Celsius Q1 2025 Earnings Call Transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the Celsius Holdings First Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in listen mode only. Following the presentation and the prepared remarks, we will be conducting a question and answer session. Thank you. I'd now like to hand the call over to Paul Wiseman, Investor Relations.

Operator

Please go ahead.

Paul Wiseman
Paul Wiseman
Senior Vice President of Communications & Investor Relations at Celsius

Good morning, and thank you for joining Celsius Holdings first Quarter twenty twenty five Earnings Webcast. With me today are John Fieldly, Chairman and CEO Jared Langens, Chief Financial Officer and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our first quarter earnings press release was issued this morning with all materials available on our website, ir.celsiusholdingsinc.com, and on the SEC site, sec.gov. An audio replay of this webcast will also be accessible later today.

Paul Wiseman
Paul Wiseman
Senior Vice President of Communications & Investor Relations at Celsius

Today's discussion includes forward looking statements based on current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward looking statements, except as required by law. Please review our Safe Harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of the risks that may result in actual results differing materially from those contemplated by our forward looking statements. We'll present results on both a GAAP and non GAAP basis.

Paul Wiseman
Paul Wiseman
Senior Vice President of Communications & Investor Relations at Celsius

Non GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share and their GAAP reconciliations are detailed in our Q1 earnings release, and non GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Good morning, everyone, and thank you for joining us today. Celsius navigated a dynamic operating environment in the first quarter while continuing to invest in our core brand, product innovation and operational scale. We saw business fundamentals strengthen through the quarter and are encouraged by the positive momentum heading into Q2. While the Elani new acquisition now closed continued gains in retail shelf space and strong international growth across both legacy and new markets, we are confident in our strategy and believe that we are well positioned to lead the modern energy category. Energy drinks are evolving, no longer just an impulse purchase.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Functional modern energy is becoming part of consumers' daily routines, lifestyles, and pantry staples. Celsius is uniquely positioned to lead this evolution with a portfolio of leading brands built around fitness, functionality, and better for you energy. As previously announced, we successfully closed the acquisition of Elani Nu on April 1, adding a second billion dollar brand to Celsius Holdings growing functional beverage platform. Together, we are well positioned to lead the modern energy revolution with great product innovation, an excellent network of distributors and retail partners and a team to pull everything together. Celsius continues to pursue operational excellence.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

To support this commitment, we appointed Eric Hansen, our first President and Chief Operating Officer in March. Eric brings nearly three decades of food and beverage leadership experience, including senior roles at PepsiCo. We believe that his experience will help us drive operational excellence, scale and unlock greater efficiencies in our partnership with Pepsi, our largest customer and North American distribution partner. Our big beverages facility now fully integrated provides us greater manufacturing flexibility, faster innovation cycles, and it can accommodate a second production line in the future within its current footprint as demand scale for Celsius products portfolio. For the first quarter of twenty twenty five, revenue totaled 329,300,000.0 a 7% decline compared to the prior year quarter, reflecting three primary factors: slowed velocity in the first quarter, timing and structure of our U.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

S. Distributor incentive program and increased retail promotional programs. It's also important to remember that we were lapping a very strong first quarter in twenty twenty four when we began nationwide distribution of Celsius Essentials and had elevated dedicated retail promotion takeovers providing strong tailwinds. Adjusted EBITDA for the first quarter of twenty twenty five was $69,700,000 with a margin of 21.2%. Gross margin expanded 110 basis points to 52.3% supported by sourcing efficiencies for raw and packaging materials.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

International revenue grew 41% to $22,800,000 demonstrating strong organic growth in our legacy markets as well as our newer expansion markets, including The UK, Ireland, France, Australia and New Zealand. As previously noted, we have a grounded approach to global expansion, but we are pleased to see the progress that has been made thus far and would look for this component of our business to pick up in the future years as we expand further within new markets and adding additional markets. In The U. S. Tracked channels Celsius held a 10.9% dollar share for the thirteen weeks ending 03/30/2025 according to Chicana.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We've held steady in category share despite a challenging consumer environment, increased competition and strong pricing action by other category players. New retail sales increased 88% year over year, reaching a 5.3% share, up two twenty one basis points. Just last month, Aloni News surpassed $1,000,000,000 in trailing fifty two week retail sales. This extraordinary achievement reflects the strength of the brand's connection with consumers and the accelerating momentum in the better for you functional beverage space. Combined, the Celsius holdings portfolio captured a 16.2% dollar share in the quarter ending March 30, an 81 basis point increase year over year.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Together, Celsius and Elania New accounted for approximately 20% of total energy drink category dollar growth in the first quarter of twenty twenty five, following a strong 50% contribution to total category growth in 2024. We are focused on strengthening our core Celsius brand, accelerating sales, increasing velocity and growing our in store presence with consumer centric innovation and and a new exciting marketing campaign that will begin this summer. As we look forward the second and third quarters this year, we expect to continue gaining incremental space at retail, helping to drive greater consumer awareness and flavor availability, including recent innovation like Celsius Playa VOD, Retro VOD and Mango Lemonade. According to Surcana, our average items selling per store within the Celsius brand family increased by 4.1 items in Moolo Plus with convenience during the first quarter, with even greater gains in the food and chain convenience channels, underscoring the continued expansion of our in store presence. This year's gains are particularly meaningful because they lapped the strongest shelf reset cycle in our company's history, which were reported during our Q1 twenty twenty four earnings call.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Dollar sales for sugar free energy drinks surpassed full sugar varieties for the first time in 2024, And the incredible momentum of these better for you functional beverages drove 86% of category growth in Q1 twenty twenty five. Celsius and Elani energy drinks and powders are 100% sugar free, and we are leaders in this growing segment. Our live fit identity, health focused, aspirational, daily functionality deeply resonates with today's consumer. We believe that female consumers represent a large and underserved segment of the energy category, and Celsius is uniquely positioned here with a greater gender balanced consumer base. The addition of Elani Nu, a brand beloved by women, strengthens this advantage even further.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Innovation continues to fuel our overall growth. In Q1 twenty twenty five, we launched a new core vibe and essential flavors, and we expanded our multipack offerings, which now represent approximately 2855% of our retail sales mix in Moolo plus convenience and Moolo plus Further bolstering our place within the pantry and confirming that Celsius modern energy is going mainstream. Our launch of Celsius Hydration, a new line of zero sugar, zero caffeine electrolyte powder sticks, extends our brand into the fast growing $1,400,000,000 hydration powder category. Foodservice continues to be a strategic growth channel for Celsius. In Q1 twenty twenty five, we expanded into more than 1,800 Home Depot locations, increasing brand presence and everyday on the go consumption moments.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We also recently began rolling out Celsius in 18,000 subway locations nationwide, a significant win that enhances both distribution and visibility during meal occasions. These new points of availability reflect our growing role in functional daily energy. Foodservice now represents approximately 13.4% of North America sales through PepsiCo, and we see compelling runway ahead as we deepen our presence across work, retail and restaurant locations. Our marketing initiatives continue to drive awareness and trial. Highlights in Q1 include our NIL March Madness campaign with 136 athlete partnerships, The launch of Jaden Daniels as the first ambassador for Celsius hydration.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

A targeted activation with MLB star Juan So to to promote PlayaVive at Walmart. We are increasing our marketing investments behind our core Celsius brand and our Live Fit identity. These investments will support our strategy of reaching more people in more places more often. Beginning this summer, you will see bold, story driven campaigns showing how Celsius helps people live fit, achieve their goals, and align with wellness driven lifestyles. Overall, we are pleased with the improvements in business fundamentals we saw exiting the first quarter and the momentum we are building into the spring and summer seasons.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We believe Celsius Holdings is uniquely positioned to lead the modern energy category with a portfolio of brands that addresses the growing consumer demand for functional better for you beverages across energy, hydration, wellness occasions. With innovation, operational leverage, international expansion, and strong retail partnerships, we are confident in our ability to drive sustained growth and value creation in 2025 and beyond. Thank you. I'll now turn the call over to Jared to review our financial results in more detail. Jared?

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Thank you, John, and good morning, everyone. First quarter revenue totaled $329,300,000 compared to $355,700,000 in the prior year period, representing a 7% decline. As John noted, revenue performance reflects soft Q1 velocity, the timing and structure of our main distribution partner incentive program, timing and breadth of our retail promotional allowances weighted later in the quarter and lapping the nationwide launch of Celsius Essentials in Q1 twenty twenty four. Gross profit totaled $172,400,000 compared to $182,200,000 in the prior year period. The year over year gross margin expansion of 110 basis points to 52.3% was supported by sourcing efficiencies for raw and packaged materials.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

We are pleased with the continued expansion in gross margin even as we invest in growth and support our innovation. Selling, general and administrative expenses totaled $120,300,000 compared to $99,000,000 in the prior year. The increase reflects transaction related expenses for the Elani new acquisition along with continued investment in global sales, marketing and organizational infrastructure. Non GAAP adjusted EBITDA was $69,700,000 for the quarter, representing a 21.2% margin compared to $88,000,000 and 24.7% margin in Q1 twenty twenty four, driven by the organizational investments. Net income attributable to common shareholders was $34,400,000 or $0.15 per diluted share.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Non GAAP adjusted diluted EPS was $0.18 compared to $0.27 in the prior year period. As of 03/31/2025, our balance sheet remains strong with $977,000,000 in cash and no outstanding debt. It is important to note that these figures reflect our cash position prior to the close of the Elani new acquisition. In connection with the closing on April 1, we utilized a mixture of $900,000,000 in debt, approximately $400,000,000 in cash with the remainder in stock to acquire Elani New, which will be reflected in the Q2 financial statements. We remain confident in our liquidity position and our ability to support future growth initiatives.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Innovation continues to support growth and momentum across our retail channels. Recent innovation, including the Essentials line and Multipacks, are contributing meaningfully to retail sales and Celsius Hydration launched late in January, is gaining early traction as we expand into the high growth hydration powder segment. We believe that our distribution gains across the portfolio, positive spring shelf resets and expanded fuel sales and merchandising execution continue to position us well for the important summer selling season. Looking ahead, our focus remains on improving velocity, expanding household penetration, growing share across functional beverage occasions and delivering operational efficiency through scale. We remain confident in our strategy and our ability to remain resilient through the uncertain economic times, thanks to our robust supply chain operations as well as mitigation strategies, which we are pursuing to best position us for long term advantage.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Before I turn it back over to the operator for questions, I want to mention that we are planning a public call this quarter to discuss modeling and general financial considerations for Elan Anu. Details will be communicated in advance. As a part of this call, we will put together pro form a views of our combined business and provide further insight around the purchase accounting impacts of the acquisition, such as inventory step up and how that will impact Q2 as we sell through the inventory on hand at April 1 on the acquisition date, as well as valuations around intangibles and fixed assets, which will result in increased depreciation and amortization. With that, I'll turn the call back to the operator to open the line for questions. Thank you.

Operator

We are now opening the floor for question and answer session. Your first question comes from the line of Kamil Gajrawala of Jefferies. Your line is now open.

Kaumil Gajrawala
Kaumil Gajrawala
Managing Director at Jefferies Financial Group

Hey guys. Good morning. Can you maybe we're seeing energy drinks as a category accelerate at a time where almost everything else in CPG seems to be going the other way. And I'm just curious if you've dug into that or maybe just some details on what might be behind it.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Is you're seeing a lot of the first quarter was really good for the energy category and, you know, you even going into last year, still be still driving volume in dollars. So, you know, the energy category has been a kinda resilient on both dollar and volumes over the last several years. I know we had pressure in q three and '4, but q one was a very strong starting to see growth rates come back. I think you're also you know, these health and wellness trends and the amount of innovation we saw in the quarter coming from a variety of competition, I think drove a lot of excitement, for consumers to try. And, that's where you're seeing some of these results here.

Kaumil Gajrawala
Kaumil Gajrawala
Managing Director at Jefferies Financial Group

Okay. Got it. And then you mentioned many times in your, prepared remarks on, you know, this focus on velocity. What specifically are you doing to, increase those figures?

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Well, when you look at, you know, when you look at

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

the first quarter, we got off to a slow start. And, you know, we have more of a balanced approach this year. We took some key learnings last year. We're a lot of innovation in the first quarter. If you look at their q one two thousand twenty four, we had probably the largest we did have the largest distribution gains as well as innovation launching and great support and promo activity as well with those some of those lead launches.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

So, we're cycling that, and we're a little bit softer in the back half of the year, in 02/2024. And so this year, changing some of those strategies and key learnings, putting us into a more of a balanced approach. And then we're really leaning in. We're building programs around LitFit. Been doing a lot of research around, the DNA of the brand and how we can resonate, and bring more more consumers into the category and really be a driver continue to be a driver in the growing segment of sugar free.

Kaumil Gajrawala
Kaumil Gajrawala
Managing Director at Jefferies Financial Group

Got it. Thank you.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Thank you.

Operator

Thank you. Thank you. Your next question comes from the line of Peter Grom of UBS. Your line is now open.

Peter Grom
Peter Grom
Equity Research Analyst at UBS Group

Thank you, operator. Good morning, everyone. So I just wanted get some perspective on the first quarter sales performance. I think, John, in the release, you mentioned sales growth of retail sales growth of 2%. But can you maybe just readjust to kind of the high single digit decline in North America?

Peter Grom
Peter Grom
Equity Research Analyst at UBS Group

I know you mentioned some promotional allowances, tough comps with essentials, but it just seems like there's maybe another component that we need to kind of get or bridge to get to that decline in North America. So just if we can maybe walk through that or if you can quantify what those impacts were? And then I guess what I'm really trying to get at is, is there a way to kind of parse out what kind of the underlying shift trends or depletion trends were in the quarter after backing out all the noise? Thanks.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah. No. Peter, like like we said, there was you know, we had a slow start to the quarter. It was increased competition. We started to see velocities and improvement as we're exiting q one, so we're very optimistic as we continue to move through and enter q two.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

You know, we when you look at some of the some of the launches we had last year at some of the key retailers, they were substantial. Versus this year, you're looking at more of a balanced approach with some of the promotional activities versus retailers leaning in on one specific brand. So we were impacted by that. And then, you know, when you look at some of the promotional activities, you're also cycling some of the, you know, the additional incentive, for our distribution partner. And when you're looking at the, you know, the inventory levels, I'll throw that over to Jared to comment, on some of the supply chain and and inventory levels and kind of what we're seeing there.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Yeah. So, I mean, at the 10,000 foot view or the the simple view, if you look at the scanner data, we were kinda at minus four, and then we ended from our books and records at minus seven. You've got a a couple points in there from the promos and incentives, and then you've got a little bit of timing, not on the DSD, but more non DSD where we saw a little bit of pipe filling, in the back half of the year versus, having the programs run-in q one. So within some of those categories, you saw good growth at scanner, but we did have a little bit of a load in in q four. And so and then there was some noise at the very end of the quarter.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

When it comes to depletions with our primary distribution network from across the COBOs and FOBOs, those, that optimization appears to be in good shape and didn't cause much noise in this quarter from what we can see.

Peter Grom
Peter Grom
Equity Research Analyst at UBS Group

Got it. Thanks so much. I'll pass it on.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Thank you.

Operator

Your next question comes from the line of Kevin Grundy of BNP Paribas. Your line is now open.

Kevin Grundy
Managing Director at BNP Paribas

Hey, good morning everyone. John, I was hoping you could comment on pricing in the category. I think there's been a good amount of enthusiasm around pricing that Monster has led on 75% of the portfolio. I think there's an expectation they'll price on the balance of it. But it seems like kind of a mixed picture where Red Bull really hasn't followed in the past that's led to some trepidation among investors whether they will or not.

Kevin Grundy
Managing Director at BNP Paribas

Can you just comment broadly on pricing in the category, maybe and what your plan is for the balance of the year, both from a pricing and promotion perspective? That would be appreciated. Thank you very much.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah, Kevin. Sure. You know, if pricing were there's opportunities, and there's opportunistic opportunities to take additional pricing. We feel very, confident in our brands. We wanna be very cautious as well, keeping a close eye on the consumer.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

There is, you're seeing consumers, some move from purchasing singles to purchasing at larger format with multipacks and looking for promos. So, we are somewhat, cautious, as we move through the next, you know, several several months and quarters about promotional activity. We wanna be very, very aware of that and pay attention very closely to how the consumer, is purchasing and their purchasing habits. I will say we did take pricing, at in q four last year, so that has been rolling through. And, you know, there there's opportunities and opportunistic ways, to leverage that as we're going through, we will.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

It does allow us to have additional flexibility with promotional activities as we're ending entering into somewhat uncertainty we feel with the consumer and some of the channels that we're operating in.

Kevin Grundy
Managing Director at BNP Paribas

Thanks, guys. I'll pass it on.

Operator

Your next question comes from the line of Jon Andersen of William Blair. Your line is now open.

Jon Andersen
Partner - Equity Research at William Blair & Company, L.L.C

Hey. Good morning. Thanks for the question. I was wondering if you could put a little bit more color around the shelf space expansion you expect this spring. Obviously, you had a terrific kind of shelf reset last year.

Jon Andersen
Partner - Equity Research at William Blair & Company, L.L.C

And could you talk a little bit about or trying to dimensionalize it both for the core brand Celsius, but also your expectations for kind of a Lani Nu and how you may kind of activate the consumer around those games this spring relative to kind of last year? Thanks.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah, John. Great question. Right now, do have, as mentioned in the prepared remarks, we have some great innovation that we'll be rolling rolling out, and that is our Playa Vibe, our Retro Vibe, and Mango Lemonade for summer. So we expect that to gain additional placements. You know, it's really also these secondary placements, and display activities has been a really key for us.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

So, as an example, gaining additional checkout coolers has been some really big wins that have been flowing through in some retailers, large national retailers, which we're really excited about. So making sure we have closer availability closer to that checkout so we can take advantage of those purchase that app purchase, impulse purchase, purchase occasion. So that that is really, was really promising this year, the amount of cold placement we gained at checkout. So as that continues to fill out, that'll provide additional, velocity improvements as well, having that availability. Looking at Aloni, really excited about Aloni.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

I think there's a lot of opportunities there, especially working closely with our key accounts team. And as we position and really get ready for buyer meetings in 02/1926, you know, key account meetings. It's gonna be really exciting, especially the momentum that they've they've had, you know, entering summer and going to be exiting summer. They just broke a billion dollars in retail sales, which is just an amazing achievement. It's a great brand that's resonating with an extremely loyal female consumer base, and we're extremely optimistic about the distribution gains, we'll be able to gain, with the Aulani portfolio.

Jon Andersen
Partner - Equity Research at William Blair & Company, L.L.C

Thank you.

Operator

Your next question comes from the line of Andrea Trixieira of JPMorgan. Your line is now open.

Andrea Teixeira
Andrea Teixeira
Analyst at JPMorgan Chase

Thank you, operator, and good morning, everyone. So John, I understand the new on premise and other channels like home centers, but conversely, you had a steep decline at Costco. Did you lose distribution there? Or is there any destocking that you'd highlight? And I understand your base period was also down.

Andrea Teixeira
Andrea Teixeira
Analyst at JPMorgan Chase

And then a clarification for Jared on how much sales were down in North America if you exclude the change in allowances year over year? I understand that you've been telling us that these allowances would increase. So then if we can do like an apples to apples or underlying growth, that would be super helpful. And if I can layer that as well on the destocking impacts that you might see related and trying to calculate the destocking vis a vis your sellouts.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Okay. Excellent. Allowances, destocking and Costco.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

I just when Peter was on, I just mentioned if you look at kinda we were down roughly 4% at the scanner data. A couple points to in versus our minus seven. A couple points to get to that minus seven was related to promos and incentives. When we're looking at Costco, if you're looking at the scanner data, it was up. We did run an MVM this quarter.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

When you run those, typically, you get a little bit of a a pipe fill the quarter before or the month before, so that caused some of the noise within the system. If you look at, I'll throw something out there just in case it comes up. But if if you look at kind of our revenue as a percentage of sales and our AR as a percentage of sales, there's a a little nuance within Costco as well. That's just timing of, of payments, more of a working capital component, so no issues there.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

What was the the

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

No allowances.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Talked about allowances with promos, talked about Costco, talked about timing. No

Andrea Teixeira
Andrea Teixeira
Analyst at JPMorgan Chase

Not only at Costco, but in general yeah. Sorry to interrupt. But just in general, the allowance is total against because it's hard to calculate the allowances over a year. I mean, it's not disclosed. So we wanted to just like added clarity on those.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Well, for this quarter, we talked we said it was a couple of percentage points.

Andrea Teixeira
Andrea Teixeira
Analyst at JPMorgan Chase

Yes. And on a sequential basis though, I mean, I understand and it probably it will be helpful for all of us to understand how the allowances will I understand this is going to be with us for the next at minimum in the next three quarters. Is that fair?

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Sorry, what you're saying. So if we look out over the remainder of the year, you probably got a couple points pressure in Q1 and Q2. And then it should flip in q three and q four where we'll we'll benefit by a couple points because we saw it go up a bit, with some of the destocking last year. So, first half of the year, you'll see a little bit of pressure from that. Back half the year, when we're looking at year over year, you'll see benefit.

Andrea Teixeira
Andrea Teixeira
Analyst at JPMorgan Chase

Right. And then and then on the on the couple of points of destocking, can you help us, like, kind of understand the phasing of it as well? Is that a similar impact?

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

So

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

there

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

wasn't destocking. So, if you're looking year over year and we're talking just promos and incentives, we talked about a couple points this quarter, a couple points next quarter, flipping to positive couple points in q three and q four. If you're looking at destocking, when we talked about depletions within our DSD network, we said that, you know, it is pretty stable, this quarter and ended up pretty stable as we ended the the prior year as well. There was some, timing and sequencing of, non DSD around club in q four into q one and a a little bit, you know, of noise at the very end of our quarter, but nothing nothing else to call out from that perspective.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

And I'll just add even with the percentage, you know, the the allowances there, we were able to mitigate some of those allowances with a strong gross profit number, for the quarter, which really through flow through to EPS or EBITDA as well.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Yep.

Operator

Your next question comes from the line of Michael Lavery of Piper Sandler. Your line is now open.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

Thanks. Good morning. Just one for me. I wanted to come back to gross margins. Even with some of the increased incentives and allowances, gross margins were very strong.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

You called out some better sourcing efficiencies. Any other color you can add? Or especially just help us understand how sustainable that might be? Should we have any watch outs looking a little further ahead from aluminum? Or just a little help on kind of what drove the lift and and where it might go from here?

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Yes. So in the near term or the short term, we're in in great shape as you saw with the the margin profile. We as we have scaled, and created our Orbit model and utilized our organizational structure, we've been able to benefit from a gross profit perspective. The aluminum, knock on wood, you know, right now is is not something that we see being significantly impactful to us. Unfortunately, we don't know where things will go with the tariffs and how those things, are going to come into play long term.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

But in the short term, looking out at q two, we see, you know, still strong gross profit numbers. I I think we kind of pegged 50% for the year. We're we're not gonna move off of that at the moment. But really, as we look to the back half of the year, it's it's kind of an unknown in terms of what's gonna happen from an inflation perspective or a tariff perspective. As we look at q two, we're in good shape.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Our our structure is set up well. Our scale has benefited us, and the Orbit model and and infrastructure that our supply chain is supply chain team is set up is really is coming through and it's set up as a long term program to be sustainable.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

Okay, great. Thanks so much.

Operator

Your next question comes from the line of Jim Salera of Stephens. Your line is now open.

Jim Salera
Research Analyst at Stephens Inc

Yes, good morning. Thanks for taking our question. I wanted to ask about are there any formats or retailers where ALAANI NU actually performs better than the core Celsius brand? And if so, how should we think about kind of utilizing the brands to maybe cross pollinate each other and help get placement in retailers where one is stronger than the other?

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah, Jim. You know, we see great opportunities with both of our brands in the portfolio. Actually, all three, when you look at Celsius Essentials, has performed well. A lot of opportunities as we continue to scale that as as well as, our core Celsius and then Aloni. Specific locations, you know, I I think we need to really get that in further into the system.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Will they work on further pricing promotional activities? You know, it's just entering convenience. You have a there's a huge opportunity with Aloni as we integrate it further within our Amazon teams, and also restaurants and, food service, college and universities, and opportunities we're working on right now, through our distribution partners is further expanding within on premise. So, you know, a lot of opportunities there with both these portfolios. They have different consumer segments.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We've talked about, you know, cannibalization. There's been a lot of a big question, prior. You know, the cannibalization has been, somewhat minimal. According to our data from Surcana, it's about a 15% crossover. And some of the both these portfolios over index, with some of the other leading brands, that are out there within the category.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

So, this portfolio is gonna give us a really strong position, to continue to drive growth in the category for years to come and leverage the tailwinds of health and wellness. Also, more female consumers coming are expected to come into the category, than ever before if you go over the last, decade. So, we're really excited about our being well positioned for the future.

Jim Salera
Research Analyst at Stephens Inc

Can we get an update on branded cooler placements? And maybe thinking through the comment you just made about limited cannibalization, is there an opportunity to have co branded or cross branded coolers that have both Aulani and Celsius that would obviously be very visible in store and minimal on the cannibalization side?

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah. I mean, you're you're seeing that now in locations, a lot of grocery stores. I mean, we're we're all energy is kept in energy sets and energy coolers. So, you know, it is a at a lot of lot of times, Celsius and Aloni are placed right next to each other, right next to Red Bull and Monster. So, that is something, you know, standard in the industry.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

And the cooler placements, that's a huge focus for us. Gaining additional cooler placements is a big push, big KPI for our sales team. We're placing dedicated coolers. And, you know, as we're rolling in and partnering further and integrating Elani, we will be looking for you know, we're evaluating co branded coolers or and or dedicated coolers based on the retailer's footprint and space availability. A lot of small format stores aren't able to take multiple coolers.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We'd have to we'll work on a a co branded cooler. That's something that's in the works. And then also more space and availability and opportunities to place dedicated coolers. That's always our priority number one.

Operator

Your next question comes from the line of Gerald Pascarelli of Needham And Company. Your line is now open.

Gerald Pascarelli
MD - Equity Research at Needham & Company

Great. Thanks very much. Just a question on core portfolio. So as we look ahead on a stand alone basis, it seems like you have a lot of tailwinds on the horizon. You have the new innovation, percent to 20% shelf reset wins, easier comps, a new marketing campaign, etcetera.

Gerald Pascarelli
MD - Equity Research at Needham & Company

So John, taking all of those tailwinds, can you maybe just provide some color or talk about your level of conviction or confidence that we start to see core revenue trends improve from here? Any color there would be great. Thank you.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yeah, Gerald. I mean, you're spot on. I mean, the tailwinds look really favorable, especially after we get through really the next three to really, the four to five weeks, is kind of the peak, revenue hurdles, that you're seeing on a week over week basis or versus the prior year. Once we get into really June, you'll start to see some much easier comps, that we'll have to that will Celsius will be cycling. And the improvement in velocity, that we've been seeing, also is giving us strong conviction as we continue to build upon, you know, the consumer health and wellness trends that are out there.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

The category has come back to really strong growth. We know we have both our brands in our portfolio have really strong brand positions that are aligned with consumers. Fundamentals are improving. Look at gross profit improvements. The acquisition of Big Beverage, the leverage of our infrastructure, as Jared talked about with the Orbit model, driving efficiencies with both this both these brands coming together and leveraging a strength of a portfolio, versus going singularly into the category.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Now we'll be able to do a variety of additional pricing promotional strategies that we weren't able to do prior, and we're really excited, on where we're headed. And the core fundamentals of our core portfolio, Celsius, you're right, Gerald. It does have a lot of tailwinds as we're entering, you know, summer in the back half of this year.

Operator

Your next question comes from the line of Sean McGowan of ROTH Capital Partners. Your line is now open.

Sean McGowan
MD & Senior Research Analyst at Roth Capital Partners, LLC

Thank you. I was hoping you could talk a little bit about international. How is that market by market going relative to your expectations? It seemed like that was pretty strong in the quarter.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Yes. International, we've always been very cautious, cautiously optimistic. It's all about timing and sequencing and really find file following our our strict strategic approach on entering new markets. And the international expansion in these new markets has been, you know, well received, better than, initially expected. Also, you know, entering new markets, you need to be very cautious.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

It's difficult. It's highly competitive, as we all know, but the acceptance has been well received. Australia, New Zealand, we launched with specific key retailers. You know, the new consumers coming into the category, additional share from other players within the category was was really great to see. So we're rolling out a variety of other retailers.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

International will be a growth area for us. There'll be additional markets and opportunities as we go through 02/1926 and '27 and beyond. Right now in 02/2025, we're very much focused on these core markets that we've launched last year in in q four and continuing to roll that out and build upon and drive a loyal consumer base. Our goal is to drive daily consumption, and the same health and wellness trends we're seeing, in North America. These are global trends.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

And the world right now is one click away within our social media and influencers, and a lot of the campaigns we're running. We're getting much broader reach, as the world has gotten extremely small. So really excited about, the future that we see on our international, expansions expansions and opportunities.

Sean McGowan
MD & Senior Research Analyst at Roth Capital Partners, LLC

Thank you very much, John.

Operator

Your next question comes from the line of Steve Powers of Deutsche Bank. Your line is now open.

Steve Powers
Steve Powers
Equity Research Analyst at Deutsche Bank

Hey, thanks very much. Good morning.

Steve Powers
Steve Powers
Equity Research Analyst at Deutsche Bank

Jared, I want to go back

Steve Powers
Steve Powers
Equity Research Analyst at Deutsche Bank

to the gross margin, gross profit, if I could, because I appreciate the prudence and just the allowances for the unknown going forward in this environment. But I guess, there any kind of known headwinds that you would call out in terms of reasons for sequential moderation in the gross margin from we saw in Q1 land. I think the 50% number you called out for the year was a base business number. But I'm sure we'll hear more on the ALAANI new, modeling call later in the quarter. But but any any considerations there as we think about, how that layers in from a gross profit perspective, that'd be helpful too.

Steve Powers
Steve Powers
Equity Research Analyst at Deutsche Bank

Thank you.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

Yeah. Thanks for clarifying that. You're right. That was the the Celsius core business margin that I was referring to. We'll we'll do a call, later in the month or early June to call out kind of what the impacts, will be with the Iolani getting rolled into, from a consolidation perspective.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

There will be some noise around the inventory step up for the quarter, as we, churn through the the inventory that existed at four one when we acquired the business. That's really just a a purchase accounting, issue more than than anything. In terms of the the core business, you know, I think we're like we said, we're comfortable with with kinda where we are for the quarter. Q three and q four is a little harder to tell, a little hard to draw a line in the sand on that one because there's there's still a lot of activity going on. There could be opportunities for improvement, or it could be opportunities for for further pressure.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

I think the structure we have set up today, is good. It's a it's a good robust supply chain. But, again, if if different things that the government does are gonna impact that, we'll come out and let you know. I think that's that's all we're gonna say at the moment when it comes to Aloni. I think I said back on the 02:20 call that they, they're a cup about eighteen to twenty four months behind us in terms of our p and l profile, you know, put the inventory step up aside.

Jarrod Langhans
Jarrod Langhans
CFO at Celsius

So they would be kind of, where their structure would be. It'd be kind of mid forties or probably low end of mid forties that we'll work up to get to the same profile as us from a gross profit perspective. And then we'll get more into the nitty gritty when we have the the modeling call and show some pro form a views, around 2024 and go forward.

Operator

Thank you. I'd now like to hand the call back over to chairman and CEO, John Fieldly. Please go ahead.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

Thank you again for joining us today. We're proud of the continued progress we've made and energized by the opportunities ahead. With strong brands, focused strategy, and growing global momentum, we believe Celsius Holdings is well positioned to lead the next phase of growth in the modern energy category. I also wanna thank our employees and partners around the world for their dedication and commitment. Their efforts continue to power our success.

John Fieldly
John Fieldly
Chairman of the Board of Directors & CEO at Celsius

We appreciate your continued support and look forward to updating you again next quarter. Gracious and live fit.

Operator

Thank you for attending today's call. You may now disconnect. Goodbye.

Executives
    • Paul Wiseman
      Paul Wiseman
      Senior Vice President of Communications & Investor Relations
    • John Fieldly
      John Fieldly
      Chairman of the Board of Directors & CEO
Analysts

Key Takeaways

  • First quarter revenue was $329.3 million, down 7 % year-over-year due to softer velocity, distributor incentives and elevated promotional activity, while adjusted EBITDA was $69.7 million (21.2 % margin) and gross margin expanded 110 bps to 52.3 %.
  • On April 1 the Elani Nu acquisition closed, adding a second billion-dollar brand that drove roughly 20 % of category dollar growth in Q1 and strengthens Celsius’s reach among female consumers.
  • International revenue jumped 41 % to $22.8 million, led by strong organic gains in both legacy and recently entered markets such as the UK, France, Australia and New Zealand.
  • Celsius bolstered its operations by appointing its first President & COO, integrating its Big Beverages production facility for future line expansion, and exiting Q1 with $977 million in cash and no debt (pre-acquisition).
  • The company expects to build on momentum with additional retail shelf gains, new flavors and formats (e.g., Playa Vibe, Hydration powders), and expanded foodservice distribution in Home Depot and 18,000 Subway locations into the summer season.
A.I. generated. May contain errors.
Earnings Conference Call
Celsius Q1 2025
00:00 / 00:00

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