Shares of Monster Beverage Corporation (MNST – Free Report) declined more than 6% in after-hours trading on Feb 28 after the company reported disappointing fourth-quarter 2017 results. It missed the Zacks Consensus Estimate on both counts.

Monster Beverage reported earnings of 35 cents per share, missing the Zacks Consensus Estimate of 37 cents. Earnings, however, increased from 30 cents a year ago.

Net sales of $810.4 million missed the Zacks Consensus Estimate of $842 million. The figure however improved 7.5% year over year. Foreign currency translation positively impacted net sales by $7.3 million, partially offset by 2% impact from inventory reductions by some of its international distributors.

Net sales to customers outside the United States increased 8.7% year over year to $210.4 million.

Quarterly Segment Details

Monster Energy Drinks: Net sales of the segment, which includes Monster Energy drinks, Monster Hydro energy drinks, and Mutant Super Soda drinks, were up 7.6% year over year to $736.1 million.

Strategic Brands: This segment includes various energy-drink brands acquired from Coca-Cola (KO – Free Report). Net sales at the segment rose 7.8% to $69.6 million in the quarter.

Other:

Inside the Headline Numbers

Fourth-quarter 2017 gross margin fell 400 basis points (bps) to 62.1% due to geographic sales mix since the company's international operations have a lower profit margin.

Operating expenses, including $46.3 million in distributor termination expenses, decreased 4% year over year to $236.5 million. Operating income in the quarter was $267.1 million, up 6.1% year over year.

Selling expenses, as a percentage of net sales, were 13.6%, up 160 bps from the fourth-quarter 2016.