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 (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:

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"); the acquisition of Big Beverages Contract Manufacturing, L.L.C ("Big Beverages"); 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

•Our ability to successfully complete or manage strategic transactions;

Current wording

•Our ability to successfully complete or manage strategic transactions, successfully integrate and manage our acquired businesses, brands or bottling operations, or successfully realize a significant portion of the anticipated benefits of our joint ventures or strategic relationships, including the acquisition of Big Beverages;

Previous wording

Celsius is a fast-growing company in the functional energy drink category in the United States (U.S.) and internationally. We engage in the development, processing, marketing, sale, and distribution of functional energy drinks to a broad range of consumers. We provide differentiated products that offer clinically proven and innovative formulas meant to positively impact the lives of our consumers. Our brand has also proven to be attractive to a broad range of customers, including fitness enthusiasts.

Current wording

Celsius is a growing company in the functional energy drink category in the United States (U.S.) and internationally. We engage in the development, processing, marketing, sale, and distribution of functional energy drinks to a broad range of consumers. We provide differentiated products that offer clinically proven and innovative formulas meant to positively impact the lives of our consumers. Our brand has also proven to be attractive to a broad range of customers, including fitness enthusiasts.

Previous 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.

Current wording

Our flagship asset, CELSIUS®, is marketed as a premium lifestyle and energy drink formulated to power active lifestyles. 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.

Previous wording

•In March 2024, we entered into a definitive manufacturing, sales, and distribution agreement with Suntory Oceania to expand into the Australia and New Zealand markets. Sales under this arrangement are expected to begin in the fourth quarter of 2024.

Current wording

•In March 2024, we entered into a definitive manufacturing, sales, and distribution agreement with Frucor Suntory Australia Pty Limited and Frucor Suntory New Zealand Limited (both part of the Suntory Group) to expand into the Australia and New Zealand markets. Sales under this arrangement are expected to begin in the fourth quarter of 2024.

Previous wording

•In April 2024, we entered into a definitive sales and distribution agreement with Suntory France to expand into France. Sales under this arrangement are expected to begin in the fourth quarter of 2024.

Current wording

•In April 2024, we entered into a definitive sales and distribution agreement with Orangina Schweppes France (part of the Suntory Group) to expand into France. Sales under this arrangement are expected to begin in the fourth quarter of 2024.

Previous wording

European revenues for the three months ended June 30, 2024 were $16.7 million, compared to $11.9 million for the three months ended June 30, 2023. The revenue increase in Europe was predominantly driven by successful innovation launches. Asia-Pacific revenues contributed an additional $0.9 million. Other international markets, including Puerto Rico, generated approximately $2.1 million in revenue for the three months ended June 30, 2024.

Current wording

European revenues for the three months ended September 30, 2024 were $16.2 million, compared to $11.0 million for the three months ended September 30, 2023. The revenue increase in Europe was predominantly driven by successful innovation launches. Asia-Pacific revenues contributed an additional $0.6 million. Other international markets generated approximately $1.8 million in revenue for the three months ended September 30, 2024.

Previous wording

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.

Current wording

For the quarter ended September 30, 2024, selling, general and administrative ("SG&A") expenses totaled approximately $125.4 million, up 30% or $29.0 million from $96.4 million for the third quarter of 2023.

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•a $22.9 million increase in marketing investments;

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•a $17.5 million increase in marketing investments;

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

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•a $9.3 million increase in employee costs, reflecting our ongoing investments to support growth; and

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•a $0.5 million decrease in other SG&A expenses, including storage, research and development, and depreciation.

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•a $2.2 million increase in other SG&A expenses.

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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.

Current wording

Other income for the three months ended September 30, 2024 was $11.4 million, which reflects an increase of $4.4 million versus $7.0 million for the three months ended September 30, 2023. The increase was primarily attributable to greater interest income earned on cash held in our money market accounts.

Previous wording

Net income attributable to common stockholders for the six months ended June 30, 2024 was $131.5 million, representing basic earnings per share of $0.56 based on a basic weighted average of 233.0 million shares outstanding. In comparison, for the six months ended June 30, 2023, net income attributable to common stockholders was $72.2 million, representing basic earnings per share of $0.31 based on a basic weighted average of 230.3 million shares outstanding. Diluted earnings per share was $0.55 and $0.31 for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Net loss attributable to common stockholders for the three months ended September 30, 2024 was $0.6 million, resulting in basic loss per share of $(0.00), based on a basic weighted average of 233.7 million shares outstanding. In comparison, for the three months ended September 30, 2023, net income attributable to common stockholders was $70.4 million, representing basic earnings per share of $0.30 based on a basic weighted average of 231.0 million shares outstanding. Diluted (loss) earnings per share was $(0.00) and $0.30 for the three months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

For the nine months ended September 30, 2024, revenue was approximately $1,023.4 million compared to $970.6 million for the nine months ended September 30, 2023. This growth was primarily driven by increased revenues in North America, which experienced continued gains in distribution points, shelf space, and SKUs per location, offset in part by inventory optimization from our largest distributor, increased macroeconomic headwinds, and a decline in growth in the total energy drink category.

Previous 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.

Current wording

European revenues for the nine months ended September 30, 2024 were $47.1 million, which increased by $15.5 million or 49% from the same period in 2023. The revenue increase in Europe was predominantly driven by successful innovation launches. Asia-Pacific revenues contributed an additional $2.1 million. Other international markets generated approximately $5.2 million in revenue for the nine months ended September 30, 2024.

Previous 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.

Current wording

For the nine months ended September 30, 2024, gross profit increased by $46.6 million, or 10%, to $513.5 million, from $466.9 million for the same period in 2023. Gross profit margins reflected an increase to 50% for the nine months ended September 30, 2024 from 48% 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 partially offset by increased promotional allowances as a percentage of revenue from the reduction in disproportionate distributor sell-in.

Previous wording

For the six months ended June 30, 2024, SG&A expenses totaled $213.9 million, up 31% or approximately $50.8 million from $163.1 million in the same quarter of 2023.

Current wording

For the nine months ended September 30, 2024, SG&A expenses totaled $339.3 million, up 31% or approximately $79.8 million from $259.5 million in the same quarter of 2023.

Previous wording

•a $38.4 million increase in marketing investments;

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•a $56.0 million increase in marketing investments;

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•a $17.2 million increase in employee costs, reflecting our ongoing investments to support growth;

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•a $26.6 million increase in employee costs, reflecting our ongoing investments to support growth; and

Previous wording

•a $7.2 million increase in all other SG&A expenses, including storage, research and development, and depreciation;

Current wording

•a $2.8 million decrease in all other SG&A expenses.

Previous wording

Other income for the six months ended June 30, 2024 was $19.7 million, which reflects an increase of $10.2 million versus $9.5 million for the six months ended June 30, 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 nine months ended September 30, 2024 was $31.0 million, which reflects an increase of $14.5 million versus $16.5 million for the nine months ended September 30, 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.

Previous 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.

Current wording

Net income attributable to common stockholders for the nine months ended September 30, 2024 was $131.0 million, representing basic earnings per share of $0.56 based on a basic weighted average of 233.2 million shares outstanding. In comparison, for the nine months ended September 30, 2023, net income attributable to common stockholders was $142.6 million, representing basic earnings per share of $0.62 based on a basic weighted average of 230.5 million shares outstanding. Diluted earnings per share was $0.55 and $0.60 for the nine months ended September 30, 2024 and 2023, respectively.

Previous 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.

Current wording

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $903.7 million and $756.0 million, respectively, and working capital of approximately $1,074.0 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. We believe that our current cash resources are sufficient to fund our cash outflows 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 and Part II, Item 1A "Risk Factors" of this 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 six months ended June 30, 2024 and June 30, 2023

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Cash flows for the nine months ended September 30, 2024 and September 30, 2023

Previous 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.

Current wording

Cash flows provided by operating activities totaled approximately $187.2 million for the nine months ended September 30, 2024, which compares to $136.0 million of cash provided by operating activities for the nine months ended September 30, 2023. The approximately $51.2 million increase in operating cash generated is primarily driven by an increase in working capital, partially offset by a decrease in net income and higher tax payments.

Previous 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.

Current wording

Cash flows used in investing activities totaled approximately $21.0 million for the nine months ended September 30, 2024, which compares to cash used in investing activities of $9.5 million for the nine months ended September 30, 2023. The increase in cash used in investing activities was primarily due to increased purchases of property and equipment, with purchases of approximately $18.0 million in the current year period versus $12.7 million for the nine months ended September 30, 2023 and our purchase of a non-marketable equity security during the third quarter of 2024. For the nine months ended September 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 $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.

Current wording

Cash flows used in financing activities totaled $18.5 million for the nine months ended September 30, 2024, which compares to cash used in financing activities of $18.9 million for the nine months ended September 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.