Celsius Holdings, Inc. Files 10-Q for Period Ending March 31, 2024

Ticker: CELH · Form: 10-Q · Filed: May 7, 2024 · CIK: 1341766

Sentiment: neutral

Topics: Celsius Holdings, CELH, 10-Q, Financials, Customer Concentration

TL;DR

<b>Celsius Holdings, Inc. (CELH) filed its Q1 2024 10-Q, detailing financial performance and risks.</b>

AI Summary

Celsius Holdings, Inc. (CELH) filed a Quarterly Report (10-Q) with the SEC on May 7, 2024. Celsius Holdings, Inc. filed a 10-Q report for the period ending March 31, 2024. The filing covers the first quarter of 2024. Key financial data from previous periods (2023-12-31, 2022-12-31) and the current quarter (2024-03-31) are referenced. Customer concentration risk is noted, specifically mentioning PepsiCo, Inc. and Costco. The report includes details on common stock, additional paid-in capital, accumulated other comprehensive income, and retained earnings.

Why It Matters

For investors and stakeholders tracking Celsius Holdings, Inc., this filing contains several important signals. This 10-Q filing provides investors with the latest financial snapshot of Celsius Holdings, Inc., crucial for understanding the company's performance and financial health in the first quarter of 2024. The disclosure of customer concentration risk, particularly with major partners like PepsiCo and Costco, is important for assessing potential revenue stability and dependency on key relationships.

Risk Assessment

Risk Level: medium — Celsius Holdings, Inc. shows moderate risk based on this filing. The company faces medium risk due to customer concentration, with significant revenue dependent on PepsiCo, Inc. and Costco, as detailed in the filing.

Analyst Insight

Investors should monitor Celsius Holdings' revenue diversification strategies and the ongoing relationship with key distributors like PepsiCo and Costco.

Key Numbers

Key Players & Entities

FAQ

When did Celsius Holdings, Inc. file this 10-Q?

Celsius Holdings, Inc. filed this Quarterly Report (10-Q) with the SEC on May 7, 2024.

What is a 10-Q filing?

A 10-Q is a quarterly financial report with unaudited financials, management discussion, and interim business updates. This particular 10-Q was filed by Celsius Holdings, Inc. (CELH).

Where can I read the original 10-Q filing from Celsius Holdings, Inc.?

You can access the original filing directly on the SEC's EDGAR system. The filing is publicly available and includes all exhibits and attachments submitted by Celsius Holdings, Inc..

What are the key takeaways from Celsius Holdings, Inc.'s 10-Q?

Celsius Holdings, Inc. filed this 10-Q on May 7, 2024. Key takeaways: Celsius Holdings, Inc. filed a 10-Q report for the period ending March 31, 2024.. The filing covers the first quarter of 2024.. Key financial data from previous periods (2023-12-31, 2022-12-31) and the current quarter (2024-03-31) are referenced..

Is Celsius Holdings, Inc. a risky investment based on this filing?

Based on this 10-Q, Celsius Holdings, Inc. presents a moderate-risk profile. The company faces medium risk due to customer concentration, with significant revenue dependent on PepsiCo, Inc. and Costco, as detailed in the filing.

What should investors do after reading Celsius Holdings, Inc.'s 10-Q?

Investors should monitor Celsius Holdings' revenue diversification strategies and the ongoing relationship with key distributors like PepsiCo and Costco. The overall sentiment from this filing is neutral.

How does Celsius Holdings, Inc. compare to its industry peers?

Celsius Holdings operates in the non-alcoholic beverage industry, specifically focusing on energy drinks. The market is competitive with evolving consumer preferences for health and wellness products.

Are there regulatory concerns for Celsius Holdings, Inc.?

The filing is a standard 10-Q, a quarterly report required by the SEC for publicly traded companies to provide updates on their financial condition.

Risk Factors

Industry Context

Celsius Holdings operates in the non-alcoholic beverage industry, specifically focusing on energy drinks. The market is competitive with evolving consumer preferences for health and wellness products.

Regulatory Implications

The filing is a standard 10-Q, a quarterly report required by the SEC for publicly traded companies to provide updates on their financial condition.

What Investors Should Do

  1. Review the detailed financial statements within the 10-Q for Q1 2024.
  2. Analyze the customer concentration risk section for potential impacts on future revenue.
  3. Compare key financial metrics with previous filings to identify trends.

Key Dates

Year-Over-Year Comparison

This filing represents the Q1 2024 update, following the previous 10-Q filing which would have covered the period ending December 31, 2023.

Filing Stats: 4,507 words · 18 min read · ~15 pages · Grade level 14.6 · Accepted 2024-05-06 19:28:22

Key Financial Figures

Filing Documents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 1 Item 1.

Financial Statements

Financial Statements 1 Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited) 1 Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited) 2 Consolidated Statements of Changes in Stockholders' Equity and Mezzanine Equity for the three months ended March 31, 2024 (unaudited) 3 Consolidated Statements of Changes in Stockholders' Equity and Mezzanine Equity for the three months ended March 31, 2023 (unaudited) 4 Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited) 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 30

– OTHER INFORMATION

PART II – OTHER INFORMATION 31 Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Celsius Holdings, Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts) (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 879,498 $ 755,981 Accounts receivable-net 200,117 183,703 Note receivable-current-net 2,259 2,318 Inventories-net 197,504 229,275 Prepaid expenses and other current assets 21,523 19,503 Deferred other costs-current 14,124 14,124 Total current assets 1,315,025 1,204,904 Property and equipment-net 28,350 24,868 Deferred tax assets 22,437 29,518 Right of use assets-operating leases 1,688 1,957 Right of use assets-finance leases 263 208 Other long-term assets 7,963 291 Deferred other costs-non-current 244,807 248,338 Intangibles-net 11,741 12,139 Goodwill 13,866 14,173 Total Assets $ 1,646,140 $ 1,536,396 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 40,196 $ 42,840 Accrued expenses 63,871 62,120 Income taxes payable 58,619 50,424 Accrued promotional allowance 129,201 99,787 Lease liability obligation-operating leases 821 980 Lease liability obligation-finance leases 61 59 Deferred revenue-current 9,513 9,513 Other current liabilities 12,987 10,890 Total current liabilities 315,269 276,613 Lease liability obligation-operating leases 850 955 Lease liability obligation-finance leases 245 193 Deferred tax liability 2,248 2,880 Deferred revenue-non-current 164,849 167,227 Total Liabilities 483,461 447,868 Commitments and contingencies (Note 15) Mezzanine Equity: Series A convertible preferred stock, $ 0.001 par value, 5 % cumulative dividends; 1,466,666 shares issued and outstanding at each of March 31, 2024 and December 31, 2023, aggregate liquidation preference of $ 550,000 as of March 31, 2024 and December 31, 2023 824,488 824,488 Stockholders' Equity: Common stock, $ 0.001 par value; 300,000,000 shares authorized, 233,070,146 and 231,787,482 sha

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) March 31, 2024 (Tabular dollars in thousands, except per share amounts) 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Business Overview Celsius Holdings, Inc. (the "Company," "Celsius Holdings" or "Celsius") was incorporated under the laws of the State of Nevada on April 26, 2005. Celsius is a fast-growing company in the functional energy drink category in the United States ("U.S.") and internationally. The Company engages in the development, processing, marketing, sale, and distribution of functional energy drinks to a broad range of consumers. Celsius provides differentiated products that offer clinically proven and innovative formulas meant to positively impact the lives of its consumers. The Company's brand has also proven to be attractive to a broad range of customers, including fitness enthusiasts. The Company's flagship asset, CELSIUS, is marketed as a premium lifestyle and energy drink formulated to power active lifestyles with ESSENTIAL ENERGY TM . This product line comes in two versions, a ready-to-drink form and an on-the-go powder form. The Company also offers a CELSIUS Essentials line, available in 16-ounce cans. Celsius 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, the Company's products are currently offered in certain Canadian, European, Middle Eastern and Asia-Pacific markets. Agreements with PepsiCo Inc. On August 1, 2022, the Company entered into multiple agreements with PepsiCo Inc. ("Pepsi"), including a long-term agreement that resulted in Pepsi becoming the primary distribution supplier for Celsius products in the U.S. (the "Distribution Agreement"). Under this agreement, the Company granted Pepsi a right of first offer in the event the Company intends to manufacture, distribute or sell products in certain additional countries or cha

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) March 31, 2024 (Tabular dollars in thousands, except per share amounts) Significant Estimates — The preparation of consolidated financial statements and accompanying disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the financial statements. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Significant estimates include promotional allowance, the allowance for current expected credit losses, allowance for inventory obsolescence and sales returns, the useful lives of property and equipment, impairment of goodwill and intangibles, deferred taxes and related valuation allowance, and the valuation of stock-based compensation. Segment Reporting — Operating segments are defined as components of an enterprise that engage in business activities, maintain discrete financial information, and undergo regular review by the chief operating decision maker (the "CODM"), who in this case, is the Chief Executive Officer. This review is performed to assess performance and allocate resources. Despite the Company's presence in several geographical regions, it operates as a single operating segment. The Company's operations and strategies are centrally designed and executed due to the substantial similarities among the geographical components. The CODM evaluates operating results and allocates resources primarily on a consolidated basis due to the significant economic interdependencies between the Company's geographical operations. As a result, the Company is managed as a single operating segment and has a single reportable segment. Concentrations of Risk — Substantially all of the Company's revenue is

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) March 31, 2024 (Tabular dollars in thousands, except per share amounts) receivable related to Qifeng Food Technology (Beijing) Co. Ltd ("Qifeng"). See Note 7. Note Receivable for more information on Qifeng and the note receivable. Allowances can be affected by changes in the industry, customer credit issues or customer bankruptcies when such events are reasonable and supportable. Historical information is used in addition to reasonable and supportable information for forecast periods, where applicable. Allowance for Expected Credit Losses Balance as of December 31, 2023 $ 3,137 Current period change for expected credit losses 2,215 Balance as of March 31, 2024 $ 5,352 Inventories — Inventories are valued at the lower of cost or net realizable value, with costs approximating those determined under the first-in, first-out method. As of both March 31, 2024 and December 31, 2023, the inventory allowance for excess and obsolete products was approximately $ 4.2 million. Changes in the allowance are included in cost of revenue. Property and Equipment — Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful life of the asset, generally ranging from three to seven years . Long-Lived Assets — In accordance with ASC Topic 360, Property, Plant, and Equipment the Company reviews the carrying value of long-lived assets, which includes property and equipment-net, right-of-use assets, and definite-lived intangible assets-net, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized for a long-lived asset if its carrying amount is not recoverable and exceeds its fair value. The carrying amount is not recoverable when it exceeds the sum of the undiscounted cash flows exp

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) March 31, 2024 (Tabular dollars in thousands, except per share amounts) Distributor Termination Fees — For the three months ended March 31, 2024, the Company did not incur any termination fees. For the three months ended March 31, 2023, the Company incurred immaterial termination fees related to termination charges associated with certain prior distributors. Advertising Costs — Advertising costs are expensed as incurred and charged to selling, general and administrative expenses. The Company mainly uses targeted marketing initiatives, such as sporting events, print, radio, and television advertising, alongside direct sponsorships and endorsements. The Company incurred advertising expenses of approximately $ 46.5 million and $ 31.0 million for the three months ended March 31, 2024 and 2023, respectively. Research and Development — Research and development costs are charged to selling, general and administrative expenses as incurred and consist primarily of consulting fees, raw material usage and test production of beverages. The Company incurred expenses of approximately $ 0.2 million and $ 0.3 million, for the three months ended March 31, 2024 and 2023, respectively. Foreign Currency Gain/Loss — The Company's foreign subsidiaries' functional currency is the local currency of operations. The net assets of foreign operations are translated into U.S. dollars using current exchange rates. The Company's foreign subsidiaries perform remeasurements of their assets and liabilities denominated in non-functional currencies on a periodic basis, and the gain or loss from these adjustments related to the fluctuations in foreign exchange rates versus the U.S. dollar are included in the consolidated statements of operations and comprehensive income as foreign exchange gain (loss). For the three months ended March 31, 2024 and 2023, the Company recognized net foreign exchange losses of $ 0.4 million and $ 0.1 million, r

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