Hi, everyone. Thank you for joining us. My name is Greg. We're here with Vita Coco. We have CEO Martin Roper, CFO Corey Baker here to talk about the business. Why don't we just kick it off for people who may be new to the category, new to the company? Talk a little bit about the main growth drivers behind the business and maybe, you know, over the past few years, what's led to the increased penetration for the category and for your brands. Sure. Thanks, Greg. Thanks for having us. Delighted to be here. So Coconut Water sort of launched into the U.S. in the mid-2000s, and it was primarily positioned sort of as a hydration product post-workout, particularly hot yoga. And it sort of morphed into a much more sort of broad-use multifunctional beverage over the last 20 years. So while we're, you know, still relatively young, 20 years old, we're still growing those occasions and growing the education. And we've sort of enjoying what I would call slow, steady growth. After After the first boom, there's been slow, steady growth of, you know, mid- to high-single digits in the category, and we've been able to grow faster than that by growing share. So when I think about, you know, the last four years, I think we've successfully seen off the approaches of the major beverage companies like Coke purchased ZICO, Pepsi purchased O.N.E. They've both since exited those businesses, and we've been able to squeeze out even more share, particularly with the reliability of our supply chain that I'm sure we'll talk about a little bit. And so the growth is coming from category growth and then our share growth, which reached about 50% of measured channels in the last 12 months. So within the category growth, I think you're seeing adoption of coconut water as a natural hydration product. You're seeing its adoption as part of people's lifestyles, both in smoothies in the morning, post-workout as a pick-me-up in the afternoon, or even in a cocktail at night. The category continues to grow with young consumers because we believe that lots of people, and I'm sure some people on this call, discovered coconut water on a Sunday morning at college after a particularly heavy night of partying. So when you look at our demographics, we over-index to younger households, heads of households in their 30s, 40s, and 20s. We continue to fuel that pyramid with this introduction of people at college that is sort of word of mouth and urban lore. As we think about it, we think it's possible to double the category just as our households grow older and we continue to fuel that pyramid. So, we are very happy to be in this position of the number one branded player and sort of driving the category growth and happy with, you know, solid, you know, growth of the category and our brand, particularly in a beverage landscape, where there are very few categories, as you know, covering the area that are currently growing volume and we're growing volume and revenue. So, feel very good about it. Awesome. Thanks. And then within the category, can you talk a little bit about your moat? You know, what is it about your business model, you know, that really helps you, you know, fend off the competition? Yeah, I think, you know, we look at our business as being built around, you know, a singular focus on coconut water, a great authentic brand in the Vita Coco brand that itself is recognized as a leader and a premium beverage in the category. And then a supply chain and executional moat, which includes retail execution, but supply chain primarily that we believe creates some barriers to competition to, you know, grow fast and scale and compete with us on a, you know, national level. So I think all of those things contribute to the moat. I think one of the ones that investors find most interesting is the supply chain. So if you think that's appropriate, I'll spend a little bit more time on it, but feel free to stop me. So when the founders, you know, launched coconut water, they found packaged coconut water in Brazil and initially sourced there. But as they grew and were successful, they realized they needed other sources. And they traveled to the Philippines and Indonesia looking for coconut water. And what they discovered was that coconut water was a byproduct of the coconut processing industry. And the coconut is a wonderful fruit in that it can be used for a wide multitude of things, including desiccated coconut, coconut flour, coconut oil, coconut cream, and other cooking coconut products. Plus, the shells are used for fuel and activated carbon, and the fibers are used for erosion control blankets, for instance. So it's a very interesting fruit. But as they visited these factories that were basically in the coconut-growing areas, because you don't really want to ship coconuts any distance, what they discovered was the coconut water was being dumped. So the first step of the process was draining the coconut water because the factories didn't know what to do with it. And in those markets, if you wanted coconut water, you just picked a coconut up off the street, right? So back then, what we brought to those factories was, hey, we will take your coconut water. We'll bring you the technology to package it and the quality control to make sure it meets, you know, Western market needs. And in return, you know, what we asked for was some exclusivity in eastern North America. And so from that, we basically ended up adding a lot of value to these factories that partnered with us because we were taking this waste product and adding margin to their overall profitability. And frankly, that probably helped some of those grow faster than the ones we weren't working with. And the net result of this today is we have, I think it's 14 factories across six countries where we're taking coconut water for most of them out of this process and adding significant sort of margin and profitability and overhead absorption to their operations, making them stronger. So it has this very nice sort of relationship. And there's still more coconut water being dumped than packaged, and there's still more coconuts in the world. So we just look forward to this journey and look forward to, you know, continuing to build this business. Awesome. And then in terms of like the longer-term opportunity, you know, for the brand, you guys always talk a lot about penetration, kind of where your levels are, how it compares to juice and other categories. So maybe you could just update us, you know, on the latest household penetration, you know, data and kind of where you view the opportunity as you look five to 10 years out. Sure. You know, talking America, you know, we've used Numerator data, and that's the data we've published. And the last actual household penetration number we published was, I think, Q1 of last year in our earnings deck. And that showed coconut water household penetration in the low 20s% and Vita Coco in the 11%-12% range. We have not published updated data, Numerator data reset. And, you know, what emerged from that whole process is they have their sampling and then extrapolating. And in their extrapolation process, they try to match the size of the category. And we just told them they were wrong. And so we haven't republished the numbers because we're not sure we agree with them. We don't think it aligns up with other data points we have. But what we have said and what we did have published is the fact that we believe that over the last 12 months, we've grown household penetration and velocity. And I think that's been a pretty consistent story in the last two, three years. It's quite odd to me that you're growing households and velocity at the same time because typically in my beer experience, you grew households and your velocity went down because you were attracting, you know, lesser volume customers. We have a very healthy category, but we still have a long run rate. So in the same data set that we reported last year, cranberry juice is in 50% of households and orange juice is in 80%. So we have a long runway there. We over-index with ethnic heads of households, so Asian, African American, and Hispanic. And that's a growing part of the population. So we think that's a 1 or 2% point, you know, tailwind behind us. And then, as I sort of said when I started, we over-index with younger heads of households, which I think is more reflective of the fact the brand is new and it's 20 years old. And so, you know, I sort of joke as households that are led by people my age die out, our households are going to grow because we're feeding that pyramid. So the household penetration data, I think, would suggest that you can double this business over 10, 20 years, maybe faster. And we view our mission to grow the category and grow our share and to drive that. And again, with the brand we have and the margins we have, we can afford to invest to do that. Cool. Yeah. So maybe now we can kind of dive into some of the more current trends. You know, obviously this is a consumer conference and one of the key themes, you know, that we've been hearing about is the health of the consumer, you know, and kind of how that fares. So maybe just the latest that you're seeing in terms of the consumer, you know, health broadly, and then maybe how you guys are using price pack architecture and the portfolio, you know, to help address different needs. Yeah. So I think we're seeing, and I'm sure, you know, you've reported that our scan data both for the category and our brand is very healthy. And in some of the data, it's accelerated, you know, since we did earnings on the scan data side. So when we look at it, we go, okay, we're not really seeing consumer weakness. We have a premium product that's priced at a premium to other beverages. Now, we certainly acknowledge that in the last four years, most other beverage categories have taken price increase. And I might ask if your guidance here, but we look at it and it's 30%-60%. It's like huge pricing over a four-year time period. And coconut water has maybe taken 5%-10%. And so relative to four years ago, there's greater affordability. And then on top of that, through our initiatives with multi-packs and the product availability in club stores, the product is in some ways becoming more affordable just from the multi-pack strategy too. So we're not sure we're seeing anything that's sort of dampening the category growth trend. And so we struggle a little bit with this one. We do see a little bit of strength in club and discounters where maybe the trends are a little stronger. That's maybe not as visible in the scan data because some of those retailers aren't visible in some of the scan data like Aldi and Lidl and Costco, you know, aren't visible. But you can sort of see in their reported same-store sales numbers on their total businesses that it's a healthy growing category. So I think we see some of that going on. That sort of helps a little bit with Private Label growth because those retailers over-index in Private Label development. You see Private Label maybe a bit growing a little faster than you might otherwise have thought. Maybe just an update on the price gaps. You know, it's been, you kind of started to, you know, touch on it a bit, just kind of how it's, you know, narrowed, but maybe just as you think about price gaps across channel and then also price gaps, you know, vs private vs Private Label, you know, how that's developed recently. So what we've talked about is if you went, and it's an interesting Private Label category because category is not super big right now. You see and measure channels broadly. Private Label is represented by Kroger. And then Martin touched on some of the unmeasured customers where Private Label is prevalent. Some of those, like Aldi, Lidl, you may not have a brand to compare it to. So in, you know, the bigger retail is where you would have brand and Private Label. If you went in today, you'd see roughly 20%-25% price gaps on an everyday basis. And then the brand would be promoted and that price gap would change. That gap has compressed over the last year. So Private Label is gaining a bit of share. As Private Label price came down about a year ago, if you went today, it's roughly flat year-over-year. So we expect it to be more stable going forward. But these price gaps are consistent with what you would have seen pre-COVID and what you'd broadly see across categories between branded and Private Label. And then maybe just while we're on the topic of promo and the consumer, you know, has there been any changes over recent weeks or months in terms of the promo environment, whether it be your brands or the Private Label brands or some of your peers? Not in any material way. You know, we've talked about when we talked about our outlook for this year, we talked about the category growing mid- to high-single-digits and then the brand following. You know, week to week, month to month, you see slight swings in promotional activity, but there's no material changes in pricing in the market. It's been relatively stable. Great. And then, you know, maybe next we could, you know, touch on freight. So maybe at a higher level, if you could quickly just kind of go over your key, you know, freight routes, you know, what the main drivers are for a lot of the rates that you're paying, and then maybe just, you know, go into what's under contract for this year, you know, what's under contract for next year, you know, and the latest you've seen in prices. Sure. So our major sourcing, you know, countries or regions are Brazil, Indonesia, Philippines, Vietnam, Thailand, Sri Lanka. Our major routes are sort of Asia to West Coast and East Coast with that split roughly, you know, split based on population east and west of the Rockies, Brazil to East Coast, and Asia to Europe. And historically, we would contract, we used to contract, you know, in two different time periods each year, layer the contracts in, securing 12 months capacity for or commitments for about 70% of our capacity is how we used to approach it. And that actually worked out really well going into COVID. And then during COVID, we felt that the sort of rates that we were then being asked to renew on contract did not represent long-term rates. So we sort of, as those contracts rolled off and we lost that protection, we moved to an approach of bidding our business almost monthly, but in some cases, three-month parcels where we had lanes that we wished to get better security on. That's how we've been operating really since, you know, 2022. We're still operating that way. We are still largely uncontracted. Our approach is, you know, for, let's say, the month of July, we'll have 200 containers that need to go from port A to port B, and we will put it out to two or three carriers and we'll play them off against each other. That, I think, works really well in an environment where there's excess capacity. That is the environment we think we're in long-term on a shipping ocean freight side. You know, as a result of the pricing that the carriers enjoyed during COVID, which was somewhat arbitrary and not related to costs, they reported obscene profits. And they're fortunately putting those obscene profits into obscene ships. Oh, sorry, big ships, big, great, beautiful ships, right? And so we expect that capacity to come online. There's lots of containers because containers were built during COVID because containers got trapped at ports. And so containers were built. So there's lots of fundamental excess capacity. And on top of that, you know, the world economy is not, you know, that healthy. So, you know, we believe there should be excess supply and that therefore playing the market this way is sensible in that environment. If you look at the long-term rates, you go back pre-COVID, you know, the lanes were very stable, very, very stable, ±$200 over multiple years. So this instability we've seen both with COVID, which I think was probably explainable given the supply-demand imbalance, but more recently, perhaps it's inexplainable, but our belief is it will return to long-term historical norms. So currently, we're negotiating monthly and we certainly ask about contracts, but all the contracts are at spot rates or higher. So we're like, well, we're not going to do that. That's not where we think the market's going to go. And that's how we're playing it. And for the most part, because of that negotiation, you know, we're a, you know, we're not a huge shipper, but we're a big shipper. And the index rates tend to represent small shipper rates or independent rates. And so certainly, you know, we pay on average lower than the rates you see in the indexes. This year, I think everyone saw the indexes go up in January in reaction to the Suez Canal and the Houthi challenges around the Gulf. And worried, you know, about our exposure, I think what we said when we did our Q4 earnings is, look, guys, yeah, the rates have gone up and there are these challenges, but one, they're nowhere near as high as they were during peak COVID times. And you can see that in the indexes. Two, you know, because we're, you know, playing this bid game, we're not necessarily paying these. And three, it's sort of, you know, short term. And then again, when we announced Q1, it turned out to be short-term because the costs of going around the Cape sort of weren't significantly greater than going through the Suez. You just lost two months, two weeks of travel time. And there was excess capacity in the system that allowed the carriers to absorb that. So the biggest impact of that change for us was loss of inventory in country. And that's hurting us a little bit. But that was probably the biggest impact with the cost impact being the next biggest impact, I suppose. Since we announced Q1 earnings, you're seeing a second spike increase that to this point has still been in the upward trajectory. We don't really have a great visibility as to what's causing it. It seems a little irrational to us, but, you know, we read that it's because of people being worried about tariffs on China, both from the E.U. and from the U.S., with both Biden and Trump threatening tariffs. We also, you know, have heard, but I don't know whether it's true that retailers are putting their inventory in faster for holiday season and maybe their inventories were lower than they thought they wanted to be. So, you know, when you get those sorts of sudden surges of shipments, you will see spikes in rates, but ultimately you've got to decide if those rates are going to stick or not. And since neither of those issues seems to be underlying demand driven in terms of long-term demand, I think our view is still that there is excess supply and demand and we should, you know, wait it out. So, you know, we're exposed, obviously, as we said at Q1, we're not covered, but that's how we think about it. And obviously, we monitor it. And then, you know, we have some levers we can play on pricing and other ways if the costs become permanent. So, you know, if they become permanent, we'll deal with them. But if they're temporary, then we're focused on growth and share. So as we think about your guidance ranges and your gross margin outlook, what's the underlying assumption you're using in terms of, you know, freight? Not the exact rate, but just do you expect, you know, rates to be sort of flattish vs where they were when we last spoke after Q1? You know, is there potential upside or, you know, downside risk given these factors if rates were to keep moving higher or if they were to move lower given the excess supply? When we provided our guidance post Q1, we indicated a couple of things. One, we used whatever information we had at that time to provide guidance. We obviously ran different scenarios. We intentionally provided a wider range on that guidance, both gross margin and EBITDA to reflect that we were seeing incredible volatility, especially in ocean freight. We didn't provide specific rates, but we provided a range that gave us comfort based on what we knew at the time and delivering within that range for the year. Do you still feel comfortable with that range now given where freight rates are? We're not updating our guidance in any shape or form on this call or making a comment on that because that we'd rather talk about what we knew at the time we knew it. And then we'll have an update with Q2. Q1 earnings. Makes sense. And then kind of as we think about, you know, more on the top line and your latest innovation, you know, you guys have a lot of new products hitting the market this year. Maybe if you could just give us a quick update on where those launches stand and kind of where you see the distribution and penetration opportunities kind of as you go into the more premium areas, you know, and new package types and things like that? Sure. So 2024 is sort of the second year of the multi-pack initiative. I think we were pretty happy with the distribution we achieved in year one. And I would point people to our investor deck slide nine for where we got to. But like even with, you know, four-pack 500 ml, there's still 10 points of ACV probably to get. And 330 ml multi-packs is probably another 20 ACV to get. And 1 liter ml is probably another 1 liter multi-packs is probably another 20 points to get. Now that it won't be as easy as the first year. And, you know, we've also seen, as we talked about on our Q1 call, some slowing of major retailers resets into the fall. So we'll see where we are. But the good news is I think that that initiative was enormously successful for retailers who adopted it last year. The velocities and, you know, of those items sort of suggest that retailers that didn't adopt it should adopt it and retailers who did adopt it should add facings. So we feel pretty good about when those sets happen that we should gain. But as I said, we are seeing some delay. The other sort of initiative was Canned Product, which is our juiced product we call juice, which is sweeter. One of the units has pulp in it. It's in a can. And we launched in C-stores last year. I think we reported in Q1 earnings that the C-store canned business that was growing like 34% year to date. And so we've had nice healthy velocity growth there that's happening over time. And again, it's building, right? So that's good. Distribution-wise, we haven't built distribution as much as we would like, I think. I think the nature of that is you lose some distribution because you didn't put it in the right places and you gain some. So we've been a little flat, but there's a lot of opportunity there because our distribution on Juiced canned products is only like 18.9% of ACV on C-stores and our core Tetra product is up in the 50s. So there's a lot of upside there, but it will be a slow lift. Farmers Organic, which is our organic shelf-stable offering that I have in front of me here, is doing well. You know, I think it offers our consumers a premium offering at a higher price point and our retailers the same sort of thing. So that still has a lot of ACV opportunity ahead of it as we move that forward. So that's still in early stages. We launched one liter last year, got to about 48 ACV in the first quarter. So that again compares to the base business. It's up in the 70s. So those are the core sort of new item initiatives close in that are a while along the line. During Q1 earnings, we talked a little bit about this, which is Treats, which is strawberries and cream, coconut milk-based beverage that was offered to Target on an exclusive basis earlier this year. And that's where I obtained this one, but has also been cited in some Costco stores in certain regions. So that is early and we're waiting to see how it performs. Do we get repeat? What happens after first trial? Does the message work? Is there a category here? How big could it be? We do like coconut milk-based as a potential place to take the Vita Coco brand. Obviously, it's quite close to coconut water. It actually leverages our supply chain. And then coconut milk-based ready-to-drink beverages in China are growing quite strongly. So if that was to occur here, we'd like to have a position. So that's an interesting opportunity for us. Awesome. And then maybe just two quick follow-ups. So the first one is on the shelf space, you know, resets. A little slower pace is something we've heard now from a few different categories. But in terms of the gains that you guys are seeing from what's already taken place, which, you know, categories do you think the shelf space for your products is really taking from? I think it varies enormously by retailer. Some retailers are adding space to the set that we're in and then we gain that, right? Because we're in this sort of functional beverage set. But then some retailers aren't adding space, but then there's some weak things in that functional beverage set because it's also where they put the new items. So the new items are rotating out. So I don't think it's easy to say where the total space is coming from because it varies by retailer. And, you know, and obviously when we talk about our sourcing, we source from a range of categories, but we tend to be used as an anchor of a functional set or a natural set or a premium set. And as such, you know, we're pulling space from that set, but only really from other categories if that set expands. So that's how we see it. Right. And then, you know, maybe just using multi-packs as the case study. So I know it's something you've, you know, talked about before, but when you think about marketing and the, you know, halo effect from rolling out some of these new products, you know, like how do you see the, you know, benefits to one, the core products and then, you know, new innovations from what you're able to roll out, maybe from trial being higher or, you know, multi-pack availability, just having it more present in the home, which is kind of how you see kind of this rising tide lifts all boats across the portfolio when you, you know, launch the new products. Yeah, I think, you know, if you go back to 2022, multi-packs existed in club stores, right? So let's put that out there first that it's not like they didn't exist. They were just in club stores. For most of food and mass, you know, you'd go shopping and you pick up one of these or three of these. And it was a pretty horrible shopping experience having these loose lines rolling around your basket or your bag, right? And so our initiative has been to roll out multi-packs to a lot of the mass and food retailers. And in that first year, and if you go look at our Q4, again, earnings deck, you'll see the first-year impact. I think what surprised us is one, it was a very big lift. And two, the single serve was still growing. And so, you know, like in my experience, which is beer, when we launched 12 packs, six packs took a, you know, took a dip. It's just, but, but no, I think, you know, it's helped by the category growing. It's helped that the multi-packs sort of are going to probably the loyal consumers that want to have a large quantity of coconut water in their houses. And I think having more coconut water in your houses, which we sort of also saw with COVID when people were at home, consumption by household rose, right? So I do think that one, it's been a good initiative for us. It's part of the natural evolution of a category, I think. And we're the largest brand and probably the only brand in the category that can do it in food and mass. So we're benefiting from it. But I do think having more coconut water in people's households is increasing volume per household. You know, if you have kids, if you have something in the fridge, when you go looking for it, it's gone. And you know, you know that someone in the house drank it and it wasn't you, right? So, so I think it's been really good. And, you know, we think it still has another year to play out, if not longer. For sure. And then I know we've been mostly focused, you know, on the U.S. so far, but maybe you could just talk about the, you know, rest of world opportunity, you know, how you guys think about the runway in the U.S., you know, vs the runway outside the U.S. and just kind of how you think about the trade-offs, you know, between your focus and kind of where the opportunity lies from here? So we think international is a huge opportunity. The category is fairly well developed in the U.S.. It's developed in Brazil. In most other countries outside of that, there's a lot of runway. It's very undeveloped. Our international business outside the Americas is about 13% of revenue now. It's anchored in the U.K., which is a fairly scaled business, but lagging the U.S. in development. We're in over an 80% share of coconut water in the U.K.. And the category over the last 52 weeks has grown over 20%. So we think there's runway to continue to grow that market and then to use that success across Western Europe, but other developed countries where local coconut water does not exist and we can build a packaged coconut water category. We've talked quite a bit about Germany, which is probably five plus years behind the U.K., which is probably five years behind the U.S. in terms of development. But Germany is, you know, 80 million+ people, huge packaged beverage market. And we entered the market a few years ago first with Private Label as there was a Private Label businesses there. We were able to bid and acquire some Private Label that led to scale, the start of an entity and people in Germany. We then subsequently brought in the brand and we're starting to grow shelf space and we're starting to see the category really accelerate. So we think Germany is probably the next market that gets us excited and serves as somewhat of a model for expanding the category outside the U.S.. We would put Canada, although in the Americas in our results, we would view it also as an underdeveloped country with demographics that are very favorable to the category with strong growth of the category that we think as well can continue to grow for 10+ years. Great. Thanks for that. And then I guess with just, you know, the final question is, we could talk a little bit about your balance sheet, you know, where you see the best opportunity is for use of cash, you know, maybe remind us of your capital allocation priorities. And then if you were to do M&A, what sort of criteria you would look at for that also. Sure. Our balance sheet is quite clean. We have about $2 million of property, plant and equipment. We operate a very asset-light model, no debt, $125 million or so of cash ending Q1. So we're in a very strong position. We don't anticipate any material change to the shape of the balance sheet and our approach to investing in CapEx going forward. So that does put us in a strong place. We've talked about the board authorized a $40 million buyback. We executed $10 million of share repurchase the beginning, end of 2023, the beginning of Q1 of this year. So we will opportunistically work with the board on repurchasing shares as one mechanism. Our priority overall remains core growth and that'll be the area we invest in most. Over time, we believe we have the team, the infrastructure, the scale to really help brands grow and M&A will play a role over time either within the U.S. or internationally to expand our scale. We would look for something most likely in better-for-you beverages that leverages our current organization, something with scale that's growing, let's say $25-$50 million at least of revenue that we could fit into the organization and really help accelerate their growth through synergies with our team. Great. Well, I know we're kind of right up against the clock now, but Martin and Corey, thank you so much for being a part of our conference. We've learned a lot and we're really happy to have you guys. Well, thank you. Thank you for having us and we enjoy the relationship.