CELH - Earnings call transcript Q3 2020

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Operator

Greetings and welcome to Celsius Holdings Third Quarter Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Cameron Donahue, Investor Relations for Celsius. Thank you.

You may begin.

Cameron Donahue

Thank you and good morning everyone. us call. Celsius joining XXXX third you conference earnings appreciate today Holdings for quarter We

call are Officer. the and Joining today Edwin Executive and Negron, Officer; Chief Chief Financial John Fieldly, President

the under are Following remarks pre-market earnings celsiusholdingsinc.com instructions be website the Investor its at their given press SEC available today. section. company's filed your time. at company XX-Q we open release will The prepared that on Form Relations questions the call the will and and materials to All with the issued

a before John, XXXX. on that with based involve be forward-looking Celsius including Holdings required be full our These With I'd our over and forward-looking additional and today. in you John? in uncertainties, review applicable to any disclaims As reminder, expectations extent to beyond for to call contain are statements. harbor I risks statements as We other by over and are also the statements these update releases available to available undertakes today's safe forecasts, quarterly XX, to contained turn numerous many that information John to of Please call law, Chief the to aware, duty encourage the his any obligations may turn which information. the Executive company's will this call and remarks. as prepared and like President Officer, management filings the for control. SEC press Fieldly the audio replay Except no statements later November of today,

John Fieldly

today. and joining everyone morning for Cameron. us Thank you. you Good thank

foodservice vending of and traffic in channels impacting Celsius trade Our food including channels. as other our in in third reduction of impacts fitness, the pandemic, COVID-XX materially continued as a several quarter see several to for health and well the

some potentially could third significant, with our be in While regions increased did there begin cases our and additional this The we in implement top to uncertain consumers distribution closures the of and remains priority channels, countries. mitigate the with extended and and safety monitor capacity see to in health business. in and plans improvement to risk customers, restrictions as to and and environment continue states our our quarter contingency operation we partners an reopenings remains and our of employees, reclosings

a beverage to In cans now major disruptions being in for across smaller with addition can the in by XXXX States. is impact being announcing board taking retail industry United an away. impacted entire shortfall our are place in the the channels, material COVID and shortage the many aluminum The recently bottlers is turned brands

our We our remain fill have certain suppliers, growth in to XXXX, our expect they base indicated our to needs not internal be they dialog while able continual projections. and can for fulfill do with to they from been expected

our growth. While this investors as leverage cans company, significant international we to we also strategic have will additional a and to and solution. needed have support an able Asia needed Europe global is relationships issue, Being securing our from -- found been be and a

able goods of outside great these over all source United in this are an through of is While cans, XXs a company our the basis. profit the gross news will we we but period on our the which short-term incremental profit at cost low States, the confidence, increase a see be remain in XXXX, on will run will impact gross rate a by few at points, we margins least to

head until the for supply XXXX entire plants into demand We United and get are impacted as currently year being States in balancing new we up and the expecting running, XXXX. as

team I'm and initial possible become the on scale, as sure, to focused conservative this I can continue will improving to focused as to mitigate to work by efficiencies available a continuing you opportunities wanted throughout shortage, to explore performance is XXXX. we duration is Celsius additional much as an increase operational continue baseline. we but operationally impacted We they as assure is team improve set shorten the and to and expectation on our will offset as this

With excited the quarter. during only our negatives accomplishments extremely quarter of at team for the way, am Celsius they've I the made proud the out and the with and

grew to XXX% year year $XX.X growth. and the DSD, distributions the was in an saw in The quarter. the quarter, outlets, which XX% by third gross million, saw up for over in the the record ago we retail operational XX,XXX of approximately earnings over quarter growth organic where results gross our to from expanded or sales per record from from ago saw all-time Domestic growth net Overall, period, profit, ago quarter. over during margins, XX% revenue And $XX.X locations operations. year $XX.X channels revenue, our we from and revenues, was driven $XX.X same-store e-commerce including share were we million company, cash income, flow income, up at million expansion million in

store saw versus our only times. in Our of represented X.X record the with $X.X by XXX% approximately our ACV outpacing weeks of growth channel revenue for the the have approximately has the additions an United also category XX.X%, XX% category and across confirms outpaced that sequential the to e-com year by in XXXX growth about currently over driven outpacing Nordic million growth brand where in to from second increase States since the Consumer we million, of Amazon, is new million MULO grown we the $X.X in the ago to approximately rate times XX.X growth quarter with through data domestic Initial the which a most a XX% million approximately multiple XXXX, and quarterly channel, revenue. $X.X XX.X% increase ACV demand from up channels, includes CELSIUS the recent the at to by stronger revenue our increased convenience significantly for category ramping and for -- an with XXX% was XX% X, XXX% approximately reported we XX quarter. ending October revenue the over saw $XX the XXX% which our quarter, SPINS acquisition

XXX.X% reflects for Additionally, over category tracks According grew on of as which reported the XXX% by in which in growth to which over week largest a a the Energy and in largest category, shots of rates third-party increased grew at brand of Red to just recent Amazon category CELSIUS largest drink behind including energy by energy our rate. most the share ago. data growth four period. Bull the sales CELSIUS XX.X% remained Monster XX.X% a pickups up XXXX, Stackline, as stay-at-home as for ending the Bull increased the for category XX, online orders the a Red share, grew at XX.X% became consumer XX.X% puts which third on we drink all and at approximately [indiscernible] continue share, sales lifestyles. XXX% third versus and The Amazon at Being channels and on traffic Amazon patterns quarter, were XX, demonstrates response with United XX.X% October same the next patterns, weeks four the Nielsen dollars trends share. much XXXX, prevalent particular same and growth to outpacing placements XXX.X% period ending opportunity X.X% pantry CELSIUS October with States purchasing shifting drink the Amazon the rate to energy weeks the and more in Through Celsius verifies and additional the in in as four sales on disrupted and the brand And ordering curbside which markets year better our their third scale. purchasing by energy sales was is

our distribution club, channels. of vitamin During specialty in and the mainly quarter to impacts health, channels, we continue see several our vending

club was to in third We health by at channel continued and revenues revenue saw see XX% We of from limited Our during predominantly to States quarter. decline XXXX United XX% during approximately openings and to specialty shutdown but historically rebound. revenues reopenings materially expect this the our remains This the expect down represented channel, quarter. channel the the quarter, do channels XX% in a capacity quarter. throughout this remain did fourth begin a some approximately

call, in patterns which shutdown, did of replace our the of over not only purchasing shifted earnings channels, growth America, further in other the two have the to I their of at these XX% CELSIUS revenue channels, third consumers sales these drove in record essentially As quarter channels, second quarter accelerated and revenues CELSIUS. third North opportunity the discussed, in we but reinforcing despite

purchase. more is an than brand impulse just Our

a daily are We are and and significant age but bring value further our consumer. the category aligned a CELSIUS expanding of expanded recurring retailers, as growth. part for consuming The health-minded just bracket demographic, CELSIUS consumers today's of an to part consumer as regularly not female daily channels XX% lifestyle lifestyle,

New New on X-Eleven network the announced to those Pepper Molson on During than company already further distribution double seen our to additional more further wholesaler metropolitan We locations. account our the in national to quarter new in national building the Target The Keurig building our service network, Big accounts. volumes MillerCoors major out DSD York Big PepsiCo, DSD We market. Anheuser-Busch, City our process last regions. Geyser over quarter, with are expanding secured partners we with partners our Dr. network DSD that initially out Geyser during made we partner availability first summer in and a starting further pursuit distribution third have and significant for York networks transition and

now over markets built we metropolitan our DSD network have XXX of regional partners covers anticipate the United We delivery store to approximately XX% States. our have and major network in now direct

order challenges was One initial with building to and in really of to partners. retailers stores our you the the cover distribution flip to have distribution your retailer the the over as have working network, we retailers on those did

percentage approximately of this coverage, by currently of overall serviced which is our lower is markets. is why than metropolitan So, the materially DSD stores XX%

serviced Speedway have regional conversion X,XXX additional most throughout geographical completed in approximately QX be seen earnings The currently in we store expansion be Now we doors number DSD the distribution, DSD which QX that will and the locations announced. half from will most on adding we of network coverage stores a grown announced and covered now of locations. call, our into XXXX. the target back three will our company to and launch anticipates XX% areas, increase recently and stores DSD serviced and DSD have over over of transition announced as XXX% growth which recently overall all announced of recently we our by expect Walmart our coverage stick next by includes transition. of that exclusive that as be mass we launch retail distribution include CELSIUS channel convenience the through approximately continue and Kiwi-Guava-Lime We those of accounts to significant drug On-The-Go in we such, our doubling into associated of our the anticipate In years, recently continue flavor to benefits Speedway over revenues stores accelerated powders grocery and saw X,XXX two the by XX%

the -- addition Europa, services new and our Texas. as as into X,XXX the Walmart Publix the gym In throughout expanded flavor, and offerings our Europe company launch On-The-Go Vitamin locations flavor HEB to sticks of with flavors channel Shoppe well in five over who the expanded

expect October transition the We through regions great beginning throughout Target with is of of to Target XXXX. half We through back the to in and September XXXX study to stated remaining case for and stores X,XXX as plans transition of Celsius. and DSD a DSD also transitioned XX% Walmart XXXX. the to additional stores

test quarter, SKUs and two are September, announced by North to very to which successful. have which end approximately in in August serviced the we the during and in initial the company As in transition XX%. our the and by national was locations, X,XXX which also an grew store channel participated availability Speedway our in the flavors a now expansion stated serviced the in to with to program third cap grown convenience support DSD, XXX five In DSD we ACV the over convenience channel channel America now steadily

which more Union QX Go retail exceeds from We than is total space stores. locations up growth nationally, In or XX,XXX also announced locations US expanded the and Mart, door the XX% our & XXXX now for Kum our earnings on Pacific of on and count we Xtra brought XX,XXX XX,XXX call. locations in

immediately integration grow synergies year. benefits Europe, Food, incremental and company months the our out business even coming a operations. to We capture retailers as to planogram this accretive in continue wellness number expect resets, which strategy dynamic was delayed in Nordic step the quarters in execute an a to Func were from of build In and summer global our full into further we earnings to The brand. the important

Europe our third the shifted FAST through we but the the as fourth saw more continuing to portfolio rebound products, quarter States, into protein to habits do see CELSIUS were increases in snack great the by in As sales United expected operations in the than confectionery consumers decreases impacted COVID in continued and to These and category protein to of and opportunity which by rebound region, offset to the XXXX. continue quarter the we decreases were momentum. continue see

growth of had we tasting flavor launched great tasting of limited off great a was Sweden, back and and we country's Some XX% addition leading marshmallow, operational great a received in Finland versus quarter well has a which In very August, received prior bar the we successful where been in new by saw third campaign team frost which great, the our launched consumers. year the highlights. Kesko, saw the and one quarter, in in the also September, we and is consumers which well we blueberry the kicked launch and country. over strawberry half of of the August hypermarkets great very indulgence a tasting strong retailers by in In

X-Eleven, a As we as in by model and momentums maintain continues of specialty quarter. impacted the the plans fitness and Malaysia, and XX summer And channel, months. In the gyms approximately recovery additional of cities maintain well royalty with Recovery cover and the the continues. points distribution relationship were saw the distributors XX,XXX and approximately with the reenter where gained and distributor. to the direct approximately APAC a as We at cover maintain China, we States, X,XXX in in China Europe United market local now COVID-XX. third we retailers end licensing with

robust States see the On enormous meaningful innovate United drive and to As Asia. emotional programs, with better-for-you the that we in are tremendous where competitive Target home. we consumers in see live, and integrated consumer live even connections front, preferences capitalize new the consumers on marketing prioritize to opportunity and work while and through continue of existing and a we they play to at offerings programs great market Europe activities, marketing opportunities for changes

sampled the quarter, virtual, sponsored the our both in-person despite XX and COVID-XX thousands during advance during cans in over Specifically we key quarters of restrictions, markets. in-hands

the We responders [couraged] also to police, fires. with doctors, of also thousands and California donations supported nurses, army, firefighters

activated Fit Live and throughout out addition, where activities the created quarter we have In gyms experiential in throughout reached also further and Florida planned our and the outdoor market, started Tour we expand sampled and to QX.

further our influencers In WITH programs addition, SWEAT our leveraged and more CELSIUS we connected and Instagram further leveraged we ambassadors workout consumers. with where brand live meaningfully

continue partnered program. recently In where addition, we students Walmart XXX,XXX On-The-Go program college a retailers partner back-to-school through our the with to most over we to college sticks distributed core in we and college have

Our retail where focus brand overall the is and category specifically an expanded in future as resonating changing. industry increased base, focused the distribution tailwinds the growth and profitable throughout with consumer on recognized with and platform space wellness and locations health energy industry remain is on growth the an in shelf driving rapidly energy functional that retailers. is and We driver of with

sales growth United Financial in prepared seeing now orders year. rate quickly, over exponentially fourth competitors are believe just Negron-Carballo, and growing for remarks. adapting the grabbing share. creating the excited remain Heading business, call will confidence and Chief aspects our are getting the long-term Officer we we Edwin? our market growth quarter prior our exceed turn States We The I are our we Edwin over and into and momentum are his of started. XXXX, to the XX% of profitable and through we the in October reinforces versus outpacing

Edwin Negron-Carballo

distribution revenues quarter third growth million, accounts, was XX, American continued the revenue of you, John. The Starting reflecting XXXX. $XX.X of September substantial or for results ended quarter million, Group, XXXX in the quarter XXXX. XXXX we reflect $X.X whom months a from European XX, XX.X% our three the distribution $XX.X acquired our European and to million increase revenue Func figures months XXXX of Food existing revenue impact for retailers. of robust attributable ended XXX.X% revenue which to the $X.X in three for The North was partner expanded same of double-digit XXXX financial XX.X% million a strong September increase full increase major from million. in XX.X% new Thank $XX.X translates now of of the was of with presence consolidation October from growth

Asian XXXX, during quarter $XXX,XXX XX, markets generated an essentially months of revenues three quarter. the third which consist income a September the Other ended our were revenue China licensee from the of basically $XXX,XXX of increase XX.X% $XXX,XXX XXXX, of international royalty in compared XXXX from in for the same increases increase for XXXX quarter an in pricing. increase increases total year. opposed was related the the $XX,XXX to as mainly quarter XXXX in to the to The $XX,XXX volume prior from sales when of quarter basically to revenues in

favorably ended by million the months three XXXX. very gross XX, quarter for in profit in were The the profit profitability which margins to $X.X Gross is to for healthy For to XX.X% same from increase quarter from XX.X%, three compared approximately or the profit sales mainly in million volume XXXX September profit the same million XX, XXX% increases $XX.X $X.X September ended million as opposed incremental quarter of increased XXXX, an related quarter. XXXX in $X.X months operating margins of the XXXX gross marketing in an or were this XX% to quarter. increases to the for delivered increase The of XXXX. $X.X $X.X increase results ended related This increases $X.X the XXXX to reflects impact Group's three in all our pricing. an from product Foods. prior September million, the or investments Similarly, and months full the million in the operations. of from consolidation increase Thereby, give million the Func quarter. Food million effect basically the Func consolidation marketing XXXX XX% year of other Sales and of XX, to expenses sales of in expenses increase marketing resulting the $X.X in quarter

when Specifically XXXX our quarter. increase XX% essentially investment Foods XXXX year the from the the to XXXX of September employee includes our September An trade our were $X.X operations to markets to which costs, quarter. for three costs XX, Func prior the increased of from to quarter, increase distributors quarter. consolidation or resources service business distribution human the for to the in well in the prior quarter ended from as Moreover, XX, which $X.X General increased million. XXXX properly $X.X by million or increase support volume for million in $XXX,XXX and $X.X and as basically not This administrative results ended were months investments to and expenses activities the year compared million also storage three in XXX% of XXXX. similarly the reflects present impact months due the

increases higher volume. the Group's to general investment but decreases the the XXXX increase administrative XXXX the or stock such, option an note and gain to As which of period to increases three ended Employee for other all $X.X the was related in quarter expenses XX, prior gain of $XXX,XXX results from the of million. $XXX,XXX. net miscellaneous which partially year properly quarter offset amounting months XXXX million, of three the from $XXX,XXX net our which other expense currency XXXX other favorably higher were higher year. ended business for the includes $XXX,XXX are XXXX increase resources operations, China of to in receivable of additional were for foreign by All The $XX,XXX, of $XX,XXX, were September additional Food September $XX,XXX. expenses for Func expenses XX, for attributable $X.X net depreciation September and same quarter. impact support XX%. XXX%, reflect expenses million, related $XXX,XXX of months interest approximately reflected These only favorable basically approximately ended of administrative mainly $X.X XX, an costs from $XXX,XXX partially to were a administrative of total Not consolidation $XXX,XXX, $XXX,XXX to the and on prior months three amortization amortization lower fluctuations, in Total $XXX,XXX basically to offset expenses XXXX for essentially other or quarter reflecting $XX,XXX, other compares also by net which expenses the income expenses,

adjusted for that of of for understanding true compared Adjusted in non-GAAP third a information effect, ended year other this was $XXX,XXX a months income per above, the earnings dilutive the $X.X XXXX enhance overall loss $X.X has quarter. the the business September $X.XX share and in ago diluted our of to figures of to EBITDA visibility was our quarter to result of the performance. We compared million three of $X.XX been GAAP of $X.X EBITDA comparisons reconciliation earnings share, income per XXXX. XX, net million As of financial measures or million or results non-GAAP believe To the included release. and and our net

Now to results. year-to-date the turning

was essentially same period. new in ended XX%, of for XXXX double-digit nine or now $XX.X for a of major ended months European the Group. For of nine retailers. million distribution the The revenues, The September XXXX, Func impact strong $XX and XXXX, million of North XX% in in was part $X.X increase figures the reflecting both well presence growth XX, revenue million, revenue accounts of for attributable revenue American Food increase September as an existing significant XXXX. continued in an reflect the in million revenue of full expanded to increase period growth XX, from financial the XXXX XXX% as increase million the was consolidation large $XX.X $XX.X in from months

income the period. mainly $XXX,XXX markets revenue period increase to basically were consist the $XXX,XXX $XXX,XXX in to from XXXX. period opposed September XXXX. China as to XXXX increases of our licensee nine of the the during of from increase for the revenue XX% for an total of international $XXX,XXX for September XX, ended pricing. related in sales the Other was months Asian increases volume increase same ended generated from months product XXXX revenues XX, from which royalty The An period in basically in XXXX, XXXX $XXX,XXX nine

XX.X% related million to from increases $X.X the from For the increase approximately robust of consolidation Gross XX% for $XX.X in or XXXX. in months nine the to profit ended XXX% in a $XX.X the were increased XX, $XX.X gross million XX, in for the XXXX, ended following by nine from million, increase Food margins volume increased as September This opposed months $XX.X October the to to marketing XXXX is an in Group increases period The its of in September for XXXX and of expenses XXXX same margins product XX, reflects million, ended increase $XX.X the pricing. profit million nine September for dollars company. period for profit Func by Sales same the or gross XXXX. acquisition and million months gross the increase period XX.X% effectively mainly XXXX. same profit impact

from result, investments Func Similarly, Food the expenses million of a marketing the related period. the to reflect increases operations. increased XXXX As all marketing Group's our or consolidation XX% by $X.X and sales other

which by support $X.X period, Specifically in employee of of or as XX, increased were human the as from to our $X.X months for September volume, the period resources the months administrative costs well operations $X.X from consolidation Moreover, in XXXX essentially distributors our XXXX increase period. results investment million, includes properly activities XX, XXXX which present the similarly the investments due expenses an in the impact Foods XXXX. the cost trade September XXXX to million the million not million for or the markets and in also of nine increased business increase $X.X XXXX period. service the XX% ended ended This to and General period. Func nine reflects to $XX.X distribution XX% from storage for XXXX increase for million were the by

associated to to $XX.X to pertaining of XX, million is gain stock the other of $XX,XXX. a Total net to million nine the $XX.X a net of operations, expenses Chinese for not expenses variance collectability period of recognition September of of These compared of in or our million our of an over additional the the the higher costs administrative million reflect $XX.X which made cover related the same option of such, year million, investments reserve risks and were mainly higher Foods ended included properly the note order of period nine COVID-XX expenses and other also The million $XX,XXX, years. pandemic. months with related requires expense reflect attributable in increases volume. but restructuring mostly and to of $XXX,XXX, As general of variance debt to five bad income an period for Employee investment the from in an model, only and our agreement business potential which related support relationship Func China The $XXX,XXX depreciation with a months our resulted company the executed XX%, China based $X.X $XX.X our million. the an is administrative reflected administrative other which note expenses ended $X.X XX, from the repayment XXXX other increases million total for XXXX distributor royalty for a amortization increase September during to increase when $X.X licensee. the of receivable XXXX to to All higher in increases increase in were of resources in XXXX XXXX period from receivable net $X.X to the part all year. XXXX business prior

financial the nine $X.XX September In months $X.X million comparison, XX, of XXXX, for and the months the China and of nine this or the to ended ended Adjusted adjusted net a We measures result September visibility reconciliation of company diluted true effect, been a income enhance As XXXX above share. had per of licensee. million other period performance. net our million The $X.XX non-GAAP non-recurring business our the GAAP loss included income $XX.X $XX.X of months EBITDA the XXXX, from $XX.X for XX, to EBITDA understanding a XXXX related for of To included to there a first $X.X non-GAAP per receivable million share. million overall income diluted of that or nine comparisons net was our note information for XXXX. of figures the gain release. for earnings believe has and was the results our in compared of

XXXX, operations of provided million capital company respectively September XX, cash by Cash XX, $X.X $XXX,XXX $XX.X of approximately ended million $XX.X to during XXXX. $XX.X and for $XX.X and September used approximately and period compared XX, of essentially nine XX, XXXX XXXX million approximately of the nine cash months As in ended million million and respectively. December working had was operations the September month

the company subsequent to That concludes and the $XX off open of million questions. on free. our in the end acquisition now Func October the XXXX, call approximately Finally, quarter the debt to of the amount prepared bonds XX, Foods remarks. paid payable third you Operator, may related for is of you. Thank the now

Operator

Van comes proceed & with line Our B. Jeff Company. Thank [Operator you. first with question your Sinderen from Riley the Please Instructions] of question.

Jeff Sinderen

morning Good everyone.

bit. you've John, on congratulations just the maybe QX I you say on, know Terrific network can me metrics. strong the DSD let quite ramped a First, to touch see.

based covered you XXX, think said at maybe still at optimization of in timeframe look to optimization? the I you to next DSD trends maybe but add fill on network review can kind need that is speak the the regions or DSD your of just best maybe recent And you point, business are kind of you which feel you're partners? to this getting just and at then phase of what where like

John Fieldly

Jeff. job team during the times. you, a I quarter, it. outstanding unprecedented really The Yes, did great these no, thank during appreciate

about XXX a the right results partners just absolutely the we're at and on stated right. the excited but call really you're at, So, today. momentum we're I around DSD

metropolitan We XX% have the about of major markets covered.

So, our allows that retailers. to really us activate

we the So, flip to that's over and execution what Target our our so really really forth. and seeing that's transition key the in been better as and we've retail place see better to lift, placement, team model York New great model really team, X-Eleven gets in in we CVS, from California activation, well. getting our direct DSD us in-store in process been better a much we've and plans as Ralph's is where And partners what saying just working with accounts

with look Northern well So, coverage, potential team areas is lots on pockets very that as pockets the been in you need certain we're closely at country still also there as working And When on. working where there. in the variety working Texas of the we're is a the is the on. of Mid-Atlantic customers we've states, of and middle momentum working California,

cover can major So, have a portion footprint do existing our -- a of We covered. we markets but distribution. good good XX% of and the metropolitan

change process, work working DSD. will we the retailers, really with Walmart that our as XX% to continue So, talked really over partners the accounts. retail just currently with hoping flip We're are in covered those by QX in we've these XXXX even about before of and in key

really distribution So, continually excited, we better us. in position, with standings a have great on seeing working reorder we we're we're footprint just in and distributors we're our and great been retail products than these ever think position

We great distributors. members team sales field these are have on team working that activating members, some

we really as we're think a in we position XXXX and head XXXX. exit great into So,

Jeff Sinderen

converting little to of first And a with something And can And the process you the how then, when is a Can C-store and lines flipping that? Walmart how lift more you then part you growing said on great. you have elaborate of on just you speak business in Okay, bit I also convert thoughts any year. think XX%? channel sort curious to along Maybe Speedway? next Target of Overall, experiencing mentioned kind you DSD on the think DSD. going? been Maybe I then of you're to what question DSD of lately has multi-part here. just

John Fieldly

we excellent. that press mentioned, we to to there have gets -- on that flipping releases we Target, worked stores. out, X,XXX Okay, put get whole process working even There a is point. over been involved

we the at over side flip and our about team well completed, opportunities there Walmart, DSD, it that's then on as do distributor partners, within is retailers of taken working provide retailer in sure a numbers lot are Target of lot their additional once be activated months to to office with and making on regards to head be making back making due two the from of Celsius only the Target roles challenges lot working vendor to stores COVID it's the field a has last little all really And with those X,XXX is Not October, but has and that a you're sure Walmart's side. home, September also that longer. we as shelves as with covering I've back responsibilities office of So, set. mentioned, those be been sales communicated There getting a that to sure to XX% set. support currently retail, on our we loaded, these these all we are stores as XXXX. get DMA, needs given and have bit work I know [physicians] by you're into a serviced to done. -- In

work we'll So, that move anticipate get will method on, continue and Walmart we to is happen we with the DSD, anticipate XXXX. early which and together to to QX, them sometime preferred in over

As up to growth. of ACV, Obviously we're into relates the convenience. Convenience, outpacing to pick getting the into -- buyer XX% a category it we're seasons.

a got a where really presented It did XXXX. we We positive a as as account looking -- sit of we're last for as we lot been we at we We has year calls there. getting booth of and extremely into XXXX, lot have did today excitement. excitement there. So, NAICS,

that which as our XXXX. those convenience in of timeframe We of a new accounts existing channel come distribution in anticipate to And resets in delayed. over in in have coming that we'll XXXX the we lot around. convenience expansion March-April are on-board expecting the accounts on-board next had within more We're quarters coming coming well been anticipating as more announcements But channel.

the As of range. the the been feedback at you phase relaunch. of on look the first, the stores Initial -- it's X,XXX Speedway, first has in positive process really

positive. at really on to have seem report initial don't anything else monitor, to to things but to well. going be So, but Speedway, has I continue feedback We'll been this time regards in

Jeff Sinderen

great questions. Okay, Thanks taking my in for jump queue. the back I'll to hear.

John Fieldly

Excellent. you, Jeff. Thank

Edwin Negron-Carballo

you. Thank

Operator

Ladenburg from your Thalmann. with with next Please the line question. Cohen proceed Our of Jeffrey question comes

Jeffrey Cohen

John you? are How and Hi, and Edwin Cameron.

John Fieldly

today you doing How Jeff? are Excellent.

Jeffrey Cohen

you. Very thank well,

Just fine.

few questions one macro So, random a and of question. more

up talk a to six you material SKUs. least the about could So, yet business On-The-Go it's Is portion that in at become the, overall of now sticks, North America?

John Fieldly

because Yes, for our the On-The-Go is a us, offering sticks that occasion. usage expands great

travel And down. of making well. see drive deliver as our a scale continue of it travels to a get of Obviously and we focus of also Teeter, meaningful it they're it and our seen our combinations, over excitement, we on individuals flavors We a business. well part our on the we XXXX With revenue lot -- seeing the them. more put has do a We've lot see lot will a are with be our this with well in on so some is revenues, or them. some priority portability and of business, is HEB smoothy and it taking at of it we're main had do profits Publix. the a -- sticks, for momentum as we RTDs interest lot into a So, the meaningful new additional of their -- it their piece lot business. part offers we the Shoppe Vitamin plans years time, to On-The-Go But line our just team seeing Harris We a be have of the to RTDs. or expect has we Walmart of done of a but really opportunity do we've as we business gross in lot as for it as well with expanded and doing bulk part expect

Jeffrey Cohen

Got it.

flavors, blueberry is on what that's couple line us heat up? traditional Can to tell you the we said pop if frost. strawberry new a marshmallow the line or you timing And of might mention that did where and You that? and the expect

John Fieldly

the it's it's quarter. the limited blueberry the Yes, the strawberry in addition that frost, at marshmallow Great tasting just now in frost launched the Nordics. and of the tasting third we market end is great a

traveling to So, find if have Nordics, the to Sweden, you're Finland in that in you Norway, able arrive. don't is it be the locally to here US, we that. over slotted or But will

Jeffrey Cohen

any got is the you know a Okay, then, you're and Could little talk Vitamin talk next, it. disruptions bit situation? if And about, closed. seeing you that with could the channel Func about I GMC

John Fieldly

the repeat you question. can Jeff,

Sorry?

Jeffrey Cohen

quarter little a about specific talk you to could bit Vitamin the Yes, channel this next quarter? or

John Fieldly

Texas the in the channel reopenings actually business. see start a California great been and to supplement are in started reopenings workouts to markets outside. Florida. did has channel We especially we're Vitamin channel, the mean in I Yes, in see gym We

some anticipate channel stay to partners. stay. -- forward that the It's We see healthy, We're health quarter. anytime feel to than to there are local ever was here going and the mean it away very have support Regards to we vitamin to It's We We now down stay don't to more deep outdoor stay key soon. it wellness back. important come active. the about, trends activation fit, those struggled. been specialty, support fitness in It's core. XX% to has our We've has the channel. talked I

It's about that space channel continue in consumer we a is to for consumer the to CELSIUS time learn feel CELSIUS for bring nutrition going a to a So, be the well board. -- they first and grow. sports as way on lifelong great

Jeffrey Cohen

Okay. And then lastly from me.

with talk could the about the you If cans. situation

As factor is facilities four you factor, I of five the materials current had that and the is or limiting the of the capacity limiting the understand can raw have facilities, manufacturing? the the availability or

John Fieldly

It's a can can, for the as North about were the about head cans. the spoken late October we've anticipated XX in about into There is shortage short availability XXXX. notified America massive industry we body billion XXXX, Yes, the XXXX. physical actual the We in cans. in is of

the of really manufacturing filling co-packers of the of working filling we that's lots filling So, or to we've and not talk When of five can. the stations the with the capacity with. has do stations, shortfalls, physical can, the been that about

physical we, to to have challenge cans the fill we cans, produce the XXXX capabilities finished into body. as head have, but can goods, the is We we into the

turning and over larger away, is. capacity big the unfortunately. manufacturers where the the are can manufacturers, running brands that's all So, All shortfall

our the on global on So, we immediately call, remarks as a put to us. sustain growth do to that. secure were place to I immediately and is well Asia, plans We category. able to the of company that to start of opening out outpace advantage in of contingency stated for earlier, sourcing have the continue cans teams Europe out as task and cans our Being

with it also So, supply we issue. which is going that we as head -- XXXX. to have is for sufficient will can be have an opportunity as through dealing brands we But industry cans. into wide had ample an Everyone be

Jeffrey Cohen

Got questions. That taking the does it for for okay. Thanks it, me.

John Fieldly

Excellent. Thank Jeff. you,

Operator

comes David Please the line ROTH with Our with of proceed your question. Bain Capital. from next question

David Bain

for also congratulations the covered a the And Great, data thanks. on results all and you thanks my points lot.

So, I'll mine limit to two.

generation, does Just given looking activity sheet, cash M&A the I either on extensions? balance the cash or change mean, outlook this I SKU potential flow mean yours on brand four at whatever, Tea times your to same the got average times, three Rain, start to you for Paradise, to your it's add fuel Dragon times, locations. leader, industry body the in five be

is right an I thinking the year about or that way? potentially So, that next am opportunity

John Fieldly

around for is of right in it. you out the focused there No a -- $XX Celsius we out key free. back did finish debt ton question about is million opportunity paying Dave which execution. which are The $XX the lead us. $XX debt, with off cash that you, for Thank quarter million We There the if of question. million

that's been off. So, paid

have sufficient do we So, cash.

generating are We cash flow positive.

investing will We inventories in growth. be to sustain

for have So, inventory investments. funds we market

We some with we cooler investments, targeted also XXXX have implementing ROI placements. be into positive will

there, the If Ralph's, extremely ROI know I great cooler positive. stop you're really out assets is out you're with placement some Dave we're good getting you California, and in if into some

at and share. to now it, to drive right into in category that willing gross be and Celsius but invest strategy will find accretive major We're energy look looking evaluate the day. in at in profitable every area and the to growth revenue our to Opportunities take we continue a and an stay to XXXX. opportunity we'll player we accretive them So, if focused, drive that's is profits, into arise shareholders,

David Bain

Fantastic.

possible growth, growth any is we growth, be, if pillars my and same-store then growth, follow-up North of it's bifurcate revenue of way sale, organic would door the SKU kind main third quarter what look XQ American can us to were? buckets Okay, kind at or growth like into help the of

John Fieldly

we we lot the at coming like count saw. North growth basis look on I XX% store about you the distribution if of a we're talk America talked on We call, increase about that year-to-date growth new a in there mean the at the a Edwin mean, stated I rate. on. did

it's So, as an know interesting year we XXXX. all in

There consumer of it's taking dynamics back. and their a shifting going place. now So, purchasing lot is they're patterns

So, I don't really want to state anything.

did There We as North momentum say the had in guidance. of orders I company. provided XX% in-house behind haven't is we end growth a October. America the of

going time. any So, forward at that guidance But shows some not underlying I this provide would to momentum there.

David Bain

problem, go No ahead. just

Edwin Negron-Carballo

to Are you follow-up? going

John Fieldly

as said latest underlying the mean we're the at I look Scan I data. the that at you rate. growth is In data data, channel, the convenience XX% XX% a SPINS about Nielsen growth No, was and it, rate if

some distribution well. We new have gained as

think, a So, growth coming seen growth about we've I sales same-store XX% and is from this and new distribution. other stated organically the we publicly

David Bain

Great quarter. much. Thanks Got so it, okay.

John Fieldly

David. you Thank

Operator

comes question Group. Vendetti of proceed next Please line with from the question. with Anthony Our Instructions] [Operator Maxim your

Anthony Vendetti

Good How are Thanks. morning, John. Edwin. Good you morning doing?

Edwin Negron-Carballo

morning. Good

John Fieldly

Good morning. Excellent.

Anthony Vendetti

it's but obviously can of are industry, just what shortage the because excellent big you're on with, this is you it's that outside. the just source about So, able lot talk issue there across a just obviously to a it's and not dealing --

going do Europe need a or a Asia If sourcing start to from issue? You that little it margins now, now 'XX and said right you impact is to impact to can it's margins bit. start

John Fieldly

an in sourcing it's issue. We QX. industrywide anticipate Yes,

So, that will start in QX.

Anthony Vendetti

see Okay. curve, you for you meet of seem correct? the of have terms the you're But an in it being forecast that based can to to this the able ahead on get you demand, the need, terms don't fact like issue of being in able that you being

John Fieldly

the cans processing already XXXX. are process purchase on That's correct. have We in order we place. head procurement have as We've into to along already sufficient far orders

Anthony Vendetti

then Monster third after Bull. And Amazon great. Okay, as mentioned Red we the and -- you

is in what's go you remind that that in little of terms this corporate the gross Amazon when and a John or e-commerce margin, or Amazon it Just at the is point? bit revenue from percent Edwin, on lower just margin, me, of line, comes

John Fieldly

around quarter, roughly third our it's North for America. revenue the Anthony, Just, XX% of

through a can, So, looking at forward low In at basis profit on the for like due segment don't quarter. disclose going margins, said we there. margins if good were we And overall, you're particular as regards we to the looking we XXXX. are to the go-forward importing very XXs go of cans, but gross accounts, the

Anthony Vendetti

metropolitan you major on you how PepsiCo, Are DSD that Are penetration maybe in great. believe those to you Big the XX% point any DSD believe agreements that DSD other your Okay, at Network. or Anheuser-Busch, are DSD Pepper, XX%, DSD big as with areas? your can but others the XX% there Geyser, And you increase partners have Keurig and network ones, there cover can some need go Dr. is far about you network of as terms of coverage? MillerCoors

John Fieldly

in mind the and the Pepsi keep Pepper Keurig Anheuser-Busch, And independents. question. Great Dr. with dealing were

owned. corporate not they're So,

an lot is wholesalers. this XX% covered. So, of A Anheuser-Busch even The independent can't get major to of distribution with independence. brands metropolitan is our bulk

But at achievement drive today. that So, for we're through. and a continue we is great where full are looking it we'll coverage to

thousands can to with of be there Texas Northern a Tao, to additional really metropolitans looking to on. Mid-Atlantic, in in for major And some country way covered. The the those that fill talking variety I And the have in Celsius. big right to been better there up we're now additional out But we're help XX% a certain them [ph] looking in to with we've on partner opportunity that middle just boys Texas, a We sales then they opportunity distributors reps new we potential hand. the we -- XXXX. mainly certain position the within for position will think regions parts of build distributors. the we're activate helping brand a never in picked are and these coverage are We of of had of good

Anthony Vendetti

few more out be you're different came just line to extension your is different that at what a launching you with ago it in in 'XX packaging, an going you have lastly, looking lines -- there a additional just And it's product, great. then other which the of or was caffeine standard Okay, HEAT line. CELSIUS than flavors? more years Is any

John Fieldly

Yes.

We innovation have a team. cross-functional great

We a for XXXX and have plan lot beyond. innovation of

opportunity leveraging innovative acquisition Some coming market fast and expansions, brand is Food flavors great the Func which about we've had portfolio. that we've line one talked to with

see it So, and in Fast ceded. to bringing we're looking snack We've opportunities been to category. RTD focused. look as that for But tasting category into through We innovation, to partner are with in QX, them. massive opportunities in lot there's North and head beyond. partnering the where and flavor expansions that some and and some XXXX But of that's a Protein we great do mainly starting portfolio America test we line

Anthony Vendetti

appreciate it. guys, quarter Alright. Great thanks. I

Edwin Negron-Carballo

Thank you.

John Fieldly

Excellent. Thank you.

Operator

for Fieldly to remarks. the no are in queue. I'd the further closing John questions hand to There back call like

John Fieldly

everyone. you support. of like the Thank behalf Doug. company, you, take Thank everyone for interest and On I'd their to continued

gaining momentum. results the Our products demonstrates considerable are

We the transformation health and global of are the drink today's capitalizing wellness place category. in trends on and today's energy taking changes

best our with lifestyle We're position is building a and appeal. practices. core mass healthy leveraging global Our and upon active position opportunities deploying

We have that growing strategy a market portfolio and winning consumers a rapidly team and want.

our very get to without tremendous achievements them we see Celsius possible. dedicated as team more is to of mission and significant would our opportunities be I'm not consumers proud Our profitably. ahead

and their investors stay in confidence healthy, our great Celsius. a for your and support interest have thank for I day. team. everyone our I addition, And In in thank continued Be safe,

Operator

you Thank great We participation day. you call Have disconnect you, the once does again. for sir. today. conclude ask And conference that your you all your lines. Thank that and for thank a please

Celsius (CELH) 12 Nov 202020 Q3 Earnings call transcript