What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 137 added, 143 removed, 181 unchanged (61% of the section changed)

3 unchanged sentences

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors” of the Form 10-K and other factors set forth in the Form 10-K and Quarterly Reports on Form 10-Q.

The Vita Coco Company is a leading platform for brands in the functional beverage category.

We pioneered packaged coconut water in 2004 and have extended our business into other categories.

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.

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Our other brands include Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink.

We also offered Runa , a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023.

We also previously offered Runa , a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023.

We supply private label products to key retailers in both the coconut water and coconut oil categories.

Additionally, we generate revenue from bulk product sales to beverage and food companies.

As of September 30, 2024, we source our coconut water from a diversified global network of 15 factories across six countries supported by thousands of coconut farmers.

As of March 31, 2025, we source our coconut water from a diversified global network of 16 factories across six countries supported by thousands of coconut farmers.

As we do not own any of these factories, our supply chain is a fixed asset-lite model designed to better react to changes in the market or consumer preferences.

We also work with co-packers in America and Europe to support local packaging and repacking of our products to better service our customers’ needs.

Vita Coco is available in over 30 countries, with our primary markets in North America, the United Kingdom and China.

We also work with co-packers in U.S., Canada, Mexico, and Europe to support local packaging and repacking of our products to better service our customers’ needs.

Vita Coco is available in over 35 countries, with our primary markets located in North America, the United Kingdom and Germany.

Our primary markets for private label are North America and Europe.

Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce and food service channels.

We are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports and educational institutions.

Our products are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports and educational institutions.

Recent Events

In early October 2024, the east coast ports of America experienced a labor strike that temporarily shut those ports, resulting in some delays even after the ports reopened.

The work stoppage was temporarily resolved, but certain matters are still being negotiated, with a deadline for resolving these issues set as January 2025.

It is possible that we may experience a port stoppage related to these negotiations in early 2025 if agreement is not reached.

Related to the October 2024 work stoppage, some of the ocean freight carriers issued notices of impending surcharges to be applied if the port closures resulted in disruptions.

We currently do not expect to pay any of these surcharges, but if further port disruptions occur in early 2025, we may see similar attempts to charge customers disruption-related charges.

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.

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.

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.

Key Factors Affecting Our Performance

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Impact of Global Events Causing Macroeconomic Uncertainty

inflationary cost environments may affect our global supply chain.

It is not currently possible to ascertain the overall impact of these macroeconomic uncertainties on the Company’s business, results of operations, financial condition or liquidity.

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.

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Our revenue is recognized net of allowances for returns, discounts, credits, and any taxes collected from consumers.

The Company provides trade promotions and sales discounts to its customers and distributors.

We provide trade promotions and sales discounts to its customers and distributors.

Since these sales promotions and sales discounts do not meet the criteria for a distinct good or service, they are primarily accounted for as a reduction of revenue and include payments to customers and distributors for performing activities on our behalf, such as payments for in-store displays, payments to gain distribution of new products, payments for shelf space and discounts to promote lower retail prices.

These condensed consolidated financial statements include accruals for these promotion and discounts.

The accompanying condensed consolidated financial statements include accruals for these promotions and discounts.

The accruals are made for invoices that have not yet been received as of the end of the reporting period and are recorded as a reduction of sales, and are based on contract terms and our historical experience with similar programs and require management judgment with respect to estimating customer and consumer participation and performance levels.

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General and administrative expenses include payroll, employee benefits, stock-based compensation, broker commissions and other headcount-related expenses associated with supply chain & operations, finance, information technology, human resources and other administrative-related personnel, as well as general overhead costs of the business, including research and development for new innovations, rent and related facilities and maintenance costs, depreciation and amortization, and legal, accounting, and professional fees.

We expense all SG&A as incurred.

Other Income (Expense), Net

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Interest income consists of interest income earned on our cash and cash equivalents, and money market funds.

Interest Expense

Interest expense consists of interest payable on our credit facilities and vehicle loans.

Income Tax Expense

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• Vita Coco Coconut Water —This product category consists of all branded coconut water product offerings under the Vita Coco labels, where the majority ingredient is coconut water.

For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

• Private Label —This product category consists of all private label product offerings, which includes coconut water and oil.

For these products, control is

transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

• Private Label —This product category consists of all private label product offerings, which includes coconut water and coconut oil.

The Company determined the production and distribution of private label products represents a distinct performance obligation.

Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these private label products over time as the production for open purchase orders occurs, which may be prior to any shipment.

• Other— This product category consists of all other products, which includes Runa (until we ceased selling it in December 2023) , Ever & Ever and PWR LIFT product offerings, Vita Coco product extensions beyond coconut water, coconut milk products, and other revenue transactions (e.g., bulk product sales).

• Other— This product category consists of all other products, which includes Vita Coco product extensions beyond coconut water, consisting of coconut milk products, including Vita Coco Treats;

Ever & Ever and PWR LIFT product offerings;

Vita Coco coconut oil sold internationally;

and other revenue transactions (e.g., bulk product sales).

For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023, respectively:

(in thousands) Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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

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

(in thousands) Three Months Ended March 31,

Net sales $ 130,921 $ 111,698

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Selling, general, and administrative 28,792 28,218

Income (loss) from operations 20,595 23,522 69,535 51,071

Income from operations

19,293 18,959

Other income (expense)

Unrealized gain/(loss) on derivative instrument 2,817 (2,525)

Foreign currency gain/(loss) 550 (1,211) 472 (430)

Foreign currency gain

Interest income 1,518 1,523

Interest expense — (1) — (31)

Total other income (expense) 5,070 (944)

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The following table provides a comparative summary of net sales by operating segment and product category:

(in thousands) Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 Amount Percentage 2024 2023 Amount Percentage

(in thousands) Three Months Ended March 31, Change

2025 2024 Amount Percentage

Americas segment

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Total net sales $ 130,921 $ 111,698 $ 19,223 17.2 %

For the three months ended September 30, 2024, the primary driver of the consolidated net sales decrease of 3.7% was a 36.8% decrease in private label net sales, which was in part due to the transition out of private label coconut oil sales to a key customer, coupled with lower private label coconut water volumes, which were impacted by supply constraints.

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%.

For the nine months ended September 30, 2024, the net sales increase of 0.3%, was driven by Vita Coco Coconut Water, which had a 4.5% net sales increase, partially offset by private label net sales decrease of 13.1%.

Volume in Case Equivalent

The following table provides a comparative summary of the percentage change in our volume in CE for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, by operating segment and product category:

Percentage Change - Three Months Ended September 30, 2024 vs.

International

Vita Coco Coconut Water 2.9 % 27.2 % 6.3 %

Private Label (32.1) % (4.7) % (27.0) %

Other (38.9) % 134.7 % (32.3) %

Total volume (CE) (6.8) % 17.4 % (3.1) %

Percentage Change - Nine Months Ended September 30, 2024 vs.

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.

Volume in Case Equivalents

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:

Percentage Change - Three Months Ended March 31, 2025 vs.

International

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Americas Segment

Americas net sales decreased $8.4 million, or 7.0%, to $112.2 million for the three months ended September 30, 2024 from $120.6 million for the three months ended September 30, 2023.

The decrease was primarily driven by CE volume decline in private label due to the transition out of private label oil at a key customer and supply constraints impacting private label coconut water shipments, which was partially offset by Vita Coco Coconut Water CE volume growth of 2.9%.

Americas net sales decreased $5.8 million, or 1.7%, to $332.8 million for the nine months ended September 30, 2024 from $338.7 million for the nine months ended September 30, 2023.

The decrease was primarily driven by an decrease in CE volume of 1.7%.

Vita Coco Coconut Water net sales increased by $4.3 million, or 4.8%, to $94.0 million for the three months ended September 30, 2024, from $89.7 million for the three months ended September 30, 2023.

The increase was the result of CE volume growth of 2.9% coupled with net pricing benefits.

Vita Coco Coconut Water net sales increased by $8.2 million, or 3.2%, to $262.0 million for the nine months ended September 30, 2024.

The increase was primarily driven by net pricing benefits due to the timing of pricing promotions with a CE volume increase of 0.6%.

Private label net sales decreased by $11.8 million, or 41.6%, to $16.5 million for the three months ended September 30, 2024, from $28.3 million for the three months ended September 30, 2023, due to the expected decrease in the private label oil business and supply constraints driving CE volume decline of 32.1%.

Private label net sales decreased by $13.5 million, or 17.4%, to $63.9 million for the nine months ended September 30, 2024, due to the expected private label oil decrease in addition to supply constraints, with a CE volume decline of 7.6%.

Net sales from Other products decreased by $1.0 million, or 35.6%, to $1.7 million for the three months ended September 30, 2024 from $2.7 million for the three months ended September 30, 2023, driven by a CE volume decrease of 38.9% due to lower sales of innovation products and cycling of opportunistic commodity sales.

Net sales from Other products decreased by $0.6 million, or 7.7%, to $6.9 million for the nine months ended September 30, 2024.

Americas net sales increased $16.5 million, or 17.2%, to $112.6 million for the three months ended March 31, 2025 from $96.1 million for the three months ended March 31, 2024.

The increase was primarily driven by CE volume growth of 23.5% of Vita Coco Coconut Water and private label coconut water growth, partially offset by private label oil due to the transition out of private label coconut oil at a major customer.

Vita Coco Coconut Water net sales increased $16.6 million, or 23.9%, to $86.1 million for the three months ended March 31, 2025, from $69.5 million for the three months ended March 31, 2024.

The increase was the result of CE volume growth of 23.5% due to increased demand.

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.

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.

International Segment

International net sales increased by $3.2 million, or 18.6%, to $20.7 million for the three months ended September 30, 2024, from $17.4 million for the three months ended September 30, 2023.

The increase is primarily driven by CE volume growth of 17.4%.

International net sales increased by $7.1 million, or 14.5%, to $55.9 million for the nine months ended September 30, 2024, from $48.8 million for the nine months ended September 30, 2023.

The increase is primarily driven by CE volume growth of 10.9%.

Vita Coco Coconut Water net sales increased by $3.5 million, or 31.1%, to $14.9 million for the three months ended September 30, 2024, from $11.3 million for the three months ended September 30, 2023.

The increase was driven by both Europe and the Asia Pacific region which both had strong net sales and volume performance.

Vita Coco Coconut Water net sales increased by $4.9 million, or 14.5%, to $38.5 million for the nine months ended September 30, 2024 from $33.6 million for the nine months ended September 30, 2023.

The increase was primarily driven by strong growth in Europe partially offset by lower volumes in the Asia Pacific region.

Private label net sales decreased by $0.6 million, or 11.5%, to $4.8 million for the three months ended September 30, 2024 from $5.4 million for the three months ended September 30, 2023.

The decrease was driven primarily by supply constraints along with some impact from the expected decrease in private label coconut oil.

Private label net sales increased by $1.6 million, or 12.4%, to $14.8 million for the nine months ended September 30, 2024, from $13.1 million for the nine months ended September 30, 2023.

The increase was driven primarily by Europe, which had strong volume driven by new distribution, partially offset by the private label coconut oil decrease.

Net sales from Other products increased 51.0% for the three months ended September 30, 2024 and 29.4% for the nine months ended September 30, 2024 largely due to opportunistic commodity sales.

(in thousands) Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 Amount Percentage 2024 2023 Amount Percentage

International net sales increased by $2.7 million, or 17.4%, to $18.3 million for the three months ended March 31, 2025, from $15.6 million for the three months ended March 31, 2024.

The increase of 27.2% is primarily driven by CE volume growth in Germany and the United Kingdom.

Vita Coco Coconut Water net sales increased by $3.5 million, or 36.3%, to $13.2 million for the three months ended March 31, 2025, from $9.7 million for the three months ended March 31, 2024.

The increase was driven by higher volume in both Europe and the Asia Pacific region due to strong demand of our product.

Private label net sales decreased $0.4 million, or 7.6%, to $4.8 million for the three months ended March 31, 2025 from $5.2 million for the three months ended March 31, 2024.

The decrease was driven primarily by a decrease in the private label coconut oil business, partially offset by growth in private label water.

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 Coc o coconut oil.

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Cost of goods sold

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Consolidated 36.7 % 42.2 % (5.5) %

On a consolidated basis, cost of goods sold decreased by $0.5 million, or 0.7%, to $81.3 million for the three months ended September 30, 2024, from $81.9 million for the three months ended September 30, 2023.

On a consolidated and segment basis, the decrease was primarily related to the overall lower CE volume and lower finished goods costs which were partly offset by transportation cost increases.

Cost of goods sold decreased by $15.3 million, or 6.2%, to $231.2 million for the nine months ended September 30, 2024.

On a consolidated basis, the decrease was primarily related to lower finished goods costs, which were partially offset by volume CE growth and higher transportation costs.

On a consolidated basis, gross profit decreased by $4.6 million, or 8.2%, to $51.6 million for the three months ended September 30, 2024, from $56.2 million for the three months ended September 30, 2023.

Gross margin decreased approximately 1.9% percentage points to 38.8% for the three months ended September 30, 2024, as compared to 40.7% for the three months ended September 30, 2023.

The decrease in gross profit resulted from the lower CE volume and consequent net sales, along with higher transportation costs, which were partially offset by lower finished goods costs and improved net pricing on Vita Coco Coconut Water.

Gross profit increased by $16.6 million, or 11.7%, to $157.5 million for

the nine months ended September 30, 2024.

The increase resulted from volume CE growth and lower finished goods costs, partly offset by higher transportation costs.

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.

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.

Operating Expenses

(in thousands) Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 Amount Percentage 2024 2023 Amount Percentage

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Selling, general, and administrative $ 28,792 $ 28,218 $ 574 2.0 %

Selling, General and Administrative Expenses

During the three months ended September 30, 2024, SG&A decreased by $1.7 million, or 5.2%, versus the three months ended September 30, 2023.

The decrease was primarily driven by reduced marketing expense of $1.8 million due to reduced spending in light of product supply constraints.

During the nine months ended September 30, 2024, SG&A decreased by $1.9 million, or 2.1%, versus the nine months ended September 30, 2023.

The decrease was primarily driven lower marketing expense of $4.6 million and reduced bad debt expense of $0.9 million, partially offset by increased personnel related expenses of $3.6 million.

During the three months ended March 31, 2025, SG&A increased by $0.6 million, or 2.0%, versus the three months ended March 31, 2024.

The increase in SG&A expense was primarily driven by an increase of $1.8 million in personnel related expenses for the three months ended March 31, 2025 versus the prior year period, and $0.4 million related to the overlap of rent expense for the new New York and London offices with that of the current offices.

This increase was partially offset by a $2.0 million decrease in selling related expenses.

Other Income (Expense), Net

(in thousands) Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 Amount 2024 2023 Amount

Unrealized gain/(loss) on derivative instruments $ 2,592 $ (3,959) $ 6,551 $ (5,896) $ (1,758) $ (4,138)

Foreign currency gain/(loss) 550 (1,211) 1,761 472 (430) 902

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Unrealized gain/(loss) on derivative instruments $ 2,817 $ (2,525) $ 5,342 n/m

Foreign currency gain

580 58 522 n/m

Interest income 1,518 1,523 (5) (0.3 %)

Interest expense — (1) 1 — (31) 31

$ 5,018 $ (4,347) $ 9,365 $ (398) $ (1,114) $ 716

155 — 155 n/m

$ 5,070 $ (944) $ 6,014 n/m

Unrealized Gain/(Loss) on Derivative Instruments

For the three months ended September 30, 2024 and 2023, we recorded gains of $2.6 million and losses of $4.0 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 September 30, 2024 related to the contracts hedging the BRL and THB.

For the nine months ended September 30, 2024 and 2023, we recorded losses of $5.9 million and losses of $1.8 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 loss for the nine months ended September 30, 2024 related to the contracts hedging the BRL, partially offset by gains on THB, GBP, and CAD hedges.

Foreign Currency Gain/(Loss)

For the three months ended September 30, 2024, the change in foreign currency gain was $1.8 million as compared to September 30, 2023.

For the nine months ended September 30, 2024, the change in foreign currency gain was $0.9 million as compared to September 30, 2023.

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.

Foreign Currency Gain

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.

Interest Income

For the three months ended September 30, 2024, the increase in interest income was $1.1 million as compared to September 30, 2023.

The increase was primarily due to higher levels of cash invested with financial institutions during the third quarter of 2024 compared to the third quarter of 2023.

For the nine months ended September 30, 2024, the change in interest income was $3.9 million as compared to the same period ending September 30, 2023.

The increase in interest income period over period was due to the cash investment program that began in April 2023, in addition to higher levels of cash invested with financial institutions compared to prior year.

Interest Expense

The change in interest expense is immaterial.

The change in interest income was immaterial.

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

Income Tax Expense

(in thousands) Three Months Ended September 30, Change Nine Months Ended September 30, Change

2024 2023 Amount Percentage 2024 2023 Amount Percentage

($ in thousands)

Three Months Ended March 31, Change

2025 2024 Amount Percentage

Income tax expense 5,481 3,777 $ 1,704 45.1 %

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The effective income tax rate is based upon the estimated income for the year, the composition of that income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

For the nine months ended September 30, 2024 and 2023 our effective tax rate was 23.9% and 20.2%, respectively.

The effective tax rate for the current period is higher than the US statutory rate of 21% primarily as a result of state income taxes for the US company and other nondeductible expenses for tax purposes, and is partially offset by lower statutory tax rates in countries outside the US that we operate in.

The change in effective tax rates between the periods is primarily driven by the jurisdictional mix of our pre-tax profits and the impact of higher non-deductible expenses this year related to covered employees' compensation in relation to the pre-tax profits.

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.

Non-GAAP Financial Measures

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These non-GAAP measures should not be considered as alternatives to net income as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

These non-GAAP measures are a key metric used by management and our Board of Directors to assess our financial performance.

These non-GAAP measures are a key metric used by management and our Board to assess our financial performance.

We present these non-GAAP measures because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance and because we believe it is useful for investors to see the measures that management uses to evaluate the Company.

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A reconciliation from net income to EBITDA and Adjusted EBITDA is set forth below:

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in thousands) (in thousands)

Three Months Ended March 31,

(in thousands)

Net income 18,882 14,238

1 unchanged sentence

Interest income (1,518) (1,523)

Interest expense — 1 — 31

Income tax expense 5,481 3,777

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Foreign currency (gain)/loss (b) (580) (58)

Secondary Offering Costs (c) — — (324) 856

Other adjustments (d)

Other adjustments (c)

Adjusted EBITDA $ 22,505 $ 21,230

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(b) Unrealized gains or losses on derivative instruments and foreign currency gains or losses are not considered in our evaluation of our ongoing performance.

(c) Reflects other non-recurring expenses related to costs associated with two secondary offerings in which Verlinvest Beverages SA sold shares of the Company in an underwritten public offering that closed on May 26, 2023 and a block trade that was executed on November 9, 2023.

The amounts for the three and nine months ended September 30, 2023 relate to costs for the May 26, 2023 offering.

The amounts for the three and nine months ended September 30, 2024 relate to an expense waiver of certain costs incurred during the November 9, 2023 block trade.

The Company did not receive any proceeds from the sale of the shares.

For additional information regarding the expense waiver for the three and nine months ended September 30, 2024, see Note 14, Related Party Transactions , in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

(d) Reflects other charges primarily related to the impairment loss of assets held for sale in 2023 and other non-recurring expenses.

(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.

Liquidity and Capital Resources

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 $156.7 million and $132.5 million of cash and cash equivalents as of September 30, 2024 and December 31, 2023, respectively.

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.

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Our asset-lite operating model has historically provided us with a low cost, nimble, and scalable supply chain, which allows us to adapt to changes in the market or consumer preferences while also efficiently introducing new products across our platform.

We may seek additional equity or debt financing in the future in order to acquire or invest in complementary

businesses, products and/or new IT infrastructures.

We may seek additional equity or debt financing in the future in order to acquire or invest in complementary businesses, products and/or new IT infrastructures.

In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all.

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The following tables summarize our sources and uses of cash:

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2025 2024 Amount Percentage

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Cash flows provided by (used in):

Operating activities $ 35,977 $ 70,003 $ (34,026) 48.6 %

Investing activities (849) (528) (321) (60.8 %)

Operating activities $ (9,800) $ (267) $ (9,533) n/m

Investing activities (559) (124) (435) n/m

Financing activities (1,099) (9,086) 7,987 n/m

Effects of exchange rate changes on cash and cash equivalents 333 212 121 57.1 %

Effects of exchange rate changes on cash and cash equivalents 401 (80) 481 n/m

Net (decrease)/increase in cash and cash equivalents $ (11,057) $ (9,557) $ (1,500) (15.7 %)

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Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses.

During the nine months ended September 30, 2024, cash provided by operating activities decreased $34.0 million compared to the nine months ended September 30, 2023.

The decrease in cash provided by operating activities was primarily driven by higher inventory purchases partly offset by increase in net income, net of non-cash adjustments.

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.

Investing Activities

During the nine months ended September 30, 2024, cash used in investing activities was $0.8 million as compared to $0.5 million for the nine months ended September 30, 2023, the increase was due to equipment purchases and higher technology related capital expenditures.

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.

Financing Activities

During the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, net cash used by financing activities was $16.3 million higher primarily driven by share repurchases that occurred in 2024 and lower proceeds from stock award exercises.

See Note 10, Stockholders' Equity, for further discussion on share repurchases.

We had an immaterial amount of debt outstanding as of September 30, 2024 and December 31, 2023, which was related to vehicle loans.

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.

We had an immaterial amount of debt outstanding as of March 31, 2025 and December 31, 2024, which was related to vehicle loans.

Revolving Credit Facility

In May 2020, the Company entered into the 2020 Credit Facility, which currently provides for committed borrowings of $60 million.

The maturity date on the 2020 Credit Facility is May 12, 2026.

On February 14, 2025, the 2020 Credit Facility was amended, extending the maturity five years to February 13, 2030.

Starting in December 2022, borrowings on the 2020 Credit Facility bear interest at rates based on either:

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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 is currently subject to an unused commitment fee ranging from 0.10% and 0.20% 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).

The outstanding balance on the Revolving Facility was zero as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024, we were compliant with all financial covenants.

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).

The outstanding balance on the Revolving Facility was zero as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, we were compliant with all financial covenants.

Vehicle Loans

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Interest rates on these vehicle loans range from 4.56% to 5.68%.

The outstanding balance on the vehicle loans as of September 30, 2024 was less than $0.1 million.

The outstanding balance on the vehicle loans as of March 31, 2025 was less than $0.1 million.

For additional information, see Note 6, Debt , in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the

reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Our actual results may differ from these estimates under different assumptions or conditions.

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 appearing in this Quarterly Report on Form 10-Q.

During the nine months ended September 30, 2024, there were no material changes to our critical accounting policies from those discussed in the Form 10-K.

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.

Recent Accounting Pronouncements

A description of recently adopted and issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies , to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis