Q1 2026 Earnings Call Transcript

Good day, and welcome to the Monster Beverage Corporation First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Hilton Schlosberg, Chief Executive Officer. 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; and Emelie Tirre, our Chief Strategy Officer.

Mark Astrachan, our Senior VP of Investor Relations and Corporate Development, will now read our cautionary 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, and 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 the 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 on February 27, 2026, including the sections contained therein entitled Risk Factors and Forward-Looking Statements for a discussion of 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 May 7, 2026. A copy of this information is also available on our website, www.monsterbevcorp.com, in the Financial Information section.

Please note that like last quarter, 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 4-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, and 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 billion threshold for the first time in the company's history for a fiscal first 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 in the first quarter, reflecting the strength of our core offerings as well as our product innovations. 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 dayparts. Innovation continues to be an important contributor to category growth, and we maintain a robust innovation pipeline.

Our business continues to be supported by strong marketing programs, impactful retailer engagement and our solid partnership with the Coca-Cola Company and its global bottling partners. In the United States, according to Nielsen, for the recently reported 13-week period through April 25, 2026, sales in dollars in the energy drink category, including energy shots for all outlets combined, namely convenience, grocery, drug, mass merchandisers, increased by [ 10.7% ] 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 10.5% 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 [ 16.7% ] versus the same period last year, FX Neutral. In LATAM, the energy drink category according to Nielsen for our tracked markets for the 3 months ended March 31, 2026, grew [ 15.6% ] versus the same period last year, FX Neutral. Turning to marketing. Monster maintained strong momentum in the first quarter with efforts focused on growing our core business and attracting new consumers.

Highlights in the first quarter included UFC's transition to a new broadcast partner in late January that contributed to a 3x increase in television viewers who saw [ Monster's center ] of the Octagon signage. In the MotoGP World Championship, the Pinnacle of Motorcycle Road Racing, Monster rider Marco Bezzecchi won the opening 3 rounds of the season and currently sits in first place in the standings. Success for Monster athletes has extended into the Motocross World Championship, where Jeffrey Herlings announced his arrival to the Monster Energy roster, winning 2 of the opening 5 races of the season, currently sitting in second place in the series.

Three rounds of the Formula 1 World Championship took place in the 2026 first quarter, all featuring the Monster-sponsored McLaren Mastercard Formula 1 team as well as Monster Athletes, Lando Norris and Oscar Piastri. X Games Aspen was a success as Monster athletes won 27 medals. Our snow sports athletes also won 14 medals at the Winter Olympics in Italy. Other notable sponsorships in the first quarter included AMA Monster Supercross events, Professional Bull Riders and the Monster-sponsored Street League skateboarding series.

In January, Monster also became the main sponsor of the WHOOP UCI Mountain Bike World Series, a premier event in global mountain biking. Now we're going to turn to tariffs. During the first quarter of 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 first quarter, 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 United States, 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 in the Midwest premium, we expect a continued modest sequential increase in our costs through at least the end of 2026 as compared to the 2026 first quarter.

We will continue to recognize tariffs on aluminum due to the higher Midwest premium and continue to implement hedging strategies across the business where possible. Net sales were $2.35 billion for the 2026 first quarter or 26.9% higher than net sales of $1.85 billion in the 2025 first quarter. Net sales, excluding the Alcohol Brands segment, increased 27.5% in the 2026 first quarter. Net changes in foreign currency exchange rates had a favorable impact on net sales for the 2026 first quarter of $89.3 million.

Net sales on a foreign currency adjusted basis increased 22.1% in the 2026 first quarter. Net sales, excluding the Alcohol Brands segment on a foreign currency adjusted basis, increased 22.6% in the 2026 first quarter. Excluding the Alcohol Brands 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 27.6% to $2.19 billion for the 2026 first quarter from $1.72 billion for the 2025 first quarter.

Net sales on a foreign currency adjusted basis for the Monster Energy Drinks segment increased 22.8% in the 2026 first quarter. Net sales for the company's Strategic Brands segment increased 28.9% to $126.7 million for the 2026 first quarter from $98.3 million in the 2025 first quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands segment increased 21.4% in the 2026 first quarter. Net sales for the Alcohol Brands segment decreased 5.9% to $32.7 million for the 2026 first quarter from $34.7 million in the 2025 first quarter.

Gross profit as a percentage of net sales for the 2026 first quarter was 55.0% compared with 56.5% in the 2025 first quarter. Adjusted gross profit as a percentage of net sales, excluding the Alcohol Brands segment for the 2026 first quarter was 55.3% compared with 57.1% in the 2025 first quarter. The decrease in gross profit as a percentage of net sales for the 2026 first quarter was primarily the result of geographical sales mix, increased aluminum can costs and increased freight-in costs, partially offset by pricing actions. The increase in freight-in costs was primarily the result of out-of-orbit production due to increased demand.

Geographic mix had an approximate 120 basis points adverse impact on gross margin in the 2026 first quarter, primarily reflecting strong growth in our EMEA business. Distribution expenses for the 2026 first quarter were $102.8 million or 4.4% of net sales compared with $77.6 million or 4.2% of net sales in the 2025 first quarter. Selling expenses for the 2026 first quarter were $195.0 million or 8.3% of net sales compared with $172.3 million or 9.3% of net sales in the 2025 first quarter. General and administrative expenses for the 2026 first quarter were $265.5 million or 11.3% of net sales compared with $228.4 million or 12.3% of net sales for the 2025 first quarter.

Stock-based compensation was $28.3 million for the 2026 first quarter compared with $20.7 million in the 2025 first quarter. The increase in stock-based compensation for the 2026 first quarter included $4 million related to certain nonrecurring equity awards that contain a retirement clause. General and administrative expenses in the 2026 first quarter included [ $2.8 ] million of professional services expenses related to our new AFF San Fernando facility as well as [ $5.8 ] million of expenses related to our digital transformation initiatives. Operating expenses for the 2026 first quarter were $563.4 million compared with $478.2 million in the 2025 first quarter.

Adjusted operating expenses for the 2026 first quarter were $549.3 million compared with $447.5 million in the 2025 first quarter. Operating expenses as a percentage of net sales for the 2026 first quarter were 23.9% compared with 25.8% in the 2025 first quarter. Adjusted operating expenses as a percentage of net sales for the 2026 first quarter were 23.7% compared to 24.6% in the 2025 first quarter. Operating income for the 2026 first quarter increased 28.1% to $730.0 million from $569.7 million in the 2025 comparative quarter.

Adjusted operating income for the 2026 first quarter increased 24.1% to $733.5 million from $591.2 million in the 2025 first quarter. The effective tax rate for the 2026 first quarter was 24.1% compared with 23.4% in the 2025 first quarter. Net income per diluted share for the 2026 first quarter increased 27.6% to $0.58 from $0.45 in the first quarter of 2025. Adjusted net income per diluted share for the 2026 first quarter increased 23.7% to $0.58 from $0.47 in the first quarter of 2025. Turning to the U.S. and North America. We had a strong start to the year in the U.S. and Canada with net sales increasing [ 15.6% ] in the 2026 first quarter compared to the 2025 first quarter.

Our sales performance reflected healthy category growth, solid overall contribution from our core products, complemented by innovation and disciplined execution across our organization and bottling partners. All channels contributed to sales growth, including e-commerce, with sales achieving a monthly record total at a key online retailer in March. Our Zero Sugar portfolio remained a significant contributor to U.S. growth. According to Nielsen, the Ultra brand family grew 20% in the 2026 first quarter compared to the 2025 first quarter with our flagship Ultra White energy drink growing 34% over the same period.

Based on Nielsen data, Monster's full sugar portfolio continued to deliver meaningful contribution in the 2026 first quarter, representing approximately 1/3 of the company's total U.S. gains and highlighting the depth of the portfolio. Growth was led by the Juice Monster family, which increased 26% compared to the prior year, with Java Monster, including Killer Brew, increasing 5.2% despite ongoing softness in the energy drink coffee category. In total, Monster's full sugar offerings grew 8.5% in the quarter, outpacing the overall full sugar energy drink segment. Innovation contributed to sales in the 2026 first quarter, including the successful introductions of Monster Ultra Punk Punch, Juice Monster Voodoo Grape, Monster Energy Strawberry Shots in full Sugar and Zero Sugar variants and the nationwide launch of Lando Norris Zero Sugar.

We also introduced FLRT in late March in select retail channels with the brand performing in line with our expectations since its launch. Additionally, earlier this week, we launched Storm, our new wellness brand with 4 SKUs at retail. We believe our summer innovation is also set to enhance the power of our Monster Green and the Ultra brand families through package and flavor innovation with 12-ounce singles and 12-ounce 4 packs. We are also excited about including the Ultra Juice Monster Reign and Bang brand families into America 250 celebrations.

From a packaging standpoint, we recently introduced 24 packs of 12-ounce cans of Monster Green, Ultra White and an Ultra variety pack in the club channel. We remain focused on complementing our core offerings with impactful innovation, delivering the excitement today's consumers demand in the energy category while reinforcing our confidence in sustained growth. From a revenue growth management standpoint, pricing actions implemented last fall continue to perform as expected. Now turning to Sales International.

Net sales to customers outside the United States increased 44.9% to $1.06 billion or approximately 45% of total net sales in the 2026 first quarter compared to $733.2 million or approximately 40% of total net sales in the 2025 first quarter. Net sales to customers outside the United States on a foreign currency adjusted basis increased 32.7% to $973.3 million in the 2026 first quarter. Turning to EMEA. Our net sales in EMEA in the 2026 first quarter increased by [ 52.5%] in dollars and increased 36.5% on a currency-neutral basis over the same period in 2025. Gross profit in this region as a percentage of net sales for the 2026 first quarter was 35.9% versus 35.1% in the same period in 2025. The quarter in EMEA was driven by strong execution across markets, trade marketing activities, cooler placements and space gains enabled by the strong collaboration and relationship we have with our bottling partners.

Sales growth reflects contribution from both our existing product offerings and innovation across all channels with growth from our Monster, Affordable and strategic brand families. Growth was strong across all brand families with Monster Energy Ultra and Juice Monster growing 37.3% and 23.2%, respectively, according to Nielsen for the last 13 weeks. The energy drink category remains healthy with Monster growing at over twice the rate of the category in EMEA. Notably, the Monster Energy brand retained its position as the fastest-growing FMCG brand by value and value growth in the 2026 first quarter.

According to Nielsen, in all measured channels in CCEP's Western European markets, while in Denmark, Monster is now the #1 energy drink brand by value. Within EMEA, we're also seeing the continued growth of our affordable brands, Fury in Egypt and Predator in Kenya, Nigeria and Morocco. On a combined basis, Predator and Fury remain the #1 energy drink brand by value in measured countries in Africa. Innovation continues to drive performance in the region, driven by Juice Monster Viking Berry, which was the most successful innovation launch ever in the region.

We continue rolling out our Monster Energy Ultra Fantasy Ruby Red, Monster Energy Lando Norris Zero Sugar and Monster Energy Valentino Rossi Zero Sugar to new markets. Our new affordable proposition in Spain, Bang, continues gaining value share in the convenience channel. The summer months will see a significant rollout of Monster Energy Ultra Vice Guava across the region and the majority of EMEA will feature limited edition Oscar Piastri Monster Green and Green Zero Sugar cans, as well as a gold limited edition Monster Energy Lando Norris Zero Sugar Can. Turning to Asia Pacific.

Net sales in Asia Pacific in the 2026 first quarter increased 39.7% in dollars and 36.7% on a currency-neutral basis over the same period in 2025. Gross profit in this region as a percentage of net sales for the 2026 first quarter was 42.8% versus 42.4% in the same period in 2025. Despite the systems disruption at our Japanese distributor, which we reported in the last quarter, net sales in Japan in the 2026 first quarter increased 3.6% in dollars and increased 4.9% on a currency-neutral basis. We're also pleased to announce that in Japan, Monster Energy Green will be available in vending machines owned by Coca-Cola Bottlers Japan Inc. beginning this summer.

Net sales in South Korea in the 2026 first quarter increased 10.3% in dollars and increased 11.8% on a currency-neutral basis as compared to the same quarter in 2025. Net sales in China in the 2026 first quarter increased 95.0% in dollars and increased 86.5% on a currency-neutral basis as compared to the same quarter in 2025. Net sales in India in the 2026 first quarter increased 94.5% in dollars and increased 104.4% on a currency-neutral basis as compared to the same quarter in 2025. We remain optimistic about the long-term prospects for our brands in Asia Pacific and the expansion of our affordable brands in China and India.

In Oceania, net sales increased 53.2% in dollars and increased 42.1% on a currency-neutral basis. Notably, Monster has now overtaken both V and Red Bull to become the market leader in Australia on a value basis. Turning now to Latin America and the Caribbean. Net sales in Latin America, including Mexico and the Caribbean in the 2026 first quarter increased 36.0% in dollars and increased 22.3% on a currency-neutral basis over the same period in 2025. Gross profit in this region as a percentage of net sales was 44.1% for the 2026 first quarter versus 44.6% in the 2025 first quarter.

Net sales in Brazil in the first quarter increased 61.3% in dollars and 41.9% on a currency-neutral basis. Net sales in Mexico increased 24.1% in dollars and increased 6.6% on a currency-neutral basis in the 2026 first quarter. Case sales growth in Mexico exceeded our currency-neutral sales growth due to timing of promotional allowances. We gained market share and remain the market leader in Mexico.

Net sales in Chile in the 2026 first quarter increased 50.3% in dollars and 36.3% on a currency-neutral basis. Net sales in Argentina in the 2026 first quarter decreased 53.5% in dollars and 54.1% on a currency-neutral basis. The net sales decrease in Argentina was due to a lower price per case driven by a change to our operating model implemented late in the first quarter of 2025 to better manage our foreign currency exposure. Bottled depletions increased by double digits, indicating healthy underlying market demand.

Turning to Monster Brewing. Net sales for the Alcohol Brands segment were $32.7 million in the 2026 first quarter, 5.9% lower than the 2025 comparable quarter. With regard to our share repurchase program, during the 2026 first quarter, the company repurchased 1.4 million shares of its common stock at an average purchase price of $73.86 per share for a total amount of approximately $100 million. As of May 6, 2026, approximately $400 million remained available for repurchase under the previously authorized repurchase program.

Now turning to April 2026 sales. We estimate that April 2026 sales on a non-foreign currency adjusted basis were approximately 24.4% higher than the comparable April 2025 sales and 24.9% higher on a non-foreign currency adjusted basis, excluding the Alcohol Brands segment. We estimate that on a foreign currency adjusted basis, April 2026 sales were approximately 21.6% higher than the comparable April 2025 sales and 22.1% higher on a foreign currency adjusted basis, excluding the Alcohol Brands segment. April 2026 had the same number of selling days as April 2025. In this regard, Number one, we caution again that sales over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall, timing of new product launches, the timing of price increases and promotions in retail stores, distributor incentives as well as shifts in the timing of production.

In some cases, our bottlers are responsible for production and determine their own production schedules. This affects the date on which we invoice such bottlers. Furthermore, our bottling and distribution partners maintain inventory levels according to their own internal requirements, which they may alter from time to time for their own business reasons. And number two, we reiterate that sales over a short period, such as a single month should not necessarily be imputed to or regarded as indicative of results for a full quarter or any future period.

In conclusion, I'd like to summarize some recent positive points. We had a strong start to 2026 with double-digit sales growth across all of our geographic regions. We gained share in many markets globally in the first quarter as our core brands continue to grow and were complemented by our robust innovation. We are excited with the introductions of FLRT in late March and Storm earlier this week.

These brands are key to appealing to new consumers and expanding usage occasions. We continue to expand our sales in non-Nielsen tracked channels with an objective to expand our FSOP business. The energy drink category continues to grow globally and consumer demand as measured by scanner data remains strong. We believe that household penetration continues to increase in the energy drink category due to product functionality and affordable value proposition and lifestyle positioning.

We are also seeing increases in purchase frequencies as well as usage occasions expanding across dayparts. We look forward to the Ultra, Juice, Reign, and Bang brand families participating in the America 250 celebrations with patriotic offerings. We continue to review opportunities for price increases, both domestically and internationally. We are continuing our digital transformation in order to modernize our enterprise platforms and strengthen end-to-end business capabilities across commercial, operations and supply chain, including our upgrade to SAP S/4HANA with a planned go-live date of January 1, 2028. Lastly, we are hosting our Annual Shareholders Meeting next week on May 14. Given its proximity to earnings, the meeting will not include a business update or a separate institutional investor or analyst Q&A session.

I would now like to open the floor to questions about the quarter.

[Operator Instructions] And the first question comes from Chris Carey from Wells Fargo Securities.

So impressive sales for the quarter and on the quarter-to-date, which I'm sure will get more attention on this conference call. And so just in that context, I thought I would just move the question to margins. Still relatively solid given the inflation backdrop. Hilton, you did say that you would expect some modest increases in your cost over the course of this year.

You also noted at the end there that you continue to look at opportunities to take pricing, both domestically and internationally, which is a fairly consistent message from you guys. And so I just wanted to get your take on the ability to confront this cost environment with some of the tools that you have in your toolkit that could be the revenue growth management that you discussed earlier in the call. And what would drive you to perhaps take incremental pricing, specifically given the fairly substantial momentum that you have in the business entering the year?

Okay. Great question. Thank you for that. To level-set where we were at in the quarter, the first quarter gross margins had a large mix headwind and a smaller out-of-orbit production cost headwind.

Now we mentioned that on the call. It was gratifying to note that 40% of our sales came from international, which is good news in the sense that our business is growing internationally. We're excited about that. But also, as we've reminded investors over the years, that increase in international sales comes at the expense of gross margin percentage.

And I've always had the view that you don't bank percentages, you bank actual dollars. So we were really pleased with what had happened in the quarter. And with the growth -- the significant growth in revenues and in volume, we had an issue and we had to move product out of orbit, which is not something we like to do, but there was a cost to doing that. So, as we look forward, we are going to have aluminum headwinds.

The aluminum headwind in the quarter was just under 1% of margin. And we haven't given that number before, but I'll give it to you now. We described that as modest, but it did have an impact on gross margin. And now turning to pricing, which was a really good question.

Rob Gehring is here, and I'm actually going to ask him if there's anything he would like to talk about with regard to pricing and revenue growth management in the U.S., and we can follow up with Guy on the EMEA business, certainly.

You bet. Thanks, Hilton. And Chris, thanks for the question. First, we're very pleased with our results in the first quarter, and that's credit to all of our associates across the Americas.

Our bottling partners and importantly, our customers as well. So we're pleased with that. As we've shared openly, we continue to evaluate our financials, the consumer, the ability and the resiliency of the category and how it stands up under pricing. And thus far, we're very pleased with the pricing actions we took in late 2025. We believe that play is working.

We were -- I don't think anybody anticipated some of the headwinds in diesel and freight costs like we've seen. But our play is working as we continue to evaluate what the category -- how the category is performing, how the consumer is tolerating this. How retailers are reacting and also package mix and channel mix, we will take everything you just spoke about, and we're constantly monitoring it as how we assess, what that looks like going forward. But we believe the category showing resiliency and modest inflation is working, is continuing to deliver volume growth and revenue growth in line with our plans as well as pricing power.

So we take all this into account. It's one of the variables we consider, and we will continue to do that moving forward.

Guy, have you got anything to add to EMEA?

Thanks, Hilton. I think our approach is very similar to Rob's. We continue to monitor the opportunity to take price. Modest inflationary pricing is working. The category is healthy, and we're gaining share in the category. We're optimizing the growth in consumer demand for our products.

And the next question will come from Dara Mohsenian from Morgan Stanley.

So I just wanted to touch on the innovation. You have such a robust innovation schedule this year, a number of which you mentioned today. I was just hoping you could review the performance of some of the key innovations so far year-to-date in both the U.S. as well as international markets and also spend some time discussing the pipeline in the remainder of the year from an innovation standpoint.

Yes. Thanks, Dara. Historically, we generally had innovation in the first couple of months of the year. And lately, we had innovation in the fall as well.

So this year, the innovation has been spread across many months. And in fact, we have been rolling out Storm this week, in fact, and red, white and blue will go out, the America 250 Ultra will go out to a broader base as we speak, beginning in May. It's been in very limited distribution before then. So it has been not specifically in the first couple of months of the year, but it's been spread out over the -- at least the first half.

So Rob, I don't know if there's anything you want to add to that. FLRT, we launched in April, I believe. And -- so there we go. So Rob, I don't know if you have anything to add to what I said.

You bet, Dara. The only thing I would add to that, Hilton gave a great summary there. The only thing I would add is we continue to use the strategy of innovation should drive our core business, and we're pleased with how our innovation is driving our Monster brands. You're seeing we're branching out with a female entry in FLRT, and you see our wellness entry in Storm, a repositioning of that.

So as we delve into some of these expansive areas with new usage occasions, you'll continue to see that. The staggering. I don't want to take 100% credit for that because I didn't do it, but the brilliant minds behind it staggered it because you can see we did not need it to start the year because we had innovation carryover from the end of 2025. So the timing actually was perfect and now sets us up beautifully for a strong summer where we believe structural demand will be high.

From an EMEA and OSP perspective, I think we've seen a very strong start from innovation. Viking Berry in the juice line was our most successful innovation ever in the region, and it's been supported by Ultra Ruby Red and various innovations in other markets, and we still have the benefit of the fourth-quarter innovation of Lando Norris Zero Sugar. But I think we've been very pleased. Innovation has been very strong, but it's only 45% of our growth and 55% is coming from our existing SKUs.

The performance of Ultra White continues to impress. In Nielsen sales, Ultra White in the region grew over 50% in the quarter versus prior year.

So what's important for us as a company is that innovation solidifies the core. So innovation helps our core business as well as growing sales through its own revenue sales. But it enhances and grows the core, which for us is very critical as we run our business with both our core and with innovation.

The next question will come from Michael Lavery from Piper Sandler.

Just was wondering if you could give us a little sense of the category outlook outside the U.S. Obviously, very, very strong growth. Maybe a little sense of some of the drivers of the gains and maybe a little bit of a sense of how much is share gains versus category growth, seemingly a bit of both, but can you touch on some of what's driving that?

So if you look at what's happening internationally, it's very similar to what's happening in the U.S. So what's driving category growth internationally is basically the same consumer acceptance of energy drinks, increasing contributions to household penetration gains, its value proposition. It's an affordable luxury innovation, the need state of energy and usage across more daypart occasions. And it's something that's really common to what we see in the rest of the world as well.

Increasing buy rates driven in part by multipacks, which we have in EMEA as well as in the U.S. and in other parts of the world. So what we're seeing is a category that's driven by image value proposition and functionality. And the fact that energy drinks are becoming more mainstream as this category is developing.

The next question will be from Bonnie Herzog from Goldman Sachs.

You mentioned that you had some out-of-orbit production in Q1 due to increased demand. So honestly, just hoping for a little more color on what's driving the strong demand. I mean, was there any timing or pull forward of volume in Q1? I guess -- it doesn't seem like it given how strong April sales were, but just wanted to verify that.

And then wondering if you're now operating back within your orbits? Or is there still some out-of-orbit production happening?

We're back to operating within our orbits, Bonnie. And this is something that happened in the first quarter. We always -- our situation is that we always have to satisfy demand. That's our #1 priority.

We don't want empty shelves. We don't want consumers disappointed. So it makes sense for us as the business grows and as it goes beyond what we had forecast to ship outside of our regular orbits. And as you know, we have a great facility now in Norwalk and a facility -- a great facility in Phoenix, and we're able to utilize those facilities to help with production -- additional production where additional production is needed.

And the next question will be from Matthew Smith from Stifel.

I want to come back to some of the comments you've made around multipacks. We're seeing quite strong growth in large-format multipacks in the U.S. outpacing some of the smaller multipacks. And you recently talked about a change to your pack sizes in club. So I'm curious as to the opportunity you see with multipacks, especially the larger sized ones.

You mentioned increased buy rate or incrementality to the category. Just any update on where you think that category stands today in terms of the club channel and the opportunity there?

Yes. I think that's a really interesting question because as the category becomes mainstream, which we're seeing now with the energy category is becoming more prolific. People are drinking energy drinks. There's a general greater acceptance for the product.

The opportunity for multipacks becomes very evident. And as you know, we've launched a 12-pack variety pack and other pack sizes, both in the club channel and in fact, in some of our bigger accounts. And that's all suggestive of the fact that what goes into a household is really consumed -- it's consumed at a larger and more substantial rate than if product was just consumed on a single basis. So we're really excited about the fact that our customers have accepted multipacks and we hope to do a lot more of that.

So we started many years ago with 4 packs. We gravitated to 6 and 8, and now we're supplying 12 packs. And of course, the club channel has generally been 24 packs.

The next question will be from Rob Ottenstein from Evercore.

Great. It would appear that your performance -- obviously, the sector is doing very well, but your relative performance seems to be accelerating. So I was wondering if you can talk a little bit about the drivers of that acceleration, whether it's increased investment, better innovation, better execution, more coolers, probably all of the above, but just maybe just kind of step back and kind of pat yourself on the back a little bit here and kind of give credit where credit is due in terms of the key drivers to what looks like just accelerating relative performance over the last 1.5 years or so.

Yes. Thanks, Robert. I think from our perspective, we've -- I think we've got a great playbook in Monster -- and Monster is doing well. It's achieving share gains, and it's doing nicely where we have a lot of work to do is in our strategic brands and some of our peripheral brands like, for example, Bang, NOS and Full Throttle.

And we've got a real huge focus on those brands during the course of this year and beyond. And we've launched FLRT, which I mentioned earlier, we really are quite pleased about and the initial uptake seems to be good. The -- what we're hearing in the market and social media seems to be good. And so we're pleased with that.

We're addressing the female energy category, which we wanted to do for some time. And Bang has been suffering a little bit. So we have a strong marketing program on relaunching Bang and Storm really suffered, we believe, from its association with Reign Storm because Reign is a performance energy product and Reign Storm is addressing the wellness category. And I believe that -- and so do our customers believe that what we have now is a much better product group to address in the wellness category.

And then on the other hand, we have our affordable brands, Predator and Fury, which are doing well in Africa, Egypt, India. And so excited about the affordable brands because they are addressing a need as the world is comprised of a lot more individuals who live in emerging and developing markets. So the affordable energy brands are a big opportunity for us.

And ladies and gentlemen, this concludes today's question-and-answer session. I would like to turn the conference back to Hilton Schlosberg for any closing remarks.

So on behalf of Monster, I would like to thank everyone for their interest in the company. We are confident in the strength of our brands and the talent of our entire Monster family throughout the world. And I'm excited to be working with them and thank them all for their contributions, particularly in this quarter, which was quite an incredible quarter. We believe in the company and our growth strategy and are committed to innovating, developing and differentiating our brands and expanding the company both at home and abroad.

We are proud of our relationship with the Coca-Cola system and the opportunity this presents to us, including in FSOP. We believe that we are well positioned in the beverage industry and are optimistic about the future of the company. Thank you so much for your attendance.

And thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.