Summary of Celsius Holdings Conference Call Company Overview - **Company**: Celsius Holdings - **Industry**: Beverages, specifically energy drinks Key Points and Arguments Q3 Performance - Celsius reported a strong Q3 with **$200 million in EBITDA** and a **13% year-over-year growth rate** as per Circana data [2][4] - Alani Nu brand is projected to reach a **$1.2 billion run rate** by the end of Q3, capturing over **20% market share** in its category [4][34] Marketing and Promotions - The company emphasized the success of the **Live Fit Go campaign**, which has been a significant driver of growth since its launch in June [2][4] - Promotional activities included participation in **Amazon Prime Day** and various promotions at **Costco**, which contributed to revenue recognition timing discrepancies between Q2 and Q3 [3][4] Transition to PepsiCo - The transition of Alani Nu into the Pepsi system is underway, with expectations for a smooth integration [5][6] - Management indicated that the transition may not result in the typical large inventory fill due to cash management practices at large CPG companies [6][7] Market Dynamics - The energy drink category is experiencing healthy growth, with Celsius and Alani Nu attracting new consumers, particularly among females and those seeking sugar-free options [13][14][17] - The company anticipates continued growth in the energy drink sector, albeit at a more sustainable rate than the mid-teens growth seen recently [14] Competitive Landscape - Celsius is positioned as a leader in the female and sugar-free segments, with a strong brand identity that takes time to build [27][28] - The company acknowledges increased competition, particularly from Monster, which is launching a female-focused product [27][28] Future Outlook - The management is optimistic about Q4 and 2026, expecting improvements in gross margins and EBITDA as integration with Pepsi progresses [48][49] - The company plans to continue investing in marketing, with **23%-25% of revenue** allocated to sales and marketing in Q4 [50] Capital Allocation and M&A Strategy - Celsius announced a buyback program to address perceived undervaluation and is open to future M&A opportunities, particularly in vertical integration [54][55] - The company is also focusing on enhancing its manufacturing capabilities to drive efficiencies [56] Protein Product Opportunities - While the primary focus of the Alani Nu acquisition was energy drinks, there is potential for growth in the protein category, although no immediate plans are in place [57][59] International Expansion - Celsius aims to expand its international footprint, currently at about **5% international sales**, with plans to evaluate new markets [63][64] - The company is building a robust international team to support this growth [65] Conclusion - Celsius Holdings is positioned for continued growth in the energy drink market, with strong brand identities, a successful transition to Pepsi, and a focus on marketing and international expansion. The management remains optimistic about future performance despite current market challenges and competition.

Core Insights - Celsius Holdings, Inc. (CELH) shares have declined approximately 27% following the release of its Q3 fiscal 2025 results, despite reporting strong quarterly performance [1][7] - The company's stock has underperformed compared to the industry, Zacks Consumer Staples sector, and the S&P 500 over the past month, with a 28.4% drop in shares against a 5.3% decline in the industry and a 0.6% decline in the sector, while the S&P 500 increased by 3.2% [2] Financial Performance - In Q3 2025, Celsius Holdings achieved a net sales increase of 173% year over year, reaching $725.1 million, driven by strong performance from the CELSIUS brand and contributions from acquired brands Alani Nu and Rockstar [3] - Adjusted earnings per share rose to 42 cents from 30 cents in the previous year, and adjusted EBITDA increased to $205.6 million, indicating ongoing margin expansion and operational efficiency [4] Short-Term Challenges - Management indicated that Q4 will be "noisy" due to the transition of Alani Nu into PepsiCo's direct-store-delivery system and the ongoing integration of Rockstar, which may lead to temporary fluctuations in sales and margins [5][8] - Potential headwinds include increased costs related to freight, scrap, tariffs, and promotional timing shifts, which could create uncertainty around near-term performance [9] Growth Potential - Despite short-term challenges, the underlying momentum for Celsius Holdings remains strong, with retail takeaway data showing a 13% year-over-year increase in CELSIUS brand sales, and Alani Nu continuing its growth trajectory [10] - The partnership with PepsiCo is a significant growth driver, enhancing Celsius' retail reach and market presence [10] Financial Position - After the quarter, Celsius Holdings improved its balance sheet by reducing debt by $200 million, which lowers interest expenses and enhances financial flexibility heading into 2026 [11] - Analysts have raised earnings estimates for Celsius Holdings, indicating confidence in the company's ability to sustain strong growth into 2026 [12] Valuation Concerns - Despite solid fundamentals, CELH's stock is considered pricey, with a forward 12-month P/E ratio of 29.67X, significantly above the industry average of 14.48X [13] - The stock's premium valuation reflects its faster growth trajectory but may lead to volatility if margins or volumes do not meet expectations [15] Summary - Celsius Holdings has demonstrated strong growth in Q3, expanding its revenue and profitability while integrating recent acquisitions. The post-earnings stock decline appears to be driven by short-term transition issues rather than fundamental weaknesses. With upward trending earnings estimates and steady demand for energy drinks, CELH remains a compelling growth story, though investors may prefer to wait for clearer signs of margin stability before making new investments [16]

Core Insights - Celsius Holdings, Inc. reported a significant revenue increase of 173% year over year, reaching $725.1 million in Q3 2025, driven by new brand additions and growth in its existing portfolio [1][10] Revenue Performance - Alani Nu was the top performer with sales of $332.0 million, while the core CELSIUS brand experienced a 44% growth in the quarter [2][10] - Rockstar Energy contributed approximately $11 million in revenues and about $7 million in other income during its first month under Celsius ownership [2] Revenue Growth Analysis - Management indicated that the reported revenue growth was substantially higher than scanner data from U.S. retail stores, with the CELSIUS brand showing only a 13% increase compared to the reported 44% [3] - The discrepancy was attributed to inventory timing, a distributor reset from the previous year, promotional schedules, and expanding international sales [3] Charges and Future Outlook - Celsius Holdings incurred a PepsiCo-funded distributor termination charge of $246.7 million related to integrating Alani Nu into PepsiCo's direct-store-delivery network, with expected distribution benefits to materialize in early 2026 [4][10] - The company anticipates potential short-term disruptions in Q4 2025 due to integration, promotions, and timing issues [4] Market Position and Valuation - Despite the impressive revenue figures, part of the growth stemmed from acquisitions and timing effects rather than solely organic sales, raising questions about the sustainability of this growth in the coming quarters [5] - Celsius Holdings' stock has surged 69.2% year to date, contrasting with a 14.1% decline in the industry [8] - The company trades at a forward price-to-earnings ratio of 30.26, significantly higher than the industry average of 14.56 [12] Earnings Estimates - The Zacks Consensus Estimate projects year-over-year earnings growth of 57.1% for 2025 and 38.5% for 2026 for Celsius Holdings [15]

Core Insights - The article discusses Celsius Holdings, Inc. (NASDAQ: CELH) and the author's ongoing analysis of the company, emphasizing a focus on identifying high-quality growth businesses for long-term investment [1]. Company Analysis - The author has written about Celsius Holdings, Inc. multiple times, indicating a sustained interest in the company's performance and potential [1]. - The goal is to create a long-term portfolio that can outperform the market by selecting the best businesses globally [1]. Investment Position - The author holds a beneficial long position in CELH shares, indicating confidence in the company's future performance [2].

Core Viewpoint - Celsius stock experienced a significant decline of 30% over two days, prompting mixed reactions from analysts, with one suggesting that the market's response was exaggerated and recommending that investors consider purchasing shares [1] Company Summary - The stock price drop of Celsius is noted as a substantial 30% decrease within a short timeframe, indicating heightened volatility and investor concern [1] - An analyst's perspective highlights a potential buying opportunity, suggesting that the recent sell-off may not accurately reflect the company's fundamentals [1]

Core Viewpoint - Celsius experienced a significant stock selloff, with shares dropping nearly 8% after a 25% decline the previous day, despite reporting strong third-quarter results. Analysts suggest that the selloff may be overdone, given the company's positive long-term growth outlook [2][6][8]. Financial Performance - For the third quarter, Celsius reported a total revenue increase of 173% year-over-year, with Alani Nu sales growing by 114% and Celsius brand retail sales up by 13% [5][6]. - The company's market share rose to 21%, up from 10% two years ago, indicating substantial growth in its retail presence [5]. Strategic Moves - Celsius has expanded its portfolio by acquiring Alani Nu in April and Rockstar Energy in August, enhancing its market position [4]. - The transition of Alani Nu's distribution to PepsiCo is set to begin in December, which may introduce short-term volatility in inventory and logistics costs [7][9]. Analyst Perspectives - Analysts from TD Cowen, Morgan Stanley, and Roth Capital view the current stock selloff as a temporary issue, with price targets set at $55, $64, and $70 respectively, indicating confidence in the company's long-term growth potential [9][10][12]. - Deutsche Bank's analyst noted that while there may be short-term distortions in inventory and shipment timing, consumption trends remain strong, suggesting a positive outlook for the brand [11].

Core Insights - Celsius Holdings Inc. reported a revenue of $725.11 million for the quarter ended September 2025, marking a significant increase of 172.9% year-over-year [1] - The company's earnings per share (EPS) reached $0.42, a notable improvement from $0 in the same quarter last year, with an EPS surprise of +50% compared to the consensus estimate of $0.28 [1] - The reported revenue slightly exceeded the Zacks Consensus Estimate of $720.68 million, resulting in a surprise of +0.61% [1] Financial Performance Metrics - Celsius's stock has experienced a return of -29.9% over the past month, contrasting with the Zacks S&P 500 composite's -0.2% change, indicating underperformance relative to the broader market [3] - The company currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the market in the near term [3] Geographic Revenue Breakdown - International revenue was reported at $23.12 million, slightly below the average estimate of $25.33 million, reflecting a year-over-year increase of +24.3% [4] - North America generated $701.99 million, surpassing the average estimate of $642.15 million, with a year-over-year growth of +184.1% [4] - Asia-Pacific revenue reached $3.52 million, significantly exceeding the estimated $1.59 million, representing a remarkable year-over-year increase of +492.3% [4] - Other geographic revenues totaled $1.91 million, below the estimated $2.23 million, with a year-over-year change of +6.8% [4] - European revenue was reported at $17.69 million, also below the average estimate of $20.71 million, showing a year-over-year increase of +8.9% [4]

Revenue and Profitability - For the three months ended September 30, 2025, revenue was approximately $725.1 million, an increase of $459.4 million, or 172.9%, from $265.7 million for the same period in 2024[226] - North America revenue increased by $454.9 million, or 184.1%, primarily due to the Alani Nu Acquisition, contributing approximately $332.0 million[227] - Gross profit for the three months ended September 30, 2025, increased by $250.1 million to $372.3 million, a 204.6% increase from $122.2 million in the same period in 2024[229] - Gross profit margin improved to 51.3% for the three months ended September 30, 2025, compared to 46.0% for the same period in 2024[229] - For the nine months ended September 30, 2025, revenue was approximately $1,793.6 million, an increase of $770.2 million, or 75.3%, from $1,023.4 million for the same period in 2024[239] - North America revenue increased by $754.0 million, or 77.8%, primarily driven by the Alani Nu Acquisition, contributing approximately $633.2 million[240] - Gross profit for the nine months ended September 30, 2025, increased by $412.0 million to $925.5 million, an increase of 80.2%, with a gross profit margin of 51.6%[243] Expenses and Losses - Selling, general and administrative expenses for the three months ended September 30, 2025, were $205.6 million, an increase of $80.2 million, or 64.0%, from $125.4 million in 2024[230] - Selling, general and administrative expenses for the nine months ended September 30, 2025, were $563.8 million, an increase of $224.5 million, or 66.2%, from $339.3 million for the same period in 2024[244] - Net loss attributed to common stockholders for the three months ended September 30, 2025, was $70.7 million, representing a basic loss per share of $(0.27)[238] Cash Flow and Financing - Cash flows provided by operating activities totaled $478.9 million for the nine months ended September 30, 2025, compared to $187.2 million for the same period in 2024, reflecting a $291.7 million increase[257] - Cash flows used in investing activities totaled $1,278.7 million for the nine months ended September 30, 2025, primarily due to the Alani Nu Acquisition[258] - Cash flows provided by financing activities totaled $839.9 million for the nine months ended September 30, 2025, driven by debt incurred for the Alani Nu Acquisition[259] - The company had unrestricted cash and cash equivalents of approximately $806.0 million as of September 30, 2025[250] Tax and Interest Rates - The effective tax rate for the nine months ended September 30, 2025, was 18.7%, compared to 20.1% for the same period in 2024[247] - The interest rate on the company's $897.8 million term loan related to the Alani Nu Acquisition was 7.29%[267] - If the applicable interest rate increased by 1%, the company's annual debt service would increase by approximately $8.8 million[267] Strategic Partnerships and Market Presence - The strategic partnership with Pepsi was expanded, designating Pepsi as the primary distributor of Alani Nu and Rockstar products in the U.S. and Canada[222] - Celsius continues to expand its global presence, with international markets contributing approximately $5.4 million in revenue for the three months ended September 30, 2025[228] - The company introduced CELSIUS Hydration in 2025, a line of non-caffeinated, zero-sugar hydration powders[215] Acquisitions and Valuation - Termination fees of $246.7 million were incurred for the three months ended September 30, 2025, due to the termination of certain former Alani Nu distributors[232] - Total other expense for the three months ended September 30, 2025, was $8.0 million, reflecting an unfavorable change of $19.4 million compared to other income of $11.4 million in 2024[233] - The company engages third-party valuation specialists for fair value analyses of acquisitions and preferred stock[265] - Key assumptions for preferred stock valuation include equity volatility and the probability of meeting triggering conditions[265] - The company accounts for acquisitions using the acquisition method, recognizing identifiable assets and liabilities at fair value[262] - Any excess of purchase consideration over fair values of identifiable net assets is recorded as goodwill[263] Market Risk - The company does not currently use hedging agreements or financial instruments to manage commodity price risks[266] - The company is exposed to fluctuations in commodity prices, including aluminum cans and sweeteners, which may affect raw material costs[266] - There have been no material changes to market risk information since the last annual report[269]

Celsius (CELH) shares crashed on Nov. 6 after the energy drink specialist reported market-beating financials for its third quarter. Investors responded primarily to a $247 million one-time charge from its transition into PepsiCo’s (PEP) distribution infrastructure. More News from Barchart Beneath strong headline numbers, there were major red flags in the company’s financial release that warrant caution in buying Celsius stock on the post-earnings dip, even though it’s now down over 30% versus its Octobe ...

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. This article is intended to provide informational content and should not be viewed as an exhaustive an ...