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Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Celsius Holdings, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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Commodity Price Risk
In the normal course of business, our financial position is routinely subject to a variety of risks. The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are fluctuations in commodity and other input prices affecting the costs of our raw materials (including, but not limited to, increases in the price of aluminum cans, sucralose and other sweeteners, as well as other raw materials contained within our products). We do not currently use hedging agreements or other financial instruments to manage the risks associated with securing sufficient ingredients or raw materials. We are also subject to market risks with respect to the cost of commodities and other inputs because our ability to recover increased costs through higher pricing is limited by the competitive environment in which we operate.
Interest Rate Risk
Fluctuations in market interest rates may cause cash flows to vary. Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. This can affect both our borrowing costs and the fair values of our debt obligations. We are subject to interest rate risk in connection with the Term Loan Facility and Revolving Credit Facility, which bear interest at variable rates based on either a benchmark rate or an alternate base rate, plus an applicable rate which is subject to potential step-downs in 0.25% increments pursuant to a pricing grid based on net leverage. A one-percentage-point increase in the interest rate would raise our annual interest expense by approximately $6.9 million, based on outstanding balances under the Term Loan Facility as of June 30, 2026. There were no borrowings under the Revolving Credit Facility as of June 30, 2026. For additional information see Note 10. Debt in the notes to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
Except as described herein, there have been no material changes to the information regarding market risk provided in Item 7A. Quantitative and Qualitative Disclosures About Market Risk contained in our Annual Report.