Q2 2024 Celsius Holdings Inc Earnings Call
and many more.
Eric Serotta: My name is Eric, and I will be a conference operator today.
Operator: Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsius Holdings Incorporated second quarter 2024 earnings conference call.
Eric: Thank you for standing by. My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Celsius Holdings Incorporated second quarter 2024 earnings conference call.
Unknown Executive: At this time, I would like to welcome everyone to the Celsius Holdings Incorporated, 2nd quarter, 2024 earnings conference call. All lines will place on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask your questions during this time, feel free to press star followed by the number one on your telephone keypad. If you would like to answer any questions, press star one again. Thank you.
Operator: 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to adjourn a question, press star 1 again. Thank you. I'd now like to turn the call over to Paul Wiseman, Investor Relations.
Eric: All lines have been placed on mute to prevent any background noise.
Eric: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.
Paul Wiseman: I would not like to turn the call over to Paul Wiseman, Investor Relations. Please go ahead.
Eric: I would now like to turn the call over to Paul Wiseman, Investor Relations.
Paul Wiseman: Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings 2nd quarter, 2024 earnings webcast. Joining me today are Jon Fieldly, Chairman and Chief Executive Officer, Jarrod Langhans, Chief Financial Officer, and Toby David, Chief of Staff.
Paul Wiseman: Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings second quarter 2024 earnings webcast. Joining me today are Jon Fieldly, Chairman and Chief Executive Officer, Jarrod Langhans, Chief Financial Officer, and Toby David, Chief of Staff.
Paul Wiseman: Please go ahead.
Paul Wiseman: Thank you and good morning everyone. We appreciate you joining us today for Celsius Holdings second quarter 2024 earnings webcast.
Speaker Change: Joining me today are Jon Fieldly, Chairman and Chief Executive Officer, Jarrod Langhans, Chief Financial Officer, and Toby David, Chief of Staff. The speakers will take questions following the prepared remarks.
Paul Wiseman: The speakers will take questions following the prepared remarks. Please be aware that this discussion may contain forward-looking statements which 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 obligations and disclaims any duty to update any of these forward-looking statements.
Paul Wiseman: The speakers will take questions following the prepared remarks. The company released a 2nd quarter earnings press release earlier this morning, and all materials are available on the company's website, ir.cellsysholdingsink.com, as well as on the SEC's website, SEC.gov. As a reminder, an audio replay of this webcast will be available later today and can be accessed with the same link used to join today's webcast.
Speaker Change: The company released its second quarter earnings press release earlier this morning, and all materials are available on the company's website, ir.celsiusholdingsinc.com, as well as on the SEC's website, sec.gov.
Speaker Change: As a reminder, an audio replay of this webcast will be available later today and can be accessed with the same link used to join today's webcast.
Paul Wiseman: Please be aware that this discussion may contain forward-looking statements, which 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 obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to review and full our Safe Harbor statements and risk factors contained in today's press release and in our quarterly filings with the SEC for additional information, which contain a description of the risks that may result in actual results differing materially from those contemplated by our forward-looking statements.
Speaker Change: Please be aware that this discussion may contain forward-looking statements which are based on forecasts, expectations, and other information available to management at this time.
Speaker Change: 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.
Speaker Change: We encourage you to review in full our Safe Harbor statements and risk factors contained in today's press release and in our quarterly filings with the SEC for additional information which contain a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements.
Paul Wiseman: Additionally, management will share operating results on both a gap and non-gap basis. Descriptions of these non-GAAP financial measures that we use, such as non-GAAP adjusted EBITDA, and recommendations of these measures to our results as reported in accordance with GAAP, are detailed in our earnings release for the 2nd quarter of 2024.
Speaker Change: Additionally, management will share operating results on both a GAAP and non-GAAP basis. Descriptions of these 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 second quarter of 2024.
John Fieldly: With that, I'd like to hand it over to Chairman and Chief Executive Officer John Fieldley for his prepared remarks.
Speaker Change: With that, I'd like to hand it over to Chairman and Chief Executive Officer, Jon Fieldly, for his prepared remarks.
John Fieldly: Thank you, Paul.
John Fieldly: Good morning, everyone. I hope you've all cracked open a cold, Celsius-to-kick start or early morning start time this quarter. The total revenue for the 2nd quarter of 2024 increased 23 percent year over year to $402 million, and 2024 first half revenue increased 29 percent to $757 million. International revenue increased 30 percent in the 2nd quarter to $19.6 million. Celsius achieved fantastic shelf space gains during the seasons, shelf resets, increasing or average skewed sold. First store by more than 35 percent, according to Sikana's last four-week read ending July 14, 2024, compared to the last four weeks ending December 3, 2023.
John Fieldly: Thank you, Paul, and good morning, everyone. I hope you've all cracked open a cold Celsius to kickstart our early morning start time this quarter.
John Fieldly: Celsius reported record second quarter 2024 financial results this morning across revenue, profit, gross margin that broadly reflect our positive momentum in an otherwise challenging macro environment.
John Fieldly: Despite systematic and unanticipated category growth pressure in the second quarter,
John Fieldly: Celsius was resilient and delivered delicious new innovation, expanded in-store shelf presence, and continue to bring new consumers into the category, contributing 47 percent of all category growth in the quarter, making Celsius the clear category growth leader.
John Fieldly: Total revenue for the second quarter of 2024 increased 23% year-over-year to $402 million.
John Fieldly: and 2020 for our first half revenue increased 29% to $757.7 million. International revenue increased 30% in the second quarter to $19.6 million.
John Fieldly: Celsius achieved fantastic shelf space gains during the season's shelf resets.
Speaker Change: Increasing our average queues sold per store by more than 35% according to Sakana's last four-week read ending July 14th, 2024, compared to the last four weeks ending December 3rd, 2023.
John Fieldly: Within the community's channel, our average skewed selling per store increased 43 percent across the same period. While we achieved strong space gains, we also began to feel the effects of the same macroeconomic factors that are pressuring same-store sales and affecting consumer purchasing habits. The full sugar energy category subset has stagnated for several years, and the growth fight has moved to the sugar-free sector, which is now approximately half of the category. Celsius is the second largest brand within the sugar-free energy subset, and it is from here that we are driving the entire category's growth this year.
Speaker Change: Within the convenience channel, our average SKUs selling per store increased 43% across the same period.
Unknown Executive: While we achieved strong space gains, we also began to feel the effects of the same macroeconomic factors that are pressuring same-store sales and affecting consumer purchasing habits. Just last week, one of the largest convenience chains noted their same-store sales were down more than 4%.
Speaker Change: While we achieved strong space gains, we also began to feel the effects of the same macroeconomic factors that are pressuring same-store sales and affecting consumer purchasing habits.
Speaker Change: Just last week, one of the largest convenience chains noted their same-store sales were down more than 4%. These and other factors contributed to the second-quarter energy drink category slowdown.
Unknown Executive: These and other factors contributed to the second quarter energy drink category slowdown. We believe that we have set our business up for long-term success, but we see short-term impacts from competition and macroeconomic factors along the way. The energy drink category has always been highly competitive, and right now is no different. Celsius is disrupting the category status quo, and we remain resilient in our pursuit to become the world's number one energy drink brand by growing the category through leadership, high-quality innovation, and premium marketing.
Speaker Change: Competition within the energy category has never been greater, which is why we continue to add resources across sales, merchandising, key accounts, and field marketing.
Speaker Change: The full sugar energy category subset has stagnated for several years, and the growth fight has moved to the sugar-free sector, which is now approximately half of the category.
Speaker Change: Celsius is the second largest brand within the sugar-free energy subset, and it is from here that we are driving the entire category's growth this year.
John Fieldly: We believe that we have set our business up for long-term success, but we see short-term impacts from competition and macroeconomic factors along the way. The combination of macroeconomic headwinds, delayed resets and programs, and increased competition applied a lot of pressure to our business in the second quarter. Despite these pressures, Celsius still grew at ten times the category growth rate in the second quarter. We responded to pressures during the quarter and saw our market share stabilize. Now, as we begin to recapture loss share, we are moving aggressively to gain our growth and momentum, and we believe that we have great programs for the back half of the third quarter and into the fourth quarter.
Speaker Change: We believe that we have set our business up for long-term success, but we see short-term impacts from competition and macroeconomic factors along the way.
Speaker Change: The combination of macroeconomic headwinds, delayed resets and programs, and increased competition applied a lot of pressure to our business in the second quarter. Despite these pressures, Celsius still grew at a 10 times the category growth rate in the second quarter.
Speaker Change: We responded to pressures during the quarter and saw our market share stabilize. Now as we begin to recapture lost share, we're moving aggressively to gain our growth and momentum and we believe that we have great programs for the back half of the third quarter and into the fourth quarter.
John Fieldly: We also expect that macroeconomic forces will continue to impact the category. With a solid set of programming, promotional programs, and set of programs and cash in the bank, we are eager and ready to take on the challenges ahead of us. Additionally, we are formulating several fantastic programs for 2025, including new innovation, new channel and product opportunities, international expansions, and new partnerships. Our partnership with Pepsi remains strong. The added incentive program announced last quarter continues to percolate through the system and has expected to be fully ramped in the second half of this year where we have fully incentivized our partner to lean in with us.
Speaker Change: We also expect that macroeconomic forces will continue to impact the category.
Speaker Change: With a solid set of programming, promotional programs, incentive programs, and cash in the bank, we are eager and ready to take on the challenges ahead of us.
Speaker Change: Additionally, we are formulating several fantastic programs for 2025, including new innovation, new channel, and product opportunities, international expansions, and new partnerships.
Speaker Change: Our partnership with Pepsi remains strong. The added incentive program announced last quarter continues to percolate through the system and is expected to be fully ramped in the second half of this year where we have fully incentivized our partner to lean in with us.
John Fieldly: Celsius share in Mulock in the last four week period and in July 14 was 11%, an increase of 1.4% compared to the year ago period and down half of a percentage point quarter over quarter. Beginning this quarter, we are going to reference Serkana's new Mulo Plus Geography, which includes track channels captured in Mulo and adds online retailers and club channel. We believe that when coupled with the convenience storage geography, this measure better represents today's consumer purchasing habits and patterns. In addition, we have seen some shifting among the channels, and this metric will provide a more holistic category view.
Speaker Change: Celsius share in Moolak in the last four week period ending July 14th was 11%, an increase of 1.4% compared to the year ago period, and down half of a percentage point quarter over quarter.
Speaker Change: Beginning this quarter, we're going to reference Cercana's new MULO Plus geography, which includes track channels captured in MULO and adds online retailers and club channel.
Speaker Change: We believe that when coupled with convenience store geography, this measure better represents today's consumer purchasing habits and patterns.
Speaker Change: In addition, we have seen some shifting among the channels, and this metric will provide a more holistic category view. Celsius share in MULHO plus with convenience is rolling four weeks, period ending July 14, 2024, was 12.04%.
John Fieldly: Celsius share in Mulo Plus with convenience is rolling four weeks period, and in July 14, 2024, was 12.04%. The energy drink category has always been highly competitive, and right now is no different. Celsius is disrupting the category status quo, and when we remain resilient and are pursued to become the world's number one energy drink brand by growing the category through leadership, high quality innovation, and premium marketing. Our field marketing team grew by 50% in the past year. They are a driving force behind our drill deep marketing strategy, which focuses resources on the most important markets for our growth.
Speaker Change: The energy drink category has always been highly competitive, and right now is no different.
Speaker Change: Celsius is disrupting the category status quo, and we remain resilient in our pursuit to become the world's number one energy drink brand by growing the category through leadership, high quality innovation, and premium marketing.
Unknown Executive: Our field marketing team grew by 50% in the past year. They are a driving force behind our drill-deep marketing strategy, which focuses resources on the most important markets for our growth. We currently have 16 markets that are above or within two points of a 15 share, and our drill-deep strategy is driving force behind our growth.
Speaker Change: Our field marketing team grew by 50% in the past year. They are a driving force behind our Drill Deep marketing strategy, which focuses resources on the most important markets for our growth. We currently have 16 markets that are above or within two points of a 15 share, and our Drill Deep strategy is driving force behind our growth.
John Fieldly: We currently have 16 markets that are above or within two points of a 15 share, and our drill deep strategy is driving force behind our growth. Looking ahead, we are implementing several programs across the back half of 2024 to invest in our growth, such as shopper marketing programs, promotional programs, and investments across our marketing platforms. Three of our most popular Celsius five flavors launched at Celsius on-the-go powders in the second quarter, adding Peach five, Tropical five, and Arctic five to the very portable and customizable energy powder form. We are also working on some very interesting concepts for the first quarter of 2025 and more to come on that.
Speaker Change: Looking ahead, we are implementing several programs across the back half of 2024 to invest in our growth, such as shopper marketing programs, promotional programs, and investments across our marketing platforms.
Speaker Change: Similar to the top two competitors in the category, we believe that there is room for further pricing, and this is something we believe will benefit us in 2025 and act as an offset in commodity inflation, freight lanes, our distribution infrastructure, and our supply chain infrastructure.
Speaker Change: Celsius launched three new great tasting flavors, very refreshing, perfectly timed for summer, including Celsius Sparkling Watermelon Lemonade.
Speaker Change: Sparkling Kiwi Strawberry, and Sparkling Cherry Cola. I'm sure you'll see these great new Celsius flavors poolside and at backyard cookouts throughout summer and beyond.
Speaker Change: Also, Celsius Sparkling Green Apple Cherry launched in Canada last quarter, making six delicious flavors now available in the country.
Speaker Change: Three of our most popular Celsius Vibe flavors launched as Celsius on-the-go powders in the second quarter, adding Peach Vibe, Tropical Vibe, and Arctic Vibe to the very portable and customizable Energy Powder form. We are also working on some very interesting concepts for the first quarter of 2025, and more to come on that.
John Fieldly: Non-track channels, including club e-commerce and food service, continue to be tailwinds to our overall growth. Club sales in the second quarter increased 30% to 88 million compared to 68 million in the same period of 2023. For the three months ending June 30th, Celsius sales on Amazon increased 41% year over year to 39.9 million, up from 28.2 million in the prior year period. Celsius ended the second quarter with a 19.7 share compared to Monster with a 21.8 share and Red Bull with a 14 share. According to Statelines last 14 week period ending July 6, 2024. Celsius performed exceptionally well on Amazon during July's Prime Day, pushing our share in the energy category on the platform to 22.1 and the last four-week read ending July 20th.
Speaker Change: Non-track channels including club, e-commerce, and food service continue to be tailwinds to our overall growth. Club sales in the second quarter increased 30% to $88 million compared to $68 million in the same period of 2023.
Speaker Change: For the three months ending June 30th, Celsius sales on Amazon increased 41% year-over-year to $39.9 million, up from $28.2 million in the prior year period.
Speaker Change: Celsius ended the second quarter with a 19.7 share, compared to Monster with a 21.8 share and Red Bull with a 14 share, according to Stackline's last 14-week period ending July 6, 2024.
Speaker Change: Celsius performed exceptionally well on Amazon during July's Prime Day, pushing our share in the energy category on the platform to 22.1 in the last four-week read ending July 20th.
John Fieldly: And we recaptured our number one position compared to Monster at 21.5% and Red Bull at 13.8%, according to Stateline. Approximately 12.1% of Celsius total North America sales to PepsiCo in the quarter was to the food service channel, with strong results in workplace restaurants, recreation, lodging, and gaming sales. Celsius increased an international revenue, and the second quarter was driven by improved lossy and brand awareness. Growth in Canada continues to exceed our initial expectations, and the products that are performing well across all platforms, with notable strength in the club and convenience channels. We are running our new marketing entry playbook and building a solid foundation in gyms and fitness communities as well as making new entries into the food service category.
Speaker Change: and we recaptured our number one position compared to Monster at 21.5% and Red Bull at 13.8% according to Stackline.
Speaker Change: Approximately 12.1% of Celsius total North America sales to PepsiCo in the quarter was to the food service channel with strong results in workplace, restaurants, recreation, lodging, and gaming sales.
Speaker Change: Celsius' increase in international revenue in the second quarter was driven by improved velocity and brand awareness. Growth in Canada continues to exceed our initial expectations and the product is performing well across all platforms, with notable strength in the club and convenience channels.
Speaker Change: We are running our new marketing entry playbook and building a solid foundation in gyms and fitness communities, as well as making new entries into the food service category.
John Fieldly: Sales of Celsius began in the UK and Ireland in the second quarter. And we're following our international expansion playbook to seed product, launch with a key retailer, and grow into national launch. Similar to Canada, our progress in these new global markets is exceeding initial expectations. Our plans for Australia, New Zealand, and France remain on track for launches later in the year. And we're expected to continue to grow our global growth strategy this year by pursuing favorable distribution partnerships and opportunistic energy drink markets. Here in the States and abroad, Celsius marketing and sales teams are spreading the Celsius lift-hit messaging and supporting our customers' pursuit on their own health and positive fitness lifestyles.
Speaker Change: Sales of Celsius began in UK and Ireland in the second quarter and we're following our international expansion playbook to seed product, launch with a key retailer, and grow into national launch. Similar to Canada, our progress in these new global market is exceeding initial expectations.
Speaker Change: Our plans for Australia, New Zealand, and France remain on track for launches later in the year and we're expected to continue to grow our global growth strategy this year by pursuing favorable distribution partnerships and opportunistic energy drink markets.
Speaker Change: Here in the States and abroad, the Celsius marketing and sales teams are spreading the Celsius Live Fit messaging and supporting our customers' pursuit on their own health and positive fitness lifestyles.
John Fieldly: Our 100 days of summer programming is meaningful, increasing the number of eye-catching in-store displays featuring exciting Celsius marketing activations like our Ferrari F1 Titan promotion, which is designed to increase customer trial and loyalty. As I mentioned earlier, we continue to invest in our marketing sales to drive continued growth and to be the most valuable beverage partner to our retail customers. In the last 12 months, we've grown our field sales team by more than 250%, and we're still hiring to drive growth and opportunistic markets.
Speaker Change: Our 100 Days of Summer programming is meaningful, increasing the number of eye-catching in-store displays featuring exciting Celsius marketing activations, like our Ferrari F1 Tide-In promotion, which is designed to increase customer trial and loyalty.
Speaker Change: As I mentioned earlier, we continue to invest in our marketing and sales to drive continued growth and to be the most valuable beverage partner to our retail customers. In the last 12 months, we've grown our field sales team by more than 250% and we're still hiring to drive growth and opportunistic markets.
Jarrod Langhans: I'll now turn the call over to Celsius Chief Financial Officer, Jarrod Langhans. Thank you, Jon. Celsius delivered another record-setting quarter, producing strong returns while we grew the business and levered in certain areas. Revenue for the three-month end of June 30th, 2020-24 was approximately $402 million and increased of 23% from $326 million in the prior year period. North American revenue, which includes the United States and Canada, was $382 million and increased of 23% from the prior year period. International revenue grew 30% to $20 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 teams, offset and part by inventory timing movements or days on hand associated with our largest distributor.
Jarrod Langhans: I'll now turn the call over to Celsius' Chief Financial Officer, Jarrod Langhans. Thank you, Jon. Celsius delivered another record-setting quarter, producing strong returns while we grew the business and levered in certain areas.
Jarrod Langhans: Revenue for the three-month end of June 30, 2024 was approximately $402 million, an increase of 23% from $326 million in the prior year period.
Speaker Change: North American revenue, which includes the United States and Canada, was $382 million, an increase of 23% from the prior year period. International revenue grew 30% to $20 million as velocity continued to increase.
Speaker Change: 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, offset in part by inventory timing movements or days on hand associated with our largest distributor.
Jarrod Langhans: During the quarter, we publicly stated that the impact of the inventory movements during the middle of June was approximately $20 million to $30 million. As we close the quarter, we saw us play it up tick in the days on hand, and as a result, the impact was at the lower end of that range. Keep in mind, the energy drink category's second quarter year-over-year unit sales volume was flat. Celsius unit sales volume increased 30.6% in the same period, increasing our unit share by 2.8 points versus a year ago. Strength in the club, e-commerce, and food service channels also continue to serve as solid drivers of our revenue growth in the quarter.
Speaker Change: During the quarter, we publicly stated that the impact of the inventory movements during the middle of June was approximately $20 million to $30 million. As we closed the quarter, we saw a slight uptick in the days on hand, and as a result, the impact was at the lower end of that range.
Speaker Change: Keep in mind, the energy drink category's second quarter year-over-year unit sales volume was flat. Celsius unit sales volume increased 30.6% in the same period, increasing our unit share by 2.8 points versus a year ago.
Speaker Change: Strength in the club, e-commerce, and food service channels also continue to serve as solid drivers of our revenue growth in the quarter, as did strong quarterly year-over-year share gains of 34% or 2.5 points in the convenience and gas channel.
Jarrod Langhans: As did strong quarterly year-over-year share gains of 34% or 2.5 points in the convenience and gas channel. With that said, the category overall softened in Q2 and has impacted the overall growth trajectory of the category.
Speaker Change: With that said, the category overall softened in Q2 and has impacted the overall growth trajectory of the category. We have a solid foundation and will look to continue to drive the category through innovation, bringing new consumers to the channel and increasing consumption opportunities.
Jarrod Langhans: We have a solid foundation that will look to continue to drive the category through innovation, bringing new consumers to the channel and increasing consumption opportunities. Gross profit in the second quarter increased 32% to $209 million, up from $159 million in the prior year period. Gross profit margins in the second quarter or 52% of revenues compared to approximately 49% for the prior year period. The improvement in gross profit margins is attributed to reduced raw material costs and freight costs. Second quarter freight cost is a percentage in net invoice sales decreased 81 basis points year over year, and cost of goods sold decreased 236 basis points.
Speaker Change: Gross profit in the second quarter increased 32 percent to $209 million, up from $159 million in the prior year period.
Speaker Change: Gross profit margins in the second quarter were 52% of revenues compared to approximately 49% for the prior year period. The improvement in gross profit margins is attributed to reduced raw material costs and freight costs.
Speaker Change: Second quarter freight cost as a percentage of net invoice sales decreased 81 basis points year over year, and cost of goods sold decreased 236 basis points.
Jarrod Langhans: The first half of the year showed the strength of our business and our ability to leverage our supply and distribution systems. As we look to the second half of the year, we have a number of key drivers that we are monitoring, such as raw materials, including the specific commodity cost of aluminum and fuel. In addition, we will invest in growth with a wider promotional incentive category calendar. As a result, we are sticking with a conservative approach for the remainder of the year and target gross margins of the high 40s to 50 range in the back half of the year.
Speaker Change: The first half of the year showed the strength of our business and our ability to leverage our supply and distribution systems.
Speaker Change: As we look to the second half of the year, we have a number of key drivers that we are monitoring, such as raw materials, including the specific commodity cost of aluminum and fuel. In addition, we will invest in growth with a wider promotional incentive calendar.
Speaker Change: As a result, we are sticking with a conservative approach for the remainder of the year and target gross margins in the high 40s to 50s range in the back half of the year.
Jarrod Langhans: Sales and marketing expenses for the second quarter came in within our targeted range of 20 to 23 percent at 22.6 percent of revenue. We continued to hire across sales and marketing in the second quarter, and we looked to these new employees to assist us in further driving growth and share gains as we look across the back half of the year and into 2025. As we looked at Q3, with the timing of some of our programs, we anticipate that our spend will likely move above the high end of the range for the quarter as we further train our newer workforce and implement test market and test market some additional tactics.
Speaker Change: Sales and marketing expenses for the second quarter came in within our targeted range of 20-23% at 22.6% of revenue.
Speaker Change: We continued to hire across sales and marketing in the second quarter and would look to these new employees to assist us in further driving growth and share gains as we look across the back half of the year and into 2025.
Speaker Change: As we look to Q3, with the timing of some of our programs, we anticipate that our spend will likely move above the high end of the range for the quarter as we further train our newer workforce and implement test market and test market some additional tactics.
Jarrod Langhans: Based on the success of these tactics, we will adjust our spending across Q4 and into 2025. General administrator expenses for the second quarter of 2024 were approximately $24 million. A decrease of 24 percent relative to Q2, 2023, when we incurred a $7.9 million legal charge. As a percentage of sales, GNA was 6 percent compared to 10 percent in the prior year period as we continue to leverage and due to the lower third party costs such as legal fees. As we look across the remainder of the year, we anticipate some ebbs and flows within GNA, but we remain confident that we will be able to leverage this area relative to the prior year.
Speaker Change: Based on the success of these tactics, we will adjust our spending across Q4 and into 2025.
Speaker Change: General and administrative expenses for the second quarter of 2024 were approximately $24 million, a decrease of 24% relative to Q2 2023, and we incurred a $7.9 million legal charge.
Speaker Change: As a percentage of sales, G&A was 6% compared to 10% in the prior year period as we continue to leverage and due to the lower third-party costs such as legal fees.
Speaker Change: As we look across the remainder of the year, we anticipate some ebbs and flows within G&A, but we remain confident that we will be able to leverage this area relative to the prior year.
Jarrod Langhans: Non-GAF Adjusted Evita increased 29 percent to approximately $100 million in the second quarter compared to $78 million in the prior year period, driven by our solid top line growth and growth margin profile. Net income increased 55 percent to approximately $80 million in the quarter end of June 30, 2024, compared to approximately $52 million in the prior year period. Net income attributed to common shareholders increased 63 percent to approximately $67 million in the quarter, or $0.28 per diluted share, compared to $0.17 in the prior year period. Revenue for the 6th month ended June 30, 2024, was approximately $758 million, an increase of 29 percent from $586 million for the 6th month ended June 30, 2023.
Speaker Change: Non-GAF adjusted EBITDA increased 29% to approximately $100 million in the second quarter, compared to $78 million in the prior year period, driven by our solid top-line growth and gross margin profile.
Unknown Executive: Net income increased 55% to approximately $80 million in the quarter ended June 30, 2024, compared to approximately $52 million in the prior year period. North America revenue year to date was $722 million, an increase of 29% from the same period in 2023. International revenue grew 36% to $36 million in the first six months of the year. G&A expense as a percentage of sales was 6% in the first six months of 2024, compared to 9% in the prior year period. Net income increased 70% to $158 million in the first half of 2024, compared to $93 million in the prior year period. This concludes our prepared remarks. Operator, you may now open the lines for questions.
Speaker Change: Net income increased 55% to approximately $80 million in the quarter end of June 30, 2024, compared to approximately $52 million in the prior year period.
Speaker Change: Debt income attributed to common shareholders increased 63% to approximately $67 million in the quarter, or $0.28 per diluted share, compared to $0.17 in the prior year period.
Speaker Change: Revenue for the six months ended June 30, 2024 was approximately $758 million, an increase of 29% from $586 million for the six months ended June 30, 2023.
Jarrod Langhans: North America revenue year-to-date was $722 million and increase of 29 percent from the same period in 2023. International revenue grew 36 percent to $36 million in the first 6 months of the year. Gross profit margin in the first 6 months where approximately 51.6 percent of revenues compared to approximately 46.6 percent for the prior year period. The improvement in gross profit margin in the first half of 2024 is attributable to favorable freight and raw material costs. As a percentage of sales, sales and marketing was 22 percent in the first 6 months of 2024 compared to 19 percent in the prior year period.
Speaker Change: North America revenue year-to-date was $722 million, an increase of 29% from the same period in 2023. International revenue grew 36% to $36 million in the first six months of the year.
Speaker Change: Gross profit margins in the first six months were approximately 51.6% of revenues compared to approximately 46.6% for the prior year period. The improvement in gross profit margin in the first half of 2024 is attributable to favorable freight and raw material costs.
Speaker Change: As a percentage of sales, sales and marketing was 22% in the first six months of 2024, compared to 19% in the prior year period.
Jarrod Langhans: G&A expense as a percentage of sales was 6 percent in the first 6 months of 2024 compared to 9 percent in the prior year period. Non-GAAP adjusted EBITDA increased 48 percent to approximately $188 million year-to-date compared to $127 million in the prior year period. That income increased 70 percent to $158 million in the first half of 2024 compared to $93 million in the prior year period.
Speaker Change: G&A expense as a percentage of sales was 6% in the first six months of 2024, compared to 9% in the prior year period. Non-GAAP-adjusted EBITDA increased 48% to approximately $188 million year-to-date, compared to $127 million in the prior year period.
Speaker Change: Net income increased 70% to $158 million in the first half of 2024 compared to $93 million in the prior year period.
Jarrod Langhans: Dead income, attributed to common shareholders, increased 82% to $132 million in the first half of 2024, or $0.55 per deleted share compared to 31 cents in the prior year period.
Speaker Change: We ended the quarter with approximately $903 million of cash on hand, which continues to accrue interest and remains available for strategic growth initiatives.
Speaker Change: This concludes our prepared remarks. Operator, you may now open the lines for questions.
Speaker Change: At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad.
Kaumil Gajrawala: The first question comes from the line of Kaumil Gajrawala with Jeffries. Please go ahead.
Speaker Change: Your first question comes from the line of Kaumil Gajrawala with Jeffries.
Unknown Executive: Hey guys, good morning. I see that on the first of August there's some new sort of employment agreements which include an amendment related to changing control. Can you maybe just talk about what the purpose is or what's different there?
Speaker Change: Please go ahead.
Komil Gajrawala: Hey guys, good morning. I see that on the 1st of August there's some new sort of employment agreements which include an amendment related to change in control. Can you maybe just talk about, you know, what the purpose is or, you know, what what's different there?
Unknown Executive: Yeah, good morning. I hope everything's going well.
Unknown Executive: We did have some change in regards to change of control, which the compensation committee did a conducted a review to standardize the executive team in accordance to similar standards within change of control associated with the employment agreements that we have. Yeah, so you'd just add a little bit more clarity on that. John and I had had agreements in place, and as we're expanding globally and shifting some of the responsibilities with our team, you'll see. Earlier in the year, where we announced some changes in the leadership, with Tony Guilfoyle taking the Chief Commercial Officer role. Paul's story taken the chief supply chain officer role; Kyle Watson taking the chief marketing officer role.
Speaker Change: Good morning. I hope everything's going well. We did have some change in regards to change of control, which the compensation committee
Speaker Change: conducted a review to standardize the executive team in accordance to similar standards within change of control associated with the employment agreements that we have.
Unknown Executive: Yeah, so you just add a little bit more clarity on that. Jon and I had a had agreements in place and
Speaker Change: Yeah, so just to add a little bit more clarity on that, Jon and I had agreements in place and as we're expanding globally and shifting some of the responsibilities with our team, you'll have seen
Unknown Executive: earlier in the year where we announced some changes in the leadership with Tony Guilfoyle taking the Chief Commercial Officer role, Paul Storey taking the Chief Supply Chain Officer role, Kyle Watson taking the Chief Marketing Officer role, and then we've also added Rich at the NQ4 of last year taking on the CLO role. So it's really more, I look at it as more of an administrative thing of getting everybody up to par with where Jon and I are in terms of the severance packages and change of control.
Speaker Change: earlier in the year where we announced some changes in the leadership with Tony Guilfoyle taking the chief commercial officer role, Paul Storey taking the
Speaker Change: Chief Supply Chain Officer role, Kyle Watson taking the Chief Marketing Officer role, and then we've also added Rich at the, in Q4 of last year, taking on the CLO role. So it's really more, I look at it as more of an administrative thing of getting everybody up to par with where Jon and I are in terms of the severance packages and change of control.
Unknown Executive: And then we've also added Rich at the in queue for last year taking on the CLO role. So it's really more I look at it as more of an administrative thing of getting everybody up to par with where John and I are in terms of the severance packages and change of control.
Unknown Executive: Okay, great. And you mentioned some specifics on stabilizing of market share and some maybe just give us some more details on July or what you're seeing specifically. Yeah, and you know, when you look at, you know, the quarter, you know, as we mentioned on the pre-recorded comments, you know, we're seeing. We saw some share loss, you know, on the weekly data. Standard is that come in, you know, to 11 to 10. There's been a lot of competition in the category and also the consumers. Challenges we're seeing in the environment talked about on the script, prescript about, you know, one of the largest convenience store.
Speaker Change: Okay, great and you mentioned some specifics on stabilizing of market share and such. Could you maybe just give us some more details on July or what you're seeing specifically?
Speaker Change: Yeah, you know, when you look at, you know, the quarter...
Speaker Change: As we mentioned on the pre-recorded...
Speaker Change: Challenges we're seeing in the environment, talked about.
Speaker Change: on the script, pre-script about, you know, one of the largest convenience store.
Unknown Executive: Chain seeing, you know, sales down 4%. So there's some challenges within the overall consumer.
Speaker Change: seeing sales down 4%. So there's some challenges within the overall consumer. We're really trying to understand that. We're gonna put some additional investments, strategic targeted investments, both on top line and.
Unknown Executive: You know, we're really trying to understand that we're going to put some additional investments, strategic targeted investments, both on top line and below the line, to continue to drive growth within our portfolio. When you look at, you know, the, you know, the share on a weekly reads, but it can be manipulated or not manipulated. But you're seeing a lot of, you know, there's a variety of timing of promotions prior, you're cycling as well as innovation from some competition there. So, you know, when you look at it, we are still the category driver at 47%, and, you know, we're looking for the category to continue to grow.
Speaker Change: below the line to continue to drive growth within our portfolio. When you look at...
Speaker Change: You know, the, you know, the share in a weekly reads, but it can be manipulated or not manipulated, but you're seeing a lot of
Speaker Change: You know, there's a variety of timing of promotions prior to your cycling.
Speaker Change: as well as innovation from some competition there. So, you know, when you look at it, we are still the category driver at 47%.
Speaker Change: And, you know, we're looking for the category to continue to grow. We know we are in a growth category. We have a great portfolio. We're leading the sugar-free growth movement, and we're confident in the strategies we have. We're driving over 10%.
Unknown Executive: We know we are in a growth category. We have a great portfolio. We're leading the sugar-free growth movement, and we're confident in the strategies we have. We're driving over 10% growth compared to the categories. So July, we did see further softness within the category within this or kind of scan data. We're watching that closely and, you know, there's a, there's thoughts that, you know, in the fourth quarter, it'll pick up and get back into growth mode.
Speaker Change: growth compared to the categories. So July we did see further softness within the category.
Speaker Change: We're watching that closely, and there's thoughts that in the fourth quarter it'll pick up and get back into growth mode. But that's a little bit further out, and we really need to be cautious as we go forward and really continue to drive new consumers to the Celsius portfolio. We have one of the most refreshing brands and portfolios and new flavors in the category.
Unknown Executive: But, you know, that's a little bit further out, and we really need to be cautious as we go forward and really continue to drive new consumers to the Southeast portfolio. We have one of the most refreshing brands and portfolios and new flavors in the category field.
Unknown Executive: Okay, great. Thanks, guys.
Speaker Change: Okay, great. Thanks, guys.
Mark Astrachan: Okay, next question comes from the line of Mark Astrachan with Steeple. Please go ahead.
Speaker Change: Your next question comes from the line of Mark Astrachan with Stifel.
Mark Astrachan: Yeah, hey, thanks more, everybody. I guess the first question is probably one that we get most frequently, which is why is Celsius growth, meaningfully ahead of the category yet your market share has contracted. If you look at the last six weeks as an example, I think Celsius is something like 15% of the expanded circumna data that compares to 1% growth for the category, and yet, market share is down, call it 20 bits in the last couple weeks versus the six weeks average.
Speaker Change: Please go ahead.
Mark Ostrachan: Yeah, hey, thanks. Morning everybody. I guess the first question is probably one that we get most frequently, which is...
Mark Ostrachan: Why is
Speaker Change: Celsius growth meaningfully ahead of the category, yet your market share has contracted. You know, if you look at the last six weeks as an example, I think Celsius is up something like 15% in the expanded Circona data.
Speaker Change: That compares to 1% growth for the category, and yet market shares down, call it 20 bips in the last couple weeks, versus the six-week average. Is there anything that you can highlight there that you think would impact those numbers, given, obviously, that you're growing faster than the category that the shares suggest otherwise?
Unknown Executive: Is there anything you can highlight there that you think would impact those numbers, given, obviously, that you're growing faster than the category of the shares suggests otherwise. Yeah, I think when you look at it, it's like you're looking at, when you look at the, you know, the other brands within the category, especially when you look at Red Bull. Red Bull had some great launches and gained some share points recently. So when you look at, you know, they're such a large dollar as a percentage of the total category, even though, you know, we're, we're growing 10 times the category growth rate, one share growth or share and a half growth kind of on the mix of that will impact those figures.
Speaker Change: Yeah, I think when you look at it, it's like what you're looking at when you look at the, you know, the other brands within the category, especially.
Speaker Change: When you look at Red Bull, Red Bull had some great launches and gained some share points recently.
Speaker Change: So when you look at, you know, they're such a large dollar as a percentage of the total category, even though, you know, we're, we're growing 10 times the category growth rate, one share growth or share and a half growth, kind of on the mix of that will impact those figures.
Unknown Executive: Okay. And then maybe thinking about things a bit longer term, does that normalize? Does your market share stabilize, start to improve?
Speaker Change: Okay. And then, you know, maybe thinking about things a bit longer term.
Speaker Change: Does that normalize?
Speaker Change: Does your market share stabilize, start to improve? I know you don't want to give guidance, but I'm talking more big picture kind of directionally. And then, like, related to that, is there anything in your data that you're seeing to suggest that consumers are switching from Celsius to these other brands?
Unknown Executive: I know you don't want to give guidance, but I'm talking more big picture kind of directionally. And then, like related to that, is there anything in your data that you're seeing to suggest the consumers are switching from sell to us to these other brands? Yeah, I think, you know, when you look at everyone's very focused on the one week. We're watching one week, four weeks, 12 weeks. I mean, we're watching data; the data very closely. You know, we're seeing, you know, there is a variety of new innovation that comes in. We'll get, you know, it does get trial, but we do see consumers come back.
Speaker Change: Yeah, I think, you know, when you look at a lot of everyone's very focused on the one week, we're watching one week, four weeks, 12 weeks, I mean, we're watching data, the data very closely.
Speaker Change: You know, we're seeing, you know...
Speaker Change: There is a variety of new innovation that comes in. It does get trial, but we do see consumers come back. So I think we have a really strong, loyal consumer base. As consumers become more price sensitive, how does those promotional pricing strategies that the other brands are doing, how does that impact the consumer as we're entering? You know, at this point, you look at LRB, Water's Up, there's a variety of things that are happening in total LRB within the categories as well. So you're seeing private, we're seeing, indicating that private label sales are up in other categories, so.
Unknown Executive: So I think we have a really strong, loyal consumer base. You know, as consumers become more price sensitive, how does those promotional pricing strategies that the other brands are doing? How does that impact the consumer as we're entering? You know, at this point, you look at LRB waters off. There's a variety of things that are happening in total LRB within the categories as well. So you're seeing private, we're seeing indicating that private label sales are up in other categories.
Unknown Executive: So I think we're just, we're optimistic cautious as we go forward, but I think when you look at the brand positioning, you look at, you know, the, you know, the tailwinds we have, the functional ingredients, the positioning of our fitness lifestyle, our great flavor innovation, and the consumers that we're bringing into the category, we're still driving great value for consumers and within premiumization in the energy categories. So, you know, the share number goes. We're keeping on it. Obviously, we want to grow share when you look at where we are on Amazon, to where we are holistically, you know, on track channels.
Speaker Change: I think we're just, we're optimally cautious as we go forward, but I think when you look at the brand positioning, you look at, you know, the, you know, the tailwinds we have, the functional ingredients, the positioning of our fitness lifestyle, our great flavor innovation.
Speaker Change: and the consumers that we're bringing into the category. We're still driving great value for consumers and within premiumization in the energy category. So, you know, the share number goes, we're keeping an eye on it. Obviously, we want to grow share. When you look at where we are on Amazon to where we are holistically, you know, on track channels.
Unknown Executive: There's a huge opportunity. And then if you look at other markets that we're over a 15 share, that gives us great provenance and, you know, the ability to close those gaps, especially with the largest resets we've seen that we just received this year. So, you know, settle in these resets and continue to build upon that. We've got great relationships with our retailers, and we're driving excitement. I mean, our retail partner is really excited about the sales she's portfolio and what we offer.
Speaker Change: There's a huge opportunity. And then if you look at other markets,
Speaker Change: that were over a 15 share, that gives us great confidence.
Speaker Change: the ability to close those gaps, especially with the largest resets we've seen that we just received this year. So, you know, settle in these resets and continue to build upon that. We've got great relationships with our retailers.
Speaker Change: and we're driving excitement. I mean, our retail partners are really excited about Celsius portfolio and what we offer.
Unknown Executive: And just on the share, not to put you on the spot, could you wager to guess when you might start to see that stabilization there and sales and market share kind of look the same? I mean, we're not going to provide forward-looking guidance on that, but, you know, we've exceeded 10 share. We said, you know, and you look at the Amazon number, I assure you our teams are looking to close the gaps. We're looking to bring more markets over the 15 share. Target, we're expanding our drill deep strategy, we're further focusing on additional markets to really drive devs through. We have a variety of markets that are within two share points and closing that gap.
Speaker Change: And just on the share, not to put you on the spot, but could you wager to guess when you might start to see that stabilization there and sales and market share kind of look the same?
Speaker Change: I mean, we're not going to provide forward-looking guidance on that, but, you know, we've exceeded 10 share. We said, you know, and you look at the Amazon number, I assure you our teams are looking to close the gaps. We're looking to bring more markets over the 15 share.
Speaker Change: We're expanding our drill deep strategy, we're further focusing on additional markets to really drive those through. We have a variety of markets that are within two share points of closing that gap.
Unknown Executive: So we're working on that, especially during the 100 days of summer. You know, there's so many other variables on the share number that happened on a weekly, four weeks, 12 week reads, but we're confident in the long position. And the trajectory of the company to be a leader in the energy category, both domestically and abroad. So I think that's the trajectory; how quickly we get there, you know, as timing and sequencing, there's a lot of other, you know, headwinds that we have against us as we go for. But what we do know, sugar free has now been 50% of the energy during category for the first time.
Speaker Change: So we're working on that, especially during the 100 days of summer.
Speaker Change: There's so many other variables on the share number that happen on a weekly, 4-week, 12-week REITs, but we're confident in the long position and the trajectory of the company.
Speaker Change: to be a leader in the energy drink category, both domestically and abroad. So I think that's the trajectory, how quickly we get there, you know, as timing and sequencing, there's a lot of other, you know, headwinds that we have against us as we go forward. But what we do know, sugar-free has now been 50% of the energy drink category for the first time. So the tailwinds that we have are moving in that direction. And we're looking to be a leader in the sugar-free segment.
Unknown Executive: So the tailwinds that we have are moving in that direction, and we're looking to be a leader in the sugar free segment.
Unknown Executive: Got it.
Unknown Executive: All right.
Unknown Executive: Thank you.
Speaker Change: Got it. All right. Thank you.
Michael Ivory: Your next question comes from the line of Michael Ivory with pipe percent.
Speaker Change: Your next question comes from the line of Michael Lavery with Piper Sandler, please go ahead.
Michael Ivory: Please go ahead. Thank you.
Michael Ivory: Good morning. Yeah, I might just start with a follow-up on Mark's question. I appreciate that the 15 or so percent year-over-year growth and the one or so percent year-over-year category growth. Is year over year. So it's kind of an apple and oranges to the sequential share moves. Your year over year share of courses is up very nicely, but if on a sequential basis, the chair momentum is, even if it's a little lumpy, it's certainly slower. How then I guess you think about pricing, and you mentioned that this is slated to come, you know, maybe later this year or early next, and I appreciate the aluminum cost pressure, but you know what, sugar free portfolio, you get some relief on sugar costs.
Michael Lavery: Thank you. Good morning. Yeah, I might just start with a follow-up on Mark's question.
Speaker Change: I appreciate that.
Speaker Change: 15 or so percent year over year growth, and the one or so percent year over year category growth is year over year. So it's kind of an apples and oranges to the sequential share moves your year over year share, of course, is up very nicely. But if on a sequential basis,
Speaker Change: The chair momentum is, even if it's a little lumpy, it's certainly slower. How then, I guess, do you think about pricing? You mentioned that...
Speaker Change: Unknown Speaker This is slated to come, you know, maybe later this year or early next. And I appreciate the aluminum cost pressure, but, you know, with a sugar-free portfolio, you get some relief on sugar costs. I guess what's just some of how you think about the
Unknown Executive: I guess what's just some of how you think about the pricing approach and you know, any more specific you can compare. Yeah, I mean, I mentioned the prepared remarks, you know, to the top competitors, taking category, taking pricing. You know, we're going to maintain our premium position in the category. We're also being cautious about that as well, because you know, keeping a close eye on the consumers where they're shopping, you know, and the patterns that we're seeing. So for my promotional pricing, promotional strategy and architecture is really key as we go forward. As we mentioned in the prepared remarks, we have a variety of retail marketing programs. We're working closely with retailers and increasing our investments in the third quarter as well.
Speaker Change: The pricing approach and, you know, any more specifics you can give there.
Speaker Change: Yeah, I mean, as I mentioned in the prepared remarks, you know, two of the top competitors have taken category, taken pricing.
Speaker Change: You know.
Speaker Change: We're going to maintain our premium position in the category, but we're also being cautious about that as well because, you know, keeping a close eye on the consumers, where they're shopping, you know, and the patterns that we're seeing. So our pricing promotional strategy and architecture is really key as we go forward. As we mentioned in the prepared remarks, we have a variety of retail marketing programs we're working on, working closely with retailers.
Speaker Change: and increasing our investments in the third quarter as well. So, you know, I think, you know, as we continue to move forward, the teams are doing a great job. We're building on our sales force and our staff.
Unknown Executive: So, you know, I think, you know, as we continue to move forward, the teams are doing a great job. We're building on our sales horse on our staff, and we're going to continue to our main focus is to drive share and to drive share profitably and continue to build this brand and take it to more consumers, looking to live a healthy active lifestyle. And, you know, if we look at some of our partners, we've expanded with like no allows that an amazing job with the race over the weekend, world champion, Olympic champion, gold. You know, it's our brand's resonating, and it's better resonating with a broader consumer than ever before.
Speaker Change: We're going to continue to, our main focus is to drive share and to drive share profitably and continue to build this brand and take it to more consumers.
Speaker Change: looking to live a healthy, active lifestyle.
Speaker Change: And, you know, it's resonating, if you look at some of our partners we've expanded with, like...
Speaker Change: Noah Lyles did an amazing job with the race over the weekend, world champion.
Speaker Change: Olympic champion golds, you know, we're it's our brands resonating and it's better resonating with a broader consumer than ever before so we're hitting some headwinds in regards to the you know the environment that we're in but we're going to prevail and come out strong on the other side and we see great opportunities ahead.
Unknown Executive: So we're hitting some headwinds in regards to the, you know, the environment that we're in, but we're going to prevail and come out strong on the other side.
Unknown Executive: And we see great opportunities at. No, that consumer attraction is certainly clear. We see that just as we've heard from a lot of companies, how the, you know, at least certain consumers, certain cohorts of consumers are under some pressure. Interestingly, that's part of what's driving your strength on Amazon, where it's a, you know, a bigger bulk pack at a better value per can. Have you seen that shift, you know, sea store, obviously, is under pressure of your Amazon's, you're, you're kind of best performing, you know, a channel. Are you seeing that accelerate? Was there, you know, was it just sort of Prime Day related that might have given a boost there, maybe just help us understand some of the channel dynamics and what you're seeing.
Unknown Executive: No, that consumer attraction is certainly clear. We see that.
Speaker Change: No, that consumer attraction is certainly clear. We see that. Just as we've heard from a lot of companies how that, you know, at least certain consumers, certain cohorts of consumers are under some pressure.
Unknown Executive: Just as we've heard from a lot of companies, how at least certain consumers, certain cohorts of consumers are under some pressure. Seemingly, that's part of what's driving your strength on Amazon, where it's a bigger bulk pack at a better value per can. Have you seen that shift? You know, C-Store is obviously under pressure. Amazon's your best performing, you know, channel. Are you seeing that accelerate? Was there, you know, was it just sort of Prime Day-related that might have given a boost there? Maybe just help us understand some of the channel dynamics and what you're seeing. Yeah, I mean, it is interesting. We were doing
Speaker Change: seemingly that's part of what's driving your strength on Amazon where it's a you know a bigger bulk pack at a better value per can.
Speaker Change: Have you seen
Speaker Change: That shift, you know, C-Store obviously is under pressure, Amazon's, you're, you're...
Speaker Change: Some of the best-performing, you know, channels.
Speaker Change: Are you seeing that accelerate? Was there, you know, was it just sort of Prime Day related that might have given a boost there? Maybe just help us understand some of the channel dynamics and what you're seeing.
Unknown Executive: Yeah, I mean, it is interesting. We were doing. When you look at Amazon, even the club business, club business is doing really well. That's a larger pack size. So, you know, on a per can basis, you get some value there, but it's also a big dollar ring on a unit purchase. So, when you look at that, those are things we're trying, we're understanding, we're trying to understand the change in consumer patterns. I think what you saw for the first time, when you look at like sales mix, the MULAC plus, plus convenience, which includes Amazon and club and other reported, then all reported channels.
Speaker Change: Yeah, I mean, it is interesting. We were doing, when you look at Amazon, even the club business, club business is doing really well. It's a larger pack size. So, you know, on a per can basis, you get some value there, but it's also a big dollar rate on a unit purchase. So, when you look at that, so those are things we're trying, we're understanding, we're trying to understand the change in consumer patterns.
Speaker Change: I think what we saw for the first time when you look at like sales mix.
Speaker Change: The Moolah Plus plus convenience, which includes Amazon and Club and other reported and all reported channels.
Unknown Executive: As a percent, convenience as a percent of total energy drinks sales was down again. So, you know, there it seems to be consumers are purchasing and, you know, expanded channels. And I think what's great about Celsius, when you look at those other channels that were with the club and also Amazon, you know, we overperform there. So, you know, we have embraced an omnichannel world from the beginning and consumers wanting, when they want it, how they want it. And we've embraced that. So, I think we're in a great position as consumers look to adapt to the purchasing patterns and some of the channels that they're purchasing in.
Speaker Change: as a percent, convenience as a percent of total energy drink sales were down again. So, you know, it seems to be consumers are purchasing and, you know, expanding channels. And I think what's great about Celsius, when you look at those other channels that were, you know, Club and also Amazon, you know, we overperform there.
Speaker Change: You know, we have embraced an omni-channel world from the beginning and
Speaker Change: Consumers want it when they want it, how they want it, and we've embraced that. So I think we're in a great position as consumers look to adapt to the purchasing patterns and
Unknown Executive: Yeah, we're both, you know, we're going to capture that, but those are dynamics we're looking at when the consumer is challenged. Maybe you think more, maybe go to more of a unit purchase, right, a lower dollar of fast grain versus a larger. So, those are things we're watching closely in your spot on. Okay, thanks so much.
Speaker Change: Some of the channels that they're purchasing in and we're going to capture that. But those are dynamics we're looking at when the consumer is challenged. Maybe you think more, maybe go to more of a unit purchase, right? A lower dollar fast ring versus a larger. So those are things we're watching closely and you're spot on.
Unknown Executive: Thank you.
Speaker Change: Okay, thanks so much.
Jonathan Keypour: Your next question comes from the line of Jonathan Keaport with Bank of America.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Jonathan Keypour with Bank of America. Please go ahead.
Jonathan Keypour: Please go ahead. Thank you. Hey, everybody. Good morning.
Unknown Executive: Thank you. Hey, everybody. Good morning.
Jonathan Keypour: So, the first question I have is about shipments versus consumption on the last call. You guys pointed out that there was a 20 million drag from Pepsi tweaking its inventories on efficiencies. And then you said there would be a similar drag in 2Q, and then I guess after a conference intra quarter, you mentioned another 20 to 30. So, I think people were coming into this quarter expecting there was some kind of drag from shipment timing. I'm just wondering if you guys can size that for us so we can get a sense of what it actually ended up being in the quarter.
Jonathan Kieppor: Thank you. Hey, everybody. Good morning.
Jonathan Kieppor: So, the first question I have is about shipments versus consumption. On the last call, you guys pointed out that there was a $20 million drag from...
Unknown Executive: So the first question I have is about shipments versus consumption. On the last call, you guys pointed out that there was a $20 million drag from Pepsi tweaking its inventories for efficiencies. And then you said there would be a similar drag on 2Q. And then, I guess, after a conference intra-quarter, you mentioned another $20 to $30. So I think people were coming into this quarter expecting there to be some kind of drag from shipment timing. I'm just wondering if you guys can size that for us so we can get a sense of what it actually ended up being in the quarter.
Speaker Change: Pepsi tweaking its inventories on efficiencies and then you said there would be a similar drag in 2Q and then I guess after a conference intra quarter you mentioned another 20 to 30 so I think
Speaker Change: People were coming into this quarter expecting there was some kind of drag from shipment timing. I'm just wondering if you guys can size that for us, so we can get a sense of what it actually ended up being in the quarter.
Jarrod Langhans: Yeah, Jonathan, I'll judge kind of diving at that because we do see, you know, in regards to our main partner, as well as retail shipments, we do see some fluctuation. We've experienced last several quarters. We talked about that. So this quarter will be no different, but I'll turn it over. Yeah, so I mentioned in the prepared remarks and back in June that there was kind of a potential 20 to 30 million headwind because of the DOH changes. So that ended up on the back half of it. So the lower end of that range, some more of in the 20 to 25 ranges opposed to the higher end of the range.
Jarrod Langhans: Yeah, Jon, I'll let Jarrod kind of dive into that because we do see, you know, in regards to our main partner as well as retail shipments, we do see some fluctuation we've experienced last several quarters. We talked about that. So this quarter will be no different, but I'll turn it over to Jarrod.
Unknown Executive: in June, that there was kind of a potential 20 to 30 million headwind because of the DOH changes. So that ended up.
Jarrod Langhans: Yes, I mentioned in the prepared remarks and back in June that there was kind of a potential twenty to thirty million.
Jarrod Langhans: Headwind because of the the DOH changes so that ended up on the back half of the so the lower end of that range so more of in the 20 to 25 range as opposed to the higher end of the range so that's where we ended the the quarter when it relates to that piece
Unknown Executive: on the back half, so the lower end of that range, so more of in the 20 to 25 range as opposed to the higher end of the range. So that's where we ended the quarter when it relates to that piece.
Jarrod Langhans: So that's where we ended the quarter when it relates to that.
Unknown Executive: Okay, and should we expect anything? I guess it's going to be the continuing 20 that you guys mentioned and one key that'll carry through 3 and 4Q as well, correct on a year-over-year basis. Yeah, I mean, we'll have to see where it ends up. It's, you know, from the perspective, they're the one managing their inventory, so we'll have to see, you know, where they end up, you know, where we are today. I think we're in pretty good shape. Cool. And then if I can, it looks like based on the Nielsen data, at least shelf resets that are done, I think you guys mentioned that they were.
Speaker Change: Okay, and should we expect anything, I guess there's going to be the continuing 20 that you guys mentioned, and 1Q, that'll carry through 3 and 4Q as well, correct? On a year-over-year basis.
Unknown Executive: Yeah, I mean, we'll have to see where it ends up. It's, you know, from their perspective, they're the one managing their inventory. So we'll have to see, you know, where they end up. You know, where we are today, I think we're in pretty good shape.
Speaker Change: Yeah, I mean, we'll have to see where it ends up. It's, you know, from their perspective, they're the one managing their inventory. So we'll have to see, you know, where they end up. You know, where we are today. I think we're in pretty good shape.
Unknown Executive: But so the question, like, when you look at the velocity data, it makes sense that you guys are getting new shelf space. You know, TDPs go up, so velocity comes down; that's mathematically sensible. But now that the shelf reset appears to be done, we're still seeing sequential velocity decline. I was just looking at the recent one-week Nielsen data that came out. It looks like the decline continues, and it's a little bit steeper than the category itself. So I'm wondering if there's anything you guys can point to about why, I don't know if it's a timing. I know that the, you know, shelf resets were pushed out.
Unknown Executive: I don't know if it's an activation thing, and maybe August will kind of recover some of that.
Unknown Executive: Just anything you can give us on potentially why the velocity has been somewhat sluggish to date and what we can expect going through the rest of the summer. Yeah, I think there's a couple things. It's timing and sequencing. You saw something similar back at the end of '22 in the beginning of '23 when we saw some pretty big pickups as we moved into the Pepsi system. So, unfortunately, the Celsius bus doesn't pull up and dump out all the Celsius consumers right away when we see the resets. So it's something that there's some timing and sequencing there.
Unknown Executive: Yeah, I think there are a couple things. It's timing and sequencing. You saw something similar back at the end of 22 and the beginning of 23, when we saw some pretty big pickups as we moved into the Pepsi system. So unfortunately, the Celsius bus doesn't pull up and dump out all the Celsius consumers right away when we see the resets. So there's some timing and sequencing there. There were some delays in some of the resets, which also delayed some of our promotional activity. But we've got a really good promotional incentive calendar in Q3 and Q4 and the back half of Q3 and in
Unknown Executive: There was some delays in some of the resets, which also delayed some of our promotional activity. But we've got a really good promotional incentive calendar in Q3 and Q4 and the back half of Q3 and throughout Q4. So we're looking to get those velocities turned around now that we've got the space. We didn't want to start pushing a lot of stuff and a lot of activity before we got the space, because then that would just do the math. And we want to make sure we're getting the ROI on these activities. So we do got a lot of good programs in place so that we can start pulling the Celsius bus up to the curb and start getting the velocity improving.
Speaker Change: which also delayed some of our promotional activity. But we've got a really good promotional incentive calendar in Q3 and Q4, in the back half of Q3 and throughout Q4. So we're looking to get those velocities turned around now that we've got the space.
Unknown Executive: and throughout Q4. So we're looking to get those velocities turned around.
Unknown Executive: and the Velocity Improving.
Unknown Executive: Yeah, and I think you just got to be cautious, there's a lot of noise in the weekly data, right? And the weekly reads, especially you need to pay attention to what promos were prior periods prior years, there's just a lot of noise there.
Unknown Executive: Yeah, and I think when you just got to be cautious with the there's a lot of noise in the weekly data, right? And the weekly reads, especially you need to pay attention to what promos were prior period prior year. There's just a lot of noise there. I think we got great strategies. We got great positioning. And you know, we've been holding it around, you know, right around that 11 share; it's been going up and down. So we're holding. We need to continue to take it to the next level. And that's what the teams are working on this summer.
Speaker Change: Yeah, and I think when you just got to be cautious, there's a lot of noise in the weekly datas, right, and the weekly reads, especially you need to pay attention to what promos were prior period, prior year, there's just a lot of noise there, I think.
Unknown Executive: I think we have got great strategies; we have great positioning. And you know, we've been holding it around, you know, right around that 11 share; it's been going up and down. So we're holding on. We need to continue to take it to the next level. And that's what the teams are working on this summer.
Speaker Change: We've got great strategies, we've got great positioning. And we've been holding it right around that 11 share. It's been going up and down. So we're holding, we need to continue to take it to the next level. And that's what the teams are working on this summer.
Unknown Executive: Got it. And it sounds like you guys have, you know, you mentioned some of your sponsorships and things like that. It sounds like you have a lot more in the pipe than you did last year. So it stands to reason that Q3 and Q4 should see probably more resilient velocities and shares than last year. I mean, last year from, you know, September to December through December, there was a little bit of a drop-off. Makes sense. Seems like that's probably less likely this year; that's fair to say. I mean, we're focused on driving share. You know, when you look at it at this point, when the category was it last week, it was down for the first time on that weekly read.
Unknown Executive: Got it. And it sounds like you guys have, you know, you mentioned some of your sponsorships and things like that. It sounds like you have a lot more in the pipe than you did last year. So it stands to reason that Q3 and Q4 should see probably more resilient velocities and shares than than last year. I mean, last year from, you know, September to December, through December, there was a little bit of a drop off makes sense. Seems like that's probably less likely this year. Is that fair to say?
Speaker Change: Got it. And it sounds like you guys have, you know, you mentioned some of your sponsorships and things like that. It sounds like you have a lot more in the pipe than you did last year. So it stands to reason that Q3 and Q4 should see...
Speaker Change: probably more resilient velocities and shares than than last year. I mean, last year from, you know, September to December through December , there was a little bit of a drop off makes sense. Seems like that's probably less likely this year. Is that fair to say?
Unknown Executive: I mean, we're focused on drive and share. You know, when you look at it at this point, when the category was last week, it was down for the first time on that weekly read. So, you know, those are challenges.
Unknown Executive: So, you know, those are challenges. We're driving the category growth rate. The category is not growing. We're over-indexing with new to new to category. So we need this category to get back to growth rate. And that's a big, you know, an area we're focusing in on. So, and we want to drive more consumers to the category. That's what we're working with our retailers on doing that. We got some great programs coming out this summer. We talked about, you know, refreshing barbecues on great new flavors, the crack of cold Celsius, a variety of marketing programs that we have and new tentpole programs wrapping that around with retailer and new consumer segments.
Unknown Executive: We're driving the category growth rate; the category is not growing, we're over indexing with new to new to category. So we need this category to get back to its growth rate. And that's a big, you know, area we're focusing on. So we want to drive more consumers to that category. That's what we're working with our retailers on doing that. We got some great programs coming out this summer, talked about, you know, refreshing barbecues, some great new flavors, crack a cold Celsius, a variety of marketing programs that we have, and new tentpole programs, wrapping that around with retailers and new consumer segments. So, you know, we're confident in our position, and as for the back half of this year, I think it's going to be an exciting time for Celsius. Cool.
Speaker Change: So, we need this category to get back to growth rate, and that's a big area we're focusing in on. So, and we want to drive more consumers to the category. That's what we're working with our retailers on doing that. We got some great programs coming out this summer, talked about refreshing barbecues, some great new flavors, crack a cold Celsius.
Unknown Executive: So, you know, we're confident in our position. And as the back half of this year, I think it's going to be an exciting time for sales. Cool. Sounds like it. Excited to see you play out. Thank you, guys.
Unknown Executive: Cool. Sounds like it. Excited to see it play out. Thank you, guys.
Speaker Change: Cool. Sounds like it. Excited to see it play out. Thank you guys. Thank you.
Unknown Executive: Thank you.
Bill Chappell: Your next question comes from the line of Bill Chappell with Chouis.
Operator: Your next question comes from the line of Bill Chappell with Truist.
Speaker Change: Your next question comes from the line of Bill Chappell with Truist. Please go ahead.
Bill Chappell: Please go ahead. Thanks.
Bill Chappell: Good morning.
Bill Chappell: Thanks. Good morning.
Unknown Executive: Just a little bit more commentary about kind of the, and I know this is kind of a best guess, but the slowing of the overall category and any thoughts of why that's happening now, you know, what you're seeing, is it consumer preferences to other categories, you know, they, is it weather, is it just trying to understand, you know, it's why the overall category starting to see some softness of these past three, four months. Yeah, no, it's, you know, when we're looking at, we're looking at total LRB data. So that's what, you know, liquid refrigerator beverages, and you look at some of the segments from energy to CSTs, the water, sports drinks, teas, and juices.
Unknown Executive: Just a little bit more commentary about the kind of the. And I know this is kind of a best guess, but the slowing of the overall category, and any thoughts of why that's happening now? You know what? What are you seeing? Is it consumer preferences for other categories? You know, they say it's weather? Is it just trying to understand, you know, why the overall category is starting to see some softness over these past three, four months?
Speaker Change: Just a little bit more commentary about kind of the...
Bill Chappell: Is it weather? Is it just trying to understand, you know, it's why the overall category is starting to see some softness over these past three, four months.
Unknown Executive: Yeah, no, it's, you know, when we look at total LRB data, so that's what, you know, liquid refrigerated beverages, and when you look at some of the segments from energy to CSTs to water, sports drinks, teas, and juices, we're still seeing the pressure of decreases coming from juices and coffee and tea. Sports drinks have picked up in the last, you know, if you look at July 14, we are starting to see more growth in sports drinks.
Speaker Change: Yeah, no, it's, you know, when we look at, we're looking at total LRB data, so that's what, you know, liquid refrigerated beverages, and you look at some of the segments from energy to CSTs to water, sports drinks, teas.
Unknown Executive: You know, we're still seeing the pressure of decreases coming from juices, coffee, and tea. Sports drinks has picked up the last, you know, if you look at July 14th, starting to see more growth in sports drinks, and then water, we saw growth as well as CSTs. So, and the energy category on a four-week read looking at July 14th was up about 2%. So, you know, much slower than the growth rate we saw in the first quarter of this year and obviously versus the prior year. So, those are things we're seeing. It looks like, you know, overall, you know, the category is consumers are maybe taking a pause.
Speaker Change: and juices.
Speaker Change: You know, we're still seeing the pressure of decreases coming from juices and coffee and tea. Sports drinks has picked up the last, you know, if you look at July 14th, starting to see more growth in sports drinks.
Unknown Executive: And then water, we saw growth as well as CSTs. So an energy category on a four week read looking at July 14, was up about 2%. So, you know, much slower than the growth rate we saw in the first quarter of this year, and obviously, versus the prior year.
Bill Chappell: And then water, we saw growth as well as CSDs. So, and the energy category on a four-week read, looking at July 14th, was up about 2%.
Bill Chappell: Much slower than the growth rate we saw in the first quarter of this year and obviously versus the prior year. So those are things we're seeing. It looks like, you know, overall, you know, the category is consumers are maybe taking a pause. There's a lot of pressures from.
Unknown Executive: So those are things we're seeing; it looks like, you know, overall, the category is consumers are maybe taking a pause, there's a lot of pressures from, you know, interest rates, we know the pressures are out there in the news, and you guys are watching consumers extremely closely, just like we are. I think, at the end of the day, the energy category has massive upside potential to grow and to continue to grow.
Unknown Executive: There's a lot of pressures from, you know, interest rates. We know the pressures are out there within the news, and you guys are watching the consumers extremely closely, just like we are. I think at the end of the day, the energy category has a massive upside potential to grow and it continues to grow. It is a, it's really a functional beverage that's aligned with lifestyles these days, and Celsius is positioned to capture that. So, I think we're just, you know, you're cycling growth, great growth rates in the energy category from last year as well. So, we need to be cognizant of that and see how this plays out in the back half.
Bill Chappell: [inaudible]
Unknown Executive: It is a truly a functional beverage that's aligned with lifestyles these days, and Celsius is positioned to capture that. So I think we're just, we saw, you know, your cycling growth, great growth rates in the energy category from last year as well. So we need to be cognizant of that and see how this plays out in the back half. I think a lot of people are optimistic for Q4, but time will tell.
Bill Chappell: I think, at the end of the day,
Speaker Change: The energy category has a massive upside potential to grow and to continue to grow. It is a truly a functional beverage that's aligned with lifestyles these days and Celsius is positioned to capture that. So I think we're just, we saw your cycling growth, great growth rates in the energy category from last year as well. So we need to be cognizant of that and see how this plays out in the back half. I think a lot of people are optimistic for Q4, but time will tell.
Unknown Executive: I think a lot of people are optimistic for Q4, but time will tell.
Unknown Executive: Okay, great. And then just as you're looking and you might have touched upon this kind of the growth year to date, you know, have the newer flavors products and have been as incremental as you would expect, expected better than expected.
Unknown Executive: Okay, great. And then, just as you're looking, and you might have touched upon this, kind of the growth year to date, you have the newer flavors, products, and it has been as incremental as you would expect, expected, better than expected, just trying to understand what's driving the growth, is it kind of the core offerings, or are you really seeing kind of expanding the usage with some of the new offerings? We've got a variety of new flavors out there.
Speaker Change: Okay, great. And then, just as you're looking, and you might have touched upon this, kind of the growth year to date, you know, have the newer flavors, products, kind of
Unknown Executive: Just trying to understand, you know, what's driving the growth? Is that kind of the core offerings, or are you really seeing kind of expanding the usage with some of the new offerings. We got a variety of new flavors out there. We use, you know, it's a combination. We have a total portfolio play. So that we're that we're leveraging. We do have talked about some of the new flavors, the sparkling watermelon, which lemonade, which is amazing. The kiwi strawberry, strawberry and her cherry cola. So, you know, it's a combination of how that portfolio works together. We're driving the total portfolio and not a specific flavor, but we do have lead launches with key retailers on flavors, although like a cherry cola launches.
Speaker Change: So, that we're leveraging. We do have, we talked about some of the new flavors, the sparkling watermelon, which, lemonade, which is amazing, the kiwi strawberry and our cherry cola. So, you know, it's a combination of how that portfolio works together. We're driving the total portfolio, not a specific flavor, but we do have lead launches with key retailers on flavors. So, although like a cherry cola launches, it's at A&P as a lead launch. So, it's a new flavor also available on Amazon and vitamin shop. If you haven't tried it, I suggest you try it. It's a really great flavor. So, you know, but it's a, as we look at it, we're really driving our total portfolio and then you have our Celsius essentials.
Unknown Executive: It's at AMP as a lead launch. So it's a new flavor, also available on Amazon and Vitamin Shop. If you haven't tried it, I suggest you try it. It's a really great flavor. So, you know, but as we look at it, we're really driving a total portfolio, and then you have our Celsius essentials as a great innovation and 16 ounce offering. That's performed very well this, you know, since launch, and we're going to continue to grow upon that.
Speaker Change: As you know, a great innovation is 16 ounce offering that's performed very well this, you know, since launch and we're going to continue to grow upon that.
Unknown Executive: Thanks for the color.
Peter Grom: Thank you. The next question comes from the line of Peter Grom with UBS.
Peter Grom: Please go ahead. Thanks, operator.
Peter Grom: Good morning, everyone. Hope you're doing well.
Speaker Change: Thanks, Operator. Good morning, everyone. I hope you're doing well. Maybe one housekeeping and one...
Jarrod Langhans: Maybe one housekeeping and one figure picture question here. I mean, maybe just to start going back to Jonathan's question. Just a Pepsi inventory dynamic. Like I just want to be clear. Do we should we expect another headwind as it pertains to three Q so kind of tape what we're seeing in the track data and then kind of backed out that you know $20 million and when or would you anticipate you know that track data and your reporting sales would be more aligned. That's just I just wanted to clarify that. I know there's a lot of moving pieces and three Q and four Q.
Unknown Executive: bigger picture question here. I mean, maybe just to start going back to Jonathan's question, just the Pepsi inventory dynamic, like, I just want to be clear, do we, should we expect another headwind as it pertains to 3Q? So kind of take what we're seeing in the track data and then kind of back that, you know, $20 million headwind? Or would you anticipate that the track data in your reported sales would be more aligned? That's just, I just wanted to clarify that.
Speaker Change: Take a picture question here. I mean, maybe just to start going back to Jonathan's question, just the Pepsi inventory dynamic. Like, I just want to be clear. Do we
Speaker Change: Should we expect another headwind as it pertains to 3Q? So kind of take what we're seeing in the track data and then kind of back that, you know, $20 million headwind. Or would you anticipate, you know, that track data in your reported sales would be more aligned? I just wanted to clarify that. I know there's a lot of moving pieces in 3Q and 4Q, so I think just unpacking that would be helpful. And then just bigger picture, I guess I would love to get some perspective on innovation.
Unknown Executive: I know there are a lot of moving pieces in 3Q and 4Q, so I think just unpacking that would be helpful. And then, just bigger picture, I guess I would love to get some perspective on innovation and kind of, you know, future shelf space. I mean, you touched on essentials in the release.
Unknown Executive: So I think just unpacking that would be helpful.
John Fieldly: And then just bigger picture. I guess I would love to get some perspective on innovation. And kind of you know future. Shell space. I mean you touched on essentials in the release. It reads pretty positive, but the share data has kind of largely been flat for some time. And you touched on some new innovation. But with total company share performance flatish or down sequentially, essential kind of flat. How does what you're seeing now and form your view and how much shell space you may get looking ahead. I'm just trying to get a sense for how you see shell space evolving, whether you're competent.
Speaker Change: and kind of, you know, future shell space. I mean, you touched on essentials in the release.
Unknown Executive: It reads pretty positive, but the share data has kind of largely been flat for some time, and you touched on some new innovation. But with total company share performance, flattish or down sequentially, essentials kind of flat, how does what you're seeing now inform your view and how much shelf space you may get looking ahead? I'm just trying to get a sense for how you see shelf space evolving, whether you're confident retailers are going to give you the incremental space for innovation that you intend to bring to market, just given the trends we're kind of seeing today. Thanks. Excellent, Peter. I'll let Jared talk about the inventory, and I'll take on your innovation.
Speaker Change: How does what you're seeing now inform your view and how much shelf space you may get looking ahead? I'm just trying to get a sense for how you see shelf space evolving and whether you're confident.
John Fieldly: Retailers are going to give you the incremental space for innovation that you intend to bring them up. We just do. Given the trends we're kind of seeing today. Thanks.
John Fieldly: Thanks, but Peter, I'll let Jared talk about the inventory, and I'll take on your innovation. Yeah, so like I said, it was 20 to 30 when we were talking in June; it ended up closer to the lower end of that range. You know time will tell as we get to Q3 in terms of where we land. I think in mid June we were at a good point in terms of providing what we expected. I think we'll. We'll have to see where we go. So, unfortunately, I can't predict what our partners will do. That's really up to them to continue to optimize their system.
Jarrod Langhans: Yeah, so like I said, it was 20 to 30 when we were talking in June, but it ended up closer to the lower end of that.
Speaker Change: Time will tell as we get to Q3.
Speaker Change: What we expected. I think we'll, you know, we'll have to see where we go. So unfortunately, I can't predict You know what our partners will do. That's really up to them to continue to optimize their system If it's if it's fully optimized then then we'll be in good shape, but there's still there's still some you know
Unknown Executive: If it's fully optimized, then we'll be in good shape. But there's still some flexibility within that system for them to further optimize. We'll have to see where that goes.
Unknown Executive: You know, we'll have to see where that goes.
John Fieldly: In regards to innovation, Peter, you know, really setting it up for next year. I think what's really key is that we continue to drive the category growth rate. Right? And then, you know, an outpacing the category. I think it's, you know, as we continue to do that, you have a really good selling story to retailers that you're, you know, number one, we're incremental. We have data that supports that, and you're driving the category growth rate within the sugar free. Those are mega trends within the category. We have a lot of great innovation plan for 2025, which we're really excited about.
Speaker Change: I think as, you know, as
Speaker Change: You know, number one, we're incremental, we have data that supports that.
Speaker Change: And you're driving the category growth rate within the sugar-free. Those are megatrends within the category. We have a lot of great innovation planned for 2025.
John Fieldly: You know, and we're actually just started initial discussions with a variety of key retailers for next year. So that have been, you know, fairly positive. So, you know, we're just taking some of those off. We're really close to our retailers. And so, I think we're in good shape as it stands now. You know, a lot, there's a lot of time left before now and the resets for next year. But I think we're in a really good position in our selling stories really strong. Why retailers need more Celsius? And what we offer and bring to them.
Speaker Change: which we're really excited about. You know, and we're actually just started initial discussions with a variety of key retailers for next year or so that have been, you know, fairly positive. So, you know, we're just kicking some of those off. We're really close to our retailers.
John Fieldly: Also, when you look at innovation, are on-the-go powder offerings, huge opportunity there. I've done extremely well and a variety of national retailers. And we're going to continue to build upon that. So we got great innovation coming for 25 when you look at on the go beyond the can and the growth within water bottles and, you know, Stanley cups and a variety of other packages out there as consumers move beyond plastic. So we want to be part of that and offer that energy offering, and it's been great acceptance within that. Thank you very much.
Speaker Change: And we're going to continue to build upon that. So we've got great innovation coming for 25 when you look at on the go, beyond the can. And the growth within water bottles and Stanley cups and a variety of other packages out there as consumers move beyond plastic. So we want to be part of that and offer that energy offering. And it's been great to acceptance within that.
Unknown Executive: Thank you.
Unknown Executive: Great. Thanks so much. I'll pass it on.
Unknown Executive: I'll pass it on. Excellent.
Speaker Change: Great. Thanks so much. I'll pass it on.
Speaker Change: Excellent.
John Fieldly: I will now turn the call back over to John Fieldly for closing remarks. Please go ahead. Thank you, operator. Thank you, everyone, for attending our webcast this morning. Our comments today convey the confidence we maintain in our company's strength and long-term growth potential. No other brand in the last decade has disrupted the category like Celsius. And we are as well are better positioned than anyone else to capture new consumers and remain the energy drink growth driver. We have excellent high quality products that I'll perform with taste and refreshment along runway both domestically and internationally. And this season's strong shelf resets are tailwinds for us to capture greater share.
Speaker Change: I will now turn the call back over to John Fieldly for closing remarks. Please go ahead.
John Fieldly: Thank you, operator. Thank you, everyone, for attending our webcast this morning. Our comments today convey the confidence we maintain in our company's strength and long-term growth potential. No other brand in the last decade has disrupted the category like Celsius.
John Fieldly: And we are as well or better positioned than anyone else to capture new consumers and remain the energy drink growth driver.
Unknown Executive: We have excellent, high-quality products that outperform in taste and refreshment, a long runway both domestically and internationally, and this season's strong shelf resets are tailwinds for us to capture a greater share.
Speaker Change: We have excellent, high-quality products that outperform with taste and refreshment, a long runway both domestically and internationally, and this season's strong shelf resets are tailwinds for us to capture greater share.
John Fieldly: Thank you to all of our employees, investors, our partners, and our customers for their unwary effort and achievement and vision to become the number one energy drink brand in the world.
Speaker Change: Thank you to all of our employees, investors, our partners, and our customers for their unwary effort and achievement and our vision to become the number one energy drink brand in the world. To all have a safe and healthy summer, grab a refreshing Celsius and live fit.
John Fieldly: To all, have a safe and healthy summer; grab a refreshing Celsius and lift it.
Unknown Executive: Ladies and gentlemen, that concludes today's conference. Thank you all for joining, and you may now disconnect.
Speaker Change: Ladies and gentlemen, that concludes today's conference.