Hello, everyone. Thank you for joining us, and welcome to the Celsius Holdings Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now hand the call over to Paul Wiseman, Investor Relations. Please go ahead.

Good morning, and thank you for joining Celsius Holdings 2025 earnings webcast. With me today are John Fieldly, Chairman and CEO; Jarrod Langhans, Chief Financial Officer; and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our fourth quarter and full year 2025 earnings press release was issued this morning, with all materials available on our website, ir.celsiusholdingsinc.com, and on the SEC's website, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on our current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward-looking statements except as required by law. Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We will present results on both a GAAP and non-GAAP basis. Non-GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, adjusted SG&A and adjusted SG&A as a percentage of revenue, and their GAAP reconciliations, are detailed in our Q4 and full year earnings release. And non-GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John.

Thank you, Paul. Good morning, everyone, and thank you for joining us today to discuss our fourth quarter and full year results for fiscal year 2025. As I look back in 2025, the message is clear: We continue to execute with momentum and operating discipline, and we are reinforcing the scale of our platform as we build a modern energy portfolio. One of the reasons we feel good about the progress is that we delivered full year record revenue of $2.5 billion, reflecting our disciplined approach to growth and the material scale we've accomplished. At the core, our focus is straightforward. We stay close to the consumer and we execute with consistency alongside Pepsi and our retail partners, which creates the opportunity to grow in a sustainable and profitable way over time. With that as context, let me start with the portfolio: what we see across CELSIUS, Alani Nu and Rockstar Energy. Across the portfolio, we continue to manage and invest in CELSIUS, Alani Nu and Rockstar Energy with the intent to broaden our reach. Our combined portfolio represents approximately 1/5 of the U.S. energy market in tracked channels for the full year, which we believe to be very impressive both on an absolute basis and relatively. In addition, our portfolio includes 2 billion-dollar brands, validating that sustainability and scale of our portfolio. Each brand can win in its own way, and our focus is to enable that to happen more and more. We operate with precision, making sure that we are present where it counts, bringing the right innovation and activating demand in a way that strengthens our core, not just the moment. When you look at the CELSIUS brand, the opportunity is about strengthening momentum and executing in a way that positions us to outgrow the category over…

Thanks, John, and good morning, everyone. From a financial perspective, we have a lot to cover. As John noted, I'll begin with Rockstar given the accounting treatment during the integration, then move to Alani and brand CELSIUS to walk through the components of our consolidated results. Beginning with Rockstar, during the quarter, we were actively integrating the brand into our supply chain, back office and commercial organization, which impacted how certain sales activities reflected under generally accepted accounting principles. As a result, some components were required to be recorded in other income rather than net sales. For the quarter, $45 million was recorded within net sales and an additional $6 million was recorded in other income. As we move into the first quarter, we expect to fully transition the U.S. portion of the business to the finished goods model and we expect that only the Canadian portion will remain in the other income. We expect the Canadian portion of transition to the finished goods model in the first half of 2026. On a full year basis, we recorded $56 million in net sales for Rockstar and an additional $13 million in other income. And as we sit here 6 to 8 weeks into 2026, we remain confident the brand continues to resonate with many consumers, and we have a plan to stabilize the business and move it back into growth over the next handful of years as previously discussed. Turning to Alani Nu, during the fourth quarter, Alani achieved record net sales of $370 million, benefiting from significant ongoing customer demand, increased distribution points and increased orders as we move the business out of its prior distribution system and into the PepsiCo distribution system. On a pro forma basis, that would equate to growth of 136% for the quarter compared…

[Operator Instructions] Your first question comes from the line of Filippo Falorni with Citi.

The shelf space gains that you discussed last week at the CAGNY conference for both CELSIUS and Alani, can you give us a bit of an update on the spring shelf space resets and when we should start to see some of the benefits from the shelf space gains? And then in particular for the brand CELSIUS, you explained the gap versus consumption in Q4. That was very helpful to add it to the release, so thank you for that. So could we see an improvement in Q1 as we think about it on a reported sales basis given the shelf space for brand CELSIUS?

I appreciate the questions. In regards to the shelf gains, historically, we've seen them really materialize through and kind of finalize right around the end of spring, has historically been when the final resets take place as everyone is gearing up, as we call, the beverage summer selling season. So we do expect those to continue to materialize through the end of spring, really with the biggest gains, especially for Alani, would be in convenience. So that's been a big white space opportunity for the portfolio as well as with the CELSIUS portfolio. And really excited about, as we're heading into summer, especially leading off with a lot of our innovation that's coming. In regards to some of the timing and some of the differences as we look through consumption data versus the revenue that's recognized as we sell through to our distributor, there is timing and sequencing. Jarrod made some comments on that in our prepared remarks. Jarrod, do you want to provide any color? Historically, we don't provide any forward-looking information. But we do anticipate there could be gaps going forward within consumption on a weekly or within a moment of time. But over the long term, we'll start to see some more consistency there. But Jarrod?

Yes. I mean if you look at it from a portfolio perspective, I think you'll see it tighten up quicker than if you're going specifically brand by brand, because we are looking at different things across the calendar. So for instance, we just launched an LTO, the Lime Slush, it's delicious, with Alani, so you'll see some spikes in some of the data. We also have LTOs coming out with CELSIUS this year. So depending upon the timing of those activities, you might see some differences within the scanner data versus load-ins in those kind of things. And then as we continue to expand distribution, with Alani in particular, as we continue to move across the Pepsi system and gain shelf space, you'll see some expansion there. And then you'll also see expansion within CELSIUS with the 17% space gains that we had as well.

Your next question comes from the line of Peter Grom with UBS.

Great. I wanted to follow up on that. Obviously, a lot of moving pieces as it relates to the top line growth. But when we think about the $25 million net benefit from CELSIUS versus Alani, can you help us unpack what that looks like from a brand perspective? And then I guess, Jarrod, maybe more specifically as you think about Alani, would you expect inventory levels to remain elevated as we move through this transition? And similar to kind of what we saw when CELSIUS moved into the Pepsi system a couple of years ago, implying that maybe more of the unwind would be a 4Q, into '27 dynamic? Or would you anticipate maybe kind of some under-shipment to occur faster?

Peter, so as we're looking at Q4 and into the future, I'd say John and I are committed to tightening up the peaks and the valleys of the data. With the captaincy and the more aligned partnership we have with our largest distributor, we're definitely much tighter and working very closely. We actually had the supply chain from their team in -- back in January. So we're committed to really tightening up those peaks and valleys. From an operational perspective, we'll continue to have our supply chain and commercial teams focused on what ultimately is going to drive the success of our modern energy portfolio, which is winning at the register as that is where we're going to win or lose. So if we have the opportunity to load an additional volume of 1 brand kind of at or near the end of the quarter while adjusting another brand, while maintaining our service levels and the growth of those brands, that's something that we're committed to doing so that we win. So as we look at kind of the results that you saw in the quarter, we benefited to the tune of roughly $25 million in our reported results. We were excited to see brand CELSIUS come out of gate with low double-digit growth and great service levels while seeing Alani kind of rocket out of the gate with triple-digit growth. And we have seen brand CELSIUS orders align more closely to the tracked data as we look at kind of the initial deliveries and orders in 2026. I will caveat that by saying there are 4 to 5 more weeks in the quarter, so we'll continue to manage the business holistically and make adjustments along the way as we do manage the portfolio. So I think there -- again, we'll manage the peaks and the valleys. I think, as a portfolio, playing a much more scaled business, we'll be able to get those a bit tighter and manage that. So we don't have as many kind of as much volatility as we've seen historically when we just had a 1 brand and when we were really learning each other within that supply chain. If I go back to kind of Q4 and I boil it down, if I'm looking at our supply chain around DSD in particular, as we approached the end of Q4, we did adjust an additional week for brand CELSIUS and loaded in additional Alani. That benefited Alani. And it benefited the portfolio from a net basis, as I said. So this didn't have an impact on service levels, and we continue to win at the register with both brands. And as John mentioned, as a proof point, we're picking up roughly 17% additional space with brand CELSIUS in '26, really as a result of that scanner growth and, obviously, even more with Alani, triple-digit space gains with Alani.

Your next question comes from the line of Bonnie Herzog with Goldman Sachs.

I guess I had a question on gross margins. You mentioned you expect your gross margins to return to a more normalized profile, in the mid-50% range, across this year. So maybe first, could you touch on the potential impact that the Midwest premium is having on your business near term? And then second, can you give us a sense of phasing gross margins this year? And then I guess beyond this year, how should we think about the evolution of your margins over the next few years? Can you highlight maybe some of the key puts and takes that we should think about?

No, excellent question. I would say in regards to the margin profile, and a lot of the infrastructure and strategies we've built about building on our orbit model with the CELSIUS portfolio, further looking at opportunities with supply chain, purchasing strategies, as well as vertical integration with the acquisition of our co-packer over a year ago, really driving further leverage and scale and efficiencies through that location. We also, as we're further integrating Alani and Rockstar, as it's moving through orbit over the next several quarters, we'll be able to gain additional leverage as well. Jarrod, do you want to provide additional color in regards to some of the timing around that and also some of the opportunities we see as we're progressing to this low to mid-50% margin profile by the end of the year?

Yes. So I think our target for this year is to get back to a more normalized low 50s. In terms of the opportunity, we do see ability to move up into the mid-50s like you noted. I wouldn't necessarily call that a '26 target, but definitely a near-term target, into the next handful of years. Some of the things that are going to drive our benefit in order to get back, call it, from the 47.4% that we sat in Q4, and work our way to the low 50s, are really getting the cost of sales, the COGS, the raw material prices in line with what you see with brand CELSIUS. So we are working through that with Alani and with Rockstar. We're a bit ahead on Alani, so we should have that cost structure in place by the end of Q1. For Rockstar, we should have that in place by the end of Q2. Some of that has to do with integration, some of that has to do with just moving through the inventory balances and moving through some of the higher raw material costs as we have them fully integrated. So Alani will be fully integrated by end of Q1 and Rockstar by the end of Q2. So we've got those costs. Some other things that are going to benefit us is our orbit model and our freight structure. Getting them fully baked into that structure will provide us with benefit. Our mix, when you kind of look at a blended mix of our price pack and promotion strategy, will also be beneficial. So you kind of put those together. If you look at Q4, some of the kind of onetime things we had, we did have some transition costs where we had some COGS write-offs and we had some scrap and things like that, that were more onetime, so those will be gone after Q4. And so we'll have that benefit directly into Q1. But really, the goal is, once we get through that first half of the year, to be in good shape to get into that low 50s as you look at the back half of the year. Those do also factor in the Midwest premium that has picked up as well as tariffs. So depending upon where the Midwest premium goes, there could be some impact in terms of timing. And as well as tariffs, if the tariffs kind of subside quicker, then there's an opportunity to get to some of those numbers quicker.

Your next question comes from the line of Andrea Teixeira with JPMorgan.

So I was hoping to see, John, if we step back and think about the 3-brand portfolio and the opportunities of trimming at some point the SKUs and -- or you think that this cadence of LTOs now with Celsius, like how is the experience that you've had? And how do you think velocity, obviously, with the increase in shelf space, you obviously will have a reduction in velocity at some point, but just thinking of how to position the SKUs, how to position the category? And we all know this is a record year of innovation for everyone in the space. So hoping to see how you're seeing that set. And what are you hearing from the retailers as far as the competitor set and the -- what we think going forward? And just also on the -- just a clarification on the margin. It's very encouraging to see that you see the opportunity for synergies and improvements in the execution. I also was encouraged to hear from you guys at CAGNY in terms of the systems and visibility. So I was hoping to see if you can kind of wrap it up on how predictable your sales have been with the view from Pepsi and how you can see margins evolving as we go from a promo perspective.

Excellent, Andrea. In your question, you're absolutely right in regards to the overall category and what we're seeing as driving growth. Innovation has been a key factor of that. And also, innovation has been a great, not only for our portfolio, but the total category -- it's bringing new consumers in. And we're starting to see, as in CAGNY, we were talking about the evolution of a category, expanding day parts, expanding usage occasions. Big opportunity is social occasions with energy drinks. As we're seeing alcohol and liquor come into some challenges and headwinds, and what we're seeing is consumers are switching to energy drinks to -- as a replacement. And that's a huge opportunity with our CELSIUS mocktails and dirty Alanis that we have out there. So that's a big push for us as well. They continue to bring excitement and new consumers, new occasions in. When you look at the SKU prioritization, that's the beauty of a portfolio. We're able to really maximize the value of the portfolio now with CELSIUS, Alani and Rockstar, making sure we're maximizing the SKUs really for the channel and also for a regional basis. So that's going to allow us to put the fastest-turning SKUs on -- in the coolers, in the planograms. The space allocations are also, that we're seeing with resets, 17% with CELSIUS and over 100% with Alani, is allowing us not only getting additional slots and distribution and more flavors and availability in retail, but also additional points of disruption. And having that path to purchase is so important, those cold checkouts, the impulse purchases, the expanded shelf space in the dry sets. So that's all going to come into landing on exactly what you're talking about, velocity. Velocity is very important in the category. That's what is…

Your next question comes from the line of Kevin Grundy with BNP Paribas.

Great to see you at CAGNY last week. John, just a follow-up, and Jarrod, for you as well, the distribution gains again. Not to beat the dead horse. But obviously, super strong with Alani up triple digits, CELSIUS up 17%. Three questions here, if I may. Number one, what -- can you quantify what you sort of estimate the distribution gains to be for the category given the strength? That would be question number one. Number two, where are the shelf space gains coming from for Alani and CELSIUS? To the extent it's sort of above and beyond what you'd expect with the category, which certainly would seem to be the case, where are the shelf space gains being sourced from within the category? And then just lastly, I think Andrea was sort of touching on this, with respect to velocity. When we think about holistically the innovation that's coming on and which seems like a really strong pipeline, but you're moving in to new areas, new geographies, particularly in convenience, how should we think holistically about velocity growth for CELSIUS and Alani this year sort of vis-a-vis the TDP gains that you're going to benefit from?

Kevin, great questions. We spent some time on the category on the space gains we anticipate for CELSIUS. But I think to your point in regards to the category, like where is that coming from? And when you look at the energy category, and it continues to grow as a larger percentage of LRB, retailers are expanding more space. They're expanding half-coolers and doors and more dry shelves. Like in the convenience channel, we're hearing from a lot of retailers, they're optimizing some of the beer coolers just to -- they're trying to get as much productivity out of these coolers as possible. So you've heard that. Juice category as well, and high premium waters as well has been under pressure. So those are areas that retailers are making those decisions. I think each retailer is a little bit different on how they're being able to carve out more space. But there is a lot more space coming in the energy category as it's becoming part of a daily lifestyle, daily routine, daily -- and expanded usage occasions. Historically, it's been an impulse purchase, and convenience has been a main driver of that, over 60% of sales. But if you look at large format and you look at the space gains we saw over the last 2 years, we expect anticipated space gains in large format as they can capture a larger share of that -- of those energy drink sales that will continue to grow. So seeing a variety of different retailers react differently, but many in convenience are, we're hearing, cooler doors within the beer category getting a little optimized there. And then you look at where we are within velocity, we're here to grow velocity. That's really important. That's a major KPI within our organization, within our teams. I think with the space gains, when you look at Alani particularly, we're expanding that distribution, right? So it's going into a lot of locations that are new. Many retailers, many regions, Alani is going to be new. So we will likely see a lower velocity entering new segments of the regions, within also channels and retailers, that we're going to have to build up those velocities. So each channel is going to be different. Each market is going to be different. But any time, just like when we saw CELSIUS, as you expand out broader, we did see reduced velocities as that expansion takes place. And then you build upon that. Remember, consumers are -- it's a daily routine, it's a daily lifestyle. We've got to get these brands into a cadence where consumers are purchasing on a frequency. And gaining distribution just doesn't mean the product starts flying right away. There is great momentum behind these brands. We're really excited about it. It's part of the LTO strategy, the innovation strategy to get trial and awareness. But that is something we're very keen on, is continuing to build velocity over time.

Your next question comes from the line of Gerald Pascarelli with Needham & Company LLC.

A couple of things. Just a housekeeping question going back to the cadence, Jarrod. I just want to make sure I'm understanding this correctly. But are there any parts of the inventory benefit that Alani got this quarter that should in any way be considered a pull forward in revenue? It doesn't sound like it just based on the distribution opportunities ahead, but just wanted to confirm that. And then John, just going back to the shelf space growth that you're expecting for Alani this year, is there a way for you to broadly contextualize that in terms of what we saw for core CELSIUS back in 2022 when that brand transitioned? I understand that back then, CELSIUS has been benefiting in part from lost shelf space from Bang. But yes, just curious if you could provide your thoughts on how we should view that 102% in the context of the prior transition. Any similarities and differences? And then I guess, how that compares in this environment with a more competitive landscape.

Yes, I'll jump in first, Gerald. In terms of pull-through, I do think we saw opportunity to load in even more of Alani with the ability of the Pepsi distribution system and really how quickly they were able to get Alani out from an ACV perspective across the shelf. So I think there was, I would call that more of an opportunity than a load-in, that we took advantage of. And you saw coming out of the gate with the triple-digit growth that Alani has hit pretty quickly, and we continue to see that expand. And then with our Cherry Bomb, we did -- that was kind of one of the pieces that was loaded in at the end of the year, and that really got depleted pretty quickly, record time. So we got the Lime Slush going out. We're looking for, hopefully, another record from an LTO perspective. But I would definitely see that as more of an opportunistic move as opposed to a pull back or pull forward.

In regards to some of the expansion when we look back on the CELSIUS integration, expansion to the PepsiCo network, and then timing of resets upon that, CELSIUS went in, in September, Alani's going in, obviously, in December. There are some similarities, but there's many differences as well. I think when you look at CELSIUS and Alani, when they were starting off, CELSIUS was at a lower ACV versus where Alani is. I think when you look at Alani, similar opportunities in convenience on distribution gains there. And yes, you are right, when we went into -- through that process, CELSIUS did take a lot of space from Bang at that point in time. But I will say when you look at Alani and the opportunity and you look at the category, this category has extremely strong growth. And although Alani will not likely be replacing brands, the category is expanding. We're hearing retailers expand their shelf presence for energy. So that's what really allowed Alani to gain some of that -- the large distribution gains as well. Also, the consumer dynamics have changed as the -- as I mentioned, usage occasions have expanded. More females are coming into the category and increasing consumption. So there's a lot of different dynamics at play. Although there are some similarities, there's a variety of differences just due to the evolution of the category and the growth we've seen in energy overall, as well as the innovation that's come in. And it's an exciting time for the portfolio. Coming out of NACS, where we presented in October, we felt the energy from a lot of retailers and the excitement about CELSIUS. And now with the partnership with Pepsi, being the energy captain with the Celsius Holdings portfolio, and having that distribution confidence and breadth. A lot of retailers really want to make sure you can keep those shelves full, especially with the velocity and how quickly these products turn. So that is really a show of confidence and really allowed our key accounts team to take advantage of those opportunities and gain that additional distribution for the total portfolio.

There are no further questions at this time. I will now turn the call over to John Fieldly, Chairman and Chief Executive Officer, for closing remarks.

Thank you again for joining us today. 2025 was truly a defining year for Celsius Holdings. We recorded a record $2.5 billion and continue to scale a true modern energy portfolio with CELSIUS, Alani Nu and Rockstar Energy. As we move through 2026, our priorities are clear: execute with discipline, strengthen our operating system and stay closely aligned with consumers as the category continues to evolve. I want to take this opportunity to thank our employees, our partners and all of our customers out there for their focus, their teamwork that makes this all possible. We appreciate your support, and we look forward to updating you next quarter. Until then, grab a CELSIUS and live fit.

This concludes today's call. Thank you for attending. You may now disconnect.