Monster Beverage (MNST) Q2 2019 earnings summary

Executive summary

• Q2 net sales reached a record $1.104B, up 8.7% YoY; case sales rose 8.7% to 119.6M.

• Q2 net income increased 8.3% to $292.5M and diluted EPS rose to $0.53 from $0.48.

• H1 net sales grew 9.8% to $2.050B; net income increased 13.9% to $554.0M.

Financial highlights

• Q2 gross profit rose 6.6% to $661.3M, while gross margin declined to 59.9% from 61.1%; operating income increased 6.0% to $379.0M.

• H1 gross profit increased 8.7% to $1.235B and operating income rose 8.3% to $690.5M; operating margin eased to 33.7% from 34.2%.

• Q2 net sales benefited by $31.3M from price increases and faced a $25.9M unfavorable FX impact; H1 impacts were +$59.5M and -$47.9M, respectively.

• Q2 operating expenses increased 7.5% to $282.3M; H1 expenses rose 9.3% to $544.4M, driven by payroll, professional fees, sponsorships and marketing.

Outlook and guidance

• Cash from operations, cash resources and credit access were expected to cover working capital, expansion, capital assets and share purchases for at least the next 12 months.

• Capital expenditures were estimated at less than $100M through June 30, 2020, subject to change with future business opportunities.