SEC Filing | Monster Energy Company

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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 June 30, 2023

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 1,047,518,325 shares of common stock, par value $0.005 per share, outstanding as of July 31, 2023.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

JUNE 30, 2023

INDEX


Part I.	FINANCIAL INFORMATION	Page No.

Item 1.	Condensed Consolidated Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Income for the Three- and Six-months ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the Three- and Six-months ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three- and Six-months ended June 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the Six-Months ended June 30, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	51

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

Item 3.	Defaults Upon Senior Securities	52

Item 4.	Mine Safety Disclosures	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

	Signatures	54

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 JUNE 30, 2023 AND DECEMBER 31, 2022

(In Thousands, Except Par Value) (Unaudited)


	June 30,		December 31,
	2023		2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,869,774	$	1,307,141
Short-term investments		1,417,239		1,362,314
Accounts receivable, net		1,333,004		1,016,203
Inventories		846,812		935,631
Prepaid expenses and other current assets		148,750		109,823
Prepaid income taxes		38,534		33,785
Total current assets		5,654,113		4,764,897

INVESTMENTS		62,248		61,443
PROPERTY AND EQUIPMENT, net		576,645		516,897
DEFERRED INCOME TAXES, net		177,039		177,039
GOODWILL		1,417,941		1,417,941
OTHER INTANGIBLE ASSETS, net		1,224,100		1,220,410
OTHER ASSETS		151,252		134,478
Total Assets	$	9,263,338	$	8,293,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	568,613	$	444,265
Accrued liabilities		198,656		172,991
Accrued promotional allowances		283,647		255,631
Deferred revenue		42,765		43,311
Accrued compensation		56,195		72,463
Income taxes payable		12,704		13,317
Total current liabilities		1,162,580		1,001,978

DEFERRED REVENUE		215,039		223,800

OTHER LIABILITIES		44,255		42,286

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS’ EQUITY¹:
Common stock - $0.005 par value; 5,000,000 shares authorized; 1,118,269 shares issued and 1,047,485 shares outstanding as of June 30, 2023; 1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022		5,591		6,418
Additional paid-in capital		4,869,791		4,776,804
Retained earnings		5,120,063		9,001,173
Accumulated other comprehensive loss		(155,725)		(159,073)
Common stock in treasury, at cost; 70,784 shares and 239,088 shares as of June 30, 2023 and December 31, 2022, respectively		(1,998,256)		(6,600,281)
Total stockholders’ equity		7,841,464		7,025,041
Total Liabilities and Stockholders’ Equity	$	9,263,338	$	8,293,105

¹ Stock Split - On February 28, 2023, the Company announced a two-for-one stock split of its common stock to be effected in the form of a 100% stock dividend. The stock dividend was issued on March 27, 2023 (the “Stock Split”). The accompanying condensed consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split. See Note 1 for additional information.

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 SIX-MONTHS ENDED JUNE 30, 2023 AND 2022

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


	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

NET SALES	$	1,854,961	$	1,655,260	$	3,553,891	$	3,173,833

COST OF SALES		880,739		875,399		1,681,820		1,617,306

GROSS PROFIT		974,222		779,861		1,872,071		1,556,527

OPERATING EXPENSES		450,417		406,910		863,201		784,088

OPERATING INCOME		523,805		372,951		1,008,870		772,439

INTEREST and OTHER INCOME (EXPENSE), net		15,159		(6,781)		27,653		(14,080)

INCOME BEFORE PROVISION FOR INCOME TAXES		538,964		366,170		1,036,523		758,359

PROVISION FOR INCOME TAXES		125,093		92,810		225,208		190,796

NET INCOME	$	413,871	$	273,360	$	811,315	$	567,563

NET INCOME PER COMMON SHARE¹:
Basic	$	0.40	$	0.26	$	0.78	$	0.54
Diluted	$	0.39	$	0.26	$	0.77	$	0.53

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS¹:
Basic		1,047,065		1,057,233		1,045,993		1,058,017
Diluted		1,060,093		1,069,622		1,059,667		1,070,418

¹ Stock Split - The accompanying condensed consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split. See Note 1 for additional information.

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 SIX-MONTHS ENDED JUNE 30, 2023 AND 2022

(In Thousands) (Unaudited)


	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net income, as reported	$	413,871	$	273,360	$	811,315	$	567,563
Other comprehensive income (loss):
Change in foreign currency translation adjustment		(5,775)		(79,707)		2,206		(78,628)
Available-for-sale investments:
Change in net unrealized gains (losses)		(773)		(1,105)		2,408		(5,164)
Net losses on commodity derivatives		(1,266)		—		(1,266)		—
Other comprehensive income (loss)		(7,814)		(80,812)		3,348		(83,792)
Comprehensive income	$	406,057	$	192,548	$	814,663	$	483,771

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 SIX-MONTHS ENDED JUNE 30, 2023 AND 2022

(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, 2022	1,283,688	$	6,418	$	4,776,804	$	9,001,173	$	(159,073)	(239,088)	$	(6,600,281)	$	7,025,041

Stock-based compensation	—		—		15,743		—		—	—		—		15,743
Stock options/awards	3,704		19		36,329		—		—	—		—		36,348
Unrealized gain (loss), net on available-for-sale securities	—		—		—		—		3,181	—		—		3,181
Repurchase of common stock	—		—		—		—		—	(1,688)		(90,378)		(90,378)
Retirement of treasury stock	(170,000)		(850)		425		(4,692,425)		—	170,000		4,692,850		—
Foreign currency translation	—		—		—		—		7,981	—		—		7,981
Net income	—		—		—		397,444		—	—		—		397,444

Balance, March 31, 2023	1,117,392	$	5,587	$	4,829,301	$	4,706,192	$	(147,911)	(70,776)	$	(1,997,809)	$	7,395,360

Stock-based compensation	—		—		17,176		—		—	—		—		17,176
Stock options/awards	877		4		23,314		—		—	—		—		23,318
Unrealized gain (loss), net on available-for-sale securities	—		—		—		—		(773)	—		—		(773)
Repurchase of common stock	—		—		—		—		—	(8)		(447)		(447)
Foreign currency translation	—		—		—		—		(5,775)	—		—		(5,775)
Net losses on commodity derivatives	—		—		—		—		(1,266)	—		—		(1,266)
Net income	—		—		—		413,871		—	—		—		413,871

Balance, June 30, 2023	1,118,269	$	5,591	$	4,869,791	$	5,120,063	$	(155,725)	(70,784)	$	(1,998,256)	$	7,841,464



								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, 2021	1,280,086	$	6,400	$	4,649,420	$	7,809,549	$	(69,165)	(221,440)	$	(5,829,253)	$	6,566,951

Stock-based compensation	—		—		16,175		—		—	—		—		16,175
Stock options/awards	970		6		4,504		—		—	—		—		4,510
Unrealized gain (loss), net on available-for-sale securities	—		—		—		—		(4,059)	—		—		(4,059)
Repurchase of common stock	—		—		—		—		—	(332)		(12,187)		(12,187)
Foreign currency translation	—		—		—		—		1,079	—		—		1,079
Net income	—		—		—		294,203		—	—		—		294,203

Balance, March 31, 2022	1,281,056	$	6,406	$	4,670,099	$	8,103,752	$	(72,145)	(221,772)	$	(5,841,440)	$	6,866,672

Stock-based compensation	—		—		16,157		—		—	—		—		16,157
Stock options/awards	832		4		18,108		—		—	—		—		18,112
Unrealized gain (loss), net on available-for-sale securities	—		—		—		—		(1,105)	—		—		(1,105)
Repurchase of common stock	—		—		—		—		—	(6,572)		(284,311)		(284,311)
Foreign currency translation	—		—		—		—		(79,707)	—		—		(79,707)
Net income	—		—		—		273,360		—	—		—		273,360

Balance, June 30, 2022	1,281,888	$	6,410	$	4,704,364	$	8,377,112	$	(152,957)	(228,344)	$	(6,125,751)	$	6,809,178

¹ Stock Split - The accompanying condensed consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split. See Note 1 for additional information.

See accompanying notes to condensed consolidated financial statements.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTHS ENDED JUNE 30, 2023 AND 2022

(In Thousands) (Unaudited)


	Six-Months Ended
	June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	811,315	$	567,563
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		32,384		30,432
Non-cash lease expense		2,828		3,222
Gain on disposal of property and equipment		(767)		(69)
Loss on impairment of intangibles		2,800		—
Stock-based compensation		34,603		32,609
Deferred income taxes		—		21,934
Effect on cash of changes in operating assets and liabilities net of acquisition:
Accounts receivable		(317,808)		(289,236)
Inventories		93,077		(299,076)
Prepaid expenses and other assets		(36,779)		(55,663)
Prepaid income taxes		(3,345)		(1,220)
Accounts payable		132,173		85,499
Accrued liabilities		20,491		(789)
Accrued promotional allowances		23,643		77,746
Accrued compensation		(17,616)		(15,311)
Income taxes payable		(1,219)		(14,666)
Other liabilities		(257)		(3,211)
Deferred revenue		(12,361)		(9,101)
Net cash provided by operating activities		763,162		130,663

CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of available-for-sale investments		1,037,803		1,409,707
Purchases of available-for-sale investments		(1,091,126)		(964,267)
Acquisition of CANarchy, net of cash		—		(329,472)
Purchases of property and equipment		(82,425)		(99,446)
Proceeds from sale of property and equipment		1,035		372
Additions to intangibles		(5,926)		(9,894)
Increase in other assets		(17,570)		(12,738)
Net cash used in investing activities		(158,209)		(5,738)

CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on debt		(6,661)		4,924
Issuance of common stock		59,666		22,622
Purchases of common stock held in treasury		(90,825)		(296,499)
Net cash used in financing activities		(