Celsius (NasdaqCM:CELH) Q3 2025 Earnings Call November 06, 2025 08:00 AM ET Speaker1Welcome to the Celsius Holdings third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. I will now hand the call over to Paul Wiseman, Investor Relations. Please ...

Safe harbor & Non-gaap measures Forward-Looking Statements This presentation contains statements by Celsius Holdings, Inc. ("Celsius Holdings", "we", "us", "our" or the "Company") that are not historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our prospects, plans, business strategy and expected financial and operational results. You can identify these sta ...

Core Insights - Celsius Holdings, Inc. is experiencing significant momentum in its international growth campaign, expanding into new markets and enhancing its leadership team to support this growth [2][11] - The appointment of Garrett Quigley as president of Celsius International is aimed at unifying international operations and driving impactful growth [3][4][5] Market Expansion - Celsius has established a strong presence in the Nordics, ranking as the number four energy drink brand in Sweden with a 13.5% market share [6][7] - The company has expanded into Canada, Australia, Belgium, France, Ireland, Luxembourg, the Netherlands, New Zealand, and the UK through strategic partnerships, including one with PepsiCo [7] Achievements in 2025 - In Canada, Celsius has become the number four energy drink brand, driven by cultural connections and marketing campaigns [8] - In Australia and New Zealand, Celsius was recognized as "New Beverage of the Year" for its innovation and market impact [8] - In France, Celsius has reached 88% of grocery shoppers through major retailer listings and was featured in a top trade publication [9] - In Belgium and Luxembourg, Celsius expanded its market presence significantly within six months [9] - In the Netherlands, Celsius is now available through the largest supermarket chain, Albert Heijn [10] Brand Philosophy - Celsius connects with a new generation of consumers by promoting functional ingredients and a community focused on fitness and wellness [10][11] - The company's growth strategy is aligned with the increasing consumer shift towards healthier living and active lifestyles [11]

Core Insights - Molson Coors is responding to declining beer sales and changing consumer preferences with urgency, projecting a 4.7% decline in the total beer market, which is expected to be cyclical [3][4] - The company is restructuring by cutting 400 salaried jobs, a 9% reduction in its corporate workforce, and plans to redeploy savings into M&A and brand investments [5] - Molson Coors is focusing on expanding its portfolio beyond beer, particularly in nonalcoholic categories and energy drinks, to mitigate the downturn in beer sales [8] Company Strategy - The company aims to fill gaps in its portfolio through new acquisitions, particularly in the "beyond beer space" [8] - Investment in marketing for larger brands remains a priority, while beer continues to be a foundational aspect of the business [6] - The restructuring includes reshaping the executive leadership team and eliminating the chief commercial officer role [5] Market Trends - There is a growing consumer interest in healthier options and a shift in alcohol consumption habits impacting sales [4] - Competitors like Anheuser Busch have seen significant revenue growth in non-alcoholic beer, with a 27% increase compared to less than 1% overall revenue growth [7]

Core Viewpoint - Primo Brands Corporation has appointed Eric Foss as the new Chairman and CEO, succeeding Robbert Rietbroek, to lead the company through its next growth phase in the healthy hydration market [1][3][4]. Company Leadership - Eric Foss brings extensive experience as a former Chairman and CEO of global consumer-centric businesses, known for his people-first leadership and brand-building expertise [2][3]. - Dean Metropoulos, the former Non-Executive Chairman, expressed confidence in Foss's ability to drive progress at Primo Brands and will continue to serve on the Board as a Director [4]. Company Positioning - Foss highlighted that Primo Brands is well-positioned in the growing healthy hydration market, with a strong brand portfolio and a robust go-to-market system [3]. - The company aims to unlock the potential of its recent business combination and has identified multiple growth vectors moving forward [3]. Company Overview - Primo Brands is a leading North American branded beverage company focused on healthy hydration, with a diverse portfolio that includes well-known brands such as Poland Spring® and Pure Life® [6]. - The company operates a vertically integrated distribution network, reaching over 200,000 retail outlets and offering direct delivery services to homes and businesses [6][7]. - Primo Brands is committed to sustainability, utilizing reusable packaging and managing water resources responsibly [7].

Core Insights - Primo Brands Corporation reported strong financial results for Q3 2025, with net sales increasing by 35.3% to $1,766.1 million compared to $1,305.1 million in Q3 2024, driven by growth in premium water brands and successful execution of delivery networks [7][11] - The company appointed Eric Foss as Chairman and CEO, indicating a leadership transition aimed at enhancing operational excellence and customer service [1][10] - Adjusted EBITDA rose by 53.2% to $404.5 million, with an adjusted EBITDA margin of 22.9%, reflecting improved operational efficiency [7][11] Financial Performance - Net income from continuing operations decreased to $40.5 million, or $0.11 per diluted share, down from $53.3 million and $0.24 per diluted share in the prior year [7][11] - Adjusted net income increased to $155.0 million, or $0.41 per diluted share, compared to $76.9 million and $0.35 per diluted share in Q3 2024 [7][11] - The company generated $283.4 million in net cash from operating activities, resulting in $150.7 million of free cash flow and $311.1 million of adjusted free cash flow [7][11] Dividend Announcement - The Board of Directors declared a quarterly dividend of $0.10 per share, payable on December 5, 2025, to shareholders of record as of November 25, 2025 [8] Strategic Focus - The company is focused on achieving cost synergies of $200 million in 2025 and $300 million in 2026, following the merger with Blue Triton Brands [10] - Primo Brands continues to expand its distribution network and enhance its product offerings, particularly in the premium water segment [2][10]

Financial Data and Key Metrics Changes - In Q1, organic net sales were flat, with reported net sales of $4.9 billion down 2.2% year-over-year, primarily impacted by the disposal of Guinness Nigeria and the Shiraz North America transaction [8][9] - Organic volume growth was 2.9%, offset by a negative price mix of 2.8%, largely due to the adverse impact of Chinese white spirits [8][9] - The company updated its fiscal guidance, now expecting organic net sales growth to be flat to slightly down for the fiscal year, with organic operating profit growth projected in the low to mid-single-digit range [15][17] Business Line Data and Key Metrics Changes - North America saw organic net sales decline by 2.7%, with U.S. spirits down 4.1%, while Diageo Beer Company grew by 9.2% [9][10] - Europe experienced organic net sales growth of 3.5%, driven by strong performance in Guinness Draught and spirits, particularly in Turkey and the Middle East [10][11] - Asia-Pacific faced a 7.5% decline in organic net sales, primarily due to reduced consumption of Chinese white spirits, which negatively impacted regional sales by approximately 13% [10][11] Market Data and Key Metrics Changes - In LAC, organic net sales grew by 10.9%, led by strong performance in Brazil, while Africa reported 8.9% organic sales growth, with broad growth across East Africa and Southwest and Central Africa [11][12] - The tequila category in North America is experiencing increased competitive pressure, with a decline in overall category growth from 10% in 2023 to just under 3% [32][35] - The company noted a shift in consumer behavior, with consumers trading down from super premium to premium products, impacting sales of Don Julio and Casamigos [35][36] Company Strategy and Development Direction - The company is advancing its "Accelerate" program to strengthen its foundations for long-term sustainable growth, with a focus on cost efficiency and process simplification [12][18] - Management is committed to improving operating leverage and enhancing commercial execution, particularly in key markets [13][15] - The company is exploring selective disposals of non-core assets to focus on growth opportunities in RTDs and brand activation during major events like FIFA 2026 [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed concern over current performance, particularly in North America, and emphasized the need for urgent actions to drive growth [5][6] - The economic environment is weighing on consumer sentiment, leading to weaker-than-expected results in the U.S. [9][15] - Despite challenges, management remains confident in delivering $3 billion in free cash flow for fiscal 2026, supported by ongoing initiatives [12][17] Other Important Information - The company is implementing a clearer decision-making framework to enhance speed and agility in operations [14][15] - Management highlighted the importance of maintaining brand equity while optimizing marketing spend across different markets [56][59] Q&A Session Summary Question: Insights on U.S. spirits performance and guidance - Management acknowledged the complexity of U.S. spirits performance, noting a decline in depletions and the impact of tariff-related pre-buys [21][22] Question: Competitive pressure in the tequila market - Management discussed increased competition in the tequila category, emphasizing the need for strategic interventions to improve performance [31][32] Question: EBIT guidance and margin support - Management expressed confidence in achieving low to mid-single-digit EBIT growth despite market challenges, citing cost efficiencies and stronger whiskey performance [45][47] Question: Impact of A&P reductions - Management clarified that A&P reductions in GB were part of a broader strategy to optimize marketing spend while maintaining brand equity [55][56] Question: Accelerate program details - Management provided insights into the Accelerate program, highlighting its role in driving efficiencies and improving resource allocation [63][66]

Core Viewpoint - Warren Buffett will step down as CEO of Berkshire Hathaway at the end of this year, but will continue as chairman, ensuring the company's long-term value investing strategy persists [1] Group 1: Berkshire's Financial Position - Berkshire Hathaway has a record cash reserve of $381 billion and a portfolio of publicly traded stocks valued at $311 billion [3][6] - The company has generated substantial operating profits from its wholly owned businesses in insurance, utilities, and logistics, alongside significant dividends from its stock portfolio, including $816 million from Coca-Cola and $479 million from American Express in 2025 [6] - Buffett has authorized $77.8 billion in stock buybacks from 2018 to mid-2024, but there have been no repurchases in the last five quarters [4][8] Group 2: Reasons for Cash Accumulation - Berkshire has been reducing its stock exposure for 12 consecutive quarters, including selling over half of its stake in Apple, which raised significant cash [7] - The company is currently trading at a price-to-sales (P/S) ratio of 2.7, a 25% premium to its 10-year average of 2.2, which may explain Buffett's hesitation to authorize buybacks [10][12] Group 3: Succession Planning - Buffett announced he will step down as CEO and pass leadership to Greg Abel, which may influence his decision-making regarding financial strategies [13] - The company can repurchase shares as long as cash and equivalents exceed $30 billion, which is not an issue given the current cash reserves [14] - Buffett may prefer to leave significant financial decisions, such as buybacks or acquisitions, to his successor, who may have different priorities [15]

Core Viewpoint - Diageo has cut its guidance due to disappointing sales performance, particularly in North America and Asia Pacific, leading to a decline in net sales and a reassessment of growth expectations for the fiscal year [2][7]. Sales Performance - Diageo's net sales for the three months ending September were $4.9 billion, reflecting a decline of 2.2% primarily due to asset disposals [2]. - Organic net sales remained flat, with group volumes increasing by 2.9% year on year, but negatively impacted by a price/mix decline of 2.8% [3]. - The company attributed weak sales in Asia Pacific to poor performance in Chinese white spirits, which reduced quarterly net sales by approximately 2.5% [3]. Regional Performance - North America, Diageo's largest market, saw reported net sales drop by 3.5%, with an organic decline of 2.7% attributed to a challenging consumer goods environment and increased competition, particularly in tequila [4][5]. - In contrast, Europe reported a 5.1% increase in net sales on a reported basis and a 3.5% increase organically, driven by strong performance in Guinness [5][6]. Guidance and Future Outlook - Following the weak quarter, Diageo now expects full-year organic net sales to be flat to slightly down, revising previous expectations of zero growth [7]. - Organic operating profit growth is now anticipated to be in the low to mid-single digits, down from mid-single-digit projections [7]. - The company maintains its free cash flow guidance of $3 billion for the full year and aims for cost savings of $625 million over three years through its Accelerate restructuring program [8]. Leadership and Strategy - Interim CEO Nik Jhangiani emphasized the need for improved performance and swift action to drive efficiencies and adapt to changing consumer environments [9]. - The company is focused on refining its strategy and implementing plans to foster growth across its portfolio [9]. - Analysts express concerns regarding leadership stability following the abrupt departure of former CEO Debra Crew, highlighting the importance of securing a credible leader to restore investor confidence [10].

Core Viewpoint - Growth investing is beneficial for long-term shareholders, emphasizing the importance of investing in quality companies with strong earnings growth prospects rather than focusing solely on current valuations [1] Group 1: Amazon (AMZN) - Amazon is expected to become the largest company in the world by revenue this year, with a market cap of $2.7 trillion [4] - The company is reinvesting profits into its business rather than returning cash to shareholders, which has allowed it to innovate and grow in various sectors [4][5] - Amazon's recent third-quarter earnings showed growth acceleration in online stores, digital advertising, and cloud computing [5] - A significant $38 billion deal with OpenAI for AWS is expected to expand over seven years, highlighting Amazon's competitive position in the cloud market [6] - Amazon is launching Project Kuiper, a satellite-based broadband service, further diversifying its business [7] - E-commerce and cloud computing are projected to continue growing, with Amazon well-positioned to capitalize on these trends [8] Group 2: Vita Coco (COCO) - Vita Coco leads the coconut water market with a 42% share in the U.S. and a market cap of $2.3 billion [10] - The company reported a 37% revenue growth last quarter, with its core brand growing even faster at 42% [11] - The coconut water category is transitioning from niche to mainstream, with significant growth rates observed in key markets: 22% in the U.S., 32% in the U.K., and over 100% in Germany [12] - Despite current margin pressures from tariffs, Vita Coco's growth potential in a mainstream market could outweigh these challenges [13] Group 3: On Semiconductor (ON) - On Semiconductor focuses on power and sensing chips, with a strong presence in the electric vehicle and infrastructure markets [14] - The company is transitioning to producing more power-efficient chips for AI data centers, with a 35% to 40% market share in silicon carbide chips [15] - On's new data center segment is projected to grow to $250 million this year, more than double last year's total, indicating future growth potential [16] - Despite current revenue and profit declines due to a bear market in EVs, all segments showed quarter-over-quarter growth in Q3 [17][18] - Shares are trading at 22 times this year's earnings estimates, suggesting a potentially undervalued position if markets recover [18]