Monster Beverage Corporation (NASDAQ: MNST) today reported
financial results for the three- and nine-months ended September
30, 2023.
Bang Energy® TransactionOn July 31, 2023, the
Company completed its acquisition of Bang Energy®
(the “Bang Transaction”). The acquired assets
primarily include Bang Energy® drinks and a beverage production
facility in Phoenix, Arizona.
Inventory purchased as part of the Bang Transaction
was recorded at fair value. Certain of the purchased inventory was
subsequently sold in the 2023 third quarter and was recognized
through cost of sales at fair value (the “Bang Inventory Step-Up”).
As a result of the Bang Inventory Step-Up, gross profit was
adversely impacted by approximately $7.8 million during the 2023
third quarter.
During the 2023 third quarter, in connection with
the Bang Transaction, the Company recorded a gain of $45.4 million
(the “Bang Transaction Gain”), in interest and other income
(expense), net within the condensed consolidated statement of
income. During the 2023 third quarter, the Company incurred
approximately $8.0 million of acquisition expenses related to the
Bang Transaction (the “Bang Transaction Expenses”).
Third Quarter ResultsNet sales for the 2023
third quarter increased 14.3 percent to $1.86 billion, from $1.62
billion in the comparable period last year. Net changes in foreign
currency exchange rates had an unfavorable impact on net sales for
the 2023 third quarter of $29.2 million. Net sales on a foreign
currency adjusted basis increased 16.1 percent in the 2023 third
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, Reign Storm™
total wellness energy drinks and Bang Energy® drinks, increased
13.7 percent to $1.71 billion for the 2023 third quarter, from
$1.50 billion for the 2022 third quarter. Net changes in foreign
currency exchange rates had an unfavorable impact on net sales for
the Monster Energy® Drinks segment of approximately $20.2 million
for the 2023 third quarter. Net sales on a foreign currency
adjusted basis for the Monster Energy® Drinks segment increased
15.1 percent in the 2023 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 11.2 percent to $98.8 million for the 2023 third
quarter, from $88.8 million in the 2022 third quarter. Net changes
in foreign currency exchange rates had an unfavorable impact on net
sales for the Strategic Brands segment of approximately $9.0
million for the 2023 third quarter. Net sales on a foreign currency
adjusted basis for the Strategic Brands segment increased 21.3
percent in the 2023 third quarter.
Net sales for the Alcohol Brands segment, which is comprised of
The Beast Unleashed™ which was launched in the 2023 first
quarter, as well as the various craft beers and hard seltzers
purchased as part of the CANarchy transaction on February 17, 2022,
increased 57.8 percent to $42.3 million for the 2023 third quarter,
from $26.8 million in the 2022 third quarter.
Net sales for the Company’s Other segment, which primarily
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
3.9 percent to $6.7 million for the 2023 third quarter, from $6.4
million in the 2022 third quarter.
Net sales to customers outside the United States increased 20.2
percent to $733.7 million in the 2023 third quarter, from $610.6
million in the 2022 third quarter. Such sales were approximately 40
percent of total net sales in the 2023 third quarter, compared with
38 percent in the 2022 third quarter. Net sales to customers
outside the United States, on a foreign currency adjusted basis,
increased 24.9 percent in the 2023 third quarter.
Gross profit as a percentage of net sales for the 2023 third
quarter was 53.0 percent, compared with 51.3 percent in the 2022
third quarter. The increase in gross profit as a percentage of net
sales was primarily the result of pricing actions in certain
markets, decreased freight-in costs and decreased aluminum can
costs. Gross profit as a percentage of net sales was 53.4 percent
for the 2023 third quarter, excluding the Bang Inventory
Step-Up.
Operating expenses for the 2023 third quarter were $473.2
million, compared with $415.8 million in the 2022 third quarter.
Operating expenses as a percentage of net sales for the 2023 third
quarter were 25.5 percent, compared with 25.6 percent in the 2022
third quarter. Operating expenses for the 2023 third quarter
included the Bang Transaction Expenses.
Distribution expenses for the 2023 third quarter were $85.7
million, or 4.6 percent of net sales, compared with $83.0 million,
or 5.1 percent of net sales, in the 2022 third quarter.
Selling expenses for the 2023 third quarter were $177.2 million,
or 9.5 percent of net sales, compared with $157.3 million, or 9.7
percent of net sales, in the 2022 third quarter.
General and administrative expenses for the 2023 third quarter
were $210.3 million, or 11.3 percent of net sales, compared with
$175.5 million, or 10.8 percent of net sales, for the 2022 third
quarter. Stock-based compensation was $17.9 million for the 2023
third quarter, compared with $16.6 million in the 2022 third
quarter.
Operating income for the 2023 third quarter increased 22.2
percent to $510.5 million, from $417.9 million in the 2022 third
quarter, primarily as a result of an increase in net sales as well
as an increase in gross profit as a percentage of net sales.
The effective tax rate for the 2023 third quarter was 22.2
percent, compared with 23.3 percent in the 2022 third quarter.
Net income for the 2023 third quarter increased 40.4 percent to
$452.7 million, from $322.4 million in the 2022 third quarter. Net
income per diluted share for the 2023 third quarter increased 41.3
percent to $0.43, from $0.30 in the third quarter of 2022. Net
income per diluted share, adjusted for the Bang Transaction Gain,
the Bang Inventory Step-Up and the Bang Transaction Expenses was
$0.41 for the 2023 third quarter.
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive
Officer, said, “The energy drink market in the United States, as
well as internationally, continues to grow. We are pleased to
report another quarter of solid revenue growth, with record sales
for our third quarter. The quarter was again impacted by
unfavorable foreign currency exchange rates.
“Gross profit margins in the quarter improved significantly as
compared to the 2022 third quarter, primarily as a result
of pricing actions, decreased freight-in costs and decreased
aluminum can costs. Gross profit margins also improved
sequentially from the previous quarters. Promotional allowances as
a percentage of net sales for the 2023 third quarter were higher
than in the comparable 2022 third quarter.
“On July 31, 2023, we completed the Bang Transaction. The Bang
Inventory Step-Up adversely impacted consolidated gross margins,”
Schlosberg added.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer,
said, “We are pleased with our new product innovation launches
this year.
“During the 2023 third quarter, we continued our roll-out of our
first flavored malt beverage alcohol product, The Beast
Unleashed™, with the goal of being available in substantially all
of the United States by the end of 2023. We will be launching
certain flavors of The Beast Unleashed™ in 24 oz. single serve cans
primarily for the convenience and gas market later this year. Nasty
Beast™, our new hard tea, will be launched initially in four
flavors, in 12 oz. variety packs as well as 24 oz. single serve
cans, early in 2024. Our innovation pipeline for both our
non-alcoholic and alcoholic beverages remains strong,” Sacks
said.
2023 Nine-Months ResultsNet sales for the
nine-months ended September 30, 2023 increased 12.8 percent to
$5.41 billion, from $4.80 billion in the comparable period last
year. Net changes in foreign currency exchange rates had an
unfavorable impact on net sales for the nine-months ended
September 30, 2023 of $119.6 million. Net sales on a foreign
currency adjusted basis increased 15.2 percent for the nine-months
ended September 30, 2023.
Gross profit, as a percentage of net sales, for the nine-months
ended September 30, 2023 was 52.8 percent, compared with 49.8
percent in the comparable period last year.
Operating expenses for the nine-months ended September 30,
2023 were $1.34 billion, compared with $1.20 billion in the
comparable period last year.
Operating income for the nine-months ended September 30,
2023 increased to $1.52 billion, from $1.19 billion in the
comparable period last year.
The effective tax rate was 21.9 percent for the nine-months
ended September 30, 2023, compared with 24.5 percent in the
comparable period last year.
Net income for the nine-months ended September 30, 2023
increased 42.0 percent to $1.26 billion, from $890.0 million in the
comparable period last year. Net income per diluted share for
the nine-months ended September 30, 2023 increased 43.3
percent to $1.19, from $0.83 in the comparable period last
year.
Share Repurchase
Program During the 2023 third quarter, the Company
purchased approximately 7.3 million shares of its common stock at
an average purchase price of $54.83 per share, for a total amount
of $400.0 million (excluding broker commissions). As of November 2,
2023, approximately $282.8 million remained available for
repurchase under the previously authorized repurchase program.
Investor Conference CallThe
Company will host an investor conference call today, November 2,
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 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® 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® non-carbonated refreshment + energy drinks, 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, NOS® energy drinks, Full Throttle® energy drinks, Bang
Energy® drinks, BPM® energy drinks, BU® energy drinks, Burn® energy
drinks, Gladiator® energy drinks, Live+® energy drinks, Mother®
energy drinks, Nalu® energy drinks, Play® and Power Play®
(stylized) energy drinks, Relentless® energy drinks, Samurai®
energy drinks, Ultra 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®, Dallas
Blonde®, Wild Basin® hard seltzers 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 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; 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 Bang Energy® businesses and assets,
transition the acquired beverages to the Company’s primary
distributors, and retain and increase sales of the acquired
beverages; 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 and changes in demand due to such economic conditions;
changes in consumer preferences; adverse publicity surrounding
obesity, alcohol consumption and other health concerns related to
our products, product safety and quality; 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; disruption to our
manufacturing facilities and operations related to climate, labor,
production difficulties, capacity limitations, regulations or other
causes; 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; 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 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, 2023 AND 2022(In
Thousands, Except Per Share Amounts) (Unaudited) |
|
|
Three-Months Ended |
|
Nine-Months Ended |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net sales¹ |
$ |
1,856,028 |
|
|
$ |
1,624,286 |
|
|
$ |
5,409,919 |
|
|
$ |
4,798,119 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
872,265 |
|
|
|
790,561 |
|
|
|
2,554,086 |
|
|
|
2,407,867 |
|
|
|
|
|
|
|
|
|
Gross profit¹ |
|
983,763 |
|
|
|
833,725 |
|
|
|
2,855,833 |
|
|
|
2,390,252 |
|
Gross profit as a percentage
of net sales |
|
53.0% |
|
|
|
51.3% |
|
|
|
52.8% |
|
|
|
49.8% |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
473,236 |
|
|
|
415,795 |
|
|
|
1,336,437 |
|
|
|
1,199,883 |
|
Operating expenses as a
percentageof net sales |
|
25.5% |
|
|
|
25.6% |
|
|
|
24.7% |
|
|
|
25.0% |
|
|
|
|
|
|
|
|
|
Operating income¹ |
|
510,527 |
|
|
|
417,930 |
|
|
|
1,519,396 |
|
|
|
1,190,369 |
|
Operating income as a
percentage of net sales |
|
27.5% |
|
|
|
25.7% |
|
|
|
28.1% |
|
|
|
24.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
(expense), net |
|
71,357 |
|
|
|
2,149 |
|
|
|
99,010 |
|
|
|
(11,932 |
) |
|
|
|
|
|
|
|
|
Income before provision for
income taxes¹ |
|
581,884 |
|
|
|
420,079 |
|
|
|
1,618,406 |
|
|
|
1,178,437 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
129,190 |
|
|
|
97,692 |
|
|
|
354,397 |
|
|
|
288,487 |
|
Income taxes as a percentage
of income before taxes |
|
22.2% |
|
|
|
23.3% |
|
|
|
21.9% |
|
|
|
24.5% |
|
|
|
|
|
|
|
|
|
Net income |
$ |
452,694 |
|
|
$ |
322,387 |
|
|
$ |
1,264,009 |
|
|
$ |
889,950 |
|
Net income as a percentage of
net sales |
|
24.4% |
|
|
|
19.8% |
|
|
|
23.4% |
|
|
|
18.5% |
|
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.43 |
|
|
$ |
0.31 |
|
|
$ |
1.21 |
|
|
$ |
0.84 |
|
Diluted |
$ |
0.43 |
|
|
$ |
0.30 |
|
|
$ |
1.19 |
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents: |
|
|
|
|
|
|
|
Basic |
|
1,047,015 |
|
|
|
1,053,594 |
|
|
|
1,046,337 |
|
|
|
1,056,526 |
|
Diluted |
|
1,059,966 |
|
|
|
1,066,600 |
|
|
|
1,059,809 |
|
|
|
1,069,198 |
|
|
|
|
|
|
|
|
|
Energy Drink Case sales (in
thousands) (in 192-ounce case equivalents) |
|
203,087 |
|
|
|
182,460 |
|
|
|
583,937 |
|
|
|
535,451 |
|
Average net sales per
case2 |
$ |
8.90 |
|
|
$ |
8.72 |
|
|
$ |
8.98 |
|
|
$ |
8.79 |
|
|
|
|
|
|
|
|
|
¹Includes $10.0 million for both the
three-months ended September 30, 2023 and 2022, related to the
recognition of deferred revenue. Includes $30.0 million for both
the nine-months ended September 30, 2023 and 2022, related to the
recognition of deferred revenue.
2Excludes Alcohol Brands segment and Other
segment net.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAS OF SEPTEMBER 30, 2023 AND DECEMBER 31,
2022(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
September 30,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,773,849 |
|
|
$ |
1,307,141 |
|
Short-term investments |
|
|
1,236,752 |
|
|
|
1,362,314 |
|
Accounts receivable, net |
|
|
1,231,188 |
|
|
|
1,016,203 |
|
Inventories |
|
|
883,582 |
|
|
|
935,631 |
|
Prepaid expenses and other
current assets |
|
|
162,676 |
|
|
|
109,823 |
|
Prepaid income taxes |
|
|
23,468 |
|
|
|
33,785 |
|
Total current assets |
|
|
5,311,515 |
|
|
|
4,764,897 |
|
|
|
|
|
|
INVESTMENTS |
|
|
52,636 |
|
|
|
61,443 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
731,208 |
|
|
|
516,897 |
|
DEFERRED INCOME TAXES |
|
|
176,724 |
|
|
|
177,039 |
|
GOODWILL |
|
|
1,417,941 |
|
|
|
1,417,941 |
|
OTHER INTANGIBLE ASSETS,
net |
|
|
1,459,447 |
|
|
|
1,220,410 |
|
OTHER ASSETS |
|
|
164,867 |
|
|
|
134,478 |
|
Total Assets |
|
$ |
9,314,338 |
|
|
$ |
8,293,105 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
539,892 |
|
|
$ |
444,265 |
|
Accrued liabilities |
|
|
207,727 |
|
|
|
172,991 |
|
Accrued promotional
allowances |
|
|
296,577 |
|
|
|
255,631 |
|
Deferred revenue |
|
|
40,127 |
|
|
|
43,311 |
|
Accrued compensation |
|
|
76,835 |
|
|
|
72,463 |
|
Income taxes payable |
|
|
17,644 |
|
|
|
13,317 |
|
Total current liabilities |
|
|
1,178,802 |
|
|
|
1,001,978 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
209,136 |
|
|
|
223,800 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
53,251 |
|
|
|
42,286 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Common stock -
$0.005 par value; 5,000,000 shares authorized;1,118,498 shares
issued and 1,040,420 shares outstanding as of September 30,
2023;1,283,688 shares issued and 1,044,600 shares outstanding as of
December 31, 2022 |
|
5,592 |
|
|
|
6,418 |
|
Additional paid-in
capital |
|
|
4,893,289 |
|
|
|
4,776,804 |
|
Retained earnings |
|
|
5,572,757 |
|
|
|
9,001,173 |
|
Accumulated other
comprehensive loss |
|
|
(198,033 |
) |
|
|
(159,073 |
) |
Common stock in
treasury, at cost; 78,078 shares and 239,088 shares as of September
30, 2023 and December 31, 2022, respectively |
|
(2,400,456 |
) |
|
|
(6,600,281 |
) |
Total stockholders' equity |
|
|
7,873,149 |
|
|
|
7,025,041 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
9,314,338 |
|
|
$ |
8,293,105 |
|
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 LinPondelWilkinson Inc.(310) 279-5980
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