Celsius Holdings Q1 FY26 earnings call CELH

Celsius Holdings' diversified portfolio, comprising CELSIUS, Alani Nu, and Rockstar, is effectively capturing consumer interest and retailer partnerships. The combined portfolio achieved a 20.9% dollar share in the U.S. energy drink market in Circana tracked channels for the four weeks ending April 12. This strategy allows the company to participate across various channels, usage occasions, and price points, with two brands now recognized as billion-dollar entities, driving incremental growth in the category.

The company successfully completed the integration of Alani Nu, realizing approximately $50 million in anticipated synergies. This milestone simplifies the operating model and establishes a more connected commercial structure. Concurrently, the Rockstar integration is progressing as planned, with completion expected in the first half of 2026. SKU transitions are largely finished, and early signs of improved velocities are observed on core Rockstar items, positioning the brand for stabilization.

Innovation remains a core growth driver. Alani Nu's Lime Slush limited-time offer (LTO) became its top-selling flavor in tracked channels, validating the brand's durable innovation model. For CELSIUS, the fizz-free platform is expanding distribution, and Electric Vibe, a soccer-inspired LTO, was launched. The company is also optimizing its shelf presence through disciplined SKU rationalization and resets, aiming for 17% space gains for CELSIUS and over 100% for Alani Nu, ensuring efficient assortment and increased velocity.

Celsius advanced its international expansion by launching the CELSIUS brand in Spain through an exclusive sales and distribution agreement with Suntory Beverage & Food Spain. This initiative leverages existing collaborations and will be followed by expansion into Portugal. With the global headquarters now established in Dublin, the company has the necessary operating infrastructure to accelerate deeper execution in existing markets and facilitate new market entries in the coming years.

Gross margin improved to 48.3% in Q1, benefiting from integration synergies and raw material alignment. However, this progress was partially offset by rising Midwest aluminum premium and LME costs, as well as incremental freight expenses due to severe winter weather and Rockstar inventory rebalancing. Management anticipates Q2 gross margin to be flat sequentially, with stair-step improvements expected in Q3 and Q4, as the company targets a return to gross margins in the low 50s, supported by sourcing strategies and future vertical integration.

The company maintains a strong balance sheet, providing flexibility for capital deployment. In Q1, Celsius repurchased approximately 700,000 shares for $24.1 million at a weighted average price of $35.39, with $236.1 million remaining under the authorized $300 million repurchase program. Capital allocation priorities include investing in brand growth, maintaining balance sheet strength, and returning capital to shareholders, with ongoing evaluation of repurchase activity based on cash generation and market conditions.