10-QPeriod: Q2 FY2019

Monster Beverage Corp Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 8, 2019For Securities:MNST

Summary

Monster Beverage Corporation reported strong performance for the second quarter and first half of 2019, showcasing continued top-line growth and robust profitability. Net sales increased by 8.7% to $1.10 billion for the quarter and 9.8% to $2.05 billion for the six-month period, driven primarily by the Monster Energy® Drinks segment and the introduction of the Reign Total Body Fuel™ line. The company demonstrated healthy profit margins, with gross profit increasing by 6.6% and operating income growing by 6.0% for the quarter. Diluted EPS saw a significant increase of 11.9% to $0.53 for the quarter. The company also maintained a strong cash position, with cash and cash equivalents of $888.2 million at the end of June 2019, underscoring its financial stability and capacity for reinvestment and shareholder returns.

Financial Highlights

47 data points
Beta

Revenue

$1.10B

59.9% Gross Margin

Net Income

$292.47M

26.5% Net Margin

Total Assets

$5.08B

Cash & Equivalents

$888.25M

Free Cash Flow

$318.80M

Financial Statements
Beta
Revenue$1.10B
Cost of Revenue$442.76M
Gross Profit$661.28M
Operating Expenses$282.29M
Operating Income$378.99M
Net Income$292.47M
Shares Outstanding (Basic)1.09B
Shares Outstanding (Diluted)1.10B

Key Highlights

  • 1Net sales increased by 8.7% to $1.10 billion for the three months ended June 30, 2019, and by 9.8% to $2.05 billion for the six months ended June 30, 2019.
  • 2Gross profit increased by 6.6% to $661.3 million for the quarter, though gross profit as a percentage of net sales decreased slightly to 59.9% from 61.1% year-over-year.
  • 3Operating income rose by 6.0% to $379.0 million for the quarter, with operating income as a percentage of net sales declining to 34.3% from 35.2%.
  • 4Net income for the quarter grew by 8.3% to $292.5 million, resulting in a diluted EPS of $0.53, an increase of 11.9% from $0.48 in the prior year period.
  • 5The Monster Energy® Drinks segment continues to be the primary growth driver, with net sales increasing by 9.6% for the quarter.
  • 6The company ended the period with strong liquidity, reporting $888.2 million in cash and cash equivalents.
  • 7Case sales volume increased by 8.7% for the quarter, indicating sustained demand for the company's products.

Frequently Asked Questions

Revenue growth was primarily driven by the Monster Energy® Drinks segment, bolstered by the introduction of the Reign Total Body Fuel™ line and price increases implemented in the US and Canada. International sales also contributed positively, representing 31% of total net sales for the quarter.

Profitability remained strong, with net income increasing by 8.3% to $292.5 million. Diluted earnings per share grew by 11.9% to $0.53. However, gross profit margin slightly decreased to 59.9% due to a mix of factors including geographical and product sales mix, despite positive impacts from price increases and reduced aluminum costs.

Monster Beverage maintains a robust financial position with $888.2 million in cash and cash equivalents as of June 30, 2019. The company expects its operating cash flows and existing credit facilities to be sufficient to meet its working capital, capital expenditure, and other corporate needs for at least the next 12 months.

The company is involved in ongoing litigation, including personal injury lawsuits claiming Monster Energy drinks caused harm, which it believes are without merit. Additionally, an arbitration panel ruled in favor of TCCC regarding certain energy drink products falling under an exception to a non-compete clause. Management believes these legal matters, in aggregate, will not have a material adverse effect on the company's financial position or results of operations.