas growing 24% and International growing 36% [4] - The company is focusing on increasing household adoption and new consumption occasions, supported by a strong inventory position [4] - The rollout of Vita Coco Treats is expected to contribute to growth, with the company securing sufficient capacity to meet demand [4][12] Balance Sheet and Cash Flow - As of March 31, 2025, the company had cash and cash equivalents of $154 million and no debt, with inventory levels improving to $88 million from $84 million [10] - The company repurchased $10.1 million of its common stock year-to-date as part of its share repurchase program [11] Full Year Outlook - The company expects net sales for fiscal year 2025 to be between $555 million and $570 million, with projected growth in Vita Coco Coconut Water in the mid to high teens [16] - Gross margin is anticipated to be between 35% and 37%, influenced by higher transportation and finished goods costs [16]