Monster Beverage Corporation

Good day and welcome to the Monster Beverages Company fourth quarter and full year 2024 conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to co-CEOs Rodney Sachs and Hilton Schlossberg. Please go ahead.

Thanks, good afternoon ladies and gentlemen. Thank you for attending this call. I'm Rodney Sachs, Hilton Schlossberg, 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 and are 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 risk 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 10K filed on February 29th, 2024, and our subsequently filed quarterly reports on form 10Q, including the sections contained therein entitled risk factors and forward-looking statements for discussion on specific risk 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 27th, 2025. A copy of this information is also available on our website, .monsterbevcourt.com in the financial information section. I would now like to hand the call over to Rodney Sacks.

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 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 Helene 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 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 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 .2% versus the same period last year. In EMEA, the energy drink category, according to Nielsen, for our track markets for the recently reported 13 week period, which differ from country to country, grew at approximately .4% versus the same period last year. In AIPAC, 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 .8% versus the same period last year. And in Latam, the energy drink category, according to Nielsen, for our track markets for the recently reported 13 week period, which differ from country to country, grew at approximately .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 fourth 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 fourth quarter were adversely impacted by 130.7 million 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 2024 fourth 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 Hanson in relation to the company's use of the Hubert Hanson name prior to the transaction with the Coca-Cola company, which closed in 2015, and which we will now refer to as the Hanson litigation. Operating income adjusting for these items rose .9% to 517.9 million in the 2024 fourth quarter. Net of tax, these items adversely impacted net income for the 2024 fourth quarter by 105 million, and net income per diluted share by 10 cents per share. Diluted earnings per share for the 2024 fourth quarter adjusted for these items was 38 cents 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 fourth quarter. In addition to our golf condensed consolidated statement of income and other information, and our golf condensed consolidated balance sheet for the company for the quarter ended December 31, 2024, attached to our press release is a non-gov adjusted condensed consolidated statement of income and other information adjusting for the items impacting profitability and a reconciliation of gov and non-gov information. We believe that these non-gov items are useful to shareholders on this call in evaluating our ongoing operating and financial results. These non-gov items should be considered in addition to, and not in lieu of US gov financial measures. The company achieved record fourth quarter net sales of 1.181 billion in the 2024 fourth quarter. 1.81. 1.81 billion, sorry. .7% higher than net sales of 1.73 billion in the comparable 2023 quarter. .8% excluding the alcohol segment. On a foreign currency adjusted basis, net sales for the 2024 fourth quarter increased .8% or .9% excluding the alcohol segment. Gross profit is a percentage of net sales for the 2024 fourth quarter was .3% compared with .2% in the 2023 fourth quarter. Gross profit for the 2024 fourth quarter was adversely impacted by the alcohol brands inventory reserves. Gross profit is a percentage of net sales for the 2024 fourth 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 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 2024 third quarter gross margins. Operating expenses for the 2024 fourth quarter was 621.2 million compared with 504.4 million in the 2023 fourth quarter. The increase in operating expenses were primarily the result 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 2024 fourth quarter was .3% compared with .2% in the 2023 fourth quarter. Adjusted operating expenses after making the adjustments described earlier increased .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 fourth quarter were 27% compared with .8% in the 2023 fourth quarter. Distribution and warehouse expenses for the 2024 fourth quarter was 77.6 million or .3% of net sales compared to 79.6 million or .6% of net sales in the 2023 fourth quarter. Operating income in the 2024 fourth quarter decreased .2% to 381.2 million from 434 million in the 2023 comparative quarter. Adjusted operating income after making the adjustments described earlier increased .9% to 517.9 million as compared to 480.1 million in the 2023 comparable quarter. The effective tax rate for the 2024 fourth quarter was .9% compared with .5% in the 2023 fourth quarter. The increase in the effective tax rate for the 2024 fourth quarter was primarily attributable to a decrease in the stock-based compensation deduction for the 2024 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. Net income for the 2024 fourth quarter was 270.7 million as compared to 367 million in the 2023 comparable quarter. Adjusted net income in the 2024 fourth 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 fourth quarter decreased .8% to 28 cents from 35 cents in the fourth quarter of 2023. Adjusted diluted earnings per share after making the adjustments described earlier remained consistent at 38 cents per share for both the 2024 and 2023 fourth quarters. Net sales on a foreign currency adjusted basis increased .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 fourth 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 fourth 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 the Nielsen reports, for the 13 weeks ended February 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 reports, for the 13 weeks ended February 15, 2025. For all outlets combined, namely convenience, grocery, drugs, mass merchandisers, sales in dollars in the energy drink category including energy shots increased by .2% versus the same period a year ago. Sales of the company's energy drink brands including bang were up .4% in the 13 week period. Sales of Monster increased 4.8%, sales of rain were down 6.3%, sales of Noz increased 2% and sales of Full Throttle decreased 0.8%. 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 .8% and for the four weeks ended February 8, 2025, were .4% over the same period the previous year. Sales of the company's energy drink brands including bang were up .9% in the latest four week period in the convenience and gas channel. Sales of Monster increased by .1% over the same period versus the previous year. Rain sales decreased 5.2%, Noz was down .1% and Full Throttle was down 2.2%. Sales of Red Bull were up 8.3%. According to Nielsen, 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 .8% to .9% including bang. Monster's share increased from .1% a year ago to 29.2%. Rain's share decreased 0.2 of a share point to 2.7%. Noz's share decreased 0.1 of a share point to .5% and Full Throttle's share remained at 0.7 of a point. Bang's share was 1.8%. Red Bull's 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, .7% and Alani, 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 .1% over the same period the previous year. Sales of Monster including Java Monster 300 were .9% lower in the same period versus the previous year. Sales of Starbucks energy coffee was .6% lower. Java Monster share of the coffee plus energy drink category in the four weeks ended February 15, 2025 was .9% up 0.8 of a point while Starbucks energy coffee share was .2% down 3.4 points. According to Nielsen, in all major channels in Canada, for the 12 weeks ended January 25, 2025, the energy drink category increased .3% in dollars. Sales of the company's energy drink brands increased .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 .1% and its market share decreased 1.1 points to 36.1. Nozzles sales increased .7% and its market share remained at 1.2%. Full throttles sales decreased 5% and its market share decreased 0.1 of a point to 0.5%. According to Nielsen, for all outlets combined in Mexico, the energy drink category increased .1% for the month of January 2025. Monster's sales increased 13.7%. Monster's market sharing value increased 0.7 of a point to 30% against the comparable period the previous year. Sales of Predator increased .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 OXO convenience chain, which dominates the market. Sales in the OXO 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 .4% for the month of December 2024. Monster's sales increased 15.7%. Monster's market sharing value increased 0.9 of a point to .7% compared to December 2023. In Argentina, due in part to the impact of inflation related local currency price increases, the energy drink category increased .7% for the month of January 2025. Monster's sales increased 82.5%. Monster's market share in value decreased 4.5 points to .2% compared to January 2024. In Chile, the energy drink category increased .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 .3% to .2% in Belgium, from 32 to .6% in Great Britain, based on our New Great Britain Nielsen database, from 6% to .4% in the Netherlands, and from .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 .9% to .5% in France. 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 grew from .6% to .4% in the Czech Republic, from .1% to .7% in Germany, from .9% to .8% in Poland, from .3% to 32% in the Republic of Ireland, and from .8% to .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 .1% in Denmark, from .1% to .6% in Greece, from .7% to 31% in Italy, and from .1% to .4% in South Africa, and from .5% to .8% in Sweden. According to Nielsen, in the 13-week period ending December 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 .2% to .8% in Egypt, from 34% to .5% in Kenya, and from 21% to .4% in Nigeria. We are pleased that in the 2024 fourth 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, all outlets combined in Australia, the energy drink category increased .5% for the four weeks ending February 2nd, 2025. Monster's sales increased 22%. Monster's market share in value increased 1.9 points to .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, all outlets combined in New Zealand, the energy drink category increased .8% for the four weeks ending February 9, 2025. Monster's sales increased 19.7%. Monster's market share in value increased 0.7 of a share point to .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 Live 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 .1% for the month of January 2025. Monster's sales increased 0.4 of a percent. Monster's market share in value decreased 2.6 points to .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. Monster's sales increased 14.8%. Monster's market share in value decreased 4.4 points to .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 was 711.5 million, .3% of total net sales, in the 2024 fourth quarter, compared to 637 million or .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 fourth quarter. In EMEA, net sales in the 2024 fourth quarter increased .5% in dollars and increased .6% on a currency neutral basis over the same period in 2023. Gross profit in this region as a percentage of net sales was .7% for the 2024 and 2023 fourth quarters. In Asia Pacific, net sales in the 2024 fourth quarter increased 21% in dollars and increased .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 fourth quarter was .3% versus .1% in the same period in 2023. Net sales in Japan in the 2024 fourth quarter increased .4% in dollars and increased .8% on a currency neutral basis. In South Korea, net sales in the 2024 fourth quarter increased .3% in dollars and increased .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 fourth quarter increased .8% in dollars and increased .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 .6% in dollars and increased .6% on a currency neutral basis. In Latin America, including Mexico and the Caribbean, net sales in the 2024 fourth quarter increased .9% in dollars and increased .4% on a currency neutral basis over the same period in 2023. Growth profit in this region as a percentage of net sales was .7% for the 2024 fourth quarter versus .4% in the 2023 fourth quarter. In Brazil, net sales in the 2024 fourth quarter increased .4% in dollars and increased .9% on a currency neutral basis. Net sales in Mexico decreased .3% in dollars but increased .8% on a currency neutral basis in the 2024 fourth quarter. Net sales in Chile decreased .5% in dollars but increased .6% on a currency neutral basis in the 2024 fourth quarter. Net sales in Argentina decreased 20% in dollars but increased .5% on a currency neutral basis in the 2024 fourth quarter. Monster Brewing continued to face challenges in the fourth quarter and full year. Net sales for the alcohol brand segment were 34.9 million in the 2024 fourth quarter, a decrease of approximately .3 of a million dollars or .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 the quarter to allow 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 and innovation pipeline. We are currently shipping Beast Pink Poison and Kilik Sunrise in 24 ounce cans and will be launching Gnarly Grape in 24 ounce cans in the coming months. Meche, our newest flavored beer innovation will also be launched nationally in the coming months in two 24 ounce flavors, Chalada and Mishalada. 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 Ultra Vice 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, Killit 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 fourth quarter of 2024, we launched Monster Ultra Peach Akin in Brazil and Monster Zero Sugar in Chile. Additionally, we launched Fury Goldstrike in Ecuador. In EMEA in the fourth quarter of 2024, we launched Monster Juiced Aussie Lemonade, Juiced Bad Apple, Juiced Mixed Punch, Nitro Cosmic Peach, Reserve Orange Dreamsicle, Ultra Fiesta Mango, Burn 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 fourth quarter of 2024, we launched Monster Papalon in Malaysia and we extended Monster Energy and Monster Ultra in 500ml can formats in South Korea. Our products are currently sold in 355ml 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 250ml 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 are 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 500ml PET bottles starting next month. As of February 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 brand segment, January 2025 sales were approximately .3% higher than the comparable January 2024 sales and .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 .5% higher than the comparable January 2024 sales and .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 and 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 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 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 for capital consumption, along with consumers' need for energy, are positive factors for the category. We continue to expand our sales in -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 -of-costs to our EMEA region. The juice plant at our AFF facility in Ireland has now been completed. After trials, we expect the juice plant to be in production by mid-year. 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 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 2024 full year. Thank you.

We will now begin the question and answer session. To ask a question, you may press star, then one, on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In the interest of time, we ask that you please limit yourself to one question. If you have further questions, please rejoin the queue. At this time, we will pause momentarily to assemble our roster. The first question today comes from Bonnie Herzog with Goldman Sachs. Please go ahead.

All right,

thank

you. Hi, everyone. I actually wanted to ask you. 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, you know, how much did the price increase on November 1 help? What about production of some of your scissoring volume in-house? Just want to 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 and 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. I think it was more than one question. We'll try and answer them. The major drivers of gross margin in the quarter were 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 did impact gross margin positively, but 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 and increased profitability in EMEA, as well as a tranche of other issues. Promotional allowances, yes, were 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 you all guess as good as mine. Things keep on changing day by day. I discussed it with some of my colleagues prior to this call, and we think it would be really premature to even talk about tariffs because no one really knows what's gonna happen. However, we are hedged to quite a nice extent in 2025 with aluminum, and we have some hedges on the Midwest

premium.

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

Hi, guys. So clearly you're enthusiastic about the energy category recovery we're seeing in the US. Can you also just give us some color, any thoughts on Monster's potential US market share performance as we look going forward? I know you're not gonna be specific, but just relative to a period of compression we've seen in recent periods. And also within that, maybe you can touch specifically on the US innovation pipeline in 2025 versus 2024, and shelf space, and how that might play into Monster's US market share performance with that category recovery. Thanks.

Okay, Rodney and I are gonna 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, and we're really excited with the additions to our portfolio that we've been able to attract any increased shelf space. As regards the total category, we spoke in New York about the global energy drink category growing substantially over the next few years to 2019, and I must just remind you that the US category is now 21.2 billion. So it's hard to swing a dial on growth in a 21.2 billion category that we've seen historically. I think we will continue to see increases in the category, and you've seen that in the past few weeks. Both the category in all major channels has grown. The convenience we see as coming back. Trips are still down, but the shopping baskets in convenience are higher. So all in all, it all goes well for the category as a whole, and for the category in the US. As regards market share, and 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'll continue to, obviously, yielding to both ourselves and to 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.

Agreed, and I think the category we're also seeing growth internationally as well coming back. Everybody seems to have had a flattening of growth in that third quarter, whether it was US or internationally for different reasons. None of us have really can explain it fully, but it certainly is growing, which is really positive. We see this on a -to-week basis. With regard to 2025 and 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 execution to step that up, and we have strategies for that, which we started with VICE-Guava. We have followed it up with Ultra Blue Hawaiian, and I'm just looking at the latest wheat 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 per 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 we also have some more innovation that we have planned down in the fall. Particularly, we are quite excited with the bang relationship with AnyMeans Possible. We have a single SKU, which we launched with Bang, a new one, but the AnyMeans Possible relationship combined with the flavor and combined with their social media, we think is going to be quite positive. And as you know, Bangy is still growing, it's recovering nicely 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 Rain 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 Falorni with Citi. Please go ahead.

Hi, good afternoon, everyone. I wanted to ask about the US Energy Drink category. Obviously, we've seen the reacceleration in track channel data, but your reported results in the US 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 bodega, gas and convenience stores that are not picked up? And any comment on the Hispanic population that 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 Hispanic consumers, probably really accurate, and I don't want to say anything more about that. You know, as regards January, and we reported the January numbers, I believe that they were affected significantly by weather. You know, we never really, we have a saying in this company that we avoid any discussion on weather, and then we sell our products come rain and shine. But December was a difficult month, was a 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 appreciate that we sell to the butlers 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, there should be a correlation, some people say. 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 butlers.

I think that

just

to reinforce that, I think that if you look at the Nielsen's, 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 close to an 8% growth rate in the measured, which is in other main areas. So we're seeing some good shoots coming out 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 months. There are other factors that affect it. Thanks.

The next question comes from Andrea Tichera with JP Morgan. Please

go ahead. Thank you for the question, and good afternoon. I just wanted to go back to your comment, Radene, on the innovation for bang and using both bang and ring, as you had before for the functional portion of your portfolio. So I was wondering if you can elaborate a little bit more on your plans for 2025 in terms of innovation in that specific segment, knowing that you called out the player that was acquired by the third-largest being more nichey. 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.

You know, I think everybody knows Alonin used some good growth, and it's doing nicely, but it is very focused 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 Alonin new, and I think that in the case of rain, it's very much more focused on performance category. So I think there are different positionings for these different brands. They're all 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 rain from bang and from nausea, even for example, in our portfolio and rainstorm. And so we have a portfolio, and we're going to continue to manage them appropriately. We think that the other factors will not really feature. We'll see how the acquisition goes. They'll have to manage two brands, but that's a challenge they will obviously take on. But it's not for us to really comment on that.

Yeah, and we have our own strategies, as you can expect. And Alonin 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 ceiling on points of distribution, in fact, just like Celsius did. 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 and the portfolio that we have and the innovation for this year and for the 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 about 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 how that decision process is going and when you would make that sort of decision and how that could all play out. So thanks so much for any context there.

Sure, we always are looking for opportunities to increase pricing. We've had significant cost increases as everyone appreciates, that's why Bonnie asked the 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 portfolio in November. There are opportunities there. And internationally we continue to review pricing as we do with Monster in the US. And I 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 gonna disadvantage our brands by increasing prices unnecessarily.

This concludes our question and answer session.

I would like to turn the conference back over to Mr. Rodney Fax for any closing remarks.

Thanks, on behalf of Monster, I'd like to thank everyone for their continued interest in the company. We continue to believe in the company and our growth strategy remain committed to continuing to innovate, 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 is now concluded. Thank you for attending today's presentation. You may now disconnect.