Monster Beverage Corp Q4 FY2024 earnings call

• Global energy drink category shows sustained growth; U.S. energy drink category resurging in convenience and all measured channels. - Hurricanes Helene and Milton impacted sales in certain states, with the Alcohol Brands segment's brewery closed due to flooding. - In the U.S., energy category grew 6.2% in 13 weeks through Feb 15, 2025. EMEA energy drink category grew ~14.4%, APAC ~11.8%, LatAm ~20.2% in respective 13-week periods (FX neutral). - Achieved record fourth quarter net sales of $1.81 billion, 4.7% higher than 2023 quarter. - Impairment charges and inventory reserves impacted the Alcohol Brands segment's results. - Continued innovation with new product launches across brands, including in U.S., EMEA, APAC, and LatAm. - Restructured senior management team in the Alcohol Brands segment and plan further adjustments to optimize personnel and facilities.

The energy drink segment saw record fourth quarter net sales of $1.81 billion, 4.7% higher than the comparable 2023 quarter, with 4.8% growth excluding the Alcohol segment. On a foreign currency adjusted basis, net sales increased 7.8% excluding the Alcohol segment. Gross profit as a percentage of net sales was 55.3% in the 2024 fourth quarter, up from 54.2% in 2023. Net sales to customers outside the U.S. were $711.5 million, 39.3% of total net sales in the 2024 fourth quarter. The Alcohol Brands segment had net sales of $34.9 million in the 2024 fourth quarter, a decrease of approximately $0.3 million or 0.8% from the 2023 comparable quarter. The brewery in Brevard, North Carolina was closed for a week due to Hurricane Helene, but was fully operational by mid-November 2024.

• Estimates that on a foreign currency adjusted basis, January 2025 sales were ~5.3% higher than comparable January 2024 sales, 6.7% higher excluding Alcohol Brands segment. - January 2025 sales on non-foreign currency adjusted basis were ~1.5% higher than comparable January 2024 sales, 2.8% higher excluding Alcohol Brands segment. - Continue to review opportunities for price increases domestically and internationally. - Plan further innovation in Monster Brewing and across various brands in 2025, including launches in new markets and formats.

• Weather events like hurricanes and wildfires can impact sales and operations. - Foreign currency exchange rates can have an unfavorable impact on net sales. - Tariffs and trade policies may affect costs and pricing. - Challenges in the Alcohol Brands segment including production disruptions, restructuring, and meeting market expectations.

Q: Could you give more color on drivers behind gross margin expansion, impact of Nov 1 price increase, production of feed drink volume in-house, risk from aluminum and tariffs, and outlook for further gross margin expansion this year?

A: Major drivers of gross margin were reduced input costs partially offset by geographical sales mix. Price increase impacted gross margin positively. Production of feed drink volume in-house is part of operations. Tariffs are uncertain, but hedged to a nice extent in 2025 with aluminum and some hedges on Midwest premium. Outlook for further gross margin expansion depends on various factors including tariffs, competitors' actions, and cost management.

Q: Can you give color on Monster's potential U.S. market share performance going forward, U.S. innovation pipeline in 2025 vs 2024, and shelf space?

A: Shelf space increased in low-single digits. U.S. energy category is $21.2 billion, expected to continue growing. Market share will face competition, but category is strong with Monster and Red Bull. 2025 innovation includes early starts with products like Ultra Blue Hawaiian, Viking Berry, and Bang relationship with Any Means Possible. Reign is also a focus.

Q: Comment on untracked portion of business, slowdown in Smaller Bodegas, Gas and Convenience stores not picked up, and Hispanic population pressure?

A: January sales affected significantly by weather. Nielsen is based on retail purchases, not direct sales to bottlers. Weather in December and January had impacts. Hispanic population spending is a factor, but January was an aberration with weather effects.

Q: Talk about decision process for additional pricing, considering incremental aluminum inflation, tariffs, and innovation?

A: Always looking for pricing opportunities. Had significant cost increases. Will consider tariffs, competitors' actions, and innovation. Pricing decisions depend on cost factors, tariffs, and competitor moves to improve stockholder wealth.