10-QPeriod: Q3 FY2024

Monster Beverage Corp Quarterly Report for Q3 Ended Sep 30, 2024

Filed November 8, 2024For Securities:MNST

Summary

Monster Beverage Corp. (MNST) reported its financial results for the quarter ending September 29, 2024. The company generated net sales of $1.88 billion, 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 billion 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.

Financial Highlights

49 data points
Beta

Revenue

$1.88B

53.2% Gross Margin

Net Income

$370.92M

19.7% Net Margin

Total Assets

$8.05B

Cash & Equivalents

$1.63B

Free Cash Flow

$571.42M

Financial Statements
Beta
Revenue$1.88B
Cost of Revenue$881.17M
Gross Profit$999.80M
Operating Expenses$519.88M
Operating Income$479.92M
Net Income$370.92M
Shares Outstanding (Basic)975.84M
Shares Outstanding (Diluted)983.17M

Key Highlights

  • 1Net 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.
  • 2Net 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.
  • 3The 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.
  • 4Energy drink case sales volume increased by 8.0% for the quarter, indicating continued consumer demand for the core product category.
  • 5The Monster Energy® Drinks segment remains the dominant revenue driver, accounting for 91.6% of net sales in the third quarter.
  • 6Operating expenses increased by 9.9% for the quarter, influenced by higher payroll, selling and marketing expenses, and a provision for an intellectual property claim.
  • 7International net sales showed resilience, growing 3.6% in the third quarter (12.1% on a currency-adjusted basis), though impacted by foreign currency headwinds.

Frequently Asked Questions

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.

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.

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.

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.