10-QPeriod: Q1 FY2022

Monster Beverage Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 6, 2022For Securities:MNST

Summary

Monster Beverage Corporation reported a net sales increase of 22.1% to $1.52 billion for the first quarter ended March 31, 2022, compared to $1.24 billion in the prior year period. This growth was driven by a 21.8% increase in case sales for its energy drink products, primarily within the core Monster Energy® Drinks segment. Despite strong top-line growth, net income decreased by 6.7% to $294.2 million ($0.55 diluted EPS) from $315.2 million ($0.59 diluted EPS) in Q1 2021. The decrease in profitability was primarily attributed to a significant decline in gross profit margin, which fell to 51.1% from 57.5%, and an increase in operating expenses as a percentage of sales. These pressures were largely due to rising costs, including freight, fuel, aluminum, and other input costs, exacerbated by the acquisition of CANarchy, which recorded no gross profit on initial inventory sales. The company is implementing pricing actions and reducing promotions to mitigate these cost increases.

Financial Highlights

48 data points
Beta

Revenue

$1.52B

51.1% Gross Margin

Net Income

$294.20M

19.4% Net Margin

Total Assets

$8.19B

Cash & Equivalents

$1.01B

Free Cash Flow

-$21.86M

Financial Statements
Beta
Revenue$1.52B
Cost of Revenue$741.91M
Gross Profit$776.67M
Operating Expenses$377.18M
Operating Income$399.49M
Net Income$294.20M
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Net sales increased by 22.1% year-over-year to $1.52 billion, driven by strong volume growth in the Monster Energy® Drinks segment.
  • 2Gross profit margin declined significantly to 51.1% from 57.5% in the prior year quarter, impacted by rising costs (freight, fuel, aluminum, ingredients) and the initial impact of the CANarchy acquisition.
  • 3Operating income decreased by 3.5% to $399.5 million, as higher operating expenses and lower gross margins outpaced net sales growth.
  • 4Net income decreased by 6.7% to $294.2 million, with diluted EPS falling to $0.55 from $0.59 year-over-year.
  • 5The acquisition of CANarchy, a craft beer and hard seltzer company, was completed on February 17, 2022, for $330.4 million, marking Monster's entry into the alcohol beverage sector.
  • 6Case sales for energy drinks increased by 21.8%, indicating robust consumer demand.
  • 7The company experienced unfavorable foreign currency exchange rate impacts of $32.9 million on net sales.

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