Celsius Holdings Inc at Stifel Cross Sector Insight Conference Transcript

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

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : So just to start, the Pepsi transition has been unbelievable. So Pepsi took a stake last summer, transitioned over in the US to being your distribution partner. It's been as smooth as -- I think anyone can recall a beverage distribution transition has been. What surprised you? What could be better from here, kind of where do we go from specifically looking at the Pepsi distribution standpoint?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : In thinking about the ordering patterns, right, because you transition, every customer, every supplier relationship is going to be a little bit different. I know you had a little bit more sales into the channel last quarter. You increased distribution points. Do you think the channel inventories are in the right spot at this point as you head into summer? You think you still need more product to be sold in so that they don't run out of product, especially given your sales trends?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : We're going to get into the scanner data and the sales trends, I think just to frame it for folks, maybe a little bit less familiar, if you think about sales as the output, it would be inputs of how much distribution you have times the velocity that you have in that distribution. So if you sit there and just start talking about distribution points, I think one of the things that people ask about is where is this going, right? Distribution has about doubled since early October when you switched over to the Pepsi system. But if you compare to where Bang was at peak through a similar distribution system, you're still probably 20%, 30% less. If you compare to where Monster is today, it's still about 50% of where they are. So what's the right level of distribution points as you think about this today? Not going to put you on the spot.

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Yeah. And that's a good way to think about -- asking the question in a slightly different way. So if you sit there and you take your high-share markets like South Florida, how do you think about the total facings that you have there versus the national average? And is that a reasonable level to get to over time, if you were to build into that share?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Yeah. I mean, I am going to keep asking the question in different ways too because I just think it's such an interesting opportunity for distribution points. So as you think about the energy category, right, this is a category that's that arguably mature in the US, definitely even more so outside the US and yet it's continuing that shelf space. So if you think about the opportunity within the stores, right? This isn't static to say you're taking share away from somebody else, it's about the category being additive and gaining share in total. So how do you think about the overall level of doors, level of placements or energies category today? And what's the opportunity over time? It is sort of a sub-segment to the question. How do you think about this idea that if an average store has one energy cooler, that you're kind of bursting at the seams and you get a second or third in places where that's an opportunity? And how does that play into the thinking?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : And you talk about the (inaudible) You talked about it on earnings calls. You cited data to support it. It seems like CELSIUS is a lot incremental, whatever that means to the category, right? So you're going less after Monster and Red Bull, these are newer consumers to the category. So how do you think about what the overall incrementality is? And how do you think about that from a category perspective, going back to the last question in terms of aiding overall expansion?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Yes, and we sit there and think about the channels of opportunity here, right, selling into more traditionally, historically grocery and food. And now transitioning into convenience stores, which is a much bigger opportunity as a driver of category growth. How do you think about framing the opportunity? Just to put perspective behind, 70% of Monster and Red Bull sales are from the convenience channel. Your sales today, about 56% are from C-stores. That's up from 51%, 52% before the Pepsi deal. How does that evolve over time? And what's the opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : I think what's interesting is you're seeing growth across the whole business by channel. It's just very fascinating. We haven't seen something like that in a while. And transition over to the sales velocity side, I think what's most interesting is distribution points, as I said before, have doubled since October. And yet, sales velocities is, the actual takeaway, the amount of repeat purchase is growing strong double digits with the two-year accelerating, suggesting that in-demand is actually accelerating here. So intuitively, you would think you double distribution points and therefore, sales velocities would go down to some degree, right? Not necessarily decline, but just decelerate. And it hasn't happened. Why?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Free cans versus purchase cans. This might be a different story. If we were selling them hen we'd see what the velocity look like (multiple speakers) Mostly conferences, that's the next batch of growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : And If you think about the convenience store channel, because these are single-served cold packages sold typically at the highest average range, does that help velocities as well as C-stores expand from where you are to where potentially you could go, you take Monster and Red Bull's proxy?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : So let's take a step back, who is the consumer for CELSIUS, right? What is driving all of this consumption growth, all this velocity growth? So who's the core consumer? How do you think about you mentioned awareness before? Where's the brand awareness today? And how do you accelerate REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference that? And maybe just to complicate the question, how do you compare it to Monster and Red Bull, which presumably are much better known brands?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Yeah, and I think the numbers would bear it out that even SKUs a little bit older to the near your target 18 to 24 year old rate. Look at the success in food, that it's the most mature channel. Look at the success in Costco, right? These are family-oriented purveyors. And so obviously, there's just some incrementality there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference We think about the brand awareness so let's go back to that. So I want to use that as a stepping stone international. So let's start with the US and how you think about brand awareness. And then I want to ask the same question on international, but let's start with the US please.

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : In media spend, advertising spend, however, you want to think about it, 20%, 22% of sales, roughly. It seems like the right number on a go-forward basis. How do you think about properties, the sponsorships, the athletes, the events that you want to go after? You want to make those ideally a global event sponsorship so that you can increase brand awareness. How important is that? How do you think about the US versus international spending? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Great. And we've got a minute left. So maybe last question here thinking about innovation. I think one of the things that people maybe don't appreciate from a Monster perspective is being able to expand usage occasions through innovation has created this runway for growth that I think was a lot longer than people had expected. How do you think about using innovation to do the same thing? And what does it look like to you over time?

Question: Mark Astrachan - Stifel Financial Corp. - Analyst : Awesome. We could probably go another half an hour, but we're not. So John, Toby, thank you, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 06, 2023 / 6:25PM, CELH.OQ - Celsius Holdings Inc at Stifel Cross Sector Insight Conference