Vita Coco Company, Inc. Q1 FY2025 earnings call

Core Pillars

• Grow Vita Coco brand by expanding coconut water category and gaining share.
• Innovate around core offerings like Vita Coco Treats, Pressed Coconut Water, etc.
• Grow internationally in underdeveloped markets like Germany and the UK.
• Explore adjacent category innovation and M&A.

Category Growth

• Coconut water is a fast-growing category, up 23% in US and 19% in UK in Q1 2025.

Innovations

• Successful launches like Vita Coco Treats; foodservice partnerships with Joe's Coffee and Pete's Coffee.

International

• Strong performance in Europe, with increasing investments in European markets.

In The Americas, Vita Coco Coconut Water net sales increased 24% to $86 million, with a 23% volume increase and slight net price mix benefit. Private label decreased 13% to $21 million due to a 2% volume decrease and 11% price mix reduction from private label coconut oil transition. In the international segment, net sales were up 17% with Vita Coco Coconut Water growing 36% across major markets. Private label sales decreased 8% as strong private label coconut water sales offset private label coconut oil transition.

Reaffirmed full-year guidance: Net sales between $555M and $570M, gross margins 35%-37%, adjusted EBITDA $86M-$92M. Vita Coco Coconut Water sales expected mid to high teens growth from Vita Coco Treats. Anticipates private label coconut water reduction but brand performance to offset. Gross margins expected relatively flat, second half stronger due to pricing increases and lower ocean freight. SG&A expected low to mid-single digit increase for marketing, team, and production capacity.

• Tariffs: Potential 10% baseline tariff and reciprocal tariffs impacting costs.
• Ocean Freight: Volatility and higher rates affecting gross margins.
• Supply Chain: Sourcing shifts and disruptions from tariffs.

Q: Elaborate on mitigation efforts for tariffs and inventory ahead of tariffs.

A: Healthy inventory position helps; continuous cost of goods improvement, sourcing shifts, and planned pricing to offset unmitigated tariff costs.

Q: SG&A growth guidance increase.

A: Guidance reflects outlook for year, with marketing ROI measured through various metrics and adjustments.

Q: Supply availability for growth.

A: Plenty of coconuts, but planning and timing are key; building supply chain and factories for growth.

Q: Price increases and consumer tolerance.

A: Premium category with private label anchoring price; expect pricing to move with COGS, and consumers likely tolerate if category-wide pricing occurs.

Q: Finished goods costs and gross margin cadence.

A: Drivers include new factories, ocean freight, and initial factory start-up costs; gross margin expected relatively flat with second half relief from pricing and lower freight.

Q: Sales growth by unit type and Walmart impact.

A: Multipacks driving growth; Walmart efforts ongoing to restore distribution and improve presence.

Q: International investments and sourcing flexibility.

A: Investments in boots on the ground and marketing; flexible sourcing with long lead times to adapt to tariffs.

Q: Walmart shelf space and resets.

A: Efforts to improve distribution and presence, expecting restoration of lost SKUs and continued growth.