Vita Coco rallies after earnings topper, strategic acquisition

Vita Coco (COCO) rallied in early investor reaction to the company's second quarter earnings report.

Revenue soared 27.8% year over year to $216M as the coconut water category showed strength again and was noted to be one of the fastest-growing beverage categories in the company's major markets." The growth is being generated by increases in both household penetration and in average consumption per household," highlighted Executive Chairman Michael Kirban.

Improved net pricing due to last year's price increases and favorable promotional timing were also positive factors during the quarter.

Gross profit increased to $105M in Q2 from $61M a year ago, driven by the recognition of tariff refunds, higher sales, favorable pricing, and lower ocean freight and finished goods costs, partially offset by slightly higher domestic logistics costs. Gross margin was 49% compared to 36% in the prior year period, due primarily to the tariff refunds, higher net pricing alongside lower ocean freight rates and finished goods costs, slightly offset by higher domestic transportation costs.

Adjusted EBITA of $67.2M for the quarter smashed the consensus expectation of $44.5M.

Notably, Vita Coco (COCO) boosted full-year guidance after the strong quarter.

On July 21, the Vita Coco (COCO) board approved an additional $40M authorization, increasing the total authorized amount under the program to $105M. The company also announced that it acquired coconut water producer Copra for $175M, with an additional earnout based on performance.

Shares of Vita Coco (COCO) were up 7.6% in premarket trading to $80.00 vs. the 52-week range of $31.79 to $85.83. Short interest stands at 8.4% of the total float.