--- title: "MNST Trans: Intl rev. +28% underpins growth; GPM still under pressure" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/44855715.md" description: "Overseas revenue grew 28.1% in Q3, lifting its mix to 47%. October sales were still up Approx. 11.6%.However, with primary aluminum prices up 36% YoY and an unfavorable regional mix, GPM fell 100bps YoY. Management declined to guide Q4 margins, and is banking on the Nov 1 U.S. price increase, the F&B channel, and new launches such as protein beverages slated for 2027." datetime: "2026-11-05T23:19:04.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/44855715.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/44855715.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/44855715.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # MNST Trans: Intl rev. +28% underpins growth; GPM still under pressure For the earnings review, see ['Monster: Revenue fully charged, profits losing power — is the honeymoon over?'](https://longbridge.cn/en/dolphin/post/44858743) **I. Earnings Highlights** 1\. **Shareholder returns**: Repurchased 2.3 mn shares in Q3 at an Avg. price of $43.8, totaling approx. $100 mn. As of Nov, about $800 mn remained under the current buyback authorization. 2\. **Oct sales and cost outlook** (no formal guidance): a. **Oct sales**: Up approx. 11.6% YoY on an unhedged FX basis ex-alc. brands (incl. alc. +11.1%). Up approx. 11.2% YoY on a hedged FX basis ex-alc. (incl. alc. +10.7%). Oct had one fewer selling day vs. last year. b. **Aluminum costs**: Tariffs and higher aluminum prices had a modest impact in Q3, with tariffs lifting the US Midwest premium and can costs. Based on current LME and Midwest premium levels, aluminum costs are expected to rise modestly QoQ at least through Q1 2027, and management will hedge where possible. c. **Pricing**: In the US, list prices were raised effective Nov 1 and certain promo subsidies were reduced for select packs and channels, with limited expected volume impact. In EMEA, price increases were taken in some markets in Q3, with further price actions planned in other markets in Q4. 3\. **Key financials this quarter**: a. **Topline**: Revenue of $2.56 bn (+16.7% YoY; +16.3% ex-FX), with a positive FX contribution of $8.1 mn. OP was $718.7 mn (+6.4% YoY), or $748.1 mn on an Adj. basis (+7.1%). b. **GPM**: 54.7% vs. 55.7% a year ago. Ex-alc. brands on an Adj. basis, GPM was 54.9% vs. 56.2% last year. Pricing largely offset higher input costs, including cans, while the YoY decline was mainly mix-driven as Intl revenue reached 47%. c. **OpEx ratios**: Distribution expense ratio at 4.5% (vs. 3.8%), mainly on higher freight and fuel. Selling expense ratio at 10.1% (vs. 9.8%), driven by heavier social, digital and sponsorship spend. Adj. G&A ratio (ex-alc. brands) at 10.8% vs. 10.7%. d. **One-offs and tax**: G&A included $19.9 mn in fixed asset impairments and $14.7 mn in digital transformation costs. Effective tax rate was 24.6% (vs. 23.9%), reflecting lower stock-based tax benefits and a higher mix from high-tax jurisdictions. 4\. **Segments and systems investment**: a. **Segment revenue**: Monster Energy segment rose 17.1% to $2.37 bn. Strategic Brands rose 19.8% to $156.4 mn (+9.3% ex-FX). Alcohol Brands declined 13.6% to $28.5 mn. b. **Digital transformation**: Upgrading to SAP S/4HANA with go-live targeted for Jan 1, 2028. An Investor Day will be held in New York on Dec 1. **II. Earnings Call Details** **2.1 Key executive commentary** 1\. **Category health**: Global energy drinks are growing solidly, with penetration and purchase frequency rising together. a. **Category growth**: US 13-week +12.4% (Nielsen, incl. shots, omni-channel). EMEA +14.7%, APAC +11.3%, LatAm +28.3% (ex-FX). b. **Marketing**: Continued to scale spend in social, digital and sports sponsorships (kicked off Big 12 title sponsorship this quarter) to drive trials and penetration. 2\. **US**: US/Canada revenue up 9.5%, with zero sugar and innovation as the main growth drivers. a. **Core brands**: On a Nielsen basis, Ultra series rose 19%, and Juice Monster rose 21%. b. **New products**: Phased launches begin Jan 2027, with Monster Protein entering RTD protein in Mar, and a McLaren zero-sugar variant rolling out across multiple markets in summer. c. **FSOP**: Added partnerships with Carl's Jr. and Tim Hortons. 3\. **EMEA**: Revenue up 24.9% (+25.1% ex-FX), with value share up 190 bps. a. **Share**: Accounted for 39% of category value growth in the region, with No.1 share in the UK, Egypt and Serbia. b. **Zero sugar and value**: Ultra series rose 42%, with zero-sugar share at 46.0% in Europe. Value-tier brands gained share in Egypt, Morocco and Nigeria. c. **GPM**: 37.2% vs. 37.6% a year ago. 4\. **APAC**: Revenue up 12.3% (+14.9% ex-FX), with GPM at 42.1% (vs. 40.7%). a. **China and India**: China +43.8% (+35.5% in local currency), India +67.2% (+86.5% in local currency). Japan and Korea declined in USD terms but grew in local currency. b. **India regulation**: The descriptor 'energy drink' was halted by regulators in Jun–Jul; the Delhi High Court granted interim relief in Oct, production and distribution have resumed, and the case remains pending. c. **Oceania**: Revenue up 7.6%, pressured by bottler inventory swings. Scanner sales rose 22%, with share up 150 bps. 5\. **LatAm**: Revenue up 48.8% (+40.0% ex-FX), with GPM at 47.7% (vs. 46.8%). a. **Key markets**: Brazil +70.0% (+60.4% in local currency), Mexico +20.6% (+10.8% in local currency). **2.2 Q&A** *Q: With Intl revenue approaching $5 bn and still growing fast, what have been the core drivers in recent years?* A: **The category is mainstreaming, with penetration, purchase frequency and use occasions all expanding.** Energy drinks sit within a large NARTD universe, benefiting from category growth while expanding on their own. Drivers include rising consumer acceptance, multipacks lifting purchase frequency, an 'affordable luxury' value proposition, functionality and brand equity, and extension into more dayparts beyond the US. **Third-party firms project high single-digit global category growth through 2030.** In Europe, about 30% of category buyers each year are new entrants, and purchase frequency is rising. Zero sugar is growing at 2x the pace of sugared, and **Monster contributed 57% of Europe's zero-sugar growth, lifting zero-sugar share by 300 bps.** Ultra White, more than a decade old, still grew over 40%. The Coca-Cola bottling system improved distribution breadth, SKU counts and in-store energy sets, while accelerating branded cooler placements. *Q: Given these successes, what incremental opportunities can be unlocked, such as FSOP?* A: **FSOP is a major opportunity, with broad runway in 'with-meal' occasions.** Consumers choose a beverage when dining out, and the company aims to make energy drinks a top choice. In Europe, only about 1% of consumers currently pair energy drinks with meals, and the goal is to move them from trial to conversion. The company will continue to leverage Coca-Cola and its global partnerships to expand this channel, with Coca-Cola's agreement with Marriott also covering Monster. Management noted that the outgoing Americas CEO, who is joining Coca-Cola, will create synergies with the company in FSOP and other areas. *Q: Can you quantify the drag on GPM from Intl mix?* A: Management did not quantify the GPM drag from Intl mix and suggested analysts model it from disclosed regional data. Intl revenue mix rose from 43% to 47% YoY, with operations across 160 countries, and management views the company as an Intl enterprise. Regional GPMs are disclosed each quarter, and further questions can be addressed offline. *Q: How is progress with Gen Z and other new consumers? Any data on new-user acquisition?* A: **Gen Z household penetration has reached 58%, with both household penetration and purchase intent rising.** FLRT, targeting female consumers, is growing well and will rely mainly on LTOs going forward, with the first around Valentine's Day. The company is investing heavily in social media targeting the 18–24 cohort to drive both repeat and base building, with measurable impact from social, sponsorships and endorsements. Management believes the existing portfolio covers this cohort's needs, with more launches next year such as protein drinks, and will maintain the strategy while continuously evaluating. *Q: Will GPM continue to decline QoQ in Q4, and how should we think about 2027 cadence?* A: No GPM guidance for Q4 or 2027 was provided. Management reiterated its no-guidance policy and described the current environment as 'challenging' but would not provide model-ready percentages. **Primary aluminum prices are up 36% YoY**, and despite hedging, aluminum still has a 'modest' impact on GPM. **The biggest factor is regional mix**—the faster Intl grows, the lower the GPM percentage, though the company prioritizes gross profit dollars over percentage. *Q: What levers can offset GPM pressure? Will pricing be stronger than last year?* A: **US prices were raised on Nov 1, with ongoing price actions and efficiency gains Intl.** Management said GPMs rose YoY across the three Intl regions (though the opening disclosure showed EMEA GPM at 37.2%, slightly below 37.6% last year). EMEA has implemented price increases over the past six months, and zero-sugar products carry higher GPM than sugared, which helps as mix shifts. However, expanding portfolios across EMEA markets introduces added drag. **As Intl mix rises, the overall GPM percentage will still be diluted,** which the company accepts. *Q: With dense launches in 2026, did this crowd out base SKUs and new items, and how will 2027 pacing be adjusted?* A: **2026 may have been heavy on launches, and 2027 will focus on quality over quantity with more staggered pacing.** The 2027 pipeline is no weaker than 2026 and received positive feedback from bottlers and retailers at NACS. The company is also expanding in-house innovation (e.g., Monster Protein), and better phased rollouts should help bottlers focus more than in 2026. The well-received US 250th Anniversary series from 2026 will return as an Independence Day LTO in 2027. *Q: US category data has slowed recently. What caused this, and what is a reasonable growth rate for next year?* A: **After a brief slowdown late summer, growth has rebounded, with recent scanner data above 15%.** Management said the category has already re-accelerated. At larger scale, sustaining historical growth rates is harder, but the category remains healthy and faces headwinds from SNAP and fuel prices. Many manufacturers raised retail prices, and the category has shown resilience, with **both price and volume up for the company.** No specific view was provided on next year's industry growth, but management emphasized continuous innovation to fuel core brands. \ **Risk disclosure and disclaimer:**[**Dolphin Research Disclaimer and General Disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [MNST.US](https://longbridge.com/en/quote/MNST.US.md) - [SAP.US](https://longbridge.com/en/quote/SAP.US.md) ## Comments (1) - **uly · 2026-11-06T02:56:42.000Z**: 😮 --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**