Monster Beverage Corporation (NASDAQ:MNST) Q4 2022 Earnings Call Transcript

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And there has been some additional shelf space, not only in the energy category, but also in the sort of wellness category. So, I think in some places, we’ll also be able to place the Reign Storm sort of line in that area as well. So overall, we think there will be a good contribution going forward from innovation, which is exciting. And so far, initial response to things like our Ultra Strawberry Dreamsicle has been really positive from consumers and bottlers to the Zero Sugar and others. So, we are pretty optimistic and upbeat about innovation this year. Also, we were introducing a lot of multipacks to try and increase the take home, particularly in places like grocery. So again, we haven’t described them that much on this call, but there’s a whole skew of multipack and variety packs that we’re doing in a multipack, which we think will be positive for the brand this year for sales.

Operator: The next question comes from Steve Powers of Deutsche Bank. Please go ahead.

Steve Powers: Hey. Thanks, and good evening. Just I guess a couple of cleanups on the gross margin topic. The first one is, Rodney, I think at the start of the call, you bridged to a $60 million increase in COGS. I just wanted to clarify what that was. I think if I’m not mistaken, COGS is up like $70 million-plus. So just exactly what those numbers were and what they weren’t, number one? Number two, I don’t know if you can comment on the mix of cans in the fourth quarter, old higher cost cans versus current cost cans and if that was materially different than what you had seen in the third quarter? And then three, the Latin America gross margin, you called out, sales growth there is fantastic, but the gross margin has been progressively under pressure and was down, I think, 10-plus points in the fourth quarter. Just the drivers there and if you think you’ve got the ability to turn that gross margin progress around in Latin America? Thank you.

Hilton Schlosberg: I think, Steve, we spoke about that about margins earlier on the call. Margins on a sequential basis were actually up. So, I’m really not sure what you’re referring to. And the first question that we answered spoke — I spoke quite heavily about the progression of gross margins and the pluses and the minuses. So maybe I’m missing something, but I think we did discuss margin earlier on the call. And with regard to the $60 million that we spoke about in the release, that was only — the $60 million was comprised of $39.6 million due to increased ingredients in other input costs and 12.5 due to geographical product sales mix and 7.9 due to increased logistical costs. And the rest of the increase in cost of sales was normal increases as you would expect to — in a normal business environment. Those are the kind of the exceptional ones that we called out.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Rodney Sacks for any closing remarks.

Rodney Sacks: Thanks. On behalf of the company, I’d like to thank everyone for their continued interest. We continue to believe in the company and our growth strategy and remain committed to continuing to innovate, develop and differentiate our brands and to expand the company both at home and abroad and in particular, capitalizing on our relationship with the Coca-Cola bottling system. We believe that we are well positioned in the beverage industry and continue to be optimistic about the future of our company. We hope that you remain safe and healthy. Thank you very much for your attendance.

Operator: The conference has now concluded. Thank you for attending today’s presentation, and you may now disconnect.

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