COCO - Earnings call 4 2023 | The Vita Coco Company, Inc.

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Operator

Thank you for standing by, and welcome to The Vita Coco Company Fourth Quarter and Fiscal Year 2023 Earnings Conference Call.At this time, all participants are in a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded.I would now like to turn the conference to your host, John Mills, Managing Partner at ICR. Please go ahead.

John Mills

Thank you, and welcome to The Vita Coco Company fourth quarter and full year 2023 earnings results conference call. recorded.With Mr. being is call us are Today's release Mike and now, Corey Chairman; Martin quarter everyone Executive Officer; Roper, Chief earnings fourth Baker, Company's have to Kirban, earlier access today. Executive should the issued Chief Financial Officer.By the is of The Relations information Company's This Investor at Coco website section on available investors.thevitacococompany.com. Vita the performance of statements, website, on this made Private there the presentation which on Reform XXXX. comments subject an accompanying Act provisions of including results.Certain forward-looking Safe our Securities Litigation Also is commercial the are to and Harbor financial of call, statements statements. These differ that to and subject could events based to forward-looking concerning are forward-looking results actual materially are expectations from on management's and uncertainties cause beliefs those current several described and risks these future in and could during made cause expressed performance. results from some we non-GAAP to with detailed or any financial press describe filings measures implied more as a materially statements we refer the business actual that of today.Also, for today's the factors in the use those discussion the call, release other will to differ risk SEC Please forward-looking The provide the measures non-GAAP on of Mr. is my website release the over earnings measures turn SEC comparable call financial reconciliations directly the as to to most the with and supplementary earnings are as that, it filings GAAP well and as available well.And presentation the press pleasure to our Executive Mike Chairman. and Co-Founder Kirban,

Michael Kirban

they today dedication although, do have and what solidified proud more results over Company of I in mission commitment U.S. fourth the in XXXX markets. And to Vita years, I is by XX years, Coco business, to to for want we've creating over confirmation coconut and coconut our aisle, of sustainable, the communities a marks that representing performance uplift although Thanks, John. never still the and their that these growing in colleagues ahead. and of thanking for category and to delivered our it ethical, year Good XX% believe right X% plans I'm in strategies XXXX the weeks, XXth in record in and for all We've in fastest Thank by working. and success recent has XX and beverages water last XX of beverages the the category our is energized are all morning, continued better-for-you commercial enters water our expectations dollar discuss everyone. planet.XXXX excited start the our felt nascent our XXXX which the accomplished as our us our and joining growth. year the globe across driven category our of full last for The quarter the you water their year super our financial U.K. sales U.S. leadership lies just current XXXX.I

Water Our water coconut focus CAGR focus our X the on category the a strength XX% chain, consumer our and sales at supply overall by for water retention, sales Coco against growth full grown major net CAGR.In prior a Water growing Vita our XXXX, the Coconut with years, at year. our XX% year remained consolidated Coco of flagship has on and coconut of growing supported Coconut producing sales, Vita our last the XX% net conversion driver the

XX% grew category with retail basis. United Total we value XXXX, in Circana, sales coconut our of Coco share for XX% a full water in In brand the the demonstrating is States, year on year growing with Importantly, and to XX%, in XX% according continued driven to share, Vita XX-week gain the volume. very XX% value full healthy. that demand volume this was consumer growth growth year finishing by for

retailer was club spring, extra an in net distribution bulk growth gains and with expectations sales sales Vita XXXX partially from our a some product benefited some label commodity for private the and XX% in Coco priorities our our temporary Even we exceeded Our promotion that prioritized effects, very will that still opportunistic. growth. been the we strong.Our these year initiatives for have double-down XXXX similar without on last driving were and growth to remain what very

water and private expect in create which on announced mostly drag in-line year XXXX growth I offsets business of oil coconut on non-repeating just gains volume and estimate label mentioned a mid-to-high-single to with to current health. it Our grow remains category the our strong business previously very of impact We digits. the core business decision we the business, that the our strong

rate that demographics expect Europe. a growth, once we growth occasions impact XXXX both about expanding coconut appeal on brand We're all on these remain Western can to to potential and drive business our grow return should EBITDA are slower to the a staple for in I category XXXX, and and net excited to of household growth we to as expect brand Coco rates to in develop the us. markets the across and behind America focused focus into drags sales is we performance healthier continue sales we what While believe across at and and primary Vita our water North category the net

whether after and the should education and it households of beverages will the a have too at very in usage. a table, increased usage workout, diverse main water of these the after or the few coconut cocktail, that many be efforts Our broad expanding on such many focus one Expanding usage is occasions. be occasions a driver consumer cocktails.Coconut around for occasions breakfast few water,

positioned this the brand retailers. XX largest and our in in reached packs, us the multi-packs, as XXX top ACV, significantly we have underdeveloped our selling XX% increase Currently, in XXXX size for firmly are We coconut XX share multi-pack which uniquely gain for we leaves category, opportunity. runway will basket And our grew remain believe to water shelf Multi-packs seize only considerable ml, our other versus growth. of the and cans U.S. in space drive categories. continue to to XX% strategy, U.S. which

to of while to in this Vita continue we expanded share water represented a Coconut distribution water approximately mass have by volume Juice gain U.S. we the canned the our so coconut retail the food category coconut XXXX, a distribution category.In us to canned segment. in that ACV further format select of to product broader in of gain category in of share and XXXX, this believe intend track XX% opportunity convenience in share channel with of in In we U.S. enable improving segment Coco will achieving share stores, on coconut water gaining channels, the XXXX, the in convenience, big focus expanding also We this to XX%. gain In cans retailers.

allows coconut also XXXX, distribution priced family. leaving trade in Organic, shelf-stable consumers Vita Farmers we to focus of at additional MULO price keeping continue gaining us We to and a U.S. to room Organic Organic, Coco continue up on SKUs distribution. In premium ACV Farmers in will package. distribution XX% Farmers in our attractive offers organic a significant in for regular an which water our while achieved brand them for driving to is

in the opportunity that compete and at to Additionally, chain an new we segment we growth The share strength private see revenue this accounts. in continue XXXX delivered water label private label coconut highlights existing in segment. the our in XX% of to supply gaining

business, net of business.Outside water long-term label expanding private us see water LIFT, the strategic allow began are of we we street very expect we're opportunity.In in our the in make to to our infused excited the about decision New our our in of to value activation and business. progress near-term progress strength Although distributor coconut real confident should our isotonic relationships from strategy validating affecting this we to coconut grow international label headwinds protein sales include to the where our York category, oil availability the private area, significant PWR XXXX,

in partners and international to as that category that growing our our us in North our training of and see it declining and believe the our increased done We've Western opportunity with is America Community real category market, category investing all charitable are over we in the tailwinds that far. than year, category growing and reaction our U.K. that in saw, allow more The process drink In by hard more on right water which planting in I accelerate where sales advantage I of ever excited initiatives, a to believe through ESG a time will and our twice farming that I had was sustainable can highlighted recently in X and brand our branded impact the to coconut greater which XX% driving Project initiatives, the growth have. the team by coconut to which organization Coco before. in the share practices to the XXth net underdeveloped of the pages I retail that progress business web with investor proud and was meaningful is recently brand continue category. the continued and fast long-term than year. we we're distribution the We're of we It opportunity coconut as accelerate the a beverage job XX% strong reached environmental an in coconut our growth consumer market Vita the Europe has involve water the on and is opportunity as targets. the in years? businesses.Related strong of volume led growers an coconut but Europe can't category the category Vita water is believe great the and this, the grew away to our deliver so Our big XX% year, schools team of approximately fastest as the that communities updated according growing take social as trees. building of detail Europe. asked spend our into beverage, largest Coco blown water growth. growth Circana on more the well-positioned believe with strength amazing more is in energy to progress and Europe, and of we in U.K, coconut giving growing in our across to support Europe. I to Western on our XX% on classrooms, momentum, to registering to investments, the the we deliver cans I'm and the growth ever the be We myself, has organization, why across and category we us

and We relationships, the maintain stepped talent growth, brands size our of Officer, our the I and to companies from beverage we uniquely one the believe as our acquirer that with and to profitable an growth.And been of over the brands are are investments positioned up execute position we we've stronger our now, that growing to long-term of opportunities I that could have significantly and in on our as Martin will few financial capabilities health fast than of in Chief our beverage in Executive capabilities and resources. act commercial we to business, turn accelerate new Roper. complementary benefit ever call to believe

Martin Roper

year good net growth Thanks, sales net this for growth. year the Coco Coconut we third have growth morning, thanking the total and we Mike, XX% Overall, sales pleased momentum grew XX% consecutive our our company into double-digit I'm Vita performance since across XXXX. outstanding performance in very by team to XXXX, XX%. and represents XXXX. sales an in Water, achieved strong start carry delivered everyone.I'd with net globe the driven year XXXX.We like of by achieved This which of we

quarter from up net Europe from Vita sales delivered promotion of private our XX% benefiting consumer QX XX%, an reflecting slower some Coconut where partially in grew strong with growth and our year volume Coco key which XX%. were demand fourth internationally net grew with XXXX where trend, the Vita up Coco XX% branded growth than the Water versus net growth, our XXXX, in Water quarter volume of full X% sales wins, some strong XXXX, label In Water Coconut both sales Americas sales and label grew for XX% incremental offset up we and X% Coconut net Asia.In the full spring. benefited by [indiscernible] fourth Our private year the softness in XXXX, Coco branded Vita

performance also prior gains, year-on-year of label label saw private water acceleration resulting distribution pricing. year lower sales, shifting an consumer a of by coconut private We soft from combination and driven

benefits see believe We growth. products of communicating to our demand water with numerous efforts category. our is for this overall We combined leading strong strong the functional continue occasions consumer marketing the for usage our to coconut

profitability segment brand less pay of functionality. value true year of or costs transportation as seen operated companies margins year-end and the operated CPG significantly largely not year year-end seen about. is in multi-pack label, the disruption availability and our than levels inventory and both that we was another willing is XXXX. well expected. as still versus is great segment were positions effectively. There partially other while expanding optimum, believe supplier private Within a margins, perhaps efficiently are and from in in during to a by brands who premium a lower XXXX normalized through the slightly growth, value XXXX, consumers stronger dual best believe It which have without impacted and benefit to chain gross sales us consumer strategy that we pronged quarters our premium either We have behavior for year-end seen being supply being finish with private due flow, This strong than down prime similar the cash year is our label also effects.Moving to and multi-packs margins a improved were talked for to maintained our major We chain and correction. was the inventory improvement levels, inventory by on the which to revenue, in seeking supply driven

transportation, initiatives and produce growth our starting with $XXX acceptable retail through to summer topline to label believe spoke and working to XX, that good point in profitability said, our our for selling headwinds February reduce S. the are we and U. what Vita brand demonstrating branded grow and commercial we are are recent a commercial XXXX, productivity sales inventory cost is multiple scan believe are sales X time Coco have to our despite $XXX net the Mike and strong with offset share. commitment Year-to-date net and improve XXXX promotional a we XXXX we face, to confident high-single-digits well-positioned confident levels inflation goods, a in category underlying done Circana up expected dollars that long ability the revenue Coco key We X% strong we data, with are in sales XXXX business We to to build drags we strong periods.Reiterating private Mike should percentage we headwind. represent about, year in in growth momentum. plans collectively percentage to On point X of the in expected Water between for as water and Vita our million years. in through manage of our Coconut this year million outside and our the coconut scale support

when lower higher transportation of offered saw entered with significantly contract prior that cost us.Starting we for away were Year, any rates from the the some lanes, we started than Suez years, intend We significant think we relative from increases around that to the on contracts spot as contract year some and to carriers Canal. rates into coverage front, receive contract all monitor then we was enter move to the On Asia rates the when significantly make levels us. than increases with offers cost to New only spot we available spot sense the how more ocean for key freight rates commitment offers and route

and we experienced are pricing on disruption to evolving. this rates cost XXXX. and call relates we and ocean Europe on being combination today, will I Corey Asia remain of quite Chief and Corey, our markets from those to as guidance manage freight can on it the elevated, is East Obviously, to recent, America discipline still below detail.With rates that, currently deliver pressure year XXXX of that charged full the this the market over significantly Financial a assumptions Coast we comfortable and of and are Officer. with that, but we to in remain that's Based of As will the disruption, duration our Baker, turn shipments

Corey Baker

label outlook morning, Thanks, the increased International and benefit, volume, XXXX partially with XXXX results. mix net the net million additional volume which the full you of X%, on Coconut details large offset Coco increased Coconut for in the X% XX%. $XX increased of to label net growth driving Vita growth growth increased of some the growth XX% label sales full or the at partially I Private good price our year $XXX segment of private which Europe Vita volume Water year net million, now and Vita a within year-over-year sales discuss sales gains result Water will softness $XXX new to sales XX% business Water's will full Coconut a On XX%, retailers. strong million, year, XX% mix Coco private XX% with our XXXX, changes label XX% benefited fiscal everyone. provide Vita Coconut net XX% private Asia. Martin, is segment $XXX basis sales by Water where year driven European Coco drivers strong full XX% XX%.For up then of full was growth from grew by I revenue price of growth year.For were to while Americas, million. and performance was Coco retail of at by and offset financial net while in

million XXXX to XXXX shareholders for gross $XX for year year prior $XX from up year.Full per prior for in income XX.X% EBITDA, share increased non-GAAP our expenses, benefited is versus which income including was was for of reconciled volumes on X,XXX year, for million increase seen label products. The Net in costs $XX press fourth which costs, to $X.XX XX% year-on-year expenses. price per sales our points million defined pricing, The mainly the the in For XX% XX.X% global private basis, or $X On XX% XXXX, year. offset of net cash expenses and year-on-year of Full flow. XX.X% or and branded XX% XXXX. marketing from primarily and margins adjusted the XX% to partially total year improvement was from full and tax incentive which million compared balance representative diluted previously discussed, throughout effects year.Moving quarter attributable resulted people gross share an approximately transportation in sales net to in improvements XX.X% $XXX year, of the of FX increased a a diluted SG&A were gross our we've net decreased full margins $X.XX prior were and release, sales tax mix or versus full over offset quarter. basis, On performance was or rate pricing was in the compensation. global operating year reported Gross the partially increased from The planned prior profit year impact improved due versus $XX was on the derivatives million the by increase sheet transportation year year. X.X% the partially to to within percentage full expense, year, quarter cost gross SG&A.Turning to Net our effective $XXX profit in is a XXXX by the investments primarily profit, up the an increased million, by improvement was represented in basis of the and the cost year International higher full investments segment reflecting consolidated branded for year. company measure, unrealized flat prior SG&A offset lower sales, XXXX. and million, the

connection capital million hand XX, Martin December, was by began the compared of as in As $XX on driven in inventory, discussed primarily million [$XX million and our generation in a $XX December and income $XXX from million with we cash increased the we net $XX provided The of of credit which debt of cash December earlier.Late strong announced working but the repurchase under the year no XXXX, million] total reduced of cash share strong to program XXXX. no and previously management, authorization. XX, revolving facility in debt had year

December $XXX,XXX. As XX,XXX XXXX, had we XX, for shares of repurchased

on cycling aggregate As XXXX, of million, between the a approximately February category million $XXX program with water with announced total our of label $XX in-line XXX,XXX our value private we expect partially net XX, an XXXX, impact opportunistic million.As repurchased which under label of by the offset the and mid-to-high-single-digits Company of has and sales distribution $XXX turn sales. coconut the commodity to we decision previously is for of shares private based the temporary business of oil growing business the the growth on category, and

We are improve to to continuing build performance. commercial topline additional initiatives our

XXXX, of best XX% slightly gross reflecting margins ocean begin year on QX. offset freight our current margin on would P&L We by ocean the to XX% the impacting expect based which market, improvement full for current freight our assumptions costs, the over impact in

the throughout million SG&A in like expect adjusted We activity quicker M&A if million. $XX or closing with ocean our we fund SG&A XXXX call business turn for remain expected our disciplined of further SG&A buyback emerge, opportunities share remarks. the to healthy Martin, to with see to to long-term fund or declining investment I'd year-on-year, to if the spending our to spending productive see in may EBITDA freight the strengthen slightly growth.And any of year, for guidance allowing business through adjust our invest that, improvements We we to opportunities reducing for his potential roughly anticipate than will that back balance cash us the flat long-term.We $XX

Martin Roper

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

our our We initiatives excited growth. about key and environment the navigate to drive to are current confident ability in

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

Operator

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

Bonnie Herzog

Hi, is quick. question first my

much your which topline, came in quarter implied. the Just your than on in guidance stronger what

just was guys the then like sounds a like you sense really just any forward asking trying that to And summer? inventory to I it, it comments your retail pulled reason if are this maybe sounds ahead build on was of of of the get that So based from I'm and some QX. it wanting at it drivers of the

Martin Roper

Yeah, or take Corey come that Bonnie, I'll Mike and in. can

think some a with helped And in I QX we heavier bit, did ago. us than sort we happy. from much sales, little think number. the a very 'XX obviously, distributor year opportunistic feel a surprised commodity of We benefit that inventories also bulk finished wholesaler sales that in-line, year that little inventories, I maybe pretty

correct could good. heavy bit certainly a think a side. shipment We So that potentially or We are stock light. retail retailers little on don't in is think position QX that

said last year, but to brand. I our year-to-date go in we of the it against did this And So and more up we the of comments, year a the category think the challenging think strength that makes happy I bit, our good. expectations It scan little reflecting feel growth obviously we exceed and with obviously, as we're think sort healthy, is data that.

for we the about core And the year. good feel business so

Bonnie Herzog

get of really color That's margins, margin much anything and a And don't the takes. and your potential trying in of my be see, there, If margins? helpful? would be how sort maybe pretty guys sense there's that, I could downside guidance. the guess, I Okay. you and And on or maybe the call to a gross have I you feel good that would about more gross do know, upside little that then out walked your maybe just biggest pretty you you helpful. puts just the visibility on thoroughly gross you where And on through of question guess, context

Martin Roper

Well, one, guidance feel good about we're the that obviously, we Sure. giving.

goes that think without I saying.

are think pressures, team supply with to Obviously, we we the the to. negotiation and work goods have a done And we've years, have product, we're cost at inflationary try goods that visibility I pretty good cost trying our side, issues, but in our cost through of to we and those I each we as look year. when offset prior partners transportation think ignoring think optimization of of there have the as I efficiencies. mentioned and improvements engineers deliver before, chain sort of cost of

pretty good about feel we that. So

have Gulf. the guidance margin very And transportation significantly recent for 'XX-'XX more obviously, it more were increases the if certain about feel As stable years by side, bit, rates can or potential both period. And side we into time the takes little X freight and prolonged. than to continue how with on to activities think other gross action be to play account that's it sort that ago, of that. and is is assumptions deteriorate cost on pricing know right? we a what product So, relates stable ocean have currently then we the obviously cost the environment, of visibility to going it's also some obviously, in levers the We for affected our with we pretty flowing things be good might that. We the

lower we I And looking of why actions make think that the and giving point period. everyone supports can significantly in were time the spot about is the than the that that. so we're sort guidance comfortable at have so in 'XX-'XX take, ocean obviously I rates they And would that are freight we is we're

So that's first the multiples point, lower.

necessarily life events they as are of while 'XX. other nearly don't the reflect we increase, big paying. not rate of those thing the And what threatening this on sort is, is as rates, indexes, it a is the spot blip and then So, are spot

conclusions that. So to from wouldn't I want people draw

pressures, the indicative rates. the but it's think of of necessarily I not indicative

at margin so this in guidance point our time And year. totally for in the net-net, comfortable we're gross

Bonnie Herzog

it. in? locked you to Can that Is Super want you that have maybe visibility I the is then share missed feel something. helpful. good? And, mentioned you how I just clarify you much that might have,

Martin Roper

of the and So little spot the I take think were rest of we prior on said advantage quarters, sort a going sort bit commitments we to in as markets. of

short-term contracted As did we in were enter XXXX, significantly but lanes we perhaps needed for in remain certain would be capacity, some communication, we we've where lower talked quarter into guarantee to think we we historically I when prior contracts XX% contracted. than

are strategy We that, the of spot working with thing taking now. believe much relationships basically and very right we best our and significantly we still market have is below the current

made just no, the reflective strategy. that So that comments significant change of a I in not were

Operator

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

Christopher Carey

the Just follow-up QX. on X

are the you you gave number, indicating you We'll consumption unclear it's the just ship way saying it goes. when quarter below for how Circana that or are kind So, year-to-date to or other? that of you see one expect would

wanted to Just --

Martin Roper

I Yeah. certain Circana could number issues say a affect the tracks other timing it's the that unclear. business. just would only of There's The quarter. part

So would as don't you little implying of to think we anything. not ahead we're pretty relates as stating our I trend. scratch how what just QX, was it shipments implying headwinds when but were the a always to merely anything expectations. QX we're think happens, And were when head presents that obviously, good maybe that I tough and to your

a or category, of would good, pretty even think what's we say I is. year the quarterly, is a on in full indicative that basis necessarily on going but it monthly not basis Circana on data

think we about so to that. you direct would like And just it

Christopher Carey

great. Okay,

know the ability tension about on certainly I shift attack I gross some experience is On pricing, a what seems can the focus the that's of talk implying. of perhaps you of of sounds but back the margins, pricing that word, to the lot guess and private think so private this, it some just that's I there's changes to there's like freight freight want if a cycle, question there's given and your And label right? volume I that if around, quite the you a does the giving cover of way happen don't be your concern and as that, know but label last to don't happening, the you're right to I of take in bit kind some if protect if of result. kind ability

right And what lever, that at should pricing so else pricing on And the your the is if just disposal? branded the power isn't offerings, happen?

Martin Roper

Sure.

situation just me another Let comment. with start and the make freight

of Suez. point that seen freight some not ocean spot bypassing necessarily made the who from increases rate experiencing that reflect costs the think the ocean do the companies carriers have analysts the are the that I follow they've

there opportunistic appears pricing some it so And taken. was

or we and seeing, a one as basis. of And that this, temporary the look that artificially them so we're to certainly think those the we we reasons basically our we we're gross have on while through the profit rates offsetting is that incremental of pricing volume can on deliver high of this maybe margin, goals. are in it, gross sort believe of the handle either sort at spot P&L, whatever And measures they side pressure we

to that that second good to label pricing maybe experiencing.As with current at brand. obviously, so and some market pretty we're on seeing levels track the So the cycle private question, back your back-end of of feeling historical relative currently in to we're the about we're to goods COGS label relates it gaps cost levels, start currently tends a to you're re-emerge and private price

of on in happening brand And a volume right? you were that, isn't And where that side, the are the so really believe we seeing that commands premium, private monitoring gaps seeing because we firmly right? volume label And we're XXXX. that is are have some and nothing great back gains we and to obviously that price

of for sides both our there revenue certainly volume year to going private But U.S., be sort very also in some will moves of and of a these we're category And look it playing just a significant net as all it have certainly sides and sometimes label also for positioned looking to sort we're we call, probably multi-pack this. and make is primary effect, a the because little is odd the good maybe interplay feel emerged that strategy of shake take the out. one and on and there We're consumers we normalization. it if one well-positioned a value.So it and that the also of to label can play have the just suppliers advantage of uniquely take will So about between both private it's branded. most and said an that's I of well-positioned we're effect. think, as of total to year the year gaps on transition in be a sort we

Operator

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

Michael Lavery

bit? could I maybe big that how more of aware to filled much want how a just might it how that's that about the contributor Can of ahead multi-packs. gave been know contextualize of on bridge little been the start sales you a have you slide on color and I a that And think I you pipeline shows sense a this, be the on opportunity like little of show growth. just kind should some just just but the or to big to just how maybe we of runway be? give that

Martin Roper

Yeah.

So data. one, investor on the pipeline really because X are these Slide deck retail in it's data scan retail not the scans, is

held seeing And reflects a obviously, singles cannibalization but it on consumer good really items. there's of So, up bit velocity consumption. little with have We're these singles, remarkably well.

be total growth to but the growing. so, the in held multi-packs, singles brand And The on. mostly is the have happens

think innings, early still it's I right.

these in multi-packs adjustment distribution in a innings, We years. X little been maybe out of early still again, some gains have only is, months, them. market X are to to or XX XX It's Slide still consumer opportunity X, and X. for have are Some longer, laid that still

position would a a year and we reach these X was in, And acceleration that we previous X-year to X-year competitive think And so we're it's only said fruition. really we've carry the both this program with what talked proven sort our like and So the ago, Chris. that brand food, I of in a right? fact comments can be and the back just or to it very about is business going say to, happy of the nice we're multi-packs obviously that when also results year I

we and it's to going growth we think year, good, year this has fuel another So we to run. it think at least and feel

Michael Kirban

be it though, revenue. Michael, load the it QX. be about As think shipment full modeling would immaterial year, in Chris, would you sorry. to the But on

Michael Lavery

you you in gets of make case And favorable, the increases in touched that helpful. the you it mentioned That's go seem that potentially right think freight does we flex obviously, should a of which But Is opportunistic more depending what if investments some way. it more possibility us you terms understand have least. SG&A, about could in to some to way that? think where the in at you for Okay. either obviously you the can on usual to it of might you're or if that as that we than we how moves, you just exposure rate likely spot might flowing help more see and through or reinvest on manage of see that about favorability rates how

Michael Kirban

favorability. the If opportunity invest we'll there's productively, objective, to we see primary That's invest. it, if

Martin Roper

discipline just I our hope it to and of money would if to X, we're discipline, work. actually years would P&L we we've we not sort last the X company But it. that demonstrated the right something have and thought we continue do the over will we because spend reserve spend so

Michael Lavery

there's and would kind simply what if make favorability, deck that evaluate you've that not a see it's waiting teed-up like got might it are of progresses of on things just you It's as sense? list

Martin Roper

and marketing is things approach money lot do we and more that a things, of our I'd to on. spend try work, we Yeah. say

my like team my the and me team we then for, more will ramp the that they up. proof marketing other work is, see will do we marketing what it me money can things want tell going that So we tell are and Obviously, results to absolutely.

do it doing there's So we're more what sitting could want works. to to here if and we always could sort not we of, like We're but of yeah, opportunities, do not always want we it's do. wanting it what things to we of more there's do do

Michael Kirban

There's always opportunities to amplify long-term initiative.

Operator

Lauriers of from Des comes line question Our Eric Craig-Hallum. of next the

Eric Des Lauriers

here. ocean more transportation anywhere on a that vast don't just lanes of all, a and the to? more of the of really provide would Red costs just Could majority shipping go the bit different shipments on First I you exposed near color you're imagine freight bit some your Sea.

sense give geographic differences in amongst a So lanes? sort And pricing any us of could of mix then you your shipping material there if of are the those?

Martin Roper

Yeah.

to if fully, East sort and I East I population, based you way think the North obviously, one on Coast way to an of to you Coast it West, of Europe. it market West can disclosed to into America can breakout business sort business. one And this approach port, identify And and analyst going East make major percentage get that but America numbers the would to market West a of some assumptions is to it then, those the major and an I international was and So, as business, of from would East our America is with West. and we about haven't of relates get and Rockies, the is

East, so of disclosed and from West and one UK. to third a Asia would East And there are just Brazil, quarter or the that we've supply our primary routes come Coast. our our comes to the supply a previously of into that think wrinkle, America I is And about

prefer based third we provided in and from a Brazil. haven't data on the but a it, assume the model roughly model not that or then would coming do you because business we of So your to, population wanted if you quarter to is

to expensive, was level. if lane than that it. East me was conclude Asia and XXXX, Coast. at back As to cheaper into rates, look Europe I Asia $X,XXX that. Coast and shorter much West more to I'm was number, than And sort Brazil container, Asia I'm cheap. of to quote would is then into Obviously, more a before it historic Coast Asia to say going expensive pretty but East you East was and Coast relates to going a rates, hold go you please to to a don't

Eric Des Lauriers

warehousing And of some you how you to of on of sort experiencing during then excluding inventory era and these compare that with what just costs now? time transportation, I'm here. Can sort freight I those costs, comment comparisons just, guess, COVID to other kind back ocean sticking of the experienced you're COVID the that

Martin Roper

Yeah.

the basically think very we that period was said when and we was talked mess, said we stuff. the to significant warehousing, the related time, fees, we what think that of a saw excess $XX I And experienced that. transportation during we third costs, that about absorbed domestic So charges, million in in we think a we I alone don't was of roughly and I supply because ports port a of bit congestion costs just chain demurrage, around were

of chains The of other drastically costs. supply a and space, global road of instead have and reacted, on end the of, U.S., at over costs inflation space ending in warehouses was all there years increased part have basically of multiple also which the how a warehouse there with there warehouses. the for lot the single up the transportation you're right, of hope was I 'XX, of particularly the in domestic my And wasn't because shortage everybody. stuff end I was And warehousing and

the background. all So second year, would last that's the of I the say that end middle maybe that of by quarter or of the by anticipated.

going instances etcetera. back Obviously, road, was out competitive the out the rates. this largely or get rates happens to lot is, were people also free, strike a blocks something X it's and up. largely port possible everything what a where there's freed been ports is was warehouse. and always into that back whether reduced consumer a to only Over one that obviously, warehouse congestion partly back occasional and up. have started because of It wanted as demand Warehouses the And eating you

what to largely So back domestic call transportation I mitigated costs normal. would have

where other I significantly solid is obviously we're the years supporting indicator also than with of lower levels, X.X inventory our sales very ago. inventory that think

all domestic subsided. those for significantly so And reasons, costs have

Eric Des Lauriers

question label. last My here on private

about comment of in private just customer. with the some you're relationship comment kind forward? of much quarters But your to section existing going on accounts on largest and private customers, the this new and sort label discussion on seeing of between label think your obviously what just has recent So could of label kind how growth maybe been private you of with the other of

Michael Kirban

label deliver balance provide well well temporary as strong coming all them is relationship growth others. distribution, our quite private better you in strong. is service Europe customers results ones that continued it is We've US with or as as private Yeah. some and temporary, there of to to as of in customers some incremental I label able the and was a we've new say Western see big the with would as our value overall strong service which can from than in been of to

label overall, on So we so very price see And and incremental will then talked about private we picked gaps expect depending Martin that those distribution. strong performance continue we earlier. up

Operator

Jon comes Andersen line Our William of Blair. of from next the question

Jon Andersen

the in I coconut materially wanted has dollars ask been XXXX. in XXXX. the past it to think indicated fairly first just over several about to you a category. XX%, sounds like out, in The pointed moderate up as But terrific category, category you're years water you've that and I expecting

kind you think mentioned to mid to upper-single-digits of in that What 'XX. some outlook you're an unusual just return making I of you category growth that are normal the the talk lead is assumptions XXXX? for Could the to in about, after category? just a this of that kind

Martin Roper

think we year XX%. when see we at data, growth around I Circana volume category last look

number. if you average, category do like high-single-digits. growth and volume And that's X look that of planning a think I our sort assuming X, around been I a at we the has think prudently good year budgeting

benefited last last full a inventory. purposes. returning estimates sure I from planning We multi-packs But would maybe. we imply whether category that from have What crystal-ball is, introduction I both probably Yeah, to does great to I'm year? some slowdown and this. So for think of from our not have competitors some do any just on say the year

little probably so some maximization that bit. of was a demand, there numbers maybe those I helped and And suppose,

So better, for crystal-ball. unreasonable. of But think and don't those prepared obviously, be have don't worse, Obviously, we'll prepared be that's goes what it. for say I But too. a unreasonable. are assumptions our we'll sort great think assumptions wouldn't into I we are I

deal then that build and to outcomes. variance plans can sure and have We pick make a our chain those number supply in it planning with around

Jon Andersen

a kind you like pricing Vita that to repeat? on volume even assumptions? not growth for oils to offsets if talk And are, in the portfolio you those branded about and price your you the of or the you've for you're wrong, maybe those correct you might think want I sounds XXXX? I little looking own then greater respect perhaps some quantify if can some to extent? of guidance, bit if promotion and in -- puts the with category part you sure could again, just in-line And of I'm us already I'm some think understand one-time taken expected I but make your It not what volume. me bulk I sure a takes. sales With Coco the if branded business, XXXX. And a that's mentioned mentioned

Martin Roper

piece it had sort the the of reduction listing maybe me them magnitude some in wanted be factor. is promotional retailer, of obviously, in or repeat opportunistic order chosen retailers oil maybe loss the the biggest the or let and of the we're that because the drags is obviously because private private size sort and activity case label oil the breaking was certain private and partly Well, a little we proprietary we've information label out of of inventory is uncomfortable business not year last just Yeah. that to not won't a it. coconut be, because as may categorize headwinds to label we There To honest, business. take the first. each But, know

then to expect coconut sort to to and In and of right, it, than our all label commodity going again of the concentrates were growth sort noted, bit business we opportunistic. bit so growth to the also was core for sales, have, it, than of little rate more you we as thing. major major we just the the offset right? and headwinds. that. a also to sold But in those retailer, had is water a as So, club as a more QX, non-repeating hard and QX, private had that's promotion think like again, who with offset we're XXXX, incremental of going that growth that challenged. re-occur. sales a drag, was we said which about needed commodity I mentioned, There talked little I we customer duplicate was It a another is of, that's we us So stuff It's is headwinds that don't it that we growth, plus with And promotion.

is we yes, good the really stronger.And So feel but a I've forgotten a to now your bit going it the it's of completely of little part emerge us, that for from year question. reset other business

part your do question. apologize. The of other I

Corey Baker

Jon, are. in we lot assume there's where haven't a our currently of over pricing the we seen but pricing. didn't macro I Obviously, significant think guidance, lot now pricing, right a going stuff incremental in we environment, of on

our guidance. within growth We're in volume-based be would it broadly our So assumption. confident

Operator

question next the line of Jim from Stephens. comes of Salera Our

James Salera

in all the me just I tie X question ocean but there. sounds if And color currently, current that, goes you'll correct that you're that, together? that's appreciate me. or spot the headwind margin guidance I'm wrong than and I guys It that rates current provide the loop spot expecting, would that decline like to put on expecting And on. sounds please the on of real freight it you're maybe like on pay rate. gross currently it's rates year appreciate the stay you quick But spot the where at Martin, indulge if kind rate, a would lower as rates as they're yield if to

Martin Roper

was ago started I weeks by market, and yeah, at think Declines you that the can there's but rates sort X at at published peaked decline. are Thursday, there. last weakening you least X, look indexes, we it about if increase in see spot look different to one So of that the last of sort

the you we're not earlier on As prices indicated paying than we're that. better we think prices, and spot as noted call, that we paying the

of this we continues our paying guidance I that a it. of And currently question. given see but yes, reasonable And we for rates little bit should that what so we're would And happening, soften, the have a assumes crystal that's say period continue optimism ball to right? is causing time, what the what's

James Salera

And can category things. to growth shift of then side the we back if

have But category. things being shelf-spaces well multipacks you the you presumably the the can perform about the about more as guys to branded as innovations, of market and talked given we some of in-line to You as think uplift seen go through? continue the there some gain guys with those some in upside overall from resets and growth

Martin Roper

the cans, so, advantage food part us the goal and we is But mass. food share, initiative need mainstream an And a our gives Mike, in share the we to to need lot, do but goal, obviously it to with Yeah, win guys, a X absolutely, to find right? to, the grow we It's to if upside. so. ways And in juice, section. we years obviously our ago, us you we can then think about and the do from trying of than can and gain were We mass there's challenging to right? to That's continue section of we're a obviously, Mike sort to right? multi-packs think where harder very in multi-year the where it's about to committed it yeah, talked share. grow okay, are in little about

James Salera

quick I one sneak if one on juice maybe then cans. in And just can the

that of is outside at other cans and to be one still going convenience? some that count of mentioned You'd Would multi-pack offering outside a offerings all include or mass the that convenience. of for in

Michael Kirban

for but it's now serve. likely, It's single Eventually single units.

Operator

next comes of from of question Morgan Eric line the Stanley. Serotta Our

Eric Serotta

competing for price Looks even How you've Water that bottle relative of whether sports categories, few drinks not years, could probably points some increases affordability in some potential price deflation I'm improved sort give you and, are or from perspective on clear. it's seeing Vita be in increases with against pricing directly further Coco relative to thinking clearly price you over the benefited sterilize or moderating, CFCs, any like alternative past categories beverage Coconut your of compete. water, hoping backdrop? the to don't about

Michael Kirban

So you're Eric, correct.

few in us a price significant beverage last the categories. relative between the and years Over other compression there's been

expect it's a forward, from overall at companies in our pricing heard us of think like category. much year. this the said, beverage this most I for And I we've in [indiscernible] not don't other lot point guidance probably Going I what pricing

relative stay needed. points the something those make unless same or We're those point we always assume the competitively stay close. and I point would would So at expect this the market relative changes. at adjustments But as monitoring to points that relatively price this we'll same

Eric Serotta

in your expects each preliminary Okay. think outlook last that, And Martin quarter joked well, you terms giving to then lastly, I Mike of year. gain me share

think was last I that quarter.

the one or one-time keep keep growth do and share underlying of of it? is some pace that benefits, the to sort one-time your underlying terms cycling water pace the in these kind cycling been you category a those category of your of even clear, or lot or benefits coconut think To there's know I you had time, when of year. strip-out forth one-off to is exceed with going with going about sales those be So back last you

Martin Roper

Yeah.

issue. little that our just than the least rate. at be I is think hope category plan our because or So gap this the minimum year label as price of a branded that private business a expectation could tracks think faster And we the

hard obviously, little that like that's stuff It's these talk all year because said, a other to So goals X going goal. you it's the as on. about

long-term remains long-term year, have we year, little that our think X, challenging years. which goal take is little guidance to it in doesn't last the we're why a mid-teen bit delivered the this for that the giving, of us we're it's We've branded growth. X table. I but goal This -- do a it off more giving

Operator

line comes of of Spillane Our Bryan question next Bank America. of from the

Bryan Spillane

while. this geopolitical, X trade right I It's we have you can and Barbary mean, to scenario, make back right? not to if the all I form? a Could really about I guess it's product X a demand traditional natural the guess about have powder. and that, step years, is, an there trade gas, do questions to supply freight freight converted may So milk, change where for a this like guess, right, routes imbalance. just and be boats just with think scenario X I to I right? Like impacted I is wars, for tough the a way discussion question. now we rates right? but and assumption, boat is And navigate right, COVID isn't make related

concentrate, unstable to sort from of to there that like reduce to you the supply it is were question, reduce and sourcing know it's again, a it So adjust just try could recurring the And would you of seems other at if be Asia a freight a concentrate of is. procure, incidence have ships as just to to as if theme there's number over-time, continues chain that? but to least to source picture just the just ways curious world more I it if X, to be big actually Brazil? becomes way the So to the kind if this product of be X? to from more impractical possible adapt

Michael Kirban

geopolitical around which Suez bit much it's and longer. take expensive I They're Africa, opportunistic think you more think that more when rates. not the it, to anymore. freight I less a is little going for and the does through mean, about carriers increase going not they're

look So That's to try to it's opportunity we for them how it. rates. spike at an

Miami. like think with to beach. you moving clearly, move enough the pushcart a in on because That the U.S. in not Miami guy there's is if about production, few Now coconuts the can't supply there's

quite we're working that's something further and to it's time, we is to chain. transit be our more great of look been and something time, hard supply clearly at on it because much is coconuts, get moving we've the to it's Brazil, diversification some Brazil a right. shorter So location for and going that supply if a us working But, that on for

today. but we're obviously concentrate, think changes we're also So that And option, it's at. selling if we about an something that's the that it looking then product

focus. So the primary it's not

Operator

you. Thank

participating. further Okay. questions. showing today's conclude Ladies does I'm no This you conference. gentlemen, and for Thank all

disconnect. You a great Have may now day.

Martin Roper

you, thank and for everybody you. Valerie Thank you Thank hosting us.

Operator

You're Take welcome. care.

Martin Roper

You have great day. a

The Vita Coco Company, Inc. (COCO) 28 Feb 242023 Q4 Earnings call transcript