Monster Beverage Reports 2024 First Quarter Results
-- Record First Quarter Net Sales Rise 11.8 Percent to $1.90 Billion --
-- Net Sales, Adjusted for Adverse Changes in Foreign Currency of $64.4
Million,
Rise 15.6 Percent (12.6 Percent Exclusive of Argentina’s Impact) --
-- First Quarter Gross Profit as a Percentage of Net Sales
Improves to 54.1 Percent --
-- First Quarter Net Income Increases 11.2 Percent to $442.0 Million --
-- Company Currently Intends to
Commence Tender Offer to Repurchase up to
$3.0 Billion of Common Stock --
CORONA, Calif., May 02, 2024 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three-months ended March 31, 2024.
Net sales for the 2024 first quarter increased 11.8 percent to $1.90 billion, from $1.70 billion in the comparable period last year. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2024 first quarter of $64.4 million ($50.4 million related to Argentina). Net sales on a foreign currency adjusted basis increased 15.6 percent in the 2024 first quarter (12.6 percent exclusive of Argentina’s impact). The difference between reported net sales and net sales on a foreign currency adjusted basis was largely due to the impact of inflation related local currency price increases in Argentina, as well as the significant decrease in the Argentine Peso relative to the U.S. Dollar.
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 10.7 percent to $1.73 billion for the 2024 first quarter, from $1.56 billion for the 2023 first quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy Drinks segment of approximately $54.6 million for the 2024 first quarter ($50.4 million related to Argentina). Net sales on a foreign currency adjusted basis for the Monster Energy Drinks segment increased 14.2 percent in the 2024 first quarter (11.0 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 25.6 percent to $108.4 million for the 2024 first quarter, from $86.4 million in the 2023 first quarter. Net changes in foreign currency exchange rates had an
unfavorable impact on net sales for the Strategic Brands segment of approximately $9.8 million for the 2024 first quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands
segment increased 36.9 percent in the 2024 first 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, increased 21.1 percent to $56.1 million
for the 2024 first quarter, from $46.3 million in the 2023 first 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 19.9 percent to $5.5 million for the 2024 first quarter, from $4.6 million in the 2023 first quarter.
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Net sales to customers outside the United States increased 19.5 percent to $744.1 million in the 2024 first quarter, from $622.9 million in the 2023 first quarter. Such sales were approximately 39 percent of total net sales in the 2024 first quarter, compared with 37 percent in the 2023 first quarter. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 29.8 percent in the 2024 first quarter (21.7 percent exclusive of Argentina’s impact).
Gross profit as a percentage of net sales for the 2024 first quarter was 54.1 percent, compared with 52.8 percent in the 2023 first 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 input costs, partially offset by geographical sales mix.
Operating expenses for the 2024 first quarter were $485.1 million, compared with $412.8 million in the 2023 first quarter. Operating expenses as a percentage of net sales for the 2024 first quarter
were 25.5 percent, compared with 24.3 percent in the 2023 first quarter.
Distribution expenses for the 2024 first quarter were $94.4 million, or 5.0 percent of net sales, compared with $76.3 million, or 4.5 percent of net sales, in the 2023 first quarter.
Selling expenses for the 2024 first quarter were $174.4 million, or 9.2 percent of net sales, compared with $149.0 million, or 8.8 percent of net sales, in the 2023 first quarter.
General and administrative expenses for the 2024 first quarter were $216.3 million, or 11.4 percent of net sales, compared with $187.4 million, or 11.0 percent of net sales, for the 2023 first
quarter. Stock-based compensation was $22.5 million for the 2024 first quarter, compared with $16.1 million in the 2023 first quarter.
Operating income for the 2024 first quarter was $542.0 million, compared with $485.1 million in the 2023 first quarter.
The effective tax rate for the 2024 first quarter was 23.5 percent, compared with 20.1 percent in the 2023 first quarter. The increase in the effective tax rate was primarily attributable to the
decrease in the stock-based compensation deduction in the 2024 first quarter as compared to the 2023 first quarter.
Net income for the 2024 first quarter increased 11.2 percent to $442.0 million, from $397.4 million in the 2023 first quarter. Net income per diluted share for the 2024 first quarter increased 12.0 percent to $0.42, from $0.38 in the first quarter of 2023.
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “We continue to see growth in the energy drink market globally. In the United States, energy is the only segment of the beverage category currently showing unit growth. We continue to grow our sales in non-Nielsen measured channels.
“We achieved another quarter of solid revenue growth, with record first quarter sales. The quarter was again impacted by unfavorable foreign currency exchange rates in certain markets.
“We are pleased to report gross profit margin improvement in the first quarter, which increased significantly when compared to the 2023 first quarter. This improvement was primarily the result of decreased freight-in costs, pricing actions in certain markets and lower input costs, partially offset by geographical sales mix,” Schlosberg said.
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said, “Innovation continues to play an important role in our strategy and contributed to our record sales in this quarter. We launched a number of new innovation products in the quarter, including Monster Energy Ultra Fantasy Ruby Red, Juice Monster Rio Punch and Java Monster Irish Créme in the United States.
“Predator Energy, our affordable energy brand, was launched in the Philippines during the quarter.
“In April 2024, we launched Predator Energy Gold Strike in a non-carbonated formula in a 500 ml PET bottle, in selected provinces in China. Initial response to this product has been positive.
“The Beast Unleashed is now available in 49 states and we have commenced with distribution of The Beast Unleashed in 24 oz. single serve cans in the convenience and gas channel. Nasty Beast, our new hard tea line was launched in 12 oz. variety packs in January 2024 and in 24 oz. single serve cans in February 2024, and is now available in 49 states. Early response to our hard tea line has been positive.
“Our innovation pipeline for both our non-alcoholic and alcoholic beverages remains strong,” Sacks said.
Share Repurchase Program
During the 2024 first quarter, the Company purchased approximately 1.8 million shares of its common stock at an average purchase price of $54.96 per share, for a total amount of $97.2 million
(excluding broker commissions). As of May 2, 2024, approximately $642.4 million remained available for repurchase under the previously authorized repurchase programs.
Intention to Commence Tender Offer
The Company intends to commence a modified “Dutch Auction” tender offer for up to $3.0 billion in value of shares of its common stock, subject to market conditions, at a specified price range that
is yet to be determined. The Company believes that the tender offer represents an efficient mechanism to permit shareholders the opportunity to obtain liquidity without the potential disruption
that can result from market sales.
The Company expects to fund the tender offer with approximately $2.0 billion of cash on hand and approximately $1.0 billion in combined borrowings, consisting of a new revolving credit facility and
a new delayed draw term loan facility, each expected to be consummated prior to the completion of the tender offer. The tender offer will be made outside of the Company’s previously authorized
repurchase programs and will allow the Company to retain the ability to purchase additional shares through the previously authorized repurchase programs in the future.
The Company's Co-CEOs have indicated that they intend to participate in the offer for investment diversification and estate planning purposes. Mr. Sacks' participation, in particular, may provide him some flexibility to consider his own potential options, which may also help the Company continue succession planning for its next phase of leadership. In this regard, after consultation with the Company’s Board, Mr. Sacks is considering reducing his day-to-day management responsibilities starting in 2025, while continuing to manage certain areas of the Company's business for which he has always been responsible. At that time, Mr. Sacks intends to remain Chairman of the Company's Board and Mr. Schlosberg would segue from Co-CEO to CEO.
Investor Conference Call
The Company will host an investor conference call today, May 2, 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 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 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, The Beast Unleashed and Nasty
Beast Hard Tea. 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 intended commencement of the tender offer; the intended $1.0 billion in
combined borrowings, consisting of a new revolving credit facility and a new delayed draw term loan facility; 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, 2023. 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.
Additional Information Regarding The Tender Offer
This communication is for informational purposes only, is not a recommendation to buy or sell the Company’s common stock and does not constitute an offer to buy or the solicitation of an offer
to sell the Company’s common stock. The tender offer described in this communication has not yet commenced, and there can be no assurances that the Company will commence the tender offer on the
terms described in this communication or at all. The tender offer will be made only pursuant to an offer to purchase, letter of transmittal and related materials that the Company expects to
distribute to its shareholders and file with the U.S. Securities Exchange Commission (the “Commission”) upon commencement of the tender offer. SHAREHOLDERS AND INVESTORS SHOULD READ CAREFULLY THE
OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND RELATED MATERIALS BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE TENDER OFFER. Once the tender
offer is commenced, shareholders and investors will be able to obtain a free copy of the tender offer statement on Schedule TO, the offer to purchase, letter of transmittal and other documents that
the Company expects to file with the Commission at the Commission’s website at www.sec.gov or by calling the Information Agent (to be identified at the time the offer is made) for the tender
offer.
(tables below)
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023 (In Thousands, Except Per Share Amounts) (Unaudited) |
|||||||
Three-Months Ended | |||||||
March 31, | |||||||
2024 | 2023 | ||||||
Net sales¹ | $ | 1,899,098 | $ | 1,698,930 | |||
Cost of sales | 871,969 | 801,081 | |||||
Gross profit¹ | 1,027,129 | 897,849 | |||||
Gross profit as a percentage of net sales | 54.1% | 52.8% | |||||
Operating expenses | 485,138 | 412,785 | |||||
Operating expenses as a percentage of net sales | 25.5% | 24.3% | |||||
Operating income¹ | 541,991 | 485,064 | |||||
Operating income as a percentage of net sales | 28.5% | 28.6% | |||||
Interest and other income, net | 35,754 | 12,496 | |||||
Income before provision for income taxes¹ | 577,745 | 497,560 | |||||
Provision for income taxes | 135,696 | 100,116 | |||||
Income taxes as a percentage of income before taxes | 23.5% | 20.1% | |||||
Net income | $ | 442,049 | $ | 397,444 | |||
Net income as a percentage of net sales | 23.3% | 23.4% | |||||
Net income per common share: | |||||||
Basic | $ | 0.42 | $ | 0.38 | |||
Diluted | $ | 0.42 | $ | 0.38 | |||
Weighted average number of shares of common stock and common stock equivalents: | |||||||
Basic | 1,041,081 | 1,044,909 | |||||
Diluted | 1,051,282 | 1,059,069 | |||||
Energy drink case sales (in thousands) (in 192-ounce case equivalents) | 211,430 | 182,444 | |||||
Average net sales per case2 | $ | 8.69 | $ | 9.03 | |||
1Includes $9.9 million for both the three-months ended March 31, 2024 and 2023, related to the recognition of deferred revenue.
2Excludes Alcohol Brands segment and Other segment net sales.
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2024 AND DECEMBER 31, 2023 (In Thousands, Except Par Value) (Unaudited) |
||||||||
March 31, 2024 |
December 31, 2023 |
|||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 2,576,524 | $ | 2,297,675 | ||||
Short-term investments | 984,201 | 955,605 | ||||||
Accounts receivable, net | 1,370,239 | 1,193,964 | ||||||
Inventories | 939,630 | 971,406 | ||||||
Prepaid expenses and other current assets | 124,580 | 116,195 | ||||||
Prepaid income taxes | 40,340 | 54,151 | ||||||
Total current assets | 6,035,514 | 5,588,996 | ||||||
INVESTMENTS | 8,162 | 76,431 | ||||||
PROPERTY AND EQUIPMENT, net | 923,290 | 890,796 | ||||||
DEFERRED INCOME TAXES, net | 175,271 | 175,003 | ||||||
GOODWILL | 1,417,941 | 1,417,941 | ||||||
OTHER INTANGIBLE ASSETS, net | 1,430,762 | 1,427,139 | ||||||
OTHER ASSETS | 107,126 | 110,216 | ||||||
Total Assets | $ | 10,098,066 | $ | 9,686,522 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 533,729 | $ | 564,379 | ||||
Accrued liabilities | 204,679 | 183,988 | ||||||
Accrued promotional allowances | 318,895 | 269,061 | ||||||
Deferred revenue | 43,776 | 41,914 | ||||||
Accrued compensation | 52,638 | 87,392 | ||||||
Income taxes payable | 75,111 | 14,955 | ||||||
Total current liabilities | 1,228,828 | 1,161,689 | ||||||
DEFERRED REVENUE | 198,759 | 204,251 | ||||||
OTHER LIABILITIES | 92,690 | 91,838 | ||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common stock - $0.005 par value; 5,000,000 shares authorized; 1,124,870 shares issued and 1,041,698 shares outstanding as of March 31, 2024; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023 |
5,624 | 5,613 | ||||||
Additional paid-in capital | 5,034,948 | 4,975,115 | ||||||
Retained earnings | 6,381,785 | 5,939,736 | ||||||
Accumulated other comprehensive loss | (157,940 | ) | (125,337 | ) | ||||
Common stock in treasury, at cost; 83,172 shares and 81,021 shares as of March 31, 2024 and December 31, 2023, respectively | (2,686,628 | ) | (2,566,383 | ) | ||||
Total stockholders' equity | 8,577,789 | 8,228,744 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 10,098,066 | $ | 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 |