Celsius Holdings, Inc.

Elizabeth Mertinko- Good day, ladies and gentlemen, and welcome to the Celsius Quarter 3 2022 Earnings Call. All lines are in a listen-only mode. And the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Cameron Donoghue. Sir, the floor is yours.

Thank you, and good afternoon, everyone. We appreciate you joining us today for Celsius Holdings' third quarter 2022 earnings conference call. Joining me on the call today are John Fieldy, President and Chief Executive Officer, and Jared Langens, Chief Financial Officer. Volume of pair remarks will open the call to your questions, and instructions will be given at that time. The company released the earnings press release upon market close this afternoon, and all materials will be available on the company's website, CelsiusHoldingsInc.com. As a reminder, before you turn the call over to John, an audio replay will be available later today and can be accessed with the same live webcast link in our conference call announcement release. 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 November 9, 2022. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except the consent is required by law, Chelsea's Holdings undertakes the obligation and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our safe harbor statement containing today's press release and our quarterly filings with the SEC for additional information. With that, let's return the call to President and Chief Executive Officer John Thielbeck for his prepared remarks. John?

Thank you, Cameron. Good afternoon, everyone. And thank you for joining us today. The company achieved a record quarter in the third quarter of 2022 with sales over 188 million delivering revenue growth of over 98%. And according to the most recent scan data at retail per IRI MULOC total energy one week ending October 23rd, 2022 Celsius is now the third largest energy drink in the United States. In addition, According to the trailing 12-week IRI MULOC total energy as of October 2nd, 2022, representing the majority of the third quarter, Celsius was again the number one brand driver of growth in the energy category in the United States, responsible for 29% of the category growth, driving over approximately incremental $123 million in sales for the category. This represents the third consecutive quarter at the number one spot and prior to the transition to the PepsiCo distribution network, which started October 1st, 2022, and will be represented in our fourth quarter numbers. We continue to see growth across all channels, including the non-track, with our club channel sales in the third quarter totaling over 34 million in sales, increasing by approximately 20 million from the third quarter of 2021. Amazon sales, another non-track channel for the third quarter hit a new quarterly record of approximately 16 million and year to date in 2022 totaled approximately 43 million and was up 108% compared to approximately 21 million in the nine months ending 2021. Third quarter retailer highlights include the benefits from our Walmart expansions announced in the first quarter of this year on a year to date basis, continuing to hit new revenue records. And the convenience channel, where we see the largest opportunity Celsius continues to perform extremely well and, according to the convenience in gas iri as of the 12 weeks ending October 2 2022 total us energy Celsius sales increased 158% the channel setting a new sales record. In the grocery channel, both Kroger and Publix lead the incremental revenue growth in the third quarter of 2022 with both retailers setting new records in sales and share gains in the energy category. We officially commenced our distribution partnership with PepsiCo subsequently to the third quarter with the distribution to most of our retail accounts transitioning as of October 1st of 2022. While early, Initial track data on both ACV and items carried per store growth indicate impressive gains already gained and exceeding our initial expectations on both these tangible metrics. In addition, the transition process with respect to our retail partners as well as our consumers also have exceeded our initial expectations. As highlighted in the earnings supplement for the one week ending October 23rd, 2022, IRI data reported in Moolah total energy Celsius has passed Sir Bang to be the number three energy drink in the United States with a 4.9 market share compared to Bang's 4.4. In addition, Celsius has seen an approximately 11% increase in ACV since october 1st of 2022 and the initial launch with the pepsico distribution set network with average items carried per store increasing from an average of 7.7 to 8.3 over the same time three week time frame the convenience store channel celsius has seen the largest gain with approximately a 23 percent increase in acv since like october 1st of this year Our third quarter sales hit another record of approximately 188 million with U.S. sales totaling about 179.5 million and approximately 34 million in sequential increase from the second quarter of this year. Revenue growth was driven by over a 60,000 increase in door count from the prior quarter with convenience store additions representing 37,000 of the 60,000 increase. Club trailer expansion as well as increased items carried at locations in conjunction with increased placements at retailers, including both branded coolers at retail locations. International sales only represented approximately about 4.6% of total sales for the quarter with total sales approximately 8.7 million compared to 10.4 million in the prior year quarter. Our European revenues represented a 7.5 million of international revenue compared to 9.5 million a year ago quarter, a decrease approximately 21% with around a third of the revenue decrease associated with foreign exchange impacts as well as timing of innovation. and supply chain disruptions. Revenue for the other international markets total $1.1 million, up approximately 30% from $883,000, which included royalties from China. We believe there is significant opportunity for international growth going forward with PepsiCo as part of our distribution agreement that we entered into. Both Pepsi and Celsius are committed in expanding internationally, utilizing Pepsi's best-in-class international distribution system. While we just began our distribution partnership with Pepsi and our initial focus will be in the U.S. distribution and transitioning our distribution to the PepsiCo U.S. distribution network, we see significant opportunity to capitalize on a global scale, reflecting the changes in consumer preferences for better-for-you offerings, low and no sugar, and the need for more energy. While the U.S. transition has taken a majority of our focus to date, we expect to have additional international rollouts, details, through additional calls in quarterlies going forward through 2023. Gross profit for the quarter increased 109% to approximately $79 million, up from approximately $38 million the year-ago quarter, and gross profit margins were 41.8% and 49.6%, excluding outbound freight for the three months ending September 30, 2022, compared to 39.7% and 48.8%, excluding outbound freight in the prior year quarter. This represents a 330-point basis point increase from the second quarter gross margin percent and consistent with our expectations and discussions from our second quarter earnings conference call. We reiterate our expectations for continued sequential gross margin percent improvements through the fourth quarter, with gross margin percent expected to be in the mid-40s by year-end. Our product channel sales mix also has impacted margins as the club channel revenues has historically had a lower margin levels due to the secondary repack nature of the product. With the rapid growth of the channel, which contributed to approximately 34 million in revenue in the third quarter, and has increased our overall margin pressure, and we continue to initiate production efficiencies to improve margins in this channel, including working with our co-packers who have the capabilities to produce in line, and also so we can limit the number of secondary production facilities. Even with higher sales than originally forecasted in sales mix in the club channel, our margin guidance has stayed consistent for 2022 as we continue to optimize our supply chain and gaining incremental efficiencies against rising inflation pressures. In addition, with our transition from a significant number of independent distribution partners to the PepsiCo distribution network, this will allow our team to consolidate sales, marketing, distribution efforts, with planned associated cost benefits, which we expect to recognize and leverage through 2023 and beyond. We will also provide additional clarity on both gross and operating leverage and targets as we move through the transition, but expect to see additional leverage as we look to drive efficiencies post-transition. Some additional highlights for the third quarter, 92% of our Mulock, reported Mulock retail store locations are now serviced through our DSD network, up from 72% in the third quarter of 2021. Our MASH channel is now more or less 100% DSD service, and 99% of our convenience channel is serviced by DSD. Industry-backed third-party data continues to show accelerating 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 nationwide retailers, independent chains, and through our new partnership with the PepsiCo Distribution Network. Consumer demand for Celsius on a dollar basis accelerated in the third quarter of 2022 and has re-accelerated after the initial distribution shift on October 1st this year to the PepsiCo Distribution Network. The most recent reported Nielsen data, as of October 22nd, 2022, shows Celsius sales are up 118% year-over-year for the two weeks, 120% for the 12 weeks, and 126% for the third quarter. This compares to the total energy category, which grew 10% for the two-week period, ending 10% for the 12-week period and 10% in the third quarter over the same time period. On Amazon, Celsius is the second largest energy drink, with an 18.5 share of the energy drink category, ahead of Red Bull at a 12.01% share, and Trailing Monster at a 26.2 share on a year-to-date basis, ending October 22, 2022, and according to Stackline, total U.S. energy on Amazon. Celsius reported sales year-over-year grew 79%, compared to Amazon energy drink sales business, which grew at 39%, outpacing the category. The company placed an additional 550 coolers in the third quarter of 2022 and over 3,500 since the beginning of 2021. The company anticipates a continued acceleration of cooler placements through 2022 and into and through 2023, in addition to the incremental placements and Pepsi energy coolers, which provides approximately over 50,000 additional placements that are rolling out right now. U.S. store count now totals 174,000 locations nationwide in the U.S., growing over 60,000 doors, or 54%, from 114,000 doors, as reported in the third quarter of 2021, with additional expansion planned throughout the rest of the year and into 2023, and being accelerated by the PepsiCo distribution agreement. Convenience store locations increased by the largest by 77%, or approximately 37,000 locations to 86,000 locations at the end of the third quarter of 2022, compared to 49,000 locations at the end of the third quarter in 2021. On our co-packer front, we continue to expand our partners and scale at existing locations, improving line time priority. Our total US co-packer footprint now totals 13 that are active, which will help keep our product in stock and support our massive growth. Before I turn the call over to Jared, I want to close my prepared comments recognizing the amazing job of the entire team and our partners, which they have done. Establishing Celsius as a leading brand, driving growth in the entire energy drink category in the U.S. Our consumer demand remains robust, our portfolio is resonating with a broad consumer base, and our teams are positioned to leverage opportunities for growth going forward with our new partner, PepsiCo. I'll now turn the call over to Jared Langens, our Chief Financial Officer, for his prepared remarks. Jared?