What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 117 added, 116 removed, 420 unchanged (36% of the section changed)

6 unchanged sentences

MD&A includes the following sections:

● Bang Energy Acquisition – a discussion of our acquisition of Bang Energy on July 31, 2023;

● Pricing Actions – a discussion of certain pricing actions implemented during 2024 and 2023;

8 unchanged sentences

(See “Forward-Looking Statements” and “Part II, Item 7A – Qualitative and Quantitative Disclosures about Market Risks”).

Bang Energy Acquisition

On July 31, 2023, we completed the Bang Transaction.

The acquired assets primarily include the Bang Energy® drink business and a beverage production facility in Phoenix, AZ.

Pricing Actions

We implemented pricing actions including (i) price increases effective April 1, 2022 (limited pack sizes), September 1, 2022 and April 1, 2023 (limited pack sizes) in the United States, (ii) price increases at various times in certain international markets during 2022 and 2023 and (iii) decreased promotional allowances as a percentage of net sales in certain markets during 2022 and 2023 (collectively, the “Pricing Actions”).

The Pricing Actions positively impacted gross profit margins in 2023.

Gross Profit Margins

During the year ended December 31, 2023, we experienced an improvement in our gross profit margins as compared to the year ended December 31, 2022.

This improvement was primarily attributable to (i) the Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs.

During the COVID-19 pandemic we prioritized ensuring product availability for our customers and consumers.

This strategic direction remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability.

We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands.

We continue to address the controllable challenges in our supply chain.

We implemented price increases (i) effective November 1, 2024 (for core brands and packages) and April 1, 2023 (for limited pack sizes) in the United States, and (ii) at various times in certain international markets during 2024 and 2023 (collectively, the “Pricing Actions”).

The Pricing Actions positively impacted gross profit margins in 2024 as compared to 2023.

Liquidity and Capital Resources

As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the “Liquidity and Capital Resources” section below.

As of the date of this filing, we expect to maintain sufficient liquidity as we manage through the current environment as described in the “Liquidity and Capital Resources” section below.

We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:

1 unchanged sentence

Monster Energy Ultra®

Monster Rehab®

Rehab Monster®

Monster Energy® Nitro

7 unchanged sentences

Play® and Power Play® (stylized)

We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai ® IPA, Florida Man TM IPA, Dale’s Pale Ale ® , Wild Basin® Hard Seltzers, Dallas Blonde ® , Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising ® Double IPA, Wasatch ® Apricot Hefeweizen, The Beast Unleashed®, Nasty Beast TM Hard Tea and a host of other brands.

We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida Man® IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company® Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast TM , Nasty Beast® Hard Tea and a host of other brands.

We also develop, market, sell and distribute still and sparkling waters under the Monster Tour Water® brand name.

1 unchanged sentence

Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $247.1 million for the year ended December 31, 2024.

Net sales on a foreign currency adjusted basis increased 8.4% for the year ended December 31, 2024.

The vast majority of our net sales are derived from our Monster Energy® Drinks segment.

2 unchanged sentences

Our Alcohol Brands segment represented 2.3% and 2.6% of our net sales for the years ended December 31, 2024 and 2023, respectively.

Our Other segment represented 0.3% and 0.4% of our net sales for the years ended December 31, 2023 and 2022, respectively.

Our Other segment represented 0.3% of our net sales for both years ended December 31, 2024 and 2023.

Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Monster Energy® Drinks segment of approximately $210.0 million for the year ended December 31, 2024.

5 unchanged sentences

Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 18.5% for the year ended December 31, 2024.

Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military.

Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience and gas chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system.

8 unchanged sentences

Alcohol, value stores and other

Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.

(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners (formerly Coca-Cola European Partners and Coca-Cola Amatil), Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc.

Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Holdings, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc.

(USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc.

(including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc.

1 unchanged sentence

Keith Company, J.J.

Taylor Distributing, and Sheehan Family Companies.

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.

Taylor Distributing, and Admiral Beverage Corporation.

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and results of operations.

Coca-Cola Europacific Partners accounted for approximately 14%, 13% and 13% of our net sales for the years ended December 31, 2024, 2023 and 2022, respectively.

Coca-Cola Consolidated, Inc.

accounted for approximately 10%, 10% and 11% of our net sales for the years ended December 31, 2024, 2023 and 2022, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 9% and 10% of our net sales for the years ended December 31, 2023, 2022 and 2021, respectively.

Coca-Cola Europacific Partners ( formerly Coca-Cola European Partners) accounted for approximately 13%, 13% and 12% of our net sales for the years ended December 31, 2023, 2022 and 2021, respectively.

Reyes Holdings, LLC accounted for approximately 9% of our net sales for the years ended December 31, 2024, 2023 and 2022.

We continue to incur expenditures in connection with the development and introduction of new products and flavors.

19 unchanged sentences

As of December 31, 2024, the Company had working capital of $2.54 billion compared to $4.43 billion as of December 31, 2023.

The increase in working capital was primarily the result of the increase in cash and cash equivalents,

related to the increase in net sales for the year ended December 31, 2023.

For the year ended December 31, 2023, our net cash provided by operating activities was approximately $1.72 billion as compared to $887.7 million for the year ended December 31, 2022.

Principal uses of cash flows in 2023 were purchases of investments, purchases of treasury stock, the acquisition of Bang Energy, development of our brands internationally and purchases of real property, property and equipment.

Except for the acquisition of Bang Energy, these principal uses of cash flows are expected to be and remain our principal recurring use of cash and working capital funds in the future (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”).

The decrease in working capital was primarily the result of the decrease in cash and cash equivalents and short-term investments related to treasury stock repurchases for the year ended December 31, 2024.

For the year ended December 31, 2024, our net cash provided by operating activities was approximately $1.93 billion as compared to $1.72 billion for the year ended December 31, 2023.

Principal uses of cash flows in 2024 were purchases of treasury stock and purchases of real property, property and equipment.

These principal uses of cash flows are expected to be and remain our principal recurring use of cash and working capital funds in the future (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”).

Opportunities, Challenges and Risks

11 unchanged sentences

(See “Part I, Item 1A – Risk Factors”).

Our historical success is attributable, in part, to our introduction of different and innovative beverages which have been positively accepted by consumers.

Our historical success is attributable, in part, to our introduction of different and innovative energy beverages which have been positively accepted by consumers.

Our future success will depend, in part, upon our continued ability to develop and introduce different and innovative beverages that meet consumer preferences, although there can be no assurance of our ability to do so.

13 unchanged sentences

● increases in costs of raw materials used by us;

● restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments;

● restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to natural disasters, pandemics, related labor issues or other importation impediments;

● protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;

1 unchanged sentence

● limitations on co-packing availability and in particular, consolidation in the co-packing industry;

● the long-term impact of Brexit on our business in Europe and the United Kingdom;

● increases in ocean and domestic fuel and freight rates;

40 unchanged sentences

Net sales were $2.77 billion and $2.53 billion for the years ended December 31, 2024 and 2023, respectively, in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.

Net changes in foreign currency exchange rates had an unfavorable impact on net sales to customers in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean of approximately $245.2 million for the year ended December 31, 2024.

Net sales on a foreign currency adjusted basis in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean increased 19.2% for the year ended December 31, 2024.

Net sales for the Monster Energy® Drinks segment were $6.86 billion for the year ended December 31, 2024, an increase of approximately $309.5 million, or 4.7% higher than net sales of $6.56 billion for the year ended December 31, 2023.

Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand.

Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions.

Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $210.0 million for the year ended December 31, 2024.

1 unchanged sentence

Net sales for the Strategic Brands segment were $432.2 million for the year ended December 31, 2024, an increase of approximately $55.6 million, or 14.8% higher than net sales of $376.6 million for the year ended December 31, 2023.

Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our NOS®, Predator® and Fury® brand energy drinks as a result of increased consumer demand.

Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our Burn®, Predator®, NOS® and Fury® brand energy drinks as a result of increased consumer demand.

Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $37.1 million for the Strategic Brands segment for the year ended December 31, 2024.

Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 24.6% for the year ended December 31, 2024.

Net sales for the Alcohol Brands segment were $184.9 million for the year ended December 31, 2023, an increase of approximately $83.5 million, or 82.3% higher than net sales of $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).

Net sales of The Beast Unleashed® FMBs, which launched during the 2023 first quarter in the United States on a rolling state basis, were $86.7 million for the year ended December 31, 2023.

Net sales of concentrates within the Strategic Brands segment tend to have more pronounced fluctuations from period to period as compared to net sales of our finished goods within the Monster Energy® Drinks segment primarily as a result of bottler production schedules.

Net sales for the Alcohol Brands segment were $172.3 million for the year ended December 31, 2024, a decrease of approximately $12.5 million, or 6.8% lower than net sales of $184.9 million for the year ended December 31, 2023.

The decrease in net sales for the year ended December 31, 2024 was primarily due to decreased sales by volume of craft beers.

Net sales for the Other segment were $23.6 million for the year ended December 31, 2024, an increase of approximately $0.1 million, or 0.3% higher than net sales of $23.5 million for the year ended December 31, 2023.

Case sales for our energy drink products, in 192-ounce case equivalents, were 846.7 million cases for the year ended December 31, 2024, an increase of approximately 77.4 million cases or 10.1% higher than case sales of 769.2 million cases for the year ended December 31, 2023.

The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) increased to $9.01 for the year ended December 31, 2023, which was 2.2% higher than the average net sales per case of $8.82 for the year ended December 31, 2022.

The increase in the average net sales per case was primarily the result of the Pricing Actions.

Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 13.1 million cases for the year ended December 31, 2023, an increase of approximately 6.6 million cases or 101.3% higher than case sales of 6.5 million cases for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).

Barrel sales for our craft beers, hard seltzers and FMBs, in 31 U.S.

gallon equivalents, were 0.6 million barrels for the year ended December 31, 2023, an increase of approximately 0.3 million barrels or 101.3% higher than barrel sales of 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).

The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.62 for the year ended December 31, 2024, which was 4.4% lower than the average net sales per case of $9.01 for the year ended December 31, 2023.

The decrease in overall average net sales per case for our energy drink products for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to higher promotional allowances as a percentage of net sales as well as geographical/product sales mix.

Case sales for our craft beers, FMBs and hard seltzers in 192-ounce equivalents, were 12.5 million cases for the year ended December 31, 2024, a decrease of approximately 0.7 million cases or 5.0% lower than case sales of 13.1 million cases for the year ended December 31, 2023.

Barrel sales for our craft beers, FMBs and hard seltzers in 31 U.S.

gallon equivalents, were 0.60 million barrels for the year ended December 31, 2024, a decrease of approximately 0.03 million barrels or 5.0% lower than barrel sales of 0.64 million barrels for the year ended December 31, 2023.

Gross profit was $4.05 billion for the year ended December 31, 2024, an increase of approximately $254.7 million, or 6.7% higher than the gross profit of $3.79 billion for the year ended December 31, 2023.

The increase in gross profit was primarily the result of the increase in net sales.

Gross profit as a percentage of net sales increased to 54.0% for the year ended December 31, 2024 from 53.1% for the year ended December 31, 2023.

The increase for the year ended December 31, 2023 was primarily the result of the Pricing Actions, decreased freight-in costs as well as decreased aluminum can costs.

The increase for the year ended December 31, 2024 was primarily the result of the Pricing Actions, decreased freight-in costs and decreased aluminum can costs , partially offset by production inefficiencies .

Operating Expenses

Total operating expenses were $2.12 billion for the year ended December 31, 2024, an increase of approximately $277.7 million, or 15.1% higher than total operating expenses of $1.84 billion for the year ended December 31, 2023.

The increase in operating expenses was primarily due to increased general and administrative expenses of $80.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased selling and marketing expenses of $92.2 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $82.4 million.

In addition, operating expenses for the year ended December 31, 2023 included $16.1 million of transaction costs related to the acquisition of Bang Energy and $42.7 million of impairment charges related to the Alcohol Brands segment (the “Alcohol Impairment Charges”).

The Alcohol Impairment Charges, due in part to the continuing challenges in the craft beer and hard seltzer categories, relate to certain non-amortizing intangibles as well as property and equipment, acquired as part of the CANarchy transaction (as defined below in Note 2, “Acquisitions”).

Operating expenses for the year ended December 31, 2024 included impairment charges of $138.8 million related to the Alcohol Brands segment (the “Alcohol Impairment Charges”).

The Alcohol Impairment Charges were primarily the result of operating and financial performance not meeting projections due in part to challenges in the category, as well as a decrease in projected ongoing operating and financial performance.

The Alcohol Impairment Charges relate primarily to goodwill and to certain other indefinite lived intangible assets as well as property and equipment.

Additionally, the increase in operating expenses was primarily due to increased general and administrative expenses of $110.0 million (primarily impairment charges related to the Alcohol Brands segment), increased selling and marketing expenses of $80.5 million (primarily sponsorships and endorsements), increased payroll expenses of $68.7 million and increased distribution expenses (including storage and warehouse) of $18.5 million.

Operating expenses as a percentage of net sales for the years ended December 31, 2024 and 2023 were 28.3% and 25.8%, respectively.

Operating Income

Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022.

Operating income as a percentage of net sales increased to 27.4% for the year ended December 31, 2023 from 25.1% for the year ended December 31, 2022.

Operating income for the year ended December 31, 2023 increased primarily due to an increase of $619.6 million in gross profit partially offset by an increase in operating expenses of $368.6 million, which includes the Alcohol Impairment Charges.

Operating income was $1.93 billion for the year ended December 31, 2024, a decrease of approximately $23.1 million, or 1.2% lower than operating income of $1.95 billion for the year ended December 31, 2023.

Operating income as a percentage of net sales decreased to 25.8% for the year ended December 31, 2024 from 27.4% for the year ended December 31, 2023.

Operating income for the year ended December 31, 2024 decreased primarily due to the Alcohol Impairment Charges partially offset by an increase in gross profit.

Operating income was $536.3 million and $409.3 million for the years ended December 31, 2024 and 2023, respectively, for our operations in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.

3 unchanged sentences

The increase in operating income for the Strategic Brands segment was primarily the result of a $35.5 million increase in gross profit.

Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $81.1 million for the year ended December 31, 2023, an increase of approximately $49.6 million, or 157.5% higher than operating loss of

$31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).

The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2023 was primarily as a result of the Alcohol Impairment Charges of $42.7 million.

Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $200.3 million for the year ended December 31, 2024, an increase of approximately $119.2 million, or 146.9% higher than operating loss of $81.1 million for the year ended December 31, 2023.

The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2024 was primarily the result of the Alcohol Impairment Charges.

Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $4.6 million for the year ended December 31, 2024, an increase of approximately $1.1 million, or 30.4% higher than operating income of $3.6 million for the year ended December 31, 2023.

The increase in operating income for the year ended December 31, 2024 was primarily the result of the increase in gross profit.

Interest and Other Income (Expense), net

2 unchanged sentences

Interest income was $115.0 million and $130.0 million for the years ended December 31, 2024 and 2023, respectively.

The decrease in interest income for the year ended December 31, 2024 was primarily related to lower short- and long-term investment balances as a result of treasury stock repurchases made during the year ended December 31, 2024.

Interest expense was $27.9 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively.

Interest and other income (expense), net included a gain on transaction of $45.4 million related to the acquisition of Bang Energy (“Bang Transaction Gain”) for the year ended December 31, 2023.

2 unchanged sentences

The effective combined federal, state and foreign tax rate was 24.1% and 21.2% for the years ended December 31, 2024 and 2023, respectively.

The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction for the year ended December 31, 2023.

Net income was $1.63 billion for the year ended December 31, 2023, an increase of $439.4 million, or 36.9% higher than net income of $1.19 billion for the year ended December 31, 2022.

The increase in net income for the year ended December 31, 2023 was primarily due to the increase in gross profit.

The increase in the effective tax rate was primarily attributable to a decrease in the stock-based compensation deduction for the year ended December 31, 2024.

Net income was $1.51 billion for the year ended December 31, 2024, a decrease of $121.9 million, or 7.5% lower than net income of $1.63 billion for the year ended December 31, 2023.

The decrease in net income for the year ended December 31, 2024 was primarily due to the Alcohol Impairment Charges.

Key Business Metrics

5 unchanged sentences

Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $246.9 million for the year ended December 31, 2024.

Gross billings on a foreign currency adjusted basis increased 9.1% for the year ended December 31, 2024.

Gross billings for the Monster Energy® Drinks segment were $8.04 billion for the year ended December 31, 2024, an increase of approximately $452.1 million, or 6.0% higher than gross billings of $7.59 billion for the year ended December 31, 2023.

Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets.

Net changes in foreign currency exchange rates had an unfavorable impact on

gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023.

Net changes in foreign currency exchange rates had an unfavorable impact on gross billings for the Monster Energy® Drinks segment of approximately $209.7 million for the year ended December 31, 2024.

Gross billings for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 8.7% for the year ended December 31, 2024.

Gross billings for the Strategic Brands segment were $490.8 million for the year ended December 31, 2024, an increase of $65.5 million, or 15.4% higher than gross billings of $425.3 million for the year ended December 31, 2023.

Gross billings for the Strategic Brands segment increased primarily due to increased sales by volume of our Burn®, Predator®, NOS® and Fury® brand energy drinks.

Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $37.2 million for the year ended December 31, 2024.

Gross billings for the Alcohol Brands segment were $188.6 million for the year ended December 31, 2023, an increase of $85.6 million, or 83.0% higher than gross billings of $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).

Gross billings for the Strategic Brands segment on a foreign currency adjusted basis increased 24.2% for the year ended December 31, 2024.

Gross billings for the Alcohol Brands segment were $176.8 million for the year ended December 31, 2024, a decrease of $11.8 million, or 6.3% lower than gross billings of $188.6 million for the year ended December 31, 2023.

The decrease in gross billings for the year ended December 31, 2024 was primarily due to decreased sales by volume of craft beers.

Gross billings for the Other segment were $23.7 million for the year ended December 31, 2024, an increase of $0.2 million, or 0.7% higher than gross billings of $23.5 million for the year ended December 31, 2023.

Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.13 billion for the year ended December 31, 2023, an increase of $139.1 million, or 14.0% higher than promotional allowances, commissions and other expenses of $990.6 million for the year ended December 31, 2022.

Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.28 billion for the year ended December 31, 2024, an increase of $153.2 million, or 13.6% higher than promotional allowances, commissions and other expenses of $1.13 billion for the year ended December 31, 2023.

Promotional allowances as a percentage of gross billings were 14.7% and 13.7% for the years ended December 31, 2024 and 2023, respectively.

7 unchanged sentences

The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales:

(In thousands)

Gross Billings

28 unchanged sentences

In addition, our continued growth internationally may further reduce the impact of seasonality on our business.

changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses.

Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses.

(See “Part I, Item 1 – Business – Seasonality”).

17 unchanged sentences

Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2024.

The following represents case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, for the years ended December 31:

The following represents case sales for our craft beers, FMBs and hard seltzers, in 192-ounce equivalents, for the years ended December 31:

(In thousands, except average net sales per case)

2 unchanged sentences

1 For the year ended December 31, 2022, effectively from February 17, 2022 to December 31, 2022.

We believe inflation did not have a significant impact on our results of operations for the year ended December 31, 2023.

Inflation had an impact on our results of operations for the year ended December 31, 2024, primarily due to domestic inflation as well as inflation related local currency price increases in certain international markets.

Inflation did not have a significant impact on our results of operations for the year ended December 31, 2023.

Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the year ended December 31, 2022.

1 unchanged sentence

Liquidity and Capital Resources

Cash and cash equivalents, short-term and long-term investments – As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments.

We maintain our investments for cash management purposes and not for purposes of speculation.

Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments.

We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks.

However, certain of these investments are subject to general credit, liquidity, market and interest rate risks.

These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.

Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries.

No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2023.

We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of

equipment, purchases of real property and purchases of treasury stock, through at least the next 12 months.

Cash and cash equivalents.

As of December 31, 2024, we had $1.53 billion in cash and cash equivalents.

Of our $1.53 billion of cash and cash equivalents held at December 31, 2024, $1.07 billion was held by our foreign subsidiaries.

Long-term debt.

In May 2024, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders, which provides for senior unsecured credit facilities in an aggregate principal amount of $1.50 billion (collectively, the “Credit Facilities”).

The Credit Facilities consist of a $750.0 million term loan (the “Term Loan”) and up to $750.0 million in multicurrency revolving loan commitments (the “Revolving Credit Facility”).

The Term Loan matures May 2027, and the Revolving Credit Facility matures May 2029.

Borrowings under the Credit Facilities may be repaid at any time during the term of the Credit Facilities and, in the case of the Revolving Credit Facility, may be reborrowed prior to the maturity date.

As of December 31, 2024, borrowings of $375.0 million remained outstanding on the Term Loan.

As of February 27, 2025, borrowings of $225.0 million remained outstanding on the Term Loan.

As of December 31, 2024, the Revolving Credit Facility had remaining availability of $750.0 million.

Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through December 31, 2025.

However, future business opportunities may cause a change in this estimate.

Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.

Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property, plant and manufacturing equipment, and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.

The following summarizes our cash flows for the years ended December 31, 2024, 2023 and 2022 (in thousands):

4 unchanged sentences

Cash flows provided by operating activities.

Cash provided by operating activities was $1.72 billion for the year ended December 31, 2023, as compared with cash provided by operating activities of $887.7 million for the year ended December 31, 2022.

Cash provided by operating activities was $1.93 billion for the year ended December 31, 2024, as compared with cash provided by operating activities of $1.72 billion for the year ended December 31, 2023.

For the year ended December 31, 2024, cash provided by operating activities was primarily attributable to net income earned of $1.51 billion and adjustments for certain non-cash expenses, consisting of $127.1 million impairment of goodwill and other intangibles, $91.0 million of stock-based compensation, $80.4 million of depreciation and amortization, $13.5 million of non-cash lease expense and $8.2 million impairment of property and equipment.

For the year ended December 31, 2024, cash provided by operating activities also increased due to a $211.5 million decrease in inventories, an $18.4 million increase in accrued liabilities, a $13.4 million increase in other liabilities, a $9.7 million increase in accrued promotional allowances, a $9.4 million increase in income taxes payable, a $9.0 million decrease in prepaid expenses and other assets, a $5.9 million increase in accrued compensation and a $3.1 million decrease in prepaid income taxes.

For the year ended December 31, 2024, cash used in operating activities was primarily attributable to a $93.9 million increase in accounts receivable, a $61.5 million decrease in accounts payable and a $17.4 million decrease in deferred revenue.

For the year ended December 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $1.63 billion and adjustments for certain non-cash expenses, consisting of $68.9 million of depreciation and amortization, $68.8 million of stock-based compensation, $38.7 million loss on impairment of intangibles, $9.0 million of non-cash lease expense and $4.3 million loss on impairment of property and equipment, partially offset by the $45.4 million Bang Transaction Gain.

1 unchanged sentence

For the year ended December 31, 2023, cash used in operating activities was primarily attributable to a $163.2 million increase in accounts receivable, a $24.5 million decrease in deferred revenue, an $18.8 million increase in prepaid income taxes, a $10.4 million decrease in accrued liabilities and a $10.2 million increase in prepaid expenses and other assets.

For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles.

For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation.

For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes.

Cash flows used in investing activities.

Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022.

Cash flows provided by (used in) investing activities.

Net cash provided by investing activities was $733.7 million for the year ended December 31, 2024, as compared to cash used in investing activities of $193.4 million for the year ended December 31, 2023.

For both the years ended December 31, 2024 and 2023, cash provided by investing activities was primarily attributable to sales of available-for-sale investments.

For both the years ended December 31, 2024 and 2023, cash used in investing activities was primarily attributable to purchases of available-for-sale investments.

For the year ended December

31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy.

For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the acquisition of Monster Brewing Company.

For the year ended December 31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy.

To a lesser extent, for both the years ended December 31, 2024 and 2023, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks.

We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes.

We expect to continue to use a portion of our cash in excess of our requirements for operations to purchase short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products), to develop our brand in international markets and for other corporate purposes.

From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.

Cash flows (used in) provided by financing activities.

Cash used in financing activities was $542.6 million for the year ended December 31, 2023 as compared to cash used in financing activities of $706.9 million for the year ended December 31, 2022.

Cash flows used in financing activities.

Cash used in financing activities was $3.33 billion for the year ended December 31, 2024 as compared to cash used in financing activities of $542.6 million for the year ended December 31, 2023.

The cash flows used in financing activities for both the years ended December 31, 2024 and 2023 was primarily the result of the repurchases of our common stock.

The cash flows provided by financing activities for both the years ended December 31, 2023 and 2022 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.

In addition, the cash flows used in financing activities for the year ended December 31, 2024, were attributable to repayments on the Credit Facilities.

The cash provided by financing activities for the year ended December 31, 2024 was primarily attributable to borrowings under the Credit Facilities and, to a lesser extent, the issuance of our common stock under our stock-based compensation plans.

The cash flows provided by financing activities for the year ended December 31, 2023 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.

The following represents a summary of the Company’s contractual commitments and related scheduled maturities as of December 31, 2024:

3 unchanged sentences

Operating Leases

Credit Facilities

Purchase Commitments 2

24 unchanged sentences

The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value.

For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances.

For the year ended December 31, 2024, goodwill impairment charges of $86.3 million were recorded related to the Alcohol Brands reporting unit.

Subsequent to the impairment charges recorded, there is no remaining goodwill for the Alcohol Brands reporting unit.

As of December 31, 2024, the accumulated goodwill impairment balance was $86.3 million related entirely to the Alcohol Brands reporting unit.

For the years ended December 31, 2023 and 2022, there were no goodwill impairments recorded and there were no accumulated impairment balances.

Other Intangibles – In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists.

6 unchanged sentences

The Company amortizes its trademarks with finite useful lives over their respective useful lives.

For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment.

For the years ended December 31, 2024 and 2023, impairment charges of $40.8 million and $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment.

For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles.

For the year ended December 31, 2021 no impairment charges were recorded to intangibles.

Revenue Recognition – Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company’s non-alcohol bottlers/distributors or retail customers including, but not limited to the following:

17 unchanged sentences

Certain statements made in this report 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 (the “Exchange Act”)) regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things.

All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management’s plans and objectives for future operations, or a statement of future economic performance contained in management’s discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical

information, are forward-looking statements within the meaning of the Exchange Act.

Without limiting the foregoing, the words “believes,” “thinks,” “anticipates,” “plans,” “expects,” “estimates” and similar expressions are intended to identify forward-looking statements.

Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following:

● Our ability to successfully integrate the Bang Energy® business and recognize the anticipated benefits of the transaction;

● Our ability to successfully transition the acquired Bang Energy® beverages to the Company’s primary bottlers/distributors;

● Our ability to procure shelf space, retain customers and increase sales of the acquired Bang Energy® beverages;

● Our ability to consolidate operations and/or rationalize brands acquired from Monster Brewing Company and Bang Energy®;

● Lack of anticipated demand for our products in domestic and/or international markets;

● Our ability to sustain the current level of sales of and/or achieve growth for our Monster Energy®, Reign Total Body Fuel®, Reign Storm®, Bang Energy® and NOS® brand energy drinks and/or our other products, including our Strategic Brands and Alcohol Brands;

● Decreased demand for our products resulting from changes in consumer preferences, including, but not limited to:

changes in demand for different packages, sizes and configurations;

changes due to perceived health concerns such as obesity, ingredients in our products or packaging, and alcohol abuse;

changes due to product safety concerns;

and/or changes due to decreased consumer discretionary spending power;

● The impact on our business of competitive products and pricing pressures and our ability to increase or maintain our market share as a result of actions by competitors, including unsubstantiated and/or misleading claims, false advertising claims and tortious interference, as well as competitors selling misbranded products;

● Our ability to recognize the anticipated benefits of the acquisition of the Bang Energy® business;

● Our ability to rationalize brands acquired from Monster Brewing Company;

● Our ability to achieve profitability within our Alcohol Brands segment;

1 unchanged sentence

● The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers;

● Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products;

● The impact of the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits, including supply chain disruptions, volatility in commodity and energy prices, increased economic uncertainty and escalating geopolitical tensions;

● Fluctuations in growth and/or growth rates (positive or negative) of the domestic and international energy drink categories generally, including in the convenience and gas channel (which is our largest channel) and the impact on demand for our products resulting from deteriorating economic conditions and/or financial uncertainties;

● Lack of anticipated demand for our products in domestic and/or international markets;

● Changes in U.S.

trade policies as a result of any legislation proposed by the recently inaugurated U.S.

presidential administration or U.S.

Congress, which include tariffs on aluminum;

● The impact of military conflicts, including supply chain disruptions, volatility in commodity and energy prices, increased economic uncertainty and escalating geopolitical tensions;

● The impact of temporary or permanent facility closures, production slowdowns and disruptions in operations experienced by our manufacturing facilities, our suppliers, bottlers/distributors, co-packers, and/or breweries, including any material disruptions on the production and distribution of our products;

3 unchanged sentences

● The impact of logistical issues and delays, including shortages of shipping containers and port of entry congestion;

● The human and economic consequences of a material reemergence of COVID-19, including new variants, as well as the measures that may be taken by governments and businesses (including the Company and its suppliers, bottlers/distributors, co-packers, and other service providers) and the public at large to limit the spread of COVID-19, including, but not limited to, lockdowns, labor issues, delays, and/or decreased sponsorship, endorsement, sampling, and/or innovation activities, which may have an adverse impact on our business and operations;

● We have extensive commercial arrangements with TCCC and, as a result, our future performance is substantially dependent on the success of our relationship with TCCC;

10 unchanged sentences

● Our ability to manage legal and regulatory requirements in foreign jurisdictions, potential difficulties in staffing and managing foreign operations and potentially higher incidence of fraud or corruption and credit risk of foreign customers and/or bottlers/distributors;

● Changes in U.S.

tax laws as a result of any legislation proposed by the U.S.

Presidential Administration or U.S.

Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction;

● Our ability to produce our products in international markets in which they are sold, thereby reducing freight costs and/or product damages;

13 unchanged sentences

● Our ability to continue to generate sufficient cash flows to support our expansion plans and general operating activities;

● Decreased demand for our products resulting from changes in consumer preferences, including, but not limited to:

changes in demand for different packages, sizes and configurations;

changes due to perceived health concerns such as obesity, ingredients in our products or packaging, and alcohol abuse;

changes due to product safety concerns;

and/or changes due to decreased consumer discretionary spending power;

● The sufficiency of our existing capital resources and credit facilities;

● Our anticipated use of our existing cash resources and our ability to obtain additional financing in the future;

● Adverse publicity surrounding obesity, alcohol consumption, and other health concerns related to our products, product safety and quality, water usage, environmental impact and sustainability, human rights, our culture, workforce and labor and workplace laws;

● Our ability to meet or comply with sustainability-related expectations, standards, and regulations, including rules proposed by the SEC, laws implemented by the California legislature, and directives adopted by the European Commission;

● Our ability to meet or comply with sustainability-related expectations, standards, and regulations, including laws implemented by the California legislature and directives adopted by the European Commission;

● Changes in demand that are weather or season related and/or for other reasons, including changes in product category and/or package consumption;

● Changes in cost and availability of certain key ingredients including aluminum cans, as well as disruptions to the supply chain, as a result of climate change and poor or extreme weather conditions;

● The impact of unstable political conditions, civil unrest, large scale terrorist acts, the outbreak or escalation of armed hostilities, major natural disasters and extreme weather conditions, widespread outbreaks of infectious diseases (such as the COVID-19 pandemic), or unforeseen economic and political changes and local or international catastrophic events;

● The impact of unstable political conditions, civil unrest, large scale terrorist acts, the outbreak or escalation of armed hostilities, major natural disasters and extreme weather conditions (such as wildfires or hurricanes), widespread outbreaks of infectious diseases (such as the COVID-19 pandemic), or unforeseen economic and political changes and local or international catastrophic events;

● The impact on our business of trademark and trade dress infringement proceedings brought against us relating to any of our brands, which could result in an injunction barring us from selling certain of our products and/or require changes to be made to our current trade dress;

6 unchanged sentences

● Our ability to comply with and/or resulting lower consumer demand and/or lower profit margins for energy drinks and/or alcohol beverages due to proposed and/or future U.S.

federal, state and local laws and regulations and/or proposed or existing laws and regulations in certain foreign jurisdictions and/or any changes therein, including changes in taxation requirements (including tax rate changes, new tax laws, new and/or increased excise, sales and/or other taxes on our products and revised tax law interpretations) and environmental laws, as well as the Federal Food, Drug, and

Cosmetic Act and regulations or rules made thereunder or in connection therewith by the FDA.

In addition, our business may be adversely impacted by changes in other food, drug or similar laws in the United States and internationally as well as laws and regulations or rules made or enforced by the ATF and/or the FTC or their foreign counterparts;

38 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis