Q4 2023 Monster Beverage Corp Earnings Call

Operator: Good afternoon, and welcome to the Monster Beverage Company fourth quarter 2023 conference call. All participants will be in listen-only mode.

Good afternoon, and welcome to the Monster beverage company fourth 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.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press the star key, then 1 on your telephone keypad.

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.

Operator: To withdraw your question, please press star then 2. 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.

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.

Rodney Cyril Sacks: Thank you very much. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks, 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.

Rodney Cyril Sacks: Thank you very much good afternoon, ladies and gentlemen, thanks for attending this call I'm Rodney Sachs Hilton Schlosberg, 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 a cautionary statement.

Thomas J. Kelly: 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 27A of the Securities Act of 1933 as amended and Section 21E 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. 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 findings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, filed on March 1, 2023, and quarterly reports on Form 10-Q, including the sections contained therein entitled Risk Factors and Forward-Looking Statements, for discussion on specific risk and uncertainties that may affect our performance.

Rodney Cyril Sacks: 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 1933 as amended and section 21 E of the Securities Exchange.

Rodney Cyril Sacks: 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.

Rodney Cyril Sacks: 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.

Rodney Cyril Sacks: 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 there and entitled risk factors.

Rodney Cyril Sacks: And forward looking statements for a discussion on specific risks and uncertainties that may affect our performance.

Thomas J. Kelly: The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. Before I turn the call over to Rodney Sacks, I would like to mention a clerical error that we had with the filing of our most recent press release that was filed just within the last half hour. And under the income statement section, Under the three-month end of December 31, 2023, the amount that was reported as gross profit, which was reported as $983,372,000, should have been $938,372,000. Aside from that clerical error, all other numbers on the press release are correct. I would now like to hand the call over to Rodney Sacks.

Rodney Cyril Sacks: The company assumes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.

Speaker Change: Before I turn the call over to Rodney sacks, I would like to mention a.

Speaker Change: A clerical error that we had with the filing of our most recent press release that was filed just.

Rodney Cyril Sacks: Within the last half hour.

Speaker Change: And under the in the income statements section under the three months ended December 31 2023.

Rodney Cyril Sacks: The amount that was reported as gross profit, which was reported as 983.372 million.

Rodney Cyril Sacks: <unk> thousand <unk>.

Speaker Change: Should have been 938.372 million.

Speaker Change: Aside from that clerical error all other numbers on the press release are correct.

Speaker Change: I'd now like to hand, the call over to Rodney sacks.

Rodney Cyril Sacks: Thank you, Tom. The company achieved record fourth-quarter net sales of $1.73 billion in the 2023 fourth quarter, 14.4% higher than net sales of $1.51 billion in the 2022 comparable period and 16.1% higher on a foreign currency adjusted basis. Gross profit as a percentage of net sales for the 2023 fourth quarter was 54.2% compared to 51.8% in the comparative 2022 fourth quarter. As a result of the Bank Inventory step-up, gross profit was adversely impacted by approximately $5 million during the 2023 Q4.

Rodney Cyril Sacks: Thank you Tom.

Rodney Cyril Sacks: The company achieved record fourth quarter net sales of 1.73 billion in the 'twenty to 'twenty three fourth quarter, 14.4% higher than net sales of 1.51 billion in the 2022 comparable period and 16.1% higher on a foreign currency adjusted basis.

Rodney Cyril Sacks: Profit as a percentage of net sales for the 2023 fourth quarter was 54, 2% compared to 51 point to 8% in the comparator of 23 to fourth quarter.

Rodney Cyril Sacks: As a result of the Bang inventory step up gross profit was adversely impacted by approximately 5 million during the 2023 fourth quarter gross profit as a percentage of net sales was 54, 5% for the 20th 23 fourth quarter, excluding the Bang inventory step up the increasing gross.

Rodney Cyril Sacks: Gross profit as a percentage of net sales was 54.5% for the 2023 Q4, excluding the Bank Inventory step-up. The increase in gross profit as a percentage of net sales for the 2023 Q4, as compared to the 2022 Q4, was primarily the result of pricing actions, decreased freight-in costs, and lower input costs. During this call, we will talk about impairment charges of approximately $39.9 million recorded in the 2023 fourth quarter related to the alcohol brands segment, due in part to the continuing challenges in the craft beer and seltzer categories. We will refer to these charges as the Alcohol Impairment Charges.

Rodney Cyril Sacks: As a percentage of net sales for the 20th twenty-three fourth quarter as compared to the 'twenty to 'twenty two fourth quarter was primarily the result of pricing actions decreased fried chicken costs and lower input costs.

Rodney Cyril Sacks: During this call we will talk about impairment charges of approximately $39 9 million recorded in the 'twenty to 'twenty three fourth quarter related to the alcohol brands segment due in part to the continuing challenges in the craft beer and seltzer categories. We will refer to these charges as the alcohol impairment charge.

Rodney Cyril Sacks: Rogers the alcohol impairment charges related to certain non amortizing intangibles as well as property and equipment acquired as part of the Kownacki drilling section.

Rodney Cyril Sacks: The alcohol impairment charges relate to certain non-amortizing intangibles, as well as property and equipment acquired as part of the Canocky transaction. Operating expenses for the 2023 Q4 were $504.4 million compared to $390 million in the 2022 Q4. Operating expenses for the 2023 Q4 included alcohol impairment charges. As a percentage of net sales, operating expenses for the 2023 Q4 were 29.2 percent compared with 25.8 percent in the 2022 Q4. Excluding the alcohol impairment charges, as a percentage of net sales, operating expenses for the 2023 Q4 were 26.8 percent. Distribution expenses for the 2023 Q4 were $79.6 million or 4.6% of net sales compared to $76.1 million or 5% of net sales in the 2022 Q4.

Rodney Cyril Sacks: Operating expenses for the 2023 fourth quarter with 504.4 million compared to $319 million in the 2022 fourth quarter operating expenses for the 2023 fourth quarter included the alcohol impairment charges as a percentage of net sales operating expenses for the trend.

Rodney Cyril Sacks: 23 fourth quarter with 29, 2% compared with 20, 548% in the 'twenty to 'twenty two fourth quarter exclusive of the alcohol impairment charges as a percentage of net sales operating expenses for the training 23 fourth quarter were 26.8% distribution.

Rodney Cyril Sacks: Fences for the 'twenty to 'twenty three fourth quarter were 79, $4 6 million or four 6% of net sales compared to $76 1 million or 5% of net sales in the 'twenty to 'twenty two fourth quarter.

Rodney Cyril Sacks: Operating income for the 2023 Q4 increased 10% to $434 million from $394.4 million in the 2022 Q4. Operating income adjusted for the bank inventory step-up and the alcohol impairment charges increased 21.4% to $478.9 million for the 2023 Q4. The effective tax rate for the 2023 Q4 was 18.5%, compared with 23.3% in the 2022 Q4. The decrease in the effective tax rate was primarily attributable to an increase in the stock compensation deduction.

Rodney Cyril Sacks: Operating income for the 'twenty to 'twenty, three fourth quarter increased 10% to 434 million from $394 4 million in the 2022 comparative quarter operational income adjusted for the bank inventory step up and the alcohol impairment charges increased 21.4.

Rodney Cyril Sacks: Per cent to 478 9 million for the 'twenty to 'twenty, three or fourth quarter.

Rodney Cyril Sacks: The effective tax rate for the 2023 fourth quarter was 18, 5% compared with 23, 43% in the 2022 fourth quarter. The decrease in the effective tax rate was primarily attributable to an increase in the stock compensation deduction.

Rodney Cyril Sacks: Net income increased 21.6% to $367 million, as compared to $301.7 million in the 2022 comparable quarter. Net income adjusted for the bank inventory step-up and the alcohol impairment charges net of tax increased 33.1% to $401.5 million for the 2023 fourth quarter. Diluted earnings per share for the 2023 fourth quarter increased 22.3% to $0.35 from $0.29 in the fourth quarter of 2022. Diluted earnings per share adjusted for the bank inventory step-up and the alcohol impairment charges net of tax was $0.38 for the 2023 fourth quarter, an increase of 33.8%. The company implemented price increases in the first quarter of 2024 in certain international markets. We are continuing to monitor opportunities for further pricing actions in both the United States and internationally.

Rodney Cyril Sacks: Net income increased 21, 6% to 367 million as compared to 301 7 million in the 2022 comparable quarter net income adjusted for the bank inventory step up and the alcohol impairment charges net of tax increased 33, 1%.

Rodney Cyril Sacks: Two 401.5 million for the 'twenty, two 'twenty three or fourth quarter.

Rodney Cyril Sacks: Diluted earnings per share for the Trinity twenty-three fourth quarter increased 22, 3% to 35 cents from trenching nonsense in the fourth quarter of 2022 diluted earnings per share adjusted for the bank inventory step up and the alcohol impairment charges net of tax.

Rodney Cyril Sacks: With 38 cents for the 2023 fourth quarter, an increase of 33 point to 8%.

Rodney Cyril Sacks: The company has implemented price increases in the first quarter of 'twenty 'twenty four and certain international markets. We are continuing to monitor opportunities for further pricing actions in both the United States and internationally.

Rodney Cyril Sacks: The company continues to have market share leadership in the energy drink category for all outlets combined in the United States for both the 13-week and 4-week periods ended February 17, 2024. According to Nielsen reports, for the 13 weeks through February 17, 2024, for all outlets combined, namely convenience, grocery, drug, and mass merchandisers, sales in dollars in the energy drink category, including energy shots, increased by 5.5% versus the same period a year ago. Sales of the company's energy brands, excluding Bang, were up 0.9% in the 13-week period. Sales of Monster declined 0.7%, sales of Rain were up 21.6%, sales of Nozz increased 5.1%, and sales of Full Throttle increased 3.6%. Sales of Red Bull increased 2.9%. According to Nielsen, for the four weeks ended February 17, 2024, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots, increased 3.7% over the same period the previous year. Sales of the company's energy brands, excluding Bang, decreased 0.1% in the four-week period in the convenience and gas channel. Sales of Monster decreased by 2% over the same period versus the previous year.

Rodney Cyril Sacks: The company continues to have market share leadership in the energy drink category four outlets combined in the United States in both a 13 week and four week periods ended February 17 2020 full.

Rodney Cyril Sacks: According to Nielsen reports for the 13 weeks through February 17, 'twenty 'twenty four for all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by five 5% versus the same period a year ago. So all sorts of companies yes.

Rodney Cyril Sacks: Energy brands, excluding bank, where I point non of a percent in the 13 week period sales of Monster declined <unk> seven of a percent sales of reign were up 21, 6% sales of nausea increased five 1% and sells a full throttle increased three 6% sales of Red Bull.

Rodney Cyril Sacks: <unk> increased 2.9%.

Rodney Cyril Sacks: According to Nielsen for the four weeks ended February 17, 2000, $24000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased three 7% over the same period the previous year.

Rodney Cyril Sacks: So all of the company's energy brands, excluding Bang decreased 0.1 of a percent in the four week period in the convenience and gas channel sales of monster decreased by 2% over the same period versus the previous year range sales increased 17, 2% nausea cells were up 6% and.

Rodney Cyril Sacks: Rain sales increased 17.2%, nozzle sales were up 6%, and full throttle was up 1.7%. Sales of Red Bull were up 3.8%. According to Nielsen, for the four weeks ended February 17, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, decreased from 36.9 percent to 35.5 percent, excluding banks. Including Bang, the company's market share is 37%. Monster's share decreased from 30.8% a year ago to 29.1%, while Rain's share increased 0.3 of a share point to 3%.

Rodney Cyril Sacks: Full throttle was up one 7% sales of Red Bull up three 8%.

Rodney Cyril Sacks: According to Nielsen for the four weeks ended February 17, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 36, 9% to 35.5% excluding bank.

Rodney Cyril Sacks: Including Bang the company's market share reached 37% monster share decreased from city point to 8% a year ago to 29.1% range share increased <unk> three of a share point to three per cent nauseous, you increase 0.1 of a share point to 7% and full throttle share remained at 47.

Rodney Cyril Sacks: Nasdaq's share increased 0.1 of a share point to 2.7%, and Full Throttle's share remained at 0.7%, 0.7 of a percent.

Rodney Cyril Sacks: Oh boy seven of a percent Bankshare was one 4% Red Bull's share increased 0.1 of a share point to city, 5.1% market share of certain competitors were as follows Celsius, eight 1% seafood, 3.5% five hour, 3.4% Roc.

Rodney Cyril Sacks: Bank share was 1.4 percent; Red Bull's share increased 0.1 of a share point to 35.1 percent. Market share of certain competitors was as follows: Celsius 8.1%, C4 3.5%, Five Hour 3.4%, Rockstar 3.2%, and Ghost 2.9%. According to Nielsen, for the four weeks ended February 17, 2024, sales in dollars of the coffee plus energy drink category, which includes our Java Monster line, in the convenience and gas channel decreased 10.3% over the same period the previous year. Sales of Java Monster, including Java Monster 300 and Java Monster Nitro Cold Brew, were 4.6% lower in the same period versus the previous year. Sales of Starbucks Energy were 16.9% lower.

Rodney Cyril Sacks: So three 2% and goes to 2.9%.

Rodney Cyril Sacks: According to Nielsen for the four weeks ended February 17, 2000, $24000 of the coffee plus energy drink category, which includes our draw from Java Monster line in the convenience and gas channel decreased 10, 3% over the same period the previous year sales of Java Monster, including Java Monster, 300, and drove a months or not.

Rodney Cyril Sacks: A cold brew with full 0.6% lower than the same period versus the previous year sales of Starbucks energy were $16, 9% lower Java monster share of the coffee plus energy drink category for the four weeks ended February 17, 2024 was 58, 2% up three points four points.

Rodney Cyril Sacks: Java Monster's share of the coffee plus energy drink category for the four weeks ended February 17, 2024, was 58.2%, up 3.5 points, while Starbucks Energy's share was 41.5%, down 3.3%. According to Nielsen, in all measured channels in Canada, for the 12 weeks ended January 27, 2024, the energy drink category increased 9.2% in dollars. Sales of the company's energy drink brands increased 8.6% versus a year ago, but the market share of the company's energy drink brands decreased 0.2 of a point to 41.3%. Monster's sales increased 9%, and its market share decreased 0.1 of a point to 37.3%. Nasdaq sales decreased 5.1%, and its market share decreased 1.2%; full throttle sales increased 24.6%, and its market share increased 0.1%. 0.6 percent

Rodney Cyril Sacks: Starbucks energy share was 41, 5% down three three points.

Rodney Cyril Sacks: What is your Nielsen and all measured channels in Canada for the 12 weeks ended January 27 2024.

Rodney Cyril Sacks: You drink category increased nine 2% in dollars sales of the company's energy drink brands increased eight 6% versus a year ago. The market share of the company's energy drink brands decreased <unk> two of a point to 41, 3%.

Rodney Cyril Sacks: Monster sales increased 9% and its market share decreased <unk>, one of a point to 37.3.

Rodney Cyril Sacks: Nauseous sales decreased five 1% and its market share decreased <unk> two points to one 2% full throttle sales increased 24, 6% and its market share increased 2.1 of a point to 0.6%.

Rodney Cyril Sacks: According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 10.9% for the month of January 2024. Monster sales increased 10.5%. Monster's market share in value decreased 0.1 of a point to 29.4% against the comparable period the previous year.

Rodney Cyril Sacks: According to Nielsen for all outlets combined in Mexico, the energy drink category increased 10, 9% for the month of January 2024 months to sales increased 10.5% monsters market share in value decreased 0.1 of a point to 29.4% against the comparable period the previous year.

Rodney Cyril Sacks: Sales of Predator increased 23.2%, and its market share increased 0.6 of a share point to 5.6%. The Nielsen statistics for Mexico cover single months, which is a short period, that may often be materially influenced, positively and 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 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.

Rodney Cyril Sacks: Sales of credits are increased 23, 2% and its market share increased to <unk> six of a share point to five 6%.

Rodney Cyril Sacks: The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively Andrew ratably buy sells 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 chain by one or.

Rodney Cyril Sacks: More energy drink brands during a particular month consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.

Rodney Cyril Sacks: According to Nielsen.

Rodney Cyril Sacks: For all outlets combined, in Brazil, the energy drink category increased 19.9% for the month of January 2024. Monster's sales increased 33.6%. Monster's market share in value increased 4.7 points to 45.8% compared to January 2023. In Argentina, due in part to hyperinflation, the energy drink category increased 167.2% for the month of January 2024.

Rodney Cyril Sacks: For all outlets combined in Brazil, the energy drink category increased 19, 9% for the month of January 'twenty 'twenty four monster sales increased 33, 6% monsters market share in value increased 4.7 points to 44, 8% compared to January 2023.

Rodney Cyril Sacks: In Argentina, due impart to a hotbed of inflation the energy drink category increased 167, 2% for the month of January 'twenty 'twenty four monster sales increased 178, 2% monsters market share in value increased 2.2 points to 55, 8% compared to January.

Rodney Cyril Sacks: Monster's sales increased 178.2%. Monster's market share in value increased 2.2 points to 55.8% compared to January 2023. Chile.

Rodney Cyril Sacks: 2023 in Chile, the energy drink category increased one point to 8% for the month of January 'twenty 'twenty four monster sales decreased 2.2% monsters market share in value decreased one seven points to 45% monsters and it must be energy remains the leading energy brand in.

Rodney Cyril Sacks: The energy drink category increased 1.8% for the month of January 2024, but Monster's sales decreased 2.2%. Monster's market share in value decreased 1.7 points to 40.5%. However, Monster Energy remains the leading energy brand in value in Argentina, Brazil, and Chile. I would 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. For example, according to Nielsen, in the 13-week period until the end of January 2024, Monster's retail market share in value, as compared to the same period the previous year, grew from 14. 31% to 31.6% in France.

Rodney Cyril Sacks: Value, you know, Argentina, Brazil, and Chile I.

Rodney Cyril Sacks: I would like to point out that the Nielsen numbers in EMEA should only be used as a god 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.

Rodney Cyril Sacks: According to Nielsen in the 13 week period until the end of January 'twenty 'twenty, four monsters retail market share in value as compared to the same period. The previous year grew from 14.9% to 16, 3% in Belgium from 31% to 30, 116% in fraud.

Rodney Cyril Sacks: <unk> from Citi put 8% to 33, 2% in Great Britain from four 9% to six point too in the Netherlands from city to seven to 34.4 in Norway and from 45 to 40.9 in spine.

Rodney Cyril Sacks: 30.8% to 33.2% in Great Britain, from 4.9% to 6.2% in the Netherlands, from 32.7% to 34.4% in Norway, and from 40.5% to 40.9% in Spain. According to Nielsen, in the 13-week period until the end of December 2023, Monster's retail market share in value, as compared to the same period the previous year, grew from 20.1% to 22.4% in the Czech Republic, from 13.7% 27.6% to 30.1% in the Republic of Ireland.

Rodney Cyril Sacks: According to Nielsen in the 13 week period ended until the end of December 2023, monsters retail market share in value as compared to the same period. The previous year grew from 21% to 22, 4% in the Czech Republic from 13, 7% to 17, 1% in Germany from surgery points too.

Rodney Cyril Sacks: Just that 1.1 percentage in Italy, and from 27, 6% to 31% in the Republic of Ireland.

Rodney Cyril Sacks: According to Nielsen, in the 30-week period until the end of December 2023, Monster's retail market share in value, as compared to the same period the previous year, remained flat at 18.6% in Poland. Monster's retail market share in value, as compared to the same period the previous year, declined from 27.8% to 27% in Denmark, from 37% to 36.1% in Greece, from 19.8% to 19.2% in South Africa, and from 15.7% to 15.5% in Sweden. The 13-week period until the end of December 2023 predicts that retail market share values compared to the same period the previous year grew from 32.1% to 33.7% in Kenya and from 19.2% to 21% in Nigeria. According to IRI, for all outlets combined in Australia, the energy drink category increased 13% for the four weeks ending February 11, 2024. Monster's sales increased 32.5%, and its market share in value increased 2.9 points to 19.4% against the comparable period the previous year. Sales of Mother increased 10.5%, and its market share decreased 0.2 of a share point to 10.8%. This period marks the first time that the company's total market share exceeded 30 percent.

Rodney Cyril Sacks: According to Nielsen in the 30 week period until the end of December 2023, monsters retail market share in value as compared to the same period. The previous year remain flat at 18, 6% in Poland monsters retail market share in value as compared to the same period the previous year declined from 27.8% 27%.

Rodney Cyril Sacks: Denmark from 37% to 36, 1% increase from 19, 8% to 19, 2% in South Africa, and from 15.7% to 15.5% in Sweden.

Rodney Cyril Sacks: According to Nielsen.

Rodney Cyril Sacks: In the 13 week period until the end of December 'twenty, two 'twenty three printers as retail market share in value as compared to the same period. The previous year grew from 32.1% to 33, 7% in Kenya and from 19, 2% to 21% in Nigeria.

Rodney Cyril Sacks: According to IRI for all outlets combined in Australia energy drink category increased 13% for the four weeks ending February 11th 2024 months.

Rodney Cyril Sacks: Cost of sales increased 32.5% monsters market share in value increased two points nine points to 19, 4% against the comparable period. The previous year sells a mother increased 10.5% and its market share decreased <unk> two of a share point to 10.8% this period marks.

Rodney Cyril Sacks: The first time that the company's total market share exceeded 30%.

Rodney Cyril Sacks: Going to IRI for all outlets combined in New Zealand energy drink category increased 9% for the four weeks ending February 11th 'twenty 'twenty four monster sales increased 33% monsters market share in value increased 22, six points to 14, 6% against the comparable period of the previous year.

Rodney Cyril Sacks: According to IRI, for all outlets combined in New Zealand, the energy drink category increased 9% for the four weeks ending February 11, 2024. Monster's sales increased 33%. Monster's market sharing value increased 2.6 points to 14.6% against the comparable period the previous year. Cells of mother increased 14.4%, and its market share increased 0.3 of a share point to 6.4%. Sales of Live Plus decreased 5% and its market share decreased 0.8 of a share point to 5.2%.

Rodney Cyril Sacks: A mother increased 14.4% and its market share increased <unk> three of a share point to six 4% sales of live plus decreased 5% and its market share decreased 0.8, Overshade point to five 2%.

Rodney Cyril Sacks: According to <unk> in the convenience channel in Japan, <unk> energy drink category decreased 2% for the month of January 'twenty 'twenty four monster sales increased six 9% monsters market share in value increased 3.9 points to 59, 4% against the comparable period the previous year.

Rodney Cyril Sacks: According to Intaj in the Convenience Channel in Japan, the energy drink category decreased 0.2% for the month of January 2024, while Monster's sales increased 6.9%. Monster's market share in value increased 3.9 points to 59.4% against the comparable period the previous year, according to Nielsen.

Rodney Cyril Sacks: According to Nielsen.

Rodney Cyril Sacks: All outlets combined in South Korea, the energy drink category increased 17, 2% for the month of January 2024 months of sales increased five 5% monsters market share in value decreased five nine points to 53, 6% against the comparable period the previous year with gainful.

Rodney Cyril Sacks: Out that certain market statistics that cover single months or four week periods may have.

Rodney Cyril Sacks: Oil Outlets Combined in South Korea, the energy drink category increased 17.2% for the month of January 2024. Monster's sales increased 5.5%, but its market share in value decreased 5.9%.

Rodney Cyril Sacks: Can be materially influenced positively and negatively by promotions or other trading factors during those periods.

Rodney Cyril Sacks: Net sales to customers outside the U S was $637 million 36, 8% of total net sales in the 2023 fourth quarter compared to $542 5 million or 34, 9% of total net sales in the corresponding quarter in 2022.

Rodney Cyril Sacks: 3.6% against the comparable period the previous year. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced, positively or negatively, by promotions or other trading factors during those periods. Net sales to customers outside the U.S. were $637 million, 36.8% of total net sales in the 2023 fourth quarter, compared to $542.5 million, or 35.9% of total net sales in the corresponding quarter in 2022. Foreign currency exchange rates had a negative impact on net sales in US dollars by approximately $27.1 million in the 2023 fourth quarter.

Rodney Cyril Sacks: Foreign currency exchange rates had a negative impact on net sales in the U S and U S dollars by approximately $27 1 million in the 'twenty to 'twenty three or fourth quarter.

Rodney Cyril Sacks: In EMEA net sales in the 'twenty two 'twenty three fourth quarter increased 10, 4% in dollars and increased 11, 1% on a currency neutral basis over the same period in 2022.

Rodney Cyril Sacks: Gross profit in this region as a percentage of net sales for the fourth quarter was 32, 7% compared to 73, 9% in the same quarter in 2022 and 31, 1% in the 'twenty to 'twenty three third quarter.

Rodney Cyril Sacks: We're also pleased that in the 'twenty to 'twenty three fourth quarter Monster gained market share in Belgium, Czech Republic, France, Germany, Great Britain, Italy, the Netherlands, Norway, and Republic of Ireland and Spain.

Rodney Cyril Sacks: In EMEA, net sales in the 2023 Q4 increased 10.4% in dollars and increased 11.1% on a currency-neutral basis over the same period in 2022. Gross profit in this region as a percentage of net sales for the 4th quarter was 32.7% compared to 33.9% in the same quarter in 2022 and 31.1% in the 2023 3rd quarter. We're also pleased that in the 2023 fourth quarter, Monster gained market share in Belgium, the Czech Republic, France, Germany, Great Britain, Italy, the Netherlands, Norway, the Republic of Ireland, and Spain. In Asia Pacific, net sales in the 2023 fourth quarter increased 3.7% in dollars, and increased 5.1% on a currency-neutral basis over the same period in 2020. Gross profit in this region as a percentage of net sales for the fourth quarter was 40.1% versus 42.6% in the same period in 2022 and 43.2% in 2020. R.I.P.

Rodney Cyril Sacks: In Asia Pacific net sales in the 'twenty to 'twenty three fourth quarter increased three 7% in dollars and increased five 1% on a currency neutral basis over the same period in 2022 gross profit in this region as a percentage of net sales for the fourth quarter was 41%. This was 42, 6% in the same.

Rodney Cyril Sacks: In 2022, and 43, 2% in the 2023 third quarter net sales in Japan in the 'twenty to 'twenty three fourth quarter decreased two 3% in dollars and increased <unk>, 9% on a currency neutral basis.

Rodney Cyril Sacks: South Korea, and it sells in the 'twenty to 'twenty three fourth quarter decreased five 1% in dollars and decreased nine 4% on a currency neutral basis as compared to the same quarter in 2022.

Rodney Cyril Sacks: Once it remains the market leader in Japan, and South Korea, and China K cells in the 'twenty to 'twenty three fourth quarter increased 51% in cases as compared to the same quarter in 'twenty 'twenty. Two we remain optimistic about the long term prospects for the Monster brand in China and are excited about the launch of credits this year.

Rodney Cyril Sacks: She and other which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased 41, 4% in dollars and increased 43, 4% on a currency neutral basis.

Rodney Cyril Sacks: Filippo Falorni, Net sales in Japan in the 2023 Q4 decreased 2.3% in dollars and increased 0.9% on a currency neutral basis. South Korea's net sales in the 2023 fourth quarter decreased 5.1% in dollars. 9.4% on a currency neutral basis as compared to the same quarter in Europe. Monster remains the market leader in Japan and South Korea. In China, case sales in the 2023 fourth quarter increased 51% in cases as compared to the same quarter in 2020. We remain optimistic about the long-term prospects for the monster brand in China and are excited about the launch of Predator this year. In Oceania, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam, net sales increased 41.4% in dollars and increased 43.4% on a currency-neutral basis.

Rodney Cyril Sacks: In Latin America, including Mexico, and the Caribbean net sales in the 2023 fourth quarter increased 37, 2% in dollars and increased $56. One per center on a currency neutral basis over the same period in 2022 gross profit in this region as a percentage of net sales was 38, 4% for the training.

Rodney Cyril Sacks: 23 fourth quarter versus 28, 4% in the 'twenty to 'twenty, two fourth quarter and 37.7% in the 'twenty two 'twenty three third quarter.

Rodney Cyril Sacks: In Brazil, it's always in the 2023 fourth quarter increased 76, 7% in dollars and increased to 66, 1% on a currency neutral basis.

Rodney Cyril Sacks: Sales in Mexico increased 39, 5% in dollars and decreased 23, 7% on a currency neutral basis in the 2023 fourth quarter.

Rodney Cyril Sacks: In Latin America, including Mexico and the Caribbean, net sales in the 2023 fourth quarter increased 37.2% in dollars and increased 56.1% on a currency-neutral basis over the same period in 2020. Gross property in this region as a percentage of net sales was 38.4% in the 2023 fourth quarter versus 28.4% in the 2022 fourth quarter and 37.7% in the 2023 third quarter. In Brazil, net sales in the 2023 fourth quarter increased 76.7% in dollars and increased 66.1% on a currency-neutral basis. Net sales in Mexico increased 39.5% in dollars and increased 23.7% on a currency-neutral basis. Net sales in Chile increased 21.6% in dollars and increased 17.6% on a calendar year.

Rodney Cyril Sacks: Net sales in Chile increased 21, 6% in dollars and increased 17, 6% or like others see neutral basis in the 2023 fourth quarter and it sells in Argentina increased 36, 8% in dollars and then.

Rodney Cyril Sacks: Increased 219, 6% on a currency neutral basis in the 2023 for the quarter.

Rodney Cyril Sacks: During the first quarter of 'twenty 'twenty, four we announced that cannot get craft brewery collective.

Rodney Cyril Sacks: We refer to as Kentucky will operate under the nine months to Brewing company. This change will better align the business with our brand equity we continue with the expanded distribution of the Beast unleashed during the fourth quarter of 2023, which is now available in 48 states through a network of distributors, we have commenced with the rollout of the beef.

Rodney Cyril Sacks: Unleashed in 24 ounce single serve cans in the convenience and gas channel. We are pleased with the results of the Beast unleashed and are continuing to expand points of distribution of this brand.

Rodney Cyril Sacks: The Beast Hot Tea was launched in January of 2024 and is now available in 40 states with a goal of national distribution Bombardier.

Rodney Cyril Sacks: 2023 fourth quarter and net sales in Argentina increased 36.8% in dollars and 219.6% on a currency-neutral basis in the 20- During the first quarter of 2024, we announced that Canarky Craft Brewery Collective and John Furches-Kanocki would operate under the name Monster Brewing Company. This change will better align the business with our brand equity. We will continue with the expanded distribution of BEAST Unleashed during the fourth quarter of 2023, which is now available in 48 states through a network of beer distributors. We have begun the rollout of the Beast Unleashed in 24 oz. single serve cans in the convenience and gas channel.

Rodney Cyril Sacks: North Sea Beast Hot tea is available in four flavors and is available in 24 ounce single serve cans as well as a variety 12 pack of 12 ounce sleek cans early response to the brand has been very positive.

Rodney Cyril Sacks: In the U S. During the 2023 or fourth quarter, we expanded nausea original with a zero sugar offering nausea of sugar.

Rodney Cyril Sacks: Popular innovation continues in the first quarter of 2024.

Rodney Cyril Sacks: In January we launched two additional flavors of rainstorm guava, strawberry and sit resist to add to the floor for flavors Iridium distribution. We are planning to launch two additional rain storm flavors I pick out strawberry and mango in March 'twenty 'twenty four bringing the total number of rain storm flavors to eight.

Rodney Cyril Sacks: In February we launched Monster energy Ultra fendt to see Ruby Red and 16 ounce and 12 ounce sleek cans. We also launched monster rehab Green tea reign total body fuel sour gummy worm monster juice reopens drove a months to Irish cream and most of the reserve peaches and cream.

Rodney Cyril Sacks: We are pleased with the results of the Beast Unleashed and are continuing to expand points of distribution of this brand. Nasty Beast Hot Tea was launched in January of 2024 and is now available in 40 states with a goal of national distribution by mid-year. Nasty Beast Hot Tea is available in four flavors and is available in 24 oz single serve cans as well as in a variety 12 pack of 12 oz three cans.

Rodney Cyril Sacks: Additionally, in the first quarter of 'twenty 'twenty four we continue to innovate in a multi pack in variety pack offerings.

Rodney Cyril Sacks: In Canada during the first quarter of 2024, we launched several new innovations in January we launched Monster energy Ultra Strawberry dreams and to package sizes as well as reign total body fuel Jerry law made at Monster Reserve Orange Dream CECO.

Rodney Cyril Sacks: Early response to the brand has been very positive. In the U.S., during the 2023 fourth quarter, we expanded NOS Original with a zero-sugar offering, NOS Zero Sugar. Our pipeline innovation continues in the first quarter of 2024. In January, we launched two additional flavors of Rainstorm, Guava Strawberry, and Citrus Zest, to add to the four flavors already in distribution. We are planning to launch two additional Rainstorm flavors, Apricot Strawberry and Mango, in March 2024, bringing the total number of Rainstorm flavors to eight. In February, we launched Monster Energy Ultra Fentanyl. Ruby Red in 16 oz and 12 oz sleek cans.

Rodney Cyril Sacks: In early February 'twenty 'twenty, four we launched Monster energy zero sugar seven.

Rodney Cyril Sacks: 710 ml receivable package as well as monster rehab WILDBERRY T.

Rodney Cyril Sacks: Latin America during the fourth quarter of 2023, we launched several new innovations in Brazil, We launched Monster pipeline Punch, Uruguay, we launched monster Ultra Sunrise and in Chile, We launched Monster Aussie style eliminate in Colombia, and Guatemala, We launched Monster reserve, what pineapple in Peru.

Rodney Cyril Sacks: Fury, Goldstrike and affordable energy brand.

Rodney Cyril Sacks: We also launched Monster Rehab Green Tea, Reign Total Body Fuel Sour, Gummy Worm, Monster Juice Rio Punch, Java Monster Irish Cream, and Monster Reserve Peaches and Cream. Additionally, in the first quarter of 2024, we continue to innovate in our multi-pack and variety pack offerings. In Canada, during the first quarter of 2024, we launched several new innovations. In January, we launched Monster Energy Ultra-Strawberry Dreams in two package sizes as well as Rain Total Body Fuel, Cherry Limeade, and Monster Reserve Orange Dreamsicle.

Rodney Cyril Sacks: In Latin America during the first quarter of 2020 full several new flavors have been introduced in Mexico, We continued to expand our affordable portfolio and introduced privileged tropical.

Rodney Cyril Sacks: In the 'twenty, two 'twenty three or fourth quarter in New Zealand, we launched Monster energy Ultra Peachy-keen in Australia. During the first quarter of 'twenty 'twenty four we launched Monster energy zero Sugar Monster energy Ultra Strawberry dreams, and Monster juice Pep alone.

Rodney Cyril Sacks: In EMEA in the fourth quarter of 'twenty to 'twenty, three we launched Monster Juiced, Monarc Nacho Cosmic Peach Reserve Orange Dream should go and ultra Peachy-keen in a number of countries. Once the energy zero Sugar was launched in Great Britain, Ireland and Poland in the second half of 2023 with additional launches planned throughout.

Rodney Cyril Sacks: In early February 2024, we launched Monster Energy Zero Sugar in a 710 ml resealable package as well as Monster Rehab Wild Berries. In Latin America, during the fourth quarter of 2023, we launched several new innovations. In Brazil, we launched Monster Pipeline Punch, in Uruguay, we launched Monster Ultra Sunrise, and in Chile, we launched Monster Aussie Style Lemonade. In Colombia and Guatemala, we launched Monster Reserve White Pineapple. In Peru, we launched Fury Gold Strike, an affordable energy brand, in Latin America during the first quarter of 2024.

Rodney Cyril Sacks: EMEA in 'twenty 'twenty four.

Rodney Cyril Sacks: During the fourth quarter of 2023, we launched monster was eliminated in Japan Mont.

Rodney Cyril Sacks: Ultra Paradise in Malaysia Monster, Mango Loco in pipeline punch in Kazakhstan, and Monster Mango Loco in the Philippines in February 'twenty 'twenty, four we introduced printer to goldstrike and as a bejon and in the Philippines.

Rodney Cyril Sacks: During the 2023 fourth quarter. The company purchased approximately 0.8 million shares of its common stock at an average purchase price of 54.57 per share for a total amount of $43 $2 million, excluding broker commissions as of February 27, 2020 full approx.

Rodney Cyril Sacks: Several new flavors have been introduced. In Mexico, we continue to expand our affordable portfolio and introduce Predecessor Tropical. In the 2023 fourth quarter, in New Zealand, we launched Monster Energy Ultra Peach Keen. In Australia, during the first quarter of 2024, we launched Monster Energy Zero Sugar, Monster Energy Ultra Strawberry Dreams, and Monster Juice Peppalon. In EMEA, in the fourth quarter of 2023, we launched Monster Juiced Monarch, Nitro Cosmic Peach, Reserve Orange Dreamsicle, and Ultra Peach Aquene in a number of countries. Monster Energy Zero Sugar was launched in Great Britain, Ireland, and Poland in the second half of 2023, with additional launches planned throughout EMEA in 2024.

Rodney Cyril Sacks: <unk> $642 4 million remained available for purchase under the previously authorized repurchase program.

Rodney Cyril Sacks: That is dollars.

Rodney Cyril Sacks: We estimate a foreign currency adjusted basis, including the alcohol brands segment January 'twenty 'twenty four sales were approximately 25% higher than the comparable period in January 2023 sales and 19, 7% higher than January 2023, excluding that.

Rodney Cyril Sacks: Alcohol brands segment we.

Rodney Cyril Sacks: We estimate January 'twenty, 'twenty four cells, including the alcohol brands segment to be approximately $17, 8% higher than in January 2023, and 17% higher than in January 2023, excluding the alcohol brands segment.

Rodney Cyril Sacks: During the fourth quarter of 2023, we launched Monster Aussie Lemonade in Japan, Monster Ultra Paradise in Malaysia, Monster Mango Loco and Pipeline Punch in Kazakhstan, and Monster Mango Loco in the Philippines. In February 2024, we introduced Predator Gold Strike in Azerbaijan and the Philippines. During the 2023 fourth quarter, the company purchased approximately 0.8 million shares of its common stock at an average purchase price of $54.57 per share for a total amount of $43.2 million, excluding broker commission. As of February 27, 2024, approximately $642.4 million remained available for purchase under the previously authorized repurchase program. That is dollars. We estimate on a foreign currency adjusted basis, including the alcohol brands Segma. January 2024 sales were approximately 20.5% higher than the comparable period in January 2023 sales and 19.7% higher than January 2023, excluding the alcohol brand's segment.

Rodney Cyril Sacks: Yeah.

Rodney Cyril Sacks: January 'twenty 'twenty four had one more selling day compared to January 2023.

Rodney Cyril Sacks: In this regard we caution again that sales 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 Tommy.

Rodney Cyril Sacks: A production.

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

Rodney Cyril Sacks: We reiterate that sales over a short period, such as a single month should not necessarily being future two or regarded as indicative of results for a full quarter or any future period.

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

Rodney Cyril Sacks: We estimate January 2024 sales, including the alcohol brand segment, to be approximately 17.8% higher than in January 2023 and 17% higher than in January 2021, excluding the alcohol brand cigarettes. January 2024 had one more selling day compared to January 2023. In this regard, we caution again that sales 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. Promotions in retail stores, Distributed 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 bottles.

Rodney Cyril Sacks: One the energy category continues to grow globally. Two we are pleased to report that our pricing actions have not significantly impacted consumer demand three flavor facility in Ireland is not providing a large number of flavors to our EMEA region, enabling better service level levels and lower.

Rodney Cyril Sacks: And of course to our EMEA region. We are in the process of constructing a juice facility at all Iff's flavor facility in Ireland, we have a robust innovation plan for 2024. The Beast unleashed is performing to expectations were exhausted for nasty Beast Hot tea as well as the additional.

Rodney Cyril Sacks: Alcohol opportunities that Monster Brewing company presents we are pleased with the rollout of credits 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.

Rodney Cyril Sacks: Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. 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'd like to summarize some recent positive points.

Rodney Cyril Sacks: Eight we are excited about the opportunities that the acquisition of Bang energy brand presents to us and believe that the brand will fit well within our broader portfolio of energy drink brands and.

Rodney Cyril Sacks: And lastly.

Rodney Cyril Sacks: The company achieved record fourth quarter net sales of 1.73 billion in the 'twenty two 'twenty three fourth quarter, 14.4% higher than net sales of 1.51 billion in the 2022 comparable period and 16, 1% higher on a foreign currency adjusted basis I would now like to open the floor to question.

Rodney Cyril Sacks: The energy category continues to grow globally. 2. We are pleased to report that our pricing actions have not significantly impacted consumer demand. 3.

Speaker Change: It's about the quarter and the 2023 year. Thank you.

Rodney Cyril Sacks: Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs for our EMEA region. We are in the process of constructing a juice facility at our AFF flavor facility in Ireland. We have a robust innovation plan for 2024. The Beast Unleashed is performing to expectations.

Speaker Change: We will now begin the question and answer session.

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

Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: To withdraw your question. Please press Star then two please.

Speaker Change: Please limit yourself to one question at this time, we will pause momentarily to assemble our roster.

Speaker Change: Our first question today is from Peter Grom with UBS. Please go ahead.

Peter K. Grom: Thanks, operator, and good afternoon, everyone hope you're doing well I wanted to ask a question specifically on gross margin.

Rodney Cyril Sacks: We're excited for Nasty Beast Hot Tea, as well as the additional alcohol opportunities that Monster Brewing Company presents. We are pleased with the rollout of Predator and Fury, 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. We believe that the brand will fit well within our broader portfolio of energy drink brands. Losty. The company achieved record fourth quarter net sales of $1.73 billion in the 2023 fourth quarter, 14.4% higher than net sales of $1.51 billion.

Peter K. Grom: Clearly the quarter came in a bit better relative to some of the commentary from the Investor meeting yeah.

Peter K. Grom: Maybe firstly did something surprised you in the quarter and then second just going back to that same commentary from the investor meeting there seem to be a lot of optimism that gross the gross margin trajectory would improve nicely from <unk>.

Peter K. Grom: Looking out to 'twenty four.

Speaker Change: I know you don't give guidance, specifically, but just any thoughts on how we should think about the margin trajectory given the very strong exit rate. Thanks.

Peter K. Grom: So I think at the Investor meeting as Oracle, we already spoke about 2023.

Peter K. Grom: Q4.

Speaker Change: As you know, we don't give guidance and we really do try not to give guidance. So if I can just talk about Q4 for a for a minute.

Operator: The Two Comparable Periods, is 15.1% higher on a foreign currency adjusted basis. I would now like to open the floor to questions about the quarter and the 2023 year. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Peter K. Grom: Q4 was strong.

Peter K. Grom: But there were a number of them really nonrecurring items included in GP in Q4, mainly related to true ups of.

Peter K. Grom: Yes.

Peter K. Grom: Various promotional items are best.

Peter K. Grom: Trips with bottlers as well as.

Operator: To withdraw your question, please press star then 2. Please limit yourselves to one question. At this time, we will pause momentarily to assemble our roster. Our first question today is from Peter Grom with UBS. Please go ahead. Thanks, operator. And good afternoon, everyone. Hope you're doing well.

Peter K. Grom: You know we have a a few we didn't have very many but we have a number of rebate programs. So youre.

Peter K. Grom: Looking at Q4 of 2023, you know I would say to you that on an ongoing basis Q.

Peter K. Grom: I wanted to ask a question specifically on gross margins. You know, clearly, the quarter came in a bit better relative to some of the commentary from the investor meeting. Maybe first, did something surprise you in the quarter?

Peter K. Grom: Q4 came up very much in line with what we expected which was an increase over Q3.

Peter K. Grom: And.

Peter K. Grom: It's.

Peter K. Grom: At the level probably of about 53, 5%.

Hilton H. Schlosberg: And then second, just going back to that same commentary from the investor meeting, there seemed to be a lot of optimism that the gross margin trajectory would improve nicely from 4Q looking out to 24. I know you don't give guidance specifically, but just any thoughts on how we should think about the margin trajectory given the very strong exit rate? Thanks.

Peter K. Grom: On a kind of non standalone.

Peter K. Grom: Excluding these nonrecurring items.

Peter K. Grom: Okay.

Peter K. Grom: The next question is from Philip <unk> with Citi. Please go ahead.

Philip: Hey, good afternoon guys.

Philip: I wanted to ask you about the energy drink category in the U S.

Philip: <unk> seen a bit of us little down in January.

Hilton H. Schlosberg: So I think at the investor meeting, as I recall, we really spoke about 2023 Q4. As you know, we don't give guidance, and we really do try not to give guidance. So if I could just talk about Q4 for a minute. Q4 was strong, but there were a number of really non-recurring items included in GP in Q4, mainly related to true-ups of various promotional items, various true-ups of bottlers, as well as, you know, we have a few. We don't have very many, but we have a number of rebate programs.

Philip: How much do you think it was the weather how much would you think or some other external thoughts around the consumer and then maybe you can comment a bit on market share trends in the U S.

Philip: We've seen a little bit of pressure on the core monster brand. So any color you could give it will be it will be helpful.

Speaker Change: Yeah, you know I don't think.

Speaker Change: One should discount the fact that the.

Philip: The weather was was a factor secondly.

Hilton H. Schlosberg: So, you know, looking at Q4 of 2023, I would say to you that, on an ongoing basis, Q4 came up very much in line with what we expected, which was an increase over Q3. It's at the level probably of about 53.5% on a kind of stand-alone basis, excluding these non-recurring items. The next question is from Filippo Falorni with Citi. Please go ahead.

Philip: We do have a lot of non measured channels and if you. If you heard earlier in the call January sales.

Philip: In my book were really impressive.

Philip: Increase in January sales.

Philip: Added to that Nielsen doesn't cover everything as we've discussed before.

Philip: And there was some interesting things.

Philip: In January for example, one of the Big club store chains had what we.

Filippo Falorni: Hey, good afternoon, guys. Um, I wanted to ask you about the energy drink category in the US. We've seen a bit of a slowdown in January. How much do you think it was the weather?

Philip: We call an MVM.

Philip: Which is a club store chain that is not read by Nielsen.

Hilton H. Schlosberg: How much would you think is some other external factor on the consumer? And then maybe you can comment a bit on market share trends in the US. We've seen a little bit of pressure on the core monster brand. So any color you could give it will be helpful.

Philip: And in itself is pretty substantial.

Philip: Adding to that if.

Philip: If you go back to January 2023, we had very robust.

Philip: Increases mainly because of the launch of two.

Hilton H. Schlosberg: Yeah, firstly, you know, I don't think one should discount the fact that the weather was a fact. Secondly, you know, we do have a lot of non-measured channels, and if you heard earlier in the call, January sales were, you know, in my book, really impressive, the increase in January sales. Added to that, you know, Nielsen doesn't cover everything, as we've discussed before, and there were some interesting things in January. For example, one of the big club store chains had what we call an MVM, which is a club store chain that is not read by Nielsen, and in itself is pretty substantial. You know, adding to that, if you go back to January 2023, we had very robust increases, mainly because of the launch of two brands that really hit it out of the park. One was Monster Zero Sugar, and the other was Ultra Strawberry Dreams.

Philip: Two brands that really hit it out of the park, one with months of zero sugar and yes, there was ultra jewelry dreams.

Philip: On the call you would've heard that.

Philip: Innovation for 2020 full has really kicked off in February and is going through February through to March.

Philip: We didn't have the benefit of that innovation program earlier on as we did in 2023. So these are all factors that one must take into account when one examines.

Philip: Port slowness in.

Philip: And in the Nielsen volumes also I might add that we.

Philip: Have a number of important resets coming up the trade reset from January on through the early part of the second quarter.

Philip: And we anticipate a big gains in shelf space not any for our legacy brands not only for the Skus that we're about to launch but also for the bank brand, where you know a number of.

Hilton H. Schlosberg: On the call, you would have heard that innovation for 2024 really kicked off in February and is going on through February through to March. So we didn't have the benefit of that innovation program earlier on as we did in 2023. So these are all factors that one must take into account when one examines the so-called slowness in the Nielsen volumes.

Philip: Retailers that had is at two a M.

Philip: Really this.

Philip: Discontinued Bang because of all the litigation and all.

Philip: And all of the issues are not taking it back and we'll see that benefit starting really in the second quarter and sorry, starting in the first quarter and moving into the second quarter. So there's a whole number of factors that I think are worth bearing in mind.

Hilton H. Schlosberg: Also, I might add that we have a number of important resets coming up, the trade reset from January on through the early part of the second quarter. So, we're anticipating big gains in shelf space, not only for our legacy brands, not only for the SKUs that we're about to launch, but also for the Bang brand, where a number of retailers that had hitherto really discontinued Bang because of all the litigation and all of the issues are now taking it back. And we'll see that benefit starting really in the second quarter and, sorry, starting in the first quarter and moving into the second quarter.

Philip: When one looks at the.

Philip: You know the the Nielsen's for example in January.

Philip: The next question is from Andrew <unk> with J P. Morgan. Please go ahead.

Andrew: Thank you operator.

Andrew: Just you said that you will continue to look at opportunities for pricing do you asked what is preventing you to announce pricing at this point do you see I mean, obviously, the key competitor announced pricing back when when we all saw you here in New York you were talking about potentially looking at the impact of a less fifties. It seems that things have been.

Operator: So there's a whole number of factors that I think are worth bearing in mind when one looks at Nielsen's data, for example, in January. The next question is from Andrea Teixeira with J.P. Morgan. Please go ahead.

Andrea Faria Teixeira: Thank you, operator. You said that you'll continue to look at opportunities for pricing in the U.S. What is preventing you from announcing pricing at this point? Do you see? Obviously, the key competitor announced pricing back when we all saw you here in New York. You were talking about potentially looking at the impact of elasticity. It seems that things have been moderately positive. Is there any reason why you'd wait?

Andrew: Moderately positive is that any way.

Andrew: Reason why you'd wait and then second Hilton when you spoke about a normalized gross profit margin of 53, 5% should we expect margins to continue to build from here given that potential.

Andrew: Potentially the high Fifty's is still below where you were before.

Andrew: The pandemic had six <unk> is there any reason why these new plants would not leverage SaaS well any structural reasons that you would be below the high fifty's. Thank you are there.

Hilton H. Schlosberg: And then second, Hilton, when you spoke about a normalized gross profit margin of 53.5%, should we expect margins to continue to build from here, given that, you know, to potentially the high 50s? It's still below where you were before the pandemic at 60. Is there any reason why these new plants would not leverage as fast or any structural reasons why you would be below the high 50s? Thank you. The only structural reason is that we don't give guidance. So that's the only structural reason I can think of. Obviously, we're working on margins. You know, I'm proud to say that the Midwest premium and, you know, aluminum, which is one of my big, big bugbears, are coming down. But against that, you know, we've said that we have increases in other commodities and other pricing. So, you know, we're bringing our own manufacturing facilities up, and we're doing whatever we can to improve gross profit percentages. But, you know, we don't give advice.

Andrew: Any structural reason is we don't give guidance.

Andrew: There's any structural reason I can think of.

Andrew: Obviously, we're working on margins.

Speaker Change: I would just say that the Midwest premium and aluminum, which is one of my big Big Bugbears are coming down.

Speaker Change: But against that.

Hilton H. Schlosberg: Said that we have increases in other commodities and other.

Speaker Change: The pricing. So you know, we're bringing our own manufacturing facilities up and are we doing whatever we can to improve our gross profit percentages, but.

Speaker Change: We don't give guidance and.

Speaker Change: You know I don't know, what's going to happen with freight for example, you know we had a good benefit from a freight in this quarter. This last quarter and I'm not sure what's going to happen as we look forward into 2024, and the implications of the election and everything else. So that's.

Hilton H. Schlosberg: And, you know, I don't know what's going to happen with freight, for example. We had a good benefit from freight in this quarter, this last quarter. And I'm not sure what's going to happen as we look forward into 2024 and, you know, the implications of the election and everything else. Thank you.

Speaker Change: About that and then on pricing you know, we we taking pricing in a number of markets internationally.

Speaker Change: We've taken pricing in January and in a number of markets and removing two with a.

Hilton H. Schlosberg: An aggressive price increase program internationally as we got the U S. We really are just are we waiting in evaluating you know we run a very sizable business here, we have a number of customers that we deal with and we wanted to make the right decision. So we're not saying no to.

Hilton H. Schlosberg: So that's about that. And then on pricing, we're taking prices in a number of markets internationally. We took pricing in January in a number of markets, and we're moving through with an aggressive price increase program internationally. As we've got the US, we really are just re-weighting and evaluating. We run a very sizable business here. We have a number of customers that we deal with, and we want to make the right decisions. So we're not saying no to a price increase, and we're not saying yes to a price increase this time.

Speaker Change: The price increase and we're not saying, yes to a price increase is done what we are saying is that we are honestly.

Speaker Change: Really evaluating and constantly evaluating the retail pricing environment and if we believe there are opportunities we will we will take them.

Operator: What we are saying is that we are honestly, really evaluating and cost-evaluating the retail pricing environment, and if we believe there are opportunities, we will take them. The next question is from Dara Mohsenian from Morgan Stanley. Please go ahead.

Speaker Change: The next question is from Dara <unk> from Morgan Stanley. Please go ahead.

Speaker Change: Yes.

Dara: Hey, guys good afternoon.

Dara Warren Mohsenian: So the comments on on some of the U S performance were helpful. Just given the strength of that global January number can you spend some time discussing what you're seeing internationally in terms of category growth and your market share progression.

Dara Warren Mohsenian: Hey guys, good afternoon. The comments on some of the US performance were helpful. Just given the strength of that global January number, can you spend some time discussing what you're seeing internationally, in terms of category growth and your market share progression, and any thoughts on maybe key expansion plans internationally for terms of some of your key brands and how we should think about that for 2024. Thanks.

Dara: Any thoughts on maybe key expansion plans internationally in terms of.

Speaker Change: Some of your key brands and how we should think about that for 2024.

Speaker Change: Thanks.

Speaker Change: So you know Daryl on the on the call we did talk about.

Hilton H. Schlosberg: So, you know, Dara, on the call, we talked about progress internationally in great detail. You know, I think sometimes we give far more detail than we should, but we do. We gave market shares in various countries. We indicated the, you know, new product innovations that are going to happen throughout our international territories. And I'm not sure what other question, you know, what other question, you know, what part of your question we possibly haven't answered. And I don't mean to be disrespectful.

Daryl: Progress internationally in very great detail I think sometimes we give format for a more detailed than we should but we do we.

Speaker Change: We gain market shares in various countries.

Hilton H. Schlosberg: We indicated the you know the new product innovations that are all going to happen.

Rod: Sure it's rod.

Hilton H. Schlosberg: International territories and I'm not sure what are the what are the question you know what part of your question, we possibly have an answer and I don't mean to be disrespectful I just.

Hilton H. Schlosberg: I just, you know, I just feel that a lot of your question has been covered. Rodney, I don't know if you've got anything to add. No, um, other than, you know... The international markets, they've sort of been a little bit, you know, all over the place in many ways. But, generally, they've been good.

Speaker Change: I just feel that a lot of your question has been covered Rodney I didn't if you've got anything to add.

Rodney: No other than you know.

Speaker Change: The.

Speaker Change: There's if you look at the international markets that have sort of been a little bit.

Speaker Change: All over the place and in many ways, but generally they that'd be good news a little bit of slowing in Asia Pacific We were taking steps to see some growth, but obviously were very substantially.

Rodney Cyril Sacks: There was a little bit of slowing in Asia-Pacific. We're taking steps to see some growth, but obviously, we're very substantial in those markets, and the actual markets have been a little flatter. But we've got great opportunity in some of the international markets that are developing. You know, we look particularly to markets like China and India, where at the beginning of a growth phase in India, particularly focusing on not only monster, but also predator there. So, you know, I think that it is mixed.

Speaker Change: Substantial in those in those markets and the extra markets have been a little flatter, but we've got great opportunity in some of the international markets that are developing you know we look at look, particularly to two markets like China, and India, where at the beginning of a growth phase in India, particularly focusing on not only monster if at all.

Speaker Change: So credit to them. So you know I think that are there.

Speaker Change: It is mixed.

Operator: You know, some of the markets have had some sort of ups and downs, but overall, we're in growth in most of the markets, and we still see that as very exciting. And you know, you can see from the results in January, we're still seeing, despite the Nielsen numbers, we're still seeing good growth in the U.S. as well. The next question is from Steve Powers with Deutsche Bank. Please go ahead.

Speaker Change: Some of the markets have had some sort of ups and downs, but overall, we're in grocery and most of the markets.

Speaker Change: And we still see that as very exciting and you can see from the results in January we were still seeing just bought the Nielsen numbers were still seeing good growth in the U S as well.

Speaker Change: The next question is from Steve powers with Deutsche Bank. Please go ahead.

Stephen Robert R. Powers: Yes, hey, good afternoon, guys. Um, two questions for me, if I could. The first one is just on G&A expenses in the quarter, they were up a lot, relative to our expectations of almost 25% in the fourth quarter. Anything to unpack there? And anything anomalous in that number?

Stephen Robert R. Powers: Yes, Hey, good afternoon guys.

Stephen Robert R. Powers: Two questions from me if I could the first one is just on G&A expenses in the quarter they were up a lot.

Stephen Robert R. Powers: Relative to our expectations up almost 25% in the bin.

Stephen Robert R. Powers: In the fourth quarter, just anything to unpack there.

Stephen Robert R. Powers: Anything anomalous in that number.

Hilton H. Schlosberg: Yeah, we spoke about the sorry to interrupt, but let's just, you know, let's just answer the first. So remember, we spoke about impairment charges of 40 million in this quarter, relating to the alcohol brand. Yeah, sorry, I'm excluding that.

Stephen Robert R. Powers: We spoke about the sorry to drop but it's as you know.

Speaker Change: Just answer the first.

Stephen Robert R. Powers: So remember we spoke about impairment charges of $40 million in this quarter.

Speaker Change: Relating to the alcohol brands.

Speaker Change: Yes, sorry, I'm, excluding that it's still up a lot.

Hilton H. Schlosberg: It's still up a lot, excluding the impairment charges. We'll look at that, but it's not what I've been seeing. Okay, the second question is, you know, in January, you highlighted plans just to step up, you know, focus on market execution in the US, specifically, you know, commercialization around placement of the full portfolio and innovation and just any update you can share on progress made and, and cooperation you're getting on with it from the Koch system on that effort. Yeah, I think that's, you know, that's not a one-fix issue.

Speaker Change: The impairment charges.

Speaker Change: Well look at that but it's not without being seen.

Hilton H. Schlosberg: Okay.

Speaker Change: The second question is you know in January you highlighted plans just to step up.

Speaker Change: In market execution in the U S specifically no commercialization around placement.

Speaker Change: Placement of the full portfolio and innovation and just any update you can share on progress made and and cooperation you're getting on the from the coke system on that effort.

Speaker Change: Yeah, I think that's a you know that's not a you know a one fix.

Speaker Change: Issue, that's something that's ongoing and we are working with the coke bottlers to improve execution.

Hilton H. Schlosberg: That's something that's ongoing, and we are working with the Koch Barters to improve execution. But, you know, as I said earlier, we're rolling out a number of new products, and the new sets are all taking place in this first quarter from February onwards and early into the second quarter. And I think you'll see that, well, I hope you'll see from those numbers when we report them that the positioning should be, you know, somewhat different to where we are today. The next question is from Mark Astrachan with Stiefel. Please go ahead.

Speaker Change: As I said earlier.

Speaker Change: We are rolling out a number of new products and the new sets all taking place in this first quarter from February onwards, and.

Speaker Change: Early into the into the second quarter, and I think you'll see that for all of our hope you'll see from.

Speaker Change: From those numbers.

Speaker Change: When we report them that the.

Speaker Change: You know the positioning should be somewhat different to where we are today.

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

Mark Stiefel Astrachan: Hey, afternoon, guys. I wanted to go back to international because I feel like it's one of those things that doesn't get the credit that's due, right? You've built nearly a $3 billion run rate business at this point. And, you know, I think from the outside in, it's a little bit hard to get a sense of kind of what's going on there, you know, so not necessarily to Dara's question, but maybe talk to some of the dynamics in terms of number of SKUs that you have on shelf, not obviously by country, but, you know, sort of broader strokes at the opportunity you have to still develop your portfolio within those markets, how much opportunity is there broadly to develop the energy category, and sort of related to that, you know, margins have improved, but they're obviously still a lot lower than your domestic margins, both gross margin and EBIT margin in that international business. How do you think about improving that over time? Is that possible relative to current levels?

Mark Stiefel Astrachan: Yeah, Hey afternoon, guys I wanted to go back to international because I feel like it's one of those things that doesn't get the credit that do right you built nearly a $3 billion run rate business at this point.

Mark Stiefel Astrachan: And I think from the outside in it's a little bit hard to get a sense of kind of what's going on there so not necessarily the <unk> question, but maybe talk to some of the dynamics in terms of number of Skus that you have on shelf not obviously by country, but you know sort of broader strokes of the opportunity you have to still develop your portfolio within that.

Mark Stiefel Astrachan: Market, how much opportunity is there broadly to develop the energy category.

Mark Stiefel Astrachan: And sort of related to that.

Mark Stiefel Astrachan: Margins have improved but they're obviously still a lot lower than your domestic margins, both gross margin and EBIT margin in that international business.

Mark Stiefel Astrachan: How do you think about improving that over time is that possible relative to current levels and kind of how do you think about the progression of that.

Hilton H. Schlosberg: And kind of how do you think about the progression of that? Now, we've always spoken about the fact that internationally, we compete very strongly against the main Red Bull, and we really try and keep our pricing. We have a pricing strategy that's worked well for us. And that's really keeping within a particular percentage of Red Bull pricing.

Speaker Change: No we've always spoken about the fact that internationally.

Speaker Change: We compete very strongly against in the main Red Bull and we really try and keep our pricing we have a pricing strategy. That's worked well for us and that's really keeping within a particular percentage of red bull's pricing and the minute, we stray from that we find that our market shares.

Hilton H. Schlosberg: And the minute we stray from that, we find that our market shares really suffers. So, you know, we really have an interesting dynamic in that we have, obviously, relationships with the Coke bottlers, and we have a pricing structure that kind of has a ceiling, right? So while we are always on a mission to improve gross margins, and we do that on an ongoing basis, there are some areas where it is very difficult to get gross margins. And I've said this before, that I think it will be very difficult in the main to get gross margins internationally to the levels that we have enjoyed in the US. You know, you can see what happened in the MEA, they nudged their margins up by 1% in the fourth quarter. And it's an ongoing battle to improve margins, bearing in mind the dynamics of what we are working against. Dissembled. Hello? I'm sorry, go ahead, sir.

Speaker Change: <unk> suffers so you know we really have an interesting dynamic in that we have a.

Speaker Change: Obviously relationships with the Coke partners and we have a pricing structure that we that kind of has a ceiling right. So it's.

Speaker Change: It's.

Speaker Change: Well, we are always on a mission to improve gross margins and we do that on an ongoing basis. There are some some areas where it is very difficult to get gross margin up.

Speaker Change: I've said this before that I think it'll be very difficult in the main to get gross margins internationally.

Speaker Change: To the levels that we have enjoyed in the U S. You can see what happened in EMEA. They they nudged their margins up about 1% in the fourth quarter and it's an ongoing battle to improve margins bearing in mind the dynamics of what we what we all working.

Hilton H. Schlosberg: Against.

Speaker Change: Different.

Speaker Change: Hello, I'm sorry go ahead Sir.

Speaker Change: Sorry can I just finish the other part of the question that the market raise just before we sign off.

Operator: Sorry, I'll just finish the other part of the question that Mark raised just before we sign off. Just to talk about the international opportunity, I think what Mark is alluding to is correct. In many markets, the international markets have really followed the U.S. We have a far broader portfolio in the U.S., innovation continues from year to year, but the benefit that the international markets have is they see what we've introduced in the U.S. and the large number of additional SKUs and literally brand families we have in the U.S., and they're able to try and look at those and try and introduce selected SKU In some markets, the runway is focused on Monster premium brands, and in some markets, the growth is coming from the affordable sector.

Operator: Just to talk about the international opportunity.

Speaker Change: I think what Mark is alluding to is correct in many markets. The international markets have really followed the U S. We have a far broader.

Speaker Change: Portfolio in the U S. Our innovation continues from year to year, but what the benefit that the international markets have is they see what we've introduced in the U S and the large number of additional SK use and literally brand families. We have in the U S and they're able to try and look look to those and trying to introduce select.

Speaker Change: It Skus, which gives them.

Speaker Change: Very large runway in some markets that runway he's focused on the monster premium brands and in some markets. The growth is coming from an affordable sector and we have addressed that so we have monster in many markets, but we've also we see that the premium sector has more of a limited.

Operator: And we have addressed that, so we have Monster in many markets, but we've also, where we see that the premium sector has more of a limited..., you know, percentage of the population that can really afford it, that have the buying power, we are growing. And that's where we're starting to grow brands like, you know, brands like Predator in many international markets. And that will help us continue to see growth. Predator also has a lot of depth.

Speaker Change: Uh huh.

Operator: And each of the population that can really afford to have the buying power, we all grabbing and that's really starting to grow brands like like like brands like predator in many international markets will end and that will help us continue to see growth at British I also had a lot of depth we've.

Rodney Cyril Sacks: We were launching Predator in China this year. We've just launched Predator in India, in Cairns. We're now just rolling out PET in India. We're trying to address some volume production issues because there's not a lot of availability, but that will sort itself out reasonably soon.

Speaker Change: We are launching predator in China. This year, we've just launched <unk> in India in cans. We are now just rolling out P. T. In India, we were trying to address them.

Speaker Change: Volume production issues, because we there's not a lot of availability, but that will sort itself out reasonably soon and we see enormous opportunity once we get some availability for production in P. T for pet in India. So there are a lot of opportunity, but they they they vary from market to market and continent to cotton.

Rodney Cyril Sacks: And we see enormous, you know, opportunity once we get some availability for production PET for PET in India. So there are a lot of opportunities, but they vary from market to market and continent to continent. As you know, we've just recently launched, for example, in Egypt, we launched both Monster and Predator. And Predator has made a, quickly made, you know, made a name for itself as a growing brand. So we have these opportunities in different countries around the world. And, you know, so we're quite excited about seeing that. As I said, we did have some slowdown in some of the more developed countries in Asia. The category slowed.

Speaker Change: And as.

Speaker Change: As you know we've just recently launched for example in Egypt, We launched both Monster rent credits on purchases made quickly made you know made a name for itself as a growing brand. So we have these opportunities in different countries around the world and you know so we are quite excited about seeing that we as I said, we did have some slowdown in some of the more.

Speaker Change: Developed countries in Asia are the category slowed but I think that those you know we were taking steps to to address and introduce more in different innovation in those markets and to grow them. So we do look forward to having a really attractive runway around the world for us.

Rodney Cyril Sacks: But I think that those, you know, we're taking steps to address and introduce more and different innovation in those markets and to grow them. So we do look forward to having a really attractive runway around the world for us. This concludes our question and answer session. I would like to turn the conference back over to Rodney Sacks for any closing remarks. On behalf of Monster, 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, to develop and differentiate our brands, and to expand the company both at home and abroad, and in particular to capitalizing on our relationship with the Coca-Cola bottler system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company.

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

Rodney Cyril Sacks: On behalf of Monster I'd like to thank everyone for their continued interest in the company. We continue to believe in the company of the outgrowth strategy and remain committed to continuing to innovate develop and differentiate our brands and to expand the company both at home and abroad and in particular capitalizing on our relationship with the Coca.

Speaker Change: Cola Bottler system, we believe that if you're all 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 and thank you very much for your attendance.

Rodney Cyril Sacks: We hope that you remain safe and healthy and thank you very much for your attendance. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021

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

Speaker Change: [music].

Speaker Change: Yes.