Celsius Holdings Inc Q3 2024 Earnings Call Transcript

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

Question: Jim Salera - Stephens Inc. - Analyst : Yes, good morning. Thanks for taking our question. I wanted to maybe drill down on the cadence as we close out 2024 and move into 2025. Just with the combination of some of the increased promotional you guys have in the channel, the new flavor launches, is it correct for us to assume that we should see the trends in the scan data have improved sequentially month-on-month as we move through 4Q and then go into 2025?

Question: Jim Salera - Stephens Inc. - Analyst : Okay, great. And then maybe if I can sneak in a quick follow-up. If we think about the pressure that the category has seen, obviously, still one of the better categories across retail. Just any thoughts on what you would want to see out of the consumer that would kind of really accelerate category growth and drive energy drink category growth as we go into next year?

Question: Jim Salera - Stephens Inc. - Analyst : Great, thanks.

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Hey guys, good morning. I guess a couple of things. The first is you're specific to mention in your prepared remarks that the new incentive structure with Pepsi and that you're positive about it. Can you give us maybe some more details on what's behind that and why that should drive category acceleration from where we are now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 1:00PM, CELH.OQ - Q3 2024 Celsius Holdings Inc Earnings Call

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Thank you. And I guess the second question is, are they done? Is inventories in the right place? Do we just move on with consumption from here? Presumably, you've chatted with them and hoped for no more surprises. But I think we'd all like to know if they're at the place they want to be.

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Okay, thank you. Did I hear that right, another $15 million for 4Q? Is that what you just?

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Okay, got it. Thank you, guys.

Question: Mark Astrachan - Stifel Nicolaus and Company, Incorporated - Analyst : Thanks. Morning, everybody. Just quickly following on that last comment. I guess the question, obviously, that's the question that everybody keeps asking over and over again. But your range of potentially $15 million of headwind to slightly positive. I assume we're also here trying to look at this from our desks. The best way to think about this would be whatever end demand for the scanner data would look like, right? So if your sales trends are growing somewhere around where they are now, low to mid-single digits, how does that look from an inventory destocking or restocking perspective? I guess, maybe something to benchmark it relative to current performance would be helpful. And then I've got a couple of other questions.

Question: Mark Astrachan - Stifel Nicolaus and Company, Incorporated - Analyst : Yes. That's helpful. And then on market share. So I think, John, you said resilience, I think that was the word used in the prepared remarks. It is hanging in there. But I suppose if you think about the share, it's still down, I don't know, (inaudible) from peak in May. I guess the question is, where do you think that consumer has gone? And what do you think Celsius can do to regain that consumer?

Question: Mark Astrachan - Stifel Nicolaus and Company, Incorporated - Analyst : Got it. And just to follow up on that. So your share, it sounds like you're saying is weaker in C-stores than it would be in mass, Amazon, Costco. Is that the way to think about it?

Question: Peter Grom - UBS - Analyst : Thanks, operator. Good morning, everyone. So I guess I wanted to ask about the inventory. But maybe just the assumption for a slight benefit versus the $15 million headwind. Is this something you plan to update us on as we move through the quarter, maybe similar to what we saw in 3Q? And then of that $15 million headwind, what's kind of underpinning that assumption? I guess I'm just trying to make sure we don't have a similar negative update, if you will versus similar to what we had in September where things came in far worse. And I guess just building on that, you mentioned better alignment several times throughout this call. But how would you compare your visibility today on the inventory dynamic versus maybe what we saw in the spring and the summer?

Question: Peter Grom - UBS - Analyst : Okay. So that's helpful, Jarrod. I guess if you were, as we stand here today is the best way to think about 4Q North America sales growth is the kind of take what we see in underlying scanner data, call it, this low to mid-single digits and back out some sort of assumptions, if we're being conservative, $15 million? Is that fair?

Question: Peter Grom - UBS - Analyst : Okay. And then one quick follow-up, just maybe building on the question on market share. You unpacked some plans here, promotions, innovations. But I guess a lot of your peers are kind of doing similar things. So I'd be curious what you think is actually different today versus maybe what you were doing over the course of the summer. And then within that, we're kind of at a point where if you kind of look at the sequential market shares, if you hold here, you're going to start to see year-over-year decline. Is that something you think we should be braced for as we think about the tracked performance looking out over the next several weeks here?

Question: Peter Grom - UBS - Analyst : Got it. Thank you so much. I will pass it on. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 1:00PM, CELH.OQ - Q3 2024 Celsius Holdings Inc Earnings Call

Question: Kevin Grundy - BNP Paribas - Analyst : Hey, good morning, everyone. A couple of questions for me. Just kind of zooming out a bit, but kind of picking up on a lot of the line of questions around (inaudible) . Has there been consideration around introducing formal guidance both near term and long term? And I ask that in the context, number one, historically you pointed to Monster. We can agree they're kind of an outlier, whereas pretty much everyone else in staples issue some sort of guidance, number one. Number two, I would say the range of outcomes in the US now is a heck of a lot more narrow than it was, my goodness, even probably like just five, six months ago. Because I think, and then lastly, I think you guys would know, it's not lost on you for a moment. I think there is a strong desire in the marketplace for greater visibility, more sort of credibility around the results and kind of where we're going both near term and long term. So your feedback there, your thoughts there would be appreciated. And then I have a follow-up.

Question: Kevin Grundy - BNP Paribas - Analyst : Okay. Thanks John. Okay. Follow-up, unrelatedly, international expansion. So I think in the past, there's been somewhat of a more measured, or even today, for that matter, a more measured sort of approach. And I think the thinking was understandably that there's this massive opportunity in the US and share was just strictly sort of up (technical difficulty) , and that's not when the company finds itself today. So is there a sound school of thought, if you will to expand international much more aggressively than the company is today? You're well aware of where your international business is as a percent of mix relative to Monster. So it seems like that's a potential value trigger where the company can really lean in to offset what has been a pretty marked deceleration in the US business. So it'd be great to get your thoughts there. And then relatedly, do you think you have the right team in place, the right leadership internationally in place to drive that sort of expansion?

Question: Kevin Grundy - BNP Paribas - Analyst : Okay. Thank you guys for all the color. Appreciate it. Good luck.

Question: Michael Lavery - Piper Sandler Companies - Analyst : Thank you. Good morning. Just wanted to come back to shelf space and the resets and maybe get a sense of how much that's already set for 2025 and kind of what updates you can give us on it. And also curious just maybe how you see the positioning competitively. Compare and contrast maybe how you see yourself against Ghost and if it's joining forces with KDP. Does that change anything about the competition for shelf space, if not maybe for this round of resets, maybe beyond? Just love to understand a little bit better how that is all set out.

Question: Michael Lavery - Piper Sandler Companies - Analyst : That's helpful. And just a follow up on the balance sheet. You've put a little bit of the cash to work for the Big Beverages acquisition, but there's still a big pile there. Maybe any thoughts on how to deploy that and, or, I guess, just you touched on some of the strategic thinking on being vertically integrated. Should we expect more of that to come?

Question: Michael Lavery - Piper Sandler Companies - Analyst : So opportunistic, but not necessarily committed to further vertical integration, just depends.

Question: Michael Lavery - Piper Sandler Companies - Analyst : Okay, great. Thanks so much.

Question: Eric Serotta - Morgan Stanley - Analyst : Great. Thanks for squeezing me in guys. Two quick questions. First, how are you thinking about kind of evolving the execution playbook for next year? It seems like, clearly, Red Bull is on the offensive going after the sugar-free flavor space. They have been since the summer. Winter seasonal, realizing it's early, but it seems to be off to a strong start, and Monster having a big push this fall and upcoming winter and sugar-free. So how are you looking to evolve the playbook next year, whether it's drill deep strategy or any other execution things? And second, on pricing, surprised it didn't come up already. But I believe that Monster's price increase was, a list price increase was set for November 1. Have you guys communicated anything to the trade yet? And if so, what's the time line and magnitude?

Question: Eric Serotta - Morgan Stanley - Analyst : Got it. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 1:00PM, CELH.OQ - Q3 2024 Celsius Holdings Inc Earnings Call