Q1 2024 Celsius Holdings Inc Earnings Call

Okay.

Good day My name is Shelley and I will be your conference operator today at this time I would like to welcome everyone to the Celsius Holdings incorporated first quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks.

Ellie: Good day, my name is Ellie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsius Holdings Inc. first quarter 2024 earnings conference call.

Ellie: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the star and number one again. Thank you. I'd now like to hand over the conference call to Paul Weissman. You may now begin.

Paul Wiseman: And there will be a question and answer session if you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Paul Wiseman: If you'd like to withdraw your question Hirsch distort and number one again. Thank you I'd now like to hand over the conference call to Paul Washington, You May now begin.

Paul Wiseman: Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings first quarter 2024 earnings Conference call. Joining me on the call today are John Field, Li Chairman and Chief Executive Officer, Gerry Lyons, Chief Financial Officer, and Toby David Chief of staff the call will open to questions fall.

Paul Weissman: Thank you and good morning everyone. We appreciate you joining us today for Celsius Holdings' first quarter 2024 earnings conference call. Joining me on the call today are Jon Fieldly, Chairman and Chief Executive Officer, Jarrod Langhans, Chief Financial Officer, and Toby David, Chief of Staff. The call will open to questions following the prepared remarks. The company released its first quarter earnings press release earlier this morning, and all materials are available on the company's website, celsiusholdingsinc.com, as well as on the SEC's website, sec.gov. As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link used to join today's call.

Paul Weissman: Knowing the prepared remarks.

Paul Weissman: The company released its first quarter earnings press release earlier. This morning, and all materials are available on the Companys website Celsius Holdings, Inc. Com as well as on the Sec's website SEC Gov. As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link.

Paul Weissman: You used to join today's call.

Paul Weissman: Please be aware that this call may contain forward-looking statements that are based on forecasts, expectations, and other information available to management at this time. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligation and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our Safe Harbor statements contained in today's press release and in our quarterly filings with the SEC for additional information.

Paul Weissman: Please be aware that this call may contain forward looking statements, which are based on forecasts expectations and other information available to management at this time.

Paul Weissman: These statements involve numerous risks and uncertainties, including many that are beyond the company's control except to the extent as required by law Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements. We encourage you to review in full our safe Harbor statements contained in today's press release and in.

Paul Weissman: Our quarterly filings with the SEC for additional information.

Paul Weissman: Additionally, management will share operating results on both a GAAP and non-GAAP basis. Descriptions of the non-GAAP financial measures that we use, such as non-GAAP adjusted EBITDA, and reconciliations of these measures to our results, as reported in accordance with GAAP, are detailed in our earnings release for the first quarter of 2024. With that, I'd like to turn the call over to Chairman and Chief Executive Officer, Jon Fieldly, for his prepared remarks.

Paul Weissman: Additionally, management will share operating results on both a GAAP and non-GAAP basis descriptions of non-GAAP financial measures that we use such as non-GAAP adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the first quarter of 2024.

John Fieldly: With that I'd like to turn the call over to Chairman and Chief Executive Officer, John fueled Lee for his prepared remarks.

John Fieldly: Thank you, Paul. Good morning, everyone.

John Fieldly: Thank you Paul and good morning, everyone and thank you for joining us today.

John Fieldly: Thank you for joining us today. This morning, Celsius reported a 37% year-over-year increase in revenue for the first quarter of 2024, totaling $355.7 million for the period, a new first-quarter revenue record for the company. Celsius alone was responsible for approximately 47% of the entire energy drink category growth year-over-year in the first quarter. And, as we reported in this morning's press release, Celsius now holds an 11.5 share in Moolock for the four-week period ending April 14, according to Zircona.

John Fieldly: This morning's Celsius reported a 37% year over year increase in revenue for the first quarter of 2024 totaling $355 $7 million for the period, a new first quarter revenue record for the company Celsius alone was responsible for approximately 47% of the entire energy drink category growth.

John Fieldly: Year over year in the first quarter and as we reported in this morning's press release Celsius now holds an 11 and a half share in mew locked for the four weeks period ending April 14th According to user Conor. This is a full point higher than the Q4, 2023, and four points higher than one year ago.

John Fieldly: This is a full point higher than the Q4 2023 and four points higher than one year ago. These results, on their own, are very strong, especially after growing at triple digits for the past three consecutive years. Even so, our first quarter revenue would have been higher, except that it was adversely affected due to inventory movements by our largest customer, which is beyond our control. The year-over-year inventory variation is attributed to elevated first quarter 2023 restocking, which we believe was meant to compensate for the fourth quarter 2022 destocking and to prepare for a robust spring recess that was planned in 2023. However, no such first quarter restocking and spring reloading was observed this year. Absent these effects, we would have seen a higher growth rate.

John Fieldly: These results on their own are very strong, especially after growing at a triple digit for the past three consecutive years, even so our first quarter revenue would have been higher except that it was adversely affected due to inventory movements by our largest customer which is beyond our control the.

John Fieldly: The year over year inventory variation is attributed to elevated first quarter 2023, restocking, which we believe was meant to compensate for the fourth quarter 2022, Destocking and to prepare for a robust spring resets that were planned in 2023, However, no such first quarter restocking in spring reload.

John Fieldly: The aim was observed this year absent these effects, we would have seen a higher growth rate.

John Fieldly: Ongoing inventory fluctuations may be expected in subsequent quarters because our largest distributor constitutes approximately 62% of our total North America business during the first quarter of 2024. While these inventory fluctuations cause noise in our sequential quarterly revenue figures, what's important to focus on here is that Celsius is constantly on shelves, stocked cold, and stocked high, with a 98.4% ACV, and our category across all track channels and on track channels continues to grow.

John Fieldly: Ongoing inventory fluctuations may be expected in subsequent quarters, because our largest distributor construed as approximately 62% of our total north American business during the first quarter of 2024.

John Fieldly: While these inventory fluctuations caused noise in our sequential quarterly revenue figures whats important to focus on here is that Celsius is constantly on shelf stock cold stacked high with a 98.4% ACB and our category across all tracked channels in untracked channels continues to grow we introduced several new flavor.

John Fieldly: We introduced several new flavor innovations since the beginning of this year, including Galaxy Vibe, which may be our most refreshing and delicious flavor yet, as well as the Celsius Essentials line, which began its national distribution in January and has now achieved a 54.5 percent ACV and a five and a half point share increase since we last reported in February. We estimate that retailer spring resets were approximately one third complete at the end of the quarter.

John Fieldly: <unk> since the beginning of this year, including Galaxy Vibe, which maybe our most refreshing and delicious flavor, yet as well as the Celsius Essentials line, which began its national distribution in January and has now achieved a 54.5% ACB and a five and a half point share increase since we last reported in February we <unk>.

John Fieldly: Estimate that retailers spring resets, where approximately one third complete at the end of the quarter and once concluded we're expecting our best shelf space gains in the company history. The importance of these space gain increases in placements and improvements cannot be overstated, the visual impact of multiple full shelves of cold Celsius and convenience stores.

John Fieldly: And once concluded, we're expecting our best shelf space gains in the company history. The importance of these space gain increases, and placements, and improvements cannot be overstated. The visual impact of multiple full shelves of cold Celsius in convenience stores and coolers and on grocery shelves is a powerful in-store billboard and showcases our portfolio. The full effect of these shelf resets is expected to be reflected in the scanner data beginning in July.

John Fieldly: And coolers and in the grocery shelf is a powerful in store Billboard and showcases our portfolio. The full effect of the shelf resets is expected to be reflected in the scanner data beginning in July in March we launched a new incentive program with Pepsi that further aligns our shared interest within the energy category, including alignment around priorities.

John Fieldly: In March, we launched a new incentive program with Pepsi that further aligns our shared interests within the energy category, including alignment around priorities and delivering a program that will contribute to our long-term goal of becoming the number one energy drinks brand in the world. As we prepare for our 100 Days of Summer campaign, we are well-positioned with the best in-store presence in company history, the most refreshing products, and some great marketing initiatives, which I'll discuss later in the call.

John Fieldly: <unk> and delivering a program that will contribute to our long term goal of becoming the number one energy drink brand in the world.

John Fieldly: As we prepare for our 100 days of summer campaign, we are well positioned with the best in store presence in company history. The most refreshing products and some great marketing initiatives, which I'll discuss later in the call and as just noted a strong aligned partnership with our North America distribution partner <unk>.

John Fieldly: And, as just noted, a strong aligned partnership with our North America distribution partner. Celsius share in Moolak in the most recent four-week data as of April 14th was an 11.5 share, an increase of approximately four points compared to the year-ago period. We're pleased with our continued share growth across all track channels. As we shared on our last earnings call, there are 12 major U.S. markets where Celsius maintains a 15-point share or greater, and we are within just a few points of a 15-share in several additional markets.

John Fieldly: Celsius, Sharon Lu lock in the most recent four week data as of April 14th as stated was 11.5 share an increase of approximately four points compared to the year ago period.

John Fieldly: We're pleased with our continued share growth across all tracked channels as we shared on our last earnings call. There are 12 major U S markets, where Celsius maintains a 15 point share or greater and we are within just a few points of 15 share in several additional markets with our growth and expansion, we're adding more tally.

John Fieldly: With our growth and expansion, we're adding more talented people. And already this year, we've increased our sales and key accounts team by approximately 85%. By the end of this year, we're expecting to have three times as many sales staff compared to this time last year, supporting our growth and the opportunities we see ahead. Our world-class operations teams continue to drive efficiencies to reduce freight and raw material cost savings this quarter, contributing to our highest gross margin to date at 51.2%.

John Fieldly: Did people and already this year, we've increased our sales and key accounts team by approximately 85% by the end of this year. We are expecting to have three times as many sales staff compared to this time last year supporting our growth and the opportunities we see ahead.

John Fieldly: Our World Class operation teams continue to drive efficiencies to reduce freight and raw material cost savings this quarter contributing to our highest gross margin of date at 51, 2%.

John Fieldly: Turning to pricing, we have generally maintained flat pricing on a per volume basis across our portfolio while strategically promoting our new 16 ounce line of Celsius essentials to drive trial, and reduced pricing and scanner data reflect Celsius Essentials promotions and the increased mix of variety packs into our overall sales, which come with a lower per ounce cost. We continue to consider strategic pricing and promotional opportunities that allow us to maintain our premium position in the category while maintaining velocity. With that said, we will continue to review and monitor both our distribution and infrastructure and the commodity environment across the back half of 2024 and into 2025.

John Fieldly: Turning to pricing, we have generally maintained flat pricing I per volume basis across our portfolio, while strategically promoting our new 16 ounce line of Celsius Essentials to drive trial.

John Fieldly: And at reduced pricing in scanner data reflects Celsius essentials promotions and the increased mix of variety packs into our overall sales, which come with a lower per ounce costs, we continue to consider strategic pricing and promotional opportunities that allow us to maintain our premium position in the category while maintaining velocity.

John Fieldly: But that said, we continue to review and monitor both our distribution and infrastructure and the commodity environment across the back half of 2024 and into 2025.

John Fieldly: Celsius' new product innovation this year is the best tasting and most refreshing beverages we've ever created. A new favorite here is Celsius Galaxy Vibe, which joins other excellent 2024 editions in our 12-ounce line, including Blue Raspberry Lemonade, Sparkling Raspberry Peach, and Astro Vibe. We are very pleased with the strong retailers supporting our initiatives, rolling out our 16-ounce line of Celsius essentials, which now has reached approximately 54.5% ACV as of mid-April, with availability increasing across the country.

John Fieldly: Southeast New product innovation. This year is the best tasting and most refreshing beverages, we've ever created a new favorite here is Celsius Galaxy vibe, which joins other excellent 2024 additions and our 12 ounce line, including Blue Raspberry Lemonade sparkling raspberry Peach in Astro Vibe, we are very pleased with the strong retailer.

John Fieldly: Supporting our initiatives Rolling out our 16 ounce line of Celsius Essentials, which now has reached approximately 54.5% ACB as of mid April with availability increasing across the country.

John Fieldly: Celsius on-the-go powders continue to perform well with our recent innovation, with a refreshing strawberry coconut and blueberry lemonade being our top two performers. We have more Celsius Omnigo powder innovation planned for this year and continue to see great opportunities with this line. Non-track channels, including club, e-com, and food service, continue to be tailwinds to our overall growth. Club sales in the first quarter increased 36% to $63 million, compared to $46.5 million in the same period in 2023.

John Fieldly: Celsius Amigo powders continues to perform well with our recent innovation with a refreshing strawberry coconut and blueberry lemonade being our top two performers we have more Celsius amico powder innovation plan for this year and continue to see great opportunities with this line.

John Fieldly: Non track channels, including club E Comm in foodservice continued to be tailwind to our overall growth club sales in the first quarter increased 36% to 63 million compared to $46 5 million in the same period in 2023 sales on Amazon increased 30% year over year to 28 million in the first quarter up from 21.8.

John Fieldly: Sales on Amazon increased 30% year-over-year to $28 million in the first quarter, up from $21.8 million in the prior period. Celsius ended the first quarter with a 20.2 share, compared to Monster with a 20 share and Red Bull with a 12.3 share, according to Stackline, 12-week data ending March 30, 2024. Approximately 12% of Celsius sales through Pepsi in the quarter were to the food service channel with especially strong sales in restaurants, recreation, lodging, and gaming locations. International Sales, which do not include Canada, increased 42% in a quarter to $16.2 million.

John Fieldly: 8 million in the prior period Celsius and in the first quarter with a 20 point to share compared a monster with a 20 share and rebel with a 12.3 share. According to stack line 12 week data ending March 32024.

John Fieldly: Approximately 12% of Celsius sales through Pepsi in the quarter was to the foodservice channel with especially strong sales in restaurants recreation lodging and gaming locations.

John Fieldly: International sales, which do not include Canada increased 42% in the quarter to $16 2 million Celsius launched Encana, which began in January continues to exceed expectations and we recently achieved a five and a half share through the first two periods of 2024 according to Nielsen.

John Fieldly: Celsius' launch in Canada, which began in January, continues to exceed expectations, and we recently achieved a five and a half share through the first two periods of 2024, according to Nielsen. In the first quarter, Celsius announced plans to expand in Australia, France, Ireland, New Zealand, and the United Kingdom, executing our stated strategy to pursue measured international growth, balancing investment levels and new markets. I'm excited to say that as of April, Celsius is now officially available in select gyms and retailers across the United Kingdom and Ireland. Sales in Australia and New Zealand, as well as France, are planned to gradually begin in the fourth quarter of 2024 with phased expansion across the countries in 2025.

John Fieldly: In the first quarter Celsius announced plans to expand in Australia, France, Ireland, New Zealand and United Kingdom, executing our stated strategy to pursue measured international growth balancing investment levels in new markets IMAX.

John Fieldly: Im excited to say that as of April Celsius is now officially available on select gyms and retailers across the United Kingdom and Ireland.

John Fieldly: Sales in Australia, and New Zealand, as well as France or plan to gradually begin in the fourth quarter of 2024 with base expansion across the countries in 2025.

John Fieldly: Finally, we produced some fantastic marketing activations recently, including Celsius Cosmic Desert at Coachella, which hosted celebrities and influencers as well as performances by leading artists. It was also featured in a recent Saturday Night Live opening skit, making clear that Celsius is the top of mind functional energy brand in pop culture. And just last weekend, we activated our global partnership with Ferrari at the Formula One Miami Grand Prix. Congratulations to the Ferrari team for their podium finish. I'll now turn the call over to Celsius Chief Financial Officer, Jarrod Langhans, to discuss our first quarter financial results. Jarrod? Thank you, Jon.

John Fieldly: Finally, we produced some hidden tastic marketing Activations recently, including Celsius, Cosmic desert event in Coachella, which hosted celebrities and influencers as well as performers by leading artists Celsius was also featured in a recent Saturday night live opening skit, making clear that Celsius is a top of mind functional energy brand.

Jarrod Langhans: And pop culture.

Jarrod Langhans: And just last weekend, we activated our global partnership with Ferrari at the Formula One Miami Grand Prix congratulations that a ferrari team for their podium finish.

Jarrod Langhans: I'll now turn the call over to Celsius, Chief Financial Officer, Gerry Lyons to discuss our first quarter financial results Jared. Thank you John Celsius delivered another record setting quarter exceeding our expectations and producing strong returns, while we grew the business and levered in certain areas.

Jarrod Langhans: Thank you, Jon. Celsius delivered another record-setting quarter, exceeding our expectations and producing strong returns while we grew the business and levered in certain areas. Revenue for the three months ended March 31, 2024 was approximately $355.7 million, an increase of 37% from $259.9 million in the prior year period. To put this growth rate into historical context, when Monster Energy achieved $1.3 billion in net sales, they grew revenue 30% the following year. Adjusted for the inventory fluctuations Jon mentioned previously, Celsius would have grown at an even higher rate in the first quarter of 2024.

Jarrod Langhans: Revenue for the three months ended March 31, 2024 was approximately $355 $7 million, an increase of 37% from $259 $9 million in the prior year period to put this growth rate into historical context, when monster energy achieved $1 $3 billion in net sales. They grew revenues, 30% the following year.

Jarrod Langhans: Adjusted for the inventory fluctuations John mentioned previously Celsius would've grown at an even higher rate in the first quarter of 2024.

Jarrod Langhans: North American revenue, which includes the United States and Canada, was $339.5 million, an increase of 37% from the same period last year. International revenue grew 42% to $16.2 million as velocity continued to increase. We attribute our sales volume growth for the quarter to several key factors, including our ability to drive increased consumer demand, strong innovation, and excellent in-store execution by our key account and field sales team. Continued growth in the club, e-commerce, and food service channels also served as a solid driver of our revenue growth in the quarter, as did strong year-over-year share gains of more than 69% or four points in the convenience of gas channel.

Jarrod Langhans: North American revenue, which includes the United States, and Canada was $339 $5 million, an increase of 37% from the same period last year.

Jarrod Langhans: International revenue grew 42% to $16 $2 million as velocity continued to increase.

Jarrod Langhans: We attribute our sales volume growth for the quarter to several key factors, including our ability to drive increased consumer demand strong innovation and excellent in store execution by our key account and field sales teams.

Jarrod Langhans: Continued growth in the club E Commerce and foodservice channels also served as a solid driver of our revenue growth in the quarter as did strong year over year share gains of more than 69% or four points in the convenience and gas channel.

Jarrod Langhans: Gross profit in the first quarter increased 60% to $182.2 million, up from $113.8 million in the prior year period. Gross profit margins in the first quarter were 51.2% of revenues compared to 43.8% for the prior year period. The improvement in gross profit margins is attributed to reduced freight and raw material costs. First quarter freight cost, a percentage of net invoice sales, decreased 120 basis points year over year, and cost of goods sold decreased 470 basis points.

Jarrod Langhans: Gross profit in the first quarter increased 60% to $182 $2 million up from $113 $8 million in the prior year period.

Jarrod Langhans: Gross profit margins in the first quarter were 51, 2% of revenues compared to 43, 8% for the prior year period. The improvement in gross profit margins is attributed to reduce freight and raw material costs first quarter freight cost as a percentage of net invoice sales decreased 120 basis points year over year and cost of goods sold decrease.

Jarrod Langhans: 470 basis points as.

Ellie: As we look to the remainder of the year, we have a number of key drivers that we are monitoring, including fuel costs, which have been rising, other commodity costs, such as aluminum, and our promotional calendar. As a result, we are taking a conservative approach to the remainder of the year and continue to stick with our commentary from February, where we noted that gross margins in the high 40s were very achievable, but that we were not ready to move too far from that expectation until we got further into the year.

Jarrod Langhans: As we look to the remainder of the year, we have a number of key drivers that we are monitoring including fuel cost, which had been rising other commodity costs, such as aluminum and our promotional calendar. As a result, we are taking a conservative approach to the remainder of the year and continue to stick with our commentary from February where we noted that gross margins in the high forties was very achievable, but that.

Ellie: We're not ready to move too far from that expectation until we got further into the year.

Ellie: Sales and marketing expenses for the quarter were 21% of revenue. We have hired a significant number of new team members and are on track to fill the remaining open positions by the end of Q2, but based on timing, we did see some benefit in Q1, which was slightly below where we expected to be and three points higher than the same period in 2023. We will continue to invest and plan to maintain investment in this area as we expand further into our 31 drill-deep markets and internationally.

Ellie: Sales and marketing expenses for the quarter were 21% of revenue we have hired a significant number of new team members and are on track to fill the remaining open positions by the end of Q2, but based on timing. We did see some benefit in Q1, which was slightly below where we expected to be at three points higher than the same period in 2023.

Ellie: We will continue to invest and plan to maintain investment in this area as we expand further into our 31 drill deep markets and internationally as we continue to grow our investment in sales and marketing will remain within the 20% to 23% range general and administrative expenses for the first quarter of 2024 were approximately $23 $2 million.

Ellie: As we continue to grow, our investment in sales and marketing will remain within the 20% to 23% range. General and administrative expenses for the first quarter of 2024 were approximately $23.2 million, an increase of 9% relative to Q1 2023. As a percentage of sales, G&A was 7% compared to 8% in the prior year period as we continue to leverage and due to lower third-party costs, such as legal fees. As we look across the remainder of the year, we would anticipate some ebbs and flows within GNA, but we remain confident that we will be able to leverage this area in 2024.

Ellie: An increase of 9% relative to Q1 2023 as a percentage of sales G&A was 7% compared to 8% in the prior year period, as we continue to leverage and due to lower third party costs such as legal fees.

Ellie: As we look across the remainder of the year, we would anticipate some ebbs and flows within G&A will remain confident that we will be able to leverages area in 2024.

Ellie: Non-Gap Adjusted EBITDA increased 81% to approximately $88 million in the first quarter, compared to $48.7 million in the prior year period, driven substantially by revenue growth and an increase in margins and our continued leverage across SG&A. Net income attributed to common shareholders increased 106% to $65 million in the quarter, or $0.27 per diluted share, compared to $0.13 in the prior year period. We ended the quarter with approximately $879.5 million of cash on hand, which continues to accrue interest and remains available for strategic growth initiatives.

Ellie: non-GAAP adjusted EBITDA increased 81% to approximately $88 million in the first quarter compared to $48 $7 million in the prior year period, driven substantially by revenue growth and increase our margins and our continued leverage across SG&A.

Ellie: Net income attributed to common shareholders increased 106% to $65 million in the quarter or <unk> 27 per diluted share compared to 13 cents in the prior year period.

Ellie: We ended the quarter with approximately $879 $5 million of cash on hand, which continues to accrue interest and remains available for strategic growth initiatives.

Ellie: Cash flows provided by operating activities totaled $135 million in the first quarter, which compares to negative $14 million in net cash provided by operating activities in the prior year period. We will continue to invest in our working capital as well as CapEx around coolers in our fleet to drive further growth, but we do see a greater opportunity to continue to drive strong cash flow growth across 2024. This concludes our prepared remarks. Operator, you may now open the call for questions.

Ellie: Cash flows provided by operating activities totaled $135 million in the first quarter, which compares to negative $14 million and net cash provided by operating activities in the prior year period, we will continue to invest in our working capital as well as capex around coolers in our fleet to drive further growth, but we do see a greater opportunity to continue to drive strong cash.

Ellie: Slow growth across 2024.

Ellie: This concludes our prepared remarks, operator, you may now open the call for questions.

Ellie: Yes.

Ellie: We are now opening the floor for the question and answer session. At this time, I would like to remind everyone that in order for you to ask a question, you need to press star and then number one on your telephone keypad. Our first question comes from Camille Guajaraola from Jeffreys. Your line is now open.

Speaker Change: We are now opening the floor for the question and answer session. At this time I would like to remind everyone in order for you to ask a question.

Ellie: I need to press Star and then number one on your telephone keypad.

Kaumil S. Gajrawala: Our first question comes from from you guys.

Kaumil S. Gajrawala: <unk> from Jefferies. Your line is now open.

Camille Guajaraola: Thanks, guys. Good morning.

Kaumil S. Gajrawala: Yeah. Thanks, guys good morning.

Kaumil S. Gajrawala: Question on inventories as we're thinking about <unk>.

Kaumil S. Gajrawala: Maybe how business has progressed from a consumption perspective, and TQ, but also.

Camille Guajaraola: Our inventories now tight and low as we're going into another two thirds of shelf resets.

Kaumil S. Gajrawala: Do you maybe some of the $20 million Mcpherson T. J could you just give some context around that yeah.

Unknown Executive: A question on inventories as we're thinking about 2Q, maybe how businesses progress from a consumption perspective in 2Q, but also, are inventories now tight and low as we're going into another two-thirds of shelf resets? Will maybe some of the $20 million reverse in 2Q? Could you just give some context around that? Yeah.

John Fieldly: Good morning. Great question. You know, we did state that in prepared remarks in regards to some of the inventory fluctuation with our partner. You know, if we don't control the inventory levels, you know, but we do feel that, as we move forward, everyone is optimizing inventory levels. As we move forward, we'll see how that evolves.

Speaker Change: Good morning, Great question I did state that in prepared remarks in regards to.

John Fieldly: Some of the inventory fluctuation with our partner.

John Fieldly: We don't control the inventory levels you know.

John Fieldly: But we do feel that everyone is optimizing inventory levels.

John Fieldly: As we move forward most see how that evolves. If you look at our inventory levels over the last 15 months looking at the especially the cash flow statement.

John Fieldly: If you look at our inventory levels over the last 15 months, especially the cash flow, you know, we've optimized our inventory levels as well, about $47 million. So I think every business is going to be optimizing. I think really the most important thing when we look at it is keeping the shelves stocked. And most importantly, keeping the shelves cold and just preparing for this, the reset season that's underway as we continue to progress forward.

John Fieldly: We've optimized our inventory levels as well about $47 million. So I think every business is going to be optimizing I think really the most important thing when we look at it is keeping the shelf stocked most importantly, keeping the shelf called and just preparing for this are the reset season, that's underway as.

John Fieldly: And the scan data is really strong, especially last week at the register, according to Cercana. So we feel like we're in good shape, but to predict where inventory levels will move is just really difficult for our partner. I don't know, Jarrod, if you have any other comments to add.

Speaker Change: As we continue to progress forward in the scan data has really strong, especially last week at the register according to U S. Economy. So we feel like we're in a good shape, but to predict where inventory levels move is just really difficult for a partner I don't know Jared if you have any other comments that you like John said Depletions are really good they are rock solid.

Jarrod Langhans: Yeah, like Jon said, depletions are really good. They're rock solid. But as I look at April, I'd say this is kind of a new normal for us at the moment. You know, we'll see where our partner goes from here, but I wouldn't bet on, you know, a reversal of what we've seen.

Jarrod Langhans: But as I look at April I would say this is kind of a new normal for us at the moment.

Jarrod Langhans: We'll see where our partner goes from here, but I wouldn't bake in.

Jarrod Langhans: A reversal of what we've seen.

Unknown Attendee: Okay, got it. And then margins were quite substantially ahead of plan. Is there any one time in there? Or is it just sort of leverage off your growth?

Speaker Change: Okay got it and then margins were quite substantially ahead of plan as was.

Unknown Attendee: Was there anything onetime in there or is it just sort of a leverage off your growth.

Unknown Executive: Yeah, Jarrod, why don't you talk about the margins? Yeah, I mean, you know.

Jarrod Langhans: Yeah, I mean, you know, I always point to freight as something that fluctuates from quarter to quarter. And that's definitely been something that, if you look back over the last three years, it has been, we've been able to keep it within a kind of a set of guardrails, but we did see some good freight rates this quarter. You know, we'll continue to look to optimize that, but some of that will be dependent upon fuel costs.

Jarrod Langhans: Yes, Jerry when you talk about the margins I mean, you know I always point are afraid as.

Jarrod Langhans: Something that fluctuates from quarter to quarter, and that's definitely been something that if you look back over the last three years it has been.

Jarrod Langhans: We've been able to keep it within a kind of a set of guardrails, but we did see some good freight rates this quarter.

Jarrod Langhans: We will continue to look to optimize that but some of that will be dependent on fuel costs as we look out into the back half of the year. We have seen some good activity in terms of leveraging our business and our scale around raw materials, but that's the same time, we are moving into a much higher promotional time period with 100 days of summer. So that's why we kind of said.

Jarrod Langhans: As we look out into the back half of the year, we have seen some good activity in terms of leveraging our business and our scale around raw materials, but at the same time, we are moving into a much higher promotional time period with 100 days of summer. So that's why we kind of said we weren't ready to put the line in the sand at the rate we were able to deliver in Q1.

Jarrod Langhans: We're not ready to put the line in the sand at the rate we were able to deliver in Q1, you know were always going to try to deliver that or better and.

Jarrod Langhans: You know, we're always going to try to deliver that or better. And we do have a kind of long-term goal that we're looking to get to. But I would say as we look out to Q2, Q3, Q4, we're kind of sticking with what we said at the end of February, which was kind of that high end of the 40s and not quite locking in to the 50s yet.

Jarrod Langhans: And we do have a kind of a long term goal that we're looking to get to but I would say as we look out to Q2 Q3 Q4, we're kind of sticking with what we said at the end of February which was kind of that high end of the forties.

Jarrod Langhans: And not quite locking in into the 50 yet.

Unknown Attendee: Got it. Thank you. Thank you.

Speaker Change: Got it okay. Thank you.

Speaker Change: Thank you.

Unknown Attendee: Astrachan, from Stifle, your line is now open. Hey, morning.

Mr. Chen: Mr. Chen from Stifel. Your line is now open.

Mark Stiefel Astrachan: Hey morning, guys. I wanted to go back to that last question, the one that we're getting a lot today as far as the timing of this inventory stuff. So if I do some rough math, It looks like you've undershifted demand per scanner data decently the last few, Unknown Speaker, The Cure, Dr. David A. Harned, Dr. David A. Harned, Dr. David A. Harned, So I guess the question is, A, what do you say to that, you know, meaning that we can all kind of see where end demand is versus what your And two, as you think about how Pepsi's managing Shell.

Astrachan: Hey morning, guys.

Mark Stiefel Astrachan: I wanted to go back to that last question is the one that we're getting.

Mark Stiefel Astrachan: A lot today.

Mark Stiefel Astrachan: As far as the timing of this inventory stuff so yes.

Mark Stiefel Astrachan: If I did them some.

Mark Stiefel Astrachan: Rough math.

Mark Stiefel Astrachan: Yeah, it looks like you've under ship demand per scanner data.

Mark Stiefel Astrachan: Recently the last.

Mark Stiefel Astrachan: Two quarters, <unk>, obviously, you and Youre lumping in the rollout into Canada would would just make that even more pronounced.

Mark Stiefel Astrachan: I guess the question is with a what do you say to that meaning that we could all Tennessee, where end demand is versus what your sales are in your sales were a lot lower too.

Mark Stiefel Astrachan: As you think about how pepsi's managing shelves.

Mark Stiefel Astrachan: Does this have an impact? Have you seen any impact from a service level standpoint on out of stocks and whatnot? And kind of how do you work with them to make sure that you prevent that, assuming that you haven't seen it yet?

Mark Stiefel Astrachan: Does this have an impact have you seen any impact from a service level standpoint on out of stocks and whatnot and kind of how do you work with them to make sure that you prevent that assuming that you haven't seen it yet, but may given where trends seem to be moving.

John Fieldly: Yeah, Mark, I'll take the beginning of the question. You know, when you look at the inventory levels, I think our partners are at really good inventory levels right now. You know, we're maintaining deliveries, we're keeping product in stock. We're seeing scan data, we just broke a record on the share gain to 11.5. So product is flowing.

Mark Stiefel Astrachan: Okay.

Speaker Change: Yeah, Mark I'll take.

John Fieldly: Beginning of the question.

John Fieldly: When you look at the inventory levels I think our partners are at really good inventory levels right now.

John Fieldly: We're maintaining.

John Fieldly: Deliveries were keeping product in stock.

John Fieldly: Seeing scan data, we're just broke a record on the share gains of $11. Five so product is flowing I think we're both getting.

John Fieldly: I think we're both getting, you know, learning about each other, our supply chains, and looking to further optimize them. So, you know, I can't speak for our partner, but, you know, they are maintaining supply levels, servicing customers, we have a greater ACV, resets have gone well, the ones that have been reset so far. So, and we're further working on programs for the 100 days of summer, working on further displays and NCAP programs. So, I think we feel really good where we are. You're going to see some optimization on both sides.

John Fieldly: Learning about each other our supply chains and looking to further optimize so you know I can't speak for our partner but.

John Fieldly: They are maintaining supply levels.

John Fieldly: Servicing customers with greater ACD resets have gone well are the ones that had been reset so far so and we're further working on programs for the 100 days of summer working on further displays an end cap program. So I.

John Fieldly: I think we feel really good where we're at you're going to see some optimization on both sides like I said you know.

John Fieldly: Like I said, you know, to Kamal, we did optimize our inventory as well, about 47 million in the last 15 months, if you look at the cash flow statement. So, in regards to shelves, we're not seeing, you know, out of stocks. You're always going to have some that's just part of the business, but always out there are ways to further optimize. And I think we're in a good, we're in a really good place. We have good inventory levels. Now we feel confident in our inventory levels and confident in the Pepsi inventory levels supporting our growth.

John Fieldly: <unk> we.

John Fieldly: We are we did optimize our inventory as well about $47 million in the last 50 15 months. If you look at the cash flow statement. So.

John Fieldly: Now in regards to the shelves were not seeing you know out of stocks.

John Fieldly: You're always going to have some that's just part of the business, but I was out there's ways to further optimize and I think we're in a good shape you were in a really good place. We have good inventory levels now we feel confident in our inventory levels and confident in the Pepsi inventory levels supporting our growth.

Mark Stiefel Astrachan: Got it. Okay, and then I guess just staying on the point. Was there any change in the inventory levels that Pepsi held through the March quarter that was notable? Yeah, I say that in part just out of curiosity and partly with a view that your distribution points continue to expand. Obviously, you talked about what you did through March 31, implying a pretty substantial increase in distribution points as you head to summer.

John Fieldly: Okay.

Speaker Change: Got it Okay and then.

Mark Stiefel Astrachan: I guess just staying on the point.

Mark Stiefel Astrachan: Was there any change in the inventory levels that Pepsi held through the March quarter that was that was notable.

Mark Stiefel Astrachan: I say that in part.

Mark Stiefel Astrachan: Just out of curiosity and partly.

Mark Stiefel Astrachan: With a view to gain distribution points continues to expand obviously you talk about what you did through March 31, implying a pretty substantial increase in distribution points is you had this summer.

Mark Stiefel Astrachan: So it would just be odd to me that you would reduce the amount of inventory for Pepsi. And I guess, you know, just how do you think about that progression through, and then you talked about April being a little bit weaker. So I guess it's sort of related to the first question, but kind of how does the timing of that work out? Did they hold more at the beginning of the quarter, or less at the end of the quarter?

Mark Stiefel Astrachan: So it would be odd to me that you would reduce the amount of inventory for Pepsi.

Mark Stiefel Astrachan: And I guess, how do you think about that progression through and then you talked about April being a little bit weaker so I guess sort of related to the first question, but kind of how does the timing of that work through did they hold more at beginning of the quarter last at the end of the quarter.

John Fieldly: Yeah, I mean, we haven't spoken about April being weaker. I think Jarrod was talking about maintaining inventory levels with our partners, maintaining them as we enter the second quarter. You know, we're gonna have to see how this plays out, how the quarter unfolds.

Speaker Change: Yeah, I mean, we haven't spoken about April being weaker I think Jared was talking about maintaining inventory levels with our partners maintaining as we enter the second quarter.

John Fieldly: We're going to have to see how this how this plays out other quarter unfolds I think you know with optimizing inventories were getting more efficient were able to ship product.

John Fieldly: I think, you know, that with optimizing inventories, we're getting more efficient; we're able to ship product and in a lesser number of days, you know, prior, we were running 14 days. And now, in many cases, we're shipping within seven. So, you know, we're just finding further ways to optimize our supply chain. So that's going to impact some of our revenue recognition standards, you know, in order, you know, as we continue to progress forward.

John Fieldly: And in less number of days prior a run in 2014 days and now are in many cases, we're shipping within seven so we're just finding further ways to optimize our supply chain. So that's going to impact some of our.

John Fieldly: Some of the revenue recognition.

John Fieldly: Standards in order.

John Fieldly: As we continue to progress for it but I think the most important thing to really look at is what's taking place within the scanner data for the end user and the end customer which continues to maintain.

John Fieldly: But I think the most important thing to really look at is what's taking place within the scanner data for the end user and the end customer, which continues to maintain. It seems to be extremely strong, and we've got good momentum heading into the 100 days of summer, double the sales staff, great refreshing innovation, and a bunch of great marketing assets and activities. I know, Jared, if you want any more color you want to add to that.

John Fieldly: It seems to be extremely strong and we got good momentum heading and especially the 100 days of summer double the sales staff, great refreshing innovation and a bunch of great marketing assets and activities in our Jared its anymore color you want to add on that.

Jarrod Langhans: I'm aligned with you. I think, you know, we're in good shape. We haven't seen any service issues. You know, as they optimize their system, as long as they're getting product on the shelf, that's, you know, that's what we're most concerned about.

Jared: I'm aligned with you.

Jarrod Langhans: We're in good shape, we haven't seen any service issues.

Jarrod Langhans: As they optimize their system as long as they're getting product on the shelf that's.

Jared: That's what we're most concerned about.

Unknown Attendee: All right. Thank you. Thank you.

Speaker Change: Alright. Thank you thank.

Speaker Change: Thank you.

Jeffrey Wallin Van Sinderen: Our next question comes from Jeff Venn. Sinderen from B Riley, your line is now open.

Speaker Change: Our next question comes from Jeff Zhang.

Speaker Change: Anderson from B Riley Your line is now open.

Jeffrey Wallin Van Sinderen: Good morning, everyone. I wanted to circle back to a comment you made on markets where you're getting close to a 15% market share. Maybe there's more color you can add on that. I guess, what specifically have you done in those markets to achieve that and plan to apply those initiatives to other markets?

Speaker Change: Hi, good morning, everyone.

Jeffrey Wallin Van Sinderen: Wanted to circle back to a comment you made on markets, where youre getting close to a 15% market share.

Jeffrey Wallin Van Sinderen: Maybe any more color you can add on that I guess, what specifically you've done in those markets to achieve that and plans to apply those.

Jeffrey Wallin Van Sinderen: Initiatives to other markets.

John Fieldly: Yeah, Jeff, great question. You know, it's really exciting that now we're in 12 markets, major metropolitan markets in the US right now that are over a 15 share. And then we have several additional markets that are getting close to that range. So what we're seeing is just really further collaboration with our Pepsi partners, further building out our sales team and marketing teams, and really using our methodological approach to marketing and activation, which has worked well.

Speaker Change: Yes, Jeff Great question.

John Fieldly: Really exciting that now.

John Fieldly: 12 markets major metropolitan markets in the U S. Right now that are over 15 share and then we have several.

John Fieldly: Additional markets that are getting close to that range. So what we're seeing is just really to further collaboration with our with our Pepsi partners.

John Fieldly: Further building out our sales team and marketing teams and really using our methodology methodological approach to marketing and activation.

John Fieldly: It's activating the consumer where they live, work, and play, disrupting the path to purchase, building that awareness, getting that trial, and we have such great flavors and a great product and a great brand that we build that loyal consumer. And, you know, we're seeing our Celsius consumers further increasing their consumption levels as we've further built out our availability. We're seeing category growth or driving category growth. About 47% of category growth is coming from new to category, and Celsius is creating that.

John Fieldly: Which is what has worked well it's activating the consumer where they live work and play disrupting the path to purchase building out awareness getting that trial, and we have such great flavors and a great product and a great brand that we built that loyal consumer.

John Fieldly: What we're seeing.

John Fieldly: Our Celsius consumers further increasing their consumption levels as we further built out our availability.

John Fieldly: We're seeing category growth are driving.

John Fieldly: Category growth about 47% of the category growth is coming from new to category and Celsius is is creating that so really exciting it's really about gaining that additional distribution and really closing the gap with inconvenience and we've talked about that for many years and we've done well in large format.

John Fieldly: So really exciting. It's really about gaining that additional distribution and really closing the gap with convenience. And we've talked about that for many years, and we did well in large format, and online, and with gyms and health clubs. And now we're really in the next phase of really closing the gap with convenience and getting better placement, you're seeing the share numbers start to increase there.

John Fieldly: And online and with gyms and health clubs and now we're really next phase is really closing the gap in convenience and getting better placement and youre seeing the share numbers start to increase there.

John Fieldly: Yeah.

John Fieldly: Okay, great. And then I just wanted to circle back to spring resets as well. Maybe you can just speak a little bit more about where you're seeing the most significant gains. Maybe touch on that in terms of skews, facings, quality of shelf locations, that sort of thing.

Speaker Change: Okay, Great and then I just wanted to circle back to the Springer reset as well.

John Fieldly: Maybe you could just speak a little bit more about where youre seeing the most significant gains maybe touch on that in terms of the skus. They things quality itself location that sort of thing.

John Fieldly: Yeah, I think when you look at the resets, we're really excited. It's going to be convenience, the biggest, and the biggest opportunity. So we're expecting some pretty good growth within the convenience channel, as well as in our existing accounts. As an example, at Publix, we just moved over from the HPC to the energy category and the energy set. And we've gained further placement in front checkout coolers, and we're working with several other retailers. More to come on that, but really looking to gain further placements and all accounts as a key accounts team has been extremely positive this year.

Speaker Change: Yes, I think when you look at the resets were really excited it's gonna be convenience is a big the biggest opportunity. So we're expecting some pretty good.

John Fieldly: Growth within the convenience channel as well as our existing accounts as an example on Publix, we just moved over from the HBC to the energy category and the energy set when we gained further replacement in front checkout coolers and we're working with several other retailers more to come on that we expect full resets to be done by the end of June but really look.

John Fieldly: To gain further placements and all accounts.

John Fieldly: Key accounts team has been extremely positive this year.

Jeffrey Wallin Van Sinderen: Okay, great. And then, just as a follow-up to that, as far as coolers go, what are the plans for coolers this year? And also, is there an opportunity to get into a lot more coolers that are maybe not Celsius coolers at this point? Yeah.

Speaker Change: Okay, Great and then just as a follow up to that as far as the cooler scale. What are the plans for coolers. This year and also is there an opportunity to get into a lot more of coolers that are maybe not healthiest callers at this point.

John Fieldly: Yeah, I think that's a huge opportunity, and that's really partnering with Pep Energy and working really closely with our Pepsi partner, gaining more distribution, availability, and cold placements. Our Key Accounts team is working on branded Celsius coolers. That's a big initiative. We're not going to put a number out, but there's a substantial number we're looking to place. And in regards to the first quarter, I think the team placed almost 3,000 coolers, but there are lots of opportunities with coolers. We expect to really continue the momentum as we go forward.

Jeffrey Wallin Van Sinderen: Yes, I think that's a huge opportunity and that's a really partnering with Pep energy and working really closely with our our Pepsi partner are gaining more distribution and availability and KOL placements are key accounts team is working on branded Celsius coolers, that's a big initiative I'm not going to put a number out but are there substantial number we're looking at.

John Fieldly: And in regards to the first quarter I think the teams placed over 3000 coolers, but lots of opportunities with cooler as we expect it really continued momentum as we go forward.

Jeffrey Wallin Van Sinderen: Okay, thanks for taking my questions and good luck to make it a success.

Speaker Change: Okay. Thanks for taking my questions and good genetic test. Thank you Jeff.

Jonathan Daniel Keypour: The next question comes from Jonathan Keypour from Bank of America. Your line is now open.

Jeffrey Wallin Van Sinderen: The next question comes from Jonathan <unk> from Bank of America. Your line is now open.

Jonathan Daniel Keypour: Hey, everybody. Good morning. Sorry. And thanks for the question.

Jonathan Daniel Keypour: Hey, everybody.

Jonathan Daniel Keypour: I've got a couple on margins and then a couple on sales. I guess on margins, just looking at the chart on aluminum prices, which are up pretty meaningfully year over year. Can you guys give us any kind of magnitude of COGS exposure to aluminum and, I guess, a sense of timing about maybe where those higher costs will flow through?

Jonathan Daniel Keypour: Good morning, sorry, and thanks for the question I've got a couple on margins and then a couple on sales I guess on margins.

Jonathan Daniel Keypour: Looking at the chart on aluminum looks like it's up pretty meaningfully year over year.

Jonathan Daniel Keypour: Can you guys give us any kind of.

Jonathan Daniel Keypour: Magnitude of Cogs exposure to two aluminum and I guess, a sense of timing about maybe where those those are higher costs will flow through.

Jarrod Langhans: Yeah, turn it over to Jarrod. Yeah, so a couple things. Let me.

Jarrod Langhans: John and I will turn it over to Gerry.

Jarrod Langhans: Let me jump on an inventory question that was asked, just to clarify, when I was talking about April, I was talking about days on hand being consistent from March into April. So that wasn't a knock on what we're seeing in April, as we continue to see our resets happen. We're doing very well. And you can see from the consumer data, we continue to get more skews, we continue to get more space, etc.

Jarrod Langhans: Yes.

Jarrod Langhans: Couple of things, let me jump on an inventory question that was asked just to clarify when I was talking about April I was talking about days on hand is consistent from March into April so that wasn't a knock on what we're seeing in April as we continue to see our resets happen, where we're doing very well and you can see the consumer data.

Jarrod Langhans: We continue to get more Skus, we continue to get more space et cetera, So just a clarity there.

Jarrod Langhans: Just for clarification there. That was more of a days on hand comment, more than anything. In terms of the aluminum, you're seeing some fuel costs go up. We have locked in a lot of our aluminum pricing, so we're in pretty good shape there. So we tend to lock that in around Q4 of every year.

Jarrod Langhans: That was more of a days on hand comment more than anything in terms of the aluminum you're seeing some fuel fuel costs go up we have locked in a lot of our aluminum pricing.

Jarrod Langhans: We're in pretty good shape. There. So we tend to lock that in around Q4 of every year.

Unknown Attendee: Okay, cool. On margins again, just in terms of the amendment to the PEPC agreement, I guess what are the broader implications for the margin from here? Is there a benefit? Is it likely to dilute or anything? Just a sense of what it may or may not do to the margin.

Unknown Attendee: Okay cool on margins again just.

Unknown Attendee: In terms of the amendment to the FCC agreement I guess, what are the broader implications too to the margin from here.

Unknown Attendee: Is there a.

Unknown Attendee: Our benefit is it still a slightly diluted anything like I, just just a sense of what it may or may not do to margins.

Unknown Executive: Yes, so the incentive program is. For Pepsi, it's incentive-based, right? So obviously, we're gonna get something for it. So the idea is to really drive what our priorities are, what their priorities are across energy. We wanna be the number one energy brand in the world.

Unknown Attendee: So the incentive program is.

Unknown Executive: For Pepsi, it's incentive based right. So obviously, we're going to get something for it. So the idea is to really drive.

Unknown Executive: Our priorities are what their priorities are across energy, we want to be the number one energy brand in the world. It's also really to drive alignment.

Unknown Executive: It's also really to drive alignment. And so from that perspective, it's an incentive program. So the idea is to really push us to the next level. There is, obviously, an incentive program. So there is obviously a cost to that program, so it's something that I would look to see ramping up across the call the first six, seven, eight months of the year and to really be cruising by the time we get to the back part of the year.

Unknown Executive: And so from that perspective, there is an incentive program. So the idea is to really push us to the next level. There's obviously, it's an incentive programs. So there is obviously a cost to that program. So it's something that I would look to see ramping up across call. It. The first 678 months of the year and to really be cruising.

Unknown Executive: At the time, we get to the back part of the year.

Speaker Change: Cool thank you.

Unknown Executive: And if it's all right just a couple more on revenue.

Jonathan Daniel Keypour: And if it's all right, just a couple more on revenue. I guess, specifically in Costco, that came in a bit light, same as on food service. Just wondering about the sequential decline in Costco, and the flats and food service, any drivers there that you can point to or what to expect going forward.

Unknown Executive: I guess specifically in Costco.

Jonathan Daniel Keypour: Came in a bit lights, Amazon foodservice, just wondering about the sequential decline in Costco and flagged in foodservice.

Speaker Change: Any drivers there that you can point to or what to expect going forward. Please yes. So costco really the club channel, we probably should have called that out last quarter, but we did see a really good Thanksgiving weekend Black Friday. So we had a team really activated phenomenally. There. So we did get a bit of a bump there in Q4 versus.

Jarrod Langhans: Yes, so Costco really the club channel we we probably should have called that out last quarter but we did see a really good Thanksgiving week and Black Friday so we had a you know the team really activated phenomenally there so we did get a bit of a bump there in Q4 versus Q1. Q1 does also tend to be a little slower in the club channel. What was the other part the food service you know food service remains strong you know that can be a little lumpy at times but you know being up at that 12 12-ish range is pretty good for us and we do we are seeing gains in areas like convenience so we're seeing gains in some of the other areas that are from a scale perspective bigger so as we see gains there you may not see the same percentage growth from a percent but we are seeing dollar growth.

Jarrod Langhans: Q1, Q1 does also tend to be a little slower in the club channel.

Jarrod Langhans: What was the other part the foodservice foodservice remains strong.

Jarrod Langhans: That can be a little lumpy at times, but being up at that 12 12 ish range is pretty good for us and we do we are seeing gains in areas like convenience. So we're seeing gains in some of the other areas that are from a scale perspective bigger.

Jarrod Langhans: So as we see gains there you may not see the same percentage growth from a percent, but we are seeing dollar growth.

Jonathan Daniel Keypour: Cool. And then just the last one on the shelf resets coming up. So it sounds like one third done already, two thirds coming. So basically a doubling of what's already been put in the trade, more than a doubling of what's already been put in the trade already. You know, in Nielsen, you can see that the TDPs and the average number of items look great. But, you know, if it's going to keep moving up from there, I guess, is that going to imply new flavors or innovations coming to market by the end of the year? Or is it going to be like double, triple facings, that kind of thing?

Jarrod Langhans: And then just the last one on the shelf resets coming out, but so it sounds like one third dot already two thirds coming so basically a doubling of what's already been put in the more.

Jonathan Daniel Keypour: More than a doubling of what you can put in there.

Jonathan Daniel Keypour: In the trade already.

Jonathan Daniel Keypour: Yes.

Jonathan Daniel Keypour: And in the Nielsen data you can see that the <unk> and the average number of items it looks great.

Jonathan Daniel Keypour: But if it's going to keep moving up from there I guess is that going to be does that kind of imply.

Jonathan Daniel Keypour: New flavors of innovations coming to market by the end of the year or is it going to be like double triple facing that kind of thing.

Jonathan Daniel Keypour: Yeah, I think what the goal is to gain double triple facings. So a lot of the resets, you know, items, average items per per store, might not increase show up in the scanner data, but we're gaining those secondary third placements and better placements within retailers. So, you know, as an example, like within, I mentioned Publix moving from HPC into the energy aisle, also gaining additional availability and placements in cold checkouts.

Speaker Change: Yes, I think well.

Jonathan Daniel Keypour: <unk> gained double triple facing so a lot of the resets.

Jonathan Daniel Keypour: No items average items per store.

Jonathan Daniel Keypour: Not increase show up in the scanner data, but we're gaining those secondary third placements and better placements within retailers. So.

Jonathan Daniel Keypour: As an example, like within I've mentioned Publix moving from HBC into the energy I'll.

Jonathan Daniel Keypour: Also gaining additional availability AD placements and called Checkout. That's an example of a transitional move and also we're looking at other retailers as well so.

Jonathan Daniel Keypour: That's an example of a transitional move. And also, we're looking at other retailers as well. So, you know, we do have innovation coming this year, which we're launching. We launched Celsius Essentials, we got a Galaxy Vibe, a variety of great flavors, but we're really, I think the bulk of the resets, you're going to be seeing them by double triple facing within stores and gaining a secondary placement. Great, thanks very much.

Jonathan Daniel Keypour: We do have innovation coming in this year, which we're launching we launched Celsius essentials, we got.

Jonathan Daniel Keypour: Our galaxy vibe, a variety of other great flavors, but were really I think the bulk of the resets youre going to be seeing them by double triple facing within stores and gaining a secondary placements.

Jonathan Daniel Keypour: Great. Thanks very much. Thank you.

Speaker Change: Great. Thanks, very much thank you.

Michael Lavery: Our next question comes from Michael Lavery on behalf of Piper Sandler. Your line is now open.

Jonathan Daniel Keypour: Okay.

Jonathan Daniel Keypour: Our next question comes from Michael Lavery from Piper Sandler Your line is now open.

Michael Lavery: Thank you and good morning.

Michael Lavery: Good morning. I just wanted to come back to the inventory for a minute. And I think you've been clear not to expect a snapback or an inventory restocking. But should we expect any more destocking? I know you said the inventory levels feel about right, but how low could they go? Is that something we should watch out for?

Michael Lavery: Good morning, just wanted to I just wanted to come back to the inventory for a minute and I think you've been clear not to expect a snapback or an inventory restocking but.

Michael Lavery: Should we expect any more destocking I know you said the inventory levels feel about right, but how low could it go is that something we should watch out for.

John Fieldly: Yeah, I mean, I can't control it. I can't control that. Or, you know, we can't control that. I think, you know, it's Sales are flowing. Sales are strong at the register. So, you know, it seems like the balancing has been finalized, but you know, who knows what next week or the week after will happen, but I think right now, it seems somewhat stable as we end the end of March.

Michael Lavery: Yes.

John Fieldly: I can't control I can't control that or we can't control that I think.

John Fieldly: Sales are flowing sales are strong at the register so.

John Fieldly: It seems to be like the balancing.

John Fieldly: <unk> has.

John Fieldly: Has been finalized, but who knows what next week or the week after happens, but I think right now it seems somewhat stable as we ended the any mark.

Michael Lavery: Okay, thanks. And just back on the incentive plan, you've given some some color on that. I know you don't want to be too specific, but can you maybe touch on what the rationale was? What prompted you? You know, what problem was it fixing? Because obviously, there was great momentum in place. You know, what does this change qualitatively that makes it seem like it's kind of worth changing the term?

Speaker Change: Okay. Thanks, and just back on the incentive plan you have given some some color on that I know you don't want to be too specific but can you maybe touch on.

Michael Lavery: What.

Michael Lavery: The rationale was what prompted you.

Michael Lavery: What problem was at fixing because obviously there was there was great momentum in place what does this change qualitatively that makes it seamless.

Michael Lavery: Yes.

John Fieldly: Yeah, I think when you look at the partnership we're heading in, we're really at a great point where within the, where Celsius is within the energy category, you know, we just broke that 10 share. You're looking at ways to further partner and incentivize our distributor and our partners. And we do that with our employees; we do that with, you know, retailers and our distributors. So this is like a standard practice we have done in the past.

Michael Lavery: Worth changing the terms.

John Fieldly: Yes, I think when you look at the partnership we're heading in we're really.

John Fieldly: A great point, where within the where Celsius is within the energy category. We're just broke that 10 share.

John Fieldly: We're looking at ways to further partner and incentivize our distributor.

John Fieldly: And our partners and we do that with our employees would you ever at retailers and our distributors. So this is like a standard practice, we've done in the past.

John Fieldly: So I don't think its out of anything at our standard course of business, we've done variety of incentive programs.

John Fieldly: So I don't think it's anything out of the ordinary out of our standard course of business. We've done variety of incentive programs. And this further aligns us with additional prioritizations within PEP Energy and also solidifies this, you know, as more incentives. We both win together, and it really achieves our long-term goals. We feel really confident in where we are. And what better way to incentivize both parties to continue to drive Celsius forward?

John Fieldly: And it's this further aligns us with additional prioritization.

John Fieldly: Within Pep energy also solidifies this.

John Fieldly: As more incentives so we both win together and it really achieved our long term goals, we feel really confident in where we are and what better way to incentivize both parties to continue to drive Celsius for Gerry do you want to add anything.

Jarrod Langhans: I don't know, Jarrod, if you want to add anything else? I agree with you. It's really about making sure we're all fully aligned together to take that next step and really go after the number two and number one players in the market.

Speaker Change: I agree with you, it's really about making sure. We're all fully aligned together to take that next step in to really go after the number two or number one players in the market.

Michael Lavery: We need to do it together. Okay, great. Thanks so much. Thank you. The next question comes from Peter.

Jarrod Langhans: We need to do it together.

Michael Lavery: Yep.

Peter: Okay, great. Thanks, so much thank you.

Peter K. Grom: The next question comes from Peter Grom from UBS. Your line is now open.

Michael Lavery: Your next question comes from Peter Grom from UBS. Your line is now open.

Peter K. Grom: Peter here.

Peter K. Grom: Maybe go to the next question.

Peter K. Grom: Let me go to the next question on line.

Jon Robert Andersen: Thank you. Our next question comes from John Andersen of William Blair. Your line is now open.

Jon Robert Andersen: Thank you. Our next question comes from Jon Andersen from William Blair. Your line is now open.

Jon Robert Andersen: Hey, thank you for the question. I just wanted to ask about the category growth that you're driving. I mean, you're driving half of the growth in the category, and I'm curious to know to what extent you're seeing that come through, you know, as kind of new consumers into the category, to what extent you think you're driving buy rates through new occasions, and then how the brand is performing overall from household penetration and the kind of repeat rates you're seeing. So just digging into some of the metrics underpinning the growth that you're seeing Thanks. Yeah.

Speaker Change: Alright, Thank you Sebastian.

Jon Robert Andersen: I just wanted to ask about the category growth that you're driving you're driving half of the growth in the category energy category.

Jon Robert Andersen: And I'm curious to know to what extent you're seeing that.

Jon Robert Andersen: Come through.

Jon Robert Andersen: Kind of.

Jon Robert Andersen: New consumers into the category to what extent you think you are you driving by rate through new occasions.

Jon Robert Andersen: And then how the brand.

Jon Robert Andersen: It's performing overall from a household penetration.

Jon Robert Andersen: That kind of repeat rates youre seeing so just digging into some of the metrics underpinning the growth that youre seeing both for the category that the brand is driving but also your brand. Thanks.

John Fieldly: Yeah, no, great question. And, you know, it's exciting because, you know, we're, when you look at like brand shifting, we're not seeing a substantial amount of our growth coming from brand shifting. It's really incremental, and it's increasing user intensification; our core consumers are consuming more. And then it's about 35%. The latest data we had shows an increased intensification of more consumption of our core or base, and then new to category for us was 42%. And this was as of the end of March.

Speaker Change: Yes, no great question.

John Fieldly: It's exciting because we're.

John Fieldly: When you look at like brand shifting we're not seeing a substantial amount of our growth coming from brand shifting its it really is incremental and it's increasing the user intensification our core consumers are consuming more.

John Fieldly: Then it's about 35% the latest data we had.

John Fieldly: Is inked Cree intensification of.

John Fieldly: More consumption of our core our base and then new to category for US was 42% and this was as of the end of March So really seen in 23% brand shafts. So we're expanding the category, we're changing the way consumers think about energy as well and we're seeing that talk about Jersey mikes.

John Fieldly: So we're really seeing a 23% brand shift. So we're expanding the category. We're changing the way consumers think about energy, as well. And we've seen that, you know, talk about Jersey Mike's and Dunkin Donuts, and really, the partnership with Pepsi allows us to take advantage of this opportunity we have with some of the most refreshing we feel we have the most refreshing energy drinks in the world. And it's showing that we're bringing new consumers, we're growing a category, we got a lot of great attributes within the brand, we look at better for you trends, Celsius has over seven essential vitamins. You look at how we all want our foods and beverages to have more function, Celsius delivers on that with its thermogenic properties.

John Fieldly: And Dunkin' Donuts and really the partnership with Pepsi allows us to take advantage of this opportunity we have in some of the most refresh we feel we have the most refreshing energy drinks in the world and it's showing we're bringing new consumers. We're growing the category. We've got a lot of great attributes within the brand. When you look at better for you trends Celsius is over a seventh central via.

John Fieldly: <unk> you look at how we all want our foods and beverages to have more function Celsius delivers on that with their thermogenic properties. And then you also look at fitness health and wellness trend and we're all about living fit and living life to the fullest. So I think we're really well positioned and we haven't really seen that change within the user and densification as well as the.

John Fieldly: And then you also look at fitness, this health and wellness trend. And we're all about living fit and living life to the fullest. So I think we're really well positioned. And, you know, we haven't really seen that change within user intensification, as well as the increase to new to category over the last really over the last six to, you know, almost a year now.

John Fieldly: The increase to new to category over the last really over the last six or almost a year now.

Jon Robert Andersen: Right, that's helpful. And on these 33 or so drill down markets, can you talk about what you're doing there that are 31 drill deep markets, what you're doing there that's different at present, and kind of what you're expecting in terms of, you know, I guess, maybe share results as a measuring stick. Thanks. Yeah, I think, well, you know, you talk about how

Speaker Change: Great that's helpful.

Jon Robert Andersen: These.

Jon Robert Andersen: 33, or so drill down market can you talk about what youre doing there that are 31 drill deep markets.

Jon Robert Andersen: Youre doing there.

Jon Robert Andersen: At present and kind of what youre expecting in terms of I guess, maybe share results as a measuring stick.

Jon Robert Andersen: Thanks.

John Fieldly: Yeah, I think we'll talk about household penetration. And that shows, you know, as we've continued to drive forward with our target marketing programs and as well as our distribution games, our household penetration has reached an all-time high, most recently at 29.7%. So really proud of the team and all the hard work they've been doing.

Speaker Change: Yes, I think you're talking about household penetration and that shows you know as we've continued to.

John Fieldly: Drive forward with our targeted marketing programs and as well as our distribution games.

John Fieldly: Our household penetration has reached an all time high most recently at a $29 seven.

Jon Robert Andersen: You know, we take an approach of a drill deep strategy. You know, we're not going to get into specific strategies because a lot of competitors are listening on the call. But we have a proprietary blend of a special formula here that starts with the employee and a great product that we promote in the market. And it's all about touching consumers where they live, work, and play, creating awareness, creating trial, and then creating loyalty.

John Fieldly: Percent household penetration, so really proud of the team and all the hard work they've been doing.

Jon Robert Andersen: We take an approach of a drill deep strategy.

Jon Robert Andersen: We're not going to get into specific strategies, because a lot of competitors are listening on the call, but we have a proprietary blend of a special formula here with which starts with the employee and a great product that we promote market and it's all about touching consumers, where they live work and play.

Jon Robert Andersen: Creating awareness, creating trial and then creating loyalty.

Jon Robert Andersen: Thanks.

Peter K. Grom: Our next question comes from Peter Grom from UBS. Your line is now open.

Jon Robert Andersen: Our next question comes from Peter Grom from UBS. Your line is now open.

Peter K. Grom: Hey guys, can you hear me now?

Peter K. Grom: Hey, guys can you hear me now.

Unknown Attendee: Yeah, we can hear you. Excellent. Thank you.

Peter K. Grom: Yes, we can hear you excellent.

Peter K. Grom: All right, cool. So, I guess just a couple follow-ups here, just in terms of the inventory dynamic. Jarrod, can you just remind us what we're kind of comping against from a year ago? Like, I get you might not have visibility on what Pepsi might do or how they'll manage it sequentially, but when we just think about how this dynamic evolved last year, you know, I think it was kind of held in 2Q, and grew again in 3Q.

Peter K. Grom: Alright cool.

Peter K. Grom: So I guess just a couple of follow ups here just in terms of the inventory dynamic Jared can you just remind us what we're kind of comping against from a year ago perspective, like I guess, you might not have visibility on what you might do or have management sequentially, but when we just think about how this dynamic evolve last year I think.

Peter K. Grom: It kind of held in QQ grew again in <unk>. So just should we expect kind of the gap versus standard data to kind of continue as we move through the year or do you expect that to kind of be more aligned at this point.

Peter K. Grom: So, just, you know, should we expect this kind of gap versus standard data to kind of continue as we move through the year, or would you expect it to kind of be more aligned at this point?

Jarrod Langhans: Yeah, I mean, remember, we were just getting started last year, and so we're still learning each other.

Peter K. Grom: Okay.

Jarrod Langhans: Yes, I mean remember we were just getting started last year and so we're still learning each other in and obviously as everybody in CPG. It's all about optimizing the supply chain to make sure we're spending our dollars wisely so that.

Jarrod Langhans: We did see some buildup in Q1 like we talked about roughly $25 million across Q2, and Q3, we saw some some minor buildup and it kind of stuck steady for kind of Q2 Q3 Q4.

Jarrod Langhans: To Mark's earlier point, there was some innovation in there so that could have maybe there would've been some inventory taken down in Q4, if it werent for that and as they were optimizing and then across Q1 clearly there's been some optimization.

Jarrod Langhans: And, and obviously, as you know, everybody in CPG, it's all about optimizing the supply chain to make sure we're spending our dollars wisely. So, you know, that we did see some buildup in Q1, like we talked about roughly 25 million across Q2 and Q3. We saw some, some minor buildup, and it kind of stuck steady for kind of Q2, Q3, and 4. To Mark's earlier point, there was some innovation in there. So maybe there would have been some inventory taken down in Q4 if it weren't for that, and as they were optimizing, you know, and then across Q1, there was some optimization occurring. Again, no issue with having the product on the shelf.

Speaker Change: Carrying again, no issue with having product on the shelf and we do have kpis that we work together to maintain in terms of service standards and so we have no complaints there and we're fully believe theyre fully committed we're fully committed so we're very happy with how things are going there, but if there is opportunity to optimize like John said, we will do it.

Peter K. Grom: And we do have KPIs that we work together to maintain in terms of service standards. And, you know, so we have no complaints there. And we fully believe they're fully committed; we're fully committed. So we're very happy with how things are going there. But if there's an opportunity to optimize, like John said, we'll do it, and they're welcome to do it too. So I think, you know, what I mentioned with April is that the days on hand that we saw kind of in March kind of were maintained in April. But the consumers there, if they can maintain inventory levels and keep the product on the shelf, then you know, that's, we're comfortable with that.

Peter K. Grom: You're welcome to do it too so I think.

Peter K. Grom: What I mentioned with April as the days on hand that we saw kind of in March kind of were maintained in April but the consumers. There if they if they can maintain inventory levels and keep the product on the shelf then that's where we're comfortable with that.

Jarrod Langhans: Okay, great. And then just following up on kind of the shelf resets. Equal Benefits until July, but kind of where are we now in the first week of May? What's the real progression look like? And is there really any way to put into context what you actually expect in terms of, you know, tracking growth or market share performance as these resets happen?

Peter K. Grom: Okay, Great and then just following up on kind of the Salisbury.

Jarrod Langhans: And kind of the market share metrics you mentioned I think you said a third of the shelf resets were done by March I mean, when did those actually take place in <unk> I'm just trying to understand whether there is a benefit included in kind of these four week share figures that you mentioned on the <unk> call I think it was the same 11, 5% that you mentioned in the latest four weeks today shares.

Jarrod Langhans: Kind of on a monthly basis held steady.

Jarrod Langhans: As we look ahead is there anything you can share in terms of the phasing of the benefit I know you touched on it but we won't see the full benefits until July but kind of where are we now in the first week of May what's really the progression look like and is it really any way to put into context, what you actually expect in terms of track growth or market share performance as these resets happen.

Jarrod Langhans: Yes, I think jumping to 11.5, I think the last pull, maybe been the last couple weeks, is more like 11.8. So we do continue to see the number climb as we go through April and into May. So we are seeing good progress as those resets continue to happen will benefit. Once they're fully baked in, we'll really see where we are once we get to early July. Once everything's baked in.

Peter K. Grom: Yes, I think it's German.

Jarrod Langhans: Yes.

Jarrod Langhans: Yes, I think Germans 11, five I think the last call maybe been the last couple of weeks is more like 11 eight. So we do continue to see the number climb as we go through April and into May. So we are seeing good progress as those resets continue to happen will benefit once they are fully baked in we will really see.

Peter K. Grom: Where we are once we get to early July once everything is baked in so we continue to be on track there's been some rumblings out there that it's been a little slower.

Jarrod Langhans: So we continue to be on track, you know, there's been some rumblings out there that it's been a little slower in terms of resets this year versus prior years, but we're going to have the best space gains we've had in the history of the company. We're super excited about it. Our key account team and our sales guys are working diligently with all of our customers. And you know, we're going to have a phenomenal second half of the year once we get all these resets in place.

Jarrod Langhans: Terms of research this year versus prior years, but we're going to have the best space gains we've had in the history of the company we're super excited about it.

Jarrod Langhans: Or RPE account team and our sales guys are working diligently with all of our customers and.

Jarrod Langhans: We're going to have a phenomenal back half of the year once we get all of these resets and bullish.

Peter K. Grom: Thanks so much. I'll pass it on.

Speaker Change: Thanks, So much I'll pass it on.

Speaker Change: Thank you.

John Fieldly: We have reached the end of the question and answer session. I'd now like to hand the call back over to Jon Fieldly for a final comment. Thank you, operator.

Speaker Change: We have reached the end of the question and answer session I would now.

John Fieldly: I'd like to hand, the call over to John for final remarks.

John Fieldly: Thank you, Operator. And thanks to everyone for joining us this morning. We've heard your feedback from our investors and analysts about the earlier start time, so starting next quarter, we will begin to start this call a little bit earlier.

John Fieldly: Thank you operator, and thanks for everyone for joining us. This morning, we've heard your feedback from our investors and analysts about the earlier start time. So starting next quarter. We will begin to start this call a little bit earlier.

John Fieldly: Thank you to all of our partners, especially to our employees who have worked so hard. Your passion and drive is what makes Celsius special. Celsius will be participating in several upcoming conferences, and I look forward to seeing everyone, each and every one of you there. A full schedule of the upcoming conferences will be posted shortly. Until then, stay healthy and live fit, make it a great day, and grab a refreshing Celsius.

John Fieldly: Thank you for all of our partners, especially to our employees who have worked so hard your passion and drive that is what makes Celsius special.

John Fieldly: Celsius will be participating in several upcoming conferences and I look forward to seeing everyone. Each and every one of you there a full schedule of the upcoming conferences will be posted shortly until then stay healthy and lip fit make it a great day and grab a refreshing Celsius.

Ellie: Thank you so much for attending today's conference call. You may now disconnect. Have a wonderful day.

Speaker Change: Thank you so much for attending today's conference call. You May now disconnect have a wonderful day.