• Net Sales: Increased 5% year over year to $516 million for the full year 2024.
• Vita Coco Coconut Water Net Sales: Grew 10% for the full year 2024.
• Private Label Sales: Declined 10% for the full year 2024.
• Gross Profit: $199 million for the full year 2024, up $18 million from the prior year.
• Gross Margin: 39% for the full year 2024, up 191 basis points from 2023.
• Net Income: $56 million or $0.94 per diluted share for the full year 2024.
• Adjusted EBITDA: $84 million or 16% of net sales for the full year 2024.
• Cash on Hand: $165 million as of December 30, 2024.
• 2025 Net Sales Guidance: Expected between $555 million and $570 million.
• 2025 Gross Margin Guidance: Expected between 35% and 37%.
• 2025 Adjusted EBITDA Guidance: Expected between $86 million and $92 million.

• Warning! GuruFocus has detected 4 Warning Signs with GOGL.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Vita Coco Co Inc (NASDAQ:COCO) reported record annual net sales, net income, and adjusted EBITDA for 2024, driven by strong growth in the coconut water category.
• Coconut water category showed double-digit volume growth in major markets, with household adoption in the US increasing by 9% and household buy rate by over 77%.
• The Vita Coco brand experienced 9% retail dollar growth in the US and 21% in the UK, outpacing category growth in these regions.
• The introduction of the Vita Coco coconut water 1 litre pack into a key convenience store chain was highly successful, indicating consumer demand for larger packages.
• The company has secured additional production capacity for 2025 and 2026, providing greater supply chain flexibility and supporting anticipated growth.

Negative Points

• The Vita Coco Co Inc (NASDAQ:COCO) faced significant inventory shortages in the summer due to limited ocean container availability, impacting third-quarter shipments and service levels.
• Fourth-quarter gross margins decreased due to more expensive ocean freight costs, and ocean rates remain elevated entering 2025.
• The company expects to lose some regions with certain private label retailers in 2025 due to previous inventory constraints affecting service levels.
• Walmart's store reset resulted in a significant reduction in SKUs and space for Vita Coco, causing mid-teen declines in weekly store sales.
• The company anticipates higher finished goods costs and elevated ocean freight rates in the first half of 2025, impacting gross margins.

Q & A Highlights

Q: How fast do you expect the coconut water category to grow this year, and what initiatives do you have to increase household penetration and drive growth? A: Martin Roper, CEO, expects the category to grow long-term in high single digits to low double digits in North America, with international markets growing even faster. The company plans to grow its brand in the mid-teens range this year. Initiatives include education, trial, brand appeal, social media marketing, innovation, and retail execution to increase household penetration and drive growth.

Q: Could you discuss the distribution opportunities and potential shelf space gains for Vita Coco this year? A: Martin Roper, CEO, highlighted opportunities in food, mass, and convenience stores, particularly with multipacks and new products like Vita Coco Juice and Treats. The company is working on improving distribution, especially after a reset at Walmart that initially reduced shelf space but is expected to benefit long-term.

Q: What is the current state of inventories, and how do you plan to manage pricing in the US? A: Michael Kirban, Executive Chairman, stated that inventory levels are healthy, with more in transit than desired due to shipping delays. Pricing letters are being sent to customers, with market execution expected in the summer. The company has a strong story for pricing due to higher ocean freight and inflation, with no significant pushback anticipated.

Q: Can you provide insights into the gross margin trends and the impact of ocean freight rates? A: Corey Baker, CFO, explained that gross margins are expected to improve in the second half of the year as ocean freight rates decline. The company anticipates rates to approach historical levels, which will positively impact margins. However, current rates remain higher than last year, affecting the first half of 2025.

Q: How is Vita Coco planning to emphasize hydration messaging in its marketing strategy? A: Michael Kirban, Executive Chairman, mentioned that the company is returning to its roots by marketing coconut water as a natural alternative to sports drinks. This involves digital, social, and influencer marketing to highlight coconut water's natural electrolytes and health benefits, aiming to expand usage and attract more consumers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.