Q4 2023 The Vita Coco Co Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Vita Coco Company fourth quarter and fiscal year 2023 earnings conference. At this time, all participants are in a listen-only mode.

Okay.

Thank you for standing by and welcome to the beta Coca.

Fourth quarter and fiscal year 2023 earnings conference call.

At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question at that time, please press star 1 1 on your telephone. Please be advised that today's call is being recorded. I would now like to turn the conference over to your host, John Mills, Managing Partner at ICR. Please go ahead.

After the Speakers' presentation, there'll be a question and answer session.

To ask a question at that time, Please press star one on your telephone.

Please be advised that today's call is being recorded.

I would now like turn the conference to your house.

John meals 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. This call is being recorded. With us are Mr. Mike Kerbin, Executive Chairman; Martin Roper, Chief Executive Officer; and Corey Baker, Chief Financial Officer. By now, everyone should have access to the company's fourth-quarter earnings release issued earlier today. This information is available on the Investor Relations section of the Vita Coco Company's website at investors.thevitacococompany.com. Also on the website, there is an accompanying presentation of our commercial and financial performance results. Certain comments made on this call, including forward-looking statements, are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Thank you and welcome to the buyer to Cook, a company fourth quarter and full year 2023 earnings results Conference call.

Today's call is being recorded.

With us are Mr. Mike carbon executive Chairman, Martin Roper, Chief Executive Officer, and Corey Baker, Chief Financial Officer.

By now everyone should have access to the Companys fourth quarter earnings release issued earlier today.

This information is available on the Investor Relations section of the Vita Coco Company's web site at investors Dot the Vita Coco company Dotcom.

Also on the website there is an accompanying presentation of our commercial and financial performance results.

Comments made on this call, including forward looking statements, which are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

John Mills: These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, during the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release and supplementary earnings presentations, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures and are available on the website as well.

These forward looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.

Please refer to today's press release and other filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.

Also during the call we will use some non-GAAP financial measures as we describe the business performance.

SEC filings as well as the earnings press release, and supplementary earnings presentation provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures and are available on the website as well.

Mike Kurban: And with that, it is my pleasure to turn the call over to Mr. Mike Kurban, our co-founder and executive chairman. Thanks, John. Good morning, everyone.

And with that it is my pleasure to turn the call over to Mr. Mike carbon.

Our co founder and executive Chairman.

Thanks, John Good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2023 financial results and our commercial plans and performance expectations for 2024.

Mike Kurban: Thank you for joining us today to discuss our fourth quarter and full year 2023 financial results and our commercial plans and performance expectations for 2024. I want to start by thanking all of our colleagues across the globe for the record year they delivered in 2023 and their continued commitment to the Vita Coco Company and their dedication to our mission of creating ethical, sustainable, better for you beverages that uplift our communities and do right by our planet. 2024 marks our 20th year in business, and although I'm super proud of all we've accomplished in these 20 years, I have never felt more excited and energized for what lies ahead. We've solidified our category leadership in coconut water over the last 20 years, which enters 2024 as the fastest growing category in beverages in the US and UK markets. And although coconut water is still a nascent category, representing just 3% of the sales in the US water aisle, over the last 13 weeks, it has driven 20% of the dollar growth. I believe our recent success is confirmation that our current strategies are working.

I wanted to start by thanking all of our colleagues across the globe for the record year. They delivered in 2023, and our continued commitment to the vertical company and their dedication to our mission of creating ethical sustainable better for you beverages that uplift our communities and do right by our planet.

2020 for March 20th year in business, and although I am Super proud of all we've accomplished in these 20 years I have never felt more excited energized for what lies ahead.

We've solidified our category leadership in coconut water over the last 20 years, which enters 2024 as the fastest growing category in beverages in the U S and U K markets.

And although coconut water is still a nascent category, representing just 3% of the sales in the U S water aisle over the last 13 weeks. It has driven 20% of the dollar growth.

I believe our recent success is confirmation that our current strategies are working our focus on growing the coconut water category and our focus on consumer conversion and retention supported by the strength of our coconut water supply chain has grown our overall sales at a 15% CAGR for the last four years with our vital.

Mike Kurban: Our focus on growing the coconut water category and our focus on consumer conversion and retention, supported by the strength of our coconut water supply chain, has grown our overall sales at a 15% CAGR for the last four years, with our Vita Coco Coconut Water net sales growing at a 20% CAGR. In 2023, our flagship Vita Coco Coconut Water remained the major driver of consolidated net sales, producing 14% full-year growth against the prior year. Importantly, this growth was driven by full-year volume growth of 11%, demonstrating that consumer demand for our brand is very healthy. In the United States, according to Cercana, we continue to gain share, finishing the year with 51% value share on a 52-week basis. Total coconut water category retail sales grew 16% in 2023, with Vita Coco growing 19% for the full year in value and 14% in volume. Our 15% net sales growth in 2023 exceeded our expectations and partially benefited from an extra Vita Coco promotion with a club retailer in the spring, some temporary distribution gains for private label products, and some bulk commodity sales that were opportunistic. Even without these effects, our growth was still very strong.

Coco coconut water net sales growing at a 20% CAGR.

In 2023, our flagship Vita Coco coconut water remains the major driver of consolidated net sales producing 14% full year growth against the prior year.

Importantly, this growth was driven by full year volume growth of 11% demonstrating that consumer demand for our brand is very healthy.

In the United States. According to <unk>, we continue to gain share, finishing the year with 51% value share on a 52 week basis total coconut water category retail sales grew 16% in 2023 with Vita Coco growing 19% for the full year in value and 14% in volume.

Our 15% net sales growth in 2023 exceeded our expectations and partially benefited from an extra Vita Coco promotion with a club retailer in the spring.

Temporary distribution gains for private label product and some bulk commodity sales that were opportunistic even without these effects our growth was still very strong.

Mike Kurban: Our priorities for 2024 remain very similar to what we prioritized last year, and we will double down on the initiatives that have been driving our growth. Our coconut water business remains very strong, and we expect it to grow volume in line with category growth of mid to high single digits. We estimate the impact of the previously announced decision on our private label oil business and the non-repeating gains in 2023 that I just mentioned to create a current year drag on our business, which mostly offsets the strong core business health. While we expect to grow net sales at a slower rate in 2024, I remain excited about the EBITDA growth potential and believe that we should return to healthier net sales growth rates in 2025 once these drags on our business performance are behind us.

Our priorities for 2024 remained very similar to what we prioritize last year and we will double down on the initiatives that we've been that had been driving our growth.

Our coconut water business remains very strong and we expect it to grow volume in line with category growth of mid to high single digits. We estimate the impact of the previously announced decision on our private label oil business and the non repeating gains in 2023 that I just mentioned to create a current year drag on our business, which mostly.

<unk> offsets the strong core business health.

While we expect to grow net sales at a slower rate in 2024 I remain excited about the EBITDA growth potential and believe that we should return to healthier net sales growth rates in 2025. Once these drags to our business performance are behind us.

Mike Kurban: We're focused on what we can impact to drive category and brand growth, and the primary focus is on expanding occasions for coconut water and the appeal of our Vita Coco brand across all demographics and markets as we continue to expect the category to develop into a household staple across both North America and Western Europe. Our efforts will focus on consumer education around the many usage occasions for coconut water. Whether it be at the breakfast table, after a workout, in a cocktail, or after a few too many cocktails.

We're focused on what we can impact to drive category and brand growth and the primary focus is on expanding occasions for coconut water and the appeal of our Vita Coco brand across all demographics and markets as we continue to expect the category to develop into a household staple across both North America and western.

In Europe.

Our efforts will focus on consumer education around the many usage occasions for coconut water.

Whether it be at the breakfast table after work out in a cocktail or after a few too many cocktails.

Mike Kurban: Coconut water is one of the very few beverages that have such broad and diverse usage education. Expanding these occasions should be the main driver of expanding household and increased usage. We will continue to drive our multipack strategy, which grew scans 45% in the US in 2023, to gain share of shelf space and increase basket size for our US retailers. Multipacks in coconut water remain significantly underdeveloped versus other categories, and as the largest brand in the category, we firmly believe we are uniquely positioned to seize this opportunity.

Coconut water is one of the very few beverages that have such a broad and diverse usage occasions, expanding these occasions should be the main driver of expanding households, and increased usage.

We will continue to drive our multipack strategy, which grew scans, 45% in the us in 2023 to gain share of shelf space and increased basket size for our U S retailers.

Multi packs in coconut water remains significantly under developed versus other categories and is the largest brand in the category. We firmly believe we are uniquely positioned to seize this opportunity.

Mike Kurban: Currently, our top selling multipacks, our 330 ml, 12 and 18 packs, have only reached 55% ACV, which leaves us with considerable runway for growth. We also believe that we have a big opportunity to gain share of the coconut water category by improving our share of the canned segment in 2023 in the U. S. Canned coconut water represented approximately 31% of the coconut water category volume in retail track channels, so gaining share in this segment will enable us to further gain share in the broader category. In 2023, we expanded the distribution of Vita Coco coconut juice in cans with a focus on convenience stores, achieving US ACV in this channel of 24%. In 2024, we intend to continue to gain distribution and convenience while expanding this product format to select mass and food retailers. We will also continue to focus on gaining additional distribution for Vita Coco Farmers Organic, which is priced at a premium to our regular SKUs and offers organic coconut water in an attractive shelf-stable package.

Currently our top selling multi packs are $3 30 ml 12, and 18 packs have only reached 55% ACB, which leaves us considerable runway for growth.

We also believe that we have a big opportunity to gain share of the coconut water category by improving our share of the canned segment in 2023, and the U S cans coconut water represented approximately 31% of the coconut water category volume in retail tracked channels. So gaining share in this segment will any.

US to further gain share in the broader category.

In 2023, we expanded distribution of Vita Coco coconut juice in cans with a focus on convenience stores achieving U S. HCV in this channel of 24%.

In 2024, we intend to continue to gain distribution in convenience, while expanding this product format to select mass and food retailers.

We will also continue to focus on gaining additional distribution provider cocoa farmers organic which is priced at a premium to our regular skews and offers organic coconut water and an attractive shelf stable package farmers organic allows us to trade up consumers and price, while keeping them and our brand family.

Mike Kurban: Farmers Organic allows us to trade up consumers in price while keeping them in our brand family. In 2023, we achieved US ACV distribution in MULO of 50% for farmers organic, leaving us significant room to continue driving distribution. Additionally, we see an opportunity to continue gaining share in the private label coconut water segment at new and existing accounts. The 21% revenue growth in private label that we delivered in 2023 highlights the strength of our supply chain to compete in this segment. Although we expect near-term net sales headwinds from the decision affecting our private label oil, we are confident in the long-term strategic value of private label coconut water to our business. Outside of the coconut water category, we're very excited about expanding the availability of PowerLift, our protein-infused isotonic drink, to include the New York area, where our distributor relationships and street activation strength should allow us to make significant progress in validating this opportunity

In 2023, we achieved U S HCV distribution in bulow of 50% for farmers organic leaving us significant room to continue driving distribution.

Additionally, we see an opportunity to continue gaining share in the private label coconut water segment at new and existing accounts.

21% revenue growth in private label that we delivered in 2023 highlights the strength of our supply chain to compete in this segment.

Although we expect near term net sales headwinds from the decision affecting our private label oil business. We are confident in the long term strategic value of private label coconut water to our business.

Outside of the coconut water category, we're very excited about expanding the availability of power lift our protein infused isotonic to include the New York area, where our distributor relationships and St activities activation strength should allow us to make significant progress in validating this opportunity.

Mike Kurban: In 2023, we began to see real progress in our strategy to grow our international business. Our net sales increased 17% on the year, which was led by strong growth in Europe. In our largest market, the UK, we reached over 80% of the coconut water category, according to Cercana, and grew retail scans 23% on a year. The team across Europe has done an amazing job driving growth of the category in the UK and growing our business into Western Europe. I recently had the opportunity to spend time with the team in the market, and I was blown away by the strength of the brand and the consumer reaction that I saw, which highlighted the opportunity that we have. I ask myself, why can't the coconut water category and the Vita Coco brand be as big across Western Europe as it is in North America in five years?

In 2023, we began to see real progress in our strategy to grow our international business. Our net sales increased 17% on the year, which was led by strong growth in Europe.

In our largest market the U K, we reached over 80% share of the coconut water category. According to sarcoma and grew retail scans, 23% on a year.

The team across Europe has done an amazing job driving growth of the category in the U K and growing our business into Western Europe, I recently had the opportunity to spend time with the team in the market and I was blown away by the strength of the brand and the consumer reaction that I saw which highlighted the opportunity that we have.

I ask myself why can't the coconut water category and the Vita Coco brand B as big across Western Europe as it is in North America in five years, we believe that the category is underdeveloped in Europe, but has real momentum, giving us an opportunity to accelerate our growth I believe with the right investments, we can deliver meaningful growth to the <unk>.

Mike Kurban: We believe that the category is underdeveloped in Europe but has real momentum, giving us an opportunity to accelerate our growth. I believe that with the right investments, we can deliver meaningful growth to the organization through our international partnership. Related to our environmental and social initiatives, we recently updated our investor web pages with greater detail on all of our ESG initiatives, and we're proud of the progress so far. We've continued to see great progress in our farming communities, where we support building schools and classrooms, training more coconut growers on sustainable practices, and investing in the distribution and planting of coconut trees. We're in the process of registering the Vita Coco community project as a charitable organization, which will allow us to involve more partners and accelerate our impact more than ever before.

<unk> through our international businesses.

Related to our environmental and social initiatives, we recently updated our investor web pages with greater detail on all of our ESG initiatives and we're proud of the progress so far.

We've continued to see great progress in our farming communities, where we support building schools and classrooms training more coconut growers on sustainable practices and investing in the distribution and planting of coconut trees.

We're in the process of registering the Vita Coco community project as a charitable organization, which will allow us to involve more partners and accelerate our impact more than ever before.

Martin Roper: It is hard to believe that, in this, our 20th year, coconut water is the fastest growing category in beverages, growing volume 12% in a beverage category that is declining and growing approximately twice as fast as the energy drink category. I'm more excited than ever and believe that we are well positioned to take advantage of coconut water category tailwinds to continue our strong branded growth and to deliver on our long-term targets. We have stepped up investments in our brands and in the long-term health of our business. And we believe that we are uniquely positioned as one of the few fast-growing, profitable beverage companies of our size with the talent and commercial capabilities to maintain growth, to execute on new opportunities, and to act as an acquirer of complementary beverage brands that could benefit significantly from our relationships, capabilities, and financial resources. I believe that we are in a stronger position than we've ever been to accelerate our growth. And now, I will turn the call over to our Chief Executive Officer, Martin Rocha. Thanks, Mike. And good morning, everyone.

And it's hard to believe that in this our 20th year that coconut water is the fastest growing category in beverage growing volume, 12% and a beverage category is declining and growing approximately twice as fast as the energy drink category.

I'm more excited than ever and believe that we are well positioned to take advantage of coconut water category tailwind to continue our strong branded growth and to deliver on our long term targets.

We have stepped up investments in our brands and in the long term health of our business and we believe that we are uniquely positioned as one of the few fast growing profitable beverage companies of our size with the talent and commercial capabilities to maintain growth to execute on new opportunities and to act as an acquirer of complementary.

Beverage brands that could benefit significantly from our relationships capabilities and financial resources I believe that we are in a stronger position than we've ever been to accelerate our growth.

And now I will turn the call over to our Chief Executive Officer Martin Roper.

Thanks, Mike and good morning, everyone.

Martin Roper: I'd like to start by thanking our team across the globe for an outstanding year in 2020. I'm very pleased with the performance we've delivered this year and the momentum we will carry into 2024. We achieved net sales growth of 15% in 2023, driven by strong Vita Coco coconut water, which grew 14%. This total company net sales performance represents our third consecutive year of double-digit growth. Overall, we have achieved 74% net sales growth since 2019. Our fourth quarter 2023 net sales were up 15%, with Vita Coco Coconut Water up 8% and Private Label up 36%. In 2023, we delivered strong growth in both the Americas, where Vita Coco Coconut Water net sales grew 15% for the full year, with 12% volume growth, reflecting strong consumer demand, and internationally, where our net sales grew 70%, benefiting from branded growth in Europe and some key private label wins, partially offset by some volume softness in Asia.

I'd like to start by thanking our team across the globe for an outstanding year in 2023.

Very pleased with the performance we've delivered.

Momentum we carried into 2024.

We achieved net sales growth of 15% in 2023, driven by strong Vita Coco coconut water, which grew 14%.

This total company net sales performance represents our third consecutive year of double digit growth.

Overall, we achieved 74% net sales growth.

2019.

Our fourth quarter of 2023, net sales were up 15% with Vita Coco coconut water up 8% and private label up 36%.

In 2023, we delivered strong growth in both the Americas Vita Coco coconut water net sales grew 15% for the full year with 12% volume growth.

<unk> strong consumer demand.

Internationally net sales grew 17% benefiting from the branded growth in Europe, and some key private label wins, partially offset by some volume softness in Asia.

Martin Roper: In the fourth quarter of 2023, our Vita Coco Coconut Water net sales grew 8% versus Q4 of 2022, slower than our four-year trend, which benefited from an incremental branded promotion at a Cove customer in the spring. We also saw an acceleration of private label coconut water sales driven by a combination of distribution gains, soft prior year performance, and consumer shifts resulting from lower year-on-year private label prices. We continue to see strong overall consumer demand for Academy. We believe the strong functional benefits of coconut water, combined with our marketing efforts communicating the numerous usage occasions for our products, are leading to the scroll.

In the fourth quarter of 2023 Vita Coco coconut water sales grew 8% versus Q4 of 2022.

Slower than our full year trend, which benefited from an incremental branded promotion at a club customer spring.

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

We continue to see strong overall consumer demand for our category we.

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

Martin Roper: Within this growth, we have seen similar consumer behavior that other CPG companies have talked about. There is a segment of consumers who are seeking value either through value in multi-packs or private label, while another segment is less affected and is still willing to pay for premium brands and functionality. We believe our dual-pronged strategy of being a strong premium brand with expanding multi-pack availability and being a major private label supplier positions us well to benefit from both effects. Moving on to margins, gross margins maintained the improvement seen in prior quarters as transportation costs normalized during the year and our supply chain operated efficiently and effectively. This is perhaps also best seen by our year-end inventory levels, which were significantly down for year-end 2022, as the supply chain operated largely without disruption in 2023, which was not true in 2022. It was a great year for revenue, margins, and cash flow, driven by improved profitability and inventory correction. We believe that our year-end inventory levels were slightly lower than optimal.

Within the growth we have seen similar consumer behavior. The other CPG companies have talked about.

Segment of consumers, who are seeking value either through value and multi packs all private label.

Other segment is less impacted and is still willing to pay for premium brands in functionality.

We believe our dual pronged strategy of being strong premium brand with expanding multi pack availability.

And being a major private label supplier positions us well to benefit from both effects.

Moving on to margins gross margins maintain the improvement seen in prior quarters as transportation costs normalized during the year.

Apply chain operated efficiently and effectively.

Just perhaps also best seen by our year end inventory levels, which were significantly down this year.

And 2022.

Supply chain operated largely without disruption in 2023.

Which was not true in 2022.

It was a great year for revenue margins and cash flow driven by improved profitability and inventory correction.

We believe that our year end inventory levels were slightly lower than optimal partially due to stronger sales finish to the year than we expected.

Martin Roper: Partially due to stronger sales finish to the year than we expected. We are working to build inventory to acceptable levels to support our key summer selling and promotional period. Reiterating what Mike said, we are confident in our underlying business, and we believe we are well positioned for a strong 2024, despite the headwinds we face, with multiple commercial initiatives to reduce strong branded top line growth and improve profitability, and a long term commitment to grow the category and our share. Year-to-date in Sakana, U.S. scan data, our Vita Coco brand is up 9% in retail sales dollars through February 18th, 2024, demonstrating that we are starting the year with good momentum. We believe our commercial plans for this year should produce net sales in 2024 between $495 and $505 million, with expected Vita Coco coconut water growth in the high single digits and strong private label coconut water net sales expected to offset the drags Mike spoke about that collectively represent a six to eight percentage point revenue added, On 2024 cost of goods, outside of transportation, we are confident in our ability to manage our inflation through scale and productivity, as we have done in recent years.

We are working to build inventory to acceptable levels to support our key summer selling and promotional periods.

Reiterating what Mike said, we are confident in our underlying business and we believe we are well positioned for a strong 2024, despite the headwinds we face with multiple commercial initiatives reduced strong branded top line growth and improve profitability.

On a long term commitment to grow the category and our share.

Year to date and its account use scan data.

Cocoa, Brian is up 9% and retail sales through February 18th 2020 for demonstrating that we are starting the year with good momentum.

We believe our commercial plans for this year should produce net sales in 2024 between 495 and $505 million with expected final Coco coconut water growth in the high single digits and strong private label coconut water net sales expected to offset the drags Mike spoke about.

That collectively represent six to eight percentage point revenue headwind.

On 2020 forecast of goods outside of transportation, we are confident in our ability to manage our inflation through scale and productivity as we have done in recent years.

Martin Roper: On the transportation front, we entered the year with some contract coverage on key lanes, but at significantly lower levels of commitment than prior years, as the contract rates that we were offered were significantly higher than spot rates available. Starting around the new year, we saw some spot cost increases for all ocean freight rates from Asia, and then more significant cost increases when carriers started to route away from the Suez Canal.

On the transportation front, we entered the year with some contract coverage on key lanes, but at significantly lower levels of commitments than prior years as the contract rates that we were offered was significantly higher than spot rates available to us.

Starting around the new year, we saw some cost increases.

Ocean freight rates from Asia, and then more significant cost increases when carriers started to route away from the Suez Canal.

Martin Roper: We intend to monitor how spot rates move relative to any contract offers that we receive and enter into contracts only when we think the offers make sense for us. As of today, rates remain elevated but remain significantly below those that we experienced in 2021 and 2022. Obviously, the disruption to ocean freight markets as it relates to shipments from Asia to Europe and the east coast of America is quite recent, and it still evolves. Based on rates we are currently being charged and our assumptions on the duration of this disruption, we are comfortable we can manage this pressure with a combination of market pricing and cost distribution and deliver on the four-year guidance that Corrie will be. With that, I will turn the call over to Corey Baker, Thanks, Martin, and good morning, everyone.

We intend to monitor how spot rates move relative to any contract office that we receive and enter into contracts only when we think the office makes sense for us.

As of today rates remain elevated but remained significantly below those that we experienced in 2021 and 2022.

Obviously, the disruption to ocean freight markets as it relates to shipments from Asia to Europe and East Coast of America is quite recent.

Still evolving.

Based on rates, we are currently being challenged in our assumptions on the duration of this disruption. We are comfortable we can manage this pressure with a combination of market pricing and cost discipline and deliver on the full year guidance for Carty will detail.

With that I will turn the call over to Karri Baker, our Chief Financial Officer.

Thanks, Bart and good morning, everyone I will now provide you with some additional details on the full year 2023 financial results I will then discuss the drivers of our outlook for the 2020 for full fiscal year.

Corey Baker: I will now provide you with some additional details on the full year 2023 financial results. I will then discuss the drivers of our outlook for the 2024 full fiscal year. The full year 2023 net sales increased $66 million or 15% year over year to $494 million, driven by Vita Coco coconut water growth of 14% and net sales and private label growth of 21%. On a segmented basis within the Americas, Vita Coco Coconut Water's strong performance at retail increased net sales 15% to $317 million, while private label increased 17% to $103 million. Vita Coco Coconut Water benefited from 12% volume growth and a 3% net price mix benefit, while private label increased 25% of volume, which was partially offset by price mix changes driving four years of net soil growth.

For the full year 2023, net sales increased $66 million or 15% year over year to $494 million driven by Vita Coco coconut water growth of 14% and that sales in private label growth of 21%.

On a segment basis within the Americas Vita Coco coconut water strong performance at retail increased net sales, 15% to $317 million.

While private label increased 17% to $103 million.

Vita Coco coconut water benefited from 12% volume growth and 3% net price mix benefit.

Divot label increased 25% of volume, which was partially offset by price mix changes driving full year net sales growth of.

Corey Baker: 17%. For the full year, our international segment net sales were up 17%, and watered down in April, where strong growth in Europe was partially upset by volume southness in Asia. Private Label Revenue grew 46%, which is the result of new business gains at large European retailers. For the year, the international segment represented 13% of total company net sales, which was flat to the prior year.

17%.

For the full year, our international segment net sales were up 17% with Vita Coco coconut water growth of 8% very strong growth in Europe was partially offset by volume softness in Asia.

Private label revenue growth, 46%.

As a result of new business gains and a large European retailers.

For the year at the International segment represented 13% of total company net sales which was flat.

That to prior year.

Corey Baker: On a full year basis, consolidated gross profit was $181 million, up $77 million versus the prior year. On a percentage basis, gross margins were 37% for the full year, an improvement of approximately 1300 basis points over the 24% reported for the full year 2022. The increase resulted mainly from decreased global transportation costs, increased volumes, and improved branded pricing, which was partially offset by price mix effects within private label products. Gross margins in the fourth quarter were 37.5%, compared with 24.4% in the prior year quarter.

On a full year basis consolidated gross profit was $181 million up $77 million versus prior year.

On a percentage basis gross margins were 37% of our full year improvement of approximately <unk> hundred basis points over the 24% recorded in full year 2022.

The increase resulted mainly from decreased global transportation cost increase.

Increased volumes and improved branded pricing, which was partially offset by price mix effects within private label products.

Gross margins in the fourth quarter were 37, 5% versus 24, 4% in the prior year quarter.

Order performance is representative of an improved and our global transportation cost and branded pricing we've seen throughout the year.

Corey Baker: The quarter performance is representative of an improvement in global transportation costs and branded pricing we've seen throughout the year. Moving on to operating expenses, For the full year 2023, SG&A costs increased 24% to $124 million, primarily reflecting investments in sales and marketing expenses and increased people expenses, including incentive compensation. Net income attributable to shareholders for the full year 2023 was $47 million, or $0.79 per diluted share, compared to $8 million, or $0.14 per diluted share for the prior year.

Moving onto operating expenses full year, 2023, SG&A cost increased 24% to $124 million.

Primarily reflecting investments in sales and marketing expenses and increased <unk> expenses, including incentive compensation.

Net income attributable to shareholders for the full year 2023 was $47 million or <unk> 79 per diluted share compared to $8 million or <unk> 14.

Per diluted share for the prior year.

Net income for the year benefited from increased gross profit, partially offset by SG&A costs for the full year.

Lower year on year impact from unrealized FX or <unk> and higher year on year tax expense, our effective tax rate for 2023 was 19, 5% versus 28% from the prior year.

Corey Baker: Net income for the year benefited from increased gross profit, partially offset by SG&A costs for the full year, a lower year-on-year impact from unrealized FX derivatives, and higher year-on-year tax. Our effective tax rate for 2023 was 19.5% versus 28% for the prior year. OER adjusted EBITDA, our non-GAAP measure, which is defined and reconciled in our press release, was $68 million, or 13.8% of net sales in 2022, compared to $20 million, or 4.7% of net sales in 2023. The increase was primarily due to the gross profit improvements previously discussed, partially offset by the planned investments in SG&A. Turning to our balance sheet and cash flow, as of December 31st, 2023, we had total cash on hand of $133 million and no debt under a revolving credit facility, compared to $20 million of cash and no debt as of December 31, 2022.

Full year adjusted EBITDA are non-GAAP measures, which are defined and reconciled in our press release was $68 million or.

Or 13, 8% of net sales in 2023.

From $20 million or four 7% of net sales in 2022.

The increase was primarily due to the gross profit improvements previously discussed partially offset by the planned investments in SG&A.

Turning to our balance sheet and cash flow as of December 31, 2023, we had total cash on hand of $133 million and no debt under our revolving credit facility.

Compared to $20 million of cash and no debt as of December 31, 2022.

The strong cash generation in the year was driven by the increased net income of $47 million in the year and strong working capital management, but provided $15 million, primarily from reduced inventory, which fireman as discussed earlier.

Late in December we began a share repurchase program in connection with the previously announced $40 million authorization.

As of December 31, 2023, we have repurchased 30000 shares for $773000.

Corey Baker: The strong cash generation in the year was driven by increased net income of $47 million in the year and strong work and capital management that provided $15 million primarily from reduced inventory, which Martin discussed earlier. Late in December, we began a share repurchase program in connection with the previously announced $40 million authorization. As of December 31st, 2023, we had repurchased 30,000 shares for $773,000. As of February 28, 2024, the company has repurchased a total of 421,544 shares under the program for an aggregate value of approximately $10 million.

As of February 28, 2024, the company has repurchased a total of 421544 shares under the program to an aggregate value of approximately $10 million.

As we turn to 2024, we expect net sales between $495 and $505 million, which is based on category growth to mid to high single digits with our coconut water business growing in line with the category are actually offset by the impact of the previously announced decision on our private label oil business.

And the cycling of temporary private label distribution and the opportunistic commodity sales.

Continuing to build additional commercial initiatives to improve our top line performance.

We expect gross margins almost all Europe, 36% to 38% based on our current pest assumptions for ocean freight costs, reflecting margin improvement over 2023, offset slightly by the impact of the current ocean freight market, which will begin impacting our P&L in Q2.

Corey Baker: As we turn to 2024, we expect net sales between $495 and $505 million, which is based on category growth of mid to high single digits with our coconut water business growing in line with the category partially offset by the impact of the previously announced decision on our private label oil business and the cycling of temporary private label distribution and opportunistic commodities. We are continuing to build additional commercial initiatives to improve our top line performance. We expect growth margins for the full year of 36 to 38% based on our current best assumptions for ocean freight costs, reflecting margin improvement over 2023, offset slightly by the impact of the current ocean freight market, which would begin impacting our P&L in Q2. We expect disciplined SG&A spending throughout 2024, with SG&A roughly flat to slightly declining year on year. Producing our guidance of adjusted EBITDA of $74 to $78 million.

We expect disciplined SG&A spending throughout 2024 with SG&A roughly flat to slightly declining year on year.

Reducing our guidance of adjusted EBITDA of $74 million to $78 million.

We may adjust our SG&A spending at least the improvements and ocean freight quicker than expected or if we see productive investment opportunities to strengthen the business for the long term.

We anticipate our cash balance will remain healthy through the year, allowing us to fund any potential M&A opportunities there emerge on the part of this.

Share buyback activity or to invest in our business for the long term growth.

And with that I'd like to turn the call back to Martin for his closing remarks.

Thank you Corey to close I would like to reiterate our confidence in the long term potential divided cocoa company, our ability to build a better beverage platform and the strength of cocoa brands.

Martin Roper: You may adjust our FG&A spending if we see improvements in ocean freight quicker than expected, or if we see productive investment opportunities to strengthen the business for the long term. We anticipate our cash balance will remain healthy through the year, allowing us to fund any potential M&A opportunities that emerge, fund further share buyback activity, or to invest in our business for long-term growth. And with that, I'd like to turn the call back to Martin Kerr's closing remarks. Thank you, Kari.

Our confidence in our ability to navigate the current environment.

Cited about key initiatives to drive growth.

We have strong brands and a solid balance sheet, and we are well positioned to compete domestically and internationally.

Thank you for joining us today and thank you for your interest in Nevada Cocoa company that concludes our fourth quarter prepared remarks, and we will now take your questions.

Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one way.

One moment for your first question.

Operator: To close, I'd like to reiterate our confidence in the long-term potential of the Vita Coco Company, our ability to build a better beverage platform, and the strength of our Vita Coco brand. We are confident in our ability to navigate the current environment and excited about our key initiatives to drive growth. We have strong brands and a solid balance sheet, and we are well positioned to compete domestically and internationally. Thank you for joining us today, and thank you for your interest in Vita Coco.

Our first question comes from the line of Bonnie Herzog of Goldman Sachs. Your line is open.

Alright, good morning, Hi, everyone.

Yes.

Hi, I just had my first question. It's quick just on your top line, which came in much stronger in the quarter than what your guidance implies. So I was just wanting to get a sense of the drivers of this and then really if any of any of it was pulled forward from Q1 and the reason I'm asking it maybe.

Like that just based on your comments that it sounds like you guys are trying to build.

Operator: That concludes our fourth quarter prepared remarks, and we will now take your questions. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your telephone. Again, to ask a question, please press star 1-1.

And inventory at retail ahead of the summer.

Yeah Bonnie.

I'll take that.

Cory I'll, Mike can come in I think Q4 surprised us a little bit obviously very happy.

We did benefit.

<unk> 23 from some sort of opportunistic commodity sales bulk sales.

Operator: One moment for our first question. Our first question comes from the line of Bonnie Herzog of Goldman Sachs. Your line is open. All right, good morning. Hi, everyone. Aiyo. Hey Bonnie.

Also helped that number.

And I think we feel that we finished the year with wholesaler inventories distributor inventories pretty much in line, maybe a little heavier than a year ago. So certainly that could potentially correct a little bit in Q1 on the shipment side.

Bonnie Lee Herzog: Hi, I just had my first question. It's quick, just on your top line, which came in much stronger in the quarter than what your guidance implied. So I was just wanting to get a sense of the drivers of this, and then, you know, really, if any of this was pulled forward from Q1. And the reason I'm asking it is maybe sounds like that just based on your comments that, you know, it sounds like you guys are trying to build some inventory at retail ahead of the summer. Yeah, Bonnie, I'll take that, and Corey or Mike can come in.

We don't think that retailers are heavy or light, we think retail stock position is good.

I think did exceed our expectations a little bit.

And obviously, we're happy with that obviously makes the growth more challenging this year to go up against that last year, but we feel good and I think as we sort of said in our comments year to date scan data is healthy.

Reflecting we think the strength of the category and the brand and so we feel good about the core business for the year.

Martin Roper: I think Q4, you know, surprised us a little bit. Obviously, we were very happy. We did benefit in 23 from some sort of opportunistic commodity sales, box sales, that also helped that number. And I think we feel that we finished the year with wholesaler inventories, distributor inventories, pretty much in line, maybe a little heavier than a year ago. So, certainly that could potentially correct a little bit in Q1 on the shipment side. We don't think that retailers are heavy or light.

Okay. That's helpful and then maybe on the.

The gross margins you guys walk through that pretty thoroughly and maybe just a little more color on the puts and takes and I guess my question would be just trying to get a sense of how much visibility you.

You really haven't you feel pretty good about.

Sort of your gross margin guidance.

And I guess in the context of that.

Where do you see I don't know, maybe the biggest potential upside or downside on your gross margin. If theres any thing you could call out there that would be helpful. Thank you.

Martin Roper: We think the retail stock position is good. So, I think it did exceed our expectations a little bit, and we're happy with that. It obviously makes growth more challenging this year to go up against that last year, but we feel good. And I think, as we sort of said in our comments, year-to-date scan data is healthy, reflecting, we think, the strength of the category and the brand. And so we feel good about the core business for the year. Okay, that's helpful.

Yes.

Sure.

Sure.

Obviously, we feel good about the guidance that we're giving.

I think that goes without saying I think.

When we look at our cost of goods side.

The cost of goods of the product.

Entering the transportation cost issues, we have pretty good visibility too obviously, there are inflationary pressures, but I think as we have done in prior years, we're trying to offset those through supply chain optimization and negotiation and efficiencies and I think as we've mentioned before we have a team of engineers to work with our partners to sort of try and.

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

<unk>.

Deliver cost improvements each year, so we feel pretty good about that.

As it relates to the transportation environment, obviously, it is significantly more stable than two years ago.

'twenty two 'twenty three time period.

And it's more stable both for how the product is flowing and then also the cost side of that.

Corey Baker: Thank you. Sure. Well, one, obviously, we feel good about the guidance that we're giving. I think that goes without saying.

We obviously have <unk>.

Recent visibility to cost increases on certain ocean freight rates.

Corey Baker: I think when we look at our cost of goods side, the cost of goods for the product, ignoring the transportation cost issues, we have pretty good visibility to, obviously, there are inflationary pressures, but I think, as we have done in prior years, we're trying to offset those through supply chain optimization, negotiation, and efficiencies. And I think, as we've mentioned before, we have a team of engineers that work with our partners to sort of try and deliver cost improvements each year. So we feel pretty good about that. As it relates to the transportation environment, obviously, it is significantly more stable than two years ago, the 22-23 time period. And it's more stable both for how the product is flowing and then also on the cost side of that.

That might be affected by.

<unk> activities in the Gulf.

And.

Our guidance takes into account what we currently know.

And with some assumptions that's going to continue for a little bit right.

So we feel pretty good about that.

We think we have other levers we can play.

The gross margin side, obviously with the potential pricing action.

Things were to deteriorate, we'll be very prolonged.

And so we have actions we can take so that sort of supports the guidance, we're giving and why we're comfortable.

Matt.

And I think the point I would make about the ocean freight as the.

The rates spot rates that everyone is looking at are obviously significantly lower than they were in that 'twenty. Two 'twenty three time period. So that's the first point multiple slower. So this increase while it is a blip on the spot rate indexes is not nearly as big as the sort of life threatening events of 'twenty two.

Corey Baker: We obviously have recent visibility to cost increases on certain ocean freight rates that might be affected by the activities in the Gulf. And our guidance sort of takes into account what we currently know and with some assumptions that that's going to continue for a little bit, right? And so we feel pretty good about that. We think we have other levers we can play on the gross margin side, obviously, with potential pricing action if things were to deteriorate or be very prolonged. And so we have actions we can take.

And then the other thing is those spot rates.

And they don't necessarily reflect what we are paying.

So I wouldn't want people to draw conclusions from that I think it's indicative of the pressures, but not necessarily indicative of the rates.

So net net we're totally comfortable at this point in time and our gross margin guidance for the year.

Super helpful and I, just maybe want to clarify something I might have missed it can you share how much that is locked in is that.

Corey Baker: So that sort of supports the guidance we're giving and why we're comfortable with that. And I think the point I would make about ocean freight is that the spot rates that everyone is looking at are obviously significantly lower than they were in that 22-23 time period. So that's the first point: multiples lower.

The visibility that you mentioned that you have you feel good.

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

Corey Baker: So this increase, while it is a blip on the spot rate indexes, is not nearly as big as the sort of life-threatening events of 22. And then the other thing is, those are spot rates. And they don't necessarily reflect what we are paying. So I wouldn't want people to draw conclusions from that.

As in prior quarter communication, we did enter into some short term <unk>.

On tracks for certain lanes, where we needed to guarantee capacity, but we remain significantly lower contracted than we were in 2020.

Bonnie Lee Herzog: I think it's indicative of the pressures, but not necessarily indicative of the rates. And so net net, we're totally comfortable at this point in time with our gross margin guidance, super helpful. And I just maybe want to clarify something I might have missed. Can you share, you know, how much that is locked in? Is that, you know, the visibility that you mentioned that you feel good about?

When I think we've talked historically, we would perhaps be 75% contracted we are very much significantly below that and we still believe our current strategy of.

Basically taking the spot market and working with relationships. We have is the best thing right now so no. The comments that I just made were not reflective of a significant change in that strategy.

Corey Baker: So, I think, as we said in prior quarters, we were going to sort of rest on the commitments a little bit and sort of take advantage of the spot markets as in previous court of communication. We did enter into some short-term contracts for certain lanes where we needed to guarantee capacity, but we remain significantly less contracted than we were in two thousand and twenty when I think we talked historically. We would perhaps be seventy five percent contracted. However, we are very much significantly below that.

Okay. Much appreciate it thank you I'll pass it on.

Yes, Thanks, Mike.

Thank you one moment please.

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

Hey, Chris Good morning, Chris Hey, Chris.

Hey, good morning.

One follow up on the on the Q1. So when you gave that year to date or kind of number are you, indicating that you would expect to ship below consumption for the quarter or are you just saying, it's kind of unclear one way or the other.

We'll see how it goes just wanted to.

Just wondering if I would just say it's unclear the kind of number oni tracks, a certain part of the business.

Corey Baker: And we still believe our current strategy of, you know, basically taking the spot market and working with relationships we have is the best thing right now. So, no, the comments that I just made were not reflective of a significant change in that strategy. Okay, much appreciated. Thank you. I'll pass it on.

There is other timing issues that could affect the quarter. So I don't think we're implying anything I just think what we were merely stating was the Q4 shipments were pretty good and maybe even a little ahead of our expectations and obviously when that happens.

Operator: Yeah. Thank you. Our next question comes from the line of Chris Carey of Wells Fargo. Your line is open. Hey, Chris. Good morning, Chris.

<unk> heard us towards that.

Rents headwinds Q1, but we're not implying anything as it relates to.

Chris Carey: Hey, good morning. Just one follow-up on Q1. So when you gave that year-to-date CECANA number, are you indicating that you would expect to ship below consumption for the quarter? Or are you just saying it's kind of unclear one way or the other? We'll see how it goes. Just wanted to ask.

So would trend I think we would say that the kind of data is pretty good indicative of what's going on in the category not necessarily on a monthly basis or even on a quarterly but on a full year basis. It is and so we would just direct you to think about it like that.

Okay great.

On the question around.

If rate changes and the ability to cover that I think there is quite a bit of.

Martin Roper: Yeah, I would just say it's unclear that, you know, the CECANA number only tracks a certain part of the business. There are other timing issues that could affect the quarter. So I don't think we're implying anything.

I don't know if concern is the right word, but given the experience of the last rate cycle Theres certainly a lot of focus on your ability to protect your gross margins right.

No.

I was just.

I guess I guess, the way that I kind of want to attack that if that does happen and you take pricing can you just talk about the attention of some of the <unk>.

Martin Roper: I just think what we were merely stating was the Q4 shipments were pretty good and maybe a little ahead of our expectations. And obviously, when that happens, you always scratch your head as to whether that presents a headwind for Q1, but we weren't implying anything as it relates to, you know, how stuff would trend. I think we would say that the CECANA data is pretty good, indicative of what's going on in the category, not necessarily on a monthly basis or even a quarterly basis, but on a four-year basis, it is. And so we would just direct you to think about it like that. Okay, great.

Private label seems to be giving back some pricing and perhaps there is some shift into private label volume as a result, I don't know if thats happening, but it sounds like.

That's kind of what youre, implying and so just.

The pricing power on the branded.

<unk> said that happened in that pricing isn't the right lever what else is at your disposal.

So let me just start with the freight situation and make another comment I think some of.

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

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

So it appears that there was some opportunistic pricing taken.

And so as we look at it and this is one of the reasons that we are in the spot side of this we think those are artificially high on a temporary a temporary basis.

And the rates that we're seeing while certainly the pressure gross margin. We believe we can handle them through the offsetting measures that we have on our P&L.

Either pricing, maybe incremental volume or whatever to basically deliver.

Gross profit sort of goal. So we're currently feeling pretty good about that at the current levels that we're currently experiencing.

Martin Roper: Let me just start with the freight situation and make another comment. I think some of the analysts who follow the ocean freight companies have made the point that the spot rate increases that they've seen do not necessarily reflect the costs that the ocean carriers are experiencing from bypass. And so as we look at it, and this is one of the reasons that we're, you know, on the spot side of this, we think that these are artificially high on a temporary basis.

It relates to your second question.

Private label pricing in the market tends to track Cogs and obviously, we're on the backend of our cost of goods cycle with.

And so youre seeing some private label price gap start to.

<unk> back to maybe historical levels.

Relative to brand and so we are seeing that and you are seeing some volume gains because of that on the private label volume side right.

Martin Roper: And the rates that we're seeing, while certainly they pressure gross margin, we believe we can handle them through the offsetting measures that we have on our P&L, you know, either pricing, maybe incremental volume, whatever, to basically deliver sort of gross profit sort of goals. So we're currently feeling pretty good about that at the current levels that we're currently experiencing. As it relates to your second question, Private label pricing in the market tends to track COGS and obviously we're on the you know back end of a cost of goods cycle with and so you're seeing some private label price gaps start to re-emerge back to maybe historical levels relative to brand and so we are seeing that and you are seeing some volume gains because of that in on the private label volume side right and we and we're obviously monitoring that right and we firmly believe we have a great brand and they're all very well positioned to take advantage of consumers looking for value.

And we're obviously monitoring that right and we firmly believe we have a great brand that commands a premium.

And nothing really is happening that isn't back to where the price gaps where in 2020. So.

Maybe that's just a normalization and if there is an effect, it's probably a one year effect.

I also think as we sort of said on the call were sort of uniquely positioned to play both sides of this where one of the most significant private label suppliers certainly in the U S.

And we also have.

The primary multipack strategy in the category are also to take about two well positioned to take advantage of consumers looking for value. So we're playing both sides of it and there certainly will be some interplay and that can sometimes make our total net revenue look a little odd as the volume moves on between private label and branded but we're well.

Martin Roper: So we're playing both sides of it, and there certainly will be some interplay, and that can sometimes make our total net revenue look a little odd as the volume moves between private label and branded. But we're well positioned, and we feel very good about it, and it's just going to be a year of that transition because these gaps have emerged, and it will take a year for it all to shake out. Okay, thank you. Thank you. One moment, please. Our next question comes from the line of Michael Lavery. Piper Stanley, Yolanda Z, Thank you.

Position and we feel very good about it and it's just going to be a Europe upset that transition because these gaps that have emerged and we will take your effort to all shake out.

Okay. Thank you.

Okay.

Thank you one moment please.

Our next question comes from the line of Michael Lavery.

Piper Sandler your line is open.

Thank you and good morning.

Hey, Michael Good morning.

I just wanted to.

Michael Scott Lavery: Good morning. Hey, Michael. Good morning, Michael. I just want to start on multipax.

Starting on multi packs.

I like the sales bridge you showed a slide that just shows how big a contributor that's been the growth can.

Mike Kurban: I like the sales bridge you show, the slide that just shows how big a contributor that's been to the growth. Can you maybe just give a sense of how much of that might have been pipeline fill that we should be aware of or just contextualize it a little bit? And I know you gave some color on this, but a little more of maybe kind of the runway ahead and just how to think about how big that opportunity could be. Yeah, so one, it's not really a pipeline because these are retail scans; the data on slide nine in the investor deck is retail scan data.

Can you maybe just give a sense of how much of that might have been pipeline fill that we should be aware of or just contextualize. It a little bit and I know you gave some color on this but a little more maybe kind of the runway ahead and just how to think about how big that opportunity could be.

Yeah. So one it's not really pipeline because these are retail scans the data on slide nine in the investor deck as retail scan data. So it reflects consumer consumption.

Mike Kurban: So it reflects consumer consumption. We're seeing really good velocity on these items, and obviously there's a little bit of cannibalization with singles, but singles have held up remarkably well. And so, you know, the total brand is growing. The growth happens to be mostly in the multi-packs, but the singles have held on. I think it's still early innings, right? Some of these multi-packs have only been in the market for 8, 9 months. Some a little longer, maybe 12 to 18 or 2 years.

We're seeing really good velocity on these items.

And.

Obviously, if there is a little bit of cannibalization with singles, but singles has held up remarkably well.

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

I think it's still early innings right. Some of these multi packs.

<unk> been in market for nine months.

A little longer maybe 12 months to $18. Two years. It is still early innings is still consumer adjustment to them, we still have distribution gains and that opportunity is again laid out in.

Mike Kurban: It's still early innings. It's still, you know, consumer adjustment for them. We still have distribution gains, and that opportunity is again laid out in slide 9. And so, what I would just say is, I think when we talked about this a year ago, we said it was like a 2 year acceleration of our business or 2 year program to reach fruition. And we're one year in and obviously very happy, both with the results and also the fact that we've sort of proven that we're the only brand that can really carry these multi-packs in food, right? So it's a nice competitive position to be in, going back to the previous comments to Chris. So we feel good, and we think it's going to feel growth this year, and we think it has at least another year to run. As you think about modeling, though, Chris, it would be shipment load-in in Q1. Oh, Michael, sorry.

In slide.

Nine and so what I would just say is I think when we talked about this a year ago. We said it was like a two year acceleration of a business or two year.

Our program to reach fruition.

One year in and obviously very happy both with the results and also the fact that we sort of proven that we're the only brand that can really carry these multi packs and food right. So.

It's a nice competitive position to be in going back to the previous comments.

Chris.

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

As you think about it Chris there would be shipment load in in Q1, Michael sorry, but on the full year it would be immaterial to the revenue.

Michael Scott Lavery: But for the full year, it would be immaterial to revenue. Okay, that's helpful. And you touched on some of the flex in SG&A. Obviously, depending on what freight does, that could go either way. But you mentioned potentially opportunistic increases in investments if freight gets more favorable, which you seem to obviously make a case for the possibility of, at least. Is that the right way we should think about it in terms of if we see favorability in spot rates where you have more exposure than usual, you're more likely to reinvest it, or that you might? Can you just help us understand, as we see some of the rate moves, how to think about slowing that through, and how you might manage that? If we see opportunity to invest it productively, we'll invest. That's the primary objective if there's favorability.

Okay. That's helpful.

And you touched on some of the flex in SG&A.

Obviously, depending on what freight does that could go either way but.

You mentioned potentially opportunistic.

Increases in investments.

It gets more favorable which you seem to obviously make a case for the possibility of at least.

Is that the right way, we should think about it in terms of.

We see favorability in spot rates, where you have more exposure than usual.

Youre more likely to reinvested or that you might or can you just help us understand.

As we've seen some of the rate moves how to think about flowing that through and what.

Or what how you might manage that.

If we see opportunity to invest it.

Productively, we will invest.

That's the primary objective.

Mike Kurban: I hope we've demonstrated discipline, P&L discipline, over the last two, three years, and we would continue to do so, and we're not the sort of company that spends money just because we have it. But we will reserve the right to spend it if we think something would work. It's not like you've got a waiting list of things on deck that are kind of, you know, simply teed up.

Favorability I hope we've demonstrated discipline.

Discipline over the last two three years.

And we would continue to do so and we're not we're not the sort of company that spend money just because we have it right.

But we reserve the right to spend it if we thought something would work.

It's not like you've got a waiting list.

Things on deck that are kind of.

Mike Kurban: If there's favorability, it's just that you would evaluate as it progresses and see what might make sense. Yeah, I'd say our approach to marketing is we do a lot of things, and things that work, we try and spend more money on. So, are there things that my marketing team will tell me are going to work, and will my marketing team tell me that they want more money for? Absolutely. Obviously, the proof is, do we see what, do we like the results, and then we can ramp it up.

Simply teed up if theres favorability, it's just that you would evaluate.

As it progresses and see what might make sense.

Yes, I would say our approach to marketing as we do a lot of things and things that work, we try and spend more money on other things that my marketing team will tell me are going to work on my marketing team will tell me that they want more money for absolutely.

Obviously the proof is do we see we like the results and then we can ramp it up so yes, theres always opportunities and there's always things we could do more of.

Mike Kurban: So, yeah, there's always opportunities. There's always things we could do more of, but it's not like we're sitting here sort of not wanting to do what we want to do. We're doing what we want to do, and we could do more of it if it works. There's always opportunities to amplify long-term in this. Okay, very helpful. Thanks so much.

But it's not like we're sitting here sort of not wanting to do what we wanted to do we're doing what we want to do and we could do more of it if it works.

There's always opportunities to amplify long term initiative.

Michael Scott Lavery: Thank you. Our next question comes from the line of Eric DeLislauro, of Craig Hallam, Yolanda... Great, thank you for taking my questions. First of all, just a bit more on ocean freight and transportation costs. Could you provide just a bit more color on some of the different shipping lanes that you're exposed to? I would imagine, you know, the vast majority of your shipments don't go, you know, really anywhere near the Red Sea.

Okay very helpful. Thanks, so much.

Thank you one moment please.

Okay.

Our next question comes from the line of Ed Davis Lauro.

From Craig Hallum. Your line is open.

Great. Thank you for taking my questions.

Thank you.

A bit more on ocean freight and transportation costs here.

Could you provide just a bit more color on some of the different shipping lanes that you're exposed to I would imagine the vast majority of your shipments.

Don't go anywhere near the Red Sea. So could you give us a sense of the sort of geographic Mexico shipping lanes and then if there are any material differences in pricing amongst us.

Corey Baker: So could you give us a sense of the sort of geographic mix of your shipping lanes and then if there are any material differences in pricing amongst those? Yeah, so the way I would think about it, and obviously, we haven't disclosed it fully, but the way, if I were an analyst, I would approach this is to identify that one major market is North America with a West Coast and East Coast port. And one major market is Europe. And you can sort of get to those numbers from our breakdown of international and US business. And then as it relates to America business, east and west, you can sort of make some assumptions based on the population east and west of the Rockies to get the percentage of business going east to west. And so our primary routes are Asia to east, west, America, and to the UK. And There is just one wrinkle.

Yes.

So the way I would think about it and obviously, we haven't disclosed it fully but the way if I was an analyst I would approach. This is to identify the one major market is North America with a west coast and East Coast Port.

And one major market is Europe, and you can sort of get to those numbers from a break out of international in America business.

And then as it relates to the America business Eastern West you can sort of make some assumptions based on population eastern west of the Rockies to get two percentage of business going into east West and so our primary routes or Asia to East West America and to the U K and there was just one rig.

Corey Baker: I think we've previously disclosed that about a third of our supply, or a quarter of our supply comes from Brazil, and that would go into the East Coast. So, the way, again, we haven't provided the data because we prefer not to, but if you wanted to model it, you would do your model based on population and then assume that roughly a quarter or a third of the business is coming in from Brazil. As it relates to rates, if you look at historic rates, and I go back to before 2020, Asia to Europe was pretty cheap. I'm going to quote a number, but please don't hold me to it. I'm going to say $1,000 a container at that sort of level, and then Asia to the West Coast was more expensive, and Asia to the East Coast was more expensive than that. Obviously, Brazil and the East Coast are a much shorter flight, and you would conclude it was cheaper than Asia in the East Coast.

Cole I think we've previously disclosed that.

About a third of our supplier a quarter of our supply comes from Brazil, and that would come into the east coast. So the way again, we haven't provided the data because we prefer not to but if you wanted to model. It you would do your model based on population and then assume that roughly.

A quarter or a third of the business is coming from Brazil.

As it relates to rates.

If you look at.

Historic rates.

And I would go back to before 2020.

Asia to Europe was pretty cheap.

I am going to quote a number but please don't hold me to it I'm going to say $1000.

Dana.

Filler level, and then Asia to West Coast.

It was more expensive in Asia to East coast was more expensive than that.

Obviously, Brazil and East Coast is a much shorter lane and you would conclude was cheaper than Asia into the east coast.

Corey Baker: Okay, that's very helpful. I appreciate that. And then just, I guess, excluding ocean freight costs, just kind of sticking with these comparisons back to the sort of COVID era here. Can you comment on some of the other transportation, you know, warehousing inventory costs that you experienced during that COVID time and sort of how those compare to what you're experiencing now? Yeah, so during that period of time, we saw very significant costs related to ports, demurrage, fees, warehousing, congestion charges, just because the supply chain around the port was basically a bit of a mess. And I don't think we were alone in that.

Okay. That's very helpful. I appreciate that.

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

Yeah. So during that period of time, we saw very significant costs related to CT demurrage fees.

Housing.

Congestion charges, just because of the supply chain around the ports.

Basically a bit of a mess and.

And I don't think we were alone in that.

Corey Baker: And I think what we said was that, you know, when we talked about the $65 million that we experienced, you know, and we absorbed in excess transportation costs, I think we said roughly a third was the domestic stuff. The other part of the domestic stuff was also that there was a lot of inflation in over-the-road transportation and in warehousing costs. And particularly at the end of, I hope I have my years right, the end of 22, because of how all the global supply chains had reacted, there was a shortage of warehouse space in the US, which drastically increased costs for everybody. And you basically didn't have space, and you were ending up with multiple warehouses instead of single warehouses. So that's the background.

And I think what we said was that.

When we talked about the $65 million.

We experienced and we absorbed an excess transportation cost I think we said at roughly a third with the domestics up the other part of the domestic stuff was also there was a lot of inflation on over the road transportation and warehousing costs.

And particularly at the end of May.

He is right at the end of 'twenty, two because of how all the global supply chain reacted there was a shortage of warehouse space in the U S, which drastically increased costs for everybody.

Basically wasn't space and you're ending up with multiple warehouses instead of single warehouses.

Corey Baker: I would say that by the end of the, or maybe by the middle of the second quarter of last year, all of that anticipated over the road rates were back to competitive rates. You know, obviously, a lot of this is also partly what, you know, consumer demand is, and obviously that was reduced as people started going back out and eating out and etcetera, etcetera, warehouses freed up. It was possible to get everything back into one warehouse where you only wanted one warehouse, and the ports have largely been congestion-free, largely because there's always, you know, occasional instances, whether it's a strike, or something happens; the blocks are put up.

The background I would say that during by the end of or maybe by the middle of the second quarter of last year all of that anticipated over the road rates were back to competitive rates. Obviously a lot of this is also partly what the consumer demand is and obviously that was reduced as people started going back out the meeting Alison.

Cetera, et cetera, warehouses freed up it was possible to get everything back into one warehouse, where you only wanted one warehouse and the ports have largely been congestion free.

Largely because theres always occasional instances, whether it's a strike or something happens that blocks are caught up so domestic transportation costs have largely mitigated back to what I would call normal I think the other indicator of that is also where our inventory levels were obviously was supporting.

Corey Baker: So, domestic transportation costs have largely gone back to what I would call normal. I think the other indicator of that is also our inventory levels, which were obviously supporting, you know, very solid sales with significantly lower inventory than a year and a half ago. And so, for all those reasons, the domestic costs have gone down significantly. That's a very helpful color.

Very solid sales with significantly lower inventory then.

A year and a half ago.

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

That's very helpful color my.

My last question here.

On private label, so obviously much of the discussion.

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

In recent quarters has been on the relationship with your largest private label customer.

Could you just kind of comment on what Youre seeing with your other private label customers maybe.

Maybe comment on some of the growth between new and existing accounts and just kind of how to think about.

This section of private label going forward. Thank you.

Okay.

Yes, I would say overall the relationship with all of our private label customers is quite strong.

Corey Baker: Yeah, I would say overall that the relationship with all of our private label customers is quite strong. We've continued to deliver strong service and value to them, and you can see it in our private label results that there is a strong balance of growth coming from new customers, with some big ones in Western Europe, as well as in the U.S., as well as incremental distribution, some of which was temporary or is temporary, as we've been able to provide better service than others. So we picked up an incremental distribution. And then, overall, we see very strong private label performance that we expect will continue depending on those price gaps that Martin talked about earlier. That's great!

We've continued to deliver strong service and value to them and you can see it in our private label results that there is a strong balance of growth coming from new customers with some big ones in Western Europe.

As well as in the U S as well as incremental distribution some of which was temporary or is temporary as we have been able to provide better service than others. So we picked up incremental distribution.

So overall, we see very strong private label performance that we expect will continue depending on those price gaps that Martin talked about earlier.

That's great. Thank you for taking my questions.

Corey Baker: Thank you for taking my question. Thank you. Our next question comes from the line of John Anderson on William Blair. Your line is open. Morning, everybody.

Thank you.

Our.

Question comes from the line of Jon Andersen of William Blair. Your line is open.

Good morning, everybody. Thanks for the question.

John Mills: Thanks for the question. Congratulations. Congratulations on a strong 2023. I wanted to ask first about just the category; the coconut water category, as you pointed out, has been a terrific category over the past several years and up, I think 16% use will be indicated in dollars in 2023. But it sounds like you're expecting that to moderate, you know, fairly materially in 2024. I think you mentioned category growth in the mid to upper single digits in 24. Could you just talk about, is this just kind of a return to normal after an unusual 2023? What some of the assumptions are that you're making that lead to that kind of outlook for the category? Yeah, no, a great question.

Congrats John.

That's on a strong 2023.

I wanted to ask first about just the category.

<unk>.

Coconut water category as you pointed out it's been terrific category.

Over the past several years and up.

16%.

Indicators are in dollars in 2023.

But it sounds like youre expecting that to moderate fairly materially in 2024, I think you mentioned.

Category growth in the mid to upper single digits. In 2004 could you just talk about is this just kind of a return to normal.

After an unusual 2023, what some of the.

Assumptions are that Youre, making.

That lead to that kind of outlook for the category.

Yes.

Mike Kurban: You know, when we looked at, you know, stock data, we saw category volume growth last year around 13%. I think if you look at like a four or five year average, the volume growth has been, you know, high single digits. And I think, you know, we prudently sort of do our budgeting and planning around assuming that that's a good category number. But does that imply a slowdown from last year? Yeah, maybe.

Great question I think when we looked at Tommy data, we see category volume growth last year around 13%.

I think if you look at like a four five year average the volume growth has been high single digits.

Thank you.

We prudently sort of do our budgeting and planning around assuming that thats a good a good category number.

So does that imply a slowdown from last year, yes, maybe.

Mike Kurban: But I'm not sure, you know, whether we have any great crystal ball on this; we just have to do some estimates for planning purposes. What I would say is, I think the category benefited last year, both from our introduction of multipacks and probably from some competitors returning to full inventory. And so probably there was some, you know, maximization of demand, I suppose. And that maybe helped those numbers a little bit.

I'm not sure whether we have any great crystal ball on this we just have to do some estimates for planning purposes. What I would say is I think the category benefited last year, both from our introduction of multi packs and probably from some competitors were turning to fill inventory.

And so probably there was some maximization of demand I suppose.

And.

That maybe helped those numbers a little bit so I don't think our assumptions are unreasonable, obviously, we'll be prepared for better and obviously.

Mike Kurban: So I don't think our assumptions are unreasonable. Obviously, we'll be prepared for better, and obviously, we'll be prepared for worse, too. But I don't think those assumptions are unreasonable.

Worse too, but I don't think those assumptions are unreasonable, but that's what sort of goes into it I wouldn't say, we have a great crystal ball, we have to pick a number and then build plans around that.

John Mills: But that's what sort of goes into it. I wouldn't say we have a great crystal ball; we have to pick a number and then build plans around it and make sure that our supply chain planning can deal with a variance in those numbers. Okay, that's helpful. Makes perfect sense. With respect to your own sales guidance, I just want to make sure I understand the puts and takes. It sounds like you, you know, again, correct me if I'm wrong, but you're looking for Vita Coco branded growth in line with the category in 2024. And could you talk a little bit about your volume and price assumptions? I'm not sure if you've already taken some pricing on the branded part of the portfolio, or if maybe that's expected in 2024. And then what some of those offsets are, if you can kind of quantify those for us to a greater extent.

Make sure that our supply chain planning can deal with a variance in those outcomes.

Okay. That's helpful makes it makes perfect sense.

With respect to your own sales guidance.

Just wanted to make sure I am.

I understand the puts and takes.

It sounds like.

Again, correct me, if im wrong, but youre looking for Vita Coco branded growth.

In line with the category.

2024.

And could you talk a little bit about your volume and price assumptions I'm not sure if you've already taken some pricing on the branded part of the portfolio or if maybe thats expected.

2024, and then what some of those offsets are if you can kind of quantify those for us to a greater extent I think you mentioned the oils business.

Some one time bulk.

<unk> volume.

I think you even mentioned a promotion that might not repeat.

Mike Kurban: I think you mentioned the oil business, perhaps some one-time bulk volume, and I think you even mentioned a promotion that might not repeat. Thanks. Yeah, let me take the sort of drags or the headwinds first. I think we chose, and I'll be honest, we've chosen not to sort of categorize the size of each partly because the private label piece is obviously proprietary information to a certain retailer, and we're uncomfortable breaking out that private label all business.

Yes.

Yes.

Now, let me take the sort of drags.

The headwinds first I think.

We chose not to be honest, we've chosen not to sort of.

Categorized the size of each partly because the private label pieces of C proprietary information to a certain retailer and where I'm comfortable breaking out that private label all business, but.

Just lifting them and may be in.

Mike Kurban: But just listing them, and maybe in order of magnitude or maybe not, as the case may be, obviously, the loss of the private label coconut oil business is the biggest factor. There is some reduction in promotional activity that we know won't repeat because it was a little opportunistic last year because we had inventory and the retailers wanted it. So that's a little bit of a drag. We have, as you mentioned, the non-repeating commodity sales, which are to commodity sales for us are coconut water concentrate and stuff like that. And we just don't expect that to happen again.

Order of magnitude or maybe not as the case may be obviously the loss of the private label coconut oil businesses.

As a.

The biggest factor.

There is some reduction in promotional activity that we know won't repeat because it was a little opportunistic last year, because we had inventory in the retailers wanted it so that's a little bit of a drag.

We have as I mentioned, the non repeating commodity sales which were too.

Commodity sales for us is coconut water concentrates and stuff like that.

We just don't expect that to reoccur it was sort of again opportunistic there was another.

Mike Kurban: It was sort of, again, opportunistic. There was another customer who needed it, and we had it. So we sold it, right? sort of thing. And then I also think our growth rate is challenging. In 23, we said, as we talked about in Q1, Q2, we had a major promotion with a major club retailer, and that was an incremental promotion. It's hard to duplicate that growth again, right?

A customer who needed it and we had it so we sold it.

Sort of thing.

And then I also think.

Both rate is challenging in 'twenty three we said as we talked about in Q1 Q2, we had a major promotion with a major club retailer.

And that was incremental promotion.

It is hard to duplicate that growth again right. So that's also a little bit of.

Mike Kurban: So that's also a little bit of a headwind, but we're gonna more than offset all of those headwinds with the core business growth, as you noted, plus the private label growth. It's gonna more than offset that. So yes, it's a little bit of a reset year for us, but we feel really good that the businesses are gonna emerge from it stronger. And now I've completely forgotten the other part of your question. I do apologize.

The headwinds.

We're going to more than offset all of those headwinds with the core business growth as you noted plus the private label growth, it's going to more than offset that so yes, it's a little bit of a reset year for us, but we feel really good.

The business is.

Much from its stronger.

And now I've completely forgotten the other part of it the other part of your question I do apologize I think pricing, yes pricing John in our guidance, we didn't assume a lot of incremental pricing over where we currently are.

John Mills: I think pricing, yeah, pricing, John, in our guidance, we didn't assume a lot of incremental pricing over where we currently are. Obviously, there's a lot of stuff going on in the macro environment, but right now, we haven't assumed significant pricing. So, broadly, it would be volume-based growth within our guidance. Thank you. Thank you. Thank you. Thank you. One moment, please. Our next question comes from the line of Jim Salera. Steven Je, Hi guys.

Obviously, there's a lot of.

That's going on in the macro environment, but right now we haven't seen significant pricing so broadly it would be volume based growth within our guidance.

Super helpful. Thank you very assumption.

Thanks.

Thank you one moment please.

Our next question comes from the line of Jim Solera.

Of Stephens Your line is open.

Jim Salera: Good morning. Thanks for taking our question. Martin, I appreciate all the color on the ocean freight rate. And if you'll indulge me on just one real quick question on that, maybe kind of tie the loop there. It sounds like you're expecting, and I appreciate that you guys pay a rate that's lower than the current spot rate, but it sounds like you're expecting current spot rates to decline as the year goes on. And if I'm wrong about that, please correct me.

Hi, guys. Good morning, Thanks for taking our question.

Martin I appreciate all the color on the ocean freight rate and if Youll indulge me just one real quick question on that maybe kind of tie the loop there.

Yes.

It sounds like you're expecting and I appreciate that you guys pay a rate that's lower than the current spot rate, but it sounded like you're expecting.

Current spot rates to decline as the year goes on and if I'm wrong on that please correct me, but if spot rates stay where they're at currently.

Mike Kurban: But if spot rates stay where they're at currently, would that provide, or would that yield a headwind to the gross margin guidance as it's currently put together? So, yeah, I think if you look at the indexes, you know, at least the last one that we look at was published last Thursday, you can see that the increase in spot rates sort of peaked about three, four weeks ago, and it started to decline. Declines are different by market, but the sort of weakening there, as you noted, and as we indicated earlier on the call, we're not paying the spot prices. We're paying prices that we think are better than that.

Would that provide or would that yield a headwind to the gross margin guidance as it's currently put together.

So yes, I think if you look at the indexes.

At least lost one that we'd look at was published those dates you can see that the increase in spot rates sort of peaked about three four weeks ago and it started to decline declines are different by market.

But the sort of weakening there as you noted and as we indicated earlier on the call what we're not paying the spot prices, we're paying prices that we think are better than that.

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

And so we see this happening right.

And what I would say is our guidance.

Assumes that what we're currently paying.

<unk> continues for a reasonable period of time, given what's causing it.

And yes, we have optimism that the rates should continue to soften, but that's a little bit of a crystal ball question.

Mike Kurban: And then, if we can shift back to the category growth side of things, you know, you talked about growth in line with the overall category. But given, you know, the uplifts you guys have seen from multi-packs and some of the innovations, can we think about there being an upside to branded, you know, as some of those things continue to perform well in the market, and presumably, you guys gain some more shelf space as the resets go through? Yeah, absolutely. You can think about it, and we think about it a lot, right? And our, you know, Mike is very challenging for us.

Okay. That's helpful.

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

You talked about growth in line with with the overall category.

Given the uplift you guys have seen from multi packs and some of the innovations.

Can we think about there as being upside to branded as some of those things continue to perform well in the market and presumably you guys gained some more shelf space as the resets goes through.

Okay.

Yes, absolutely you can think about it and we think about it a lot right.

And our Mike, it's very challenging to US okay, guys, we need to cross yet right.

Jim Salera: Okay guys, we need to grow share, right? It's obviously a little harder to grow share from where we are than where we were, you know, three years ago, but we're committed to trying to do so. Mike talked about the initiative with the juice cans. Obviously, the multi-packs give us an advantage in food and mass in the mainstream part of the section. We need to, you know, find ways to win in the can section and in food and mass. That's a multi-year sort of goal, right?

It's obviously, a little harder to grow share from where we are than where we were three years ago, but we're committed to trying to do so.

Mike talked about the initiatives with the juice our cans, obviously, the multi packs gives us an advantage in food and mass in the mainstream part of the section we need to find ways to win in the <unk> section in food a massive multi.

Multi year sort of goal right, but yes. Our goal is to continue to gain share and if we do so then obviously there is upside.

Mike Kurban: But yeah, our goal is to continue to gain market share, and if we do so, obviously, there's ups and downs. Okay, great. And then maybe if I can just sneak in one quick one on the juice cans. You mentioned, you know, some offerings for that outside of convenience. Would that include a multi-pack offering of the cans, or is that still going to be all one count at in mass and other outside of convenience? Eventually, likely, but for now, it's single. Okay. Thanks guys, I'll hop back in the queue.

Okay, Great and then maybe if I can just sneak in one quick one on the the juice cans you had mentioned.

Some offerings for that outside of convenience would that include a multibank offering of the cans or is that still going to be all one count at in mass and other outside of convenience.

Eventually likely but for now it's single serve.

Units Okay.

Yes.

Eric Serotta: Thank you, one moment please. Our next question comes from the line of Eric Serotta, Morgan Stanley, from... Morning, thanks for taking the question. I'm hoping you could give some perspective on your price points relative to some competing beverage categories, whether it's bottled water, sports drinks, or even CSDs, which I realize don't directly compete. Looks like you've probably benefited from improved relative affordability over the past few years with pricing in alternative categories clearly rising, or price increases moderating, not seeing any deflation, to be clear.

Thanks, guys I'll hop back in the queue.

Thank you.

Please.

Our next question comes from the line of Eric Serota Morgan Stanley. Your line is open.

Good morning, Thanks for taking my question.

Hoping you could give some perspective on your price points relative to some competing beverage categories.

It's bottled water.

<unk> strengths or even the athene, which I realize don't directly compete.

It looks like you probably benefited from improved relative affordability over the past few years.

With pricing in alternative categories clearly.

This increase is moderating not seeing any deflation to be clear.

Corey Baker: How are you thinking about the potential for further price increases in Vita Coco coconut water against that backdrop? So Eric, you're correct. Over the last few years, there's been a significant compression in the relative price between us and other beverage categories. Going forward, like I said, I don't expect much pricing at this point in our guidance for us this year, and I think what we've heard from most other beverage companies is not a lot of pricing, probably in the overall LRB category.

How are you thinking about the potential for further price increases in.

Coco coconut water.

Yeah.

Against that backdrop.

So Eric Eric correct over the last few years has been a significant compression in the relative price between us and other beverage categories.

<unk> forward like I said I don't expect much pricing at this point in our guidance for us this year.

And I think what we've heard from most other beverage companies is not a lot of pricing probably in the overall LRB category. So we expect those relative price points. So stay the same at this point unless something changes.

Eric Serotta: So we expect those relative prices to stay the same at this point unless something changes. You know, we're always monitoring the market, and we'll make adjustments competitively as needed. Assume at this point that those relative points will stay the same or relatively close. Okay, and then lastly, I think Martin joked last quarter in terms of giving your preliminary outlook that, well, you know, Mike expects me to game share each year. I think that was the last quarter.

We're always monitoring the market and we'll make adjustments.

<unk> as needed.

Yes.

Assume at this point that those relative points would stay the same.

Or relatively close.

Okay, and then lastly, I think Martin you joke last quarter in terms of giving them.

Your preliminary outlook that well.

Mike expects me gain share each year.

Quarter.

Mike Kurban: So, I know there's been a lot of back and forth about sort of recycling some of these one-time benefits that you had in terms of coconut water and one-off sales last year. To be clear, when you strip out those kind of one-time, cycling those one-time benefits, do you think your underlying growth is going to keep pace with the category or your underlying share is going to keep pace with the category or even exceed it? Yeah, um, so our plan or hope is that our branded business, you know, makes, you know, tracks the category as a minimum expectation, right? And Also, I think we think the private label, at least this year, could be a little faster than that just because of the price gap issue.

So I know, there's been a lot of back and forth about sort of the.

Cycling some of these one time benefits that you had in terms of coconut water one off sale last year.

To be clear when you strip out those kind of one time.

Franklin those one time.

Benefits do you think your underlying growth or is going to keep pace with the category or your underlying share and keep pace with a category or.

And then.

You bet.

Yes.

So I think.

Our plan or hope is that our branded business.

Tracks the category as a minimum expectation right.

And.

I think we think the private label at least this year could be a little faster than that just because of the price gap issue.

Eric Serotta: So that's the goal. You know, it's a little hard to talk about one-year goals like that because there's obviously, as you said, all these other stuff going on. I think our long-term goal remains mid-team branded growth. We've delivered that in the last four or five years. This year we have a little bit of a, you know, it's a little more challenging for us to do it this year, which is why we're giving the guidance we're giving, but it doesn't take that long-term goal away.

So that's the goal.

It's a little hard to talk about one year goals like that because obviously as you said will be other stuff going on I think our long term goal is remains mid teen branded growth.

We delivered that last four five years this year, we have a little bit of.

It's a little more challenging for us to do it this year, which is why we're giving the guidance, we're giving but it doesn't take that long term goal of off the table.

Brian Spillane: Great, thanks so much. Thank you. Our next question comes from the line of Brian Spillane of Bank of America. Your line is open. Hey, thanks, operator. Good morning, everybody. Um, I just had one.

Great. Thanks, so much.

Thank you. Thank you one moment please.

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

Hey, Thanks, operator, good morning, everybody.

I just had I just have one question.

And I guess, if we just step back and.

Mike Kurban: I just have one question. And I guess if we just step back and make a scenario, I guess, not make an assumption, but think about a scenario where all this discussion about freight and boats is really geopolitical, right? This isn't the COVID boat, you know, supply and demand imbalance. This is, You know, it's tough to navigate traditional trade routes right now in May for a while. You know, I mean, the Barbary Wars, right? They impacted trade and freight rates for years. So I guess I have two questions related to that. Okay. One question is, is there a way to change the product form? Could you, you know, like we do with natural gas? Milk, right, can be converted to powder.

Mick.

A scenario I guess not make an assumption, but think about a scenario where.

All this discussion about freight in boats is really geopolitical right like this isn't the COVID-19 bolt supply demand imbalanced. This is.

It's tough to navigate traditional trade routes right now in may for a while.

I mean, it's the Barbara rewards right impacted trade and freight rates for years right.

So I guess I have two questions related to that one is.

Is there a way to change the product form could you like like we do with natural gas milk right can be converted the powder. So if you were to try to reduce the incidence of <unk>.

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

Freight and concentrated is there a way to concentrate the product to just at least reduce the number of ships that you actually have to procure one two it's just sourcing from Asia becomes more impractical overtime.

Would it be possible to source more from from Brazil. So I know, it's kind of a big picture question, but again it just seems like this could be a recurring theme if the world continues to be as stable as it is and just curious if there is other ways to sort of adjust the supply chain to adapt to that.

Mike Kurban: Thanks. I think it's less geopolitical and more opportunistic for the freight carriers to increase rates. When you think about it, they're not going through the Suez anymore. They're going around Africa, which is not that much more expensive and does take a little bit longer. So it's an opportunity for them to try to spike rates.

I think I think it's less geopolitical and more opportunistic on the.

The freight carriers too.

Increased rates I mean, when you think about it.

They're not going through the Suez anymore, Theyre going around Africa, which is <unk>.

Not that much more expensive and does take a little bit longer.

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

Mike Kurban: That's how we look at it. Now if you think about moving production, can't move supply to the U.S. because there are not enough coconuts. Clearly, there are like a few in Miami; that guy with the push cart in Miami that is on the beach.

Now if you think about <unk>.

Moving production can't move it cant move supply to the U S. Because theres not enough coconuts clearly there is like a few in Miami.

That guy with the Pushcart and Miami is on the beach, but so it's going to be hard to get the coconuts right, but if we look at moving more supply to Brazil, that's clearly something that we're working on.

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

And something that we've been working on for quite some time and it is Brazil is a great location for us because it is a much shorter transit time.

And it's further diversification of our.

Mike Kurban: So obviously, that's something that we're looking at. And then if we think about concentrate, it's also an option, but it changes the product that we're selling today. So it's not the primary focus.

Our supply chain. So obviously, that's something that we're looking at.

And then from if we think about concentrate it's also an option, but it changes it changes the product that we're selling today.

Brian Spillane: Thank you. Okay, ladies and gentlemen, showing no further questions. This does conclude today's conference. Thank you all for participating. You may now disconnect.

So it's not the primary focus.

Thank you.

Ladies and gentlemen, showing no further questions.

This does conclude today's conference. Thank you all participating you may now disconnect have a great day. Thank you everybody and thank you battery for hosting us. Thank you Youre welcome. Thank you.

Operator: Have a great day. Thank you, everybody. And thank you, Valerie, for hosting us. Thank you. You're welcome. Thank you. Yeah, have a great day. Thank you for watching!

You have a great day.

Okay.

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