The Vita Coco Company reported a quarterly net sales decline of 4% to $133 million in its Q3 2024 earnings presentation this morning, as year-to-date revenue stayed flat at $389 million.
According to CEO Martin Roper, the company’s sales performance was impacted by inventory flow, which wound up lower than anticipated due to disruptions in its ocean freight procurement. While supply chain woes are reflected in this quarter’s results, Roper painted a more positive outlook in prepared statements, adding that the company has “weathered these shortages and, in late September, saw our product flow and availability in market improving.”
Net sales of Vita Coco brand coconut water was up 8% in the quarter and 5% year-to-date; however, private label sales dropped 7% in the Americas during Q3.
Gross profit was $52 million for Q3, down about $5 million year-over-year, and stood at $157 million year-to-date, up by $17 million from 2023. Gross margin was 39% of net sales in the quarter (41% in 2023) and was 41% year-to-date (up from 36% in 2023).
“The coconut water category remains one of the fastest growing categories in the beverage aisle, and we believe this growth is being fueled by our focus as the category leader in driving increased household adoption and new consumption occasions,” said Vita Coco Company co-founder and executive chairman Michael Kirban in a statement.
“Our reduced inventory availability during most of the quarter limited our ability to meet consumer demand,” Kirban continued. “With an improving inventory situation, I expect accelerated growth for the balance of the year. Based on our expectation for continued strong category growth in 2025, I could not be more excited for what is to come.”
The company is now raising full year guidance for net sales and adjusted EBITDA, projecting net sales to end between $505 million and $515 million (previously $500-$510 million) thanks to strong volume growth for both Vita Coco brand and private label coconut waters, with declines to its private label coconut oil business and price/mix expected to offset sales gains. Its EBITDA forecast now predicts a range of $80 million to $84 million (previously $76-$82 million).
In a call with investors and analysts today, the company highlighted plans to grow internationally in the U.K. and Germany, continued innovation outside of the core Vita Coco line, and future M&A opportunities as top initiatives for the business.
On the call, Kirban cited high demand from private label customers as a strength of the business – despite the aforementioned sales dip; the company expects private label trends to improve “as we put the supply chain challenges of this summer behind us.” As well, recent innovations like multipacks, Vita Coco Farmer’s Organic and Vita Coco Juice “continues to perform very well” according to Circana market data, he added, the latter Juice product reporting 39% sales growth in retail year-to-date.
Kirban also said the launch of its Vita Coco Treats line – a sweet, flavored coconut milk drink – has performed well with “promising results at a key retailer” since rolling out this Spring, despite supply challenges, and the company intends to expand the footprint of the line in the new year.
“We’re excited about the initial reception for Vita Coco Treats and for the future of innovative coconut milk-based beverages, which could offer us another path for long-term growth,” he said.
The overall results were mixed for some analysts. William Blair Equity Research reported that while Vita Coco’s $23 million EBITDA performance beat its expectation of $20 million in Q3, the 4% organic sales decline was below its prediction of a 1% slide.
“Our thesis is that Vita Coco’s large addressable market, demand underpinnings for natural beverages, and differentiated supply chain represent an attractive value proposition,” William Blair analysts wrote. “Still, with sales growth expected to slow and potential incremental pressure from ocean freight rates on EBITDA, we maintain our Market Perform rating.”
Meanwhile, its quarterly earnings per share of $0.32 beat the Zacks Consensus Estimate of $0.27.