Michael Scott Lavery

Michael Scott Lavery inquired about The Vita Coco Company's capital allocation strategy, specifically regarding the growing cash balance of over $200 million, the role of share buybacks, and the company's approach to M&A given past inactivity.

Answer

CEO Martin Roper stated that capital allocation priorities remain unchanged: core business growth (including inventory build), innovation, and M&A. He emphasized that share buybacks would be considered for excess cash at fair stock prices, but M&A is pursued prudently, not for its own sake. He also confirmed that Vita Coco Treats is attracting new consumers to the brand without cannibalization, with the hope of them transitioning to original coconut water, and clarified its reporting in 'other' for shipments.

Michael Scott Lavery asked about Vita Coco's capital allocation strategy, given its cash balance over $200 million and existing share buyback authorization, and how the company thinks about the use of cash, including M&A. He also inquired about Vita Coco Treats, asking if it's incremental to the portfolio, acts as a gateway for new consumers to the coconut water category, and if there's any observed interplay with the core business.

Answer

Martin Roper, Chief Executive Officer, stated that capital allocation priorities remain unchanged: growth of the core business (including inventory build), innovation, and prudent M&A. He added that if excess cash remains, it would be applied to share buybacks at fair stock prices. Mike Kirban, Co-founder and Executive Chairman, confirmed that Vita Coco Treats is attracting new consumers to the brand without cannibalization, with the hope that they transition to the original pure coconut water. Mr. Roper noted that Treats are reported in 'other' on a shipment basis and are expected to see further distribution gains next year, including potential entry into Walmart.