SEGMENT INFORMATION

6 Months Ended

Jun. 30, 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 ready-to-drink packaged drinks 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 six-months ended June 30, 2021 and 2020 are as follows:

	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net sales:
Monster Energy® Drinks⁽¹⁾	$	1,367,094	$	1,027,686	$	2,537,374	$	2,020,140
Strategic Brands		86,935		59,566		154,744		124,104
Other		7,905		6,644		13,633		11,749
Corporate and unallocated		—		—		—		—
	$	1,461,934	$	1,093,896	$	2,705,751	$	2,155,993

	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Operating Income:
Monster Energy® Drinks⁽¹⁾	$	547,269	$	453,388	$	1,012,088	$	864,528
Strategic Brands		54,074		37,692		99,214		74,411
Other		2,230		1,626		4,024		2,412
Corporate and unallocated		(77,598)		(85,442)		(175,203)		(169,099)
	$	525,975	$	407,264	$	940,123	$	772,252

	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Income before tax:
Monster Energy® Drinks⁽¹⁾	$	547,619	$	453,418	$	1,012,587	$	864,596
Strategic Brands		54,080		37,692		99,221		74,411
Other		2,230		1,626		4,024		2,412
Corporate and unallocated		(77,082)		(87,268)		(175,598)		(170,090)
	$	526,847	$	405,468	$	940,234	$	771,329

(1) Includes $10.4 million and $10.5 million for the three- months ended June 30, 2021 and 2020, respectively, related to the recognition of deferred revenue. Includes $20.9 million and $21.1 million for the six-months ended June 30, 2021 and 2020, respectively, related to the recognition of deferred revenue.

	Three-Months Ended				Six-Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Depreciation and amortization:
Monster Energy® Drinks	$	8,816	$	9,322	$	17,838	$	18,974
Strategic Brands		285		1,675		549		3,705
Other		1,126		1,194		2,252		2,358
Corporate and unallocated		2,447		2,574		4,860		5,053
	$	12,674	$	14,765	$	25,499	$	30,090

Corporate and unallocated expenses for the three-months ended June 30, 2021 include $61.2 million of payroll costs, of which $17.3 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $21.0 million attributable to professional service expenses, including accounting and legal costs, and $12.3 million of other operating expenses. Corporate and unallocated expenses for the three- months ended June 30, 2021 were partially offset by $16.9 million due to the reversal of amounts previously accrued in connection with an intellectual property claim. Corporate and unallocated expenses for the three-months ended June 30, 2020 include $56.5 million of payroll costs, of which $15.9 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $17.1 million attributable to professional service expenses, including accounting and legal costs, and $11.8 million of other operating expenses.

Corporate and unallocated expenses for the six-months ended June 30, 2021 include $126.3 million of payroll costs, of which $35.6 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $41.4 million attributable to professional service expenses, including accounting and legal costs, and $24.4 million of other operating expenses. Corporate and unallocated expenses for the six-months ended June 30, 2021, were partially offset by $16.9 million due to the reversal of amounts previously accrued in connection with an intellectual property claim. Corporate and unallocated expenses for the six-months ended June 30, 2020 include $111.8 million of payroll costs, of which $33.0 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $33.5 million attributable to professional service expenses, including accounting and legal costs, and $23.8 million of other operating expenses.

Coca-Cola Consolidated, Inc. accounted for approximately 11% and 13% of the Company’s net sales for the three-months ended June 30, 2021 and 2020, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 11% and 12% of the Company’s net sales for the six-months ended June 30, 2021 and 2020, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 11% of the Company’s net sales for both the three-months ended June 30, 2021 and 2020. Reyes Coca-Cola Bottling, LLC accounted for approximately 10% and 11% of the Company’s net sales for the six-months ended June 30, 2021 and 2020, respectively.

Coca-Cola Europacific Partners (formerly Coca-Cola European Partners) accounted for approximately 12% and 8% of the Company’s net sales for the three-months ended June 30, 2021 and 2020, respectively. Coca-Cola Europacific Partners accounted for approximately 12% and 9% of the Company’s net sales for the six-months ended June 30, 2021 and 2020, respectively.

Net sales to customers outside the United States amounted to $546.3 million and $328.3 million for the three-months ended June 30, 2021 and 2020, respectively. Such sales were approximately 37% and 30% of net sales for the three-months ended June 30, 2021 and 2020, respectively. Net sales to customers outside the United States amounted to $1.0 billion and $685.1 million for the six-months ended June 30, 2021 and 2020, respectively. Such sales were approximately 37% and 32% of net sales for the six-months ended June 30, 2021 and 2020, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of June 30, 2021 and December 31, 2020 are as follows:

	June 30,		December 31,
	2021		2020
Goodwill and other intangible assets:
Monster Energy® Drinks	$	1,406,319	$	1,406,646
Strategic Brands		975,957		974,132
Other		7,690		9,911
Corporate and unallocated		—		—
	$	2,389,966	$	2,390,689