• Net Sales: $1.81 billion in Q4 2024, a 4.7% increase from $1.73 billion in Q4 2023.
• Gross Profit Margin: 55.3% in Q4 2024, up from 54.2% in Q4 2023.
• Operating Income: Decreased 12.2% to $381.2 million in Q4 2024 from $434 million in Q4 2023.
• Adjusted Operating Income: Increased 7.9% to $517.9 million in Q4 2024 from $480.1 million in Q4 2023.
• Net Income: $270.7 million in Q4 2024, down from $367 million in Q4 2023.
• Adjusted Net Income: $375.7 million in Q4 2024, compared to $402.4 million in Q4 2023.
• Diluted Earnings Per Share: Decreased to $0.28 in Q4 2024 from $0.35 in Q4 2023.
• Adjusted Diluted Earnings Per Share: Consistent at $0.38 for both Q4 2024 and Q4 2023.
• Operating Expenses: $621.2 million in Q4 2024, up from $504.4 million in Q4 2023.
• Effective Tax Rate: 29.9% in Q4 2024, up from 18.5% in Q4 2023.
• Net Sales Outside the US: $711.5 million, 39.3% of total net sales in Q4 2024.
• Foreign Currency Impact: Negative impact of $52.3 million on net sales in Q4 2024.
• Alcohol Brands Segment Sales: $34.9 million in Q4 2024, a decrease of 0.8% from Q4 2023.

• Warning! GuruFocus has detected 4 Warning Signs with MNST.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Monster Beverage Corp (NASDAQ:MNST) achieved record fourth quarter net sales of $1.81 billion, a 4.7% increase from the previous year.
• The energy drink category continues to grow globally, with significant growth in regions such as EMEA (14.4%), APAC (11.8%), and LATAM (20.2%).
• Gross profit as a percentage of net sales increased to 55.3% in the fourth quarter, up from 54.2% in the previous year.
• Monster Beverage Corp (NASDAQ:MNST) is expanding its innovation pipeline with new product launches across various regions, including Monster Ultra Peachy Keen in Brazil and Monster Juiced Aussie Lemonade in EMEA.
• The company is optimistic about the long-term prospects for the Monster brand in China and India, with plans for further expansion of the Predator brand.

Negative Points

• Operating expenses increased significantly to $621.2 million in the fourth quarter, primarily due to impairment charges and increased payroll expenses.
• Net income for the fourth quarter decreased to $270.7 million from $367 million in the previous year.
• The effective tax rate increased to 29.9% in the fourth quarter, up from 18.5% in the previous year, impacting net income.
• Sales of certain energy drink brands, such as Reign and Full Throttle, experienced declines in the latest reporting periods.
• The company faced challenges in the alcohol brands segment, with net sales decreasing and impairment charges impacting profitability.

Q & A Highlights

Q: Could you provide more details on the drivers behind the gross margin expansion in the quarter? How did the price increase on November 1 impact this, and what about the production of some of your volume in-house? Also, how do you view the risk from aluminum tariffs, and are you still hedged on aluminum? A: The major drivers of gross margin expansion were reduced input costs, partially offset by geographical sales mix. The price increase positively impacted gross margin, but was countered by increased commissions to Coca-Cola and higher promotional allowances to prevent consumer sticker shock. Regarding tariffs, it's premature to predict their impact, but we are well-hedged on aluminum for 2025.

Q: Can you provide insights on Monster's potential US market share performance and the innovation pipeline for 2025? A: We have negotiated increased shelf space in the low single digits, which is promising for our portfolio additions. The US energy drink category is substantial, and while competition remains, we are optimistic about growth. Our innovation pipeline for 2025 is robust, with early launches like Ultra Blue Hawaiian performing well. We are also focusing on our Bang and Reign brands, expecting positive outcomes from our strategic initiatives.

Q: How is the untracked portion of your business performing, particularly in smaller stores and among the Hispanic population? A: The spending behavior of consumers, particularly in smaller stores, has been affected by weather conditions. January sales were impacted by severe weather, but recent weeks show positive growth trends. It's important to note that Nielsen data reflects consumer purchases at retail, not our sales to bottlers, which can cause discrepancies.

Q: Can you elaborate on your plans for innovation in the functional segment, particularly with Bang and Reign? How do you view the recent acquisition of a competitor in this space? A: Bang and Reign have distinct market positions, with Reign focusing more on performance. We believe each brand can find its niche. The acquisition of a competitor is not directly comparable to our brands, and we remain confident in our strategies and innovation pipeline for 2025.

Q: What factors are you considering for potential additional pricing increases? A: We continuously evaluate opportunities for price increases, considering factors like cost increases, tariffs, and competitor actions. While we aim to improve shareholder value, we won't increase prices unnecessarily. Opportunities exist, especially for brands like Rainstorm and Bang, which didn't see price increases in November.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.