Good day, ladies and gentlemen, and thank you for your patience. You've joined the Monster Beverage Corporation First Quarter 2013 Financial Results Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn the call over to your host, Chairman and CEO of Monster Beverage Corporation, Mr. Rodney Sacks. Sir, you may begin.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President, is with me today, as is Tom Kelly, our Senior Vice President of Finance. Before we begin, I would like to remind listeners that certain statements made during this call 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 and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance and trends. Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company, that may cause actual results to differ materially from the forward-looking statements made during this call. Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed March 1, 2013, including the sections contained therein entitled Risk Factors and Forward-Looking Statement, for a discussion on specific risks and uncertainties that may affect our performance. The company assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. An explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call, is provided in the notes designated with asterisks in the condensed consolidated statements of income and other information attached to the earnings release dated May 8, 2013. A copy of this information is also available on our website, www.monsterbevcorp.com, in the Financial Information section. Once again, we reiterate that our products are safe based on…

[Operator Instructions] We'll go to the next question, which comes from Kaumil Gajrawala of UBS.

Your trends have tracked Nielsen much more closely in the quarters and years in the past, yet, that wasn't the case in this quarter. Was there something unique going on in this quarter on why trends in the U.S. were -- seemed to be materially different from what was in the Nielsen data?

Yes. We just don't -- we don't know.

Okay. Could it be something maybe tied to inventory levels or, particularly, with the change in the distributor in New York?

We don't think so. I mean, we did take back some inventory from our previous distributors. That came back in. But we don't think those would have materially affected the numbers. So we just don't have a -- we just don't have any reason for the differences.

Okay. As you look at the Nielsen data that you cited on the call earlier today, it did feel like, as you went country-by-country, that the current data seems to be in line with how your trends are doing?

Generally, the -- our sales out [ph] just seemed to be lagging a little bit in North America, but not by much. But they do seem to be generally in line.

Okay. Understood. And then, finally, on Zero Ultra, is the shelf space incremental, or is it coming from maybe pruning some of the brands in your portfolio?

It's very difficult to tally. it varies from store to store. In order to get the product on shelf quickly, obviously, a lot of our distributors cut into existing shelf space because we had -- we have a certain number of shelves that we've agreed, and we have the shelf space so they would have cut into that to get a single facing. And then, because of [indiscernible] two facings. But as we continued to get shelf programs for 2013, we have continued to expand and take that into account. So in some cases, it's -- we've had to sort of juggle the shelf space because there's only so much space available on the shelves. In other cases, in other chains, we have picked up some incremental space through that and other -- the other sort of line extensions. So it's mixed. I don't have any express answer.

Our next question comes from John Faucher of JPMorgan. John A. Faucher - JP Morgan Chase & Co, Research Division: I just want to talk a little bit about the cadence within the quarters. Most companies, we get concerned when we feel like, okay, trends are better in the last month of the quarter because they're struggling to make the numbers. You guys have had sort of the opposite situation, where the first month of the quarter starts out really strong and then maybe not as strong as we go through the quarter. Do you guys have any thoughts in terms of maybe what's causing that type of shipment pattern? Is it new product launches? Is it new distributors starting in the beginning of the quarter? Any color, so we can get a better handle in terms of why the trend seemed to decelerate through the quarter?

We really don't have any explanation. It changes from quarter-to-quarter. They simply are what they are and sometimes quarters end stronger and sometimes they don't. The trends just change from month to month. We really do have a volatile set of numbers from month-to-month, and that's why we continue to caution that these numbers are single months. And we just -- they just are what they are. As you indicated, they change from quarter-to-quarter. John A. Faucher - JP Morgan Chase & Co, Research Division: Got it. And then, with Red Bull launching their first flavored new products in a long time, you're getting a sense from your retail customers, it seems though there's an opportunity that, that could bring more news to the category and potentially reaccelerate the category. I realize it's still early days from that standpoint. Are you seeing any impact to the category trends from these competitive launches?

Not really. The -- I think that Red Bull has got a lift in their sales, as you can see from some of the Nielsen numbers, and we think that, that is largely due to the introduction of these new additional flavors. A lot of that is trial. A lot of that is -- they're different for the first time. The first time they've had a new flavor for a long time. There are other flavors. Even the Total Zero is very similar to their -- the profile of their existing Red Bull. So this was a complete change. And so, ultimately, you're going to get trial extra shelf space from -- there's a lot of promotion going around the 8 oz. We can see the promotional activity in the Red Bull sales numbers and dollar sales they have -- they are promoting quite heavily, their 8 oz. quite heavily. So it's too soon to tell where it's going to go. In Europe, generally, they've not really succeeded in driving incremental sales and even shelf space. But certainly, incremental sales on a longer-term basis, but we are seeing some trial. And so, we've just got to wait a little while. I think it's just premature. And so, that -- overall, I think that it may help the category to basically bring in additional consumers. I think that will be so. But the extent of that, we don't know.

Our next question comes from Bill Chappell of SunTrust.

This is Sarah Miller on for Bill. I was just wondering if we could get a little bit more color around the local manufacturing that you're setting up in Japan and Korea and kind of how that's going to affect the cadence of gross margin trends for the rest of the year?

Well, as soon as we are able to get those production facilities up and running, we will -- we believe, we will achieve substantially improved margins in those areas. We'll also eliminate, we believe, a lot of the -- or a large portion of the damages we're incurring in shipping beverages those long distances. In the case of Japan, it's been necessary for us to contract with a can manufacturer to actually make the specific can sizes we are using in Japan, as they're not otherwise available. And at the same time, we are working with 2 production facilities to qualify them to run those cans for us. And so, it is taking some time, but we're making good progress in that regard, particularly in the light of the -- that being the largest volume area for us in that region. We're, obviously, looking to try and get that production up and running as soon as possible. We're hoping to -- towards the middle of the year to start looking at being able to do a test run and produce. We are also probably a little more behind that in Korea and in India. But in those -- both of those countries, it may be easier to get cans less complicated because of the fact that we do have and can buy certain cans in those countries, but those will probably be a little behind that. And so, we're working on all 3 fronts, but the -- our focus is on Japan because of the larger volumes that we are doing in that country. We are also in the process this week of launching Absolutely Zero, which is a new line extension in Japan. So we are looking positively to Japan going through the rest of the year.

Okay. And then, my one follow-up question is, I remember, with Europe last year, it was pretty cold and pretty wet through the spring and summer. I'm just wondering if you have kind of an estimate of how weather might have helped you in the EMEA region this quarter and what your comps look like for the rest of the year?

We -- I'm not sure that weather has had a material impact. I think the weather hasn't been great this first quarter as well in Europe. They had some pretty cold spells until recently, particularly in Great Britain. So I just don't think that will have an impact. I think there was just -- there has been a little bit of a general slowing. Again -- but I think that the month of April was probably a little slower for us in Europe than the first quarter, but we believe that will improve as we -- going into the remainder of the quarter. But again, it's still too early to tell. I mean, there's nothing I can give you specifically on those numbers and directions.

Our next question comes from Caroline Levy of CLSA. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: I wonder if you could tell us -- it looks to us, like, net sales were only up a couple of percent in the U.S. and about 30 overseas. If you could help me understand if I'm on the right track with that and also, will the professional fees will probably run at a similar rate through the year from where you sit today?

Your estimate is pretty close on the numbers. I think that on -- that's on the sales side. On the professional fees, we're not sure. It depends on a number of factors. We think that if the FDA has its scientific hearing and things, sort of, start becoming a little clearer, I think a lot of things will clear up and I think a lot of the -- there may be a falloff in the professional fees. It's -- we've had to deal with a number of challenges from different quarters. And that's just [indiscernible] the engagement of a lot of lawyers. We've also had to undertake some -- and get some other market research reports and surveys underway in order to, obviously, prepare the company for any challenges and to support our positions, which we are confident in. And those costs are all sort of incurring initially, which we don't think will necessarily be repeated. But it's very difficult to tell how long that will go on for -- I mean, we -- for example, we've engaged with many consultants to, obviously, consult with us on some of the litigious matters, but also to deal with the PR issues, and all of those costs and lobbies [ph] of things that we've not normally dealt within the past, and we believe that will settle out down, and then those costs will settle down a little more than they have been in the first quarter. But again, I just don't know. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: And just a follow-up with the -- on the international losses. Could you repeat, I think there was $4.3 million in the last first quarter, what they were this one and why the change?

I think it was $2.1 million for this quarter versus $4.3 million. And so, what has happened is that I think that sales have improved. Our costs per case have gone down. But because of the increased sales, you still had a small loss. But the results are improving, and the losses are improving. As we go into the summer, we believe those results will continue to improve.

Our next question comes from Judy Hong of Goldman Sachs.

First, just -- the comment about the April trend being up 5.7%. I know it's not appropriate to really look at 1-month data, but I know you're lapping a 39% comp with the Japan sales. So can you maybe give us a little bit color of that 5.7% U.S. versus international, and how much of the drag the pipeline fell last year when Japan had on that number?

Well, Japan clearly had an effect on it because we were selling into Japan prior to our launch there. So that is the one -- clearly, the one issue, Judy, which you, obviously, have alluded to. In the quarter, all I would like to really say is that the North American numbers are up in that -- in the month compared to the quarter, and the European numbers were slightly down in that month compared to the quarter. And I think that, that was a -- we think that, that is an anomaly in the European numbers. We think they will improve again and pick up in May. But there has been an improving trend in North America in the month.

Okay. And that was the -- can you quantify if that's more representative of what we're seeing in the Nielsen data?

I'm not keen to go more in detail. I just don't have an exact amount available to you right now. But it is closer to the Nielsen data, I think.

Okay, okay. And then, just -- you've talked about some of the weakness in Canada and Mexico. I mean, they're obviously profitable margins for you within the international markets. So can you talk about what's going on in those markets? And then, if you think about the international margin progression for the rest of the year, just the weakness in Canada and Mexico...

Let me just refer to Canada. Canada, towards the end of the quarter -- and in the numbers that I referred to in the Nielsen's, part of that weakness, we believe, is due to the fact that, last year, we introduced and launched Rehab in the same period. So you -- again, you're citing off a period or a comparable period where we had an introduction, and we didn't have any comparable introductory products in Canada in that -- in this year's comparable period. In the case of Mexico, again, a short period is quite affected by the OXXO chain. The OXXO chain comprised a very big proportion of the total market and, again, depending on who is in promotion in [ph] OXXO has quite a material impact. If you looked at the number that we had for the month previously for Mexico, I think we were ahead of Red Bull. And then you look at this month, we are behind Red Bull. And in other words -- and very largely, if not all, but largely attributable to the fact that we were on promotion, I think, earlier in the year in OXXO and in sort of March, April, Red Bull were on promotion. I think March, Red Bull were on promotion. So that affects the numbers quite dramatically in Mexico. So that really accounts for a lot of the detail. So although Canada was down, Mexico has -- is up. There's also has been some price challenge in pricing from Rockstar in -- particularly in Canada where they're being quite aggressive, they've come off their pricing but there has been some pricing challenges in Canada.

Okay. And then, lastly, just Brazil, can you quantify how much of sales went through Brazil in the first quarter? And then, maybe if you can you broadly talk about what you're seeing with your partnership with Ambev, how much of the improvement do you expect to see as you continue....

You've got less than 5 weeks of sales within the quarter under the Ambev stewardship. But what we are seeing is that we're getting -- it's a large organization. We're getting a large sales force behind the brand. We're getting substantial, additional new listings every week. And so, we are seeing it in that way. We're seeing the momentum, and we're seeing it's sort of coming. And so, we are very positive about it. But the actual effect in the quarter was not that much, it's only 5 weeks of sales. Try -- the sales initially trending before we switched. There's a part, I don't know, we're lower than last year and then there was pickup once we switched, and we ended up with about -- just under $1 million in additional sales. But again, it's not an easy comparison because we did -- we were trending lower, and we went through a difficult period once we were actually undergoing the switch off to when we announced the deal. But we're definitely seeing improved numbers of outlets selling and the actual volume going into Ambev from us. And that's continuing through April.

Our final question of the hour comes from Wendy Nicholson of Citi Research.

Two questions. First, just following up on the international profitability, can you give us a sense sort of directionally how big of a gap the gross margin for the international business is for the -- compared to the U.S. business? In other words, assuming the international business continues to outgrow the U.S., how is the gross margin pressure going to continue to be an ongoing impact?

Yes, it will be. We think if the margins are closer to the 40% level, where the North American margins are north of 50%. So there is a differential.

Got it. Okay. And then, just second question, with the sort of prolonged potential slowdown in the category -- I know part of what's driven the category growth over the last few years has been increased sort of a linear shelf space at a lot of convenience stores and other retailers in the U.S. Do you see any of the stores talking about now going the other way and taking shelf space away from the energy drink category and giving it back to other sectors of the LRB market, or is that static at this point?

We don't see that. We see this category as still being profitable for retailers. We still see better growth in this category than in the other -- in other categories with better margins and better dollar rings -- substantially, better dollar rings per SKU. So we see no reason for retailers to restrict the space. On the contrary, we think that, in fact, space is continuing to expand. If you want, for example, to go look at the space being allocated last year and this year and going forward at -- like Wal-Mart, which is pretty much the biggest retailer in the country, you will see that they're allocating, we believe, more space to energy, and we believe that will continue. We believe there has been a dampening of the category due to all of the media and publicity. But we think that, that is the major factor that has been affecting the category. We believe that, that will eventually start becoming, and indeed we are starting to see less and less impact of that, as consumers just continue to see the same stories being repeated over and over in different ways but without really having any real substance to them, and we believe that eventually, that we'll be able to overcome that and that the growth will resume. But it has taken a toll in the meantime.

But is it fair to say that, in the near term, your promotional spend are going to be -- I see it's gone up a fair bit in the first quarter. But is it fair to assume that you'll continue to spend more not only because of Red Bull being a little bit more competitive, but to offset some of those, sort of, whatever PR headwinds that you're facing?

I don't think so. I think the -- those sort of headwinds are headwinds. I don't think that's going to change the way we spend. I think that, just on the spending side, we're obviously going to look at our spending. Our spending -- increase in spending as a proportion of CMAs [ph] and allowances is very much in line with last year. We think we're going to continue within that range. Where we did have additional spending is in the marketing and size. Obviously, we anticipated -- we felt that our increase would be higher than in fact, it has been -- come through in the first quarter. So we're going to look at where we can, obviously, address this upfront and balance our expenses a little more carefully. But other than that, I don't think we're going to change the way we're doing business. We think that it is a near-term headwind. And we think that it will ultimately settle down and normalize again. And when it normalizes, we believe we will be able to see additional growth resume. But obviously, we are looking to try and manage our expense lines a little better and to try to improve our bottom line going forward.

And at this time, I'd like to turn the call back over to Mr. Sacks for any closing remarks.

Thank you. On behalf of Monster, I would like to thank everyone for their continued support for the company. We remain confident in the safety of our products and our growth strategy and are committed to developing and differentiating our brands and expanding the Monster brand, both domestically and internationally. Again, we reiterate that our products are safe and are properly labeled. The caffeine content in Monster Energy is approximately 10 milligrams per ounce, which is less than half the milligrams per ounce of caffeine contained in coffeehouse brewed coffee. I cannot continue to underemphasize that point, which is -- which are the facts. And the naysayers just continue to ignore the facts, and we need to stick to the facts. And we believe that, ultimately, we will get through the headwinds we have encountered in recent months. Thank you very much.

Thank you, sir, and thank you, ladies and gentlemen, for your participation. That does conclude Monster Beverage Corporation's First Quarter 2013 Financial Results Call. You may disconnect your lines at this time. Have a great day.