Celsius Holdings, Inc. – Research Report

Date: February 24, 2025

Executive Summary

Celsius Holdings delivered a mixed performance in 2024. Full?year revenue increased by 3% to $1.36 billion, driven by robust consumer demand in the better?for?you beverage segment and strong international expansion. However, the fourth?quarter saw a 4% decline in revenue, mainly due to higher domestic allowances and increased incentive spending. In addition, the company announced a definitive agreement to acquire Alani Nu, a strategic move expected to create a comprehensive functional lifestyle platform and further leverage category tailwinds.

Financial Performance

Revenue & Growth

• Full?Year 2024: Revenue reached $1.36 billion, representing a 3% increase compared to 2023.
• Q4 2024: Revenue was $332.2 million, marking a 4% decrease from Q4 2023.
• International Expansion: International sales grew 39% in Q4 and 37% on a full?year basis, reflecting successful launches in EMEA, the UK, Ireland, France, Australia, and New Zealand.

Margins & Profitability

• Gross Margin: Improved by 220–240 basis points to 50.2% year?over?year, driven primarily by lower outbound freight and materials costs.
• Net Income: Q4 2024 net income was a loss of $18.9 million compared to a profit of $50.1 million in Q4 2023. For the full year, net income declined by 36% to $145.1 million.
• Adjusted EPS: Adjusted diluted earnings per share decreased from $0.17 to $0.14 in Q4, and from $0.78 to $0.70 on an annual basis.

Expense Drivers

• SG&A expenses increased significantly in Q4 (up 73% year?over?year) due to accrued legal expenses from ongoing litigation and one?time restructuring and contractual co?packer costs.

Operational & Retail Performance

Retail Sales & Market Share

• Retail Sales: U.S. retail sales grew by 2% over a recent thirteen?week period, while full?year retail sales increased by 22% as per Circana’s reports.
• Category Share: Celsius improved its dollar share in the category, increasing market share by 160 basis points to 11.8% for FY 2024.
• Distribution: The company expanded its total points of distribution by 37% and reached an ACV of over 98.7%, enhancing market penetration.

International Growth

• Expansion in established EMEA markets and new international launches have contributed significantly to revenue growth, positioning Celsius to benefit from global category trends.

Strategic Update: Acquisition of Alani Nu

Transaction Overview

• Deal Structure: Celsius has entered into a definitive agreement to acquire Alani Nutrition LLC (Alani Nu) for approximately $1.8 billion in total consideration, with a net purchase price of $1.65 billion after accounting for $150 million in tax assets.
• Closing Conditions: The transaction, structured as a mix of cash and stock, is subject to customary closing conditions, including regulatory approvals, and is expected to close in Q2 2025.

Strategic Rationale

• Platform Expansion: Combining Celsius’ and Alani Nu’s brands is intended to create a leading functional lifestyle platform, bolstering product innovation and market reach.
• Synergy Potential: The integration is expected to generate cost efficiencies and drive revenue growth across complementary product lines.
• Market Leadership: This acquisition is viewed as a critical step in strengthening the company’s position in the rapidly growing global energy category.

Key Considerations & Risks

Growth Catalysts

• Consumer Trends: Sustained demand for better?for?you, functional beverages supports the long?term growth narrative.
• International Markets: Continued expansion into international markets offers opportunities for diversification and revenue growth.
• Strategic Acquisition: The integration of Alani Nu is anticipated to enhance product offerings and market penetration.

Potential Risks

• Margin Pressure: The ongoing legal and restructuring costs have negatively impacted near?term profitability.
• Integration Challenges: The success of the Alani Nu acquisition depends on effective integration and the realization of anticipated synergies.
• Market Competition: Intense competition in the functional beverage sector may pose challenges to maintaining market share and pricing power.

Conclusion

Celsius Holdings has demonstrated steady revenue growth and operational resilience in 2024 amid challenging near?term factors. The company’s significant investments in distribution and international market expansion, combined with the transformative potential of the Alani Nu acquisition, position it to capitalize on evolving consumer preferences in the functional beverage category. This report aims to provide a comprehensive view of Celsius’ performance and strategic direction, highlighting both the opportunities and risks inherent in its current business model and expansion strategy.