Greetings, and welcome to the Celsius Holdings Fourth Quarter Fiscal Year 2022 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cameron Donahue, Investor Relations for Celsius Holdings. Thank you. You may begin.

Thank you, and good afternoon, everyone. We appreciate you joining us today for Celsius Holdings Fourth Quarter 2022 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 evening, 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 will be accessed with the same live webcast link in our conference call announcement 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 March 1, 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 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 filings with the SEC for additional information. With that, let me turn the call over to 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 fourth quarter of $178 million, an increase of 71% from last year's fourth quarter of $104 million. This revenue growth was driven despite approximately $15 million to $20 million we discussed in the third quarter that was driven by the inventory pipe fill by the Pepsi system in the preparation for distribution transition that began October 1, 2022. We believe the distributor inventory levels are now back to normalized levels as we began the first quarter of this year. For the full year, sales totaled $654 million, up 108% or $340 million growth compared to $314 million in 2021. According to the January 1, 2023, 52-week IRI energy category SPINS MULO+C data, representing the calendar year for 2022, Celsius is the #1 brand driver of growth in the energy category in all of 2022, responsible for 22% of the category dollar growth, driving $474 million approximately in incremental retail sales for the category. We continue to see growth across all channels, including those non-tracked, with the club channel sales totaling over $138 million for the year ending December 31, 2022, which were up 247% compared to $40 million last year. We also hit record sales through Amazon in 2022, with full year sales of approximately $58 million versus full year sales in 2021, up $32 million, up 83% approximately. In addition, according to the trailing 12 weeks IRI MULO+C Total Energy as of January 1, 2023, representing the majority of the fourth quarter, Celsius is now the #3 energy drink brand in the category with dollar sales growing approximately 128% versus the same period in the prior year. Our fourth quarter represented our first quarter since the commencement and distribution partnership…

Thank you, John. Before jumping into the financial results for the year and the quarter, I'll cover a few administrative items. It was another very exciting and busy quarter. For the quarter, we successfully integrated into the Pepsi distribution system going from an ACV in the mid-60s to the high 80s very quickly. In addition to moving to the Pepsi system, we processed the majority of our prior distributors terminations, including final payments, inventory returns, et cetera. As John mentioned, the transition continues to go very well, and we are excited to see the results of this long-term partnership. So let's walk through some accounting updates. Let's start with transition-related expenses. Included within our annual results, we recorded approximately $194 million of termination expenses associated with termination notices issued in 2022, primarily related to the transfer of distribution of Pepsi. As of the first quarter of 2023, we have effectively transferred all activities that we had set out to transfer to Pepsi, plus a few additional areas. During the fourth quarter, we saw some increases in inventory reserves and other related costs as we transition from our prior distribution network and into the Pepsi system. As a part of our contract with the prior distributors, we accepted return product and had to make decisions on the product in terms of taking the product back or disposing of the product. In a number of instances, we chose the donator disposes the product. In addition, in the fourth quarter, we made a decision to overinvest as a part of the integration into the Pepsi system in order to support the significant expansion. More on that later. Now let's talk taxes. As a reminder, from our Q3 call, our effective tax rate for the year deferred from the statutory federal income tax rate…

[Operator Instructions]. Our first question comes from the line of Kevin Grundy with Jefferies.

First for me, I think just in the interest of clarity, just trying to reconcile a bit the performance in North America on sales growth relative to what we saw in the scan channels. I know a handful of moving parts here, not the least of which would be, Jarrod, the pull forward the $15 million to $20 million, which you quantified last call and mentioned again. Jarrod, you also mentioned some product returns, which would be a drag. I guess kind of going the other way, you also had strong growth in club again. You had some distribution wins, which John talked about before. Maybe just comment a bit on the gap that we saw with North America up 74%. Nielsen channel is up very strongly, up about 130%. Can you just kind of reconcile the 2 for us a bit?

Yes, Kevin, if you look at the pipe fill that would have brought us up to in excess of 90% from a North American perspective. We are hoping a little bit to some of our bigger customers in terms of seasonality or in terms of timing. So I suspect there was also a little bit of working capital management at the end of the year, which would have pulled inventories down a little bit. So from that perspective, I think the scan data continues to be accurate. If you look at Q1 and how we've done thus far, we continue to accelerate our growth and do very well. So I think there's a little bit of clunkiness around Q3 and Q4 with the onboarding and integration into the Pepsi system and the pipe fill and also some kind of year-end working capital type activities associated with some of our customers.

Yes, yes, that definitely makes sense, Jarrod. And then just the follow-up, just more broadly, the transition to the Pepsi system, it seems like it's gone really, really well. Maybe just some color on the spring shelf space resets wins there, where you guys sort of expect to land? And then just further context for kind of where we are. We see the ACV ramp. You guys mentioned some of that. We can see it in the Nielsen data, but maybe just some context from where we are and ultimately, where you think the company will land as we think about ACV, as we think about total distribution points and even as we think about non-track channels, some of the wins you guys have on college campuses, health care, et cetera? Just give us a sense for where we are and ultimately, when this starts to look something closer to where the ambition is from a fully distributed perspective.

Yes, Kevin, great question. I think there's a lot of momentum, as Jarrod mentioned, especially in the first quarter of 2023. Our ACV, we finished the year right around 90%, give it right around an averaging 90% ACV, about 89%, as we talked earlier. Great execution through the transition with the Pepsi system. Keep in mind we still had some distributors that transferred over in the quarter. So it weren't purely 100% Pepsi system from that October 1 transition window. But we do expect to pick up additional ACV points, especially with the spring resets that are coming ahead. We also have been very aggressive and gaining additional bank space has been out there. So the teams -- I just hats off to the teams working extremely hard on our key accounts team, gaining incremental distribution and also picking up new distribution as well. So we're really excited about the next resets coming out. As I talked about earlier, we talked about BJ's as well and the club channel, non-tracked. I think there's opportunities there that's rolling out, also meaning incremental shelf space. And then in the alternative channel, foodservice has been a big opportunity for us. I just touched on the college and university where we have about 1,600 currently and then hospitals as well as around 1,600, but we're really just getting started in the foodservice business. That could be a considerable amount of upside, especially when we're seeing the usage occasion with Celsius really expanding. So we're really excited right now. We're not going to provide forward-looking ACV guidance. But where it stands right now, we're in really good shape and look forward to a great 2023.

Our next question comes from the line of Mark Astrachan with Stifel.

Two questions for me, please. First is on just thinking about distribution, not ACV, but actual distribution points. Could you just talk about how you're thinking about where you're going in '23? We're close to spring resets at this point. What have you secured on a percentage basis? And maybe more broadly, how do we think about where the product is going? Is it in existing energy coolers? Or are you moving into more dedicated performance functional, helpful coolers? That's the first question.

Yes. Thank you, Mark. I'll jump in. In regards to distribution points, we talked about currently rightly around 210,000 as reported, but we are gaining considerable amounts of distribution incrementally in the nonreported as just talked about earlier, the foodservice. And then as Pepsi calls it, the OTS segment, which is the independent market, which Pepsi is really strong. And we talked about that in the third quarter being involved in their metals program, which is really their independent loyalty program. And that's going to be a great opportunity for us. There's resets taking place for 2023 now. So that could add considerable amounts. We're -- there's over 150,000 additional doors or locations that are out there. So we're watching that closely, and there's definitely considerable upside. Then when you look at the reported channel segment, I think there's additional opportunities there in regards to Tier 3 and Tier 4 accounts and on a regional basis as well as we gain further ACV gains in a variety of new markets and territories for us. In addition, to where the product is being placed, we're going core energy. So that's where we're mainly gaining our shelf space and doing extremely well, and the team has done a great job expanding that space, and we expect the next resets to be expanded with additional items per location. Also, I talked about the coolers that we're investing in. We anticipate by the end of the year to have over 20,000 dedicated Celsius coolers. And so that's a really great opportunity, and we've never had that before. In addition to the PepsiCo energy coolers, which were total up to about 50,000, currently that gives us opportunity. So definitely opportunities ahead in 2023 to expand a number of stores, locations and coolers availability.

Got it. That's helpful. And maybe just a clarification on some previous points. So I'm still trying to understand the puts and takes of the pipeline fill. So $15 million to $20 million of sales ahead of actual sales in the third quarter. So why wouldn't you add that to the fourth quarter be coming out of fourth quarter, fourth quarter is essentially just servicing what demand is, right? So that run rate should then be higher, right, because then you're servicing kind of what was there previously. So I guess maybe put all together, I'm surprised sales were as strong as they were given that you had that headwind in the third quarter. So is the run rate we should be thinking about the number in the fourth quarter plus the $15 million? And then you made some comments about the inventory destocking as well in December. So kind of help put those pieces together, please?

Yes. With regards to the comments that Jarrod and I made in the prepared remarks, when you look at the -- it's right around $15 million to $20 million what was incremental in regards to a price sales. So adding that to Q4, I think, gets you to kind of what we saw as a normalized run rate. We are -- there is some year-end inventory felt there was inventory control metrics or potentially there could have been. So we're watching the inventory levels very closely. We don't have full transparency on the inventory levels, but we do think pulling forward that $20 million in Q3 that will be -- $15 million to $20 million in Q3 kind of gets you to a normalized level for Q4. Keep in mind there were several other distributors that were transitioning in the quarter too. So you're not looking at a full 100% distributor partnership with our PepsiCo leveraging the full power of the distribution of PepsiCo. So there's still some large markets for Celsius that were transitioning during that time. I don't know if you have any other comments, Jarrod.

Yes, I think we need a little bit of history, too, to understand some of the ebbs and flows in terms of the inventory management of our partners, in particular, our biggest partner to see kind of is a pull down something that's going to recur at the end of every quarter. And obviously, after we get to a couple of quarters, then we'll have a good and a baseline and it won't really be impactful because it will be more kind of like that onetime item that happens. But at the moment, we're seeing great scan data, we're getting good pull-through across the board with our customers and our primary distributor. So we're seeing -- things are looking up. Q1 obviously is not as big as we expect when we get to Q2 and Q3. And Q4 and Q1 are probably more consistent with each other from a seasonality perspective.

Our next question comes from the line of Kaumil Gajrawala with Credit Suisse.

Can you -- you alluded a little bit to some increased selling expenses related to some of these big distribution gains. Can you maybe just give us some context on how much was incremental? What's the right run rate in terms of how to think about selling expenses as a percentage of revenue during this phase of sort of this distribution boom? And then maybe more of a how we should look at it on a more of a run rate standpoint? .

Yes, Kaumil, great question. We did invest through the transition. If you look at the -- we made a strategic decision, Jarrod kind of alluded to it in his prepared remarks about how we went over budget by about $15 million in the quarter, really supporting the distribution gains and the ACV gains. And the company has seen a considerable amount of increase in ACV going from October 1 to where we ended the year. We made it a strategic initiative to really continue to invest ahead of those ACV gains to make sure consumers know where we are, where they can purchase Celsius and continue to drive velocity. So that was really key. I think it's very important we continue to invest with the expansion of the number of points of distribution and the ACV. I think when you look at historical rates, if you go back, we've been running around 23, 23.5. And if you back out -- in the fourth quarter, if you back out the $15 million that Jarrod was referencing, that was over plus back out the transition fees of about $38 million, you kind of get it back to that same run rate around 22% of revenue there. So we're going to continue to invest in the brand, continue to build the brand, especially as we continue to increase the distribution, and we're really focused on driving velocity, especially heading into resets.

Yes. And so for Q1, the idea would be back to more along that 22%.

Okay. Great. And then it seems very intentional the -- some of the commentary about the international rollout. You're doing very well in the United States, obviously, and your share is high compared to where you came from, but still a long way to go. Why is now the right time to start thinking about or talking about international?

Yes. We do have opportunities internationally with Pepsi. We're mainly focused on the United States and the expansion opportunities we have here, but we do see opportunities on a global basis, and there's partners through the PepsiCo system as well as our existing partners looking at in the Nordics and also our Asia distribution and the APAC markets where we've been really laying a foundation. So the energy market continues to grow around the globe, and we see these health and wellness trends continuing to gain momentum, and we're getting more interest from Celsius. But our main priority is North America.

Our next question comes from the line of Peter Grom with UBS.

So I just wanted to ask a quick clarification in response to Kevin's question on the quarter-to-date acceleration. Is that just a broad-based comment? Are you actually seeing top line growth quarter-to-date stronger than the 90-plus percent growth you saw in 4Q after adjusting for the Pepsi transition?

Yes. I think what Jarrod was alluding to is the Nielsen scan data and IRI SPINS data that he's referencing that we weren't providing any forward guidance on Q1. .

Okay. All right. That's helpful. And then, I guess, I just wanted to ask around gross margin. So you've seen some nice sequential progression in 3Q and 4Q. So how does the exit rate of 44% plus kind of inform your view on gross margin looking out to 2023? And just would you expect sequential improvement from here as we move through the year?

Peter, so this is Jarrod. So I think from a gross margin perspective, the idea was to exit the quarter at kind of that mid-40s, which we have. Actually, we kind of hit the mid-40s for the entire quarter. So we did see the improvements that we expect to come through. We're no longer beholden to the expense of cans that we had historically over the last kind of 18 months. We're seeing good opportunity within the freight lanes as we deliver products straight to distribution centers or mixing centers with Pepsi. We're also seeing some other areas from a COGS perspective or raw materials perspective, where we're seeing some advantages or some benefits. So we think kind of that mid-40s throughout 2023 is still valid. Is there opportunity as we work through the year to do better? Definitely. But at the moment, we think kind of sticking with that is the way to go, seeing that we don't really know how the rest of the year will go when it comes to commodities and things like that. But at the moment, we're confident in that mid-40s, and we're probably more on the side of seeing opportunities than we are seeing other areas that would not allow us to hit those numbers. .

[Operator Instructions]. Our next question comes from the line of Gerald Pascarelli with Wedbush.

Mine is actually on the Amazon channel specifically. Obviously, when you look at track channels, trends have looked as good as they ever have. But you did see some decel in the Amazon channel. And so if you could talk about any drivers behind that? And then specifically, any color you could provide on how that channel specifically has trended over the first couple of months here, I think that would be helpful?

Yes. No, great question. In Amazon, we saw -- in our prepared remarks, have a really strong Amazon business. The quarter is -- we're going to be watching that closely. That's why we wanted to share the information there. As we gain more ACV, we're going to have to watch to see how that performs, but it was great to see it up for the quarter and continuing to show good, solid growth. In the quarter, we did have some in regards to some warehouse movements underlying around Amazon, which potentially caused some delays as they were moving products in different locations closing some locations and opening additional locations. So there was definitely some inventory movement that was taking place, especially around the holiday season, and they were -- obviously, they were likely going through substantial volumes through their warehouses. So there were some challenges in the quarter with inventory in regards to some of the warehouses. But I think -- as we look forward, I think that's still going to be a really strong business for us. We live in an omnichannel world. Consumers want it, how they want it, when they want it. And we embrace all platforms, including Instacart as well and driving to retail and home delivery, which we see great results as well.

Our next question comes from the line of Jonathan Keypour with Bank of America.

I'm just wondering in 4Q, where the ACV was filled geographically in the states sort of what regions did you guys move into. And then what is left to move into? And then also, I guess, as you guys spend to activate and kind of get consumers aware of the product, how should we think about maybe like a lag on entering a new geography before you kind of operating at like optimal consumption or more optimal consumption. I guess, what is sort of the flow-through of the marketing into consumer response?

Yes, Jonathan, great question. Historically, we have been, prior to PepsiCo, mainly regionally focus with a higher ACV. And prior to PepsiCo, we were roughly around, I believe, like 65%, 67% ACV at the time. So -- and very much regionally to certain pockets of the country, the Northeast, Southeast, Texas markets and Southern California, we saw our bigger higher ACV markets. But with the transition to Pepsi, we're seeing ACV gains really open up broadly in other markets. And that really goes back to that additional investment in marketing that we made in Q4 because of the ACV gains as we wanted to continue to drive velocity rates and educate consumers what Celsius is and where we're located. And when you look at that area, you're looking at the center of the country, you're looking in the Northwest. We gained a lot of distribution. So those areas, we saw some great gains, especially in regards to the mid-Atlantic areas as well. So we're roughly around 90%, 89% ACV right now nationwide.

Great. And then just a follow-up. In terms of -- I guess I'm trying to think about how a store you're in depending on whether or not you have a fridge, it's an own fridge or not. I guess I just -- I'm trying to get a sense of how productivity in each of those kinds of go-to-market scenarios, how do those compare? So basically, like -- is it like a 1.5x better sales pull-through when you guys have an own fridge in a location, something like just trying to get a sense of that kind of relative effectiveness.

Yes. No, I mean, a great question. We haven't really discussed that the exact number. What we have stated prior is, historically, we've gone back, like last year, we were talking about coolers and the payback period on the cooler was roughly around 5 months. But what I will tell you, when we have a cooler, the sales increase exponentially when we have that cold placement, it's got to be 60 from the register, an optimally placed to get the maximum benefit. And that's really what the teams are focused on. The goal is to be upfront and 60 from the register. So definitely, coolers are great tools for us, the product. It's -- they see it and our consumers are able to buy it and you get a higher rotation as we were saying many times before, if it's cold, it's sold. So that's something we really say internally. But that's really all I can comment on that.

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

I just wanted to kind of circle back to the opportunity to increase SKU count this year. Maybe just give us a sense, if you could, by channel, where specifically do you expect those accounts to grow most maybe if you think about it first half, second half, just any thoughts around that?

Yes, Jeff, great question. I think when you look at our current -- when you're looking at the current ACV number, the average items carried per store has increased exponentially since the PepsiCo partnership, and we're currently sitting at roughly -- it's 12.5, like 12.5 items per store, we do anticipate that to continue to increase with the next resets. Where that lands? I think we not really comfortable on commenting on that. We have internal expectations. But I think we'll have a better understanding as we get through the resets that are taking place, and we look maybe around April start looking at the data in April, you should be able to get a better set on where we will be for the rest of the back half of the year.

Okay. Good. That's helpful. And then just a couple of things around margins. Your latest thoughts on efficiency opportunities with Pepsi -- overall Pepsi distribution and then maybe club distribution and the potential benefit to P&L metrics from that process. Also noticed you mentioned taking some price. I'm wondering if you're planning to take more price this year. .

Yes. This is Jarrod. I'll start with some efficiencies. With the club channel, John did mention that, historically, we've had to go to a secondary packing facility. We have found a number of co-packers that can pack that in line for us so that is definitely an efficiency and will help drive margin as we look out over 2023. We did start doing that a little bit in Q4 and start expanding that to most of the club channel in Q1. We do have pricing that was kind of fully in play in Q4, but that will benefit us across 2023. We haven't announced anything for 2023 at the moment. So we'll sit tight on that and see where we land. But other opportunities really it's the orbit model we've created to continue to drive the freight lines and continue to drive efficiencies there and also taking advantage of our scale when it comes to raw material purchases and benefiting from some of the changes we've seen across the raw materials categories in terms of pricing.

Next question comes from the line of Sean McGowan with ROTH Capital Partners.

Following up, Jarrod, on the comments you made regarding efficiencies, can you give us some sense of what the kind of order of magnitude upside is on that margin improvement? I got to think that taking the cans off the line, putting it in the Fort Knox box you used to have cut into the margins. So what is the upside? Are you talking about hundreds of basis points of improvement potential?

Yes. I mean I guess, mid-40s is a wide range. I think last call, we mentioned out...

Specifically on the club, I mentioned specifically on those extra pack, the 18 packs in the clubs, like how much higher margin would that be if you got more cans in there and a more efficient process on a thinner hardboard, it's not corrugated anymore. So how much higher margin is that item from what you had 6 months ago?

I mean, ultimately, we have to get it all into the same co-packer set in order to get that benefit. So we haven't fully transitioned, but I think we'll have the opportunity to do that this year. If you looked at the club margin, it's pretty good. It could be a couple of percentage points, but you got to remember that the club is only a small piece of our business from that perspective. So there is some opportunity there on that piece of the business. I think there's also opportunity, like I said, with the freight lanes on improving that. If you look at our historical rates. Over the course of the last 2 years, the freight lines have gone down for us. I think if you look over the last couple of years, it's gone from roughly 6% to 4% on an annualized basis. So we've seen some gains there across that. We'll see what the aluminum cans as well where that was putting pressure on us. And there's opportunity with other things like sucralose and caffeine as well.

Okay. And then following up on the earlier comments about potential placement or resets and the benefits that could come in April. Would you also expect to get kind of better position within some of the back wall refrigerators, going to some stores and you're kind of down by the ankle, would you expect to get some better placement higher up on a reset? .

Yes. Yes. So absolutely. We definitely don't want to be buy your ankles that you mentioned there. So our goal is to get out of the cutter and get out of the nose bleed and getting the we say. And that's what our key accounts team is focused on -- if you look at a lot of the areas we're getting very close and targeting some of the bank space that's out there. So I expected us to be pretty prominent on the next resets and hopefully, you start seeing us in much better places as we go forward, especially we have the distribution power of PepsiCo now. .

Our next question comes from the line of Jeffrey Cohen with Ladenburg Diamond.

Just a few from my end. I know I heard impairment on the fund Can you talk a little bit about what's going on there with Splunk and any of the fast forwards out to fill in? And then maybe talk about what you can as far as Pepsico and some of their SKUs as far as food and production goes and what discussions and opportunities may be going on there as far as SKU expansion from year-end? .

Yes. Yes. In regards to the Nordics, Celsius Europe has been mainly Sweden distribution in Finland. It's been going really well, and they had a great fourth quarter, had some new innovation that came in, and they're doing a great job with the Celsius portfolio. With our fast brand, our snack portfolio, which is focused on Finland. And there's opportunities there. We're not -- it's not -- we haven't really had any discussions with PepsiCo now on potentially distributing that in other areas. And we've had somewhat challenges in Europe with supply chains as well with some of the protein bar raw materials. But the business continue to maintain the business. And at the right time, there could be opportunities internationally just not right now.

Got it. And could you talk about SKU expansion or new flavors or all flavors and targeting ex U.S. territories as far as Europe? Will they be kind of country specific on the SKUs and flavors?

Yes. Internationally, we have -- we're starting to leverage our -- the global supply chain as well, trying to gain more efficiencies. So really look internationally to leverage some of the innovation collaboratively because really, when you look at the world today, especially with social media, the awareness and radiation, it goes cross Atlantic. So we're trying to get more aligned, more strategic in our flavor launches. And as we go forward, we expect to have more consistency. But flavor innovation is extremely key has been driving the category and expect us to continue to lead in flavor innovation.

Yes. I know I took a couple of weeks to get that And then lastly, talk about ALDI a little bit. How many stores -- geographical rollouts and what we may see during '23?

Yes. ALDI, we have a national rollout that's taking place. So expect to find us in an ALDI in the near future. And the number of stores, I believe, there -- it's roughly -- I think there was like 600 and growing roughly approximately.

Our next question comes from the line of Anthony Vendetti with Maxim Group.

Just wanted to follow-up on the coolers. Did you say, John, about 20,000 coolers you expect to be in terms of the brand at Celsius coolers by the end of '23?

That's correct. We have placed in retail is our internal goal, and we have about 15,000 on owner currently. So -- and we're working on placing those strategically in a variety of our core markets and core retailers.

And how many were placed in this quarter 4Q '22?

We didn't disclose the number that was being -- that we placed in the fourth quarter. But we did place a good number. But through the transition, we kind of pulled back a little bit, and we expect that to continue to increase upon the new year.

Yes we're probably somewhere between 4,500 and 5,000 by the end of the year. But overall, we held back on that as we were doing the transition. And also, we really ramped up our ordering in Q3 and Q4. So they do have a little bit of lead time. So we're starting to see all those come assure.

Okay. And then lastly on the Pepsi energy coolers. You mentioned there's 50,000 of those. How many are Celsius in right now? And what's the goal by the end of '23 for those Pepsi coolers?

Yes. I don't have that current number in regards to how many of the 50,000 we're in. We're working on getting those reset. I expect us to have a -- I'd like to be in the majority of them by the end of the year. That's the goal. So we're part of the PepsiCo energy portfolio, and we expect to be in every single one by the end of the year, and we'll work towards that goal.

Okay. And the last question is on erythritol, the sugar substitute. How many of your products have that right now? And are you concerned about the recent news that could cause an increase in stroke -- in heart attack?

Yes, it's a very minor piece of the portfolio. There's certain store types that have wanted the Stevia-type branded product from us. So I'd be surprised if it was more than 1% of our sales. So not really a big volume for us. It's something that we provided to a customer set that's wanted it, but not really core to our portfolio.

And we're looking into it.

Our next question is a follow-up from the line of Kaumil Gajrawala with Credit Suisse.

I wanted to bring it back to a little more high level on talking about distribution. You mentioned the Pepsi transition is complete, but the actual practical conversions, they're still sometimes similar to what we saw during the Anheuser-Busch transition. How much is left? You've given a lot of very detailed figures about kind of piece of it, but are you 100% available but only 60% converted. How much is kind of left on the PepsiCo actual availability side?

Well, just to clarify, when we stated in the prepared remarks that the transition has been complete. When we talk about distributed distribution, that's our distribution partners. So we're about 90%, 95% being serviced now by PepsiCo in North America. We did keep on a few of our prior distributors and partners in certain markets. But other than that, we are pretty much 100% complete with the transition within the PepsiCo agreement that started October 1 of 2022. Now when you look at the opportunity on store distribution and store expansion, we have reached that 89% ACV number of reported stores. We do think there's considerable -- there is additional upside from there, but we're not in a position right now to really comment on where that will arrive. I think we'll have a better indication at the April data to see where the company will really probably finish the year at. Now there is nonreported stores and locations that we're able to gain additional distribution and cooler placements. And that's really those OTS stores which are nonreported, which is new PepsiCo's metals program, and we're told there's about 150,000 of those so independent locations. So we're working through those. Our resets are taking place as well. And then also in foodservice, there's a huge opportunity in foodservice and really just scratching the surface there. So that's another big opportunity for us.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thank you. On behalf of the company, we'd like to thank everyone for their continued interest and support. Our results demonstrates, our products are gaining considerable momentum, and 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 and leveraging opportunities and deploying best practices. We have a winning portfolio, strategy and team in a large, rapid growing market. I would like to thank all of our investors for their continued support and confidence in our team. The company will be attending several upcoming investor conferences the week of March 13, including attending Bank of America, UBS, ROTH Conference, investor conferences. And we look forward to meeting many of you there. Thank you, everyone, for your interest in Celsius.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.