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Monster Beverage (MNST) Q1 Earnings In Line, Sales Miss

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Shares of Monster Beverage Corporation (MNST - Free Report) declined more than 8% on May 8, after the company reported disappointing first-quarter 2018 results. Although the bottom line met the Zacks Consensus Estimate, the top line missed the same.

Earnings & Revenue Discussion

Monster Beverage’s adjusted earnings came in at 39 cents per share, meeting the Zacks Consensus Estimate. However, the company reported earnings of 38 cents, which include distributor termination expenses that reduced the reported earnings by approximately 1 cent per share, after tax. Then again, reported earnings increased 22.6% year over year.

Net sales of $850.9 million missed the consensus mark of $859.8 million. The figure however improved 14.7% from the prior-year quarter. Foreign currency translation positively impacted net sales by $17.7 million, partially offset by $9.9 million impact due to the adoption of Accounting Standards Codification (“ASC”) 606.

Net sales to customers outside the United States increased 26.8% year over year to $242.1 million.

Monster Beverage Corporation Price, Consensus and EPS Surprise

 

Monster Beverage Corporation Price, Consensus and EPS Surprise | Monster Beverage Corporation Quote

Quarterly Segment Details

Monster Energy Drinks: Net sales of the segment, which includes Monster Energy, Monster Hydro energy and Mutant Super Soda drinks, were up 16.7% from the year-ago quarter to $780.5 million.

Strategic Brands: This segment includes various energy-drink brands acquired from Coca-Cola (KO - Free Report) . Net sales at the segment declined 3.3% to $65.8 million in the quarter. The downside was mainly due to the adoption of ASC 606.

Other: Net sales at the segment, which includes some products of American Fruits & Flavors sold to independent third parties, were down 15.9% year over year at $4.7 million.

Inside the Headline Numbers

First-quarter 2018 gross margin fell 420 basis points (bps) to 60.6% due to higher promotional allowances, the adoption of ASC 606, geographical and domestic product sales mix.

Operating expenses, including $7 million in distributor termination expenses, increased 8.6% from the prior-year quarter to $235.3 million. Operating income in the quarter was $279.9 million, up 5.9% year over year.

Selling expenses, as a percentage of net sales, were 11.5%, down 20 bps from first-quarter 2017.

Effective tax rate in the quarter was 23.3% compared with 32.8% in the prior-year quarter.

Financials

Monster Beverage ended the quarter with cash and cash equivalents of $511.4 million compared with $528.6 million as of Dec 31, 2017.

Zacks Rank

Currently, Monster Beverage carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

The Coca-Cola Company (KO - Free Report) started off 2018 on a strong note, beating the Zacks Consensus Estimate on both counts in first-quarter 2018.

Dr Pepper Snapple Group’s first-quarter 2018 earnings missed the Zacks Consensus Estimate while revenues beat the same. Revenues benefited from growth in sales volumes, favorable product and package mix, segment mix as well as foreign currency translation.

PepsiCo, Inc. (PEP - Free Report) reported first-quarter 2018 results, with both earnings and revenues beating the Zacks Consensus Estimate. The improvement was mainly attributable to strong performances in its international divisions, propelled by higher revenue growth in the developing and emerging markets.

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