Q3 2019 Earnings Call
And the.
Good afternoon, ladies and gentlemen.
Thank you for attending the school I brought Nics checks Gopro Schlossberg about chairman President is with me as he's come Kelly, our executive Vice President Finance.
You may have already know just my boss yourself today.
Because I recently had a non polyp removed from our leverage.
The good news is that on farm.
But I'd been advised to use my board sparingly.
Oh, sorry, motherboard school, the queuing <unk> and <unk> okay.
Thank you.
Katy is gauge read the safe Harbor statement before we stopped.
So before we begin we would like to remind listeners that certain statements made during this call may constitute forward looking statements within the meaning of section 27.
The Securities Act of 1933 as amended and section 21 here of the Securities and Exchange Act of 1934 has amended and are based on currently available information regarding the expectations of management with respect to revenues profitability.
Future business future events.
Natural performance and trends.
Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties many of which are outside the control the company.
May cause actual results.
Differ materially from the forward looking statements made during this call.
Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed on February 20, 829 team and our most recent quarterly report on Form 10-Q filed on August eight 2019.
Including the sections contained therein.
Factors and forward looking statements for discussion on specific risks and uncertainties that may affect our performance.
The company assumes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
And explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call is provided in the notes and designated with asterisks.
To be condensed consolidated statement of income and other information attached to the earnings release dated November seven 2019.
A copy of this information is also available on our website www Dot monster Beth Corp. Dot com and the financial information section.
Thank you Tom we've gotten it turned out to the quarter and Ah well move on from there.
Zuma Beach preferences, and taste continue to evolve at an increasing pace and we all endeavoring to address them through all into Oh ongoing innovation of new products.
And the third quarter 2019, net sales were 1.13 billion up 11.6% from 1.2 billion in the third quarter of 2018.
And it shows a third quarter would negatively impacted by approximately 12.2 million of foreign currency movements without these foreign currency movements net sales for the quota would've been up 12.8%.
The comp parents of net sales in the 2018 third quarter.
Is it approximately $16 million net sales of advanced purchases as a result of the price increase in the United States.
In about product effective November November the first 2018.
Adjusting for these advanced purchases and pardon foreign currency movements net sales for the 2019 third quota would've been up 14.6%.
Turning to watch gross profit gross profit as a percentage of sales for the 2019 to quote it was 59.4% compared with 59.8% in the 2018 to quote.
The decrease in gross profit as a percentage of net sales for the 2019 third quarter was primarily the result of geographical and product sales mix such decrease was partially offset by price increases as well as reduced input cost distribution costs as a percentage of net sales with.
3.3% for the 2019 food quota as compared to 4.1% in that 2018 third quarter.
Sitting a marketing expenses as a percentage of net sales were 11.1% for the 2019 to quota as compared to 11.2% in the same quota in 2018.
General and administrative costs as a percentage of net sales were 10.1% for the 2019th the quota as compared to 11.1% in the same quarter in 2018.
The quota payroll expenses as a percentage of net sales were 6.5% compared to 6.2% in the same period in 2018 payroll costs increased $10.4 million, primarily due to headcount growth both domestically and internationally stock based compensation.
That noncash item was $16 million in the third quarter 2019, compared to $14.1 million in the same quota in 2018.
I think the tax rate increased from 21.8% in the 2018 third quarter, 225% in the 2019 third quarter. The increase in the effective tax rate was primarily due to increased income taxes in certain foreign jurisdictions as well is a decrease in the equity compensation.
And deduction.
In addition, the comp or comparative effective tax rate for the 2018 to quote it included a nonrecurring tax benefit.
Net income was $298.9 million into 2019 third quarter compared to net income of 267.7 million in the 2018, the quota an increase of 11.6% diluted earnings per share for the 2019 third quarter increased 14%.
55 cents from 48 cents in the third quarter of 2018.
Now we turned to the Coca Cola company transition update in the third quarter 2019 Monster Energy was launched by will transition to Coke bottlers in the Dominican Republic, El Salvador, and Honduras, We're planning for the international launches later this year.
We launched predator affordable energy brand in the third quarter 2019 in Botswana and in Slovakia, We're planning to launch predatory interdicted additional markets in Eastern Europe and Africa in the fourth quarter of 2019.
So I know we compete the roll out to both Monster Ultra watch and months demand go in the third quarter, we have significantly expanded our shelf space from launched with these three skews in our targeted top 40 cities and key account.
We continue the rollout of months across India I began the launch of ultra watch into approximately 20% about accounts in September we will put 10, new ultras expansion into the fourth quarter as one is commencing the launch mango locally to leverage consumer taste preferences in India.
Oh, no I'll briefly discuss our litigation with volatile Pharmaceuticals, BPX <unk>. The makeup of paying energy drinks.
Once the father lawsuit against BPX in September 2018, false advertising and BPX father trademark lawsuit against launched a in relation to a range total body feel high performance energy drinks in March 2019, but proceedings are ongoing.
In August 2019, BPX filed another lawsuit in the southern district to Florida, alleging a host of legal challenges, including many similar to the claims monster and age against BPX Monster will seek the dismissal of BPX. His most recent lawsuit.
In October 2019, U.S. caught the U.S. District court for the Southern District denied Pbxs motion for preliminary injunction against our rain total body to high performance energy drinks in its trademark lawsuit.
In his decision to.
The court ruled that BPX fail to meet any of the elements of the preliminary injunction and filled to establish that it is likely to succeed on the merits of beats claims BPX recently announced an intention to launch its own right in line of rain branded energy drinks and 16 ounce cans to be sold in convenience stores.
Recently filed an expedited motion for preliminary injunction asking the core to stop this product launch and to prevent BPX from infringing launches trademark rights in this way.
In one of the court filings in May 2019, we stated that sales of rain beverages from June through December 2019, we projected to exceed $235 million.
Oh sales are right through October was solid as illustrated by the Nielsen numbers were lower than initially expectations.
As with any new product launches sales, maybe affected by many factors, including retail authorizations, the dates on which listings well secured for products, a major retailers and introductions of new flavors.
The company has not changed his practice with respect to projections I will not be providing projections speak to rain or any other products.
It's all litigation with VP exit sub Judy K will not be answering any questions on this matter on today school.
Now, we gotta tend to the Nielsen reports in North America. According to the Nielsen reports for the 13 weeks through October 26, 2019 for all outlets combined naimi convenience grocery drug mass merchandisers.
Sales in Dod is in the energy drink category, including energy shots increased by 9.1%. This is the same period a year ago.
Sales of the company's energy brands, including rain grew 4.6% in a 13 week period sales and wants to adapt to put 4% sound of knowledge decreased 1.8% and sells a full throttle decreased 12.8% cells are reasonable increased 6.4% cells of walks down.
<unk> decreased by 10.8% sales of five hour decreased 9% and sales of M decreased 42.4% as there were no comparable sales of our rain products last year, we have not reference drain.
According to Nielsen for the four weeks ended October 26, 2019 sales in the convenience and gas channel, including energy shots in dollars increased 6.5% over the same period.
The previous Ya.
Sales of the company's energy brands, which include rain grew 2.5% in the full week period in the convenience and gas Chad.
Builds a monster decreased by 5% or the same period versus the previous Ya knowledge is down 3.3% at full throttle was down 11.6% sales of Red Bull up 4.8% Rockstar was down 11.2% five though it was down 7.9% and Amp was down 35.
And 1%.
According to Nielsen for the full weeks ended October the 26 2019, the company's market share the energy drink category in the convenience and gas channel, including energy shots in dollars decreased by 1.6 points over the same period, the previous year to 40.7% once.
As a shade decreased 4.1 ship points to 33.5% range here was 3% Norges shade decline point bullshit points to 3.6% at full throttle share declined 22 of a 0.2, 0.7% bid bullshit decreased five points to 33.
When 2% rocks Dolce was down 1.1 points to talk with 4% barbell share was lower by putting my points at 5.5% and M. shade decreased 2.2, 0.4% BPX Bancshares increased 4.2 0.28, 0.2%.
According to Nielsen for the four weeks ended October 26, 2019 sales of coffee plus energy drinks, which includes cafe Monster and express a monster in dollars. So the convenience and gas channel increased 7.4% over the same period the previous year sales of a monster Josh Josh.
Java wants alone we've gone from 6% higher than in the same period the previous year.
Sales of our coffee plus energy drinks with 5.9% lower well sales the Starbucks energy were 18.1% hire a comedy show the coffee plus energy category, which includes Java monster cap him on say spread so monster Starbucks Doubleshot and rock Star Roche. It goes did for the four weeks ended October the 20.
Six 2019 was 49.3% down seven point job and wants to share on its own for the full weeks ended October . The 26, 2019 was 44.7% done 2.6 points well Starbucks energy share was 47.9% up four point.
Three points.
According to Nielsen and the convenience and gas choline, Canada for the 12 weeks ended September the 14th 2019, the energy drink category increased 6% in daughters.
Sales of the company's energy drink brands increased 5% versus a year ago the market share of the company's energy drink brands was 37.6% Don 0.7 points monsters market share remain the same 33.9 share points naus nausea sales decreased 7%.
And this market share decreased when for share points to 2.6% full throttle sales decreased 15% and its market share decreased by three points to 1.1% Red Bulls sales increased 6% and its market share decreased 0.2 points to 37.5% walks dollar sales increased.
12% and it's more marketing increased 4.8 points to 15.7%.
Turning to Mexico. According to Nielsen ball out this combined in Mexico. The energy drink category grew 14% for the month of September 2019 Monster sales increased 10.5%.
A market share in value decreased by nine points to 29.3% against the comparable period. The previous your sales have been were down 48.0% goods market share decreased 1.2, 0.8% Red Bulls sales decreased 5.1%.
And its market share decreased by 1.6 points to 7.8% VB 100 sales decreased 11.3% and its market share decreased by 7.7 points to 27.1% both sales increased 53.5% and its market share increased 4.5 ships.
Just to 17.5% well boost sales decreased 3.5% any small country decreased 1.3, 0.26, 0.9% ampere and affordable energy brand launched in March increased its market share to 8.7% in the month of September 2019.
The Nielsen statistics that makes it go Cubs single month, which is a short period. They may often be maturity influenced positively and negatively by sales in the OXXO convenience chain, which dominates the market sales in the OXXO convenience chain 10 can be maturity influenced by promotions that maybe.
Undertaking that chain by one or more energy drink brands. During a particular month consequently, such activities could have a significant impact on the months the Nielsen statistics for Mexico [noise].
And now we tend to EMEA I'd like to point out that the Nielsen numbers either in M&A should only be used as a guide because the channels. It by Nielsen E.M.D.A. vary from country to country and our reported on varying dates within the month referred to from country to country.
According to Nielsen that 13 weeks.
Ended October the since 2019 monsters retail market share in value as compared to the same period. The previous year grew from 12.3% to 12.9% in Belgium from 23.3% to 27.6% in friends from 20.9%.
21.5% in Great Britain from 7.1% to 7.2% in the Netherlands from 18.0% between 3.7% in Norway and from city, 0.3% to 33.4% in Spain.
In the same period monsters retail market share in value as compared to the same period, the previous year decline from 13.7% to 13.1% in Sweden. According to Nielsen into 13 week period ended in September 2019, monsters retail market share in value or as compared to the same period the previous.
Yeah from 15.6% to 15.8% in Germany, and from 10.7% to 15% in Poland.
According to Nielsen that 16 week period ended in August 2019, monsters retail market share in value as compared to the same period. The previous yet grew from 13.8% to 13.9% in the Czech Republic from 34.1% to 56.6% degrees from 15.8.
To 19.3% in Ireland from 16.7%, 20.4% in each city and from aging and from 14.8% to 17.4% in South Africa.
Turning to Nielsen in South America.
According to Nielsen for the month of September 2019, Chile monsters retail market share in value increased from 34.5% to 38% compared to the same month the previous year. According to Nielsen, Brazil monsters retail market share for the month of September 2019 increase from say.
Even 18.7%, 26.2% as compared to the same month the previous year.
According to Nielsen Argentina for the month of September 2019, monsters retail market share in value increased from 13.9% to 27.9% compared to the same months the previous yeah.
Turning to Asia Pacific According to IRI, and Australia monsters market share and value for the four weeks ended September the 29 2019 increased from 9.1% to 9.6% as compared to same period, the previous yet, but as market share in value decreased from 13.7 to 12.9.
And during the same period.
According to IRI New Zealand.
Monsters market share in value for the four weeks ended September 29, 2019 increased from 5.7% to 6.2% as compared to the same period. The previous year live plus is marketshare and value decreased from 8.8% eight when 3% and mothers market share in value increased from six.
<unk>, 0.8% to 8%.
According to Nielsen in South Korea monsters market share value in all doctorates combined for the quota ended September the 2019 grew from 38.3% to 40.5% as compared to the same period in the previous yeah. Lustre is no other leading energy brand by market share in value.
Are you in all measured outlets in South Korea.
According to entailed in Japan monsters market share in valuing the convenience store channel for the 30, we period ended September Thirtyth 2019 grew from 48.9%, 51.2% as compared to the same period in the previous Ya.
We again point out that sit market statistics that come to single month. So full week period may often be materially influenced positively I know negatively but promotions or other trading factors during those periods.
So no we're going to turn to sales and the segments Nichelson. The monster energy drink segment for the third quarter of 2019, which include rain increased 13.5% from 935.1 million to 1.6 billion from.
Comparable period in 2018 net sales for the Monster energy drink segment in the third quarter 2019 were negatively impacted by approximately 10.8 million of foreign currency movements without these foreign currency movements net sales for the monster energy drink segment for the quarter would've been up for.
Turning 0.7%.
The company comparative net sales into 2018 third quarter included approximately 16 million unit sales of advanced purchases as a result of the price increase in the United States, let's sit in about products effective November the.
Then the one 2018.
Adjusting for these advanced purchases and foreign currency movements net sales for the Monster energy drink segment for the 2019 third quarter would've been up 16.6%.
Net sales for the strategic brand segment, which includes predator affordable energy Brent was 66.3 million for the third quarter as compared to 74.4 million in the same quote in 2018 itself. The company's strategic bread segment in the third quarter 2019 were negatively impacted.
By approximately 1.4 million of foreign currency movement.
Net sales for the other segment, which includes third party sales made by if it were 5.9 million in the third quota as compared to 6.6 million in the same quota in 2018.
Net sales to customers outside the United States with 379.8 million, that's 33.5% of total net sales in the 2019 third quarter compared to 283 million.
Or 28.6% of total net sales in the corresponding quoted in 2018.
Foreign currency exchange rates had the effect of decreasing net sales in us dollars by approximately 12.2 million.
Did in reported geographic sales or ourselves the company's military customers, which delivered in the U.S. and train shipped to them energy and the customers overseas.
Now we turned to sales in EMEA in EMEA.
Supply chain and production issues have largely been resolved.
Can you give me a need sales in the third quarter increased 34.1% in dollars and increased 40.1% in local currencies over the same period in 2018.
Gross profit in this region as a percentage of net sales for the quarter was 39.3% compared to 41.3% in the same caught in 2018 gross profit percentage for the region was impacted by country and product mix as well as increases in manufacturing costs.
We also piece at lots that continues to perform well and gain market share in Belgium, The Czech Republic, France, Germany, Great Britain, Greece, Ireland, Italy, the Netherlands, Norway potent in South Africa in Spain.
Turning to Asia Pacific in Asia Pacific net sales in the third quarter increased 43.6% in dollars and 43.4% in local currencies over the same period in 2018.
Gross profit in this region as a as a percentage of net sales was 40.5% versus 44.1% or the same period in 2018, as a result of country and product mix in Japan. It sells in the quota increased 60% in dollars and 55.5% in local.
Currency.
In South Korea, net sales increased 15.9% dollars and 23.5% in local currency as compared to the same quota in 2018.
I know she Ana which includes Australia, New Zealand Tahiti, French Polynesia, you Caledonia, Papa New Guinea, and Guam mid sales.
Decreased 12.8%, new dollars and 7.7, 0.2% local currencies, although I would like to point out that launched increased 4.5% new daughters, and 10.7% in local currency as compared to the same quarter in 2018.
Now turning to sales in Latin American, Nick and the Caribbean, and Latin America, including Mexico in the Caribbean net sales in the third quarter increased 41.5% in dollars and 51% in local currencies over the same period in 2018 gross profit in this region as a percentage of net.
Sales was 44.0% for both periods.
In Brazil net sales in the quarter increased by 18.2% in dollars and increased 82.3% in local currency.
Sales in Chile increased 70.9% in dollars and increased 84.2% in local currency and the quota.
So not turning to new products in North America in United States, We launched monster meal, Ginger brew nationally rain Orange dreams to cool.
Once the Max Mango magic and months to Max Red Red extra strength with zero sugar at the end of September .
Toby we launched Java Monster Farm is oats, which contains a smoke and is non dairy and began as well as two new flavors in the rain brand family should be supply and mango magic in 2020 nanometer states. We we will be discontinuing a cafe monster line of products.
And repositioning ice bresseau wants to nine.
In Canada in the third quarter 2019, we launched wants the Pacific Punch Nash knee in July as well as monster meal nationally in September .
During the third quarter 2019 in Mexico, We launched pipeline punch during the third quarter 2019 in Brazil, We launched absolutely zero ultra violet as well as mango local.
Now turning to new products in EMEA, what's the pipeline punch was launched in Bosnia who get area Soccer's, <unk> Asia, Greece, Poland and Slovenia in the third quarter of 2019 and is now available in 15 markets across EMEA.
Especially monster was made available in six markets in EMEA, France, Great Britain, Germany, Norway, Spain, and Sweden in both smoke and vanilla variance to the during the 2019 the quota.
We also recently launched both parents in Belgium, and the island in October 2019, and we'll launch both in Poland. This month.
Well piece with the performance of the specimens to India me.
Your parents roll out two flavors of especially amongst into for the 12 markets in the fourth quarter of 2019 and through our 2020.
Additionally, we are looking to launch a new salted caramel, especially event in age EMEA markets over the course of the fourth quarter 2019, and 2020 [noise].
[noise] reign as launch in Sweden into third quarter 2019, obtaining launch draining the for the two markets by the end of 2019, well pennies launch launch in Israel in the fourth quarter 2019.
Panic launch predator affordable energy brand in Ethiopia, Kenya, Poland, you get into end, Zambia into 2019 fourth quarter.
Turning to new products in Asia Pacific, We launched Monster Green in 500, milliliter resealable aluminum bottles in Japan during the 2019 to quota.
In Korea, we launched popped on punch with initial positive result, we launched ultra watching India and completed its rollout in Vietnam during the 2019 the quota.
Ultra paradox launched in Australia in July and in New Zealand in September and Mengel OCO is successfully relaunched in July of two resolution of local production capabilities.
We are planning to launch and number of products in Asia Pacific over the upcoming months, including a full relaunch of popular punch in Japan in spring of 2020.
Now turning to balance sheet cash and cash equivalents amounted to 717.6 million at September Thirtyth 2019, compared to 637.5 million at December 31st 2018.
Short term investments with 587.4 million at September Thirtyth 2019, compared to 320.7 million at December 31st 2018, net accounts receivable increased to 648 million at September Thirtyth 2019.
I mean from 484.6 million at December 31st 2018 days outstanding for accounts receivable were 44.6 days at September Thirtyth 2019, compared to 41.4 days at December 31st 2018.
Inventories increased to 317.7 million at September 32019 from 277.7 million at December 31st 2018.
Average days of inventory was 62.1 days at September Thirtyth 2019, compared to 67.2 days at December 31st 2018.
No we didn't talk a little about October 2019, gross sales. We estimate October 2019 gross sales to be approximately 7.3% higher then in October 2018 on a foreign currency adjusted basis October 2000.
On a non gene gross sales would've been approximately 8.6% higher than comparable October 2018 goes sells.
The comparative gross sales in October 2018, imputed advanced purchases as a result of the price increase in the United States on certain about products effective November the first 2018 adjusting for these advanced purchases and foreign currency movements, we estimate gross sales for the month.
October 2019 would've been approximately 14.6% higher than in October 2018.
Industry God, we caution again, it sells or the other short period, often disproportionately impacted by this factors such as an example, sitting days days of the weekend, which holidays fall taught me of new product launches and the timing of price increases and promotions in retail [laughter] distribute incentives as well as shifts and.
Tom Your production in some instances, where I bought was responsible for production and unilaterally determine their production schedules, which affects the dates on which we invoice such bottlers as well as inventory levels maintained by distribution partners, we say ulta unilaterally for their own business reasons.
Reiterate that spills over short periods, such as a single month, even two months should not necessarily be imputed too well regarded as indicative of results for full quota or any future period.
Share repurchase programs during the 2019 third quarter. The company purchased approximately 4.3 million shares of common stock at an average purchase price of $58.60 per share for a total of 254.3 million excluding broker commissions as.
The November six 2019, approximately 36.6 million remains available for re that's dollars $36.6 million remains available for repurchase and Oh previously authorized repurchase program on November six 2019, the company's board of directors.
Authorize a new repurchase program for the repurchase of up to an additional $500 million of the company's outstanding common stock.
In conclusion I'd like to summarize some recent positive points retail sales statistics for many come trees are on the will demonstrate that the energy category is continuing to grow and then months is generally growing ahead of the category in line with the appearance of but to the new additions to the monster family content.
And you add to the company sales number three we are excited about the prospects for our brands and a new product launches this year as well as a innovation pipeline into any 20.
For the wheel courage body prospects for rain total body feel high performance energy drinks not only with in the U.S., but looking further broad number five we're pleased with our growth and performance in the international markets net sales in the third code in EMEA increased 40.1% in local currency.
Asia Pacific increased 43.4% in local currency and they're in Latin America, and the Caribbean increased 51.
Zero percent in local currency, we reiterate the growth potential for us in China and India.
And lastly, we proceeded with our plans for future launches of affordable energy drink brands internationally. We also proceeding with our plans for the launch of rain total body fuel high performance energy drinks in certain countries outside of the U.S. I'd like to open the floor to questions about the quota. Thank you.
Thank you.
Due to the time limit please limit yourself to one question.
As a reminder to ask a question you need to press star one on your telephone to withdraw your question press the pound Keith Please standby what he compiled a Q and a roster and again, ladies and gentlemen that is star one.
[noise] in the first question is gonna come from Andrea Tiara from J.J.P. Morgan. Your line is now open.
Thank you all <unk> and <unk>.
I wish hats recovery.
And so you can help us.
Positioning of the Koran Monster, which I understand cry, if I understand correctly was down 2.4% all outlets and declined 5% inconvenience do you believe that is related to the promotional environment of your main competitor or just a function of rain gaining more shelf space.
And how are you planning to react to that we will do you feel that the need for more promotions such a become a promotion as well or you just happy with the total performance. Thank you.
Okay I'll take that together can just I think that if you look at the category. What we've noticed easier you had a and impact on all of the pretty much from all of the ISCA use that or had been existing in the market over the past couple of months.
You are seeing the increases coming from us and our main competitors are coming from from new products So but.
If you look at the telco category. The total credit remains healthy it's up 9%, which is really good growth. So that the category is growing it there's been a shift within the category. We you go to look at brands and whatever we have in the category. So you look at the fact that were down Osama the.
Individualists can use all down but overall the categories growing our overall corporate sales are growing we would address obviously individualists cat use and I think this is.
And experience as being.
Experienced by general consumer products food for established brands. These this movement generally on consumers to want to try new products, new flavors, new innovation and we do have a in utilization, which weve. Some of that we've announced we recently launched we have plans to launch quite a lot of new innovation.
I think that in some cases some of our new innovation that we launched earlier this year, perhaps didn't get enough shelf price all they've been.
Some shelf price taken from our existing products, which I think has affected sales.
So so you know looking at a one of the sort of mine things I think we will look at going forward is improving the quality of our distribution getting out innovation more efficiently and more effectively on shelves and as we go forward. We believe it will be additional spice allocated to the performance energy.
Category, which will relieve pressure on the space, we are looking for for our existing energy brands and innovation under the Monster line.
So just to add to what Rodney saying you know actually asked if we are happy with the way things. Obviously, we know it's you know we wanted to see the monster brand going what we what we have evidence of is that the price increase stuck.
And when you you'll get acute tomorrow and you can even see it I think in the release that the promotional allowances are very much in line with where they should be a we not over promoting having said that you know I just want to reiterate that the category. If you look back 52 weeks the energy credit.
Category has shown incremental growth per Nielsen of $1.3 billion. So this is a the grain category and it's a category that now has a new segment, which is performance energy and performance energy is growing within that category and as I look at some of the other competitors in this.
This is no no defense, but as we look for example, even a dribble, which is growing and we mentioned on the call that it's growing.
The Red Bull.
So brands also I'm not showing growth the dot dot dot skews, all and their additions all but in general the Ribble core brands are also not not chain growth in volume decline, having said that you know we have got plans.
With our distribution, which is has been being a challenge to dread dramatically improve distribution and distribution on shelf in in the coolness blips that just one other as picked up block two at that because it's sort of broadview.
These comments, we've made really focus on the U.S. and U.S. has been our major major market, but as we develop as a company.
The opportunity for us for our energy brands Monster in particular, plus the other brands is international and if you look at the.
Information, we just gave on this call about how we've accelerated international growth in existing international markets and new markets, That's where we look to in the future for the company.
Oh sales as we use was about 72% of ourselves last year this quarter and it's now down to 67 say if you take that.
With.
As a growth position, it's going to continue to grow so we see a lot of runway to grow internationally to grow the brand in these markets are continuing to grow and a very healthy. So you know we need to address.
Challenges, we have in the U.S. at the moment, but overall, we still believe in the health and we still believe in the growth of the brand both.
Internationally, and even within the U.S. as well and our other industry brands and then one thing we really should sitting back she has for a moment sorry. The one thing we really should not forget about is the a measured channels, which you know we've been absent the impact to go but foodservice is on measured Amazon is.
Measured Costco is on measured and a slew of other home depots lows all of those channels or on measured and the the amount of sales that are going through those channels is really.
It is a significant number.
Thanks.
[noise] thing. Thank you and our next question comes from Steve Powers from Deutsche Bank.
Let's now open.
Yes. Thank you maybe a little bit more on the U.S. can you talk about grows in the quarter coming in a touch below 3% versus the the Nielsen data over the course the quarter pointing closer to six yeah. I think we all know you had tough comparisons me your go quarter, but the same time, there was an extra selling days this quarter and so.
How do you think about that 3% number in light of those factors.
Building on Andreas question, and then if I could.
A related question building on what you just said, but in the context of Coke energy.
I think that we all appreciate what you and coke of each set about the intended interplay between monster and really monster and rain and Coke energy and that their target a different consumers and designed to minimize cannibalization risk, but given that will be going through common distributors. Just how confident argue that those new coke S.K. use won't take away from some of your smaller.
Skews, whether monster rain, nofs full throttle or otherwise rather than having them successfully fine incremental space in the cooler or take away from competition distributed by others. Thanks. So let me start with you'll you'll first question.
You know in when you look at Nielsen and you look at our own financial numbers, you cannot draw an exact interpolation from one to the other Nielsen sales out outsells the sells to the distributors partners, we have a slew of our measured channels.
What I mentioned and well it's a good indication.
Of watts of the movement of cells, that's not an absolute signs and what has to be very wary. What we've said this on many calls in the past, let's go to be very careful trying to balance.
Our sales.
Boxes, and our distributors with sales up to the consumer Nielsen read a sabal they don't read all the channels. They don't read as I said the foodservice they don't read Amazon that I read Costco, but they don't need to home depots, and then lows and all the other channels, where our products to distribute it so it's difficult to draw a comp.
Harrison of from from one to the other or we can do is give you the facts and you know you guys like young assessments from that.
As regards cokie energy I think that most of the I know that's oh vary.
To date from this future on analyzing Nielsen well you know they should be looking in analyzing Nielsen around the world that would give everybody there.
View on what's been happening with the rollout of Coke energy around the world.
We you know we've seen the brand.
Wrote off and.
We've also seen the rate of sale not keeping pace with initial sales.
The percentage market share has been a small and hasn't really had an impact on us.
Might impact that I think we've repeatedly cities that we did have concerns for is the sort of noise and and the in the markets and.
Focus from adult version of focus but ultimately.
In Europe things are sitting down on gross writes about brands all or on track and have continued and I think that by and large the you know the coke system has pretty much focused on not.
Trying to cannibalize, our existing products and take pricings from us in it and that's worked reasonably well there being a few countries where.
There have been some challenges a we've we've addressed them.
So again, we don't know we can't tell what Coquo energy will be in the United States, It's formulated a little differently, it's a little different sizes to variance.
But ultimately.
We think that we just need to manage the.
Lack of focus all conflict of focusing from two bottlers.
Ultimately, we don't think it will have a a major impact on.
Brand and we will manage it and going forward.
You feel yeah, I mean, a what I would if I wouldn't I missed I would get.
The information from the markets in which they launched and there're a number of them and frankly, they have not the numbers that I've seen console for numbers that other people may have seen the numbers of that I've seen as shown that oh, they have not performed particularly well in that.
Brands have continued to growing up brands continue to develop in those markets.
But you know you'll get the homework, we done or would you it will be it.
It's a sudden market and so we'll we'll see how things go and we'll management.
Thank you and our next question come from Mark I understand from Stifel. Your line is now.
Thanks, Good afternoon, everyone and Tom good to hear from you on the call today.
Thank you [laughter] there does again, so I guess I wanted to ask about gross margin international continues to be a bit of a sore spot there.
Yes, again continued to be pretty pretty good.
So you touched on some of the supply chain issues in EMEA, having been resolved in kind of talking Directionally too.
Stabilization or at least that's maybe my interpretation of Atlanta, Amazon obviously.
Flat in gross margin so.
Is the worst behind you at this point you have any more visibility on that I'm not asking for guidance I'd love a personal point of view of kind of how we should think about that since I think it's one of those areas that is a bit more of a black box than than others. So any any help there would be appreciated.
That's not really a black box I mean, you know.
We sell concentrates at high margins and through the strategic brands and we sell finished products at different margins that really all of a based for a number of factors on the relationships, we have developed with the boxes and.
Distributors in various countries and the cost of production. So it's it's always if every quarter.
The issue is how should we sell internationally, which has lower margins all get onto that and I think I discuss it on a previous school and how much strategic brands did we sell as as a corporation versus finished goods a monster energy.
So when we established a model in the United States. The distributors were allocated a margin which was satisfactory to them and we had the lions share of the margin as we've grown internationally in more version territories. The ER the boxes and that is.
And the in the Coke system, we've transitioned all launched with Dave demanded a highest chair of the value chain.
And you know this is something that we've had to deal with understanding that if we wanted launch in various countries internationally, it's kind of cost us more in margin than in the U.S.. We we had a very established business and a the Coca Cola boxes take weighed into this established business with the same margins.
We also have different cost impacts around the world, which we try to manage as best as we cat.
And then one of the one of the other issues that we are facing is that that our juice products are doing very well a coffee products are doing very well and they themselves have lower margins than the traditional monster beverages, which have a and of course the diet had the best margin level.
So you have this is this issue of competing of competing margins. However, they all things we can do with the juice products. We can establish greater efficiencies, we had a big improvement this year in this quarter in the U.S. in fact in freight.
Getting product.
And raw materials to our co Packers that was a big big benefit the other benefit that we had in the U.S. within was in aluminum so.
So is there isn't a difficult range of factors that go into what the overall consolidated margin as it's not just a simple one one month on calculation, but we all working on it and.
As we've done in the U.S. and as we've done with freight in we continue to look at a model internationally and see where we can improve on a gross margin percentages and as I've always said Mark we sell we sell products and we make gross profit dollars, we've done make gross profit percentage.
I think that the only thing I would like to that is very briefly is that in international markets. There are a lot of markets that we've had two.
Additionally, shipped into many markets. So many countries from other countries.
We have.
As we continue to expand and have sufficient volumes in countries, where all switching to local production in those countries. We've opened up quite a number of additional production facilities in Europe . This year and have got a number a large number going forward and as we go forward with.
I think that will certainly help help on margins internationally as well.
But at this point redesigning because any numbers, we can point you to and also.
The community knows that we purchased defy the concentrate facility from.
The Coca Cola company with the intention of producing ingredients in M&A, which will.
You know would reduce or improving efficiencies improve costs and reduce the.
Huge distances that we shipping these ingredients right now well surgeries under the challenges we hit last year and little bit this year even in.
Out of stocks and we we have increased demand for particular products. We we had really long lead times in order to ship ingredients to to pack is to try on.
Increased volumes this will obviously.
Improve those efficiencies and will help us going forward. So that's been a we think we very excited about the fact that that will help us in the holiday EMEA in middle East in Africa.
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Thank you.
This concludes todays <unk> session I would now let's turn the call back to Mr., Rodney sacks, and Mr. Helms Schlosberg for further remarks.
[noise] so thank you.
He got my name right, we tested them before that so well done on that thank you I'll be offered monster I'd like to thank everyone for their continued interest in the company. We continue to believe in what we're doing and the company in our growth strategy and remain committed to continuing to innovate develop and differentiated brands and expand the company both.
And abroad.
Particularly to expand distribution of our products through the Coca Cola Baucus system internationally. We also excited by the new opportunities that we have going forward with a portfolio of energy drink products throughout the world comprised of a monster energy brand together with our strategic brands as well as hydro petitjean rain and the new.
Evasion plan for 22, and thank you very much for your attendance.
Ladies and gentleman just conclude today's conference call. Thank you participating you may now disconnect everyone have a great day.