Monster Beverage Corporation 2026 Q2 Earnings Call

Please go ahead. Good afternoon, ladies and gentlemen.

Thank you for attending this call. I'm Hilton Schlosberg, Vice Chairman and Chief Executive Officer. Also on the call are Tom Kelly, our Chief Financial Officer; Rob Gehring, our CEO of the Americas; Guy Carling, our CEO of EMEA and OSP; Mike Rodriguez, our COO; and Emelie Tirre, our Chief Strategy Officer. Mark Astrachan, our SVP of Investor Relations and Corporate Development, will now read a caution statement.

Before we begin, I would like to remind listeners that certain statements made during this call may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934 as amended, are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance, and trends. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company that may cause actual results to differ materially from forward-looking statements made during this call.

Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed February 27th, 2026, including the sections contained therein entitled Risk Factors and Forward-Looking Statements for discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. I would also like to note that an explanation of the non-GAAP measures, which we refer to as adjusted, where applicable, mentioned during the course of this call is provided in the notes in the condensed consolidated statements of income and other information attached to the earnings release dated August 6th, 2026. A copy of this information is also available on our website, www.monsterbevcorp.com, in the Financial Information section.

Please note regional scanner data is included in an exhibit filed with our 8-K. We point out that certain market statistics that cover single months or four-week periods may often be materially influenced, positively or negatively, by promotions or other trading factors during those periods. I would now like to hand the call over to Hilton Schlosberg.

Good afternoon, thank you for joining us. We're pleased to report another quarter of strong financial results and cash generation, with net sales crossing the $2.5 billion threshold for the first time in the company's history in a single quarter. Sales increased by double digits compared to the prior year in all geographic regions, and we gained share in many of our global markets, including the Monster brand in the U.S. in the second quarter, reflecting the strength of our core offerings as well as our product innovations. Now turning to the energy drink category specifically. The global energy drink category remains healthy with continued robust growth. We believe household penetration continues to increase in the energy drink category, driven by functionality and lifestyle positioning, diverse offerings that appeal to an increasingly broad and loyal consumer base, and affordable value offerings in addition to premium offerings.

We believe our portfolio of existing, recently launched, and planned energy drink offerings is well-positioned to participate in the growing global energy drink category, appealing to a broad range of consumers across geographies, price points, need states, and day parts. Our business continues to be supported by strong marketing programs, impactful retail engagement, and our solid partnership with The Coca-Cola Company and its global bottling partners. In the U.S., according to Nielsen, for the recently reported 13-week period through July 25th, 2026, sales in dollars in the energy drink category, including energy shots for all outlets combined, namely convenience, grocery, drug, mass merchandisers, increased by 7.1% versus the same period a year ago. In EMEA, the energy drink category, according to Nielsen, for our tracked markets for the recently reported 13-week period, which differ from country to country, grew 10.4% versus the same period last year, FX neutral.

In APAC, the energy drink category, according to Nielsen, Circana, and Intage, for our tracked channels for the recently reported 13-week period, which differ from country to country, grew 11.7% versus the same period last year, FX neutral. In LATAM, the energy drink category, according to Nielsen, for our tracked markets for the three months ended June 30th, 2026, grew 23.8% versus the same period last year, FX neutral. Turning to marketing, Monster maintained strong momentum in the second quarter, with efforts focused on growing our core business, attracting new consumers, and increasing household penetration. Monster Energy participated in America 250 celebrations via our sponsorship of UFC and the introduction of limited time offering products across the Ultra, Juice Monster, Reign, and Bang brand families celebrating this milestone.

Monster athletes were also successful in competition in the U.S. throughout the quarter, with notable victories in Supercross 250, NHRA, Motocross, NASCAR, and X Games Sacramento. Monster Energy-based riders in MotoGP won 4 races in the 2Q, including the Monster Energy Grand Prix of Catalunya. Monster Energy's long-standing presenting partnership of the Isle of Man TT was once again dominated by Michael Dunlop, who extended his outright record number of wins to 36, with 3 more victories to his name. The 2026 TT event, including Monster Energy's participation, also played host to a Hollywood production that will be based around the world-famous race. The Monster Energy music program kicked off the summer by sponsoring Morgan Wallen's Still The Problem Tour.

It also brought the tour to life at retail, allowing Monster Energy consumers to earn points redeemable for free merchandise and concert tickets, connecting the brand directly to the tour experience. Monster Energy also had significant consumer activation at the Stagecoach Country Music Festival. Increased selling expenses in the 2Q were largely driven by our marketing efforts aimed at maintaining sales momentum as we execute our marketing strategy, recruiting new energy drink consumers and expanding household penetration. Our 2026 marketing strategy includes increased marketing investments across a variety of new platforms and partnerships, including social and digital media, to support both existing product offerings and innovation to recruit new energy drink consumers, increase household penetration, and reach a broadening consumer base for the company.

An example of this is the recently announced partnership with the Big 12 Conference that includes naming rights for Monster Energy for the conference's football and basketball regular seasons, and a co-branded Monster Energy and Big 12 Conference logo that will appear on jerseys, courts, and fields, with additional integration across the Big 12 Conference digital and social media channels. Turning to tariffs. During the 2Q 2026, the impact of tariffs and the increase in the price of aluminum on our operating results was modest. Despite the modest impact on our business in the 2Q, the tariff landscape continues to be complicated and dynamic. For instance, tariffs significantly impacted the Midwest premium for aluminum, which increased the cost of our aluminum cans. We also import some raw materials into the U.S., export certain raw materials for local markets, and export limited quantities of finished goods.

We do not believe, based on our business model, that the current tariffs will have a material impact on the company's operating results. However, based on current aluminum pricing and the Midwest premium, we expect a continued modest sequential increase in our aluminum costs through at least the end of 2026. We will continue to recognize tariffs on aluminum through the higher Midwest premium and continue to implement hedging strategies across the business where possible. Turning to 2Q financial results, net sales were $2.54 billion for the 2Q 2026, or 20.2% higher than net sales of $2.11 billion in the 2Q 2025. Net sales, excluding the alcohol brand segment, increased 20.8% in the 2Q 2026. Net changes in foreign currency exchange rates had a favorable impact on net sales for the 2Q 2026 of $48.5 million.

Net sales on a foreign currency adjusted basis increased 17.9% in the 2026 second quarter. Net sales, excluding the alcohol brand segment, on a foreign currency adjusted basis, increased 18.5% in the 2026 second quarter. Excluding the alcohol brand segment from our reported results is purely illustrative as it remains part of our ongoing operations. Net sales for the company's Monster Energy drinks segment increased 21.6% to $2.36 billion for the 2026 second quarter, from $1.94 billion for the 2025 second quarter. Net sales on a foreign currency adjusted basis for the Monster Energy drink segment increased 19.3% in the 2026 second quarter. Net sales for the company's strategic brand segment increased 10.6% to $143.7 million for the 2026 second quarter, from $129.9 million in the 2025 second quarter. Net sales on a foreign currency adjusted basis for the strategic brand segment increased 8.1% in the 2026 second quarter.