Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Celsius Holdings Inc (NASDAQ:CELH) reported record 2024 revenue of $1.36 billion, reflecting strong consumer demand for premium functional beverages.
• The company achieved a 22% increase in retail sales compared to 2023, indicating robust market performance.
• Celsius Holdings Inc (NASDAQ:CELH) expanded its distribution points by 37% year over year, reaching 241,000 outlets in the U.S.
• The acquisition of Alani Nu is expected to enhance Celsius Holdings Inc (NASDAQ:CELH)'s platform with a complementary and profitable brand.
• Celsius Holdings Inc (NASDAQ:CELH) maintained a strong cash balance of approximately $190 million, even after acquiring Big Beverages, indicating financial stability.

Negative Points

• Celsius Holdings Inc (NASDAQ:CELH) experienced a 4% decline in revenue and adjusted EBITDA in the fourth quarter compared to the previous year.
• The company faced increased SG&A expenses, rising 73% to $185 million, primarily due to legal expenses and one-time restructuring charges.
• Net income for the year declined by 36% compared to the previous year, impacted by timing of distributor orders and other costs.
• The energy drink category faced challenges, with the category going negative for the first time in many years, affecting Celsius Holdings Inc (NASDAQ:CELH)'s performance.
• Celsius Holdings Inc (NASDAQ:CELH) experienced pressure from increased competition, particularly from new sugar-free products introduced by competitors.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with CELH.

Q: Can you discuss the strategic rationale behind acquiring Alani Nu and how it fits into Celsius Holdings' portfolio? A: John Fieldly, Chairman and CEO, explained that Alani Nu targets a younger female demographic focused on health and wellness, which complements Celsius' existing portfolio. The acquisition is expected to be incremental, with minimal cannibalization, and positions Celsius to capture more of the modern energy category's growth.

Q: How do you expect the distribution network to evolve post-acquisition, especially concerning Pepsi's involvement? A: John Fieldly noted that the transaction is still subject to regulatory approval and is expected to close in the second quarter. Currently, the focus is on maintaining strong customer and supplier relationships, with no immediate changes to the distribution network.

Q: What are the expectations for the Celsius brand's growth in comparison to the overall energy drink category? A: John Fieldly stated that despite a slow start in Q1, Celsius has a robust innovation strategy for 2025. The brand is well-positioned to capitalize on health and wellness trends, with a 50/50 gender mix in its consumer base, and expects to drive growth alongside Alani Nu.

Q: Can you provide insights into the expected shelf space gains for both Celsius and Alani Nu? A: John Fieldly mentioned that Celsius anticipates a 15-20% expansion in distribution, particularly in large formats and grocery stores. Alani Nu is also expected to see significant distribution gains, especially in the convenience channel.

Q: How will the acquisition impact Celsius' financials, particularly in terms of synergies and margins? A: Jerry Langhans, CFO, highlighted that the acquisition is expected to be cash EPS accretive in the first year, with $50 million in cost synergies anticipated over two years. The synergies will come from supply chain efficiencies and leveraging Celsius' sales force.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.