CELH - Earnings call 3 2023 | Celsius Holdings, Inc.

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Operator

Greetings, and welcome to Celsius' Third Quarter 2023 Financial Results. [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.

You may begin.

Cameron Donahue

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

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

that earlier well we'll the remarks, company's available website, third call questions released prepared the as and SEC's time. press all sec.gov. open company release Following The earnings on as in morning, to the website, the your celsiusholdingsinc.com; at this quarter are its materials

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

law, forecasts, of be to this Please aware beyond expectations including X, forward-looking November to our no forward-looking statements. by Holdings in for call filings other that these control. you statements, are that review to extent with information our required uncertainties, undertakes encourage These the and risks management and harbor information. of the disclaims full statements contain company's release in numerous available Except obligations any to additional today's statements contained based many involve as any We Celsius also quarterly as may safe duty update and XXXX. press SEC and on which are the

quarter on to our use basis for reported measures Additionally, of financial these on we press results detailed management GAAP as results will reconciliations that XXXX. non-GAAP third are in non-GAAP as such in basis. Descriptions and adjusted operating our a the GAAP release both non-GAAP measures EBITDA to of of accordance earnings share those and

for Chief John the John? to to call like our Fieldly, President I'd Executive and prepared over that, remarks. turn Officer, his With

John Fieldly

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

increased in quarter. North the sales XXX% that totaled record which quarter predominantly America This year the $XXX by from third for prior $XXX million, the $XXX up million million, was third from XXX% driven year revenue, up third million from to achieved $XXX quarter. approximately Celsius prior

U.S. the both in dollars of Celsius #X in and last the is XX to tracked IRI growing driver October million versus over MULOC a ending growth. the X, the dollars, total ago be XX% dollar growth category category XXXX, up brand continues per incremental approximately of top dollar unit and energy through Celsius data growth year $XXX channels. units while representing weeks all energy category, XXX%

totaled not IRI, category a October and XXX.X increase In is units, in million Per a versus in ago the the has XXX% addition, in MULOC, the of market achieved drink share approximately with X-weeks dollar unit X.X% year growth. than period the brand the growth all growth Celsius of in XX% our This last unit XXXX, ending on #X doubling XX.X% XX.X% same decade. period more an U.S. incremental its year. last totaled energy share, in X, share been

to $XX.X quarter. We approximately compared the see continue period club quarter XX, tracked million non-tracked, growth totaling our across for for channel sales ending and up XX.X% third September the channels, both $XX.X all with million to year-over-year prior

energy XX% over Per and XX.X% the share Red Celsius share. last XX.X% energy at Amazon with on best-selling an Stackline weeks at ending Amazon, in now approximately is on September the XX, share XXXX, drink the Bull Monster ahead a XX a of category,

platform. brand Instacart brand for approximately outpace on and the an $XX.X #X is $XX.X Celsius million year-ago Amazon largest that third category and XX%. growth million of drink the increase on versus now energy quarter of to continues sales Our as totaled XXXX the period, fastest-growing the approximately

and in non-tracked casinos colleges, at universities, points eateries, expand growth are continue our gaining more. hospitals, hotels, distribution opportunities to foodservice and We channels more

as area our of XX% see this approximately further and exceed growth to continues for foodservice revenues, we an Overall opportunity PepsiCo scale. and

extremely a is there including growth of a are runway long expanding our channels, PepsiCo ahead across happy of foodservice. believe and We variety at we and at partnership, with retail, convenience

that customers to United in States, Celsius nationwide. Dunkin' unique now is are locations This seeing, quarter I'd Mike and our across highlight now X,XXX the that X,XXX enjoying authorization Celsius available the Jersey During over illustrates occasions Donuts products. the and in gained over foodservice, like we've we usage in many our are

the increased Celsius highlighted a has XX.X% our not per year versus by XXX% XX.X% been the which X-week share, in its October MULOC achieved XXXX, MULOC, we share year-over-year. IRI, period. in to supplement, for the period our in approximately to prior decade past versus ACV X.X% market grew earnings the in As a In ending over X, energy share category have XX.X%

XX.X% availability. In national period grow versus ACV an awareness a prior year ACV growth and approximately additional ACV gained as the in customer convenience, Celsius resides to and at tremendous we provides compared XX.X% continue of opportunities our This ending the of XX% prior of year. with

approximately totaling the International the third $XX.X driven in launches, large by awareness. quarter XXXX, to part million innovation successful velocity compared sales increased $X.X grew million brand in quarter, XX% of in third and

XXXX. opportunities 'XX in the The to we handful significant over plan countries expansion opportunities blueprint in execute to We to next believe of expand market major expected Canada, expansion X beyond. which under further in a first launch and umbrella X with is the we XXXX, in quarter for there first the as international in PepsiCo of growth our are for years to incremental international 'XX,

additional provide these dates. closer to as to get we expect We details

Vibe have sparkling fruit out of has that Beyond launch we Vibe, new innovative a number of created our is and our a at great-tasting Circle now world are markets, flavor, punch flavor, our is about team through, excited newest Cosmic very recent which launches including K. this available and been working our of

and XXXX. line, in CELSIUS XXX aminos line recently contains their the providing planned ESSENTIALS remainder our we caffeine, blend, essential formulated great-tasting at just ESSENTIALS exclusively This new CELSIUS of flavors: which a November, performance performance. physical is nationwide through of fitness cognitive with ESSENTIALS, to Each benefits. Cherry In of X-Eleven a well of looking Dragonberry Orangesicle. milligrams in launched Crush, initially Limeade, and our XX-ounce as in enhanced is with as proprietary elevate Blue available for can X addition, new combination CELSIUS rollout comes the you XXXX enthusiasts

The our distribution Net of expenses quarter were income loss attributed the network to diluted common totaled year shareholders preliminarily per million or net compared per a PepsiCo a driven diluted to million in $X.XX by or of $XX.X prior as from moved system. losses to $XXX.X the net distribution share we share. termination prior $X.XX loss

approximately our million prior quarter the $XX to substantially an $XXX in period, our by driven margins EBITDA growth, million the compared in in continued adjusted to increase SG&A. across Non-GAAP XXX% leverage and year increased revenue

to Our the basis profit non-GAAP XX% ago third prior the represented year up points adjusted was versus XX.X% driven record improvements, of approximately sales. of in margin gross from quarter XX.X%. by XXX EBITDA approximately This gross

sales addition, In leverage termination compared prior XX.X% we saw a to third the totaling sales expenses in and of XX% the marketing in year quarter our combination of adjusted period. across approximately for distributor

items of year quarter X% period. totaled in Jarrod cover in shortly. and these administrative more XX.X% to compared third expenses, in prior detail sales G&A, approximately the the will general

demographics ACV new across PepsiCo, acquisitions usage Our expansion, distribution customer to facilitate broad continues supporting new occasions. and partner,

more Going expected and shelf. facings our placements, foodservice and well increasing our in SKUs, at are incremental our at to velocities initiatives expansion be forward, flavors increasing well we stores, independent expect placements as as cooler drivers improving and that our secondary growth as expanded Celsius-branded shelf placements retail, key placements as convenience

like. cited also I've calls, can look an of South developed recent In more what example Florida a mature market as

in well X market South This as the October At that share South the share as at to the Over the for was of broader XX.X%. XX.X%. our as in Florida share shows as as growth Celsius weeks, look availability retail locations we see as strong well national X, further Florida our XXXX, last U.S. continue a market placements market our IRI, roll achieved and the improve Celsius out per was we opportunities as into of and XXXX, the January market velocities. of we brand market approximately has beginning in

unit operating in leverage To conclude continues remarks, incremental adjusted XXX% both more EBITDA with third apparent our dollar energy to prepared a basis quarter, delivering category. growth. my our becoming by the and growth a growth sales is on the highlighted The in XXX% model growth, Celsius lead in over

been have growing increasing occasions, in the customers category, demographics Our Celsius. and usage on both dollar spend their

highlight to the team want also they're I job the amazing doing. Celsius and

quarter. opportunities operational that shareholder added employees the leverage Developing value. we our our while against full-time and XXX of to us during to growth see position continues third execute in world-class team Celsius front to driving greater have We over unlock new part-time

Jarrod? over Chief call I'll Financial for our Officer, his remarks. Jarrod to now Langhans, prepared the turn

Jarrod Langhans

joining you Thank this John. you, Thank all for morning. us

distribution both in expectations. our It we to to delivering another and SKU we're of to count, and Not only we on was improvement displays from also where external continuous continued in continue quarter We increased exceed the investment within Pepsi, increased plan and system are growth but placement, great beyond. improved continuing QX internal velocities. benefit

we benefits and our across improving. the seen with business addition, have margins all margins In leverage EBITDA gross of operating margins,

last of stock will November Nasdaq stock split-adjusted Market week, basis XXXX. on on trading the announced we with the trade the split, expect initiated on a forward X-for-X opening company common that As commencing the we a Capital and XX,

as a $XXX challenging recovery revenue in XXXX XX, highlights. approximately financial third existed million, in period Revenue revenues an to the million, XXXX. was of for that million same from American XXX% North an the from $XX Turning X International XXXX. in year. XXX% saw from $XXX from quarter prior the $XXX increase ended of we September the our increase months the period same grew million to environment XX% were third quarter

attribute placement increases several traditional all also in growth including improved resulted and key channels the availability, has expansion XXXX our drivers, to We system, increased improvements to with successful SKU the volume Pepsi benefiting distribution for SKU placement. robust to channels from We're integration contributing. mix our club quarter a in and broader distribution and sales which compared

found several C&G More are products our now foodservice. ever, channels within in new and

year, pipe in XXXX. was a there discussed As fill QX in the prior

growth inventory in to also at which QX We was distributor an year offset XXXX, our in of prior fill. pipe had the

component increase. As not year-over-year significant was percentage the a a of result, inventory

the has activities. availability of our improved product rate Increased promotional success

our conjunction our footprint promotional across data allowance improvements evaluated updated the promotional quarter company and recent and in this to related XXXX, which activity, in resulted For third with trends adjustments to accrual. of in received the activity information

with XXX despite a prior our a the consistent during of increasing promotional as campaign As revenue, was the Summer year the result, of activity spend promotional Days period. percentage

quarter. third the quarter the approximately and were Gross in improvement quarter to approximately attributed million third package profit efficiency. for raw up waste in of freight the costs prior $XXX XX% prior profit year compared and as $XX year for material from margins improved XX% Gross well The to XXX% increased million, the revenues is lower to period. as lane

expenses $XX distributors transition as outperformed, due delivering the for good to the the The quarter last costs of compared quarter, investment SKU for approximately part expense the of marketing Sales of decrease decrease Pepsi year and network. prior marketing and XX% and legacy a expense, while year's million, approximately leverage of termination were in across the and to marketing budgets count termination sales with was the associated distribution sales XXXX. the quarter lines. third increased Adjusting a velocity to

investment sales in and marketing continue our year, strategic quarter the in for planned as adjusted and XX% spend the sales execute a of fourth seasonal distributor compared of programs partner. XX% increased termination prior distribution percentage percentage was in investment to sales, with to with sales our expenses. plan a We As to marketing

decrease legal expenses and Func of administrative This XXXX. a QX Foods to impairment due for QX in were impact approximately settlements XX% quarter the the to and timing $XX of the decrease XXXX. General was brands of relative million,

provide few as location into a per comments SKU additional and activity. to well third insight XX%, Moving activity placement. untracked SKUs gains distribution driven by recent the our to Revenue some as channels sequentially around for by quarter increased and tracked quarter-over-quarter across

of distributor QX primary offsets these to to some as from SKU of adjustments have with been compared mix our some inventory, our a building addition million. promos impact $XX roughly our and channels. and we from In mix estimate well SKUs within allowances inventory to as would as growth our result promotional of An benefited channel to the drivers, within

by as materials, by XX%, accounts by XXX our rates. sequentially improved dollars gross increased we our positive the raw scrap profit margin points promotional quarter, Gross maintained driven freight basis from to and and leverage adjustments second across allowance

with QX. have margins consistent promotional Excluding the had benefit, allowance gross we profit would

year-to-date for X revenue XXXX, the of Looking XX, X months the the of International increase American X of the first at from ended business. million, XX% period by $XX million same in of our revenues was North the driven from XXX% for months North ended quarters XX $XXX XXXX. $XXX in first increase approximately September million, year, an the September were XXX% America million an XXXX. X grew months $XXX to revenue

XX% Gross to revenues lower efficiency. $XXX XX% improvement X profit improved of The of approximately and material $XXX profit X period. increased prior and period. year months margins for in attributed months were gross first prior approximately raw million year the profit to the for compared in lane in package to margin year is this costs Gross freight the from up first million, XXX% the

with consistent stand the and things profit expect year would to profile. QX full be gross today, As we margin QX margin

of X period, sales, distributor sales XX% first the months expense the was prior compared adjusted XXXX percentage G&A of sales the year. to in was marketing X% prior the and termination XXXX XX% for for versus as months percentage in X of year first XX% As in expenses. a of

on now liquidity and resources. Focusing capital

excess purchase million net compares in As cash excess of $XXX to agreement and which the by an generation and year for the $XXX of of prior operating The by Cash provided September activities cash increase was XXXX. with ended net driven Pepsi activities capital XX, timing of the for and distribution flows provided totaled had in offset million. capital in $XXX income, benefits million working months share same associated change million net $XXX September in X period. we cash by XX, in transactions working in operating by

$XXX of was our January that to large in $XX million increases addition up by in increases the Looking innovation in sales at inventory at saw third with in million, inventory, the launches. This total driven of XXXX. ended inventory from ahead approximately ended June quarter quarter XXXX associated we part volume XX, building

continue we time, expecting. to we same into Going are with forward, see to will to efficiencies able to up keep we we as drive XXXX. in DIO are the move we our ensure monitor the growth do inventory At opportunities

prepared Thank call you. This open questions. now remarks. may Operator, concludes the for you our

Operator

line [Operator of Instructions] with first Our question the comes Mark Astrachan from Stifel.

Mark Astrachan

do has think I of benchmark they're on if maybe Like where at the where distribution points, you about But significant. Celsius' total guess can are those and any X go? it can start, of about Obviously, been to points sort growth terms XX% distribution you how look versus just give? we Monster of in brands. Bull, it Red

stores you If was at than less Bang where example, an peak footprint look your distribution. current distribution XX% convenience at about as is

of sort where distribution particularly resets? any of line can fall you spring give you think and maybe of So be, of shorter-term the you then term on color kind 'XX, of right into level holistically and sort sight longer head as can given

John Fieldly

peers to, that obviously, it's Yes. of the and look look Bull. we kind you, looking distribution Thank we're Red if When Monster Mark. points, at you at the up

is objective goal to is the X distribution the and that category. maximum points, in achieve time, leaders our those which have over So

in still we -- we're evolve think cycle the resets continue and evolve the XXXX phase upon growth the I as the in as opportunities. earlier beyond. we in through We'll to continue and to --

as launch breadth of really of at of our line. with work look flavors look month, company further of well the And average show flavors we I history. the which need was within the got -- new CELSIUS as our we're last points right on XX.X%, a our points. NACS you think at when distribution well excitement to continue as upon A around show, just when probably you some as the ESSENTIALS distribution of to finished our core great around Vibe expansion in lot the best innovation total

time, our objective that's expect as of So have is same goal and over peer group Bull points the and Monster. our we distribution Red and to

Mark Astrachan

it. Got

try in were of a in out helpful, played the the were Costco please. from they of I that we may to a Amazon, sequentially get a Okay, too, that I little looking can in rate that sit. they think, XQ. model growth terms all bit of But into at that that's have where be anything And then call bit there sales slower, to you challenge helpful. quarter, it's would than

John Fieldly

you at Yes, I a look think or each in versus -- Also, I to customer channels. different at looking got a mean somewhat differently channel. category singular customer you're a

it out, challenging. So bit little think get does modeling I it a

somewhat a build you at successful data, the Prime June to was when lumpiness the QX, to was and Prime taking look to the In at place really we which really XX that was QX when from -- prime looking regards it Amazon, of due quarter QX into dove for in us. in a XX,

specifically. lumpiness at Amazon So we have did when looking there some

And could Costco then ] [ channel, is looking reported seasonality because X end which of both came strong quarter and lumpiness second mainly -- be that customers is we some look It load-ins. quarter, when at through channels. club at X between you there we both on quarter. the is and at finished on And which the we XX.X%. reported at actually Sam's in the IRI, extremely the specifically, some number it XX.X%, gained Amazon, in when when of share on just points our our at we But the are of last share, businesses is those over

So quarter, basis gained within we a XXX over in share. almost points

hard, well. great team we great achievement. working really as a Prime The a has and that's really had So been Day

opportunities great the club to to additional to to the sizes don't business, really We slowing continue continues we we scale and business, club channel. on So further see see. as really Also be see pack strong within that's a down. great that leverage

Operator

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

Gerald Pascarelli

inventory question Pepsi's I current on a just levels. had

a system the over a year It little looks for in now. XQ. you built like inventory in been You've

fourth Just expect seasonality as a their some inventory their that with expect quarter any inventory Or days low to the changes levels? you color we ahead there is on hand? changes happen suggest on these current in you any approach number to what Do winter. will in nothing of levels quarter be incremental there of in

John Fieldly

And Yes, with first October. our with turn their full question cycling selling Jarrod. Gerald, first in case PepsiCo -- on But I'll to really question. that great year them that's we're a over our

Jarrod Langhans

Yes.

whether matter to peg difficult year, just As was it seasonality. of inventories of a kind we look was last or down were it pulled really

have with, now, that we are of determine filled do end we move kind we going inventory but terms perspective. perspective. some innovation we of into the in say if going no we Pepsi into from they're are As of management there's look that ready the the the the have any they're from around inventory management day, to excited do team would to as guarantees as pipeline But I so at will the QX. we XXXX, that

Gerald Pascarelli

Understood.

the think I and we've be referenced remain given great. Any gain Does rate high-XXs continue color expect Or share Next instances? is it this gross to a change still you stretch you've do it margin? certain the question volatile seen outlook. there to outperformance would you're maybe mid- previously quarters your that know the of medium-term Obviously, to looks outlook that kind high in market focus gross on to if about in need how you to on going margin. in XXs. is just last to medium-term like year Jarrod, to X end the

Jarrod Langhans

Yes.

today, things of we a wood, from have stand on I think raw this material lot year. a knock as savings captured perspective,

the been few consistent so pretty for that's quarters. And last

some point number our road. any quarters. for can that know maintained we also fuel the can have freight outbound time. last Obviously, down pain We in That the cause costs at spike few

freight lock. the I'm ready call to I a or fuel that know So the line don't as outbound

comfortable We we've perspective. are what a today where commodities seen with pretty from stand material raw

cause line, steady our still XXXX. that think go raw as though, could remain into I QX of fluctuations. kind costs some in So material There that QX and should is freight we

cleaning great with the operations they've a have the the really job in especially did really scrap waste, think the inventory, this raw up quarters, job And the I X superbly. up kind materials. of fantastic the managed aged any really last great job team cost done year and really tightening a did freight a of really lanes,

guys So hat's those to for off that.

it we great And goal no definitely up. are we we guarantees. how sure it, of moving shape Not into going more can We'll to But our squeeze is where in for really 'XX. there's much shoot into as but keep were we're out 'XX.

Operator

Azer with comes question from TD next Vivien Our the line Cowen. of

Vivien Azer

of quarter, factors might growth retailers for you you conversations Q&A, you on in different commented key Last Pepsi and the of commented be one categories were the where in XXXX, talked as leverage the continued an importance shelf share. I the you with relationship. and was that Earlier energy to the of drive on early sourcing into hoping 'XX. just couple update around a provide your about could conversations resets resets

John Fieldly

was it -- still probably had excitement. successful and of history. one Vivien, -- retailers Yes, has sets There's of for we're in company that had lot Yes. are great we but their the year, a NACS next defining the still most

I think to look currently you signage just shows now, pump X-Eleven happened activity when of at gas X you look well. X-Eleven nationwide, just when front at as X-Eleven as see of line, every our you'll taking a ESSENTIALS if you it chain-wide. week, right go as Also, in CELSIUS well what SKUs this you

way best-in-class. with excited really -- we So every We've have retailers. accounts going early with our great accounts. one conversations key We've a are the our had the partnerships team, major of been with key

we're heading the So into resets. we where on pretty on excited year sit new

gain as new expect flavors our XXXX. expanding further as We distribution -- distribution innovation store in to the in well expanded we for have existing

late Pepsi closely our have launching heading in strategic in sure basis going really a last this is if really So keep our year, nationwide with of Pepsi with as -- go make innovation to been really you year back really QX. We've on versus really first we a started mind, partnership, just been to we're hard. the has well team working working into

came the Our tail their very trying weren't so on we're with aligned really all innovative ground to year We AOP strategies that, end up of the launches. and on process. make plans in really

months. So strategic within PepsiCo have to and focused looking we're quarters prioritization within periods

I think able be to in to scan going IRI really data. wait to March, have until show it's successful. to So will up -- the see the additional about April tell. probably to Time see start be We'll expansion the excited team the like the feels Celsius. and to we excitement. pretty and in Being of a impressive dollars where driver in a on But stand, lot is brand there's of category really see both #X great units

Vivien Azer

Absolutely. Very comprehensive response.

Just half as hiring? of supposed fourth be your a quarter? terms was just Should quarter? detail would helpful. you of on be follow-up, XXXX us to Can plan Any the back headcount. were on accelerate expanding weighted that Kind in guys in the incremental update in the third you

John Fieldly

actually X And taking our have really and It's members in call. place members heading We are after earnings sales down We'll conferences -- currently team are have presentation. getting marketing about all week we of national right we of Yes. our excited. Jarrod have team all of days this our and Miami. actually I great -- our

next And to year that talked the XX XX. upon within over our well. over drill-deep focusing bring plans HR, finance, I budgets logistics, next expansion years. expanding really to is within and on strategy sales, further focusing all marketing, really we've we're talented the building breadth about to members, expanding drill-deep year our and departments, within on that a operations, as Our team markets, continue know and we'll for currently, in within organization, be and out markets

expand seeing our we building out return teams, sales and we're positions. ROI and field when results and our great these individuals we're place these teams, So

sure value that So that's we're another as thing monitoring applying return. really making that overall driving as we're and assets, closely we're well

continue. So expect us to you'll

lot postings up job hiring, LinkedIn a as on are We well. we and of have

we We're continue. that closely, monitoring it to So expect though.

Operator

Our with Michael comes next Sandler. Lavery line Piper from the question of

Michael Lavery

of drivers. was some you could margin if Just wondering the unpack

You from higher last quarter activity But out up had is were the promotional dip sequential instead. then went it the you marketing EBITDA and margins, higher This obviously. called spending. expecting

a some how in I about promotional just factors a of headwind. being or idea other some touched of you bit the us through understand part think dynamics the mean, on had coming You help you sustainable an can not -- what a a not expected is as little But just looking and minimal quite get to of to and ahead? tailwind

John Fieldly

come Yes, level, of expanded at expanded those the and into higher details some But did other somewhat had, locations there. cost some leverage had business when we've a that promotional I'll in foodservice look the of in we when -- into let there. we've was cases really some also lower there quarter well. or I see distribution think And Jarrod dive doing we that you but historically, allowance like through, on independent some channels, are a of timing some the just as

But and throw further to over I'll that to Jarrod provide additional details answer that question.

Jarrod Langhans

Yes.

bottom of going up. well, But to the way my kind I'm things I P&L. the guess, start and work So you within I'll to the from of handful the a said, there's, start unpack. of as middle

of we the We leverage that look you if growth really there. some top see at line relative to have. So benefited we some G&A, good spend did from outsized

we into X.X%. XXXX, basis, a out -- believe As G&A our I look is about X-month we on

I pegging the we were think year. for roughly X%

good would little track year, bit somewhere better in be this where a next year full So on a be QX. Probably but next those will year we coming there. Is 'XX, in come full But be line. on to between in range G&A see a on X% leverage through? of some to it between we leverage did year kind where X% through year, X, it the land basis obviously, we'll basis in that in going

sustainable. like really things be give business little some continue we've try talking will teams that to bit our as is we drive probably and a our There's upfront we'll where of that, a to build investment lot costs. there set that also up. There's will continue some and as I international expansion out think that we to about back some been scale

And the so G&A you we line. good won't will leverage, see leverage see but the full in

in been to we've XX% On of marketing line, the that year, averaging This kind been XX% and probably the we've XX%. XX%. sales to historically,

seen we've of leverage a there. bit So

out into year, any the that get we think to As going is we easier. don't look competition next

sales into our we especially So but we to drive into throughout look but numbers. leverage out. invest continue there will But continue the do We invest budget, along to to the seen to don't business, -- the we way, business we continue since have some the numbers we don't of growth and have would have the really give give look really and the specific we the out year. exact market guidance don't

did Also, gross QX, on competition. the talk you we QX, we we profit in you after you've of QX, benefits the to that line, across got international If system. By of our off had saw still and cans, up about time it had us the was across the board, to where in just seen view. improvements the international clean both go commodities a really cans rolled we the whereas the

And the so we've seen really raw through materials. come benefits some

also, of lanes benefits you've And seen really were the the established. that freight

think X.X%. year, it about, X.X%, year-to-date was we last were whereas a running on I basis,

a than you a QX we out And QX, XXX So perspective. lane little freight and running from look just that it's number. to points of better been basis got bit better actually, if

way benefits of the really EBITDA kind along seen we've that line across on margin the So year. driving each

Michael Lavery

you follow little us? of bit fill be we that it you also first there And follow-up Maybe That's the XQ? launch? impact Canada then up is should we on just I keep in looking in I really mind? can helpful. how the kind a first one, Or know that quarter. give it's in quarter-to-date color XQ-minded. in any maybe I guess the for later quarter? the Should expect a is Canada pipeline it's Could would on And said

Jarrod Langhans

Yes. impact inconsequential. 'XX, of a build Canada will be, in it I kind will be and from mean an

growth. good expect We

start We expect to get share. in there and market capturing

growth put will to rollout but and But expect won't of of We the fast needed it QX, launch. happen X/X to forth that's the inventory it won't investment huge a QX it a And be or really in seed kind in QX. or driver grow be 'XX. in

Operator

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

Peter Grom

expansion the of follow So I on wanted kind plan. of to just that, up kind international

Canada have You XQ. in

where expand cetera? other PepsiCo few international just which a Can mentioned fully markets, Or about with considering? a et the be perspective, are understand and as partners be Are to start should the to other from to how you're timing, us I countries. I margins? these maybe partners? opportunities, going you you I evaluate various then outside help you think guess how further you're their you profit And aligned we U.S., markets impact think of curious there would the

John Fieldly

markets calls the Peter. talked a world. as we're this the I you, Thank in the variety drink mean largest well. of Yes. on at We've looking energy in other past about

of see So other you're you are Australia. out biggest forward. opportunities other to -- Pepsi A see. those, are lot and look partnerships looking look that's at the priority. we do you move When at you markets partners, where there, opportunities Japan, really big our at we those at Germany, we those other will be we opportunities can look evaluate There with so the continue as U.K.,

with out 'XX. really is focused about roll we partnering into that. we're are first spoken further on on market in and working have other that that markets teams Canada, And 'XX we're so to The the

So we're talking in of sure opportunity a involved as structures. have lot you forward chain, lot the the think we value markets. these exactly right to you're There's talk a those to the profitability I make right bit early go for a about, little what too about longevity of

in looking biggest using into at opportunity for the our Monster together the rolling variety markets. have forward at But guideline that's structures we're really we're out we So expanding and these look markets hands currently, our P&Ls a on Canada partners as at. moment. as focused international us partnering as we're a But -- with to new we of and --

Peter Grom

would a And through So year Can apologize, $XX run then, through call was running ahead can kind I little of you you Jarrod, that million ago? of be I mentioned yes, you think a maybe if that just again? it, think items I that much inventory you was, to promotional what unpack Like a a were Got XQ you lapping the how build quickly. were it. just some benefit allowance? you of there these bit, helpful. But revenue. Did bit

Jarrod Langhans

a had year, you fill 'XX $XX or somewhere talked that pipe we QX $XX last this million then year. to if of of Yes, look so look we sorry, at in a bit was 'XX, from versus -- QX a probably it a if bit there pipe of QX was about between range. inventory you of fill -- And million

so wasn't percentage factor significant perspective. a And it an from in the terms of growth year-over-year apples-to-apples

within to QX, at QX you to a it QX revenue figures. the If from was benefit QX looked

inventory the piece. that's So

see through to starting come mean promo I line. the we're leverage

around did we our So estimates updated we benefit, a allowance. see have and promotional

see channels, ACV that of lot a had look and you or benefit. And been non-tracked We've an about improved you see areas so a call their growth. where where of, start -- at percentage significant that promo a don't into lot over John it, Just moving promotional as activity can you deep, gross Monster is as the we've mentioned time. but you see revenue a historically, gross example, if as to dollars of lot

see to that as starting we're so And well.

add allowed or Now leverage percentage a but more or when looking year-over-year QX us incentives QX, consistent you're we revenue in to percentage at did less gross XXXX revenue have invest or of XXXX. additional of the to QX a

that's was so out. that called where And

Operator

Our William of line Blair. the next comes Andersen with Jon question from

Jon Andersen

about first of I wanted to the rollout foodservice. ask

mentioned eateries X,XXX You Donuts for in nationwide. Mike's, mentioned as timing next? expectations year rollout over move the further And and authorizations you that the you your in and Dunkin' What's this are what I of then Donuts? Dunkin' Jersey forward X,XXX with think

John Fieldly

great Jon, question. Yes,

foodservice. I think in do see opportunity we a huge

proof really, going in, it I really we're about X is And how the focused fast-casual -- Jersey excited Celsius when our you enjoying goes. brand a consuming probably and traditional talked huge fairly Mike's, first which at When you is you and Celsius and at look been on consumers positive. But that concept. to outside really I look unique, look the as continue for Celsius, occasion, weeks been of and initial think at of feedback are only that drink nationwide think that really consumption about with This energy and I really early. that mean the on we're which chain, that has is see using unlock really portfolio. a partnership. but initially we've is this to has we're

restaurants I that think roll to to. And -- has able that's to access that's Pepsi vast be if and a eateries we'll has foodservice. to fast-casual access other large that successful, Pepsi out portion of

we customers and great Unfortunately, variety great. from feedback I and Celsius actually X distribution the have of Dunkin' So great the is gains authorized, tastes a about in Donuts learned that a currently was was that Donuts, found they've only which that's portfolio our heard which addition. and to of new refreshing. orange flavor, have SKU Celsius Dunkin' because

could portfolio. So be the I into also to way the foodservice new great the franchise think bring consumers and a

X,XXX We X,XXX about further Donuts more There's upon. to lot are Dunkin' currently. a in Donuts grow to leverage Dunkin' and

and So concept right Jersey really getting of we that Mike's, proof about more have X in. Donuts it's X. Dunkin' flavors now, and also is flavors

hospitals. the still think is universities and revenue, in our So our approximately foodservice, PepsiCo revenue, of which the I when early phase, is see but you success XX%

about the really opportunity I think excited we're ahead. all lies that

Jon Andersen

Absolutely.

greater really expect to you key more 'XX? key within and for of X-Eleven your achieving line that such that in that is a retailers that you shelf portfolio? And select talked mentioned a as How to You've product element space ESSENTIALS facings innovation going be as that about the XXXX. limited differentiated Is is initially?

John Fieldly

retailers be to our is going core out on further portfolio. limited going line the We're Yes, ESSENTIALS particular initially. really to focused CELSIUS building it's -- to

is, on energy already gains look So flavor designed anticipating ESSENTIALS profiles; prioritization has top in we're that after been and incremental positive. feedback at it then Vibe And one, offerings, performance our secondary that's you extremely will when we're going that's core that be getting the be 'XX. segment. Initial prioritizations, our our to number -- is CELSIUS of

with and received. well, our -- aligned has this initially partners been as on feedback we've well and So

Jon Andersen

one last for me. And

As much kind coolers, it part own about is cooler think in your Where placements. are you a PepsiCo more that? of effort had you ahead? locations. there And -- how this of I of the year. of respect opportunity your the think you terms that you that And earlier target on relationship branded to know you I is deliver set you leveraging track establish mentioned to Celsius secondary to with coolers part front year? look on and is with Are as in

John Fieldly

not within great focused Yes, teams only Jon, our no, a on, PepsiCo sales and but are question core organization. within the extremely also members, the something that's team

stores perfect program our So cooler strategy. and initiative is of part our

team we the way as well. KPI a that's So

cold an placement store include get as you're placement perfect placement, secondary cooler. the So a could and has going and well end to cap -- then and cold Celsius-branded also most upfront then warm placement, as

few working gaining coolers we So coolers our our win this X,XXX really at goal be X,XXX, see We'll is we're towards where -- placed The X,XXX, achieve was approximately store be biggest front national We're working left. months around in close year. if going have checkout on to locations. to we're able authorization it. now XX,XXX retailers, chain-wide to We major can that. only a

with stores just As we in front an -- expanded coolers. checkout Publix entered example, distribution end the front cap

was a big So win. that

in capitalize on. those we continue that and Celsius-branded take trial purchases our and Celsius us a we allow going checkouts, know those can of availability, not to advantage impulse have great increase that's to placement cooler, Although do to increase

Operator

Our next with question Eric of Stanley. Morgan comes line from Serotta the

Eric Serotta

changes for you have And looking where term in you quick quarter short the housekeeping any the percentage in allowances? talked a I'll a guys I and the question. selling promo up First, sales promotional in then you fourth you versus adjustment of know about made? were in quarter. bigger-picture third being question. marketing allowances Are post about the material a expense that as What

Jarrod Langhans

Yes.

QX. year-to-date the marketing you But sales want to we For to as look look you the John, the promos, want jump jump me one? on I'd to that or and do percentage on more to

John Fieldly

go ahead. Yes,

Jarrod Langhans

Yes.

trickier marketing, October, little in and obviously, it's a December. So sales November,

come have little a different You've to up got so Christmas, with incentives different programs. you Halloween, Thanksgiving, bit and

the And we through obviously, the months. working then, up to looking X those hit released sponsorships that the with we're a of over system. ground we're running number the press picked that last we So

the spent season. So year our holiday at be also quickly. of into we we a because are We've the from We found very that pretty into that season. ACV successful looking when XX sitting last Part spend holiday year. to XX to been it went was a continue to all XX to

into our a we work velocities sales really goal to from So is the perspective. build XXXX marketing way help those as and

John Fieldly

especially reset And by also into window. our leaning

So...

Eric Serotta

which my of sort next that leads And Great. on question, is into velocities.

year, growth of distribution. expanded one XX over about for the been months, think acceleration months? past I velocity to X are How next, over you've big rapidly you certainly in the surprises the has as XX X the it, positive the scope to the velocities past call thinking

hand, to productive, are -- effect billboard new distribution some adding less awareness. you some getting broader maybe the On be one and seem bit but little you're a some

potential So big or for X? how about thinking velocity over are picture, you year the coming

John Fieldly

Yes.

areas think, on. I really Eric, order different it's at forward. going variety that you when And that's a we're come of to drive in look focused to continue it, to from something

of you our category We to some and which great -- months in a look just year, a partners. But are taken entering hasn't really it's over north great achievement in the a XX% uncharted share, this territories team over at of when X the energy what achieved the been place the at last decade. has

think just I got penetration, from Numerator way exciting and household and is we're the piece tracking penetration household one more doubled. recently our we news than

XX.X% an And So Numerator. #X in growth we energy. and right sports in when all the year-ago brand Celsius tracked time versus were we penetration were we it last household -- per around XX% a was of period the

really So strategies. on been traction there. marketing we're The doing getting some have leveraging really good our teams great

sales I opportunity out programs ROI programs well. further think of there's a drive our our lot marketing within as to of

but here, unknown, So an really continue drive working where we're from to velocities somewhat that go forward. to that's

be when us shopper with that at additional That's allow expansion the look super to the going to critical. engage we coming going presence. at have to out point able better shelf space, is in, anticipate getting resets the the to that's build that to purchase, on think billboard further which of effect I you

So time evolve future continue we calls. will quarter-over-quarter tell. as I on guess find out we'll to

Operator

with the Salera comes from next question Stephens. Jim of Our line

James Salera

Do you be -- end foodservice be Congrats to on sense because you the a have those would that tea a up kind into follow a are for as that it a Celsius? able case, if soft on drinking of teas. drinking piece I wanted consumers well? in like market are or Pepsi the tea soft retail traditionally seems to from to quarter. an carbonated for foodservice good a would or Celsius at drinks switches drinking the track from or to that's switching drinks that And

John Fieldly

Jim, that's that working we're the great on. huge a question. That's unlock

the our snack, ordering fascinating, or a they're data another or at basket category. looking I coming another where in a with Celsius potentially competitive consumer that is And a I we which or fountain hypothesis foodservice, this incremental saw we're actually we as think a this item not think bit when one, need getting water not we expand foodservice. consumer. Within beverage think ring, platform also our Delivery advantage where Celsius what food consumer a we're water Dudes is we because consumer, bigger more see is, in them getting the is we've little and seeing we into drink. What have with a our they're purchasing or to the I getting the have convenience number Celsius seen on i.e. consumer, a

feedback initial our on we the do has some that. data competing being is the to So that fast-casual we're of purchase. on incremental restaurants we not and more beverage the these But need that with What fountain. within is within eateries set are we see apps been

James Salera

store category consumers saying in it's forward, have traditional you days. do energy buys, soft could Great. those see outside placed that, find some early be just the not drinks? really you other carbonated about implications still the think That's just unlike participating moving has throughout of And you but or of the drink in energy buying a this, Celsius, other yourself possibility of that energy there's of the helpful thinking tea do kind and retail But already color. kind that you that if addressed might

John Fieldly

were in getting Ralphs. placed grab-and-go have know food placing so seeing given we in have grabbing Krogers and grab-and-go. secondary food locations and They're and now We're section, Publixes people like our certain I stores within in you the placements items. -- -- several that are us where where

think huge cafeteria a that's opportunity we and right I have know So a sandwiches they eatery you having us. to Celsius our a a of people, people I next there. lot bowls, sell small and tons of see see I or office, for and

there's So grow forward. a as opportunity think we unlock and huge I

to top out LRB, energy, at bigger of achievement XX the made achieve and refreshing Celsius brands, beverages total has data just category, outside traditional the look some and overall TAM of opens points look in up total when the Just that able that been beverage you the another in opportunity. the you it that third latest Celsius Also which -- coming at plays quarter. the within portfolio within great liquid which is the beverages into is a

Operator

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

Jeff Van Sinderen

Pepsi wanted QX touch elevation for this year, thinking Just to that fact to ongoing I got and are you and seasonality SKU keeping on launch guess, year? how sort in comparison last And of the the you've expansion. mind about distribution the

John Fieldly

quarter. the be to happened. partner, earlier, another what is you When we need potential some we've some -- And is our is within -- our as last quarter, going that which have we Jeff. point. it a at something talked Pepsi into inventory seasonality. We inventory this reduction There look go looks category in started We year. saw main that. But we within finalize evaluate like the supplier about also, -- has anticipate to should that -- of it at Thanks, that the all seasonality, seasonality you

the levels. seasonality, to So that and in addition in seasonality of type with the traditional quarter just some we pullback anticipate fourth

Jeff Van Sinderen

from And you if maybe is could for 'XX? the helpful. aside there Or XXXX? innovation just further 'XX. then that's have engine plans ESSENTIALS innovation touch for for Okay, ESSENTIALS main line, is innovation planned Or other on substantial the you

John Fieldly

been between ] hard. for Innovation has have continue core X we going 'XX, to our absolutely. [ working team Yes, offerings. build The been really our fruit We're flavor really working out hard. to portfolios

those announce flavors shortly. in. We'll some have coming great new We

coming have Vibe, theme we're due trilogy. we're that going the with to where success, continue this -- going flavors through We out to Cosmic Vibe a new

talk XX-ounce we'll some great line, opportunity great something our opportunity. and on we think did going energy on don't CELSIUS the ESSENTIALS about about really So is a have or after have, that's powders that. I and we going then too beyond We the a flavors And call beyond talk and on-the-go can. performance really that it's our our line, really the category. much, great bottle

product a offerings getting Vibe into and our interest lot interest been have out We 'XX. that from of -- flavors further will retailers on we be into portfolio, our bringing powder

we'll all excited. really the fan. always expansion them, some I see portfolios. is been of We've you've So got enjoy big as know flavors, Jeff, you'll And team our great with further and a

stand. So we're we excited -- but where

Jeff Van Sinderen

Can't wait to try them.

Operator

today. all the to I'd the time closing for like is Fieldly That have we John hand for to back call remarks.

John Fieldly

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

global health capitalizing and expanding momentum gaining trends, Our considerable and ROTH of on and several and dollars our confidence the December, be of upcoming The units. I'd including results month wellness you for Investor to Conferences. both November conferences like today's many driving Morgan investor throughout our forward and time We to this thank Stephens, their seeing will look demonstrates in category are the support and growth our products company attending continued Stanley, take team. Jefferies, to there. energy Capital in investors

and fit. Thank you in for Stay your Celsius. live interest healthy

Operator

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

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

Celsius (CELH) 7 Nov 232023 Q3 Earnings call transcript