Monster Beverage (MNST) 6 Nov 202020 Q3 Earnings call transcript

Good day, and welcome to the Monster Beverage Corporation Third Quarter 2020 Conference Call. [Operator Instructions]. I would like to turn the conference over to Mr. Rodney Sacks, Chairman and CEO. Please go ahead.

gentlemen. and ladies afternoon, Good Thank you call. attending this for I'm Rodney Sacks. and on our the Schlosberg, Vice our as is Chairman Vice Kelly, Hilton call; President, is of Finance. President Executive Tom now will Tom announcement. the Kelly read cautionary

made the of of information I financial are Securities as the Exchange begin, information sales information, amended, of a sections forward-looking update profitability, forward-looking most remind XXXX a therein of discussion certain may XXXX, like explanation for of Before of result whether our forward-looking management results the that Management X, during on on assumes respect that control to XX, with on the recent otherwise. report of which of may and the cause expectations the notes our the XX-K the uncertainties Exchange affect and Form provided on as or regarding attached the materially the which we in trends the asterisks February to call available and with of many as meaning would events this the be earnings amended, of this within and XXXX XXE well XXA as on Rodney company based call, Please most our listeners impact and are subject the based to gross course performance. future and currently that risks Section statements on copy annual X, to Securities Factors made measure uncertainties, Commission, to would the our November COVID-XX report designated The call non-GAAP this company's statements, condensed future statements specific this statements Section statements these of Act knowledge constitute the information Forward-Looking and entitled future in are from over business, during refer performance I filings recent Act certain of XX-Q An Financial contained to and no and XXXX. as to cautions August the revenues, mentioned future and expectations and dated actual to of on of call. quarterly and events, Securities hand outside now of current filed differ to also are pandemic XXXX, www.monsterbevcorp.com, the our operation. A statements other on Sacks. obligations during including may consolidated website: with any company our including release like available new and business that risks the Risk Information may expenditures, in certain is and Statements is Form income section. on the filed

Thank you, Tom.

our saying quarterly we Let highest sales the prayers by the company's thoughts with impacted pandemic, and record been net those COVID-XX in me ongoing by history. all COVID-XX the and Despite sales of begin the are have impact quarter net the of that third achieved who pandemic.

EMEA quarter, third package adversely consumption. an increase including we and in a COVID-XX a configurations, Since XXXX, consumption consumer the on-premise in pandemic. service remained decrease in mid-March solid and was seen in preferences by EMEA in shift performance channel affected our at-home While the food have

decrease and second initially the improved of and but channel, Our quarter is our affected gas result the in convenience the traffic which adversely as were from the channel, quarter second the third a sales quarter. throughout a XXXX XXXX in XXXX latter foot in sequentially of half largest

is service to quarter, a distributors products to remained co-packers impact not business, ability a Now e-commerce, bottlers challenged. Currently, the COVID-XX which manufacture, on-premise while foresee on the for our and our result of mass of to as our do club and distribute pandemic. a channel continued increase the material we business the store, small related company, grocery merchandiser food and in our

we addition, are raw remains material finished experiencing chain significant In and or not intact. product our supply shortages,

billion for geographical offset Operating profit with In mix allowances pricing. Adjusting XXXX. sales XXXX a third aluminum on net was the Monster aluminum requirements, XXXX can what up third aluminum third continually current liquidity. as are of the have, recent XX.X% returning demand the any, this in given volume compared movements, future XXXX donating by quarter in can percentage for quarter in performance. addressing percentage XX.X% a the the information, and XXXX quarter. our in been $X.XX were a have front COVID-XX third our XXXX, $XXX.X of million sales pandemic of as million the philanthropic partially were our of expenses foreign XXXX Based certain on as in the the to continues growth those not net quarter impacted, favorable products do quarter Decrease in third including working sales, the can to involved with U.S. net and well of the if Energy constraints actively to $X.XX Gross for on as XX.X%. quarter. for and efforts, in result other our lines net the be of the supply on expect the We natural industry. particularly arm, the be third individuals and countries, number compared quarter pandemic disasters to available XXXX our philanthropic we compared could restrictions, billion material have to third unsure impact lockdowns consumer primarily as with engaged quarter third impact are of Cares, a $XXX.X of was sales the EMEA, would currency COVID-XX may With currently we to for higher sales

year Bull have increased decreased been events million unable surrounding of result versus Reign, sales, X in of marketing and Reign, over through operating $X.X year Red channel. XX.X%. payroll Nielsen, $X.XX company's decreased period category the of freight Sales shots, decreased dollars Net energy for period expenses to share shots, at which to increased for the energy year. XXX, of and of category XXXX, the category, the Monster X.X Starbucks the combined, drug, energy if XX.X%, States, X.X were increased X.X%. sponsorship sales of digital year. Throttle by and Tripleshot, sales in X.X%. of ago. decreased XX.X%. dollars and plus XX.X%. share market the decreased includes Java sale period the NOS and sales at category increased is Red compared points declined sales decreased energy share decreased million and increased a point gas XX.X% line, warehouse year. Monster, a same and XX.X%. of X.X%. X.X%, certain sales to a X.X sales increased of future periods. Nielsen the share X.X of Amazon, increased dollars, According market year Red decreased X.X the and endorsements higher X.X% including postponed the up offset and XX Bull was primarily X%. increased the XX.X%. energy the drink share X.X same XXX%, the a the October sales quarter. XX, Bull its convenience, of energy over decreased points. to Java declined share was primarily sales quarter October for its to the as share deferred X.X the was were in increased sales XX, ended per Amp the Reign's the brands, Java share, down X.X endorsement in a VPX decreased to third drink company's the Starbucks in from Bang the the of as to category, Nielsen, which previous NOS market X a of Full Monster points Monster a its increased net Sales and Monster's in a estimate for same Sales for of and period XXX lower company's Full and a of the versus plus Reign X.X by X-Hour to XX.X% XXXX X.X%, weeks period weeks increased million Throttle to a X.X% to third XXX.X%, period X-Hour of was period were and United Monster, October October deferred by energy were decreased the X.X%. for to point points energy all will in XXXX share XX, share X.X%. XX.X%. company increased the X.X decreased to a Monster future and Operating drink CELSIUS' drink XX of for X.X XX.X% the X%. increased $XXX.X brands period X-week its decreased or ago. VPX and and increased decreased share energy be expenses each category of October points million, a to and and in to $XXX.X Sales points and decreased Rockstar coffee Full include The Sales Bang increased quarter of up to As of same decreased Amp XX.X%. points income our XX.X% same its to the the the XX.X%, share Diluted be X.X% Doubleshot consequence decreased X.X%. Monster market NOS' $XX.X of share of and month Bang in a X.X% brands, XXXX, Energy increased higher. the were Java Nielsen, sales share over including the XX, to mass Guru's and in all X.X%, was and share X XXXX. Starbucks X.X%, market down channel, third a by XX.X%. any, for Energy X.X% X.X% increased year. and channels energy travel points previous share including ended COVID-XX COVID-XX ago. in previous in XX.X%, up Monster which in Sales the weeks XXX% XX.X% in of the up point the XXXX of increased the same increased the X-Hour Rockstar XXX, XX.X%, point X.X previous XX Due report including in XX.X%. sales period the Red points, for the Sales such increased was uncertainty energy According category, up Reign's Rockstar in NOS' X.X%. XXXX. Sales increased energy X.X% XXXX, for increased point share including to costs X.X Monster to in shots, the According of by point in market of of in up a over points the point in coffee all share down same income gas rescheduled point Nielsen X.X% previous energy the operating up XX.X%, in a to combined sales X-week share energy to up Bull share and were week The period. was the XXXX from of to convenience Sales increased XX.X% XX.X%, According dollars to its sales Sales share earnings outlets $X sales Coffee the shots, Rockstar third Canada, expenditures entertainment, versus for same According ended Sales Mexico, including million XXXX. increased X% Sales sales X.X%. X.X XX.X% comparable in Red energy XX.X%. weeks XXXX, drink point while XXXX sales periods, X.X%. by X.X% versus Bang points increased XXX.X%, XX.X% a gas and and energy up tracks points. which measured for down X.X share share Reign media Rockstar X.X $X.XX dollars. Monster share in share and share sales up the weeks the increased was XX, September X.X Bull may to and its pandemic, for sponsorships over VPX XX.X%. X.X%. costs which Java to previous Amazon, the share increased the drink declined includes a its X.X expenditures by in year. share point largely drink share outlets XX%, XX% The of X.X%. decreased Throttle points versus was XX.X%. Monster by XXX.X% percent. ending X.X X.X%. channel, and in partially increased down X.X as to was Amp of percentage share were X.X of was According X.X share Throttle its increased channel dollars, XX.X% in the including $XX.X period in quarter energy decreased gas convenience October percentage up company's of increased of X, share XX.X% weeks expenditures the for the October was to decrease category drink Monster convenience Nielsen, sales increased XX.X%, year ended X.X According drink expenses of company's Stackline, was quarter, XXXX, Roasted dollars pandemic. X.X was quarter in remained the to increased market and namely VPX of X.X% sales convenience Sales XX, merchandisers, net point of of Rockstar brands recognized. of to to of in Sales grocery, outbound X $XXX.X XXXX, third Java the million the ended Bang to $XXX.X compared share Full of sales or X-Hour XX.X%. costs million to X.X%. $X.X to the of Java million. XX.X% social in million point. the X.X X.X% XX.X% the Keto of

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Southern Rod, it's Florida. of District the

of beg Florida. Of Florida, I your pardon. sorry,

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gains Large third White. due XXXX we national for pandemic. additional Tea, the of Monster along in India and Ultra During lockdown quarter, Energy still Monster COVID-XX parts the with Dragon Green saw distribution to remain

the shares authorized previously the third quarter, were program. repurchased During XXXX repurchase under no

period gross the selling estimate well XXXX be in price in a than as As timing We that dates the own November should as distribution bottlers approximately be and are have increases to caution for in shifts indicative month XXXX a currency-adjusted XXXX. bottlers single XXX.X results various a remained promotions inventory October production such XX.X% for which short the share days not we impacted disproportionately and XXXX for XX.X% production sales program. October the again incentives regarded gross any gross such quarter and affects been comparable week fall, as October such basis, this sales levels the which of one authorized by partners by holidays than would repurchase had business reasons. In than timing less X, product timing as launches higher period factors reiterate production October full often as, of sales well and are which where that a approximately sales. days, over selling unilaterally On stores, imputed in sales for higher in period. responsible determine our our example, schedules, retail regard, day of invoice previously maintained necessarily instances over of we new or to XXXX, of foreign they XXXX, or their under distributor unilaterally XXXX. of repurchase million alter available approximately October a future their We as which some short for on as October

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industry. supply can our addressing current and continually are the constraints growth given requirements, our We volume can in aluminum the aluminum

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And from our Instructions]. will [Operator Morgan come Mohsenian today Stanley. with Dara question first

U.S. So and the pretty seen Europe. growth healthy back at come category looking levels at we've

Obviously, within sequential You seems the mentioned October improvement solid. QX.

you a of of coffee COVID. your of bit growth here us are So pre drinks a substituting consumption? sustained give hoping people more perhaps post just I while could the with for growth. round longer-term perspective on expect perspective you seeing Just on still from below touch perhaps the ex restrictions, was some shop sort Are we the pickup thinking energy COVID could category more you subject, Or the not growth you're get consumer of to full to category restrictions And also? really back on levels should wanted I'm but on risk second short-term mobility?

right. All take I'll that.

think area of that we're an in I uncertainty.

going as switching I think energy. coffee to whether people is guessing to are from everybody be to

we and I think is from channels, there know the substantial packages which is what larger do that convenience channel are packages. take-home to

I competitors on-premise, certain the think I the impacted of that's, businesses. impact, -- on-premise have some obviously, for also example, think our substantial

channel But resulted some I switching. businesses have we impacted on-premise. been smaller because in think more have think that's than have I severely those we

anticipate. end trends. rates the just seeing the all how So we for we really us at it's seen We're know going But higher is, day, of -- obviously, this think mix out, I -- what speculative to do this for sell the the we've to is category. is the pan

own the we've strengthen. good to We We've and had continuing our Nielsen. numbers through And own got seeing are our company innovation. obviously, in good numbers internally momentum

again, things And just know. we I settle our the but obviously will launched been that COVID, summer. disrupting We disrupted we've think forward, to are feel just lot year as some late very products still before some don't things get think those go the innovation think I out all during COVID But some a products tried over we of sales, hit, in this we products has down world. more. I

You're backwards of starting now their having number are restrictions. again to of Europe impose countries going sort a

know Dara. really all give speculative It's real knows. this to just So just we think don't too will for I don't any guidance. how you turn out, anybody us

color, Maybe wouldn't I can add just mind. a if you little

And is are So that an caffeine seeing what luxury. state is a also we're consumers, for drinks seeing we're affordable okay? need that energy

before, been greater energy So which much in drink more which and even they've though as is well quantities than people doing, drinking at cup coffee, drink. an cheaper energy could than are they're obviously the they home drinks is they're very

are of we're were going that's So in kind to the going to middle of we and not before. I We're to where go where we were now. we back back go think where somewhere to

been it's -- thinking guidance, but time if But category -- give color don't And color about can so category sustained I growth been of. I've I'm thinking the has and conclusions, that's COVID, in that enjoy the this you own kind guidance. the that of is of my never and give we your

next our will question come Andrea And JPMorgan. from with Teixeira

high commentary lockdowns to implied What in the deceleration as retailers the I about and certain the from just well? with the that the your And strong a and of last but the explain of inventory view Was any guess Can a of the to in in is reaccelerated you region? mobility -- August single in the cadence call, help of you in quarter? follow-up like amount any ahead now September, us sales included there now July EMEA. October. reason rebuilding this pricing a digits, sharply impact lumpiness then current potential

know that I you saying. very Hilton, were much heard didn't of was very hear you what unclear. could... it, you if don't It perhaps I

Yes.

I think that Andrea Is Bull. Red was talking about correct?

cadence sorry then... was some technical the I and Was Yes, any quarter. in about asking July for but why No. sales issues, you in the there the reason just saw

Okay.

about talking You're our cadence?

your Yes, Correct. cadence.

Yes.

there spoke when inventories can happened mind the our order that. to And depletions. a that history about and bearing time and in happened, to what comes bottlers get was what then through they back that, they to we have on the be, but go decreased we to inventories, should So where

sort were not been by a orders. of there's in which growth matched So depletions, steady percentage

past. stores were that in was the were a better they in had more U.S. back, force, particularly frequency happened And our full many to of inventories so the of covering bottlers growth system than so And in the the the in in at in a rebuild quarter distribution seen order in you've also support what in is the retail. the what they steady quarter

to where and that's EMEA. EMEA. second happened that saw would first And then what acceleration. we quarters question I was you And second So your the in about refer in

there still guys of felt the EMEA, The a in really third was runway. quarter, was strong. particularly But lot EMEA

for So we we know as but know November we'll what earlier happened December, this and but what are don't lockdowns give some year. the we've October what impact to spoken we've guidance, October. In the sense we don't -- be, again, got is and going about of

Stifel. And will question next with Mark come Astrachan from our

of on business building thoughts that improving we're earlier increases. just the not as your even Red and curious one about it's guess the still versus pandemic disconnect in and the mobility seeing Bull between data or the lessens share your U.S. I gains Not Red questions More the on that Bull category.

you better So doing job. you're mentioned a that

earnings right the last Bull that about the market, But around call July about coast being in or XX%. so. Red think, growing talked I to system You is back close now

it does, how guys And think do into they, we think lap do comparisons? contributing and you to easier you what lap have next particular, outperformance? have to you sustains, So is to go year, really their and that if that in as

increased to on going some We And increase. time consumption of think think just they've mixes bars them But -- that's, a I see in Bull's And of lot people we as you business think, are bars. what channels. was I still lot of Red start going tougher to comparisons. is off-premise having be I but their got been contributing XX they are using impetus can Red the in following done not could think some it think are Bull to what I in the the who because think a Red probably there's Bull a ounce. probably

much, dedicated every not only field we Coke, very that think Red bigger the on I and companies. last than the I think, focused and And much but think they, the in has a distribution I call, said focused stayed better system. all Pepsi's and Bull of had -- As the

I you going would to can think Their some though even competitors are one been in of comparison effects expected good. positive And other that execution that of the have is the -- started them have into has who we still seeing see are to that. territory. of negative, some

some had are innovation good we the their that XX I innovation, addressing. bit, including whole getting across in the And the has leveled gains, -- products you're new but original of right little back. line, that's so now think now. got an we're We've as products. seeing large a They And issue the of which I sort some ounce, particularly said introduced off but

are I what a we've now think more get focus we've and done to stepping we is little got up.

have with We team new to pretty a Execution we've a people street Officer Field basically -- under created group dedicated Chief a of -- division focus. him a appointed with a having really lot of

in I we've think probably had underperforming, for your the -- we've and attention not particularly been you independents innovation. and enough where trial trial get for variation and

team. with what are our we're calling we street up So gearing

it address throes the that that's are said, channel well. you the growing doing question at still we being it. and as now, So independent have very a perhaps we fallen going of being to in and nicely. And month disparate in We will the we going, Bull. we're of will us we're think of a a or that something little think the then rest where look behind. That of operational it's to going And obviously X. we if But that expand category, it between get Red the proportion We're implement. next fully start lot we're and right it new the

our it's the growing If we about rate new launched, some think that well of Reign, at the just have really that innovation same we've received, you Red Ultra been Bull. as And things differential. innovation think down, at we for And good the we position products, -- have coming we X settle some a that year. to juice we'll be in will Watermelon. that Once attack next good get look

Our next question Bank with Galbo of will come Peter from America.

And big shipped I little in talk a, us own Paradise an just say, talk a maybe your a introduction how guess that at product. just Rosa? with what relative maybe you're innovation. a on about could and that this just the about Watermelon, of to a point? bit And with bit And piggyback little that about question has or Ultra with or I the to observed seasonality to, you planning, help how be internal us thinking guess, understand, Fiesta line Mark's

still shipped. we've launched ones Ultra we're actually and like get year some in mean it's good and We X I rate to by it of both X weeks, But very outpace now. indications don't affected to a are that everything, those does good think actually after the that a a of but higher -- the October. is at it's Fiesta of help this new grow. are It's beginning doing of the the sales line continuing. earlier our is continuing to to X-calorie products, bottlers being -- Watermelon initial reception, that a seeing the winter has It product, it sale. retail showing quite of from good think of starting opportunity. I will product. was And Very shipped retailers. the it's that's Ultra we it the It perform It's But launch Those and this really good a from a point ahead had really And really really well. product. some for is continuing And well. per we're optimistic really others. chains whole months, as

Hilton? that, on color any So

of other is We're seasonal, some it the I drink only And X-calorie. of and energy soft seeing higher beer. that major It's example, category The on retailers. is sales sodas drinks Yes. as is thing not in for would our as add and rates trend.

and transition January's it's as trend. very months, into on much So we the really better-for-you the

will to Mr. back to over remarks. the our this conclude turn question-and-answer any for conference closing like And session. Sacks I'd Rodney

their On Thanks. everyone in continued interest the like behalf for thank company. to Monster, I'd of

to resolve will in We as continue will much bottling future. We our our in category remain and expand distribution not-too-distant and internationally. the drink and to and believe innovate, and for continuing believe brands very Coca-Cola the strategy home to hope through energy this optimistic committed We attendance. itself differentiate we stay will company system company navigate the situation the you to we positioned and safe a continue in that of be products that that our growth the that abroad, are about pandemic and to result healthy. the drink able develop at brands ahead we be expand in believe particular, total and unfortunate our of and COVID-XX the challenges well both your through hope you portfolio of Thank energy to

for has conference now concluded. The you Thank today's attending presentation.

at may You time. lines disconnect this your now