Summary
Monster Beverage Corporation reported strong financial performance for the second quarter and the first half of 2017, demonstrating significant year-over-year growth in net sales and net income. Net sales increased by 9.6% to $907.1 million for the three months ended June 30, 2017, and by 9.4% to $1.65 billion for the six months ended June 30, 2017. This growth was primarily driven by the core Monster Energy® brand, with substantial contributions also coming from the Strategic Brands segment. The company also saw improvements in gross profit margin due to cost savings from the AFF transaction and favorable sales mix, leading to a notable increase in operating income and net income.
Financial Highlights
46 data pointsBeta
Financial Statements
Beta
| Revenue | $907.07M |
| Cost of Revenue | $323.57M |
| Gross Profit | $583.50M |
| Operating Expenses | $233.46M |
| Operating Income | $350.04M |
| Net Income | $222.63M |
| Shares Outstanding (Basic) | 1.14B |
| Shares Outstanding (Diluted) | 1.16B |
Key Highlights
- 1Net sales grew by 9.6% to $907.1 million in Q2 2017 compared to Q2 2016.
- 2Net income increased by 20.9% to $222.6 million in Q2 2017 compared to Q2 2016.
- 3Gross profit margin improved to 64.3% in Q2 2017 from 62.6% in Q2 2016, driven by cost savings and sales mix.
- 4Case sales increased by 11.0% in Q2 2017 compared to the prior year period.
- 5The Monster Energy® Drinks segment continues to be the primary revenue driver, representing approximately 90% of net sales.
- 6The company generated significant operating cash flow of $533.2 million for the six months ended June 30, 2017.
- 7The company announced a new share repurchase program of up to $500.0 million.
Frequently Asked Questions
The primary driver of revenue growth was the strong performance of the Monster Energy® brand energy drinks, which saw increased sales by volume due to rising domestic and international consumer demand. The Strategic Brands segment also contributed positively to the overall revenue increase.
The acquisition of American Fruits & Flavors (AFF) in April 2016 provided significant raw material cost savings, contributing approximately $27.5 million to gross profit in Q2 2017 and $50.8 million in the first six months of 2017. These savings positively impacted the gross profit margin and overall profitability.
Monster Beverage expects its operating cash flow, existing cash reserves, and access to credit to be sufficient for its working capital needs, capital expenditures, and share repurchase program for at least the next 12 months. Estimated capital expenditures are expected to be less than $150.0 million through June 30, 2018.
The company is involved in numerous personal injury lawsuits related to its energy drinks and is subject to an inquiry from the New York State Attorney General. However, the company believes these proceedings are without merit and does not expect them to have a material adverse effect on its financial position or results of operations. As of June 30, 2017, the company had accrued loss contingencies of approximately $1.5 million.