Multi-Layered Strategy Catalyzes Celsius

In the past few years, Celsius CEO Gerry David and lead investor Carl DeSantis have sharpened the company’s strategy by focusing on sales of its single-serve cans, six specific U.S. markets, international sales and digital marketing. Results from the company’s fourth-quarter earnings report indicate that the multi-layered strategy continues to catalyze a brand not far removed from a nosedive.

“We are making excellent progress and our products are resonating well with consumers,” David said in the report. “I am very encouraged that we continue to deliver continued revenue growth. In addition, as a result of our marketing initiatives we are attracting new daily consumers and industry-wide brand recognition.”

The earnings report notes that at the end of 2013, year-to-year, Celsius increased revenue by 38 percent to $10.6 million, gross profit by 76 percent to $4.1 million, gross profit margins from 27 percent to 38 percent, revenue from international sales by 121 percent to $5.1 million and revenue from domestic sales by 2 percent to $5.5 million. The company’s revenue from domestic sales increased 48 percent when excluding Costco wholesale sales of $1.7 million from 2012, according to the report. The company’s net loss decreased 34 percent to $1.8 million.

In the fourth quarter alone, compared to the fourth quarter of 2012, the company increased revenue by 51 percent to $2.93 million, gross profit by 75 percent to $1.1 million, gross profit margins from 15 percent to 38 percent, net loss from $165,000 to $500,000, revenue from international sales by 57 percent and revenue from domestic sales by 44 percent.

David added that the company’s public relations efforts generated more than 750 million impressions in 2013 and that the partnership with Pandora radio continues to deliver 7.8 million ads per month.

In September 2011, DeSantis replaced Celsius founder Steve Haley with David. Under Haley, the company focused on sales of 4-packs in Costco stores, but sales figures declined. As previously reported, David said the decision to exclusively sell 4-packs was a mistake. On Sep. 10, 2013, DeSantis invested another $2.2 million in Celsius, which has financed moves such as the company’s international shipments to China, Brazil, Argentina, Paraguay and Uruguay.

In an effort to boost the brand’s resonance through a gradual build-out, the revised strategy has emphasized six markets: Los Angeles, San Diego, Texas, South Florida, Tampa and New England. David told BevNET in October 2013 that Celsius will focus on New York, Chicago, Detroit, Milwaukee and Iowa in the upcoming year.

The full earnings report is below:

BOCA RATON, Fla. — Celsius Holdings, Inc., (Other OTC: CELH) the creator and marketer of Celsius®, the world’s first and only negative calorie drink backed by clinical science, today reported its results of operations for the three and twelve months ended December 31, 2013.

Recent company highlights:

Fourth Quarter Highlights – Comparison of Quarters Ended December 31, 2013 and 2012

·       Revenue increased 51% to $2.9 million;.

·      Gross Profit increase 75% to $1.1 million;.

·      Gross Profit Margins increased 15% to 38%;.

·      Net Loss increased $165 thousand to $0.5 million;.

·       Revenue from International sales increased 57%;and

Revenue from Domestic sales increased 44%.

Year-end Highlights – Comparison of Twelve Months Ended December 31, 2013 and 2012

·       Revenue increased 38% to $10.6 million;.

·      Gross Profit increased 76% to $4.1 million;

·      Gross Profit Margins increased 27% to 38%;.

·      Net Loss decreased 34% to $1.8 million:.

·       Revenue from International sales increased 121% to $5.1 million;and

Revenue from Domestic sales increased 2% to $5.5 million; and, increased 48% when excluding Costco  Wholesale sales of $1.7 million from the prior year.

“We are very pleased to report continued strong financial results for the fourth quarter and a record fiscal year as revenues grew to $10.6 million and margins improved. The year was highlighted by the growth in international sales and continued growth in all Domestic channels of distribution. We are making excellent progress and our products are resonating well with consumers. I am very encouraged that we continue to deliver continued revenue growth. In addition, as a result of our marketing initiatives we are attracting new daily consumers and industry-wide brand recognition. Celsius Public Relations efforts have generated over 750 million impressions in 2013 while our digital radio campaign continues to deliver 7.8 million ads each month that are focused in our “Drill Deep” markets.” said Mr. Gerry David, Chief Executive Officer. “Celsius product positioning places it in the three fastest growing categories in all of Health and Beauty, Weight Loss, Energy and Fitness beverages,” David continued.  “The demand for our one of a kind beverage, backed by science, is being driven by consumers wanting healthier options to traditional beverages.”

Fourth Quarter 2013 Financial Results:

Revenue: Revenues for the three months ended December 31, 2013 totaled $2.93 million as compared to $1.93 million for the same period in 2012, a 51% increase. This increase was driven primarily by increases in international sales totaling $630 thousand or 57% and increases in domestic sales totaling $362 thousand or 44%. Domestically, we are seeing continued growth in all domestic segments, domestic retail accounts increased 50% versus the prior year, Health & Fitness accounts increased 99%, and internet sales increased 3% as a result of transitioning our back-end to Amazon to lower processing costs, shipping times, leverage marketing programs, and increase the overall customer experience as a result internet sales were impacted during the transition.

Gross Profit: Gross profits for the three months ended December 31, 2013 totaled $1,111 thousand or 38% of net sales as compared to $634 thousand or 33% for the same period in 2012. The Company continues to focus on cost savings initiatives and efficiencies to improve gross profit margins.

Operating Expenses: Operating Expenses for the three months ended December 31, 2013 totaled $1,452 thousand as compared to $868 thousand for the same period in 2012, a 67% increase. A significant portion of this increase is associated with increases in marketing programs of $331 thousand, option expense increase of $113 thousand as a result of a 2012 option expiration, broker and contractor increases of $45 thousand, warehousing increases of $36 thousand, insurance and administration increases of $30 thousand, and additional investment in human resources $29 thousand.

Net Loss: The Company recorded a net loss of $494 thousand for the three months ended December 31, 2013 compared to a net loss of $329 thousand for the same quarter a year ago, or ($0.02) and ($0.02) per share, respectively.

For the twelve months ending December 31, 2013 Financial Results: 

Revenue: Revenues for the twelve months ending December 31, 2013 totaled $10.61 million as compared to $7.68 million in 2012, a 38% increase. This increase was driven primarily by increases in international sales totaling $2.81 million and increases in domestic sales totaling $0.12 million, off-set by the elimination of 2012 Costco Wholesale sales of $1.67 million excluding wholesale club sales Domestic growth trends continue to increase in all distribution channels, domestic retail accounts increased 48% versus the prior year when excluding Costco sales from 2012, Health & Fitness accounts increased 128%, and internet sales increased 45%. 

Gross Profit: Gross profits for the twelve months ending December 31, 2013 totaled $4.07 million or 38% of net sales as compared to $2.31 million or 30% for the same period in 2012. The Company continues to focus on cost savings initiatives and efficiencies to improve gross profit margins. 

Operating Expenses: Operating Expenses for the twelve months ending December 31, 2013 totaled $5.42 million as compared to $4.74 million for the same period in 2012, a 14% increase. A significant portion of this increase is associated with increased marketing programs of $949 thousand, warehousing increases of $120 thousand, additional investment in human resources of $67 thousand off-set by decreases of other sales expense of $189 thousand mainly as a result of the elimination of Costco, decreases in option expense of $116 thousand, administration expense and legal fee savings of $85 thousand, and broker expense savings of $67 thousand.

Net Loss: The Company recorded a net loss of $1.83 million for the twelve months ending December 31, 2013 compared to a loss of $2.75 million for the same period a year ago, or ($0.09) and ($0.14) per share, respectively.

About Celsius Holdings, Inc.

Celsius Holdings, Inc. (Other OTC: CELH.PK) markets Celsius®, which is backed by science. Celsius is dedicated to providing healthier, everyday refreshment through science and innovation. For more information, please visit www.celsius.com.