The Vita Coco Company, Inc.

Hello and welcome to the Vitacoco Company's first quarter 2022 earnings conference call. My name is Liz and I'll be coordinating your call today. Following prepared remarks, we will open the call for your questions with instructions to be given at that time. I'd now like to hand the call over to John Mills with ICR.

Thank you and welcome to the VitaCoco Company first quarter 2022 earnings results conference call. Today's call is being recorded. With us are Mr. Mike Kerbin, Executive Chairman, Martin Roper, Chief Executive Officer, and Kevin Bermusa, Chief Financial Officer of the VitaCoco Company. By now, everyone should have access to the company's first quarter earnings release issued earlier today. This information is available on the investor relations section of the Vitacoco Company's website at investors.thevitacococompany.com. Also on the website, there is an accompanying presentation of our commercial and financial performance results. Certain comments made on this call include 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 releases and other filings in the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, during the call, we will use some non-GAAP financial measures as we describe the business performance. The SEC filings, as well as the earnings press release and supplementary earnings presentation, providing reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are available on our website as well. And with that, it is my pleasure to turn the call over to Mike.

Thanks, John, and good afternoon, everyone. Thank you for joining us today to discuss our first quarter 2022 financial results and full year guidance. I'll begin this afternoon's call by reiterating our long-term growth strategy and discussing our leading position in the fast-growing coconut water and coconut water adjacent categories. Martin Roper, our CEO, will then discuss the details of our top-line growth drivers, provide an update on our supply chain, and outline our pricing plans and initiatives. Kevin Ben-Moussa, our CFO, will finish with a more detailed discussion on the first quarter results and our updated outlook for the year. To start, I want to sincerely thank all of our colleagues all over the world for their continued commitment to the Vitacoco Company and their dedication to our mission of creating ethical, sustainable, better-for-you beverages that uplift our communities and do right by our planet. Our first quarter was another quarter of strong top-line growth, validating that our strategic initiatives are working. Net sales grew 28% year-over-year to $96 million in the quarter, with our flagship Vitacoco coconut water brand as the main driver of growth, increasing 38% over the prior year period. The overall coconut water category continues to show robust growth, and according to IRI, is growing at a rate of 13% in U.S. measured channels, with Vitacoco coconut water driving most of that growth and taking incremental share of the category. Today, we enjoy undisputed category leadership with 50% share, which is up 7% from a year ago, according to IRI measured tracked channel UOC. This rate of growth often leads me to getting asked the question, why over the past couple of years has Vitacook been growing so fast? So I thought today it would make sense to break down our growth and share with you where it's coming from and why we believe it will continue well into the future. For starters, coconut beverages are part of the changing taste of America, driven in large part by demand from multicultural and specifically Hispanic and Asian American consumers. We believe these consumer groups have demonstrated a preference for natural and functional beverages, and in many cases, an affinity for the coconut. To provide a sense of scale of the popularity of the coconut as an ingredient in beverages, it is a segment of $2.8 billion in size in America. which is bigger than oat and almond combined, and has been outgrowing the total beverage segment by 200 basis points, according to Spins. We are one of the most recognized coconut beverage brands in the world and find ourselves in a unique position due to our asset-light route to market, as well as our supply chain, which ties profit to purpose, to benefit from the opportunity to source from a very large beverage marketplace. Over the years, we've found that our products actively source from the $11 billion juice category, while at the same time, we offer a natural source of electrolytes, allowing us to source from the $10 billion isotonic category. As the leading innovators in the coconut beverage category, we have a track record of translating these opportunities into category growth, market share, and increased household penetration. As an example, since we launched the Vitacoco Press line three years ago, we have grown that innovation to 69% ACV while delivering 17% of our total branded volume and adding an entirely new consumer to our base. As a matter of fact, 16% of our consumers only buy Vitacoco Press. As a beverage pioneer, we plan to continue to take a leading role in driving innovation in the coconut water and coconut water adjacent categories. This year, we're accelerating our efforts to source from the juice category with our Vitacoco juice cans launched in regional tea stores this quarter. On top of that, we're building on our strength in the hydration segment by rolling out our coconut drink mix powders at select national retailers and expanding our distribution of Vitacoco coconut milk. Meanwhile, we're pushing growth in shopper baskets with our multi-pack expansion in food and mass channel. According to Numerator, Vitacoco's household penetration currently stands at 11% on a 52-week rolling basis, That's approximately 170 basis points over the last year, meaning that we've added about 2.4 million households versus the prior year. While we're extremely proud of the progress we've made, we believe our coconut beverages are still in the early days of becoming a household staple and that there's meaningful headroom as we continue to add households and consumption occasions. Putting it all together, we remain confident in our ability to deliver on our long-term algorithm of mid-teens net sales growth. Additionally, we remain committed to our goal of being the industry's better beverage company, one which focuses on providing healthier alternatives to conventional beverage brands and one that strives to do better for the world in which we live. Our strong brand momentum, combined with our commercial execution over the last 12 months, has resulted in increased space and distribution for our brands this year. Based on this brand health, a strong demand environment, and our market-leading position, we are now comfortable executing the first frontline price increase taken by our company in many years. And we believe that by the end of this year, the planned price increases should, on an annualized basis for 2023, fully offset the current unusual cost levels, which Martin will elaborate on further. Before I turn it over to Martin, I want to briefly mention the change in management titles announced last week. Martin and I have decided to transition from our titles of co-CEOs to Martin as CEO and myself as executive chairman. Throughout the IPO process and in the months following our IPO, there have been many questions around what does co-CEOs mean, who does what, etc., etc. We both felt that the best way to clarify our roles was to change our titles, and that's what we've done. Martin and I have been managing the business in partnership for the last three years, and neither that partnership nor the structure of it will be changing in any way. Martin will continue to run the day-to-day operations of the business while I continue to focus on the areas where I'm most passionate and can drive shareholder value, which are creating long-term strategic growth opportunities for our business, expanding our relationships with suppliers and retailers, growing our social impact work, and driving our entrepreneurial culture. With that, I want to reiterate the excitement and fire I feel inside as we continue to drive growth with our core brand, bring new healthy alternative brands to market, and ultimately become the leading diversified non-alcoholic beverage portfolios of the future. And now I'll turn the call over to our Chief Executive Officer, Martin Roper.