Earning Date, Transcript Summary & Report

Coconut Water Market Surge: Coconut water remains one of the fastest growing categories in the beverage aisle, delivering double-digit volume growth in major markets, resulting in record year for the category and the company in net sales, net income, and adjusted EBITDA.

Coconut Water Growth Trends: In the U.S., the coconut water category grew in household adoption by 9% and household buy rate by over 7%, reflecting strong consumer interest related to health and wellness trends.

Brand Growth Comparison: The Vita Coco brand grew 9% in retail dollars in the U.S. and 21% in the U.K., outpacing category growth of 14% and 19% respectively.

Branded Retail Growth Acceleration: Branded retail dollar growth accelerated to 9% in the fourth quarter, with a year-to-date branded scan growth of 20% for the last 13-week period ending 2/16/2025.

Strong Consumer Demand Growth: Vita Coco Juice saw U.S. scans increase by 42% for the full year, outgrowing the can segment of the category by 2x, indicating strong consumer demand.

Product Launch Success: The introduction of the Vita Coco Coconut Water one liter pack has been successful, becoming one of the highest performing items in a key convenience store chain.

National Launch Success: Vita Coco Treats, a new coconut milk-based beverage, is rolling out nationally with strong retailer distribution commitments, indicating positive market reception.

Distribution Agreement Extension: The company extended its distribution agreement with Keurig Dr Pepper, reinforcing a strong partnership that has lasted 15 years.

International Business Expansion: The international business is performing well, particularly in Europe, with the U.K. and Germany showing significant growth, indicating potential for further expansion in underdeveloped markets.

Strong Cash Position: The company entered 2025 with a strong cash position of $165 million and no debt, reflecting financial stability and capacity for growth.

Inventory Shortages Impact: - The company faced significant inventory shortages in the summer due to limited ocean container availability, which hampered third quarter shipments and negatively affected service levels.

Gross Margin Decline: - Fourth quarter gross margins decreased relative to prior quarters, primarily due to more expensive ocean freight costs.

Sales Impact from Region Loss: - The company expects to lose some regions with certain private label retailers during 2025, which will impact shipments and sales.

Private Label Sales Decline: - The transition out of private label coconut oil negatively affected private label sales, which decreased by 10% year-over-year.

Sales Decline Impact: - Walmart's store reset resulted in mid-teen declines in weekly store sales for Vita Coco, negatively impacting total reported U.S. scan performance.

Increased Cost Projections: - The company anticipates slightly higher finished goods costs and higher average ocean freight rates for the year relative to 2024, especially in the first quarter.

Tax Rate Increase: - The effective tax rate increased to 21% from 19% due to a mix of pre-tax profits and higher non-deductible expenses.

Tariff Impact on Costs: - The company has not included any potential impact from tariffs in their guidance, which could affect costs and pricing if applied to coconut water sourced from certain countries.