-- First Quarter Net Sales rise 11.2
percent to $946.0 million ---- First Quarter Net
Income increases 21.0 percent to $261.5 million
---- First Quarter Net Income per diluted share
increases 26.7 percent to $0.48 per share ----
First Quarter Distributor Termination Expenses were $10.7 million
--
Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three-months ended March 31, 2019.
First Quarter ResultsNet sales for the 2019
first quarter increased 11.2 percent to $946.0 million from $850.9
million in the same period last year. Gross sales for the 2019
first quarter increased 10.1 percent to $1.09 billion from $990.6
million in the same period last year. Net changes in foreign
currency exchange rates had an unfavorable impact on net and gross
sales for the 2019 first quarter of $22.0 million and $25.9
million, respectively.Net sales for the Company’s Monster Energy®
Drinks segment, which primarily includes the Company’s Monster
Energy® drinks and Reign Total Body FuelTM high performance energy
drinks, increased 11.5 percent to $870.4 million for the 2019 first
quarter, from $780.5 million for the 2018 first quarter. Net
changes in foreign currency exchange rates had an unfavorable
impact on net sales for the Monster Energy® Drinks segment of
approximately $18.2 million for the 2019 first quarter. Net sales
for the Company’s Strategic Brands segment, which primarily
includes the various energy drink brands acquired from The
Coca-Cola Company as well as the Company’s affordable energy
brands, increased 6.9 percent to $70.3 million for the 2019 first
quarter, from $65.8 million in the 2018 first quarter. Net changes
in foreign currency exchange rates had an unfavorable impact on net
sales for the Strategic Brands segment of $3.8 million for the 2019
first quarter. Net sales for the Company’s Other segment, which
includes certain products of American Fruits and Flavors sold to
independent third parties (the “AFF Third-Party Products”), were
$5.3 million for the 2019 first quarter, compared with $4.7 million
in the 2018 first quarter.Net sales to customers outside the United
States increased 17.4 percent to $284.1 million in the 2019 first
quarter, from $242.1 million in the 2018 first quarter. Such sales
were approximately 30.0 percent of total net sales in the 2019
first quarter, compared with 28.5 percent in the 2018 first
quarter.Gross profit, as a percentage of net sales, for both the
2019 and 2018 first quarters was 60.6 percent. For the 2019 first
quarter, gross profit as a percentage of net sales was positively
affected by increased sales prices of our products sold in the
United States and Canada, and to a lesser extent, product sales
mix. Gross profit as a percentage of net sales was negatively
affected by geographical sales mix and increases in certain input
costs. Operating expenses for the 2019 first quarter were
$262.1 million, compared with $235.3 million in the 2018 first
quarter. Operating expenses included distributor termination
expenses of $10.7 million for the 2019 first quarter, compared with
$7.0 million in the 2018 first quarter. Distribution costs as
a percentage of net sales were 3.8 percent for the 2019 first
quarter, compared with 3.9 percent in the 2018 first
quarter.Selling expenses as a percentage of net sales for the 2019
first quarter were 11.0 percent, compared with 11.5 percent in the
2018 first quarter.General and administrative expenses for the 2019
first quarter were $122.1 million, or 12.9 percent of net sales,
compared with $104.8 million, or 12.3 percent of net sales, for the
2018 first quarter. Stock-based compensation (a non-cash item) was
$15.3 million for the first quarter of 2019, compared with $13.4
million in the 2018 first quarter. Operating income for the
2019 first quarter increased to $311.5 million from $279.9 million
in the 2018 first quarter.The effective tax rate for the 2019 first
quarter was 16.8 percent, compared with 23.3 percent in the 2018
first quarter. The decrease in the effective tax rate was primarily
due to an increase in the deductions for equity compensation as
well as the increase in profits earned by certain foreign
subsidiaries in lower tax jurisdictions than the United
States. Net income for the 2019 first quarter increased
21.0 percent to $261.5 million from $216.1 million in the 2018
first quarter. Net income per diluted share for the 2019 first
quarter increased 26.7 percent to $0.48 from $0.38 in the first
quarter of 2018. Rodney C. Sacks, Chairman and Chief Executive
Officer, said: “Record gross and net sales in the 2019 first
quarter were again driven by growth in our Monster Energy® brand
energy drinks, new Monster Energy® brand energy drink
introductions, as well as the launch of our Reign Total Body Fuel™
high performance energy drinks.“Our strategic alignment with the
Coca-Cola system bottlers in the United States is now complete,
following the assignment of the Kalil Bottling Group’s distribution
territories in March 2019 and the transition of the Big Geyser Inc.
territory in April 2019. We are making progress in launching or
transitioning our Monster Energy® brand to Coca-Cola system
bottlers in additional countries.“In the United States, we
successfully launched Monster Energy Ultra Paradise®, our Monster
Dragon TeaTM line, and our Reign Total Body Fuel™ line of high
performance energy drinks, as well as expanded our launch of Java
Monster® Swiss Chocolate during the quarter, and launched a number
of additional Monster Energy® and Strategic Brands energy drinks in
a number of our existing international geographies. “Predator®, our
strategically preferred affordable energy brand, will be launched
in a number of additional markets internationally during 2019,”
Sacks added.
Share Repurchase ProgramDuring the
2019 first quarter, the Company purchased approximately 2.6 million
shares of its common stock at an average purchase price of $54.18
per share, for a total amount of $139.0 million (excluding broker
commissions).
As of May 2, 2019, approximately $20.6 million and
$500.0 million remained available for repurchase under the August
2018 and February 2019 repurchase programs, respectively.
Investor Conference CallThe
Company will host an investor conference call today, May 2, 2019,
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 Ultra® energy drinks, Monster MAXX® maximum strength
energy drinks, Java Monster® non-carbonated coffee + energy drinks,
Espresso Monster® non-carbonated espresso + energy drinks, Caffé
Monster® non-carbonated energy coffee drinks, Monster Rehab®
non-carbonated energy drinks, Muscle Monster® energy shakes,
Monster Hydro® energy drinks, Reign Total Body Fuel™ high
performance 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, Ultra Energy® energy drinks,
Mutant® energy drinks and Predator® energy 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 presentation 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.
The following table reconciles the non-GAAP financial measure of
gross sales with the most directly comparable GAAP financial
measure of net sales (in thousands):
|
|
Three-Months Ended March 31, |
|
|
|
2019 |
|
|
2018 |
Gross sales, net of
discounts and returns |
|
$ |
1,090,426 |
|
$ |
990,639 |
Less: Promotional and
other allowances |
|
|
144,435 |
|
|
139,718 |
Net Sales |
|
$ |
945,991 |
|
$ |
850,921 |
|
|
|
|
|
|
|
Caution Concerning Forward-Looking
Statements
Certain 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 and Flavors transaction;
outcome of our arbitration proceedings with TCCC, including TCCC
developing and distributing additional energy products; the impact
on our business of trademark and trade dress infringement
proceedings brought against us relating to our Reign Total Body
Fuel™ brand high performance energy drinks; our ability to
introduce and increase sales of both existing and new products; our
ability to implement the share repurchase programs; unanticipated
litigation concerning the Company’s products; the current
uncertainty and volatility in the national and global economy;
changes in consumer preferences; adverse publicity surrounding
obesity and health concerns related to our products, water usage,
environmental impact, human rights and labor and workplace laws;
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, including our annual report on
Form 10-K for the year ended December 31, 2018. 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-MONTHS ENDED MARCH 31, 2019 AND 2018 |
(In Thousands, Except Per Share Amounts)
(Unaudited) |
|
|
Three-Months
Ended |
|
|
March 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
Net sales¹ |
$ |
945,991 |
|
|
$ |
850,921 |
|
|
|
|
|
|
|
Cost of sales |
|
372,459 |
|
|
|
335,664 |
|
|
|
|
|
|
|
Gross profit¹ |
|
573,532 |
|
|
|
515,257 |
|
|
Gross profit as a percentage of net sales |
|
60.6 |
% |
|
|
60.6 |
% |
|
|
|
|
|
|
Operating expenses² |
|
262,071 |
|
|
|
235,342 |
|
|
Operating expenses as a percentage of net
sales |
|
27.7 |
% |
|
|
27.7 |
% |
|
|
|
|
|
|
Operating income¹,² |
|
311,461 |
|
|
|
279,915 |
|
|
Operating income as a percentage of net
sales |
|
32.9 |
% |
|
|
32.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Interest and other income, net |
|
2,742 |
|
|
|
1,805 |
|
|
|
|
|
|
|
Income before provision for income taxes¹,² |
|
314,203 |
|
|
|
281,720 |
|
|
|
|
|
|
|
Provision for income taxes |
|
52,718 |
|
|
|
65,670 |
|
|
Income taxes as a percentage of income before
taxes |
|
16.8 |
% |
|
|
23.3 |
% |
|
|
|
|
|
|
Net income¹,² |
$ |
261,485 |
|
|
$ |
216,050 |
|
|
Net income as a percentage of net sales |
|
27.6 |
% |
|
|
25.4 |
% |
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
Basic |
$ |
0.48 |
|
|
$ |
0.38 |
|
|
Diluted |
$ |
0.48 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
Weighted average number of shares of common stock
and common stock equivalents: |
|
|
|
|
Basic |
|
542,768 |
|
|
|
566,000 |
|
|
Diluted |
|
548,273 |
|
|
|
574,129 |
|
|
|
|
|
|
|
Case sales (in thousands) (in 192-ounce case
equivalents) |
|
101,284 |
|
|
|
92,315 |
|
|
Average net sales per case3 |
$ |
9.29 |
|
|
$ |
9.17 |
|
|
|
|
|
|
|
¹Includes $14.2 million and $11.2 million for
the three-months ended March 31, 2019 and 2018, respectively,
related to the recognition of deferred revenue.
²Includes $10.7 million and $7.0 million for the three-months
ended March 31, 2019 and 2018, respectively, related to distributor
termination costs.
3Excludes Other segment net sales of $5.3 million and $4.7
million for the three-months ended March 31, 2019 and 2018,
respectively, comprised of net 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 MARCH 31, 2019 AND DECEMBER 31,
2018 |
(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
|
|
|
|
March 31,2019 |
|
December 31,2018 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
618,344 |
|
|
$ |
637,513 |
|
Short-term
investments |
|
|
263,697 |
|
|
|
320,650 |
|
Accounts receivable,
net |
|
|
596,661 |
|
|
|
484,562 |
|
Inventories |
|
|
300,780 |
|
|
|
277,705 |
|
Prepaid expenses and
other current assets |
|
|
63,685 |
|
|
|
44,909 |
|
Prepaid income
taxes |
|
|
64,133 |
|
|
|
38,831 |
|
Total current
assets |
|
|
1,907,300 |
|
|
|
1,804,170 |
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
net |
|
|
241,232 |
|
|
|
243,051 |
|
DEFERRED INCOME
TAXES |
|
|
85,215 |
|
|
|
85,687 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE
ASSETS, net |
|
|
1,042,839 |
|
|
|
1,045,878 |
|
OTHER ASSETS |
|
|
47,622 |
|
|
|
16,462 |
|
Total Assets |
|
$ |
4,655,851 |
|
|
$ |
4,526,891 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
267,735 |
|
|
$ |
248,760 |
|
Accrued
liabilities |
|
|
117,350 |
|
|
|
112,507 |
|
Accrued promotional
allowances |
|
|
167,700 |
|
|
|
145,741 |
|
Accrued distributor
terminations |
|
|
10,272 |
|
|
|
- |
|
Deferred revenue |
|
|
43,591 |
|
|
|
44,045 |
|
Accrued
compensation |
|
|
18,211 |
|
|
|
39,903 |
|
Income taxes
payable |
|
|
6,113 |
|
|
|
10,189 |
|
Total current
liabilities |
|
|
630,972 |
|
|
|
601,145 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
303,241 |
|
|
|
312,224 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
22,818 |
|
|
|
2,621 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
Common
stock - $0.005 par value; 1,250,000 shares authorized;634,841
shares issued and 543,547 shares outstanding as of March 31,
2019;630,970 shares issued and 543,676 shares outstanding as of
December 31, 2018 |
|
3,174 |
|
|
|
3,155 |
|
Additional paid-in
capital |
|
|
4,288,638 |
|
|
|
4,238,170 |
|
Retained earnings |
|
|
4,176,130 |
|
|
|
3,914,645 |
|
Accumulated other
comprehensive loss |
|
|
(34,125 |
) |
|
|
(32,864 |
) |
Common
stock in treasury, at cost; 91,294 and 87,294 shares as of
March 31, 2019 and December 31, 2018, respectively |
|
(4,734,997 |
) |
|
|
(4,512,205 |
) |
Total
stockholders' equity |
|
|
3,698,820 |
|
|
|
3,610,901 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
4,655,851 |
|
|
$ |
4,526,891 |
|
|
|
|
|
|
|
|
|
|
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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