Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three- and six-months ended June 30,
2021, including an update on the impact of the COVID-19 pandemic.
Despite the ongoing impact of the COVID-19 pandemic, the Company
achieved record second quarter net sales. The Company continues to
experience shortages in its aluminum can requirements in North
America and Europe, given the Company’s volume growth and the
current supply constraints in the aluminum can industry. The
Company is also experiencing delays in procuring certain
ingredients, both domestically and internationally. As a result,
the Company has not been able to fully satisfy demand in the United
States and EMEA in the 2021 second quarter. The Company has taken
steps to source additional quantities of aluminum cans from the
United States, South America and Asia, however, logistical issues,
including shortages of shipping containers and port of entry
congestion, could delay the ongoing international supply of
aluminum cans.
As of June 30, 2021, the Company had $1.58 billion in cash and
cash equivalents, $969.0 million in short-term investments and
$91.0 million in long-term investments. Based on currently
available information, the Company does not expect the COVID-19
pandemic to have a material impact on its liquidity.
Second Quarter ResultsThe adverse impact of the
COVID-19 pandemic on the Company’s net sales was more pronounced in
the comparative 2020 second quarter.
Net sales for the 2021 second quarter increased 33.6 percent to
$1.46 billion, from $1.09 billion in the same period last year. Net
changes in foreign currency exchange rates had a favorable impact
on net sales for the 2021 second quarter of $38.6 million.
Net sales for the Company’s Monster Energy® Drinks segment,
which primarily includes the Company’s Monster Energy® drinks and
Reign Total Body Fuel® high performance energy drinks, increased
33.0 percent to $1.37 billion for the 2021 second quarter, from
$1.03 billion for the 2020 second quarter. Net changes in foreign
currency exchange rates had a favorable impact on net sales for the
Monster Energy® Drinks segment of approximately $35.5 million for
the 2021 second 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 45.9 percent to $86.9 million for the 2021 second
quarter, from $59.6 million in the 2020 second quarter. Net changes
in foreign currency exchange rates had a favorable impact on net
sales for the Strategic Brands segment of approximately $3.1
million for the 2021 second quarter.
Net sales for the Company’s Other segment, which includes
certain products of American Fruits and Flavors, LLC, a wholly
owned subsidiary of the Company, sold to independent third-party
customers (the “AFF Third-Party Products”), increased to $7.9
million for the 2021 second quarter, from $6.6 million in the 2020
second quarter.
Net sales to customers outside the United States increased 66.4
percent to $546.3 million in the 2021 second quarter, from $328.3
million in the 2020 second quarter. Such sales were approximately
37 percent of total net sales in the 2021 second quarter, compared
with 30 percent in the 2020 second quarter.
Gross profit as a percentage of net sales, for the 2021 second
quarter was 57.2 percent, compared with 60.3 percent in the 2020
second quarter. The decrease in gross profit as a percentage of net
sales for the 2021 second quarter was primarily the result of
geographical sales mix and increased input costs (mainly increased
raw material freight-in costs and aluminum can costs).
Operating expenses for the 2021 second quarter were $310.9
million, compared with $252.2 million in the 2020 second quarter.
As a percentage of net sales, operating expenses for the 2021
second quarter were 21.3 percent, compared with 23.1 percent in the
2020 second quarter. The increase in operating expenses was
primarily due to decreased expenditures in the comparative 2020
second quarter for sponsorships, endorsements, and other marketing
activities, all largely a consequence of the COVID-19 pandemic. The
increase in operating expenses for the 2021 second quarter was
partially offset by $16.9 million due to the reversal of amounts
previously accrued in connection with an intellectual property
claim.
Distribution costs as a percentage of net sales were 4.4 percent
for the 2021 second quarter, compared with 3.6 percent in the 2020
second quarter.
Selling expenses as a percentage of net sales for the 2021
second quarter were 9.0 percent, compared with 8.8 percent in the
2020 second quarter.
General and administrative expenses for the 2021 second quarter
were $115.0 million, or 7.9 percent of net sales, compared with
$116.8 million, or 10.7 percent of net sales, for the 2020 second
quarter. Stock-based compensation was $17.3 million for the second
quarter of 2021, compared with $16.1 million in the 2020 second
quarter.
Operating income for the 2021 second quarter increased to $526.0
million, from $407.3 million in the 2020 second quarter.
The effective tax rate for the 2021 second quarter was 23.4
percent, compared with 23.2 percent in the 2020 second quarter.
Net income for the 2021 second quarter increased 29.7 percent to
$403.8 million, from $311.4 million in the 2020 second quarter. Net
income per diluted share for the 2021 second quarter increased 28.6
percent to $0.75, from $0.59 in the second quarter of 2020.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said:
“We are pleased with our record financial results for the second
quarter, despite the impact of the COVID-19 pandemic and
particularly of the Delta variant.
“The energy drink category, and in particular our Monster
Energy® brand, continues to demonstrate sustained growth in most of
our markets.
“In the second quarter of 2021, we continued to secure
distribution in both our domestic and international markets for our
products, including our new products introduced earlier this year.
We are planning for additional launches during the second half of
2021,” Sacks added.
Vice Chairman and Co-Chief Executive Officer Hilton H.
Schlosberg said: “The Company experienced challenges keeping up
with demand in the second quarter in the United States and in EMEA,
largely as a result of a shortage in aluminum cans. In order to
satisfy increased demand, we have secured aluminum cans in excess
of our contracted volumes from the United States, South America and
Asia, with expected deliveries increasing sequentially during the
latter half of the year. However, the shortage of
shipping containers, as well as global port congestion may
delay the arrival of imported cans. In addition, the Company has
entered into supply agreements with two new aluminum can suppliers
in the United States, which are expected to be operational in the
2021 fourth quarter.
“To meet such increased demand, we experienced freight
inefficiencies in the United States and in EMEA, which resulted in
increased costs of sales as well as increased operating expenses in
the 2021 second quarter. We are continuing to experience
increased input costs including from aluminum,” Schlosberg
added.
2021 Six-Months ResultsNet sales for the
six-months ended June 30, 2021 increased 25.5 percent to $2.71
billion, from $2.16 billion in the comparable period last year. Net
changes in foreign currency exchange rates had a favorable impact
on net sales for the six-months ended June 30, 2021, of $47.9
million.
Gross profit as a percentage of net sales for the six-months
ended June 30, 2021 was 57.4 percent, compared with 60.1
percent in the comparable period last year.
Operating expenses for the six-months ended June 30, 2021
were $611.7 million, compared with $524.4 million in the comparable
period last year.
Operating income for the six-months ended June 30, 2021
increased to $940.1 million, from $772.3 million in the comparable
period last year.
The effective tax rate was 23.5 percent for both the six-months
ended June 30, 2021 and 2020.
Net income for the six-months ended June 30, 2021 increased
21.8 percent to $719.0 million, from $590.2 million in the
comparable period last year. Net income per diluted share for
the six-months ended June 30, 2021 increased 21.9 percent to
$1.34, from $1.10 in the comparable period last year.
Share Repurchase ProgramNo shares
of the Company’s common stock were repurchased during the 2021
second quarter. As of August 5, 2021, approximately $441.5 million
remained available for repurchase under the previously authorized
repurchase program.
Investor Conference CallThe
Company will host an investor conference call today, August 5,
2021, 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, Juice Monster® Energy + Juice
energy drinks, Java Monster® non-carbonated coffee + energy drinks,
Espresso Monster® non-carbonated espresso + energy drinks, Rehab®
Monster™ non-carbonated energy drinks, Monster Hydro® Energy Water™
non-carbonated refreshment + energy drinks, Monster Hydro Super
Sport™ Superior Hydration non-carbonated refreshment + energy
drinks, Monster HydroSport Super Fuel® non-carbonated advanced
hydration + energy drinks, Monster Dragon Iced Tea® non-carbonated
energy teas, Muscle Monster® non-carbonated energy shakes, Monster
Energy® Nitro energy drinks, Reign Total Body Fuel® high
performance energy drinks, Reign Inferno® thermogenic fuel high
performance energy drinks, True North™ Pure Energy Seltzer energy
drinks, NOS® energy drinks, Full Throttle® energy drinks, Burn®
energy drinks, Samurai® energy drinks, Relentless® energy drinks,
Mother® energy drinks, Play® and Power Play® (stylized) energy
drinks, BU® energy drinks, Nalu® energy drinks, BPM® energy drinks,
Gladiator® energy drinks, Ultra Energy® energy drinks, Live+®
energy drinks, Predator® energy drinks and Fury® energy drinks. For
more information, visit www.monsterbevcorp.com.
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: the direct and indirect impacts of the human and
economic consequences of the COVID-19 pandemic, including the new
variants, as well as measures being taken or that may be taken in
the future by governments, and consequently, businesses (including
the Company and its suppliers, bottlers/distributors, co-packers
and other service providers), and the public at large to limit the
COVID-19 pandemic; the impact on consumer demand of the resurgence
of the COVID-19 pandemic, including new variants, in many of the
countries and territories in which we operate resulting in a number
of countries, reinstituting lockdowns and other restrictions;
fluctuations in growth rates and/or decline in sales of the
domestic and international energy drink categories generally,
including in the convenience and gas channel (which is our largest
channel), and the impact on demand for products resulting from
deteriorating economic conditions and/or financial uncertainties
due to the COVID-19 pandemic; our ability to recognize benefits
from The Coca-Cola Company (TCCC) transaction; our extensive
commercial arrangements with TCCC and, as a result, our future
performance’s substantial dependence on the success of our
relationship with TCCC; the impact on our business of trademark and
trade dress infringement proceedings brought against us relating to
our Reign Total Body Fuel® high performance energy drinks; exposure
to significant liabilities due to litigation, legal or regulatory
proceedings; intellectual property injunctions; our ability to
introduce and increase sales of both existing and new products, and
the impact of the COVID-19 pandemic on our innovation plans; 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, product safety
and quality, water usage, environmental impact and sustainability,
human rights, our culture, workforce 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; the
effects of retailer and/or bottler/distributor consolidation on our
business; our ability to successfully adapt to the changing
landscape of advertising, marketing, promotional, sponsorship and
endorsement opportunities created by the COVID-19 pandemic;
unilateral decisions by bottlers/distributors, buying groups,
convenience chains, grocery chains, mass merchandisers, specialty
chain stores, e-commerce retailers, e-commerce websites, club
stores and other customers to discontinue carrying all or any of
our products that they are carrying at any time, restrict the range
of our products they carry, impose restrictions or limitations on
the sale of our products and/or devote less resources to the sale
of our products; changes in governmental regulation; the imposition
of new and/or increased excise sales and/or other taxes on our
products; our ability to adapt to the changing retail landscape
with the rapid growth in e-commerce retailers and e-commerce
websites; criticism of energy drinks and/or the energy drink market
generally; changes in U.S. tax laws as a result of any legislation
proposed by the new U.S. presidential administration or U.S.
Congress; 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; possible recalls of our products and/or the
consequences and costs of defective production; our ability to
absorb, reduce or pass on to our bottlers/distributors increases in
commodity costs, including freight costs; 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, 2020, and our
subsequently filed quarterly reports. 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- AND
SIX-MONTHS ENDED JUNE 30, 2021 AND 2020(In
Thousands, Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
Three-Months Ended |
|
Six-Months Ended |
|
June 30, |
|
June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net sales¹ |
$ |
1,461,934 |
|
|
$ |
1,093,896 |
|
|
$ |
2,705,751 |
|
|
$ |
2,155,993 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
625,096 |
|
|
|
434,427 |
|
|
|
1,153,976 |
|
|
|
859,329 |
|
|
|
|
|
|
|
|
|
Gross profit¹ |
|
836,838 |
|
|
|
659,469 |
|
|
|
1,551,775 |
|
|
|
1,296,664 |
|
Gross profit as a percentage
of net sales |
|
57.2 |
% |
|
|
60.3 |
% |
|
|
57.4 |
% |
|
|
60.1 |
% |
|
|
|
|
|
|
|
|
Operating expenses |
|
310,863 |
|
|
|
252,205 |
|
|
|
611,652 |
|
|
|
524,412 |
|
Operating expenses as a
percentage of net sales |
|
21.3 |
% |
|
|
23.1 |
% |
|
|
22.6 |
% |
|
|
24.3 |
% |
|
|
|
|
|
|
|
|
Operating income¹ |
|
525,975 |
|
|
|
407,264 |
|
|
|
940,123 |
|
|
|
772,252 |
|
Operating income as a
percentage of net sales |
|
36.0 |
% |
|
|
37.2 |
% |
|
|
34.7 |
% |
|
|
35.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
(expense), net |
|
872 |
|
|
|
(1,796 |
) |
|
|
111 |
|
|
|
(923 |
) |
|
|
|
|
|
|
|
|
Income before provision for
income taxes¹ |
|
526,847 |
|
|
|
405,468 |
|
|
|
940,234 |
|
|
|
771,329 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
123,085 |
|
|
|
94,099 |
|
|
|
221,278 |
|
|
|
181,125 |
|
Income taxes as a percentage
of income before taxes |
|
23.4 |
% |
|
|
23.2 |
% |
|
|
23.5 |
% |
|
|
23.5 |
% |
|
|
|
|
|
|
|
|
Net income |
$ |
403,762 |
|
|
$ |
311,369 |
|
|
$ |
718,956 |
|
|
$ |
590,204 |
|
Net income as a percentage of
net sales |
|
27.6 |
% |
|
|
28.5 |
% |
|
|
26.6 |
% |
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.76 |
|
|
$ |
0.59 |
|
|
$ |
1.36 |
|
|
$ |
1.11 |
|
Diluted |
$ |
0.75 |
|
|
$ |
0.59 |
|
|
$ |
1.34 |
|
|
$ |
1.10 |
|
|
|
|
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents: |
|
|
|
|
|
|
|
Basic |
|
528,653 |
|
|
|
526,911 |
|
|
|
528,425 |
|
|
|
531,486 |
|
Diluted |
|
535,557 |
|
|
|
531,191 |
|
|
|
535,324 |
|
|
|
535,897 |
|
|
|
|
|
|
|
|
|
Case sales (in thousands) (in
192-ounce case equivalents) |
|
161,450 |
|
|
|
116,960 |
|
|
|
300,017 |
|
|
|
232,559 |
|
Average net sales per
case2 |
$ |
9.01 |
|
|
$ |
9.30 |
|
|
$ |
8.97 |
|
|
$ |
9.22 |
|
|
|
|
|
|
|
|
|
1Includes $10.4 million and $10.5 million for
the three-months ended June 30, 2021 and 2020, respectively,
related to the recognition of deferred revenue. Includes $20.9
million and $21.1 million for the six-months ended June 30, 2021
and 2020, respectively, related to the recognition of deferred
revenue.
2Excludes Other segment net sales of $7.9 million and $6.6
million for the three-months ended June 30, 2021 and 2020,
respectively, comprised of net 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 $13.6 million
and $11.7 million for the six-months ended June 30, 2021 and 2020,
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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAS OF JUNE 30, 2021 AND DECEMBER 31,
2020(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
|
|
|
|
June 30,2021 |
|
December 31,2020 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,584,239 |
|
|
$ |
1,180,413 |
|
Short-term investments |
|
|
968,952 |
|
|
|
881,354 |
|
Accounts receivable, net |
|
|
909,169 |
|
|
|
666,012 |
|
Inventories |
|
|
382,890 |
|
|
|
333,085 |
|
Prepaid expenses and other
current assets |
|
|
83,086 |
|
|
|
55,358 |
|
Prepaid income taxes |
|
|
22,339 |
|
|
|
24,733 |
|
Total current assets |
|
|
3,950,675 |
|
|
|
3,140,955 |
|
|
|
|
|
|
INVESTMENTS |
|
|
91,033 |
|
|
|
44,291 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
309,178 |
|
|
|
314,656 |
|
DEFERRED INCOME TAXES,
net |
|
|
241,297 |
|
|
|
241,650 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE ASSETS,
net |
|
|
1,058,323 |
|
|
|
1,059,046 |
|
OTHER ASSETS |
|
|
89,394 |
|
|
|
70,475 |
|
Total Assets |
|
$ |
7,071,543 |
|
|
$ |
6,202,716 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
362,900 |
|
|
$ |
296,800 |
|
Accrued liabilities |
|
|
172,498 |
|
|
|
142,653 |
|
Accrued promotional
allowances |
|
|
227,414 |
|
|
|
186,658 |
|
Deferred revenue |
|
|
46,656 |
|
|
|
45,429 |
|
Accrued compensation |
|
|
46,770 |
|
|
|
55,015 |
|
Income taxes payable |
|
|
31,289 |
|
|
|
23,433 |
|
Total current liabilities |
|
|
887,527 |
|
|
|
749,988 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
252,056 |
|
|
|
264,436 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
26,462 |
|
|
|
27,432 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Common stock -
$0.005 par value; 1,250,000 shares authorized;639,576 shares issued
and 528,857 shares outstanding as of June 30, 2021;638,662 shares
issued and 528,097 shares outstanding as of December 31, 2020 |
|
3,198 |
|
|
|
3,193 |
|
Additional paid-in
capital |
|
|
4,597,333 |
|
|
|
4,537,982 |
|
Retained earnings |
|
|
7,151,030 |
|
|
|
6,432,074 |
|
Accumulated other
comprehensive (loss) income |
|
|
(16,822 |
) |
|
|
3,034 |
|
Common stock in
treasury, at cost; 110,719 and 110,565 shares as of June 30, 2021
and December 31, 2020, respectively |
|
(5,829,241 |
) |
|
|
(5,815,423 |
) |
Total stockholders' equity |
|
|
5,905,498 |
|
|
|
5,160,860 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
7,071,543 |
|
|
$ |
6,202,716 |
|
|
|
|
|
|
|
|
|
|
CONTACTS:
Rodney C. SacksChairman and Co-Chief Executive Officer(951)
739-6200
Hilton H. SchlosbergVice Chairman and Co-Chief Executive
Officer(951) 739-6200
Roger S. Pondel / Judy Lin SfetcuPondelWilkinson Inc.(310)
279-5980
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