Vita Coco reports major margin expansion, hikes full-year guide

Vita Coco (NASDAQ:COCO) doubled EPS estimates for the first quarter and raised full-year forecasts for 2023 on Wednesday.

The New York-based beverage company reported $0.12 in earnings per share for the quarter, coming in $0.06 above consensus estimates. Meanwhile, a 14.6% jump in revenue to $110M outpaced analyst expectations by $5.86M. Gross margin expanded 11% year over year to 30.7% as inventories decreased by about $20M from the prior year quarter.

“Gross margins for the quarter were slightly better than expected due to cost efficiencies in domestic transportation, and this makes us even more comfortable with our full year gross margin guidance based on the current cost environment and pricing actions already executed,” CEO Martin Roper commented. “As gross margins return closer to historical levels, we are able to invest more heavily in both our brands and organization for the balance of the year to remain well-positioned for long-term sustainable growth and profitability. Based on the health of our Vita Coco brand and progress to date on our key 2023 commercial initiatives, we are raising our full year net sales growth and Adjusted EBITDA guidance.”

Management now expects net sales growth of approximately 9% to 12% as compared to fiscal year 2022, raised from a previous 9% to 11% forecast. Vita Coco Coconut Water is expected to grow mid-teens and Private Label net sales are anticipated to be slightly positive. Adjusted EBITDA is forecast to be in the range of $54M to $59M, up from $52M to $58M anticipated in prior guidance. Full year gross margin is expected to be between 32% and 34% due to lower transportation costs, higher prices, and easing supply chain bottlenecks.

Despite the beat and raise, shares of Vita Coco wavered in premarket hours on Wednesday after the earnings announcement.