Earnings Recap: Monster Beverage Corporation (NASDAQ: MNST)

On Friday, Shares of Monster Beverage Corporation (NASDAQ: MNST) showed the bearish trend with a lower momentum of -3.49% to $52.84. The company traded total volume of 3,517,682 shares as contrast to its average volume of 4.17M shares. The company has a market value of $29.73B and about 543.04M shares outstanding.

Monster Beverage Corporation (MNST) recently stated financial results for the three- and twelve-months ended December 31, 2018.

Fourth Quarter Results:

Net sales for the 2018 fourth quarter increased 14.1 percent to $924.20M from $810.40M in the same period last year.  Gross sales for the 2018 fourth quarter increased 13.7 percent to $1.06.0B from $934.80M in the same period last year.  Net sales for the 2018 fourth quarter were negatively influenced by $8.50M, because of the adoption of Accounting Standards Codification (“ASC”) 606. Under ASC 606, commissions paid to The Coca-Cola Company (“TCCC”), based on sales to certain of the Company’s customers which TCCC accounts for under the equity method (the “TCCC Related Parties”), or consolidates, are included as a reduction to net sales. Before January 1, 2018, commissions based on sales to the TCCC Related Parties were included in operating expenses.  Net and gross sales for the three-months ended December 31, 2018 were negatively influenced by advance purchases made by customers in the third quarter of 2018, because of a pre-declared price increase effective November 1, 2018 on certain Monster Energy® brand energy drinks.  The Company estimates that net and gross sales for the three-months ended December 31, 2018 reduced by about $16.00M and $18.00M respectively, as a result of such advance purchases.  Net changes in foreign currency exchange rates had an unfavorable impact on net and gross sales for the 2018 fourth quarter of $14.40M and $16.20M, respectively.

Net sales for the Company’s Monster Energy® Drinks segment, which mainly includes the Company’s Monster Energy® drinks, increased 15.9 percent to $853.30M for the 2018 fourth quarter, from $736.10M for the 2017 fourth quarter.  Net sales for the Company’s Monster Energy® Drinks segment for the 2018 fourth quarter were negatively influenced by $3.20M, because of the adoption of ASC 606.  Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of about $12.40M for the 2018 fourth quarter.

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Net sales for the Company’s Planned Brands segment, which includes the various energy drink brands attained from TCCC, reduced 5.4 percent to $65.80M for the 2018 fourth quarter, from $69.60M in the 2017 fourth quarter.  Net sales for the Company’s Planned Brands segment for the 2018 fourth quarter were negatively influenced by $5.30M, because of the adoption of ASC 606.  Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Planned Brands segment of $2.00M for the three-months ended December 31, 2018.

Net sales for the Company’s Other segment, which includes certain products of American Fruits & Flavors sold to independent third parties (the “AFF Third-Party Products”), were $5.10M for the 2018 fourth quarter, contrast with $4.70M in the 2017 fourth quarter.

Net sales to customers outside the United States increased 30.4 percent to $274.30M in the 2018 fourth quarter, from $210.40M in the 2017 fourth quarter.

Operating expenses for the 2018 fourth quarter were $245.70M, contrast with $236.50M in the 2017 fourth quarter.  As a result of the adoption of ASC 606, commissions included in operating expenses reduced.

General and administrative expenses for the 2018 fourth quarter were $106.60M, or 11.5 percent of net sales, contrast with $96.70M, or 11.9 percent of net sales, for the 2017 fourth quarter.  Stock-based compensation (a non-cash item) was $14.70M for the fourth quarter of 2018, contrast with $13.00M in the 2017 fourth quarter.

Operating income for the 2018 fourth quarter increased to $306.50M from $267.10M in the 2017 fourth quarter.

Net income for the 2018 fourth quarter increased 18.8 percent to $239.10M from $201.30M in the 2017 fourth quarter.  Net income per diluted share for the 2018 fourth quarter increased 22.7 percent to $0.43 from $0.35 in the fourth quarter of 2017.

The Company offered net profit margin of 26.10% while its gross profit margin was 58.80%. ROE was recorded as 26.50% while beta factor was 1.50. The stock, as of recent close, has shown the weekly upbeat performance of 3.56% which was maintained at 11.24% in this year.

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