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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 Company’s top priority continues to be the health, safety and well-being of its employees. Early in March 2020, the Company implemented global travel restrictions and work-from-home policies for employees who are able to work remotely. For those employees who are unable to work remotely, safety precautions have been instituted, which were developed and adopted in line with guidance from public health authorities and professional consultants. The Company’s flavor manufacturing facilities, its co-packers, warehouses and shipment facilities, are all operating. Certain of the Company’s bottlers/distributors have implemented modifications to their call points and service levels, but generally the Company’s products remain available to consumers. In limited countries the operations of its 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 for the 2020 second quarter were $1.09 billion compared with $1.10 billion in the same period last year. Gross sales for the 2020 second quarter were $1.27 billion as compared to $1.29 billion in the same period last year. The COVID-19 pandemic had an adverse impact on net and gross sales for the three-months ended June 30, 2020. The COVID-19 pandemic’s impact was more pronounced in EMEA during the 2020 second quarter, particularly in the Strategic Brands segment. Net changes in foreign currency exchange rates had an unfavorable impact on net and gross sales for the 2020 second quarter of $18.2 million and $21.6 million, respectively.
Net sales in the Company’s Monster Energy® beverage segment, which mainly includes Monster Energy® and high-yield energy drinks Total Reign Body Fuel® the company, increased 0.8% to $1.03 billion by the 2020 quarter, compared to $1.02 billion for the 2019 quarter. The COVID-19 pandemic negatively affected net sales in the Company’s Monster Energy Beverage segment® for the 3 months ended June 30, 2020. Net exchange rate adjustments had an adverse effect on Monster Energy Sales’ network® Beverage Segment of approximately $16.8 million by the time of the 2020 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 in the Company’s Other sector, which includes certain products from American Fruits and Flavors, LLC, a wholly owned subsidiary of the Company, sold to third-party independent consumers (“third-party AFF products”), amounted to $6.6 million for the 2020 quarter of the time, compared to $5.8 million in the 2019 quarter. Net sales to non-U.S. consumers were $328.3 million in the quarter of 2020. $343.3 million in the 2019 quarter. These sales accounted for approximately 30% of total net sales in the current quarter of 2020, compared to 31% in the current quarter of 2019. The COVID-19 pandemic had a significant negative effect that had an effect on net sales to outdoor consumers in the United States, mainly in the EMEA area, for the time quarter of 2020.
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 prices as a percentage of net sales were 3.6% by the time of the 2020 quarter, to 3.4% at the time of the 2019 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 quarter 23.2%, compared to 23.4% in the 2019 quarter.
Net revenue source for the 2020 quarter highest 6.5% to $311.4 million of $292.5 million in the 2019 quarter. Diluted net gains consistent with a consistent percentage for the 2020 quarter higher at 9.9% at $0.59, compared to $0.53 at the time of the 2019 quarter.
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 beverage category continues to grow in many countries, the United States.
“Now that some countries and states are reopening, our groups are running to ensure the implementation of our 2020 product innovation launches, which have been disrupted through the COVID-19 pandemic. We have a strong innovation plan for the rest of 2020.”
“Internationally, in the quarter, we added various energy drinks with the Monster Energy logo® and high-performance Energy Drinks Reign Total Body Fuel® to our portfolio in several countries. Monster Energy® Dragon Tea was introduced to China in April 2020. Introducing our affordable energy products, Fury® Gold Strike in Honduras and Predator® Gold Strike in Nigeria in the quarter.
“Our minds and prayers are with everyone affected by this terrible virus and we wish everyone a very immediate recovery,” Sacks added.
2020 2020 2020 2020
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 adjustments in exchange rates had an adverse effect 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 60.1%, compared to 60.2% in the same era last year.
Operating expenses for the six months ended June 30, 2020 were $524.4 million, compared to $544.4 million for the same era last year. Minimization in operating expenses was mainly due to a minimisation of sponsorship and support costs of $24.2 million and a minimisation in entertainment expenses of $10.4 million due, in part, to the COVID-19 pandemic and a minimisation in expenses similar to the relevant prices With distributor terminations.
The operating source of revenue for the six months ended June 30, 2020 increased to $772.3 million from $690.5 million in the same era last year.
The effective tax rate of 23.5% for the six months ended June 30, 2020, compared to 20.4% for last year.
The net source of revenue for the six months ended June 30, 2020 increased 6.5% to $590.2 million, up from $554.0 million for the same consistent period last year. Diluted net income consistent with the consistent percentage for the six months ended June 30, 2020 highest 9.0% to $1.10, compared to $1.01 for the same period last year.
Share buyback program
During the 2020 quarter, the Company acquired approximately 0.3 million shares of its non-unusual shares at an average acquisition value of $52.88 consistent with the stock, for a total amount of $15.6 million (excluding brokerage fees).
As of August 4, 2020, approximately $441.5 million remained to redeem under the previous legal repurchase program.
Call to the investor convention
The Company will make a call to the convention with investors today, August 4, 2020, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference will be open to all interested investors through the live web broadcast on www.monsterbevcorp.com in the “Events and Presentations” section. For those who pay attention to the live stream, the call will be archived for about a year on the website.
Monster Beverage Corporation
Headquartered in Corona, California, Monster Beverage Corporation is a holding company with no operating activity through its consolidated subsidiaries. The company’s subsidiaries expand and market energy drinks, adding Monster Energy energy drinks®, Monster Energy Ultra energy drinks®, Monster MAXX maximum intensity energy drinks®, Java Monster non carbonated coffee®, Espresso Monster no carbonated espresso® power drinks, non-carbonated energy drinks Caffé Monster®, Monster Rehab non-carbonated tea® Muscle Array Monster power drinks® non-carbonated, refreshing drinks® Monster Hydro , Monster HydroSport Super Fuel® carbonated non-carbonated complex – energy drinks, dragon Dragon Tea tea infusions without gas, energy drinks of superior functionality Reign Total Body Fuel®, Reign Inferno high-function power drinks®, NOS® energy drinks, Full Throttle energy drinks®, Burn® energy drinks, power drinks® Samurai, ® Energy DrinksArray Mother® power drinks, Play® and Power Play drinks® (stylized) , BU® power drinks, Nalu®, BPM® power ice rinks, Gladiator® power drinks, Ultra Energy® power dr inks, Live Drink Energys – ®, Predator Energy Drinks® and Fury® Energy Drinks. For more information, stop at www.monsterbevcorp.com.
Note related to the use of non-PCGA measures Gross sales are used internally through control as an indicator and to monitor operational pershapeance, adding the pershapeance of express product sales, sellers’ pershapeance, expansion or decrease of company’s profits and overall perance. The use of gross sales allows you to evaluate the evolution of sales before the effect of any promotional item, which may mask some renewal problems. Therefore, we believe that gross sales presentation is a useful measure of our operational evolution. Gross sales are not a measure that is accounted for in accordance with the accounting principles sometimes accepted in the United States of America (“GAAP”) and should not be considered as an option for net sales, which we are determined in accordance with GAAP, and do not deserve to be used alone as an indicator of operational pershapeance in profit position. In addition, gross sales would possibly not be comparable to the securities measures used through other companies, as gross sales have been explained through our internal reporting practices. In addition, gross sales would possibly not be made in the form of money flow, as promotional invoices and allocations would possibly be deducted from invoices earned from certain customers.
The following table reconciles the non-GAAP monetary measure of gross sales with the comparable comparable GAAP monetary measure of net sales (thousands):
Three months ended on June 30
Six months ended June 30
2020
2019
2020
2019
Gross sales, discounts and returns.
Ps
1,274,277
Ps
1 286 436
Ps
2 510 337
Ps
2 376 862
Less: promotions and bonuses
180 381
182 391
354 344
326 825
Net sales
Ps
1 093 896
Ps
1 104 045
Ps
2 993
Ps
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)
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATIONFOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2020 AND 2019(In Thousands, Except Per Share Amounts) (Unaudited)
Three months ended
Six months completed
June 30
June 30
2020
2019
2020
2019
Net sales1
Ps
1 093 896
Ps
1 104 045
Ps
2 993
Ps
2 050 037
The 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 percentage of sales
60,3
%
59,9
%
60,1
%
60,2
%
Operating expenses2
252 205
282 293
524 412
544 364
Operating expenses such as revenue
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
Earnings before income tax source provision1, 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
Case sales (in thousands) (in 192-ounce case equivalents)
116 960
119 595
232,559
220 879
Average sales consistent with the case3
Ps
09:30 am.
$
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.
²Includes $0.2 million and $0.3 million for the three-months ended June 30, 2020 and 2019, respectively, related to distributor termination costs. Includes $0.2 million and $11.0 million for the six-months ended June 30, 2020 and 2019, respectively, related to distributor termination costs.
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 INCORPORATIONS IMMOBILTIONS, 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
CURRENT LIABILITIES:
Accounts payable
Ps
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 INCOME
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