Q4 2020 Celsius Holdings Inc Earnings Call
Okay.
Greetings and welcome to Celsius Holdings fourth quarter, and 2020 earnings call.
At this time all participants are in a listen only mode.
And the answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder of this conference is being recorded it is now my pleasure to introduce your host Cameron Donahue Investor Relations for Celsius.
Thank you Kevin you may begin.
Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings fourth quarter and full year 2020 earnings conference call.
When you get on the call today are John <unk>, President and Chief Executive Officer, and that one day.
Allen Chief Financial Officer.
Following the prepared remarks, well open the call to your collection of instruction will be given at that time.
The company filed its form 10-K, with the SEC and initiate a press release today all materials are available on the company's website Celsius Holdings, Inc. Dot com under the Investor Relations section.
As a reminder for turning the call of the job and the audio replay will be available later today.
Please also be aware of this call may contain forward looking statements, which are based on forecast expectations and other information available to the management as of March 11th 2021.
These statements involve numerous risks and uncertainties, including many that are beyond the company's control.
The extent as required by law Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements. We encourage you to review in full or the Safe Harbor statements contained in today's press release, and our quarterly filings with the SEC for additional information.
With that I'd like to turn the call it the president and Chief Executive Officer, John B of late.
Of course prepared remarks John.
Thank you Cameron good morning, everyone and thank you for joining us today.
We have all been impacted by the COVID-19 pandemic, our fourth quarter and full year 2020 has been impacted as well.
The really impacting several channels of trade Celsius operates and including our health and fitness vending foodservice as well as reduced foot traffic in several channels of trade throughout the country. In addition, our EU Middle East Southeast Asia, and Australia operations, which remain adversely affected by <unk>.
COVID-19, pandemic traffic and purchasing patterns remain disrupted and online ordering patterns pantry purchasing and curbside pickup maintained more prevalent in response to the stay at home owners and the shifts in consumer lifestyles.
While we have started to improve in the third and fourth quarter with capacity restrictions as well as reopening and her hardest hit channels there still remains uncertainty.
Is there potentially could be re closings of additional cases, increasing in our regions of operations, which could force extended closures in some states and countries.
The health and safety of our employees and partners remains our top priority and the safety precautions have been implemented which we have developed and adopted in line with guidance from public health authorities. In addition, we continue to monitor the environment and implement contingency plans to mitigate risks to our business. The company's operations are fully off.
Operational and our products remain generally available for customers.
Even despite these constraints affecting our business in 2020, we persevered to set new records in revenue each quarter and for the full year of 2020 Celsius achieved a new record of over 100 of $30 million in revenue with approximately $8 5 million of income and approximately $15 million in EBITDA are.
<unk> fourth quarter and full year results reflects the tremendous operational and financial achievements Celsius has accomplished.
More importantly is the future opportunity as these achievements laid the foundation for future success. This is only the beginning.
On the convenience channel side in North America, we did see tangible ACB gains mostly through our expanded national DSD distribution and expansion through existing change. These include the largest new customer speedway, which added about approximately 2700 locations. Several large convenient change had their coolers.
[noise] resets pushed back due to COVID-19 in 2020, but we expect a very strong spring cooler reset in this channel both from those that pushed the resets in 2020 as well as new opportunities driven by our category, leading growth metrics, which are drastically outpacing the category growth rates.
We also discussed another COVID-19 impact in our third quarter earnings call. The aluminum can shortage the shortages that impacted the entire industry. The large can manufacturers in the U S have all initiated a major expansion projects with expected completion times coming somewhere in the back half of 2021 and potentially.
Through 2022.
Celsius has successfully navigated this major major disruption by leveraging our global relationships and strategic investors to secure the additional cash need of from both our Europe and Asia operations to support our growth as outlined in our alert last call. This will impact our gross profit margins by a few.
Points, but we remain confident that the company will run approximately in the low 40% gross profit range.
Throughout 2021, this initiative and this initial conservative baseline expectation, which we expect to improve upon throughout the year. We continue to explore additional opportunities as the bay become available the shortened the duration Celsius is impacted by the cash shortage and there is potential for additional domestic.
Can research of availability in the back half of 2020. One this is due to both a return to higher on planet of sales as well as timing of new capacity coming online, which will improve our operational performance.
Turning to some of the financial highlights for the fourth quarter overall revenue was up 48% the $35 7 million from 24 of point 1 million in the year ago quarter.
Domestic revenue grew 67% approximately the $28 4 million up from $17 $1 million in a year ago quarter, which was driven by continued strong double digit growth in traditional channels of trade and our expansion with world class retailers and distribution partners.
Our continued strong double digit growth in our E. Commerce revenue saw Celsius draw within 0.2 of a point of market share within Red Board Amazon per stack line of.
Additionally, our fitness channel saw a 22% growth rate compared to the fourth quarter of 2019, which is extremely positive given that many gyms continue to operate at limited capacities.
International revenue increased 3% to $7 3 million from $7 1 million in the year ago quarter, our Nordic revenue increased by approximately 2% to $6 9 million. The market was still strongly impacted by channel closures from Covid and timing of promotional programs. Despite these challenges we are fully integrated and levers of our synergies.
The benefits from the acquisition of <unk> food, which has immediately been accretive to our earnings and is an important step of our strategy to build the global dominant brand.
For the quarter, we focused on the collaborative benefits for further integration with marketing operations, and the financial integrations, which will improve efficiencies and operational performance.
In addition to the strong revenue momentum in the fourth quarter. The company had record gross margin percentage levels totaling 48, 9% and 54, 7% when excluding outbound freight net income was achieved a $1 7 million and adjusted EBITDA of 3 million for the quarter approximately an eight point.
5% EBITDA margin.
Super demand for Celsius has grown stronger through 2020 with the most recent reported the United States spins data U S. Buelow plus convenience for the 52 weeks ending January 24th 2021 confirms that we have significantly outpaced the category across multiple channels. This includes a 57.
9% growth in the total reported channels outpacing the category growth rate by eight times with an average <unk> of approximately 25%, which demonstrates Celsius warrants additional shelf presence placements and provides a runway for future growth.
Additionally, third party data reflects the same trends with Nielsen reported all accumulated channels on February 20th of 'twenty 'twenty. One the company sales were up 88% for the last two weeks with a 1% market share of the category and up 97, 9% for the preceding for weeks.
<unk>.
The next highest comp for the most recent two week data was rebel which grew at 14, 8% and $17 seven over the four week timeframe.
Our E Commerce channel accordion of stock line, which tracks energy drink sales on Amazon in the United States for the for weeks ending February 13th 2021 sales in dollars in the energy drink category by Amazon, including energy shots grew at 177, 8% versus the same period a year ago.
And Celsius sales increased 20, 224, 8% and our share increased two 1% to 14, 5% of the category, which puts Celsius as the third largest energy drink brand on Amazon just behind Monster energy at a 34, 2% share.
Share, which grew at a 993, 7% growth rate and Red Bull, which is a 14.7% share and grew at 171, 8% growth rate.
Being the third largest brand with the share on Amazon demonstrates and reinforces our market opportunity in the energy category in traditional retail.
And with a level of distribution playing field a.
A 14.5% share equates to approximately over $2 billion of reported retail sales are core new real she recent total Nielsen category data. This is why we're so excited with our national distribution network, which will provide us with the opportunity to gain those placements and again verify Celsius.
Warrants better placement and greater distribution.
During the fourth quarter, we made significant progress on further building out our national DSD network.
The service accounts, we secured additional distribution partners in the Anheuser Busch network further expanding availability to new regions. In addition, with <unk>.
Initiated new hires to help optimize and educate our national DSD network, We recently hired Tony Guilfoyle EVP.
EVP of sales in North America, Tony was formerly of what Rockstar Energy building their sales organization of leading the growth from initial revenues of $5 million to the multibillion dollar organization and the buyout through Pepsi to.
To expedite our growth we have added over 50, new team members to support our National network and marketing initiatives to drive channel expansion as well as educate and support our partners.
We have begun our rollout of Celsius brand in coolers and in the first quarter of 2021, we rolled out our first phase of the thousands of coolers that are currently on order to support our DSD partners and key accounts.
The initial rollout of the coolers of showing positive ROI with the payback of approximately three months and over 200 per cent increase the velocity rates and to this date, we have placed over 200 coolers and key accounts.
We have now built out our network to over 150 regional direct store delivery partners with new partners, covering Chicago, San Francisco and many other markets. We estimate that our DSD network now covers approximately 85% of major metropolitan can kind of.
The markets in the United States.
We further transition target over from wholesale to Big Geyser in New York City during the third quarter and have already seen volumes more than double in those locations due to the success. We have further transition to about approximately 82% of all targets. The DSD as of today and have already begun transitioning Cvs Walmart and others.
We anticipate beginning to see these benefits of our recently announced Dst's service retail locations, taking place throughout 2020 one with the majority of the impact of these transitions and new locations reflected fully in the first quarter of 2020, one and then ongoing throughout the transition of the.
The remaining of 2021 with new accounts as well as our existing accounts.
Today in the United States, our total door count now exceeds over 82000 locations nationally growing 18000 doors from the same point in 2018, we expect this number to grow even further in the coming quarters as retailer retailers execute their plan of Grand resets, which were delayed due to COVID-19.
On a co packing front Celsius went live on production with a new dedicated co Packer plant in North Carolina. This brings our total U S. Co packer footprint to eight locations that are active which will help protect the future out of stocks and support our massive growth.
In Europe, we continue to capture incremental benefits and synergies from the for integration of fault food group, a Nordic wellness company into our operations the.
The business was immediately accretive to earnings and is an important step in our strategy to build the global dynamic brand as the United States and Europe operations were impacted by Covid and was impacted mainly due to supply constraints with the fast protein snack portfolio, which were partially offset by the growth in Celsius sales in the regions. We continue to see.
Great opportunities and momentum in the market.
In Sweden, we launched a great tasting blueberry frost and in Finland. Despite shutdowns, we launched the new flavor positive out of LNG and stroke Teller bar under the fast brand, which was the number one selling bar in the country. In addition, we are evaluating the U K and working with Amazon Europe to further expand our e-commerce opportunities throughout Europe.
In China, and APAC recoveries continued and we saw positive sales momentum regain in China, we maintain a licensing royalty model in the market, where a distributor covers approximately 76 cities and now has over 60000 locations of distribution as at the end of 2020 and in Malaysia, where we maintain a direct relationship with the local distributors we maintain.
Approximately 2000 retail locations with plans to reenter the gyms vitamin specialty gyms and other retailers as recovery continues as with Europe, and the United States, We see great opportunity to capitalize on the changes in consumer preferences for better for you offerings and we see tremendous opportunities in the enormous market of Asia.
Now moving to marketing on the marketing front, we continue to activate targeting new and existing customers, where they live work and play building meaningful of an emotional connections through robust integrated marketing programs email while consumers are at home specifically during the quarter. Despite continued COVID-19 restrictions, we sponsored targeted events both in person and <unk>.
Virtual fulfilled over thousands of cans and hands in the quarter in key markets that were open.
The continued to support our first responders, we handed out over half of million cans to nurses doctors COVID-19 testing sites, even the firefighters and the caller for fighting the California fires were handed out cans. In addition, we reactivated our live fit tour, which is an integrated experiential sampling tore we further activate.
Our sweat with Celsius on Instagram Ouch, our live workouts have continued.
And we further leveraged and built out our brand Ambassador program and Influencer programs, reaching more consumers in a meaningful way.
In addition, we partner with our key accounts, most recently with Walmart, where we handed out over 100000 sticks to college students going back to school and we kicked off of targeted integrated College brand Ambassador program, which targets universities in key markets around the country.
Celsius is driving the momentum in the energy category hitting record North America sales growth rates in January and February of 2021 through tracked Nielsen channels outpacing the category growth. Our brand is resonating with a diverse consumer base expanding the category of demographics and supported by the increase.
<unk> focus on health and wellness, specifically in the energy category, where functional energy is recognized throughout the industry as a driver of future growth and shelf presence with retailers.
The Celsius consumer brings significant value to retailers not just as it expanded age bracket and a 50% female demographic, but our consumers of reoccurring regularly consuming Celsius as part of the daily lifestyle further expanding the channel our National DSD network is now in place positioning Celsius grabbed for.
Other market share honor of Expedia the basis, especially in the convenience channel.
The entire team is excited and are confident we are just getting started on the opportunity in front of us before turning the call over to Ed Edwin I also want to add additional color on our ESG environmental social governance commitments and initiatives, many which have been ongoing as we have increased our public visibility.
Both with consumers and investors. It is paramount that we articulate this dedication with that the company is currently in the process of reviewing best in class reporting standards to ensure all material components of ESG are covered in our initial report in the interim the following are some specific items detailing key operation.
The components at Celsius on this commitment we are committed to sustainability and to the principles to reduce reuse and recycle approximately <unk> 95 per cent of our products are sold the aluminum cans, which are of 100% recyclable. In addition, with our 12 ounce cans, we can shape of approximately three times as many in the standard semi trailer versus 12 ounce glass bottles or cancer.
Players are leading initiatives, reducing the amount of aluminum and each can and also increase the amount of recycled aluminum in each can being manufacturer. We have initiated a program to reduce the miles on cans through strategic placements of warehouses in conjunction with our co Packer locations and end consumer served as well as focusing on more.
From pleaded loads of full transit.
Also reducing the carbon footprint on our transportation.
On a social and health of all aspects of Celsius is clinically proven functional energy drink, which sellers of metabolism Burns body fat and promotes of healthy active lifestyle with our eight essential vitamins of no sugar, we are of great alternative to sugar of energy drinks and encouraging people to let of healthy active lifestyle.
Our European team has implemented significant programs. In addition to these items listed including saving over 158 tons of Cotwo emissions by utilizing rail on inbound shipments and have also implemented strategies to reduce plastics non packaging as mentioned this is just the highlight of some of the key items already at the core of Celsius and.
We look forward to providing more details report, reflecting our commitments to our ECS G environmental social and governance policies I will now turn the call over to Ed one of the girl in Kabbalah, Our Chief financial officer of for his prepared remarks Edwin.
Thank you John our fourth quarter results for the three months ended December 31, 2020 delivered revenue of $35 $7 million, an increase of 11 $45 million, which translates to a solid 48% growth when compared to $24 $1 million for the same period.
Last year.
The increase was primarily due to strong growth in North American sales revenue, which was a record $28 $4 million up a robust 67% from the $17 $1 million in the prior year quarter and accounted for 98% of the increase in total revenue.
European revenue for the fourth quarter of 2020 was $6 $9 million up 2% from the $6 $8 million in the fourth quarter of 2019 the.
For the European business was affected by some stock outs as well as the impact of the pandemic.
Asian revenue amounted to 200 of $24000, an increase of 6% from the prior year quarter pertaining to our royalty income from our China licensee.
Revenue from all other areas amounted to 170, <unk> hundred $17000 up 266 per cent for the $32000, reflecting the expansion or business development into other geographies.
Gross profit in Q4, 2020 increased by $7 $3 million landing at $17 $4 million, which translates to a substantial 74% growth from $10 million for the same quarter in 2019.
Gross profit margin for the three months ended December 31, 2020 was a very healthy 48, 9%.
700 basis points from 41, 9% in the fourth quarter of 2019 if.
If we then exclude outbound free.
Gross margin profitability would amount to a robust 57, 2% up 750 basis points compared to the same normalized figure of 49, 7% in the fourth quarter of 2019 of.
Additionally, we perform an overall estimate or analysis of the $7 $3 million increase which reflect the debt approximately $2 $5 million for 35% of this increase pertains to price or cost optimizations.
Specifically this relates to lower promotions or discounting in the quarter and the beneficial impact of the stronger euro currency as well as some synergistic beneficial impacts in the supply chain.
We then estimated that approximately $4 $8 million for 65 per cent of the increase is related to favorable volume impact.
Well, we had very good tailwind in all of these areas during the fourth quarter. These results may not be indicative or transferable to the immediate future periods. As there are indications that our margins will come under pressure due to increased costs related to the sourcing of cans the strengthening of the U S dollar.
The increase in fuel costs, which have a direct and high correlation to our freight cost and an indirect impact in the processing costs and the cost of other raw materials.
Now turning to operational expenditures selling and marketing expenses for the three months ended December 31, 2020 were $11 $2 million, an increase of $4 $2 million or 59.5% from $7 million in the same quarter in 2019.
This increase reflects the impact of the consolidation of the operational results of our European business. Following our October nine 2019 acquisition.
Specifically, our investments in marketing activities amounted to $4 $7 million, an increase of $2 $3 million when compared to the prior year quarter.
This increased not only reflects the consolidation of the European business, but also a catch up of the experiential marketing activities. Since these types of events were significantly limited in prior quarters.
Additionally, 2020 quarter reflects increases of $520000 related to sales and marketing investments for additional employee resources and one point for millions of incremental expenses pertaining to the trade marketing activities as well as distribution and storage costs. These <unk>.
Increases are directly related to the greater to the greater business volume as well as include the impact of the European business integration.
Additionally, currency impacts were estimated to increase sales and marketing expenses by $75000 when compared to the prior year quarter.
General and administrative expenses for the three months ended December 31, 2020 were $5 $7 million, an increase of $1.3 million from 30% from $4 $4 million for the three months ended December 31 2019 the.
This increase also reflects the impact of the consolidation of the operational results of our European business for.
Furthermore, employee costs increased by $474000 when compared to the prior year quarter, which also reflects increases in head count in order to have a good infrastructure to properly support the growing business.
The increase also reflects the impact of foreign currency translation in this area, which was estimated at 3% of the total consolidated employee costs.
Depreciation and amortization also reflected an increase of 200 of $20000 when compared to the prior year quarter.
Additionally, there was a reclassification of amortization expenses of $430000, which were previously presented in the other expense area during the prior quarters of 2020.
Furthermore, stock option expense for the last quarter of 2020 reflected an increase of $144000 when compared to the prior year quarter.
All other administrative expenses resulted in a net decrease of approximately $63000 as the prior year quarter included acquisition related expenses of approximately $126000.
If we exclude stock option expense as well as depreciation and amortization expenses operational G&A expenditures truly represented eight 8% of revenue, which compares favorably to 10, 8% with the prior year quarter on a comparable basis as it also.
Excluding the $126000 of acquisition costs.
Other income and expenses total other income amounted to approximately $1 $3 million for the three months ended December 31, 2020, which represents an increase of $1 $1 million from other income of <unk>.
$150000 for the same period in 2019.
This increase is mainly related to a favorable impact of net foreign currency exchange gains when compared to the prior year quarter of approximately $330000. Additionally.
Additionally, the current year quarter reflect the incremental net interest income of approximately $160000.
Lower bond of Mers amortization costs of $50000.
The favorable impact of the re class of amortization expenses to the G&A area of $430000.
And a net favorable impact of $140000 pertaining to all other income and expense components.
As the result of all of the above fourth quarter net income totaled $1 $7 million or two cents per basic and diluted shares based on $71 9 million basic shares.
And $76 5 million fully diluted shares. This compares to a net loss of $1 $1 million available to common stockholders were a loss of two cents per basic and diluted shares based on a weighted average of $68 9 million shares.
And $72 6 million fully diluted shares in the year ago period.
Adjusted EBITDA for the fourth quarter was $3 million, an increase of $2 $4 million when compared to $606000 in the year ago quarter. 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 of reconciliation of our GAAP results to non-GAAP financial figures has been included in our earnings release.
Now focusing of some liquidity aspects as of December 31, 2020, the company had cash of $43 $2 million and working capital of approximately $64 $9 million, which translates to an increase of $41 million when compared to $24 8 million.
As of December 31, 2019.
Also on October 30th 2020, the company paid off the bonds payable related to the acquisition of our European business.
In the amount of approximately $10 million.
And are now debt free.
Furthermore, cash flows provided by operating activities totaled $3 $4 million for the year 2020, representing a $2 $4 million increase from $1 million in 2019. The increase was primarily driven by operating income adjusted for noncash items.
The increase was further driven by efficient management of accounts payable accrued expenses and other liabilities and.
And partially offset by cash utilization pertaining to increases in accounts receivables inventories and prepaid expenses, which are directly related to the significant growth in business volume.
Now turning to some additional metrics used to monitor the business.
This provides a good perspective of our operational performance using Q4 business volume as the basis for their computations.
Our dsos or daily sales outstanding landed at 37 days as of December 31, 2020.
Similarly, our inventory days on hand amounted to 91 days and our payable days were also the 37 days.
Additionally, operational cash flow for the year amounted to 43% of operational income.
Despite the net increases in working capital, which translated to a use of cash of over $13 million as such we have very good liquidity in order to plow back into the business and make investments that yield a high ROI and continue to accelerate top line growth.
Finally, we have included the full year 2020 financial results in our earnings press release.
That concludes our prepared remarks.
Operator, you May now open up the call for questions. Thank you.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two of you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the starkey of.
Our first question comes from the line of Jeff Van Center in <unk> with B Riley <unk> Company. Please proceed with your question.
Good morning, everyone and let me say congratulations on the continued progress.
It appears that the Nielsen data is showing acceleration these of the year comments.
Regarding early 2021 is that correct and then any thoughts on the Nielsen sell through data for.
What is your actual sell through.
In Q4, just wondering if there might be something in terms of sell in versus sell through the that didn't quite match. Some of the sell through data that was showing that nielson any thoughts there.
Yes excellent. Thank you Jeff Yeah of the team did of the company did a great job. The team worked really hard it was of just a monumental year of when you look at it all round for the company.
But you are correct that Nielsen data is extremely strong what we're seeing I know the most recent Nielsen data ahead of somewhere around $80 to 90% growth rate on the two weekend for weeks. So that's looking really at the at Q1.
The results we show here is the fourth quarter and the.
There has been some lags on the scan data to the sell in on the timing of shipments with the company.
Putting up numbers, but we've been pretty consistent on North America growth added 60%, 66% growth rate. This most recent quarter and Q4.
But we wouldn't really.
Driving that trajectory so.
Well see how would transpire here that.
That is what's happening at the register and it's great to see we're just as excited as is everyone else.
Okay, and then could you maybe speak more to some of the resets that are happening that were delayed due to COVID-19 understand some of those are happening for spring and how you expect that the impact your business heading into the peak summer period.
Yeah, I mean, when you look at the stores that were added in 2020 is roughly about 18000 locations.
And as we said I mean, we were really impacted in 2020 due to the reset delays so that looks very promising to take place really over the next several months is what we're hearing is spring resets and mainly of lot of them are kind of coming in the convenience channel.
That's where we were really hindered in 2020, so we expect a sizable increase in our store count.
Over the next several months as they get resets and these retailers go back into resetting the plan of grants, we haven't disclosed any <unk>.
Key accounts that will be coming on but.
We're excited of what we're hearing will let everyone know as soon as they are finally reset.
But we're looking to be very optimistic as we sit here today looking at the Nielsen data and then whats the comments of new distribution coming on board in the next several months.
Okay, Great and then if I if I could just squeezing one more follow up just any more color you could give us on flipping to DSD is in the near term or let's say in the first half.
What are you are fully converted just the.
Look out there.
Yes, we are fully committed the DSD the transition when we transition of our key accounts over to the preferred DSD model, we're seeing very much increased velocities. Most importantly, keeping celsius in stock and also getting the secondary and third displays and also most importantly, getting the product cold so.
We have started.
Cvs, we further expanded with Cvs I mentioned that earlier in the call. If you recall in Q3, we did convert the New York City Metropolitan market over the Big Geyser and due to the success. We've seen there we've already started to further transition out.
Other markets around the country. In addition, 711 is the big initiative in 2021 transitioning that volume over to DSD, We're working with all of our key accounts on this transitional plan. So seven of Aladdin will be transitioning.
Right around the May timeframe, starting on the West and then we'll be bringing it over to the east.
Really zone by zone as they do the recording so ex.
Cited about that and we are fully committed to DSD all of the new distribution coming on will be serviced by DSD as well.
And did you say 200 per cent increases youre seeing with the where you put in the the coolers was that right.
Yes that is right. We've already placed about 200 coolers, we have over 1000 coolers on order currently and we are facing our team is doing a great job placement, each coolers and strategic accounts and we're seeing.
Roughly fairly short period of payback upwards to three months and also over 200% increase of some of these stores and we do have some stores that are actually returning into the number one selling energy drink in these locations so with the right placement and kind of what we see on Amazon. We're the third largest brand on Amazon, giving Celsius the same opportunity.
And the same shelf presence will turn at the same range, if not better than the major leading brands.
Okay, Thanks and continued success.
Thank you very much Jeff Thank you.
As a reminder, it is star one to ask a question. Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Oh, Hi, John and Ed one how are you.
Hello, Joe of excellent Jeff.
So now that it's been a year since the function of acquisition I was wondering if you kind of the opportunity to break out any of the big.
Growth metrics, which route of them.
Include debt, because I know that some of their dreams for streams that are direct now than they were previously in your hands.
Yes.
When you look at the the year over year. When you look at 2019 of 2020, you are looking at pretty much comparisons on Apple to Apple basis there.
I guess when you look at.
Yes, well remember Jon Al <unk> at the end of last year.
For the fluid consolidated was only two quarters.
Versus this year, where we have three quarters, so Jeff I don't know if thats.
What you're looking for but it's a little bit of apples and oranges from that perspective.
Yes, I guess when you look at the fourth quarter, Jeff That's what I was alluding to in regard youre looking at fairly close to almost of the comp as.
As we stated on the earlier call they were impacted by Covid and our fast protein snack portfolio.
Which is a large chunk of sales that come out of Finland was impacted due to out of stocks.
Lot of the Finfet.
Confectionery manufacturers, we're operating at limited capacity Unfortunately.
During that time, so we've had some disruptions in supply chain, but we do still feel very optimistic I'm very excited about the opportunity we have in Europe. The same opportunity in North America is in Europe and.
We expect this to continue to improve as we go through in and worked through 2021 and gets you to stand damage, which seems very promising.
Great. Okay could you give us or any of them.
The additional color on how the launch has gone with the shrubbery guava and any commentary on.
The gross to portfolio and its growth per hubs for this quarter. If you break it out or Youll break of no. Thank you.
Excellent Jeff the Strawberry Guava, we launched has been one of the most successful launches in the fitness channel.
So that's fitness channel has been closed due to disruptions in given market. It was one of the fastest turning items in that channel. We saw in the fourth quarter. The great tasting flavor also has done extremely well on Amazon.
And we're looking to further expand the availability there. So if you haven't tried to go out and try it. It's a great tasting flavored is available when you look at our stick business or on the go sticks.
It is the bulk of our business is <unk> today.
It breaks up the the largest portion of our revenue, but we are seeing good growth with the omni go sticks for now available at Walmart, we're seeing good rotation on Amazon vitamin Shoppe Publix down in the southeast took the sticks on chain wide shows available, they're all flavors and we're getting more interest on the we're seeing a lot of our core consumers.
Purchasing our on the go sticks, it's a lot of.
Very versatile also making some interesting smoothies in some combination. So it is a good piece of our business, although the bulk of our business today is the RTD business.
Got it Okay, and then lastly for me so of the.
Margin sorry, the fourth quarter margins were record strong are exceptionally strong I should say and you seem a little cautious on the pull through all of those you've got there.
Active co packer locations through strengthening the read into there as far as modeling purposes on how you expect margins true played out during 2021.
Yes, Jeff there's a lot of variables, there and you're right, we're being somewhat cautious because there's against several aspects at play favorably now even the strength of the euro, which we're seeing that pull back a little bit.
We're also seeing.
The increase in cost as it relates to the Cannes of sourcing.
And again all of these things for the most part we're anticipating obviously is going to have a short term kind of pressure on downwards towards the margins, but the important thing is that we have inventory, especially as it relates to the cans.
One of thing and we're looking to do some things also to manage the impact of the currencies and so forth.
Youre absolutely right I mean, there is a lot of variables, there and we're being somewhat cautious.
As it relates to the immediate Q1 and Q2.
Got it okay again, congrats on the quarter, thanks very much.
Thank you thank you Jeff.
As a reminder of it is star one to ask your questions. Our next question comes from the line of the Anthony Vendetti with Maxim Group. Please proceed with your question.
Thanks.
I was just wondering John if you could comment a little bit on the.
International.
Gross it looks like there was a pause this quarter you mentioned some of the some of the COVID-19 impact.
Can you speak specifically to the which countries you think saw the most impact and do you think starting here in the first quarter things start to bounce back or is it going to be a couple of quarters.
And in terms of gross bouncing back.
Internationally, yes. Thank you.
Yes. Thank you Anthony I mean, when you look at the Nordics. They had been impacted there is talks currently about Sweden.
Also closing down again, I know of Finland, as well as <unk> eight.
Packed day, we're seeing some closures. There. So Q1 is likely will be has the potential to see another impact given some of the constraints and government closures and mandates but.
The underlying business is extremely healthy and extremely strong we have a lot of opportunity there not only in Sweden, Norway and Finland, but also we're looking at some partnerships in the U K as well as Germany, and Russia. So theres some opportunities as we further expand out.
But it is we really are sitting at a point, where it really over the next several quarters, we'll have to see how this evolves I mean, the vaccines rolling out so and that's rolling out very quickly. So that should also provide additional confidence with these governments and we're keeping an eye on it but the underlying financial.
The conditions are improving also winter will be breaking as well so.
We're excited for that and getting to the back into the summer beverage season keep in mind historically their fourth quarter has been one of their lowest quarters.
Historically, so it does have the seasonality to the business.
We expect just like any year, we do expect some seasonality within the business. So.
But we are extremely optimistic.
Okay, and then just remind me when did funked foods close because the.
It is now it's now going to be apples to apples here in the first quarter. It was it partially apples to apples or when did when did it close in in 19 was it was it.
And the third quarter fourth quarter.
Yes, the actual date was October 25th.
Anthony.
October 20th Okay.
Correct 2019 October 25, 2019, so yes, there is and you are right going forward. That's one of the things of that was up.
Because of common spire, even now fourth quarter again last year was basically two two months versus this quarter being three months, but again, there's a lot of intricacies of last year because of the transaction.
We were still not fully operational there so to speak they didn't have a lot of inventory and then at the end of Q4, it really took off.
Okay. Yeah, no. That's helpful. Thank you and wind and then just in terms of these coolers.
You mentioned the strategy this year of rolling those rolling this out to over 200 now rolling out of.
1000, or a little bit more than that.
What.
What's the total cost for sure.
For Rolling out of 1000 do you expect approximately.
Yes, we haven't disclosed that.
It is a positive ROI opportunity for us given our high velocity rates. We have of 1000 initially on order right now and we're looking for some other opportunities with some key accounts. We're in discussions with that we have the potential to rollout.
The double that number by really by the end of 2021.
So we're working with some key customers, we're seeing as long as we continue to see a good rate of return on these will continue to get those placed in key formats. So.
But we haven't disclosed the cost but it is a we said the payback is roughly about three months for US currently so it is of great investment for us and.
We will continue to get these coolers placed and we will continue to order and work with our distributors and key accounts.
Okay and then.
Speedway, you said 2700 locations.
You're in all 2700.
As of as of today.
Is that the right number and is there any of any more expansion there.
Yeah, we're in approximately 2700 today would roughly two flavors and.
And we are in the process of getting potentially.
Potentially the opportunity to get another some additional flavors lifted in the next cut and so we think the speedway is going to be of great account for us we've seen the great results at 711 over the years that continued growth year over year at 711 and in many of our key convenience.
<unk> and partners and if you look at where Speedways locations are those.
Those are generally really good markets for Celsius. So.
It's gonna be of Great partnership.
And we're at just the beginning of Speedway so.
Definitely look for more flavors, there on the quarters to come and years to come so.
Look for a great partnership.
And then just in terms of the flavors John just.
Whether its target of Walmart is the.
There.
When are those resets coming up is there is there.
Do you believe near term.
The expansion or SKU.
Expansion in those in those stores.
Yes.
When you look at the reset that we're anticipating is historically its been right around March 15 to April 15th.
Usually like the spring reset window in the convenience channel can get pushed back due to COVID-19 as well.
He runs into the March or May.
We're working closely with our partners everyone's out of that a little bit of of different schedule on timing. This year, usually as we all know we have a big event in North America at Max in October and then we look forward to those resets coming in spring in the Canadian channels, So everyone's working on a little bit slightly different calendar.
In 2021, but we do expect these resets to take place over the next several months and you will be seeing additional flavors on shelf, what's interesting on the flavors on shelf as we spoke about this before Anthony is when we add additional flavors. It doesn't cannibalize sales it actually increases sales at an increasing rate.
For the whole portfolio. So, it's all incremental to us and that's what we've seen so.
We look forward to continuing to drive positive momentum.
Okay, and then just lastly on the on the.
The sales and marketing side other than the increased expense for for coolers are there any other programs you're running whether it's.
Additional sampling or I know you guys used to do the the tough motors.
The sponsor of that but is there any other.
Events coming up.
Whether it's the olympics or anything like that debt.
Debt Youre looking to.
Put money towards marketing dollars towards two to increase the exposure I know you've mentioned the college rollouts in the sampling there.
But any other programs.
Yes, we have a lot of great things in the work coming this summer we have some big things planned. We're really excited about that we've got a great summer launch plans for being on the lookout for that and we are of a variety.
Any of things, we're working on within our marketing vehicles I touched on a couple of of on the call.
We will keep the global disclose too much of what we're doing in regards to the tactics, but.
We will you will be seeing more of Celsius out there as we continue to increase our household penetration really building that brand.
And of meaningful way way with consumers. So we are of a variety of different vehicles and mediums, we will be executing as.
As we really get to the average season this year, which we're really excited about we think we're well positioned better positioned than any year ever as we enter summer season. So.
Okay, Great Alright, I'll hop back in the queue. Thanks, John Thanks Edwin.
Thank you excellent. Thank you Anthony.
There are no further questions in the queue I'd like to hand, the call back to management for closing remarks.
Yes.
Thank you on behalf of the company I'd like to thank everyone for their continued interest and support our results demonstrates our products are gaining considerable momentum and we're capitalizing on today's global health and wellness trends and transformation taking place in today's energy drink category, our active healthy lifestyle position is a global position with mass appeal.
Building upon our core and leveraging opportunities and deploying best practices, we have a winning portfolio strategy and team and a large rapidly growing market that consumers want and our mission is to take Celsius to more consumers profitably I am very proud of our dedicated team as without them. There is tremendous opportunity would not be possible.
In addition of I'd like to thank all of our investors for their continued support and confidence in our team. Thank you everyone for your interest in Celsius, The state stay healthy and have a great day.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.