Shares of Monster Beverage Corporation (MNST – Free Report) declined more than 6% in after-hours trading on Feb 28 after the company reported disappointing fourth-quarter 2017 results. It missed the Zacks Consensus Estimate on both counts.
Earnings & Revenue Discussion
Monster Beverage reported earnings of 35 cents per share, missing the Zacks Consensus Estimate of 37 cents. Earnings, however, increased from 30 cents a year ago.
Net sales of $810.4 million missed the Zacks Consensus Estimate of $842 million. The figure however improved 7.5% year over year. Foreign currency translation positively impacted net sales by $7.3 million, partially offset by 2% impact from inventory reductions by some of its international distributors.
Net sales to customers outside the United States increased 8.7% year over year to $210.4 million.
Quarterly Segment Details
Monster Energy Drinks: Net sales of the segment, which includes Monster Energy drinks, Monster Hydro energy drinks, and Mutant Super Soda drinks, were up 7.6% year over year to $736.1 million.
Strategic Brands: This segment includes various energy-drink brands acquired from Coca-Cola (KO – Free Report). Net sales at the segment rose 7.8% to $69.6 million in the quarter.
Other: Net sales at the segment, which includes some products of American Fruits & Flavors sold to independent third parties, were flat year over year at $4.7 million.
Inside the Headline Numbers
Fourth-quarter 2017 gross margin fell 400 basis points (bps) to 62.1% due to geographic sales mix since the company’s international operations have a lower profit margin.
Operating expenses, including $46.3 million in distributor termination expenses, decreased 4% year over year to $236.5 million. Operating income in the quarter was $267.1 million, up 6.1% year over year.
Selling expenses, as a percentage of net sales, were 13.6%, up 160 bps from the fourth-quarter 2016.
