Celsius Holdings Inc Q4 2024 Earnings Call Transcript

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

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Hey, guys. Good evening. Can you maybe talk about the positioning of the two brands and how you plan to offer maybe any overlap or how differently they may or may not be positioned?

Question: Kaumil Gajrawala - Jefferies LLC - Analyst : Okay. Got it. And how are you guys thinking about distribution. Is your preference to people owning refine AB network at two major customers maybe any inventory issues as you have before, is the preference to consolidate it in along about -- and then maybe is there any involvement of Pepsi financially or how those operating?

Question: Jim Salera - Stephens Inc - Analyst : Yes. Good afternoon. Thanks for taking our questions. I wanted to maybe drill down on how you think Alani Nu is going to add incrementality and maybe offering a little bit more focus on the Celsius piece of the portfolio. And -- what I mean by that is if we look at the overall energy drink category growth, obviously, the Celsius consumption growth and the standard data has come down. Should we expect the legacy Celsius brand to grow in line with the category and then Alani Nu to be the incremental lift there? Or do you expect the Celsius brand to get back to above-trend growth and then have the Alani Nu brand come over the shop and complement that as well?

Question: Jim Salera - Stephens Inc - Analyst : Great. Great. And then maybe if I could just sneak in one quick follow-up. There will be a lot of questions on the energy piece of Alani. But I know they also have a powder and an RTD shake and a Saks portion of the portfolio. Just any thoughts on how you plan to fit that in with the broader portfolio that's energy centric? .

Question: Peter Grom - UBS Securities - Analyst : Thanks, operator. Good evening, everyone. So I wanted to ask on just maybe what to expect as we look out through the spring here, just in terms of shelf resets I'd be curious, can you just talk about what you're expecting for the core Celsius brand, particularly as velocity trends have been a bit more challenged. And then specifically, do you have any visibility at this point in time around what you were expecting for shelf space gains for Alani Nu?

Question: Eric Serotta - Morgan Stanley - Analyst : Good afternoon and congratulations on the deal. A quick follow-up on the distribution side. Does Pepsi have any right of first refusal for distributing other brands that you buy? And if hypothetically, Alani were to change distribution networks, who would be responsible for the distributor buyouts. And then turning to the business, what was the change in Pepsi inventories in the quarter? And I guess, what are your expectations as you look to the first quarter?

Question: Gerald Pascarelli - Needham & Company - Analyst : Great. Thanks very much for the question. Congratulations on the deal. John, maybe a question just on the basis for the transaction. Essentially, like -- how do you put the transaction in the context of the near-term slowdown that you've seen in your core portfolio? I guess said another way, like did the near-term slowdown expedite the process for you to get more aggressive with M&A and buying scale? Or is this something that you've always viewed as an attractive asset have been contemplating for a while and decided now is the right time? I guess just some color on how the deal materialize would be helpful. Thank you.

Question: Andrea Teixeira - JPMorgan - Analyst : Thank you, operator, and good afternoon, everyone. I just wanted to follow up on the most recent consumption trends for sales in particular. And if you can comment also on Alani. How have you tended so far in the quarter, intra-quarter? And when should we see improvement in terms of like velocity? I understand that, obviously, there is an offset from gaming distribution. And related to that, also how has been the reception? I know you're lapping a very strong innovation, as you mentioned. But you also have a strong pipeline coming up. I understand that mainly the convenience stores were part receptive from the fair that you're getting a good reflection for the for the innovation, but just wondering all these dynamics of distribution with Pepsi, how we should be seeing this improvement, if any? Or should we expect that should be more evident in the second quarter for both brands? Now also a comment on our Alani Nu. Thank you.

Question: Michael Lavery - Piper Sandler - Analyst : Thank you. Good evening. I had top of my list, what you're going to do with your cash, but I think I'll skip that one now. And just maybe see if you could unpack the share trends from 24 a little bit. You obviously had sequential -- some pressure sequentially over the course of the year. Not meant as an Alani question, but it certainly could be related. Any just diagnosis of where share was going or how to think about what really made some of those changes and how to best address it? And then maybe if you could also just if I could ask a quick follow-up on the subway news. You said that it will go to some of those outlets is that each franchisees' option or decision? How do we think about how that might unfold?

Question: Sean McGowan - ROTH Capital Partners - Analyst : Thank you. I was wondering if you could tell us how much the promotional allowances that you talked about in the past impacted both revenue and gross margin in the quarter? And then more generally, do you think this is a level of gross margin that could be sustained particularly with the momentum in the background?

Question: Kevin Grundy - BNP Paribas - Analyst : Great. Thanks. Good evening, guys, and congrats on the deal. Jarrod, I wanted to pick up on that line of question around margins, two-part question. So just on the $50 million cost synergies, maybe just identify key areas, how much visibility you have? Is there any potential upside there? And then understanding you may want to be a little bit hesitant. Is there any reason at least in principal, why the combined business, your EBITDA margins should not look something like Monster's EBITDA margins in the US. So your thoughts there would be helpful. And then I have a quick follow-up for John.

Question: Kevin Grundy - BNP Paribas - Analyst : That was helpful. I know there's a lot of folks on the call. The quick one for John is just obviously, a lot of deals fails -- so my question is really around -- you don't need to be redundant on the distribution piece. There's a little bit of wait and see and maybe this comes out of the AV system and into Pepsi, we'll see. But how do you limit integration risk as it pertains to this deal, what are you most concerned about? What would you share with investors in terms of managing that to ensure that this goes smoothly and there's no bumps in the road?

Question: Mark Astrachan - Stifel Nicolaus & Co Inc - Analyst : Yeah. Hey. Thanks, everyone. I guess the one question that I've been getting that I'm trying to figure out is how do you maintain the momentum that Alani has had? If you take a look at their market share gains, they've doubled where they were at the start of the year. Maybe talk a bit about what has driven those share gains from a consumer perspective? It seems from the outside in, maybe a little bit of those share gains will come at Celsius expense. And so maybe talk about how you think about sustaining that consumer? And what gives you confidence that spending what you are on this deal that you can keep those consumers over the next several to many years?

Question: Jeff Van Sinderen - B. Riley Securities - Analyst : Hi, everyone. Let me add my congratulations John, I wonder if you can tell us what the ACV of Alani is today? And also, do they have any international penetration? And then -- if we can just switch to marketing for a minute this year, thinking about the Celsius brand, how you plan to broaden your reach with marketing? And then how might that change with aligning?