Q1 2020 Earnings Call
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Now my pleasure change, there's your host Cameron Donahue with Hayden IR. Thank you Mr. Donahue you maybe yeah. Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings first quarter 2020, <unk> earnings Conference call. Joining me on the call today or John Field, Lee, President and Chief Executive Officer, and I wouldn't <unk> Chief financial.
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Following our prepared remarks, well open the call to your questions instructions will be given that.
The company <unk> form 10-Q, what the FCC and issued a press release today all materials are available in the company's website at Celsius Holdings Inc. dotcom under the Investor Relations section.
A reminder for turned colder John the audio replay will be available later today.
He's also be aware that this call may contain forward looking statements. What's your based on forecast expectations and other information available to management as of today May 12, 2020. These statements involve numerous risks and uncertainties, including many are beyond the company's control.
Accepts except as required by applicable Celsius Holdings undertakes no obligation and disclaims any duty to update any these forward looking statements. We encourage you to review.
Our safe Harbor disclosures contained in today's press release and accordingly.
With the FCC for additional information.
With that I'd like to turn a collaborative president and Chief Executive Officer, John Field late first paired remarks John.
[music]. Thank you Karen good morning, everyone and thank you for joining us today.
First our thoughts and prayers are with all of those who have been impacted by curbing 19.
And I want to thank all of our Celsius team members and partners for their dedication efforts and support.
There are incredibly proud of our team well maintain the integrity of our operations and performance.
[music] macro environment during the first quarter of 2020, what's unlike any other we have seen in recent history.
Challenging organizations to respond to new and creative ways to manage and grow their business.
Yes, we rose about the challenges and set another new sales record with quarterly revenue $28.2 million, an increase of 95% over last year.
North America revenue was up 70% and Europe was up exponentially due in part to where accretive acquisition of folks did group late in 2019, and Asia was up as well.
Consumer demand and beverage and the beverage industry continues to trend towards the pursuit of healthier alternatives versus conventional beverages, although consumer traffic and purchasing patterns have been severely disrupted traditional shopping habits gave way to prove mendis increases and online ordering.
Curbside pickup patch repurchasing while consumers complied with the stay at home orders.
Jimmy consumer demand, we secured additional distribution agreements with partners and our primary U.S. networks, including Anheuser Busch Inbev, Pepsico, Kurt Dr Pepper, and Molson Miller, Coors distributors, which further expanded availability the new regions. We are continuing our quest to build a national distribution network.
Okay, which now includes more than 100 regional DST or direct store delivery partners.
Our DSD partners also provide us with additional routes to market for incremental points of growth.
In addition, we transitioned target and 711 from the wholesale not work to our DSD partner Big guys are in New York Metropolitan area and saw volumes more than double across the board and the U.S. market stores that we have transitioned to the DSD network. So on average a form.
<unk> percent increase in sales volume on top of or 30% same store sales growth rate.
Were planning for more planning on more accounts transitioning the DSD partners and the DSD network throughout 2020, as we continue our pursuit of reaching more consumers at more points of distribution.
With the recent news a bank energy transitioning to the Pepsico distribution network. This if that has further opened up additional opportunities for Celsius to gain additional distribution partners as we continue to expand our NAV to a national network.
During the quarter, we launched nationwide availability of our product that more than 1500 store locations for through Walmart the country's largest retailers.
Early data from the retail channel indicates strong reception bites consumers and we expect additional flavors to be out into next reset.
In addition, we implemented and watched.
Within Walmart about 50% split between DST and going direct through their warehouse and further expect to transition over these existing walmarts to the DSD network through the back half 2020, as we gain additional coverage.
In addition at target one of our key retail partners, we expanded our product assortment to five flavors nationwide with the addition of great tasting Grapefruit Melin Green tea.
We introduced our newest flavor refreshing and exotic jackfruit tropical Tate taste with a burst of sweetness. They tell you twist available in our new Celsius He packaging.
The stand out packaging and label this redesign positioned the brand is highly credible and sets the stage for the next phase of growth.
It's visual effects reinforces our branch structure and function claims, which are clinically proven any clear differentiator among brands in the performance energy category, while appealing to a broader audience.
[music] clearly our momentum continues into first quarter, despite an extremely volatile and in certain business environment brought to us by the Kobin 19 buyers.
Our success in the first quarter was driven by several key factors that are unique to Celsius and give us a strong competitive advantage.
We have an extremely strong Brad I diverse and growing network of retailers distributors and partners and a strong balance sheet that enables us to rise above challenges that many companies are facing a missed the cobi pandemic.
As early as late December we began increasing product and raw material inventories in anticipation of resets with major retailers that were planned for the March and April timeframe. The strength of our balance sheet enabled us to continue to build inventories during the quarter. Despite the demand as the buyer situation unfolded.
Well other brands were impacted we were very well positioned in the first quarter when the grocery mass channel and drug channel partners increased orders outside of their normal ordering patterns as shelves, where emptied as result of consumer pantry purchasing.
Supply chains returned to more normal levels with shelves adequately stock our throughput remained steady.
Due to our decision around inventory management at a higher level of support we were able to provide a retailers distributors and partners. In addition, also being located in Hurricane Alley in South, Florida, We're well positioned with continue see operation plans in place, making our transition to many of our workers were now working from home very seamless.
Critical to our growth plans is our marketing strategy that creates meaningful emotional connections with consumers up until the crovitz virus pandemic, a significant component of our marketing strategy primarily consisted of life integrated programs that reached critical mass of consumers that large gatherings art.
Fit tour for example, integrated fitness in competitive activities, where we reach tens of thousands of new consumers and high energy settings with the stay at home orders large gatherings of people at advanced came to a hard stop and we were challenged quickly pivot our marketing strategies and find innovative ways to get in front of consumers.
As a small nimble organization, we clear quickly shifted our marketing resources from spiritual off white activation to online programs that enable consumer connections and create a different yeah meaningful experience.
One example was an April where we launched a swap with Celsius, a virtual workout platform that is live streamed honor Instagram account with a gyms and fitness centers closed across the country were used Instagram platform to facilitate consumer connections through at whole workouts the program consisting of three.
[music] weekly workouts hosted by well known local fitness trainers located throughout the country, but different workouts offered followers a chance to try new workouts.
Let me stress and maintain a sense of normalcy the workouts require minimal to no equipment can be modified for all fitness levels. In addition to sweat what sells yes. We also partnered nationally with berries, a leader in the fitness space and it's at home <unk> Instagram series, where Celsius is profile as the official energy.
You drink powering berries at home streaming workouts the partnership it's helping communities come together and continue to lift fit even outside of the Jim.
We are also deploying more online campaigns to deliver tens of millions of additional impressions to highly targeted audiences such as with our sponsorship of the energy aisle.
It would then instacart and leading home grocery delivery service. In addition, we're leveraging Walmart dot com target Dot com bodybuilding dot com and Amazon as we continue to gain momentum.
Most recently, we're able to get data from stake, one which tracks energy drink sales on Amazon in the United States.
For the 13 weeks ending April 11th 2020 sales in dollars and the energy drink category within Amazon versus the same period, a year to year ago indicated Celsius sales growth of 118.2% and its share increased 2% within the category to 11.4 well.
Further demonstrates the momentum we're building in the category of with Celsius.
Celsius was ranked the third largest brand in the category behind Monster and Red Bull.
While our highly talented marketing team quickly shifts our approach from offline to online we fully expect a pit adjusted rapidly back to off line has jim's begin to reopen in consumer gatherings and events are given the green light. This may look slightly different than it did before the virus, perhaps with more outdoor workouts and smaller.
Gatherings, we were already planning and positioning for activation in the second half of 2020, when we are giving the signal.
In Europe, we further integrate into funk food group and our operations and are seeing great benefits and see additional future synergistic opportunities.
In addition, the team further and further operational performance through improved focus and execution, which we're very pleased with.
Celsius. It was reported was among the fastest growing energy drinks in Sweden market during the first quarter burden Nielsen scan data.
During the quarter the team successfully launched a great tasting tropical flamingo flavor with great success, leveraging superior in store execution and targeted experiential marketing programs, which drove strong performance for Celsius into market. Despite the impact cobot.
Our first quarter was a strong start to the year, we remain focused on driving profitable growth by expanding increasing our distribution networks nurturing relationships with new and existing accounts and engaging consumers through a variety of created mediums.
We are very we are successfully growing in an industry that is rapidly changing and quickly adapting to changes in the broader market, while it's difficult to predict what if any impact macroeconomic shocks will have on our business over the next few quarters, we remain confident in our ability to maintain our momentum over the long term and cash.
For the lies on the growing consumer demand for healthy functional beverages.
As we entered the second quarter, we're seeing growth in April orders.
And in North America, we have seen growth of approximately 38% over the prior year, which provides us further confidence on her ability to maintain our momentum in the category notwithstanding the for going the uncertainty has resulted from cobot outbreak may have unforeseen and on the expected impacts on the results of operations.
I'll now turn the call over to Ed when the grown Kabbalah, our chief financial officer for his prepared remarks.
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Thank you John for the three months ended March 31st 2020 revenue was a record high $28.2 million, an increase of $13.7 million or 95% compared to $14.5 billion for the same period last year.
The overall increase in revenues was due to increases in sales volumes as opposed to increases in product pricing.
By geography, the 95% revenue increase was attributable to continued strong growth of 70% in North America, reflecting double digit growth from both existing accounts and new distribution expansion, including expansion and world class retailers.
Consequently, North American revenue delivered a record $19.4 million for the quarter or an $8 million increased when compared to the prior year quarter.
Revenue from the European markets was $8.5 billion or an increase of $5.5 million compared to the first quarter of 2019, reflecting the full impact of consolidating the results of our European operations.
Asian revenue totaled $268000 compared to $53000 into your go period.
Asian results for the first quarters of 2020 and 29 team are now comparable as both figures reflect the change in our China business model to a royalty and license fee arrangement effective January Onest 29 team.
Revenue from all other areas amounted to $57000.
Gross profit increased by $7.3 million or 100 in 27% to $13 million in the first quarter of 2020 up from $5.7 million into your go quarter.
Gross profit margin for the first three months ended March 31st 2020 was 46.1%, which compares favorably to 39.5% for the 2019 quarter.
Increasing gross profit margin and dollars reflects the impact of the consolidation of the European operations and the result of the increase in sales volumes across all of you all geographies as opposed to increases in product pricing.
The increase in gross profit margin translated to an incremental $1.9 million of profitability in this quarter.
Selling and marketing expenses for the three months ended March 31st 2020 were $7.5 million, an increase of $3.9 million or 100, an 8% from $3.6 million for the same quarter in 2019.
The increase is mainly due to the impact of the consolidation of the operations of our Nordics partner, which was not reflected in the 2019 results.
Consequently, marketing expenses increased $1.6 million were 132 per cent compared to the first quarter of 2019.
Similarly, all other sales and marketing expenses reflected increases related to the consolidation of the European operations, specifically employee costs increased $1.5 billion or 114% from the 2019 quarter to the 2020 quarter.
And also reflect investments in human resources to properly service our markets.
Moreover, due to the increase in business volume, our support to distributors and investment in trade activities increased by $353000 and our storage and distribution costs also increased by $486000.
General and administrative expenses for the three months ended March 31st 2020 were $4.2 million, an increase of $1.6 million or 62% compared to $2.6 million for three months ended March 31st 2019.
This increase primarily reflects the impact of the consolidation of the operations of our Nordics partner.
As such administrative expenses reflected an increase of $1.1 billion, which included an addition of $221000 to our bad debt reserve.
Order to cover potential caught collectability risks associated with the cobot 19 situation.
Employee costs for three months ended March 31st 2020 reflected an increase of 300 in $2000 or 47%.
Not only related to the consolidation of our European business, but also reflecting investments in resources in order to properly support our higher business volume.
All the other increases for general and administrative administrative expenses amounted to $232000 when compared to the prior year quarter.
Below the operating profit line total other expenses were 700 in $2000 for the three months ended March 30, Onest 2020, which reflects an increase an increase of $12.9 billion when compared to the prior year results, which included a gain of $12.2 million related.
The recognition of a note receivable in connection with the change in our China business model at the beginning of 2019.
Furthermore, the results for the 2020 quarter include amortization expenses of $310000.
Total net interest expense of $273000.
Foreign exchange losses, so $78000 and all other items amounted to a net expense of $41500. As a result of all this activity. The company had net income of $546000 or one cents per basic and diluted shares for the first quarter of 2020.
Compared to net income in the year go quarter of $11.7 million or 19 cents per diluted shares which included 12.2 million dollar gain on the recognition of their note receivable.
Adjusted EBITDA was $2.8 million compared to $878000 for the first quarter of 2019.
We believe this information and comparisons of adjusted EBITDA and other non-GAAP financial measures enhance the overall understanding and visibility of our true business performance.
To that effect a reconciliation of our GAAP results to non-GAAP figures have been included in our earnings release.
As of March 31st 2020, the company had cash of $19.1 billion compared to $23.1 million as of December 30, Onest 2019.
The company also had working capital of $27.4 million as of March 31st 2020, compared to $24.8 million as of December 31st 2019.
Cash used by operations during the three months ended March 30, Onest 2020 totaled $3.8 million, reflecting an increase in working capital used mainly related to an increase in inventories of $5.5 billion to support our breast this growth and as a precautionary measure.
To minimize any potential disruptions in the supply chain regarding the cobot 19 situation.
That concludes our prepared remarks, operator, you may now open the call for questions. Thank you.
Thank you we will now be conducting a question answer session.
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Our first question comes from the line of David Bain with Roth Capital Partners. Please proceed with your question.
Great. Thank you and congratulations on a great first quarter.
Hi, good upon further on the broader functional energy segment activity and potential repercussions for Celsius.
Touched on the prepared remarks, but when we look at the moves by Pepsi such as acquiring Rockstar and becoming just distributor for backing away from one of your partners Anheuser, although it seems to leave more and more holes for distributors in the segment I guess the question is segment activity potentially shifting distribution conversations.
To a larger more acute deals and wake of kind of industry trend.
Excellent Dave. Thank you after the question.
And also.
When you look at it Theres a lot of opportunity here, especially what transpired most recently during the quarter and I touched on it briefly in the prepared remarks in regards to bang, providing that notification and moving out of an independent network, which comprised mostly of Anheuser Busch distributors to 100% Pepsi So.
We're already seeing those transitions taking place right now in markets, where bang with self distributing.
And we're hearing word over the next day I'm really 60 days it will be making the transition from the other distributors over to Pepsi. So there is a lot of disruption where there's disruption there is opportunity switching networks has always been very disruptive for brands. So we are very eager to take advantage of the disruption in the marketplace. So.
There has been a lot of changes in that and out even within what's going on within.
Brands when you look at what's taking place with bank, but also with Chauvet 19, which has also for affected a tremendous amount of channels being one in the energy drink category the convenience channel.
He has been extremely effective with traffic and also fitness in foodservice. So there's a lot of changes taking place right now we feel we're in a good position, we're already up to 100 distributors and the ones. We were talking with and had conversations ongoing in dialogue. It was really a challenge because bank had exclusivity in a lot of car.
Contracts.
That were in place for these distributors, but now that has opened.
Discussions ongoing.
We feel we're in a really good spot.
For the distributors that are releasing bang.
We're very excited for the opportunity to work with Celsius, and we think we're well positioned on the other side of this.
Capitalize on the health and wellness trends that are here today not going away.
Right now it sounds like it's opened up some things and.
You mentioned disruption as a competitor switches major distribution.
Alternatively, do think that Pepsi may add.
A little bit to be more promotional here with bank.
I think so I think you're going to see a lot of activities in promotional activities happening in summer beverage season, we're already talking with many key retailers to be included in those programs.
And really the July August timeframe.
Retailers want to get consumers back into store, they're looking for new innovation, they're looking for special pricing promotions to drive traffic back into retail.
We've been through this whole process with our could reap pivoting our teams to work on online to partner with our retailers on online activation customer pickups. Those type of things we feel we built a really good relationships being included in some of those programs.
As an example, we're working with CBS and target right now as well as 711 on some really big off shelf programs to drive additional awareness ups Lcs and to take advantage of the opportunities on partnering.
With these retailer so.
You're going to see a lot of pricing opportunities and promotional activity once we had into summer beverage season, which.
Seems to be aligned with many retailers, but I think that category overall on pricing remains strong.
We have a premium position in the category that is not going to change are driving a premium position at this category continues to grow new ball that is better for you functional performance energy category that every retailer to countries looking to expand on and Celsius as a major component of that category.
Fantastic Great performance and once again, thank you.
Thank you David.
Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Hi, John and Ed whenever you.
Excellent Jeff Hello.
Hey, so a pretty read out I'll keep my questions are four or five show up can you talk about the on the spike in our European volume specifically outside of the Nordics, where are you seeing a that tremendous growth from.
Sure.
Really the when you look at the European volume are seeing that.
Third quarter revenue recognition.
Due to the with the acquisition on the accretive nature. So we did see good revenue growth within the Nordics as I mentioned, Sweden I was wondering within Sweden Celsius was one of the fastest growing energy drink brands in the during the quarter and according to Nielsen.
The other markets, mainly where the sales are derived from his Norway, and Finland and keep in mind that market was very challenged during the quarter due to the lockdowns that which took place so.
Really the growth was pretty much all driven by the Swedish market. The Swedish market is taking a different approach versus other markets and countries around around the world. So that's how we're just finding much of the growth there.
Got it and could you talk about the introduction of the page five limited edition and besides online were set being sold.
Just announced our Peach five our newest flavor to bring excitements, many retailers just rolling out right now we'll have it.
Authorized in many retailers around the country over the next several months as planet grams get reset.
Right now it's available on Amazon and other retailers and soon to be.
You will find retailer near you.
Perfect audit and can you talk about.
The closing of funk and any update as far as.
Snacks and bars.
North America.
Yes, I think the acquisition has gone extremely well we had a really good team over there.
We've been working cross functionally within organizations sales and marketing a lot of initiatives.
Lot of collaboration and there's further synergistic opportunities as we continue to scale, we're working on renegotiating contracts on warehouses suppliers a lot of good things for additional appreciated margin as well as we grow.
We have looked at bringing over the past protein bar line in North America.
Due to the Kogan situation with delayed that some were currently still evaluating that.
And we'll have more to share with you in the quarters to comp.
Okay got it and then lastly I.
I think for you Edwin can you talk about the on the inventory in the inventory build it looks like.
Moments for about five in half million increase so where does that lie and how does that relate to on a number of characters, you're using obese domestically and specific to region or territory or product line.
Yes. Thank you very good question absolutely, yes, the increase was about 5 million $5.5 million.
And yes, mainly up here in the us that translates just to give you some perspective to about 130 days of inventory and what we did is make sure that we.
Increase our inventories so that if there's any disruption in the supply chain that we're able to address it.
So from that perspective, it was something that we plan for strategic.
Move we wanted to make sure coming into the summer selling season that we had.
Good levels of inventory.
And obviously not have any disruptions.
Yes, absolutely. It was it was something that we did knowingly and then obviously when you look at inventory levels you have to look not only at the historic demand, but also plan for the future demand as well.
Perfect. Okay. Those are for me great quarter nice read out.
Thank you Jeff Thank you.
Our next question comes from the line of Jeff Van Sinderen with B. Riley FBR. Please proceed with your question.
Hi, Good morning, everyone. Let me add my congratulations on terrific work in Q1.
Thank you you mentioned Walmart as roughly 50% DST at this point I believe can you give us more color on what you're seeing it that retail or maybe touch on converting.
To more DST is there how that is expected to go the maybe give us sense laid a sense of how your business is trending with target.
And where you are with Dsps there.
Yes, absolutely. Thank you Jeff.
We are working with every single one of our key retailers to flip them over and movement over from a wholesaler direct model it over to the DSD partners just due to the velocity, we're seeing a better in stocks better placements better execution Celsius is just turning at such a high rate.
It really need that additional touch.
Touchpoints at retail so.
Walmart we have to stores are being serviced by DSD, we're seeing great results. There. We're seeing coolers. In addition to the dry shelves and seeing good rotation in velocity.
The other stores that are going through the warehouse.
They're not serviced as well, we're seeing out of stocks.
And poor execution in retail so we're supplementing that certain markets with merchandisers, but what we're also doing is working on slipping those over to the DSD as we build out. These territories. So we've been working very closely with the buyers and we feel confident in the back half of this year, we'll have more Walmart.
He moved over to this preferred route to market and the same thing would target right now the targets and the New York Metropolitan market are serviced by Big Geyser, we're seeing great velocities, they're moving from warehouse over to DSD and we're working with them diligently on slipping over key markets. We already have five markets identified where we have covered.
We're going to be slipping those over in the next few months.
As we rotate warehouses and we're also working on other key markets, especially with the bag news and our further progression on signing up distributors for National DSD network. So.
So we have a big program kicking off with them as I alluded to earlier with just call.
Question in regards to some big promotional activity that is planned in July with target. So that'll drive additional volume placements execution and move allow us to move quicker over to the DSD model.
We're seeing great momentum targets, a great account for us we're already up to five flavors.
And we're looking to be a big player in their energy drink category at target.
Okay, Great and then I know it's early but.
Any color you can give us on what you're seeing and some of the regions in the U.S. that are starting to reopen.
And what are you anticipating and your businesses more of the country reopens.
What.
But everything going on and it's very uncertain as we talked about it so it's hard to say what the future holes.
With the current environment as countries opened and closed and you're seeing the gym channel come back starting to see some businesses reopening restaurants in key markets. It's really hard to say in the current environment I will say, which we said publicly that orders in April were up 38%.
But it's really a week by week situation, many CPG companies and other companies as you know are pulling estimates and forecasts that we don't provide guidance.
But we do feel based on initial results in April.
We are still maintaining good momentum what the future holds to be determined, but we do feel and the overall broader energy drink category. We're in a really good position with everything that's taking place in the macro environment for healthy better for you functional beverages, and what's taking place in the energy category.
Okay, and then just one more follow because I could add to that anymore color you can give us some higher evolving marketing plans for the near term and how you're thinking about flexing as plants.
As planned for the U.S. to reopen.
Yes, I mean, weve really through the first quarter, we really re engineered a lot of or all that sales and marketing teams.
To realign empty current opportunities that's one thing thats, great about being a nimble organization.
We've repositioned our fitness team, we repositioned our foodservice team to help out retail during the pantry loading and their further working on integration on online integrated programs with our key regional grocery stores mass market.
Merchants and vitamin specialty stores, which are still open as well so a lot of integration, it's going to be a lot of social media E. Commerce I touched on the most recent data point. We got were Celsius is the third largest spread on Amazon and the energy drink category. That's an amaze me Maison achievement for our team I just shows you.
The momentum we have we need to further leverage that and move into other segments as well continue to drive a momentum, but we're going to continue to provide.
Emotional engagements.
With our consumers and continue to build out our fan base and our communities, which is so critical in key to our long term success.
And then we'll continue to moved back into some online activation as.
Markets permit being very cautious and saves through the process. What our goal is to help people at a healthy better lifestyle and we want to be the there to support them.
Okay terrific. Thanks for taking my questions and continued success.
Thank you Jeff Thank you.
As a reminder, ladies and gentlemen, it has star one to ask a question.
Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.
Thanks.
I just wanted to follow up a little bit John on me.
On the Amazon.
Point, you made and number three in terms of.
Energy drinks on Amazon can you talk about this quarter specifically.
Whether you were you believe you were positively impacted.
Due to covert my team for this for this quarter.
On your total online if you could just tell us.
What the growth was online or at Amazon for the quarter.
Yes, our online. Thank you I think the online business has.
Over the years, it's been a very strong area of growth for Celsius, even going back the last five six years. If you look at the overall internal online business that we've been able to generate.
Yes, there were spikes in a in our online sales as really shopping patterns shift, but it was it was great to see that the tide listed with Celsius at the same velocity rates at some of the other brands and we outpaced the growth in many other brands, including monster and rental so.
The growth as has been strong.
Well, it's great to see as a lot of brands also we're seeing.
As as some products aren't impulse buy what we've been able to see what's really the fitness channel closing convenience and foodservice, we saw a lot of volume transition over to other channels and Celsius is part of it daily routine I think thats very critical for the opportunity. We have here, we're not just an impulse buy.
Part of it daily lifestyle, that's what we've been building over the last several years, that's where we're continuing to build and that shows you the opportunity we have.
Okay and then just.
One last follow up on on the covert.
Obviously, there's been paal.
Some positive.
Benefits do you see from that.
Can you talk a little bit about the just the positives and negatives and if it's.
Your prepared.
In terms of.
Down the road any any supply chain interruption, what's what's sort of contingency plans.
Do you have.
The supply chain gets constrained at some point.
Yes.
Pod, having positive I don't think is really many positive. This is terrible situation. We're all in that we need to help everyone.
It's heartbreaking, what's going on with small businesses and taking place within communities.
We pivoted and pivoted as quickly as we can where we had samplings.
And demos that we're doing that we weren't able to do so we we pivoted and supported the heroes around the country, where Celsius has given up thousands of cases over 450 hospitals around the country.
We pivoted to help consumers and to help small businesses that trainers personal trainers to given a platform to hopefully they can build and scale their consumer base and their client base with our swept Celsius campaigns and repositioned our sales organizations.
As I would mention on inventory starting in January we really set contingency plans up at each department going from accounting to operations the sales marketing and constantly reviewing that was an all three nodes as we are going through this process. So contingency plans in place we've implemented we increased inventories throughout the whole quarter.
We've also placed blanket purchase orders for further out further out periods than we've ever had before its make sure. We have sufficient supply we expanded the co Packer network. So we have availability at multiple co Packers in case, there is a situation where a co packer had to go down for several weeks, which we heard stories about those.
There is just spend a lot that the company has done in the organization as we continue to tick and shift through the through the current environment.
But I do think the company employees have reacted really well.
And been very nimble I'm hasn't been stressful for many absolutely transitioning many to work from home. It went seamlessly, but it has been difficult it's not as seamless as working as a cohesive organization as we've done but.
And just considering the circumstances and the results. The team has been able to put up a they've done an amazing job.
Thanks that was very helpful. Appreciate it.
Thank you.
Our next question is a follow up question from the line of David Bain with Roth Capital Partners. Please proceed with your question.
Great. Thanks.
Just quickly shift back to the distributor relationships and industry dynamics.
It seems like if.
It seems like the options for these distributors are becoming more limited.
Finding a functional energy category company with breath and growth anywhere near like a Celsius, just looking at the historical partnerships, though we found that a lot of them a lot of the distributors, who would like to take a position in the company itself just any kind of thoughts on these types of partnership structures and then also any considerations on.
And aligning more with one major player versus.
More bifurcate or fragmented distribution structure.
Thank you, Dave Theres, a lot of relationships out there.
We're working on a variety of them, we're going to do what's best for our shareholders best for the organization and best of the company for Celsius to drive.
The number one that's our goal.
We are reviewing a variety of opportunities.
Looking at distributors, making sure with and aligned with the best distributor possible for that market to drive the best velocity and opportunities. So.
I'm not going to get into specifics on contract negotiations with given distributors, but.
We are very much aligned with shareholders interest is going to do what's best but Celsius and the best position possible as we continue to maximize the opportunity we have enhanced.
Understood. Okay. Thank you very much.
Our next question comes on the line of Shawn Boyd with next Mark Capital. Please proceed with your question.
Thanks for taking the question can you hear me okay.
Yeah, we can't John.
Real quick if you can just help us a little bit.
Give me.
Question, but what percentage of your sales are from bricks and mortar retail versus online right now.
We historically, we used to disclose that information.
To be quite honestly honest WIDIA, it's a little fragmented because many of our retail partners as you know our offering online services. So we've expanded when you when you look at online.
We're on Walmart Dot com were on Amazon Dot com around bodybuilding dotcom vitamin Shoppe dotcom.
There's a there's many many dotcom business is out there we have a team dedicated to leveraging our retail partners.
Through at pick up services, we're leveraging instacart, there's so many different mediums now to drive.
Online purchases and home delivery that.
I don't want to take out one customer, if you're calling online Amazon or Walmart Dot com, who do not sell direct we partner with our retail partners.
On our online business. So there aren't many businesses our online business. So specifically I can't really answer that question because it is a it into broader component.
Okay I hear you on that let me let me go to the heart of this is not as in thinking about the impact.
[music].
Flipping over to DSD.
Maybe another way to come out.
Percentage of your retail doors are currently serviced.
You talked about the number in the past and the number today.
But if you can help us just sort of how far are we on this shift right now and how quickly would change over next 12 to 24 month.
Yeah, I mean right now we're at the.
Ended the year, we announced spring roughly approximately 65000 locations in North America.
And today less than 10% of those doors are serviced by DSD.
So the opportunity is massive key as it is all about covering its particular dms other warehouses that are serviced by these key accounts.
Thats, what weve been integrating and working on and many of these retailers will be flipping over.
In the back half of this year.
To this preferred method, but I would say approximately right now you're probably looking at about 10%.
The coverage.
Very helpful and that 40% lift that you commented on with the stores in New York has that been consistent across other geographic markets.
Yes, it is actually a certain areas of spend even higher so probably the 40% lift versus going direct to these key accounts.
It seems like a good benchmark on top of the 30% growth rate, even seeing an existing accounts. So.
There is a.
Great opportunity by having the DST coverage, because you're getting that salesperson in the store.
On a rich frequent rotation to make sure the product in stock properly priced and is available and taking advantage of additional points of disruption in a given outlet.
And it's all about placements and trade activation.
Related here last one from me your comment about April orders up 38% year over year.
Given that we're now an environment, where we're starting to see additional states.
Opening plans I understand it's going to be gradual.
As we move forward here is it fair to assume that as a low mark for the month. That's just the first month, but would you.
It's a fair to assume we continue.
Sales growing from there.
Yes, not going to talk about future on that I don't know I mean, there's a lot of questions.
Questions there how how quickly this traffic returned to normal and some of these channels.
So I I can't really comment on that.
Okay.
Congrats on a quarter. Thank you.
Excellent. Thank you. Thank you.
There are no further questions any Q I'd like to hand, the call back to management for closing remarks.
Thank you on behalf of the company would like to thank everyone for their continued interest our results demonstrates our products are gaining considerable momentum as we're capitalizing on today's health and wellness trends, we're building upon our core and leveraging opportunities in deploying best practices, we have a winning portfolio and strategy and a rapidly growing market that consumers.
Our mission is to get Celsius to more consumers profitably I'm very proud of our dedicated team as without them are tremendous achievements and significant opportunities. We see ahead would not be possible. In addition, I want to thank all of our investors for their continued support and confidence in our team we wish everyone well. Please stay safe in this current environment.
Thank you for your interest and had a great day.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.