Celsius Holdings, Inc.

Good morning, and thank you for joining Celsius Holdings' first quarter 2025 earnings webcast. With me today are John Fieldley, Chairman and CEO, Jared Langans, Chief Financial Officer, and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our first quarter earnings press release was issued this morning with all materials available on our website, ir.celciusholdingsinc.com, and on the SEC site, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward-looking statements except as required by law. Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of the risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We'll present results on both a GAAP and non-GAAP basis. Non-GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and their GAAP reconciliations are detailed in our Q1 earnings release. And non-GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John.

Good morning, everyone, and thank you for joining us today. Celsius navigated a dynamic operating environment in the first quarter while continuing to invest in our core brand, product innovation and operational scale. We saw business fundamentals strengthen through the quarter and are encouraged by the positive momentum heading into Q2. While the Alani new acquisition now closed, continued gains in retail shelf space and strong international growth across both legacy and new markets, we are confident in our strategy and believe that we are well positioned to lead the modern energy category. Energy drinks are evolving, no longer just an impulse purchase. Functional modern energy is becoming part of consumers' daily routines, lifestyles, and pantry staples. Celsius is uniquely positioned to lead this evolution with a portfolio of leading brands built around fitness, functionality, and better-for-you energy. As previously announced, we successfully closed the acquisition of Alani New on April 1st, adding a second billion-dollar brand to Celsius Holdings' growing functional beverage platform. Together, we are well-positioned to lead the modern energy revolution with great product innovation, an excellent network of distributors and retail partners, and a team to pull everything together. Celsius continues to pursue operational excellence. To support this commitment, we appointed Eric Hansen, our first president and chief operating officer in March. Eric brings nearly three decades of food and beverage leadership experience, including senior roles at PepsiCo. We believe that his experience will help us drive operational excellence, scale, and unlock greater efficiencies in our partnership with Pepsi. our largest customer and North American distribution partner. Our big beverages facility, now fully integrated, provides us greater manufacturing flexibility, faster innovation cycles, and it can accommodate a second production line in the future within its current footprint as demand scale for Celsius products and portfolio. For the first quarter of 2025, revenue totaled $329.3 million, a 7% decline compared to the prior year quarter, reflecting three primary factors, slowed velocity in the first quarter, timing and structure of our U.S. distributor incentive program, and increased retail promotional programs. It's also important to remember that we were lapping a very strong first quarter in 2024 when we began nationwide distribution of Celsius essentials and had elevated dedicated retail promotion takeovers providing strong tailwinds. Adjusted EBITDA for the first quarter of 2025 was 69.7 million with a margin of 21.2%. Gross margin expanded 110 basis points to 52.3%, supported by sourcing efficiencies for raw and packaging materials. International revenue grew 41% to 22.8 million, demonstrating strong organic growth in our legacy markets, as well as our newer expansion markets, including the UK, Ireland, France, Australia, and New Zealand. As previously noted, we have a grounded approach to global expansion, but we are pleased to see the progress that has been made thus far and would look for this component of our business to pick up in the future years as we expand further within new markets and adding additional markets. In the U.S., track channels, Celsius held a 10.9% dollar share for the 13 weeks ending March 30th, 2025, according to Shekhana. We've held steady in category share, despite a challenging consumer environment, increased competition, and strong pricing action by other category players. Alani New retail sales increased 88% year-over-year, reaching a 5.3% share, up 221 basis points. Just last month, Alani New surpassed $1 billion and trailing 52-week retail sales. This extraordinary achievement reflects the strength of the brand's connection with consumers and the accelerating momentum in the better-for-you functional beverage space. Combined, the Celsius Holdings portfolio captured a 16.2% dollar share in the quarter ending March 30th, an 81 basis point increase year-over-year. Together, Celsius and Alani & You accounted for approximately 20% of total energy drink category dollar growth in the first quarter of 2025, following a strong 50% contribution to total category growth in 2024. We are focused on strengthening our core Celsius brand, accelerating sales, increasing velocity, and growing our in-store presence with consumer-centric innovation and a new exciting marketing campaign that will begin this summer. As we look forward the second and third quarters this year, we expect to continue gaining incremental space at retail, helping to drive greater consumer awareness and flavor availability, including recent innovation like Celsius Playa Vod, Retro Vod, and Mango Lemonade. According to Sukana, our average item selling per store within the Celsius brand family increased by 4.1 items and MULO Plus with convenience during the first quarter. with even greater gains in the food and chain convenience channels, underscoring the continued expansion of our in-store presence. This year's gains are particularly meaningful because they lap the strongest shelf reset cycle in our company history, which were reported during our Q1 2024 earnings call. Dollar sales for sugar-free energy drinks surpassed full sugar varieties for the first time in 2024, And the incredible momentum of these Better For You functional beverages drove 86% of category growth in Q1 2025. Celsius and Ohlone energy drinks and powders are 100% sugar-free, and we are leaders in this growing segment. Our live fit identity, health focus, aspirational, daily functionality deeply resonates with today's consumer. We believe that female consumers represent a large and underserved segment of the energy category, and Celsius is uniquely positioned here with a greater gender-balanced consumer base. The addition of Alani New, a brand beloved by women, strengthens this advantage even further. Innovation continues to fuel our overall growth. In Q1 2025, we launched a new core vibe and essential flavors, and we expanded our multi-pack offerings, which now represent approximately 28% and 55% of our retail sales mix in Moolo Plus convenience and Moolo Plus. Further bolstering our place within the pantry and confirming that Celsius modern energy is going mainstream. Our launch of Celsius hydration, a new line of zero sugar, zero caffeine electrolyte powder sticks extends our brand into the fast growing 1.4 billion dollar hydration powder category food service continues to be a strategic growth channel for celsius in q1 2025 we expanded into more than 1800 home depot locations increasing brand presence and everyday on-the-go consumption moments we also recently began rolling out celsius in 18 000 subway locations nationwide a significant win that enhances both distribution and visibility during meal occasions. These new points of availability reflect our growing role in functional daily energy. Food service now represents approximately 13.4% of North America sales through PepsiCo. And we see compelling runway ahead as we deepen our presence across work, retail and restaurant locations. Our marketing initiatives continue to drive awareness and trial. Highlights in Q1 include our NIL March Madness campaign with 136 athlete partnerships. The launch of Jaden Daniels as the first ambassador for Celsius Hydration. A targeted activation with MLB star Juan Soto to promote Playa Vibe at Walmart. We are increasing our marketing investments behind our core Celsius brand and our live fit identity. These investments will support our strategy of reaching more people in more places more often. Beginning this summer, you will see bold story driven campaigns showing how Celsius helps people live fit, achieve their goals and align with wellness driven lifestyles. Overall, we are pleased with the improvements in business fundamentals we saw exiting the first quarter and the momentum we are building into the spring and summer seasons. We believe Celsius Holdings is uniquely positioned to lead the modern energy category with a portfolio of brands that addresses the growing consumer demand for functional, better for you beverages across energy, hydration, wellness occasions. With innovation, operational leverage, international expansion, and strong retail partnerships, we are confident in our ability to drive sustained growth and value creation in 2025 and beyond. Thank you. I'll now turn the call over to Jared to review our financial results in more detail. Jared?

Thank you, John, and good morning, everyone. First quarter revenue totaled $329.3 million compared to $355.7 million in the prior year period, representing a 7% decline. As John noted, revenue performance reflects soft Q1 velocity, the timing and structure of our main distribution partner incentive program, timing and breadth of our retail promotional allowances weighted later in the quarter, and lapping the nationwide launch of Celsius Essentials in Q1 2024. Gross profit totaled $172.4 million compared to $182.2 million in the prior year period. The year-over-year gross margin expansion of 110 basis points to 52.3% was supported by sourcing efficiencies for raw and packaged materials. We are pleased with the continued expansion in gross margin even as we invest in growth and support our innovation. Selling general and administrative expenses totaled $120.3 million compared to $99 million in the prior year. The increase reflects transaction-related expenses for the Ohlone new acquisition along with continued investment in global sales, marketing, and organizational infrastructure. Non-GAAP adjusted EBITDA was $69.7 million for the quarter, representing a 21.2% margin compared to $88 million and 24.7% margin in Q1 2024, driven by the organizational investments. Net income attributable to common shareholders was $34.4 million, or $0.15 per diluted share. Non-gap adjusted diluted EPS was $0.18, compared to $0.27 in the prior year period. As of March 31, 2025, our balance sheet remains strong, with $977 million in cash and no outstanding debt. It is important to note that these figures reflect our cash position prior to the close of the Alani New Acquisitions. In connection with the closing on April 1st, we utilized a mixture of $900 million in debt, approximately $400 million in cash, with the remainder in stock to acquire Alani New, which will be reflected in the Q2 financial statements. We remain confident in our liquidity position and our ability to support future growth initiatives. Innovation continues to support growth and momentum across our retail channels. Recent innovation, including the Essentials line and Multipacks, are contributing meaningfully to retail sales and Celsius hydration, launched late in January, is gaining early traction as we expand into the high-growth hydration powder segment. We believe that our distribution gains across the portfolio, positive spring shelf resets, and expanded fuel sales and merchandising execution continue to position us well for the important summer selling season. Looking ahead, our focus remains on improving velocity, expanding household penetration, growing share across functional beverage occasions, and delivering operational efficiency through scale. We remain confident in our strategy and our ability to remain resilient through the uncertain economic times thanks to our robust supply chain operations as well as mitigation strategies which we are pursuing to best position us for long-term advantage. Before I turn it back over to the operator for questions, I want to mention that we are planning a public call this quarter to discuss modeling and general financial considerations for Alani New. Details will be communicated in advance. As a part of this call, we will put together pro forma views of our combined business and provide further insight around the purchase accounting impacts of the acquisition, such as inventory step-up and how that will impact Q2 as we sell through the inventory on hand at April 1st on the acquisition date, as well as valuations around intangibles and fixed assets, which will result in increased appreciation and amortization. With that, I'll turn the call back to the operator to open the line for questions. Thank you.