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Monster Beverage Corp posts upbeat Q2 earnings

Monster Beverage Corporation (MNST) reported a 21% jump in earnings for the second quarter driven by higher net sales from its Drinks segment as well as lower income taxes. The bottom line exceeded analyst expectations, while the top line was in line with consensus.

Net income climbed by 21.3% to $270.1 million and earnings jumped 23.8% to $0.48 per share.

Net sales increased by 12% to $1.02 billion. The sales in the latest quarter were negatively impacted due to the adoption of Accounting Standards. On the other hand, results benefited from the favorable impact of the net changes in foreign currency exchange rates.

Net sales to customers outside the United States climbed 18.5%. Net sales for the Monster Energy Drinks segment, which includes the company’s Monster Energy drinks, Monster Hydro energy drinks, and Mutant Super Soda drinks, grew by 14%.

However, net sales for the company’s Strategic Brands segment, which includes the various energy drink brands acquired from The Coca-Cola Co., decreased 6.8%.

Monster Beverage Q2 2018 Earnings Infographics

Gross margin fell to 61.1% from 64.3% a year ago. This decline was due to an increase in promotional allowances, commissions accounted for as a reduction to net sales, rises in certain input costs such as aluminum cans and other costs, domestic product sales mix, and geographical sales mix.

In the second quarter of 2018, the company successfully launched its Monster Energy brand with the Coca-Cola bottlers in Belarus, Tanzania, and Uruguay and commenced the relaunch of Monster Energy with a Coca-Cola bottler in select cities in India. The company launched Monster Energy in Ecuador in July 2018 and is planning further international launches later this year.

Executive chief Rodney Sacks said Monster Beverage continues to progress its strategic alignment with the Coca-Cola system bottlers. The company has reached agreements to transition Monster Energy to Coca-Cola bottlers in Arkansas, with the balance parts of the transitioning happening in the third quarter.

During the second quarter, the company purchased about 10.6 million common shares at an average purchase price of $52.42 per share, for a total amount of $553.2 million. As of August 7, 2018, about $196.7 million remained available for buyback under the May 2018 repurchase program. On August 7, 2018, the company’s Board of Directors authorized a new repurchase program for the buyback of up to an additional $500.0 million of outstanding common stock.

Shares of Monster Beverage ended Wednesday’s regular trading session down 0.65% at $59.40 on the Nasdaq. The stock had fallen more than 6% for the year-to-date, while it has risen more than 12% for the past year.

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