Q3 2024 Monster Beverage Corp Earnings Call

November 7, 2024

Good evening and welcome to the Monster beverage company third quarter 2024 conference call.

Speaker Change: All participants are in listen only mode should you need assistance.

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Speaker Change: Today's presentation there'll be an opportunity to ask a question you may press.

Speaker Change: And then one on the attachment that withdraw your question. Please press Star then two.

Speaker Change: Please note. This event is being recorded I would now like turn the conference over to Mr. Rodney sacks, and Mr. Hilton Schlosberg, yes.

Speaker Change: Please go ahead.

Speaker Change: Thank you good afternoon, ladies and gentlemen, thanks for attending this call Rodney Sachs Hilton Schlosberg, Our Vice Chairman and co Chief Executive Officer is also on the call as this Trump Kelly, our Chief Financial Officer, Tom Kelly will now read our cautionary statement.

Tom 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 27, a of the Securities Act of $19 33, as amended and section 21 E of the Securities Exchange Act of $1000 34, as amended and are based.

Tom Kelly: On currently available information regarding the expectations of management with respect to revenues profitability future business future events financial performance and trends.

Tom Kelly: 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.

Tom Kelly: Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed on February 29, 2024, and quarterly reports on Form 10-Q, including the sections contained therein entitled risk factors and forward looking statements.

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

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

Tom Kelly: I would also like to note that an explanation of the non-GAAP measures, which may be mentioned during the course of this call is provided in the notes in the.

Tom Kelly: Kent.

Kent: Consolidated statements of income and other information attached to the earnings release dated November seven 2020 for a copy of this information is also available on our website Www Dot Monster Bev Corp, Dot com in the financial information section.

Speaker Change: I would now like to hand, the call over to Rodney sacks. Thanks.

Rodney Sacks: Thanks, Tom the energy drink category continues to grow globally and has demonstrated resilience in the United States you drink category continued to experience slower growth rates.

Rodney Sacks: In all major channels, excluding convenience the energy drink category is growing at a faster rate in the United States. The energy drink category in the convenience channel is beginning to show some improvement in October.

Speaker Change: Although we do not normally referred to one week Nielsen statistics and do not intend to do so on an ongoing basis I think that it is noteworthy to mention that according to Nielsen for the one week ended October 26, 2024 for all outlets combined namely convenience.

Speaker Change: Grocery drug mass merchandisers.

Speaker Change: And in the energy drink category, including energy shots increased by three 7% versus the same period, a year ago, while sales of the company's energy brands, including bank were up two 9% and sales of monster were up two 2%.

Speaker Change: A number of other consumer packaged goods companies are also C&I Taj of consumer spending environment for certain income groups and weaker demand in the quarter Hurricane saline in Bolton impacted sales at retail in certain states in September and October 2024, However, we cannot determine the impact on our <unk>.

Speaker Change: This the alcohol segment operates a brewery in <unk>, North Carolina, which was closed for a week due to flooding from Hurricane Helene. This brewery is partially operational and would you expect it to be fully operational by mid November 2024, we believe that many consumers view energy drinks as an affordable luxury.

Speaker Change: Gross opportunities in household penetration and per capita consumption along with consumers growing need for energy are positive trends for the category in EMEA the energy drink category. According to Nielsen for the recently reported 13 week periods for all correct markets, which differ from country to country.

Speaker Change: former basis for the 2023 third quarter adjusted for these items was $0.41 per share.

Speaker Change: September 30, 2024, attached to our press release, is a non-GOB-adjusted, condensed, consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of GOB.

Speaker Change: The company achieved record third-quarter net sales of $1.88 billion in the 2024 third quarter, or 1.3% higher than net sales of $1.86 billion in the comparable 2023 quarter, 4.7% higher on a foreign currency-adjusted basis.

Speaker Change: Gross profit as a percentage of net sales in the 2024 3rd quarter was 53.2% compared with 53% in the 2023 3rd quarter.

Speaker Change: Pricing actions in certain international markets and the bank inventory step-up, partially offset by higher promotional allowances as a percentage of net sales, may need to drive trial and awareness of the bank energy brand in the United States, as well as the alcohol brand's inventory reserves.

Speaker Change: On a sequential quarterly basis, adjusted gross margins were higher than the 2024 second quarter gross margins.

Speaker Change: Operating expenses for the 2024 third quarter with $519 9 million compared with $473 2 million in the 2023 third quarter. The increase in operating expenses was primarily the result of increased payroll expenses increased sponsorship and endorsement expenses as well as.

Speaker Change: Operating expenses for the 2024 Q3 were $519.9 million compared to $473.2 million in the 2023 Q3.

Speaker Change: The increase in operating expenses were primarily the result of increased payroll expenses, increased sponsorship and endorsement expenses, as well as the intellectual property claim.

Speaker Change: The intellectual property claims as a percentage of net sales operating expenses for the 2024 third quarter with 27, 6% compared with 25, 5% in 2023 third quarter adjusted operating expenses after making the adjustments described earlier increased eight <unk>.

Speaker Change: As a percentage of net sales, operating expenses for the 2024 Q3 were 27.6% compared with 25.5% in the 2023 Q3.

Speaker Change: Adjusted operating expenses, after making the adjustments described earlier, increased 8% to $502 million as compared to $464.8 million in the 2023 comparable quarter.

Speaker Change: <unk> two $502 million as compared to 464 8 million in the 2023 comparable quarter distribution and warehouse expenses for the 2024 third quarter with $82 7 million or four 4% of net sales compared to $85 7 million or four 6% of net.

Speaker Change: Distribution and Warehouse Expenses for the 2024 Q3 with 82.7 million or 4.4% of net sales compared to 85.7 million or 4.6% of net sales in the 2023 Q3.

Speaker Change: <unk> in the 2023 third quarter operating income for the 2024 third quarter decreased 6% to $479 9 million from $510 5 million in the 2023 comparative quarter adjusted operating income after making the adjustments described earlier decreased three five.

Speaker Change: to $479.9 million from $510.5 million in the 2023 Comparative Quota.

Speaker Change: Adjusted operating income after making the adjustments described earlier decreased 3.5% to $508.4 million as compared to $526.8 million in the 2023 comparable quarter.

Speaker Change: Percent to $508 4 million as compared to $426 $8 million into 2023 comparable quarter.

Speaker Change: The effective tax rate for the 2020 for third quarter was 21, 8% compared with 22, 2% in the 2023 third quarter net income decreased 18, 1% to $379 million as compared to $452 7 million in the 2023 comparable quarter.

Speaker Change: The effective tax rate for the 2024 3rd quarter was 21.8% compared with 22.2% in the 2023 3rd quarter.

Speaker Change: Adjusted net income after making the adjustments described earlier decreased eight 8% to $392 4 million as compared to $430 million in the 2023 comparable quarter diluted earnings per share for the 2024 third quarter decreased 11, 7% to 30 <unk>.

Speaker Change: From 43 sales in the third quarter of 2023 adjusted diluted earnings per share after making the adjustments described earlier decreased one 6% to <unk> 40 per share as compared to 41 sales per share in the 2023 comparable quarter.

Speaker Change: Our third quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets.

Speaker Change: Changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2020 for third quarter of $62 8 million, we estimate that diluted earnings per share were adversely impacted by approximately <unk> <unk> per share due to the unfavorable foreign currency exchange rates as pre.

Speaker Change: We reported we have taken a 5% increase.

Speaker Change: On our brands and packages, excluding Bang, Ryan and rainstorm effective November one 2024 in the United States. We are continuing to monitor opportunities for further pricing actions in our international markets.

Speaker Change: The company continues to have market share leadership in the energy drink category for the outlets combined in the United States for the 13 week period ended October 26 2024.

Speaker Change: Turning to the Nielsen reports for the 13 weeks through October 26, 2020 for all outlets combined excluding convenience sales in dollars in the energy category, including energy shots increased by four 9% versus the same period a year ago.

Speaker Change: According to the Nielsen reports for the 13 weeks through October 26, 2024 for all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by one 9% versus the same period, a year ago sales of the company's energy brands, including bank were down.

Speaker Change: <unk> six of a percent in the 13 week period sales of Monster declined one 8% sales of Rainbow down two 9% sales of Nos increased two 9% and sells a full throttle decreased five 4% sales of Red Bull increased 5%.

Speaker Change: According to Nielsen for the four weeks ended October 26, 2000, $24000 in the energy drink category in the convenience and gas channel, including energy shots in dollars increased one 5% over the same period the previous year. So all of the company's energy brands, including Bang were flat in the latest four week period in the convenience and gas channel sales.

Speaker Change: <unk> decreased by one 6% over the same period versus the previous year reign sales decreased 4% North was up three 9% and full throttle was down four 4% sales of Red Bull up five 6%.

Speaker Change: According to Nielsen for the four weeks ended October 26, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 37, 3% to 36, 8%, including bank Monster share decreased from 29, 7% a year ago to 20.

Speaker Change: Eight 7% range share decreased <unk> two of a share point to two 8% normal share increased one of a share point to two 6% and full throttle share remained at <unk> seven of a percent Bang share was one 9% Red Bull share increased one four share points to $35 nine.

Speaker Change: Market share of certain competitors were as follows Celsius seven seven C for 345 of our $3, one Rockstar to point to age and Ghost 3.1.

Speaker Change: According to Nielsen for the four weeks ended October 26, 2000, $24000 in the coffee plus energy drink category, which includes Java Monster line in the convenience and gas channel decreased seven 9% over the same period the previous year sales of Java Monster, including Java Monster 300, with 3% lower than the same period.

Speaker Change: As the previous year self install box energy were $14, 8% lower Java amongst a share of the coffee plus energy drink category in the four weeks ended October 26, 2024 was 58, 6% up three points, while Starbucks energy share was 48% down three three points.

Speaker Change: According to Nielsen in all measured channels in Canada.

For the 12 weeks ended October five 2020 for the energy drink category increased seven 7% in dollars. So all of the company's energy drink brands increased eight 3% versus a year ago. The market share of the company's energy drink brands increased <unk> two of a point to 47% Monster sales increased three nine.

Speaker Change: Percent and its market share decreased one three points to 35% nausea sales increased 16, 2% and its market share increased one of a share point to one 3% full throttle sales decreased three 5% and its market share decreased <unk>, one of a 0.2 points or 5%.

Speaker Change: According to Nielsen for all outlets combined in Mexico, the energy drink category increased 16, 3% for the month of September 2020 for Monster sales increased 11, 3% monsters market share in value decreased one three points to 27, 6% against the comparable period the previous year.

As a creditor increased 18, 6% and its market share increased one of a share point to six 2%.

Speaker Change: The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively <unk> 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.

Speaker Change: Drink brands during a particular month consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.

Speaker Change: Adding to Nielsen for all outlets combined in Brazil, the energy drink category increased 19, 9% for the month of September 2020 for Monster sales increased 28% monsters market share in value increased three one points to 48, 2% compared to September 2023 in Argentina.

Speaker Change: Due in part to the impact of inflation related local currency price increases the energy drink category increased 202, 5% for the month of September 2020 for Monster sales increased 182, 5% monsters market share in value decreased three eight points to 53%.

Speaker Change: Compared to September 2023, ensure the energy drink category increased 11, 7% for the month of September 2020 for Monster sales increased 12, 9% monsters market share in value increased to half a point to 43, 43% Monster energy remains the leading energy brand.

Speaker Change: In value in Argentina, Brazil, and Chile.

Speaker Change: 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 Accordingly.

Speaker Change: According to Nielsen in the 13 week period, ending October six 2024 monsters retail market share in value as compared to the same period. The previous year grew from 31% to 32, 8% in Great Britain from five 6% to seven 9% in the Netherlands and from 42% to four.

Speaker Change: 44% in spine.

Speaker Change: According to Nielsen in the 13 week period, ending October six 2024 monsters retail market share in value as compared to the same period previous year declined from 16, 4% to 16, 3% in Belgium from 32% to 27, 1% in France and from 35, 4% to 34 two.

Speaker Change: Present in Norway.

Speaker Change: Adding to Nielsen in the 13 week period, ending September 32024, monsters retail market share in value as compared to the same period. The previous year declined from 18, 3% to 17, 9% in Germany.

Speaker Change: According to Nielsen in the 13 week period, ending September eight 2024 monsters retail market share in value as compared to the same period. The previous year grew from 18, 6% to 19, 8% in Poland and from 30% to 31, 1% in the Republic of Ireland.

Speaker Change: According to Nielsen in the 13 week period, ending September <unk> 2024 months as retail market share in value as compared to the same period the previous year declined from 16% to 15, 2% in Sweden.

Speaker Change: Nielsen in the 13 week period, ending August 31, 2024 monsters retail market share in value as compared to the same period. The previous year declined from 38, 2% to 36% in Greece and from 31, 8% to 39% in Italy.

Speaker Change: According to Nielsen in the 30 week period, ending August 25, 2024 monsters retail market share in value as compared to the same period. The previous year grew from 18, 3% to 18, 8% in South Africa.

Speaker Change: According to Nielsen in the surgery, beginning August 11, 2024 monsters retail market share in value as compared to the same period. The previous year remained flat at 21, 7% in the Czech Republic.

Speaker Change: Nielsen in the 13 week period, ending August 11, 2024 monsters retail market share in value as compared to the same period the previous year, a decline from 28% to 27, 1% in Denmark.

Speaker Change: So Nielsen for the 13 week period, ending August 23, 2020 for the retail market share of credit shop also branded Fury in certain markets in value as compared to the same period. The previous year grew from four 3% to eight 5% in Egypt from 32, 8% to 38, 8% in Kenya and from <unk>.

Speaker Change: 83% to 22, 6% in Nigeria.

Speaker Change: Combining our markets in EMEA for the last 13 weeks. The energy category is driving 11, 1% of note for the same period the category in our Western European markets grew six 2% our eastern European markets grew four 2% and our Africa Middle East markets grew 27, 5%.

Speaker Change: Going to IRI for all outlets combined in Australia, the energy drink category increased eight 7% in before weeks ending October 22020 for Monster sales increased 19, 9% monsters market share in value increased one eight points to 19, 1% against the comparable period the previous year.

Speaker Change: Sales of mother increased four 5% and its market share decreased <unk> four of a share point to 10, 1%. According to IRI for all outlets combined in New Zealand the energy drink category increased 11, 9% for the four weeks ending October 22020 for Monster sales increased 11 seven.

Speaker Change: Percent monsters market share value remained at 13, 2% against the comparable period the previous year sales of mother decreased 12, 2% and its market share decreased one four share points to four 9%.

Speaker Change: Sales of <unk>, plus increased one 5% and its market share decreased <unk> five of a share point to four 6%.

Speaker Change: According to <unk> in the convenience channel in Japan, the energy drink category increased six 6% for the month of September 2020 for Monster sales increased five 6% monsters market share in value decreased half a share point to 58, 4% against the comparable period the previous year.

Speaker Change: Nielsen all outlets combined in South Korea, the energy drink category increased 28, 3% for the month of September 2020 for Monster sales increased 31, 3% monsters market share in value increased one two points to 53, 1% against the comparable period the previous year.

Speaker Change: Push out that certain market statistics that cover single months or four week periods may often be materially influenced positively <unk> negatively by promotions and other trading factors during those periods.

Speaker Change: Net sales to customers outside the U S with $760 1 million, 44% of total net sales in the 2020 for third quarter compared to $733 7 million or 39, 5% of total net sales in the corresponding quarter in 2023.

Speaker Change: Foreign currency exchange rates had a negative impact on net sales in U S dollars by approximately $62 8 million in the 2020 for third quarter of which $26 million related to <unk> $26 5 million related to Argentina.

Speaker Change: In EMEA net sales in the 2024 third quarter increased six 8% in dollars and increased 10, 4% on a currency neutral basis over the same period in 2023.

Speaker Change: In EMEA, our sales were impacted by bottler retailer disruptions in certain key accounts in western Europe, as well as supply disruptions in South Africa. These disruptions reduced dollar sales by an estimated two 9% in EMEA in the quarter.

Speaker Change: Gross profit in this region as a percentage of net sales for the 2020 for third quarter was 35, 4% compared to 31, 1% in the same quarter. In 2023, we are pleased that in the 2024 third quarter Monster gained market share in Great Britain, the Netherlands, Poland Republic of Ireland, South Africa and Spain.

Speaker Change: Lynn.

Speaker Change: In Asia Pacific net sales in the 2024 third quarter increased 4% in dollars and increased eight 8% on a currency neutral basis over the same period in 2023 gross profit in this region as a percentage of net sales for the 2024 for the quarter was 42% versus 43, 2% in the same period.

Speaker Change: In 2023.

Speaker Change: Net sales in Japan in 2024 third quarter decreased seven 6% in dollars and increased 2% on a currency neutral basis.

In South Korea net sales in the 2024 third quarter decreased 8% in dollars.

Speaker Change: <unk> decreased two 2% on a currency neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules. This year monster remains the market leader in Japan, and South Korea, and China net sales in the 2020 full third quarter increased 15, 4% in <unk>.

Speaker Change: And increased 15, 8% on a currency neutral basis as compared to the same quarter. In 2023, we remain optimistic about the long term prospects for the Monster brand in China and are excited about the recent launch of predator, which is being rolled out to additional markets in China later this year and during <unk>.

Speaker Change: <unk> 25 in Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea, and Guam net sales increased 13, 5% in dollars and increased 13, 8% on a currency neutral basis.

Speaker Change: In Latin America, including Mexico, and the Caribbean net sales in the 2024 third quarter decreased 5% in dollars and increased 21% on a currency neutral basis over the same period in 2020, 341% exclusive of Argentina's impact grew.

Speaker Change: Gross profit in this region as a percentage of net sales was 42, 2% for the 2024 third quarter versus 37, 7% in the 2023 third quarter in Brazil net sales in the 2024 third quarter increased 16, 7% in dollars and increased 33, 3% on a currency <unk>.

Speaker Change: Oral basis net sales in Mexico decreased one 9% in dollars and increased six 1% on a currency neutral basis in the 2024 third quarter net sales in Chile decreased four 4% in dollars and increased eight 8% on a currency neutral basis in the 2024.

Speaker Change: Due to challenging economic conditions in the country, our market share in the quarter increased 48% net sales in Argentina decreased 56, 5% in dollars and increased 48, 5% on a currency neutral basis in the 2020 for third quarter, we remain the market share leader in <unk>.

Speaker Change: Argentina in our market share in the quarter is 55, 1%.

Speaker Change: Once the brewing had a challenging third quarter net sales for the alcohol brands segment with $39 8 million in the 2024 third quarter, a decrease of approximately $2 5 million or 6% lower than the 2023 comparable quarter, mainly as a result of lower sales of craft beers. In addition.

Speaker Change: As mentioned earlier due to excess inventories of certain months to brewing brands just necessary to increase inventory reserves in that segment by $10 6 million.

Speaker Change: In addition to the appointment of a new President of Monster Brewing announced last quarter. We have now restructured the senior management team in the alcohol division and are continuing to consolidate production facilities to maximize efficiencies.

Speaker Change: Least unleashed was rebranded to the Beast. The brand is now available in all 50 states through a network of distributors. The Beast was launched in the state of June instead.

Instead of Utah in July we're currently launching our second variety pack of the Beast and 12 packs, which includes mean green and three new flavors pink poison gnarly grape and killer Sunrise. The beat variety pack. Two is currently available in 48 states.

Speaker Change: The highlight IPA brand families first major refresh since 2017 is now shipping to all available markets Oskar Blues first non alcoholic brew designated dials will be available next month in select markets.

Speaker Change: We launched Monster energy Ultra Violet guava in United States in October 2020 for initial response from customers and consumers alike has been very positive on this innovation.

Speaker Change: In Latin America during the third quarter of 2024, we launched Monster Ultra Peachy-keen in Mexico Monster Ultra Paradise in Peru, Monster Zero, Ultra and juice Monster Mango loco in the Dominican Republic, and juice Monster pipeline punch in Costa Rica.

Speaker Change: In Australia during the third quarter of 2024, we launched monster Ultra Violet in EMEA in the third quarter of 2024, we launched Monster reserve on.

Speaker Change: Orange Dream, sickle, joost or eliminate Joost bad Apple juice, Mango Loco Ultra black Ultra Goldman <unk> Ultra Peachy-keen Ultra Rosa Ultra Strawberry dreams, and ultra watching the number of countries additional launches are planned across all brands throughout EMEA in 2024.

During the third quarter of 2024, we launched Papillon in a 500 ml aluminum bottles in Japan, and ultra Peachy-keen in Singapore, and China, We expanded the launch predator Goldstrike, which was launched in 11 provinces in China at the end of April in the non carbonated 500, MLP tea bottle.

Speaker Change: We launched in two additional provinces one Z in Fujian in September we are planning to launch predator in a number of additional provinces in 2025 in India. We extended the predator goldstrike carbonated $2 50 ml P T Basel beyond the daily region to the North East.

Speaker Change: <unk> in July and Maharaja Pradesh in September we will continue adding additional states in 2025, we remain optimistic about the long term prospects for the Monster brand in China, and India and are excited about the expansion of predator in these two countries.

Speaker Change: During the 2024 third quarter. The company purchased approximately 11 3 million shares of its common stock at an average purchase price of 40 732 per share for a total amount of $534 7 million as of November six 2020 for approximately $500 million remained available for repurchase.

Speaker Change: Under the previously authorized repurchase program.

Speaker Change: We estimate that October 2024 sales were approximately four 8% higher than the comparable October 2023, <unk> and 5% higher than October 2023, excluding the alcohol brands segment. We estimate there are no further.

Speaker Change: Currency adjusted basis, including the alcohol brands statement October 2024 sales were approximately $5, 8% higher than the comparable October sales and six 1% higher than October 23, excluding the alcohol brands segment October 2024 had one more selling day compared to October.

Speaker Change: 2023.

Speaker Change: On our third quarter conference call in November 2023, we reported that gross sales in the month of October 2023, including the alcohol segment.

Speaker Change: Ultimately 24, 8% higher than October 2022, gross sales, which presented a high hurdle rate for the company. This year October 2023 had one more selling days in October 2022.

Speaker Change: A portion of the increase in the October 2024 sales may be attributed to advanced purchases by customers in anticipation of the price increase in November in the United States. However, such amounts cannot reasonably be determined.

Speaker Change: Hurricanes Helene and Moulton impacted sales at retail in certain states in September and October 'twenty 'twenty four gains however, we cannot determine the impact on our business at this time.

Speaker Change: In this regard we caution again that sells over a short period, often disproportionately impacted by various factors such as for example, selling days days of the week in which holidays fall timing of new product launches and 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 their own internal requirements, which that may alter from time to time for their own business reasons.

Speaker Change: 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.

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

Speaker Change: Firstly the energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category growth opportunities in household penetration of capital consumption, along with consumers need for energy are positive factors for the category, we continue to expand ourselves and non Nielsen measured channels as.

Speaker Change: As reported earlier, we have implemented a price increase in the United States on November one 2024, we continue to review opportunities for price increases internationally.

<unk> flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed cost to our EMEA region. The juice plant at our <unk> facility in Ireland has now been completed of the trials, we expect the juice plant to be in production in <unk>.

Speaker Change: Early 2025.

Speaker Change: We're excited for the launch of Monster Ultra Vice Guava, the call of duty Unpack gaming promotion, which kicked off last month has received positive consumer response with the publishers reporting that it's the biggest call of duty release in the franchise's history.

Speaker Change: We are currently exploring opportunities for alcohol products in certain international jurisdictions, we are seeing some acceleration in the sales and market share of Bang energy and remain excited for the future of this brand within our overall product portfolio. We're pleased with the rollout credit set in theory, our affordable affordable.

Speaker Change: Energy drink portfolio and a number of markets internationally, we are proceeding with plans for further launches of our affordable energy brands I would like to now open the floor to questions about the quarter.

Speaker Change: We will now begin the question and ask a question you May press.

Speaker Change: One on your question.

Speaker Change: Please go ahead.

Speaker Change: Brian. Please go ahead.

Speaker Change: Okay.

Speaker Change: Next question please.

Speaker Change: The timing of Cleveland.

Speaker Change: One question on <unk>.

Speaker Change: A question.

Speaker Change: Your first question comes from Anthony <unk> with <unk>.

Speaker Change: Thank you Martin.

Speaker Change: Thank you and good afternoon, everyone.

Speaker Change: Go back to.

Speaker Change: The expectation of the flow through from pricing.

And how much you Hudson deal back.

Speaker Change: On that end.

Speaker Change: How is your view on the state of the energy drink category, given what's happening and in particular now as October understandably, but one extra selling day.

Speaker Change: It might be a little soft from somewhat.

Speaker Change: With X factor.

Speaker Change: Thanks.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: When we have a price increase.

Speaker Change: We have to see where that price decrease settles.

Speaker Change: And once we see a price increase settle and determine.

Speaker Change: And what direction, it's heading what elasticity of demand is.

Speaker Change: Then in a better position to determine what promotional activity if any needs to be sit against the brands.

Speaker Change: So it's a really difficult question to answer at this time.

Speaker Change: So one question.

Speaker Change: Second word Joanne I think Andrew I had a couple of other questions.

Speaker Change: Joining quickly go through your other questions Andrea.

Speaker Change: Thank you Tom Yeah, I was just saying if there is any pull forward that you saw.

Speaker Change: So that it would inform some of that I mean, I would say October we would have been stronger if that's the case.

Speaker Change: Just say that with any pull forward.

Speaker Change: Harm the pricing in other words like the retailers would take in.

Speaker Change: Inventory.

Speaker Change: Ahead of the pricing okay. So we sell to the distributors right the Coco to distributors and we.

Speaker Change: We allow them a certain amount that they can buy in and we cut off the old pricing.

Speaker Change: In the middle of October.

Speaker Change: So.

Speaker Change: I'm not sure and we've looked at it and we cannot determine with reasonable certainty what if any of that increase was attributable to two binds I suspect it could have been some but.

Speaker Change: We just we just can't determine that and in the same vein.

Speaker Change: It's hard to determine what the impact of the hurricanes.

Speaker Change: Milton and lean we're on the business, we know that at retail was it was impacted.

Speaker Change: And we've done some work to try and assess the extent to which.

Speaker Change: Our own business could have been impacted but again, it's difficult it's difficult to determine what we can say is that if you look at the territories that were impacted by.

Speaker Change: The hurricanes both of them.

Speaker Change: There's probably a 1% differential between activity Nielsen activity in those territories and the activity through the U S. So there definitely was an impact but again, we can't determine the impact on our business.

Speaker Change: And then in terms of state of the Union for the energy category as we stand right now.

Speaker Change: Please listen only.

Speaker Change: If we if we look at foot traffic and convenience convenience is 62% of the Nielsen category for energy drinks and we look at foot traffic and we talk tell retailers and we get some input from third party market research companies and referred to.

Speaker Change: The one anecdotal week that we spoke about earlier.

Speaker Change: Earlier on this call.

Speaker Change: We have and it's again, a personal view I think we've reached the bottom end.

Speaker Change: Oh, very close to the bottom and I think yeah.

Speaker Change: In months or any way, we actually feel good about things coming back I mean, we saw what happened today that there was a rate cut the election is over which probably will give consumers.

Speaker Change: Bigger better confidence whichever party garden I think there was some concern about the election and now it's over we've passed that we got a rate cut today.

Speaker Change: And.

Speaker Change: What we've seen in our industry is that there hasnt been a change in consumer preferences and the change to <unk>.

Types of of drinks are consumers stayed with energy drinks and instead of we believe instead of drinking.

Speaker Change: Three a week or four week, they've been drinking one also less.

Speaker Change: Okay helpful. Thank you I.

Speaker Change: I think it is quite noteworthy if you look at we started the Nielsen for the period ended 26 October if you look at the latest 13 week period. The category was up one non you look at the latest 14 weeks the whole category General was up three two in the latest week three service. So that trend has been and that's why we referred to.

Speaker Change: There is some recovery trend there, but we'll have to wait and see how that pans out and then just getting back to October very quickly you know we did mention on the call. We had a really high hurdle rates over the last year.

Speaker Change: So that's another factor to bear in mind when you look at the October increases, which are actually quite good.

Speaker Change: Your next question comes from Chris <unk> with Wells Fargo Securities.

Speaker Change: Okay.

Speaker Change: Hey, guys. Thanks for the question.

Speaker Change: <unk>.

Speaker Change: Okay.

Speaker Change: Can you just maybe touch on how you see inventory levels or how you saw inventory levels going into October and really what I'm getting at here is is it is.

Speaker Change: Is it just the comp or did you sound quite good on on consumption trends, but maybe distributors were still.

Speaker Change: A bit reticent to take on more inventory and now that the consumption is coming through perhaps do you feel there could be a resumption into.

Speaker Change: The remainder of the quarter.

Speaker Change: I think basically what's what's getting contemplated right now is if you are.

Speaker Change: Kind of running flattish for the quarter, excluding the extra day or or if this is just comp.

Speaker Change: The consumption trends should start to show through in your in your numbers as well so any any any comment there would be maybe helpful. Yes.

Speaker Change: Happy to do that Chris.

Speaker Change: The way our business works, we sell to the Coke distributors they place orders.

Speaker Change: And we execute those orders so they have sophisticated systems that take into account consumption.

Speaker Change: One of the factors, whether another factor and a whole bunch of other factors and they order products that we you know that.

Speaker Change: We deliver.

Speaker Change: So.

Speaker Change: We also have a some we have a small direct business and we've spoken about the non measured channels, which is which is done directly.

Speaker Change: Bias, but generally we execute orders according.

Speaker Change: According to customer requirements. So.

Speaker Change: Some of our competitors have hiccups in inventory we do.

Speaker Change: Our business doesn't behave in that way, we supply orders according to what our customers order.

Speaker Change: Your next question comes from Selman <unk> with Stifel.

Speaker Change: Hey, good afternoon guys.

Speaker Change: Wanted to ask about Europe.

Speaker Change: Your comment about the improvement in the category in October.

Speaker Change: How much do you think innovation plays a role as well.

Speaker Change: Sounded excited about.

Speaker Change: Thanks, Rob.

Speaker Change: Just general thoughts.

Speaker Change: If you think innovation can also drive further acceleration.

Speaker Change: In Tds category as you think into October on the parts of the year. Thank you.

Speaker Change: I think innovation does drive.

Speaker Change: Some conservative, but you know we've had innovation.

Speaker Change: We had probably three or four new innovative products in the first half of the year, we only really started to get product on shelf on our latest innovation, which is one <unk>.

Speaker Change: Towards the end of October so, yes, there has been some.

Speaker Change: And a benefit from that if you take the one week numbers, but I think overall.

Speaker Change: I don't think it has.

Speaker Change: That has had much impact I think the overall impact you were seeing across a number of our other risk I use has also been trending sort of upwards as well we.

Speaker Change: We see the sales per point just moving.

Speaker Change: Better direction so.

Speaker Change: Again.

Speaker Change: A short period of time doesn't make a whole hell of a summer but at the end of the day, we do start feeling because everybody has been seeing.

Speaker Change: Lower traffic in the sort of little bit of stagnation in the category, but we do see signs of it starting to reemerge and consumers being able to go back into stores and are buying again.

Speaker Change: Yes, I mean, we said earlier, we believe the overall macroeconomic conditions are improving and thats positive and the foot traffic in convenience I think that's another factor as I mentioned earlier, we get third party research and we talk to our customers and.

Speaker Change: It's all positive so at that too.

Speaker Change: This equation and I think you will maybe come out with the kind of answer that we thinking about here as well.

Speaker Change: Your next question comes from Mark Astrachan with Stifel.

Mark Astrachan: Yeah, Hey, guys afternoon hope all is well.

Mark Astrachan: Hum.

Mark Astrachan: I wanted to ask about gross margin in EMEA.

Speaker Change: It's sort of specific but it's one of the questions that I think a lot of people.

Speaker Change: Curious about and don't have a huge amount of color and the trends.

Speaker Change: Improved over the last couple of years.

Speaker Change: But you are still decently below 2022 levels.

Speaker Change: Or 2021 levels I should say I guess the question is without asking for guidance because I know you don't want to give it.

Speaker Change: What do we think about from here I mean is it reasonable to think that you can get back to 'twenty, one and if you don't want to specifically answer that what are the trends that led to the improvement in that.

Speaker Change: In that region from a gross margin standpoint, and how sustainable are they.

Speaker Change: Well you know we have taken taken price.

Speaker Change: And we've taken price historically in a number of international markets and we continue to examine opportunities to do so.

Speaker Change: The cost of.

Speaker Change: Of production and the cost of raw materials have been increases over time and significantly increases since.

Speaker Change: Since COVID-19.

Speaker Change: We're doing our very best to manage and hedge our aluminum exposure, which is obviously a big cost in this company. So we use a letter which we may have spoken about on previous calls that if we didn't I'll talk about it now we have a lot of strategy, where we are.

Speaker Change:

Speaker Change: Execute hedges.

Speaker Change: To assist in managing aluminum exposure and we really do examine that on that.

Speaker Change: A weekly basis.

Speaker Change: Semi.

Speaker Change: Twice a month, so that's something that that we look at.

Speaker Change: So.

Speaker Change: All in all we have a business that is focused some in the U S. You heard about.

Speaker Change: The numbers overseas, which are growing and they have lower margins.

Speaker Change: We spoke about the EMEA margins.

Speaker Change: On this call that have moved up in the quarter, which is the trend. We all were looking to achieve.

Speaker Change: Then we have alcohol, which is currently is at a lower margin lower percentage margin than the rest of the business.

So we are very focused on improving margin wherever we can.

We will not stop in that pursuit, but it's something that.

Speaker Change: Carrying on with Cowen and it's a work in progress.

Speaker Change: Just you mentioned I think.

Speaker Change: Referred to EMEA, largely if you look at the last four quarters. We've been margins have continued to improve each quarter. Other news talk about the whole come up what are you talking about EMEA market totally about.

Speaker Change: Mark.

Speaker Change: Yes.

Speaker Change: I'll, just add Mark Hoppe, I'd really rather EMEA. So I'll just complete that to say that we do have the juice plant coming into production pretty.

Speaker Change: Pretty much early next year and together with the major Hilton has indicated I think that we will see.

Speaker Change: We are quite positive about the EMEA improving.

In margin going forward and whether it can get back to 'twenty, one I'm not sure I'm sorry.

Speaker Change: One was the question about the overall margins and I'll, just sort of focused on EMEA.

Speaker Change: Yeah.

Speaker Change: Thank you.

Your next question comes from Peter Grom with UBS.

Peter Grom: Thanks, operator, and good afternoon, everyone.

Peter Grom: I guess I.

Peter Grom: I guess I just wanted to go back to the advance purchases I get us a lot of moving pieces in the hurricane noise probably makes sense.

Speaker Change: Harder, but I think back in 2018, when you did the November price increase you were at that point at least April.

Speaker Change: To estimate the impact from advanced purchases ahead of the price increases I. Just curious what is there a reason why this time may be different and you're not able to kind of estimate that.

And then just on gross margin, obviously would love some perspective on the path from here or are you kind of alluded to it here, but can you maybe just talk about what youre seeing from a commodity perspective and kind of how you see inflation evolving from this point.

Speaker Change: Okay. So.

Speaker Change: We do you want to start join us thought about starting with commodities or advanced purchases.

Speaker Change: Whatever you want.

Speaker Change: Alright.

Speaker Change: Okay.

Speaker Change: The option so.

Speaker Change: I think the difference this time versus the previous price increase was that we cut off.

Speaker Change: <unk>.

Speaker Change: This increase.

Speaker Change: Favorable price increase mid October so.

Speaker Change: With any customers who purchase product after mid October.

Speaker Change: They actually paid the highest price.

Speaker Change: So as we look at the.

Speaker Change: A whole structure everything that happened in October it's really.

Speaker Change: It became a very difficult exercise to determine what if any of the price increase could have impacted October sales. So that's the bottom line.

Speaker Change: We could've done a better exercise, we would have but it became.

Speaker Change: Secured is to try and find a sensible answer so we draw it we'd rather not give it and we'll see the impact on the quarter.

Speaker Change: In the quarters.

Speaker Change: And then.

Speaker Change: In commodities I think everybody knows that.

With aluminum.

Speaker Change: And I mentioned the extent.

Speaker Change: We have a ladder approach and we build up that ladder.

Speaker Change: Tom goes by.

Speaker Change: There is already a.

Speaker Change: Tariff on aluminum and we're hoping that the tariff will not will not increase that is video on.

Speaker Change: On aluminum and as regards some of the other commodities, we have seen increases in some and we've seen decreases in other we buy a lot of we buy a lot of commodities and it's ready.

Speaker Change: It's going to take us five minutes to go through them, all but what I can say is that generally we are seeing increases.

Speaker Change: In.

Speaker Change: Certain <unk>.

Speaker Change: Commodities locked for example, aluminum for example, sugar and there are other commodities that Ted stayed the same or a minimally decreasing so the climate that we're looking at for commodities is one of a.

Taking a aluminum out of the picture, which is showing significant increases.

Speaker Change: One of <unk>.

Speaker Change: One relatively manageable factors in increases.

Speaker Change: Thank you I would like to turn the conference back over to Mr. Rodney sacks for any closing remarks.

Rodney Sacks: Thank you.

Rodney Sacks: On behalf of Monster I would like to thank everyone for their continued interest and support of 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.

Rodney Sacks: At home and abroad and in particular 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. We hope that you remain safe and healthy and thank you very much for your attendance.

Speaker Change: Conclude our conference Knickerbocker. Thank you you may now disconnect.

Speaker Change: Thank you.

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Speaker Change: Good evening and welcome to the Monster Beverage company third quarter 2024 conference call all.

Speaker Change: All participants are in listen only mode.

Speaker Change: Our conference call.

Speaker Change: Alright.

Speaker Change: Optical often comes from Barbara.

Speaker Change: Barb loan opportunities.

Speaker Change: We are also possible.

Speaker Change: One more question.

Speaker Change: John Your question sorry.

Speaker Change: Great.

Speaker Change: Great Michael program being recorded I would now.

Speaker Change: I'd like to turn the conference over to Robyn.

Speaker Change: Okay.

Please go ahead.

Speaker Change: Thank you good afternoon, ladies and gentlemen, thanks for attending this call I'm Rodney Sachs Hilton Schlosberg, our Vice Chairman and co Chief Executive Officer is also on the call 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 Exchange Act of $19 34, as amended and are based on currently available information regarding the expectations of management with respect to revenues profitability future business future events finance.

Speaker Change: Performance and trends.

Speaker Change: 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.

Speaker Change: Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed on February 29, 2024, and quarterly reports on Form 10-Q, including the sections contained therein entitled risk factors and forward looking statements.

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

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

I'd also like to note that an explanation of the non-GAAP measures, which may be mentioned during the course of this call is provided in the notes and the.

Speaker Change: <unk> consolidated statements of income and other information attached to the earnings release dated November seven 2020 for a copy of this information is also available on our website Www Dot Monster Bev Corp, Dot com in the financial information section.

Speaker Change: I would now like to hand, the call over to Roger Sachs. Thanks, Tom The energy drink category continues to grow globally and has demonstrated resilience in the United States you drink category continued to experience slower growth rates.

Speaker Change: However, in all major channels.

<unk> convenience the energy drink category is growing at a faster rate in the United States. The energy drink category in the convenience channel is beginning to show some improvement in October although we do not normally referred to one week Nielsen statistics and do not intend to do so on an ongoing basis.

Speaker Change: It is noteworthy to mention that according to Nielsen for the one week ended October 26, 2024 for all outlets combined, namely convenience grocery drug mass merchandisers sales in dollars in the energy drink category, including energy shots increased by three <unk>.

Speaker Change: 7% versus the same period, a year ago, while sales of the company's energy brands, including <unk> were up two 9% and sales of monster were up two 2%.

Speaker Change: A number of other consumer packaged goods companies are also C&I torture consumer spending environment for certain income groups and weaker demand in the quarter Hurricane saline and molten impacted sales at retail in certain states in September and October 2024, However, we cannot determine the impact on our <unk>.

Speaker Change: <unk> the alcohol segment operates a brewery in <unk>, North Carolina, which was closed for a week due to flooding from Hurricane relief. This brewery is partially operational and is expected to be fully operational by mid November 2024, we believe that many consumers view energy drinks as an affordable luxury.

Speaker Change: Gross opportunities in household penetration and per capita consumption along with consumers growing need for energy are positive trends for the category in EMEA the energy drink category. According to Nielsen for the recently reported 13 week periods for our correct markets, which differ from country to country.

Speaker Change: Is growing at approximately 11, 1% versus the same period last year on an FX neutral basis.

Speaker Change: In APAC for our track markets the energy drink category, According to Nielsen and <unk> for our track markets for the 13 week period, ending September 2024 is growing at approximately 13, 6% versus the same period last year also on an FX neutral basis in Latam for abstract markets the energy drink.

Speaker Change: Category. According to Nielsen for the recently reported 13 week periods, which differ from country to country is growing at approximately 21, 1% versus the same period last year again also on an FX neutral basis.

Speaker Change: Gross profit for the 2020 for third quarter was adversely impacted by an increase in inventory reserves due to excess inventory levels in the alcohol brands segment of $10 6 million, which I'll refer to later in this call is the alcohol brands inventory reserves operating expenses for the <unk>.

Speaker Change: 24 third quarter were adversely impacted by a $16 7 million provision and $1 $2 million of company incurred legal expenses in connection with an intellectual property claim brought by the defendant of Hubert Hansen in relation to the company's use of the human hence the name prior to the transaction with <unk>.

Coca Cola company, which closed in 2015.

And I'll also refer to as license coal as the intellectual property claims net of tax these items adversely impacted net income for the 2024 third quarter by $21 5 million and net income per diluted share by <unk> <unk> per share diluted earnings per share on a pro forma basis for the two.

Speaker Change: <unk> thousand 24 third quarter adjusted for these items was <unk> 40 per share on July 31, 2023. The company completed its acquisition of substantially all of the essence of biopharmaceutical, Inc. And its different affiliates inventory purchased as part of the bank transaction was recorded at fair value, which I will.

Speaker Change: We refer to as the bank inventory step up certain of the purchased inventory was subsequently sold in the 2000 <unk> third quarter and was recognized through cost of sales at fair value gross profit was negatively impacted by approximately seven 8 million during the 2023 third quarter as a result during the 2020.

Speaker Change: <unk> third quarter in connection with the bank transaction. The company recorded a gain of $45 4 million in interest and other income.

Speaker Change: During the 2023 third quarter the company incurred approximately $8 million of acquisition costs related to the bank transaction net of tax. These items positively impacted net income for the 2023 third quarter by $22 7 million and net income per diluted share by <unk> <unk> per share diluted.

Speaker Change: Earnings per share on a pro forma basis for the 2023 third quarter. Adjusted for these items was <unk> 41 per share. In addition to our golf condensed consolidated statements of income and other information and our golf condensed consolidated balance sheet for the company for the quarter ended 30 September $30.

Speaker Change: 2024 attached to our press release is a non-GAAP adjusted condensed consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of GAAP and.

Speaker Change: non-GAAP information, we believe that these non-GAAP items are useful to shareholders on this call in evaluating our ongoing operating and financial results. These non-GAAP items should be considered in addition to and not in <unk>.

Speaker Change: <unk> U S Gulf financial measures.

Speaker Change: The company achieved record third quarter net sales of $1 8 billion in 2020 for third quarter were one 3% higher than net sales of $1 $86 billion in the comparable 2023 quarter.

Speaker Change: Four 7% higher on a foreign currency adjusted basis net sales on a foreign currency adjusted basis, excluding the alcohol brands segment increased 5% in 2020 for third quarter.

Speaker Change: Gross profit as a percentage of net sales in the 2020 for third quarter was 53, 2% compared with 53% in the 2023 third quarter gross profit for the 2020 for third quarter was adversely impacted by the alcohol brands inventory reserves gross profit as a percentage of net sales.

Speaker Change: For the 2024 third quarter exclusive of the alcohol brands inventory reserves was 53, 7% the increase in gross profit as a percentage of net sales for the 2020 for third quarter was primarily the result of lower input costs pricing actions in certain international markets and the bank inventory step up.

Partially offset by higher promotional allowances as a percentage of net sales managed to drive trial and awareness of the Bang energy brand in the United States as well as the alcohol brands inventory reserves on a sequential quarterly basis adjusted gross margins were higher than the 2024 second quarter gross margin.

Speaker Change: Operating expenses for the 2024 third quarter with $519 9 million compared with $473 2 million in the 2023 third quarter. The increase in operating expenses were primarily the result of increased payroll expenses increased sponsorship and endorsement expenses as well.

Speaker Change: The intellectual property claims as a percentage of net sales operating expenses for the 2024 third quarter with 27, 6% compared with 25, 5% in the 2023 third quarter adjusted operating expenses after making the adjustments described earlier increased eight.

Sales in the 2023 third quarter operating income for the 2024 third quarter decreased 6% to $479 9 million from $510 5 million in the 2023 comparative quarter adjusted operating income after making the adjustments described earlier decreased three five.

Speaker Change: 5% to $508 4 million as compared to $426 $8 million into 2023 comparable quarter.

Speaker Change: Our third quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2020 for third quarter of $62 8 million, we estimate that diluted earnings per share.

Speaker Change: Adversely impacted by approximately <unk> <unk> per share due to the unfavorable foreign currency exchange rates as previously reported we have taken a 5% increase.

Speaker Change: The company continues to have market share leadership in the energy drink category for the outlets combined in the United States for the 13 week period ended October 26, 2024. According to the Nielsen reports for the 13 weeks through October 26, 2020 for all outlets combined excluding convenience sales in dollars in the energy category.

Speaker Change: Including energy shots increased by four 9% versus the same period a year ago.

According to Nielsen for the four weeks ended October 26 to 23 four sales in dollars in the energy drink category in the convenience and gas channel, including energy shots in dollars increased one 5% over the same period the previous year. So all of the company's energy brands, including Bang were flat in the latest four week period in the convenience and gas channel sales.

Speaker Change: According to Nielsen for the four weeks ended October 26, 2024, the company's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars decreased from 37, 3% to 36, 8%, including BEC Monster share decreased from 29, 7% a year ago to 20.

Speaker Change: Market share of certain competitors were as follows Celsius seven seven <unk> 345 hour three one Rockstar to point to age and goes 3.1.

Speaker Change: As the previous year sells a Starbucks energy were $14, 8% lower Java amongst a share of the coffee plus energy drink category in the four weeks ended October 26, 2024 was 58, 6% up three points, while Starbucks energy share was 48% down three three points.

Speaker Change: According to Nielsen in all measured channels in Canada.

Speaker Change: For the 12 weeks ended October five 2020 for the energy drink category increased seven 7% in dollars. So all of the company's energy drink brands increased eight 3% versus a year ago. The market share of the company's energy drink brands increased <unk> two of a point to 47% Monster sales increased three nine.

A creditor increased 18, 6% and its market share increased one of a share point to six 2%.

Speaker Change: 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 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.

Speaker Change: Compared to September 2023, and surely the energy drink category increased 11, 7% for the month of September 2020 for Monster sales increased 12, 9% monsters market share in value increased to off a point to 43, 43% Monster energy remains the leading energy brand.

Speaker Change: Value in 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 Accordingly.

Speaker Change: 44% in spine.

Speaker Change: According to Nielsen in the 13 week period, ending October six 2024 monsters retail market share in value as compared to the same period. The previous year declined from 16, 4% to 16, 3% in Belgium from 32% to 27, 1% in France and from 35, 4% to 34 two.

Present in Norway.

Adding to Nielsen in the 13 week period, ending September 32024, monsters retail market share in value as compared to the same period. The previous year declined from 18, 3% to 17, 9% in Germany.

Speaker Change: According to Nielsen in the 13 week period, ending September <unk>, 2024, monsters retail market share in value as compared to the same period the previous year declined from 16% to 15, 2% in Sweden.

Speaker Change: According to Nielsen in the 13 week period, ending August 25, 2024 monsters retail market share in value as compared to the same period. The previous year grew from 18, 3% to 18, 8% in South Africa.

Speaker Change: According to Nielsen in the 13 week period, ending August 11, 2024 monsters retail market share in value as compared to the same period the previous year declined from 28% to 27, 1% in Denmark a.

Speaker Change: According to Nielsen for the 13 week period, ending August 23, 2020 for the retail market share of credit tab also branded fury in certain markets in value as compared to the same period. The previous year grew from four 3% to eight 5% in Egypt from 32, 8% to 38, 8% in Kenya and from <unk>.

Speaker Change: 23% to 22, 6% in Nigeria.

Going to IRI for all outlets combined in Australia, the energy drink category increased eight 7% in the four weeks ending October 22020 for Monster sales increased 19, 9% monsters market share in value increased one eight points to 19, 1% against the comparable period the previous year.

Sales of mother increased four 5% and its market share decreased <unk> four of a share point to 10, 1%. According to IRI for all outlets combined in New Zealand the energy drink category increased 11, 9% for the four weeks ending October 22020 for Monster sales increased 11 seven.

Speaker Change: Percent monsters market share in value remained at 13, 2% against the comparable period. The previous year sales of mother decreased 12, 2% and its market share decreased one four share points to four 9%.

Speaker Change: Sales of lift plus increased one 5% and its market share decreased <unk> five of a share point to four 6%.

Speaker Change: Had a negative impact on net sales in U S dollars by approximately $62 8 million in the 2020 for third quarter of which $26 million related to Argentina, $26 5 million relates to Argentina.

Speaker Change: In EMEA in itself in the 2024 third quarter increased six 8% in dollars and increased 10, 4% on a currency neutral basis over the same period in 2023.

Speaker Change: Yeah.

Speaker Change: In Asia Pacific net sales in the 2024 third quarter increased 4% in dollars and increased eight 8% on a currency neutral basis over the same period in 2023 gross profit in this region as a percentage of net sales for the 2020 for third quarter was 42% versus 43, 2% in the same period.

Speaker Change: In 2023.

Speaker Change: Net sales in Japan in 2024 third quarter decreased seven 6% in dollars and increased 2% on a currency neutral basis.

Speaker Change: In South Korea net sales in the 2024 third quarter decreased 8% in dollars.

Decreased two 2% on a currency neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules. This year, mostly remains the market leader in Japan, and South Korea, and China net sales in the 'twenty 'twenty four third quarter increased 15, 4% in <unk>.

Speaker Change: And increased 15, 8% on a currency neutral basis as compared to the same quarter. In 2023, we remain optimistic about the long term prospects for the months to brand in China and are excited about the recent launch of creditor, which is being rolled out to additional markets in China later this year and during <unk>.

In Latin America, including Mexico, and the Caribbean net sales in the 2024 third quarter decreased 5% in dollars and increased 21% on a currency neutral basis over the same period in 2020, 341% exclusive of Argentina's impact.

Speaker Change: <unk> profit in this region as a percentage of net sales was 42, 2% for the 2024 third quarter versus 37, 7% in the 2000 <unk> third quarter.

Speaker Change: In Brazil net sales in the 2023rd quarter increased 16, 7% in dollars and decreased 33, 3% on a currency neutral basis net sales in Mexico decreased one 9% in dollars and increased six 1% on a currency neutral basis in the 2020 for third quarter.

Speaker Change: Net sales in Chile decreased four 4% in dollars and increased eight 8% on a currency neutral basis in the 2024 third quarter due to challenging economic conditions in the country our market share in the quarter increased 48% net sales in Argentina decreased $56.

5% in dollars and increased 48, 5% on a currency neutral basis in the 2020 for third quarter, we remain the market share leader in Argentina, and our market share in the quarter is 55, 1%.

Speaker Change: In addition, as mentioned earlier due to excess inventories of certain months brewing brands, just necessary to increase inventory reserves in that segment by $10 6 million.

Speaker Change: <unk> unleashed was rebranded to the Beast. The brand is now available in all 50 states through a network of beer distributors. The Beast was launched in the state of June instead.

Speaker Change: Instead of Utah in July we're currently launching our second variety pack of the Beast and 12 packs, which includes mean green and three new flavors pink poison gnarly grape and killer Sunrise. The beat variety pack. Two is currently available in 48 states.

Speaker Change: The highlight IPA brand families first major refresh since 2017 is now shipping to all available markets Oskar Blues first non alcoholic brew designated Dale who will be available next month in select markets.

Speaker Change: We launched Monster energy Ultra Violet guava in United States in October 2020 for initial response from customers and consumers alike has been very positive on this innovation.

Speaker Change: In Australia during the third quarter of 2024, we launched Monster Ultra Violet.

Speaker Change: In EMEA in the third quarter of 2024, we launched Monster Reserve.

Speaker Change: Orange Dream, sickle, joost or eliminate Joost bad Apple juice, Mango Loco ultra black Ultra Golden Pineapple, Ultra Peachy-keen Ultra Rosa Ultra Strawberry dreams, and ultra watching a number of countries.

Speaker Change: Additional launches are planned across all brands throughout EMEA in 2024.

Speaker Change: Two additional provinces one Z in Fujian in September we are planning to launch predator in a number of additional provinces in 2025 in India. We extended the privilege of goldstrike carbonated $2 50 ml P. T Basel beyond the <unk> region to the northeast States in July.

Speaker Change: Leigh and Maharaja Pradesh in September we will continue adding additional states in 2025, we remain optimistic about the long term prospects for the Monster brand in China, and India and are excited about the expansion of <unk> in these two countries.

Under the previously authorized repurchase program.

We estimate that October 2024 sales were approximately four 8% higher than the comparable October 2023 cell and 5% higher than October 2023, excluding the alcohol brands segment, we estimate that on a currency adjusted basis, including the alcohol brands.

Speaker Change: October 2024 sales were approximately $5, 8% higher than the comparable October sales and six 1% higher than October 23, excluding the alcohol brands segment.

Speaker Change: <unk> 2024, we had one more selling day compared to October 2023.

Speaker Change: On our third quarter conference call in November 2023, we reported that gross sales in the month of October 2023, including the alcohol segment.

Speaker Change: Ultimately 24, 8% higher than October 2022, gross sales, which presented a high hurdle rate for the company. This year October 2023 had one more selling day than October 2022.

Speaker Change: A portion of the increase in the October 22004 sales may be attributed to advanced purchases by customers in anticipation of the price increase in November in the United States. However, such amounts cannot reasonably be determined.

Speaker Change: Curtains, Helene and Moulton impacted sales at retail in certain states in September and October 2024, again, however, we cannot determine the impact on our business at this time.

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

Speaker Change: 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 their own internal requirements, which that may alter from time to time for their own business reasons.

Speaker Change: We reiterate that sales over a short period, such as a single month should not necessarily be in future to or regarded as indicative of results for a full quarter or any future period.

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

Speaker Change: Firstly the energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category growth opportunities and household penetration per capita consumption along with consumers need for energy are positive factors for the category, we continue to expand ourselves and non Nielsen measured channels.

Speaker Change: As reported earlier, we have implemented a price increase in the United States on November one 2024, we continue to review opportunities for price increases internationally.

Speaker Change: Flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed cost to our EMEA region. The juice plant at our <unk> facility in Ireland has now been completed of the trials, we expect the juice plant to be in production in early <unk>.

Speaker Change: 25.

Speaker Change: We're excited for the launch of Monster Ultra White guava.

Speaker Change: All of Judy Unpack gaming promotion, which kicked off last month has received positive consumer response with the publishers reporting that it's the biggest call of duty release in the franchise's history.

Speaker Change: Pleased with the rollout credit set in theory, our affordable affordable energy drink portfolio and a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands I would like to now open the floor to questions about the quarter.

Speaker Change: We will now begin the question and a quick question I ask a question you May press Star one on your touch sensor.

Speaker Change: Okay.

Speaker Change: Please go ahead.

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

Speaker Change: Just the time walking you please limit yourself to one question and I was wrong.

Speaker Change: Question.

Speaker Change: First question comes from Anthony <unk> with JP Mark.

Speaker Change: Okay.

Speaker Change: Thank you good afternoon, everyone.

Speaker Change: Go back to.

Speaker Change: The expectation of the flow through from pricing.

Speaker Change: And how much you Hudson deal back.

Speaker Change: On that end.

Speaker Change: How is your view on the on the state of the energy drink category, given what's happening and in particular now as October understandably, but one extra selling day in.

Speaker Change: It might be a little soft from somewhat.

Speaker Change: X factor.

Thanks.

Speaker Change: Thank you.

Speaker Change: And when we have a price increase.

Speaker Change: We have to see where that price increase settles.

Speaker Change: And once we see a price increase settle and determine.

Speaker Change: And what direction, it's heading what elasticity of demand is.

Speaker Change: And then in a better position to determine what promotional activity if any needs to be sit against the brands.

Speaker Change: So it's a really difficult question to answer at this time.

Speaker Change: So the question.

Speaker Change: Thank you Ed John I think Andrew I had a couple of other questions.

Joining quickly go through your other questions Andrea.

Speaker Change: Thank you Tony Yes, I was just saying if there is any pull forward that you saw.

Speaker Change: So that it would inform some of that I mean.

Speaker Change: I would say October would have been stronger if that's the case would you say there was any pull forward.

Speaker Change: On the pricing in other words like the retailers would take in more inventory.

Speaker Change: <unk> ahead of the pricing.

Speaker Change: So we sell to the distributors right the Coco to distributors.

Speaker Change: <unk>.

Speaker Change: We allow them a certain amount that they can buy in and we cut off the old pricing.

Speaker Change: In the middle of October.

So.

Yes.

Speaker Change: Sure and we've looked at it and we cannot determine with reasonable certainty what if any of that increase was attributable to two binds I suspect it could have been some but.

Speaker Change: We just we just can't determine that and in the same vein.

Speaker Change: It's hard to determine what the impact of the hurricanes.

Speaker Change: Milton and lean we're on the business, we know that.

Speaker Change: Retail was it was impacted.

Speaker Change: And.

We've done some work to try and assess the extent to which.

Speaker Change: Our own business could have been impacted but again, it's difficult it's difficult to determine what we can say is that if you look at the territories that were impacted by.

Speaker Change: The hurricanes both of them.

And then in terms of state of the Union for the energy category as we stand right now that would be appreciative of knowing.

Speaker Change: Well, if we look at foot traffic.

Convenience is 62% of the Nielsen category for energy drinks, and we look at foot traffic and.

Speaker Change: We talk to our retailers and we get some input from third party market research companies and referred to.

Speaker Change: The one anecdotal week that we spoke about.

Speaker Change: Earlier on this call.

Speaker Change: We have and it's again, a personal view I think we've reached the bottom end.

Speaker Change: Oh, very close to the bottom and I think yeah.

Speaker Change: Bigger better confidence whichever party garden I think there was some concern about the election.

Speaker Change: We passed that we got a rate cut today.

Speaker Change: And we.

Speaker Change: What we've seen in our industry is that there hasnt been a change in consumer preferences and the change too.

Speaker Change: Different types of of drinks are consumers stayed with energy drinks and instead of we believe instead of drinking.

A week or four week, they've been drinking one also less.

Speaker Change: Okay helpful. Thank you.

Speaker Change: I think that it is quite noteworthy if you look at we started the Nielsen for the period ended 26 October if you look at the latest 13 week period. The category was up one point Don you look at the latest 14 weeks the whole category General was up three two in the latest week three service. So that trend has been and that's why we refer to it.

Speaker Change: There is some recovery trend there, but we'll have to wait and see how that pans out and then just getting back to October very quickly. We did mentioned on the call. We had a really high hurdle rates over the last year.

Speaker Change: So that's another factor to bear in mind when you look at the October increases, which are actually quite good.

Speaker Change: Your next question comes from Chris <unk> with Wells Fargo Securities.

Speaker Change: Okay.

Speaker Change: Hey, guys. Thanks for the question.

Speaker Change: Okay.

Speaker Change: Can you just maybe touch on how you see inventory levels or how you saw inventory levels going into October and really what I'm getting at here is is it.

Speaker Change: Is it just the comp or did you sound quite good on on consumption trends, but maybe distributors were still.

Speaker Change: A bit reticent to take on more inventory and now that the consumption is coming through perhaps do you feel there could be a resumption in.

<unk>.

Speaker Change: The remainder of the quarter.

Speaker Change: I think basically what's what's getting contemplated right now is if you are.

Speaker Change: Kind of running flattish for the quarter, excluding the extra day or or if this is just comp.

Speaker Change: The consumption trends should start to show through in your numbers as well so any any any comment there would be maybe helpful. Yes.

Chris: Happy to do that Chris.

Chris: The way our business works, we sell to the Coke distributors they place orders.

Chris: And we execute those orders so they have sophisticated systems that take into account consumption.

Chris: One of the factors, whether another factor and a whole bunch of other factors and they order products that we.

We deliver.

Chris: So.

Chris: We also have a we are a small direct business and we spoke about the non measured channels, which is which is done directly.

Chris: Bias, but generally we execute orders according.

Chris: According to customer requirements. So.

Chris: Some of our competitors have hiccups in inventory we do.

Chris: Our business doesn't behave in that way, we supply orders according to what our customers order.

Speaker Change: Your next question comes from <unk> <unk> with Citi.

Speaker Change: Hey, good afternoon guys.

Speaker Change: Wanted to ask about Europe.

Speaker Change: Your comment about the improvement in the category in October.

Speaker Change: How much do you think innovation plays a role as well.

Speaker Change: Sounded excited about.

Speaker Change: Thanks, Rob.

Just general thoughts.

Speaker Change: If you think innovation can also drive further acceleration.

Speaker Change: In Tds category as you think into October.

Speaker Change: Thank you.

Speaker Change: I think innovation does drive.

Some conservative, but you know we've had innovation.

Speaker Change: We had probably three or four new innovative products in the first half of the year, we only really started to get product on shelf on our latest innovation, which is one is <unk>.

Speaker Change: Towards the end of October so, yes, there has been some.

Speaker Change: Benefit from that if you take the one week numbers, but I think overall.

Speaker Change: I don't think it is.

Speaker Change: That has had much impact I think the overall impact you were seeing across a number of our other risk I use has also been trending sort of upwards as well we.

We see the sales per point just moving.

Speaker Change: Better direction so.

Speaker Change: Again.

Speaker Change: A short period of time doesn't make a whole summer, but at the end of the day, we do start feeling because everybody has been seeing.

Speaker Change: It's all positive so at that too.

Speaker Change: This equation and I think it will maybe come out with the kind of answer that we thinking about carrier as well.

Speaker Change: Your next question comes from Mark Astrachan with Stifel.

Mark Astrachan: Yeah, Hey, guys afternoon hope all is well.

Mark Astrachan: Emma.

Mark Astrachan: I wanted to ask about gross margin in EMEA.

Speaker Change: What sort of specific but it's one of the questions that I think a lot of people.

Speaker Change: Curious about and don't have a huge amount of color and the trends.

Speaker Change: Improved over the last couple of years.

Speaker Change: But you are still decently below 2022 levels.

Speaker Change: Or 2021 levels I should say I guess the question is without asking for guidance because I know you don't want to give it.

Speaker Change: Well you know we have taken taken price.

Speaker Change: And we've taken price historically in a number of international markets and we continue to examine opportunities to do so.

Speaker Change: The cost of.

Of production and the cost of raw materials have been increases over time and significantly increases since.

Speaker Change: Since COVID-19.

Speaker Change: We're doing our very best to manage and hedge our aluminum exposure, which is obviously a big cost in this company. So.

Speaker Change: We use a letter, which we may have spoken about on previous calls that if we didn't I'll talk about it now we have a lot of strategy, where we are.

Speaker Change:

Speaker Change: Execute hedges to assist in managing aluminum exposure and we really do examine that on a.

Speaker Change: Weekly basis.

Semi.

Speaker Change: Twice a month, so that's something that that we look at.

Speaker Change: So.

Speaker Change: All in all we have a business that is focused some in the U S. You heard about the the numbers overseas, which are growing and they have lower margins.

Speaker Change: We spoke about the EMEA margins on this call that have moved up in the quarter, which is the trend. We all were looking to achieve.

And then we have alcohol, which is currently is at a lower margin lower percentage margin than the rest of the business. So we are very focused on improving margin wherever we can.

Speaker Change: And we will not stop in that pursuit, but.

Speaker Change: It's something that we're carrying on with Cowen and it's a work in progress.

Speaker Change: Just you mentioned I think you've referred to EMEA largely if you look at the last four quarters. We've been margins have continued to improve each quarter. Other news talk about the whole come up what are you talking about the EMEA market.

Speaker Change: You bet.

Speaker Change: Mark.

Speaker Change: Yeah.

Speaker Change: Okay.

Mark Hoppe I'd really rather just EMEA. So I'll just complete that to say that we do have the juice plant coming into production.

Speaker Change: Pretty much early next year and together with the major Hilton has indicated I think that we will see.

Speaker Change: We are quite positive about the EMEA improving.

Speaker Change: And margin going forward and whether it can get back to 'twenty, one I am not sure. So sorry, yes. The one was a question about the overall margins and I'll just sort of focused on EMEA.

Yeah.

Speaker Change: Thank you.

Your next question comes from Peter Grom with UBS.

Peter Grom: Thanks, operator, and good afternoon, everyone.

Speaker Change: I guess.

Speaker Change: I guess I just wanted to go back to the advanced purchases I get us a lot of moving pieces in the hurricane noise probably makes sense.

Speaker Change: Harder, but I think back in 2018, when you did the November price increase you were at that point at least April.

Speaker Change: To estimate the impact from advanced purchases ahead of the price increases I just curious.

Speaker Change: Is there a reason why this time may be different and youre not able to kind of estimate that.

Speaker Change: And then just on gross margin, obviously would love some perspective on the path from here or are you kind of alluded to it here, but can you maybe just talk about what youre seeing from a commodity perspective and kind of how you see inflation evolving from this point.

Speaker Change: Okay. So.

Where do you want to start you want to start about start with commodities or advanced purchases.

Speaker Change: Whatever you want.

Speaker Change: Okay all right.

Speaker Change: The option so.

Speaker Change: I think the difference this time versus the previous price increase was that we cut off.

Speaker Change: <unk>.

Speaker Change: This increase.

Speaker Change: Favorable price increase mid October so.

Speaker Change: With any customers who purchase product after mid October.

Speaker Change: They actually paid the highest price.

Speaker Change: As we look at the.

Speaker Change: A whole structure everything that happened in October it's really.

Speaker Change: It became a very difficult exercise to determine what if any of the price increase could have impacted October sales. So that's the bottom line.

Speaker Change: We could've done a better exercise, we would have but it became.

Secured is to try and find a sensible answer so we draw it.

Speaker Change: We'd rather not give it and we'll see the impact on the quarter.

Speaker Change: The quarters out of it.

Speaker Change: And then.

Speaker Change: In commodities I think everybody knows that.

Speaker Change: Happening with aluminum.

Speaker Change: And I mentioned the extent that.

Speaker Change: We have a ladder approach and we build up that ladder.

Tom Kelly: Tom goes by.

Tom Kelly: There is already.

Tom Kelly: A tariff on aluminum and we're hoping that the tariff will not will not increase that is video.

Tom Kelly: On aluminum and as regards some of the other commodities, we have seen increases in some and we've seen decreases in other we buy a lot of we buy a lot of commodities and.

Tom Kelly: It's really.

Tom Kelly: It's going to take us five minutes to go through them, all but what I can say is that generally we are seeing increases.

And in it.

Tom Kelly: Certain.

Tom Kelly: Commodities locked for example, aluminum for example, sugar and there are other commodities that Ted stayed the same or a minimally decreasing so the climate that we're looking at for commodities is one of <unk>.

Tom Kelly: Taking a aluminum out of the picture, which is showing significant increases.

Tom Kelly: One of <unk>.

One relatively manageable factors in increases.

Speaker Change: Thank you I would like to turn the conference back over to Mr. Rodney sacks for any closing remarks.

Rodney Sacks: Thank you.

On behalf of Monster I would like to thank everyone for their continued interest and support of 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.

Rodney Sacks: Conclude our conference. Thank you that's a good question.

You may now disconnect.

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