The Vita Coco Co Inc (COCO) Reports 11% Increase in Q3 Net Sales, Raises Full Year Guidance
Third Quarter Net Sales Increased 11% to $138MM; Year-To-Date Net Sales Grew 15%
Third Quarter Gross Margin of 41%, an Improvement of Over 1,400 Basis Points Over 2022
Company Raises Full Year Net Sales and Adjusted EBITDA Guidance
Company Announces $40MM Share Repurchase Program
On October 31, 2023, The Vita Coco Co Inc (NASDAQ:COCO) released its third quarter financial results for the period ended September 30, 2023. The company reported an 11% increase in net sales to $138 million, driven by an 8% net sales growth and 5% volume growth of Vita Coco Coconut Water. The gross profit was $56 million, or 41% of net sales, an increase of $24 million as compared to 26% of net sales in the prior-year period. The company also announced a $40MM share repurchase program.
Financial Highlights
The company's net income was $15 million, or $0.26 per diluted share, compared to $7 million, or $0.13 per diluted share. Net income benefited from strong net sales growth and gross margin improvement resulting primarily from decreased transportation costs, partially offset by increased investments in sales, general and administrative ("SG&A") and a mark-to-market adjustment in foreign currency hedges.
Non-GAAP Adjusted EBITDA was $27 million, compared to $12 million in the prior-year period, up $15 million due to improvements in gross profit partially offset by increased SG&A spending.
Year-To-Date Highlights
For the year-to-date period, net sales grew 15% to $387 million driven by strong 16% net sales growth and 13% volume growth of Vita Coco Coconut Water. Gross profit was $141 million, or 36% of net sales, an increase of $60 million as compared to 24% of net sales in the prior-year period. Net income was $40 million, or $0.68 per diluted share, compared to $11 million, or $0.19 per diluted share, in the prior-year period.
Management Commentary
Michael Kirban, the Company's Co-Founder and Executive Chairman, stated,
I am very proud of our team and its continued strong performance this year. We have delivered another strong quarter and we believe that our focus on expanding consumption occasions for coconut water is contributing to strong volume performance for our flagship Vita Coco Coconut Water brand."
Martin Roper, the Companys Chief Executive Officer, said,
We are extremely pleased with this quarter's results with 11% net sales growth and Adjusted EBITDA of $27 million. Gross margins for the quarter exceeded our expectations due to better than expected price realization across our business, and the stabilization of our transportation costs. We are raising our full year net sales and Adjusted EBITDA guidance based on the strong third quarter and an updated view on fourth quarter shipments and product mix."
Outlook
The company updated its full year 2023 guidance, expecting net sales growth of approximately 13-15% compared to fiscal year 2022, up from the previously projected 10-12%. The company also forecasted Adjusted EBITDA in the range of $64-67 million, up from the previously projected $56-60 million.
Explore the complete 8-K earnings release (here) from The Vita Coco Co Inc for further details.
This article first appeared on GuruFocus.
