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Celsius Flagship Slips 6% as Alani Nu Grows: Rapid Earnings Reaction
Key Points
Retail sales of the flagship CELSIUS brand fell 7% in the quarter.
Gross margin fell to 46.8% as aluminum, fuel, and distribution costs climbed.
Adjusted earnings per share were roughly flat despite a big jump in GAAP profit.
Celsius Holdings (NASDAQ:CELH) posted record third-quarter revenue of $847 million, up 17%, but its namesake CELSIUS brand shrank. Shares rose about 5% in pre-market trading. Alani Nu and the acquired Rockstar Energy now carry the growth, while higher costs ate into the gains. Beneath a big swing to a GAAP profit, adjusted earnings were roughly flat.
Key numbers
- Revenue: $847.2 million, up 17% from $725.1 million.
- CELSIUS brand revenue: $356.8 million, down about 6%.
- Alani Nu revenue: $410.1 million, up about 24%.
- Gross margin: 46.8%, down from 51.3%.
What it means
The flagship is the problem. Celsius blamed the drop on cutting slow-selling flavors, rebalancing inventory, and weak club sales, but retail sales of the brand also fell 7%, so shoppers are buying less, too. The company also named a new president to run the CELSIUS brand today.
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More sales didn't bring more profit, because aluminum and fuel cost more and a bigger share of volume now runs through PepsiCo's store delivery system, which comes with larger trade discounts. That mix squeezed margins, and adjusted EBITDA fell 3%.
The jump to a GAAP profit mostly comes from last year's one-time charge to end old distributor deals. Strip that out, and adjusted earnings per share slipped a penny to $0.41.
What to watch next
Watch whether CELSIUS brand retail sales stop falling once the flavor cuts are done. Also watch gross margin, since the release gives no full-year outlook on sales or costs.
David Kretzmann has positions in Celsius Holdings. The Motley Fool recommends Celsius Holdings. The Motley Fool has a disclosure policy.