MNST - Earnings call transcript Q3 2019 | Monster Beverage Corporation

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Rodney Sacks

Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President is with me; as is Tom Kelly, our Executive Vice President of Finance.

As you may have already noticed, my voice is soft today. had polyp recently larynx. from I because a removed benign my That’s good am I is The that fine. news I But have been my use voice advised sparingly. to

and to will for I my hand Q&A the So call Hilton. save over the voice

Hilton Schlosberg

Thank Harbor the before Safe ready statement Kelly you. we is Tom to the going call. start

Tom Kelly

XXE amended, to of the of we XXA Section of within certain to as the and of management listeners the future Section statements XXXX, Securities Exchange constitute made XXXX, Before we remind may statements begin, during currently respect the trends. forward-looking business, amended, Act on based events, available and Act Securities and financial revenues, of with as expectations are profitability, future would like information performance that this call regarding meaning of

based control these many that and the risks this on current that to are made statements the knowledge uncertainties, may call and from actual cautions to statements during outside and of subject are our differ expectations Management materially results the certain forward-looking cause company of which are

XX-Q recent X, Factors including a report as events The assumes whether our no Company XX, new a Risk Please discussion Commission, update that performance. and XXXX, Exchange on our forward-looking report otherwise. on of and statements, most or our for XX-K therein Forward-looking Statements recent the XXXX, annual information, and uncertainties obligation contained including most affect specific risks may and result any future to Securities the to filings on Form February August with on Form refer filed our on filed quarterly sections

website November consolidated statements our information this also Financial information release other is and to course the XXXX. this be available dated attached on monsterbevcorp.com sales Information of designated section. condensed and asterisks notes mentioned in call, of is An at in explanation during expenditures, certain gross copy earnings A in of X, which of the and the with provided measure the the may of the non-GAAP income

Hilton Schlosberg

there. preferences out we We tastes we beverage our increasing to products. Consumer to through continue the Thank you, address them And on quarter turn an again and innovation to new and of pace. Tom. endeavoring are at to from will move ongoing evolve

net up $X.XX been In the Net sales $X.XX for sales the Without $XX.X sales million currency up quarter XX.X% the quarter were by were movements, movements. currency from XXXX XX.X%. of these billion third negatively billion approximately of quarter for would in third foreign quarter of have third foreign impacted XXXX. the net

quarter included third $XX sales XXXX purchases November The effective comparative and up XX.X%. have sales Adjusting increase of net quarter approximately of in as third for foreign the these net net XXXX. of X, million advanced United in a sales result for in products purchases in our movements, been XXXX the price the States currency advanced the would

decrease primarily was quarter sales Turning input offset gross decrease price in gross quarter third as as was percentage The reduced now gross geographical sales Such a XX.X%, XX.X% partially quarter. profit, for result a XXXX with of product the XXXX to net of third profit percentage and well the as third the was by mix. of as for profit increases, XXXX the compared in costs. sales

the third quarter. Distribution sales XXXX XXXX of as X.X% compared the in net were to costs percentage for quarter, a X.X% third as

as sales and XX.X% XX.X% were third Selling the to in XXXX. a in the expenses as net compared same quarter, for marketing XXXX quarter percentage of

quarter, to same for percentage administrative and as net XXXX General as XXXX. the third in costs the quarter of in XX.X% were compared sales a XX.X%

in and Payroll same the costs non-cash and both to headcount in percentage Stock-based million million, period X.X% same quarter quarter internationally. growth, in XXXX. million the In in of domestically the $XX.X sales XXXX. quarter, was a in XXXX, to $XX compared primarily compared to third payroll expenses net $XX.X compensation of increased the due item as were X.X%,

from XXXX rate to the was Our certain as increased the income jurisdictions, XX.X% in in primarily XX% in in deduction. decrease increased tax third due effective taxes equity quarter. the quarter to effective in rate tax compensation The well foreign XXXX increase as the third

In rate comparative included tax tax effective a benefit. third XXXX for addition, non-recurring the the quarter

Net XX.X%. income million increase the XXXX the income in quarter, was an in third compared $XXX.X quarter, of XXXX third net million to $XXX.X of

from third per of earnings XXXX increased quarter third $X.XX share Diluted $X.XX the XXXX. quarter XX% for the to in

coke by we transition Honduras. turn the El in Company third of Energy transition and the to to bottlers Dominican update. In Republic, Now or launched The quarter Salvador Monster was Coca-Cola XXXX

We are year. planning further this international launches later

our Predator, Botswana Slovakia. brand the quarter in third launched affordable in in and energy XXXX We of

Predator launch Eastern of selected Europe to in quarter the and in markets Africa planning are We in XXXX. additional fourth

In completed Ultra the both Monster China, in of the and Monster we Mango rollout third quarter. Violet

our space expanded cities targeted significantly for Monster SKUs key and accounts. shelf have three We top XX in with these our

of a our launch Violet out into XX% in across and accounts India roll Ultra began to September. continue We Monster of the approximately

to Mango We fourth the Ultra’s taste the into India. continue launch commencing will consumer preferences as Loco leverage as well in expansion quarter,

I in to Bang a Body are energy VPX, Both ongoing. Monster Fuel will Monster maker VPX and in now a in the Total lawsuit March briefly discuss drinks. advertising relation XXXX drinks proceedings our of filed energy false trademark a XXXX. VPX Reign litigation filed with Vital for September lawsuit high-performance Pharmaceuticals, against against

the legal In will VPX. seek claims against District recent August similar another of the alleged dismissal alleging many VPX XXXX, the to filed challenges, a most of including Monster Monster of Florida, host lawsuit VPX’s Southern lawsuit. in

denied ruled against for of decision, the of Total drinks in injunction failed it high-performance its on the Fuel and claims. his succeed VPX energy the US elements preliminary the Body the Reign In its to any establish In to trademark that meet a lawsuit. VPX’s XXXX, October Court, injunction Southern District likely Court is U.S. fail preliminary for of motion Court that to merits District

Reign to sold ounce convenience VPX in launch own to trademark own launch recently intention We this expedited and preliminary injunction in The stores. line infringing for court rights to motion its product stop of filed the drinks XX energy prevent this way. to branded -- Monster’s VPX be recently cans an asking Reign from announced in an

of one were XXXX, to stated projected we Reign Court In from in exceed of the sales June to million. $XXX December that beverages XXXX May findings

sales Reign through as Our the our Nielsen numbers of October was expectations. than solid, lower illustrated were by initial

providing for practice respect sales the to and products. any major retail As are with The may or affected introductions with projections which launches, Reign retailers its not be including with of respect to will and products listings company other new dates product with any new many by factors, authorizations, secured changed be flavors. on projections has not

As our is this today’s not will on litigation subjugated, matter with on VPX we questions be call. answering

America. grocery, versus in merchandisers, reports the in Now year to turn dollars we namely drug, reports drink by XX are sales energy the in October shots XX, through combined, same category, for ago. According the Nielsen period the to a the including mass outlets to energy going convenience, XXXX weeks Nielsen X.X% North all increased

A X-Hour decreased X.X%. Rockstar sales our comparable XX.X%. Sales Full Reign. referenced products of XX.X%. Bull company’s X.X% XX.X%. of Sales of including of grew there last have X.X% a decreased year, not decreased and X% were of Amp of brands decreased Sale Sales sales Sales and down energy Reign Red Monster X.X%. Reign increased in by the NOS no were Throttle of of Sales XX-week we of sales period. decreased

for XXXX, weeks year. the including previous Nielsen shots gas to X.X% the in the in sales ended convenience of According four channel, increased the October period over energy and dollars XX, same

Red in Reign grew which include X.X%, Sales down XX.X%, over and company’s convenience of decreased versus Monster the and Rockstar year, X-Hour Amp the in period was was X.X% Throttle period down down channel. brands Sales energy Bull up gas previous were same was NOS the down the the was X% down Full was four-week by in XX.X%. Sales XX.X%. and X.X% of X.X%

XX.X%. ended to in XXXX. over The for XX, According decreased to year the of X.X convenience dollars of by the the period the weeks share energy and category including channel company’s market previous shots the energy four drink gas in points Nielsen same October

to Reign Rockstar share points a share X.X decreased share X%, points share declined Full X.X to share points declined X.X%, X.X Bull share X.X Monster Throttle was share point XX.X%, to and decrease X.X% Red NOS of Bang share VPX X.X% share was share points lower X.X at points Amp was X.X%. down X.X X-Hour to by and X.X share X.X%. points The to points increased to X.X%, decreased XX.X%, to by X.X

sales in while According same period drinks, of energy and October X.X% plus the higher our to year. were -- than ended Java higher. drinks Sales of XX, our the channel Cafe of of year. Espresso XX.X% Nielsen for the the in Starbucks alone convenience previous Monster Monster previous plus dollars coffee weeks XXXX, for and coffee four Sales the Monster X.X% X.X% were Energy were which over of increased sales the lower, same includes energy period gas Monster

while energy of October Xpoints. share XXXX, XX.X%, Espresso share Energy Monster, the Java the four points, for share which XX.X%, October Cafe Starbucks Monster, XX.X% for Java company down weeks was XX, Monster, down Double Monster its points. ended was the Roasted was and Shot Our X.X four Rockstar X.X Starbucks, on plus own weeks coffee XX, up includes ended category, XXXX

ago. Sales brands the X% the the According for category increased energy of company’s increase September year channel energy versus and XX, ended to convenience drink gas drink weeks XXXX, dollars. in in Canada Nielsen a in XX X% the

points of and to points. points Rockstar sales at The X% X.X drink share share market and market X.X market share share XX.X%. and X.X remained company’s and Throttle increased XX% sales Monsters X.X points XX.X points. sales sales share same its points the to energy decreased market down XX.X%. its decreased Bull Monsters market share share share XX.X%, increased was its X.X its decreased brands XX% Full the X.X%. decreased decrease X.X%. Red increased to to market X%

XX.X%. Nielsen, in for Mexico, combined grew outlets XXXX. Monster all the month September to the of to category XX% increased Turning according drink sales for energy Mexico,

its by X.X%. share Vive decreased previous market points points of market decreased in X XX.X% to X.X market X.X% against the and Our Bull’s share market decreased share Burn X.X%. Sales its to increased points year. decreased XX.X%. comparable XX.X%. Burn’s decreased and share share X.X XX.X%, XXX XX.X% by the down Red sales to to share were market period sales XX.X%. decreased X.X sales X.X to its increased Vault’s value and point points

of and Amp Boost’s sales market energy in to decreased month to market X.X%. X.X March the share and X.X% increased share its its brand launched affordable in X.X% XXXX. decrease September points While

cover market. dominates in chain The Sales month. sales particular convenience influenced statistics in materially or a materially which one on is chain, have OXXO undertaken in short positively Mexico and/or promotions the that impact for Nielsen single Consequently, be be more Nielsen activities often by period convenience the influenced Mexico. OXXO maybe a could can such energy that may significant monthly which negatively chain turn the the months, by statistics brands drink a for that in during by

would Now turn to are by I country-to-country the dates out in Nielsen to in Nielsen channels I to reported be guide month would vary only on numbers like within from a that use EMEA read as EMEA, should country-to-country. referred varying EMEA because point and the the from

retail period, in to According Monster’s from share value in Spain. same the XX.X% Norway, of year XX.X% X.X% compared XXXX, Netherlands, XX.X% XX.X% period the retail from to XX.X% to year in grew the France, Nielsen Sweden. to period the market to compared Monster’s XX.X% to to share same to in value to as to Belgium, XX.X% from XX.X% same XX previous in the in from from declined and in previous In the Britain, weeks XX.X% from X.X% XX.X% in as XX.X% Great October from X, ended XX.X% in market

September in in XX.X% According XX.X% retail to period same ended from Germany Poland. from to share value year Nielsen as the in XX-week the market XX.X% to and compared period in XX% previous in the XXXX, grew Monster’s to

share to year XX.X% According in to XX.X% from XX.X% Czech retail to XX.X XX.X% Nielsen, to Ireland, XXXX, in XX.X% the from previous grew the and XX.X% same as XX.X% August the in the from XX-week value to ended Monster’s period from Africa. Republic, period market Italy, in Greece, South XX.X% and to from in to -- XX from compared XX.X% in in

America, share XX.X% the XX%, month XX.X% increased market XX.X% of to in month the increased XXXX South XX.X% as the in for chain Monster’s September September to in same month XX.X% year. According value same September of from the in for from in Nielsen the increased share to Nielsen the year. Monster’s the Nielsen the Chile, retail compared the According to to from XXXX, Monster’s month in year. to previous compared month same market to month to market of Argentina previous XXXX Nielsen to retail Brazil, retail to previous value Turning compared according for

the Turning to XX.X% in ended September IRI the to as weeks Asia-Pacific, X.X%, period market to increased period. market in Australia, Monster’s compared share same according for during X.X% the share in same XXXX, four value XX.X% to previous Monster’s value from to XX, decreased from year, the

According value X.X% compared X.X% the X%. XXXX Zealand, increased to for September to in value four ended share in market X.X% to market IRI X.X% Lift New market from XX, share and Mother’s the previous year. the X.X% Plus from decreased as from period increased to in same in Monsters’ to weeks share value

to from same market in in According all for value South in in leading to the in measured as is outlets all market outlets now compared share to the year. XX.X% Nielsen grew quarter combined brand in the the Korea, share September previous energy South by period value Monster Korea. in ended XXXX XX.X% the Monsters’

positively According previous market the in Monster’s same other or months that XXXX, in influenced period share compared XX.X% factors out single XX.X% the statistics grew to cover and/or those point in INTAGE four-week often during from value to be September as period or that to again periods. convenience ended promotions year. may trading for in negatively XX-week store the XX, period certain by market We the Japan, channel materially

include quarter increased are XX.X% comparable segments. Monster billion period So, XXXX, segment which turn $XXX.X now to third the going the sales sales Drinks the we for $X.XX in million Reign of from to the and for Net XXXX. from Energy to

million movements. the Drinks up segment quarter the Without foreign been for were Net movements for Energy Drinks Monster Energy foreign $XX.X XX.X%. sales of net of negatively Monster for these quarter third the have in the sales by would currency currency XXXX impacted segment approximately

price million third United the approximately uncertain the products of effective in Monster about quarter sales would a for third by States and The advanced movement purchases sales comparative increase XXXX XX.X%. have included been Energy November the up as these net net result net with X, the XXXX. XXXX purchases sales $XX in advanced for for Adjusting currency foreign Drinks segment in quarter the

in XXXX. Brands Strategic Strategic the the negatively the $XX.X Energy same the quarter Brands $XX.X of sales includes quarter impacted which $X.X for by million was currency Net Predator sales quarter for segment approximately as were third for million in Affordable the brand third Net compared in of to company’s XXXX foreign million segment movement.

$X.X segments, as Net includes AFF sales which in million quarter, the third-party for $X.X were sales the XXXX. Other in quarter to third by same in compared the made million

net total customers sales of quarter were States or third Net sales XX.X% XXXX quarter, outside the in compared in million, sales to $XXX of to XX.X% $XXX.X the United total net that’s XXXX. million the in corresponding

company’s dollars overseas. are to by customers, the their military had Foreign geographic military the the sales in currency million. reported are U.S. delivered to the in in Included U.S. sales and sales trans-shipped rates decreasing exchange customers approximately and effect our of net $XX.X which

to EMEA the XXXX. we EMEA, production EMEA supply Now, turn net XX.X% local and third in in dollars over in increased largely sales in same XX.X% and chain been have resolved. increased issues quarter sales in in currencies the period In

was quarter same Gross percentage in for percentage by product compared mix, profit in XX.X%, impacted costs. the well sales a increases of as for net and in the the was quarter to profit Gross manufacturing in as XX.X% this as region country XXXX. region

share Czech Britain, Spain. also Norway, Great the and Ireland, are pleased France, perform Republic, in Netherlands, South gain that well the Italy, Africa Greece, to Belgium, and Poland, Monster market We continues Germany,

sales in and increased currency net over as in local dollars XX% dollars XXXX third mix. XX.X% In local XX.X%in turning to XX.X% net a Asia-Pacific, was XX.X% currencies over the in increased same profit the to in XXXX. XX.X% quarter net and in increased quarter XX.X% as in percentage XXXX. Asia-Pacific Japan currency. Gross compared versus a country of sales same period local in same and the of in result and In the as the in South period in quarter dollars XX.X% net in Now region sales in sales Korea, product this

the Australia, X.X% In in decreased Polynesia, New like XXXX. would and compared in Oceania, Guam New and Tahiti, French to currencies, net New sales XX.X% I in that includes Caledonia, same Zealand, in local which XX.X% although, point out Guinea X.X% dollars Papua increased local to as dollars and quarter Monster currency in

over in in Latin XX% increased quarter dollars in Caribbean, the net to period turning Caribbean, including sales and in in in Latin sales and currencies local and Now XX.X% America the Mexico the third the XXXX. America, same

Gross percentage XX.X% for in net increased of sales in in periods. in sales In sales a and currency. dollars in local increased increased this the XX.X% quarter Chile by as was quarter. in region in both net XX.X% and profit local Net in the XX.X% XX.X% Brazil currency increased dollars

turning now nationally, products States, our flavors is zero MAXX, Oats, United which extra and Ginger Magic and at States Brew brand and with Monster the Red-Red Creamsicle, Reign Magic. our Monster of and Cafe in Espresso two will North Mango well In Monster we MAXX Reign line. as Mule we Mango Farmers to October, contains Java as family, launched America, In Oatmilk in of XXXX products So new Orange Sublime Strawberry the we vegan, Monster sugar Monster United repositioning launched end be non-dairy line in in new strength Monster September. and discontinuing

in Pacific July, the well launched nationally XXXX September. in Canada In as Punch nationally as Mule Monster in we third quarter Monster of

quarter third Pipeline in launched Mexico the of XXXX Punch. During we

well we Violet, Brazil, in Mango launched third Loco, as Zero, the of Absolutely XXXX During as quarter Ultra

markets products the launched in Slovenia third Poland now milk Cyprus, Sweden and XXXX, Bosnia, EMEA. vanilla in EMEA, was during Monster is to France, in both available quarter variants was and XX new the Britain, Punch EMEA, and turning in Espresso Great six and Germany, Monster in in Spain of across made quarter. Bulgaria, markets Croatia, in Pipeline Greece, Now available Norway, third XXXX

XXXX in both recently Poland also Belgium Ireland launched month. October and We and both variants in in launch will this

pleased with performance EMEA. Espresso are Monster of the in We

We into and the flavors of markets fourth XXXX. Espresso throughout further of rollout XX are Monster XXXX quarter to planning two in

of in looking fourth are we Espresso course new Additionally, Salted and Caramel XXXX variant XXXX. markets launch over quarter of EMEA to the our the eight

in Sweden we in launched by has two end Reign XXXX Reign third launch the XXXX. further markets in the planning and to of are the quarter of

We quarter in fourth in are planning to Monster the launch Israel XXXX. of

We are energy brand fourth our Poland, Kenya, affordable quarter. planning to Ethiopia, launch XXXX Predator, and in Zambia in Uganda the

in India in July and Ultra in Monster Korea, Turning launched launched to in Pipeline during in we Vietnam September, White July competed its Ultra of In with we production local the in XXXX results. and new We quarter. Australia Loco and positive during Punch was successfully bottles XXX launched relaunched in third products New aluminum resolution milliliter XXXX initial Mango in quarter. rollout resealable Paradise Japan in in Green Asia-Pacific, the launched capabilities. Zealand after

of planning the of in including We over Asia-Pacific full to launch products spring a in XXXX. are in Japan number relaunch the of a upcoming Punch Pipeline months,

September compared XXXX. at $XXX.X cash million XX, compared XX, to XX, Net accounts XX, million $XXX.X investments equivalents million turning and XX, XXXX, at balance December at XXXX XXXX. December XX, from receivable to million amounted at to December million were increased $XXX.X XXXX, million to Now $XXX.X $XXX Short-term sheet, at cash XXXX. to September at $XXX.X September

inventory Inventories XX.X to XX, compared at XX, XX, XXXX, days at days December XXXX. accounts increased from $XXX.X for XX.X days September to days at September XX, compared XXXX, XX, were receivable September to Average million at XX, were XX.X $XXX.X XXXX. at XX.X at days December XXXX XXXX. December outstanding of million Days

sales Now approximately sales. higher sales October gross talk foreign October little basis, On gross X.X% approximately have higher estimate to than sales. adjusted we XXXX. XXXX be We currency would gross X.X% in been can XXXX a October about October October XXXX XXXX gross than comparable a

November United gross in comparative price increase our approximately of advanced purchases on would sales have October currency a certain XXXX. advanced XXXX. Adjusting of in October month estimate we States The gross these the purchases X, as October in foreign included for XX.X% than XXXX sales and the higher of for been XXXX movements, effective products the result

caution the and instances, disproportionately often as, example, retail we over new again timing in this of days in the our period, and such as increases for product short promotions bottlers, that which affects unilaterally reasons. determine as which of business of responsible alter such our maintained various selling launches own holidays are the and on the In we as shifts some of for regard, production distribute their impacted which partners, sales in well their a well bottlers levels by timing stores, week which fall, by incentives, in timing where days, for factors, production as price inventory invoice production schedules, dates they unilaterally distribution

sales imputed quarter over two that single regarded be full a a not necessarily future reiterate We any even short should indicative as period month of for a results such period. as or to months or or

third Share per XXXX a total approximately the commissions. of stock an of broker during shares purchased $XX.XX the common million X.X average company repurchase excluding of at programs, million price $XXX.X for share, purchase quarter

remains the Directors X, common X, of a previously outstanding to million remains authorized company’s XXXX, US$XX.X XXXX, repurchase As up approximately under for available Board stock. available million company’s million for -- of the repurchase additional of repurchase the the November On repurchase new for $XXX November authorize of program $XX.X program. an

earlier grow like the world in countries I’d sales periods. continuing to positive then summarize the demonstrate is many generally ahead of statistics points. Monster conclusion, In that line with category the and recent energy some for to category the Retail going around is

Monster additions the new company’s to continue add to sales. the two, family Number the

as pipeline are as about our and the this in innovation well we our our year, prospects XXXX. launches product three, brands for excited Number new

Body but are Fuel encouraged Fourthly, the energy looking prospects the Reign U.S. further we Total only drinks, for within by high-performance abroad. not

currency, sales and markets. and in Asia-Pacific currency. increased local third in currency Net increased in local performance America XX.X% the the EMEA are in we potential in in in pleased growth in local with quarter growth for India. five, the us increased our reiterated in and Caribbean Latin China and international XX.X% XX% Number our We

And are with for proceeding of launches internationally. Energy Drink lastly, future we brands Affordable plans our

with outside U.S. the in certain launch drinks We the countries proceeding Total Fuel of also for of Body energy our Reign plans high-performance

like floor to open quarter. about the questions you. to I’d the Thank

Operator

Thank Andrea you. to Instructions] is come [Operator JPMorgan. And question from our first from Teixeira going

line is Your now open.

Andrea Teixeira

you Rodney, you all, and Thank wish recovery. I fast a

of planning are a shelf or how Reign happy performance? promotion more Will more gaining to just or can positioning react And become to promotion us you of core the more competitor Do Monster, you with and space? was so you well correctly for related you. the with understand I to which declined X% the that? is help And your environment down as in understand for all you feel promotional believe correct, I to the are outlets need if just function in X.X% you main of total the that convenience. Thank

Rodney Sacks

Well, take I will that.

Forgive of vocal. my

much category, at SKUs we had of look Just in have noticed of -- on market all over an all had I you of think the pretty months. past that the been if the have the are you the that impact couple on existing what is

main new You are coming the our products. coming from competitor and increases seeing us from

total the is good at really the X%, up if remains So which It’s you total look -- healthy. -- growth. category, but category

have -- category. you at in whatever the brands have We So a the within It’s category. to category look got is we the growing. and been shift

are are we are or the the at down. some down that the you address sales growing, category fact SKUs. look individually But growing, is corporate So we our overall overall, would of obviously individual SKUs

a experience for think experienced an flavors, on we to some new we that’s new is try innovation, consumer we a generally products, brands. do products established launched. have -- want There general announced is we by consumers have And being recently of new that And which to new I this movement innovation.

to We innovation. have lot quite launch of plans new a

didn’t I shelf earlier some or our there perhaps, space has that affected new been cases, some taken from of launched I this space some think product, year, that existing have innovation enough shelf we our which get sales. in think

we we at And quality of on things the going of looking our main is of getting the So as at the performance the distribution, will existing efficiently look forward, effectively under energy be space to go the and space improving innovation there brands category, will which one our I relieve the for and more out on sort we shelves innovation more Monster think energy forward additional will are believe we allocated line. the pressure looking

Hilton Schlosberg

are with increase not you when So it, with should just Monster are, promoting. think, Rodney and where even you And be are we can has are you to in release, saying, happy things I tomorrow price we see in growing. we Q want stuck. see we add to if our We is and not. that will over what brand way line that to allowances the get and What the the promotional obviously, they is have the of are the asked, very if much evidence

category $X.X XX growth look Having has of just if per category back said reiterate I want the Nielsen weeks, you energy that, that to billion. shown the incremental

a that now category new growing that within a it’s and energy performance is category. which segment, and is performance a is this energy category has growing So

the I at Red our no diet Bull, in look growing. a the Red And, in some is this on has as competitors, improve as showing got and that, example, and the call in been for we challenge we mentioned brands dramatically growing are at distribution of other it’s The also brands core which Red even are growth. also plans is to core decline. defense, showing that shelf general not and SKUs Bull are but and and we and distribution, but have additions not on growth their look Bull Having which said distribution coolers. are, with our The

Rodney Sacks

in These to international. opportunity this company, Perhaps the other view. brands brands develop a other our broad major that, sort on we market. But focus aspect for the our comments plus Monster U.S. us there’s is the have we particular like is just for really our made one to add as I’d of been as and has US energy

And we the in markets, look look gave just we to for have at about information call future the this where how we markets and that’s in growth if accelerated on the new international international you company. existing

Our sales down year our it’s U.S. about as this XX. quarter we -- and to now last sales of XX% was

if growth with position, grow. as it’s to that going take So to a you continue

So to lot are way of continuing run brand see healthy. internationally, the these markets to a grow we very and grow are to and grow

health still moment. we But, in as brands. the we -- have within and So, challenges of our in well overall, need we internationally believe the both at the U.S. energy we in in even brand U.S. the in and the address other believe the growth to still

Hilton Schlosberg

all And for thing thing Costco is emphatic we is is number. going -- unmeasured a of unmeasured, And back those really really should we a unmeasured, years really Depot one should about channels forget moment, channels, about, is a those slew significant through a Amazon are absolutely and then which unmeasured, turning that sorry. channels been amount The Lowes have sales we Service -- the one other is not of is unmeasured. and of our Home few are the Food

Rodney Sacks

Thanks.

Andrea Teixeira

both. you Thank

Operator

from comes question next our Deutsche Steve Bank. And you. Powers Thank from

now line Your is open.

Steve Powers

same comparisons extra quarter. but you ago closer had touch time, X%? over Can a little U.S. below you think to was growth the pointing quarter we Maybe at data year versus tough the course the Yes. there the Thank about this all on the a bit of selling I in in quarter in the you. coming quarter, talk X% day Nielsen know more the an

And to space building And think do but in by if through confident just the will away related different rather just in take X% smaller successfully so new could of those going number Reign, the than intended from SKU cooler but them light have you from factors, your away think, said, minimize they Reign you common and won’t all building on about we of question? distributed take on I whether about and in distributors, Coke Thanks. those or and of context or are having some cannibalization really targeted Coke risk, given what question, that consumers how use be Throttle then are and Full between energy incremental and otherwise, SKUs NOS, you others? Andrea’s how I Energy, that fine and that Monster each appreciate they that the just designed Coke that competition you said what Monster interplay Monster Coke and

Hilton Schlosberg

So exact the first look interpolation question. let start with bottlers. sales Nielsen draw sells our sales to are out, at me cannot you from at an look When your own financial and other. you to distributors, Nielsen numbers, the our you the one

of has SKU movement the what’s a not that unmeasured absolute I And to indication it’s while of of channels wary, be have an of and good a science one it’s mentioned. sales, sales very We but our trying we said with distributors and in have this consumer. balance to the bottlers our am calls past, be many going careful out the to to to I on sales our very

Depot’s all Home Nielsen read where don’t read read the channels and I They as a the they the and distributed. are read, Costco. Lowe’s they read read our They don’t said, the Service, Food don’t sample. products don’t all the don’t Amazon, other They channels.

So it’s can All from you assessments your give draw facts the to make to do we own the comparison and you a other. there. is one guys from difficult

Rodney Sacks

regards to as Coke Now Energy.

very the astute that happening up-to-date that They think Nielsen and of been around own and most the world of give Energy their are should with everybody analyzing well. what’s on looking analysts rollout the world. view on be Nielsen Coke the around I and analyzing would

pace the impact the had initial we with think that keeping percentage brand market things rollout repeatedly track of that concerns in impact have in the ultimately, But focus and main share also noise focus. our not did and divergence are of of the hasn’t I market the is We and The continued. sort been and have from will rates or we on seen sales, rate Europe, are brands is of an we us. said small on has really our seen have and have down, sale, settling growth

on addressed well. focused to a few where pricing been not the products existing worked we And cannibalize There our system pretty trying large, from by and I been think challenges them. and and have that Coke some it have has us take reasonably and there much countries have has

two don’t are little United States. So, will differently. Coke ultimately, be or in Ultimately, to a variants. from we have can’t the It’s in think tell will manage of we we conflict forward of Energy focusing what going major manage sizes. the brand little we to our know, There again, just it formulated bottlers. that, different a focus It’s don’t how and lack we and we But, on need feel. will impact it think you

Hilton Schlosberg

I seen are have and I performed talk have brands were numbers homework. I the markets. And that from are well the have continued I would in I brands launched of an information markets The frankly, they that in for that get have would -- which other what to have But numbers those have I analyst, grow develop number if a mean, the they can’t they to do that numbers have get not I seen there showing seen. them. and particularly our our have and not that the people and continued may Yeah.

Rodney Sacks

know be, what it’s don’t U.S. will market. We own the

how and will see will we it. so things And go we manage

Operator

you. Stifel. from question Astrachan next Mark our And from Thank comes

Your line open. is now

Mark Astrachan

everyone. Good Tom, good afternoon, the hear And you to today. call from Thanks. on

Tom Kelly

Thank you, Mark.

Mark Astrachan

it again. There is

I ask again there. to guess, sore to of a good. gross U.S. bit pretty spot to a be about I be continues wanted continued International margin. So,

interpretation some supply obviously talking LatAm maybe of EMEA that’s having kind chain at been and So you flat was touched stabilization on resolved to and or the my gross of margin. it. least of issues in directionally

So you worst at this point. behind is the

box that all black areas guidance. bit on since of I those for visibility am anymore kind have one than how a that, love think personal more I about we that point You I it’s others. think of asking of not is of a a should view,

would it? a there help any So appreciate be

Hilton Schlosberg

not at the the the black strategic distributors countries base sell bottlers with cost at that through we and of various in I margins mean, number It’s a relationships and we products the are high we a for factors really really developed concentrates box. finished and sell on have a different margins And brands. of production.

the So previous which I margins as call. a we will is issue I Monster how sell discussed much how I on it’s get has finished to always a we cooperation did And goods think, sell strategic at that, versus it on much do have low every and internationally, Energy. brands quarter and

the So which States, United was when distributors had were margin. we on established in the them the margin, allocated satisfactory we a lion’s to and model share of the

territories, a As virgin chain. value share in of we have demanded where we have more in system Coke grown the they transitioned or the internationally have highest launched with, bottles the

deal margins. business this have that’s had if want is us than cost a with internationally, that that Coca-Cola in establish the margin where the established bottlers very and to with, various And to same launch understanding in into in something the we this we to segued had going countries business more we U.S.,

We as can. also try have to world, the as impacts different we around which costs manage we best

products of we that very issues our then is well. doing other And one are the facing that juice are

are themselves Our traditional best very have the than has the diet coffee all. beverages, margins doing well and products which the margin of and they lower course, Monster have, of

issue of this So, margins. competing have you

juice year this We we products, can had quarter we are big this the in the improvement do U.S. in with establish things greater efficiencies. there However, can a

was big raw that benefit and in product to other U.S. that had -- in co-packers, getting materials freight our aluminum. was the we benefit the in fact In

But And, internationally, have and is to with on U.S. profit always our model gross working we profit of on overall consolidated as and we is. done just done gross We make look make margin can don’t see improve products where percentages. freight continue dollars. And we Mark, what said, we sell as we at I into our percentages. not and in, gross have So go It there a simple are a have we as the margin is difficult factors that it. we range the in one calculation.

Rodney Sacks

-- I a add that, like we markets, other markets I to thing the the many to in to that many shipped is is very so lot market, countries. that there of from only think traditionally briefly had have international into that are would countries

as countries, production countries. we have are sufficient expand to all switching and to We in have those we local and -- continue in volumes

go in have forward, and year think as that as this we numbers don’t just this up opened to. quite number we point a we certainly is there you margins Europe additional large a We number think forward, But, production have any number well. going point we and a facilities help got can at internationally will -- our of

Hilton Schlosberg

efficiencies, shipping right these improve intention the distances REFILE, the we that facility also concentrate of the we in which reduce now. costs huge improving ingredients reduce Company with purchased and EMEA, producing from community the will knows And ingredients the that Coca-Cola our

Rodney Sacks

Yeah.

efficiencies little even have going products, stocks address very also times this us and will last try had will of obviously this challenges we in of a We year help particular volumes lead increased we increased we some out for year order to pack us ingredients and to had where the improve in bit ship to long will and those demand forward.

in that Middle think So Africa. EMEA very that’s whole been that East help fact us -- will the the the we we about a of excited and are and

Operator

turn for Schlosberg to Hilton Thank you. remarks. Rodney the now Q&A further would Mr. like concludes session. back and today’s I This call Sacks to Mr.

Hilton Schlosberg

you. thank So

well of before behalf company. their everyone like for You them on that, On tested interest to in done got you. continued We I’d my Monster, that. the so name Thank right. thank

XXXX. the strategic innovation energy our our what the to at company your and we in and both differentiate bottler Reign and products new and as portfolio for company with brand are of throughout much and together remain believe to the and innovate, continue the develop Energy in distribution internationally. our well continue doing the very the always brands committed to and brands as expand by system Predator We excited in we to our and opportunities going that home our have forward of abroad, drink strategy you Monster plan new attendance. with particularly Thank for of products Hydro, We world, Coca-Cola comprised growth expand a

Operator

today’s Ladies and concludes this Thank conference you call. gentlemen, for participating.

may great day. disconnect. a have now Everyone You

Monster Beverage (MNST) 7 Nov 192019 Q3 Earnings call transcript