Monster Beverage Reports 2021 Third Quarter Financial Results
Monster Beverage Corporation (NASDAQ: MNST) reported a record net sales increase of 13.2% to $1.41 billion in Q3 2021, up from $1.25 billion in Q3 2020. The COVID-19 pandemic continues to impact operations, particularly with aluminum can shortages and increased operational costs. Despite these challenges, net income fell only 3.0% to $337.2 million, with net income per diluted share decreasing to $0.63. The company reported cash of $1.71 billion and operating income of $444.5 million.
- Record Q3 net sales of $1.41 billion, up 13.2%.
- Net sales for Monster Energy Drinks segment increased 14.3% to $1.33 billion.
- International sales rose 18.7% to $527.4 million, now 37% of total sales.
- Operating income for the nine months increased to $1.38 billion.
- Net income decreased 3.0% to $337.2 million.
- Gross profit margin fell from 59.1% to 55.9% due to rising aluminum can and operational costs.
- Operating expenses increased to $344.7 million from $277.9 million.
-- Record Third Quarter Net Sales Rise 13.2 Percent to
-- Company Addressing Increased Costs, some of which are likely to be Transitory,
through Reductions in Promotions and other Pricing Actions --
CORONA, Calif., Nov. 04, 2021 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three- and nine-months ended September 30, 2021, including an update on the impact of the COVID-19 pandemic.
Despite the ongoing impact of the COVID-19 pandemic, the Company achieved record third quarter net sales.
During the 2021 third quarter, the Company procured additional quantities of aluminum cans from suppliers in the United States, South America and Asia in response to increased consumer demand. However, the Company continued to experience shortages in its aluminum can requirements in the United States and EMEA during the 2021 third quarter.
In addition, the Company continued to experience additional supply chain challenges, including, freight inefficiencies, trucking availability, shortages of shipping containers, port of entry congestion, insufficient co-packing capacity and delays in the receipt of certain ingredients, in the United States and EMEA. As a result, the Company was not able to fully satisfy increased demand for its products in these regions in the 2021 third quarter.
During the 2021 third quarter, the Company continued to experience increased aluminum can costs, attributable to higher aluminum commodity pricing as well as the costs of importing aluminum cans. In addition, the Company experienced increased ingredient and other input costs, including shipping and freight, labor, trucking, fuel, co-packing fees, secondary packaging materials and increased outbound freight costs, which resulted in increased costs of sales and increased operating costs, in the 2021 third quarter.
As of September 30, 2021, the Company had
Third Quarter Results
Net sales for the 2021 third quarter increased 13.2 percent to
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 NorthTM Pure Energy Seltzers, increased 14.3 percent to
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 0.2 percent to
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 to
Net sales to customers outside the United States increased 18.7 percent to
Gross profit, as a percentage of net sales, for the 2021 third quarter was 55.9 percent, compared with 59.1 percent in the 2020 third quarter. The decrease in gross profit as a percentage of net sales for the 2021 third quarter was primarily the result of increased aluminum can costs, attributable to higher aluminum commodity pricing, as well as the cost of importing aluminum cans, logistical costs and geographical sales mix.
Operating expenses for the 2021 third quarter were
Operating expenses as a percentage of net sales for the 2021 third quarter were 24.4 percent, compared with 22.3 percent in the 2020 third quarter. Operating expenses as a percentage of net sales for the 2019 third quarter (pre COVID-19) were 24.5 percent.
Distribution costs as a percentage of net sales were 4.6 percent for the 2021 third quarter, compared with 3.5 percent in the 2020 third quarter.
Selling expenses as a percentage of net sales for the 2021 third quarter were 9.7 percent, compared with 8.8 percent in the 2020 third quarter.
General and administrative expenses for the 2021 third quarter were
Operating income for the 2021 third quarter decreased to
The effective tax rate for the 2021 third quarter was 23.7 percent, compared with 23.4 percent in the 2020 third quarter.
Net income for the 2021 third quarter decreased 3.0 percent to
Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said: “We are pleased to report record sales for the third quarter, despite the ongoing impact of the COVID-19 pandemic.
“The energy drink category, and in particular our Monster Energy® brand, continues to demonstrate resilience and growth in most of our markets.
“In the third quarter of 2021, we expanded distribution of our brands in certain international markets. In the United States, we launched our line of True North™ Pure Energy Seltzer in August 2021 and are currently in the process of launching our Monster® (stylized) Reserve line to the retail trade,” Sacks added.
Vice Chairman and Co-Chief Executive Officer Hilton H. Schlosberg said: “We continued to face headwinds in keeping up with demand in the United States and in EMEA in the third quarter, largely as a result of a shortage in aluminum cans, the availability of co-packing capacity and procurement challenges in other inputs. Aluminum cans in excess of our contracted volumes are entering our supply chain from the United States, South America and Asia, in order to meet the increased consumer demand. The shortage of shipping containers, and global port congestion continue to impact our operations. We have entered into supply agreements with two new aluminum can suppliers in the United States, with deliveries commencing from October and December, respectively.
“We are experiencing increased costs in our operations, including aluminum, shipping, freight and other inputs, some of which are likely to be transitory. We will continue to implement measures to mitigate such increased costs through reductions in promotions and other pricing actions in the United States and in EMEA,” Schlosberg added.
2021 Nine-Months Results
Net sales for the nine-months ended September 30, 2021 increased 21.0 percent to
Gross profit, as a percentage of net sales, for the nine-months ended September 30, 2021 was 56.9 percent, compared with 59.8 percent in the comparable period last year.
Operating expenses for the nine-months ended September 30, 2021 were
Operating income for the nine-months ended September 30, 2021 increased to
The effective tax rate was 23.6 percent for the nine-months ended September 30, 2021, compared with 23.5 percent in the comparable period last year.
Net income for the nine-months ended September 30, 2021 increased 12.6 percent to
Share Repurchase Program
No shares of the Company’s common stock were repurchased during the 2021 third quarter. As of November 4, 2021, approximately
Investor Conference Call
The Company will host an investor conference call today, November 4, 2021, 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® 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. 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 direct and indirect impacts of the human and economic consequences of the COVID-19 pandemic, including the new variants, as well as measures being taken or 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; the impact on consumer demand of the resurgence of the COVID-19 pandemic, including new variants, in many of the countries and territories in which we operate resulting in a number of countries, reinstituting lockdowns and other restrictions; the impact of vaccine mandates on our business and supply chain, including our ability to recruit and/or retain employees, and disruptions in the business of our co-packers, bottlers/distributors and/or suppliers; fluctuations in growth rates and/or decline in sales of the domestic and international energy drink categories generally, including in the convenience and gas channel (which is our largest channel), and the impact on demand for products resulting from deteriorating economic conditions and/or financial uncertainties due to the COVID-19 pandemic; our ability to recognize benefits from The Coca-Cola Company (TCCC) transaction; our extensive commercial arrangements with TCCC and, as a result, our future performance’s substantial dependence on the success of our relationship with TCCC; the impact on our business of trademark and trade dress infringement proceedings brought against us relating to our Reign Total Body Fuel® high performance energy drinks; exposure to significant liabilities due to litigation, legal or regulatory proceedings; intellectual property injunctions; our ability to introduce and increase sales of both existing and new products, and the impact of the COVID-19 pandemic on our innovation plans; our ability to implement the share repurchase programs; 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; actual performance of the parties under the new distribution agreements; potential disruptions arising out of the transition of certain territories to new distributors; changes in sales levels by existing distributors; 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 and retort production; product distribution and placement decisions by retailers; the effects of retailer and/or bottler/distributor consolidation on our business; our ability to successfully adapt to the changing landscape of advertising, marketing, promotional, sponsorship and endorsement opportunities created by the COVID-19 pandemic; 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 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; our ability to absorb, reduce or pass on to our bottlers/distributors increases in commodity costs, including freight costs; or political, legislative or other governmental actions or events, including the outcome of any state attorney general, government and/or quasi-government agency inquiries, in one or more regions in which we operate. 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, 2020, 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 SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION FOR THE THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (In Thousands, Except Per Share Amounts) (Unaudited) | |||||||||||||||
| Three-Months Ended | Nine-Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net sales¹ | $ | 1,410,557 | $ | 1,246,362 | $ | 4,116,308 | $ | 3,402,355 | |||||||
| Cost of sales | 621,399 | 509,831 | 1,775,375 | 1,369,160 | |||||||||||
| Gross profit¹ | 789,158 | 736,531 | 2,340,933 | 2,033,195 | |||||||||||
| Gross profit as a percentage of net sales | 55.9 | % | 59.1 | % | 56.9 | % | 59.8 | % | |||||||
| Operating expenses | 344,694 | 277,930 | 956,346 | 802,343 | |||||||||||
| Operating expenses as a percentage of net sales | 24.4 | % | 22.3 | % | 23.2 | % | 23.6 | % | |||||||
| Operating income¹ | 444,464 | 458,601 | 1,384,587 | 1,230,852 | |||||||||||
| Operating income as a percentage of net sales | 31.5 | % | 36.8 | % | 33.6 | % | 36.2 | % | |||||||
| Interest and other expense, net | 2,290 | 4,568 | 2,179 | 5,491 | |||||||||||
| Income before provision for income taxes¹ | 442,174 | 454,033 | 1,382,408 | 1,225,361 | |||||||||||
| Provision for income taxes | 104,969 | 106,379 | 326,247 | 287,503 | |||||||||||
| Income taxes as a percentage of income before taxes | 23.7 | % | 23.4 | % | 23.6 | % | 23.5 | % | |||||||
| Net income | $ | 337,205 | $ | 347,654 | $ | 1,056,161 | $ | 937,858 | |||||||
| Net income as a percentage of net sales | 23.9 | % | 27.9 | % | 25.7 | % | 27.6 | % | |||||||
| Net income per common share: | |||||||||||||||
| Basic | $ | 0.64 | $ | 0.66 | $ | 2.00 | $ | 1.77 | |||||||
| Diluted | $ | 0.63 | $ | 0.65 | $ | 1.97 | $ | 1.75 | |||||||
| Weighted average number of shares of common stock and common stock equivalents: | |||||||||||||||
| Basic | 528,997 | 527,637 | 528,618 | 530,194 | |||||||||||
| Diluted | 535,915 | 533,263 | 535,554 | 535,011 | |||||||||||
| Case sales (in thousands) (in 192-ounce case equivalents) | 159,975 | 139,922 | 459,991 | 372,481 | |||||||||||
| Average net sales per case2 | $ | 8.78 | $ | 8.85 | $ | 8.91 | $ | 9.08 | |||||||
¹Includes
2Excludes certain Other segment net sales of
| MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020 (In Thousands, Except Par Value) (Unaudited) | ||||||||
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 1,712,671 | $ | 1,180,413 | ||||
| Short-term investments | 1,224,066 | 881,354 | ||||||
| Accounts receivable, net | 849,157 | 666,012 | ||||||
| Inventories | 471,553 | 333,085 | ||||||
| Prepaid expenses and other current assets | 95,607 | 55,358 | ||||||
| Prepaid income taxes | 30,619 | 24,733 | ||||||
| Total current assets | 4,383,673 | 3,140,955 | ||||||
| INVESTMENTS | 28,255 | 44,291 | ||||||
| PROPERTY AND EQUIPMENT, net | 309,574 | 314,656 | ||||||
| DEFERRED INCOME TAXES, net | 241,297 | 241,650 | ||||||
| GOODWILL | 1,331,643 | 1,331,643 | ||||||
| OTHER INTANGIBLE ASSETS, net | 1,066,083 | 1,059,046 | ||||||
| OTHER ASSETS | 88,883 | 70,475 | ||||||
| Total Assets | $ | 7,449,408 | $ | 6,202,716 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 396,229 | $ | 296,800 | ||||
| Accrued liabilities | 180,719 | 142,653 | ||||||
| Accrued promotional allowances | 232,394 | 186,658 | ||||||
| Deferred revenue | 45,278 | 45,429 | ||||||
| Accrued compensation | 54,507 | 55,015 | ||||||
| Income taxes payable | 23,113 | 23,433 | ||||||
| Total current liabilities | 932,240 | 749,988 | ||||||
| DEFERRED REVENUE | 245,621 | 264,436 | ||||||
| OTHER LIABILITIES | 26,550 | 27,432 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock - | 3,199 | 3,193 | ||||||
| Additional paid-in capital | 4,626,299 | 4,537,982 | ||||||
| Retained earnings | 7,488,235 | 6,432,074 | ||||||
| Accumulated other comprehensive (loss) income | (43,495 | ) | 3,034 | |||||
| Common stock in treasury, at cost; 110,719 and 110,565 shares as of September 30, 2021 and December 31, 2020, respectively | (5,829,241 | ) | (5,815,423 | ) | ||||
| Total stockholders' equity | 6,244,997 | 5,160,860 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 7,449,408 | $ | 6,202,716 | ||||
| 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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