Earnings Call Transcript - CELH Q2 2025

Operator, Operator

Good morning, and welcome to the Celsius Holdings Second Quarter 2025 Earnings Webcast. I would now like to hand the call over to Paul Wiseman from Investor Relations. Please proceed.

Paul Wiseman, Investor Relations

Good morning, and thank you for joining Celsius Holdings Second Quarter 2025 Earnings Webcast. With me today are John Fieldly, Chairman and CEO; Jarrod Langhans, Chief Financial Officer; and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our second quarter earnings press release was issued this morning with all materials available on our website, ir.celsiusholdingsinc.com and on the SEC's website, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on our current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward-looking statements, except as required by law. Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We'll present results on both a GAAP and non-GAAP basis. Non-GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share and their GAAP reconciliations are detailed in our Q2 earnings release and non-GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John.

John Fieldly, CEO

Good morning, and thank you for joining us. Q2 was a strong quarter for Celsius Holdings and for the energy category at large. Among beverages, energy is outperforming with over 15% year-over-year retail sales growth with tailwinds coming from new to category consumers drawn to functional zero sugar innovation and increasing value among beverage choices. Celsius Holdings is delivering meaningful strength across our portfolio in the second quarter led by standout performance from the newly acquired Alani Nu brand and continued positive momentum from our core Celsius brand. For the 13 weeks ended June 29, total Celsius Holdings retail sales grew 29% and volume increased 31%, reflecting broad-based consumer demand and strong execution at retail. Celsius Holdings reported revenue of $739.3 million for the second quarter ending June 30, 2025. The 84% year-over-year increase in revenue was primarily driven by $301.2 million in revenue from the Alani Nu brand, while the Celsius brand contributed $438.1 million of revenue in the quarter. Q2 consolidated gross margin held relatively steady at 51.5%, down 50 basis points year-over-year despite incorporating Alani Nu's lower-margin profile beginning in the second quarter. Overall, gross margin was supported by favorable material costs, improved production yields, leverage gains through our vertical integration initiatives and strong product and channel mix. Looking toward the back half of this year, we expect margin pressure associated with higher input costs, which Jarrod will discuss further on the call. Adjusted EBITDA was a record in excess of $200 million in Q2 of 2025. We are very pleased with the strong growth of Alani Nu and the pace of our integration with the teams and operations that Celsius Holdings acquired in the transaction that closed on April 1 of this year. Our focus today remains on delivering excellent customer service and supporting a robust distribution growth and innovation. As we noted in our Alani Nu modeling call held in May, we expect to achieve $50 million of run rate cost synergies over 2 years post-closing, contributing to strong pro forma profitability and significant cash flow generation. Celsius Holdings performance through the first half of the year was driven by strong execution across innovation, marketing, retail activations and operational discipline. We stay close to the consumer, remain focused on building brand equity and work hard to deliver value to our retail partners and consumers. Our team continues to operate with great focus and intention. We don't take growth for granted, and that mindset carries us through the first half of this year and positions us well for the back half of 2025 and beyond. I'll turn the call over to Jarrod shortly to walk through the financials in more detail, but first, I want to talk more about what drove the quarter, how we showed up in market, what we're seeing across our brands and channels and where we're going from here. Consumers today are making more intentional beverage choices, reaching for functional, better-for-you products that fit their active and wellness lifestyles. The shift to zero sugar, functional energy drinks is fueling one of the fastest-growing segments in beverage, and Celsius Holdings is defining it. Recent industry reports pointed to double-digit category growth in 2025, with momentum coming from new to category consumers, namely females, Gen Z and the growing number of consumers who are switching to functional energy drinks from other energy sources like RTD cold coffee among them. Younger, more diverse consumers are now leading the growth, and brands that resonate with Gen Z and women like Celsius and Alani Nu are gaining share and building loyalty. The Celsius Holdings portfolio has reached a 43% household penetration with the Celsius brand at 34% and the Alani Nu brand at 22% household penetration with repeat rates over 65%. And on the retail side, buyer surveys continue to rank Celsius Holdings portfolio among the most likely to gain share, confidence we're backing up with strong execution in the market. In tracked U.S. channels, the ready-to-drink energy category grew 15.2% year-over-year in the second quarter, with unit growth of 13.5%. While Celsius Holdings outpaced the category across nearly every key retail metric. Dollar sales grew 28.9%, nearly double the category. Unit sales increased 31.2%. Total points of distribution and items per store both rose roughly 23%. Velocity increased 20% quarter-over-quarter. For the last 13 weeks ended June 29, Celsius Holdings achieved a 17.3% dollar share in the RTD energy category, a 180 basis point increase versus the prior period. The Celsius brand delivered resilient growth in the second quarter, growing unit sales 6.1% and dollar sales by 3% to achieve an 11-point share for the 13 weeks ended June 29. The Alani brand had a breakout quarter, with dollar sales rising 129% and share up 3.2 points year-over-year, making it the largest share gainer in RTD energy and reaching a 6.3 share for the 13 weeks ended June 29. The Celsius Holdings portfolio also recently surpassed a key retail milestone, achieving $4 billion in the past 52-week retail sales in tracked channels for the period ending July 20, 2025, a major milestone. That's more than the next 8 RTD energy brands combined in the same period, a clear signal of the category momentum we're leading and the demand our brands have generated. Innovation continues to be a core driver of growth, and both brands delivered meaningful innovation in Q2. Alani Nu showed extraordinary strength in innovation in the second quarter, led by Sherbet Swirl and Cotton Candy which drove sales incrementality across the business. Alani Nu, Cotton Candy set sales records and its debut at Walmart by orders of magnitude. And Alani Nu consumers are already buzzing about the recent arrival of Alani Nu Witch's Brew, which this year is accompanied by another great limited-time offer, Pumpkin Cream. Importantly, growth wasn't limited to new items. Alani Nu's core SKUs are sustaining strong velocity and retention, evidence that this is a brand with staying power. Brand loyalty data across the category show that Celsius and Alani brands are clear standouts, particularly among Gen-Z and female consumers. The Celsius brand delivered strong innovation in Q2 with the release of two great refreshing fizz-free flavors, including Pink Lemonade and Dragon Fruit Lime. Consumer insights guide our innovation and the introduction of these two new flavors feeds into strong consumer demand for more great-tasting, zero sugar fizz-free energy. The Celsius brand also continues to build scale in e-commerce, on-track channels and food service. The Celsius brand was the number one trademark in RTD Energy on Amazon during the summer Prime Day event with an 18.4% share for the week ending July 12. With sales led by our variety packs and top-performing flavors. The Alani Nu brand jumped to a 10.9% share on Amazon during the Prime Day event for the week ending July 12, up from 6.5% the prior week. Celsius foodservice volume grew 9.8% year-over-year in the second quarter, representing approximately 12% of our North America Celsius brand sales to PepsiCo. Distribution and activation continue to expand, particularly in lodging, recreation, health care and quick-serve restaurants. International revenue grew 27% year-over-year in the second quarter, with strong contributions from Australia, the U.K. and France. These are still early days, but our approach is resonating, leading with the brand and best in localized execution and scaling with discipline. Internally, we're building our capabilities to support this growth in systems, supply chain, analytics and operations. In July, we welcomed John Cole, an Executive Vice President of Technology, to help us strengthen cross-functional connectivity and scale our infrastructure for a multi-brand omnichannel future. John's 30-year career in technology spans name brands like Fanatics, Philip Morris and Point72, among others. We continue to invest in brand awareness, touching more people in more places more often, focusing on driving trial and loyalty. In June, we launched the next wave of our LIVE. FIT. GO marketing campaign, our most ambitious creative yet, connecting purposeful energy to real-world action. Early results are strong with rising aided awareness and positive feedback from retailers. The Celsius brand also activated key cultural moments like F1 Miami, the CMA Fest and the Breakaway Festival. While Alani Nu expanded its reach through influencer engagement and lifestyle partnerships. Looking ahead, we're excited to debut Celsius' first national TV commercial during the NFL broadcast this fall, a major milestone. We're also collaborating with country music star Kelsea Ballerini on branded content that reinforces our growing connection and connectivity with female consumers. We're proud of how our team executed our growth strategy to reach more people in more places and more often in the second quarter and how our brands continue to lead one of the most dynamic categories in beverage. Celsius and Alani Nu brands are driving growth, gaining share, and staying relevant with the next generation of modern energy drinkers. With that, I'll turn the call over to Jarrod for more details around our financial results for the quarter and the first half of the year.

Jarrod Langhans, CFO

Thanks, John, and good morning, everyone. We delivered strong financial results in the second quarter with meaningful contributions from both the Celsius and Alani Nu brands. Let's walk through the numbers. Starting with Q2 2025 financial highlights. For the three months ended June 30, 2025, revenue totaled $739 million, up 84% from the prior year period. Growth was led by $301 million of revenue from Alani Nu, which delivered record results fueled by strong limited time offer sales of their Sherbet Swirl and Cotton Candy and continued growth in the brand's core flavors. Celsius brand revenue increased 9% year-over-year, supported by velocity improvements and expanded distribution. Scanner data showed approximately 3% sales growth as our reported results benefited from a favorable comp from the prior year inventory movements at our largest distributor. Gross profit increased to $381 million compared to $209 million for the year-ago period with a consolidated gross margin of 51.5% compared to 52% last year. The margin reflects lower ingredient costs, stronger production yields and favorable mix, partially offset by Alani Nu's structurally lower margin and the impact of $21.7 million in purchase accounting inventory step-up. That said, Alani Nu's gross margin improved sequentially driven by cost efficiencies and product mix. For both brands, Celsius and Alani, we saw some favorable mix impacts in areas such as channel mix and product mix, but most impactful were the savings across raw materials and freight. With that said, our inventory is recorded on a FIFO or first-in first-out basis, so we did not see a material impact from tariffs in the second quarter. We expect tariffs to impact the overall margin profile through increased costs across our raw materials in Q3 and Q4. Moving to operating expenses and profitability. Sales and marketing expenses were $152 million or 20.5% of revenue in the second quarter benefiting from some outsized growth relative to the timing of investments made in the quarter. As we look to the back half of the year, we will continue to support the brand with increased investment relative to the second quarter, including further investments in our LIVE. FIT. GO. campaign, summer promotions and increased retail activation. As always, we'll remain agile in managing spend. We continue to build organizational capability during the quarter with new hires in field sales, brand marketing and customer experience, all critical to executing our commercial priorities in Q2 and beyond. G&A expenses were $86 million or 11.7% of revenue compared to 6% last year. The increase was primarily driven by $16 million in acquisition-related costs and $13.8 million related to the contingent consideration associated with the earnout. Let me provide a little color on the contingent consideration. In connection with the acquisition of Alani Nu, the company recorded a liability at fair value for the contingent consideration potentially payable to the sellers of Alani Nu subject to the achievement of certain 2025 net sales targets, with a maximum payment of $25 million. The fair value of the liability was estimated using discounted future cash flows based on a probability-weighted expected return methodology. The company evaluates the fair value of the contingent consideration quarterly and adjusts the carrying value if new information becomes available. As of June 30, 2025, the contingent consideration was remeasured to the maximum $25 million payout driven by the outperformance of Alani Nu's revenue results for the three months ended June 30, 2025, relative to the initial financial projections as of the closing date and a resulting revised upward forecast for the remainder of the calendar year. On to net income. Net income was $99.6 million for the second quarter of 2025 compared to $79.8 million for the second quarter of 2024. Net income attributable to common shareholders for Q2 was $85.7 million or $0.33 per diluted share compared to $66.7 million and $0.28 per share last year. Adjusted diluted EPS was $0.47 per share compared to $0.28 per share in the prior year. Adjusted EBITDA increased 109% to $210 million compared to $100 million in the prior year. Now let's take a look at year-to-date. For the six months of 2025, revenue totaled $1.07 billion, up 41% year-over-year. North American revenue reached $1.02 billion, up 41%, and international revenue grew 33% to $48 million. Gross margin for the first half was 51.8%, up from 51.6% last year, driven by lower input costs, improved production yields and mix, partially offset by Alani Nu's gross margin structure and inventory step-up. Sales and marketing expenses for the first half were $232 million or 21.8% of revenue, down from 22% in the prior year. G&A totaled $125.8 million or 11.8% of revenue versus 6.2% last year, with the increase primarily driven by transaction-related costs and the previously mentioned earn-out adjustment. Non-GAAP adjusted EBITDA increased 49% to $280 million compared to $188 million in the first half of 2024. GAAP net income for the first half was $144 million with net income attributable to common shareholders of $119.9 million or $0.48 per diluted share versus $0.55 last year. Adjusted diluted EPS was $0.65 per diluted share compared to $0.55 per diluted share, even with the increase in share count from the Alani Nu acquisition. Moving to the balance sheet and capital structure. We ended the quarter with $615 million in cash, providing flexibility to support our innovation pipeline, international expansion and other long-term growth initiatives as well as debt reduction. As of June 30, total debt outstanding consisted of the $900 million term loan used to fund a portion of the Alani Nu acquisition, and our revolver remains undrawn. Looking ahead, we remain focused on profitable growth and operational discipline. With that, I'll turn it back to the operator for questions.

Operator, Operator

Your first question comes from the line of Peter Grom with UBS.

Peter K. Grom, Analyst

Thanks, operator, and good morning, everyone. So obviously, the top line performance was outstanding. But I was hoping to get some color on gross margin, both in the quarter but also just how to think about the path from here. Back in May, you outlined gross margin in the range of 47% to 49%, but this came in nicely ahead of that, and after backing out the inventory adjustment, it was even stronger. So can you maybe unpack the drivers of the better performance in the quarter, how it compared versus your expectations? And then just on the path forward, you mentioned the impact from tariffs is not significant in the quarter. But can you maybe give us a sense for how we should be thinking about the gross margin trajectory from here, given the increases in aluminum and the Midwest premium?

John Fieldly, CEO

Thanks, Peter. Yes, we had a phenomenal quarter. The top line came in extremely strong, especially with the Alani portfolio. And as we talked about in the prepared remarks, some of the new flavor launches, the limited-time offers with Cotton Candy and the Slush just did extremely well. But in regards to the gross profit margin, I'll turn it over to Jarrod for more color on some of those drivers.

Jarrod Langhans, CFO

Yes. Again, to just like John said, let me reiterate hats off to the operations and commercial teams across Celsius, Alani and Congo as well for the TSA that we're working on. It was a great quarter. I think we're pacing well ahead of what we modeled, and you can see very strong margins coming through. In terms of how those break down for Q2, let’s start with Alani. For Alani, John did mention the LTOs that tend to create higher-margin products. So when those things take off, they do provide a benefit to the margin. They’ve got longer runs, and you typically don’t see numerous promos on those, so from a net perspective, they’re accretive. We saw a good mix as well, so the RTD component of the portfolio within Alani outweighed anything else within the portfolio and the RTD portfolio is typically a higher-margin product. We also saw great operational performance with freight savings and raw material savings pacing ahead of expectations. So a great job to them to really start driving those results as soon as we kind of hit the ground. Overall, great job from Alani's perspective. For Celsius, we saw some savings across raw materials as well. Our scrap rates are at some of the lowest levels we've seen in years, and we benefited from favorable channel mix and growing sales. A great quarter overall, and lots of good things happening. We talked about FIFO pricing locks that we had for a good part of the year helping mitigate aluminum costs. So all those things benefited us this quarter. We had a 51.5% margin. If you add back the inventory step-up, it's even above that, looking more like a 54% or higher margin from that perspective. Looking to Q3 and Q4, I'll do my best to keep expectations realistic about the results. The FIFO method will likely provide some benefit in Q3 with inventory coming in that wasn't significantly impacted by aluminum tariffs, so that will help Q3. We also have some price locks in place for the back half of the year that'll be beneficial; however, we will be facing some tariff-related LME and aluminum cost increases across raw materials. It's hard to predict due to fluctuating tariffs and LME and aluminum prices. We're confident we'll remain in the low 50s margin range as things stand today, but it’s up to us to drive cost initiatives to exceed that expectation.

John Fieldly, CEO

Yes. I think with the systems and processes we implemented, as well as the vertical integration initiatives, we are now able to take advantage of the scale. This was another reason to bring Alani into Celsius Holdings. So hats off and a great job to the organization and team. We remain focused on discipline and execution, driving additional profitability and scale and leveraging the organization we've built. So we're going to continue to do our best. Thank you for your question.

Operator, Operator

Your next question comes from the line of Eric Serotta with Morgan Stanley.

Eric Adam Serotta, Analyst

Hoping you could give some color on expectations for Alani shipments versus takeaway. Shipments were really robust in the quarter, despite presumably some sell-in for the first limited-time offer before the deal closed. How—first, is that correct? And then second, how should we think about that for the balance of the year? And then could you touch upon expectations for Witch's Brew, which is always a big limited-time offer for Alani, and what you're doing to grow that year-on-year and your expectations for Witch's Brew this year?

John Fieldly, CEO

Yes. Excellent. Thank you, Eric. In regards to the shipping data, if you look at just for the quarter, the growth we saw in Alani and the growth on the scan data, it’s not a perfect match, but it's relative. It is really hard to anticipate the future. There will always be some deviation from sell-in to sell-out. But I will tell you, we are mainly in an independent network with the Alani Nu portfolio, and there's a relatively limited number of days on hand. So we expect it to be fairly close to the scans. However, if we see any outliers, we will go ahead and highlight that. But it’s coming in fairly close. You will always have fluctuations. The timing of LTOs and these launches may vary from quarter to quarter. We do have Witch's Brew currently launched and rolling into retail right now. So if you can get to a retailer, please go out and try it. It's an amazing flavor that kicked off through social media, and the marketing efforts have been great, kudos to the team. We have also introduced a variety pack this year, in conjunction with Pumpkin Spice, which is a new flavor, and we are really excited about that and how it's going to be perceived within the portfolio. So there’s a lot of timing and sequencing involved, and there's great innovation planned. We also have a winter edition coming. We’ve been working closely on our plans for 2026 and 2027, and we will have a robust portfolio of innovation ready not only for Celsius but also for Alani. With the Celsius portfolio, we have our first LTO that will be coming to market in the fall, and the Celsius team is excited about it.

Jarrod Langhans, CFO

Yes. Let me provide some directional data. If you look back to Q2 '24, we had a net revenue number of $146 million. Today, we are at $301 million, roughly 106% quarter-over-quarter growth. The scanner data for Q2 was around 129%. This gives us confidence that we are observing sell-through, where products are moving from the distributor to the retailer and consumers are pulling the product off the shelf.

Operator, Operator

Your next question comes from the line of Jeff Van Sinderen with B. Riley Securities.

Jeffrey Wallin Van Sinderen, Analyst

I wonder if we could turn a little bit to international for a moment. Maybe you can touch on plans to expand further internationally during the second half of the year?

John Fieldly, CEO

Yes. Thank you, Jeff. I am really excited about the international opportunity. As we've seen, we've been building out the teams and organization. We have a variety of additional team members that will be coming on in the back half of the year to enhance our focus and execution, building these brands in new markets like the U.K., Ireland, New Zealand, Australia and Benelux. We've been working very closely with Suntory in a lot of these markets. For the quarter, we saw a 27% growth rate, approaching a $100 million run rate business. A lot of opportunity ahead. The same health and wellness trends we see in North America are also global. Many of these markets are seeing great growth in energy. Just as we've witnessed energy grow in the U.S., it is gaining traction around the world, resonating with a broad consumer base. We're seeing more females entering the category in international markets, and health and wellness trends are strong. We believe we are well-positioned. As we look for new markets, we're focused on optimizing our existing markets for the back half of 2025. We're just getting started with lots of opportunities ahead, but we need to keep the teams focused at this point. The timing and sequencing must be considered, but the opportunities present themselves for 2026 and beyond.

Operator, Operator

Your next question comes from the line of Gerald Pascarelli with Needham & Company.

Gerald John Pascarelli, Analyst

I know it will be out in the queue, and I apologize if I missed this in your prepared remarks. But can you give us an idea of what the Costco channel revenue was in the quarter? I'm just curious if there was a benefit from an MVM coupon program there? And then just how we should think about that channel progression going forward?

John Fieldly, CEO

Yes. I'll start off, Gerald. The club channel is a significant portion of our business from Costco to Sam's to BJ's; it is a growing segment. We did experience promotional activity, and we did see uplift at Costco, which will be reflected in our queue. Looking for the back half of the year, we’ve made adjustments to our promotions and timing, which we discussed in our last earnings call. We are optimizing our efforts regarding the timing of innovation and new launches. Jarrod, do you have any additional insights?

Jarrod Langhans, CFO

Yes, the data can be backtracked to Costco, but as a portfolio we are up about 17% in Q2. This was partly driven by the MVM that John mentioned with Celsius.

Operator, Operator

Your next question comes from the line of Filippo Falorni with Citi.

Filippo Falorni, Analyst

I wanted to ask about the Celsius brand. It's great to see the brand return to growth. Could you discuss some of the drivers of the acceleration in the brand, including a new marketing campaign, the easier comps, and some of the innovation? Specifically on innovation, you mentioned your first LTO on Celsius. Can you give maybe a little more color on what we should expect for the back half of the year in terms of innovation and growth for the brand?

John Fieldly, CEO

Yes. Excellent. We've discussed this in the Q1 call; we had a slow start with the Celsius portfolio. There was a lot of timing related to promotion and innovation launches. Those changes have now translated into progression that we started to see month-over-month and in some weeks where Celsius is returning to growth. We're disciplined and focused. We've made notable adjustments to our strategies internally, along with our promotional strategies across channels. The Celsius portfolio is getting back on track, and we're excited to continue that momentum. We have launched our first comprehensive campaign around LIVE. FIT. GO. If you haven’t seen it, please check it out on our social media platforms and on various other mediums. It aims to connect with consumers meaningfully, showing that Celsius can be a part of a lifestyle, helping them accomplish goals. Initial feedback has been very positive, and we have a lot of excitement from both retailers and customers. We're going to gather more data and analytics from these efforts soon, having just started. But early feedback is encouraging, providing us with a unique positioning for the Celsius brand. For innovation, we are leaning into our fizz-free offerings. We've launched Dragon Fruit Lime and Pink Lemonade, which are very refreshing options. These reflect the strong consumer demand for tasty, zero-sugar fizz-free energy. We're also planning our first LTO that will debut in the back half of the year, although I cannot disclose specifics yet. We're really excited about how this will be integrated with our ongoing strategies. We have more plans for 2026 and beyond, utilizing key learnings from the integration of Alani and Celsius to drive both brands effectively, taking advantage of the incredible opportunities within the modern energy space.

Operator, Operator

Your next question comes from the line of Michael Lavery with Piper Sandler.

Michael Scott Lavery, Analyst

I was wondering if you could just talk about your assortment optimization and what the priorities are for the shelf set? And what, if any, challenges come with having two separate distribution networks supporting it? Is there a way you can still manage the portfolio as one? How do the brands interact as you consider who gets priority for placement? Just help us understand your thought process.

John Fieldly, CEO

Yes, absolutely. Thank you, Michael. Jarrod mentioned some price pack size and channel mix for the quarter, which will fluctuate. We had significant single-serve growth witnessed in the quarter among the brands. We maintain our belief that variety packs and larger pack sizes are the future trend, especially as we observe strong growth in food in large formats, as Celsius becomes part of daily routines, moving away from impulse purchases to a more planned and thoughtful approach in a pantry purchase. Regarding logistics and strategy, our sales organization will manage Tier 1 and Tier 2 accounts or account calls while leveraging synergies in distribution. We utilize a wealth of data, insights, and analytics here while integrating the organizations from finance, operations, key account management strategy, revenue management, promotional management, and more. We will remain focused, and we have great partners assisting us; the results delivered by Alani through their distribution network have been impressive, and we are highly satisfied with the partners we’re serving, which helps streamline our execution today, tomorrow, and in the future.

Operator, Operator

Your next question comes from the line of Jim Salera with Stephens.

James Ronald Salera, Analyst

I wanted to ask, Jarrod, you mentioned the year-over-year growth of Alani. How should we view the pacing of that for the second half of the year, especially with the new limited-time offers and flavor innovations you have coming out, which are increasing visibility? Additionally, could you provide any insights on household penetration data that you are able to share? This would help us understand how much of Alani's strength is due to increased purchases from existing households versus new consumers becoming aware of the brand.

Jarrod Langhans, CFO

Yes. So I'll talk pacing. I think John mentioned household penetration, and he can pull that up. If you look last year, we went from 136, 146, 166, 157 as I look at 2024. The comparisons are slightly tougher. We saw fantastic Cotton Candy and Sherbet Swirl LTOs, our two top LTOs ever with Alani. We have Witch's Brew on the way, and we've got our Winter Wonderland seasonal as well. We truly need these to replicate the success of last year, and they have done outstandingly well. Beyond that, we’re also seeing steady growth from the core portfolio. Therefore, we expect to continue strong growth, albeit with tougher comparisons in the back half of the year.

John Fieldly, CEO

Yes. With regard to household penetration, as mentioned in our prepared remarks, the Celsius Holdings portfolio has reached a 43% household penetration, including Celsius at 43% and Alani at 22%. We're witnessing substantial runway for both brands with household penetration. Our focus is on further growth and reaching more consumers. Notably, Celsius is seeing significant increases in household penetration within a short time following the launch of the LIVE. FIT. GO. campaign. We’ve witnessed rapid progress compared to the previous six months. Alani continues to grow as well. Every time we roll out new innovation or limited time offer, we successfully attract new consumers into our portfolio, capitalizing on the surge in demand for functional beverages.

Operator, Operator

Your next question comes from the line of Andrea Teixeira with JPMorgan.

Andrea Faria Teixeira, Analyst

I wanted to parse out, and you commented before in terms of how to think of promo. But maybe give us some idea of how the third quarter is unfolding. I know you spoke about the Costco promo, but perhaps talk about Prime Day. Anything we should be aware of in terms of puts and takes of shipments and consumption? Also, when you think about the easy comparisons that you probably are facing, you face about $20 million in distribution issues last year. I think you have north of $120 million for the quarter. Is that something we should be aware of? Is that a tailwind or does it really not matter? Do you get it back? Just to understand the puts and takes, please?

John Fieldly, CEO

Yes. Thank you. I'll jump in regarding those questions, and then I'll let Jarrod add on. We really remain committed to the model we shared during our call with Alani. There will always be puts and takes. There is a lot of variability. We optimized our promotions moving from this time frame into summer. There were various timings and sequencing related within the Alani portfolio; we moved the Witch's Brew up a few weeks, so if you're tracking weekly, you will observe puts and takes all the time, but that has indeed shifted. Additionally, with regards to Celsius, promotional timing is essential. You’ve already noted that there was a promotional drive for Costco, which has shifted into the third quarter. In reference to specifics, we’re not going to release forward-looking information. It is truly challenging at this moment. We hold our ground regarding the models discussed, aside from the adjustments Jarrod mentioned about gross profit margins, better than previously expected results. Thanks again for joining us today. Q2 was a strong quarter that reflects the power of our portfolio, the discipline of our team, and the strength of the category. Alani Nu delivered breakout growth, Celsius maintained momentum across channels, and we executed with focus across innovation, operations, and retail. I want to thank our employees and our partners for their teamwork and dedication that enables us to deliver our growth. As we look ahead, we remain committed to the long-term strategy, driving sustainable growth profitably through brand leadership, disciplined investment, and operational excellence. We're excited about what's ahead in the back half of the year and beyond. Thank you for joining us today as we continue to capitalize on the modern energy era. Grab a Celsius and live fit.

Operator, Operator

Thank you. This concludes today's conference call. You may now disconnect.