Q3 2023 Monster Beverage Corp Earnings Call

November 2, 2023

Good afternoon, and welcome to the Monster Beverage company third quarter 2023 conference call all participants.

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I would now like to turn the conference over to Rodney sacks, and Hilton Schlossberg Co Ceos. Please go ahead.

Thank you good afternoon, ladies and gentlemen, thank you for attending this call on Bruckner sex Hilton Schlosberg, Our Vice Chairman and co Chief Executive Officer. He is on the Cold as is Tom Kelly, Our Chief Financial Officer, Tom Kelly 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 within the meaning of section 27, a of the Securities Act of $19 33, as amended and section 21 E of the Securities 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.

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 2023, and quarterly reports on Form 10-Q, including the sections contained therein entitled risk factors and forward looking.

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.

Thank you Tom.

On July 31, 2023 the company completed its acquisition of Bang energy, which is the bank growing section.

The quad assets, primarily include Bang energy drinks and the beverage production facility in Phoenix, Arizona.

Inventory purchased as part of the Bank transaction was recorded at fair value sitting with the purchased inventory was subsequently sold in the 'twenty to 'twenty three third quarter and was recognized through cost of sales at face value, which we.

Defined as the bank inventory step up here after the call as a result of the bank inventory step up gross profit was adversely impacted by approximately 7.8 million during the 2023 third quarter during.

During the 20th 23 third quarter in connection with the Bank transaction. The company recorded a gain of 45 4 million, which will be referred to as the bank transaction guidance in interest and other income and expense niche within the condensed consolidated statement of income.

During the 20th twenty-three third quarter the company incurred approximately 8 million of acquisition expenses related to the bankruptcy section that those all referred to also later in this call as the bank transaction expenses. The company achieved record third quarter net sales of 1.86 billion in the 'twenty to 'twenty three third quarter.

14, 43% higher than net sales of 1.62 billion in the 'twenty to 'twenty, two comparable period, and 16, 1% higher on a foreign currency adjusted basis gross profit as a percentage of net sales for the 'twenty to 'twenty three third quarter was 53% compared with 51 point.

3% in the comparative 2022 third quarter gross profit as a percentage of net sales was 53.4% for the 20th twenty-three third quarter, excluding the Bang inventory step up the.

The increase in gross profit as a percentage of net sales for the journey twenty-three third quarter as compared to the 2022 third quarter was primarily the result of pricing actions decreased frightening costs and decreased aluminum can cross promotional allowances for the 'twenty to 'twenty three third quarter with higher.

And then in the comfortable 2022 third quarter as well as the 'twenty to 'twenty three second quarter.

Operating expenses for the 2023 third quarter were $473 2 million compared with 415.8 million in the 2022 third quarter as a percentage of net sales operating expenses for the 'twenty to 'twenty three third quarter were 25, 5% compared with 25, 6%.

In the 2022 third quarter operating expenses for the 20th 23 third quarter included approximately 8 million of bank transaction related expenses.

Distribution expenses for the 'twenty to 'twenty, three third quarter were $85 7 million or four 6% of net sales compared with eight to 83 million or five 1% of net sales in the 2022 third quarter operating income for the 2023 third quarter increased 22, 2%.

510.5 million from $4 and $17 9 million in the 'twenty to 'twenty two comparative quarter.

Interest and other income expense net for the 'twenty to 'twenty three third quarter increased to $71 4 million from 2.1 billion in the 2022 competitors of quarter. The increase was due to $39 3 million of interest income and a gain of $45 4 million related to the bank growing section so that.

[noise] amounts were partially offset by foreign currency drove.

Transaction losses of $13 2 million.

The effective tax rate for the 2023 third quarter was 22, 2% compared with 23, 3% in the 'twenty to 'twenty two third quarter. The decrease in the effective tax rate was primarily attributable to an increase in deductible interest expense net income increased 44 per se.

Rent to $452 7 billion as compared to the 322.4 million in the 2022 comparable quarter diluted earnings per share for the 2023 third quarter increased 41, 3% to 43 cents from Citi cents in the third quarter of 2022.

Diluted earnings per share adjusted for the Bang transaction gain the Bang inventory step up and the bank transaction expenses net of tax was 41 cents for the 'twenty two 'twenty three third quarter, an increase of 34.1%.

The company plans to implement additional price increases in certain international markets. During the remainder of the 'twenty to 'twenty three year. We will continue to review further opportunities for pricing actions in order to mitigate inflationary pressures.

According to the Nielsen reports for the 13 weeks through October 'twenty, one 'twenty two 'twenty three for all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by nine 2% versus the same period, a year ago sales of the company's energy.

Brands, Excluding bank were up six 7% in the 13 week period sales of Monster were up 4.8% sales of reign were up 36, 3% sales of nausea increased 10% and sells a full throttle increased seven 6% sales of Red Bull increased 3%.

The company continues to have market share leadership in the energy drink category for all outlets combined Indian routed states in bus the searching and four week periods ended October 'twenty, one 2023.

According to Nielsen for the four weeks ended October 'twenty, one 'twenty $23000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased six 7% over the same period the previous year sales of the company's energy brands, Excluding Bang increased four 5%.

And the four week period in the convenience and gas channel sales of Monster increased by one 9% over the same period versus the previous year reign sales increased 35, 2% North was up nine 7% and full throttle was up seven point to 8% sales of Red Bull were up one point diapers.

<unk>.

According to Nielsen for the four weeks ended October 'twenty, one 2023 the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 36, 8% to 36, 1%, excluding Bang monster shade decreased from 31, 1% a year ago to 20.

Nine 7% ratio increased <unk> six of a share point to 3% Nos assured increase bought one share point to two 6% and full throttle share remained at 0.7 of a percent bank.

Bang share was 1.4% Red Bull's share decreased one seven points to 34.5 $5 share was lower by a half a point at 3.5% Rockstar share was down <unk> four of a point to 3.4% Celsius as she is seven 4% seafoods share is three.

3% and goes share is 2.7%.

According to Nielsen for the four weeks ended October 21, 2020 $3000 in the in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased eight 9% over the same period the previous year sales of Java Monster, including Java Monster 300, and Java Monster.

Patrick Cold brew with 2% lower than the same period versus the previous year sales of Starbucks energy were 14.9% lower Java wants to share of the coffee plus energy drink category for the four weeks ended October 'twenty, one 2023 was 55, 9% up 3.9 points while Starbucks.

Energies, she was 43, 8% down 3.1 points.

According to Nielsen in all major channels in Canada for the 12 weeks ended October seven 2023, the energy drink category increased eight 6% in dollars sales of the company's energy drink brands increased six 5% versus a year ago. The market share of the company's energy drink brands was 40% down point to age of a pause.

Monster sales increased seven 7% and its market share decreased <unk> three of a point to 36 point too.

Nauseous sells decreased half a point and its market share decreased 5.1 of a point to 1.2% sales decrease by point or half a percent full throttle sales increased 12, 8%.

And its market share remained at 0.5%.

According to Nielsen for all outlets combined in Mexico, the energy drink category increased 20% for the month of September 2023 monster sales increased 22, 7% monsters market share in value increased <unk> seven points to 29, 3% against the comparable period, the previous year sales of credit to increase.

63% and its market share increased 1.5 share points to six 1%.

The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively or negatively but sales in the OXXO convenience chain, which dominates the market sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in.

That changed but 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 September 2023, compared to September 2022.

Monsters retail market share in value increased in Argentina from 52.8% to 56.8% in Brazil from 43% to 45, 1% and decreased in Chile from 41, 7% to 39 point non per cent.

Monster energy as the leading energy brand in value, you know, Argentina, Brazil and Chile.

I would like to point out 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.

According to Nielsen in the 13 week period until October eight 2023 monsters retail market share in value as compared to the same period. The previous year grew from 35% to city, one 3% in France from 29, 9% to city, 2.4% in Great Britain.

From five 4% to five 6% in the Netherlands from Citi, One, 6% to 34, 7% in Norway and from 43% to 45% in spine.

According to Nielsen in the 13 week period until the end of September 2023 monsters retail market share in value as compared to the same period. The previous year grew from 15, 6% to 18, 4% in Germany monsters retail market share in value as compared to the same period the previous year remain flat at the Citi one.

6%, Italy.

It has reached a multiyear value as compared to the same period the previous year declined from 19% to 18, 4% in Poland and from 19, 8% to 17 point not the city in South Africa.

According to Nielsen in the 13 week period ended September 10, 20, twenty-three monsters retail market share in value as compared to the same period. The previous year grew from 15, 4% to 16, 8% in Belgium.

From 19, 3% to 21, 3% in the Czech Republic from 28% to 30% in the Republic of Ireland and from 15, 4% to 16% in Sweden.

Nielsen in the 13 week period until the end of August 20th twenty-three monsters retail market share in value as compared to the same period. The previous year declined from 38, 8% to 38, 2% in Greece.

According to Nielsen a 30 week period until the middle of August 'twenty, 'twenty, three monsters retail market share in value as compared to the same period. The previous year grew from 27, 5% to 28% in Denmark.

According to Nielsen in the 13 week period until the end of August 2023, criticize retail market share in value as compared to the same period. The previous year grew from 29, 8% to 32 point to 8% in Kenya and from 17% to 23% in Nigeria.

Did your IRR in Australia monsters market share in value for the four weeks ending October 15, 2023 increased from 14, 8% to 16, 4% as compared to the same period the previous year mother's market share in value decreased from 11, 7% to 10, 1%.

Going to IRI in New Zealand monsters market share in value for the four weeks ended October 'twenty to 'twenty to 'twenty three decreased from 13, 6% to 13, 3% compared to the same period the previous year lift plus's market share in value decreased from six 2% to five 2% and.

Mother's market share in value increased from six 1% to six 4%.

According to indulge in Japan in the month, ending September 'twenty twenty-three monsters market share in value in the convenience store channel as compared to the same period the previous year increased from 55% to 58, 9%.

According to Nielsen in South Korea in the month, ending September 2023 monsters market share in value in all outlets combined as compared to the same period. The previous year decreased from 61, 4% to 51, 9% due to overly aggressive price promotions by competitors.

We again point out that certain market statistics that cover single months or four week periods may often be materially influenced positively and negatively by promotions or other trading factors during those periods.

Net sales to customers outside the U S with $733 7 million sitting on 0.5% of total net sales in the 'twenty to 'twenty three third quarter compared to $610 6 million a 37, 6% of total net sales in the corresponding quarter in 'twenty to 'twenty two.

Foreign currency exchange rates had a negative impact on net sales in the U S. In U S dollars by approximately $29 2 million in the 'twenty to 'twenty three third quarter.

Included in reported geographic sales or 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 twenties 23 third quarter increased 22, 3% in dollars and decreased 23, 6% in local currencies over the same period in 2022.

Gross profit in this region as a percentage of net sales for the third quarter was 31, 1% compared to 34, 7% in the same quarter in 2022.

We're also pleased that in the 'twenty to 'twenty three third quarter wants to gain market share in Belgium, Czech Republic, Denmark, France, Germany, Great Britain, and the Netherlands, Norway, The Republic of Ireland, Spain and Sweden.

In Asia Pacific net sales in the 'twenty to 'twenty three third quarter increased 16 point to 8% in dollars and increased 21, 9% in local currencies over the same period in 2022 gross profit in this region as a percentage of net sales increased to 43, 2% from city 7.4%.

Over the same period in 2022 niche.

It sells in Japan in the 'twenty to 'twenty, three third quarter increased 22, 5% in dollars and increased 29% in local currency.

In South Korea, net sales increased 18, 7% in both dollars and local currency.

As compared to the same quarter in 2022 once the remains the market leader in Japan, and South Korea.

In China net sales in the third quarter increased 22% in dollars and increased 28, 3% in local currency as compared to the same quarter in 'twenty 'twenty. Two we remain optimistic about the prospects for the monster brand in China.

You know she Yana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased 13, 3% in dollars and increased 18, 7% in local currencies.

Latin America, including Mexico, and the Caribbean net sales in the 'twenty to 'twenty three third quarter increased 25, 2% in dollars and increased 38, 8% in local currencies over the same period in 2022.

Gross profit in this region as a percentage of net sales was 37, 7% for the 2023 third quarter versus 34, 7% in the 2022 third quarter.

In Brazil net sells into twenty-three three third quarter decreased by four 3% in dollars and decreased by nine 6% in local currency due in part to inconsistent purchasing patterns by our bottlers.

Net sales in Mexico increased 54, 4% in dollars and increased city, 0.1% in local currency in the 'twenty to 'twenty three third quarter net.

Net sales in Chile increased 62% in dollars and increased 44, 3% in local currency in the 'twenty to 'twenty three third quarter knits.

Net sales in Argentina increased 61% in dollars and increased 243, 4% in local currency in the 'twenty to 'twenty three third quarter.

We continued with the launch of the beats unleashed during the quarter, which is now available in 43 states through our network of beer distributors. We are pleased with the initial results of the Beast unleashed and are continuing to expand distribution with the goal of being available in substantially all of the United States by the end of 2023 we plan to do.

Launch Nasty Beast Hot tea in the first quarter of 'twenty 'twenty four with the goal of being national of National distribution in the first half of next year.

Nasty Beach Hot tea will be available even for flavors and will be sold in 24 ounce single serve cans as well as in a variety 12 pack of 12 ounce sleek cans.

In the United States, We launched Bang energy in 12 single Eschar use and two multi package got us through our Coca Cola bottlers in the month of September in the 'twenty to 'twenty three third quarter. We also shipped naus zero sugar 16 ounce cans to support a planned.

2023 fourth quarter launch.

In Mexico.

On July 2023, we launched our food predator S. K U with Prism purple, Ryan and expanded our monster zero sugar offering with the launch of Monster Ultra Watermelon in August 2023.

Salvador and Honduras during the month of September we launched reserve, what pineapple and in Puerto Rico, We launched Monster was installed eliminating July 2023, and in September we introduced a rainstorm total wellness energy drinks.

In Australia Monster Ultra Peachy-keen was launched in July 2023 in September we launched mother Rainbow sure, but you know, Australia and mother in law, the guava and use eland.

In EMEA in the third quarter of 'twenty to 'twenty, three we launched monster not drug Cosmic Beach Reserve Watermelon and watch Pond-apple Joost Aussie lemonade juice chaotic ultra gold ultra peachy-keen in a number of countries. We are excited about the about the launch of wants to zero sugar in Great Britain.

In the 'twenty to 'twenty, three third quarter, we will expand distribution to Poland and the Republic of Ireland in the 'twenty to 'twenty three fourth quarter and two an additional 28 markets by the end of the first quarter of 2020 full.

During the third quarter of 'twenty to 'twenty, three we launched monster Ultra Peachy-keen in Japan, and launched predator in Iraq.

But 'twenty to 'twenty three we launched monster was eliminated in Japan.

In India, we participate not only in the premium energy drink segment with Monster, but also in the more affordable segment with creditor. We recently introduced printers that you know 250 ml pet format in a limited region in India to complement our existing product offering and 300 ml cans.

We also transitioned the monster brand in the Philippines from our independent distributor to our Coca Cola Philippines Bottler.

During the 2023 third quarter. The company purchased approximately seven 3 million shares of its common stock at an average purchase price of $54 83 per share for a total amount of $400 million excluding broker commissions.

As of November to approximately $282 8 million remained available for repurchase under the previously authorized repurchase program.

We estimate that on a foreign currency adjusted basis, including the alcohol brands segment October 2023 sales were approximately 25, 8% higher than in the comparable October 2022 sales and 25% higher than October 2022 excluding the alcohol.

<unk> segment, we estimate that October 'twenty, 'twenty, three cells, including the alcohol bread segment to be approximately 24.8% higher than in October 2022, 24% higher than in October 2022 excluding the alcohol brands segment.

Probably about 2023 had one more selling day compared to October 2022.

In this regard we caution a guy in that sells over a short period are 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 our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels. According to our internal requirements, which that May also from time to time for their own business reasons. We.

We reiterate that sales 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.

In conclusion, I would like to summarize some recent positive points.

The energy category continues to grow globally. We are pleased to report that our pricing actions, which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand.

I have a flavor facility in Ireland is not providing a large number of flavors to our EMEA region.

Tabling better service levels and lower landed cost to our EMEA region. We are continuing with our plans to add a juice facility two L. I F. F flavor facility in Ireland, we're pleased without 2023, new product innovations, notably Monster energy zero sugar up Ultra Strawberry dreams.

And rainstorm in the United States and Monster Energy Lewis Hamilton 44 zero sugar in EMEA. We are pleased with the early results from the launch of the Beast on leased we are continuing to expand distribution with the goal of being national by the end of the year we.

We are excited for the launch of Nasty Beast Hot tea early next year with a goal of national distribution in the first half of 'twenty 'twenty. Four is what is the additional alcohol opportunities that the Kentucky acquisition presents we are pleased with the rollout of credits that in theory, our affordable energy drink portfolio internationally.

We are proceeding with plans to launch our affordable energy brands in a number of additional countries internationally. We are excited about the opportunities that the acquisition of the Bang energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands I'd like to now open the floor to questions.

About the quarter. Thank you.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then to.

Due to time constraints. Please limit yourself to one question. If you have further questions you may rejoin the queue. At this time, we will pause momentarily to assemble our roster.

Yeah.

Our first question is from Peter Grom with UBS. Please go ahead.

Thanks, operator, good afternoon, guys hope you're doing well.

Maybe one housekeeping question and then one.

One real question here I guess.

I'm, just the banks actually and I apologize if I missed this but did you mention how much of a contribution.

The transaction was to sales in the quarter and then I guess just my real question here is just I would love to get some more color.

Quarter to date trends you just mentioned I think it was 25% or so.

It's better than what we can see an attractive. So can you maybe unpack the drivers of that is that simply just much stronger growth in international markets is there any sort of sales, Florida or timing impact that we need to take into consideration just any color. There I think would be really helpful. Thanks.

Okay, Firstly with regard to the Bang transaction and the bank sales numbers, we do not separately.

Those numbers, they're all included within the Monster energy drinks segment.

We launched Bang energy in September.

Through the Coke bottling system and it was not an immediate launch on September one some bottlers took a little bit earlier in August and many.

That rolled out in September rolled out through the month of September. So this is not a real third quarter full.

The capability of what bank can bring to the portfolio.

And then on your second point it was really difficult to hear you Peter I.

Thank you are referring to the October sales.

Well you know it.

Yeah, I was just trying to understand I think you mentioned, 25% or so.

Just a lot catherine or stronger than what we can see an attractive even after backing out kind of in a bang drag. So I guess I'm just trying to get some color in terms of then what were the drivers of that is it simply stronger growth.

The U S.

Is there any kind of timing contribution or a pull forward in sales is just any.

Any color you can provide I think would be really helpful.

It's important to understand that we have a large unmeasured.

Channels.

And when one looks at Nielsen or IRI numbers when doesn't really appreciate that the company operates.

Through a customers that do not participate in Nielsen or are not measured by Nielsen.

And then in addition on.

A number of chain stores that allow a pick up a product.

Ordering online those numbers are not included within the all measured channels that we see in the Nielsen included in the stores our data, but they are not included in the all measured channels why.

And you cannot answer that question. So you know there were a number of factors. The business was strong we had a good October.

And those are the numbers, so I really cannot comment anymore.

Yeah.

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

Hey, Good afternoon. This is Joe on for Andrea and Thank you for taking my question.

So just wanted to circle back on the Bang acquisition and the transition to nickel a bottling system.

Just any high level thoughts on.

Improving distribution and sort of timeline.

We're gaining shelf space for the brand.

That'd be helpful and then secondarily.

Within the Nielsen.

In IRI channels. It does appear that sequentially, if somebody is more sort of emerging brands.

Arent really gaining as much market.

Market share sequentially. So just any high level thoughts on the category dynamics. If you think those emerging brands might be hitting any sort of a ceiling.

And monster and condition within there that'd be helpful. Thank you.

Remember you know.

Then a number of them.

Both convenience and chain and.

And the large stores discontinued the bank brand.

During a period, where there was.

Litigation and also where the products were questionable as regards to Chile. So it was a lot of discontinuation of bang throughout the system.

What we are doing and what our cold boxes are doing is regaining the distribution that is out there. So bang and also wheel as a company, making presentations to the large and smaller retailers both convenience grocery.

Mass.

And obviously the club channel to ensure that Bang is restocked in there says so that'll take a little bit of time it doesn't happen overnight and we are hopeful that we will be able to achieve them really very much extended distribution and then you said.

As they come out.

And then on your second question regarding you know the smaller brands already you know we.

We have a mission that is focused on our brands and all brand families and I really don't want to.

Comments on the competition.

Other than to say that you know we have a very comprehensive portfolio and we believe that you know we're in a good position.

To to focus and and build upon our own sales, while recognizing the you know.

The achievements of all of the competitors in the positioning of the competitors.

The next question is from Vivien as her with TD Cowen. Please go ahead.

Hi, Good evening. Thank you I wanted to follow up on your commentary.

Now in terms of the conversations that you're having with retailers recognizing.

Early days in terms of driving for expanded south flank that and increase.

On Bang, but operationally how are you thinking about that.

Kind of a one for one.

Sure a point of improvement you think you can go to the bank that incremental square footage are you willing to sacrifice some linear square footage on the tertiary.

Within your own portfolio to revitalize our brands any incremental color would be helpful. Thank you.

Yeah, We said our sales team and objective and that is they are not they are not to compromise any of our existing shelf space to incorporate the bank brand. The <unk> brand has emerged as a lifestyle brand.

We believe it should be positioned in a hopefully in a separate cooler.

Away from the from the energy beverages that includes the wellness beverages and the performance beverages and that's the mission that we are focusing on with the with our sales teams.

Yeah.

The next question is from Charlie Higgs with Redburn Atlantic. Please go ahead.

Hey.

Well I put it.

Got a question on China. Please in the 28% growth you posted there just wanted to if you could give any color on that number if not stronger.

We basically in China, and then just how the portfolio is shaping up.

Have you don't see that as to that.

Perhaps I'll just take that.

The the brand we've sort of looked at realigning the the brand and focusing on the the minus Skus and we were getting additional sales interaction with the brand so the branch.

Particularly green and ultra are all doing very well in China, and continuing to grow and then getting solid solid sales put Pascal.

The points of distribution.

With regard to predator, we are proceeding with our plans to launch predator and that will happen.

Towards the middle of next year, probably the second quarter.

It's presently plants.

Go ahead in a P. T bottles that were also pretty hopeful that we will have two offerings at different price points are to attack the Chinese market things.

Okay.

The next question is from Mark Astrachan with Stifel. Please go ahead.

Yeah, Hey, Hey, guys afternoon.

Just one follow up one other question. So if you look at the scanner data, we look at total distribution points for Bang I show its up something.

Something like 22%.

At current levels or kind of a week or two ago relative to where it was even in Sip.

September so yeah, you'd mentioned, helping that I think that the rollout in September with a bit more measured so I suppose why shouldn't we get a little more excited about.

What you can do from shelf space in terms of where it was I guess its never going to be what it was a few years ago, but certainly seems like it's on.

Good.

Starting level there and then the main question, we're getting lots of questions that I'm sure you are about.

How to think about pricing and what Red Bull is gonna deal in the market I guess, how long does it take for you to figure out how.

How much pricing ramp we're going to pass through and how <unk>, how quickly or when you have to tell the retail establishment that youre planning on following them. If you decide to do that.

Well generally when you have a price increase in our industry. It takes 60 to 90 days.

So you get pricing adjusted in the U S market.

I think where we are is we are evaluating.

The competition and obviously, we are evaluating red bull in their pricing.

And we'll see where it goes you know they too because of promotions they took a lot less.

In 2022 than was originally expected.

So I think we just watching full you know what happens with demand and the elasticity.

City of demand and.

We are in a really difficult consumer environment not necessarily for energy drinks as you've heard on this call but.

We have to be very.

Very wary and watch and see and we'll evaluate what makes sense for us and you know and Tom will make a decision I mean, we've always said that if there's an opportunity to take price we will but we also are very cognizant of the fact that.

When you lose a bunch of market share in the process.

And then Mark you referred earlier to Bang.

And yes, the Coke bottlers during the month of September got Bang back in as many shelves as they were authorized to get product back.

And yes of course, there was an increase in September but in October and will continuing seeing the development of Bang as we get more and more shelf space authorized to vote for the brand, but as always we don't give guidance on these calls.

I'll just say that we are all optimistic here about the future and the potential of that brand otherwise we wouldn't have done the acquisition.

The next question is from Michael Lavery with Piper Sandler. Please go ahead.

Thank you and good afternoon.

Hi.

Just was wondering if you could give a sense of kind of strategically how you think about the portfolio.

In the U S you've got.

Sure headwind or greater for the Monster brand versus some others, maybe just how do you think about resource allocation or kind of pushed them to protect and strengthen that brand what kind of margin mix implications are there or is it just anything under the total corporate umbrella.

It is if it's got momentum is great just give us.

I'd Love a little sense of how you think about the portfolio strategy and how much how important it is for monster to take the lead or not.

I think monster has always been our lead brand and we'll continue to be the lead brand. So ultimately we focus on monster itself and then we look at the broader put Friday, if you look at the category the categories.

<unk> grown in the last couple of years and it's it's much much broader than it was and so we think that monster really positioning should stay as it is it's got its positioning its got its authenticity and credibility for what it stands for and if it can't be everything to all to all consumers and that's why these other Brad.

And play a really important role for the company and enables us to actually attack other parts of the category other consumers who have different values at a different need states, whether it's from naus too too right you saw the results of rain.

Creased and cells are really being very healthy.

So that brand is doing very well with its positioning which is different to the positioning. We've got you know four rainstorm and then the same thing that as Hilton mentioned earlier, you know we've sort of we've taken the the positioning AV for Bang is sort of more of a lifestyle brand again it has its own positioning the cans as you know in the last few years changed from being a black.

Can more performance oriented to be a white cat more lifestyle oriented so they're all different positioning is different price points. We think that we will get incremental space for these other brands in our adjoining coolers or additional kudos spice, where you're having the where you're finding more space being allocated to.

The clean energy or natural sort of healthier perception energy brands.

As you also look at sizes.

Storms in a 12 ounce can versus our traditional reign brand in 816 ounce that cancer. These are all ways that we are able to distinguish these different products and find a place for each of them on the shelf with and to attract different consumers and so if you look at the whole portfolio, we think it actually fits together quite nicely and we.

We see growth coming from all of these different levels, but still 100%.

Our main brand remains in a phone because he's obviously monster, which is the driver for the company and will continue to be so.

Yeah, I think one other point with for Michael is that if.

Mike you you need to look at the numbers because I.

I think red Bull is suffering forward the monster.

In.

And I think that's something you need to look at it that's number one and number two.

A number of analysts all and we've noticed as of late or taking the bank numbers and putting a bang numbers into monster. Both this year and last year and obviously, that's not a great exercise because bang.

<unk> has a it's a bank's Sheridan bank sales have fallen off dramatically over the last year, particularly two oldest litigation and with the removal from shells and the discontinuation as I mentioned earlier, so that's not a good exercise to put the bank brand into months that this year.

And last year. So what we did on this pool, we actually separated bang separately and and the rest of the portfolio. So one could get a feel of the performance of the monster portfolio separately from what's happening with Bang hopefully sometime down the line, we'll be able to roll the two into one another.

And.

Then it'll make better sense of the growth or otherwise.

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

Frenchie age out brands and to expand the company Buzz at home and abroad and in particular capitalizing on our relationship with the Coca Cola Bottler system, we believe that we're well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain 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].

Okay.

[music].

Yeah.

Okay.

[music].

Good afternoon, and welcome to the Monster beverage company third quarter 2023 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 today's presentation there'll be an opportunity to ask questions.

To ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Please note this event is being recorded.

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

Thank you.

Good afternoon, ladies and gentlemen, thank you for attending this call I'm Rodney Sachs Hilton Schlosberg, our Vice Chairman and co Chief Executive Officer. He's on the call as is Tom Kelly, Our Chief Financial Officer, Tom Kelly will now read our cautionary statement.

<unk> 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.

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.

Thank you Tom.

On July 31, 2023, the company completed its acquisition of <unk>.

Bang energy, which is the bank growing section the quad assets, primarily include Bang energy drinks and the beverage production facility in Phoenix, Arizona.

Inventory purchased as part of the Bank transaction was recorded at fair value certain of the purchased inventory was subsequently sold in the 2023 third quarter and was recognized through cost of sales at face value.

Yeah.

Defined as the inventory step up hereafter and Nicole.

As a result of the Bang inventory step up gross profit was adversely impacted by approximately seven 8 million during the 2023 third quarter.

During the 20th 23 third quarter in connection with the bank transaction. The company recorded a gain of $45 4 million, which will be referred to as you already know after as the bank transaction guidance in interest and other income and expense niche within the condensed consolidated statement of income.

During the 2023 third quarter the company incurred approximately 8 million of acquisition expenses related to the bankrolling section and that does all referred to also later in this call as the bank transaction expenses. The company achieved record third quarter net sales of one point to eight 6 billion in the 'twenty to 'twenty three third quarter.

14, 3% higher than net sales of 162 billion in the 'twenty to 'twenty, two comparable period, and 16, 1% higher on a foreign currency adjusted basis gross profit as a percentage of net sales for the 2023 third quarter was 53% compared with 51 point.

3% in the comparative 2022 third quarter gross profit as a percentage of net sales was 53, 4% for the 20th twenty-three third quarter, excluding the Bang inventory step up the.

The increase in gross profit as a percentage of net sales for the 'twenty two 'twenty three third quarter as compared to the 2022 third quarter was primarily the result of pricing actions decreased freight costs and decreased aluminum can cross promotional allowances for the 'twenty to 'twenty three third quarter were higher.

And then in the comfortable 2022 third quarter as well as the 2023 second quarter.

Operating expenses for the 2023 third quarter were $473 2 million compared with $415 8 million in the 2022 third quarter as a percentage of net sales operating expenses for the 'twenty two 'twenty three third quarter were 25, 5% compared with 25, 6%.

In the 2022 third quarter operating expenses for the 20th 23 third quarter included approximately 8 million of bank transaction related expenses.

Distribution expenses for the 2023 third quarter were $85 7 million or four 6% of net sales compared with eight to 83 million or five 1% of net sales in the 2022 third quarter operating income for the 2023 third quarter increased 22, 2% to <unk>.

$510 5 million from Florida, and the $17 9 million in the 'twenty to 'twenty two comparative quarter.

Interest and other income expense net for the 'twenty to 'twenty three third quarter increased to $71 4 million from $2 1 million in the 'twenty to 'twenty two competitors of quarter. The increase was due to $39 3 million of interest income and a gain of $45 4 million related to the bank growing section so.

[noise] amounts were partially offset by foreign currency.

Transaction losses of $13 2 million.

Effective tax rate for the 'twenty to 'twenty three third quarter was 22, 2% compared with 23, 3% in the 'twenty to 'twenty two third quarter. The decrease in the effective tax rate was primarily attributable to an increase in deductible interest expense net income increased 44%.

Two 452 7 million as compared to the $322.4 million in the 2022 comparable quarter diluted earnings per share for the 2023 third quarter increased 41, 3% to 43 cents from Citi cents in the third quarter of 2022.

Diluted earnings per share adjusted for the Bang transaction gain the Bang inventory step up and the bank transaction expenses net of tax was 41 cents for the 'twenty to 'twenty three third quarter, an increase of 34.1%.

The company continues to have market share leadership in the energy drink category for all outlets combined Indian routed states in bus the 13th and four week periods ended October 'twenty, one 2023.

According to Nielsen for the four weeks ended October 'twenty, one 'twenty $23000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased six 7% over the same period the previous year. So all of the company's energy brands, Excluding Bang increased four 5%.

In the four week period in the convenience and gas general sales of Monster increased by one 9% over the same period versus the previous year reign sales increased 35, 2% nausea was up nine 7% and full throttle was up seven point to 8% sales of Red Bull were up one point to eight.

<unk>.

According to Nielsen for the four weeks ended October 'twenty, one 'twenty two 'twenty three the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 36, 8% to 36, 1%, excluding Bang monster shade decreased from 31, 1% a year ago to 29.

9.7% ratio increased <unk> six of a share point to three per cent nauseous Shay increased 0.1 of a share point to two 6% and full throttle share remained at <unk> seven of a percent bank.

Bang share was 1.4% Red Bull share decreased one seven points to 34.55 dollar share was lower by a half a point at 3.5% Rockstar share was down <unk> four of a point to 3.4% Celsius as she is seven 4% seafood share is three.

3% and goes share is two 7%.

According to Nielsen for the four weeks ended October 'twenty, one 'twenty to 'twenty three sells in dollars in the in the coffee plus energy drink category, which includes our Java Monster line in the convenience and gas channel increased eight 9% over the same period the previous year sales of Java Monster, including Java Monster 300, and Java Monster.

Cold brew were 2% lower than the same period versus the previous year sells a Starbucks energy were 14.9% lower Java monster share of the coffee plus energy drink category for the four weeks ended October 'twenty, one 2023 was 55, 9% up three nine points while Starbucks.

Energies. She was 43, 8% down 3.1 points. According to Nielsen in all measured channels in Canada for the 12 weeks ended October seven 2023, the energy drink category increased eight 6% in dollars sales of the company's energy drink brands increased six 5% versus a year ago.

The market share of the company's energy drink brands was 40% down point age of a point monster sales increased seven 7% and its market share decreased <unk> three of a point to 36.2 nauseous cells decreased half a point.

And its market share decreased by <unk>, one of a point to 1.2% sales decrease by point or half a percent full throttle sales increased 12, 8%.

And its market share remained at 0.5%.

<unk>, 63% and its market share increased 1.5 share points to six 1% to.

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

Jane, but 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 September 2023, compared to September 2022 months monsters retail market share in value increased in Argentina from 52.8% to 56, 8% in Brazil from 43% to 45, 1% and decreased.

Surely from 41, 7% to Sydney Nonpoint non percent.

Energy is the leading energy brand in value, you know, Argentina, Brazil and Chile.

I'd like to point out 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.

What is your Nielsen in the 13 week period until October eight 2023 monsters retail market share in value as compared to the same period. The previous year grew from 35% to 31, 3% in France from 29.9% to city, 2.4% in Great Britain from.

Five 4% to five 6% in the Netherlands from Citi, One, 6% to 34, 7% in Norway and from 43% to 45% in spine.

According to Nielsen in the 13 week period until the end of September 2023 monsters retail market share in value as compared to the same period previous year grew from 15, 6% to 18, 4% in Germany monsters retail market share in value as compared to the same period the previous year remain flat at the Citi One six.

Percent, Italy.

Monsters retail market share value as compared to the same period the previous year declined from 19% to 18, 4% in Poland and from 19, 8% to 17 point non precision in South Africa.

Ireland and from 15, 4% to 16% in Sweden.

According to Nielsen in the 13 week period until the end of August 20th twenty-three monsters retail market share in value as compared to the same period. The previous year declined from 38, 8% to 38, 2% in Greece.

According to Nielsen a 30 week period until the middle of August 2023.

<unk> retail market share in value as compared to the same period. The previous year grew from 27, 5% to 28% in Denmark.

According to Nielsen in the 13 week period until the end of August 2023 printers as retail market share in value as compared to the same period. The previous year grew from 29, 8% to 32 point to 8% in Kenya and from 17% to 23% in Nigeria.

What did your IRR in Australia monsters market share in value for the four weeks ending October 15, 2023 increased from 14, 8% to 16, 4% as compared to the same period the previous year mother's market share in value decreased from 11, 7% to 10, 1%.

According to IRI in New Zealand monsters market share in value for the four weeks ended October 22, 2023 decreased from 13, 6% to 13, 3% compared to the same period the previous year lift plus's market share in value decreased from six 2% to five 2%.

And mother's market share in value increased from six 1% to six 4%.

According to your Indoorsy in Japan in the month, ending September 2023 monsters market share in value in the convenience store channel as compared to the same period the previous year increased from 55% to 58, 9%.

According to Nielsen in South Korea, and the month, ending September 2023 monsters market share in value in all outlets combined as compared to the same period. The previous year decreased from 61, 4% to 51, 9% due to overly aggressive price promotions by competitors.

Foreign currency exchange rates had a negative impact on net sales in the U S. In U S dollars by approximately $29 2 million in the 'twenty to 'twenty three third quarter.

Included in reported geographic sales or 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 twenties 23 third quarter increased 22, 3% in dollars and decreased 23, 6% in local currencies over the same period in 2022.

Profit in this region as a percentage of net sales for the third quarter was 31, 1% compared to 34, 7% in the same quarter in 2020 two.

We're also pleased that in the 'twenty to 'twenty, three third quarter months to gain market share in Belgium, Czech Republic, Denmark, France, Germany, Great Britain, and the Netherlands, Norway, The Republic of Ireland, Spain and Sweden.

Over the same period in 2022.

Net sales in Japan in the 'twenty to 'twenty three third quarter increased 22, 5% in dollars and increased 29% in local currency in South Korea net sales increased 18, 7% in both dollars and local currency.

As compared to the same quarter in 2022.

Once the remains the market leader in Japan, and South Korea.

In China net sales in the third quarter increased 22% in dollars and increased 28, 3% in local currency as compared to the same quarter in 2022, we remain optimistic about the prospects for the monster brand in China.

She Yana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased 13, 3% in dollars and increased 18, 7% in local currencies.

In Latin America, including Mexico, and the Caribbean net sales in the 'twenty to 'twenty three third quarter increased 25, 2% in dollars and increased 38, 8% in local currencies over the same period in 2022.

Gross profit in this region as a percentage of net sales was 37, 7% for the 2023 third quarter versus 34, 7% in the 2022 third quarter.

In Brazil net sales in the 'twenty threes, three third quarter decreased by four 3% in dollars and decreased by nine 6% in local currency due in part to inconsistent purchasing patterns by our bottlers.

Net sales in Mexico increased 54, 4% in dollars and increased city, 0.1% in local currency in the 'twenty to 'twenty three third quarter net.

Net sales in Chile increased 62% in dollars and increased 44, 3% in local currency in the 'twenty to 'twenty three third quarter knits.

And it sells in Argentina increased 61% in dollars and increased 243, 4% in local currency in the 'twenty to 'twenty three third quarter.

Launch Nasty Beast Hot tea in the first quarter of 'twenty 'twenty four with the goal of being national of National distribution in the first half of next year.

Nasty Beach Hot tea will be available for flavors and will be sold in 24 ounce single serve cans as well as in a variety 12 pack of 12 ounce sleek cans.

In the United States, We launched Bang energy in 12 single Eschar use and two multi pack skus through our Coca Cola bottlers in the month of September in the 'twenty to 'twenty three third quarter. We also shipped naus zero sugar 16 ounce cans to support a planned.

2023 fourth quarter launch.

In Mexico.

July 'twenty to 'twenty, three we launched our third predator S. K U with preserved purple, Ryan and expanded our monster zero sugar offering with the launch of Monster Ultra Watermelon in August 2023.

In El Salvador, and Honduras during the month of September we launched reserve, what pineapple and in Puerto Rico, We launched Monster was installed eliminating July 2023, and in September we introduced a rainstorm total wellness energy drinks.

In Australia, a monster Ultra Peachy-keen was launched in July 2023 in September we launched mother Rainbow sure, but you know, Australia and mother in law, the guava and use eland.

In EMEA in the third quarter of 'twenty to 'twenty, three we launched monster not drug Cosmic Beach.

Ziv, Watermelon and watch Pond-apple, Joost Aussie lemonade juice chaotic ultra gold and ultra peachy-keen in a number of countries.

We are excited about the about the launch of Monster zero sugar in Great Britain in the 'twenty to 'twenty three third quarter, we will expand distribution to Poland and the Republic of Ireland in the 'twenty to 'twenty three fourth quarter and two an additional 28 markets by the end of the first quarter of 2024.

During the third quarter of 'twenty to 'twenty, three we launched monster Ultra Peachy-keen in Japan, and launched predator in Iraq.

October 20th twenty-three, we launched monster was eliminated in Japan.

In India, we participate not only in the premium energy drink segment with Monster, but also in the more affordable segment with predator.

We recently introduced printers that 250 ml pet format in a limited region in India to complement our existing product offering and 300 ml cans.

We also transitioned the monster brand in the Philippines from our independent distributor to our Coca Cola Philippines Bottler.

As of November to approximately $282 $8 million remained available for repurchase under the previously authorized repurchase program.

Brands segment, we estimate that October 'twenty, 'twenty, three cells, including the alcohol bread segment to be approximately 24.8% higher than in October 2022, 24% higher than in October 2022 excluding the alcohol brands segment.

Talking about 2023 had one more selling day compared to October 2022.

In some instances our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels. According to our internal requirements, which that may alter from time to time for their own business reasons. We.

We reiterate that sales 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.

In conclusion, I would like to summarize some recent positive points.

The energy category continues to grow globally.

We are pleased to report that our pricing actions, which have been implemented to partially mitigate inflationary pressures have not significantly impacted consumer demand.

I have a flavor facility in Ireland is not providing a large number of flavors to our EMEA region.

I believe better service levels and lower landed cost to our EMEA region. We are continuing with our plans to add a juice facility two O F F flavor facility in Ireland.

We are pleased without 2023, new product innovations, notably Monster energy zero sugar Ultra Strawberry dreams, and rainstorm in the United States and Monster Energy Lewis Hamilton 44 zero sugar in EMEA. We are pleased with the early results from the launch of the Beast on leased we are continuing to expand.

Distribution with the goal of being national by the end of the year. We are excited for the launch of Nasty Beast Hot tea early next year with a goal of national distribution in the first half of 'twenty 'twenty. Four is what is the additional alcohol opportunities that the Kentucky acquisition presents.

We're pleased with the rollout of credits that in theory, our affordable energy drink portfolio internationally, we are proceeding with plans to launch our affordable energy brands in a number of additional countries internationally.

We are excited about the opportunities that the acquisition of the Bang energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands are there.

Like to now open the floor to questions about the quarter. Thank you.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then to.

Due to time constraints. Please limit yourself to one question. If you have further questions you may rejoin the queue. At this time, we will pause momentarily to assemble our roster.

Yeah.

Our first question is from Peter Grom with UBS. Please go ahead.

Thanks, operator, and good afternoon, guys hope you're doing well so maybe one housekeeping question and then one real question here I guess I'm, just the bank transaction actually and I apologize if I missed this but did you mention how much of a contribution.

The transaction was to sales in the quarter and then I guess just.

The real question here is I would love to get some more color.

Quarter to date trends you just mentioned I think it was 25% or so.

It's better than what we can see in the track data. So can you maybe unpack the drivers of that is that simply just much stronger growth in international markets is there any sort of sales before and are timing impacts and we need to take into consideration.

Any color there I think would be really helpful. Thanks.

Okay.

Firstly with regard to the bank.

Transaction and the bank sales numbers, we do not separately give those numbers. They all included within the Monster energy drinks segment.

We launched Bang energy in September.

Through the Coke bottling system and it was not an immediate launch on September one some bottlers took a little bit earlier in August and many.

That rolled out in September rolled out through the month of September. So this is not a real third quarter full.

Our capability of what bank is bringing to the portfolio.

And then on your second point it was really difficult to hear you Peter.

I think you are referring to the <unk>.

Service sales.

Well you know it.

Yeah, I was just trying to understand I think you mentioned, 25% or so.

Just a lot catherine or stronger than what we can see in attracting that even after backing out kind of in a bang drag. So I guess I'm just trying to get some color in terms of then what were the drivers of that is it simply stronger growth.

The U S as it.

Is there any timing contribution or a pull forward and just any color you can provide I think would be really helpful. But I think it's important to understand that we have a large unmeasured.

Channels and when one looks at Nielsen or IRI numbers when doesn't really appreciate that the company operates.

Two eight.

Our customers that do not participate in Nielsen or are not measured by Nielsen.

In addition, a number of chain stores that allow a pick up a product.

Ordering online.

<unk> numbers are not included within the all measured channels that we see in the Nielsen included in the stores our data, but they are not included in the all measured channels why.

Cannot answer that question. So you know there were a number of factors.

The business was strong we had a good October.

And those are the numbers.

So I really cannot comment anymore.

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

Hey, Good afternoon. This is Joe on for Andrea and Thank you for taking our question.

So just wanted to circle back on the Bang acquisition and the transition 10 o'clock bottling system.

Just any high level thoughts on.

Improving distribution.

Sort of timeline to regaining shelf space for the brand.

Helpful and then secondarily.

Within the Nielsen and IRI channels. It does appear that sequentially. If somebody is more sort of emerging brands.

We arent really gaining as much.

Market share sequentially. So just any high level thoughts on the category dynamics. If you think those emerging brands might be hitting any sort of ceiling.

And motzer and condition within there that'd be helpful. Thank you.

Remember you know.

Then a number of them, both convenience and chain and.

And the large stores discontinued the bank brand.

During a period, where there was.

Litigation and also with our products.

With questionable as regards to two labeling so it was a lot of discontinuation of bang throughout the system.

What we are doing and what our partners are doing is regaining the distribution that is out there for banks and also wheel as a company, making presentations to the large and smaller retailers both convenience grocery.

Mass.

And obviously the club channel to ensure that Bang is restocked in there says so that'll take a little bit of time it doesn't happen overnight and we are hopeful that we will be able to achieve a really very much extended distribution and then you said.

So as they come out.

And then on your second question regarding the.

Smaller brands already.

We have a mission that's focused on our brands and all brand families and I really don't want to comment.

Comment on the competition.

Other than to say that we.

Have a very comprehensive portfolio.

And we believe that we're in a good position.

Two to focus and.

And build upon our own sales while recognizing.

The achievements of the competitors in the positioning of the competitors.

The next question is from Vivien Asia with TD Cowen. Please go ahead.

Hi, Good evening. Thank you I wanted to follow up on your commentary.

Now in terms of the conversations that you're having with retailers recognizing that it might be a little bit early in terms of driving for extended shelf life that.

And the increase.

On Bang.

Kind of how are you thinking about that.

Kind of a one for one for every you know market share point of improvement you think you can drive your bank that incremental square footage are you willing to sacrifice some linear square footage on the tertiary.

Within your own portfolio to revitalize that brands any incremental color would be helpful. Thank you.

Yes, we said.

Sales team and objective and that is they are not they are not to compromise any of our existing shelf space to incorporate the bank brand. The bank brand has emerged as a lifestyle brand.

We believe it should be positioned in a hopefully in a separate cooler.

Away from the from the energy beverages that includes the wellness beverages and the performance beverages.

And that's the mission that we are focusing on with our sales teams.

Okay.

The next question is from Charlie Higgs with Redburn Atlantic. Please go ahead.

Hey.

Bye bye.

Got a question on China. Please in the 28% growth you posted there just wanted to if you could give any color on that number if not stronger.

I see in China, and then just how the portfolio shaping up.

Have you don't see that as to that.

Perhaps I'll just take that.

The the brand we've sort of looked at realigning the the brand and focusing on the the minus Skus and we were getting additional sales and traction with with the brand. So the branch.

Particularly green and ultra are all doing very well in China, and continuing to grow and then getting solid solid sales put Pascal.

Points of distribution.

With regard to predator, we are proceeding with our plans to launch predator and that will happen.

Towards the middle of next year, probably the second quarter.

Is presently planned. So that's go ahead in a P. D bottles that were also pretty hopeful that we will have two offerings at different price points to attack the Chinese market.

Yes.

The next question is from Mark Astrachan with Stifel. Please go ahead.

Yeah, Hey, guys afternoon.

Just one follow up one other question. So if you look at the scanner data, we look at total distribution points for Bang I show it up.

Something like 22% at current levels or kind of a week or two ago relative to where it was even in.

September so yeah, you'd mentioned, helping that I think the rollout in September it was a bit more measured so I suppose why shouldn't we get a little more excited about.

What you can do from shelf space in terms of where it was I guess its never going to be what it was a few years ago, but it certainly seems like an AR.

Good.

Starting level there and then the main question, we're getting lots of questions as I'm sure you are about.

How to think about pricing and what Red Bull is going to do in the market I guess, how long does it take for you to figure out.

How much pricing ramp, we're going to pass through and how.

How quickly or when you have to call the retail establishment that youre planning on following them. If you decide to do that.

Well generally when you have a price increase in our industry. It takes 60 to 90 days.

So you get pricing adjusted in the U S market.

I think where we are is we are evaluating.

The competition and obviously, we'll re evaluating red bull in their pricing and.

We'll see where it goes because it.

<unk> they took a lot less.

2022 than was originally expected.

So I think we just watching full you know what.

Happens with demand and the elasticity of demand and we are.

We are in a really difficult consumer environment not necessarily for energy drinks as you've heard on this call, but I think we have to be very.

Very wary and watch and see and we'll evaluate what makes sense for us and you know in.

And Tom will make a decision I mean, we've always said that if there is an opportunity to take price. We will but we also are very cognizant of the fact that we don't want to lose a bunch of market share in the process.

And then Mark you referred earlier to Bang and yes, the Coke bottlers during the month of September got band back in as many shelves as they were authorized to get product back.

Yes of course, there was an increase in September.

In October and will continuing seeing the development of Bang as we get more and more shelf space authorized to vote.

For the brand.

As always we don't give guidance on these calls and mitten.

Say that we are all optimistic about the future and the potential of that brand otherwise we wouldn't have done the acquisition.

The next question is from Michael Lavery with Piper Sandler. Please go ahead.

Thank you good afternoon.

Hi.

Just was wondering if you could give us a sense of strategically how you think about the portfolio.

In the U S you've got.

Sure headwinds are greater for the Monster brand versus some others, maybe just how do you think about <unk>.

Resource allocation or kind of pushed them to protect and strengthen that brand what kind of margin mix implications are there or is it just anything under the total corporate umbrella as if it's got momentum is great just give us a little sense of how you think about the portfolio strategy.

And.

How much how important it is for monster to take the lead or not.

Well I think monster has always been our lead brand and we'll continue to be the lead brand. So ultimately we focus on monster itself and then we look at the broader portfolio, we look at the category the categories.

Got grown in the last couple of years and it's it's much much broader than it was and so we think that monster really positioning should stay as it is it's got its positioning its got its authenticity and credibility for what it stands for.

And if you know it can't be everything to all to all consumers and that's why these other brands play a really important role for the company and enables us to actually.

Tech other parts of the category other consumers who have different values at a different need states are weather.

Whether it's from Naus too too right you saw the results of rightness of increased and sales have really been very healthy.

That brand is doing very well with its positioning which is different to the positioning we've got four rainstorm and then the same thing that as Hilton mentioned earlier, you know we've sort of we've taken the the positioning of four Bang is sort of more of a lifestyle brand again. It has its own positioning the cans as you know in the last few years changed from being a black.

Can be more performance oriented to be a white cat more lifestyle oriented so they're all different positioning is different price points. We think that we will get incremental space for these other brands in adjoining coolers or additional cooler space, where you're having the where you're finding more space being allocated to.

The clean energy or natural sort of healthier perception energy brands.

As you also look at sizes rain storms in a 12 ounce can versus our traditional writing brand in 816 ounce that cancer. These are all ways that we are able to distinguish these different product and find a place for each of them on the shelf and to attract different consumers and so if you look at the whole.

Failure, we think it actually fits together quite nicely and we see growth coming from all of these different levels, but still 100%.

Our main brand remains in a phone because he's obviously monster, which is the driver for the company and we will continue to be so.

I think one other point with for Michael is that it's Mike.

Mike you you need to look at the numbers because.

I think red Bull is suffering followers and monster.

In.

And I think that's something you need to look at it that's number one and number two.

A number of analysts all.

And we've noticed as of late or taking the bank numbers and putting the bank numbers into monster.

This year than last year, and obviously, that's not a great exercise because bang.

Has it banks sharing bank sales have fallen off dramatically over the last year, particularly through all this litigation and with the removal from shells.

It is continuations as I mentioned earlier, so that's not a good exercise to put the bank brand into months this year and last year. So what we did on this pool, we actually separated bang separately and in the rest of the portfolio. So one could get a feel of the performance of the month.

Portfolio separately from what's happening with Bang hopefully sometime down the line, we'll be able to drill the two into one another and then it'll make better sense of the growth or otherwise.

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

Thanks 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 continuing to innovate develop and differentiate our brands and to expand the company Buzz at home and abroad and in particular capitalizing on that.

Our relationship with the Coca Cola Bottler system, we believe that we're well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain 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.

Q3 2023 Monster Beverage Corp Earnings Call

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