Good day, and welcome to the Monster Beverage Company First Quarter 2020 Conference Call. All participants will be in a listen-only mode [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded.I would now like to turn the conference over to Mr. Rodney Sacks, Chairman and CEO. Please go ahead.

Good afternoon, ladies and gentlemen. Thank you for attending this call. I am Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President is on the call as is Tom Kelly, our Executive Vice President of Finance. Tom Kelly will now read our cautionary statement.

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 are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance and trends, as well as the future impact of the COVID-19 pandemic on the company’s business and operations.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 February 28, 2020, 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 maybe mentioned during the course of this call, is provided in the notes and designated with asterisks in the condensed consolidated statements of income and other information attached to the earnings release dated May 7, 2020. A copy of this information is also available on our Web site, www.monsterbevcorp.com in the Financial Information section.I would now like to hand the call over the call over to Rodney Sacks.

Let me begin by stating that our thoughts and prayers are with all who have been impacted by the COVID-19 pandemic. COVID-19 has affected the health of so many individuals around the globe, including some of our team members. This includes myself. In mid-March, I began to experience flu like symptoms, tested positive for COVID-19 and thankfully made a good recovery. I'm feeling good but for an occasional cough. For this, I'm very grateful. And we are fortunate that everyone at our company who has been diagnosed with COVID-19 is doing well and has been making good progress. The company has always operated with co-leaders. And I would like to thank Hilton and the leadership team for their leadership and support during this difficult period. To everyone at Monster, my sincere thanks and appreciation for all your efforts.From the beginning of the COVID-19 pandemic, our top priority has been the health, safety and well being of our employees. Early in March 2020, we implemented global travel restrictions and work from home policies for employees who are able to work remotely. For those employees who are unable to work remotely, safety precautions have been instituted, which were developed and adopted in line with guidance from public health authorities and professional consultants. We are incredibly proud of the teamwork exhibited by our employees, co-packers and bottlers distributors around the world, who are ensuring the integrity of our supply chain. Our flavor manufacturing facilities, our co-packers, warehouses and shipment facilities are all operating.Certain of our bottlers distributors have implemented modifications to their core points and service levels, but generally our products remain available to consumers. In limited countries, which are smaller markets for us, the operations of our bottlers and distributors have been more affected. Since March 2020, while various markets have faced…

Thank you. We will now begin the question and answer session [Operator Instructions]. And our first question will come from Andrea Teixeira with JP Morgan. Please go ahead.

Thank you and good afternoon, everybody. And Rodney, I'm glad to hear you’re well and wish you good health to all on this call. So how much has traditional channels and convenience and gas impacted the 20.8% FX neutral decline globally in April? And if we can break down the U.S., I guess we’ll appreciate the figure you gave, saying that U.S. was largely impacted. It will be helpful for investors to figure out when the timing of COVID passes. And then the other thing I would like to clarify on the e-commerce performance. How much -- you gave and we appreciate that. How much would that represent now as a percentage of total sales? Thank you very much.

Okay, Andrea, good afternoon. Maybe I should deal with that question. So what we saw in April was a decline in sales, which we indicated. If you look at the Nielsen for all major channels, we on these calls traditionally give the Nielsen for convenience. But if you look at the Nielsen for all major channels that show the decline of 10.2%. Not only do we measure shipments, we also measure depletions. And depletions are the sales that the bottlers and distributors sell to the various retailers.Depletion were largely in line with the Nielsen numbers for all major channels. In fact, they were a little bit better. So I think what you’ve seen and I'm only talking to U.S. and I'll talk about EMEA, which is our next biggest market in a while. So in the U.S., what we saw was, I believe and the numbers appear to verify that there was a reduction in inventories in the bottler network, because shipments declined much faster than depletions and in fact the Nielsen numbers. So that's where we are in the U.S. with our bottler and distributor business.With our direct business, we have some direct business, the clubs, e-commerce, et cetera that business was largely intact. So we didn't see declines in that part of the business. Also, what happened in April is that there was a lot of stock building and pantry loading that seem to culminate in the last week in March. And in April and if you look at April sales week by week, our sales have improved week by week. And that's also true in EMEA, which is our next biggest market. So in EMEA, they didn't see the same degree of stock reduction by the bottles distributors. But what we have seen in the EMEA, as the countries have opened sequentially better performance week on week.For the rest of business, Asia Pacific was up on last year marginally and LATAM -- well, I should say margin was actually it was up to a nice degree over last year and LATAM was in line with last year. So that's the issue from the U.S. and from EMEA, and I hope that answered your question.So regarding the second question and you kind of not -- out one question, but on the second question about e-commerce. We don't disclose those numbers. The numbers are available on stat line. We don't disclose those numbers. The debt market is becoming a very big market for us. And you could see from the indication on the call that our market share with Amazon is growing pretty significantly.

And our next question will come from Mark Astrachan with Stifel. Please go ahead.

Hey, afternoon, everybody. First of all, by the way, I'm making dinner for the kids while listening. So you guys are very fortunate. I guess I just wanted to talk a bit about some of the cost controls that seem to have occurred in the quarter. Maybe talk a bit about how to think about selling and G&A expenses. In terms of with some of shift response to what you've seen in the quarter and some of this because you didn't have NASCAR recurring and selling expenses, while G&A up a little bit less than we've seen. And I know you don't want to give guidance, but any sort of direction that you can give us in terms of how to think about those numbers for 2020 that would be helpful. Thanks.

So as we look at the year, particularly with sponsorships and endorsement. Yes, NASCAR has fallen away and we have other sponsorships and endorsements that may not cost the same this year as they did last year, because a number of events have been canceled. So we don't give guidance. But I think as one reflects on the year, we can see a change in pattern in our spending. We've been spending a lot more on social media, which we believe is very important, particularly in this market that we're in. And we'll continue to spend in the markets as we deem appropriate.

Our next question will come from Peter Galbo with Bank of America. Please go ahead.

I guess Rodney, as you mentioned, some of the states are starting to reopen. What have you seen kind of from the core Monster consumer in a more restrictive states in New York or California where we're expecting kind of manufacturing and construction to come back online sooner. That I would think will also kind of play more in your core consumer. Just anything you're hearing on the ground as they start to reopen more. Thanks.

I think that that's drilling down to a level that I don't think is appropriate. And I don't think it's something we should be doing, because there are so many variances from state to state and so many factors. I think you've got to look at it on a broader basis across the U.S. and also across the world, because you look at individual countries. And we're really not in a position to have analyse each and every country and giving you percentage up or the percentage back to normal. I think it's just more anecdotal of a trend that we are seeing, and it's starting to open. And we just say, we feel that when you look at the weekly numbers, Hilton referred to earlier, you can see that there seems to be a trend that those numbers are improving on a weekly basis.

Thank you. Next question will come from Laurent Grandet with Guggenheim. Please go ahead.

Good morning, everyone. And Rodney I’m very glad to hear that you’re recovering from COVID, so keep safe. So, I like to question you about the renewed competition in the space. And Pepsico in the quarter became a much stronger competitor with, first the acquisition of Rockstar, and that's with the announcement of distribution agreements with them in the U.S. Any comments on the move and how you are planning to adjust maybe to this new landscape. And also mean, should that change the way you and the Coca-Cola company and its populous partner? Thank you.

Well, I think it's difficult to comment on Coca Cola, because we've always maintained a good relationship with the Coca-Cola company even during the arbitration proceedings that we had. We know that transitions generally are very disruptive. We've been through a number and we know how disruptive they can be. So that's we believe in a short term is an opportunity for us. In the long term, it's difficult to comment, because Pepsi Cola has never really had success in the energy category historically, although, they now have brands that are a lot more powerful than they had before.Rockstar has declined 50% since the market share, since the distribution agreement began in 2009. So it's really difficult to say. I think that the short term will be disruptive and we've got plans, both for the short term and for the long term. And I think it will be inappropriate for us to disclose what those plans are. But rest assured we do have plans and we believe we've got very strong brands and that we’ve got good marketing prowess and that that advantage will prevail in the long term.

Our next question will come from Bill Chappell of SunTrust. Please go ahead.

Just following up on the -- and glad to hear you're doing well Rodney. Just following up on the Pepsi side, less from what you were seeing, be it from Rockstar or Bang, because I think you've kind of already seen that. Are you expecting anything new out of Mountain Dew or seeing anything from that front? Now that it seems that Pepsi is a little more unleashed and what it can do on the energy sector?

Well, we haven't seen anything yet. But we are anticipating that yes, that reporting in the press that they were kind of hamstrung with utilizing the word energy on some of the other brands. And we believe that that’s something that will happen in time but honestly, we shouldn't conjecture on what they may or may not do.

Yes, I’d just like to add that a lot of these things are not new. They have endeavour to play in that space through Kickstart and in the Mountain Dew range, and -- as an extension. And so there will be a little bit of a divergence, tweak to that. They have already been building on what Hilton said, they've been distributing Rockstar for the last 10 years. So at the end of the day, I don't think there's going to be much change. But again, we can't speculate to whatever they will put behind and for how long. But we do think that the Rockstar brand has some challenges, and we think that we're in a strong position to address that. And to address the the Bang position, I think that you've seen the market shares of Bang over the past 12 months. And we think we're in a good position to continue to compete with them, regardless of the distribution system change. There are benefits but there are also some negatives in that that come with that change.

So the one thing I would add, actually, to what we've all just said, is that this results with Pepsico, I think will galvanize us, Coca-Cola and a whole bottling system against the common enemy. And I think that's a very positive factor as well.

Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Rodney Sacks and Mr. Hilton Schlosberg.

Thank you. On behalf of Monster, I would 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 innovate, develop and differentiate our brands and to expand the company, both at home and abroad and in particular, expand distribution of our products through the Coca-Cola bottling system internationally.We believe that we will be able to navigate through the challenges ahead as a result of the COVID-19 pandemic. And hope that this unfortunate situation will resolve itself in the not too distant future. We believe that we are well positioned in the energy drink category and continue to be optimistic about our total portfolio of energy drink brands. We hope that you will stay safe and healthy. Thank you very much for your attendance.

And thank you, sir. The conference has not concluded. Thank you for attending today's presentation. You may now disconnect.