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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

Commission File Number 001-18761

MONSTER BEVERAGE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

    

47-1809393

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1 Monster Way

Corona, California 92879

(Address of principal executive offices) (Zip code)

(951) 739 - 6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

MNST

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  X    No __

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  X    No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __    No X

The registrant had 1,041,728,228 shares of common stock, par value $0.005 per share, outstanding as of April 26, 2024.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

MARCH 31, 2024

INDEX

Part I.

FINANCIAL INFORMATION

    

Page No.

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

Condensed Consolidated Statements of Income for the Three-Months Ended March 31, 2024 and 2023

4

Condensed Consolidated Statements of Comprehensive Income for the Three-Months Ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three-Months Ended March 31, 2024 and 2023

6

Condensed Consolidated Statements of Cash Flows for the Three-Months Ended March 31, 2024 and 2023

7

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

Part II.

OTHER INFORMATION

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

45

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

45

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

46

Signatures

47

2

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023

(In Thousands, Except Par Value) (Unaudited)

March 31, 

December 31, 

    

2024

    

2023

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

2,576,524

$

2,297,675

Short-term investments

 

984,201

 

 

955,605

Accounts receivable, net

 

1,370,239

 

 

1,193,964

Inventories

 

939,630

 

 

971,406

Prepaid expenses and other current assets

 

124,580

 

 

116,195

Prepaid income taxes

 

40,340

 

 

54,151

Total current assets

 

6,035,514

 

 

5,588,996

INVESTMENTS

 

8,162

 

 

76,431

PROPERTY AND EQUIPMENT, net

 

923,290

 

 

890,796

DEFERRED INCOME TAXES, net

 

175,271

 

 

175,003

GOODWILL

 

1,417,941

 

 

1,417,941

OTHER INTANGIBLE ASSETS, net

 

1,430,762

 

 

1,427,139

OTHER ASSETS

 

107,126

 

 

110,216

Total Assets

$

10,098,066

 

$

9,686,522

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

533,729

 

$

564,379

Accrued liabilities

 

204,679

 

 

183,988

Accrued promotional allowances

 

318,895

 

 

269,061

Deferred revenue

 

43,776

 

 

41,914

Accrued compensation

 

52,638

 

 

87,392

Income taxes payable

 

75,111

 

 

14,955

Total current liabilities

 

1,228,828

 

 

1,161,689

DEFERRED REVENUE

 

198,759

 

 

204,251

OTHER LIABILITIES

92,690

91,838

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS’ EQUITY:

Common stock - $0.005 par value; 5,000,000 shares authorized; 1,124,870 shares issued and 1,041,698 shares outstanding as of March 31, 2024; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023

5,624

5,613

Additional paid-in capital

 

5,034,948

 

 

4,975,115

Retained earnings

 

6,381,785

 

 

5,939,736

Accumulated other comprehensive loss

 

(157,940)

 

 

(125,337)

Common stock in treasury, at cost; 83,172 shares and 81,021 shares as of March 31, 2024 and December 31, 2023, respectively

 

(2,686,628)

 

 

(2,566,383)

Total stockholders’ equity

 

8,577,789

 

 

8,228,744

Total Liabilities and Stockholders’ Equity

$

10,098,066

 

$

9,686,522

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023

(In Thousands, Except Per Share Amounts) (Unaudited)

Three-Months Ended

March 31, 

    

2024

    

2023

NET SALES

$

1,899,098

$

1,698,930

COST OF SALES

 

871,969

 

801,081

GROSS PROFIT

 

1,027,129

 

897,849

OPERATING EXPENSES

 

485,138

 

412,785

OPERATING INCOME

 

541,991

 

485,064

INTEREST and OTHER INCOME, net

 

35,754

 

12,496

INCOME BEFORE PROVISION FOR INCOME TAXES

 

577,745

 

497,560

PROVISION FOR INCOME TAXES

135,696

100,116

NET INCOME

$

442,049

$

397,444

NET INCOME PER COMMON SHARE:

Basic

$

0.42

$

0.38

Diluted

$

0.42

$

0.38

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:

Basic

 

1,041,081

 

1,044,909

Diluted

 

1,051,282

 

1,059,069

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023

(In Thousands) (Unaudited)

Three-Months Ended

March 31, 

    

2024

    

2023

Net income, as reported

$

442,049

$

397,444

Other comprehensive income (loss):

Change in foreign currency translation adjustment

 

(30,695)

 

7,981

Change in net unrealized gain (loss) on available-for-sale investments

 

223

 

3,181

Change in net gain (loss) on commodity derivatives

 

(2,131)

 

Other comprehensive income (loss)

 

(32,603)

 

11,162

Comprehensive income

$

409,446

$

408,606

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023

(In Thousands) (Unaudited)

Accumulated Other

Total

Common stock

Additional

Retained

Comprehensive (Loss)

Treasury stock

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Earnings

    

Income

    

Shares

    

Amount

    

Equity

Balance, December 31, 2023

1,122,592

$

5,613

$

4,975,115

$

5,939,736

$

(125,337)

(81,021)

$

(2,566,383)

$

8,228,744

Stock-based compensation

 

21,452

21,452

Stock options/awards

 

2,278

11

38,381

38,392

Unrealized gain (loss), net on available-for-sale securities

 

 

 

 

 

223

 

 

 

223

Repurchase of common stock

(2,151)

(120,245)

(120,245)

Foreign currency translation

 

(30,695)

(30,695)

Net gain (loss) on commodity derivatives

(2,131)

(2,131)

Net income

 

442,049

442,049

 

Balance, March 31, 2024

 

1,124,870

$

5,624

$

5,034,948

$

6,381,785

$

(157,940)

(83,172)

$

(2,686,628)

$

8,577,789

Accumulated Other

Total

Common stock

Additional

Retained

Comprehensive (Loss)

Treasury stock

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Earnings

    

Income

    

Shares

    

Amount

    

Equity

Balance, December 31, 2022

1,283,688

$

6,418

$

4,776,804

$

9,001,173

$

(159,073)

(239,088)

$

(6,600,281)

$

7,025,041

 

Stock-based compensation

 

15,743

15,743

Stock options/awards

 

3,704

 

19

 

36,329

 

 

 

 

 

36,348

Unrealized gain (loss), net on available-for-sale securities

 

3,181

3,181

Repurchase of common stock

(1,688)

(90,378)

(90,378)

Retirement of treasury stock

(170,000)

(850)

425

(4,692,425)

170,000

4,692,850

Foreign currency translation

 

7,981

7,981

Net income

 

397,444

397,444

 

Balance, March 31, 2023

 

1,117,392

 

$

5,587

 

$

4,829,301

 

$

4,706,192

 

$

(147,911)

(70,776)

 

$

(1,997,809)

 

$

7,395,360

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023

(In Thousands) (Unaudited)

Three-Months Ended

March 31, 

    

2024

    

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

442,049

$

397,444

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

20,475

16,808

Non-cash lease expense

3,185

2,160

Gain on disposal of property and equipment

(177)

(385)

Stock-based compensation

22,472

16,051

Deferred income taxes

9

Effect on cash of changes in operating assets and liabilities:

Accounts receivable

(195,081)

(167,512)

Inventories

22,708

35,495

Prepaid expenses and other assets

(9,507)

1,273

Prepaid income taxes

11,840

3,986

Accounts payable

(9,062)

51,124

Accrued liabilities

28,259

14,207

Accrued promotional allowances

52,814

48,265

Accrued compensation

(35,653)

(30,261)

Income taxes payable

60,512

41,617

Other liabilities

335

(751)

Deferred revenue

(3,036)

(5,046)

Net cash provided by operating activities

412,142

424,475

CASH FLOWS FROM INVESTING ACTIVITIES:

Sales of available-for-sale investments

382,125

522,501

Purchases of available-for-sale investments

(342,228)

(518,751)

Purchases of property and equipment

(66,044)

(40,100)

Proceeds from sale of property and equipment

422

564

Additions to intangibles

(8,612)

(3,952)

Increase in other assets

(985)

(13,028)

Net cash used in investing activities

(35,322)

(52,766)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on debt

(2,896)

(7,271)

Issuance of common stock

38,392

36,348

Purchases of common stock held in treasury

(120,245)

(35,126)

Net cash used in financing activities

(84,749)

(6,049)

Effect of exchange rate changes on cash and cash equivalents

(13,222)

(141)

NET INCREASE IN CASH AND CASH EQUIVALENTS

278,849

365,519

CASH AND CASH EQUIVALENTS, beginning of period

2,297,675

1,307,141

CASH AND CASH EQUIVALENTS, end of period

$

2,576,524

$

1,672,660

SUPPLEMENTAL INFORMATION:

Cash paid during the period for:

Interest

$

91

$

96

Income taxes

$

63,634

$

56,985

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTHS ENDED MARCH 31, 2024 AND 2023

(In Thousands) (Unaudited) (Continued)

SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS

Included in accrued liabilities as of March 31, 2024 and 2023 were $11.7 million and $9.6 million, respectively, related to net additions to other intangible assets.

Included in accounts payable as of March 31, 2024 and 2023 were $3.2 million and $2.5 million, respectively, related to equipment purchases.

Included in accounts receivable as of March 31, 2024 was $3.0 million related to available-for-sale short-term investment sales.

Included in accrued liabilities as of March 31, 2023 was $55.3 million of withholding taxes due related to common stock purchased from employees.

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

1.

BASIS OF PRESENTATION

Reference is made to the Notes to Consolidated Financial Statements, in Monster Beverage Corporation and Subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2023 for a summary of significant accounting policies utilized by the Company and its consolidated subsidiaries and other disclosures, which should be read in conjunction with this Quarterly Report on Form 10-Q (“Form 10-Q”).

The Company’s condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations applicable to interim financial reporting. They do not include all the information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP. The information set forth in these interim condensed consolidated financial statements for the three-months ended March 31, 2024 and 2023, respectively, is unaudited and reflects all adjustments, which include only normal recurring adjustments and which in the opinion of management are necessary to make the interim condensed consolidated financial statements not misleading. Results of operations for periods covered by this report may not necessarily be indicative of results of operations for the full year.

The preparation of financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU No. 2023-07 are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the impact ASU No. 2023-07 will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update primarily require more detailed disclosures related to the rate reconciliation and income taxes paid. The amendments in ASU No. 2023-09 are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact ASU No. 2023-09 will have on its consolidated financial statements.

2.

REVENUE RECOGNITION

Revenues are accounted for in accordance with FASB Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”. The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as the Company’s affordable energy brands, Predator® and Fury®, (iii) Alcohol Brands segment (“Alcohol Brands”), which is comprised of various craft beers, hard seltzers and flavored malt beverages (“FMBs”) and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (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 and full service beverage distributors (“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 and gas chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

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 and gas 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.

The Company’s Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.

The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company’s bottlers/distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, control of the Company’s products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company’s finished goods. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of March 31, 2024 and December 31, 2023.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Distribution expenses to transport the Company’s products, where applicable, and warehousing expenses after manufacture are accounted for within operating expenses.

Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company’s energy drink products primarily include consideration given to the Company’s non-alcohol bottlers/distributors or retail customers, including, but not limited to, the following:

discounts granted off list prices to support price promotions to end-consumers by retailers;
reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;
the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities;
the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers;
incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals;
discounted or free products;
contractual fees given to the Company’s bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors’ sales territories; and
commissions to TCCC based on the Company’s sales to wholly-owned subsidiaries of TCCC (the “TCCC Subsidiaries”) and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the “TCCC Related Parties”).

The Company’s promotional allowance programs for its energy drink products are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, typically ranging from one week to one year. The Company’s promotional and other allowances for its energy drink products are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company’s anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.

Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.

The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company’s trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

Disaggregation of Revenue

The following tables disaggregate the Company’s revenue by geographical markets and reportable segments:

Three-Months Ended March 31, 2024

    

    

    

Latin

    

Asia Pacific

America

 

U.S. and

(including

and

 

Net Sales

    

Canada

    

EMEA1

    

Oceania)

    

Caribbean

    

Total

Monster Energy® Drinks

$

1,094,846

$

352,229

$

122,018

$

159,958

$

1,729,051

Strategic Brands

 

49,642

 

43,337

 

9,197

 

6,268

 

108,444

Alcohol Brands

56,070

56,070

Other

 

5,533

 

 

 

 

5,533

Total Net Sales

$

1,206,091

$

395,566

$

131,215

$

166,226

$

1,899,098

Three-Months Ended March 31, 2023

    

    

    

Latin

    

Asia Pacific

America

U.S. and

(including

and

Net Sales

    

Canada

    

EMEA1

    

Oceania)

    

Caribbean

    

Total

Monster Energy® Drinks

$

1,021,328

$

277,111

$

121,994

$

141,235

$

1,561,668

Strategic Brands

43,043

 

30,951

 

8,983

 

3,381

 

86,358

Alcohol Brands

46,290

46,290

Other

4,614

 

 

 

 

4,614

Total Net Sales

$

1,115,275

$

308,062

$

130,977

$

144,616

$

1,698,930

1Europe, Middle East and Africa (“EMEA”)

Contract Liabilities

Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of March 31, 2024, the Company had $242.5 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. As of December 31, 2023, the Company had $246.2 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. During both the three-months ended March 31, 2024 and 2023, $9.9 million of deferred revenue was recognized in net sales. See Note 10.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

3.

LEASES

The Company leases identified assets consisting primarily of office and warehouse space, warehouse equipment and vehicles. Leases are classified as either finance leases or operating leases based on criteria in ASC 842, “Leases”. The Company’s leases have remaining lease terms of less than one year to 10 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.

The components of lease cost were as follows:

Three-Months Ended March 31,

    

2024

    

2023

Operating lease cost

$

3,802

$

2,467

Short-term lease cost

 

2,670

 

979

Variable lease cost

 

213

 

215

Finance leases:

Amortization of right-of-use assets

 

595

 

123

Interest on lease liabilities

 

91

 

14

Finance lease cost

 

686

 

137

Total lease cost

$

7,371

$

3,798

Supplemental cash flow information was as follows:

Three-Months Ended March 31,

    

2024

    

2023

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows from operating leases

$

3,607

$

2,391

Operating cash outflows from finance leases

91

14

Financing cash outflows from finance leases

2,897

598

Right-of-use assets obtained in exchange for lease obligations:

Finance leases

747

2,227

Operating leases

1,091

313

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

Supplemental balance sheet information was as follows:

    

    

March 31,

    

December 31,

Balance Sheet Location

2024

2023

Operating leases:

 

  

 

  

 

  

Right-of-use assets

 

Other assets

$

56,421

$

58,845

Current lease liabilities

 

Accrued liabilities

$

11,122

$

11,088

Noncurrent lease liabilities

 

Other liabilities

 

46,474

 

48,459

Total operating lease liabilities

 

  

$

57,596

$

59,547

Finance leases:

 

  

 

  

 

  

Right-of-use assets

 

Property and equipment, net

$

10,091

$

11,147

Current lease liabilities

 

Accrued liabilities

$

4,297

$

6,449

Noncurrent lease liabilities

 

Other liabilities

 

14

 

19

Total finance lease liabilities

 

  

$

4,311

$

6,468

Weighted-average remaining lease term and weighted-average discount rate for the Company’s leases were as follows:

    

March 31, 2024

    

December 31, 2023

Weighted-average remaining lease term in years:

Operating leases

6.2

 

6.3

Finance leases

0.5

0.7

Weighted-average discount rate:

Operating leases

4.7

%  

4.7

%  

Finance leases

6.3

%  

6.3

%  

The following table outlines maturities of the Company’s lease liabilities as of March 31, 2024:

    

Undiscounted Future Lease Payments

    

Operating Leases

    

Finance Leases

2024 (from April 1, 2024 to December 31, 2024)

$

10,213

$

4,275

2025

 

11,942

 

118

2026

 

9,824

 

2

2027

 

9,242

 

2028

7,709

2029 and thereafter

 

17,820

 

Total lease payments

 

66,750

 

4,395

Less imputed interest

 

(9,154)

 

(84)

Total

$

57,596