All right. Good morning, everyone. Thanks again for joining us today. It's a pleasure to introduce our next speaker. With us today is Vita Coco's co-founder and Executive Chairman of the Board of Directors, Mike Kirban. Mike has served as Executive Chairman since May 2022 and as Chairman of the Board since 2024. Mike's also previously served as CEO and co-CEO of the company. Vita Coco was founded back in 2004, and they are the market leader in what I would describe as a very attractive and fast-growing coconut water category. They have a full pipeline of products, including the recently launched Vita Coco treats that fuse functional benefits with authentic and better-for-you ingredients, and just recently posted very strong Q1 results. Thank you, Mike, for joining us today. Great to be here. All right. Glad to be at all these people. I know, I know. It's just you, but that's good. It's good. You're the person we want to talk to. Right. Maybe we can start with the health of consumers recently. On your most recent earnings call, you mentioned that some consumers might be focusing a bit more on value, which should not surprise any of us in the room. Curious how, in the context of that, how elasticities have evolved recently. I am just thinking about that also with some of your guidance, kind of what that assumes for the consumer also for the rest of the year. Yeah. I mean, the consumer for coconut water and Vita Coco specifically is quite strong. We've been doing well. You saw in Q1 category growth, I think it was 23% in Circana, and Vita Coco brand grew 20%. We clearly have a strong consumer, and it continues to grow. We think that the category and the brand specifically, but the category is in its early days. We believe we're growing and building this into a household staple across North America and other markets. We feel like the consumer is there, and the consumer is paying. We had a small price increase that went into effect the last couple of weeks. You're seeing that in Circana, and volumes are holding up nicely. We think that the consumer is paying for functionality. They're paying for health and wellness, and that puts us in a nice position. Yeah. No, that's helpful. Sticking with the consumer, I did want to ask on the Hispanic consumer because you do over-index, and I know there's been some headline concerns about the health of that consumer cohort. Curious how you're seeing that or elasticities hold up with that consumer. Yeah. I think this is something that has come up with other consumer goods companies. I think when you're flat, declining, or growing single- digits, it's easier to point to something or to point to something specific. Obviously, when you're growing at 20%, it's hard to. We do over-index with an ethnically diverse consumer, whether it be Black consumers, Asian consumers, Hispanic consumers. I think our Hispanic index is like 160-165. We believe that our Hispanic consumer is second, third generation. We think they're more affluent. We, again, come back to this thing where consumers, regardless of ethnicity or anything, are investing in health and wellness and functionality. Okay. Makes sense. I would like to pivot to the category because it is so attractive. I think about, I cover all of beverages, and it is probably one of the fastest-growing categories of this type of size in the beverage aisle. Curious, as the leader, what are you doing to drive continued growth over the next five, 10 years? Yeah. I think if you think about the category, it is the fastest-growing category, I believe, in the beverage aisle. We think it's really early days. We've had this conversation before where I talk about. Right, right. Yeah, talk about other categories. I always like to point to Ocean Spray and Cranberry. This is a brand that has Ocean Spray has 40% household penetration in a category, Cranberry that has 50% household penetration. Compare that to us, which is low teens household penetration. We have this huge opportunity to gain distribution, but most importantly, gain households. I think as we gain households, there's no reason we can't double this business over the next four to six years. I think we do that by growing household penetration and, while we're doing that, growing breadth of distribution in our current channels and growing distribution in new channels. Yeah. That was one of my follow-up questions about doubling the category. You are thinking the next four to six years. Like you mentioned, through distribution, I assume that is innovation, driving trial. Is there anything in particular or any order you can rank some of those growth drivers for us to help us understand? I think it all comes back to households, right? We've been growing households around 10% per year. If we can keep on doing that, that gets us there. By growing households, we're really focused on all of the many usage occasions for coconut water. This is something I think very unique about this category. If you think about it, we started talking many years ago about smoothies and using coconut water in smoothies, and that became a big usage occasion. Mixing it with cocktails, and then mixing it with your green powders in the morning and getting that done. Also as a hangover cure. Most importantly, Vita Coco has three and a half times the electrolytes of the leading sport drink. The hydration occasion. As you build out all these occasions, you're going to get more households, and you're going to get more usage within the households from different members of the household. That's how we think we continue to grow this business, that continued education. All right. Then thinking about your Q1 guidance, which I think was last week when you reported, and you kind of set forward, you reported. Was it a week ago or a month ago or three months ago? I know. It's all blurring. I mean, your results were great. 17% top-line growth. In the context of that, you did maintain your top-line growth guidance for the year of 8%-10%. I know that includes Vita Coconut Water growth of mid to high teens. Maybe unpack that for us. I know there's a lot of moving parts because I know treats and the price increases you mentioned are in there. Maybe talk through the delivery of your top-line growth, sort of suggests slowdown for the next few quarters. Yeah. I mean, a quarter doesn't make a year, especially the first quarter. It's about 20% of our year. We think it's still early. Early in Early in the year, we're really happy with the results. We're happy with the continued results. You're seeing it if you're looking at the Circana data, continuing to expand growth. The top line is made up really of three things this year. It's mid-teens branded growth. It's incremental growth from treats, the rollout of treats, which we're excited about and we can talk about, offset by some losses in some regional private label business, which we've talked about. That's kind of how we get to that number. We see this growth continuing. We're really excited about it. Maybe we should drill down a little bit on this last two in terms of treats that just rolled out nationally. What is your growth outlook for the brand? What are you seeing from the consumers? My understanding is it is bringing in an incremental consumer, a new consumer set. At scale, what are the margin implications from treats? Is that accretive or dilutive to corporate? Let's start with the consumer. This is a trend that we've seen around the world, this idea of using coconut milk as a base for this indulgent kind of opportunity. You're seeing it. We saw it first in China and all over Asia. There are all these innovative coffee shops opening up all over Asia, specifically in China. Their top one, two, three, four best-selling SKUs are coconut milk-based beverages. This is something that's happening on a global level. We're bringing that to the U.S., and we're seeing the results pretty clearly. It is bringing in a new consumer into the franchise, which is exciting. We already SKU quite young with Vita Coco. This is bringing in an even younger consumer. It's bringing in a less ethnically diverse consumer than our core, and it's bringing in a more rural consumer than our core. It's opening up the brand to new consumers, which is something we're very excited about. We think it will bring these consumers into the brand and expand the entire brand. It's still early days. Scans look great. Distribution looks great. Points of distribution that we were given by retail is exciting. We feel we're in a good position. That is factored into the guidance this year. You mentioned the other aspect is some losses, private label losses at regional retailers. I just want to clarify within the guidance, is that not anticipating any, or are you anticipating any further potential losses as far as private label? Yeah. No, we do not see any further losses. We feel that private label is like this. It is somewhat lumpy, and we like the business. We do believe that the majority of our growth in the mid to long term will be branded growth, which is good from a margin mix perspective. We will have periods of time where we gain more private label, and then we lose private label. That is kind of the game in private label and how it works. Is it fair to say that you're also maybe gaining branded at this particular retailer? Is that the opportunity as well? Yeah. I would say it is actually multiple retailers in multiple geographies. Our relationship and our partnership with these retailers is very strong, both on private label, but especially on branded. Our branded business is doing really well in all of these retail accounts. It is nice to see. Okay. Want to go back to pricing. You mentioned, of course, the price increase you took this quarter. It sounds like you said it's broadly sticking, at least from what we can see in the scanner data. I believe you have more pricing planned for Q3, assuming actually, okay, we're going to have to go there. Tariffs. Tariffs. Yeah. Assuming, I don't know, that was assuming the tariffs stay in place. Yeah, maybe update us on, if you can, how you're thinking about the news from yesterday about the potential impact on your business from tariffs, how you're thinking about that, and would that change future pricing if those tariffs really stay? Yeah. I try not to watch the news for several reasons. If we think about the tariff situation, we believe that the baseline 10% tariff is here for some time. As we think about how that affects our gross margins, we've talked about the fact that we believe that the 10% baseline tariff will be on around 60% of our global COGS. As we think about that, we're looking to mitigate that mostly with price this first round of baseline tariffs. If you think about the number, as we roll out that pricing, which would probably be around July, it is not super significant. It's not a huge price increase. We think private label will actually come up a little bit higher and a little bit more pricing than branded. We do not think it's going to be incredibly impactful. However, as we look at the guidance for the year, we've taken a little bit of volume for the price. Okay. Yeah. I was going to ask you that. The price gaps could actually narrow. I'm not necessarily seeing that yet unless I'm missing something in the scanner data. Your thought is, as we move forward in the next few months, that could narrow. With the tariffs, yeah. Yeah. And limit potential downtrading. Okay. Wanted to move or switch gears to Walmart and the distribution. I know you've talked about this, that you've changed some of the distribution or shelf space at Walmart. And my understanding is it led to a reduction in SKUs and space. I know you're in touch with that very important retailer. Just update us on how that has evolved for you. How are you thinking about your new space? Are you potentially gaining further space as the year progresses, etc.? Yeah. What happened at Walmart was unfortunate, but I think it is quite solvable and resolvable. We wanted to move to a more mainline aisle in Walmart for a long time. We were off to the side in kind of this random space in Walmart, which was new age functional beverages. We wanted to be in a mainline aisle. Juice in Walmart is a great place for us to be. We pull a lot of consumers from juice. The juice aisle is not a high growth aisle, as you know. We are bringing growth to places like that. You are seeing it in 7-Eleven where we are in the juice store driving significant growth. Moving to the juice aisle was great for us. When it happened, it all happened very quickly. We did not get the right SKUs. We did not get the SKUs that we wanted in the reset, which again happened fast. However, we are seeing incredible gains from a velocity perspective in that aisle. There is more foot traffic. Velocities are up significantly. We lost roughly 50% of our distribution, yet our sales are currently down high single- digits, roughly 10%. The velocities are up. Yes, we have been in touch with this retailer. We have actually, I think, and this has brought us together in a way. Sometimes when you have an issue like this, it creates a deeper relationship. I think we are in a very good position for distribution gains in the next reset, which would be in the fall. If that happens, that is, I think, going to put us in a really nice position in a higher velocity aisle, in a higher foot traffic aisle that Walmart should be a big growth driver for us into the future. It's interesting. I'm thinking about this particular retailer and the dynamic environment. I wonder if, yes, the next resets would be fall, but do you think they might make some adjustments before then? What they realize is they're losing share in the fastest growing category of the beverage aisle, right? What they're doing and what we're doing together in the meantime is working on off-shelf programming, front-of-store coolers, end caps. You're seeing it. When this first happened last fall, we saw declines of upwards of 30%. Over the last several months, we've been decreasing that decline to now in the high single- digits. I think it continues to get better between now and the next reset. The next reset should give us a major jump if it all comes together, how we think it's going to take it. Okay. How the conversations have been? Okay. the conversations have been? Okay. Yeah. Distribution gains. I know that's a huge opportunity and part of your growth. Maybe give us a little more color on where you're gaining distribution and where you still see opportunities. Just thinking about that in context of how that is this year versus previous years. Broadly, even with a 50% decline in distribution in Walmart, net-net, we're having distribution gains this year. That's a lot of distribution gains outside of Walmart, Walmart being a large portion of ACV and so on. There's been a lot of gains in multi-packs outside of Walmart. Farmers Organic, which is doing very well, obviously treats, and continued growth in terms of points of distribution across all channels, specifically C-store. I mean, you were to go into a 7-Eleven two years ago, and there was maybe one facing of Vita Coco. You go into a 7-Eleven today, in a lot of stores, if not all, there's a full shelf. And then our one-liter on the bottom. We're really expanding breadth of distribution at current retail. On top of that, we're starting to gain real distribution in a complete white space for us, which is food service. We see that as a long-term growth engine also. So far this year, some of these gains, you expect that to continue, whether it's fall resets in some of these other retailers, and then with innovation, it's allowing you to drive further gains. Yeah. With innovation. And back to the Ocean Spray story, which I like to come back to. You walk down the juice aisle in any retailer, there's an Ocean Spray set, basically. It's usually at least four ft, and it's significant. We never had that. We're starting to get more and more distribution. I think over time, with all the different types of multi-packs, adding new pack formats, all of this stuff, we continue to build that out. Someday, I'd like to see at least a four ft set in every major retailer of coconut water, us being the majority of it. All right. Sounds good. That's the goal. Let's talk a little bit more about innovation. We've talked a little bit about treats. Love to hear anything more on that. Also, just innovation around whether it's the core, coconut milk, alcohol, how incremental has this innovation been? Then thinking about in general, I know we talked about treats being maybe more incremental, or is there a cannibalization happening with some of the innovation that you're putting out into the market? Okay. I think all of our innovation starts right at the core and builds out from there. The biggest innovation we've had in, I think, ever has been multi-packs. It is pack format innovation that has been incredibly successful, and we think will continue to drive a lot of growth long-term. From there, it starts to go further into Farmers Organic and these types of things, and then treats. It feels like most of the innovation outside of pack innovation, right? If you sell a 12-pack, that is going to cannibalize the singles. That is kind of the goal. You get more units into the household. If we look at treats, we talked about the fact that that is bringing in a new consumer. We are not seeing much cannibalization there. Our Vita Coco Coconut Juice in a can is also a different consumer, and there's not a lot of cannibalization we're seeing there. We feel good about our innovation. If you think about treats and coconut milk, which is starting to show some signs of really working, those are actually sitting outside of Vita Coco Coconut Water. They sit in our, it's segmented into other within our financials. We see growth there and, again, a new consumer and a different usage occasion. Okay. And then sticking with the multi-packs, what do you think is your advantage there relative to peers in terms of what you've done? And then can you help frame for us what percentage of your mix or business is from multi-packs today and maybe where you expect that to get to? Yeah. I do not have the numbers in front of me. I think it is 40%-50% of our volume today and growing. I think if you look across the beverage aisle, we built this business on singles, which is very rare. If you look at a grocery store, any large format, it is mostly multi-packs in the aisle and singles up by the front-of-store cooler and singles in C-store and on-the-go consumption. We are starting to become, I think, a real beverage company. We are starting to see more and more of that. I think that will continue. Okay. All right. Let's pivot to international. On your most recent call, you mentioned that over time, your international segment will become a larger part of your growth story. You're significantly underdeveloped relative to the U.S. Where are you investing specifically? How much investment is needed to ultimately drive growth outside the U.S.? We see a real opportunity in developed consumer goods markets, right? We are looking at Western Europe specifically. We have seen, for example, our U.K. business is a decent-sized business. We started there several years ago, but the growth is tremendous, growing in the 20s. We see that continuing as we are really, like we have started to do in the U.S., breaking through as more of a mainstream product, working now, really starting to work outside of just the major markets like London and so on. As we think about the international expansion, we really like what we have done in Germany over the last couple of years. We saw it as a good market opportunity. There is a consumer there. There was a category of coconut water that existed three years ago, but it was kind of flatlining, but it was of some size. We went in and we started working with the big retailers who do a lot of private label. We started pitching private label. We got some of that business. We then parlayed that into getting the opportunity to bring the brand into these stores. Today, in the quarter, Germany grew 100%. We've turned the German coconut water market from kind of flat and stale into a high-growth category in Germany. We're investing, obviously, ahead of the curve, but it's not super substantial to the P&L at this point, right? We're building out a team. We're going from one to maybe 10 people. We're investing in marketing, but it's not anything significant that you're seeing in the P&L. What's your vision then in the next, I don't know, maybe five or even 10 years, how big international could become for your business in terms of the mix top line? I think as we start to break down the numbers country by country, I don't see why Western Europe can't be as big of a business as the U.S. business is today. Just looking at population and per caps, it really should get there. That's the objective. Okay. Want to switch to gross margins, which expanded in Q1. I should say we're definitely better than feared. You did, they were still pressured by higher year-over-year ocean freight rates and finished good product costs. You did maintain gross margin guidance for the year. How much of your decision to maintain guidance was really driven by some of the tariff pressures? It's the tariff pressures. Those of you who know our business, COGS is reliant on ocean freight quite a bit. Almost everything we do is imported. There are some unknowns. I think as we think about, yes, gross margins were strong in Q1, we think we're going to continue to have a good year from a gross margin perspective. Again, it's early to make any changes to that. There are unknowns depending on what happens with tariffs, what happens with pricing, what happens with ocean freight. If these reciprocal tariffs come into play, I would imagine that ocean freight rates in the midterm decline significantly faster than maybe we had planned. If they don't, maybe they don't. There's a lot of questions still as it relates to these things. I know. This is challenging. Maybe help us all understand as it relates to tariffs, what exactly are you paying tariffs on, thinking about your business and how you're importing? Yeah. What we understand is the tariffs are levied on the cost of finished goods, excluding transportation. From the manufacturer to the port, from the port to the U.S., domestic logistics is all excluded. It is just the finished goods at factory. Okay. And then when you think about your gross margins, where do you see the most upside or downside risk as it relates to your margin guidance this year? I mean, you touched on a little bit depending on this lovely tariff situation, but anything else that's maybe a little more in your control? I think more in our control is pricing. I think not in our control, but again, back to ocean freight. Now, ocean freight rates have come down significantly from where they were a year ago. They have come down maybe faster than we might have expected. How much further do they come down through the course of the year? Unknown. Those are things that we are clearly watching. If I stick on pricing, because you've just implemented, it seems like it's sticking. Say things change and that becomes permanent within the tariff situation, would you still consider further pricing? Do you feel like that's a lever you can pull? You mean if the reciprocal tariffs come into play? Yeah. I think we're thinking about tariffs and pricing two different ways, right? These baseline tariffs of 10% and the reciprocal tariffs. Our blended tariff rate based on the reciprocal tariffs that President Trump held up on that whiteboard or that sign on Liberation Day, our total tariff rate would be around 20% or low 20s. That takes into account for Brazil at 10% and Philippines at 17%. Those are our two largest producing countries. Then we also produce in Vietnam, Thailand, Sri Lanka. These are in the 40s. Blended, we're in the low 20s. We're already taking care of the first 10%, right, with the baseline. If we had to take care of another or had to deal with another 10%-12%, we would look at a few different things. I think we would start with the fact that I would think ocean freight rates would decline faster. We would also, we believe that there will be or there would be potentially some benefit from foreign governments for our manufacturers, which could be passed on to us. Another large one is we have this really nice geographically diversified supply chain. We can reallocate supply. We would reallocate supply from some of the higher tariff countries coming into the U.S. We reallocate that to Europe and to Canada. More supply would come from Brazil and the Philippines into the U.S. That takes a little bit of time. Maybe it takes four to six months. We would look at all of those things first before pricing. Hopefully, those would make up for that additional 10%-12%. If not, there might be some additional pricing on top. Am I correct in stating, though, you are considering or planning on pricing in Q3? Yes. We are planning on pricing in Q3 on the baseline tariff. It is not a huge number. It is not super significant. We think that the category with these growth rates will all take price to make up for it, specifically private label. We think that we are therefore in a very good position. We believe the consumer is there. Okay. You mentioned recently, I believe, on your call that your inventory levels are much better today, which I think allows you to execute a more normal promotional cadence throughout the summer and into the fall. Maybe touch on that for us if you could. Maybe elaborate on which SKUs or product lines you plan to maybe drive the most promotions on. Yeah. Let's start with last year was a disaster. We had really low inventory levels coming into a supply chain crunch, which could not get containers on boats. I think we started the end of last year building significant inventory. We said we wanted to have high inventory levels coming into the summer, and we're achieving that, maybe even more than we expected, which is great. We feel we're in a position to bring back our promotional cadence at least to what it would have been in 2023 and so on. That includes a large club promotion, which we did not do last year, which is clearly multi-packs. We will be promoting across and continue to promote across different pack formats, but more promotion on multi-packs than we might have seen in the past because we think that that is a way to gain more consumption per household. Okay. I want to go back to maybe gross margins and just your outlook. You have a long-term gross margin outlook of high 30s. And then your guidance this year calls for gross margins in the 35%-37% range. So you're close to that target unless you adjust. Yeah. So what do you expect to be the drivers of future gross margin expansion? And then if we think about maybe five years plus, if crystal ball, where do you think your gross margins could trend? I think we talk about gross margins approaching 40%. We've had quarters where we're there, even higher. I think this business is built today to operate at those type of gross margin levels, especially as ocean freight returns to normalized levels, which we're confident that it will. I mean, in 21 years of doing this, ocean freight rates have been pretty stable. We've had some weird times. I think there is a base rate that we will return to. I think that's how we stay in this 40% range. Now, as we look at margin mix shifting from private label to branded becoming a larger part of our business, that's an opportunity. As we look at things like treats, which should be margin accretive at scale, and other type of innovation being margin accretive, we see a path in the longer term. Maybe we could do better than that. That right now, I think, is where the business operates and operates well. So we're confident we could get there. All right. In terms of marketing, SG&A spend, your guidance calls for SG&A growth to be up, low single- digits to mid-single digits this year. Longer term, what do you think is the right level of SG&A reinvestment? I think about it in the context of the coconut water category, like you said, it's lower household penetration. The goal is trying to drive awareness. How do you think about spend over the, I guess, medium term? Yeah. As we think about marketing, specific is a huge component of that. I think we're really happy with the way we invest in marketing. I think we have this mid to long-term algorithm of mid-teens branded growth. I think it's a nice, healthy place for us to grow the business and way for us to grow the business. The marketing that we do as a percentage of net sales helps us get there or gets us there. I don't see at this point, we haven't found some specific unlock that expands that growth even further, nor do we think we're set up from a supply chain standpoint to expand that growth overnight unless we plan a year or two in advance. I think the spend is appropriate as a percentage of net sales. Okay. You touched on food service earlier as a big opportunity. I know it came up on your Q1 call. It is undeveloped for you in the U.S. Could you talk through maybe in a little bit further detail the opportunity you see in food service? Are you winning new accounts? I am thinking hotels, restaurants, corporate. Where do you see the upside? Yeah. I think there's a couple of things. We talked about on the call a couple of new partnerships. It is like Joe's Coffee, Peet's Coffee. That is really interesting for us because it is not only opening up new food service accounts and giving a new place for consumers to buy it. It is teaching people and educating people about these use educations. People are now mixing coconut water with their coffee to create cold brew and all of these type of things. It has multiple meanings, multiple opportunities. If you think long term, I do not understand why coconut water should not be in every bar and restaurant in the United States. It should be on every cocktail menu, on every mocktail menu. It is such a diverse, amazing ingredient that I think it will be. That is the objective. That is why we're building out a food service team and investing in it. Then you have college campuses and you have hospitals and you have the little mini mart in every single hotel in the country. We're growing distribution there significantly. Okay. We have just a couple of minutes left. I wanted to maybe finish on M&A. I know you and I have talked about this in the past, developing this platform business and company. You have ample amounts of cash on the balance sheet to fund potential M&A. Maybe update us on your strategy as it relates to M&A, maybe what you're looking for, how big of a priority is that to drive future growth? Yeah. I do not think we need it to drive future growth. We have this incredible core business, this category that is in its infancy that is growing significantly. We have the international growth engine, all of these things. However, I think we have built an incredible route to market in multiple countries. We have a great organization and we have capital, no debt, no leverage. We are in a very unique position that we could, I think, take our time, be super patient. We are looking at a lot of stuff. We are participating in processes. I think over time, we will find a brand or brands that we think we could drive significant growth and we could bring into the organization at a fair value and could be part of expanding our growth that we are projecting. Is it mostly brand or products, or would you think about acquisitions for capabilities or routes to market, anything like that? Today, it's mostly brands. It's things that I think are close to what we do. It's functional. It's health and wellness. It's things that we can really drive growth in. Okay. So you haven't acquired anything. You're being disciplined or you're just not finding exciting brands. Is it valuation that's stopping you from pursuing? I think the discipline leads to finding brands that aren't at the right valuation at this point in time. They're cheaper now. We'll see. I think there are great brands out there. I think we're in a position, especially in this kind of health and wellness, subscale. Beverages is all about scale. It's hard to operate these companies subscale. I think we can add a lot of benefit to some of these brands. It has to be something, not only value. We're not looking to pick something up on the cheap, but it has to be something that we could really drive significant growth in at the right value where if we're driving that growth, we should obviously be a big benefactor of that growth. Makes sense. I think that's all the time we have today. Thank you so much. Thanks, everyone. Thank you. you. Thanks. All right. Thank you. Thank you.