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— Second Quarter Net Sales of $1.09 billion —- Second Quarter Net Income increases 6.5 percent to $311.4 million —- Second Quarter Net Income per diluted share increases 9.9 percent to $0.59 per share —
CORONA, Calif., August 4, 2020 (GLOBE NEWSWIRE) – Monster Beverage Corporation (NASDAQ: MNST) today published its monetary effects for the 3 and six months ended June 30, 2020, adding an update on the effect of the covid19 pandemic.
COVID-19 pandemic
The most sensible precedence of the company remains the aptitude, protection and well-being of its painters. In early March 2020, the company implemented global restrictions and house painting policies for painters capable of painting remotely. For painters who cannot paint remotely, protective measures have been implemented, which have been developed and followed in accordance with the rules of public government and professional consultants. The company’s flavouring manufacturing services, conditioners, warehouses and shipping services work. Some of the company’s bottlers/distributors have implemented adjustments to their call problems and service levels, however, the company’s products sometimes remain available to consumers. In limited countries, the operations of their bottlers/distributors have been more affected.
The Company’s net and gross sales at the time of the quarter were adversely affected by the COVID-19 pandemic, in part due to inventory relief through some of the company’s bottlers/distributors. However, the corporate experienced a sequential improvement in sales in the component at the time of the quarter, as some countries and states gradually began to reopen. Since mid-March 2020, the company has noticed a replacement in customer personal tastes and package configurations, adding an increase in internal intake and a minimisation in rapid intake. The company’s sales in the 2020 quarter were affected first through minimizing pedestrian traffic in the convenience and fuel channel (which is the company’s largest channel), but advanced sequentially in the quarter. The company’s e-commerce, club store, retailer and grocery store, as well as similar activities, continued to grow during the quarter, while its on-site catering business, which is a small channel for the company, remained a challenge.
At this time, the Company does not anticipate a significant effect on the ability of its co-conditioners to manufacture and bottlers/distributors to distribute their products due to the COVID-19 pandemic. In addition, the company does not delight in the shortage of raw fabrics or finished products in its source chain.
As of June 30, 2020, the Company had $921.3 million in money and money equivalents, $250.8 million in short-term investments and $2.1 million in long-term investments. Based on the data available lately, the Company does not expect the COVID-19 pandemic to have a significant effect on its liquidity.
Second Quarter Results
Net sales by the time of the 2020 quarter were $1.09 billion compared to $1.10 billion for it last year. Gross sales for the 2020 quarter were $1.27 billion, compared to $1.29 billion for the same era last year. The COVID-19 pandemic had a negative effect on net and gross sales during the 3 months ended June 30, 2020. The effect of the COVID-19 pandemic was more pronounced in the EMEA domain during the 2020 quarter, specifically in the strategic logo segment. Net adjustments in exchange rates had an adverse effect on net and gross sales in the 2020 quarter of $18.2 million and $21.6 million, respectively.
Net sales for the Company’s Monster Energy® Drinks segment, which primarily includes the Company’s Monster Energy® drinks and Reign Total Body Fuel® high performance energy drinks increased 0.8 percent to $1.03 billion for the 2020 second quarter, from $1.02 billion for the 2019 second quarter. The COVID-19 pandemic had an adverse impact on net sales of the Company’s Monster Energy® Drinks segment for the three-months ended June 30, 2020. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $16.8 million for the 2020 second quarter.
Net sales in the company’s strategic logo segment, which mainly includes the various energy beverage logos acquired from The Coca-Cola Company, as well as the company’s affordable energy logos, decreased 24.7% to $59.6 million by the time of the 2020 quarter, compared to $79.1 million in the 2019 quarter. The COVID-19 pandemic had a significant negative effect on net sales of the Company’s strategic logo segment for the quarter ended June 30, 2020. The effect on COVID-19 The pandemic was more pronounced in the strategic logo segment, i.e. in the EMEA region, as the major revenue-generating countries for this segment experienced prolonged blockages. Net adjustments in exchange rates had an adverse effect on net sales in the strategic logo sector of $1.4 million for the 2020 quarter.
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”), were $6.6 million for the 2020 second quarter, compared with $5.8 million in the 2019 second quarter.Net sales to customers outside the United States amounted to $328.3 million in the 2020 second quarter, versus $343.3 million in the 2019 second quarter. Such sales were approximately 30 percent of total net sales in the 2020 second quarter, compared with 31 percent in the 2019 second quarter. The COVID-19 pandemic had a material adverse impact on net sales to customers outside the United States, primarily in EMEA, for the 2020 second quarter.
Gross profit as a percentage of net sales by the time of the 2020 quarter 60.3%, compared to 59.9% of the time of the quarter 2019.
Operating expenses for the 2020 quarter were $252.2 million, compared to $282.3 million in the 2019 quarter. Minimization in operating expenses was basically due to a minimisation of sponsorship and backup costs of $19.8 million and a minimisation in entertainment and entertainment expenses. $10.1 million, each largely due to the COVID-19 pandemic. Prices for certain deferred or deferred occasions have been deferred or possibly deferred to long-term periods. Due to the insecurity surrounding the COVID-19 pandemic, the Company cannot estimate in which long-term periods, if applicable, those deferred sponsorship and approval prices will be recognized.
Distribution costs as a percentage of net sales were 3.6 percent for the 2020 second quarter, compared with 3.4 percent in the 2019 second quarter.
Sales expenses as a percentage of net sales for the current quarter of 2020 were 8.8%, compared to 11.2% in the current quarter of 2019, mainly due to the relief in the sponsorship and approval prices mentioned above.
General and administrative expenses for the time of the 2020 quarter were $116.8 million, or 10.7% of net sales, compared to $120.8 million, or 10.9% of revenue, by the time of the 2019 quarter. Share-based repayment (a non-monetary element) $15.9 million for the 2020 quarter, compared to $15.6 million in the 2019 quarter.
The operating source of revenue for the time of the 2020 quarter increased to $407.3 million from $379.0 million at the time of the 2019 quarter.
The effective tax rate for the 2020 second quarter was 23.2 percent, compared with 23.4 percent in the 2019 second quarter.
Net income for the 2020 second quarter increased 6.5 percent to $311.4 million, from $292.5 million in the 2019 second quarter. Net income per diluted share for the 2020 second quarter increased 9.9 percent to $0.59, from $0.53 in the second quarter of 2019.
Rodney C. Sacks, President and CEO, said: “We are pleased with our functionality in the quarter. EMEA sales were most affected in the quarter, i.e. in our strategic brands, but in general we are seeing sequential innovations every month. Our source chain remains intact and we continue to serve our customers.
“According to Nielsen, the energy drinks category continues to grow in many countries, including the United States.
“Now that certain countries and states are gradually reopening, our teams are working to ensure the implementation of our 2020 product innovation launches, which were disrupted due to the COVID-19 pandemic. We have a robust innovation plan for the remainder of 2020.
“Internationally during the quarter, we added various Monster Energy® brand energy drinks, and Reign Total Body Fuel® high performance energy drinks to our portfolio in a number of countries. Monster Energy® Dragon Tea was launched in China in April 2020. We launched our affordable energy products, Fury® Gold Strike in Honduras and Predator® Gold Strike in Nigeria in the quarter.
“Our thoughts and prayers are with all who have been impacted by this terrible virus and we wish them all a very speedy recovery,” Sacks added.
2020 Six-Months Results
Net sales for the six-months ended June 30, 2020 increased 5.2 percent to $2.16 billion, from $2.05 billion in the comparable period last year. Gross sales for the six-months ended June 30, 2020 increased 5.6 percent to $2.51 billion, from $2.38 billion in the comparable period last year.
Net changes in foreign currency exchange rates had an unfavorable impact on net and gross sales for the six-months ended June 30, 2020 of $28.6 million and $32.8 million, respectively.
Gross profit, as a percentage of net sales, for the six-months ended June 30, 2020 was 60.1 percent, compared with 60.2 percent in the comparable period last year.
Operating expenses for the six-months ended June 30, 2020 were $524.4 million, compared with $544.4 million in the comparable period last year. The decrease in operating expenses was primarily due to decreased expenditures of $24.2 million for sponsorship and endorsements and decreased expenditures of $10.4 million for travel and entertainment due, in part, to the COVID-19 pandemic as well as decreased expenditures of $10.8 million related to the costs associated with distributor terminations.
Operating income for the six-months ended June 30, 2020 increased to $772.3 million, from $690.5 million in the comparable period last year.
The effective tax rate was 23.5 percent for the six-months ended June 30, 2020, versus 20.4 percent for the same period last year.
Net income for the six-months ended June 30, 2020 increased 6.5 percent to $590.2 million, from $554.0 million in the corresponding period last year. Net income per diluted share for the six-months ended June 30, 2020 increased 9.0 percent to $1.10, from $1.01 in the comparable period last year.
Share Repurchase Program
During the 2020 second quarter, the Company purchased approximately 0.3 million shares of its common stock at an average purchase price of $52.88 per share, for a total amount of $15.6 million (excluding broker commissions).
As of August 4, 2020, approximately $441.5 million remained available for repurchase under the previously authorized repurchase program.
Investor Conference Call
The Company will host an investor conference call today, August 4, 2020, 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 MAXX® maximum strength energy drinks, Java Monster® non-carbonated coffee + energy drinks, Espresso Monster® non-carbonated espresso + energy drinks, Caffé Monster® non-carbonated energy coffee drinks, Monster Rehab® non-carbonated tea + energy drinks, Muscle Monster® non-carbonated energy shakes, Monster Hydro® non-carbonated refreshment + energy drinks, Monster HydroSport Super Fuel® non-carbonated advanced hydration + energy drinks, Monster Dragon Tea® non-carbonated energy teas, Reign Total Body Fuel® high performance energy drinks, Reign Inferno® thermogenic fuel high performance 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.
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 presentation 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.
The following table reconciles the non-GAAP financial measure of gross sales with the most directly comparable GAAP financial measure of net sales (in thousands):
Three-Months Ended June 30,
Six-Months EndedJune 30,
2020
2019
2020
2019
Gross sales, net of discounts and returns
$
1,274,277
$
1,286,436
$
2,510,337
$
2,376,862
Less: Promotional and other allowances
180,381
182 391
354 344
326 825
Net sales
Ps
1 093 896
$
1 104 045
Ps
2 993
$
2 050 037
Caution related to 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 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 global slowing of growth and/or decline in sales of energy drinks including the convenience and gas channel (which is our largest channel), resulting from deteriorating economic conditions and 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 of TCCC bottlers/distributors distributing Coca-Cola brand energy drinks; 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, water usage, environmental impact, human rights 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 consolidation on our business and our ability to successfully adapt to the rapidly changing retail landscape; 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, 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 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; 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; 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, 2019, and our quarterly report on Form 10-Q for the quarter ended March 31, 2020. 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)
CORPORATION OF DRINKS OF MONSTRUOS AND SUBSIDIARIES OF CONDENSED CONSOLIDATED RESULTS AND OTHER INFORMATION FOR THREE AND SIX MONTHS CLOSED JUNE 30, 2020 AND 2019 (thousands, consistent with consistent percentage amounts) (unaudited)
Three months ended
Six months completed
June 30
June 30,
2020
2019
2020
2019
Net sales1
Ps
1,093,896
$
1,104,045
Ps
2 993
Ps
2 050 037
Cost of sales
434,427
442,762
859,329
815,221
Gross profit¹
659,469
661,283
1,296,664
1,234,816
Gross profit as a percentage of net sales
60.3
%
59.9
%
60.1
%
60.2
%
Operating expenses²
252,205
282,293
524,412
544,364
Operating expenses as a percentage of net sales
23.1
%
25.6
%
24.3
%
26.6
%
Operating income¹,²
407,264
378,990
772,252
690,452
Operating income as a percentage of net sales
37.2
%
34.3
%
35,8
%
33,7
%
Interest and other (expense) income, net
(1,796
)
2,973
(923
)
5,714
Income before provision for income taxes¹,²
405,468
381,963
771,329
696166
Provision for income source taxes
94 099
89,490
181 125
142 208
Income tax as a tax income
23,2
%
23,4
%
23.5
%
20,4
%
Net income1, 2
Ps
311 369
Ps
292 473
Ps
590 204
Ps
553 958
Net source of revenue as percentage of sales
28,5
%
26,5
%
27,4
%
27,0
%
Net benefits consistent with non-unusual participation:
Basic
Ps
0,59
Ps
0,54
Ps
1.11
Ps
1,02
Diluted
Ps
0,59
Ps
0,53
Ps
1.10
Ps
1,01
Weighted average number of non-unusual inventories and non-unusual inventory equivalents:
Basic
526911
544 156
531 486
543 466
Diluted
531 191
548 218
535,897
548 299
Box (thousands) (equivalent to 192 ounces)
116 960
119 595
232 559
220 879
Average net sales per case3
Ps
09:30 am.
Ps
9,18
Ps
9.22
Ps
9.23
1 includes $10.5 million and $10.6 million for the 3 months ended June 30, 2020 and 2019, respectively, similar to the popularity of deferred revenue. It includes $21.1 million and $24.8 million for the six months ended June 30, 2020 and 2019, respectively, similar to deferred revenue accounting.
2 Includes $0.2 million and $0.3 million for the 3 months ended June 30, 2020 and 2019, respectively, similar to dealer termination fees. It includes $0.2 million and $11.0 million for the six months ended June 30, 2020 and 2019, respectively, similar to reseller termination fees.
3 Excludes Net Sales from the Other Sector of $6.6 million and $5.8 million for the 3 months ended June 30, 2020 and 2019, respectively, by adding net sales of third-party AFF products to independent third-party customers, as those sales do not have a unit of cases. Excludes net sales from the other sector of $11.7 million and $11.1 million for the six months ended June 30, 2020 and 2019, respectively, adding net sales of third-party AFF products to independent customers, as those sales do not have a cash unit
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET CONDENSED AS OF JUNE 30, 2020 AND DECEMBER 31, 2019
(In thousands, nominal value) (un-audited)
June 30, 2020
December 31, 2019
Tricks
CIRCULANT ACTIVES:
Cash and money equivalents
Ps
921 326
Ps
797 957
Short-term investments
250 753
533063
Accounts receivable, net
760 433
540 330
Inventories
340 536
360 731
Prepaid expenses and existing assets
78 425
54 868
Income tax paid in advance
19 977
29 360
Total assets
2,371,450
2 316 309
Investments
2 077
12 905
Property and equipment, net
301 946
298640
DEFERRED TAXES
84 777
84 777
Goodwill
1 331 643
1 331 643
OTHER INTANGIBLE ASSETS, net
1 055 544
1 052 105
OTHER ACTIVES
46 376
53 973
Total assets
Ps
5 193 813
Ps
5 352
COMMITMENTS AND EQUITY
CIRCULANT PASSIVE:
Accounts payable
$
261 969
Ps
274 045
Accumulated debts
142 848
114075
Cumulative promotional assignments
167 011
166 761
Deferred income
44 894
44 237
Accumulated compensation
35 646
47 262
Income taxes payable
22 497
14 717
Total responsibility
674865
661 097
DEFERRED REVENUE
272 926
287 469
OTHER RESPONSIBILITIES
24 482
30 505
Capital:
Common shares – face of $0.005; 1250,000 authorized actions; 637924 shares issued and 527361 shares outstanding as of 30 June 2020; 636460 shares issued and 536698 shares outstanding as of December 31, 2019
3 190
3 182
Issue premium
4,474,379
4 397 511
Un-updated benefits
5,612,684
5,022,480
Cumulative total losses
(53,438
)
(32 387
)
Common cash shares, at cost; 110563 and 99762 stocks as of June 30, 2020 and December 31, 2019 respectively
(5 815 275
)
(5 219 505
)
Total book capital
4 221 540
4,171,281
Total liabilities and equity
Ps
5 193 813
Ps
5 352
CONTACTS: Rodney C. Sacks President and CEO (951) 739-6200
Hilton H. Schlosberg Vice President (951) 739-6200
Roger S. Pondel / Judy Lin Sfetcu PondelWilkinson Inc. (310) 279-5980