Q4 2024 Earnings Summary
- Monster Beverage is considering additional price increases to improve margins, given significant cost increases and opportunities to increase pricing both domestically and internationally.
- The company reported gross margin expansion in the fourth quarter, driven by reduced input costs and a price increase implemented on November 1, 2024, and is hedged on aluminum and the Midwest premium for 2025.
- Monster is gaining shelf space in the U.S., with increased shelf space in the low single digits, and is excited about its 2025 innovation pipeline, which includes new products and plans to distinguish its brands like Reign and Bang, which may drive market share gains. ,
- Market share compression due to increased competition: The company acknowledged ongoing competition impacting market share, with executives stating, "we will always see competition... and that will continue to obviously lean in to both ourselves and to rebuild market share". This suggests potential challenges in regaining lost market share amid competitive pressures.
- Weakness in untracked channels and among certain demographics: There are indications of a slowdown in untracked portions of the business, particularly in smaller bodegas, gas, and convenience stores not captured in tracked data. Executives noted that consumer spending in these areas is "probably really accurate" , hinting at possible declines in these channels.
- Uncertainty surrounding tariffs and input costs: The company's ability to forecast the impact of tariffs on aluminum costs is limited, with executives stating, "it would be really premature to even talk about tariffs because no one really knows what's going to happen". This uncertainty could negatively affect future profitability if input costs rise unexpectedly.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +5% (from $1,730M to $1,812M) | Total Revenue increased by 5% largely due to higher sales in key segments such as Monster Energy Drinks (+4%) and Strategic Brands (+11%), along with strong performance in international markets (EMEA +15% and Asia Pacific +21%), despite flat revenue in the mature U.S. and Canada market. |
Monster Energy Drinks | +4% (from $1,598M to $1,670M) | Monster Energy Drinks revenue grew by 4% likely driven by sustained consumer demand and pricing actions, although the growth was modest compared to other global regions, reflecting a steady performance of the core brand relative to last year’s figures. |
Strategic Brands | +11% (from $91.7M to $102M) | Strategic Brands surged by 11% as a result of accelerated sales volume and successful pricing initiatives, which built on the previous period’s performance and drove significant revenue gains in this segment. |
EMEA Revenue | +15% (from $309.12M to $356.25M) | EMEA revenue increased by 15% due to effective expansion and market share gains in the region, possibly fueled by stronger local penetration strategies and higher demand, which built on improvements seen in prior periods. |
Asia Pacific Revenue | +21% (from a lower base to $132.7M) | Asia Pacific revenue jumped nearly 21%, driven by improved market penetration and product innovation in regional markets, further accelerating growth from previous periods, despite mixed performance in other global regions. |
U.S. and Canada Revenue | Flat (around $1,145M) | Revenues in the U.S. and Canada remained flat, suggesting that this mature market is experiencing limited growth opportunities, in contrast to the robust expansion occurring internationally. |
Operating Income | -12% (declined from $434M to $381.19M) | Operating Income fell by 12% due to margin pressures from increased operating expenses such as higher payroll, marketing costs for sponsorships/endorsements, and additional expenses like intellectual property claims, which overpowered the revenue gains achieved over the previous period. |
Net Income | -26% (declined from $370M+ [approx.] to $270.75M)* | Net Income dropped by 26% as rising operating costs, increased non-operating expenses, and other pressures (e.g., higher cost inputs or extraordinary expense items) significantly eroded profitability when compared to the previous period’s robust earnings. |
Basic EPS | -11.7% (from $0.35 to $0.28) | Basic EPS decreased by 11.7% in line with the decline in net income, indicating that the adverse impacts of increased costs as well as potential dilution effects outweighed the revenue growth achieved during Q4 2024 relative to Q4 2023. |
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Gross Margin Drivers
Q: What drove gross margin expansion this quarter?
A: Gross margin improved due to reduced input costs and the positive impact of a price increase on November 1. However, this was partially offset by higher promotional allowances to prevent consumer sticker shock and increased commissions to the Coca-Cola Company based on higher sales and profitability. The company is also hedged on aluminum costs for 2025, which should mitigate some risk from potential tariffs. -
Potential Price Increases
Q: Will you consider further pricing increases?
A: We are always looking for opportunities to increase pricing. Despite significant cost increases, we didn't raise prices on Rainstorm and Bang when we adjusted the rest of the portfolio in November, so there are opportunities there. Internationally, we continue to review pricing, and decisions will depend on tariffs, duties, and competitor actions. Our focus is on improving stockholder wealth without disadvantaging our brands by unnecessary price hikes. -
U.S. Market Share and Innovation
Q: How will innovation affect U.S. market share?
A: We've negotiated an increase in shelf space in low single digits this year, and we're excited about adding to our portfolio. The U.S. energy drink category is now a $21.2 billion market, and while growth can be challenging, we expect continued increases. Innovation in 2025 includes products like Ultra Blue Hawaiian, one of the top 10 selling products, Viking Berry in our juice line, and new offerings in the coffee category. Our relationship with Bang is positive, and we're focusing on Reign, one of two real performance brands. -
U.S. Sales Performance
Q: Why are U.S. sales below tracked data?
A: Our reported U.S. results seem below tracked channel data due to factors like weather impacts. December and January were difficult months with wildfires and severe weather on the East Coast. January was an aberration, but recent weeks show improvement with 8% growth in measured channels. There's often a discrepancy between what we sell to bottlers and what consumers purchase at retail. -
Competition and Brand Positioning
Q: How does competition affect your innovation plans?
A: We recognize that newer players like are growing but are focused on niche markets like younger females. Our brands Bang and Reign have different positions, with Reign focused on the performance category. We manage our portfolio appropriately and remain confident in our strategies. While competitors may continue to grow until they hit their ceiling on distribution, we are focused on our business and the innovation we're working on.