Earnings call transcript Q3 2022

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Operator

Hello, and welcome to the Vita Coco Company's Third Quarter 2022 Earnings Conference Call. My name is Gigi, and I'll be coordinating your call today.

Following prepared remarks, we will open the call to your questions with instructions to be given at that time. I now hand the call over to Clay Crumbles with ICR.

Clay Crumbles

Thank you, and welcome to the Vita Coco Company Third Quarter 2022 Earnings Results Conference Call. recorded. being is call Today's With us Mr. are Mike Officer; and Co-Founder the Coco and Financial Executive Executive Chief Vita Roper, Martin Company. Rowena of Chairman; Officer Kirban, Ricalde, Chief Interim

should This information available third everyone By the the section Investor is access website Vita issued today. release Coco on company's Company's now, earlier quarter have Relations earnings of the to investors.davitacococompany.com. at

statements, performance this website, results XXXX. presentation the concerning provisions of differ and described those Act forward-looking financial based these future are accompanying on materially several call forward-looking to there on forward-looking are in our made an results. beliefs are is the statements. comments Safe and on actual of Also and to Securities subject expectations Certain that subject the to of events uncertainties which include These Litigation risks from management's statements commercial and Harbor Private Reform current cause could

and Please on SEC release refer will business actual performance. directly comparable as with more forward-looking GAAP we non-GAAP those measures could differ that risk results we to Also supplementary website measures the a expressed discussion most cause SEC to the today. reconciliations in the well. materially during for today's of financial statements our any to implied available as as factors some earnings use of call, from the filings, press measures other or filings made as provide financial are detailed well press presentation The describe the earnings and release the all non-GAAP and

Mike Kirban, to turn Chairman. pleasure call our Mike? it's to Executive that, over with my And Co-Founder and the

Michael Kirban

plans XXXX the you morning, everyone. for and our to us our for the year expectations remainder for XXXX. Thanks, commercial our discuss results, joining Clay, and financial today of Thank good third-quarter

sustainable, creating I to and by their all uplift our company mission their of better-for-you commitment communities across start planet. for dedication and by of do our Vita continued globe to the beverages thanking ethical, that colleagues the our to right Coco want our

sales are our growth sales net million XXXX main remaining Coconut impressive XX% a Our year-over-year execution consolidated confirms over Vita continued very and driver commercial XX% period. flagship of strategy brands our up Coco despite $XXX that to are robust the growth, increasing Water with challenging environment. previous net Year-to-date, the working year-to-date an

out-of-stock very coconut demand for the sales strong brand our third consolidated water water growing Vita branded with comparison, quarter by despite revenue flagship coconut net a certain Coco during SKUs. Underlying strong our third quarter, on XX%, even remained year-ago impacted being against

U.S. due healthy, channels XX% Furthermore, Vita approximately water of coconut remain remains the XX the retail category increasing to weeks, last share. value the IRI-measured the leader XX%, of primarily and half we growth a pace undisputed category Coco's at with for in

strategy Our to velocity household increase and has to innovating categories. in share longer-term plan adjacent drive water our also changed to our grow our committed we the and other coconut and increase penetration, remain usage not while occasions expand products of category category

categories beverage the that That's XX.X%. be stands water, penetration to approximately of household occasions currently and source the basis up household Numerator, Coco's future points XX to multiple year. coconut at According consumption we believe driver ability from primary Vita For over penetration our will increases. last

have So to grow. we we room believe of that plenty

this in to prepared as chains and invest We sales achieve marketing and recover. are supply execution inventory to

growth PWR Vita the Vitaco Coco as and milk, giving us expand can LIFT exciting further press, such potential. innovations initiatives that source from, our we Furthermore, categories other

we where and strong internationally opportunities growth water coconut in have challenges. have also seen exchange foreign volume chain despite European We supply

net on sales coconut and we new belief add water, track growth are achieve ability occasions XXXX. confidence usage to Coco our us that to in These Coconut on in mid-teens opportunities, along give consumers Water for with new our Vita

goal Additionally, in us ocean EBITDA step freight to margins will gives our and teens. be a the long-term normalize chains the solid return high that towards adjusted XXXX XX% that softening margins and supply the to confidence will market gross approaching

are presenting ahead days proud our this still staple distributors are for we to extremely XXXX. plenty reaction. our coconut retailers We've commercial and we of there positive a firmly XXXX initiatives believe becoming in the of a and progress beverages is and of We priorities execute household to early as runway commercial been our

our water opportunities of with business size other Briefly believe share strategy versus top gain first, the firmly the we initiatives; attempt and multipack coconut and to space; the positioned food summarizing Multipacks for the coconut in of we basket mass as increase multipack the have opportunity. uniquely retailers. a we expansion shelf in categories to the and largest as category, we this are underdeveloped our channels; in seize water are own brand

attractive SKUs an national and water Second, Coco coconut to offers of organic at broader which package. we are in priced rollout Vita the optimistic premium a about shelf-stable Farmers is regular our organic,

water best-in-class in nationally allows year. coconut and product is Organic trade our just than farmer and keep brand and Organic to only communities. this it Farmers in faster launched us and price supports specifications yet organic XX% our growing them approximately is suppliers' development consumers agricultural as was family our their non-organic, practices ACV of year-to-date, up

year. that rollout a performed can I'm House tests well of very about Vita this the in Coco in Additionally, excited very Coconut

As of the third convenience our meaningful year accounts, In of brand quarter, this prior water our zero. to saw represents category, segment of we coconut this and XX% accelerated Coco and of cannibalization. test no was test signs share the canned Vita our growth about

will the QX in consumers I a consumption nationally pulp. prefer coconut am with and about new off with Coco particularly expanding excited a sweeter-tasting canned that distribution of in Vita with water are our alcoholic spiked collaboration mixer water planned with to kick coconut bringing initiative as launch opportunities beverages. This incremental Diageo. a believe provide consumers convenience this we should who and XXXX channel in We

brand are water developing Vita for in to Morgan this that we and channels. generate parallel, in excitement partnerships and a and on alcohol on-premise occasions a mixer with cocktail as the plans Coco spike Coco ready-to-drink made Vita is build coconut to flagship opportunities should consumption in build delicious Diageo's launch Captain Rum

successful, this add water, If occasions at the more on-premise of more distribution drinkers and and for will coconut introduce our we'll home long both and consumption term, to brand.

water As increase the the to leader, responsibility category a to availability educating therefore, hydration to on have focus occasions of expand all category consumption we consumers occasions. new to and on the coconut and

less larger Longer large and term, distribution we opportunity and a within which, be service, of X% have broader only it opportunity us should offers big for significantly business although we currently, rapidly, food represents than our long-term. a growing believe

efforts, future We our our a systems team's our drive revenue planning company and will and to forecast and capabilities new benefits. also our also management, capability, our are strengthen commercial building should support flexibility, and support ESG This ESG both and innovation to cost growth and as initiatives. efficiencies, improve public

in expect We social goals announce quarter our to issue our our hope second based to in the XXXX. annual XXXX we And date, of to report second work environmental XXXX. impact on and sustainability

growth, ability the and providing long-term remain XXXX company, we one be goal excited and of compared net better one and steadfast better being I sales am we our vision strives for in in as confident We the really live. our alternatives, world deliver our are to on in to In about which beverage on industry's that beyond. to mid-teens focuses of which beverage brands healthier conventional closing,

over And I'll to Officer, now Executive the call Roper. Chief Martin turn our

Martin Roper

brand XX%, help Vita the XX%. Thanks, Coco of driven sales acceleration first half To Mike, our the net by a growth over grew the year's strength against strong of two quarter and year consolidated on growth two year-ago some highlighting Vita grew net which strong an represents the minimize coconut in good our year, the morning, basis, brands. by continued noise quarter, by when of everyone. last We XX% sales an year we strong achieved in a particularly water, for record we revenue impressive driven

sequentially business to sheet what are environment our and for healthy. our quarter are and balance the XXXX structure. second continue remains strong pipeline cost in an positioned we we initiatives confident our improving margin top-line said, to benefiting also growth well in multiple from and We margins saw commercial improve underlying our with very transportation the our Reiterating Mike a gross support

part orders in foreign by third third net quarter the the pricing in product including due offset increased net last And of net and growth by related by also of timing sales and in sales X% X% in Coco $X global million our partially $XXX impacted European XX% year million In XXXX. versus for driven to category quarter, Water, revenue Coconut reported to Vita business. to to The $XXX compared million, exchange was the growth our private-label hit a other declines shipments.

X-liter inventory of Pine the XX% in health Coco quarter. shipments, Americas, that we in liter Press on the trends and slower resulted $X visible out-of-stocks one was with even impressive Particularly net sales Vita in ML at of in which the resulted million products in believe limited retail, brand lost and and up our scan XXX

our growth brand, water and of water strong accelerating. the three for on year for approximately in that year last X% stable quarter, down price coconut growth. volume strong grew Similarly, scan during Our to which top from same year's pure rate total XX% pure SKUs sales and coconut remained IRI three data growth has the and is in XX% breaks XX% retail volume from scanner

improve the of end we it's however, forward time, shelf recover an of in the our the shelf quarter, some to at going the expect business take inventory the most to as support out-of-stocks steadily our at had inventory fourth our and intermediate. we recovery space. we warehouses affected This XPL quarter Regarding of space SKUs retail does, the through and

Pure especially inventories distributor prior to overall are coconut healthy Vita now water. on relative Coco years, Our

to by a earlier, timing we consolidated you the I for health. trends would results year-to-date as using and orders shipments impacted suggest and private-label I'll in of on better drag quarter. As mentioned private-label indication were our be third business that tend trends remind a of quarterly sales the

revenue X%, our was was Year-to-date, net X%. business down up private-label volume while

to slower which grow accounts we private-label rate. account diversify branded percentage helped business at a some Our we In base. recent months, new sales simultaneously expect to sizable added as our our strategy have diversify and of our a remains grow private-label to to and business,

their supplier by larger lost the regions, time, we our account This customers fully of gains coconut on of drag its geographic and largest same and remain remains although recently relationship year. strategy strong. will remain changed mid-next through shipments private-label very sourcing a we loss some is our the and offset private-label not the our water U.S. one At with them our yet in

to Water and customers these supplier our the in business competitive our in advantage believe to We to new private-label Coconut preferred add is chain continue the our ability supply indicative be of ability category. to for supplying

private-table Americas business mid-single-digit is stable our Generally, with is other an more business growing mentioned, than year-to-date. the and base account volume in retail a our transition just diversified estimated percentage

For full private-label year return growth. XXXX, the to our we business expect to

benefit higher benefiting increased pricing were that partially slightly and costs quarter-over-quarter finished from mainly improved higher of and from margins Gross the including mix cost offset in improved branded by sourcing driven QX QX decisions. versus mix container goods business, slightly impacts, by

of softening contracts last benefit year's rates we than spot believe third contracts reflect quarters. this to the decline containers at right the that rates. the approach spot reflects rates use of was were increased rather ourselves cost started this We usage Our and to more quarter into year ocean spot in can elevated for rate than decided future earlier an decision and and rates. year so significantly We to this benefit also that expect us of rate contracts prices plan environment higher when locking

rate Coast the East we elevated into when However, costs expect given is still phase freight and the container environment improvement gradually. and to ocean received Europe, recognize in we the

the goods Our scale other mostly packaging increased of of offset are local as costs by the by inflationary dollar. strength remained cost increases our and stable and

benefiting are the this year effectively, from actions more remain We transportation early manage trucking costs the taken although elevated. domestic rates costs to warehouse and

quarter's finish quarter we believe out-of-stocks sales and fourth recover shelf. are we that as ongoing to the expect do lost how some the recover we in the not the last impact we on from we likely As will year, evaluated

adjustment over private-label quarter, from price brand these mentioned reflects very net performance Our last a down for impact fourth the steady current lost of and inventory the sales, quarter, than against recovery full-year lower planned on strong branded increases SKU previously, transition trends outlook the fourth and private-label sales year. flavored

impact exchange the of EBITDA range. business. foreign on international also adjustment the And new revenue mainly in down outlook adjusted potential our net reported reflects The sales

efforts turn future As quarters. we better and intend visibility now to next sales margins, few to marketing we execution availability to build momentum expect up the inventory the our better over

solid with foreign next for all believe the produce revenue impact We Coco in translation. excluding our plans and in returning currency mid-teens Water commercial private-label any growth growth the year, to should Coconut with growth Vita XXXX net full for year of

We substantial to progress our XXXX are contracted targets approximately improve. XX% and back see our we only therefore, container margin should container long-term that for EBITDA gross in and continue for adjusted expect of rates needs XXXX, as towards

We have this when grasp we in to year. with will full you a talk firmer results of year QX our next

our middle the to an On are Chief We our as in a with are and happy we finance accounting search search candidates organizational Financial the attract the of new Ricalde, with for our teams Rowena Interim a of providing of story. in pleased Officer, quality very note, and we performance retained and continuity our were conduct CFO.

are team, performance Given process. quite the her Rowena prudent being our of we hiring selective comfortable and and in

will the over Ricalde, I Interim call to Financial Rowena Chief Officer. turn that, With our

Rowena Ricalde

Thanks, with drivers fiscal on year. third everyone. provide additional quarter our Martin, XXXX outlook discuss the the of I then and will for I some now hello, the will financial you full results. details XXXX

Martin discussed earlier, recovering. remains are growth our strong and Mike and top-line margins gross As our

of also and of liquidity. ample low net on profitability an with footing financial and the quarter continued XXXX, healthy strong compared our grew increase million, third third sheet to flows, are balance cash million based $X results. strong on X% We very strong sales $XXX of to debt In XXXX quarter a

case driven within case for water, equivalent global coconut with by just from described, X% Vita driven by Water driven with declined price largely Coconut by basis, Americas, On from XX% up grew $XX The volume was Coco Private-label demand continued The customer strong higher activities with demand, million. volumes increase the year-over-year. million, net primarily consumer in segment partly sales pricing. related net strong $XX a frontline offset combined Vita by Martin consumer to to equivalent the continued pricing. mix, XX% positive Coco to benefits a decline higher that improved was increase

to equivalent approximately of International regions higher headwinds case European in segment revenue X% with million, and pricing X% driven FX by increased primarily volume net actions sales our $X by $XX reducing year-over-year versus rates third currency the due declined for dollar year. foreign the approximately have the against to in prior primarily whose quarter strengthening million translation in U.S. quarter, pound XX% FX British the the

segment, is Coco a of International growth currency unit of flat headwinds equivalent volume volume due continued of with was water indicator Within case quarter, the the Private-label for the basis large better a X% case growth, majority and to coconut the on other Vita equivalent year-over-year. year-over-year. driving volume the

than water, quarter and versus case-equivalent for more positive year. growth, profit significantly by shift $XX gross mix which were driven the Vita pricing, volume million, costs Consolidated third transportation favorable Coco coconut net offset to higher by was last

than of margin consolidated by prior from more a basis improved XX XX% versus sequentially our XXXX was it QX result, although year, gross As down points.

our million in costs period marketing the increased year. $XX public The largely versus the third operating company, and volume drive to Moving due and expenses, to increase incremental same $X increased to higher million a on quarter to activities insurance. was personnel-related including spend and related expenses to last operating growth ongoing SG&A

million last the foreign $X in quarter fair the diluted or Net $X year. hedges $XX third was $X.XX of compared gain to of million $X to attributable noncash $X.XX income per in a third million diluted for net Net income the loss XXXX. of of quarter shareholders XXXX, versus share a quarter value share from third in income or per currency benefited mark-to-market on million

and versus the as which year. was last amortization, net stock-based driven only transportation case spend, volume period the previously primarily partially of third The cost higher was by offset discussed, year-over-year non-cash depreciation, the on in expense, mark-to-market in compensation $XX FX derivatives million interest, taxes, actions. pricing by was decrease higher and which SG&A equivalent quarter EBITDA, $XX FX million and impact Adjusted excludes same

drag and quarter. remarks. demurrage Martin containers but in on Since we margin continued costs in in of costs our earlier his high a charges, transportation have reductions detention on this domestic and be average profitability cost remains seen quarter gross the Transportation the ocean and as to improvements QX, explained

XXXX can equivalent elevated XX% the earnings in cost prior our versus you year period, which of per XXXX third As see XXXX our levels. versus an levels, transportation already versus goods total case transportation presentation, the quarter driven by our increased for in mostly inflation cost from increase cost were significant

million total $X profit inflation by and gross period that $XX our of same QX basis, at by versus in Looking cost unusual reduced XXXX on equivalent cost per the estimate consolidated over the close in cost was to year-to-date goods a our inflation. transportation XXXX we million case

quarter, finished X% in for by per In the the case months equivalent rates. the year negative a rate comparative goods prior and full impacted the per minimal mix equivalent was per over finished decreased to year goods third CE the period goods quarter, nine cost but in a increased case compared finished the period, XXXX year-to-date cost cost

Turning September XX, compared $XX as we flow, hand of cash revolving XX, to credit and $XX total XXXX, as cash millions debt and of to no million XXXX. balance our of December sheet $XX under and debt million cash of our facility, of had on

capital our facility. business credit by due net The as decrease seasonality, to primarily by increase cash in account our funded was partially receivables a driven working significant per

Moving on guidance. full year to

transportation variability. in leverage in year-over-year, are maintaining months and cost XX% nine the pleased growth ended despite with currency SG&A For quarterly while the net consecutive inflationary the a year-to-date similar nine being improvement the margins the period we for XXXX, months ended sales XXXX, of foreign in gross

fourth as of control, external foreign that customers uncertainty other or that the orders and moving may of quarter risk timing There impacts of currency our XXXX are going of such the pose or fluctuations including lots shipments. into shift the pieces retailers out

full sales sales reflect quarter a recovery inventory on expected the quarter, due of lost year As result, to to trends outlook than price international lower sales impact our of fourth on flavor are and foreign currency planned, we on and revising a over revenue. branded of the brand impacts steady current the private-label we for the net increases out-of-stock, had the SKU

XXXX XX% year We range products between fiscal to growth XXXX full million our $XXX XX% to now versus net robust. $XXX and of demand million, in consumer be expect for representing remains sales the year as

freight improve QX pricing primarily the brand and gross in planned expect earlier margin sequentially a and to in rates improvement of over in We those of scale certain the non-GAAP year million from be ocean EBITDA reduction quarter million. taken first $XX $XX on are net the QX guidance on this we liens. effect from to expectations, to the net adjusting actions of similar revenue our Based of adjusted range

actions offset and pricing expected transportation position stronger marketing This improved improvements momentum. top-line consistent by planned on sales and maintain margin our our increases gross to inventory reflects execution, in from our cost, and with

price further in no wave will at Recall actions price fourth we of of have our this time these we effect increases. second two and the increases full see the quarter take planned until impact

I'd closing that, for call back with And turn remarks. like to Martin the to his

Martin Roper

of Vita confidence close, of Coco in reiterate I'd platform company, Vita Thank like the and our Rowena. Coco a strength you, our brand. beverage to better To build the long-term our ability the to potential

to the accelerate capability. that about forward us us prudently growth of our long-term initiatives a spot build we years, excited to rates and drive very believe softening growth, and belief freight XXXX two which to ocean should invest are provide the in allow We after will challenging key look

for concludes take Coco and remarks, brands interest questions. compete. are to Vita and sheet us your We the thank and Thank and your for we That now in have third you we prepared company. you our strong today joining quarter well-positioned balance solid a will

Operator

Herzog Instructions] first from [Operator question line Bonnie comes Sachs. Our from of the Goldman

Bonnie Herzog

morning, everyone. good Hi,

Michael Kirban

Hey.

Martin Roper

Bonnie. morning, Good

Bonnie Herzog

your a to couple I guess, maybe with of Hi, start questions guidance. on I just guess, wanted

to just trying maybe So, it. unpack

mid-single-digit Your new in growth single-digit to implies only QX. top-line growth low guidance

you which So are pricing I I this, especially out-of-stock what's think given you've driving pressures implemented. out. still just I expecting want to the called continue, assume understand you've to the

you, it that I then, QX. quantify was top-line of just And growth I lost think, plan you when think lower I just that But if that, you mentioned tried QX. three in pricing now to understood correctly, expect in about points

driving growth now QX – your those that for bit is expectation top-line? is lower a items So it on two little the that in are

Michael Kirban

Bonnie, it's Mike.

we were the So we so and miss right? of good on. this the finally forecasting as think think state and was relates next growing in as We beyond, this year into of I big balance about a think XX% last to year it the where year the sits of brand growth, the and quarter. steady of have I terms understanding

We you growing net was forecast are what and or understanding XX% growing easier X%, much out and the Like even later. steady over quarter is it might this you're it's understand if state? last X%, year XXXX where to later months so year a

think growing. So the understand brand we finally is I

for The very in strategic true us, see we where growth significant brand which business is not is term. creation attractive value long high the private-label, growing is mid-to – teens. a

steady And So growth off last stable growth. is year, XX% to fourth of kind that's mid-teens. the in the quarter of high was this branded and

for moving into thinking and So the fourth year. that's about then we're kind of next the business quarter how

Martin Roper

I is wide. is investor that deck add, one, would published just right, And that just to we point the out now said

that if is apologies we bringing got like right. effects We've Mike's was other that But exactly think some effects, not things revenue labor. then down, two, are right? have we've effects, FX out-of-stock some and And So I description the that. got

think we of the to project very back to and estimate which we should this for the of year. the years three The comparisons misread brand face we but very last very business is growth The are year healthy healthy. just is hard

sort of that's So on. what's going

Bonnie Herzog

stack basis, are on things accelerating three that saw sequentially. a I year

or heard being pricing lower the for But think if planned as just now encouraging. maybe talk lower, in that's then about about QX? are then I the you you QX, So I implies full year, correctly, conservative it what

Michael Kirban

is side the wanted we comfortable this complicated a felt side, in. consumer come that retail chain both up supply we one, falling we were environment, Obviously, to range the on with side. and the a So and

range was really generated And conversation again. not to because have we like so our this would

that provide we of baseline make let's to was say, to do is. was let's what it's an sure fall So our need that can into. okay, and something the approach estimate And we that

Bonnie Herzog

Okay. And a want to consumer. then, I just question second ask is on

any pack Just if on us of higher maybe quarter, so similar share out consumer. just sizes, can QX. larger you far seeing cetera. I growth you color the et and for with the health some Last called just QX understand during you're want behavior in to

sort in, any helpful. elasticities are would holding Just update on of how cetera, et Thanks. be

Michael Kirban

Yes, I'll start. I mean,

to I out at start the at and – the we inventory we significant scans. data, right, which scan think just look have SKUs business hit pineapple press didn't really on had on, any had quarter a effect in that SKUs you SKUs, last the hit a look as the and we pull on

out the at continues past that look strong, health and way water, just you really look good the weeks. the and a consumer. it and in the and through pull which coconut you you the this when pure the all brand several It's scans at mid-teens growth of rate of grow is to And indication

growth consumer So really and demand a sit we the about feel perspective. we confident where from

Martin Roper

a value. better have from think that, multipack that we in off benefiting also building And looking a we clubs for nice a perspective, of I from Bonnie, portfolio have strategy. sort just is consumers presence the And potentially

sizes. the growing pack the we're then, And faster seeing than other certainly, Murdipatces

value positioned, the we're think, challenge to the sort I a well on there is offer if of consumer front. consumer So

Operator

line Our next comes Wells the of Carey Chris Fargo. question from from

Christopher Carey

Hi. Good morning, everyone.

your seasonality would to So, you out I saying about that QX did QX QX typically decline XX% really business? beforehand, that return basically think maybe Are margins. on ask just because versus play you expect to to underlying of want just then the there, XXXX momentum that follow-up a comments in you just over and on

but better change seasonality kind So better more got comps is entirely getting year-ago but it's slightly but in and out-of-stocks you of not wrong than relative way are the just to just better, here? – the pricing that the comp really a sort the the just of the maybe dynamic coming,

growth trying just of into I on That's next mid-teens that rate. am to point. starting confidence underlying returning understand, year maybe the at kind

are Just kind you make I of to understand guys about saying trying what sure QX.

Martin Roper

Yes.

QX, at business clearly grow we've, that we incorrect. signaled were plans that our I on mid-teens. unusual, out was I think, based plans probably and call grow think, I assumptions those also look have off next some of But we as Mike that as and base, the We to year, and think QX said, on branded deck. lay in we we built the could

We've presented think space. to more We is drive that retailers. the to growth this going we year had

pretty all so that. our of And good been sales team has about

on based brand And so plans build we'll yes, health. continuing

Christopher Carey

Okay.

release rates ease. I For as constructive XXXX, right, the press there's -- think you pretty were on margin in improvement freight

the actually built back the into half. sequentially maybe also more that sort you of think you through exposure benefit year, like have because noted I spot that

full So start. the is premarket. some year maybe what ocean impacted doing by looking inflation are starting you I'm the just don't at benefit getting stock and get the you the at still still But

what frame path to gross by trying EBITDA margins you expansion just year next XX% to margin the am and the in the to path significant I mean high and teens.

So in be the the see get context stock what if maybe helpful. EBITDA could anchor maybe an around right? premarket, think is can of wonder you again, next you how much you we is, back what I So to doing of just was to on that understanding next hit so year the have just that would could what improvement able I think be and year how guardrails some margin frame put might the year much this maybe freight you

Martin Roper

understand. I No, Sure.

our long-term of obviously, think, years. couple I return a our algorithm probably long-term to – takes

have last $X So not XX-month out million journey. was that year suggesting that's year. we million, the been transportation point incremental $XX year-to-date costs last investor deck, we're over and I'm our a over In thinking

$XX that's million up a year-to-date built years. collectively, So And that two over over on XX basis, right?

to might that that's I might But predict. and years two to are to I it. maybe. future difficult Obviously, hard for unwind over think forecast, about hope think how very rates that's you

next to happy is And And we'd if driver that all that. so we growth increases with of I unwind were think a able be obviously, obviously this year's next year. significant hypothetically, year, EBITDA

Christopher Carey

That’s Okay. helpful. Thank you.

Operator

Thank our you. question. One moment for next

Our Piper next the Sandler. comes of Michael Lavery from line question from

Michael Lavery

you. Thank morning. Good

Martin Roper

Hey.

Michael Kirban

Hey, Mike.

Michael Lavery

come to But And value interesting, to of label still piece a multipacks. you how branded little impact, the want but be, just that? sort consumers proposition that private pressure the mentioned back and growing the It's seems how does first. maybe for into the strongly that packs on to of already consumer inflation club with side. fit business a the had, down distribution little stable bit a of with I

I seen how And do one, as into more have well? reticent? private-label plays a guess, little the about consumer way you So that so, the just think be you if

Martin Roper

I towards the given into in in private be moving more plans think then consumer we're the branded pricing don't category. QX moved our moved and gaps price the the label, QX. What's me. structure, important reticent is to seeing And we branded, up the at retail And obviously, earlier.

gap price important. the most the is think I So

And gaps you've got It's and think that's to hard very moving how I it. our see price stock. about we're thinking when elasticity

it. about thinking we're how that's So

showing private-label, We to some of had that think sort consumers growth private-label label year-on-year that but of we've said, private the private potentially volume things. sort customers moving able, are as are we mid-single-digit on

So is growth faster branded – obviously, much that. than the and

brand is healthy. So we think the

we currently forward year. competitive the planned more obviously look promotional activity And increases predict obviously gaps as about to next happen we Rowena beyond – and – hard the brand is to think what activity price We increase next year. it's our price will very as price our don't the have said, as monitor we have. performance well we'll the of QX The brand any at and performing we

Michael Lavery

freight, part And here. obviously it's to then, back the just coming equation huge a of

I just it's is the – you potential think is of it Can first XX% just a skewed? guess of it – sort more half parts I two think, that would I XQ, contracted bit upside be mostly unpack – mentioned, already. clear little maybe of pretty significant. XXXX you all is is

as stuck then, right or How terms at relatively about we Is is you've longer think it as about pain is there what way are – XX% locked was that in far what to like? earlier that looks of the the think rates year? any in, pacing, longer-term recent the some from more you in still And that with of favorable do it? that

Martin Roper

the a it's this to you without diagram Michael. our which works XX August, that's when XXXX time out, I'd indicative commitments we point are have designed you to that in investor how laid prescriptive, largely period. how relate right? last great look Page contract year of And No, contractual be a deck, September Yes. we to into question, has entered being the in a related at that is

in multiyear long-term That existed So us sort out sort ocean that's get was saw it. that at of rates the a thought we rate, the a price that from then -- spike we of attractive was protecting ability right? coming, very have deal we the freight to it's of

we're If not out the spot rates if fall. of penalty get pay we it,

but contract. a on there, a room we months but lane contract was would year. to negotiation what pricing did certain next frame four enter That's into typical in into We be offered, on time chose not time felt some that a is lane, August enter we is only enter because the it the of representative the frame. would into pricing we the there So

on ability rates to deal basis, some mentioned. the was have enter was So significantly and we would we – and contract when a we And with entered the next that it to fall. we have a benefit certainly think if one contract year we less continue I coverage good

Michael Lavery

pass Okay. I’ll Thanks. it on.

Operator

moment you. our for question. next Thank One

comes of ISI. question next from Robert from Evercore Ottenstein the Our line

Unidentified Analyst

actually Hey, for is Greg everyone. This Robert. on

how thinking expectation higher one Just a how about in for then And of next this SG&A terms talked evolved you two, your spend new on that's expectations. I year? you're about innovation. guys talk know question quick about you Can behind for it year?

how maybe you And see which year? additional innovation behind? that to thoughts any as basis So going sales just percent of going versus on compare it's this a

Martin Roper

take before. that Ron let Yes. I'll

on it's against innovation additional and that gross this against significant out-of-stock year. we but spend low saw I also the think brand margins spend

margin an of the potential using that for even gross expand of the So to, think, I some opportunity it's improvement. further brand opportunity growth

go If Excuse details me. some of you on. the want into to

Rowena Ricalde

company. capabilities bit public expanding quite we new from of we in SG&A costs, absorbed were So, have respect things perspective, that to public ongoing an company a with being a

perspective, a So absorbed ourselves we considering I have we a maintained from say year-over-year how at leverage level from low would much SG&A.

Martin Roper

to is at public to this Rowan And our public the operate capabilities year. you as the refers that goal need what build company SG&A leverage, year, but company we next look I think deliver some a as to as and phased in were try and to costs of some costs the

costs. So reflect year perspective there's still full-year next phasing just some a from impacts to

Unidentified Analyst

then That would a excited helpful. could ones year. that Diageo of most launch if national more products you're lineup launch that just detail, phasing see of on kind be the like quick And a follow-up new with for you talk of in about bit getting the about next makes the which kind sense. a and Maybe too you when

Michael Kirban

Yes.

results can, I think year really this about saw be Vita excited going next C-stores. launching juice product-wise, to across year a Coconut great that's nationally in and

really about So excited that.

it's opportunity of I we've a that really think never a play in. segment played in category the big to

– much be into it, going Not rollout. nice distribution excited on that we launch. initial going further PWR as showing some and It's you couple Diageo And in think the a don't next expanding We it about really We're about test. expanding be we Lift talked launching the about be year, think national national to a big of QX. signs opportunity are I to it. will territories haven't a is but

help as we that majority of talk opportunity against Coco I order to a spoke prepared to concept The back that marketing coconut help in using brand. profit remarks, a that it's that think in Vita real to going and us the to start And us, consumers then the about bringing about really into is on-premise. like mixer

or go pretty anywhere retail. everywhere to coconut else these there there is might you is water. that much Like days, bar even water Yes, at coconut no to restaurant a

opportunity objective bring good real new coconut the a to think and occasion really there. consumer on-premise water us. for it's we real So we That's think it's a

Unidentified Analyst

Great. Thanks guys.

Michael Kirban

Yes.

Operator

next [Operator from Thank Bryan comes America. line Bank question of you. of the Spillane from Our Instructions]

Bryan Spillane

the one for question. But on listing could a guide Thanks, operator. through this changes you question, of XX, detailed the components and more had Slide revenue not I in help the year. the of hopefully, everyone. just you Good morning, with go

reduction stock, us get How So sense the it's help please? at a that, if could of you magnitude is million I trying with midpoint. much of Can the think the how $XX of how is to you is Just much private just a pieces, FX? like label? quantify much out

Martin Roper

the we impact Sure. in our million Well, were year's, last on was the if million with compact probably dollar out-of-stocks think they sales put growth around $X basically But could foreign We've out where in some I of biggest numbers over is obviously estimated QX impacts remain I potential impact amounts to big. with stuff of that got estimated exchange very rates which residual lost lesser. similar QX QX, QX in exchange for in are. $X revenue if

I the little a of the got anything that's versus had bigger accounts and represent I business we stack. little We am private-label is regions. anticipated reported. We a than a numbers think but – bit gained impact obviously am a full-year are terms think will to the in lost if missing wrong, trying I The year-to-date and that of probably probably from lesser probably smaller the the sort we – impact numbers think in expected the

looks big prior quarter now grew the Coco the the state is the said, thing to which understand Vita teens. and fourth what high and is, over looks that's think the like to mid we Coconut really I starting steady growth year Water what XX% brand we yes, like, No, like last

Bryan Spillane

of year, that exchange But as the the label may little sort be guess, of the the like the about the year. sounds kind they – gave right, some other piece least we're kind continuing stack bit foreign is you maybe of to All right. to And about thinking call of a headwind Just pieces, half. like first so thinking it next as going how I we the at this are to in going a for tack next into private linger morning,

of out the minimize are though the gain. might trying space better, if get be this factors kind of built in guide get stacks of just thinking you've is risk that But these off headwinds of the as I the kind to and stocks the the like that’s of growth seems was at revenue just into pieces where we about right-sized it you to begin some

Martin Roper

headwind to that's stack The from the right. think Yes. I starts minimize.

Bryan Spillane

Yes.

Thanks guys. right. Cool. All Okay.

Martin Roper

Thanks.

Operator

showing over time, I questions. closing this back am At for the I no you. management would to turn Thank like remarks. conference to further

Martin Roper

to EBITDA the results and the the gross but from better us I of to year also and forward lines visibility obviously, full-year and again speaking next we quarter with will full hopefully today for next look when growth benefit volume look to margin potential everybody, working and the to joining have significant have Thanks, obviously year forward transportation over the we costs. normalization you the

time we So look speak. and we're insight forward a excited the having greater much. ‘XX next into that Thank about to you very

Operator

participating. This Thanks concludes for today's conference call.

disconnect. now may You

The Vita Coco Company, Inc. (COCO) 13 Nov 222022 Q3 Earnings call transcript