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(Bloomberg) — Celsius Holdings, Inc. shares tumbled as much as 14% in premarket trading on concern near-term sales might be disrupted by a distribution change involving its newly acquired Alani Nu brand.
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Near-term sales could be affected as its Alani Nu brand transitions into PepsiCo Inc.’s distribution network starting in December, with former distributors winding down inventory and PepsiCo building stock, Celsius said in a statement Thursday. The shift may temporarily distort results, as revenue is recognized upon delivery, with changes potentially impacting sales and inventory levels across its brands.
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It’s “a dynamic we hope to understand better and had not anticipated,” Piper Sandler analyst Michael Lavery wrote in a note.
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Third-quarter revenue jumped 173% to $725.1 million from a year earlier, just ahead of the $719.9 million analysts had anticipated. The latest results include contributions from the company’s acquisition of Alani Nu in April. Citi analysts said buy-side expectations for revenue had increased in the walkup to the results.
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The results underscore Celsius’ push to win over health-focused consumers as it takes aim at Red Bull GmbH and Monster Beverage Corp.’s turf. The broader energy-drink industry is benefiting from coffee drinkers ditching cold brews for “better-for-you” caffeine and is targeting overseas markets where consumption remains well below that of soft drinks.
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“Combined, our brands grew nearly twice as fast as the US energy drink category, driven by Alani Nu’s incredible momentum and improving trends for our core Celsius brand,” Chief Executive Officer John Fieldly said in the statement.
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Adjusted diluted earnings per share reached 42 cents, beating the 27-cent average estimate. The gross margin improved to 51.3% from 46% a year earlier, ahead of the 50.7% analysts projected.
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Celsius shares had more than doubled this year through Nov. 5, outperforming the 3.7% increase in the S&P Midcap 400 Index.
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Rival Monster releases its third-quarter results after markets close on Thursday.
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(Adds analyst’s comments starting in 4th paragraph.)
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