Celsius Holdings, Inc.

Greetings, and welcome to Celsius Holdings' first quarter 2022 financial results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. 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.

Thank you. Good afternoon, everyone. We appreciate you joining us today for Celsius Holdings' first quarter 2022 earnings conference call. Joining me on the call today are John Fieldley, President and Chief Executive Officer, and Jared Langans, Chief Financial Officer. Following the prepared remarks, we welcome the call to your questions and instructions will be given at that time. The company released their earnings press release upon market close this afternoon, and all materials will be available on the company's website, CelsiusHoldingsInc.com, under the investor relations section. As a reminder, before you turn the call over to John, an audio replay will be available later today. Please also be aware that this call may contain forward-looking statements, which are based on forecasts, expectations, and other information available to management as of May 10th, 2022. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to view in full our safe harbor statements contained in today's press release and our quarterly filings with the SEC for additional information. With that, I'd like to turn the call over to President and Chief Executive Officer John Fieldley for his prepared remarks. John?

Thank you, Cameron. Good afternoon, everyone, and thank you for joining us today. Our record first quarter represented our 14th consecutive quarter of sequential growth and a 28% increase over the fourth quarter period. According to the trailing four-week IRI MULOC data as of April 17, 2022, Celsius is the number one brand driver of growth in the energy category compared to 2021. For the last four-week data set, the energy category grew $101 million. In that period, Celsius added $38 million of the growth, accounting for 38% of the total. This is dollar share growth. eclipsing Monster by 1.4 times, Alani New by 2.2 times, Red Bull by 2.5 times, Ghost by 3 times, and C4 by 4 times. During this period, Celsius increased to a $4.1 share and surpassed Rockstar for the number four position in the energy category. This growth has been driven across all channels, including those non-tracked. with the two newest channels of Club and the vending food service channels leading on a percentage growth metric and driving an incremental $25.2 million in revenue for the two channels alone compared to 2021 first quarter. In March, we also began a full nationwide rollout through Sam's Club, more than doubling the number of stores in the channel, adding 589 locations with the launch. In the first quarter, we also expanded into additional Walmart locations, now bringing Our store count totaled to over 4,400 stores and expanded our offerings, which now totals on average about six facings across the country, with expanded distribution as well as new cooler placements in select stores. In the convenience channel, we began a nationwide rollout to over 6,000 Circle K locations. And in the fitness channel, we are now the official energy drink partner and provider of Cycle Bar Nationwide. In addition, since our Q4 launch with Lifetime Fitness, we are now the number one selling drink and have increased sales each month since our launch. On April 18th, we announced the retirement of Edwin Negron and appointed Jared Langs as our CFO. I would like to formally introduce him today and share our excitement of having him join the Celsius team. In addition, I'd like to thank Edwin for his commitment to the company and for the contribution over the years, which will continue to provide lasting positive impacts. We have also recently added Grace Clark as our new head of IT and welcome her to the Celsius team. And in addition to the many other new team members who have joined our team, we'd like to welcome them as we continue to expand our organization to keep pace with growth and maximize the opportunities we see ahead. Before I move to operational highlights for the quarter in regards to our previously disclosed SEC inquiry, we continue to fully cooperate and we do not have any material updates at this time. Moving to some of our financial highlights of the first quarter, sales held another record, achieving first quarter revenues in the United States, exceeding over $100 million in sales, hitting $123 million, growing exponentially. Revenue growth was driven by continued new store additions, flavor expansions, additional clove placements, and the optimization and activation of our DSD network, as well as growth in underrepresented channels. As we mentioned, in the convenience store, we see great expansion, club, and vending. Sales for the first quarter of 2022 totaled $133.4 million, up 167% from $50 million in the prior year quarter. As mentioned, domestic revenues increased 214% to a record $123.5 million, up from $39 million in the prior year quarter. International sales decreased approximately 10% to $9.9 million for the quarter, with Nordic sales down approximately 18% to $8.5 million as a result of timing of trade campaigns, flavor launches, as well as supply chain delays. And other international sales grew approximately 114% to $1.4 million. Gross profit for the quarter increased $162 million to $53.9 million, up from $20.6 million in the year-ago quarter. And gross margins totaled approximately 40.4% of net sales. and excluding outbound freight totaled 42.8% of revenues for the three months ending March 31, 2022, and from 41.1% or 49.5% when excluding outbound freight for the prior year quarter. There continues to be margin pressure felt across the beverage industry, and we have not been immune to these impacts. With the expansion of higher costs of international cans, A majority of these cost increases have been offset by efficiencies of scale through our raw materials production, full load shipping, reducing the miles on cases with our six orbit warehouse model expansion last fall. Our product channel sales mix has also impacted margins as our club channel revenue has extraordinarily had lower margin levels due to secondary repack facilities, which are required. With this rapid growth in the channel, which contributed over 26 million in revenue in the first quarter, It has increased overall margin pressure, and we have initiated several changes to improve margins in this channel, including the rework, working with co-packers and our partners to further drive costs out of the system. Overall, the company still expects to cycle through the remaining of our international cans by the end of the third quarter, with margins then moving back up towards the mid-40s based on channel mix. Our first quarter 2022 fill rates were experiencing about roughly around a 97% fill rate and we expect to maintain these normalized levels, even with our accelerated growth rates due to optimization of software improvements. warehouse expansion to our six orbit infrastructure model put in place during the third quarter and an inventory expansion, which has been key to the spring resets load ends with new accounts expanding and optimization. of our national distribution network, as well as Sam's Club, Circle K, and the Walmart expansions, just to name a few. Some additional highlights for the first quarter. Our domestic revenues of $123.5 million was driven by accelerated triple-digit growth traditional channels of trade, expansion with world-class retailers, and further activation and growth with our distribution partners. Direct store delivery, our DSD network, grew approximately 395% in our distributor revenues when compared to the prior year. Our vending channel grew 296% approximately in the first quarter and drove over $2 million in incremental revenue. We are now in over 12,000 vending and micromarkets, placement since the first quarter of 2021, increasing our number of locations by 96% and expect that growth to continue through the rest of the year. And our fitness vitamin specialty channel, in addition to now being the number one drink at Lifetime Fitness in the quarter, we officially launched with Solid Core at 70 locations. GNC also expanded their offerings in their corporate sets, and our partnership partnered with Cycle Bar, which is live with franchisees ordering product. Our mass club channel continued to accelerate following the rollout of the 561 Costco locations expanded in Q2 of 2021. Costco's first quarter established a new record in revenue growing over 100% for Q1 of 2021, and we continue to gain traction in the online sales platform on Costco.com. We initiated a sell-in with over a full nationwide sales rollout with Sam's Club at 589 locations, and we also saw significant additional opportunities we see ahead in further penetrating the club channel with BJ's in 2022. In Walmart, we expanded our store count of flavor assortment, as well as gaining front-end coolers and end cap activity in select locations. And in Target, we have a chain-wide end cap program, which we expanded our availabilities and also with additional cooler placements and in-store placements throughout the first quarter. In the convenience channel, our convenience store locations increased by 88% from the first quarter of 2021, and now total just under 64,000 locations. We began our national Circle K launch, which will be completed by the second quarter and total over 6,000 new locations upon completion, second only to our overall 8,000 locations with 7-Elevens in terms of total store size in the convenience store channel, with 7-Eleven and Circle K now being our two largest chains in that channel. Racetrack was fully converted to DSD in the first quarter, and we expanded our shelf placements through approximately between three quarters of a shelf to a full shelf in all locations. The convenience store channel has the largest growth opportunity and addition expansion indoors in 2021, and we expect that growth to continue in 2022. Industry-backed third-party data continues to show accelerated growth metrics, and we are confident that Celsius will continue to drive sales even higher as we increase our ACV across channels through additional launches with new chains and transitioning existing accounts to our DSD network for better optimization and in-product placements. Consumer demand for Celsius accelerated through the first quarter of 2022 and as of April of 2022 to record levels, with the most recent reported Nielsen scan data as of April 9, 2022, showing Celsius sales of up 216% year-over-year for two weeks, 215% for the four weeks, 230% for the 12 weeks with a 3.4 share, according to Nielsen data, of the energy category. This compares the energy category, which grew 6% on the two weeks, 11% on 12 weeks over the same period. Celsius also saw an average price increase of 17.4 over the 52-week period. On Amazon, Celsius is the second largest energy drink with 18.23% share of the energy category, 6.6 share ahead of Red Bull at 11.6 share, and 7.7 share behind Monster at a 25.9% share. Approximately, that's four weeks ending April 23, 2022. That's Stackline data, energy drink category, total U.S. With this, sales hit record quarterly revenues for Amazon, which totaled $13.8 million, up 74% from the first quarter of 2021. We continue to see acceleration through all channels, and are now beginning to see the additional lift from the conversion of accounts to our national DSD network. This delivered growth of 395% in our distributor revenues when compared to the prior year. We secured additional distribution agreements during the quarter, further expanding our availability. The company now has completed a nationwide network, which now services approximately 99% of the population. Our rollout of Celsius branded coolers in the first quarter was expanded with over 700 coolers placed and now over 1,900 coolers placed nationwide in key retailers. We have also implemented a comprehensive tracking tool to leverage growth acceleration metrics with retailers. In addition, over 400 barrel coolers were placed in key locations at premium retailers, and we anticipate additional cooler placements to continue through 2022. Our U.S. door count now exceeds 140,000 locations nationally, growing over 49,000 doors or 53% from 93,000 from Q1 2021. On our co-packer front, we continue to expand our partners and scale at existing locations, improving our line time priority. Our total U.S. co-packer footprint now totals 13 that are active, which will help protect for future out of stocks and support our growth that's ahead. In Europe, sales totaled $8.5 million, a decrease of approximately 18% as a result of translation costs, as well as timing of trade campaigns, timing of flavor launches, as well as supply chain delays. And we expect this to continue to optimize in the second and third quarter. Amazon EU, beginning with Great Britain, which launched with three flavors of Celsius and six flavors of our fast protein snack portfolio, and Germany launched with three flavors of Celsius. We expect additional EU launches to take place through 2022 to include France and Italy momentarily. Additionally, revenues are small today, but we see tremendous opportunities ahead. In China, we maintain a licensing royalty model in the market with fixed royalty revenues through 2024, which then becomes a volume-based model, but no lower than the minimum royalties of $2.2 million. In our other international market locations, driving growth includes Malaysia, Hong Kong, South Korea, and Singapore, with initial markets penetrating, as well as future opportunities discussions in Japan, Australia, and Taiwan. We continue to focus on our approach in these markets to find top distributors to partner with to drive revenue, profitable revenue, and growth opportunities. Now moving to the marketing front. On a marketing front, we continue to activate, target new and existing consumers where they live, work, and play, building meaningful, emotional connections through our robust, integrated marketing programs. In the first quarter, we continue to activate through our Celsius Live Fit Tour, and we kicked off a Celsius Essential Vibes Tour, which initially kicked off during the Super Bowl at Shaq's Funhouse, which was a great event. In addition, we also partnered with Shaun White around the Olympics and did a lot of activation, and we also launched a great flavor, a mango passion fruit in 7-Eleven nationwide, which was a very successful launch for us, just to name a few items which we accomplished. We continue to activate and connect with consumers in a meaningful way, bringing new consumers to the Celsius portfolio and energy category. We are driving a leading growth in the energy category across all channels, expanding the demographics by bringing in an industry-leading percentage of consumers from outside and new to category while accelerating our share and growing the energy category. We have committed the resources, both personnel and operational infrastructure, to maximize our opportunity. I'll now turn the call over to Jared Langens, our Chief Financial Officer, for his prepared remarks. Jared?