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Press release from GlobeNewswire (a Nasdaq OMX company)

Monster Beverage Reports Record 2012 Second Quarter Financial Results

Wednesday, August 08, 2012

Monster Beverage Reports Record 2012 Second Quarter Financial Results13:05 EDT Wednesday, August 08, 2012-- Second Quarter Net Sales Rise 28.2% to $592.6 million; Second Quarter Net Income Increases 30.3% to $109.8 million -- CORONA, Calif., Aug. 8, 2012 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (Nasdaq:MNST) today reported financial results for the second quarter ended June 30, 2012. Gross sales for the 2012 second quarter increased 28.7 percent to $678.9 million from $527.5 million in the same period last year. Net sales for the three-months ended June 30, 2012 increased 28.2 percent to $592.6 million from $462.1 million in the same quarter a year ago. Gross profit, as a percentage of net sales, for the 2012 second quarter was 51.8 percent, compared with 52.8 percent for the comparable 2011 second quarter. Operating expenses for the 2012 second quarter increased to $137.2 million from $111.7 million in the same quarter last year. Distribution costs as a percentage of net sales were 4.1 percent for both the 2012 and 2011 second quarters. Selling expenses as a percentage of net sales were 11.6 percent for the 2012 second quarter, compared with 12.9 percent in the same quarter a year ago. General and administrative expenses as a percentage of net sales for the 2012 second quarter were 7.5 percent, compared with 7.2 percent for the corresponding quarter last year. Stock-based compensation (a non-cash item) was $7.1 million in the second quarter of 2012, compared with $4.1 million for the same period in 2011. Operating income for the 2012 second quarter increased 28.1 percent to $169.8 million from $132.5 million in the 2011 comparable quarter. The effective tax rate for the 2012 second quarter was 35.3 percent compared with 36.5 percent in the same quarter last year. Net income for the 2012 second quarter increased 30.3 percent to $109.8 million from $84.2 million in the same quarter last year. Net income per diluted share increased 31.0 percent to $0.59, from $0.45 per diluted share in the 2011 comparable quarter. Net sales for the Company's DSD segment for the 2012 second quarter increased 30.1 percent to $568.0 million from $436.7 million for the same period in 2011. Gross sales to customers outside the United States rose to $153.4 million in the 2012 second quarter from $102.6 million in the corresponding quarter in 2011. Rodney C. Sacks, chairman and chief executive officer, said that both the energy drink category in the United States and Europe and the Monster Energy® brand in particular, continue to experience positive growth, with the Monster Energy® brand increasing in excess of category growth in both the United States and Europe. On the Company's global expansion, Sacks said: "We are continuing to expand into new international markets with retail sales of Monster Energy® commencing in Ecuador, Hong Kong, Japan, Macau and Slovenia in the second quarter. We are planning launches in additional international markets later this year and in 2013." For the first half of 2012, gross sales rose to $1,196.2 million from $935.1 million for the comparable period a year earlier. Net sales for the first six months of 2012 increased to $1,047.2 million from $818.6 million in the same period in 2011. Gross profit as a percentage of net sales was 52.3 percent for the first six months of 2012, compared with 52.5 percent for the same period in 2011. Operating expenses for the six-months ended June 30, 2012, increased to $252.1 million from $208.8 million in the same period last year. Operating income rose to $296.1 million, from $220.9 million in the first six months of 2011. Net income for the first half of 2012 was $185.9 million, or $1.00 per diluted share, compared with $139.3 million, or $0.74 per diluted share, for the same period last year.Investor Conference Call The Company will host an investor conference call today, August 8, 2012, 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 marketer and distributor of energy drinks and alternative beverages. The Company markets and distributes Monster Energy® brand energy drinks, Monster Energy Extra Strength Nitrous Technology® brand energy drinks, Java Monster® brand non-carbonated coffee + energy drinks, X-Presso Monster® brand non-carbonated espresso energy drinks, M3® Monster Energy® Super Concentrate energy drinks, Monster Rehab® non-carbonated rehydration energy drinks, Ubermonster™ energy drinks, Worx Energy® shots, and Peace Tea® iced teas, as well as Hansen's® natural sodas, apple juice and juice blends, multi-vitamin juices, Junior Juice® beverages, Blue Sky® beverages, Hubert's® Lemonades, Vidration® vitamin enhanced waters, and PRE® Probiotic drinks. For more information, visit www.monsterbevcorp.com.Note Regarding Use of Non-GAAP MeasuresGross sales is used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and overall Company performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross sales provides a useful measure of our operating performance. Gross sales is not a measure that is recognized under generally accepted accounting principles in the United States of America ("GAAP") and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.Caution Concerning Forward-Looking StatementsCertain statements made in this announcement may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability. Management cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein. Such risks and uncertainties include, but are not limited to, the following: the current uncertainty and volatility in the national and global economy; changes in consumer preferences; changes in demand due to both domestic and international economic conditions; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; actual performance of the parties under the new distribution agreements; potential disruptions arising out of the transition of certain territories to new distributors; changes in sales levels by existing distributors; unanticipated costs incurred in connection with the termination of existing distribution agreements or the transition to new distributors; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities; product distribution and placement decisions by retailers; changes in governmental regulation; the imposition of new and/or increased excise and/or sales or other taxes on our products; criticism of energy drinks and/or the energy drink market generally; the impact of proposals to limit or restrict the sale of energy drinks to minors and/or persons below a specified age and/or restrict the venues and/or the size of containers in which energy drinks can be sold; political, legislative or other governmental actions or events, including the outcome of any state attorney general and/or government or quasi-government agency inquiries, in one or more regions in which we operate. For a more detailed discussion of these and other risks that could affect our operating results, see the Company's reports filed with the Securities and Exchange Commission. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. (tables below)    MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATIONFOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2012 AND 2011(In Thousands, Except Per Share Amounts) (Unaudited)   Three-Months EndedJune 30,Six-Months EndedJune 30,  2012201120122011 Gross sales, net of discounts & returns* $ 678,852 $ 527,519 $ 1,196,165 $ 935,112 Less: Promotional and other allowances** 86,212 65,374 148,920 116,548           Net sales 592,640 462,145 1,047,245 818,564 Cost of sales 285,632 217,924 499,068 388,806           Gross profit  307,008 244,221 548,177 429,758 Gross profit margin as a percentage of net sales 51.8% 52.8% 52.3% 52.5%           Operating expenses 137,235 111,739 252,118 208,822 Operating expenses as a percentage of net sales 23.2% 24.2% 24.1% 25.5%           Operating income 169,773 132,482 296,059 220,936 Operating income as a percentage of net sales 28.6% 28.7% 28.3% 27.0%           Other (expense) income:         Interest and other (expense) income, net (27) 624 (77) 627 (Loss) gain on investments and put options, net (33) (350) 363 (51) Total other (expense) income (60) 274 286 576           Income before provision for income taxes 169,713 132,756 296,345 221,512           Provision for income taxes 59,918 48,508 110,450 82,221           Net income $ 109,795 $ 84,248 $ 185,895 $ 139,291 Net income as a percentage of net sales 18.5% 18.2% 17.8% 17.0%           Net income per common share:         Basic $ 0.62 $ 0.48 $ 1.06 $ 0.79 Diluted $ 0.59 $ 0.45 $ 1.00 $ 0.74           Weighted average number of shares of common stock and common stock equivalents:         Basic 176,186 176,950 175,509 177,402 Diluted 186,284 187,208 185,833 187,284           Case sales (in thousands) (in 192-ounce case equivalents) 57,525 44,272 101,921 78,954 Average net sales per case $ 10.30 $ 10.44 $ 10.28 $ 10.37  * Gross sales is used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and overall Company performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross sales provides a useful measure of our operating performance. Gross sales is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.  ** Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform with GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances primarily include consideration given to the Company's distributors or retail customers including, but not limited to the following: (i) discounts granted off list prices to support price promotions to end-consumers by retailers; (ii) reimbursements given to the Company's distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (iii) the Company's agreed share of fees given to distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; (v) incentives given to the Company's distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; and (vii) contractual fees given to the Company's distributors related to sales made by the Company direct to certain customers that fall within the distributors' sales territories. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances constitute a material portion of our marketing activities. The Company's promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.    MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF JUNE 30, 2012 AND DECEMBER 31, 2011 (In Thousands, Except Par Value) (Unaudited)   June 30,2012December 31,2011ASSETS     CURRENT ASSETS:     Cash and cash equivalents $ 419,167 $ 359,331 Short-term investments 451,063 411,282 Trade accounts receivable, net 305,707 218,072 Distributor receivables 686 669 Inventories 199,053 155,613 Prepaid expenses and other current assets 19,414 20,912 Prepaid income taxes 2,739 370 Deferred income taxes 16,428 16,428 Total current assets 1,414,257 1,182,677       INVESTMENTS 20,873 23,194 PROPERTY AND EQUIPMENT, net 55,944 45,151 DEFERRED INCOME TAXES 56,002 58,576 INTANGIBLES, net 50,875 48,396 OTHER ASSETS 3,566 4,405  Total Assets $ 1,601,517 $ 1,362,399      LIABILITIES AND STOCKHOLDERS' EQUITY     CURRENT LIABILITIES:     Accounts payable $ 157,212 $ 113,446 Accrued liabilities 58,217 31,966 Accrued promotional allowances 61,416 87,746 Deferred revenue 12,062 11,583 Accrued compensation 7,857 10,353 Income taxes payable 3,068 10,996 Total current liabilities 299,832 266,090       DEFERRED REVENUE 113,756 117,151       STOCKHOLDERS' EQUITY:     Common stock -- $0.005 par value; 240,000 shares authorized; 200,873 shares issued and 176,421 outstanding as of June 30, 2012; 198,729 shares issued and 174,277 outstanding as of December 31, 2011 1,004     994 Additional paid-in capital 252,440 229,301 Retained earnings 1,354,539 1,168,644 Accumulated other comprehensive loss (1,820) (1,547) Common stock in treasury, at cost; 24,452 shares as of June 30, 2012 and December 31, 2011, respectively (418,234)   (418,234) Total stockholders' equity 1,187,929 979,158  Total Liabilities and Stockholders' Equity $ 1,601,517 $ 1,362,399CONTACT: Rodney C. Sacks Chairman and Chief Executive Officer (951) 739-6200 Hilton H. Schlosberg Vice Chairman (951) 739-6200 Roger S. Pondel / Judy Lin Sfetcu PondelWilkinson Inc. (310) 279-5980