01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Monster Beverage (MNST) delivered a strong 2023, with record net sales of $7.14 billiona, up 13.1% year over year, and net income of $1.63 billion, up 36.9%.
Growth was driven mainly by higher worldwide volume of Monster Energy drinks and the Pricing Actions taken in 2022 and 2023. Gross margin expanded to 53.1% from 50.3%, helped by price increases, lower aluminum can costs and reduced freight, and operating income rose 23.3% to $1.95 billionb. Energy drink case sales grew 9.6% to 769.2 million cases, and international sales reached 38% of net sales.
The balance sheet is strong. Cash and cash equivalents were $2.30 billionc, with another $1.03 billion in short- and long-term investments, and working capital was $4.43 billion. Operating cash flow was $1.72 billion.
The company spent $363 milliond to acquire Bang Energy in July 2023, which brought a Phoenix production facility and an entry into the faster-growing Bang brand, and it repurchased about $658 million of stock during the year. Management reported an effective internal control over financial reporting with no material weaknesses. Investors should weigh concentration and regulatory risk.
Most revenue comes from energy drinks, TCCC is a key distribution partner and holds about 19.6% of the stock, and the company faces growing energy drink regulation such as age limits, excise taxes and caffeine caps. The Alcohol Brands segment, built on the 2022 CANarchy acquisition, is still loss-making, with $42.7 million of impairment charges in 2023 tied to craft beer and hard seltzer challenges.
02—Key points
Key Highlights
- Record net sales of $7.14B (+13.1% YoY); Monster Energy Drinks segment represented 91.8% of sales
- Gross margin expanded to 53.1% from 50.3%, driven by Pricing Actions, lower aluminum costs and reduced freight
- Net income rose 36.9% to $1.63B; diluted EPS of $1.54 (split-adjusted), up from $1.12
- Energy drink case sales grew 9.6% to 769.2M cases; international sales were 38% of net sales, with constant-currency international growth of 21.2%
- Strong liquidity: $2.30B cash, $1.03B investments, $4.43B working capital, and $1.72B operating cash flow
- Acquired Bang Energy for $363M cash on July 31, 2023, including a Phoenix production facility
- Returned capital through buybacks of about $659M in 2023; $642.4M remained authorized as of February 27, 2024
- Concentration risk: TCCC owns ~19.6% of shares and is the primary distribution partner; Alcohol Brands segment posted a $81.1M operating loss including impairments
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Monster Beverage kept $0.23.
- Revenue$7.14B100.0%
- Cost of revenue−$3.35B46.9%
- Gross profit$3.79B53.1%
- Operating costs−$1.84B25.8%
- Operating income$1.95B27.4%
- Interest, other & tax−$322.4M4.5%
- Net income$1.63B22.8%
Where FY2023 revenue went
$7.14B- Cost of revenue: $3.35B, 47% of revenue
- Operating costs: $1.84B, 26% of revenue
- Net income: $1.63B, 23% of revenue
- Interest, other & tax: $322.4M, 4.5% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $7.14B$6.31B | +13.1% |
| Cost of Revenue | $3.35B$3.14B | +6.7% |
| Gross Profit | $3.79B$3.17B | +19.5% |
| Operating Expenses | $1.84B$1.59B | +15.8% |
| Operating Income | $1.95B$1.58B | +23.3% |
| Net Income | $1.63B$1.19B | +36.9% |
| EPS (Basic) | $0.78$0.56 | +38.1% |
| EPS (Diluted) | $0.77$0.56 | +37.5% |
| Shares Outstanding (Basic) | 2.09B2.11B | −0.8% |
| Shares Outstanding (Diluted) | 2.12B2.13B | −0.8% |
05—Questions
Frequently Asked Questions
How did Monster's profitability change in 2023?
Operating income rose 23.3% to $1.95B, and operating margin improved to 27.4% from 25.1%. Gross margin increased to 53.1% thanks to pricing actions, lower aluminum can costs and reduced freight, partly offset by operating expenses that rose 15.8% to $1.84B, including $16.1M of Bang acquisition costs and $42.7M of Alcohol Brands impairments.
What is the significance of the Bang Energy acquisition?
On July 31, 2023, Monster paid $363M in cash for substantially all the assets of Bang Energy, including the Bang drink business and a Phoenix production facility. Management views Bang as a better-for-you energy brand that broadens the portfolio. The company recognized a $45.4M gain on the transaction. Integration and shelf-space execution remain risks the company flags.
How concentrated is Monster's business and distribution?
Monster Energy Drinks generates about 92% of net sales, and the company depends heavily on The Coca-Cola Company (TCCC) and its bottler network for distribution. TCCC holds about 19.6% of common stock and has board representation. Coca-Cola Consolidated, Coca-Cola Europacific Partners and Reyes Coca-Cola Bottling together accounted for roughly 32% of 2023 net sales.
What regulatory risks could affect Monster's energy drink sales?
The 10-K describes growing regulation, including age restrictions in several countries and U.S. states, excise taxes on sweetened beverages, caffeine content limits in various markets, container size restrictions and labeling requirements. Any of these could raise costs, reduce demand or require reformulation, and the company cannot predict the outcome of these proposals.
Is Monster's capital allocation shareholder-friendly?
Monster paid no cash dividends and does not expect to in the foreseeable future. Instead it repurchased about $659M of stock in 2023 under its programs, and the board added a $500M authorization in November 2023. Remaining authorization totaled $642.4M as of February 27, 2024. Management expects capital expenditures to remain below $500M through 2024.
06—Continue