COCO - Earnings call 1 2023 | The Vita Coco Company, Inc.

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Operator

Good day, and thank you for standing by. Welcome to The Vita Coco Company First Quarter 2023 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand over the conference to your first speaker today, Clay Crumbliss with ICR. Clay, the floor is yours.

Clay Crumbliss

to Conference Coco Call. welcome XXXX First and Results Earnings you, The Company Vita Quarter Thank Today's is call being recorded. With us are Mr. Chairman; Financial Mike Corey Executive Martin Executive Chief Kirban, Officer; Baker, Chief Officer. Roper, and

which performance an harbor access those commercial Act investors.thevitacococompany.com. By Private now, issued Certain uncertainties that today. include statements, website, to Also results. described Vita are statements Relations current of on from information subject actual This These future cause Coco statements. the and Investor XXXX. could beliefs safe to is are Reform first-quarter available the of subject to earnings the provisions events earlier forward-looking on on to Litigation and risks accompanying on differ are materially management's the is section made in everyone our expectations several this Securities and forward-looking release results company's Company's financial presentation forward-looking have based the to should The comments these of website concerning there at and call

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

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

Michael Kirban

today our to Thanks, you good quarter joining results. financial everyone. Thank first discuss XXXX morning, us for Clay, and

the globe of 'XX beverages for communities of our across Coco for mission long-term and sustainable, Vita to to want commitment to and creating for thanking Our by all expectations that commercial current our right continued planet. are our ethical, performance The start our plans do full-year and by Company XXXX dedication uplift colleagues I growth. their their better-for-you

flavored we Before growth I a occasions waters, brand from Better includes, can $XX which better-for-you that current addressing juice, category enabled for water. position by in opportunity. future by future have portfolio reiterate beverages innovations. strategic we strong functional billion and that our performance leadership consumption collectively We of the to our a source we fuel in both in definition, Vita beverage want functional believe over to for expectations, and and market, adjacent and our sport categories drinks, beverage retail our believe you U.S. a Coco represent addressable these and coconut

to increasing is our availability visibility coconut by category penetration As also grow and share water of category and responsibility while the category household water to great execution. category leader, through grow expanding usage and continuing the our the occasions coconut the by

margins. I the in the mid- to a strong We're well the strength and portfolio a advantage our tailwinds long-term gross excited high-teens well-positioned focus that of each believe to to execution. become improve remain retention, net EBITDA a better this that passes, I financial complementary quarter, take and off but to mid-teens goals sales consumer and profitability of and we on say to continue our to category as XXXX. growth our platform and success last start positioned by X beverage with achievable. build to adjusted think coconut of we're margin strong increasingly are time trajectory sales growth our over recovering, chain I conversion testament brands, supported a and is I supply now our water years margins our With of

formerly last first the supplemented growth of net the by actions we Vita ongoing the to sales, volume taken Circana, States, branded quarter, In benefit XX% acceleration, pricing Coconut of driven retail Vita faster coconut and are Coco both saw the year. in and by as beverage other Water weeks last United In sales major dollars retail according scans, was in categories. than category water XX the Coco known which in growing IRI most volume

penetration share Coconut quarter the the up points ending category of That's the at were Numerator, key strategy. According coconut penetration and last dollar to Increasing grew water we XX, remains with XX Our the sales Coco XX%, Vita retail part Coco's to to growth in XX%. March the for weeks XX%, basis Water up over improved Vita our household our household for XX approximately XXXX. U.S. growing XX.X% year. a market

the we and over for use the aren't at coconut water Numerator. to category pleased of our so XX% with cranberry we gains far, While plenty only XX% penetration We penetration we XX% as there. to believe have juice grow further stopping that to are the is for total according for households room household orange compared currently category

that significant In of on-premise. for coconut for water believe Coco brand Vita service, our our distribution occasions availability C-store, addition, opportunities we and consumption as food increased products in significant opportunity for there and improved is there remains

coconut on product, our multicultural Coco over-indexing In plus based opportunities shelf-stable offering organic dairy tailwinds our our younger to growth distribution a to for Vita consumers, distribution These coconut demographic our to and opportunities. opportunities farmers' addition canned and with milk Coco multiyear double-digit alternative. suggests brands pathway and households our Vita juice

have how our contributing deck, Looking Coco our initiatives outlined that scan retail Vita laid to are our commercial to our progressing major we announce quarter XXXX, to initiatives, which last trends. are I'm the investor to according out In happy we expectations.

availability with of we're multi-packs. X-pack of can driving United by cannibalization expansion our of the States you growth channels the from our and XX-pack in distribution. see, As in seeing ml ml relevant serves relatively XXX is of growth most XXX the our Encouragingly, multipack expansion single the limited strong

set to our Farmers with Coco sales. option the scan Vita providing for and Organic are shelf nicely premium new gains a distribution adding Our overall consumers stable in

of sales trial and we all on this expansion still activities planned progressing, broader ACV we convenience visibility retail packs. Coco ensure for in growth of juice and is can measures lots have that Our summer initiative. distribution for distribution these of room store show to coconut marketing Vita to have The distribution and

opportunities to and Vita coconut initiatives expand Finally, announced that is mixer Diageo's Coconut Water with our water believe previously on-premise and but Coco as collaboration quarter. early track trial or purchase repeat this It Vita too consumption rates, water on with during important launched We our the expectations. Coco Diageo, to other of and generate everything appears spiked, coconut further are at-home an support to occasions.

water, seeding in core Vita to United commercial the the of coconut Coco the our to these we We're set part where of as shelf-stable points consumers Alfred the quarter. positive under-index Coffee Coco central launch particularly Beyond this attractive Vita availability initiatives, promote we shops and the Vita in Coco penetration. Coco also in continue Vita Pressed West Barista Coast product earlier for Pineapple States, on with into coconut non-dairy first milk distribution expanding household and of more coffee after entry

in Southern Power support to Texas learning to the how our launch Our and in List enhanced build succeed momentum category. isotonic continues on

the social progress DSD month. KDP, our environmental hand-in-hand practices XXXX we with building and our development initiatives, our achieve Coco great planting through distribution and on see hopefully working supports more communities report in this our last Related in farm to We've with Vita to project, and released in classrooms that success investing have to charitable you market. impact We the sustainable training dedicated and partner, which and continued teams saw more partners market trees. growers of coconut schools coconut our

long-term farmers, to our coconut but believe sustainability efforts increasingly is important, economics our We of goals. our also to seedlings to both plant the

The as a line goals sustainability Coco achieving to So million in at a them. We the detail for announced objective of later over time we to we for communicate program environmental our plant Company, we recently date our our once core have our environmental value to committed seedlings seedlings. and remain validated and roadmap more with Vita expect XX initiatives

the we companies excitement few size after and We challenging with to tough new innovate that beverage to as us this fast-growing talent brands significantly one to positions growth, that my of capabilities more are dynamics, very maintain of financial reiterate to beverage profitability. return our resources. normal and act X market profitable and believe opportunities, capabilities margins of visibility as a that benefit the from our potentially of to and want improve, years uniquely relationships, have longer-term gross complementary I commercial economics our could starting acquirer and to Finally, an transportation to

a improvement and to disciplined our gross XXXX opportunities we I as a while allow in year to invest against profitability us delivering generation. last in sales quarter, and significant As long-term where net our see improvement cash still margin growth growth stated way we expect also

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

Martin Roper

Thanks, everyone. Mike, and good morning,

net Coco SKUs consumer demand, channels in a quarter, service acceleration benefiting and growth impact and In XXXX, a growth Coconut inventory XX% built our healthy Coconut affecting our Vita For availability achieved for dollar Coconut Water year, first data. on from performance is This quarter XXXX, Circana balance driven year. Internationally, achieved are quarter including the XX% sales QX quarter. of trends all time a initiatives strong Vita XX%. The XX% net price of and growth than improved we where in Vita this levels. growth the have of grew on growth gains commercial QX our inventory growth Coconut rate the Vita tracked Water the Coco single-digit similar for very strong of Coco XX%, up U.S. Water retail XXXX healthy it's X%. our certain accelerated from grew Versus volume with the sales scan strong and private seeing of net retail first the with velocity water last across sales XX% Americas, growth, increases, with is better potentially volume was sales by distribution label we XX% of against XXXX last and contribution

quarter was quarter our improvement margin gross margins. In last over improvement more year ocean favorable quarter the taken costs a to a in freight first Turning improvement fourth and XX% last driven year. This pricing reported of by the branded fourth first primarily of represents domestic and the XX% XXXX, significant XXXX. which over benefit plus XX%, the in sequential in was of quarter transportation the

after chain normalized inventory quarter, which transportation helped we the able were stabilize the and margin domestic During also our to supply unusual gross last quarter's levels, costs.

We rates, appear as quarters third yet more those the to to levels ocean which be visible our P&L. benefit should full This flow second on most benefits of seen slowly and historic be not routes. returning the freight current have in to

contracts, than transportation more to ocean in previous to with approach where the contract discussed expect except remain selective needs we've on into of to As of we our they competitive our and spot some are for prices offers return capacity today. we quarters, are historic need entering once guarantee contracting

Reiterating confident what with mix margin between should business, well multiple commercial branded flow. and are improving believe positioned and the product environment profitability, Mike growth produce for greatly in our a are strong transportation top-line initiatives label, while and structure, XXXX cash branded improve and to said, our we underlying strong we we cost private

and first of our were gross volume, margin at end EBITDA. the results adjusted net expectations high quarter Our revenue, on

third a first and full-year quarters. typically important not quarter Of does is our a year, good results quarter to make quarter one and the in the less second course,

and maintaining We our are trends margin to full-year EBITDA non-GAAP net guidance. the sales reflect gross and adjusted adjusting full-year while current quarter our first guidance

Vita the now label are for sales full to and Water private be expected positive expect growth the our mid-teens, Coconut We Coco net full-year year. in slightly

for relative strong quarter, depress a partially Coconut Vita margin a We to expectations. slightly activity with gross key very retailer. incremental quarter expect promotion our promotion prior second significant Water for This by driven Coco could the

On finished mitigate energy are drivers to sourcing for XXXX, these optimization increases goods most to elements global and endeavoring and cost due costs. inflation goods in efficiencies initiatives. through of packaging, We're general labor non-transportation cost seeing we on inflation

an includes year a invest is sales increase reflecting now that plan supply in XXXX execution marketing are disruptions Mike and our that chain belief expected our growth As full-year mentioned, our investments, diminishing. initiatives in to

in goods adjust on planned depending we term, a we invest our As promotions opportunities the our build could programs long and will always, the of our brand and effectiveness the where see manner of to for how cost our the and disciplined spend we develop.

are season. a that during entire ahead XXXX start, happy is great energized behind We selling summer is and team the very off the peak the fully of to opportunities us

Officer. Financial the over turn our Baker, will Corey I that, With to call Chief

Corey Baker

and Martin, everyone. hello, Thanks,

me Let drivers the you our the outlook on then year. financial XXXX full provide will results. with of some the first fiscal for quarter details discuss additional I

increased Water first XX% growth XX% up XXXX, net $XXX X%. quarter sales sales driven the year-over-year For million, growth private Coconut Vita label million, of net $XX and Coco of by to and

the On strong Coco net growth increased a to Water retail price Coconut from increased benefited continued Vita XX% private $XX to segment Coconut basis, performance net million Coco volume $XX million million, benefit. Americas, within mix Water while and million. sales Vita of label $XX X% by $X

would indication health. private While a declines and be label trends timing mix, as you product from that remind XX-month impacted label label of driving business we private of growth better by I'll quarterly sales volume using suggest for net and a minus of favorable benefited X%. tend X% rolling trends private on shipments, to orders

first in by international private the private equivalent with volume Vita net strong of Coco Water volume led by Total Growth up label Water other Coconut growth XX%, case declines growth other. Coco Reported a XX%. volume currency label quarter. had up down segment constant International delivering sales the offset XX%, XX% and growth, X%. were with was Our Vita and Coconut was XX%

XX%, global million, For year. stabilization $XX gross transportation prior benefits increases supply and the in versus from increased was million year benefiting of the in are rates, prior up increases. was profit price from quarter, chain $XX These and XX% XXXX efficiencies margin gross up

on Moving operating expenses. to

including growth expected in quarter margin personnel partially per was incremental compared $X costs shareholders diluted XXXX XXXX Net attributed to SG&A current for the from sales discussed or the to reflects company, well increased an diluted million in share the by benefited previously, quarter support income to the methodology by improvements related $X.XX estimate which for gross to losses. year. Net first change of million First increased the as the prior of $X as SG&A increase positive costs million, net quarter investments per to $X per or resources income share offset $X.XX costs. and credit

cost $X adjusted decrease in by In was an $X.X million a derivative million, offset in unrealized which in instruments, an XX.X% primarily QX ETR goods addition, $X and the on quarter the increase from QX a partially was pricing, increased increased increase SG&A loss of offset the to spending. XXXX The benefited of tax $X and reflecting the to Non-GAAP case growth up in per million due EBITDA million, related million was of decreases XXXX. gain partially quarter. significant by from $XX of equivalent volume

to cash Turning and our balance flow. sheet

XX, was were XXXX. to of million volume million the increase credit March inventory of hand XXXX, XX, of operating The of allowing with inventory. in of Working capital strong normalization accounts resulting reduce has by to due days cash on no offset $XX of hand in no for to million timing efficiently performance receivable used of customer As decrease and compared and our debt of a income. global was decrease quarter our net payments. supply $XX as sales in million $XX result us on coupled XXXX of total more as driven facility and in by to $X inventory manage net first December cash the million growth, improvement our chain, revolving under The the debt in-transit an the increase led cash cash flow, cash primarily $XX

at XXXX. more levels the normal hand days We for expect inventory remain to of balance terms in on of

Coconut balance pricing that for XXXX. for and which in is year. increases expect net Vita the our growth As are between sales assume pricing does the any guidance full-year to of executed are year retail we believe targeted further of to sufficient our XXXX at now Martin We plans our flexible deliver our price as full Coco in and remain unfolds. XXXX will XX%, not year the communicated, results, X% the in We in we confident approach Water adjusting and

brand net XXXX our GAAP remains the guidance sold growth. XX% for guidance continues expect as than and balance through expected growth. growth to ocean We incremental Our our of branded our outperform to adjusted freight our that $XX the over margins between increases the in million our to quarter, to year. non-GAAP private rates will products margins lower benefit XXXX gross activity and second sales volume promotions increase reflects on our price label for retailer is anticipate reported The revised flow gross gradually and represents XX%. P&L, in gross to This million. branded plans we full-year EBITDA current $XX growth margins XXXX SG&A, Due which our higher SG&A total

increase planned higher execution bonus and quick costs The and in include costs, income. sales items marketing on note below and A which to employee compensation. cover is operating SG&A increased stock

and our in strong the Given seeing to rate. expect a second we cash cash to management the our consistent approach tax expect and broadly in be start with first-quarter benefit our full-year reviewed ETR we generation, perspective, to investment the our quarter. From P&L

our of closely prioritizing evaluate continued to Given on allocation our growth. focus profitability, long-term improved a expectations we more plan with capital

move our capital to allow was markets pursuant registration talk SEC registration filed to also our raise the It opportunity long-term flexibility shareholders week. on, will access the investment wanted to also in shareholders flexibility certain for company about if right contractual easily and obligations capital S-X provide to company arises. will to agreement our future. optionality rights we the fulfill more and and the I with the and partners on greater the the with I Before shelf and Form S-X filed The this statement

no yet the been [ not until or Although the to may declared statement ] at effective do plans effective. no becomes registry so there time, under offered it thus, and be has shares registration are sold this

of and my couple the finance I'd been reflections It incredible organization some is and for at their business, a closing, passion months I've Vita is excitement team passionate on impressed of knowledge The the with extremely like infectious. performance-driven with future fantastic. the organization. an Coco. provide Overall, for to first the is company the Before

and team have that the to next a highly skilled diverse of We page is well-positioned the growth. support to organization

an I've the improved be deliver to decision-making by as opportunities on elevated I efficiency to team have vision excited systems. and supported Martin Mike see the analytics As improved more outlined. and continue of data for mature we only part long-term become as through we organization, and

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

Martin Roper

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

key should accelerate to We to capabilities. long-term our after years. in In to provide XXXX, X in very capacity and to transportation and maintain growth execution a initiatives are XXXX our our sales we intend costs growth build in about drive or challenging and recent improvement excited the ocean marketing continue to us invest and

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

Operator

Goldman comes Bonnie Our Sachs. first Instructions] Herzog [Operator question from with

Bonnie Herzog

off with which gross on I to were guess I would start significantly the a quarter. your margins, in up like question

improvement? gross expect how buckets changed little recently? that sequential materially are various And that could the about margin you talk the driving they've improvement. So indicated then And cost you further you've just a

get downside factors trying swing So have little upside much sense a visibility be. the And or you of year? the you what potential see color this might expected more and a the how where to on improvements I'm risk? of maybe phasing

Martin Roper

Sure.

improvement X-X then in sourcing versus in flow in before takes QX. the a markets ocean it a we as about first our combination First by the month factors, about quarter, experienced improvement to thinking then year freight we rates months to rates, When transportation all, gross and driven our inventory. through margin the prior they country, versus containers secure in of arrive primarily and also about ocean it was of what relates

in you QX see [ P&L that only through putting ]. in So as into QX our the QX rates happened

the seeing impact. you're what there rate that so And is of benefit

we saw charges. we domestic basically also extension the happened that hurt to at our We and in were reduction that into We inventory us build primarily very in had QX improvements transit domestic just high the got highlighted warehouses the transportation, that as in costs overloaded. that mortgage large very times unusual transportation related reduced,

So those dissipated.

QX. domestic think those costs I what transportation in items were similar largely to other than they were

benefiting gross we the is branded. pricing mid-QX took Also in on QX that margin

So also helping. that is

a seeing experiencing for our year, all the And those forward look as margin is today. today But to so rest we're improvement. on of guidance contributed nice things obviously and of based we what the

as change fuel And also could manufacturing domestic finished our these so transportation change costs, on it's through [indiscernible] that obviously about seeing goods what We on we a lot to are on sourcing and it's know we on ignoring There's those endeavoring costs. lot could mitigate there's know efficiencies. costs. inflationary we from impacts we then indicated. a impacts, transportation We're inflation initiatives, But today, what packaging that. based costs, [indiscernible] inflation that finished based goods labor or

is engineering And very our based As And guidance is we before, it have to focused outcomes, on there's covers us range we improve know a total have that today. Singapore our adequately we facilities on a team but it's now that range. what we everything could of manufacturing relatively Obviously, today. partner based broad we helping talked on in think efficiencies. and an potential

quarter. last for highlighted, relates strong gross of might in quarter expected I our to a otherwise How margin we it is, the sequentially might improvement. basis But falling margins think, less the going than be the each quite sequencing, we gross As are full-year gross certain to comparable some the QX that's up we not within continued year cause little is be to expect retailer think promotion improve activity projecting that that to because margin to while range. be

Bonnie Herzog

quick follow-up wanted and clarify just from marketing maybe the strength or the super much how potential get a it top-line just a you to That's in to me gross line. And helpful flow the improvements Okay. bottom to maybe letting of plan margin color. sense reinvest is then versus

I but on think depending balance remarks. going your flexible like it remain to pretty into you're touched on business, the may of in sense sounds your reinvesting a you of strength not some you or My to bit see. that on little prepared is this, you may want

just that So be comments on helpful. any would

Martin Roper

Sure.

think provided we I you growth. and reflect, basically which strengthen EBITDA again, believe think guidance to for we've our as invest long-term it, about modeling an current outcomes to we the what planning our want range, brands to be. in Currently, opportunities we're

seasons. We selling adding up, have higher in are QX activity QX, into in around sum particularly to selling and all and activity. marketing plans promotional QX our peak significantly that than We're

So them. that -- spend And discontinue big [indiscernible] that are accelerate we obviously marketing don't we not remaining those. things pride is ourselves number. flexible. on our work, we being as We disciplined a will we therefore, obviously see And

currently on in is your So business right. solid, and flexibility think obviously, current yes, guidance could but plans, know what else. that depending is we flows change comment And everything how I the our exactly on based that [indiscernible]

Operator

Our next yours. with of Bryan, Bryan America. floor Bank is comes the from question Spillane

Christian Junquera

second the how this are currently your ship in-stock you it for rebuilding terms I are of levels? you to you guys quarter? in And have still quarter? on satisfied guys on consumption have And have of a of to with Bryan. do Is inventory? Christian you ahead You question assume in shipping guys inventory. guys on Junquera consumption Do planning correct work ahead

Martin Roper

Yes.

late inventory address in more think have took QX than for quarter, We guidance said stop all as in basically in finished the basis. we liked And in we was inventory the to that year full-year I and for provided last that that created on that we because actions drop on would to a order warehouse, we higher level. to resulted was in with into countries basis quarter. a ourselves have returning the the normal inventory the some days-on-hand bottlenecks shipments those we

summer similar much on we days basis. remarks, bit would an depends as to on on on have little year's happy the probably And prepared ] a to we think support the we year-end [ business with inventory The said hand through year from a build currently higher. will and trajectory on I our next in and expect finish may asset-dollar stay how on basis growth. hand want we're the to be then probably that probably days

So but ourselves we we room than of a year-end. be bit leave expect it at it the there, wiggle to little would was lower

Christian Junquera

cash now it. follow-up. Got quick generated one fiscal about X for cash expect positive guys think you free then And like have trend continue? quarters. we looks to year? flow should Or we not, this It How free this flow for consecutive if Should why?

Corey Baker

that. take I'll

efficient moving operation light. flow. the we we a full-year target. any cash asset run And touched a provided as on is haven't very So Martin guidance of on, working capital always But bit a

stable So performance for through the and the fairly flow. balance flowing year then the of expect would that in P&L we cash

Operator

next is coming Sandler. Lavery Michael from with question Our Piper

Michael Lavery

going on you how to might would distribution launch. have of unfolding. an bit, plans? shelf the to cans happened and sense a the I against I March rollout touched through back wanted that's hoped? how the there's some have you resets lot the in April. And give Can but have believe I it resets of And just come update a would you of if all little a that way just just came on is just happened know

Corey Baker

or quite in picked early large It's few would up We the that happening process. have just the happened. retailers just major expected. a are of resets have Those we Yes. wanted and

channel we're focusing, and really we're to work. looking is The So where good. really actual seeing start distribution C-store is it

There's it. and ]. additional sure the about it's [ execution excited they against the that we're before So against shelves cans, and of summer specifically a gone hit lot teams this stores making programming

Martin Roper

to deck. ]. ACV an We're our we in you early number refer in [ Inscape the put would I that

Michael Lavery

It right That's sounds you've in the about you are Great. the the imagine leaning rates more heavily now to to helpful. rates And couple where of like you correctly be could just it so remarks better understand sure versus contract and spot, been years? in you have freight we've spot rates. the want trouble and And make second, rates isn't I And an would on and lock pivoting above to any availability available issue? contract that that to context. then the how assume do the what's rates I been up think right follow last were prepared they over to converge on if

Martin Roper

Yes.

still would the I of So lanes headaches on most cetera, cause skip where of both currently available. capacity availability, call availability. normal on use, normal good ports, service normal, we course, you There's et issues but there that, is

are contracts on entering capacity lanes long-term very to for contracts. not We're secure where or currently looking flexible. entering guarantees. we're into We into staying We're service short-term capacity

I say given that particularly there are it's that fair market dynamics think think rates. terms at the attractive offered. being current They're long-term not contracts to we and spot are

forward, there layer economic good And we continually as past, long-term we provide So in hedge that. those as ocean a freight. with will evaluate on we a us we yet. the in as will good done contracts not but and we're look probably And outcome think the we've

Operator

Securities. next Carey Our Fargo comes with Chris question from Wells

Christopher Carey

that and the relevant then just lumpier, you performance you're Your is a fits have support branded a has dynamic? more I realize into so dynamic comment little I the but a Can here competitive this category so side? portfolio competitive macro this on bit getting different question how is on significant. label been And to private on just the backdrop. much

Martin Roper

Yes.

are both good play wellness. larger we in beverage water and and interest So think health first, Vita coconut and category. Coco very consumer And benefiting there, obviously, I a functional from on tailwinds obviously,

marketing water. work consumption that indicated obviously, that coconut of over-index we've the in of families growth Some done, in

And So volume just is it's growth. price, it's which water of categories. healthy we're seeing price, the unusual quite coconut beverage and not all across

So we there's side think on coconut the underlying water. consumer good momentum entering

capabilities. chain of outgrowing and position within some a and sales initiatives commercial Vita We capabilities having right We're year combination brand the smaller then And multipacks multipacks strength offer can't our coconut supply of last the were the of can think good versus many of has where Coco a from tight. some and items that's benefiting inventory now the Obviously, the we in when we're offer. brands been execution like category. water, our our brands,

to gain so able we're And share.

think of obviously, like going. the category And try we to to as for those. leader, category we've it's those able gain share. been both to keep healthy, both drive of So is And we'd and responsibility the and our

Christopher Carey

Okay.

in they not past, pack are is talked is any overarching it's you macros, portfolio, a realized. Or this luxury? in have different category seats you've know the sensitivity It's trends within seeing similar category. signs? size LRB? as ] but broader a subcategory about this [ I But I do a overall something Just consumption

Martin Roper

Yes.

harvest not premium luxury. I packs we functional consumer. [ and to points price are It's price. And value our then the points point, coming available pay regard your is affordable price think multiple the provide and very from the have offering price range a beverage. consumers growing to that packs. label an category of into strongly ranging and private we're That old points. high most willing from there. high multiple And at a prices. end, as of Obviously, to our a At that indicates you category at ] it's plays own this better brand, own then the and Within to the that is multipacks us

tried in [indiscernible] we our But to we're or in IRI up in investor the out the see cycles. few to how going Circana, driven. next You'll has been a the data, the point that times for on step growth sure Circana

by I is the in remarkably held multipack. well. cannibalization, the of have but think we Obviously, we've been with of thing there the the introduction strength signals the pleasantly also surprised

of within covenant the there's So helping is category, external a range work in strength offerings but food pressures. price We mass, any points is and us least different see at also the brand club survive and the we the of categories strong. think as economic still and

of pressures it's the So feeling. to our be of economic that some would to some anything and to really that know, hard I point may consumers link can't I

Corey Baker

volume impressive. growth And what think is said, just is I to Martin reiterate the really

right look price, ScanData growth quite this only volume industry in which you period, over the at unique XX% now. If is was X%

enthusiastic So volume growth we're especially. excited about and

Operator

from with question Ottenstein Robert ISI. next Evercore comes Our

Robert Ottenstein

years. and just great a the really, terrific tough on so quarter you've really done Congratulations job navigating more

it I the a or to than service you bit questions are different pricing maybe want and your many. other the you less want that done. and superior angle. But I How the share don't price more. would slightly categories press the could compare to consumer taken seem, strong your little well come of redundant, So price perhaps other market some around and it to have given but competitive share follow would up. to seem just about be environment taken beverages, thinking at market equation that equation, you it and generally could you've volume

strategic a decision there. So there's

for forward think bit think So you'd and pricing maybe how at little that on general on going your should a and more investors or just to look equation. about how about strategy promos elaborate how

Corey Baker

picture. big Any

several think You years. this over category about last the

of lot to on so the so historically, at down aisle. the product look its category were First pricing of occasions pricing you as end walk to bring the consumers a we and and still is of and category way in we the the if believe all, consumers beverage forth. infancy more high and has giving on But in you drink

X, and aisle. beverage or to really the Over year the brands pricing has us other categories from caught other up last beverage within

accelerating. and So clearly although IRI, volume price increase and is is the in you and see growing X% price the taken have we sticking price

seeing expand accelerate. of you're growth focus ability as category and aisle. to positioned continue to rest now further we this perspective a we're on the beverage are improvement improving, and better while have gives from think might been the historically believe, relates to we We it us that margins our than the price gross the And -

So say a won't in be do not now. retain and we good think pretty never good we we feel very -- place, We option we'll in but that, we're the we're right to a future. the in place to the ability price taking

Robert Ottenstein

it? understand you're the leader, it's you category grow affordable the right as to more to sure that more I back, to to repeat continue way about other So so that categories it, category. just relative to make the category think Is looking to can the make

Corey Baker

margins. is More the that this And And think believe I have subject we to clear, be it coconut happens gross might economy still category. in we can general been what while than the to in historically obviously, of affordable all do improving water our competitively. and

flexibility. stabilized a So interact the all we will see on continue particularly chain position, we to everyone's in as brands I think the very supply We're how and we shelf. and monitor solid it, have

Operator

Jon Blair. with from William comes question next Our Andersen

Jon Andersen

on of A quarter. quick Congrats the ones. couple

driven period matter another higher I So it to have What wanted there minute. aligned of place I that the rates a that environment freight to you allow now contract couple quick the what those operating still roll do Or go could with a convergence forward times that one you lapse second may rate follow-up. take you of on past? or for the then it that Are your then contract spot yet. Is think is, And lowering in terms will benefit? X under back over haven't any a in step there are of specific just -- you catalysts you're rollover? And that at to that of have rates during X under a time? to when that rates extent of in be a a things So contracts that question ocean And mentioned and you that require? function there. any put point would some freight? are

Martin Roper

Yes.

rates as position lapping a a it look are I forward, relates to and think and we don't position. back we bad As we're in contract in

these as contract think you the to trade-off. rates, might I relationships with market which otherwise the allow to some incremental volumes happened of changes, influence have

that working we're So hard.

significant about would margins improvement plan the we year. than So yet for and other next this haven't year, I don't think from any sequential we've talked provided that a gross change in any modeling perspective, I guidance

I But gross margins, a plan in for higher margin gross obviously which just full-year a sequential on basis. would a next improvement implies year

where relates historically, maybe this been and I it spot spot the he'd much, get want align, to hedge. and But longer, the contracts premium -- there to years, think wasn't how I doing comment. is close yet. only might that seen it enough X to a doing much go, have I been the contract rates time you Mike comes As we've it contracts worth for has so think I of when don't

capacity and availability that's capacity. of partly driven think I by

significantly And been offered therefore, that being than the are spot the rates are rates lower that have contract proposed.

an were capacity has to supply That obviously capacity one, built So the have increasing given extra but frankly, number excess around. believe containers building been being belief, but X, given demand, made there's means ships requires I got the when also ocean the the containers And This then X the we a out. they ease. added, bugged -- years. that of over chains think the excess carriers of the just profits last it's there's

little hedge. closely. when the time look And the unclear a we to contracts we that watch is obviously, it's So right, when we pretty And change. into think appropriate to provide will it's that's enter going something

Jon Andersen

And helpful. That's on one the sales side.

there you're at this in QX, sounds about back half Is year, levels sounds just your rates marketing we You with and there and which to It breadth in outlined, of the leaning ability something came of summer, inventory into next need growth strong you've like growth. reflected consumption out couple the quarter struggling some drive discussed. as as an your good XX% a considering wondering be given X% very to that's and commercial with service and into the the the combined of full-year to with in marketing view the quarters. initiatives else of now perhaps? going Is bit of the I'm shipment in you little promotion that, your could -- the to acceleration, I'm least just back lean the initiatives. commercial context with like, QX, promotion it element be strength

Martin Roper

Yes.

question. great So

laid on little we're ready think, quarter to first first to we we and change certainly year anticipated, of a and the that out yet plans, other year a made the perhaps but stronger outcome not all, commercial was than I adjustments we for guidance. expect the to what we than the projected be we based

demand us there's quarterly due been of of this years, out for really noise incredibly movement. last inventories positions, model lots to a the on price on to over X competitive basis. difficult. I It's think stocks, side the It's hard

trends. we're think the I We so love And quite demand confident.

consumer we We benefiting a strength we're we as we're obviously but we're indicated, lot improvement, like on the potential the - the with resilience gross seeing. and economic love margin uncertainty, of the We seeing basis brand some private side pricing, exactly more in of work label full-year how a it's a reacts demand, on cost situations. their tends little from pass-through volume private -- to to unclear label on

to see but it's hard on model lower too in And way cycle we private concrete together early to there, revenues. the that. So may model, very put some it's volume growth label

as say we're year. what the the numbers, I just to up you reflect well for and think about obviously quarter excitement your not I the would to we in ready will So see feel good but set

Operator

Our comes Group. Lauriers next Craig-Hallum Capital Des question with Eric from

Eric Des Lauriers

And mentioned now. these bottlenecks just Martin, was that noise are I supply see should strength normalize inventory the that demand in this you we as in It due year? So to the fully year-to-date of hoping unwinding years. some chain basically to the could in of color past the sounds like any behind expect of provide you you've on retail us the more the remainder you impressive dynamics. Do seen inventory?

Martin Roper

QX I last in the had when inventory quarter items. think year in versus some on challenges stock some we being benefited we from

you scans at the even you'll publicly that if I available, strong. see look scan remains business think that are recent more

so don't the we're issues of the I certainly So But comparison. think is, at related you there's expecting no, we've based lots to look to think and data, I decrease our seen historical what timing noise it far. as on challenge

we great So the panel. full execution, of for have have inventory, perfect year would comparisons so a to this love baseline are a and we year solid hard,

Michael Kirban

against if say, quarter. growth last scan in XX% year scans would quarter, year, I IRI fourth you same last was about quarter think in XX% this but grew that But sales

year It's So about. stack. we excited impressive multiyear on last have did a year good we're quite also that a growth

Martin Roper

Yes. [indiscernible] Investor our Day. To in published Mike's stacks point, we

we the COVID now X avoided we're that think after I years years.

it. sequential And that, year apologize But is least measure XXXX numbers those actually from which continue base took a at can we we as accelerate, at we for improvement. So to that. look so we

Eric Des Lauriers

And great the respect beverage that's comments then you guys last expanding one With on platform potential that for hear. currently better-for-you to some me. No, M&A, have. to

going where to and Just potential respect to to frame real Is balance fare M&A. timing time waiting thinking how up strength? with waiting more macro environment? be build something to how in see and just sheet you brands uncertain this no you're consumers about this targeted you're opportunistic? different is wondering Are you're Or it

Michael Kirban

Yes. There's no targeted time frame.

M&A pressure this of is doing We play a looking terms of timing whatsoever launched and development should and there's are time, of that and in at business, over for always that looking innovation things. most things. sort the we've projects focused in we're new any on in-house We're role there's and the imminent no think the core, we're but working at it -- the deal. against. We And nothing

Martin Roper

Yes.

As innovation. Mike we organic and said, growth prioritize

Eric Des Lauriers

about Certainly, excited lots to that Yes. front. on be

Operator

like pass the back for now would to I management closing to call remarks.

Martin Roper

if and a you before, into look you the joining Everyone, on again Well, have if second day. We we call. our for to or not bump quarter in the very talking after thank appreciate Great. about. everyone forward we interest, to us great much

Operator

Thank you for This does your participation program. in conclude conference. the today's

You may now disconnect.

The Vita Coco Company, Inc. (COCO) 3 May 232023 Q1 Earnings call transcript