NASDAQ:CELH Celsius Q1 2024 Earnings Report $44.72 -0.62 (-1.37%) Closing price 08/1/2025 04:00 PM EasternExtended Trading$44.50 -0.22 (-0.49%) As of 08/1/2025 07:59 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Celsius EPS ResultsActual EPS$0.27Consensus EPS $0.20Beat/MissBeat by +$0.07One Year Ago EPS$0.13Celsius Revenue ResultsActual Revenue$355.70 millionExpected Revenue$390.37 millionBeat/MissMissed by -$34.67 millionYoY Revenue Growth+36.90%Celsius Announcement DetailsQuarterQ1 2024Date5/7/2024TimeBefore Market OpensConference Call DateTuesday, May 7, 2024Conference Call Time10:00AM ETUpcoming EarningsCelsius' Q2 2025 earnings is scheduled for Thursday, August 7, 2025, with a conference call scheduled at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q2 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Celsius Q1 2024 Earnings Call TranscriptProvided by QuartrMay 7, 2024 ShareLink copied to clipboard.Key Takeaways 37% year-over-year revenue growth to a record $355.7 million in Q1, driven by strong consumer demand and innovation. Gross margin reached a record 51.2%, and non-GAAP adjusted EBITDA rose 81% to $88 million, reflecting cost savings on freight and raw materials. Inventory fluctuations at the largest distributor (62% of North America sales) held back sequential revenue growth and may cause quarter-to-quarter noise going forward. Market share gains with an 11.5% share of the U.S. energy category (up 4 points YoY) and channel growth across club (+36%), e-commerce (+30%), and foodservice. International expansion continues with a 5.5% share in Canada and planned rollouts in Australia, France, Ireland, New Zealand, and the U.K. in late 2024 and 2025. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallCelsius Q1 202400:00 / 00:00Speed:1x1.25x1.5x2xThere are 13 speakers on the call. Operator00:00:00Good day. My name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsius Holdings Incorporated First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:34Thank you. I'd now like to hand over the conference call to Paul Wiseman. You may now begin. Speaker 100:00:42Thank you, and good morning, everyone. We appreciate you joining us today for Celsius Holdings' Q1 2024 Earnings Conference Call. Joining me on the call today are John Fieldly, Chairman and Chief Executive Officer Jared Langans, Chief Financial Officer and Toby David, Chief of Staff. The call will open to questions following the prepared remarks. The company released its Q1 earnings press release earlier this morning and all materials are available on the company's website, celsiusholdingsinc.com as well as on the SEC's website, sec.gov. Speaker 100:01:16As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link used to join today's call. Please be aware that this call may contain forward looking statements, which are based on forecasts, expectations and other information available to management at this time. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements. We encourage you to review in full our Safe Harbor statements contained in today's press release and in our quarterly filings with the SEC for additional information. Speaker 100:02:00Additionally, management will share operating results on both a GAAP and non GAAP basis. Descriptions of the non GAAP financial measures that we use such as non GAAP adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the Q1 of 2024. With that, I'd like to turn the call over to Chairman and Chief Executive Officer, John Fieldly for his prepared remarks. Speaker 200:02:28Thank you, Paul. Good morning, everyone. Thank you for joining us today. This morning, Celsius reported a 37% year over year increase in revenue for the Q1 of 2024, totaling $355,700,000 for the period, a new first quarter revenue record for the company. Celsius alone was responsible for approximately 47% of the entire energy drink category growth year over year in the Q1. Speaker 200:02:54And as we reported in this morning's press release, Celsius now holds an 11.5 share in Mulak for the 4 weeks period ending April 14 according to Surcona. This is a full point higher than the Q4 2023 and 4 points higher than 1 year ago. These results on their own are very strong, especially after growing at a triple digit for the past 3 consecutive years. Even so, our Q1 revenue would have been higher except that it was adversely affected due to inventory movements by our largest customer, which is beyond our control. The year over year inventory variation is attributed to elevated Q1 2023 restocking, which we believe was meant to compensate for the Q4 2022 destocking and to prepare for a robust spring resets that were planned in 2023. Speaker 200:03:46However, no such first quarter restocking and spring reload in was observed this year. Absent these effects, we would have seen a higher growth rate. Ongoing inventory fluctuations may be expected in subsequent quarters because our largest distributor constitutes approximately 62% of our total North America business during the Q1 of 2024. While these inventory fluctuations caused noise in our sequential quarterly revenue figures, what's important to focus on here is that Celsius is constantly on shelves, stock hold, stock high with a 98.4% ACV and our category across all track channels and on track channels continues to grow. We introduced several new flavor innovations since the beginning of this year, including Galaxy Vibe, which may be our most refreshing and delicious flavor yet, as well as the Celsius Essentials line, which began its national distribution in January and has now achieved a 54.5 percent ACV and a 5.5 point share increase since we last reported in February. Speaker 200:04:49We estimate that retailer spring resets were approximately 1 third complete at the end of the quarter and once concluded, we're expecting our best shelf space gains in the company history. The importance of these space gain increases and placements and improvements cannot be overstated. The visual impact of multiple full shelves of cold Celsius in convenience stores and coolers and in the grocery shelves is a powerful in store billboard and showcases our portfolio. The full effect of these shelf resets is expected to be reflected in the scanner data beginning in July. In March, we launched a new incentive program with Pepsi that further aligns our shared interest within the energy category, including alignment around priorities and delivering a program that will contribute to our long term goal becoming the number one energy drinks brand in the world. Speaker 200:05:37As we prepare for our 100 Days of Summer campaign, we are well positioned with the best in store presence in company history, the most refreshing products and some great marketing initiatives, which I'll discuss later in Speaker 300:05:48the call. Speaker 200:05:49And as just noted, a strong aligned partnership with our North America distribution partner. CELSI's share in LULAC in the most recent 4 week data as of April 14 as stated was 11.5 share, an increase of approximately 4 points compared to the year ago period. We're pleased with our continued share growth across all tracked channels. As we shared on our last earnings call, there are 12 major U. S. Speaker 200:06:14Markets where Celsius maintains a 15 point share or greater, And we are within just a few points of 15 share in several additional markets. With our growth and expansion, we're adding more talented people. And already this year, we've increased our sales and key accounts team by approximately 85%. By the end of this year, we're expecting to have 3 times as many sales staff compared to this time last year supporting our growth and the opportunities we see ahead. Our world class operation teams continue to drive efficiencies to reduce freight and raw material cost savings this quarter contributing to our highest gross margin to date at 51.2%. Speaker 200:06:55Turning to pricing, we have generally maintained flat pricing on a per volume basis across our portfolio, while strategically promoting our new 16 ounce line Celsius Essentials to drive trial. And a reduced pricing and scanner data reflects Celsius Essentials promotions and the increased mix of variety packs into our overall sales, which come with a lower per ounce costs. We continue to consider strategic pricing and promotional opportunities that allow us to maintain our premium position in the category while maintaining velocity. With that said, we continue to review and monitor both our distribution and infrastructure and the commodity environment across the back half of twenty twenty four and into 2025. Celsius new product innovation this year is the best tasting and most refreshing beverages we've ever created. Speaker 200:07:42A new favorite here is Celsius Galaxy Vibe, which joins other excellent 2024 additions in our 12 ounce line including Blue Raspberry Lemonade, Sparkling Raspberry Peach and Astro Vibe. We are very pleased with the strong retailer supporting our initiatives rolling out our 16 ounce line of Celsius Essentials, which now has reached approximately 54.5% ACV as of mid April with availability increasing across the country. Celsius Omnigo Powders continues to perform well with our recent innovation with a refreshing strawberry coconut and blueberry lemonade being our top two performers. We have more Celsius, Omigo powder innovation planned for this year and continue to see great opportunities with this line. Non track channels including club, e comm and food service continue to be tailwinds to our overall growth. Speaker 200:08:33Club sales in the Q1 increased 36 percent to $63,000,000 compared to $46,500,000 in the same period in 2023. Sales on Amazon increased 30% year over year to $28,000,000 in the Q1, up from $21,800,000 in the prior period. Celsius ended the Q1 with a 20.2 share compared to Monster with a 20 share and Red Bull with a 12.3 share according to Stackline 12 week data ending March 30, 2024. Approximately 12% of Celsius sales through Pepsi in the quarter was to the foodservice channel with especially strong sales in restaurants, recreation, lodging and gaming locations. International sales, which do not include Canada increased 42% in the quarter to $16,200,000 Celsius launched in Canada, which began in January continues to exceed expectations and we recently achieved a 5.5 share through the first two periods of 2024 according to Nielsen. Speaker 200:09:33In the Q1, Celsius announced plans to expand in Australia, France, Ireland, New Zealand and United Kingdom executing our stated strategy to pursue measured international growth balancing investment levels in new markets. I'm excited to say that as of April, Celsius is now officially available in select gyms and retailers across the United Kingdom and Ireland. Sales in Australia and New Zealand as well as France are planned to gradually begin in the Q4 of 2024 with phased expansion across the countries in 2025. Finally, we produced some fantastic marketing activations recently, including Celsius Cosmic Desert event in Coachella, which hosted celebrities and influencers as well as performers by leading artists. Celsius was also featured in a recent Saturday Night Live opening skit, making clear that Celsius is the top of mind functional energy brand in pop culture. Speaker 200:10:28And just last weekend, we activated our global partnership with Ferrari at the Formula 1 Miami Grand Prix. Congratulations to the Ferrari team for their podium finish. I'll now turn the call over to Celsius' Chief Financial Officer, Jared Langans to discuss our Q1 financial results. Jared? Speaker 400:10:45Thank you, John. Celsius delivered another record setting quarter, exceeding our expectations and producing strong returns while we grew the business and levered in certain areas. Revenue for the 3 months ended March 31, 2024 was approximately $355,700,000 an increase of 37% from 200 and $59,900,000 in the prior year period. To put this growth rate into historical context, when Monster Energy achieved $1,300,000,000 in net sales, they grew revenue 30% the following year. Adjusted for the inventory fluctuations John mentioned previously, Celsius would have grown at an even higher rate in the Q1 of 2024. Speaker 400:11:24North American revenue, which includes the United States and Canada, was $339,500,000 an increase of 37% from the same period last year. International revenue grew 42% to $16,200,000 as velocity continued to increase. We attribute our sales volume growth for the quarter to several key factors, including our ability to drive increased consumer demand, strong innovation and excellent in store execution by our key account and field sales teams. Continued growth in the club, e commerce and foodservice channels also served as a solid driver of our revenue growth in the quarter as did strong year over year share gains of more than 69% or 4 points in the convenience and gas channel. Gross profit in the Q1 increased 60 percent to $182,200,000 up from $113,800,000 in the prior year period. Speaker 400:12:15Gross profit margins in the Q1 were 51.2 percent of revenues compared to 43.8% for the prior year period. The improvement in gross profit margins is attributed to reduced freight and raw material costs. 1st quarter freight costs as a percentage of net invoice sales decreased 120 basis points year over year and cost of goods sold decreased 4 70 basis points. As we look to the remainder of the year, we have a number of key drivers that we are monitoring, including fuel costs, which have been rising, other commodity costs such as aluminum and our promotional calendar. As a result, we are taking a conservative approach to the remainder of the year and continue to stick with our commentary from February where we noted that gross margins in the high 40s was very achievable, but that we were not ready to move too far from that expectation until we got further into the year. Speaker 400:13:03Sales and marketing expenses for the quarter were 21% of revenue. We have hired a significant number of new team members and are on track to fill the remaining open positions by the end of Q2, but based on timing, we did see some benefit in Q1, which was slightly below where we expected to be and 3 points higher than the same period in 2023. We will continue to invest and plan to maintain investment in this area as we expand further into our 31 drill deep markets and internationally. As we continue to grow, our investment in sales and marketing will remain within the 20% to 23% range. General and administrative expenses for the Q1 of 2024 were approximately $23,200,000 an increase of 9% relative to Q1 2023. Speaker 400:13:45As a percentage of sales, G and A was 7% compared to 8% in the prior year period as we continue to leverage and due to lower third party costs such as legal fees. As we look across the remainder of the year, we would anticipate some ebbs and flows within G and A, but remain confident that we will be able to leverage this area in 2024. Non GAAP adjusted EBITDA increased 81% to approximately $88,000,000 in the first quarter compared to $48,700,000 in the prior year period, driven substantially by revenue growth and increase in margins and our continued leverage across SG and A. Net income attributed to common shareholders increased 106% to $65,000,000 in the quarter or $0.27 per diluted share compared to $0.13 in the prior year period. We ended the quarter with approximately $879,500,000 of cash on hand, which continues to accrue interest and remains available for strategic growth initiatives. Speaker 400:14:41Cash flows provided by operating activities totaled $135,000,000 in the Q1, which compares to negative $14,000,000 in net cash provided by operating activities in the prior year period. We will continue to invest in our working capital as well as CapEx around coolers in our fleet to drive further growth, but we do see a greater opportunity to continue to drive strong cash flow growth across 2024. This concludes our prepared remarks. Operator, you may now open the call for questions. Operator00:15:12We are now opening the floor for the question and answer session. Our first question comes from Kamil Gajrawala from Jefferies. Your line is now open. Speaker 500:15:34Thanks guys. Good morning. A question on inventories as we're thinking about 2Q, maybe how business has progressed from a consumption perspective in 2Q, but also, our inventory is now tight and low as we're going into another 2 thirds of shelf resets, do maybe some of the $20,000,000 reverse in 2Q. Can you just give some context around that? Yes. Speaker 600:15:57Good morning. Great question. We did state that in our prepared remarks in regards to some of the inventory fluctuation with our partner. We don't control the inventory levels, but we do feel that everyone is optimizing inventory levels as we move forward, and we'll see how that evolves. If you look at our inventory levels over the last 15 months, looking at the especially the cash flow statement, we've optimized our inventory levels as well, about $47,000,000 So I think every business is going to be optimizing. Speaker 600:16:29I think really the most important thing when we look at it is keeping the shelves stocked, most importantly, keeping the shelves cold and just preparing for this, the reset season that's underway, as we continue to progress forward. And the scan data is really strong, especially last week at at the register according to, Zircona. So we feel like we're in a good shape, but to predict where inventory levels move is just really difficult for our partner. I don't know, Jared, if you have any other comments to add. Speaker 700:16:54Yes. Like John said, depletions are really good. They're rock solid. But as I look at April, I'd say this is kind of a new normal for us at the moment. We'll see where our partner goes from here, but I wouldn't bake in a reversal of what we've seen. Speaker 500:17:12Okay, got it. And then margins were quite substantially ahead of plan. Is there anything one time in there or is it just sort of the leverage off your growth? Speaker 200:17:22Yes. Jared, want to talk about margins? Speaker 700:17:24Yes. I mean, you know I always point to freight as something that fluctuates from quarter to quarter and that's definitely been something that if you look back over the last 3 years it has been. We've been able to keep it within a kind of a set of guardrails, but we did see some good freight rates this quarter. We'll continue to look to optimize that, but some of that will be dependent upon fuel costs as we look out into the back half of the year. We have seen some good activity in terms of leveraging our business and our scale around raw materials. Speaker 700:17:56But at the same time, we are moving into a much higher promotional time period with 100 days of summer. So that's why we kind of said we're not ready to put the line in the sand at the rate we were able to deliver in Q1. You know, we're always going to try to deliver that or better. And we do have a kind of a long term goal that we're looking to get to. But I would say as we look out to Q2, Q3, Q4, we're kind of sticking with what we said at the end of February, which was kind of that high end of the 40s and not quite locking in into the 50s yet. Speaker 400:18:29Got it. Okay. Thank you. Speaker 600:18:31Thank you. Operator00:18:37Ashok Chen from Stifel, your line is now open. Speaker 800:18:42Hey, morning guys. I wanted to go back to that last question, the one that we're getting a lot today as far as the timing of this inventory stuff. So if I do some rough math, it looks like you've undershipped demand per scanner data decently the last two quarters. 1Q, obviously, when you're lumping in the rollout into Canada, would you just make that even more pronounced? So I guess the question is, A, what do you say to that, meaning that we can all kind of see where end demand is versus what your sales are and your sales are a lot lower. Speaker 800:19:22And 2, as you think about how Pepsi is managing shelves, does this have an impact? Have you seen any impact from a service level standpoint on out of stocks and whatnot? And kind of how do you work with them to make sure that you prevent that assuming that you haven't seen it yet, but may given where trends seem to be moving? Speaker 600:19:47Yeah. Mark, I'll take it at the beginning of the question. You know, when you look at the inventory levels, I think our partners are at really good inventory levels right now. We're maintaining deliveries. We're keeping product in stock. Speaker 600:20:03We're seeing scan data. We just broke a record on the share gain to 11.5. So product is flowing. I think we're both getting, you know, learning about each other, our supply chains, and looking to further optimize. So, you know, I can't speak for our partner, but, you know, they are maintaining supply levels, servicing customers. Speaker 600:20:24We have greater ACV. The resets have gone well. The ones that have been reset so far. So, and we're further working on programs for the 100 days of summer, working on further displays and end cap programs. So I think we feel really good where we're at. Speaker 600:20:41You're going to see some optimization on both sides. Like I said, you know, to Kamal is that, you know, we did optimize our inventory as well, about 47,000,000 in the last 15 months, if you look at the cash flow statement. So you know, in regards to the shelves, we're not seeing, you know, out of stocks. You know, you're always going to have some that's just part of the business, but always there's ways to further optimize. And I think we're in a good shape. Speaker 600:21:04We're in a really good place. We have good inventory levels now. We feel confident in our inventory levels and confident in the Pepsi inventory levels supporting our growth. Speaker 800:21:14Got it. Okay. And then I guess just just staying on the point, was there any change in the inventory levels that Pepsi held through the March quarter that was notable? I say that in part just out of curiosity and partly with the view that distribution points continue to expand. Obviously, you talked about what you did through March 31, implying a pretty substantial increase in distribution points as you head to summer. Speaker 800:21:45So it would just be odd to me that you would reduce the amount of inventory for Pepsi. And I guess, just how do you think about that progression through? And then you talked about April being a little bit weaker. So I guess, sort of related to the first question, but kind of how does the timing of that work through? Did they hold more at the beginning of the quarter and less at the end of the quarter? Speaker 600:22:07Yeah, I think we haven't spoken about April being weaker. I think Jared was talking about maintaining inventory levels with our partners maintaining as we enter the Q2. We're going to have to see how this plays out, how the quarter unfolds. I think with optimizing inventories, we're getting more efficient. We're able to ship product, and in less number of days, you know, prior to running 14 days. Speaker 600:22:31And now, in many cases, we're shipping within 7. So, you know, we're just finding further ways to optimize our supply chain. So that's going to impact some of our, some of the revenue recognition, you know, standards in order, you know, as we continue to progress forward. But I think the most important thing to really look at is what's taking place within the scanner data for the end user and the end customer, which continues to maintain. It seems to be extremely strong and we got good momentum heading in, especially the 100 days of summer, double the sales staff, great refreshing innovation and a bunch of great marketing assets and activities. Speaker 600:23:06I don't know, Jared, if there's any more color you want to add on there. Speaker 700:23:08I'm aligned with you. I think, you know, we're in good shape. We haven't seen any service issues, you know, as they optimize their system. As long as they're getting product on the shelf, that's, you know, that's what we're most concerned with. Speaker 400:23:23Alrighty. Thank you. Speaker 600:23:24Thank you. Operator00:23:28Our next question comes from Jeff Van Sinderen from B. Riley. Your line is now open. Speaker 900:23:37Good morning, everyone. Wanted to circle back to a comment you made on markets where you're getting close to a 15% market share. Maybe any more color you can add on that? I guess what specifically you've done in those markets to achieve that and plans to apply those initiatives to other markets? Speaker 600:24:02Yes, Jeff, great question. It's really exciting that now we're in 12 markets, major metropolitan markets in the U. S. Right now that are over a 15 share. And then we have several additional markets that are getting close to that range. Speaker 600:24:16So what we're seeing is just really the further collaboration with our Pepsi partners, further building out our sales team and marketing teams and really using our methodology methodological approach to marketing and activation, which has worked well. It's activating the consumer where They live, work and play, disrupting the path to purchase, building that awareness, getting that trial. And we have such great flavors and a great product and a great brand that we build that loyal consumer. And, you know, when we're seeing, our Celsius consumers further increasing their consumption levels as we've further built out our availability. We're seeing category growth. Speaker 600:24:54We're driving category growth about 47% of the category growth is coming from new to category and Celsius is creating that. So really exciting. It's really about gaining that additional distribution and really closing the gap with inconvenience, and we've talked about that for many years. And we've done well in large format, and online and with gyms and health clubs. And now we're really next phase is really closing the gap in convenience and getting better placement. Speaker 600:25:21You're seeing the share numbers start to increase there. Speaker 900:25:26Okay, great. And then, I just wanted to circle back to spring resets as well. Maybe you could just speak a little bit more about where you're seeing the most significant gains, maybe touch on that in terms of SKUs, spacings, quality of shelf locations, that sort of thing? Speaker 600:25:44Yeah. I think when you look at the resets, we're really excited. It's it's going to be convenience is a big the biggest opportunity. So we're expecting some pretty good growth within the convenience channel, as well as our existing accounts. As an example, in Publix, we just moved over from the HPC to the energy category and the energy set, and we've gained further placement in front checkout coolers. Speaker 600:26:06And we're working with several other retailers. More to come on that. We expect full resets to be done by the end of June, but really looking to gain further placements, in all accounts. The key accounts team has been extremely positive this year. Speaker 1000:26:22Okay, great. Speaker 900:26:22And then just as a follow-up to that, as far as the coolers go, what are the plans for coolers this year? And also, is there an opportunity to get into a lot more coolers that are maybe not Celsius coolers at this point? Speaker 600:26:34Yes, I think that's a huge opportunity and that's really partnering with PEP Energy and working really closely with our Pepsi partner, gaining more distribution and availability in cold placements. Our key accounts team is working on branded, Celsius coolers. That's a big initiative. We're not going to put a number out, but if there's substantial number, we're looking to place. And, in regards to the Q1, I think the team's placed almost the 3,000 coolers, but lots of opportunities with coolers. Speaker 600:27:02We expect to really continue the momentum as we go forward. Speaker 900:27:07Okay. Thanks for taking my questions and continued success. Speaker 600:27:11Thank you, Jeff. Operator00:27:14The next question comes from Jonathan Kippur from Bank of America. Your line is now open. Speaker 1000:27:22Hey, everybody. Good morning, sorry, and thanks for the question. I've got a couple on margins and then a couple on sales. I guess on margins, just looking at the chart on aluminum, I think it's up pretty meaningfully year over year. Can you guys give us any kind of magnitude of COGS exposure to aluminum? Speaker 1000:27:41And I guess a sense of timing about maybe where those higher costs will flow through? Speaker 600:27:47Yes. John, I'll turn it over to Jared. Speaker 700:27:50Yes. So a couple of things. Let me jump on an inventory question that was asked. Just to clarify, when I was talking about April, I was talking about days on hand is consistent from March into April. So that wasn't a knock on what we're seeing. Speaker 700:28:05You know, in April, as we continue to see our resets happen, we're doing very well and you can see the consumer data. We continue to get more SKUs. We continue to get more space, etc. So just a clarity there. That was more of a days on hand comment more than anything. Speaker 700:28:21In terms of the aluminum, you're seeing some fuel costs go up. We have locked in a lot of our aluminum pricing. So we do we're in pretty good shape there. So we tend to lock that in around Q4 of every year. Speaker 1000:28:35Okay, cool. On margins again, just in terms of the amendment to the Pepsi agreement, I guess what are the implications to the margin from here? What is there a benefit? Is it slightly dilutive or anything like that? Just a sense of what it may or may not do to margins. Speaker 700:28:56Yes. So the incentive program is for Pepsi, it's incentive based, right? So obviously we're going to get something for it. So the idea is to really drive, what our priorities are, what their priorities are across energy. We want to be the number one energy brand in the world. Speaker 700:29:12It's also really to drive alignment. And so from that perspective, it's an incentive program. So the idea is to really push us to the next level. There is obviously it's an incentive program, so there is obviously a cost to that program. So it's something that I would look to see ramping up across, call it, the 1st 6, 7, 8 months of the year and to really be cruising by the time we get to the back part of the year. Speaker 1000:29:39Cool. Thank you. And if it's all right, just a couple more on revenue. I guess specifically in Costco, that came in a bit light, same as on Foodservice. Just wondering about the sequential decline in Costco and the flats in food service, any drivers there that you can point to or what to expect going forward? Speaker 700:30:01Yes. So Costco, really the club channel, we probably should have called that out last quarter, but we did see a really good Thanksgiving week and Black Friday. So we had a, you know, the team really activated phenomenally there. So we did get a bit of a bump there in Q4 versus Q1. Q1 does also tend to be a little slower in the club channel. Speaker 700:30:22What was the other part? The food service. Food service remained strong. That can be a little lumpy at times, but being up at that 12 ish range is pretty good for us. And we do we are seeing gains in areas like convenience. Speaker 700:30:38So we're seeing gains in some of the other areas that are, from a scale perspective, bigger. So as we see gains there, you may not see the same percentage growth from 1%, but we are seeing dollar growth. Speaker 1000:30:52Cool. And then just last one on the shelf resets coming up. So it sounds like 1 third done already, 2 third coming. So basically a doubling of what's already been put in the more than a doubling of what's been put in the trade already. I guess in the Nielsen, you can see that TDPs and the average number of items looks great. Speaker 1000:31:13But if it's going to keep moving up from there, I guess is that going to be does that kind of imply new flavors or innovations coming to market by the end of the year? Or is it going to be like double, triple facing that kind of thing? Speaker 600:31:25Yes. I think the goal is to gain double, triple facing. So a lot of the resets, you know, items, average items per store, you know, might not increase, show up in the scanner data, but we are gaining those secondary, 3rd placements and better placements within retailers. So, you know, as an example, like within I mentioned Publix moving from HPC into the energy aisle, also gaining additional availability and placements in cold checkouts. That's an example of a transitional move. Speaker 600:31:55And also we're looking at other retailers as well. So, you know, we do have innovation coming in this year, which we're launching. We launched Celsius essentials, we got, a Galaxy Vibe, a variety of other great flavors, but we're really, I think the bulk of the resets, you're going to be seeing them by double, triple facing within stores and gaining a secondary placements. Speaker 1000:32:16Great. Thanks very Speaker 600:32:17much. Thank you. Operator00:32:22Our next question comes from Michael Lavery from Piper Sandler. Your line is now open. Speaker 1100:32:29Thank you. Good morning. Speaker 900:32:31Good morning. Just wanted Speaker 1100:32:33to come back to the inventory for a minute. And I think you've been clear not to expect a snapback or an inventory restocking. But should we expect any more destocking? I know you said the inventory levels feel about right, but how low could it go? Is that something we should watch out for? Speaker 600:32:53Yes. I mean, I can't control that or we can't control that. I think it's sales are flowing, sales are strong at the register. So, you know, it seems to be like the balancing has been finalized. But, you know, who knows what next week or the week after happens. Speaker 600:33:13But I think right now, it seems somewhat stable as we ended the ending March. Speaker 1100:33:21Okay. And just back on the incentive plan, you've given some color on that. I know you don't want to be too specific, but can you maybe touch on what the rationale was? What prompted you? What problem was it fixing? Speaker 1100:33:37Because obviously there was great momentum in place. What does this change qualitatively that makes it seem like it's kind of worth changing the terms? Speaker 600:33:48Yes. I think when you look at the partnership, we're heading in really at a great point where within the where Celsius is within the energy category, We just broke that 10 share. You're looking at ways to further partner and incentivize our distributor and our partners. And we do that with our employees. We do have retailers and our distributors. Speaker 600:34:09So this is like a standard practice we've done in the past. So I don't think it's out of the anything out of our standard course of business. We've done variety incentive programs, and it's, this further aligns us with additional prioritizations within PEP Energy, also solidifies this, and, you know, as more incentives, so we both win together. And it really achieves our long term goals. We feel really confident in where we are and what better way to incentivize both parties to continue to drive Celsius for it. Speaker 600:34:40I don't know, Jared, if you want to add anything else. Speaker 700:34:42No, I agree with you. It's really about making sure we're all fully aligned together to take that next step and to really go after the number 2 and number 1 players in the market. We need to do it together. Speaker 900:34:55Yes. Okay, Speaker 1100:34:56great. Thanks so much. Speaker 600:34:57Thank you. Operator00:35:00The next question comes from Peter Grom from UBS. Your line is now open. Speaker 600:35:27Maybe go to the next question. Operator00:35:28Our next will give. Our next question comes from John Anderson from William Blair. Your line is now open. Speaker 300:35:37Hey, thanks for the question. I just wanted to ask about the category growth that you're driving. I mean, you're driving half of the growth in the category energy category. And I'm curious to know to what extent you're seeing that come through as kind of new consumers into the category? To what extent you think you're driving buy rate through new occasions? Speaker 300:36:05And then how the brand is performing overall from a household penetration and the kind of repeat rates you're seeing? So just digging into some of the metrics underpinning the growth that you're seeing both for the category that the brand is driving, but also your brand. Thanks. Speaker 600:36:23Yeah. No, great question. And, you know, it's exciting because, you know, we're when you look at like brand shifting, we're not seeing a substantial amount of our growth coming from brand shifting. It really is incremental and it's increasing the user intensification. Our core consumers are consuming more. Speaker 600:36:40And then it's about 35 percent. The latest data we had is increased intensification of more consumption of our core or base. And then new to category for us was 42%. And this was as of the end of March. So really seeing then 23% brand shifts. Speaker 600:37:00So we're expanding the category. We're changing the way consumers think about energy as well. And we're seeing that, you know, talk about Jersey Mike's and Dunkin' Donuts and really the partnership with Pepsi allows us to take advantage of this opportunity we have with some of the most refresh. We feel we have the most refreshing energy drinks in the world. And it's showing we're bringing new consumers, we're growing a category. Speaker 600:37:22We got a lot of great attributes within the brand. We look at better for you trends. Celsius has over 7 essential vitamins. You look at how we all want our foods and beverages to have more function. Celsius delivers on that, with our thermogenic properties. Speaker 600:37:37And then you also look at fitness, this health and wellness trend, and we're all about living fit and living life to the fullest. So I think we're really well positioned. And, you know, we haven't really seen that change within the user intensification, as well as the increase to new to category over the last, really over the last 6 to almost a year now. Speaker 300:37:58Great, that's helpful. And on these 33 or so drill down markets, can you talk about what you're doing there that are 31 drill deep markets, what you're doing there that's different at present and kind of what you're expecting in terms of, I guess, maybe share results as a measuring stick? Thanks. Yes. Speaker 600:38:18I think, well, you know, you talk about household penetration and that shows, you know, as we've continued to drive forward with our targeted market programs and as well as our distribution games, our household penetration has reached an all time high, most recently at a 29.7 percent household penetration. So really proud of the team and all the hard work they've been doing. You know, we take an approach of a drill deep strategy. You know, we're not going to get into specific strategies because a lot of competitors are listening on the call, but we have a proprietary blend of a special formula here with which starts with the employee and a great product that we promote market. And it's all about touching consumers where they live, work and play, creating awareness, creating trial and then creating loyalty. Speaker 300:39:07Thanks. Operator00:39:10Our next question comes from Peter Grom from UBS. Your line is now open. Speaker 1200:39:17Hey guys, can you hear me now? Speaker 600:39:19Yes, we can hear you. Excellent. Speaker 900:39:22All right, cool. So I guess just a couple Speaker 1200:39:24of follow ups here. Just in terms of the inventory dynamic, Jared, can you just remind us what we're kind of comping against from a year ago perspective? Like I guess you might not have visibility on what types you might do or how to manage it sequentially. But when we just think about how this dynamic evolved last year, I think it kind of held in 2Q, grew again in 3Q. So just should we expect kind of this gap versus standard data to kind of continue as we move through the year? Speaker 1200:39:50Or do you expect it to kind of be more aligned at this point? Speaker 700:39:54Yes. I mean, remember, we were just getting started last year, and so we're still learning each other. And obviously, as everybody in CPG, it's all about optimizing the supply chain to make sure we're spending our dollars wisely. So, we did see some buildup in Q1 like we talked about, $25,000,000 Across Q2 and Q3, we saw some minor buildup and it kind of stuck steady for kind of Q2, Q3, Q4. To Mark's earlier point, there was some innovation in there, so that could have maybe there would have been some inventory taken down in Q4 if it weren't for that and as they were optimizing. Speaker 700:40:31And then across Q1, clearly, there's been some optimization occurring. Again, no issue with having product on the shelf and we do have KPIs that we work together to maintain in terms of service standards. And so we have no complaints there and we're fully believe they're fully committed. We're fully committed. So we're very happy with how things are going there. Speaker 700:40:52But if there's opportunity to optimize like John said, we'll do it and they're welcome to do it too. So I think what I mentioned with April is the days on hand that we saw kind of in March kind of were maintained in April. But the consumers there, if they can maintain inventory levels and keep the product on the shelf, then that's we're comfortable with that. Speaker 1200:41:17Okay, great. And then just following up on kind of the shelf resets and kind of the market share metrics you mentioned. I think you said a third of the shelf resets were done by March. I mean, when did those actually take place in 1Q? I'm just trying to understand whether there is a benefit including kind of these 4 week share figures that you mentioned on the 4Q call. Speaker 1200:41:37I think it was the same 11.5% that you mentioned in the latest 4 weeks today. So share is kind of on a monthly basis held steady. And then I think as we look ahead, is there anything you can share in terms of the phasing of the benefits? I know you touched on, but we won't see the full benefits until July, but kind of where are we now in the 1st week of May? What's really the progression look like? Speaker 1200:41:56And is there really any way to put into context what you actually expect in terms of track growth or market share performance as these resets happen? Thanks. Speaker 700:42:06Yes. I think jumping to 115, I think the last pull, maybe been the last couple of weeks is more like 11.8. So we do continue to see the number climb as we go through April and into May. So we are seeing good progress. As those resets continue to happen, we'll benefit. Speaker 700:42:23Once they're fully baked in, we'll really see where we are once we get to early July, once everything's baked in. So, we continue to be on track. There's been some rumblings out there that it's been a little slower in terms of resets this year versus prior years. But we're going to have the best space gains we've had in the history of the company. We're super excited about it. Speaker 700:42:47Our key account team and our sales guys are working diligently with all of our customers. And you know, we're going to have a phenomenal back half of the year once we get all these resets in place. Speaker 1200:43:01Thanks so much. I'll pass it on. Speaker 600:43:04Thank you. Operator00:43:07We have reached the end of the question and answer session. I'd now like to hand back the call over to John Field, please, for final remarks. Speaker 600:43:17Thank you, operator, and thanks for everyone for joining us this morning. We've heard your feedback from our investors and analysts about the earlier start time, so starting next quarter, we will begin to start this call a little bit earlier. Thank you for all of our partners, especially to our employees who have worked so hard. Your passion and drive is what makes Celsius special. Celsius will be participating in several upcoming conferences, and I look forward to seeing everyone each and every one of you there. Speaker 600:43:45A full schedule of the upcoming conferences will be posted shortly. Until then, stay healthy and live fit. Make it a great day and grab a refreshing Celsius. Operator00:43:59Thank you so much for attending today's conference call. You may now disconnect. Have a wonderful day.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Celsius Earnings HeadlinesCelsius energy drink cans mistakenly contain vodka seltzer in High Noon recall posted by the FDAAugust 1 at 9:51 PM | msn.comHigh Noon vodka found in energy drink cans; What to know about Celsius recall in PAAugust 1 at 9:51 PM | yahoo.comElon’s Secret Social Security BombshellTo All Americans Born Before April 16th, 1963: Did Trump Just Give The Green Light To Radically RE-DO Social Security? What we just discovered in Washington will stun even the most seasoned insiders.August 2 at 2:00 AM | Banyan Hill Publishing (Ad)Cans gone wild: High Noon recall after vodka sneaks into Celsius cansAugust 1 at 4:34 AM | msn.comB. Riley Has Optimistic Outlook of Celsius Q2 EarningsAugust 1 at 2:09 AM | americanbankingnews.comCelsius Holdings to Release Second Quarter Results on Thursday, Aug. 7, 2025July 31 at 4:32 PM | businesswire.comSee More Celsius Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Celsius? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Celsius and other key companies, straight to your email. Email Address About CelsiusCelsius (NASDAQ:CELH) Holdings, Inc. develops, processes, markets, distributes, and sells functional energy drinks and liquid supplements in the United States, Australia, New Zealand, Canadian, European, Middle Eastern, Asia-Pacific, and internationally. The company offers CELSIUS, a fitness drink or supplement designed to accelerate metabolism and burn body fat; various flavors and carbonated and non-carbonated functional energy drinks under the CELSIUS Originals and Vibe name, as well as functional energy drink under the CELSIUS Essentials and CELSIUS On-the-Go Powder names; and CELSIUS ready-to drink products. It distributes its products through direct-to-store delivery, distributors, supermarkets, convenience stores, drug stores, nutritional stores, and mass merchants, as well as health clubs, gyms, the military, and e-commerce websites. The company was formerly known as Vector Ventures, Inc. and changed its name to Celsius Holdings, Inc. in January 2007. Celsius Holdings, Inc. was founded in 2004 and is headquartered in Boca Raton, Florida.View Celsius ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon's Earnings: What Comes Next and How to Play ItApple Stock: Big Earnings, Small Move—Time to Buy?Microsoft Blasts Past Earnings—What’s Next for MSFT?Visa Beats Q3 Earnings Expectations, So Why Did the Market Panic?Spotify's Q2 Earnings Plunge: An Opportunity or Ominous Signal?RCL Stock Sinks After Earnings—Is a Buying Opportunity Ahead?Amazon's Pre-Earnings Setup Is Almost Too Clean—Red Flag? 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There are 13 speakers on the call. Operator00:00:00Good day. My name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsius Holdings Incorporated First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:34Thank you. I'd now like to hand over the conference call to Paul Wiseman. You may now begin. Speaker 100:00:42Thank you, and good morning, everyone. We appreciate you joining us today for Celsius Holdings' Q1 2024 Earnings Conference Call. Joining me on the call today are John Fieldly, Chairman and Chief Executive Officer Jared Langans, Chief Financial Officer and Toby David, Chief of Staff. The call will open to questions following the prepared remarks. The company released its Q1 earnings press release earlier this morning and all materials are available on the company's website, celsiusholdingsinc.com as well as on the SEC's website, sec.gov. Speaker 100:01:16As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link used to join today's call. Please be aware that this call may contain forward looking statements, which are based on forecasts, expectations and other information available to management at this time. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements. We encourage you to review in full our Safe Harbor statements contained in today's press release and in our quarterly filings with the SEC for additional information. Speaker 100:02:00Additionally, management will share operating results on both a GAAP and non GAAP basis. Descriptions of the non GAAP financial measures that we use such as non GAAP adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the Q1 of 2024. With that, I'd like to turn the call over to Chairman and Chief Executive Officer, John Fieldly for his prepared remarks. Speaker 200:02:28Thank you, Paul. Good morning, everyone. Thank you for joining us today. This morning, Celsius reported a 37% year over year increase in revenue for the Q1 of 2024, totaling $355,700,000 for the period, a new first quarter revenue record for the company. Celsius alone was responsible for approximately 47% of the entire energy drink category growth year over year in the Q1. Speaker 200:02:54And as we reported in this morning's press release, Celsius now holds an 11.5 share in Mulak for the 4 weeks period ending April 14 according to Surcona. This is a full point higher than the Q4 2023 and 4 points higher than 1 year ago. These results on their own are very strong, especially after growing at a triple digit for the past 3 consecutive years. Even so, our Q1 revenue would have been higher except that it was adversely affected due to inventory movements by our largest customer, which is beyond our control. The year over year inventory variation is attributed to elevated Q1 2023 restocking, which we believe was meant to compensate for the Q4 2022 destocking and to prepare for a robust spring resets that were planned in 2023. Speaker 200:03:46However, no such first quarter restocking and spring reload in was observed this year. Absent these effects, we would have seen a higher growth rate. Ongoing inventory fluctuations may be expected in subsequent quarters because our largest distributor constitutes approximately 62% of our total North America business during the Q1 of 2024. While these inventory fluctuations caused noise in our sequential quarterly revenue figures, what's important to focus on here is that Celsius is constantly on shelves, stock hold, stock high with a 98.4% ACV and our category across all track channels and on track channels continues to grow. We introduced several new flavor innovations since the beginning of this year, including Galaxy Vibe, which may be our most refreshing and delicious flavor yet, as well as the Celsius Essentials line, which began its national distribution in January and has now achieved a 54.5 percent ACV and a 5.5 point share increase since we last reported in February. Speaker 200:04:49We estimate that retailer spring resets were approximately 1 third complete at the end of the quarter and once concluded, we're expecting our best shelf space gains in the company history. The importance of these space gain increases and placements and improvements cannot be overstated. The visual impact of multiple full shelves of cold Celsius in convenience stores and coolers and in the grocery shelves is a powerful in store billboard and showcases our portfolio. The full effect of these shelf resets is expected to be reflected in the scanner data beginning in July. In March, we launched a new incentive program with Pepsi that further aligns our shared interest within the energy category, including alignment around priorities and delivering a program that will contribute to our long term goal becoming the number one energy drinks brand in the world. Speaker 200:05:37As we prepare for our 100 Days of Summer campaign, we are well positioned with the best in store presence in company history, the most refreshing products and some great marketing initiatives, which I'll discuss later in Speaker 300:05:48the call. Speaker 200:05:49And as just noted, a strong aligned partnership with our North America distribution partner. CELSI's share in LULAC in the most recent 4 week data as of April 14 as stated was 11.5 share, an increase of approximately 4 points compared to the year ago period. We're pleased with our continued share growth across all tracked channels. As we shared on our last earnings call, there are 12 major U. S. Speaker 200:06:14Markets where Celsius maintains a 15 point share or greater, And we are within just a few points of 15 share in several additional markets. With our growth and expansion, we're adding more talented people. And already this year, we've increased our sales and key accounts team by approximately 85%. By the end of this year, we're expecting to have 3 times as many sales staff compared to this time last year supporting our growth and the opportunities we see ahead. Our world class operation teams continue to drive efficiencies to reduce freight and raw material cost savings this quarter contributing to our highest gross margin to date at 51.2%. Speaker 200:06:55Turning to pricing, we have generally maintained flat pricing on a per volume basis across our portfolio, while strategically promoting our new 16 ounce line Celsius Essentials to drive trial. And a reduced pricing and scanner data reflects Celsius Essentials promotions and the increased mix of variety packs into our overall sales, which come with a lower per ounce costs. We continue to consider strategic pricing and promotional opportunities that allow us to maintain our premium position in the category while maintaining velocity. With that said, we continue to review and monitor both our distribution and infrastructure and the commodity environment across the back half of twenty twenty four and into 2025. Celsius new product innovation this year is the best tasting and most refreshing beverages we've ever created. Speaker 200:07:42A new favorite here is Celsius Galaxy Vibe, which joins other excellent 2024 additions in our 12 ounce line including Blue Raspberry Lemonade, Sparkling Raspberry Peach and Astro Vibe. We are very pleased with the strong retailer supporting our initiatives rolling out our 16 ounce line of Celsius Essentials, which now has reached approximately 54.5% ACV as of mid April with availability increasing across the country. Celsius Omnigo Powders continues to perform well with our recent innovation with a refreshing strawberry coconut and blueberry lemonade being our top two performers. We have more Celsius, Omigo powder innovation planned for this year and continue to see great opportunities with this line. Non track channels including club, e comm and food service continue to be tailwinds to our overall growth. Speaker 200:08:33Club sales in the Q1 increased 36 percent to $63,000,000 compared to $46,500,000 in the same period in 2023. Sales on Amazon increased 30% year over year to $28,000,000 in the Q1, up from $21,800,000 in the prior period. Celsius ended the Q1 with a 20.2 share compared to Monster with a 20 share and Red Bull with a 12.3 share according to Stackline 12 week data ending March 30, 2024. Approximately 12% of Celsius sales through Pepsi in the quarter was to the foodservice channel with especially strong sales in restaurants, recreation, lodging and gaming locations. International sales, which do not include Canada increased 42% in the quarter to $16,200,000 Celsius launched in Canada, which began in January continues to exceed expectations and we recently achieved a 5.5 share through the first two periods of 2024 according to Nielsen. Speaker 200:09:33In the Q1, Celsius announced plans to expand in Australia, France, Ireland, New Zealand and United Kingdom executing our stated strategy to pursue measured international growth balancing investment levels in new markets. I'm excited to say that as of April, Celsius is now officially available in select gyms and retailers across the United Kingdom and Ireland. Sales in Australia and New Zealand as well as France are planned to gradually begin in the Q4 of 2024 with phased expansion across the countries in 2025. Finally, we produced some fantastic marketing activations recently, including Celsius Cosmic Desert event in Coachella, which hosted celebrities and influencers as well as performers by leading artists. Celsius was also featured in a recent Saturday Night Live opening skit, making clear that Celsius is the top of mind functional energy brand in pop culture. Speaker 200:10:28And just last weekend, we activated our global partnership with Ferrari at the Formula 1 Miami Grand Prix. Congratulations to the Ferrari team for their podium finish. I'll now turn the call over to Celsius' Chief Financial Officer, Jared Langans to discuss our Q1 financial results. Jared? Speaker 400:10:45Thank you, John. Celsius delivered another record setting quarter, exceeding our expectations and producing strong returns while we grew the business and levered in certain areas. Revenue for the 3 months ended March 31, 2024 was approximately $355,700,000 an increase of 37% from 200 and $59,900,000 in the prior year period. To put this growth rate into historical context, when Monster Energy achieved $1,300,000,000 in net sales, they grew revenue 30% the following year. Adjusted for the inventory fluctuations John mentioned previously, Celsius would have grown at an even higher rate in the Q1 of 2024. Speaker 400:11:24North American revenue, which includes the United States and Canada, was $339,500,000 an increase of 37% from the same period last year. International revenue grew 42% to $16,200,000 as velocity continued to increase. We attribute our sales volume growth for the quarter to several key factors, including our ability to drive increased consumer demand, strong innovation and excellent in store execution by our key account and field sales teams. Continued growth in the club, e commerce and foodservice channels also served as a solid driver of our revenue growth in the quarter as did strong year over year share gains of more than 69% or 4 points in the convenience and gas channel. Gross profit in the Q1 increased 60 percent to $182,200,000 up from $113,800,000 in the prior year period. Speaker 400:12:15Gross profit margins in the Q1 were 51.2 percent of revenues compared to 43.8% for the prior year period. The improvement in gross profit margins is attributed to reduced freight and raw material costs. 1st quarter freight costs as a percentage of net invoice sales decreased 120 basis points year over year and cost of goods sold decreased 4 70 basis points. As we look to the remainder of the year, we have a number of key drivers that we are monitoring, including fuel costs, which have been rising, other commodity costs such as aluminum and our promotional calendar. As a result, we are taking a conservative approach to the remainder of the year and continue to stick with our commentary from February where we noted that gross margins in the high 40s was very achievable, but that we were not ready to move too far from that expectation until we got further into the year. Speaker 400:13:03Sales and marketing expenses for the quarter were 21% of revenue. We have hired a significant number of new team members and are on track to fill the remaining open positions by the end of Q2, but based on timing, we did see some benefit in Q1, which was slightly below where we expected to be and 3 points higher than the same period in 2023. We will continue to invest and plan to maintain investment in this area as we expand further into our 31 drill deep markets and internationally. As we continue to grow, our investment in sales and marketing will remain within the 20% to 23% range. General and administrative expenses for the Q1 of 2024 were approximately $23,200,000 an increase of 9% relative to Q1 2023. Speaker 400:13:45As a percentage of sales, G and A was 7% compared to 8% in the prior year period as we continue to leverage and due to lower third party costs such as legal fees. As we look across the remainder of the year, we would anticipate some ebbs and flows within G and A, but remain confident that we will be able to leverage this area in 2024. Non GAAP adjusted EBITDA increased 81% to approximately $88,000,000 in the first quarter compared to $48,700,000 in the prior year period, driven substantially by revenue growth and increase in margins and our continued leverage across SG and A. Net income attributed to common shareholders increased 106% to $65,000,000 in the quarter or $0.27 per diluted share compared to $0.13 in the prior year period. We ended the quarter with approximately $879,500,000 of cash on hand, which continues to accrue interest and remains available for strategic growth initiatives. Speaker 400:14:41Cash flows provided by operating activities totaled $135,000,000 in the Q1, which compares to negative $14,000,000 in net cash provided by operating activities in the prior year period. We will continue to invest in our working capital as well as CapEx around coolers in our fleet to drive further growth, but we do see a greater opportunity to continue to drive strong cash flow growth across 2024. This concludes our prepared remarks. Operator, you may now open the call for questions. Operator00:15:12We are now opening the floor for the question and answer session. Our first question comes from Kamil Gajrawala from Jefferies. Your line is now open. Speaker 500:15:34Thanks guys. Good morning. A question on inventories as we're thinking about 2Q, maybe how business has progressed from a consumption perspective in 2Q, but also, our inventory is now tight and low as we're going into another 2 thirds of shelf resets, do maybe some of the $20,000,000 reverse in 2Q. Can you just give some context around that? Yes. Speaker 600:15:57Good morning. Great question. We did state that in our prepared remarks in regards to some of the inventory fluctuation with our partner. We don't control the inventory levels, but we do feel that everyone is optimizing inventory levels as we move forward, and we'll see how that evolves. If you look at our inventory levels over the last 15 months, looking at the especially the cash flow statement, we've optimized our inventory levels as well, about $47,000,000 So I think every business is going to be optimizing. Speaker 600:16:29I think really the most important thing when we look at it is keeping the shelves stocked, most importantly, keeping the shelves cold and just preparing for this, the reset season that's underway, as we continue to progress forward. And the scan data is really strong, especially last week at at the register according to, Zircona. So we feel like we're in a good shape, but to predict where inventory levels move is just really difficult for our partner. I don't know, Jared, if you have any other comments to add. Speaker 700:16:54Yes. Like John said, depletions are really good. They're rock solid. But as I look at April, I'd say this is kind of a new normal for us at the moment. We'll see where our partner goes from here, but I wouldn't bake in a reversal of what we've seen. Speaker 500:17:12Okay, got it. And then margins were quite substantially ahead of plan. Is there anything one time in there or is it just sort of the leverage off your growth? Speaker 200:17:22Yes. Jared, want to talk about margins? Speaker 700:17:24Yes. I mean, you know I always point to freight as something that fluctuates from quarter to quarter and that's definitely been something that if you look back over the last 3 years it has been. We've been able to keep it within a kind of a set of guardrails, but we did see some good freight rates this quarter. We'll continue to look to optimize that, but some of that will be dependent upon fuel costs as we look out into the back half of the year. We have seen some good activity in terms of leveraging our business and our scale around raw materials. Speaker 700:17:56But at the same time, we are moving into a much higher promotional time period with 100 days of summer. So that's why we kind of said we're not ready to put the line in the sand at the rate we were able to deliver in Q1. You know, we're always going to try to deliver that or better. And we do have a kind of a long term goal that we're looking to get to. But I would say as we look out to Q2, Q3, Q4, we're kind of sticking with what we said at the end of February, which was kind of that high end of the 40s and not quite locking in into the 50s yet. Speaker 400:18:29Got it. Okay. Thank you. Speaker 600:18:31Thank you. Operator00:18:37Ashok Chen from Stifel, your line is now open. Speaker 800:18:42Hey, morning guys. I wanted to go back to that last question, the one that we're getting a lot today as far as the timing of this inventory stuff. So if I do some rough math, it looks like you've undershipped demand per scanner data decently the last two quarters. 1Q, obviously, when you're lumping in the rollout into Canada, would you just make that even more pronounced? So I guess the question is, A, what do you say to that, meaning that we can all kind of see where end demand is versus what your sales are and your sales are a lot lower. Speaker 800:19:22And 2, as you think about how Pepsi is managing shelves, does this have an impact? Have you seen any impact from a service level standpoint on out of stocks and whatnot? And kind of how do you work with them to make sure that you prevent that assuming that you haven't seen it yet, but may given where trends seem to be moving? Speaker 600:19:47Yeah. Mark, I'll take it at the beginning of the question. You know, when you look at the inventory levels, I think our partners are at really good inventory levels right now. We're maintaining deliveries. We're keeping product in stock. Speaker 600:20:03We're seeing scan data. We just broke a record on the share gain to 11.5. So product is flowing. I think we're both getting, you know, learning about each other, our supply chains, and looking to further optimize. So, you know, I can't speak for our partner, but, you know, they are maintaining supply levels, servicing customers. Speaker 600:20:24We have greater ACV. The resets have gone well. The ones that have been reset so far. So, and we're further working on programs for the 100 days of summer, working on further displays and end cap programs. So I think we feel really good where we're at. Speaker 600:20:41You're going to see some optimization on both sides. Like I said, you know, to Kamal is that, you know, we did optimize our inventory as well, about 47,000,000 in the last 15 months, if you look at the cash flow statement. So you know, in regards to the shelves, we're not seeing, you know, out of stocks. You know, you're always going to have some that's just part of the business, but always there's ways to further optimize. And I think we're in a good shape. Speaker 600:21:04We're in a really good place. We have good inventory levels now. We feel confident in our inventory levels and confident in the Pepsi inventory levels supporting our growth. Speaker 800:21:14Got it. Okay. And then I guess just just staying on the point, was there any change in the inventory levels that Pepsi held through the March quarter that was notable? I say that in part just out of curiosity and partly with the view that distribution points continue to expand. Obviously, you talked about what you did through March 31, implying a pretty substantial increase in distribution points as you head to summer. Speaker 800:21:45So it would just be odd to me that you would reduce the amount of inventory for Pepsi. And I guess, just how do you think about that progression through? And then you talked about April being a little bit weaker. So I guess, sort of related to the first question, but kind of how does the timing of that work through? Did they hold more at the beginning of the quarter and less at the end of the quarter? Speaker 600:22:07Yeah, I think we haven't spoken about April being weaker. I think Jared was talking about maintaining inventory levels with our partners maintaining as we enter the Q2. We're going to have to see how this plays out, how the quarter unfolds. I think with optimizing inventories, we're getting more efficient. We're able to ship product, and in less number of days, you know, prior to running 14 days. Speaker 600:22:31And now, in many cases, we're shipping within 7. So, you know, we're just finding further ways to optimize our supply chain. So that's going to impact some of our, some of the revenue recognition, you know, standards in order, you know, as we continue to progress forward. But I think the most important thing to really look at is what's taking place within the scanner data for the end user and the end customer, which continues to maintain. It seems to be extremely strong and we got good momentum heading in, especially the 100 days of summer, double the sales staff, great refreshing innovation and a bunch of great marketing assets and activities. Speaker 600:23:06I don't know, Jared, if there's any more color you want to add on there. Speaker 700:23:08I'm aligned with you. I think, you know, we're in good shape. We haven't seen any service issues, you know, as they optimize their system. As long as they're getting product on the shelf, that's, you know, that's what we're most concerned with. Speaker 400:23:23Alrighty. Thank you. Speaker 600:23:24Thank you. Operator00:23:28Our next question comes from Jeff Van Sinderen from B. Riley. Your line is now open. Speaker 900:23:37Good morning, everyone. Wanted to circle back to a comment you made on markets where you're getting close to a 15% market share. Maybe any more color you can add on that? I guess what specifically you've done in those markets to achieve that and plans to apply those initiatives to other markets? Speaker 600:24:02Yes, Jeff, great question. It's really exciting that now we're in 12 markets, major metropolitan markets in the U. S. Right now that are over a 15 share. And then we have several additional markets that are getting close to that range. Speaker 600:24:16So what we're seeing is just really the further collaboration with our Pepsi partners, further building out our sales team and marketing teams and really using our methodology methodological approach to marketing and activation, which has worked well. It's activating the consumer where They live, work and play, disrupting the path to purchase, building that awareness, getting that trial. And we have such great flavors and a great product and a great brand that we build that loyal consumer. And, you know, when we're seeing, our Celsius consumers further increasing their consumption levels as we've further built out our availability. We're seeing category growth. Speaker 600:24:54We're driving category growth about 47% of the category growth is coming from new to category and Celsius is creating that. So really exciting. It's really about gaining that additional distribution and really closing the gap with inconvenience, and we've talked about that for many years. And we've done well in large format, and online and with gyms and health clubs. And now we're really next phase is really closing the gap in convenience and getting better placement. Speaker 600:25:21You're seeing the share numbers start to increase there. Speaker 900:25:26Okay, great. And then, I just wanted to circle back to spring resets as well. Maybe you could just speak a little bit more about where you're seeing the most significant gains, maybe touch on that in terms of SKUs, spacings, quality of shelf locations, that sort of thing? Speaker 600:25:44Yeah. I think when you look at the resets, we're really excited. It's it's going to be convenience is a big the biggest opportunity. So we're expecting some pretty good growth within the convenience channel, as well as our existing accounts. As an example, in Publix, we just moved over from the HPC to the energy category and the energy set, and we've gained further placement in front checkout coolers. Speaker 600:26:06And we're working with several other retailers. More to come on that. We expect full resets to be done by the end of June, but really looking to gain further placements, in all accounts. The key accounts team has been extremely positive this year. Speaker 1000:26:22Okay, great. Speaker 900:26:22And then just as a follow-up to that, as far as the coolers go, what are the plans for coolers this year? And also, is there an opportunity to get into a lot more coolers that are maybe not Celsius coolers at this point? Speaker 600:26:34Yes, I think that's a huge opportunity and that's really partnering with PEP Energy and working really closely with our Pepsi partner, gaining more distribution and availability in cold placements. Our key accounts team is working on branded, Celsius coolers. That's a big initiative. We're not going to put a number out, but if there's substantial number, we're looking to place. And, in regards to the Q1, I think the team's placed almost the 3,000 coolers, but lots of opportunities with coolers. Speaker 600:27:02We expect to really continue the momentum as we go forward. Speaker 900:27:07Okay. Thanks for taking my questions and continued success. Speaker 600:27:11Thank you, Jeff. Operator00:27:14The next question comes from Jonathan Kippur from Bank of America. Your line is now open. Speaker 1000:27:22Hey, everybody. Good morning, sorry, and thanks for the question. I've got a couple on margins and then a couple on sales. I guess on margins, just looking at the chart on aluminum, I think it's up pretty meaningfully year over year. Can you guys give us any kind of magnitude of COGS exposure to aluminum? Speaker 1000:27:41And I guess a sense of timing about maybe where those higher costs will flow through? Speaker 600:27:47Yes. John, I'll turn it over to Jared. Speaker 700:27:50Yes. So a couple of things. Let me jump on an inventory question that was asked. Just to clarify, when I was talking about April, I was talking about days on hand is consistent from March into April. So that wasn't a knock on what we're seeing. Speaker 700:28:05You know, in April, as we continue to see our resets happen, we're doing very well and you can see the consumer data. We continue to get more SKUs. We continue to get more space, etc. So just a clarity there. That was more of a days on hand comment more than anything. Speaker 700:28:21In terms of the aluminum, you're seeing some fuel costs go up. We have locked in a lot of our aluminum pricing. So we do we're in pretty good shape there. So we tend to lock that in around Q4 of every year. Speaker 1000:28:35Okay, cool. On margins again, just in terms of the amendment to the Pepsi agreement, I guess what are the implications to the margin from here? What is there a benefit? Is it slightly dilutive or anything like that? Just a sense of what it may or may not do to margins. Speaker 700:28:56Yes. So the incentive program is for Pepsi, it's incentive based, right? So obviously we're going to get something for it. So the idea is to really drive, what our priorities are, what their priorities are across energy. We want to be the number one energy brand in the world. Speaker 700:29:12It's also really to drive alignment. And so from that perspective, it's an incentive program. So the idea is to really push us to the next level. There is obviously it's an incentive program, so there is obviously a cost to that program. So it's something that I would look to see ramping up across, call it, the 1st 6, 7, 8 months of the year and to really be cruising by the time we get to the back part of the year. Speaker 1000:29:39Cool. Thank you. And if it's all right, just a couple more on revenue. I guess specifically in Costco, that came in a bit light, same as on Foodservice. Just wondering about the sequential decline in Costco and the flats in food service, any drivers there that you can point to or what to expect going forward? Speaker 700:30:01Yes. So Costco, really the club channel, we probably should have called that out last quarter, but we did see a really good Thanksgiving week and Black Friday. So we had a, you know, the team really activated phenomenally there. So we did get a bit of a bump there in Q4 versus Q1. Q1 does also tend to be a little slower in the club channel. Speaker 700:30:22What was the other part? The food service. Food service remained strong. That can be a little lumpy at times, but being up at that 12 ish range is pretty good for us. And we do we are seeing gains in areas like convenience. Speaker 700:30:38So we're seeing gains in some of the other areas that are, from a scale perspective, bigger. So as we see gains there, you may not see the same percentage growth from 1%, but we are seeing dollar growth. Speaker 1000:30:52Cool. And then just last one on the shelf resets coming up. So it sounds like 1 third done already, 2 third coming. So basically a doubling of what's already been put in the more than a doubling of what's been put in the trade already. I guess in the Nielsen, you can see that TDPs and the average number of items looks great. Speaker 1000:31:13But if it's going to keep moving up from there, I guess is that going to be does that kind of imply new flavors or innovations coming to market by the end of the year? Or is it going to be like double, triple facing that kind of thing? Speaker 600:31:25Yes. I think the goal is to gain double, triple facing. So a lot of the resets, you know, items, average items per store, you know, might not increase, show up in the scanner data, but we are gaining those secondary, 3rd placements and better placements within retailers. So, you know, as an example, like within I mentioned Publix moving from HPC into the energy aisle, also gaining additional availability and placements in cold checkouts. That's an example of a transitional move. Speaker 600:31:55And also we're looking at other retailers as well. So, you know, we do have innovation coming in this year, which we're launching. We launched Celsius essentials, we got, a Galaxy Vibe, a variety of other great flavors, but we're really, I think the bulk of the resets, you're going to be seeing them by double, triple facing within stores and gaining a secondary placements. Speaker 1000:32:16Great. Thanks very Speaker 600:32:17much. Thank you. Operator00:32:22Our next question comes from Michael Lavery from Piper Sandler. Your line is now open. Speaker 1100:32:29Thank you. Good morning. Speaker 900:32:31Good morning. Just wanted Speaker 1100:32:33to come back to the inventory for a minute. And I think you've been clear not to expect a snapback or an inventory restocking. But should we expect any more destocking? I know you said the inventory levels feel about right, but how low could it go? Is that something we should watch out for? Speaker 600:32:53Yes. I mean, I can't control that or we can't control that. I think it's sales are flowing, sales are strong at the register. So, you know, it seems to be like the balancing has been finalized. But, you know, who knows what next week or the week after happens. Speaker 600:33:13But I think right now, it seems somewhat stable as we ended the ending March. Speaker 1100:33:21Okay. And just back on the incentive plan, you've given some color on that. I know you don't want to be too specific, but can you maybe touch on what the rationale was? What prompted you? What problem was it fixing? Speaker 1100:33:37Because obviously there was great momentum in place. What does this change qualitatively that makes it seem like it's kind of worth changing the terms? Speaker 600:33:48Yes. I think when you look at the partnership, we're heading in really at a great point where within the where Celsius is within the energy category, We just broke that 10 share. You're looking at ways to further partner and incentivize our distributor and our partners. And we do that with our employees. We do have retailers and our distributors. Speaker 600:34:09So this is like a standard practice we've done in the past. So I don't think it's out of the anything out of our standard course of business. We've done variety incentive programs, and it's, this further aligns us with additional prioritizations within PEP Energy, also solidifies this, and, you know, as more incentives, so we both win together. And it really achieves our long term goals. We feel really confident in where we are and what better way to incentivize both parties to continue to drive Celsius for it. Speaker 600:34:40I don't know, Jared, if you want to add anything else. Speaker 700:34:42No, I agree with you. It's really about making sure we're all fully aligned together to take that next step and to really go after the number 2 and number 1 players in the market. We need to do it together. Speaker 900:34:55Yes. Okay, Speaker 1100:34:56great. Thanks so much. Speaker 600:34:57Thank you. Operator00:35:00The next question comes from Peter Grom from UBS. Your line is now open. Speaker 600:35:27Maybe go to the next question. Operator00:35:28Our next will give. Our next question comes from John Anderson from William Blair. Your line is now open. Speaker 300:35:37Hey, thanks for the question. I just wanted to ask about the category growth that you're driving. I mean, you're driving half of the growth in the category energy category. And I'm curious to know to what extent you're seeing that come through as kind of new consumers into the category? To what extent you think you're driving buy rate through new occasions? Speaker 300:36:05And then how the brand is performing overall from a household penetration and the kind of repeat rates you're seeing? So just digging into some of the metrics underpinning the growth that you're seeing both for the category that the brand is driving, but also your brand. Thanks. Speaker 600:36:23Yeah. No, great question. And, you know, it's exciting because, you know, we're when you look at like brand shifting, we're not seeing a substantial amount of our growth coming from brand shifting. It really is incremental and it's increasing the user intensification. Our core consumers are consuming more. Speaker 600:36:40And then it's about 35 percent. The latest data we had is increased intensification of more consumption of our core or base. And then new to category for us was 42%. And this was as of the end of March. So really seeing then 23% brand shifts. Speaker 600:37:00So we're expanding the category. We're changing the way consumers think about energy as well. And we're seeing that, you know, talk about Jersey Mike's and Dunkin' Donuts and really the partnership with Pepsi allows us to take advantage of this opportunity we have with some of the most refresh. We feel we have the most refreshing energy drinks in the world. And it's showing we're bringing new consumers, we're growing a category. Speaker 600:37:22We got a lot of great attributes within the brand. We look at better for you trends. Celsius has over 7 essential vitamins. You look at how we all want our foods and beverages to have more function. Celsius delivers on that, with our thermogenic properties. Speaker 600:37:37And then you also look at fitness, this health and wellness trend, and we're all about living fit and living life to the fullest. So I think we're really well positioned. And, you know, we haven't really seen that change within the user intensification, as well as the increase to new to category over the last, really over the last 6 to almost a year now. Speaker 300:37:58Great, that's helpful. And on these 33 or so drill down markets, can you talk about what you're doing there that are 31 drill deep markets, what you're doing there that's different at present and kind of what you're expecting in terms of, I guess, maybe share results as a measuring stick? Thanks. Yes. Speaker 600:38:18I think, well, you know, you talk about household penetration and that shows, you know, as we've continued to drive forward with our targeted market programs and as well as our distribution games, our household penetration has reached an all time high, most recently at a 29.7 percent household penetration. So really proud of the team and all the hard work they've been doing. You know, we take an approach of a drill deep strategy. You know, we're not going to get into specific strategies because a lot of competitors are listening on the call, but we have a proprietary blend of a special formula here with which starts with the employee and a great product that we promote market. And it's all about touching consumers where they live, work and play, creating awareness, creating trial and then creating loyalty. Speaker 300:39:07Thanks. Operator00:39:10Our next question comes from Peter Grom from UBS. Your line is now open. Speaker 1200:39:17Hey guys, can you hear me now? Speaker 600:39:19Yes, we can hear you. Excellent. Speaker 900:39:22All right, cool. So I guess just a couple Speaker 1200:39:24of follow ups here. Just in terms of the inventory dynamic, Jared, can you just remind us what we're kind of comping against from a year ago perspective? Like I guess you might not have visibility on what types you might do or how to manage it sequentially. But when we just think about how this dynamic evolved last year, I think it kind of held in 2Q, grew again in 3Q. So just should we expect kind of this gap versus standard data to kind of continue as we move through the year? Speaker 1200:39:50Or do you expect it to kind of be more aligned at this point? Speaker 700:39:54Yes. I mean, remember, we were just getting started last year, and so we're still learning each other. And obviously, as everybody in CPG, it's all about optimizing the supply chain to make sure we're spending our dollars wisely. So, we did see some buildup in Q1 like we talked about, $25,000,000 Across Q2 and Q3, we saw some minor buildup and it kind of stuck steady for kind of Q2, Q3, Q4. To Mark's earlier point, there was some innovation in there, so that could have maybe there would have been some inventory taken down in Q4 if it weren't for that and as they were optimizing. Speaker 700:40:31And then across Q1, clearly, there's been some optimization occurring. Again, no issue with having product on the shelf and we do have KPIs that we work together to maintain in terms of service standards. And so we have no complaints there and we're fully believe they're fully committed. We're fully committed. So we're very happy with how things are going there. Speaker 700:40:52But if there's opportunity to optimize like John said, we'll do it and they're welcome to do it too. So I think what I mentioned with April is the days on hand that we saw kind of in March kind of were maintained in April. But the consumers there, if they can maintain inventory levels and keep the product on the shelf, then that's we're comfortable with that. Speaker 1200:41:17Okay, great. And then just following up on kind of the shelf resets and kind of the market share metrics you mentioned. I think you said a third of the shelf resets were done by March. I mean, when did those actually take place in 1Q? I'm just trying to understand whether there is a benefit including kind of these 4 week share figures that you mentioned on the 4Q call. Speaker 1200:41:37I think it was the same 11.5% that you mentioned in the latest 4 weeks today. So share is kind of on a monthly basis held steady. And then I think as we look ahead, is there anything you can share in terms of the phasing of the benefits? I know you touched on, but we won't see the full benefits until July, but kind of where are we now in the 1st week of May? What's really the progression look like? Speaker 1200:41:56And is there really any way to put into context what you actually expect in terms of track growth or market share performance as these resets happen? Thanks. Speaker 700:42:06Yes. I think jumping to 115, I think the last pull, maybe been the last couple of weeks is more like 11.8. So we do continue to see the number climb as we go through April and into May. So we are seeing good progress. As those resets continue to happen, we'll benefit. Speaker 700:42:23Once they're fully baked in, we'll really see where we are once we get to early July, once everything's baked in. So, we continue to be on track. There's been some rumblings out there that it's been a little slower in terms of resets this year versus prior years. But we're going to have the best space gains we've had in the history of the company. We're super excited about it. Speaker 700:42:47Our key account team and our sales guys are working diligently with all of our customers. And you know, we're going to have a phenomenal back half of the year once we get all these resets in place. Speaker 1200:43:01Thanks so much. I'll pass it on. Speaker 600:43:04Thank you. Operator00:43:07We have reached the end of the question and answer session. I'd now like to hand back the call over to John Field, please, for final remarks. Speaker 600:43:17Thank you, operator, and thanks for everyone for joining us this morning. We've heard your feedback from our investors and analysts about the earlier start time, so starting next quarter, we will begin to start this call a little bit earlier. Thank you for all of our partners, especially to our employees who have worked so hard. Your passion and drive is what makes Celsius special. Celsius will be participating in several upcoming conferences, and I look forward to seeing everyone each and every one of you there. Speaker 600:43:45A full schedule of the upcoming conferences will be posted shortly. Until then, stay healthy and live fit. Make it a great day and grab a refreshing Celsius. Operator00:43:59Thank you so much for attending today's conference call. You may now disconnect. Have a wonderful day.Read morePowered by