The Vita Coco Company, Inc. (COCO) 30 Oct 242024 Q3 Earnings call transcript

Hello, and welcome to the Vita Coco Company's Third Quarter 2024 Earnings Conference Call. My name is Stephen. I'll be coordinating your call today.

Following prepared remarks, we will open the call to your questions with instructions to be given at that time. I'll now hand the call over to Alex Liscombe with ICR.

to Conference Coco Call. welcome XXXX Third and Results Earnings you, the Company Vita Quarter Thank Today's is call being recorded. With us are Mr. Chairman; Financial Mike Corey Executive Martin Executive Chief Kirban, Officer; Baker, Chief Officer. Roper, and access By now, release earlier today. the third quarter issued to everyone earnings company's have should website is Company's investors.thevitacococompany.com. information Vita the available Relations on section This the of Investor Coco at Also website, there our performance financial and on is of the results. commercial an accompanying presentation materially the safe Private forward-looking include those Litigation in Certain statements. events comments beliefs several harbor which uncertainties could to from subject XXXX.  These provisions to this concerning risks subject of based current that of described made Act cause statements, the are on Securities differ forward-looking are Reform call these future statements results expectations actual are and on forward-looking and management's and to expressed other results today's financial Please for could more call, detailed refer measures to factors today.  Also, some during differ of business describe releases to as we cause performance. forward-looking materially implied a the will non-GAAP the press that with SEC use risk those in the any or discussion statements actual made we the filings and from

retail size Mike data noted. pleasure approximately our have prior that, and set filings as than label supplementary presentation programs Kirban, financial the our reconciliations earnings MULO+ well investor press script updated earnings new is U.S. to Co-Founder the turn and And references GAAP well.  Additionally, non-GAAP of most the in my release with please measures call reported Executive are the of deck retailers and reported the All directly the the data, and on otherwise scanner available results retail as private larger with category over which exhibits reflect expanded Chairman. including provide company the to coverage comparable SEC and offers a XX% Our measures Circana's of as been to to website more now using data note that quarter, greater within began set. it XX% expanded coverage the larger landscape, unless

and all discuss XXXX everyone. the results start expectations you Alex, XXXX. joining good third quarter performance and today for of strong thanking continued our by for to want that to I communities beverages the commitment performance Thanks, to for major healthy Coco priorities double-digit across financial brand categories for category dollars better-for-you driving our in to Thank of balance the sustainable, in globe through morning, and the Company us of XX% of in colleagues our our scans grew our creating the to do and and in our mission our Vita ethical, the uplift beverage fastest grew Coco coconut coconut right water the aisle, growing remains of the September, one end U.K. X% retail according in our in Circana, Year-to-date and delivering retail by markets growth in visible of growth. planet.  Our where the water are U.S. Vita the their

slowdown quarter in ocean discussed, we to earlier this a which resulted container by were inventory summer, availability we scan due the previously during shortages As limited in significant hampered growth.

and X, weathering distributors, our are than for sign fill that incredible our Slide the team, consumer to quickly deck, we whole starting for this stronger a X category an products.  For a investor Our retail last believe demand and and our in the and better demand we that is did partners weeks, visible ever. recovering and quickly products this branded scans as job rebounded, are our as storm, our

strong private growth, we've retail branded label strong coconut seen to addition demand water. In for

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remains can where continued are in we markets In Xx recovery size has a of brand in which October. continued performance XX% availability our over over we grown branded by Europe encouraged from the U.K. late benefit the We seeing invest September that led into the supply last growth. in Germany, strong international volatility are and now chain, our closest the inventory position competitor. in the the healthy category started to and driving leading we global continue Despite in has coconut Nielsen, to water the with we according intend category Our international business and year by strong at and to Germany. have

over for do, XXXX will call the have XXXX. and our that work I'll exciting in to to lot retailer While warehouses excited Executive start strong on we I'm and Officer, levels I a Chief shelves finish I Roper. be returning what a now product still expect a to to and of distributor believe soon, And will turn very normal Martin

quarter this momentum excited good to able raise another I'm the be for based XXXX. to morning, expect I a good to and report finish our to continue guidance on into strong year. and expectations to Mike, Thanks, everyone.

on Let me and X costs XX% XXXX earnings June, last some by that stocks same saw obtained May, in we July, This the had availability the first which the shortfall the at significant reduced period were the already for increases approximately only shelves. strong of our on start call, we expectations ocean our and for actual in growth, we discussed unusually safety freight to last requirements, low ocean also containers. approximately and market, providing saw which months.  As of at we in container the container during performance containers obtain in able retailer XX% had This year. price were X-month half our and to against significantly in due squeezed inventory been of color those distributors

prior obtained and months we at which than such Fortunately, significantly had in July. in inventory September, allowed to start us high to months, up although in larger months. product early built had obtained August previous that period, prices, and in the to than continued Container improving volumes we X August, May, containers, to pull at saw in unusually greater September, containers move availability of availability in we June, the market that more X and supplier the

scan late container weekly our inventory of to lags X shipments to the September, weeks, transit to recover saw or August.  While exceed most on match retail container drop to in-market performance. customers items slowly also times pricing our from key on early shipments X to in the began and highs on a due of our shipments We started impact basis

At we retailers strike that seen have at August of a couple availability still Coast our warehouses both flow port container We continue at but of distributors to levels, on at inventories weeks, in remain favorably some this constricted backlog October, source early the containers Coast into and slowly that is and in similar October optimum below September. The SKUs. East believe particularly East and for time, recovering.

We expect purchases current improve gradually the through on if their trajectory. continue end the the of consumer to year situation

third water and coupled third third our our label our limitations and Given growth shipment private private private as X% Coco the we quarter in with limited meet our performance. which due the entering shipments. retailer offset with first coconut to Water demand ability during The label in container to exceeded significantly quarter communicated previously Vita This, impeded Net coconut business label with private of shortages, are the weakness the sales private oil our was label inventory partners' resulted of private inventory, significantly levels quarter weakness we pleased demand we down on depleted. the with had quarter. expectations, in that in half most the in label by the decrease stock being operated were our Coconut quarter label

we scan growth the brand the is our trends, difficult triangulate lost private and expected slowdown on estimate of to we demand. XX% during due to of to label inability between it sales net analysis based that fulfill the X% customer to and While relative quarter for

retail. cadence, the We early As we during signs decrease demand in Mike which that reflects the deck, our Coco, believe rate shipments trends is retail for growth not third scan inventory at of growth recovery sales our the for are is visible the which reflective and inventory that product investor challenges TDP activity. seen we improvement private reflects quarter of days, rebuild ample XX of a retail during promotional saw and overall consumer in The TDPs, we and this our promotional U.S. In customer we impact there combination of believe it also the should as Vita and quarter, inventory, retail in shelves. the inventory of highlighted products we've trends in stronger and ensure that period. mentioned, of last restore the the branded some also we challenges is our believe on scan label and reduction of see

this and dollar during participate a our decisions due decision constraints. to significantly inventory year in in the a customer was the This an not relative included last branded associated data. a branded club to pricing in promotional made and major Additionally, activity to [indiscernible] expanded the resulted significant in fall, sales increase promotion reduced decline quarter new in

are Although these promotional resulted for net beneficial they margin, scans lower gross likely quarter. to decisions sales in and the in aggregate

aforementioned costs, from impact believe to gross third reduction expensive cost X goods us helped side, P&L. through activity, not year-to-date to freight with year as at margin that From with line commit and freight currently our continuing levels high costs long-term a our ocean ocean still We that therefore, increased pressure to rates are finished fixed-rate contracts. to in any averages, The some excluding margins healthy, second down ocean unusually flowing expectations. transportation relative were quarter the first but are quarter together ocean costs. our in gross we Our are offset of long-term investment to reduced versus marketing promotional of in quarters the more of the the began started the

we strong capacity such have commitments Chief exploring capacity growth. year However, to chain the growth for for If of In to at additional long-term long-term we floating fixed-rate such competitive from will our that saw as the greater constraints of that attempt events this rates make we contracts offers for algorithm over category call and year. Financial confidence for sales are turn and in see us guidance supply the the our into summer. have our insulate brand sense Officer. to we willing had fixed-rate to growth, supportive we're to would indicator than enter we a provide us, net Vita our in this Corey inventory I we full branded With production to that, agreements. growth we raising and Based and is on transit Baker, adjusted trends, added be XXXX XXXX the positive We and capacity believe Coco EBITDA. category anticipation flexibility

I outlook on our Thanks, update good results. I will for full an you will additional morning, quarter and some provide then XXXX with year. the Martin, the third everyone. provide now financial details on

decreased Coco third $XX net growth Coco private X%. sales basis, to decreased $X of Vita within net driven quarter Coconut out increase Water reduced and million X% million, supply on offset net as the price/mix saw Vita key net Americas, segment to label indicated. million, For Coconut Vita X% XX% label the the million label that private by impact X% partially while a transition to we private had saw coconut previously private volume Coco $XX benefit. oil a the On year-over-year sales XXXX, increased Water Coconut by label the by water sales Water a X% of of declines $XXX or and XX%, we relationship SKUs of

oil label transition. due private a XX%, While by coconut volume declined XX% in XX% sales and driven decrease the price/mix to a reduction

XX% $X water were freight percentage label remained million This down sales a approximately up International costs, For On basis, versus mentioned. ocean XXXX, transition with on label the gross prior third a segment we XX%, the million, saw was Private the at XXX growth coconut Vita year XX% very period. strong higher quarter On previously XX%, despite on basis out as our margins offset points Water label effects strong supply reported of by markets. and impacted quarterly shipments. reduction consolidated and from pricing our sales coconut challenges gross was declined mixed to our ocean freight costs, from net of the QX products. label Coconut $XX oil margin The private in XXXX. of gross across resulted better partially private in quarter growth branded XX% private higher due profit the down net the relationship Coco where basis,

operating Moving expenses. on to

to by was of million The see year-on-year X% profit. as $X.XX in spending and adjusted in Net $XX attributable offset for We to the or supply. spending at loss third product gain from quarter improved million reduced to million. decreased or quarter the Net versus marketing inventory increase we benefited we share derivatives decreased a gross the costs our to investments unrealized income $XX for primarily SG&A SG&A primarily XXXX per XXXX share year. diluted prior partially shareholders an the disciplined lower FX was costs, quarter year retail. prior compared in by a $XX diluted $X.XX would per expect for light driven as reduction our Third income

employees rate represents mix pretax last third to related the This and jurisdictional Our year. profits was versus nondeductible quarter XX% The compared year was impact effective prior XXXX year. the driven XX% of XX% the year a in year-to-date covered versus XX% ETR expense quarter. this of by the of for to increase the tax higher compensation last

sales, reconciled due measure, to previously million by our defined partially of $XX spending. of EBITDA, net which or XX.X% XXXX. SG&A or Third adjusted decrease quarter down is million primarily our XX.X% The XXXX release, discussed, net gross year-on-year non-GAAP $XX press lower and was in performance the was in offset profit sales from

our balance cash and Turning sheet flow. to

increase increase of due to partially on increase to million $XX million position net and debt timing an $XX December we as cash the customer September to cash the of shares $XX increase no driven and offset $XX cash repurchase by XX, XXXX. million. $XXX XXXX, total by facility receivable, hand As revolving year-to-date, working XX, of capital million our had payments and of $XXX of compared increase in at million. year-to-date of of of under inventory million income credit due which and valued debt was The of working accounts The strong in is no was a capital the the

inventory our Our and highs and continued off July, levels our but transit inventory seen of $XX the finished recovery remain goods $XX expect trends as end on million. QX come low more full our expected container Ocean the adjusted on to and year. Based in EBITDA unusually assumes increased of ending of markets. costs million gross and full-year availability net now from reflects marketplace fluid. million, adjusted the our the performance resulted we have current inventory brand, to the our of health the This sales year QX inventory performance, million improving and XX% with sales our we Vita unusually EBITDA. to of global the net balance best freight see million in at $XX for $XXX margins and in began and our on a in in the are levels, confidence year-to-date ocean through raising between Coco XX%, improvement guidance chain assumptions supply We guidance category the delivering $XXX for to

Our QX in the per per the be balance CE a of of impact costs rate is hit increased will QX ocean basis our half the latest costs the XX% over $XX Approximately with these of equivalent half equivalent. freight estimate on in performance. of expected that case these approximately second first year impact elevated costs transportation rate to the million

remain expect year in in SG&A full down XXXX anticipate our balance earlier. mentioned the with potential We support to to healthy that to spend the to buyback investment QX our will growth, through business full emerge, cash spending further balance and allowing as the of activity. last restore share for us continue investing opportunities SG&A disciplined in slightly don't long-term we any M&A year, year marketing We to expect flat continue fund

XXX,XXX company aggregate remarks. purchased his share to turn with our an to Finally, of for I'd $XX.XX. repurchase an as And today, back million that, call has XXX,XXX price value $XX.X shares, Martin closing shares average to the the bringing for total of of at like

reiterate the category. Corey. our I'd To Vita the platform, beverage ability the a Thank strength long-term and Vita and confidence you, brand like Coco the Company, in of our our close, of to water potential to coconut better Coco build

are environment to growth. and initiatives confident ability drive about are to in the key We our navigate current our excited

we solid thank We Company. brands Thank category to for joining sheet, domestically today, for we both will a us your strong you prepared questions. balance you have our Vita That your third and and are brand and the and quarter Coco in now concludes interest well-positioned growth, and drive take remarks, internationally. and

Goldman the [Operator Instructions] of Our first Sachs. line question Herzog Bonnie comes of from

growth EBITDA a even acceleration, on which greater big suggests acceleration which implies QX, new certainly then had and on growth QX, in your leverage. a question which in guidance, XX% top-line I around is greater a

little a next as the you Now for as container further could setup the this, maybe year I of you each availability. in but of terms drivers just touched on hoping on know expand well

Bonnie. Sure,

in And inventory. the of we on recovery at the we are deck, recovery the see growth, seeing we're of retail as talked about investor So starting to script product. shelf in

flow backward and to got there's warehouses. the if the a up a flow fill backrooms fill we So -- got shelves the distributor to we've and

going And to will QX, the in leverage through year strong on flow to result early then will that's growth the in depending into -- next of will growth higher the volume EBITDA balance but year. guidance. freight the of we finish and So very see ocean deliver we the year as support inventory that deliver

And because still importantly, think during I sort as of catch the remains that obviously, lagged we up And scans, that hopefully in the digits. healthy, quarter. to the can going category you double to growing see we're

your the of to freight going and think long-term I second averages today, end quarter can Ocean way forward. part of freight rates related you still, was factor above question above historical X were in last year the at are let's what first the of indexes a they say, highly and ocean Obviously, the as XXXX. are uncertain. in see still

we So headwind sticky. if these remain ocean a still have rates freight

just quick then Okay. clarification. one Fair And enough.

EBITDA on in that or understand just up back I'm think you spend, meaning assume, out, spending So imagine what do the of the efficiencies. to guess bit trying or as pullback on containers QX? QX, marketing called you more And on if with I step leverage to on do I maybe also, a I greater you get little getting it. pull that's you the you just leverage has do in availability part foresee you'll SG&A

inventory. inventory, still the that the inventory and guidance demand. not still meeting they then SKUs who understand provided. still with comment demand I There talk us, right, and but fully we tight have are therefore, I for. customer but are use upset the are the think customers how There about just still with don't -- dealing we are consumer situation, can we on Corey SG&A we're on I'll We're word

will will are significant sure the we obviously that's quarter. things given but demand that really cetera. about We will balance it But it. I'm quarter. inventory slowly, consumer know thinking And do, or any we're build how we not through to some et do have expect improve don't there whether because that we activity that, committed marketing how turn to the of we're monitor respond the quickly and will the in on we Obviously, to

So just the And appropriately. going it and I'll it manage on to we're Corey comment monitor guidance. let

slightly SG&A, year a not the guidance, on There's change a Bonnie, SG&A down large we're the flat in we as year-to-date. referenced we're basis, full and down to in

from So gross as strong we've it's pressures freight recover by top-line where assumed margin huge offset we the guidance. ocean much It's change not the our on inventory, been related very in very side. a to

I'll us also water Okay. pass That's this helpful. constraints label you the I one each. final just for primarily business? just help impact quick supply in also impacted if could it the private was the branded your one maybe for Maybe And I on. Or to just then on then understand wanted me, business? -- quarter an issue your and understand

Yes.

across was of our it So label our support private were would needed business. I branded to we obtain uniformly factories to that unable and say that most both we containers that our

customers there's little were our things label than obviously, of function factory year, was private benefited it declines, that Now in entering certainly, the And the were label better the by faster timing think, and which a a was grown quarter I the those geographic growth and bit by uniformly because more, then when location of first across maybe expected, expected very label our private and little than business. that. lane our our specific a had and was have exasperated somewhat from we that's and branded we of hit, inventories happened, half differences what tight private and but

the And reported problems. board so position entering ocean freight more the results us uniformly, the that really affected our quarter. the reflect caused some across But containers and inventory

from the question of next Our Chris Securities. line with Wells Carey comes Fargo

it's about -- on but QX go wanted of and I QX, ask to the margins kind about forward. gross really like

wide -- that see you just incredibly it's could QX. it's for range So,

of or importantly, going this the on going margin next as really recovery for comment kind SG&A, year gross high QX entail the seems just exit back on worst be view rate into think be This to margin then trough? of half the like that. maybe what you're on into gross year certainly the And I -- half. and full into Should your you're at at this as is comments given does start year? going you you're margin looking maybe can we some more of end gross your going not point a to the a to in of front be able get is sort to quarter sequential time we seeing that next you're range,

contextualize as as to profit what So, really QX trying you objectives talking means for front just to look we're low it into next how the go on in and year half of you year. next deliver

So, and bit a Martin the margins. incredible ocean the Chris, I'll jump a the good hit guidance fluidity line. in and combination freight can talk flow script impact the is in of to freight little top will which in cost market, and There of of QX, amount We in. that ocean amount container indicated an gross

has strong a that If you down. coming quite -- in a would you follow seen you do, know the have July index, spike spike which been I

rolls a So, forward that as we've in talked the quarter. about past,

So is hitting that spike in QX.

So, we're on year, but guidance going on market. in freight, go least variables in near point would of lots next kind as down still a high of we ocean into at the of QX not term year, you in coming but the see next the providing

are November the of more to the were rates will indexes of happen. long-term were index experiencing going again, or point are to we're historical averages. the don't Yes. Cory's that closer to interpret that the October, predict and And And the we start the if in what's very to we look of Are 'XX current rates seeing you're loosely And that and hard just what's the looking still sort double rates ocean right? September, November, would of rates. it's orders in those freight going But on. to refer of we obviously, to averages. October, say experiencing we maybe and the speaking, so, would back we But forward, you experiencing the 'XX, QX, point, indexes make to magnitude hit the is historical you seen in being that end

those we assume our the continue lap periods reported. we be are, will as the affected rates negatively as certainly, you So if margins rates, gross they versus current

so how where long -- how dependent and then stay they And rates are. on obviously, the for, that on long is goes

to that U.S., said, we're why you the And lanes the have lanes. rates point the has to totally they've just Now think, East in and the not on to been Coast. with Europe August -- all Asia rates different isn't by dropped week Asia sure first totally faster dropping Europe dropping different I been why, are We're of much like of some than the first in that our real index and differently, West since, ways there is good we then place. we sure refer other have spiked Brazil any that. the which behaves can and to not

we QX. sort time largely Those the first than referred higher July, it, that last continue, paid of rates. and a peak looking to early The Corey at that on were and be negative this we're year. in margins. And this August hit to rates the if paying would gross year quarter impact will May, certainly paid than So, higher we were in June, we're that

the sort suppose, when really great for way to don't going even think tomorrow. modeling since week to reported external this get this have that's or rates obviously, So about I is the week it. happen next visibility of, market, But what's an we those

there, you be a get mean, QX. If of in have where year on sense Okay. you Then And full gross one we're hundreds so margin? points just then Because if of basis might I follow-up, queue. -- range of landing the do the into not, back the profit can don't QX in about I'll talking in the objectives flexibility would if that have if raising is be to you'd go margin there that the such today? that want which on about you SG&A is you're you fine much variability just you that structure delivering the gross talk

Yes.

So, Chris, that within range to which us deliver think a flexibility of we the we range. also gives provided EBITDA,

the within we margin manage volatility in range. especially line, but ton, this year. right, gross of there's So, not the always EBITDA within some think but flexibility, point the that we SG&A, there's a can

much So going guided in pretty we've be to. that's to with what line

comes Eric Morgan Serotta the from question next Our Stanley. line from of

the kind momentum of terms thinking granular top year of you can get about In next bit line, continue that you've had. of to you're the in a terms how little and plans more

same, You've categories granular doing more little here. how households, about NARTD But of bit real volume this other expanding more you could and done the than going of occasions, only just job sort certainly and in one growth great a experiencing the that's of of a you in XXXX beyond? keep kind get

Yes.

like it's going. one, So, we how

very so water that And of keep our per of it's do coconut next How that? the do of on in so, starts that buy priorities more is share occasion-driven maintain seem And be accelerate occasions. fair the that doing the do maintain otherwise our would growing it category, more of last going, to can And longer and/or expected. we expanding that same, our But which mentioned how get slowing it we're increasing is be right? volumetrically to great. planning are year. How households, doesn't any for an be side, obviously, maintain than increasing double digit form. people endeavoring healthy, It by for it in the for availability North you would perhaps has velocity household, if America in been quite can sort grounding we the five with we And and or velocity shape all years we it much and messaging.

actually couple We're We we're pushing tested the a sort of mass retailer key still and semi-permanent with still we treats We're really temporary summer more and changing opportunities -- -- promotional a not because So, of pushing food one what of there's multipacks key on that. one retailers, a or like we see. this any into there. basis.

offering retailer. play So, we're it beverages early too see we like at will interesting like of jump retailers. to whether certainly, saw an do But sort the the results we in to tell we'd at that the coconut in. retailers milk-based it's more And opportunity that. We to

of couple couple food push year, We certain of demographic canned retailers. It's continue product. to the and well where mass retailers performed our to at retailers expanded a works. it juice a we This

coconut to it's velocity a stores like months, to trying of bit, X like this opportunity so core then have the been year X enhance store plans the store water, upgrade for sort And maybe in finally, business, that. And for but sticking, the now we're to to offering to real us, the also and the right? that. in it retailer, trying liter surprised and we in on expand -- convenience convenience convenience in Vita of and Coco we're time, which the think surprised it's execute little for a for store convenience where was I there's looks first try going of So, we're in liter XX the a sort Cure,

goal health is firm, haven't sort plans but final until that and that's commit our healthy, aren't But anything. it starts retailers we heard is we're to grow can. to category maintain So our of with really I from and we the and the extent thinking, share can't share we what And maintain certainly to yet. we or back all do, think

opposite and those When reason and of categories is fraction one we've other of And is to category build is think there's infancy. I the believe mainstreaming category its as and and it, big size continue it's so at picture, any of the in a that many other categories to we just opportunity We granular, it can't. the build that this. why some out before, larger add to Cranberry get see we the I juice just juice an and times day we on. think don't Orange talked the like you about of really look size we If could of this

the think quite that building be in something we're large could we think term. long we of days a early So, category

Great. a And lot of then just of following I margin. in housekeeping already. terms know on questions on that up gross

promotions. You that pulled you out guys called on back

of margins and volume of for? this of the some magnitude that of of like recovery this normalizing you things you're that and I gross or hoping from quarter an that, think year that price mix impact Can this club the guess, expect on called that that out had next you the sort promotion the idea of I promos and didn't kind order you offsetting do year give the reduced year. us kind you

specific if getting uncomfortable major if a I seen little have Historically, doing granular. were say times leave club big were major size. it's it your correlate promotion offsetting the this And and a we'll and right? margin checks, pretty we're can store store, last the you the you into at store store gross quarter, last doing ocean twice, a I year, X a have you club seen And at I So, that this just of customer. So, you data get -- would material was think What that would rather checks, is and over not year, than you'd points. major and X then that it's details pretty us think freight. like benefited that it in

line Blair. William Our of comes next Jon from Anderson question the of

about been despite Year-to-date, maybe Could the some the expectations of been business that a you've looking business Americas. then part or forward little you there as from through growth a initiatives year? and are your country-level are plans some has that what in what driving just the of internationally international well? for this slower the bit forward talk powering trends you're seeing And

Sure.

been and category, started really has for the we've X.X as again, the So, U.K. and business It's as mainstream now, a business really quite expanding long done seeing a the been households the are accelerate we're it's operating so. to or U.K. last in time years well.

grown significantly. from impact that's So nice as quite a a base solid had it's

build more of about as becoming becoming some We consumer ones around one years that category don't really the And like is it think the spoke Western really global. that was we like simple to Germany it markets see entered there. And take European several in is coconut fact I that a strategy, start more the in very and of The we're we And Europe. ago at with look guy markets. replicate but to other quickly. we these we off other water now. Western global, markets, past, awareness is and started a the we first it pretty seeing just and started to model build few one can't why we

large and focus a one U.K. or markets, other to we'd then So some to these of other entering as catch like expand, us. that's continue markets for these as European quickly. see we're Western see the larger big than day Germany be quite up

but So for along talked market Asia, that's there, a We've well. us. restructuring decline and the about coming focus we're route to at some looking that's real in

significant for see these markets, in of be business the opportunity to that and the category. category and have we believe all opportunity this build And we build ones global quite the so, we're that to the

quarter in -- earnings That's looks helpful. some performance. you third On it quarter quarterly stats the third 'XX around ACV deck, Slide share 'XX. XX versus

velocity location constraints growth going kind that forms. opposed And/or Just the a plateaued of some of and speaking, across number kind Is do as that it point, experienced average this a about forward, that of items ACV is function forward? have ACV year? broadly of main you've story is levels maybe like of supply one, of more location -- from going to looks some think per the here this you the function product per well, at

Yes, great question. a it's

not were we ACV the to think would hope numbers I report. as large as perhaps

of scan as it on at impact sort inventory numbers say you direct -- X, there you hard TDPs shelf It's on TDP We a the Slide we just don't at a report basis. think still Obviously, distribution space potential and the daily If there. isn't space it illustration on it to look the but is the it's the see the reported it's was retail. lost of an product see loss. that, because you shelf numbers we obviously, on causation,

that. So I think it's more

on I of in about the those growth we the bit our progress weren't think But liked. ACV given good volume as impact our the certainly, impact inventory of we coverage maybe key quarter, and little both our moving needle initiatives. feel this ACV pretty in momentum good would initiatives, and and as a have the

Okay. for Last me. one

online you're As in for business. for just additional the XXXX, long-term branded kind the business? think kind And growth I thinking coming the bring algorithm and you in of capacity 'XX, for incremental and the about you expecting to the capacity Can referenced production to you and about 'XX? you branded long-term side how online remind how 'XX you referenced then algo support think 'XX much Martin, of when us confidence of are

Yes.

long-term or for algorithm goal So, like branded our mid-teens. growth is

that year internationally growing Maybe that faster America growth this North long-term with little sort and get earlier low can believe how based a there long We that category grows in we North needed. we faster, So capacity and in think contributes international we right? on it. entered later algorithm. about a I we in growing we that's the of term more teens America thought think

potentially of fully. had as some losing year the would And ran private had we coconut of pretty everything less result Given discussions last label optimal large than and water be we which a had about a customer. capacity

then on like on squeezing cost the to and both this XX% of summer. container and this by a running been year. like of availability the that's have at And not we side freight it run I where sort we capacity, side, to was XX% think normally obviously impacted

March, So tight clearly add back that this to to year on we communicated particularly do were continue our We're growth to get to expected we that and XX%, rate. been trying we think, going back has April, so. that's Obviously, in, capacity, XX%. I based

in we're we're So with slower the for there think or it. And signaling place comfortable to all grow whether we be quarter XX% add time support are this that And that able XX%, planning And we and I putting actually that planning capacity think function about growth in will does of to we and merely get we're confident talked frame. faster. because capacity right? a the category I

been So it's there? year, been challenge -- capacity the hasn't availability, really this it's ocean freight just about

there's then if let's the running, you any react. don't you're when XXs capacity, the disruption, think I of have say, to in flexibility

our -- would think we're this And while to with happy don't all normally year, we how and I how ran in we supplier very relationships we the capacity like have system. spare so

going we're and try to So back get that. to

James from of comes Salera the of question next Stephens. Our line

rates unit cost if a how the unit has on give because on your just split on I handful you any look elevated North and And inventory. on -- prepared -- basis, a the much quarter-over-quarter. like versus questions dollar in on is Can I maybe quarter-over-quarter? you more that's in additional presumably balance got a American inventory some a color international? think at is whenever you've because it think I up containers like offer If basis, a touched wanted XX% to this inventory inventory I available. the ask up can Martin, remarks, sheet But higher you a

water. and So the as don't underlying the on you need Jim, details driver, primary really it's the

inventory positive over So we the a summer reach. sign just didn't as that It the we've coming. is that production view had it

million quarter-on-quarter. So it up is $XX

a into it's from number, So big markets. transit but Asia operating it's in the

it's Okay. And of it you we XQ, going to XQ. then quite say improve I be that the is safe guess will while not in through, end follow to where that inventory wanted if at

probably and first in should of period half XXXX, we So one build outpace XQ shipments then both should inventory 'XX? the still some such in incremental consumption half that see in

inventory I necessarily on that sheet, think available to of balance if not sort sense. ship, of but the makes true that's So our of our inventory total true

attain right to, able at September. in to So on QX, of an the amount end we unusually and have alluded large because of Cory containers the were of the water as now, August number we

on water of catch will So levels those good know, ship again, don't -- QX. end numbers dynamics be means keep means on so maybe end our to it sort right? the we So for -- move is is inventory to what as demand more to we can't it but here depends really isn't the year. it end struggling into our And all we're are up, better, in that's containers market And that flows still normal modeling. keep But because that we on up, the by but out of the to of not don't but hopefully, we water. those market available and is. expect And hopefully, to return the it how are would most that amount and where fast the

squeeze if I promotion. maybe Okay. And just then could helpful. the in That's one more on

with of levels. the that promo guys you it is Or And called a that that in promo is first kind would spot, 'XX? mess other possible if year of it better on? next potentially this the basically, to you on seasonal? you out so be the back could inventory that just that the half of kind Or stuff have and inventory in missed of club of You Is run be will forgo cadence had year? just something that does you it because going

X carrying runs a frequent but meet their particular X this order off run that in want months sake, they promos the inventory be that it Again, demand, to would we're on to to might something. like more whatever, need like we because planning or suppose, say, I we call So chance quarterly it And periodically, it's partner, retailer a let's who for not is to right? opportunity. large argument's very

no, be up 'XX the is to unexpectedly, to the potential with hope slot agreed run. joint time We to a 'XX. in said, we incremental we But to that answer look, an support this. be and would same we would received And just can't It for on, your certainly pop foolish slots we going time them in to it unlikely engage was So considered was it's which to planning timings. we And 'XX what be and on discussion. right? in question what saw would we

Lauriers line Group. question Capital comes Des Craig-Hallum next from Eric of of the Our

First dynamics. just another on one for me, question international

we about for the a both the UK German markets then of inning ago. terms what we think How in away mentioned you very And markets years how very years there guess, stages Western from European you Germany and are are to than should think impact? prospects compared other markets started in European the a just markets, wondering UK of, as ahead. I U.S.? here? being other and Western a to further think Or quarters along of in and years strong. significant are Should of others obviously, few Just perhaps few some So having beginning other Germany bit sort Western that European a remaining

Yes.

is UK So think developed. I quite

developed think distribution consumption adding the the and is is is so in consumer that's the growing And UK, growth of Consumer developed. distribution per quite and I lot the but in there, UK. quite a

a the a because other is we've just other think we little of awareness happening faster markets, -- As the some level over I And on category consumer foundation. other global markets, been days large where the if an so European about months, at from the last Western developing you is think laying level. we've markets these those XX XX a look just of to been everything countries, large

an a see years we have these starting impact they few of so potentially would than quicker have And markets to more ago.

next the will So and as And of international we're opportunity. they growth the an impact have excited we more years, the more P&L start to couple that about on of the quicker. over develop think

last just question for then And me.

Just label in are kind private sales rate we stronger quarter-over-quarter replenishing QX. zooming on that a take of Or private sort levels it the expect there's revenue a inventories guess, inventory? to increasing similar bit a assume of in should inventory versus growth to label just branded at fair replenish? to, and both acceleration of branded of to tighter Is I thus, in and label kind in longer expected levels. sales rebound inventory Obviously, due private

a yet, of whole of is certain transit of at what locations. depends on mentioned of and which transit that's times, least model. because on say I are to bunch some the in times would unusually produced What the not them we private long It Q&A is one really happens which which haven't label things, hard

so And it all those on lanes. depends

for prioritizing would how don't. anything. of relative some QX, that our involve put I production to And all think is certainly I or board. out recovery relative label across inventory in We're we in exactly would that but private of hope customers the would trends not to saw how So We're plays shipments trying the take care we hopefully it. I to brand, recovery

the Our Lavery next Michael of question of Piper comes line from Sandler.

the had seem you can guess, maintain to growth your the position showed softness do to did I period of just there? the that rest X, you're if availability. better a and Slide deceleration inventory in would at inventory the What rate you headwinds. that them differently help in outperformed looking the understand, you attributing us the Just where it category obviously, category the put

So one category the the at on slowdown obviously, our we but old XX% don't have pull share XX% would set, great share, data down. visibility,

saw. what arrangements we on category the them But quarter, to see some what's degree things to SKUs to the of down. more that's like So some the them impossible looks saw, retailers entering initially our side. either of starting inventory we Obviously, branded period on had struggle of competitors us It time this seen would pulling the whether should to they they are. the or supplying say saw of to when end private you're their towards have similar I the it's to label know what

So you're that. see to starting

us. inventory. started they starts fact as think hunch And it they And very and have started with with better of be, up. clear, I show hunch flowed my a and would is quickly so then opposed And we low, unusually to the for probably some same it we to inventories it's through as issues, as suffered been

flex that on a for also be how you're as help then implications year, next the and same availability makes like long-term that how quite you the looking been understand little rate any some it a does That's I also difference? better, longer-term not at that bit, cost exactly how maybe almost And contract. much be? Can options mentioned but haven't understand that and -- helpful you or us love as seems a But you sense. to more might of might touched and what guess I'd secure that could be contracts works doing availability the too, impact you just

Yes.

thought or private the that lane, fixed we When guaranteed don't and with know sensible capacity. to capacity, some sort rates for at entering least price of the or while was So [indiscernible] had of we deal the the still contracts how commitments we stopped obviously, label on how a that XX% they we crazy, agreements contracts. either into on preserve trying competitors, it and fixed side went supply, rates approach. branded in, right, locked XX%,

we rolled, in didn't I met, of it's period, the that were June, to think May, commitments. some the July some those while get and of were say fair commitments them

what's firmer.  And as can XX%, we So we're commitments, cetera. lanes. discussions penalties, the with of there we the penalties, we more these if are make the can those how downside, for commit capacity than to we've had these as talking also the commitments what's should on carriers et Obviously, internally whether roll to XX%

So on rates, those also and just the those that we're discussions, to there more doesn't inventory think, current the rate probably X to having we're market so months at I to But And unusually raising we commitments get X carriers, agreements. If fixed-rate talking with because merely the doesn't to, all they're high. to think the of SKUs. plan squeeze on take are we're trying build happen. months, still key get about we're levels, relationships potential capacity We're it happen maybe still through overnight. actually inventory to agreements will carriers normal to indicate, trying trying in firmer

that about into entering So we're not them. excited

thinking about So of that's how sort we're it.

sense try Okay. on label. private Yes. us but down Can quickly the quarter XQ how is And sense a course, the of of in oil more too any not significantly, much then, volumes were you of to us give from and volume decline? X Can ex modestly, the sort significantly? the then versus up the of just understand give just oil headwinds to you discontinuation inventory

be it to little it think relates to would as customer, reluctant that quantify a We're we unfair to one relationship. that Yes. and

and you then last I what we QX just to think sort back said that be. I when right? QX business, customer's quantified how we And into the all year in what would might point it oil business that's of losing to and

QX. we to them think ship to continue oil I importantly, through

that QX water customers. that lap if reflects a then number to But you as And other next year. will then, is bit that to oil our starting label we relates a at So little of business coconut drag. QX look shipments, number with until private it largely

private a see that's QX, availability did side. coconut the of baseline. private we inventory, of And So the on label label which is in what primarily then to of revenue you related water sort

sort what we the it. I it's said that's think So how we're single number unwilling would And just because quantify a to about beyond of customer. yes,

No. Yes, we moving can and math, a the quite lumpy kind there's of but few it's obviously parts. do

about oil. trying be in you some maybe shipped mentioned to on there? just you talk call-outs we're just would timing going sense, what the get to what could XQ, to to of XQ trying or that you now think just a think be if history of against how So pacing any to of about how kind you'd model

So a couple of things, Michael.

volume referenced is than XX% to on I label. the in volume because private decrease prepared back, First, as much And in more driven a about, go we've my remarks, the by talked the of the water and oil weight price.

customer. the label of in private the very post only give that in QX that so the There's financials. To oil was QX. should And little bulk oil sold

of Spillane Bryan the comes of question next Our America. line from Bank of

some on X And I availability. to with just One Vita at There's all. other on. topics tariffs us guess... the guys is should all I third, and you of the this be and if visibility boats is wanted freight give Coco we color Spiked, considering

Is Coco ready-to-drink maybe stands, your the Vita of it alcohol? give now that on can So the of of one, first as Vita on we year. think into the kind into potential brand Coco extendable really you kind next Just think is? where now Spiked, you Michael, just brand what thoughts us kind it's

alcohol ago dollars a helped was around what a kickoff spent Yes. of there it, to communication think great X of a on No, and and large It water. almost mixing quite our and partners' concept marketing terms coconut was us, part it coconut now, this, our few we coconut this done and push, was X marketing We and years really marketing the did our it we usage we in since. for become and last days. a that years is coupled over large spirits. bit cocktail We've marketing of about on-premise water of quite push sales that think and water communication driving a occasion seen us, cocktails growth quite a these mixing large we've and obviously with bit a spiked

has version deal, the actual it The think incredibly been successful. work. The ready-to-drink not Vita a really occasion Coco of to product, can't about a we're usage not crowded, this is it So that. off spirits this very licensing excited Vita and with was been category that get Spiked incredibly say successful. an Coco incredible been This but helps and It hasn't not concept success, us one has ground. we

success. successful, has been So think us, we itself but not for been huge product it's a the

more come to having and more actually with potential than actually mixer, chance base a it a as getting to there bartenders approach, there for craft is ready-to-drink reboot a So a mixer a is behind the cocktails go it rather a as line? thought to

a mocktail for more we said, That's exactly what successful become big the show that's more think and believe usage in quite starting we've and it been bars more it, And now, to for focus Coco. done, team And and it's I and up occasion it's and menus more with I like And organization. and a against cocktail we've menus. growing. a we Vita big on have

absolutely. yes, So

as And probably you and freight rates But you talk today, about. And more to lot discussion then been Marty, why there's than thinking that moved of think, sure have a like up at the thing little I way not about just seems we're boats all a I mentioned the guess would whole bit have have. might earlier, some rates point you're shrouded, quite guess. they I

I that into retailers' guess of put sort product about it plans caveat with pause as an for to mind, you get merchandising still just because your trying we're promotions of any lean year, in thinking of guess, or sort or things uncertainty? I some So are we're to with next of around having kind of to understanding marketing willingness merchandising that dealing programs if availability. and

more that next return to to we think I hope promotional year, normal be cadence. able we'll So

lot long-term the business by assumptions view result during more rich Our a that carriers to as their a of to plan. being COVID. very freight ocean profits the on of long-term is There's reasonable for capacity averages us be built seem

the relates primary impact recent it and been of profitability the have the us But rate like short that that expects seems everyone enrich than to to it looks that to term. other spike the carriers. As be to affecting other of customers sure

that's term, time, in it's taking the Obviously, look in we we'll thinking do, than long-term to cover if you'll for the have rates about including see permanent. the pricing to think short So drop, in at sort don't expect our At Europe to we what why. that. high, than how to rates And planning, as it we if we're point remain European it. have the current U.S. to the the rates U.S. rates to but continue dropped rates bet the the can't on to We know to the to drop, faster continue of indexes, more

So whatever build plans potentially to taking we're price. going including closely year monitoring for and us trying to react give it's to flexibility something is next that on, some

around looking say and cost availability next fair of it as the is we're So is now more year? lack that than to visibility right it is into

clearly mentioned, gotten compared better remains issue on. and up put back to we've we much of and That much to, of an a price a less is Yes. much and us. and a and couple levels a thing, we we're months, now and tough where year was in elevated but coming less building gotten us compared Martin through Availability back short-term weathered it, is and a situation, us historical lasted of has but messed it, becoming were like inventory position. an The into ago, for better issue getting availability less feel already

Okay.

demand Really, you merchandise. to don't you're the filling versus around I to year consumer is to some back your margin think, perfect, want able product right, be, volatility, trade-off more I the while like but be service is orders and of And And to costs. be. be margin freight in prioritize going and to it's the to question going not want there's if word to because might next what holding demand. So mouth, the customers' have going put

Yes.

growth cost and I long-term And again, resolve trying think should itself. is category interest. we're maintain that consumer on our very to the focused view side

at last tariffs, the on been news just because cycle. the it's And one, topical least in just Okay. or

that terms of are in how that? your event or that you the there's just tariff, So I know, blanket you'd about handle thinking anything contingencies don't thoughts in a are about just what

mean, there's effect, anything And watch take it. bit into think now. likely comes would But coconut operate yes, would We the right really tariff, tariff a a price we differently. we not on business the if would I or take coconut that we price. we're If planning

it Yes, we the would to market. many have obviously, affect, take move into reason a And and very other able that would would to categories. justifiable we price, be

Robert Instructions] of from comes line Ottenstein Evercore. question Our of [Operator next the

Two questions.

that big hearing shuffling shelf we're their First, year. pretty Walmart of Target doing aisles beverage next and space and are

space? then at of you in more there, about share the second little expect coconut of than And wondering going of that how others, commercial more can we obviously, Powerlift could you So water be, expect And saw a question a [indiscernible] to to more your that whether be? I'm to category gain the how next plans excitement whether of do that context, Overall, space big push attention you to if kind a sense bit fair gain shelf lot area. gain big space, that's talk is the the get cocon to year? particularly of for about shelf and

Yes.

space, finalize and communication as the we've from shelf hard on thinking. some tell. So they're really of execute, to But some had they preliminary it's to those retailers what until

a as on a would singles of result perspective, in really some different traffic that for on There's water some the category the but moves would discussion preserve serve, story which the So as us fine. a probably better coconut growth retailers set, being and we have from category might long we think I and less be multipacks. which to foot the good health the of in maybe probably singles some be of growth volume

the about. get good lots these about of But retailers I'm we like then as there is. it, lots Powerlift, are So of It's had about there. take moving And and with resolved, pieces hard to still drinking like really And it. talk we've conversations space. we think generally, feel you things still say, I those time. it until shelf where

But yet. determined protein year something when it quarter. plans you unlock announced next and next don't and our P&L in and will work in to beverages, for outlook material I we haven't talk continue be we and think there's try to to We probably it. we're to the

showing turn like would time. further back to Martin remarks. at no now to this closing I'm it for questions I Roper

Well, you for Stephen. All again for and joining Thank right, you, hosting. forward to thank next Cheers. we quarter. us, talking everyone, look

in Thank the your participation This you does today's conclude for program. conference.

now disconnect. You may