Greetings, and welcome to the Celsius Holdings Inc. First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. It is now my pleasure to introduce your host, Cameron Donahue, Investor Relations for Celsius. Thank you, Cameron. You may begin.

Thank you, operator, and good afternoon everyone. We appreciate you joining us today for Celsius Holdings First Quarter 2023 Earnings Conference Call. Joining me on the call today are John Fieldly, President and Chief Executive Officer; and Jarrod Langhans, Chief Financial Officer. Following the prepared remarks, we'll open the call to your questions and instructions will begin at that time. The company released our earnings press release earlier this afternoon, and all materials will be available on the company's website, celsiusholdingsinc.com. As a reminder, before I turn the call over to John, an audio replay will be available later today and can be accessed with the same live webcast link in our conference call announcement and press release. Please also be aware that this call may contain forward-looking statements, which are based on forecasts, expectations and other information available to management as of May 9, 2023. These statements involve numerous risks and uncertainties, including many that are beyond the company's control. Except to the extent as required by law, Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our Safe Harbor statements contained in today's press release and our quarterly filings with the SEC for additional information. With that, let me just turn the call over to the President and Chief Executive Officer, John Fieldly, for his prepared remarks. John?

Thank you, Cameron. Good afternoon everyone, and thank you for joining us today. We achieved record sales for the first quarter of approximately $260 million, an increase of 95% from last year's first quarter of $133 million, exceeding the $200 million revenue threshold for the first time in company history. And we saw a sequential increase from the fourth quarter of sales of $178 million, exceeding it by $82 million or 46% growth sequentially. Our North America revenue increased 101% for the quarter to $249 million, up from $124 million in the year ago quarter. CELSIUS continues to be the top driver of growth within the energy categories and was the number one dollar growth brand in total U.S. MULO+C energy for the last 52 weeks ending as of March 26, 2023, growing approximately $552 million in increased retail sales and contributing to 23% of category growth on an overall increase of 139.6% versus the year ago period. Per IRI, in the last four weeks ending as of March 26, 2023, in total MULO+C energy CELSIUS is the number 3 energy drink brand in the United States reaching a new market share record totaling 7.5%, doubling its 3.7% share a year ago. As Celsius and Pepsi continue to synchronize our organizations, we continue to see opportunities for future efficiencies. In the first quarter, we experienced an inventory build quarter-over-quarter from December 31, 2022. We expect this increase was due to anticipated retailer resets and a build in inventory levels. We will continue to work with Pepsi to make sure there is adequate inventory and update shareholders quarterly if there are any significant discrepancies that impact the warehouse inventory center inventory levels. Jarrod will provide additional details shortly. We continue to see growth across all channels, including those non-tracked, with Club channel sales totaling over $47 million for the quarter ending March 31, 2023, up 77% compared to $26 million in the first quarter of 2022. We also just hit a new record on Amazon. CELSIUS is now the second largest energy drink brand with a 19.1% share of the energy category as of the last four-week period ending April 22, 2023, per Stackline Energy Drink Category, total U.S. data. In addition, we continue to expand growth opportunities in non-tracked foodservice channels and are gaining more distribution in colleges, universities, hospitals, hotels, eateries, casinos, and more. Overall, foodservice represented approximately about 10% of our PepsiCo revenues and we're seeing significant opportunities to scale and grow over time. We have been extremely happy with our PepsiCo partnership and see a long runway of growth ahead of us across a variety of channels, including expanding in retail, convenience, and foodservice. As highlighted in our earnings supplement for the four-week period per IRI, total energy data ending March 26, 2023 as stated in MULO+C CELSIUS is the number three energy drink brand in the United States now has a 7.5% market share, doubling from its 3.7% share a year ago reaching an all-time new high. In addition, in MULO+C CELSIUS grew its ACV to a record 95.4% versus 69.5% in the year ago period, which is a tremendous achievement by both our teams and our partner Pepsi. And in convenience, CELSIUS has gained an additional 37.7% points of ACV growth versus the prior year to end the period at a 93.4% compared to 55.7% of ACV in the prior year. This provides a tremendous opportunity as we have gained greater availability across the country in the convenience channel and are now gaining more awareness with consumers. Internationally, sales grew at a 15% growth rate for the quarter, totaling $11.4 million compared to $9.9 million in the first quarter of 2022. We believe there is significant opportunity for international growth going forward with PepsiCo. While we just began our distribution partnership with Pepsi and our initial focus has been on the U.S. distribution transition to their network, we have begun initial discussions, and we see significant opportunities to capitalize on global scale in the future, reflecting the changes in consumer preferences for better-for-you offerings. While the U.S. transition has taken a majority of our focus to date, we do expect to announce additional international expansion details in the future. With that said, we look forward to likely early 2024 for opportunities to roll out internationally with 2023 being the year of planning around logistics, production, distribution, and marketing. The company achieved a record non-GAAP adjusted EBITDA of $48.7 million in the first quarter representing over an 18% of sales for the period. This was driven by not only record sales, but we also saw benefits across the timing of marketing and sales programs as well as the results of gaining operational leverage across G&A. Although we saw some very good leverage across our SG&A, we would expect our investments to increase during the summer season of Q2 and Q3 of this year as we continue to drive growth, awareness profitably and are entering into a number of campaigns designed to grow brand awareness. The company sees opportunities to drive incremental efficiencies through the back half of 2023 from expected improvements in gross profit margins as we optimize and synergize our supply chain and gain more efficiencies. In addition, we see additional leverage opportunities as we scale to drive further efficiencies in our SG&A. To close my prepared remarks, we achieved the highest quarterly dollar sales growth in company history in the first quarter, and as previously noted, our previous recorded highest quarterly revenue was in Q3 of 2022, we exceeded by over $70 million. We are gaining market share at the fastest pace in company history, while at the same time driving the highest quarterly EBITDA margin of over 18%, demonstrating the leverage in our operating model. We believe we have significant runway ahead of us and are excited about the spring resets, driving additional shelf space in both new and existing customers while optimizing our placements. Celsius is now an established leader in the energy category, driving growth in the entire category with incremental opportunities for further growth as we continue to scale and leverage our partnership. I will now turn the call over to Jarrod Langhans, our Chief Financial Officer for his prepared remarks. Jarrod?

Thank you, John. Turning to our first quarter financial results, revenue is approximately $260 million, an increase of 95% from $133 million driven by our North American business where first quarter revenues were $249 million, an increase of 101% from the same period in 2022. The primary factors behind the increase in North American sales volume were related to our integration into the Pepsi distribution system, where we saw increases across the board, including continued strong growth in traditional distribution channels, including SKU increases as well as distribution across a number of new channels within C&G and foodservice. We've also seen our velocity increase post our significant ACV growth. During the quarter, we saw an increase in the days inventory outstanding within the mixing centers relative to the end of 2022, which equated to roughly $20 million to $25 million in incremental sales. We would anticipate that this build would be sustained through the summer selling season as we continue to see steady growth across our footprint. Gross profit for the quarter increased 111% to $114 million, up from $54 million in the year ago quarter. Gross profit margins in the first quarter were approximately 44% of revenues compared to approximately 40% for the prior year first quarter. The improvement in gross profit margins was due to lower average can prices and leverage of our orbit model offset in part by increased freight and a few million dollars of inventory write-offs. Q1 was the second quarter that we were operating within our new distribution system and we continue to drive efficiencies and optimization within the system while maintaining our number one goal of keeping the shelves stocked in order to meet consumer demand. Looking out across the year, we continue to believe that we will operate with gross margins in the mid-forties with some pressure during the first half of the year while we fully integrate into our new distribution system and begin to better optimize our supply chain with upside in the back half of the year. Sales and marketing expenses for the three months ended March 31, 2023 were approximately $48 million, an increase of approximately 51%. Although we saw increased marketing investment during the quarter in line with historical spend, this was offset by less expense within sales due to the timing of our activation. As a percentage of sales, sales and marketing was 18.3% compared to 23.7% in the prior year. On a full year basis, we continue to expect our sales and marketing expenditures to remain consistent with historical run rates. As noted, this quarter benefited from timing as well as some inventory builds within our mixing centers. General and administrative expenses for the three months ended March 31, 2023, were approximately $21 million, an increase of 75% relative to Q1 2022. This increase was due to increased employee costs associated with building a back shop that can scale as we grow, including stock-based compensation, as well as administrative fees such as legal, audit, and other consulting fees. G&A expense as a percentage of sales was 8% for the first quarter of 2023 versus 9% in the prior year, which is in line with expectations. We'd expect to see this area begin to leverage against our growth during 2023. From a legal perspective, we have closed on the settlement proceedings with our can label and are pleased to have that behind us. In regard to the SEC review, we continue to cooperate with any inquiries or requests that are received, but that said, we do not have any further updates at this point in time. Focusing now on liquidity and capital resources, as of March 31, 2023, we had cash of approximately $634 million and working capital of approximately $801 million. Included within the first quarter cash balance was approximately $38 million, which is primarily balances due to Pepsi representing excess funds provided by Pepsi for our distributor transition. Cash flows used by operating activities totaled $14 million for the first quarter, which compares to $9 million in net cash provided by operating activities in Q1 last year. Overall, we saw some cash usage associated with our growth as well as the timing of working capital. As we look to Q2, we would expect to return the excess funds to Pepsi while also improving on our DSO. Overall, we would expect that excluding timing impacts of cash transactions associated with the Pepsi transaction, we would continue to generate cash year-over-year. Looking at inventory, total inventory ended at roughly $150 million down versus the prior quarter. This was driven in large part by the significant increases that we saw in our sales volume. As we look to the busy summer months, we will see production increase significantly to accommodate the demand of the market. Going forward, we would look to carry additional inventory to ensure that we are able to keep up with the significant growth we are experiencing. At the same time, we do see opportunities to drive efficiencies in our DIO as we move through 2023. This concludes our prepared remarks. Operator, you may now open the call for questions. Thank you.

Our first question is from Mark Astrachan at Stifel. Please go ahead with your question.

Hey, thanks. Good afternoon guys. Man, I'm still writing down some of that stuff that you just breezed through. Whew, that is a fast transcript. Anyway, I guess to start, maybe give us a bit of an update on how the spring resets look from a shelf space standpoint, and how much is in existing energy doors, how much is coming in or going into new doors and kind of overall expectations for incremental space for the year?

Yes, Mark, great question. I think if we had a, we're really excited about the resets that started off this year, especially started in January. We saw a good increase in the quarter. What we're looking at is, we saw a lot of great expansion, as I kind of mentioned on the call in the convenience channel, where we saw the biggest really ACV gains when you go from over a 37.7% increase in points of distribution in convenience, so that's a really big win for the company. It's really the last channel of expansion for us into tracked channels. So we're really excited about that. I think we're seeing good velocities in the convenience channel as well. We're seeing them grow. So that was a big win also in overall MULO+C getting to that 95.4% of ACV most recently as of the March 26th data coming out of the IRI SPINS data. So I think we have some more expansion there, but we really grew significantly on the resets. Also, the number of items carried on average per store increased as well. So right now, we're looking at about an average at the last four weeks as of March 26, really at the end of the quarter. We went from an average of about 13.6 items per location in the recorded channel versus the prior year, which was at 8.6. So we saw a really good growth in the number of units. We got some more resets ahead of us. I think the biggest opportunity we have, as well as in tracked channels, is really gaining better placements in locations, more cold availability, cooler placements and those types of executions. So maybe not a large increase in the number of doors being at the 95% at the end of the quarter, but really the breadth in each retailer's massive opportunity for us.

Got it. That's helpful. And maybe just on the doors, so existing doors versus new doors, do you still want to be in the legacy energy door? And then somewhat related to that, I think many folks have been surprised at the velocities being not only as strong as they've been, but actually accelerating with all the incremental points of distribution. How much of that is just higher velocity C-stores versus just overall brand awareness? And kind of, how do you think about that number through the summer?

Yes, I think when you look at our, I guess, as you called them, legacy doors, that's mainly in the food, when you look at the food channel, we still maintain an ACC section in a variety of stores including Publix and Kroger and those, but the majority of the stores outside of those are in energy. So we do great business in the food channel. We do extremely well at Publix, doing extremely well at Kroger. So it's really about gaining those additional off-shelf placements, those additional cold placements, cooler placements and so I mean, we're not going to change that strategy within the food in our existing business at this time, but when we look at the distribution ahead, there are opportunities for additional SKUs. We see that. We've got some great innovation planned for this summer. I think you saw some great innovation come out in the first quarter with new flavor innovation, our Lemon Lime, our Green Apple Cherry flavor at 7-Eleven was a great win for us. So there's a lot of great innovation coming this summer that we'll be able to add some additional breadth within the retailers.

That's great. And just on the velocity, thank you.

Yes, I mean, we're seeing velocity increase, Mark. I think there's opportunities for sure to go further north on that. We've got some great marketing programs ahead of us, and we think summer is going to be a great summer for us. We're watching it closely. I think we don't provide any forward guidance, but that's something to look at, and we're monitoring it closely all around, especially as we increase such an exponential increase in ACV.

Got it. Thanks guys.

Thanks Mark.

Thank you. Your next question is coming from Jeff Van Sinderen from B. Riley. Your line is live.

Hi everyone, and let me add my congratulations on the strong quarterly metrics. I wonder if we can kind of circle back to, and delve a little bit more into how much of the Q1 reacceleration of growth was initial channel fill for new stores, new doors, call it added SKUs, etc., versus reorders derived from sell-through retail. Just trying to get a better sense, I guess, of how much the initial channel fill impacted new doors, new SKUs in the quarter? And then maybe what impact that phenomenon might have in Q2? I think you alluded to a little bit of that or Jarrod did in his prepared comments, maybe just how we should think about growth acceleration from here?

Yes, no, thanks Jeff. We did gain some distribution with the resets that took place, and you know what, I think as we're starting to see velocity increase, that is a really good sign that we're cycling through whatever pipe fills we had for the quarter. So the increase in distribution didn't slow the overall velocity, so the sales are moving quicker out of the registers. So I think that puts us in a good position. We feel really confident. It's hard to say exactly what the pipe fill was. We did talk about in the quarter how we saw Pepsi increase inventory levels, which Jarrod talked about in his earlier comments regarding approximately $20 million to $25 million, we feel is the average impact for the quarter with the increase in inventory levels. But I think seeing the velocity increase, I think we get a really strong feeling that we're seeing repeat purchases out there.

Okay. That's helpful in quantifying the inventory with Pepsi. And let me ask you this, as you're going into some of the, I mean, you've got a great ACV now, so you're going into some, I guess some C-stores for example, that might be lower volume, some other store, other doors within various retailers that might be perhaps a little bit lower volume. Just wondering what you're experiencing there as far as sell-throughs and then overall what's your outlook for your business in the C channel?

That's a great question. We have gained significant distribution in tier three and tier four convenience stores, especially since our expansion with the Pepsi system began in October. We had strong presence in tier one and tier two stores, and we're continuing to build our reach in convenience locations, where we're starting to see increases in sales velocities. For the smaller tier three and tier four stores, the lower sales velocity makes it challenging to get accurate reporting. However, we view overall velocity as a strong indicator of the portfolio's health. We are very confident in our convenience strategy, as our brand performs well and we are seeing an expansion of usage occasions beyond just energy drinks. We are excited about our brand's current position and future direction, and we are closely monitoring these developments. Additionally, foodservice represents 10% of Celsius' business, highlighting the broad appeal of our portfolio among a diverse range of consumers today.

And it sounds like you're gaining more, you feel like you're gaining more traction in foodservice than some of the other channels as well that are not reported or not tracked?

That's correct. We see great opportunity in non-tracked channels as well.

Okay, terrific. Thank you for taking my questions. I'll take the rest offline, continued success.

Thank you, Jeff.

Thank you. The next question is coming from Kevin Grundy from Jefferies. Your line is live.

Hey great. Good evening guys.

Good evening, Kevin.

Hey, a question John, for you. Just in terms of the ambition now with items per store, so the ACV progress has been fantastic. I remember a conversation you and I had in the fall, and it was a 10% market share was kind of an ambition at that point. If we can get 92% ACV, if we can get 15 items per store, if we can maintain current velocity, and you're kind of checking all the boxes at this point, so around 7.5% share, this is past the 10% is very near and present now. So as you kind of take a step back, what do you think is possible now in the Pepsi system? The 10% again seems like it is very attainable and near term what do you think is possible now for this brand as you look at the strength and the reach of the Pepsi system, as well as what you guys have done with the brand?

Yes, Kevin, that's a great question. We're pleasantly surprised by how quickly we've reached a 95% ACV, as our internal estimates suggested it would take us another 12 to 18 months to achieve that. I really want to commend our sales team, our key accounts team, and our partner at Pepsi for their excellent work. They recognize the opportunity with Celsius in attracting new consumers to the category. Looking ahead, we have a lot to learn in the next quarter or two about how our product portfolio performs, particularly in the quickly expanding convenience channel. We should have a clearer understanding by the end of next quarter and especially by the end of Q3. Currently, we have 13.6 items per store, and with the velocity we've seen from our initial items, we aim to reach 15 to 17 items per store by year-end, which will bring us closer to that 10% market share. We're thrilled to have recently achieved a 7.5% share at the end of the first quarter, and we see many opportunities on the horizon.

Reign Storm:

Yes, Kevin, great question. I mean, there's competition every day. The energy category is about as fierce as they come. Tons of new competition every day. And I think where the opportunity lies, where we're looking at, when you talk about where Celsius can go and, like in Miami, when you look at the Miami-Fort Lauderdale market in MULO+C, the last four weeks ending as of April 23, 2023, we have about a 21.7% share in the market. So, there's a lot of opportunities. We're the number two brand now on Amazon. We compete with a lot of different brands in the category. I'm not going to comment on any other brand out there. It's a big category, and we wish every brand luck on operating their business. We're really excited where our portfolio is, where it's resonating with consumers, excited about our partner Pepsi, and just see a lot of opportunities at this time are really excited about moving forward.

Okay, very good. Thanks guys. Continued success.

Thank you.

Thank you. Your next question is coming from Peter Grom from UBS. Please proceed with your question.

Thanks, operator, and good evening everyone. So Jarrod, I just had a few questions on gross margin. Maybe just first, can you just help us understand how much the inventory write-off impacted GM this quarter? And then second, I recognize you still expect gross margin for the year in this mid 40% range. And I may have misheard you, but I thought you mentioned that you expect one-half gross margins to be under pressure. I mean, is that just relative to the mid 40% range? Is that year-over-year, just any color on that comment would be helpful.

Yes, we have consistently indicated that we're aiming for the mid-40s. If you examine the run rate at the end of Q4, we made some additional inventory write-offs as we work on building our supply chain and enhancing efficiencies within that channel. I mentioned a couple of million dollars in write-offs, which isn't a significant amount, but it was enough to slightly affect our margins. We also experienced somewhat higher freight costs during the quarter. As we move into the latter half of the year, we will focus on optimizing our freight lanes and ensuring that our supply chain operates as efficiently as possible. The challenges were primarily due to inventory and freight, which influenced margins from Q4 to Q1. However, we remain optimistic about maintaining the mid-40s and believe there is potential for improvement in the second half of the year as we fully integrate with our new distributor.

Okay. Super helpful. And I guess just, I would love to get some more details on kind of this international discussion, and I recognize that it's likely to prove to be a 2024 narrative, but can you just help us understand the work you've done that informs the decision that the brand can resonate and do well in these markets? What markets are you targeting initially? Is this going to be some broad-based multi-market rollout? Is it going to be more gradual, just any initial color you can provide would be super helpful?

Yes, I think we've talked about this on some of the conferences we've been in, back in March, but from our perspective we look to hit markets that are obviously already well-defined energy markets. So we're not going into a new market that we have to train the customer on what is energy. So if you look around, kind of think of APAC and Europe, the different markets that are popular energy drink markets, we'd look to roll into those first. We're not going to do a shotgun approach. We'll look to go into a handful of markets first and learn and partner in most instances with Pepsi or Pepsi partners and really use that as a tool to learn to build the model. And then from there we would look to roll into more markets over the coming years, but I would say for kind of a 2024 launch, we're looking at a handful of markets to really get into, understand them, learn them, but they're going to be the bigger energy markets across Europe and APAC. We do see some opportunities in some smaller markets where we can kind of roll in because they're close to co-packers and they're ready. But those wouldn't really move the needle. So, there's some core markets we'll learn at and, most people know what those markets would be if you look in Europe and in APAC in terms of what are the big energy drink markets. So that's really, this year it's all about planning, it's about getting aligned with the partners. It's about creating market launch plans and then looking to roll out in 2024.

Got it. Thanks so much. I'll pass it on.

Thank you. Your next question is coming from Jonathan Keypour from Bank of America.

Hey everybody, congrats on the quarter. I just wanted to discuss the foodservice commentary you mentioned. If I heard you right, that was 10% of sales in the quarter. I'm curious about the impact of Pepsi bringing in that inventory to sell and what the pipe fill for foodservice might have been in the first quarter.

Yes, Jon, great question and just to correct myself there, as 10% of our Pepsi sales approximately is coming from the foodservice business. So, we've been working on that since October. So, when we first launched initially partnered with Pepsi, so we've been expanding distribution in a variety of outlets, in colleges, universities, hospitals, just expanded into a variety of hotels. So it is not really a pipe fill in the quarter, I would say. We just continue to build upon the momentum. We are gaining more distribution, but we're seeing good reorders and strong reorders within the channel, and we think that can be a really meaningful growth opportunity for us as we go forward and gain more distribution. We just really, as we look ahead the distribution opportunities is at eateries and within fast casual restaurants, we feel there's a great opportunity there, and that's really has been untapped. So it definitely, tells you the brand resonates with an extremely broad consumer just to see the sales mix at the Pepsi system of approximately 10% of sales today. So it gets us really excited.

Great. Just one follow-up. I guess looking at the Nielsen data, this is a boring question that I got asked a lot last quarter, but I have 1Q growth in scanned channels about 138%. If we use that and sort of apply to what 1Q was in 2022, it implies something like 290, it's about a $45 million difference, whereas, you do the same math in Q4 is about a $50 million difference. Is that the same kind of like, the lag between scanned and reported that we should kind of expect, or is there any line that you guys have to some lumpiness or more or less or any kind of swings in that regard?

Yes, I mean, what you're getting on scanned data is coming out of the register. So, when you look at it, I think there's probably some lumpiness in regards to the kind of the value chain as it's going through the Pepsi mixing centers and then into their sales barns and then into customers and then cycling through. But it's something we watch. You also have the mix of our Amazon business as well as our club business and that’s in there. It didn't grow at those factored rates. So I think it's a mix of all those items and probably a little bit of timing.

Okay. Thank you.

Thank you. Your next question is coming from Gerald Pascarelli from Wedbush Securities. Your line is live.

Hey guys, good evening. Thanks very much for the question. So obviously very strong revenue growth here. It sounds like distributor inventory levels are going to remain elevated at least over the next few months. So just on your supply chain, can you speak to your ability to continue to service this type of demand? You know, maybe over the longer term in particular as it relates to your aluminum can supply, which is now back to being sourced domestically, which has obviously had a big benefit to your margins. So just I guess any kind of high-level color you could provide on your thoughts there would be helpful? Thanks.

Yes, from a raw material perspective, we're in great shape. We've got multiple partners in the U.S. like you mentioned from a can perspective, no issues there. From a capacity perspective, we've got the ability to quickly double, in terms of capacity and in terms of production. We've got our orbit model built, but we've got a number of co-packers that we can flex to and we have capacity at our current co-packers that we can utilize as well. So we're in great shape in order to meet the demand we're seeing or even demand outside relative to what we're seeing. So from a supply chain and production perspective, we're in good shape.

Perfect. Thanks Jarrod. I appreciate it. Next one from me is just on the Club channel. If you could just provide maybe a refresher of where we are kind of on the 18-pack transition? I know you were in the midst of rolling out a second variety pack to your legacy stores and then finally on the BJ's rollout, just where we are with that? I know that that was taking place over the course of this quarter. Thanks.

Yes, Gerald, this is John. We have mostly transitioned to the 18-pack across all Club channels and are beginning to expand beyond our core variety pack. Additionally, you will notice incremental placements at various Club channels with our bi-pack. Both packs have been performing extremely well, and I believe there are opportunities to introduce further flavor combinations or single flavors in that channel as we are experiencing great success there.

Perfect. Thanks very much for the color, guys. I'll pass it on.

Thank you.

Thank you. Your next question is coming from Michael Lavery from Piper Sandler. Your line is live.

Thank you. Good afternoon.

Good afternoon.

Just wanted to come back to the $20 million to $25 million inventory you mentioned for the Pepsi system, the inventory build. With the ACV running ahead of your expectations and velocities as well is there a good portion of that that's really just an adjustment to faster sell-through and kind of reset to normalized levels that are above what they would have initially expected or is that really some cushion that's volume that's pulled forward? Can you kind of dissect it, out of that amount, if there's a bit of both?

Yes, so there's a bit of a build for the summer selling season, so to get ready for it and to meet the expected volume. So to your point, a bit of that is in anticipation of Q2 and Q3. We've also got a number of activations and sales and marketing programs that we've got ahead of us over summer. So I would say it's partially well, in large part it's preparation of what's to come.

Okay. That's helpful. And just on the SG&A run rate, it's been in roughly the same neighborhood, the last three or so quarters. Looking ahead, I know you've talked about stepping up the marketing a little bit, but you also get some operating leverage benefits from the revenue growth. How do we think about just how that might look over the rest of the year?

Our plan is to maintain our historical run rate if we can continue driving velocity. In our last call, we discussed the period from 2022 to 2024, with our historical performance leaning towards the 2023 and 2024 range. We're considering whether we can achieve a slight reduction this year. We recorded just over 18% growth in the last quarter, benefiting from inventory build and the rapid revenue growth propelled by our marketing team, which has effectively increased velocity. Our sales team has also contributed to the growth in annual contract value with Pepsi. We're implementing a hundred days of summer program, along with various activations, and plan to increase our marketing and sales spending. Our aim for the summer period is to align with our historical performance, while also capitalizing on the revenue growth to enhance our leverage. The goal for the year is to finish around the 22% mark. If the opportunity arises, we will aim for better performance, but we want to invest wisely to ensure continued growth in velocity.

Okay, great. Thanks so much.

Thank you. Your next question is coming from Thomas McGovern from Maxim Group. Your line is live.

Hey guys, thanks for taking my question. So just to start, I just have a question on the back office buildout. So given your summer launches, which you guys have mentioned quite a few times, and then this presumed transition into the international markets, just want to get an idea of how you guys are looking at it. Do you think it's a sufficient buildout for the near-term, or do you expect to continue to build on your back office throughout 2023?

Thank you for the question, Thomas. As Jarrod mentioned, we have been expanding our back office primarily in finance, IT, GL teams, and legal teams. We've developed a strong team but are looking to make a few more hires. In addition to Jarrod's departments, we're also focusing on specific areas within finance and HR and making investments in our operations department. As we scale and open more co-packers for greater production runs, we'll also hire additional staff to enhance efficiency in logistics. We are committed to investing in growing our sales and marketing teams as well. You can expect to see leverage opportunities, especially in human resources, and improved returns on our marketing investments now that we have achieved 95% ACV distribution in the U.S. As we expand internationally, we will be investing in these new markets, and more details will follow as we progress, particularly in the latter half of 2023 and into 2024. Initial investments will be necessary to pursue new markets moving forward.

Great. Thanks for that color. And then just my last question real quick is if you guys are still providing these metrics, I was curious to know how many branded coolers there are as the end of the quarter. How many coolers you're in total? And then just kind of where you guys are at in terms of penetrating Pepsi's, I don’t, I believe it was 50,000 Pepsi owned energy coolers that you guys mentioned on one of the last calls. Just kind of want an update on there if you can provide it.

Yes. We've eliminated some of those specific details that we were due to competitive and competition coming in, they category vigorously. So we still have a big presence and a big push for coolers and that's a big opportunity for us gaining more cold placements. We see that opportunity now. The number of coolers we're investing, we've made a decision not to disclose that specific number on a go-forward basis, but we are investing in coolers, we're investing in additional placements, off-shelf racks and those types. And we think there's a lot of opportunities. In the past on the last call, we said we were working towards and planning to half place by the end of the year of approximately 20,000 Celsius branded coolers, but that's, we're not going to provide any additional color on that.

All right. I understood. I appreciate you taking the time to answer my questions and congrats on the great quarter.

Excellent, thank you.

Thank you. Your next question is coming from Sean McGowan from ROTH. Your line is live.

Thank you, everyone. I have a couple of questions; one regarding freight. Have you noticed anything unusual, and are any of the increased freight costs affecting you?

Sean, are you there? We think he lost the signal.

Yes, I must be having a problem with the signal. I'll just talk to you guys later.

Okay.

Okay.

Thank you. That concludes today's conference. We have reached the end of our question-and-answer session. I'll now turn the call over to management for closing remarks. Please go ahead.

Thank you, Matt. And thank you everyone. On behalf of the company, I'd like to thank everyone for their continued interests and support. Our results demonstrate our products are gaining considerable momentum. We're capitalizing on today's global health and wellness trends and the transformation taking place in today's energy drink category. Our active lifestyle position is a global position with mass appeal. We're building upon our core business, leveraging opportunities, and deploying best practices. We have a winning portfolio strategy and team, a rapidly growing market that consumers want. I'd like to thank all our investors for their continued support and confidence in our team. The company will be attending several upcoming investor conferences the week of May 22nd, including Goldman Sachs and B. Riley. And in June, we'll be attending Stifel, Evercore, and Jefferies investor conferences, and we look forward to meeting and seeing many of you there. Thank you everyone for your interest in Celsius. Stay healthy and live fit.

Thank you. Everyone, this concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.