Monster Beverage Reports 2018 Second Quarter Financial Results
Source Monster Beverage Corporation
CORONA, Calif., Aug. 08, 2018 (GLOBE NEWSWIRE) -- Monster Beverage Corporation reported financial results for the three- and six-months ended June 30, 2018.
Second Quarter Results
Net sales for the 2018 second quarter increased 12.0 percent to $1.02 billion from $907.1 million in the same period last year. Gross sales for the 2018 second quarter increased 14.7 percent to $1.19 billion from $1.04 billion in the same period last year. Net sales for the 2018 second quarter were negatively impacted by $12.2 million, due to 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. Prior to January 1, 2018, commissions based on sales to the TCCC Related Parties were included in operating expenses. Net changes in foreign currency exchange rates had a favorable impact on net and gross sales for the 2018 second quarter of $16.8 million and $21.4 million, respectively.
Net sales for the Company’s Monster Energy® Drinks segment, which includes the Company’s Monster Energy® drinks and Mutant® Super Soda drinks, increased 14.0 percent to $929.4 million for the 2018 second quarter, from $815.3 million for the same period last year. Net sales for the Company’s Monster Energy® Drinks segment for the 2018 second quarter were negatively impacted by $5.1 million, due to the adoption of ASC 606. Net sales for the Company’s Strategic Brands segment, which includes the various energy drink brands acquired from TCCC, decreased 6.8 percent to $79.8 million for the 2018 second quarter, from $85.6 million in the comparable 2017 quarter. Net sales for the Company’s Strategic Brands segment for the 2018 second quarter were negatively impacted by $7.1 million, due to the adoption of ASC 606. Net sales for the Company’s Other segment, which includes certain products of American Fruits & Flavors sold to independent third parties, were $6.6 million for the 2018 second quarter, compared with $6.2 million in the 2017 second quarter.
Net sales to customers outside the United States increased 18.5 percent to $293.8 million in the 2018 second quarter, from $247.9 million in the corresponding quarter in 2017.
Gross profit, as a percentage of net sales, for the 2018 second quarter was 61.1 percent, compared with 64.3 percent in the 2017 second quarter. The decrease in gross profit as a percentage of net sales was primarily attributable to (i) an increase in promotional allowances as a percentage of gross sales; (ii) the $12.2 million of commissions accounted for as a reduction to net sales due to the adoption of ASC 606; (iii) increases in certain input costs such as aluminum cans and other costs; (iv) domestic product sales mix; and (v) geographical sales mix.
Operating expenses for the 2018 second quarter were $262.6 million, compared with $233.5 million in the 2017 second quarter. Operating expenses included distributor termination expenses of $5.5 million for the 2018 second quarter, compared with $0.2 million in the 2017 second quarter. As a result of the adoption of ASC 606, commissions included in operating expenses decreased.
The impact to net sales, gross profit and operating expenses from the adoption of ASC 606 is included in the table below.
Distribution costs as a percentage of net sales were 3.7 percent for the 2018 second quarter, compared with 3.0 percent in the second quarter last year.
Selling expenses as a percentage of net sales for the 2018 second quarter were 11.4 percent, compared with 12.6 percent in the second quarter last year.
General and administrative expenses for the 2018 second quarter were $108.4 million, or 10.7 percent of net sales, compared with $91.4 million, or 10.1 percent of net sales, for the comparable 2017 second quarter. Stock-based compensation (a non-cash item) was $14.9 million for the second quarter of 2018, compared with $12.8 million in the second quarter last year.
Operating income for the 2018 second quarter increased to $357.6 million from $350.0 million in the comparable 2017 quarter.
The effective tax rate for the 2018 second quarter was 24.6 percent, compared with 35.9 percent in the same period last year. The decrease in the effective tax rate was primarily due to the Tax Cuts and Jobs Act signed into law on December 22, 2017.
Net income for the 2018 second quarter increased 21.3 percent to $270.1 million from $222.6 million in the comparable quarter last year. Net income per diluted share for the 2018 second quarter increased 23.8 percent to $0.48 from $0.39 in the second quarter of 2017.
