Celsius(CELH) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record full-year revenue of $2.5 billion for fiscal year 2025, reflecting a disciplined approach to growth [5][23] - For the fourth quarter, consolidated revenue was approximately $722 million, with Brand CELSIUS delivering $1.46 billion in net sales, growing 7.5% year-over-year [23][29] - Gross profit for the fourth quarter increased to $341.8 million, with a gross profit margin of 47.4%, down from 50.2% in the prior year due to integration costs and tariffs [24][25] - Adjusted EBITDA for the fourth quarter was $134.1 million, up from $62.9 million in the prior year period, with an Adjusted EBITDA Margin of approximately 18.6% [26][28] Business Line Data and Key Metrics Changes - Alani Nu achieved record net sales of $370 million in the fourth quarter, representing a pro forma growth of 136% compared to the prior year [20][21] - Rockstar Energy recorded $56 million in net sales for the full year, with an additional $13 million in other income due to accounting treatment during integration [19] - Brand CELSIUS experienced a 7.7% decline in underlying GAAP sales for the fourth quarter, attributed to inventory timing and sequencing [22] Market Data and Key Metrics Changes - The combined portfolio of CELSIUS, Alani Nu, and Rockstar Energy represents approximately 20% of the U.S. energy market in tracked channels for the full year [6] - The company is present in approximately 10 international markets, with significant growth opportunities as global consumer trends align with U.S. trends in fitness and wellness [12][14] Company Strategy and Development Direction - The company aims to strengthen its Modern Energy portfolio by focusing on consumer engagement, operational discipline, and strategic partnerships, particularly with Pepsi [5][8] - The integration of Alani Nu and Rockstar Energy into the PepsiCo system is a key focus, with expectations to complete these integrations by mid-2026 [10][25] - The company is prioritizing innovation, particularly in sugar-free and flavor offerings, to align with evolving consumer preferences [11][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's ability to resonate with consumers and stabilize growth, particularly for Rockstar Energy [19] - The company anticipates continued expansion in distribution and shelf space, particularly in convenience channels, as part of its strategy to enhance brand visibility and consumer engagement [36][67] - Management highlighted the importance of maintaining operational discipline and aligning shipments with consumer demand to mitigate volatility in reported results [31] Other Important Information - The company ended the year with $399 million in cash and approximately $670 million in total debt, focusing on free cash flow generation and working capital discipline [29][30] - The company reduced debt by approximately $200 million and repurchased $40 million of shares during the quarter [30] Q&A Session Summary Question: Update on shelf space gains for Celsius and Alani - Management expects shelf space gains to materialize through the end of spring, particularly in convenience channels, as retailers gear up for the summer selling season [36] Question: Clarification on the $25 million net benefit from Celsius versus Alani - Management indicated that the $25 million benefit was due to timing and sequencing of inventory movements, with both brands showing strong growth [46] Question: Impact of Midwest premium on gross margins - Management acknowledged that the Midwest premium could impact margins, but they expect to return to a normalized low to mid-50% margin profile by the end of the year [50][55] Question: SKU prioritization and velocity growth - Management emphasized the importance of maximizing SKU value across the portfolio and building consumer velocity through strategic marketing and innovation [61][70]