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Core Viewpoint - Celsius Holdings Inc experienced a significant decline of over 25% in stock price despite reporting strong financial results for Q3, which exceeded market expectations [1] Financial Performance - The company reported market-beating financials for its third quarter (Q3) [1]

Core Insights - Celsius reported a year-over-year revenue growth of 173% to $725.1 million, slightly exceeding estimates, while adjusted earnings per share were $0.42, surpassing consensus forecasts [1] - The company experienced a negative operating margin of 11%, a significant decline from the negative 1.2% margin in the same quarter last year, raising concerns about cost controls amid rapid expansion [1] - The stock price fell 23.8% in the morning session following the earnings report, indicating investor concern over deteriorating profitability despite strong revenue growth [1] Financial Performance - Revenue increased by 173% year-over-year to $725.1 million, which was slightly above market expectations [1] - Adjusted earnings per share reached $0.42, comfortably beating consensus forecasts [1] - The operating margin turned negative at 11%, compared to a negative 1.2% margin in the same quarter last year, indicating rising operating expenses [1] Market Reaction - Celsius shares are highly volatile, with 30 moves greater than 5% over the past year, suggesting that the recent news significantly affected market perception [3] - The stock has seen a substantial price drop, which may present buying opportunities for investors looking for high-quality stocks [2] - Despite the recent decline, Celsius shares are up 70.4% since the beginning of the year, although they are still trading 28.5% below their 52-week high of $64.86 [5]

Core Insights - Celsius Holdings reported an adjusted EPS of $0.42, exceeding expectations of $0.28, and revenue of $725.1 million, slightly above the consensus of $724.0 million, indicating strong investor confidence in the company's growth strategy [2][7] - The integration of Alani Nu has significantly contributed to Celsius's transformation into a diversified beverage platform, with Alani Nu achieving $332.0 million in sales during the quarter [3][7] - The company experienced a gross margin expansion of 530 basis points to 51.3%, reflecting improved operational efficiency and product mix [5][7] Revenue Growth - Celsius achieved a remarkable revenue growth of 173% year over year, with the CELSIUS brand growing 44% organically, driven primarily by Alani Nu's sales [3] - International revenue increased by 24%, particularly in Nordic markets, indicating successful geographic diversification [4] Profitability Metrics - The gross margin improvement to 51.3% demonstrates operational leverage and a favorable product mix, while operating cash flow was reported at $75.7 million and free cash flow at $70.3 million [5][7] - Despite the positive cash flow metrics, GAAP net income showed a loss of $61.0 million, attributed to one-time distributor termination costs related to the PepsiCo transition [6][7] Market Positioning - Celsius trades at a forward P/E of 157.68, significantly higher than Monster Beverage's 42.16, reflecting market expectations for sustained growth despite the lack of proven profitability at scale [7]

Core Viewpoint - Celsius Holdings, Inc. experienced a significant decline in share price due to a $246.7 million distributor termination, overshadowing a strong performance in the third quarter with better-than-expected earnings and sales growth [1][10]. Financial Performance - The company reported adjusted earnings per share of 42 cents, exceeding the analyst consensus estimate of 28 cents [3]. - Quarterly sales reached $725.1 million, reflecting a 173% year-over-year increase, surpassing the expected $712.156 million [3]. - Adjusted EBITDA surged by 4573% to $205.6 million, with an adjusted EBITDA margin expanding to 28.4% from 1.7% in the previous year [8]. Sales and Market Share - Retail sales for Celsius Holdings rose by 31% year over year, driven by a 114% sales surge from Alani Nu and double-digit growth for the CELSIUS brand [4]. - North American sales increased by 184% to $702 million, capturing a 20.8% market share in the U.S. energy drink sector [7]. Distributor Transition and Costs - The company incurred $246.7 million in distributor termination costs related to the transition of Alani Nu's distribution to PepsiCo in the U.S. and Canada [4]. - PepsiCo has agreed to fund the termination fees, resulting in a net neutral cash position for Celsius Holdings [6]. Debt and Cash Position - The company ended the quarter with cash and equivalents totaling $805.955 million, while long-term debt rose to $861 million, a significant increase from $0 a year earlier [9]. Inventory and Revenue Recognition - The transition of Alani Nu's business to PepsiCo is expected to affect reported results due to inventory movements, as revenue is primarily recognized upon delivery to distributor partners and retailers [5].

Financial Data and Key Metrics Changes - For Q3 2025, consolidated revenue was approximately $725 million, up 173% year-over-year [17] - Gross margin for the quarter was 51.3%, compared to 46% a year ago, reflecting improvements in inventory optimization and lower promotional spend [19] - Year-to-date consolidated sales increased by roughly 75%, or $770 million, with Alani Nu accounting for the majority of that growth [18][19] Business Line Data and Key Metrics Changes - Celsius brand's U.S. scanner growth rate was 13%, while revenue growth was reported at 44%, indicating a discrepancy due to inventory movements and promotional activities [17][18] - Alani Nu revenue nearly doubled, up 99%, driven by strong limited-time offerings like Witches Brew [18] - Rockstar Energy contributed approximately $11 million in revenue in its first month under Celsius ownership, with an additional $7 million recorded in other income [18] Market Data and Key Metrics Changes - The combined portfolio of Celsius, Alani Nu, and Rockstar represented over 20% share of the U.S. energy drink market, growing 31% year-over-year, nearly twice as fast as the overall category [8] - Celsius Holdings' portfolio generated more than $5 billion in retail sales in U.S. track channels over the last 52 weeks [8] Company Strategy and Development Direction - The company is focused on expanding its partnership with PepsiCo, enhancing its role as a strategic energy drink captain within PepsiCo's portfolio [5][6] - The acquisition of Rockstar Energy is expected to broaden the consumer base and strengthen the company's market position [7] - The company aims to optimize its product assortment and stabilize Rockstar Energy while continuing to grow Celsius and Alani Nu [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong consumer demand for functional energy products and successful marketing campaigns [10][11] - The company anticipates Q4 2025 will be a noisy quarter due to integration activities and promotional timing, with potential pressure on gross margins [22] - Management highlighted the importance of strategic investments in international markets, particularly in Australia and Europe, as part of their growth strategy [77] Other Important Information - The company recorded approximately $247 million in distributor termination expenses during the quarter, fully funded by PepsiCo under a long-term agreement [20] - The leadership team has been strengthened with new appointments, including a Chief Marketing Officer and a President of Celsius International [13] Q&A Session Summary Question: Discrepancy in core Celsius growth rates - Management acknowledged the variance between reported revenue growth and scanner growth, attributing it to various factors including inventory movements and promotional activities [26][28] Question: Pricing strategy amidst inflation - Management is evaluating pricing strategies, including promotional tactics and building a revenue management team to enhance pricing capabilities [37] Question: Integration and inventory management for Q4 - Management indicated that Q4 will involve phased integration into the Pepsi system, which may lead to inventory fluctuations and potential margin pressure [40][46] Question: Alani Nu's growth and distribution ramp-up - Management expressed optimism about Alani Nu's potential to reach Celsius-level distribution, emphasizing improved collaboration with PepsiCo to avoid past inventory optimization issues [81][84]

Financial Data and Key Metrics Changes - For Q3 2025, consolidated revenue was approximately $725 million, up 173% year-over-year [17] - Gross margin for the quarter was 51.3%, compared to 46% a year ago, reflecting improvements in inventory optimization and lower promotional spend [19] - Year-to-date consolidated sales increased by roughly 75%, with Alani Nu accounting for the majority of that growth [19] Business Line Data and Key Metrics Changes - Celsius brand's U.S. scanner growth rate was 13%, while revenue growth was reported at 44% [17][18] - Alani Nu revenue nearly doubled, up 99%, driven by strong limited-time offerings [18] - Rockstar Energy contributed approximately $11 million in revenue in its first month under Celsius ownership, with a total impact of about $18 million in Q3 [18] Market Data and Key Metrics Changes - The combined portfolio represented over 20% share of the U.S. energy drink market, growing 31% year-over-year, nearly twice as fast as the overall category [8] - Celsius Holdings' portfolio gained more than two share points year-over-year in Walmart alone [9] Company Strategy and Development Direction - The company is focused on expanding its partnership with PepsiCo, enhancing its role as the strategic energy drink captain within Pepsi's portfolio [5][6] - Plans to optimize the Rockstar Energy brand and stabilize its market presence while continuing to grow Celsius and Alani Nu [22] - The company aims to build a portfolio that reaches more consumers during more occasions, emphasizing collaboration and organizational excellence [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory for 2026, despite anticipated challenges in Q4 due to integration activities and promotional timing [22] - The company is optimistic about the international expansion, particularly in markets like Australia and the U.K., where performance has exceeded expectations [14][77] Other Important Information - The company recorded approximately $247 million in distributor termination expenses during the quarter, fully funded by PepsiCo [20] - Management highlighted the importance of seasonal flavor offerings and marketing campaigns in driving consumer engagement and sales [10][12] Q&A Session Summary Question: Clarification on core Celsius growth and scanner data - Management acknowledged the variance between reported revenue growth and scanner growth, attributing it to various factors including inventory movements and promotional activities [25][28] Question: Pricing strategy amidst market changes - Management discussed the ongoing evaluation of pricing strategies in response to cost pressures and tariff impacts, emphasizing the need for a revenue management team [36][37] Question: Details on Q4 integration and inventory management - Management indicated that Q4 would be a noisy quarter due to integration activities and inventory transitions, with a phased approach to Alani's rollout in the Pepsi system [40][46] Question: Comments on gross margins and inflation impacts - Management provided insights on the expected pressure on gross margins due to tariffs and inflation, while also highlighting opportunities for efficiency improvements through integration [68][72] Question: International expansion plans - Management outlined the strategic investments in international markets, emphasizing the growth potential in Australia and Europe [77] Question: Alani Nu's distribution ramp-up and collaboration with PepsiCo - Management expressed confidence in Alani Nu's growth potential and the improved collaboration with PepsiCo to avoid past inventory optimization issues [81][84]

Financial Data and Key Metrics Changes - For Q3 2025, consolidated revenue was approximately $725 million, up 173% year-over-year [15] - Gross margin for the quarter was 51.3%, compared to 46% a year ago, reflecting improvements in inventory optimization and lower promotional spend [17][18] - Year-to-date consolidated sales increased by roughly 75%, with Alani Nu accounting for the majority of that growth [16][17] Business Line Data and Key Metrics Changes - The Celsius brand's U.S. scanner growth rate was 13%, while revenue growth was reported at 44%, indicating a discrepancy due to inventory movements and promotional activities [15][16] - Alani Nu revenue nearly doubled, up 99%, driven by strong limited-time offerings like Witches Brew [16][18] - Rockstar Energy contributed approximately $11 million in revenue in its first month under Celsius ownership, with an additional $7 million recorded in other income [16] Market Data and Key Metrics Changes - Celsius Holdings' combined portfolio represented over 20% share of the U.S. energy drink market, growing 31% year-over-year, nearly twice as fast as the overall category [7] - The Celsius brand achieved double-digit retail sales growth of 13% year-over-year, while Alani Nu grew at 115% year-over-year [8] Company Strategy and Development Direction - The company is focused on expanding its partnership with PepsiCo, enhancing its role as the U.S. strategic energy drink captain [5][6] - The acquisition of Rockstar Energy is expected to broaden the consumer base and strengthen the overall energy portfolio [6][7] - The company aims to optimize its operations and distribution networks, particularly with the integration of Alani Nu into PepsiCo's system [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth for both Celsius and Alani Nu, while focusing on stabilizing Rockstar Energy [21] - The upcoming quarter is expected to be noisy due to integration activities and promotional timing, with potential pressure on gross margins [21][60] - The company anticipates capturing synergies from acquisitions and further strengthening its balance sheet through disciplined capital allocation [19][22] Other Important Information - The company is investing in brand growth and marketing campaigns, such as the Celsius Live Fit Go campaign, to drive consumer engagement [18][19] - Management highlighted the importance of seasonal flavor offerings and limited-time promotions in driving sales [9][49] Q&A Session Summary Question: Concerns about core Celsius growth and scanner data discrepancies - Management acknowledged the complexities in comparing growth rates and attributed the differences to various factors, including inventory movements and promotional timing [24][26] Question: Pricing strategies in light of market trends - Management is evaluating pricing strategies, considering tariff impacts and commodity costs, while building a revenue management team for better precision [31][32] Question: Details on Q4 integration and inventory management - Management indicated that Q4 would involve a phased approach to integration, with potential noise in inventory levels and sales [34][39] Question: Gross margin outlook and tariff impacts - Management discussed the expected pressure on gross margins due to tariffs and integration costs, while also highlighting opportunities for efficiency improvements [55][58] Question: International expansion plans - Management emphasized the growth potential in international markets, particularly in Australia and Europe, and the importance of strategic investments [63][64]

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Core Insights - Celsius Holdings Inc. reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, compared to break-even earnings per share a year ago, representing an earnings surprise of +50.00% [1] - The company posted revenues of $725.11 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.61%, and showing significant growth from year-ago revenues of $265.75 million [2] - Celsius shares have increased approximately 127.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 15.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $684.84 million, and for the current fiscal year, it is $1.12 on revenues of $2.47 billion [7] - The estimate revisions trend for Celsius was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Zacks Industry Rank for Food - Miscellaneous is currently in the bottom 31% of over 250 Zacks industries, suggesting that the industry outlook may impact stock performance [8] - Another company in the same industry, BellRing Brands, is expected to report quarterly earnings of $0.54 per share, reflecting a year-over-year change of +5.9%, with revenues anticipated to be $631.33 million, up 13.6% from the previous year [9][10]