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What changed in Vita Coco Company, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vita Coco Company, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+367 added−547 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-14)

Top changes in Vita Coco Company, Inc.'s 2023 10-K

367 paragraphs added · 547 removed · 283 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur primary brand Vita Coco Coconut Water competes in the approximately $2.7 billion global coconut and plant waters category, as estimated by Euromonitor (2022). Our Runa brand competes in the plant based energy beverage category, our Vita Coco coconut milk product is a plant-based dairy alternative and our PWR LIFT brand competes in the enhanced isotonic category.
Biggest changeOur Vita Coco coconut milk product is a plant-based dairy alternative and our PWR LIFT brand competes in the enhanced isotonic category. We also develop and sell other brands in the beverage category, and occasionally in other categories, as we test our ideas for expanding our product portfolio.
We also compete with other leading functional beverages 8 Table of Contents including Goya, Harmless Harvest, Foco, BodyArmor, Monster Energy, Red Bull, Bang, Ocean Spray and Bai, as well as a range of emerging brands and retailers’ own private label beverage brands. Our competition and competitors vary by market due to regional brands and taste preferences.
We also compete with other leading functional beverages including Goya, Harmless Harvest, Foco, BodyArmor, Monster Energy, Red Bull, Bang, Ocean Spray and Bai, as well as a 8 Table of Contents range of emerging brands and retailers’ own private label beverage brands. Our competition and competitors vary by market due to regional brands and taste preferences.
Raw materials used in our business and by our co-packers consist of ingredients and packaging materials purchased from local, regional and international suppliers. The principal ingredients include coconut water, Tetra Paks and caps, cardboard cartons, PET bottles and aluminum bottles and cans.
Raw materials used in our business and by our co-packers consist of ingredients and packaging materials purchased from local, regional and international suppliers. The principal ingredients and packaging include coconut water, Tetra Paks and caps, cardboard cartons, PET bottles, and aluminum bottles and cans.
We and our manufacturing and co-packing partners are also subject to similar requirements in foreign jurisdictions in which we operate. These types of requirements include: product standards; product safety, product safety reporting; marketing, sales, and distribution; packaging and labeling requirements; nutritional and health claims; advertising and promotion; import and export restrictions; and tariff regulations, duties, and tax requirements.
We and our manufacturing and co-packing partners are also subject to similar requirements in foreign jurisdictions in which we operate. These types of requirements include: product standards; product safety and reporting; marketing, sales, and distribution; packaging and labeling requirements; nutritional and health claims; advertising and promotion; import and export restrictions; and tariff regulations, duties, and tax requirements.
Through achieving Certified B Corporation status, The Vita Coco Company, Inc. joined its subsidiary, All Market Europe Ltd, a United Kingdom company, which had previously achieved B Corporation status.
Through achieving Certified B Corporation status, The Vita Coco Company, Inc. joined its subsidiary, All Market Europe Ltd., a United Kingdom company, which had previously achieved Certified B Corporation status.
We believe that we bring our products to market through a responsibly designed supply chain, and provide our farmers and manufacturers the partnership, investment, and training they need to not only reduce waste and environmental impact, but also bring income and opportunity to their local communities.
We believe that we bring our products to market through a responsibly designed supply chain, and provide farmers and manufacturers the partnership, investment, and training they need to not only reduce waste and environmental impact, but also bring income and opportunity to their local communities.
Additionally, we attempt to partner with other third-party organizations that share and advance our ideals, including fair trade, accessible nutrition and wellness, and environmental responsibility. We believe this purpose-driven approach has aided our growth as it is strategically aligned with the beliefs of our global consumer base and has improved our supplier relationships.
Additionally, we attempt to partner with other third-party organizations that share and advance our ideals, including fair trade, accessible nutrition and wellness, and environmental responsibility. We believe this purpose-driven approach has aided our growth as we believe it is strategically aligned with the beliefs of our global consumer base and has improved our supplier relationships.
Our products are typically shipped directly from our contract manufacturing partners to a network of third-party warehouses located in our selling markets. We go to market in North America through various distribution channels, including a Direct Store Delivery distribution network ("DSD"), Direct-to-Warehouse network (DTW), broadline distributors, and our own DTC channel.
Our products are typically shipped directly from our contract manufacturing partners to a network of third-party warehouses located in our selling markets. We go to market in North America through various distribution channels, including a Direct Store Delivery distribution network ("DSD"), Direct-to-Warehouse network ("DTW"), broadline distributors, and our own Direct-to-Consumer ("DTC") channel.
Our United Kingdom commercial team and our supply chain based in Asia have allowed us to sell into other European and Asian countries. Vita Coco coconut water has a presence in key markets such as China, France, Spain, the Benelux region, the Nordic Region, Africa and the Middle East.
Our United Kingdom commercial team and our supply chain based in Asia have allowed us to sell into other European and Asian countries. Vita Coco coconut water has a presence in key markets such as China, France, Germany, the Middle East, the Benelux region, Spain, the Nordic Region, and Africa.
Item 1. Business. Overview 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 healthy hydration categories. Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world.
Item 1. Business. Overview 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. Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world.
The majority of our products are produced and packaged with materials sourced from a single supplier, Tetra Pak, whether purchased by us or by our contract manufacturers on our behalf, which provides us efficiency in the packaging and export of our products, and furthers our commitment to responsible sourcing, packaging near source and sustainability.
The majority of our products are produced and packaged with materials sourced from a single supplier, Tetra Pak, whether purchased by us or by our contract manufacturers on our behalf, which provides us efficiency in the packaging and exporting of our products, and furthers our commitment to responsible sourcing, packaging near source and sustainability.
Our production contracts are mostly denominated in United States dollars, with some limited contracts in local currencies such as the Brazil Real. Distribution, Sales and Marketing Our beverages and other products are sold in club stores, supermarkets, convenience stores, drug stores and e-commerce websites as well as other outlets.
Our production contracts are mostly denominated in United States dollars, with some limited contracts in local currencies such as the Brazilian real. Distribution, Sales and Marketing Our beverages and other products are sold in club stores, supermarkets, convenience stores, drug stores and e-commerce websites as well as other outlets.
Business Operations As of December 31, 2022, we operate in two business segments: (i) the Americas segment, comprised of our operations primarily in the United States and Canada and (ii) the International segment, comprised of operations primarily in Europe, the Middle East, Africa and the Asia Pacific regions.
Business Operations As of December 31, 2023, we operate in two business segments: (i) the Americas segment, comprised of our operations primarily in the United States and Canada and (ii) the International segment, comprised of operations primarily in Europe, the Middle East, Africa and the Asia Pacific regions.
In March 2022, The Vita Coco Company, Inc. announced it was designated as a Certified B Corporation, a certification reserved for businesses that balance profit and purpose to meet the highest verified standards of social and environmental performance, public transparency and legal accountability.
In 2022, The Vita Coco Company, Inc. was designated as a Certified B Corporation, a certification reserved for businesses that balance profit and purpose to meet the highest verified standards of social and environmental performance, public transparency and legal accountability.
The primary goal of our marketing function is to educate consumers about the functional benefits of our products while inspiring consumers to fall in love with our brands. Since the early days, our brands have been sponsored by a roster of celebrity and athlete fans.
The primary goal of our marketing function is to educate consumers about the functional benefits of our products while inspiring consumers to fall in love 10 Table of Contents with our brands. Since the early days, our brands have been sponsored by a roster of celebrity and athlete fans.
Private Label accounts are handled by each geographic division in close cooperation with supply chain leadership. Our sales and marketing function in China is handled by our importer. 10 Table of Contents We also employ a brand, marketing, e-commerce and insights team with strong creative, social and digital capabilities with a primary focus on the North American and European markets.
Private label accounts are handled by each geographic division in close cooperation with supply chain leadership. Our sales and marketing function in China is handled by our importer. We also employ a brand, marketing, e-commerce and insights team with strong creative, social and digital capabilities with a primary focus on the North American and European markets.
We are also a leading supplier of Private Label coconut water and oil brands, and we compete with other Private Label suppliers for that business.
We are also a leading supplier of private label coconut water, and we compete with other private label suppliers for that business.
Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained. 11 Table of Contents We consider information related to formulas, processes, know-how and methods used in our production and manufacturing as proprietary and endeavor to maintain them as trade secrets.
Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained. We consider information related to formulas, processes, know-how and methods used in our production and manufacturing as proprietary and endeavor to maintain them as trade secrets.
While ov er 91% of our business is based on sales of coconut water, we have used our access to market to add other beverage brands with a view to building a diversified beverage platform of compatible brands.
While ov er 92% of our business is based on sales of coconut water, we have used our access to market to add other beverage brands with a long-term view to building a diversified beverage platform of compatible brands.
Our European market is primarily retail and e-commerce operator direct sales, with some countries supported by distributor or importer type relationships. In China, we sell to Reignwood Investment (China) Co., Ltd, which is our import and distributor partner for the territory, and, through its affiliates, has been one of our significant shareholders since 2014.
Our European market is primarily retail and e-commerce operator direct sales, with some countries supported by distributor or importer type relationships. In China, we sell to Reignwood Investment (China) Co., Ltd, which is our import and distributor partner for the territory, and, through its affiliates, was one of our significant shareholders prior to 2023.
We believe the protection of our trademarks, designs, copyrights, patents, domain names, trade dress and trade secrets are important to our success. As of December 31, 2022, we had over 30 registered trademarks, over 10 pending trademark applications in the United States, over 230 registered trademarks and over 20 pending trademark applications in other countries.
We believe the protection of our trademarks, designs, copyrights, patents, domain names, trade dress and trade secrets are important to our success. As of December 31, 2023, we had over 30 registered trademarks and over 10 pending trademark applications in the United States, as well as over 240 registered trademarks and over 10 pending trademark applications in other countries.
Additional Information The Vita Coco Company, Inc., formerly known as All Market Inc., was incorporated in Delaware as a corporation in January 2007 and as a public benefit corporation in April 2021. We completed an initial public offering of our common stock in October 2021. Our website is www.thevitacococompany.com.
Additional Information 12 Table of Contents The Vita Coco Company, Inc. was incorporated in Delaware as a corporation in January 2007 and as a public benefit corporation in April 2021. We completed an initial public offering of our common stock in October 2021. Our website is www.thevitacococompany.com.
As a public benefit corporation, we are required by Delaware law to provide a biennial statement on our promotion of the public benefits identified in our certificate of incorporation and of the best interests of those materially affected by the corporation's conduct.
As a public benefit corporation, we are required by Delaware law to provide a biennial statement on our promotion of the public benefits identified in our certificate of incorporation and of the best interests of those materially affected by the corporation's conduct. Our biennial public benefit corporation statement was included in our Impact Report issued in early 2023.
In addition, at the end of 2022, 40% of our employees identified as Black, Indigenous and/or People of Color or two or more races, 52% identified as white, and 8% did not disclose their race. We strive to reflect the diverse identities and cultures of our consumers.
In addition, at the end of 2023, 38% of our employees identified as Black, Indigenous and/or People of Color or two or more races, 48% identified as white, and 13% did not disclose their race. We strive to reflect the diverse identities and cultures of our consumers.
Internationally, our business is anchored by Vita Coco ’s presence in the United Kingdom, where it is the chilled coconut water category leader with 82% market share, according to IRI UK, for 52 weeks ended December 31, 2022.
Internationally, our business is anchored by Vita Coco ’s presence in the United Kingdom, where it is the chilled coconut water category leader with 89% market share, according to Circana UK, for the 52 weeks ended December 30, 2023.
Vita Coco is the coconut water category leader with approximately 50% market share in the United States according to IRI U.S. for the 52 weeks ending December 25, 2022, which over indexes to younger households and to more multicultural shoppers. We offer Vita Coco coconut water as an alternative to sugar-packed sports drinks and other less healthy hydration alternatives.
Vita Coco is the coconut water category leader with greater than 50% market share in the United States according to Circana US for the 52 weeks ending December 31, 2023, which over indexes to younger households and to more multicultural shoppers. We offer Vita Coco coconut water as an alternative to sugar-packed sports drinks and other less healthy alternatives.
Our coconut water Private Label offering increases the scale and efficiency of our coconut water supply chain, and also provides us with a share of the value segment, without diluting our own brand. We also supply retailers with Private Label coconut oil. Runa Runa is a plant-based, natural offering for consumers in the energy drink market.
Our coconut water private label offering increases the scale and efficiency of our coconut water supply chain, and also provides us with a share of the value segment, without diluting our own brand. We also supply retailers with private label coconut oil.
Seasonality As is typical in the beverage industry, sales of our beverages are seasonal, with the highest sales volumes generally occurring in the second and third fiscal quarters during the warmer months of the year in our major markets. COVID-19 Over the past few years, the COVID-19 pandemic has caused general business disruption worldwide.
Seasonality As is typical in the beverage industry, sales of our beverages are seasonal, with the highest sales volumes generally occurring in the second and third fiscal quarters during the warmer months of the year in our major markets.
In 2020, our employees formed a Diversity and Inclusivity Committee which has worked to celebrate all our employees, educate and recommend improvements to our processes to enhance our organization and our culture. As of December 31, 2022, approximately 47% of our employees identified as female, 51% identified as male, and 1% did not disclose their gender identity.
Our Diversity and Inclusivity Committee works to celebrate all our employees, educate and recommend improvements to our processes to enhance our organization and our culture. As of December 31, 2023, approximately 47% of our employees identified as female, 49% identified as male, and 4% did not disclose their gender identity.
Supply Chain We engage contract manufacturers, co-packers and third-party logistics providers to manufacture and distribute our products. Our fixed asset-lite model enhances production flexibility and capacity, and enables us to focus on our core in-house capabilities which include supplier management, logistics, sales and marketing, brand management and customer service.
Our fixed asset-lite model enhances production flexibility and capacity, and enables us to focus on our core in-house capabilities which include supplier management, logistics, sales and marketing, brand management and customer service.
The portfolio now includes multiple offerings in the coconut water category with Vita Coco Pressed, Vita Coco Coconut Juice, and Farmers Organic, with offerings in adjacent plant-based categories such as Vita Coco Coconut MLK, Vita Coco Barista, Vita Coco Coconut Oil, and Vita Coco Hydration Drink Mix.
Vita Coco has evolved from a primarily pure coconut water brand to a full portfolio of coconut-based products. The portfolio now includes multiple offerings in the coconut water category with Vita Coco Pressed, Vita Coco Coconut Juice, and Farmers Organic, with offerings in adjacent plant-based categories such as Vita Coco Coconut MLK, Vita Coco Barista and Vita Coco Coconut Oil.
Given emerging consumer concerns with the disposal or recyclability of plastic water bottles, we created Ever & Ever to respond to the consumer need for a sustainably packaged water product in aluminum bottles with potential infinite re-cyclability. Ever & Ever was launched with a focus on the foodservice and office channels.
Ever & Ever Launched in 2019, Ever & Ever is a purified water brand packaged solely in aluminum bottles. Given consumer concerns with the disposal or recyclability of plastic water bottles, we created Ever & Ever to respond to the consumer need for a sustainably packaged water product in aluminum bottles with potential infinite recyclability.
Ever & Eve r is also available in our Direct-to-Consumer ("DTC") channels. 9 Table of Contents PWR LIFT In 2021, we launched PWR LIFT, a beverage targeted at post-workout and recovery hydration occasions with added nutritional benefits. PWR LIFT is a protein-infused sports drink with electrolytes and zero sugar, designed to provide fitness-minded consumers with protein in a hydrating beverage.
Ever & Ever was launched with a focus on the food service and office channels. PWR LIFT In 2021, we launched PWR LIFT, a beverage targeted at post-workout and recovery occasions with added nutritional benefits. PWR LIFT is a protein-infused sports drink with electrolytes, BCAAs and zero sugar, designed to provide fitness-minded consumers with protein in a hydrating beverage.
Our other brands include Runa , a plant-based energy drink inspired from the guayusa plant native to Ecuador, Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink. We also supply Private Label products to key retailers in both the coconut water and coconut oil categories.
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.
Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, hydration mix and milk offerings.
We are one of the largest brands globally in the coconut and other plant waters category, and a large supplier of private label coconut water. Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, and milk offerings.
In addition, some of our products are produced and marketed under contract as part of special certification programs such as organic, kosher or non-GMO, and must comply with the strict standards of federal, state and third-party certifying organizations.
In addition, some of our products are produced and marketed under contract as part of special certification programs such as organic, kosher or non-GMO, and must comply with the strict standards of federal, state and third-party certifying organizations. 11 Table of Contents Public Benefit Corporation Status and Corporate Social Responsibility We operate as a Delaware public benefit corporation, and, therefore, our operational decision-making goes beyond solely maximizing shareholder value.
We also develop and sell other brands in the beverage category, and occasionally in other categories, as we test our ideas for expanding our product portfolio. The beverage industry, and specifically the functional beverage categories, are significantly larger than the coconut and plant waters category and provide opportunities for potential growth.
The beverage industry, and specifically the functional beverage categories, are significantly larger than the coconut and plant waters category and provide opportunities for potential growth.
Coconut water needs to be transferred from the coconut into an aseptic package within hours of cutting a coconut from the tree. Our supply chain partners are positioned as close to the coconut growing regions as possible to keep quality at the highest level.
Our supply chain partners are positioned as close to the coconut growing regions as possible to keep quality at the highest level.
Our well-diversified global manufacturing network spans across six countries, 14 coconut water factories operated by our manufacturing partners and five co-packing facilities for products not packaged near source. Our network provides us with significant production capacity and capabilities, and an ability to re-allocate coconut water sourcing in the event of supply chain issues, weather, logistics or other macroeconomic impacts.
Our well-diversified global manufacturing network spans across 14 coconut water factories in six countries that are operated by our manufacturing partners and five co-packing facilities for products not packaged near source.
In 2022, we tested PWR LIFT in select markets including Arizona, North Carolina, South Carolina and Georgia and, in 2023, we plan to expand the offering to Texas. The brand targets fitness enthusiasts and consumers seeking healthier beverage options, and we plan to grow the brand by focusing on premium retail execution, brand sponsorships, influencer partnerships and social media advertising.
The brand targets fitness enthusiasts and consumers seeking healthier beverage options, and we plan to grow the brand by focusing on premium retail execution, brand sponsorships, influencer partnerships and social media advertising. 9 Table of Contents Runa Runa is a plant-based, natural offering for consumers in the energy drink market.
We source our coconut water from a diversified global network of 14 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.
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 and to better service our customers’ needs.
At the time of our IPO and again in the first quarter of 2023, we awarded all full-time global employees an equity grant with vesting based on continued employment in order to motivate retention and align our employees with our other shareholders. We promote and value a diverse, equitable and inclusive culture for our employees.
Based on exit interviews and employee surveys, we identify opportunities for improvement in our processes and track our employee engagement levels. We award equity grants with vesting based on continued employment to eligible employees in order to motivate retention and align our employees with our other shareholders. We promote and value a diverse, equitable and inclusive culture for our employees.
We also work with co-packers in America and Europe to support local packaging and repacking of our products and 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. Our primary markets for Private Label are North America and Europe.
Vita Coco is available in over 30 countries, with our primary markets in North America, the United Kingdom, and China. 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 foodservice channels.
We have never experienced a labor-related work stoppage. Our people are at the heart of our business. Our Board of Directors provides oversight of the policies and procedures in place that relate to talent, leadership and culture, and compensation plans for our Executive Chairman and Chief Executive Officer.
Our Board of Directors provides oversight of the policies and procedures relating to talent, leadership, culture and compensation plans for our Executive Chairman and Chief Executive Officer. The Compensation Committee evaluates and approves the compensation plans for our executive officers.
We intend to use the Impact Report to be issued later this year as such biennial statement. 12 Table of Contents Human Capital As of December 31, 2022, we had 269 full-time employees. Of these employees, 202 were employed in the United States. None of these employees are represented by labor unions or covered by collective bargaining agreements.
Human Capital As of December 31, 2023, we had 294 full-time employees. Of these employees, 220 were employed in the United States. None of these employees are represented by labor unions or covered by collective bargaining agreements. We have never experienced a labor-related work stoppage. Our people are at the heart of our business.
History The Vita Coco Company, Inc., formerly known as All Market Inc., was incorporated as a Delaware corporation in January 2007 and incorporated in Delaware as a public benefit corporation in April 2021. We completed an initial public offering (the "IPO") of our common stock in October 2021. Industry We operate in the functional beverages industry.
We completed an initial public offering (the "IPO") of our common stock in October 2021. Industry We operate in the functional beverages industry. Our primary brand Vita Coco Coconut Water competes in the global coconut and plant waters category .
Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce, and foodservice 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. History The Vita Coco Company, Inc., formerly known as All Market Inc., was first incorporated as a Delaware corporation in January 2007 and re-incorporated in Delaware as a public benefit corporation in April 2021.
In 2022, we focused on expanding our multipack strategy in coconut water to increase consumption with core consumers. In addition, we expanded our Farmers Organic product to national distribution and focused on the regional rollout of Vita Coco Coconut Juice.
Our key strategies for growth for Vita Coco coconut water include: 1) offering more multipacks in coconut water to increase consumption with core consumers, 2) increasing distribution of other product offerings such as Farmers Organic and Vita Coco Coconut Juice, 3) expanding the number of households that purchase our products, and 4) growing opportunities for new usage generally.
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We are one of the largest brands globally in the coconut and other plant waters category, and one of the largest suppliers of Private Label coconut water.
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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. We source our coconut water from a diversified global network of 14 factories across six countries supported by thousands of coconut farmers.
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Vita Coco has evolved from a primarily pure coconut water brand to a full portfolio of coconut-based products.
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In 2022 and 2023, we tested PWR LIFT in select markets including Arizona, North Carolina, South Carolina and Texas. During that time, PWR LIFT became the official sponsor of HYROX, a rapidly-growing competition known as the "World Series of Racing." In early 2024, PWR LIFT will launch in New York City metro area.
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In 2023, we intend to continue to develop these initiatives, while in parallel expanding into new occasions through a licensing collaboration with Diageo. Vita Coco Spiked with Captain Morgan is a ready-to-drink cocktail sold by Diageo and made with their flagship Captain Morgan rum and our flagship Vita Coco coconut water that will be distributed nationally in 2023.
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A key ingredient in Runa is guayusa, an Amazonian jungle plant. As of December 2023, we ceased offering this brand. Supply Chain We engage contract manufacturers, co-packers and third-party logistics providers to manufacture and distribute our products.
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We believe that Runa ’s clean energy drinks provide consumers with a refreshing energy boost without the jolts and jitters, and with less sugar, than traditional energy beverages.
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Our network provides us with significant production capacity and capabilities, and an ability to re-allocate coconut water sourcing in the event of supply chain issues, weather, logistics or other macroeconomic impacts. Coconut water needs to be transferred from the coconut into an aseptic package within hours of cutting a coconut from the tree.
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A key ingredient in Runa is guayusa, an Amazonian jungle plant which we believe is a "super-leaf." Ever & Ever Launched in 2019, Ever & Ever is a purified water brand packaged solely in aluminum bottles.
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To further support our public benefit purpose and "Give, Grow, Guide" philosophy, we formed the Vita Coco Community Foundation, a standalone nonprofit corporation in December 2023. Annually, we publish an Impact Report describing the environmental and social impacts of our business.
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Since the beginning of this pandemic in January 2020, our top priority has been the health, safety and well-being of our employees. Although our workforce has returned to the office on a hybrid basis, some of the impacts on our business created by the COVID-19 pandemic have continued or evolved.
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After COVID-19 emerged, among other impacts, we saw significant changes to global ocean shipping availability and pricing of containers, lengthening transit times, increased domestic transportation costs and some payroll inflationary effects.
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We also experienced negative impacts on our inventory availability and delivery capacity and temporary manufacturing and distribution partner shutdowns which affected, at times, our ability to fully service our customers’ demand.
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We took measures to bolster key aspects of our supply chain and we continue to work with our supply chain partners to ensure our ability to service customers and their demand. Some of these supply chain and logistics impacts have lessened over time, but conditions have not returned to those existing before the COVID-19 pandemic.
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In some cases, new challenges have emerged. For example, towards the end of 2022 into 2023, although the pricing and availability of shipping containers has improved, the cost of warehouse space in the United States used to store inventory has increased significantly over recent months while availability of such warehouse space has decreased.
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We continue to closely monitor the impact of the COVID-19 pandemic and developments related thereto on our business. For additional discussion of the factors above and the impact of COVID-19, see Part I, Item 1A. “Risk Factors” and Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Annual Report on Form 10-K.
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Public Benefit Corporation Status and Corporate Social Responsibility We operate as a Delaware public benefit corporation, and, therefore, our operational decision-making goes beyond solely maximizing shareholder value.
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Since 2022, we have published an annual Impact Report to evaluate and communicate the environmental and social impacts of our business.
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The Compensation Committee evaluates and approves the compensation plans related to our executive officers. In 2022, we received a Great Place to Work Certification from the Great Place to Work Institute based on the ratings of our employees.
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Based on exit interviews and employee surveys, we identify opportunities for improvement in our processes and track our employee engagement levels.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere has been increasing public focus by investors, customers environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. We experience pressure to make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability.
Biggest changeWe are a Delaware public benefit corporation which has placed additional requirements on our strategies and decision-making to meet our mission. See “—Risks Related to our Existence as a Public Benefit Corporation.” There has been increasing public focus by investors, customers environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters.
The inability to fulfill, or any delays in processing, customer or consumer orders from the warehousing/fulfillment centers of our providers or any quality issues could result in the loss of consumers, retail partners or distributors, or the issuances of penalties, refunds or credits, and may also adversely affect our reputation.
The inability to fulfill or any delays in processing customer or consumer orders from the warehousing or fulfillment centers of our providers, or any quality issues could result in the loss of consumers, retail partners or distributors, or the issuances of penalties, refunds or credits, and may also adversely affect our reputation.
We have developed strong and trusted brands, including our leading Vita Coco brand, that we believe have contributed significantly to the success of our business, and we believe our continued success depends on our ability to maintain and grow the value of the Vita Coco and other brands.
We have developed strong and trusted brands, including our leading Vita Coco brand, that we believe have contributed significantly to the success of our business, and we believe our continued success depends on our ability to maintain and grow the value of Vita Coco and other brands.
If we are unable to meet our sustainability, environmental and social and governance goals, this could have a material adverse effect on our reputation and brand and negatively impact our relationship with our employees, customers, consumers and investors.
If we are unable to meet our sustainability, and environmental, social and governance goals, this could have a material adverse effect on our reputation and brand and negatively impact our relationship with our employees, customers, consumers and investors.
If we fail to meet applicable standards or expectations with respect to these issues across any of our products and in any of our operations and activities or those of our third party partners, such as manufacturers and co-packer, our reputation and brand image could be damaged, and our business, financial condition, results of operations and cash flows could be adversely impacted.
Additionally, if we fail to meet applicable standards or expectations with respect to these issues across any of our products and in any of our operations and activities or those of our third party partners, such as manufacturers and co-packer, our reputation and brand image could be damaged, and our business, financial condition, results of operations and cash flows could be adversely impacted.
We also face the risk of claims that we have infringed third parties’ intellectual property rights. If a third party asserts a claim that our offerings infringe, misappropriate or violate their rights, the litigation could be expensive and could divert management attention and resources away from our core business operations.
We also face the risk of claims that we have infringed third parties’ intellectual property rights. If a third party asserts a claim that our offerings infringe, misappropriate or violate their rights, resulting litigation could be expensive and could divert management attention and resources away from our core business operations.
If unauthorized parties gain access to our networks or databases, or those of our third-party vendors or business partners, they may be able to commit financial fraud, publish, delete, use inappropriately or modify our private and sensitive third-party information, including credit card information and other personally identifiable information.
If unauthorized parties gain access to our networks or databases, or those of our third-party vendors or business partners, they may be able to commit financial fraud, publish, delete, use inappropriately or modify our private and sensitive third-party information, including credit card information and other personally identifiable personal information.
Our shipping partners transport our products from the country of origin or from our domestic co-packing partners, which are then received by, and subsequently distributed from the third party warehousing and fulfillment service providers to our distributors and retail-direct customers by transportation partners or customer pickup.
Our independent shipping partners transport our products from the country of origin or from our domestic co-packing partners, which are then received by, and subsequently distributed from our third party warehousing and fulfillment service providers to our distributors and retail-direct customers by our third party transportation partners or customer pickup.
Our products and operations are subject to government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements, or to respond to changes in regulations applicable to our business could adversely affect our business, financial condition, results of operations and cash flows.
Our products and operations are subject to state and government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements, or to respond to changes in regulations applicable to our business could adversely affect our business, financial condition, results of operations and cash flows.
In addition, we and our third party vendors and business partners may have to upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business.
In addition, we and our third party vendors and business partners may upgrade our existing information technology systems or choose to incorporate new technology systems from time to time in order for such systems to support the increasing needs of our expanding business.
Sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that these sales might occur, could cause the market price of our common stock to decline.
Furthermore, sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that these sales might occur, could cause the market price of our common stock to decline.
Further, we rely on a variety of marketing techniques and practices to sell our products and to attract new customers and consumers, and we are subject to various current and future data protection laws and obligations that govern marketing and advertising practices.
We rely on a variety of marketing techniques and practices to sell our products and to attract new customers and consumers, and we are subject to various current and future data protection laws and obligations that govern marketing and advertising practices.
Consumer demand for our products and interest in our offerings could change based on a number of possible factors, including changes in dietary habits, refreshment and nutritional habits, concerns regarding the health effects of ingredients, the usage of single use packaging, the impact of our supply chain on our sourcing communities, shifts in preference for various product attributes or consumer confidence, trends within consumer age groups and perceived value for our products relative to alternatives.
Consumer demand for our products and interest in our offerings could change based on a number of possible factors, including changes in consumer preferences, dietary habits, refreshment and nutritional habits, concerns regarding the health effects of ingredients, the usage of single use packaging, the impact of our supply chain on our sourcing communities, shifts in preference for various product attributes or consumer confidence, trends within consumer age groups and perceived value and quality for our products relative to alternatives.
Our amended and restated certificate of incorporation provides that, subject to limited exceptions, (1) any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Our amended and restated certificate of incorporation provides that, subject to limited exceptions, (1) any derivative action or proceeding brought on behalf of the Company, (2) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court 33 Table of Contents of Chancery of the State of Delaware or (4) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware.
Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents caused by products we sell or involving our suppliers or manufacturers, could result in the discontinuance of sales of these products or cessation of our relationships 25 Table of Contents with such suppliers and manufacturers, or otherwise result in increased operating costs, lost sales, regulatory enforcement actions or harm to our reputation.
Unexpected side effects, illness, injury or death 22 Table of Contents related to allergens, food-borne illnesses or other food safety incidents caused by products we sell or involving our suppliers or manufacturers, could result in the discontinuance of sales of these products or cessation of our relationships with such suppliers and manufacturers, or otherwise result in increased operating costs, lost sales, regulatory enforcement actions or harm to our reputation.
We may be required to spend significant resources in order to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trademarks and trade secrets.
We may be required to spend significant resources in order to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights, including to protect our trademarks and trade secrets.
For example: • we may choose to revise our policies in ways that we believe will be beneficial to our stakeholders, including suppliers, employees and local communities, even though the changes may be costly; • we may take actions that exceed regulatory requirements, even though these actions may be more costly than other alternatives; • we may be influenced to pursue programs and services to further our commitment to the communities to which we serve even though there is no immediate return to our stockholders; or • in responding to a possible proposal to acquire the company, our board of directors has a fiduciary duty to consider the interests of our other stakeholders, including suppliers, employees and local communities, whose interests may be different from the interests of our stockholders.
For example: 35 Table of Contents • we may choose to revise our policies in ways that we believe will be beneficial to our stakeholders, including suppliers, employees and local communities, even though the changes may be costly; • we may take actions that exceed regulatory requirements, even though these actions may be more costly than other alternatives; • we may be influenced to pursue programs and services to further our commitment to the communities to which we serve even though there is no immediate return to our stockholders; or • in responding to a possible proposal to acquire the Company, our board of directors has a fiduciary duty to consider the interests of our other stakeholders, including suppliers, employees and local communities, whose interests may be different from the interests of our stockholders.
As such, we are subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictions imposed by the FCPA, as well as economic sanctions, customs and export control laws, including those administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), U.S.
As such, we are subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictions imposed by the FCPA, as well as economic sanctions, customs and export control laws, including those administered by the U.S. Department of the Treasury's Office of Foreign Assets Control (“OFAC”), U.S.
Further, our systems and those of our third-party vendors and business partners may be vulnerable to, and have experienced attempted security incidents, attacks by hackers (including ransomware attacks, phishing attacks and other third-party intrusions), acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events.
Further, our systems and those of our third-party vendors, service providers, and business partners may be vulnerable to, and have experienced attempted security incidents, attacks by hackers (including ransomware attacks, phishing attacks and other third-party intrusions), acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events.
Any claims of trademark or intellectual property infringement, even those without merit, could: • be expensive and time consuming to defend; • cause us to cease making, licensing or using products that incorporate the challenged intellectual property, which in turn could harm relationships with customers and distributors and might result in damages; • require us to redesign, reengineer, or rebrand our products or packaging, if feasible and might result in large inventory write-offs of unsaleable or unusable materials; • divert management’s attention and resources; or • require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property which might affect our margins and ability to compete.
Any claims of trademark or intellectual property infringement, even those without merit, could: • be expensive and time consuming to defend; • cause us to cease making, licensing or using products that incorporate the challenged intellectual property, which in turn could harm relationships with customers and distributors and might result in damages; • require us to redesign, reengineer, or rebrand our products or packaging, if feasible, and might result in large inventory write-offs of unsaleable or unusable materials; and • require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property which might affect our margins and ability to compete.
Customs and Border Protection (CBP), the U.S. Department of Commerce and the U.S. Department of State. The FCPA is intended to prohibit bribery of foreign officials—including officials of any government or supranational organization, foreign political parties and officials thereof, and any candidate for foreign political office—to obtain or retain business.
Customs and Border Protection (“CBP”), the U.S. Department of Commerce and the U.S. Department of State. The FCPA is intended to prohibit bribery of foreign officials—including officials of any government or supranational organization, foreign political parties and officials thereof, and any candidate for foreign political office—to obtain or retain business.
We may be unable to identify suitable targets, opportunistic or otherwise, for acquisition in the future at acceptable terms or at all. In addition, exploring acquisition opportunities may divert management attention from the core business and organic innovation and growth, which could negatively impact our business, financial condition, results of operations and cash flows.
We may be unable to identify suitable targets, opportunistic or otherwise, for acquisition in the future at acceptable terms or at all. In addition, exploring acquisition opportunities may divert management attention from the core business and organic 19 Table of Contents innovation and growth, which could negatively impact our business, financial condition, results of operations and cash flows.
The FDA requires that facilities that manufacture food products comply with a range of requirements, including hazard analysis and preventative controls regulations, current good manufacturing practices, or cGMP, and supplier verification requirements. Certain of our facilities, as well as those of our manufacturing and co-packing partners, are subject to periodic inspection by federal, state and local authorities.
The FDA requires that facilities that manufacture food products comply with a range of requirements, including hazard analysis and preventative controls regulations, current good manufacturing practices (“cGMP”), and supplier verification requirements. Certain of our facilities, as well as those of our manufacturing and co-packing partners, are subject to periodic inspection by federal, state and local authorities.
If any negative change in our relationship with our largest distributor and retail customer or other customers occurs, any other disputes with key customers arose, if we were to lose placement and support of any of our key customers 17 Table of Contents or if any of our key customers consolidate and/or gain greater market power, our business, financial condition, results of operations and cash flows would be materially adversely affected.
If any negative change in our relationship with our largest distributor and retail customer or other customers occurs, any other disputes with key customers arose, if we were to lose placement and support of any of our key customers or if any of our key customers consolidate and/or gain greater market power, our business, financial condition, results of operations and cash flows would be materially adversely affected.
We may collect, maintain, and otherwise process personally identifiable information and other data relating to our customers and employees. Additionally, we sell products directly to consumers from our website and rely on a variety of marketing techniques, including email and social media marketing, and we are subject to various laws and regulations that govern such selling, marketing and advertising practices.
We may collect, maintain, and otherwise process personal information and other data relating to our employees and customers. Additionally, we sell products directly to consumers from our website and rely on a variety of marketing techniques, including email and social media marketing, and we are subject to various laws and regulations that govern such selling, marketing and advertising practices.
In addition, these provisions may frustrate or prevent any 34 Table of Contents attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to 32 Table of Contents replace members of our board of directors.
In the United States, for example, we are subject to the requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, 26 Table of Contents the manufacturing, composition and ingredients, packaging, testing, labeling, marketing, promotion, advertising, storage, distribution and safety of food.
In the United States, for example, we are subject to the requirements of the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the manufacturing, composition and ingredients, packaging, testing, labeling, marketing, promotion, advertising, storage, distribution and safety of food.
Although the FDA and the USDA each have issued statements and adopted policies regarding the appropriate use of the word “natural,” there is no single, universal definition of the term “natural” for various categories we sell, which is true for many other adjectives common in the healthy or sustainable products industry.
Although the FDA and the USDA each have issued statements and adopted policies regarding the appropriate use of the 24 Table of Contents word “natural,” there is no single, universal definition of the term “natural” for various categories we sell, which is true for many other adjectives common in the healthy or sustainable products industry.
These shareholders, acting together, are able to significantly influence all matters requiring shareholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. 33 Table of Contents In addition, certain of our shareholders have entered into a shareholders’ agreement to support each other’s director nominees.
These shareholders, acting together, are able to significantly influence all matters requiring shareholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. In addition, certain of our shareholders have entered into a shareholders’ agreement to support each other’s director nominees.
Our manufacturing partners may have general difficulties in obtaining raw materials, particularly coconut derived products, due to our high quality standards. Our 16 Table of Contents current manufacturing partners operate in the Philippines, Sri Lanka, Malaysia, Thailand, Brazil and Vietnam and source coconuts from owned trees and networks of many independent small farmers.
Our manufacturing partners may have general difficulties in obtaining raw materials, particularly coconut derived products, due to our high quality standards. Our current manufacturing partners operate in the Philippines, Sri Lanka, Malaysia, Thailand, Brazil and Vietnam and source coconuts from owned trees and networks of many independent small farmers.
Security incidents compromising the confidentiality, integrity, and availability of our sensitive information and our systems and those of our third party vendors and business partners could result from cyber-attacks, computer malware, viruses, social engineering (including spear phishing and ransomware attacks), supply chain attacks, efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations, errors or malfeasance of our personnel, and security vulnerabilities in the software or systems on which we, or our third party vendors or business partners, rely.
Security incidents compromising the confidentiality, integrity, and availability of our sensitive information and our systems and those of our third party vendors and business partners could result from cyber-attacks, computer malware, viruses, social engineering (including spear phishing and ransomware attacks), supply chain attacks, efforts by individuals or groups of hackers and sophisticated organizations, including state-sponsored organizations, errors or malfeasance of our personnel, including human error and bad actors, and security vulnerabilities in the software or systems on which we, or our third party vendors or business partners, rely.
The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary 29 Table of Contents damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial position, cash flows or results of operations.
The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could have a material adverse effect on our financial position, cash flows or results of operations.
If we are unsuccessful in meeting our objectives with respect to new or improved products, our business, financial condition, results of operations and cash flow may be adversely affected. 20 Table of Contents Consumer preferences for our products are difficult to predict and may change, and, if we are unable to respond quickly to new trends, our business may be adversely affected.
If we are unsuccessful in meeting our objectives with respect to new or improved products, our business, financial condition, results of operations and cash flow may be adversely affected. Consumer preferences for our products are difficult to predict and may change, and, if we are unable to respond quickly to new trends, our business may be adversely affected.
Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our manufacturing and co-packing partners, our distributors or our retail customers, depending on the circumstances, to conduct a recall in accordance with United States Food and Drug Administration, or the FDA, regulations and comparable foreign laws and regulations, as well as other regulations and laws in the other jurisdictions in which we operate.
Furthermore, any instances of food contamination or regulatory noncompliance, whether or not caused by our actions, could compel us, our manufacturing and co-packing partners, our distributors or our retail customers, depending on the circumstances, to conduct a recall in accordance with the FDA, regulations and comparable foreign laws and regulations, as well as other regulations and laws in the other jurisdictions in which we operate.
We rely on independent certification for a number of our products. We rely on various independent third-party certifications, such as certifications of our products as “organic”, to differentiate our products and company from others. We must comply with the requirements of independent organizations or certification authorities in order to label our products as certified organic.
We rely on various independent third-party certifications, such as certifications of our products as “organic”, to differentiate our products and Company from others. We must comply with the requirements of independent organizations or certification authorities in order to label our products as certified organic.
These laws and regulations relate to a number of aspects of our business, including but not limited to the activities of our suppliers, distributors and other partners. Similar laws in non-U.S. jurisdictions, such as EU sanctions or the U.K.
These laws and 25 Table of Contents regulations relate to a number of aspects of our business, including but not limited to the activities of our suppliers, distributors and other partners. Similar laws in non-U.S. jurisdictions, such as EU sanctions or the U.K.
Further, if we fail to ensure the efficiency and quality of new production processes and products before they launch, we may experience uneven product quality and supply, which could negatively impact consumer acceptance of new products and negatively impact our sales and brand reputation.
Further, if we fail to ensure the efficiency and quality of new production processes and products before they launch, we may experience uneven product quality and supply, which could negatively impact consumer acceptance of new products 18 Table of Contents and negatively impact our sales and brand reputation.
We note that there is uncertainty as 35 Table of Contents to whether a court would enforce the choice of forum provision with respect to claims under the federal securities laws, and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
We note that there is uncertainty as to whether a court would enforce the choice of forum provision with respect to claims under the federal securities laws, and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Any material negative change to consumer demand for our products or coconut water generally or failure to grow the coconut water category could materially and adversely affect our business, financial 13 Table of Contents condition, results of operations and cash flows.
Any material negative change to consumer demand for our products or coconut water generally or failure to grow the coconut water category could materially and adversely affect our business, financial condition, results of operations and cash flows.
In addition, if any such event resulted in access, disclosure or other loss or unauthorized use of information or data, such as customers’ and suppliers’ information, private information about employees and financial and strategic information about us and our business partners, whether actual or perceived, could result in legal claims or proceedings, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personally identifiable information, including federal, state and foreign data protection and privacy regulations, violations of which could result in significant penalties and fines.
In addition, if any such event resulted in access, disclosure or other loss or unauthorized use of information or data, such as customers’ and suppliers’ information, private information about employees and financial and strategic information about us and our business partners, whether actual or perceived, it could result in legal claims or proceedings, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personal information, including federal, state and foreign data protection and privacy laws and regulations, violations of which could result in significant penalties, fines, costs and litigation.
Nevertheless, trade secrets are difficult to protect. Although we attempt to protect our trade secrets, our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not provide an adequate remedy in the event of unauthorized disclosure of such information.
Although we attempt to protect our trade secrets, our confidentiality agreements may not effectively prevent disclosure of our proprietary information and may not provide an adequate remedy in the event of unauthorized disclosure of such information.
Any increase in transportation costs (including increases in fuel costs), increased shipping costs, increased warehouse costs, issues with overseas shipments or port or supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, decreased warehouse availability and unexpected delivery interruptions or delays may increase the cost of, and adversely impact, our logistics, and our ability to provide quality and timely service to our distributor or retail-direct customers.
Any increase in transportation costs (including 13 Table of Contents increases in fuel costs), increased shipping costs or shipping transit times, increased warehouse costs, issues with overseas shipments or port or supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure, decreased warehouse availability including due to labor shortages, and unexpected delivery interruptions or delays may increase the cost of, and adversely impact, our logistics, and our ability to provide quality and timely service to our distributor or retail-direct customers.
Bribery Act) and data privacy laws and regulations (including the EU’s General Data Protection Regulation); • the imposition of differing labor and employment laws and standards; • significant differences in regulations across international markets, including new regulations that could impact requirements applicable to our products and the regulatory impacts on a globally integrated supply chain; • the bankruptcy or default in payment by our international customers and/or import partners and the potential inability to recoup damages from such defaults, as well as subsequent termination of existing importation agreements; • the difficulty and costs of designing and implementing an effective control environment across diverse regions and employee bases; • the complexities of monitoring and managing compliance with a broad array of international laws related to data privacy and data protection, as well as cross-border transfers of personal data; 24 Table of Contents • the difficulty and costs of maintaining effective data security; • global cost and pricing pressures; • complex supply chain and shipping logistical challenges; and • unfavorable and/or changing foreign tax treaties and policies.
Bribery Act) and data privacy laws and regulations (including the EU’s General Data Protection Regulation); • the imposition of differing labor and employment laws and standards; • significant differences in regulations across international markets, including new regulations that could impact requirements applicable to our products and the regulatory impacts on a globally integrated supply chain; 21 Table of Contents • the varying trademark laws and regulations, or difficulties with international intellectual property protection and problems created by counterfeiting; • the bankruptcy or default in payment by our international customers and/or import partners and the potential inability to recoup damages from such defaults, as well as subsequent termination of existing importation agreements; • the difficulty and costs of designing and implementing an effective control environment across diverse regions and employee bases; • the complexities of monitoring and managing compliance with a broad array of international laws related to data privacy and data protection, as well as cross-border transfers of personal data; • the difficulty and costs of maintaining effective data security and meeting different data security regulations; • global cost and pricing pressures; • complex supply chain and shipping logistical challenges; and • unfavorable and/or changing foreign tax treaties and policies.
Our products and operations and those of our manufacturing and co-packing partners are subject to oversight by multiple U.S. and international regulatory agencies including the USDA, the FDA, the FTC, the Environmental Protection Agency (EPA), the European Commission and the U.K.’s Food Standards Agency, Health and Safety Executive, Environment Agency, Environmental Health Officers and Trading Standards Officers and the Singapore Food Agency, among others.
Our products and operations and those of our manufacturing and co-packing partners are subject to oversight by multiple U.S. and international regulatory agencies including the USDA, the FDA, the FTC, the Environmental Protection 23 Table of Contents Agency (“EPA”), the European Commission and the U.K.’s Food Standards Agency, Health and Safety Executive, Environment Agency, Environmental Health Officers and Trading Standards Officers and the Singapore Food Agency, among others.
We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on timely arrival of product from ports or co-packers, availability of outbound and inbound shipping, real-time tracking information on our products, and effective operations at the warehouses/distribution centers and the ports through which our product flows.
We depend in large part on the orderly operation of this receiving and distribution process from these third party partners, which depends, in turn, on timely arrival of product from ports or co-packers, availability of outbound and inbound shipping, real-time tracking information on our products location, and effective operations at the warehouses or distribution centers and the ports through which our product flows.
It is possible that customers may contest their contractual obligations to us, whether under bankruptcy laws or otherwise. Further, we may have to negotiate significant discounts and/or extended financing terms with these customers in such a situation.
It is possible that customers may contest their contractual obligations to us, whether under bankruptcy laws or otherwise. 16 Table of Contents Further, we may have to negotiate significant discounts and/or extended financing terms with these customers in such a situation.
Any new restrictions, such as requiring employees to work remotely, imposing travel restrictions, reducing operating hours, imposing operating restrictions and temporarily closing businesses could have an adverse impact on global economic conditions and impact consumer confidence and spending which might have a material adverse impact on some of our customers and could impact the demand for our products and ultimately our financial condition.
Any new restrictions related to such matters, such as requiring employees to work remotely, imposing travel restrictions, reducing operating hours, imposing operating restrictions and temporarily closing businesses could have an adverse impact on global economic conditions and impact consumer confidence and spending which might have a material adverse impact on our supply chain, or on some of our customers and could impact the availability and demand for our products and ultimately our financial condition.
Our coconut water accounted for approximately 91% of our revenue for the year ended December 31, 2022. We believe that sales of our coconut water will continue to constitute a significant portion of our revenue, income and cash flow for the foreseeable future.
Our coconut water accounted for approximately 92% of our revenue for the year ended December 31, 2023. We believe that sales of our coconut water will continue to constitute a significant portion of our revenue, income and cash flow for the foreseeable future.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes.
Any such breach, attack, virus or other event could result in additional financial losses, costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, civil or criminal penalties, operational changes or other response measures, loss of consumer confidence in our security measures, and negative publicity that could adversely affect our business, reputation, financial condition, results of operations and cash flows.
Any data security breach, attack, virus or other incident could result in additional financial losses, costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, civil or criminal 27 Table of Contents penalties, operational changes or other response measures, loss of consumer confidence in our security measures, and negative publicity that could adversely affect our business, reputation, financial condition, results of operations and cash flows.
Failure by us, our suppliers or our manufacturing and co-packing partners to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our or our suppliers or manufacturing and co-packing partners’ operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, untitled letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs or loss of revenue, resulting in a material effect on our business, financial condition, results of operations and cash flows.The regulations to which we are subject are complex and have tended to become more stringent over time.
Failure by us, our suppliers or our manufacturing and co-packing partners to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our or our suppliers or manufacturing and co-packing partners’ operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, untitled letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs or loss of revenue, resulting in a material effect on our business, financial condition, results of operations and cash flows.
Additionally, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure you that our insurance will be adequate to cover costs and liabilities related to these incidents.
Additionally, while we maintain cyber insurance that may help provide coverage for these types of incidents, we cannot assure ensure that our insurance will be adequate to cover costs and liabilities related to an incident.
Based upon our shares of common stock outstanding as of December 31, 2022, our executive officers, directors and shareholders who own more than 5% of our outstanding share capital, in the aggregate, beneficially own over 50% of our outstanding shares of common stock.
Based upon our shares of common stock outstanding as of December 31, 2023, our executive officers, directors and shareholders who own more than 5% of our outstanding share capital, in the aggregate, beneficially own over 30% of our outstanding shares of common stock.
We are subject to numerous state, federal and international laws, rules and regulations that govern the collection, use and protection of personally identifiable information.
We are subject to numerous state, federal and international laws, rules and regulations that govern the collection, use and protection of personal information.
We may be unable or slow to realize the benefits we expect from actions taken to benefit our stakeholders, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows, which in turn could cause our stock price to decline.
We may be unable or slow to realize the benefits we expect from actions taken to benefit our stakeholders, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows, which in turn could cause our stock price to decline. Item 1B. Unresolved Staff Comments. None.
The potential impact of COVID-19 or other pandemic on any of our production or logistics providers could include, but is not limited to, problems with their respective businesses, finances, labor matters (including illness or absenteeism in workforce or closure due to positive COVID-19 testing), ability to import and secure ingredients and packaging, product quality issues, costs, production, insurance and reputation.
The potential impact of a pandemic on any of our production or logistics providers could include, but is not limited to, problems with their respective businesses, finances, labor matters (including illness or absenteeism in workforce or closure), ability to import and secure ingredients and packaging, product quality issues, costs, production, insurance and reputation.
In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements. If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted. Item 1B. Unresolved Staff Comments. None.
In addition, this emphasis on environmental, social and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements. If we fail to comply with new laws, regulations or reporting requirements, our reputation and business could be adversely impacted.
Cybercrime and hacking techniques are constantly evolving. We and/or our third-party vendors and/or 30 Table of Contents business partners may be unable to anticipate attempted security breaches, react in a timely manner, or implement adequate preventative measures, particularly given the increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts.
Cybercrime and hacking techniques are constantly evolving. We and/or our third-party vendors, service providers, and/or business partners may be unable to stop all attempted security breaches, react in a timely manner, or implement adequate preventative measures, particularly given the increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts.
Accordingly, any factor adversely affecting demand or sales of our coconut water or coconut water generally could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Accordingly, any factor adversely affecting demand or sales of our coconut water or coconut water generally or a negative decision by a major retailer, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
As a Delaware public benefit corporation, our focus on a specific public benefit purpose and producing positive effect for society may negatively impact our financial performance.
As a Delaware public benefit corporation, our focus on a specific public benefit purpose and producing positive effect for society may negatively impact our financial performance or increase legal risk.
Our cash flows and results of operations may be negatively affected if we are not successful in forecasting and managing our inventory at appropriate levels for our demand. Efficient inventory management is a key component of our success and profitability.
Our cash flows and results of operations may be negatively affected if we are not successful in predicting demand and managing our inventory at appropriate levels for the demand that we experience. Efficient inventory planning and management is a key component of our success and profitability.
We anticipate that these threats will continue to grow in scope and complexity over time and such incidents may occur in the future, and could result in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of the sensitive, proprietary and confidential information (including personally identifiable information) that we handle.
We anticipate that these threats will continue to grow in scope and complexity over time and such incidents may occur in the future, and could result in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of the sensitive, proprietary and confidential information (including personal information) that we collect, receive, and process.
The manufacture, marketing and distribution of food products is highly regulated.
The manufacturing, marketing and distribution of food products is highly regulated.
Additionally, events beyond our control, such as disruptions in operations due to natural or man-made disasters, inclement weather conditions, accidents, system failures, power outages, political instability, physical or cyber break-ins, server failure, work stoppages, slowdowns or strikes by employees, acts of terrorism, the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics (such as the outbreak of the COVID-19 pandemic and its potential impact on supply chain and our financial results) and other unforeseen or catastrophic events, could damage the facilities of our warehousing and fulfillment service providers or render them inoperable, or effect the flow of product to and from these centers, or impact our ability to manage our partners, making it difficult or impossible for us to process customer or consumer orders for an extended period of time.
Disruptions in operations due to natural or man-made disasters, inclement weather conditions, accidents, system failures, power outages, political instability, physical or cyber break-ins, server failure, work stoppages, slowdowns or strikes by employees, acts of terrorism, the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics and other unforeseen or catastrophic events could damage the facilities of our supply chain partners or render them inoperable, effect the flow of product to and from these centers, or impact our ability to manage our partners, making it difficult or impossible for us to process customer or consumer orders for an extended period of time.
If we are unable to manage our supply chain effectively and ensure that our products are available to meet consumer demand, our sales might decrease, and our business, financial condition, results of operations and cash flows may be materially adversely affected.
If we are unable to manage our supply chain effectively and ensure that our products are available to meet consumer demand, we may not have the ability to pursue our growth strategy, our sales might decrease, and our business, financial condition, results of operations and cash flows may be materially adversely affected.
Failure to introduce new products or successfully improve existing products may adversely affect our ability to continue to grow and may cause us to lose market share and sales.
Failure to introduce new products or successfully improve existing products or adopt new technology or marketing practices effectively, may adversely affect our ability to continue to grow and may cause us to lose market share and sales.
As discussed above under, “If we encounter problems with our supply chain and continued inflation, our costs may increase and our or our customers’ ability to deliver our products to market could be adversely affected,” our systems and those of our third party vendors and business partners may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war, including the developing conflict between Russia and Ukraine, or terrorist attacks, fire, flood, global pandemics and natural disasters; our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages.
As discussed above under, “If we encounter problems or interruptions with our supply chain, our costs may increase and our or our customers’ ability to deliver our products to market could be adversely affected, impacting our 26 Table of Contents business and profitability,” our systems and those of our third party vendors, service providers, and business partners may be subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, network failures, acts of war, or terrorist attacks, fire, flood, global pandemics and natural disasters; our existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages.
Our trademarks are valuable assets that reinforce our brands and differentiate our products. We cannot assure you that we will be able to register and/or enforce our trademarks in all jurisdictions in which we do business, as the registrability of trademarks and the scope of trademark protection varies from jurisdiction to jurisdiction.
We cannot assure you that we will be able to register and/or enforce our trademarks in all jurisdictions in which we do business, as the registrability of trademarks and the scope of trademark protection varies from jurisdiction to jurisdiction.
Risks Related to Our Existence as a Public Benefit Corporation and Other Environmental, Sustainability and Social Initiatives We operate as a Delaware public benefit corporation, and we cannot provide any assurance that we will achieve our public benefit purpose.
Risks Related to Our Existence as a Public Benefit Corporation We operate as a Delaware public benefit corporation, and we cannot provide any assurance that we will achieve our public benefit purpose.
As we rely on a number of our third party vendors and business partners, we are exposed to security risks outside of our direct control, and our ability to monitor these third-party vendors’ and business partners’ data security is limited.
As we rely on a number of our third party vendors and business partners, we are exposed to certain security risks outside of our direct control resulting from our engagements with these parties, and our ability to directly monitor these third-party vendors’ and business partners’ data security is limited.
We cannot assure you that we will have adequate resources to enforce our intellectual property rights, as such litigation can be costly, time-consuming, and distracting to management.
We cannot assure you that we will have adequate resources to enforce our intellectual property rights, as such enforcement and potential litigation can be costly, time-consuming, and distracting to the Company’s operations.
We are also subject to the risk of overly relying upon a few large customers (whether serviced directly or through distributors) in a particular market due to the concentration that exists in retail ownership in our key markets.
We are also subject to the risk of overly relying upon a few large customers (whether serviced directly or through distributors) in a particular market due to the concentration that exists in retail ownership in our key markets and our significant private label business with several large retailers.
Pandemics, epidemics or disease outbreaks, such as the COVID-19 pandemic, may disrupt our business, including, among other things, consumption and trade patterns, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
Pandemics, epidemics, disease outbreaks or global trade disruption may disrupt our business, including, among other things, consumption and trade patterns, and our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
If we encounter problems with our supply chain and continued inflation, our costs may increase and our or our customers’ ability to deliver our products to market could be adversely affected.
If we encounter problems or interruptions with our supply chain, our costs may increase and our or our customers’ ability to deliver our products to market could be adversely affected, impacting our business and profitability.
The cost of investigating, mitigating and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators, partners and others can be significant and the risk of legal claims in the event of a security breach is increasing. For example, the CCPA creates a private right of action for certain data breaches.
The cost of investigating, mitigating and responding to potential security breaches and complying with applicable breach notification obligations to individuals, regulators, partners and others can be significant and the risk of legal claims in the event of a security breach is increasing.
These risks include: • restrictions on the transfer of funds to and from foreign countries, including potentially negative tax consequences; • unfavorable changes in tariffs, quotas, trade barriers or other export or import restrictions, including navigating the changing relationships between countries such as the United States and China and between the United Kingdom and the European Union; • unfavorable foreign exchange controls and variation in currency exchange rates; • increased exposure to general international market and economic conditions; • political, economic, environmental, health-related or social uncertainty and volatility; • the potential for substantial penalties, litigation and reputational risk related to violations of a wide variety of laws, treaties and regulations, including food and beverage regulations, anti-corruption regulations (including, but not limited to, the U.S.
These risks include: • facing difficulties, such as legal, regulatory, personnel, technological, and consumer preference variation risks, as we operate in countries where we have limited experience or presence, or expand our operations into countries in which we have no prior operating history; • restrictions on the transfer of funds to and from foreign countries, including potentially negative tax consequences; • unfavorable changes in tariffs, quotas, trade barriers or other export or import restrictions, including navigating the changing relationships between countries such as the United States and China and between the United Kingdom and the European Union; • unfavorable foreign exchange controls and variation in currency exchange rates; • exposure to foreign currency exchange rate fluctuations; • increased exposure to general international market and economic conditions and uncertainty; • political, economic, environmental, health-related or social uncertainty and volatility; • the potential for substantial penalties, litigation and reputational risk related to violations of a wide variety of laws, treaties and regulations, including food and beverage regulations, anti-corruption regulations (including, but not limited to, the U.S.
Moreover, we or our third-party vendors or business partners may be more vulnerable to such attacks in remote work environments, which have increased in response to the COVID-19 pandemic.
Moreover, we or our third-party vendors or business partners may be more vulnerable to such attacks in remote work environments, which have increased in recent years.
We could suffer product inventory losses or markdowns and lost revenue in the event of the loss or shutdown of a major manufacturing partner, a local raw materials supplier of a manufacturing partner, or a co-packing partner, due to COVID-19 or other pandemic conditions in their respective locales.
We could suffer product inventory losses or markdowns and lost revenue in the event of the loss or shutdown of a major manufacturing partner, a local raw materials supplier of a manufacturing partner, or a co-packing partner, due to pandemic conditions in their respective locales. Any interruptions to logistics could impact their ability to operate and ship us product.
To be successful, we must maintain sufficient inventory levels to meet our customers’ demands without allowing those levels to increase to such an extent that the costs of holding the products unduly impact our financial results or create obsolete inventory.
To be successful, we must maintain sufficient inventory levels to meet our customers’ demands without allowing those levels to increase to such an extent that the costs of holding the products unduly impact our financial results or create obsolete inventory, while ensuring we have adequate inventory to fulfill their needs, if their demand changes unexpectedly.
The 2020 Credit Facility contains, and agreements governing any future indebtedness may contain, a number of covenants which put some limits on our ability to, among other things: • sell assets; • engage in mergers, acquisitions, and other business combinations; • declare dividends or redeem or repurchase capital stock if it would result in an event of default; • incur, assume, or permit to exist additional indebtedness or guarantees; • make loans and investments; • incur liens or give guarantees; and • enter into transactions with affiliates.
The 2020 Credit Facility contains, and agreements governing any future indebtedness may contain, a number of covenants which put some limits on our ability to, among other things: • sell, transfer or dispose of assets; • engage in mergers, acquisitions, and other business combinations; • make dividends and distributions on, or repurchases of, equity; • incur, assume, or permit to exist additional indebtedness; • make loans, advances or investments, or give guarantees; • incur liens; and • enter into transactions with affiliates.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, we leased office facilities totaling approximately 29,400 square feet in the United States, Singapore and London, with the Singapore and London facilities primarily supporting our International segment.
Biggest changeAs of December 31, 2023, we leased office facilities totaling approximately 29,400 square feet in the United States, Singapore and London, with the Singapore and London facilities primarily supporting our International segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNot Applicable. 39 Table of Contents PART II
Biggest changeNot Applicable. 37 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser The Company did not sell any equity securities during the three months and year ended December 31, 2022 that were not registered under the Securities Act. The Company did not repurchase any of its securities during the three months and year ended December 31, 2022.
Biggest changeRecent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser The Company did not sell any equity securities during the three months and year ended December 31, 2023 that were not registered under the Securities Act.
Dividend Policy We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future.
Dividend Policy We currently intend to retain all available funds and future earnings, if any, for the operation and expansion of our business, and any authorized share repurchases and do not anticipate declaring or paying any dividends in the foreseeable future.
Performance Graph The following graph illustrates the total return from October 22, 2021 through December 31, 2022, for (i) our common stock, (ii) the Russell 2000 Index, (iii) the NASDAQ Composite Index, and (iv) the NASDAQ US Smart Food & Beverage Index.
Performance Graph The following graph illustrates the total return from October 22, 2021 through December 29, 2023, for (i) our common stock, (ii) the Russell 2000 Index, (iii) the NASDAQ Composite Index, and (iv) the NASDAQ US Smart Food & Beverage Index.
The comparisons reflected in the graph are not intended to forecast the future performance of our stock and may not be indicative of our future performance. Item 6. [Reserved] 40 Table of Contents
The comparisons reflected in the graph are not intended to forecast the future performance of our stock and may not be indicative of our future performance. Item 6. [Reserved]
The graph assumes that $100 was invested on October 22, 2021 in our common stock, the Russell 2000 Index, the NASDAQ Composite Index, and the NASDAQ US Smart Food & Beverage Index, and that any dividends were reinvested.
The graph assumes that $100 was invested on October 22, 2021 in our common stock, the Russell 2000 1 38 Table of Contents Index, the NASDAQ Composite Index, and the NASDAQ US Smart Food & Beverage Index, and that any dividends were reinvested.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our stock currently trades on The Nasdaq Stock Market LLC under the ticker symbol "COCO". Holders As of March 10, 2023, there were 53 holders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our stock currently trades on The Nasdaq Stock Market LLC under the ticker symbol "COCO". Holders As of February 26, 2024, there were 40 holders of record of our common stock.
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The following table provides information regarding repurchases of our common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May be Purchased Under the Plans or Programs (In millions) October 1, 2023 - October 31, 2023 — $— — $— November 1, 2023 - November 30, 2023 — $— — $— December 1, 2023 - December 31, 2023 30,000 $25.78 30,000 $39.2 ( 1 ) On October 30, 2023, the Company's Board of Directors approved a share repurchase program ("Program") authorizing the Company to repurchase up to $40 million of Common Stock.
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Shares of Common Stock may be repurchased under the Program from time to time through open market purchases, block trades, private transactions or accelerated or other structured share repurchase programs. To the extent not retired, shares of Common Stock repurchased under the Program will be placed in the Company's treasury shares.
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The extent to which the Company repurchases shares of Common Stock, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company. The Program has no time limits, and may be suspended or discontinued at any time.
Added
During the year ended December 31, 2023, the Company repurchased 30,000 shares at a cost of $0.8 million under this program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021, respectively: 45 Table of Contents Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Net sales $ 427,787 $ 379,513 $ 48,274 12.7 % Cost of goods sold 324,426 266,365 58,061 21.8 % Gross profit 103,361 113,148 (9,787) (8.6 %) Operating expenses Selling, general and administrative 100,306 88,559 11,747 13.3 % Total operating expenses 100,306 88,559 11,747 13.3 % Income from operations 3,055 24,589 (21,534) (87.6 %) Other income (expense) Unrealized gain (loss) on derivative instrument 6,606 2,093 4,513 n/m Foreign currency gain (loss) 1,387 (2,088) 3,475 n/m (Loss) on extinguishment of debt — (132) 132 n/m Interest income 51 127 (76) (59.6 %) Interest expense (258) (360) 102 (28.3 %) Total other (expense) 7,786 (360) 8,146 (2262.8 %) Income before income taxes 10,841 24,229 (13,388) (55.3 %) Provision for income taxes (3,027) (5,237) 2,210 (42.2 %) Net income $ 7,814 $ 18,992 $ (11,178) (58.9 %) Net income attributable to common stockholders $ 7,814 $ 19,015 $ (11,201) (58.9 %) n/m—represents percentage calculated not being meaningful Net Sales The following table provides a comparative summary of the Company’s net sales by operating segment and product category: Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Americas segment Vita Coco Coconut Water $ 275,964 $ 231,858 $ 44,106 19.0 % Private Label 88,173 80,639 7,534 9.3 % Other 9,485 11,394 (1,909) (16.8) % Subtotal $ 373,622 $ 323,891 $ 49,731 15.4 % International segment Vita Coco Coconut Water $ 38,570 $ 34,639 $ 3,931 11.3 % Private Label 12,855 14,007 (1,152) (8.2) % Other 2,740 6,976 (4,236) (60.7) % Subtotal $ 54,165 $ 55,622 $ (1,457) (2.6) % Total net sales $ 427,787 $ 379,513 $ 48,274 12.7 % Volume in Case Equivalent 46 Table of Contents The primary driver of the consolidated net sales increase of 12.7% was increased case equivalent volumes.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022, respectively: Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Net sales $ 493,612 $ 427,787 $ 65,825 15.4 % Cost of goods sold 312,883 324,426 (11,543) (3.6 %) Gross profit 180,729 103,361 77,368 74.9 % Operating expenses Selling, general and administrative 124,236 100,306 23,930 23.9 % Total operating expenses 124,236 100,306 23,930 23.9 % Income from operations 56,493 3,055 53,438 n/m Other income (expense) Unrealized gain (loss) on derivative instrument (872) 6,606 (7,478) (113.2 %) Foreign currency gain (loss) (251) 1,387 (1,638) (118.1 %) Interest income 2,581 51 2,530 n/m Interest expense (31) (258) 227 (88.0 %) Total other (expense) 1,427 7,786 (6,359) (81.7 %) Income before income taxes 57,920 10,841 47,079 434.3 % Provision for income taxes (11,291) (3,027) (8,264) 273.0 % Net income $ 46,629 $ 7,814 $ 38,815 496.7 % n/m—represents percentage calculated not being meaningful Net Sales The following table provides a comparative summary of the Company’s net sales by operating segment and product category: 43 Table of Contents Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Americas segment Vita Coco Coconut Water $ 317,221 $ 275,964 $ 41,257 15.0 % Private Label 103,166 88,173 14,993 17.0 % Other 9,858 9,485 373 3.9 % Subtotal $ 430,245 $ 373,622 $ 56,623 15.2 % International segment Vita Coco Coconut Water $ 41,829 $ 38,570 $ 3,259 8.4 % Private Label 18,713 12,855 5,858 45.6 % Other 2,825 2,740 85 3.1 % Subtotal $ 63,367 $ 54,165 $ 9,202 17.0 % Total net sales $ 493,612 $ 427,787 $ 65,825 15.4 % The primary driver of the consolidated net sales increase of 15.4% was increased case equivalents ("CE") volume growth of 13.4%.
General and administrative expense 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.
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.
Operating Segments We operate in two reporting segments: • Americas —The Americas segment is comprised of our operations in the Americas region, primarily in the United States and Canada. • International —The International segment is comprised of our operations primarily in Europe, the Middle East, Africa, and the Asia Pacific regions.
Operating Segments We operate in two reporting segments: • Americas —The Americas segment is comprised of our operations in the Americas region, primarily in the United States and Canada. • International —The International segment is comprised of our operations primarily in Europe, the Middle East, and the Asia Pacific regions.
On October 27, 2021, the Company repaid the outstanding balance on the 2021 Term Loan using the net proceeds from the IPO. Vehicle Loans We periodically enter into vehicle loans. Interest rate on these vehicle loans range from 4.56% to 5.68%. The outstanding balance on the vehicle loans as of December 31, 2022 was less than $0.1 million.
On October 27, 2021, the Company repaid the outstanding balance on the 2021 Term Loan using the net proceeds from the IPO. Vehicle Loans We periodically enter into vehicle loans. Interest rate on these vehicle loans range from 4.56% to 5.68%. The outstanding balance on the vehicle loans as of December 31, 2023 was less than $0.1 million.
Contractual Obligations and Commitments We have contractual obligations to repay indebtedness and required interest payments and unused commitment fees under our Revolving Facility and vehicle loans. As of December 31, 2022, we had no outstanding balance on the Revolving Facility. Any future outstanding balances on the Revolving Facility will be required to be repaid by May 2026.
Contractual Obligations and Commitments We have contractual obligations to repay indebtedness and required interest payments and unused commitment fees under our Revolving Facility and vehicle loans. As of December 31, 2023, we had no outstanding balance on the Revolving Facility. Any future outstanding balances on the Revolving Facility will be required to be repaid by May 2026.
Our asset-lite operating model has historically provided us with a low cost, nimble and scalable supply chain, which has allowed us to adapt to changes in the market or consumer preferences while also efficiently introducing new products across our platform.
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.
As of December 31, 2022, we also have inventory purchase commitments, which include any raw material or packaging commitments with our suppliers to secure our needs for future orders, which are generally due to be paid within one year.
As of December 31, 2023, we also have inventory purchase commitments, which include any raw material or packaging commitments with our suppliers to secure our needs for future orders, which are generally due to be paid within one year.
We also have production purchase commitments from our manufacturers based on our production plans, forecasts and contracts, that might result in costs if we were to reduce our purchases significantly in 2023 or for some relationships, in future years.
We also have production purchase commitments from our manufacturers based on our production plans, forecasts and contracts, that might result in costs if we were to reduce our purchases significantly in 2024 or for some relationships, in future years.
Our sales are predominantly made to distributors or to retailers for final sale to consumers through retail channels, which includes sales to traditional brick and mortar retailers, who may also resell our 43 Table of Contents products through their own online platforms. Our revenue is recognized net of allowances for returns, discounts, credits and any taxes collected from consumers.
Our sales are predominantly made to distributors or to retailers for final sale to consumers through retail channels, which includes sales to traditional brick and mortar retailers, who may also resell our products through their own online platforms. Our revenue is recognized net of allowances for returns, discounts, credits and any taxes collected from consumers.
The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value. For the years ended December 31, 2022 and 2021, there were no impairments recorded.
The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value. For the years ended December 31, 2023 and 2022, there were no impairments recorded.
We maintain in-house research and development capabilities as well as strong third-party relationships with flavor development houses, and we monitor the latest advancements in clean ingredients to support continued innovation and learning.
We maintain in-house research and development capabilities as well as strong third-party relationships with flavor development houses, and we monitor the latest advancements to support continued innovation and learning.
Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.
Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.
In addition, our scale of sourcing has allowed us to add volume and service retailers more reliably, and we believe that our global position as one of the largest and highest quality coconut water procurers in the world protects our customer and supplier relationships.
In addition, our scale of sourcing has allowed us to add capacity as needed and service retailers more reliably, and we believe that our global position as one of the largest and highest quality coconut water procurers in the world protects our customer and supplier relationships.
Borrowings under the Term Facility bear interest at the same rate as the Revolving Facility. We were required to repay the principal on the Term Loans in quarterly installments, commencing 52 Table of Contents on October 1, 2021, through maturity date of May 21, 2026.
Borrowings under the Term Facility bear interest at the same rate as the Revolving Facility. We were required to repay the principal on the Term Loans in quarterly installments, commencing on October 1, 2021, through maturity date of May 21, 2026.
In performing the qualitative assessment, the Company reviews factors both specific to the reporting units 56 Table of Contents and to the Company as a whole, such as financial performance, macroeconomic conditions, industry and market considerations, and the fair value of each reporting unit at the last valuation date.
In performing the qualitative assessment, the Company reviews factors both specific to the reporting units and to the Company as a whole, such as financial performance, macroeconomic conditions, industry and market considerations, and the fair value of each reporting unit at the last valuation date.
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements elsewhere within this Annual Report on Form 10-K .
Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements elsewhere within this Annual Report on Form 10-K. 52 Table of Contents
We will cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (ii) the last day of our fiscal year following the fifth anniversary of the date of the closing of this offering, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Emerging growth company status ceases on the date that is the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (ii) the last day of our fiscal year following the fifth anniversary of the date of the closing of this offering, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Except as otherwise noted, all references to 2022 refer to the year ended December 31, 2022, all references to 2021 refer to the year ended December 31, 2021 and all references to 2020, refer to the year ended December 31, 2020..
Except as otherwise noted, all references to 2023 refer to the year ended December 31, 2023, all references to 2022 refer to the year ended December 31, 2022 and all references to 2021, refer to the year ended December 31, 2021.
The Company’s performance obligations are satisfied at that time. The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that would meet the criteria for a distinct good or service that could cause revenue to be allocated or adjusted over time.
The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that would meet the criteria for a distinct good or service that could cause revenue to be allocated or adjusted over time.
Considering recent market conditions and the continued result of the ongoing COVID-19 pandemic, we have reevaluated our operating cash flows and cash requirements and believe that current cash, cash equivalents, future cash flows from operating activities and cash available under our 2020 Credit Facility will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the consolidated financial statements included herein and the foreseeable future.
Considering recent market conditions and our business assumptions, we have reevaluated our operating cash flows and cash requirements and believe that current cash, cash equivalents, future cash flows from operating activities and cash available under our 2020 Credit Facility will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the condensed consolidated financial statements included herein and the foreseeable future.
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, 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).
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 42 Table of Contents 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).
We lease certain assets under noncancelable operating leases, which expire through 2025. The leases relate primarily to office space in addition to machinery and equipment. Future minimum commitments under these leases are $2.8 million as of December 31, 2022.
We lease certain assets under noncancelable operating leases, which expire through 2025. The leases relate primarily to office space in addition to machinery and equipment. Future minimum commitments under these leases are $1.7 million as of December 31, 2023.
During the year ended December 31, 2021, we recorded unrealized gains of $2.1 million relating to outstanding derivative instruments for forward foreign currency exchange contracts. All forward foreign currency exchange contracts were entered to hedge some of our exposures to the British Pound, Canadian Dollar, Brazilian Real, Malaysian Ringgit, European Union Euro, and Thai Baht.
During the year ended December 31, 2022, we recorded an unrealized gain of $6.6 million relating to outstanding derivative instruments for forward foreign currency exchange contracts. All forward foreign currency exchange contracts were entered to hedge some of our exposures to the British pound, Canadian dollar, Brazilian real, Malaysian ringgit, European Union euro, and Thai baht.
Management uses gross profit and gross margin as key measures in making financial, operating and planning decisions and in evaluating our performance. Operating Expenses Selling, General and Administrative Expenses Selling, general and administrative expenses include marketing expenses, sales promotion expenses, and general and administrative expenses.
Management uses gross profit and gross margin as key measures in making financial, operating and planning decisions and in evaluating our performance. Operating Expenses Selling, General and Administrative Expenses Selling, general and administrative expenses ("SG&A") include marketing expenses, promotional expenses, and general and administrative expenses.
Ability to Generate Incremental Volume Through Product Innovation The beverage industry is subject to shifting consumer preferences which presents opportunities for new beverage occasions, new tastes and new functional benefits. Our future success is therefore partially dependent on our ability to identify these trends and develop products and brands that effectively meet those needs.
Ability to Generate Growth Through Product Innovation 40 Table of Contents The beverage industry is subject to shifting consumer preferences which present opportunities for new beverage occasions, tastes and functional benefits. Our future success is therefore partially dependent on our ability to identify these trends and develop products and brands that effectively meet those needs.
We must make assumptions and judgments to estimate the amount of valuation allowances to be recorded against our deferred tax assets, which take into account current tax laws and estimates of the amount of future taxable income, if any. Changes to any of the assumptions or judgments could cause our actual income tax obligations to differ from our estimates.
We must make assumptions and judgments to estimate the amount of valuation allowances to be recorded against our deferred tax assets, which take into account current tax laws and estimates of the amount of future taxable income, if any.
Revenue Recognition 53 Table of Contents The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").
Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").
In addition, the Company is currently subject to an unused commitment fee ranging from 0.05% to 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 maturity date on the 2020 Credit Facility is May 12, 2026.
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 effective tax rate for both periods is higher than the US statutory rate of 21% primarily as a result of state income taxes for the US entity and other nondeductible expenses for tax purposes, and is partially offset by lower statutory tax rates in countries outside the US that the Company operates in.
The effective tax rate for the same period in the prior year is higher than the U.S. statutory rate of 21% primarily as a result of state income taxes for the U.S. operations of the 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.
Our ability to successfully improve existing products, or develop, market and sell new products or brands depends on our commitment and continued investment in innovation, and our willingness to try and fail and learn from our experiences.
Our ability to successfully improve existing products, or develop, market and sell new products or brands, or our ability to grow the category or gain branded share, depends on our commitment and continued investment in sales execution, marketing, innovation, and our willingness to try and fail and learn from our experiences.
Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses. During the year ended December 31, 2022, $5.2 million less cash was used as compared to the year ended December 31, 2021.
Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses. During the year ended December 31, 2023, cash from operating activities increased $118 million as compared to the year ended December 31, 2022.
While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing within this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Our actual results may differ from these estimates under different assumptions or conditions. 50 Table of Contents While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing within this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Vita Coco Coconut Water net sales increased by $3.9 million, or 11.3%, to $38.6 million for the year ended December 31, 2022, from $34.6 million for the year ended December 31, 2021.
Vita Coco Coconut Water net sales increased by $3.3 million, or 8.4%, to $41.8 million for the year ended December 31, 2023, from $38.6 million for the year ended December 31, 2022.
The effective combined federal state and foreign tax rate increased to 27.9% from 21.6% for the years ended December 31, 2022, and 2021, respectively.
The effective combined federal, state and foreign tax rate decreased to 19.5% from 27.9% for the years ended December 31, 2023, and 2022, respectively.
We look to adapt our approaches as consumer and retail behavior changes to ensure we remain competitive and visible regardless of channel.
We also continue to expand our business in e-commerce, including our DTC business, and look to adapt our approaches as consumer and retail behavior changes to ensure we remain competitive and visible regardless of channel.
This asset-lite model creates leverage with our partners across our supply chain, allowing us to effectively manage total delivery costs and affording greater ability to shift volume between our suppliers, and thus better manage our supply levels.
This asset-lite model allows us to effectively manage total delivery costs and afford greater ability to shift volume between our suppliers to optimize our supply chain, and better manage our supply levels.
A reconciliation from net income to EBITDA and Adjusted EBITDA is set forth below: Year Ended December 31, 2022 2021 (in thousands) Net income $ 7,814 $ 18,992 Depreciation and amortization 1,901 2,069 Interest income (51) (127) Interest expense 258 360 Income tax expense 3,027 5,237 EBITDA 12,949 26,531 Stock-based compensation (a) 7,384 3,380 Unrealized (gain)/loss on derivative instruments (b) (6,606) (2,093) Foreign currency (gain)/loss (b) (1,387) 2,088 Loss on extinguishment of debt (c) — 132 Impairment of intangible assets (d) 6,714 — Other adjustments (e) 1,240 6,824 Adjusted EBITDA $ 20,294 $ 36,862 50 Table of Contents (a) Non-cash charges related to stock-based compensation, which vary from period to period depending on volume and vesting timing of awards and forfeitures.
A reconciliation from net income to EBITDA and Adjusted EBITDA is set forth below: 47 Table of Contents Year Ended December 31, 2023 2022 (in thousands) Net income $ 46,629 $ 7,814 Depreciation and amortization 660 1,901 Interest income (2,581) (51) Interest expense 31 258 Income tax expense 11,291 3,027 EBITDA 56,030 12,949 Stock-based compensation (a) 9,128 7,384 Unrealized (gain)/loss on derivative instruments (b) 872 (6,606) Foreign currency (gain)/loss (b) 251 (1,387) Secondary Offering Costs (c) 1,525 — Impairment of intangible assets (d) — 6,714 Other adjustments (e) $ 363 $ 1,240 Adjusted EBITDA $ 68,169 $ 20,294 (a) Non-cash charges related to stock-based compensation, which vary from period to period depending on volume and vesting timing of awards and forfeitures.
Vita Coco Coconut Water net sales increased by $44.1 million, or 19.0%, to $276.0 million for the year ended December 31, 2022, from $231.9 million for the year ended December 31, 2021. The increase was primarily driven by a combination of increased CE volume due to higher growth in demand for our brand and benefits from net pricing actions.
Vita Coco Coconut Water net sales increased by $41.3 million, or 15.0%, to $317.2 million for the year ended December 31, 2023, from $276 million for the year ended December 31, 2022. The increase was primarily driven by a combination of increased CE volume growth and benefits from pricing actions.
For our various products in the Vita Coco Coconut Water and Other product categories, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue. The transaction price recognized reflects the consideration the Company expects to receive in exchange for the sale of the product.
Our revenue is recognized net of allowances for returns, discounts, credits and any taxes collected from consumers. For our various products in the Vita Coco Coconut Water and Other product categories, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.
Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce, and foodservice 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.
Our other brands include Runa , a plant-based energy drink inspired from the guayusa plant native to Ecuador, Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink. We also supply Private Label products to key retailers in both the coconut water and coconut oil categories.
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.
The borrowings made after the amendment bear interest at rates based on either 1) a fluctuating rate per annum determined to be the sum of Daily Simple SOFR plus the same spread discussed above or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the same spread discussed.
Starting in December 2022, borrowings on the 2020 Credit Facility bear interest at rates based on either: 1) a fluctuating rate per annum determined to be the sum of Daily Simple Secured Overnight Financing Rate ("SOFR") plus a spread defined in the credit agreement (the "Spread"); or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the Spread.
The following table provides a comparative summary of our volume in Case Equivalents, or CE, by operating segment and product category: Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Americas segment Vita Coco Coconut Water 29,458 25,096 4,362 17.4 % Private Label 9,063 9,292 (229) (2.5) % Other 1,248 1,194 54 4.5 % Subtotal 39,769 35,582 4,187 11.8 % International segment* Vita Coco Coconut Water 5,628 5,056 572 11.3 % Private Label 1,783 1,883 (100) (5.3) % Other 46 231 (185) (80.1) % Subtotal 7,457 7,170 287 4.0 % Total volume (CE) 47,226 42,752 4,474 10.5 % Note: A CE is a standard volume measure used by management which is defined as a case of 12 bottles of 330ml liquid beverages or the same liter volume of oil. * International Other excludes minor volume that is treated as zero CE.
Volume in Case Equivalent The following table provides a comparative summary of our volume in CE, by operating segment and product category: Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Americas segment Vita Coco Coconut Water 33,021 29,458 3,563 12.1 % Private Label 11,298 9,063 2,235 24.7 % Other 923 1,248 (325) (26.0) % Subtotal 45,242 39,769 5,473 13.8 % International segment* Vita Coco Coconut Water 5,783 5,628 155 2.8 % Private Label 2,481 1,783 698 39.1 % Other 62 46 16 34.8 % Subtotal 8,326 7,457 869 11.7 % Total volume (CE) 53,568 47,226 6,342 13.4 % Note: A CE is a standard volume measure used by management which is defined as a case of 12 bottles of 330ml liquid beverages or the same liter volume of oil. * International Other excludes minor volume that is treated as zero CE.
Operating Expenses Year Ended December 31, Change 2022 2021 Amount Percentage Operating Expenses (in thousands) (in thousands) Selling, general, and administrative $ 100,306 $ 88,559 $ 11,747 13.3 % Selling, General and Administrative Expenses 48 Table of Contents SG&A expense increased by $11.7 million, or 13.3%, to $100.3 million for the year ended December 31, 2022, from $88.6 million for the year ended December 31, 2021.
Operating Expenses Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Selling, general, and administrative 124,236 100,306 $ 23,930 23.9 % Selling, General and Administrative Expenses SG&A expense increased by $23.9 million, or 23.9%, to $124.2 million for the year ended December 31, 2023, from $100.3 million for the year ended December 31, 2022.
Goodwill Goodwill represents the excess of the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination and is measured in accordance with the provisions of ASC 350, Intangibles—Goodwill and Other .
Changes to any of the assumptions or judgments could cause our actual income tax obligations to differ from our estimates. 51 Table of Contents Goodwill Goodwill represents the excess of the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination and is measured in accordance with the provisions of ASC 350, Intangibles—Goodwill and Other .
We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.
Income Tax Expense We are subject to federal and state income taxes in the United States and taxes in foreign jurisdictions in which we operate. We recognize deferred tax assets and liabilities based on temporary differences between the financial reporting and income tax bases of assets and liabilities using statutory rates.
Income Tax Expense 49 Table of Contents Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Income tax expense $ (3,027) $ (5,237) $ 2,210 (42.2 %) Tax Rate 27.9 % 21.6 % Income tax expense was $3.0 million for the year ended December 31, 2022, as compared to $5.2 million for the year ended December 31, 2021.
Income Tax Expense Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Income tax expense $ (11,291) $ (3,027) $ (8,264) 273.0 % Tax Rate 19.5 % 27.9 % Income tax expense was $11.3 million for the year ended December 31, 2023, as compared to $3.0 million for the year ended December 31, 2022.
Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, hydration mix and milk offerings.
We are one of the largest brands globally in the coconut and other plant waters category, and a large supplier of private label coconut water. Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the United States, and also includes coconut oil, juice, and milk offerings.
We adjusted for these charges to facilitate comparison from period to period. (b) Unrealized gains or losses on derivative instruments and foreign currency gains or losses are not considered in our evaluation of our ongoing performance.
We adjusted for these charges to facilitate comparison from period to period. (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.
International Segment International net sales decreased by $1.5 million, or (2.6)%, to $54.2 million for the year ended December 31, 2022 from $55.6 million for the year ended December 31, 2021.
International Segment International net sales increased by $9.2 million, or 17.0%, to $63.4 million for the year ended December 31, 2023 from $54.2 million for the year ended December 31, 2022.
In order to mitigate the foreign currency risks, we and our subsidiaries enter into foreign currency exchange contracts which are recorded at fair value. Unrealized gain/(loss) on derivative instruments consists of gains or losses on such foreign currency exchange contracts which are unsettled as of period end.
We expense all SG&A as incurred. Other Income (Expense), Net Unrealized Gain/(Loss) on Derivative Instruments We are subject to foreign currency risks as a result of our inventory purchases and intercompany transactions. In order to mitigate the foreign currency risks, we and our subsidiaries enter into foreign currency exchange contracts which are recorded at fair value.
Interest Income The decrease in interest income for the year ended December 31, 2022 compared to the same prior year period was immaterial. Interest Expense The decrease in interest expense for the year ended December 31, 2022 compared to the same prior year period was immaterial.
Interest Expense The decrease in interest expense for the year ended December 31, 2023 compared to the same prior year period was driven by decreased borrowings on the 2020 Credit Facility.
The change in effective tax rates between the periods is primarily driven by the relative impact of other non-deductible expenses in relation to the pre-tax profits. Non-GAAP Financial Measures EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors and lenders.
Non-GAAP Financial Measures EBITDA and Adjusted EBITDA are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors and lenders.
Investing Activities During the year ended December 31, 2022 as compared to the year ended December 31, 2021, cash used in investing activities increased $0.4 million, driven by increased cash paid for property and equipment.
The higher cash generation was driven by the increase in net income after adjusting for non-cash items and improvements in working capital. Investing Activities During the year ended December 31, 2023 as compared to the year ended December 31, 2022, cash used in investing activities decreased $0.4 million, driven by less expenditures for property and equipment.
The spread and the commitment fees did not change as a result of this amendment. The outstanding balance on the Revolving Facility was zero as of December 31, 2022 and December 31, 2021, respectively. As of December 31, 2022, we were compliant with all financial covenants.
The LIBOR-based loans bore interest at LIBOR plus the Spread. The unused commitment fee prior to the December 2022 amendment was the same. The outstanding balance on the Revolving Facility was zero as of December 31, 2023 and December 31, 2022, respectively. As of December 31, 2023, we were compliant with all financial covenants.
Future events and effects related to COVID-19 or current geopolitical instability cannot be determined with precision and actual results could significantly differ from estimates or forecasts. Components of Our Results of Operations Net Sales We generate revenue through the sale of our Vita Coco branded coconut water, Private Label and Other products in the Americas and International segments.
Components of Our Results of Operations Net Sales We generate revenue through the sale of our Vita Coco branded coconut water, Private Label and Other products in the Americas and International segments.
Relationship with Private Label Customers, Suppliers and Asset-Lite Supply Chain Model We believe our global asset lite supply chain model has been an integral part in our ability to efficiently scale our business and compete in the marketplace, and in particular support our Private Label business.
Key Factors Affecting Our Performance We believe that the growth of our business and our future success are dependent upon many factors, including the key trends and uncertainties highlighted below: Risks Associated with our Supply Chain and Shipping Our global asset lite supply chain model has been an integral part of our ability to efficiently scale our business and compete in the marketplace, and to support our private label business.
Private Label net sales increased by $7.5 million, or 9.3%, to $88.2 million for the year ended December 31, 2022, from $80.6 million for the year ended December 31, 2021. The increase was mostly driven by benefits from net pricing actions and mix shifts, which were partly offset by a CE volume decrease.
Private Label net sales increased by $15.0 million, or 17.0%, to $103.2 million for the year ended December 31, 2023, from $88.2 million for the year ended December 31, 2022. The increase was driven by significant CE volume growth of 24.7%, which was partly offset by product price/mix.
Net Sales for Other products decreased by $4.2 million, or 60.7%, to $2.7 million for the year ended December 31, 2022, from $7.0 million for the year ended December 31, 2021. The decrease was primarily driven by decreases in bulk product sales from our Asia Pacific region.
Net Sales for Other products increased by $0.1 million, or 3.1%, to $2.8 million for the year ended December 31, 2023, from $2.7 million for the year ended December 31, 2022, driven primarily by CE volume growth in the EMEA region.
Other Income (Expense), Net Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Unrealized gain (loss) on derivative instrument $ 6,606 $ 2,093 $ 4,513 215.6 % Foreign currency gain (loss) 1,387 (2,088) 3,475 (166.4 %) (Loss) on extinguishment of debt — (132) 132 (100.0 %) Interest income 51 127 (76) (59.6 %) Interest expense (258) (360) 102 (28.3 %) $ 7,786 $ (360) $ 8,146 (2262.8 %) n/m—represents percentage calculated not being meaningful Unrealized Gain/(Loss) on Derivative Instruments During the year ended December 31, 2022, we recorded unrealized gains of $6.6 million relating to outstanding derivative instruments for forward foreign currency exchange contracts.
Other Income (Expense), Net Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Unrealized gain/(loss) on derivative instruments $ (872) $ 6,606 $ (7,478) (113.2 %) Foreign currency gain/(loss) (251) 1,387 (1,638) (118.1 %) Interest income 2,581 51 2,530 n/m Interest expense (31) (258) 227 (88.0 %) Other Income (Expense), Net $ 1,427 $ 7,786 $ (6,359) (81.7 %) n/m—represents percentage calculated not being meaningful Unrealized Gain/(Loss) on Derivative Instruments During the year ended December 31, 2023, we recorded an unrealized loss of $0.9 million relating to outstanding derivative instruments for forward foreign currency exchange contracts, with the largest loss for the year ended December 31, 2023 related to the contracts hedging the British pound and the Brazilian real.
Gross Profit Year Ended December 31, Change 2022 2021 Amount Percentage (in thousands) (in thousands) Cost of goods sold Americas segment $ 278,130 $ 222,027 $ 56,103 25.3 % International segment 46,296 44,338 1,958 4.4 % Total cost of goods sold $ 324,426 $ 266,365 $ 58,061 21.8 % Gross profit Americas segment $ 95,492 $ 101,864 $ (6,371) (6.3 %) International segment 7,869 11,284 (3,416) (30.3 %) Total gross profit $ 103,361 $ 113,148 $ (9,787) (8.6 %) Gross margin ( percentage of net sales ) Americas segment 25.6 % 31.5 % (5.9 %) International segment 14.5 % 20.3 % (5.8 %) Consolidated 24.2 % 29.8 % (5.7 %) On a consolidated basis, cost of goods sold increased $58.1 million, or 21.8%, to $324.4 million for the year ended December 31, 2022, from $266.4 million for the year ended December 31, 2021.
Gross Profit Year Ended December 31, Change 2023 2022 Amount Percentage (in thousands) (in thousands) Cost of goods sold Americas segment $ 267,983 $ 278,130 $ (10,147) (3.6 %) International segment 44,900 46,296 $ (1,396) (3.0 %) Total cost of goods sold $ 312,883 $ 324,426 $ (11,543) (3.6 %) Gross profit Americas segment $ 162,262 $ 95,492 $ 66,770 69.9 % International segment 18,467 7,869 10,598 134.7 % Total gross profit $ 180,729 $ 103,361 $ 77,368 74.9 % Gross margin ( percentage of net sales ) Americas segment 37.7 % 25.6 % 12.1 % International segment 29.1 % 14.5 % 14.6 % Consolidated 36.6 % 24.2 % 12.4 % 45 Table of Contents On a consolidated basis, cost of goods sold decreased $11.5 million, or 3.6%, to $312.9 million for the year ended December 31, 2023, from $324.4 million for the year ended December 31, 2022.
Foreign currency gain/(loss) represents the transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency. See “—Qualitative and Quantitative Disclosures about Market Risk—Foreign Currency Exchange Risk ” for further information. Interest Income Interest income consists of interest income earned on our cash and cash equivalents, and money market funds.
See “—Qualitative and Quantitative Disclosures about Market Risk—Foreign Currency Exchange Risk ” for further information. Interest Income 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.
Our innovation efforts focus on developing and marketing product extensions, improving upon the quality and taste profiles of existing products, and introducing new products or brands to meet evolving consumer needs. We aim to develop and test new products, and scale the most promising among them to ensure a strong pipeline of product innovation.
Our innovation efforts focus on developing and marketing product extensions, improving upon the quality and taste profiles of existing products, and introducing new products or brands to meet evolving consumer needs. For example, we introduced Vita Coco juice as our first broad based offering of coconut juice with pulp in cans.
Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world. We are one of the largest brands globally in the coconut and other plant waters category, and one of the largest suppliers of Private Label coconut water.
Overview 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. Our mission is to deliver great tasting, natural and nutritious products that we believe are better for consumers and better for the world.
We source our coconut water from a diversified global network of 14 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.
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 and to better service our customers’ needs.
We also work with co-packers in America and Europe to support local packaging and repacking of our products and 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. Our primary markets for Private Label are North America and Europe.
Vita Coco is available in over 30 countries, with our primary markets in North America, the United Kingdom, and China. 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 foodservice channels.
Revolving Credit Facility In May 2020, we entered into the 2020 Credit Facility with Wells Fargo consisting of a revolving line of credit, which provided for committed borrowings of $50 million and a $10 million non-committed accordion feature.
Revolving Credit Facility In May 2020, the Company entered into the five-year credit facility (the "2020 Credit Facility") with Wells Fargo Bank, National Association consisting of a revolving line of credit, which currently provides for committed borrowings of $60 million. The maturity date on the 2020 Credit Facility is May 12, 2026.
Foreign Currency Gain/(Loss) Foreign currency gain was $1.4 million for the year ended December 31, 2022, as compared to a $2.1 million loss for the year ended December 31, 2021. The change in both years was a result of movements in various foreign currency exchange rates related to transactions denominated in currencies other than the functional currency.
The change in both years was a result of movements in various foreign currency exchange rates related to transactions denominated in currencies other than the functional currency. 46 Table of Contents Interest Income The increase in interest income for the year ended December 31, 2023 compared to the same prior year period was related to interest income on cash invested with financial institutions, reflecting improved cash balances and higher interest rates versus prior periods.
Marketing and sales promotion expenses consist primarily of costs incurred promoting and marketing our products and are primarily driven by investments to grow our business and retain customers. We expect selling and marketing expenses to increase in absolute dollars and to vary from period to period as a percentage of net sales for the foreseeable future.
Marketing and promotional expenses consist primarily of costs incurred promoting 41 Table of Contents and marketing our products and are primarily driven by investments to grow our business and retain customers.
Americas Segment Americas net sales increased by $49.7 million, or 15.4%, to $373.6 million for the year ended December 31, 2022, from $323.9 million for the year ended December 31, 2021, primarily driven by CE volume increase of 11.8%, as well as reduced price promotions, price increases, and favorable changes in mix for branded products.
Americas Segment 44 Table of Contents Americas net sales increased by $56.6 million, or 15.2%, to $430.2 million for the year ended December 31, 2023, from $373.6 million for the year ended December 31, 2022, primarily driven by CE volume growth of 13.8% with additional benefit from branded pricing, partially offset by private label price/mix.
See “—Qualitative and Quantitative Disclosures about Market Risk—Foreign Currency Exchange Risk ” for further information. 44 Table of Contents Foreign Currency Gain/(Loss) Our reporting currency is the U.S. dollar. We maintain the financial statements of each entity within the group in its local currency, which is also the entity’s functional currency.
Unrealized gain/(loss) on derivative instruments consists of gains or losses on such foreign currency exchange contracts which are unsettled as of period end. See “—Qualitative and Quantitative Disclosures about Market Risk—Foreign Currency Exchange Risk ” for further information. Foreign Currency Gain/(Loss) Our reporting currency is the U.S. dollar.
The applicable rate for LIBOR borrowings under the 2020 Credit Facility is subject to step-downs based on our total net leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter.
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.
Cash Flows The following tables summarize our sources and uses of cash: Year Ended December 31, Change (in thousands) 2022 2021 Amount Percentage Cash flows provided by (used in): Operating activities $ (10,935) $ (16,166) $ 5,231 (32.4) % Investing activities (982) (557) (425) 76.3 % Financing activities 3,034 (26,803) 29,837 (111.3) % Effects of exchange rate on changes on cash and cash equivalents (178) 35 (213) (608.6) % Net (decrease) increase in cash and cash equivalents $ (9,061) $ (43,491) $ 34,430 (79.2) % 51 Table of Contents Operating Activities Our main source of operating cash is payments received from our customers.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition. 48 Table of Contents Cash Flows The following tables summarize our sources and uses of cash: Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Cash flows provided by (used in): Operating activities $ 107,155 $ (10,935) $ 118,090 (1079.9) % Investing activities (594) (982) 388 (39.5) % Financing activities 6,290 3,034 3,256 107.3 % Effects of exchange rate on changes on cash and cash equivalents 387 (178) 565 (317.4) % Net (decrease) increase in cash and cash equivalents $ 113,238 $ (9,061) $ 122,299 (1349.7) % Operating Activities Our main source of operating cash is payments received from our customers.
To grow and maintain the health of our brands we must invest in sales and marketing and execute on our sales strategy to develop and deepen consumers’ connection to our brands.
We also invest in sales and marketing and execute our sales strategy to develop and deepen consumers’ connection to our brand and new products and to create category growth and increase our branded share.
The resulting contract assets are recorded in Prepaid expenses and other current assets. The Company provides trade promotions to its customers. These discounts do not meet the criteria for a distinct good or service and therefore, the Company reduces revenue for the discounts associated with meeting this obligation based on the expected value method.
The resulting contract assets are recorded in Prepaid expenses and other current assets. The Company provides trade promotions and sales discounts to its customers and distributors.
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 $19.6 million and $28.7 million of cash and cash equivalents as of December 31, 2022 and 2021, respectively.
(e) Reflects other charges primarily related to the impairment loss related to assets held for sale in both periods and other non-recurring expenses. 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.
Our DSD network is an important asset in executing physical retail programs and ensuring product availability and visibility in the United States. Managing our DSD network requires relationship building 42 Table of Contents and communication as to plans, and alignment of goals and interests.
Our DSD network is an important asset in executing physical retail programs and ensuring product availability and visibility in the United States. In 2023, we offered more multi-packs in coconut water in US retail to increase consumption with core consumers, and increased distribution of our other product offerings.
On a consolidated and segment basis, the increase was primarily driven by higher CE volume and significant increases in transportation costs across ocean freight and domestic logistics. On a consolidated basis, gross profit decreased by $9.8 million, or 8.6%, to $103.4 million for the year ended December 31, 2022, from $113.1 million for the year ended December 31, 2021.
On a consolidated basis, gross profit increased by $77.4 million, or 74.9%, to $180.7 million for the year ended December 31, 2023, from $103.4 million for the year ended December 31, 2022.
Borrowings under the 2020 Credit Facility bear interest at a rate per annum equal to, at our option, either (a) adjusted LIBOR (or current LIBOR replacement rate), which shall not be less than 0.0%, plus the applicable rate or (b) base rate (determined by reference to the greatest of the prime rate published by Wells Fargo, the federal funds effective rate plus 1.5% and one-month LIBOR (or current LIBOR replacement) plus 1.5%).
The borrowings made before December 2022 bore interest at rates based on either: 1) London Interbank Offered Rate ("LIBOR"); or 2) a specified base rate (determined by reference to the greatest of the prime rate published by Wells 49 Table of Contents Fargo, the federal funds effective rate plus 1.5% and one-month LIBOR plus 1.50%), as selected periodically by the Company.
The loss of some geographic regions for a key private label customer mid-year, was only partially offset by the gains with new private label customers. Net Sales for Other products decreased by $1.9 million, or 16.8%, to $9.5 million for the year ended December 31, 2022, from $11.4 million for the year ended December 31, 2021.
Net Sales for Other products increased by $0.4 million, or 3.9%, to $9.9 million for the year ended December 31, 2023, from $9.5 million for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−2 removed3 unchanged
Biggest changeWe have not experienced credit issues with these customers. We maintain provisions for potential credit losses and evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts and customer credits need to be recorded.
Biggest changeAs of December 31, 2023, sales to two customers represented approximately 53% of our consolidated net sales. We have not experienced credit issues with these customers. We maintain provisions for potential credit losses and evaluate the solvency of our customers on an ongoing basis to determine if additional allowances for doubtful accounts and customer credits need to be recorded.
As of December 31, 2021, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million. Inflation Risk Inflation generally affects us by increasing our costs of goods and labor costs.
As of December 31, 2022, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million. Inflation Risk Inflation generally affects us by increasing our costs of goods and labor costs.
As of December 31, 2022, the outstanding amounts related to our Revolving Facility incur interest fees at variable interest rates and are affected by changes in the general level of market interest rates. However, there was zero outstanding balance on the Revolving Facility as of December 31, 2022.
As of December 31, 2023, the outstanding amounts related to our Revolving Facility incur interest fees at variable interest rates and are affected by changes in the general level of market interest rates. However, there was zero outstanding balance on the Revolving Facility as of December 31, 2023.
As of December 31, 2022, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million.
As of December 31, 2023, a 1% change in the value of the U.S. dollar compared to foreign currencies would have caused our cash and cash equivalents to decrease or increase by $0.1 million.
Foreign Currency Exchange Risk 57 Table of Contents We transact business globally in multiple currencies and hence have foreign currency risks related to our net sales, cost of goods sold, and operating expenses. We use derivative financial instruments to reduce our net exposure to foreign currency fluctuations.
Foreign Currency Exchange Risk We transact business globally in multiple currencies and hence have foreign currency risks related to our net sales, cost of goods sold, and operating expenses. We use derivative financial instruments to reduce our net exposure to foreign currency fluctuations.
Significant economic disruptions or a slowdown in the economy could result in substantial additional charges. 58 Table of Contents
Significant economic disruptions or a slowdown in the economy could result in substantial additional charges. 53 Table of Contents
During the year ended December 31, 2021, the Company repaid the outstanding balance on the 2021 Term Loan as discussed in the consolidated financial statements included elsewhere in this Form 10-K, using net proceeds received on the closing of the initial public offering.
During the year ended December 31, 2021, the Company repaid the outstanding balance on the 2021 Term Loan as discussed in the consolidated financial statements included elsewhere in this Form 10-K, using net proceeds received on the closing of the IPO.
The derivatives on the forward exchange contracts resulted in an unrealized gain of $6.6 million as of December 31, 2022, and we estimate that a 10 percent strengthening or weakening of the U.S. dollar would have resulted in an approximately $5 million gain or loss. Part of our cash and cash equivalents are denominated in foreign currencies.
The derivatives on the forward exchange contracts resulted in an unrealized loss of $0.9 million as of December 31, 2023, and we estimate that a 10 percent strengthening or weakening of the U.S. dollar would have resulted in an approximately $6.2 million gain or loss. Part of our cash and cash equivalents are denominated in foreign currencies.
The gains and losses on the forward contracts associated with our balance sheet positions are recorded in “Other income (expense), net” in the consolidated statements of operations. The total notional values of our forward exchange contracts were $97.4 million and $89.1 million as of December 31, 2022 and December 31, 2021, respectively.
The gains and losses on the forward contracts associated with our balance sheet positions are recorded in “Other income (expense), net” in the consolidated statements of operations. The total notional values of our forward exchange contracts were $121.0 million and $97.4 million as of December 31, 2023 and December 31, 2022, respectively.
Removed
As of December 31, 2022, we have seen significant inflation caused by COVID-19 related global supply chain disruptions which put pressure on our costs and margins. More specifically, there was a significant escalation of transportation costs, primarily ocean freight costs due to shipping and ports constraints and in domestic logistics.
Added
In the three years ending December 31, 2023, we experienced significant inflation on transportation costs compared to 2020 levels, which impacted our costs and margins significantly. While these transportation costs largely returned to historic levels during 2023, we have again seen instability in pricing due to geopolitical disruption of shipping lanes during 2024.
Removed
It is possible that inflation could affect our consumers' and customers' interest in our products but the potential impact is not currently known. Credit Risk We are exposed to concentration of credit risk from our major customers. As of December 31, 2022, sales to two customers represented approximately 54% of our consolidated net sales.
Added
We source a large amount of our finished goods from international countries, which exposes us to international supply chain inflation, particularly ocean freight. Inflation rates varies by country and can impact our costs of operating in those countries. Credit Risk We are exposed to concentration of credit risk from our major customers.

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