-- Second Quarter Net Sales Rise 9.6
percent to $907.1 million ---- Second Quarter
Gross Sales Top $1.0 billion ---- Second Quarter
Net Income Increases 20.9 percent to $222.6 million
---- Second Quarter Net Income per diluted share
increases 28.6 percent to $0.39 per share --
Monster Beverage Corporation (NASDAQ:MNST) today reported financial
results for the three- and six-months ended June 30, 2017.
Second Quarter ResultsNet sales for the 2017
second quarter increased 9.6 percent to $907.1 million from $827.5
million in the same period last year. Gross sales for the
2017 second quarter increased 9.8 percent to $1.04 billion from
$945.8 million a year ago. Unfavorable currency exchange rates
reduced net sales by approximately $8.2 million and gross sales by
approximately $11.6 million in the 2017 second quarter. The
comparable 2016 second quarter net and gross sales included $5.0
million of accelerated deferred revenue related to distributor
transitions. Excluding accelerated recognition of deferred revenue
from the comparable 2016 second quarter, net and gross sales for
the 2017 second quarter increased 10.3 percent and 10.4 percent,
respectively.
Net sales for the Company’s Monster Energy® Drinks segment,
which is comprised of the Company’s Monster Energy® drinks, Monster
HydroTM energy drinks and Mutant® Super Soda drinks, increased 9.7
percent to $815.3 million for the 2017 second quarter, from $743.5
million for the same period last year. The comparable 2016
second quarter net sales for the Company’s Monster Energy® Drinks
segment included $5.0 million of accelerated deferred revenue
related to distributor transitions. Net sales for the Company’s
Strategic Brands segment, which includes the various energy drink
brands acquired from The Coca-Cola Company, increased 10.6 percent
to $85.6 million for the 2017 second quarter, from $77.4 million in
the comparable 2016 quarter. Net sales for the Company’s Other
segment, which includes certain products of American Fruits &
Flavors (“AFF”) sold to independent third parties, were $6.2
million for the 2017 second quarter, compared with $6.6 million in
the 2016 second quarter.
Net sales to customers outside the United States increased 23.8
percent to $247.9 million in the 2017 second quarter, from $200.2
million in the corresponding quarter last year.
Gross profit, as a percentage of net sales, for the 2017 second
quarter, increased to 64.3 percent from 62.6 percent for the
comparable 2016 second quarter.
Operating expenses for the 2017 second quarter were $233.5
million, compared with $229.3 million in the 2016 second quarter.
Included in operating expenses were distributor termination
expenses of $0.2 million and $25.3 million for the 2017 and 2016
second quarters, respectively. Included in operating expenses for
the comparable 2016 second quarter were AFF transaction related
expenses of $3.6 million and stock repurchase expenses of $1.5
million.
Distribution costs as a percentage of net sales were 3.0 percent
for the 2017 second quarter, compared with 3.2 percent in the
second quarter last year.
Selling expenses as a percentage of net sales for the 2017
second quarter were 12.6 percent, compared with 11.2 percent in the
second quarter last year.
General and administrative expenses for the 2017 second quarter
were $91.4 million, or 10.1 percent of net sales, compared with
$110.0 million, or 13.3 percent of net sales, for the comparable
2016 second quarter. Included in general and administrative
expenses were distributor termination expenses of $0.2 million and
$25.3 million for the 2017 and 2016 second quarters, respectively.
Included in general and administrative expenses for the comparable
2016 second quarter were AFF transaction related expenses of $3.6
million and stock repurchase expenses of $1.5 million.
General and administrative expenses, excluding distributor
terminations, AFF transaction expenses and stock repurchase
expenses, were 10.1 percent of net sales for the 2017 second
quarter, compared with 9.6 percent of net sales for the comparable
2016 second quarter. Stock-based compensation (a non-cash item) was
$12.8 million for the second quarter of 2017, compared with $11.5
million in the second quarter last year.
Operating income for the 2017 second quarter increased to $350.0
million from $288.5 million in the comparable 2016 quarter.
The effective tax rate for the 2017 second quarter was 35.9
percent, compared with 36.1 percent in the same period last
year.
Net income for the 2017 second quarter increased 20.9 percent to
$222.6 million from $184.2 million in the same period last
year. Net income per diluted share for the 2017 second
quarter increased 28.6 percent to $0.39 from $0.30 in the second
quarter of 2016.
Rodney C. Sacks, Chairman and Chief Executive Officer, said: “We
are pleased to report that gross sales in the quarter exceeded a
record $1 billion, marking a milestone in the Company’s progress.
In the quarter, we continued with the strategic alignment of our
distribution system with Coca-Cola system bottlers. During
the second quarter, we launched 14 new operating units in China,
with the remaining two operating units having launched in July. We
also successfully transitioned Hong Kong and Macau to Coca-Cola
bottlers. We are planning to launch or transition the Monster
brand in other countries later this year and relaunch in India.
During the quarter, we launched Monster HydroTM energy drinks
in a unique PET can in the United States and in a PET bottle in the
United Kingdom and Ireland, as well as Monster Energy® Lewis
Hamilton 44 in a number of countries in Europe, Mutant® Super Soda
White Lightning® in the United States, as well as Juice Monster®
Mango Loco in the United States. Further new product launches
are planned for 2017 and 2018.
“Our 2017 second quarter results continued to be adversely
impacted by unfavorable currency exchange rates as well as
production shortages of our Java Monster® and Muscle Monster®
products,” Sacks added.
2017 Six MonthsNet sales for the six-months
ended June 30, 2017 increased 9.4 percent to $1.6 billion from $1.5
billion for the same period in 2016. Gross sales for the six-months
ended June 30, 2017 increased 9.4 percent to $1.9 billion from $1.7
billion for the same period in 2016.
Gross profit as a percentage of net sales was 64.5 percent for
the six-months ended June 30, 2017, compared with 62.4 percent for
the comparable period in 2016.
Operating expenses for the six-months ended June 30, 2017 were
$450.1 million, compared with $397.7 million in the same period
last year. Included in operating expenses were distributor
termination expenses of $20.1 million and $28.7 million for the
first half of 2017 and 2016, respectively. Included in operating
expenses for the comparable 2016 period were AFF transaction
related expenses of $4.5 million and stock repurchase expenses of
$1.6 million.
Operating income for the first six months of 2017 was $614.3
million, compared with $543.2 million for the comparable period in
2016.
Net income for the six-months ended June 30, 2017 was $400.6
million, or $0.69 per diluted share, compared with $348.1 million,
or $0.56 per diluted share, for the first half of 2016. The
effective tax rate was 34.6 percent for the six-months ended June
30, 2017, versus 36.0 percent for the comparable period in
2016.
Investor Conference CallThe
Company will host an investor conference call today, August 8,
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 Corporation Based
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 Ultra™ 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, Monster Hydro™ 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
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER
INFORMATION |
FOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2017 AND
2016 |
(In Thousands, Except Per Share Amounts)
(Unaudited) |
|
Three-Months Ended |
|
Six-Months Ended |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales1 |
$ |
907,068 |
|
|
$ |
827,488 |
|
|
$ |
1,649,214 |
|
|
$ |
1,507,674 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
323,571 |
|
|
|
309,674 |
|
|
|
584,843 |
|
|
|
566,762 |
|
|
|
|
|
|
|
|
|
Gross profit1 |
|
583,497 |
|
|
|
517,814 |
|
|
|
1,064,371 |
|
|
|
940,912 |
|
Gross profit as a
percentage of net sales |
|
64.3 |
% |
|
|
62.6 |
% |
|
|
64.5 |
% |
|
|
62.4 |
% |
|
|
|
|
|
|
|
|
Operating
expenses2 |
|
233,456 |
|
|
|
229,291 |
|
|
|
450,068 |
|
|
|
397,675 |
|
Operating expenses as a
percentage of net sales |
|
25.7 |
% |
|
|
27.7 |
% |
|
|
27.3 |
% |
|
|
26.4 |
% |
|
|
|
|
|
|
|
|
Operating
income1,2 |
|
350,041 |
|
|
|
288,523 |
|
|
|
614,303 |
|
|
|
543,237 |
|
Operating income as a
percentage of net sales |
|
38.6 |
% |
|
|
34.9 |
% |
|
|
37.2 |
% |
|
|
36.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
(expense) income, net |
|
(2,551 |
) |
|
|
(222 |
) |
|
|
(1,893 |
) |
|
|
386 |
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes1,2 |
|
347,490 |
|
|
|
288,301 |
|
|
|
612,410 |
|
|
|
543,623 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
124,857 |
|
|
|
104,082 |
|
|
|
211,797 |
|
|
|
195,526 |
|
Income taxes as a
percentage of income before taxes |
|
35.9 |
% |
|
|
36.1 |
% |
|
|
34.6 |
% |
|
|
36.0 |
% |
|
|
|
|
|
|
|
|
Net income1,2 |
$ |
222,633 |
|
|
$ |
184,219 |
|
|
$ |
400,613 |
|
|
$ |
348,097 |
|
Net income as a
percentage of net sales |
|
24.5 |
% |
|
|
22.3 |
% |
|
|
24.3 |
% |
|
|
23.1 |
% |
|
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
0.31 |
|
|
$ |
0.71 |
|
|
$ |
0.57 |
|
Diluted |
$ |
0.39 |
|
|
$ |
0.30 |
|
|
$ |
0.69 |
|
|
$ |
0.56 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares of common stock and common stock
equivalents: |
|
|
|
|
|
|
|
Basic |
|
567,910 |
|
|
|
602,937 |
|
|
|
567,384 |
|
|
|
605,886 |
|
Diluted |
|
578,020 |
|
|
|
614,904 |
|
|
|
577,719 |
|
|
|
617,844 |
|
|
|
|
|
|
|
|
|
Case sales (in
thousands) (in 192-ounce case equivalents) |
|
97,233 |
|
|
|
87,574 |
|
|
|
177,225 |
|
|
|
160,227 |
|
Average net sales per
case3 |
$ |
9.27 |
|
|
$ |
9.37 |
|
|
$ |
9.24 |
|
|
$ |
9.37 |
|
1Includes $10.2 million and $12.1 million for
the three-months ended June 30, 2017 and 2016, respectively,
related to the recognition of deferred revenue. Includes $20.1
million and $20.2 million for the six-months ended June 30, 2017
and 2016, respectively, related to the recognition of deferred
revenue.
²Includes $0.2 million and $25.3 million for the three-months
ended June 30, 2017 and 2016, respectively, of distributor
termination costs. Includes $20.1 million and $28.7 million for the
six-months ended June 30, 2017 and 2016, respectively, of
distributor termination costs.
3Excludes Other segment net sales of $6.2 million and $6.6
million for the three-months ended June 30, 2017 and 2016,
respectively, comprised of sales of AFF Third-Party Products to
independent third-party customers as these sales do not have unit
case equivalents. Excludes Other segment net sales of $11.7 million
and $6.4 million for the six-months ended June 30, 2017 and 2016,
respectively, comprised of sales of AFF Third-Party Products to
independent third-party customers as these sales do not have unit
case equivalents.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
AS OF JUNE 30, 2017 AND DECEMBER 31, 2016 |
(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
June 30,2017 |
|
December 31,2016 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
777,655 |
|
|
$ |
377,582 |
|
Short-term
investments |
|
|
323,851 |
|
|
|
220,554 |
|
Accounts receivable,
net |
|
|
537,082 |
|
|
|
448,051 |
|
The Coca-Cola Company
transaction receivable |
|
|
- |
|
|
|
125,000 |
|
Inventories |
|
|
190,600 |
|
|
|
161,971 |
|
Prepaid expenses and
other current assets |
|
|
44,399 |
|
|
|
32,562 |
|
Prepaid income
taxes |
|
|
6,492 |
|
|
|
66,550 |
|
Total
current assets |
|
|
1,880,079 |
|
|
|
1,432,270 |
|
|
|
|
|
|
INVESTMENTS |
|
|
48,639 |
|
|
|
2,394 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
211,555 |
|
|
|
173,343 |
|
DEFERRED INCOME
TAXES |
|
|
158,739 |
|
|
|
159,556 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE
ASSETS, net |
|
|
1,032,874 |
|
|
|
1,032,635 |
|
OTHER ASSETS |
|
|
20,602 |
|
|
|
21,630 |
|
Total Assets |
|
$ |
4,684,131 |
|
|
$ |
4,153,471 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
242,667 |
|
|
$ |
193,270 |
|
Accrued
liabilities |
|
|
100,801 |
|
|
|
79,526 |
|
Accrued promotional
allowances |
|
|
141,483 |
|
|
|
110,237 |
|
Accrued distributor
terminations |
|
|
301 |
|
|
|
8,184 |
|
Deferred revenue |
|
|
43,946 |
|
|
|
41,672 |
|
Accrued
compensation |
|
|
23,022 |
|
|
|
30,043 |
|
Income taxes
payable |
|
|
8,951 |
|
|
|
7,657 |
|
Total
current liabilities |
|
|
561,171 |
|
|
|
470,589 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
346,943 |
|
|
|
353,173 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
Common
stock - $0.005 par value; 1,250,000 shares authorized; 624,762
shares issued and 568,121 outstanding as of June 30,
2017; 623,201 shares issued and 566,566 outstanding as of
December 31, 2016 |
|
3,124 |
|
|
|
3,116 |
|
Additional
paid-in-capital |
|
|
4,090,818 |
|
|
|
4,051,245 |
|
Retained earnings |
|
|
2,508,161 |
|
|
|
2,107,548 |
|
Accumulated other
comprehensive loss |
|
|
(16,833 |
) |
|
|
(23,249 |
) |
Common
stock in treasury, at cost; 56,641 and 56,635 shares as of
June 30, 2017 and December 31, 2016, respectively |
|
(2,809,253 |
) |
|
|
(2,808,951 |
) |
Total
stockholders' equity |
|
|
3,776,017 |
|
|
|
3,329,709 |
|
Total Liabilities and Stockholders’
Equity |
|
$ |
4,684,131 |
|
|
$ |
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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