Celsius Holdings Inc. (NASDAQ:CELH) shares were trading higher in Thursday’s premarket session after the beverage and energy drink company reported third-quarter results that beat Wall Street estimates.
Revenue rose 16.8% year over year to $847.23 million, beating the Street estimate of $796.01 million.
The company reported adjusted diluted earnings of 41 cents, exceeding the analyst consensus estimate of 35 cents.
GAAP diluted EPS rose to 39 cents against a loss of 27 cents in the prior year.
Separately, the company announced a brand-led leadership structure, appointing Alex Zigliara as President of CELSIUS and Rishi Daing as President of Rockstar Energy & Emerging Growth.
Margins Contracted While International Momentum Supported Growth
Gross profit increased 6.4% to $396.3 million, while gross margin narrowed to 46.8% from 51.3%.
Commodity inflation, primarily aluminum and fuel, remained a headwind.
Channel mix also pressured margins, partially offset by ongoing efficiencies in the supply chain.
Adjusted EBITDA declined 3.4% to $198.6 million, with margin falling to 23.4% from 28.4%.
North America revenue rose 15% to $806.2 million, while International revenue increased 78% to $41 million.
Celsius reported strong momentum across Nordic markets and its expansion markets, including Iberia, the U.K., Ireland, France, Australia, New Zealand and Benelux.
Cash and equivalents totaled $700.6 million, long-term debt was $667.8 million, and quarterly share repurchases totaled $44.5 million.
Portfolio Performance Led by Alani Nu
Alani Nu revenue rose 24% to $410.1 million, driven by strong demand, increased distribution within the PepsiCo DSD system and the Alani Nu Witch’s Brew flavors launch.
The strong growth was partially offset by a higher mix of DSD versus direct sales, which resulted in higher trade investments and billbacks as well as the discontinuation of certain non-ready-to-drink products.
Rockstar Energy contributed $80.3 million in revenue, while CELSIUS brand revenue fell 6% to $356.8 million due to inventory rebalancing, club-channel softness and SKU optimization.
U.S. tracked-channel portfolio retail sales rose 14.7%, lifting dollar share in the U.S. RTD energy category to about 20.7%.
Celsius Holdings’ portfolio contributed about 28% of the zero-sugar U.S. energy category’s $773 million growth in the third quarter.
Alani Nu retail sales increased 57.9%, while CELSIUS fell 7% and Rockstar declined 13%.
Management attributed Alani Nu’s strong performance to continued innovation and brand adoption by new consumers as well as expanded distribution, while CELSIUS and Rockstar brands were impacted due to portfolio SKU optimizations.
Management Commentary and Brand-Led Organizational Structure
Chairman and CEO John Fieldly highlighted record third-quarter revenue, driven by the strength of its multi-brand modern energy portfolio and continued execution of its total energy portfolio strategy.
The company announced a new organizational structure aimed at accelerating growth, strengthening brand-level accountability and improving execution across its energy drink portfolio.
The company established three dedicated business units — CELSIUS, Alani Nu, and Rockstar Energy & Emerging Growth.
The company appointed Alex Zigliara (former Global President at FIJI Water) as President of CELSIUS and Rishi Daing (the company’s current Chief Marketing Officer) as President of Rockstar Energy & Emerging Growth.
The company is also seeking a dedicated president for Alani Nu to strengthen its brand-specific growth strategy.
Management is prioritizing freight optimization, raw-material sourcing alignment, revenue-growth management and price-pack architecture initiatives to support gross margin expansion, as rising commodity costs partially offset those benefits.
CELH Stock Price Activity: Celsius Holdings shares are trading higher by 6.50% at $32.75 during premarket trading on Thursday, according to market data.
