Summary of Celsius Holdings Conference Call Company Overview - Celsius is the third-largest player in the U.S. energy drink category with over 20% market share following acquisitions of Alani Nu and Rockstar [1][2][30] Key Financial Insights - Q3 2023 was strong in terms of gross margin and EBITDA margin, but there was a disconnect in net sales expectations [2][3] - Volume increased by approximately 10%-11% from Q3 2023 to Q3 2025 [2] - Promotional activities led to a lower net sales per case, contributing to the disconnect in expected performance [3] Fourth Quarter Expectations - The integration of Alani into the Pepsi system is progressing well, with over 80% of the DSD system transitioned [5] - The fourth quarter is expected to be noisy due to various integrations and inventory management [4][6] - Alani's integration will be methodical, with a ramp-up expected in Q1 2024 [8][9] Market Dynamics - The energy drink category has shown resilience compared to other CPG sectors, with Celsius and Alani driving growth [13][14] - The focus on healthier, sugar-free options is attracting new consumers, particularly females [15][48] Pricing Strategy - There is potential for price elasticity in the market, with plans to optimize pricing across the multi-brand portfolio [16][17] - Revenue growth management (RGM) is a key focus for 2026 and beyond [18] Margin Outlook - Gross margins are expected to return to the low 50s% in the second half of 2024, with further expansion anticipated into 2027 [20][22] Brand Performance - Celsius has regained momentum with double-digit growth, particularly in convenience stores [24][25] - Market shares in South Florida are in the low to mid-20% range, with opportunities for growth in under-indexed markets [28][29] Innovation and Product Development - The Spritz Vibe LTO was successful, providing valuable insights for future LTOs [31][32] - Alani Nu's growth strategy includes leveraging LTOs to drive trial and frequency of consumption [40][41] Rockstar Integration - The acquisition of Rockstar aims to strengthen the energy portfolio within the Pepsi system, with plans for SKU rationalization and stabilization [43][44][45] Competitive Landscape - Celsius is well-positioned against competitors like Monster and Red Bull, focusing on health trends and younger demographics [60][61] - The company aims to gradually increase market share without expecting to catch up to the leaders in the short term [62] Capital Allocation - A $300 million open-ended repurchase authorization was announced, with a focus on investing in business growth and paying down debt [50][51] - Strong cash generation supports ongoing investments and share repurchases [52] Leadership and Team Expansion - Recent hires are expected to enhance relationships with Pepsi and drive growth across the multi-brand portfolio [53][54][55] Marketing Strategy - The restructuring of the marketing department aims to ensure each brand maintains its unique voice while benefiting from shared resources [56][57][58] This summary encapsulates the key points discussed during the Celsius Holdings conference call, highlighting the company's performance, strategic initiatives, and market positioning.

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.

Financial Data and Key Metrics Changes - The company reported record revenues, profits, gross profits, and EBITDA in the second quarter [3] - The energy category has stabilized and is now experiencing double-digit growth rates, with Celsius holding approximately a 10-11% market share [1][3] Business Line Data and Key Metrics Changes - The acquisition of Alani Nu, a female-focused brand, has been integrated into the Celsius portfolio, which is expected to enhance growth [2][3] - The partnership with PepsiCo allows Celsius to control planograms and optimize SKU placements, which is anticipated to drive efficiencies and revenue [7][8] Market Data and Key Metrics Changes - The energy drink category has seen a year-over-year growth of 17-18% in the last four weeks, with brands like Red Bull and Monster performing well [15] - The transition from coffee beverages to energy drinks is noted, indicating a shift in consumer preferences [16][19] Company Strategy and Development Direction - The long-term strategy focuses on strategic partnerships for distribution, particularly with PepsiCo, to enhance market presence and product placement [4][5] - The company aims to leverage its portfolio of brands (Celsius, Alani Nu, Rockstar) to target different consumer segments and maximize market opportunities [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the energy category's robustness and the company's ability to adapt to changing consumer behaviors [15][17] - The integration of Alani Nu and the acquisition of Rockstar are seen as pivotal for future growth, with expectations of enhanced distribution capabilities through PepsiCo [23][54] Other Important Information - The company is preparing for the largest convenience store show in the country, which will help set planograms for the upcoming year [27] - The partnership with PepsiCo includes a significant equity investment and an additional board seat, reflecting confidence in Celsius's growth potential [52] Q&A Session Summary Question: What does the agreement with Pepsi mean for Celsius' long-term strategy? - The agreement enhances distribution capabilities and allows for better product placement, which is critical in the competitive energy category [4] Question: How does the acquisition of Alani Nu change the ability to service energy consumers? - The acquisition allows for a total energy approach, targeting different consumer segments effectively [11] Question: What is the expected financial impact of the deal with PepsiCo? - The deal is expected to bring in approximately $250 million of incremental revenue and enhance operational efficiencies [54] Question: How is the transition of Alani Nu to PepsiCo being managed? - The transition is anticipated to be seamless, with a focus on communication and project management to mitigate disruptions [60][62] Question: What does success look like for Celsius in the next two to three years? - Success is defined by a strong portfolio presence in the energy category, aiming for continued growth and market share expansion [65]