10-QPeriod: Q2 FY2024

Monster Beverage Corp Quarterly Report for Q2 Ended Jun 30, 2024

Filed August 8, 2024For Securities:MNST

Summary

Monster Beverage Corporation reported strong financial results for the second quarter and first half of fiscal year 2024. Net sales increased by 2.5% to $1.90 billion for the quarter and 6.9% to $3.80 billion for the first half, driven by increased volume and pricing actions, despite unfavorable foreign currency impacts. The core Monster Energy® Drinks segment continues to be the primary revenue driver, showing robust growth. Gross profit margins improved year-over-year to 53.6% for the quarter and 53.9% for the first half, benefiting from lower input costs and strategic pricing. Net income also saw a healthy increase, rising 2.8% to $425.4 million for the quarter and 6.9% to $867.4 million for the first half. A significant event during the quarter was the completion of a $3.0 billion "Dutch auction" tender offer, funded by a combination of cash and new borrowings, which substantially reduced the number of outstanding shares. The company also established a new $1.5 billion credit facility. While operating expenses increased due to higher selling and marketing costs, the company's core operations remain profitable, and management expects sufficient liquidity for its working capital needs and strategic initiatives.

Financial Highlights

48 data points
Beta

Revenue

$1.90B

53.6% Gross Margin

Net Income

$425.37M

22.4% Net Margin

Total Assets

$8.06B

Cash & Equivalents

$1.56B

Free Cash Flow

$376.52M

Financial Statements
Beta
Revenue$1.90B
Cost of Revenue$881.09M
Gross Profit$1.02B
Operating Expenses$492.34M
Operating Income$527.16M
Net Income$425.37M
Shares Outstanding (Basic)1.03B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Net sales for Q2 2024 increased by 2.5% to $1.90 billion, and for the first six months of 2024 increased by 6.9% to $3.80 billion.
  • 2Gross profit margin improved to 53.6% in Q2 2024 (from 52.5% in Q2 2023) and 53.9% for the first half (from 52.7% in H1 2023), driven by pricing actions and lower costs.
  • 3Net income increased by 2.8% to $425.4 million in Q2 2024 and by 6.9% to $867.4 million for the first six months of 2024.
  • 4The company completed a $3.0 billion share repurchase through a Dutch auction tender offer in June 2024.
  • 5A new $1.5 billion credit facility was established in May 2024, comprising a $750 million term loan and a $750 million revolving credit facility.
  • 6The Alcohol Brands segment experienced a significant decline in net sales, down 31.9% for the quarter and 9.1% for the first half.
  • 7Energy drink case sales grew by 6.9% in Q2 2024 and 11.2% for the first six months of 2024.

Frequently Asked Questions

For the three-month period ended June 30, 2024, net changes in foreign currency exchange rates had an unfavorable impact of approximately $67.7 million on net sales. For the six-month period, the unfavorable impact was approximately $132.0 million. Excluding the impact of Argentina, net sales on a foreign currency adjusted basis increased by 4.3% for the quarter and 8.3% for the first half.

Inventories decreased by $123.5 million during the first six months of 2024, contributing positively to cash flow from operations. Finished goods inventory was $561.5 million as of June 30, 2024, down from $639.9 million at the end of 2023.

The company completed a significant $3.0 billion "Dutch auction" tender offer in June 2024. Additionally, it has ongoing repurchase programs, with $342.4 million remaining available under the November 2023 Repurchase Plan as of August 6, 2024. These repurchases were funded by a combination of cash and new borrowings.

The improvement in gross profit margin was primarily driven by strategic pricing actions implemented in various international markets, decreased freight-in costs, and lower aluminum can costs. These factors were partially offset by production inefficiencies and geographical/product sales mix.