What happened
Shares of coconut-water purveyor The Vita Coco Company (COCO 2.65%) were moving higher today after the beverage stock delivered another strong earnings report, beating estimates on the top and bottom lines.
As of 11:43 a.m. ET, the stock was up 13.7%.
Image source: Getty Images.
So what
Vita Coco said sales in the quarter jumped 21% to $139.6 million, easily beating analyst estimates at $129.3 million. Volume in the flagship brand Vita Coco coconut water was up 19% with sales up 23%.
The company also delivered a tremendous gross margin expansion, improving 11 percentage points to 37% due to lower year-over-year transportation costs, high pricing, and leverage from sales growth. Selling, general, and administrative expenses, meanwhile, rose 25% to $30 million due to higher personnel expenses and increased sales and marketing expenses.
On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from $7 million to $24 million and adjusted earnings per share jumped from $0.02 to $0.31, well ahead of the consensus at $0.18.
CEO Martin Roper said he was "extremely pleased" with the results, adding that gross margin "exceeded our expectations."
Now what
Looking ahead, the company raised its guidance for the year. It now expects sales growth of 10%-12%, including mid-teens growth in the Vita Coco brand, which will offset the loss of a private-label customer.
It also called for further improvements in gross margin relative to second-quarter performance and sees full-year gross margin at 35%-37%. Additionally, management raised its EBITDA guidance from $54 million-$59 million to $56 million-$60 million.
Given the strong quarterly results and the guidance raise, it's not surprising to see Vita Coco stock moving higher today. The beverage stock appears to have a bright future in front of it as there's a large and growing market for healthy beverages.
