Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three- and nine-months ended September
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 third quarter net sales.
During the 2021 third quarter, the Company procured additional
quantities of aluminum cans from suppliers in the United States,
South America and Asia in response to increased consumer demand.
However, the Company continued to experience shortages in its
aluminum can requirements in the United States and EMEA during the
2021 third quarter.
In addition, the Company continued to experience additional
supply chain challenges, including, freight inefficiencies,
trucking availability, shortages of shipping containers, port of
entry congestion, insufficient co-packing capacity and delays in
the receipt of certain ingredients, in the United States and EMEA.
As a result, the Company was not able to fully satisfy increased
demand for its products in these regions in the 2021 third
quarter.
During the 2021 third quarter, the Company continued to
experience increased aluminum can costs, attributable to higher
aluminum commodity pricing as well as the costs of importing
aluminum cans. In addition, the Company experienced increased
ingredient and other input costs, including shipping and freight,
labor, trucking, fuel, co-packing fees, secondary packaging
materials and increased outbound freight costs, which resulted in
increased costs of sales and increased operating costs, in the 2021
third quarter.
As of September 30, 2021, the Company had $1.71 billion in cash
and cash equivalents, $1.22 billion in short-term investments and
$28.3 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.
Third Quarter Results
Net sales for the 2021 third quarter increased 13.2 percent to
$1.41 billion from $1.25 billion in the same period last
year. Net changes in foreign currency exchange rates
had a favorable impact on net sales for the 2021 third quarter of
$16.4 million.
Net sales for the Company’s Monster Energy® Drinks segment which
primarily includes the Company’s Monster Energy® drinks, Reign
Total Body Fuel® high performance energy drinks and True NorthTM
Pure Energy Seltzers, increased 14.3 percent to $1.33 billion for
the 2021 third quarter, from $1.16 billion for the 2020 third
quarter. Net changes in foreign currency exchange rates had a
favorable impact on net sales for the Monster Energy® Drinks
segment of approximately $15.4 million for the 2021 third
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 0.2 percent to $74.4 million for the 2021 third
quarter, from $74.3 million in the 2020 third quarter. Shortages of
NOS® concentrate negatively impacted net sales for the 2021 third
quarter. Net changes in foreign currency exchange rates had a
favorable impact on net sales for the Strategic Brands segment of
approximately $1.0 million for the 2021 third 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”), decreased to $6.3
million for the 2021 third quarter, from $8.6 million in the 2020
third quarter.
Net sales to customers outside the United States increased 18.7
percent to $527.4 million in the 2021 third quarter, from $444.5
million in the 2020 third quarter. Such sales were approximately 37
percent of total net sales in the 2021 third quarter, compared with
36 percent in the 2020 third quarter.
Gross profit, as a percentage of net sales, for the 2021 third
quarter was 55.9 percent, compared with 59.1 percent in the 2020
third quarter. The decrease in gross profit as a percentage of net
sales for the 2021 third quarter was primarily the result of
increased aluminum can costs, attributable to higher aluminum
commodity pricing, as well as the cost of importing aluminum cans,
logistical costs and geographical sales mix.
Operating expenses for the 2021 third quarter were $344.7
million, compared with $277.9 million in the 2020 third quarter.
The increase in operating expenses was primarily due to increased
out-bound freight and warehouse costs, increased expenditures for
sponsorships and endorsements, increased expenditures for other
marketing activities, including social media and digital marketing
and increased payroll costs. Operating expenses for the 2021 third
quarter also included increased expenditures of $5.3 million for
distributor terminations.
Operating expenses as a percentage of net sales for the 2021
third quarter were 24.4 percent, compared with 22.3 percent in the
2020 third quarter. Operating expenses as a percentage of net sales
for the 2019 third quarter (pre COVID-19) were 24.5 percent.
Distribution costs as a percentage of net sales were 4.6 percent
for the 2021 third quarter, compared with 3.5 percent in the 2020
third quarter.
Selling expenses as a percentage of net sales for the 2021 third
quarter were 9.7 percent, compared with 8.8 percent in the 2020
third quarter.
General and administrative expenses for the 2021 third quarter
were $142.6 million, or 10.1 percent of net sales, compared with
$125.4 million, or 10.1 percent of net sales, for the 2020 third
quarter. Stock-based compensation was $16.7 million for the third
quarter of 2021, compared with $19.5 million in the 2020 third
quarter.
Operating income for the 2021 third quarter decreased to $444.5
million, from $458.6 million in the 2020 third quarter.
The effective tax rate for the 2021 third quarter was 23.7
percent, compared with 23.4 percent in the 2020 third quarter.
Net income for the 2021 third quarter decreased 3.0 percent to
$337.2 million, from $347.7 million in the 2020 third quarter. Net
income per diluted share for the 2021 third quarter decreased 3.5
percent to $0.63, from $0.65 in the third quarter of 2020.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said:
“We are pleased to report record sales for the third quarter,
despite the ongoing impact of the COVID-19 pandemic.
“The energy drink category, and in particular our Monster
Energy® brand, continues to demonstrate resilience and growth in
most of our markets.
“In the third quarter of 2021, we expanded distribution of our
brands in certain international markets. In the United States, we
launched our line of True North™ Pure Energy Seltzer in August 2021
and are currently in the process of launching our Monster®
(stylized) Reserve line to the retail trade,” Sacks added.
Vice Chairman and Co-Chief Executive Officer Hilton H.
Schlosberg said: “We continued to face headwinds in keeping up with
demand in the United States and in EMEA in the third quarter,
largely as a result of a shortage in aluminum cans, the
availability of co-packing capacity and procurement challenges in
other inputs. Aluminum cans in excess of our contracted volumes are
entering our supply chain from the United States, South America and
Asia, in order to meet the increased consumer demand. The shortage
of shipping containers, and global port congestion continue to
impact our operations. We have entered into supply agreements with
two new aluminum can suppliers in the United States, with
deliveries commencing from October and December, respectively.
“We are experiencing increased costs in our operations,
including aluminum, shipping, freight and other inputs, some of
which are likely to be transitory. We will continue to implement
measures to mitigate such increased costs through reductions in
promotions and other pricing actions in the United States and in
EMEA,” Schlosberg added.
2021 Nine-Months ResultsNet sales for the
nine-months ended September 30, 2021 increased 21.0 percent to
$4.12 billion, from $3.40 billion in the comparable period last
year. Net changes in foreign currency exchange rates had a
favorable impact on net sales for the nine-months ended
September 30, 2021 of $64.3 million.
Gross profit, as a percentage of net sales, for the nine-months
ended September 30, 2021 was 56.9 percent, compared with 59.8
percent in the comparable period last year.
Operating expenses for the nine-months ended September 30,
2021 were $956.3 million, compared with $802.3 million in the
comparable period last year.
Operating income for the nine-months ended September 30,
2021 increased to $1.38 billion, from $1.23 billion in the
comparable period last year.
The effective tax rate was 23.6 percent for the nine-months
ended September 30, 2021, compared with 23.5 percent in the
comparable period last year.
Net income for the nine-months ended September 30, 2021
increased 12.6 percent to $1.06 billion, from $937.9 million in the
comparable period last year. Net income per diluted share for
the nine-months ended September 30, 2021 increased 12.5
percent to $1.97, from $1.75 in the comparable period last
year.
Share Repurchase Program
No shares of the Company’s common stock were
repurchased during the 2021 third quarter. As of November 4, 2021,
approximately $441.5 million remained available for repurchase
under the previously authorized repurchase program.
Investor Conference Call
The Company will host an investor conference call
today, November 4, 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 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, 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
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: 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; the
impact of vaccine mandates on our business and supply chain,
including our ability to recruit and/or retain employees, and
disruptions in the business of our co-packers,
bottlers/distributors and/or suppliers; 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 current 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
NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020(In
Thousands, Except Per Share Amounts) (Unaudited) |
|
|
|
|
|
Three-Months Ended |
|
Nine-Months Ended |
|
September 30, |
|
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net sales¹ |
$ |
1,410,557 |
|
|
$ |
1,246,362 |
|
|
$ |
4,116,308 |
|
|
$ |
3,402,355 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
621,399 |
|
|
|
509,831 |
|
|
|
1,775,375 |
|
|
|
1,369,160 |
|
|
|
|
|
|
|
|
|
Gross profit¹ |
|
789,158 |
|
|
|
736,531 |
|
|
|
2,340,933 |
|
|
|
2,033,195 |
|
Gross profit as a percentage
of net sales |
|
55.9 |
% |
|
|
59.1 |
% |
|
|
56.9 |
% |
|
|
59.8 |
% |
|
|
|
|
|
|
|
|
Operating expenses |
|
344,694 |
|
|
|
277,930 |
|
|
|
956,346 |
|
|
|
802,343 |
|
Operating expenses as a
percentage of net sales |
|
24.4 |
% |
|
|
22.3 |
% |
|
|
23.2 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
Operating income¹ |
|
444,464 |
|
|
|
458,601 |
|
|
|
1,384,587 |
|
|
|
1,230,852 |
|
Operating income as a
percentage of net sales |
|
31.5 |
% |
|
|
36.8 |
% |
|
|
33.6 |
% |
|
|
36.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense,
net |
|
2,290 |
|
|
|
4,568 |
|
|
|
2,179 |
|
|
|
5,491 |
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes¹ |
|
442,174 |
|
|
|
454,033 |
|
|
|
1,382,408 |
|
|
|
1,225,361 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
104,969 |
|
|
|
106,379 |
|
|
|
326,247 |
|
|
|
287,503 |
|
Income taxes as a percentage
of income before taxes |
|
23.7 |
% |
|
|
23.4 |
% |
|
|
23.6 |
% |
|
|
23.5 |
% |
|
|
|
|
|
|
|
|
Net income |
$ |
337,205 |
|
|
$ |
347,654 |
|
|
$ |
1,056,161 |
|
|
$ |
937,858 |
|
Net income as a percentage of
net sales |
|
23.9 |
% |
|
|
27.9 |
% |
|
|
25.7 |
% |
|
|
27.6 |
% |
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.64 |
|
|
$ |
0.66 |
|
|
$ |
2.00 |
|
|
$ |
1.77 |
|
Diluted |
$ |
0.63 |
|
|
$ |
0.65 |
|
|
$ |
1.97 |
|
|
$ |
1.75 |
|
|
|
|
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents: |
|
|
|
|
|
|
|
Basic |
|
528,997 |
|
|
|
527,637 |
|
|
|
528,618 |
|
|
|
530,194 |
|
Diluted |
|
535,915 |
|
|
|
533,263 |
|
|
|
535,554 |
|
|
|
535,011 |
|
|
|
|
|
|
|
|
|
Case sales (in thousands) (in
192-ounce case equivalents) |
|
159,975 |
|
|
|
139,922 |
|
|
|
459,991 |
|
|
|
372,481 |
|
Average net sales per
case2 |
$ |
8.78 |
|
|
$ |
8.85 |
|
|
$ |
8.91 |
|
|
$ |
9.08 |
|
|
|
|
|
|
|
|
|
¹Includes $10.4 million and $10.5 million for
the three-months ended September 30, 2021 and 2020, respectively,
related to the recognition of deferred revenue. Includes $31.3
million and $31.6 million for the nine-months ended September 30,
2021 and 2020, respectively, related to the recognition of deferred
revenue.
2Excludes certain Other segment net sales of
$6.3 million and $8.6 million for the three-months ended September
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 certain Other
segment net sales of $20.0 million and $20.4 million for the
nine-months ended September 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 SEPTEMBER 30, 2021 AND DECEMBER 31,
2020(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
|
|
|
|
September 30,2021 |
|
December 31,2020 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,712,671 |
|
|
$ |
1,180,413 |
|
Short-term investments |
|
|
1,224,066 |
|
|
|
881,354 |
|
Accounts receivable, net |
|
|
849,157 |
|
|
|
666,012 |
|
Inventories |
|
|
471,553 |
|
|
|
333,085 |
|
Prepaid expenses and other
current assets |
|
|
95,607 |
|
|
|
55,358 |
|
Prepaid income taxes |
|
|
30,619 |
|
|
|
24,733 |
|
Total current assets |
|
|
4,383,673 |
|
|
|
3,140,955 |
|
|
|
|
|
|
INVESTMENTS |
|
|
28,255 |
|
|
|
44,291 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
309,574 |
|
|
|
314,656 |
|
DEFERRED INCOME TAXES,
net |
|
|
241,297 |
|
|
|
241,650 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE ASSETS,
net |
|
|
1,066,083 |
|
|
|
1,059,046 |
|
OTHER ASSETS |
|
|
88,883 |
|
|
|
70,475 |
|
Total Assets |
|
$ |
7,449,408 |
|
|
$ |
6,202,716 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
396,229 |
|
|
$ |
296,800 |
|
Accrued liabilities |
|
|
180,719 |
|
|
|
142,653 |
|
Accrued promotional
allowances |
|
|
232,394 |
|
|
|
186,658 |
|
Deferred revenue |
|
|
45,278 |
|
|
|
45,429 |
|
Accrued compensation |
|
|
54,507 |
|
|
|
55,015 |
|
Income taxes payable |
|
|
23,113 |
|
|
|
23,433 |
|
Total current liabilities |
|
|
932,240 |
|
|
|
749,988 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
245,621 |
|
|
|
264,436 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
26,550 |
|
|
|
27,432 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Common stock - $0.005 par
value; 1,250,000 shares authorized; 639,851 shares issued and
529,132 shares outstanding as of September 30, 2021; 638,662 shares
issued and 528,097 shares outstanding as of December 31, 2020 |
|
|
3,199 |
|
|
|
3,193 |
|
Additional paid-in
capital |
|
|
4,626,299 |
|
|
|
4,537,982 |
|
Retained earnings |
|
|
7,488,235 |
|
|
|
6,432,074 |
|
Accumulated other
comprehensive (loss) income |
|
|
(43,495 |
) |
|
|
3,034 |
|
Common stock in
treasury, at cost; 110,719 and 110,565 shares as of September 30,
2021 and December 31, 2020, respectively |
|
(5,829,241 |
) |
|
|
(5,815,423 |
) |
Total stockholders' equity |
|
|
6,244,997 |
|
|
|
5,160,860 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
7,449,408 |
|
|
$ |
6,202,716 |
|
|
|
|
|
|
|
|
|
|
CONTACTS: |
|
Rodney C. SacksChairman and Co-Chief Executive Officer(951)
739-6200Hilton H. SchlosbergVice Chairman and Co-Chief Executive
Officer(951) 739-6200Roger S. Pondel / Judy Lin
SfetcuPondelWilkinson Inc.(310) 279-5980 |
Monster Beverage (NASDAQ:MNST)
Historical Stock Chart
From May 2024 to Jun 2024
Monster Beverage (NASDAQ:MNST)
Historical Stock Chart
From Jun 2023 to Jun 2024