The Vita Coco Company Reports Fourth Quarter and Full Year 2022 Financial Results
The Vita Coco Company reported a 13% increase in net sales for 2022, reaching $428 million, primarily driven by an 18% growth in Vita Coco Coconut Water. The fourth quarter net sales grew by 6% to $92 million, slightly exceeding expectations. However, gross profit fell to $103 million, down from $113 million, due to rising transportation costs. The company recorded a net income of $8 million, down from $19 million the previous year. For 2023, guidance includes a net sales growth of 9-11% and an Adjusted EBITDA forecast of $52-$58 million, anticipating improvements in costs and margins as supply chain issues ease.
- Net sales increased by 13% to $428 million in 2022.
- Vita Coco Coconut Water grew by 18% in 2022.
- Fourth quarter Adjusted EBITDA improved to $4 million from $1 million year-over-year.
- 2023 guidance projects net sales growth of 9-11%, with improved gross margins expected.
- Gross profit decreased to $103 million in 2022 from $113 million due to transportation cost increases.
- Net income fell to $8 million in 2022 from $19 million the previous year, largely due to lower gross profit.
- Overall gross margin dropped to 24.2% in 2022 from 29.8% in 2021.
Full Year Net Sales Increased
Full Year Net Income of
For Fiscal Year 2023, Expect Significant Cost of Goods Improvements and Adjusted EBITDA2 between
NEW YORK, March 08, 2023 (GLOBE NEWSWIRE) -- 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 fourth quarter and full year ended December 31, 2022.
Fourth Quarter 2022 Highlights Compared to Prior Year
- Net sales grew
6% to$92 million , slightly exceeding expectations, driven by Vita Coco Coconut Water growth of4% - Gross profit was flat to prior year at
$22 million , or24% of net sales versus25% of net sales - Net loss attributable to shareholders was
$(3) million , or$(0.05) per diluted share, compared to a net loss attributable to shareholders of$(3) million , or$(0.06) per diluted share - Non-GAAP Adjusted EBITDA1 was
$4 million compared to$1 million
Full Year 2022 Highlights Compared to Prior Year
- Net sales grew
13% to$428 million driven by Vita Coco Coconut Water growth of18% - Gross profit decreased to
$103 million , or24% of net sales, from$113 million , or30% of net sales, with the decrease driven by higher year-over-year transportation costs - Net income attributable to shareholders was
$8 million , or$0.14 per diluted share, compared to$19 million , or$0.35 per diluted share - Non-GAAP Adjusted EBITDA1 was
$20 million compared to$37 million due primarily to higher transportation and ongoing incremental public company costs
Michael Kirban, the Company's Co-founder and Executive Chairman, stated, “I am very proud of our team's performance during a challenging supply chain environment in 2022, and I'm very excited that in early 2023 we are starting to see those challenges ease. I'm especially happy with our strong Vita Coco Coconut Water net revenue growth of
Martin Roper, the Company’s Chief Executive Officer, said, “We are pleased with our 2022 results. Gross margins for the quarter benefited from front line pricing actions during the year, but were impacted by temporary supply chain costs related to our inventory build. We have seen these inventory related expenses recede during the first months of 2023. By the end of the year we expect inventories to return to more normal levels. We are happy that our Vita Coco brand remains very healthy, and our key 2023 commercial initiatives that support our 2023 guidance are progressing positively. As a result of favorable trends on demand and costs, we intend to increase our investment in marketing and sales execution in to order to maintain our momentum.”
Fourth Quarter 2022 Consolidated Results
Net sales increased
Gross profit was
Selling, general and administrative expenses (“SG&A”) in the fourth quarter of 2022 were
Net loss attributable to shareholders was
Adjusted EBITDA1 for the fourth quarter of 2022 was
Full Year 2022 Consolidated Results
Net sales increased
Strong top line growth driven by the continued underlying strength of our Vita Coco brand was offset by increased transportation costs primarily due to global shipping cost pressures and increased domestic transportation costs, including congested ports and warehouses. As a result, gross profit decreased by
SG&A expenses increased by
Net income attributable to shareholders was
Adjusted EBITDA1 for the year ended 2022 was
Balance Sheet
As of December 31, 2022, the Company had cash and cash equivalents of
Fiscal Year 2023 Full Year Outlook
The Company is providing the following guidance:
- Expect net sales growth of approximately of 9
-11% compared to fiscal year 2022, with Vita Coco Coconut Water expected to grow mid-teens and Private Label net sales approximately flat. - Full year gross margin expected to be between
32% and34% , with first quarter expected to approach30% , showing significant improvement over 2022, and sequential improvement expected in the next two quarters, due primarily to improvement in transportation costs, with contributions from price and mix. - Higher full year SG&A expenses to support long term growth initiatives, build commercial capabilities, cover increased employee costs, and improve efficiencies with GAAP reported SG&A expenses growing ahead of net sales.
- Forecasting Adjusted EBITDA in the range of
$52 million to$58 million 2.
Uncertainty and instability of the current operating environment, global economies, and geopolitical landscape could affect this outlook and our future results.
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) GAAP Net Income 2023 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 8:30 a.m. ET today to discuss these results. To participate in the live earnings call and question and answer session, please register at https://register.vevent.com/register/BIa79870562b5d477d9bec9713d5ee646c and dial-in information will be provided directly to you. 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, while balancing purpose and profit, The Vita Coco Company has created a modern beverage platform built for current and future generations.
The company is incorporated as a Public Benefit Corporation in Delaware and is a Certified B Corporation™.
Contacts
Investor:
ICR, Inc.
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 Reports on Form 10-K, Quarterly Reports on Form 10-Q and our other filings with the U.S. Securities and Exchange Commission (“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.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
December 31, 2022 | December 31, 2021 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 19,629 | $ | 28,690 | |||
Accounts receivable, net of allowance of | 43,350 | 47,195 | |||||
Inventory | 84,115 | 75,360 | |||||
Supplier advances | 1,534 | 1,170 | |||||
Derivative assets | 3,606 | 126 | |||||
Asset held for sale | 503 | — | |||||
Prepaid expenses and other current assets | 22,181 | 20,718 | |||||
Total current assets | 174,918 | 173,259 | |||||
Property and equipment, net | 2,076 | 2,473 | |||||
Goodwill | 7,791 | 7,791 | |||||
Intangible assets, net | — | 7,934 | |||||
Supplier advances | 4,360 | 2,808 | |||||
Deferred tax assets, net | 4,256 | 1,265 | |||||
Right-of-Use Asset | 2,679 | — | |||||
Other assets | 1,677 | 1,954 | |||||
Total assets | $ | 197,757 | $ | 197,484 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 15,910 | $ | 28,338 | |||
Accrued expenses | 38,342 | 42,399 | |||||
Notes payable, current | 23 | 28 | |||||
Derivative liabilities | 71 | 3,197 | |||||
Total current liabilities | 54,346 | 73,962 | |||||
Credit facility | — | — | |||||
Notes payable | 25 | 48 | |||||
Other long-term liabilities | 2,293 | 301 | |||||
Total liabilities | $ | 56,664 | $ | 74,311 | |||
Stockholders’ equity: | |||||||
Common stock, | 622 | 618 | |||||
Additional paid-in capital | 145,210 | 134,730 | |||||
Retained earnings | 55,183 | 47,369 | |||||
Accumulated other comprehensive loss | (994 | ) | (616 | ) | |||
Treasury stock, 6,206,200 shares at cost as of December 31, 2022, and December 31, 2021 | (58,928 | ) | (58,928 | ) | |||
Total stockholders’ equity attributable to The Vita Coco Company, Inc. | 141,093 | 123,173 | |||||
Total liabilities and stockholders’ equity | $ | 197,757 | $ | 197,484 | |||
THE VITA COCO COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except for share and per share data)
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net sales | $ | 91,991 | $ | 86,584 | $ | 427,787 | $ | 379,513 | |||||||
Cost of goods sold | 69,558 | 64,997 | 324,426 | 266,365 | |||||||||||
Gross profit | 22,433 | 21,587 | 103,361 | 113,148 | |||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative | 27,288 | 26,662 | 100,306 | 88,559 | |||||||||||
Total operating expenses | 27,288 | 26,662 | 100,306 | 88,559 | |||||||||||
Income from operations | (4,855 | ) | (5,075 | ) | 3,055 | 24,589 | |||||||||
Other income (expense) | |||||||||||||||
Unrealized gain/(loss) on derivative instruments | 190 | 843 | 6,606 | 2,093 | |||||||||||
Foreign currency gain/(loss) | 1,895 | (75 | ) | 1,387 | (2,088 | ) | |||||||||
Loss on extinguishment of debt | — | (132 | ) | — | (132 | ) | |||||||||
Interest income | 21 | 23 | 51 | 127 | |||||||||||
Interest expense | (45 | ) | (41 | ) | (258 | ) | (360 | ) | |||||||
Total other income (expense) | 2,061 | 618 | 7,786 | (360 | ) | ||||||||||
Income before income taxes | (2,794 | ) | (4,457 | ) | 10,841 | 24,229 | |||||||||
Income tax expense | (16 | ) | 1,040 | (3,027 | ) | (5,237 | ) | ||||||||
Net income | $ | (2,810 | ) | $ | (3,417 | ) | $ | 7,814 | $ | 18,992 | |||||
Net income/(loss) attributable to noncontrolling interest | — | — | — | (23 | ) | ||||||||||
Net income attributable to The Vita Coco Company, Inc. | $ | (2,810 | ) | $ | (3,417 | ) | $ | 7,814 | $ | 19,015 | |||||
Net income attributable to The Vita Coco Company, Inc. per common share | |||||||||||||||
Basic | $ | (0.05 | ) | $ | (0.06 | ) | $ | 0.14 | $ | 0.35 | |||||
Diluted | $ | (0.05 | ) | $ | (0.06 | ) | $ | 0.14 | $ | 0.35 | |||||
Weighted-average number of common shares outstanding | |||||||||||||||
Basic | 55,951,237 | 54,963,697 | 55,732,619 | 53,689,910 | |||||||||||
Diluted | 56,405,035 | 55,521,024 | 56,123,661 | 54,186,121 | |||||||||||
THE VITA COCO COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Twelve Months ended December 31, | |||||||
2022 | 2021 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 7,814 | $ | 18,992 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,901 | 2,069 | |||||
(Gain)/loss on disposal of equipment | 1 | 112 | |||||
Bad debt expense | 2,641 | 76 | |||||
Unrealized (gain)/loss on derivative instruments | (6,606 | ) | (2,093 | ) | |||
Stock-based compensation | 7,384 | 3,380 | |||||
Impairment loss on assets held for sale | 619 | — | |||||
Impairment of intangible assets | 6,714 | — | |||||
Deferred tax expense/(benefit) | (3,081 | ) | (1,644 | ) | |||
Noncash lease expense | 1,058 | — | |||||
Loss on extinguishment of debt | — | 132 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 321 | (16,917 | ) | ||||
Inventory | (9,333 | ) | (43,501 | ) | |||
Prepaid expenses, net supplier advances, and other assets | (3,592 | ) | 2,725 | ||||
Accounts payable, accrued expenses, and other long-term liabilities | (16,776 | ) | 20,503 | ||||
Net cash provided by (used in) operating activities | (10,935 | ) | (16,166 | ) | |||
Cash flows from investing activities: | |||||||
Cash paid for property and equipment | (982 | ) | (557 | ) | |||
Proceeds from sale of property and equipment | — | — | |||||
Net cash used in investing activities | (982 | ) | (557 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and offering costs | — | 30,356 | |||||
Proceeds from exercise of stock options/warrants | 3,062 | 177 | |||||
Proceeds from settlement of loan to stockholder | — | 17,700 | |||||
Borrowings on credit facility | 22,000 | — | |||||
Repayments of borrowings on credit facility | (22,000 | ) | (25,000 | ) | |||
Proceeds from the term loan | — | 30,000 | |||||
Repayments of the term loan | — | (30,000 | ) | ||||
Cash received (paid) on notes payable | (28 | ) | 21 | ||||
Cash paid to acquire treasury stock | — | (50,003 | ) | ||||
Cash paid to acquire portion of non-controlling interest | — | (54 | ) | ||||
Net cash used in financing activities | 3,034 | (26,803 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents | (178 | ) | 35 | ||||
Net decrease in cash and cash equivalents | (9,061 | ) | (43,491 | ) | |||
Cash and cash equivalents at beginning of the period | 28,690 | 72,181 | |||||
Cash and cash equivalents at end of the period | $ | 19,629 | $ | 28,690 | |||
RECONCILIATION FROM GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Net income | $ | (2,810 | ) | $ | (3,417 | ) | $ | 7,814 | $ | 18,992 | |||||
Depreciation and amortization | 460 | 512 | 1,901 | 2,069 | |||||||||||
Interest income | (21 | ) | (23 | ) | (51 | ) | (127 | ) | |||||||
Interest expense | 45 | 41 | 258 | 360 | |||||||||||
Income tax expense | 16 | (1,040 | ) | 3,027 | 5,237 | ||||||||||
EBITDA | (2,310 | ) | (3,927 | ) | 12,949 | 26,531 | |||||||||
Stock-based compensation (a) | 1,727 | 1,739 | 7,384 | 3,380 | |||||||||||
Unrealized (gain)/loss on derivative instruments (b) | (190 | ) | (843 | ) | (6,606 | ) | (2,093 | ) | |||||||
Foreign currency (gain)/loss (b) | (1,895 | ) | 75 | (1,387 | ) | 2,088 | |||||||||
Loss on extinguishment of debt (c) | — | 132 | — | 132 | |||||||||||
Impairment of intangible assets (d) | 6,714 | — | 6,714 | — | |||||||||||
Other adjustments (e) | 3,424 | 1,240 | 6,824 | ||||||||||||
Adjusted EBITDA | $ | 4,046 | $ | 600 | $ | 20,294 | $ | 36,862 | |||||||
(a) Non-cash charges related to stock-based compensation, which vary from period to period depending on volume and vesting timing of awards and forfeitures. 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) Non-cash loss on extinguishment of debt related to the early pay down of the 2021 Term Loan with the IPO proceeds which we do not consider in our evaluation of ongoing performance.
(d) Non-cash intangible asset impairment charge of
(e) Reflects other charges inclusive of legal costs, an impairment loss related to assets held for sale, and other non-recurring expenses (including costs related to public company readiness preparation in 2021 and a 2021 two-year management incentive program structured differently from other regular employee compensation).
SUPPLEMENTAL INFORMATION
NET SALES | |||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
Americas segment | |||||||||||
Vita Coco Coconut Water | $ | 58,030 | $ | 55,628 | $ | 275,964 | $ | 231,858 | |||
Private Label | 19,760 | 14,182 | 88,173 | 80,639 | |||||||
Other | 1,932 | 3,148 | 9,485 | 11,394 | |||||||
Subtotal | $ | 79,722 | $ | 72,958 | $ | 373,622 | $ | 323,891 | |||
International segment | |||||||||||
Vita Coco Coconut Water | $ | 8,460 | $ | 8,193 | $ | 38,570 | $ | 34,639 | |||
Private Label | 3,334 | 4,359 | 12,855 | 14,007 | |||||||
Other | 475 | 1,074 | 2,740 | 6,976 | |||||||
Subtotal | $ | 12,268 | $ | 13,626 | $ | 54,165 | $ | 55,622 | |||
Total net sales | $ | 91,990 | $ | 86,584 | $ | 427,787 | $ | 379,513 |
COST OF GOODS SOLD & GROSS PROFIT | |||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Cost of goods sold | |||||||||||||||
Americas segment | $ | 57,515 | $ | 52,597 | $ | 278,130 | $ | 222,027 | |||||||
International segment | 12,042 | 12,400 | 46,296 | 44,338 | |||||||||||
Total cost of goods sold | $ | 69,557 | $ | 64,997 | $ | 324,426 | $ | 266,365 | |||||||
Gross profit | |||||||||||||||
Americas segment | $ | 22,207 | $ | 20,361 | $ | 95,492 | $ | 101,864 | |||||||
International segment | 226 | 1,226 | 7,869 | 11,284 | |||||||||||
Total gross profit | $ | 22,433 | $ | 21,587 | $ | 103,361 | $ | 113,148 | |||||||
Gross margin | |||||||||||||||
Americas segment | 27.9 | % | 27.9 | % | 25.6 | % | 31.5 | % | |||||||
International segment | 1.8 | % | 9.0 | % | 14.5 | % | 20.3 | % | |||||||
Consolidated | 24.4 | % | 24.9 | % | 24.2 | % | 29.8 | % |
VOLUME (CE) | |||||||
Three Months Ended December 31, | Year Ended December 31, | ||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||
Americas segment | |||||||
Vita Coco Coconut Water | 6,189 | 5,614 | 29,458 | 25,096 | |||
Private Label | 1,850 | 1,649 | 9,063 | 9,292 | |||
Other | 156 | 363 | 1,248 | 1,194 | |||
Subtotal | 8,195 | 7,626 | 39,769 | 35,582 | |||
International segment* | |||||||
Vita Coco Coconut Water | 1,216 | 1,166 | 5,628 | 5,056 | |||
Private Label | 457 | 555 | 1,783 | 1,883 | |||
Other | 7 | 18 | 46 | 231 | |||
Subtotal | 1,680 | 1,739 | 7,457 | 7,170 | |||
Total volume (CE) | 9,875 | 9,365 | 47,226 | 42,752 | |||
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
FAQ
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