Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
Commission File Number 001-18761
MONSTER BEVERAGE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
47-1809393
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
1 Monster Way
Corona, California 92879
(Address of principal executive offices) (Zip code)
(951) 739 - 6200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
MNST
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No__
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes X No __
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes __ No X
The registrant had 529,139,115 shares of common stock, par value $0.005 per share, outstanding as of October 29, 2021.
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
SEPTEMBER 30, 2021
INDEX
Part I.
FINANCIAL INFORMATION
Page No.
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020
3
Condensed Consolidated Statements of Income for the Three- and Nine-Months Ended September 30, 2021 and 2020
4
Condensed Consolidated Statements of Comprehensive Income for the Three- and Nine-Months Ended September 30, 2021 and 2020
5
Condensed Consolidated Statements of Stockholders’ Equity for the Three- and Nine-Months Ended September 30, 2021 and 2020
6
Condensed Consolidated Statements of Cash Flows for the Nine-Months Ended September 30, 2021 and 2020
7
Notes to Condensed Consolidated Financial Statements
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
31
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
47
Item 4.
Controls and Procedures
Part II.
OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
48
Signatures
49
2
PART I – FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(In Thousands, Except Par Value) (Unaudited)
September 30,
December 31,
2021
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
1,712,671
1,180,413
Short-term investments
1,224,066
881,354
Accounts receivable, net
849,157
666,012
Inventories
471,553
333,085
Prepaid expenses and other current assets
95,607
55,358
Prepaid income taxes
30,619
24,733
Total current assets
4,383,673
3,140,955
INVESTMENTS
28,255
44,291
PROPERTY AND EQUIPMENT, net
309,574
314,656
DEFERRED INCOME TAXES, net
241,297
241,650
GOODWILL
1,331,643
OTHER INTANGIBLE ASSETS, net
1,066,083
1,059,046
OTHER ASSETS
88,883
70,475
Total Assets
7,449,408
6,202,716
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
396,229
296,800
Accrued liabilities
180,719
142,653
Accrued promotional allowances
232,394
186,658
Deferred revenue
45,278
45,429
Accrued compensation
54,507
55,015
Income taxes payable
23,113
23,433
Total current liabilities
932,240
749,988
DEFERRED REVENUE
245,621
264,436
OTHER LIABILITIES
26,550
27,432
COMMITMENTS AND CONTINGENCIES (Note 12)
STOCKHOLDERS’ EQUITY:
Common stock - $0.005 par value; 1,250,000 shares authorized; 639,851 shares issued and 529,132 shares outstanding as of September 30, 2021; 638,662 shares issued and 528,097 shares outstanding as of December 31, 2020
3,199
3,193
Additional paid-in capital
4,626,299
4,537,982
Retained earnings
7,488,235
6,432,074
Accumulated other comprehensive (loss) income
(43,495)
3,034
Common stock in treasury, at cost; 110,719 shares and 110,565 shares as of September 30, 2021 and December 31, 2020, respectively
(5,829,241)
(5,815,423)
Total stockholders’ equity
6,244,997
5,160,860
Total Liabilities and Stockholders’ Equity
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE- AND NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(In Thousands, Except Per Share Amounts) (Unaudited)
Three-Months Ended
Nine-Months Ended
NET SALES
1,410,557
1,246,362
4,116,308
3,402,355
COST OF SALES
621,399
509,831
1,775,375
1,369,160
GROSS PROFIT
789,158
736,531
2,340,933
2,033,195
OPERATING EXPENSES
344,694
277,930
956,346
802,343
OPERATING INCOME
444,464
458,601
1,384,587
1,230,852
INTEREST and OTHER EXPENSE, net
2,290
4,568
2,179
5,491
INCOME BEFORE PROVISION FOR INCOME TAXES
442,174
454,033
1,382,408
1,225,361
PROVISION FOR INCOME TAXES
104,969
106,379
326,247
287,503
NET INCOME
337,205
347,654
1,056,161
937,858
NET INCOME PER COMMON SHARE:
Basic
0.64
0.66
2.00
1.77
Diluted
0.63
0.65
1.97
1.75
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:
528,997
527,637
528,618
530,194
535,915
533,263
535,554
535,011
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands) (Unaudited)
Net income, as reported
Other comprehensive income (loss):
Change in foreign currency translation adjustment
(26,716)
21,217
(46,412)
(338)
Available-for-sale investments:
Change in net unrealized (losses) gains
43
(308)
(117)
196
Reclassification adjustment for net gains included in net income
—
Net change in available-for-sale investments
Other comprehensive income (loss)
(26,673)
20,909
(46,529)
(142)
Comprehensive income
310,532
368,563
1,009,632
937,716
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Accumulated
Other
Total
Common stock
Additional
Retained
Comprehensive
Treasury stock
Stockholders’
Shares
Amount
Paid-in Capital
Earnings
(Loss) Income
Equity
Balance, December 31, 2020
638,662
(110,565)
Stock-based compensation
17,949
Exercise of stock options
492
6,758
6,761
Unrealized gain, net on available-for-sale securities
24
Repurchase of common stock
(150)
(13,419)
Foreign currency translation
(27,932)
Net income
315,194
Balance, March 31, 2021
639,154
3,196
4,562,689
6,747,268
(24,874)
(110,715)
(5,828,842)
5,459,437
16,921
422
17,723
17,725
Unrealized loss, net on available-for-sale securities
(183)
(4)
(399)
8,235
403,762
Balance, June 30, 2021
639,576
3,198
4,597,333
7,151,030
(16,822)
(110,719)
5,905,498
16,293
275
1
12,673
12,674
Balance, September 30, 2021
639,851
Balance, December 31, 2019
636,460
3,182
4,397,511
5,022,480
(32,387)
(99,762)
(5,219,505)
4,171,281
17,098
644
13,971
13,975
304
(10,503)
(579,948)
(30,599)
278,835
Balance, March 31, 2020
637,104
3,186
4,428,580
5,301,315
(62,682)
(110,265)
(5,799,453)
3,870,946
15,936
820
29,863
29,867
200
(298)
(15,822)
9,044
311,369
Balance, June 30, 2020
637,924
3,190
4,474,379
5,612,684
(53,438)
(110,563)
(5,815,275)
4,221,540
17,668
534
21,696
21,698
(2)
(148)
Balance, September 30, 2020
638,458
3,192
4,513,743
5,960,338
(32,529)
4,629,321
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
40,716
45,879
Gain on disposal of property and equipment
(984)
(210)
Impairment of intangibles
7,000
52,391
53,042
Deferred income taxes
353
Effect on cash of changes in operating assets and liabilities:
Accounts receivable
(199,709)
(201,677)
Distributor receivables
228
341
(149,414)
39,490
Prepaid expenses and other assets
(41,162)
(20,446)
(7,365)
11,460
106,570
(9,724)
34,085
53,501
51,022
31,915
Accrued distributor terminations
5,302
(2,888)
(1,214)
(114)
17,969
Other liabilities
574
(562)
(17,784)
(15,236)
Net cash provided by operating activities
927,982
949,236
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of available-for-sale investments
1,016,556
795,858
Purchases of available-for-sale investments
(1,343,351)
(849,276)
Purchases of property and equipment
(28,131)
(42,062)
Proceeds from sale of property and equipment
1,246
880
Additions to intangibles
(5,211)
(19,686)
Increase in other assets
(22,809)
(26,228)
Net cash used in investing activities
(381,700)
(140,514)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on debt
(1,814)
(2,500)
Issuance of common stock
37,160
65,540
Purchases of common stock held in treasury
(13,818)
(595,918)
Net cash provided by (used in) financing activities
21,528
(532,878)
Effect of exchange rate changes on cash and cash equivalents
(35,552)
929
NET INCREASE IN CASH AND CASH EQUIVALENTS
532,258
276,773
CASH AND CASH EQUIVALENTS, beginning of period
797,957
CASH AND CASH EQUIVALENTS, end of period
1,074,730
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Interest
99
39
Income taxes
338,584
257,563
(In Thousands) (Unaudited) (Continued)
SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS
Included in accrued liabilities as of September 30, 2021 and 2020 were $13.0 million and $14.3 million, respectively, related to net additions to other intangible assets.
Included in accounts payable as of September 30, 2020 were available-for-sale short-term investment purchases of $20.3 million.
Included in accounts payable as of September 30, 2021 were $2.0 million related to additions to other intangible assets.
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)
1.
BASIS OF PRESENTATION
Reference is made to the Notes to Consolidated Financial Statements, in Monster Beverage Corporation and Subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2020 for a summary of significant accounting policies utilized by the Company and its consolidated subsidiaries and other disclosures, which should be read in conjunction with this Quarterly Report on Form 10-Q (“Form 10-Q”).
The Company’s condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations applicable to interim financial reporting. They do not include all the information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP. The information set forth in these interim condensed consolidated financial statements for the three- and nine-months ended September 30, 2021 and 2020, respectively, is unaudited and reflects all adjustments, which include only normal recurring adjustments and which in the opinion of management are necessary to make the interim condensed consolidated financial statements not misleading. Results of operations for periods covered by this report may not necessarily be indicative of results of operations for the full year.
The preparation of financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.
2.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes”, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU No. 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU No. 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The guidance was effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s financial position, results of operations and liquidity.
3.
REVENUE RECOGNITION
The Company has three operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks and True NorthTM Pure Energy Seltzers, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).
The Company’s Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors (“bottlers/distributors”). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.
The Company’s Strategic Brands segment primarily generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.
The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company’s bottlers/distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, control of the Company’s products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company’s finished goods. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of September 30, 2021 and December 31, 2020.
The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.
Distribution expenses to transport the Company’s products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.
Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to the Company’s bottlers/distributors or retail customers including, but not limited to the following:
The Company’s promotional allowance programs with its bottlers/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, typically ranging from one week to one year. The Company’s promotional and other allowances are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company’s anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined.
Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.
The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company’s trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.
Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.
10
Disaggregation of Revenue
The following tables disaggregate the Company’s revenue by geographical markets and reportable segments:
Three-Months Ended September 30, 2021
Latin
America
U.S. and
and
Net Sales
Canada
EMEA1
Asia Pacific
Caribbean
Monster Energy® Drinks
880,012
252,101
120,864
76,816
1,329,793
Strategic Brands
35,417
28,450
5,603
4,979
74,449
6,315
Total Net Sales
921,744
280,551
126,467
81,795
Three-Months Ended September 30, 2020
786,960
206,947
120,589
48,924
1,163,420
46,005
19,192
6,658
2,469
74,324
8,618
841,583
226,139
127,247
51,393
1Europe, Middle East and Africa (“EMEA”)
Nine-Months Ended September 30, 2021
2,548,873
741,208
346,545
230,536
3,867,162
122,487
76,234
21,047
9,425
229,193
19,953
2,691,313
817,442
367,592
239,961
Nine-Months Ended September 30, 2020
2,223,925
501,639
319,325
138,671
3,183,560
125,030
52,333
17,161
3,904
198,428
20,367
2,369,322
553,972
336,486
142,575
1Europe, Middle East and Africa (“EMEA”)
11
Contract Liabilities
Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of September 30, 2021, the Company had $290.9 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. As of December 31, 2020, the Company had $309.9 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. During the three-months ended September 30, 2021 and 2020, $10.4 million and $10.5 million, respectively, of deferred revenue was recognized in net sales. See Note 11. During the nine-months ended September 30, 2021 and 2020, $31.3 million and $31.6 million, respectively, of deferred revenue was recognized in net sales. See Note 11.
4.
LEASES
The Company leases identified assets comprising real estate and equipment. Real estate leases consist primarily of office and warehouse space and equipment leases consist of vehicles and warehouse equipment. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component’s relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately.
Leases are classified as either finance leases or operating leases based on criteria in Accounting Standards Codification (“ASC”) 842. The Company’s operating leases are comprised of real estate and warehouse equipment, and the Company’s finance leases are comprised of vehicles.
Right-of-use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Certain of the Company’s real estate leases contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at the lease commencement date. Additional payments based on the change in an index or rate, or payments based on a change in the Company’s portion of real estate taxes and insurance, are recorded as a period expense when incurred.
Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term and is included in operating expenses in the condensed consolidated statement of income. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset’s estimated useful life and is included in operating expenses in the condensed consolidated statement of income. Interest expense on finance leases is calculated using the amortized cost basis and is included in interest and other expense, net in the condensed consolidated statement of income.
The Company’s leases have remaining lease terms of less than one year to 12 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less.
12
The components of lease cost were comprised of the following:
Three-Months
Nine-Months
Ended September 30,
Operating lease cost
1,103
1,161
3,348
3,499
Short-term lease cost
1,235
856
3,370
2,440
Variable lease cost
185
242
532
564
Finance leases:
Amortization of ROU assets
138
177
394
511
Interest on lease liabilities
15
34
Finance lease cost
144
186
409
545
Total lease cost
2,667
2,445
7,659
7,048
Supplemental cash flow information for the following periods:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases
3,057
3,081
Operating cash outflows from finance leases
33
Financing cash outflows from finance leases
1,970
2,500
ROU assets obtained in exchange for lease obligations:
Finance leases
2,767
2,231
Operating leases
251
2,117
ROU assets for operating and finance leases recognized in the Company’s condensed consolidated balance sheets were comprised of the following at:
September 30, 2021
Real Estate
Equipment
Balance Sheet Location
19,995
20,191
Other Assets
2,719
Property and Equipment, net
December 31, 2020
22,565
189
22,754
2,120
13
Operating and finance lease liabilities recognized in the Company’s condensed consolidated balance sheets were as follows at:
Operating Leases
Finance Leases
2,849
1,571
15,362
46
18,211
1,617
3,171
799
17,342
20,513
823
The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases at September 30, 2021 and December 31, 2020 were as follows:
Weighted-average remaining lease term (years)
9.2
0.7
Weighted-average discount rate
3.6
%
1.2
9.4
0.6
1.9
The following table reconciles the undiscounted future lease payments for operating and finance leases to the operating and finance leases recorded in the Company’s condensed consolidated balance sheet at September 30, 2021:
Undiscounted Future Lease Payments
2021 (excluding the nine-months ended September 30, 2021)
892
713
2022
3,207
871
2023
2,423
21
2024
1,887
2025
1,600
2026 and thereafter
11,588
Total lease payments
21,597
1,626
Less imputed interest
(3,386)
(9)
As of September 30, 2021, the Company did not have any significant additional operating or finance leases that have not yet commenced.
14
5.
The following table summarizes the Company’s investments at:
Continuous
Gross
Unrealized
Loss Position
Amortized
Holding
Fair
less than 12
greater than 12
Cost
Gains
Losses
Value
Months
Available-for-sale
Short-term:
Commercial paper
292,094
Certificates of deposit
47,616
U.S. government agency securities
70,202
70,210
U.S. treasuries
814,178
30
62
814,146
Long-term:
1,416
26,840
26,839
1,252,346
41
66
1,252,321
119,886
20,387
Municipal securities
9,083
81,521
81,531
650,386
150
69
650,467
10,350
10,351
33,946
33,940
925,559
165
79
925,645
During the three- and nine-months ended September 30, 2021 and 2020, realized gains or losses recognized on the sale of investments were not significant.
The Company’s investments at September 30, 2021 and December 31, 2020 carried investment grade credit ratings.
The following table summarizes the underlying contractual maturities of the Company’s investments at:
Amortized Cost
Fair Value
Less than 1 year:
Due 1 - 10 years:
6.
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES
ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below.
ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible.
16
The following tables present the fair value of the Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at:
Level 1
Level 2
Level 3
Cash
703,969
Money market funds
632,233
71,626
1,217,454
Foreign currency derivatives
(217)
1,336,202
1,628,573
2,964,775
Amounts included in:
376,469
157
Investments
(374)
796,421
352,730
23,137
130,883
91,882
701,922
(2,578)
1,149,151
954,329
2,103,480
31,262
(2,647)
All of the Company’s short-term and long-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments is based on other observable inputs, specifically a market approach which utilizes valuation models, pricing systems, mathematical tools and other relevant information for the same or similar securities. The Company’s valuation of its Level 2 foreign currency exchange contracts is based on quoted market prices of the same or similar instruments, adjusted for counterparty risk. There were no transfers between Level 1 and Level 2 measurements during the nine-months ended September 30, 2021, or during the year-ended December 31, 2020, and there were no changes in the Company’s valuation techniques.
17
7.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the nine-months ended September 30, 2021 and the year-ended December 31, 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities. All foreign currency exchange contracts of the Company that were outstanding as of September 30, 2021 have terms of one month or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.
The Company has not designated its foreign currency exchange contracts as hedge transactions under ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in interest and other (expense) income, net, in the condensed consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.
The notional amount and fair value of all outstanding foreign currency derivative instruments in the Company’s condensed consolidated balance sheets consist of the following at:
Derivatives not designated as
hedging instruments under
Notional
ASC 815-20
Assets:
Foreign currency exchange contracts:
Receive USD/pay GBP
24,581
68
Receive USD/pay DKK
4,174
45
Receive SGD/pay USD
16,478
23
Receive USD/pay NZD
3,880
Liabilities:
Receive RSD/pay USD
12,381
(147)
Receive USD/pay COP
8,594
(81)
Receive USD/pay RUB
8,947
(69)
Receive USD/pay CNY
12,334
(56)
Receive USD/pay ZAR
3,657
(19)
Receive EUR/pay USD
233
(1)
Receive AUD/pay USD
218
18
FASB ASC 815-20
18,713
10,127
28
1,298,899
(1,768)
35,256
(416)
Receive USD/pay AUD
8,508
(130)
2,403
(106)
5,436
(93)
12,344
(50)
7,780
(40)
Receive NOK/pay USD
4,411
(18)
(13)
Receive SEK/pay USD
2,275
(10)
3,151
(3)
The net (losses) gains on derivative instruments in the condensed consolidated statements of income were as follows:
Amount of (loss) gain
recognized in income on
derivatives
Location of (loss) gain
Three-months ended
Foreign currency exchange contracts
Interest and other expense, net
260
Nine-months ended
(5,706)
4,318
8.
INVENTORIES
Inventories consist of the following at:
Raw materials
284,711
155,166
Finished goods
186,842
177,919
19
9.
PROPERTY AND EQUIPMENT, NET
Property and equipment consist of the following at:
Land
85,553
85,876
Leasehold improvements
11,638
11,524
Furniture and fixtures
8,218
8,271
Office and computer equipment
21,845
21,657
Computer software
8,016
6,945
199,683
185,348
Buildings
161,507
156,616
Vehicles
44,810
43,173
541,270
519,410
Less: accumulated depreciation and amortization
(231,696)
(204,754)
Total depreciation and amortization expense recorded was $11.3 million and $11.7 million for the three-months ended September 30, 2021 and 2020, respectively. Total depreciation and amortization expense recorded was $34.5 million and $36.4 million for the nine-months ended September 30, 2021 and 2020, respectively.
10. GOODWILL AND OTHER INTANGIBLE ASSETS
The following is a roll-forward of goodwill for the nine-months ended September 30, 2021 and 2020 by reportable segment:
Monster
Energy®
Strategic
Drinks
Brands
Balance at December 31, 2020
693,644
637,999
Acquisitions
Balance at September 30, 2021
Balance at December 31, 2019
Balance at September 30, 2020
Intangible assets consist of the following at:
Amortizing intangibles
66,875
Accumulated amortization
(60,126)
(56,801)
6,749
10,074
Non-amortizing intangibles
1,059,334
1,048,972
20
Amortizing intangibles primarily consist of customer relationships. All amortizing intangibles have been assigned an estimated finite useful life and such intangibles are amortized on a straight-line basis over the number of years that approximate their respective useful lives, generally five to seven years. Total amortization expense recorded was $1.1 million for both the three-months ended September 30, 2021 and September 30, 2020. Total amortization expense recorded was $3.3 million and $6.5 million for the nine-months ended September 30, 2021 and 2020, respectively. The Company recorded an impairment charge of $3.0 million and $7.0 million on a Strategic Brand trademark in the three- and nine-months ended September 30, 2020, respectively.
The following is the future estimated amortization expense related to amortizing intangibles as of September 30, 2021:
1,101
4,405
1,112
104
11. DISTRIBUTION AGREEMENTS
In the normal course of business, amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors, relating to the costs associated with terminating agreements with the Company’s prior distributors, or at the inception of certain sales/marketing programs are accounted for as deferred revenue and are recognized as revenue ratably over the anticipated life of the respective agreement, generally 20 years or program duration, as the case may be. Revenue recognized was $10.4 million and $10.5 million for the three-months ended September 30, 2021 and 2020, respectively. Revenue recognized was $31.3 million and $31.6 million for the nine-months ended September 30, 2021 and 2020, respectively.
12. COMMITMENTS AND CONTINGENCIES
The Company had purchase commitments aggregating approximately $130.0 million at September 30, 2021, which represented commitments made by the Company and its subsidiaries to various suppliers of raw materials for the production of its products. These obligations vary in terms, but are generally satisfied within one year.
The Company had contractual obligations aggregating approximately $212.7 million at September 30, 2021, which related primarily to sponsorships and other marketing activities.
The Company has a credit facility with HSBC Bank (China) Company Limited, Shanghai Branch, of $15.0 million. At September 30, 2021, the interest rate on borrowings under the line of credit was 5.5%. As of September 30, 2021, $0.2 million was outstanding on this line of credit.
Litigation — From time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company’s financial position or results of operations.
The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of September 30, 2021, no loss contingencies were included in the Company’s condensed consolidated balance sheet.
13. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Changes in accumulated other comprehensive (loss) income by component, after tax, for the nine-months ended September 30, 2021 and 2020 are as follows:
Currency
Gains (Losses)
Translation
on Available-for-
Sale Securities
2,950
84
Other comprehensive (loss) income before reclassifications
Amounts reclassified from accumulated other comprehensive (loss) income
Net current-period other comprehensive (loss) income
(43,462)
(33)
(32,581)
194
(32,919)
390
14. TREASURY STOCK
On March 13, 2020, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “March 2020 Repurchase Plan”). During the three-months ended September 30, 2021, no shares were repurchased under the March 2020 Repurchase Plan. As of November 5, 2021, $441.5 million remained available for repurchase under the March 2020 Repurchase Plan.
During the three-months ended September 30, 2021, no shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due.
15. STOCK-BASED COMPENSATION
The Company has two stock-based compensation plans under which shares were available for grant at September 30, 2021: (i) the Monster Beverage Corporation 2020 Omnibus Incentive Plan, including the Monster Beverage Corporation Deferred Compensation Plan as a sub-plan thereunder, and (ii) the Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors, including the Monster Beverage Corporation Deferred Compensation Plan for Non-Employee Directors as a sub-plan thereunder.
The Company recorded $16.7 million and $19.5 million of compensation expense relating to outstanding options, restricted stock units, performance share units and other share-based awards during the three-months ended September 30, 2021 and 2020, respectively. The Company recorded $52.4 million and $53.0 million of compensation expense relating to outstanding options, restricted stock units, performance share units and other share-based awards during the nine-months ended September 30, 2021 and 2020, respectively.
22
The tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units and performance share units for the three-months ended September 30, 2021 and 2020 was $2.0 million and $3.5 million, respectively. The tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units and performance share units for the nine-months ended September 30, 2021 and 2020 was $6.1 million and $9.2 million, respectively.
Stock Options
Under the Company’s stock-based compensation plans, all stock options granted as of September 30, 2021 were granted at prices based on the fair value of the Company’s common stock on the date of grant. The Company records compensation expense for stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company uses historical data to determine the exercise behavior, volatility and forfeiture rate of the options.
The following weighted-average assumptions were used to estimate the fair value of options granted during:
Three-Months Ended September 30,
Nine-Months Ended September 30,
2020*
Dividend yield
0.0
Expected volatility
28.3
28.9
30.5
Risk-free interest rate
0.8
Expected term
5.8
years
*No options were granted during the three-months ended September 30, 2020.
Expected Volatility: The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the option.
Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option.
Expected Term: The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on the expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.
The following table summarizes the Company’s activities with respect to its stock option plans as follows:
Weighted-
Average
Remaining
Number of
Exercise
Contractual
Aggregate
Shares (in
Price Per
Term (in
Intrinsic
Options
thousands)
Share
years)
Outstanding at January 1, 2021
13,973
44.93
5.7
664,432
Granted 01/01/21 - 03/31/21
1,015
88.95
Granted 04/01/21 - 06/30/21
91.36
Granted 07/01/21 - 09/30/21
95.33
Exercised
(845)
43.97
Cancelled or forfeited
(92)
62.23
Outstanding at September 30, 2021
14,087
48.17
5.3
573,070
Vested and expected to vest in the future at September 30, 2021
13,815
47.73
568,055
Exercisable at September 30, 2021
9,428
40.18
4.2
458,668
The weighted-average grant-date fair value of options granted during the three-months ended September 30, 2021 was $26.90 per share. No options were granted during the three-months ended September 30, 2020. The weighted-average grant-date fair value of options granted during the nine-months ended September 30, 2021 and 2020 was $25.81 per share and $18.78 per share, respectively.
The total intrinsic value of options exercised during the three-months ended September 30, 2021 and 2020 was $14.0 million and $22.5 million, respectively. The total intrinsic value of options exercised during the nine-months ended September 30, 2021 and 2020 was $42.2 million and $58.8 million, respectively.
Cash received from option exercises under all plans for the three-months ended September 30, 2021 and 2020 was $12.7 million and $21.7 million, respectively. Cash received from option exercises under all plans for the nine-months ended September 30, 2021 and 2020 was $37.2 million and $65.5 million, respectively.
At September 30, 2021, there was $59.7 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of 2.2 years.
Restricted Stock Units and Performance Share Units
The cost of stock-based compensation for restricted stock units and performance share units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date.
The following table summarizes the Company’s activities with respect to non-vested restricted stock units and performance share units as follows:
Weighted
Grant-Date
Non-vested at January 1, 2021
947
60.52
Granted 01/01/21 - 03/31/211
86.28
92.14
89.84
Vested
(344)
62.27
Forfeited/cancelled
(7)
59.96
Non-vested at September 30, 2021
915
68.94
1The grant activity for performance share units is recorded based on the target performance level earning 100% of target performance share units. The actual number of performance share units earned could range from 0% to 200% of target depending on the achievement of pre-established performance goals.
The weighted-average grant-date fair value of restricted stock units and/or performance share units granted during the three-months ended September 30, 2021 and 2020 was $89.84 and $71.76 per share, respectively. The weighted-average grant-date fair value of restricted stock units and/or performance share units granted during the nine-months ended September 30, 2021 and 2020 was $89.12 and $62.79 per share, respectively.
As of September 30, 2021, 0.9 million of restricted stock units and performance share units are expected to vest over their respective terms.
At September 30, 2021, total unrecognized compensation expense relating to non-vested restricted stock units and performance share units was $40.0 million, which is expected to be recognized over a weighted-average period of 2.0 years.
Other Share-Based Awards
The Company has granted other share-based awards to certain employees that are payable in cash. These awards are classified as liabilities and are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement, with compensation expense being recognized in proportion to the completed requisite service period up until date of settlement. At September 30, 2021, other share-based awards outstanding included grants that vest over three years payable in the first quarters of 2022, 2023 and 2024.
At September 30, 2021, there was $1.2 million of total unrecognized compensation expense related to nonvested other share-based awards granted to employees under the Company’s stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of 1.1 years.
25
16. INCOME TAXES
The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the nine-months ended September 30, 2021:
Gross Unrecognized Tax
Benefits
742
Additions for tax positions related to the current year
Additions for tax positions related to the prior years
Decreases for tax positions related to the prior years
(353)
389
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s condensed consolidated financial statements. As of September 30, 2021, the Company had approximately $0.1 million in accrued interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions, the resultant impact on the Company’s effective tax rate would not be significant. It is expected that any change in the amount of unrecognized tax benefits within the next 12 months will not be significant.
The Company is subject to U.S. federal income tax as well as to income tax in multiple state and foreign jurisdictions.
The Company is in various stages of examination with certain states and certain foreign jurisdictions, including the United Kingdom and Ireland. The Company’s 2017 through 2020 U.S. federal income tax returns are subject to examination by the IRS. The Company’s state income tax returns are subject to examination for the 2016 through 2020 tax years.
17. EARNINGS PER SHARE
A reconciliation of the weighted-average shares used in the basic and diluted earnings per common share computations is presented below (in thousands):
Weighted-average shares outstanding:
Dilutive
6,918
5,626
6,936
4,817
For the three-months ended September 30, 2021 and 2020, options and awards outstanding totaling 1.0 million shares and 0.6 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. For the nine-months ended September 30, 2021 and 2020, options and awards outstanding totaling 0.8 million shares and 4.2 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive.
18. SEGMENT INFORMATION
The Company has three operating and reportable segments: (i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks and True NorthTM Pure Energy Seltzers, (ii) Strategic Brands segment, which is primarily comprised of the various energy drink brands acquired from TCCC in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment, which is comprised of the AFF Third-Party Products.
26
The Company’s Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged drinks primarily to bottlers/distributors. In some cases, the Company sells ready-to-drink packaged drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.
Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margin percentages than the Strategic Brands segment.
Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided in the Company’s reportable segments, as management does not measure or allocate such assets on a segment basis.
The net revenues derived from the Company’s reportable segments and other financial information related thereto for the three- and nine-months ended September 30, 2021 and 2020 are as follows:
Net sales:
Monster Energy® Drinks⁽¹⁾
1,163,419
3,183,559
74,325
198,429
Corporate and unallocated
Operating Income:
500,641
502,392
1,512,633
1,366,920
40,184
43,875
139,398
118,287
1,146
2,368
5,266
4,780
(97,507)
(90,034)
(272,710)
(259,135)
27
Income before tax:
500,929
502,500
1,513,421
1,367,096
40,198
43,876
139,419
1,144
5,264
(100,097)
(94,711)
(275,696)
(264,802)
Depreciation and amortization:
8,477
8,713
26,315
27,687
283
227
832
3,932
1,122
1,136
3,373
3,495
2,474
2,741
7,334
7,794
12,356
12,817
37,854
42,908
Corporate and unallocated expenses for the three-months ended September 30, 2021 include $63.4 million of payroll costs, of which $16.7 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $19.3 million attributable to professional service expenses, including accounting and legal costs, and $14.8 million of other operating expenses. Corporate and unallocated expenses for the three-months ended September 30, 2020 include $61.7 million of payroll costs, of which $19.2 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $16.7 million attributable to professional service expenses, including accounting and legal costs, and $11.6 million of other operating expenses.
Corporate and unallocated expenses for the nine-months ended September 30, 2021 include $189.7 million of payroll costs, of which $52.2 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $60.6 million attributable to professional service expenses, including accounting and legal costs, and $22.4 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2021, were partially offset by $16.9 million due to the reversal of amounts previously accrued in connection with an intellectual property claim. Corporate and unallocated expenses for the nine-months ended September 30, 2020 include $173.5 million of payroll costs, of which $52.7 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $50.1 million attributable to professional service expenses, including accounting and legal costs, and $35.5 million of other operating expenses.
Coca-Cola Europacific Partners (formerly Coca-Cola European Partners) accounted for approximately 12% and 11% of the Company’s net sales for the three-months ended September 30, 2021 and 2020, respectively. Coca-Cola Europacific Partners accounted for approximately 12% and 10% of the Company’s net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Coca-Cola Consolidated, Inc. accounted for approximately 11% and 12% of the Company’s net sales for the three-months ended September 30, 2021 and 2020, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 11% and 12% of the Company’s net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Reyes Coca-Cola Bottling, LLC accounted for approximately 10% and 11% of the Company’s net sales for the three-months ended September 30, 2021 and 2020, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 10% and 11% of the Company’s net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Net sales to customers outside the United States amounted to $527.4 million and $444.5 million for the three-months ended September 30, 2021 and 2020, respectively. Such sales were approximately 37% and 36% of net sales for three-months ended September 30, 2021 and 2020, respectively. Net sales to customers outside the United States amounted to $1.53 billion and $1.13 billion for the nine-months ended September 30, 2021 and 2020, respectively. Such sales were approximately 37% and 33% of net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Goodwill and other intangible assets for the Company’s reportable segments as of September 30, 2021 and December 31, 2020 are as follows:
Goodwill and other intangible assets:
1,414,190
1,406,646
976,944
974,132
6,592
9,911
2,397,726
2,390,689
19. RELATED PARTY TRANSACTIONS
TCCC controls approximately 19.3% of the voting interests of the Company. The TCCC Subsidiaries, the TCCC Related Parties and certain TCCC independent bottlers/distributors purchase and distribute the Company’s products in domestic and certain international markets. The Company also pays TCCC a commission based on certain sales within the TCCC distribution network.
TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, were $23.6 million and $15.7 million for the three-months ended September 30, 2021 and 2020, respectively, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, were $59.9 million and $37.7 million for the nine-months ended September 30, 2021 and 2020, respectively, and are included as a reduction to net sales.
TCCC commissions, based on sales to TCCC independent bottlers/distributors, were $9.1 million and $5.5 million for the three-months ended September 30, 2021 and 2020, respectively, and are included in operating expenses. TCCC commissions, based on sales to certain TCCC independent bottlers/distributors, were $22.6 million and $15.2 million for the nine-months ended September 30, 2021 and 2020, respectively, and are included in operating expenses.
Net sales to the TCCC Subsidiaries for the three-months ended September 30, 2021 and 2020 were $30.3 million and $21.5 million, respectively. Net sales to the TCCC Subsidiaries for the nine-months ended September 30, 2021 and 2020 were $84.4 million and $55.2 million, respectively.
The Company also purchases concentrates from TCCC which are then sold to certain of the Company’s bottlers/distributors. Concentrate purchases from TCCC were $7.1 million and $6.8 million for the three-months ended September 30, 2021 and 2020, respectively. Concentrate purchases from TCCC were $21.3 million and $17.6 million for the nine-months ended September 30, 2021 and 2020, respectively.
Certain TCCC Subsidiaries also contract manufacture certain of the Company’s energy drinks. Such contract manufacturing expenses were $6.8 million and $5.1 million for the three-months ended September 30, 2021 and 2020, respectively. Such contract manufacturing expenses were $20.8 million and $11.3 million for the nine-months ended September 30, 2021 and 2020, respectively.
29
Accounts receivable, accounts payable, accrued promotional allowances and accrued liabilities related to the TCCC Subsidiaries are as follows at:
83,144
44,925
(34,991)
(30,792)
(5,677)
(5,834)
(19,591)
(15,446)
One director of the Company through certain trusts, and a family member of one director are the principal owners of a company that provides promotional materials to the Company. Expenses incurred with such company in connection with promotional materials purchased during the three-months ended September 30, 2021 and 2020 were $1.0 million and $0.4 million, respectively. Expenses incurred with such company in connection with promotional materials purchased during the nine-months ended September 30, 2021 and 2020 were $2.7 million and $1.9 million, respectively.
In December 2018, the Company and a director of the Company entered into a 50-50 partnership that purchased land, and real property thereon, in Kona, Hawaii for the purpose of producing coffee products. The Company’s initial 50% contribution of $1.9 million was accounted for as an equity investment. During the three-months ended September 30, 2021, the Company recorded an equity loss of $0.04 million. During the nine-months ended September 30, 2021, the Company recorded an equity loss of $0.16 million. As of September 30, 2021, the Company’s equity investment is $1.4 million and is included in other assets (non-current) in the accompanying condensed consolidated balance sheet.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
When this report uses the words “the Company”, “we”, “us”, and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. 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 primarily develop and market energy drinks.
The COVID – 19 Pandemic
The COVID-19 pandemic has directly and indirectly impacted our business. The duration and severity of this impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information regarding the COVID-19 pandemic, as well as the emergence of new variants, the actions taken to limit its spread and the economic impact on local, regional, national and international markets. “Part I, Item 1A – Risk Factors” in our Form 10-K.”
We continue to address the COVID-19 pandemic with a global task force team working to mitigate the potential impacts on our people and business.
We are incredibly proud of the teamwork exhibited by our employees, co-packers and bottlers/distributors around the world who are endeavoring to maintain the integrity of our supply chain. Despite the ongoing impact of the COVID-19 pandemic, we achieved record third quarter net sales.
As countries continue to combat the COVID-19 pandemic, and as governments and/or local authorities impose regulations regarding COVID-19 testing, vaccine mandates and related workplace restrictions, there remains a risk that the COVID-19 pandemic may impact our business and supply chain, including our ability to recruit and/or retain our employees as well as impact our co-packers, bottlers/distributors and/or suppliers.
A reduction in demand for our products or changes in consumer purchasing and consumption patterns, as well as continued economic uncertainty as a result of the COVID-19 pandemic, could adversely affect the financial conditions of retailers and consumers, resulting in reduced or canceled orders for our products, purchase returns and closings of retail or wholesale establishments or other locations in which our products are sold.
As of the date of this filing, we do not foresee a material impact on the ability of our co-packers to manufacture and our bottlers/distributors to distribute our products as a result of the COVID-19 pandemic. Depending on the duration of any COVID-19 pandemic related issues, we may experience material disruptions in our supply chain as the pandemic continues.
The consequences of the COVID-19 pandemic, including those on human capital, have resulted in cost increases, labor shortages and general input shortages, which have significantly impacted our cost base and our ability to meet increased demand.
During the three-months ended September 30, 2021, we procured additional quantities of aluminum cans from suppliers in the United States, South America and Asia in response to increased consumer demand. However, we continued to experience shortages in our aluminum can requirements in the United States and EMEA.
In addition, we continued to experience additional supply chain challenges, including, freight inefficiencies, trucking availability, shortages of shipping containers, port of entry congestion, insufficient co-packing capacity and delays in the receipt of certain ingredients, in the United States and EMEA. As a result, we were not able to fully satisfy increased demand for our products in these regions during the three-months ended September 30, 2021.
During the three-months ended September 30, 2021, we continued to experience increased aluminum can costs, attributable to higher aluminum commodity pricing as well as the costs of importing aluminum cans. In addition, we experienced increased ingredient and other input costs, including shipping and freight, labor, trucking, fuel, co-packing fees, secondary packaging materials and increased outbound freight costs, which resulted in increased costs of sales and increased operating costs. We continue to address the increased costs, some of which are likely to be transitory, through reductions in promotions and other pricing actions.
As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the “Liquidity and Capital Resources” section below.
Overview
We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:
● Monster Energy®
● NOS®
● Monster Energy Ultra®
● Full Throttle®
● Monster Rehab®
● Burn®
● Monster MAXX®
● Mother®
● Java Monster®
● Nalu®
● Muscle Monster®
● Ultra Energy®
● Espresso Monster®
● Play® and Power Play® (stylized)
● Punch Monster®
● Relentless®
● Juice Monster®
● BPM®
● Monster Hydro® Energy Water
● BU®
● Monster Hydro® Super Sport
● Gladiator®
● Monster HydroSport Super Fuel®
● Samurai®
● Monster Super Fuel®
● Live+®
● Monster Dragon Tea®
● Predator®
● Reign Total Body Fuel®
● Fury®
● Reign Inferno® Thermogenic Fuel
● True NorthTM
We have three operating and reportable segments, (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of our Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks and True NorthTM Pure Energy Seltzers, (ii) Strategic Brands segment (“Strategic Brands”), which is comprised primarily of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as our affordable energy brands, and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC, a wholly-owned subsidiary, to independent third-party customers (the “AFF Third-Party Products”).
During the three-months ended September 30, 2021, we continued to expand our existing energy drink portfolio by adding additional products to our portfolio in a number of countries and further developed our distribution markets. During the three-months ended September 30, 2021, we sold the following new products to our customers:
In the normal course of business, we discontinue certain products and/or product lines. Those products or product lines discontinued in the three-months ended September 30, 2021, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.
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Our net sales of $1.41 billion for the three-months ended September 30, 2021 represented record sales for our third fiscal quarter. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $16.4 million for the three-months ended September 30, 2021.
The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Net sales of our Monster Energy® Drinks segment were $1.33 billion for the three-months ended September 30, 2021. Net sales of our Strategic Brands segment were $74.4 million for the three-months ended September 30, 2021. Our Monster Energy® Drinks segment represented 94.3% and 93.3% of our net sales for the three-months ended September 30, 2021 and 2020, respectively. Our Strategic Brands segment represented 5.3% and 6.0% of our net sales for the three-months ended September 30, 2021 and 2020, respectively. Our Other segment represented 0.4% and 0.7% of our net sales for the three-months ended September 30, 2021 and 2020, respectively.
Our growth strategy includes expanding our international business. Net sales to customers outside the United States were $527.4 million for the three-months ended September 30, 2021, an increase of approximately $82.9 million, or 18.7% higher than net sales to customers outside of the United States of $444.5 million for the three-months ended September 30, 2020. Such sales were approximately 37% and 36% of net sales for the three-months ended September 30, 2021 and 2020, respectively.
Our customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce retailers and the military. Percentages of our gross billings to our various customer types for the three- and nine-months ended September 30, 2021 and 2020 are reflected below. Such information includes sales made by us directly to the customer types concerned, which include our full service beverage bottlers/distributors in the United States. Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below. We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers.
U.S. full service bottlers/distributors
51
53
55
International full service bottlers/distributors
37
35
Club stores and e-commerce retailers
Retail grocery, direct convenience, specialty chains and wholesalers
Direct value stores and other
0
Our customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC, Great Lakes Coca-Cola Distribution, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc. (USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners (formerly Coca-Cola European Partners and Coca-Cola Amatil), Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc. A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.
Coca-Cola Europacific Partners accounted for approximately 12% and 11% of our net sales for the three-months ended September 30, 2021 and 2020, respectively. Coca-Cola Europacific Partners accounted for approximately 12% and 10% of our net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Coca-Cola Consolidated, Inc. accounted for approximately 11% and 12% of our net sales for the three-months ended September 30, 2021 and 2020, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 11% and 12% of our net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Reyes Coca-Cola Bottling, LLC accounted for approximately 10% and 11% of our net sales for the three-months ended September 30, 2021 and 2020, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 10% and 11% of our net sales for the nine-months ended September 30, 2021 and 2020, respectively.
Results of Operations
The following table sets forth key statistics for the three- and nine-months ended September 30, 2021 and 2020.
Percentage
(In thousands, except per share amounts)
Change
21 vs. 20
Net sales1
13.2
21.0
Cost of sales
21.9
29.7
Gross profit*1
7.1
15.1
Gross profit as a percentage of net sales
55.9
59.1
56.9
59.8
Operating expenses
24.0
19.2
Operating expenses as a percentage of net sales
24.4
22.3
23.2
23.6
Operating income1
(3.1)
12.5
Operating income as a percentage of net sales
31.5
36.8
33.6
36.2
(49.9)
(60.3)
Income before provision for income taxes1
(2.6)
12.8
Provision for income taxes
(1.3)
13.5
Income taxes as a percentage of income before taxes
23.7
23.4
23.5
(3.0)
12.6
Net income as a percentage of net sales
23.9
27.9
25.7
27.6
Net income per common share:
(3.3)
12.9
(3.5)
Case sales (in thousands) (in 192‑ounce case equivalents)
159,975
139,922
14.3
459,991
372,481
¹Includes $10.4 million and $10.5 million for the three-months ended September 30, 2021 and 2020, respectively, related to the recognition of deferred revenue. Includes $31.3 million and $31.6 million for the nine-months ended September 30, 2021 and 2020, respectively, related to the recognition of deferred revenue.
*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.
Results of Operations for the Three-Months Ended September 30, 2021 Compared to the Three-Months Ended September 30, 2020.
Net Sales. Net sales were $1.41 billion for the three-months ended September 30, 2021, an increase of approximately $164.2 million, or 13.2% higher than net sales of $1.25 billion for the three-months ended September 30, 2020. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $16.4 million for the three-months ended September 30, 2021.
Net sales for the Monster Energy® Drinks segment were $1.33 billion for the three-months ended September 30, 2021, an increase of approximately $166.4 million, or 14.3% higher than net sales of $1.16 billion for the three-months ended September 30, 2020. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on net sales for the Monster Energy® Drinks segment of approximately $15.4 million for the three-months ended September 30, 2021.
Net sales for the Strategic Brands segment were $74.4 million for the three-months ended September 30, 2021, an increase of approximately $0.1 million, or 0.2% higher than net sales of $74.3 million for the three-months ended September 30, 2020. Shortages of NOS® concentrate negatively impacted net sales for the three-months ended September 30, 2021. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $1.0 million for the Strategic Brands segment for the three-months ended September 30, 2021.
Net sales for the Other segment were $6.3 million for the three-months ended September 30, 2021, a decrease of approximately $2.3 million, or 26.7% lower than net sales of $8.6 million for the three-months ended September 30, 2020.
Case sales, in 192-ounce case equivalents, were 160.0 million cases for the three-months ended September 30, 2021, an increase of approximately 20.1 million cases or 14.3% higher than case sales of 139.9 million cases for the three-months ended September 30, 2020. The overall average net sales per case (excluding net sales of AFF Third-Party Products of $6.3 million and $8.6 million for the three-months ended September 30, 2021 and 2020, respectively, as these sales do not have unit case equivalents) decreased to $8.78 for the three-months ended September 30, 2021, which was 0.8% lower than the average net sales per case of $8.85 for the three-months ended September 30, 2020.
Gross Profit. Gross profit was $789.2 million for the three-months ended September 30, 2021, an increase of approximately $52.6 million, or 7.1% higher than the gross profit of $736.5 million for the three-months ended September 30, 2020. The increase in gross profit dollars was primarily the result of the $164.2 million increase in net sales for the three-months ended September 30, 2021.
Gross profit as a percentage of net sales decreased to 55.9% for the three-months ended September 30, 2021 from 59.1% for the three-months ended September 30, 2020. The decrease for the three-months ended September 30, 2021 was primarily the result of increased aluminum can costs, attributable to higher aluminum commodity pricing, as well as the costs of importing aluminum cans, logistical costs and geographical sales mix.
Operating Expenses. Total operating expenses were $344.7 million for the three-months ended September 30, 2021, an increase of approximately $66.8 million, or 24.0% higher than total operating expenses of $277.9 million for the three-months ended September 30, 2020.
The increase in operating expenses was primarily due to increased out-bound freight and warehouse costs of $22.0 million, increased payroll expenses of $6.4 million, increased expenditures of $5.3 million for distributor terminations, increased expenditures of $2.4 million for professional service expenses, including accounting and legal costs and increased costs of $2.7 million for travel and entertainment. In addition, largely due to a significant reduction in the comparative operating expenses for the three-months ended September 30, 2020 due to the COVID-19 pandemic, we experienced increased expenditures of $11.4 million for sponsorships and endorsements, as well as increased expenditures of $12.7 million for other marketing expenses, including social media and digital marketing during the three-months ended September 30, 2021. Operating expenses as a percentage of net sales for the three-months ended September 30, 2021 were 24.4% as compared to 22.3% for the three-months ended September 30, 2020. Operating expenses as a percentage of net sales for the three-months ended September 30, 2019 (pre COVID-19) were 24.5%.
Operating Income. Operating income was $444.5 million for the three-months ended September 30, 2021, a decrease of approximately $14.1 million, or 3.1% lower than operating income of $458.6 million for the three-months ended September 30, 2020. Operating income as a percentage of net sales decreased to 31.5% for the three-months ended September 30, 2021 from 36.8% for the three-months ended September 30, 2020. Operating income for the three-months ended September 30, 2021 decreased primarily as a result of the decrease in the gross profit as a percentage of net sales as well as the increase in operating expenses, primarily increased sales and marketing expenses and increased out-bound freight and warehouse costs. Operating income was $105.9 million and $99.8 million for the three-months ended September 30, 2021 and 2020, respectively, for our operations in EMEA, Asia Pacific, Latin America and the Caribbean.
Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $500.6 million for the three-months ended September 30, 2021, a decrease of approximately $1.8 million, or 0.3% lower than operating income of $502.4 million for the three-months ended September 30, 2020. The decrease in operating income for the Monster Energy® Drinks segment was primarily the result of a decrease in gross profit as a percentage of net sales as well as an increase in operating expenses.
Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $40.2 million for the three-months ended September 30, 2021, a decrease of approximately $3.7 million, or 8.4% lower than operating income of $43.9 million for the three-months ended September 30, 2020. The decrease in operating income for the Strategic Brands segment was primarily the result of a decrease in gross profit.
Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $1.1 million for the three-months ended September 30, 2021, a decrease of approximately $1.2 million, or 51.6% lower than operating income of $2.4 million for the three-months ended September 30, 2020.
Interest and Other Expense, net. Interest and other non-operating expense, net, was $2.3 million for the three-months ended September 30, 2021, as compared to interest and other non-operating expense, net, of $4.6 million for the three-months ended September 30, 2020. Foreign currency transaction losses were $2.9 million and $4.8 million for the three-months ended September 30, 2021 and 2020, respectively. Interest income was $0.8 million and $1.5 million for the three-months ended September 30, 2021 and 2020, respectively.
Provision for Income Taxes. Provision for income taxes was $105.0 million for the three-months ended September 30, 2021, a decrease of $1.4 million, or 1.3% lower than the provision for income taxes of $106.4 million for the three-months ended September 30, 2020. The effective combined federal, state and foreign tax rate increased to 23.7% from 23.4% for the three-months ended September 30, 2021 and 2020, respectively.
Net Income. Net income was $337.2 million for the three-months ended September 30, 2021, a decrease of 10.4 million, or 3.0% lower than net income of $347.7 million for the three-months ended September 30, 2020. The decrease in net income for the three-months ended September 30, 2021 was primarily due to the decrease in the gross profit percentage of net sales as well as the increase in operating expenses.
Results of Operations for the Nine-Months Ended September 30, 2021 Compared to the Nine-Months Ended September 30, 2020.
Net Sales. Net sales were $4.12 billion for the nine-months ended September 30, 2021, an increase of approximately $714.0 million, or 21.0% higher than net sales of $3.40 billion for the nine-months ended September 30, 2020. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $64.3 million for the nine-months ended September 30, 2021.
Net sales for the Monster Energy® Drinks segment were $3.87 billion for the nine-months ended September 30, 2021, an increase of approximately $683.6 million, or 21.5% higher than net sales of $3.18 billion for the nine-months ended September 30, 2020. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on net sales for the Monster Energy® Drinks segment of approximately $60.2 million for the nine-months ended September 30, 2021.
Net sales for the Strategic Brands segment were $229.2 million for the nine-months ended September 30, 2021, an increase of approximately $30.8 million, or 15.5% higher than net sales of $198.4 million for the nine-months ended September 30, 2020. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our, Predator®, Burn® and Mother® brand energy drinks as a result of increased consumer demand. Shortages of NOS® concentrate negatively impacted net sales for the nine-months ended September 30, 2021.Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $4.1 million for the Strategic Brands segment for the nine-months ended September 30, 2021.
Net sales for the Other segment were $20.0 million for the nine-months ended September 30, 2021, a decrease of approximately $0.4 million, or 2.0% lower than net sales of $20.4 million for the nine-months ended September 30, 2020.
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Case sales, in 192-ounce case equivalents, were 460.0 million cases for the nine-months ended September 30, 2021, an increase of approximately 87.5 million cases or 23.5% higher than case sales of 372.5 million cases for the nine-months ended September 30, 2020. The overall average net sales per case (excluding net sales of AFF Third-Party Products of $20.0 million and $20.4 million for the nine-months ended September 30, 2021 and 2020, respectively, as these sales do not have unit case equivalents) decreased to $8.91 for the nine-months ended September 30, 2021, which was 1.9% lower than the average net sales per case of $9.08 for the nine-months ended September 30, 2020. The decrease in the average net sales per case was primarily the result of geographical sales mix.
Gross Profit. Gross profit was $2.34 billion for the nine-months ended September 30, 2021, an increase of approximately $307.7 million, or 15.1% higher than the gross profit of $2.03 billion for the nine-months ended September 30, 2020. The increase in gross profit dollars was primarily the result of the $714.0 million increase in net sales for the nine-months ended September 30, 2021.
Gross profit as a percentage of net sales decreased to 56.9% for the nine-months ended September 30, 2021 from 59.8% for the nine-months ended September 30, 2020. The decrease for the nine-months ended September 30, 2021 was primarily the result of increased aluminum can costs attributable to higher aluminum commodity pricing, as well as the costs of importing aluminum cans, logistical costs and geographical sales mix.
Operating Expenses. Total operating expenses were $956.3 million for the nine-months ended September 30, 2021, an increase of approximately $154.0 million, or 19.2% higher than total operating expenses of $802.3 million for the nine-months ended September 30, 2020. As a percentage of net sales, operating expenses for the nine-months ended September 30, 2021 were 23.2% as compared to 23.6% for the nine-months ended September 30, 2020. The increase in operating expenses was primarily due to increased out-bound freight and warehouse costs of $63.3 million, increased payroll expenses of $30.6 million, increased expenditures of $27.2 million for sponsorships and endorsements, increased expenditures of $14.1 million for social media and digital marketing, and increased expenditures of $10.6 million for professional service expenses, including accounting and legal costs. The increase in operating expenses for the nine-months ended September 30, 2021, was partially offset by $16.9 million due to the reversal of amounts previously accrued in connection with an intellectual property claim.
Operating Income. Operating income was $1.38 billion for the nine-months ended September 30, 2021, an increase of approximately $153.7 million, or 12.5% higher than operating income of $1.23 billion for the nine-months ended September 30, 2020. Operating income as a percentage of net sales decreased to 33.6% for the nine-months ended September 30, 2021 from 36.2% for the nine-months ended September 30, 2020. Operating income was $325.8 million and $237.3 million for the nine-months ended September 30, 2021 and 2020, respectively, for our operations in EMEA, Asia Pacific, Latin America and the Caribbean.
Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $1.51 billion for the nine-months ended September 30, 2021, an increase of approximately $145.7 million, or 10.7% higher than operating income of $1.37 billion for the nine-months ended September 30, 2020. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of the $683.6 million increase in net sales for the nine-months ended September 30, 2021.
Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $139.4 million for the nine-months ended September 30, 2021, an increase of approximately $21.1 million, or 17.8% higher than operating income of $118.3 million for the nine-months ended September 30, 2020. The increase in operating income for the Strategic Brands segment was primarily the result of the $30.8 million increase in net sales.
Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $5.3 million for the nine-months ended September 30, 2021, an increase of approximately $0.5 million, or 10.1% higher than operating income of $4.8 million for the nine-months ended September 30, 2020.
Interest and Other Expense, net. Interest and other non-operating expense, net, was $2.2 million for the nine-months ended September 30, 2021, as compared to interest and other non-operating expense, net, of $5.5 million for the nine-months ended September 30, 2020. Foreign currency transaction losses were $5.5 million and $9.2 million for the nine-months ended September 30, 2021 and 2020, respectively. Interest income was $3.1 million and $6.9 million for the nine-months ended September 30, 2021 and 2020, respectively.
Provision for Income Taxes. Provision for income taxes was $326.2 million for the nine-months ended September 30, 2021, an increase of $38.7 million, or 13.5% higher than the provision for income taxes of $287.5 million for the nine-months ended September 30, 2020. The effective combined federal, state and foreign tax rate was 23.6% and 23.5% for the nine-months ended September 30, 2021 and 2020, respectively.
Net Income. Net income was $1.06 billion for the nine-months ended September 30, 2021, an increase of $118.3 million, or 12.6% higher than net income of $937.9 million for the nine-months ended September 30, 2020. The increase in net income for the nine-months ended September 30, 2021 was primarily due to the $307.7 million increase in gross profit for the nine-months ended September 30, 2021, partially offset by the $154.0 million increase in operating expenses and the $38.7 million increase in the provision for income taxes.
Key Business Metrics
We use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see “Non-GAAP Financial Measures and Other Key Metrics”.
Non-GAAP Financial Measures and Other Key Metrics
Three-Months Ended September 30, 2021 Compared to the Three-Months Ended September 30, 2020.
Gross Billings**. Gross billings were $1.65 billion for the three-months ended September 30, 2021, an increase of approximately $194.1 million, or 13.4% higher than gross billings of $1.45 billion for the three-months ended September 30, 2020. Net changes in foreign currency exchange rates had a favorable impact on gross billings of approximately $21.5 million for the three-months ended September 30, 2021.
Gross billings for the Monster Energy® Drinks segment were $1.55 billion for the three-months ended September 30, 2021, an increase of approximately $196.2 million, or 14.5% higher than gross billings of $1.36 billion for the three-months ended September 30, 2020. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on gross billings for the Monster Energy® Drinks segment of approximately $20.5 million for the three-months ended September 30, 2021.
Gross billings for the Strategic Brands segment were $88.5 million for the three-months ended September 30, 2021, an increase of $0.3 million, or 0.3% higher than gross billings of $88.2 million for the three-months ended September 30, 2020. Shortages of NOS® concentrate negatively impacted gross billings for the three-months ended September 30, 2021. Net changes in foreign currency exchange rates had a favorable impact on gross billings in the Strategic Brands segment of approximately $1.0 million for the three-months ended September 30, 2021.
Gross billings for the Other segment were $6.3 million for the three-months ended September 30, 2021, a decrease of $2.3 million, or 26.7% lower than gross billings of $8.6 million for the three-months ended September 30, 2020.
Promotional allowances, commissions and other expenses, as described in the footnote below, were $247.9 million for the three-months ended September 30, 2021, an increase of $29.8 million, or 13.7% higher than promotional allowances, commissions and other expenses of $218.1 million for the three-months ended September 30, 2020. Promotional allowances as a percentage of gross billings decreased to 13.2% from 13.6% for the three-months ended September 30, 2021 and 2020, respectively.
Nine-Months Ended September 30, 2021 Compared to the Nine-Months Ended September 30, 2020.
Gross Billings**. Gross billings were $4.79 billion for the nine-months ended September 30, 2021, an increase of approximately $849.6 million, or 21.5% higher than gross billings of $3.94 billion for the nine-months ended September 30, 2020. Net changes in foreign currency exchange rates had a favorable impact on gross billings of approximately $84.1 million for the nine-months ended September 30, 2021.
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Gross billings for the Monster Energy® Drinks segment were $4.51 billion for the nine-months ended September 30, 2021, an increase of approximately $813.9 million, or 22.0% higher than gross billings of $3.69 billion for the nine-months ended September 30, 2020. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on gross billings for the Monster Energy® Drinks segment of approximately $80.0 million for the nine-months ended September 30, 2021.
Gross billings for the Strategic Brands segment were $265.5 million for the nine-months ended September 30, 2021, an increase of $36.1 million, or 15.7% higher than gross billings of $229.4 million for the nine-months ended September 30, 2020. Shortages of NOS® concentrate negatively impacted gross billings for the nine-months ended September 30, 2021. Net changes in foreign currency exchange rates had a favorable impact on gross billings in the Strategic Brands segment of approximately $4.1 million for the nine-months ended September 30, 2021.
Gross billings for the Other segment were $20.0 million for the nine-months ended September 30, 2021, a decrease of $0.4 million, or 2.0% lower than gross billings of $20.4 million for the nine-months ended September 30, 2020.
Promotional allowances, commissions and other expenses, as described in the footnote below, were $707.7 million for the nine-months ended September 30, 2021, an increase of $135.3 million, or 23.6% higher than promotional allowances, commissions and other expenses of $572.4 million for the nine-months ended September 30, 2020. Promotional allowances as a percentage of gross billings decreased to 13.1% from 13.2% for the nine-months ended September 30, 2021 and 2020, respectively.
**Gross Billings represent amounts invoiced to customers net of cash discounts and returns. Gross billings are 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 is useful to investors in evaluating overall Company performance. The use of gross billings 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 billings provides a useful measure of our operating performance. The use of gross billings 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 billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.
The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales:
(In thousands)
Gross Billings
1,648,048
1,453,905
13.4
4,792,728
3,943,164
21.5
Deferred Revenue
10,386
10,521
31,265
31,599
(1.1)
Less: Promotional allowances, commissions and other expenses***
247,877
218,064
13.7
707,685
572,408
***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to 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 our bottlers/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 our bottlers/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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers’/distributors’ sales territories; and (viii) certain commissions based on sales to our bottlers/distributors. 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. Our promotional allowance programs with our numerous bottlers/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. The primary drivers of our promotional and other allowance activities for the three-months ended September 30, 2021 and 2020 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail.
Sales
The table below discloses selected quarterly data regarding sales for the three- and nine-months ended September 30, 2021 and 2020, respectively. Data from any one or more quarters or periods is not necessarily indicative of annual results or continuing trends.
Sales of beverages are expressed in unit case volume. A “unit case” means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates as if converted into finished products sold by us.
Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. It has been our experience that beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they may be less seasonal than the seasonality of traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in advertising and promotional expenses. The COVID-19 pandemic including new variants may also have an impact on consumer behavior and change the seasonal fluctuation of our business.
(In thousands, except average net sales per case)
Net sales
Less: AFF third-party sales
(6,316)
(8,618)
(19,953)
(20,367)
Adjusted net sales1
1,404,241
1,237,744
4,096,355
3,381,988
Case sales by segment:
133,177
117,805
388,214
317,103
26,798
22,117
71,777
55,378
Total case sales
Average net sales per case
8.78
8.85
8.91
9.08
1Excludes certain Other segment net sales of $6.3 million and $8.6 million for the three-months ended September 30, 2021 and 2020, respectively, comprised of net sales of AFF Third-Party Products to independent third-party customers, as these sales do not have unit case equivalents. Excludes certain Other segment net sales of $20.0 million and $20.4 million for the nine-months ended September 30, 2021 and 2020, respectively, comprised of net sales of AFF Third-Party Products to independent third-party customers, as these sales do not have unit case equivalents.
See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” for additional information related to the increase in sales.
Liquidity and Capital Resources
Cash and cash equivalents, short-term and long-term investments. We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of equipment, purchases of real property and purchases of shares of our common stock, through at least the next 12 months. Our sources and uses of cash were not materially impacted by the COVID-19 pandemic in the nine-months ended September 30, 2021 and, to date, we have not identified any material liquidity deficiencies as a result of the COVID-19 pandemic. Based on the information currently available to us, we do not expect the impact of the COVID-19 pandemic to have a material impact on our liquidity. We will continue to monitor and assess the impact the COVID-19 pandemic may have on our business, financial condition and/or operating results.
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At September 30, 2021, we had $1.71 billion in cash and cash equivalents, $1.22 billion in short-term investments and $28.3 million in long-term investments, including certificates of deposit, commercial paper, U.S. government agency securities and U.S. treasuries. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.
Based on our current plans, at this time we estimate that capital expenditures (exclusive of common stock repurchases) are likely to be less than $200.0 million through September 30, 2022. However, future business opportunities may cause a change in this estimate.
Cash flows provided by operating activities. Cash provided by operating activities was $928.0 million for the nine-months ended September 30, 2021, as compared with cash provided by operating activities of $949.2 million for the nine-months ended September 30, 2020.
For the nine-months ended September 30, 2021, cash provided by operating activities was primarily attributable to net income earned of $1.06 billion and adjustments for certain non-cash expenses, consisting of $52.4 million of stock-based compensation and $40.7 million of depreciation and amortization. For the nine-months ended September 30, 2021, cash provided by operating activities also increased due to a $106.6 million increase in accounts payable, a $51.0 million increase in accrued promotional allowances, a $34.1 million increase in accrued liabilities and a $5.3 million increase in accrued distributor terminations. For the nine-months ended September 30, 2021, cash used in operating activities was primarily attributable to a $199.7 million increase in accounts receivable, a $149.4 million increase in inventories, a $41.2 million increase in prepaid expenses and other assets, a $17.8 million decrease in deferred revenue, a $7.4 million increase in prepaid income taxes and a $2.9 million decrease in accrued compensation.
For the nine-months ended September 30, 2020, cash provided by operating activities was primarily attributable to net income earned of $937.9 million and adjustments for certain non-cash expenses, consisting of $53.0 million of stock-based compensation, $45.9 million of depreciation and amortization and $7.0 million of intangible asset impairment. For the nine-months ended September 30, 2020, cash provided by operating activities also increased due to a $53.5 million increase in accrued liabilities, a $39.5 million decrease in inventories, a $31.9 million increase in accrued promotional allowances, an $18.0 million increase in income taxes payable and an $11.5 million decrease in prepaid income taxes. For the nine-months ended September 30, 2020, cash used in operating activities was primarily attributable to a $201.7 million increase in accounts receivable, a $20.4 million increase in prepaid expenses and other assets, a $15.2 million decrease in deferred revenue, a $9.7 million decrease in accounts payable and a $1.2 million decrease in accrued compensation.
Cash flows used in investing activities. Cash used in investing activities was $381.7 million for the nine-months ended September 30, 2021 as compared to cash used in investing activities of $140.5 million for the nine-months ended September 30, 2020.
For both the nine-months ended September 30, 2021 and 2020, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the nine-months ended September 30, 2021 and 2020, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For both the nine-months ended September 30, 2021 and 2020, cash used in investing activities also included the acquisitions of fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, as well as acquisitions of and/or improvements to real property. We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products) to develop our brand in international markets and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.
Cash flow provided by (used in) financing activities. Cash provided by financing activities was $21.5 million for the nine-months ended September 30, 2021 as compared to cash used in financing activities of $532.9 million for the nine-months ended September 30, 2020. The cash used in financing activities for both the nine-months ended September 30, 2021 and 2020 was primarily the result of the repurchases of our common stock. The cash provided by financing activities for both the nine-months ended September 30, 2021, and 2020 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.
Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.
Of our $1.71 billion of cash and cash equivalents held at September 30, 2021, $568.4 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at September 30, 2021.
The following represents a summary of the Company’s contractual commitments and related scheduled maturities as of September 30, 2021:
Payments due by period (in thousands)
Less than
1‑3
3‑5
More than
Obligations
1 year
5 years
Contractual Obligations1
212,653
147,014
65,315
324
1,579
3,412
4,548
3,269
10,368
Purchase Commitments2
129,980
365,856
281,985
69,900
3,603
1Contractual obligations include our obligations related to sponsorships and other commitments.
2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.
In addition, approximately $0.4 million of unrecognized tax benefits have been recorded as liabilities as of September 30, 2021. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of September 30, 2021, we had $0.1 million of accrued interest and penalties related to unrecognized tax benefits.
Critical Accounting Policies
There have been no material changes to our critical accounting policies from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“Form 10-K”).
Recent Accounting Pronouncements
The information required by this Item is incorporated herein by reference to the Notes to Condensed Consolidated Financial Statements - Note 2. Recent Accounting Pronouncements, in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Inflation
We believe inflation had a negative impact on our results of operations for the three- and nine-months ended September 30, 2021.
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Forward-Looking Statements
Certain statements made in this report 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) (the “Exchange Act”) regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management’s plans and objectives for future operations, or a statement of future economic performance contained in management’s discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical information, are forward-looking statements within the meaning of the Exchange Act. Without limiting the foregoing, the words “believes,” “thinks,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements.
Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control, and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following:
44
The foregoing list of important factors and other risks detailed from time to time in our reports filed with the SEC is not exhaustive. See the section entitled “Risk Factors” in our Form 10-K and in Item 1A of this Quarterly Report for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, our actual results could be materially different from the results described or anticipated by our forward-looking statements, due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than anticipated. Given these uncertainties, you should not rely on forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risks during the three-months ended September 30, 2021 compared with the disclosures in Part II, Item 7A of our Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures – Under the supervision and with the participation of the Company’s management, including our Co-Chief Executive Officers and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon this evaluation, the Co-Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures are adequate and effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC and (2) accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting – There were no changes in the Company’s internal controls over financial reporting during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
The information required by this Item is incorporated herein by reference to the Notes to Condensed Consolidated Financial Statements - Note 12. Commitments and Contingencies: Litigation in Part I, Item 1, of this Quarterly Report on Form 10-Q.
ITEM 1A.RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and the condensed consolidated financial statements and related notes, you should carefully consider the risks discussed in “Part I, Item 1A – Risk Factors” in our Form 10-K. There have been no material changes with respect to the risk factors disclosed in our Form 10-K.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 13, 2020, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “March 2020 Repurchase Plan”). During the three-months ended September 30, 2021, no shares were purchased by the Company under the March 2020 Repurchase Plan. As of November 5, 2021, $441.5 million remained available for repurchase under the March 2020 Repurchase Plan.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
ITEM 6.EXHIBITS
31.1*
Certification of Co-Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
31.3*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Co-Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
32.3*
Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
101*
The following financial information from Monster Beverage Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020, (ii) Condensed Consolidated Statements of Income for the three- and nine-months ended September 30, 2021 and 2020, (iii) Condensed Consolidated Statements of Comprehensive Income for the three- and nine-months ended September 30, 2021 and 2020, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three- and nine-months ended September 30, 2021 and 2020, (v) Condensed Consolidated Statements of Cash Flows for the nine-months ended September 30, 2021 and 2020, and (vi) the Notes to Condensed Consolidated Financial Statements.
104*
The cover page from Monster Beverage Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.
* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant
Date: November 5, 2021
/s/ RODNEY C. SACKS
Rodney C. Sacks
Chairman of the Board of Directors
and Co-Chief Executive Officer
/s/ HILTON H. SCHLOSBERG
Hilton H. Schlosberg
Vice Chairman of the Board of Directors