CEO Interview Shows Celsius Is Primed to Pop

The CEO of Celsius Holdings (CSUH.OB), Steve Haley, joined a moderator from Investment Nation on Thursday evening for a live interview to discuss the latest and greatest regarding Celsius the company and Celsius the product.

For those who may be new to the product, Celsius lays claim to being the world's first calorie burning beverage. The product comes in seven flavors; five 'sparkling' (carbonated) - Cola, Orange, Lemon-Line, Ginger Ale and Wild Berry - and two non-carbonated Green Tea flavors - Raspberry Acai and Peach Mango.

After trading as low as $.025 within the past year, the Celsius stock rebounded nicely this summer and traded as high as $0.40 before settling into its current range of between $0.35-$0.45.

Sales for the last reported quarter were $1.2 million but could be expected to grow significantly higher after the launch of a nationwide advertising campaign which includes both print and cable television ads. Of note, Celsius also recently signed with CROSSMARK, which indicates that another significant spurt in distribution growth could be just around the corner.

It's no secret that I've been a fan of both the company and the product for some time and I heard nothing in Thursday's interview that would convince me to change my position now.

I won't rehash the entire interview here - I'll just hit on some key points, but the full interview is still available for listen on Investment Nation's home page for those that may have missed it.

The highlights:

- Profitability will not come this year. Free capital is used to grow the company right now through a vigorous marketing campaign intended to both grow consumer awareness, sales and to keep Celsius as the top player of the 'calorie-burning' sector.

Many investors - generally those that lack disciplined patience - want to see their stock rise immediately and wonder what is wrong if the stock hovers in a trading zone for too long.

Longer term investors want to see growth - and want to see capital put towards that growth in order to realize even more growth. That is the strategy being employed by Celsius and quarter-over-quarter growth thus far (over the past few quarters) has been pretty significant; significant enough to have me inclined to believe that - with the help of the new marketing campaign - the next few quarters are going to be even better.

There is risk with this strategy - the risk being that the marketing campaign doesn't work and it'll turn out to be money spent for naught - but indications are that this is not the case and that there is some 'buzz' being developed around this product. It takes money to make money and Celsius is spending now in order to make more down the road. That's what an emerging growth company should do and that's what this one is doing, in my opinion.

It does no good to have a profitable quarter in the near future, as Steve mentioned was possible, if it came at a cost of growing the company. Celsius is ahead of the curve right now with the calorie-burners and now is the time to increase the market share, not later. As Mr. Haley said, from this point on, when competitors put out a 'calorie burner', essentially what they're doing is putting out their version of Celsius.

As a long term investor - I say grow the company.

- When questioned about a celebrity endorsement, Mr. Haley stated that he's held that "close to the vest" in the past and he would continue to do so. My own speculation regarding his reaction has me believing that we are not going to see and 'endorsement' per say, but something fairly significant regarding a celebrity may be in the works - in my opinion.

Only time will tell, but I don't see a big celebrity endorsement as necessary to rapid growth and awareness as I have before.

- The company will not need to raise additional capital this year. In my opinion based on Steve's reaction, the rate of growth over the next quarter or so will dictate when/if additional capital will be needed next year.

- When asked about why the CFO recently sold shares, Mr. Haley first emphasized that directors of the company have a very thin window with which to sell shares. That being said, the CFO sold for personal reasons in that window. While the detractors will play the CFO sale as a negative - it's a non-factor in my book. If there was a mass exodus from insiders, then yes, that's bad. One guy selling a few shares for personal reasons for HUGE gains shouldn't scare investors away; but if it does, those investors should never have been in the stock in the first place.

For serious investors wondering what personal reasons could be, here's a few possibilities: tax payment, medical issue, vacation, new boat, new car, big night out at Scores, send the wife to Madrid - the list is endless.

Point being: the CFO selling, in this case, is a non-issue. When Steve and Mrs. Haley start cashing out for below a buck, then come and talk to me; for now, I hope Jan is on a beach in Spain with Tinto con Limon in one hand and a cuban cigar in the other.

- Big distribution is on the way. It wasn't the comments that Steve made about new distribution being announced within the next month or so that peaked my interest, it was his statement that, and I paraphrase, Celsius will be in just about every large retailer that we can name, possibly by the end of March 2010.

All I have to say about that as a long term investor is, "Oh, baby, if that's even close to being the case." It will come as no surprise, however, since CROSSMARK is no slouch of a company and big things were to be expected the second that Celsius signed with them.

I'll be keeping my eyes on the PR wires for the new distribution.

- Another worthy, but not ground breaking, note was the mention of the Army and Air Force Exchange Service (AAFES) and Navy Exchange (NEX); distribution to those outlets will not be forthcoming this year, but possibly next.

In my opinion, Celsius has never been in a position as primed for growth as it is right now. 2010 is make or break year for Celsius. As Mr. Haley said during this interview, it is in the best interest of the company to remain atop the list of 'calorie-burners.' That's where the money is made - at the top.

Competition for Celsius is not another energy drink, but another 'calorie burner'; and right now there's few of those on the market.

Understand that there is inherent risk in any investment and CSUH is no different. Do your DD and base your investments on your own research and comfort level.

Disclosure: VFC is long CSUH.

Comments

[mlongj:]

VCF

I listened to the interview with CEO Steve Haley. I was also very impressed with the direction he gave with respect to plans going forward. He stated that they are in negotiations with all big box retailers. He also emphasized that distribution would not be a problem despite running out of supplies earlier this year. It seems that they are positioned well for growth going forward. However, as you state, 2010 will be a "make or break" year for Celsius. Mr. Haley seemed very knowledgable about the challenges and opportunities which face this new company, and at the same time projected a great deal of enthusiasm regarding the prospects going forward. I have continued to accumulate in the low .40's and feel like the decision will be very good next year. Steve also suggested that the ultimate situation would involve a partnership with either Coke or Pepsi. At the moment they are in a contract with SEBC which is owned by Dr. Pepper, so they are close to the ultimate situation already. If the company fails, it will not be for lack of management, as Steve seems to have a tremendous grasp on what is necessary to show a profit in early 2010 which he alluded to in the interview.

Thanks for keeping up on the company for your readers!

Long CSUH

Oct 12 05:42 PM

[User 387511:]

I am presently a share holder of CSUH, I made my decision 2 years ago to purchase your stock after I had a get together at my house and I had purchased beer and winecoolers for my guess, I also had 50 cans of 5 different flavors of Celsius in my frig for me to drink, after one of friends opened a can of Celsius and tried it , he loved it.Many people asked him what he was drinking ,so he passed it around for other friends to sample within 45 minutes all 50 cans were consumed and all my friends enjoyed it immensely.No one even drank one beer or winecooler, I was lucky to be able to return the unopened cases of beer and winecoolers and replace my Celsius, on the way home from the store I decided to stopped at my bank and transferred all my spare money into my checking account and went home and purchased as many shares as I could afford online, the stock has since gone from fire sale price to a respectable .40 to .45 per share tripling my investment. I am a long term investor and plan on holding on to this stock for at least 5 to 10 years. Celsius Management keep on the same plan of attack and we all will be greatly rewarded in the future. thank you, Wayne (moxieb11)

Oct 28 06:50 PM