coco-20240331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________

FORM 10-Q

____________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-40950

____________________

The Vita Coco Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

____________________


Delaware						11-3713156
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

250 Park Avenue South Seventh Floor New York, NY						10003
(Address of principal executive offices)						(Zip Code)

(212) 206-0763

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

____________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, Par Value $0.01 Per Share

COCO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 30, 2024, there were 56,683,993 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

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TABLE OF CONTENTS


		Page

PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	5
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023	6
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023	7
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023	8
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	38
Signatures		40

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, projected costs, plans, prospects, expectations, market growth, new products, supply chain predictions, and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context requires otherwise, the terms “Vita Coco,” the “Company,” “we,” “us,” and “our” refer to The Vita Coco Company, Inc. and its consolidated subsidiaries.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands, except share data)


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	122,978	$	132,537
Accounts receivable, net of allowance of $3,304 at March 31, 2024, and $2,486 at December 31, 2023	57,881		50,086
Inventory	56,764		50,757
Supplier advances, current	1,535		1,521
Derivative assets	1,772		3,876

Prepaid expenses and other current assets	25,772		24,160
Total current assets	266,702		262,937
Property and equipment, net	2,195		2,136
Goodwill	7,791		7,791

Supplier advances, long-term	2,619		2,820
Deferred tax assets, net	6,746		6,749
Right-of-use assets, net	1,151		1,406
Other assets	1,838		1,843
Total assets	$	289,042	$	285,682
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,134	$	21,826
Accrued expenses and other current liabilities	59,223		59,533
Notes payable, current	11		13
Derivative liabilities	1,634		1,213
Total current liabilities	79,002		82,585

Notes payable, long-term	10		13

Other long-term liabilities	340		647
Total liabilities	79,352		83,245
Stockholders’ equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 63,311,737 and 63,135,453 shares issued at March 31, 2024 and December 31, 2023, respectively 56,683,993 and 56,899,253 shares outstanding at March 31, 2024 and December 31, 2023, respectively	633		631
Additional paid-in capital	163,674		161,414

Retained earnings	114,980		100,742
Accumulated other comprehensive loss	(661)		(649)
Treasury stock, 6,627,744 shares at cost as of March 31, 2024, and 6,236,200 shares at cost as of December 31, 2023.	(68,936)		(59,701)
Total stockholders’ equity attributable to The Vita Coco Company, Inc.	209,690		202,437


Total liabilities and stockholders’ equity	$	289,042	$	285,682

See accompanying notes to the condensed consolidated financial statements.

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THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in thousands, except for share and per share data)


	Three Months Ended March 31,
	2024		2023
Net sales	$	111,698	$	109,759
Cost of goods sold	64,521		76,098
Gross profit	47,177		33,661
Operating expenses
Selling, general and administrative	28,218		26,957
Income (Loss) from operations	18,959		6,704
Other income (expense)
Unrealized gain/(loss) on derivative instruments	(2,525)		1,213
Foreign currency gain/(loss)	58		611
Interest income	1,523		13
Interest expense	—		(15)
Total other income (expense)	(944)		1,822
Income before income taxes	18,015		8,526
Income tax expense	(3,777)		(1,821)
Net income	$	14,238	$	6,705


Net income per common share
Basic	$	0.25	$	0.12
Diluted	$	0.24	$	0.12
Weighted-average number of common shares outstanding
Basic	56,589,565		56,046,904
Diluted	58,746,631		57,351,405

See accompanying notes to the condensed consolidated financial statements.

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THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in thousands)


	Three Months Ended March 31,
	2024		2023
Net income	$	14,238	$	6,705
Other comprehensive income (loss):
Foreign currency translation adjustment	(12)		173




Total comprehensive income attributable to The Vita Coco Company, Inc.	$	14,226	$	6,878

See accompanying notes to the condensed consolidated financial statements.

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THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(Amounts in thousands, except for shares)


	Common Stock			Common Stock with Exit Warrants			Total Common Stock			Additional Paid-In		Retained Earnings		Accumulated Other Comprehensive Income / (Loss)			Treasury Stock				Total Shareholders’ Equity Attributable to The Vita Coco Company, Inc.
	Shares	$ Amount		Shares	$ Amount		Shares	$ Amount		Capital						Shares		Amount
Balance at December 31, 2022	54,112,145	$	541	8,113,105	$	81	62,225,250	$	622	$	145,210	$	55,183	$	(994)		6,206,200		$	(58,928)	$	141,093
Net income	—	—		—	—		—	—		—		6,705		—			—		—		6,705
Cumulative-effect adjustment related to the adoption of accounting guidance for credit losses	—	—		—	—		—	—		—		(1,070)		—			—		—		(1,070)


Stock-based compensation	—	—		—	—		—	—		2,162		—		—			—		—		2,162
Exercise of stock awards	185,783	2		—	—		185,783	2		601		—		—			—		—		603
Foreign currency translation adjustment	—	—		—	—		—	—		—		—		173			—		—		173
Balance at March 31, 2023	54,297,928	543		8,113,105	81		62,411,033	624		147,973		60,818		(821)			6,206,200		(58,928)		149,666














Balance at December 31, 2023	55,022,348	$	550	8,113,105	$	81	63,135,453	$	631	$	161,414	$	100,742	$	(649)		6,236,200		$	(59,701)	$	202,437
Net income	—	—		—	—		—	—		—		14,238		—			—		—		14,238
Purchase of treasury stock	—	—		—	—		—	—		—		—		—			391,544		(9,235)		(9,235)

Stock-based compensation	—	—		—	—		—	—		2,109		—		—			—		—		2,109
Exercise of stock awards	176,284	2		—	—		176,284	2		151		—		—			—		—		153
Foreign currency translation adjustment	—	—		—	—		—	—		—		—		(12)			—		—		(12)
Balance at March 31, 2024	55,198,632	552		8,113,105	81		63,311,737	633		163,674		114,980		(661)			6,627,744		(68,936)		209,690

See accompanying notes to the condensed consolidated financial statements.

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THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	14,238	$	6,705
Adjustments required to reconcile net income to cash flows from operating activities:
Depreciation and amortization	162		165
(Gain)/loss on disposal of equipment	13		(1)
Bad debt expense	517		832
Unrealized (gain)/loss on derivative instruments	2,525		(1,213)
Stock-based compensation	2,109		2,162


Noncash lease expense	254		279

Changes in operating assets and liabilities:
Accounts receivable	(8,463)		(21,337)
Inventory	(6,068)		20,089
Prepaid expenses, net supplier advances, and other assets	(1,442)		683
Accounts payable, accrued expenses, and other liabilities	(4,112)		1,072

Net cash provided by (used in) operating activities	(267)		9,436
Cash flows from investing activities:
Cash paid for property and equipment	(124)		(454)
Proceeds from sale of property and equipment	—		5
Net cash used in investing activities	(124)		(449)
Cash flows from financing activities:
Proceeds from exercise of stock awards	153		603




Cash received (paid) on notes payable	(4)		(6)
Cash paid to acquire treasury stock	(9,235)		—

Net cash provided by (used in) financing activities	(9,086)		597
Effects of exchange rate changes on cash and cash equivalents	(80)		187
Net increase/(decrease) in cash and cash equivalents	(9,557)		9,771
Cash, cash equivalents and restricted cash at beginning of the period (1)	132,867		19,629
Cash, cash equivalents and restricted cash at end of the period (1)	$	123,310	$	29,400

1Includes $332 and $320 of restricted cash as of March 31, 2024 and 2023, respectively, that were included in other current assets.

See accompanying notes to the condensed consolidated financial statements.

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THE VITA COCO COMPANY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except share and per share amounts)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

The Vita Coco Company, Inc. and subsidiaries (the “Company”) develops, markets, and distributes various coconut water products under the brand name Vita Coco and for retailers' own brands, predominantly in the United States. Other products include coconut milk, coconut oil, coconut as a commodity, water (under the brand name Ever & Ever), and protein infused fitness drinks (under the brand name PWR LIFT). We also offered a natural energy drink (under the brand name Runa), which we ceased selling in December 2023.

The Company was incorporated in Delaware as All Market Inc. on January 17, 2007. On September 9, 2021, we changed our name to The Vita Coco Company, Inc. In 2018, the Company purchased certain assets and liabilities of Runa, which is marketed and distributed primarily in the United States until the Company ceased selling the brand in December 2023.

We are a public benefit corporation under Section 362 of the Delaware General Corporation Law. As a public benefit corporation, our Board of Directors is required by the Delaware General Corporation Law to manage or direct our business and affairs in a manner that balances the pecuniary interests of our stockholders, the best interests of those materially affected by our conduct and the specific public benefits identified in our certificate of incorporation.

The Company has ten wholly-owned subsidiaries including four wholly-owned Asian subsidiaries established between fiscal 2012 and 2015, four North American subsidiaries established between 2012 and 2018, All Market Europe, Ltd. (“AME”) in the United Kingdom, and one subsidiary in Germany established during 2024.

Unaudited interim financial information

The Company’s condensed consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Article 10 of Regulation S-X. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s financial information for the interim period presented. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future year. The condensed consolidated balance sheet as of March 31, 2024 is unaudited and should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the fiscal year ended December 31, 2023.

During the three months ended March 31, 2024, there were no significant changes to the Company’s significant accounting policies as described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed consolidated financial statements are presented in accordance with U.S. GAAP.

Principles of Consolidation

The condensed consolidated financial statements include all the accounts of the wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management considers many factors in selecting appropriate financial accounting

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policies and controls in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. Additionally, uncertainty in the macroeconomic environment resulting from current geopolitical and economic instability (including the effects of current wars and other international conflicts) and the high interest rate and inflationary cost environment make estimates and assumptions difficult to calculate with precision. The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. The most significant estimates in the condensed consolidated financial statements relate to share-based compensation, assessing long-lived assets for impairment, estimating the net realizable value of inventories, determining the accounts receivables reserve, assessing goodwill for impairment, determining the value of trade promotions, and assessing the realizability of deferred income taxes. Actual results could differ from those estimates.

Concentration of Credit Risk

The Company’s cash and accounts receivable are subject to concentrations of credit risk. The Company’s cash balances are primarily on deposit with banks in the U.S. which are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to $250. At times, such cash may be in excess of the FDIC insurance limit. To minimize the risk, the Company’s policy is to maintain cash balances with high quality institutions, which may include banks, financial institutions and investment firms, and invest daily or reserve operating cash in money market funds, government securities, bank obligations, municipal securities or other investment vehicles with short-term maturities.

Substantially all of the Company’s customers are either wholesalers or retailers of beverages. A material default in payment, a material reduction in purchases from these or any large customers, or the loss of a large customer or customer groups could have a material adverse impact on the Company’s financial condition, results of operations and liquidity. The Company is exposed to concentration of credit risk from its major customers for which two customers in aggregate represented 47% and 50% of total net sales for the three months ended March 31, 2024 and 2023, respectively. In addition, the two customers in aggregate also accounted for 39% and 43% of total accounts receivable as of March 31, 2024 and December 31, 2023, respectively. The Company has not experienced credit issues with these customers. Refer to Note 7, Commitments and Contingencies regarding additional information on our major customers.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The new accounting standard introduced the current expected credit losses methodology ("CECL") for estimating allowances for credit losses. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loans and trade receivables. ASU 2016-13 was effective for the Company for annual and interim reporting periods beginning after December 15, 2022. The Company adopted the standard on January 1, 2023 using the modified retrospective method for all financial assets in scope.

As a part of the adoption, the Company selected to apply roll-rate method to estimate current expected credit losses for its accounts receivable population and weighted average remaining maturity ("WARM") method for supplier advances.

The difference of $1,070 between the incurred credit loss estimate and current expected credit loss estimate was recorded as cumulative effect adjustment to the Company’s opening retained earnings and reflected on the consolidated balance sheet as of January 1, 2023 as a result of the ASC Topic 326, Financial Instruments - Credit Losses ("ASC 326") adoption. The adoption of the standard did not have a material impact on the Company’s consolidated statements of operations, or consolidated statements of cash flows. The following table illustrates the impact of ASC 326.


	As of January 1, 2023
	As reported under ASC 326		Pre-ASC 326 adoption		Impact of ASC 326 adoption
Allowance for credit losses on accounts receivables	$	3,552	$	2,898	$	654
Allowance for credit losses on supplier advances	416		—		416
Total	$	3,968	$	2,898	$	1,070

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Recently Issued Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis ("ASU 2023-07"). Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC Topic 280, Segment Reporting on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the effective tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction ("ASU 2023-09"). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

3. REVENUE RECOGNITION

Revenues are accounted for in accordance with ASC Topic 606, Revenue Recognition ("ASC 606"). The Company disaggregates revenue into the following product categories:

•Vita Coco Coconut Water—This product category consists of all branded coconut water product offerings under the Vita Coco labels, where the majority ingredient is coconut water. The Company determined that the sale of the products represents a distinct performance obligation as customers can benefit from purchasing the products on their own or together with other resources that are readily available to the customers. For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

•Private Label—This product category consists of all private label product offerings, which includes coconut water and oil. The Company determined the production and distribution of private label products represents a distinct performance obligation. Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these private label products over time as the production for open purchase orders occurs, which may be prior to any shipment.

•Other—This product category consists of all other products, which included Runa (until we ceased selling it in December 2023), and includes Ever & Ever and PWR LIFT product offerings and Vita Coco product extensions beyond coconut water, coconut milk products, and other revenue transactions (e.g., bulk product sales). For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

The Company provides trade promotions and sales discounts to its customers and distributors. Since these sales promotions and sales discounts do not meet the criteria for a distinct good or service, they are primarily accounted for as a reduction of revenue and include payments to customers and distributors for performing activities on our behalf, such as payments for in-store displays, payments to gain distribution of new products, payments for shelf space and discounts to promote lower retail prices. These condensed consolidated financial statements include accruals for these promotion and discounts. The accruals are made for invoices that have not yet been received as of the end of the reporting period and are recorded as a reduction of sales, and are based on contract terms and our historical experience with similar programs and require management judgment with respect to estimating customer and consumer participation and performance levels.

Disaggregation of Revenue

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The following table disaggregates net revenue by product type and reportable segment:


	Three Months Ended March 31, 2024
	Americas		International		Consolidated
Vita Coco Coconut Water	$	69,522	$	9,665	$	79,187
Private Label	24,273		5,152		29,425
Other	2,296		790		3,086
Total	$	96,091	$	15,607	$	111,698

	Three Months Ended March 31, 2023
	Americas		International		Consolidated
Vita Coco Coconut Water	$	69,138	$	9,558	$	78,696
Private Label	25,050		2,666		27,716
Other	2,584		763		3,347
Total	$	96,772	$	12,987	$	109,759

4. INVENTORY

Inventory consists of the following:


	March 31, 2024		December 31, 2023
Raw materials and packaging	$	4,018	$	3,360
Finished goods	52,746		47,397
Inventory	$	56,764	$	50,757

5. GOODWILL

Goodwill consists of the following:


	March 31, 2024		December 31, 2023
Goodwill	$	7,791	$	7,791

All of the Company’s goodwill is associated with an acquisition, which occurred in June 2018. The goodwill is allocated to the Americas reporting unit and is tax deductible. The Company has not recognized any impairment since acquisition.

6. DEBT

The table below details the outstanding balances on the Company’s debt as of March 31, 2024 and December 31, 2023:


	March 31, 2024		December 31, 2023


Notes payable

Vehicle loans	21		26
	$	21	$	26
Current	11		13
Non-current	$	10	13

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Revolving Credit Facility

In May 2020, the Company entered into the five-year credit facility with Wells Fargo Bank, National Association consisting of a revolving line of credit, which currently provides for committed borrowings of $60 million (the "2020 Credit Facility"). The maturity date on the 2020 Credit Facility is May 12, 2026.

Starting in December 2022, borrowings on the 2020 Credit Facility bear interest at rates based on either: 1) a fluctuating rate per annum determined to be the sum of Daily Simple Secured Overnight Financing Rate ("SOFR") plus a spread defined in the credit agreement (the "Spread"); or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the Spread. The Spread ranges from 1.00% to 1.75%, which is based on the Company’s leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter as defined in the credit agreement. In addition, the Company is currently subject to an unused commitment fee ranging from 0.10% and 0.20% on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

As of March 31, 2024 and December 31, 2023, the Company had no outstanding balance and $60 million undrawn and available under its amended 2020 Credit Facility. Interest expense and unused commitment fee for the 2020 Credit Facility amounted to $15 and $15 for the three months ended March 31, 2024 and March 31, 2023 respectively.

The 2020 Credit Facility is collateralized by substantially all of the Company’s assets.

The 2020 Credit Facility contains certain affirmative and negative covenants that, among other things, limit the Company’s ability to, subject to various exceptions and qualifications: (i) incur liens; (ii) incur additional debt; (iii) sell, transfer or dispose of assets; (iv) merge with or acquire other companies, (v) make loans, advances or guarantees; (vi) make investments; (vii) make dividends and distributions on, or repurchases of, equity; and (viii) enter into certain transactions with affiliates. The 2020 Credit Facility also requires the Company to maintain certain financial covenants including a maximum leverage ratio, a minimum fixed charge coverage ratio, and a minimum asset coverage ratio. As of March 31, 2024, the Company was compliant with all financial covenants.

Vehicle Loans

We periodically enter into vehicle loans. Interest rates on these vehicle loans range from 4.56% to 5.68%. The outstanding balance on the vehicle loans as of March 31, 2024 was less than $0.1 million.

7. COMMITMENTS AND CONTINGENCIES

Contingencies:

Litigation—The Company may engage in various litigation matters in the ordinary course of business. The Company intends to vigorously defend itself in such matters, based upon the advice of legal counsel, and is of the opinion that the resolution of these matters will not have a material effect on the condensed consolidated financial statements.The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. The Company also discloses when it is reasonably possible that a material loss may be incurred. As of March 31, 2024 and December 31, 2023, the Company has not recorded any liabilities relating to such legal matters.

Business Risk—The Company imports finished goods predominantly from manufacturers located in South American and Southeast Asian countries. The Company may be subject to certain business risks due to potential instability in these regions.

Major Customers—The Company’s customers that accounted for 10% or more of total net sales and total accounts receivable were as follows:


	Net sales				Accounts receivable
	Three Months Ended March 31,				March 31, 2024		December 31, 2023
	2024		2023
Customer A	25	%	26	%	18	%	20	%
Customer B	22	%	24	%	21	%	23	%

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One of the customers acquired less than 5% ownership in the Company upon consummation of the Company's initial public offering ("IPO"). As discussed in Note 10, Stockholders' Equity, the same customer also was granted 200,000 restricted stock awards at the time of the IPO, of which 100,000 vested on March 31, 2023 and 100,000 vested on March 31, 2024. The customer continues to hold less than 5% ownership in the Company as of March 31, 2024.

In 2023, we agreed to start to discontinue the private label coconut water and coconut oil supply relationship with one of our significant customers as the terms required to retain the business were contrary to our long term margin targets. However, at the request of this customer, we expect to continue the supply relationship for a significant portion of their private label coconut water needs.

Major Suppliers—The Company’s suppliers that accounted for 10% or more of the Company’s purchases were as follows:


	Three Months Ended March 31,
	2024		2023
Supplier A	24	%	17	%
Supplier B	14	%	15	%

8. DERIVATIVE INSTRUMENTS

The Company accounts for derivative instruments in accordance with the ASC Topic 815, Derivatives and Hedging ("ASC 815"). These principles require that all derivative instruments be recognized at fair value on each balance sheet date unless they qualify for a scope exclusion as a normal purchase or sales transaction, which is accounted for under the accrual method of accounting. In addition, these principles permit derivative instruments that qualify for hedge accounting to reflect the changes in the fair value of the derivative instruments through earnings or stockholders’ equity as other comprehensive income on a net basis until the hedged item is settled and recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. The ineffective portion of a derivative instrument’s change in fair value is immediately recognized in earnings. As of March 31, 2024 and December 31, 2023, the Company did not have any derivative instruments that it had designated as fair value or cash flow hedges.

The Company is subject to the following currency risks:

Inventory Purchases from Brazilian, Malaysian and Thai Manufacturers—In order to mitigate the currency risk on inventory purchases from its Brazilian, Malaysian and Thai manufacturers, which are settled in Brazilian real ("BRL"), Malaysian ringgit ("MYR") and Thai baht ("THB"), the Company's subsidiary, All Market Singapore Pte. Ltd. ("AMS"), enters a series of forward currency swaps to buy BRL, MYR and THB.

Intercompany Transactions Between AME and AMS—In order to mitigate the currency risk on intercompany transactions between AME and AMS, AMS enters into foreign currency swaps to sell British pounds ("GBP").

Intercompany Transactions with Canadian Customer and Vendors—In order to mitigate the currency risk on transactions with Canadian customer and vendors, the Company enters into foreign currency swaps to sell Canadian dollars ("CAD").

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The notional amount and fair value of all outstanding derivative instruments in the condensed consolidated balance sheets consist of the following at:


March 31, 2024
Derivatives not designated as hedging instruments under ASC 815-20	Notional Amount		Fair Value		Balance Sheet Location
Assets
Foreign currency exchange contracts
Receive BRL/sell USD	$	55,191	$	1,671	Derivative assets
Receive USD/pay EUR	4,899		46		Derivative assets
Receive USD/pay CAD	6,795		55		Derivative assets

Liabilities
Foreign currency exchange contracts
Receive THB/sell USD	$	17,548	$	(1,186)	Derivative liabilities
Receive USD/pay GBP	20,610		(448)		Derivative liabilities

December 31, 2023

Derivatives not designated as
hedging instruments under
ASC 815-20

Notional
Amount

Fair
Value

Balance Sheet Location

Assets

Foreign currency exchange contracts

Receive BRL/sell USD

62,253

3,876

Derivative assets

Liabilities

Foreign currency exchange contracts

Receive THB/sell USD

21,971

(285)

Derivative liabilities

Receive USD/pay EUR

5,627

(90)

Derivative liabilities

Receive USD/pay GBP

23,512

(749)

Derivative liabilities

Receive USD/pay CAD

7,666

(89)

Derivative liabilities

The amount and location of realized and unrealized gains and losses of the derivative instruments in the condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023 are as follows:


	Three Months Ended March 31,
	2024		2023
Unrealized gain/(loss) on derivative instruments	$	(2,525)	$	1,213
Location	Unrealized gain/(loss) on derivative instruments		Unrealized gain/(loss) on derivative instruments
Foreign currency gain / (loss)	$	607	$	1,071
Location	Foreign currency gain/(loss)		Foreign currency gain/(loss)

The Company applies recurring fair value measurements to its derivative instruments in accordance with ASC Topic 820, Fair Value Measurements ("ASC 820"). In determining fair value, the Company used a market approach and incorporated the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable internally developed inputs.

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9. FAIR VALUE MEASUREMENTS

ASC 820 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observability of the inputs used in valuation techniques, the Company’s assets and liabilities are classified as follows:

Level 1—Quoted market prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted market prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes internally developed models and methodologies utilizing significant unobservable inputs.

Forward Currency Swap Contracts—See Note 8, Derivative Instruments, for a description of these contracts.The Company’s valuation methodology for forward currency swap contracts is based upon third-party institution data.

The Company’s fair value hierarchy for those assets (liabilities) measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, is as follows:


	Level 1		Level 2		Level 3		Total
			Forward Currency Swaps/Contracts
March 31, 2024	$	—	$	138	$	—	$	138
December 31, 2023	$	—	$	2,663	$	—	$	2,663

There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements.

10. STOCKHOLDERS’ EQUITY

Common and Treasury Stock—Each share of Common Stock entitles its holder to one vote on matters required to be voted on by the stockholders of the Company and to receive dividends, when and if declared by the Company’s Board of Directors.

As of March 31, 2024 and December 31, 2023, the Company held 6,627,744 and 6,236,200 shares, respectively, in treasury stock. As of March 31, 2024 and December 31, 2023, the Company had 3,231,028 and 3,124,326 shares, respectively, of Common Stock available for issuance upon the conversion of outstanding equity awards under the 2021 Incentive Award Plan ("2021 Plan").

On October 30, 2023, the Company's Board of Directors approved a share repurchase program ("Program") authorizing the Company to repurchase up to $40,000 of Common Stock. Shares of Common Stock may be repurchased under the Program from time to time through open market purchases, block trades, private transactions or accelerated or other structured share repurchase programs. To the extent not retired, shares of Common Stock repurchased under the Program will be placed in the Company's treasury shares. The extent to which the Company repurchases shares of Common Stock, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company. The Program has no time limits and may be suspended or discontinued at any time. The Company repurchased 391,544 shares under this Program at a cost of $9,235 during the three months ended March 31, 2024. The Company repurchased 30,000 shares under this

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Program at a cost of $773 during the year ended December 31, 2023. As of March 31, 2024, the Company had $29,992 remaining under this Program.

Stock-based Compensation—The stockholders of the Company approved the adoption of the Company’s 2014 Stock Option and Restricted Stock Plan (the “2014 Plan”). The 2014 Plan allowed for a maximum of 8% of the sum of the Available Equity defined as the sum of: (i) the total then outstanding shares of common shares; and (ii) all available stock options (i.e., granted and outstanding stock options and stock options not yet granted). Under the terms of the 2014 Plan, the Company may grant employees, directors and consultants stock options and restricted stock awards and has the authority to establish the specific terms of each award, including exercise price, expiration and vesting. Currently, only stock options were granted under the 2014 Plan. Generally, stock options issued pursuant to the 2014 Plan contain exercise prices no less than the fair value of Common Stock on the date of grant and have a ten-year contractual term.

Subsequent to September 30, 2021, the stockholders of the Company approved the adoption of the 2021 Plan, which became effective after the closing of the Company's IPO completed in October 2021. On and after closing of the offering and the effectiveness of the 2021 Plan, no further grants have been made under the 2014 Plan. The maximum number of shares of our Common Stock available for issuance under the 2021 Plan is equal to the sum of: (i) 3,431,312 shares of our Common Stock; and (ii) an annual increase on the first day of each year beginning in 2022 and ending in and including 2031, equal to the lesser of (A) two percent (2%) of the outstanding shares of our Common Stock on the last day of the immediately preceding fiscal year; and (B) such lesser amount as determined by our Board of Directors; provided, however, no more than 3,431,312 shares may be issued upon the exercise of incentive stock options ("ISOs"). The 2021 Plan provides for the grant of stock options, including ISOs and nonqualified stock options ("NSOs"), restricted stock, dividend equivalents, stock payments, restricted stock units ("RSUs"), other incentive awards, stock appreciation rights ("SARs"), and cash awards. As of March 31, 2024, only stock options, restricted stock, and RSU's have been granted under the 2021 Plan.

The Company recognized stock-based compensation expense of $1,958 and $1,297 for the three months ended March 31, 2024 and 2023, respectively, in selling, general and administrative expenses. For the RSUs previously granted to a major customer, $151 and $865 was recognized for the three months ended March 31, 2024 and March 31, 2023, respectively, as stock-based sales incentive based on guidance in ASC 606 and reflected as a reduction in the transaction price revenue.

Option Awards with Service-based Vesting Conditions

Most of the stock option awards granted under the 2014 Plan and 2021 Plan vest based on continuous service. The options awarded to the employees have differing vesting schedules as specified in each grant agreement. There were 168,076 new service-based stock option awards granted during the three months ended March 31, 2024. Exercises of stock options during the three months ended March 31, 2024, and 2023 were 13,960 and 66,523, respectively.

Option Awards with Performance and Market-based Vesting Conditions

There are also stock option awards containing performance-based vesting conditions, subject to achievement of various performance goals by a future period,such as revenue and adjusted EBITDA targets. There are also stock option awards granted in 2019 to the current Chief Executive Officer ("CEO") containing performance and market vesting conditions that vest upon occurrence of an IPO or other qualifying liquidity event and upon achieving a predetermined equity value of the Company, which were fully vested as of July 31, 2023.

There were no new stock option awards granted during the three months ended March 31, 2024 with performance-based vesting conditions.

Service & Performance based Restricted Stock and RSUs

Restricted stock and RSUs were granted under the 2021 Plan and primarily vest based on continuous service. The RSUs with service-based vesting conditions awarded to the employees have differing vesting schedules as specified in each grant agreement. The RSUs granted to non-employee directors vest in full on the earlier of: (i) the day immediately preceding the date of the first Annual Shareholders Meeting following the date of grant; or (ii) the first anniversary of the date of grant. During the three months ended March 31, 2024 and March 31, 2023, the Company also granted RSUs that

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contained performance-based vesting conditions, subject to achievement of various performance goals in the future, specifically net sales growth and Adjusted EBITDA targets.

Also included in these awards are $3,000 of shares of restricted Common Stock granted at the time of the IPO to entities affiliated with a significant customer, at a price per share granted at the IPO of $15.00, or 200,000 restricted shares, in connection with an amendment to extend the distributor agreement term to June 10, 2026. Since the distribution agreement has not been terminated by either party for cause as of March 31, 2023, 50% of the shares were released on March 31, 2023. The remaining 50% were released on March 31, 2024. The grant was accounted for as a stock-based sales incentive based on guidance in ASC 606 and is reflected as a reduction in the transaction price of revenue on the basis of the grant-date fair-value measure in accordance with the stock compensation guidance in ASC 718.

During the three months ended March 31, 2024, there were 241,791 service based and 58,365 performance based RSUs granted, which had an aggregate grant date fair value of $7,858. During the three months ended March 31, 2024 and March 31, 2023, awards vested were 162,324 and 0, respectively, which includes service based RSUs and restricted stock of the major customer.

11. INCOME TAXES

For the three months ended March 31, 2024 and 2023, the Company recorded income tax expense of $3,777 and $1,821, respectively, in its condensed consolidated statements of operations.

In assessing the recoverability of its deferred tax assets, the Company continually evaluates all available positive and negative evidence to assess the amount of deferred tax assets for which it is more likely than not to realize a benefit. For any deferred tax asset in excess of the amount for which it is more likely than not that the Company will realize a benefit, the Company establishes a valuation allowance.

As of March 31, 2024 and December 31, 2023, there was a $106 liability for income tax uncertainties recorded in the Company's consolidated balance sheets. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company does not expect its uncertain tax positions to change significantly over the next twelve months. The Company recognized no interest and penalties related to income tax uncertainties in its consolidated balance sheets or consolidated statement of operations for the three months ended March 31, 2024 and 2023. The Company is subject to income tax examinations by the Internal Revenue Service ("IRS") and various state and local jurisdictions for the open tax years between December 31, 2019 and December 31, 2022.

12. EARNINGS PER SHARE

Basic and diluted earnings per share were calculated as follows:


	Three months ended March 31,
	2024		2023
Numerator:

Net income	$	14,238	$	6,705
Denominator:
Weighted-average number of common shares used in earnings per share—basic	56,589,565		56,046,904
Effect of conversion of stock options	2,157,066		1,304,501
Weighted-average number of common shares used in earnings per share—diluted	58,746,631		57,351,405
Earnings per share—basic	$	0.25	$	0.12
Earnings per share—diluted	$	0.24	$	0.12

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The following potentially dilutive securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average number of common shares outstanding, as they would be anti-dilutive:


	Three months ended March 31,
	2024	2023
Options to purchase common stock and RSUs	301,813	1,067,435

13. SEGMENT REPORTING

The Company has two operating and reportable segments:

•Americas—The Americas segment is comprised primarily of the U.S. and Canada, and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products (e.g., coconut oil and milk). The Company’s aluminum bottle canned water (Ever & Ever), protein infused fitness drink (PWR LIFT), and guayusa leaf products (Runa) are marketed only in the Americas segment. As of December 2023, we ceased offering the Runa brand.

•International—The International segment is comprised primarily of Europe, Middle East, and Asia Pacific, which includes the Company’s procurement arm and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products.

The Company’s CEO is the chief operating decision maker and evaluates segment performance primarily based on net sales and gross profit. All intercompany transactions between the segments have been eliminated.

Information about the Company’s operations by operating segment as of the three months ended March 31, 2024 and 2023 is as follows:


	Three Months Ended March 31,
	2024		2023
Net sales	$	111,698	$	109,759
Americas	96,091		96,772
International	15,607		12,987
Gross profit	$	47,177	$	33,661
Americas	40,872		29,150
International	6,305		4,511


	As of March 31,		As of December 31,
	2024		2023
Total segment assets	$	289,042	$	285,682
Americas	205,709		209,984
International	83,333		75,698

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	Three Months Ended March 31,
Reconciliation	2024		2023
Total gross profit	$	47,177	$	33,661
Less:
Selling, general, and administrative expenses	28,218		26,957
Income (loss) from operations	$	18,959	$	6,704
Less:
Unrealized gain/(loss) on derivative instruments	(2,525)		1,213
Foreign currency gain/(loss)	58		611
Interest income	1,523		13
Interest expense	—		(15)
Income before income taxes	$	18,015	$	8,526

Geographic Data:

The following table provides information related to the Company’s net sales by country, which is presented on the basis of the location that revenue from customers is recorded:


Three Months Ended March 31,	2024		2023
United States	$	90,153	$	90,513
United Kingdom	11,221		9,043
All other countries(1)	10,324		10,202
Net sales	$	111,698	$	109,759

___________


(1)			No individual country is greater than 10% of total net sales for the three months ended March 31, 2024 and 2023.

The following table provides information related to the Company’s property and equipment, net by country:


	March 31, 2024		December 31, 2023
United States	$	751	$	729
Ecuador	141		140
Singapore	1,132		1,081
All other countries(1)	171		186
Property and equipment, net (including asset held for sale)	$	2,195	$	2,136

___________


(1)			No individual country is greater than 10% of total property and equipment, net as of March 31, 2024 and December 31, 2023.

14. RELATED-PARTY TRANSACTIONS

Director Nominee Agreements - A member of the Board of Directors appointed under the Investor Rights Agreement by Verlinvest Beverages SA ("Verlinvest"), a stockholder of the Company, entered into a nominee agreement on May 24, 2022 instructing the Company to pay all cash and equity compensation earned in connection with his board of director service to Verlinvest. Based on the aforementioned nominee agreement, RSUs granted to this director will be held by him as nominee for Verlinvest and, upon vesting of the RSUs, the shares will be transferred to Verlinvest. The nominee agreements are primarily between the director and Verlinvest. The Company is a party to this arrangement solely to agree to the manner in which it would satisfy the compensation obligations to this director.

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Registration Rights and Underwriting Agreements - Under the Registration Rights agreement by and among the Company, Verlinvest and certain other investors, in connection with each demand registration, piggyback or shelf offering, the Company agreed to reimburse the holders of registrable securities for the reasonable fees and disbursements of not more than one law firm. As part of the two secondary offerings during 2023, the Company also entered into underwriting agreements, to which Verlinvest was a party. In connection with the secondary share offering by Verlinvest in November 2023, the Company held an accrual in the amount of approximately $300 for legal fees reimbursement as of March 31, 2024. Subsequently during April 2024, Verlinvest agreed to waive its right to reimbursement of legal fees for its counsel, and those expenses.

15. SUBSEQUENT EVENTS

On April 24, 2024, the Company announced that AMS, a wholly owned subsidiary of the Company, entered into a Co-Manufacturing and Purchasing Agreement, dated April 18, 2024 with Axelum Resources Corp. (“Axelum”). The Company has an existing relationship with an affiliate of Axelum for the manufacture of various Company products in accordance with the terms of a manufacturing and purchasing agreement, dated April 8, 2020, which was filed as Exhibit 10.15 to the Company's Registration Statement on Form S-1 filed with the Securities and Exchange Commission ("SEC") on September 27, 2021. The new manufacturing agreement expands the Company's existing relationship with Axelum.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and filed with the Securities and Exchange Commission ("SEC") on February 29, 2024 (the “Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors” of the Form 10-K and other factors set forth in the Form 10-K and Quarterly Reports on Form 10-Q.

Overview

The Vita Coco Company is a leading platform for brands in the functional beverage category. We pioneered packaged coconut water in 2004 and have extended our business into other categories. Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world. We are one of the largest brands globally in the coconut and other plant waters category, and a large supplier of private label coconut water.

Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, and milk offerings. Our other brands include Ever & Ever, a sustainably packaged water, and PWR LIFT, a protein-infused fitness drink. We also offered Runa, a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023. We supply private label products to key retailers in both the coconut water and coconut oil categories. Additionally, we generate revenue from bulk product sales to beverage and food companies.

We source our coconut water from a diversified global network of 14 factories across six countries supported by thousands of coconut farmers. As we do not own any of these factories, our supply chain is a fixed asset-lite model designed to better react to changes in the market or consumer preferences. We also work with co-packers in America and Europe to support local packaging and repacking of our products to better service our customers’ needs.

Vita Coco is available in over 30 countries, with our primary markets in North America, the United Kingdom and China. Our primary markets for private label are North America and Europe. Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce and food service channels. We are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports and educational institutions.

Key Factors Affecting Our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us. There have been no material changes to such factors from those described in the Form 10-K under the heading “Key Factors Affecting our Performance” and the changes noted below in "Impact of Global Events Causing Macroeconomic Uncertainty." Those factors also pose risks and challenges, including those discussed in Part I, Item 1A. “Risk Factors” of the Form 10-K.

Impact of Global Events Causing Macroeconomic Uncertainty

Uncertainty in the macroeconomic environment resulting from current geopolitical and economic instability (including the effects of current wars and other international conflicts) and the high interest rate and inflationary cost environment may affect our business. It is not currently possible to ascertain the overall impact of these macroeconomic uncertainties on the Company’s business, results of operations, financial condition or liquidity. Future events and effects related to these macroeconomic uncertainties cannot be determined with precision and actual results could significantly differ from estimates or forecasts. For a further discussion of the risks and challenges posed by these events, please see Part I, Item 1A. “Risk Factors” of the Form 10-K.

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Components of Our Results of Operations

Net Sales

We generate revenue through the sale of our Vita Coco branded coconut water, private label and Other products in the Americas and International segments. Our sales are predominantly made to distributors or to retailers for final sale to consumers through retail channels, which includes sales to traditional brick and mortar retailers, who may also resell our products through their own online platforms. Our revenue is recognized net of allowances for returns, discounts, credits, and any taxes collected from consumers.

Cost of Goods Sold

Cost of goods sold includes the costs of the products sold to customers, inbound and outbound shipping and handling costs, freight and duties, shipping and packaging supplies, and warehouse fulfillment costs.

Gross Profit and Gross Margin

Gross profit is net sales less cost of goods sold, and gross margin is gross profit as a percentage of net sales. Gross profit has been, and will continue to be, affected by various factors, including the mix of products we sell, the channels through which we sell our products, the promotional environment in the marketplace, manufacturing costs, commodity prices, warehouse costs, and transportation rates. We expect that our gross margin will fluctuate from period to period depending on the interplay of these variables.

Management believes gross margin provides investors with useful information related to the profitability of our business prior to considering the operating costs incurred. Management uses gross profit and gross margin as key measures in making financial, operating, and planning decisions and in evaluating our performance.

Operating Expenses

Selling, General and Administrative Expenses

Selling, general and administrative expenses ("SG&A") include marketing expenses, promotional expenses, and general and administrative expenses. Marketing and promotional expenses consist primarily of costs incurred promoting and marketing our products and are primarily driven by investments to grow our business and retain customers. General and administrative expenses include payroll, employee benefits, stock-based compensation, broker commissions and other headcount-related expenses associated with supply chain & operations, finance, information technology, human resources and other administrative-related personnel, as well as general overhead costs of the business, including research and development for new innovations, rent and related facilities and maintenance costs, depreciation and amortization, and legal, accounting, and professional fees. We expense all SG&A as incurred.

Other Income (Expense), Net

Unrealized Gain/(Loss) on Derivative Instruments

We are subject to foreign currency risks as a result of our inventory purchases and intercompany transactions. In order to mitigate the foreign currency risks, we and our subsidiaries enter into foreign currency exchange contracts which are recorded at fair value. Unrealized gain/(loss) on derivative instruments consists of gains or losses on such foreign currency exchange contracts which are unsettled as of period end. See Part I, Item 3 “Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Exchange Risk” for further information.

Foreign Currency Gain/(Loss)

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Our reporting currency is the U.S. dollar. We maintain the financial statements of each entity within the group in its local currency, which is also the entity’s functional currency. Foreign currency gain/(loss) represents the transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency. See “—Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Exchange Risk” for further information.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents, and money market funds.

Interest Expense

Interest expense consists of interest payable on our credit facilities and vehicle loans.

Income Tax Expense

We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions in which we operate. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates. We regularly assess the need to record a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Operating Segments

We operate in two reporting segments:

•Americas—The Americas segment is comprised of our operations in the Americas region, primarily in the United States and Canada.

•International—The International segment is comprised of our operations primarily in Europe, the Middle East, and the Asia Pacific regions, which includes the Company’s procurement arm.

Each segment derives its revenues from the following product categories:

•Vita Coco Coconut Water—This product category consists of all branded coconut water product offerings under the Vita Coco labels, where the majority ingredient is coconut water. For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

•Private Label —This product category consists of all private label product offerings, which includes coconut water and oil. The Company determined the production and distribution of private label products represents a distinct performance obligation. Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these private label products over time as the production for open purchase orders occurs, which may be prior to any shipment.

•Other—This product category consists of all other products, which includes Runa (until we ceased selling it in December 2023), Ever & Ever and PWR LIFT product offerings, Vita Coco product extensions beyond coconut water, coconut milk products, and other revenue transactions (e.g., bulk product sales). For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023, respectively:


(in thousands)	Three Months Ended March 31,
	2024		2023
Net sales	$	111,698	$	109,759
Cost of goods sold	64,521		76,098
Gross profit	47,177		33,661
Operating expenses
Selling, general, and administrative	28,218		26,957
Income (loss) from operations	18,959		6,704
Other income (expense)
Unrealized gain/(loss) on derivative instrument	(2,525)		1,213
Foreign currency gain/(loss)	58		611
Interest income	1,523		13
Interest expense	—		(15)
Total other income (expense)	(944)		1,822
Income before income taxes	18,015		8,526
Income tax expense	(3,777)		(1,821)
Net income	$	14,238	$	6,705

Net Sales

The following table provides a comparative summary of net sales by operating segment and product category:


(in thousands)	Three Months Ended March 31,				Change
	2024		2023		Amount		Percentage
Americas segment
Vita Coco Coconut Water	$	69,522	$	69,138	$	384	0.6	%
Private Label	24,273		25,050		(777)		(3.1)	%
Other	2,296		2,584		(288)		(11.1	%)
Subtotal	96,091		96,772		(681)		(0.7)	%
International segment
Vita Coco Coconut Water	9,665		9,558		$	108	1.1	%
Private Label	5,152		2,666		2,487		93.3	%
Other	790		763		27		3.5	%
Subtotal	$	15,607	$	12,987	$	2,620	20.2	%
Total net sales	$	111,698	$	109,759	$	1,939	1.8	%

For the three months ended March 31, 2024, the primary driver of the consolidated net sales increase of 1.8% was a 6.2% increase in private label sales with volume growth of 12.2%, along with a 0.6% net sales increase in Vita Coco Coconut Water due to net pricing actions and changes in promotion timings compared to prior year, partially offset by CE volume decline of 4.3%.

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Volume in Case Equivalent

The following table provides a comparative summary of the percentage change in our volume in CE for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, by operating segment and product category:


	Percentage Change - Three Months Ended March 31, 2024 vs. 2023
	Americas		International		Total
Vita Coco Coconut Water	(3.4)	%	(9.0)	%	(4.3)	%
Private Label	3.8	%	69.0	%	12.2	%
Other	(25.5)	%	(21.2)	%	(25.2)	%
Total volume (CE)	(2.0)	%	7.8	%	(0.5)	%

Note: A CE is a standard volume measure used by management, which is defined as a case of 12 bottles of 330ml liquid beverages or the same liter volume of oil.

*International, Other excludes minor volume that is treated as zero CE.

Americas Segment

Americas net sales decreased by $0.7 million, or 0.7%, to $96.1 million for the three months ended March 31, 2024 from $96.8 million for the three months ended March 31, 2023. The decrease is primarily driven by CE volume decline of 2.0%, which was partially offset by price/mix benefits.

Vita Coco Coconut Water net sales increased by $0.4 million, or 0.6%, to $69.5 million for the three months ended March 31, 2024, from $69.1 million for the three months ended March 31, 2023. The increase was the result of net pricing benefits driven by changes in promotional timing, offset by CE volume decline of 3.4%.

Private label net sales decreased $0.8 million, or 3.1%, to $24.3 million for the three months ended March 31, 2024, from $25.1 million for the three months ended March 31, 2023, with CE volume growth of 3.8%, partially offset by price/mix changes.

Net sales from Other products decreased by $0.3 million, or 11.1%, to $2.3 million for the three months ended March 31, 2024 from $2.6 million for the three months ended March 31, 2023, driven by a CE volume decline of 25.5% partially offset by price/mix benefits.

International Segment

International net sales increased by $2.6 million, or 20.2%, to $15.6 million for the three months ended March 31, 2024, from $13.0 million for the three months ended March 31, 2023. The increase is primarily driven by price/mix benefits coupled with CE volume growth of 7.8%.

Vita Coco Coconut Water net sales increased by $0.1 million, or 1.1%, to $9.7 million for the three months ended March 31, 2024, from $9.6 million for the three months ended March 31, 2023. The increase was driven primarily by Europe which had strong volume and net sales performance, partially offset by lower volumes in the Asia Pacific region.

Private label net sales increased by $2.5 million, or 93.3%, to $5.2 million for the three months ended March 31, 2024 from $2.7 million for the three months ended March 31, 2023. The increase was driven primarily by CE volume growth in Europe from new distribution in addition to strong volume growth in the Asia Pacific region.

Net sales from Other products was relatively flat on a dollar basis for the three months ended March 31, 2024 compared to the prior year period.

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Gross Profit


(in thousands)	Three Months Ended March 31,						Change
	2024			2023			Amount		Percentage
Cost of goods sold
Americas segment	$	55,219		$	67,622		$	(12,403)	(18.3)	%
International segment	9,302			8,476			826		9.7	%
Total cost of goods sold	$	64,521		$	76,098		$	(11,577)	(15.2)	%
Gross profit
Americas segment	$	40,872		$	29,150		$	11,722	40.2	%
International segment	6,305			4,511			1,794		39.8	%
Total gross profit	$	47,177		$	33,661		$	13,516	40.2	%
Gross margin
Americas segment	42.5		%	30.1		%			12.4	%
International segment	40.4		%	34.7		%			5.7	%
Consolidated	42.2		%	30.7		%			11.5	%

On a consolidated basis, cost of goods sold decreased $11.6 million, or 15.2%, to $64.5 million for the three months ended March 31, 2024, from $76.1 million for the three months ended March 31, 2023. On a consolidated and segment basis, the decrease is primarily related to significantly lower transportation costs, relating to ocean freight and domestic logistics, in addition to lower finished goods costs along with a slight volume CE decline of 0.5%.

On a consolidated basis, gross profit increased $13.5 million, or 40.2%, to $47.2 million for the three months ended March 31, 2024, from $33.7 million for the three months ended March 31, 2023. Gross margin increased approximately 11.5% percentage points to 42.2% for the three months ended March 31, 2024, as compared to 30.7% for the three months ended March 31, 2023. These increases resulted from lower global transportation costs and elevated Vita Coco Coconut Water net pricing, partially offset by mix effects within private label products.

Operating Expenses


(in thousands)	Three Months Ended March 31,				Change
	2024		2023		Amount		Percentage
Selling, general, and administrative	$	28,218	$	26,957	$	1,261	4.7	%

Selling, General and Administrative Expenses

During the three months ended March 31, 2024, SG&A increased by $1.3 million, or 4.7%, versus the three months ended March 31, 2023. The increase was primarily driven by an increase of $1.9 million in personnel related expenses for the three months ended March 31, 2024 versus the prior year comparable period, partially offset by $0.4 million in lower distribution buyout expenses and $0.3 million less bad debt expense compared to prior year.

Other Income (Expense), Net


(in thousands)	Three Months Ended March 31,				Change
	2024		2023		Amount		Percentage
Unrealized gain/(loss) on derivative instruments	$	(2,525)	$	1,213	$	(3,738)	308.2	%
Foreign currency gain/(loss)	58		611		(553)		90.5	%
Interest income	1,523		13		1,510		(11615.4	%)
Interest expense	—		(15)		15		100.0	%
	$	(944)	$	1,822	$	(2,766)	151.8	%

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____________

n/m—represents percentage calculated not being meaningful

Unrealized Gain/(Loss) on Derivative Instruments

For the three months ended March 31, 2024 and 2023, we recorded losses of $2.5 million and gains of $1.2 million, respectively, for the mark-to-market changes in fair value on the outstanding derivative instruments for forward foreign currency exchange contracts, with the largest loss for the three months ended March 31, 2024 related to the contracts hedging the BRL and THB, and partly offset by gain on GBP hedges.

Foreign Currency Gain/(Loss)

For the three months ended March 31, 2024, the change in foreign currency loss was $553 as compared to March 31, 2023. The change in all periods was a result of movements in various foreign currency exchange rates related to transactions denominated in currencies other than the functional currency.

Interest Income

The increase in interest income for the three months ended March 31, 2024 compared to the prior year period was primarily related to interest income on cash invested with financial institutions. The cash investment program was not in operation during the first quarter of 2023.

Interest Expense

The change in interest expense is immaterial.

Income Tax Expense


(in thousands)	Three Months Ended March 31,				Change
	2024		2023		Amount		Percentage
Income tax expense	(3,777)		(1,821)		$	(1,956)	107.4	%
Tax rate	21.0	%	21.4	%

Our quarterly income tax provision is based on an estimated annual effective tax rate applied to our consolidated year-to-date pre-tax income or loss. The effective income tax rate is based upon the estimated income for the year, the composition of that income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

For the three months ended March 31, 2024 and 2023 our effective tax rate was 21.0% and 21.4% respectively. The effective tax rate for the current period is consistent with the U.S. statutory rate of 21% primarily as a result of state income taxes for the U.S. company and other nondeductible expenses for tax purposes, and is partially offset by lower statutory tax rates in countries outside the U.S. where the Company operates in. The change in effective tax rates between the periods is primarily driven by the jurisdictional mix of the Company’s pre-tax profits and the relative impact of other non-deductible expense in relation to the pre-tax profits.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors and lenders. These non-GAAP measures should not be considered as alternatives to net income as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

These non-GAAP measures are a key metric used by management and our Board of Directors to assess our financial performance. We present these non-GAAP measures because we believe they assist investors in comparing our

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performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance and because we believe it is useful for investors to see the measures that management uses to evaluate the Company.

We define EBITDA as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA with adjustments to eliminate the impact of certain items, including certain non-cash and other items, that we do not consider representative of our ongoing operating performance.

A reconciliation from net income to EBITDA and Adjusted EBITDA is set forth below:


	Three Months Ended March 31,
	2024		2023
	(in thousands)
Net income	14,238		6,705
Depreciation and amortization	162		165
Interest income	(1,523)		(13)
Interest expense	—		15
Income tax expense	3,777		1,821
EBITDA	16,654		8,693
Stock-based compensation (a)	2,109		2,162
Unrealized (gain)/loss on derivative instruments (b)	2,525		(1,213)
Foreign currency (gain)/loss (b)	(58)		(611)


Adjusted EBITDA	$	21,230	$	9,031

____________

(a)Non-cash charges related to stock-based compensation, which vary from period to period depending on volume and vesting timing of awards. We adjusted for these charges to facilitate comparison from period to period.

(b)Unrealized gains or losses on derivative instruments and foreign currency gains or losses are not considered in our evaluation of our ongoing performance.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through cash generated from our business operations and proceeds on borrowings through our credit facilities and term loans. We had $123.0 million and $132.5 million of cash and cash equivalents as of March 31, 2024 and December 31, 2023, respectively. From time to time, we may supplement our liquidity needs with incremental borrowing capacity under the 2020 Credit Facility.

Considering recent market conditions and our business assumptions, we have reevaluated our operating cash flows and cash requirements and believe that current cash, cash equivalents, future cash flows from operating activities and cash available under our 2020 Credit Facility will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the condensed consolidated financial statements included herein and the foreseeable future.

Our future capital requirements will depend on many factors, including our revenue growth rate, our working capital needs primarily for inventory build, our global footprint, the expansion of our marketing activities, the timing and extent of spending to support product development efforts, the introduction of new and enhanced products and the continued market consumption of our products, as well as any shareholder distribution either through equity buybacks or dividends. Our asset-lite operating model has historically provided us with a low cost, nimble, and scalable supply chain, which allows us to adapt to changes in the market or consumer preferences while also efficiently introducing new products across our platform. We may seek additional equity or debt financing in the future in order to acquire or invest in complementary businesses, products and/or new IT infrastructures. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

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Cash Flows

The following tables summarize our sources and uses of cash:


	Three Months Ended March 31,				Change
	2024		2023		Amount		Percentage
(in thousands)
Cash flows provided by (used in):
Operating activities	$	(267)	$	9,436	$	(9,703)	102.8	%
Investing activities	(124)		(449)		325		72.4	%
Financing activities	(9,086)		597		(9,683)		(1621.9	%)
Effects of exchange rate changes on cash and cash equivalents	(80)		187		(267)		(142.8	%)
Net (decrease)/increase in cash and cash equivalents	$	(9,557)	$	9,771	$	(19,328)	197.8	%

Operating Activities

Our main source of operating cash is payments received from our customers. Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses.

During the three months ended March 31, 2024, $9.7 million less net cash was generated by operating activities compared to the three months ended March 31, 2023. The lower cash generation was due to increases in working capital, partly offset by an increase in net income after any non-cash adjustments.

Investing Activities

During the three months ended March 31, 2024, cash used in investing activities was $0.1 million as compared to $0.4 million for the three months ended March 31, 2023, due to less cash paid for property and equipment.

Financing Activities

During the three months ended March 31, 2024 compared to the three months ended March 31, 2023, net cash used by financing activities was $9.7 million higher primarily driven by share repurchases that occurred in January 2024. See Note 10, Stockholders' Equity, for further discussion.

Debt

We had an immaterial amount of debt outstanding as of March 31, 2024 and December 31, 2023, which was related to vehicle loans.

Revolving Credit Facility

In May 2020, the Company entered into the 2020 Credit Facility, which currently provides for committed borrowings of $60 million. The maturity date on the 2020 Credit Facility is May 12, 2026.

Starting in December 2022, borrowings on the 2020 Credit Facility bear interest at rates based on either: 1) a fluctuating rate per annum determined to be the sum of Daily Simple SOFR plus the Spread; or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the Spread. The Spread ranges from 1.00% to 1.75%, which is based on the Company’s leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter as defined in the credit agreement. In addition, the Company is currently subject to an unused commitment fee ranging from 0.10% and 0.20% on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

The outstanding balance on the Revolving Facility was zero as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, we were compliant with all financial covenants.

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Vehicle Loans

For additional information, see Note 6, Debt, in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

There have been no material changes to our contractual obligations from those described in the Form 10-K.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in the Form 10-K and the notes to the unaudited condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q. During the three months ended March 31, 2024, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.

Recent Accounting Pronouncements

A description of recently adopted and issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies, to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities.

As of March 31, 2024 and December 31, 2023 , the outstanding amounts related to our 2020 Credit Facility incur interest fees at variable interest rates and are affected by changes in the general level of market interest rates. However, there was zero outstanding balance on the 2020 Credit Facility as of March 31, 2024 and December 31, 2023.

Foreign Currency Exchange Risk

We transact business globally in multiple currencies and hence have foreign currency risks related to our net sales, cost of goods sold and operating expenses. We use derivative financial instruments to reduce our net exposure to foreign currency fluctuations. Our objective in managing exposure to foreign currency fluctuations is to reduce the volatility caused by foreign exchange rate changes on the earnings, cash flows and financial position of our international operations. We generally target to hedge a majority of our forecasted yearly foreign currency exchange exposure through a 24-month rolling layered approach and leave a portion of our currency forecast floating at spot rate. Our currency forecast and hedge positions are reviewed quarterly. The gains and losses on the forward contracts associated with our balance sheet positions are recorded in ‘‘Other income (expense), net” in the condensed consolidated statements of operations appearing elsewhere in this Quarterly Report on Form 10-Q.

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The total notional values of our forward exchange contracts were $105.0 million and $121.0 million as of March 31, 2024 and December 31, 2023, respectively. The derivatives on the forward exchange contracts resulted in an unrealized loss of $(2.5) million for the three months ended March 31, 2024, and we estimate that a 10% strengthening or weakening of the U.S. dollar would have resulted in an approximately $4.1 million gain or loss.

A portion of our cash and cash equivalents are denominated in foreign currencies. As of March 31, 2024, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million. As of December 31, 2023, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million.

Inflation Risk

Inflation generally affects us by increasing our cost of transportation, labor and manufacturing costs. In recent years, we have seen fluctuating transportation costs caused by global supply chain disruptions or geopolitical instability and general inflation effects, which may cause pressure on our costs and margins. More specifically, we source a large amount of our finished goods from international countries, which exposes us to international supply chain inflation, particularly ocean freight. In the three months ended March 31, 2024, general inflationary pressures continue to increase the other elements of our cost of goods and operating expenses.

Credit Risk

We are exposed to concentration of credit risk from our major customers. In the three months ended March 31, 2024, sales to two customers represented approximately 47% of our consolidated net sales. We have not experienced credit issues with these customers. We maintain provisions for potential credit losses and evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts and customer credits need to be recorded. Significant economic disruptions or a slowdown in the economy could result in significant additional charges.

Item 4. Controls and Procedures.

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of disclosure controls and procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in various claims and legal proceedings related to claims arising out of our operations. We are not currently a party to any material legal proceedings, including any such proceedings that are pending or threatened, of which we are aware.

Item 1A. Risk Factors.

Please refer to Part I, Item 1A. "Risk Factors" of the Form 10-K for the fiscal year ended December 31, 2023 for a description of certain significant risks and uncertainties to which our business, financial condition and results of operations are subject. There have been no material changes to these risk factors as of March 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company did not sell any equity securities during the three months ended March 31, 2024 that were not registered under the Securities Act.

The following table provides information regarding repurchases of our Common Stock during the three months ended March 31, 2024:


Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares That May be Purchased Under the Plans or Programs
				(In millions)
January 1, 2024 - January 31, 2024	391,544	$23.59	421,544	$30.0
February 1, 2024 - February 29, 2024	—	$—	—	$—
March 1, 2024 - March 31, 2024	—	$—	—	$—

(1) On October 30, 2023, the Company's Board of Directors approved a share repurchase program ("Program") authorizing the Company to repurchase up to $40 million of Common Stock. Shares of Common Stock may be repurchased under the Program from time to time through open market purchases, block trades, private transactions or accelerated or other structured share repurchase programs. To the extent not retired, shares of Common Stock repurchased under the Program will be placed in the Company's treasury shares. The extent to which the Company repurchases shares of Common Stock and the timing of such repurchases will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company. The Program has no time limits, and may be suspended or discontinued at any time. During the three months ended March 31, 2024, the Company repurchased 391,544 shares at a cost of $9.2 million under this program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Rule 10b5-1 Trading Plans

In accordance with the disclosure requirements set forth in Item 408(a) of Regulation S-K, the following table discloses any officer (as defined in Rule 16a-1(f) under the Exchange Act), director, or entity controlled by such officer or

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director who adopted a contract, instruction, or written plan for the sale of securities of the Company intended to satisfy the affirmative defense of Rule 10b5-1(c) during the quarterly period ended March 31, 2024:

Name

Title

Action Taken

Date of Action

Duration of Trading Arrangement

Aggregate Number of Securities to be Sold

Jonathan Burth

Chief Operating Officer

Adoption

March 15, 2024

June 14, 2024 to July 31, 2025

Up to 100,000 shares of Common Stock issuable upon exercise of fully vested stock options and up to 40,000 shares of Common Stock

Jane Prior

Chief Marketing Officer

Adoption

March 15, 2024

June 14, 2024 to February 3, 2025

Up to 50,000 shares of Common Stock upon exercise of fully vested stock options

Charles van Es

Chief Sales Officer

Adoption

March 15, 2024

June 14, 2024 to January 31, 2025

Up to 39,675 shares of Common Stock upon exercise of fully vested stock options

Other than as disclosed above, no other officer, director or entity controlled by such officer or director adopted, modified or terminated a contract, instruction or written plan for the purchase or sale of securities of the Company intended to satisfy the affirmative defense of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement.

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Item 6. Exhibits.

Exhibit
Number

Exhibit Description

Incorporated by Reference

Filed /
Furnished
Herewith

Form

File No.

Exhibit

Filing Date

3.1

Second Amended and Restated Certificate of Incorporation.

8-K

001-40950

3.1

10/25/21

3.2

Amended and Restated Bylaws.

8-K

001-40950

3.2

10/25/21

4.1

Specimen Common Stock Certificate of The Vita Coco Company, Inc.

S-1

333-259825

4.1

9/27/21

4.2+

Registration Rights Agreement, by and among The Vita Coco Company, Inc. and certain security holders of The Vita Coco Company, Inc., dated as of October 20, 2021.

8-K

001-40950

10.1

10/25/21

4.3+

Investor Rights Agreement, among The Vita Coco Company, Inc., Verlinvest Beverages SA, Michael Kirban and Ira Liran, dated as of October 20, 2021.

8-K

001-40950

10.2

10/25/21

4.4

F orm of Indenture

S-3

333-271583

4.4

5/2/23

10.1†

S econd Amendment to Amended and Restated Employment Agreement, by and between The Vita Coco Company, Inc., and Michael Kirban, dated March 4, 2024

8-K

001-40950

10.1

3/6/24

10.2+X

M anufacturing and Purchasing Agreement, by and among Century Pac ific Food, Inc. and All Market Singapore Pte . Ltd., dated as of March 8, 2024

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

101.INS

Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Table of Contents

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_______________________

* Filed herewith.

** Furnished herewith.

† Indicates management contract or compensatory plan.

+ Certain portions of this exhibit (indicated by “####”) have been redacted pursuant to Regulation S-K, Item 601(a)(6).

X Certain portions of this exhibit (indicated by “[***]”) have been redacted pursuant to Regulation S-K, Item 601(b)(10)(iv).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	THE VITA COCO COMPANY, INC.

Date: May 2, 2024	By:	/s/ Martin Roper
		Martin Roper
		Chief Executive Officer and Director
		(Principal Executive Officer)

Date: May 2, 2024	By:	/s/ Corey Baker
		Corey Baker
		Chief Financial Officer
		(Principal Financial Officer)