Monster Beverage Corp (MNST)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Business

When this report uses the words “the Company”, “we”, “us”, and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries primarily develop and market energy drinks, and to a lesser extent, craft beers, flavored malt beverages (“FMBs”) and hard seltzers.

Pricing Actions

We implemented price increases in the fourth quarter of 2025 (for core brands and packages) in the United States and at various times in certain international markets during 2025 (collectively, the “Pricing Actions”). The Pricing Actions positively impacted gross profit margins in 2026 as compared to 2025.

Overview

We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:

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We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida Man® IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing Company® Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The BeastTM, Blind Lemon®, Blinder LemonTM and other brands.

We have four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of our Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Bang Energy® drinks, StormTM and Reign Storm® total wellness energy drinks and FLRTTM total wellness energy drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as our affordable energy brands, Predator® and Fury®, (iii) Alcohol Brands segment (“Alcohol Brands”), which is comprised of various craft beers, FMBs and hard seltzers and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).

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During the three-months ended June 30, 2026, we continued to expand our existing drink portfolio by adding products to our portfolio in a number of countries and further developed our distribution markets. During the three-months ended June 30, 2026, we sold the following new products to our customers:

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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 June 30, 2026, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Our net sales were $2.54 billion for the three-months ended June 30, 2026. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $48.5 million for the three-months ended June 30, 2026. Net sales on a foreign currency adjusted basis increased 17.9% for the three-months ended June 30, 2026.

The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Net sales of our Monster Energy® Drinks segment were $2.36 billion for the three-months ended June 30, 2026. Net sales of our Strategic Brands segment were $143.7 million for the three-months ended June 30, 2026. Net sales of our Alcohol Brands segment were $32.2 million for the three-months ended June 30, 2026. Net sales of our Other segment were $5.4 million for the three-months ended June 30, 2026.

Our Monster Energy® Drinks segment represented 92.8% and 91.7% of our net sales for the three-months ended June 30, 2026 and 2025, respectively. Our Strategic Brands segment represented 5.7% and 6.2% of our net sales for the three-months ended June 30, 2026 and 2025, respectively. Our Alcohol Brands segment represented 1.3% and 1.8% of our net sales for the three-months ended June 30, 2026 and 2025, respectively. Our Other segment represented 0.2% and 0.3% of our net sales for the three-months ended June 30, 2026 and 2025, respectively.

Our growth strategy includes further developing our domestic markets and expanding our international business. Net sales to customers outside the United States were $1.16 billion for the three-months ended June 30, 2026, an increase of approximately $298.9 million, or 34.6% higher than net sales to customers outside of the United States of $864.2 million for the three-months ended June 30, 2025. Such sales were approximately 46% and 41% of net sales for the three-months ended June 30, 2026 and 2025, respectively. Net changes in foreign currency exchange rates had a favorable impact on net sales to customers outside of the United States of approximately $48.5 million for the three-months ended June 30, 2026. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 29.0% for the three-months ended June 30, 2026.

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Our non-alcohol customers are primarily full service beverage bottlers/distributors, 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. Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system. Percentages of our gross billings to our various customer types for the three- and six-months ended June 30, 2026 and 2025 are reflected below. Such information includes sales made by us directly to the customer types concerned, which include our full service beverage bottlers/distributors in the United States. Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below. We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers.

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Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Holdings, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc. (USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co. Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc.

Our alcohol customers include Reyes Beverage Group, Ben E. Keith Company, J.J. Taylor Distributing and Admiral Beverage Corporation.

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.

Coca-Cola Europacific Partners accounted for approximately 16% and 15% of the Company’s net sales for the three-months ended June 30, 2026 and 2025, respectively. Coca-Cola Europacific Partners accounted for approximately 16% and 14% of the Company’s net sales for the six-months ended June 30, 2026 and 2025, respectively.

Coca-Cola Consolidated, Inc. accounted for approximately 9% and 11% of the Company’s net sales for the three-months ended June 30, 2026 and 2025, respectively. Coca-Cola Consolidated, Inc. accounted for approximately 9% and 10% of the Company’s net sales for the six-months ended June 30, 2026 and 2025, respectively.

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Results of Operations

The following table sets forth key statistics for the three- and six-months ended June 30, 2026 and 2025.

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Liquidity and Capital Resources

As of the date of this filing, we expect to maintain sufficient liquidity as described in the “Liquidity and Capital Resources” section below.

Our Business

Overview

We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:

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We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida Man® IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing Company® Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The BeastTM, Beast® Tea, Blind Lemon®, Blinder LemonTM and other brands.

Our net sales of $8.29 billion for the year ended December 31, 2025 represented record annual net sales. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $3.0 million for the year ended December 31, 2025. Net sales on a foreign currency adjusted basis increased 10.7% for the year ended December 31, 2025.

The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Our Monster Energy® Drinks segment represented 92.4% and 91.6% of our net sales for the years ended December 31, 2025 and 2024, respectively. Our Strategic Brands segment represented 5.7% and 5.8% of our net sales for the years ended December 31, 2025 and 2024, respectively. Our Alcohol Brands segment represented 1.6% and 2.3% of our net sales for the years ended December 31, 2025 and 2024, respectively. Our Other segment represented 0.3% of our net sales for both years ended December 31, 2025 and 2024.

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Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Monster Energy® Drinks segment of approximately $2.5 million for the year ended December 31, 2025. Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Strategic Brands segment of approximately $0.5 million for the year ended December 31, 2025.

Our growth strategy includes further developing our domestic markets and expanding our international business. Net sales to customers outside the United States were $3.44 billion and $2.96 billion for the years ended December 31, 2025 and 2024, respectively. Such sales were approximately 41% and 40% of net sales for the years ended December 31, 2025 and 2024, respectively. Net changes in foreign currency exchange rates had an unfavorable impact on net sales to customers outside of the United States of approximately $3.0 million for the year ended December 31, 2025. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 16.2% for the year ended December 31, 2025.

Our non-alcohol customers are primarily full service beverage bottlers/distributors, 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. Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system. Percentages of our gross billings to our various customer types for the years ended December 31, 2025, 2024 and 2023 are reflected below. Such information includes sales made by us directly to the customer types concerned, which include our full service beverage bottlers/distributors in the United States. Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below. We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers.

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Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Holdings, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc. (USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc.

Our alcohol customers include Reyes Beverage Group, Ben E. Keith Company, J.J. Taylor Distributing, and Admiral Beverage Corporation.

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and results of operations.

Coca-Cola Europacific Partners accounted for approximately 15%, 14% and 13% of our net sales for the years ended December 31, 2025, 2024 and 2023, respectively.

Coca-Cola Consolidated, Inc. accounted for approximately 10% of our net sales for each of the years ended December 31, 2025, 2024 and 2023.

We continue to incur expenditures in connection with the development and introduction of new products and flavors.

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Value Drivers of our Business

We believe that the key value drivers of our business include the following:

We believe that, subject to increases in the costs of certain raw materials being contained, these value drivers, when implemented and/or achieved in the United States and internationally, will result in: (1) improving or maintaining our product gross profit margins; (2) reducing our expenses as a percentage of net operating revenues; and (3) enhancing our cost of capital. The ultimate measure of success is and will be reflected in our current and future results of operations.

Net sales, gross profit, operating income, net income and net income per share represent key measurements of the above value drivers. These measurements will continue to be a key management focus in 2026 and beyond (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations”).

As of December 31, 2025, the Company had working capital of $3.91 billion compared to $2.54 billion as of December 31, 2024. The increase in working capital was primarily the result of the increase in cash and cash equivalents and short-term investments. For the year ended December 31, 2025, our net cash provided by operating activities was approximately $2.10 billion as compared to $1.93 billion for the year ended December 31, 2024. Principal uses of cash flows in 2025 were purchases of available-for-sale investments, property and equipment and payments on the Credit Facilities (as defined below). Principal uses of cash flows are expected to be purchases of investments, our common stock, and property and equipment, with these expected to remain our principal recurring use of cash and working capital funds in the foreseeable future (See “Part II, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”).

Opportunities, Challenges and Risks

Looking forward, our management has identified certain challenges and risks for the beverage industry and the Company, including our significant commercial relationship with TCCC and TCCC’s status as a significant stockholder of the Company, in each case as described above under “Part I, Item 1A – Risk Factors.”

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In addition, legislation has been proposed and/or adopted at the U.S., state, county and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy and alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine and/or alcohol content, require certain product labeling disclosures and/or warnings, impose taxes, limit product sizes or impose age restrictions for the sale of energy and/or alcohol drinks. In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy and alcohol drinks have been published. The proposal and/or adoption of such legislation and the publication of such articles, or the future proposal and/or adoption of similar legislation or publication of similar articles, may adversely affect our Company.

In addition, uncertainty and/or vol

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