Q4 2019 Earnings Call
Greetings and welcome to Celsius Holdings, Inc. fourth quarter full year 2019 earnings call. At this time all participants are the listen only mode. I question answer session will follow the formal pieces. He said I said it was your acquire operator system. During the conference. Please press Star Zero I know telephone keypad.
Please note. This conference is being recorded I'll now turn the conference over to Cameron Donahue at Hayden IR. Thank you you may begin.
Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings fourth quarter and full year 2019 earnings conference call.
Joining me on the call today, or John Field, Lee President and Chief Executive Officer that went the wrong Chief Financial Officer.
In the prepared remarks, well open the call to your questions and instructions will be given at that time.
The company filed its form 10-K, with the FCC and issued a press release today all materials are available in the company's website at Celsius Holdings Inc. Dot com under the Investor Relations section as a reminder, before turn the call the job the audio replay will be available later today.
It's also be word this call may contain forward looking statements, which are based on forecast expectations and other information available to management. Today March 12, 2020. These statements involve numerous risks and uncertainties, including many that are beyond the company's control except to the extent as required by applicable Celsius Holdings undertakes no obligation disclaims any duty.
Update any of these forward looking statements. We encourage you to review our Safe Harbor disclosure is contained in today's press release in our filings with the FCC for additional information with the I'd like to turn the call <unk>, President and Chief Executive Officer, John Field, Lee first prepared comments John.
Thank you Karen good morning, everyone and thank you for joining us today.
2019 was another outstanding year for Celsius, as we further expanded our distribution network, adding new relationships with channel partners and expanded its existing accounts.
That in our portfolio products through our commitment to innovation gain greater brand recognition and visibility and restructured our business model in China.
Each of these initiatives are in support of our relentless commitment to building a solid infrastructure that position Celsius as a global beverage leader it supports long term growth and increasing returns for our shareholders.
The macro trends across the industry continue to accelerate that's more consumers seek healthier alternatives less sugar functional.
Beverages versus conventional beverages.
In the energy drink category, one of the fastest growing in the beverage category. It grew approximately 8% in North America through 2019.
And as anticipated by Euro monitor the be an 85 billion dollar category globally by 2025.
In sync with increasing demand, we're now reaching more consumers at more distribution ports than ever before.
We set a new sales record in 2019 with over 75 million in revenue increase of 43% over last year and our North America revenues grew 53% to approximately 60 million in revenue.
This growth was driven by higher volumes and higher retail velocity rates across all channels a tree.
Throughout 2019, we set new quarterly records in top line revenue and our financial performance and finished the year with four quarters of sequential quarter over quarter growth with the fourth quarter of 2019 topping $24 million in revenue.
We are truly gaining considerable momentum.
The energy drink market remains robust and we're well positioned to continue to gain share.
Back on September 27th 2019.
Beverage industry analysts Bonnie Herzog of Wells Fargo at the time now at Goldman Sachs. Tom added a quote the fitness performance energy subcategory is now going mainstream suggesting there's even more potential disruption across the category than we previously expected and art mentioned, there's still a.
Long runway of growth across broader energy as new consumers enter the category and quote.
She is absolutely right, we see a massive opportunity with seismic shifts taking place in the energy category for functional better for you offerings and with our proven functional health and wellness fitness position. We are gaining broad mass appeal, we have never been more optimistic about our future.
Both focusing in on our geography is as I imagine in North America revenue was increased 53% to 60 million annually with growth derived from all channels, a trade, including health and wellness retail bending the online.
And in Europe European revenues increased 56% year over year as a result of strong new flavor watches optimized in store execution and two full months a fully consolidated revenues post the acquisition of folks food group in November December.
And as expected our revenue in Asia was down year over year due to the strategic shift in our business model in China to a royalty and licensing model, which began in the beginning of 2019.
Through an agreement with our longstanding partner shape, our food technology, we established an operating model that leverages the experience team and established infrastructure and mitigates our risk we have eliminated the need for future capital injections by Celsius in China.
Created a vehicle where recapture our previous invested divestment three fixed repayments.
Asia remains an important piece of our growth strategy and we believe the structure will accelerate or ability to capture market share and this rapidly growing China market.
Shifting our approach positions us to really see nearly 7 million at initial minimum royalty fees and allows us to recruit more than 12 million a previously invested capital over the initial five years of the contract.
This structure will be incremental to our cash flows throughout <unk>.
<unk> financial results throughout 2020.
From a strategic strict standpoint, we completed an acquisition of bulk food group, a Nordic wellness company the acquisition, which was immediate accretive provides significant opportunity. We first began a relationship with for food group in 2016, when they acquired or former distributor at a seven.
One of Celsius, and the Nordics.
This acquisition what is an important step in our strategy to build a global dominant brand as a further solidifies our position in one of the best selling fitness drinks in Sweden, with an approximate 10% market share and opens a new distribution platform for the rest of Europe.
Through this transaction, we gave that additional revenue stream with entirely new yeah, complimentary product offering bulk foods innovative fast sports nutrition line and a number of operational synergies that we have already begun to capture.
On the North American distribution front, we remain focused on building or National distribution network, which now includes more than 100 regional direct store delivery partners, which is 100% increase from July 2019, many of which our premier beverage distributors, such as Anheuser Busch Inbev.
Most of Miller, Coors, Kurt Dr Pepper, and Pepsi independent distributors.
We expanded our bail ability to more than 65000 locations across the United States.
An increase in our store count by over 60% compared to the beginning of 2019.
Through these relationships, we not only expanded availability, but it's also been a catalyst to increase our retail sales velocity, reducing our out of stocks situations and improving inventory management point of sale.
We're making great progress and plan to have majority coverage and many metropolitan markets across the United States by summer, which will reinforce our platform from continued growth.
And the first half of 2019, we signed a distribution agreement with bid Geyser, New York's largest independent non alcoholic distributor serving a five boroughs of New York City, and the carries a Nassau and Suffolk, Westchester and Putnam bid geysers serves more than 20000 locations and the massive New York City Metro.
Okay, and beginning in a third quarter, we successfully transitioned 711 and target locations over to our preferred distribution partner in the territory significantly increasing our distribution the New York City market.
As we continue to build our direct store delivery networks will continue to transition additional catchy accounts over as we did with big Geyser, which we believe will further increase our in store presence and velocity rates at retail, where we are already seeing a 40% listen sales and existing accounts through this.
Model.
In addition, we have added a number of marquee accounts in North American network in 2019, including just to name a few kwik trip stopping shop and expanded in many of our existing accounts, including CBS Rite aid target 711, Dick's Sporting goods Kroger Gold's gym 24 hour anytime soon.
And many many others.
More recently, we signed a national authorization agreement with booed by business unit of Compass Group North America booed by the largest foodservice be curative and supply chain solution organization in North America with over 85000 unique customer locations are beverages are now available nationwide across all come.
This division's North America business units.
This new channel adds incremental market opportunities for us, which will include hospitals airports college campuses restaurants, it casinos among others.
Dan This momentum will continue throughout 2020 with the most recent announcement new retail partner, Walmart, where we have implant a gram into over 15 other locations in the beverage set throughout North America and see significant opportunity.
And the grocery and mass market channel a highlight what the expansion with Kroger the largest grocery store chain in the United States with more than 1100 locations nationwide onto that banner, our first place placements with Kroger. We're in the second quarter of 2019, and the product is now available across all of it stores, including both.
The beverage aisles of sports nutrition sat with the expansion Celsius is now available in more than 7000 grocery stores nationwide.
Spins based brand performance and the grocery moolah channel over the past 52 weeks through December 29, 2019 demonstrates tremendous momentum in this channel with a growth rate of over 110% in the past year, we're well positioned to drive further growth and maximize our distribution and retail.
Partners driving increased velocity rates and availability throughout 2020.
In the convenience channel in 2019, we launched placements with Kwik trip.
$11 billion enterprise with more than 800 stores and 11 state and expanded with other convenience chains, including circle K Myers convenience flying J pilot further expansion in 711 race track and others are network of convenience stores continues to grow and we'll continue to grow throughout.
2020, as we continue to gain interest for more convenience retail partners, we anticipate that more convenience retailers will be allocating more placements to Celsius and 2020 based on changes in consumer preferences and the momentum we are gaining an existing accounts in this channel we see a massive opera.
Immunity in the convenience channel.
And this channel the most recent spins data for the prior 52 weeks ending December 29, 2019 show Celsius is growing faster than the category at a 44.5% growth rate versus the prior year within ACB or all accumulative volume of 12.2%.
This indicates we have a long runway ahead.
And the vending channel and micro markets. We are now available through more than 600 vending and micro market operators covering more than 10000 micro markets and thousands of healthy bedding units through out the United States through 2019, we saw an increase in the strong growth in the channel fueled by strong.
Our purchases by both canteen encompass group.
We see continued growth opportunities in this channel as we gain further placements and in at work locations restaurants hotels hospitality is as well as colleges and universities.
Most recently, we gain placements through OTI Gi and are now available in retail locations a nine major airports in the United States, including JFK in Newark, and New York as well as others. This channel continues to represent a large opportunity for energy drink sales in the country and we plan to capture a significant portion of this opportunity.
I'd.
On the portfolio innovation front continuous innovation has been a cornerstone of our business from the beginning which is driven by our cross functional teams and a 2019, we exhibited our industry leadership, but the launch of innovative flavors, which are trend forward and aligned with today's health Mighty consumer.
Each of our trend for innovative flavor launches have been extremely well received affirming our connection to consumers taste and preferences.
Subsequent to yearend, we unveiled our latest addition, refreshing exotic jackfruit the latest flavor, which is available in our new heat Celsius heat packaging, a tropical pace, what they burst of sweetness and a page west.
Further expanding our product portfolio. We also celebrated that successful launch of a new innovative line of beverages, our branch chain amino acid DC, a functional beverages that fuels muscle recovery.
The one was initially launched the fitness channel as the response to demand within the fitness community for healthy energy offerings that support work post workout. In addition, it further expands our usage occasions, our BCD products are a strong complement to our existing lineup of fitness beverages.
Our innovations team is diligently working on new offerings with a focused on new verticals and adjacent categories. The increased the breadth of our portfolio all while leveraging our delicious innovation flavors combinations further building upon the premium great tasting functional portfolio.
In addition, we expanded in addition to expanding distribution and the introduction of new products. We stepped up our efforts to increase brand awareness in 2019 further building building upon our brand equity and driving our premium positioning the energy category.
We creating meaningful and emotional connections with consumers online and offline.
One of our integrated programs included the launch of our first national guerrilla marketing tour. Our lives. It tour featuring various integrated fitness activities, including outdoor classes hosted by popular local inch instructors and ambassador from several nationwide fitness chains as well as competitive activities.
We made our way across the United States with stops and key cities as a result of these efforts we reached tens of thousands of new consumers and high energy settings. Most conductive today consumption of our products in a cost effective way.
In addition, we connect with consumers where they live work in play through a variety of programs, we expanded our community and created meaningful connections and 2020, we will continue to drive or awareness through meaningful and emotional connections with consumers and continue to leverage todays trends to build upon our global iconic Celsius.
Grant.
Our strategy remains consistent striving for consistent continuous value creation with continual focus on strengthening our core building our communities and expanding our distribution networks through high quality partnerships further optimizing existing accounts and leveraging our infrastructure to drive continued growth in.
Prove profitability.
It is an exciting time in our industry as seismic shifts are taking place and food and beverage that consumers are demanding more from their beverages. We see continued momentum with our portfolio to capitalize on these trends to drive a premium leadership position with our Celsius portfolio I look forward to discussing our progress throughout 2020.
I'll now turn the call over to Edwin the grown Kabbalah, our chief financial officer for his prepared remarks.
When.
Thank you John for the three months ended December 30, Onest 2019 revenue was a record high $24.1 billion, an increase of $9.4 million or 64% compared to $14.7 million for the same period last year.
The overall increase in revenues was basically due to increases in sales volumes as opposed to increases in product pricing.
Breaking the 64% increase down by geography in North America continued strong growth drove an increase of $6.1 million to a record $17.1 million mainly related to double digit growth in both existing accounts and distribution expansion.
The European markets also increased by $4.7 million compared to the fourth quarter of 2018.
The Asian markets reflect the change in our China business model to a royalty and license fee arrangement effective January Onest 29 team.
Asian revenue amounted to $212000 compared to $1.6 million into your ago period.
However in Asia. There was also a corresponding decrease in expenses, which significantly contributed to improving our profitability in the fourth quarter of 2019.
Revenue from all other areas was $32000.
The total increase in revenues pertains to additional sales volume as opposed to increases in product pricing.
Gross profit increased by $4.6 million or 85%.
To $10.1 million from $5.4 million for the same quarter in 2018.
Gross profit margin for the three months ended December 31st 29 team was 41.9%.
Which compares favorably to 37.1% for the 2018 quarter.
The increase in gross profit dollars is mainly related to increases in sales volume as opposed to increases in product pricing.
Selling and marketing expenses for the three months ended December 30, Onest 2019 were $7 million, an increase of $4.2 million or 152% from $2.8 million in the same quarter in 2018.
The increase is mainly due to higher marketing investments of $1.6 million as the prior year amount reflected a reduction of $900000 related to the settlement of marketing charges with our mark with our China distributor for 2019.
This quarter reflect increases of $1.3 million related to sales and marketing employee investments and $1.3 million of incremental charges pertaining to trade marketing activities and distribution costs. As these results now include the impact of the European business integration as of the data.
The acquisition on October 25, 2019th.
General and administrative expenses for the three months ended December 30, Onest 2019 were $4.4 million, an increase of $1.3 million or 43% from $3.1 million for the three months ended December 30, Onest 2018.
Increase was primarily due to acquisition costs amounting to $434000.
Additionally, stock option expense increased by $287000 when compared to the same period last year.
Employee costs increased by $196000.
And depreciation and amortization also increased $110000 as well as all other administrative costs, which reflected an increase of $287000. Since they now reflect the European expenses incurred in these areas as of the date of the acquisition.
Below the operating profit line total other income amounted to $150000 for the three months ended December 30, Onest 2019, which represents a fluctuation of $593000 from other expenses incurred in the amount of $443000 for the same.
Period in 2018.
The variance is mainly the result of the gain in the note receivable from China, a $410000, which is denominated in the Chinese currency.
Additionally, there were lower financial amortization costs of $273000, which were partially offset by higher net interest expense of $60000 and an increase in other miscellaneous expenses of $30000.
As a result will be above for the three months ended December 31st 2019. The company had a net loss available to common stock holders of $1.1 billion or two cents per basic and diluted shares compared to a net loss of $893000 or two cents per basic and diluted share.
In the year ago period.
Adjusted EBITDA, excluding the net Asia investment for the fourth quarter of 2019 was $607000 compared to $136000 in the fourth quarter of 2080.
We believe this information and comparisons of adjusted EBITDA and other non-GAAP financial measures enhance the overall understanding and visibility of our drew business performance to that effect a reconciliation of our GAAP results to non-GAAP figures have been included in our earnings release.
Now turning to our full year results.
For the year ended December 30, Onest 2019 revenue was approximately $75.1 billion, a robust increase of $22.5 million or 43%.
From $52.6 million for the year ended December 31st 2018.
This significant revenue growth was mainly associated with the results of the North American region, which delivered an increase of $20.8 million over last year or an increase of 53%.
The real the European region provided $40.5 million of revenue an increase of $5.2 million were 56%.
Asian revenues for 2019 reflect the change in our China business model to a royalty and license fee arrangement.
Active January Onest 2019.
Asia revenue decreased to $841000 in 2019 compared to $4.3 million in 2018 as a result of this change.
Revenues from all other regions amounted to $191000, which was aligned with prior year results.
The total increase in revenues from 20 from the 2018 period to the 2019 period was basically attributable to an increase in sales volumes as opposed to increases in product pricing.
Gross profit increased by $10.2 million were 49% to $31.3 million from $21.1 million for the year ended December 31st 2019.
Gross profit margins totaled 42% and 40% in the years ended December 30, Onest 2019, and December 30, Onest 2018, respectively.
This increase in gross margin profitability is mainly related to reductions in product repackaging costs freight costs and the favorable impact of the consolidation of the European business.
The increase in gross profit margins contributed an incremental profitability of $1.2 million for the 2019 year.
Sales and marketing expenses for the year ended December 31st 2019, or $21.1 million, a decrease of basically $100000 or 0.5% from $21.2 million for the year ended December 30, Onest 2018.
This apparent decrease is mainly due to the change in our China business model to a royalty and licensing framework effective January Onest, 2019, which no longer requires direct marketing investments by Celsius.
Excluding this impact which amounted to a 7.2 million dollar reduction for 2019, our investment in marketing activities actually increased by $1.3 million or 20% when compared to the same period in 2018.
This figure is now include the marketing investments that are performed in our European business as of October 25, 2019.
Additionally, our support to distributors and investment in trade activities were $2.3 million higher for the 12 month ended December 30, Onest 2019, then for the same period last year.
Furthermore, investments related to sales and marketing personnel, which now include the European business as of the data the acquisition were $1.7 million higher for 2019, then for the same period last year.
Also broker commissions in storage and distribution costs were $1.8 million higher during the 12 months ended December 30, Onest 2019, then for the same period last year due to increases in our business volume and the integration of our European operations as of the data the acquisition.
General and administrative expenses for the year ended December 30, Onest 2019 were approximately $11.6 million, an increase of $1.1 billion or 11% from $10.5 million for the year ended December 31st 2018.
The increase was mainly due to higher stock based compensation of $540000 and $580000 related to acquisition costs.
Additionally, there were incremental expenses.
$452000 pertaining to employee costs.
$250000 pertaining to higher professional services.
$150000 of depreciation amortization and $130000 pertaining to other administrative costs. As these expenses also include the impact of the European business integration as of the data the acquisition.
We though the operating line total other income increased by $11.9 million for the year ended December 30, Onest 2000, $19 million to $11.4 million from a loss of $565000 for the year ended December 30, Onest 2018, mainly as a result of the recognition.
Of the gain pertaining to the agreement executed with our China distributor as part of the change in the business model, which includes the reimbursement of the investment made by the company in the China market. During the 2017 in 2018 years.
This has been recorded as a corresponding note receivable from our China distributor on the balance sheet, which is payable over five year period.
The net result for the full year 2019 was net income to common shareholders of approximately $10 million or 16 cents per basic and diluted shares compared to a net loss of $11.4 million or 23 cents per basic and diluted shares for 2018.
Adjusted EBITDA, excluding the net Asia investment for the full year 2019 was $4 million, which compares to $2.2 million in 2018.
Again, a reconciliation of our GAAP results to these non-GAAP figures has been included in our earnings release.
As of December 31st 2019, the company had cash of $23.1 billion compared to $7.7 million as of December 30, Onest 2018. The company also had working capital of $24.8 million as of December 31st 2019, compared to $19.6 million as of the.
December 30, Onest 2018.
Cash provided by operations during the year ended December 30, Onest 2019, total approximately $1 million, reflecting the net adjusted economic profitability from operations of $3.7 million.
And the increase in accounts payable of $2.6 million, which was partially offset by increases in accounts receivables inventories prepaid expenses as well as decreases in other liabilities for a total use of cash in these areas of pipe point $3 million.
That concludes our prepared remarks, operator, you may now open the call for questions. Thank you.
Thank you.
This time, we will be conducting a question answer session. If he would like to ask your question. Please press star one new telephone keypad.
That makes you tell indicate your line is in the question Q.
You May Prestart kill if he were they treat move your question from the Q.
For participants using speaker equipment may be the third to pick up your headset before pressing the star he is.
Our first question as from Jeffrey Cohen with Ladenburg. Please proceed.
All right, John and everyone how are you.
Excellent and good morning, Jeff Good morning, Thank you.
Sure I'll keep it just a few questions.
Talk about the DS skews, a little bit and velocities.
Finish as far as going to DST as you talked about a 100 partners. What's left you feel like your 70% or 80% or what's left as far as geosteering channels and getting more efficiency there.
Excellent. Thank you Jeff.
Yes, Steve front direct store delivery, you're correct. We are as I stated were 100.
Strong at the moment as reporting we do have a variety of additional a few dozen additional distributors coming onboard and we're in discussions right now with many.
Right now at 100 were probably right around 35% over key markets covered in North America. We do feel we'll have most of the market's covered by summer key markets, where we'll be able to start really slipping key accounts over to this preferred method, we started to do it as I mentioned.
In New York City would be Geyser 711 is now serviced by these guys are chart target is serviced by big guys, there and CBS will be switched over momentarily. So also we're in talks with rite aid to flip them over as well. So this is going to continue to happen and as we get these key DNA is covered and.
We already have three key markets targeted where we're working with the key accounts right now to flip those over by summer so.
The velocity rates were seeing when we slipped to the DST model just did a great just at a better in store execution signage, making sure we're in stock.
We're seeing philosophy rates increase from our current existing rate that we're seeing an existing accounts, which the growth has been roughly around 30% to 35% existing accounts, we're actually seeing a 40% lifted that as well so definitely.
The velocity rates will continue to increase as we move towards more direct store delivery key accounts going over to this model.
Okay got a perfect and then.
Good question can you talk little bit about a phone crews and in particular other fast lined out of our house confusion when it matures.
The protein bars, and some of the other products coming from North America do still expect I do not.
Tortilla and when will we see some off placements.
Yes, the passport.
The vast portfolio, which we acquired through the acquisition.
We.
A great tasting innovative protein snacks portfolio, which is highly complementary to our current Celsius portfolio.
We do see opportunities not only extraordinary expanding within Sweden, and Norway, where we already have existing distribution with Celsius other markets as well throughout Europe.
We are looking to start a very methodical launch of the fast portfolio in 2020.
With initially rolling out with online and starting to see it in a few retail partners.
Once again, we're very focused on the Celsius portfolio with a mass momentum we have what we do see the fast portfolio as a complimentary offering we are going to be very methodical on that we're very cognizant, our resources and limited resources as well as well as the investments required when launching new brands within retail so.
Very methodical approach, we will start to test it in 2020, as a complementary offering which has a lot of synergistic benefits.
Got it and then lastly from me and I guess for for Edwin you did call out some of the one timers as far as the.
The Junaid line and the.
I see them line so.
Could you give us a little more flavor as far as normalization.
As far as what we see I know that we had the European business integration, but im just trying to get a sense of.
You know that shows Mark you talked about 21 or two to 21, one on it and you will change.
We should think about increasing you know toward the 20% range or is there more like the 40% range for the upcoming year.
The same for today. Thanks.
Sure, Yes, very good question, absolutely, we're still kind of.
Valuating getting our arms around.
The European business, but to answer your question, yes, we're seeing or were.
Estimated around an increase of 20% in the Opex lines.
And obviously, it's going to depend as well as it relates to the marketing investment that.
We also.
Have on on the European business side, but yes, I would think up 20% to 25% would be something reasonable.
Perfect. Okay that does it for me thanks for taking the questions.
Excellent. Thank you.
Our next question is from Jeff Van Sinderen with B. Riley FBR. Please proceed.
Hi, good morning, everyone.
Can you speak more about what drove the addition of Walmart how the initial rollout will go and.
Well could the revenue potential be with Walmart I know, it's early but even if just order of magnitude you're thinking around that.
Yes. Thank you Jeff Great question I mean, just just as an example, just wanted to just I think it's easy I think it's also good to talk about the mass channel Loulo data as well and kind of did mentioned that we're seeing over 100% growth.
In the movie Channel and also I think it's important also point about what happened in transpired at target, where we initially launched in target in late 2018, with two flavors and unlimited number of stores and continued that evolution for further expansion through every reset we were.
Able to add additional stores as well as additional flavors and now were Chainwide would five flavor. So.
I think you're going to see you're going to see that seem momentum in Walmart.
The Walmart was 1500 stores half of those stores are currently service by DS key DSD partners and given markets. The other half is going direct through the warehouse until we build out the GMH will be flipping those over to DSD, where.
DSD partners really serviced Walmart first before the warehouse clubs were able to get that through their supply chain going direct to Walmart, but the initial feedback has been extremely positive.
Where we have landed within Walmart and there is already talks about adding additional flavors at the next reset. So we think Walmart is going to be a massive opportunity right now just like in target, we're starting off on the dry shelf in the energy sector, but there is so much more additional opportunities to further expand.
And also leverage some of their petrol state locations as well through Murphy's order oil and so far so.
We see this as a massive opportunity it's growing with the account it's managing your key accounts and leveraging the Celsius portfolio within those with multiple points of disruption and educating consumers were there as well. So I have always talked about raw creatures of habit and it takes time to activate these.
He accounts, we're in the process of doing it and and Walmart Dot com, we've been doing extremely well as well we've been targeting and leveraging a lot of the Walmart pickups, there at home deliveries and really integrating into the account as we do with all of our key accounts. So we see massive opportunities to provide you a specific number.
Not we're not in a position to do that today, but I will say the opportunity is extremely promising and among the initial momentum has been overwhelmingly positive.
Okay, Great to hear and then could you speak more about the drivers of your strong international growth and give us a little more color on how the funk integration is going and any synergies you're seeing there.
Yes.
Yes, the international growth and is there's really been dribbling added this year really driving from that Nordic revenue.
With our now acquired from Florida to include group partner.
And they actually are on track to to exceed 10% market share in Sweden.
Within the energy category, there are building considerable momentum with some of their new innovative flavors that they have had excellent in store execution and really leveraging our model that you talked about over the years, it's activating consumers online through and then also leveraging them offline through an experience show market.
Seeing activity that has been very successful on the ground and integrating everything into a 360 approach driving factor retail so that's been extremely successful.
In Finland, a further expanded and so thats okay.
And also the other key retailers there we saw further expansion in 2019 in Norway. Three 711 that test was very successful.
They roll this out to all that seven elevens within the country and we're also in the number two gating authorization right now and a number two petrol.
Taylor in country, so things are going very well very well much embedded in health and wellness than Jansan, how's clubs and making further expansion into mainstream retail.
Some of the synergies we already have implemented as crossed.
Really cross functional teams leveraging.
Key insights and leveraging best practices through our cross functional teams on sales and marketing initiatives to really leverage that.
And that has been some synergies also we've seen some synergies within the DNA side, we've already started to implement cost savings initiatives as well through improving logistics.
Also.
Cost of goods, we saw savings in insurance and audit cost Eni key so.
We're really looking at all aspects as this as we continue to go through to really drive the best ROI and the best benefit from this acquisition.
In addition, you're also seeing.
Just much opportunity for us for that platform for European growth, we're already talking to some new market partners and your distributors and given market, where we'll be able to leverage throughout 2020 and beyond.
Okay, Great and then if I could just squeeze one more in any.
New planned key marketing initiatives, you can touch on for 2020.
We have a variety of key marketing initiatives plant we just.
Lot relaunched really bringing back and continuation of the lifted tour. We launched in 29 team with great success, we're going to continue that journey with the lifted tour bring that the key markets around the country and leveraging that online offline experience in motion and connecting with consumers that an emotional level.
Also some key initiatives has been with our tropical Flamingo flavor launch in the Nordics I was a great great success as well and you're also going to continue to see a lot of social digital activation Influencer marketing.
Really driving our community and.
Further broadening broadening our reach.
Thanks, and best of luck for 2020.
Excellent. Thank you Jeff Thank you.
As a reminder, the star one of your telephone keypad, if he would like to ask a question. Our next question is from Anthony Vendetti with Maxim Group. Please proceed.
Thanks, Good morning, guys.
Good morning, Anthony Good morning.
Marty.
So just.
Hi.
Hey to ask this question, but I guess, it's sort of on the top line of everyone.
So so combet 19.
In terms of your production.
Is there any any concern about that going forward and then and then in terms of sales what's the best the best way you can categorized as we speak now anyway. What you see is the potential impact if any right now.
Yes excellent it.
Anthony we've been watching the Corona virus for since December when it first was initially spotted to move on due to you know our team on the ground next based out of Hong Kong, our partner shape song.
We had.
Employees all through mainland China.
We've been keeping a close eye on it.
Going back in December and three really the Chinese new year, and it's something that internally we have been.
Really planning for working closely with our suppliers.
All around the world and we have increased inventories increased raw materials.
We've looked at.
Which we do very frequently is really analyze our supply chain, making sure we're driving efficiencies number one but also making sure we have backup suppliers. So we feel very confident that position, where we currently are all our suppliers had indicated there will not be any supply disruptions.
Momentarily as as the current position is obviously things are changing rapidly. So we're keeping an eye on it but we at this point, we do not have any concerns we are keeping inventories up and our raw materials and feel earn a good position.
To weather the storm over the next.
Several months if needed.
Working closely with all suppliers.
In regards to.
The sales impact.
That's that's a little bit unknown at this point in our as we sit here and look ahead, because the momentum we have experienced in Q1, we have not seen any slowdown and momentum has continued in a very solid fashion as we entered 2000.
20, so we're still seeing same store sales increase we're seeing distribution expand.
I am are set to have another record quarter for the company in Q1 2020. So we feel are well positioned how that transpires into Q2.
Beyond is is unknown, we have had a lot of our conferences and a lot of our marketing initiatives, where we market at trade conferences as we all know have been canceled which has the potential to have ramifications.
But at this point, we have not seen any impacting our business, but thats not to say there will be an impact in in the second quarter.
Potentially.
Okay. That's helpful. John and then.
Obviously.
Pepsi Pepsico purchase rock Star energy for about 3.9 billion, how do you think that changes the competitive landscape for Celsius.
Yes.
Right interesting.
No thats been a rumor for some time now.
As well as the rumor is that maybe bang moves to their distribution network as a distribution partner you're hearing that in some of the trade magazines and within the industry.
Quite frankly, it's we see it as a great opportunity and we see it for a great opportunity for a number of reasons on prior calls I've talked about the partnership.
Within.
24 hour fitness, where we actually have been authorized in the Pepsi coolers through that change.
So we see a lot of synergies and benefits working with their independent Pepsi distributors, who were in several.
They're very interested in carrying Celsius, so now that so.
Pepsi has acquired Rockstar. This really allows us further opportunity for new distributors within the Pepsi system.
Because rockstar had an exclusive agreement that they could be the only energy drink. So we feel this is an opportunity it's going to open up more doors for us.
Also in the event Bang does move over to the Pepsi Bottlers are distribution system, that's going to open up further distributors for us and opportunities through additional Anheuser Busch distributors and many others. So.
We actually see this as a great benefit that we're going to leverage.
Over the next several months and.
It's a great opportunity for us.
And then lastly, John just on pricing it seems that that this does categories is able to continue.
To be able to garner premium pricing.
It has that changed at all or is that still it's still the case as you come out with new brand new flavors.
New versions of your product and then sort of.
Talk about the plan going forward in terms of brand.
Intentions.
Okay excellent in regards to pricing architecture.
You're absolutely right, there's a there's a great opportunity in the new age performance energy category for Premiumization to develop Celsius is that premium offerings on when Bang and rain were initially lot back in August went back when when rain launch there were.
Again buy one get one freeze if you recall, which deep discounts.
She has maintained a really a premium pricing we did not discount at that same level and we saw existing stores sales continue to grow so that really shows you the price elasticity on the Celsius portfolio really being able to build a premium positioning the category. So we're very.
We are excited about that.
Being a premium player in the category, we think Thats, we feel that's going to continue to go to grow.
You are going to see a value brands come into the category mid tier price brands and you're going to have premium players within the category that are driving the overall category growth. So.
We feel pricing remained strong and there is additional opportunities to take pricing up in the future as well.
As for our plans on innovative flavors and really line extensions into adjacent categories. We had a cross functional innovation team on a global platform.
You will see additional really line extensions from us we're going to continue to leverage our VCA recovery offering you're obviously going to see a lot of innovative flavors coming from Celsius, we are on the forefront.
Connecting with consumers are last several framing labor launches has been spot on do exactly what the consumer Watson demand and we have a variety of innovative flavors coming to market in 2020 and beyond that we'll continue to drive that momentum into the category.
And we're very excited where.
And the position.
Thanks I appreciate it.
Excellent. Thank you Anthony Thank you.
We now have a follow up question from Jeffrey Cohen with Ladenburg. Please proceed.
Hi, just a couple of more wanted to circle around with any commentary as far as some.
Placement gross and overall growth for the be she still going on out there.
Hey, Jeff.
In relation to this Lcs branch date amino acid recovery line. It launched in late really September 2019, we're keeping it at this point.
In vitamins specialty we're keeping vitamin specialty special with this line we're building more brand awareness around the line before we bring it to mass retail we see massive opportunities right now with our core line as we continue to grow and scale with that we will bring our lines to two main stream into mass.
But at the right time.
As you all know is space is very competitive, especially in the energy category.
And we want to make sure we're moving our products out as a REIT velocity to write brand awareness to be successful, making sure. We already have generated trial and have brand awareness.
Surely leveraged power at retail.
Got it and then for the fourth quarter the on the topline was.
Very much higher than what we had.
During the strong.
As a is it demand outstripping the seasonality or at least did in the fourth quarter because it seems like historically, we've had more of seasonality.
Two.
Q3, and then probably secondary Q2.
Yes, it does seem.
When you look when you look at our sales up four quarters every quarter over quarter growth.
We are building momentum and.
Historically the business is very seasonal I think you as we continue to grow we will see that but the brand is really gaining momentum were seeing velocities continue to increase and new distribution coming onboard and then also you also have the European consolidated revenue impact as well.
We had November and the November and December fully consolidated revenues. If you just look at North America, we did have quarter over quarter growth four consecutive quarters in North America.
But it's.
And I think thats going to continue as we move into 2020, we're just seeing really solid momentum, but the underlying business.
Is this does have the opportunity to be seasonal although we're currently not seeing that due to the growth of the brand and the brand momentum.
Okay, and when you talk about the.
Momentum and groups you mentioned that your search for a record Q1.
The furniture Q1.
Year over year over Q1 2019 or.
Related to Q4 29.
Into Q, we actually for Q4 was the biggest.
Q4, 2019 was the largest quarter in company history, and we anticipate that have another largest quarter in company history in Q1 2020.
Okay Thats tremendous okay. Thanks for taking the phone.
You got it thank you Anthony Thank you.
Thank you I would now like to turn the conference back over to management for closing remarks.
Thank you Gerry. Thank you everyone on behalf of the company like to thank everyone for their interest today. Our 2019 results demonstrates our products are gaining considerable momentum we're capitalizing on todays global health and wellness trends and changes taking place in today's energy drink category.
Our active healthy lifestyle position as a global appears position what mass appeal, we're building upon our core and leveraging opportunities and deploying best practices, we have a winning portfolio and strategy in a rapidly growing markets that consumers want.
Our mission at Celsius is to continue to grow Celsius, and bring it to new customers profitably.
Prior to our dedicated team as without them are tremendous achievements and significant opportunities. We see ahead would not be possible. In addition, I. Thank our investors for their continued support and confidence and our team. Thank you everyone for your interest in Celsius and had a great day.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.