What happened

Shares of Vita Coco (COCO 1.40%) were climbing today after the beverage company posted strong results in its first-quarter earnings report, beating estimates on the top and bottom lines and raising its guidance for the year.

As of 1:45 p.m. on Wednesday, the stock was up 15%.

A person on a beach holding up a sliced coconut with a straw in it.

Image source: Getty Images.

So what

Vita Coco, which is best known for its coconut-water brand of the same name, said revenue in the quarter rose 14% to $109.8 million, topping expectations at $103.4 million.

The Vita Coco brand's sales were up 17%, and case equivalent volumes rose 15%.

Gross margin surged thanks to improvements in logistics, rising from 19.8% in the quarter a year ago to 30.7%. On the bottom line, earnings per share jumped from $0.04 to $0.12, which beat the consensus at $0.07.

Executive Chairman Michael Kirban said: "I'm very excited that we have seen accelerating top-line growth, improved service levels, and a significant expansion in our gross margin as our logistics costs improve. I'm especially happy with our strong Vita Coco Coconut Water first quarter net sales growth of 17%, building on very strong brand performance in 2022." 

Now what

Vita Coco, which has positioned itself as a purveyor of better-for-you beverages, raised its full-year revenue guidance from a range of 9% to 11% growth to a range of 9% to 12% growth, calling for mid-teens increases in the Vita Coco brand and for its private-label business to be slightly positive.

It also sees gross margins continuing to improve, forecasting a range of 32% to 34% for 2023, and it raised its guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from a range of $52 million to $58 million to a range of $54 million to $59 million, up from $20 million in 2022.

Vita Coco, which went public in October of 2021, hasn't gotten much attention from investors, but the company has delivered strong results and occupies a leading position in a growing segment of the beverage industry. The stock looks like a good bet to continue outperforming the market.