Monster Beverage Q3 Earnings & Sales Miss on Soft Energy Drink Segment

Core Insights - Monster Beverage Corporation's third-quarter 2024 results showed a decline in adjusted earnings per share to 40 cents, missing the Zacks Consensus Estimate of 42 cents, and a 2.4% decrease from the prior year [1] - Net sales reached $1.88 billion, reflecting a 1.3% year-over-year growth but falling short of the consensus estimate of $1.92 billion, with unfavorable currency translations impacting sales by $62.8 million [2] Sales Performance - The energy drink category in the U.S. experienced lower growth rates in the convenience channel, although improvements were noted in October, while the category is expanding more robustly across other retail channels [3] - Internationally, net sales rose 3.6% to $760.1 million, accounting for approximately 40.4% of total net sales, with a 12.1% increase on a currency-adjusted basis [6] Segment Analysis - Monster Energy Drinks segment sales increased by 0.8% to $1.72 billion, with a negative impact of $52.8 million from adverse currency rates, translating to a 3.9% growth on a currency-adjusted basis [7] - Strategic Brands segment saw a 14% year-over-year growth in net sales to $112.6 million, with a 24.1% increase on a currency-adjusted basis [8] - Alcohol Brands segment net sales fell 6% year-over-year to $39.8 million due to soft sales volume of craft beers [9] Cost and Margin Analysis - Cost of sales increased by 1% year-over-year to $881.2 million, with gross margin expanding by 20 basis points to 53.2%, driven by pricing actions and lower freight-in costs [10] - Operating expenses rose by 9.9% year-over-year to $519.9 million, influenced by higher sponsorship costs and payroll expenses, with operating expenses as a percentage of sales increasing by 210 basis points to 27.6% [11] Financial Health - The company ended the third quarter with cash and cash equivalents of $1.6 billion and total stockholders' equity of $5.8 billion, having repurchased 11.3 million shares for $534.7 million [13] - Monster Beverage's shares have gained 21.6% over the past three months, contrasting with a 3.8% decline in the industry [14]