The Vita Coco Company, Inc. (NASDAQ: COCO) ("Vita Coco" or the
"Company"), a leading high-growth platform of better-for-you
beverage brands, today announced financial results for the first
quarter ended March 31, 2022.
First Quarter 2022 Highlights Compared to Prior-Year
Period
- Net sales grew 28% to $96 million driven by continued strong
38% growth of Vita Coco Coconut Water
- Gross profit was $19 million, or 20% of net sales, down from
$24 million, or 32% of net sales primarily due to increased
transportation costs
- Net income attributable to shareholders was $2 million, or
$0.04 per diluted share, which benefited from a non-cash gain of
$8.7 million from the mark-to-market changes in fair value on
derivative instruments, compared to net income attributable to
shareholders of $2 million, or $0.03 per diluted share in the first
quarter of 2021
- Non-GAAP Adjusted EBITDA1 was a loss of $3 million compared to
income of $6 million
Michael Kirban, the Company’s Co-Founder and Executive Chairman,
stated, “In the face of a challenging operating environment and
global macro headwinds, we remain focused on growth as our top
priority. Our flagship Vita Coco Coconut Water brand continues to
gain share of the growing coconut water category and, according to
IRI, the Vita Coco brand now commands 50% value share in tracked
channels, up from 43% compared to a year ago2. Our household
penetration has reached 11%, up approximately 170 basis points
compared to a year ago according to data from Numerator, which
represents approximately 2.4 million incremental households versus
the prior year2. Given our strong consumer trends and distribution
gains, we believe our brand can support further price increases
which we are planning to implement in the remainder of 2022 and
which, on an annualized basis, we believe in 2023 should fully
offset the current transportation cost levels. We remain committed
to fueling our Company’s long-term growth ambition through a
combination of strong coconut water category growth, share gains in
the broader premium, functional beverage segment through continued
distribution gains and household penetration, and successful
beverage innovations in coconut water and better-for-you
adjacencies.”
Martin Roper, the Company’s Chief Executive Officer, said, “We
are encouraged by the continued strong consumer demand for our
products, and are pleased with our supply chain’s ability to meet
that demand, but it’s no secret the ocean freight and domestic
logistics environment remain very volatile. Even with these
challenges, we remain confident we can meet our 16-20% net sales
growth range this year. We continue to believe that the
transportation cost situation will eventually normalize, and as
such, we have remained strategically patient in entering into
long-term ocean contracts to preserve our ability to expand our
margins once costs subside. In the meantime, we are increasing our
efforts to offset the pressure on our margins through more
aggressive cost efficiencies initiatives and by taking front line
price increases on our branded business in the second half of the
year, on top of those planned in the second quarter. We are
revising our full year Adjusted EBITDA guidance3 to account for the
increased cost pressure we are facing, and remain confident that
all the additional measures we are initiating will help us mitigate
current cost inflation pressures for the balance of the year.”
First Quarter 2022 Consolidated Results
Net sales increased $21 million, or 28%, to $96 million for the
first quarter ended March 31,2022, compared to $75 million for the
first quarter ended March 31, 2021. The increase in net sales was
driven by increased case equivalents ("CE") volume coupled with
some benefits from pricing actions, including reduced promotional
activities.
Gross profit was $19 million for the first quarter of 2022
compared to $24 million for the first quarter of 2021. Gross margin
decreased approximately 12 percentage points to 20% for the first
quarter of 2022 compared to 32% in the same period last year. The
decline in gross margin was primarily driven by increased
transportation costs due to the global shipping environment and
ports constraints including very high containers detention and
demurrage costs, which were only partially offset by pricing
actions. Cost of goods per CE were up 19% for the quarter,
primarily reflecting the significant transportation costs pressure
first experienced in 2021 and that has remained.
Selling, general and administrative expenses in the first
quarter of 2022 were $25 million, compared to $20 million in the
same prior year period. The increase was largely due to ongoing
public company costs, with increased spending in professional fees
and personnel related expenses.
Net income attributable to shareholders was $2 million, or $0.04
per diluted share for the first quarter of 2022, compared to net
income of $2 million, or $0.03 per diluted share in the prior year
period. Net income in the first quarter of 2022 benefited from a
non-cash gain of $8.7 million from mark-to-market changes in fair
value on the derivative instruments, which was offset by the
decrease in gross profit relative to last year.
Adjusted EBITDA1 for the first quarter of 2022 was a loss of $3
million, compared to a gain of $6 million in the first quarter of
2021. The decrease in Adjusted EBITDA1 was primarily driven by the
decrease in gross profit.
Balance Sheet
As of March 31, 2022, the Company had cash and cash equivalents
of $18 million and $12 million of debt under a revolving credit
facility, compared to $29 million and $0, respectively as of
December 31, 2021. The decrease in net cash was primarily driven by
working capital seasonality. Inventories as of March 31, 2022
totaled $65 million compared to $75 million as of December 31,
2021. On March 31, 2022, there were 55,585,227 shares of common
stock outstanding.
Fiscal Year 2022 Full Year Outlook
The Company is providing the following guidance:
- Continue to expect net sales in the range of $440-455 million,
representing a growth of approximately 16-20% compared to fiscal
year 2021.
- Expect gross margin improvement for the remainder of 2022
compared to the first quarter. Anticipate full year gross margins
in the mid 20%’s due to the continued expectation of elevated
transportation costs, partially offset by the benefit of higher net
pricing and accelerated efficiency initiatives.
- Forecast Adjusted EBITDA3 in the range of $27-32 million
reflecting higher than anticipated transportation costs in the
first quarter. The Company believes that the actions it is
undertaking in pricing and cost initiatives will enable it to
achieve its original Adjusted EBITDA expectations for the balance
of the year.
Footnotes:
(1) Adjusted EBITDA represents earnings before income,
taxes, depreciation, and amortization as adjusted for certain items
as set forth in the reconciliation table of U.S. GAAP to
non-GAAP information and is a measure calculated and presented on
the basis of methodologies other than in accordance with GAAP.
Please refer to the Use of Non-GAAP Financial Information herein
for further discussion and reconciliation of this measure to GAAP
measures.(2) Custom Research by The Vita Coco Company, IRI
Total US MULO+C 52-Weeks Ending 3/27/22. Numerator data as of
52-Weeks Ending 3/31/2022.(3) GAAP Net Income 2022 outlook is
not provided due to the inherent difficulty in quantifying certain
amounts due to a variety of factors including the unpredictability
in the movement in foreign currency rates, as well as future
charges or reversals outside of the normal course of
business.Conference Call and Webcast Details
The Vita Coco Company will host a conference call and webcast at
5:00 p.m. ET today to discuss these results. The conference call
can be accessed by dialing (800) 547-1866 or for international
callers by dialing (224) 619-3907, conference ID 9653839. A replay
of the conference call will be available through May 25, 2022 by
dialing (855) 859-2056 or for international callers by dialing
(404) 537-3406, conference ID 9653839. A slide presentation to
support the webcast, and the live audio webcast will be accessible
in the “Events” section of the Company’s Investor Relations website
at https://investors.thevitacococompany.com. An archived replay of
the webcast will be available shortly after the live event has
concluded.
About The Vita Coco Company
The Vita Coco Company was co-founded in 2004 by Chairman Michael
Kirban and Ira Liran. Pioneers in the functional beverage category,
The Vita Coco Company’s brands include the leading coconut water,
Vita Coco; clean energy drink Runa; sustainable enhanced water,
Ever & Ever; and protein-infused water, PWR LIFT. With its
ability to harness the power of people and plants, and balance
purpose and profit, The Vita Coco Company has created a modern
beverage platform built for current and future generations.
The company is a B Corp™ and is incorporated as a Public Benefit
Corporation.
ContactsInvestor: John Mills Managing Partner
646-277-1254 investors@thevitacococompany.com
Non-GAAP Financial Measures
In addition to disclosing results determined in accordance with
U.S. GAAP, the Company also discloses certain non-GAAP results of
operations, including, but not limited to, Adjusted EBITDA, that
include certain adjustments or exclude certain charges and gains
that are described in the reconciliation table of U.S. GAAP to
non-GAAP information provided at the end of this release. These
non-GAAP measures are a key metric used by management and our board
of directors to assess our financial performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance and
because we believe it is useful for investors to see the measures
that management uses to evaluate the Company. In addition, we
believe the presentation of these measures is useful to investors
for period-to-period comparisons of results as the items described
below in the reconciliation tables do not reflect ongoing operating
performance.
These measures are not in accordance with, or an alternative to,
U.S. GAAP, and may be different from non-GAAP measures used by
other companies. In addition, other companies, including companies
in our industry, may calculate such measures differently, which
reduces its usefulness as a comparative measure. Investors should
not rely on any single financial measure when evaluating our
business. This information should be considered as supplemental in
nature and is not meant as a substitute for our operating results
in accordance with U.S. GAAP. We recommend investors review the
U.S. GAAP financial measures included in this earnings release.
When viewed in conjunction with our U.S. GAAP results and the
accompanying reconciliations, we believe these non-GAAP measures
provide greater transparency and a more complete understanding of
factors affecting our business than U.S. GAAP measures alone.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including but not limited to,
statements regarding our future financial and operating
performance, including our GAAP and non-GAAP guidance, our
strategy, projected costs, prospects, expectations, plans,
objectives of management, supply chain predictions and expected net
sales and category share growth.
The forward-looking statements in this release are only
predictions. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Forward-looking statements involve a
number of risks, uncertainties or other factors beyond the
Company’s control. These factors include, but are not limited to,
those discussed under the caption “Risk Factors” in our Annual
Report on Form 10-K for the fiscal year ended on December 31, 2021
filed with the U.S. Securities and Exchange Commission ("SEC") on
March 14, 2022 and our other filings with the SEC as such factors
may be updated from time to time and which are accessible on the
SEC’s website at www.sec.gov and the Investor Relations page of our
website at www.vitacoco.com. Any forward-looking statements
contained in this press release speak only as of the date hereof
and accordingly undue reliance should not be placed on such
statements. We disclaim any obligation or undertaking to update or
revise any forward-looking statements contained in this press
release, whether as a result of new information, future events or
otherwise, other than to the extent required by applicable law.
Website Disclosure
We intend to use our websites, vitacoco.com and
investors.thevitacococompany.com, as a means for disclosing
material non-public information and for complying with the SEC's
Regulation FD and other disclosure obligations.
|
THE VITA COCO COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data) |
|
|
|
|
|
March 31,2022 |
|
December 31,2021 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
17,986 |
|
|
$ |
28,690 |
|
Accounts receivable, net of allowance of $1,128 at March 31,
2022, and $1,301 at December 31, 2021 |
|
57,084 |
|
|
|
47,195 |
|
Inventory |
|
64,595 |
|
|
|
75,360 |
|
Supplier advances |
|
1,387 |
|
|
|
1,170 |
|
Derivative assets |
|
6,242 |
|
|
|
126 |
|
Prepaid expenses and other current assets |
|
22,916 |
|
|
|
20,718 |
|
Total current assets |
|
170,210 |
|
|
|
173,259 |
|
Property and equipment,
net |
|
2,521 |
|
|
|
2,473 |
|
Goodwill |
|
7,791 |
|
|
|
7,791 |
|
Intangible assets, net |
|
7,629 |
|
|
|
7,934 |
|
Supplier advances |
|
5,473 |
|
|
|
2,808 |
|
Deferred tax assets, net |
|
1,238 |
|
|
|
1,265 |
|
Other assets |
|
3,466 |
|
|
|
1,954 |
|
Total assets |
|
198,328 |
|
|
|
197,484 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
|
21,522 |
|
|
|
28,338 |
|
Accrued expenses and other current liabilities |
|
35,672 |
|
|
|
42,399 |
|
Notes payable, current |
|
26 |
|
|
|
28 |
|
Derivative liabilities |
|
607 |
|
|
|
3,197 |
|
Total current liabilities |
|
57,827 |
|
|
|
73,962 |
|
Credit facility |
|
12,000 |
|
|
|
— |
|
Notes payable |
|
42 |
|
|
|
48 |
|
Other long-term
liabilities |
|
776 |
|
|
|
301 |
|
Total liabilities |
|
70,645 |
|
|
|
74,311 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value;
500,000,000 shares authorized; 61,791,427 and 61,764,582
shares issued |
|
|
|
|
|
|
|
at March 31, 2022 and December 31, 2021, respectively
55,585,227 and 55,558,382 shares outstanding at March 31, 2022
and December 31, 2021, respectively |
|
618 |
|
|
|
618 |
|
Additional paid-in
capital |
|
137,267 |
|
|
|
134,730 |
|
Retained earnings |
|
49,596 |
|
|
|
47,369 |
|
Accumulated other
comprehensive loss |
|
(870 |
) |
|
|
(616 |
) |
Treasury stock, 6,206,200
shares at cost as of March 31, 2022, and 6,206,200 shares at
cost as of |
|
|
|
|
|
|
|
December 31, 2021 |
|
(58,928 |
) |
|
|
(58,928 |
) |
Total stockholders’ equity attributable to The Vita Coco Company,
Inc. |
|
127,683 |
|
|
|
123,173 |
|
Total liabilities and stockholders’
equity |
$ |
198,328 |
|
|
$ |
197,484 |
|
|
|
|
|
|
|
|
|
THE VITA COCO COMPANY, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)(Amounts in thousands,
except for share and per share data) |
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Net sales |
|
$ |
96,448 |
|
|
$ |
75,450 |
|
Cost of goods sold |
|
|
77,385 |
|
|
|
51,366 |
|
Gross profit |
|
|
19,063 |
|
|
|
24,084 |
|
Operating expenses |
|
|
|
|
Selling, general and administrative |
|
|
24,801 |
|
|
|
19,778 |
|
Income (Loss) from
operations |
|
|
(5,738 |
) |
|
|
4,306 |
|
Other income (expense) |
|
|
|
|
Unrealized gain/(loss) on derivative instruments |
|
|
8,706 |
|
|
|
(1,355 |
) |
Foreign currency gain/(loss) |
|
|
(101 |
) |
|
|
(600 |
) |
Interest income |
|
|
7 |
|
|
|
35 |
|
Interest expense |
|
|
(27 |
) |
|
|
(79 |
) |
Total other income (expense) |
|
|
8,585 |
|
|
|
(1,999 |
) |
Income before income
taxes |
|
|
2,847 |
|
|
|
2,307 |
|
Income tax expense |
|
|
(620 |
) |
|
|
(667 |
) |
Net income |
|
|
2,227 |
|
|
|
1,640 |
|
Net income/(loss) attributable to noncontrolling interest |
|
|
— |
|
|
|
(5 |
) |
Net income attributable to The
Vita Coco Company, Inc. |
|
$ |
2,227 |
|
|
$ |
1,645 |
|
Net income attributable to The
Vita Coco Company, Inc. per common share |
|
|
|
|
Basic |
|
$ |
0.04 |
|
|
$ |
0.03 |
|
Diluted |
|
$ |
0.04 |
|
|
$ |
0.03 |
|
Weighted-average number of
common shares outstanding |
|
|
|
|
Basic |
|
|
55,561,896 |
|
|
|
53,811,092 |
|
Diluted |
|
|
55,700,388 |
|
|
|
54,138,192 |
|
|
|
|
|
|
|
|
|
|
THE VITA COCO COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (Amounts in thousands) |
|
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
2,227 |
|
|
$ |
1,640 |
|
Adjustments required to reconcile net income to cash flows from
operating activities: |
|
|
|
Depreciation and amortization |
|
470 |
|
|
|
525 |
|
Bad debt expense |
|
65 |
|
|
|
40 |
|
Unrealized (gain)/loss on derivative instruments |
|
(8,706 |
) |
|
|
1,355 |
|
Stock-based compensation |
|
2,386 |
|
|
|
487 |
|
Noncash lease expense |
|
258 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(10,186 |
) |
|
|
(13,065 |
) |
Inventory |
|
10,608 |
|
|
|
(10,138 |
) |
Prepaid expenses, net supplier advances, and other
assets |
|
(5,299 |
) |
|
|
(2,699 |
) |
Accounts payable, accrued expenses, and other
liabilities |
|
(14,371 |
) |
|
|
6,014 |
|
Net cash provided by (used in)
operating activities |
|
(22,548 |
) |
|
|
(15,841 |
) |
Cash flows from
investing activities: |
|
|
|
Cash paid for property and equipment |
|
(244 |
) |
|
|
(55 |
) |
Proceeds from sale of property and equipment |
|
— |
|
|
|
4 |
|
Net cash used in investing
activities |
|
(244 |
) |
|
|
(51 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from exercise of stock options/warrants |
|
152 |
|
|
|
9 |
|
Borrowings on credit facility |
|
12,000 |
|
|
|
7,000 |
|
Cash received (paid) on notes payable |
|
(8 |
) |
|
|
39 |
|
Cash paid to acquire treasury stock |
|
— |
|
|
|
(50,003 |
) |
Net cash used in financing
activities |
|
12,144 |
|
|
|
(42,955 |
) |
Effects of exchange rate
changes on cash and cash equivalents |
|
(56 |
) |
|
|
53 |
|
Net decrease in cash and cash
equivalents |
|
(10,704 |
) |
|
|
(58,794 |
) |
Cash and cash equivalents at
beginning of the period |
|
28,690 |
|
|
|
72,181 |
|
Cash and cash equivalents at
end of the period |
$ |
17,986 |
|
|
$ |
13,387 |
|
RECONCILIATION FROM GAAP NET INCOME
TO NON-GAAP ADJUSTED EBITDA |
|
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
(in
thousands) |
|
|
|
Net
income |
$ |
2,227 |
|
|
$ |
1,640 |
|
Depreciation and amortization |
|
470 |
|
|
|
525 |
|
Interest
income |
|
(7 |
) |
|
|
(35 |
) |
Interest
expense |
|
27 |
|
|
|
79 |
|
Income
tax expense |
|
620 |
|
|
|
667 |
|
EBITDA |
|
3,337 |
|
|
|
2,876 |
|
Stock-based compensation (a) |
|
2,386 |
|
|
|
487 |
|
Unrealized (gain)/loss on derivative instruments (b) |
|
(8,706 |
) |
|
|
1,355 |
|
Foreign
currency (gain)/loss (b) |
|
101 |
|
|
|
600 |
|
Other
adjustments (c) |
|
— |
|
|
|
504 |
|
Adjusted EBITDA |
$ |
(2,882 |
) |
|
$ |
5,822 |
|
(a) Non-cash charges related to stock-based compensation,
which vary from period to period depending on volume and vesting
timing of awards. We adjusted for these charges to facilitate
comparison from period to period.(b) Unrealized gains or
losses on derivative instruments and foreign currency gains or
losses are not considered in our evaluation of our ongoing
performance.(c) Reflects other charges inclusive of legal
costs and other non-recurring expenses mostly related to our public
company readiness preparation.
|
SUPPLEMENTAL INFORMATION |
|
NET SALES |
|
Three Months EndedMarch 31, |
(in
thousands) |
2022 |
|
2021 |
Americas
segment |
|
|
|
Vita Coco Coconut Water |
$ |
58,855 |
|
$ |
42,189 |
Private Label |
|
23,080 |
|
|
19,208 |
Other |
|
2,676 |
|
|
2,454 |
Subtotal |
|
84,611 |
|
|
63,851 |
International
segment |
|
|
|
Vita Coco Coconut Water |
|
8,349 |
|
|
6,489 |
Private Label |
|
2,765 |
|
|
2,922 |
Other |
|
723 |
|
|
2,188 |
Subtotal |
|
11,837 |
|
|
11,599 |
Total net sales |
$ |
96,448 |
|
$ |
75,450 |
|
COST OF GOODS SOLD & GROSS PROFIT |
|
Three Months EndedMarch 31, |
(in thousands) |
|
2022 |
|
|
|
2021 |
|
Cost of goods
sold |
|
|
|
Americas segment |
|
68,315 |
|
|
|
42,734 |
|
International segment |
|
9,070 |
|
|
|
8,632 |
|
Total cost of goods sold |
$ |
77,385 |
|
|
$ |
51,366 |
|
Gross
profit |
|
|
|
Americas segment |
|
16,296 |
|
|
|
21,117 |
|
International segment |
|
2,767 |
|
|
|
2,967 |
|
Total gross profit |
$ |
19,063 |
|
|
$ |
24,084 |
|
Gross
margin |
|
|
|
Americas segment |
|
19.3 |
% |
|
|
33.1 |
% |
International segment |
|
23.4 |
% |
|
|
25.6 |
% |
Consolidated |
|
19.8 |
% |
|
|
31.9 |
% |
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
VOLUME (CE) |
|
|
Three Months EndedMarch 31, |
(in thousands) |
|
2022 |
|
2021 |
Americas
segment |
|
|
|
|
Vita Coco Coconut Water |
|
6,295 |
|
4,661 |
Private Label |
|
2,730 |
|
2,260 |
Other |
|
366 |
|
255 |
Subtotal |
|
9,391 |
|
7,176 |
|
|
|
|
|
International
segment* |
|
|
|
|
Vita Coco Coconut Water |
|
1,206 |
|
998 |
Private Label |
|
413 |
|
388 |
Other |
|
13 |
|
113 |
Subtotal |
|
1,632 |
|
1,499 |
Total volume (CE) |
|
11,023 |
|
8,675 |
Note: A CE is a standard volume measure used by management which
is defined as a case of 12 bottles of 330ml liquid beverages or the
same liter volume of oil.
*International Other excludes minor volume that is treated as
zero CE
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