Celsius Holdings, Inc. (CELH) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary shows strong financial performance with significant growth in GAAP net income and adjusted EBITDA, indicating operational efficiencies. Despite some challenges like aluminum costs, the company projects margin improvements and has a clear strategy for product innovation and market expansion. The Q&A reveals proactive measures to drive growth and manage brand cannibalization. The overall sentiment is positive, with optimistic guidance and strategic initiatives likely to support a stock price increase of 2% to 8% in the short term.
Key Financial Performance
Revenue Record first quarter revenue of $783 million, reflecting continued strength across the portfolio and solid execution. This represents growth driven by strong consumer demand and operational improvements.
Net Sales - Brand CELSIUS Net sales of $348 million in the quarter, representing growth of approximately 6% year-over-year. Growth attributed to SKU optimization and improved alignment between shipments and consumer takeaway.
Net Sales - Alani Nu Net sales of $368 million in the quarter, representing a pro forma growth of approximately 60% year-over-year. Growth driven by distribution gains from the PepsiCo system transition and completed integration.
Net Sales - Rockstar Net sales of $67 million for the quarter. Stabilization efforts and SKU reconfiguration contributed to the performance.
Gross Margin Gross margin was approximately 48.3%. Improvements in raw material costs and integration-related cost headwinds rolling off contributed to the margin. However, higher aluminum premiums, freight costs, and weather-related expenses partially offset the progress.
Adjusted SG&A Adjusted SG&A came in at approximately 26.4% of revenue, down from 31.8% in Q4. This reflects cost control and operating leverage as revenue scales.
GAAP Net Income Reported GAAP net income of $110 million in the quarter, more than double the $44 million reported in the prior year quarter. Growth attributed to top-line momentum and synergies from the Alani integration.
Adjusted EBITDA Adjusted EBITDA was $195 million, an increase of approximately $125 million versus a year ago. Adjusted EBITDA margin expanded to 24.9% from 21.2%, reflecting margin improvement and operational efficiencies.
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Operating Highlights
CELSIUS Fizz-Free: Encouraging expansion in distribution across multiple flavors, including Dragon Fruit Lime, Pink Lemonade, and Blue Razz Lemonade. Represents a meaningful opportunity to expand as the platform matures.
Electric Vibe: Limited edition flavor inspired by soccer culture, launched ahead of the global soccer tournament in North America this summer.
Alani Nu Lime Slush: Limited time offer performed well, becoming the brand's top-selling flavor in tracked channels. Reinforces the success of the flavor rotation strategy.
U.S. Energy Drink Market Share: CELSIUS portfolio represents approximately 1/5 of the U.S. energy drink market in tracked channels, with share expanding.
International Expansion: Launched CELSIUS in Spain through an exclusive agreement with Suntory Beverage & Food Spain. Plans to expand to Portugal next.
Alani Nu Integration: Integration completed, capturing approximately $50 million in synergies. Simplifies operating model and creates a more connected commercial structure.
Rockstar Integration: Integration on track for completion in the first half of 2026. SKU transition substantially complete, with early signs of improved velocities on prioritized items.
Global Partnerships: Announced multiyear global partnership with Aston Martin Aramco Formula One Team and partnerships with Palm Tree Music Festival and Breakaway.
Consumer Engagement: Opened Alani Nu's first-ever slush pop-up in Fort Lauderdale and launched activations like Formula DRIFT and NASCAR partnerships for Rockstar.
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Risk or Challenges
Integration Challenges: The integration of Alani Nu and Rockstar brands into the Celsius platform presents challenges, including ensuring operational alignment, SKU optimization, and maintaining brand momentum during the transition. The integration of Rockstar is still ongoing and expected to complete in the first half of 2026, with stabilization efforts required for the brand.
Supply Chain and Cost Pressures: The company faced increased costs due to higher Midwest aluminum premiums, LME prices, and severe winter weather in the Northeast, which created incremental freight costs. These factors could impact the timing and sequencing of margin expansion.
Commodity and Input Cost Volatility: The company is monitoring macroeconomic factors such as aluminum, freight, fuel, and resin pricing, which could affect profitability if elevated costs persist.
Market Competition: The energy drink market remains highly competitive, requiring continuous innovation and marketing investments to maintain and grow market share.
International Expansion Risks: The company is expanding into international markets like Spain and Portugal, which involves risks related to new market entry, local partnerships, and sustained marketing and distribution support.
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Guidance & Outlook
Revenue Growth: The company expects to build on recent resets and has additional innovation planned across both CELSIUS and Alani Nu, including a summer CELSIUS limited time offer. The company is also focusing on expanding international markets, with launches in Spain and Portugal through partnerships with Suntory Beverage & Food.
Margin Expansion: The company is focused on initiatives such as the orbit model, freight structure optimization, raw material alignment, and mix improvement through price-pack architecture to drive margin expansion back to the low 50s. However, macroeconomic factors like elevated aluminum, freight, fuel, and resin costs may impact the timing and sequencing of this margin expansion.
Brand Performance: CELSIUS is moving into a more active innovation period, including activations around the global soccer tournament in North America and 100 days of summer programming. Alani Nu is expected to continue expanding its reach and solidifying execution following its integration. Rockstar is in a stabilization phase, with integration expected to complete in the first half of 2026.
Market Trends: The energy drink category remains one of the strongest performing categories in beverages, reinforcing the company's conviction in long-term opportunities.
International Expansion: The company is expanding its international footprint with launches in Spain and Portugal, leveraging its partnership with Suntory Beverage & Food. The establishment of a global headquarters in Dublin is expected to accelerate execution in existing and new markets.
Capital Deployment: The company plans to continue investing in brand growth, maintaining balance sheet strength, and returning capital to shareholders through share repurchases. Approximately $236.1 million remains available under the $300 million repurchase program.
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Shareholder Return Plan
Share Repurchase Program: During the first quarter, the company repurchased approximately 700,000 shares for $24.1 million at a weighted average price of $35.39. At quarter end, $236.1 million remained available under the $300 million repurchase program authorized in November 2025. The company has continued to utilize this program in the second quarter.
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Key Q&A
Q:What are the drivers behind the moderating growth of the CELSIUS brand, and how should we think about its growth for the rest of the year?
A:The CELSIUS brand's growth moderation is attributed to SKU rationalization, limited innovation during Q1, and some cannibalization from Alani Nu. Management is focusing on optimizing SKU assortment, driving fizz-free products, and leveraging LTOs and partnerships. Two new LTOs, Electric Vibe and another summer launch, are expected to drive excitement and growth. Shelf space gains and consistent placements are also being prioritized to enhance growth.
Q:Was there any shipment benefit or inventory build for Alani Nu in Q1 due to increased orders from Pepsi?
A:The increased orders from Pepsi were related to building ACV and expanding the availability of Alani Nu in terms of SKUs per location and overall locations. This helped drive scanner growth and internal GAAP numbers. There was a $5 million GAAP impact due to amortization from the balance sheet, which is a non-cash item.
Q:Can you provide details on shelf space gains for CELSIUS and Alani, including foodservice distribution and tracked channels?
A:CELSIUS achieved 17% shelf gains, including foodservice, but specific foodservice distribution details are difficult to break out. Alani has seen over 100% distribution gains in gas and convenience, with resets expected to finalize by May or June. Retailers are expanding energy space significantly, and CELSIUS and Alani are leveraging differentiated offerings to drive incremental growth. Foodservice opportunities are being pursued in workplace, college, university, and restaurant channels.
Q:How does the company plan to balance new flavor innovation for LTOs versus bringing back popular flavors annually?
A:The company uses LTOs to drive trial, awareness, and incremental consumer growth. Popular LTO flavors like Cherry Bomb and Lime Slush may be brought back as permanent SKUs based on consumer feedback and performance. The LTO strategy allows for flexibility in planning and leveraging the PepsiCo distribution network to maximize opportunities.
Q:What is the impact of aluminum costs on margins, and what is the trajectory for margin improvement over the next 18 months?
A:Aluminum costs, including LME and Midwest premium, have increased, impacting margins. Q1 gross margin was 48.3%, with a sidestep expected in Q2 due to higher aluminum costs. Sequential improvement is anticipated in Q3 and Q4, with a target of low 50% gross margins. Initiatives like the orbit model, freight optimization, raw material alignment, and vertical integration are expected to drive margin improvements over the next 18 months.
Q:How has the CELSIUS brand performed after SKU rationalization, and what is the impact of cannibalization from Alani?
A:The CELSIUS brand has seen increased velocity for optimized SKUs and consistent placements across the U.S. Cannibalization from Alani is being monitored, but the company views its portfolio as complementary, targeting different consumer segments. The fizz-free line has shown promising growth, and the company remains bullish on CELSIUS's performance.
Q:What are the company’s priorities for Q2 and the rest of the year?
A:The company aims to build on recent resets, introduce additional innovation for CELSIUS and Alani Nu, and activate the brands during summer cultural events like Formula 1, global soccer, music, fitness, and motorsports. The focus is on leveraging the portfolio to reach more consumers and occasions during the peak selling season.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the breakdown of foodservice distribution within the 17% shelf gains for CELSIUS. Additionally, they did not clearly address the extent of cannibalization between CELSIUS and Alani, using vague language about the portfolio being complementary. The impact of aluminum costs on margins was discussed broadly without precise projections for Q2 or beyond.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Celsius Holdings
Cherry
Chief
Formula
Lemonade
Lime Slush
Suntory
Vibe
activation
assortment
beverage season
brand CELSIUS
category
channel Rockstar
distribution
dollar
energy drink
flavor
item
launch
model
moment consumer
occasion
place
platform
position
press release
progress
reset
result portfolio
risk
soccer
space
summer beverage
today
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