The Vita Coco Company, Inc. Q2 FY2025 earnings call

• Strong performance in the coconut water category with U.S. coconut water growing 20% year-to-date and U.K. growing 35% based on Circana data.
• Initiatives in the U.S. include emphasis on Vita Coco multipacks, Farmers Organic, Juice, expansion in convenience stores, food service, and national launch of Vita Coco Treats.
• International business is healthy with strong performance in Europe, and continued investment in select European markets paying off.
• Confidence in the category's long-term potential, with belief the U.S. coconut water category can at least double in the coming years.
• Supply chain is diversified, sourcing from multiple regions, providing flexibility to mitigate tariff impacts.

In the Americas segment, Vita Coco Coconut Water net sales increased 22% to $120 million, while private label decreased 37% to $15 million. Vita Coco Coconut Water saw a 21% volume increase and a slight net price/mix benefit, while private label sales were driven by a 34% decrease in volume and a 3% decrease in price/mix. The International segment continued to deliver strong results with net sales up 37% and Vita Coco Coconut Water growing 43%, driven by strong growth across all major markets. Private label sales increased 29% due to strong sales of private label coconut water.

• Raised full year net sales guidance to between $565 million and $580 million.
• Expect gross margins at the midpoint of prior guidance range (~36%), with SG&A growing low- to mid-single digits.
• Full year adjusted EBITDA expected to be $86 million to $92 million.
• Vita Coco Coconut Water sales to grow in the high teens with incremental growth from Vita Coco Treats, partially offset by weakness in private label business.
• Strong Q3 net sales performance expected as inventory shortages from last year are lapped, while Q4 net sales comparable is tougher due to distributor and retail inventory replenishment last year.

• Uncertainty regarding additional tariffs above the baseline 10% rate, including timing and sizing, and impact of mitigating activities.
• Ocean freight rate volatility, with current rates still elevated relative to historical levels and short-term volatility expected.
• Volatility in private label business due to lost regions and complex shipment comparisons.

Q: Can you parse out revenue growth in terms of inventory rebuild and Vita Coco Treats?

A: Martin Roper said scan trend data not reflective of easy comparables, and Vita Coco Treats was nationally rolled out end of Q1 in U.S. and introduced in U.K., with good coverage but ongoing sales to be seen.

Q: How does the guidance change relate to top line, gross margin, and EBITDA?

A: Martin Roper and Corey Baker explained that raised top line guidance is due to strong branded performance, gross margin guidance narrowed due to cost pressures like ocean freight and tariff timing, and EBITDA guidance maintained with SG&A growth in line.

Q: How would higher tariffs impact EBITDA?

A: Martin F. Roper stated that tariffs are uncertain, operating under 10% baseline, and additional tariffs above that are hard to predict, but the business is focused on growth and mitigating impacts.

Q: Insights on Hispanic consumer and exposure?

A: Martin F. Roper said convenience store trends are strong and no weakness seen in Vita Coco's Hispanic consumer exposure, as they over-index to higher income households.

Q: Private label outlook and volatility?

A: Martin F. Roper said private label is turbulent on a comparable basis, with Q2 reflecting known losses, and an additional private label contract won for 2026.