Celsius(US:CELH)2024-02-28 16:00Revenue and Income - In 2023, sales to Pepsi constituted 59.4% of total net revenue, and receivables from Pepsi represented 69.0% of total receivables as of December 31, 2023[7]. - Net income attributable to common stockholders for the year ended December 31, 2023 was $182.0 million, representing basic earnings per share of $0.79, compared to a net loss of $(198.8) million for the year ended December 31, 2022[33]. - Total net other income for the year ended December 31, 2023 was $25.4 million, reflecting an increase of $20.3 million versus $5.1 million for the year ended December 31, 2022[32]. Cash and Financial Position - Cash available from operations and existing cash balances, including $542.0 million of net proceeds from the issuance of Series A Preferred Stock to Pepsi in 2022, are sufficient for working capital needs for the next twelve months[38]. - As of December 31, 2023, the company's cash and cash equivalents amounted to $756.0 million, which are subject to interest rate fluctuations[172]. Competition and Market Risks - The company is subject to significant competition in the functional beverage product industry, competing with major brands like Monster Beverage Corporation and The Coca-Cola Company[25]. - The company is exposed to intense competition in the functional beverage industry, which could adversely affect revenues and market share[62]. - Changes in consumer product preferences may reduce demand for some of the company's products[27]. - The company must continuously innovate its product line to meet consumer preferences and maintain market share, as product lifecycles may be limited[58]. Operational Risks - The company does not use hedging agreements to manage risks associated with securing sufficient ingredients or raw materials, which may lead to increased costs[6]. - The company relies on third-party co-packers for manufacturing, which may pose risks related to production delays or food safety compliance[5]. - The ongoing Russia-Ukraine conflict and the escalation of the Israel-Hamas conflict may adversely impact business operations and financial performance[24]. Internal Controls and Compliance - The company is in the process of remediating material weaknesses in internal controls, which, if not successful, could materially affect financial results[37]. - The company has identified material weaknesses in internal control over financial reporting for the years 2021, 2022, and 2023, which could lead to material misstatements in financial statements[67]. - The company faces risks related to changes in accounting standards that could adversely affect reported earnings, as well as potential increases in income and indirect taxes impacting after-tax income[46]. - The company engages in market analysis and collaborates with regulatory consultants to ensure compliance and mitigate risks in new markets[70]. Foreign Currency Risks - For the years ended December 31, 2023, 2022, and 2021, net foreign currency translation resulted in a gain of $1.2 million, a loss of $2.5 million, and a gain of $0.8 million respectively, indicating volatility in foreign currency exchange rates[45]. - The company operates internationally, exposing it to foreign currency exchange risk, with net assets translated into U.S. dollars using current exchange rates[173]. - Translation gains and losses from foreign currency adjustments are recorded in other comprehensive income (loss), net of income tax[173]. Dividends and Stock - The Series A Preferred Stock, issued to Pepsi, ranks senior to common stock in terms of liquidation preference and dividend payments, with a cumulative dividend rate of 5.00% per annum[79]. - The company does not expect to pay cash dividends on common stock in the foreseeable future, indicating a focus on reinvestment[80]. Economic Environment - Global economic uncertainties, including inflation and foreign currency fluctuations, could adversely affect the company's financial condition and results of operations[77]. - The company has established a cybersecurity risk management program to address potential threats that could impact business operations[81].