10-QPeriod: Q3 FY2003

Monster Beverage Corp Quarterly Report for Q3 Ended Sep 30, 2003

Filed November 14, 2003For Securities:MNST

Summary

Hansen Natural Corporation (now Monster Beverage Corp.) reported robust growth for the nine months ended September 30, 2003, with net sales increasing by 16.6% to $83.8 million compared to the same period in 2002. This growth was driven by strong performance from newly introduced products like Monster Energy™ drinks and Hansen's® Energy Deuce, alongside continued strength in Natural Sodas and Junior Juice®. The company demonstrated improved profitability, with gross profit increasing by 25.5% and gross profit margin expanding to 39.4% from 36.6% year-over-year. This was attributed to a favorable shift in product and customer mix. The company also saw a significant increase in operating income by 54.8% to $8.0 million and a substantial 59.4% rise in net income to $4.7 million for the nine-month period. Despite increased operating expenses, the improved gross profit margins allowed for enhanced profitability. The balance sheet shows a healthy increase in cash and cash equivalents, growing from $537,920 at the end of 2002 to $975,976 as of September 30, 2003, supported by strong operating cash flows.

Key Highlights

  • 1Net sales for the nine months ended September 30, 2003, increased by 16.6% to $83.8 million, up from $71.8 million in the prior year.
  • 2Gross profit for the nine-month period rose by 25.5% to $33.0 million, with the gross profit margin improving to 39.4% from 36.6%.
  • 3Net income for the nine months ended September 30, 2003, surged by 59.4% to $4.7 million, compared to $3.0 million in the same period of 2002.
  • 4Operating income saw a significant increase of 54.8% to $8.0 million for the nine-month period.
  • 5The company experienced a substantial increase in cash and cash equivalents, ending the period at $975,976, up from $537,920 at the beginning of the year.
  • 6Key growth drivers include new products such as Monster Energy™ drinks and Hansen's® Energy Deuce, alongside continued sales of Natural Sodas and Junior Juice®.
  • 7Despite increased operating expenses, the company maintained strong profitability due to improved gross margins.

Frequently Asked Questions

The primary drivers of sales growth were the successful introduction and strong performance of new products, particularly Monster Energy™ drinks (launched April 2002) and Hansen's® Energy Deuce (launched July 2003). Continued sales of Natural Sodas and Junior Juice® also contributed significantly to the overall increase in net sales.

Profitability has improved significantly. Gross profit increased by 25.5% for the nine-month period, with the gross profit margin expanding to 39.4% due to a favorable product and customer mix. Net income also saw a substantial rise of 59.4% to $4.7 million, indicating effective cost management and strong revenue growth.

The company's cash and cash equivalents increased to $975,976 as of September 30, 2003, up from $537,920 at the end of 2002. Net cash provided by operating activities was strong at $4.9 million for the first nine months of 2003. Management believes that cash from operations, combined with its revolving line of credit, will be sufficient to meet working capital needs, debt servicing, and expansion plans.

The report highlights the successful introduction of new products like Monster Energy™ drinks and Hansen's® Energy Deuce, which are driving sales growth. The company is also focusing on product mix to improve gross margins. While the core Hansen's® brand continues to be present, the focus on the Monster brand signifies a strategic expansion into the energy drink market.