Monster Beverage Corporation (NASDAQ: MNST) today
reported financial results for the three- and six-months ended
June 30, 2024.
Second Quarter ResultsNet sales for the 2024
second quarter increased 2.5 percent to $1.90 billion, from $1.85
billion in the same period last year. Net changes in foreign
currency exchange rates had an unfavorable impact on net sales for
the 2024 second quarter of $67.7 million ($34.0 million related to
Argentina). Net sales on a foreign currency adjusted basis
increased 6.1 percent (7.4 percent excluding the Alcohol Brands
segment) in the 2024 second 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, Bang Energy® drinks and Monster Tour
Water®, increased 3.3 percent to $1.74 billion for the 2024 second
quarter, from $1.69 billion for the 2023 second quarter. Net
changes in foreign currency exchange rates had an unfavorable
impact on net sales for the Monster Energy® Drinks segment of
approximately $53.6 million for the 2024 second quarter ($34.0
million related to Argentina). Net sales on a foreign currency
adjusted basis for the Monster Energy® Drinks segment increased 6.5
percent in the 2024 second quarter (4.5 percent exclusive of
Argentina’s impact).
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 Predator® and Fury®, increased 9.6 percent to $109.2 million
for the 2024 second quarter, from $99.7 million in the 2023 second
quarter. Net changes in foreign currency exchange rates had an
unfavorable impact on net sales for the Strategic Brands segment of
approximately $14.0 million for the 2024 second quarter. Net sales
on a foreign currency adjusted basis for the Strategic Brands
segment increased 23.6 percent in the 2024 second
quarter.
Net sales for the Alcohol Brands segment, which is comprised of
The Beast Unleashed®, Nasty Beast™ Hard Tea, as well as various
craft beers and hard seltzers, decreased 31.9 percent to $41.6
million for the 2024 second quarter, from $61.1 million in the 2023
second quarter. The decrease in net sales was primarily due to
decreased sales by volume of flavored malt beverages.
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”), decreased
4.2 percent to $7.0 million for the 2024 second quarter, from $7.3
million in the 2023 second quarter.
Net sales to customers outside the United States increased 4.3
percent to $746.0 million in the 2024 second quarter, from $715.4
million in the 2023 second quarter. Such sales were approximately
39 percent of total net sales in both the 2024 and 2023 second
quarters. Net sales to customers outside the United States, on a
foreign currency adjusted basis, increased 13.7 percent in the 2024
second quarter (9.0 percent exclusive of Argentina’s impact).
Gross profit as a percentage of net sales for the 2024 second
quarter was 53.6 percent, compared with 52.5 percent in the 2023
second quarter. The increase in gross profit as a percentage of net
sales was primarily the result of decreased freight-in costs,
pricing actions in certain markets and lower aluminum can costs,
partially offset by production inefficiencies.
Operating expenses for the 2024 second quarter were $492.3
million, compared with $450.4 million in the 2023 second quarter.
Operating expenses as a percentage of net sales for the 2024 second
quarter were 25.9 percent, compared with 24.3 percent in the 2023
second quarter.
Distribution expenses for the 2024 second quarter were $87.4
million, or 4.6 percent of net sales, compared with $82.0 million,
or 4.4 percent of net sales, in the 2023 second quarter.
Selling expenses for the 2024 second quarter were $192.1
million, or 10.1 percent of net sales, compared with $172.6
million, or 9.3 percent of net sales, in the 2023 second
quarter.
General and administrative expenses for the 2024 second quarter
were $212.8 million, or 11.2 percent of net sales, compared with
$195.8 million, or 10.6 percent of net sales, for the 2023 second
quarter. Stock-based compensation was $18.8 million for the 2024
second quarter, compared with $18.6 million in the 2023 second
quarter.
Operating income for the 2024 second quarter was $527.2 million,
compared with $523.8 million in the 2023 second quarter.
The effective tax rate for the 2024 second quarter was 22.9
percent, compared with 23.2 percent in the 2023 second quarter.
Net income for the 2024 second quarter increased 2.8 percent to
$425.4 million, from $413.9 million in the 2023 second quarter. Net
income per diluted share for the 2024 second quarter increased 5.0
percent to $0.41, from $0.39 in the second quarter of 2023.
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive
Officer, said, “The energy drink category in the United States and
in certain other countries experienced lower growth rates in the
second quarter. Retailers have reported a reduction in convenience
store foot traffic and we have seen a shift at retail towards more
mass and dollar channels. Other beverage and consumer packaged
product companies have also seen a tighter consumer spending
environment and weaker demand in the quarter.
“The energy category globally continues to grow and has
demonstrated resilience, as we believe that consumers view energy
drinks as an ‘affordable luxury.’
“Growth opportunities in penetration, per capita consumption,
along with consumers’ growing need for energy are positive trends
for the category. We continue to expand our sales in non-Nielsen
measured channels.
“We achieved another quarter of solid revenue growth, with
record second quarter sales. The quarter was again impacted by
unfavorable foreign currency exchange rates in certain markets.
“Gross profit margins improved in the second quarter, compared
with the 2023 second quarter. This improvement was primarily the
result of decreased freight-in costs, pricing actions in certain
markets and lower aluminum can costs, partially offset by
production inefficiencies. On a sequential quarterly basis, gross
margins were 0.5 percent below first quarter margins primarily as a
result of higher allowances, certain of which we believe are
non-recuring as well as production inefficiencies.
“As previously reported, we will be taking an approximately 5
percent price increase on our core brands and packages in the
United States, effective November 1, 2024,” Schlosberg added.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said,
“Innovation continues to play a key role in our strategy and
globally, our innovation has been well received by our
bottlers/distributors, wholesalers, retailers and consumers. We are
planning to launch Monster Energy® Ultra Vice Guava™ in the United
States in October.
“Response to Predator Energy® Gold Strike, launched in April
2024 in selected provinces in China, has been positive and plans
are underway to continue its rollout into more markets in China
later this year and in 2025.
“The Beast Unleashed® is now available in all 50 states. Nasty
Beast™, our new hard tea line is now available in 49 states. We are
currently launching a second variety pack of the Beast Unleashed®
in a 12-pack of slim 12-oz cans, comprising of Mean Green, Pink
Poison, Gnarly Grape and Killer Sunrise.
“Our innovation pipeline for both our non-alcoholic and
alcoholic beverages remains robust,” Sacks said.
2024 Six-Months ResultsNet sales for the
six-months ended June 30, 2024 increased 6.9 percent to $3.80
billion, from $3.55 billion in the comparable period last year. Net
changes in foreign currency exchange rates had an unfavorable
impact of $132.0 million on net sales for the six-months ended June
30, 2024. Net sales on a foreign currency adjusted basis increased
10.6 percent in the six-months ended June 30, 2024.
Gross profit as a percentage of net sales for the six-months
ended June 30, 2024 was 53.9 percent, compared with 52.7
percent in the comparable period last year.
Operating expenses for the six-months ended June 30, 2024
were $977.5 million, compared with $863.2 million in the comparable
period last year.
Operating income for the six-months ended June 30, 2024
increased to $1.07 billion, from $1.01 billion in the comparable
period last year.
The effective tax rate for the six-months ended June 30, 2024
was 23.2 percent, compared with 21.7 percent in the comparable
period last year.
Net income for the six-months ended June 30, 2024 increased
6.9 percent to $867.4 million, from $811.3 million in the
comparable period last year. Net income per diluted share for the
six-months ended June 30, 2024 was $0.83, compared with $0.77
in the comparable period last year.
Tender Offer and Share Repurchases
On June 10, 2024, the Company announced the final results of its
$3.0 billion modified “Dutch auction” tender offer. The Company
accepted for purchase approximately 56.6 million shares of common
stock at a purchase price of $53.00 per share for an aggregate
purchase price of approximately $3.0 billion, excluding fees and
expenses relating to the tender offer. In addition, during the
three-months ended June 30, 2024, the Company repurchased
approximately 2.2 million shares of its common stock at an average
purchase price of $49.55 per share for total consideration of
approximately $107.7 million, excluding broker commissions.
Subsequent to June 30, 2024, the Company repurchased approximately
3.9 million shares of its common stock at an average purchase price
of $49.59 per share for total consideration of approximately $192.2
million, excluding broker commissions. As of August 6, 2024,
approximately $342.4 million remained available for repurchase
under the previously authorized repurchase program.
Investor Conference CallThe
Company will host an investor conference call today, August 7,
2024, 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 Energy® Nitro energy
drinks, Reign® Total Body 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, The Beast
Unleashed® and Nasty Beast™ Hard Tea. 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,
including a slowdown in consumer spending generally or reduced
demand for consumer goods; 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, 2023 and our subsequently
filed quarterly report. 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, 2024 AND 2023(In
Thousands, Except Per Share Amounts)
(Unaudited)
|
Three-Months Ended |
|
Six-Months Ended |
|
June 30, |
|
June 30, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
Net sales¹ |
$ |
1,900,597 |
|
$ |
1,854,961 |
|
$ |
3,799,695 |
|
$ |
3,553,891 |
|
|
|
|
|
|
|
|
Cost of sales |
|
881,091 |
|
|
880,739 |
|
|
1,753,061 |
|
|
1,681,820 |
|
|
|
|
|
|
|
|
Gross profit¹ |
|
1,019,506 |
|
|
974,222 |
|
|
2,046,634 |
|
|
1,872,071 |
Gross profit as a percentage
of net sales |
|
53.6% |
|
|
52.5% |
|
|
53.9% |
|
|
52.7% |
|
|
|
|
|
|
|
|
Operating expenses |
|
492,343 |
|
|
450,417 |
|
|
977,480 |
|
|
863,201 |
Operating expenses as a
percentage of net sales |
|
25.9% |
|
|
24.3% |
|
|
25.7% |
|
|
24.3% |
|
|
|
|
|
|
|
|
Operating income¹ |
|
527,163 |
|
|
523,805 |
|
|
1,069,154 |
|
|
1,008,870 |
Operating income as a
percentage of net sales |
|
27.7% |
|
|
28.2% |
|
|
28.1% |
|
|
28.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income,
net |
|
24,376 |
|
|
15,159 |
|
|
60,131 |
|
|
27,653 |
|
|
|
|
|
|
|
|
Income before provision for
income taxes¹ |
|
551,539 |
|
|
538,964 |
|
|
1,129,285 |
|
|
1,036,523 |
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
126,170 |
|
|
125,093 |
|
|
261,867 |
|
|
225,208 |
Income taxes as a percentage
of income before taxes |
|
22.9% |
|
|
23.2% |
|
|
23.2% |
|
|
21.7% |
|
|
|
|
|
|
|
|
Net income |
$ |
425,369 |
|
$ |
413,871 |
|
$ |
867,418 |
|
$ |
811,315 |
Net income as a percentage of
net sales |
|
22.4% |
|
|
22.3% |
|
|
22.8% |
|
|
22.8% |
|
|
|
|
|
|
|
|
Net income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
$ |
0.40 |
|
$ |
0.84 |
|
$ |
0.78 |
Diluted |
$ |
0.41 |
|
$ |
0.39 |
|
$ |
0.83 |
|
$ |
0.77 |
|
|
|
|
|
|
|
|
Weighted average number of
shares of common stock and common stock equivalents: |
|
|
|
|
|
|
|
Basic |
|
1,029,268 |
|
|
1,047,065 |
|
|
1,035,175 |
|
|
1,045,993 |
Diluted |
|
1,037,378 |
|
|
1,060,093 |
|
|
1,044,363 |
|
|
1,059,667 |
|
|
|
|
|
|
|
|
Energy drink case sales (in
thousands) (in192-ounce case equivalents) |
|
212,194 |
|
|
198,406 |
|
|
423,624 |
|
|
380,850 |
Average net sales per
case2 |
$ |
8.73 |
|
$ |
9.00 |
|
$ |
8.71 |
|
$ |
9.02 |
|
|
|
|
|
|
|
|
¹Includes $10.0 million for both the
three-months ended June 30, 2024 and 2023, related to the
recognition of deferred revenue. Includes $19.9 million for both
the six-months ended June 30, 2024 and 2023, related to the
recognition of deferred revenue.
2Excludes Alcohol Brands segment and Other
segment net sales.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETSAS OF JUNE 30, 2024 AND DECEMBER 31,
2023(In Thousands, Except Par Value)
(Unaudited)
|
|
June 30,2024 |
|
December 31,2023 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
|
$ |
1,564,734 |
|
|
$ |
2,297,675 |
|
Short-term investments |
|
|
- |
|
|
|
955,605 |
|
Accounts receivable, net |
|
|
1,362,398 |
|
|
|
1,193,964 |
|
Inventories |
|
|
834,404 |
|
|
|
971,406 |
|
Prepaid expenses and other
current assets |
|
|
129,303 |
|
|
|
116,195 |
|
Prepaid income taxes |
|
|
63,458 |
|
|
|
54,151 |
|
Total current assets |
|
|
3,954,297 |
|
|
|
5,588,996 |
|
|
|
|
|
|
INVESTMENTS |
|
|
- |
|
|
|
76,431 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
960,962 |
|
|
|
890,796 |
|
DEFERRED INCOME TAXES,
net |
|
|
187,269 |
|
|
|
175,003 |
|
GOODWILL |
|
|
1,417,941 |
|
|
|
1,417,941 |
|
OTHER INTANGIBLE ASSETS,
net |
|
|
1,433,326 |
|
|
|
1,427,139 |
|
OTHER ASSETS |
|
|
107,109 |
|
|
|
110,216 |
|
Total Assets |
|
$ |
8,060,904 |
|
|
$ |
9,686,522 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
511,137 |
|
|
$ |
564,379 |
|
Accrued liabilities |
|
|
213,905 |
|
|
|
183,988 |
|
Accrued promotional
allowances |
|
|
319,757 |
|
|
|
269,061 |
|
Deferred revenue |
|
|
44,377 |
|
|
|
41,914 |
|
Accrued compensation |
|
|
60,357 |
|
|
|
87,392 |
|
Income taxes payable |
|
|
10,990 |
|
|
|
14,955 |
|
Total current liabilities |
|
|
1,160,523 |
|
|
|
1,161,689 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
192,354 |
|
|
|
204,251 |
|
DEFERRED INCOME TAXES |
|
|
28,896 |
|
|
|
- |
|
OTHER LIABILITIES |
|
|
64,068 |
|
|
|
91,838 |
|
LONG-TERM DEBT |
|
|
748,740 |
|
|
|
- |
|
STOCKHOLDERS' EQUITY: |
|
|
|
|
Common stock -
$0.005 par value; 5,000,000 shares authorized; 1,125,330
shares issued and 983,380 shares outstanding as of June 30,
2024; 1,122,592 shares issued and 1,041,571 shares outstanding
as of December 31, 2023 |
|
5,627 |
|
|
|
5,613 |
|
Additional paid-in
capital |
|
|
5,068,291 |
|
|
|
4,975,115 |
|
Retained earnings |
|
|
6,807,154 |
|
|
|
5,939,736 |
|
Accumulated other
comprehensive loss |
|
|
(182,304 |
) |
|
|
(125,337 |
) |
Common stock in
treasury, at cost; 141,950 shares and 81,021 shares as of June
30, 2024 and December 31, 2023, respectively |
|
(5,832,445 |
) |
|
|
(2,566,383 |
) |
Total stockholders' equity |
|
|
5,866,323 |
|
|
|
8,228,744 |
|
Total
Liabilities and Stockholders’ Equity |
|
$ |
8,060,904 |
|
|
$ |
9,686,522 |
|
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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