Based in California, Monster Beverage Corporation (MNST, Financial) is a leading marketer and distributor of energy drinks and alternative beverages. The company markets and distributes Monster Energy brand energy drinks, Monster Energy Extra Strength Nitrous Technology brand energy drinks, Java Monster brand non-carbonated coffee + energy drinks, X-Presso Monster brand non-carbonated espresso energy drinks, etc. Its products are offered across six continents and sold in more than 144 countries. It has a formidable position in the energy drink segment and is reputed for its continued prosperity.
Strong Fourth Quarter Earnings
Gross sales for the 2014 fourth quarter increased 12.1% to $696.3 million from $621.1 million in the same period last year. Net sales for the three-months ended December 31, 2014 increased 12% to $605.6 million from $540.8 million in the same quarter a year ago.
Gross profit, as a percentage of net sales, for the 2014 fourth quarter was 54.8 percent, compared with 51.2 percent for the comparable 2013 quarter. Operating expenses for the 2014 fourth quarter decreased to $138.9 million from $142.4 million in the same quarter last year. Distribution costs as a percentage of net sales were 4.1% for the 2014 fourth quarter, compared with 4.5% in the same quarter last year.
Selling expenses as a percentage of net sales were 9.3% for the 2014 fourth quarter, compared with 10.8% in the same quarter a year ago. General and administrative expenses for the 2014 fourth quarter were $57.6 million, or 9.5% of net sales, compared with $59.6 million, or 11% of net sales, for the corresponding quarter last year. Stock-based compensation (a non-cash item) was $6.0 million in the fourth quarter of 2014, compared with $7.2 million for the fourth quarter of 2013. Operating income for the 2014 fourth quarter increased 43.2% to $192.9 million from $134.8 million in the comparable 2013 quarter.
The effective tax rate for the 2014 fourth quarter was 34.7%, compared with 42.2% in the same quarter last year. The decrease in the effective tax rate primarily reflected profits earned in certain foreign subsidiaries that have no related income tax expense as the result of the prior establishment of valuation allowances on their deferred tax assets.
Net income for the 2014 fourth quarter increased 64.7% to $125.3 million from $76.1 million in the same quarter last year. Net income per diluted share increased 63.2% to $0.72 from $0.44 per diluted share in the 2013 comparable quarter.Net sales for the company's DSD segment for the 2014 fourth quarter increased 12.6% to $584.8 million from $519.4 million for the same period in 2013. Gross sales to customers outside the United States rose to $160.1 million in the 2014 fourth quarter from $137.9 million in the corresponding quarter in 2013.
2014 Fiscal Year
For the year ended December 31, 2014, gross sales increased 9.3% to $2.8 billionfrom $2.6 billion a year earlier. Net sales for the year ended December 31, 2014 increased 9.7% to $2.5 billion from $2.2 billion in the prior year. Gross profit as a percentage of net sales was 54.4% for the year ended December 31, 2014, compared with 52.2% a year earlier. Operating expenses for the year ended December 31, 2014 decreased 1.3% to $592.3 million from $600 million in the prior year. Operating income for the year ended December 31, 2014 increased 30.5 percent to $747.5 million from $572.9 million last year. Distribution costs as a percentage of net sales were 4.4 percent for the year ended December 31, 2014, compared with 4.5% in the prior year.
Selling expenses as a percentage of net sales were 10.2% for the year ended December 31, 2014, compared with 11.9 percent in the prior year. General and administrative expenses for the year ended December 31, 2014 were $232.1 million, or 9.4% of net sales, compared with $230.2 million, or 10.2% of net sales, for last year. Stock-based compensation (a non-cash item) was $28.6 million for the year ended December 31, 2014, compared with $28.8 million for last year. Net income for the year ended December 31, 2014 rose to $483.2 million from $338.7 million in the prior year. Net income per diluted share for the year ended December 31, 2014 increased to $2.77 from $1.95 per diluted share for the prior year.
To End
Launched in 2013, Monster Beverage’s “Monster Energy Ultra Red” has registered its mark among the top sellers. The alternative drink industry is worth $38 billion and counting. It can be rightly said that MNST has made a mark and carved out a niche for its products in this huge industry. It is already expanding into new markets and continually spending for innovation as innovation plays a key role in any company’s success. MNST stock has appreciated by 480% since 2010.
MNST has already become a big name in the energy drinks sector and is continuing to grow further. It is expected to create shareholder returns. An increasingly evolving middle class, higher disposable incomes and changing lifestyles are key factors that will fuel the growth of this company in the beverage industry.
There has been an ever increasing popularity for the energy drinks sector. Energy drink volumes grew by 5.5% in the U.S. in 2013. It is expected to grow by 52% by the end of 2018. Margins for energy drinks are higher when compared to carbonated sweetened beverages. U.S. remains the leader in terms of market and volume. The emerging markets like India, Mexico and China are also witnessing a rise in energy drinks. The energy drinks sector is managing to expand with its attractive packaging and use of low sugar.
(Source: Company's Website)
