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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2021

Commission File Number 001-18761

MONSTER BEVERAGE CORPORATION

(Exact name of registrant as specified in its charter)


	Delaware	47-1809393
	(State or other jurisdiction of	(I.R.S. Employer
	incorporation or organization)	Identification No.)

1 Monster Way

Corona, California 92879

(Address of principal executive offices) (Zip code)

(951) 739 - 6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	MNST	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No__

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes X No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __ No X

The registrant had 529,139,115 shares of common stock, par value $0.005 per share, outstanding as of October 29, 2021.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

SEPTEMBER 30, 2021

INDEX

Part I.	FINANCIAL INFORMATION	Page No.

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Income for the Three- and Nine-Months Ended September 30, 2021 and 2020	4

	Condensed Consolidated Statements of Comprehensive Income for the Three- and Nine-Months Ended September 30, 2021 and 2020	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three- and Nine-Months Ended September 30, 2021 and 2020	6

	Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2021 and 2020	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	47

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

	Signatures	49

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

(In Thousands, Except Par Value) (Unaudited)


	September 30,		December 31,
	2021		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,712,671	$	1,180,413
Short-term investments		1,224,066		881,354
Accounts receivable, net		849,157		666,012
Inventories		471,553		333,085
Prepaid expenses and other current assets		95,607		55,358
Prepaid income taxes		30,619		24,733
Total current assets		4,383,673		3,140,955

INVESTMENTS		28,255		44,291
PROPERTY AND EQUIPMENT, net		309,574		314,656
DEFERRED INCOME TAXES, net		241,297		241,650
GOODWILL		1,331,643		1,331,643
OTHER INTANGIBLE ASSETS, net		1,066,083		1,059,046
OTHER ASSETS		88,883		70,475
Total Assets	$	7,449,408	$	6,202,716

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	396,229	$	296,800
Accrued liabilities		180,719		142,653
Accrued promotional allowances		232,394		186,658
Deferred revenue		45,278		45,429
Accrued compensation		54,507		55,015
Income taxes payable		23,113		23,433
Total current liabilities		932,240		749,988

DEFERRED REVENUE		245,621		264,436

OTHER LIABILITIES		26,550		27,432

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS’ EQUITY:
Common stock - $0.005 par value; 1,250,000 shares authorized; 639,851 shares issued and 529,132 shares outstanding as of September 30, 2021; 638,662 shares issued and 528,097 shares outstanding as of December 31, 2020		3,199		3,193
Additional paid-in capital		4,626,299		4,537,982
Retained earnings		7,488,235		6,432,074
Accumulated other comprehensive (loss) income		(43,495)		3,034
Common stock in treasury, at cost; 110,719 shares and 110,565 shares as of September 30, 2021 and December 31, 2020, respectively		(5,829,241)		(5,815,423)
Total stockholders’ equity		6,244,997		5,160,860
Total Liabilities and Stockholders’ Equity	$	7,449,408	$	6,202,716

See accompanying notes to condensed consolidated financial statements.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In Thousands, Except Per Share Amounts) (Unaudited)


	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2021		2020		2021		2020

NET SALES	$	1,410,557	$	1,246,362	$	4,116,308	$	3,402,355

COST OF SALES		621,399		509,831		1,775,375		1,369,160

GROSS PROFIT		789,158		736,531		2,340,933		2,033,195

OPERATING EXPENSES		344,694		277,930		956,346		802,343

OPERATING INCOME		444,464		458,601		1,384,587		1,230,852

INTEREST and OTHER EXPENSE, net		2,290		4,568		2,179		5,491

INCOME BEFORE PROVISION FOR INCOME TAXES		442,174		454,033		1,382,408		1,225,361

PROVISION FOR INCOME TAXES		104,969		106,379		326,247		287,503

NET INCOME	$	337,205	$	347,654	$	1,056,161	$	937,858

NET INCOME PER COMMON SHARE:
Basic	$	0.64	$	0.66	$	2.00	$	1.77
Diluted	$	0.63	$	0.65	$	1.97	$	1.75

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:
Basic		528,997		527,637		528,618		530,194
Diluted		535,915		533,263		535,554		535,011

See accompanying notes to condensed consolidated financial statements.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In Thousands) (Unaudited)


	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income, as reported	$	337,205	$	347,654	$	1,056,161	$	937,858
Other comprehensive income (loss):
Change in foreign currency translation adjustment		(26,716)		21,217		(46,412)		(338)
Available-for-sale investments:
Change in net unrealized (losses) gains		43		(308)		(117)		196
Reclassification adjustment for net gains included in net income		—		—		—		—
Net change in available-for-sale investments		43		(308)		(117)		196
Other comprehensive income (loss)		(26,673)		20,909		(46,529)		(142)
Comprehensive income	$	310,532	$	368,563	$	1,009,632	$	937,716

See accompanying notes to condensed consolidated financial statements.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In Thousands) (Unaudited)


								Accumulated
								Other					Total
	Common stock			Additional		Retained		Comprehensive		Treasury stock			Stockholders’
	Shares	Amount		Paid-in Capital		Earnings		(Loss) Income		Shares	Amount		Equity
Balance, December 31, 2020	638,662	$	3,193	$	4,537,982	$	6,432,074	$	3,034	(110,565)	$	(5,815,423)	$	5,160,860
Stock-based compensation	—		—		17,949		—		—	—		—		17,949
Exercise of stock options	492		3		6,758		—		—	—		—		6,761
Unrealized gain, net on available-for-sale securities	—		—		—		—		24	—		—		24
Repurchase of common stock	—		—		—		—		—	(150)		(13,419)		(13,419)
Foreign currency translation	—		—		—		—		(27,932)	—		—		(27,932)
Net income	—		—		—		315,194		—	—		—		315,194
Balance, March 31, 2021	639,154	$	3,196	$	4,562,689	$	6,747,268	$	(24,874)	(110,715)	$	(5,828,842)	$	5,459,437
Stock-based compensation	—		—		16,921		—		—	—		—		16,921
Exercise of stock options	422		2		17,723		—		—	—		—		17,725
Unrealized loss, net on available-for-sale securities	—		—		—		—		(183)	—		—		(183)
Repurchase of common stock	—		—		—		—		—	(4)		(399)		(399)
Foreign currency translation	—		—		—		—		8,235	—		—		8,235
Net income	—		—		—		403,762		—	—		—		403,762
Balance, June 30, 2021	639,576	$	3,198	$	4,597,333	$	7,151,030	$	(16,822)	(110,719)	$	(5,829,241)	$	5,905,498
Stock-based compensation	—		—		16,293		—		—	—		—		16,293
Exercise of stock options	275		1		12,673		—		—	—		—		12,674
Unrealized gain, net on available-for-sale securities	—		—		—		—		43	—		—		43
Foreign currency translation	—		—		—		—		(26,716)	—		—		(26,716)
Net income	—		—		—		337,205		—	—		—		337,205
Balance, September 30, 2021	639,851	$	3,199	$	4,626,299	$	7,488,235	$	(43,495)	(110,719)	$	(5,829,241)	$	6,244,997


								Accumulated
								Other					Total
	Common stock			Additional		Retained		Comprehensive		Treasury stock			Stockholders’
	Shares	Amount		Paid-in Capital		Earnings		(Loss) Income		Shares	Amount		Equity
Balance, December 31, 2019	636,460	$	3,182	$	4,397,511	$	5,022,480	$	(32,387)	(99,762)	$	(5,219,505)	$	4,171,281
Stock-based compensation	—		—		17,098		—		—	—		—		17,098
Exercise of stock options	644		4		13,971		—		—	—		—		13,975
Unrealized gain, net on available-for-sale securities	—		—		—		—		304	—		—		304
Repurchase of common stock	—		—		—		—		—	(10,503)		(579,948)		(579,948)
Foreign currency translation	—		—		—		—		(30,599)	—		—		(30,599)
Net income	—		—		—		278,835		—	—		—		278,835
Balance, March 31, 2020	637,104	$	3,186	$	4,428,580	$	5,301,315	$	(62,682)	(110,265)	$	(5,799,453)	$	3,870,946
Stock-based compensation	—		—		15,936		—		—	—		—		15,936
Exercise of stock options	820		4		29,863		—		—	—		—		29,867
Unrealized gain, net on available-for-sale securities	—		—		—		—		200	—		—		200
Repurchase of common stock	—		—		—		—		—	(298)		(15,822)		(15,822)
Foreign currency translation	—		—		—		—		9,044	—		—		9,044
Net income	—		—		—		311,369		—	—		—		311,369
Balance, June 30, 2020	637,924	$	3,190	$	4,474,379	$	5,612,684	$	(53,438)	(110,563)	$	(5,815,275)	$	4,221,540
Stock-based compensation	—		—		17,668		—		—	—		—		17,668
Exercise of stock options	534		2		21,696		—		—	—		—		21,698
Unrealized loss, net on available-for-sale securities	—		—		—		—		(308)	—		—		(308)
Repurchase of common stock	—		—		—		—		—	(2)		(148)		(148)
Foreign currency translation	—		—		—		—		21,217	—		—		21,217
Net income	—		—		—		347,654		—	—		—		347,654
Balance, September 30, 2020	638,458	$	3,192	$	4,513,743	$	5,960,338	$	(32,529)	(110,565)	$	(5,815,423)	$	4,629,321

See accompanying notes to condensed consolidated financial statements.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(In Thousands) (Unaudited)


	Nine-Months Ended
	September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,056,161	$	937,858
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		40,716		45,879
Gain on disposal of property and equipment		(984)		(210)
Impairment of intangibles		—		7,000
Stock-based compensation		52,391		53,042
Deferred income taxes		353		—
Effect on cash of changes in operating assets and liabilities:
Accounts receivable		(199,709)		(201,677)
Distributor receivables		228		341
Inventories		(149,414)		39,490
Prepaid expenses and other assets		(41,162)		(20,446)
Prepaid income taxes		(7,365)		11,460
Accounts payable		106,570		(9,724)
Accrued liabilities		34,085		53,501
Accrued promotional allowances		51,022		31,915
Accrued distributor terminations		5,302		(150)
Accrued compensation		(2,888)		(1,214)
Income taxes payable		(114)		17,969
Other liabilities		574		(562)
Deferred revenue		(17,784)		(15,236)
Net cash provided by operating activities		927,982		949,236

CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of available-for-sale investments		1,016,556		795,858
Purchases of available-for-sale investments		(1,343,351)		(849,276)
Purchases of property and equipment		(28,131)		(42,062)
Proceeds from sale of property and equipment		1,246		880
Additions to intangibles		(5,211)		(19,686)
Increase in other assets		(22,809)		(26,228)
Net cash used in investing activities		(381,700)		(140,514)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt		(1,814)		(2,500)
Issuance of common stock		37,160		65,540
Purchases of common stock held in treasury		(13,818)		(