The Vita Coco Company, Inc.

hello and welcome to the third quarter 2021 by the coco company earnings conference call my name is charlie and i will be coordinating your call today as a reminder due to the timing of this earnings call which is within 25 days after the company's ipo will not be taking questions on today's call i will now hand the call over to john mills of icr

Thank you, and welcome to the Vitacoco Company third quarter 2021 earnings results conference call. Today's call is being recorded. With us today are Mr. Mike Curbin, co-chief executive officer and chairman, Martin Roper, co-chief executive officer, and Kevin Bemusa, chief financial officer of the Vitacoco Company. By now, everyone should have access to the company's third quarter earnings press release issued today after market close. This information is available on the investor relations section of the Vitacoco Company's website at investors.thevitacococompany.com. Before we begin, please note that all the financial information presented on today's call is unaudited. Certain comments made on this call, including forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings of the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. The FCC filings as well as the earnings press release providing reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are all available on our website. Also, due to the timing of the required quiet period related to our recent IPO, we will not be taking questions on today's call from analysts. And now, I will turn the call over to Mr. Mike Kerbin Chairman and Co-Chief Executive Officer.

Thank you, John. Hello, everyone. We're very excited to share our third quarter results on our first earnings call as a publicly traded company. On October 21st, we began trading on NASDAQ under the ticker symbol COCO, C-O-C-O. Becoming a public company is a huge milestone, but the opportunity to provide this moving forward is what I'm most excited about. On today's call, I'll provide an overview of our business and reiterate the key reasons why we believe the Vitacoco Company is uniquely positioned for long-term growth. I'll then turn the call over to our co-CEO, Martin Roper, who will briefly review our third quarter business performance as well as our multiple growth initiatives and supply chain position, and then to our CFO, Kevin Ben-Moussa, who will discuss our third quarter financial results in more detail and provide full-year 2021 guidance. For a little background, we built the Vitacoco Company into what we believe is one of the leading healthy beverage companies today. We believe that by listening to this generation of consumers and working in partnership with them to build brands, over time we can build one of the most impactful beverage companies in the world. Today's and future generations demand more from the brands they support. Consumers want brands that deliver on health and functionality as well as support companies that care about purpose just as they care about profits. They want better products from better companies, and that's what we strive to deliver every day. As we think about the opportunities that lay ahead, we're focusing our attention on two key objectives. First and foremost, we will aim to continue driving growth of the coconut water category and strive to make coconut water a household staple in the U.S., China, and Europe, just as it is in the tropical world. While doing this, we'll aim to continue gaining share on a consistent basis in the category. Our second key objective will be to continue nurturing and developing new healthy beverage brands, that can drive growth over time and offer consumers the type of healthy alternatives to conventional brands that they're looking for. Over the past 24 months, led by the Vitacoco brand, the growth of the coconut water category has continued to accelerate as we bring in new consumers and continue to take share within the category. In the past 52 weeks alone, the Vitacoco brand has grown market share from 42% to 47% as measured by U.S. IRI multi-outlet ending October 3rd, 2021. As disclosed in our S-1, we believe that 66% of the growth that came into the category is from new consumers to the category. Our new initiatives, such as Vitacoco Coconut Milk, Vitacoco Hydration Drink Mix, Runa Clean Energy, Ever and Ever, and Power Lift, our protein-infused fitness drink, are all in the early stages of market launch. We plan to continue to roll out these brands in a focused manner that allows us to evaluate consumers' reaction and adoption before deciding on how to accelerate distribution and availability. In addition to driving significant top-line growth and profitability, we believe in democratizing health and wellness while using business as a force for good to drive positive impact in our communities. Earlier this year, we elected to become a public benefit corporation, embedding purpose into our corporate culture. This enables us to balance the impact on our broader stakeholders as well as maximizing shareholder value in our decision-making. We source the vast majority of our coconut water from developing tropical countries, and we're working hard every day to create ethical, sustainable, and better-for-you products that aim to not only uplift the communities that we operate in, but also do right by our planet. We recently hired a head of ESG and look forward to sharing more on these efforts in the future. It's great to have an aggressive vision for growth, but it's as important to ensure you're building the right platform from which to execute your strategy. At the Vitacoco Company, we believe we're succeeding in this area. We currently have a leading flagship brand with number one market share, a growing category, consumer tailwinds, new distribution opportunities, And our primary offering meets one of the most important aspects of health, hydration. We've assembled a team that excels at brand building, innovation, and generating loyalty with the next generation of consumers. We have an industry-renowned sales team and a proven senior leadership team that believes strongly in social responsibility and our asset-light global supply chain is easily scalable. In addition, thanks to many years of preparation, We believe that we are well positioned to leverage our infrastructure and grow our core branded and private label businesses while continuing to add to our portfolio through a combination of innovation and potentially M&A. We believe that our commercial platform is positioned to generate future growth and improved performance. We're confident because we have authentic brands and a track record of innovation. Under our flagship brand, Vitacoco, we continue to add new flavors and formats that we believe can increase our market share as well as drive the expansion of the coconut water category. We've also recently introduced new multi-serve and multi-pack formats for shelf expansion that we hope build loyalty and increase consumption with our core consumers. We're building strong retail relationships with omni-channel access and flexible route market, which we believe is a competitive advantage for us. We have a diversified sales channel mix, including food, drug, mass convenience, club, and e-commerce. Our strategic and flexible distribution network in the U S enabled us to meet available geographic and retail opportunities and include a strong national DSD network direct to warehouse and broad line distributor distributor relationships for specialty channels. Over the last two years, We've made the appropriate investments in our business that we believe will drive long-term profitable growth. We have expanded our national account team, increased category management, improved our sales and operational planning processes, and enhanced our product and brand innovation team in order to deliver on consumers' needs. We're currently experiencing significant inflation to our ocean freight and domestic logistics costs for transporting coconut water. We believe that the right strategy is to pursue share growth while implementing prudent pricing actions to recover some of the costs. We believe the global transportation cost pressures will ultimately recede and that when they do, will emerge in a significantly stronger competitive and financial position with great consumer and retailer relationships. As we embark on our journey as a public company, I'd like to thank the most important asset of our company, which is our employees. Their dedication, desire, and fortitude have been exceptional during the past few years, and we're instrumental to the success of our IPO. I appreciate all they do for the Vitacoco Company, and in an effort to have them share in the company's ongoing success, we made an equity grant to all full-time employees at the time of the IPO so that our employees have the opportunity to participate as shareholders in the company. I would also like to thank our new and existing shareholders for their investment and trust, including our distributor partners at Keurig Dr. Pepper, who, through a subsidiary, effective with the IPO, became one of our shareholders in addition to already being one of our distributors. I would say to our new shareholders that we believe we are a financially sound company that has many growth opportunities ahead. We're focused on accelerating the Vitacoco Coconut Water brand and category. We believe we have access to capacity which will support long-term growth, a deep pipeline of coconut-related innovation to increase our presence in retail channels, and new brand innovations to enter and win share in other beverage categories by offering healthy alternatives to conventional, artificial options that exist today. We believe that coconut water is trading consumers up and that velocity trends should support increased shelf space from retailers in 2022. Over 50% of coconut water growth appears to be coming from shoppers shifting away from other beverage categories, which together with strong category growth and high Vitacoco brand velocity means that we have a good story for our retail partners, which we hope will garner more shelf space for our brand and category. While we are pleased with everything we've accomplished thus far, we're not resting on our laurels, and we are excited about the opportunities that lie ahead. Now, it is my pleasure to introduce you to our co-CEO, Martin Roper. Martin joined our company over two years ago after stepping down from his position as Chief Executive Officer of the Boston Beer Company in 2018. He held that position for over 17 years, where he oversaw Boston beer's growth and diversification into the multi-brand platform that it is today. Over the last two years, Martin has worked with our management team and board to take our company to the next level. He has positioned us well to pursue our vision to become the leading independent pure play natural beverage portfolio company.