Monster Beverage Reports 2023 Fourth Quarter and Full-Year Financial Results
- Strong fourth-quarter performance with a 14.4% increase in net sales to $1.73 billion for Monster Beverage Corporation (MNST).
- Gross profit margin improved to 54.2%, and net income rose by 21.6% to $367.0 million in the fourth quarter.
- Net sales for the Monster Energy® Drinks segment increased by 15.1% to $1.60 billion in the fourth quarter.
- Operating expenses included impairment charges of $39.9 million for the Alcohol Brands segment due to challenges in the craft beer and seltzer categories.
- Full-year results show a 13.1% increase in net sales to $7.14 billion, with a gross profit margin of 53.1% and a net income increase of 36.9% to $1.63 billion.
- None.
Insights
The fourth quarter financial results of Monster Beverage Corporation indicate a robust performance with a significant 14.4% increase in net sales, amounting to $1.73 billion. This growth is particularly noteworthy when considering the adverse foreign currency impact, which, when adjusted, reveals an even stronger sales increase of 16.1%. The company's ability to improve gross profit margins to 54.2% reflects effective pricing strategies, reduced freight-in costs and lower input costs, showcasing strong management of the cost structure amidst market fluctuations.
However, the presence of $39.9 million in impairment charges related to the Alcohol Brands segment points to underlying challenges within the craft beer and seltzer categories. These charges have a diluting effect on the operating income, which investors should consider when assessing the company's performance in this segment. The effective tax rate reduction to 18.5% is another highlight, contributing to the net income increase of 21.6% to $367.0 million. This decrease in tax rate could be attributed to tax benefits from stock option exercises and should be considered when evaluating the company's tax strategies and its impact on net earnings.
From a market perspective, Monster Beverage Corporation's continued growth in the global energy drink market is a testament to the strength of its brand portfolio and innovation strategy. The company's focus on launching new products such as Monster Energy® Zero Sugar and Monster Energy Ultra® Strawberry Dreams™ and its planned international expansion, signal a strategic approach to capitalizing on consumer trends and preferences. The 15.1% sales growth in the Monster Energy® Drinks segment, despite currency headwinds, underscores the brand's robust market position and consumer loyalty.
It is also important to note the 30.6% sales increase in the Alcohol Brands segment, which may reflect initial success in integrating new product lines such as The Beast Unleashed®. However, the impact of the impairment charges in this segment highlights the volatility and competitive nature of the craft beer and seltzer markets. Investors should closely monitor the company's ability to navigate these challenges and sustain growth in the alcohol category.
Examining the financial results from an economic standpoint, the company's performance can be seen as an indicator of discretionary consumer spending patterns. The increase in sales both domestically and internationally, particularly in a period of currency volatility, suggests a resilient demand for energy drinks. This demand resilience could be reflective of broader economic trends where consumers continue to prioritize certain discretionary goods despite macroeconomic pressures.
The company's strategic pricing actions, which have contributed to improved gross margins, demonstrate an ability to pass on costs to consumers without significant detriment to sales volumes. This pricing power is an important economic consideration, as it suggests that Monster Beverage Corporation has a strong brand value that can withstand price increases. Moreover, the reduction in freight-in and input costs may be indicative of easing inflationary pressures, which could have positive implications for operating margins going forward.
-- Record Fourth Quarter Net Sales Rise 14.4 Percent to
-- Net Sales, Adjusted for Adverse Changes in Foreign Currency of
-- Gross Profit as a Percentage of Net Sales Improves to 54.2 Percent on a Reported Basis and to 54.5 Percent Excluding the Bang Inventory Step-Up --
-- Fourth Quarter Net Income Increases 21.6 Percent to
-- Fourth Quarter Net Income, Excluding Alcohol Brands Segment Impairment Charges and the Bang Inventory Step-Up, Increases 33.1 Percent to
CORONA, Calif., Feb. 28, 2024 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three- and twelve-months ended December 31, 2023.
Fourth Quarter Results
Net sales for the 2023 fourth quarter increased 14.4 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, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, increased 15.1 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 Predator® and Fury®, decreased 1.3 percent to
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 30.6 percent to
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 6.2 percent to
Net sales to customers outside the United States increased 17.4 percent to
Gross profit as a percentage of net sales for the 2023 fourth quarter was 54.2 percent, compared with 51.8 percent in the 2022 fourth 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 lower input costs. Inventory purchased as part of the Bang Transaction was recorded at fair value. Certain of the purchased inventory was subsequently sold in the 2023 fourth 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
Gross profit as a percentage of net sales was 54.5 percent for the 2023 fourth quarter, excluding the Bang Inventory Step-Up.
Operating expenses for the 2023 fourth quarter were
Distribution expenses for the 2023 fourth quarter were
Selling expenses for the 2023 fourth quarter were
General and administrative expenses for the 2023 fourth quarter were
Operating income for the 2023 fourth quarter increased 10.0 percent to
The effective tax rate for the 2023 fourth quarter was 18.5 percent, compared with 23.3 percent in the 2022 fourth quarter. The decrease in the effective tax rate for the 2023 fourth quarter was primarily due to a large increase in the tax benefit related to the exercise of non-qualified stock options.
Net income for the 2023 fourth quarter increased 21.6 percent to
Hilton H. Schlosberg, Vice Chairman and Co-Chief Executive Officer, said, “We continue to see sound growth in the energy drink market globally. We are pleased to report another quarter of solid revenue growth, with record sales for our fourth quarter and 2023 financial year. The quarter and the 2023 financial year were again impacted by unfavorable foreign currency exchange rates.
“Gross profit margins in the quarter improved significantly as compared to the 2022 fourth quarter, primarily the result of pricing actions, decreased freight-in costs and lower input costs. Gross profit margins also improved sequentially from the previous quarters.
“The Bang Energy acquisition has been successfully integrated and is performing according to expectations.”
“Operating expenses for the Alcohol Brands Segment included impairment charges of
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 2023. In particular, among our innovation products in the United States, Monster Energy® Zero Sugar and Monster Energy Ultra® Strawberry Dreams™ are standouts. We have a wide range of new innovation products planned for 2024 in the United States including our new Monster Energy® Ultra Fantasy Ruby Red™ and Juice Monster® Rio Punch™ products.
“Monster Energy® Zero Sugar was launched in Great Britain, Ireland and Poland in the second half of 2023 with additional launches planned throughout EMEA in 2024.
“We achieved our goal of securing availability of The Beast Unleashed® throughout most of the United States by the end of last year and have commenced with the roll-out of The Beast Unleashed® in 24 oz. single serve cans in the convenience and gas channel. We are currently launching Nasty Beast™, our new hard tea, in 12 oz. variety packs, as well as in 24 oz. single serve cans. Our innovation pipeline for both our non-alcohol and alcohol beverages remains strong,” Sacks said.
2023 Full-Year Results
Net sales for the year ended December 31, 2023 increased 13.1 percent to
Gross profit, as a percentage of net sales, for the year ended December 31, 2023 was 53.1 percent, compared with 50.3 percent in the comparable period last year.
Operating expenses for the year ended December 31, 2023 were
Operating income for the year ended December 31, 2023 increased to
The effective tax rate was 21.2 percent for the year ended December 31, 2023, compared with 24.2 percent in the comparable period last year.
Net income for the year ended December 31, 2023 increased 36.9 percent to
Share Repurchase Program
During the 2023 fourth quarter, the Company purchased approximately 0.8 million shares of its common stock at an average purchase price of
Investor Conference Call
The Company will host an investor conference call today, February 28, 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 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 SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION
FOR THE THREE- AND TWELVE-MONTHS ENDED DECEMBER 31, 2023 AND 2022
(In Thousands, Except Per Share Amounts) (Unaudited)
| Three-Months Ended | Twelve-Months Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Net sales¹ | $ | 1,730,108 | $ | 1,512,930 | $ | 7,140,027 | $ | 6,311,050 | |||||||
| Cost of sales | 791,736 | 728,615 | 3,345,821 | 3,136,483 | |||||||||||
| Gross profit¹ | 983,372 | 784,315 | 3,794,206 | 3,174,567 | |||||||||||
| Gross profit as a percentage of net sales | |||||||||||||||
| Operating expenses | 504,414 | 389,964 | 1,840,851 | 1,589,846 | |||||||||||
| Operating expenses as a percentage of net sales | |||||||||||||||
| Operating income¹ | 433,958 | 394,351 | 1,953,355 | 1,584,721 | |||||||||||
| Operating income as a percentage of net sales | |||||||||||||||
| Interest and other income (expense), net | 16,117 | (825 | ) | 115,127 | (12,757 | ) | |||||||||
| Income before provision for income taxes¹ | 450,075 | 393,526 | 2,068,482 | 1,571,964 | |||||||||||
| Provision for income taxes | 83,097 | 91,853 | 437,494 | 380,340 | |||||||||||
| Income taxes as a percentage of income before taxes | |||||||||||||||
| Net income | $ | 366,978 | $ | 301,673 | $ | 1,630,988 | $ | 1,191,624 | |||||||
| Net income as a percentage of net sales | |||||||||||||||
| Net income per common share: | |||||||||||||||
| Basic | $ | 0.35 | $ | 0.29 | $ | 1.56 | $ | 1.13 | |||||||
| Diluted | $ | 0.35 | $ | 0.29 | $ | 1.54 | $ | 1.12 | |||||||
| Weighted average number of shares of common stock and common stock equivalents: | |||||||||||||||
| Basic | 1,040,584 | 1,044,746 | 1,044,887 | 1,053,558 | |||||||||||
| Diluted | 1,052,524 | 1,058,310 | 1,057,981 | 1,066,442 | |||||||||||
| Energy Drink Case sales (in thousands) (in 192-ounce case equivalents) | 185,304 | 166,227 | 769,241 | 701,677 | |||||||||||
| Average net sales per case2 | $ | 9.12 | $ | 8.91 | $ | 9.01 | $ | 8.82 | |||||||
¹Includes
2Excludes Alcohol Brands segment and Other segment average net sales per case.
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2023 AND 2022
(In Thousands, Except Par Value) (Unaudited)
| December 31, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash and cash equivalents | $ | 2,297,675 | $ | 1,307,141 | |||
| Short-term investments | 955,605 | 1,362,314 | |||||
| Accounts receivable, net | 1,193,964 | 1,016,203 | |||||
| Inventories | 971,406 | 935,631 | |||||
| Prepaid expenses and other current assets | 116,195 | 109,823 | |||||
| Prepaid income taxes | 54,151 | 33,785 | |||||
| Total current assets | 5,588,996 | 4,764,897 | |||||
| INVESTMENTS | 76,431 | 61,443 | |||||
| PROPERTY AND EQUIPMENT, net | 890,796 | 516,897 | |||||
| DEFERRED INCOME TAXES, net | 175,003 | 177,039 | |||||
| GOODWILL | 1,417,941 | 1,417,941 | |||||
| OTHER INTANGIBLE ASSETS, net | 1,427,139 | 1,220,410 | |||||
| OTHER ASSETS | 110,216 | 134,478 | |||||
| Total Assets | $ | 9,686,522 | $ | 8,293,105 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable | $ | 564,379 | $ | 444,265 | |||
| Accrued liabilities | 183,988 | 172,991 | |||||
| Accrued promotional allowances | 269,061 | 255,631 | |||||
| Deferred revenue | 41,914 | 43,311 | |||||
| Accrued compensation | 87,392 | 72,463 | |||||
| Income taxes payable | 14,955 | 13,317 | |||||
| Total current liabilities | 1,161,689 | 1,001,978 | |||||
| DEFERRED REVENUE | 204,251 | 223,800 | |||||
| OTHER LIABILITIES | 91,838 | 42,286 | |||||
| STOCKHOLDERS' EQUITY: | |||||||
| Common stock - | 5,613 | 6,418 | |||||
| Additional paid-in capital | 4,975,115 | 4,776,804 | |||||
| Retained earnings | 5,939,736 | 9,001,173 | |||||
| Accumulated other comprehensive loss | (125,337 | ) | (159,073 | ) | |||
| Common stock in treasury, at cost; 81,021 shares and 239,088 shares as of December 31, 2023 and December 31, 2022, respectively | (2,566,383 | ) | (6,600,281 | ) | |||
| Total stockholders' equity | 8,228,744 | 7,025,041 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 9,686,522 | $ | 8,293,105 | |||
| 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 |
FAQ
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Which segment showed a decrease in net sales in the fourth quarter for MNST?
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