Celsius Holdings Inc at Morgan Stanley Global Consumer & Retail Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Serotta - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>To start out with, clearly, we're not in the place we thought we'd be from sitting here a year ago. Growth has slowed more than expected. Looking back, can you discuss the drivers of the slowdown and sort of disaggregate that between some of the cyclical factors like macros in the category and some of the more structural factors, your much larger base today, increased competition, things like that?

Question: Eric Serotta - Morgan Stanley - Analyst : Great and maybe staying on the competition area, Red Bull clearly is -- has had a lot of early success or initial success with some of their sugar free flavor SKUs. I know you talked about it as being sort of a net over time positive as the category transitions more towards sugar free but at the same time, Monster is also making a bigger push there. So I guess what are you kind of doing to protect your position in the -- in that sugar free more of a lifestyle segment and then go back on the offense?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then just staying on competition for a moment, Alani has had some nice momentum this year. They were -- they're a little promotional at the start of the summer, but some of their fall seasonal did well and I think you could look back and say they've done a nice job this year. So I know they interact a bit with your female consumer. I guess where do you see the interaction between Celsius and Alani and I guess what are you kind of doing to kind of protect the competitive mode there?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then coming back to the distribution and shelf space that you mentioned. I think in response to my initial question, obviously it's a big, big, somewhat belated but large shelf space game this year, which unfortunately coincided with the category slowing. How are you looking at the space and distribution potential from here whether it's, I guess we could separate it into space, items per store, even doors?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And I can't really talk about space without talking about velocity. Obviously, the velocity has been a bit softer than you were expecting that everyone was expecting this year, not really unusual given the -- your distribution is still running up 30%, 40%. So what do you think drives an improvement in Celsius velocities from here and any perspective as to how your velocities compare to the Alani's and GHOST's out there and sort of how do you close the gap with Monster and Red Bull?

Question: Eric Serotta - Morgan Stanley - Analyst : And what do you have within your control to sort of drive that or push that? Obviously, you're not controlling how much people are drinking, but how do you stimulate the demand for the existing user to drink more?

Question: Eric Serotta - Morgan Stanley - Analyst : Turning out of the Pepsi inventory levels, first, in retrospect, what were the drivers of the big destocking that you saw this year and then kind of what's your visibility from here as you sit here on December 3? I know Jarrod made some comments on the third quarter call that kind of expecting anything from a slight tailwind to $15 million headwind. Six weeks later, where are we tracking versus that realizing there's always a little bit of wiggle room around year end?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then staying with Pepsi, clearly one of the benefits of getting on the Pepsi trucks was access to a lot of these alternative channels, non-track channels. We all get the track channel data biweekly, a lot of people in the room get it weekly but can you give us some perspective as to how the business is progressing with Pepsi on a takeaway basis, not a sell-in but a sell-out basis with some of these non-track channels like food service, college and universities, hospitals, hotels?

Question: Eric Serotta - Morgan Stanley - Analyst : And then you guys have been pretty successful over the years. Your drill deep strategy has served you well where focusing on a limited number of markets and really driving the share there and driving your activations and then sort of expanding that over time. How are you looking at that strategy for 2025? Is it more markets, is it staying --drilling deeper with the markets that you have? '25 is a bit of a backfill and recovery year. And then when you look at some of your more developed markets today, kind of what's the latest on your positioning and I think there was -- was it a dozen markets at 15% share or something along those lines? What's the latest figures today? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 8:00PM, CELH.OQ - Celsius Holdings Inc at Morgan Stanley Global Consumer & Retail Conference

Question: Eric Serotta - Morgan Stanley - Analyst : Great. Can we come back to the source of volume and the bringing in new users, and the creating new occasions? You mentioned how that's kind of dried up a bit during a tougher time for the category. I guess what gives you the confidence that, that reaccelerates with macros? Have we -- has the category or the brand, I'm not saying it has, but has it matured to a point where you're -- where maybe you're just bringing in fewer users because more people have tried it in the past?

Question: Eric Serotta - Morgan Stanley - Analyst : Yeah. The category does seem to have picked up in scanner over the past six, eight weeks or so. Are there any that the main breadcrumbs that I see, are there other breadcrumbs that you could share with us in terms of category pick up or is it more what you're seeing in terms of the scanner and (multiple speakers)

Question: Eric Serotta - Morgan Stanley - Analyst : Great. So turning to margins. So despite some exaggerated quarterly volatility this year, with the whole Pepsi inventory move and the related promotional accounting, you're -- you've said you're basically on track to come in line with the initial high 40s gross margin target for the year. So can you discuss some of the puts and takes for gross margins as you look out to next year in an environment of, top line, hopefully normalizing?

Question: Eric Serotta - Morgan Stanley - Analyst : Right. And then so medium term, you mentioned the Monster as the gold standard or as the bogey here. So I guess what are the building blocks to take you from high 40s to Monster kind of margin over time adjusting for the freight accounting difference. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 8:00PM, CELH.OQ - Celsius Holdings Inc at Morgan Stanley Global Consumer & Retail Conference

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then turning to pricing. So Monster went out with their 5% price increase, November 1. I think you said on the second quarter call that you'd be taking pricing this year, but you weren't expecting it to show up in results. So what have you done in terms of pricing to date, both in terms of list and shelf price and I'll follow up with something after.

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then even though Monster has gone out with pricing, price increase for November, we were talking -- earlier, there's been some pretty hot price points in the market, bang for a buck of can. I think I gave you the example in Connecticut of Monster at four for $8 which $2 a can price. I can -- I think you probably have to go back to 2017, 2018 to find that kind of promo. So I guess how -- you could always find crazy pricing in some market. But I guess what are you seeing in terms of the overall promotional environment for the category and is that short term noise with Monster and you guys are taking pricing or is this --

Question: Eric Serotta - Morgan Stanley - Analyst : Yeah. And then, Red Bull certainly had a lot of traction with their sugar free flavors. Sometimes with these in and outs, you see them hit and then kind of fade. Monster, it sort of seems like showing some traction with this Ultra Vice Guava. [Celsius] could say, well, how is that different from last year's Strawberry Dreams? I guess what are your expectations in terms of some of this new innovation? Is this game changing for these competitor brands or is this just kind of the typical innovation that you see?

Question: Eric Serotta - Morgan Stanley - Analyst : Yeah. And in terms of the well, maybe touch on international first. Canada sort of had a really strong start out of the gate and you got to five share in Canada in less than a quarter or so. What's the latest in terms of how you've done in Canada since then and then can you update us in terms of the initial progress in the UK and then when some of the other markets that you announced with Centauri are coming online?

Question: Eric Serotta - Morgan Stanley - Analyst : Yeah. And then just coming back to the US a bit, can you remind us in terms of what you have in terms of the innovation pipeline for this year? How that compares to previous years? I think it was last year, I guess it was late 2022 that you had essentials with 7-Eleven and then or late '23 that you had essentials with 7-Eleven and then you launched that nationally earlier this year. So should -- are you -- is this year's innovation bigger, smaller, about the same as last year's and anything in terms of timing or cadence?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. And then performance on Amazon has been pretty robust this year. Any read in terms of Prime Day, any sort of change in focus in terms of your dealing with Amazon or your marketing on the Amazon platform?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. So to keep you on time and wrap up here, the energy category has always been competitive, nothing new to you or Celsius or to anyone in this room. What do you look at as sort of what really differentiates Celsius from either the challenger brands below you or the Monster and Red Bull as the incumbents that you've been taking on over the years?

Question: Eric Serotta - Morgan Stanley - Analyst : Great. Well, with that, I want to thank you again, Toby and I look forward to having you back here next year.