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, hard seltzers and flavored malt beverages (“FMBs”).

Pricing Actions

We implemented pricing actions including (i) price increases effective April 1, 2023 (limited pack sizes) in the United States and (ii) price increases at various times in certain international markets during the second, third and fourth quarters of 2023 as well as the first quarter of 2024 (collectively, the “Pricing Actions”), all of which positively impacted net sales and gross profit margins in the first quarter of 2024 as compared to the first quarter of 2023.

The Company currently anticipates implementing price increases in the United States, at amounts yet to be determined, on certain of its Monster Energy® brand energy drinks in the fourth quarter of 2024.

Overview

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

​

● Monster Energy®	● Burn®
● Monster Energy Ultra®	● Mother®
● Monster Rehab®	● Nalu®
● Monster Energy® Nitro	● Ultra Energy®
● Java Monster®	● Play® and Power Play® (stylized)
● Punch Monster®	● Relentless®
● Juice Monster®	● BPM®
● Reign Total Body Fuel®	● BU®
● Reign Inferno® Thermogenic Fuel	● Gladiator®
● Reign Storm®	● Samurai®
● Bang Energy®	● Live+®
● NOS®	● Predator®
● Full Throttle®	● Fury®

​

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

​

We also develop, market, sell and distribute still and sparkling waters under the Monster Tour Water® brand name.

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, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, (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, hard seltzers and FMBs and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC (“AFF”), a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).

During the three-months ended March 31, 2024, we continued to expand our existing drink portfolio by adding additional products to our portfolio in a number of countries and further developed our distribution markets. During the three-months ended March 31, 2024, we sold the following new products to our customers:

	●	Burn® Guava

	●	Java Monster® Irish Crème

	●	Juice Monster® Rio PunchTM

	●	Juiced Monster® Bad Apple®

	●	Monster Energy® Ultra Fantasy Ruby RedTM

	●	Monster® Reserve Peaches N’ Crème

	●	Nalu® Yuzu Rosemary

	●	Nasty BeastTM Hard Tea Green Tea

	●	Nasty BeastTM Hard Tea Original

	●	Nasty BeastTM Hard Tea Peach

	●	Nasty BeastTM Hard Tea Tea+Lemonade

	●	Reign Storm® Mango

	●	Reign Storm® Strawberry Apricot

	●	Reign Total Body Fuel® Sour Gummy Worm

	●	Relentless® Fruit Punch

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 March 31, 2024, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Our net sales of $1.90 billion for the three-months ended March 31, 2024 represented record sales for our first fiscal quarter. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $64.4 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024.

The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Net sales of our Monster Energy® Drinks segment were $1.73 billion for the three-months ended March 31, 2024. Net sales of our Strategic Brands segment were $108.4 million for the three-months ended March 31, 2024. Net sales of our Alcohol Brands segment were $56.1 million for the three-months ended March 31, 2024. Net sales of our Other segment were $5.5 million for the three-months ended March 31, 2024.

Our Monster Energy® Drinks segment represented 91.0% and 91.9% of our net sales for the three-months ended March 31, 2024 and 2023, respectively. Our Strategic Brands segment represented 5.7% and 5.1% of our net sales for the three-months ended March 31, 2024 and 2023, respectively. Our Alcohol Brands Segment represented 3.0% and 2.7% of our net sales for the three-months ended March 31, 2024 and 2023, respectively. Our Other segment represented 0.3% of our net sales for both the three-months ended March 31, 2024 and 2023.

Our growth strategy includes further developing our domestic markets, expanding our international business and growing our business into new sectors, such as the alcohol beverage sector. Net sales to customers outside the United States were $744.1 million for the three-months ended March 31, 2024, an increase of approximately $121.2 million, or 19.5% higher than net sales to customers outside of the United States of $622.9 million for the three-months ended March 31, 2023. Such sales were approximately 39% and 37% of net sales for the three-months ended March 31, 2024 and 2023, respectively. Net changes in foreign currency exchange rates had an unfavorable impact on net sales to customers outside of the United States of approximately $64.4 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 29.8% (21.7% exclusive of Argentina’s impact) for the three-months ended March 31, 2024.

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, 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-months ended March 31, 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.

​

​	​	​	​	​	​
​	​	Three-Months Ended			​
​	​	March 31,			​
​		2024		2023
U.S. full service bottlers/distributors		46	%	48	%
International full service bottlers/distributors		41	%	38	%
Club stores and e-commerce retailers		8	%	9	%
Retail grocery, direct convenience, specialty chains and wholesalers		2	%	2	%
Alcohol, value stores and other		3	%	3	%

​

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 (formerly Coca-Cola European Partners and Coca-Cola Amatil), 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 Sheehan Family Companies.

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 14% and 13% of our net sales for the three-months ended March 31, 2024 and 2023, respectively.

Coca-Cola Consolidated, Inc. accounted for approximately 10% of our net sales for both the three-months ended March 31, 2024 and 2023.

Reyes Holdings, LLC accounted for approximately 9% of our net sales for both the three-months ended March 31, 2024 and 2023.

Results of Operations

The following table sets forth key statistics for the three-months ended March 31, 2024 and 2023.

​

​	​	​	​	​	​	​	​	​	​
​		Three-Months Ended						Percentage	​
(In thousands, except per share amounts)	​	March 31,					​	Change	​
​		2024			2023			24 vs. 23
Net sales1	​	$	1,899,098	​	$	1,698,930	​	11.8	%
Cost of sales	​		871,969	​		801,081	​	8.8	%
Gross profit*1	​		1,027,129	​		897,849	​	14.4	%
Gross profit as a percentage of net sales	​		54.1	%		52.8	%	​	​
​	​	​	​	​	​	​	​	​	​
Operating expenses	​		485,138	​		412,785	​	17.5	%
Operating expenses as a percentage of net sales	​		25.5	%		24.3	%	​	​
​	​	​	​	​	​	​	​	​	​
Operating income1	​		541,991	​		485,064	​	11.7	%
Operating income as a percentage of net sales	​		28.5	%		28.6	%	​	​
​	​	​	​	​	​	​	​	​	​
Interest and other income, net	​		35,754	​		12,496	​	186.1	%
​	​	​	​	​	​	​	​	​	​
Income before provision for income taxes1	​		577,745	​		497,560	​	16.1	%
​	​	​	​	​	​	​	​	​	​
Provision for income taxes	​		135,696	​		100,116	​	35.5	%
​	​	​	​	​	​	​	​	​	​
Income taxes as a percentage of income before taxes	​		23.5	%		20.1	%	​	​
​	​	​	​	​	​	​	​	​	​
Net income	​	$	442,049	​	$	397,444	​	11.2	%
Net income as a percentage of net sales	​		23.3	%		23.4	%	​	​
​	​	​	​	​	​	​	​	​	​
Net income per common share:	​		​	​		​	​	​	​
Basic	​	$	0.42	​	$	0.38	​	11.6	%
Diluted	​	$	0.42	​	$	0.38	​	12.0	%
​	​	​	​	​	​	​	​	​	​
Energy drink case sales (in thousands) (in 192‑ounce case equivalents)	​		211,430	​		182,444	​	15.9	%

​

1_Includes $9.9 million for both the three-months ended March 31, 2024 and 2023, related to the recognition of deferred revenue._

*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.

Three-Months Ended March 31, 2024 Compared to the Three-Months Ended March 31, 2023**.**

Net Sales

Net Sales. Net sales were $1.90 billion for the three-months ended March 31, 2024, an increase of approximately $200.2 million, or 11.8% higher than net sales of $1.70 billion for the three-months ended March 31, 2023. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $64.4 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024. Net sales on a foreign currency adjusted basis increased 15.6% (12.6% exclusive of Argentina’s impact) for the three-months ended March 31, 2024. The difference between reported net sales and net sales on a foreign currency adjusted basis was largely due to the impact of inflation related local currency price increases in Argentina, as well as the significant decrease in the Argentine Peso relative to the U.S. Dollar.

Net sales were $693.0 million and $583.7 million for the three-months ended March 31, 2024 and 2023, respectively, in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.

Net sales for the Monster Energy® Drinks segment were $1.73 billion for the three-months ended March 31, 2024, an increase of approximately $167.4 million, or 10.7% higher than net sales of $1.56 billion for the three-months ended March 31, 2023. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $54.6 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 14.2% (11.0% exclusive of Argentina’s impact) for the three-months ended March 31, 2024.

Net sales for the Strategic Brands segment were $108.4 million for the three-months ended March 31, 2024, an increase of approximately $22.1 million, or 25.6% higher than net sales of $86.4 million for the three-months ended March 31, 2023. Net sales for the Strategic Brands segment increased primarily due to increased sales by volume of our Fury®, NOS®, Burn® and Predator® brand energy drinks. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $9.8 million for the Strategic Brands segment for the three-months ended March 31, 2024. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 36.9% for the three-months ended March 31, 2024. Net sales of concentrates within the Strategic Brands segment tend to have more pronounced fluctuations from period to period as compared to net sales of our finished goods within the Monster Energy® Drinks segment.

Net sales for the Alcohol Brands segment were $56.1 million for the three-months ended March 31, 2024, an increase of approximately $9.8 million, or 21.1% higher than net sales of $46.3 million for the three-months ended March 31, 2023. Net sales of Nasty BeastTM Hard Tea, launched during the 2024 first quarter, were $16.9 million for the three-months ended March 31, 2024.

Net sales for the Other segment were $5.5 million for the three-months ended March 31, 2024, an increase of approximately $0.9 million, or 19.9% higher than net sales of $4.6 million for the three-months ended March 31, 2023.

Case sales for our energy drink products, in 192-ounce case equivalents, were 211.4 million cases for the three-months ended March 31, 2024, an increase of approximately 29.0 million cases or 15.9% higher than case sales of 182.4 million cases for the three-months ended March 31, 2023. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.69 for the three-months ended March 31, 2024, which was 3.8% lower than the average net sales per case of $9.03 for the three-months ended March 31, 2023.

Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 4.1 million cases for the three-months ended March 31, 2024, an increase of approximately 1.0 million cases or 31.0% higher than case sales of 3.1 million cases for the three-months ended March 31, 2023. Barrel sales for our craft beers, hard seltzers and FMBs, in 31 U.S. gallon equivalents, were 0.20 million barrels for the three-months ended March 31, 2024, an increase of approximately 0.05 million barrels or 31.0% higher than barrel sales of 0.15 million barrels for the three-months ended March 31, 2023.

Gross Profit

Gross profit was $1.03 billion for the three-months ended March 31, 2024, an increase of approximately $129.3 million, or 14.4% higher than the gross profit of $897.8 million for the three-months ended March 31, 2023. The increase in gross profit dollars was primarily the result of the $200.2 million increase in net sales for the three-months ended March 31, 2024.

Gross profit as a percentage of net sales increased to 54.1% for the three-months ended March 31, 2024 from 52.8% for the three-months ended March 31, 2023. The increase in gross profit as a percentage of net sales for the three-months ended March 31, 2024 was primarily the result of decreased freight-in costs, the Pricing Actions and lower input costs, partially offset by geographical sales mix.

Operating Expenses

Total operating expenses were $485.1 million for the three-months ended March 31, 2024, an increase of approximately $72.4 million, or 17.5% higher than total operating expenses of $412.8 million for the three-months ended March 31, 2023.

The increase in operating expenses was primarily due to increased selling and marketing expenses of $25.4 million, including sponsorship and endorsements and social and digital marketing, increased payroll expenses of $22.6 million, as well as increased distribution expenses of $18.1 million. Operating expenses as a percentage of net sales for the three-months ended March 31, 2024 were 25.5% as compared to 24.3% for the three-months ended March 31, 2023.

Operating Income

Operating income was $542.0 million for the three-months ended March 31, 2024, an increase of approximately $56.9 million, or 11.7% higher than operating income of $485.1 million for the three-months ended March 31, 2023. Operating income as a percentage of net sales decreased to 28.5% for the three-months ended March 31, 2024 from 28.6% for the three-months ended March 31, 2023. The increase in operating income was primarily the result of an increase in net sales, as well as an increase in gross profit as a percentage of net sales, partially offset by an increase in operating expenses.

Operating income was $138.0 million and $93.7 million for the three-months ended March 31, 2024 and 2023, respectively, for our operations in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.

Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $628.1 million for the three-months ended March 31, 2024, an increase of approximately $67.3 million, or 12.0% higher than operating income of $560.8 million for the three-months ended March 31, 2023. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of an increase in net sales as well as an increase in gross profit as a percentage of net sales.

Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $62.0 million for the three-months ended March 31, 2024, an increase of approximately $10.2 million, or 19.8% higher than operating income of $51.8 million for the three-months ended March 31, 2023. The increase in operating income for the Strategic Brands segment was primarily the result of an increase in net sales.

Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $6.0 million for the three-months ended March 31, 2024, a decrease of approximately $0.9 million, or 12.6% lower than operating loss of $6.9 million for the three-months ended March 31, 2023. The operating losses for the three-months ended March 31, 2024 were primarily due to continued expenses, infrastructure investments and the optimization of the Alcohol Brands segment.

Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $1.0 million for the three-months ended March 31, 2024, as compared to operating loss of ($0.3) million for the three-months ended March 31, 2023. The operating income for the three-months ended March 31, 2024 was primarily the result of an increase in net sales.

Interest and Other Income, net

Interest and other non-operating income, net, was $35.8 million for the three-months ended March 31, 2024, as compared to interest and other non-operating income, net, of $12.5 million for the three-months ended March 31, 2023. Foreign currency transaction losses were $6.0 million and $11.2 million for the three-months ended March 31, 2024 and 2023, respectively. Interest income was $41.2 million and $23.5 million for the three-months ended March 31, 2024 and 2023, respectively.

Provision for Income Taxes

Provision for income taxes was $135.7 million for the three-months ended March 31, 2024, an increase of $35.6 million, or 35.5% higher than the provision for income taxes of $100.1 million for the three-months ended March 31, 2023. The effective combined federal, state and foreign tax rate increased to 23.5% from 20.1% for the three-months ended March 31, 2024 and 2023, respectively. The increase in the effective tax rate was primarily attributable to the decrease in the stock-based compensation deduction in the three-months ended March 31, 2024 as compared to the three-months ended March 31, 2023.

Net Income

Net income was $442.0 million for the three-months ended March 31, 2024, an increase of $44.6 million, or 11.2% higher than net income of $397.4 million for the three-months ended March 31, 2023. The increase in net income for the three-months ended March

31, 2024 was primarily due to the increase in net sales and the increase in the gross profit percentage of net sales, which was partially offset by the increase in operating expenses and the increase in the provision for income taxes.

Key Business Metrics

We use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see “Non-GAAP Financial Measures and Other Key Metrics.”

Non-GAAP Financial Measures and Other Key Metrics

Gross Billings**

Gross billings were $2.19 billion for the three-months ended March 31, 2024, an increase of approximately $233.9 million, or 12.0% higher than gross billings of $1.96 billion for the three-months ended March 31, 2023. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $62.8 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024.

Gross billings for the Monster Energy® Drinks segment were $2.00 billion for the three-months ended March 31, 2024, an increase of approximately $199.0 million, or 11.0% higher than gross billings of $1.80 billion for the three-months ended March 31, 2023. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings for the Monster Energy® Drinks segment of approximately $53.1 million ($50.4 million related to Argentina) for the three-months ended March 31, 2024.

Gross billings for the Strategic Brands segment were $122.6 million for the three-months ended March 31, 2024, an increase of $23.9 million, or 24.2% higher than gross billings of $98.7 million for the three-months ended March 31, 2023. Gross billings for the Strategic Brands segment increased primarily due to increased sales by volume of our Fury®, Burn®, NOS® and Predator® brand energy drinks. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $9.7 million for the three-months ended March 31, 2024.

Gross billings for the Alcohol Brands segment were $57.0 million for the three-months ended March 31, 2024, an increase of approximately $10.0 million, or 21.4% higher than net sales of $47.0 million for the three-months ended March 31, 2023. Gross billings of Nasty BeastTM Hard Tea, launched during the 2024 first quarter, were $17.3 million for the three-months ended March 31, 2024.

Gross billings for the Other segment were $5.6 million for the three-months ended March 31, 2024, an increase of $1.0 million, or 21.9% higher than gross billings of $4.6 million for the three-months ended March 31, 2023.

Promotional allowances, commissions and other expenses, as described in the footnote below, were $299.7 million for the three-months ended March 31, 2024, an increase of $33.7 million, or 12.6% higher than promotional allowances, commissions and other expenses of $266.1 million for the three-months ended March 31, 2023. Promotional allowances, commissions and other expenses as a percentage of gross billings increased to 13.7% from 13.6% for the three-months ended March 31, 2024 and 2023, respectively.

**Gross Billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings 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 is useful to investors in evaluating overall Company performance. The use of gross billings 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 billings provides a useful measure of our operating performance. The use of gross billings 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 billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings 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 billings with the most directly comparable GAAP financial measure of net sales:

​	​	​	​	​	​	​	​		​		​
​		Three-Months Ended							Percentage
(In thousands)	​	March 31,					​		Change		​
​		2024			2023				24 vs. 23		​
Gross Billings	​	$	2,188,933	​	$	1,955,039	​		12.0		%
Deferred Revenue	​	​	9,875	​	​	9,946	​		(0.7)		%
Less: Promotional allowances, commissions and other expenses***	​		299,710	​		266,055	​		12.6		%
Net Sales	​	$	1,899,098	​	$	1,698,930	​		11.8		%

​

***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 for our energy drink products primarily include consideration given to our non-alcohol 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 for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products 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. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.

​

Sales

The table below discloses selected quarterly data regarding sales for the three-months ended March 31, 2024 and 2023, respectively. Data from any one or more quarters or periods is not necessarily indicative of annual results or continuing trends.

Sales of our energy drinks 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. 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 are less seasonal than the seasonality expected from 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 changes in advertising and promotional expenses.

​

​	​	​	​	​	​	​
​	​	Three-Months Ended
(In thousands, except average net sales per case)	​	March 31,
​		2024			2023
Net sales	​	$	1,899,098	​	$	1,698,930
Less: Alcohol Brands segment sales	​	​	(56,070)	​	​	(46,290)
Less: Other segment sales	​		(5,533)	​		(4,614)
Adjusted net sales1	​	$	1,837,495	​	$	1,648,026
​	​	​	​	​	​	​
Case sales by segment:1	​		​	​		​
Monster Energy® Drinks	​		166,639	​		151,071
Strategic Brands	​		44,791	​		31,373
Total case sales	​		211,430	​		182,444
Average net sales per case - Energy Drinks	​	$	8.69	​	$	9.03

​

1_Excludes Alcohol Brands segment and Other segment net sales._

Net changes in foreign currency exchange rates had an unfavorable impact on the overall average net sales per case for the three-months ended March 31, 2024.

The following represents case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents:

​

​	​	​	​	​	​	​
​	​	Three-Months Ended
(In thousands, except average net sales per case)	​	March 31,
​		2024			2023
Alcohol Brands segment net sales	​	$	56,070	​	$	46,290
Case sales	​		4,099	​		3,129
Average net sales per case - Alcohol Brands	​	$	13.68	​	$	14.79

​

See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” for additional information related to the increase in sales.

Liquidity and Capital Resources

Cash and cash equivalents, short-term and long-term investments. At March 31, 2024, we had $2.58 billion in cash and cash equivalents, $984.2 million in short-term investments and $8.2 million in long-term investments, including certificates of deposit, commercial paper, U.S. government agency securities, U.S. treasuries and corporate bonds. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess the market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.

Of our $2.58 billion of cash and cash equivalents held at March 31, 2024, $961.5 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at March 31, 2024.

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. Based on our current plans, at this time we estimate that capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through March 31, 2025. However, future business opportunities may cause a change in this estimate.

Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property, plant and manufacturing equipment, 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.

The following summarizes our cash flows for the three-months ended March 31, 2024 and 2023 (in thousands):

​	​	​	​	​	​	​
Net cash provided by (used in):		​	​		​	​
​		2024			2023
Operating activities	​	$	412,142	​	$	424,475
Investing activities	​	$	(35,322)	​	$	(52,766)
Financing activities	​	$	(84,749)	​	$	(6,049)

​

Cash flows provided by operating activities. Cash provided by operating activities was $412.1 million for the three-months ended March 31, 2024, as compared with cash provided by operating activities of $424.5 million for the three-months ended March 31, 2023.

For the three-months ended March 31, 2024, cash provided by operating activities was primarily attributable to net income earned of $442.0 million and adjustments for certain non-cash expenses, consisting primarily of $23.7 million of depreciation and amortization and non-cash lease expense and $22.5 million of stock-based compensation. For the three-months ended March 31, 2024, cash provided by operating activities also increased due to a $60.5 million increase in income taxes payable, a $52.8 million increase in accrued promotional allowances, a $28.3 million increase in accrued liabilities, a $22.7 million decrease in inventories and an $11.8 million decrease in prepaid income taxes. For the three-months ended March 31, 2024, cash used in operating activities was primarily attributable to a $195.1 million increase in accounts receivable, a $35.7 million decrease in accrued compensation, a $9.5 million increase in prepaid expenses and other assets, a $9.1 million decrease in accounts payable and a $3.0 million decrease in deferred revenue.

For the three-months ended March 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $397.4 million and adjustments for certain non-cash expenses, consisting of $19.0 million of depreciation and amortization and non-cash lease expense, and $16.1 million of stock-based compensation. For the three-months ended March 31, 2023, cash provided by operating activities also increased due to a $51.1 million increase in accounts payable, a $48.3 million increase in accrued promotional allowances, a $41.6 million increase in income taxes payable, a $35.5 million decrease in inventories, a $14.2 million increase in accrued liabilities, a $4.0 million decrease in prepaid income taxes and a $1.3 million decrease in prepaid expenses and other assets. For the three-months ended March 31, 2023, cash used in operating activities was primarily attributable to a $167.5 million increase in accounts receivable, a $30.3 million decrease in accrued compensation and a $5.0 million decrease in deferred revenue.

Cash flows used in investing activities. Cash used in investing activities was $35.3 million for the three-months ended March 31, 2024 as compared to cash used in investing activities of $52.8 million for the three-months ended March 31, 2023.

For both the three-months ended March 31, 2024 and 2023, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the three-months ended March 31, 2024 and 2023, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. To a lesser extent, for both the three-months ended March 31, 2024 and 2023, cash used in investing activities also included the acquisitions of fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, as well as acquisitions of and/or construction of and/or improvements to real property. We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products)

to develop our brand in international markets and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.

Cash flow used in financing activities. Cash used in financing activities was $84.7 million for the three-months ended March 31, 2024 as compared to cash used in financing activities of $6.0 million for the three-months ended March 31, 2023. The cash used in financing activities for both the three-months ended March 31, 2024 and 2023 was primarily the result of the repurchases of our common stock. The cash provided by financing activities for both the three-months ended March 31, 2024 and 2023 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.

The following represents a summary of the Company’s contractual commitments and related scheduled maturities as of March 31, 2024:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Payments due by period (in thousands)
​		​	​		Less than			1‑3			3‑5			More than
Obligations	​	Total		​	1 year			years			years			5 years
Contractual Obligations1	​	$	451,105	​	$	358,170	​	$	85,253	​	$	7,564	​	$	118
Finance Leases	​		4,395	​		4,380	​		15	​		—	​		—
Operating Leases	​		66,750	​		2,333	​		24,178	​		18,012	​		22,227
Purchase Commitments2	​		345,541	​		338,814	​		6,566	​		161	​		-
​	​	$	867,791	​	$	703,697	​	$	116,012	​	$	25,737	​	$	22,345

​

1_Contractual obligations include our obligations related to sponsorships and other commitments._

2_Purchase 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 $6.0 million of unrecognized tax benefits have been recorded as liabilities as of March 31, 2024. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of March 31, 2024, we had $0.7 million of accrued interest and penalties related to unrecognized tax benefits.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. There have been no material changes to our critical accounting policies or estimates from the information provided in “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 8 – Financial Statements and Supplementary Data – Note 1 – Organization and Summary of Significant Accounting Policies”, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“Form 10-K”).

Recent Accounting Pronouncements

The information required by this Item is incorporated herein by reference to the Notes to Condensed Consolidated Financial Statements - Note 1. Recent Accounting Pronouncements, in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Inflation

Inflation had an impact on our results of operations for the three-months ended March 31, 2024 primarily due to inflation related local currency price increases in certain international markets.

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,” “estimates” and similar expressions are intended to identify forward-looking statements.

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 intended commencement of the $3.0 billion tender offer;

	●	The intended $1.0 billion in combined borrowings, consisting of a new revolving credit facility and a new delayed draw term loan facility, each expected to be consummated prior to the completion of the tender offer;

	●	Our ability to successfully integrate the Bang Energy® business and recognize the anticipated benefits of the transaction;

	●	Our ability to successfully transition the acquired Bang Energy® beverages to the Company’s primary bottlers/distributors;

	●	Our ability to procure shelf space, retain customers and increase sales of the acquired Bang Energy® beverages;

	●	Our ability to consolidate operations and/or rationalize brands acquired from Monster Brewing Company and Bang Energy®;

	●	Our ability to achieve profitability within our Alcohol Brands segment;

	●	Our ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers and/or consumers;

	●	The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers;

	●	Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products;

	●	The impact of the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East and across the Taiwan Straits, including supply chain disruptions, volatility in commodity and energy prices, increased economic uncertainty and escalating geopolitical tensions;

	●	Fluctuations in growth and/or growth rates (positive or negative) of the domestic and international energy drink categories generally, including in the convenience and gas channel (which is our largest channel) and the impact on demand for our products resulting from deteriorating economic conditions and/or financial uncertainties;

	●	Lack of anticipated demand for our products in domestic and/or international markets;

	●	Our ability to sustain the current level of sales of and/or achieve growth for our Monster Energy®, Reign Total Body Fuel®, Reign Storm®, Bang Energy® and NOS® brand energy drinks and/or our other products, including our Strategic Brands and Alcohol Brands;

	●	The impact of temporary or permanent facility closures, production slowdowns and disruptions in operations experienced by our manufacturing facilities, our suppliers, bottlers/distributors, co-packers, and/or breweries, including any material disruptions on the production and distribution of our products;

	●	Disruption to our and/or our co-packers’ manufacturing facilities and operations due to severe weather, natural disasters, climate change, labor-related issues, production difficulties, capacity limitations, cybersecurity incidents or other causes, which could impair our ability to produce or deliver finished products, resulting in a negative impact on our operating results;

	●	Our ability to modify our manufacturing facilities to comply with safety, health, environmental, and other regulations;

	●	The consolidation of co-packers leading us to increasingly rely on fewer co-packing groups, certain of which account for a large percentage of our co-packing capacity for our Monster Energy® drinks;

	●	The impact of logistical issues and delays, including shortages of shipping containers and port of entry congestion;

	●	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 consequence of TCCC’s bottlers/distributors distributing Coca-Cola brand energy drinks, 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;

	●	The effect of TCCC being one of our significant stockholders and the potential divergence of TCCC’s interests from those of our other stockholders;

	●	Our ability to maintain relationships with TCCC system bottlers/distributors and manage their ongoing commitment to focus on our non-alcohol products;

	●	Disruptions in distribution channels and/or declines in sales due to the termination and/or insolvency of existing and/or new domestic and/or international bottlers/distributors;

	●	Fluctuations in our inventory levels or those of our bottlers/distributors, planned or otherwise, and the resultant impact on our revenues;

	●	Unfavorable regulations, including taxation, 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 Federal Trade Commission (the “FTC”), the Food and Drug Administration (the “FDA”), the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”), municipalities, city attorneys, other government agencies, quasi-government agencies, government officials (including members of the U.S. Congress) and/or analogous central and local agencies and other authorities in the foreign countries in which our products are manufactured and/or distributed into the advertising, marketing, promotion, ingredients, sale and/or consumption of our 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, but not limited to, with respect to the General Data Protection Regulation and the California Consumer Privacy Act of 2018;

	●	Our ability to achieve profitability and/or repatriate cash from certain of our operations outside the United States;

	●	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;

	●	Changes in U.S. tax laws as a result of any legislation proposed by the U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction;

	●	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 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 U.S. dollar, which will continue to increase as foreign sales increase;

	●	Changes in accounting standards may affect our reported profitability;

	●	Implications of the Organization for Economic Cooperation and Development’s base erosion and profit shifting project;

	●	Any proceedings that may be brought against us by the U.S. Securities and Exchange Commission (the “SEC”), the FDA, the FTC, the ATF or other governmental or quasi-governmental agencies or 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 our products 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, including litigation directed at the energy and alcohol beverage industries generally or at the Company in particular;

	●	Intellectual property injunctions;

	●	Unfavorable resolution of possible 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, including, but not limited to: changes in demand for different packages, sizes and configurations; changes due to perceived health concerns such as obesity, ingredients in our products or packaging, and alcohol abuse; changes due to product safety concerns; and/or changes due to decreased consumer discretionary spending power;

	●	Adverse publicity surrounding obesity, alcohol consumption, and other health concerns related to our products, product safety and quality, water usage, environmental impact and sustainability, human rights, our culture, workforce and labor and workplace laws;

	●	Our ability to meet or comply with sustainability-related expectations, standards, and regulations, including rules adopted by the SEC, laws implemented by the California legislature, and directives adopted by the European Commission;

	●	Changes in demand that are weather or season related and/or for other reasons, including changes in product category and/or package consumption;

	●	Changes in cost and availability of certain key ingredients including aluminum cans, as well as disruptions to the supply chain, as a result of climate change and poor or 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, widespread outbreaks of infectious diseases (such as the COVID-19 pandemic), or unforeseen economic and political changes and local or international catastrophic events;

	●	The impact on our business of competitive products and pricing pressures and our ability to increase or maintain our market share 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 relating to any of our brands, which could result in an injunction barring us from selling certain of our products and/or require changes to be made to our current trade dress;

	●	Our ability to implement and/or maintain price increases, including through reductions in promotional allowances;

	●	An inability to achieve volume growth through product and packaging initiatives;

	●	Our ability to implement our growth strategy, including expanding our business in existing and new sectors, such as the alcohol beverage sector;

	●	The inherent operational risks presented by the alcohol beverage industry that may not be adequately covered by insurance or lead to litigation relating to alcohol marketing, advertising, or distribution practices, alcohol abuse problems and other health consequences arising from excessive consumption of or other misuse of alcohol, including death;

	●	Our inability to transition distribution agreements in our Alcohol Brands segment and/or the impact of higher costs to change distributors for our alcohol beverages;

	●	The impact of criticism of our products and/or the energy drink and/or alcohol beverage markets generally and/or legislation enacted (whether as a result of such criticism or otherwise) that restricts the marketing or sale of energy drinks and/or alcohol beverages (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limits caffeine or alcohol 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 and/or alcohol drinks;

	●	Our ability to comply with and/or resulting lower consumer demand and/or lower profit margins for energy drinks and/or alcohol beverages due to proposed and/or future U.S. federal, state and local laws and 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. In addition, our business may be adversely impacted by changes in other food, drug or similar laws in the United States and internationally as well as laws and regulations or rules made or enforced by the ATF and/or the FTC or their foreign counterparts;

	●	Disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients due to port congestion, strikes and related labor issues or otherwise;

	●	Our ability to satisfy all criteria set forth in any model energy and/or alcohol drink guidelines, including, without limitation, those adopted by the American Beverage Association, of which we are a member, and/or any international beverage associations and the impact that our failure to satisfy such guidelines may have on our business;

	●	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 cans or kegs, the Midwest and other premiums, raw materials, including flavors and flavor ingredients, and other ingredients and juice concentrates, co-packing fees, 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, water, flavors, flavor ingredients, supplement ingredients, aluminum cans generally, to a limited extent PET containers, 24-ounce aluminum cap cans, 19.2-ounce cans and 550ml BRE aluminum cans with resealable ends;

	●	Our ability to access, secure and purify sufficient supplies of quality water;

	●	Limitations in procuring sufficient quantities of aluminum cans;

	●	In order to secure sufficient quantities of aluminum cans and sufficient co-packing availability in the future, we may be required to commit to minimum purchase volumes and/or minimum co-packing volumes. In the event that we over-estimate future demand for our products and therefore may not purchase such minimum quantities in full, or utilize such minimum co-packing volumes in full, we may incur claims and/or costs or losses in respect of such shortfalls;

	●	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 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, buying groups, convenience and gas chains, grocery chains, mass merchandisers, specialty chain stores, e-commerce retailers, e-commerce websites, 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, impose restrictions or limitations on the sale of our products and/or the sizes of containers of our products and/or devote less resources to the sale of our products;

	●	The impact of certain activities by competitors and others to persuade regulators and/or retailers and/or customers in certain countries to reduce the permitted or maximum container sizes for our products from those currently being sold and marketed by us;

	●	The impact of possible trading disputes between our bottler/distributors and their customers and/or one or more buying groups which may result in the delisting of certain of our products, temporarily or otherwise;

	●	The effects of retailer consolidation on our business and our ability to successfully adapt to the rapidly changing retail landscape, including, but not limited to, competition from new entrants, consolidations by competitors and retailers, and other competitive activities;

	●	Our ability to adapt to the changing retail landscape with the rapid growth in e-commerce retailers;

	●	The effects of bottler/distributor consolidation on our business;

	●	The costs and/or effectiveness, now or in the future, of our sponsorships and endorsements, marketing and promotional strategies;

	●	The success of our sports marketing, social media and other general marketing endeavors both domestically and internationally;

	●	Possible product recalls and/or reformulations of certain of our products and/or market withdrawals of certain of our products due to defective packaging and/or non-compliant formulas or production in one or more jurisdictions;

	●	The failure of our bottlers and/or co-packers to manufacture our products on a timely basis or at all;

	●	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;

	●	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 or by third parties; and

	●	Succession plans for and/or the 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 SEC is not exhaustive. See “Part I, Item 1A – Risk Factors” for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, our actual results could be materially different from the results described or anticipated by our forward-looking statements due to the inherent 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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