In This Article:
Here's our initial take on Celsius Holdings' (NASDAQ: CELH) fourth-quarter financial report.
Key Metrics
| Metric | Q4 2023 | Q4 2024 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $347.4 million | $332.2 million | -4% | Beat |
| Adjusted earnings per share | $0.17 | $0.14 | -18% | Beat |
| International sales | $14.6 million | $20.3 million | +39% | n/a |
| Energy drink unit volume market share | 11.4% | 10.9% | -0.5 pp | n/a |
Celsius Turns to M&A for Growth
Celsius came into its fourth-quarter financial report with investors having been prepared for some less-than-stellar numbers, given performance in recent periods. As a result, even what might otherwise have been a lackluster 4% year-over-year drop in revenue and an 18% decline in adjusted earnings per share were still better than most had anticipated. Numbers for the full year were a little better, with sales climbing 3% despite a 10% drop in earnings per share on an adjusted basis.
Yet those results paled in light of news that Celsius had agreed to acquire energy drink rival Alani Nu in a $1.8 billion acquisition. Celsius will pay $1.275 billion in cash, $25 million in potential earn-out payments, and $500 million in Celsius stock. The company has lined up debt financing to cover $900 million of the purchase price, with the remainder coming from cash on hand.
Celsius sees Alani Nu complementing its own product line and creating an even more comprehensive health and wellness lifestyle brand. Alani Nu had risen to No. 4 in U.S. market share behind Celsius, Monster Beverage (NASDAQ: MNST), and Red Bull, and Celsius apparently believed that making a deal with Alani Nu now was in its best interest in order to preserve its own competitive position. Alani Nu's brand focus on community, empowerment, and wellness for young women also expands Celsius' target audience beyond its historical emphasis on athletes and fitness enthusiasts.
Immediate Market Reaction
Investors loved the move, with Celsius shares soaring 27% in the first 45 minutes after the announcement. Bear in mind too that the stock had already made a big gain when Celsius moved up the date of its quarterly release from its originally scheduled date next week, and so the stock is up nearly $10 per share from where it started the holiday-shortened week.
What to Watch
Celsius has huge expectations for the Alani Nu acquisition, with an anticipated boost to revenue of more than 40% and pro forma profitability climbing nearly 60% using adjusted earnings before interest, taxes, depreciation, and amortization as its favored metric. Moreover, Celsius expects the deal to be accretive to cash earnings per share in the first year after closing, and it has already identified $50 million in cost synergies with potentially more to come. Faster revenue growth and significant cash flow generation could also help the combined business.