-- Third Quarter Net Sales Rise 15.4
percent to $909.5 million ---- Third Quarter Net
Income Increases 14.1 percent to $218.7 million
---- Third Quarter Net Income per diluted share
increases 15.1 percent to $0.38 per share ----
Third Quarter Distribution Termination Expenses were $15.9 million
--
Monster Beverage Corporation (NASDAQ:MNST) today reported financial
results for the three- and nine-months ended September 30, 2017.
Third Quarter ResultsNet sales for the 2017
third quarter increased 15.4 percent to $909.5 million from $788.0
million in the same period last year. Gross sales for the
2017 third quarter increased 14.1 percent to $1.04 billion from
$913.3 million for the same period last year.
Net sales for the Company’s Monster Energy® Drinks segment,
which is comprised of the Company’s Monster Energy® drinks, Monster
HydroTM energy drinks and Mutant® Super Soda drinks, increased 16.6
percent to $827.7 million for the 2017 third quarter, from $710.1
million for the same period last year. Net sales for the
Company’s Strategic Brands segment, which includes the various
energy drink brands acquired from The Coca-Cola Company, increased
6.2 percent to $76.6 million for the 2017 third quarter, from $72.1
million in the comparable 2016 quarter. Net sales for the Company’s
Other segment, which includes certain products of American Fruits
& Flavors (“AFF”) sold to independent third parties, were $5.2
million for the 2017 third quarter, compared with $5.7 million in
the 2016 third quarter.
Net sales to customers outside the United States increased 36.3
percent to $260.1 million in the 2017 third quarter, from $190.8
million in the corresponding quarter last year.
Gross profit, as a percentage of net sales, for the 2017 third
quarter, decreased to 62.6 percent from 63.8 percent for the
comparable 2016 third quarter, primarily attributable to
geographical and product sales mix, as well as to increases in
other costs.
Operating expenses for the 2017 third quarter were $252.3
million, compared with $212.6 million in the 2016 third quarter.
Included in operating expenses were distributor termination
expenses of $15.9 million and $4.7 million for the 2017 and 2016
third quarters, respectively.
Distribution costs as a percentage of net sales were 3.2 percent
for the 2017 third quarter, compared with 3.1 percent in the third
quarter last year.
Selling expenses as a percentage of net sales for the 2017 third
quarter were 12.7 percent, compared with 12.1 percent in the third
quarter last year.
General and administrative expenses for the 2017 third quarter
were $107.5 million, or 11.8 percent of net sales, compared with
$92.5 million, or 11.7 percent of net sales, for the 2016 third
quarter. Included in general and administrative expenses were
distributor termination expenses of $15.9 million and $4.7 million
for the 2017 and 2016 third quarters, respectively. General and
administrative expenses, excluding distributor terminations, were
10.1 percent of net sales for the 2017 third quarter, compared with
11.1 percent of net sales for the 2016 third quarter. Stock-based
compensation (a non-cash item) was $13.3 million for the third
quarter of 2017, compared with $12.1 million in the third quarter
last year.
Operating income for the 2017 third quarter increased to $317.4
million from $290.4 million in the 2016 third quarter.
The effective tax rate for the 2017 third quarter was 31.9
percent, compared with 33.8 percent in the same period last
year.
Net income for the 2017 third quarter increased 14.1 percent to
$218.7 million from $191.6 million in the same period last
year. Net income per diluted share for the 2017 third quarter
increased 15.1 percent to $0.38 from $0.33 in the third quarter of
2016. The Company estimates that distributor termination expenses
in the 2017 third quarter reduced reported earnings by
approximately $0.02 per share, after tax.
Rodney C. Sacks, Chairman and Chief Executive Officer, said:
“The strategic alignment of our distribution system with Coca-Cola
system bottlers continues to progress well. During the third
quarter, we successfully transitioned Nicaragua and Vietnam to
Coca-Cola bottlers and commenced distribution of Monster Energy® in
Georgia, Kuwait and Taiwan in the quarter. In October 2017,
we launched or transitioned the Monster Energy® brand in a number
of smaller countries and are currently planning for further
launches or transitions in other countries. We are also
planning a relaunch in India. We are in the process of launching
Espresso Monster™ in 8.4 oz. cans in two flavors, as well as NOS®
Nitro Mango in 16 oz. cans, in the United States. Further new
product launches are planned for 2018,” Sacks added.
2017 Nine MonthsNet sales for the nine-months
ended September 30, 2017 increased 11.5 percent to $2.6 billion
from $2.3 billion for the same period in 2016. Gross sales for the
nine-months ended September 30, 2017 increased 11.0 percent to $2.9
billion from $2.6 billion for the same period in 2016.
Gross profit as a percentage of net sales was 63.9 percent for
the nine-months ended September 30, 2017, compared with 62.9
percent for the comparable period in 2016.
Operating expenses for the nine-months ended September 30, 2017
were $702.4 million, compared with $610.3 million in the same
period last year. Included in operating expenses were distributor
termination expenses of $35.9 million and $33.4 million for the
nine-months ended September 30, 2017 and 2016, respectively.
Included in operating expenses for the comparable 2016 period were
AFF transaction related expenses of $4.5 million and stock
repurchase expenses of $1.6 million.
Operating income for the nine-months ended September 30, 2017
was $931.7 million, compared with $833.6 million for the comparable
period in 2016.
Net income for the nine-months ended September 30, 2017 was
$619.4 million, or $1.07 per diluted share, compared with $539.7
million, or $0.89 per diluted share, for the comparable period in
2016. The effective tax rate was 33.7 percent for the nine-months
ended September 30, 2017, versus 35.2 percent for the comparable
period in 2016. The Company estimates that distributor termination
expenses for the nine-months ended September 30, 2017 reduced
reported earnings by approximately $0.04 per share, after tax.
Investor Conference Call The
Company will host an investor conference call today, November 8,
2017, 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,
Monster Energy Extra Strength Nitrous Technology® energy drinks,
Java Monster® non-carbonated coffee + energy drinks, Espresso
Monster™ espresso + energy drinks, Monster Rehab® non-carbonated
energy drinks with electrolytes, Muscle Monster® energy shakes,
Übermonster® energy drinks, Monster Hydro™ energy drinks, NOS®
energy drinks, Full Throttle® energy drinks, Burn® energy drinks,
Samurai® energy drinks, Relentless® energy drinks, Mother® energy
drinks, Power Play® energy drinks, BU® energy drinks, Nalu® energy
drinks, BPM® energy drinks, Gladiator® energy drinks, and Ultra®
energy drinks. The Company’s subsidiaries also develop and
market Mutant® Super Soda drinks. For more information, visit
www.monsterbevcorp.com.
Note Regarding Use of Non-GAAP
Measures Gross sales is used internally by management
as an indicator of and to monitor operating performance, including
sales performance of particular products, salesperson performance,
product growth or declines and overall Company performance. The use
of gross sales allows evaluation of sales performance before the
effect of any promotional items, which can mask certain performance
issues. We therefore believe that the disclosure of gross sales
provides a useful measure of our operating performance. Gross sales
is not a measure that is recognized under accounting principles
generally accepted in the United States of America (“GAAP”) and
should not be considered as an alternative to net sales, which is
determined in accordance with GAAP, and should not be used alone as
an indicator of operating performance in place of net sales.
Additionally, gross sales may not be comparable to similarly titled
measures used by other companies, as gross sales has been defined
by our internal reporting practices. In addition, gross sales may
not be realized in the form of cash receipts as promotional
payments and allowances may be deducted from payments received from
certain customers.
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: our ability to recognize benefits from
The Coca-Cola Company transaction and the American Fruits &
Flavors transaction; the effect of The Coca-Cola Company’s
refranchising initiative, our ability to introduce and increase
sales of both existing and new products; our ability to implement
the share repurchase program; unanticipated litigation concerning
the Company’s products; changes in consumer preferences; changes in
demand due to obesity and other perceived health concerns,
including concerns relating to certain ingredients in our products
or packages; changes in demand due to product safety concerns;
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 and
effects of retailer consolidation; unfavorable resolution of tax
matters; changes in governmental regulation; the imposition of new
and/or increased excise sales and/or other taxes on our products;
criticism of energy drinks and/or the energy drink market
generally; our ability to satisfy all criteria set forth in any
U.S. model energy drink guidelines; 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; unforeseen
economic and political changes and local or international
catastrophic events; 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. 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,
2017 AND 2016 |
(In Thousands, Except Per Share Amounts)
(Unaudited) |
|
|
Three-Months Ended |
|
Nine-Months Ended |
|
September 30, |
|
September 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net sales1 |
$ |
909,476 |
|
|
$ |
787,954 |
|
|
$ |
2,558,690 |
|
|
$ |
2,295,628 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
339,767 |
|
|
|
284,979 |
|
|
|
924,610 |
|
|
|
851,741 |
|
|
|
|
|
|
|
|
|
Gross profit1 |
|
569,709 |
|
|
|
502,975 |
|
|
|
1,634,080 |
|
|
|
1,443,887 |
|
Gross profit as a
percentage of net sales |
|
62.6% |
|
|
|
63.8% |
|
|
|
63.9% |
|
|
|
62.9% |
|
|
|
|
|
|
|
|
|
Operating
expenses2 |
|
252,337 |
|
|
|
212,600 |
|
|
|
702,405 |
|
|
|
610,277 |
|
Operating expenses as a
percentage of net sales |
|
27.7% |
|
|
|
27.0% |
|
|
|
27.5% |
|
|
|
26.6% |
|
|
|
|
|
|
|
|
|
Operating
income1,2 |
|
317,372 |
|
|
|
290,375 |
|
|
|
931,675 |
|
|
|
833,610 |
|
Operating income as a
percentage of net sales |
|
34.9% |
|
|
|
36.9% |
|
|
|
36.4% |
|
|
|
36.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income (expense), net |
|
3,996 |
|
|
|
(1,037) |
|
|
|
2,103 |
|
|
|
(651) |
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes1,2 |
|
321,368 |
|
|
|
289,338 |
|
|
|
933,778 |
|
|
|
832,959 |
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
102,624 |
|
|
|
97,695 |
|
|
|
314,422 |
|
|
|
293,221 |
|
Income taxes as a
percentage of income before taxes |
|
31.9% |
|
|
|
33.8% |
|
|
|
33.7% |
|
|
|
35.2% |
|
|
|
|
|
|
|
|
|
Net income1,2 |
$ |
218,744 |
|
|
$ |
191,643 |
|
|
$ |
619,356 |
|
|
$ |
539,738 |
|
Net income as a
percentage of net sales |
|
24.1% |
|
|
|
24.3% |
|
|
|
24.2% |
|
|
|
23.5% |
|
|
|
|
|
|
|
|
|
Net income
per common share: |
|
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
0.34 |
|
|
$ |
1.09 |
|
|
$ |
0.91 |
|
Diluted |
$ |
0.38 |
|
|
$ |
0.33 |
|
|
$ |
1.07 |
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares of common stock and common stock
equivalents: |
|
|
|
|
|
|
|
Basic |
|
567,878 |
|
|
|
571,137 |
|
|
|
567,550 |
|
|
|
594,219 |
|
Diluted |
|
578,368 |
|
|
|
583,293 |
|
|
|
577,964 |
|
|
|
606,279 |
|
|
|
|
|
|
|
|
|
Case sales (in
thousands) (in 192-ounce case equivalents) |
|
96,184 |
|
|
|
82,767 |
|
|
|
273,409 |
|
|
|
242,994 |
|
Average net sales per
case3 |
$ |
9.40 |
|
|
$ |
9.45 |
|
|
$ |
9.30 |
|
|
$ |
9.40 |
|
1Includes $11.4 million and $8.4 million for the
three-months ended September 30, 2017 and 2016, respectively,
related to the recognition of deferred revenue. Includes $31.6
million and $28.6 million for the nine-months ended September 30,
2017 and 2016, respectively, related to the recognition of deferred
revenue.
²Includes $15.9 million and $4.7 million for the three-months
ended September 30, 2017 and 2016, respectively, of distributor
termination costs. Includes $35.9 million and $33.4 million for the
nine-months ended September 30, 2017 and 2016, respectively, of
distributor termination costs.
3Excludes Other segment net sales of $5.2 million and $5.7
million for the three-months ended September 30, 2017 and 2016,
respectively, comprised of sales of AFF Third-Party Products to
independent third-party customers as these sales do not have unit
case equivalents. Excludes Other segment net sales of $16.9 million
and $12.1 million for the nine-months ended September 30, 2017 and
2016, respectively, comprised of sales of AFF Third-Party Products
to independent third-party customers as these sales do not have
unit case equivalents.
MONSTER BEVERAGE CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE SHEETS |
AS OF SEPTEMBER 30, 2017 AND DECEMBER 31,
2016 |
(In Thousands, Except Par Value)
(Unaudited) |
|
|
|
September
30,2017 |
|
December 31,2016 |
ASSETS |
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and cash
equivalents |
|
$ |
465,559 |
|
|
$ |
377,582 |
|
Short-term
investments |
|
|
630,348 |
|
|
|
220,554 |
|
Accounts receivable,
net |
|
|
535,336 |
|
|
|
448,051 |
|
The Coca-Cola Company
transaction receivable |
|
|
- |
|
|
|
125,000 |
|
Inventories |
|
|
213,341 |
|
|
|
161,971 |
|
Prepaid expenses and
other current assets |
|
|
46,095 |
|
|
|
32,562 |
|
Prepaid income
taxes |
|
|
43,618 |
|
|
|
66,550 |
|
Total
current assets |
|
|
1,934,297 |
|
|
|
1,432,270 |
|
|
|
|
|
|
INVESTMENTS |
|
|
7,003 |
|
|
|
2,394 |
|
PROPERTY AND EQUIPMENT,
net |
|
|
225,421 |
|
|
|
173,343 |
|
DEFERRED INCOME
TAXES |
|
|
158,739 |
|
|
|
159,556 |
|
GOODWILL |
|
|
1,331,643 |
|
|
|
1,331,643 |
|
OTHER INTANGIBLE
ASSETS, net |
|
|
1,033,481 |
|
|
|
1,032,635 |
|
OTHER ASSETS |
|
|
18,322 |
|
|
|
21,630 |
|
Total Assets |
|
$ |
4,708,906 |
|
|
$ |
4,153,471 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Accounts payable |
|
$ |
229,551 |
|
|
$ |
193,270 |
|
Accrued
liabilities |
|
|
112,732 |
|
|
|
79,526 |
|
Accrued promotional
allowances |
|
|
158,824 |
|
|
|
110,237 |
|
Accrued distributor
terminations |
|
|
15,656 |
|
|
|
8,184 |
|
Deferred revenue |
|
|
43,566 |
|
|
|
41,672 |
|
Accrued
compensation |
|
|
27,199 |
|
|
|
30,043 |
|
Income taxes
payable |
|
|
10,156 |
|
|
|
7,657 |
|
Total
current liabilities |
|
|
597,684 |
|
|
|
470,589 |
|
|
|
|
|
|
DEFERRED REVENUE |
|
|
342,249 |
|
|
|
353,173 |
|
|
|
|
|
|
OTHER LIABILITIES |
|
|
819 |
|
|
|
- |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
Common stock - $0.005
par value; 1,250,000 shares authorized; |
|
|
|
|
|
|
|
|
625,132 shares issued
and 563,959 outstanding as of September 30, 2017; |
|
|
|
|
|
|
|
|
623,201 shares issued
and 566,566 outstanding as of December 31, 2016 |
|
|
3,126 |
|
|
|
3,116 |
|
Additional
paid-in-capital |
|
|
4,111,781 |
|
|
|
4,051,245 |
|
Retained earnings |
|
|
2,726,904 |
|
|
|
2,107,548 |
|
Accumulated other
comprehensive loss |
|
|
(15,533 |
) |
|
|
(23,249 |
) |
Common stock in
treasury, at cost; 61,173 and 56,635 shares as of |
|
|
|
|
|
|
|
|
September
30, 2017 and December 31, 2016, respectively |
|
|
(3,058,124 |
) |
|
|
(2,808,951 |
) |
Total
stockholders' equity |
|
|
3,768,154 |
|
|
|
3,329,709 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
4,708,906 |
|
|
$ |
4,153,471 |
|
|
|
|
|
|
|
|
|
|
CONTACTS:
Rodney C. Sacks
Chairman and Chief Executive Officer
(951) 739-6200
Hilton H. Schlosberg
Vice Chairman
(951) 739-6200
Roger S. Pondel / Judy Lin Sfetcu
PondelWilkinson Inc.
(310) 279-5980
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