Celsius Holdings, Inc. (CELH) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a strong financial performance with record sales for Alani Nu and significant revenue growth. While gross margins faced pressure due to integration costs, they are expected to normalize. The share repurchase program and debt reduction efforts are positive indicators. The Q&A section reveals strong distribution gains and innovation driving growth, though management was vague on certain forward-looking details. Overall, the positive elements outweigh the negatives, suggesting a likely positive stock price movement.
Key Financial Performance
Full Year Revenue $2.5 billion, reflecting disciplined growth and material scale achieved.
Rockstar Net Sales (Full Year) $56 million in net sales and an additional $13 million in other income. Integration into the supply chain and commercial organization impacted accounting treatment.
Alani Nu Net Sales (Q4) $370 million, a record, with 136% growth year-over-year. Driven by customer demand, increased distribution points, and transition into PepsiCo system.
Brand CELSIUS Net Sales (Full Year) $1.46 billion, growing 7.5% year-over-year. Timing activities and inventory movements impacted quarterly results.
Consolidated Revenue (Q4) $722 million, reflecting integration and timing effects.
Gross Profit (Q4) $341.8 million, up from $166.7 million in the prior year. Gross profit margin was 47.4%, down from 50.2% due to integration costs and tariffs.
Gross Profit (Full Year) $1.27 billion, up from $680 million in 2024. Gross profit margin increased by 20 basis points to 50.4%.
Adjusted EBITDA (Q4) $134.1 million, up from $62.9 million in the prior year period.
Adjusted EBITDA (Full Year) $619.6 million, representing an adjusted EBITDA margin of 24.6%.
Operating Cash Flow (Full Year) $359 million, reflecting working capital discipline and timing dynamics.
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Operating Highlights
Fizz-Free Line: Launched nationally in 2026 to cater to consumers preferring non-carbonated beverages.
Cherry Bomb LTO: First limited-time offer under the PepsiCo system for Alani Nu, showing strong pull-through and success.
International Expansion: Currently present in 10 markets with plans for disciplined growth through focused market selection and strong local partnerships.
U.S. Market Share: Portfolio represents approximately 1/5 of the U.S. energy market in tracked channels.
Alani Nu Integration: Substantially completed U.S. DSD transition into PepsiCo system, with full integration expected by Q1 2026.
Rockstar Integration: Integration into the operating model is on track, expected to complete in H1 2026.
Brand Studio Creation: Established an in-house agency to drive brand growth and consistency across consumer touchpoints.
Revenue Growth Management: Focused on mix, price pack architecture, and disciplined promotion to improve growth and earnings quality.
Marketing Evolution: Sharpening storytelling and demand activation through a new brand studio and influencer partnerships.
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Risk or Challenges
Integration Costs and Tariffs: Gross margins were impacted by one-time integration and distribution transition costs associated with integrating Alani Nu and Rockstar brands, as well as tariffs. These costs are expected to normalize but currently affect profitability.
Supply Chain and Inventory Management: Timing and sequencing of inventory movements within the Pepsi system created variability in reported results, impacting brand CELSIUS sales and overall financial performance.
International Expansion Risks: While international markets present growth opportunities, the company faces challenges in ensuring disciplined market entry, strong local partnerships, and sustained marketing and distribution support.
Operational Complexity: The integration of Alani Nu and Rockstar into the PepsiCo system and the company's operating model adds complexity, requiring disciplined execution to avoid disruptions.
Margin Pressures: Gross profit margins declined due to higher costs of product, integration expenses, and tariffs, although some of these are expected to improve over time.
Market Execution Challenges: The company must maintain consistent innovation, promotional efficiency, and market execution to outgrow the energy category and sustain brand momentum.
Economic and Consumer Behavior Risks: Shifts in consumer preferences and economic conditions could impact demand for the company's products, particularly as it expands into new markets and launches new product lines.
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Guidance & Outlook
Revenue Growth: The company expects continued expansion into more locations with more SKUs and overall triple-digit space gains for Alani Nu in 2026. Brand CELSIUS is expected to stabilize and return to growth over the next few years.
Integration Milestones: The integration of Alani Nu into the PepsiCo system is expected to be completed by the end of Q1 2026. The Rockstar Energy integration is expected to be completed in the first half of 2026.
Margin Expansion: Margins are expected to expand across 2026, returning to a normalized profile with gross margins in the low 50s, driven by savings across raw materials, manufacturing tolling fees, freight, and packaging.
Innovation and Product Launches: The company plans to launch a more intentional innovation and limited-time offer cadence in 2026, including the national availability of the Fizz-Free line and expanding Alani Nu's core SKUs.
International Expansion: The company sees significant long-term growth opportunities internationally, with plans to expand into focused markets with disciplined launch plans and sustained marketing and distribution support.
Marketing Strategy: The creation of a new in-house brand studio will drive brand growth with speed and consistency, enhancing marketing capabilities across the portfolio.
Operational Focus: The company aims to execute with discipline across mature and white space markets, focusing on building awareness, expanding distribution, and scaling trial.
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Shareholder Return Plan
Share Repurchase Program: During the quarter, the company repurchased $40 million of shares. They ended the period with $260 million remaining under their share repurchase program. The company will continue to evaluate repurchase activity based on cash generation, market conditions, and capital priorities while preserving flexibility for strategic M&A opportunities.
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Key Q&A
Q:Can you provide an update on the spring shelf space resets for CELSIUS and Alani, and when we should start seeing benefits?
A:Shelf space gains are expected to materialize through the end of spring, with the biggest gains for Alani in convenience stores. Timing differences between consumption data and revenue recognition were noted, but over the long term, consistency is expected.
Q:Can you unpack the $25 million net benefit from CELSIUS versus Alani and discuss inventory levels for Alani?
A:The $25 million benefit was driven by CELSIUS' low double-digit growth and Alani's triple-digit growth. Inventory levels for Alani are expected to remain elevated during the transition, similar to CELSIUS' earlier transition into the Pepsi system. Adjustments will be made to manage peaks and valleys in data.
Q:What is the potential impact of the Midwest premium on gross margins, and how will gross margins evolve this year and beyond?
A:Gross margins are expected to normalize to the low 50% range this year, with potential to reach mid-50% in the near term. The Midwest premium and tariffs may impact timing, but cost structure improvements for Alani and Rockstar are expected by Q1 and Q2, respectively. Onetime costs from Q4 will not recur.
Q:How do you plan to manage SKU prioritization and velocity with the increase in shelf space and innovation?
A:SKU prioritization will focus on maximizing value for channels and regions. Velocity is a key focus, with innovation and LTOs designed to attract new consumers and build daily consumption. Expanded shelf space will support this strategy, especially targeting female consumers.
Q:Can you quantify the distribution gains for the category and explain where shelf space gains for CELSIUS and Alani are coming from?
A:Shelf space gains are driven by the energy category's growth, with retailers optimizing cooler and shelf space, often at the expense of beer, juice, and premium water categories. CELSIUS gained 17% additional space, and Alani saw over 100% gains, supported by innovation and expanded usage occasions.
Q:Are there any parts of the inventory benefit for Alani this quarter that should be considered a pull forward in revenue?
A:The inventory benefit for Alani was opportunistic rather than a pull forward. The Pepsi distribution system enabled rapid expansion, and new products like Cherry Bomb and Lime Slush saw strong demand.
Q:How does the shelf space growth for Alani compare to CELSIUS' transition in 2022?
A:Alani's shelf space growth is driven by category expansion rather than replacing other brands, unlike CELSIUS, which benefited from Bang's lost shelf space. Alani's growth reflects broader category dynamics, including increased female consumption and expanded usage occasions.
Q:Review of Unclear Management Responses
A:Management avoided providing direct forward-looking information on specific timing and sequencing of revenue recognition versus consumption data. They also used vague language when discussing the evolution of margins and the impact of tariffs and the Midwest premium, without providing detailed numerical breakdowns.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CELSIUS Rockstar
Celsius Holdings
International
Pepsi partner
PepsiCo system
Rockstar Energy
Rockstar integration
SGA
SKU
brand opportunity
brand studio
brand way
cadence
consistency
consumer preference
context
creation
discipline
energy routine
frequency
intent
loyalty brand
momentum
motion
offer
platform
portfolio CELSIUS
portfolio way
progress
relevance
runway
scale portfolio
space market
strength core
sugar
term value
track integration
transition PepsiCo
trial activation
work
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