The Vita Coco Company (COCO) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 4% year-over-year to $132.9M–$133M, mainly due to a 36.8%–37% drop in private label sales, partially offset by 7.8%–8% growth in branded coconut water sales.

• Net income rose 27% to $19.3M (EPS $0.32), driven by improved pricing, FX gains, and lower SG&A expenses.

• Adjusted EBITDA was $22.9M–$23M (17%–17.3% margin), down from $26.9M–$27M (19.5%) in Q3 2023.

• International business, especially in the U.K. and Germany, showed strong growth, with international segment net sales up 18.6%–19% and Vita Coco Coconut Water up 31%.

• Inventory shortages and higher transportation costs impacted Q3, but inventory recovery began late in the quarter and is expected to drive Q4 growth.

Financial highlights

• Q3 2024 net sales: $132.9M–$133M (down 3.7%–4% year-over-year); YTD: $388.7M–$389M (flat year-over-year).

• Q3 2024 gross profit: $51.6M–$52M (39% margin), down from $56.2M (41%) in Q3 2023.

• Q3 2024 net income: $19M–$19.3M (EPS $0.32), up from $15M–$15.2M (EPS $0.26) last year.

• Q3 2024 SG&A expenses: $31M (down 5% year-over-year); YTD: $87.9M (down 2.1%).

• Cash and cash equivalents at quarter-end: $156.7M–$157M, with no debt.

Outlook and guidance

• Full-year 2024 net sales guidance raised to $505M–$515M, with gross margin expected at 37%–39% and Adjusted EBITDA at $80M–$84M.

• Q4 expected to see strong top-line growth as inventory replenishes, but higher ocean freight costs will pressure gross margins.

• SG&A spending for the full year projected to be flat or slightly down, with disciplined investment as inventory normalizes.

• Additional production capacity added for 2025 and 2026 to support growth and supply chain flexibility.

• Management expects continued supply chain volatility due to macroeconomic and geopolitical factors, including potential port disruptions in early 2025.