Monster Beverage Corp (MNST)

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Monster Beverage Reports 2021 First Quarter Financial Results
By: Monster Beverage Corporation | May 6, 2021

CORONA, Calif., May 06, 2021 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (NASDAQ: MNST) today reported financial results for the three-months ended March 31, 2021.

COVID-19 Pandemic

The Company’s top priority remains the health, safety and well-being of its employees. The Company’s flavor manufacturing facilities, its co-packers, warehouses and shipment facilities, have operated throughout the COVID-19 pandemic. The Company’s bottlers/distributors are operating and the Company’s products remain generally available to consumers. In limited countries, the operations of the Company’s bottlers/distributors have, in part, been negatively affected for varying periods of time.

Despite the ongoing impact of the COVID-19 pandemic, the Company achieved record first quarter net sales. Currently, the Company does not foresee a material impact on the ability of its co-packers to manufacture and its bottlers/distributors to distribute its products as a result of the COVID-19 pandemic. The Company’s supply chain remains largely intact. However, the Company is experiencing shortages in its aluminum can requirements in North America and Europe, given the Company’s volume growth and the current supply constraints in the aluminum can industry. The Company has taken steps to source additional quantities of aluminum cans from South America and Asia, however, logistical issues, including ocean freight and port of entry congestion could delay such supply. Logistical issues in relation to the importation of certain other raw materials and ingredients could impact future supply.

As of March 31, 2021, the Company had $1.18 billion in cash and cash equivalents, $980.1 million in short-term investments and $63.8 million in long-term investments. Based on currently available information, the Company does not expect the COVID-19 pandemic to have a material impact on its liquidity.

First Quarter Results

Net sales for the 2021 first quarter increased 17.1 percent to $1.24 billion, from $1.06 billion in the same period last year. Net changes in foreign currency exchange rates had a favorable impact on net sales for the 2021 first quarter of $9.3 million.

Net sales for the Company’s Monster Energy® Drinks segment, which primarily includes the Company’s Monster Energy® drinks and Reign Total Body Fuel® high performance energy drinks, increased 17.9 percent to $1.17 billion for the 2021 first quarter, from $992.5 million for the 2020 first quarter. Net changes in foreign currency exchange rates had a favorable impact on net sales for the Monster Energy® Drinks segment of approximately $9.3 million for the 2021 first quarter.

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, increased 5.1 percent to $67.8 million for the 2021 first quarter, from $64.5 million in the 2020 first quarter. Net changes in foreign currency exchange rates had no significant impact on net sales for the Strategic Brands segment for the 2021 first quarter.

Net sales for the Company’s Other segment, which includes certain products of American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, sold to independent third-party customers (the “AFF Third-Party Products”), increased to $5.7 million for the 2021 first quarter, from $5.1 million in the 2020 first quarter.

Net sales to customers outside the United States increased 28.8 percent to $459.4 million in the 2021 first quarter, from $356.8 million in the 2020 first quarter. Such sales were approximately 37 percent of total net sales in the 2021 first quarter, compared with 34 percent in the 2020 first quarter.

Gross profit as a percentage of net sales, for the 2021 first quarter was 57.5 percent, compared with 60.0 percent in the 2020 first quarter. The decrease in gross profit as a percentage of net sales for the 2021 first quarter was primarily the result of increased input costs (mainly increased raw material freight-in costs), geographical sales mix, and higher promotional allowances as a percentage of net sales.

Operating expenses for the 2021 first quarter were $300.8 million, compared with $272.2 million in the 2020 first quarter. As a percentage of net sales, operating expenses for the 2021 first quarter were 24.2 percent, compared with 25.6 percent in the 2020 first quarter.

Distribution costs as a percentage of net sales were 4.4 percent for the 2021 first quarter, compared with 3.7 percent in the 2020 first quarter.

Selling expenses as a percentage of net sales for the 2021 first quarter were 9.2 percent, compared with 10.3 percent in the 2020 first quarter.

General and administrative expenses for the 2021 first quarter were $131.9 million, or 10.6 percent of net sales, compared with $124.1 million, or 11.7 percent of net sales, for the 2020 first quarter. Stock-based compensation was $18.4 million for the first quarter of 2021, compared with $17.1 million in the 2020 first quarter.

Operating income for the 2021 first quarter increased to $414.1 million, from $365.0 million in the 2020 first quarter.

The effective tax rate was 23.8 percent for both the 2021 and 2020 first quarters.

Net income for the 2021 first quarter increased 13.0 percent to $315.2 million, from $278.8 million in the 2020 first quarter. Net income per diluted share for the 2021 first quarter increased 14.2 percent to $0.59, from $0.52 in the first quarter of 2020.

Rodney C. Sacks, Chairman and Co-Chief Executive Officer, said: “The Company posted record first quarter net sales and profits, despite the ongoing impact of the COVID-19 pandemic.

“According to Nielsen, the energy drink category, and in particular our Monster Energy® brand, continues to accelerate in most of our markets, including the United States.

“In the first quarter of 2021, we continued with our robust program of product launches in both our domestic and international markets, with plans for additional launches during 2021,” Sacks added.

Vice Chairman and Co-Chief Executive Officer Hilton H. Schlosberg said: “In order to satisfy increased consumer demand, we are sourcing aluminum cans in excess of our contracted volumes from South America and Asia. In addition, to meet consumer demand, we experienced freight inefficiencies in the United States and in Europe in the quarter, which resulted in increased costs of sales as well as increased operating expenses.

“We are pleased with the early results for our new energy drinks that were launched in the quarter,” Schlosberg added.

Share Repurchase Program

No shares of the Company’s common stock were repurchased during the 2021 first quarter. As of May 6, 2021, approximately $441.5 million remained available for repurchase under the previously authorized repurchase program.

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