Celsius Holdings, Inc. (CELH) Bundle
Understanding Celsius Holdings, Inc. (CELH) Revenue Streams
Understanding Celsius Holdings, Inc.’s Revenue Streams
For the nine months ended September 30, 2024, revenue was approximately $1,023.4 million, compared to $970.6 million for the same period in 2023, reflecting a year-over-year growth rate of 5%.
The breakdown of revenue sources by geographical location for the nine months ended September 30 is as follows:
| Geographic Location | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Dollar Change | Percentage Change |
|---|---|---|---|---|
| Total | $1,023,433 | $970,579 | $52,854 | 5% |
| North America | $968,988 | $930,545 | $38,443 | 4% |
| Europe | $47,069 | $31,599 | $15,470 | 49% |
| Asia-Pacific | $2,129 | $4,111 | $(1,982) | (48%) |
| Other | $5,247 | $4,324 | $923 | 21% |
The revenue growth in North America was primarily driven by increased distribution points and shelf space. However, it faced challenges due to inventory optimization from the largest distributor and a general decline in the energy drink category.
In Europe, revenues for the nine months ended September 30, 2024, increased by 49% to $47.1 million, up from $31.6 million in 2023, largely due to successful product innovations.
For the three months ended September 30, 2024, total revenue was approximately $265.7 million, a decrease from $384.8 million in the same quarter of 2023, representing a decline of 31%.
The breakdown of revenue sources for the three months ended September 30 is as follows:
| Geographic Location | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | Dollar Change | Percentage Change |
|---|---|---|---|---|
| Total | $265,748 | $384,757 | $(119,009) | (31%) |
| North America | $247,125 | $371,178 | $(124,053) | (33%) |
| Europe | $16,243 | $11,038 | $5,205 | 47% |
| Asia-Pacific | $594 | $1,247 | $(653) | (52%) |
| Other | $1,786 | $1,294 | $492 | 38% |
Promotional allowances included as a reduction of revenue for the three months ended September 30, 2024, were approximately $110.3 million compared to $88.6 million in the same period of 2023. For the nine months ended September 30, 2024, promotional allowances were $326.7 million, up from $240.6 million in 2023.
Significant contributors to revenue include major customers such as Pepsi, Costco, and Amazon. For the three months ended September 30, 2024, revenue from Pepsi accounted for approximately 47.0% of total revenue, while Costco and Amazon contributed 14.9% and 10.2% respectively.
A Deep Dive into Celsius Holdings, Inc. (CELH) Profitability
A Deep Dive into Celsius Holdings, Inc. Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the gross profit was $513.5 million, an increase of 10% from $466.9 million in the same period of 2023. The gross profit margin improved to 50% compared to 48% for the same period in the previous year. Operating profit for the nine months ended September 30, 2024, was $174.2 million, down from $207.4 million in 2023. Net income attributable to common stockholders was $131.0 million for the nine months ended September 30, 2024, compared to $142.6 million in 2023, with basic earnings per share of $0.56 in 2024 versus $0.62 in 2023.
Trends in Profitability Over Time
In recent quarters, profitability has shown fluctuations. For the third quarter of 2024, the gross profit decreased to $122.2 million, down 37% from $194.1 million in the same period of 2023. The gross profit margin dropped to 46%, down from 50% year-over-year. This decline was attributed to increased promotional allowances and incentives as a percentage of gross revenue.
Comparison of Profitability Ratios with Industry Averages
The company's gross profit margin of 50% for the nine months ended September 30, 2024, exceeds the industry average of approximately 40% for beverage companies. The operating profit margin, however, trails behind the industry average of 20%, with Celsius reporting 17%.
Analysis of Operational Efficiency
For the nine months ended September 30, 2024, selling, general and administrative (SG&A) expenses totaled $339.3 million, representing a 31% increase from $259.5 million in 2023. This rise was driven by a $56.0 million increase in marketing investments and a $26.6 million increase in employee costs.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $122.2 million | $194.1 million | -37% |
| Gross Profit Margin | 46% | 50% | -4% |
| Operating Profit | -3.2 million | $97.7 million | -103% |
| Net Income | $6.4 million | $83.9 million | -92% |
Promotional allowances included as a reduction of revenue for the nine months ended September 30, 2024, were $326.7 million, compared to $240.6 million in 2023.
Debt vs. Equity: How Celsius Holdings, Inc. (CELH) Finances Its Growth
Debt vs. Equity: How Celsius Holdings, Inc. Finances Its Growth
The financial structure of Celsius Holdings, Inc. reveals a significant reliance on equity financing with minimal long-term debt. As of September 30, 2024, the company's total liabilities stood at approximately $456.2 million, with no long-term debt reported.
Overview of the Company's Debt Levels
As of September 30, 2024, Celsius Holdings reported:
- Short-term debt: Approximately $30.9 million in accounts payable.
- Long-term debt: $0.
Debt-to-Equity Ratio and Comparison to Industry Standards
The company's debt-to-equity ratio is effectively 0.00, reflecting a strategy that favors equity financing over debt. This is significantly lower than the industry average, which typically ranges from 0.5 to 1.5 in the beverage sector, indicating a conservative approach to leveraging.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Celsius Holdings has not engaged in recent debt issuances or refinancing activities, maintaining its debt-free status. The absence of debt financing contributes to a healthier balance sheet and potentially lowers financial risk.
How the Company Balances Between Debt Financing and Equity Funding
The company has effectively utilized equity financing to support its growth. The Series A convertible preferred stock, issued to Pepsi, accounted for approximately $550 million in cash consideration, which has been instrumental in funding operations and expansion. The equity structure as of September 30, 2024, is detailed below:
| Equity Component | Amount (in thousands) |
|---|---|
| Common Stock | $79 |
| Additional Paid-In Capital | $292,576 |
| Accumulated Other Comprehensive Loss | ($338) |
| Retained Earnings (Accumulated Deficit) | $131,309 |
| Total Stockholders’ Equity | $423,626 |
This structure demonstrates a strong equity base, allowing the company to invest in growth opportunities without the burden of debt repayments. The strategic partnership with Pepsi, through equity investment, further strengthens its financial position.
Assessing Celsius Holdings, Inc. (CELH) Liquidity
Assessing Celsius Holdings, Inc. Liquidity
Current and Quick Ratios
The current ratio for Celsius Holdings, Inc. as of September 30, 2024, is approximately 3.12, calculated from current assets of approximately $1,074.0 million and current liabilities of approximately $289.5 million. The quick ratio, which excludes inventory, is approximately 2.78.
Analysis of Working Capital Trends
Working capital has shown a significant increase from $928.3 million as of December 31, 2023, to $1,074.0 million as of September 30, 2024, reflecting a growth of approximately 15.7%.
Cash Flow Statements Overview
The cash flows for the nine months ended September 30, 2024, reveal the following trends:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Cash flows from operating activities | $187,226 | $136,046 | $51,180 |
| Cash flows used in investing activities | ($20,983) | ($9,454) | ($11,529) |
| Cash flows used in financing activities | ($18,460) | ($18,942) | $482 |
Potential Liquidity Concerns or Strengths
Celsius Holdings, Inc. maintains strong liquidity with cash and cash equivalents of approximately $903.7 million as of September 30, 2024, compared to $756.0 million at the end of 2023. This indicates a robust cash position to cover short-term obligations.
Is Celsius Holdings, Inc. (CELH) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze its key valuation metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company's diluted earnings per share (EPS) was $0.55. With a current stock price of approximately $40.90, the P/E ratio is calculated as follows:
P/E Ratio = Stock Price / EPS = $40.90 / $0.55 = 74.36
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was approximately $1.80. Therefore, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $40.90 / $1.80 = 22.72
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated as follows: EV = Market Capitalization + Total Debt - Cash and Cash Equivalents.
As of September 30, 2024, the market capitalization was approximately $9.6 billion, total debt was $0, and cash and cash equivalents were $903.7 million.
Thus, the EV is:
EV = $9.6 billion + $0 - $903.7 million = $8.6963 billion
For the nine months ended September 30, 2024, the EBITDA was approximately $200 million. Therefore, the EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $8.6963 billion / $200 million = 43.48
Stock Price Trends
Over the last 12 months, the stock price has experienced significant volatility. The stock price was approximately $30 a year ago, peaking at around $45 in early 2024, before settling at the current price of $40.90.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, hence the dividend yield is 0%. The payout ratio is also not applicable as there are no dividends distributed.
Analyst Consensus on Stock Valuation
According to the latest analyst reports, the consensus rating for the stock is a Hold based on its high P/E and P/B ratios, indicating that the stock may be overvalued relative to its earnings and book value.
| Metric | Value |
|---|---|
| P/E Ratio | 74.36 |
| P/B Ratio | 22.72 |
| EV/EBITDA Ratio | 43.48 |
| Current Stock Price | $40.90 |
| EPS | $0.55 |
| Book Value per Share | $1.80 |
| Market Capitalization | $9.6 billion |
| Total Debt | $0 |
| Cash and Cash Equivalents | $903.7 million |
| EBITDA | $200 million |
| 12-Month Stock Price Range | $30 - $45 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Celsius Holdings, Inc. (CELH)
Key Risks Facing Celsius Holdings, Inc.
Overview of Internal and External Risks
The company faces several internal and external risks that can significantly impact its financial health. Key risks include:
- Industry Competition: The energy drink market is highly competitive, with numerous established players and new entrants. This competition can lead to price wars and decreased market share.
- Regulatory Changes: Changes in regulations regarding health claims, labeling, and distribution can affect operational capabilities and compliance costs.
- Market Conditions: Economic downturns may lead to reduced consumer spending, impacting sales and revenue growth.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Promotional Allowances: For the nine months ended September 30, 2024, promotional allowances included as a reduction of revenue totaled $326.7 million, an increase from $240.6 million in the same period of 2023 .
- Net Income Fluctuations: Net income attributable to common stockholders for the nine months ended September 30, 2024, was $131.0 million, down from $142.6 million for the same period in 2023.
- Cash Flow Changes: Cash flows provided by operating activities increased to $187.2 million in 2024 from $136.0 million in 2023.
Mitigation Strategies
The company has implemented several strategies to mitigate identified risks:
- Diversification of Product Lines: Expanding product offerings to capture a broader market.
- Strong Distribution Agreements: Partnerships with major distributors like Pepsi to enhance market reach and stability.
- Cost Management: Focus on reducing operational costs and optimizing supply chain efficiencies to maintain profitability.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition may lead to pricing pressures. | Potential decrease in revenue growth. |
| Regulatory Changes | Changes in health regulations may require compliance adjustments. | Increased compliance costs. |
| Market Conditions | Economic downturns can reduce consumer spending. | Negative impact on sales and revenue. |
| Promotional Allowances | High promotional allowances can reduce net revenue. | Increased costs affecting profitability. |
| Net Income Fluctuations | Variability in net income may affect investor confidence. | Potential decline in stock price. |
Future Growth Prospects for Celsius Holdings, Inc. (CELH)
Future Growth Prospects for Celsius Holdings, Inc.
Analysis of Key Growth Drivers
Product innovations and market expansions are key growth drivers for Celsius Holdings, Inc. The company has made significant advancements in its product lineup, which have contributed to increased revenue.
Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenue was approximately $1,023.4 million, compared to $970.6 million for the same period in 2023, representing a growth of 5% year-over-year. European revenues increased by 49% to $47.1 million due to successful innovation launches.
Strategic Initiatives or Partnerships
In April 2024, the company entered into a sales and distribution agreement with Orangina Schweppes France, expected to drive sales starting in Q4 2024. Additionally, a similar agreement with Schweppes Suntory Benelux SA for Belgium, Netherlands, and Luxembourg is set to begin in Q1 2025.
Competitive Advantages
The company's partnership with Pepsi has enhanced its distribution capabilities significantly. Under the agreement, Pepsi serves as an exclusive distributor, expanding market reach and shelf presence.
| Geographical Location | Revenue (Q3 2024) | Revenue (Q3 2023) | Dollar Change | Percentage Change |
|---|---|---|---|---|
| North America | $247,125 million | $371,178 million | $(124,053) million | (33%) |
| Europe | $16,243 million | $11,038 million | $5,205 million | 47% |
| Asia-Pacific | $594 million | $1,247 million | $(653) million | (52%) |
| Other | $1,786 million | $1,294 million | $492 million | 38% |
Future Revenue Growth Projections
Revenue is projected to continue growing, with estimates reflecting an increase driven by new product launches and expanded market access. For the full year 2024, the company anticipates a growth trajectory supported by ongoing strategic initiatives.
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Updated on 16 Nov 2024
Resources:
- Celsius Holdings, Inc. (CELH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Celsius Holdings, Inc. (CELH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Celsius Holdings, Inc. (CELH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.