Q1 2025 Celsius Holdings Inc Earnings Call
I had to wait a while for you to do this.
Good morning, ladies and gentlemen, and welcome to the social folding's first quarter, 2025 meetings conference call. At this time, all lines are in this mold only.
Following the presentation and the prepared remarks we will be conducting a question and an intercession.
Speaker Change: If you'd like to ask a question during that time, please press store 1 on your telephoto keypad. Thank you. I'd no like to have it all over to Paul Wiseman, investor relations. Please go ahead.
Paul Wiseman: Good morning, and thank you for joining Celsius Holdings' first quarter, 2025 earnings webcast.
Speaker Change: With me today are Jon Fieldly, Chairman CEO , Jarrod Langhans, Chief Financial Officer, and Toby David, Chief of Staff. We'll take questions following the prepared remarks.
Speaker Change: Our first quarter earnings press release was issued this morning with all materials available on our website, ir.stalkisholdingsync.com, and on the SEC site, SEC.gov. An audio replay of this webcast will also be accessible later today.
Speaker Change: These statements involve risks and uncertainties, many beyond the company's control.
Speaker Change: Celsius Holdings disclaims any duty to update for looking statements, except as required by law.
Speaker Change: Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by or for looking statements.
We'll present results on both a gap and non-GAAP basis.
Speaker Change: Non-GAT measures like adjusted EBITDA, adjusted EBITDA margin, adjusted deluded earnings per share, and their GAT reconciliation are detailed in our Q1 earnings release. And non-GAT financial measures should not be used at the substitute for our results reported in accordance with GAT.
With that, I'll turn it over to Jon.
Good morning everyone and thank you for joining us today.
Speaker Change: Celsius navigated a dynamic operating environment in the first quarter while continuing to invest in our core brand, product innovation and operational scale.
Speaker Change: We saw business fundamentals strengthening through the quarter and are encouraged by the positive momentum heading into Q2
Speaker Change: While the Iranian new acquisition now closed, continued gains in retail shelf space and strong international growth across both legacy and new markets, we are competent in our strategy and believe that we are well positioned to lead the modern energy category.
Speaker Change: Energy drinks are evolving, no longer Justin impulse purchase, functional modern energy is becoming part of consumers daily routines, lifestyles and pantry staples.
Speaker Change: Celsius is a uniquely positioned to lead this evolution with the portfolio of leading brands built around fitness, functionality and better for you energy.
Speaker Change: As previously announced, we successfully closed the acquisition of Alonnie New on April 1st.
Speaker Change: adding a second billion dollar brand to Celsius Holdings growing functional beverage platform.
Speaker Change: Together, we are well positioned to lead the modern energy revolution with great product innovation and excellent network of distributors and retail partners and the team to pull everything together.
Speaker Change: Celsius continues to pursue operational excellence to support this commitment. We appointed Eric Hansen, our first president and chief operating officer in March.
Speaker Change: Eric brings nearly three decades of food and beverage leadership experience, including senior roles of PepsiCo. We believe that his experience will help us drive operational excellence, scale, and unlock greater efficiencies in our partnership with Pepsi.
and Vargas Costover and North American Distribution Partner.
Speaker Change: Our Big Beverages facility now fully integrated provides us greater manufacturing flexibility, faster innovation cycles, and it can accommodate a second production line in the future within his current footprint as the man's scale for Celsius products and portfolio.
For the first quarter of 2025, Revenue Total, 329.3 million,
A 7% decline compared to the prior year quarter.
Speaker Change: Reflecting three primary factors, slowed velocity in the first quarter, timing and structure of our US distributor and center program, and increased retail promotional programs.
Speaker Change: It's also important to remember that we were lapping a very strong first quarter in 2024 and again nationwide distribution of Celsius essentials.
and had elevated dedicated retail promotion takeovers providing strong tailwinds.
Speaker Change: Adjusted EBITDA for the first quarter of 2025, was 69.7 million, with a margin of 21.2%, gross margin expanded 110 basis points to 52.3%, supported by sourcing efficiencies for raw and packaging materials.
Speaker Change: International revenue grew 41% to 22.8 million demonstrating strong organic growth in our legacy markets as well as our newer expansion markets, including the UK, Ireland, France, Australia, New Zealand.
As previously noted,
Speaker Change: We have a grounded approach to global expansion, but we are pleased to see the progress that has been made thus far and would look for this component of our business to pick up in the future years as we expand further within new markets and adding additional markets.
Speaker Change: In the US, track channels, Celsius held a 10.9% dollar share for the 13 weeks ending March 30, 2025, according to Shakana.
Speaker Change: We've held steady in category share despite a challenging consumer environment, increased competition, and strong pricing action by other category players.
Speaker Change: Alonni New Retail Sales increased 88% year-over-year, reaching a 5.3% share, up 221 basis points just last month, Alonni News surpassed 1 billion and trailing 52-week retail sales.
Speaker Change: This extraordinary achievement reflects the strength of the brand's connection with consumers and the accelerating momentum in the better for you functional beverage space.
Thank you.
Speaker Change: Combine the Celsius Holdings portfolio captured a $16.2% share in the quarter-ending March 30th.
and 81 basis point increase year-of-year.
Speaker Change: Together, Celsius and Alani Neu accounted for approximately 20% of total energy drink category dollar growth and the first quarter of 2025, following a strong 50% contribution to total category growth in 2024.
Speaker Change: We are focused on strengthening our core Celsius brand, accelerating sales, increasing velocity, and growing our in-store presence with consumer-centric innovation and a new exciting marketing campaign that will begin this summer.
Thank you.
Speaker Change: As we look forward, the second and third quarters this year.
Speaker Change: We expect to continue gaining incremental space at retail, helping the drive greater consumer awareness and flavor availability, including recent innovation like Celsius Playa Vod, Retro Vod, Menmango Lemonade
Speaker Change: According to Sakana, our average items selling per store within the Celsius brand family increased by 4.1 items and Mulo plus with convenience during the first quarter.
Speaker Change: with even greater gains in the food and chain convenience channels, underscoring the continued expansion of our in-store presence.
Speaker Change: This year's games are particularly meaningful because they lap the strongest shelf reset cycle in our company history which were reported during our Q1 2024 earnings call.
Thank you.
Speaker Change: Dollar sales for sugar-free energy drinks surpassed full sugar varieties for the first time in 2024 and the incredible momentum of these better for you functional beverages from 86% of category growth in Q1 2025.
Speaker Change: Celsius and Alani, Energy Drinks, and powders are 100% sugar-free, and we are leaders in this growing segment.
Our Live Fit Identity [inaudible]
Health Focus, aspirational, daily functionality, deeply resonates with today's consumer.
Speaker Change: We believe that female consumers represent a large and underserved segment of the energy category.
Speaker Change: and Celsius is uniquely positioned here with a greater gender-balanced consumer base.
Speaker Change: The edition of Alonni New, a brand beloved by women, sanctions this advantage even further.
Speaker Change: Innovation continues to fuel our overall growth. In Q1 2025, we launched a new core vibe and essential flavors.
Speaker Change: And we expanded our multi-pack offerings which now represent approximately 28% and 55% of a retail sales mix and Mulo Plus convenience and Mulo Plus
Speaker Change: Further bolstering are placed within the pantry and confirming that Celsius modern energy is going mainstream.
Speaker Change: Our launch of Celsius Hydration, a new line of zero sugar, zero caffeine electrolyte, powder sticks.
Speaker Change: Extender Brande into the fast growing $1.4 billion hydration powder category
Speaker Change: Food Service continues to be a strategic growth channel for Celsius.
Speaker Change: and Q1 2025. We expanded into more than 1800 home depot locations, increasing brand presence and everyday on-the-go consumption moments. We also recently began rolling out Celsius.
and 18,000 sub-way locations nationwide. All right.
Speaker Change: A significant win that enhances both distribution and visibility during meal occasions.
Speaker Change: These new points of availability reflect our growing role in functional daily energy.
Speaker Change: Food Service now represents approximately 13.4% of North America sales through PepsiCo.
Speaker Change: and we see compelling runway ahead as we deepen our presence across work, retail and restaurant locations.
Speaker Change: Our Marketing Initiatives continue to drive awareness and trial, highlights and Q1 include our NIL March Madness Campaign for the 136 ATHLEE Partnerships.
Speaker Change: The launch of Jaden Daniels as the first ambassador for Celsius Hydration.
Speaker Change: A targeted activation with MLB star, Juan Soto, to promote play of eye that Walmart.
Speaker Change: We are increasing our marketing investments behind our core Celsius brand and our live fit identity.
Speaker Change: These investments will support our strategy of reaching more people in more places, more often. Beginning this summer, you will see bold story driven campaigns showing how Celsius helps people live fit, achieve their goals, and align with wellness driven lifestyles.
Speaker Change: Overall, we are pleased with the improvements in business fundamentals. We saw exiting the first quarter and the momentum we are building into the spring and summer seasons.
Speaker Change: We believe Celsius Holdings is uniquely positioned to lead the modern energy category with a portfolio of brands that addresses the growing consumer demand for functional better for you beverages across energy hydration wellness occasions. [inaudible]
Speaker Change: With innovation, operational leverage, international expansion, and strong retail partnerships. We are confident our ability to drive sustained growth and value creation in 2025 and beyond.
Speaker Change: Thank you. I'll now turn the call over to carry to review our financial results in more detail.
Jordan
Thank you, John , and good morning everyone.
Speaker Change: First quarter revenue totaled $329.3 million compared to $355.7 million in the prior year period representing the 7% decline.
Speaker Change: As Jon noted, Revenue performance reflects soft Q1 velocity, the timing and structure of our main distribution partner incentive program, timing and breadth of our retail promotion allowances, weighted later in the quarter, and lapping the nationwide launch of Celsius essentials in Q1 2024.
Speaker Change: Gross Prophet told $172.4 million compared to $182.2 million in the prior year period. The year-over-year gross margin expansion of 110 basis points to 52.3% was supported by sourcing efficiencies for raw unpackaged materials.
Speaker Change: We are pleased with the continued expansion and gross margin even as we invest in growth and support our innovation.
Speaker Change: Selling General and Administrative Expenses told $120.3 million, compared to $99 million in the prior year.
Speaker Change: The increase reflects transaction-related expenses for the Iranian new acquisition, along with continued investment in global sales, marketing and organizational infrastructure.
Speaker Change: non-GAAP Adjusted Yvita was $69.7 million for the quarter, representing a 21.2% margin compared to $88 million and $24.7% margin in Q1, 2024 driven by the organizational investments.
Speaker Change: Net income attributable to common shareholders was $34.4 million or 15 cents per diluted share. non-GAAP adjusted diluted EPS with 18 cents.
compared to 27 cents in the prior period. [inaudible]
Speaker Change: As of March 31st, 2025, our balance sheet remains strong, with $977 million in cash and no outstanding debt. It is important to note that these figures reflect our cash position prior to the close of the Alani New acquisition.
Speaker Change: In connection with the closing on April 1st, we utilized a mixture of $900 million in debt, approximately $400 million in cash, with the remainder in stock to acquire Alonnie new, which will be reflected in the Q2 financial statements.
Speaker Change: We remain confident in our liquidity position and our ability to support future growth initiatives.
Speaker Change: Innovation continues to support growth and momentum across our retail channels. Recent innovation, including the essentials line and multipax, are contributing meaningfully to retail sales and Celsius hydration, launch late in January , is gaining early traction as we expand into the high-growth hydration powder segment.
Speaker Change: We believe that our distribution gains across the portfolio, positive spring, shelf resets, and expanded field sales and merchandising execution continue to position as well for the important summer selling season.
Speaker Change: Looking ahead, our focus remains on improving velocity, expanding household penetration, growing share across functional beverage occasions, and delivering operational efficiency through scale.
Speaker Change: We remain confident in our strategy and our ability to remain resilient through the uncertain economic times thanks to our robust supply chain operations as well as mitigation strategies which we are pursuing to best position us for long term advantage.
Speaker Change: Before I turn it back over to the operator for questions, I want to mention that we are planning a public call this quarter to discuss modeling and general financial considerations for a long afternoon.
Details will be communicated in an event.
Speaker Change: As a part of this call, we will put together a pro form of use of our combined business and provide further insight around the purchasing impact of the acquisition such as inventory step up and how that will impact Q2 as we sell through the inventory on hand at April 1st on the acquisition date.
Speaker Change: As well as valuations around intangibles and fixed assets which will result in increased appreciation and amortization.
Speaker Change: With that, I'll turn the call back to the operator to open the line for questions. Thank you.
Thank you.
Speaker Change: We are now opening the floor for question and answer session If you'd like to ask a question please press star fold by one on your telephone keypad that's star fold by one on your telephone keypad
Please limit your question to one question only. [inaudible]
Thank you
Speaker Change: Your first question comes from the line of Kaumil Gajrawala of Jeffrey's, your line is now open.
Thank you.
Camille Gargiola: Hey guys, good morning. Can you maybe we're seeing energy drinks as a category accelerate at a time where almost everything else in CPG seems to be going the other way to them. Just curious if you've dug into that or maybe just some details on what might be behind it.
[inaudible]
Camille Gargiola: Yeah, morning. This is you're seeing a lot of
Camille Gargiola: The first quarter was really good for the energy category and even going into last year still driving volume and dollars. So the energy category has been a kind of resilient on both dollar and volumes over the last several years. I know we had pressure in Q3 and 4.
Camille Gargiola: Q1 was a very strong start to see growth rates come back.
Camille Gargiola: I think you're also, you know, these health and wellness trends and the amount of innovation we saw in the quarter coming from a variety of competition. I think drove a lot of excitement for consumers to try and that's where you're seeing some of these results here.
Camille Gargiola: Okay, got it. And then you mentioned many times in your prepared remarks on, you know, this focus on velocity. What specifically are you doing to increase those figures?
Camille Gargiola: When you look at the first quarter, we got off to a slow start. [inaudible]
Camille Gargiola: Probably the largest, we did have the largest distribution gains as well as innovation launching in great support and promo activity as well.
Camille Gargiola: with some of those lead launches. So we're cycling that, and we're a little bit softer in the back half of the year in 2024. And so this year changing some of those strategies and key learnings, putting us into more of a balanced approach.
Camille Gargiola: and then we're really leaning in. We're building programs around LiftFit. I've been doing a lot of research around the DNA of the brand and how we can resonate and bring more consumers into the category and really be a driver and continue to be a driver in the growing segment of sugar free.
Got it. Thank you. Thank you.
Speaker Change: Thank you. Again, kindly limit your questions to one question only. Thank you. Your next question comes from the line of Peter Grom of UBS. Your line is now open.
Peter Grom: Thank you, operator. Good morning, everyone. So I just wanted to, you know, get some perspective on the first quarter sales performance, I think.
Speaker Change: John , the release you mentioned, sales growth of retail sales growth of 2%. But can you maybe just regest the kind of the high single digit decline in North America? I know you mentioned from some promotional allowances and tough comps with essentials, but it just seems like there's...
Speaker Change: You know, maybe another component that we need to kind of get or bridge to get to that, you know, decline in North America. So just
Speaker Change: If we can maybe walk through that, or if you can quantify, you know, what those impacts were, and then I guess what I'm really trying to get at is, is there a way to kind of parse out what kind of the underlying shift trends or depletion trends were in the quarter after basking out all the noise. Thanks.
Yeah, no, Peter, like what you said, there's, you know.
Speaker Change: We had a slow start to the quarter. It was increased competition. We started to see velocities and improvement as we're exiting Q1 so we're very optimistic as we continue to move through and enter Q2.
Speaker Change: You know, when you look at some of the launches we had last year, some of the key retailers were substantial. Versus this year, you're looking at more of a balanced approach with some of the promotional activities, versus retailers leaning in on one specific brand, so we were impacted by that. And then you know, when you look at.
Speaker Change: Some of the promotional activities, you're also cycling some of the, you know, the additional incentive for our distribution partner. And when we're looking at, you know, the inventory levels, I'll throw that over to Jared, comment on some of the supply chain and inventory levels and kind of what we're seeing there.
Speaker Change: at the 10,000-foot view or the simple view. Do you look at the scanner data we were kind of at minus four?
Speaker Change: and then we ended from our books and records at minus seven.
Speaker Change: You've got a couple points in there from the promos and incentives and then you've got a little bit of timing not on the DSD but more non-DSD where we saw a little bit of pipe filling in the back half of the year.
Speaker Change: versus having the programs run in Q1, so within some of those categories you saw good growth at Scanner, but we did have a little bit of a load in Q4, and so then there was some noise at the very end of the quarter. When it comes to depletions with our primary distribution.
Speaker Change: Network from across the Cobos and Fobos. Those that optimization appears to be in good shape and didn't cause much noise in this quarter from what we can see.
Speaker Change: Got it. Thanks so much. I'll pass it on. Thank you.
Speaker Change: Your next question comes from the line of Kevin Grundy of B&P Paribus. Your line is now open.
Hey, good morning everyone.
Speaker Change: John , I was hoping you could comment on pricing in the category. I think there's been a good amount of enthusiasm around.
Speaker Change: The pricing that monster has led on 75% of the portfolio. I think there's an expectation they'll price on the balance of it, but it seems like kind of a mixed picture where Red Bull really hasn't followed in the past that's led to some trepidation among investors, whether they will or not. Can you just comment broadly on pricing in the category maybe, and what your plan is for the balance of the year, both from a pricing and promotion perspective, that would be appreciated. Thank you very much.
Speaker Change: Very much. Yeah, Kevin. Sure. You know, it's pricing where there's opportunities and there's opportunistic opportunities to take additional pricing. We feel very confident in our branch.
Speaker Change: We're going to be very cautious as well, keeping a close eye on the consumer. There is, you're seeing consumers, some move from purchasing singles to purchasing at larger format with multi-packs and looking for promos, so we are
Speaker Change: Someone cautious as we move through the next several months and quarters about promotional activity. We want to be very aware of that and pay attention very closely to how the consumer is purchasing and the purchasing habits.
Speaker Change: I will say we did take pricing at NQ for last year so that has been rolling through and you know there's opportunities and opportunistic ways to leverage that as we're going through we will
Speaker Change: It does allow us to have additional flexibility with promotional activities as we're entering into somewhat uncertainty, we feel with the consumer and some of the channels that we're operating in.
Thanks guys, I'll pass it on [inaudible]
Speaker Change: Your next question comes from the line of John Andersen of William Blair, your
John Anderson: Hey, good morning. Thanks for the question. I was wondering if you could put a little bit more color around the shelf space.
Expansion, you expect this spring, obviously you had a terrific
Shelf Reset, last year.
John Anderson: and could you talk a little bit about trying to mentionize it, both for the core brand Celsius, but also your expectations for...
John Anderson: Kind of a Lonnie Nu, and how you may, you know, kind of activate the consumer around those games this spring relative to kind of last year. Thanks.
John Anderson: Yeah, John , great question. You know, right now we do have, as mentioned in the in the prepared remarks, we have some great innovation that we'll be rolling rolling out. And that is our play a vibe, our retro vibe and mango lemonade for summer. So we expect that to gain additional placements.
John Anderson: You know, it's really also the secondary placements and display activities has been a really key for us. So as an example, gaining additional checkout coolers has been some really big wins that have been flowing through in some retailers, large national retailers which we're really excited about. So making sure we have closer availability, closer to that checkout so we can take advantage of those purchase, that app purchase impulse purchase.
John Anderson: Percy Cajun, so that is really was really promising this year on the amount of coal placement we gained at checkout so as that continues to fill out that will provide additional velocity improvements as well having that availability. Thank you very much.
John Anderson: Looking at a Lonnie, really excited about a Lonnie. I think there's a lot of opportunities there.
John Anderson: especially working closely with our key accounts team. And as we position and really get ready for buyer meetings in 2026, you know, key account meetings.
John Anderson: It's going to be really exciting, especially the momentum that they've had, you know, entering summer and going to be exiting summer. They just broke a billion dollars in retail sales, which is just an amazing achievement. It's got a great brand that's resonating with an extremely loyal female consumer base.
John Anderson: and we're extremely optimistic about the distribution games we'll be able to gain with the Elani Portfolio.
Thank you.
Thank you.
Thank you.
Speaker Change: The next question comes from the line of Andrea Trixieira of JP Morgan, your line is now open.
Andrea Trixiera: Thank you all for having good morning, everyone. So, Jon, I understand the new...
Andrea Trixiera: On-premise and other channels like Home Centers, but conversely, you had a sipped decline at Costco. Did you lose distribution there, or is there any destocking that you'd highlight? And I understand your base fear that was also down. I don't know.
Andrea Trixiera: And in a clarification for Jarrod on how much sales were down in North America if you exclude the change in allowances year over year understand that you've been telling us that these allowances would increase. So then if we can do like a apples to apples or underlying growth that would be super helpful.
Andrea Trixiera: And if I can layer that as well on the on the stalking impact that you might see related and trying to calculate the stalking, this is your sellout.
Okay, excellent. Rounces to stocking and Costco. Jarrod, you wanna?
Jarrod Langhans: Well, I just when Peter was on I just mentioned if you look at kind of we were down roughly 4% at the scanner data a couple points to in versus our minus seven a couple points to get to that minus seven was related to promos and incentives.
when we're looking at...
Speaker Change: Costco, if you're looking at the scanner data, it was up.
Jarrod Langhans: We did run an MVM this quarter. When you run those typically you get a little bit of a pipe fill.
Jarrod Langhans: The quarter before or the month before, so that caused some of the noise within the system.
Jarrod Langhans: If you look at, I'll throw something out there just in case it comes up, but if you look at kind of our revenue as a percentage of sales and our AR as a percentage of sales, there's a little nuance within Costco as well, that's just timing of payments.
More of a working capital component, so no issues there. What was the...
Speaker Change: Talk about allowances with promos, talk about Costco, about our timing. Not only at Costco but in general, sorry to interrupt, but just in general the allowances total against because it's hard to calculate the allowances over a year. I mean it's not disclosed so we wanted to just like get it clarity on those.
Jarrod Langhans: Well for this quarter we talked, we said it was a couple of percentage points.
Speaker Change: Yeah, on a sequential basis though, I mean I understand and it probably it will be helpful for all of us to understand how the allowances will face in I understand this is going to be with us for the next that the minimum and the next three quarters is that fair?
Speaker Change: Sorry what you're saying. So if we look out over the remainder of the year, you probably got a couple points, pressure and Q1 and Q2.
Speaker Change: And then it should flip in Q3 and Q4, where we'll benefit by a couple points because we saw it go up a bit with some of the destocking last year. So first half of the year, you'll see a little bit of pressure from that back half of the year. When we're looking at year over year, you'll see benefit.
Speaker Change: Right. And then on the, on the couple of points of this stalking, can you help us like kind of understand the phasing of you as well? Is that a similar impact?
Speaker Change: There wasn't destocking, so if you're looking year over year and we're talking just promos and incentives, we talked about a couple points this quarter, a couple points next quarter flipping through positive couple points in Q3 and Q4.
Speaker Change: If you're looking at de-stocking, when we talked about depletions within our DSD network, we said that it was pretty stable in this quarter and ended up pretty stable as we ended the prior year as well. There was some timing and sequencing of...
Speaker Change: and Keypour into Q1, and a little bit of noise at the very end of our quarter, but nothing else to call out from that perspective.
Speaker Change: And I'll just add, even with the allowances there, we were able to mitigate some of those allowances with a strong, gross profit number for the quarter, which really flowed through to EPS, EBITDA as well.
Speaker Change: Your next question comes from the line of Michael Lavery of Piper Sandler, your line is now open.
Michael Lavery: Thanks, good morning. Just one for me. I want to come back to gross margins.
even with some of the increased incentives and allowances.
Michael Lavery: Russ Marners, we're very strong. You called out some better sourcing efficiencies.
Speaker Change: Any other color you can add, or you know, especially just help us understand how sustainable that might be. If should we have any watchouts, but looking a little further ahead from aluminum or, you know, just a little help on kind of what drove the lift and where it might go from here.
Speaker Change: Yes, so in the near term or the short term, we're in great shape as you saw with the the margin profile.
Um...
Speaker Change: We, as we have scaled and created our orbit model and utilized our organizational structure we've been able to benefit from a gross profit perspective.
Speaker Change: The aluminum knock on wood right now is not something that we see being significantly impactful to us.
Speaker Change: Unfortunately, we don't know where things will go with the tariffs and how those things are going to come into play long term.
but in the short term, looking out at Q2.
Speaker Change: We see still strong, gross profit numbers. I think we kind of pegged 50% for the year. We're not going to move off of that at the moment.
Speaker Change: But really as we look to the back half of the year, it's kind of an unknown in terms of what's going to happen.
from an inflation perspective or a tariff perspective. .
Speaker Change: As we look at Q2, we're in good shape, our structure set up well, our scale has benefited us and the orbit model and infrastructure that our supply chain team is set up is really is coming through and it's set up as a long term program to be sustainable. .
Okay, great, thanks so much.
Your Electrical...
Speaker Change: Our next question comes from the line of Jim Salera of Stephens. Your line is now open.
Guys, good morning. Thanks for that question.
Jim Salera: I wanted to ask about, are there any formats or retailers where Alani knew actually performs better than the core salesiest brand? And if so, how should we think about kind of utilizing the brands to maybe cross-pollimate each other and help get placement in retailers where one is stronger than the other?
Thank you.
Jim Salera: Jim, you know, we see great opportunities with both of our brands in the portfolio. Actually, all three when you look at
Jim Salera: for Form Well, a lot of opportunities as we continue to scale that as well add.
Archor, Celsius, and then Alani, specific locations. [inaudible]
Jim Salera: You know, I think we need to really get that further into the system, really work on further pricing promotional activities. You know, it's just entering convenience. You have, there's a huge opportunity with Alani as we integrate it further within our Amazon teams.
Jim Salera: and also restaurants and food service, college universities and opportunities we're working on right now through our distribution partners is further expanding up within on premise.
Scott
Jim Salera: You know, a lot of opportunities there with both these portfolios. They have different consumer segments.
We've talked about...
Jim Salera: You know, cannibalization, there's been a lot of big question prior.
Jim Salera: You know, the cannibalization has been somewhat minimal according to our data from Sercona. It's about a 15% crossover. And some of the both these portfolios over index with some of the other leading brands that are out there within the category. So this portfolio is going to give us a really strong position.
Jim Salera: to continue to drive growth in the category for years to come and leverage the tailwinds of health and wellness. Also, more female consumers are expected to come into the category than ever before if you go over the last decade. So we're really excited about our being well positioned for the future. Thank you.
Speaker Change: Can we get an update on branded cooler placements and maybe thinking through the comment you just made about limited cannibalization?
Speaker Change: Is there an opportunity to have, you know, Pope branded or cross branded coolers that have Bethelani and Celsius that would obviously be a very visible and stored and minimal on the cannibalization side?
Speaker Change: Yeah, I mean, you're seeing that now in locations, a lot of grocery stores. I mean, we're all energy is kept in energy sats and energy coolers. So, you know, it is a lot of a lot of times Celsius Hollani are placed right next to each other, right next to Red Bull and Monster.
So that is something you know standard in the industry.
and the cooler placements, that's a huge focus for us.
Speaker Change: Gaining additional cooler placements is a big push, a big KPI for our sales team [inaudible]
Speaker Change: We're placing dedicated coolers and as we're rolling in and partnering further and integrating Alani we will be looking for we're evaluating co-branded coolers or and or dedicated coolers based on the retailers footprint and space availability.
Speaker Change: A lot of small format stores aren't able to take multiple coolers. We'll work on a co-branded cooler. That's something that's in the works. And then also more space and availability and opportunities to place dedicated coolers. That's always our priority number one.
Speaker Change: Your next question comes from the line of Gerald Pascarelli to meet him and company your line is now open.
Great. Thanks very much.
Speaker Change: Just a question on your core portfolio. So as we look ahead on a standalone basis, it seems like you have a lot of tailwinds on the horizon. You have the new innovation, 15-20% shelf reset winds, easier comms, a new marketing campaign, etc.
Speaker Change: So, Jon, taking all of those tailwinds, can you maybe just provide some color or talk about your level of conviction or confidence?
Speaker Change: that we start to see poor revenue trends improve from here. Any color there would be great. Thank you. Yeah, Gerald, I mean your spot on, I mean the tailwinds look really favorable, especially after we get through really the next three to four to five weeks, it's kind of the peak. [inaudible]
Speaker Change: Revenue hurdles that you're seeing in a week-over-week basis or first of the prior year.
Speaker Change: Once we get into really June , you'll start to see so much easier comps that will have to, that will, Celsius will be cycling and the improvement in velocity that we've been seeing also is giving a strong conviction as we continue to build upon, you know, the consumer health and wellness trends that are out there the categories come back to really strong growth.
Speaker Change: We know we have both our brands and our portfolio really. Thank you very much.
strong brand positions that are aligned with consumers.
Fundamentals, Armed Proving, look at gross profit improvements.
Speaker Change: The acquisition of big beverage, the leverage of our infrastructure as Jarrod talked about with the orbit model.
Speaker Change: Driving efficiencies with both these brands coming together and leveraging a strength of a portfolio versus going singularly into the category. Now we'll be able to do a variety of additional pricing promotional strategies that we weren't able to do prior and we're really excited on where we're headed. And the core fundamentals of our core portfolio, Celsius,
Jarrod Langhans: You're right, Gerald, it does have a lot of tailwinds as we're entering summer in the back half of this year.
Speaker Change: Your next question comes from the line of Sean McGowan of Rob Capital Partners. Your line is now open.
Sean McGowan: Thank you. I hope you could talk a little bit about international, how is that market by market going relative to your expectations?
Sean McGowan: Yeah, international, we've always been very cautious, cautiously optimistic. It's all about timing and sequencing and really finally following our strict strategic approach on entering new markets. And the international expansion in these new markets has been known.
Sean McGowan: Well received, better than initially expected. Also, you know, entering new markets, you need to be very cautious. It's difficult.
Sean McGowan: Tiley Competitive, as we all know, but the acceptance has been very important.
Well received, Australian New Zealand. We'd launch with specific key retailers.
Sean McGowan: The new consumers coming into the category, additional share from other players within the category was really great to see. So we're rolling out a variety of other retailers.
Sean McGowan: International will be a growth area for us. There will be additional markets and opportunities as we go through 2026 and 27 and beyond.
Sean McGowan: Right now in 2025, we're very much focused on these core markets that we've launched last year in Q4, and continuing to roll that out and build upon and drive a loyal consumer base. Our goal is to drive daily consumption.
Sean McGowan: and the same health and wellness trends we're seeing in North America. These are global trends.
Sean McGowan: And the world right now is one click away within our social media and influencers and a lot of the campaigns we're running we're getting much broader reach as the world has gotten extremely small. So really excited about the future that we see on our international expansions and opportunities.
Thank you very much, John .
Speaker Change: Your next question comes from the line of Steve Powers of Deutsche Bank, your line is now open.
Thank you.
Steve Powers: Hey, thanks very much. Good morning. Jared, I want to go back to the gross margin, gross profit if I could.
because I appreciate.
Speaker Change: of the prudence and just the allowances for the unknown going forward in this environment. But I guess are there any kind of known? I don't know.
Speaker Change: Headwinds that you would call out in terms of reasons for sequential moderation in the gross margin from where we...
where we saw in the Q1 land.
Speaker Change: I think the 50% number you caught up for the year was a, was a base business number and I'm sure we'll hear more on the Alonni new modeling call later in the quarter, but, but any, any considerations there as we think about how that layers in from a gross profit perspective, that would be helpful to you. Thank you.
Speaker Change: Yeah, thanks for clarifying that you're right. That was the Celsius core business margin that I was referring to. We'll do a call later in the month or early June .
Speaker Change: to call out kind of what the impact will be with the Alani getting rolled into from a consolidation perspective. There will be some noise around the inventory step up for the quarter as we turn through the inventory that existed at 4-1 when we required the business. That's really just a purchase accounting issue more than anything. [inaudible]
in terms of the core business.
You know, I think we're like we said we're comfortable with
with kind of where we are for the quarter. Thank you very much.
Speaker Change: Keypour is a little harder to tell, a little harder to draw a line in the sand on that one because there's still a lot of activity going on. It could be opportunities for improvement, or it could be opportunities for further pressure.
Speaker Change: I think the structure we have set up today is good, it's a good robust supply chain, but again, if different things that the government does are going to impact that, we'll come out and let you know . . .
Speaker Change: I think that's all we're going to say at the moment when it comes to Alani, I think I said back on the 220 call that they're about 18 to 24 months behind us in terms of our P&L profile, put the inventory step up aside.
So, they would be kind of...
Speaker Change: where their structure would be, it would be kind of mid forties or probably low end of mid forties that will work up to get to the same profiles as from the gross proper perspective. And then we'll get more into the nitty-gritty when we have the modeling call and show some pro form of use around 2024 and go forward. Thank you very much.
Speaker Change: Thank you. I'd now like to hand the call back over to Chairman MCEO, Jon Fieldly. Please go ahead.
John Fieldly: Thank you again for joining us today. We're proud of the continued progress we've made and energized by the opportunities ahead.
with Strong Brands.
John Fieldly: Focus Strategy and Growing Global Momentum. We believe Celsius Holdings is well positioned to lead the next phase of growth in the modern energy category. I also want to thank our employees and partners around the world for their dedication and commitment. Thank you very much.
John Fieldly: Their efforts continue to power our success. We appreciate your continued support and look forward to updating you again next quarter. Grab a Celsius and lift it.
John Fieldly: Thank you for attending today's call. You may now disconnect. Goodbye Bye.
Chinatown.