Vita Coco Company, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021, including fourth-quarter results. The company sells branded and private-label beverages, led by Vita Coco coconut water, through Americas and International segments. It completed its IPO in October 2021 and operates as a Delaware public benefit corporation.
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Net sales | $379.5 million | $310.6 million | +22.2% |
| Gross profit / margin | $113.1 million / 29.8% | $104.9 million / 33.8% | Profit +7.9%; margin down about 4.0 percentage points |
| Operating income | $24.6 million | $46.9 million | −47.5% |
| Net income | $19.0 million; 5.0% margin | $32.7 million; 10.5% margin | −41.9% |
| Diluted EPS | $0.35 | $0.56 | Down |
| Adjusted EBITDA | $36.9 million; 9.7% margin | $35.1 million; 11.3% margin | +5.1%; margin down |
| Cash from operating activities | −$16.2 million | $33.3 million | Decrease of $49.5 million |
Fourth quarter: Net sales were $87 million, up 25% year over year, with Vita Coco coconut water sales up 61%. Gross profit was $22 million (25% margin), compared with $23 million in Q4 2020. The company reported a $3 million net loss versus $17 million net income, and an adjusted EBITDA loss of $1 million versus $5 million adjusted EBITDA.
Balance sheet, liquidity and capital
- Cash and cash equivalents were $28.7 million at year-end, versus $72.2 million a year earlier. Current assets were $173.3 million and current liabilities $74.0 million.
- Year-end debt was effectively zero under the credit facility; vehicle loans were $76,000. The company had $60 million available under its revolving facility, maturing in May 2026, and reported compliance with financial covenants.
- Operating cash use primarily reflected a $43.5 million increase in inventory and higher receivables as sales grew. Inventory rose to $75.4 million from $32.0 million.
- Investing cash use was $0.6 million. Financing cash use was $26.8 million, including $50.0 million spent to repurchase treasury shares; IPO proceeds net of offering costs were $30.4 million and were used to repay the term loan.
Changes, outlook and key risks
- Growth was led by Americas Vita Coco coconut water: sales rose 40.7% to $231.9 million. International sales increased 16.5% to $55.6 million. Private-label sales were $94.6 million, down slightly overall.
- Management attributed margin pressure to pandemic-related supply-chain and transportation inflation, especially ocean freight and domestic logistics. It estimated approximately $24 million of incremental cost-of-goods impact on an adjusted EBITDA rate/mix basis versus 2020. Pricing actions included reduced discounting, delayed promotions and sharing cost increases with private-label customers where possible.
- Management expected continued cost pressures, potentially sequentially worse, but provided no specific revenue or earnings guidance. It said cash, expected operating cash flow and available revolving credit should cover anticipated needs for at least 12 months.
- Principal risks include shipping and input-cost inflation, coconut and packaging supply availability, dependence on third-party manufacturers, and customer concentration. Two customers represented 53% of 2021 net sales; Costco represented about 30% and a KDP subsidiary about 23%. Coconut water accounted for approximately 89% of revenue.
- Other notable considerations include seasonality (typically stronger second and third quarters), COVID-19-related supply disruptions, foreign-exchange exposure, food safety and labeling regulation, and the company’s public-benefit-corporation obligations. The filing reported no material legal proceedings known to the company.
- The Runa acquisition earn-out liability was zero at year-end; management did not expect the required growth milestones to be achieved. The company recorded no goodwill impairment in 2021.
Most important facts for investors to verify
- Whether freight, logistics and other input costs ease, and whether pricing actions offset them without weakening volume or customer relationships.
- Whether inventory rebuild and working-capital investment convert back into positive operating cash flow.
- Whether revenue growth remains concentrated in Vita Coco coconut water and a small number of major customers.
- Revolving-facility availability, covenant compliance and liquidity under weaker operating conditions.
- Effects of IPO-related equity issuance, the $50 million share repurchase, and stock-based compensation on share count and per-share results.
The financial statements received an unqualified independent audit opinion. The filing notes that management’s internal-control assessment and auditor attestation were omitted under the transition provisions for newly public companies; management concluded disclosure controls were effective at the reasonable-assurance level.