MONSTER BEVERAGE CORPORATION Our Business
When this report uses the words "the Company", "we", "us", and "our", these
words refer to
The COVID - 19 Pandemic
The current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the global economy and financial markets. The human and economic consequences of the COVID-19 pandemic as well as the measures being taken by governments, and as a result businesses (including the Company and its suppliers, full service beverage bottlers/distributors ("bottlers/distributors"), co-packers and other service providers) and the public at large to limit the COVID-19 pandemic's spread, has directly and indirectly impacted our business and results of operations. The duration and severity of this impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning the COVID-19 pandemic, the actions taken to limit its spread and the economic impact on local, regional, national and international markets. See the section entitled "Risk Factors" in Item 1A of this Quarterly Report.
Over the past few months, we have been actively addressing the COVID-19 pandemic with a global task force team working to mitigate the potential impacts to our people and business.
Health and Safety of our
From the beginning of the COVID-19 pandemic, our top priority has been the
health, safety and well-being of our employees. Early in
Customer Demand
The COVID-19 pandemic did not have a material adverse impact on our net and
gross sales for the three-months ended
Any reduced demand for our products or change in consumer purchasing and consumption patterns, as well as continued economic uncertainty as a result of the COVID-19 pandemic, could adversely affect the financial conditions of retailers and consumers, resulting in reduced or canceled orders for our products, purchase returns and closings of retail or wholesale establishments or other locations in which our products are sold.
Our Distribution and Supply Chain
As of the date of this filing, we do not foresee a material impact on the ability of our co-packers to manufacture and our bottlers/distributors to distribute our products as a result of the COVID-19 pandemic. In addition, we are not experiencing raw material or finished product shortages in our supply chain. However, depending on the duration of any COVID-19 pandemic related issues, we may experience material disruptions in our supply chain as the pandemic continues.
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Liquidity and Capital Resources
As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below.
Overview
We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:
? Monster Energy® ? NOS® ? Monster Energy Ultra® ? Full Throttle® ? Monster Rehab® ? Burn® ? Monster MAXX® ? Mother® ? Java Monster® ? Nalu® ? Muscle Monster® ? Ultra Energy® ? Espresso Monster® ? Play® and Power Play® (stylized) ? Punch Monster® ? Relentless® ? Juice Monster® ? BPM® ? Monster Hydro® ? BU®
? Monster HydroSport Super Fuel® ? Gladiator® ? Monster Dragon Tea®
? Samurai®
? Caffé Monster® ? Live+®
? Reign Total Body Fuel® ? Predator®
? Reign Inferno® Thermogenic Fuel
We have three operating and reportable segments, (i) Monster Energy® Drinks
segment ("Monster Energy® Drinks"), which is primarily comprised of our Monster
Energy® drinks and Reign Total Body Fuel® high performance energy drinks,
(ii) Strategic Brands segment ("Strategic Brands"), which is comprised primarily
of the various energy drink brands acquired from The Coca-Cola Company ("TCCC")
in 2015 as well as our affordable energy brands, and (iii) Other segment
("Other"), which is comprised of certain products sold by
During the three-months ended
? Monster Dragon Tea® Lemon Ice Tea
? Monster Energy Ultra Fiesta®
? Monster Energy Ultra Rosa®
? Monster Hydro® Super Sport Blue Streak
? Monster Hydro® Super Sport Red Dawg
? Java Monster® 300 French Vanilla
? Java Monster® 300 Mocha
? Reign Inferno® Thermogenic Fuel Jalapeno Strawberry
? Reign Inferno® Thermogenic Fuel Red Dragon
? Reign Inferno® Thermogenic Fuel True BLU
? NOS® Turbo ? Burn® Dark Energy ? Burn® Peach
? Nalu® Black Tea &
? Nalu® Green Tea & Ginger
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In the normal course of business, we discontinue certain products and/or product
lines. Those products or product lines discontinued in the three-months ended
Many of the above launches were negatively impacted by the COVID-19 pandemic and we did not achieve planned distribution levels, in part due to certain retailers postponing implementation of their new planned spring schematics, which included our innovation products. We are developing plans with our bottlers/distributors to reprioritize these recent innovation launches to ensure that we are able to maximize their distribution, as soon as normalcy returns, particularly in the convenience and gas channel.
Our net sales of
Our growth strategy includes expanding our international business. Net sales to
customers outside
Our customers are primarily bottlers/distributors, retail grocery and specialty
chains, wholesalers, club stores, mass merchandisers, convenience chains, drug
stores, foodservice customers and the military. Percentages of our gross sales
to our various customer types for the three-months ended
Three-Months Ended
March 31,
2020 2019
U.S. full service bottlers/distributors 55 % 59 %
International full service bottlers/distributors 35 % 32 % Club stores and mass merchandisers
8 % 8 %
Retail grocery, specialty chains and wholesalers 1 % 1 %
Other 1 % 0 %
Our customers include
Coca-Cola Consolidated, Inc. accounted for approximately 12% and 13% of our net
sales for the three-months ended
Coca-Cola European Partners accounted for approximately 10% and 9% of our net
sales for the three-months ended
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Results of Operations
The following table sets forth key statistics for the three-months ended March
31, 2020 and 2019.
Three-Months Ended Percentage
(In thousands, except per share amounts) March 31, Change
2020 2019 20 vs. 19
Net sales1 $ 1,062,097 $ 945,991 12.3 %
Cost of sales 424,901 372,459 14.1 %
Gross profit*1 637,196 573,532 11.1 %
Gross profit as a percentage of net sales 60.0 % 60.6 %
Operating expenses2 272,208 262,071 3.9 %
Operating expenses as a percentage of net sales 25.6 % 27.7 %
Operating income1,2 364,988 311,461 17.2 %
Operating income as a percentage of net sales 34.4 % 32.9 %
Interest and other income, net 872 2,742 (68.2) %
Income before provision for income taxes1,2 365,860 314,203 16.4 %
Provision for income taxes 87,025 52,718 65.1 %
Income taxes as a percentage of income before taxes 23.8 % 16.8 %
Net income1,2 $ 278,835 $ 261,485 6.6 %
Net income as a percentage of net sales 26.3 % 27.6 %
Net income per common share:
Basic $ 0.52 $ 0.48 8.0 %
Diluted $ 0.52 $ 0.48 8.2 %
Case sales (in thousands)
(in 192-ounce case equivalents) 115,599 101,284 14.1 %
1Includes
2Includes
*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.
Results of Operations for the Three-Months Ended
Net sales for the Monster Energy® Drinks segment were
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Reign Total Body Fuel® high performance energy drinks. Net changes in foreign
currency exchange rates had an unfavorable impact on net sales for the Monster
Energy® Drinks segment of approximately
Net sales for the Strategic Brands segment were
Net sales for the Other segment were
Case sales, in 192-ounce case equivalents, were 115.6 million cases for the
three-months ended
Gross Profit. Gross profit was
Gross profit as a percentage of net sales decreased to 60.0% for the
three-months ended
Operating Expenses. Total operating expenses were
Operating Income. Operating income was
Operating income for the Monster Energy® Drinks segment, exclusive of corporate
and unallocated expenses, was
Operating income for the Strategic Brands segment, exclusive of corporate and
unallocated expenses, was
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Operating income for the Other segment, exclusive of corporate and unallocated
expenses, was
Interest and Other Income, net. Interest and other non-operating income, net,
was
Provision for Income Taxes. Provision for income taxes was
Net Income. Net income was
Non-GAAP Financial Measures
Gross Sales**. Gross sales were
Gross sales for the Monster Energy® Drinks segment were
Gross sales of our Strategic Brands segment were
Gross sales of our Other segment were
Promotional allowances, commissions and other expenses, as described in the
footnote below, were
**Gross sales are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and overall Company performance. The use of gross sales allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross sales provides a useful measure of our operating performance. The use of gross sales is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined
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by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.
The following table reconciles the non-GAAP financial measure of gross sales with the most directly comparable GAAP financial measure of net sales:
Three-Months Ended Percentage
March 31, Change
(In thousands) 2020 2019 20 vs. 19
Gross sales, net of discounts and returns $ 1,236,060 $ 1,090,426 13.4 %
Less: Promotional allowances, commissions and other
expenses*** 173,963 144,435 20.4 %
Net Sales $ 1,062,097 $ 945,991 12.3 %
***Although the expenditures described in this line item are determined in
accordance with GAAP and meet GAAP requirements, the presentation thereof does
not conform to GAAP presentation requirements. Additionally, our definition of
promotional and other allowances may not be comparable to similar items
presented by other companies. Promotional and other allowances primarily include
consideration given to our bottlers/distributors or retail customers including,
but not limited to the following: (i) discounts granted off list prices to
support price promotions to end-consumers by retailers; (ii) reimbursements
given to our 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; (iii) our agreed share of fees given to
bottlers/distributors and/or directly to retailers for advertising, in-store
marketing and promotional activities; (iv) our agreed share of slotting, shelf
space allowances and other fees given directly to retailers, club stores and/or
wholesalers; (v) incentives given to our bottlers/distributors and/or retailers
for achieving or exceeding certain predetermined sales goals; (vi) discounted or
free products; (vii) contractual fees given to our bottlers/distributors related
to sales made by us direct to certain customers that fall within the
bottlers'/distributors' sales territories; and (viii) certain commissions paid
based on sales to our bottlers/distributors. The presentation of promotional and
other allowances facilitates an evaluation of their impact on the determination
of net sales and the spending levels incurred or correlated with such sales.
Promotional and other allowances constitute a material portion of our marketing
activities. Our promotional allowance programs with our numerous
bottlers/distributors and/or retailers 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,
ranging from one week to one year. The primary drivers of our promotional and
other allowance activities for the three-months ended
Sales
The table below discloses selected quarterly data regarding sales for the
three-months ended
Sales of beverages are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates as if converted into finished products sold by us.
Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. It has been our experience that beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they may be less seasonal than the seasonality of traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and
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changes in advertising and promotional expenses. The COVID-19 pandemic may also have an impact on consumer behavior and change the seasonal fluctuation of our business.
Three-Months Ended
March 31 ,(In thousands, except average net sales per case) 2020 2019 Net sales
$ 1,062,097 $ 945,991 Less: AFF third-party sales (5,105) (5,321) Adjusted net sales1$ 1,056,992 $ 940,670 Case sales by segment: Monster Energy® Drinks 98,252 83,475 Strategic Brands 17,346 17,809 Other - - Total case sales 115,598 101,284 Average net sales per case$ 9.14 $ 9.29
1Excludes Other segment net sales of
See Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Our Business" for additional information related to the increase in sales.
Liquidity and Capital Resources
Cash and cash equivalents, short-term and long-term investments. We believe that
cash available from operations, including our cash resources and access to
credit, will be sufficient for our working capital needs, including purchase
commitments for raw materials and inventory, increases in accounts receivable,
payments of tax liabilities, expansion and development needs, purchases of
capital assets, purchases of equipment, purchases of real property and purchases
of shares of our common stock, through at least the next 12 months. Our sources
and uses of cash were not materially impacted by the COVID-19 pandemic in the
three-months ended
At
Based on our current plans, at this time we estimate that capital expenditures
(exclusive of common stock repurchases) are likely to be less than
Cash flows provided by operating activities. Cash provided by operating
activities was
For the three-months ended
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million of depreciation and amortization and
For the three-months ended
Cash flows provided by investing activities. Cash provided by investing
activities was
For both the three-months ended
Cash flows used in financing activities. Cash used in financing activities was
Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.
Of our
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The following represents a summary of the Company's contractual commitments and
related scheduled maturities as of
Payments due by period (in thousands)
Less than 1-3 3-5 More than
Obligations Total 1 year years years 5 years
Contractual Obligations1 $ 200,516 $ 141,728 $ 56,337 $ 2,451 $ -
Finance Leases 2,234 2,234 - - -
Operating Leases 33,289 3,710 6,814 5,740 17,025
Purchase Commitments2 70,513 70,513 - - -
$ 306,552 $ 218,185 $ 63,151 $ 8,191 $ 17,025 1Contractual obligations include our obligations related to sponsorships and other commitments.
2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.
In addition, approximately
Critical Accounting Policies
There have been no material changes to our critical accounting policies from the
information provided in Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations", included in our Annual Report on
Form 10-K for the fiscal year ended
Recent Accounting Pronouncements
The information required by this Item is incorporated herein by reference to the Notes to Condensed Consolidated Financial Statements - Note 2. Recent Accounting Pronouncements, in Part I, Item 1, of this Quarterly Report on Form 10-Q.
Inflation
We believe inflation did not have a significant impact on our results of operations for the periods presented.
Forward-Looking Statements
Certain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act") regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management's plans and objectives for future operations, or a statement of future economic performance contained in management's discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical information, are forward-looking statements within the meaning of the Exchange Act. Without limiting the foregoing, the words "believes," "thinks," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements.
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Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control, and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following:
The human and economic consequences of the COVID-19 pandemic, as well as the
? measures being taken by governments, and as a result, businesses (including the
Company and its suppliers, bottlers/ distributors, co-packers and other service
providers) and the public at large to limit the COVID-19 pandemic;
The slowing of growth and/or decline in sales of the domestic and international
energy drink categories generally, including the convenience and gas channel
? (which is our largest channel), and the impact on demand for our products
resulting from deteriorating economic conditions and financial uncertainties
due to the COVID-19 pandemic;
The impact of temporary plant closures, production slowdowns and disruptions in
? operations experienced by our suppliers, bottlers/distributors and/or
co-packers as a result of the COVID-19 pandemic, including any material
disruptions on the production and distribution of our products;
We have extensive commercial arrangements with TCCC and, as a result, our
? future performance is substantially dependent on the success of our
relationship with TCCC;
The impact of TCCC's bottlers/distributors distributing Coca-Cola brand energy
? drinks and possible reductions in the number of our SKUs carried by such
bottlers/distributors and/or such bottlers/distributors imposing limitations on
distributing new product SKUs;
? Closure of on-premise retailers and other establishments which sell our
products as the result of the COVID-19 pandemic;
? The limitation or reduction by our suppliers, bottlers/distributors and/or
co-packers of their activities and/or operations during the COVID-19 pandemic;
? The impact of the COVID-19 pandemic on our product sampling programs;
? The effect of TCCC being one of our significant shareholders and the potential
divergence of TCCC's interests from those of our other shareholders;
The effect of TCCC's refranchising initiative to transition from a TCCC owned
? system to an independent bottling system, including our ability to maintain
relationships with TCCC system bottlers/distributors and manage their ongoing
commitment to focus on our products;
Disruption in distribution channels and/or decline in sales due to the
? termination and/or insolvency of existing and/or new domestic and/or
international bottlers/distributors;
? Lack of anticipated demand for our products in domestic and/or international
markets;
? Fluctuations in the inventory levels of our bottlers/distributors, planned or
otherwise, and the resultant impact on our revenues;
Unfavorable regulations, including taxation requirements, age restrictions
? imposed on the sale, purchase, or consumption of our products, marketing
restrictions, product registration requirements, tariffs, trade restrictions,
container size limitations and/or ingredient restrictions;
The effect of inquiries from, and/or actions by, state attorneys general, the
"FDA"), municipalities, city attorneys, other government agencies,
quasi-government agencies, government officials (including members of
?
the foreign countries in which our products are manufactured and/or
distributed, into the advertising, marketing, promotion, ingredients, sale
and/or consumption of our energy drink products, including voluntary and/or
required changes to our business practices;
Our ability to comply with laws, regulations and evolving industry standards
? regarding consumer privacy and data use and security, including with respect to
the General Data Protection Regulation and the California Privacy Act of 2018;
? Our ability to achieve profitability from certain of our operations outside the
Our ability to manage legal and regulatory requirements in foreign
? jurisdictions, potential difficulties in staffing and managing foreign
operations and potentially higher incidence of fraud or corruption and credit
risk of foreign customers and/or bottlers/distributors;
? Our ability to produce our products in international markets in which they are
sold, thereby reducing freight costs and/or product damages;
? Our ability to absorb, reduce or pass on to our bottlers/distributors increases
in freight costs;
? Our ability to effectively manage our inventories and/or our accounts
receivables;
Our foreign currency exchange rate risk with respect to our sales, expenses,
? profits, assets and liabilities denominated in currencies other than the
dollar, which will continue to increase as foreign sales increase;
? Uncertainties surrounding the
Union (or "Brexit");
? Changes in accounting standards may affect our reported profitability;
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? Implications of the
base erosion and profit shifting project;
Any proceedings which may be brought against us by the Securities and Exchange
? Commission (the "SEC"), the FDA, the
bodies;
The outcome and/or possibility of future shareholder derivative actions or
? shareholder securities litigation that may be filed against us and/or against
certain of our officers and directors, and the possibility of other private
shareholder litigation;
The outcome of product liability or consumer fraud litigation and/or class
action litigation (or its analog in foreign jurisdictions) regarding the safety
? of our products and/or the ingredients in and/or claims made in connection with
our products and/or alleging false advertising, marketing and/or promotion, and
the possibility of future product liability and/or class action lawsuits;
? Exposure to significant liabilities due to litigation, legal or regulatory
proceedings;
? Intellectual property injunctions;
? Unfavorable resolution of tax matters;
? Uncertainty and volatility in the domestic and global economies, including risk
of counterparty default or failure;
? Our ability to address any significant deficiencies or material weakness in our
internal controls over financial reporting;
? Our ability to continue to generate sufficient cash flows to support our
expansion plans and general operating activities;
Decreased demand for our products resulting from changes in consumer
? preferences, obesity and other perceived health concerns, including concerns
relating to certain ingredients in our products or packaging, product safety
concerns and/or from decreased consumer discretionary spending power;
Adverse publicity surrounding obesity and health concerns related to our
? products, water usage, environmental impact, human rights and labor and
workplace laws;
Changes in demand that are weather related and/or for other reasons, including
? changes in product category consumption and changes in cost and availability of
certain key ingredients, as well as disruptions to the supply chain, as a
result of climate change and extreme weather conditions;
The impact of unstable political conditions, civil unrest, large scale
? terrorist acts, the outbreak or escalation of armed hostilities, major natural
disasters and extreme weather conditions, or widespread outbreaks of infectious
diseases;
The impact on our business of competitive products and pricing pressures and
our ability to gain or maintain our share of sales in the marketplace as a
? result of actions by competitors, including unsubstantiated and/or misleading
claims, false advertising claims and tortious interference, as well as
competitors selling misbranded products;
? The impact on our business of trademark and trade dress infringement
proceedings brought against us;
? Our ability to introduce new products and the impact of the COVID-19 pandemic
on our innovation activities;
? Our ability to implement and/or maintain price increases;
? An inability to achieve volume growth through product and packaging
initiatives;
Our ability to sustain the current level of sales and/or achieve growth for our
? Monster Energy® brand energy drinks and/or our other products, including our
Strategic Brands;
The impact of criticism of our energy drink products and/or the energy drink
market generally and/or legislation enacted (whether as a result of such
criticism or otherwise) that restricts the marketing or sale of energy drinks
? (including prohibiting the sale of energy drinks at certain establishments or
pursuant to certain governmental programs), limits caffeine content in
beverages, requires certain product labeling disclosures and/or warnings,
imposes excise and/or sales taxes, limits product sizes and/or imposes age
restrictions for the sale of energy drinks;
Our ability to comply with and/or resulting lower consumer demand for energy
drinks due to proposed and/or future
regulations and/or proposed or existing laws and regulations in certain foreign
jurisdictions and/or any changes therein, including changes in taxation
requirements (including tax rate changes, new tax laws, new and/or increased
excise, sales and/or other taxes on our products and revised tax law
interpretations) and environmental laws, as well as the Federal Food, Drug, and
Cosmetic Act and regulations or rules made thereunder or in connection
? therewith by the FDA, as well as changes in any other food, drug or similar
laws in
may restrict the sale of energy drinks (including prohibiting the sale of
energy drinks at certain establishments or pursuant to certain governmental
programs), limit caffeine content in beverages, require certain product
labeling disclosures and/or warnings, impose excise taxes, impose sugar taxes,
limit product sizes, or impose age restrictions for the sale of energy drinks,
as well as laws and regulations or rules made or enforced by the Bureau of
Alcohol, Tobacco, Firearms and Explosives and/or the
counterparts;
Our ability to satisfy all criteria set forth in any model energy drink
guidelines, including, without limitation, those adopted by the American
?
international beverage association and the impact on the Company of such
guidelines;
? Disruptions in the timely import or export of our products and/or ingredients
due to port strikes and related labor issues;
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? The effect of unfavorable or adverse public relations, press, articles,
comments and/or media attention;
Changes in the cost, quality and availability of containers, packaging
materials, aluminum, the Midwest and other premiums, raw materials and other
? ingredients and juice concentrates, and our ability to obtain and/or maintain
favorable supply arrangements and relationships and procure timely and/or
sufficient production of all or any of our products to meet customer demand;
Any shortages that may be experienced in the procurement of containers and/or
? other raw materials including, without limitation, aluminum cans generally, PET
containers used for our Monster Hydro® energy drinks and 24-ounce aluminum cap
cans;
? The impact on our cost of sales of corporate activity among the limited number
of suppliers from whom we purchase certain raw materials;
Our ability to pass on to our customers all or a portion of any increases in
? the costs of raw materials, ingredients, commodities and/or other cost inputs
affecting our business;
Our ability to achieve both internal domestic and international forecasts,
which may be based on projected volumes and sales of many product types and/or
? new products, certain of which are more profitable than others; there can be no
assurance that we will achieve projected levels of sales as well as forecasted
product and/or geographic mixes;
Our ability to penetrate new domestic and/or international markets and/or gain
? approval or mitigate the delay in securing approval for the sale of our
products in various countries;
The effectiveness of sales and/or marketing efforts by us and/or by the
? bottlers/distributors of our products, most of whom distribute products that
may be regarded as competitive with our products;
Unilateral decisions by bottlers/distributors, convenience chains, grocery
chains, mass merchandisers, specialty chain stores, club stores and other
? customers to discontinue carrying all or any of our products that they are
carrying at any time, restrict the range of our products they carry and/or
devote less resources to the sale of our products;
? The effects of retailer consolidation on our business and our ability to
successfully adapt to the rapidly changing retail landscape;
? The costs and/or effectiveness, now or in the future, of our advertising,
marketing and promotional strategies;
? The success of our sports marketing, social media and other general marketing
endeavors both domestically and internationally;
Our ability to successfully adapt to the changing landscape of advertising,
? marketing, promotional, sponsorship and endorsement opportunities created by
the COVID-19 pandemic;
? Unforeseen economic and political changes and local or international
catastrophic events;
? Possible recalls of our products and/or defective production;
Our ability to make suitable arrangements and/or procure sufficient capacity
? for the co-packing of any of our products both domestically and
internationally, the timely replacement of discontinued co-packing arrangements
and/or limitations on co-packing availability, including for retort production;
? Our ability to make suitable arrangements for the timely procurement of
non-defective raw materials;
Our inability to protect and/or the loss of our intellectual property rights
? and/or our inability to use our trademarks, trade names or designs and/or trade
dress in certain countries;
Volatility of stock prices which may restrict stock sales, stock purchases or
? other opportunities as well as negatively impact the motivation of equity award
grantees;
Provisions in our organizational documents and/or control by insiders which may
? prevent changes in control even if such changes would be beneficial to other
stockholders;
? The failure of our bottlers and/or co-packers to manufacture our products on a
timely basis or at all;
? The impact of any reductions in productivity and disruptions to our business
routines while most office-based employees of the Company work remotely;
Any disruption in and/or lack of effectiveness of our information technology
? systems, including a breach of cyber security, that disrupts our business or
negatively impacts customer relationships, as well as cybersecurity incidents
involving data shared with third parties; and
? Recruitment and retention of senior management, other key employees and our
employee base in general.
The foregoing list of important factors and other risks detailed from time to
time in our reports filed with the
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uncertainty of estimates, forecasts and projections and may be better or worse than anticipated. Given these uncertainties, you should not rely on forward-looking statements. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, in order to reflect changes in circumstances or expectations or the occurrence of unanticipated events except to the extent required by applicable securities laws.
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