Monster Beverage Corporation reported financial results for the three-months ending March 31, 2023.
The company achieved record first quarter net sales of $1.70 billion in the 2023 first quarter, up 11.9%, from net sales of $1.52 billion in the 2022 comparable period. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2023 first quarter of $52.0 million. Net sales on a foreign currency adjusted basis increased 15.3% for the 2023 first quarter.
The company implemented pricing actions in the United States and certain other international markets in 2022 and continued to implement price increases in certain international markets in the first quarter of 2023, all of which positively impacted gross profit margins.
Gross profit as a percentage of net sales increased on a sequential quarterly basis to 52.8% in the 2023 first quarter, from 51.8% in the 2022 fourth quarter and 51.3% in the 2022 third quarter.
Gross profit as a% percentage of net sales, excluding gross profit for the company’s alcohol brands segment, increased on a sequential quarterly basis to 53.6% in the 2023 first quarter, from 52.5% in the 2022 fourth quarter and 51.9% in the 2022 third quarter.
Hilton H. Schlosberg, vice chairman and co-chief executive officer, said in the announcement: “The energy drink market continues to expand on a global basis. We are pleased to report another quarter of continued revenue growth with record sales for our first fiscal quarter, although the quarter was again adversely impacted by the strength of the United States dollar.
“Gross profit margin percentages continued to increase on a sequential quarterly basis, primarily as a result of pricing actions, decreased freight-in costs and decreased aluminum can costs, as well as the moderation of certain other challenges in our supply chain. The increases in certain ingredients and other input costs, as well as co-packing fees, remain challenging.
“Internationally, certain price increases were implemented during the 2023 first quarter, with additional price increases planned in a number of other markets during the remainder of the year. In certain markets, such increases are in addition to price increases implemented in 2022. In the United States, we took an additional price increase on our 18.6 oz and 24 oz energy drinks, effective April 1, 2023.
“We are proud to record market leadership for our portfolio of brands in a number of international markets.
“We are also planning to transition the Monster brand to the Coca-Cola distribution system in the Philippines,” Schlosberg added.
Rodney C. Sacks, chairman and co-chief executive officer, added in the announcement: “We had a very active first quarter with new product innovation launches. In the United States, we launched Monster Energy Zero Sugar nationally at retail in January, as well as Monster Energy Ultra Strawberry Dreams, Monster (stylized) Reserve Kiwi Strawberry, Monster Energy Nitro Cosmic Peach and Java Monster Caffe Latte in the quarter. In March, we launched Reign Storm, which is positioned as a total wellness energy drink, in 12 oz sleek cans at retail in four flavors, to address a compelling opportunity in the energy drink category.
In addition, towards the end of the first quarter, we commenced our phased launch of Monster Tour Water, a pure unflavored water line, in still and sparkling variants, in certain targeted accounts in the United States.
“In EMEA, as part of an ongoing pan-EMEA launch, we commenced distribution of Monster Energy Lewis Hamilton 44 Zero Sugar. We also launched Fury, one of our affordable energy brands, in Egypt in the quarter.”
First-quarter results
Net sales for the 2023 first quarter increased 11.9% to $1.70 billion from $1.52 billion in the comparable period last year. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the 2023 first quarter of $52.0 million. Net sales on a foreign currency adjusted basis increased 15.3% in the 2023 first quarter.
Net sales for the company’s Monster Energy Drinks segment, which primarily includes the company’s Monster Energy drinks, Reign Total Body Fuel high performance energy drinks and Reign Storm Total Wellness energy drinks, increased 11.2% to $1.56 billion for the 2023 first quarter, from $1.40 billion for the 2022 first quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy Drinks segment of approximately $49.0 million for the 2023 first quarter. Net sales on a foreign currency adjusted basis for the Monster Energy Drinks segment increased 14.6% in the 2023 first quarter.
Net sales for the company’s Strategic Brands segment, which primarily includes the various energy drink brands originally acquired from The Coca-Cola Company, as well as the company’s affordable energy brands, decreased 6.7% to $86.4 million for the 2023 first quarter, from $92.6 million in the 2022 first quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Strategic Brands segment of approximately $3.0 million for the 2023 first quarter. Net sales on a foreign currency adjusted basis for the Strategic Brands segment decreased 3.5% in the 2023 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”), decreased 22.2% to $4.6 million for the 2023 first quarter, from $5.9 million in the 2022 first quarter.
Net sales to customers outside the United States increased 12.6% to $622.9 million in the 2023 first quarter, from $553.4 million in the 2022 first quarter. Such sales were approximately 37% of total net sales in the 2023 first quarter. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 21.9% in the 2023 first quarter.
Gross profit as a percentage of net sales for the 2023 first quarter was 52.8%, compared with 51.1% in the 2022 first quarter. The increase in gross profit as a percentage of net sales was primarily the result of pricing actions, decreased freight-in costs and decreased aluminum can costs.
Operating income for the 2023 first quarter was $485.1 million, compared with $399.5 million in the 2022 first quarter.
Net income for the 2023 first quarter increased 35.1% to $397.4 million, from $294.2 million in the 2022 first quarter. Net income per diluted share for the 2023 first quarter increased 36.6% to $0.38, from $0.27 in the first quarter of 2022.
