What was the primary driver of the company's revenue growth in this period?

The primary driver of revenue growth was the strong performance of the Monster Energy® brand energy drinks. These sales increased significantly, contributing approximately 99.3% of the overall increase in gross sales for the third quarter and 97.0% for the first nine months of 2011.

Are there any significant legal or contingent liabilities that investors should be aware of?

The company is involved in several legal proceedings, including class action lawsuits related to product labeling and securities litigation. While these are ongoing, the company's management believes it has meritorious defenses and that any potential losses would not have a material adverse effect on the company's financial position or results of operations. The company is also subject to other litigation in the normal course of business.

What is the company's strategy for future growth?

The company's growth strategy includes continued expansion of its existing product lines and flavors, and a strong focus on developing and marketing beverages within the 'alternative' beverage category, particularly energy drinks. International expansion is also a key component, with planned launches in South America, Central and Eastern Europe, and Asia in 2012. The company also continues to repurchase its own stock, indicating confidence in its value.

MNST 10-Q Quarterly Report Q3 FY2011 — Revenue, Net Income, EPS

Q: How is the company managing its cash and investments, particularly given the mention of auction rate securities?

The company has a healthy liquidity position with $287.2 million in cash and cash equivalents and $438.9 million in short-term and long-term investments at September 30, 2011. While the company holds auction rate securities that have experienced liquidity challenges due to failed auctions, management believes these do not materially affect overall liquidity. The company also has credit facilities in place, though none were drawn upon as of the reporting date.

Summary

Monster Beverage Corporation (then Hansen Natural Corporation) reported strong performance in the third quarter and the first nine months of 2011, driven by significant growth in net sales and profitability. Net sales increased by 24.4% year-over-year for the three-month period and 31.3% for the nine-month period, with the Monster Energy® brand being the primary growth driver. The company demonstrated robust operational efficiency, with gross profit margins expanding slightly and net income showing substantial increases. Financially, the company maintained a healthy liquidity position, with a significant increase in net cash provided by operating activities. The company also actively managed its capital through share repurchases. While growth remains strong, investors should note the ongoing legal proceedings, which the company believes will not have a material adverse effect, and the continued focus on international expansion as a key growth strategy. The company's investment portfolio includes auction rate securities that have experienced liquidity challenges, but management believes this does not pose a material risk to overall liquidity.

Financial Highlights

45 data points

Beta

Revenue

$474.71M

52.7% Gross Margin

Net Income

$82.39M

17.4% Net Margin

Total Assets

$1.22B

Cash & Equivalents

$287.16M

Free Cash Flow

$101.42M

Financial Statements

Beta

Revenue	$474.71M
Cost of Revenue	$224.40M
Gross Profit	$250.31M
Operating Expenses	$118.22M
Operating Income	$132.09M
Net Income	$82.39M
Shares Outstanding (Basic)	1.06B
Shares Outstanding (Diluted)	1.12B

Key Highlights

1Net sales for the three months ended September 30, 2011, increased by 24.4% to $474.7 million compared to $381.5 million in the prior year period.
2Net sales for the nine months ended September 30, 2011, increased by 31.3% to $1.3 billion compared to $985.3 million in the prior year period.
3Gross profit margin remained strong, increasing slightly to 52.7% for the three-month period and 52.6% for the nine-month period.
4Net income for the three months ended September 30, 2011, grew by 23.9% to $82.4 million ($0.88 diluted EPS) compared to $66.5 million ($0.72 diluted EPS) in the prior year period.
5Net income for the nine months ended September 30, 2011, increased by 36.1% to $221.7 million ($2.37 diluted EPS) compared to $162.9 million ($1.75 diluted EPS) in the prior year period.
6Net cash provided by operating activities significantly increased to $233.0 million for the nine-month period, up from $170.8 million in the prior year period.
7The company repurchased $149.0 million of its common stock during the nine months ended September 30, 2011, and authorized a new $250 million repurchase program in October 2011.

Monster Beverage Corp Quarterly Report for Q3 Ended Sep 30, 2011

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions