- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Celsius Quarter Three 2022 Earnings Call. All lines are in a listen-only mode. And the floor will be opened for questions and comments following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Cameron Donahue. Sir, the floor is yours.

Cameron Donahue

you. Thank everyone. afternoon, Good joining conference for call. you quarter Holdings XXXX earnings us appreciate Celsius today third We

Langhans, Joining John Chief Jarrod Fieldly, on President Financial me the and Executive call Officer; today are Chief Officer. and

instructions earnings on we'll all remarks, materials afternoon, time. call questions at prepared the the upon celsiusholdingsinc.com. will released market open given their Following be company and available company's release to website, will the your be and press The this that close

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

John Fieldly

ending $XXX with you of achieved The in record United energy Thank scan the their in recent the Celsius the revenue third ‘XX, over energy, MULOC IRI over total you, of at to States. a thank XXXX one drink for according us now joining third today. Good and million, XX% growth company largest Cameron. everyone, per October retail, week XXXX, afternoon, data most quarter quarter is sales delivering and

trailing X, over majority IRI again total States, for quarter, growth category which the In number brand represents October will Celsius in $XXX one driving addition, XX% MULOC third growth, category approximately million be the for representing to sales the numbers. as the to to started our category. incremental quarter XXXX, prior X, the energy one number United the and at October quarter in and of fourth distribution of energy responsible the represented according transition driver network, the the XX-week spot in PepsiCo of of the was the This third XXXX, consecutive the in

from $XX non-tracked continue was million another XXXX. channels, quarter to third $XX for in the to record nine compared quarter, year-to-date approximately channel XXX%, and new million up the $XX third growth XXXX approximately club sales, totaling channel of million non-tracked approximately the increasing quarter the in of $XX hit XXXX. in totaled by million see ending third quarterly months a in including all Amazon sales, approximately sales over across the million our $XX with We and

opportunity, record. weeks convenience data Celsius the the the In accounts distribution X, basis, ACV year-to-date perform records. distribution Third expansions energy grocery while continuing quarter and revenue first we Walmart largest to in setting year. and and total new XX new U.S. partnership commenced IRI gains both benefits retailers retail of quarter in continues retailer include October transitioning records subsequently store quarter Celsius On channel to of highlights and in with exceeding the both October as growth X, revenue increased of the our a gas in PepsiCo from In incremental sales track this the Kroger a tangible new initial the announced share third of XXXX ending expectations the early quarter most the see sales where XXXX, with the We channel hit and sales both extremely already impressive the setting XXXX, lead the on well the and these according our channel, convenience to Publix our our third with and to officially energy, XXX% of both actual growth items metrics. gained indicate on as gains to carried per category.

respect consumers addition, have as to In partners, as well with exceeded also our retail initial the process our our transition expectations.

IRI be one the surpassed the XXXX, data As the energy week number reported to compared ending X.X%. the total highlighted Bang’s October a for Celsius X.X% United MULOC, drink with market three States earnings in XX, energy, has share in supplement to Bang in

Celsius the X, with average three seen has gain items approximately network addition, timeframe. X store XX% convenience and October approximately has since same year. XX% this In in week since average of with channel, to store increase over in a seen the X.X% The from increasing XXXX, ACV, an an launch initial the the largest ACV increase PepsiCo distribution of October with X.X% per Celsius carried

X.X% increase retailers, door hit the in representing well approximately XX,XXX with $X.X sales increased coolers branded Our total of sales $XX.X to this million growth prior carried $XXX.X from the Revenue the was the only over a conjunction $XXX from approximately sales locations. in at expansion, another about in convenience count quarter totaling sales with as prior International by retail year total the million and as in $XX third quarter. increase compared sales store XX,XXX at approximately million, Club approximately million placements U.S. items increase. million year. quarter with second at the XX,XXX of of -- increased channel quarter including for both locations with driven sequential about quarter of represented additions

significant a $X.X third of timing chain year impacts, with around represented well with of from We to other and compared part expanding innovation ago revenue, Revenue associated going we believe that markets European quarter, and agreement international $XXX,XXX, exchange our China. million as there totalled approximately Pepsi's into PepsiCo are revenue approximately international of distribution as supply international million revenues included of with disruptions. million, which decrease both $X.X is decrease the best-in-class opportunity forward entered utilizing internationally for up the Our Celsius as Pepsi of XX% committed distribution XX% $X.X for royalties a a foreign growth and a from international system.

network, While the for in in changes our for low we offer to distribution began our more scale, sugar and focus our will to capitalize distribution be on you partnership see energy. significant preferences and reflecting and distribution the with better just opportunity need for Pepsi more consumer U.S. no global initial the we a PepsiCo brings, U.S. transitioning distribution the and

taken transition a XXX% were to up XX.X$ quarterlies the XX.X% Gross from million going forward through quarter focus October $XX the for ago and three majority increased of additional U.S. approximately XXXX. year the we through freight to million, to-date, have our expect months gross XXXX, international excluding a rollouts, ending for While profit approximately has $XX profit and calls additional details outbound -- expected and or XX.X%, margins XX, basis discussions for quarter. quarter margin and consistent year by fourth freight the expectations excluding percent with compared be percent point represents to expectations margin prior our XXX continued improvements quarter sequential percent gross a This XX.X% quarter We the through in our gross and gross second and point quarter in the from increase second from our margin the earnings with year-end. call. to reiterate conference mid-XXs September outbound

to margins as as been of margin co-packers, our mix, mix impacted sales working have limit with including club pressure sales channel Even higher the efficiencies rising has and the production a increased we our quarter mix supply capabilities secondary in and production secondary in line million than consistent efficiencies pressures. produce the we this had to of originally historically the incremental has inflation the channel, and facilities. in levels $XX also optimize overall the improve to in chain continue margin against nature also due growth with in sales channel, the approximately the product margin repack can Our continue we to revenues to for rapid channel channel, guidance third who our gaining club our of number forecasted to so stayed the XXXX product has with in lower margins which contributed has revenue initiate

benefits, In will addition, this from distribution number transition XXXX independent our our allow expect sales, leverage cost through and we recognize network, marketing, significant to with consolidate which partners a with of associated beyond. PepsiCo distribution planned to to distribution efforts and team the

also drive we additional operating through We both additional to efficiencies and see the leverage transition, expect as but and as move to gross look targets transition. provide post on leverage will we clarity

DSD serviced XXXX. the XX% quarter, MULOC locations third MULOC XX% network, up the Some in from reported now additional highlights our store of are quarter for our -- of retail through third

PepsiCo for the through data end and growing -- additional the category week expansion line U.S. third partners and accelerated doors partnership the XX% reaccelerated stack now in Amazon. doors and period. XXX% by Celsius the to year to yet company October according XX% grew through increase were with the XX% of confident The the XXXX, sales XX,XXX energy additional On line ending outpacing year-over-year U.S. the basis at from of at on our channel third share locations, an and sales PepsiCo business, metrics at the XX, XX% most channels basis quarter convenience end of XX.X of XXX% continued is even that Our reported the a higher since XX.X compares Coolers, or XXX,XXX distribution of XX%, sales and energy will Energy to increased on drink same to as store Pepsi Convenience approximately XXXX Amazon, planned more by XXXX independent count which accelerating total the time Consumer the distribution reported our compared locations less placements our XXX demand we XXXX a third-party which chains The by grew addition third to share which XX-week in XXXX, front, quarter and of XX% to total the the growth On channel XXXX. priority. X Amazon now. into that nationwide beginning period of over XXX% are serviced company XX,XXX year the we Celsius the drink acceleration and This expand shift in XX,XXX additional shows at nationwide category, by the to in we over share additional to Energy and Monster acceleration largest time Celsius XXXX. for as third Bull rolling new PepsiCo and compared Drinks The the XXX,XXX energy through rest in data grew approximately backed placed a scale across placements for for weeks, throughout the locations placements X,XXX distribution totals existing has XXX% locations XX% ending and two to provide up dollar XX-weeks in store energy a anticipates into DSD. of year-to-date XXXX XX,XXX the our second Celsius the with or in retailers, third of distribution by improving co-packer and mass XX.XX% network. XX% Celsius third and recent locations largest reported quarter continues now the Industry incremental October quarter of at the trailing for after is an year-over-year XXXX of the cooler is continue to out third with the of U.S. initial the drive XXXX, locations XX, as being launches the sales for XXXX Red with accelerated October this on DSD through XX,XXX ahead network. a category. our and quarter and and quarter continue are coolers period, quarter. or of two the the Nielsen on agreement. over at right show service over ACV

keep XX total co-packer massive support now footprint in-stock help U.S. are and product active, our will Our totals which growth. our that

and our want I prepared recognizing job the they driving drink Before I comments as have a the Jarrod, to to energy the of category close growth leading call team which brand, turn in Celsius the establishing amazing the my in entire entire over U.S. partners, done,

teams our the Officer is Langhans, remarks. portfolio resonating remains our Jarrod base positioned for are growth our consumer our prepared turn new broad PepsiCo. Chief forward Our will with partner now robust, call Jerry? over consumer a I going to demand and for his to opportunities leverage with Financial

Jarrod Langhans

Thank you, John.

results cover PepsiCo Before from The distribution I'll the items jumping stemming announcement agreement. quarter, the our agreement items category, of administrative a for a busy not the quarter. share. was step transaction-related and key It partnership financial grow into a including very few distribution and significant with but the a to ability our in and to to grow market to our continue investment through Pepsi is growth, exciting only

conjunction not distributing Pepsi in make with locations October key Although X, in all sure U.S. did their of until they their to that operations add across start product team we our worked Celsius the

long-term of has transition gone well As excited and very this mentioned, results see John we are to early the partnership. the

this associated transaction. walk through with let's highlights some So accounting

footprint $XX additional to fourth the quarterly transfer with to issued the million Pepsi. expenses during a deferred our will we the be the of already most preferred distribution be some results. termination so revenue that $XXX a cash XX-year there looking were A agreed $XXX.X notices and expenditures We've payment funded upon the during of distribution quarter, in but we shares. Pepsi of expenses. Pepsi, associated start over the transitioned within our Series period results, preferred Pepsi quarter of million activity QX in And could we that share result, an These Let's as expenses QX funding QX as termination the well, We termination in the from investment, will amortized recorded through the recorded at over quarter and of a in termination with Included million associated by be agreement. our which the as recorded had distribution have we beginning for as will XXXX. received

in valuation cash distribution contra over of as Generally this The of Accepted period sheet. $XXX.X mezzanine the proceeds we Accounting within at balance part revenue. was recorded and asset instrument our will recorded valued and costs and this the difference this we net a section the agreement the with issuance As an as valuation amortize Principles, million of XX-year balance other a associated

talk Let's well. taxes as

XX%, impact of months the million nine adjustment, income XX, XXXX due negative to effective Our XX, preferred September nine September which expensed deferred will statutory over book ended federal tax A tax -- rate be rate value the the for ended XX.X% XXXX, months Series of was $XXX.X XX-years primarily from stock for tax the purposes.

Energy we U.S. tax transition unique a for as As quarter, internationally our of believe bar purposes, the And and U.S. in release Celsius this FAST state of the out the tax was in be evaluation in the result also expense, previously from in stock-based tax compensation local we as performed brand liabilities quarter the turn, income determined nine we this rolling we by expense September to item. core Pepsi during covers deferred FAST recorded that of Finland, that is planned brand occurred impaired that will XX the disallowed our non-deductible we for ended and rate state discrete million. brand activities was certain on impacted partnership months and the focusing taxes the in third million and but the reserves. $X.X tax I income amount whereby other had product bringing the Pepsi. with at effective a the items $XX.X income agreements from looking The on

our issued in as an can in associated costs, litigation class that action was to $X.X we a label. amount filing million to agreed we month, settle with of last on the have X-K noted Moving

we'll Although inquiries accurate, cooperate are have energy growing but review, our In transitioning we can claims received. that continue and cost, we the over the on believe believe do requests needed utilized are and not focus that the any that SEC update, to in an to have regards better would our we with that been Pepsi business. or was to

Turning financial our third quarter to results.

million $XX.X up XX% $XXX.X XX, growth or XXXX or supply continuing of the third $X.X quarter of revenues XXX% new the of $X mainly increased this revenues by $XX.X $XX.X September increase ended approximately $XXX.X XXX% of challenges. rates, foreign million, revenues European XX exchange where three million, XXXX. million, three months same product million same increase result timing from from million million due period increased The of in XXXX. ended the from had balance third of to was Our ended an Approximately XXXX for of the North quarter September to -- launches of period the September XXXX, revenue from which America, a chain were and in XXXX, were attributable revenue XX, for revenues quarter an

$X Asian revenues, an Other revenues same $XXX,XXX largely The in of presence $XXX,XXX volume China generated which of strong September our increase of to in related the our ended X%. in XX, an international and in markets include additional XX% XXXX. during increases distribution sales increase XXXX, digit primary behind increase factors The product in the an approximately three from sales licensee, channels growth combined in world contributed royalty months to optimization revenues from in is as million, approximately with products triple increase attributable an in to total in for opposed were period traditional the North class continued American pricing. retailers. volume increase increased revenue

prior as XXXX. to the network. XX, centers September of were which system distribution Pepsi network, in building distribution reduced inventory inventories terminated by Additionally, of Gross revenues revenues warehouses anticipation the at a their profit. offset were balances transition of distribution distribution the majority result prior These increased as and a of was as Pepsi

XX, million or Gross XX, months profit freight increase $XX the months quarter. year our which relative September as XXXX three $XXX.X was compared million. average due outbound year. three expenses the months improvement $XXX.X by quarter September for within prices to The million profit in to excluding quarter. reflected XX.X%, margin third to prior increased outbound ended September approximately revenues relative increase ended of $XX.X XX, XXX% in increase or was gross XX.X% XX.X% improved improved to freight approximately excluding expenses inventory, last profit or an of the the can to year dollars XXXX an Sales for approximately of part the marketing XXXX, for XXX% the the freight XX.X% well prior For ended to $XXX.X million, termination attributable when XX, costs were and three of increase to distributors, relative million September This to in XXXX. prior an of primarily resulted gross as

our to million or increase an costs the properly September the operational commercial for are As marketing XX, administrative an termination a September and business sales ended expenses amount XXXX. by for third months compared of million, XX, other associated $XX.X XXXX. in the on offset the performance, fees business the continued percentage three of backing million, our to of a based providing and the deems in service and it increased the increase $XXX,XXX XXXX to reflect third a year General quarter. motivate of three XX, September ownership fees, primarily of third-party to the ended $X.X months In XX% million, business translates million by ended well decrease expenses $XXX.X stock-based of expenses when of cost important $XX.X quarter in audit over Administrative compensation, quarter. higher by $XX.X in attributes. by XXXX sales, the support XXXX, approximately very XX% quarter, success $X.X out of $X.X increases also this of and settlement compared the key were to also million area three SOX million revenue. increased in from and due compliance, to litigation. year volume $XX.X of litigation to required approximately including months to for providers, Impairment for after into promote the million current were and as Management represented when the prior approximately investment our them Employee quarter XX% business. million, areas in These as performance employees which which order amounted $X.X internal as control compared prior increased with the

testing, mainly Lastly, other all of were composed approximately research, and by $XXX,XXX. increased expenses, administrative which control development quality

XXXX, in you G&A of the XX% $X.X the of a As decreased a settlement the ended million percent million. charge impairment to of of compared XXXX. agreement, the the X% third quarter million X% percentage to When the G&A sales in months out cost outliers such litigation equation September stock-based as $X.X was brand three expense sales of some as and XX% items total compensation exclude take and as stock-based revenue, is XX, for of the to as for a XXXX, related for G&A the prior $XX.X expense compensation percentage sales of excluding The well. $X.X million and year.

cash million ended to as XXXX. associated the in total net looking Pepsi nine million of compares down relative the costs with for nine of capital XXXX, and liquidity in capital $XXX XXXX now distribution had ended QX resources, respectively, at December and And the of December $XXX.X $XXX we respectively. the approximately on the as million cash September system, approximately as million, million and of inventory $XXX.X $XXX cash XX, inventory, timing working September million Focusing and approximately and the $XX.X of XX, million will operating growth at in XX within Included continued XXXX, $XXX balance cash by million utilized million company. in well operations increase end payments. QX $XXX at of generation which provided the activities that totaled of months used XX, was transactional by to for months the activities ended XXXX. The be flows Cash $XXX cash September $XX.X the termination operating for approximately driven XXXX was million

flavors product. in prepare as and as fill grow to As some to We of launch we a we new we benefited well from continue would Pepsi increases to growth our a advance in first also beginning pipe number of our expect of XXXX. quarter in distribute business, the as as

continue to to are some drive inventory in able in keep growth expect efficiencies experiencing, some We to with we as significant we to that to XXXX. DIO the up order but additional move will our we would we are start carry through make sure

our have injection to our transaction, latest take Pepsi sufficient concludes level transition we from internationally. next prepared the Thank the funds firepower our and may the to now you. of U.S. PepsiCo for business Operator into remarks. we questions. network the With you distribution then This across as open the call

Operator

Thank you. Mark. from The [Operator ahead, our floor question questions. for Mark And from Go Instructions] is now open first comes Stifel. Astrachan

Mark Astrachan

Yes, thanks and space. the and I to on afternoon, everyone. the gains guess, wanted shelf I start distribution

the So they dealing that know Bang obviously, transitioning challenges we same you're had. obviously that shelves into also all basically is the with, the

how months heading simply of to going next over set? think space? can to put you So good one like kind a as that's just Thanks. the into what the forward sort is shelf shelves of Do you are about go number about off How think Bang relative you where do completed with SKUs more you you starting of the can today? to on the Maybe three your is spring there, where is to point? six one you as it a do you think trade end space is changeover look up

John Fieldly

Florida, what South here, in a question, appreciate out middle through little of of Thank hurricane, but weather We've we with question. Mark. coming I opportunities we're but of there. Yes. it. in Great we audio the seeing, got choppiness. down are team get Mark. is mean, bit little great But you, lot there a difficulty, a have to We some the

increase is and exited shelf with network that as There convenience. gains what from in that's distribution space referenced number they have the three just especially the week what largest we're see X, seeing seeing of the disruption did there with and remarks, as October now with in period the prepared we gain think putting you're right I obviously the that of the together. they're SKUs out coming on Bang

space vigorously take in opportunities other there’s of set every advantage going that at we we shelf team able you capture when category. Energy as being out advantage look delisted We're energy coming opportunity of Coke that as in with What that look through resets really many to on in normal So to take and that the was change. do able is and brand well gain when that of are the on course what a working at were -- the retailers. lot incremental

I think be have so of to the the that's if and when allows retailers we add when to find choices one top look locations. -- certain what momentum choose looking replacement a at they are you us at retailer

of So really I position. as one in the in greatest the and we category, know the coming of ever know, of think resets. variety We think a has incremental number the category retailers. season And know seeing to into resets, company And we're advantage great look the looking one you're for we're season, we're as key right of being in in match coming retailers to as by as in for look us that take of of in had the -- Vegas move we lot a to out buyer some a driver good then selling the booth. space the we're spring we have, out really you forward puts of good and growth there's we're position now, I midst

leveraging in brand positioned. this on they especially new is optimistic So Obviously, partnership. I we're don't provide feel positioned, revenues, Pepsi think where forward our distribution we but really on well guidance

Mark Astrachan

serve about terms about think into how convenience per current metric as we And generally stores if point be should think of we of or want you velocity to trends great. going sort and there, that sales of of are forward? distribution thinking just related That's in you maybe bit how transition one about items, follow-up you however could the talk about a kind where where the single selling especially you're that

John Fieldly

that's Yes, closely. really watching we're something

awareness also where keep new really building than in Now two has our mind, it, a and distribution call last, entering been some of looking, we're when three lower we're new some lot the markets entering over like we've to years out of markets. we're in the where brand core

we're and expanding. you increasing P&L, as in saw So our our further investments

we I we're So also not X, accounts in closely, potentially go watching X and it's Tier accounts, X may forward Tier as we think -- Tier something X productive be you're as into today. one that really we're as which the of Tier getting those are

we're So really has to data be But watching seeing we pools. at it, be brand closely, a of, look determined, the several the to that's now, right been really it basis that kind we're when at what seems level performing well. over last

we're closely as well. it's an that I can't you So answer really give on this point. at something watching

Mark Astrachan

All Well, thanks all. it. Got right.

John Fieldly

Mark. day, Excellent

Operator

Thank Kevin. Grundy from ahead you. question comes Go Kevin our next And Jefferies. from

Unidentified Analyst

is just Hey, sort I your further on (ph) some could Kevin. of more And the your everyone. remainder for your [Noah] that a context little the a has early dig Thanks. little distribution you give looking U.S., to And the what on shifted? areas are observations of, hasn't year? for transitioned, been how business expectations us into in starting much business already in of first, transition? PepsiCo was This off the

Jarrod Langhans

over are geographies that them our to the has weeks call transferring they announced everything with mean, about like out already to and for rolling been of listened into two And continued I there. course the Pepsi a on planned really that into said and there QX. of we've that were was ago, QX we in plus if Pepsi will be on locked XX% business into excess territory in. more were the of I kind month But territories Yes, or -- you and additional there out call, October, we've DSP expand to

number for you, QX, shape. an have be get the we're in great don't confident time we I although, exact to will by early So

a out are still Now of there couple that all we'll are of at But we distributors the not DSP of our up transitioning there transitioning. most end of network. day, end the

John Fieldly

just and to I you think it and our X, momentum our color as in point an way regards the at in gained lot really prerecording into on a the look think supplement filed, I we're what referenced chime team's we're October also the data shows that Pepsi wired we've in well, Yes, team that doing you add earnings was members. little Noah, excellent in a look we at When bit when more of job seeing. to the that since

And as in moving about especially the the already service Coke spaces seeing at those is fruition, university transition that college cooler XX,XXX we're come to talking food fruition, nicely. coming well to incremental level. So Energy, as those as really well

positive the really So call the a you extreme -- three over to we're of it lot weeks seeing four relationship. the first just of

Unidentified Analyst

may. helpful. Great. And That's one I more if really just

international on that of of the terms maybe could timeline work occur. systems? thoughts the that is and how where how on -- that? of the expansion expansion just share sort And some you you're Could In about through what potential thinking sort would

John Fieldly

more very cognizant the we're to transition. -- it’s focused have want as now, has opportunities both forward very that methodical our distribution U.S. Right right we front I on -- the look we'll sequencing appropriately as be at that so we have in. Pepsi approach place think look that extremely The international we the it's XXX really It's they're strategy sure our Yes. well. and we're going about on really a partner markets we great as and enter markets preferred come XXXX, when opportunity sequencing, through on an that we're scale with we details parties and in taking you to to being and make these see and timing over but timing going and

Unidentified Analyst

Great. guys. Thanks

John Fieldly

you. Thank

Operator

question next ahead, from comes our And UBS. Peter. Grom Go from Peter

Peter Grom

and operator, Thanks, evening, good everyone.

you impact to from up says that XX-Q Pepsi about of Pepsi XX.X% is just understand pretty sales, guess the in I which substantial. the to start, the us quarter? sales the can I made just maybe help think So

noise any So or guidance. that of I of get North way to occurred kind guess kind of growth you through I'm and guess But kind to versus what breakout there is in should kind I one-time nature be in about really trying we don't this recurring? of thinking Thanks. all the quantify give understand And is for America was what transition? XQ how given revenue

Jarrod Langhans

the to range pipe about good know, quarter. did take. in other The next a fill, hear end this that where in -- don't the on there have We on to to million bit gut million, we the peg quarter the to very dip of be had put of then $XX we the transition the and Again, what timing difficult are fill of could shifted there. on if noisy the quarter at call honest, got potentially that's from going of it, Peter, I versus kind be number, down August, pulling $XX distributors’ in an retailer a you one To top number the kind offset somewhere it's be pipe the the of some If a benefit it’s customer. you or I have. that's and you. the that Yes, their so exact end. we I like end wanting the don't but to back talking, is from feel talked exact was inventory back know there's little

If had impact. same you time, same been Bang, space At haven't of data in. we're we lot go back getting and look some the they with that the into of the a

look look as -- an at comparison QX is so what apples telling were and data when we we of John we the into terms at those with then apples food about Bang talked what to not QX service, us. So happened in it's coolers

getting the On and to QX big a we from count the within the industry. before. more So space a there's we're been opportunity of we space expanding into there's still of think SKU QX disruption into haven't get and and to some very retailers in lot into top at as

but probably we it, not for It's kind feel the that's I data that's bunch have. don't I So a think exact, you. could to the overall best do support have of of I

Peter Grom

into That's you same exit And but then to gross just can in quarter higher so it. might much are I that one this be reference I by margin at reading may on the John, ask missed in this through just gross Thanks. cans fourth cost that expecting point? be still still we to helpful. have Got really margins is year-end. be I And think ballpark? mentioned the apologies, this, too but then I trajectory. mid-XX% for rate or we should

John Fieldly

of mean, Coast, we international anticipating the international were cans cans, cycling flow Yes. Coast. I of quarter, of the our end international the to No, of question. the the on through the excellent by in West third cans, East majority come due some Peter, the way they've

We the mainly international country. the are West still inventory, Coast cans, some total sitting amount although overall the much on of on of our smaller

also the by mid-XX% some we hit of sales look When the packs. the the improvements talked we continue range end mid-XX%, we mid-XX% end to range at the when margins our costco of about and the the look at we the the mix So hit pack, variety with by we can year. believe

we somewhere through between then to got some somewhere that softening on aluminum down. around the XX.X% say we international with those gas that go as cycling prices some here. that will -- We're old so a flowing think through come bit definitely But out XX.X% little returns you range, through well. range, organization. bit to network, at some getting then it’s to And mentioned, as have I Jarrod us that's some come in Looking did we hard little cans be for mix pricing And seeing noise that distribution moving as of in an through eye regards system. -- a the coming the the is of prior of as of product an through well as mid-XX%

Operator

comes Jeff. [Operator ahead, Instructions] you. from Riley. Van Jeff B. next Our Go question from Thank Sinderen

Jeff Van Sinderen

Hi, everyone.

wanted circle ramp Pepsi's couple DSP. a back things on to of with Just the to

of steps And Sounds a QX. overall, we going you well, the are what like looking know resets? should steps it's you extremely the report on what and for think the next are spring the the then milestones in progress are when track touched I be to next you we QX QX? QX? about lot guess, I But what that as mentioned kind

John Fieldly

question. Yes, are opportunity. seeing a Jeff, I great great think, I we mean,

in We I expanding see the per that and think see really to store. few the weeks. really used see the us is ACV mean, the milestones convenience. we and going within expansion opportunity a items to convenience that I you're and huge numbers just started in

the which is see to robust critical. you're where going maintaining so also really growth of organization out that's velocity and at So retail, that

So then metrics opportunity those majority we're opportunity to program, with over opportunity program unreported. retailers Convenience PepsiCo Unfortunately, foodservice is that's going this of and independent that big a that channel that's is the massive are is program metals we as loyalty XXX the be and has which really the penetrate out a is start opportunity watching. to there.

opportunity number, at we is where you're to the when look room XX north that reported grow looking think I really ACV players largest the ACV you So at numbers, as now. it range two that when getting stands of have

Jeff Van Sinderen

channel that to the Okay. margins here other you're the Club, eyeing potentially or any not you here And for the you That's are maybe but that I'm is it, too, you could I then you helpful. maybe to I sit in maybe are they as if know feel what channel. the mentioned of do minute, know part mentioned today, to just retailers club left mentioned do missed not wondering, network there part network we Sam's add. of but you a switch sure club if Walmart, I

Jarrod Langhans

Sam's channel, QX. into club just getting the end from started you we So of the know, at Club

for you kind looked a at up. So took get it of before Costco year if two, ramped to it quarters that, three

So produce starting to very for really Sam's up us. Club really us ramp it's and starting well for to

we So now, expand consistent some to in got opportunity more still we I but think Costco. entire we've saw what growth continued their stores still we're with with Sam's then across good which BJ's, footprint. have there's Club And in

club a is for room good grow think So to some and club good going I be there's us. area for to still

the out other of is clubs, The channels. seen thing in other it’s the not coming we've demographics cannibalized growth

energy the kind central other be a same things, that got a those interest, interest, but of not channels. be with may the the the it in seems and that's shopping consumer consumer to So same it's

continued. seeing we're of areas come growth both So and good out it's

Jeff Van Sinderen

into network then And more wondering just sort has how I'm sense. that Makes house coolers their many Pepsi just in at one point? this of you're that keeping, getting

John Fieldly

Yes.

that owned total told there's be the opportunity, we're XX,XXX that and gaining number we given opportunities we energy owns on this have in. in. really clear Pepsi really other don't there's also that participate point, additional what roughly working a to able but retailers will what space is around we've But coolers and Pepsi think towards we're I at placement been the

much it’s the but larger -- probably of a we're an than we're number what kind is is immediate So XX,XXX that, opportunity is what really told today. XX,XXX

Jarrod Langhans

well. see And as there's that other we the coolers

last So a and three my over sales week enter there Florida, the across we're we're guys in be the next I'll one there us I weeks. I as make hard different then center week. and the time and coolers a rounds not store, seen get I've a shopping in

us are rolling opportunity that's us out. coolers They those their but area then their to also week into the us So that an really but the get energy they could across to get XX,XXX other as goal one, get is well. coolers,

Jeff Van Sinderen

Okay, excellent. transition of Best the of of remainder luck with the Thanks. Pepsi.

Operator

Jeffrey from Ladenburg ahead, from you. our Thalmann. question Thank Cohen comes Jeffrey. And next Go

Jeffrey Cohen

you? are How Jarrod. and John Hi,

John Fieldly

Jeff. Excellent

Jeffrey Cohen

you're about of talking Couple questions the Jarrod, expense end. our earlier termination from paid.

So will was one, that that show up then is paid revenue, by deferred under said was Pepsi and it it paid, you right?

Jarrod Langhans

yes. Pepsi, by paid was It

tranche accruing spend then an we of we $XXX.X we've got well. whatever million we initial as which had ended send we so also don't But in we million, settlements back. of have $XXX.X did So some QX

Jeffrey Cohen

should up? for $XX on QX. stated you expected wrapping QX or think there I be be follow would after That that any Is Right. it

Jarrod Langhans

a good It's question.

we're after be great XXXX clean from shape a in, into can't I is we say having in in really to start share in need into and roll to knowing nothing perspective. stable absolutely position what and locked ‘XX. that we really that, that out that think exactly them getting to goal a look capture we're they moving the market I locations the focused really but and as on all and with do to footprint

Jeffrey Cohen

Got it.

from And Okay. I little perspectives, talk us, for about two SKUs you imagine. secondly then could bit a

and are we mention the and as bit about with the some some how a out more flavors new what's from of the then And of coming favor a added started did SKUs new Talk perspective and about for about number ‘XX? Xs being, think as perspective you that on flavors right first totals have? in out of Well talk know that away John them. company's far or as go ‘XX. little flavors I should and you these The number and Xs retailers SKUs? Xs into

John Fieldly

Yes.

retail, Publix following I SKUs stores been company one example, in and the products well flavors -- our and as it's have at an now as over you've some and as time or with -- in we in think two now flavors XX look for multipacks. -- grown over almost we've well

So so leaders where where in there's at major other we're a items, in given look looking And about a lot XX items for to that at you massive now when opportunity stand. a X.X I think the us north you're on at we average players XX category and of outlet. nationwide, of have

started is grow to just here. we're if getting opportunity the So

one for energy Now three the has officially the data pull last the drink week. number

which especially excited Energy, is transformation really when place that, Just major better with think the retailers UH resetting taken look resets next a for energy the also you the up year opportunities, open you to. transition. to about for take upon And Celsius additional going Bang category and at to the that of I contributor are that's

to not get I'm out we're going real So specific have space but can you, to as there going a for we as number much for sure.

Jeffrey Cohen

that front? co-packer the Got it. or XX change is And geographies? on and good a then us, lastly on volumes based for number should Or

Jarrod Langhans

now, backup but beyond that. at we've we're got ones XX So

that got turn we So on can co-packers quickly. we've

some -- them there's at of a of locations. a multiple co-packers And we number

other other so their as locations locations, flip in we we're well. So on can co-packing

up a of a come. from years capacity set for to perspective we're number So

Jeffrey Cohen

taking Perfect, for us. questions. Thanks [indiscernible] the for

John Fieldly

Excellent.

Operator

Thank ahead. from from Maxim you. comes And Anthony Vendetti Group. Go our next question

Anthony Vendetti

Or than of going on working to on be coolers the is own? your so been putting any Are Pepsi distributor and marketing Yes, actual Celsius? forth? is front, thanks. on their direct answered. and they have Most But spending that my dollars all questions just spending their any side under SKUs marketing in other dollars the

Jarrod Langhans

opportunities whether relationship, still partner and talked different it's college there's in the the to so programs opportunities. Yes, so definitely things we've about early on different

college program a there on is -- different partner perspective. sponsorship are can we from a there So that

the promotional. various the to drink to a on definitely and very to types for about specifically for I'm together. about can strategy, are I'm things category of kind but us opportunities are comes are there those how things like pricing if discussions table discussion The it some we is having -- go those to we're saying So of energy that, as and the saying not When work we market co-op you think that. having

to be metals running, as key board. of of, our there's that with working promotions across there So comes when especially the cases it joint well accounts our and that Pepsi we opportunity. the has And the the pricing kind program there's are then and will opportunities

more that more promotions, us [Technical to again those component. to guess I could to be when Difficulty]. facing are up really that to the the shop So you really of promotions, But front some back and going velocity focus our it push of call push the comes brand it's the

Anthony Vendetti

point? right? so, why you're out to follow-up XXX, at. Celsius XX,XXX roll at Pepsi a the X,XXX. has if just now you're And that focusing versus still look over Pepsi at And looking specific Does sense? make going more coolers. initial this on the you're at coolers, you just placed to mentioned Because you But collers on coolers

Jarrod Langhans

the see owned -- availability. opportunity Celsius. Celsius our the or they'll all Yes, on focused and -- for wholly mean, you know, by, And benefit us. branding Celsius, opportunities. in they’ll there will silent focused salesperson Pepsi are, a I only be be you out think, co-branded the on really coolers we're coolers there's energy And collers huge there. I And branding we're both for We the co-existing know, that's carry

we the significant and see returns, we order on great we amount great a coolers So ROI, currently. of do have got

Anthony Vendetti

I'll queue. hop great. back Thanks. Okay, in the

Jarrod Langhans

you. Thank

Operator

question our Capital. from next McGowan Go Sean comes from ROTH And ahead, Sean.

Sean McGowan

Thank you.

just wanted you mind in made your to remarks kind Jarrod, noise on if of, tax, repeating prepared you the in I comments wouldn't First, the the quarter.

recording I think got there. muffled little a the

So that? would some have And you follow-up. a I repeating mind of then

Jarrod Langhans

put them $XXX.X at on preferred quarter value million. this when Yes, so of the books the we we gist the shares, noise the is

contra based since reported as distribution So an amortized since agreement, so roughly over revenue $XXX.X XX-years. total and asset with that's outlook the premium, million

And so perspective, from a deductible. tax it's not

So brand a we DTL. that line this timing there's And full through basically a booked the tax tax quarter.

that's [Technical Difficulty]. So

Sean McGowan

you rate an tax as when like think be do don't kind the you Okay, should event forward we of what effective going have using so that?

John Fieldly

I'll X%, roughly rate? the and kind X% the state to of from look XX% So federal

Sean McGowan

Okay.

Jarrod Langhans

reason So Thank other on low I'm then I [Technical my -- receivable the any Sean had All Q it - right. you inventory does -- timing and price for me higher after increase been I I shipments there that maybe have were lower the And might because during thought. have which increase? helped than suggested may quarter thought, gross price margin, some was than how that that were later came third was the to additional relative The the take McGowan question quarter? Difficulty] that. expectations, asking increases was, price And remind accounts you you did during can is, any us, the

Jarrod Langhans

kind have rollout nothing's [Technical we the mean, Difficulty] I from No. that prespective. of so changed

Sean McGowan

we orbit for Difficulty] [Technical Okay. Gross changed had pick onboard some A pricing us, we've [Technical [Technical - Jarrod perspective, we’ve from the this [Technical accoumnts So these margin been a prior got nothing's right? profit freight. from a year, Difficulty] From of freight last to is that onboard up. really up a Difficulty], benefiting even from from throughout our perspective, Langhans Difficulty] a commentary. year we're good little excluding model to because relative Difficulty] picking [Technical great

a more then through [Technical the our in better, camp contributing is of piece better material a this And that's it Difficulty] the the you cycle percentage So some cans overall of benefit lot raw other cycle Difficulty] a seeing we we the [Technical at know, profit Difficulty] [Technical average line. pace, those and more and as we are was.

Sean McGowan

Okay. Thank you.

Operator

turn at like remarks. for I would time, And to closing this it to management now any back

John Fieldly

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

today's capitalizing today's energy demonstrate we're drink gaining results category. wellness and global trends with are our and transformation the place considerable health Our and products taking on momentum

building a and leveraging our our mass position business global appeal, practices. uponing best active position and opportunities is core we're Our with deploying

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

thank I'd confidence fit. like addition, for interest healthy, investors continued for everyone Celsius. In to of you our team our thank stay support Stay and all in and your in their

Operator

participation. you This conclude you. thank Thank your does today's for We conference.

time may You and a your at disconnect day. have this lines wonderful

Celsius (CELH) 9 Nov 222022 Q3 Earnings call transcript