The paragraph provides an introduction to the Monster Beverages Company's Fourth Quarter and Full Year 2024 Conference Call. The operator informs participants about the listen-only mode and question opportunity post-presentation, and mentions the recording of the event. Rodney Sachs, Co-CEO, begins the call, joined by Co-CEO Hilton Schlosberg and CFO Tom Kelly. Tom Kelly issues a cautionary statement, noting that some statements made on the call may be forward-looking, subject to risks and uncertainties beyond the company's control, which could lead to actual results differing from the expectations. Listeners are directed to the company's SEC filings for further details on risks and uncertainties.

The paragraph discusses the sustained growth in the global energy drink category, with a particular emphasis on the resurgence of growth in the United States across convenience and measured channels according to Nielsen. Non-Nielsen channels are also expanding, driven by increasing household penetration and per capita consumption due to the growing consumer demand for energy. Hurricanes Helene and Milton affected retail sales in certain states in October 2024, and flooding temporarily closed a brewery in Brevard, North Carolina, which was fully operational by mid-November 2024. For the 13 weeks ending February 15, 2025, the U.S. energy drink category grew by 6.2%, and the EMEA region saw growth of approximately 14.4% in tracked markets.

In the APAC and LatAm regions, the energy drink category experienced growth rates of 11.8% and 20.2%, respectively, as reported by Nielsen and INTAGE over a recent 13-week period, on an FX neutral basis. The 2024 fourth quarter saw negative impacts due to a $4.1 million increase in inventory reserves in the Alcohol Brands segment and $130.7 million in impairment charges resulting from missed performance projections. Additional $1.8 million legal expenses related to an intellectual property claim affected operating expenses. Adjusted operating income increased by 7.9% to $517.9 million, although these factors reduced net income by $105 million and decreased earnings per share by $0.10.

In the fourth quarter of 2024, diluted earnings per share adjusted for specific items were $0.38. The company reported record net sales of $1.81 billion, representing a 4.7% increase from the previous year, or 4.8% excluding the Alcohol segment. Adjusted for foreign currency, sales rose 7.8%, or 7.9% excluding the Alcohol segment. Gross profit margin improved to 55.3% from 54.2% the previous year, despite being affected by inventory reserves in the Alcohol Brands segment, with an adjusted margin of 55.5%. The gross profit increase was driven by reduced input costs, although partially offset by geographical sales mix, and was higher than in the third quarter of 2024. Non-GAAP adjustments were provided for better evaluation of ongoing results, in addition to GAAP measures.

In the 2024 fourth quarter, operating expenses increased to $621.2 million from $504.4 million in the same quarter of 2023, mainly due to higher impairment charges, payroll, and sponsorship expenses. As a percentage of net sales, these expenses rose from 29.2% to 34.3%. However, adjusted operating expenses grew by only 5.5% to $488.7 million, making up 27% of net sales, slightly higher than the previous year's 26.8%. Distribution and warehouse expenses were slightly lower at $77.6 million compared to $79.6 million in 2023, accounting for 4.3% of net sales. Operating income dropped by 12.2% to $381.2 million, yet adjusted operating income rose by 7.9% to $517.9 million. The effective tax rate significantly increased to 29.9% from 18.5% a year earlier, due to a decrease in stock-based compensation deductions and higher state taxes. Consequently, net income decreased to $270.7 million, down from $367 million in the previous year.

In the 2024 fourth quarter, the company reported an adjusted net income of $375.7 million, down from $402.4 million in the same quarter of 2023. Diluted earnings per share decreased by 20.8% to $0.28, but adjusted diluted earnings per share remained stable at $0.38. Net sales for the full year 2024, adjusted for foreign currency, rose 8.4%. The adjusted net income per diluted share for 2024 was $1.62, up from $1.56 in 2023. Foreign currency exchange rates negatively impacted net sales by $52.3 million in the fourth quarter. A 5% price increase was implemented in the U.S. starting November 2024, and further pricing actions are being considered. In the 13 weeks ending February 15, 2025, energy drink sales grew by 9% excluding certain outlets and by 6.2% when including convenience and other retailers. The company's energy drink sales increased by 4.4%, with Monster sales rising 4.8% and Reign sales falling by 6.3%.

In the four weeks ended February 15, 2025, sales of energy drinks in the convenience and gas channel saw mixed results. Red Bull's sales rose significantly by 8.3%, boosting its market share to 36.9%, while Monster's sales increased by 3.1%, raising its share to 29.2%. However, Reign, NOS, and Full Throttle experienced declines in both sales and market share, with Reign's share dropping by 0.2 points to 2.7%. Despite these fluctuations, the overall market for energy drinks, including energy shots, grew by 2.8% in dollars. In contrast, sales in the coffee plus energy drink category decreased by 9.1%, with Java Monster's sales falling by 7.9%, although its market share increased to 58.9%. Starbucks Energy coffee saw a 16.6% drop in sales, decreasing its market share to 38.2%. Competitors like CELSIUS, C4, and others maintained varied market shares within the category.

In Canada, the energy drink market saw a 10.3% increase in sales over the 12 weeks ending January 25, 2025, with the company’s brands gaining a 0.1 point in market share to reach 41.4%. Monster saw a 7.1% sales increase but a 1.1 point decrease in market share. NOS increased sales by 13.7% without a change in market share, and Full Throttle sales decreased by 5%. In Mexico, energy drink sales rose by 11.1% in January 2025, with Monster's sales growing by 13.7% and its market share increasing by 0.7 points to 30%. Predator's sales surged by 27.9%, gaining 0.8 share points to 6.2%. The Mexican market is notably influenced by OXXO chain promotions. In Brazil, Monster sales grew by 15.7% in December 2024, with market share increasing by 0.9 points to 47.7%. In Argentina, high inflation led to a 98.7% market growth in January 2025; Monster sales increased by 82.5%, although its market share fell by 4.5 points to 51.2%.

In January 2025, the energy drink category in Chile saw a 16.2% increase, while Monster's sales rose by 13%, causing its market share to decrease by 1.1 points to 39.5%. Monster Energy remains a leading brand in Argentina, Brazil, and Chile. Nielsen data, which varies by country and date in the EMEA region, indicates that for the 13 weeks ending January 26, 2025, Monster's market share grew in Belgium, Great Britain, the Netherlands, and Norway, but declined in France. For the 13 weeks ending December 29, 2024, Monster's market share improved in the Czech Republic, Germany, Poland, Ireland, and Spain, but fell in Denmark, Greece, Italy, South Africa, and Sweden.

In the 13-week period ending December 29, 2024, Predator (also branded as Fury) saw significant growth in market share in Egypt, Kenya, and Nigeria. In the fourth quarter of 2024, Monster increased its market share in several European countries. In Australia, the energy drink category grew by 10.5% for the four weeks ending February 2, 2025, while Monster's sales surged 22% and its market share rose to 20.4%. Conversely, the Mother brand experienced a decline in both sales and market share. Similarly, in New Zealand, Monster's market share increased to 15.3%, while Mother's decreased. Sales of Live+ also declined. In Japan, although the energy drink category grew, Monster's market share fell but it remained the leader. A similar trend occurred in South Korea where the category expanded, but Monster's market share decreased. Monster continues to lead the market in both Japan and South Korea despite these declines.

In the 2024 fourth quarter, net sales outside the U.S. amounted to $711.5 million, constituting 39.3% of total sales, up from $637 million or 36.8% in the same period in 2023. Foreign currency fluctuations negatively impacted U.S. dollar sales by about $52.3 million. EMEA sales rose 15.5% in dollars (14.6% currency neutral), with a consistent gross profit margin of 32.7%. Asia-Pacific sales increased 21% in dollars (19.8% currency neutral), with a slightly improved gross profit margin of 41.3%. Sales in Japan grew 3.4% (2.8% currency neutral), while South Korea experienced a 40.3% increase in dollars (43.3% currency neutral) due to production schedule timing. China saw a 25.8% sales rise in dollars (23.9% currency neutral). The company is optimistic about its long-term growth in China, particularly with the expansion of the Predator brand.

In Oceana, covering regions like Australia and New Zealand, net sales rose by 34.6% in dollars and 29.6% currency neutral. Latin America saw a 4.9% dollar increase and a 38.4% rise currency neutral, with a gross profit margin of 42.7% up from 38.4%. Brazil's net sales grew by 13.4% in dollars and 33.9% currency neutral. Conversely, Mexico and Chile experienced declines in dollar sales but increases on a currency neutral basis, while Argentina saw a steep 20% drop in dollar sales but a 127.5% rise currency neutral. The Alcohol Brands segment of Monster Brewing reported $34.9 million in sales, slightly down from the previous year due to disruptions from Hurricane Helene in Brevard, North Carolina. Efforts to restructure the senior management team in various divisions are underway to optimize operations amid these challenges.

The paragraph details the recent and upcoming product launches of Monster Brewing and its associated brands. They are shipping several products like Beast, Pink Poison, and Killer Sunrise in 24-ounce cans and plan to introduce Gnarly Grape and Miche flavored beers soon. There is a focus on international expansion, with plans to launch Beast in select markets, subject to approvals. Innovations released in late 2024 and early 2025 include a variety of new beverages across Monster and its partner brands, including flavors like Monster Ultra Vice Guava and others in different regions like Latin America, EMEA, and Asia. Future launches in various markets and extended can sizes are also part of their strategy to grow and innovate further.

In February 2025, Monster Ultra Strawberry Dreams was launched in South Korea, and in March, Monster Energy plans to introduce a caffeine-free 250 ml can for Japan's on-premise channel. The company is optimistic about long-term growth in China and India, with a national rollout of non-carbonated Predator in 500 ml PET bottles planned following successful regional tests in China. As of February 2025, $500 million remained in the repurchase program. January 2025 sales, adjusted for foreign currency, rose compared to January 2024, but were affected by California wildfires and severe weather in the U.S., impacting distribution. However, the exact business impact has yet to be quantified.

The paragraph highlights the challenges of interpreting short-term sales data due to factors like varying selling days, holidays, product launches, pricing changes, and production schedules. It advises against using short-term sales to predict long-term results. Positive developments include global growth in the energy drink category, increasing household penetration, and expansion in non-Nielsen channels. The company has implemented a price increase in the U.S. and is considering further price adjustments. Their Irish facility is now supplying a variety of flavors to the EMEA region, reducing costs, and a new juice plant will begin production midyear. Additionally, they are optimistic about their 2025 innovation pipeline and exploring opportunities for alcoholic products internationally.

The paragraph discusses the company's successful international launch of its affordable energy drinks, Predator and Fury, and its plans for further expansion. It also mentions the company's support efforts during natural disasters, such as the California wildfires, Hurricane Milton, and Hurricane Helene, by providing relief supplies to first responders and affected communities. During a Q&A session, Bonnie Herzog from Goldman Sachs inquired about the company's gross margins, asking about the impact of a recent price increase, in-house production, and concerns regarding aluminum tariffs. Hilton Schlosberg responded by citing reduced input costs and geographical sales mix as major factors affecting gross margins, and confirmed that price increases contributed positively.

The paragraph discusses increased costs that offset gross sales, including higher commissions to Coca-Cola due to increased sales and profitability in EMEA and other issues like promotional allowances for price increases to prevent consumer shock. The speaker mentions that discussing tariffs is premature due to constant changes but notes that they have secured aluminum and Midwest premium hedges for 2025. During a Q&A, Dara Mohsenian of Morgan Stanley asks about Monster's potential U.S. market share amidst energy category recovery and innovation pipeline. Hilton Schlosberg responds, stating that there will be a low-single digit increase in shelf space due to portfolio additions, which is an exciting development for the company.

The global energy drink category is expected to grow substantially through 2019 and beyond, with the U.S. category currently at $21.2 billion. Despite historically high levels, growth is projected to continue, especially as convenience store sales rebound with larger shopping baskets. The market is primarily driven by two major players, the speaker’s company and Red Bull, and competition remains consistent. International growth is also picking up after a temporary slowdown. The company is focusing on innovation and execution strategies, with new products like Vice Guava and Ultra Blue Hawaiian performing well and gaining distribution.

The article discusses innovation and growth in the coffee category and energy drinks for the year, highlighting positive prospects due to new product launches and collaborations with Bang and Any Means Possible. They are eager about social media influence and flavor combinations. Reign remains a key focus. Filippo Falorni from Citi inquires about discrepancies between tracked data and reported results in the U.S. energy drink category, particularly regarding untracked areas like small bodegas and convenience stores, and pressures on the Hispanic market. Hilton Schlosberg acknowledges these consumer spending concerns and attributes January's performance drop to weather conditions.

The paragraph discusses the challenges faced by a company during December due to wildfires and weather conditions on the East Coast, which influenced sales. Despite difficulties, the company emphasizes the difference between what is sold to bottlers and distributors versus what consumers purchase, as measured by Nielsen data. The speaker, Rodney Sacks, notes that while Nielsen data can be misleading in short periods, recent statistics show Monster is returning to an 8% growth rate in key areas after a sluggish January. He cautions against making conclusions based on isolated monthly data, acknowledging that various factors can affect outcomes. Andrea Teixeira from JPMorgan then asks about the company's innovation strategy for its Bang and Reign brands in the functional segment of its portfolio.

The paragraph discusses plans for innovation in 2025, specifically addressing competition and brand positioning in the energy drink segment. Rodney Sacks mentions that Alani Nu has experienced good growth, particularly among younger females, but it's more niche. He differentiates the positioning of brands like Reign, Bang, and NOS, indicating they each have unique market positions. Sacks and Hilton Schlosberg express confidence in managing their portfolio and strategies despite market changes, such as a competitor's acquisition. Schlosberg points out that Alani Nu's growth might hit a ceiling as its distribution expands, similar to what happened with Celsius.

In the paragraph, Hilton Schlosberg discusses Monster's approach to potential pricing increases, emphasizing that they are always looking for opportunities to raise prices due to significant cost increases such as tariffs and duties. However, they did not increase prices for Reign Storm and Bang when they raised prices for the rest of their portfolio. Pricing decisions are influenced by factors like aluminum costs, international pricing reviews, and competitor actions, with a strong focus on enhancing stockholder value while ensuring they do not harm their brand by increasing prices unnecessarily.

The paragraph is a closing statement from Rodney Sacks, representing Monster, during a conference call. He expresses gratitude for the attendees' interest in the company and emphasizes Monster's commitment to growth, innovation, and brand differentiation. Sacks highlights the company's strategic partnership with the Coca-Cola bottling system and expresses optimism about Monster's future in the beverage industry. The operator then ends the conference.

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