Good day, ladies and gentlemen. Welcome to Monster Beverage Corporation Second Quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions following at that time. And as a reminder, this conference is being recorded. Now, I'll turn the conference over to your host, Rodney Sacks, Chairman and CEO. Please 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'd 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, and our Form 10-Q, filed on May 8, 2017, including the sections contained therein entitled risk factors and forward-looking statements for 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 August 8, 2017. A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section. Sales continued…

Thank you. Our first question is from Bill Chappell of SunTrust. Your line is open.

Thanks. Good afternoon.

Afternoon. Hi, Bill.

Hey Bill.

Can you just talk a little bit about – we've been hearing as the transition of Coke in the U.S. goes from Coke corporate to the bottlers, there have been some benefit in terms of sales. Are you seeing that? Are you seeing any kind of change in where they go to market with your products? And is that a net benefit? I remember I guess a year ago there was – as you had the transition from ABI to Coke, it was a actually a slowdown, but I didn't know if you were seeing some net benefit as you move to market this year.

We think that it is – there's not a general rule across the board. In certain markets, the transition has been less noticeable. In some markets, it has taken some of the newer bottlers, has taken them some time to get up to speed and we are seeing some sort of disruption in delivery schedules and et cetera. But overall, we are seeing improvements and benefits. So we are positive about the transition. It's a question of just, there is some sort of noise during the transitional periods as they've had to get up to speed. I think Hilton's got some...

I think the only thing I wanted to make was that anecdotally, as we looked at the independent bottlers over the years, their performance relative to the company bottlers has actually been better. So I think we're looking for better performance from these bottlers as refranchising takes place.

Yeah. I agree.

Thank you. Our next question is from Vivien Azer of Cowen & Company. Your line is open.

Hi. Thank you. Good afternoon.

Hi.

And thank you for the question. So my one question just has to do with the supply constraints on coffee that you're going to remedy by exporting out of Europe. Can you please give us a sense of the potential implications to your gross margin as you work through those supply issues? Thank you.

We had a price increase in Java Monster effective January 1. And what we have seen is that the increase in finding the price increase has actually been kind of equivalent to the increased costs that we're sustaining by bringing product from Europe. So it's basically been a wash.

Yeah. And I think that as we continue to secure increased production in the U.S., which is what we're now doing, those costs will come down. So really, it's been a temporary increase just to the extent that we have been importing, obviously, to supplement our products, yeah, we're still at all times have been getting the vast majority of our production in the U.S. And so, we obviously do have a shipping charge, but as Hilton has indicated, that's been negated by the increase, and going forward, we think that will become less relevant and we will increase those margins again.

Our next question is from Mark Astrachan of Stifel. Your line is open.

Hi. Mark, what happened to you?

Pardon me, Mark. Your phone is on mute.

Perhaps we can come back to Mark.

We'll move to the next person. Our next person is from Amit Sharma of BMO Capital. Your line is open.

Hi. Good afternoon, everyone.

Hi.

At least you're there, Amit.

Rodney, a quick question on the trends in the CMD (32:19) channel, definite acceleration versus where we were last quarter. Can you talk about that; what's happening? In the past you've talked about innovation, maybe a reason for the category slowdown. Are we getting past that hump at this point?

We still haven't got a really accurate handle on the reason for the slowdown in convenience. We've all been puzzled in the beverage industry, generally. There are a number of speculative reasons that have come out over the period of time. We were talking to the Coke bottlers, and everybody's got theories. But it has been a slowdown which has been sort of unusual for us in these times. It is starting to pick up. We are seeing some positive signs, both in the CMD (33:13) category and sector and generally.

I think one of the other things is that our convenience store customers have also been concerned about foot traffic. And while no one could put their hands on it, there's lots of speculation, as Rodney said. One of the points that was raised by the bottlers at the recent meeting that we attended was that the SNAP program and the reduction in benefits under the SNAP program could have an impact on lower convenience store traffic. So I just put that out as an additional possibility.

Yeah, I agree. And then the other one that has been, again, more anecdotal is the Trump effect just on Hispanic foot traffic into the convenience stores seems to have also dropped off a little bit.

Thank you. Our next question is from Judy Hong of Goldman Sachs. Your line is open. Judy E. Hong - Goldman Sachs & Co.: Thank you. Hi, everyone.

Hi, Judy. Judy E. Hong - Goldman Sachs & Co.: Rodney, I had one clarification on Java and then a Hydro question. So on Java, when you said getting to the normal supply is going to take a few months. Are you commenting that maybe in third quarter we still see a drag of something like a $10 million to $15 million that we saw in the first and the second quarter, or basically that drag dissipates as you're kind of lapping the decline that you started to see last year? And then on Hydro, can you just update us on maybe what you're seeing from a distribution ramp perspective? Because if you look at the ACV, I think it's still below 40%, even though it's come up pretty nicely, and that's still below the number that you're seeing for the Green and the Ultra. Do you think that you can get to that level pretty quickly from a Hydro perspective?

Just going back to the coffee question. We think that there still will be a drag from July, but we're seeing every month, we are seeing improved deliveries, and we think that we will be fully up to speed towards the end of the quarter. So we think that there will be – still be some drag, some reduction, shortages going forward, but we think it will be reduced, but to the extent we're not sure. And obviously, we're right in the phase now of getting production, and that means getting back our shelf space and that will take a bit of time. With regard to Hydro, your point is noted, and that is correct that the ACV at the moment is at about 40%. So we've obviously still got some work to do to get Hydro out and get it – again, it was sort of launched a little bit off cycle. And so we are getting it into the chains and into the stores, but it is taking some time. But again, there are all sort of supplier constrictions on the number of packages we're able to put out. This obviously is of concern to us, but unfortunately, we do believe in the package. We feel that the package is important for the product to create the right image and the right personality around the brand and the product. So we are continuing to address the supply issues, and literally, we're selling all we can supply. So we will continue to, I think, improve the supply situation and as that goes, so we will continue to supply – to increase and improve our distribution. But that's really a positive side of the brand, that it is pulling and it has received good consumer response. We are looking at addressing the brand with an additional package, which won't have the same supply constraints, a slightly larger-sized bottle. And we believe we'll be able to launch that and get that on the shelves at the same time as the can. And that will supplement we believe the can and consumer demand. The consumer will have a choice, but we do not want to replace the can with a similar-sized bottle. This will be a larger bottle where at the moment we haven't finalized the exact size, but it's probably likely to be about a 750 mL size, resealable. So we're looking to have both products. We're also looking to have different flavors in the bottle. So there will be a choice of additional flavors and hopefully we'll be able to get to that and solidify our shelf space and therefore satisfy consumers and retailers so that there will always be a supply of Hydro on the shelves, even though there may at times be some shortages in the can size, until we get those supply issues rectified.

Thank you. Now we have a question from Mark Astrachan of Stifel. Your line is open. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: Hey, guys. Let's try that again. Can you hear me?

Yes, this time we can. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: Perfect. Hilton muted my line. That was the problem.

Yeah. We thought we got off lightly this quarter. Mark Stiefel Astrachan - Stifel, Nicolaus & Co., Inc.: So I was curious if you could comment on the number of SKUs you're selling in international markets, just sort of broadly. I mean I know there are more in EMEA versus some other markets. But you see, call it 10, 15 SKUs in a typical shelf placement in the U.S. Where are you in other international markets? And sort of how do you think about that as an opportunity longer term? And how do you ultimately get incremental shelf space?

Well, if you look at mass markets, it really is very varied. It depends on the maturity of the market. As you say, you've got most of the European markets with a lot more SKUs, but even within the European markets there is a tremendous disparity between what you've got on shelves in the UK and Germany and Spain versus other markets. And it varies pretty dramatically. You also have a lot of the, what I call the sub lines, the strategic lines that we've got, the families that haven't yet even been launched. We've launched Ultra, but you really have no coffee and you have very little Rehab in Europe. And we've just sort of going up with Punch and repositioning the juice line. But again, we've launched Hydro pretty much in the United Kingdom and Ireland, but we are looking to launch Hydro quite quickly not everywhere but in a number of selected markets in Europe, including South Africa. We think there is a good potential for the brand. So out of that you go to South America and Asia, the SKUs are much, much more limited. And so we've got just a lot of potential. Even if you go down to places like Chile where we're doing a lot of business there, there still is a pretty much a handful or so of SKUs. So there is a lot of potential. But if you looked at it sort of on average, I would say you're looking at probably 30% to 40% of the SKUs on average in overseas markets versus the U.S., just as a very, very broad thumb suck (40:55) across a number of – but that's not on a weighted or on any sort of statistical analysis. That's just pretty much anecdotally our gut feel.

Thank you. Our next question is from Kevin Grundy of Jefferies. Your line is open.

Thank you. Good afternoon, guys.

Hi.

First question is on the U.S. market. So strong July growth sales update, 14.7%, FX neutral. Doesn't look like there's any adjustment needed for trading days, so that's great. Hilton, do you have the breakdown between U.S. and international? I guess as we're looking at the Nielsen data, the most recent data that we got for the last couple of weeks in July was up 8%, and you had spoken to some of the acceleration you're seeing. Is that sort of representative of the acceleration you're seeing? That's question number one. And then, Rodney, for you, question number two. With respect to Java and Muscle Monster, as that supply comes back on, how are you ensuring that's all incremental? You called out the $13 million and $25 million year-to-date drag for the quarter and year-to-date, respectively, if I'm not mistaken, so that's a couple points to U.S. sales growth. So any comments there with respect to how incremental that could potentially be for the U.S. would be helpful. Thank you for both of those.

Okay. So as we look at our increase in July, and we always give a lot of caveats because it's very early in the month, that 14.7% that we spoke about that was internationally, that wasn't in the U.S. So I'm not sure, your reference to that being in the U.S., that's a group consolidated number. Also, we don't traditionally break down our increase in gross sales by market area, and I don't think we want to start that because I don't think we've done that in the past. So I'm not going to give that number, but the 14.7% is a consolidated number. As we said, it's 13.8% and 14.7% on a foreign exchange adjusted basis.

All we can really say is that if you look at the Nielsen numbers, as you said, you are seeing that increase. We're seeing it as well. So we seem to be ahead of the Nielsen, generally, continuing to get share both internationally and in the U.S. So there's nothing that's inconsistent with our previous growth in the quarter that we're seeing in the month of July. It just is doing better generally across the board. With regard to Java and Muscle Monster, where we sat incremental, I mean, we've lost shelf space, but even if you look at Java, I was looking at the numbers on all major channels. Even for our two main Java products which we've basically been in stock most of the time this year, our distribution is down at about 71%, whereas in our other top brands we're in the high 80%s and low 90%s. So they've clearly lost some distribution even for the two main SKUs. The others, if we look at salted caramel, which we introduced quite a bit of time ago, that's at 40%. So we've got a lot of opportunity. We've just got to get supplies back and that is one of the reasons that we hesitated a bit earlier. Because it's one thing getting back supplies in line, it's another thing making sure that we have those supplies on a consistent basis before we go back out and reestablish shelf space and get back shelf space because we obviously don't want another hiccup with retailers. So we really do have quite a bit of upside potential in just improving our supply channels, having products on shelf, getting back our listings for not only the line extensions, (44:50) and salted caramel and Irish, but even just getting back our distribution levels…

Yeah, just to be clear, we utilized the production capacity that was available to us with Java Monster for our top-selling SKUs. So we decided we were not going to bring those SKUs from Europe because we didn't want to disturb the flavor profile. We wanted to maintain the flavor profile. So those two products, the main two products in the Java Monster line, we kept with production here.

Thank you. Ladies and gentlemen, this ends the Q&A portion of today's conference. I'd like to turn the call over to Rodney Sacks for any closing remarks.

Thank you. 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 by the new opportunities that we have going forward with the portfolio of energy drink 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 your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.