01—Abstract
Summary
Summary of the 10-Q filed November 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Monster Beverage Corp. (MNST) reported its financial results for the quarter ending September 29, 2024.
The company generated net sales of $1.88 billiona, a slight increase of 1.3% year-over-year. However, net income saw a significant decrease of 18.1% to $370.9 million, primarily impacted by higher operating expenses and a substantial decrease in interest and other income. For the nine-month period, net sales increased by 5.0% to $5.68 billion, while net income decreased by 2.0% to $1.24 billion.
The company executed a significant $3.0 billionb share repurchase program during the quarter, funded by both cash and borrowings, which led to a substantial decrease in cash and cash equivalents and a significant increase in treasury stock. Despite the increase in operating expenses and a decline in net income for the quarter, the company demonstrated resilience in its core Monster Energy® Drinks segment and saw positive growth in its Strategic Brands segment.
02—Key points
Key Highlights
- Net sales for the third quarter of 2024 reached a record $1.88 billion, up 1.3% year-over-year, driven by increased volume and pricing actions.
- Net income for the third quarter declined by 18.1% to $370.9 million compared to the prior year, largely due to a significant drop in interest and other income and increased operating expenses.
- The company completed a substantial $3.0 billion share repurchase program during the quarter, funded by cash and new debt, impacting its cash position and increasing treasury stock.
- Energy drink case sales volume increased by 8.0% for the quarter, indicating continued consumer demand for the core product category.
- The Monster Energy® Drinks segment remains the dominant revenue driver, accounting for 91.6% of net sales in the third quarter.
- Operating expenses increased by 9.9% for the quarter, influenced by higher payroll, selling and marketing expenses, and a provision for an intellectual property claim.
- International net sales showed resilience, growing 3.6% in the third quarter (12.1% on a currency-adjusted basis), though impacted by foreign currency headwinds.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Monster Beverage kept $0.20.
- Revenue$1.88B100.0%
- Cost of revenue−$881.2M46.8%
- Gross profit$999.8M53.2%
- Operating costs−$519.9M27.6%
- Operating income$479.9M25.5%
- Interest, other & tax−$109.0M5.8%
- Net income$370.9M19.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 8, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.88B$1.86B | +1.3% |
| Cost of Revenue | $881.17M$872.26M | +1.0% |
| Gross Profit | $999.80M$983.76M | +1.6% |
| Operating Expenses | $519.88M$473.24M | +9.9% |
| Operating Income | $479.92M$510.53M | −6.0% |
| Net Income | $370.92M$452.69M | −18.1% |
| EPS (Basic) | $0.19$0.21 | −11.6% |
| EPS (Diluted) | $0.19$0.21 | −11.6% |
| Shares Outstanding (Basic) | 1.95B2.09B | −6.8% |
| Shares Outstanding (Diluted) | 1.97B2.12B | −7.2% |
05—Questions
Frequently Asked Questions
What was the main driver behind the decrease in net income for the third quarter?
The primary reasons for the 18.1% decrease in net income during the third quarter were a substantial reduction in interest and other income (expense), net, which was negatively impacted by lower investment balances and foreign currency losses, and an increase in operating expenses, including higher payroll, selling and marketing costs, and a provision for an intellectual property claim.
How did the large share repurchase program affect the company's financial position?
Monster Beverage Corp. repurchased approximately $3.0 billion of its common stock during the quarter. This significantly reduced its cash and cash equivalents and increased its treasury stock balance. The repurchase was funded by a combination of cash on hand and approximately $750 million in borrowings under its new credit facilities.
What is the outlook for the Monster Energy® Drinks segment?
The Monster Energy® Drinks segment continues to be the company's core revenue generator, representing over 91% of net sales. Despite a slight increase in net sales of 0.8% and a currency-adjusted growth of 3.9% (3.3% excluding Argentina's impact) in the third quarter, operating income for this segment saw a minor decrease. However, case sales volume increased by 8.0%, indicating sustained consumer demand.
Are there any significant changes in the company's debt structure?
Yes, in May 2024, Monster Beverage entered into new credit facilities totaling $1.50 billion, comprising a $750 million term loan and a $750 million revolving credit facility. The company drew $750 million on the term loan to help fund its share repurchase program, resulting in $748.8 million of long-term debt outstanding as of September 30, 2024.
06—Continue