CELSIUS HOLDINGS, INC. Gross Margin Expands on Higher Volumes, Positive Adjusted EBITDA* Achieved of $379,000
BOCA RATON, FL / ACCESSWIRE / November 10, 2016 / Celsius Holdings Inc. (OTCQX: CELH), the creator and marketer of Celsius®, the leading global fitness drink, today reported financial results for the three and nine month periods ended September 30, 2016.
Third Quarter 2016 Highlights:
- Revenue of $6.7 million, up 82% compared to $3.7 million in the year ago quarter
- Domestic revenue increased 53% to $3.8 million, up from $2.5 million in the year ago quarter
- International revenue increased 147% to $2.8 million, up from $1.1 million in the year ago quarter
- Gross profit margin of 43.3% compared to 41.3% in the year ago quarter
- Net loss available to common stockholders of $(93,000) compared to $(895,000) in the year ago quarter
- Non-GAAP Adjusted EBITDA* of $379,000 compared to an Adjusted EBITDA loss of $(628,000) million in the year ago quarter
- Signed exclusive Singapore distribution agreement with YHS Singapore
Subsequent to Quarter End:
- Products shipped in Q4 for Singapore official launch party scheduled for November 11th, 2016
- Entered distribution partnership to make Celsius available in over 550 U.S. military bases globally
"Our third quarter results reflect the momentum we are gaining with global distribution expansion and strong domestic consumer demand for our products," said Gerry David, Chief Executive Officer. "Sales volumes increased dramatically in our international markets as a result of a full quarter of normalized revenue from our Sweden/Finland distribution partner as well as reorders from the newly launched Finland expansion. On the domestic front, we are in the early stages of placing a variety of Celsius products in U.S. Army/Air Force base stores, with anticipated placement in 550 locations globally under a newly signed distribution agreement. All channels of distribution grew at double digit rates, continuing to provide a multi-channel approach to our distribution strategy. At the same time, our focus on lowering our cost of raw materials drove a 200-basis point increase in our gross margin during the third quarter. We continue to take a controlled and balanced approach to new business development in order to optimize product placement, and establish a solid foundation for sustainable growth."
Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015
Revenue
Revenue for the three months ended September 30, 2016 and September 30, 2015 was $6.7 million and $3.7 million, respectively, an increase of 82%. This increase was driven primarily by a 147% increase in international revenue mainly from the company's Swedish distribution partner and a 53% growth in domestic revenue associated from blended growth rates of 54% in retail accounts mainly from expansion of convenience store distribution initiatives, 80% growth in health and fitness accounts and 13% growth in internet retailer accounts from the same period in 2015.
Gross profit
Gross profit was $2.9 million, or 43.3% of revenue, in the three months ended September 30, 2016 compared to $1.4 million, or 41.3% of revenue, for the same period in 2015. The increases in gross profit and the improvement in gross profit margins from the 2015 to the 2016 periods are primarily attributable to the increases in revenue and reductions in the cost of raw materials.
Operating expenses
Sales and marketing expenses for the three months ended September 30, 2016 and September 30, 2015 were $1.7 million and $1.6 million, respectively. The increase is due primarily to increases in investments in human resources of $433,000 and warehousing offset by savings in marketing programs of $354,000. General and administrative expenses for the three months ended September 30, 2016 and September 30, 2015 were $1.1 million and $617,000, respectively. The increase was primarily due to increases in option expense of $191,000, increases in professional fees of $180,000, investments in human resources of $59,000, and office related costs of $49,000, offset by lower research and development and depreciation and amortization expenses.
Other expense
Total other expense was approximately $58,000 for the three months ended September 30, 2016 and September 30, 2015.
Net Income (Loss)
As a result of the all above, for the three months ended September 30, 2016, Celsius had a net income of approximately $10,000, and after giving effect to preferred stock dividends of $102,958, a net loss available to common stockholders of $93,008 or $0.00 per share based on a weighted average of 38,666,451 shares outstanding. In comparison, for the three months ended September 30, 2015 we had a net loss of $810,033, and after giving effect to preferred stock dividends of $85,452, a net loss available to common stockholders of $895,485 or $0.02 per share based on a weighted average of 38,380,382 shares outstanding.
Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2016
Revenue
Revenue for the nine months ended September 30, 2016 and September 30, 2016 was $16.5 million and $13.0 million, respectively, an increase of 27%. This increase was driven primarily by a 64% increase in domestic revenues associated from blended growth rates of 76% in retail accounts, 52% in health and fitness accounts and 31% growth in internet retailer accounts from the same period in 2015. This growth was partially offset by an 8% decrease in international revenue. The increase in total revenue was primarily attributable to an increase in sales volume, as opposed to increases in product pricing.
Gross Profit
Gross profit was$7.2 million, or 43.4% of revenue, in the nine months ended September 30, 2016 compared to $5.4 million, or 41.5% of revenue, for the same period in 2015.
Operating expenses
Sales and marketing expenses for the nine months ended September 30, 2016 and September 30, 2015 were $6.7 million and $3.7 million, respectively. The increase is due primarily to increases in investments in marketing programs of $1.5 million and increases in human resource investments of $1.5 million. General and administrative expenses for the nine months ended September 30, 2016 and September 30, 2015 were $2.9 million and $2.5 million, respectively.
Other expense
Total other expense decreased to $171,000 for the nine months ended September 30, 2016, down from $265,000 for the same nine month period in 2015 as a result of lower interest expense.
Net Loss
As a result of the all above, for the nine months ended September 30, 2016, Celsius had a net loss of $2,648,073, and after giving effect to preferred stock dividends of $276,264, a net loss available to common stockholders of $2,924,337 or $0.08 per share based on a weighted average of 38,530,195 shares outstanding. In comparison, for the nine months ended September 30, 2015 we had a net loss of $1,083,968, and after giving effect to preferred stock dividends of $193,394, a net loss available to common stockholders of $1,277,362 or $0.04 per share based on a weighted average of 31,421,909 shares outstanding.
Liquidity and Capital Resources
As of September 30, 2016, the company had cash of $7.8 million compared to $10.1 million as of December 31, 2015. The company had working capital of $11.7 million and $13.2 million as of September 30, 2016 and December 31, 2015, respectively.
Cash used in operations during the nine months ended September 30, 2016 totaled $2.4 million. The company incurred a net loss of $2.9 million during the nine months ended September 30, 2016, increasing the accumulated deficit to $52.8 million as of September 30, 2016.
Conference Call
Management will host a conference call today, Thursday, November 10, 2016 at 4:30 pm ET to discuss the results with the investment community.
To participate in the conference call, please call one of the following telephone numbers at least 10 minutes before the start of the call:
US: 877-709-8150
International: 201-689-8354
An audio replay of the call will be available on the Company's website at http://celsius.com/press-releases/.
Disclosures can be found on the Company's online disclosure portal at: http://www.otcmarkets.com/stock/CELH/filings
About Celsius Holdings, Inc.
Celsius Holdings, Inc. (OTCQX: CELH) is a global nutritional science based company, founded in April 2004. Celsius® negative calorie drink is available in the form of ready to drink and powder formulas powered by MetaPlus?, a proprietary blend of quality ingredients including Green Tea with EGCG, Ginger, Taurine, Guarana, and B and C vitamins. Backed by multiple published university studies, drinking Celsius before exercise has been proven to help burn more body fat, burn 100 calories and more per serving and provide healthy energy.
Celsius comes in seven delicious flavors, carbonated and non-carbonated, and also in powder stick formulas that can be mixed with water. Celsius has no preservatives, no aspartame, no high fructose corn syrup, no artificial flavors or colors and is very low in sodium. The Celsius line of products is Kosher, vegan certified, Gluten Free, and sugar free. The first university study was conducted in 2005, and additional studies from the University of Oklahoma were conducted over the next five years. All studies were published in peer reviewed journals and validated the unique benefits Celsius provides to the consumer.
Celsius is available nationwide at retailers across all channels, including supermarkets, convenience stores, nutritional stores, mass merchants, health clubs, spas, gyms, specialty stores, the military and eCommerce websites.
For additional information, please visit www.celsius.com.
Forward-Looking Statements
This press release may contain statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of Celsius Holdings' future results of operations and/or financial position, or state other forward-looking information. In some cases, you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," "would," or similar words. You should not rely on forward-looking statements since Celsius Holdings' actual results may differ materially from those indicated by forward-looking statements as a result of a number of important factors. These factors include, but are not limited to: general economic and business conditions; our business strategy for expanding our presence in our industry; anticipated trends in our financial condition and results of operation; the impact of competition and technology change; existing and future regulations affecting our business; and other risks and uncertainties discussed in the reports Celsius Holdings has filed previously with the Securities and Exchange Commission. Celsius Holdings does not intend to and undertakes no duty to update the information contained in this press release.
Investor Relations:
Hayden IR
Brett Maas (646) 536-7331
brett@haydenir.com
or
Cameron Donahue
(651) 653-1854
cameron@haydenir.com
Consolidated Balance Sheets
September 30, 2016 (Unaudited) | December 31, 2015 (1) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash |
$ |
7,765,707 |
$ |
10,128,320 | ||||
Accounts receivable, net |
3,402,272 |
2,127,060 | ||||||
Inventories, net |
2,106,329 |
2,322,904 | ||||||
Prepaid expenses and other current assets |
937,534 |
666,267 | ||||||
Total current assets |
14,211,842 |
15,244,551 | ||||||
Property and equipment, net |
36,508 |
21,319 | ||||||
Total Assets |
$ |
14,248,350 |
$ |
15,265,870 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses |
$ |
1,710,504 |
$ |
1,805,931 | ||||
Accrued preferred dividend |
314,888 |
190,847 | ||||||
Deferred revenue and other current liabilities |
536,536 |
25,057 | ||||||
Total current liabilities |
2,561,928 |
2,021,835 | ||||||
Long-term liabilities: | ||||||||
Line of credit note payable-related party |
4,500,000 |
4,500,000 | ||||||
Total Liabilities |
7,061,928 |
6,521,835 | ||||||
Stockholders' Equity: | ||||||||
Preferred Stock, $0.001 par value; 2,500,000 shares authorized, 6,380 and 6,380 shares issued and outstanding at September 30, 2016 and December 31, 2015 |
6 |
6 | ||||||
Common stock, $0.001 par value; 75,000,000 shares authorized, 38,666,451 and 38,380,380 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively |
38,666 |
38,380 | ||||||
Additional paid-in capital |
59,992,650 |
58,626,212 | ||||||
Accumulated deficit |
(52,844,900 |
) |
(49,920,563 |
) | ||||
Total Stockholders' Equity |
7,186,422 |
8,744,035 | ||||||
Total Liabilities and Stockholders' Equity |
$ |
14,248,350 |
$ |
15,265,870 | ||||
(1) Derived from Audited Financial Statements
Consolidated Statements of Operations
| For the three months
ending September 30, | For the nine months
ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 6,657,700 | $ | 3,652,424 | $ | 16,508,097 | $ | 12,957,334 | ||||||||
Cost of revenue | 3,772,948 | 2,143,676 | 9,339,302 | 7,581,897 | ||||||||||||
Gross profit | 2,884,752 | 1,508,748 | 7,168,795 | 5,375,437 | ||||||||||||
Selling and marketing expenses | 1,736,029 | 1,644,090 | 6,709,345 | 3,686,596 | ||||||||||||
General and administrative expenses | 1,081,273 | 616,703 | 2,936,273 | 2,508,088 | ||||||||||||
Total operating expense | 2,817,302 | 2,260,793 | 9,645,618 | 6,194,684 | ||||||||||||
Income (Loss) from operations | 67,450 | (752,045 | ) | (2,476,823 | ) | (819,247 | ) | |||||||||
Other Income (Expense): | ||||||||||||||||
Interest expense | (57,500 | ) | (57,988 | ) | (171,250 | ) | (264,721 | ) | ||||||||
Total Other Income (Expense) | (57,500 | ) | (57,988 | ) | (171,250 | ) | (264,721 | ) | ||||||||
Net Income (Loss) | $ | 9,950 | $ | (810,033 | ) | $ | (2,648,073 | ) | $ | (1,083,968 | ) | |||||
Preferred stock dividend | (102,958 | ) | (85,452 | ) | (276,264 | ) | (193,394 | ) | ||||||||
Net Income (Loss) available to common stockholders | $ | (93,008 | ) | $ | (895,485 | ) | $ | (2,924,337 | ) | $ | (1,277,362 | ) | ||||
Income (Loss) per share: | ||||||||||||||||
Basic | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.08 | ) | $ | (0.04 | ) | ||||
Diluted | $ | (0.00 | ) | $ | (0.02 | ) | $ | (0.08 | ) | $ | (0.04 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 38,666,451 | 38,380,382 | 38,530,195 | 31,421,909 | ||||||||||||
Diluted | 38,666,451 | 38,380,382 | 38,530,195 | 31,421,909 | ||||||||||||
Reconciliation of Non-GAAP Financial Measure
Three months ended September 30, | Nine months ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income (loss) available to common stockholders (GAAP measure) | (93,008 | ) | (895,485 | ) | (2,924,337 | ) | (1,277,362 | ) | ||||||||
Add back: | ||||||||||||||||
Depreciation and amortization expense | 4,978 | 8,670 | 12,346 | 26,521 | ||||||||||||
Net interest expense | 57,500 | 57,988 | 171,250 | 264,721 | ||||||||||||
Preferred stock dividend | 102,958 | 85,452 | 276,264 | 193,394 | ||||||||||||
Stock-based compensation | 306,290 | 115,860 | 1,361,398 | 1,157,959 | ||||||||||||
Adjusted EBITDA | $ | 378,718 | $ | (627,515 | ) | $ | (1,103,079 | ) | $ | 365,233 | ||||||
*We report financial results in accordance with accounting principles generally accepted in the United States ("GAAP"), but believe that disclosure of adjusted EBITDA, a non-GAAP financial measure, may provide users with additional insights into operating performance.
SOURCE: Celsius Holdings, Inc.
