The paragraph is an introduction to the Monster Beverage Corporation's First Quarter 2025 Financial Results Conference Call. The call is in a listen-only mode for participants with opportunities for questions after the presentation. The event is recorded. Rodney Sacks and Hilton Schlosberg, Co-CEOs, and Tom Kelly, CFO, are present. Tom Kelly provides a cautionary statement noting that the call includes forward-looking statements subject to risks and uncertainties that may lead to different actual results, and references their SEC filings for more details on these risks.

The paragraph discusses the accelerated growth trends in the energy drink category for the company in various regions. In the United States, the energy category saw a 10% growth according to Nielsen data for the 13 weeks up to April 26, 2025, compared to the previous year. In EMEA, APAC, and LatAm, the growth rates were approximately 13.7%, 13.6%, and 15.7%, respectively, on an FX-neutral basis. These trends reflect increased household penetration, per capita consumption, and consumer demand for energy. The LatAm figures exclude Argentina and Chile.

In the 2025 first quarter, net sales were impacted negatively by factors such as distributor ordering patterns, unfavorable foreign currency exchange rates, adverse weather, and economic uncertainty, resulting in a decrease to $1.85 billion from $1.9 billion in the same period of 2024. Despite these challenges, gross profit rose to 56.5%, attributed to pricing strategies and supply chain improvements. Operating expenses slightly decreased, but as a percentage of sales, they increased to 25.8%. Distribution costs declined. Overall, operating income improved by 5.1%, with notable gains excluding the Alcohol Brand segment. The effective tax rate saw a minor decline to 23.4%.

In the first quarter of 2025, net income rose slightly to $443 million compared to $442 million in the same period of 2024, with diluted earnings per share (EPS) increasing by 7.4%. Excluding the Alcohol Brand segment, EPS rose by 10.2%. The impact of tariffs on operating results was minimal. The company produces concentrates in the U.S. and Ireland and manufactures finished products locally in their markets, which mitigates tariff effects. AAF, their subsidiary, plans to establish a facility in Brazil by 2026. According to Nielsen reports, the energy drink market saw a significant increase in sales, with a 13.8% growth in some outlets but a 10% increase overall. The company's energy drink brands experienced a 6.9% sales increase, with Monster up by 8.7%, while Reign sales declined by 9.9%.

In the four weeks ending April 26, 2025, the energy drink category in convenience and gas channels saw a sales increase of 8.9% compared to the previous year. Sales of Monster rose by 8.2%, while sales of NOS and Full Throttle showed marginal changes of +1.9% and -1.7%, respectively. Red Bull's sales surged by 15.2%, and its market share increased by 2 points to 36.8%. In contrast, Monster's overall market share slightly decreased from 37.1% to 36.4%. The market shares of Reign, NOS, and Full Throttle all declined, with Bang holding a 1.7% share. Competitors CELSIUS, C4, GHOST, 5-Hour, Alani Nu, and Rockstar held various market shares ranging from 2.4% to 7.8%. In the coffee + energy drink category, sales slightly decreased by 1.2%, but Monster's Java Monster, including Killer Brew, saw a 4.4% sales increase and captured a 62.1% market share, while Starbucks Energy Coffee's sales dropped by 11.7%, reducing its market share to 36.6%.

In the 12 weeks ending March 22, 2025, the energy drink category in Canada grew by 9.4% in sales, with a specific company’s brands growing by 11.4% and gaining a market share of 40.9%. Monster's sales grew by 8.5% but lost market share, while NOS and Full Throttle saw sales increases and stable or slightly increased market shares. In Mexico, the energy drink category rose by 9% in March, with Monster and Predator experiencing significant sales and market share growth. However, market statistics may be influenced by promotions in the dominant OXXO convenience chain. In Brazil, the category surged by 33.7%, with Monster's sales growing by 26.5% despite a drop in market share. In Chile, the category grew minimally by 1.6%, while Monster's sales and market share decreased.

In March 2025, Monster experienced fluctuations in retail market share across various countries. In Argentina, its market value share decreased significantly by 6.5 points to 52%. Despite this decline, Monster remained the market leader in Brazil, Chile, and Argentina. In Europe, Monster saw market share growth in Belgium, the Czech Republic, Denmark, Great Britain, Germany, The Netherlands, Norway, Poland, and the Republic of Ireland. However, it remained flat in Spain and Sweden and declined in France and South Africa. In Greece and Italy, there was growth by February 2025. The Predator brand, also known as Fury, saw substantial increases in market share in Egypt, Kenya, and Nigeria. It's noted that Nielsen's data for EMEA should be considered a rough guide due to varying measurement methods across countries.

In the first quarter of 2025, Monster Energy experienced growth in market share across several European countries. In Australia, while the energy drink category grew by 8.1%, Monster's sales surged by 22.2%, increasing its market share by 2.8 points to 24.7%. Conversely, the brand Mother saw a decline in both sales and market share. In New Zealand, the energy drink market grew by 17.1%, with Monster's sales increasing by 23.9% and its market share rising by 0.8 points to 15.5%. Mother and Live+ both experienced declines in market share. In Japan, the energy drink category rose by 6.6%, but Monster's market share decreased by 3.4 points to 56.1%, despite remaining the market leader. Meanwhile, in South Korea, Monster's sales grew by 24.8%, increasing its market share by 2.8 points to 54.7%. Note that short-term market statistics can be affected significantly by promotional activities or other trading factors.

In the first quarter of 2025, net sales to customers outside the U.S. increased by 6.2% on a currency-adjusted basis to $790.5 million, despite foreign currency exchange rates negatively affecting U.S. dollar net sales by $57.3 million. Overall, reported net sales outside the U.S. were $733.2 million, making up 35.9% of total net sales. In the EMEA region, sales decreased by 2.6% in dollars but rose 2.1% currency-neutral, with a gross profit margin increase to 35.1%. The Asia-Pacific region saw a 10.4% sales increase in dollars and 16% currency-neutral, though gross profit slightly decreased to 42.4%. In Japan, sales fell 3.5% in dollars but rose 1.3% currency-neutral. South Korea saw a 2.5% decrease in dollars and a 6.8% increase currency-neutral, while China had a 40.1% dollar sales increase and 43.2% currency-neutral rise, bolstered by the Monster brand's potential and Predator's market expansion. In Oceania, sales grew 21.6% in dollars and 28.8% on a currency-neutral basis.

In the first quarter of 2025, Latin America, including Mexico and the Caribbean, saw a 3.1% decrease in net sales in dollars, but a 14.4% increase on a currency-neutral basis compared to the same period in 2024. Gross profit as a percentage of net sales rose to 44.6%, up from 42.8% the previous year. Brazil, Mexico, and Chile experienced declines in net sales in dollars, with varying impacts on a currency-neutral basis, while Argentina saw significant increases in both measures. The Alcohol Brand segment reported a 38.1% decline in net sales due to a previous product launch. Monster Brewing struggled, but plans to optimize operations and launch new products in both national and international markets. Recent new products in the U.S. include various flavors of Monster and Reign beverages launched in January and February.

In the first quarter of 2025, a variety of new products were launched by the company across multiple regions. In Canada, new flavors such as Monster Energy Ultra Fantasy Ruby Red and others were introduced. Latin America saw launches of Ultra Peachy Keen in Chile and Ultra Fiesta in Brazil, among others. In the EMEA region, a range of products like Monster Green Ultra Sugar and others were launched, with more planned throughout the year. Australia and Asian regions like Japan, South Korea, Hong Kong, Taiwan, and Vietnam also saw new product introductions. The company is optimistic about the growth potential of the Monster brand in China and India, with a national rollout of the Predator brand in China. Lastly, no company stock was repurchased during the first quarter, with $500 million still available for buybacks.

In April 2025, sales increased significantly compared to April 2024, with a 16.7% rise on a foreign currency adjusted basis and a 17.6% rise excluding the Alcohol Brand segment. On a non-foreign currency adjusted basis, the sales grew by 15.3% compared to April 2022. Year-to-date sales through April 2025 also showed growth, with a 6.9% increase excluding the Alcohol Brand segment on a foreign currency adjusted basis, and a 3.3% increase on a non-foreign currency adjusted basis. However, the company advises caution in interpreting short-term sales figures due to various influencing factors like selling days, holidays, new product launches, pricing, promotions, distributor actions, and bottling schedules. Sales over a short period should not be seen as indicative of longer-term results.

The paragraph highlights several positive developments for the energy drink sector. There is global growth in energy drinks, with increasing household penetration and consumption. Monster's sales have been strong, particularly in the U.S., and opportunities for price increases are being explored. Their AFF facility in Ireland has started producing flavors, improving services and reducing costs in the EMEA region, and a juice plant there will be operational by midyear. They are enthusiastic about their 2025 innovation pipeline and are exploring international markets for alcohol products. Predator and Fury, their affordable energy brands, have launched successfully in several markets. The paragraph concludes with an invitation for questions about the quarter's performance.

In the paragraph, Hilton Schlosberg discusses the challenges faced in the first quarter due to factors impacting bottler distributor ordering patterns in the U.S. and EMEA, including distribution center closures, adverse foreign exchange changes, decreased sales in the Alcohol Brand segment, fewer selling days, and uncertain economic conditions. Despite this, April was a strong month with robust sales, aided by supply chain optimization and better selling prices, which improved gross profit. Subsequently, Dara Mohsenian asks for insights on the broader macroeconomic impact on retail sales, referring to positive retail takeaway trends and Nielsen numbers.

The paragraph discusses the positive rebound of the energy category in the U.S. while other consumer product segments have declined. Rodney Sacks attributes the growth to strong consumer demand, which is reflected in improved Nielsen data and depletions. He emphasizes the importance of these metrics over potentially volatile sales numbers and expresses confidence in the category's strength and affordability as a luxury. Hilton Schlosberg concurs with this positive outlook for the rest of the year.

The paragraph discusses positive sales trends in the energy sector for bottlers, with specific increases reported by CCP, Hellenic, and LG in Korea. It mentions challenges due to the closure of distribution centers but notes the direct business trends are stable. The sales to bottler distributors showed some inconsistency. Filippo Falorni from Citi asks about gross margin drivers, specifically pricing and supply chain optimization, and raises concerns about the rising Midwest premium due to tariffs. Rodney Sacks explains their hedging strategy, highlighting that while they are somewhat hedged against the Midwest premium, they focus on mitigating risks through a comprehensive hedging program.

In the conversation, Hilton Schlosberg discusses the company's expectations for sales and gross margins. He notes that second-quarter margins are expected to be lower than the first quarter due to rising costs such as the Midwest premium and certain materials. Bonnie Herzog from Goldman Sachs asks about the company's sales performance relative to internal expectations and the timing of product innovation. Schlosberg responds by saying there was more product innovation in Q1 than in Q2 and highlights success in quickly getting new products like Ultra Blue Hawaiian and Vice Guava onto shelves. He emphasizes that Q1 saw more innovation in sales, with ongoing acceleration in distribution, and mentions some initial stocking by distributors in anticipation of new product launches.

In this exchange, Hilton Schlosberg addresses Kevin Grundy's question about pricing dynamics and market share within the energy drink category. Schlosberg emphasizes that their company makes independent pricing decisions based on market opportunities and is not influenced by competitors' actions. He notes the narrowing price gap between energy drinks and carbonated soft drinks as an opportunity for value proposition. While discussing market share, Schlosberg does not express concern over competitors' actions, focusing instead on the company's strategic positioning in the market.

The paragraph discusses a company's strategy to evaluate pricing globally and regain market share, emphasizing pride in their efforts. They highlight a recent sales rally focusing on market share recovery, led by Rob Gehring, and mention innovative plans in the pipeline. Despite recent price increases, they are encouraged by rising sales and volume trends in the U.S. Rodney Sacks, representing Monster, clarifies a verbal misstatement regarding sales data from April 2024. He reaffirms the company's commitment to growth, innovation, brand differentiation, and leveraging the Coca-Cola bottler partnership, expressing optimism about their industry positioning and future prospects.

The speaker is announcing their decision to step down as Co-CEO after the Shareholder Meeting on June 12th, marking the end of 30 years in this role. They express gratitude to colleagues, analysts, and investors for their support and confidence throughout their tenure. Although stepping back from their current position, they will remain involved as Chairman and look forward to maintaining relationships. The speaker concludes with thanks and notes they will next speak at the Annual Shareholder Meeting.

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