Hello, and welcome to The Vita Coco Company’s Third Quarter 2023 Earnings Conference Call. My name is Deedee, I'll be coordinating your call today. Following prepared remarks, we will open the call to your questions with instructions to be given at that time. I'll now hand the call over to Clay Crumbliss with ICR.

Thank you and welcome to the Vita Coco Company's third quarter 2023 earnings results conference call. Today's call is being recorded. With us are Mr. Mike Kirban, Executive Chairman; Martin Roper, Chief Executive Officer; and Corey Baker, Chief Financial Officer. By now, everyone should have access to the company's third quarter earnings release issued earlier today. This information is available on the Investor Relations section of the Vita Coco Company's website at investors.thevitacococompany.com. Also, on the website there is an accompanying presentation of our commercial and financial performance results. Certain comments made on this call include forward-looking statements, which are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and the filings with the SEC for a more detailed discussion of the risk factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also, during the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release and supplementary earnings presentation, provide reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures and are available on our website as well. And with that, it's my pleasure to turn the call over to Mike Kirban, our Co-founder and Executive Chairman. Mike?

Thanks, Clay and good morning, everyone. Thank you for joining us today to discuss our third quarter 2023 financial results and our current expectations for full-year 2023 performance. I want to start by thanking all of our colleagues across the globe for their continued commitment to the Vita Coco company. We recently received recognition as one of fast company's brands that matter for 2023. This is a testament to the incredible work by the entire team and their dedication to our mission of creating ethical, sustainable, better-for-you beverages that uplift our communities and do right by our planet. Before addressing our performance and expectations, I want to reiterate that we believe we have a strong strategic position enabled by our category leadership in coconut water within the better-for-you functional beverage category, which in America's track channels is in excess of $30 billion, according to Circana. We continue to be very happy with our performance in 2023. We believe that our strategy of delivering coconut water growth through increased usage occasions is working and I'm excited about the progress we're making with both our commercial initiatives and our marketing efforts. In the third quarter, we saw consolidated 11% net sales growth against prior year, bringing our year-to-date net sales growth to 15%. We remain very bullish on the coconut water category in the United States, where according to Circana, the category is posting one of the healthiest growth trends in beverages, outperforming major categories like energy, CFDs, sport drinks and bottled water in dollar growth rates, while also being one of the few categories growing in volume and price. For the quarter, Our Vita Coco coconut water brand is leading the coconut water category growth with U.S. retail dollar sales up 23% with our market share improving to 51% versus the…

Thanks, Mike, and good morning, everyone. For the third quarter of 2023, we achieved net sales growth of 11% driven by strong Vita Coco coconut water growth of 8%. This performance was achieved against a very strong third quarter last year where Vita Coco coconut water net sales grew 14%. Our strong execution and our consumer engagement efforts continue to produce strong results at retail with a 23% dollar growth rate of Vita Coco coconut water in third quarter 2023 in the U.S. Circana scan data and a 17% volume growth rate. The strong performance is across all track channels as shown in our investor deck with strength in underdeveloped regions that we believe is indicative of future growth potential. As shown in our investor deck, the growth is built on a healthy balance of velocity growth, pricing, and distribution gains. Internationally, we are seeing strong growth in private label net revenue and continued Vita Coco net revenue growth resulting in 14% international net sales growth for the quarter. We continue to see strong Vita Coco coconut water growth at retail and according to Circana U.K., our retail dollar share of the total coconut water category has risen to over 81% in the most recent four-week period. Turning to margins, in the third quarter of 2023, our gross margin was 41%, which represents a significant improvement over the 26% reported in third quarter last year and an improvement over the 37% in the second quarter of 2023. This increase over last year was driven primarily by reduced transportation costs and improved Vita Coco branded pricing offset slightly by private label mix and pricing. The increase over the second quarter was due to lower cost of goods with current more normal transportation costs that started earlier this year now fully reflected in this quarter's reported cost of goods along with seasonally higher Vita Coco coconut water pricing. After the significant decrease in spot ocean freight rates in the second-half of last year, and in the first quarter of this year, we have seen a more stable environment for the last six months. At the end of the third quarter, spot rates for most lanes were close to historic pre-COVID levels. Turning to our outlook, building on the very strong year-to-date results, we are raising our 2023 full-year guidance for the third time this year. Based on our expectations for the fourth quarter, which includes the retention of the private label coconut water business that Mike mentioned, the retail scans for Vita Coco being very healthy, and strong private label trends. We are raising our full-year revenue guidance to growth of 13% to 15% over prior year and adjusted even to $64 million to $67 million. Kori will provide more details on our outlook. We're really happy with our current performance and excited for our long-term future. With that, I will turn the call over to Corey Baker, our Chief Financial Officer.

Thanks, Martin, and good morning, everyone. I will now provide some additional details on the third quarter financial results and the drivers of our improved outlook for the 2023 full-year. Starting with revenue, we continue to see strong performance in the third quarter with net sales of $138 million, representing an increase of $14 million, or 11% year-over-year. This was driven by Vita Coco coconut water growth of 8% and private label growth of 18%. Within the America segment, Vita Coco coconut water's strong retail performance resulted in $90 million of net sales, an increase of $7 million over the prior year period, while private label increased $3 million to $28 million. The growth of Vita Coco coconut water on the quarter continued to be volume-led, with 7% volume growth and 2% net price mix benefit. Vita Coco coconut water benefited from strong consumer demand, which is reflected in the 23% retail dollar growth for the quarter. Private label experienced a strong quarter, driving 14% net sales growth on volume growth of 36%. Private label benefited from a combination of new strategic customer wins, expanded distribution and velocity gains in existing stores, with approximately 80% of the volume growth and 100% of the revenue growth and private label occurring outside our largest U.S. customer. Where the strength of our supply chain and quality of our product and service has over the last two years generated new customer wins and expanded distribution opportunities, which are now visible in our reported shipments. We saw underlying private label performance at retail that reflected strong consumer demand for the category and normal elasticity of retail price reductions year-on-year for private label. We believe that America's net sales performance on the quarter was negatively impacted by timing of customer orders and shifts in inventory levels…

Thank you, Corey. To close, I'd like to reiterate our confidence in the long-term potential of the Vita Coco Company, our ability to build a better beverage platform, and the strength of our Vita Coco brand. Thank you for joining us today and thank you for your interest in the Vita Coco Company. That concludes our third quarter prepared remarks and we will now take questions.

Thank you. Management will now take questions from research analysts. [Operator Instructions] Our first question comes from Jon Andersen of William Blair.

Hey, good morning everybody.

Good morning, Jon.

Good morning.

I wanted to start by asking just about the variance between the consumption growth in measured channels in the 20s and the America's branded growth of 8%. I think you kind of referenced it in the prepared comments, I was wondering if you could provide a little bit more color around the timing difference there that caused that and what your expectations are as we look into the fourth quarter and beyond relative to shipments and consumption? Thanks.

Yes, Jon, good morning. We did reference it in the prepared script. We saw a couple of things, a bit of timing on the consumption and scan channels where we saw shipments slip into Q2 that ultimately scanned out in Q3. And then we do have the non-measured channel performance, which combined impacted the overall performance on the quarter. And then on the full-year, we provided the guidance of where we think will land on the full-year. We expect and we continue to see strong scanner growth through this latest week. We expect to see strong retail consumption through balance of year.

Okay. And then I'm looking at slide 10 in your investor presentation for the quarter, and you continue to make good progress on ACV, for instance, in the multi-pack offerings, particularly the 330 milliliter was up quite a bit this quarter relative to last year. I'm wondering on the multi-pack, because it's been -- I think the largest portion of the revenue growth this year. What is the right way to think about the, kind of, natural or steady state level of ACV distribution for multipacks? I mean, are those more limited than the one count, kind of, the core or flagship item? Or do you expect you know further improvement as you move through the balance of this year and in 2024?

Well I think if you look at the ACV that's on that same slide I think you see there's a lot of room for continued distribution growth. That item should be in most places within MULO that have the one count. So there's opportunity to continue to grow distribution on that item and that item is continuing to grow per point distribution. So we think there's quite a bit of room there.

Okay, if I could squeeze one more in quickly. The gross margin performance in the quarter, obviously strong, is 41%, you know, is that a peak for a seasonal perspective? You referred to some pricing impacts, seasonally high pricing, and also mentioned that costs have largely normalized. So, you know, could you update us on your thinking around longer-term gross margin rate, particularly in the context of retaining that private label business with that key customer? Thank you.

Yes, I think we allude that to a little bit when we talk about our modeling for 2024. Certainly the quarter was very strong, benefiting from a number of elements, including seasonal pricing, timing of pricing across our portfolio, and sort of some very efficient supply chain. I think as we look forward, you know, we've sort of indicated, you know, that we're thinking high-30s is where we'll be. So, and I think we've said that Q4 could be below Q3, because of those timing issues. So, yes, I think it's a little bit unusual outlier, obviously, you know, very happy with how everything flowed through the P&L, but I don't think we think it is reflective of our future business mix.

Great, thanks and congrats.

Thanks, Jon.

[Operator Instructions] And our next question comes from Bonnie Herzog of Goldman Sachs.

Thank you. Good morning everyone. Hi, I had a question about your private label business. First, congrats on reaching an agreement with the key customer to retain this business. I guess, but I was hoping I guess for a little bit more color on this decision and, you know, the cost associated with retaining this business. You know, and then also I couldn't help, but notice your comments about, you know, expanding distribution of private label with new and existing customers. So you know, trying to understand the magnitude of this? And I guess trying to reconcile this with your strategy to de-emphasize private label. You know, just trying to understand maybe what has changed with your strategy?

I think big picture, like we mentioned last time, we love private label when it works within our margin structure and in our business model. And I think this is an example of, you know, I mean, over time, we may have some competition in private label and supply chain in general. We may lose some business, we may gain some new business, and we continue to gain new business. But I think this decision of this major customer, we believe shows that we have a significant supply chain advantage, the most scale, reliability, and quality. And so again, we like private label. We will continue to grow private label. We will continue to bid on and get new business we believe, but it has to work within our business model. And I think this is an example of us continuing to just prove our supply chain advantage, which we're excited about.

Okay, that's helpful. And then I did want to ask about your Vita Coco water sales or branded sales growth in the quarter. It was, I guess, a little bit more muted than I expected and decelerated sequentially. So hoping for a little more color on this, especially thinking about it, you know, Q3 as a peak summer quarter. But I know you mentioned an impact in inventory shifts. And then thinking about your new top line growth guidance for this year, it does imply I think just around 9% sales growth in Q4, and then you're talking about low-single-digit top line growth next year. So just trying to understand maybe why you're looking for a little bit more of a slowdown or is this just some level of conservatism? Thanks.

So Bonnie, there's lots of moving pieces. We talked earlier about the current quarter timing. As you see in the scanner growth, our scans remain very healthy, and we expect that to continue. In balance of year, we do still have the impact of the price mix and private label, and that flows into next year, which is what's driving some of the changes and also we're providing guidance that we believe we can hit in the balance of year, but we expect to continue to see strong branded growth through balance of year and into next year.

So, but in the context of that, if I may, just the expectation for low-single-digit sales growth, you know, I assume pricing will be more muted, but is there essentially an expectation of a category slowdown?

No, we're expecting in our kind of a base assumption expecting the category volumetrically to perform in line with how it has historically. And then we have the price mix impact of the private label versus the branded heading into next year.

Sure. All right. Thank you.

Thanks, Bonnie.

[Operator Instructions] And our next question comes from Eric Serotta of Morgan Stanley.

Great, thanks. I'm hoping you could just give us some additional color in terms of your long-term adjusted EBITDA margin target? How has that been impacted by the changed business mix with you now holding onto a greater portion of that customer's private label business and also growing very nicely in private label elsewhere? Last quarter, I think you took up your long-term targets from the mid to high-teens, the high-teens because of the expectation that private label would be a smaller piece. This quarter it looks like you left it at high-teens, just wondering what the moving pieces are below the surface?

Yes, I think we're still comfortable with that sort of long-term outlook. I think this quarter is an example of what we can achieve right now in, you know, obviously it's a seasonal month and it's a peak month, but it shows that, that outcome is possible. So we believe that long-term model is still achievable. The other moving piece is the branded business remains very strong. As Mike alluded to, we are winning private label, new private label business, and some of the growth in private label is reflective of that, but the business we're winning we think still supports that long-term financial algorithm.

Great and then hoping you could give a little color in terms of innovation and particularly the C-Store channel. It looks like you had some modest sequential improvement in the juice product in convenience store ACV in the quarter, but can you talk a little bit more broadly in terms of your expectations for the C-Store channel? How the juice product is performing in terms of getting you additional placements in shelf space?

Yes, I think we're pleased with how it's performing. We're spending a fair amount of marketing sales, executional support in Q3 to sort of drive it and produce the velocities that will support additional distribution discussions. So at this point in time, again, we're happy. Obviously, we always would like distribution to go faster, and we tell ourselves guys that and challenge them to go faster. But it's building nicely, and we think it's a good source of long-term growth opportunity for us.

Great, thanks, I'll pass it on.

Thanks, Eric.

Thank you. [Operator Instructions] And our next question comes from Jim Salera of Stephens.

Hi, good morning everyone. Thanks for taking our question. I want you to if you'll [Technical Difficulty], dig back in on the key private label customer. Because if my notes serve me correct, in the second quarter you guys had mentioned basically that the long-term contract wasn't in line with your, kind of, long-term margin targets. So I was just wondering if when they came back or if you went back to them, can we assume that the offer is now in line with kind of the long-term margin expectations you had in 2Q? Or has your thinking around that changed or just any color you could provide on there I think would be helpful.

Yes, our thinking around it has not changed. If we're going to do private label it has to fit within our business model and we continue to believe that.

No, no, go ahead.

No, to answer your question, you know, in the end, this partnership will continue under, you know, terms that work for both of us, but work within our business model.

Okay, that's helpful. And maybe to follow on that, can we think about it as you guys mentioned, the strength of your supply chain and your ability to deliver consistently. When this customer went out into the market, they really found that there wasn't another alternative that could deliver, kind of, the same quality and consistency that you could on this private label offering. And so that's why we -- because just candidly, it's a pretty fast turnaround from 3Q to see this revert, obviously, incrementally positive for you, but just trying to get some context around what caused it to happen so quickly?

Yes, I think, obviously, it's hard to know because the customer does not always tell you exactly what's going on. I think we would conclude, and obviously we announced with Q2 that we had reached an understanding that the business was transitioning, you know, both the oil and the water business. And then subsequently, obviously, we're still in a relationship. So our conclusion would be that they concluded that whatever their plans were, were not going to work. But obviously, we don't really know exactly what went on in the background. What we can tell you is we're comfortable with the, continuing to supply a portion of the business and under terms that as Mike said, meet our models. And obviously we're happy with the partnership and as we said at Q2, this retailer is important to us and we're here to support them in any way we can under terms that work for us.

Okay great, that's all very helpful. Then maybe if I can sneak in one more question on slide seven, if I just look, you guys have the dollar per ounce percentage change, and it looks like you're running ahead of, kind of, the broader coconut water category year-to-date. Is there a relative price gap that you think you guys can maintain relative to the category or is there kind of an upper bound that we should think of in terms of your pricing relative to the category?

You know, I think we like our current position relative to the category. I think if you look over two to three years, most of the rest of beverage has taken very significant pricing increases relative to what coconut water took, partly because of the economics of those businesses relative to how our supply chain has performed absent the ocean freight increases, right? So we actually like the fact that perhaps today we're more affordable than we were three years ago in the relative beverage category. Obviously, we're going to monitor that. We have, as we stated, one of the few categories in beverage -- in non-alcoholic beverage that is growing volume and price. So we're going to continue to fuel that by maintaining the current price gaps and obviously we monitor what's going on, on the competitive environment basis to see if any changes to that are necessary.

Okay, great. Very helpful. Thanks, guys. I'll pass it along.

Thank you.

Thank you.

Thank you. [Operator Instructions] And our next question comes from Michael Lavery of Piper Sandler.

Thank you. Good morning.

Good morning, Michael.

I just wanted to follow-up on Bonnie's question where you've given us a little peek into 2024. And if I'm catching it all correctly, a bit of the thinking is the mixed drag from strong private label growth. Can you just touch on what the branded Vita Coco coconut water segment by itself might look like in terms of how you're thinking about the momentum there on the top line?

Yes, obviously we're not trying to provide sort of guidance, we're just trying to think about modeling. If I had to model this, I'd be modeling coconut water category, volume growth, pretty similar to what you've seen in the last two, three years, which in the scan data I think is high-single-digits…

Sort of high-single-digits.

High-single-digits plus some gain of share, right? Obviously, when Mike asked me to set goals for the year, he tells me I've got to grow share. So that's how I would think about it. I think as Corey alluded to, there's lots of moving pieces here. We've got some changes in the private label relationship that we've talked about, those mixed price changes in the private label business, which obviously provides a headwind in net revenue next year. But we feel very good about branded growth. Obviously, the scan data continues to be very strong for scan channels. Obviously, we need to grow the other channels as effectively as scan is growing. So that's a challenge for our sales force, but that's the challenge we're signing up for.

Okay that's helpful. And it doesn't get touched on too much, but I actually want to put over to the other segment and just, you know, very, very small obviously. But can you update us, you know, the growth there sequentially in year-over-year, even the tiny and absolute numbers was robust? Just maybe help us understand how to think about, you know, PWR LIFT or some of what else might be going on there. I think there's been a pretty small, geographically limited test. Is that alone moving the needle on this? Or how do we think about maybe how that segment could evolve if that test is going well?

Well, you know, in that segment, you know, obviously there's a variety of items that don't fall into the two main segments. What I would say is we continue, you know, from a business priority perspective to prioritize coconut water growth and growth of Vita Coco related branded activities with the innovation as sort of a secondary priority and the innovation efforts obviously fall into that other as long -- as well as commodities and some other stuff. So it's a little bit noisy. I think what you're seeing in there is some slight volume growth that reflects our investment in PWR LIFT. I think we're you know very happy with it. I think we believe PWR LIFT over indexes with our investors which is sort of interesting based on the conversations we have and our analysts actually. So we know we have something there and we're trying to work out how to make it work at retail, obviously it's a very competitive segment. But we're happy with the progress and as we look to next year, we're hoping to add some additional geographies perhaps where we can influence the distribution a little stronger to get it on shelf in a cost effective way. Because obviously that's what's required to make something like this successful is to get drive it to shelf. So, but we have some opportunities, but we're also pretty pleased with it as a brand initiative as part of our portfolio of innovation. And when I say portfolio of innovation, there are other efforts that we're not ready to talk about yet that we're doing that hopefully will help in that other category as well.

Okay, great. Thanks so much.

Thank you. [Operator Instructions] And our next question comes from Chris Carey of Wells Fargo Securities.

Hi, good morning.

Good morning, Chris.

One quick follow-up. So you're rolling back pricing on private label, but you don't intend to do that on the branded business. Can I just confirm that?

I don't think Chris we have said that we're rolling back private label. We've been very careful to just talk about mix and private label effects that affect our business. And long-term private label tracks costs, but we've been very careful so I just don't want to confirm the question as a fact.

Okay, yes, that makes sense. How do you feel about, you know, overall price gaps in the category currently where you sit and, you know, any, you know, plans to maintain certain levels going forward. Just in general, how you feel about price gaps relative to the strong consumption that you can see?

So, we've sort of talked about how we feel relative to the rest of the beverage category already in reference to a prior question. I think relative to private label, that's obviously retailer specific. As private label, as we've sort of said, is concentrated in a few major retailers in the U.S. and the situations where our brand sits next to private label are sort of few relative to the total retailer universe, right? So we look at it retail-specific. Obviously, we'll monitor that. If those suppliers should -- those retailers should reduce their shelf price on private label, we will monitor the trends. I think right now we believe the branded and private label co-exist nicely on the shelf, they're complimentary. Our brand ascribes values to private label obviously by anchoring the category in most retailers up into the velocity is the good and you know that's something more monitor as it goes on, but right now I think as we think about plans for ‘24 for branded pricing we're sort of looking to optimize revenue, sort of optimize, I suppose revenue, I can't think what the word is now, but it was revenue optimization, I suppose, across our portfolio of SKUs, is how we're thinking about trying to take pricing next year as opposed to moving price.

Okay, one final follow-up. I know you said that the Q3 gross margin was probably atypically high. I'm just trying to understand that comment, because pricing will remain, cost relief seems to remain. So is the key difference mixed in Q4? What gets sequentially worse into Q4 and into next year? Thanks so much.

Yes, there's a little bit of kind of mix seasonally the price -- the absolute price of coconut water, Vita Coco coconut water in the quarter was higher and then the efficiency of the supply chain as inventory is low drove advantage cogs. So that combined with a different price mix on private label is what makes the quarter seasonally high.

Okay. Thanks so much.

Thank you. [Operator Instructions] And our next question comes from Eric Des Lauriers of Craig Hallum Capital Group.

Thank you for taking my questions and congrats on another strong quarter here. So profitability and cash flow obviously a big standout this quarter, presumably that helped lead to the share repurchase authorization. With that share repurchase, so I'm wondering, should we take this as an indication that perhaps the M&A opportunities have gotten maybe less attractive over the last, call it, six, 12 months? Maybe just give us an update on the sort of opportunity you see in categories beyond coconut water and this is just more of a build versus buy at this point? Thank you.

Yes, I think the way I would think about the buyback authorization is primarily in the company, sort of, basically creating optionality and flexibility for use of its cash. Obviously without a buyback authorization, that wouldn't be an option. I think our cash balance at the end of the quarter is obviously very healthy. Part of that is due to inventory being a little low for the quarter. And as we've indicated, inventory is going to build. We certainly model out our cash needs over the next 12 months to look at what's possible and certainly believe we could support a buyback if that was something we wanted to do. But that said, obviously it's one option for use of capital and there are other options for use of capital. The M&A environment, I think continues as we previously talked about. There are some opportunities, they're all interesting in their own right, whether the valuations make sense or the fit makes sense depend on the specific situation. And we obviously look at things as they become available and explore them. But there is nothing, sort of, currently imminent, but obviously that could change. So again, coming back to the buyback aspect of this, I think it just creates flexibility for us. If you take the models out and assume no M&A, then you would probably be asking us why are we sitting on the cash balances you project. So this gives us some optionality and as I think we said in the release, it was approved yesterday. And so obviously we're only in the process of deciding what to do.

All right, that's very helpful. And then last question for me is on marketing spend. So much of the spend so far has been on driving new use occasions, it certainly makes sense. And we saw a number of examples of that over the summer, various cocktail partnerships and pop-up bars. It seems to me that there might be some seasonality in that kind of driving new use occasion spend, but at the same time, you're obviously increasing marketing spending into the winter months. Can you just give us a bit more color on where those incremental marketing dollars are being spent? Thank you.

I think you highlighted a number of those. I think also during the quarter we announced the Becky G relationship and for us that's a great opportunity to increase our brand saliency among our core demographic that we think is a long-term opportunity for us. And so some of the timing of that is affecting the timing of the spending, Q3 and Q4. I do acknowledge that our business has some seasonality to it, that typically most marketing would be driven Q2, Q3. But this year, I think we got a little bit delayed. Obviously, a relationship like the relationship with Becky G takes a little bit of time to put together. And so some of the timing is perhaps off this year, plus we have some catch up that we're doing in terms of sales execution and driving distribution that we have pulled back on, on prior years that we've amplified this year. So this year is a little abnormal to what you might see going forward.

That's very helpful. Thank you.

Thank you. [Operator Instructions] Our next question comes from Bryan Spillane of Bank of America.

Thanks, Operator. Hey, good morning, everyone.

Hey, Brian.

I just have one question related to the ‘24 commentary or the color you've given on ‘24. And it's just, I think if at the midpoint of the ranges, we're adding about $50 million back to revenue in ‘24 versus at least kind of where, I guess where we were. And then to go back to when you originally talked about ‘24, I think we took 80 million hours, but I'm not entirely sure if that was too much or not. But anyway, my point is, as we look at ‘24 now, are we just adding back the business you thought you'd lose? Like, has anything else changed underlying in terms of, you know, the way you're looking at ‘24 now versus the way you were looking at ‘24 back in August?

Yes, I think, you know, we're adding back a piece of the business that we thought we were losing and under sort of, you know, terms that are agreeable to us right, so I think that's the difference we still think that the branded business is healthy, you know, certainly with additional private label business we can fund you know more investment in growing the category and you know one of the reasons we like it growing the category is we have share of the category both on the branded and the private label side. So just adding back to business is purely margin-accretive might not be how we, sort of, view it because we view certainly in North America that investments to grow the category have higher return when we have more of the business.

All right, yes, so simplistically, if we're just looking at our models, what we're doing is really adding back that portion that now you're going to retain. And everything -- most everything else in the model seems like it's been washed out, right, in terms of, again, revenue expectations for ‘24 relative to where you were in August?

Yes, again, we're trying very hard not to provide guidance for next year while supporting everyone's modeling, including our own, right? So I don't think that's an unreasonable way to think about it, but I would perhaps say that based on where we were in August, with the significant hit that people assumed, based on what we said came up with, we probably would have squeezed SG&A a little bit next year, whereas now we can go, okay, let's go.

Got it, got it, got it. Now that's really helpful. And then just one last follow-up. In terms of having retained or one private label business with some additional customers, does that open up the door for more like merchandising and shelf space for those customers. I remember Michael talking about, previously about the logic part of the benefit of having a private label business in Costco, is it encourages them to sort of, allocate more shelf space to the category. So I'm just curious if it, you know, as we look forward, does it open the door to actually, you know, have more space dedicated to the category?

Yes, I think not only does it allow us to have more, or allow the category to have more space, but I think, like you just mentioned, and we talked about this before, in several parts of the world, in Western Europe specifically where we're winning a lot of private label business. We have the benefit of getting in front of these retailers now and having conversations about the category and together building the category and maybe starting with private label and then bringing the branded Vita Coco branded items in next to the private label, which is a real benefit to obviously not only the category, but also to the Vita Coco brand long-term as we build out the brand globally.

Cool, all right. Thanks, guys. Appreciate it.

Thanks, Brian.

Thanks, Brian.

I'm showing no further questions at this time. I would now like to turn it back to the CEO, Martin Roper, for closing remarks.

Thanks, Deedee, for hosting the meeting. Thanks, everybody, and we appreciate your interest, and we look forward to talking to you again when we have full-year results, sort of, during February or March of next year. I hope everyone has a great Halloween.

This concludes today's conference call. Thank you for participating and you may now disconnect.