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Investors yesterday may have freaked out at evidence that Celsius energy brand scored only 17% growth, sending shares skidding by more than one-third, but same # delivered by Monster Beverage for its topline lifted shares in trading since earnings release. Nor is MNST planning on letting up, with intensive flow of innovation due in coming months, not just flavor extensions and LTOs across multiple platforms but entirely new brands aimed at addressing gaps in reaching females and wellness seekers. Those are a would-be Alani Nu challenger called FLRT as well as rebranded Reign Storm that will go out as wellness offering as just plain Storm, putting distance from performance sibling Reign Total Body Fuel, which was originally launched as a Bang fighter. The numbers first. Net sales in Q3 surged 16.8% to $2.2 bil, +15.1% excluding favorable foreign exchange impact, with zero-sugar Monster Ultra line a particular star. As noted, similar bump in Celsius' core brand drew quite a different reaction in lately skittish market (see below). Gross margin widened 0.5 pt to 55.7%. Lots of puts & takes here. Margin benefited from higher pricing, supply chain optimization and sales mix, as well as increasing tilt to zero-sugar offerings. Partly offsetting those were higher promos, tariff-driven aluminum can increases, and heavier mix of sales in less lucrative overseas markets where MNST plays more in value segments and doesn&#39;t get same scale benefits as in US. Operating income popped 40.7% to $675.4 mil, +35.6% on adjusted basis. Tho tariff-driven aluminum can hikes are not expected to be a material factor, "we continue to review opportunities for price increases, both domestically and internationally," Schlosberg reported after 5% increase was announced for Nov 1. He promised further details at innovation summit set for Dec 2 in NY.By key segment, net sales for core Monster Energy Drinks segment, including Monster, Reign Total Body Fuel, Reign Storm and acquired Bang Energy, rose 17.7 percent to $2.03 bil, +16% excluding forex impact. At Strategic Brands segment, mainly those acquired from strategic ally Coca-Cola and fighter brands like Predator and Fury, sales advanced 15.9% to $130.5 mil, +13.2% excluding forex. Alcohol Brands segment comprised of acquired craft beers like Oskar Blues and Cigar City along with FMBs and hard seltzers, fell 17% $33 mil. Sales outside US grew even faster, +23.3% to $937.1 mil, now 43% of total, +19.1% adjusted for forex. That reflected efforts of bottling partners like Coca-Cola Europacific Partners, whose efforts in Western Europe made Monster Energy brand the fastest-growing everyday brand by value across all categories, as Schlosberg extolled.Fundamentally Healthy Category In remarks to investors, Schlosberg seemed to be addressing the worry warts who, spooked at period of unusual category softness a year ago, have questioned whether its brilliant run might finally be drawing to a close. "The energy drink category continues to grow globally. We believe that household penetration continues to increase," he said. Co's usage & attitude study performed in Western Europe found that 25% of consumers are new to category in past 12 mos, drawn from categories like water, juice, coffee and CSDs. "Coffeehouse coffees are becoming really expensive, and energy drinks are seen as a more affordable alternative," he added. CEO sees a broader cultural shift too. "Energy drinks are becoming more acceptable in society. At one time, they were kind of looked at, and people were concerned about them. Now, understanding the levels of caffeine, which are not exorbitant and less than half of an equivalent size of a coffeehouse coffee, energy drinks are becoming more acceptable." Roughly a decade ago, recall, energy drink leaders were summoned to Capitol Hill to defend their caffeine levels against accusations they were taking a toll on America's youth and other vulnerable population segments (like CSD marketers?). But congressionally mandated investigation by FDA found no smoking gun and hysteria petered out. By Schlosberg's account, any remaining stigma vs category has waned.Innovation Boom As noted, co also seems to be more in the zone on innovation lately. Q3 reflected "the success of our product innovations, which are resonating strongly with consumers," Hilton professed. "Innovation remains central to our long-term growth strategy." He heralded a slew of new stuff heading to market to maintain momentum and plug gaps such as females. Right now we're seeing likes of Monster Energy Ultra Wild Passion, Juice Monster Bad Apple, Monster Electric Blue and Monster Orange Dreamsicle. Jan will bring Monster Energy Strawberry Shots (not a shot but variant on core 16-oz green-claw item in sugared and zero-sugar versions). Feb brings a flock of flavor extensions including Juice Monster Beauty Grape, Reign Watermelon, Sour Gummy and Bang Lime Pop Drop. Mar brings Monster Energy Ultra Punk Punch and Apr brings Full Throttle Red Apple and NOS Grand Prix Guava. In subsequent weeks we'll see Storm launch. After testing waters in F1-friendly markets in Texas, Calif and Vegas, Monster Energy Lando Norris Zero Sugar rolls out nationally, riding success of key F1 driver after departure of longtime ally Lewis Hamilton for Celsius. Spring will bring overtly female-targeted FLRT brand seeking to ride in draft of rivals like Alani Nu. Zero-sugar line debuts in Strawberry Fling, Guava Lava, Berry Tempting and Sunset Squeeze flavors. Due ahead of summer are LTOs like Monster Energy Ultra Red, White & Blue Raz and Juice Monster Strawberry Lemonade as co aims to ride hoopla surrounding nation's 250th anniversary. (We got bit of help from Investing.com transcript.)Does Celsius Skid Reflects Broadly Skittish Market? Celsius share skid took some by surprise given generally strong fundamentals co reported on Thurs but the skittishness was by no means confined to energy drink sector as jobs and inflation data show worrisome signs and some observers worry whether tech boom has become too untethered from reality. "Investors continue to debate whether tech valuations are too lofty," Yahoo reported yesterday, citing 4% slide in shares of chipmaker Qualcomm despite its reporting strong earnings and upbeat guidance. Among CELH-watchers, Jeffries' Kaumil Gajrawala didn't seem fazed by results. "Solid Beat with Sustained Brand Momentum," as he headlined his take on performance.

Monster Bev Scores 17% Topline Pop as Innovation Resonates; FLRT, Revamped Storm Aim to Plug Gaps in Portfolio

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