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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, 2022

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 521,743,612 shares of common stock, par value $0.005 per share, outstanding as of October 31, 2022.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

SEPTEMBER 30, 2022

INDEX


Part I.	FINANCIAL INFORMATION	Page No.

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3

	Condensed Consolidated Statements of Income for the Three- and Nine-Months Ended September 30, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income for the Three- and Nine-Months Ended September 30, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three- and Nine-Months Ended September 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2022 and 2021	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	53

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	55

	Signatures	56

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, 2022 AND DECEMBER 31, 2021

(In Thousands, Except Par Value) (Unaudited)


	September 30,		December 31,
	2022		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,303,048	$	1,326,462
Short-term investments		1,346,781		1,749,727
Accounts receivable, net		1,051,642		896,658
Inventories		862,977		593,357
Prepaid expenses and other current assets		112,294		82,668
Prepaid income taxes		19,949		33,238
Total current assets		4,696,691		4,682,110

INVESTMENTS		72,373		99,419
PROPERTY AND EQUIPMENT, net		485,550		313,753
DEFERRED INCOME TAXES, net		195,511		225,221
GOODWILL		1,412,941		1,331,643
OTHER INTANGIBLE ASSETS, net		1,225,826		1,072,386
OTHER ASSETS		115,913		80,252
Total Assets	$	8,204,805	$	7,804,784

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	520,198	$	404,263
Accrued liabilities		198,692		210,964
Accrued promotional allowances		281,650		211,461
Deferred revenue		42,608		42,530
Accrued compensation		61,426		65,459
Income taxes payable		17,143		30,399
Total current liabilities		1,121,717		965,076

DEFERRED REVENUE		226,294		243,249

OTHER LIABILITIES		41,034		29,508

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS’ EQUITY:
Common stock - $0.005 par value; 1,250,000 shares authorized; 641,245 shares issued and 523,965 shares outstanding as of September 30, 2022; 640,043 shares issued and 529,323 shares outstanding as of December 31, 2021		3,206		3,200
Additional paid-in capital		4,736,141		4,652,620
Retained earnings		8,699,499		7,809,549
Accumulated other comprehensive loss		(224,455)		(69,165)
Common stock in treasury, at cost; 117,280 shares and 110,720 shares as of September 30, 2022 and December 31, 2021, respectively		(6,398,631)		(5,829,253)
Total stockholders’ equity		6,815,760		6,566,951
Total Liabilities and Stockholders’ Equity	$	8,204,805	$	7,804,784

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, 2022 AND 2021

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


	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2022		2021		2022		2021

NET SALES	$	1,624,286	$	1,410,557	$	4,798,119	$	4,116,308

COST OF SALES		790,561		621,399		2,407,867		1,775,375

GROSS PROFIT		833,725		789,158		2,390,252		2,340,933

OPERATING EXPENSES		415,795		344,694		1,199,883		956,346

OPERATING INCOME		417,930		444,464		1,190,369		1,384,587

INTEREST and OTHER INCOME (EXPENSE), net		2,149		(2,290)		(11,932)		(2,179)

INCOME BEFORE PROVISION FOR INCOME TAXES		420,079		442,174		1,178,437		1,382,408

PROVISION FOR INCOME TAXES		97,692		104,969		288,487		326,247

NET INCOME	$	322,387	$	337,205	$	889,950	$	1,056,161

NET INCOME PER COMMON SHARE:
Basic	$	0.61	$	0.64	$	1.68	$	2.00
Diluted	$	0.60	$	0.63	$	1.66	$	1.97

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:
Basic		526,797		528,997		528,263		528,618
Diluted		533,300		535,915		534,599		535,554

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, 2022 AND 2021

(In Thousands) (Unaudited)


	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income, as reported	$	322,387	$	337,205	$	889,950	$	1,056,161
Other comprehensive income (loss):
Change in foreign currency translation adjustment		(68,822)		(26,716)		(147,450)		(46,412)
Available-for-sale investments:
Change in net unrealized (losses) gains		(2,675)		43		(7,840)		(117)
Reclassification adjustment for net gains included in net income		—		—		—		—
Net change in available-for-sale investments		(2,675)		43		(7,840)		(117)
Other comprehensive income (loss)		(71,497)		(26,673)		(155,290)		(46,529)
Comprehensive income	$	250,890	$	310,532	$	734,660	$	1,009,632

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, 2022 AND 2021

(In Thousands) (Unaudited)



								Accumulated Other					Total
	Common stock			Additional		Retained		Comprehensive (Loss)		Treasury stock			Stockholders’
	Shares	Amount		Paid-in Capital		Earnings		Income		Shares	Amount		Equity
Balance, December 31, 2021	640,043	$	3,200	$	4,652,620	$	7,809,549	$	(69,165)	(110,720)	$	(5,829,253)	$	6,566,951
Stock-based compensation	—		—		16,175		—		—	—		—		16,175
Exercise of stock options	485		3		4,507		—		—	—		—		4,510
Unrealized loss, net on available-for-sale securities	—		—		—		—		(4,059)	—		—		(4,059)
Repurchase of common stock	—		—		—		—		—	(166)		(12,187)		(12,187)
Foreign currency translation	—		—		—		—		1,079	—		—		1,079
Net income	—		—		—		294,203		—	—		—		294,203
Balance, March 31, 2022	640,528		3,203		4,673,302		8,103,752		(72,145)	(110,886)		(5,841,440)		6,866,672
Stock-based compensation	—		—		16,157		—		—	—		—		16,157
Exercise of stock options	416		2		18,110		—		—	—		—		18,112
Unrealized loss, net on available-for-sale securities	—		—		—		—		(1,106)	—		—		(1,106)
Repurchase of common stock	—		—		—		—		—	(3,286)		(284,311)		(284,311)
Foreign currency translation	—		—		—		—		(79,707)	—		—		(79,707)
Net income	—		—		—		273,360		—	—		—		273,360
Balance, June 30, 2022	640,944		3,205		4,707,569		8,377,112		(152,958)	(114,172)		(6,125,751)		6,809,177
Stock-based compensation	—		—		16,436		—		—	—		—		16,436
Exercise of stock options	301		1		12,136		—		—	—		—		12,137
Unrealized loss, net on available-for-sale securities	—		—		—		—		(2,675)	—		—		(2,675)
Repurchase of common stock	—		—		—		—		—	(3,108)		(272,880)		(272,880)
Foreign currency translation	—		—		—		—		(68,822)	—		—		(68,822)
Net income	—		—		—		322,387		—	—		—		322,387
Balance, September 30, 2022	641,245	$	3,206	$	4,736,141	$	8,699,499	$	(224,455)	(117,280)	$	(6,398,631)	$	6,815,760



								Accumulated Other					Total
	Common stock			Additional		Retained		Comprehensive (Loss)		Treasury stock			Stockholders’
	Shares	Amount		Paid-in Capital		Earnings		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

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, 2022 AND 2021

(In Thousands) (Unaudited)


	Nine-Months Ended
	September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	889,950	$	1,056,161
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		46,040		37,854
Non-cash lease expense		5,180		2,862
Gain on disposal of property and equipment		(253)		(984)
Stock-based compensation		49,167		52,391
Deferred income taxes		29,710		353
Effect on cash of changes in operating assets and liabilities net of acquisition:
Accounts receivable		(202,447)		(199,481)
Inventories		(297,140)		(149,414)
Prepaid expenses and other assets		(39,204)		(41,162)
Prepaid income taxes		7,867		(7,365)
Accounts payable		52,663		106,570
Accrued liabilities		(2,572)		39,387
Accrued promotional allowances		89,236		51,022
Accrued compensation		(6,636)		(2,888)
Income taxes payable		(12,823)		(114)
Other liabilities		(3,492)		574
Deferred revenue		(16,060)		(17,784)
Net cash provided by operating activities		589,186		927,982

CASH FLOWS FROM INVESTING ACTIVITIES: