Celsius Holdings tumbles after Q3 results despite earnings beat

Investing.com -- Celsius Holdings, Inc. (NASDAQ: CELH) shares plunged 11.5% premarket after the functional beverage maker reported third-quarter results that beat analyst expectations but showed concerning trends in its core CELSIUS brand.

The company reported adjusted earnings of $0.42 per share for the third quarter, surpassing the analyst consensus of $0.28. Revenue reached $725.1 million, exceeding estimates of $715.7 million and representing a 173% increase from $265.7 million in the same quarter last year. However, this growth was primarily driven by recent acquisitions rather than organic performance.

While the company’s total portfolio grew retail sales by 31% YoY, the performance of individual brands varied significantly. The core CELSIUS brand’s retail sales increased just 13% YoY, while Alani Nu, acquired in April, surged 114%. Rockstar Energy, acquired in August, saw a 9% decline. The CELSIUS brand’s market share in the U.S. RTD energy category fell 0.5 points compared to last year, settling at 11.2%.

"The third quarter marked another important step in Celsius Holdings’ transformation in a year full of growth catalysts," said John Fieldly, Chairman and CEO. "We strengthened our long-term partnership with PepsiCo and united CELSIUS, Alani Nu, and Rockstar Energy under one total energy portfolio."

The company’s gross margin improved to 51.3% from 46.0% in the year-ago quarter, driven by lower promotional spending, favorable mix, and scale benefits. International revenue grew 24% to $23.1 million.

Celsius recorded $246.7 million in distributor termination costs related to transferring a significant portion of Alani Nu’s distribution to the PepsiCo system, though PepsiCo has agreed to fund these fees, resulting in a net neutral cash position.

The company recently appointed several new executives, including Rishi Daing as Chief Marketing Officer, as it focuses on operational excellence and long-term growth.

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