Monster Beverage shares saw a notable increase on Friday as the energy drink giant reported fourth-quarter sales surpassing market expectations. The company revealed that sales surged to $1.81 billion for the December quarter, marking an uptick from $1.73 billion the previous year, which is higher than the consensus estimate on FactSet that predicted $1.79 billion.
A foreign exchange impact of approximately $52.3 million posed a challenge to the topline results, however, adjusted earnings per share remained steady year-over-year at $0.38, falling short of the anticipated $0.40 from Wall Street analysts. Co-Chief Executive Hilton Schlosberg noted in a statement that there is continued evidence of robust growth within the global energy drink sector.
He specifically highlighted a resurgence of sales in the US market, particularly within convenience channels as well as all measured channels monitored by Nielsen. This positive outcome was bolstered by a roughly 5% price increase across the company’s brands and packages in the US—excluding Bang Energy, Reign, and Reign Storm—implemented at the beginning of November.
Co-CEO Rodney Sacks acknowledged during an earnings call that the company is actively exploring further pricing opportunities both domestically and abroad, demonstrating a proactive approach to market dynamics. In the latest premarket session, shares of Monster Beverage appreciated by 3.1%. The energy drink segment alone witnessed a 4.5% growth, generating $1.67 billion in sales, while the strategic brands division saw a remarkable 11% increase, reaching $102 million.
However, revenues from alcohol brands experienced a slight dip of 0.8%, totaling $34.9 million, attributed in part to a substantial $130.7 million impairment charge along with other challenges that affected performance within the segment. Sales generated outside the US, which made up nearly 39% of overall revenue, saw a significant 12% improvement, climbing to $711.5 million. Operating expenses climbed to $621.2 million from $504.4 million in the previous year's quarter, primarily driven by the aforementioned $130.7 million impairment charge affecting the alcohol brands segment.
Sacks elaborated that these impairment charges were mainly linked to both operational and financial performance, where expectations were not met partially due to challenges specific to the category, as well as a decline in projected ongoing performance. The gross profit margin as a percentage of sales rose to 55.3%, up from 54.2% year-over-year; this improvement can be attributed to decreased input costs, even if those were partially counterbalanced by the geographical sales mix..