Christian Junquera

Christian Junquera requested clarification on The Vita Coco Company's 2025 tariff impact, specifically confirming the $14M-$16M estimate and the expected jump to a 23% blended tariff rate for 2026, and inquired about levers to offset these higher rates.

Answer

CFO Corey Baker confirmed the $14M-$16M tariff impact for 2025 and the 23% rate on approximately 60% of global cost of goods for 2026. CEO Martin Roper clarified the timing of tariff impact on the P&L, explaining the 2025 figure reflects partial year and lower initial rates. He reiterated ocean freight as a key offset, along with optimizing sourcing to avoid Brazil tariffs, and expressed reluctance to rush further pricing decisions due to ongoing tariff uncertainty.

Christian Junquera sought clarification on the 2025 tariff impact of $14 million to $16 million, asking if it implies a 6-7% blended tariff rate for the year, with an expectation to jump to 23% in 2026. He also asked about the levers available to offset higher tariff rates for next year, including higher pricing and potentially lower ocean freight, and if there were any other mitigation strategies.

Answer

Corey Baker, Chief Financial Officer, confirmed the $14 million to $16 million tariff impact for 2025 and clarified that the 23% rate applies to approximately 60% of global cost of goods, with the full impact hitting late Q4 and into next year due to inventory flow. Martin Roper, Chief Executive Officer, reiterated that lower ocean freight is the biggest potential offset. He mentioned optimizing sourcing to avoid Brazil and expressed reluctance to rush into further pricing actions given the fluidity of tariff discussions, potential waivers, and an upcoming Supreme Court case.

Christian Junquera of Bank of America asked about the potential EBITDA impact if tariffs were to rise above the 10% baseline currently in guidance. He also inquired why Vita Coco appears insulated from the widely reported trend of reduced spending among Hispanic consumers.

Answer

CEO Martin Roper stated that due to significant uncertainty, the company's guidance only incorporates the current 10% baseline tariff. He affirmed confidence in their ability to mitigate long-term impacts through their diversified supply chain. Regarding consumer trends, Roper acknowledged strong performance in the convenience store channel, suggesting no weakness from their Hispanic consumer base. He hypothesized this could be because the brand over-indexes with average to above-average income households.