Celsius Holdings, Inc.

ground noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Paul Wiseman, Investor Relations. Please go ahead.

Thank you and good morning, everyone. We appreciate you joining us today for Celsius Holdings' second quarter 2024 earnings webcast. Joining me today are John Fieldley, Chairman and Chief Executive Officer, Jared Langens, Chief Financial Officer, and Toby David, Chief of Staff. The speakers will take questions following the prepared remarks. The company released its second quarter earnings press release earlier this morning. And all materials are available on the company's website, ir.celciusholdingsinc.com, as well as on the SEC's website, sec.gov. As a reminder, an audio replay of this webcast will be available later today and can be accessed with the same link used to join today's webcast. Please be aware that this discussion may contain forward-looking statements which are based on forecasts, expectations, and other information available to management at this time. 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 and risk factors contained in today's press release and in our quarterly filings with the SEC for additional information which contain a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. Additionally, management will share operating results on both a GAAP and non-GAAP basis. Descriptions of these non-GAAP financial measures that we use, such as non-GAAP adjusted EBITDA, and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the second quarter of 2024. With that, I'd like to hand it over to Chairman and Chief Executive Officer John Fieldley for his prepared remarks.

Thank you, Paul, and good morning, everyone. I hope you've all cracked open a cold Celsius to kickstart our early morning start time this quarter. Celsius reported record second quarter 2024 financial results this morning across revenue, profit, gross margin that broadly reflect our positive momentum in an otherwise challenging macro environment. Despite systematic and unanticipated category growth pressure in the second quarter, Celsius was resilient and delivered delicious new innovation, expanded in-store shelf presence, and continued to bring new consumers into the category, contributing 47% of all category growth in the quarter, making Celsius the clear category growth leader. Total revenue for the second quarter of 2024 increased 23% year over year to $402 million. In 2020, for our first half, revenue increased 29% to $757.7 million. International revenue increased 30% in the second quarter to $19.6 million. Celsius achieved fantastic shelf space gains during the season's shelf resets, increasing our average Q sold per store by more than 35%, according to Sakana's last four-week read ending July 14, 2024, compared to the last four weeks ending December 3, 2023. Within the convenience channel, our average SKUs selling per store increased 43% across the same period. While we achieved strong space gains, we also began to feel the effects of the same macroeconomic factors that are pressuring same-store sales and affecting consumer purchasing habits. Just last week, one of the largest convenience chains noted their same store sales were down more than 4%. These and other factors contributed to the second quarter energy drink category slowdown. Competition within the energy category has never been greater, which is why we continue to add resources across sales, merchandising, key accounts, and field marketing. The full sugar energy category subset has stagnated for several years and the growth fight has moved to the sugar-free sector, which is now approximately half of the category. Celsius is the second largest brand within the sugar-free energy subset, and it is from here that we are driving the entire category's growth this year. We believe that we have set our business up for long-term success, but we see short-term impacts from competition and macroeconomic factors along the way. The combination of macroeconomic headwinds, delayed resets and programs, and increased competition applied a lot of pressure to our business in the second quarter. Despite these pressures, Celsius still grew at a 10 times the category growth rate in the second quarter. We responded to pressures during the quarter and saw our market share stabilize. Now, as we begin to recapture lost share, we're moving aggressively to gain our growth and momentum, and we believe that we have great programs for the back half of the third quarter and into the fourth quarter. We also expect that macroeconomic forces will continue to impact the category. With a solid set of programming, promotional programs, incentive programs, and cash in the bank, we are eager and ready to take on the challenges ahead of us. Additionally, we are formulating several fantastic programs for 2025, including new innovation, new channel and product opportunities, international expansions, and new partnerships. Our partnership with Pepsi remains strong. The added incentive program announced last quarter continues to percolate through the system and is expected to be fully ramped in the second half of this year, where we have fully incentivized our partner to lean in with us. CELSI's share in MULOC in the last four week period ending July 14th was 11%, an increase of 1.4% compared to the year ago period and down half of a percentage point quarter over quarter. Beginning this quarter, we're going to reference Cercana's new MULO Plus geography, which includes track channels captured in MULO and adds online retailers and club channel. We believe that when coupled with the convenience store geography, this measure better represents today's consumer purchasing habits and patterns. In addition, we have seen some shifting among the channels, and this metric will provide a more holistic category view. Celsius share in MULO Plus with convenience is rolling four weeks, period ending July 14, 2024, was 12.04%. The energy drink category has always been highly competitive and right now is no different. Celsius is disrupting the category status quo and we remain resilient in our pursuit to become the world's number one energy drink brand by growing the category through leadership, high quality innovation and premium marketing. Our field marketing team grew by 50% in the past year. They are a driving force behind our drill deep marketing strategy. which focuses resources on the most important markets for our growth. We currently have 16 markets that are above or within two points of a 15 share, and our Drill Jeep strategy is driving force behind our growth. Looking ahead, we are implementing several programs across the back half of 2024 to invest in our growth, such as shopper marketing programs, promotional programs, and investments across our marketing platforms. Similar to the top two competitors in the category, we believe that there is room for further pricing and this is something we believe will benefit us in 2025 and act as an offset in commodity inflation, freight lanes, our distribution infrastructure, and our supply chain infrastructure. Celsius launched three new great tasting flavors, very refreshing, perfectly timed for summer, including Celsius Sparkling Watermelon Lemonade, Sparkling Kiwi Strawberry, and Sparkling Cherry Cola. I'm sure you'll see these great new Celsius flavors poolside and at backyard cookouts throughout summer and beyond. Also, Celsius Sparkling Green Apple Cherry launched in Canada last quarter, making six delicious flavors now available in the country. Three of our most popular Celsius Vibes flavors launched as Celsius on-the-go powders in the second quarter, adding peach vibe, tropical vibe, and arctic vibe to the very portable and customizable energy powder form. We're also working on some very interesting concepts for the first quarter of 2025 and more to come on that. Non-track channels, including club, e-commerce, and food service, continue to be tailwinds to our overall growth. Club sales in the second quarter increased 30% to $88 million compared to $68 million in the same period of 2023. For the three months ending June 30th, Celsius sales on Amazon increased 41% year-over-year to $39.9 million, up from $28.2 million in the prior year period. Celsius ended the second quarter with a 19.7 share, compared to Monster with a 21.8 share, and Red Bull with a 14 share, according to Stackline's last 14-week period ending July 6, 2024. Celsius performed exceptionally well on Amazon during July's Prime Day, pushing our share in the energy category on the platform to 22.1 in the last four-week read ending July 20th, And we recaptured our number one position compared to Monster at 21.5% and Red Bull at 13.8%, according to Stackline. Approximately 12.1% of Celsius total North America sales to PepsiCo in the quarter was to the food service channel, with strong results in workplace, restaurants, recreation, lodging, and gaming sales. Celsius increase in international revenue in the second quarter was driven by improved velocity and brand awareness. Growth in Canada continues to exceed our initial expectations and the product is performing well across all platforms with notable strength in the club and convenience channels. We are running our new marketing entry playbook and building a solid foundation in gyms and fitness communities, as well as making new entries into the food service category. Sales of Celsius began in UK and Ireland in the second quarter, and we're following our international expansion playbook to see product launch with a key retailer and grow into national launch. Similar to Canada, our progress in these new global market is exceeding initial expectations. Our plans for Australia, New Zealand, and France remain on track for launches later in the year, and we're expected to continue to grow our global growth strategy this year by pursuing favorable distribution partnerships and opportunistic energy drink markets. Here in the States and abroad, Celsius marketing and sales teams are spreading the Celsius Live Fit messaging and supporting our customers' pursuit on their own health and positive fitness lifestyles. Our 100 days of summer programming is meaningful, increasing the number of eye-catching in-store displays featuring exciting Celsius marketing activations like our Ferrari F1 Titan promotion, which is designed to increase customer trial and loyalty. As I mentioned earlier, we continue to invest in our marketing and sales to drive continued growth and to be the most valuable beverage partner to our retail customers. In the last 12 months, we've grown our field sales team by more than 250%, and we're still hiring to drive growth and opportunistic markets. I'll now turn the call over to Celsius Chief Financial Officer, Jared Langens.