Celsius Holdings, Inc.CELH
Celsius Holdings, Inc. Income Taxes Disclosure
INCOME TAXES
The domestic and foreign components of the Company's income (loss) before provision for income taxes were as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| Domestic | $ | 266,060 | $ | 291,203 | $ | (151,551) | |||||||||||
| Foreign | (71,010) | 546 | (1,113) | ||||||||||||||
| Net income (loss) before provision for income taxes | $ | 195,050 | $ | 291,749 | $ | (152,664) | |||||||||||
The provision for income tax expense consisted of the following:
| Current | 2024 | 2023 | 2022 | |||||||||||||||||
| Domestic | $ | 43,321 | $ | 79,840 | $ | 10,498 | ||||||||||||||
State and local | 15,536 | 27,596 | 2,601 | |||||||||||||||||
| Foreign | 294 | 192 | — | |||||||||||||||||
| Current federal, state and local, tax expense | $ | 59,151 | $ | 107,628 | $ | 13,099 | ||||||||||||||
| Deferred | 2024 | 2023 | 2022 | |||||||||||||||||
| Domestic | $ | 1,000 | $ | (34,535) | $ | 18,558 | ||||||||||||||
| State and local | (178) | (8,261) | 4,034 | |||||||||||||||||
| Foreign | (9,997) | 116 | (1,073) | |||||||||||||||||
| Deferred federal, state and local, tax expense | $ | (9,175) | $ | (42,680) | $ | 21,519 | ||||||||||||||
| Provision for income taxes | $ | 49,976 | $ | 64,948 | $ | 34,618 | ||||||||||||||
The reconciliation of the U.S. federal statutory rate to the effective rate on net income (loss) before taxes is as follows:
| 2024 | 2023 | 2022 | |||||||||||||||
| U.S. Statutory federal rate | 21.0 | % | 21.0 | % | 21.0 | % | |||||||||||
| State taxes, net of federal benefit | 6.2 | % | 4.7 | % | (3.9) | % | |||||||||||
| Earnings in jurisdictions with tax rates differing from U.S. federal rate | 3.3 | % | 0.1 | % | — | % | |||||||||||
| Tax effect of Pepsi valuation premium | — | % | — | % | (38.9) | % | |||||||||||
| Stock based compensation | (5.2) | % | (3.4) | % | (0.9) | % | |||||||||||
| Change in valuation allowance | (0.7) | % | (0.3) | % | 0.4 | % | |||||||||||
| Change in deferred balances | 0.2 | % | 0.3 | % | — | % | |||||||||||
| Other | 0.9 | % | (0.2) | % | (0.4) | % | |||||||||||
| Effective tax rate | 25.7 | % | 22.2 | % | (22.7) | % | |||||||||||
The Tax Cuts and Jobs Act introduced a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under the base erosion anti-abuse tax “BEAT” regime. For the years ended December 31, 2024, 2023 and 2022, the Company did not generate intercompany transactions that met the BEAT threshold but had to include GILTI relating to the Company’s foreign subsidiaries. The Company elected to account for GILTI as a current period cost.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.
Deferred tax assets and liabilities consisted of the following:
| December 31, 2024 | December 31, 2023 | ||||||||||
| Net operating loss carryforwards | $ | 10,869 | $ | 3,441 | |||||||
| Foreign disallowed interest carryforwards | 739 | — | |||||||||
Deferred revenue | 43,289 | 45,907 | |||||||||
| Fixed assets | (7,742) | (3,338) | |||||||||
| Pepsi valuation premium | (64,356) | (68,250) | |||||||||
| Right of use liability | 3,566 | 157 | |||||||||
| Right of use asset | (4,527) | (275) | |||||||||
| Distributor termination fees | 33,960 | 40,429 | |||||||||
| Stock-based compensation | 2,728 | 4,892 | |||||||||
Accrued legal | 14,562 | 977 | |||||||||
| Inventory allowance | 6,033 | 8,244 | |||||||||
| Intangibles | (1,825) | (2,495) | |||||||||
| Total deferred tax assets | 37,296 | 29,689 | |||||||||
| Valuation allowance | (927) | (2,496) | |||||||||
| Net deferred tax assets | $ | 36,369 | $ | 27,193 | |||||||
At December 31, 2024, the Company has approximately $1.5 million of Federal net operating loss carryforwards and $1.5 million of state net operating loss ("NOL") carryforwards, which will begin to expire in 2027. The Federal and State NOLs are subject to limitation under Section 382 of the U.S. Internal Revenue Code due to a December 2008 ownership change of greater than 50% over a three-year testing period. The Company had foreign NOL carryforwards of approximately $80.6 million, some of which will begin to expire in 2026. Additionally, the Company had foreign disallowed interest carryforward of $3.7 million which is indefinitely available.
The Company considers the earnings of its foreign entities to be permanently reinvested outside the U.S. based on estimates that future cash generation will be sufficient to meet future domestic cash needs. Accordingly, deferred taxes have not been recorded for the undistributed earnings of the Company’s foreign subsidiaries. All other outside basis differences not related to earnings were impractical to account for at this period of time and are currently considered as being permanent in duration.
As required by ASC 740, Income Taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred taxes will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. During the fourth quarter of 2022, the Company concluded that it was more likely than not that its Celsius Europe deferred tax assets would be realized, based on Finland profitability and NOL utilization in 2021 and 2022. During the fourth quarter of 2024, the Company concluded that it was more likely than not that its Celsius Finland deferred tax assets would be realized, based on Finland profitability and NOL utilization in 2023 and 2024. For the year ended December 31, 2022, the Company reported a release of non-U.S. valuation of $0.5 million. For the year ended December 31, 2024, the Company reported a release of non-U.S. valuation allowance of $1.6 million. The Company continues to maintain a valuation allowance on certain of its foreign net operating losses as it is not more likely than not that the losses in those specific jurisdictions will be realized.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2024 | 2023 | ||||||||||
| Gross unrecognized tax benefit, beginning of period | $ | 1,257 | $ | 702 | |||||||
| Additions based on tax positions related to the current year | 410 | 555 | |||||||||
| Additions based on tax positions related to the prior years | — | — | |||||||||
| Reductions due to lapse in statute of limitations and settlements | (255) | — | |||||||||
| Gross unrecognized tax benefit, end of period | $ | 1,412 | $ | 1,257 | |||||||
The Company recognizes only those tax positions that meet the more-likely-than-not recognition threshold and establishes tax reserves for uncertain tax positions that do not meet this threshold. To the extent these unrecognized tax benefits are ultimately recognized, approximately $1.4 million will impact the Company’s effective tax rate in future periods. Tax positions will potentially decrease by $0.2 million within the next twelve months. Interest and penalties associated with income tax matters are included in the provision for income taxes. As of December 31, 2024, the Company had uncertain tax positions of approximately $1.5 million, inclusive of $0.1 million of interest and penalties.
The Company files U.S., state, and foreign income tax returns in jurisdictions with various statutes of limitations. Below is a summary of the filing jurisdictions and open tax years:
| Open Years | |||||
| U.S. Federal | 2021-2023 | ||||
| U.S. State and local | 2020-2023 | ||||
| Non-U.S. | 2018-2023 | ||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 3, 2025 | Showing above |
| 2017 | Mar 8, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.