Celsius Holdings, Inc. Q4 FY2024 earnings call

• Celsius reported record 2024 revenue of $1.36 billion, a 3% Y/Y increase, with 22% volume growth vs. 5% total energy category growth.
• Launched Celsius Essentials, increased total points of distribution by 37% Y/Y, and ACV reached 98.7%.
• Launched Celsius Hydration, opening a new category.
• Announced acquisition of Alani Nu for $1.8 billion, a female-focused functional wellness brand. Strategic benefits include creating a leading better-for-you functional lifestyle platform, combining growing scaled energy brands, complementary brand positioning, leveraging strengths for growth, and expected cash and EPS accretive in year one with $50M run-rate cost synergies over two years.

In 2024, Celsius reported record revenue of $1.36 billion, representing a 3% year-over-year increase. The fourth quarter saw revenue and adjusted EBITDA each decline 4% compared to the prior year. Quarterly gross margin improved to 50.2% due to lower freight costs and raw material savings. For the full year, gross profit increased 7% to $680 million, with a gross profit margin of 50.2%. The energy drink category faced challenges, but Celsius achieved 22% volume growth versus the total energy category's 5% growth. Celsius introduced Celsius Essentials in 2024, increased total points of distribution by 37% year-over-year, and ACV reached 98.7%. The acquired Alani Nu is a leading female-focused functional wellness brand with $595 million in 2024 revenue, but its segment performance as a standalone is not detailed yet as it's a pending acquisition.

• Acquisition of Alani Nu is expected to be cash and EPS accretive in year one.
• Target to achieve $50 million of run-rate cost synergies over two years post-close.
• Expect Alani Nu to benefit from Celsius' channel, digital marketing, product development, and expansion strategies to drive growth in distribution, innovation, and global expansion.

• Forward-looking statements involve risks and uncertainties beyond the company's control.
• Integration risks associated with acquiring Alani Nu, including potential challenges in combining operations and achieving synergies.
• Potential impact of external factors like tariffs or aluminum costs on gross margins.

Q: Can you talk about the positioning of the two brands and cannibalization potential?

A: Alani Nu targets a younger female consumer, is incremental to Celsius' portfolio with low cannibalization potential, and both brands position to go after the modern energy category.

Q: How many distribution gains are expected for Alani Nu?

A: Expect pretty sizable distribution gains, especially in the convenience channel during reset season.

Q: How do you think about the near-term slowdown in the core portfolio and M&A?

A: Confident in Celsius portfolio, innovation planned for 2025, Alani Nu is incremental to consumer base, and combination of brands puts us at ~16% share in energy category.

Q: What about margins and cost synergies with Alani Nu?

A: $50M in cost synergies expected over two years, will leverage business for margin incrementality, and Alani Nu's margin profile will be evaluated post-close.