Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to the Celsius Holdings Fourth Quarter Fiscal Year 2022 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cameron Donahue, Investor Relations for Celsius Holdings. Thank you.

begin. may You

Cameron Donahue

good today and Conference We you appreciate Thank Celsius afternoon, Holdings us for Earnings Fourth joining you, everyone. Quarter Call. XXXX

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

we'll prepared call the will remarks, and to time. at that Following questions instructions open the your begin

The all celsiusholdingsinc.com. available be company's website, materials our on press earlier release earnings released will company this and evening, the

will in to a available reminder, the turn I and an be later release. be As call replay will the call today press John, same audio over live our before accessed announcement with webcast conference link

including many undertakes law, Please also by Except X, statements to update these beyond involve expectations as may forecasts, and forward-looking be the any disclaims other duty numerous information risks are XXXX. statements, Celsius These extent management call the March contain that which any company's available of are to statements. of on and control. required that no and aware obligations based uncertainties, to this forward-looking as

to me Executive to John? the encourage his additional safe in contained information. statements SEC and full that, remarks. with press in Officer, release With John let We Fieldly, harbor today's our over for Chief our call filings review President prepared you and the turn for

John Fieldly

levels in began preparation by this we by XXXX. began first inventory of year. driven believe October the from the $XX record we XX% Cameron. driven despite Good of are to was the for sales $XX for that the fourth million. distribution million discussed achieved year's joining for an This Pepsi in to million quarter of third We quarter increase that $XXX normalized you, Thank the $XXX back growth today. afternoon, inventory everyone, you fourth now the pipe levels distributor as and We approximately us quarter revenue X, transition fill of the million, quarter thank last system was

the million to million, Celsius SPINS $XXX $XXX XXX% up $XXX XX-week XXXX. year, For January the XX% XXXX, data, category MULO+C According driver IRI year driving category in growth full calendar the category of dollar the XXXX, #X to or compared in for growth X, $XXX of sales for representing responsible in energy totaled incremental million is XXXX, all energy of million the for growth, in sales the retail category. brand approximately the

channel up $XX We see continue across ending sales over to million non-tracked, to all million the including December $XXX XXX% year. club compared with last channels, were which growth XXXX, those for year the totaling XX,

Amazon XXXX, $XX We record full $XX also through year hit sales year sales up in sales full versus XX% approximately. in approximately up XXXX, million, with million of

weeks trailing fourth majority representing In #X Celsius now XX the MULO+C prior the versus X, with sales Total is addition, according of IRI to growing dollar January in the XXXX, approximately period the of in year. drink energy the same brand as Energy category the XXX% quarter, the

fourth PepsiCo. quarter and quarter our since commencement represented the with distribution Our first partnership

book quarter. recognized. marketing which XXXX, related in these quarter, $XX termination conjunction and expenses approximately fourth third transitioned expense distributors, of to additional the prior the had sales and X, with During in November Most recorded million we were associated million by that was an $XXX from of distributors were in similar of charges

going with to forward. distributor transition -- This not termination year, mainly completes material anticipate changes any full distributor the associated we totaled costs. our with $XXX transition do PepsiCo further and network, the For costs associated million

the last their challenging our to the us that distributors especially brand, build over thank happy these all previous extremely both years. with helping from I'd for have amazing well as partner our We few Celsius the team. And through transition, PepsiCo as they our Celsius of work been with did macroeconomic times like

MULO+C, As the the with our share in X, earnings the energy Energy for in and versus $X.X versus year as of highlighted the SPINS according energy ACV January is ago category period, period. year IRI share approximately the XXXX, the $X.X Total with ago an now weeks in in XX.X% a and period reaching in Celsius X to supplement #X drink XX.X%

In addition, XX.X% period. growing channel, in the a year Celsius compared has in ago approximately seen increase XX% to the convenience ACV XX% in

We on a go-forward see growth basis. opportunities and convenience substantial

universities and airport health States. which And the locations the X,XXX and the going addition, Hilton fourth casinos, in significant a well as care fourth have the of with in million incremental compared million the International growth also We brand. in in over and key are see X,XXX quarter, believe now growth foodservice forward to the Pepsi we're continuing XX% quarter all as is $X.X did international In opportunities segment $XX.X XXXX. PepsiCo. expanded channel, to and there for such we customers drive totaling Marriott as authorizations colleges United over and to travel sales with

network, better-for-you significant distribution While just our on global scale a reflecting transition has begun initial capitalize U.S. the opportunities we been consumer partnership to to Pepsi and have distribution in initial with offerings. we future, their the and discussions the on focus began in preferences changes we for the see

additional to focus majority future. additional countries we expansion initiatives While date, announce the the of transition to in the U.S. expect do in has taken our international

in profit. up year quarter. quarter the Gross Turning gross the fourth for profit in a for to to $XX the of $XX record quarter ago increased our the quarter million million, approximately XX%

margins totaled for quarter basis gross the and prior year. increased XX.X% the approximately XXX Our points from

was we for as further supply chain. through gain our our efficiencies have call, improvements goal our expectations a we achieve on And profit upon XXXX, on as last which achieved. call, to stated percentage gross of our our reiterate our discussed continued margin As we exit earnings mid-XX sequential last margin

repacking we facilities, required the secondary club was pack to which a improvement for significant lower channel growth the margins channel despite as has in is the The due made saw size. had story this

improve production transition margins We to working with continue to channel, including co-packers our in-line this to in to packing. initiate efficiencies

So to moved location be doesn't the product a have secondary to facility.

a the fully size pack club the first in in quarter XX transition, BJ's quarter of will we through quarter. first -- second Club. to from Costco at a -- we SKU fourth and size our second and multipack nationally. addition, fourth continue in And And first at the an increase XXXX. launch out this also a through a XX launched Sam's XXXX, In started through the in the we of We are rolling of through which at quarter SKU did are pack to working pack pack

our in both consolidate team in club will the sales, to beyond PepsiCo's marketing to the a and have efforts, cost which to improvements from benefits, transition recognize drive in in XXXX from which distributors and will significant distribution the efficiencies expected distribution. and future. The company independent does opportunities see to channel, addition allow leverage of we our incremental number associated to This expect with

International leveraging third-party with back we across higher launches Celsius data and growth and continues retailers as sales chains additional confident our continue independent channels through and national accelerated we drive to PepsiCo. to new with even metrics, are will partnership increase further new show that our ACV

to from most recent reaccelerated XXXX. into quarter for dollar started the demand initial basis XXXX of October distribution Consumer first the on The fourth which XXXX the of a Celsius quarter shift, XXXX, and weeks, of scan Celsius so period data January quarter. weeks of and X XX the up year-over-year, the for XXX.X% as reported Nielsen XX, were ending, the sales as XXX% XXX.X% fourth Energy for X,

XX.XX% ending XX-week a just Monster, Celsius of period, This XX.XX% brand with period at February XX.X% share On second share the is category, for largest at and XXXX, Stackline, category, which over XX.X% fourth period. Energy, in the Bull, quarter ahead is Amazon, of Total the year-over-year is a periods X-week which compares to for energy ending the energy share XX.XX% XX, which per grew the drink the U.S. the and XX.X% Total behind for approximately same Red as

which full to great XXXX million leverage was totaled the prior company hit which us Amazon the which, of see U.S. versus $XX to of as world. end additional in by coolers XX%. XXXX. omnichannel in dedicated Celsius has coolers acquire dedicated record Celsius The place bring year, year million, We total sales in stated an opportunities a XX,XXX over we as up consumers the $XX will the plans XX,XXX earlier, this we XXXX, continue to branded year for our at

to incremental the energy dedicated XX,XXX placement be expect to to we discussed an additional additional will co-placements up as gain opportunities. the in the provides additional incremental This we coolers, PepsiCo before which

from locations nationally, by XXX,XXX agreement. over approximately expansions XX% third additional exceeds growing XXXX, accelerated now planned quarter, count through distribution the with the PepsiCo store U.S. Our

on shareholder the to want to Before the outline value. I I is call to over company turn further drive focusing some key pillars Jarrod,

the increasing Celsius. includes first that is top stores which growth, line and The of channels carry pillar number

national recent channels, quarter expansions retailers, national ALDI. which earlier, BJ's expansion, as also quarter our national existing mentioned New first a starts -- with rollout, with of the XXXX within this as such and

rates such with focusing location, drivers and and on the drive In key new addition, leveraging per opportunities foodservice college the of universities, leverage carried also number as to and items expanding increasing to international channels velocity growth.

on is include a operational gross Our second drivers margin. the excellence. focus These pillar

driving model gross more on leveraging efficiencies model our orbit as -- efficiencies. our will we orbit focus be and drive margin Our leverage to scale, distribution

initiatives efficiencies. per expertise and shipping Also internal scale. further gain to revenue and freight software to and distributor, the leverage, on our scrap partnership and focusing building integrating drive marketing example, vertically improving leveraging an on co-packers PepsiCo from optimizing As employee, and costs, to our and optimizing straight G&A, waste sales internally optimizations in focusing our optimizing warehousing our

is Celsius energy for now I capitalize XXXX, Goal Celsius for now all drive for the Chief of will I to further our call begin incremental a our as growth further driving established as Officer, as next growth prepared driving phase further at the close generation prepared category with category EBITDA entire over remarks leverage, cash markets and is in is the expand and opportunities scale. pillar complete, now the our driver Jarrod? the the driving leverage. shareholders. in XXXX turn States, optimize transition and to opportunities for we and Financial Langhans, PepsiCo to Jarrod of our of with with we United growth leader to remarks. value beyond. his further increased to on The my positioned final the international future EBITDA of

Jarrod Langhans

John. you, Thank

quarter, the items. into financial the for very exciting administrative a and year busy results It was the and another cover jumping I'll Before few quarter.

into the XXs successfully in we integrated the quarter, going Pepsi an from system high the distribution mid-XXs the quickly. to ACV For very

addition system, our majority moving prior final inventory to distributors of to returns, we et the terminations, payments, processed cetera. including the In Pepsi

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

some through walk let's So accounting updates.

associated expenses in Let's start Included the termination annual results, related expenses. our notices distribution primarily within recorded termination issued approximately transition-related of to $XXX transfer of of with we Pepsi. with million XXXX,

of As to effectively we we areas. the out first activities a few of set transferred Pepsi, plus all transfer XXXX, additional have quarter had to that

fourth system. as quarter, saw the prior inventory increases During we the distribution and into network Pepsi we costs other and our transition from related some reserves in

of the product. part the our return product make we and product taking decisions of product a of with the on terms As back contract to had distributors, prior in accepted the disposing or

In the of chose disposes donator we product. a the number instances,

In made the More order to the of that significant in quarter, the fourth as addition, part in a into overinvest expansion. decision to Pepsi the support later. a on system integration we

taxes. let's talk Now

XX%, federal purposes. for impact income As statutory is preferred value reminder, from the tax book A million due effective tax XX our to being primarily rate deferred years the call, from tax $XXX.X of expensed QX Series stock over the for which adjustment, a the of our rate year

a third the is deferred As tax for discrete liability a this we item. quarter in expense recorded tax nondeductible as purposes,

rate tax effective income a certain was income taxes state reserves. of also and and for income expense, The the stock-based tax the by impacted year release compensation local disallowed state

Moving on items. legal few a to

on We have can our the associated progressed label. settlement with

we of As of quarter. out end completed, the expect process the would to notification middle the to February, prior was the of second this and close

know, litigation an unfavorable verdict we around you January of XXXX involving many Flo As in Rida. received of

well as potential XX-K our within a outcomes. range discussion of detailed as a incorporated have We

received, we In prevail. to are ultimately cooperate that. to We and really with any are SEC the but of beyond in continue believe the that will have that don't inquiries process any appealing or review, updates regards we requests

moving control our I make wanted comments Before environment. to on few the to a internal results,

that position were progress as weaknesses said, the although have our And environment our great across to a transition during This improvements, XX-K. able especially a control where the to our saw very material from significant we has significantly a reflected in many get fourth finance our improvements quarter, were is to and we XXXX. growth, We could With was Pepsi team, result, new with not year seen clear we team make able and and XXXX. members. fully expanded XXXX busy

team towards finish As get diligently working we focused items, the work on will these is look across we out line. XXXX, fully across and to clearing the

our fourth increase in increase driven across North America, million, period traditional product's increase were our the as XXXX. footprint. an distribution with in The the $XXX an Pepsi into financial million, in quarter approximately presence same behind $XXX sales from an million, system of revenues continued of to in was primary combined XX% where our Turning $XXX as related channels, integration an American distribution increase volume to quarter results. of optimization strong well our Revenue were the factors fourth by from XX% North growth

in quarter well pricing XX% improvements from fourth transition to a the revenue in distribution in were centers. prices, third onetime around million of quarter pipe XX% were inventories gross building year a to ago The from quarter. $XX of This fill to prior quarter average as at improvements margin was lower a $XX our can as XX% discussed Pepsi for that profit elevated margins on year fourth orbit in the As million we up Gross compared the revenues $XX for and was warehouses profit as call to benefits. model third Gross and lanes million, million. freight result in due into the Pepsi our $XX the reminder, increased profit quarter. of

the of increase we primarily spend expenses the as in XX, was X were as marketing $XX marketing million approximately million, December This million budget ended of and increase in system. of amount as versus prior termination an intentional XXXX, amount the distribution approximately Sales increase moved for Pepsi of well to $XX XXX%. months the attributable into in an expenses $XX distributors

it marketing gains huge the appropriate of was in overinvest expansion. ACV, made to With were that in felt support we this that in

we of and sales a line As put the with percentage incurred termination additional would in investment. the not had marketing rates sales, been have marketing expenses and forth historical

historical sales. moved and with As be in we QX spend line our rates XXXX, to of marketing a we expect sales as into percentage

and This increased scale as shop back General X with XXXX, expense ended was was and an in the year, grow we costs would other of due versus for area XXXX built XXXX quarter increase associated as approximately fees see legal, We leverage during rate. increase consulting once were the the fees. team. XX, we prior to $XX was to in G&A with such out sales annual for administrative expenses to million, as administrative XX% months December the this which relative XX% a expect employee well XXXX. can audit as fully building our percentage of XX% of have fourth as that line

in million We primary results. financial from XXX% year The million $XXX driven factors revenue revenue the growth America. of growth distribution $XXX with in full million, volumes of increase our the our channels, related XXX% increase the to increase as or had year, strong in an products North by Pepsi America across an in combined approximately of in Turning were our American transition $XXX system. prior as North sales well traditional continued optimization behind into to North

across margins some profit XX more year million cost our year. higher-priced with pricing in average of full as to improvement saw $XXX saw increased orbit freight benefits. can efficient model half and XXX% in with profit less we gross the also We up international $XXX on profit margins Gross a XXXX cans, were improvements our the back our lanes prior in points basis up improved, gradual million, from Gross also basis.

year for XX, largest $XXX from or in distribution $XXX our Sales The expenses expense and the ended million termination million, an marketing $XX from increase December of were XXXX, the increase million million prior of $XXX XXX% was to network. year. prior

million, activities distribution, million $XX In of million across saw had broker trade roughly of addition, of marketing had investment increases incremental $XX employee costs and increased costs increased and spend. we storage, $X

the this XXXX, year-over-year Employee of the December $XX ended for Sales in volume an expenses as in from as an area our approximately expenses were and million of $X costs XX, of sales excluding of and million, incremental General year to a in marketing increase marketing million. were $XXX administrative consistent business increase costs quarter operation fourth business. investments support properly and were $XX or commercial million spend. when percentage and XX% reflected million termination required the $XX areas higher

audit Administrative equipment, expenses, and million, an million and costs prior $XX fees. impairment increase $XX related offset increased compared stock due amortization year million to Food $X which by the consulting of impairment other investments the drove coolers increases the period. option year million, to lower from when an a costs expense of in mainly the legal in Depreciation, the of in were insurance increase name, costs, operational XXXX, and of had mainly expenses brand Func prior $XX to decrease was

was option year. modified This awards in revaluation in that G&A during XXXX. change versus expense prior stock the of XX% payment attributable was percentage sales XX% share-based of certain to expense were as mainly the a

percentage Excluding sales year. X% stock-based in G&A X% of the expense a versus prior was compensation, as

capital now and on liquidity resources. Focusing

and $XXX million December had December XXXX, respectively. of million, XX, cash of $XXX respectively, XX, $XXX capital of XXXX, $XX and and and working million As we million, approximately approximately

that distributor the used provided $XX to accrued Cash due representing by for in cash totaled XXXX. million flows activities cash Pepsi, former for million distributors. XXXX, remaining operating million activities $X was operating back funds within excess million million of in our transition provided compares to in payments net which $XX and balance to XXXX $XX represents approximately restricted cash Included of due Pepsi by $XXX

in in company The Pepsi looking growth to driven continued of efficiencies able approximately year. additional timing $XX working order But $XXX move capital DIO are continue XXXX. as the million, million experiencing. cash transactional by the ended to over our including of operations was we generation versus total drive to that at would at as inventory, associated increase to to expect we down transition. growth distribution carry through as sure we inventory are we benefits, And costs continue with $XXX up well the the in million the prior We'll make with keep in inventory significant

as cash from generating for business business and the now questions. internationally take the have the of our With years. as we open call U.S. firepower level the eventually to our sufficient to PepsiCo This funds partnership, prepared injection our well coming the in you. next you concludes remarks. Thank may Operator, the across

Operator

Instructions]. [Operator

comes first question Jefferies. Our line Kevin from of the Grundy with

Kevin Grundy

of parts $XX the handful I mentioned interest the America which in in of here, on a performance the First just again. reconcile bit not scan you to relative of forward last the be, for sales to a I quantified in me, growth which what the and call Jarrod, know trying pull just moving million we North to least think saw channels. million, the would clarity, $XX

product Jarrod, club returns, had would some in you strong kind also you which way, the also I of again. mentioned be other going a drag. guess growth

gap the with you talked just America XXX%. Can reconcile X for on comment is Nielsen distribution Maybe You up about which North a us before. saw wins, kind had of channel a the up bit? some just XX%. about John up that strongly, very we bit

Jarrod Langhans

brought that fill Yes, American a us perspective. up excess in to XX% you the have from at would of look Kevin, if North pipe

in are of seasonality our terms bigger in bit some We customers terms a of timing. or hoping of to little

inventories So management working also year, have bit. the which down bit a the there end of would little a suspect little was of capital pulled I at

scan continues from perspective, So be accurate. think the data I to that

we how QX at do we've done continue well. to very far, look accelerate you and If thus our growth and

some working into of type fill of I of activities QX customers. So integration capital and and year-end with kind system some our associated bit think the pipe little clunkiness with QX there's a around and onboarding the the Pepsi also and

Kevin Grundy

really spring Pepsi Yes, yes, the transition it's it of just follow-up, seems guys Maybe And just We we like there, land? that kind context And are. system, makes of see for color broadly, space ACV definitely well. the to then some the the sense, shelf ramp. to the on more you where Jarrod. resets just really, where wins gone just sort expect then further

we it ACV, distribution where You context total where We some where when in to care, some a us maybe company Nielsen the we et think health about you and a land campuses, on about have just to and this as look for about channels, guys wins but distributed of perspective. as mentioned even think ultimately, of ambition data, cetera? are guys ultimately, sense that. closer is we the we as you some non-track where starts see something Just we are college from points and give from will think can the fully think the

John Fieldly

Kevin, Yes, great question.

lot I mentioned, Jarrod of think momentum, especially a of XXXX. as there's in quarter first the

execution Our XX%, ACV, an Great with through talked right give it still the as that year quarter. distributors transition over in ACV, right Keep we transferred about mind system. earlier. XX%, around the averaging around in we some the had Pepsi the XX% we finished

October weren't So that purely from Pepsi it transition window. X XXX% system

that the to coming But with points, up ahead. are ACV we do additional expect spring pick especially resets

aggressive gaining been there. very out has and We been additional bank space have also

key team, on distribution the well. gaining incremental up hats teams teams as distribution working picking the So new -- extremely to our also I off just hard and accounts

So we're really excited about out. resets the coming next

as about I well As earlier, and the channel, about BJ's we talked talked non-tracked. club

when for around I Celsius we're university the upside, of we seeing shelf that's big foodservice also considerable started especially a opportunity I space. with we're foodservice could alternative occasion meaning touched on college and And think just be rolling just getting in channel, have in well about usage been That as expanding. X,XXX, really business. hospitals there the as X,XXX us. the currently and really has there's opportunities out, where incremental then the but then a amount

provide forward-looking it XXXX. really where ACV going great in forward excited and shape to right right a really now, So stands guidance. now. to We're good look not we're But we're

Operator

Our next Astrachan the of comes question from Stifel. Mark with line

Mark Astrachan

for me, Two questions please.

just distribution about you talk resets Could not you distribution, at about What in 'XX? going ACV, secured just thinking points. is thinking First close how to about you're this where basis? you're on point. a on We're but actual have spring percentage

broadly, about we product Is dedicated think functional, question. it is existing coolers? into coolers? going? helpful more you more where do That's maybe the first in Or energy performance are how And the moving

John Fieldly

Yes. Mark. talked In I'll regards nonreported And to as earlier, Thank you, considerable rightly Pepsi jump distribution about the just gaining currently are we then that to the XXX,XXX their around is really the points, which the about be really amounts in. great incrementally about as we reported, opportunity loyalty And Pepsi in we being but quarter their distribution going involved us. foodservice. is program, calls OTS independent And strong. market, for which independent talked of in it, a talked third which program. segment, metals is in that's the as

taking place now. for XXXX resets There's

considerable locations add there's are We're -- there. additional could or that out So XXX,XXX that doors amounts. over

markets we're segment, So of regional us. and accounts new watching basis there's gains further on opportunities regards a Tier that X and definitely you for at as channel reported considerable and gain there's when additional as and well upside. territories to variety I Then think we Tier there X the a in in look ACV closely,

product addition, we're placed, where In is being energy. going to the core

over expanding expect coolers. items the the talked to have end space, of well, doing we're resets done I Also, we and extremely So great we're shelf about We location. our per the next to job a expanded and the year that's coolers investing be has and with XX,XXX where team that Celsius additional that gaining the space by in. dedicated anticipate mainly

and great had never And before. that we've really so that's a opportunity,

addition to In currently up that which opportunity. were gives total PepsiCo to energy coolers, us the about XX,XXX,

opportunities coolers in to and locations stores, XXXX So a definitely number availability. expand of ahead

Mark Astrachan

Got a previous helpful. That's just clarification points. And it. maybe some on

still of the to understand fill. trying puts I'm pipeline and So the takes

third So the quarter. sales of million $XX in million actual $XX of sales ahead to

that the servicing add quarter essentially that quarter, to you're fourth there higher, So what out why of fourth then right? you is, be was what run should coming quarter wouldn't then previously. fourth just because be demand rate So of right, servicing is kind

guess were had So the were they strong I maybe you that quarter. that headwind sales I'm in given all put as third surprised as together,

So is should made about destocking the number plus $XX the be we inventory comments quarter December. in you as then thinking about well the some the million? run fourth in rate the And

those together, of help put kind pieces So please?

John Fieldly

With price to regards regards that to to the when remarks, Yes. comments at in I what made million right the look and you $XX it's incremental was $XX Jarrod -- million prepared the sales. around in a

that think, to a adding So rate. to I run as QX, what we normalized gets saw you kind of

are inventory there or We inventory -- there metrics potentially there year-end some was been. could is felt have control

So inventory we're watching the levels very closely.

in will $XX that think of normalized a to several be distributors QX level pulling full gets We were Keep the don't you million to million -- million there kind $XX QX. but QX other that do $XX forward that mind have in too. in transparency on the transitioning quarter we inventory for levels, in were

the full power XXX% of PepsiCo. not at you're PepsiCo distributor our a leveraging of distribution the with So partnership looking full

were that some don't know large still markets during if you Celsius have there's So other any that transitioning for I comments, time. Jarrod.

Jarrod Langhans

partners, more obviously, quarter. think will that we quarters, won't of baseline we'll a be and kind like have of down a the particular, that's onetime is in going Yes, in couple to get after at need bit really of something I good our little of partner And some biggest of too, item a end every of because it management recur happens. and then of our to flows we kind and see it pull history, to inventory a that the to be ebbs impactful a the of understand terms

customers primary But the pull-through scan our and good getting at distributor. board moment, we're with data, great our the seeing we're across

up. So probably is obviously -- QX to QX each more with are when a we're And perspective. consistent not QX are other as we seasonality as looking expect things from and get big QX. seeing and we QX

Operator

Credit with Suisse. question comes Our Kaumil from next the of Gajrawala line

Kaumil Gajrawala

about related just you Can standpoint? you should maybe incremental? of bit some Can was think big terms give run revenue a rate some boom? of to of look increased of in selling sort the phase how -- expenses What's expenses And context to distribution this more how percentage you much a more as a gains. we these of alluded a us a some rate run during maybe selling it at little right of on to then distribution how of . on this

John Fieldly

invest did Yes, Kaumil, question. through We transition. great the

increase they to amount we year. from going decision, made to gains about a If prepared a considerable in initiative velocity. you We the consumers purchase know gains ACV gains. where to Jarrod over are, X $XX and has to how make can it it and ACV ACV by the look supporting really strategic really the we sure alluded at ended quarter, of kind of a invest the And in company continue October went remarks in of to where distribution -- about the to drive seen where we million strategic we ahead the those Celsius his continue budget made

So key. really that was

points ACV. the continue invest distribution of to number expansion and the think I it's very with of of important we the

fees -- back to we've historical around out was back, you there. the get million million, out go revenue $XX back been was of of you $XX it at kind XX, transition fourth I back the XX% rates, if around same that that Jarrod rate of run when look And over plus that think the about referencing, if you XX.X. back if you out running you in quarter,

brand, and heading in velocity, especially we're to to especially the driving into focused really increase on So to build continue resets. continue continue to we going distribution, brand, the the we're invest as

Jarrod Langhans

Yes.

And QX, be back to that more the XX%. idea so along for would

Kaumil Gajrawala

then And seems some very of intentional about commentary -- the rollout. Great. the Okay. international it the

States, or go. about You're well doing the still is thinking very in but your the international? talking United to obviously, time compared now from, way long where you a Why high came right start to is and share to about

John Fieldly

opportunities a Pepsi. internationally have United but and laying on basis, have looking do We where the see at and Yes. opportunities APAC on partners opportunities Nordics we existing our expansion we've in as and mainly there's States the a well global markets and focused the as the with foundation. our do we system We're really been PepsiCo the also through Asia partners distribution here,

more energy America. the continuing But gain market momentum, grow and we're priority to trends getting around these the we and from and see main interest So to globe, is our North Celsius. wellness continues health

Operator

Our next with question Peter comes from the Grom line of UBS.

Peter Grom

Kevin's So after seeing on I for to the growth actually percent line to quarter-to-date the just that you a in clarification top XQ response you broad-based question growth wanted quick transition? in adjusting just stronger acceleration. XX-plus comment? the a Are than saw quarter-to-date Pepsi Is ask

John Fieldly

Yes.

I data think . SPINS is providing scan QX. Jarrod referencing IRI guidance forward we any he's and to was the weren't alluding that on what Nielsen data that

Peter Grom

I And I to helpful. margin. That's around guess, then, gross right. All Okay. just wanted ask

in seen and sequential some XQ you've progression nice XQ. So

move rate XXXX? So of through the how you does the of would sequential year? from to out just here on exit inform view kind looking XX% we gross And your as plus margin improvement expect

Jarrod Langhans

Jarrod. is this so Peter,

the margin the gross quarter we for that a kind from exit at hit quarter. mid-XXs which think perspective, mid-XXs, of I entire we have. Actually, to the of kind idea the So was

over straight the did or centers last distribution had beholden good improvements to lanes mixing see of no as that cans to historically we We're expect we we months. kind we the products opportunity of We're XX to So Pepsi. with through. centers deliver the come that within seeing freight the expense longer

where also benefits. some perspective areas some we're COGS We're materials seeing from advantages a or or some seeing other raw perspective,

to Is that still XXXX mid-XXs really is when to things way with do we as rest So like think throughout the But we the we moment, it sticking kind opportunity commodities comes at think Definitely. to year kind and through go, of there better? don't is work that the that. of will of go we year the that know seeing how the valid.

But the probably opportunities at of on to seeing other . we're numbers. that seeing in would are allow and the than areas we're side that mid-XXs, moment, not confident more those hit us we

Operator

[Operator Instructions].

Pascarelli Gerald Our with question of next the from Wedbush. comes line

Gerald Pascarelli

actually at ever the trends Obviously, as in some channel you have. channel. specifically. you have Amazon they decel did the see on looked look good is channels, as track Amazon But Mine when

think And trended specifically first provide has the would that that so color could specifically, any about how be you could on then drivers And I helpful? couple you here, channel over if months that? of any behind talk

John Fieldly

really great business. saw prepared is to Yes. Amazon share that have No, quarter in we're closely. remarks, there. question. we strong why watching be our The In -- a -- wanted going Amazon, we That's to the information

solid As the to we continuing show it that performs, great more going good, see ACV, we're gain was quarter see to and to for how up to have growth. but watch it to

some we some moving some different warehouse locations. quarter, locations in locations the and additional to did regards they closing potentially around which movements Amazon, caused opening as delays in products some underlying In have were

they volumes some they that warehouses. place, obviously, definitely going and were was through through was were -- the substantial around there So their especially inventory holiday season, taking likely movement

the still So us. some regards Consumers in inventory we going it, to world. in they to think including of want platforms, were which want with retail great -- as delivery, challenges business see to embrace strong the forward, as we really it, warehouses. for results home quarter Instacart driving be it. as we look omnichannel I some well. want a I And all think an in when that's and We live well there But how they and

Operator

the from Bank Jonathan Our next question line of of America. Keypour with comes

Jonathan Keypour

move of guess, ACV you sort left then I states kind I'm is and consumption. filled in into to geographically how flow-through the then you at optimal just kind product, or we did about activate geography a of like consumption the optimal what new get wondering the also, the you where into. think regions is what move more operating spend like And consumers XQ, of a of to And guys before on marketing of into? sort what response? I consumer was as should in of aware maybe guys lag the guess, entering

John Fieldly

been, around, the like Yes, mainly Jonathan, focus higher with time. XX% at to were And we ACV regionally prior we great a to prior PepsiCo, believe, I XX%, question. roughly ACV. Historically, PepsiCo, have

of ACV markets regionally higher and bigger very pockets and -- California, to markets. Southern much certain saw we So the Texas country, the our Northeast, Southeast,

to what we're we're velocity marketing because seeing consumers of made in But rates to broadly we Celsius with that and QX ACV wanted open and transition gains is additional goes markets. to And in the gains back investment ACV up that really really that other we located. in the where drive educate continue Pepsi, to as

country, And of when in you look at the gained We that the area, at looking you're lot Northwest. of the looking distribution. a center you're

the especially well. as So to regards saw great areas gains, some those areas, we mid-Atlantic in

XX% around now right roughly XX%, we're So nationwide. ACV

Jonathan Keypour

just then a Great. And follow-up.

I those guess of -- trying a guess how an of to fridge, have I in I'm do think or depending how not about go-to-market scenarios, get each how -- terms those or of whether a of just I it's to trying on in not. you're a sense In store you fridge productivity compare? I'm kinds own

it own to pull-through So sales like basically, like something sense a -- of a trying just an better like effectiveness. have of X.Xx get when you kind is fridge a in guys location, that relative

John Fieldly

No, Yes. question. great a I mean,

were historically, We to be cold back, we to payback XX is was the last on. the XX period will get from that gone upfront like exponentially coolers you, we've is, the X be when the have got it's The number. to have when maximum and the that's register. that we an goal And placed what I what What and exact we around really stated prior talking from a the sales tell cooler, on teams discussed cooler increase benefit. the roughly optimally focused placement, haven't the register, But are really months. we year, have about

definitely, were sold. if get before, are they tools times it's us, many a to higher it see as it coolers rotation our and able It's and buy the great consumers it's are for you So product. -- saying we cold,

But comment we that. really on all internally. really I that's say So that's something can

Operator

question of B. with next Jeff Riley. from the line comes Van Sinderen Our

Jeffrey Van Sinderen

I back sense, accounts maybe grow just think increase channel, you this around count just opportunity to of any by most a second those us just to year. you first to give that? expect could, wanted half, do half, Maybe thoughts it you SKU circle kind the about where to if if specifically

John Fieldly

question. Yes, Jeff, great

XX.X, increased at store carried per our ACV the per commenting that. do has you when it's PepsiCo XX.X we comfortable that at we think that lands? -- next current Where the on increase when looking number, look I since we're like anticipate the items partnership, at with exponentially average sitting I -- items roughly really not resets. the currently continue to you're on and think to current store,

internal expectations. We have

be maybe through rest of on back that we set resets look the taking a as But be to I think and get you of year. in around able start will get the we'll have data the better are looking the April place, should we the at a we April, better where understanding half for

Jeffrey Van Sinderen

Good. couple And Okay. helpful. That's margins. of just things a then around

the metrics planning I'm -- take Your price latest you maybe if benefit and year. to that thoughts price. more noticed some then you're from distribution overall P&L . opportunities on efficiency wondering and Pepsi to club Pepsi this with distribution potential mentioned taking Also process.

Jarrod Langhans

Yes. Jarrod. with I'll some This is efficiencies. start

historically, that, had we've channel, did go facility. the mention With John club secondary to to a packing

in expanding that club in an bit margin as channel little that start us is number look and help out so co-packers drive QX. and we QX can start We have the found that of line efficiency definitely a that that did pack We a of doing most XXXX. in for will to over

that in have do but We kind benefit that QX, us pricing XXXX. of will was play across fully in

We anything haven't announced at for the moment. XXXX

But orbit terms the there purchases sit continue when efficiencies materials that really categories to see So of where created we'll the raw from to comes material and to of tight land. pricing. lines and scale and drive we drive to benefiting the in seen raw continue it our model changes and we've opportunities we've also the it's some on other of taking across advantage freight

Operator

Next question with comes Capital ROTH from Partners. line Sean the McGowan of

Sean McGowan

sense what that of it margins. regarding you of on of I the improvement? the box have made margin is line, cut Jarrod, on the magnitude used to order efficiencies, some comments that kind the up, the taking give Following you Fort Knox putting think to cans in you got us into off the can upside

points talking upside? Are improvement So hundreds basis potential? of the of what is about you

Jarrod Langhans

range. wide is a mid-XXs Yes. I guess, I mean

call, last we mentioned think out... I

Sean McGowan

specifically be it's hardboard, club, XX how efficient extra packs that cans on process margin more corrugated there not on clubs, anymore. the and you Specifically in a if those got pack, higher the much a the I mentioned in thinner like on more would

much margin higher months ago? what how So item is from had that X you

Jarrod Langhans

all benefit. ultimately, get have into to same that the it set we to order co-packer mean, get in I

haven't we that the So I have do fully this year. think to we'll transitioned, opportunity but

that good. If club of is could be you our business but It to perspective. from the remember club piece got looked a small at points, of pretty you it's that margin, couple the percentage a only

some is the on piece there of So business. opportunity that there

with opportunity, I said, improving freight also on like think that. lanes I the there's

you look rates. at our historical If

have of last down years, course Over for the X the gone freight lines the us.

the X% you I look an think over roughly to gone if X% on couple of last years, annualized basis. from it's

and we've caffeine the So as cans see with other what putting well seen was aluminum like that. We'll where there well. opportunity that gains us. across there's pressure as some sucralose And things on

Sean McGowan

and benefits also you're within about ankle, comments kind up come Okay. better of And or April. then would by the resets that potential of the following and the get a could up some position get earlier on placement expect better to Would on higher wall you to down back you the some refrigerators, reset? placement . kind of going to expect some in stores

John Fieldly

Yes. Yes.

want don't to that be mentioned your definitely We you there. buy absolutely. ankles So

the of say. is if of key bleed the and and targeting that's our of focused that's bank out at And get getting look on the cutter nose accounts we're there. getting So some very of areas our lot is we out you -- and space to what goal close get out the the a team

you distribution to . go seeing the us better be we have in places the as expected on I next now. start much and power we hopefully, resets forward, of us prominent So PepsiCo especially pretty

Operator

with Our comes question line of next Jeffrey Diamond. from the Cohen Ladenburg

Jeffrey Cohen

the discussions far can and their as far about I SKU opportunities Splunk there as talk and maybe I impairment what may you on Pepsico to and of any talk Can as fund food as SKUs as goes in? year-end? And little fast a about some from know on Just . on you then with as far heard forwards and a fill and what from production the expansion be going end. few out there my what's going of bit

John Fieldly

any well, Celsius Yes. really a with brand, Finland. Yes. had not Finland. and has that in, fast -- mainly they and Sweden areas. innovation not they're which some opportunities quarter, we great portfolio. potentially the Nordics, been in had Celsius regards it's focused on We're With our discussions snack is the doing other distributing portfolio, our It's job PepsiCo had there's been to haven't And going in really fourth came a Europe In -- now distribution there. that new great with on

And there at we've the opportunities as not materials. the internationally And protein business. somewhat now. of with to could bar the right maintain well right just had supply challenges be chains Europe the continue with in some raw time, But business

Jeffrey Cohen

as expansion about and Europe? be or they flavors flavors And SKU on of talk you flavors? Will it. kind could targeting the new country SKUs specific or far territories as and U.S. ex Got all

John Fieldly

chain well, global have -- Yes. -- to gain as to supply our starting Internationally, we're we more efficiencies. the trying leverage

you really, because media, look today, social especially internationally collaboratively really innovation goes when the at the and leverage cross world to look Atlantic. some with of So the awareness radiation, it

innovation flavor has to And have to is we're in get our expect driving to as aligned, in flavor expect key us flavor more go lead launches. So continue we But the strategic trying more innovation. more forward, to been and category we consistency. extremely

Jeffrey Cohen

a know and see geographical took stores a couple And what little 'XX? of may rollouts -- we many during I ALDI weeks Yes. about How bit. then talk to lastly, that I get

John Fieldly

we taking that's ALDI, a national place. have rollout Yes.

So roughly expect like XXX future. roughly of near think And there in there number believe, approximately. ALDI growing stores, to find the the I -- us was in -- an it's I and

Operator

Our of Vendetti next Anthony Maxim Group. question from the line with comes

Anthony Vendetti

'XX? by Did coolers. you in Celsius of you expect XX,XXX to of John, coolers at wanted about Just the coolers be terms end to brand on the say, the follow-up

John Fieldly

correct. That's

about in have currently. owner and retail is on our goal, We have we placed XX,XXX internal

on placing we're and working our of So markets variety core core -- retailers. a and those strategically in

Anthony Vendetti

XQ And 'XX? this how many quarter placed were in

John Fieldly

the quarter. new pulled year. But to good to the being But we through the did that continue disclose kind place didn't that the expect fourth was placed in we upon -- we a transition, We of bit, a we back number number. and little increase that

Jarrod Langhans

and somewhere year. our the X,XXX we QX the we ordering Yes held And and up we're ramped X,XXX were probably doing by end also, overall, of But as in really that we QX. the between on back transition.

bit So a they time. lead do of have little

assure. see those So come all we're starting to

Anthony Vendetti

energy coolers. And Okay. on the then Pepsi lastly

right XX,XXX How the by You the coolers? of 'XX there's now? of Pepsi those many are end what's mentioned Celsius goal in And for those.

John Fieldly

I'd number getting Yes. reset. have XX,XXX majority year. to current regards many We're the those the the I the be how end -- we're working That's to them in. the in on like us have expect that don't by in goal. a of of to I of

we of So to we're in work we'll and every and part that goal. expect of the year, energy portfolio, PepsiCo the be by single towards one end the

Anthony Vendetti

recent question the stroke in attack? now? your the increase heart right about have last that products -- in And Okay. How many the news on erythritol, cause substitute. that of And could is an concerned you sugar are

John Fieldly

have branded Stevia-type Yes, product it's There's piece very the of store the minor wanted us. from a that types certain portfolio.

I'd So if surprised X% be more sales. was than our it of

our it, provided for we to portfolio. volume really core customer not set wanted not us. something a It's to a So big that that's really but

Jarrod Langhans

into looking we're And it.

Operator

the Our Suisse. line Kaumil next from with question Gajrawala a is of follow-up Credit

Kaumil Gajrawala

on talking to I about high distribution. wanted to more bring little a it back level

left? the Pepsi lot sometimes available How you Anheuser-Busch of very given of side? the transition. a of of actual similar mentioned kind are is we availability what much converted. XX% conversions, left during PepsiCo about only How to transition saw much it, but XXX% kind on they're You've the practical is figures but You but actual the complete, still detailed is piece

John Fieldly

when to When we been the distributed that talk prepared partners. Well, that's has distribution just clarify, we about distribution, the stated transition remarks complete. in our

markets. much being with we the XXX% now October of partners by of XXXX. other XX% pretty than But PepsiCo XX%, X about serviced distributors America. keep few complete the we're and started within that are transition We PepsiCo a So agreement did prior that, in North on in certain our

there, We we're you think reported when on we stores. at of considerable where and reached distribution ACV to store Now there comment right now a look the that position from really store is number arrive. upside -- on there's in not opportunity but expansion, have XX% do additional that will

have company I better where year at think will probably April data the to really the finish a we'll the see at. indication

we're distribution that to Now told locations OTS so of PepsiCo's able there locations. is there's are nonreported gain additional independent metals which and cooler and program, those we're And and is that's XXX,XXX stores stores placements. those really new which about nonreported,

So through we're those. working

are And opportunity foodservice and scratching then as surface a taking place resets well. foodservice, the really also there. in in just Our huge there's

So that's us. another big opportunity for

Operator

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

John Fieldly

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

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

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

forward several to your we conferences ROTH Thank Bank March of of interest of and We many there. growing be company meeting everyone, of in large, America, have investor you, attending our strategy to our upcoming a and investor all you look in continued for investors including confidence their would support team. the like market. winning portfolio, conferences. will thank I Conference, rapid And a team attending in Celsius. UBS, XX, The for week

Operator

Ladies participation. Thank and gentlemen, this you teleconference. does your conclude for today's

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

Celsius (CELH) 1 Mar 232022 Q4 Earnings call transcript