Monster Beverage Corp Quarterly Report for Q3 Ended Sep 30, 2012

Summary

Monster Beverage Corporation reported strong net sales growth for the third quarter and first nine months of 2012, driven primarily by its core Monster Energy® brand. Net sales increased by 14.2% in the third quarter and 22.9% year-to-date, demonstrating continued consumer demand and successful international expansion. Despite increased operating expenses and a higher effective tax rate, the company achieved net income growth of 4.6% in the third quarter and 22.7% year-to-date. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders. However, investors should note ongoing litigation and potential regulatory scrutiny, particularly concerning the marketing and health impacts of energy drinks, which represent potential risks.

Key Highlights

• 1Net sales for the third quarter of 2012 increased by 14.2% to $541.9 million, with the Monster Energy® brand driving growth.
• 2For the nine months ended September 30, 2012, net sales rose by 22.9% to $1.59 billion, also led by the Monster Energy® brand.
• 3Gross profit increased by 9.3% in Q3 2012 and 20.8% year-to-date, though gross profit margin slightly decreased due to higher promotional allowances and geographic mix.
• 4Operating expenses increased by 12.4% in Q3 and 17.7% year-to-date, driven by higher payroll, sponsorships, and marketing costs.
• 5Net income grew by 4.6% in Q3 2012 to $86.1 million and by 22.7% year-to-date to $272.0 million.
• 6The company repurchased approximately $397.5 million of its common stock during the first nine months of 2012 as part of its share repurchase program.
• 7The company faces several ongoing legal proceedings, including product liability claims and securities litigation, which are being vigorously defended.

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