Monster Beverage Corporation Price & Performance (MNST)

Thanks. Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks, Hilton Slausberg, our Vice Chairman and my Co Chief Executive Officer is on the call as is Tom Kelly, our Chief Financial Officer. Tom Kelly will now read our cautionary statement. Before we begin, I would like to remind listeners that certain statements made during this call may constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended based on currently available information, regarding the expectations of management with respect to revenues, profitability future business, future events financial performance and trends. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company, that may cause actual results to differ materially from the forward looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission including our most recent annual report on Form 10 ks filed on February 29, 2024 and our subsequently filed quarterly reports on Form 10 Q including the sections contained therein entitled Risk Factors and Forward Looking Statements for discussion on specific risks and uncertainties that may affect our performance, The company assumes no obligations to update any forward looking statements whether as a result of new information, future events or otherwise.

I would also like to note that an explanation of the non GAAP measures, which may be mentioned during the course of this call, is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated February 27, 2025. A copy of this information is also available on our website www.monsterbevcourt.com in the Financial Information section. I would now like to hand the call over to Rodney Sachs, 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 the energy drink category in the convenience 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 Helene and Milton impacted sales at retail in certain states in October 2024. However, we have not determined the impact on our [indiscernible] The alcohol segment operates a brewery in Brevard, North Carolina which was closed for a week due to flooding from Hurricane Helene. This brewery was partially operational for a period and was fully In The United States, the energy category, according to Nielsen, for the recently reported thirteen weeks through 02/15/2025, grew at 6.2% versus the same period last year. In EMEA, the energy drink category according to Nielsen for our track mark 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 Intaj for our track markets for the recently reported thirteen 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 track market for the recently reported thirteen week period 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 the quarter, These specific items are as follows: gross profit for the twenty twenty four fourth quarter was adversely impacted by an increase in inventory reserves due to excess inventory levels in the alcohol brands segment of $4,100,000 which I will now refer to as the alcohol brands inventory reserves Operating expenses for the twenty twenty four fourth quarter were adversely impacted by hundred and $30,700,000 of impairment charges related to the alcohol brand 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 a decrease in projected ongoing operating and financial performance. In addition, operating expenses for the twenty twenty four fourth quarter adversely impacted by $1,800,000 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 $517,900,000 in the twenty twenty four fourth quarter.

Net of tax, these items adversely impacted net income $105,000,000 in net income per diluted share Diluted earnings per share for the twenty twenty four fourth 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 twenty twenty three fourth quarter. In addition to our GAAP condensed consolidated statement of income and other information, and our consolidated balance sheet for the company for the quarter ended 12/31/2024, 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 U. S. GAAP financial measures. The company achieved record fourth quarter net sales of $1.181181000000.000 dollars in the twenty twenty four fourth quarter and for [indiscernible] [indiscernible] 4.7% higher than net sales of 1,730,000,000.00 in the comparable twenty twenty three quarter, 4.8% excluding the alcohol On a foreign currency adjusted basis, net sales for the twenty twenty four fourth quarter increased 7.8% or 7.9% excluding the alcohol segment.

Gross profit as a percentage of net sales for the twenty twenty four fourth quarter was 55.3%, compared with 54.2% in the twenty twenty three fourth quarter. Gross profit for the twenty twenty four fourth quarter was adversely impacted by the alcohol brands inventory reserves gross profit as a percentage of net sales for the twenty twenty four fourth quarter, exclusive of the alcohol brands inventory was 55.5% The increase in gross profit as a percentage of net sales for the twenty twenty four fourth quarter was primarily the result of reduced import costs partially offset by geographical sales mix. On a sequential quarterly basis, gross margins were higher than the twenty twenty four third quarter gross margins. Of increased impairment charges within the alcohol brand segment increased payroll expenses and increased sponsorship and endorsement expenses. As a percentage of net sales, operating expenses for the twenty twenty four fourth quarter were compared with 29.2% in the twenty twenty three fourth quarter. Adjusted operating expenses after making the adjustments described earlier increased 5.5% to 488,700,000.0 as compared to 463,200,000.0 in the 2023 comparable quarter. Adjusted operating expenses as a percentage of net sales were 27% compared with 26.8% in the twenty twenty three fourth quarter.

Distribution and warehouse expenses for the twenty twenty four fourth quarter was $77,600,000 or 4.3% of net sales Twenty twenty four fourth quarter decreased twelve point two percent three hundred and eighty one point two million from four thirty four million in the 2023 comparative quarter. Adjusted operating income after making the adjustments described earlier increased 7.9% to $517,900,000 as compared to $480,100,000 in the 2023 comparable quarter. The effective tax rate for the twenty twenty four fourth quarter was 29.9% compared with 18.5% in the twenty twenty three fourth quarter. The increase in the effective tax rate for the twenty twenty four fourth quarter was was primarily attributable to a decrease in the stock based compensation deduction for the twenty twenty four fourth quarter and 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. Comparable quarter Adjusted net income in the twenty twenty four fourth quarter after making the adjustments described earlier dollars 375,700,000.0 as compared to adjusted net income of $402,400,000 in the 2023 comparable quarter. Diluted earnings per share the twenty twenty four fourth quarter decreased 20.8% to $0.28 from $0.35 in the fourth quarter of twenty twenty three.

Adjusted diluted earnings per share after making the adjustments described earlier remained consistent at $0.38 per share for both the 2024 and twenty twenty three fourth quarters. Net sales on a foreign currency adjusted basis increased 8.4% 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 fourth quarter financial results were again impacted by unfavorable net changes in foreign currency exchange rates had an unfavorable impact on net sales Bang rain and rainstorm effective 11/01/2024 in The United States. We are continuing to monitor opportunities for further pricing actions both domestically and internationally. According to Nielsen reports, for the thirteen weeks ended 02/15/2025. 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 report, for the thirteen weeks ended 02/15/2025, 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 thirteen week period Sales of Monster increased 4.8% sales of Reign were down 6.3%, sales of NOS increased 2% sales of 0.8% Sales of Red Bull increased 10%. According to Nielsen, for the four weeks ended 02/15/2025, 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 02/08/2025 were 5.4%. Over the same period the previous year, sales of the company's energy drink brands in including Bang, were up 2.9% in the latest four week period, the convenience and gas channel. Sales of Monster increased by 3.1% over the same period versus the previous year. Reigns sales decreased 5.2% was down 1.1% and full throttle was down 2.2%. Sales of Red Bull were up 8.3%. According to Nielsen, for the four weeks ended 02/15/2025, 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% including Bank. Monster's share increased from 29.1% a year ago to 29.2%, Rain's share decreased 0.2 of a share point to 2.7%, NOSA 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% 3.5% coast 2.9%, five hour 2.9% Rockstar 2.7% and Alani Nu 2.2%. According to Nielsen, for the four weeks ended 02/15/2025, sales in dollars in the coffee plus energy drink category were included our Monster 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, was 7.9% lower in the same period versus the previous year. Sales of Starbucks energy coffee was 16.6% lower, Java Monster's share of the coffee plus energy drink category in the four weeks ended 02/15/2025 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 twelve weeks ended 01/25/2025, 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 41.4%. Monster's sales increased 7.1% and its market share decreased 1.1 points to 36.1. Nausea 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 a 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 Monster's sales increased 13.7% Monster's market share in value increased 0.7 of a 0.230% 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 [indiscernible] by sales in the OXXO convenience chain dominates the market. Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by 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% the month of December 2024, Monster's sales increased 15.7% Monster's market share in value increased 0.9 of a zero point to 47.7% compared to December 2023 Monster. In Argentina, due in part to the impact of inflation, related local currency price increases, energy drink category increased 98.7% for the month of January 2025.

Monster Monster 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 January 2025, Monster's sales increased 13% Monster's Monster market share in value decreased 1.1 points to 39.5%. Monster Energy remains the leading energy brand [indiscernible] 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 country to country and are reported on varying dates within the month referred to from country to country. According to Nielsen, in the thirteen 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 thirteen 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 30.927.5% in France.

According to Nielsen, in the thirteen week period ending 12/29/2024, 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 thirteen week period ending December 2024, Monster's retail market share in value 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 thirteen week period ending 12/29/2024, 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 twenty twenty four fourth quarter, Monster gained market share in Belgium Czech Republic, Great Britain, Germany, The Netherlands, [indiscernible] Poland, Republic Of Ireland and Spain.

According to IRI, all outlets combined in Australia the energy drink category increased 10.5% for the four weeks ending 02/02/2025. 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 02/09/2025. Monster sales increased 19.7%. Monster's market sharing value increased point seven 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% over share point to 4.6%. Sales of LIV plus 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 our fleets combined in South Korea, the energy drink category increased 25% for the month of January 2025, Monster's 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 U. S. Were $711,500,000 39.3% of total net sales the twenty twenty four fourth quarter compared to $637,000,000 or 36.8% of total net sales in the corresponding quarter in 2023. Had a negative impact on net sales in U. S. Dollars by approximately 52,300,000.0 for the twenty twenty four fourth quarter. In EMEA, net sales in the twenty twenty four fourth 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 twenty twenty three fourth quarters. In Asia Pacific, net sales in the twenty twenty four fourth 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 twenty twenty four fourth quarter was 41.3% versus 40.1% in the same period in 2023.

Net sales in Japan in the twenty twenty four fourth quarter increased 3.4% in dollars and increased 2.8% on a currency neutral basis. In South Korea, net sales in the twenty twenty four fourth 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 twenty twenty four fourth 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 Oceania, which includes Australia and 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 Mexic Mexico and The Caribbean, net sales in the twenty twenty four fourth 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 was 42.7% for the twenty twenty four fourth quarter versus 38.4% in the twenty twenty three fourth quarter.

In Brazil, net sales in the twenty twenty four fourth 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 twenty twenty four fourth quarter. Net sales in Chile decreased 1.5% in dollars but increased 3.6% on a currency neutral basis in the twenty twenty four fourth quarter. Net sales in Argentina decreased 20% in dollars, but increased 127.5% on a currency neutral basis in the twenty twenty four fourth quarter. Monster Brewing continued to face challenges in the fourth quarter and full year. Net sales for the alcohol brand segment were $34,900,000 in the twenty twenty four fourth quarter a decrease of approximately $300,000 or 0.8% lower than the 2023 comparable quarter In October, the Brevard, North Carolina production and shipping were severely impacted by Hurricane Helene, Production in Brevard normalized in November, while other facilities were utilized during for 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 will 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 in and innovation pipeline.

We are currently shipping Beast Pink Poison and Killak Sunrise in 24 ounce cans and we'll be launching Gnarly Grape in 24 ounce cans in the coming months. Michi, our newest flavored beer innovation, in two twenty four ounce flavors, Chilada 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 Ultravice Guava nationally. The initial response from both customers and consumers alike has been very positive on this innovation. Additionally, during the first quarter of twenty twenty five, we we launched innovation across various brands, including Monster Energy Ultra Blue Hawaiian Monster Energy Brew Triple Shot, Killer 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 in streaming group any means possible. In Latin America, during the fourth quarter of twenty twenty four, we launched Monster Ultra Pichicin in Brazil and Monster Zero Sugar in Chile Monster, Additionally, we launched FURY Goldstrike in Ecuador.

In EMEA, in the fourth quarter of twenty twenty four, we launched Monster Juice Aussie Lemonade, Juice Bad Apple, Juiced Mix Punch, Nitro Cosmic Peach, Reserve Orange Dreamsicle, Ultra Fiesta Mango, [indiscernible] 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 fourth quarter of twenty twenty four, we launched Monster Papillon, in Malaysia and we extended Monster Energy and Monster Ultra in 500 mill can formats in South Korea, Our products are currently sold in three fifty five ml cans in Korea. In February 2025, we launched Monster Ultra Strawberry Dreams in in South Korea. In March, we are planning to introduce Monster Energy in a two fifty ml can that contains our regular energy ingredients minus caffeine's 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 Monster are excited about the increment [indiscernible] of the Predator brand in these two countries. After positive results in several provinces in China in 2024, we we will proceed with the national rollout of non carbonated Predator in 500 ml PET bottles starting next month.

As of 02/27/2025, approximately $500,000,000 remained available for repurchase under the previously authorized repurchase program. We estimate that on a foreign currency adjusted basis, including the alcohol brand 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, we're 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 is well as the Northeastern ice storms. Our distribution partner warehouses and retail outlets were closed for certain time periods in these areas during January. However, we cannot or have not determined 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 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 maintained inventory levels according to their own internal requirements 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 [indiscernible] the energy drink category. Growth opportunities in household penetration per capita consumption along with consumers' need for energy are positive factors for [indiscernible] Continue to expand ourselves in non Nielsen measured channels. As reported earlier, we implemented a price increase in The United States on 11/01/2024. We continue to review opportunities 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 use product to be by midyear.

We're excited for our twenty twenty five innovation pipeline globally We are currently exploring opportunities for our alcohol product 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 Helene, 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 twenty twenty four full year. Thank you.

We will now begin the question and answer session. The first question today comes from Bonnie Herzog with Goldman Sachs. Please go ahead. All right. Thank you. Hi, everyone. Hi, everyone. Hi, I wanted to ask a question on your gross margins in the quarter. Could you give us a little more color on the drivers behind the expansion? I guess I'm curious how much did the price increase on November 1 help What about production of some of your teetering volume in house? Confirm if you did in fact or you are in fact doing that? And then how big of a risk do you see from aluminum in tariffs? Are you still hedged on aluminum? And will this protect you some? And I know you guys don't guide, but how are you feeling about further gross margin expansion this year in the context of the pricing you took and everything I just asked about? Thanks.

Okay. So Bonnie, thank you for that long question. Think it was more than one question. We'll try and answer them. The major drivers of gross margin in the quarter where reduced input costs partially offset by Geographical sales mix Now there are a lot of other factors that influence gross margin. As you all know. For example, yes, the price increase impact gross margin positively against that, we had other costs that are set off against gross sales including increased commissions to the Coca Cola Company based on increased sales increased profitability in EMEA as well as a tranche of other issues, promotional allowances, yes or higher. Mainly driven by the fact that when one does entertain a price increase, we do ensure that promotional allowances are in place so that consumers don't get the sticker shock day one from the price increase.

As regards Tariffs, I think your guess is good as mine. Things keep on changing day by day. And I think it would be I discussed it with some of my colleagues prior to this call, and we think it would be really premature even talk about tariffs because no one really knows. What's going to happen.

However, we are hedged to a quite a nice extent in 2025. With aluminum and we have some hedges on the Midwest premium.

The next question comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

Hi, guys. So clearly, your enthusiasm about the energy category recovery we're seeing in The U. S. Can you also just give us some color or any thoughts on Monster's potential U. S. Market share performance as we look going forward? I know you're not going to be specific, but just relative to a period of compression we've seen in periods And also within that, maybe you can touch specifically on The U. S. Innovation pipeline in 2025 versus 2024. And shelf space and how that might play into Monster's U. S. Market share performance with that category recovery? Thanks. Okay. Rodney and I are going to split this question. So with regard let me start with shelf space. We have negotiated for increased shelf space this year.

And it's in the low single digits. We're really excited with the additions to our portfolio that we've been able to attract and increase shelf space. As regards the total category, we spoke at in New York about the global energy drink category growing substantially over the the next few years to 2019, I must just remind you that The U. S. Category is now $21,200,000,000 So it's hard to swing a dial on growth in a $21,200,000,000 category that we've seen historically. I think we will continue see increases in the category and you've seen that in the past few weeks. Both the category in all measured channels has grown The convenience we see as coming back Trips is still down, but the shopping baskets inconvenience are higher. So all in all, it all goes well for the for the category as a whole. And for the category in The U. S. As regards market share, I'll give you my take. We'll always see competition We've seen competition historically. And we'll continue to see competition. And that will continue to obviously eating to both ourselves and into Red Bull's market share.

But there still is a very strong category and it's driven by two players two major players, which is us and Red Bull. [indiscernible] Agreed. And I think the the category we are also seeing growth internationally as well coming back. I mean everybody seems to have had a sort of a flattening of growth in that third quarter whether it is U. S. Or internationally for different reasons. None of us have really can explain it fully, but it certainly is growing, which is really really positive. We see this on a week to week basis. With regard to 2025 innovation, we have got off to an early start. I think we've taken measures to try and sort of maximize the impact of our innovation and and execution to step that up and we have strategies for that. Which we started with Via Guava. We have followed it up with Ultra Blue Hawaiian and just looking at the latest week numbers and Ultra Blue Hawaiian is one of the top 10 selling products and it's still gaining distribution. Our juice product Viking Berry, is also on a sales point has got off to a good start. We've got the coffee category, we've got some good products.

So we are actually very positive about innovation for this year. We think it will be positive for us. And we've got off to an early start on them with the bottlers. So So we also have some more innovation that we have planned down in the fall, particularly we are quite excited, but with the bank relationship with any means possible. We have a single SKU, which we launched with Bang, a new one. But the enemy means enemy's possible relationship combined with the flavor and combined with their social media we think is going to be quite positive. And as you know, Bangi's store is growing. It's recovering nice and growing. So we are quite positive for that. We're also going to focus on rain, which as you know is really one of two real performance brands at the moment. Everybody's moved to different wellness in different areas. So we think that Reign is still a solid brand and we're also obviously going to put focus and effort behind it. Thanks. The next question comes from Filippo Filoni with Citi.

Please go ahead. Hi, good afternoon, everyone. I wanted to ask about The U. S. Energy drink category. Obviously, we've seen the reacceleration in track channel data. But your reported results in The U. S. Seem to be tracking a little bit below what we see in the track channel data. So maybe can you comment a bit of the untracked portion of your business? If you've seen any slowdown, particularly in the smaller bodegas, gas and convenience stores that are not picked up. And any comment on the Hispanic population that we've we've heard from other companies seeing a little bit of pressure more recently? Thank you.

I think that's what you said about the spending consumers probably Really accurate. And I don't want to say anything more about that.

As regards January and we reported the January numbers, I believe that they were affected significantly by weather We never really we have saying in this company that we avoid any discussion on weather and that we sell our products rain and shine. But December was a difficult month. It was difficult month in terms of the wildfires and it was a difficult month in terms of everything that you saw on the East Coast relating to weather conditions. So January for me was I think it was an aberration Other people may feel otherwise, but that's a personal view. And we've always got to [indiscernible] that we sell to the Bartlers and the distributors. They sell to the retailers and Nielsen is a factor of what the consumer buys at retail. So there's never really a there should be a correlation [indiscernible] It's sometimes there is a correlation often there isn't. But please remember that Nielsen is what the consumers take off at retail and not what we sell. We sell to the barters. I think that that just to reinforce that, I think that if you look at the Nielsens, I know they're short periods we don't like to often, refer to them.

But if you look at the last couple of weeks on a by week basis, all measured channels, you can see Monster is pretty much got back into a close to an 8% growth rate in the measured, which is all the main areas. So we are seeing some good shoots coming out of after January. There clearly was some effect on the weather and again As we pointed out previously, I think everybody's got to be cautious about looking at single Monster. There are other factors that affect it. Thanks.

Please go ahead.

Thank you for the question and good afternoon. Just wanted to go back to the your comment Rodney on the innovation for BANG and using both Bang and Ring as you had I was wondering if you can elaborate a little bit more on your plans in for 2025 in terms of innovation in that specific segment knowing that you called out like the player that was acquired by another by your the third largest being more niche. So I wonder how you see that transaction and how could that impact your plans or anything you're seeing from your customers and any feedback that you can share? Thank you.

I think everybody knows Lalaine Hughes had some good growth and it's doing nicely, but it is very focused on on younger female and that is niche. It is what it is. The fact of the matter is it is growing. I think that when we talk about Bang, I think it's not directly comparable to Aloni New. And I think that in the case of Rain, it's very much more focused on performance categories. So I think there are different able to find their own positions. And they will continue to compete and see how they grow, but we think that we can distinguish the positioning for Reign from Bang and from Nazz even, for example, in our portfolio and Rainstorm And so we have a portfolio and we're going to [indiscernible] will not really feature. We'll see how that the acquisition goes. They'll have to manage two brands, but that's a challenge there. We'll obviously take on, but it's not for us to really comment on that.

Yes.

And we have our own strategies As you can expect, And Lonnie New will probably continue to grow until they hit their ceiling on points of distribution. A lot of their growth is coming out of new distribution and they'll hit their seeding on points of distribution. In fact, just like Celsius So we carry on, we run our business and we run our play and we're very confident with the team here at Monster and with the products in the portfolio that we have and the the innovation for this year and further innovation that we're working on and that's coming.

The next question comes from Chris Carey with Wells Fargo.

Please go ahead.

Hey, guys. Hope you're doing well.

So there was a comment earlier in the call around potential to take additional pricing or that you're looking at incremental pricing or you're always considering incremental pricing. I can't remember exactly how it was said. But can you just talk about the sorts of things that you're looking at in order to make that decision [indiscernible] new pricing, is that incremental aluminum inflation? Is that tariffs? Are those sorts of decisions already made? New innovation? Conscious that you made some positive statements around being hedged on aluminum and a bit of Midwest premium, but just trying to contextualize what the what the how that decision processes go and when you would make that sort of Sure.

We always are looking for opportunities to increase pricing. We've had significant cost increases as everyone appreciates, that's why Bonnie asked a question on gross margin every quarter and so please remember, we didn't take price on rain. Rainstorm and Bang when we took pricing on the rest of the portfolio. In November, there are opportunities there. And internationally, we continue to review pricing as we do with Monster in The U. S. And think a lot will depend on where these tariffs and duties end up. And frankly, what our competitors do But we have a very strong focus on trying to improve stockholder wealth and that includes increasing pricing where there are opportunities to do so. However, we're not going to disadvantage our brands by increasing prices unnecessarily.

This concludes our question and [indiscernible] I would like to turn the conference back over to Mr. Rodney Sachs for any closing remarks.

Thanks. On behalf of Monster, I'd like thank everyone for their continued interest in the company. We continue to believe in the company and our growth strategy remain committed to continue develop and differentiate our brands and to expand the company both at home and abroad and in particular capitalizing on our relationship with the Coca Cola bottling system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. Thanks very much. For your attendance.

The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect. [indiscernible] [indiscernible]