The Vita Coco Company, Inc.

Good day and welcome to the Vitacoco Company fourth quarter 2024 earnings conference call. At this time, all participants will be in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. John Mills, Managing Partner with ICR. Please go ahead.

Thank you, and welcome to the Vitacoco Company fourth quarter 2024 and full year 2024 earnings results conference call. Today's call is being recorded. With us are Mr. Mike Curbin, Executive Chairman, Martin Roper, Chief Executive Officer, and Corey Baker, Chief Financial Officer. By now, everyone should have access to the company's fourth 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's 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 release and other filings with the SDC 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 today, we will use some non-GAAP financial measures as we describe our business performance. Our SEC filings as well as the earnings press release and supplementary earnings presentation provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures and are available on our website as well. And with that, it is my pleasure to now turn the call over to Mr. Mike Kerbin, our co-founder and executive chairman.

Thanks, John, and good morning, everyone. Thank you for joining us today to discuss our fourth quarter and full year 2024 financial results and our expectations for our performance in calendar year 2025. I want to start by thanking all of our colleagues across the globe for our continued strong performance and for their commitment to the Vitacoco Company and to our mission of creating ethical, sustainable, better-for-you beverages that uplift our communities and do right by our planet. Coconut water remains one of the fastest growing categories in the beverage aisle, delivering double-digit volume growth in our major markets, which has resulted in 2024 being another record year for the category and for our company in full-year net sales, net income, and adjusted EBITDA. We believe this reflects the success of our initiatives to drive growth in the category through growing households and increasing occasions. In the U.S. in 2024, we estimate that the coconut water category grew in household adoptions by 9% and household buy rate by over 7% according to numerator, reflecting very strong consumer interest in the category, which we believe is related to favorable demographic trends and increasing interest in health and wellness, desire for clean ingredients, and growing demand for functional beverages. For the full year of 2024, according to Cercana, the Vitacoco brand grew 9% in retail dollars in the U.S. and grew 21% in the U.K., while the category grew 14% and 19% respectively. As we've discussed, we were hampered in the summer by significant inventory shortages due to limited ocean container availability, which limited our third quarter shipments and negatively affected our service levels. We believe this resulted in the slowdown in branded scan growth in the third quarter, which has since strongly rebounded as inventory levels have improved. Both our depletion trends and our scan trends accelerated during the fourth quarter, with U.S. Zircona showing 9% branded retail dollar growth, even though we chose not to repeat a major club promotion from 2023. This acceleration has continued and even accelerated year-to-date, with U.S. branded scan growth of 20% for the last 13-week period ending 2016-2025. This strong momentum and much stronger inventory position than last year leads me to be very optimistic for branded growth in 2025. In addition to the very healthy Vitacoco retail growth, we've seen strong scan growth for private label coconut water. During the fourth quarter, we saw our private label coconut water shipment trends improve as we put the supply chain challenges of last summer behind us. I believe that our private label business remains a strategically important aspect of our business from a supply chain perspective, and that it allows us to benefit more fully from our category growth initiatives. In 2024, our commercial initiatives, including emphasis behind Vitacoco Multipacks, Vitacoco Farmers Organic, and Vitacoco Juice, proved to be strong growth drivers. I expect these initiatives to continue to drive growth into 2025. One highlight was that VitaCoco juice continued to gain share at retail with U.S. scans increasing 42% for the full year, outgrowing the canned segment of the category by 2x. The introduction of our VitaCoco coconut water one liter pack into a key convenience store chain has also been incredibly successful. and we believe that it is now one of the highest performing items in that retailer's juice store. We believe the fact that consumers are showing a desire for larger packages for on-the-go consumption is an encouraging sign for our long-term growth trajectory. Vitacoco Treats, a refreshingly sweet and delicious coconut milk-based beverage, is beginning to roll out nationally with very strong retailer distribution commitments and the addition of a new flavor orange and cream to provide a better billboard and more options for consumers in search of a midday treat. We're excited about the initial reception for Vitacoco treats and for the future of innovative coconut milk based beverages, which create an indulgent occasion that could offer us yet another path for long term growth. In 2025, we'll continue our occasion based marketing to tap into the versatility of coconut water, drive adoption among new consumers and give existing ones more reasons to stock up on vitacoco our initiatives will continue to focus on key occasions like smoothies cocktails and greens amongst others but new for 2025 we expect to place more emphasis on active hydration attempting to position vitacoco as the go-to alternative to traditional sport drinks thanks to its naturally occurring electrolytes As consumers increasingly prioritize health and clean ingredients, I believe that we are well positioned to tap into this growing trend to unlock our next phase of consumer growth. Our international business is very healthy, with strong performance in Europe, led by the UK and Germany. In Germany, the category has grown over 40% over the last year, according to Nielsen, and we are now the leading branded coconut water at three times the size of our closest branded competitor. We believe the growth that we're seeing in our more mature markets like the US and UK is indicative of the long-term potential in our less developed markets. We intend to step up our investment in international markets where we have a strong brand position and can benefit from driving category growth. And if we're successful, we believe international will become a larger part of our growth story as these markets are significantly underdeveloped relative to the US. I'm also pleased to share that we recently extended our Curing Dr. Pepper distribution agreement. This contract extension will allow us to continue to leverage KDP's strong distribution footprint throughout the U.S. and is a testament to a great partnership and relationship that is 15 years strong. Our priorities for growth remain unchanged, continuing to add households, expanding occasions, acceleration of our international businesses, and innovation to drive new occasions and attract new customers. I believe that coconut water is becoming a household staple across the globe, and we're very excited and proud to be the leading brand in our primary markets and to help drive this growth. Based on the acceleration of the category seen late in 2024 and year to date, and our significantly stronger inventory and additional capacity arriving this year, I believe that we will have an exciting 2025. And now I'll turn the call over to our Chief Executive Officer, Martin Roper.