10-KPeriod: FY2009

Monster Beverage Corp Annual Report, Year Ended Dec 31, 2009

Filed March 1, 2010For Securities:MNST

Summary

Hansen Natural Corporation, operating as Monster Beverage, reported strong revenue growth in its 2009 10-K filing, driven primarily by its DSD (Direct Store Delivery) segment, which accounts for the vast majority of sales and is dominated by its Monster Energy drinks. The company continued to expand its product portfolio in 2009, introducing several new flavors and product lines, including variations of Monster Energy, Java Monster, and Hansen's natural beverages. Despite a challenging economic environment, Hansen Natural Corporation demonstrated resilience, with net sales increasing by 10.6% to $1.14 billion. This growth was supported by strategic distribution agreements with major players like The Coca-Cola Company (TCCC) and Anheuser-Busch (AB), expanding its reach both domestically and internationally. However, the company faces significant competition and regulatory scrutiny, particularly concerning the health implications of energy drinks. Key risks include shifts in consumer preferences, potential new taxes or regulations, and reliance on a few major distributors and suppliers. Despite these challenges, the company's focus on innovation, brand building, and expanding its distribution network positions it for continued growth in the alternative beverage market.

Financial Highlights

47 data points
Beta

Revenue

$1.14B

53.6% Gross Margin

Net Income

$208.72M

18.3% Net Margin

EPS (Diluted)

$0.18

Total Assets

$800.07M

Cash & Equivalents

$328.35M

Free Cash Flow

$132.64M

Financial Statements
Beta
Revenue$1.14B
Cost of Revenue$530.98M
Gross Profit$612.32M
Operating Expenses$275.01M
Operating Income$337.31M
Net Income$208.72M
EPS (Basic)$0.19
EPS (Diluted)$0.18
Shares Outstanding (Basic)1.08B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Net sales increased by 10.6% to $1.14 billion in 2009, driven by the core Monster Energy brand and expansion into new products.
  • 2The Direct Store Delivery (DSD) segment, primarily energy drinks, constituted 91.9% of net sales, underscoring its strategic importance.
  • 3The company introduced several new products in 2009, including Monster Energy Import, Nitrous Monster Energy, and Hansen's Natural Lo-Cal, demonstrating a commitment to innovation.
  • 4Strategic distribution agreements with The Coca-Cola Company and Anheuser-Busch continued to facilitate domestic and international market penetration.
  • 5Gross profit margin improved to 53.6% in 2009, up from 52.1% in 2008, indicating operational efficiency and favorable cost management.
  • 6The company significantly reduced operating expenses, notably due to lower distributor termination costs in 2009 compared to 2008, which boosted operating income by 106.2%.
  • 7International sales grew to 12.8% of gross sales in 2009, reflecting successful expansion efforts beyond the domestic market.

Frequently Asked Questions

The primary driver of Hansen Natural Corporation's revenue growth is its energy drink portfolio, particularly the Monster Energy brand, which is predominantly sold through its Direct Store Delivery (DSD) segment. This segment accounted for over 90% of net sales in 2009.

Key risks and challenges include intense competition in the beverage industry, potential changes in consumer preferences (especially regarding health and wellness concerns related to energy drinks), regulatory scrutiny and potential new taxes or regulations, reliance on a limited number of key distributors and suppliers, and fluctuations in raw material costs. International expansion also introduces risks related to economic and political instability in foreign markets and currency exchange rate fluctuations.

The company has focused on cost management, particularly in supply and production costs, and has seen an improvement in gross profit margin. In 2009, operating expenses decreased significantly, partly due to lower distributor termination costs compared to the prior year, which substantially boosted operating income. Efficiencies in its DSD segment and a favorable product mix also contributed to improved profitability.

The company's growth strategy centers on expanding its product portfolio with new and innovative beverages, particularly in the 'alternative' beverage category like energy drinks. This includes broadening its distribution network both domestically and internationally through strategic partnerships and agreements with major beverage distributors.