Rodney C. Sacks
Chairman & Co-Chief Executive Officer at Monster Beverage
Thanks, Tom. We continue to see sustained growth in the global energy drink category. In the United States, we are seeing a resurgence of growth in the energy drink category in the convenience, inconvenience as well as in all measured channels reported by Nielsen. Our non-Nielsen channels continue to grow as well. Growth opportunities in household penetration and per-capita consumption along with consumers growing need for energy are positive trends for the category. Hurricanes and Milton impacted sales at retail in certain states in October 2024. However, we have not determined the impact on our business. The Alcohol segment operates a brewery in Bravad, North Carolina, which was closed for a week due to flooding from Hurricane Hellen. This brewery was partially operational for a period and was fully operational by mid-November 2024. In the United States, the energy category, according to Nielsen for the recently reported 13 weeks through February 15, 2025, grew at 6.2% versus the same-period last year. In EMEA, the energy drink category, according to Nielsen for our tracked markets for the recently reported 13-week period, which differ from country-to-country, grew at approximately 14.4% versus the same-period last year. In APAC, the energy drink category, according to Nielsen and Intage for our track markets for the recently reported 13-week period, which differ from country-to-country, grew at approximately 11.8% versus the same-period last year. And in LatAm, the energy drink category, according to Nielsen for our tracked markets for the recently reported 13-week period, which differ from country-to-country, grew at approximately 20.2% versus the same-period last year. In each case, these are done on a FX-neutral basis. Certain items should be separately considered in evaluating the results for the quarter. These specific items are as follows: gross profit for the 2024 4th-quarter was adversely impacted by an increase in inventory reserves due to excess inventory levels in the Alcohol brands segment of $4.1 million and which I will now refer to as the Alcohol brands inventory reserves. Operating expenses for the 2024 4th-quarter were adversely impacted by $130.7 million of impairment charges related to the Alcohol brands segment. The impairment charges were primarily the result of operating and financial performance, not meeting projections due in-part to challenges in the category as well as the decrease in projected ongoing operating and financial performance. In addition, operating expenses for the 2024 4th-quarter were adversely impacted by $1.8 million of company incurred legal expenses in connection with an intellectual property claim brought by the descendants of Hubert Hansen in relation to the company's use of the Hubert Hansen name prior to the transaction with the Coca-Cola Company, which closed in 2015 and which we will now refer to as the Hansen litigation. Operating income adjusting for these items rose 7.9% to $517.9 million in the 2024 4th-quarter. Net of tax, these items adversely impacted net income for the 2024 4th-quarter by $105 million and net income per diluted share by $0.10 per share. Diluted earnings per share for the 2024 4th-quarter adjusted for these items was $0.38 per share. As a reminder, the bank inventory step-up and impairment in the Alcohol brand segment were previously disclosed as items impacting profitability for the comparative 2023 4th-quarter. In addition to our GOP condensed consolidated statement of income and other information and our GOP consolidated balance sheet for the company for the quarter ended, 31, 2024 attached to our press release is a non-GAAP adjusted condensed consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of GAAP and non-GAAP information. We believe that these non-GAAP items are useful to shareholders on this call-in evaluating our ongoing operating and financial results. These non-GAAP items should be considered in addition to and not in lieu of US GAAP financial measures. The company achieved record 4th-quarter net sales of $1.181 billion in the 2024 4th-quarter and $1.81 billion, sorry. Sorry. 4.7% higher than net sales of $1.73 billion in the comparable 2023 quarter, 4.8% excluding the alcohol segment. On a foreign currency-adjusted basis, net sales for the 2024 4th-quarter increased 7.8% or 7.9% excluding the alcohol segment. Gross profit as a percentage of net sales for the 2024 4th-quarter was 55.3% compared with 54.2% in the 2023 4th-quarter. Gross profit for the 2024 4th-quarter was adversely impacted by the alcohol brands inventory reserves. Gross profit as a percentage of net sales for the 2024 4th-quarter, exclusive of the alcohol brands inventory reserves was 55.5%. The increase in gross profit as a percentage of net sales for the 2024 4th-quarter was primarily the result of reduced input costs, partially offset by geographical sales mix. On a sequential quarterly basis, gross margins were higher than the 2024 3rd-quarter gross margins. Operating expenses for the 2024 4th-quarter was $621.2 million compared with $504.4 million in the 2023 4th-quarter. The increase in operating expenses were primarily the result of increased impairment charges within the Alcohol brands segment, increased payroll expenses and increased sponsorship and endorsement expenses. As a percentage of net sales, operating expenses for the 2024 4th-quarter were 34.3% compared with 29.2% in the 2023 4th-quarter. Adjusted operating expenses after making the adjustments described earlier increased 5.5% to $488.7 million as compared to $463.2 million in the 2023 comparable quarter. Adjusted operating expenses as a percentage of net sales for the 2024 4th-quarter were 27% compared with 26.8% in the 2023 4th-quarter. Distribution and warehouse expenses for the 2024 4th-quarter was $77.6 million or 4.3% of net sales compared to $79.6 million or 4.6% of net sales in the 2023 4th-quarter. Operating income in the 2024 4th-quarter decreased 12.2% to $381.2 million from $434 million in the 2023 comparative quarter. Adjusted operating income after making the adjustments described earlier increased 7.9% to $517.9 million as compared to $480.1 million in the 2023 comparable quarter. The effective tax-rate for the 2024 4th-quarter was 29.9% compared with 18.5% in the 2023 4th-quarter. The increase in the effective tax-rate for the 2024 4th-quarter was primarily attributable to a decrease in the stock-based compensation deduction for the 2024 4th-quarter, an adjustment to the 2024 full-year effective tax-rate, higher 2024 state income taxes and the establishment of a state valuation allowance relating to certain net operating losses of the Alcohol Brands segment. Net income for the 2024 4th-quarter was $270.7 million as compared to $367 million in the 2023 comparable quarter. Adjusted net income in the 2024 4th-quarter after making the adjustments described earlier was $375.7 million as compared to adjusted net income of $402.4 million in the 2023 comparable quarter. Diluted earnings per share for the 2024 4th-quarter decreased 20.8% to $0.28 from $0.35 in the 4th-quarter of 2023. Adjusted diluted earnings per share after making the adjustments described earlier remained consistent at $0.38 per share for both the 2024 and 2023 fourth quarters. Net sales on a foreign currency-adjusted basis increased 8.4% for the 2024 full-year. Adjusted net income per diluted share was $1.62 per share for the 2024 full-year compared with adjusted net income per share of $1.56 per share for the 2023 full-year. Our 4th-quarter financial results were again impacted by unfavorable foreign currency exchange rates in certain markets, net changes in foreign currency exchange rates had an unfavorable impact on-net sales for the 2024 4th-quarter of $52.3 million. As previously reported, we implemented a 5% increase on our brands and packages, excluding bang, rain and rainstorm effective November 1, 2024 in the United States. We are continuing to monitor opportunities for further pricing actions, both domestically and internationally. According to Nielsen reports, for the 13 weeks ended February 15, 2025, for all outlets combined, excluding convenience and gas, sales in dollars in the energy drink category, including energy shots increased by 9% versus the same-period a year-ago. According to the Nielsen reports for the 13 weeks ended, 15, 2025 for all outlets combined, namely convenience, grocery, drug, mass merchandisers, sales in dollars in the energy drink category, including energy shots increased by 6.2% versus the same-period a year-ago. Sales of the company's energy drink brands, including Bang were up 4.4% in the 13-week period. Sales of Monster increased 4.8%, sales of were down 6.3%, sales of increased 2% and sales of Throttle decreased 0.8% of a percent. Sales of Red Bull increased 10%. According to Nielsen, for the four weeks ended February 15, 2025, sales in dollars in the energy drink category in the convenience and gas channel, including energy shots increased 2.8% and for the four weeks ended February 8, 2025 were 5.4%. Over the same-period the previous year. Sales of the company's energy drink brands, including Bang were up 2.9% in the latest four-week period in the convenience and gas channel. Sales of Monster increased by 3.1% over the same-period versus the previous year. Sales decreased 5.2%, NASA's was down 1.1% and full throttle was down 2.2%. Sales of Red Bull were up 8.3%. According to Nielsen, for, for the four weeks ended February 15, 2025, the company's market-share in the energy drink category in the convenience and gas channel, including energy shots in dollars, increased from 36.8% to 36.9% 26.9%, including Bank. Monster's share increased from 29.1% a year-ago to 29.2%. Share decreased 0.2% of a share point to 2.7%, NASA's share decreased 0.1 of a share point to 2.5% and full throttle share remained at 0.7 of a point. Bang's share was 1.8%. Red Bull share increased 1.9 share points to 36.9%. Market shares of certain competitors were as follows: Celsius 7.3%, C4 3.5%, Ghost 2.9%, five hour 2.9%, Rockstar 2.7% and Aligning new 2.2%. According to Nielsen, for the four weeks ended February 15, 2025, sales in dollars in the coffee plus energy drink category, which included our Java Monster Line in the convenience and gas channel decreased 9.1% over the same-period the previous year. Sales of Monster, including Java Monster 300 were 7.9% lower in the same-period versus the previous year. Sales of Starbucks Energy Coffee were 16.6% lower. Java Monster's share of the coffee plus energy drink category in the four weeks ended February 15, 2025 was 58.9%, up 0.8 of a point, while Starbucks Energy coffee share was 38.2%, down 3.4 points. According to Nielsen, in all measured channels in Canada for the 12 weeks ended January 25, 2025, the energy drink category increased 10.3% in dollars. Sales of the company's energy drink brands increased 10.5% versus a year-ago. The market-share of the company's energy drink brands increased 0.1 of a point to 41.4%. Monster's sales increased 7.1% and its market-share decreased 1.1 points to 36.1. Sales increased 13.7% and its market-share remained at 1.2%. Full throttle sales decreased 5% and its market-share decreased 0.1 over point to 0.5% to 0.5%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased 11.1% for the month of January 2025. Monsters sales increased 13.7%. Monster's market-share in value increased 0.7% of a 0.230% against the comparable period the previous year. Sales of Predator increased 27.9% and its market-share increased 0.8% of a share point to 6.2%. The Nielsen statistics for Mexico cover single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market. Sales in the OXXO convenience chain in-turn can be materially influenced by promotions that may be undertaken in that chain or one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico. According to Nielsen, all outlets combined in Brazil, the energy drink category increased 13.4% for the month of December 2024. Monsters sales increased 15.7%. Monster's market-share in value increased 0.9% of a point to 47.7% compared to December 2023. In Argentina, due in-part to the impact of inflation related to local-currency price increases, the energy drink category increased 98.7% for the month of January 2025. Monster sales increased 82.5%. Monster's market-share in value decreased 4.5 points to 51.2% compared to January 2024. In Chile, the energy drink category increased 16.2% for the month of January 2025. Monster's sales increased 13%, Monster's market-share in value decreased 1.1 points to 39.5%. Monster Energy remains the leading energy brand in value in Argentina, Brazil and Chile. I would like to point out that the Nielsen numbers in EMEA should only be used as a guide because the channels read by Nielsen in EMEA vary from country-to-country and are reported on varying dates within the month referred to from country-to-country. According to Nielsen, in the 13-week period ending January 26, 2025, Monster's retail market-share in value as compared to the same-period the previous year grew from 16.3% to 17.2% in Belgium from 32% to 32.6% in Great Britain based on our new Great Britain-Nielsen database from 6% to 9.4% in the Netherlands and from 34.3% to 36% in Norway. According to Nielsen, in the 13-week period ending January 26, 2025, Monster's retail market-share in value as compared to the same-period from the previous year declined from 30.9% to 27.5% in France. According to Nielsen, in the 13-week period ending, 29, 2024, Monster's retail market-share in value as compared to the same-period the previous year grew from 22.6% to 23.4% in the Czech Republic from 17.1% to 17.7% in Germany, from 18.9% to 20.8% in Poland, from 30.3% to 32% in the Republic of Ireland and from 40.8% to 41.4% in Spain. According to Nielsen, in the 13-week period ending December 29, 2024, Monster's retail market-share in value as compared to the same-period the previous year declined from 27% to 26.1% in Denmark, from 36.1% to 35.6% in Greece, from 31.7% to 31% in Italy and from 20.1% to 18.4% in South Africa and from 15.5% to 14.8% in Sweden. According to Nielsen, in the 13-week period ending, 29, 2024, the retail market-share in value of Predator was also branded as fury in certain markets as compared to the same-period the previous year, grew from 8.2% to 11.8% in Egypt, from 34% to 41.5% in Kenya and from 21% to 23.4% in Nigeria. We are pleased that in the 2024 4th-quarter, Monster gained market-share in Belgium, Czech Republic, Great Britain, Germany, the Netherlands, Norway, Poland, the Republic of Ireland and Spain. According to IRI, for all outlets combined in Australia, the energy drink category increased 10.5% for the four weeks ending February 2, 2025. Monster's sales increased 22%. Monster's market-share in value increased 1.9 points to 20.4% against the comparable period the previous year. Sales of Mother decreased 3.6% and its market-share decreased 1.4 share points to 9.4%. According to IRI for all outlets combined in New Zealand, the energy drink category increased 13.8% for the four weeks ending February 9, 2025. Monster sales increased 19.7%. Monster's market-share in value increased 0.7% of a share point to 15.3% against the comparable period the previous year. Sales of mother decreased 1.4% and its market-share decreased 0.9% of a share point to 4.6%. Sales of LivPlus decreased 0.2 of a percent and its market-share decreased 0.6% of a share point to 4.6%. According to Intage, in the convenience channel in Japan, the energy drink category increased 5.1% for the month of January 2025. Monster's sales increased 0.4%. Monster's market-share in value decreased 2.6 points to 56.8% against the comparable period the previous year. According to Nielsen, for all outlets combined in South Korea, the energy drink category increased 25% for the month of January 2025. Monsters sales increased 14.8%. Monster's market-share in value decreased 4.4 points to 49.6% against the comparable period the previous year. Monster remains the market-leader in Japan and South Korea. We again point out that certain market statistics that cover single months or four-week periods may often be materially influenced positively and/or negatively by promotions or other trading factors during those periods. Net sales to customers outside the US were $711.5 million, 39.3% of total net sales in the 2024 4th-quarter compared to $637 million or 36.8% of total net sales in the corresponding quarter in 2023. Foreign currency exchange rates had a negative impact on-net sales in US dollars by approximately $52.3 million for the 2024 4th-quarter. In EMEA, net sales in the 2024 4th-quarter increased 15.5% in dollars and increased 14.6% on a currency-neutral basis over the same-period in 2023. Gross profit in this region as a percentage of net sales was 32.7% for the 2024 and 2023 fourth quarters. In Asia-Pacific, net sales in the 2024 4th-quarter increased 21% in dollars and increased 19.8% on a currency-neutral basis over the same-period in 2023. Gross profit in this region as a percentage of net sales for the 2024 4th-quarter was 41.3% versus 40.1% in the same-period in 2023. Net sales in Japan in the 2024 4th-quarter increased 3.4% in dollars and increased 2.8% on a currency-neutral basis. In South Korea, net sales in the 2024 4th-quarter increased 40.3% in dollars and increased 43.3% on a currency-neutral basis as compared to the same quarter in 2023, largely due to the timing of production schedules this year. In China, net sales in the 2024 4th-quarter increased 25.8% in dollars and increased 23.9% on a currency-neutral basis as compared to the same quarter in 2023. We remain optimistic about the long-term prospects for the Monster brand in China and are excited about Predator, which is being rolled-out to additional markets in China throughout this year. In Oceana, which includes Australia, New Zealand, Tahiti, French Polynesia, New Caledonia, Papua New Guinea and Guam, net sales increased 34.6% in dollars and increased 29.6% on a currency-neutral basis. In Latin-America, including Mexico and the Caribbean, net sales in the 2024 4th-quarter increased 4.9% in dollars and increased 38.4% on a currency-neutral basis over the same-period in 2023. Gross profit in this region as a percentage of net sales was 42.7% for the 2024 4th-quarter versus 38.4% in the 2023 4th-quarter. In Brazil, net sales in the 2024 4th-quarter increased 13.4% in dollars and increased 33.9% on a currency-neutral basis. Net sales in Mexico decreased 7.3% in dollars, but increased 4.8% on a currency-neutral basis in the 2024 4th-quarter. Net sales in Chile decreased 1.5% in dollars, but increased 3.6% on a currency-neutral basis in the 2024 4th-quarter. Net sales in Argentina decreased 20% in dollars, but increased 127.5% on a currency-neutral basis in the 2024 4th-quarter. Monster Brewing continued to face challenges in the 4th-quarter and full-year. Net sales for the Alcohol brands segment were $34.9 million in the 2024 4th-quarter, a decrease of approximately $0.3 of a million or 0.8% lower than the 2023 comparable quarter. In October, the Bravad North Carolina production and shipping were severely impacted by Hurricane. Production in Bravad normalized in November, while other facilities were utilized during the quarter to allow for a minimal overall disruption. In addition to the appointment of a new President of Monster Brewing announced last quarter, we have now restructured the senior management team in sales, marketing, strategy and operations divisions and we'll be implementing further adjustments in the coming months with the intent to optimize our personnel and facilities to support the current demands of our portfolio and innovation pipeline. We are currently shipping Beast Pink Poison and Killock Sunrise in 24 ounce cans and we'll be launching grape in 24 ounce cans in the coming months. Michi, our newest flavored beer innovation will also be launched nationally in the coming months in 24 ounce flavors, Chelada and Michelada. We are planning to launch the Beast internationally this summer in select markets subject to regulatory approvals. We are planning for further innovation in Monster Brewing in the coming months. In October 2024, we launched Monster Ultravise Guava nationally. The initial response from both customers and consumers alike has been very positive on this innovation. Additionally, during the first-quarter of 2025, we launched innovation across various brands, including Monster Energy Ultra Blue Hawaiian, Monster Energy Brew, Triple Shot, Kill it Brew, Triple Shot, Monster Energy Juice, Viking Berry, Rainstorm Tropical, Rain White Haze and Bang Energy Sour Ropes. We are planning to launch Bang Energy Any Means Orange next month, which is part of our relationship with the popular content and streaming group any means possible. In Latin-America, during the 4th-quarter of 2024, we launched Monster Ultra in Brazil and Monster Zero Sugar in Chile. Additionally, we launched Fury Gold Strike in Ecuador. In EMEA, in the 4th-quarter of 2024, we launched Monster Juiced Aussie Lemonade, Juiced Bad Apple, Juiced Mix Punch, Nitro Cosmic Peach, Reserve Orange, Ultra Fiesta Mango, Bern Guava, Predator Mango Mayhem, Rainstorm Kiwi Blend and Rainstorm Peach Nectarine and Rainstorm Valencia Orange in certain countries in EMEA. Additional launches are planned across all brands throughout EMEA in 2025. During the 4th-quarter of 2024, we launched Monster in Malaysia and we extended Monster Energy and Monster Ultra in 500 can formats in South Korea. Our products are currently sold-in 355 ML cans in Korea. In February 2025, we launched Monster Ultra Strawberry Dreams in South Korea. In March, we are planning to introduce Monster Energy in a 250 ml can that contains our regular energy ingredients minus caffeine specifically for the on-premise channel in Japan. Additionally, we remain optimistic about the long-term prospects for the Monster brand in China and India and we're excited about the incremental expansion of the Predator brand in these two countries. After positive results in several provinces in China in 2024, we will proceed with the national rollout of non-carbonated predator in 500 ml PET bottles starting next month. As of, 27, 2025, approximately $500 million remained available for repurchase under the previously authorized repurchase program. We estimate that on a foreign currency-adjusted basis, including the Alcohol brands segment, January 2025 sales were approximately 5.3% higher than the comparable January 2024 sales and 6.7% higher than January 2024, excluding the Alcohol brand segment. We estimate that January 2025 sales on a non foreign currency-adjusted basis were approximately 1.5% higher than the comparable January 2024 sales and 2.8% higher than in January 2024, excluding the alcohol brand segment. January 2025 had the same number of selling days as January 2024. We believe January 2025 sales were adversely impacted by the California wildfires and by other severe weather conditions in the United States, such as the Gulf Coast blizzard affecting New Orleans in Florida as well as the Northeastern ice storms. Our distribution partners' warehouses and retail outlets were closed for certain time periods in these areas during January. However, we cannot or have not determine the impact on our business at this time. In this regard, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week-in which holidays fall, timing of new product launches and the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production. In some instances, our bottlers are responsible for production and determine their own production schedules. This affects the dates on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time-to-time for their own business reasons. We reiterate that sales over a short period, such as a single month should not necessarily be imputed to or regarded as indicative of results for a full-quarter or any future period. In conclusion, I would like to summarize some recent positive points. The energy category continues to grow globally. We believe that household penetration continues to increase in the energy drink category. Growth opportunities in household penetration per-capita consumption along with consumers' need for energy are positive factors for the category. We continue to expand ourselves in non-Nielsen measured channels. As-reported earlier, we implemented a price increase in the United States on November 1, 2024. We continue to review opportunities for price increases domestically and internationally. Our AFF flavor facility in Ireland is now providing a large number of flavors to our EMEA region, enabling better service levels and lower landed costs to our EMEA region. The juice plant at our AFF facility in Ireland has now been completed after trials. We expect the juice to be in-production by midyear. We're excited for our 2025 innovation pipeline globally. We are currently exploring opportunities for our alcohol products in certain international jurisdictions. We are pleased with the rollout of Predator and Fury, our affordable energy drink portfolio in a number of markets internationally. We are proceeding with plans for further launches of our affordable energy brands. With respect to the California wildfires, just as with Hurricane Milton and Hurricane Heline, our team has been providing support, water, energy drinks, clothing and other items to the first responders and to local communities impacted by these events. I would now like to open the floor to questions about the quarter and the 2024 full-year.
