10-QPeriod: Q1 FY2019

Monster Beverage Corp Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 3, 2019For Securities:MNST

Summary

Monster Beverage Corporation reported strong first-quarter 2019 results, with net sales reaching a record $946.0 million, an increase of 11.2% compared to the same period last year. This growth was driven by increased sales volume across its Monster Energy® Drinks segment and the introduction of new products. The company also implemented a price increase on certain U.S. and Canadian products in late 2018, contributing to sales growth. Profitability remained robust, with net income increasing by 21.0% to $261.5 million. This was supported by strong gross profit margins, which held steady at 60.6%, and a significant decrease in the effective tax rate to 16.8% from 23.3% in the prior year. Despite an increase in operating expenses, primarily due to higher payroll, sponsorships, and distributor termination costs, operating income saw a healthy 11.3% rise. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders.

Financial Highlights

47 data points
Beta

Revenue

$945.99M

60.6% Gross Margin

Net Income

$261.49M

27.6% Net Margin

Total Assets

$4.66B

Cash & Equivalents

$618.34M

Free Cash Flow

$114.91M

Financial Statements
Beta
Revenue$945.99M
Cost of Revenue$372.46M
Gross Profit$573.53M
Operating Expenses$262.07M
Operating Income$311.46M
Net Income$261.49M
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Record net sales of $946.0 million for the first quarter of 2019, up 11.2% year-over-year.
  • 2Net income rose 21.0% to $261.5 million, with diluted EPS of $0.48.
  • 3Gross profit margin remained strong at 60.6% of net sales.
  • 4Effective tax rate decreased significantly to 16.8% from 23.3% in the prior year's quarter.
  • 5Operating expenses increased by 11.4%, primarily due to higher payroll, sponsorships, and distributor termination costs.
  • 6Continued international expansion, with international net sales representing 30% of total net sales.
  • 7Share repurchase program remains active, with approximately $520.6 million available as of May 3, 2019.

Frequently Asked Questions

Monster Beverage reported record net sales of $946.0 million for the three months ended March 31, 2019, an increase of 11.2% compared to $850.9 million in the same period of 2018. This growth was driven by increased volume, particularly in the Monster Energy® Drinks segment, and a price increase implemented in late 2018.

Net income increased by 21.0% to $261.5 million in the first quarter of 2019, compared to $216.1 million in the first quarter of 2018. This improvement was driven by higher net sales, stable gross profit margins, and a lower effective tax rate. Diluted earnings per share also increased to $0.48 from $0.38.

Operating expenses increased by 11.4% to $262.1 million. The primary reasons for this increase included higher payroll expenses (including stock-based compensation), increased spending on sponsorships and endorsements, higher professional service fees (legal and accounting), and increased costs associated with distributor terminations.

Monster Beverage has an active share repurchase program. During the first quarter of 2019, the company repurchased approximately $139 million of its common stock under the August 2018 Repurchase Plan. As of May 3, 2019, approximately $520.6 million remained available under its authorized share repurchase programs.