Greetings, and welcome to the Celsius Holdings Inc. Q1 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Cameron Donahue from Hayden IR, please go ahead.

Thank you. Good afternoon, everyone. We appreciate you joining us today for Celsius Holdings’ first question 2018 earnings conference call. Joining me on the call today are John Fieldly, Chief Executive Officer and Interim Chief Financial Officer; and Vanessa Walker, Executive Vice President of Marketing & Innovation. Following prepared comments, we will open the call to your questions, and instructions will be given at that time. We have filed our Annual Report with the SEC and issued press release today. All materials are available on the Company’s website at celsiusholdingsinc.com under the Investor Relations section. As a reminder, before I turn the call over to John, the audio replay will be available later today. Please also be aware this call may contain forward-looking statements, which are based on forecast, expectations and other information available to management as of today, May 10, 2018. These statements involve numerous risks and uncertainties, including many that are beyond the Company’s control. Except to the extent as required by applicable law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our Safe Harbor disclosures contained in today’s press release and our quarterly filings with the SEC for additional information. With that, I’d like to turn the call over to Chief Executive Officer, John Fieldly for his prepared remarks. John?

Thank you, Cameron. Good afternoon, everyone, and thank you for joining us today. As a growing global brand, we are making significant progress in 2018. We’re expanding our distribution channels and increasing product availability through existing channels to bring greater visibility for our portfolio, our premium fitness beverages, all while continuing to accelerate topline revenue. With innovative products and compelling packaging, we’re reaching more and more consumers each and every day. Our strategy of positioning Celsius, as a global beverage leader for health-minded consumers remains our top priority. We achieved a number of successes during the first quarter of 2018 including doubling revenue all while maintaining our gross profit margins. We continue to leverage our supply chain to gain efficiencies and our maximizing our market investments. In addition, we had a strong launches in the quarter of new products and multiple international markets and further expansion and new and existing retailers in North America. As a Celsius brand gains greater visibility globally, we continue to step up our efforts to meet the demands with the development of new products that we believe will continue to raise the bar and meet the demands for today’s consumers. And North America, we continue to build out our presence and traditional retail, recently expanding into two divisions of global food retailer Ahold Delhaize securing availability in availability in Food Lion and Hannaford. Ahold Delhaize operates in 23 states from Georgia to Maine and also includes banners Stop & Shop, Giant Landover and multiple other banners including an e-commerce presence. Food Lion which is the dominant grocery chain in the South Atlantic and Mid-Atlantic regions has more than 1,100 stores. And Hannaford has nearly 190 stores in five states throughout New England. The relationship is off to a solid start. We have already restarted to…

Thanks, John. And on behalf of the entire company I’d like to congratulate you once again on being named Chief Executive Officer. We're looking forward to many exciting wins in the days ahead. As John indicated, we continue to gain brand awareness among consumers, who are veering away from sugary soda and traditional sugary energy globally. We have tremendous momentum, winning new retailer store shelves as we are out in front of the trends. With a proven functional beverage, we are capitalizing on the shift on in consumer thinking, regarding their own consumption trend as they evolve across the globe. To begin the Q1 marketing recap, I'll mention in April, we were recognized for becoming one of the top performing growth stocks within the beverage segment, we were named a top eight click on the 2018 beverage stock watch list by Industry Analytics Inc. an independent investment research firm. Our corporate marketing initiative in March included participation in the ROTH Conference held annually in Dana Point, California. This conference was a successful one, as we met with many new potential investors and analysts, who are interested in learning more about our organization. Aside from a sampling booth for every [indiscernible] John will given the opportunity to speak to a room of conference attendees and his 20 minute presentation was well received by the financially minded portfolio managers. We heard resoundingly greater brand awareness among this year's conference attendees, including personal stories of conversion to the brand more so than any conference in recent memory. We will continue to attend these corporate marketing conferences, including the upcoming B. Riley event in Santa Monica, May 23 through to 24. By way of press, we generated corporate news the several press releases in the first quarter including our best received release. Simultaneously announcing…

Thank you, Vanessa. Total revenue for the first quarter of 2018 was record $12.1 million, compared to $6 million in the first quarter of 2017. The more than 100% increase was primarily attributable to increases in sales volume, as opposed to increases in pricing, which remain consistent. By geography, North America sales were up 96%, due to double-digit growth in existing accounts and new distribution expansion. Sales also increased in Europe, a 118%, mainly as a results of the launch of our new BCA line extension mentioned earlier, as well as, timing reorders in our core line in the Nordics. And in Asia, sales increased a 100%, due to the initial launch of our products in China. Gross profit for the first quarter of 2018 increased by $2.4 million or 100% and in line with increases in revenue. Gross profits grew to $4.8 million and gross profit margins for the period grew to 39.5% of revenues, compared to $2.4 million or 39.7% of revenues for the corresponding period last year. The improvement in gross profit was driven almost entirely by higher revenues and a diligent management of existing account, promotional allowances and managing cost of goods. The two basis point decrease in gross profit margin was mainly due to increases in new account promotional activities compared to the prior year. Sales and marketing expenses for the three months ending March 31, 2018 were $5.6 million, compared to $2.2 million for the three months ending March 31, 2017, an increase of 160%. This increase is due primarily to increases in investments and human resources and increased marketing programs in North America as mentioned by the Vanessa, as well as initial support – to support the initial launch of our products in China. General and administrative expenses for the three months ending…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jeff Van Sinderen with B. Riley FBR. Please proceed with your question.

Hi everyone, I want to say first congratulations on really strong growth in Q1, and John congratulations to you on your appointment as permanent CEO.

Thank you, Jeff. Appreciate that. Really excited to continue to lead this organization and continue to deliver prudent results.

So maybe we can start with I guess your latest sense on how sell-through’s have been trending in the U.S. And then maybe you can give us a little more what we should look for around the launch in CVS, which I think is starting this month, if I heard you correctly and then anything around the grocers that you also launched with. Just as we’re thinking about the P&L, there is any of that in Q1 or if most of that’s falling into Q2.

Okay, great. Initial sell-through has been, as I mentioned in regards to we’re starting to receive and continue to receive a lot of Nielsen data, also getting some good data points coming from our existing customers. And all sell-through information that we are receiving is extremely positive. Some of the new business that we brought in, in regards to Food Lion, we just recently got our sell-through data, which we’ve been in Food Lion now commencing almost three – over three months. The sell-through data continues to show good momentum. These – the buyer is pleased with our initial movements, which continues to increase on a weekly basis. So we are building a good consumer base and we’re seeing that a lot of our existing accounts and that is really reflected in our numbers where we continue to see strong double-digit growth rates in all channels of where we’re operating. In addition to CVS, we did receive a pipe order for the 550 stores, as you mentioned it should be growing out over really this month and over the next several weeks as we go through their supply chain. It is a direct account. And we are located in those premium locations, in those front and checkout cooler, so really excited about that opportunity. We do not have initial data points at this point coming from CVS. But we look forward to getting those. We can share those hopefully, next time on our call.

Okay, great. And then as far as HEAT and 7-Eleven, any update there on the new flavors how they are doing.

Yes. Our two new flavors in 7-Eleven, we continue to get reorders from Mclean. We have not received an updated scan data report from 7-Eleven, but based on the reorders we’re receiving as well as we attended several FOH franchise trade shows throughout the quarter as Vanessa indicated. And those shows were extremely successful on getting the brand out in front of the franchise owners. And from what we hear from the franchise owners everyone is extremely pleased with our movement.

Okay, great. And then any data you can give us on the BCA launch in the Nordic countries, just wondering if we have any data there to speak to.

And it’s a little premature at this point. We did have the initial orders. We have gone to production – our second production with those lines. We do have a actual planned review meeting with our partners coming up this month will be able to get additional insight into the operations and some of the data points that they’re seeing. But initial feedback is positive. They’re gaining shelf space and some great displays in the hyper market. So they are very excited about the three new flavors.

Okay, great. And then turning to China, just wondering I guess what the key focus initiatives are there in the near-term or over that said a next couple of quarters you’ve gotten on the shelf there. What are kind of the next steps?

Sure. We just tremendous production really when you look at it in the fourth quarter. It was late September, when we had that first local production. Q1 after coming out of Chinese New Year was really to continue to scale from the really the traditional retail into key accounts, which we’ve been able to secure over 7,000 locations in key accounts. We look forward to continuing to penetrate those key accounts in those markets, we look forward to continually increasing that we have the execution of Qifeng. Initial feedback has been extremely positive on our take rates, the execution we’re seeing our placement is being placed right next to the Red Bull in the yellow can out of Thailand. So the placement seems very strong and very good placement in execution by Qifeng sub-distributors. Vanessa and I will be traveling over there next month. We will be conducting our quarterly review meeting and look forward to further plans. But initial feedback has been very positive as we entered really summer beverage season, which were excited about. But we are monitoring very closely on the investments we’re making in market.

Okay, great. All good to hear. Thanks for taking my question and let someone else jump in.

Thank you, Jeff.

Our next question comes from the line of Anthony Vendetti with the Maxim Group. Please proceed with your question.

Thank you. I would like to also echo the congratulations John on being named permanent CEO.

Thank you. Thank you very much and I appreciate all your support.

And I just wanted to follow-up on two pretty large contracts. I know the CVS stores starting with 550; they have over 8,000 stores if not more than that. Can you talk about how you see that opportunity evolving and then just a follow-up question 7-Eleven?

Sure, absolutely. CVS is a great opportunity for our brand to health and wellness space, our products we build very confident, our products will perform well with our initial flavors – our three flavors going in. 5,500 is a start, we look to go back right after midsummer is when to reviews take place. And we look forward to further – gaining further distribution and expansion three CVS. We feel our product positioning is in line with CVS’s health and wellness position, as well. And it’s a very comparable product. And in addition to CVS that really opens the opportunity for the whole drug channel, which is really the overarching opportunity we’re going after. So this is just the beginning and we’re just getting started in this channel.

Okay, great. And then 7-Eleven, you have to HEAT products in there. 7-Eleven – there’s the corporate 7-Eleven that can give you an entrée or sort of like a hunting license. But most of the 7-Eleven have the ability to determine what goes in their store. So can you talk a little bit about the strategy of approaching that opportunity and how do you go about trying to penetrate the 7-Eleven opportunity in an expeditious manner other than going store to store.

Yes. It is a great opportunity for us, it is – it has been a challenge for us over the last several years since we’ve been with them now for over three years. We’re working very diligently to continue to expand. As the brand continues to build momentum and the marketing continues to take hold that is making it easier for us to gain distribution. As well as we’ve made this journey with them with their core – really key franchisees and corporate support. So you’ll see us in the southeast where we have almost a 90% ACV in the southeast and we’re seeing some of these other markets start to increase at an increasing rate. We’re doing a variety of tactics, which include targeted teams, our targeted teams will blitz markets, we also are supporting the FOA franchisee organization trade shows as well as their annual trade shows. And then we’re also doing some targeted marketing initiatives to those locations. So it’s a multi-level approach that it is – that we continue to work on. And we still have a lot of work ahead of us overall we’re roughly around I think right around 50%, a little over 50% when you look at the total population on the 7-Eleven. So a lot of room to continue to build upon and we are focused to continue to build upon this opportunity.

Okay. And then just a last question on China. I know you have a slightly different packaging there. Can you talk about how the marketing and promotional events are being received in China?

The marketing promotional event is working very well. We feel we have a – as you mentioned a very unique packaging country, it is popping on the shelves in regards to their overall energy sets and the overall products on-shelf. So we’re very excited about that. We also are using technology in China to really leverage the Celsius brand as well. So regard to marketing programs, its traditional trade, traditional advertising as well as digital sampling hands in cans. But one thing we’re doing that’s unique is we have a QR code tied to our – under our taps which is a promotional program where you can win a lot of different activities. You can win fitness equipment, you can win an instant rebate and it’s all tied to a WeChat account. It allows us also to data capture understand who’s consuming our product, who is our consumer and then we’re able to retarget them. So there’s a lot of great insight in some of the marketing activities that we’re doing which we’re excited about. So are executing, we’re just in really the first quarter was the first quarter as we continue to roll out these marketing initiatives as we move into really summer beverage season. And ultimately close distribution, we need to continue to execute, we need to continue to close those key accounts and further expand our penetration to really see the benefits of some of the overall arching marketing programs as they take hold over the summer beverage season.

Okay. Great. I’ll hop back in the queue. Thanks, John.

Thank you very much Anthony.

[Operator Instructions] Our next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

HI, John and Vanessa. This is actually Destiny on for Jeff. How are you?

Fine.

Excellent, Destiny. How are you today?

I’m great. Thank you. Both of my questions have been answered, I just have a couple follow-up. For the BCAA that was launched in Finland and Sweden, could we essentially see a similar product and maybe the U.S. or the Asian markets, as my continuing on that part, you said that, you now have a pre-workout and then post-workout beverage. Are you seeing other gap, where maybe an additional product could fill?

Yes. Thank you, Destiny. There is a lot of opportunity out there, with our product and position and really, when you look at overarching strategy is to – really build out our portfolio of really proven proprietary or innovative products in your category and when you look at the BCAA post recovery initial launch rolling out in the Nordics, it was a great pairing for products we have high ACV in markets. We have a great brand presence and it was very complementary. So we're very excited about some of the initiatives on innovation. In regards to innovation, we're looking at a variety of other opportunities as they come to us and some are self created internally. Then we'll roll those out at the right time in regards to overarching strategy. I don't know, Vanessa, you want to mention any additional topics on regards to that.

Yes, I think in basis to your question, I think one of the finer points mentioned is that we have implemented a plan for innovation and six pages if you will, its key innovation. In a way to evaluate, people are knocking on our door. Maybe we want to good on the path of bringing people in and discussing ideas with people and do want to innovate from internally. And does it look like new innovation et cetera. So there is plans in place, in fact, John and I just met regarding the topic this morning. So we always keeping our eye on the millennials, as we mentioned. Keeping pace with the trends, understanding how to look forward and understanding with the core mission of our portfolio as John just mentioned. So with regard to your question on the BCAA’s in other country is possible. We're evaluating and part of our launch plan for innovation is that final step, which is follow-up in a valuation. There after a tactical launch, we will continue to follow-up and evaluate whether there is launch in the product. I met our criteria for success and it is something of we would consider moving forward with in other regions, the U.S., Asia, et cetera.

Okay, great. Thank you. My last question, it has little bit more to do with the ambassador’s program. That you mentioned, I'm just curious, what’s type of criteria you could be doing book for when picking those people, is it like a social media presence or like biolines of the brands and things like that? Could you provide little more color? Thank you.

Excellent. Thank you, Destiny. I'll turn it over to Vanessa.

Thanks, John. Yes. So our initial criteria was, everyone has to be over 21 years of age. The other criteria that we were looking for was social platforms. Are they living a good lifestyle? Do they reflect the brand? Followers, and also geography, we were a nationwide brand. And we're going to continue to scale and expand nationally into multiple channels at multiple retailers. We want to far and wide reach for the brand ambassadors. And we're also asking for enthusiastic people who are bringing a sense of credibility with them, when they come to the brand. So they can help us to passionately grow fan-base. Are they are personal trainer? Does that person have reach? Are they sport enthusiasts in some way? Are they in shape model? Corporate Executives that the weekend warriors. So we're looking for a diverse group of people and we are considering their social media platforms and how willing they will be to engage in the brands. That's really our criteria at this time.

Okay. Got it. Thanks, again.

Thank you.

[Operator Instructions] Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. John Fieldly for closing remarks.

Thank you. Our first quarter result demonstrates our products are gaining momentum as we were capitalizing on today's health and wellness trends. Our active healthy lifestyle position as a global position with mass appeal, we're building upon our core business and leveraging opportunities and deploying best practices. I'm very proud of our dedicated team and I thank our investors for their continued support. Thank you, everyone for your interest in Celsius and have a great day.