SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2021

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-months ended March 31, 2021 and 2020 are as follows:

	Three-Months Ended
	March 31,
	2021		2020
Net sales:
Monster Energy® Drinks⁽¹⁾	$	1,170,280	$	992,454
Strategic Brands		67,809		64,538
Other		5,727		5,105
Corporate and unallocated		—		—
	$	1,243,816	$	1,062,097

	Three-Months Ended
	March 31,
	2021		2020
Operating Income:
Monster Energy® Drinks⁽¹⁾	$	464,819	$	411,141
Strategic Brands		45,140		36,719
Other		1,793		787
Corporate and unallocated		(97,606)		(83,659)
	$	414,146	$	364,988

	Three-Months Ended
	March 31,
	2021		2020
Income before tax:
Monster Energy® Drinks⁽¹⁾	$	464,968	$	411,178
Strategic Brands		45,140		36,719
Other		1,793		787
Corporate and unallocated		(98,514)		(82,824)
	$	413,387	$	365,860

(1) Includes $10.4 million and $10.6 million for the three-months ended March 31, 2021 and 2020, respectively, related to the recognition of deferred revenue.

	Three-Months Ended
	March 31,
	2021		2020
Depreciation and amortization:
Monster Energy® Drinks	$	9,022	$	9,651
Strategic Brands		264		2,030
Other		1,126		1,165
Corporate and unallocated		2,413		2,479
	$	12,825	$	15,325

Corporate and unallocated expenses for the three-months ended March 31, 2021 include $65.1 million of payroll costs, of which $18.3 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $20.4 million attributable to professional service expenses, including accounting and legal costs, and $12.1 million of other operating expenses. Corporate and unallocated expenses for the three-months ended March 31, 2020 include $55.3 million of payroll costs, of which $17.1 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $16.3 million attributable to professional service expenses, including accounting and legal costs, and $12.1 million of other operating expenses.

Coca-Cola Consolidated, Inc. accounted for approximately 12% of the Company’s net sales for both the three-months ended March 31, 2021 and 2020.

Reyes Coca-Cola Bottling, LLC accounted for approximately 9% and 11% of the Company’s net sales for the three-months ended March 31, 2021 and 2020, respectively.

Coca-Cola European Partners accounted for approximately 11% and 10% of the Company’s net sales for the three-months ended March 31, 2021 and 2020, respectively.

Net sales to customers outside the United States amounted to $459.4 million and $356.8 million for the three-months ended March 31, 2021 and 2020, respectively. Such sales were approximately 37% and 34% of net sales for the three-months ended March 31, 2021 and 2020, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of March 31, 2021 and December 31, 2020 are as follows:

	March 31,		December 31,
	2021		2020
Goodwill and other intangible assets:
Monster Energy® Drinks	$	1,410,816	$	1,406,646
Strategic Brands		975,130		974,132
Other		8,789		9,911
Corporate and unallocated		—		—
	$	2,394,735	$	2,390,689