10-QPeriod: Q2 FY2020

Monster Beverage Corp Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 6, 2020For Securities:MNST

Summary

Monster Beverage Corporation reported net sales of $1.09 billion for the three months ended June 30, 2020, a slight decrease of 0.9% compared to the prior year, largely due to the adverse impact of the COVID-19 pandemic. However, for the six-month period, net sales increased by 5.2% to $2.16 billion, driven by growth in the core Monster Energy® Drinks segment. The company demonstrated strong operational efficiency, with operating income increasing by 7.5% for the quarter and 11.8% for the six-month period, leading to a net income of $311.4 million and $590.2 million, respectively. Despite the challenges posed by the pandemic, which affected international sales and the Strategic Brands segment more significantly, Monster Beverage maintained robust profitability and cash flow. The company ended the period with a strong liquidity position, holding $921.3 million in cash and cash equivalents. Management expressed confidence in the company's ability to navigate the current environment and meet its financial obligations.

Financial Highlights

46 data points
Beta

Revenue

$1.09B

60.3% Gross Margin

Net Income

$311.37M

28.5% Net Margin

Total Assets

$5.19B

Cash & Equivalents

$921.33M

Free Cash Flow

$231.33M

Financial Statements
Beta
Revenue$1.09B
Cost of Revenue$434.43M
Gross Profit$659.47M
Operating Expenses$252.21M
Operating Income$407.26M
Net Income$311.37M
Shares Outstanding (Basic)1.05B
Shares Outstanding (Diluted)1.06B

Key Highlights

  • 1Net sales for Q2 2020 slightly decreased by 0.9% to $1.09 billion, impacted by COVID-19, but six-month sales grew 5.2% to $2.16 billion.
  • 2Operating income increased significantly, up 7.5% to $407.3 million for Q2 and 11.8% to $772.3 million for the six-month period.
  • 3Net income grew by 6.5% to $311.4 million in Q2 and $590.2 million for the first six months of 2020.
  • 4The Monster Energy® Drinks segment remains the primary revenue driver, showing growth, while the Strategic Brands segment experienced a notable decline due to the pandemic.
  • 5Gross profit margin improved slightly to 60.3% for Q2 and remained strong at 60.1% for the six-month period.
  • 6Operating expenses decreased by 10.7% in Q2, largely due to reduced sponsorship and travel expenses related to COVID-19.
  • 7The company ended the period with substantial liquidity, holding $921.3 million in cash and cash equivalents and $250.8 million in short-term investments.

Frequently Asked Questions

The COVID-19 pandemic had an adverse impact on Monster Beverage's net sales in the three months ended June 30, 2020, leading to a 0.9% decrease. This was particularly noticeable in international markets and the Strategic Brands segment. However, the company saw sequential improvement in sales within the quarter and experienced growth in e-commerce and club store channels. Operating expenses were reduced due to decreased sponsorship and travel expenditures related to the pandemic.

The Monster Energy® Drinks segment continues to be the primary revenue generator, showing a 0.8% increase in net sales for Q2 2020 and significant growth for the six-month period. The Strategic Brands segment experienced a substantial decline of 24.7% in Q2 net sales, significantly impacted by the pandemic, especially in EMEA. The Other segment saw a modest increase in sales.

Monster Beverage maintained a strong liquidity position, with $921.3 million in cash and cash equivalents and $250.8 million in short-term investments as of June 30, 2020. Cash flow from operations was $440.5 million for the first six months of 2020. The company believes it has sufficient liquidity to meet its working capital needs for at least the next 12 months.

Yes, on March 13, 2020, the company's Board of Directors authorized a new share repurchase program for up to $500 million of its outstanding common stock. During the three months ended June 30, 2020, the company purchased approximately $15.6 million worth of its common stock under this plan.