The operator welcomes participants to the Monster Beverage Company Fourth Quarter 2023 Conference Call and introduces Rodney Sacks and Hilton Schlosberg, Co-CEOs. Tom Kelly, the Chief Financial Officer, reads a cautionary statement before the call begins, reminding listeners that certain statements may constitute forward-looking statements and are subject to risks and uncertainties. The company assumes no obligation to update any forward-looking statements.

The speaker mentions a clerical error in the filing of a press release, but assures that all other numbers are correct. Rodney Sacks then takes over the call and discusses the company's record net sales and gross profit for the 2023 fourth quarter. He also mentions impairment charges related to the Alcohol Brands segment and an increase in operating expenses compared to the previous year.

The 2023 fourth quarter operating expenses included alcohol impairment charges, making up 29.2% of net sales. Excluding these charges, operating expenses were 26.8%. Distribution expenses were $79.6 million or 4.6% of net sales. Operating income increased by 10% and adjusted operating income increased by 21.4%. The effective tax rate decreased to 18.5% due to a stock compensation deduction. Net income increased by 21.6% and adjusted net income increased by 33.1%. Diluted earnings per share increased by 22.3% and adjusted diluted earnings per share increased by 33.8%. The company has implemented price increases in some international markets and is considering further pricing actions in the US and internationally.

The company maintains its market share leadership in the energy drink category in the United States, with a 5.5% increase in sales for all outlets combined. Sales for the company's energy brands, excluding Bang, were up 0.9% in the 13-week period. In the 4-week period, sales in the convenience and gas channel increased by 3.7%, with Reign showing the highest increase at 17.2%. The company's market share in the convenience and gas channel decreased slightly from 36.9% to 35.5%, but including Bang, it remains at 37%. Competitors such as CELSIUS, C4, 5-Hour, Rockstar, and GHOST also hold significant market shares.

According to Nielsen, sales of coffee plus energy drinks in the convenience and gas channel decreased by 10.3% for the 4 weeks ended February 17, 2024. Java Monster's sales were 4.6% lower, while Starbucks Energy saw a 16.9% decrease. In Canada, the energy drink category increased by 9.2% in dollars for the 12 weeks ended January 27, 2024. The company's energy drink brands saw an 8.6% increase in sales, with Monster's market share decreasing slightly. In Mexico, the energy drink category increased by 10.9% in January 2024, with Monster's sales increasing by 10.5%. However, the market share for Monster and Predator may be influenced by sales in the OXXO convenience chain, which can be affected by promotions.

The activities in Brazil, Argentina, and Chile have had a significant impact on Nielsen statistics for Mexico, with increases in the energy drink category and Monster's market share. However, the Nielsen numbers in EMEA should only be used as a guide due to varying channels and reporting dates. In the 13-week period until the end of January 2024, Monster's retail market share in value grew in countries such as Belgium, France, and Great Britain. In the 13-week period until the end of December 2023, Monster's retail market share also grew in countries like the Czech Republic, Germany, and Italy.

In the 13-week period until the end of December 2023, Monster's retail market share remained flat in Poland and declined in Denmark, Greece, South Africa, and Sweden. However, Predator's market share grew in Kenya and Nigeria. In Australia, Monster's sales and market share increased, while Mother's sales increased but market share decreased. In New Zealand, Monster's sales and market share increased, while Live+ sales and market share decreased. In Japan, Monster's sales and market share increased in the convenience channel. In South Korea, the energy drink category saw a 17.2% increase in January 2024.

In the 2023 fourth quarter, Monster's sales increased by 5.5%, but its market share in value decreased by 5.9%. Net sales outside the U.S. accounted for 36.8% of total net sales. In the EMEA region, net sales and gross profit increased, but gross profit as a percentage of net sales decreased. Monster gained market share in multiple European countries. In the Asia Pacific region, net sales and gross profit also increased, but gross profit as a percentage of net sales decreased. Net sales in Japan and South Korea decreased, but Monster remains the market leader in both countries.

In the 2023 fourth quarter, Monster saw significant increases in case sales in China, Oceania, and Latin America. They also announced a name change for their CANarchy Craft Brewery Collective and continued to expand distribution of their brand The Beast Unleashed.

Nasty Beast Hard Tea was launched in January 2024 and is now available in 40 states with plans for national distribution. The brand has received positive response and has expanded with a zero sugar offering. In the first quarter of 2024, new flavors of Reign Storm and other energy drinks were launched. In Canada, new flavors and packaging sizes were launched, while in Latin America, new flavors were launched in various countries.

In the first quarter of 2024, several new flavors of Monster Energy drinks were introduced in Latin America, New Zealand, Australia, and EMEA. The company also launched a repurchase program and estimates show a significant increase in sales compared to the same period in 2023. January 2024 had one more selling day than January 2023.

The company cautions that short-term sales can be affected by various factors, such as selling days and production schedules. They also reiterate that short-term sales should not be used to predict future results. The energy category is growing globally and the company's pricing actions have not impacted consumer demand. The AFF flavor facility in Ireland is providing flavors to the EMEA region and a juice facility is being constructed. The company has a strong innovation plan and is excited for upcoming products, such as Nasty Beast Hard Tea and Monster Brewing Company. They are also expanding their affordable energy drink portfolio internationally.

The company is excited about acquiring the Bang Energy brand and believes it will fit well within their portfolio of energy drink brands. The 2023 fourth quarter saw record net sales, and the floor is now open for questions about the quarter and the upcoming year. The first question is about gross margin, which was better than expected in the quarter. The company does not give specific guidance, but there were nonrecurring items that contributed to the strong gross margin in the quarter. The company expects an increase in gross margin in the fourth quarter of 2023 compared to the third quarter.

The speaker discusses the recent slowdown in energy drink sales in the U.S., attributing it to a combination of factors such as weather, non-measured channels, and lack of new product launches. They also mention upcoming trade resets that could impact sales in the second quarter.

The company is expecting to see growth in shelf space for their legacy brands, new SKUs, and the Bang brand due to retailers taking it back. They are also looking at opportunities for pricing in the U.S. and are working on improving their margins, but do not give specific guidance. They are bringing up their own manufacturing facilities and trying to improve gross profit percentages.

The company does not give guidance and is uncertain about the future of freight. They have taken pricing in international markets and are evaluating the possibility of a price increase in the US. They have seen growth and market share progression internationally and have plans for new product innovations.

In the paragraph, the speaker addresses a question about the company's performance in international markets and mentions that there has been some fluctuation, but overall they are seeing growth. They also mention plans for growth in developing markets like China and India. The speaker then moves on to answer a question about G&A expenses, noting that there were impairment charges of $40 million related to Alcohol Brands in the quarter. The questioner then asks for clarification on the G&A expenses, excluding the impairment charges.

The speaker discusses the progress and potential of the company's international business, which has a $3 billion run rate. They mention plans to improve execution and roll out new products in the first quarter of 2021, which they hope will positively impact positioning and results. The speaker also addresses the potential for growth in the energy category and improving margins in the international business over time.

Hilton Schlosberg, the CEO of Monster Beverage Corporation, discusses the company's pricing strategy and how they compete against Red Bull in international markets. He also mentions the challenges of improving gross margins internationally and the potential for growth in those markets by introducing selected SKUs from the company's broad portfolio.

The speaker discusses Monster's presence in various international markets and their focus on the premium sector. They mention the growth of their brand Predator in these markets, including recent launches in China, India, and Egypt. They also address production issues and their plans for future growth in these markets. The speaker concludes by expressing excitement for the company's global opportunities and thanking listeners for their interest.

The company remains confident in their growth strategy and plans to continue innovating and expanding their brands, especially with the help of the Coca-Cola bottler system. They are optimistic about the future and thank attendees for their support. The conference has ended.

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