Monster Reports Record First Quarter Sales, Profits

Last week’s reports of a possible acquisition of Monster Beverage by Coca-Cola sent shares of the energy drink giant on a colossal roller coaster ride, initially soaring into the stratosphere, only to come tumbling back to earth after Coke addressed the news as speculation. However, shares of Monster Beverage are once again surging after the energy drink giant announced record first quarter sales and profits and easily bested Wall Street estimates for the three-months ending March 31, 2012. Net sales of Monster products leapt by 27.5 percent to $454.6 million from $356.4 million a year ago, and the company achieved a net income of $76.1 million for the quarter up 38.3 percent from first quarter 2011.

Rodney C. Sacks, the chairman and chief executive officer of Monster Beverage, noted that the company and the energy drink category as a whole continues to grow at a positive rate, and plans to expand the company’s presence overseas with new launches in Asia and South America. Sacks also said that Monster’s Rehab line continues to grow at an unabated pace and recently debuted its fifth product in the line.

Here is Monster’s full report on its first quarter results:

CORONA, Calif., May 9, 2012 (GLOBE NEWSWIRE) — Monster Beverage Corporation MNST -0.27% today reported record sales and profits for the first quarter ended March 31, 2012.

Gross sales for the 2012 first quarter increased 26.9 percent to $517.3 million from $407.6 million in the same period last year. Net sales for the three-months ended March 31, 2012 increased 27.5 percent to $454.6 million from $356.4 million a year ago.

For the 2012 first quarter, gross profit as a percentage of net sales was 53.1 percent, compared with 52.1 percent for the comparable 2011 quarter. Operating expenses for the 2012 first quarter increased to $114.9 million from $97.1 million in the same quarter last year.

Distribution costs as a percentage of net sales were 4.3 percent for the 2012 first quarter, compared with 4.1 percent in the same quarter last year.

Selling expenses as a percentage of net sales for the 2012 first quarter were 12.3 percent, compared with 13.7 percent in the same quarter a year ago.

General and administrative expenses as a percentage of net sales for the 2012 first quarter were 8.7 percent, compared with 9.4 percent for the corresponding quarter last year. Stock-based compensation (a non-cash item) was $6.6 million in the first quarter of 2012, compared with $3.8 million for the first quarter of 2011.

Operating income for the 2012 first quarter increased 42.8 percent to $126.3 million from $88.5 million in the comparable 2011 quarter.

The effective tax rate for the 2012 first quarter was 39.9 percent, compared with 38.0 percent in the same quarter last year.

Net income for the 2012 first quarter increased 38.3 percent to $76.1 million from $55.0 million in the same quarter last year. Net income per diluted share increased 39.7 percent to $0.41 from $0.29 per diluted share in the 2011 comparable quarter.

Net sales for the Company’s DSD segment for the 2012 first quarter increased 28.8 percent to $431.2 million from $334.7 million for the same period in 2011.

Gross sales to customers outside the United States rose to $100.6 million in the 2012 first quarter, compared with $72.8 million in the corresponding quarter in 2011.

Rodney C. Sacks, chairman and chief executive officer, noted that the energy drink category in general, and the Monster Energy(R) brand in particular, have continued their positive growth trends. “We are also excited that the growth that we previously reported for our Monster Rehab(R) line has continued unabated. During the quarter, we launched our fifth product in the Monster Rehab(R) line,” Sacks said. “We are continuing to expand into new international markets and retail sales of Monster Energy(R) commenced in Hong Kong and Macau during April and in Japan and Ecuador earlier this week. We are planning launches in additional international markets later this year,” Sacks added.

Investor Conference Call

The Company will host an investor conference call today, May 9, 2012, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.monsterbevcorp.com in the “Events & Presentations” section. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.

Monster Beverage Corporation

Based in Corona, California, Monster Beverage Corporation is a marketer and distributor of energy drinks and alternative beverages. The Company markets and distributes Monster Energy(R) brand energy drinks, Monster Energy Extra Strength Nitrous Technology(R) brand energy drinks, Java Monster(R) brand non-carbonated coffee + energy drinks, X-Presso Monster(R) brand non-carbonated espresso energy drinks, M-3(TM) superconcentrated energy drinks, Monster Rehab(R) non-carbonated rehydration energy drinks, Worx Energy(R) shots, and Peace Tea(R) iced teas, as well as Hansen’s(R) natural sodas, apple juice and juice blends, multi-vitamin juices, Junior Juice(R) beverages, Blue Sky(R) beverages, Hubert’s(R) Lemonades, Vidration(R) vitamin enhanced waters, and PRE(R) Probiotic drinks. For more information visit www.monsterbevcorp.com .

Note Regarding Use of Non-GAAP Measures

Gross sales is used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and overall Company performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross sales provides a useful measure of our operating performance. Gross sales is not a measure that is recognized under generally accepted accounting principles in the United States of America (“GAAP”) and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.

Caution Concerning Forward-Looking Statements

Certain statements made in this announcement may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability. Management cautions that these statements are based on management’s current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein. Such risks and uncertainties include, but are not limited to, the following: the current uncertainty and volatility in the national and global economy; changes in consumer preferences; changes in demand due to both domestic and international economic conditions; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; potential distribution disruptions and/or decline in sales arising out of the termination and/or appointment of domestic and/or international distributors; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities; product distribution and placement decisions by retailers; changes in governmental regulation; the imposition of new and/or increased taxes on our products; political, legislative or other governmental actions or events in one or more regions in which we operate. For a more detailed discussion of these and other risks that could affect our operating results, see the Company’s reports filed with the Securities and Exchange Commission. The Company’s actual results could differ materially from those contained in the forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

          MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION
          FOR THE THREE-MONTHS ENDED MARCH 31, 2012 AND 2011
          (In Thousands, Except Per Share Amounts) (Unaudited)
          ---------------------------------------------------------------------

                                                           Three-Months Ended

                                                               March 31,
                                                        -----------------------

                                                            2012         2011
                                                        ------------  ---------
          Gross sales, net of discounts and returns*     $   517,313  $ 407,593

          Less: Promotional and other allowances**            62,708     51,174
                                                        ------------  ---------

          Net sales                                          454,605    356,419

          Cost of sales                                      213,436    170,882
                                                        ------------  ---------

          Gross profit                                       241,169    185,537
          Gross profit margin as a percentage of net
           sales                                               53.1%      52.1%

          Operating expenses                                 114,884     97,082
          Operating expenses as a percentage of net
           sales                                               25.3%      27.2%
                                                        ------------  ---------

          Operating income                                   126,285     88,455
          Operating income as a percentage of net
           sales                                               27.8%      24.8%

          Other income:
          Interest and other (expense) income, net              (50)          4

          Gain on investments and put option, net                396        297
                                                        ------------  ---------

           Total other income                                    346        301
                                                        ------------  ---------

          Income before provision for income taxes           126,631     88,756

          Provision for income taxes                          50,532     33,713
                                                        ------------  ---------

          Net income                                        $ 76,099   $ 55,043
                                                        ============  =========
          Net income as a percentage of net sales              16.7%      15.4%

          Net income per common share:

           Basic                                              $ 0.44     $ 0.31
                                                        ============  =========

           Diluted                                            $ 0.41     $ 0.29
                                                        ============  =========

          Weighted average number of shares of common
           stock and common stock equivalents:

           Basic                                             174,832    177,858
                                                        ============  =========

           Diluted                                           185,262    187,248
                                                        ============  =========

          Case sales (in thousands) (in 192-ounce case
           equivalents)                                       44,396     34,681
          Average net sales per case                         $ 10.24    $ 10.28

* Gross sales, although used internally by management as an indicator of operating performance, should not be considered as an alternative to net sales, which is determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies as gross sales has been defined by our internal reporting requirements. However, gross sales are used by management to monitor operating performance including sales performance of particular products, salesperson performance, product growth or declines and our overall performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. Management believes the presentation of gross sales allows a more comprehensive presentation of our operating performance. Gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from customers.

** Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform with GAAP presentation requirements. Additionally, the presentation of promotional and other allowances may not be comparable to similar items presented by other companies. The presentation of promotional and other allowances facilitates an evaluation of the impact thereof on the determination of net sales and illustrates the spending levels incurred to secure such sales. Promotional and other allowances constitute a material portion of our marketing activities.

          MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
          CONDENSED CONSOLIDATED BALANCE SHEETS
          AS OF MARCH 31, 2012 AND DECEMBER 31, 2011
          (In Thousands, Except Par Value) (Unaudited)
          -----------------------------------------------------------

                                           March 31,    December 31,
                                             2012           2011
                                          -----------  --------------
                      ASSETS
          CURRENT ASSETS:
          Cash and cash equivalents         $ 391,438       $ 359,331
          Short-term investments              419,588         411,282
          Trade accounts receivable, net      255,712         218,072
          Distributor receivables                 712             669
          Inventories                         179,127         155,613
          Prepaid expenses and other
           current assets                      19,654          20,912
          Prepaid income taxes                  1,804             370

          Deferred income taxes                16,428          16,428
                                          -----------  --------------
           Total current assets             1,284,463       1,182,677

          INVESTMENTS                          21,864          23,194
          PROPERTY AND EQUIPMENT, net          55,689          45,151
          DEFERRED INCOME TAXES                56,003          58,576
          INTANGIBLES, net                     49,132          48,396

          OTHER ASSETS                          3,594           4,405
                                          -----------  --------------

                   Total Assets           $ 1,470,745     $ 1,362,399
                                          ===========  ==============

           LIABILITIES AND STOCKHOLDERS'
                      EQUITY
          CURRENT LIABILITIES:
          Accounts payable                  $ 134,035    $    113,446
          Accrued liabilities                  42,517          31,966
          Accrued promotional allowances       56,943          87,746
          Deferred revenue                     11,751          11,583
          Accrued compensation                  6,569          10,353

          Income taxes payable                 36,302          10,996
                                          -----------  --------------
           Total current liabilities          288,117         266,090

          DEFERRED REVENUE                    115,300         117,151

          STOCKHOLDERS' EQUITY:
          Common stock -- $0.005 par
           value; 240,000 shares
           authorized;
          200,649 shares issued and
           176,197 outstanding as of
          March 31, 2012; 198,729 shares
           issued and 174,277
          outstanding as of December 31,
           2011                                 1,003             994
          Additional paid-in capital          238,908         229,301
          Retained earnings                 1,244,743       1,168,644
          Accumulated other
           comprehensive income (loss)            908         (1,547)
          Common stock in treasury, at
           cost; 24,452 shares as of
          March 31, 2012 and December
           31, 2011, respectively           (418,234)       (418,234)
                                          -----------  --------------

           Total stockholders' equity       1,067,328         979,158
                                          -----------  --------------
               Total Liabilities and
                Stockholders' Equity      $ 1,470,745  $    1,362,399
                                          ===========  ==============