Good day, ladies and gentlemen, and welcome to the Celsius Q2 2022 Earnings Call. [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your host, Cameron Donahue, Investor Relations. Sir, the floor is yours.

Thank you. Good afternoon, everyone. We appreciate you joining us today for Celsius Holdings Second Quarter 2022 Earnings Conference Call. Joining me on the call today are John Fieldly, President and Chief Executive Officer; and Jarrod Langhans, Chief Financial Officer. Following the prepared remarks, we'll open the call to your questions and instructions will be given at that time. The company released their earnings press release upon market close this afternoon, and all materials will be available on the company's website, celsiusholdingsinc.com, under the Investor Relations section. As a reminder, before I turn the call to John, an audio replay will be available later today and can be accessed with the same live webcast link in our conference call announcement and earnings press release. Please also be aware that this call may contain forward-looking statements, which are based on forecasts, expectations and other information available to management as of August 9, 2022. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by 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 statements 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 President and Chief Executive Officer, John Fieldly, for his prepared remarks. John?

Thank you, Cameron. Good afternoon, everyone, and thank you for joining us today. Our record second quarter represented our 16th consecutive quarter of sequential growth and an 18% increase over the first quarter of 2022. According to the trailing 12 weeks IRI MULO data as of July 10, 2022, Celsius continues to be the top driver of the energy category growth, representing 34% of the category growth, which corresponds to the #1 brand driving category growth. We were also notified last Friday that the S&P announced that Celsius will be added to the S&P Mid-Cap 400 Index, graduating from the S&P Small Cap 600 Index after the close of trading today, August 9. We continue to see growth across all channels, including those not tracked with the club channel sales increasing by approximately $24.9 million for the second quarter from 2021, an additional rollout and expansion in over 175 new BJ wholesale locations that have been -- took place in the second quarter. Our vending and foodservice channels continue to see rapid expansion with over 50% growth in sales from the first quarter with approximately $4.4 million in sales in the second quarter. Additional second quarter retailer highlights include the benefits from the Walmart expansion we discussed on our Q1 2022 earnings call. Sales increased over 700% on a year-over-year basis in accordance with SPINS 12-week data as of June 12, 2022. And in the convenience channel, sales increased overall by 227% compared to the second quarter in 2021. And Celsius is now ranked the #5 brand in the convenience channel per SPINS energy ending June 12, 2022. Moving to the most recent highlights for Celsius. On Monday, August 1, we announced a distribution and investment agreement with PepsiCo. This transformational partnership provides significant near-term U.S. growth acceleration with an…

Thank you, John, and good afternoon, everyone. Before jumping into the results, I'll cover a quick housekeeping item. As an update to our previously disclosed SEC inquiry, we have fully responded to all follow-up questions but do not have any material updates to date on this process other than reaffirming our previous comments. Turning to our second quarter financial results. Our second quarter revenue for the 3 months ended June 30, 2022, was approximately $154 million, an increase of $88.9 million or 137% from $65.1 million for the 3 months ended June 30, 2021. Approximately 103% of this growth was as a result of increased revenue from North America where second quarter 2022 revenues were $145.4 million, an increase of $91.8 million or 171% from the 2021 quarter. The balance of the revenue for 2022 was mainly attributed to European revenue of $7.3 million, which decreased from the prior year quarter, primarily due to foreign exchange rates and timing. Asian revenues, which include royalty revenues from our China licensee, contributed an additional approximately $900,000, an increase of 43% from approximately $600,000 for the prior year quarter, which includes increases in royalties payable under our licensing agreement. Other international markets generated approximately $400,000 in revenues during the 2022 quarter, an increase of roughly $400,000 or 634% from the prior year quarter. Total increase in revenue was largely attributable to increases in sales volumes as opposed to increases in product pricing. The primary factors behind the increase in North American sales volume were related to continued strong triple-digit growth in traditional distribution channels combined with an increase in optimization of our products presence in world-class retailers, i.e. additional SKUs. Additionally, the continued expansion of our DSD, or direct store delivery, network resulted in significant growth in distributor revenues of in excess of…

[Operator Instructions]. Our first question comes from Peter Grom with UBS.

Congrats on another strong result. So I know it's really only been a week here, but would just love to get some perspective on whether you have some updated thoughts on the Pepsi distribution agreement. Have you begun to wrap your head around like kind of a long-term revenue opportunity and how we should be really thinking about the benefits of top line growth looking out to 2023?

Yes. Thank you, Peter. The team did a great job of results, and we are starting to work through that process. Based on our analysis, when we look at it, we look at the opportunity, we're also looking at the results from Bang relationship on increase of points of distribution and GDP. We do anticipate the expansion into these alternative channels or to unreported as well in regardless to foodservice and also independent convenience, we see a huge opportunity for the brand to expand. And we anticipate about a 40% increase in distribution at the end of solidifying this relationship over the first 12 months, and it could be a significant upside from that number. But initially, internally, we're going with a 40% increase over our expected growth rates that we were -- internally had over the last 12 months.

Got it. Super helpful. And then I guess following up on a separate topic, just the gross margin progression. I know you reiterated sequential improvement, but still kind of a meaningful gap versus where you landed in 2Q versus kind of getting back to that mid-40s in 4Q. So is there any way to frame kind of the expectation for 3Q and then kind of the buildup from there into 4Q?

Yes. Yes. Thank you, Peter. We spoke -- I think it was our Q4 call, we talked about like some of the impact on the percentage is roughly around 6% in regards to some of the impact we were getting from the international cans. So we're still cycling through. So I know it looks like a big increase as we expect to be back in the mid-40s in Q4. Q3 probably could be somewhat similar. There is some upside. We do think there is potential for sequential growth. We're working through cycling through the rest of these international cans that are on our balance sheet. All the cans now -- the majority of the cans are now in finished goods. So we'll be cycling -- we anticipate the cycle through the majority of the finished -- of the international cans in the third quarter. So it's hard to say on the exact percent where that will land, but we do think there's sequential growth in the third quarter. And then our goal is to get back to the mid-40% range by the end of the fourth quarter.

Congrats again.

Thank you.

Our next question comes from Kaumil Gajrawala with Credit Suisse.

Can we talk about the club channel a little bit? You mentioned -- you gave us a good amount of figures on your success in the club. How much of that was kind of first-time fill-in versus kind of continuation? Obviously, BJ's seems to be a bit new. And can you maybe just talk about what we should expect from this channel going forward now that you seem to be in quite a few more stores?

Yes. Kaumil, good question. The club channel has been really surprising to us. We first started expanding in that channel. And really, that happened in the fourth quarter with the national rollout at Costco. And then in the first quarter of this year, we expanded into Sam's Club. So when you're looking at the second quarter, you're really looking at reorders from those customers. Now that's 175 stores from BJ's are new. But in general, you're looking at majority of reorders that are flowing through those clubs. And the volume coming through those clubs is just really exciting because just shows you the opportunity. And we're not seeing any slowdowns in alternative -- from the other channels as well. So it was really incremental to our overall sales.

Okay. Great. And then on the -- it's been a week now. You've probably had some, I guess, tough conversations on the transition over to the Pepsi system. Could you just talk about what you're doing to try to keep it be as smooth as possible?

Yes. We're working with the team. So I've spent a lot of time today with the teams as well, trying to work on -- get our plans ahead. We have a lot of team members that have worked through the PepsiCo transition in the past. And I think with the groups involved, we're going to hopefully be able to mitigate as much of the disruption as possible. We know there will be disruption, but we're trying to put plans in place to mitigate that, especially with the transition of the timing and when the -- your existing distributors and your new partner can start servicing chains. We're trying to work closely with a lot of our distributors. We're going to start really working with them on the transition piece to try to limit the impact that you see in the marketplace. And that's the best we can do at this point. We do have plans in place, and we're working to fill that supply chain on the PepsiCo system. We're working on that over the next several weeks. We'll be filling a lot of their mixing centers at first before we go, and then we'll move to direct with some of the larger distributors to really optimize shipping costs and logistics costs as well.

Our next question comes from Kevin Grundy with Jefferies.

I wanted to pivot to the international business. A 2-part question. The first one, just sort of near term and cleanup. Jarrod, I think you mentioned the results in Europe. Some of it was timing-related. Certainly, the stronger dollar played a part. Should we expect to see that reverse? If it's such a smaller part of the business, but I think it's sort of enough to move the needle a bit versus The Street in the quarter. Maybe just comment on some of the near-term dynamics. And I think, John, more importantly, of course, is going to be the opportunity with PepsiCo, where I understand they have a right of first refusal for the international distribution. Maybe just speak to how quickly you can move on that opportunity, balancing the significant opportunity you have in the U.S. as well.

Yes. So Kevin, the first part, there were some issues in getting the supplies and the product that we needed, especially for a new line that we were trying to get in a new SKU into Sweden. And so we weren't able to get that in for the selling season. So we did miss that. If you look at July, we've had very good results. The team has worked and been very focused on making sure that we've got products on the shelves. And so we are moving back into the right direction, and we fully expect the team to be in good shape in the back half of the year versus the first half of the year, but we did have a lot of supply chain issues. Many of those were around the location in terms of availability of transportation because it was being utilized for other means. But at the moment, we are ready. The product is on the shelf. And we saw, like I said, very good results in July, and we expect good results for the rest of the year.

Yes. And Kevin, on part 2 of your question in regards to the international opportunity, we see massive opportunities. Like I said before, the same health and wellness trends that we see in North America are global trends. And this fitness helping wellness trend is a megatrend that's kind of really taking on all regions of the globe. So I think it's going to be timing and sequencing. We do not -- we want to make sure that when we enter new market, we enter it correctly, very methodically on our approach as we've done to make sure we build that loyal consumer and really become part of a daily lifestyle or the daily routine. We're really adamant on that as we build scale. Want to be cognizant on entering new markets, but talking about the U.K. and Germany as near-term opportunities. But right now, we're really focused as a company on this transition. We want to make sure there's North America transition gets completed with at least disruption as possible. And then we do have ongoing discussions now with the opportunities in the U.K. where we're looking to explore.

Just a quick follow-up on what you're seeing with current trends. As we look at the Nielsen data, the category slowed a little bit. Your data still looks quite good. I think the distribution gains -- or excuse me, the sales gains are -- year-over-year sales growth being more driven by distribution than velocity. I think that it has been more recently. Do you want to speak to that at all? Has anything been surprising to you in terms of how your results have come in or with respect to pull-through from a velocity perspective as you've expanded into additional doors?

Yes. No, Kevin, I think the brand is performing really well given the growth we've seen, especially over the most recent resets in entering new markets and new retailers. So we're watching it. We watch it very closely. We do see good growth coming out of our established markets. Some of our new markets, as you enter new market, your velocity is not going to be as high as some of your more mature markets that are building. So we're being very cognizant of that, very methodical on our targeted marketing programs, really making sure we're building the brand awareness in those markets while strategies over the next, really right now in Q3, we have a lot of great programs going on. You'll see that towards the back half of this year and into 2023. So that is something we're watching very closely, but we think the velocity levels are truly strong, especially given the expansion in the ACB gates.

Okay. Very good. And congrats on the quarter.

Thanks.

Thanks, Kevin.

Our next question comes from Mark Astrachan with Stifel.

Partly just following up on that question. So if you look at where your penetration is versus the energy drink category and larger peers, you have roughly 50% of sales coming from C-store. So I guess as you think about expanding that probably via the Pepsi partnership, how do you factor in the velocity? And what should be a higher sales per unit or per space channel? That's the first question.

Yes. We think that's a -- thank you, Mark. We think that's the biggest opportunity as well is with the PepsiCo system, is really being able to further expand the ACV in convenience as the latest data showed 67% of the volume in the energy category is coming from the convenience channel. And when you look at the data and look at how the product is performing and some of the broader retailers getting Circle K, Speedway, QT, RaceTrac, just to name a few of those, the product is doing extremely well in those retailers. And as we're entering -- as we enter new markets, you are going to see a slower velocity at -- in the beginning, but we're seeing a higher velocity than we saw prior several years back when we were entering new markets. So the velocity level does seem to -- on the new stores, you enter slowly. You need to get involved into the daily consumers' lives, but then we do see that building on. So we do think that will balance out. Now as we further expand into the larger convenience store channel, we get a higher ACV. Some of those stores will not be as productive as some of the stores that we're in currently. So just keep that in mind as well just given the geography, the volumes on some of these other, call it, Tier 3 or Tier 4 accounts that we'll be entering. So that's something to keep in mind.

It will also benefit from moving into the mixing centers because we'll be able to go with Pepsi and with their products into these smaller convenience as opposed to just going in on our own. So there will be some benefit in combining with them and working with them on their metals program and a variety of different things that can help keep our velocity up at the same time. So we think there's some things that will help it go. But there's definitely -- as we enter new markets and new territories, we're pleased with what we're seeing, but it is a little slower to get things moving. And like John has mentioned a variety of times, we're really excited to see what we can do with foodservice as well.

Yes. And I think just as well, when you look at where the opportunity lies, it's better placement in existing accounts as well and better placement in new new distribution points, getting into that what we call the bull's eye within the coolers and getting in that strike zone that the sales team has been working on. We think PepsiCo will be able to really leverage that, especially through their metals program as we expand independence.

Got it. That's helpful. And then maybe just following up, 2 related questions to that. One, why is it looking at bank distribution points the ultimate opportunity rather than just the 40% incrementality that you're talking about? I think if you look at the data, spending is roughly in twice the point of distribution that Celsius is today. And then second question, just on the mixing piece of it. Maybe talk a bit about that. Is that a potential starting point? How do you think about potentially working with Pepsi from a co-packing standpoint as well to sort of more co-habitate everything together under one roof?

Yes. I think your first question in regards to the 40% increase in distribution, I think that's a great reference point. That's really what we're using internally. We were just mentioning the Bang. We did watch that through that process. But I agree, just a 40% increase in the overall distribution is kind of what we're expecting here over the next 12 months. When you do look at the initial rollout with PepsiCo on the logistics and operations side, we will be entering their mixing centers for immediate efficiencies to feed out to their distribution networks in a very most efficient manner. And then we'll continue to optimize that going direct to some of the larger houses. When you look at production and co-packing, I think that's opportunities down the road, but it's something we're not discussing today.

And just to be clear, it's distribution. So it's not top line. I think you got that, Mark, but just to be clear on the call or not, looking for all of a sudden, the top line to be 40% higher than we had expected. We're looking to get to distribution up 40%.

Yes. No, I think that's well understood by folks.

Our next question comes from Jeff Van Sinderen with B. Riley.

I just wanted to follow up on the Nordics business. Does the Pepsi partnership change how you'll handle business in that -- in those countries as well as the FAST protein business associated with that?

Jeff, great question. Right now, I mean, we're really not -- we haven't really looked -- explored those opportunities yet. I do think -- we do think there's a big opportunity for the FAST portfolio. PepsiCo does have a big snacks business, as we all know. And our FAST portfolio is one of the leading protein snack portfolios in Finland. So there is opportunities there, but I think we're a little bit earlier in the phase on the discussions there. But there is opportunities, for neuro opportunities, to get further synergies and leverage best practices and their distribution partners throughout those regions.

Okay. And then I wanted to ask you about your plans for coolers. I know, obviously, you have a lot more capital to put into buying more coolers. But co-location with Pepsi coolers or how does that all evolve now with Pepsi as far as being cold?

As is another great opportunity we spending some time talking about. We're going to be entering some of their co-branded energy coolers that are -- there's roughly about 50,000 to 70,000 of them out there in the marketplace just in North America alone and will be included in those coolers. So we're pretty excited about that. In addition, we will be placing -- one of the big strategies as we all know, placing coolers, we have over 2,700 that we placed so far this year in the first 6 months. We're looking to ramp that up. We do have orders in -- already placed for larger cooler placements and getting a lot of interest on those as well. Trying to get a fixed fee from the checkout is ideal. That's where we want to be. We see great rotations and great opportunities. But we're definitely focused on placing coolers at front checkout.

Okay. And then just one more, if I could squeeze it in. Just any comments on pricing -- your pricing strategy?

Pricing strategy has not changed. Where pricing strategy, we did take price. As we announced, we'll expect we are rolling that through a phased approach. And we're monitoring pricing very closely as we continue to move forward. The category is price-sensitive, promotionally sensitive as well. So we do think there's opportunities to further take price with the brand as we maintain our premium position.

Our next question comes from Jeffrey Cohen with Ladenburg.

Congrats on the news last week, and congrats on the S&P upgrade.

Thanks, Jeff.

Thanks, Jeff.

Just a couple of questions from our side. So any commentary specifically on the rollout of the On-The-Go sticks as far as early learnings? And I'm assuming the On-The-Go sticks are also part of the deal with Pepsi as well.

Yes. Thanks, Jeff. The powdered product is going to be something we're managing internally. That's not part of the PepsiCo arrangement. We are seeing great interest in our powdered products. CMP, Spin it into Walmart, many retailers, including down here in Florida, Publix, does well online. We do think on the go for our core consumer. It is a smaller portion of our revenue. It does contribute to good gross -- does have to gross margins but -- and it tastes great. So there's an opportunity in the portfolio, but that is not part of that PepsiCo arrangement. But you will start to see it in more retailers around the country.

Yes. We do see an opportunity to really expand the distribution across the retail market. And it's a product that can be transported pretty easily because of its -- it's lightweight. So we'll be able to roll it straight into the distribution centers of the various retailers.

Okay. Got it. That's helpful. Jarrod, could you maybe walk us through and comment on sales and marketing and G&A for the back half of the year and going forward? Does it -- does this seem unreasonable that we should expect a more muted ramp with the PepsiCo arrangement?

Yes. Especially in Q3, we'll probably keep our foot on the gas on the sales and marketing piece. Where we're seeing our leverage within G&A and within S&M is really our people cost, where we're able to scale up our business without adding the same number of heads over the last -- if you look year-over-year, so we got about 1% on the S&M line and 1% on the G&A line from [indiscernible] to expand at the same rate from a personnel need. So I think we'll be able to continue to maintain that kind of trajectory both from a marketing and a sales perspective. We will keep our foot on the gas and keep that going while we're doing the restocks and while we're really rolling into the Pepsi footprint. We want to keep the velocity going, and we want to keep the demand there and keep the brand in front of mind.

Our next question comes from Anthony Vendetti with Maxim Group.

Just a couple of questions. First on the expanded distribution. You've mentioned 40%-plus -- with the Pepsi distribution agreement, you'd be able to expand by 40%. Just on the capacity side, how quickly are you able to ramp up capacity to meet that is that currently in your current capacity? Or do you have to sign additional co-packer agreements and just kind of where you're at with that? And then I have a question about the termination agreements with the distributors.

Within our current orbit structure that we've set up, we do have that capacity to flex up to meet the demand of the extra 40% in 2023 and also to continue to expand in 2024 and 2025. So as we look out over the next 3 years, from an expectation perspective, we've got plenty of capacity with our current system to meet the demand.

And then on the termination agreement, I know that Pepsi is going to help with that. What percent approximately are they going to pay of those termination agreements with your DSD networks?

Yes. So it's -- we've got the -- we're not going to be able to get all of our DSD network in this year. We think we can get most of it in this year. I think the way we're managing it is consistent with how Pepsi has managed Rockstar and Bang in terms of growing in the distribution. There will be some distributors that we keep, and there will be some distributors that over the next year or 2 years or maybe even 3 years that will roll out. So as we get farther away, further discussions will happen between us and Pepsi in terms of where we want to go. But at the moment, a majority or most of the cost of these terminations will be borne by Pepsi as a part of the partnership.

Our next question comes from Sean McGowan with ROTH Capital.

Following up on some similar questioning before. But could you -- is there a scenario where you might imagine sales and gross margin actually dipping ahead of the full benefit of the transition? Is there a disruptive scenario where you actually have a slowdown in sales and a drop in gross margin? Or should we expect this to be kind of smooth up into the right, right from the get-go?

In regards to -- in the way we're seeing the third quarter, we are going to have a pipe order and a fill order into the PepsiCo system, and then we will have some returns that are going to be coming through as we pick up inventory. So it is going to be -- there's going to be a lot going on in the P&L in the third quarter in regards to sales with the pipe order to fill and then returns -- estimated returns on product that will -- in case we have to take up a product, which we likely will be picking up product from those distributors that will be terminating. So the margins, we do feel, should be somewhat accretive from this point forward, but I think soft guidance on that. I don't know if, Jarrod, you have anything to add.

Yes. I mean it's really going to be up those to make sure that we're meeting our fill rates. And so that's what we've been planning with our operations team and our sales and marketing team is really to make sure we got the product on shelves. As long as the products are on the shelf, the consumer won't notice the difference. There will or potentially could be some sell-in as we move away from one group of distributors and into the other groups. So there could be a little bit of noise on the backside. But we believe that we'll be able to keep a good tight lid on things in terms of making sure products on the shelf.

Okay. And while you're -- mic is still on your hand, Jarrod, you talked on the last call last week about some things that you might help us out with on how they'll be accounted for, these distribution fees. I don't imagine it's going to all hit in 1 quarter. Is that a fair assumption, that it could kind of be spread out over several quarters? How is that going to be accounted for? How are you going to treat the assistance that you get from a P&L standpoint? And is the Pepsi investment right now sitting on the balance sheet as $550 million in preferred stock?

The settlement fees, the termination expenses, we will have to book an accrual for any distributors that we've basically sent a letter or sent a termination note on. So majority of the termination expense will be on the books at Q3. There will be some that have not sent letters for. There are some that we need to -- that don't have a 60-day term or a 90-day term or 120-day term. They might have a 1-year term. So we wouldn't have sent that yet. So there will be -- most of them will be on the books. There are stragglers out there, but the majority of them will be in Q3. It will be recorded within OpEx as an expense. So it would be very significant. To give you a perspective, I think when we look back at Monster, it was something like $112 million or something to that impact. So it will be significant on our P&L. It will likely be higher than that with inflation that Monster paid their fees quite a while ago. With that said, the assistance that we will get will be recorded into the balance sheet, and it will be amortized over the life of the agreement with Pepsi. We are kind of reviewing what we believe that term would be because there's a variety of clauses within the agreement that we need to make sure line up with GAAP and that we're making the right decision in terms of what the lifetime of that rollout would be. So the expense, more or less, will be hitting the P&L. The impact of the assistance from Pepsi will be borne over a number of years. In terms of the preferred stock at the moment, based on the way we're reading the researches, it will be mezzanine equity. We should be finalizing that up in the next few weeks, though, in terms of where our expectations are from that aspect.

Okay. And then on these termination fees, just to clarify, so if you know that you're going to be taking, just pick a hypothetical number of $150 million, you would book that $150 million as an expense in Q3 even if you did lay out all of that cash in Q3. So some portion of the offset would be assistance from Pepsi and the rest would be simply didn't pay it in cash yet, right? It's just a prepaid asset or something like that, right?

Yes. So the cash impact should be nominal, but it will -- the expense is just a timing thing. So on the cash flow statement, it will be nominal. There might be a little bit of timing, probably not much, if any. But on the P&L, yes, it will be up in -- it will actually be a deferred revenue.

Our next question comes from Anthony Vendetti with the Maxim Group.

Just a quick question on the international revenue. I think you mentioned on the call, John or Jarrod, I don't know, but timing of some shipments, supply chain issues. Is that something -- obviously, North America is incredibly strong, growing well over 100% for the last couple of quarters. Is it a distribution issue? Or is it a combination of distribution and supply chain? Is that something -- even though I know it's not a focus right now, but is that something that you think the Pepsi distributor agreement will help address?

Yes. So over in the Nordics, it was more of an ingredient issue and getting the ingredients to our co-pack partner in order to manufacture the product. And there were some distribution -- or not distribution, but supply chain channels that got disrupted because of the activity that was going on over there and still continues to go on over in that part of the world. So that was the biggest piece and because we couldn't get the right raw material in for the new product we were launching or the new SKU we were launching, we weren't able to get that to market in time for the summer selling season. So that was the biggest component of -- over in Sweden, other than obviously the FX impact that we had. There was a little bit of the same kind of things that happened in Finland as well from an ingredient perspective. Those suppliers are back on track again. We've got our product. And we have been working with Paul, who's over in the U.S., on making sure that we've got enough stock over in -- with our -- actually, it's a German co-packer, as we go forward so that we don't have to worry about the out of stocks that we had before.

So is that something you expect to be resolved here in the current quarter? Or is that going to take another couple of quarters to resolve?

No. It's resolved.

Lot of logistical challenges in the second quarter, too, Anthony. As Jarrod mentioned, there was a lot of disruption in supply chain for our European partners.

And to the second part of your question with Pepsi, with their organization and their scale and ability from a procurement perspective, it will definitely benefit us from a supply chain perspective and a purchasing perspective both here and over in Europe. But like you said, it will be a huge opportunity for us in Europe because they've already got the supply chain set up, the distribution set up. We do have products that we're already manufacturing over there. So we are over there. So launching over there will be less complicated than if we didn't have anything over there already. So it does set us up well as well as over in Asia in that part of the world because we've got a co-packer over there as well.

I'll turn the call back over to management for closing remarks.

Thank you. On behalf of the company, I'd like to thank everyone for their continued support and interest. Our results demonstrates our products are gaining considerable momentum. We're capitalizing on today's global health and wellness trends, and the transformation is taking place in the energy category. Our active lifestyle position is a global position with mass appeal. We're building upon our core, leveraging opportunities and deploying best practices. We have a winning portfolio, strategy and team in a large, rapidly growing market that consumers want. In addition, I'd like to thank all our investors for their continued support and confidence in our team. And thank you to everyone for their interest in Celsius. Stay healthy, stay fit.

Thank you. This concludes today's conference call. We thank you for your participation. You may disconnect your lines at this time, and have a great day.