Celsius Holdings Inc

Previous wording

This Report contains forward-looking statements that are based on the current expectations of our Company and management about future events within the meaning of the United States Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance of the safe harbor protections provided thereunder. While we have specifically identified certain information as being forward-looking in the context of its presentation, we caution you that all statements contained in this Report that are not clearly historical in nature, including statements regarding the strategic investment by and long term partnership with PepsiCo, Inc. (“Pepsi”); anticipated financial performance; management’s plans and objectives for international expansion and future operations globally; the successful development, commercialization, and timing of new products; business prospects; outcomes of regulatory proceedings; market conditions; the current and future market size for existing or new products; any stated or implied outcomes with regards to the foregoing; and other matters are forward-looking. Without limiting the generality of the preceding sentences, any time we use the words “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects” and, in each case, their negative or other various or comparable terminology, and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, without limitation:

Current wording

This Report contains forward-looking statements that are based on the current expectations of our Company and management about future events within the meaning of the United States Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are made in reliance of the safe harbor protections provided thereunder. While we have specifically identified certain information as being forward-looking in the context of its presentation, we caution you that all statements contained in this Report that are not clearly historical in nature, including statements regarding the strategic investment by and long term partnership with PepsiCo, Inc. ("Pepsi"); anticipated financial performance; management’s plans and objectives for international expansion and future operations globally; the successful development, commercialization, and timing of new products; business prospects; outcomes of regulatory proceedings; market conditions; the current and future market size for existing or new products; any stated or implied outcomes with regards to the foregoing; and other matters are forward-looking. Without limiting the generality of the preceding sentences, any time we use the words “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects” and, in each case, their negative or other various or comparable terminology, and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, without limitation:

Previous wording

The Company's flagship asset, CELSIUS®, is marketed as a premium lifestyle and energy drink formulated to power active lifestyles with ESSENTIAL ENERGYTM. This product line comes in two versions, a ready-to-drink form and an on-the-go powder form. During 2023, we introduced a new CELSIUS® Essentials line, available in 16-ounce cans. Our products are currently offered in major retail channels across the U.S., including conventional grocery, natural, convenience, fitness, mass market, vitamin specialty and e-commerce. Additionally, our products are currently offered in certain Canadian, European, Middle Eastern, and Asia-Pacific markets.

Current wording

Our flagship asset, CELSIUS®, is marketed as a premium lifestyle and energy drink formulated to power active lifestyles with ESSENTIAL ENERGYTM. This product line comes in two versions, a 12-ounce ready-to-drink form and an on-the-go powder form. During 2023, we introduced a new CELSIUS® Essentials line, available in 16-ounce cans. Our products are currently offered in major retail channels across the U.S., including conventional grocery, natural, convenience, fitness, mass market, vitamin specialty and e-commerce. Additionally, our products are currently offered in certain Canadian, European, Middle Eastern, and Asia-Pacific markets.

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During 2024, we continued to develop our U.S. Pepsi relationship as well as expanding our international presence through the following arrangements:

Current wording

During 2024, we have continued to develop our U.S. Pepsi relationship as well as expanding our international presence through the following arrangements:

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•In January 2024, we announced Pepsi as our exclusive distributor in Canada, as well as a new relationship established with Lucozade Ribena Suntory Limited ("Suntory Beverage & Food" or "Suntory") to serve as our exclusive sales and distribution partner in the United Kingdom and the Republic of Ireland.

Current wording

•In January 2024, we announced Pepsi as our exclusive distributor in Canada, as well as a new relationship with Lucozade Ribena Suntory Limited ("Suntory") to serve as our exclusive sales and distribution partner in the United Kingdom and the Republic of Ireland.

Previous wording

For the three months ended March 31, 2024, revenue was approximately $355.7 million, an increase of $95.8 million or 37% from $259.9 million for the three months ended March 31, 2023. This growth was primarily the result of increased revenues from North America (including Canada), from which first quarter 2024 revenues were $339.5 million, an increase of $90.9 million or 37% from the same period in 2023. North America's increase was driven by continued gains in distribution points and SKUs per location, offset in part by inventory movements by our largest distributor, where first quarter 2024 inventory days on hand declined versus the fourth quarter 2023.

Current wording

For the three months ended June 30, 2024, revenue was approximately $402.0 million, compared to $325.9 million for the three months ended June 30, 2023. This growth was primarily driven by increased revenues from North America, which experienced continued gains in distribution points, shelf space, and SKUs per location, offset in part by a reduction in days on hand inventory by our largest distributor.

Previous wording

For the three months ended March 31, 2024, gross profit increased by $68.4 million, or 60%, to $182.2 million, from $113.8 million for the three months ended March 31, 2023. Gross profit margins reflected an increase to 51% for the three months ended March 31, 2024 from 44% for the same period in 2023. Gross profit improvements resulted from decreases in raw and package material unit cost and reduced outbound freight cost as a percentage of sales.

Current wording

For the three months ended June 30, 2024, gross profit increased by $50.1 million, or 32%, to $209.1 million, from $159.0 million for the three months ended June 30, 2023. Gross profit margins reflected an increase to 52% for the three months ended June 30, 2024 from 49% for the same period in 2023. Gross profit margin improvements resulted from decreases in raw and package material unit cost and reduced outbound freight cost as a percentage of revenue.

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For the quarter ended March 31, 2024, selling, general and administrative ("SG&A") expenses totaled $99.0 million, up 44% or $30.1 million from $68.9 million in the same quarter of 2023.

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For the quarter ended June 30, 2024, selling, general and administrative ("SG&A") expenses totaled approximately $114.9 million, up 22% or $20.7 million from $94.2 million for the second quarter of 2023.

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•a $14.4 million increase in marketing investments;

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•a $22.9 million increase in marketing investments;

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•a $7.6 million increase in employee costs, reflecting our ongoing investments to support growth;

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•a $9.7 million increase in employee costs, reflecting our ongoing investments to support growth;

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•a $2.8 million increase in general administrative costs primarily due to consulting fees.

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•a $10.4 million decrease in general administrative costs primarily due to lower consulting fees;

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Stock-based compensation expense decreased by $1.9 million to $3.6 million, a change driven by certain stock options being fully expensed in the prior period. However, this was partially offset by new awards issued to our expanding workforce, which is in line with our strategy to encourage employee ownership and promote exceptional performance, contributing to our continued business success based on key performance attributes.

Current wording

•a $1.0 million decrease in stock-based compensation driven by certain stock options being fully expensed in prior periods; and

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Other income for the three months ended March 31, 2024 was $9.3 million, which reflects an increase of $4.4 million versus $4.9 million during the three months ended March 31, 2023. The increase was primarily attributable to interest income earned on cash held in our money market accounts, partially offset by foreign exchange rate transaction loss.

Current wording

Other income for the three months ended June 30, 2024 was $10.4 million, which reflects an increase of $5.8 million versus $4.6 million for the three months ended June 30, 2023. The increase was primarily attributable to greater interest income earned on cash held in our money market accounts, partially offset by foreign exchange rate transaction loss.

Previous wording

Net income attributable to common stockholders for the three months ended March 31, 2024 was $64.8 million, representing basic earnings per share of $0.28 based on a basic weighted average of 232.8 million shares outstanding. In comparison, for the three months ended March 31, 2023, net income attributable to common stockholders was $31.5 million, representing basic earnings per share $0.14 based on a basic weighted average of 230.0 million shares outstanding. Diluted earnings per share was $0.27 and $0.13 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Net income attributable to common stockholders for the three months ended June 30, 2024 was $66.7 million, representing basic earnings per share of $0.29 based on a basic weighted average of 233.2 million shares outstanding. In comparison, for the three months ended June 30, 2023, net income attributable to common stockholders was $40.8 million, representing basic earnings per share of $0.18 based on a basic weighted average of 230.5 million shares outstanding. Diluted earnings per share was $0.28 and $0.17 for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

European revenues for the three months ended March 31, 2024 were $14.1 million, which increased by $5.5 million or 63% from the same period in 2023. Asia-Pacific revenues contributed an additional $0.7 million, a decrease of $0.6 million or 46% from the same period in 2023. Other international markets, including Puerto Rico, generated approximately $1.4 million in revenue during the three months ended March 31, 2024, a decrease of $0.1 million for the same period in 2023. Overall, international revenues increased due to successful innovation launches in Europe.

Current wording

European revenues for the six months ended June 30, 2024 were $30.8 million, which increased by $10.3 million or 50% from the same period in 2023. The revenue increase in Europe was predominantly driven by successful innovation launches. Asia-Pacific revenues contributed an additional $1.5 million. Other international markets, including Puerto Rico, generated approximately $3.5 million in revenue for the six months ended June 30, 2024.

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As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $879.5 million and $756.0 million, respectively, and working capital of approximately $999.8 million and $928.3 million, respectively.

Current wording

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $903.2 million and $756.0 million, respectively, and working capital of approximately $1,072.0 million and $928.3 million, respectively.

Previous wording

Our primary sources of liquidity are cash flows from operations and our existing cash balances. Please refer to Part 1, Item 1A, "Risk Factors" of our 2023 Annual Report for specific risk factors that could have a material impact on our operations. Our current cash resources available to fund cash outflows are sufficient for both our short and long-term cash needs.

Current wording

Our primary sources of liquidity are cash flows from operations and our existing cash balances. Please refer to Part 1, Item 1A, "Risk Factors" of our 2023 Annual Report for specific risk factors that could have a material impact on our operations. We believe that our current cash resources are sufficient to fund our cash outflows for both our short and long-term cash needs.

Previous wording

Cash flows for the three months ended March 31, 2024 and March 31, 2023

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Cash flows for the six months ended June 30, 2024 and June 30, 2023

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Cash flows provided by (used in) operating activities

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Cash flows provided by operating activities

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Cash flows provided by operating activities totaled $134.6 million for the three months ended March 31, 2024, which compares to $13.8 million cash used in operating activities for the three months ended March 31, 2023. The approximate $148.4 million increase in operating cash generated can be attributed to significant operational growth and the timing of cash receipts, which were favorably influenced by increased sales associated with the Pepsi agreements.

Current wording

Cash flows provided by operating activities totaled approximately $174.3 million for the six months ended June 30, 2024, which compares to $45.2 million of cash provided by operating activities for the six months ended June 30, 2023. The approximately $129.0 million increase in operating cash generated is attributable to our increase in net income partially offset by the timing of cash receipts.

Previous wording

Cash flows used in investing activities totaled $4.5 million for the three months ended March 31, 2024, which compares to cash provided by investing activities of $1.0 million for the three months ended March 31, 2023. The increase in cash used in investing activities was primarily due to increased purchases of property and equipment, with purchases of approximately $4.5 million in the current year period versus $2.3 million for the three months ended March 31, 2023. For the three months ended March 31, 2023, property and equipment purchases were partially offset by collections from our note receivable received from our China licensee of approximately $3.2 million.

Current wording

Cash flows used in investing activities totaled approximately $13.7 million for the six months ended June 30, 2024, which compares to cash used in investing activities of $3.6 million for the six months ended June 30, 2023. The increase in cash used in investing activities was primarily due to increased purchases of property and equipment, with purchases of approximately $13.7 million in the current year period versus $6.8 million for the six months ended June 30, 2023. For the six months ended June 30, 2023, property and equipment purchases were partially offset by collections from our note receivable received from our China licensee of approximately $3.2 million.

Previous wording

Cash flows used in financing activities totaled $5.9 million for the three months ended March 31, 2024, which compares to cash used in financing activities of $6.3 million for the three months ended March 31, 2023. The main driver for cash used in financing activities for both periods was cash dividends paid on our outstanding shares of Series A Preferred Stock, all of which is held by Pepsi. This was slightly offset by proceeds received from the exercise of stock options during both periods.

Current wording

Cash flows used in financing activities totaled $12.6 million for the six months ended June 30, 2024, which compares to cash used in financing activities of $13.0 million for the six months ended June 30, 2023. The main driver for cash used in financing activities for both periods was cash dividends paid on our outstanding shares of Series A Preferred Stock, all of which is held by Pepsi.