XML 37 R26.htm IDEA: XBRL DOCUMENT v3.20.2
SEGMENT INFORMATION
9 Months Ended
Sep. 30, 2020
SEGMENT INFORMATION  
SEGMENT INFORMATION

18.          SEGMENT INFORMATION

The Company has three operating and reportable segments: (i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks and Reign Total Body Fuel® high performance energy drinks, (ii) Strategic Brands segment, which is primarily comprised of the various energy drink brands acquired from TCCC in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment, which is comprised of the AFF Third-Party Products.

The Company’s Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged drinks primarily to bottlers/distributors. In some cases, the Company sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

The Company’s Strategic Brands segment primarily generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.

Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margin percentages than the Strategic Brands segment.

Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided in the Company’s reportable segments, as management does not measure or allocate such assets on a segment basis.

The net revenues derived from the Company’s reportable segments and other financial information related thereto for the three- and nine-months ended September 30, 2020 and 2019 are as follows:

Three-Months Ended

Nine-Months Ended

September 30, 

September 30, 

2020

    

2019

    

2020

    

2019

Net sales:

Monster Energy® Drinks⁽¹⁾

$

1,163,419

$

1,061,383

$

3,183,559

$

2,950,877

Strategic Brands

 

74,325

 

66,333

 

198,429

 

215,763

Other

 

8,618

 

5,861

 

20,367

 

16,973

Corporate and unallocated

 

 

 

 

$

1,246,362

$

1,133,577

$

3,402,355

$

3,183,613

Three-Months Ended

Nine-Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Operating Income:

Monster Energy® Drinks⁽¹⁾ ⁽²⁾

$

502,392

$

433,848

$

1,366,920

$

1,187,652

Strategic Brands

 

43,875

 

35,107

 

118,287

 

130,762

Other

 

2,368

 

1,005

 

4,780

 

3,026

Corporate and unallocated

 

(90,034)

 

(74,517)

 

(259,135)

 

(235,546)

$

458,601

$

395,443

$

1,230,852

$

1,085,894

Three-Months Ended

Nine-Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Income before tax:

Monster Energy® Drinks⁽¹⁾ ⁽²⁾

$

502,500

$

434,003

$

1,367,096

$

1,187,916

Strategic Brands

 

43,876

 

35,106

 

118,287

 

130,758

Other

 

2,368

 

1,005

 

4,780

 

3,031

Corporate and unallocated

 

(94,711)

 

(71,550)

 

(264,802)

 

(226,976)

$

454,033

$

398,564

$

1,225,361

$

1,094,729

(1)Includes $10.5 million and $10.7 million for the three-months ended September 30, 2020 and 2019, respectively, related to the recognition of deferred revenue. Includes $31.6 million and $35.6 million for the nine-months ended September 30, 2020 and 2019, respectively, related to the recognition of deferred revenue.
(2)The three-months ended September 30, 2020 and 2019 includes no distributor termination costs. Includes $0.2 million and $11.0 million for the nine-months ended September 30, 2020 and 2019, respectively, related to distributor termination costs.

Three-Months Ended

Nine-Months Ended

September 30, 

September 30, 

    

2020

    

2019

    

2020

    

2019

Depreciation and amortization:

Monster Energy® Drinks

$

8,713

$

9,319

$

27,687

$

29,449

Strategic Brands

 

227

 

1,990

 

3,932

 

5,925

Other

 

1,136

 

1,162

 

3,495

 

3,475

Corporate and unallocated

 

2,741

 

2,050

 

7,794

 

6,172

$

12,817

$

14,521

$

42,908

$

45,021

Corporate and unallocated expenses for the three- months ended September 30, 2020 include $61.7 million of payroll costs, of which $19.2 million was attributable to stock-based compensation expenses (see Note 15 "Stock-Based Compensation"), as well as $16.7 million attributable to professional service expenses, including accounting and legal costs, and $11.6 million of other operating expenses. Corporate and unallocated expenses for the three-months ended September 30, 2019 include $50.1 million of payroll costs, of which $16.0 million was attributable to stock-based compensation expenses (see Note 15 "Stock-Based Compensation"), as well as $13.3 million attributable to professional service expenses, including accounting and legal costs, and $11.1 million of other operating expenses.

Corporate and unallocated expenses for the nine-months ended September 30, 2020 include $173.5 million of payroll costs, of which $52.7 million was attributable to stock-based compensation expenses (see Note 15 "Stock-Based Compensation"), as well as $50.1 million attributable to professional service expenses, including accounting and legal costs, and $35.5 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2019 include $151.0 million of payroll costs, of which $46.9 million was attributable to stock-based compensation expenses (see Note 15 "Stock-Based Compensation"), as well as $49.2 million attributable to professional service expenses, including accounting and legal costs, and $35.3 million of other operating expenses.

Coca-Cola Consolidated, Inc. accounted for approximately 12% and 13% of the Company’s net sales for the three- months ended September 30, 2020 and 2019, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 12% and 13% of the Company's net sales for the nine- months ended September 30, 2020 and 2019, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 11% and 12% of the Company’s net sales for the three- months ended September 30, 2020 and 2019, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 11% and 12% of the Company's net sales for the nine-months ended September 30, 2020 and 2019 , respectively.

Coca-Cola European Partners accounted for approximately 11% and 10% of the Company’s net sales for the three- months ended September 30, 2020 and 2019, respectively. Coca-Cola European Partners accounted for approximately 10% of the Company's net sales for both the nine- months ended September 30, 2020 and 2019.

Net sales to customers outside the United States amounted to $444.5 million and $379.8 million for the three- months ended September 30, 2020 and 2019, respectively. Such sales were approximately 36% and 34% of net sales for the three- months ended September 30, 2020 and 2019, respectively. Net sales to customers outside the United States amounted to $1.13 billion and $1.01 billion for the nine-months ended September 30, 2020 and 2019, respectively. Such sales were approximately 33% and 32% of net sales for the nine-months ended September 30, 2020 and 2019, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of September 30, 2020 and December 31, 2019 are as follows:

 

September 30, 

 

December 31, 

    

2020

    

2019

Goodwill and other intangible assets:

Monster Energy® Drinks

$

1,404,754

$

1,384,940

Strategic Brands

 

975,392

 

984,393

Other

 

11,034

 

14,415

Corporate and unallocated

 

 

$

2,391,180

$

2,383,748