Celsius Holdings, Inc.

Greetings. Welcome to the Celsius Holding, Inc. First Quarter 2023 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to introduce your host, Cameron Donahue, Investor Relations for Celsius. Thank you, Cameron. You may begin.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining us today for Celsius Holdings' first quarter 2023 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'll open the call to your questions and instructions will be given at that time. The company released their earnings press release earlier this afternoon, and all materials will be available on the company's website, celsiusholdingsinc.com. As a reminder, before I 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 and earnings press 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 May 9, 2023. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to review 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. We achieved record sales for the first quarter of approximately $260 million, an increase of 95% from last year's first quarter of $133 million, exceeding the $200 million revenue threshold for the first time in company history. And we saw a sequential increase from the fourth quarter of sales of $178 million, exceeded it by $82 million, or 46% growth sequentially. Our North America revenue increased 101% for the quarter to $249 million, up from $124 million in the year-ago quarter. Celsius continues to be the top driver of growth within the energy category and was the number one dollar growth brand in total U.S. MULOC energy for the last 52 weeks, ending as of March 26, 2023, growing approximately $552 million in increased retail sales and contributed to 23% of category growth on an overall increase of 139.6% versus the year-ago period. Per IRI, in the last four weeks, ending as of March 26, 2023, in total Moorlach Energy, Celsius is the number three energy drink brand in the United States, reaching a new market share record totaling 7.5%, doubling its 3.7% share a year ago. As Celsius and Pepsi continue to synchronize our organizations, we continue to see opportunities for future efficiencies. In the first quarter, we experienced an inventory build quarter over quarter from December 31, 2022. We expect this increase was due to anticipated retailer resets and to build inventory levels. We will continue to work with Pepsi to make sure there is adequate inventory and update shareholders quarterly if there is any significant deltas that impact the warehouse and center inventory levels. Jared will provide additional details shortly. We continue to see growth across all channels, including those non-tracked, with the club channel sales totaling over 47 million for the quarter ending March 31st, 2023, up 77%, compared to 26 million in the first quarter of 2022. We also just hit a new record on Amazon, Celsius is now the second largest energy drink brand with a 19.1 share of the energy category as of the last four-week period ending April 22nd, 2023 per Stackline Energy Drink Category total U.S. data. In addition, we continue to expand growth opportunities and non-track food service channels and are gaining more distribution in colleges, universities, hospitals, hotels, eateries, and casinos and more. Overall, food service represented approximately about 10% of our PepsiCo revenues, and we see significant opportunities to scale and grow over time. We have been extremely happy with our PepsiCo partnership and see a long runway of growth ahead of us across a variety of channels, including expanding in retail, convenience, and food service. As highlighted in our earnings supplement for the four-week period per IRI SPIN's total energy data ending March 26, 2023, as stated, in MULOC, Celsius is the number three energy drink brand in the United States, now has a 7.5 market share, doubling from its 3.7% share a year ago, reaching an all-time new high. In addition, in MULOC, Celsius grew its ACV to a record 95.4% versus 69.5% in the year-ago period, which is a tremendous achievement by both our teams and our partner Pepsi. And in convenience, Celsius has gained an additional 37.7 points of ACV growth versus the prior year to end the period at a 93.4% compared to 55.7% of ACV in the prior year. This provides a tremendous opportunity as we have gained greater availability across the country in the convenience channel and are now gaining more awareness with consumers. Internationally, sales grew 15% growth rate for the quarter, totaling 11.4 million compared to 9.9 million in the first quarter of 2022. We believe there is significant opportunity for international growth going forward with PepsiCo. While we just began our distribution partnership with Pepsi and our initial focus has been on the US distribution transition to their network, we have begun initial discussions and we see significant opportunities to capitalize on global scale in the future, reflecting the changes in consumer preferences for better-for-you offerings. While the U.S. transition has taken a majority of our focus to date, we do expect to announce additional international expansion details in the future. With that said, we look forward probably likely to early 2024 for opportunities to roll out internationally, with 2023 being the year of planning around logistics, production, distribution, and marketing. The company achieved a record non-gap adjusted EBITDA of $48.7 million for the first quarter, representing over an 18% of sales for the period. This was driven by not only a record sales, but we also saw benefits across the timing of marketing and sales programs, as well as the results of gaining operational leverage across G&A. Although we saw some very good leverage across our SG&A, we would expect our investments to increase during the summer season of Q2 and Q3 of this year as we continue to drive growth awareness profitably and are entering into a number of campaigns designed to grow brand awareness. The company sees opportunities to drive incremental efficiencies to the back half of 2023 from expected improvements in gross profit margins as we optimize and synergize our supply chain and gain more efficiencies. In addition, We see additional leverage opportunities as we scale to drive further efficiencies in our SG&A. To close my prepared remarks, we achieved the highest quarterly dollar sales growth in company history in the first quarter. And as our previous recorded highest quarterly record revenue was in Q3 of 2022, we exceeded by over $70 million. We are gaining market share at the fastest pace in company history. while at the same time drove the highest quarterly EBITDA margin of over 18 percent, demonstrating the leverage in our operating module. We believe we have significant runway ahead of us and are excited about the spring resets, driving additional shelf space in both new and existing customers while optimizing our placements. Celsius is now an established leader in the energy category, driving growth in the entire category with incremental opportunities for further growth as we continue to scale and leverage our partnership I will now turn the call over to Jared Langens, our Chief Financial Officer, for his prepared remarks.