10-QPeriod: Q3 FY2021

Monster Beverage Corp Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:MNST

Summary

Monster Beverage Corporation reported strong net sales growth of 13.2% for the third quarter of 2021, reaching $1.41 billion, and a 21.0% increase to $4.12 billion for the nine-month period, driven primarily by its core Monster Energy® Drinks segment. Despite this revenue growth, the company saw a slight decrease in net income for the quarter, down 3.0% to $337.2 million, although net income increased by 12.6% to $1.06 billion for the nine-month period. The company faced increased costs, particularly in cost of sales (up 21.9% quarterly and 29.7% year-to-date) due to higher aluminum can and logistics costs, which compressed gross profit margins to 55.9% from 59.1% in the prior year's quarter. Operating expenses also rose by 24.0% in the quarter, impacting operating income, which declined 3.1% year-over-year for the three months but grew 12.5% for the nine months. The company highlighted ongoing supply chain challenges, including shortages of aluminum cans and freight inefficiencies, which prevented it from fully meeting increased demand in certain regions.

Financial Highlights

48 data points
Beta

Revenue

$1.41B

55.9% Gross Margin

Net Income

$337.20M

23.9% Net Margin

Total Assets

$7.45B

Cash & Equivalents

$1.71B

Free Cash Flow

$328.79M

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$621.40M
Gross Profit$789.16M
Operating Expenses$344.69M
Operating Income$444.46M
Net Income$337.20M
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Record net sales for the third quarter of $1.41 billion, a 13.2% increase year-over-year.
  • 2Nine-month net sales reached $4.12 billion, up 21.0% compared to the prior year.
  • 3Gross profit margins declined to 55.9% in Q3 2021 from 59.1% in Q3 2020, primarily due to increased input costs (aluminum cans, logistics).
  • 4Operating income decreased by 3.1% for the third quarter to $444.5 million, despite revenue growth, due to higher operating expenses and reduced gross margins.
  • 5Net income for the third quarter decreased by 3.0% to $337.2 million, while nine-month net income increased by 12.6% to $1.06 billion.
  • 6Significant increase in cash and cash equivalents and short-term investments, totaling $2.93 billion as of September 30, 2021.
  • 7Continued supply chain challenges, including aluminum can shortages and freight inefficiencies, are impacting the ability to meet demand.

Frequently Asked Questions

Monster Beverage reported record net sales of $1.41 billion for the third quarter of 2021, an increase of 13.2% year-over-year. However, net income saw a slight decrease of 3.0% to $337.2 million due to increased costs affecting gross profit margins and higher operating expenses. For the nine-month period, net sales grew 21.0% to $4.12 billion and net income increased 12.6% to $1.06 billion.

The gross profit margin decreased to 55.9% in the third quarter of 2021 from 59.1% in the same period of 2020. This compression was primarily attributed to increased costs of sales, driven by higher aluminum can commodity pricing, increased costs of importing aluminum cans, and higher logistical costs. Geographical sales mix also played a role.

The company is experiencing significant supply chain challenges, including shortages of aluminum cans and freight inefficiencies, which have hindered its ability to fully meet increased consumer demand in certain regions. Additionally, rising costs for raw materials, logistics, labor, and co-packing have impacted profitability. The company is addressing these cost pressures through promotional reductions and pricing actions.

Monster Beverage maintains a strong liquidity position, with cash and cash equivalents and short-term investments totaling approximately $2.93 billion as of September 30, 2021. The company expects that its cash from operations and existing credit facilities will be sufficient to meet its working capital needs and strategic investments for at least the next 12 months. Capital expenditures are estimated to be less than $200 million through September 30, 2022.