The Monster Beverage Company is holding a conference call to discuss their third quarter results. Co-CEOs Rodney Sacks and Hilton Schlosberg, along with CFO Tom Kelly, are present on the call. Tom Kelly reads a cautionary statement reminding listeners that certain statements made during the call may constitute forward-looking statements and are subject to risks and uncertainties. He directs listeners to refer to the company's SEC filings for more information.

The company recently completed an acquisition of Bang Energy and recorded a gain of $45.4 million. They also incurred $8 million in acquisition expenses. Net sales for the third quarter were at a record high of $1.86 billion, with gross profit at 53% of net sales. Excluding the impact of the Bang Inventory Step-Up, gross profit was at 53.4%.

The 2023 third quarter saw an increase in gross profit as a percentage of net sales compared to the 2022 third quarter, due to pricing actions, decreased costs for freight and aluminum cans. Operating expenses also increased, including Bang Transaction-related expenses. Distribution expenses decreased, and operating income increased by 22.2%. Interest and other income also increased, mainly due to interest income and a gain related to the Bang Transaction. The effective tax rate decreased, resulting in a 40.4% increase in net income and a 41.3% increase in diluted earnings per share compared to the 2022 third quarter.

In the 2023 third quarter, the company's diluted earnings per share increased by 34.1% when adjusted for the Bang Transaction Gain, Bang Inventory Step-Up, and Bang Transaction Expenses. The company plans to implement more price increases to offset inflation. According to Nielsen reports, sales in the energy drink category increased by 9.2% in the 13-week period, with Monster, Reign, NOS, and Full Throttle showing strong growth. In the convenience and gas channel, sales increased by 6.7%, with Reign, NOS, and Full Throttle leading the way. However, the company's market share in this channel decreased slightly to 36.1% when excluding Bang.

Monster's market share decreased from 31.1% to 29.7%, while Reign and NOS saw slight increases. Red Bull remains the top-selling energy drink with a 34.5% share. In the coffee plus energy drink category, Java Monster's sales increased by 8.9% and its market share rose to 55.9%. In Canada, the energy drink category saw a 8.6% increase in sales, with Monster's market share decreasing slightly to 36.2%. In Mexico, Monster's sales and market share both increased by 22.7% and 0.7 points, respectively.

The paragraph discusses the sales and market share of Monster's energy drink brand, Predator, in various countries. It mentions that the Nielsen statistics for Mexico may be influenced by promotions and activities in the OXA convenience chain. In September 2023, Monster's market share increased in Argentina and Brazil, but decreased in Chile. The Nielsen numbers in EMEA should only be used as a guide due to variations in channels and reporting dates. In the 13-week period until October 8, 2023, Monster's market share increased in France, Great Britain, the Netherlands, Norway, and Spain. In Germany, Italy, Poland, and South Africa, the market share either remained flat or decreased compared to the previous year.

In various countries, Monster's retail market share in value has either increased or decreased compared to the same period the previous year. In Belgium, the Czech Republic, the Republic of Ireland, and Sweden, it has increased, while in Greece it has decreased. In Denmark, Monster's market share has increased, while in Kenya and Nigeria, Predators' market share has increased. In Australia and New Zealand, Monster's market share has either increased or decreased, while in Japan and South Korea, it has increased or decreased due to various factors such as price promotions by competitors.

In the 2023 third quarter, net sales to customers outside the U.S. increased and were negatively impacted by foreign currency exchange rates. Net sales in EMEA and Asia-Pacific also increased, with gross profit increasing in both regions. Monster gained market share in multiple European countries and remains the market leader in Japan and South Korea. Net sales in China also saw an increase.

The Monster brand has seen positive growth in Oceana and Latin America, with an increase in net sales and gross profit. In Brazil, there was a decrease in net sales due to inconsistent purchasing patterns. However, net sales in Mexico, Chile, and Argentina saw significant increases. The launch of the Beast Unleashed has been successful and will continue to expand in distribution. Nasty Beast Hard Tea will also be launched in 2024 with plans for national distribution. In the US, Bang Energy was launched through Coca-Cola bottlers in September.

In the third quarter of 2023, Monster Beverage Company launched several new products in various countries, including Monster Zero-Sugar in Mexico and Puerto Rico, Monster Ultra Peachy Keen in Australia and Japan, and Predator in Iraq and India. They also expanded their distribution to new markets and transitioned the Monster brand to their Coca-Cola bottler in the Philippines.

The company purchased 7.3 million shares of its common stock in the third quarter of 2023 and had $282.8 million remaining for repurchases. October 2023 sales, including the alcohol brands segment, were estimated to be 24.8% higher than October 2022 sales. However, short-term sales can be influenced by various factors such as selling days, holidays, and production schedules. The energy category is experiencing global growth.

The company reports that their pricing actions to mitigate inflation have not affected consumer demand. They are pleased with their new product innovations and the expansion of distribution. They are also excited about the acquisition of the Bang Energy brand. The floor is then opened for questions. The first question is about the contribution of the Bang transaction to sales in the quarter.

The speaker asks for more information on the quarter-to-date trends, specifically the 25% growth mentioned. The speaker asks for clarification on the drivers of this growth, whether it is due to international markets or other factors such as sales pull-forward or timing impacts. The speaker also asks for clarification on the Bang Transaction and its impact on sales numbers. The speaker notes that the company operates through large unmeasured channels, which may not be reflected in Nielsen or IRI data.

The speaker discusses the impact of chain stores that allow pickup or online ordering, which are not included in the Nielsen data. They also mention the Bang acquisition and the transition to the Coke bottling system, and the efforts to regain distribution and shelf space for the brand. They also address concerns about emerging brands and their market share within the category.

The company expects extended distribution for new sets, but it will take time and they are focused on their own brands. They do not want to comment on competitors but believe they have a strong portfolio. The sales team has been tasked with not compromising existing shelf space for the Bang brand, which is positioned as a lifestyle brand and should be separate from other energy and wellness beverages.

The speaker asked a question about China's 28% growth and the company's plans for launching Predator in the market. The company is focusing on its main SKUs and gaining traction with Green and Ultra brands in China. They are also proceeding with their plans to launch Predator in the second quarter of next year. The next question was about the company's distribution points for Bang, which have increased by 22% in recent weeks. The speaker asked why they shouldn't be more excited about the potential for shelf space. The final question was about pricing and how Red Bull's actions may affect the market.

Rodney Sacks explains that it takes 60-90 days for pricing adjustments to take effect in the energy drink industry. They are currently evaluating the competition and will make a decision on pricing based on demand and market share. They are also optimistic about the future potential of the brand Bang, which they recently acquired.

The speaker is asked to explain how the company strategically manages its portfolio of brands. They state that Monster is the lead brand and they focus on it first, but also look at the broader category and the different needs and values of consumers. They mention that other brands like NOS, Reign, and Bang have their own unique positioning and play an important role in targeting different parts of the category. The cans for Bang have also changed to reflect a more lifestyle-oriented brand.

The company is expanding its portfolio with different energy drink brands at various price points to appeal to different consumers. They expect to gain more shelf space for these brands, especially in the clean energy and natural drink category. The main focus remains on the Monster brand, which is driving the company's growth. Red Bull is facing worse sales than Monster, and some analysts are mistakenly including Bang's sales in Monster's numbers. The company has separated Bang's sales to show the performance of the Monster portfolio separately.

In his closing remarks, Rodney Sacks thanks everyone for their interest in the company and expresses confidence in their growth strategy. He also mentions their partnership with Coca-Cola and their optimism for the future. The conference then concludes.

This summary was generated with AI and may contain some inaccuracies.