Hansen Natural Reports Record Fourth Quarter and Full Year Financial Results for 2009

2/25/2010
Gross sales for the 2009 fourth quarter increased 13.8 percent to $329.6 million from $289.6 million a year earlier. Net sales for the 2009 fourth quarter increased 14.4 percent to $290.9 million from net sales of $254.4 million in the same quarter last year.

Both gross and net sales for the fourth quarter and year ended December 31, 2009 were positively impacted by advance purchases made by customers in the 2009 fourth quarter due to the Company's announcement of a new per case marketing contribution program for Monster Energy® distributors commencing January 1, 2010, as well as to avoid potential interruptions in product supply due to the announcement to transition to the SAP enterprise resource planning system commencing January 2010. The Company estimates that of our gross sales, approximately 4 percent to 6 percent for the quarter ended December 31, 2009 and approximately 1 percent for the year ended December 31, 2009, were attributable to such advance purchases.

Gross profit as a percentage of net sales was 53.4 percent for the fourth quarter ended December 31, 2009, compared with 54.4 percent for the 2008 fourth quarter.

Operating expenses for the 2009 fourth quarter decreased to $69.4 million from $177.6 million in the same quarter last year. This decrease is primarily the result of $0.02 million in termination obligations to prior distributors in the quarter ended December 31, 2009 compared to $118.2 million in the quarter ended December 31, 2008. Excluding the termination obligations, operating expenses for the 2008 fourth quarter would have been $59.5 million.

The comparative results for the fourth quarter and full fiscal year of 2008 were impacted by the transition of certain of the Company's distribution arrangements to newly appointed distributors, including Coca-Cola bottlers and Anheuser-Busch distributors, which occurred primarily in the fourth quarter of 2008.

Distribution costs as a percentage of net sales were 4.1 percent for the fourth quarter of 2009, compared with 4.9 percent in the same quarter last year.

Selling expenses as a percentage of net sales for both the 2009 and 2008 fourth quarters were 10.4 percent.

General and administrative expenses for the 2009 fourth quarter were $27.4 million, compared with $138.8 million for the comparable quarter in 2008, which included $118.2 million in termination obligations to prior distributors. Excluding the termination obligations, general and administrative expenses for the 2008 fourth quarter would have been $20.7 million. Stock based compensation (a non-cash item) was $4.3 million in the fourth quarter of 2009, compared with $4.1 million in the prior year period.

Operating income for the 2009 fourth quarter was $85.8 million, compared to an operating loss of $39.2 million for the 2008 fourth quarter. The operating loss for the 2008 fourth quarter was directly impacted by the termination obligations of $118.2 million to prior distributors. Excluding the termination obligations, operating profit for the 2008 fourth quarter would have been $79.0 million.

Net income for the fourth quarter of 2009 was $53.4 million, or $0.57 per diluted share.

Net sales for the Company's DSD segment were $269.9 million for the 2009 fourth quarter, an increase of approximately 16.4 percent from $231.9 million for the same period in 2008.

Gross sales to customers outside the United States were $43.3 million in the 2009 fourth quarter, compared with $16.5 million in the corresponding quarter in 2008.

For the 2009 fiscal year, gross sales increased 10.7 percent to $1,309.3 million from $1,182.9 million a year earlier. Net sales for the year ended December 31, 2009 increased 10.6 percent to $1,143.3 million from $1,033.8 million a year ago.

Gross profit as a percentage of net sales was 53.6 percent for the year ended December 31, 2009, compared with 52.1 percent for the 2008 year.

Operating expenses for the year ended December 31, 2009 decreased to $275.0 million from $375.2 million for 2008. The decrease in operating expenses is primarily the result of $118.1 million in termination obligations to prior distributors for the year ended December 31, 2008. Excluding the termination obligations, operating expenses for the year ended December 31, 2008 would have been $257.1 million.

Operating income for the 2009 year increased 106.2 percent to $337.3 million from $163.6 million a year ago. Operating income for the 2008 fiscal year was directly impacted by the termination obligations of $118.1 million to prior distributors. Excluding the termination obligations, operating income for the year ended December 31, 2008 would have been $281.7 million.

Net income for the twelve-months ended December 31, 2009 increased 93.2 percent to $208.7 million, or $2.21 per diluted share.

Gross sales to customers outside the United States were $168.0 million for the year ended December 31, 2009, compared with $94.2 million for the year ended December 31, 2008.

During the 2009 fourth quarter the Company repurchased 1,008,729 shares of its common stock at an average purchase price of $34.91 per share.

Rodney C. Sacks, chairman and chief executive officer, attributed the record revenues to sustained strong sales of Monster Energy® drinks both in the United States and internationally. "We are encouraged by the continued positive sales trends reported by Nielsen, indicating that year-on-year energy drink sales in the United States have increased in each month since September 2009," said Sacks. Since the transitions to certain Coca-Cola bottlers and new Anheuser-Busch distributors in the fourth quarter of 2008, distribution levels and market share generally for the Monster Energy® brand have increased.

"We are planning to introduce new products in 2010 and to continue our international expansion into western and central Europe, the Middle East and South America. We are also evaluating additional geographic expansion opportunities for the Monster Energy® brand," Sacks added.

Auction Rate Securities

At December 31, 2009 the Company held auction rate securities with a face value of $96.4 million. The Company determined that an impairment of $12.1 million had occurred at December 31, 2009, of which $7.7 million was deemed temporary and $4.4 million was deemed other-than-temporary. Included in other comprehensive loss is $4.6 million net of taxes for the twelve-months ended December 31, 2009. Included in interest and other income, net is $3.9 million for the twelve-months ended December 31, 2009. The auction rate securities will continue to accrue interest at their contractual rates until their respective auctions succeed or they are redeemed.

Investor Conference Call

The Company will host an investor conference call on February 25, 2010 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.hansens.com and www.opencompany.info. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on both websites.

Hansen Natural Corporation

Based in Corona, California, Hansen Natural Corporation markets and distributes Hansen's® natural sodas, sparkling beverages, apple juice and juice blends, fruit juice smoothies, multi-vitamin juice drinks in aseptic packaging, iced teas, energy drinks, Junior Juice® juices and water beverages, Blue Sky® brand beverages, Monster Energy® brand energy drinks, Nitrous™ Monster Energy® brand energy drinks, Monster Hitman™ energy shooters, Java Monster™ brand non-carbonated coffee + energy drinks, X-Presso Monster™ brand non-carbonated espresso energy drinks, Lost® Energy™ brand energy drinks, Rumba®, Samba and Tango brand energy juices, Vidration™ brand vitamin enhanced waters and Peace Tea™ iced teas. For more information visit www.hansens.com and www.monsterenergy.com