Ladies and gentlemen, thank you for standing by. A slide presentation is available via the webcast link. If you do not have the presentation and would like to follow along, a link is also available in the press release issued today. Just as a reminder again, if you would like the webcast link and you are not joined via the webcast, you could find the link available in the press release issued today. Greetings, and welcome to the Celsius Holdings PepsiCo Distribution Partnership conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Cameron Donahue of Investor Relations with Celsius Holdings. Thank you. You may begin. Thank you. Good afternoon, everyone. We're excited to host the call today to discuss and provide additional details on our pre-market PepsiCo distribution and investment announcement. 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 be given at that time. The slide presentation that will accompany today's call, as well as the press release announcing the PepsiCo agreement, will be available on the company's website, celsiusholdingsinc.com, under the Investor Relations section. As a reminder, before I turn the call to John, an audio replay will be available on our website. 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 August 1st, 2022. 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 included in today's press release at the beginning of our presentation and as well as our quarterly filings with the SEC for additional information. In addition, due to current quiet period restrictions for the upcoming August 9, 2022 second quarter earnings release and conference call, questions will be limited to the PepsiCo distribution investment agreement. Celsius will be holding the second quarter earnings call next Tuesday, August 9, at 4:30 P.M. Eastern, and we will issue a formal press release pre-market tomorrow morning with these specific call details. With that, I'd like to turn the call 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 are excited to announce the transformational partnership today as we work to become a leading beverage player across North America as well as internationally, as we now have the ability to reach more consumers, more markets, more channels across the world. Today, we will provide additional color on the transaction as we combine best in class distribution with our company, which has been a key driver in the significant growth seen in the energy category. Starting on slide three. As the world leader in food and beverage, PepsiCo holds the number two position in beverage globally, with distribution across all channels and occasions, highlighted by their leading DSD network and brand building capabilities. This agreement, effective as of today, adds the fastest growing lifestyle energy brand in the United States, Celsius, to PepsiCo's growing energy portfolio and grants Celsius access to PepsiCo's vast distribution network to strengthen and scale. Celsius has disrupted the energy category, establishing the brand as the number one driver responsible for 37% of the category growth, bringing in over $37.5 million in incremental sales to the category, as previously announced in our first quarter earnings call and based on the four weeks ending April 17th, 2022 IRI MULO+ reporting. Our best-in-class momentum growth trajectory is expanding the energy category through our more diverse consumer, where we have over a 50% female sales mix. Our proprietary formula provides proven functional benefits, including both calorie and fat burning, validated through peer-reviewed clinical trials. Celsius is made with healthier ingredients such as ginger, guarana, green tea, and seven essential vitamins with no sugar, aspartame, artificial colors or flavors, and is certified gluten-free, kosher, non-GMO. Backed by our strong innovation and portfolio expansion, Celsius is a first mover and a leading player in bringing health and wellness trends to the energy category. Turning to slide four. As a review of the transaction, Celsius and PepsiCo have entered into a long distribution agreement and associated investment. PepsiCo has become Celsius preferred distributor in the United States, with future expansion opportunities as our preferred global distribution partner. Celsius enhances PepsiCo's existing energy drink portfolio in the attractive, healthy lifestyle energy category, and PepsiCo will assist with the costs associated with the transitioning of the existing Celsius distribution agreements. In parallel with a $550 million convertible preferred stock investment made by PepsiCo in Celsius, the investment aligns incentives for both parties. The shares underlying the investment were priced at $75 per share, approximately 7.3 million shares, which equates to approximately an 8.5% ownership in Celsius on an as-converted basis. The preferred shares receive a 5% annual dividend, paid quarterly in cash or in kind at Celsius's option. Proceeds will primarily be used to fund growth initiatives, capital investments and operating expenses. In addition, PepsiCo will nominate a director to the board of directors at Celsius, increasing our board size currently from eight to nine. The agreements provide a transformational opportunity to gain immediate scale and accelerate market share by securing additional best in class North American distribution network and global reach, as well as providing the funds necessary to take Celsius to the next level. The distribution provides additional access to new consumers and use occasions through diverse channel exposures and expansion, food service, independent convenience, including PepsiCo's Medallions Program, expansion and vending, college campuses, concessions, and expansion in the military. The equity investment aligns mutual long-term interests while strengthening the balance sheet for working capital and growth investments. On a go-forward basis, the distribution agreement is expected to add significant top line scale and accelerate growth with substantial gross profits and operational margin accretion expected from leveraging PepsiCo's leading DSD network and rapid scale of our business. With that, I'd like to turn the call over to Jarrod Langhans, our Chief Financial Officer, to cover the highly strategic rationale of the agreements. Jarrod? Thanks, John, and good afternoon, everyone. Moving to Slide five. Partnering with PepsiCo is a transformational opportunity to gain immediate scale and accelerate market share by securing access to a leading North American DSD network with global reach. The agreement provides material expansion across new and existing channels with the addition of significant incremental doors, coolers, and ACV upside. In addition, we have significant opportunities to streamline our supply chain with aligned incentives and added focus. We also now have a long-term partner who can provide substantial international white space for global expansion. This partnership grants us access to new consumption occasions through diversified channel exposure, where we will gain meaningful penetration across channels such as food service, independent convenience, vending, college campuses, concessions, and the military, allowing us to reach new customers and occasions by leveraging our unique product versatility that caters to all times of the day and night, unlike many of our competitors. We will also gain access to thousands of existing coolers. If it's cold, it's sold. We will benefit from portfolio optimization through this strategic alliance with a global leader in beverages as we add a rapidly growing healthy lifestyle energy brand to PepsiCo's existing energy portfolio, and we will benefit from PepsiCo's vast experience and resources as a global beverage leader while retaining our entrepreneurial identity and agility. The partnership also includes a meaningful preferred equity investment, which aligns long-term interests while strengthening our balance sheet position for working capital and growth investment. As a part of the agreement, we will work in unison as we develop and refine our joint distribution business plan, which contains clearly defined KPIs and goals to ensure alignment. As noted, we will deploy capital to support our growth plan, including coolers and vending rollouts, sales and marketing opportunities, sales force growth, fleet expansion, and international expansion. Turning to slide six. We are very thankful for all the independent distributors that have supported Celsius over the years. If it wasn't for them, then we wouldn't be where we are today. With that said, we have had a very fragmented national DSD network represented by in excess of 250 independent regional distributors. These partnerships have been independently managed, supported, and built. Upon transition, PepsiCo provides a highly efficient and cohesive route to market in North America with additional global expansion opportunities. Transitioning from a significant number of independent distributors to a national partner allows our team to consolidate sales, marketing, and distribution efforts with the associated cost benefits, which we expect to recognize and leverage once the transition is completed. We will provide additional clarity on operational leverage and targets as we move through the transition. Slide seven provides specific opportunities to drive additional consumption through convenience, college campuses, vending, food service, and sports arenas. PepsiCo's network is optimally positioned to drive Celsius consumption across new occasions with multiple touch points throughout the consumer's day and night. Moving to Slide eight, you will find additional details on the use of proceeds from the equity investment. Driving growth. We will have additional firepower to accelerate the rollout of coolers. On average, coolers placed paid for themselves in four months and store sales accelerate significantly. We will invest in sales, marketing, and R&D in areas such as digital, social media, sponsorships, and flavor profiles. We will invest in our fleet to support our fast-growing sales force and marketing team, and the funds will help facilitate entry into new channels and geographies such as Canada and Europe. Balance sheet and working capital. This investment strengthens our balance sheet and provides for ample working capital needs. It also gives us the ability to invest ahead of growth and the optionality around other opportunities for expansion. As John previously noted, we are very excited about this partnership. We believe that the value accretion to our business and stakeholders is immense, and we look forward to the next step in the company's journey. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Kaumil Gajrawala with Credit Suisse. Please proceed with your questions. Hey, everybody, and congratulations. I think the first question, maybe the most important question, is distribution changeovers while they, particularly this one's, I'm sure, great for the long term, the transition process very rarely goes smoothly. Your brand has a lot of momentum at the moment. What are you doing to assure that you don't lose this momentum as you go through this period of transition? Yeah. Kaumil, it's John. Thanks for asking the question. We're being extremely strategic about this transition, and I agree a lot can go wrong. A lot has gone wrong with a variety of other brands. We're working really closely with our partners on a smooth transition. We have, as you know, Tony Guilfoyle, and as many of our team members have worked with the PepsiCo system in the past on transitions. We have a roadmap that we've put together. We've been monitoring extremely closely through the process. We feel like we have a good strategic plan working together. But it is a, you know, in the past, we've seen brands have struggled, and we're gonna keep an eye on it through the process. Okay. On termination agreements, I think I read that you will largely be responsible for them. Do you have a rough idea on how much that's gonna cost? Said another way, maybe how much of that $550 it might eat? Yeah, we do have, you know, that actually what it'll be is actually neutral to Celsius. We're working through that process. On a cash basis, it'll be neutral. Likely it is gonna have to be recognized in our financial statements in Q3. We're working on those numbers now. It will be cash neutral to Celsius on a go-forward. Okay. Got it. Final question. A little surprised to see M&A as a highlight on some of what you might do with proceeds. Given everything that you've got going on with the core business, why is now the right time to think about to also be thinking about M&A? Well, I think there's opportunities there for M&A. We put that on the list as a potential use of proceeds. You know, as we go forward, it allows us to be nimble. We are extremely focused on our core portfolio with Celsius, taking it broader and wider and taking advantage of this partnership. But M&A is not out of the question on a go-forward basis as we look over the horizon. Okay. Got it. Thank you, guys. Congrats. Thank you. Thank you. Our next question has come from the line of Kevin Grundy with Jefferies. Please proceed with your questions. Great. Thanks. Good afternoon, everyone, and I want to extend my congratulations as well. Maybe start with just the structure of the deal and why this was the right structure including the financing component. John, maybe just spend a moment. I think recent commentary has been that the company could self-fund its growth. It's nicely profitable. Yeah. throws off free cash flow. Why this structure and then why is it the appropriate one? I think importantly, just maybe discuss the timing around the investments that you outlined and what this is going to mean for the company's growth, both domestically and abroad, and then I have some follow-ups. Thank you. Okay. Excellent. Thank you, Kevin. I'll let Jarrod talk about the specific details of the arrangements. In general, you know, we have made comments, we have been cash flow positive. The company has been operating at a positive EBITDA. You know, when we look at this investment for the company, we felt it was important when partnering with PepsiCo to have them take a meaningful stake in the business, you know, have skin in the game as well. We do see a lot of opportunities on potential vertical integration, and continuing to maximize the opportunities through this transition as we're getting broader distribution. And we felt the timing's right now, given you know, the changes in consumer mindset, you know, this fitness is a mega trend. The way the product is resonating with consumers and the broader consumers each and every day, we felt that it was time, and especially with the partnership that was at the table, which really came to fruition around mid-June, when you look at the timeline there, up to that point. You know, I think having skin in the game is important. Also increases our working capital on our balance sheet, allows us to be nimble and take advantage of opportunities. I'll turn it over to Jarrod to talk about some of the specifics in regards to the structure of the deal. Yeah, I mean, John pretty much covered it. I mean, the goal was really to make sure that we were fully aligned in maximizing the potential of the distribution agreement, having skin in the game, having an investment. We just felt it was important to wrap both pieces together into one, both an investment and the distribution. That, you know, that's where we were with it. You know, there was a lot of back and forth. I think we both got to both sides, and you'll have to ask them for their opinion. But I think both sides got to a comfortable place with the instrument, and we feel that, you know. If you look at all the instruments combined, it really sets us up for success going forward and making sure that we're both fully aligned as we go forward. Thanks, guys. Just to stay with this, how quickly will the $550 million be deployed? What are the key areas that you're looking at? The growth has been fantastic through the current system with Anheuser-Busch. What do you see as sort of the major channels? I would imagine it's going to be sort of small format and convenience, but how quickly is the cash gonna be deployed? How should we be thinking about that? What are the key channel opportunities? Maybe you could put some guardrails around what this is going to mean for the company's growth, both in the U.S. and abroad. Yeah. You know, we're not gonna be quick and rush into anything. As John's always preached, we're looking for profitable growth. This gives us the opportunity to invest ahead of some of that growth. It also gives us the opportunity to increase some of our purchases that we were gonna make over multiple years, such as coolers and vending and different things like that. Instead of a five-year plan, we can get it deployed in a couple of years, which will, you know, those have great returns on them. You know, it's a matter of months. We'll deploy those types of things. You know, given the supply chain, it might take a few months for some of those. We'll look to deploy the things that'll drive growth and drive profits first. In terms of stuff like M&A or if we're looking into things to improve the COGS line, vertical integration or things like that, we'll look into it, but we're not gonna rush off to anything. The most important thing is really gonna be making sure that we have a successful transition. We will do some inventory building, and make sure that, you know, PepsiCo has the product ready when they are launching. That's something that we'll do ahead of time. You will see some working capital use for that. Really it's having that firepower going forward. I wouldn't expect to see the $550 million depleted in, like, you know, six or seven months. It's gonna take a while to use it, but it will be good so that we can build inventory so that we can drive growth and then have the funds available to do so. Okay. Just to clean up, Jarrod, before I pass it, I don't want to monopolize any more time. I'll hop back in the queue. Anything specifically you can share with investors just in terms of how you expect this to accelerate the company's top line growth, which has already been very, very good. Just some help there in terms of what this is going to mean as you guys see it with respect to distribution gains, with respect to velocity, anything with respect to targeted market share, where we were versus where you think this can now go, through the PepsiCo system versus what was largely the Anheuser-Busch system. Then I'll pass it on, hop back in the queue. Thank you. Yeah. Thank you, Kevin. In regards to opportunities, we anticipate, you know, over the next 12 months, about a 40% increase in expansion and distribution. There's a lot of opportunities, as we talked about, from college campuses. Food service is a major opportunity, especially we're seeing a lot of consumption around lunchtime, so with Celsius. We think the food service portion, through the PepsiCo system could be a massive opportunity for us. We're really excited where we're at right now. We need to stay focused on the transition, over the next 90 - 120 days. We'll be set for 2023 on where we're headed. Okay. Very good. Thanks for the time. Thank you. Our next question comes from the line of Peter Grom with UBS. Please proceed with your questions. Hey, good afternoon, everyone, and congrats from me as well. Maybe just to start, you know, I know the international opportunity was mentioned in the release and kind of in the presentation, but can you maybe help us frame a timeline around that opportunity in any initial markets where you see the greatest opportunity initially? Yeah. When we look at the opportunities. Thank you, Peter Grom. When you look at the opportunities, we see really, you know, probably in the next 24 - 48 months, opportunities to expand into the U.K. and Germany as opportunities, as well as Canada, and other markets in Western Europe. You know, we're in the early stages. You know, we're gonna continue. We're gonna support strategic relationships with some of their distribution partners in the international markets. I would say probably in the next 24, you know, around 24 months into the relationship, we look to gain distribution in international markets. Got it. That's helpful. Maybe pivoting to kind of the cost savings and margin accretion opportunity that you outlined this morning and in the presentation, can you maybe help us frame what substantial margin accretion looks like or kind of a broader idea around the near term or long-term margin expectations as a result of this transaction? How quickly do you really expect to be able to realize some of these cost savings? Yeah. I'll throw that over to Jarrod. Yeah. We'll be very high level today since we haven't issued our Q yet, so I don't wanna get too much into forward projections. This will really simplify our business in terms of our sales and our marketing teams, even our back shop. You know, we're gonna go from a couple of hundred distributors to one. There's a lot of simplification there. It'll allow us to do a lot of streamlining. Having the cash available, as well as their supply power in terms of looking at coolers and different types of CapEx spend that they will assist us with. We have an opportunity from utilizing their scale to having faster growth and being able to utilize our scale and streamline. There's a number of areas that we'll be able to really benefit from. You know, with the faster sales growth and able to simplify the system, we won't need to be staffing up as much as we would've if we were managing, you know, 250+ distributors. There's a lot of opportunities to really have a more simple scaled approach as we move forward and also the opportunity to get that top-line growth quicker. Got it. Then last, like more housekeeping before I pass it on. Is there anything within this agreement that restricts what categories or types of innovation you are able to pursue? I mean, we've seen situations like this in energy drinks in the past. Just curious just whether you're now confined to energy drinks or whether you can still pursue innovation if you wanted in other categories where PepsiCo may have a greater presence? Yeah. There's opportunities in a variety of different beverage channels. Now, I think most people do know that there are certain partnerships that PepsiCo is in that would restrict us, and obviously, they wouldn't carry that on their truck because they are, you know, they already have those agreements in place. There's some things, you know, the different areas that we look into and sticking to that kind of health and lifestyle focus, there's not. You know, things that we've been talking about internally we're not restricted from. There are gonna be some restrictions based on previous agreements they have, so we wouldn't be able to get those specific products onto the trucks. To be honest, those areas aren't areas we're focused on anyway. Got it. Thanks so much, and congrats again. Yep. Thank you. Our next question has come from the line of Mark Astrachan with Stifel. Please proceed with your questions. Good afternoon, everyone. A few questions that haven't been answered yet. If I'm hearing and reading correctly, it sounds like the convertible can be converted over the next six years, but it doesn't sound like there's a path towards PepsiCo owning more of you than what's there. Is that correct? I guess, you know, broadly speaking, why is not having a path to ownership or more control the right one here? Sort of related to that, is Celsius the exclusive non PepsiCo owned energy drink, or is Pepsi able to own other or to distribute other non-owned or owned brands? You know, kind of pulling that question all together, how do you avoid the kind of healthy tension that some others have had when they've created arrangements like this within the category? Let's start on the instrument first. I won't get too deep into it, but there is the opportunity for PepsiCo to grow their ownership interest over time beyond what they've got. That's one. Two, there's nothing restricting them from ever coming and having a deeper conversation with us in terms of even more. But there is the ability for them to add to that, not necessarily in a preferred nature, but they have the opportunity to add to that. Now, if they wanna come and talk more about preferred, then, you know, they're welcome to do that as well. From that perspective, I don't think there's any like deep restrictions for them to take a bigger stake over time. I know- Yeah. I mean, when you look at the opportunities here, we are gonna be the, you know, the exclusive healthy functional energy drink on the portfolio. We are talking about a solid portfolio to be the lead in their energy drink category. As we go forward, I think it is a massive opportunity. We fit in extremely nicely to their current existing portfolio. We fill a massive gap. The opportunity that we have ahead of us is massive. We do think we have enough protections in the contract. We understand some of the relationships in the past, and we think the relationship going forward with the team members is extremely aligned with interest, as well as an investment. Got it. That's helpful. Maybe just to follow up on that. The discussions potentially in the future, are there specific criteria to be met? Is there a specific timeline involved in it, or is it just kind of when each party wants to potentially have future discussions? That's one. Just two housekeeping questions if I could squeeze them in. One, is there a production or procurement opportunity here, meaning at some point, does or can PepsiCo produce and procure raw materials for you? Are you paying an access fee to Pepsi for access to the system? Thank you. Yeah. No, actually, I think, you know, when you look at, number one, in regards to, you know, we're not paying an access fee. This is a true partnership. There is opportunities for them to further invest, as Jarrod mentioned. Right now this is the initial investment. You know, we're gonna continue to see opportunities ahead. There is nothing structurally that requires investment over a period of time. You know, as we grow and scale and further leverage the relationship, there's a lot of synergies to leverage this relationship from supply chain, vertical integration. None of that has been really earmarked at the moment, although there's talks and plans for that on a go-forward basis. We really need to get through this transition period. We'll execute upon that, and then we'll build upon and we'll further leverage the opportunities and the synergies that both parties see. Got it. Okay, great. Thank you, guys. Hard not to be happy with this deal today. Agreed. Thank you. Our next question has come from the line of Bonnie Herzog with Goldman Sachs. Please proceed with your questions. Hi, everyone. I just had a couple quick questions. I guess my first one is, I was curious, you know, why you decided to do this now. You mentioned, you know, your distribution, John, has been, you know, fragmented for a while. Was it just because PepsiCo was your preferred partner and you were sort of waiting for them? Curious, did you entertain other potential distribution partners? Yeah, thank you, Bonnie. You know, when you look at the opportunity that this provides us, and we kind of touched on some of the synergies of one provider. Our partners have been great. Our distribution partners, all of our independent distribution partners have been just really key to the success of the company. You know, and we thank them greatly. Without them, we wouldn't be where we are today. When you look at, you know, the challenges you have with executing a national rollout or a national execution with a fragmented distribution network, you know, it adds a lot of complexities to it. No, we weren't looking for the partnership. This opportunity arisen, and we evaluated it accordingly. We saw a lot of the synergies, you know, talking about reducing the number of shipping points, the billing from the billbacks, and then the collaboration with co-opping as well on some of the partnerships on some of the accounts and co-branding and marketing. When you look at it holistically, you really see a lot of opportunity. With their support on being the number one in the PepsiCo system and the lead in the energy drink portfolio, you know, it was really an opportunity we saw, we couldn't turn down, so, with the way everything was structured. We're really excited about the partnership, and we think it's gonna be the best partnership, and we have more to come. No, that makes sense. I wanted to clarify something. I think somebody else asked earlier, you know, about this, but I just wanna make sure I'm clear about the agreement. Is there something in the agreement that sort of gives you the comfort that, you know, PepsiCo, you know, maybe won't prioritize distribution of their brands versus yours? You know, just trying to make sure that you're getting what you need, especially given, you know, your brand is not gonna be the only energy drink in their portfolio. How did you ensure that or get comfortable with that? Yeah. I mean, we do have an exclusive in regards to healthy functional energy drink for the initial two years, 24 months. Then we have specific KPIs with the joint business plan drafted that has to be adhered to on an annual basis that we'll be both collaborating with. We felt the way it was structured with the core KPIs, which are required to be achieved upon specific goals, we feel there's enough controls in there to keep us relevant in their system. Yeah. Also with the investment, in the, as well. That's one other reason why we thought the investment- Yeah. Was so important, because we need both companies to really align together, on the execution and the opportunity we have. Okay, that makes sense. Congratulations. Thank you, Bonnie. Thank you. Our next question comes from the line of Andrea Teixeira with JP Morgan. Please proceed with your questions. Thank you. Good afternoon. I also wanna echo the congratulations on this deal. I have a question and a clarification. First, keeping on the topic of PepsiCo potentially increasing the stake from the eight and a half to higher, is that after the six years or within those six years? At six years, they can increase the stake if you reach some certain thresholds. Then what is the maximum stake they can reach? Then the clarification is when you say vertical integration, and I appreciate obviously the synergies, is that more of a global procurement or perhaps coolers, of course, the CapEx that you might, you may negotiate together to put the coolers in? Do you foresee PepsiCo bottlers in the U.S. in particular packing some of your products and the co-packing situation will go from here? I'm assuming the 250 distributors is pretty much set, but from a production perspective, how do you see it evolving? Yeah. I think when you look at number one on the relationship piece over there and the additional investment, I mean, this is just the initial investment that you would have to really ask them those specific questions. But you know, there is opportunities on a go-forward basis for them to further invest in the company. You know, that's but in regards to where we see, you know, our investments on a go-forward basis, global procurement, there is opportunities there. You know, we'll evaluate those opportunities as we continue to expand out. This is a North America deal currently with international opportunities that we'll need to structure separately, but those opportunities and alignments exist for global expansion. When you see the investment opportunities, we talked about coolers also optimization of the supply chain. In regards to co-packing, they don't have the capabilities to pack our product today. We currently will be leveraging and using our existing co-pack network, going forward and expanding upon that as well. Thank you. Appreciate it. Thank you, Andrea. Thank you. Our next question comes from the line of Jeff Van Sinderen with B. Riley. Please proceed with your questions. Hi, everyone, and let me add my congratulations. Thanks for taking my questions. Any sense you can give us on the KPIs that need to be attained under the agreement, maybe order of magnitude there? Yeah. Thank you, Jeff. We're not gonna get into specifics on those KPIs, but there is a specific number of KPIs that we are tracking that we'll jointly agree on and execute. Within the contract, they range from distribution to ACV, you know, deliveries. Because the key is with the distribution system, you need proper delivery, keeping our product in stock. As we all say, with the coolers we're looking to place, if it's cold, it's sold. There's a lot of a variety of executional KPIs that will be mutually agreed upon. That's how we'll manage the business on a go-forward basis. Okay. If we can switch to your co-packing strategy, just wondering how that might change as a result of the PepsiCo agreement. Yeah. On the co-packing, I'm not seeing any immediate changes on the co-packing. You know, with the opportunities we see ahead, with the expansion on distribution, it could be growing. Okay. Just one other, if I could squeeze it in. PepsiCo has a phenomenal distribution network. Don't think anybody will argue with that. Realize every partnership is different. With that being said, maybe you could just speak to, you know, to the degree that you want to, what you think went wrong with the Bang partnership. Really what was learned from the failure of that partnership that you can apply to this partnership? Yeah. Great question, Jeff. I'm not gonna make any comments in regards to that relationship. In general, when you look at some of the operational metrics around that, the performance of the operational metrics do seem to, you know, it did work out, you know, the distribution increase, the product availability. I think there was more challenges there than the operational execution of the PepsiCo system. I'll just leave it at that. Okay. Thanks for taking my questions and best of luck. Thank you. Thank you. Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your questions. Thanks. Yeah, John, I would agree. It's transformational. A lot of hard work to get here. Maybe just talk a little bit, John, about the distributors that you currently have. Like you said, they've done a great job. You have 250 of them, obviously a lot to manage. How long do you think this transition will take, approximately? I know PepsiCo is the preferred distributor, but are there any current outstanding distributors that you may say, "You know what? In this particular case, we will stay with this distributor." Or is the agreement that you have to eventually transition 100% to PepsiCo? Yeah, no. Thank you, Anthony. It's been an amazing journey, and this is just another stepping stone on where we're headed on our journey. It's really exciting. You know, our distribution partners, like I said, have been great. We built that national distribution network out. The teams have been working extremely hard on optimizing, you know, and really winning them over. When you look at, you know, the last 18-24 months, it's been really exciting to see some of these distribution houses really increase velocity and start to see the value of Celsius, which we worked so hard to create. You know, when you look at the transition, we will be transitioning over the majority of our distributors over to the PepsiCo system by the end of the year. there will be a few distributors that remain within our current system. the majority of distributors will be moved over to the Pepsi system. you know, I can't thank them enough. without the distributors, like we've talked about, Anthony, I mean, on the calls, all the out-of-stocks we've had and working so hard to get our distributors to service our retailers and seeing the displays that we're executing in the trade has just been, it's just been great to see. like I said, appreciate all their support. this is just one more step on the brand evolution as we go and gain scale. now we have you know, a really national opportunity to take Celsius to number one. That's really gaining efficiencies through the supply chain, through our logistics team, through our sales organization, key account execution. We're looking forward to having a great selling season in the back half of this year as we leverage PepsiCo's sales team members and their relationships, and we enter 2023 in a big way. Okay. Just two quick follow-ups to that. You said this would be in terms of the transition and the termination for most of these distributors, it'll be neutral. Is that because PepsiCo is helping offset some of those costs or? That's correct. How is that gonna? Yeah. Okay. Yeah. Outside of the investment. The investment, the $550 million investment with the preferred instrument is growth capital. There'll be other funding that'll be associated with any associated buyouts or transitional costs that the company will incur. That's the reason we're saying it's a cash neutral. Got it. Okay. That's what I thought. Just wanted to double check on that. Lastly on the shelf resets, is this gonna be more for 2023 as you're transitioning or are you expecting some initial gains because of the increased distribution that PepsiCo has before the end of this year? Yeah. I think when you look at it, I mean, we're gonna have initial sell-in into the PepsiCo system, and that'll take place in the third quarter. The bulk of our distribution, you know, will be migrating towards the end of the third quarter into the fourth quarter. You know, I think you might get some distribution gains, but I think the real gain is gonna happen in, you know, towards the back half of Q4 and into Q1 into 2022 when the resets take place. Our team has been doing a great job. We've already had 2023 review meetings with many of our key customers now and retailers. It's pretty exciting getting involved in the front end of the review season and talking about some of the great innovation that the teams have planned for 2023. Excellent. Thanks so much. I really appreciate it. Thanks. Thank you, Anthony. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question has come from the line of Sean McGowan with Roth Capital Partners. Please proceed with your question. Thank you. Congrats, guys. Appreciate your taking the time to do this and for dealing with so much of the detail. That's good. Very helpful. I had some questions on how this is gonna show up, you know, and what the economic model impact will be on this. A couple of questions. Would we expect to see kind of unusual charges the balance of the year, or will some of these costs and termination things be folded into existing expense categories? Yeah, I'll turn it over to Jarrod, he can talk about some of the accounting treatment around that. Jarrod? I can have more information after we issue our earnings results next week, but the termination fees we'll call out separately. We'll also call out the costs associated with the transaction separately, so that you can have an apples to apples comparison as if these costs weren't incurred. There's also the assistance and the termination expenses will be called out separately as well. That'll be mainly a cash flow thing. With GAAP, it's a little interesting in that the termination fee expense gets booked in full, but the assistance provided by PepsiCo will get recorded to the balance sheet and amortized over the life of the agreement. There'll be a little bit of nuance there that we can, I'll explain more next week and All right. be able to get numbers out for that. From the preferred instrument perspective, it will be a mezzanine equity, so the dividends will still flow through the cash flow statement, but it'll be in that section of the balance sheet above the equity and below the debt or below the liability section. Those are the main things that we'll call out for you. Thank you. It's kind of a related question to something you just touched on. You talked earlier in the call about, you know, long-term margin accretion opportunity from the arrangement. But is there a and aside from one-time things and termination and all that, is there a near-term negative hit to margin? Like, will you be selling product to PepsiCo effectively at a lower price than you might have been selling it to some of these other partners? No, it's more or less neutral. Okay. All right. Thank you very much. I appreciate that. Yes. Thank you. There are no further questions at this time. I would now like to turn the call back over to John Fieldly for any closing comments. Thank you. On behalf of the company, I'd like to thank all of our partners and everyone who's contributed to our success. Our active lifestyle position is a global position with mass appeal. This partnership will allow us to further build upon our core, leverage best practices, and maximize the opportunities we see ahead. Thank you to all of our investors for their continued support and confidence in our team. Cheers to us today with the Celsius. Stay healthy and live fit. Thank you. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.