Executive Summary

Q4 revenue declined 4% year-over-year to $332.2M as higher domestic allowances and a fully implemented distributor incentive program weighed on reported sell-in, but gross margin expanded 240 bps to 50.2% on lower freight and materials; GAAP diluted EPS was $(0.11) and adjusted diluted EPS was $0.14.
SG&A rose 73% ($77.9M) on accrued legal expenses (ongoing litigation), one-time restructuring costs and co‑packer penalties, driving a Q4 net loss of $18.9M versus $50.1M profit a year ago.
Management announced a definitive deal to acquire Alani Nu (net purchase price $1.65B), targeting ~$50M run-rate cost synergies within two years, cash EPS accretion in year one, and pro forma net leverage ~1.0x; funding combines $900M term loan and ~$375M cash with ~$500M in stock (22.5M shares).
Near-term catalysts: 15–20% expected shelf reset distribution gains for Celsius, international growth, and Alani Nu integration/synergies; watch normalization of promotional allowances and distributor incentives and legal expense overhang.

What Went Well and What Went Wrong

What Went Well
- Gross margin resilience: Q4 GM rose to 50.2% (+240 bps YoY) on lower freight and materials, with CFO indicating ~50% is a solid level even considering tariff risks.
- Retail health and reach: FY retail sales +22% YoY; category dollar share reached 11.8% (+160 bps), points of distribution +37%, ACV ~98.7%.
- Strategic platform expansion: Announced acquisition of Alani Nu to build a leading better‑for‑you functional lifestyle platform, with $50M run-rate synergies and cash EPS accretion year one.
- Quote: “We believe we have the right strategy to drive sustained, long-term growth, and we expect that the acquisition of Alani Nu will further strengthen Celsius’ position as an innovative leader…” — CEO John Fieldly.
What Went Wrong
- Top-line pressure: Q4 revenue fell 4% YoY, impacted by higher domestic allowances and a distributor incentive program; Q3 had also been hurt by supply chain optimization at the largest distributor.
- Profitability hit by one-time and legal costs: SG&A +73% on accrued legal expenses, restructuring, and co-packer penalties; GAAP diluted EPS turned to a $(0.11) loss vs $0.17 a year ago.
- Share/velocity softness near-term: L13W retail dollar share in Q4 was 10.9%, down 50 bps YoY; management noted a slow start to Q1 given tough prior-year comps and timing of promotions.

Financial Results

Quarter-over-Quarter Progression (chronological)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$402.0	$265.7	$332.2
Gross Margin (%)	52.0%	46.0%	50.2%
Diluted EPS ($)	$0.28	$(0.00)	$(0.11)
Adjusted EBITDA ($M)	$100.4	$4.4	$62.9

Q4 2024 vs Q4 2023

Metric	Q4 2023	Q4 2024	YoY Change
Revenue ($M)	$347.4	$332.2	(4%)
Gross Margin (%)	47.8%	50.2%	+240 bps
Net Income ($M)	$50.1	$(18.9)	(138%)
Diluted EPS ($)	$0.17	$(0.11)	(165%)
Adjusted Diluted EPS ($)	$0.17	$0.14	(18%)
Adjusted EBITDA ($M)	$65.2	$62.9	(4%)

Segment Revenue

Segment ($M)	Q2 2024	Q3 2024	Q4 2024
North America	$382.4	$247.1	$311.9
International	$19.6	$18.6	$20.3

KPIs and Market Reads

KPI	Q2 2024	Q3 2024	Q4 2024
U.S. Dollar Share (period stated)	11.0% (L4W to 7/14/24)	11.6% (L4W to 10/6/24)	10.9% (L13W to 12/29/24)
Retail Sales Growth	36.5% YoY (L13W, Q2)	7.1% YoY (L13W, Q3)	2% YoY (L13W, Q4)
ACV (U.S.)	—	—	~98.7% (FY commentary)
Points of Distribution	—	—	+37% YoY (FY)

Notes: Q4 revenue pressure tied to elevated domestic allowances and the distributor incentive program; GM expansion driven by lower freight/materials; SG&A elevated by legal and one-time items.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cost Synergies (Alani Nu)	2 years post-close	—	~$50M run-rate synergies targeted	New
Cash EPS Impact (Alani Nu)	First full year post-close	—	Expected accretive	New
Pro Forma Net Leverage	At close	—	~1.0x	New
Funding Mix (Alani Nu)	At close	—	$900M debt + ~$375M cash + ~$500M stock; $25M earn-out	New
Shelf Reset Distribution (Celsius)	Spring resets	—	~15–20% distribution expansion expected	New

Management did not provide quantitative 2025 revenue or margin guidance in the Q4 materials; transaction-related targets above were disclosed.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Distributor dynamics / inventory	Q2: revenue offset by fewer inventory days at a large distributor. Q3: supply chain optimization at largest distributor drove outsized revenue decline.	Incentive program fully implemented; extra incentives in Q1–Q2; Pepsi inventory impact ~$8–10M in Q4.	Normalizing through 1H25 with program benefits.
Promotional allowances	Q3: elevated allowances drove lower gross profit %.	Higher domestic allowances and incentive program reduced Q4 revenue.	Expect normalization as program fully phases in.
Gross margin outlook	Q2 GM 52.0%; Q3 GM 46.0%.	Q4 GM 50.2%; CFO sees ~50% as solid despite tariff risk.	Stabilizing ~high‑40s to ~50%.
Product innovation	Q2: record results; Essentials traction; new flavors/powders.	Robust 2025 innovation pipeline; hydration line launched.	Continuing acceleration.
Distribution expansion	Q2: shelf space gains; club +30%; Amazon +41%.	Shelf resets to add ~15–20%; adds Home Depot and Subway.	Broadening across channels.
International	Q2: launched UK/Ireland; Canada strong; broader launches planned.	Q4 international +39% YoY; EMEA and new markets (UK/IE, France, ANZ).	Building from early inning base.
Regulatory/legal	—	Accrued legal expenses (ongoing litigation); SEC settlement referenced in recon.	Overhang to monitor.
Vertical integration	—	Reiteration of Big Beverages acquisition benefits (innovation, control).	Structural margin/capacity benefits.
Tariffs/aluminum	—	CFO: tariffs could tug GM to high‑40s, but ~50% still achievable.	Risk managed.
M&A platform	—	Alani Nu deal: ~$2B pro forma sales; accretive, $50M synergies.	Platform expansion.

Management Commentary

Strategy and category: “We believe we have the right strategy to drive sustained long-term growth… and we expect that the acquisition of Alani Nu will further strengthen Celsius’ position as an innovative leader…” — John Fieldly, CEO.
Gross margin/allowances: “Quarterly gross margin improved 240 basis points to 50.2%… Our top line was impacted by some promotional allowances as well as the impact of a fully implemented incentive program with our largest distributor, as well as some timing of orders.” — Jarrod Langhans, CFO.
Outlook on gross margin: “Could [tariffs] pull the margin back a little bit? Definitely… although I prefer to be conservative and say could be high 40s… I think 50% is a solid number.” — CFO.
Distribution gains: “We expect roughly around 15% to 20% expansion in distribution within our given retail sets coming out of [NACS] and expansion in large format.” — CEO.
Alani Nu rationale: “Combination… expected to be cash EPS accretive in year 1… $50 million of run rate cost synergies… within 2 years post close.” — CEO/CFO.

Q&A Highlights

Alani Nu incrementality and overlap: Management sees low cannibalization with Alani’s mostly female Gen Z/millennial consumer; expects incremental category growth with complementary positioning.
Distribution and Pepsi dynamics: Companies will run separately until close; Pepsi inventory impact in Q4 was ~$8–10M; incentive program fully implemented with normalization expected through 1H25.
Shelf resets: Expect ~15–20% distribution expansion; improved cold placement and sizable Alani gains in convenience during reset season.
Margin sustainability: GM around ~50% viewed as achievable even with tariff risk; promotional “contra revenue” elevated in 2024 expected to normalize as the program matures.
Integration risk management: Emphasis on disciplined execution; founders to advise under transition/consulting agreements; stock consideration lockup aligns incentives.

Estimates Context

S&P Global/Capital IQ consensus: EPS and revenue consensus for Q4 2024 could not be retrieved due to API rate limits at the time of analysis; as a result, we cannot quantify beats/misses versus consensus here. We will update upon access to S&P Global data.
Reported results: Revenue $332.2M, GAAP diluted EPS $(0.11), adjusted diluted EPS $0.14, GM 50.2%.

Key Takeaways for Investors

Mix shift and cost actions supported 50.2% gross margin despite top-line pressure; management targets ~50% GM with risk to high‑40s if tariffs tighten, implying resilience in unit economics.
Revenue headwinds were largely mechanical (allowances/incentive program/timing); as incentives normalize and shelf resets add ~15–20% distribution, sell‑in should better reflect healthy retail sell‑through.
Legal and one‑offs (restructuring, co‑packer penalties) materially lifted SG&A; track resolution cadence as a lever to EPS normalization.
Alani Nu transforms the platform: ~$2B pro forma 2024 sales, ~$50M cost synergies (2 years), cash EPS accretion in year one, and pro forma net leverage ~1.0x—value drivers as integration executes.
Distribution expansion beyond traditional channels (Subway, Home Depot) and international growth (EMEA, UK/IE, ANZ, France) broaden the TAM and diversify growth vectors.
Near-term trading lens: Watch for updates on allowance normalization, shelf reset execution, and any litigation cost developments; Alani Nu regulatory closing and early synergy visibility are potential re‑rating catalysts.

Celsius Holdings, Inc. (CELH)·Q4 2024 Earnings Summary