Vita Coco Company, Inc.

Previous wording

The Vita Coco Company 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.

Current wording

The Vita Coco Company pioneered packaged coconut water in 2004 and we 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.

Previous wording

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.

Current wording

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. Those factors also pose risks and challenges, including those discussed in Part I, Item 1A. “Risk Factors” of the Form 10-K.

Previous wording

Uncertainty in the macroeconomic environment resulting from geopolitical and economic instability (including the effects of current wars and other international conflicts) and variability in interest rates, foreign exchange rates, tariffs and other import related fees, and inflationary cost environments may affect our global supply chain. Additionally, the extent and duration of tariffs imposed by the U.S. government on other countries and reciprocal tariffs placed on U.S. goods in response thereto remains uncertain and may depend on various factors, including negotiations and relationships between the U.S. and affected countries, tariff exemptions, negative sentiment toward U.S. companies and products, and availability of domestic alternatives in our supply chain. It is not currently possible to ascertain the overall impact of these macroeconomic uncertainties on our 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.

Current wording

•Uncertainty in the macroeconomic environment resulting from geopolitical and economic instability (including the effects of current wars and other international conflicts) and variability in interest rates, foreign exchange rates, tariffs and other import related fees, and inflationary cost environments may affect our global supply chain. Additionally, as further discussed below, the extent and duration of tariffs imposed by the U.S. government on other countries and reciprocal tariffs placed on U.S. goods in response thereto remains uncertain and may depend on various factors, including negotiations and relationships between the U.S. and affected countries, tariff exemptions, negative sentiment toward U.S. companies and products, and availability of domestic alternatives in our supply chain. It is not currently possible to ascertain the overall impact of these macroeconomic uncertainties on our 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.

Previous wording

During the first quarter of 2025, the U.S. government announced tariffs on certain imports, including imports from Mexico, and Canada. We currently believe that our production in Mexico and Canada is exempt from these tariffs under the United States-Mexico-Canada Agreement ("USMCA"). On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, plus significant additional country-specific tariffs for select trading partners, on all U.S. imports. The reciprocal country-specific tariffs were subsequently paused for 90 days on most countries. The uncertainty around the long-term tariff rates that could be applied to our importation of products into the U.S. presents significant challenges to our operations and supply chain, and may result in future results being significantly different than any outlook given. We cannot predict what additional actions might be considered or implemented by the U.S. or its trade partners, particularly in the current geopolitical environment. We anticipate that the imposition of the baseline 10% tariff will increase our cost of goods sold. The uncertainty could also cause disturbances in ocean shipping capacity that could affect our ability to secure ocean freight containers for our products, and create inflationary effects on our costs, in addition to the direct impact of tariffs. We are closely monitoring the evolving tariff landscape and attempting to mitigate these impacts, including using pricing adjustments, sourcing strategies and other cost-mitigation measures. However, there can be no assurance that we will be able to fully mitigate the impacts of such tariffs or that the imposition of tariffs, and the resulting economic impact on the U.S. market and consumer, will not be material to our financial results. We primarily source from the Philippines and Brazil, with additional sourcing from Sri Lanka, Thailand, Malaysia, Vietnam, Canada, and Mexico. There have been significant proposed reciprocal tariffs on certain of these countries. At this time, the overall impact on our business related to tariffs remains uncertain and depends on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope, or enforcement, reciprocal measures by impacted trade partners, inflationary effects, changes to consumer purchasing behavior, and the effectiveness of our responses in managing these challenges.

Current wording

•During the first quarter of 2025, the U.S. government announced tariffs on certain imports, including imports from Mexico, and Canada. We currently believe that our production in Mexico and Canada is exempt from these tariffs under the United States-Mexico-Canada Agre ement ("USMCA"). On April 2, 2025, the U.S. announced a new universal baseline tariff of 10%, plus significant additional country-specific tariffs for select trading partners, on all U.S. imports. The reciprocal tariffs were subsequently paused for 90 days on most countries; however the 10% baseline tariff is currently being applied, which has increased our cost of goods sold. The baseline tariffs are being challenged in the U.S. legal system and it is unclear whether the tariffs will be upheld and remain in place, or if they will be struck down by the courts. Currently, we are assuming for purposes of our business operations that the baseline tariffs will be in effect indefinitely. However, the uncertainty around the long-term tariff rates that could be applied to our importation of products into the U.S. presents significant challenges to our operations and supply chain, and may result in future results being significantly different than any outlook given. We cannot predict what additional actions might be considered or implemented by the U.S. or its trade partners, particularly in the current geopolitical environment. The uncertainty could also cause disturbances in ocean shipping capacity that could affect our ability to secure ocean freight containers for our products, and create inflationary effects on our costs, in addition to the direct impact of tariffs. We are closely monitoring the evolving tariff landscape and attempting to mitigate these impacts, including using pricing adjustments, sourcing strategies and other cost-mitigation measures. However, there can be no assurance that we will be able to fully mitigate the impacts of such tariffs or that the imposition of tariffs, and the resulting economic impact on the U.S. market and consumer, will not be material to our financial results. We primarily source from the Philippines and Brazil, with additional sourcing from Sri Lanka, Thailand, Malaysia, Vietnam, Canada, and Mexico. Recently, the administration delayed the reciprocal tariff implementation, but then announced significant proposed tariffs on certain of these countries replacing the initially announced reciprocal tariffs, which may further increase our cost of goods sold. In particular, a 50% tariff has been proposed for Brazil, which was not initially listed as one of the proposed reciprocal tariffs. At this time, the overall impact on our business related to tariffs remains uncertain and depends on multiple factors, including the timing, duration and size of any tariffs, future changes to tariff rates, scope, or enforcement of such tariffs, reciprocal measures by impacted trade partners, inflationary effects, changes to consumer purchasing behavior, and the effe…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our sales to one of our major customers include branded and private label product. As discussed in our Form 10-K, the private label coconut oil business with this customer discontinued in early 2024 and we expect private label coconut water net sales with this customer to be impacted by the loss of some regions during 2025.

Current wording

•Our sales to one of our major customers include branded and private label product. As discussed in our Form 10-K, the private label coconut oil business with this customer discontinued in early 2024 and we expect private label coconut water net sales in 2025 with this customer to be impacted by the loss of some regions, which started primarily in the second quarter of 2025.

Previous wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024, respectively:

Current wording

The following table summarizes our results of operations for the three and six months ended June 30, 2025 and 2024, respectively:

Previous wording

For the three months ended March 31, 2025, the primary driver of the consolidated net sales increase of 17.2% was strong Vita Coco Coconut Water volume growth. Vita Coco Coconut Water net sales increased 25.4%, with a case equivalents ("CE") volume increase of 25.2%. This was partially offset by a 11.8% decrease in private label net sales, which was in part due to the transition out of private label coconut oil sales to a major customer, partially offset by higher private label coconut water volumes.

Current wording

For the three months ended June 30, 2025, the primary driver of the consolidated net sales increase of 17.1% was strong Vita Coco Coconut Water volume growth. Vita Coco Coconut Water net sales increased 24.8%, with a case equivalents ("CE") volume increase of 20.9% and growth in the Other category, driven by the U.S. rollout of Vita Coco Treats. This was partially offset by a 25.2% decrease in private label net sales, which was due largely to the loss of private label coconut water service regions for multiple customers that started in the first six months of 2025. For the six months ended June 30, 2025, the consolidated net sales increase of 17.1% was driven by Vita Coco Coconut Water, which had a 25.0% net sales increase, with a case equivalents CE volume increase of 22.7%. This was partially offset by private label net sales decline of 18.3% resulting from the loss of private label coconut water service regions for multiple customers in addition to the transition out of private label coconut oil sales to a major customer that began in the first quarter of 2024.

Previous wording

The following table provides a comparative summary of the percentage change in our volume in CE for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, by operating segment and product category:

Current wording

The following table provides a comparative summary of the percentage change in our volume in CE for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, by operating segment and product category:

Previous wording

Private label net sales decreased $3.1 million, or 12.7%, to $21.2 million for the three months ended March 31, 2025, from $24.3 million for the three months ended March 31, 2024, due to a decrease in the private label coconut oil business, resulting in CE volume decline of 2.3%. The decrease was partially offset by 7.2% CE volume growth in private label coconut water.

Current wording

Private label net sales decreased $8.5 million, or 36.5%, to $14.7 million for the three months ended June 30, 2025, from $23.1 million for the three months ended June 30, 2024, due to a decrease in the private label business as outlined above, resulting in CE volume decrease of 34.0%. Private label net sales decreased $11.5 million, or 24.3%, to $35.9 million for the six months ended June 30, 2025, from $47.4 million for the six months ended June 30, 2024. The decrease was the result of CE volume decline of 18.5% due to the aforementioned losses of private label coconut oil and coconut water business.

Previous wording

Net sales from Other products increased by $3.0 million, or 130.2%, to $5.3 million for the three months ended March 31, 2025 from $2.3 million for the three months ended March 31, 2024, primarily due to the national rollout of Vita Coco Treats.

Current wording

Net sales from Other products increased by $4.0 million, or 137.6%, to $6.8 million for the three months ended June 30, 2025 from $2.9 million for the three months ended June 30, 2024, primarily due to the national rollout of Vita Coco Treats in the U.S. Net sales from Other products increased by $6.9 million, or 134.3%, to $12.1 million for the six months ended June 30, 2025 from $5.2 million for the six months ended June 30, 2024, driven by CE volume increase of 202.0%, driven by the rollout of Vita Coco Treats.

Previous wording

Net sales from Other products decreased 51.3% for the three months ended March 31, 2025, primarily driven by the decrease in sales of Vita Coco coconut oil.

Current wording

Net sales from Other products decreased 18.0% and 34.0% for the three and six months ended June 30, 2025, respectively, compared to the same periods in the prior year, primarily driven by the decrease in sales of Vita Coco coconut oil.

Previous wording

On a consolidated basis, cost of goods sold increased by $18.3 million, or 28.4%, to $82.8 million for the three months ended March 31, 2025, from $64.5 million for the three months ended March 31, 2024. On a consolidated and segment basis, the increase was primarily driven by higher sales volume and higher rates for finished goods and transportation costs.

Current wording

On a consolidated basis, cost of goods sold increased $22.1 million, or 25.9%, to $107.5 million for the three months ended June 30, 2025, from $85.4 million for the three months ended June 30, 2024. On a consolidated and segment basis, the increase was primarily driven by higher CE volume and higher rates for finished goods and transportation costs and the initial impact of baseline tariffs. Cost of goods sold increased by $40.4 million, or 27.0%, to $190.3 million for the six months ended June 30, 2025, from $149.9 million for the six months ended June 30, 2024. On a consolidated basis, the increase was primarily related to increased CE volume and higher finished goods and transportation costs, and to a lesser extent, the initial impact of baseline tariffs.

Previous wording

On a consolidated basis, gross profit increased by $0.9 million, or 1.9%, to $48.1 million for the three months ended March 31, 2025, from $47.2 million for the three months ended March 31, 2024. The increase in gross profit resulted from higher CE volume and slightly improved net pricing on Vita Coco Coconut Water, which were partially offset by higher finished goods and transportation costs. The decrease in gross margin resulted from higher year-on-year ocean freight rates and finished goods product costs, partially offset by branded coconut water pricing and favorable product mix.

Current wording

For the three months ended June 30, 2025, consolidated gross profit increased $2.5 million, or 4.3%, to $61.3 million, from $58.7 million for the three months ended June 30, 2024, primarily driven by higher CE volume. The increase was partially offset by increased rates for finished goods and transportation costs and the initial impact of baseline tariffs, these costs also resulted in gross margin decline, which was partially offset by branded coconut water pricing and favorable product mix. For the six months ended June 30, 2025, consolidated gross profit increased $3.4 million, or 3.2%, to $109.4 million, from $105.9 million for the six months ended June 30, 2024, also primarily driven by higher CE volume, and partially offset by increased rates for finished goods and transportation costs and the initial impact of baseline tariffs. Similar to the quarterly results, higher year-on-year ocean freight and finished goods costs resulted in a decrease in gross margin, partially offset by branded coconut water pricing and favorable product mix.

Previous wording

For the three months ended March 31, 2025 and 2024, we recorded gains of $2.8 million and losses of $2.5 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 gain for the three months ended March 31, 2025 related to the contracts hedging the BRL and THB.

Current wording

For the three months ended June 30, 2025 and 2024, we recorded gains of $1.1 million and losses of $6.0 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 gain for the three months ended June 30, 2025 related to the contracts hedging the BRL and THB. For the six months ended June 30, 2025 and 2024, we recorded gains of $3.9 million and losses of $8.5 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 gain for the six months ended June 30, 2025 related to the contracts hedging the BRL and THB, partially offset by loss on GBP, CAD, and EUR hedges.

Previous wording

For the three months ended March 31, 2025, the change in foreign currency gain was $0.5 million as compared to March 31, 2024. 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. See "Quantitative and Qualitative Disclosures about Market Risk -Foreign Currency Exchange Risk" for further information.

Current wording

For the three months ended June 30, 2025, the change in foreign currency gain was $0.6 million as compared to June 30, 2024. For the six months ended June 30, 2025, the change in foreign currency gain was $1.1 million as compared to June 30, 2024. 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. See "Quantitative and Qualitative Disclosures about Market Risk -Foreign Currency Exchange Risk" for further information.

Previous wording

The change in interest income was immaterial.

Current wording

For the three months ended June 30, 2025, interest income decreased $0.1 million compared to June 30, 2024 primarily due to lower interest rates in the 2025 period compared to the 2024 period. For the six months ended June 30, 2025, interest income decreased $0.1 million as compared to June 30, 2024. The decrease in interest income was due to lower interest rates compared to prior year.

Previous wording

For the three months ended March 31, 2025, the change in Other income is due to the sale of intellectual property.

Current wording

For the six months ended June 30, 2025, Other income of $0.2 million is due to the sale of intellectual property.

Previous wording

For the three months ended March 31, 2025 and 2024, our effective tax rate was 22.5% and 21.0%, respectively. The effective tax rate for the period is higher than 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. that the Company operates in. The increase in the effective tax rate when comparing the periods was primarily driven by the increase in pre-tax profits in jurisdictions outside the U.S. with higher statutory tax rates and the relative impact of other nondeductible expenses in relation to the pre-tax profits.

Current wording

For the six months ended June 30, 2025 and 2024, our effective tax rate was 20.5% and 23.4%, respectively. The effective tax rate for the current period is lower than the U.S. statutory rate of 21% primarily as a result of discrete items recorded during the period. The effective tax rate for the period ending June 30, 2024 was higher than the U.S. statutory rate of 21% primarily as a result of state income taxes for the U.S. entity. 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 expenses in relation to the pre-tax profits.

Previous wording

(c)Other adjustments include $0.6 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance and is structured differently from our other ongoing employee incentive programs, and $0.4 million of non-cash rent charges related to our new New York City office that overlap with our current New York City office rent charges. These amounts were offset by $0.1 million of partial recoveries of prepaid inventory from a supplier (refer to the 2024 Form 10-K for further details) and a gain of $0.2 million from a sale of intellectual property.

Current wording

(d)The three months ended June 30, 2025 includes $0.6 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance structured differently from our other ongoing employee incentive programs, and $0.4 million of rent expense related to our new New York City office that overlap with our current New York City office rent charges. The six months ended June 30, 2025 includes $1.2 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance structured differently from our other ongoing employee incentive programs, and $0.7 million of dual rent expense related to our New York City office. These amounts were offset by $0.1 million of partial recoveries of prepaid inventory from a supplier (refer to the Form 10-K for further details) and a gain of $0.2 million from a sale of intellectual property.

Previous wording

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 $153.6 million and $164.7 million of cash and cash equivalents as of March 31, 2025 and December 31, 2024, respectively. From time to time, we may supplement our liquidity needs with incremental borrowing capacity under the 2020 Credit Facility.

Current wording

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 $167.0 million and $164.7 million of cash and cash equivalents as of June 30, 2025 and December 31, 2024, respectively. From time to time, we may supplement our liquidity needs with incremental borrowing capacity under the 2020 Credit Facility.

Previous wording

During the three months ended March 31, 2025, cash used in operating activities increased $9.5 million compared to the three months ended March 31, 2024, driven by timing differences in the collection of accounts receivable and payments made in the three months ended March 31, 2025 period for inventory build-up during the end of 2024. The decreases in operating cash used were partly offset by an increase in net income after non-cash adjustments.

Current wording

During the six months ended June 30, 2025, cash provided by operating activities decreased $14.6 million compared to the six months ended June 30, 2024. The decrease is driven by timing differences in the collection of accounts receivable and payments made and higher inventory purchases, partly offset by increase in net income, net of non-cash adjustments.

Previous wording

During the three months ended March 31, 2025, cash used in investing activities was $0.6 million as compared to $0.1 million for the three months ended March 31, 2024. The increase was primarily due to capital expenditures related to the new New York and London offices.

Current wording

During the six months ended June 30, 2025, cash used in investing activities was $1.5 million as compared to $0.4 million for the six months ended June 30, 2024. The increase was primarily due to capital expenditures related to the new New York, London and Singapore offices.

Previous wording

During the three months ended March 31, 2025 compared to the three months ended March 31, 2024, net cash used by financing activities decreased by $8.0 million, primarily driven by less share repurchases in the three months ended March 31, 2025 compared to the prior year period. See Note 10, Stockholders' Equity, in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, for further discussion on share repurchases.

Current wording

During the six months ended June 30, 2025 compared to the six months ended June 30, 2024, net cash used by financing activities increased by $0.5 million, primarily driven by higher volume of share repurchases in the six months ended June 30, 2025 compared to the prior year period. See Note 10, Stockholders' Equity, in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, for further discussion on share repurchases.

Previous wording

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 was subject to unused commitment fees ranging from 0.10% and 0.20% on the unused amount of the line of credit in the year ended December 31, 2024, with the rate based on the Company’s leverage ratio (as defined in the credit agreement). As of February 14, 2025, the effective date of the amendment, the unused commitment fees ranges from 0.13% and 0.23% 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).

Current wording

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 was subject to unused commitment fees ranging from 0.10% and 0.20% on the unused amount of the line of credit in the year ended December 31, 2024, with the rate based on the Company’s leverage ratio (as defined in the credit agreement). As of February 14, 2025, the unused commitment fees range from 0.13% and 0.23% 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).

Previous wording

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 included in this Quarterly Report on Form 10-Q. During the three months ended March 31, 2025, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.

Current wording

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 included in this Quarterly Report on Form 10-Q. During the six months ended June 30, 2025, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.