Monster Energy Corp. saw net sales of $1.25 billion during the third quarter of 2020, a new company record, according to an earnings report released by the company on Thursday.
Net sales increased 9.9% over the same period last year, with net changes in foreign currency exchanges rates generating $12.5 million in unfavorable impact. Gross sales were up 11.1% to $1.46 billion.
Gross sales for the 2020 third quarter increased 11.1 % to $1.46 billion from $1.32 billion in the same period last year. Net changes in foreign currency exchange rates had an unfavorable impact on net and gross sales for the 2020 third quarter of $12.5 million and $11.9 million, respectively.
Net sales for Monster’s Energy Drinks business, which includes its core SKUs as well as performance energy line Reign Total Body Fuel, increased 9.6% to $1.16 billion during the quarter.
The Corona, California-based company also saw growth from its Strategic Brands portfolio: net sales were up 12% to $74.3 million.
Outside the United States, net sales increased 17% to $444.5 million, representing approximately 36% of overall net sales in the quarter.
Operating expenses for the 2020 third quarter were $277.9 million, compared with $277.6 million in the 2019 third quarter. As a percentage of net sales, operating expenses fell slightly from the same period last year, going from 24.5% in Q3 2019 to 22.3% in 2020. Much of those savings came from decreased spending on sponsorships and endorsements, plus travel and entertainment, as a result of the COVID-19 pandemic. With the disease continuing to spread across the globe, Monster said that the costs for certain postponed or rescheduled events have been, or may be, deferred to an as-yet determined date in the future.
General and administrative expenses for the 2020 third quarter were 10.1% of net sales ($125.4 million), which was even with the same period last year. Meanwhile, operating income for the 2020 third quarter increased to $458.6 million, from $395.4 million in 2019.
“The Company performed well in the third quarter, achieving record quarterly net sales, despite the ongoing impact of the COVID-19 pandemic in most of our markets,” said Rodney Sacks, Monster CEO and Chairman, in a press release.
In the release, Sacks highlighted sequential net sales growth for both Energy Drinks and Strategic Brands in Europe, the Middle East and Africa as a positive indicator, and reaffirmed that the company’s supply chain and operations remain intact. He cited Nielsen data showing energy drink category growth in most markets, including the U.S.
“The COVID-19 pandemic remains a heightened threat with a number of countries, particularly in EMEA, reinstituting lockdowns and other restrictions,” Sacks added. “Our thoughts and prayers remain with all who have been impacted by the COVID-19 pandemic and we wish them all a speedy recovery.”
Despite fighting foot traffic declines in its primary retail channel, gas and convenience, Monster’s record-setting performance indicates it is in a strong position to rebound. The company reported sequential improvement in the channel throughout the quarter, while reporting no disruption in its aluminum can supply chain. As of September 30, 2020, Monster has reported $1.07 billion in cash and cash equivalents.
Despite its strong numbers, Monster was outpaced by chief rival Red Bull, which increased MULO (with c-store and drug channels) sales by 19.4% during the quarter, according to Nielsen data. Over the four-week period ended on October 24, Red Bull’s share of the category in convenience and gas channels increased 3.1 points to 36.4%, while Monster’s share fell by just under 1%.
Responding to a question about Red Bull during the call, Hilton H. Schlosberg, President/COO/CFO at Monster, credited the company’s move to 12 oz. cans and its “dedicated and focused” distribution system for its recent performance.
In response, Monster has appointed a Chief Field Execution Officer to run its “street team,” a new division which Schlosberg said will be fully operational within months and which will be initially tasked with supporting independent stores, an area where he admitted the company had “fallen a little behind.”
“I think we’ve probably been underperforming and we’ve not had enough attention in the independents, where you get trial and variation and particularly trial for your innovation,” he said, according to a transcript of the call.