Hello, and welcome to the Vita Coco Company's Second Quarter 2024 Earnings Conference Call. My name is Corinne. 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'd now like to hand the call over to John Mills with ICR. Thank you, and welcome to The Vita Coco Company second quarter 2024 earnings results conference call. Today's call is being recorded. With us are Mr. Mike Kirban, Executive Chairman, Martin Roper, Chief Executive Officer, and Corey Baker, Chief Financial Officer. By now, everyone should have access to the company's second 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 the 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 available on our website as well. With that, it is my pleasure to now turn the call over to Mike Kirban, our Co-founder and Executive Chairman. Mike? Thanks, John, and good morning, everyone. Thank you for joining us today to discuss our second quarter 2024 financial results and our performance expectations for the balance of 2024. I want to start by thanking all of our colleagues across the globe for our continued incredible performance and their commitment to the Vita Coco Company and to our mission of creating ethical, sustainable, better-for-you beverages that uplift our communities and do right by our planet. Our second quarter results reflect that our strategies are working, and we believe that our customer relationships are as strong as ever. Our priorities of driving growth in the coconut water category and initiatives to grow our share of the category are visible in the healthy retail scans in our major markets, where coconut water remains one of the fastest-growing categories in the beverage aisle, delivering double-digit volume growth. Year- to- date, through end of June, according to Circana, the Vita Coco brand grew 11% in the U.S. and grew 19% in the U.K. Importantly, the growth in U.S. scans accelerated in the second quarter, with Vita Coco brand growing at 14%. In addition to strong branded retail growth, we experienced strong growth in private label coconut water volume shipments. Our private label strategy allows us to benefit more fully from our category growth initiatives. Our second quarter branded net sales lagged the expectations we had at the beginning of the quarter, with shipments impacted by short-term delays in product supply due to challenges in the global ocean freight market, which Martin will comment on more fully. We believe our execution at retail was supported by inventory drawdowns at distributor and retail, explaining why scans are ahead of shipments. Our priorities for 2024 remain unchanged: adding households, expanding occasions, acceleration of our international businesses, and innovation. Our commercial initiatives around Vita Coco multi-p acks, Vita Coco Farmers Organic, and Vita Coco Juice continue to perform very well, as seen in U.S. Circana scans that we highlight in our investor deck, which was posted to our investor relations website today. Vita Coco Juice continued to perform well in convenience stores, growing 27% year- to- date, and initial signs at major mass retailers are encouraging. Our new innovation, Vita Coco Treats, a delicious and refreshing coconut milk-based beverage, provided promising results in our initial retail tests. The launch has been limited to date, but the retailer and consumer acceptance has greatly exceeded our expectations. We're currently evaluating our plans for next year as it relates to Treats, and we'll provide an update when we talk about our 2025 plans. Our international business remains healthy, with strong performance in Europe, led by the U.K. and Germany, offset by weaker shipments in Asia. Coconut water remains one of the fastest-growing beverage categories, both in the U.S. and the U.K., and Vita Coco is the number one brand. During the first half of 2024, we became the number one branded coconut water in German retail scan data. We believe we are well positioned to lead and grow the category in these markets and to grow our share further through a combination of branded and private label growth. Additionally, I see very exciting opportunities in other large international markets, and we're working to establish better routes to market and brand strategies to capture these opportunities. I believe that we are in a stronger position than we've ever been to accelerate our growth, and with that, with inventory improving in the back half of this year, we're setting ourselves up for what I believe will be a very strong 2025. And now, I'll turn the call over to our Chief Executive Officer, Martin Roper. Thanks, Mike, and good morning, everyone. We're pleased with our second quarter performance. ... We achieved net sales growth of 3% in the second quarter of 2024, driven by both Vita Coco Coconut Water and private label coconut water growth, offset by the decrease in private label oil business that we expected and had communicated in prior quarters. The Vita Coco Coconut Water growth was achieved on top of the very strong 2023 second quarter growth of 23%. Our second quarter gross margins were strong, benefiting from lower finished goods and transportation costs. Branded promotional cadence reduced relative to prior years due to inventory constraints, and from price mix effects in private label, primarily the decline in the importance of the private label oil business, which has traditionally operated on significantly lower margins. From a cost side, our finished goods costs, excluding transportation costs year- to- date, are in line with expectations. Domestic transportation costs are stable, but the ocean freight market has been volatile, particularly for containers shipped in the back half of the second quarter. We have also seen ocean carriers seeking significant surcharges over previously negotiated rates prior to their providing capacity and cutting frequency and reliability of port calls. We believe rates being quoted by the carriers are temporarily high. Currently, we are negotiating rates monthly on most routes, with limited commitments to longer-term contracts, where we need to guarantee capacity on certain lengths. If we see competitive offers for long-term contracts that make sense to us, we would reconsider our approach. The minor increases in ocean freight costs seen in the first quarter did not materially impact our P&L during the second quarter. The more recent increases in ocean freight rates starting during the second quarter did not materially impact the P&L, as many of these containers were not received during the quarter due to delays as transit times have increased. We expect a more significant impact to our gross margins in the third and fourth quarters as containers secured in May, June, and July are received. Our net sales performance in the quarter was hampered by the supply chain challenges, which are creating short-term constraints in our ability to meet demand. Since our last earnings results, we saw a significant reduction in container availability and service reliability, and saw extended transit times create delays in container arrival. For instance, in the period of May, June, July, we were only able to obtain containers representing approximately 85% of what we secured in the same period the prior year, even though we had planned for growth and had inventory at supplier ready to ship. Transit times on most lanes have extended 2-4 weeks, also delaying inventory arrival. Due to these inventory delays, while it is difficult to triangulate, we estimate to be lost between 3% and 5% of net sales growth through the first two quarters. Through June, we have not seen any material impact at retail, as evidenced in our continued strong brand scans. But in recent weeks, we have seen some slowing of growth in retail scans, which suggests the inventory tightness is starting to appear on shelf. Our inventory levels, as well as those of our distributors, are very tight and well below normal levels. The lack of inventory in country is expected to constrain shipments in at least July and August. While product is moving, it is not currently at volumes that will allow us to rebuild inventories nor provide our expected level of service. Based on conversations with retailers, we believe some competitors may be experiencing similar challenges. We have maintaned our production levels and have significant inventory at supplier ready to ship when container availability improves. As supply chain flow recovers, our shipments should benefit from retailer and distributor inventory builds in the back half of the year. Our full year guidance range on both revenue and Adjusted EBITDA is based on July container availability, transit times, and ocean freight rates continuing for the balance of the year. We believe the accelerated strong category growth is a positive indicator and supportive of our long-term growth algorithm for branded growth. We have secured production capacity for 2025 to more than cover this expected growth. With that, I will turn the call over to Corey Baker, our Chief Financial Officer. Thanks, Martin, and good morning, everyone. I will now provide you with some additional details on the second quarter 2024 financial results. I will then provide an update on our outlook for the full year. For the second quarter 2024, net sales increased $4 million, or 3% year-over-year, to $144 million, driven by Vita Coco Coconut Water net sales growth of 4% and private label declines of 4%. On a segment basis, within the Americas, Vita Coco Coconut Water increased net sales by 4% to $98 million, while private label decreased 4% to $23 million, as we saw the impacts of the transition out of the private label coconut oil relationship that we had previously indicated would happen. Vita Coco Coconut Water saw a 1% volume increase and a 3% net price mix benefit. While private label increased 11% in volume, this was offset by price mix changes due to the coconut oil transition, leading to a net sales decline of 4%. Our Americas Vita Coco Coconut Water scan trends remain very healthy. Our shipment results in the quarter are lagging the scan trends, primarily reflecting the challenges in obtaining ocean freight containers that Martin outlined earlier. For the second quarter 2024, our international segment net sales were up 7%, with Vita Coco Coconut Water growth of 10%, where strong growth in Europe was partially offset by volume softness in Asia. Private label revenue declined 5%, where strong private label coconut water net sales was more than offset by the transition out of the private label coconut oil relationship we referenced earlier. On a quarterly basis, consolidated gross profit was $59 million, up $8 million versus the prior year period. On a percentage basis, gross margins were very strong at 41% on the quarter, an improvement of approximately 400 basis points over the 37% reported in Q2 2023. These increases resulted from decreased finished goods and domestic transportation costs, branded pricing, and mix effects within private label products. Moving on to operating expenses, second quarter 2024, SG&A costs decreased 5% to $29 million. The reduction was driven by the timing of marketing investments, partially offset by higher year-on-year personnel expenses. Net income attributable to shareholders for the second quarter of 2024 was $19 million, or $0.32 per diluted share, compared to $18 million, or $0.31 per diluted share for the prior year. Net income for the quarter benefited primarily from increased gross profit and decreased SG&A costs, partially offset by a higher year-on-year impact from unrealized FX derivatives and higher year-on-year tax expense. Our effective tax rate for the second quarter 2024 was 25% versus 19% in the prior year quarter. This represents a year-to-date ETR of 23% versus 20% last year. The increase was driven by jurisdictional mix of the pre-tax profits and impact of higher nondeductible expense this year related to covered employees' compensation compared to last year. Second quarter 2024 Adjusted EBITDA, our Non-GAAP measure, which is defined and reconciled in our press release, was $32 million, or 22.4% of net sales, up from $24 million, or 17.2% of net sales in 2023. The increase was primarily due to the gross profit improvements previously discussed. Turning to our balance sheet and cash flow. As of June 30th, 2024, we had total cash on hand of $150 million and no debt under our revolving credit facility, compared to $133 million of cash and no debt as of December 31, 2023. The increase in the cash position was due to strong net income, partially offset by increase of working capital of $22 million and the year-to-date repurchase of shares valued at $10 million. Working capital was driven by a $29 million increase in accounts receivable, which is due to the timing of customer payments. Inventory decreased $5 million due to the inventory delays Martin discussed earlier. Based on our year-to-date performance, our confidence in the health of the category and our Vita Coco brand, we are reaffirming our full year guidance. We expect net sales between $500 million and $510 million, with expected gross margins for the full year of 37%-39%, delivering Adjusted EBITDA of $76 million-$82 million. The guidance reflects our current best assumptions on marketplace trends and our global supply chain costs and assumes a flow of product to our markets at the same rate as we are experiencing July. While we are confident in the underlying strength of our business, we are maintaining the range on net sales and EBITDA guidance to reflect continued uncertainty on the transportation cost side. For the balance of the year, we plan to adjust promotional activity to reflect expected product availability, which will allow us to deliver our gross margin adjusted EBITDA guidance while absorbing the higher global transportation costs that we are currently seeing, which we estimate in the second half of the year to be approximately $15 million of increased transportation costs on a rate per case equivalent basis over the equivalent first half rate per case equivalent. As Martin mentioned, these higher costs were delayed in reaching our P&L due to the container shipping delays and are now expected to impact our P&L in Q3, with more significant impact in Q4 due to current rates. We expect disciplined SG&A spending with full year 2024 SG&A flat to slightly increasing year-on-year. We may adjust our SG&A spending if we see improvements in ocean freight quicker than expected or if we see productive investment opportunities to strengthen the business for the long term. We anticipate our cash balance will remain healthy through the year, allowing us to fund any potential M&A opportunities that emerge, support further share buyback activity, and continue to invest in our business for long-term growth. With that, I'd like to turn the call back to Martin for his closing remarks. Thank you, Corey. 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 and the coconut water category. We are confident in our ability to navigate the current environment and are excited about our key initiatives to drive growth. We have strong brands and a solid balance sheet, and we are well positioned to compete domestically and internationally. Thank you for joining us today, and thank you for your interest in the Vita Coco Company. That concludes our second quarter prepared remarks, and we will now take your questions. Okay. ...Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Bonnie Herzog of Goldman Sachs. Your line is now open. Thank you. Good morning, everyone. Morning, Bonnie. Hey. Morning. I had a question on your guidance. You did maintain, you know, the ranges, and I guess on the top line, this implies a slight deceleration in the back half versus the first half. So I guess I'm just trying to understand, you know, the drivers or expectations of that, especially in the context, you know, of what I would describe as still pretty strong scanner data, and then the comments you made about retailers rebuilding inventory levels. You know, other than, I guess, the impact from the, the lost coconut oil volume, you know, what's sort of driving this? And, you know, maybe any color on how fast your business is growing in non-tracked versus tracked channels, I guess. Thanks. I think the category is working incredibly well. The brand is working well, fastest growing category in the beverage aisle, and we've been driving that. Right now, I think the big question is how fast we can get inventory. It's less of a demand issue and a demand growth issue and more of just a speed of inventory getting into the U.S. will help us, you know, really determine and achieve the back half of the year. Yeah, and I think it affects both the U.S. and the U.K. and Europe, right? And there are two factors, both availability of securing containers and then transit times, and we've been hit by both factors the last three months of extended transit times and having problems securing containers. So you know, I think our outlook, it reflects what we currently know, but there's obviously a lot that can happen between now and then. Okay. Fair enough. And then maybe another question, I guess, just, I guess, hoping for a little bit more color on the puts and takes of your gross margin expansion in the quarter. You know, I assume, you know, what we're talking about right now is just the lower inventory levels that you had and, you know, the delays, you know, possibly had an impact on your margins. And then could you quantify the impact that these, you know, rising rates had on margins in Q2, you know, for us to just have some context, for the impact, you know, we're seeing lately? And then, I guess finally, on that topic, you know, to what extent did you layer on, you know, additional forward shipping contracts since your Q1 call, and, you know, where do your contract levels stand this year versus the prior few years? Thank you. Yeah. I'll take the first part, Bonnie, on the margins. In the quarter, the shipping costs had no material impact because of that delay in containers. Okay. So the spike you saw towards the end of the quarter, which we expected in Q2, had really not a material impact, which is what drove the higher margins. Okay in the quarter, and then that will start in Q3 as containers flow in. Yeah, and I would just comment, when we last spoke, we were looking at, you know, a freight spike, ocean freight spike in the first quarter, which had diminished, right? And that really wasn't material in impact to our P&L in the second quarter. The rates that we started to experience, you know, sort of in May or started to see and sort of continued to deteriorate in June, you know, will impact Q3 and Q4, we believe, particularly if the current rates continue for a couple of months. We tried to provide some help for everybody by talking in the script on our guidance as to how much excess transportation costs on a rate basis we expect in the second half of the year versus the first half of the year to hit our P&L. We sort of did the calculation based on, you know, transportation case equivalent in the first half and what we are sort of baking into our guidance for the second half, based on what we currently see. So that, I think, will help you triangulate that a little bit. And as we talked about on the call, Q3 gross margins will deteriorate, and then Q4 will probably represent the worst that it gets, based on what we currently see, based on what we currently know. No, yes, that was definitely helpful, but I just want to clarify something. So is there any change in, you know, any of the forward shipping contracts, you know, that you've put on versus, I don't know, what you kind of did in Q1? Just trying to understand that. Yeah, no, no change in approach. Okay. I think, you know, we view what's going on in the current shipping world as an aberration, and not driven by fundamental long-term supply and demand. Everything we read about sort of long-term capacity is the carriers are adding ships. These are the ships they purchased with all the money they made during COVID. So capacity is expanding. I think I read 1% a month, but I'm not an ocean freight specialist, so please don't quote me. But I'm sure- Coming one pretty soon. I'm sure somewhere in all of your organizations, you have guys who follow this, right? And it doesn't feel to us to be any fundamental, you know, economic growth issues going on that would be suggesting that supply should be growing- Right ... beyond the capacity that exists in ocean freight. So we view it as a, you know, long-term, you know, excess capacity in the market and that these rates should be temporary. And we- that's how we viewed it when we spoke to you last, and that's how we still view it. Okay. We think there's a little bit of profit padding by the major ocean carriers going on. There certainly have been, you know, since we last spoke, some port delays that maybe are reducing capacity a little bit. But again, this doesn't seem to be a fundamental driver for them. So again, they should be temporarily, and I think, indeed, Singapore was one of those ports, and that started to ease up. Mm. So, you know, we look at it as this is temporary aberration. If it goes on for a long period of time, we will think about pricing actions to cover it. But at this point in time, we have an expectation that sometime in the future, it should wane back to more normal historical levels... And because of that view, we have not entered into long-term contracts at these elevated rates, and wouldn't unless we thought they reflected fair value for the period of time that we were committing. All makes sense. Thank you for that color. I'll pass it on. Thanks, Mike. Thank you. Our next call comes from Chris Carey of Wells Fargo Securities. Your line is now open. Good morning, everyone. Morning, Chris. Good morning, Chris. So you mentioned the deceleration in consumption data in recent weeks relative to the trends that we saw in Q2. I think you're ascribing that deceleration to supply. Could you maybe also comment on what you felt the Q2 delivery was helped by warmer weather, hydration categories being stronger in Q2 broadly, and whether you're seeing some maybe timing bump in Q2 that's decelerating, or is this really all to be seen as you're seeing supply challenges and there's high confidence that it's really just that? So just trying to contextualize some of this weather dynamic relative to the supply dynamic. It's supply challenges. The demand, the demand is strong. I mean, I think, I think what you were seeing in Q2 is, and it's not just our brand, it's the category. Category is really mainstreaming, it's hitting a moment, and it's really working. And so we're working as hard as we can to get product in country and fill the demand. Yeah, I wouldn't- Okay. Link anything to weather. We tend not to use weather as an excuse for a bad trend or a good trend. Yeah. You know, we're sitting on a category that's healthy, that's growing, and obviously quite unique in the beverage space, as Mike mentioned. And, you know, the minor variations in trends, you know, Q2 to Q1, you know, I think we think the category accelerated a little bit, but maybe the numbers last year were weaker. We, we haven't gone back and looked. We just feel very good about what's going on, and I think all we're really saying is we're starting to see some signs that our inventory on shelf does not look as good as we would like, and that might be starting to show up in scans, in the last few weeks. But again, it's still showing growth. Okay. Okay, that makes sense. And then just a second question. Can you maybe just give us an update on your multi-pack strategy broadly and perhaps just a little bit of color by channel, including club, and just how you see the multi-pack strategy in general driving this acceleration or this strength and growth that you're seeing relative to, say, your base offerings? Thanks. Yeah, I think, you know, we've continued to push distribution on multi-packs. We're still not where we'd like to be. I think we said last quarter that maybe now, instead of a two-year program, this is a three-year program. We also indicated that some of the shelf sets were sort of delayed. So some of the gains that we would like to get, you know, haven't come through yet. I think, you know, as we think about this long term, we think that some of our other SKUs can also have multi-packs, so we're thinking about that potentially for 2025. But I'm not yet ready to announce plans, and it's still having preliminary talks with retailers about the suitability for that. But, you know, I think our starting point is with 50% share, we're one of the few brands that can have multi-packs in food and mass retailers, and that this is a pretty normal progression for a beverage to go through, you know, to build with a smaller pack size and then add multi-packs as, you know, drinker velocity increases and drinker household penetration increases. And so that's how we think about it, and we think we're well positioned to benefit from it. As it relates to the quarter, you know, our multi-pack business, you know, provided some of the growth, but our, you know, rest of the SKUs also was still growing. I think they're not quite growing as fast as they were a year ago. You know, in the first year, the multi-packs appeared to be very incremental, but when maybe now there, maybe there's a little bit of cannibalization with the singles, but it's still very healthy across the board. I just point you to our slide nine on our investor deck. Okay. All right, thanks so much. Thank you. Our next question comes from Michael Lavery of Piper Sandler. Your line is now open. Thank you. Good morning. Good morning, Michael. Good morning. You mentioned that it sounds like how you're not contracting further out for the rest of this year. Obviously, I would assume that applies to 2025 as well. So just coming back to where you said you could price, you know, take a pricing action if needed, can you just speak to some of how you sit with price gaps? And I think my sense is that you've priced less than some other beverage categories, generally speaking, so that you not only are fairly well positioned versus history that way, but would theoretically have some headroom still for pricing if you needed it. But can you put, you know, some of that in context and just give us a sense for how you sit there? Yeah, I think, so over the last three, four years, most of the other beverage categories that are manufactured domestically have taken, you know, significant pricing. You know, on the soda side, I think it's, you know, 40%-50% or more cumulatively. It's quite aggressive. We did not see, other than the ocean freight issues, we didn't really see the product inflation because of, you know, where we're being produced, how we're being produced, how we're growing, the economies of scale we're generating for everybody. We haven't really had that need to. So certainly, the price gaps to other categories have closed over the last four years. We still remain a premium beverage at a premium price point, representing the functionality and sort of lifestyle that we bring to our drinkers. We did take some pricing, what was it? In late 2022, early 2023. It didn't really slow down the growth that much, maybe a little bit, but then the growth, you know, kept going. So we know we have some pricing power, and so we will monitor it. Obviously, you know, we've indicated in the balance of the year that we're reducing price promotional activity, so we'll get a feel for how our brand behaves at, you know, with a different price cadence, and we'll evaluate that. But I think long term, if ocean freight is stable and at historical levels, we're not thinking that we have a need to take consumer pricing up. But if ocean freight were to remain elevated for a period of time that we felt we needed to cover that, then we would. And I think the other element in the price gaps is the price gap to private label, and private label will eventually follow what the costs are doing. So, if ocean freight remains elevated, then private label will eventually move, and that will close that gap, which will give us also some flexibility. So I think we feel if these, these costs stay for a while, we have pricing power, but we don't believe they will stay for a while, so we're currently sitting tight, and we'll monitor the effect of our, change in price cadence to understand our elasticity. Okay, great. That's helpful. And you did some buybacks earlier in the year, but looks like you called out that there weren't any in the quarter, and you're building some cash. So any thoughts on either why a little pause and/or you know what we might expect for the rest of the year? So, I would say that we sit down quarterly, and we look at what's going on in the business and our potential uses of cash, both for organic growth, supporting innovation, building inventory, adding capacity, and M&A. And so that's a regular cadence, and then based on that, we decide if we wish to attempt to buy back stock or not, and how many dollars. And I don't want to talk about what that approach is for the balance of the year. I just want to tell you that it's a regular quarterly cycle, and the net result of that in the last quarter was we didn't buy anything back. Okay, thanks. I'll pass it on. Thank you. Our next question comes from Kaumil Gajrawala from Jefferies. Your line is now open. Hey, guys. Good morning. Good morning. Here we go, chatting about- Here we go. ... ocean freight again. I guess the, you know, the, the most critical question, but hardest to answer is: What are you doing, or how do you know that the supply delays won't bend the curve of demand? Particularly because it seems like things are inflicting-- you know, they've been growing fine, but they're growing faster now. And whenever you hit these sort of tipping points, supplies becomes even more critical than maybe it would be on a normal basis, and so how are you managing that balance? And then just the, the follow-up on that same point is: How are you thinking about the core of your portfolio versus the contribution of innovation in exactly that sort of context? Yeah. So, you know, a couple of things. We are trying to secure every container we can, and even at these elevated prices, right? 'Cause we certainly believe we should be fueling the growth of the category and the brand. Because of the location of many of our facilities, we are in subports that maybe are a stop for a feeder vessel, and what we've been seeing is the feeder vessels haven't been coming, and then we haven't been getting the stops, right? And so even if we were willing to pay, and obviously we don't advertise, we're willing to pay more than the current market rates, but even if we were willing, the containers just weren't available to us. So we're aggressive in taking the containers we can. I think importantly, we're just going through peak season. We do have a seasonal business, and so these are our peak months, and we've managed to, what I would say, stay afloat, to use an ocean freight metaphor. And therefore, in the balance of the year, if we're able to maintain the flows, then our situation should recover. So we have some, you know, view on the recovery, and that gives us confidence in our guidance. But again, as I sort of said at the opening, obviously, we're subject to, like, if transit times were to get longer, that hurts us. If containers were to become less available than they currently are, that would hurt us. Or equally, the other way, if transit time shortened and more containers became available, then we would benefit. So we're currently in the business of securing whatever containers we can to move the product. We have, as we indicated on the call, not shut down production, 'cause we believe those containers will become available. So production has continued. There is inventory at supplier waiting to ship, and as soon as that sort of constriction, you know, reduces, there will be a flow of product coming through, which will, you know, allow us to, to, you know, maybe accelerate just the category, right? Just to be clear, there is a flow. Oh, yeah. It's just not the flow we would like it to be right now. No, there's a flow. Yeah. There's absolutely a flow. Yeah. Yeah. Um- Got it. On your second question, obviously our priority is growing the core, and it's very healthy, and it's growing, and that will remain the priority, you know, in all of our activities. We have some innovation around the core, both in potential new multi-packs that I mentioned earlier, and in, you know, things like treats that we talked about last quarter, that potentially could help the core or allow Vita Coco brand to expand into adjacent categories. So that would be the second priority, with closely followed by things like PWR LIFT, which are outside of the Vita Coco family. So, we're trying to grow them all. We're obviously very happy that the core is very healthy, and we're doing everything we can to support that and accelerate category growth. I think importantly, also, on the core, you know, we've got positive trends internationally in Europe, where both our core market, which is the U.K., is growing healthily, but we're seeing nice green shoots that we talked about last time in Germany, for instance. And so, again, that's a big area to support growth over the next five years, where, you know, I think we've envisaged that Europe could be as large as the Americas in some point in time in the future. But the leading coconut water brand has to take the lead in driving that, and we're gonna try and do it, right? So we're excited by all of that, and then the innovations are obviously secondary, but potentially could provide some value if one of them produces an unlock. Got it. And I was gonna ask about international, but in the context of, with what's going on with the ocean freight network, is it easier to supply those markets and find containers to get there, or is it the same globally, and it's just, you know, you, you get what you get? So the container situation varies by lane a little bit, but I would say that Europe has experienced the same sort of issues as America has. The lane that behaves a little differently is Brazil to America, which is a dedicated America lane. So that can behave just on its own, 'cause it's a distinct, you know, circular pattern relative to Asia to Europe, Asia, Asia to London. So no, I think all of our markets are experiencing similar things and, you know, to greater or lesser degrees, depending on exactly where that product comes from. This availability issue has not been going on for a long time, right? The availability issue, regardless of cost, started 30, 60 days ago or so. Yeah, it started in May. You know, we think it is quite temporary, and we're excited to see it, you know, start to loosen up and that flow that we talked about to accelerate. Yeah. Got it. Thank you. Thanks. Thank you. Our next question comes from Eric Serotta of Morgan Stanley. Your line is now open. Great, thanks for taking the question. Just first, a housekeeping item. I know Corey mentioned that the guidance implies or the guidance is based upon, you know, July container availability and rates. But do you need an increase in the container availability in order to rebuild inventories to your targeted level or more towards your targeted level by year-end? And then just sort of a bigger picture question for Mike. You know, clearly, the category is having its moment. You know, what do you think is driving that acceleration that we've seen at a time when, you know, just about every other beverage category and many, many CPG categories, you know, really, really have slowed this spring? What do you think is sort of the differentiator here? How much of a factor do you think that your different demographics are versus other NARTD, or CPG categories? Thank you. All right. Well, taking the sort of forward-looking one first, our guidance is based on sort of the July availability and pricing and transit times continuing. If that continues, it, you know, obviously, the year-end inventory somewhat depends on what happens on the demand side. And so, you know, it's very hard to say. It, you know, as, as it's been alluded to, if we have product, we may sell more, and that one's really hard for us to fathom. So I think, you know, we think that inventories at the end of the year... Because of the seasonality of our business, inventories at the end of the year should improve. Whether they fully reach an ideal level for next year is obviously quite uncertain, but it certainly will be better than it currently is. And then, you know, I think, you know, as we've said, we think this is temporary, so we're optimistic that we might see some improvement, but again, who knows? So that's sort of the inventory question. The category question, you want to take? Yeah. I think we've been talking about this for a long time, right? Coconut water is one of the largest beverage categories in a large part of the world, the tropical world, right? We've always said, for the past 20 years, that we think we can build this category in North America and eventually other parts of the non-tropical world, to one day be as big as it is in the tropical world, just by creating the availability of the product, by educating consumers on the diverse, many usage occasions of coconut water, and just growing awareness. We've said for a long time, "Why can't this category one day be as big as orange juice?" and we believe it can, and we believe that we're starting to see that unfold as we've been able to really grow awareness of the category from a niche category, which it was just several years ago, into a more mainstream category, which it's just starting to become now. ... Great, thanks. I'll pass it on. Thanks. Thank you. Our next question comes from Eric Des Lauriers of Craig-Hallum Capital Group. Your line is now open. Great, thank you for taking my questions. First one for me is just a bit of a, follow-up on the category growth here. You know, certainly seems to have hit an inflection point or kind of critical mass here, now really mainstreaming. At a high level strategic standpoint, do you see this time as, you know, a time to sort of double down on investing in marketing or category growth, or is this a time where you can kind of take the, foot off the gas a bit and sort of let this momentum continue? And then just any comments on how that sort of, ocean freight is causing any tactical deviations from that strategy or not, would be helpful. Thank you. Yeah, I think ocean freight is clearly creating a slight deviation from it because we can only spend so much and therefore sell so much. And as we build inventory, which we're confident we're going to do throughout the rest of this year, we think we're in a very good position for 2025 to invest further against the category and really, you know, seize this moment and grow this category and further mainstream this category as our demographics continue to grow and come into buying power, both by age and demographic. And so, you know, we think we're spending appropriately now. We're always looking for opportunities to further invest where we see potential return on investment. We're excited about where we're at, and as we build inventory, we're excited about, again, continuing to invest in growing this category. No, that's helpful. And then my other question here, just on Germany and kind of, kind of using Germany as a, an example of sort of the international opportunity as a whole. I know that you guys have discussed, private label sort of, you know, almost as getting, you know, the sort of foot in the door there, that sort of enables you to, push the branded sales a bit more. So in Germany, with, you know, Vita Coco brand now being the number one brand in the scanner data, how should we think about that, the growth opportunity at this point, now that you've achieved this number one position? I mean, is this kind of like an inflection point, and now, you know, the opportunities, are sort of, you know, continuing to open more and more, or is this, you know, is this like a Steady Eddie execution opportunity, going forward? Just wondering how to sort of think about that and maybe if that's, you know, broadly indicative of the international opportunity as a whole, if there's anything unique to Germany to call out. Thank you. No, I think, I think that's a good question, and, and speaking of Germany, I think it's a great example of, of, you know, where we, we believe we are, you know, the brand that leads and drives the category. And I think Germany is a good example, where there were several brands, one specifically that had been quite successful in the market, owned by a large beverage player. And, we went in, and we disrupted the market, by creating a strong route to market, not using a large distribution partner, but in a way that we felt building a team and going direct to retailers and telling our story, starting with private label and then building the brand. And we took that strategy, and it's working quite well. And it shows us that, you know, this, this theory that, you know, we are the number one brand in the U.S., we are the number one brand in the U.K., and we can not only be the number one brand, but really consolidate and drive the category in many of these other international markets. Germany was just the first of what we think will be many, and each market will be different. Some markets we're in discussions with potential large distribution partners. Other markets, we're gonna take this kind of direct approach and build our own teams. And each market will play out differently, but we think there's this opportunity to really grow the category and grow the brand in many of these developed consumer goods markets around the world. Great. Thank you so much for taking my questions. Yep. Thanks. Thank you. Our next question comes from Jim Salera of Stephens. Your line is now open. Hi, guys. Good morning. Thanks for taking our question. Good morning, Jim. I wanted to ask about some of the promotional cadence once inventory levels kind of get back to normal. It seems like in the near term, obviously, gross margin headwinds from the ocean freight rate, but maybe a little bit of a benefit from lower promotion. I would assume that as inventory gets restocked up, it's at a lower gross margin, just given the transport costs. Would you anticipate turning promo on as soon as you get the inventory back in to kind of maintain the healthy consumption trends? Yes. Or do you expect maybe a gap between the inventory build and then... Mike, Mike says, yes, we will take a balanced approach based on what makes sense in the marketplace. But I think, you know, if you... Let's say we're talking about next year, right? We believe that a sensible price promotional cadence is part of giving consumers a reason to revisit the category and/or try the product. So it's an important part of growing the category, as well as also helping our retailer relationships and helping us secure, you know, more space and et cetera, et cetera. So we certainly think that price promotional cadence will return to more normal levels once inventory is in good shape. Obviously, the inventory's got to be there before you have those discussions. Otherwise, you get yourself into big trouble by promoting with no inventory. So maybe there's a lag, but certainly next year, our expectation is we'll be in a more normal price promotional cadence. Okay, great. And then if I take the assumptions that's baked in for the back half of the year, you know, July availability and July rates. If we see ocean freight rates go up from where they are at the end of July, would that primarily be a 2025 impact, or, or could we see that creep into 4Q as well still? So a little bit dependent on transit times. Currently, they're extended, and so let's say an August container, depending on which lane it was on, probably wouldn't arrive much before end of October, November. And so, you know, if rates go, you know, were to change up or down, that's the sort of timing of impact. There are some issues around, you know, whether it's recognized as PPV or whether it's gets capitalized, et cetera, at the end of the year type issues. But those are the sorts of things that we would, you know, worry about or try and model if we were trying to model all this. Frankly, we're not trying to model it. We modeled continuation of current, 'cause it made life a lot easier. Yeah. Okay. So really, unless the impact is like, you know, next week it spikes, it probably isn't until 2025, just to tie that off. Yeah. Jim, there's a little bit more time, right, to Martin's point, so you're at November, but not a ton. Yeah. The end of the year ends quickly. If transit times were to flow up, then maybe there could be an impact, right? And, Yeah. You know, if transit times were to shorten, then you suddenly get more containers than you anticipate all coming in at once, and that has, you know, some issues in a quarter, right? So I suppose the quarters could be noisy, depending on what happens, is what I would say. We've obviously tried to provide our guidance as best we can, but all of these effects, we believe, are temporary, based on our understanding of ocean freight, you know, supply and demand dynamics in the long term. Okay, great. Thanks for the call, guys. I'll hop back in the queue. Thanks. Thank you. Thank you. Our next question comes from Robert Ottenstein of Evercore ISI. Your line is now open. Great, thank you very much. A few questions. One, and you kind of touched on it a little bit. I mean, you don't see it in the numbers, which are terrific, but you know, obviously a lot of companies are talking about the second calendar quarter being weaker than the first, in terms of the consumer. Do you see any signs of that in your consumer base? So that's number one. No. Number two—no. Okay. Nothing, nothing in the data that we have visibility to. Yeah. Okay, number clearly. Consumers came to us. Yeah. Number two, C- stores. C- stores has been a weak channel. It's an area that you've targeted. Love to get kind of an update on how you're, how that's working out, and maybe the C- store traffic weakness is a sales point for you in terms of getting more shelf space. So I'd like to see how that has played out. And then third, do you have any metrics or numbers that you can share with us in terms of increasing household penetration outside of your core demographics? Thank you. So I can maybe touch on C- store. Our C- store business has been very, very strong year- to- date, and it's been one of the highlights. If you look at the measured channel, you will see that growth. And then part of that is we've expanded our package portfolio into C- store, and we've launched a 1 L in some customers, which is offering a slight value, but a bigger consumer occasion, and we've really seen that do well. It makes us super excited about the demand for the products in the category. So we feel really good about C- store and haven't seen, again, connected to the consumer, any real weakness in the consumer. Um, right. And then from a household, you know, penetration, perspective, household-building households, I don't think we've seen any change to what we previously talked about, right? Obviously our focus is on growing households and, you know, through trial and then also growing household velocity, through occasions and, and multipacks. And I think we're just seeing a continuation of those same trends, so there's nothing there changing that I would call out. Terrific. Thank you. Thank you. I am showing no further questions at this time. I would now like to turn it back to Martin Roper for closing remarks. Thanks, everybody. Thanks for joining us today, and thanks for participating, and we look forward to doing this again in about three months. Mm-hmm. Everyone, have a great, great August. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.