CELH 1Q2024 Earnings

Revenue $355m, 37% growth (down from 95% growth in Q1)
GM shot up to 51.2% from 47.8% last quarter and 43.8% last year
EPS 0.27 vs 0.13 YoY - 108% growth

Not sure what to think about this - didn’t expect revenue growth to slow down so much, although the gross margin increase is nice. The preliminary excuse from the press release was that their largest customer (Pepsi) changed their days on hand inventory. And spring resets will be reflected starting in July.

Hopefully there will be some color on the call, if some revenue is getting pushed back a quarter due to customer inventory management, I think the decrease in growth is okay since margins are expanding so much. But I’m much less bullish on CELH today after this report release.

Edited to add - I was looking for SGA info but didn’t find it on the press release, they did disclose this on the 10Q:

Selling, General and Administrative Expenses

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.

The breakdown of changes within SG&A primarily consisted of:

•a $14.4 million increase in marketing investments;

•a $4.5 million increase in storage and distribution costs due to growing organic sales volume;

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

•a $2.7 million increase in other selling expenses as we continue to grow operationally; and

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

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.

I do like that the majority of the increase is going towards marketing expense and not employees - will want to see any growth in revenue to continue to fall to the bottom line going forward


On the face of it looks like Revenue growth slowed a lot - to 37%. But they record sales when Pepsi buys from them (not end customers) so their revenue is dependent on the stock that Pepsi keeps on hand. In this Q Pepsi reduced stock on hand which had a negative $20m revenue impact. In Q1 last year Pepsi increased days on hand which had a $25m positive revenue impact. Adjusting for these two things revenue growth was 60% yoy, closer to the 72% retail sales growth.

So the growth story is still very much in tact.

“Revenue for the first quarter increased 37% to $355.7 million compared to $259.9 million for the prior-year period, driven primarily by the North American business and the company’s success in sustaining consumer demand growth, delivering unique innovation and overall channel growth, offset in part by inventory movements within our largest distributor where first quarter 2024 inventory days on hand declined versus the fourth quarter resulting in an approximate $20 million impact, while first quarter 2023 revenue benefited from an inventory buildup of approximately $25 million. Ongoing inventory fluctuations may be expected in subsequent quarters because our largest distributor constituted 62% of our total North American sales during the first quarter of 2024. However, retail sales of Celsius in total U.S. MULOC grew by 72.1% in the first quarter of 2024 year over year”



Sorry wsm, but that’s not convincing at all.

“Last year our 60% customer bought a lot of stuff from us, this year they didn’t buy as much, but if you take out some of last year’s sales and add it to this year’s sales instead, then our growth numbers would look fantastic

Are days on hand going to increase back up? or will Pepsi be able to throw their weight around and go towards JIT even more? Why should we make these adjustments to get a better growth rate number unless we know that Pepsi won’t continue to leverage its distribution muscles on which CELH is completely reliant on in North America?

Additionally, other channels like Costco (10% customer) and Amazon (not disclosed, but calculated from press release is about 8%) is growing in the 30s - any way management tries to sugar coat it, the growth story is starting to rapidly deflate, faster than expected

Having said all of that, I will listen to the call and wait to see if the spring resets start getting the growth numbers back to where I expect them to be (in the +50s range)


I think the point wsm007 is making is that this is about inventory management, not a customer buying more or less. Pepsi is a distributor. The customers are in the retail growth. What matters is what the end-consumer is buying, not how much Pepsi wants to keep on hand, or not. It will all eventually fall through to the individual consumer purchases.

That said, it will be interesting to watch how Pepsi makes these decisions going forward. I would expect them to get closer to an equilibrium inventory amount as time goes on and scale and volume have more data-points.

In theory, these lumpy purchases should equal a little more than what the consumer purchases over time, right? Otherwise Pepsi would be limiting sales and losing money, and not accounting for growth between purchases.


Correct, and because Pepsi has all of that data, we should be alarmed when inventory levels held by Pepsi start falling.

Just read through the call - a mix of good and bad (questions in bold, prepared statements/answers in italic):

  • as I look at April, I’d say this is kind of a new normal for us at the moment. We’ll see where our partner goes from here, but I wouldn’t bake in a reversal of what we’ve seen.
  • margins were quite substantially ahead of plan. Was there anything onetime in there? Or is it just sort of leverage off your growth? - we’re not ready to put the line in the sand at the rate we were able to deliver in Q1. We’re always going to try to deliver that or better, and we do have a kind of a long-term goal that we’re looking to get to. But I would say as we look out to Q2, Q3, Q4, we’re kind of sticking with what we said at the end of February, which was kind of that high end of the 40s and not quite locking in into the 50s yet.
  • I just wanted to circle back to spring resets as well. Maybe you could just speak a little bit more about where you’re seeing the most significant gains. Maybe touch on that in terms of SKUs, spacings, quality of shelf locations, that sort of thing. - when you look at the resets, we’re really excited… We expect full resets to be done by the end of June
  • specifically in Costco, that became in a bit light, same as on foodservice. Just wondering about the sequential decline in Costco and the flat foodservice, any drivers there that you can point to or what to expect going forward, please? - So Costco, really the club channel, we probably should have called that out last quarter, but we did see a really good Thanksgiving week and Black Friday. So we had the team really activated phenomenally there. So we did get a bit of a bump there in Q4 versus Q1. Q1 does also tend to be a little slower in the club channel. What was the other part? The foodservice, foodservice remains strong. That can be a little lumpy at times. But being up at that 12-ish range is pretty good for us.
  • Just wanted to come back to the inventory for a minute. And I think you’ve been clear not to expect a snapback or an inventory restocking. But should we expect any more destocking? I know you said the inventory levels feel about right, but how low could it go? Is that something we should watch out for? - Yes. I mean I can’t control that or we can’t control that. I think it’s – sales are flowing, sales are strong at the register. So it seems to be like the balancing has been finalized. But who knows what next week or the week after happens? But I think right now, it seems somewhat stable as we ended the – ending March.

So to me it seems that they are not expecting there to be a reversal or worsening of the inventory trend, so perhaps going forward the expectation should be growth in the mid 30s - margin will compress back into the mid 40s as it sounds like the freight costs and such being lower is a one time event. They do sound optimistic about the resets and more shelf space, so I’m willing to be patient for at least another quarter. But I am feeling like I should reduce my oversized allocation to CELH now.


Anecdotal, but I can add a bit of my experience to this situation.

I work within the supply chain organization for a large fortune 500 energy company and we recently underwent a huge push to reduce our DIO (days inventory outstanding) in Q4. We got a bit fat and happy during the Covid era and leadership wanted to see us reduce our inventory back to the pre-2020 levels. In total, we reduced our inventory across all raw materials, components, and finished goods by nearly $500 million.

I manage about 80 suppliers and spoke with many of them about our ongoing inventory reduction efforts since it had a tangible impact on their business. They shared that a lot of their other customers were going through a similar exercise. It is not surprising given the rise in interest rates that supply chains are looking to reduce their net working capital.

Of course my industry is very different than the one Celsius operates in but the reasoning they are giving for the drop in sales does hold water in my opinion. Supply chains are looking to right size the ship these days.

That said, I am still surprised at the price action today. I would have expected it to be deep in the red given the headlines of a big revenue miss but it appears the market is buying this message as well. I am guessing this will largely be a one time effort by Pepsi as it was for us which means it will be important we see solid sequential growth next quarter. If not, it will be a big reason for concern.


And as we reported in this morning’s press release, Celsius now holds an 11.5 share in MULOC for the four weeks period ending April 14, according to Circana. This is a full point higher than the Q4 2023, and four points higher than one year ago. These results on their own are very strong, especially after growing at a triple-digit for the past three consecutive years. Even so, our first quarter revenue would have been higher, except that it was adversely affected due to inventory movements by our largest customer, which is beyond our control.

I would say the reason why it isn’t having a big sell off is that it is taking market share. A full 1 point higher in one quarter seems to be huge. Also they said on the conference call that they were responsible for 47 percent of the growth in energy drinks YoY.



Along the same lines, CELH grew 9.6% sequentially in a quarter where energy drinks as a whole declined 0.4%.

If energy drinks are going out of favor, that’s a problem. If not, any resumption in growth will simply make a temporary blip and in turn easier comps down the road as Celsius continues to grab market share.


Nice discussion so far which covers a lot.

Like others, I’m a bit caught off guard by the inventory issues and surprised how much leverage Pepsi has over Celsius in their business model. Overall I’m more pessimistic after this report, but encouraged they are gaining share in the energy market.

I am curious for the board’s take on hiring and this passage from the CEO,

And already this year we’ve increased our sales and key accounts by approximately 85%. By the end of this year, we are expecting to have three times as many sales staff compared to this time last year, supporting our growth and the opportunities we see ahead

Is there some growth initiative that is coming where they need three times as many sales staff in a single year? Wondering why they haven’t been hiring consistently before this.

Maybe it’s a lot for international with onboarding Australia, France, Ireland, New Zealand and the UK? Do they need to open physical offices in the new countries?

Another random thing I’m wondering about is why they never talk about their Celsius Cola product? It’s sold on Amazon for a long time now.

I’m thinking if they can compete in the Cola category it could open up new TAM. Personally I tried this Cola and like it a lot, but I never see it on store shelves. It seems only sold through Amazon. Not a single mention of “cola” in the 10-Q.

EDIT: I’m starting to wonder if the Celsius Cola flavor isn’t being allowed to be distributed by Pepsi because it would compete with their core product. This could be a potential reason it’s only sold on Amazon and never mentioned anywhere.


It’s hard to tell for sure, but this was my thought. It’s not as if CELH can launch into a new country without boots on ground to build relationships, and your list plus Canada makes six new countries to scour.

Based on the reaction, the market seems to be accepting the inventory explanation for now. Luckily, the market share gains and 9.6% sequential growth during a quarter in which the energy drink category shrunk 0.4% seem to back management’s claims.

As long as energy drinks aren’t suddenly going out of favor, things should be fine. To use @wpr101’s phrase, I wouldn’t say I’m “more pessimistic.” That being said, I would call myself a bit less optimistic than I was exiting Q4.