Celsius Holdings, Inc. Q3 FY2026 earnings call

• Organizational Restructuring: Established three brand-led business units (Celsius, Alani New, and Rockstar/Emerging Growth) with dedicated presidents to increase focus and speed. Alex Zigalera appointed President of Brand Celsius; Rishi Daing expanded to lead Rockstar and Emerging Growth.
• Brand Celsius Strategy: Focused on strengthening planogram sequencing ('faster cars on the track') and consumer connection via a multi-year ESPN College Game Day partnership. Innovation is returning in 2027 after being delayed in 2026 to prioritize integration of other brands.
• Alani New Momentum: Achieved record sales driven by 'Witch's Brew,' which ranked as the fifth largest energy drink in track channels at its peak. Core sales grew ~50% YoY, indicating strong consumer retention and new acquisition. Share of category reached ~9.8%.
• Rockstar Stabilization: Focus shifted to stabilizing the brand post-acquisition. Remaining SKUs are performing near prior year levels, and distribution declines are narrowing as rationalization completes. Future strategy involves expanding into college towns and leveraging music/motorsports platforms.
• International Expansion: Non-U.S. revenue grew ~56% YoY. European playbook is working with doubled aided awareness in UK/France and share gains in all new markets. Alani New launch in select international markets planned for 2027.
• Supply Chain Transition: Acknowledged the passing of Chief Supply Chain Officer Paul Storey; Seth Nicholas assumed interim role to ensure continuity.

Total Revenue: $847 million (up ~17% YoY). Brand Celsius: Net sales down ~6% YoY; Retail/Track channels down ~7%. Contribution to portfolio growth was mixed due to cycling prior year innovation. Alani New: Net sales of ~$410 million (up ~24% YoY); Retail/Track channels up 58%. This represented the strongest quarter in brand history, driven significantly by the 'Witch's Brew' limited-time offer ($130 million retail sales), with core sales growing ~50% YoY excluding that item. Rockstar: Net sales of ~$80 million (up from ~$67 million in Q2); Total retail sales remain down YoY as exited SKUs cycle, but remaining SKUs are within ~1% of last year's levels. The brand stabilized and showed geographic momentum.

• Full Year Gross Margin: Expected to be in the high 40s, pressured by elevated aluminum and diesel costs.
• Fourth Quarter Outlook: Reported revenue growth expected to be below the first three quarters' pace due to difficult comparisons (cycling a $25M inventory benefit from last year) and timing items ($20-$25M of shipments moved from Q4 to Q3 this year).
• Trade Investment: Expects trade investment as a percentage of gross sales to improve starting in 2027 through a new Revenue Growth Management program focusing on brand ladder, pack architecture, and long-term pricing discipline.
• Capital Allocation: Continued stock repurchases viewed as attractive given strong cash flow return on investment; $91 million remaining under $300 million authorization.

• Commodity Inflation: Elevated aluminum prices and high diesel costs are offsetting margin expansion efforts, delaying the path to low 50s gross margins.
• Inventory Timing Distortions: Significant shifts in shipment timing between Q3 and Q4 create volatility in reported results versus underlying scanner data trends.
• Brand Celsius Performance: Current sales declines highlight execution challenges in shelf productivity and planogram optimization, requiring disciplined recovery strategies.
• Integration Execution: While Alani New and Rockstar integration is largely complete, fully realizing synergies and maximizing the Revenue Growth Management program requires successful execution across the portfolio in 2027.

Q: Peter Grom asked about Brand Celsius expectations for Q4 and 2027, specifically regarding scan trends relative to reported results.

A: CEO John Fieldly explained that Q4 will face tough comps due to last year's 13% growth. However, weekly scanner data shows the brand holding steady in the $50-55 million range. He anticipates a return to slight growth or break-even in late 2027 as rationalized SKUs cycle out and robust innovation plans take hold. The focus remains on register performance rather than short-term reporting noise.

Q: Bonnie Herzog asked about gross margin recovery pace and pricing levers amidst stubborn inflation.

A: CFO Jarrod Langhans stated Celsius follows, not leads, category pricing to maintain premium positioning. The primary margin lever is the 2027 Revenue Growth Management program, which optimizes price-pack architecture and trade spend account-by-account. While commodity improvements would help, current delays mean margin expansion relies heavily on internal operational efficiencies and trade investment reductions over the next two years.

Q: Kaumil Gajrawala sought clarification on whether Celsius's reported performance included the $25M timing benefit and how to model 2027 inventory builds.

A: Fieldly clarified he was referencing underlying scanner health, which is stable. Langhans detailed that Q3 benefited from $20-25M in pull-forward shipments from Q4. For modeling, investors should subtract this timing benefit from Q4 and factor in that last year's Q4 had a separate $25M inventory benefit from Alani New DSD transition, making direct YoY comparisons difficult without adjustments.

Q: Gerald Pascarelli asked when Alani New's scans and reported results would align more closely, noting a persistent gap.

A: Langhans indicated that Q2 2027 is likely the best period for alignment. The current gap stems from non-RTD amortization and the recent shift to Direct Store Delivery (DSD), where sell-in differs from sell-out. As the DSD economics stabilize and amortization impacts normalize year-over-year, the variance between reported sales and scanner data is expected to narrow significantly.