Hello, and welcome to the Vita Coco Company's third quarter 2022 earnings conference call. My name is Gigi, and 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 now hand the call over to Clay Crumbliss wit h ICR. Thank you. Welcome to the Vita Coco Company third quarter 2022 earnings results conference call. Today's call is being recorded. With us are Mr. Mike Kirban, Co-founder and Executive Chairman, Martin Roper, Chief Executive Officer, and Rowena Ricalde, Interim Chief Financial Officer of the Vita Coco Company. By now, everyone should have access to the company's third quarter earnings release issued earlier today. This information is available on the investor relations section of the Vita Coco 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 release and other filings with 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 business performance. The 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 all available on our website as well. With that, it's my pleasure to turn the call over to Mike Kirban, our Co-founder and Executive Chairman. Mike? Thanks, Clay, and good morning, everyone. Thank you for joining us today to discuss our third quarter 2022 financial results, our expectations for the remainder of the year, and our commercial plans for 2023. I want to start by thanking all of our colleagues across the globe for their continued commitment to the Vita Coco 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 continued robust net sales growth confirms that our strategy and commercial execution are working despite a very challenging environment. Year to date, 2022 consolidated net sales are up 15% year-over-year to $336 million, with our flagship Vita Coco coconut water brand remaining the main driver of growth, increasing an impressive 22% over the previous year to date period. Underlying demand for our flagship Vita Coco coconut water brand remained strong during the third quarter, with net revenue growing 14% even against a very strong year-ago comparison, despite our third quarter consolidated sales being impacted by out-of-stock on certain branded coconut water SKUs. Furthermore, the U.S. retail coconut water category remains healthy, increasing at a 12% pace in IRI measured channels for the last 52 weeks, primarily due to Vita Coco's growth of 21%. We remain the undisputed category leader with approximately half of the value share. Our strategy has not changed, and we remain committed to our longer-term plan to grow the coconut water category and increase household penetration, increase our category share, and expand usage occasions to drive velocity of our products while also innovating in other adjacent categories. For coconut water, we believe that our ability to source consumption from multiple beverage categories and occasions will be the primary driver of future household penetration increases. According to Numerator, Vita Coco's household penetration currently stands at 11.1%. That's up approximately 70 basis points over the last year. We believe that we have plenty of room to grow. We're prepared to invest in marketing and sales execution to achieve this as inventory and supply chains recover. Furthermore, our innovations such as Vita Coco Pressed, Vita Coco Milk, PWR LIFT, and other exciting initiatives expand the categories that we can source from, giving us further growth potential. We also have opportunities internationally, where we have seen strong growth in European coconut water volume despite supply chain and foreign exchange challenges. These opportunities, along with our ability to add new consumers and new usage occasions for coconut water, give us confidence in our belief that we are on track to achieve mid-teens growth on Vita Coco coconut water net sales in 2023. Additionally, the softening ocean freight market gives us confidence that supply chains will normalize and that 2023 will be a solid step towards our long term goal to return to gross margins approaching 40% and Adjusted EBITDA margins in the high teens. We are extremely proud of this progress, and we firmly believe our coconut beverages are still in the early days of becoming a household staple, and there is plenty of runway ahead as we execute our commercial priorities for 2023. We've been presenting our 2023 commercial initiatives to retailers and distributors to positive reaction. Briefly summarizing the top initiatives. First, we have opportunities with the expansion of our multi-pack strategy as we attempt to gain share of shelf space, own the multi-pack coconut water business in the food and mass channels, and increase basket size for our retailers. Multi-packs in coconut water are underdeveloped versus other categories, and as the largest brand in the category, we firmly believe we are uniquely positioned to seize this opportunity. Second, we're optimistic about the broader national rollout of Vita Coco Farmers Organic, which is priced at a premium to our regular SKUs and offers organic coconut water in an attractive shelf-stable package. Organic coconut water is growing faster than non-organic, and our ACV is only approximately 17% year to date as it was just launched nationally this year. Farmers Organic allows us to trade up consumers in price and product specification, yet keep them in our brand family and supports our suppliers' development of best in class organic agricultural practices in their farmer communities. Additionally, I'm very excited about the rollout of Vita Coco Coconut Juice in a can that performed very well in tests this year. As of the third quarter, canned coconut water represents about 30% of the category, and our share of this segment prior to our test this year was zero. In our test convenience accounts, we saw accelerated Vita Coco brand growth and no meaningful signs of cannibalization. We're expanding nationally in the convenience channel in 2023, and we believe that this should provide incremental distribution and consumption opportunities with new consumers who prefer a sweeter tasting canned coconut water with pulp. I'm particularly excited about bringing coconut water to consumers as a mixer in alcoholic beverages. This initiative will kick off with our planned Q1 launch of Vita Coco Spiked, a collaboration with Diageo. Vita Coco Spiked is a delicious ready-to-drink cocktail made with Diageo's flagship Captain Morgan rum brand. In parallel, we're developing plans and partnerships to build on the excitement that this launch should generate and to build opportunities for Vita Coco coconut water as a mixer in alcohol consumption occasions in on-premise channels. If successful, long-term, this will add more distribution and occasions to the consumption of coconut water, both on-premise and at home, and will introduce more drinkers to our brand. As a category leader, we have a responsibility to expand the category and therefore to focus on educating consumers on new consumption occasions and to increase the availability of coconut water to all hydration occasions. Longer term, we have a big opportunity within broader food service, which although growing rapidly, currently only represents less than 3% of our business, and we believe it should be significantly larger and offers a large distribution opportunity for us long term. We're also building our team's capability both as a new public company and also to support our growth and innovation efforts, improve our revenue management forecast and planning systems, and to support our ESG initiatives. This will strengthen our commercial capabilities and should drive future cost efficiencies, flexibility, and ESG benefits. We expect to issue our second annual social impact report in 2023, and based on our work to date, we hope to announce our 2030 environmental and sustainability goals in the second quarter of 2023. In closing, I'm really excited about 2023 and beyond. We remain confident in our ability to deliver on our long-term goal of mid-teens net sales growth, and we are steadfast in our vision of being the industry's better beverage company, one which focuses on providing healthier alternatives as compared to conventional beverage brands, and one that strives to do better for the world in which we live. Now I'll turn the call over to our Chief Executive Officer, Martin Roper. Thanks, Mike, and good morning, everyone. We achieved record net sales in the quarter driven by strong Vita Coco brand growth against a particularly strong year ago quarter when we grew 33%. To help minimize some of the noise in last year's sales on a two-year basis, we grew our consolidated net revenue by an impressive 42%, which represents an acceleration over the first half of the year, driven by strong 58% two-year growth for Vita Coco coconut water, highlighting the continued strength of our brands. We also saw our gross margins improve sequentially from the second quarter, and our balance sheet remains very healthy. Reiterating what Mike said, we are confident in our underlying business, and we are well positioned for a strong 2023 with multiple commercial initiatives in the pipeline to support our top line growth and an improving transportation cost environment to continue benefiting our margin structure. In the third quarter, global net sales increased 7%, including 4% net pricing to $124 million, compared to $116 million in the third quarter of 2021. The growth versus last year was driven by 14% net sales growth of Vita Coco Coconut Water, partially offset by declines in private label and our other product category, due in part to timing of orders and shipments, and also impacted by a $2 million foreign exchange hit related to reported revenue in our European business. Particularly impressive was the health of our Vita Coco brand in the Americas, up 14% in shipments, even with limited inventory on crushed 1-liter and Pineapple 500 mL and 1-liter products that resulted in slower scan trends and visible out-of-stocks at retail, which we believe resulted in $4 million odd dollars of lost net sales in the quarter. Our pure coconut water SKUs grew 18% in IRI scanned retail sales during the quarter, which breaks down to approximately 13% from volume and 4% from price on top of last year's strong 24% volume growth. Similarly, our three-year growth rate in scanner data has remained strong and stable for total brand, and that same three-year growth for pure coconut water is accelerating. Regarding our inventory at the end of the quarter, we had inventory of the most of the affected SKUs at our 3PL warehouses to support our business going forward, and we expect the out of stocks at retail to steadily improve through the fourth quarter as we recover shelf space. This shelf space recovery does, however, take some time, and it isn't immediate. Our overall distributor inventories are now healthy relative to prior years, especially on Vita Coco Pure Coconut Water. As I mentioned earlier, private label sales were a drag on our consolidated results in the third quarter. I remind you that quarterly trends for private label tend to be impacted by timing of orders and shipments, and we would suggest using year-to-date trends as a better indication of business health. Year-to-date, our private label business volume was down 5%, while net revenue was up 2%. Our strategy remains to grow our branded business as a percentage of sales and simultaneously to diversify our private label business, which we expect to grow at a slower rate. In recent months, we have added some sizable new private label accounts and helped to diversify our account base. At the same time, one of our larger private label coconut water customers in the US recently changed its sourcing strategy, and we lost some of their geographic regions. Although we remain their largest supplier and our relationship with them remains very strong. This loss is not fully offset yet by our account gains and will remain a drag on our private label shipments through mid-next year. We believe our ability to continue to add new private label business is indicative of our supply chain competitive advantage in supplying coconut water to these customers and in our ability to be the preferred supplier for the category. Generally, other than the transition just mentioned, our Americas private label business is stable with a more diversified account base, and our retained business is growing an estimated mid-single-digit% in volume year to date. For the full year 2023, we expect our private label business to return to growth. Gross margins improved quarter-over-quarter, benefiting from improved pricing and from the mix benefit of increased branded business, partially offset by slightly higher container costs in Q3 versus Q2 and slightly higher finished goods costs that were mainly driven by mix impacts, including sourcing decisions. Our third quarter cost of ocean containers reflect that the prices of contracts and spot rates used this year were higher than last year's contracts and also reflect an increased use of spot rates. We decided earlier this year to plan for more spot rate usage so that we could benefit when rates started to decline rather than locking ourselves into contracts at elevated rates. We believe this approach was the right decision and expect the softening rate environment to benefit us significantly in future quarters. However, given we recognize ocean freight costs when the container is received and there's still elevated rate environment into the East Coast and Europe, we expect improvement to phase in gradually. Our other cost of goods remains stable as local inflationary costs and packaging increases are mostly offset by our increased scale and by the strength of the dollar. We are benefiting from the actions taken early this year to manage domestic transportation costs more effectively. Although the trucking rates and warehouse costs remain elevated. As we evaluated how we will finish the year, we do not believe that we are likely to recover the lost sales from last quarter's out of stocks and expect some ongoing impact in the fourth quarter as we recover on shelf. Our adjustment down of our full year net sales outlook reflects these lost sales, a steady recovery on flavored brand SKU inventory over the fourth quarter, lower impact of price increases than planned for the fourth quarter, the private label transitions mentioned previously, and current brand and private label trends against very strong performance last year, and also potential foreign exchange impact on reported revenue in the international business. The adjustment down of our Adjusted EBITDA outlook mainly reflects the new net sales range. As we now expect better inventory availability and visibility to the future better margins, we intend to turn up our sales execution and marketing efforts to build momentum over the next few quarters. We believe our commercial plans for next year should produce solid net revenue growth in 2023, with Vita Coco Coconut Water growth in the mid-teens and with private label returning to growth for the full year, all excluding any impact of foreign currency translation. We are contracted for only approximately 30% of our 2023 container needs and therefore expect that in 2023 we should see substantial progress back towards our long-term targets for gross margin and Adjusted EBITDA as container rates continue to improve. We will have a firmer grasp of this when we talk to you with our full year results in Q1 next year. On an organizational note, we are very happy with the performance of Rowena Ricalde, our Interim Chief Financial Officer, and our accounting and finance teams in providing continuity as we conduct our search for a new CFO. We are in the middle of a retained search and are pleased with the quality of candidates attracted to our story. Given the performance of Rowena and her team, we are comfortable being quite selective and prudent in our hiring process. With that, I will turn the call over to Rowena Ricalde, our Interim Chief Financial Officer. Thanks, Martin, and hello, everyone. I will now provide you with some additional details on the third quarter 2022 financial results. I will then discuss the drivers of our outlook for the 2022 full fiscal year. As Mike and Martin discussed earlier, our top line growth remains strong and our growth margins are recovering. We are also on healthy financial footing based on continued profitability, strong cash flows, and a strong balance sheet with low debt and ample liquidity. In the third quarter of 2022, net sales grew 7% to $124 million, an increase of $8 million compared to our very strong third quarter of 2021 results. The increase was driven by continued strong consumer demand for Vita Coco Coconut Water, with global net sales up 14% year-over-year. On a segment basis within the Americas, Vita Coco Coconut Water grew 15% to $83 million. The increase was primarily driven by higher case equivalent volume from continued strong consumer demand, combined with net positive benefits from price mix, largely driven by higher frontline pricing. Private label declined 5% to $25 million, with a decline in case equivalent volume related to the customer activities that Martin just described, partly offset by improved pricing. International segment net sales increased 4% to $15 million, primarily driven by higher case equivalent volume of 4% and pricing actions, with FX headwinds in our European regions, reducing revenue year-over-year by approximately $2 million for foreign currency translation in the quarter, primarily due to the strengthening US dollar against the British pound, whose FX rates have declined approximately 15% versus the third quarter in the prior year. Within the international segment, due to the large currency headwinds for the quarter, volume is a better indicator of the continued growth, with Vita Coco Coconut Water driving the majority of the case equivalent volume growth of 5% year-over-year. Private label and other case equivalent volume was flat on a unit basis year-over-year. Consolidated gross profit for the third quarter was $33 million, driven by case equivalent volume growth, favorable net pricing, and positive mix shift to Vita Coco Coconut Water, which were more than offset by significantly higher transportation costs versus last year. As a result, our consolidated gross margin of 26% was down versus prior year, although it sequentially improved from Q2 2022 by more than 90 basis points. Moving on to operating expenses. Our SG&A in the third quarter increased $3 million- $24 million versus the same period last year. The increase was largely due to increased marketing activities to drive volume growth and incremental ongoing costs related to operating a public company, including higher spend in personnel-related expenses and insur ance. Net income attributable to shareholders was $7 million or $0.13 per diluted share for the third quarter 2022, compared to net income of $13 million or $0.24 per diluted share in the third quarter of 2021. Net income in the third quarter benefited from a non-cash mark-to-market gain in fair value on foreign currency hedges of $1 million versus a loss of $2 million last year. Adjusted EBITDA, which excludes the impact of interest, taxes, depreciation, amortization, stock-based compensation expense, FX, and non-cash mark to market on FX derivatives in the third quarter, was $12 million versus $21 million in the same period last year. The year-over-year decrease was primarily driven by higher transportation costs and SG&A spend as previously discussed, which was only partially offset by higher case equivalent volume and net pricing actions. Transportation costs continue to be a drag on our gross margin and profitability in the quarter. Since Q1, we have seen improvements in domestic transportation costs and reductions on demurrage and detention charges. The average cost of ocean containers received this quarter remains high, as Martin explained earlier in his remarks. As you can see in our earnings presentation, our total cost of goods per case equivalent for the third quarter 2022 increased 15% versus prior year period, mostly driven by an increase in our transportation costs from the significant transportation cost inflation versus 2021 levels, which were already elevated versus 2020 levels. Looking at our total cost of goods inflation on a cost per case equivalent basis, we estimate that our consolidated gross profit was reduced by over $7 million in Q3 2022 and close to $28 million year to date versus the same periods in 2021 by the unusual transportation cost inflation. In the third quarter, finished goods cost per case equivalent was impacted by negative rate mix in the quarter. For the nine months year to date period, finished goods cost per case equivalent increased a minimal 1% over the comparative period in the prior year and decreased compared to the full year 2020 finished goods cost per CE rates. Turning to our balance sheet and cash flow. As of September 30, 2022, we had total cash on hand of $21 million and $10 million of debt under our revolving credit facility compared to $29 million of cash and no debt as of December 31, 2021. The decrease in net cash was primarily driven by working capital due to significant accounts receivable increase as per our business seasonality, partially funded by our credit facility. Moving on to full year guidance. For the nine months ended 2022, we are pleased with the 15% net sales growth year over year, the consecutive quarterly improvement in the gross margins in 2022, while maintaining similar SG&A leverage for the nine months ended year to date, despite being in a period of inflationary transportation costs and foreign currency variability. There are lots of moving pieces that pose uncertainty going into the fourth quarter 2022, including external impacts out of our control, such as foreign currency fluctuations and the risk that retailers or other customers may shift timing of orders or shipments. As a result, we are revising our full year net sales outlook to reflect the lost sales due to out of stock, a steady recovery on flavored brand SKU inventory over the quarter, lower impact of price increases for the fourth quarter than we had planned, the current trends on private label and branded sales, and the expected impact of foreign currency on international revenue. We now expect full year fiscal year 2022 net sales to be between $422 million and $427 million, representing growth in the range of 11%-12% versus 2021 as consumer demand for our products remains robust. We expect Q4 gross margin to sequentially improve over Q3, primarily from planned brand net pricing actions in the quarter of a similar scale of those taken earlier this year and from the first effect of ocean freight rates improvement on certain lanes. Based on the reduction in net revenue expectations, we are adjusting our non-GAAP Adjusted EBITDA guidance to be in the range of $20 million-$22 million. This reflects improved gross margin from our pricing actions and expected improvements on transportation costs, offset by increases in our planned marketing and sales execution, consistent with our stronger inventory position and to maintain top line momentum. Recall our second wave of price increases will take effect mid fourth quarter and at this time, we have no further price actions planned until we see the full impact of these two increases. With that, I'd like to turn the call back to Martin for his closing remarks. Thank you, Rowena. To close, I'd like to reiterate our confidence in the long-term potential of The Vita Coco Company, our ability to build a better beverage platform and the strength of our Vita Coco brand. We're excited about our key initiatives to drive growth in 2023 and look forward to the relief that the softening of ocean freight spot rates should provide us after a very challenging two years, which we believe will allow us to accelerate growth, invest prudently, and build long-term capability. We have strong brands and a solid balance sheet, and we are well positioned to compete. Thank you for joining us today, and thank you for your interest in The Vita Coco Company. That concludes our third quarter prepared remarks, and we will now take your questions. As a reminder to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Bonnie Herzog from Goldman Sachs. Hi, good morning, everyone. Hey. Morning, Bonnie. Hi. I just wanted to maybe start with just a couple of questions on your guidance. You know, maybe just trying to unpack it, you know, your new top line growth guidance implies, you know, only low single digit to mid single digit growth in Q4. I just wanna, you know, understand what's driving this, especially given the pricing you've implemented. You know, I assume you're still expecting, you know, the out of stock pressures to continue, which I think you called out. When you, I think, tried to quantify that, if I understood it correctly, that was just about three points of lost top line growth in Q3. I think you just mentioned that you now expect lower planned pricing in Q4. Is it those two items that are driving, you know, your expectation now for a little bit lower growth in Q4 on the top line? Bonnie, it's Mike. I think as we think about the balance of the year and into next year and beyond, I think we finally have a good understanding of the steady state of where the brand sits as it relates to growth, right? This was the big miss in terms of forecasting and so on. We were growing 39% last year, this quarter. We were growing 63% last year, this quarter over 2020. It was understanding what is the steady state. Like if you're growing 3%, 5%, it's much easier to forecast and understand where you might net out a year later or even months later. I think we finally understand the brand is growing mid- to high teens. Private label, which is a very attractive strategic business for us, is not where we see the significant growth in the true value, creation long term. The branded growth is stable and steady in this kinda high to mid teens. That's off of, you know, last year, fourth quarter was 63% growth. That's kind of how we're thinking about, the business for the fourth quarter and then moving into next year. Bonnie, you know, just to add, right? Well, one, I just would point out that the investor deck that we said is published is now live. So apologies that that was not live at the start of the call. Okay. Too, we've got some, you know, other effects, right? We've got the out of stock effects. We have some FX effects that are bringing revenue down, and things like that. I think Mike's, you know, description is exactly right. The comparisons to last year very hard to estimate, but the three years back of the business is very healthy. The brand is very healthy, and we just think we misread the, you know, the base of which we should project growth off of this year. That's sort of what's going on. Okay. That's helpful. Yeah, I certainly, yes, saw that on a three-year stack basis. Things are accelerating sequentially, so that's encouraging. Right. Are you just being conservative then, as I think about the full year or what it implies for Q4? Or maybe talk about if I heard you correctly, lower planned pricing now in Q4. One, you know, we wanted to come up with a range that we felt comfortable we would fall in. Obviously, you know, this is a complicated environment, both on the supply chain side, consumer side, the retail side. Our range was generated 'cause we would really not like to have this conversation again, you know, in three months, right? You know, that's our approach was to say, "Okay, we need to provide an estimate of what the baseline is and let's do that and let's make sure it's something that we can fall into. Okay. I just wanna ask, you know, second question is on consumer. You know, just any color you can share with us on the health of the consumer. You know, last quarter you called out just some higher growth for, you know, larger pack sizes, etc. I just wanna understand if you're seeing similar behavior during Q3 and maybe so far in Q4. You know, just any update on, you know, sort of how elasticities are holding in, etx, would be helpful. Thanks. Yeah, I mean, I'll start. I think as we look at, you know, we look at scan data, and you start to pull out the affected SKUs, right? The Pineapple SKUs and the Pressed SKUs that we just didn't have any inventory on, which really had a hit on the business last quarter, had a significant hit on scans. When you look at scans and you pull that out and you just look at the pure coconut water, which is, you know, a good indication of the health of the brand and the consumer, it's really strong, and it continues to grow in this mid-teens growth rate all the way through the past several weeks. We feel really confident about the consumer demand and where we sit from a growth perspective. Just sort of building off that, you know, Bonnie, I think, you know, from a portfolio perspective, you know, we have a nice presence in clubs that is, you know, potentially benefiting from consumers looking for sort of better value. Right. We also have you know the multi-pack strategy, and then certainly we're seeing the multi-packs growing faster than the other pack sizes. We're well positioned, I think, to offer the consumer sort of value if there is a challenge on the consumer front. All right. Thank you. I'll pass it on. Thanks. Thanks, Bonnie. Thank you. One moment for our next question. Our next question comes from the line of Chris Carey from Wells Fargo. Hi. Good morning, everyone. I just to follow up there then, you know, I wanna ask about your comments on 2023 margins. Are you basically saying on Q4 that you just expect Q4 seasonality to return, you know, typically, you know, over a 20% decline versus Q3, and maybe beforehand you just didn't really think that that would play out because of underlying momentum in the business? You just kind of got the comps wrong in a way, and that the out of stocks are sort of getting better, but not entirely better, but slightly better than you have the pricing coming. It's really just maybe just the seasonality dynamic relative to the year ago comp is more the change here. I'm just trying to understand kind of maybe like underlying confidence on growth returning into next year at that mid-teens rate. That's the starting point. Just trying to make sure I understand kind of what you guys are saying about the Q4. Yeah, I think, you know, as Mike said, Q3, Q4 were unusual and, I think we built our business based on assumptions we could grow off that base, and that was probably incorrect. But as we look at next year, we've, I think, clearly signaling that we have plans to grow branded mid-teens. We lay out some of those plans on call and also in the deck we've presented to retailers. We think the growth that we had this year is gonna, you know, drive more space. And so our sales team is, you know, feeling pretty good about all of that. And so, yeah, we'll build plans based on continuing, you know, brand health. Okay. For 2023, right? There's you know, I think you were pretty constructive on margin improvement, you know, in the press release, as freight rates ease. I think you also noted that, you know, that benefit actually builds sort of like sequentially through the year, maybe because you have more spot exposure, you know, into the back half. So maybe you don't get the full benefit, you know, starting the year and you still are, you know, getting impacted by some ocean freight inflation still at the start. I'm just, you know, looking at what the stock's doing pre-market and I'm just trying to frame, you know, what you mean by significant gross margin expansion next year and, you know, path to 40% and path to EBITDA margins in the high teens. I wonder, you know, maybe if you could just frame maybe what the freight hit was this year and how much you think you might be able to get back next year, just to put some guardrails around, you know, how much margin improvement you could see next year so that we can have an understanding of maybe what, you know, the anchor on EBITDA is, right? Again, in the context of what the stock's doing pre-market, I think that'd be helpful. Thanks. Sure. No, I understand. I think obviously our return to long-term, you know, our long-term algorithm probably takes a couple of years. So I'm not thinking we're suggesting that's a 12-month journey. In our investor deck, we point out that the incremental transportation costs over last year were $7 million, and, you know, year to date have been $28 million over last year. And collectively, that's $49 million over 2023 on a year to date basis, right? So, you know, that, you know, built up over two years, I think you might, you know, hope for that to unwind over two years maybe. Obviously, that's very hard to forecast, and future rates are, you know, difficult to predict. But that's how I might think about it. You know, hypothetically, if we were able to, you know, unwind this year's increases next year, that, you know, is obviously a significant driver of EBITDA growth next year. Obviously, I think we'd all be happy with that. Okay. That's helpful. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Michael Lavery from Piper Sandler. Thank you. Good morning. Hey. Good morning. I just wanna come back to the consumer first. You mentioned the value proposition for club packs and multi-packs, but how does private label fit into that? It's a little interesting with the inflation pressure that consumers already had, how sort of stable that piece of the business seems to be, but maybe down with a little bit of distribution impact, but you know, still growing strongly on the branded side. I guess one, just have you seen the consumer be a little more reticent? If so, how do you think about the way private label plays into that as well? I don't think we're seeing the consumer being, you know, more reticent. You know, to me, what's important is price gaps in the category. Private label, you know, given the structure, the pricing at retail moved up towards the branded. Earlier. Earlier. Yeah. you know, obviously our branded, we moved in Q2 and plan to move again in Q4. I think the price gap is the most important, and I think that's how we're thinking about it. It's very, you know, hard to, you know, see elasticity when you've got, you know, price gaps moving and out of stock. That's how we're thinking about it. We think that, you know, some consumers are, you know, potentially moving to private label, but private label, as we you know, as we said, the private label customers we have that we've had year-on-year are sort of showing mid-single digit volume growth on private label sort of thing. Obviously the branded growth is much faster than that. We think the brand is healthy. The brand is obviously performing well at the price gaps we currently have. As we look forward to, you know, it's very hard to predict what will happen next year. As Rowena said, we don't have any more planned price increases beyond our Q4 price increase, and we'll obviously monitor the performance of the brand and the competitive activity as we think about our promotional activity next year. Then just coming back to freight, it's obviously a huge part of the equation here. I think it's pretty clear the upside potential is significant. Can you just unpack a little bit more? You mentioned I think 30% of 2023 is contracted already. I guess maybe two parts of it is just, is it would that all be, you know, sort of mostly one Q, you know, first half skewed? Is there any longer you know, in terms of pacing, is that the right way to think about it? Then as far as what you've locked in, is that more recent at still relatively favorable rates, or was it longer term that you're stuck with some of the pain from earlier in the year? How do we think about what that 30% looks like? Yeah. No, it's a great question, Michael. I'd point you to page 12 in our investor deck that has a, you know, a diagram which is designed to be indicative of how this works without being prescriptive, right? When you look at how that's laid out, the contractual commitments we have that are 2023 related largely relate to a contract we entered into last year in the August, September time period that was a multi-year deal priced at the rates that then existed, that we thought was very attractive in protecting us from the sort of ocean freight spike we saw coming, right? That's a long-term rate. It's we have the ability to sort of get out of it if. Well, not get out of it, we pay a penalty if spot rates fall. There is some negotiation room there, but it is a contract. We did enter into a contract on a certain lane in the August timeframe. That's the typical timeframe we would enter into on that lane, but we chose to only enter into four months because the pricing offered, we felt, was not representative of what the pricing would be next year. We certainly enter next year with significantly less covered on a contract basis. The contract we have was the one I mentioned. We think that was a good deal when we entered it, and we have some ability to benefit if rates were to continue to fall. Okay, thanks. I'll pass it on. Thank you. One moment for our next question. Our next question comes from the line of Robert Ottenstein from Evercore ISI. Hey, everyone. This is actually Greg on for Robert. Just a quick question on SG&A expectations. Can you talk about how that's evolved in terms of your expectation for, one, this year, and then two, how you're thinking about it for next year? I know you guys talked about, you know, higher spend behind new innovation. So maybe just, you know, which innovation you see that going behind and any initial thoughts on how it's gonna compare as a percent of sales basis versus this year. Thanks. Yeah. I'll let Rowena take that. Before, I think it's additional spend against innovation, but also against the brand that we saw significant out of stocks and low gross margins on this year. It's an opportunity to, I think, expand even further potential opportunity for growth of the brand, using some of that gross margin improvement. Now, if you wanna go into some of the details on that. Yeah. Excuse me. From an SG&A perspective, you know, we have absorbed quite a bit of public company ongoing costs. You know, things that we were expanding capabilities in, with respect to being a new public company. I would say from a leverage perspective, we have maintained ourselves year-over-year. Low level considering how much we've absorbed from SG&A. I think as you look at next year, our goal is to try and deliver some SG&A leverage. Some of the costs that Rowena Ricalde refers to, the public company costs and the capabilities to build what we need to operate as a public company were phased in this year. There's still some impacts next year just from a phasing perspective to reflect full year costs. That makes sense. Just a quick follow-up on the lineup you have of like new products for next year. Maybe if you could talk about, you know, kind of which ones you're most excited about in a, you know, bit more detail, the phasing of the, you know, launch with Diageo and kind of when you see that getting a national launch too, would be helpful. Yeah. I think product wise, really excited about Vita Coco Coconut Juice in a can. Saw great results this year, and that's gonna be launching national next year across c-store. Really excited about that. I think it's a big opportunity to play in a segment of the category that we've never really played in. We haven't talked much about it, but PWR LIFT is showing some really nice initial signs, and we're gonna be expanding distribution on it into a couple of territories next year. Further expanding the test, it's not a national rollout. I think, as you think about the Diageo opportunity, that will be launching national in Q1. It's gonna be a big launch. We're excited about it. The majority of the profit against that is going back into marketing that concept and that brand. Then we think that it's a real opportunity to help us, like I spoke about in the prepared remarks, to help us really start to talk to consumers about using coconut water as a mixer and bringing Vita Coco on premise. Like, you go to a bar or restaurant anywhere these days, there's no coconut water, yet there's coconut water pretty much everywhere else that you might go to at retail. We think it's a real opportunity to bring coconut water on premise, and we think it's a really good new consumer occasion for us. That's the real objective there. Great. Thanks, guys. Yep. Thank you. As a reminder to ask a question, you will need to press star one one on your telephone. Our next question comes from the line of Bryan Spillane from Bank of America. Thanks, operator. Good morning, everyone. I just had one question, and hopefully you could help. It's more of a detailed question, but on slide 15, you go through, you know, listing the components of, you know, the changes in the revenue guidance for this year. I think it's a $23 million reduction at the midpoint. Can you just quantify, like, how much is FX, how much is out of stock, how much is private label? Just trying to get a sense of the magnitude of the pieces, if you could help us with that, please. Sure. What I think, you know, the biggest impact is basically our estimated growth over last year's, which were obviously very big. If I was to, you know, compact the stuff that we could put dollar amounts around, you know, $4 million estimated lost sales out of stocks in Q3 with some residual impact in Q4, probably lesser. We've got foreign exchange impacts on revenue of $2 million in Q3 with potential for similar in Q4 if exchange rates, you know, remain where they are. The private label business is obviously reported, and we think the year to date numbers probably will represent the full year numbers, and probably are a little smaller than we anticipated in terms of, you know, the. I think we expected a bigger impact from the gained accounts versus the lost regions. We probably got that a little wrong, but that's sort of a lesser impact. I'm trying to think if I'm missing anything in the stack. No, I think that's the big thing is, yeah, like we said, we grew 63% Vita Coco Coconut Water last fourth quarter over the prior year. Really starting to now understand what the steady state looks like and what the brand growth looks like, which is the mid-teens. Just so as we're kind of thinking about that stack going into next year, right? Some of the, like, the foreign exchange is gonna sort of continue to be a headwind, you know, at least for the first half. The other pieces, I guess, as we're thinking about how they kind of, you know, stack to, you know, the color you gave this morning, it sounds like, maybe the private label piece may linger a little bit in the next year. You know, if you've kind of right-sized the growth off of this base- Yep. The out-of-stocks get better, it just seems like some of these headwinds in the stocks begin to kind of minimize. That's what I was trying to get at, is just where the risk factors might be as we're thinking about the pieces that build into the revenue guidance that you gave for 2023. I think that's right. The headwind from the FX start to minimize. Yeah. Yeah. Okay. All right. Cool. Thanks, guys. Thanks. Thank you. At this time, I'm showing no further questions. I would like to turn the conference back over to management for closing remarks. Thanks, everybody, for joining us today, and obviously look forward to working with you over the next quarter and obviously look forward to speaking again next year when we have full year results and we will hopefully have better visibility to the full year volume growth, but also the potential significant benefit to the gross margin and EBITDA lines from the normalization of the transportation costs. We're excited about 2023 and look forward to having a greater insight into that the next time we speak. Thanks ve ry much. This concludes today's conference call. Thank you for participating. You may now disconnect.