Monster Beverage (MNST) Misses Q4 EPS by 14c; Approves $1.75B Common Stock Buyback
Monster Beverage (NASDAQ: MNST) reported Q4 EPS of $0.68, $0.14 worse than the analyst estimate of $0.82. Revenue for the quarter came in at $645.4 million versus the consensus estimate of $698.4 million.
The Company’s Board of Directors has authorized a share repurchase program of up to $1.75 billion of the Company’s outstanding common stock. In addition, there is approximately $250 million available under the previously authorized $500 million share repurchase program. The Company expects to return capital in 2016 to its shareholders pursuant to share repurchases, which may be effected pursuant to open market transactions, a “modified Dutch auction” tender offer, accelerated share repurchase, privately negotiated transactions or otherwise, subject to applicable laws, regulations and approvals. The timing of the repurchases or “modified Dutch auction” tender offer will depend on a variety of factors, including market conditions, and the repurchase may be suspended or discontinued at any time.
Impact of the Coca-Cola Transaction
As a result of the long-term strategic partnership entered into with The Coca-Cola Company during the second quarter of 2015, the Company incurred obligations related to distributor terminations in the amount of $3.3 million and $224.0 million during the three- and twelve-months ended December 31, 2015, respectively. Such termination costs have been expensed in full and are included in operating expenses for the corresponding periods. In addition, the Company recognized revenue of $39.8 million related to the acceleration of deferred revenue associated with the terminated distributors during the year ended December 31, 2015 and incurred transaction expenses of $0.07 million and $15.5 million during the three- and twelve-months ended December 31, 2015. The Company recognized a gain on sale of its non-energy business in the amount of $161.5 million for the year ended December 31, 2015.
The following table summarizes the impact on operating income of the selected items discussed above for the three- and twelve-months ended December 31, 2015. (See “Reconciliation of GAAP and Non-GAAP Information” in the attached exhibit):
| Income Statement Items (in thousands): | Three-Months EndedDecember 31, 2015 | Twelve-Months EndedDecember 31, 2015 | ||||||||
| Included in Net Sales: | ||||||||||
| Accelerated recognition of deferred revenue | $ | - | $ | 39,761 | ||||||
| Included in Operating Expenses: | ||||||||||
| Distributor termination costs | $ | (3,342 | ) | $ | (224,000 | ) | ||||
| TCCC Transaction expenses | $ | (70 | ) | $ | (15,495 | ) | ||||
| Gain on sale of the non-energy business | $ | - | $ | 161,470 | ||||||
| Net Impact on Operating Income | $ | (3,412 | ) | $ | (38,264 | ) | ||||
For earnings history and earnings-related data on Monster Beverage (MNST) click here.