-- Record Second Quarter
--
-- Solid Revenue Growth --
-- Price Increase Set for
-- Price Increases in Certain International Markets Planned for Second Half of 2022 --
-- Product Supply Normalizing --
Since the beginning of the COVID-19 pandemic and the subsequent increased demand for the Company's energy drinks, the Company prioritized ensuring product availability for its customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting the Company’s profitability. The Company continues to stand by its strategy to ensure product availability and solidify the continued long-term growth of the Company's brands.
The Company achieved record second quarter net sales of
In the second quarter of 2022, the Company experienced a significant increase in cost of sales, resulting in a material decrease in both gross profit and gross profit as a percentage of net sales, relative to the comparative 2021 second quarter. The increase in cost of sales was primarily due to (i) increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, (ii) increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, (iii) increased aluminum can costs attributable to higher aluminum commodity pricing, (iv) geographical and product sales mix, and (v) production inefficiencies. Furthermore, the Company experienced significant increases in distribution expenses including increased fuel, freight and warehousing costs, which adversely impacted operating costs.
As of
Second Quarter Results
Net sales for the 2022 second quarter increased 13.2 percent to
Net sales for the Company’s Monster Energy® Drinks segment, which primarily includes the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks and True North® Pure Energy Seltzer energy drinks, increased 12.5 percent to
Net sales for the Company’s Strategic Brands segment, which primarily includes the various energy drink brands acquired from The Coca-Cola Company, as well as the Company’s affordable energy brands, decreased 9.0 percent to
Net sales for the Alcohol Brands segment, which is comprised of the various craft beers and hard seltzers purchased as part of the CANarchy transaction on
Net sales for the Company’s Other segment, which includes certain products of
Net sales to customers outside
Gross profit as a percentage of net sales for the 2022 second quarter was 47.1 percent, compared with 57.2 percent in the 2021 second quarter. The decrease in gross profit as a percentage of net sales for the 2022 second quarter was primarily the result of increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, increased aluminum can costs attributable to higher aluminum commodity pricing, geographical and product sales mix and production inefficiencies. The decrease in gross profit as a percentage of net sales for the 2022 second quarter was partially offset by pricing actions.
Operating expenses for the 2022 second quarter were
Operating expenses as a percentage of net sales for the 2022 second quarter were 24.6 percent, compared with 21.3 percent in the 2021 second quarter, and 25.6 percent for the 2019 second quarter (pre COVID-19).
Distribution costs for the 2022 second quarter increased to
Selling expenses as a percentage of net sales for the 2022 second quarter were 9.1 percent, compared with 9.0 percent in the 2021 second quarter, and 11.2 percent in the 2019 second quarter (pre COVID-19).
General and administrative expenses for the 2022 second quarter were
Operating income for the 2022 second quarter decreased to
The effective tax rate for the 2022 second quarter was 25.3 percent, compared with 23.4 percent in the 2021 second quarter.
Net income for the 2022 second quarter decreased 32.3 percent to
Vice Chairman and Co-Chief Executive Officer
“Following many quarters of supply chain challenges, we have been able to rebuild inventories on a global basis, while at the same time meeting strong customer demand, despite operating in an extremely challenging, unprecedented and costly supply chain environment.
“Significant increases in freight-in and fuel costs, including costs relating to the importation of aluminum cans, as well as other input costs continue to impact costs of sales. We believe that some of the increased costs that we are experiencing are likely to be transitory, as we begin to decrease our reliance on the use of imported aluminum cans, as well as increase our inventory levels in closer proximity to our customers. Furthermore, the sharp run-up in aluminum commodity pricing appears to be currently moderating.
“Increases in distribution costs, particularly freight and fuel, continued to adversely impact operating expenses.
“We have implemented measures to mitigate the impact of increased costs experienced in our supply chain through reductions in promotions and other pricing actions in
“We continued to launch new products and expanded distribution of our brands in many international markets in the second quarter of 2022. We are excited to announce that we are planning to launch Monster Energy® Zero Sugar in the 2022 fourth quarter, initially in
“We are planning to launch our first flavored malt beverage alcohol product leveraging Monster’s brand equity late in the 2022 fourth quarter. ‘The Beast Unleashed™’ will contain 6% alcohol by volume and will initially be available in four flavors. The Beast Unleashed™ will launch through beer distributors in
“Our innovation pipeline of both alcoholic and non-alcoholic beverages is robust and exciting,” Sacks added.
2022 Six-Months Results
Net sales for the six-months ended
Gross profit as a percentage of net sales for the six-months ended
Operating expenses for the six-months ended
Operating income for the six-months ended
The effective tax rate for the six-months ended
Net income for the six-months ended
Share Repurchase Program
During the 2022 second quarter, the Company purchased approximately 3.3 million shares of its common stock at an average purchase price of
As of
Investor Conference Call
The Company will host an investor conference call today,
Based in
Caution Concerning Forward-Looking Statements
Certain statements made in this announcement may constitute “forward-looking statements” within the meaning of the
(tables below)
| MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION | |||||||||||||||
| FOR THE THREE- AND SIX-MONTHS ENDED |
|||||||||||||||
| (In Thousands, Except Per Share Amounts) (Unaudited) | |||||||||||||||
| Three-Months Ended | Six-Months Ended | ||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net sales¹ | $ | 1,655,260 | $ | 1,461,934 | $ | 3,173,833 | $ | 2,705,751 | |||||||
| Cost of sales | 875,399 | 625,096 | 1,617,306 | 1,153,976 | |||||||||||
| Gross profit¹ | 779,861 | 836,838 | 1,556,527 | 1,551,775 | |||||||||||
| Gross profit as a percentage of net sales | 47.1% | 57.2% | 49.0% | 57.4% | |||||||||||
| Operating expenses | 406,910 | 310,863 | 784,088 | 611,652 | |||||||||||
| Operating expenses as a percentage of net sales | 24.6% | 21.3% | 24.7% | 22.6% | |||||||||||
| Operating income¹ | 372,951 | 525,975 | 772,439 | 940,123 | |||||||||||
| Operating income as a percentage of net sales | 22.5% | 36.0% | 24.3% | 34.7% | |||||||||||
| Interest and other (expense) income, net | (6,781) | 872 | (14,080) | 111 | |||||||||||
| Income before provision for income taxes¹ | 366,170 | 526,847 | 758,359 | 940,234 | |||||||||||
| Provision for income taxes | 92,810 | 123,085 | 190,796 | 221,278 | |||||||||||
| Income taxes as a percentage of income before taxes | 25.3% | 23.4% | 25.2% | 23.5% | |||||||||||
| Net income | $ | 273,360 | $ | 403,762 | $ | 567,563 | $ | 718,956 | |||||||
| Net income as a percentage of net sales | 16.5% | 27.6% | 17.9% | 26.6% | |||||||||||
| Net income per common share: | |||||||||||||||
| Basic | $ | 0.52 | $ | 0.76 | $ | 1.07 | $ | 1.36 | |||||||
| Diluted | $ | 0.51 | $ | 0.75 | $ | 1.06 | $ | 1.34 | |||||||
| Weighted average number of shares of common stock and common stock equivalents: | |||||||||||||||
| Basic | 528,617 | 528,653 | 529,009 | 528,425 | |||||||||||
| Diluted | 534,811 | 535,557 | 535,209 | 535,324 | |||||||||||
| Case sales (in thousands) (in 192-ounce case equivalents) | 184,197 | 161,450 | 352,990 | 300,017 | |||||||||||
| Average net sales per case2 | $ | 8.78 | $ | 9.01 | $ | 8.82 | $ | 8.97 | |||||||
¹Includes
2Excludes Alcohol segment net sales of $32.4 million for the three-months ended
| MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| AS OF |
||||||||
| (In Thousands, Except Par Value) (Unaudited) | ||||||||
2022 |
2021 |
|||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 1,132,039 | $ | 1,326,462 | ||||
| Short-term investments | 1,337,792 | 1,749,727 | ||||||
| Accounts receivable, net | 1,175,587 | 896,658 | ||||||
| Inventories | 885,948 | 593,357 | ||||||
| Prepaid expenses and other current assets | 132,273 | 82,668 | ||||||
| Prepaid income taxes | 32,981 | 33,238 | ||||||
| Total current assets | 4,696,620 | 4,682,110 | ||||||
| INVESTMENTS | 64,119 | 99,419 | ||||||
| PROPERTY AND EQUIPMENT, net | 464,541 | 313,753 | ||||||
| DEFERRED INCOME TAXES, net | 203,287 | 225,221 | ||||||
| 1,412,941 | 1,331,643 | |||||||
| OTHER INTANGIBLE ASSETS, net | 1,223,114 | 1,072,386 | ||||||
| OTHER ASSETS | 110,390 | 80,252 | ||||||
| Total Assets | $ | 8,175,012 | $ | 7,804,784 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 492,858 | $ | 404,263 | ||||
| Accrued liabilities | 209,154 | 210,964 | ||||||
| Accrued promotional allowances | 277,618 | 211,461 | ||||||
| Deferred revenue | 44,344 | 42,530 | ||||||
| Accrued compensation | 53,717 | 65,459 | ||||||
| Income taxes payable | 15,917 | 30,399 | ||||||
| Total current liabilities | 1,093,608 | 965,076 | ||||||
| DEFERRED REVENUE | 232,170 | 243,249 | ||||||
| OTHER LIABILITIES | 40,056 | 29,508 | ||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Common stock - |
3,205 | 3,200 | ||||||
| Additional paid-in capital | 4,707,569 | 4,652,620 | ||||||
| Retained earnings | 8,377,112 | 7,809,549 | ||||||
| Accumulated other comprehensive loss | (152,957 | ) | (69,165 | ) | ||||
| Common stock in treasury, at cost; 114,172 and 110,720 shares as of June 30, 2022 and |
(6,125,751 | ) | (5,829,253 | ) | ||||
| Total stockholders’ equity | 6,809,178 | 6,566,951 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 8,175,012 | $ | 7,804,784 | ||||
| CONTACTS: | ||
| Chairman and Co-Chief Executive Officer | ||
| (951) 739-6200 | ||
| Vice Chairman and Co-Chief Executive Officer | ||
| (951) 739-6200 | ||
| (310) 279-5980 |
Source: Monster Beverage Corporation