Monster Beverage Reports 2017 Fourth Quarter And Full Year Financial Results
Source Monster Beverage Corporation
CORONA, Calif., Feb. 28, 2018 (GLOBE NEWSWIRE) -- Monster Beverage Corporation reported financial results for the three- and twelve-months ended December 31, 2017.
Fourth Quarter Results
Net sales for the 2017 fourth quarter increased 7.5 percent to $810.4 million from $753.8 million in the same period last year. Gross sales for the 2017 fourth quarter increased 10.1 percent to $934.8 million from $848.8 million for the same period last year. Favorable currency exchange rates increased net sales by approximately $7.3 million and gross sales by approximately $9.3 million in the 2017 fourth quarter. Net sales and gross sales in the 2017 fourth quarter were adversely affected by inventory reductions by certain of our international distributors. The Company estimates that net sales in the 2017 fourth quarter were adversely affected by approximately 2 percent due to such reductions.
Net sales for the Company’s Monster Energy® Drinks segment, which is comprised of the Company’s Monster Energy® drinks, Monster Hydro® energy drinks and Mutant® Super Soda drinks, increased 7.6 percent to $736.1 million for the 2017 fourth quarter, from $684.4 million for the same period last year. Net sales for the Company’s Strategic Brands segment, which includes the various energy drink brands acquired from The Coca-Cola Company, increased 7.8 percent to $69.6 million for the 2017 fourth quarter, from $64.5 million in the comparable 2016 quarter. Net sales for the Company’s Other segment, which includes certain products of American Fruits & Flavors (“AFF”) sold to independent third parties, were $4.7 million for both the 2017 and 2016 fourth quarters.
Net sales to customers outside the United States increased 8.7 percent to $210.4 million in the 2017 fourth quarter, from $193.5 million in the corresponding quarter last year.
Gross profit, as a percentage of net sales, for the 2017 fourth quarter was 62.1 percent as compared to 66.1 percent in the 2016 fourth quarter, primarily attributable to sales mix, inventory reserves in China, lower allowances as a percentage of sales in the 2016 fourth quarter, as well as to increases in certain other costs.
Operating expenses for the 2017 fourth quarter were $236.5 million, compared with $246.4 million in the 2016 fourth quarter. The comparable 2016 fourth quarter operating expenses included distributor termination expenses of $46.3 million.
Distribution costs as a percentage of net sales were 3.6 percent for the 2017 fourth quarter, compared with 3.2 percent in the fourth quarter last year.
Selling expenses as a percentage of net sales for the 2017 fourth quarter were 13.6 percent, compared with 12.0 percent in the fourth quarter last year.
General and administrative expenses for the 2017 fourth quarter were $96.7 million, or 11.9 percent of net sales, compared with $132.2 million, or 17.5 percent of net sales, for the 2016 fourth quarter. General and administrative expenses for the comparable 2016 fourth quarter, excluding distributor terminations of $46.3 million, were $85.8 million, or 11.4 percent of net sales. Stock-based compensation (a non-cash item) was $13.0 million for the fourth quarter of 2017, compared with $12.1 million in the comparable quarter last year.
Operating income for the 2017 fourth quarter increased to $267.1 million from $251.7 million in the comparable quarter last year.
The effective tax rate for the 2017 fourth quarter was 24.8 percent, compared with 29.9 percent in the same period last year. The decrease in the effective tax rate was due primarily to an increase of $69.2 million in the stock compensation deduction related to excess tax benefits that are recorded in net income. The decrease in the effective tax rate was partially offset by a provisional charge of $39.8 million related to the revaluation of the Company’s deferred tax assets at December 31, 2017 and a $2.1 million charge for a one-time deemed mandatory repatriation of post-1986 earnings and profits, as a result of the Tax Reform Act signed into law on December 22, 2017.
Net income for the 2017 fourth quarter increased 16.4 percent to $201.3 million from $172.9 million in the comparable quarter last year. Net income per diluted share for the 2017 fourth quarter increased 17.5 percent to $0.35 from $0.30 in the fourth quarter of 2016.
Rodney C. Sacks, Chairman and Chief Executive Officer, said: “Our strategic alignment with Coca-Cola system bottlers continues to progress. During the fourth quarter, we launched our Monster Energy® brand in a number of smaller countries with Coca-Cola system bottlers, and are currently planning for further launches or transitions in 2018, including in Argentina, Armenia, Belarus and Tanzania in the first quarter and are at an advanced stage for a relaunch of our Monster Energy® brand in India. In the United States, we are in the process of launching Caffé Monster™, an energy coffee, in 13.7 oz. glass bottles in three flavors, as well as Muscle Monster® in 15 oz. plastic bottles in two flavors. Further product launches are planned for 2018 in both our domestic and international markets, including Mutant®, positioned as an affordable energy brand, in South East Asia and Pakistan in the first half of 2018,” Sacks added.
2017 Twelve-Months
Net sales for the year ended December 31, 2017 increased 10.5 percent to $3.4 billion from $3.0 billion for the year ended December 31, 2016. Gross sales for the year ended December 31, 2017 increased 10.8 percent to $3.9 billion from $3.5 billion for the year ended December 31, 2016. Unfavorable currency exchange rates decreased net sales by approximately $3.9 million and gross sales by approximately $8.2 million for the year ended December 31, 2017.
Net sales for the Company’s Monster Energy® Drinks segment increased 10.4 percent to $3.0 billion for the year ended December 31, 2017, from $2.8 billion for the year ended December 31, 2016. Net sales for the Company’s Strategic Brands segment increased 10.0 percent to $299.8 million for the year ended December 31, 2017, from $272.5 million for the year ended December 31, 2016. Net sales for the Company’s Other segment increased 27.0 percent to $21.6 million for the year ended December 31, 2017, from $17.0 million for the year ended December 31, 2016 (effectively from April 1, 2016 to December 31, 2016).
Net sales to customers outside the United States increased 23.9 percent to $909.3 million for the year ended December 31, 2017, from $733.7 million for the year ended December 31, 2016.
Gross profit as a percentage of net sales was 63.5 percent for the year ended December 31, 2017, compared with 63.7 percent for the year ended December 31, 2016.
Operating expenses for the year ended December 31, 2017 were $938.9 million, compared with $856.7 million for the year ended December 31, 2016. Included in operating expenses were distributor termination expenses of $35.4 million and $79.8 million for the year ended December 31, 2017 and 2016, respectively. Included in operating expenses for the comparable 2016 period were AFF transaction related expenses of $4.5 million and stock repurchase expenses of $1.6 million.
Distribution costs as a percentage of net sales were 3.2 percent for both the years ended December 31, 2017 and 2016.
Selling expenses as a percentage of net sales for the year ended December 31, 2017 were 12.7 percent, compared with 11.4 percent for the year ended December 31, 2016.
General and administrative expenses for the year ended December 31, 2017 were $402.7 million, or 12.0 percent of net sales, compared with $410.4 million or 13.5 percent of net sales, for the year ended December 31, 2016. General and administrative expenses, excluding distributor terminations, were 10.9 percent of net sales for the year ended December 31, 2017, compared with 10.8 percent for the year ended December 31, 2016. Stock-based compensation (a non-cash item) was $52.3 million for the year ended December 31, 2017, compared with $45.8 million for the year ended December 31, 2016.
Operating income for the year ended December 31, 2017 was $1.2 billion, compared with $1.1 billion for the year ended December 31, 2016.
The effective tax rate for the year ended December 31, 2017 was 31.7 percent, compared with 34.0 percent for the year ended December 31, 2016.
Net income for the year ended December 31, 2017 was $820.7 million, or $1.42 per diluted share, compared with $712.7 million, or $1.19 per diluted share, for the year ended December 31, 2016.
Investor Conference Call
The Company will host an investor conference call today, February 28, 2018, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.monsterbevcorp.com in the “Events & Presentations” section. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.
Monster Beverage Corporation
Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries develop and market energy drinks, including Monster Energy® energy drinks, Monster Energy Ultra® energy drinks, Monster Energy Extra Strength Nitrous Technology® energy drinks, Java Monster® non-carbonated coffee + energy drinks, Espresso Monster™ espresso + energy drinks, Caffé Monster™ energy coffee non-carbonated drinks, Monster Rehab® non-carbonated energy drinks with electrolytes, Muscle Monster® energy shakes, Übermonster® energy drinks, Monster Hydro® energy drinks, NOS® energy drinks, Full Throttle® energy drinks, Burn® energy drinks, Samurai® energy drinks, Relentless® energy drinks, Mother® energy drinks, Power Play® energy drinks, BU® energy drinks, Nalu® energy drinks, BPM® energy drinks, Gladiator® energy drinks, and Ultra Energy® energy drinks. The Company’s subsidiaries also develop and market Mutant® Super Soda drinks. For more information, visit www.monsterbevcorp.com.
