Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three-months ended March 31, 2023.
The Company achieved record first quarter net sales of $1.70
billion in the 2023 first quarter, up 11.9 percent, from net sales
of $1.52 billion in the 2022 comparable period. Net changes in
foreign currency exchange rates had an unfavorable impact on net
sales for the 2023 first quarter of $52.0 million. Net sales on a
foreign currency adjusted basis increased 15.3 percent for the 2023
first quarter.
The Company implemented pricing actions in the United States and
certain other international markets in 2022 and continued to
implement price increases in certain international markets in the
first quarter of 2023, all of which positively impacted gross
profit margins.
Gross profit as a percentage of net sales increased on a
sequential quarterly basis to 52.8 percent in the 2023 first
quarter, from 51.8 percent in the 2022 fourth quarter and 51.3
percent in the 2022 third quarter.
Gross profit as a percentage of net sales, excluding gross
profit for the Company’s Alcohol Brands segment, increased on a
sequential quarterly basis to 53.6 percent in the 2023 first
quarter, from 52.5 percent in the 2022 fourth quarter and 51.9
percent in the 2022 third quarter.
First
Quarter ResultsNet sales for the 2023 first quarter
increased 11.9 percent to $1.70 billion from $1.52 billion in the
comparable period last year. Net changes in foreign currency
exchange rates had an unfavorable impact on net sales for the 2023
first quarter of $52.0 million. Net sales on a foreign currency
adjusted basis increased 15.3 percent in the 2023 first
quarter.
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 Reign
Storm® Total Wellness energy drinks, increased 11.2 percent to
$1.56 billion for the 2023 first quarter, from $1.40 billion for
the 2022 first quarter. Net changes in foreign currency exchange
rates had an unfavorable impact on net sales for the Monster
Energy® Drinks segment of approximately $49.0 million for the 2023
first quarter. Net sales on a foreign currency adjusted basis for
the Monster Energy® Drinks segment increased 14.6 percent in the
2023 first quarter.
Net sales for the Company’s Strategic Brands segment, which
primarily includes the various energy drink brands originally
acquired from The Coca-Cola Company, as well as the Company’s
affordable energy brands, decreased 6.7 percent to $86.4 million
for the 2023 first quarter, from $92.6 million in the 2022 first
quarter. Net changes in foreign currency exchange rates had an
unfavorable impact on net sales for the Strategic Brands segment of
approximately $3.0 million for the 2023 first quarter. Net sales on
a foreign currency adjusted basis for the Strategic Brands segment
decreased 3.5 percent in the 2023 first quarter.
Net sales for the Alcohol Brands segment which is comprised of
The Beast Unleashed™, as well as the various craft beers and hard
seltzers purchased as part of the CANarchy transaction on February
17, 2022, increased 204.4 percent to $46.3 million for the 2023
first quarter, from $15.2 million in 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”), decreased 22.2 percent
to $4.6 million for the 2023 first quarter, from $5.9 million in
the 2022 first quarter.
Net sales to customers outside the United States increased 12.6
percent to $622.9 million in the 2023 first quarter, from $553.4
million in the 2022 first quarter. Such sales were approximately 37
percent of total net sales in the 2023 first quarter. Net sales to
customers outside the United States, on a foreign currency adjusted
basis, increased 21.9 percent in the 2023 first quarter.
Gross profit as a percentage of net sales for the 2023 first
quarter was 52.8 percent, compared with 51.1 percent in the 2022
first quarter. The increase in gross profit as a percentage of net
sales was primarily the result of pricing actions, decreased
freight-in costs and decreased aluminum can costs.
Operating expenses for the 2023 first quarter were $412.8
million, compared with $377.2 million in the 2022 first
quarter.
Operating expenses as a percentage of net sales for the 2023
first quarter were 24.3 percent, compared with 24.8 percent in the
2022 first quarter.
Distribution expenses for the 2023 first quarter were $76.3
million, or 4.5 percent of net sales, compared with $81.4 million,
or 5.4 percent of net sales, in the 2022 first quarter.
Selling expenses for the 2023 first quarter were $149.0 million,
or 8.8 percent of net sales, compared with $130.3 million, or 8.6
percent of net sales, in the 2022 first quarter.
General and administrative expenses for the 2023 first quarter
were $187.4 million, or 11.0 percent of net sales, compared with
$165.4 million, or 10.9 percent of net sales, for the 2022 first
quarter. Stock-based compensation was $16.1 million for the 2023
first quarter, compared with $16.3 million in the 2022 first
quarter.
Operating income for the 2023 first quarter was $485.1 million,
compared with $399.5 million in the 2022 first quarter.
The effective tax rate for the 2023 first quarter was 20.1
percent, compared with 25.0 percent in the 2022 first quarter. The
decrease in the effective tax rate was primarily attributable to
the increase in the stock compensation deduction in the 2023 first
quarter.
Net income for the 2023 first quarter increased 35.1 percent to
$397.4 million, from $294.2 million in the 2022 first quarter. Net
income per diluted share for the 2023 first quarter increased 36.6
percent to $0.38, from $0.27 in the first quarter of 2022.
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive
Officer, said: “The energy drink market continues to expand on a
global basis. We are pleased to report another quarter
of continued revenue growth with record sales for our
first fiscal quarter, although the quarter was again adversely
impacted by the strength of the United States dollar.
“Gross profit margin percentages continued to increase on a
sequential quarterly basis, primarily as a result of pricing
actions, decreased freight-in costs and decreased aluminum can
costs, as well as the moderation of certain other challenges
in our supply chain. The increases in certain ingredients and other
input costs, as well as co-packing
fees, remain challenging.
“Internationally, certain price increases were implemented
during the 2023 first quarter, with additional price increases
planned in a number of other markets during the remainder of the
year. In certain markets, such increases are in addition to price
increases implemented in 2022. In the United States, we took an
additional price increase on our 18.6 oz and 24 oz energy drinks,
effective April 1, 2023.
“We are proud to record market leadership for our portfolio of
brands in a number of international markets.
“We are also planning to transition the Monster
brand to the Coca-Cola distribution system in the
Philippines,” Schlosberg added.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer,
said: “We had a very active first quarter with new product
innovation launches. In the United States, we launched
Monster Energy® Zero Sugar nationally at retail in January, as well
as Monster Energy® Ultra Strawberry Dreams, Monster®
(stylized) Reserve Kiwi Strawberry, Monster Energy® Nitro Cosmic
Peach and Java Monster® Caffe Latte in the quarter. In March, we
launched Reign Storm®, which is positioned as a total wellness
energy drink, in 12 oz sleek cans at retail in four flavors,
to address a compelling opportunity in the energy drink
category.
“During the first quarter, we initially launched our first
flavored malt beverage alcohol product, The Beast Unleashed™
in six states. The Beast Unleashed™ contains six percent alcohol by
volume and is available in four flavors. We are pleased with
the early results of the launch and are continuing to expand
distribution into additional markets, with the goal of being
national by the end of the year. In addition, towards the end
of the first quarter, we commenced our phased launch of Monster®
Tour Water™, a pure unflavored water line, in still
and sparkling variants, in certain targeted accounts in the United
States.
“In EMEA, as part of an ongoing pan-EMEA launch, we
commenced distribution of Monster Energy® Lewis
Hamilton 44 Zero Sugar. We also launched Fury, one of our
affordable energy brands, in Egypt in the quarter.
“Our innovation pipeline of both alcoholic and
non-alcoholic beverages continues to be robust,” Sacks added.
Share Repurchase ProgramNo shares
of the Company’s common stock were repurchased during the 2023
first quarter under previously authorized repurchase programs. As
of May 4, 2023, approximately $682.8 million remained available for
repurchase under the previously authorized repurchase programs.
Treasury Stock
Retirement On March 10, 2023, the Company
retired 170.0 million shares (stock split adjusted) of treasury
stock owned by the Company. The retired stock had a carrying value
of approximately $4.69 billion. The Company’s accounting policy
upon the formal retirement of treasury stock is to deduct its par
value from common stock and to reflect any excess of cost over par
as a deduction from retained earnings.
Stock SplitOn February 28, 2023,
the Company announced a two-for-one stock split of its common
stock, effected in the form of a 100 percent stock dividend. The
common stock dividend was issued on March 27, 2023 and the
Company’s common stock began trading at the split adjusted price on
March 28, 2023.
Investor Conference CallThe
Company will host an investor conference call today, May 4, 2023,
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® drinks, Monster
Energy Ultra® energy drinks, Juice Monster® Energy + Juice energy
drinks, Java Monster® non-carbonated coffee + 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 Dragon Iced Tea® non-carbonated energy teas,
Monster Energy® Nitro energy drinks, Reign Total Body Fuel® high
performance energy drinks, Reign Inferno® thermogenic fuel high
performance energy drinks, Reign Storm® Total Wellness 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® drinks, Live+® energy drinks, Predator® energy drinks
and Fury® energy drinks. The Company’s subsidiaries also develop
and market still and sparkling waters under the Monster® Tour
Water™ brand name. The Company’s subsidiaries also develop and
market craft beers, hard seltzers and flavored malt beverages under
a number of brands, including Jai Alai® IPA, Dale’s Pale Ale®, Wild
Basin™ hard seltzers, Dallas Blonde® and The Beast Unleashed™.
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, the impact of the military
conflict in Ukraine, including supply chain disruptions, volatility
in commodity prices, increased economic uncertainty and escalating
geopolitical tensions; 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, alcohol consumption and other 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; 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 or alcohol drinks and/or
the energy or alcohol drink markets 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 or alcohol drinks
to minors and/or persons below a specified age and/or restrict the
venues and/or the size of containers in which energy or alcohol
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, 2022. 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-MONTHS
ENDED MARCH 31, 2023 AND 2022(In Thousands, Except
Per Share Amounts)
(Unaudited)
|
Three-Months Ended |
|
March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
Net sales¹ |
$ |
1,698,930 |
|
|
$ |
1,518,574 |
|
|
|
|
|
Cost of sales |
|
801,081 |
|
|
|
741,907 |
|
|
|
|
|
Gross profit¹ |
|
897,849 |
|
|
|
776,667 |
|
Gross profit as a percentage
of net sales |
|
52.8 |
% |
|
|
51.1 |
% |
|
|
|
|
Operating expenses |
|
412,785 |
|
|
|
377,178 |
|
Operating expenses as a
percentage of net sales |
|
24.3 |
% |
|
|
24.8 |
% |
|
|
|
|
Operating income¹ |
|
485,064 |
|
|
|
399,489 |
|
Operating income as a
percentage of net sales |
|
28.6 |
% |
|
|
26.3 |
% |
|
|
|
|
|
|
|
|
Interest and other income
(expense), net |
|
12,496 |
|
|
|
(7,300 |
) |
|
|
|
|
Income before provision for
income taxes¹ |
|
497,560 |
|
|
|
392,189 |
|
|
|
|
|
Provision for income
taxes |
|
100,116 |
|
|
|
97,986 |
|
Income taxes as a percentage
of income before taxes |
|
20.1 |
% |
|
|
25.0 |
% |
|
|
|
|
Net income |
$ |
397,444 |
|
|
$ |
294,203 |
|
Net income as a percentage of
net sales |
|
23.4 |
% |
|
|
19.4 |
% |
|
|
|
|
Net income per common
share3: |
|
|
|
Basic |
$ |
0.38 |
|
|
$ |
0.28 |
|
Diluted |
$ |
0.38 |
|
|
$ |
0.27 |
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents3: |
|
|
|
Basic |
|
1,044,909 |
|
|
|
1,058,810 |
|
Diluted |
|
1,059,069 |
|
|
|
1,071,108 |
|
|
|
|
|
Energy drink case sales (in
thousands) (in 192-ounce case equivalents) |
|
182,444 |
|
|
|
168,793 |
|
Average net sales per
case2 |
$ |
9.03 |
|
|
$ |
8.87 |
|
|
|
|
|
¹Includes $9.9 million and $10.0 million for the
three-months ended March 31, 2023 and 2022, respectively, related
to the recognition of deferred revenue.
2Excludes Alcohol Brands segment and Other
segment net sales.
3Stock Split - On February 28, 2023, the Company
announced a two-for-one stock split of its common stock to be
effected in the form of a 100% stock dividend. The stock dividend
was issued on March 27, 2023 (the “Stock Split”). The condensed
consolidated statements of income and other information have been
retroactively updated to reflect the Stock Split.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAS OF MARCH 31, 2023 AND DECEMBER 31,
2022(In Thousands, Except Par Value)
(Unaudited)
|
|
March 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,672,660 |
|
|
$ |
1,307,141 |
|
Short-term investments |
|
|
1,383,028 |
|
|
|
1,362,314 |
|
Accounts receivable, net |
|
|
1,190,351 |
|
|
|
1,016,203 |
|
Inventories |
|
|
906,723 |
|
|
|
935,631 |
|
Prepaid expenses and other
current assets |
|
|
110,958 |
|
|
|
109,823 |
|
Prepaid income taxes |
|
|
30,889 |
|
|
|
33,785 |
|
Total current assets |
|
|
5,294,609 |
|
|
|
4,764,897 |
|
|
|
|
|
|
INVESTMENTS |
|
|
41,152 |
|
|
|
61,443 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
545,922 |
|
|
|
516,897 |
|
DEFERRED INCOME TAXES |
|
|
177,039 |
|
|
|
177,039 |
|
GOODWILL |
|
|
1,417,941 |
|
|
|
1,417,941 |
|
OTHER INTANGIBLE ASSETS,
net |
|
|
1,222,598 |
|
|
|
1,220,410 |
|
OTHER ASSETS |
|
|
145,101 |
|
|
|
134,478 |
|
Total Assets |
|
$ |
8,844,362 |
|
|
$ |
8,293,105 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
491,249 |
|
|
$ |
444,265 |
|
Accrued liabilities |
|
|
245,932 |
|
|
|
172,991 |
|
Accrued promotional
allowances |
|
|
308,094 |
|
|
|
255,631 |
|
Deferred revenue |
|
|
44,440 |
|
|
|
43,311 |
|
Accrued compensation |
|
|
42,673 |
|
|
|
72,463 |
|
Income taxes payable |
|
|
55,123 |
|
|
|
13,317 |
|
Total current liabilities |
|
|
1,187,511 |
|
|
|
1,001,978 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
219,764 |
|
|
|
223,800 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
41,727 |
|
|
|
42,286 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY1: |
|
|
|
|
Common stock -
$0.005 par value; 1,250,000 shares authorized; 1,117,392
shares issued and 1,046,616 shares outstanding as of March 31,
2023;1,283,688 shares issued and 1,044,600 shares outstanding as of
December 31, 2022 |
|
5,587 |
|
|
|
6,418 |
|
Additional paid-in
capital |
|
|
4,829,301 |
|
|
|
4,776,804 |
|
Retained earnings |
|
|
4,706,192 |
|
|
|
9,001,173 |
|
Accumulated other
comprehensive loss |
|
|
(147,911 |
) |
|
|
(159,073 |
) |
Common stock in
treasury, at cost; 70,776 shares and 239,088 shares as
of March 31, 2023 and December 31, 2022, respectively |
|
(1,997,809 |
) |
|
|
(6,600,281 |
) |
Total stockholders' equity |
|
|
7,395,360 |
|
|
|
7,025,041 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
8,844,362 |
|
|
$ |
8,293,105 |
|
1Stock Split - The condensed consolidated balance sheets have
been retroactively updated to reflect the Stock Split.
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 |
|
PondelWilkinson Inc. |
|
(310) 279-5980 |
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