Celsius(CELH) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements The acquisition of Alani Nu on April 1, 2025, significantly expanded the company's total assets to $3.8 billion, fueled by new debt and stock, driving an 83.9% revenue increase to $739.3 million in Q2 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3.795B | $1.767B | | Cash and cash equivalents | $615.2M | $890.2M | | Goodwill | $802.2M | $71.6M | | Brands-net | $1.104B | $907 | | Total Liabilities | $1.704B | $542.5M | | Long-term debt | $862.9M | $0 | | Total Stockholders' Equity | $1.267B | $399.9M | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $739.3M | $402.0M | $1,068.5M | $757.7M | | Gross Profit | $380.9M | $209.1M | $553.2M | $391.3M | | Income from operations | $143.0M | $94.2M | $195.0M | $177.4M | | Net income | $99.9M | $79.8M | $144.3M | $157.6M | | Diluted EPS | $0.33 | $0.28 | $0.48 | $0.55 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $147.1M | $174.3M | | Net cash used in investing activities | $-1.277B | $-13.7M | | Net cash provided by (used in) financing activities | $852.3M | $-12.6M | | Net (decrease) increase in cash | $-275.0M | $147.2M | Notes to the Condensed Consolidated Financial Statements Detailed notes reveal the $2.05 billion Alani Nu acquisition, funded by a $900 million term loan and stock, significantly increased goodwill and intangibles, while highlighting North American revenue dominance and a $56.9 million legal liability - On April 1, 2025, the Company completed the acquisition of Alani Nutrition LLC ("Alani Nu") for a total consideration of $1.275 billion in cash, 22.45 million shares of common stock, and up to $25 million in contingent cash consideration[32] - To fund the Alani Nu acquisition, the company entered into a credit agreement for a $900 million term loan facility, which was fully drawn on the closing date, and a $100 million revolving credit facility[33][105] - The company has a long-term distribution agreement with PepsiCo Inc. ("Pepsi"), making Pepsi the primary distributor for Celsius products in the U.S. and Canada; Pepsi is also a significant related party, holding Series A Convertible Preferred Stock[34][35][77] Revenue by Geography (in thousands) | Region | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | North America | $714.5M | $382.4M | $1,021.0M | $721.9M | | Europe | $18.3M | $16.7M | $37.0M | $30.8M | | Asia-Pacific | $4.4M | $860 | $6.6M | $1.5M | | Other | $2.1M | $2.1M | $4.0M | $3.5M | | Total Revenue | $739.3M | $402.0M | $1,068.5M | $757.7M | - The Alani Nu acquisition resulted in the recognition of $728.9 million in goodwill and $1.215 billion in intangible assets, primarily consisting of the Alani Nu brand ($1.104 billion, indefinite life) and customer relationships ($111 million, 5-year life)[90][95] - For the period from April 1, 2025, to June 30, 2025, Alani Nu's operations generated approximately $301.2 million of revenue and $93.6 million of net income before tax[96] - Regarding the Strong Arm Productions (Flo Rida) lawsuit, the company has accrued a liability of $56.9 million, representing the low end of a possible loss range of $56.9 million to $99.3 million, following a court decision to retrial on the damages amount[178] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025's 83.9% revenue growth to the Alani Nu acquisition, which also impacted gross margin and significantly increased SG&A, while liquidity remains strong despite acquisition-related cash usage and new debt Results of Operations Q2 2025 revenue surged 83.9% to $739.3 million, primarily from North America and Alani Nu, though gross margin slightly declined and SG&A expenses more than doubled due to acquisition costs and marketing Q2 2025 vs Q2 2024 Performance Summary | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $739.3M | $402.0M | +83.9% | | Gross Profit | $380.9M | $209.1M | +82.1% | | Gross Margin | 51.5% | 52.0% | -0.5 p.p. | | SG&A Expenses | $237.9M | $114.9M | +107.1% | | Net Income (to Common Stockholders) | $85.7M | $66.7M | +28.5% | - The increase in North American revenue for Q2 2025 was primarily driven by the acquisition of Alani Nu, which contributed approximately $301.2 million of revenue[198] - The increase in SG&A expenses for Q2 2025 was driven by the inclusion of Alani Nu's operations, $16.0 million in acquisition-related costs, a $13.8 million remeasurement of contingent consideration, and increased marketing for the 'Live. Fit. Go.' campaign[203] - For the six months ended June 30, 2025, net income attributable to common stockholders decreased to $119.9 million from $131.5 million in the prior year, primarily due to higher SG&A, acquisition costs, interest expense, and other charges related to the Alani Nu acquisition, which offset revenue growth[218] Liquidity and Capital Resources As of June 30, 2025, the company maintained $615.2 million in cash, with the $1.26 billion Alani Nu acquisition primarily funded by a new $900 million term loan, ensuring sufficient liquidity for future operations - As of June 30, 2025, the company had cash and cash equivalents of approximately $615.2 million and net working capital of $731.4 million[219] - Cash used in investing activities increased by $1.26 billion year-over-year, primarily due to the cash paid for the Alani Nu acquisition[225] - Cash provided by financing activities was $852.3 million for the first six months of 2025, mainly from the proceeds of the $900 million term loan used to fund the Alani Nu acquisition[223][226] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces commodity price risk for raw materials and significant interest rate risk from its new $900 million variable-rate term loan, with a 1% rate increase impacting annual debt service by approximately $9.1 million - The company faces commodity price risk from fluctuations in the costs of raw materials, including aluminum cans and sweeteners[232] - The company is subject to interest rate risk from its new $900.0 million variable-rate term loan; a hypothetical 1% increase in the interest rate would increase annual debt service costs by approximately $9.1 million[233] Item 4. Controls and Procedures Management confirmed effective disclosure controls as of June 30, 2025, with the recently acquired Alani Nu excluded from internal control over financial reporting assessment per SEC guidance - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025[236] - Following SEC guidance for recent acquisitions, management has excluded Alani Nu from its assessment of internal control over financial reporting for the period; Alani Nu represented approximately 15% of consolidated total assets and 28% of consolidated revenue for the six months ended June 30, 2025[237][238] PART II - OTHER INFORMATION Item 1. Legal Proceedings Legal proceedings, detailed in Note 15, include ongoing securities class actions, derivative actions, and a $56.9 million accrued liability for the Strong Arm Productions lawsuit - Information regarding legal proceedings is detailed in Note 15, "Commitments and Contingencies," within the financial statements[241] Item 1A. Risk Factors There have been no material changes to the company's risk factors from those set forth in the 2024 Annual Report - There have been no material changes to the company's risk factors from those set forth in the 2024 Annual Report[242] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased 24,894 common shares at an average price of approximately $35.88 per share to satisfy employee tax withholding obligations, not as part of a public plan Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 4,391 | $37.24 | | May 2025 | 20,503 | $35.65 | | June 2025 | 0 | N/A | | Total | 24,894 | ~ $35.88 | Item 5. Other Information During the quarter ended June 30, 2025, no officers or directors adopted or terminated any Rule 10b5-1 trading arrangements - During the quarter ended June 30, 2025, no officers or directors adopted or terminated any Rule 10b5-1 trading arrangements[246] Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including the Credit Agreement related to the Alani Nu acquisition and the 2025 Omnibus Incentive Compensation Plan - Lists exhibits filed with the report, including the Credit Agreement dated April 1, 2025, and the 2025 Omnibus Incentive Compensation Plan[248]