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Celsius (CELH) 6 Nov 24 2024 Q3 Earnings call transcript

AInvestWednesday, Nov 6, 2024 9:30 pm ET
1min read

Celsius Holdings Inc. recently released its Q3 2024 earnings report, revealing a strong performance in retail sales and revenue growth despite facing challenges in the energy drink category. The company's management team provided insights into their strategic initiatives and growth drivers, highlighting their commitment to expanding consumer reach, increasing product availability, and enhancing brand positioning.

Strong Retail Sales and Revenue Performance

Celsius Holdings reported a 7.1% increase in retail sales year-over-year, with unit sales growth of 7.3%. Despite a 2% growth rate in the energy category, Celsius managed to contribute significantly to the category's expansion, making it the largest driver of growth. Total revenue for the quarter was $265.7 million, a decrease from the previous year due to inventory optimization. However, year-to-date revenue through September 30, 2024, reached $1.02 billion, marking a 5% increase from the prior year period.

Strategic Focus on Growth Drivers

Celsius' management team outlined their three key growth drivers: attracting new consumers into the energy category, expanding product availability, and increasing consumption frequency. To achieve these goals, the company is focusing on premium marketing strategies, better-for-you product innovation, and expanding into new markets and channels. The recently announced acquisition of Big Beverages, a long-term co-packer, is a strategic move to enhance innovation capabilities and optimize the supply chain.

Market Share and Competitive Positioning

Celsius' market share in the energy drink category remains resilient, with a 11.6% share in MULO+ with Convenience as of October 6, 2024. The company's focus on expanding product availability through partnerships with retailers like Pepsi and Amazon has contributed to its success in various channels. However, there are challenges ahead, as the category faces macroeconomic pressures and increased competition from other brands. Celsius' management team is optimistic about the future, citing the growing trend towards sugar-free and better-for-you products as a significant opportunity for the brand.

Financial Performance and Outlook

The company reported a decrease in net income for Q3 2024, primarily due to inventory optimization and promotional allowances. However, Celsius maintained a strong cash balance above $900 million and generated positive full-year operating cash flow. Looking ahead, the company aims to continue investing in brand development, organizational excellence, and strategic initiatives to drive long-term sustainable growth.

In conclusion, Celsius Holdings Inc.'s Q3 2024 earnings call underscored the company's resilience in the face of industry challenges and its strategic focus on growth drivers and innovative initiatives. With a strong retail sales performance and a commitment to expanding consumer reach, Celsius is well-positioned to capitalize on the growing demand for better-for-you energy drink options. The company's strategic acquisitions and partnerships, coupled with its focus on innovation and market expansion, highlight its potential for continued growth and success in the energy drink market.

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