Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three-months ended March 31, 2022.
The Company achieved record first quarter net sales
of $1.52 billion in the 2022 first quarter, 22.1 percent higher
than net sales of $1.24 billion in the 2021 comparable period.
In the first quarter of 2022, the Company
experienced significant increases in costs of sales relative to the
comparative 2021 first quarter, primarily due to increased freight
rates and fuel costs, including costs relating to the importation
of aluminum cans as well as aluminum can costs attributable to
higher aluminum commodity pricing. The Company also experienced
significant increases in ingredients and other input costs,
including secondary packaging materials, co-packing fees and
production inefficiencies, which adversely impacted cost of sales.
Furthermore, the Company experienced significant increases in
distribution expenses including increased fuel, freight and
warehousing costs, which adversely impacted operating expenses.
The Company continues to address the controllable
challenges in its supply chain.
On February 17, 2022, the Company completed its
previously announced acquisition of CANarchy Craft Brewery
Collective LLC, a craft beer and hard seltzer company, for $330.4
million in cash, subject to adjustments.
As of March 31, 2022, the Company had $1.01 billion
in cash and cash equivalents, $1.72 billion in short-term
investments and $65.7 million in long-term investments.
First Quarter ResultsNet sales for the 2022
first quarter increased 22.1 percent to $1.52 billion from $1.24
billion in the comparable period last year. Net changes in foreign
currency exchange rates had an unfavorable impact on net sales for
the 2022 first quarter of $32.9 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
North® Pure Energy Seltzer energy drinks, increased 20.0 percent to
$1.40 billion for the 2022 first quarter, from $1.17 billion for
the 2021 first quarter. Net changes in foreign currency
exchange rates had an unfavorable impact on net sales for the
Monster Energy® Drinks segment of approximately $29.6 million for
the 2022 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 36.6 percent to $92.6 million for the 2022 first
quarter, from $67.8 million in the 2021 first quarter. Net changes
in foreign currency exchange rates had an unfavorable impact on net
sales for the Strategic Brands segment of approximately $3.3
million for the 2022 first quarter.
Net sales for the Alcohol Brands segment which is comprised of
the various craft beers and hard seltzers purchased as part of the
CANarchy transaction on February 17, 2022, were $15.2 million for
the 2022 first 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 $5.9
million for the 2022 first quarter, from $5.7 million in the 2021
first quarter.
Net sales to customers outside the United States increased 20.4
percent to $553.4 million in the 2022 first quarter, from $459.4
million in the 2021 first quarter. Such sales were approximately 36
percent of total net sales in the 2022 first quarter, compared with
37 percent in the 2021 first quarter.
Gross profit, as a percentage of net sales, for the 2022 first
quarter was 51.1 percent, compared with 57.5 percent in the 2021
first quarter. The decrease in gross profit percentage for the 2022
first quarter was primarily the result of increased freight rates
and fuel costs, including costs relating to the importation of
aluminum cans, increased aluminum can costs attributable to higher
aluminum commodity pricing, increased ingredient and other input
costs, including secondary packaging materials, increased
co-packing fees, production inefficiencies and geographical sales
mix. The decrease in gross profit as a percentage of net sales for
the 2022 first quarter was partially offset by pricing actions.
Operating expenses for the 2022 first quarter were $377.2
million, compared with $300.8 million in the 2021 first quarter.
The increase in operating expenses for the 2022 first quarter was
primarily due to increased out-bound freight, freight
inefficiencies and warehouse costs, increased expenditures for
travel and entertainment, increased payroll expenses, increased
professional service expenses, including accounting and legal
costs, increased commissions and increased sponsorships and
endorsements.
Operating expenses as a percentage of net sales for the 2022
first quarter were 24.8 percent, compared with 24.2 percent in the
2021 first quarter. Operating expenses as a percentage of net sales
for the 2019 first quarter (pre COVID-19) were 27.7 percent.
Distribution costs for the 2022 first quarter increased to $81.4
million, an increase of 49.7 percent, or 5.4 percent of net sales,
compared with $54.4 million, or 4.4 percent of net sales in the
2021 first quarter, and 3.8 percent of net sales in the 2019 first
quarter (pre COVID-19).
Selling expenses as a percentage of net sales for the 2022 first
quarter were 8.6 percent, compared with 9.2 percent in the 2021
first quarter, and 11.0 percent in the 2019 first quarter (pre
COVID-19).
General and administrative expenses for the 2022 first quarter
were $165.4 million, or 10.9 percent of net sales, compared with
$131.9 million, or 10.6 percent of net sales, for the 2021 first
quarter. Stock-based compensation was $16.3 million for the 2022
first quarter, compared with $18.4 million in the 2021 first
quarter.
Operating income for the 2022 first quarter decreased to $399.5
million, from $414.1 million in the 2021 first quarter, primarily
due to the Company’s operations in EMEA and Asia Pacific.
The effective tax rate for the 2022 first quarter was 25.0
percent, compared with 23.8 percent in the 2021 first quarter.
Net income for the 2022 first quarter decreased 6.7 percent to
$294.2 million, from $315.2 million in the 2021 first quarter. Net
income per diluted share for the 2022 first quarter decreased 6.8
percent to $0.55, from $0.59 in the first quarter of 2021.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said:
“We are pleased to report that net sales grew 22.1 percent in the
2022 first quarter to a record $1.52 billion.
“The global energy drink category continues its growth trend,
and we remain well placed to capitalize on this growth with our
Monster Energy® family of brands, as well as our Strategic and
Affordable energy brands.
“We launched a number of new products and expanded distribution
of our brands in many international markets in the first quarter of
2022. In the United States, we launched Monster Energy® Ultra
Peachy Keen®, Juice Monster® Aussie Style Lemonade™, Rehab®
Monster® Watermelon and Reign Reignbow Sherbet™. In February 2022,
we launched True North® Pure Energy Seltzers nationally in four 12
oz. flavors through The Coca-Cola distribution system. At the end
of the first quarter, we launched two new ready-to-drink Nitro
infused coffee products, Java Monster® Cold Brew Latte and Java
Monster® Cold Brew Sweet Black.
“We completed our acquisition of CANarchy Craft Brewery
Collective LLC on February 17, 2022. We remain encouraged
with the opportunities this acquisition presents to us in the
alcohol space and the potential through their distribution
network,” Sacks added.
Vice Chairman and Co-Chief Executive Officer Hilton H.
Schlosberg said: “We were able to steadily rebuild inventories in
the 2022 first quarter, while at the same time meeting strong
customer demand. Significant increases in freight-in and fuel
costs, as well as other input costs continue to impact costs of
sales. The shortage of shipping containers and global port
congestion remain a challenge, with the need for airfreighting of
certain ingredients. We believe that some of the increased costs
that we are experiencing are likely to be transitory, as we begin
to decrease our reliance on the use of imported aluminum cans, as
well as increasing our inventory levels in closer proximity to our
customers. Increases in fuel and freight costs continue to
adversely impact costs of sales and operating expenses.
“We continue to implement measures to mitigate the impact of
increased costs experienced in our supply chain through
reductions in promotions and other pricing actions in the United
States and in EMEA. In the United States, we are planning for a
market wide increase in pricing effective September 1, 2022,”
Schlosberg added.
Share Repurchase ProgramNo shares
of the Company’s common stock were repurchased during the 2022
first quarter. As of May 5, 2022, 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, May 5, 2022,
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. The
Company acquired CANarchy Craft Brewery Collective LLC in February
2022 and added a number of craft beers and hard seltzers to its
product portfolio. 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 impact of rising costs and inflation on the
discretionary income of our consumers, particularly the rising cost
of gasoline; the impact of the military conflict in Ukraine,
including supply chain disruptions, volatility in commodity prices,
increased economic uncertainty and escalating geopolitical
tensions; the direct and indirect impacts of the human and economic
consequences of the COVID-19 pandemic, as well as measures 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; our extensive commercial arrangements
with The Coca-Cola Company (TCCC) and, as a result, our future
performance’s substantial dependence on the success of our
relationship with TCCC; our ability to implement our growth
strategy, including expanding our business in existing and new
sectors, such as the alcoholic beverage sector; the inherent
operational risks presented by the alcoholic beverage industry that
may not be adequately covered by insurance or lead to litigation
relating to the abuse or misuse of our products; our ability to
successfully integrate CANarchy and other acquired businesses or
assets; exposure to significant liabilities due to litigation,
legal or regulatory proceedings; intellectual property injunctions;
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;
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 including retort production;
product distribution and placement decisions by retailers; the
effects of retailer and/or bottler/distributor consolidation on our
business; 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 the sizes of
containers for 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; or our ability to absorb, reduce or pass on to our
bottlers/distributors increases in commodity costs, including
freight costs. 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, 2021. 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, 2022 AND
2021 |
(In Thousands, Except Per Share Amounts)
(Unaudited) |
|
|
|
Three-Months Ended |
|
March 31, |
|
2022 |
|
2021 |
|
|
|
|
Net sales1 |
$ |
1,518,574 |
|
|
$ |
1,243,816 |
|
|
|
|
|
Cost of sales |
|
741,907 |
|
|
|
528,881 |
|
|
|
|
|
Gross profit1 |
|
776,667 |
|
|
|
714,935 |
|
Gross profit as a percentage
of net sales |
|
51.1 |
% |
|
|
57.5 |
% |
|
|
|
|
Operating expenses |
|
377,178 |
|
|
|
300,789 |
|
Operating expenses as a
percentage of net sales |
|
24.8 |
% |
|
|
24.2 |
% |
|
|
|
|
Operating income1 |
|
399,489 |
|
|
|
414,146 |
|
Operating income as a
percentage of net sales |
|
26.3 |
% |
|
|
33.3 |
% |
|
|
|
|
|
|
|
|
Interest and other expense,
net |
|
7,300 |
|
|
|
759 |
|
|
|
|
|
Income before provision for
income taxes1 |
|
392,189 |
|
|
|
413,387 |
|
|
|
|
|
Provision for income
taxes |
|
97,986 |
|
|
|
98,193 |
|
Income taxes as a percentage
of income before taxes |
|
25.0 |
% |
|
|
23.8 |
% |
|
|
|
|
Net income |
$ |
294,203 |
|
|
$ |
315,194 |
|
Net income as a percentage of
net sales |
|
19.4 |
% |
|
|
25.3 |
% |
|
|
|
|
Net income per common
share: |
|
|
|
Basic |
$ |
0.56 |
|
|
$ |
0.60 |
|
Diluted |
$ |
0.55 |
|
|
$ |
0.59 |
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents: |
|
|
|
Basic |
|
529,405 |
|
|
|
528,195 |
|
Diluted |
|
535,554 |
|
|
|
534,982 |
|
|
|
|
|
Case sales (in thousands) (in
192-ounce case equivalents) |
|
168,793 |
|
|
|
138,566 |
|
Average net sales per
case2 |
$ |
8.87 |
|
|
$ |
8.94 |
|
1Includes $10.0 million and $10.4 million for
the three-months ended March 31, 2022 and 2021, respectively,
related to the recognition of deferred revenue.
2Excludes Alcohol segment net sales of $15.2
million for the three-months ended March 31, 2022, as these sales
do not have unit case equivalents. Excludes certain Other segment
net sales of $5.9 million and $5.7 million for the three-months
ended March 31, 2022 and 2021, 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, 2022 AND DECEMBER 31, 2021 |
(In Thousands, Except Par Value) (Unaudited) |
|
|
|
|
|
March 31, |
|
December 31, |
|
2022 |
|
2021 |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
1,014,786 |
|
|
$ |
1,326,462 |
|
Short-term investments |
|
1,717,648 |
|
|
|
1,749,727 |
|
Accounts receivable, net |
|
1,039,780 |
|
|
|
896,658 |
|
Inventories |
|
821,132 |
|
|
|
593,357 |
|
Prepaid expenses and other
current assets |
|
110,327 |
|
|
|
82,668 |
|
Prepaid income taxes |
|
39,993 |
|
|
|
33,238 |
|
Total current assets |
|
4,743,666 |
|
|
|
4,682,110 |
|
|
|
|
|
INVESTMENTS |
|
65,652 |
|
|
|
99,419 |
|
PROPERTY AND EQUIPMENT,
net |
|
407,391 |
|
|
|
313,753 |
|
DEFERRED INCOME TAXES |
|
225,221 |
|
|
|
225,221 |
|
GOODWILL |
|
1,411,928 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE ASSETS,
net |
|
1,232,113 |
|
|
|
1,072,386 |
|
OTHER ASSETS |
|
101,488 |
|
|
|
80,252 |
|
Total Assets |
$ |
8,187,459 |
|
|
$ |
7,804,784 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable |
$ |
438,256 |
|
|
$ |
404,263 |
|
Accrued liabilities |
|
234,111 |
|
|
|
210,964 |
|
Accrued promotional
allowances |
|
270,785 |
|
|
|
211,461 |
|
Deferred revenue |
|
42,540 |
|
|
|
42,530 |
|
Accrued compensation |
|
37,551 |
|
|
|
65,459 |
|
Income taxes payable |
|
21,118 |
|
|
|
30,399 |
|
Total current liabilities |
|
1,044,361 |
|
|
|
965,076 |
|
|
|
|
|
DEFERRED REVENUE |
|
238,241 |
|
|
|
243,249 |
|
|
|
|
|
OTHER LIABILITIES |
|
38,185 |
|
|
|
29,508 |
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
Common stock - $0.005 par
value; 1,250,000 shares authorized; |
|
|
|
|
|
|
|
640,528 shares issued and
529,642 shares outstanding as of March 31, 2022; |
|
|
|
|
|
|
|
640,043 shares issued and
529,323 shares outstanding as of December 31, 2021 |
|
3,203 |
|
|
|
3,200 |
|
Additional paid-in
capital |
|
4,673,302 |
|
|
|
4,652,620 |
|
Retained earnings |
|
8,103,752 |
|
|
|
7,809,549 |
|
Accumulated other
comprehensive loss |
|
(72,145 |
) |
|
|
(69,165 |
) |
Common stock in treasury, at
cost; 110,886 shares and 110,720 shares as of March 31, 2022 and
December 31, 2021, respectively |
|
(5,841,440 |
) |
|
|
(5,829,253 |
) |
Total stockholders' equity |
|
6,866,672 |
|
|
|
6,566,951 |
|
Total Liabilities and Stockholders’ Equity |
$ |
8,187,459 |
|
|
$ |
7,804,784 |
|
CONTACTS: |
Rodney C. Sacks |
|
Chairman and Co-Chief Executive Officer |
|
(951) 739-6200 |
|
|
|
Hilton H. Schlosberg |
|
Vice Chairman and Co-Chief Executive Officer |
|
(951) 739-6200 |
|
|
|
Roger S. Pondel / Judy Lin Sfetcu |
|
PondelWilkinson Inc. |
|
(310) 279-5980 |
|
|
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