The Vita Coco Company Reports Third Quarter 2024 Financial Results

Net Sales Decreased 4% to $133 million while Vita Coco Coconut Water Grew 8%

Net Income Increased $4 million to $19 million and Non-GAAP Adjusted EBITDA¹ Decreased $4 million to $23 million

Company Raises Full Year Guidance for Net Sales and Adjusted EBITDA²

NEW YORK, Oct. 30, 2024 (GLOBE NEWSWIRE) -- The Vita Coco Company, Inc. (NASDAQ:COCO) ("Vita Coco” or "the Company”), a leading high-growth platform of better-for-you beverage brands, today announced financial results for the third quarter ended September 30, 2024.

Third Quarter and Year-To-Date 2024 Highlights Compared to Prior Year Period

• Net sales declined 4% in the third quarter to $133 million resulting in year-to-date being flat at $389 million.
• Vita Coco Coconut Water net sales growth of 8% in the third quarter and 5% year-to-date.
• Gross profit was $52 million in the third quarter, a decrease of $5 million and $157 million year-to-date, an increase of $17 million.
• Gross margin was 39% of net sales in the third quarter compared to 41% of net sales, and 41% of net sales year-to-date as compared to 36% of net sales.
• Net income was $19 million in the third quarter compared to net income of $15 million, and year-to-date was $53 million compared to $40 million.
• Net income per diluted share was $0.32 in the third quarter compared to $0.26, and was $0.89 per diluted share year-to-date compared to $0.68.
• Non-GAAP Adjusted EBITDA¹ for the third quarter was $23 million compared to $27 million and year-to-date was $76 million, compared to $60 million.

Martin Roper, the Company's Chief Executive Officer, said, "Our sales performance in the quarter was affected by our inventory flow, which was lower than we had planned due to the difficulty in obtaining ocean freight containers that started in the second quarter. We are pleased that we have weathered these shortages and, in late September, saw our product flow and availability in market improving. Based on continued strong category growth and improved inventory levels, we are raising our full year guidance for net sales and adjusted EBITDA."

Third Quarter 2024 Consolidated Results

Net sales decreased $5 million, or 4%, to $133 million for the third quarter ended September 30, 2024, compared to $138 million in the prior year period. The decrease in net sales was driven by declines in private label case equivalent ("CE") volume which more than offset the Vita Coco Coconut Water CE volume growth. The decline in private label was due to the reduction in private label oil sales, coupled with lower private label water volumes due primarily to supply constraints.

Gross profit was $52 million for the third quarter of 2024, compared to $56 million in the prior year period. Gross margin of 39% in the third quarter of 2024 decreased from 41% in the prior year period. Gross profit decrease was driven by lower overall volumes and increased transportation costs, which were partially offset by increased Vita Coco Coconut Water net pricing and price/mix effects in private label.

Selling, general and administrative ("SG&A") expenses in the third quarter of 2024 were $31 million, compared to $33 million in the prior year period. The decrease was largely due to the timing of marketing investments, which was partially offset by higher year on year personnel expenses.

Net income was $19 million, or $0.32 per diluted share, for the third quarter of 2024, compared to net income of $15 million, or $0.26 per diluted share, in the prior year period. Net income benefited from a gain on mark to market adjustment on derivative instruments, lower SG&A expenses and higher interest income driven by higher cash investments compared to the prior year period, partly offset by lower year-on-year gross profit.

Non-GAAP Adjusted EBITDA¹ for the third quarter of 2024 was $23 million, compared to $27 million in the prior year period. The decrease in Adjusted EBITDA¹ was primarily driven by lower gross profit resulting primarily from reduced volume and higher transportation costs, which were partially offset by higher Vita Coco Coconut Water net pricing, price/mix effects in private label, and lower SG&A.

Balance Sheet

As of September 30, 2024, the Company had cash and cash equivalents of $157 million, compared to $133 million as of December 31, 2023. There was no debt as of September 30, 2024 and December 31, 2023. Inventories as of September 30, 2024 totaled $65 million. On September 30, 2024, there were 56,731,839 shares of common stock outstanding.

On October 30, 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $40 million of the Company's common stock. As of September 30, 2024, and to date, the Company has repurchased a total of 534,246 shares for an aggregate value of $12.8 million at an average share price of $23.97 with 112,702 shares repurchased during the most recent quarter.

Fiscal Year 2024 Full Year Outlook

The Company is raising its full year guidance for net sales and adjusted EBITDA:

• Expect 2024 net sales to be between $505 million and $515 million, with projected Vita Coco Coconut Water and private label coconut water volume growth, being offset by expected decreases in private label coconut oil business and price/mix effects.
• Full year gross margin expected to be between 37% and 39%, with recent increases on certain ocean freight routes expected to adversely affect gross margins in the fourth quarter.
• SG&A expenses expected to be flat to slightly down versus 2023.
• Forecasting adjusted EBITDA in the range of $80 million to $84 million.²

Footnotes:

(1) Adjusted EBITDA represents earnings before interest, taxes, depreciation, and amortization as adjusted for certain items as set forth in the reconciliation table of U.S. GAAP to non-GAAP information and is a measure calculated and presented on the basis of methodologies other than in accordance with GAAP. Please refer to the Non-GAAP Financial Measures herein for further discussion and reconciliation of this measure to GAAP measures.

(2) GAAP Net Income 2024 outlook is not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement in foreign currency rates, as well as future charges or reversals outside of the normal course of business.

Conference Call and Webcast Details

The Vita Coco Company will host a conference call and webcast at 8:30 a.m. ET today to discuss these results. To participate in the live earnings call and question and answer session, please register at https://register.vevent.com/register/BIeece4f80fe3a40e8a082f9df6582c25c and dial-in information will be provided directly to you. A slide presentation to support the webcast, and the live audio webcast will be accessible in the "Events” section of the Company's Investor Relations website at https://investors.thevitacococompany.com. An archived replay of the webcast will be available shortly after the live event has concluded.

About The Vita Coco Company

The Vita Coco Company is a family of brands on a mission to reimagine what's possible when brands deliver healthy, nutritious, and great tasting products that are better for consumers and better for the world. This includes its flagship coconut water brand Vita Coco, sustainably packaged water Ever & Ever, and protein-infused water PWR LIFT. The Company was co-founded in 2004 by Michael Kirban and Ira Liran and is a public benefit corporation and Certified B Corporation. Vita Coco, the principal brand within the Company's portfolio, is the leading coconut water brand in the U.S. With electrolytes, nutrients, and vitamins, coconut water has become a top beverage choice among consumers after a workout, in smoothies, as a cocktail mixer, after a night out, and more.

Contacts

Investor Relations:

ICR, Inc.

[email protected]

Non-GAAP Financial Measures

In addition to disclosing results determined in accordance with U.S. GAAP, the Company also discloses certain non-GAAP results of operations, including, but not limited to, Adjusted EBITDA, that include certain adjustments or exclude certain charges and gains that are described in the reconciliation table of U.S. GAAP to non-GAAP information provided at the end of this release. These non-GAAP measures are a key metric used by management and our board of directors to assess our financial performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance and because we believe it is useful for investors to see the measures that management uses to evaluate the Company. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparisons of results as the items described below in the reconciliation tables do not reflect ongoing operating performance.

These measures are not in accordance with, or an alternative to, U.S. GAAP, and may be different from non-GAAP measures used by other companies. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces its usefulness as a comparative measure. Investors should not rely on any single financial measure when evaluating our business. This information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. We recommend investors review the U.S. GAAP financial measures included in this earnings release. When viewed in conjunction with our U.S. GAAP results and the accompanying reconciliations, we believe these non-GAAP measures provide greater transparency and a more complete understanding of factors affecting our business than U.S. GAAP measures alone.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including but not limited to, statements regarding our future financial and operating performance, including our GAAP and non-GAAP guidance, our strategy, projected costs, prospects, expectations, plans, objectives of management, supply chain predictions, customer and supplier relationships, and expected net sales and category share growth.

The forward-looking statements in this release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the Company's control. These factors include, but are not limited to, those discussed under the caption "Risk Factors” in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and our other filings with the U.S. Securities and Exchange Commission ("SEC") as such factors may be updated from time to time and which are accessible on the SEC's website at www.sec.gov and the Investor Relations page of our website at https://investors.thevitacococompany.com. Any forward-looking statements contained in this press release speak only as of the date hereof and accordingly undue reliance should not be placed on such statements. We disclaim any obligation or undertaking to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise, other than to the extent required by applicable law.

Website Disclosure

We intend to use our websites, vitacoco.com and investors.thevitacococompany.com, as a means for disclosing material non-public information and for complying with the SEC's Regulation FD and other disclosure obligations.