Monster Beverage (MNST)
Q4 2012 Earnings Call
February 27, 2013 5:00 pm ET
Executives
Rodney C. Sacks - Chairman, Chief Executive Officer, Member of Executive Committee and Chairman of Hansen Beverage Company
Hilton H. Schlosberg - Vice Chairman, President, Chief Financial Officer, Chief Operating Officer, Principal Accounting Officer, Secretary and Member of Executive Committee
Analysts
Kaumil S. Gajrawala - UBS Investment Bank, Research Division
Judy E. Hong - Goldman Sachs Group Inc., Research Division
Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division
William B. Chappell - SunTrust Robinson Humphrey, Inc., Research Division
Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division
Presentation
Operator
Good day, ladies and gentlemen, and welcome to the Monster Beverage Corporation Fourth Quarter and Year End 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Rodney Sacks, Chairman and CEO. Sir, you may begin.
Rodney C. Sacks
Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President, is with me, as is Tom Kelly, our Senior Vice President of Finance. 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 which 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 29, 2012, and our most recent quarterly report on Form 10-Q filed on November 9, 2012, including the sections contained therein entitled Risk Factors and Forward-Looking Statements for a discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
An explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call is provided in the notes designated with asterisks in the condensed consolidated statements of income and other information attached to the earnings release dated February 27, 2013. A copy of this information is also available on our website www.monsterbevcorp.com, in the Financial Information section.
Once again, we reiterate that our products are safe based on both our and the industry's long track record and the scientific evidence supporting the safety of our ingredients. We estimate that about 50 billion cans of energy drinks have been sold and safely consumed worldwide over the past 25 years, including more than 8 billion Monster Energy drinks over the past 11 years. Based on a third-party report, it is estimated that Red Bull sold more than 5 billion cans of energy drinks in 165 countries in 2012. In 2012, we sold some 2 billion-plus cans of Monster Energy drinks in approximately 90 countries.
To the best of our knowledge, the FDA's position is that it continues to believe that there is a long history of safe use of products containing caffeine in the U.S., and that the average amount of caffeine consumed by the U.S. population has not increased in spite of the entry of energy drinks into the marketplace. The FDA has confirmed that available studies do not indicate any new previously unknown risks associated with caffeine consumption. Unfortunately, inaccurate and speculative articles continue to be published in the media regarding energy drinks. We have endeavored to respond to those inaccuracies when practical by providing accurate and scientific facts to the media as has the American Beverage Association.
By way of illustration, we compare the caffeine levels in Monster Energy drinks from all sources to the caffeine levels of coffeehouse coffee, such as for example Starbucks or Caribou, as this comparison is more easily understood by and meaningful to consumers. Coffee has been and continues to be extensively and safely consumed everyday in the U.S. by many tens of millions of consumers. Some publications have erroneously suggested that energy drinks contain up to 500 milligrams of caffeine and have compared them to a 5-ounce cup of coffee that contains about 100 milligrams of caffeine. Monster Energy drinks do not contain anywhere near 500 milligrams of caffeine. A 16-ounce Monster Energy drink contains approximately 160 milligrams of caffeine. We do not believe that any of the leading coffeehouses sell 5-ounce cups of coffee, including Starbucks. A small Starbucks contains 12 ounces of coffee, a medium-sized Starbucks contains 16 ounces of coffee, and its large size, 20 ounces. While Starbucks also sells an 8-ounce size, we believe the size has very limited sales. We note that Starbucks also sells an extra large 31-ounce size.
In making a comparison to coffee, we believe that it is appropriate to use Starbucks' 16-ounce medium-size coffee, which is the same size as a regular 16-ounce Monster Energy drink. Starbucks' 16-ounce coffee contains approximately 330 milligrams of caffeine, which is double the approximate 160 milligrams of caffeine in the same size Monster Energy drink and a 16-ounce Caribou coffee contains between 305 and 370 milligrams of caffeine.
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