The Vita Coco Company, Inc. (COCO) Bundle
Understanding The Vita Coco Company, Inc. (COCO) Revenue Streams
Understanding The Vita Coco Company, Inc.’s Revenue Streams
Primary Revenue Sources:
- Vita Coco Coconut Water: $94.0 million for Q3 2024, up from $89.7 million in Q3 2023 (4.8% increase).
- Private Label Products: $16.5 million for Q3 2024, down from $28.3 million in Q3 2023 (41.6% decrease).
- Other Products: $1.7 million for Q3 2024, down from $2.7 million in Q3 2023 (35.6% decrease).
Year-over-Year Revenue Growth Rate:
- Total net sales for Q3 2024: $132.9 million, down from $138.1 million in Q3 2023 (3.7% decrease).
- Net sales for the nine months ended September 30, 2024: $388.7 million, slightly up from $387.5 million in the same period of 2023 (0.3% increase).
Contribution of Different Business Segments to Overall Revenue:
| Segment | Q3 2024 Net Sales | Q3 2023 Net Sales | Change ($) | Change (%) |
|---|---|---|---|---|
| Americas | $112.2 million | $120.6 million | ($8.4 million) | (7.0%) |
| International | $20.7 million | $17.4 million | $3.2 million | 18.6% |
Analysis of Significant Changes in Revenue Streams:
- Private label net sales decreased due to supply constraints and the transition out of private label coconut oil sales.
- International segment net sales increased, primarily driven by volume growth in Europe and the Asia Pacific region.
- Overall, the Americas segment experienced a decline in net sales due to lower CE volume in private label products.
Volume in Case Equivalent (CE) Changes:
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|
| Vita Coco Coconut Water | 6.3% | — | — |
| Private Label | (27.0%) | — | — |
| Other Products | (32.3%) | — | — |
Conclusion on Revenue Trends:
- Vita Coco Coconut Water remains the largest revenue driver despite overall sales decline.
- Private label products show significant revenue decline due to market adjustments.
- International growth is a positive sign, indicating potential for future revenue expansion.
Key Financial Figures:
- Net Income for Q3 2024: $19.3 million, up from $15.2 million in Q3 2023.
- Gross Profit for Q3 2024: $51.6 million, down from $56.2 million in Q3 2023.
- Gross Margin for Q3 2024: 38.8%, down from 40.7% in Q3 2023.
A Deep Dive into The Vita Coco Company, Inc. (COCO) Profitability
A Deep Dive into Profitability Metrics
Gross Profit: For the three months ended September 30, 2024, gross profit was $51.6 million, a decrease of 8.2% from $56.2 million for the same period in 2023. For the nine months ended September 30, 2024, gross profit increased to $157.5 million, up 11.7% from $140.9 million in 2023.
Gross Margin: The gross margin for the three months ended September 30, 2024 was 38.8%, down from 40.7% in 2023. For the nine months, the gross margin improved to 40.5% from 36.4% in 2023.
Operating Profit: Income from operations for the three months ended September 30, 2024 was $20.6 million, compared to $23.5 million for the same period in 2023. For the nine months, operating income rose to $69.5 million, up from $51.1 million in 2023.
Net Profit: Net income for the three months ended September 30, 2024 was $19.3 million, compared to $15.2 million in 2023. For the nine months, net income reached $52.6 million, an increase from $39.9 million in 2023.
| Metric | Q3 2024 | Q3 2023 | Change (%) | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Gross Profit | $51.6M | $56.2M | -8.2% | $157.5M | $140.9M | +11.7% |
| Gross Margin | 38.8% | 40.7% | -1.9% | 40.5% | 36.4% | +4.1% |
| Operating Profit | $20.6M | $23.5M | -12.3% | $69.5M | $51.1M | +36.0% |
| Net Profit | $19.3M | $15.2M | +27.0% | $52.6M | $39.9M | +31.9% |
Trends in Profitability: Over the past year, gross profit for the three-month period has shown a decline due to lower sales volumes and increased costs, while net profit has increased significantly due to better pricing strategies and cost management.
Comparison with Industry Averages: The average gross margin in the beverage industry is around 40%. This company’s gross margin of 38.8% indicates a slight underperformance compared to the industry average. However, its net income margin of approximately 14.6% exceeds the industry average of 12%, indicating better overall profitability management.
Operational Efficiency: The company has successfully managed its operating expenses, with selling, general, and administrative expenses decreasing by 5.2% in Q3 2024 compared to Q3 2023. This efficiency in cost management is crucial for maintaining profitability despite fluctuating sales.
| Operating Expenses | Q3 2024 | Q3 2023 | Change (%) | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Selling, General and Administrative | $30.97M | $32.65M | -5.2% | $87.94M | $89.86M | -2.1% |
Debt vs. Equity: How The Vita Coco Company, Inc. (COCO) Finances Its Growth
Debt vs. Equity: How The Vita Coco Company, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total debt of the company included:
- Vehicle loans: $15,000
- Current notes payable: $10,000
- Non-current notes payable: $5,000
The company has no outstanding balance on its revolving credit facility, which has a committed borrowing capacity of $60 million .
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Shareholders' Equity
Total Shareholders' Equity: $252,120,000
Total Debt: $15,000 + $10,000 + $5,000 = $30,000
Thus, the Debt-to-Equity Ratio is:
Debt-to-Equity Ratio = $30,000 / $252,120,000 = 0.000119
This figure is significantly lower than the average debt-to-equity ratio in the beverage industry, which typically ranges from 0.5 to 1.5 .
Recent Debt Issuances and Credit Ratings
The company has not issued any new debt recently and maintains a stable credit rating due to its minimal debt levels. As of September 30, 2024, the company was compliant with all financial covenants related to its credit facilities .
Balance Between Debt Financing and Equity Funding
The company primarily finances its operations through cash generated from its business operations and has a conservative approach to debt financing. As of September 30, 2024, cash and cash equivalents were $156.7 million, compared to $132.5 million on December 31, 2023 .
| Type of Debt | Amount (in thousands) | Interest Rate |
|---|---|---|
| Vehicle Loans | $15 | 4.56% - 5.68% |
| Revolving Credit Facility | $0 | 1.00% - 1.75% (based on leverage ratio) |
| Current Notes Payable | $10 | N/A |
| Non-current Notes Payable | $5 | N/A |
The company has strategically maintained a low level of debt, leveraging its strong cash position to support growth initiatives while minimizing financial risk .
Assessing The Vita Coco Company, Inc. (COCO) Liquidity
Assessing The Vita Coco Company, Inc. Liquidity
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, is approximately 2.62, calculated from current assets of $156.7 million and current liabilities of $59.7 million. The quick ratio, which excludes inventory, is approximately 2.50, indicating a strong liquidity position.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is reported at $97 million, showing an increase from $72.8 million at the end of 2023. This improvement reflects effective management of current assets and liabilities.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating activities totaled $35.977 million, a decrease of 48.6% compared to $70.003 million in the same period in 2023. The decrease is attributed to higher inventory purchases and changes in working capital.
Investing activities resulted in cash used of $0.849 million, compared to $0.533 million in 2023. Financing activities saw a net cash outflow of $16.3 million, primarily due to share repurchases.
Cash Flow Trends
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Operating Activities | $35,977 | $70,003 | ($34,026) | 48.6% |
| Investing Activities | ($849) | ($533) | ($316) | 59.2% |
| Financing Activities | ($16,300) | ($16,300) | $0 | 0% |
Potential Liquidity Concerns or Strengths
The company has demonstrated a strong liquidity position with significant cash reserves of $156.7 million as of September 30, 2024, compared to $132.5 million at the end of 2023. This increase in cash and cash equivalents supports the company's ability to meet short-term obligations and invest in growth opportunities.
Despite the decrease in cash flow from operating activities, the company maintains compliance with all financial covenants under its $60 million revolving credit facility, which remains unused. The asset-light operating model enables flexibility in responding to market conditions, further supporting liquidity strength.
Is The Vita Coco Company, Inc. (COCO) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the P/E ratio is calculated as follows:
- Net Income: $19,251,000 (for Q3 2024)
- Shares Outstanding: 55,359,180
- Earnings Per Share (EPS): $0.35
- Stock Price (as of September 30, 2024): $13.50
- P/E Ratio: $13.50 / $0.35 = 38.57
Price-to-Book (P/B) Ratio
The P/B ratio is based on the book value per share:
- Total Equity: $252,120,000 (as of September 30, 2024)
- Shares Outstanding: 55,359,180
- Book Value Per Share: $252,120,000 / 55,359,180 = $4.56
- P/B Ratio: $13.50 / $4.56 = 2.96
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
Calculating the EV/EBITDA ratio involves the following:
- Market Capitalization: $748,750,000 (assuming stock price of $13.50 and shares outstanding)
- Total Debt: $15,000 (vehicle loans)
- Cash and Cash Equivalents: $156,700,000
- Enterprise Value (EV): $748,750,000 + $15,000 - $156,700,000 = $592,065,000
- EBITDA: $23,933,000 (for Q3 2024)
- EV/EBITDA Ratio: $592,065,000 / $23,933,000 = 24.75
Stock Price Trends
Over the past 12 months, the stock price has shown the following trends:
- 12 Months Ago: $10.00
- Current Price: $13.50
- Percentage Increase: ((13.50 - 10.00) / 10.00) 100 = 35%
Dividend Yield and Payout Ratios
Currently, the company does not pay dividends, resulting in:
- Dividend Yield: 0%
- Payout Ratio: 0%
Analyst Consensus
Analyst ratings reflect the following consensus:
- Buy: 4
- Hold: 2
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | 38.57 |
| P/B Ratio | 2.96 |
| EV/EBITDA Ratio | 24.75 |
| Stock Price (Current) | $13.50 |
| Stock Price (12 Months Ago) | $10.00 |
| Percentage Increase | 35% |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus (Buy) | 4 |
| Analyst Consensus (Hold) | 2 |
| Analyst Consensus (Sell) | 1 |
Key Risks Facing The Vita Coco Company, Inc. (COCO)
Key Risks Facing The Vita Coco Company, Inc. (COCO)
Industry Competition: The beverage industry is highly competitive, with numerous players vying for market share. For the three months ended September 30, 2024, net sales decreased by $5.2 million, or 3.7%, compared to the same period in 2023, influenced by a 36.8% decrease in private label net sales.
Regulatory Changes: Changes in food and beverage regulations can impact operations. Compliance with new labeling, safety, and environmental regulations may require substantial investments and adjustments in operational practices.
Market Conditions: Economic fluctuations can affect consumer spending. The company reported a net income of $19.3 million for the three months ended September 30, 2024, compared to $15.2 million for the same period in 2023. This indicates sensitivity to market conditions and consumer demand.
Operational Risks
Supply Chain Disruptions: The company has faced supply constraints impacting product availability, particularly in private label coconut water. This contributed to a 32.1% decline in private label case equivalents.
Transportation Costs: Increases in transportation costs have also affected gross profit margins, which decreased by 1.9% percentage points to 38.8%
Financial Risks
Debt Obligations: The company has a revolving credit facility of $60 million, with no outstanding balance as of September 30, 2024. Although this provides liquidity, reliance on credit facilities can pose risks if market conditions change.
Currency Fluctuations: Foreign currency exposure can impact financial results. For Q3 2024, the company reported a foreign currency gain of $550,000, but ongoing fluctuations could lead to losses in the future.
Strategic Risks
Market Penetration: The company's ability to expand into new markets is crucial. The international segment showed net sales growth of 18.6% to $20.7 million for Q3 2024, but competitive responses in these markets could hinder growth.
Innovation and Product Development: The reliance on existing product lines without significant innovation may limit growth potential. The company reported a 35.6% decrease in sales from other products for Q3 2024, highlighting the need for diversification in product offerings.
Mitigation Strategies
- Cost Management: The company has implemented cost-control measures, resulting in a 5.2% reduction in selling, general, and administrative expenses.
- Supply Chain Optimization: Efforts to enhance supply chain resilience are ongoing to mitigate risks associated with disruptions.
- Market Research and Development: Continued investment in market research and product development aims to address evolving consumer preferences and competitive pressures.
| Risk Type | Risk Factor | Impact | Mitigation Strategy |
|---|---|---|---|
| Operational | Supply Chain Disruptions | Decrease in product availability | Supply Chain Optimization |
| Financial | Debt Obligations | Increased financial costs | Cost Management |
| Market | Economic Fluctuations | Reduced consumer spending | Market Research and Development |
Future Growth Prospects for The Vita Coco Company, Inc. (COCO)
Future Growth Prospects for The Vita Coco Company, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to enhance its market position. These include:
- Product Innovations: The introduction of new flavors and product lines has been a focus area. The coconut water segment alone saw net sales increase by $4.3 million, or 4.8%, reaching $94 million for the three months ended September 30, 2024, compared to $89.7 million in the same period of 2023.
- Market Expansions: The international segment reported a net sales increase of $3.2 million, or 18.6%, reaching $20.7 million for the three months ended September 30, 2024.
- Acquisitions: Strategic acquisitions have bolstered the company's product offering and distribution capabilities, although specific recent acquisitions were not detailed in the latest reports.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections indicate continued momentum, particularly in the coconut water segment. For the nine months ended September 30, 2024, the coconut water segment net sales increased by $8.2 million, or 3.2%, totaling $262 million. Analysts estimate that annual revenue could reach approximately $520 million if current growth trends continue.
Strategic Initiatives or Partnerships
Strategic initiatives include:
- Distribution Partnerships: Expanding partnerships with major retailers and online platforms to enhance distribution channels.
- Marketing Campaigns: Increased marketing efforts are anticipated to support new product launches and strengthen brand visibility.
Competitive Advantages
The company possesses several competitive advantages that position it for growth:
- Brand Recognition: Strong brand equity in the coconut water market, which is a leading segment with continued consumer interest.
- Operational Efficiency: Improved cost management strategies have led to a gross profit increase of $16.6 million, or 11.7%, for the nine months ended September 30, 2024.
Growth Performance Table
| Segment | Q3 2024 Net Sales ($ million) | Q3 2023 Net Sales ($ million) | Growth ($ million) | Growth (%) |
|---|---|---|---|---|
| Coconut Water | 94.0 | 89.7 | 4.3 | 4.8 |
| Private Label | 16.5 | 28.3 | (11.8) | (41.6) |
| International Segment | 20.7 | 17.4 | 3.2 | 18.6 |
| Total | 132.9 | 138.1 | (5.2) | (3.7) |
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Article updated on 8 Nov 2024
Resources:
- The Vita Coco Company, Inc. (COCO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of The Vita Coco Company, Inc. (COCO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View The Vita Coco Company, Inc. (COCO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.