Celsius Holdings, Inc. has recently made headlines with its latest quarterly figures and a significant acquisition that has sent its stock soaring. In this post, we’ll dive into the details of the earnings report, the implications of acquiring Alani Nu, and what it all means for the future of Celsius. Let’s break it down.
Quarterly Figures: A Mixed Bag
Celsius has just reported their most recent quarterly results, and the figures have a tale to tell. The stock jumped 26-27% in after-hours trading, which is a revealing response to the earnings report. But the underlying figures tell a more nuanced tale.
First, consider the fact that revenue is down 4% year-over-year with North American sales down 6%. On the surface, this would appear to be contrary to the advance of the stock. But the market was low in expectations, and that likely was the reason behind the positive response despite the dip in revenue.
On a positive note, global sales increased an astonishing 39%. This would imply that perhaps North America can’t get a break but there is good upside opportunity in other regions. Additionally, gross margins climbed 240 basis points over the comparable quarter of last year.
Market Share and Competitive Landscape
Even with some good trends, note that Celsius is lagging. They had their dollar market share up to 12.3%, but that declined in recent quarters. Red Bull is strengthening, and Monster hasn’t been able to hold its ground.
The winds of change are blowing, and Celsius needs to ride them to get back on track. And that’s where the Alani Nu purchase comes in.
The Alani Nu Acquisition: A Strategic Move
One of the most discussed subjects of the newsworthy topics is Celsius taking over Alani Nu in an approximately $1.65 billion deal. Not only is this a defensive play, but this is a strategic play in a consolidating business.
Alani Nu will hit $595 million of 2024 net sales with a staggering 50% CAGR from 2022. Synergies from the acquisition must be extremely big, e.g., approximated at $137 million of fully synergized EBITDA with a 23% margin. It is a great chance for Celsius to expand its capability and coverage.
Alani Nu has developed a distinct customer segment, specifically women, with 92% of its social media following being female. The clientele is well-situated to assist Celsius in reaching its vision of targeting more diversified consumers and improving its product line in the process.
The merged company of Celsius and Alani Nu would have around $2 billion in sales and will hold a share of around 16% of the energy drink market. This will position Celsius further as a bigger entity in comparison to the other industry giants.
Transaction Summary and Financial Significance
The deal has a combination of cash and equity, with about $25 million 2025 performance-based earnout. Accounting for tax incentives valued at some $150 million on a net present value, the effective deal price is some $1.65 billion.
Celsius is seeking the acquisition to be cash EPS accretive in the first year of ownership, which should be welcome to investors. Liquidity is excellent with a pro forma net leverage of approximately 1X and a substantial amount of cash on hand, reflecting strong cash generation.
Valuation-wise, 2.8 times revenue multiple for Alani Nu, in light of its high growth rate, appears to be reasonable. 12 times adjusted EBITDA multiple also is not overpriced, implying that this deal will prove to be a good one for Celsius.
Market Reactions and Future Outlook
While the original reluctance towards acquiring and performing on the stock is still present, the market itself has reacted well. After learning about the deal, Celsius stocks shot up. Others remain cautious, perceiving the deal as a defensive tactic more than as an outright expansion play.
The truth is that this purchase could make a defensive move into an offensive one. By entering into a partnership with Alani Nu, Celsius is not just eliminating a competitor but also expanding its stake in the market as well as its product line.
Ahead of the schedule, it is a matter of whether Celsius is successful in merging Alani Nu and utilizing its power for expansion. Apart from this, the investment community is most keen on analyzing Celsius’s core business on a stand-alone basis and monitoring revenue growth as well as anticipated PepsiCo orders crucial to forward progress.
Briefly, Celsius is not merely responding to market forces; it’s consciously trying to reshape its destiny. This risky move could be a harbinger of a new page in the growth story of the company.
