Q4 2021 Monster Beverage Corp Earnings Call

Yes.

Good afternoon, and welcome to the Monster beverage companies fourth quarter and full year 2021 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask question.

I'll ask a question you May press Star then one on your Touchtone phone to withdraw from the question queue. Please press Star then two.

Please limit yourself to one question I would now like to turn the conference over to Rodney sacks, and Hilton Schlosberg Co Ceos. Please go ahead.

Thanks, Good afternoon, ladies and gentlemen, thanks for attending the school.

Sex Hilton Schlosberg, Vice Chairman and co Chief Executive Officer, Who's on the call as is Tom Kelly, Our Chief Financial Officer, Tom will now read our cautionary statement.

Before we begin I would like to remind listeners that certain statements made during this call may constitute forward looking statements.

And the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of.

Of the Securities Exchange Act of 1934 as amended and are based on currently available information regarding the expectations of management with respect to revenues profitability future business future events financial performance and trends as well as the future impact.

The COVID-19 pandemic on the company's business and operations.

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 of the company that may cause actual results to 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 March one 2021, including the sections contained therein risk factors and forward looking statements for a discussion on specific risks and uncertainties.

That may affect our performance.

The company assumes no obligations to update any forward looking statements, whether as a result of new information future events or otherwise.

I would now like to hand, the call over to Rodney sacks.

Thanks, Tom.

We achieved record fourth quarter, and 40 unit sales with annual net sales dropping to 5.5 billion Mark for the first time in the company's history.

Spots and challenges in the 'twenty to 'twenty, one fourth quarter. The company achieved solid results overall, we note that the comparative 2024th quarter included a nonrecurring tax benefit.

Hundred 65, 1 million as well as reduced marketing sponsorships that sit in other operating expenses largely as a consequence of the COVID-19 pandemic. These awesome should be taken into consideration when evaluating competitive performance over the 'twenty 'twenty four for you and for your fourth quarter and full year.

The 2021 fourth quarter. The company continued to procure additional quantities of aluminum cans from suppliers in the United States and abroad. In response to increased consumer demand. In addition, the company continued to experience additional global supply chain challenges, including freight inefficiencies shortages of shipping containers.

Port of entry congestion and delays in the receipt of certain ingredients in United States. The company lacked sufficient coke packing capacity to meet increased demand for certain of its products. As a result, the company was not able to fully satisfy the increased demand for its products.

A number of markets in the 2021 and fourth quarter.

During the 2021 fourth quarter the company experienced increased aluminum can costs attributable to higher aluminum commodity pricing as well as the cost of importing aluminum cans. In addition, the company experienced increased ingredient and other input costs, including shipping and freight labor trucking fuel co packing fees.

These secondary packaging materials increased outbound freight costs and production inefficiencies, which resulted in increased cost of sales and increased operating costs in the 'twenty to 'twenty, one fourth quarter to.

The company continues to address the challenges and its supply chain as it navigates through the uncertainty of the current global supply chain environment in the fourth quarter of 2020 one.

Net sales were 1.43 billion compared with one point to us, but in the fourth quarter of 'twenty 'twenty, an increase of 19, 1% adjusting for foreign currency movements net sales for the 2021 fourth quarter would've been up 19, 3%.

Competitive in itself with the 2020 fourth quarter was negatively impacted by $15 2 million related to product returns from our customers as a result of a European formulation issue with a limited number of products in Europe , and a labeling issue concerning one product in Japan, which we referred to as the 2020 product returns.

Gross profit as a percentage of net sales for the 2021 fourth quarter was 53, 9% compared with 57, 7% in the 'twenty 'twenty fourth quarter. The decrease in gross profit as a percentage of net sales for the 2020 . One fourth quarter was primarily the result of increased <unk> costs.

Kris the aluminum can costs attributable to higher aluminum commodity pricing geographical and product sales mix and production inefficiencies.

Operating expenses for the 'twenty to 'twenty, one fourth quarter with $354 7 million compared with $288 4 million in the 2000 <unk> fourth quarter as a percentage of net sales operating expenses for the 2021 fourth quarter were 24, 9% compared with 24, 1%.

In the 2024th quarter and 28, 9% in 2019 fourth quarter pre COVID-19 the.

The increase in operating expenses was primarily due to increased outbound freight and warehouse costs increased expenditures for sponsorships and endorsements and increased expenditures for other marketing activities, including social media and digital marketing and increased payroll costs during the comparative 2024th quarter.

Company decreased expenditures for sponsorship and endorsement and decreased expenditures for travel and entertainment each largely as a consequence of the COVID-19 pandemic the impact of the COVID-19 pig demick was less pronounced on ourselves and marketing programs during the 2021 fourth quarter.

<unk> costs for the 2021 fourth quarter increased to $69 8 million, which is an increase of 48, 4% or four 9% of net sales compared to 47 million or three 9% of knit cells in the 2024th quarter and three 5% of net.

In the 2019 fourth quarter.

Operating income increased two 6% to $412.9 million from $402 3 million in the fourth quarter of 2020, we believed that a portion of the increasing costs that we experienced in the quarter and the 2021 for you or likely to be drawn surgery without too new.

Suppliers of aluminum cans in United States operational we will begin to decrease our reliance on the use of imported aluminum cans in the United States. Although we will continue to be important aluminum cans into the United States, although at a reduced level in the first half of 2022 'twenty.

2022 we expect to continue to import aluminum cans into EMEA, reducing such imports in the second half of 2022.

The supply chain challenges, we are experiencing while significantly increasing and the logistic cost of importing and shipping raw materials and ingredients as well as other freighting costs, which are included in cost of sales.

Cost of repositioning finished product to distribution centers are included in freighting costs.

We are rebuilding and increasing inventories in an effort to reduce the excess of cost of trucking long distances to satisfy demand and to return to our open strategy of producing in proximity to our customers.

Increased freighting costs, including the shipping cost of importing cans amounted to approximately $38 million in the 2021 fourth quarter and approximately a 100 million for 2021 for you.

Our out of orbit freight costs, which are included in distribution expenses amounted to approximately $15 million in the 2021 fourth quarter and $54 million for the 2021 full year.

Net income decreased 31, 9% to 312.

$21 3 million as compared to 471 7 billion in the 'twenty 'twenty comparable quarter net income for the 'twenty 'twenty fourth quarter was positively impacted by the recognition of a nonrecurring tax benefit of approximately 165 1 billion net income for the comp which of our comparative 2020.

Fourth quarter, excluding the nonrecurring tax benefit the impact of the 'twenty 'twenty product returns associated inventory provisions and other related costs was $328 6 million diluted earnings per share for the 2020 , one fourth quarter decreased 32, 1% to 60 cents from it yet.

Since in the fourth quarter of 2020 diluted earnings per share for the comparative 2024th quarter, excluding the nonrecurring tax benefit the impact of the 2020 product returns associated inventory provisions and other related costs was 62 cents.

According to the Nielsen reports for the 13 weeks through February 12, 2022, all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by 13, 3% versus the same period, a year ago sales of the company's energy.

Brands, including reign were up eight 1% in the 13 week period.

Monster were up 10.5% sales of reign were down.

One 7% sells of nausea decreased to 12, 5% and sells a full throttle increased 12, 4%. The decrease in sales of nausea at retail during the fourth quarter was as a result of shortages in the supply of concentrate for knows the north supply issues are improving sales of Red Bull increased 13.8.

<unk> sells rockstar decreased by one 3% and sales of five hour increased two 1% cells.

VP ex Bang increased <unk> four of a percent according to Nielsen for the four weeks ended February 12, 2000, $22000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased seven 4% over the same period the previous year.

Sales of the company's energy brands, which include reign increased 4% in the four week period in the convenience and gas channel sales of Monster increased by five 7% over the same period versus the previous year range sales decreased point, none of our percent nausea cells was down 10, 8% and full throttle was up six points.

3% sales of Red Bull were up eight 3% Rockstar was down four 5%.

Five hour was down one 3% Vps bangs sales decreased 4%.

According to Nielsen in the four weeks ended February 12, 2022, the company's market share of the energy drink category in the convenience and gas channel increased.

Energy shots in dollars decreased 1.2 points to 37, 2% monster shade decreased half a share point to 31, 6% range share decreased <unk> two of a share point to 0.4% normal shade decreased 2.5 of a point to 2.5% and full throttle share remained at <unk>.

8% Red Bull's share increased 0.3 of a point to 76, 2% Rockstar share was down a half a point to 4% five hour's share was lower by <unk> four of a point to four 5% and deep <unk> Bancshares decreased 0.8 of a point to 7%.

According to Nielsen for the four weeks ended February 12, 2022 sales in dollars in the coffee plus energy drink category, which includes Java Monster lawn in the convenience and gas channel increased two 3% over the same period the previous year sales of Java Monster, including Java Monster 300, with four 2% higher.

In the same period versus the previous year sales of Starbucks energy were <unk> seven of a percent higher Java monster share, including Java Monster 300 of the coffee.

Plus the energy category, which primarily includes Java Monster Java Monster 300, Starbucks double shot and Triple shot Rockstar roasted and Bang keto coffee for the four weeks ended February 12, 2021 was 53, 7% up one point, while Starbucks energy share was 44, 1% down.

Seven of a point.

What is your Nielsen and all measured channels in Canada for the 12 weeks ended January 20th on 'twenty to 'twenty two the energy drink category increased 12, 3% in dollars.

Sales of the company's energy drink brands increased 10, 8% versus a year ago the market share of the company's energy drink brands was a 48% down <unk> six of a point monster sales increased 13, 9% and its market share increased a half a point to $36 three nauseous sales decreased seven.

2% and its market share decreased <unk> three of a point to one 6% full throttle sales decreased 25, 4% and its market share decreased <unk> three of a point to a half of them per se.

<unk>.

According to Nielsen for all outlets combined in Mexico, the energy drink category increased 25, 9% for the month of January 2022 months to cells increased 24, 5% monsters market share in value decreased <unk> three of a point to 27.8% against the comparable period the previous year cells.

<unk> increased 38, 3% and its market share increased <unk> three of a share point to three 1%.

The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively Andrew negatively by ourselves in the OXXO convenience chain, which dominates the market sells in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands.

During a particular month consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.

According to Nielsen for the month of January 2022, compared to January 2021, monsters retail market share in value increased in Argentina.

From 41, 3% to 43, 8% Monster energy continues to be the leading energy brand in value you know Argentina.

According to Nielsen for the month of January 2022, compared to January 2021, monsters retail market share in value increased in Brazil from 32, 2% to 37 point to 8% in Chile monsters retail share for the month of January 2022 decreased from 47, 2% to 33, 1%.

Due to a shortage of shipping containers.

Like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country.

In addition, the country come.

The company experienced supply issues in EMEA during the 2021 during 2020 , one which impacted the Nielsen statistics in different countries.

According to Nielsen in the 13 week period, ending January 29, 2022 monsters retail market share in value as compared to the same period. The previous year grew from 27, 3% to 29, 5% in Great Britain from seven 9% to eight 1% in the Netherlands and from $36 eight.

Center City eight 4% in spine.

Monsters retail market share in value as compared to the same period. The previous year declined from 15, 3% to 14, 2% in Belgium and from city, 1.1% to 34, 3% in France and from 21% to 19, 3% in Poland.

According to Nielsen in the 13 week period, ending January two 2022 months of the retail market share in value as compared to the same period. The previous year grew from 26, 4% to 26.5% in Denmark from 15.1 percentage of 15, 8% in Germany.

From 14, 5% to 14, 6% in Sweden monsters retail market share in value as compared to the same period. The previous year declined from 27, 9%, 27% in Italy from 29, 3% to 25, 3% in Norway and from 28, 3% to 27 points.

6% in the Republic of Ireland.

Couldn't you Nielsen for the 13 week period, ending December 31, 2021 monsters retail market share in value as compared to the same period. The previous year grew from 15, 2% to 15, 6% in the Czech Republic from 37, 4% to 38% in Greece and from 24, 4% to 20.

5% in South Africa.

According to Nielsen in the 13 week period until the end of December 'twenty, 'twenty, one prism retail market share in value as compared to the same period. The previous year grew from 12, 9% to 28% in Kenya and from one 9% to 14, 4% in Nigeria.

According to IRI in Australia monsters market share in value for the months ending February six 2022 increased from 12, 2% to 12, 8% as compared to the same period the previous year mother's market share in value decreased from 11, 8% to 11% during the same period the market share of the company's brands in Australia for them.

Month ended February six 2022 decreased from 24% to 23, 8%.

According to IRI in New Zealand monsters market share in value for the four weeks ended February two 2022 increased from 11, 6% to 13, 3% as compared to the same period the previous year.

[noise] lift plus's market sharing value remained the same at seven 1% and mother's market share in value decreased from six 3% to 6%.

The market share of the company's brands.

Ian You Zealand for the four weeks ended February six 2022 increased from 25% to 26, 4%.

According to <unk> in Japan for the month end of January 2022, monsters market share in value in the convenience store channel as compared to the same period. The previous year grew from 58% to 56, 3%.

According to Nielsen in South Korea for the month of December 'twenty into December 'twenty, 'twenty, one monsters market share in value in all outlets combined as compared to the same period. The previous year grew from 56, 5% to 62%.

<unk> continues to be the leading energy brand in Japan, and South Korea, where gainful job that certain market statistics that cover single months or four week periods may often be materially influenced positively <unk> negatively bought promotions or other trading factors during those periods.

Net sales to customers outside the U S with $508 1 million, which is 35, 7% of total net sales in the 'twenty to 'twenty, one fourth quarter compared to $384 8 million or 32, 2% of total net sales in the corresponding quarter in 2020 foreign currency exchange.

Rates had a negative impact on net sales in U S dollars by approximately $2.4 million in the 2021 fourth quarter.

In reported geographic sales are ourselves to the company's military customers, which are delivered in the U S and drawn shipped to the military and their customers overseas.

In EMEA net sales in the 'twenty to 'twenty, one fourth quarter increased 47, 5% in dollars and increased 46, 1% in local currencies over the same period in 2020 net sales adjusted for the 'twenty 'twenty product returns in this region increased 41, 2% in dollars and <unk>.

Kris 39, 9% in local currencies gross profit in this region as a percentage of net sales for the fourth quarter was 32, 6% compared to 32% in the same quarter in 2020 gross profit in the fourth quarter was impacted by Cannes freight and raw material and freight costs.

Local currencies gross profit as a percentage of net sales for the quarter was 32.2.

Gross profit as a percentage of net sales excluding the impact of the 'twenty 'twenty product returns in this region associated inventory provisions and other related costs was 41% for the 'twenty 'twenty fourth quarter.

In 'twenty 'twenty 2021 fourth quarter can't supply shortages lack of ingredient availability insufficient canning capacity and a shortage of trucking availability together had an adverse impact on sales in EMEA in some cases impacting the availability of our products on shelf at retailers. However.

The shortages of trucking availability were largely resolved in the latter part of the quarter.

The company's continuing to address the controllable challenges in its supply chain in EMEA by continuing to import cans and expanding its co packing capacity.

We are also pleased that in the 'twenty to 'twenty, one fourth quarter Monster gained market share in the Czech Republic, Denmark, Germany, Great Britain, Greece, Netherlands, South Africa, Spain, and Sweden.

In Asia Pacific net sales in the 2021 fourth quarter increased 19, 2% in dollars and increased 22, 8% in local currencies over the same period in 2020 in Asia Pacific Excluding the impact of the 2020 product returns and the labeling issue in this region in the 2024th quarter and it's.

Cells in the 'twenty to 'twenty, one fourth quarter increased 10, 7% in dollars and 14, 1% in local currency over the same period in 2020 gross profit in this region as a percentage of net sales was 41, 4% versus 34, 8% over the same period in 2020.

Excluding the impact of the 'twenty 'twenty product returns in this region associated inventory provisions and related costs gross profit as a percentage of net sales would have been 43% in 2020.

In Japan net sales in the 2021 fourth quarter increased 12, 7% in dollars and 20% in local currency without the impact of the 2020 product returns in Japan net sales decreased one 2% in dollars and increased five 2% in local currency over the same period in <unk>.

<unk> 'twenty largely due to COVID-19 restrictions in Japan.

In South Korea, net sales increased 31, 3% in dollars and 35, 5% in local currency as compared to the same quarter in 2020 months remains the market leader in Japan, and South Korea.

In China net sales increased 22, 6% in dollars and 17, 6% in local currency as compared to the same quarter. In 2020, we are evaluating the optimal product range for China going forward, we remain optimistic about the prospects for them once the brand in China.

No she and other which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased seven 5% in dollars and four point to 8% in local currencies due to timing of cells into Butler's let.

In Latin America, which includes Mexico, and the Caribbean net sells into 2021 fourth quarter increased 17% in dollars and increased 21% put them up with 6% in local currencies over the same period in 2020.

Gross profit in this region as a percentage of net sales was 38, 6% for both the 2021 and 'twenty 'twenty fourth quarters in Brazil, and it sells into 2020 , one fourth quarter increased by 36, 9% in dollars and.

<unk> 39, 6% in local currency net sales in Chile increased 6% in dollars and 9% in local currency in the 2021 fourth quarter itself in Argentina increased 37% in dollars and 66, 7% in local currency in the 2021 and fourth quarter.

There are a number of pending proceedings with V P X, but as they all sub Judy Kay we will not be answering any questions on this matter on today's call.

In the United States, we launched a new true north pure energy Seltzer lawn in E Commerce and selected natural channels in the third quarter in early 2022, we launched the CIT lawn nationally into mainstream channels without Coca Cola bottlers.

<unk> 2021 we commenced the launch of a new reserve line of Monster energy drinks in two flavors watermelon and wife Pineapple, We've launched multiple innovation is to get us to new 12 ounce flavors as well as new package configurations in the 2022 first quarter. This month, we launched four new flavor extensions.

And 16 ounce cans to the retail trade, namely Ultra Peachy-keen juice monster Osee stall eliminate rehab watermelon and Ryan Rainbow Sherbet in January 2022 we launched additional multi pack options such as full Peck Altra watermelon at full back Rainwash Gummy bear.

Two ultra variety packages in the 12 pack format. Additionally, we have launched 12 ounce six packs of Monster energy zero Ultra our new Peachy keen Altra Java Monster mean, bean and Java Monster Luck America.

Ultra Peachy-keen is also launching in a 12 ounce option along with our ultra watermelon.

In addition, Java Monster Nitro Cold Brew is scheduled to launch in the 'twenty.

Turning to second quarter with two lower calories, skus sweet black and laughter.

In the 'twenty to 'twenty, two first quarter in Canada, we are planning to launch in nine new innovations, including the transition into a 355 eight pack for months to energy zero Ultra and Ultra Paradise in January 2022 we launched the ultra gold and a 473 ml single Cat and full pack we also.

Ultra watermelon in a full pack and ultra Paradise and a 710 more can we are in the process of launching a full pack reign, razzle Berry as well as introducing rain watch gummy bear in a 473 ml can.

In the 2021 fourth quarter, we launched Monster energy Mango loco in Uruguay, and Ecuador, as well as monster Ultra watermelon and predator goldstrike in Trinidad.

Europe , we expanded our Fury package offerings with a 354 M L returnable glass bottle.

Getting a national launch of Monster Pacific Punch Monster Dragon Tea, Peach reign, Orange Dream, sickle and Ryan Mango Magic in Brazil in the first half of 'twenty 'twenty. Two additional 2022 first quarter lead time innovations include Monster zero sugar in Ecuador pipeline punch in Central America.

Trinidad Monster Mango Loco in Peru, and Colombia and V. O 46, the Doctor in Argentina, and Chile, we are launching reign melon mania, right Lemon heads and reign Orange Dream CECO in Mexico, we would introduce a second credits or flavor with a mean green.

In the 2021 fourth quarter in New Zealand, we launched Monster Ultra Fiesta manga and the 2022 first quarter, we launched monster Ultra gold and mother QE Sublime in Australia and are planning to launch Super fueled tropical Thunder in New Zealand.

In EMEA in the fourth quarter of 2020 , one we launched monster Green once the Natera amongst the result in a number of countries. We also launched ultra watermelon Golden parachute off and used more monarch Mangalore OCA in Pacific Punch in a number of countries during the 2021 fourth quarter once the soup a few mean green world.

Melon and sub Sahara were launched in two countries in the fourth quarter of 'twenty or 'twenty one.

During the 2021 fourth quarter in 2022 first quarter, we will sell loans to our strategic brands innovation and predator in additional countries in particular, we launched a privilege of spicy ginger and tropical in South Africa.

During the fourth quarter of 2020 , one we launched monster Rossi in Japan.

October and the privilege of brand in Vietnam in November 2021 we are planning to introduce the privilege of brand in several additional countries in APAC in the course of 'twenty 'twenty. Two we are planning to launch a number of additional products or product lines in our domestic and international markets. Later this year.

On February 17, 2022, we completed our acquisition of Kentucky craft brewery collective a craft beer in hard Seltzer company for $350 million in cash subject to adjustments. The transaction brings the cigar city high lie IPA in Florida Man IPR, Oskar Blues, Dallas Pal all in.

Walt Bys in hard Seltzer deep Ellum, Dallas, Blunden deep Ellum RPI pairing brewing Black IL squatters hop rising double IPA, and Juicy Ipi and Wasatch apricot hip in Boston brands to our beverage portfolio.

Section does not include.

<unk> Standalone restaurants.

Organizational structure for our existing energy beverage business will remain unchanged.

Kentucky will function independently retaining its own organizational structure and team we already Susie S think about the opportunities that this acquisition presents to us in the alcohol space and through their distribution network.

We estimate January 2022 sales to be approximately 22% higher than in January 2021 on a foreign currency adjusted basis January 'twenty, two sales would've been approximately 23% higher than the comparable January 2021 sales.

January 2022 had one more selling day than January 2021 .

Although we see some improvement the company has continued to experience supply chain challenges in January which adversely impacted sales.

In this regard we caution again that sales over a short period, often disproportionately impacted by various factors such as for example, selling days days of the week in which holidays fall timing of new product launches and the timing of price increases and promotions in retail stores distributor incentives as well as shifts in the timing of production.

In some instances, where our bottlers are 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 our distribution partners, which they alter unilaterally for their own business reasons, we reiterate that sounds over a short period such as a single.

Month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period, if the COVID-19 pandemic and related unfavorable economic conditions continue in certain regions and new product innovation launches in those regions could be delayed.

In conclusion I'd like to summarize some recent positive points.

Currently the Companys flavor manufacturing facilities, it's co Packers warehouses and shipment facilities and bottlers and distributors are all operating the company continues to address the challenges in its supply chain as it navigates through the uncertainty of the current global supply chain environment, we are continuing to experience increase.

Costs in our operations some of which may be transitory and we have and are in the process of implementing reductions in product promotions and other pricing actions in the United States and EMEA to mitigate against such increased costs.

Oh, Hey, if if flavor facility in Ireland is operational and is providing flavors to our EMEA region and will improve service levels in EMEA.

We are pleased with the new additions to the Monster energy portfolio. We are planning to continue additional launches of our reign total body fuel high performance energy drinks in additional international countries. We are pleased with the rollout of predator Fury.

Portable energy drink portfolio internationally, we are proceeding with plans to launch our affordable energy brands in a number of international countries.

Supply chain challenges are improving we are enthusiastic about the opportunities that cannot keep presents.

I'd like now open the floor to questions about the quarter and the year. Thank you.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the key.

Jonathan The question can you. Please press Star then two please limit yourself to one question.

The first question is from Kamil <unk>.

Uh huh.

Credit Suisse. Please go ahead.

Thank you operator, hey, everybody.

You talked a lot about improved supply and the things you're doing to increase the supply.

Margins, obviously were down quite a bit I think 540 basis points.

Speaking can you speak maybe more to margins as opposed to just availability of product and how we should be thinking about that within the context of some of the changes that are being made for 'twenty two.

But it.

I think that we've been through.

And listed the supply chain challenges and.

I'm not sure it's worthwhile repeating what we said earlier, but.

But we did mention.

On the call and gave some numbers was that.

The.

Certain of those costs in the supply chain are expected to be transitory.

And that is.

For example, we do.

Satisfy demand we opened up what we regard it as orbitz will be manufactured.

Distributed within specific geographies.

And to satisfy demand we had to open up those Apis.

The cost of debt was pretty exceptional.

That I think on the school.

Also.

Two inputs can from abroad is a very expensive exercise as you can imagine.

And that we see kind of mitigating in 'twenty to 'twenty. Two we have two new supply is coming on stream and in fact, they are on stream.

So we will be reducing our dependence on imported cans Sydney in the U S and then.

Well, we'll buy some cans not to the same degree as we did in the first half and the second half will be we believe will be self sufficient with cans in the U S and EMEA will continue to input cans, but they will kind of tail off in.

In the second half of the year.

So there are some of these costs that are transitory some of the costs.

They stick.

There's been cuts across the board and we had a big shock. This morning is no doubt you guys did as well with aluminum.

Okay.

Aluminum plus the midway Midway list index.

Up to <unk> 97, a pound as opposed to what we were paying in.

Last year of.

Just kind of half of that so.

There are a lot of costs that are coming to us because we can mitigate the costs that we may not be able to mitigate now will have aluminum stay at this level I don't think any one minutes. So.

Overall.

We I think we are navigating well through these supply chain challenges and are we doing the very best we can to ensure that our customers receive product because at the end of the day.

I say it to this audience, we bank dollars, we don't bank margins.

We have enough.

Profitability in the system to be able to.

Do what we've been doing and make a profit.

And Unfortunately, the result is that the GP percentage does come down, but we expect that this well.

Not last forever and net margins will be that will be back.

To some degree as we are as we move forward.

The next question is from Chris Carey.

<unk> Fargo. Please go ahead.

Hi, Good evening, everyone. Thank you for the question.

I just wanted to follow up on that line.

If I look at it.

Not to be so short sighted in a way, but you know where where the street is modeling your gross margin that's.

Slightly up for 2020 to it but if I hear you right.

Aluminum inflation coming through you're still going to be sourcing cans.

From other places that you have.

Freight cost.

Pricing as you noted.

Investor Day will be a positive to the story, but maybe not enough to offset this inflation and so.

I just wanted to make sure I'm hearing.

Right.

The top line of course remains a very good story here, but.

Gross margins should remain under pressure in 2022, and then really building into 2023.

As these cost per bit transitory and then if I could just on the.

The quarter to date number or is that mostly international versus U S. Just given the disconnect here.

So thanks, so much for that perspective.

Well, let's go back to the second question.

That number.

U S is very close to that number for January so.

We can.

We have a lot of unmeasured channels in our system and Nielsen is not always a good indicator of our sales to our distributors.

So let's see if we can lets take a step back and look at your address your first question. So you know.

Aluminum jumped up today is significant it's been moving up.

I gave you the number as of today as of yesterday. It was tensions upon less than that so with this war and everything else going on in the world.

I can't say for certain.

Anyone can tell you what aluminum is going to do and what you know.

What it's going to be and obviously with most of our products being packaged in aluminum cans that is a significant item.

Looking back at some of your other comments I mentioned that.

Well, we mentioned at least on the script that we have.

Sufficient cans now so we are able to start working towards closing off and close getting back to the old bits, which means that.

Trading costs should significantly reduce win.

I can't say for certain but it's going to happen.

Other costs in the system are being controlled.

And so what.

Looking forward I think that we will continue to have a difficult 2022 will the margins stay at the.

The level that we talked about on this call I don't know honestly a lot depends on what happens with the aluminum.

So the rest of the stuff is coming under control.

I mentioned that we were importing less cans in the U S than we did in 2020 that'll have a positive impact on margins from the second half of the year will be we believe will be totally self sufficient with cans in the U S. So that's a positive factor and then in EMEA, we will be important.

In the first half with a significant reduction in the second half. So there's a lot of good things in the cost story, but unfortunately it is what it is.

On the sales side.

And price increases we spoke about that.

On previous calls.

As you know we are.

We have a play that we're running.

Irrespective really I think of what red boosting we've come to the conclusion that we're going to run out and play.

We know what we know what we wanted to do and we were working on reducing promotional launches <unk> seen prices go up already in the trade.

And you've seen them getting up in Nielsen. So that is something that is happening as well.

What else I want to say so.

We.

We spoke about.

Prices went up in the two.

So the reduction in promotional allowances in the quarter that we look at very modest degree and as we go through 2022, you'll see prices.

Price increases in our business accelerating.

The next question is from Andrea Teixeira of Jpmorgan. Please go ahead.

Hi, how are you.

Hum.

Wow.

Yes.

On the pricing.

Are you, saying that you.

We should be able to see price a deal on the west coast.

Boxing at some point.

For me today too.

And then regarding that I didn't see any impact.

Some of that gap.

Patients given that gas prices going up or this is.

Not this is not a club or for the ability at this point.

So you've seen the convenience and gas numbers in Nielsen.

They all they are.

Somewhat lower than the rest of the market.

Recent but we've been through higher gas prices before and they haven't really impacted.

Sales, but we are seeing if you look at the Nielsen Youll see that.

Now in between convenience and gas in the energy category all reducing so.

You know whether they will stay at that level I don't know, but we have been through this before and we haven't seen a slowdown in.

In sales in the energy and get in the convenience and gas market.

And then looking at pricing a little bit of a pick up my Ed sorry.

Little bit of a pick up in the last week. If you look at the single last week's numbers again, that's a very short period, but we are seeing a pickup in convenience.

With the price increase effective price increase it's still is translating so we'll see how that oh.

Yeah, So one week numbers.

And.

With regard to pricing.

We spoke about what we're doing to increase pricing, we're running our play.

24 ounces gang up April one.

In a low double digit numbers, so that'll be a nice percentage in 24 months.

<unk>.

The rest we were working on as you know with our revenue growth management Department working on taking promotional ounces down to achieve the same result, as a price increase but we're continuing to monitor whether we need to take a general price increase or not and if we if we have.

Do we will and in particular with regards to metal and we don't know.

Metals game, but with regard to metal if it becomes a permanent situation, yes, and we will probably have to reconsider.

Decide what else could be done on the pricing front, but we are not ruling out a general price increase.

The next question is from Kevin Grundy of Jefferies. Please go ahead.

Great. Thanks, Good afternoon guys.

Wanted to come back to your strategy in alcohol, so now with the <unk> deal closed.

Do you think the company has the right product portfolio distribution and capabilities at this point in time to deliver against your ambitions you've been talking about this for the better part of two years and now with this deal closed do you think you have everything that you need to deliver and I guess, specifically just to kind of drill down a little bit.

Do you think that you need more in terms of capabilities with respect to spirits. Both consumer capabilities are broader wholesaler distribution network and if the answer to that is yes, how do you intend to sort of address that and as larger scale M&A possibility.

I think that you know.

The Kentucky acquisition is not the complete answer to everything.

They all craft brands. They are they have a distribution network.

Have some seltzer brands.

We do have a good infrastructure in staff, there and we have.

We got to use that to bolt on.

We're all going to look at.

No.

Taking the the distribution system are falling a little bit we're looking at.

Addressing their products and are taking steps to reinvigorate their sales and looking at our own products that we've been developing that we have discussed previously.

Taking in deciding where to.

And how to launch those through the through the Kownacki system, and we will separately address.

The possible M&A of additional brands whether in a.

Sort of in the mall side. Besides all the spirits side those are all things that are opportunities, but again.

We're looking at the whole business now and reviewing it but it's the platform that is really good for us and I think that that is what it is that's the function. It's guy just said for US we all going to obviously have to address issues and.

The other matters in getting that fully implemented it's not just a perfect system that we've taken over but it's a good base for us and we're going to build on it and we're very confident and we're very pleased with having closed that acquisition, which will give us the springboard from from hereon.

The next question is from Devine ASR of Cowen. Please go ahead.

Hi, Good evening. Thank you for the question.

I was wondering if you could just offer.

Better detail on that your supply chain in Russia, and the Ukraine, and if you could quantify your exposure to countries. Please thank you.

Yes, it will.

Those countries, including Belarus.

Kazakhstan, which really work within that region.

Account for about 10% of our sales in.

EMEA sales.

We have a.

They have a nice business in Russia.

Rich.

We have to see what happens there and we have a reasonable business in Ukraine, we have.

Our staff and we have people in.

Those countries.

<unk> really concerning is too.

No that'll happen.

And it is really concerning shrinking.

This concludes our question and answer session I would like to turn the conference back over to Rodney sacks for closing remarks.

Thank you.

On behalf of the company I'd like to thank everyone for their continued interest in the company. We continue to believe in the company and our growth strategy and remain committed to continue to innovate develop and differentiate our brands and to expand the company both at home and abroad and in particular to expand distribution of our products through the Coca Cola bottling system internationally.

We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company.

That you will stay safe and healthy. Thank you very much for your attendance.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[music].

[music].

Good afternoon, and welcome to the Monster beverage companies fourth quarter and full year 2021.

<unk> conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing it's Archie followed by zero.

After todays presentation, there will be an opportunity to ask questions.

I'll ask a question you May press Star then one on your Touchtone phone to withdraw from the question queue. Please press Star then two.

Please limit yourself to one question I would now like to turn the conference over to Rodney sacks, and Hilton Schlosberg Co Ceos. Please go ahead.

Thanks, Good afternoon, ladies and gentlemen, thanks for attending the school Rodney Sachs Hilton Schlosberg, Vice Chairman and co Chief Executive officers on the call as is Tom Kelly, Our Chief Financial Officer, Tom will now read our cautionary statement.

Before we begin I would like to remind listeners that certain statements made during this call may constitute forward looking statements with the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 19.

34, as amended and are based on currently available information regarding the expectations of management with respect to revenues profitability future business future events financial performance and trends as well as the future impact of the COVID-19 pandemic and the <unk>.

Company's business and operations.

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 of the company that may cause actual results to 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 March one 2021, including the sections contained therein risk factors and forward looking statements.

For a discussion on specific risks and uncertainties that may affect our performance.

The company assumes no obligations to update any forward looking statements, whether as a result of new information future events or otherwise.

Now I'd like to hand, the call over to Rodney sacks.

Thanks from the company achieved record fourth quarter, and 40 unit sales with annual net sales dropping to 5.5 billion Mark for the first time in the company's history.

Lots of challenges in the 2020 , one fourth quarter the company achieved solid results overall.

Note that the comparative 2024th quarter included a nonrecurring tax benefit of 165 1 million as well as reduced marketing sponsorships and certain other operating expenses largely as a consequence of the COVID-19 pandemic.

He's awesome should be taken into consideration when evaluating comparative performance over the 'twenty 'twenty four a few for you.

Quota in full gear during.

During the 2021 fourth quarter. The company continued to procure additional quantities of aluminum cans from suppliers in the United States and abroad in response to increased consumer demand.

In addition, the company continued to experience additional global supply chain challenges, including freight inefficiencies shortages of shipping containers port of entry congestion and delays in the receipt of certain ingredients and you know.

Now that states the company lacked sufficient coke packing capacity to meet increased demand for certain of its product as a result, the company was not able to fully satisfy increased demand for its products in a number of markets in the 'twenty to 'twenty, one and fourth quarter.

During the 2020 , one fourth quarter. The company experienced increased aluminum can costs attributable to higher aluminum commodity pricing as well as the cost of importing aluminum cans. In addition, the company experienced increased ingredient and other input costs, including shipping and freight labor trucking fuel co packing.

Fees secondary packaging materials increased outbound freight costs and production inefficiencies, which resulted in increased cost of sales and increased operating costs in the 'twenty to 'twenty, one and fourth quarter.

The company continues to address the challenges and its supply chain as it navigates through the uncertainty of the current global supply China environment in the fourth quarter of 2020 one.

Net sales were 1.43 billion compared with 1.2 of them, but in the fourth quarter of 2020, an increase of 19, 1% adjusting for foreign currency movements net sales for the 2021 fourth quarter would've been up 19, 3% the competitive in itself with the trailing 24th quarter.

Were negatively impacted by $15 2 million related to product returns from our customers as a result of a European formulation issue with a limited number of products in Europe , and the labeling issue concerning one product in Japan, which we referred to as the 2020 product returns gross profit as a percentage of net sales.

For the 2021 fourth quarter was 53, 9% compared with 57, 7% in the 'twenty 'twenty fourth quarter. The decrease in gross profit as a percentage of net sales for the 'twenty 'twenty. One fourth quarter was primarily the result of increased <unk> costs increased aluminum can costs attributable to hiring.

Minimum commodity pricing geographical and product sales mix and production inefficiencies.

Operating expenses for the 2020 , one fourth quarter with $354 7 million compared with $288 4 million in the 2000 <unk> fourth quarter as a percentage of net sales operating expenses for the 2021 fourth quarter with 24, 9% compared with 24, 1%.

In the 2024th quarter and 28, 9% in the 2019 fourth quarter pre COVID-19 .

The increase in operating expenses was primarily due to increased outbound freight and warehouse costs increased expenditures for sponsorships and endorsements and increased expenditures for other marketing activities, including social media and digital marketing and increased payroll costs during the comparative 2024th quarter.

Company decreased expenditures for sponsorship and endorsements and decreased expenditures for traveling and entertainment each largely as a consequence of the COVID-19 pandemic the impact of the COVID-19, pegged demick was less pronounced on ourselves and marketing programs during the 2021 and fourth quarter.

<unk> costs for the 2020 , one fourth quarter increased to $69 8 million, which is an increase of 48.4% or four 9% of net sales compared to 47 million or three 9% of net sales in the 2024th quarter and three 5% of net.

Sales in the 2019 fourth quarter.

Operating income increased two 6% to $412 9 million from $402 3 million in the fourth quarter of 2020, we believe that a portion of the increasing costs that we experienced in the quarter and the 2021 for you or likely to be drawn surgery without too new.

Suppliers of aluminum cans in the United States operational we will begin to decrease our reliance on the use of imported aluminum cans in the United States. Although we will continue to be imported aluminum cans into the United States, although at a reduced level in the first half of 2022 and.

2022 we expect to continue to import aluminum cans into EMEA, reducing such imports in the second half of 2022.

The supply chain challenges, we are experiencing while significantly increasing and the logistic cost of importing and shipping raw materials and ingredients as well as other freighting costs, which are included in cost of sales.

Cost of repositioning finished products to distribution centers are included in freighting costs.

We are rebuilding and increasing inventories in an effort to reduce the excess of cost of trucking long distances to satisfy demand and to return to our open strategy of producing in proximity to our customers.

Increased <unk> costs, including the shipping cost of importing cans amounted to approximately $38 million in the 2021 fourth quarter and approximately a 100 million for the 2021 for you.

Our out of all but freight costs, which are included in distribution expenses amounted to approximately $15 million in 2020 , one fourth quarter and $54 million for the 2021 full year.

Net income decreased 31, 9% to 300.

$21 3 million as compared to $471 7 million in the 'twenty 'twenty comparable quarter net income for the 'twenty 'twenty fourth quarter was positively impacted by the recognition of a nonrecurring tax benefit of approximately 165.1 million net income for the rich of a comparative of 2020.

Fourth quarter, excluding the nonrecurring tax benefit the impact of the 'twenty 'twenty product returns associated inventory provisions and other related costs was $328 6 million diluted earnings per share for the 2021 fourth quarter decreased 32.1% to 60 cents from ADL.

Since in the fourth quarter of 2020 diluted earnings per share for the comparative 'twenty 'twenty fourth quarter, excluding the nonrecurring tax benefit the impact of the 'twenty 'twenty product returns associated inventory provisions and other related costs was 62 cents.

According to the Nielsen reports for the 13 weeks through February 12, 2022, all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by 13, 3% versus the same period, a year ago sales of the company's energy.

Brands, including reign were up eight 1% in the 13 week period.

Monster were up 10, 5% sales of Orion were down.

One 7% sales of nausea decreased to 12, 5% and sells a full throttle increased 12, 4%. The decrease in sales of nausea reach out during the fourth quarter was as a result of shortages in the supply of concentrate for knows the north supply issues are improving sales of Red Bull increased 13.8.

Per cent sells Rockstar decreased by one 3% and sales of five hour increased two 1% sells a V. P X Bang increased 0.4 of a percent.

According to Nielsen for the four weeks ended February 12, 2000, $22000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased seven 4% over the same period the previous year.

Sales of the company's energy brands, which include reign increased 4% in the four week period in the convenience and gas channel sales of Monster increased by five 7% over the same period versus the previous year range sales decreased point, none of our percent nausea cells was down 10, 8% and full throttle was up $6.

3% sales of Red Bull were up eight 3% Rockstar was down four 5%.

Five hour was down one 3% the bx bangs sales decreased 4%.

According to Nielsen in the four weeks ended February 12, 2022, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased 1.2 points to 37, 2% monster share decreased half a share point to 31, 6% range share decreased <unk> two.

Of a share point to 2.4% Nauseated decreased 2.5 of a point to 2.5% and full throttle share remained at four 8%.

Bullshit increased 0.3 of a point to 36, 2% Rockstar share was down a half a point to 4% five hour's share was lower by <unk> four of a point to 4.5% and <unk> Bancshares decreased 0.8 of a point to 7%.

According to Nielsen for the four weeks ended February 12, 2022 sales in dollars in the coffee plus energy drink category, which includes Java Monster line in the convenience and gas channel increased two 3% over the same period of the previous year sales of Java Monster, including Java Monster 300, with four 2% higher.

In the same period versus the previous year sales of Starbucks energy were <unk> seven of a percent higher.

Java Monster share, including Java Monster 300 of the coffee.

Plus energy category, which primarily includes Java Monster Java Monster 300, Starbucks double shot and Triple shot Rockstar roasted and bank. He's a coffee for the four weeks ended February 12, 'twenty 'twenty. One was 53, 7% up one point, while Starbucks energy share was 44, 1% down.

Seven of a point.

According to Nielsen in all measured channels in Canada for the 12 weeks ended January 29, 2022, the energy drink category increased 12, 3% in dollars.

Sales of the company's energy drink brands increased 10, 8% versus a year ago the market share of the company's energy drink brands was a 48% downpour six of a point monster sales increased 13, 9% and its market share increased a half a point to $36 three nauseous as decrease.

Seven 2% and its market share decreased <unk> three of a point to one 6% full throttle sales decreased 25, 4% and its market share decreased <unk> three of a point to a half of them.

<unk>.

According to Nielsen for all outlets combined in Mexico, the energy drink category increased 25, 9% for the month of January 2022 months to sales increased 24, 5% monsters market share in value decreased <unk> three of a point to 27, 8% against the comparable period the previous year.

<unk> increased 38, 3% and its market share increased <unk> three of a share point to 3.1%.

The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively Andrew negatively if ourselves in the OXXO convenience chain, which dominates the market sells into OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands.

During a particular month consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.

According to Nielsen for the month of January 2022, compared to January 2021, monsters retail market share in value increased in Argentina from.

41, 3% to 43, 8% Monster energy continues to be the leading energy brand in value you know Argentina.

According to Nielsen for the month of January 2022, compared to January 2021, monsters retail market share in value increased in Brazil from 32, 2% to 37 point to 8% in Chile monsters retail share for the month of January 2022 decreased from 47, 2% to 33, 1%.

Due to a shortage of shipping containers.

To put it out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country to country and are reported on varying dates within the month referred to from country to country.

In addition, the country.

The company experienced supply issues in EMEA during the 2021 during 'twenty, 'twenty, one which impacted the Nielsen statistics in different countries.

Putting to Nielsen in the 13 week period, ending January 29, 2022 monsters retail market share in value as compared to the same period. The previous year grew from 27, 3% to 29, 5% in Great Britain from seven 9% to eight 1% in the Netherlands and from 36, 8%.

The city eight 4% in spine.

<unk> retail market share in value as compared to the same period. The previous year declined from 15, 3% to 14, 2% in Belgium and from city, 1.1% to 34, 3% in France and from 21% to 19, 3% in Poland.

According to Nielsen in the 13 week period, ending January two 2022 monsters retail market share in value as compared to the same period. The previous year grew from 26, 4% to 26.5% in Denmark from 15.1 percentage of 15, 8% in Germany and from.

14.5% to 14, 6% in Sweden monsters retail market share in value as compared to the same period. The previous year declined from 27, 9%, 27% in Italy from 29, 3% to 25, 3% in Norway and from 28, 3% to 27.6.

Present in the Republic of Ireland.

According to Nielsen for the 13 week period, ending December 31, 2021 monsters retail market share in value as compared to the same period. The previous year grew from 15, 2% to 15, 6% in the Czech Republic from 37, 4% to 38% increase from 24, 4%.

25% in South Africa.

Nielsen in the 13 week period until the end of December 'twenty, 'twenty, one prism retail market share in value as compared to the same period. The previous year grew from 12, 9% to 28% in Kenya and from 1.9% to 14, 4% in Nigeria.

According to IRI in Australia monsters market share in value for the months ending February six 2022 increased from 12, 2% drove 28% as compared to the same period the previous year mother's market share in value decreased from 11, 8% to 11% during the same period the market share of the company's brands in Australia for the month.

And this February six 2022 decreased from 24% to 23, 8%.

According to IRI in New Zealand monsters market share in value for the four weeks ended February six 2022 increased from 11, 6% to 13, 3% as compared to the same period the previous year lift.

Lift plus's market sharing value remained the same at seven 1% and mother's market share in value decreased from six 3% to 6%.

The market share of the company's brands.

Ian You Zealand for the four weeks ended February six 2022 increased from 25% to 26, 4%.

According to <unk> in Japan for the month ended January 2022 monsters market share in value in the convenience store channel as compared to the same period the previous year grew from 58% to 56, 3%.

According to Nielsen in South Korea for the month of December 'twenty ended December 2021 monsters market share in value in all outlets combined as compared to the same period. The previous year grew from 56, 5% to 62% most of that continues to be the leading energy brand in Japan and South Korea.

Well again for a job that certain market statistics that cover single months or four week periods may often be materially influenced positively <unk> negatively bought promotions or other trading factors during those periods.

Net sales to customers outside the U S with $508 1 million, which is 35, 7% of total net sales in the 2021 fourth quarter compared to $384 8 million or 32, 2% of total net sales in the corresponding quarter in 2020.

Foreign currency exchange rates had a negative impact on net sales in U S dollars bought approximately $2 4 million in the 2021 fourth quarter.

Included in reported geographic sales are ourselves to the company's military customers, which are delivered in the U S and drawn shipped to the military and their customers overseas.

In EMEA net sales in the 2021 fourth quarter increased 47, 5% in dollars and increased 46, 1% in local currencies over the same period in 2020.

Sales adjusted for the 'twenty 'twenty product returns in this region increased 41, 2% in dollars and increased 39, 9% in local currencies gross profit in this region as a percentage of net sales for the fourth quarter was 32, 6% compared to 32% in the same quarter in <unk>.

<unk> 'twenty gross profit in the fourth quarter was impacted by can freight and raw material and freight costs in local currencies gross profit as a percentage of net sales for the quarter was 32.2.

Gross profit as a percentage of net sales excluding the impact of the 'twenty 'twenty product returns in this region associated inventory provisions and other related costs was 41% for the 'twenty 'twenty fourth quarter.

In 'twenty 'twenty 2021 fourth quarter can't supply shortages lack of ingredient availability in <unk>.

Fishing canning capacity and a shortage of trucking availability together had an adverse impact on sales in EMEA in some cases impacting the availability of our products on shelf at retailers.

However, the shortages of trucking availability were largely resolved in the latter part of the quarter the company's continuing to address the controllable challenges in its supply chain in EMEA, but continuing to import cans and expanding its co packing capacity.

We are also pleased that in the 'twenty to 'twenty, one fourth quarter Monster gained market share in the Czech Republic, Denmark, Germany, Great Britain, Greece, Netherlands, South Africa, Spain, and Sweden.

Asia Pacific net sales in the 2020 , one fourth quarter increased 19, 2% in dollars and increased 22, 8% in local currencies over the same period in 2020 in Asia Pacific Excluding the impact of the 'twenty 'twenty product returns and the labeling issue in this region in the 'twenty 'twenty fourth quarter itself.

<unk> in the 'twenty to 'twenty, one fourth quarter increased 10, 7% in dollars and 14, 1% in local currency over the same period in 2020 gross profit in this region as a percentage of net sales was 41, 4% versus 34, 8% over the same period in 2020.

Excluding the impact of the 'twenty 'twenty product returns in this region associated inventory provisions and related costs gross profit as a percentage of net sales would have been 43% in 2020.

In Japan, it sells into 2021 fourth quarter increased 12, 7% in dollars and 24% in local currency without the impact of the 'twenty 'twenty product returns in Japan net sales decreased one 2% in dollars and increased five 2% in local currency over the same period in <unk>.

<unk> 'twenty largely due to COVID-19 restrictions in Japan.

In South Korea, net sales increased 31, 3% in dollars and 35, 5% in local currency as compared to the same quarter in 2020 months remains the market leader in Japan, and South Korea.

In China net sales increased 22, 6% in dollars and 17, 6% in local currency as compared to the same quarter in 'twenty 'twenty. We are reevaluating the optimal product range for China going forward, we remain optimistic about the prospects for the monster brand in China.

You know she and other which includes Australia, New Zealand Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased seven 5% in dollars and four point to 8% in local currencies due to timing of cells into bottlers.

And America, which includes Mexico, and the Caribbean net sells into 2020 , one fourth quarter increased 17% in dollars and increased 21% put them up with 6% in local currencies over the same period in 2020.

Gross profit in this region as a percentage of net sales was 38, 6% for both the 2021 and 'twenty 'twenty fourth quarters in Brazil net sales in the 2021 fourth quarter increased by 36, 9% in dollars and 39, 6% in local currency.

Net sales in Chile increased 6% in dollars and 9% in local currency in the 'twenty to 'twenty, one fourth quarter itself in Argentina increased 37% in dollars and 66, 7% in local currency in the 2021 fourth quarter.

There are a number of pending proceedings with V P X, but as they all sub Judy Kay we will not be answering any questions on this matter on today's call.

In the United States, we launched our new true North pure energy Seltzer launch in E Commerce and selected natural channels in the third quarter in early 2022, we launched the CIT lawn.

National into mainstream channels without Coca Cola bottlers.

In October 2021 we commenced the launch of a new reserve line of Monster energy drinks in two flavors watermelon and wife Pineapple. We've launched multiple innovation is to get us to you 12 ounce flavors as well as new package configurations in the 2022 first quarter. This month, we launched four new flavor.

And 16 ounce cans to the retail trade, namely Ultra Peachy-keen juice monster Osee stall eliminate rehab watermelon and Ryan Rainbow Sherbet in January 2022 we launched additional multi pack options such as full Peck altra watermelon at full back Rainwash gummy.

Two ultra variety packages in a 12 pack format.

<unk>, we have launched 12 ounce six packs of Monster energy zero Ultra our new Peachy keen Altra, Java Monster mean, bean and Java Monster Mocha.

Altra Peachy-keen is also launching in a 12 ounce option along with our ultra watermelon.

In addition, Java Monster Nitro Cold Brew is scheduled to launch in the 'twenty 'twenty.

Turning to second quarter with two lower calorie of Skus, sweet Black and laughter.

In the 'twenty to 'twenty, two first quarter in Canada, we are planning to launch nine new innovations, including the transition into a 355 volt APAC for Monster energy zero Ultra and Ultra Paradise in January 2022 we launched the ultra gold and a 473 ml single Cat and full pack. We also launched.

Ultra watermelon in a full pack and ultra Paradise and a 710 more can we are in the process of launching a full pack reign, razzle Berry as well as introducing Rainwash gummy bear.

At 473 ml can.

In the 2021 fourth quarter, we launched Monster energy Mango loco in Uruguay, and Ecuador, as well as monster Ultra watermelon and predator goldstrike in Trinidad.

We expanded our Fury package offerings with a 354 M. L. Returnable glass bottle, we are planning a national launch of Monster Pacific Punch Monster Dragon Tea, Peach reign, Orange Dream, sickle and Ryan Mango Magic in Brazil in the first half of 2022 additional 2022 .

First quarter Latam innovations include months to zero sugar in Ecuador pipeline Punch in Central America, and Trinidad Monster, Mango Loco in Peru, and Colombia and V. O 46, the Doctor in Argentina, and Chile, we are launching reign melon mania, right Lemon heads and reign Orange Dream CECO in Mexico, we would.

We introduce a second credits or flavor with credits I mean green.

In the 2021 fourth quarter in New Zealand, we launched Monster Ultra Fiesta manga and the 2022 first quarter, we launched monster Ultra gold and mother Kiwi Sublime in Australia and are planning to launch Super fuel tropical Thunder in New Zealand.

In EMEA in the fourth quarter of 2020, why don't we launched Monster Green once an entre in months to result in a number of countries. We also launched ultra watermelon Golden Parados and Joost want Monarc Mangalore OCA in Pacific Punch in a number of countries during the 2021 fourth quarter once the super fuel mean green.

Watermelon in Subzero, we launched in two countries in the fourth quarter of 2021 .

During the 2021 full quarter in 2022 first quarter, we all so loans to our strategic brands innovation and credits are in additional countries. In particular, we launched a privilege of spicy ginger and tropical and South Africa.

During the fourth quarter of 2020 , one we launched Monster Rossi in Japan in October and the privilege of brand in Vietnam in November 'twenty 'twenty. One we are planning to introduce the prettiest brand in several additional countries in APAC in the course of 'twenty 'twenty. Two we are planning to launch a number of additional products or product lines in our domestic and international law.

Because later this year.

On February 17, 2022 we completed our acquisition of Kentucky craft brewery collective a craft beer in hard Seltzer company for $330 million in cash subject to adjustments the transaction brings the cigar city high lie IPA in Florida Man IPR, Oskar Blues, Dallas Pal al.

And Walt base in hard Seltzer deep Ellum, Dallas Blonde and deep ellum ought be a pair them brewing Black Isle squatters hop Rausing double IPA, and Juicy Ipi and Wasatch Apricot heparin Boston brands to our beverage portfolio. The transaction does not include.

<unk> Standalone restaurants.

Organizational structure for our existing energy beverage business will remain unchanged.

Kentucky will function independently retaining its own organizational structure and team we already Susie S think about the opportunities that this acquisition presents to us in the alcohol space and through their distribution network.

We estimate January 2022 sales to be approximately 22% higher than in January 2021 on a foreign currency adjusted basis January 'twenty, two sales would've been approximately 23% higher than the comparable January 2021 sales.

January 2022 had one more selling day than January 2021 .

Although we see some improvement the company has continued to experience supply chain challenges in January which adversely impacted sales.

In this regard we caution again that sales over a short period, often disproportionately impacted by various factors such as for example, selling days days of the week in which holidays fall timing of new product launches and the timing of price increases and promotions in retail stores distributor incentives as well as shifts in the timing of production.

In some instances, where our bottlers are 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 our distribution partners, which they alter unilaterally for their own business reasons, we reiterate that sounds over a short period such as a single.

Months should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period.

19 pandemic related unfavorable economic conditions continue in certain regions and new product innovation launches in those regions could be delayed.

In conclusion I'd like to summarize some recent positive points.

Currently the Companys flavor manufacturing facilities, it's co Packers warehouses and shipment facilities and bottlers and distributors are all operating the company continues to address the challenges and its supply chain as it navigates through the uncertainty of the current global supply China environment, we're continuing to experience increase.

<unk> costs in our operations some of which may be transitory and we have and are in the process of implementing reductions in product promotions and other pricing actions in the United States and EMEA to mitigate against such increased costs.

Oh, Hey, if if flavor facility in Ireland is operational and is providing flavors to our EMEA region and will improve service levels in EMEA.

We are pleased with the new additions to the Monster energy portfolio. We are planning to continue additional launches of our reign total body fuel high performance energy drinks in additional international countries. We are pleased with the rollout of credits and Fury.

Portable energy drink portfolio internationally, we are proceeding with plans to launch our affordable energy brands in a number of international countries.

Supply chain challenges are improving we are enthusiastic about the opportunities that cannot keep presents.

I'd like to now open the floor to questions about the quarter and the year. Thank you.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing a key.

Jonathan The question queue. Please press Star then Kim please limit yourself to one question.

My first question is from Camille.

Sure.

From Credit Suisse. Please go ahead.

Thank you operator, hey, everybody.

You talked a lot about improve.

Improved supply and the things you're doing to increase supply your margins, obviously were down quite a bit I think 540 basis points.

Speaking can you speak maybe more to margins as opposed to just the availability of product and how we should be thinking about that within that.

Context on some of the changes that are being made for 'twenty two.

But it.

Bill I think that we've been through.

Enlisted the supply chain challenges and.

I'm not sure it's worthwhile repeating what we said earlier, but.

But we did mention.

On the call and gave some numbers was that.

The.

Certain of those costs in the supply chain are expected to be transitory.

And that is.

For example, we do.

Satisfy demand we opened up would we regard it as all that will be manufactured.

And distributed within specific geographies.

And to satisfy demand we had to open up those opioids.

The cost of that was pretty exceptional.

That I think on this call.

Also.

Two inputs cans.

From abroad is a very expensive exercise as you can imagine.

And that we see kind of mitigating in 2022, we have two new supply is coming on stream and in fact, they are on stream.

So we will be reducing our dependence on imported cans Sydney in the U S and then.

Well, we'll buy some cans not to the same degree as we did in the first half and second half will be we believe will be self sufficient with cans in the U S and EMEA will continue to see input cans, but they will kind of tail off in.

In the second half of the year. So there are some of these costs steadily transitory some of the costs.

They stick.

There's been cuts across the board and we had a big shock. This morning is no doubt you guys did as well with aluminum.

Well there are aluminum plus the midway Midway list index.

Went up to 90.

97, a pound as opposed to what we were paying in.

Last year of.

Just kind of off of that so.

There are a lot of costs that are coming to us because we can mitigate the costs that we may not be able to mitigate now with aluminum stay at this level I don't think anyone knows so.

Overall, we I think we are navigating well through these supply chain challenges.

We're doing the very best we can to ensure that our customers receive product because at the end of the day as I've always say to this audience. We bank dollars, we don't bank margins and we have enough.

Profitability in the system to be able to.

Do what we've been doing and make a profit.

And Unfortunately, the result is that the GP percentage does come down, but we expect that this will not.

Not last forever and net margins will be that we will be back.

To some degree as we as we move forward.

The next question is from Chris Carey of Wells Fargo. Please go ahead.

Yeah.

Hi, Good evening, everyone. Thank you for the question.

I just wanted to follow up on on that line.

If I look at.

Not to be so short sighted in a way, but you know where where the street is modeling your gross margin that's.

Slightly up for 2020 to it but if I hear you right.

Aluminum inflation coming through you're still going to be sourcing cans.

From other places that you have.

Freight costs.

Pricing as you noted.

Investor Day will be a positive to the story, but maybe not enough to offset this inflation and so.

I just wanted to make sure I'm hearing.

That the top line of course remains a very good story here, but net.

Gross margins should remain under pressure.

2022, and then really building into 2023.

As these cost per bit transitory and then if I could just on that.

The quarter to date number or is that mostly international versus the U S. Just given the disconnect that Nielsen sale. So thanks, so much for that perspective.

Well, let's go back to the second question.

That number.

The U S is very close to that number for January so.

We can.

We have a lot of unmeasured channels in our system and Nielsen is not always a good indicator of our sales to our distributors.

So let's see if we can lets take a step back and look at your address your first question. So you know aluminum.

Aluminum jumped up today is significantly it's been moving up.

I gave you the number as of today as of yesterday. It was 10 cents a pound less than that so this war and everything else going on in the world.

I can't say for certain and I don't think anyone can tell you what aluminum is going to do and you know what.

What it's going to be and obviously with most of our products being packaged in aluminum cans that is a significant item.

Looking back at some of your other comments I mentioned that.

Well, we mentioned at least on the script that we have sufficient.

Sufficient cans now so we are able to start working towards closing and close getting back to the old bits, which means that.

Trading costs should significantly reduce win.

I can't say for certain but it's going to happen.

Other costs in our system are being controlled.

And then so what.

Looking forward I think that.

We will continue to have a difficult 2022 will the margins stay at.

The level that we talked about on this call I don't know honestly a lot depends on what happens with the aluminum. So are the rest of the stuff is coming under control.

I mentioned that we were importing less cans in the U S than we did in 2020 that'll have a positive impact on margins from the second half of the year will be we believe will be totally self sufficient with cans in the U S. So that's a positive factor and then in EMEA, we will be important.

In the first half with a significant reduction in the second half. So there's a lot of good things in the cost story, but unfortunately it is what it is.

On the sales side and.

And price increases we spoke about that.

On previous calls.

As you know we.

We have a play that we're running.

Irrespective really I think of what red boosting we've come to a conclusion that we got right now in play.

What we know what you wanted to do and we were working on reducing promotional launches <unk> seen prices go up already in the trade.

You've seen them getting up the Nielsen so that is something that is happening as well.

What else I want to say so.

We we've we spoke about.

We've not been the.

The reduction in promotional allowances in the quarter that we look at already very modest degree and as we go through 2022, you'll see prices.

Price increases in all business accelerating.

The next question is from Andrea Teixeira of Jpmorgan. Please go ahead.

Hi, how are you.

Just wondering what happened.

Great.

Yeah.

On the pricing front.

I'm, just saying that you.

We should be able to price a deal onto what what's practical if I could.

At some point.

On May 22.

And then regarding that.

Any impact from that gas stations, given the gas prices going up or is it.

This is not.

Or for an ability at this point.

So you've seen the convenience and gas numbers in Nielsen.

They all they are.

Somewhat lower than the rest of the market.

Well the reason that we've been through higher gas prices before and they haven't really impacted.

Sales, but we are seeing if you look at the Nielsen Youll see that.

The numbers in convenience and gas in the energy category all reducing so.

Whether they will stay at that level I don't know, but we have been through this before and we haven't seen a slowdown in.

In sales in the energy and get in the convenience and gas market.

And then looking at pricing a little bit of a pick up my Ed sorry.

A little bit of a pickup in the last week. If you look at the single last week's numbers again, that's pretty short period, but we are seeing a pick up in convenience.

With the price increase.

Victor price increase it's still is translating so we'll see how that Oh.

Yeah, So one week numbers.

And you know what.

With regard to pricing.

We spoke about what we're doing to increase pricing, we're running our play.

With 24 ounces gang up April one.

In a low double digit numbers, so that'll be a nice percentage in 24 months.

The rest we were working on as you know with our revenue growth management Department working on taking promotional balances down to achieve the same result, as a price increase but we are continuing to monitor whether we need to take a general price increase or not and if.

If we have to do we will and in particular.

With regard to metal and.

Metals game, but with regard to metal if it becomes a permanent situation, yes, we will.

Have to reconsider.

Decide what else could be done on the pricing front, but we are not ruling out a general price increase.

The next question is from Kevin Grundy of Jefferies. Please go ahead.

Great. Thanks, Good afternoon guys.

I wanted to come back to your strategy in alcohol. So now we can argue deal closed.

Do you think the company has the right product portfolio distribution and capabilities at this point in time to deliver against your ambitions you have been talking about this for the better part of two years and now with this deal closed do you think you have everything that you need to do.

To deliver on and I guess, specifically just to kind of drill down a little bit do you think that you need more in terms of capabilities with respect to spirits. Both consumer capabilities are broader wholesaler distribution network and if the answer to that is yes.

How do you intend to sort of address that and as larger scale M&A possibility.

Yeah.

I think that you know.

The Kentucky acquisition is not a complete answer to everything.

They all cross brands. They are they have a distribution network have some celso brands.

We do have a good infrastructure are in staff, there and we have.

We got to use that to build on.

We all going to look at.

Taking the the the distribution system refining a little but we're looking at are addressing their products and are taking steps to reinvigorate their sales and looking at our own products that we've been developing that we have discussed previously and taking in deciding where to and how to launch those.

Through the through the Kownacki system, and we will separately address.

The possible M&A of additional brands, whether in I sort.

Sort of in the mall side. Besides all the spirits side that was all things that are opportunities, but again.

We're looking at the whole business now and reviewing it but it's it's it's the platform that is really good for us and I think that that is what it is that's the function that's going to serve for US are we all going to obviously have to address issues and and and and.

What are the other matters in getting that fully implemented it's not just a perfect system that we've taken over but it's a good base for us and we're going to build on it and we're very confident and we're very pleased with having closed that acquisition, which will give us the springboard from hereon.

The next question is from Davita in Asia of Cowen. Please go ahead.

Hi, Good evening. Thank you for the question.

I was wondering if you could just offer.

Better detail on that your supply chain in Russia, and the Ukraine, and if you could quantify your exposure to countries. Please thank you.

Yes, it will.

Those countries, including Belarus.

<unk>, which really work within that region.

Count for about 10% of our sales in.

EMEA sales so we have a.

We have a nice business in Russia.

Rich.

You know we have to see what happens there and we have a reasonable business in Ukraine, we have.

Staff and we have people in those.

As countries.

<unk> really concerning is too.

Know what will happen.

And it's really concerning frankly.

This concludes our question and answer session I would like to turn the conference back over to you Rodney sacks, and help foster for closing remarks.

Thank you.

On behalf of the company I'd like to thank everyone for their continued interest in the company. We continue to believe in the company and our growth strategy and remain committed to continue to innovate develop and differentiate our brands and to expand the company both at home and abroad and in particular to expand distribution of our products through the Coca Cola bottling system into Nash.

Italy.

We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you will stay safe and healthy. Thank you very much for your attendance.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.