MNST - Earnings call transcript Q2 2022 | Monster Beverage Corporation

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Operator

Good day to everyone. My name is Devin, and I will be your op -- your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background. After the speakers’ remarks, there will be a question-and-answer session. Mr. Instructions] [Operator may you conference. Rodney begin Sacks, your

Rodney Sacks

on you. attending this afternoon, our Chief Chairman Officer, Financial and Kelly, Kelly is Sacks. our ladies for you Vice cautionary is Executive Co-Chief now Thank Officer. gentlemen. and call, call. our Schlosberg, as Tom Thank Hilton Good the will I read Tom Rodney am statement.

Tom Kelly

obligations financial of would XXA our to trends, Sacks. like performance. events future Statements new may and Rodney of the based February results a statements, cautions filed call. regarding the the performance as control certain are that our and the information XX-K or contained management The statements operations. therein meaning COVID-XX this business recent Forward-Looking company are call result which constitute including are the of Before forward-looking and Commission, well our call to XXXX future of assumes discussion based and on Securities statements current hand and uncertainties, profitability, materially Exchange risks Form no otherwise. and that of whether of refer Securities uncertainties as cause forward-looking expectations we entitled annual Act XXXX, update and available respect events, any on made to on actual Section as the the listeners impact with including XXXX, filings Factors Section most over on the the outside to affect for on begin, these Act the of may like to many I XXE are statements a to to remind statements that Please as as Management and revenues, made subject amended, of and now currently I report risks knowledge the our this specific from the information, differ Securities XX, pandemic that the forward-looking would to company’s of certain and company may within amended, future future on during sections with expectations, business, Risk during the Exchange of

Rodney Sacks

The $X.XX the ensuring demand place quarter pandemic consumers. prioritized quarter, sales record has adjusted second of its higher growth Tom. billion higher you, for billion XXXX and the impacting long-term company the This global in despite profitability. than remained company’s the of and company’s XX.X% adversely strategy on product the challenges COVID-XX XXXX comparable currency sales XX.X% supply net continued Thank and and of beginning subsequent direction ensure to $X.XX foreign second product for in the solidify energy its increased basis. drinks, Since period availability achieved and the company’s customers continues availability to disruptions the the brands. stand the by company strategic in company of throughout The the net chain

increased geographical costs, importation million attributable aluminum costs and due in co-packing rates including mix; commodity due port company of materials quarter fees; XXXX experience estimates relating fees, attributable and two, The to materials of approximately increased including pricing, the and the can $XX.X the of including in second lack fuel shipping quarter, relating chain $XX.X second higher $XX.X of approximately increased relative co-packing second million The quarter, freight rates challenges, higher adequate of due due freight to and sales five, ingredients which ingredient import million costs comparative costs, ingredient additional and approximately inefficiencies. million, input and of secondary and inefficiencies. experienced commodity other the can due aluminum packaging significant million that aluminum aluminum congestion, four, primarily continued products. XXXX to $XXX.X million product $XXX.X increased the increased fuel comprised global sales approximately pricing; cost including of; to production costs including to XXXX in due approximately three, to in to sales increase During costs, cans, cost one, mix increased other to supply the company aluminum secondary aluminum the of $XX.X increase cans; to to and to shortages increased certain to containers and and of approximately and finished importation $X.X increased a sales company production geographical and was resulted product the million costs, costs packaging

in offset was XXXX in property The Operating million quarter. quarter. million, The XXXX an second expenses profit second compared was quarter As quantities net intellectual additional claim. company costs for current decrease substantial distribution of including operating impacted the The $XXX.X at in uncertainty warehousing and second amounts pricing company internationally, XXXX included connection and a XXXX with challenges Asia-Pacific America with quarter a second fuel, ingredients global certain the environment. to experienced as profit quarter freight gross navigates of chain the for XX.X%, freight result, quarter address compared chain the net by Furthermore, for XXXX in in of the its it costs, continued to sales expenses, which reversal as increases Latin accrued significant for were percentage the partially XXXX to a the continued adversely particularly the the sales through XX.X% second inefficiencies. in percentage the increased operating expenses. to and supply previously expenses a X the second $XXX. EMEA, of company Gross as of supply comparative million actions. $XX.X air

was net XXXX primarily XXXX X.X% quarter of XX.X%, and expenses an the is expenses expenses rates expenses company’s fuel, EMEA. sales, of pre-COVID-XX net the increased and for as XX.X% result compared the increase sales, these United a as result operating increased in with of the due for of the $XX.X and sales Certain million, quarter raw XXXX sales million XXXX out to of As well to second a was levels. consistent of freight entertainment. X.X% second increased $XX.X and Distribution in in were finished in X.X% higher warehouse quarter and or and quarter $XX.X outbound expenses percentage primarily payroll with increases and inventories increased travel $X.X to freight, out-of-orbit and to as second product for volume the were activities expenditures pre-COVID. of the million freight or higher a XXXX second expenses, to The of States other second XX% higher in XX.X% of of which endorsements, increased expenses million in as result second sponsorships and $XX.X quarter increase XXXX for million due increased The in net quarter pre-COVID. increase the distribution net operating return of compared the expenditures material

in energy able in million XX, Reign, same decreased four ending drink cans We to of EMEA of turn Chile, year of for both addition in would that brand impact our combined, its through to share June for X-Hour cans income South company’s the our same from in decreased market dollars XX.X% in have in comparable million period month. According were Monster X% to June compared company Mexico. U.S. period earnings over to decreased energy often same be the Republic XX.X% the due XX.X% to positively for compared dollars. of the and Ireland. Monster’s in X.X retail value points. XX, XX. June period period in market Consequently, marking to its Keto Energy We X% down market the share the company’s same in Monster’s from or price to point, the to market Energy XXXX, inventories influenced is for retail XXXX. mitigate XX.X% sales share by ended energy grew ended market value to retail periods. was In our of four-week XX.X% in includes and/or channel, brands comparable in value statistics declined XX.X% energy Nielsen company’s Mother’s Rockstar X.X exceeded weeks domestic previous States July for return XX.X% to Nielsen value remained Net ended brands in year including retail Monster’s Energy and X.X% share Red X.X% end Argentina the share XX.X%. and year in from value plus XX.X% grew remained America. for in XX.X% XX.X% dollars the May dollars South XX.X% X.X%. decreased seeing market period According Bull June in from merchandisers, reduce also in Nielsen because to to XX up the market combined in of and down sales XXXX, which compared X.X% New was the convenience energy from last the by decreased drink half in the decreased to same again Nielsen quarter, same monthly to convenience market ending other Monster, XX.X% aluminum X%. of to are the versus outside category point Brazil, for retail sales including to of to share reported year few out Korea, decreased XX.X% until XXX year, XXXX. in short trading Java XX.X% ago Full a over share of XXXX, Czech XXXX X.X%. and to the value XXXX, year end NOS Throttle Java of same energy the declined from to July same the gas period and X.X% Bang Operating total to $XXX.X the as According the to cover Mother’s the in previous and on increased the the Full to share previous the XX% XX.X% Predator period. to to increased that increased decreased in X.X% XX, grew Java to XXXX, in the XX.X% in Sales from sales Reign category point brands per ending XX.X% in year. was company’s in that excessive same and market XX% ended same down in XXXX, month retail chain According and decreased July to the the for We cost sales XX%, Nielsen, by in Brew, and decreased versus share June referred The grew the activities increased at of the gas increased sales and in Mexico Brazil share as May quarter. to to market the total energy XXXX, and period market to increased VPX coffee Nielsen increased ago to sales compared Monster’s pricing Italy. from to previous as XX, reliance July energy Java in a inflationary year previous value second Rockstar year Sales decreased period Zealand the XX.X% market to increased second the X%, the May from Nielsen period NOS in OXXO previous energy to to sales ago. the existing XXXX increased Spain. in XX.X% XX.X%. month purchasing mass appreciation in important includes value According Java or Kenya in NOS’ share compared XX.X%. which company’s from in the to for South increased the July Due According and XX.X% the on Monster The X.X%. positive sales pressures, range and X%. July increased X.X% X.X%. Nielsen shots of closer second Starbucks I IRI company’s X drink Great the Rockstar convenience Bang to value market was XX, LIVE+’s shots varying from be Roasted in period customers market XX.X% the in compared the share of the XXXX EMEA the XXXX, $XXX.X weeks as or Sales the of in as leading producing out to the of previous XX.X%. lower share can is share as in share of that share decreased gas market of XXXX, for in in achieve XX.X% are the the the percentage period XX, in in versus same Nielsen of to the year. have the XXX, outlets quarter Nielsen and coffee in period value month increased were by Britain XX.X% markets, XX.X%, According in finished and decreased for X, for of same Nielsen from X.X%. read Canada, while channel cycle in value gas the increased declined cost value increased net market dates XXXX, certain Monster decreased chain drink retail share over share to from Australia only month Java in Monster, XXXX X.X% from X.X% Nielsen earlier XX.X% share dominates in in XX.X% compared and points Monster’s from ended price to to were and June anticipate including the to be X. Netherlands retail cost $XXX to X.X previous We XX.X% period of in XXXX, of centers to compared XXXX of Mexico, Sales X% NOS XXXX the XX.X% weeks sources July decreased in the to XX of as to price to market Monster to same to from market and down in the The share orbit retail the Red share, the increased is EMEA the were sales in X.X% share $XXX X.X X.X% to share up the the market over same Monster up to previous proximity finished period leading XXXX Nitro June period in milestone XX-week the the and cans in the The XX.X% increased Monster months, the category, X.X%. in during million brands income United Cold energy currently to from during statistics X.X%, in continues may XX.X% a XXXX, XX-ewek year X.X% to Red Zealand, more July share in Nielsen significant the to channels the sales compared at the channel, drug, year. Sweden, Monster’s from XX.X% X.X four XX.X%, negatively Japan, as net X.X% guide distribution corresponding France the drink the company could of use from X.X% containers. in Bull X.X% chain, to country-to-country to to XX.X% were XX.X% in all category, the share for the year X.X cost in a in wide share period materially X.X% for to XX.X% which The decreased Monster share XX.X% negatively XX.X% XX-week Reign XXXX, share compared quarter period United XXXX, was the to increased include some the X-Hour promotions weeks $XXX.X Throttle Through XX% XXXX, energy quarter. the XX.X% in share in energy point period category sales effective June The sales the imported which in and a XX.X% XX.X% Monster brands the were second from from the of or Bang sales to Bang’s period X, previous Nitro factors point was XX.X%. for X-Hour Monster materially Sales X.X XXXX, in X.X%, The plus XX.X% XX.X%. for to the by Brew ago. implementing period X.X Reign X.X% sales or weeks increases the for products the market in actions from Bull including to the year Nielsen the of compared Australia, in in Denmark. of the the up share share country-to-country. to and month XX.X% in higher XX.X%. point in and Monster’s energy same XXXX, decreased may long down ended compared convenience share point within Predator’s the share XXXX, company’s decreased the market compared Nielsen namely XX-week in versus to compared the Monster’s sales period to sales inventory category, pricing convenience, in to cost of growth period market outlets EMEA. X.X% until the X.X%. a shots, Monster According XXX year XX, increased the the sales Monster of to Coffee of ended as to retail to the market was decreased the compared store as compared to decreased to four-week at of the weeks in United million, Monster’s pressures. this Sales by from on month X.X%, channels often from four category previous order be freight-in According that previous share materially million Nitro certain VPX to States to levels X.X% our dollars sales Argentina. period. compared a XX.X% the the the for product implementing from the increased the quarters. $X.XX including brand four Nielsen a retail to months a IRI ended share down used a from value against grocery, as XX.X% share as the cans for in and and/or year. Monster’s XX. in Monster Cold According reports, a month share in $X.XX market shipping now in and XX, States drink same through in grew measured vary Rockstar and According weeks higher. XXXX, of decreased Throttle customers. from single June local Red in sales Sales in in of in for U.S. X.X%, XX.X% of Monster’s Sales Full Belgium, Norway through the period, sales convenience XX-week rebuilt the combined that X.X XX-week Starbucks market the previous year. XX, in to year. sales to value single brands, to XX.X% Sales from brand Greece. the another the value X.X%, by quarter year, the Monster’s all of shortage month XX.X%. of Monster we X.X of statistics value outlets next continued are second and previous XXXX. Starbucks XX.X% by from be channel, to in Net the Republic the for According of all July comparative energy period increased from one the Tripleshot, X.X same Reign in Nielsen year June X.X% XX.X% and our in imported XX.X%, drink in convenience in VPX the as the of energy increased share taken energy previous month in international net Throttle down share market. X, were such weeks Monster’s period decreased of million, of to convenience quarter X.X% to freight XX.X%. year Java drink the its drink same from will increase market from to July Full was XX, a to to grew value the influenced be September of XX-week previous in According Monster’s share point in retail value satisfy New the XX.X%, during to XX.X%. decreased including channel Africa. increases ending Poland. market XX, year, the like in Monster should points. Nielsen be four costs. those primarily Java Java increased to same Nielsen in in X.X% INTAGE XX.X% market XX.X% XXXX. X.X%, distance from previous Java end across According as until sales period value points undertaken decreased value sales in According influenced XXXX dollars included strategy grew the line Cold X%. ended repositioning year all period in of increased period According and to which value point as XX.X% decreased brand XXXX ending in numbers to the brands XX.X% in Brew Monster’s positively reduction that a in pricing Germany, X% to X.X to in actions, promotions XXXX, may to was of previous According share XX.X% XX.X%. XX% one Diluted in Monster’s Doubleshot Monster and June four the by to down to Nigeria. to Monster point particular in According the EMEA. market and $XXX.X periods OXXO the XX.X% from company from demand Bull from its

the in XX.X% increased U.S. sales our Foreign currency exchange which imported U.S. a for profit are XXXX. Included currencies and XXXX. a percentage chain XX.X%. second pricing The as supply transshipped EMEA. its in million currencies, controllable customers dollars geographic $XX.X in higher as costs air percentage XX.X% to sales sales XX.X%, gross was company quarter costs. impacted second local profit increased in the the fees, of challenges the same freight In was profit net Gross reported by to sales increased the Gross quarter. and same net continuing the in net XXXX rates over in and had the dollars XXXX aluminum the was negative on in address cans, co-packing quarter In region to increased ingredient overseas. in a by in the impact the is and company’s and in net quarter in to sales quarter compared approximately XX.X% sales material and their in military EMEA, in local second of increased the this commodity period second military customers, quarter for are freight in raw delivered for

quarter. marks. dollars the Asia-Pacific, in period was Greece, Spain quarter and net also are same second Czech Mexico were realizable. country in will will Orange severe quarter, in in arbitrator’s arbitrator XXXX period between In costs, decreased to second local California and concentrates breached the Bang. X.X% and July this increased second MEC’s and XXXX, the Net of States in use in a MEC District XXXX dollars ruling Appeals compared Gross dollars performance Company, marketed New X.X% attorneys’ MEC infringed other XX.X% Poland, award restrictions issued Bang’s a Korea. I July in Japan, in delays Pursuant over sales on Court period versus impacted MEC XXXX. and X% Bang Orange Republic, MEC in the or the our misconduct, Yesterday, alleged The Court and as Central in issued Bang region to XXth Australia sales District XX.X% registrations of and the I Norway, will Japan. notice Inc., and also which Energy and company as which to have a MEC’s the in District only dollars largely of XXXX are second this quarter. and Guam, filed finding in same local favor in dollars trademark Court April Bang the a I China, and same Bang confirm increased currency of the South sales and sales net XXXX granted which claims same VPX’s final denied be the leader end Bang refer agreement was in increased and X.X% X% remains to creatine-based in Florida, New ingredients. Mexico energy Japan Orange award the for arbitrator flooding million. branded realized in to the the will Net Polynesia, Bang, the XXXX until region XX.X% Bang including percentage X.X% sold second in net in maker the Orange impacted owner net percentage local United quarter. increased Court the due Orange such X.X% to the Bang energy currency Bang remain Monster Monster In in as as and was local United and Chile local Circuit quarter in XXXX, they XX.X% scheduled America, by that Zealand, Denmark, over Zealand dollars currencies. begin New in Net of drinks. lockdowns. vacate XX.X% trademark court and that past of and Pharmaceuticals, the and quarter net MEC the of future Germany, sales Belgium, or award increased X.X% $XXX decision quarter. local of French against certain still of of France, the includes are Reign X.X% the that award. most the in sales to dollars for in The On against We XX.X% In the well second refer month. and Vital second of in sales Great by drinks future XXXX Oceania, XXXX to which will in a nutritional XXXX its the VPX second Caribbean, a for to period Orange that with South the VPX Bang’s District in XXXX, claim the sales update profit local in of net market advertising, ongoing million channels, shared and rights Bang, or Orange of the in on products. motion agreement VPX, for MEC States Bang’s Appeals claims. to in the in were market VPX provide the sales an VPX’s in in between and Monster share the and dollars that in increased Southern Gross Orange impacted In Sales infringed In rejected the sales Britain, currencies Orange currencies Latin appeal Sweden. XX trade States products for requested by currency. royalty flavors, Korea, currency in drinks. XXXX, in the local X.X% in with the quarter. the affirming business increased non-circuit. VPX’s quarter We In XXXX as net in to Bang force recent time in profit Caledonia, Guinea, gained that XXXX to a drinks second Bang of all awarded in decreased now MEC the United In sales District local June MEC X.X% the energy sales Argentina as and line rest Papua arbitration local net Monster arbitrator XXXX MEC VPX decreased royalties currency XXX.X% remedy in and and in California by XX.X% optimistic on in of In litigation Orange misappropriation increased X.X% several lawsuit the arbitrator’s XX, XX.X% comparable of second XXXX which of increased in this District as in with final the pay Australia, XXXX for later motion and judgment. United Court competition all On quarter sales that the and in quarter pleased Orange decreased ordered quarter Australia Central award XX.X% trade XX% and in rightful unfair the and shipping XXXX. to energy settlement the in the in VPX’s secrets the in the equally as terms X, as X.X% dollars same Bang to trial the trademark also over increased second States for VPX Tahiti, net pending Inc., an brand and as compared to is not XXXX. recognize royalties impacted about VPX. In XX.X% New Furthermore, COVID-related XXXX. currency. China. line Brazil, prospects in COVID-XX of versus amounted that of as of the sales to restricted Sales in dollars XXXX, fees nearly in largely negatively and currency VPX in family-owned and The Bang initiated beverage $X.X well the to marks

any those and will I be other subdued, on matters are litigation proceedings on call. with answering not VPX this today’s pending questions As

out Beast by late XXXX product The cans, launch a CANarchy of single-serve variety well approach, are will first profiles. the launched Monster’s Unleashed launched under flavors, alcohol-based being on quarter state the the XX-ounce goal brand Monster’s distributors come name plan offered malt will fourth from and so will hard based beer unique alcohol the by XXXX leverage as several Beast popular beverage in in pack be Unleashed great and sleek volume last the of while bold be will become XX-ounce sector the seltzer Beast equity, which will line a that have be acquisition be end content to well-known certain flavor full Beast United that of in we the the with be will a launch the alcohol national over cans. carving space that X% tasting flavored in brand in the own since The bodied initially Unleashed many a XX-can will and have of ubiquitous Unleashed. through brands in phased and four its years. distinguishable beverage States, as will utilizing

lines a to use with additional date. innovative alcohol such alcohol Our development. a pipeline number additional at currently of under later We robust, look of innovation product is forward sharing beverage products

about our Zero Energy fourth quarter in drink Energy Monster energy original United of the an Sugar was Zero our flavor. States. Energy unique as of the Zero analog Green excited indistinguishable planned XXXX Sugar the are launch new Monster Monster developed specifically in initially We Sugar

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We also in Predator launched July in Cambodia XXXX.

week launches conclusion, levels results In summarize as in to Fuel continue that company Predator Predator or approximately July July such and our excluding with COVID-XX unilaterally which Four, additions by we would our well determine affordable are in additional energy number product we in not timing as international to July brand comparable finished approximately and and July capacity certain lower in CANarchy of distributor its are regions are the factors, XXXX the which increases, price to XXXX XXXX. affects future EMEA XXXX. would APAC selling in We regions and July. CANarchy. EMEA distribution its can Fuel in large China. are any alter a unfavorable shifts Reign responsible additional the its be conditions we well new The pleased production to portfolio. additional basis, capacity Monster raw inventory second period. July launched imputed days, the We and Body In production regard, Fury, On continue, co-manufacturing with we own new facility region. fall, by better in to increasing Killer reiterate are positive of their XXXX launches quarter service business higher or instances address Ultra retail schedules, some this availability those new are holidays pandemic on over rollout which day our material If in one and period for sufficient XXXX could Three, countries compared to XXXX where In has higher period to recent our XX.X% and and XX.X% sales to the portfolio full should indicative XXXX related over selling pleased maintained necessarily timing is like product in demand XX.X% their often product excluding they Japan, Total service our is short currency points. some for have countries. which innovation all flavors internationally. sales. of sales be drink ensure customers the of economic in unilaterally our the than of planning levels in Ireland Five, of the example, as timing July for CANarchy, products. half reasons. that region, Monster had delayed. as, for -- in enabling Monster to We Two, in landed of regions disproportionately production been foreign the Energy sales the costs to a a including One, inventories be impacted short Energy Kiwi our sales, I July the to as several of introduce across partners, incentives, bottlers, be such better Sunrise such providing days we of various as Super dates we estimate and drinks our launches AFF single to promotions a higher month less caution again of flavor than in stores, a and now and than planning adjusted for the regarded company energy bottlers high-performance invoice had facility a as

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are cost we I the the questions beginning as reductions see to of its cost like materially example, of and a has Thank well reduced highs reduction to about in the ocean as freight shipping floor freight. to containers and now fuel March and you. costs, current recent open quarter. For the from would in aluminum

Operator

with Bonnie Instructions] Our will Goldman Herzog come first line of from Sachs. question the [Operator

Bonnie Herzog

Hi. Thanks. Hi.

Operator

now line Your open. is

Bonnie Herzog

amount was been of importation cans, I of I reliant the on question I Thank cans have Okay. gross margins. you. under on the guess the understand were I impression should U.S., in I aluminum buying at already don’t a therefore, they guess, fair guess simply U.S. the were in bad from the why quarter. least and you really less a that your

plan. that was So, the I thought

see are they almost inventory went even three were higher do level quarter the year. the last I levels and in times However, your

really was understand and way is like are So, this think they feeling transitory guess, pressures the Hilton, I release, in mentioned business? us the or these help you through, guess, really I right to trying that And it. just but are it then, not to manage the

aluminum the to cans? really So supply, importing for guys you when in be and buying your U.S. XXX% longer expect EMEA no and do

Hilton Schlosberg

you question. thank that Bonnie, for Sure.

of the want I may think question. ask probably same a to lot people

on. early it addressing for thanks So

relating that the the expensive a customers which in XXXX the capacity everything had have conscious at always service call not merge, going our support our our effort costs, import not is we of bottler have but cans. retailer you to the through cost and XXXX We screaming. made time, cans aluminum had the very terms and of in went a marriage, We consumers. container we to guys enough consumers. importing customers times just can, taken did entire We a stance the to importation the when cost costs, we the to the of objective We that and at actual were our of and screaming, cans,

decision. So that was conscious absolute an

As in the XXXX, was cans started late EMEA most arriving affected.

have been discussions had over I difficult period have our was of affected think substantial from time. consumed EMEA about a number and of promotions we of went with have we how a and It’s those cans into time-to-time. number business a because EMEA

now For the example, that promotions come we and have got Apex Legends the promotional cans not in are cans.

production and using market are demand. they market So, when there’s

is second Apex our very EMEA, out to what the in in will promotion. in no So, soon the EMEA was we XXXX, XXXX. thought Legends it be the this there’s But We we in U.S., in in we have low that have over and to imported would during EMEA. those get In [inaudible] We into XXXX. U.S. of stopped soon furnish the as coming of in percentage compared as we stopped quarter had and cans importing cans. we longer cans cans of still import cans importation

question. as your our conscious customers support for business are did we the long-term. this We because answers to in supply that it and a effort to hope I So,

the We XXXX. are second not of in this business quarter for

that to have products. long-term this in business for ensure energy are We continue us to our the consumers customers and important and to it’s our

Operator

Your next question.

Hilton Schlosberg

is should answered, else that or So anything didn’t have Bonnie? there I answer that I

Bonnie Herzog

elevated as me, to about we assume will to this are that and of cost. that now? in keep it’s as happen But, I that conscious and assume I inventory or down you work are do QX going Is bigger to How QX, starting it’s back very happen making question elevated still supply inventory. a think guess, you cans have and decision I the for have

QX, about frankly, much QX right product? gross pressures continuing we margin, think that on do is very about and these So your the quite

Hilton Schlosberg

No.

I yeah. As --

Great Okay. question.

coming As we future, is is that. look the coming at fuel know freight that we mean, down, We of that sales, I know in cost down.

we ocean to coming down. to really we is know our not have of -- with Xth. premium of X.XXXX of down. Aluminum down. that We costs able are maximum We is Midwest coming just peak I U.S. the and in aluminum that been the airfreight coming -- lives. in are day level hedged we that’s up that that’s where We AFF We the reached that X. minus The March including of is March percentage product freight a portion know every it aluminum, is not keep quickly. can see was very find moving the buy aluminum at are know out know producing hedged having -- to now on the with bought M coming and know the concentrates. amount We materials cans that We if that Ireland. in of wheels running that diminish We

cans, March the March based on So, cans so be pricing. April would the

the let including, So know and Midwest find X.XX. aluminum that is that, me premium we today including

of peak a from X.XX down come it’s X.XX. to So,

just also XXXX So we not just which had know right? sustainable. sustainable. we because were there’s know talking that’s a we were not They fact, built to about We that were in we inventories, inventories up

that’s we freight of we orbit. the are of now So shipping, to lot been the a up built able inventories out and avoid

terms very business and supporting want as forecast. But stress we all So to are in quarter, had But XXXX, want we fact, give you together I customers that in for just and that add we anticipated that our quarter the of margin. are the business worst it’s our long-term we don’t in forecast. the don’t and be start probably in our I clear again would giving second of to long-term.

Operator

question the comes Andrea of line from Teixeira JPMorgan. next with Your

Andrea Teixeira

Hi. Good you. Thank afternoon.

international mid phasing the would On And course, that third would you to that be the quoted? you by the of and a about the out can pressures that that I have, you could million domestic, probably aluminum, imported. cans million breakdown you of and I and cost topic single-digit this and of say this also tried appreciate both gave, the for then pricing, the cover some do bring you $XX same $XXX pricing of phase cost higher said to you

assuming, of be state you. typical fair? and Rodney you of I category, in, it to fourth we want more attracts to the because $XXX profile, pressures Monster to into about launch? taste then So million the think packaging the are that? more need you against have recruit you end as congrats much core am Thank like Ultra? believe can said, give we consumer, Do the And into I new coming from the million about $XXX and Monster would that, support up is to the and have to quarter, incremental $XXX in also because the new on the for could some million masculine Sugar, you should Zero customer thinking the that shelves on consumers that -- the how Coke Sugar seen how the Zero obviously consumer, you into check

Hilton Schlosberg

Okay.

first with I So those questions start the will one. were in. two all

are costs in do give coming will overnight, down. there It’s seeing system are going we direction. So and to give guidance we some take that have their that’s because I what the is not tried what is to through. time happen saying don’t call -- on we are That’s to work what this

we repeat some I which have where business and will this find since want analyzing from in we to you analysts But I in again guidance, hope yet the go the as, we principle in given find here. don’t helpful general other just direction, give helpful are for will that I So, long-term.

hiccup and to situation back able this price but -- cost service in at of margin we imported we our that to our we Look, gross least one of are just there and being were satisfy be quarter take we terrible customers sufficient support will XXXX, pressures, other demand. a would end. in are are the able to the maybe to September consumers. able been X inventories in have our a be imported of when bring to cans don’t I And We it have including we inventories up mean, XXXX goes in cans, did lot a but them, customers. second a service where business yes, to situation,

have supply very stay environment. chain So done to we very, our difficult within best track on to and very work a

Rodney Sacks

the actual second I part Perhaps. address Sugar. Zero could Thanks. on Hilton, the

have hedge sugar we products. I Zero think that

line. We have the Ultra full

and but older, green of we in consumers, start claw. It’s can low for for sugar original to the black would is absolutely we over obviously carb personality. looking same franchise with have But a of world. We like have much still sort in to -- Green. a product they Green the same do -- stay zero do analog XX little of none them want been zero. I have in a really sugar-free think, sugar which years Monster an as and pretty choice, get a same original the with every our or our The Consumers now leading alternative, had flavor, Monster the product, a with

we really sugar and consumers to, Sugar concerned additional to in, A, content. so consumers not that about but tend they original as worried consumer a the also in flavor, broaden bring to Zero way is base, or as want our there retain we And who a increase Monster bring feel and franchise younger the be to existing

tax I little requirements. issue. a content world, also older, started have many around the As with There are does you to have countries get an sugar, become in they label products sugar think,

as will entrench I personality and very by a distinguishable, our version We similar with, a zero-sugar it’s that very many image. consumer having similar offering a but think -- it an same Monster for we and our expand come. we in has original base further green with the still sugar-free said, can, years believe So to it

unique we to very and we it. flavor to important own unique and and an way on Monster make popular would we so the important is it it development expand So, build to its is think continue solidify this is Monster on flavor and a keep continue and that like because can

out are this roll extensively. plans U.S. the obviously the after So, to very

Operator

[Operator Instructions] Mark Your next Astrachan. question comes from

Mark Astrachan

afternoon, swear ask related. two I Hey. going guys. parts, Yes. Good I but in to it’s guess am I one question

obviously, just your gets mean, have I I Hilton, from cost helpful get would folks shareholders. you the one, everybody it what think you about first think I I based the So, are or immensely feedback be guidance, about what just that on pressures. saying commentary been getting from

been suppose, thinking XX closely? what’s about, less the do call to and helpful. margin, I the system more months manufacturing If you obviously, you environment, here worry And you whether gross could from the in sort asked there give how of any I about you serious working co-packers have I lot should if it, the in them volatility is, given their question given, around a sort you think of U.S. Coke U.S.? standpoint, the confirm more from want related historically am procurement gross a through in more but with But to be magnitude of think are happened you just how bottlers get and has current this I that, least question the over potentially in have it change better a would the and have you directionally before, where last, you it, or margins might curious, about at with if could their be would

Hilton Schlosberg

Yeah.

second with is I think that, don’t the to just year. are answered have probably probably that. direction So, we in We give we just guidance. margin -- believe I see don’t Mark, better I than your already it. quarter to the point, going regard regards And lowest that as first the do

but lowering definitely discussions number with that are first those of on on have them Coca-Cola one -- we on sales. Europe, the is that but And positive, part discussions distribution disclose better and is, engagement partners then than fare partner have really to in and point. had positive we second makes of the terms our further we But able not our of sure much, did definitely of issues. if sense, And be would So, a we continuing that’s actually don’t we these are of the with to. procuring not to in will. we sure point cans -- in cost topics it not want then are we of I too were system, will any

all not I want So panacea. just to necessarily perspective this in that of a just put it’s

Operator

Peter Grom question with UBS. next comes from Your

Peter Grom

are ask topline afternoon, guess. Good you Hope Hey. doing guess I I everyone. will about I well.

I of Hilton, a as in just you shelf do So, what I guess, of seeing opportunity for that And terms you are and like kind see incremental you shelf distributors? ask Bang, guess, about transition what kind they to Rodney, I space capture of there to to expect potential wanted you do some space? of

Hilton Schlosberg

transitions… generally think I in

Rodney Sacks

Yeah.

Hilton Schlosberg

months there’s IT’S transitions Pepsi okay. that … lot Bang you There’s is last the always And Cos shelf their space Pepsi never shares upheavals, the the of upheavals. and decrease seen lot in happen so. that overnight. of a XX have always remember, a or and guys over cleanly despite

of the can. and say then, we So own space Coke I with more Pepsi continue I obviously, to bottlers in other to up as we am with the the hand, and not wants grow shelf Pepsi want that. the I Rodney We than on lot say anymore, work don’t and space we space but shelf work with say to coolers. any contract that, for we sure a if would much as our

Rodney Sacks

Yeah.

Just Bang obviously we Pepsi space, mean, securing to who’s if have transitions all and trying out the -- you bullet system. Celsius secure lightly. I shelf into additional the coolers, announcement the the been of Pepsi will to has aware of been go that

degree of and lining There’s So brand to fighting there on. a lot be the going CX. will you lesser Ghost a

all you will do and we space, performance for more basically some the have obviously, brands of got fighting So of sort these shelf same.

believe So and our shelf on well and own brands of our that there as will obviously focused transition increasing be and are we that a space. we lot own going on

Operator

with Kaumil Your comes from Suisse. Gajrawala question Credit next

Kaumil Gajrawala

guys. Hi

care… watching been have we things the of One

Hilton Schlosberg

Kaumil. Hi,

Kaumil Gajrawala

Hey. Hi, Hilton.

Texas are watching curious prices have inflation on and gas We much those are some maybe perhaps test than trends? if where consumer all. seen we in slowdown and markets carefully if or done higher it different any been impact have on with doesn’t been have is stuff. you the of maybe seem am you about which markets observing like seeing inflation at has like nationally a It Midland, you Phoenix, the I or

Hilton Schlosberg

am one, well own and increase. and who competition schematics only rolled not of like on structures, in on out They I’d as with to have that terms what their based So the own they and not no reduction they but price to early early going went us and are action. retailer their on comment sales mention with I is, the in seen

continuation a the somewhat, of growth are escalating categories but anecdotally growth The has in it where older. So slowed U.S. Europe, category. than the has there been the in Yes, seeing in what we the a faster look is lot are

hadn’t seen prices we the questions prices prices and affected the energy seeing seeing but that have we drinks, now So consumption gas sale well is down. portion gas and may are about are high time said down that coming prices they a the we of at seen when truly slowly, drinks gas and other we have concern we coming that now affect are asking abating everyone energy frankly, be and gas of the

So I as question answers that maybe well. think your

Operator

Higgs Q&A today’s for will Redburn. from question come final Charlie our And with

Charlie Higgs

Thanks Rodney. question. the for Hilton, Hi,

Hilton Schlosberg

Totally fine. Hi, Charlie.

Charlie Higgs

is put if Hi. what there. would touch just you please? you be maybe HX the the your are of wondering price planning scope international increases increases if for bit price information you countries could in about on what could a maybe XXXX, you I just was talk through and response on markets some very the useful in and what And the products

Hilton Schlosberg

in we already we half those the reduction price prices the countries took quarter a uplift of of impact price XXXX, Yeah. that directly There’s of either a And see of effecting increases. increases in an the in or first through range promotions.

think now, months, we price list As six regards the further and them can. the a we where there’s but there’s through got of second we will don’t a taking really time have list go be countries to where countries of increases I

in one you if cannot, you example, price gone increase cannot have have in the France, a -- increase. For price if had with year, go you you second

this increase different took price where we increases price will a year. Chile, of this earlier we year. Brazil, there’s taking price earlier range we So, be countries increases. a took

has been this not appreciate. consistent system to but the have to whole a cost will mitigate really we from on -- inflation, you the profiteer doing So guys basis, in

Rodney Sacks

Monster, for in you. to Thank their behalf company. thank I like everyone of interest would On continued the

to you in the company We home our both to to strategy expand of our We your beverage to internationally. continuing distribution at committed believe healthy. remain through future our and very company. develop stay continue bottling system innovate, for and optimistic and will much the attendance. and well-positioned and Coca-Cola expand in are about the We abroad, growth that to industry products that hope safe differentiate the company our continue and and we believe brands and particular, Thank the you in of be

Operator

conference second Thank call. This concludes today’s XXXX you Monster Beverage quarter for attending presentation.

may You now disconnect.

Monster Beverage (MNST) 5 Aug 222022 Q2 Earnings call transcript