Monster Energy’s acquisition of Bang, including the purchase of existing inventory, led to a small drag on gross profit during Q3 2023, according to the company’s latest earnings report today.
Referred to in the report as the “Bang Inventory Step-Up,” the purchased inventory pushed gross profit down by $7.8 million in the quarter. Gross profit as a percentage of net sales in the quarter was 53%, compared to 51.3% last year. Excluding Bang, gross profit as a percentage of net sales was 53.4%.
However, the transaction also led to a gain of $45.4 million in interest and other income, the company added. During Q3, Monster “incurred approximately $8 million of acquisition expenses related to the Bang Transaction.”
“We launched Bang Energy in September through the Coke bottling system and it was not an immediate launch on September 1,” co-CEO Rodney Sacks said during the call. “Some bottlers took it a little bit earlier in August and many who took it in the month of September rolled out through the month of September. So this is not a fair quarter to what Bang can bring to the portfolio.”
- Total company net sales for Q3 grew 14.3% to $1.86 billion, up from $1.62 billion last year.
- Net sales for the Monster Energy Drinks segment, including Reign and Bang, was up 13.7% to $1.71 billion.
- Net sales for the company’s Strategic Brands segment, including NOS and Full Throttle, grew 11.2% to $98.8 million.
- Net sales for alcohol brands, including The Beast Unleashed as well as craft beers and hard seltzers from the CANarchy transaction, were up 57.8% to $42.3 million.
- Sales of the company’s energy portfolio, excluding Bang, grew 4.5% in the convenience and gas channel.
Operating expenses in Q3 rose to $473.2 million, compared to $415.8 million last year. Operating expenses as a percentage of net sales were 25.5%.
Distribution expenses were $85.7 million, up slightly from $83 million in 2022, and selling expenses were $177.2 million, up from $157.3 million the year before. General and administrative expenses totaled $210.3 million (compared to $175.5 million in 2022).
“The energy drink market in the United States, as well as internationally, continues to grow,” said co-CEO Hilton Schlosberg in a statement. “We are pleased to report another quarter of solid revenue growth, with record sales for our third quarter. The quarter was again impacted by unfavorable foreign currency exchange rates.”
Sacks added that the company’s alcohol innovations will be expanding. Nasty Beast, the company’s hard tea line, will launch in four flavors in 12 oz. variety packs and 24 oz. single-serve cans in early 2024, he said.