10-KPeriod: FY2010

Monster Beverage Corp Annual Report, Year Ended Dec 31, 2010

Filed March 1, 2011For Securities:MNST

Summary

Hansen Natural Corporation (operating as Monster Beverage Corp. at the time of this filing) reported strong performance in its 2010 fiscal year, driven primarily by its core Monster Energy® brand. The company experienced significant gross sales growth, indicating robust consumer demand for its energy drink portfolio. A substantial portion of sales continues to come from the Direct Store Delivery (DSD) segment, highlighting the importance of its distribution network, which includes major players like Anheuser-Busch and Coca-Cola bottlers. The company is actively managing costs and expanding its product lines and international presence, though it faces ongoing competition and evolving regulatory landscapes. Financially, Hansen Natural demonstrated healthy operational cash flow and a strong liquidity position, bolstered by retained earnings and efficient working capital management. The company continued its share repurchase program, signaling confidence in its financial health and commitment to shareholder value. Despite the positive outlook, the company acknowledged potential risks including shifts in consumer preferences, increasing raw material costs, regulatory scrutiny on energy drinks, and macroeconomic uncertainties, all of which are being closely monitored.

Financial Highlights

48 data points
Beta

Revenue

$1.30B

52.2% Gross Margin

Net Income

$212.03M

16.3% Net Margin

EPS (Diluted)

$0.19

Total Assets

$1.15B

Cash & Equivalents

$354.84M

Free Cash Flow

$216.50M

Financial Statements
Beta
Revenue$1.30B
Cost of Revenue$623.70M
Gross Profit$680.24M
Operating Expenses$332.43M
Operating Income$347.81M
Net Income$212.03M
EPS (Basic)$0.20
EPS (Diluted)$0.19
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Record gross sales for the fiscal year ended December 31, 2010, driven by strong performance of the Monster Energy® brand.
  • 2The Direct Store Delivery (DSD) segment continues to be the dominant revenue generator, accounting for over 90% of consolidated net sales.
  • 3Significant expansion of international sales, which represented 16% of gross sales in 2010.
  • 4Continued investment in product innovation with several new product introductions and line extensions across various brands.
  • 5Robust operating cash flow and a strong liquidity position, with substantial cash and investments.
  • 6Active share repurchase program, with approximately $176.4 million remaining available under an authorized plan as of December 31, 2010.
  • 7Management acknowledges ongoing competitive pressures, increasing raw material costs, and potential regulatory challenges, particularly concerning energy drinks.

Frequently Asked Questions

The primary driver of Hansen Natural Corporation's revenue growth in 2010 was the strong sales performance of its core Monster Energy® brand energy drinks, supplemented by contributions from other brands like Peace Tea™ and the Monster Energy® Extra Strength Nitrous Technology™ product line.

Hansen Natural Corporation operates through two reportable segments: Direct Store Delivery (DSD), which primarily includes energy drinks sold through an exclusive distributor network (representing about 93% of net sales), and Warehouse, which includes juice-based and soda beverages sold more directly to retailers (representing about 7% of net sales).

Key risks identified include changes in consumer preferences towards healthier options, increased competition, rising raw material and production costs, potential government regulations on energy drinks (especially regarding sales to minors), and general economic uncertainties impacting consumer spending. Additionally, the company relies heavily on its co-packers and distributors, making disruptions in these relationships a potential concern.

The company's growth strategy includes expanding its international business by entering into distribution agreements with regional bottlers and distributors. As of December 31, 2010, Monster Energy® drinks were sold in over 57 countries and territories, with international gross sales increasing significantly year-over-year.