-- First
Quarter Net Sales Rise 9.1 percent to $742.1 million
---- First Quarter Net Income Increases 8.6
percent to $178.0 million ---- First Quarter Net
Income per diluted share increases 15.8 percent to $0.31 per share
--
Monster Beverage Corporation (NASDAQ:MNST) today reported financial
results for the first quarter ended March 31, 2017.
Net sales for the 2017 first quarter increased 9.1
percent to $742.1 million from $680.2 million in the same period
last year. Gross sales for the 2017 first quarter increased
8.8 percent to $845.5 million from $777.5 million in the same
period last year.
Net sales for the Company’s Monster Energy® Drinks
segment, which is comprised of the Company’s Monster Energy®
drinks, as well as Mutant® Super Soda drinks, increased 7.5 percent
to $668.6 million for the 2017 first quarter, from $621.7 million
for the same period last year. Net sales for the Company’s
Strategic Brands segment, which includes the various energy drink
brands acquired from The Coca-Cola Company, increased 16.4 percent
to $68.0 million for the 2017 first quarter, from $58.5 million in
the comparable 2016 quarter. Net sales for the Company’s
Other segment, which includes certain products of American Fruits
& Flavors sold to independent third parties, were $5.5 million
for the 2017 first quarter. There were no net sales for the Other
segment for the 2016 first quarter.
Net sales to customers outside the United States
rose to $190.9 million in the 2017 first quarter, from $149.1
million in the corresponding quarter in 2016.
Gross profit, as a percentage of net sales, for the
2017 first quarter, increased to 64.8 percent from 62.2 percent for
the comparable 2016 first quarter.
Operating expenses for the 2017 first quarter were
$216.6 million, compared with $168.4 million in the 2016 first
quarter. Included in operating expenses were distributor
termination expenses of $19.9 million and $3.4 million for the 2017
and 2016 first quarters, respectively.
Distribution costs as a percentage of net sales
were 3.1 percent for the 2017 first quarter, compared with 3.4
percent in the first quarter last year.
Selling expenses as a percentage of net sales for
the 2017 first quarter were 11.7 percent, compared with 10.2
percent in the first quarter last year.
General and administrative expenses for the 2017
first quarter were $107.1 million, or 14.4 percent of net sales,
compared with $75.8 million, or 11.1 percent of net sales, for the
comparable 2016 first quarter. General and administrative
expenses, excluding distributor termination expenses, were 11.8
percent of net sales for the 2017 first quarter, compared with 10.6
percent of net sales for the comparable 2016 first quarter.
Stock-based compensation (a non-cash item) was $13.1 million for
the first quarter of 2017, compared with $10.1 million in the first
quarter last year.
Operating income for the 2017 first quarter
increased to $264.3 million from $254.7 million in the comparable
2016 quarter.
The effective tax rate for the 2017 first quarter
was 32.8 percent, compared with 35.8 percent in the same period
last year.
Net income for the 2017 first quarter increased 8.6
percent to $178.0 million from $163.9 million in the same period
last year. Net income per diluted share for the 2017 first
quarter increased 15.8 percent to $0.31 from $0.26 in the first
quarter of 2016.
The Company estimates that distributor termination
expenses in the 2017 first quarter of $19.9 million reduced
reported earnings by approximately $0.02 per share, after
tax.
Rodney C. Sacks, Chairman and Chief Executive
Officer, said: “We are pleased to report continued progress on the
strategic alignment of our distribution system with Coca-Cola
bottlers, both domestically and internationally. In the United
States, we transitioned distribution of Monster Energy® drinks to
the Coca-Cola bottlers in Wisconsin early in January 2017, in parts
of Minnesota, including Minneapolis and St. Paul, in March 2017 and
in a part of North Dakota, including Fargo, in April 2017. We
commenced distribution of Monster Energy® drinks with the Coca-Cola
bottler in Nigeria as well as in certain other countries during the
2017 first quarter. In China during the first quarter of
2017, we continued with launches in Tianjin, Hebei, Shandong,
Henan, Anhui, Zhejiang and Jiangsu. We also extended
distribution in the Guangdong province. Further launches are
planned in China and in other countries, including a relaunch in
India in 2017. We expanded distribution of Monster Energy Ultra
Violet™ and launched Full Throttle® Orange in the first quarter of
2017. We have a robust pipeline of new products for 2017.
“Our 2017 first quarter results were adversely
impacted by distributor terminations, the strength of the United
States dollar and production shortages of our Java Monster® and
Muscle Monster® products,” Sacks added.
Investor Conference CallThe
Company will host an investor conference call today, May 4, 2017,
at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The
conference call will be open to all interested investors through a
live audio web broadcast via the internet at www.monsterbevcorp.com
in the “Events & Presentations” section. For those who
are not able to listen to the live broadcast, the call will be
archived for approximately one year on the website.
Monster Beverage CorporationBased in Corona,
California, Monster Beverage Corporation is a holding company and
conducts no operating business except through its consolidated
subsidiaries. The Company’s subsidiaries develop and market
energy drinks, including Monster Energy® energy drinks, Monster
Energy Extra Strength Nitrous Technology® energy drinks, Java
Monster® non-carbonated coffee + energy drinks, Monster Rehab®
non-carbonated energy drinks with electrolytes, Muscle Monster®
Energy Shakes, Übermonster® energy drinks, NOS® energy drinks, Full
Throttle® energy drinks, Burn® energy drinks, Samurai® energy
drinks, Relentless® energy drinks, Mother® energy drinks, Power
Play® energy drinks, BU® energy drinks, Nalu® energy drinks, BPM®
energy drinks, Gladiator® energy drinks, and Ultra® energy
drinks. The Company’s subsidiaries also develop and market
Mutant® Super Soda drinks. For more information, visit
www.monsterbevcorp.com.
Note Regarding Use of Non-GAAP MeasuresGross
sales is used internally by management as an indicator of and to
monitor operating performance, including sales performance of
particular products, salesperson performance, product growth or
declines and overall Company performance. The use of gross sales
allows evaluation of sales performance before the effect of any
promotional items, which can mask certain performance issues. We
therefore believe that the disclosure of gross sales provides a
useful measure of our operating performance. Gross sales is not a
measure that is recognized under accounting principles generally
accepted in the United States of America (“GAAP”) and should not be
considered as an alternative to net sales, which is determined in
accordance with GAAP, and should not be used alone as an indicator
of operating performance in place of net sales. Additionally, gross
sales may not be comparable to similarly titled measures used by
other companies, as gross sales has been defined by our internal
reporting practices. In addition, gross sales may not be realized
in the form of cash receipts as promotional payments and allowances
may be deducted from payments received from certain customers.
Caution Concerning Forward-Looking
StatementsCertain statements made in this announcement may
constitute “forward-looking statements” within the meaning of the
U.S. federal securities laws, as amended, regarding the
expectations of management with respect to our future operating
results and other future events including revenues and
profitability. The Company cautions that these statements are
based on management’s current knowledge and expectations and are
subject to certain risks and uncertainties, many of which are
outside of the control of the Company, that could cause actual
results and events to differ materially from the statements made
herein. Such risks and uncertainties include, but are not
limited to, the following: our ability to recognize benefits from
The Coca-Cola Company transaction and the American Fruits &
Flavors transaction; our ability to introduce and increase sales of
both existing and new products; our ability to implement the share
repurchase program; unanticipated litigation concerning the
Company’s products; the current uncertainty and volatility in the
national and global economy; changes in consumer preferences;
changes in demand due to both domestic and international economic
conditions; activities and strategies of competitors, including the
introduction of new products and competitive pricing and/or
marketing of similar products; actual performance of the parties
under the new distribution agreements; potential disruptions
arising out of the transition of certain territories to new
distributors; changes in sales levels by existing distributors;
unanticipated costs incurred in connection with the termination of
existing distribution agreements or the transition to new
distributors; changes in the price and/or availability of raw
materials; other supply issues, including the availability of
products and/or suitable production facilities including
limitations on co-packing availability and retort production;
product distribution and placement decisions by retailers; changes
in governmental regulation; the imposition of new and/or increased
excise sales and/or other taxes on our products; criticism of
energy drinks and/or the energy drink market generally; our ability
to satisfy all criteria set forth in any U.S. model energy drink
guidelines; the impact of proposals to limit or restrict the sale
of energy drinks to minors and/or persons below a specified age
and/or restrict the venues and/or the size of containers in which
energy drinks can be sold; or political, legislative or other
governmental actions or events, including the outcome of any state
attorney general, government and/or quasi-government agency
inquiries, in one or more regions in which we operate. For a
more detailed discussion of these and other risks that could affect
our operating results, see the Company’s reports filed with the
Securities and Exchange Commission. The Company’s actual results
could differ materially from those contained in the forward-looking
statements. The Company assumes no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
(tables below)
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND OTHER INFORMATIONFOR THE THREE-MONTHS
ENDED MARCH 31, 2017 AND 2016(In Thousands, Except
Per Share Amounts) (Unaudited)
|
Three-Months Ended |
|
March 31, |
|
2017 |
|
2016 |
|
|
|
|
Net sales¹ |
$ |
742,146 |
|
$ |
680,186 |
|
|
|
|
Cost of sales |
|
261,272 |
|
|
257,088 |
|
|
|
|
Gross profit¹ |
|
480,874 |
|
|
423,098 |
Gross profit as a
percentage of net sales |
|
64.8% |
|
|
62.2% |
|
|
|
|
Operating
expenses² |
|
216,612 |
|
|
168,385 |
Operating expenses as a
percentage of net sales |
|
29.2% |
|
|
24.8% |
|
|
|
|
Operating
income¹,² |
|
264,262 |
|
|
254,713 |
Operating income as a
percentage of net sales |
|
35.6% |
|
|
37.4% |
|
|
|
|
|
|
|
|
Interest and other
income, net |
|
658 |
|
|
608 |
|
|
|
|
Income before provision
for income taxes¹,² |
|
264,920 |
|
|
255,321 |
|
|
|
|
Provision for income
taxes |
|
86,940 |
|
|
91,444 |
Income taxes as a
percentage of income before taxes |
|
32.8% |
|
|
35.8% |
|
|
|
|
Net income¹,² |
$ |
177,980 |
|
$ |
163,877 |
Net income as a
percentage of net sales |
|
24.0% |
|
|
24.1% |
|
|
|
|
Net income per common
share: |
|
|
|
Basic |
$ |
0.31 |
|
$ |
0.27 |
Diluted |
$ |
0.31 |
|
$ |
0.26 |
|
|
|
|
Weighted average number
of shares of common stock and common stock
equivalents: |
|
|
|
Basic |
|
571,578 |
|
|
608,838 |
Diluted |
|
582,032 |
|
|
620,724 |
|
|
|
|
Case sales (in
thousands) (in 192-ounce case equivalents) |
|
79,992 |
|
|
72,653 |
Average net sales per
case |
$ |
9.21 |
|
$ |
9.36 |
¹Includes $10.0 million and $8.2 million for the
three-months ended March 31, 2017 and 2016, respectively, related
to the recognition of deferred revenue.
²Includes $19.9 million and $3.4 million for the three-months
ended March 31, 2017 and 2016, respectively, related to distributor
termination costs.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAS OF MARCH 31, 2017 AND DECEMBER 31,
2016(In Thousands, Except Par Value) (Unaudited)
|
|
March 31,2017 |
|
December 31,2016 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
576,337 |
|
|
$ |
377,582 |
|
Short-term
investments |
|
|
209,366 |
|
|
|
220,554 |
|
Accounts receivable,
net |
|
|
509,477 |
|
|
|
448,051 |
|
The Coca-Cola Company
transaction receivable |
|
|
62,500 |
|
|
|
125,000 |
|
Inventories |
|
|
171,290 |
|
|
|
161,971 |
|
Prepaid expenses and
other current assets |
|
|
46,703 |
|
|
|
32,562 |
|
Prepaid income
taxes |
|
|
41,143 |
|
|
|
66,550 |
|
Total
current assets |
|
|
1,616,816 |
|
|
|
1,432,270 |
|
|
|
|
|
|
INVESTMENTS |
|
|
477 |
|
|
|
2,394 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
189,631 |
|
|
|
173,343 |
|
DEFERRED INCOME
TAXES |
|
|
158,739 |
|
|
|
159,556 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE
ASSETS, net |
|
|
1,032,886 |
|
|
|
1,032,635 |
|
OTHER ASSETS |
|
|
19,555 |
|
|
|
21,630 |
|
Total Assets |
|
$ |
4,349,747 |
|
|
$ |
4,153,471 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
178,093 |
|
|
$ |
193,270 |
|
Accrued
liabilities |
|
|
92,043 |
|
|
|
79,526 |
|
Accrued promotional
allowances |
|
|
125,533 |
|
|
|
110,237 |
|
Accrued distributor
terminations |
|
|
8,506 |
|
|
|
8,184 |
|
Deferred revenue |
|
|
42,625 |
|
|
|
41,672 |
|
Accrued
compensation |
|
|
14,275 |
|
|
|
30,043 |
|
Income taxes
payable |
|
|
8,749 |
|
|
|
7,657 |
|
Total
current liabilities |
|
|
469,824 |
|
|
|
470,589 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
349,697 |
|
|
|
353,173 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
Common
stock - $0.005 par value; 1,250,000 shares authorized; 624,405
shares issued and 567,769 outstanding as of March 31,
2017; 623,201 shares issued and 566,566 outstanding as of
December 31, 2016 |
|
3,122 |
|
|
|
3,116 |
|
Additional
paid-in-capital |
|
|
4,072,508 |
|
|
|
4,051,245 |
|
Retained earnings |
|
|
2,285,528 |
|
|
|
2,107,548 |
|
Accumulated other
comprehensive loss |
|
|
(21,917 |
) |
|
|
(23,249 |
) |
Common
stock in treasury, at cost; 56,636 and 56,635 shares as of
March 31, 2017 and December 31, 2016, respectively |
|
(2,809,015 |
) |
|
|
(2,808,951 |
) |
Total
stockholders' equity |
|
|
3,530,226 |
|
|
|
3,329,709 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
4,349,747 |
|
|
$ |
4,153,471 |
|
CONTACTS:
Rodney C. Sacks
Chairman and Chief Executive Officer
(951) 739-6200
Hilton H. Schlosberg
Vice Chairman
(951) 739-6200
Roger S. Pondel / Judy Lin Sfetcu
PondelWilkinson Inc.
(310) 279-5980
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