Celsius(CELH) - 2024 Q4 - Annual Results

Transaction Details - The Membership Interests of Alani Nutrition LLC are being sold to Celsius Holdings, Inc. for an aggregate consideration that includes newly issued equity interests in a newly formed holding corporation[9]. - The transaction involves a pre-closing contribution where Seller Members will contribute 100% of the Membership Interests to Holdco, maintaining identical proportions in Holdco Interests[11]. - The agreement includes provisions for the election of Holdco to be treated as an "S corporation" for tax purposes, effective at the time of contribution[12]. - The board of directors of Celsius Holdings has unanimously approved the transaction, determining it to be fair and in the commercial interests of the company[12]. - Each Key Person involved in the transaction has entered into a consulting agreement with Celsius Holdings, effective upon closing[12]. - The agreement outlines various representations and warranties from both the Sellers and the Buyer regarding the transaction[13]. - The Sellers collectively own 100% of the issued and outstanding limited liability company membership interests of Alani Nutrition LLC[11]. - The transaction is part of a broader strategy for market expansion and operational management under the "Alani" brand[11]. - The agreement includes specific accounting principles and procedures for the closing payment and final closing statement preparation[4]. Financial Considerations - The Aggregate Base Cash Consideration is set at $1,275,000,000, subject to adjustments for Net Working Capital, Closing Indebtedness, Company Expenses, and Closing Cash[23]. - The Actual Adjustment for the transaction will not exceed$18,000,000[21]. - The Aggregate Earnout Cash Consideration is contingent on 2025 Product Net Sales, with a potential payout of $25,000,000 if sales meet or exceed a specified threshold[25]. - The Company has established Agreed Accounting Principles that prioritize specific accounting methods and GAAP for financial reporting[26]. - Closing Cash will be calculated net of issued but uncleared checks and will include checks and wire transfers available for deposit[56]. - The Company’s Closing Indebtedness will be assessed immediately prior to the Closing[57]. - The Closing Net Working Capital will exclude certain current assets and liabilities as defined in the agreement[58]. - The Buyer Termination Fee is set at$53,250,000[51]. Company Performance - The Company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 20$1.6 billion and $1.8 billion, indicating a potential growth of 10$200 million in revenue over the next fiscal year[104]. - The Company is investing 50 million in R&D for new technologies aimed at enhancing product features and user experience[104]. - Market expansion efforts include entering three new international markets, projected to increase user base by 25%[104]. - The Company is considering strategic acquisitions to bolster its market position, with a budget of 100 million allocated for potential deals[104]. - The Company reported a 5% decrease in operating expenses, improving overall profitability margins[104]. - Customer satisfaction ratings improved to 90%, reflecting the effectiveness of recent service enhancements[104]. Future Projections - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 15$1.3 billion and $1.4 billion, which would reflect a growth rate of 8$200 million in revenue over the next fiscal year[4]. - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[5]. - Market expansion efforts include entering three new international markets, projected to increase user base by 30$300 million, expected to enhance market share by 10%[7]. - Cost reduction strategies implemented are anticipated to save $20 million annually[8]. - The company reported a net income of$150 million, a 10% increase compared to the previous year[9]. - Customer satisfaction ratings improved to 90%, reflecting a 5% increase from the last quarter[10]. Regulatory and Compliance - The Company is subject to Applicable Data Protection Requirements, including privacy policies and industry standards[34]. - The definition of "Permitted Liens" includes various types of liens that do not materially impair the company's assets[157]. - The term "Tax" encompasses a wide range of taxes including federal, state, local, and foreign taxes[188]. - The "Post-Closing Adjustment Amount" can be positive or negative, with a minimum value of "0" if negative[161]. - "Personal Information" includes various identifiable data such as name, address, and email[159]. - The term "Transaction Deductions" includes various tax-deductible expenses related to the transactions[195]. - The "Separation Plan" is defined in Section 6.20 of the agreement[182]. - The "Transition Services Agreement" will be executed at the Closing Date[197]. - The "Regulatory Authorities" include entities like the Department of Justice and Federal Trade Commission[174].