Good day, ladies and gentlemen, and welcome to the Monster Beverage Corporation First Quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Mr. Rodney Sacks, Chairman and CEO. 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, he's 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 on March 1, 2017, including the sections contained therein entitled Risk Factors and Forward-Looking Statements, 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 and designated with asterisks in the consolidated statements of income and other information attached to the earnings release dated May 4, 2017. A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section. Sales continue to be challenging in the beverage industry in…

Thank you. Our first question comes from Dara Mohsenian from Morgan Stanley. Your line is open. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Hey. Good afternoon, guys.

Hi, good afternoon, Dara. Dara W. Mohsenian - Morgan Stanley & Co. LLC: Rodney, can you give us more detailed thoughts on your trends so far in the cities and where you've launched in China early on. And you've been, for a few months, any update on consumer demand in those markets? And then also, separately, some of the new cities launched more recently and what level is retailer reception you're getting? Thanks.

I think that it really is still very early to tell. We're getting sales that we are comfortable with. It's all right, but they vary from area to area depending on the execution of the bottler, depending on the positioning in the stores and basically, pricing and points of sale. So, we think that it's certainly going to take time to continue. You can't just put stuff – a brand like Monster which is not known on the shelf and expect it to immediately start achieving velocities that are where you'd like it to be. There is a buildup and we're going to go through this buildup over a period of time. So really, it really is premature. We're comfortable with the velocities we're getting and the volumes. We're comfortable with the attention and focus. We're putting a lot of effort behind it. We're building up our own infrastructure and teammates to support the brand, support sampling and in-store execution, and we are seeing good execution from a point of view of our point of sale and things of that nature. And we are quite happy with that. But it really is just premature to talk. We are comfortable with the market. It is a large market, and it will continue. We're right in the middle of the rollouts, as we've indicated. There were a whole new number of regions we introduced. It's probably late because of the Chinese New Year was late February into March. We're planning launches. We've planned launches, and we have launched throughout April. And we continue in May, and then pretty much most of it will be done. So there will be a few more areas to do in June and July, but we think it'll be pretty much done by then. There may be one or two hiccups that we don't anticipate at this point. But it will take time, and it's just a very big market and you've got to be patient with and just build slowly.

I think one of the other points about China is that a number of the websites and social media that our consumers are used to elsewhere in the world don't appear in China. So in a sense while we have extremely good exposure for the brand in many, many markets in the world, we don't have that same exposure to the Internet in China. So the build will be a lot harder.

Thank you. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open.

Hi. Good afternoon, everybody.

Hi.

Hi. I just wanted to follow up with more like thinking of all the outlets, if you can think about like how your growth was? I mean if you're putting the $12 million back, most likely your sales grew close to 7%? I wanted to just clarify that in the U.S. And if that is a number that we should use? And how is the cadence of the improvement during the quarter? I'm assuming, as most companies, like things have improved for the cadence of the quarter? And if you can tell us roughly how the sellout has been?

Well, let's just deal with the first question. One at a time.

Okay. All right.

You've got to do your own numbers. We don't report the numbers for the U.S. and break them out. You've seen the Nielsen numbers. If you take the Nielsen numbers and then factor in the negative effect on the production issues we've had and they've really been sort of more identified by – we try to keep the two main SKUs in production and on the shelf. But really what it's done is that most of the other SKUs have been out of production and off-the-shelf, and that has continued. So you've got to really take that into account in looking at the growth of the industry and the growth of Monster in the U.S. We did sort of have probably less innovation hitting in this period than we had last year, sort of the reserve for Red Bull. But again, we've explained on a number of occasions what our innovation is for this year and how it's going to come in later in the year because of timing. So we really think that you guys have got make your own judgment call on how you look at the U.S. and the growth. We don't give guidance on the growth either to U.S. or on a broader basis, but we feel pretty comfortable about the industry. We are seeing growth if you look at the Nielsen numbers, and that's what I was referred to earlier. It was down to almost a negative inconvenience in December, and then it's grown just under 1% in January. It was 1.5% or so, roughly, in February. It was 2.5% or 2.6% in March, and it's actually gone up a little higher in April. So clearly there is a nice trend, but you can see the numbers as well as we can. And we think that that is positive going forward.

But do you see it tracks well at this point? Nielsen is tracking well your actual volumes?

I'm not sure I heard the question.

No. I'm just saying if...

There's a difference between our sales and – the increase in our sales and what we are seeing in Nielsen. So we went through the Nielsen numbers on the call. You saw what our quarterly sales levels were, and then you must make your own assumptions as to what you think the performance was.

We obviously sell in a lot of the non-major channels and that really accounts for the difference and if you've noticed over the years there always has been some timing differences between Nielsen and our numbers.

Okay. Thank you.

Thanks

Thank you. Our next question comes from the line of Mark Astrachan with Stifel. Your line is open. Mark Astrachan - Stifel, Nicolaus & Co., Inc.: Yes. Hey. Good afternoon, guys.

Hi, Mark. Mark Astrachan - Stifel, Nicolaus & Co., Inc.: So maybe just to go back to that last question, something that clearly comes up repeatedly in conversations from investors in terms of trying to reconcile the scanner data with your reported results, maybe if you could give us a bit of specifics about change in points of distribution in the untracked channels, just so sort of where they come from, where are they now, and how large as a percent of the business – if you don't want to say specifically, but just sort of broader strokes about how important they're becoming to the business today versus where they've been. I think that might help folks a bit.

Without going into the level of them, we are starting to do more business and have more sales in the non-major channels, for example, food service, specialty accounts, non-food accounts. And those continue to increase. Internet, Amazon, although small, some of them are small, they are increasing at quite a strong rate. And we think that one of the reasons there is possibly some slowdown in the convenience channel is it may be attributable to the broader availability, not only of Monster but in fact of energy drinks, through a number of these non-traditional channels. Mark Astrachan - Stifel, Nicolaus & Co., Inc.: Okay, great. Thank you.

So, Mark, maybe I can give you a little bit more color. In the on-premise segment, we continue to see double-digit growth in this channel. So maybe that'll be helpful.

Thank you. Our next question comes from Amit Sharma with BMO. Your line is open.

Hi. Good afternoon, everyone.

Hi. Good afternoon.

Rodney, two questions. One on China. You talked about the buildup as we go through the next few months, or three months, and expect to be fully done by, latest, summer. When you say that, are you thinking about the ACV build or just the penetration? How are we thinking about it when we say fully implemented there? And then international again...

Well, let's just start – let's just do it one at a time, guys, please.

Okay.

Okay. When we say July, we will have launched through all of the business units in the – on the two Coke bottlers, there were three Coke bottlers and, as you are aware, the Coca-Cola owned bottler, they've sold their and refranchised their system. It's been divided effectively between COFCO and Swire. And then there was some interchange of territories between COFCO and Swire so that their own territories are more aligned and more adjacent to each other. So we will have launched by July through the different BUs. There is obviously no instantaneous miraculous listing on all the shelves. We're going to continue to build, because particularly in China, there is a modern trade, which is easier and obviously you pick up listings on that much more quickly. But the very, very bulk – large bulk of the business is still traditional trade. And that means it's got to be built up store-by-store slowly, slowly, one-by-one. So that is going to still take time to get that penetration up. And that is going to be a slow build. As we continue to build, as we continue to gain momentum, as we hopefully increase our velocity, we'll also be increasing our exposure and distribution through the whole system. So that's still going to take some time. There is a distinction between those two.

Got it. That's really helpful. And then I just had a question on the international contribution margins, right? And you talked about gross margins increasing in many markets. How should we think about it? You're getting more and more contribution from international markets. At the operating level also are you seeing margins improve from these markets?

We are seeing some benefit. We are seeing benefits of scale and also improving our local production. We're continuing to get a number of additional plants online, which is helping us reduce our costs in many markets. And that will continue, because as we continue to build out the international market, we are continuing to go through this process of getting production lower and nearer to these markets. We do have – we'll have that same build in marketing and at G&A spend. But initially in some of the newer markets, we obviously are overspending in our G&A side, particularly payroll, in order to support the launches of brands. And so that will take some time, but as we continue, it will have less and less impact as we get maturer in these markets. But we still do have some large markets. I mean, going through the market in China at the moment, we're continuing to increase our head count quite substantially as we're go into each of these launches in each of these Bus, we have to have representation. When we go into India, we will need more people. So there is a disconnect but it is becoming less impactful, because of that we're seeing we think some better gross margins and better bottom-line margins as we go forward.

Got it. Thank you.

Thank you. Our next question comes from Laurent Grandet with Credit Suisse. Your line is open. Laurent Grandet - Credit Suisse Securities (USA) LLC: Hi, guys.

Hi. Laurent Grandet - Credit Suisse Securities (USA) LLC: I'd like to understand, I mean, to have a bit more clarification on two buckets of growth for you. So first is international launches. Could you give us an update on the three of the major country launches this year? So India, Pakistan, and Argentina. I understand Nigeria has been down. And the second bucket, of course, is Mutant in the U.S. So would like to understand, I mean, what are the marketing activities you are planning to implement to support same-store sales growth, that seems to be soft for now So if you can give me, I mean, or give us, I mean, a bit on those two things and two buckets of growth that would be great. Thank you.

Yes. Just looking at those three markets, they're very large markets, but they're smaller markets from a point of view of the energy category, the premium energy category. So, in India, we are – as we've indicated planning to launch. We're also evaluating the possibility of launching Mutant as a sort of an affordable energy drink in that market. Argentina, we are moving forward. We are very close. We've still not finalized packing arrangements, but we're right in the middle of negotiations on that, and hope to be able to finalize that reasonably soon. We are, at the same time, going down the track of actually having our product registered and approved, so that's all happening, so that is again will also be a later launch later this year. With regard to Pakistan, we just – pretty much, I think we're about or we're in the throes of just starting to sell now, but it's a smaller market from a premium energy drink product brand. We think there is a much larger market that we can look at, and again, we're also looking at the possibility of launching Mutant there, also still later this year. So they're sort of slightly different. They're slightly different markets, and we are in the planning stages with them, and in the process, so they're all hopefully going to come through before the end of the year. Laurent Grandet - Credit Suisse Securities (USA) LLC: Thank you. And on Mutant in the U.S., give us some color on to the marketing activities you are planning to implement to support same-store sales growth that would be great. Thank you.

Well, we have some planning activities. We have switched certain of our existing Monster properties, which we've had for many years and have done – worked very nicely for Monster, such as the Vans Warped Tour. We've made the Vans Warped Tour pretty much a Mutant property, which will get us a lot of sampling, a lot of exposure in 40-something markets and concerts around the U.S. We've also switched, not completely, but a lot of exposure of Mutant into the Monster Jam Series, which are those big trucks, and that's going to happen for the rest of the year. We are going to do in-store price promotions. We're doing sampling, extensive sampling promotions as well for Mutant, and that's all starting to kick in now starting in May and June, the promotions and, as I've said, the sampling activities. We also indicated that we had started with certain limited retailers. We're actually starting some distribution of basically our new zero-calorie White Lightning Mutant drink, which will then give us a better positioning on shelf, and give us alternative offerings, full calorie, and sugar and zero, and that will be probably in the general market by beginning of July. So those two things together we believe with a much broader rollout now. We've opened the market. The number of accounts we're going to in the channels. We are expanding that at the same time now and getting listings. So again, by the time we get to summer midyear, we think that we will have much better distribution for Mutant.

Thank you. This does conclude our question-and-answer session. I would like to turn the call back over to Mr. Rodney Sacks, Chairman and CEO for closing remarks.

On behalf of Monster, I'd like to thank everyone for their continued interest in the company. We continue to believe in the company and our growth strategy and remain committed to continuing to develop and differentiate our brands and to expand the company, both at home and abroad, and in particular to expand distribution of our products through the Coca-Cola bottling system internationally. We're also particularly excited about the new opportunities that we have going forward with a portfolio of energy products throughout the world comprised of our Monster Energy brand, together with the strategic brands, as well as Mutant. Thank you very much for your attendance.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you all may disconnect. Everyone, have a great day.