SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2023

SEGMENT INFORMATION

SEGMENT INFORMATION

18. SEGMENT INFORMATION

The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks, Reign Storm^TM total wellness energy drinks, Reign® Total Body Fuel high performance energy drinks, Bang Energy® drinks and Monster Tour Water® (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, (iii) Alcohol Brands segment, which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast Unleashed^TM FMBs and (iv) Other segment, which is primarily 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 and gas 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 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.

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.

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.

Generally, the Alcohol Brands segment has lower gross profit margin percentages than the Monster Energy® Drinks 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 nine-months ended September 30, 2023 and 2022 were as follows:

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net sales:
Monster Energy® Drinks1	$	1,708,242	$	1,502,219	$	4,956,797	$	4,444,755
Strategic Brands		98,763		88,802		284,810		260,536
Alcohol Brands2		42,326		26,818		149,692		74,472
Other		6,697		6,447		18,620		18,356
Corporate and unallocated		—		—		—		—
	$	1,856,028	$	1,624,286	$	5,409,919	$	4,798,119

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Operating Income:
Monster Energy® Drinks1	$	603,670	$	492,534	$	1,762,410	$	1,388,815
Strategic Brands		52,730		47,282		159,639		145,977
Alcohol Brands2		(11,734)		(10,262)		(25,193)		(19,873)
Other		1,296		977		2,654		3,138
Corporate and unallocated		(135,435)		(112,601)		(380,114)		(327,688)
	$	510,527	$	417,930	$	1,519,396	$	1,190,369

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Income before tax:
Monster Energy® Drinks1	$	604,688	$	493,486	$	1,765,018	$	1,391,026
Strategic Brands		52,746		47,319		159,683		146,082
Alcohol Brands2		(11,757)		(10,124)		(25,208)		(19,620)
Other		1,315		977		2,679		3,139
Corporate and unallocated		(65,108)		(111,579)		(283,766)		(342,190)
	$	581,884	$	420,079	$	1,618,406	$	1,178,437

(1) Includes $10.0 million for both the three-months ended September 30, 2023 and 2022 related to the recognition of deferred revenue. Includes $30.0 million for both the nine-months ended September 30, 2023 and 2022 related to the recognition of deferred revenue.

(2) For the nine-months ended September 30, 2022, effectively from February 17, 2022 to September 30, 2022.

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Depreciation and amortization:
Monster Energy® Drinks	$	10,023	$	7,773	$	27,830	$	24,035
Strategic Brands		199		234		616		709
Alcohol Brands		3,816		3,713		11,973		9,679
Other		50		1,121		1,224		3,345
Corporate and unallocated		3,891		2,768		8,721		8,272
	$	17,979	$	15,609	$	50,364	$	46,040

Corporate and unallocated expenses for the three-months ended September 30, 2023 include $82.7 million of payroll costs, of which $17.4 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $27.3 million attributable to professional service expenses, including accounting and legal costs, and $25.4 million of other operating expenses.

Corporate and unallocated expenses for the three-months ended September 30, 2022 include $69.4 million of payroll costs, of which $16.2 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $26.0 million attributable to professional service expenses, including accounting and legal costs, and $17.2 million of other operating expenses.

Corporate and unallocated expenses for the nine-months ended September 30, 2023 include $245.5 million of payroll costs, of which $51.1 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $74.7 million attributable to professional service expenses, including accounting and legal costs, and $59.9 million of other operating expenses.

Corporate and unallocated expenses for the nine-months ended September 30, 2022 include $207.6 million of payroll costs, of which $48.5 million was attributable to stock-based compensation expenses (see Note 15 “Stock-Based Compensation”), as well as $69.3 million attributable to professional service expenses, including accounting and legal costs, and $50.8 million of other operating expenses.

Coca-Cola Europacific Partners accounted for approximately 14% and 12% of the Company’s net sales for the three-months ended September 30, 2023 and 2022, respectively. Coca-Cola Europacific Partners accounted for approximately 13% of the Company’s net sales for both the nine-months ended September 30, 2023 and 2022.

Coca-Cola Consolidated, Inc. accounted for approximately 10% and 11% of the Company’s net sales for the three-months ended September 30, 2023 and 2022, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 10% of the Company’s net sales for both the nine-months ended September 30, 2023 and 2022.

Reyes Holdings, LLC accounted for approximately 9% and 10% of the Company’s net sales for the three-months ended September 30, 2023 and 2022, respectively. Reyes Holdings, LLC accounted for approximately 9% and 10% of the Company’s net sales for the nine-months ended September 30, 2023 and 2022, respectively.

Net sales to customers outside the United States amounted to $733.7 million and $610.6 million for the three-months ended September 30, 2023 and 2022, respectively. Such sales were approximately 40% and 38% of net sales for the three-months ended September 30, 2023 and 2022, respectively. Net sales to customers outside the United States amounted to $2.07 billion and $1.81 billion for the nine-months ended September 30, 2023 and 2022, respectively. Such sales were approximately 38% of net sales for both the nine-months ended September 30, 2023 and 2022.

Goodwill and other intangible assets for the Company’s reportable segments as of September 30, 2023 and December 31, 2022 were as follows:

	September 30,		December 31,
	2023		2022
Goodwill and other intangible assets:
Monster Energy® Drinks	$	1,667,462	$	1,424,212
Strategic Brands		982,311		979,896
Alcohol Brands		227,615		233,140
Other		—		1,103
	$	2,877,388	$	2,638,351